Understanding Medicaid Home and Community Services: A Primer, 2010 Edition. 4. State Plan Coverage of Participant-Directed Personal Assistance Services


Section 6087 of DRA-2005 added §1915(j) to the Social Security Act, effective January 2007.46 This authority permits a state to institute a participant-directed services option that includes the disbursement of cash prospectively to participants who direct their personal assistance services.47 (While specific statutes use different terms--personal care and personal assistance--the service provided is the same.) Absent the §1915(j) authority, participant direction of Medicaid State Plan personal care services is limited to use of the employer authority, as previously discussed.

The §1915(j) authority also allows states to permit participants who direct their services under the State Plan Personal Care benefit to use individual budgets to purchase non-traditional goods and services other than personal care/assistance, to the extent that expenditures would otherwise be made for human assistance. (States already have the authority under §1915(c) to allow HCBS waiver participants to purchase a broad range of goods and services.)

States may use the §1915(j) authority only in a State Plan Personal Care program or in HCBS waiver programs already in operation (i.e., states may not offer participant-directed services under the §1915(j) authority except through an existing State Plan Personal Care program or an HCBS waiver program).

Especially with respect to Medicaid State Plan personal care services, this authority is specifically intended to relieve states of the need to operate §1115 waivers in order to offer participants wide-ranging authority to direct their personal care services, including using their personal care budget to purchase other goods and services, as long as they substitute for or reduce the need for paid personal assistance.

In September 2007, CMS issued a State Medicaid Director Letter that provides guidance to states concerning this Medicaid State Plan option.48 The letter is accompanied by a Medicaid State Plan amendment pre-print that states may submit in order to invoke this authority.49 The rule was finalized on October 3, 2008.50 So far, seven states--Alabama, Oregon, Florida, Texas, New Jersey, California, and Arkansas--have secured CMS approval of a State Plan amendment under this authority, and several other states have submitted their draft amendments to CMS and requested technical assistance.

Key Features of the §1915(j) Authority

The authority has the following major features:

  • Disregard of Statewideness and Comparability. A state may elect to make its participant direction option available statewide or in specified parts of the state, and may limit the number of persons who direct their services under this option.

  • Limitations on Participants Who May Self-Direct. The participant direction option may only be offered to participants who live with their families or in housing that they own or lease, not to those whose living arrangement is owned, operated, or controlled by a service provider. States also have the latitude to make participant direction available to all participants (subject to the preceding limits) or only to specified groups of participants.

  • Election of Participant Direction. A state must provide information and counseling regarding participant direction to individuals so they can make an informed choice about whether to direct their services and supports. A state also must allow participants to voluntarily terminate participant direction and return to receiving provider-managed services. When a person voluntarily ends participant direction (or the state determines that participant direction should be terminated involuntarily), the state must ensure that the individual continues to receive critical services during the transition period.

  • Use of a Representative. A state may permit the individual to appoint a representative to direct services, but the person acting as a representative is prohibited from providing personal assistance services to that individual.

  • Service Plan. The state must fashion a person-centered service planning process that includes an assessment of the individual’s needs, strengths, and preferences and that “… (a) builds upon the participant’s capacity to engage in activities that promote community life and that respects the participant’s preferences, choices, and abilities; and (b) involves families, friends, and professionals in the planning or delivery of services or supports as desired or required by the participant.”

  • Quality Assurance and Risk Management. The state must develop appropriate quality assurance methods and employ processes that identify and address risks. The risk management plan must be developed in concert with the participant.

  • Individual Budget. The state must provide an individual budget to each participant who elects to direct his/her services. The amount of this budget must be determined through the uniform application of a methodology developed by the state.

  • Cash Option. A state may elect to disburse cash prospectively to self-directing participants to directly purchase services. Participants who elect this option are also permitted to pay their workers and file the employer share of payroll taxes, subject only to retrospective oversight to ensure compliance with labor and tax law requirements. There is no comparable cash option available under the State Plan Personal Care option, the HCBS waiver program, or Medicaid State Plan HCBS coverage.51

  • Purchase of Non-traditional Goods and Services. A state may elect to permit participants who self-direct to “to acquire items that increase independence (such as a microwave oven or an accessibility ramp) or substitute for human assistance, to the extent that expenditures would otherwise be made for the human assistance.” In other words, participants may be given the authority to use their individual budgets to purchase goods and services other than personal assistance, as long as they substitute for or reduce the need for paid personal assistance. On November 19, 2009, CMS issued a State Medicaid Director Letter to provide guidance on this provision. Among other clarifications, the Letter stated that “the services, supports, and items that are purchased with a service budget must be linked to an assessed participant need or goal established in the service plan.”52

  • Availability of Ongoing Assistance in Participant Direction. The state must make ongoing training, assistance, and counseling available to participants who direct their personal assistants through the use of a counselor and other information and assistance methods.

  • Providers. Under this authority, participants can “choose as a paid service provider, any individual capable of providing the assigned tasks including legally liable relatives,” as long as they meet applicable state requirements, such as those related to training and criminal background checks.

  • Financial Management Services. A state must arrange for the provision of financial management services on behalf of self-directing participants (except those who have elected the cash option, if available).53 The state may obtain such services from vendors or elect to provide the services itself. The costs of these services are eligible for Federal financial participation only as an administrative expense. As noted above, under an HCBS waiver, they can be reimbursed as either a service or an administrative expense.

While this authority shares some of the features of participant direction that are available under the HCBS waiver and Medicaid State Plan HCBS options, it goes beyond those options by permitting states to offer an individual the option to receive some or all of the benefit directly in cash.

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