Federal Rule on
Conflicts of Interest in HCBS
In 2014, the Centers for Medicare and Medicaid Services (CMS) implemented a Settings Final Rule with many new requirements for Home and Community-Based Services (HCBS). Some of those requirements covered conflicts of interest. This page will help explain the HCBS Settings Final Rule and how it affects Kansas.
“A key component of federal HCBS regulations is the conflict-of-interest provision, with which Kansas is not compliant.”
–Letter from the Centers for Medicaid and Medicare Services to KDHE
December 16, 2024
The Settings Final Rule
The Centers for Medicare & Medicaid Services passed the Settings Final Rule on March 17, 2014. For most parts of the rule, states had multiple years to come into compliance. But one part of the rule, 42 CFR 441.301(c)(1)(6), went into effect immediately.
This graphic helps explain the rule and how it applies to conflicts of interest. On the left of the graphic, you can read the full text of the rule. Then, on the right side, we’ll break it down part by part so you can see what it all means. You can also click here for an accessible PDF covering the same content.
Who does the rule on COIs apply to?
As detailed in 42 CFR 441.301(c)(6), any provider that completes one of the functions listed in the service planning regulation must follow the rules around conflicts of interest.
The functions in the regulation include:
Person-centered planning process
Developing the person-centered service plan
Reviewing the person-centered service plan
What CMS Says on Kansas and the Final Rule
On December 16, 2024, the Deputy Director of CMS, Anne Marie Costello, sent a letter to the Kansas Department of Health and the Environment (KDHE). The letter outlined CMS’s position on Kansas’s compliance with the conflict-of-interest provision of federal HCBS regulations.
This section covers the key quotes from the letter and what CMS’s position could mean for Kansas if things stay the way they are.
Click the button below to read the entire letter.
“A key component of federal HCBS regulations is the conflict-of-interest provision, with which Kansas is not compliant.”
CMS has made it clear that the way Kansas operates right now does not follow current federal guidelines about conflicts of interest. The state is required to follow these guidelines under federal regulations for HCBS.
“CMS strongly encourages Kansas to take these necessary steps in a timely manner to ensure compliance with the conflict-of-interest provision outlined in regulation…”
CMS recommends that Kansas take any steps necessary to address conflicts of interest, or any other HCBS regulations the state must comply with. Likewise, CMS suggests Kansas should move quickly to deal with these issues.
“…so CMS does not have to consider formal actions, which could include withholding federal reimbursement of impacted HCBS.”
If Kansas does not deal with these issues, CMS can take formal action against the state. This could include removing federal funding for HCBS programs in Kansas. Right now, 60% of KDADS’s funding comes from federal funding. Losing that would seriously impact HCBS in the state.
