Self-Direction and FMS in Kentucky
All states: self-direction map
In short: Participant Directed Services (PDS) is offered on five 1915(c) waivers; the participant is the employer and a Financial Management Agency runs payroll. Change ahead: Oversight of Participant Directed Services is moving from the aging department to each waiver's operating agency, with the transition anticipated by January 1, 2027.
Kentucky self-direction at a glance
| Self-directed programs | Participant Directed Services (PDS) in five 1915(c) waivers: HCB, Michelle P., SCL, ABI and ABI Long-Term Care |
|---|---|
| FMS model | A Financial Management Agency (FMA) handles payroll, taxes and billing for the participant |
| FMS vendors | No single statewide vendor. Area Development Districts and Community Mental Health Centers act as FMAs. |
| Who is the employer | The participant, or the PDS representative, is the employer of record |
| Can family be paid | Yes, with limits. Spouses, parents or guardians of minors and court-appointed guardians of adults need state approval first. |
| EVV for self-directed workers | Yes. Employees use the FMA's EVV system, and a PDS claim with no matching EVV visit is denied. |
| Budget authority | Not confirmed. Annual PDS budgets ended in 2018. Participants set pay within a range. |
Last verified against state sources: 2026-10-13.
Which Medicaid programs in Kentucky offer self-direction?
Kentucky offers self-direction in five 1915(c) Medicaid waivers. The state calls the option Participant Directed Services, or PDS. It used to be called the Consumer Directed Option. PDS is not a separate program. It is a way of receiving services inside a waiver, and it lets the participant directly hire providers for non-medical, non-residential waiver services.
- Home and Community Based (HCB) Waiver: serves older adults and people with physical disabilities. The Department for Medicaid Services (DMS) runs it, with the Department for Aging and Independent Living (DAIL) as the operating agency. The participant has employer authority.
- Michelle P. Waiver (MPW): serves people with intellectual or developmental disabilities. DMS runs it, with the Department for Behavioral Health, Developmental and Intellectual Disabilities (DBHDID) as the operating agency. The participant has employer authority.
- Supports for Community Living (SCL) Waiver: serves people with intellectual or developmental disabilities. DMS runs it, with DBHDID as the operating agency. The participant has employer authority.
- Acquired Brain Injury (ABI) Waiver: serves adults with an acquired brain injury, with a focus on rehabilitation. DMS runs it and is also the operating agency. The participant has employer authority.
- Acquired Brain Injury Long-Term Care (ABI LTC) Waiver: serves adults with an acquired brain injury who need long-term supports. DMS runs it and is also the operating agency. The participant has employer authority.
Employer authority means the participant recruits, hires, trains, schedules, directs and can fire the employees, and sets an hourly pay rate within an established range. The state describes this in its PDS standard operating procedures. Two Kentucky waivers, Model II and CHILD, have no PDS option.
Budget authority, which means managing a set amount of money, is not confirmed for any of the five waivers. DMS ended annual and exception budgets for PDS participants in 2018. Since then, each PDS service is listed one by one on the person-centered service plan with its units, frequency and rate, as explained in a DMS letter on PDS budgets. We did not find a state statement on whether Kentucky treats this as budget authority. Ask the waiver's operating agency or the case manager.
Who handles financial management services (FMS) in Kentucky?
Kentucky has no single statewide FMS vendor. Financial management is done by a Financial Management Agency (FMA), and the state says Area Development Districts (ADDs) and Community Mental Health Centers (CMHCs) fill that role. The participant, or the PDS representative, is the employer of record. The FMA handles payroll, tax withholding and billing on the participant's behalf.
A Financial Management Agency is the organization that does the paperwork side of being an employer. An Area Development District is a regional planning and service agency. A Community Mental Health Center is a regional behavioral health provider. The state's PDS frequently asked questions describe both as the agencies that have historically delivered PDS financial management.
- Legal employer: the participant or the PDS representative. The HCB regulation says the participant is responsible for all employer-related expenses and responsibilities.
- Vendor by program: ADDs and CMHCs act as FMAs across all five waivers (HCB, MPW, SCL, ABI and ABI LTC). We did not find a published list that names the individual agencies. To find the FMA for a county or waiver, call DAIL at (877) 315-0589, option 3, or write to HCBInquiries@ky.gov.
- Choice: the state FAQ says participants must have free choice of both their case management agency and their financial management agency.
- Two separate services: under the waiver applications effective May 1, 2024, PDS case management and financial management are two distinct services and can no longer be bundled. ADDs and CMHCs that historically delivered both may keep providing both to the same participant. A newly enrolled provider of either service may not provide both to the same person.
- HCB exception: ADDs and CMHCs serving HCB participants were told to keep billing the bundled service, called Participant Directed Coordination, until further guidance.
- Pay schedule: the FMA must pay PDS employees at least semi-monthly through a payroll system that meets all tax obligations.
On pay rates, the FAQ says PDS services were included in the 21 percent rate increase directed by the legislature, and participants can request raises for their employees up to the maximum allowable waiver rates.
Who can be a paid caregiver under self-direction in Kentucky?
PDS employees can be friends, neighbors, some provider agencies and certain family members. They must be at least 18 and pass a background check. Close family members that the state calls legally responsible individuals can be paid only for extraordinary care, and only after the state reviews and approves them. A PDS representative cannot be a paid employee.
Important: For anyone hired on or after July 1, 2024, the review of a legally responsible individual must be done at hire and approved before that person starts work. Do not schedule paid shifts for a spouse, parent or guardian until the approval is in hand.
- Who counts as a legally responsible individual (LRI): the parent, stepparent, adoptive parent or court-appointed guardian of a minor, and the spouse or court-appointed guardian of an adult.
- Adults: an LRI, including a spouse, can be paid if at least one circumstance is verified. Caregiving has reduced or ended the LRI's paid employment in the past 12 months and there is no other able caregiver in the home, or a qualified provider could not be recruited, or the participant has a communication barrier.
- Minors: one Category A criterion and one Category B criterion must be met. The categories are set out in the state's PDS FAQ.
- Power of attorney: a person who holds power of attorney is not an LRI unless they also meet the LRI definition, so they do not need the LRI review.
- PDS representative: the friend or family member who helps direct services cannot be paid for that help and cannot be a paid PDS employee.
The HCB waiver has its own regulation, 907 KAR 7:010. It requires written department approval before an immediate family member, guardian or legally responsible individual provides PDS. Its criteria include unique abilities, services that are not natural supports, and no available provider within 30 miles or able to meet the plan or schedule. It also says a PDS provider shall not provide more than 40 hours of PDS in a calendar week, Sunday through Saturday.
We did not find the hour limits for the other four waivers, and the HCB regulation's family criteria are worded differently from the 2024 FAQ. For a specific case, ask the participant's case manager or the waiver's operating agency which criteria and hour limits apply.
Does EVV apply to self-directed workers in Kentucky?
Yes. Electronic visit verification (EVV) applies to PDS employees in all five waivers. Employees record visits in the EVV system their FMA uses. Since January 1, 2026, a PDS claim with no matching EVV visit is denied.
The rules are in the state's PDS procedure on EVV. The FMA must use an EVV system for PDS. It may use the state-sponsored Therap system or a third-party system that connects to the Therap aggregator, which is the state's collection point for visit data. The FMA pays the employee when the EVV record matches the service plan, meets regulation and the employee is eligible.
- HCB: Attendant Care and Respite.
- Michelle P. Waiver: Attendant Care, Community Living Supports, Homemaker, Personal Care and Respite.
- SCL: Community Access, Personal Assistance and Respite.
- ABI: Companion, Personal Care and Respite.
- ABI LTC: Community Living Supports and Respite.
The participant or the PDS representative signs each visit in the EVV application, and some applications allow voice confirmation. Checking in and out by telephone is allowed in limited circumstances. Respite given in a congregate setting through traditional service is exempt.
We did not find an exemption for live-in caregivers in the PDS EVV procedure. If a worker lives with the participant, ask the FMA or the waiver's operating agency how visits should be recorded.
What is changing next for self-direction in Kentucky?
Oversight of Participant Directed Services is moving from the Department for Aging and Independent Living (DAIL) to each waiver's operating agency. The state says it anticipates the transition will be complete by January 1, 2027. That date is the state's expectation, not a fixed deadline, so check current contacts before relying on it.
The move is described in a Cabinet memo dated April 21, 2026. It is happening in phases:
- ABI and ABI LTC: PDS oversight moves to DMS.
- Michelle P. and SCL: PDS oversight moves to DBHDID.
- HCB: PDS oversight stays with DAIL.
The same memo says the Cabinet is streamlining financial management operations for the 1915(c) waivers. It gives no terms, no vendor and no date. We did not find a state document that explains what this will mean for the agencies that act as FMAs today, so FMAs and participants should watch for further notices from DMS.
One change is already in place. A new set of PDS Standard Operating Procedures took effect in June 2026. They cover, among other things, operating agency duties, the review of legally responsible individuals and EVV.
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Who to ask about self-direction in Kentucky
Questions about self-direction in Kentucky are best put to the state. Start with Kentucky DMS: Participant Directed Services. Published contact: PDS policy: DAIL (877) 315-0589 option 3, HCBInquiries@ky.gov. By waiver: ABI and ABI LTC 844-784-5614, 1915cWaiverHelpDesk@ky.gov; MPW and SCL 502-564-7700, DDID.Info@ky.gov; HCB 877-315-0589.
Kentucky self-direction sources
- Kentucky DMS: Participant Directed Services
- Kentucky DAIL: Participant Directed Services
- Kentucky DMS: 1915(c) waiver PDS frequently asked questions (June 27, 2024)
- Kentucky Cabinet for Health and Family Services: PDS transition memo (April 21, 2026)
- Kentucky DMS: PDS-SOP-6.1 Introduction
- Kentucky DMS: PDS-SOP-6.11 Operating Agency Responsibilities
- Kentucky DMS: PDS-SOP-6.23 Electronic Visit Verification
- Kentucky DMS: letter on 1915(c) PDS budgets (January 8, 2020)
- Kentucky Administrative Regulations: 907 KAR 7:010 (HCB waiver)
Related reading
- Self-Directed Medicaid Home Care Services in 2026
- Understanding Self-Direction and FMS
- Self-Direction Fiscal Intermediary: A Guide for Participant-Directed Care
- 5 Big Challenges in Self-Directed Care And How FMS Providers Can Solve Them
- Self-direction in every state (map)
- Kentucky EVV requirements
Other states with a choice of FMS vendors
Alaska, Colorado, Georgia, Idaho, Louisiana, Maryland, Minnesota, North Carolina, Texas, Utah. See every state on the self-direction map.
Page history
- October 13, 2026: Page rewritten and checked against state sources.
This page is a reference, not legal advice. State rules change, so confirm details with the state before you act on them.
Ankota provides software for FMS organizations and agencies that support self-direction. If you would like to talk through your program, contact Ankota or read more about Ankota's self-direction and FMS software.
