Home and Community Based Services (HCBS)

Medicaid home and community-based services provide opportunities for people to receive long-term services and supports in their own home or community, rather than in an institution or isolated setting.

HCBS Funding in the American Rescue Plan Act


The American Rescue Plan Act (ARPA) of 2021 became law on March 11, 2021. Section 9817 of ARPA provides states a temporary ten (10) percentage point increase to the federal medical assistance percentage (FMAP) for Medicaid HCBS, if certain federal requirements are met. States must use funds equaling the federal funds attributable to the increased FMAP for activities that enhance or strengthen Medicaid HCBS.

HHSC submitted an initial spending plan to the Centers for Medicare and Medicaid Services (CMS) on July 12, 2021.

On January 10, 2022, CMS provided HHSC conditional approval of the spending plan. The approval is conditional upon HHSC complying with federal requirements.  A copy of CMS’s conditional approval can be found here (PDF). HHSC received necessary state budget approvals in March 2022.


States are required to provide updates to CMS about their spending plans and highlight any changes from their original plan on a regular basis. HHSC submitted a spending plan update in track-changes for ease of review and identification of new information. The latest update was sent to CMS on July 18, 2022. Read the update here (PDF).

Stakeholder Communication

Sign up to receive updates about the HCBS spending planning. HHSC held a webinar focused on updates to the spending plan and the HCBS ARPA Provider Recruitment and Retention Bonus rate add-on on June 8, 2022.

When another webinar is scheduled, we will post the information here.

Email Medicaid HCBS Rule with questions.

HCBS Settings Rule

Overview of HCBS Settings Rule

In March 2014, the Centers for Medicare and Medicaid Services (CMS) issued the federal HCBS Settings Rule which added requirements for settings where Medicaid HCBS are provided.

CMS has given states until March 17, 2023 to bring Medicaid programs into compliance with the rule.

The purpose of the HCBS Settings Rule is to ensure people receive Medicaid HCBS in settings that are integrated in the community. A Medicaid HCBS setting must facilitate a person’s choice regarding services and supports and who provides them.

Medicaid HCBS settings must also be integrated in and support full access to the greater community, including opportunities to:

  • Seek employment and work in competitive, integrated settings;
  • Engage in community life;
  • Control personal resources; and
  • Receive services in the community.

The HCBS Settings Rule applies to the following Texas Medicaid programs and services:

  • Community Living Assistance and Support Services (CLASS)
  • Deaf-Blind with Multiple Disabilities (DBMD)
  • Home and Community-based Services (HCS)
  • Texas Home Living (TxHmL)
  • Medically Dependent Children's Program (MDCP)
  • Youth Empowerment Services (YES)
  • Community First Choice (CFC) services
  • HCBS Adult Mental Health (HCBS AMH)

Statewide Transition Plan

CMS requires states to submit a transition plan describing their planned initiatives and activities to achieve compliance with the federal HCBS settings regulations. The transition plan must include:

  • An assessment of settings where Medicaid HCBS are provided
  • Remediation strategies for settings that do not meet the requirements of the regulations
  • A summary of public and stakeholder input on the assessment processes and remediation strategies
  • A summary of public comments received on the transition plan and any revisions made to the plan in response to public comment

Texas submitted an initial STP to CMS in 2014 and has update the plan based on responses from CMS. HHSC submitted the most recent version of the STP to CMS in April 2022. The most recent version of the STP and past STPs are available at the links below.

Statewide Transition Plan – April 2022

Previous versions:

Heightened Scrutiny

CMS presumes some settings have qualities that are institutional or isolating in nature. CMS requires states to submit evidence demonstrating that these settings are able to overcome the presumption. These settings must go through a heightened scrutiny review by CMS.

CMS presumes that the following types of settings have institutional or isolating qualities:

  • Prong 1 settings: Located in a hospital, nursing facility, intermediate care facility for individuals with an intellectual disability or related condition (ICF/IID) or institution for mental disease (IMD).
  • Prong 2 settings: Located adjacent to a public hospital, nursing facility, ICF/IID or IMD.
  • Prong 3 settings: Have the effect of isolating people from the broader community of people who do not receive HCBS.

CMS requires states to identify settings that meet the criteria above and submit to CMS a list of settings that the state believes can overcome the institutional or isolating presumption. The list must include:

  • The prong that each setting falls into for heightened scrutiny
  • A summary of how each setting has or will overcome the institutional or isolating presumption and
  • The state’s plan for remediation to ensure compliance with the regulations by March 17, 2023.

HHSC will submit all assisted living facilities participating in the STAR+PLUS HCBS program for heightened scrutiny review. HHSC posted a description of the heightened scrutiny process and an initial list of settings for public comment in October 2021 at Heightened Scrutiny (PDF).

In May 2022, HHSC posted an updated list of settings and a summary of non-compliance issues and remediation activities necessary for ALFs to comply with the HCBS Settings Rule.

An evidence packet must be completed for each assisted living facility to provide evidence that the setting does, or can, comply with requirements of the HCBS Settings Rule. If an ALF is not compliant with any of the requirements of HCBS Settings Rule, the ALF will work with the MCO to develop a remediation plan. All remediation activities identified on the evidence packet remediation plan must be completed by August 31, 2022.

Policy Guidance

CMS Resources

HHSC Webinars


Please click here for Provider Communications.

Email questions to Medicaid HCBS.

Information & Provider Letters

Case-sensitive. Use commas to separate multiple entries.
Note: These files are in PDF format unless otherwise noted.
Number Title/Notes Date Published
IL 2022-49 Assessment of 3-Person Residences, 4-Person Residences, and Host Home/Companion Care (HH/CC) Settings for Compliance with Federal Home and Community Based Services (HCBS) Settings Rule

Note: Revised Sept. 22, 2022

IL 2022-30 American Rescue Plan Act (ARPA) Home and Community-Based Services (HCBS) Provider Retention Payments (Revised)

Note: Revised June 24, 2022

PL 2017-24 All Providers are Required to Redo Nurse Aide Registry (NAR) Searches Conducted from June 14, 2017, through August 3, 2017
PL 2017-23 All Providers Are Required To Redo Employee Misconduct Registry (EMR) Searches Conducted From June 9, 2017, through July 27, 2017