NCSA Position Statement: The Medicaid HCBS Settings Rule

The Medicaid HCBS Settings Rule Must Be Withdrawn or Amended to Restore Choice, Dignity, and Access for Individuals with Complex Disabilities

To address the growing need for a continuum of care and program options for adults with severe and profound autism and other complex disabilities, the 2014 Medicaid Home and Community-Based Services (HCBS) Settings Rule (“Settings Rule” or “Rule") promulgated by the federal Centers for Medicare and Medicaid Services (CMS) must be withdrawn or amended. The Rule undermines individual rights and limits access to needed services, and in practice violates the ruling of the Supreme Court decision Olmstead v. L.C. by restricting choices available to individuals with intellectual and developmental disabilities (I/DD).

While the Settings Rule (42 C.F.R. § 441.301(c)) was originally intended to increase autonomy of Medicaid recipients with I/DD and improve opportunities to access integrated, community-based living, it has in practice ushered in an era of rampant discrimination against those with more severe forms of I/DD who often require specialized supports. The rule imposes a narrow definition of “community,” enforces overly prescriptive requirements on household-level living arrangements, and deters the creation of innovative, high-quality care models such as intentional communities, farmsteads, and specialized campuses—options that many families and individuals actively seek.

The Problem 

The HCBS Settings Rule:

•          Restricts residential and vocational options for individuals with high-support needs who thrive in structured, nontraditional settings;

•          Subjects certain care models—like intentional communities—to “heightened scrutiny,” creating disincentives for states to approve them;

•          Regulates personal and domestic aspects of living (such as food access and interior design), decisions that should rest with the individual, family, and provider, all while ignoring more urgent questions such as quality of life and individual outcomes;

•          Ignores the diverse and legitimate preferences of individuals and families, undermining personal choice and autonomy.

Contradiction with Olmstead 

The Olmstead decision affirms the right of individuals with disabilities to choose how and where they receive services. The HCBS Settings Rule, by enforcing uniformity over personalization, violates the core principle of choice embedded in Olmstead. It wrongly assumes that “integration” is achieved only through proximity to the general public—rather than through meaningful inclusion, safety, and fulfillment as defined by the individual.

Our Recommendations

We call on the Centers for Medicare & Medicaid Services (CMS) to:

1.        Repeal or amend the HCBS Settings Rule under the authority of Executive Order 14219, which directs federal agencies to remove regulations that are burdensome, exceed statutory authority, or restrict innovation;

2.        Restore individual and family choice in residential and service settings, including the right to access campus-based, congregate, faith-centered, or intentional communities;

3.        End heightened scrutiny that disproportionately penalizes alternative settings based solely on physical structure or location;

4.        Eliminate micromanagement of household-level conditions like meal access and visitor hours, which are best governed by the individuals and providers involved;

5.        Support innovation and diversity in service models, especially those serving individuals with complex behavioral, medical, or intellectual support needs.

Legal and Policy Justification 

•          The rule has led to discriminatory practices against those with severe disabilities, unintended regulatory overreach, delayed infrastructure development, and limited land use for desperately needed programs.

•          Families and states face growing waitlists and declining capacity, while promising new models are stalled or rejected outright.

•          The Social Security Act (Section 1915(c)) does not authorize CMS to regulate daily household routines or setting design. 

Expected Outcomes of Repeal 

•          Increased access to appropriate residential and vocational services;

•          Reduced waitlists and regulatory barriers, decreased costs and project delays;

•          Greater respect for individual dignity and family involvement;

•          Legal alignment with Olmstead and constitutional protections;

•          Reinforcement of local control and innovation in care delivery.

Conclusion 

The HCBS Settings Rule has imposed significant and unnecessary obstacles to the creation of desperately needed projects and programs serving those with severe autism and other complex disabilities. It limits freedom, stifles innovation, and burdens families already navigating some of the most complex care challenges imaginable. CMS must act now to repeal or substantially reform the rule in alignment with Olmstead, current legal authority, and the lived experiences of individuals with profound disabilities and their families.