Requirements for new HCBS settings

Note: The information on this page applies only to Alternative Care (AC), Essential Community Supports (ECS) and Elderly Waiver (EW).

All adult day service, adult foster care and customized living providers must comply with all home and community-based settings (HCBS) standards and location requirements before enrolling with Minnesota Health Care Programs (MHCP).

Location Limitation

Effective March 18, 2023, DHS cannot authorize adult day services, adult foster care and customized living services, including 24-hour customized living services, in settings adjoined to or on the same property as an institution. The HCBS rule defines an institution as a nursing facility, hospital or intermediate care facility for persons with developmental disabilities (ICF/DD).

CMS presumes settings located either in a privately or publicly owned hospital, nursing facility, intermediate care facility (ICF-DD) or institution for mental disease (IMD), or adjacent to a publicly owned hospital, nursing facility, ICF-DD or IMD, to have institutional qualities. The HCBS rule defines publicly owned as being financed and operated by a tribal nation, county, state, municipality or other unit of government.

The location limitation does not apply to settings that successfully complete the HCBS Rule heightened scrutiny process.

DHS encourages potential providers to start the heightened scrutiny process as soon as possible and before providing waiver services to people enrolled in AC, EW or ECS in settings adjoined to or on the same property as an institution. Providers will not receive AC, EW or ECS reimbursement until successfully completing all steps of the HCBS Rule heightened scrutiny process.

CMS permits DHS to submit a setting for a heightened-scrutiny review only while non-Medicaid beneficiaries are receiving services in the new setting. If the new setting is located in a privately or publicly owned hospital, nursing facility, intermediate care facility (ICF-DD) or institution for mental disease (IMD), or adjacent to a publicly owned hospital, nursing facility, ICF-DD or IMD, CMS believes state and federal officials can accurately assess its compliance with the HCBS setting requirements based on experiences of non-Medicaid beneficiaries. For more information about CMS guidance on heightened scrutiny of new presumptively institutional settings, see Heightened scrutiny review of newly constructed presumptively institutional settings (PDF).

See the "Heightened scrutiny process" tab for more information.

Heightened scrutiny process
Request a review
Evidentiary packages

Heightened scrutiny process

DHS will assign staff to each provider to guide the provider through the heightened scrutiny process.

Responsibility of DHS staff
- Communicate with the provider via the DHS Home and Community Based Services (HCBS) unit email account
- Send required forms
- Review the setting’s policies and procedures
- Schedule and conduct an on-site assessment of the setting
Responsibility of provider:
- Complete a location verification form to assist DHS to verify that the setting is located in a privately or publicly owned hospital, nursing facility, intermediate care facility (ICF-DD) or institution for mental disease (IMD), or adjacent to a publicly owned hospital, nursing facility, ICF-DD or IMD that has institutional qualities.
- After DHS verifies the location, providers must complete a self-assessment and send copies of policies and documents to DHS to verify compliance with HCBS standards and requirements.
On-site assessment

If DHS determines that the setting’s policies and procedures are compliant with the HCBS rule requirements, DHS staff will schedule an on-site assessment at the setting location to further gather evidence that the setting meets all HCBS standards and does not have the qualities of an institution.

Evidentiary package

Based on the steps outlined above, should DHS believe the setting meets all HCBS standards and does not have the qualities of an institution, DHS will develop an evidentiary package for the setting, which will be posted online for a 30-day public comment period.

Public comment period

DHS will review the public comments to determine if the comments align with the state’s recommendation of the setting’s compliance. If the public comments support the setting as being HCBS compliant and not having institutional qualities, DHS will send the setting information to CMS.

CMS approval

CMS has final approval. CMS may ask for clarification of information or make recommendations to further compliance. CMS, at its discretion, may also disagree with the state’s determination of the setting’s compliance with HCBS requirements and deny payment until compliance is achieved. DHS will notify settings when we send the setting information to CMS. DHS will also notify settings when they may proceed with the MHCP enrollment process.

Newly licensed settings

Settings that are opening a newly licensed program in a building that completed construction on or after March 18, 2023 must withhold from completing the MHCP enrollment process until CMS sends final approval to DHS. DHS must receive CMS approval for the setting before it can pay for HCBS waiver services in that setting.

Request a review

To initiate a heightened-scrutiny review for a new setting, see the “Request a review” tab for more information.
Request a review

DHS encourages potential providers to start the heightened scrutiny process as soon as possible and before providing services to people enrolled in AC, EW or ECS. Providers will not receive reimbursement for these services until the setting successfully completes the heightened scrutiny process and is determined to be HCBS compliant.

Email your request

To initiate a heightened scrutiny review for a new setting, email the HCBS unit (“Heightened Scrutiny” will auto-fill on the subject line). In the body of the email, include the setting’s name, address, contact information and license number, if available.
Evidentiary packages

Evidentiary packages submitted for heightened scrutiny

Settings that provide adult day services

We will add evidentiary packages to this section as we complete them.

Settings that provide adult foster care services

We will add evidentiary packages to this section as we complete them.

Settings that provide customized living services

2025
2024