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. Read a copy of CMS’ conditional approval (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 April 17, 2024. Read the update (PDF).

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. Read HHSC’s statewide transition plan.

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. Read more about heightened scrutiny requirements and Texas Medicaid HCBS settings subject to heightened scrutiny.

Transition of Day Habilitation to Individualized Skills and Socialization

HHSC has determined that day habilitation services do not meet the requirements of the HCBS Settings Rule. HHSC will replace day habilitation with a new service called individualized skills and socialization in the Home and Community-based Services (HCS), Texas Home Living (TxHmL), and Deaf Blind with Multiple Disabilities (DBMD) waiver programs. Read more about individualized skills and socialization.

Some individualized skills and socialization settings may need to undergo heightened scrutiny review. Read more about the heightened scrutiny process for individualized skills and socialization providers.

Policy Guidance

CMS Resources


Read 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 2023-33 Attendant Services in Various Programs
IL 2023-18 ARPA and HCBS Provider Retention Payments Attestation and Reporting Requirements

Note: Replaces IL 2022-52

IL 2022-59 Assessment of DBMD ALF Settings for Compliance with Federal HCBS Settings
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