Individuals with disabilities have the right to a self-determined life, individual choice, and connection to those in their community just as much as those without disabilities. In 2014, the federal government issued the Home and Community Based Services (HCBS) final settings rule, also known as the Settings Rule, that protects and ensures these rights.


In keeping with this rule, providers, organizations and programs that offer home and community based services must do these things:

  • Setting is integrated in and supports full access to the community
  • Is selected by the individual among setting options
  • Ensures individual rights of privacy, dignity and respect, and freedom from coercion and restraint
  • Optimizes autonomy and independence in making life choices
  • Facilitates choice regarding services and who provides them

    Provider-owned or controlled residential home and community based service settings must also ensure that the individual:

    • Has a lease or other legally enforceable agreement providing similar protections
    • Has privacy in their unit including lockable doors, choice of roommates, and freedom to furnish or decorate the unit
    • Control their own schedule including access to food at any time
    • May have visitors at any time
    • The setting is physically accessible

      Any modifications of the settings rule requirements must be supported by a specific assessed need and justified in the Person-Centered Support Plan (PCSP), with the following items documented in the plan:

      1. Identify a specific and individualized assessed need
      2. Document the positive interventions and supports used prior to any modifications to the person-centered service plan
      3. Document less intrusive methods of meeting the need that have been tried but did not work
      4. Include a clear description of the condition that is directly proportionate to the specific assessed need
      5. Include regulation collection and review of data to measure the ongoing effectiveness of the modification
      6. Include established time limits for periodic reviews to determine if the modification is still necessary or can be terminated
      7. Include the informed consent of the individual
      8. Include an assurance that interventions and supports will cause no harm to the individual.

      In addition to the above requirements, providers that offer services (day, residential, or employment) to multiple people with disabilities in the same location must make sure services:

      • Do not isolate individuals from the community
      • Do not discriminate in any way
      • Provide services in the most integrated setting
      • Are chosen from a variety of options
      • Provide opportunities to seek employment and work in competitive integrated settings 

      What are “Settings that Isolate”?

      The Centers for Medicare and Medicaid Services (CMS) has provided guidance of settings that are assumed to be institutional. This includes: 

      • Inpatient institutional services
      • Services provided on the grounds or next to a public institution 
      • Settings that have an effect of isolating people with disabilities receiving services from the broader community.

      Some of the types of settings that have an effect of isolating could include those:

      • Designed specifically for people with disabilities,
      • Comprised mostly of people with disabilities and staff,
      • Sites providing multiple types of services to people with disabilities in one location,
      • Sites where people with disabilities have limited interaction with broader community, and
      • Settings that use/authorize interventions/restrictions that are used in institutional settings or are deemed unacceptable in Medicaid institutional settings (e.g. seclusion).

      We understand that some providers may have to modify their service delivery model to meet the rule requirements and we are committed to working with those that have changes to make.  

      State Process for Settings Rule Compliance and Heightened Scrutiny


      More Information

      The settings rule reiterates long standing federal law that institutions (like nursing homes, hospitals, psychiatric hospitals, or intermediate care facilities for people with disabilities) or institution like settings should not be funded by HCBS services. This rule is also complemented by and supports the Americans with Disabilities Act (ADA), the Supreme Court case Olmstead v. L.C. commonly known as Olmstead, and the Workforce Innovation and Opportunity Act (WIOA).