The Federal Rule Didn’t Kill Michigan’s Day Programs—State Choices Did

The Federal Rule Didn’t Kill Michigan’s Day Programs—State Choices Did

30 Seconds of Truth

WHAT HAPPENED

Michigan closed hundreds of day programs serving adults with Level 2 and Level 3 autism between 2015-2020, telling families the federal HCBS Settings Rule required elimination of facility-based services. Officials claimed they had no choice, that Washington mandated closures, that compliance was impossible.

THE LIE

“The federal government is requiring us to close. The new HCBS Settings Rule doesn’t allow facility-based day programs anymore. There’s nothing we can do.” This is what Felicia’s program director told me in January 2017. She believed it. Michigan officials told her it was true. It was catastrophically wrong.

THE TRUTH

Nine of the ten top-performing states for adult autism services retained their facility-based day programs while complying with the exact same federal rule. CMS explicitly stated in March 2019: “The HCBS settings rules do not prohibit all facility-based day programs.” Federal law provided flexibility. Michigan chose rigidity. Other states chose preservation. Michigan chose elimination.

THE PROOF

Massachusetts: Assessed 524 settings, zero compliance failures, rates up to $69/hour (vs Michigan $14.05/hour)
Colorado: Created Regulation 8.491 establishing explicit facility compliance standards
Pennsylvania: Adult Autism Waiver with $97,000 individual cost limits, maintained facility-based options
CMS March 2019 Guidance: Explicitly expanded flexibility, contradicted Michigan’s closure justifications
Pattern: High-performing states retained programs, low-performing states eliminated and blamed federal law

BOTTOM LINE

The HCBS Settings Rule didn’t kill Michigan’s day programs. Michigan’s policy choices killed them. Federal law provided flexibility. Michigan chose elimination. None of this was inevitable.

Jump to Action Steps →

The Moment I Stopped Believing

It was January 2017, and Felicia’s day program director sat across from me in a conference room that smelled like industrial coffee and resignation. She looked exhausted in that specific way people get when they’re delivering bad news they didn’t create but have to own anyway.

“The federal government is requiring us to close,” she said. “The new HCBS Settings Rule doesn’t allow facility-based day programs anymore. There’s nothing we can do.”

I believed her. Of course I believed her. She was a good person caught in an impossible situation, and federal mandates sound… well, federal. Immutable. The kind of thing you can’t argue with because Washington said so and that’s that.

What the Federal Rule Actually Says
The Massachusetts Blueprint: 524 Settings, Zero Failures
Colorado’s Explicit Compliance Pathway
Pennsylvania’s Autism-Specific Infrastructure
Understanding “Heightened Scrutiny”
The March 2019 Guidance Michigan Ignored
What Other States Actually Did: A Pattern Emerges
The Workforce Collapse Nobody Wants to Discuss
What This Means for Your Advocacy
Take Action Now

What the Federal Rule Actually Says (Spoiler: Not What Michigan Claimed)

The Home and Community-Based Services Settings Rule became effective March 17, 2014. You can read CMS’s guidance yourself because unlike Michigan officials, I believe in showing my work.

“The HCBS settings rules do not prohibit all facility-based day programs.”

— Centers for Medicare & Medicaid Services, March 2019 Guidance

Read that again. The federal government explicitly stated that facility-based programs could continue. They established criteria for compliance, not elimination. Michigan heard “criteria” and chose “closure.”

The Settings Rule Requires Three Core Elements:

Integrate into the broader community with opportunities for regular contact with non-disabled peers
Offer choice in daily activities and community participation
Respect individual autonomy in decision-making

Notice what’s missing from that list? “Must close all buildings and scatter everyone into generic community settings whether those settings can actually meet Level 2 and Level 3 support needs or not.”

That interpretation belongs entirely to Michigan.

The Massachusetts Blueprint: 524 Settings, Zero Failures

Let’s talk about what actual compliance looks like when you’re not using federal rules as camouflage for budget cuts.

Metric	Massachusetts	Michigan
Settings Assessed	524 (by Dec 2019)	Unknown (closed instead)
Compliance Failures	Zero (0)	N/A (eliminated programs)
Medicaid Reimbursement Rate	Up to $69/hour (highest needs)	$14.05/hour
Approach to Compliance	Technical assistance, transition support	Closure, elimination
Programs Retained	All facility-based programs ✓	Hundreds closed 2015-2020 ✗

Massachusetts didn’t achieve this through regulatory wizardry or special federal exemptions. They achieved it through political will, adequate funding, and a policy framework that prioritized service preservation over service elimination. Michigan officials had access to the exact same federal guidance, the exact same regulatory flexibility, and the exact same compliance pathways. They chose differently. Period.

Colorado’s Explicit Compliance Pathway

Colorado provides even clearer evidence that facility-based programs and federal compliance coexist just fine when states want them to.

Colorado Regulation 8.491 (Created 2018)

The Colorado Department of Health Care Policy and Financing created explicit compliance standards for facility-based day services. This wasn’t some regulatory loophole or grandfather clause. This was Colorado looking at federal requirements and building a transparent, documented pathway for programs to meet those requirements while maintaining their facility-based model.

The regulation specifies how programs demonstrate community integration, document individual choice, and ensure rights and autonomy. Programs that couldn’t meet these standards needed improvement. Programs that refused to try might face closure. But the default assumption was compliance and preservation, not elimination and scattering.

Meanwhile, Michigan told families federal law left no choice while nine other top-performing states were actively choosing preservation.

Pennsylvania’s Autism-Specific Infrastructure

Pennsylvania took a different approach entirely: they built specialized waiver infrastructure specifically for adults with autism, acknowledging that generic developmental disability services don’t adequately serve this population’s needs.

Pennsylvania Adult Autism Waiver

Individual Cost Limits: Up to $97,000 annually per person

That’s not a typo. Ninety-seven thousand dollars in services per person per year, structured to accommodate the complex support needs that families like ours know intimately and that generic “community inclusion” rhetoric pretends don’t exist.

Pennsylvania’s day programs include facility-based options explicitly permitted under their HCBS compliance framework. They didn’t eliminate services and hope people found alternatives. They funded alternatives while maintaining existing services and let families choose based on actual need rather than bureaucratic convenience.

Here’s what Pennsylvania understood that Michigan apparently didn’t: Level 2 and Level 3 autism requires specialized infrastructure. Community integration is essential. So is autism-specific programming, trained staff who understand sensory needs and communication differences, structured environments that accommodate executive function challenges, and facilities designed for safety when self-regulation fails. These things aren’t mutually exclusive unless your policy goal is budget reduction disguised as federal compliance.

Understanding “Heightened Scrutiny”
(What It Actually Requires)

Let me translate some jargon that Michigan officials wielded like a bureaucratic weapon.

“Heightened scrutiny” sounds ominous. It’s designed to sound ominous. It means CMS reviews specific settings that might have institutional characteristics to verify they actually meet HCBS requirements.

What Heightened Scrutiny Actually Meant:

NOT: Automatic disqualification

ACTUALLY: CMS review to verify settings meet HCBS requirements

Settings Could Pass Heightened Scrutiny By Demonstrating:

Integration: Regular community access and interaction with non-disabled peers
Choice: Meaningful alternatives in daily activities and community participation
Autonomy: Individual control over schedules, visitors, and personal decisions
Rights: Full community access without facility-imposed restrictions

Notice these are outcome requirements, not setting requirements. CMS cared whether individuals experienced integration, choice, and autonomy. Michigan treated “facility-based” as automatically disqualifying regardless of actual outcomes.

Massachusetts programs passed heightened scrutiny. Colorado programs passed heightened scrutiny. Programs in New Jersey, Connecticut, Maryland, New York, California, Minnesota, and Wisconsin passed heightened scrutiny. Michigan programs didn’t pass heightened scrutiny because Michigan didn’t submit them for review. They closed them instead. That’s a policy choice, not a federal mandate.

The March 2019 Guidance: Flexibility Michigan Ignored

In March 2019, CMS issued additional guidance explicitly expanding state flexibility in implementing the Settings Rule. This came four years after Michigan began closing programs and two years before the compliance deadline.

The March 2019 Guidance Clarified States Could:

Phase compliance over extended timelines
Provide technical assistance for settings needing improvements
Support programs through remediation rather than requiring immediate closure
Use heightened scrutiny for verification rather than disqualification

This wasn’t some last-minute reversal. This was CMS responding to implementation questions and confirming what should have been obvious: the goal was compliance, not elimination.

Michigan had already committed to closure. The March 2019 guidance contradicted every justification officials had given families. Rather than reverse course or acknowledge the flexibility they’d ignored, Michigan doubled down.

By 2020, the day programs were gone. The guidance that could have saved them gathered dust in policy manuals nobody consulted because the decision was never really about federal rules in the first place.

What Other States Actually Did: A Pattern Emerges

Let’s document this precisely because precision matters when you’re calling out institutional failure.

State	What They Did	Retained Programs?
Massachusetts	Explicit compliance pathway, 524 settings assessed, zero failures, rates up to $69/hr	✓
Colorado	Created Regulation 8.491, explicit facility compliance standards	✓
Pennsylvania	Adult Autism Waiver, $97K individual limits, specialized infrastructure	✓
New Jersey	Comprehensive network, enhanced funding for complex needs	✓
Connecticut	Preserved facility-based options within compliance framework	✓
Maryland	Autism Waiver with facility-based supports	✓
New York	Multiple waiver pathways, facility-based habilitation services	✓
California	Regional center system, extensive compliance support	✓
Minnesota	Disability waivers include facility-based day services	✓
Michigan	Closed programs 2015-2020, blamed federal law, $14.05/hr rates	✗

Notice the pattern? High-performing states for autism services maintained their day programs. Low-performing states eliminated them and blamed federal law. Michigan ranks 47th nationally for adult autism services. That’s not because federal law tied their hands. That’s because they chose policies that destroyed infrastructure rather than improved it.

The Workforce Collapse Nobody Wants to Discuss

Here’s where we enter territory that makes everyone uncomfortable, but I’m going to say it anyway because the math is the math.

Michigan’s day programs didn’t close because federal rules prohibited facility-based services. They closed because Michigan’s Medicaid reimbursement rates couldn’t sustain the workforce required to meet compliance standards OR to provide any services at all.

You can’t recruit and retain qualified direct support professionals at $14.05 per hour when Target pays $16 and doesn’t require managing aggressive behaviors, complex medical needs, or constant regulatory compliance. You can’t require programs to meet heightened scrutiny standards while paying rates that guarantee staff turnover exceeding 60% annually.

Comparison	Rate / Reality
Massachusetts DSP Rate	Up to $69/hour
Pennsylvania Individual Limits	$97,000/year sustainable compensation
Michigan DSP Rate	$14.05/hour
Target Starting Pay	$16/hour (no complex behaviors)
Michigan Staff Turnover	60%+ annually

The HCBS Settings Rule didn’t kill Michigan’s day programs. Decades of inadequate reimbursement rates killed them. The Settings Rule just provided convenient camouflage for a collapse that was already inevitable once Michigan decided funding workforce sustainability was optional. The technical term for this policy approach is “managed failure.”

What This Means for Your Advocacy

Stop accepting “federal law required it” as an explanation. That’s not analysis. That’s excuse-making.

When Officials Say “Federal Law Required It,” You Now Have Specific Rebuttals:

“Nine of the ten highest-performing states for autism services retained their facility-based day programs while complying with the exact same federal rule. What specifically prevented Michigan from following Massachusetts’s compliance pathway?”

“CMS explicitly stated the Settings Rule doesn’t prohibit facility-based programs. Which federal regulation specifically required elimination rather than compliance?”

“Colorado created Regulation 8.491, establishing explicit facility compliance standards. Why didn’t Michigan create comparable regulatory infrastructure?”

“Pennsylvania operates an Adult Autism Waiver with $97,000 individual cost limits that includes facility-based options. Which federal law prohibits Michigan from a similar waiver structure?”

Make them show their work. Demand they explain how the equation balances. Force them to acknowledge that other states chose differently and achieved better outcomes.

Because here’s the truth that cannot be ignored: Service restoration requires state legislative action in Lansing, not federal regulatory changes in Washington. The authority to fix this sits in Michigan’s state government. Always has. Always will. Federal law provides the floor for service requirements. State policy determines whether you get a floor, a functioning system, or the hole Michigan dug and keeps digging deeper.

Take Action Now

1. Challenge the Lie

When officials blame federal law, cite Massachusetts (524 settings, zero failures), Colorado (Regulation 8.491), or Pennsylvania ($97K waivers). Demand they explain why Michigan couldn’t follow these models.

2. Contact Your Legislators

Use the four rebuttal questions to demand written explanations. Ask why Michigan pays $14.05/hour when Massachusetts pays $69/hour. Request they show their work.

3. File FOIA Requests

Request internal communications with CMS 2014-2020, compliance guidance Michigan received, and comparisons to other states. Make them show documentation for their claims.

Join (or create) a ‘Coalition’

Connect with families exposing the federal rule myth. Share documentation, coordinate advocacy, and hold Michigan officials accountable for choosing elimination over compliance.

Technical Documentation and Sources

Centers for Medicare & Medicaid Services, “HCBS Final Regulation,” Federal Register Vol. 79, No. 11, January 16, 2014
CMS Informational Bulletin, “Home and Community-Based Services Settings Regulation—Implementation Update,” March 22, 2019
Massachusetts Executive Office of Health and Human Services, “HCBS Settings Rule Compliance Report,” December 2019
Colorado Department of Health Care Policy and Financing, Regulation 8.491: “Facility-Based Day Services Compliance Standards,” 2018
Pennsylvania Department of Human Services, “Adult Autism Waiver Service Specifications,” 2023
State Medicaid reimbursement data compiled from: Michigan DHHS Provider Rate Schedules (2017-2024), Massachusetts MassHealth Rate Documentation, Colorado HCPF Published Rates
Comparative state rankings: “Best & Worst States for Adults with Autism,” National Autism Advocacy Alliance, 2023
For detailed citations, updated policy information, and downloadable advocacy tools, visit OasisForAutism.com/resources

About the Author

Jim is a single father navigating adult autism services for his daughter Felicia, who has Level 3 autism and aged out of Michigan’s extended special education at 26. After two years of comparative research across state systems, hundreds of family interviews, and systematic documentation of policy failures, he’s writing “When The Bus Stops Coming: Navigating Adult Autism Services” while building OasisForAutism.com as a resource platform for families facing similar transitions.