Self-Directed Home Care: What It Is, How It Works, and What It Means for Your Agency
The agency owner's plain-English guide to consumer-directed care programs, FMS roles, EVV obligations, and how self-direction changes day-to-day operations.
Photo: Age Cymru / Unsplash
Self-Directed vs Agency Care: Which Model Fits?
Who will hire and schedule the caregiver?
Does the program use a Financial Management Service (FMS)?
Is the caregiver a family member?
Does the program require Electronic Visit Verification (EVV)?
Key Takeaways
- Participants hire and direct their own caregivers under self-direction.
- A Financial Management Service handles payroll and taxes.
- Family members can often be paid caregivers.
- EVV is still required by federal law.
- AveeCare covers EVV for self-directed visits in all 50 states.
What is self-directed home care?
Self-directed home care is a Medicaid service model where the participant, not an agency, recruits, hires, and directs their own caregiver.
Self-directed home care defined
Self-directed home care is a Medicaid model where the participant recruits, hires, and supervises their own caregiver instead of receiving a worker placed by a licensed agency.
Consumer-directed care
The federal and most common name. The consumer (Medicaid participant) directs their own care plan and caregiver.
Participant-directed care
CMS's preferred term in HCBS waiver rules. The participant holds employer authority, budget authority, or both.
CDPAP and CDPAS
State brand names, used in New York (CDPAP) and Connecticut (CDPAS) for the same participant-as-employer model.
Self-directed home care is also called consumer-directed care, participant-directed care, or CDPAS depending on the state. All names describe one core model, where the person receiving care is the employer, not a bystander.
How does self-directed home care work?
Self-directed home care follows six steps: assessment, budget, caregiver hiring, FMS enrollment, EVV setup, and ongoing participant supervision.
- 1
Medicaid eligibility assessment and HCBS waiver enrollment
The participant applies for Medicaid HCBS personal care services and is assessed for functional need. The state determines whether a self-direction option is available under the applicable waiver.
- 2
Individual budget determination
The state Medicaid agency calculates an individual budget based on the participant's assessed care needs. This budget sets the dollar limit for caregiver hours and approved services.
- 3
Participant recruits and hires their own caregiver
The participant identifies, interviews, and hires their caregiver. In most states, family members including adult children are eligible. The participant sets the schedule and care tasks.
- 4
FMS enrollment (fiscal agent handles payroll and taxes)
The participant enrolls with a state-approved Financial Management Service (FMS). The FMS processes payroll, withholds employment taxes, and manages workers compensation for the caregiver.
- 5
EVV and timesheet setup (federal mandate applies)
Electronic Visit Verification is required before care begins. The 21st Century Cures Act mandates EVV for all Medicaid personal care services including self-directed visits. The FMS or participant EVV platform captures the six required data elements.
- 6
Participant supervises caregiver on an ongoing basis
The participant directs daily care tasks, adjusts schedules, and handles performance issues. The FMS continues processing payroll and the state case manager conducts periodic service reviews.
What is a Financial Management Service (FMS)?
An FMS is a state-contracted fiscal agent that processes payroll, withholds taxes, and manages workers comp for caregivers hired by self-directing Medicaid participants. The FMS does not direct care.
What is a fiscal employer agent (FEA)?
A fiscal employer agent (FEA) is the FMS model where the participant holds full employer authority and the FEA acts only as the payroll and tax-withholding agent.
The HCBS case manager coordinates service authorization at steps 1 and 2. For detail on how case managers authorize hours and services, see the guide to the HCBS case manager authorization process.
What is the difference between self-directed and agency home care?
In agency care the agency hires caregivers; in self-directed care the participant is the employer and the FMS handles payroll.
| Dimension | Self-Directed Care | Agency-Directed Care |
|---|---|---|
| Who hires the caregiver | Participant or family member | Licensed home care agency |
| Who trains the caregiver | Participant (with state guidance) | Agency (state-required training) |
| Who handles payroll and taxes | FMS (fiscal agent) on participant's behalf | Agency payroll department directly |
| EVV responsibility | FMS or participant's EVV system (federal mandate applies) | Agency EVV system required |
| Can a family member be paid | Yes, in most states under self-direction | No, family excluded in most agency models |
Employer authority defined
Employer authority is the self-direction option where the participant acts as the legal employer of their caregiver, setting hours, tasks, and supervision expectations within the state-approved budget.
Budget authority defined
Budget authority gives the participant control over a flexible spending account to purchase approved supports and services beyond direct caregiver labor.
What the research shows
A 2025 peer-reviewed study by Kuang et al. (PMC12605748) examined how self-directed home care programs affect caregiver burden compared with agency-directed care.
Both authority types can exist independently or together depending on the state's Medicaid waiver design. For a full overview of waiver types that fund self-direction, see the Medicaid waiver programs available in your state.
For more on how caregiver employment classification differs between self-directed and agency settings, see the guide to employment classification differences between independent caregivers and agency workers.
Does self-directed home care require EVV?
Yes, the 21st Century Cures Act mandates EVV for all Medicaid personal care services including self-directed visits, with no program exemptions.
Federal EVV mandate: no exemption for self-direction
CMS enforces EVV for all Medicaid personal care visits under Section 12006 of the 21st Century Cures Act (effective 2023). Self-directed programs are not exempt; non-compliant states face financial penalties.
Type of service performed
The specific Medicaid personal care service the caregiver delivered during the visit.
Individual receiving the service
The Medicaid participant the caregiver provided care to during the visit.
Individual providing the service
The caregiver who performed the visit, including a family member under self-direction.
Date of the service
The calendar date the personal care visit took place.
Location of service delivery
Where the visit occurred, typically the participant's home or community setting.
Time the service begins and ends
The start and end time of the visit, captured electronically at clock-in and clock-out.
Six CMS-required EVV data elements
The FMS typically manages EVV enrollment for the self-directing participant. AveeCare provides native EVV for self-directed Medicaid visits across all 50 states, not through a third-party aggregator, capturing all six required CMS data elements. For full detail, see the federal EVV compliance requirements under the 21st Century Cures Act.
What does self-directed home care mean for a home care agency?
When a client self-directs, the agency exits the caregiver employment role and the FMS takes over payroll, taxes, and EVV.
Billing and payroll shift to the FMS
The FMS becomes the employer of record. The agency stops withholding taxes or processing payroll for that client's caregiver.
EVV obligation moves to FMS or participant
EVV is still federally required. The FMS or participant EVV platform must capture all six CMS-required visit data elements.
New revenue lane: FMS partnership
Some agencies contract with state FMS programs as a fiscal agent, adding payroll-processing services as a secondary revenue stream.
| Function | Agency keeps | FMS takes over |
|---|---|---|
| Caregiver employment | No (participant is employer) | Yes (employer of record) |
| Payroll and tax withholding | No | Yes |
| Care coordination | Often, if contracted | No |
| EVV visit verification | Optional, if contracted | Yes (federal mandate) |
Agency owners: confirm your state's FMS vendor list
Agencies supporting HCBS clients should coordinate with the client's case manager when a client transitions to self-direction. For detail on the case manager's role in authorizing service changes, see the HCBS case manager authorization process.
Who qualifies for self-directed Medicaid programs?
Any Medicaid beneficiary who qualifies for HCBS personal care services and meets their state's self-direction eligibility criteria can enroll, subject to available waiver slots.
| State | Program name | Authority type |
|---|---|---|
| New York | CDPAP (Consumer Directed Personal Assistance) | Employer authority |
| California | In-Home Supportive Services (IHSS) | Employer authority |
| Texas | Community First Choice (CFC) | Employer and budget authority |
| Connecticut | CDPAS | Employer authority |
| Pennsylvania | OPTIONS / Community HealthChoices | Employer authority |
CDPAP defined
CDPAP (Consumer Directed Personal Assistance Program) is New York's self-directed Medicaid personal care program, one of the largest state self-direction programs in the United States.
Self-direction is a Medicaid benefit, not a Medicare benefit. Medicare does not fund self-directed personal care programs. For payer-coverage details on what Medicare does and does not cover for home care, see the guide to whether Medicare covers home care services.
Frequently Asked Questions
Common questions about self-directed home care programs.
Sources
- Medicaid.gov: Self-Directed Services
- CMS: Home and Community-Based Services (HCBS)
- Kuang et al. (2025): Effects of Self-Directed Home Care on Caregiver Burden, PMC12605748
- Medicaid.gov: Community First Choice
- 21st Century Cures Act, Section 12006 (EVV Mandate), U.S. Congress
- Medicaid.gov: Financial Management Services
- HHS ASPE: Medicaid Self-Directed Personal Assistance Services
- AARP Foundation Paid4Care
AveeCare covers EVV for self-directed visits in all 50 states
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