What Is an FMS Agency (and Why Do They Matter?)
Imagine being able to choose the people who care for you or your loved one. You decide who helps, when they come, and what support looks like. That’s the heart of self-directed care—a growing approach that puts individuals and families in charge of their own services.
But as empowering as self-direction is, it also comes with responsibilities. When someone becomes the “employer” of their caregivers, they have to think about things like time tracking, payroll, taxes, and staying in line with Medicaid rules. That’s where Financial Management Service (FMS) agencies come in.
FMS agencies—also called fiscal intermediaries or fiscal agents—make self-direction possible behind the scenes. They handle the administrative and financial parts, so participants can focus on living their lives and receiving care that fits their needs. Whether it’s processing caregiver timesheets, managing payroll, or helping people enroll in a state program, FMS agencies are essential partners in this process.
At Ankota, we support these agencies with tools and technology that simplify their operations and help them serve their communities more efficiently. Whether you're running an FMS agency or you’re a self-directing participant or family member, this guide is for you.
Chapter 1: What Is Self-Direction, Really?
Self-direction is more than just a buzzword—it’s a way for people to take charge of their care and live life on their own terms. Whether it’s a young adult with a disability or a senior who wants to stay independent at home, self-direction gives individuals and families more control over who provides care, when it happens, and how it’s delivered.
In this chapter, we’ll break down the basics of self-directed care and answer the most common questions from both families and agencies.
What Does Self-Directed Care Mean?
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Self-directed care means that the person receiving support—often called the participant—gets to choose and manage their own caregivers. This can include hiring a family member, neighbor, or friend to provide support, as long as they meet basic qualifications.
Rather than having a home care agency assign caregivers, self-directing individuals become the “boss.” They decide:
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Who provides care
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What tasks the caregiver does
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When and where care happens
This model can apply to everything from help with bathing and dressing, to meal preparation, transportation, or even managing medications.
Why Is Self-Direction Becoming So Popular?
People like having a say in their own care. Self-direction offers:
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More freedom and flexibility
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Familiar caregivers (often someone the participant already knows)
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Customized support based on personal routines and goals
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A greater sense of dignity and independence
For many families, it also solves practical problems—like finding a caregiver who speaks their language or understands their culture.
Who Can Use Self-Directed Services?
Self-direction is often available to:
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Adults with physical, intellectual, or developmental disabilities
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Seniors who qualify for Medicaid home- and community-based services (HCBS)
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Parents or legal guardians who want to self-direct services for a child with disabilities
Eligibility and options vary by state, but in general, self-direction is part of Medicaid waiver programs or managed care plans.
What Types of Services Can Be Self-Directed?
The specific services that can be self-directed depend on the state, but common examples include:
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Personal care (bathing, dressing, grooming)
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Homemaker services (meal prep, laundry, light cleaning)
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Companionship and supervision
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Respite care
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Transportation
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Community participation or job coaching
Some programs even allow participants to control budget decisions, such as purchasing assistive technology or paying for non-traditional supports that improve quality of life.
How Is Self-Direction Different from Traditional Home Care?
This comparison highlights why self-direction feels more personal and empowering.
Common Myths About Self-Direction
Let’s clear up a few misconceptions:
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Myth: You have to handle everything yourself
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Truth: FMS agencies help manage payroll, taxes, and compliance so participants can focus on care.
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Myth: Only professionals can be paid caregivers
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Truth: Many programs allow friends and family (even adult children) to be paid caregivers.
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Myth: It’s too complicated for most people
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Truth: With the right support, most participants manage just fine—and often thrive.
Real-Life Example: Maria’s Story
Maria, a 74-year-old living in New Mexico, was frustrated with traditional home care. Caregivers were often late or didn’t show up. Through her state’s self-direction program, Maria hired her niece to help her with meals and errands. Now, she feels safer and more connected—and her niece is earning a fair wage for helping a loved one.
Stories like Maria’s are common and remind us why this model matters.
Bonus: The journey of a Self-Directing Participant
The Journey of a Self-Directing Participant
Next Up: What Is an FMS Agency (and Why Do They Matter)? Self-direction is powerful—but it doesn’t work without structure. In the next chapter, we’ll explore how Financial Management Service agencies make it possible for people to manage care without drowning in paperwork or compliance headaches.
Chapter 2: What Is an FMS Agency (and Why Do They Matter?)
If self-direction is about freedom and choice, Financial Management Service (FMS) agencies are what make that freedom work in the real world.
Self-directing a care plan means someone becomes the employer of their caregivers. That’s exciting—but it also brings a list of responsibilities: hiring paperwork, payroll, taxes, background checks, insurance, and more. For most people, that’s too much to handle alone.
That’s where FMS agencies step in. They take care of the complicated parts so participants can focus on living their lives and receiving care that meets their needs.
What Does an FMS Agency Actually Do?
FMS agencies are like the payroll department, HR, and compliance team rolled into one—for people receiving self-directed services.
Here are just some of the tasks FMS agencies handle:
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Enroll caregivers and verify that they meet program rules
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Process timesheets and calculate pay
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Run payroll and pay employment taxes
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Track budgets and spending caps
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Ensure compliance with Medicaid rules
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Provide reports to states and managed care organizations
By handling all this behind the scenes, FMS agencies make it possible for individuals to be in charge—without being overwhelmed.
Other Names You Might Hear for FMS Agencies
Depending on the state or program, you might hear other terms that mean essentially the same thing:
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Fiscal Intermediary
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Fiscal Agent
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Vendor Fiscal/Employer Agent
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Support Broker (in some states, this is a related but separate role)
Regardless of the name, the job is similar: support people in managing their services responsibly, and keep everything above board.
Why FMS Agencies Are a Critical Part of Self-Direction
Without FMS agencies, self-direction would be limited to those who already understand employment law, tax filing, Medicaid rules, and software systems. That’s not realistic.
FMS agencies make the program accessible, scalable, and sustainable. They protect:
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The individual, by helping them avoid legal or financial mistakes
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The caregiver, by ensuring timely and accurate pay
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The state, by ensuring compliance with funding rules and audits
It’s an invisible job, but a vital one.
The Two Main Models: Agency with Choice vs. Employer Authority
Most self-direction programs follow one of two models:
1. Employer Authority (or Fiscal/Employer Agent Model)
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The participant is the legal employer
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They choose, hire, and supervise caregivers
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The FMS agency handles the paperwork and payroll
2. Agency with Choice
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A provider agency acts as the legal employer
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The participant helps select caregivers and direct services
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The agency and participant share responsibility
Different states offer different models—or both. FMS agencies often operate under the Employer Authority model, which gives participants the most control and responsibility.
Who Pays the FMS Agency?
FMS agencies are paid through the Medicaid system, either:
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Directly by the state (in fee-for-service models)
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Through managed care organizations (in states with Medicaid managed care)
Participants don’t pay out of pocket for FMS services. The costs are built into the program, because the support FMS agencies provide is considered essential to making self-direction work safely and legally.
How FMS Agencies Work with States and Managed Care Organizations
FMS agencies don’t operate in a vacuum. They are accountable to:
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State Medicaid departments
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Managed care organizations (MCOs)
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Participants and their representatives
They must follow detailed rules around billing codes, timesheet formats, Electronic Visit Verification (EVV), and more. Many states have strict documentation and audit requirements. A strong FMS agency stays organized, communicates clearly, and uses the right tools to manage all of these moving parts efficiently.
What Makes a Good FMS Agency?
A great FMS agency is more than just a payroll processor. They are a trusted partner that:
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Responds quickly to questions from participants and caregivers
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Offers tools and technology that are easy to use
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Keeps up with changing state policies
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Prevents errors and protects everyone from compliance risks
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Respects the participant’s independence and choices
Agencies that do this well are appreciated by both families and state regulators—and they’re better positioned to grow and succeed.
Next up, let’s walk through what an FMS agency actually does each day—from the first caregiver enrollment to the last payroll run of the month.
Real-Life Example: Maria’s Story
Maria, a 74-year-old living in New Mexico, was frustrated with traditional home care. Caregivers were often late or didn’t show up. Through her state’s self-direction program, Maria hired her niece to help her with meals and errands. Now, she feels safer and more connected—and her niece is earning a fair wage for helping a loved one.
Stories like Maria’s are common and remind us why this model matters.
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