Every Medicaid home and community-based waiver has a person who writes the plan: what the member will receive, how much, and from whom. Since 2014 federal rule has said that person cannot work for the organization that delivers the services. That is conflict-free case management, and it is the reason the Medicaid waiver case management agency exists as a separate kind of organization in most states. This is what the rule says, where the exception is, what the states did with it, and the consequence that follows for the agency’s records, which is the part nobody writes down.
The rule, in one paragraph
The clause is 42 CFR 441.301(c)(1)(vi), part of the person-centered service plan requirements for 1915(c) waivers. It is one paragraph:
Providers of HCBS for the individual, or those who have an interest in or are employed by a provider of HCBS for the individual must not provide case management or develop the person-centered service plan, except when the State demonstrates that the only willing and qualified entity to provide case management and/or develop person-centered service plans in a geographic area also provides HCBS. In these cases, the State must devise conflict of interest protections including separation of entity and provider functions within provider entities, which must be approved by CMS. Individuals must be provided with a clear and accessible alternative dispute resolution process.
Three things are in it. The prohibition reaches past the provider itself to anyone with “an interest in” or employed by one. The exception belongs to the state, not the agency: the state must demonstrate to CMS that no other willing and qualified entity exists in the area. And where the exception is used, two safeguards are mandatory, a separation of functions inside the entity and a dispute process the member can reach.
The clause has not changed since it was written. The 2024 Access rule amended other parts of section 441.301 and added a grievance system at paragraph (c)(7); it left (c)(1)(vi) alone. Asked about “the role of conflict-free case managers in the grievance system”, CMS answered that it did not understand the comment.
Why CMS added it
The 2014 rule (79 FR 2948, January 16, 2014) is better known for the home and community-based settings requirements. The conflict clause was added in the final rule in response to commenters, and the preamble says why:
We agree that complete independence of the person(s) facilitating the planning process is important to promote the statutory objectives. In the final rule, we have added an additional requirement to the person-centered planning process at Sec. 441.301(c)(1)(vi) to address conflict of interest.
CMS declined to define conflict of interest in more detail, saying it did not believe “it is possible to define more specific conflict of interest requirements that would be meaningful in the variety of arrangements currently used”. It did state the principle, in the discussion of the state plan option: “assessment and person-centered service plan development should not be performed by providers of the services prescribed.” Where a single provider does all of it, “the Secretary would require the State Plan to include provisions assuring separation of functions within the provider entity.”
CMS’s own training decks, from 2018 and 2019, put the rationale in operational terms. When one entity “helps individuals gain access to services, monitors those services and provides services to that individual”, the conflicts are in “assuring and honoring free choice”, “overseeing quality and outcomes” and “the ‘fiduciary’ (financial) relationship”. The trigger is enrollment in the waiver, and the deck is explicit that “the COI requirements apply no matter what type of funding stream is used for case management activities”: a state that pays its case managers as targeted case management under 42 CFR 440.169, as a waiver service, or as administration is under the same rule once the member is in a 1915(c), (i) or (k) program. “Case management activities must be independent of service provision.”
The same rule under three authorities
The 1915(c) version is the short one. The 1915(i) state plan option, at 42 CFR 441.730(b), and Community First Choice under 1915(k), at 441.555(c), carry a five-part list that spells out what the waiver clause leaves to the states. The person conducting the assessment or developing the plan must not be:
- related by blood or marriage to the individual, or to any paid caregiver of the individual;
- financially responsible for the individual;
- empowered to make financial or health-related decisions on behalf of the individual;
- holding a financial interest in any entity paid to provide care for the individual (1915(i)), or someone “who would benefit financially from the provision of assessed needs and services” (1915(k));
- a provider of HCBS for the individual, or employed by or interested in one, with the same only-willing-and-qualified exception, the same separation of functions, and the same dispute process.
New York’s Department of Health, briefing its NHTD and TBI waiver providers in 2023, restated CMS’s four conflict situations as the test it applies: the same entity helping a person gain access to services and providing them; the same entity responsible for free choice of providers and being one; the same entity overseeing quality and outcomes and delivering the service; and a case management agency with a fiduciary relationship to a provider serving the member. The same presentation makes the point agencies sometimes miss in the other direction: “case management is not considered to be a direct service in conflict with person-centered planning.” The case manager and the planner can be the same person. The planner and the provider cannot.
The exception, and what it costs
“Only willing and qualified” is a demonstration the state makes to CMS, area by area. CMS’s 2019 deck lists what it asks for: the state must “demonstrate to CMS that the ‘only willing and qualified’ entity or provider of case management activities for the individual is also, or affiliated with, a direct service provider for the same individual”, then “establish safeguards covering activities specified in the HCBS Technical Guide to ensure state oversight, individual choice, and the availability of a ‘clear and accessible alternative dispute resolution process’”.
Wyoming wrote the exception into its own rule, and it shows what the safeguards look like at member level. Under 048-45 Wyo. Code R. §45-5, if a rural area “does not have a case manager without a conflict of interest for a participant”, the participant may request one with a conflict; if the Division confirms no other case manager is available in the region or a nearby one, “the conflicted case manager may be approved on an annual basis”, and “a third party entity without a conflict shall be involved in the participant’s team to mediate, advocate for the participant as needed, and address unresolved grievances”. Oklahoma took the other route: a form, OHCA 17215, signed on every plan by the member, the case manager and the supervisor, confirming “this service plan is in compliance with CMS rule 42CFR§441.301(c)(1)(vi) regarding Conflict Free Case Management”.
The 2019 deck also reports where the states stood: “of 45 respondents: 34 states (including the District of Columbia) report their systems fully comport with the COI regulations; 11 other states indicate they are in the process of system redesign”. That survey was of agencies serving people with intellectual and developmental disabilities; it is the only count CMS has published.
What the states built
Colorado is the clearest case, because it did the whole thing at once and documented it. Operational Memo 23-002 (January 20, 2023) states the premise: “Conflict-free case management is required by the Centers for Medicare & Medicaid Services (CMS) to maintain federal match funding”, exceptions are allowed “when no other willing or qualified providers exist in a defined service area”, and “Case Management Agencies (CMAs) will be selected for each defined service area through a competitive solicitation process.” The redesign produced 20 defined service areas; HCPF “received 21 applications for the 20 defined service areas”, awarded them to 15 agencies, ran the transitions in three phases through June 2024, and recorded that “as of July 1st, 2024, Case Management is no longer a direct service in the CHCBS waiver.” Where a case management agency also delivers services, the memo requires that “the direct service provider functions and CMA functions must be administratively separated (including staff)”.
Indiana is mid-change. In November 2025 the state invited “all current Case Management Organizations, along with other interested parties” to bid under a 1915(b)(4) selective contracting waiver, and in April 2026 named five that continue: Aging & In-Home Services of NE IN, Indiana Professional Management Group, Inspire Case Management, Unity of Indiana and The Columbus Organization. “Beginning August 1, 2026, only the case management companies listed above will be able to continue to provide case management.” The state’s letters frame the reset as quality and consistency rather than conflict of interest, and nothing in them uses the phrase; it belongs here because the mechanism, a selective contract for case management alone, is the one conflict-free states use. Montana used the same instrument in 2020 for its SDMI waiver, “limited to the provision of case management services”, across “10 defined service areas”. Nebraska moved the other way, from a contracted entity to the state itself: on April 1, 2026, “all service coordination duties held by LHD will be transitioned over to DHHS.”
Georgia keeps a separation rule of its own in the Division of Aging Services manual, which lets an Area Agency on Aging deliver services directly only by a waiver “limited to one year”, naming direct delivery to “clients referred or assigned by other Area Agency/Regional Commission staff” as a situation with “risk for conflict of interest or preferential referrals”. That is an Older Americans Act rule, not a 441.301 finding, and whether Georgia’s waiver case management claims the federal exception anywhere is not something a public document answers.
What it means for the records
Read the rule from the agency’s side and one consequence falls out of it. The case management agency is, by design, not a provider of services to the member. It assesses, plans and monitors; it does not treat. It holds no clinical chart of its own. Every fact the level-of-care form needs, the hospitalizations, the diagnoses, the medications, the specialist’s findings, sits in the records of organizations the agency does not control and may never have dealt with.
That matters because the law that governs how records move distinguishes exactly this. Under 45 CFR 164.501, “treatment” is “the provision, coordination, or management of health care and related services by one or more health care providers”. “Case management and care coordination” appear in the definition of “health care operations”, among the activities “that do not include treatment”. A hospital may disclose records “for treatment activities of a health care provider” without more. It may disclose to another covered entity for that entity’s operations only “if each entity either has or had a relationship with the individual”, the records pertain to that relationship, and the purpose is one the rule lists. An agency that has never served the applicant, assembling an application, does not meet the first condition.
The exchange networks draw the same line. Carequality’s Care Coordination purpose of use is, as the networks document it, available only to “non-provider-covered entities (e.g., payers) or HIPAA Business Associates”, and a provider that receives such a query “is encouraged (Not Required) to respond”. The policy uses “SHOULD” where treatment queries use “MUST”. A case management agency can be on a network under that purpose and still get nothing back.
What is left is the authority the member can give. The applicant signs a release at application; the agency obtains the records under it, from each holder; whoever retrieves on the agency’s behalf works as its business associate under that release. It is the route the case management page on this site describes, and it is slower and more deliberate than a treating provider’s query because the rule that created the agency also placed it outside the treatment relationship. A home health agency or a PACE organization is a provider and queries as one. A conflict-free case management agency is not, and that is not a gap in the agency; it is the point of the rule.
Where to go from here
- The Medicaid waiver case management agency, the entity the rule creates, and what it owns.
- Nursing facility level of care and the level-of-care form, the determination the agency’s records serve.
- The HCBS waiver, the authority all of this sits under.
- Vivlio for case management: the physician’s documentation behind the form, retrieved under the applicant’s release and organized for the instrument.
