(a) A home and community-based setting is a setting in which an individual resides or receives HCS Program services or CFC services. A home and community-based setting must have all of the following qualities, based on the needs and preferences of an individual as documented in the individual's PDP.      
        (1) The setting is integrated in and supports the individual's access to the greater community to the same degree as a person not enrolled in a Medicaid waiver program, including opportunities for the individual to:                  (A) seek employment and work in a competitive integrated setting;                   (B) engage in community life;                   (C) control personal resources; and                   (D) receive services in the community.         
        (2) The setting is selected by the individual from among setting options, including non-disability specific settings and an option for a private unit in a setting in which residential support, supervised living, or host home/companion care is provided. The setting options are identified and documented in the PDP and are based on the individual's needs, preferences, and, for settings in which residential support, supervised living, or host home/companion care is provided, resources available for room and board.       
        (3) The setting ensures an individual's rights of privacy, dignity, and respect, and freedom from coercion and restraint.       
        (4) The setting optimizes, not regiments, individual initiative, autonomy, and independence in making life choices, including choices regarding daily activities, physical environment, and with whom to interact.       
        (5) The setting facilitates individual choice regarding services and supports and the service providers who provide the services and supports.       
      (b) Except as provided in subsection (c) of this section, a program provider must ensure that HCS Program services and CFC services are not provided in a setting that is presumed to have the qualities of an institution. A setting is presumed to have the qualities of an institution if the setting:      
        (1) is located in a building in which a certified ICF/IID operated by a LIDDA or state supported living center is located but is distinct from the ICF/IID;       
        (2) is located in a building on the grounds of, or immediately adjacent to, a certified ICF/IID operated by a LIDDA or state supported living center;       
        (3) is located in a building in which a licensed private ICF/IID, a hospital, a nursing facility, or other institution is located but is distinct from the ICF/IID, hospital, nursing facility, or other institution;       
        (4) is located in a building on the grounds of, or immediately adjacent to, a hospital, a nursing facility, or other institution except for a licensed private ICF/IID; or       
        (5) has the effect of isolating individuals from the broader community of persons not receiving Medicaid HCBS.       
      (c) A program provider may provide an HCS Program service or a CFC service to an individual in a setting that is presumed to have the qualities of an institution as described in subsection (b) of this section, if CMS determines through a heightened scrutiny review that the setting:      
        (1) does not have the qualities of an institution; and       
        (2) does have the qualities of home and community-based settings.       
     Source Note:        The provisions of this §263.501 adopted to be effective March 1, 2023, 48 TexReg 1080