Using Medicaid to Cover Services for Elderly Persons in Residential Care Settings: State Policy Maker and Stakeholder Views in Six States

Publication Date

Nov 30, 2003

Janet O'Keeffe, Dr.P.H., R.N., Christine O'Keeffe, B.A., and Shulamit Bernard, Ph.D.

RTI International

This report was prepared under contract #HHS-100-97-0014 between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and the Research Triangle Institute. For additional information about the study, you may visit the DALTCP home page at http://aspe.hhs.gov/daltcp/home.htm or contact the ASPE Project Officer, Gavin Kennedy, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 20201. His e-mail address is: Gavin.Kennedy@osaspe.dhhs.gov.

Acknowledgments

We thank the many respondents who participated in this study, particularly the Medicaid program staff, who answered numerous follow-up questions. We also thank Gavin Kennedy and Pamela Doty for their thoughtful comments on earlier drafts. We dedicate this report to the memory of Richard Ladd, one of our respondents for this study. As Director of Oregon's Senior and Disabled Division in the 1980s, he pioneered the use of Medicaid waiver funds in assisted living and other types of residential care.

Executive Summary

Introduction

The anticipated increase in the population aged 65 and older in the coming decades, particularly those aged 85 and older, will lead to an increase in the number of people who need long-term care services. Virtually all individuals who need long term care services prefer to receive them in their own homes. However, some people with long term care needs cannot live in their own homes, often because they live alone and need unscheduled assistance and protective oversight on a 24 hour basis.

Residential care settings have traditionally provided such assistance and oversight to persons with physical and mental impairments who cannot live at home alone but do not require a nursing home level of care. As such, residential care lies on the long term care continuum between home care and nursing home care.

Since the mid-seventies, states have had the option to use Medicaid to cover services in residential care settings under the personal care option, and since 1981, under the home and community-based services (HCBS) waiver program. Until the 1990s, most states used the waiver program to pay for services in residential care settings only for persons with mental retardation and other developmental disabilities, as an alternative to intermediate care facilities for persons with mental retardation. By 2002, however, 36 states had amended their Medicaid waiver programs to permit payment for services in residential care settings for elderly persons, and 13 states covered personal care in these settings under the state plan, together serving approximately 102,000 elderly Medicaid clients.

Historically, states have licensed two general types of residential care: (1) adult foster care, which typically serves five or fewer residents in a provider's home, and (2) congregate care, which typically serves six or more residents in a range of settings -- from large residential homes to settings that look like commercial apartment buildings or nursing homes. These settings have been in existence for a long time. But with Medicaid funding, they are getting increased attention.

To date, there has been little research on how states use Medicaid to pay for services for elderly persons in these settings. This report is intended to fill that gap, by describing in depth how six states use their Medicaid programs to fund residential care services for elderly persons. These states are Florida, Minnesota, North Carolina, Oregon, Texas, and Wisconsin.

Methods

Our findings are based on three sources: (1) an extensive review of published and unpublished information about the six states' long term care systems, with a focus on their residential care systems and Medicaid programs; (2) consultation with Medicaid program staff and policy makers and other key staff to obtain additional information and to clarify information obtained through the Internet and other sources; and (3) interviews with current and former state staff and policy makers, residential care providers, representatives of provider and consumer organizations, and academic experts and policy analysts. Appendix A contains additional information about the qualitative methodology we used to conduct this study.

Findings

A primary purpose of the study was to gain an understanding of how state staff and policy makers and key stakeholders view Medicaid coverage of services in residential care for elderly persons.

Using Medicaid in Residential Care

All of the respondents we interviewed believed that their states' decision to use Medicaid to provide services in residential care settings was the right one. In states using the personal care option in their state plan, respondents felt that Medicaid had brought much needed revenues to a residential care sector that historically had been under-funded for Supplemental Security Income (SSI) recipients. In states using the waiver program, respondents felt that by providing an alternative to nursing homes for waiver clients who cannot be served at home, Medicaid funding had both afforded consumers additional long term care options and saved the states money.

Public Confusion about the Residential Care System

At the same time, the individuals interviewed for this report, who were typically quite candid in their comments, cited a range of concerns about the residential care system generally. With the exception of Oregon, stakeholders in each state said that public confusion about residential care options was a problem. The confusion is due primarily to the use of the term "assisted living" to market very different types of facilities, both in terms of the housing and the services offered.

Licensing and Regulatory Issues

Stakeholders also raised concerns about both overly prescriptive regulations and the lack of enforcement of existing regulations. Respondents in every state had concerns that providers were keeping residents longer and that regulatory changes were needed to address the increased nursing needs and acuity levels of residents in residential care settings.

Whatever their views on specific regulations, nearly everyone interviewed believed that licensing and regulation were state functions and there should be no national regulations for residential care.

Staffing

Almost every person we interviewed had concerns about staffing levels in residential care settings, both the quality and quantity. Several noted that even with highly trained, competent staff, insufficient staffing would compromise the quality of care. All acknowledged that low pay, lack of benefits, lack of a career ladder, poor management and oversight, and, in some cases, an unpleasant work environment made it very difficult to recruit and retain staff and that general workforce shortages exacerbated the problems.

Admission and Retention Requirements

Most of those we interviewed felt that their state's admission and retention requirements were appropriate, but many expressed considerable concern about how these requirements worked in practice. While very few had concerns about admissions, nearly everyone we interviewed had concerns related to discharge and agreed that issues related to the ability to age in place were far from settled.

Barriers to Expanding Medicaid Coverage

Respondents in all states cited similar barriers to expanding Medicaid coverage of services in residential care settings, including a lack of funding for long term care programs generally and insufficient funding for waiver programs in particular. In the two states that do not limit the amount that providers can charge Medicaid clients for room and board, several noted that room and board charges were unaffordable for Medicaid clients.

Inadequate service rates were cited by some in every state as a disincentive for providers to serve Medicaid beneficiaries, particularly in states that restrict room and board payments to SSI levels. On the other hand, in states with relatively high rates, such as Wisconsin, some were concerned that providers are making too much of a profit. In states with relatively low rates, such as Florida and North Carolina, there are concerns about inadequate care.

Suggestions to Improve the Residential Care System

Those we interviewed had numerous suggestions for improving the Medicaid funded residential care system. The most frequent suggestion was increased funding for both the service component of residential care and the housing component. Several suggested that states allow long term care funding to "follow the person." Texas is using this approach by allowing money from its nursing home budget to pay for waiver services for people transitioned to home and residential care settings.

There was consensus among those we interviewed that states need to pay more attention to quality of care issues generally, and staffing issues specifically. To increase the recruitment and retention of direct care staff, many respondents noted a need for better pay and benefits, more training, career ladders, improved management, and better work environments.

There was agreement among state staff, providers, and consumer advocates that service rates must reflect actual costs and that reimbursement systems need to better match payment rates to residents' needs.

Finally, at least one person in each state felt that the state needed to help consumers better understand the long term care system generally and the differences between different services options. Several said that consumers and their families needed some method to help them compare residential care options and choose those that were best suited to their needs and preferences.

Concluding Remarks

In each of the six states, there is very strong interest in developing affordable residential alternatives to nursing homes that will provide quality care. The individuals interviewed for this report were typically quite candid in their comments, which frequently reflected their frustration in coping with the challenges of developing affordable residential care. State staff, in particular, find themselves grappling with a number of issues that require the reconciliation of what appear to be inherently contradictory goals. These issues are:

finding ways to cover the actual costs of serving frail older individuals with chronic care needs in residential care settings, when Medicaid is not permitted to pay for room and board and the payment sources available to cover room and board are insufficient;
finding ways to meet expectations for privacy, amenities, and quality services that have been set by the private pay dominated model of "assisted living" when Medicaid cannot afford to pay private pay rates;
finding ways to make it possible for individuals to "age in place" without making residential care settings into de facto nursing homes by virtue of having to meet the needs of ever older and more impaired residents;
finding ways to give consumers a sense of what they should reasonably be able to expect from a setting that calls itself "assisted living" or "adult foster care" or some other name, without imposing uniform definitions through state regulation; and
finding ways to assure a minimally acceptable quality of care without imposing rules that stifle improvements and without the regulated "floor" becoming the "ceiling."

The appropriate balance point between these goals will vary depending on the unique characteristics of each state's long term care system and residential care systems. While the states may face the same challenges, the tradeoffs in attempting to reach the balance will also differ based on the states' characteristics. However, states can gain valuable insights by examining the experiences of other states as they work to develop affordable residential care alternatives to nursing homes for low income and Medicaid-eligible elderly persons.

Introduction

The anticipated increase in the population aged 65 and older in the coming decades, particularly those aged 85 and older, will lead to an increase in the number of people who need long term care services. Virtually all individuals who need long term care services prefer to receive them in their own homes. However, some people with long term care needs cannot live in their own homes, often because they live alone and need unscheduled assistance and protective oversight on a 24 hour basis.

Residential care settings have traditionally provided such assistance and oversight to persons with physical and mental impairments who do not require a nursing home level of care. As such, they are often viewed as the midpoint of the long term care continuum between home care and nursing home care. These settings are licensed, regulated, and monitored at the state level, and serve both private pay and publicly subsidized residents. The public subsidy is typically through the Supplemental Security Income (SSI) program and, in many states, a state funded SSI supplement. SSI and state supplement recipients can use the payments to pay for room and board and custodial care.

Every state's long term care system includes two major types of out-of-home residential care:

adult foster care in private or corporate-owned homes that serve a small number of residents (typically five or fewer), and
congregate care settings with bed sizes greater than foster care, which vary from 6 to 200 or more.

Congregate care settings traditionally have been known by a variety of names, which vary by state. The more common names are domiciliary care homes, board and care homes, adult care homes, and rest homes.

In the U.S., between 800,000 and 1,000,000 aged persons live in licensed residential care settings. An equal number are thought to live in unlicensed boarding homes.¹

In the late 1980s, a new model of residential care for elderly persons was introduced in Oregon and spread rapidly across the country.² This model, called assisted living, differed from the other two types of residential care in that it was based on a philosophy that emphasized privacy and a homelike environment; services and oversight available 24 hours a day to meet both scheduled and unscheduled needs; services provided or arranged to promote independence; and an emphasis on consumer dignity, autonomy, and choice.³ In the assisted living model, privacy and a homelike environment is assured by providing residents with, at a minimum, a private room and bath with a lockable door. The original model as piloted in Oregon provided a full apartment with separate living space for sleeping and a full kitchen or kitchenette. Assisted living potentially combines ordinary accessible housing with services so that people who need long term care services can receive them without the lifestyle sacrifices required by nursing home admission.⁴

A national survey of residential care facilities in 1998 found that while basic rates ranged from $16,000 to $26,000 per year, persons seeking high privacy and high service levels can expect to pay about 30 percent more.⁵ Considering these rates, assisted living serves a predominantly private pay clientele. The popularity of the assisted living residential care model in the private pay market has led to increased interest among aging services providers, consumer advocates, and states in developing affordable versions of the model for low income and Medicaid-eligible persons.

States in particular are interested in the potential of this model of residential care to serve as an alternative to nursing home care for some Medicaid waiver clients who cannot safely be served in their own homes but do not need the skilled care provided in nursing homes. Unlike Medicaid coverage of nursing home care, which includes payment for all services and room and board, Medicaid does not cover room and board in residential care settings. However, states have the option to use Medicaid to cover services in these settings. Paying only for services in a residential care setting and not for room and board can potentially reduce state spending for nursing home eligible individuals.

From the inception of the waiver program, states have used waivers to pay for services in residential care settings as an alternative to intermediate care facilities for persons with mental retardation (ICF-MRs). Apart from Oregon, few states used waivers to pay for residential care services for the elderly population until the 1990s. By 2002, however, 36 states had amended their Medicaid waiver programs to permit payment for services in out-of-home residential care settings, and 13 states covered personal care under the state plan in these settings. However, relatively few persons in these settings receive services through the waiver program compared to the number receiving personal care services through the state Medicaid plan.

To date, there has been little research on how states use Medicaid to pay for services for elderly persons in residential care settings.⁶ A recent publication on Medicaid home and community services briefly discussed options for Medicaid coverage of assisted living and the factors states need to consider when deciding whether and how to cover services in assisted living (see Appendix H for this information.)⁷ This report builds on that discussion by examining in depth how six states are using Medicaid to pay for services for elderly persons in residential care settings. The states are Florida, Minnesota, North Carolina, Oregon, Texas, and Wisconsin.⁸

A primary purpose of the study was to gain an understanding of how state staff and policy makers and stakeholders view Medicaid coverage of services in residential care for elderly persons. As stated earlier, the names used to describe residential care settings have historically varied, both within and among states. In the past several years, many states have begun to use the term "assisted living" generically to cover all three types of residential care: adult foster care, congregate care, and the new assisted living model. Minnesota defines assisted living as a program and not a place. At the same time, some consumers, providers, and states view assisted living as a distinct model of care. Therefore, to prevent confusion about which type of residential care is being referred to, this report uses the generic term "residential care setting" to include all types of residential care, including adult foster homes, small board and care homes, large domiciliary care homes, and private assisted living apartments. We will use different terms only when needed to distinguish between the three specific residential care models and when describing specific settings in a given state.

Our findings are based on three sources: (1) an extensive review of published and unpublished information about the six states' long term care systems, with a focus on their residential care systems and Medicaid programs; (2) consultation with Medicaid program staff and policy makers and other key staff to obtain additional information and to clarify information obtained through the Internet and other sources; and (3) interviews with current and former state staff and policy makers, residential care providers, and representatives of provider and consumer organizations. These interviews occurred between June 2002 and February 2003.

This report is organized as follows. The next section provides information on the two Medicaid options for covering services in residential care settings and a brief description of the six states' reasons for using specific options. The following two sections present the views of state staff and policy makers and key stakeholders about Medicaid coverage of services in residential care settings and their suggestions for improving the Medicaid-funded residential care system. The final section presents concluding remarks.

Appendix A contains a discussion of the qualitative methodology we used to conduct this study. Appendices B through G contain a description of each state's long term care system focused on its Medicaid program and residential care system. The state descriptions provide background and technical information, as well as summaries of the views of those we interviewed. Appendix H provides technical information about factors for states to consider when choosing to cover Medicaid services in residential care settings.

Newcomer, R. and Maynard, R. (2002). Residential Care for the Elderly: Supply, Demand, and Quality Assurance. The California HealthCare Foundation.
Kane, R.A. and Wilson, K.B. (2001). Assisted living at the crossroads: Principles for its future. Portland, Oregon: Jessie F. Richardson Foundation. (Discussion Paper).
Hawes, C., Lux, L., Wildfire, J., Green, R., Packer, L. E., Iannacchione, V., and Phillips, C. (1995). Study of North Carolina domiciliary care home residents. Report submitted to the North Carolina Department of Human Resources.
Kane, R.L. and Kane, R.A. (2002). Re-thinking housing with services in Minnesota: Interim evaluation report on demonstration projects on affordable housing with services for older people. A program conducted by the Minnesota Department of Human Services.
Facilities can have either a single rate or multiple rates. Facilities with multiple rates have a base rate which includes a limited amount of services, and charge more for additional service. Hawes, C., Rose, M., and Phillips, C. D. (1999). A National Study of Assisted Living for the Frail Elderly: Results of a National Survey of Facilities. Prepared for the Office of Disability, Aging, and Long Term Care Policy, Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. [Full HTML Report]
A compendium prepared by Robert Mollica -- State Assisted Living Policy: 2002. Portland, Maine: National Academy for State Health Policy -- is the only source of descriptive information about Medicaid coverage of services in residential care facilities.
Smith, G., O'Keeffe, J. , Carpenter, L., Doty, P., and Kennedy, G. (October 2000). Understanding Medicaid Home and Community Services: A Primer. U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, Office of Disability, Aging, and Long Term Care Policy. [Full HTML Report, Full PDF Report]
A description of the study methodology, including site selection criteria, is presented in Appendix A.

1. Medicaid Options for Providing Services in Residential Care Settings

States have the option of paying for custodial care -- including personal care -- in residential care settings through state funded supplemental payments to SSI recipients. The disadvantage for the states in using this option is that the supplement is not matched by federal funds. States also have the option to pay for personal care and other long term care services in residential care settings through the Medicaid state plan personal care option and the home and community-based services (HCBS) waiver program. This section describes these options and the six states' reasons for choosing particular options.⁹

9, The information in this section is summarized from Chapter 5 of Understanding Medicaid Home and Community Services: A Primer. [Full HTML Report, Full PDF Report] Op. cit. The complete text of Chapter 5 can be found in Appendix H.

Personal Care Option

Since the mid-1970s, states have had the option to offer personal care services under the Medicaid state plan in individuals' place of residence, whether in their own home or in a residential care setting. Until 1993, the Medicaid personal care option had a medical orientation: services had to be prescribed by a physician, supervised by a nurse, and delivered in accordance with a care plan. In 1993, Congress amended Medicaid law to allow states to use means other than physician prescription to authorize personal care services and other than nurse supervision to oversee the provision of care. States may impose reasonable medical necessity criteria for receiving personal care services, but may not restrict it to persons who require a nursing home level of care.

Because personal care is an optional Medicaid service, states have considerable discretion in its provision. While optional services must be offered statewide, states can set additional eligibility criteria for the receipt of services. For example, Florida restricts eligibility for personal care services to residents of group living arrangements, and, prior to 1995, North Carolina restricted eligibility to people in their own homes.

An advantage of using the personal care option to cover services in residential care settings is that the state can provide services to a less severely impaired population than those eligible for nursing home care. From the perspective of individuals who need personal care, a disadvantage of the personal care option is that it lacks the higher income eligibility standard that states may use for waiver programs. From the state's perspective, however, this limitation may be seen as an advantage because it enables the state to limit costs by restricting the benefit to those who meet the lower income eligibility standard.

As of 2003, 36 states have the personal care option in their state Medicaid plan, but only 13 use the option to cover services in residential care settings.¹⁰

10, Mollica, 2002. Op. cit.

Home and Community-Based Services Waiver Option

States have had the option of covering services in residential care settings through the HCBS waiver program since 1981 when Congress first established the waiver authority. This option is limited only by a state's ability to serve residents who meet the state's nursing home level-of-care criteria under current licensing and regulatory provisions for residential care settings. States can either amend an existing waiver to add services provided in residential care settings, or they can apply for a new separate waiver to cover services in residential care settings.

Adding to an existing waiver program is simple and minimizes reporting and tracking requirements. However, advocates for home and community services may perceive the addition of services in residential care settings as increased competition for a limited number of slots available for home services more generally.

The option to use the waiver program to cover services in residential care settings was rarely used until the late eighties and early nineties, when the introduction and popularity of the private pay model of assisted living led to increased state interest in providing this option for waiver clients who could not be safely cared for at home. In response to this increased interest, the Centers for Medicaid & Medicare Services (CMS)¹¹ added assisted living to the standardized waiver format as one of two types of service under the heading of Adult Residential Care. It is defined as:

Assisted living: Personal care and services, homemaker, chore, attendant care, companion services, medication oversight (to the extent permitted under state law), therapeutic social and recreational programming, provided in a home-like environment in a licensed (where applicable) community care facility, in conjunction with residing in the facility. This service includes 24 hours on-site response staff to meet scheduled or unpredictable needs in a way that promotes maximum dignity and independence, and to provide supervision, safety and security. Other individuals or agencies may also furnish care directly, or under arrangement with the community care facility, but the care provided by these other entities supplements that provided by the community care facility and does not supplant it.

Personalized care is furnished to individuals who reside in their own living units (which may include dually occupied units when both occupants consent to the arrangement, which may or may not include a kitchenette and/or living room, and which contain bedrooms and toilet facilities. The consumer has a right to privacy. Living units may be locked at the discretion of the consumer, except when a physician or mental health professional has certified in writing that the consumer is sufficiently cognitively impaired as to be a danger to self or others if given the opportunity to lock the door. (This requirement does not apply where it conflicts with a fire code.)

Each living unit is separate and distinct from each other. The facility must have a central dining room, living room or parlor, and common activity center(s) (which may also serve as living rooms or dining rooms). The consumer retains the right to assume risk, tempered only by the individual's ability to assume responsibility for that risk. Care must be furnished in a way which fosters the independence of each consumer to facilitate aging in place. Routines of care provision and service delivery must be consumer-driven to the maximum extent possible, and treat each person with dignity and respect.

This definition incorporates the central tenets of the assisted living philosophy -- privacy, autonomy, and choice -- but states have the option to use a different definition. Medicaid will pay for services provided in adult residential care settings as long as a "homelike environment" is preserved; thus, it will not pay for services in a facility that is located in the wing of a nursing home.

If states do not currently license residential care settings to provide services to persons with a nursing home level of need, they have two options. They can amend licensing and regulatory requirements for existing residential care settings to allow them to serve a more highly impaired and chronically ill population, or they can create a new category of residential care settings that is licensed to cover this population.

11, Formerly known as the Health Care Financing Administration (HCFA).

Reasons for Using Specific Options in Six States (12)

As shown in Table 1, four of the six states use both the personal care option and the waiver program to pay for services in residential care settings, while one uses only the personal care option and another uses only the waiver option. The reasons for choosing the options -- as described by those we interviewed -- are unique to each state's long term care system, philosophy, and goals.

TABLE 1. Use of Medicaid Optoins to Pay for Services in Residential Care Settings

Medicaid Option	State
Pays for services through Personal Care Option	North Carolina
Pays for services through Personal Care Option and HCBS Waiver Program	Florida Minnesota Wisconsin
Pays for services through HCBS Waiver Program	Oregon Texas

However, there was consensus among the respondents that states' primary goals in using Medicaid to pay for services in residential care settings are (1) to provide an alternative to nursing homes for people who cannot live at home, thereby providing consumers with more choice; (2) to reduce nursing home utilization; and (3) to save money.

Nearly all respondents felt that their state's decision to use Medicaid to fund services in residential care settings was a positive development. The following comments are illustrative of their views.¹³

The most important feature of Medicaid paying for services in residential care facilities is that it provides the flexibility to provide services based on people's needs. If consumers can't live at home, it gives them a choice other than the nursing home. Some people choose to live in a residential care setting and it's also a safety net for people who wind up there because they have no other choice.
The use of Medicaid to support older persons with dementia in a residential care setting has been highly successful. A good residential care setting is highly preferable to a nursing home.
People were becoming more frail and needing more services, but not qualifying for a nursing home, and couldn't afford a private assisted living facility. Under the personal care option, they can now get some services.
The waiver program has achieved the primary goals of cost saving, reduction in the nursing home bed base, and more humane long term care alternatives. Each dollar spent on the waiver would have cost $2.70 in the nursing home.
Including personal care in the state plan was key to the state's efforts to provide additional revenues to assisted living facilities. It has been instrumental in attracting providers who were reluctant to take state supplement recipients in the past and provides Medicaid funding for frail elders who are not as impaired as waiver clients.

The state wanted to get to the point where nursing homes were not a high priced alternative to community care. Using Medicaid to pay for assisted living fit a niche.

The following descriptions illustrate both the commonalities among the six states in their reasons for choosing specific options and the unique features of their long term care systems influencing their choice of options.

The information in this section is drawn from the state descriptions in Appendices B through G.
Some comments are paraphrased to assure the anonymity of the respondent and edited for brevity.

Florida

Florida uses both the personal care option and the waiver program to cover services in residential care settings. Since 1975, Florida licensed a type of residential care setting called Adult Congregate Living Facility (ACLF), which provided room and board, assistance with one Activity of Daily Living (ADL), social services, and supervision of self-administered medication.¹⁴ ACLFs served a predominantly private pay clientele, but also some individuals who received SSI and an SSI supplement through the state's Optional State Supplementation program. The state did not have a residential care setting that was licensed to serve state supplement recipients who needed substantial levels of personal or home health care but not the level of skilled nursing care provided in nursing homes. Consequently, individuals with this level of impairment had to either enter a nursing home, at a much greater expense to the state, or find an unlicensed facility that would accept them.

To address this gap, in 1992 the state developed a new licensing category of ACLF called Extended Congregate Care that could serve residents with higher levels of need. However, at that time, Florida's waiver program served only individuals who lived in their own homes. In 1995,Florida initiated a pilot program called the Assisted Living for the Elderly waiver, which was designed to serve only individuals who reside in assisted living facilities. In 1997, the state expanded the waiver to statewide status.

In 2001, Florida amended its state plan to include personal care services, which are provided through a program called Assistive Care Services. Elderly persons who live in their own homes are not eligible to receive these services; only those who live in licensed adult family care homes and licensed assisted living facilities are eligible.¹⁵

Prior to the addition of personal care services to the state's Medicaid plan, Florida paid for some personal care in residential care settings through its Optional State Supplementation (OSS) program, which is funded by general revenues. The state supplement is not provided to individuals who live in their own homes. Once personal care was added to the Medicaid program, the state reduced the OSS payment and used the money saved to provide the state match for Medicaid personal care services.

Florida calls social services "personal services." The term "social" is used here to distinguish them from personal care services.
Assistive Care Services are also available to residents of mental health residential treatment facilities, which serve primarily younger adults with mental illness.

Minnesota

Minnesota uses both the personal care option and the waiver program to cover services in residential care settings. In 1983, to reduce nursing home utilization, the state instituted a moratorium on new nursing home beds, and in 1988, implemented an Elderly Waiver program that provides services in a person's home and in residential care settings. At the same time, the state expanded the services in the Medicaid state plan to include personal care services. The state sought by these actions to maximize the number of supportive service options available to persons at risk of institutionalization. Personal care services --called Personal Care Attendant (PCA) services -- are available to eligible persons in their homes, apartments, registered housing with services, and adult foster care settings.

Minnesota uses a managed care model in its Medicaid program called the Pre-paid Medical Assistance Program (PMAP). Persons eligible for Medicaid are enrolled in PMAP and a capitated fee is paid to the PMAP managed care provider, who then becomes responsible for the delivery of all Medicaid state plan services, including PCA services. The PMAP covers PCA services in a person's place of residence, wherever that may be.

Technically, PCA services are available to an Elderly Waiver client in a residential care setting. However, because the residential care setting typically provides personal care to waiver clients under its own contract with the resident, PCA services from outside the setting (through the state Medicaid plan) are not used. PCA services under the Medicaid state plan are typically used in residential care settings such as adult foster care by persons with disabilities under age 65 who are not eligible for the Elderly Waiver program.

North Carolina

North Carolina uses only the Medicaid state plan personal care option to cover services in adult care homes. Prior to 1995, North Carolinaprovided Medicaid personal care only to individuals in their own homes. The state funded a small amount of personal care in adult care homes through a relatively generous state supplement called Special Assistance (SA), which is available only to residents of adult care homes.¹⁶ The combined SSI+SA payment is set each year by the state as the rate for adult care homes to provide room, board, and custodial care. In 2003, the SA supplement for an SSI recipient is $560.

In the late 1980s to mid 1990s, advocates for the elderly lobbied the state to address perceived quality of care problems in adult care homes. In particular, there were concerns that persons requiring a nursing home level of care were residing in these homes and were not receiving appropriate or adequate services.¹⁷ In response, North Carolina commissioned a study, whose findings confirmed these concerns. The study found that adult care home residents in North Carolina had significant levels of impairment.¹⁸ It also found that compared to persons in residential care settings in ten other states, North Carolina residents had much higher levels of incontinence, ADL impairments, and cognitive impairment, with nearly two-thirds having moderate to severe cognitive impairment.

These findings led to pressure from advocates to increase the amount of care provided to residents of adult care homes and pressure from providers for higher payments. In response, the state decided to expand the Medicaid personal care program to cover services provided in adult care homes. The expansion was budget neutral because the state reduced the state supplement and used the savings as the state match for the federal funds.

According to one respondent, another factor influencing North Carolina's decision to expand its personal care program to cover services in residential care settings was congressional consideration of a proposal to block grant Medicaid. At the time Congress was discussing the proposal, many in the state felt it would be advantageous to draw as much Medicaid funding as possible before the program was block granted. Even so, the state was concerned about the cost of the new benefit, and so it established three fixed reimbursement levels for personal care in adult care homes -- basic, and two enhanced levels -- to be determined by a case manager. In addition to paying for one hour of personal care per day, the Medicaid program also provides case management to oversee residents with heavy care needs.

North Carolina has chosen not to use the waiver program to cover services in adult care homes because these homes are licensed to provide only custodial care and some personal care. State licensing rules specifically prohibit adult care homes from serving persons who need a nursing home level of care. Thus, residents of adult care homes are not eligible for waiver services even if their condition deteriorates. Residents who need skilled nursing services or skilled therapies receive them through the Medicaid or Medicare Home Health benefit. If North Carolina wanted to serve waiver clients in residential care settings, it would have to either amend adult care home licensing requirements or create a new type of residential care setting with appropriate licensing and regulatory standards.

In 2003, the state approved a measure which will allow 800 persons with disabilities living in their own homes to receive the state supplement.
Bolda, E. (1991). Initial Report on North Carolina Domiciliary Care Policy. The Long Term Care Resources Program, Duke University Center for the Study of Aging and Human Development.
Hawes, C. et. al. (1995). Op. cit.

Oregon

Oregon uses only the waiver program to fund services in residential care settings. Although the Medicaid state plan includes the personal care option, Oregon decided to use the waiver program alone because its specific goal was to reduce nursing home utilization, and persons who meet a nursing home level of care typically need more than personal care.

The state expanded its community long term care infrastructure by focusing initially on the development of adult foster care, and later on assisted living facilities and other non-medical residential settings. Residents in all residential care settings can receive Medicaid waiver services as long as the facilities meet the regulatory requirements for providing these services.

Texas

Texas uses only the waiver program to cover services in residential care settings. In the early 1990s, Texas became interested in supporting residential care alternatives to nursing homes for individuals who met a nursing home level of care but could not be safely cared for at home. In 1994, Texas implemented an HCBS waiver program -- called Community Based Alternatives -- to provide services in private homes, in adult foster care homes, and in assisted living/residential care facilities. The state's primary goal in creating the Community Based Alternatives waiver program was to offer both home and community alternatives to institutional care and to provide an opportunity for persons in institutions to transition to the community.

Wisconsin

Wisconsin uses both the personal care option and the waiver program to cover services in residential care settings. In 1981, to decrease nursing home utilization, the state instituted a moratorium for nursing facilities and shortly after implemented an HCBS waiver program to provide services to persons residing in their own homes, supported apartments, and all types of residential care settings. The state's primary goal in using the Medicaid waiver to pay for services in residential care settings is to provide an alternative to nursing homes for people who cannot live in their own homes.

In 1988, Wisconsin amended its state Medicaid plan to provide coverage of personal care. The rationale for adding personal care to the state plan was that the Medicaid home health benefit, which paid for home health aides to perform nurse delegated tasks such as wound care, was not able to meet the personal care needs of many persons with disabilities. When personal care was added to the state plan, it was initially covered only in private homes.

In the 1990s, the state realized that there was inadequate funding to support the care of residents in Community Based Residential Facilities (CBRFs). At this time, personal care services provided in CBRFs was paid through the waiver program, the state's general revenue funded Community Options program, county funding, and federal social services block grant funding. However, these funding sources were not sufficient to meet the need, and people who were eligible for waiver services often faced long waiting lists. Therefore, the state decided to expand its personal care program to cover persons in CBRFs. Coverage in these settings was viewed as cost efficient because the state does not pay for room and board in CBRFs, as it does in nursing homes.

Initially, both waiver services and personal care under the state plan were provided only to residents of CBRFs with no more than eight beds. The state used small bed size as a proxy for "home-like" and did not want to encourage the payment of public money to quasi-institutional residential care facilities, i.e., those with more than eight beds. The bed restriction was recently increased to 20 beds, in part because some residents were being forced to leave their residence and move to one with eight or fewer beds in order to receive Medicaid services.

2. How Medicaid Is Working in Residential Care Settings: State and Stakeholder Views

Introduction

In addition to providing a technical description of how states use Medicaid to cover services in residential care settings, we wanted to gain an understanding of how the states and key stakeholders viewed this coverage. To ensure a cross section of views, in addition to interviewing state staff and program administrators we interviewed both providers and their representatives as well as consumer advocates.

We were interested in their views generally, such as whether they saw Medicaid coverage as a positive development in their long term care systems. We were also interested in knowing if they had any general or specific concerns about how the residential care system in their state was working for Medicaid clients. Specifically, we asked for their views on a range of issues, including barriers to the provision of Medicaid coverage of services in residential care settings, and licensing and regulatory requirements -- particularly those related to admission and discharge -- that affect the ability to age in place.

Although the purpose of our interviews was to gain a better understanding of Medicaid's coverage of services in residential care settings, nearly everyone we interviewed provided their views on issues related to the state's residential care system regardless of whom it serves: private pay, Medicaid-eligible residents, or a combination of both. Consequently, many of the respondents' views regarding the state's residential care system did not differentiate between Medicaid and private pay residents. For example, concerns expressed about discharge policies apply to both private pay and Medicaid clients. Nonetheless, respondents also had views about issues specific to Medicaid's coverage of services in residential care settings.

Respondents' views are categorized into six major headings:

General Comments on the Residential Care System
General Comments on Medicaid's Role in Residential Care Settings
Licensing and Regulatory Requirements
Staffing Issues
Barriers to Expanding Medicaid Coverage of Services in Residential Care Settings
Future Plans

The content of this section is based solely on the views of those we interviewed, all of whom were quite candid in their discussions with us. For an in-depth description of each state's Medicaid program and residential care system, and specific issues related to Medicaid coverage of services in residential care settings, please see the descriptions of each state in Appendices B through G.

General Comments on the Residential Care System

Comments about the residential care system generally were, for the most part, unique to each state and are summarized first, followed by a summary of comments about one issue raised by respondents in all six states.

Florida. The increase in the cost of liability insurance was cited by most respondents as the biggest problem facing the assisted living industry in Florida, and a major barrier to assuring the availability of residential care options for older persons who do not want to live in a nursing home. Recently, assisted living facilities (ALFs) with Extended Congregate Care (ECC) or Limited Nursing Services (LNS) licenses have been notified by insurers that they will be charged the same liability insurance rates as nursing homes. The rate increase is based on insurers' views that these facilities are equally at risk for lawsuits because they are licensed to serve waiver clients who meet the state's nursing home level-of-care criteria.

One provider stated that her annual liability insurance premium had increased from $7,000 three years ago to $55,000 this year. One respondent stated that since January 2002, ALFs with ECC and LNS licenses could not obtain liability insurance at all. Although the legislature authorized a state insurance program that can provide insurance for up to 800 ALFs, two respondents felt that this program would not solve the liability insurance crisis in the absence of tort reform. Most respondents recommended tort reforms that would set a limit on compensatory and punitive damages.

Minnesota. Minnesota's assisted living program is a service model that can be provided in virtually any type of housing, and respondents mentioned a number of issues related to this model. Because admission and discharge decisions in Minnesota's system are solely within the housing providers' discretion, two respondents felt that a resident's bill of rights and an appeals process were needed, particularly to address involuntary discharges. Another felt that a minimum level of care should be required of all settings.

North Carolina. Two respondents felt that the state's Certificate of Need (CON) program for ALFs needed to be better targeted. One noted that the current CON program has a cap by county, but there is a shortage of beds for people who are difficult to place, such as those with AIDS and behavior problems. Another noted that a county could have only two very old facilities with physical plants that no one wants to live in, but if someone wanted to build a better adult care home in that county, the permit would be denied as long as there were vacancies in the existing facilities. Others criticized the state's nursing home moratorium and CON program, stating that they had a negative impact on consumers because they led to an insufficient supply of beds. Consequently, "people who should be in nursing homes wind up in adult care homes."

Oregon. The only major concern, expressed by all respondents, was the effect of budget cuts on the state's residential care system. Nearly all agreed that proposed budget cuts to the waiver program, if enacted, would cause some providers to go out of business, particularly those that serve a high proportion of Medicaid residents.

Texas. The only major concern, expressed by a few respondents, was that the state could be facing a liability insurance crisis in the near future. One noted that an error in the regulations had led to increased liability for providers, and another noted that the 2003 legislative session was going to address tort reform. However, Texas does not currently require ALFs to have liability insurance.

Two respondents mentioned that the federal SSI payment was too low to cover provider costs for room and board and that a state supplement was needed. However, both acknowledged that it was unlikely the state would provide a state supplement given current budget shortfalls.

Wisconsin. A consensus existed that the state was not adequately enforcing its residential care regulations and the primary reason was lack of funding to do so. One respondent felt that the state needed more adult family care homes, i.e., adult foster care homes.

Confusion About the Various Types of Residential Care

As noted in the beginning of this report, the term "assisted living" originated as a distinct type of residential care model for the private pay market as an alternative to nursing homes and traditional residential care settings such as board and care homes. The model was developed to provide what was perceived to be lacking in these other settings: a private room and bath or full apartment, autonomy, and the ability to tailor service packages as long term care needs increased or decreased, temporarily or permanently.

Respondents in several states noted that due to the popularity of the new model, many residential care settings were using the term "assisted living" in their marketing materials, even though some did not provide private rooms or the ability to age in place. Some states now use the term as an umbrella category for quite different types of residential care settings; some have amended regulations to rename traditional domiciliary care homes as assisted living. Minnesota uses the term to describe a package of services that can be delivered in a wide range of housing settings, some of which market themselves as assisted living.

Respondents in several states noted that use of the term "assisted living" for different types of residential care settings has led to considerable confusion among consumers. Several respondents noted that the residential care system was so confusing that it was difficult for consumers (and their families) to figure out what type of residential care setting would be able to meet their needs.

Oregon is the only state of the six that limits the use of the term to residential care settings that provide individual apartments. There was a consensus among the Oregon respondents that the state was right to limit the use of the term in this way. In marked contrast with other states, no one in Oregon mentioned public confusion about the different types of residential care as an issue.

Minnesota. In Minnesota, assisted living is viewed not as an architectural model but as a service package that can be provided in a wide variety of housing types. One respondent noted that families are surprised to learn that the assisted living model in Minnesota is licensed as a home care provider, that 24-hour supervision is not available in many settings, and that although a residence is licensed, it is not regulated.

North Carolina. According to several respondents, when North Carolina amended its statutory provisions governing domiciliary care, the industry lobbied the legislature to redefine adult care homes as assisted living, because it wanted to be able to market adult care homes as assisted living to compete with the newer, private-pay, high end facilities.

The state's new statutory definition of assisted living includes adult foster care, adult care homes, and a new category of senior housing that provides meals and housekeeping and social services only. Many respondents -- providers, consumer advocates, and state staff -- said that the generic use of the term "assisted living" in North Carolina's residential care system was confusing for the public. They noted that the public does not understand the differences between nursing homes, adult care homes, and assisted living.

Several noted that the situation is particularly confusing when adult care homes with few if any of the features of market rate private-pay assisted living facilities market themselves as such. To add to the confusion, facilities licensed under the same standards offer substantially different levels of care. Some facilities accept only those with few needs, while others accept those with multiple needs.

One respondent said that another source of confusion was the use of the term "assisted living" by adult care homes that did not serve a predominantly elderly population. In North Carolina, adult care homes are permitted to serve persons of varying ages with substantially different service needs in the same facility: young adults with serious mental illness or developmental disabilities and frail elderly persons. Several felt that this caused even more confusion for the public, which generally associates the term "assisted living" with the care of elderly persons.

One person noted that she has received calls from families looking for residential care, who were upset after visiting some of these homes, saying that they could not put their frail mother in an assisted living facility that also served young adults with serious mental illness. They were particularly concerned because these homes did not have private units with lockable doors.

Several respondents, both consumer advocates and providers, said it was impossible to assure that the service needs of different groups -- the seriously mentally ill, developmentally disabled, and frail elderly -- could be met using the same set of licensing and regulatory provisions.

Wisconsin. Wisconsin has a similar situation as North Carolina, having only one licensing standard for all community based residential facilities (CBRFs), which can serve a diverse population, including elderly persons, persons with serious mental illness, traumatic brain injuries, developmental disabilities, veterans, unwed mothers, and even corrections clients.¹⁹ As in North Carolina, a few respondents -- both consumer advocates and providers -- said it was not possible to assure that the service needs of such different populations could be met using the same licensing and regulatory provisions.

When Wisconsin created a new licensure category called assisted living and required facilities licensed under this name to provide private apartments, the residential care industry lobbied the state to permit CBRFs (which provide private and shared bedrooms and mostly shared baths) to also market themselves as assisted living. Wisconsin revised the statute to allow this, and due to concerns that the public would be confused if the new apartment model and CBRFs were both called assisted living, it renamed the licensing category of the apartment model from assisted living to Residential Care Apartment Complex (RCAC).

Consequently, the model that matches the assisted living philosophy is not called assisted living. According to several respondents, this has created considerable confusion among the public. Several respondents said that just about any type of setting could call itself assisted living, and that the operative condition in the state when looking for a residential care placement is "buyer beware."

One noted that the state had a website that did an excellent job explaining the differences between RCACs and CBRFs and adult foster care, but that access to the web is an issue. The average age of entry into residential care is the early to mid-eighties, and many older persons and their families do not have computers; those that have computers do not always know how to use them to get information. This same respondent noted that another issue is that many, if not most, residential care placements are made in a crisis situation, after a hospitalization or a nursing home stay, and under these conditions, decisions are often made based on what is convenient and available rather than what is needed and preferred.

Another source of confusion for the public is that while RCACs must provide services up to 28 hours a week, they are permitted to choose which services to offer above the minimum required personal, supportive, and nursing services. One RCAC could limit nursing services to health monitoring, medication management, and administration (i.e., the minimum), and another could offer additional nursing services. Several respondents stated that differences in the services offered made it difficult for people to identify a facility that would best meet their needs over time.

In sum, with the exception of Oregon, respondents in all states agreed that the term "assisted living" has become a generic term that is not helpful to consumers, and that some standard nomenclature is needed to help the public understand the residential care system. A few respondents (all providers) stated that they opposed limiting the term "assisted living" to a specific model. The remainder felt that the term should be used to define a distinct model, because its current generic usage to cover many different types of residential care settings is confusing to the public.

19. There are a few changes in the regulations for correctional clients, e.g., provisions related to residents' rights do not apply.

General Comments on Medicaid's Role in Residential Care Settings

In all the states, while some respondents had concerns about specific Medicaid-related issues, there was unanimous agreement that Medicaid payment for services in residential care settings was overall a positive development. Medicaid payment was universally viewed as a way to reduce nursing home utilization, and in so doing, both save money and increase community alternatives to nursing homes, thereby providing consumers with more choice. A respondent in Oregon stated that the public has many more options because Medicaid participates in the funding of residential care services.

Respondents in Florida noted that prior to the use of the personal care option in residential care settings, many people needed services but did not meet the nursing home level of care criteria and could not afford to pay privately for residential care. Adding personal care under the Medicaid plan was key to the state's efforts to provide additional revenue to residential care settings that previously received only SSI and a state supplement as full payment for room and board and services. Medicaid coverage of personal care in residential care settings has attracted providers who, in the past, were reluctant to take state supplement recipients.

Florida respondents also noted that covering services in residential care settings through the waiver program was responsible for major cost savings. One stated that each dollar spent on the waiver would cost $2.70 in the nursing home. Minnesota respondents expressed satisfaction with Medicaid coverage because it enabled many people to be served in settings outside the nursing home.

North Carolina respondents felt that Medicaid coverage of personal care in residential care settings had improved the quality of care and had saved the state money by shifting some of the cost of personal care to the federal government. However, some felt that the adult care home population is becoming more and more impaired, and that the homes are not able to provide the level of care that many residents need. One respondent felt that the state is using limited resources inefficiently by providing nursing care to large numbers of people in residential care settings through the Medicaid Home Health benefit. Another noted that even though occupancy rates in some adult care homes were low, some facilities did not want to accept Medicaid residents because they would have to submit cost reports.

Single Occupancy vs. Double Occupancy Rooms

Of the six states, only Oregon requires assisted living facilities to provide private apartments to Medicaid clients.²⁰ In the other states, Medicaid contracting rules may encourage, but do not require, private bedrooms and bathrooms. Yet, in every state, nearly all respondents who commented on the issue of single vs. double occupancy rooms felt strongly that Medicaid clients should have private rooms and baths in residential care settings, noting that most older people highly value their privacy and want private rooms.

Many were highly critical that the term "assisted living" was used to describe facilities that had two and as many as four people in a room (in Florida). One respondent criticized Florida's Extended Congregate Care regulations for defining privacy as "encompassing dual-occupancy with a choice or roommate where possible." However, some noted that the low room and board rates mandated for Medicaid clients could make it difficult for some providers to offer private rooms.²¹

In North Carolina, dual occupancy is the standard for Medicaid-eligible residents. Several North Carolina respondents felt that many facilities that called themselves assisted living were similar to institutional care. In Wisconsin, whether a waiver client is served in a single room depends on the availability of these rooms in the area they live in, and whether the facility will accept the low amount that waiver clients typically have to pay for room and board.

Oregon respondents felt that success of the state's assisted living program lay in its offering Medicaid waiver clients the same residential care options available to the private pay market. As one said, "if the private pay market gets privacy and independence, then so should the Medicaid client." Another noted that while giving Medicaid clients private rooms in assisted living had been very successful, the downside was that the state has not invested in the physical upgrading of nursing homes, which are viewed as being "stuck in the 50s and 60s."

One Oregon respondent noted that the assisted living physical plant requirements had generated a greater degree of accessible housing for persons under age 65 with disabilities, noting that ALFs offer a housing option for the younger disabled who need some oversight and services but want privacy and independence.

Oregon also serves waiver clients in adult foster care and residential care facilities, which may not have private rooms and bathrooms.
Of the six study states, only Minnesota and Wisconsin do not restrict the amount that Medicaid residents can be charged for room and board.

Licensing and Regulation

States have the authority to license and regulate all types of residential care. There are no applicable federal statutes, other than the Keys Amendment to the Social Security Act, which is applicable to board and care facilities in which a "substantial number of SSI recipients" are likely to reside.²² State rules vary widely, and thus, respondents' views on licensing and regulatory issues are state specific.

In order to use Medicaid to cover services in residential care settings, the state must assure that its licensing and regulatory provisions match the needs of the individuals who will receive services in these settings. Licensing and regulatory provisions cover many areas, including construction and physical plant standards, health and safety standards, admission and retention standards, and staffing. A number of these areas are key for states serving a Medicaid population in residential care settings, particularly those who meet the state's nursing home level-of-care criteria.

Federal HCBS waiver regulations require facilities in which waiver services are furnished to meet applicable state standards, so state standards set the minimum requirements for Medicaid providers. However, the state's Medicaid program may set additional or more stringent standards for settings that serve waiver clients. For example, a state may permit residential care settings to offer rooms shared by two, three, or more residents, but a state's assisted living waiver program may choose to contract only with facilities that offer private occupancy unless the resident chooses to share a room or unit. Residential care settings providing waiver services must meet the standards for service provision that are set forth in the approved waiver documents. Medicaid contracting requirements may also specify additional training and other requirements if state licensing rules do not have sufficient requirements for facilities serving people with dementia.

State licensing and regulatory requirements address many areas, and an overview of these requirements for all fifty states can be found in other published sources.²³ Appendices B through G of this report describe key licensing and regulatory provisions for residential care settings in the six study states.

All of the respondents we interviewed had strong views about a number of licensing and regulatory provisions issues. Their responses fell into seven categories, each of which is discussed in turn:

National Standards
Prescriptive Regulations
Staffing
Nursing Services
Admission and Retention Requirements
Negotiated Risk Agreements
Enforcement

The Keys amendment is virtually unused to address quality issues. General Accounting Office. (1989) Board and Care: Insufficient Assurances that Residents' Needs are Identified and Met. Washington, D.C.
Mollica, R.L., State Assisted Living Policy: 1998 [Full HTML Report]; State Assisted Living Policy: 2000; State Assisted Living Policy: 2002. All published by the National Academy for State Health Policy, Portland Maine.

National Standards

In all of the states, nearly everyone interviewed believed that licensing and regulation were state functions and that there should be no national regulations for residential care. There was general agreement that major differences in the states' residential care systems and the heterogeneity of the population served in residential care necessitated different licensing and regulatory provisions. Some felt that federal regulations might stifle state creativity.

In Wisconsin, respondents felt that the licensing and regulatory provisions were good but needed fine tuning. Some stated that the Medicaid waiver program provided quite enough federal oversight. Even in states where considerable dissatisfaction was expressed about certain licensing and regulatory provisions, respondents did not see federal regulation as appropriate or needed.

On the other hand, model standards were viewed as both potentially helpful for informing state licensing and regulatory provisions and also as potentially problematic if they became minimum standards. Some respondents were concerned that model standards would lead to a nursing home regulatory model, which most viewed as both overly prescriptive and not particularly effective in assuring good quality care. Whatever people's views, consensus existed that model standards should not be mandated. As one person in Oregon stated succinctly: "Best practice models? Absolutely. National oversight? Not on your life."

At the same time, a few felt that some type of rating system for residential care settings would be helpful for consumers who currently find it very difficult to evaluate what is available. One respondent suggested a rating system with key features that would enable different settings to be compared in a meaningful way.

Prescriptive Regulations

Respondents in every state acknowledged that regulations were necessary, if for no other reason than to "keep the bad providers out." But many felt that some prescriptive regulations at best did not guarantee good care and at worst impeded it. A few stated that regulations "got in the way of quality of life."

Several noted that licensing and regulatory provisions are too rigid and need to be more person-centered and outcome-based, though one respondent noted that outcome-based provisions would be better included in Medicaid provider contracts than in licensing and regulatory provisions.

Regulations related to assuring a nutritious diet were most frequently cited as too rigid. Several noted that facilities are required to serve nutritious meals based on the food pyramid, but these meals may not provide the type of food that people like to eat. Some suggested an outcome-based alternative: to simply determine if the residents were maintaining an appropriate weight and were happy with the meals provided.

Inflexible, prescriptive non-person-centered rules were viewed as particularly problematic when caring for persons with dementia. For example, one respondent noted that North Carolina has a rule that there must be a minimum of ten hours between breakfast and dinner, but a resident with dementia wanted to sleep late, have breakfast at 10 AM, and dinner at 5:30 PM. Unless a facility followed this schedule, the resident became agitated; nonetheless, the facility was cited for not adhering to the ten hour rule.

Several providers in Oregon expressed concern that the state had started with a resident-centered model but that the regulations were becoming more prescriptive and more costly for providers to meet. One noted that the state prohibits bed rails because they are considered restraints, but some residents have used bed rails at home and want to continue doing so when they move to an ALF because it makes them feel safer at night. One felt that a potential consequence of more regulations is that ALF providers will admit more private pay residents to help meet the cost of the new regulations, resulting in Medicaid clients having fewer choices and ending up in double occupancy residential care facilities. On the other hand, several respondents felt that more regulation was needed because the nursing needs of the average resident have increased.

Another complaint related to licensing and regulatory provisions that were perceived to increase cost but not quality. For example, Florida prohibits stock supplies of over-the-counter medications for multiple residents and requires all non-prescription drugs to be labeled with a resident's name. One provider noted that this rule prevents providers from giving a resident an aspirin for a headache from a stock bottle. On the other hand, several respondents had major concerns about medication administration by unlicensed, untrained, and unqualified personnel, and felt that additional regulations might be needed to prevent medication errors.

Staffing

In general, respondents' concerns about staffing related to quantity and quality.

Staffing Levels. Nearly every respondent in every state had concerns about staffing levels in residential care settings, noting that even with highly trained, competent staff, insufficient staffing would compromise the quality of care. All acknowledged that low pay, lack of benefits, lack of a career ladder, poor management and oversight, and, in some cases, an unpleasant work environment made it very difficult to recruit and retain staff and that general workforce shortages exacerbated the problems.

Most felt it would be difficult to impossible to increase staffing at current Medicaid reimbursement rates. On the other hand, some felt that states needed to have a better picture of what care actually costs in residential care settings before simply putting more money into them.

A few said that staffing regulations needed to be based on care needs and not fixed staff-to-resident ratios. In North Carolina, prior to 2000, adult care homes could have one personal care aide for 50 residents on the night shift. Although this was changed to one aide for 30 on the night shift and 1 for 20 on the day shift, one provider stated that 1 aide for 20 residents is "totally insufficient" if residents have heavy care needs. There was agreement that North Carolina needs an improved assessment form and improved methods to determine the level of care people need.²⁴

Staffing Qualifications and Training. Many respondents in every state had concerns about staffing qualifications, some noting that the basic quality problem was staff not knowing and not recognizing signs of need. They noted that many residents are very old, with major health problems and cognitive impairment, and many if not most residential care staff are not adequately trained to provide good care for this vulnerable population.

Respondents in all the states expressed concerns specifically about staff qualifications to administer and manage complex medication regimes, noting that many residents have cognitive impairment and need assistance in this area. In North Carolina, several expressed concerns about medication errors and said there was inadequate nurse or pharmacy supervision. Many noted the need for additional training, and some mentioned the need for certification to be able to dispense and administer medications. Others were concerned about the lack of training to monitor the effects and side effects of medications.

In North Carolina, several expressed concern that new regulatory requirements for increased staff training were not being enforced, and in Wisconsin some providers expressed considerable concern about the additional cost of training requirements.

24. The state has projects under way to address both issues.

Nursing Services

The need for and provision of nursing care in residential care settings was a major issue that nearly all respondents commented on. Respondents in every state had concerns that providers were keeping residents longer and that regulatory changes were needed to address the increased nursing needs and acuity levels of residents in residential care settings.

Many noted that the average age of residents was the early to mid-eighties, and that this age group has more medical needs. They also noted that with shorter hospital and nursing home stays, residents were returning to residential care settings with higher acuity needs. In several states, respondents felt that residential care settings are, to a large extent, serving the population that used to be served in intermediate care facilities (ICFs); however, they noted that in contrast with the ICFs, residential care settings do not have licensed practical nurses (LPNs) on staff providing direct nursing care, supervision, and oversight.

The problem was seen as particularly acute in North Carolina, where adult care homes are not licensed to provide nursing care; but many felt that there is no difference in the type of residents served by these homes and those that used to be served in ICFs. If a resident needs nursing care, the facility arranges for it through Medicare or Medicaid Home Health. However, one person noted that providing nursing care in this one-on-one manner was not only very expensive but was insufficient because the visit lasts a half hour and there is no registered nurse (RN) or LPN oversight the rest of the day. However, another respondent said that having nurses on staff in these homes was not the solution, because if the state allowed these homes to provide health care, they would become "unlicensed substandard nursing homes."

In Oregon, several people noted that assisted living residents need and want more health and medical services from an RN or certified nursing assistant (CNA), but ALFs are not required to hire CNAs. Several acknowledged that when the state began paying for waiver services in residential care settings, it focused on ADL needs to the exclusion of chronic illness management. Now there is recognition that more nursing is needed in these settings, but they believe a nursing teaching and consultation model should be used, not a nursing services model.

While many states have nurse delegation provisions, Oregon is unique in its extensive use of nurse delegation and nurse consultation services in its HCBS system, and most said that this nursing model was an essential prerequisite for expanding its system. But several in Oregon acknowledged that questions remain about how nursing should be provided in residential care settings, and that if the state was going to require more nursing, it would have to increase reimbursement rates.

In Florida, there were differences of opinion about whether residential care settings that provided nursing care should have higher licensure standards. One respondent expressed concern that facilities licensed under extended congregate care, which enabled residential care settings to admit waiver clients and provide nursing care, were moving toward a medical model and becoming too much like nursing homes.

Admission and Retention Requirements

Most respondents felt that their state's admission and retention requirements were appropriate, but many expressed considerable concern about how these requirements worked in practice. With the exception of Texas, people did not have problems with admission requirements. In Texasthere was some concern that current licensing standards are too focused on life and safety distinctions. One person noted that fire and safety regulations have made it possible for facilities to deny residence to people who use wheelchairs. On the other hand, another person noted that the waiver program sometimes pressured facilities to take residents with needs beyond what the facility could provide.

While very few had concerns about admissions, nearly every respondent in every state had concerns related to discharge and agreed that issues related to the ability to age in place were far from settled.

In general, there are two approaches to retention/discharge requirements. One approach sets a maximum, and providers can offer any amount of services up to this limit. Wisconsin uses this approach, allowing CBRFs to provide up to three hours of nursing care per week and RCACs up to 28 hours of care overall, with exceptions for recuperative care.

The other approach sets a minimum, and residential care providers are permitted to set their own ceilings, which allows them to retain residents based on their ability to provide the services needed. Oregon uses this approach, which is less prescriptive, and based on the premise that people should be able to age in place and not be discharged when they reach a specific limit.

However, both approaches recognize that there are circumstances and conditions when nursing home care will be needed. States uniformly require that anyone needing 24-hour-a-day nursing oversight be served only in a nursing home, and some states specifically exclude certain conditions from being cared for in settings other than nursing homes. In Florida, for example, an extended care license permits residential care settings to serve waiver clients, but the statute prohibits them from admitting or retaining persons with specific conditions, such as persons on ventilators.

While most support this latter style of regulation because it permits residents to age in place, they note that it can lead to problems related both to inappropriate retention and inappropriate discharge. A few noted that aging in place policies bring with them liability issues, and this view was supported by others, who noted that with an increasingly older, more impaired and chronically ill population, providers were concerned about lawsuits and increasing premiums for liability insurance.

Even though most respondents felt that retention and discharge problems needed to be addressed, they agreed that rigid discharge requirements were not the solution.

Inappropriate Retention. In all six states, most frequently in North Carolina, inappropriate retention was mentioned as a problem. Inappropriate retention was attributed to residents not wanting to move from familiar surroundings, as well as to providers wanting to retain residents due to low occupancy rates. Several noted that while providers market to healthy, high functioning seniors, there are very few in that category who want to leave their homes to live in a residential care setting, no matter how nice. As one person said, "they can market to the healthy and independent, but the frail show up."

In just one state -- Texas -- a few respondents stated that waiver case managers often pressured facilities to retain a resident, even though rules allowed the facility to discharge based on the resident's condition or behavior. In some states, the reasons mentioned for inappropriate retention were more complex. For example, in North Carolina, there are no residential care settings licensed to care for individuals who need a nursing home level of care. Thus, when residents age and their needs increase, they need to be discharged to a nursing home. However, respondents cited several factors that keep residents in adult care homes past the point where they should be in a nursing home.

A few noted that a major problem in North Carolina is the lack of nursing home beds. Due to a previous moratorium and current CON program for nursing homes, nursing home occupancy rates are quite high. Given high nursing home occupancy rates, some said that it can be very difficult to find a Medicaid bed for a long-term heavy care resident, particularly as facilities often prefer to admit shorter stay Medicare funded residents. Additionally, the state has instituted more stringent nursing home level-of-care criteria for the Medicaid program, making it difficult for some residents whose needs exceed what can be provided in an adult care home from meeting this criteria.

Inappropriate Discharge. Many said that giving discretion to providers to determine when to discharge residents made it easy for them to discharge heavy care or "difficult" clients, even though these residents could be cared for in the community.

Some in Oregon felt that the state was moving away from an aging in place philosophy and was giving providers too much leeway over discharges. They felt that by allowing providers to set their own ceilings, corporate owned ALFs were able to "cream" the lighter care residents. They pointed out that on average, adult foster homes served more severely impaired residents than did ALFs, and that this was true in the state of Washington as well.

On the other hand, some felt that the state was taking a more realistic approach to aging in place, recognizing that individual facilities may have limits on the services they can provide. For example, a small facility that has only one staff person for ten residents can discharge a resident who needs a two-person transfer. Another facility with 20 beds may be able to handle three or four very heavy care residents, but not five or more.

In Minnesota, one respondent said the leading complaint about residential care settings was not lack of care, but "they are making me move." Similarly, in Wisconsin, several noted that a key complaint about RCACs was premature or involuntary discharge and that over half of the residents left because they needed more care than the facility provided. As mentioned previously, Wisconsin sets hourly limits on the amount of care that can be furnished, but providers are free to limit certain types of care, such as nursing, above the minimum required, and to discharge persons who exceed their own established limit.

One person in Wisconsin noted that hours of care is not the only indicator of need, noting that transfer issues cause some people to leave a facility long before they reach the maximum hours. This person also noted even if a facility provided 16 hours of hands-on care a day, it would not address the needs of persons with dementia who could not safely be left in their own unit with a locked door.

Several respondents in different states felt that states need to move away from the idea of aging in place, noting that in order to promote a range of residential care options, facilities needed to be able to market to a particular group. Some providers may want to market to the less frail and others to those with more acute needs. Those supporting this approach stated that people would have to choose a facility knowing they may not be able to stay there forever. However, those advocating this approach stated that to protect the clients and their families, there should be "no surprises down the road" and that full disclosure about the conditions for discharge should be provided before someone entered a facility.

In sum, the concept of aging in place appears to be one that is widely supported. However, even its strongest supporters recognize that many unresolved issues complicate its operationalization, even in states that are strongly committed to the concept, as is Oregon. In general, there was a feeling that aging in place was not working in practice. As one person in Wisconsin noted, the typical service approach is to "fit people into facilities rather than get the facility to match the person's needs."

Negotiated Risk Agreements

While some respondents strongly supported or opposed negotiated risk or shared responsibility agreements, many said they did not think there were any issues related to them, and others said they didn't know enough about them to comment. Those that were knowledgeable had conflicting views.

The most frequently cited situation where risk agreements were thought to be needed was the non-compliant diabetic. One provider, asked by a state inspector to explain why a diabetic was eating chocolate cake, responded: "Whose choice is it? The elderly person, the provider, or the government who is paying for service?" Many felt that properly prepared service plans should be able to address such situations and that negotiated risk agreements were not needed.

Others said that providers were very reluctant to have residents assume risk due to both outmoded paternalistic views and concerns about lawsuits. In Florida, where there is a major liability insurance crisis, some saw them as a potential solution, but one noted that trial lawyers opposed them and felt they would not hold up in a lawsuit. In other states, some felt that while families wanted freedom and autonomy for their loved ones, they still wanted the facility to be liable for anything bad that might happen.

A few respondents held the view that until elderly persons are adjudicated incompetent, they should be able to do whatever they want. While others agreed, they said that families would still hold a facility responsibility for a negative outcome.

Some felt that there were certain health and safety responsibilities that providers should never relinquish, and that since providers were paid to use their professional judgment to provide a safe environment, negotiated risk agreements should never be used where there are safety issues. For example, one provider noted that a resident with dementia should not be permitted to use a gas stove. This same person noted that it would be helpful if the state regulatory agency would define parameters -- and identify areas that are not appropriate -- for shared risk agreements.

Very few raised the issue of assessing competency to enter into and continue in a shared responsibility or negotiated risk agreement. When asked specifically about this issue, most agreed that the lack of a standardized method for assessing cognitive impairment and competency, particularly in persons with mild cognitive impairment, was potentially a major problem. One lawyer noted that if he were representing a resident who had signed such an agreement, the first thing he would look at was how a provider determined that the resident was competent to enter the agreement.

Oversight and Enforcement

Lack of oversight and enforcement of regulations was cited as a concern by at least one person in each state, but many Wisconsin respondents cited it as a major problem. Although some in Wisconsin felt that Community Based Residential Facilities (CBRFs) were over-regulated, most felt that the regulations were excellent but provided a good example of how regulations by themselves do not guarantee quality. All agreed that the major reason for lack of oversight and enforcement was inadequate funding.

On the other hand, Wisconsin's new assisted living model -- called Residential Care Apartment Complexes (RCACs) -- was developed as a minimal regulation model, and many felt that this model required more oversight. Several noted that the state's ombudsman program was not authorized to oversee the care of residents in RCACs and that consumer advocates in the state were working to amend the statute to allow them to do so.

One respondent noted that after several years of a consultative approach to RCACs, the state had realized that more oversight is needed and is now issuing citations. Initially, the state had only one staff person statewide for a new industry that built 5000 units in five years, which one respondent noted did not provide sufficient opportunity for consultation. With recent nursing home closures and reduced nursing home capacity, the state has transferred some of the nursing home enforcement staff to oversee RCACs.

Barriers to Expanding Medicaid Coverage of Services in Residential Care Settings

Respondents in all states cited similar barriers to expanding Medicaid coverage of services in residential care settings.

General Lack of Funding

In every state, respondents noted that expansion of residential care for low income elderly persons in general, and Medicaid-eligible persons in particular, would be very difficult given state budget shortfalls. In Florida, one respondent noted that people in residential care settings are not eligible for many public benefits, such as Food Stamps and energy rebates, because of program requirements regarding residency. Eligibility for such benefits was viewed by several respondents as a way to make the room and board component of residential care settings more affordable. In fact, persons who live in specific types of group community living arrangements with no more than 16 persons can receive Food Stamps if they are either blind or disabled and meet the federal financial eligibility criteria. Wisconsin has an initiative to encourage use of this option for residential care residents who would qualify.

Insufficient Capacity in the Waiver Program

Minnesota. Currently, insufficient capacity is not an issue because there is no waiting list for services. However, several respondents expressed concerns about future funding due to increased utilization of the more expensive Assisted Living Plus waiver service package, which includes a requirement for 24 hour supervision. These respondents felt that if the number of people receiving this package continues to increase, waiver slots may be capped.

Texas. All respondents agreed that the large waiting list for waiver slots was a major barrier preventing access, rather than affordability or provider availability issues. One felt that the lack of a guaranteed number of waiver slots was a disincentive for providers to enroll in the program. One provider said the state's bed hold policy was a major disincentive for providers to participate in the waiver program. This respondent said that providers could not afford to have a bed empty for 120 day periods, particularly more than once a year, because the room and board rate is only about $14.00 a day, much less than the private pay rate.

Another provider disincentive is the long time it takes to reduce the number of beds available to waiver clients in a participating facility even when there are no waiver clients to fill the beds. One respondent said that reducing the number of beds set aside for waiver clients usually takes 3 months after the request has been submitted, during which time the facility is losing money on the empty bed.

Wisconsin. In Wisconsin, respondents agreed that the major barrier to expansion is insufficient capacity in the waiver program. Approximately 9000 elderly and working age persons with disabilities are on waiting lists for the state funded Community Options Program and waiver services. Some noted that people who spend down to Medicaid eligibility in residential care settings often have to move to a nursing home because there is no waiver slot.

A few noted that residents and families do not understand why the state would pay more for a person in a nursing home rather than provide waiver services in residential care. But, as one respondent said, while on an individual basis it would cost less to keep people who spend down in residential care, fear of induced demand and fear of having a state funding source drive what's available keeps the state from expanding the waiver to cover people in residential care settings who have spent down. This person noted that doing so would make the waiver program an entitlement for people who spend down in residential care settings but not for people in their own homes. Over time, if the state kept everyone who spent down in residential care on the waiver, then it would wind up spending all of the waiver money in these settings and have very little left for home care.

Issues Related to Service Rates

Inadequate service rates were cited by some respondents in every state as a disincentive for providers to serve Medicaid beneficiaries. They said that service rates have not kept pace with the cost of doing business, noting that if the state restricts room and board payments to SSI or SSI plus a state supplement, then the service rates had to be high enough to cover not only the cost of services, but other costs such as training and, in Florida in particular, liability insurance.

Florida. One respondent noted that while the payment rate was 62 percent of the nursing home rate when the state started the Assisted Living for the Elderly waiver program in 1994, it had dropped to 37 percent in 2002. Another noted that the number of providers was decreasing because they couldn't afford to be in a program that pays so far below the industry standard that it becomes impossible to make a living.

Minnesota. Most respondents felt that Medicaid rates for residential care services are generally adequate; while lower than market rates, some providers accept Medicaid in order to fill empty beds. A few, however, voiced concerns that the state set a maximum rate but gave counties the discretion to negotiate lower rates. They felt that this led to inequities in payment rates. Several said that the state needs to develop tools to help counties determine the number of service hours needed by each resident, which would enable them to better match the reimbursement level to the services needed. One respondent noted that the state is working on developing a service rate that will vary according to the services provided and a more effective contracting mechanism for the counties to use, which will tie the service rate to the care plan.

North Carolina. A few respondents mentioned the need for a different rate system than the current one. There was consensus that the Medicaid payment rates are inadequate, particularly for residents with high service need, noting that Medicaid pays for only one hour of service a day and the rate for that hour -- $8.00 -- is inadequate to cover costs. Several noted that under the current payment system, there is no incentive to take heavy care residents and no incentive for providers who aspire to a higher level of care.

However, the low service rate was not perceived as a barrier to serving Medicaid clients in adult care homes because the state supplement for room and board was so high. But one respondent said that inadequate rates for dementia Special Care Units was a disincentive for providers to accept Medicaid residents. This respondent said that Special Care residents do not qualify for the enhanced personal care rate because Medicaid only pays this rate for hands-on physical assistance. He noted that because cueing a person to perform a task takes more time than doing the task for them, the reimbursement policy encouraged dependence. He felt that a case mix system would solve this problem.

Oregon. Most respondents did not believe that low service rates posed a barrier to residential care for Medicaid waiver clients. A few noted that because Oregon had capped room and board rates for Medicaid eligibles, the state had to pay sufficient service rates to attract providers. One noted that when the program began, setting the assisted living rate at 80 percent of nursing home payment was a clear signal to the industry that the state was encouraging assisted living development and the availability of assisted living for Medicaid waiver clients.

Others felt differently, noting that while rates had been sufficient for a while to get providers to participate, they had not kept pace with inflation and, in particular, rising insurance costs. One noted that acuity levels have gone up but the rates have not. Many felt that the proposed Medicaid budget cuts would lead some facilities to close, especially those that are highly dependent on Medicaid.

A few noted that if the state wants providers to enable people to age in place, the reimbursement rate structure has to take into account that it takes more time to take care of certain people, particularly those who need a two-person transfer or who have behavioral problems.

Texas. A few respondents thought that low rates were a barrier to the expansion of residential care for Medicaid clients. However, one respondent disagreed, noting that waiver payment rates used to be much lower, but that there had been increases to make the rates more competitive with private pay rates. This respondent said that there are now enhanced rates in exchange for the provision of better wages, workers' compensation coverage, and benefits to facility staff, but these rates might be at risk given the state's large budget deficit.

Wisconsin. There were major differences in views regarding the adequacy of service rates. Most respondents felt that market charges for room, board, and services were too high, and that the variation in these charges did not appear to be correlated with the quality of care. A few providers cited the state's payment policies as a problem, saying that Medicaid rates were too low or "wholly inadequate" to cover costs. Some expressed concern that people who spend down in RCACs will not be able to remain there because the facilities will not accept the waiver rate.

One respondent said that a major barrier to serving waiver clients in RCACs is that the state's statutory limit on waiver rates, which is 85 percent of the state's average nursing home rate, is almost double the actual waiver rate of $43 a day. Another respondent strongly disagreed, saying that the counties pay what they are asked to pay and do not have the expertise to figure out from the facility's cost report if they are overcharging. Wisconsin limits the profit on services provided to public pay residents to 10 percent, and a financial audit is required of all providers receiving $25,000 per year or more in public reimbursement. Some felt that counties do not have the expertise to enforce the 10 percent limit, and many facilities exceed it.

A few respondents expressed concerns about the effect of high Medicaid rates on the overall amount of funding available for home and community services, stating that the more money spent in residential care settings, the less available for home care. One said that serving people in residential care settings should offer economies of scale but, in fact, does not, noting that it can cost more to serve people in these settings than it does to provide services in their own homes.

A few respondents stated that the rates are not just for the services themselves, but cover additional operating costs, particularly those incurred to meet regulatory requirements such as training. At the same time, most who were critical of the rates recognized that the state does not have the money to increase them. A few others stated that the problem was not the rate per se, but the lack of a payment system that offers incentives to provide good care. One noted that the state needs to get away from a cost-based program because it does not provide an incentive to be efficient: "when you get efficient your rate goes down."

There was a consensus that it is not possible to get residential care costs low enough to be affordable for people with low incomes. One noted that providers think $2000 is a fair price and that $1600 a month is the minimum for good residential care, but most elderly who need it have only $500 a month to spend.

Administrative Requirements

Respondents in two states felt that some providers did not participate in the Medicaid program due to what was perceived as excessive paperwork. In Florida, one noted that quarterly inspections of Extended Congregate Care Facilities were a barrier to getting more providers into the program because of the substantial paperwork required.

In Texas, a few respondents said that the amount of paperwork involved in accepting waiver clients and the difficulties of dealing with a state agency keep some providers from serving these clients. For example, when a waiver client is involved in an incident in an ALF, the facility has to go through two different report processes, one with the regulatory agency and the other with the waiver program agency. Another said that the waiver program's audit process and the potential fines for what are essentially "clerical errors" are a disincentive for some providers to take waiver clients.

In some states, particularly North Carolina and Texas, respondents noted that residential care providers had to deal with too many agencies, which increased operation costs through the duplication of effort on both the part of the provider and the state.

Geographic Variability

A few respondents in Wisconsin commented that access can be limited in those parts of the state that have few residential care facilities and service providers. One noted that the state does not have a planning process to determine where residential care settings and nursing homes should be built, leading to overbuilding in some areas and inadequate supply in others. In some counties there may not be a facility within 100 miles of a person's home.

In Minnesota, where assisted living is a service model that can be provided in multiple housing types, only one person said that geographic maldistribution was a problem. A recent survey on the availability of housing with service settings in Minnesota reported variations of one facility per 5,000 persons to one facility per 10,000 persons.

Room and Board Charges are Unaffordable for Waiver Clients

Minnesota. Room and board or rental rates are not defined or controlled directly by Medicaid. However, Medicaid's financial eligibility rules do limit the amount of income that Elderly Waiver or Personal Care clients will have available to pay rent or room and board. If the client has inadequate income for room and board, the client may be eligible for the state's Group Residential Housing (GRH) program, which can be paid to a licensed or registered setting with which a county human service agency has negotiated a monthly rate. The amount of the GRH payment is based on a federal/state standard of what an individual would need, at a minimum, to live in the community. The maximum GRH room and board payment limit in 2003 is $680.

However, a few respondents noted that if private pay residents spend down to Medicaid waiver eligibility in a facility that does not accept Medicaid clients, they will have to move. Others may spend down to waiver eligibility in a facility that accepts Medicaid, but they may not be able to afford the rent, and have to move to other subsidized housing with lower rents. One said that many providers don't take Medicaid payment because they are concerned about having to continue serving people who spend down.

A few respondents said there are anecdotal reports that people are having to move when they spend down, but no data are available on how frequently this occurs. The state plans to start looking at the number of people applying for the waiver while in residential care to get some idea of the extent of spend down. One noted that most people who leave purpose-built assisted living go on to nursing homes and that it is not clear whether it is due to increased frailty or spend down.

Wisconsin. Wisconsin also does not limit the amount that Medicaid clients can be charged for room and board. There was general agreement among respondents that room and board costs in both RCACs and CBRFs were unaffordable for waiver clients. Some noted that the SSI payment does not cover the cost of room and board and said they didn't know any CBRFs that accepted the SSI benefit as the full rate. An industry survey in 2000 found that the average room charge without meals was $841 per month, but the typical waiver client's income is in the $545-$725 range.

There was disagreement about whether Wisconsin should limit the amount that can be charged to Medicaid clients for room and board. One noted that the issue had been discussed but rejected by the state's legislators, who wanted the market alone to decide the rates.

Another noted that while room and board costs are a barrier, there is no way to supplement these costs without cost shifting to other public funding sources, such as the Community Options Program (COP) -- the state's general revenue funded HCBS program. Some counties opt to use COP funding to pay for room and board for a few waiver clients in smaller CBRFs. Others felt it was a good idea to have facilities cross subsidize the Medicaid population -- have a small percentage of Medicaid residents with the majority private pay. They noted that each facility should be able to afford to take a few Medicaid residents and that a mix of clients also helps to assure quality.

A number of respondents felt that using state dollars with no federal match to pay for room and board gives too large a proportion of the state's HCBS funds to the residential care industry. Several respondents discussed the need for a greater supply of affordable residential care and stated that state and federal policy needs to create incentives to build more affordable units.

Philosophy of Home Care

Only respondents in Wisconsin felt that a philosophy favoring home care presented a barrier to serving Medicaid beneficiaries in residential care settings. They noted that many of the counties did not want to use public funding in residential care settings because they favored home care. One stated that many counties thought some CBRFs, particularly larger ones, were more like institutions. Given that the intent of the waiver program is to provide alternatives to institutions, some counties do not want to use limited funds in what they view as quasi-institutional settings. Others disagreed, saying that people living in residential care settings view that setting as their home and should be able to receive waiver services there if eligible.

Future Plans

When asked about each state's future plans with regard to Medicaid funding of services in residential care, most respondents discussed efforts to address problems with the current systems. A few discussed efforts to address barriers to increasing the number of people served.

Florida. A few respondents noted that Medicaid funded residential care could only expand if nursing home use was reduced and mentioned that a task force was meeting to study ways to reduce the nursing home bed base.

Minnesota. Most respondents agreed that the state is likely to continue the model of assisted living that is currently in place. However, they noted that while the budget is not having an impact on the availability of waiver service in the short term, it is not clear what will happen in the longer term, particularly if the Assisted Living Plus service continues to grow at its current rate.

Minnesota is developing ways to help the counties that administer the waiver program to set accurate service rates. One respondent stated that consumer advocacy was needed in the future to advocate for a bill of rights and to develop requirements for staffing and supervision.

North Carolina. The state is planning to move from a tiered rate for Medicaid personal care in adult care homes to a case mix reimbursement system to better match payment rates to residents' needs. It is developing a computerized system to enable them to perform the data analysis needed to support a case mix reimbursement methodology. In another area, a number of stakeholders are working with the legislature on a bill to allow family supplementation of room and board costs for people who spend down in assisted living facilities, as is currently allowed in nursing homes.

Oregon. One respondent stated that in the absence of a budget crisis, Oregon would probably want to expand and improve the current HCBS system, noting that the state is pretty close to a balanced system. Another said that the state's program has changed since its inception and will continue to change, noting that it is important for the state to continually assess the strengths and weaknesses of its program and make necessary changes. For example, the state is currently updating its residential care facility rules and is examining the role of community nurses in all residential care settings. It is also working on initiatives related to person-centered planning.

Another noted that the state's system for determining eligibility for nursing home and waiver services has been helpful in times of budget cuts because it provides a mechanism for the state to reduce the number of people being served based on level of need. However, this respondent said that the system is not perfect and the state wants to revise the criteria to incorporate more risk factors, such as chronic health care needs and medical acuity.

Texas. A number of respondents mentioned ongoing activities related to the Olmstead decision, with several advisory boards working on a range of issues. They noted that the state is asking for more waiver slots in the next legislative session, and that the state is conducting a pilot study using Olmstead relocation specialists to provide individuals in nursing homes with information on the full range of community options. The state is also developing a standardized care assessment process.

A number of respondents mentioned regulatory issues that the state is planning to address, including the 120 day bed hold rule that many providers oppose. The state is also tracking individuals transitioning out of nursing facilities into the waiver program. Because their funding is supported by the nursing home budget, the state wants to see if there are cost savings or whether those leaving the nursing facilities are simply replaced by new Medicaid clients.

Wisconsin. Wisconsin is developing a rate setting methodology and a model contract for counties and facilities to use for waiver clients in Residential Care Apartment Complexes, and is exploring ways to bill the Medicaid fee-for-service system for coverable services provided in residential care as a way to make optimal use of limited waiver funds. To do this, the facility would have to partner with a home health agency or county agency that is certified to bill Medicaid.

Several respondents noted that Wisconsin is also attempting to address the shortage of affordable residential care for low income persons in rural areas through a grant from the Robert Wood Johnson Foundation's Coming Home Program. They noted that the state was very interested in identifying new ways to combine housing and services that would be affordable for low income and Medicaid-eligible persons, such as maximizing the use of HUD Section 8 housing vouchers. However, others noted that these vouchers were not the solution because the amount of the voucher is not sufficient to pay rent in some areas. Additionally, they said that there are too few vouchers and many locales keep them for families with children because there is a real housing crisis for low income families and seniors have more housing subsidies. Given this, they felt it would be difficult to get housing authorities to designate money for residential care for elderly persons.

One respondent mentioned a legislative proposal under development that would enable persons leaving nursing homes to have the nursing home funds follow them to the community instead of having the money stay in the nursing home budget. This respondent noted that this measure is particularly important given that future Medicaid expansions are unlikely.

3. Suggestions for Improving the Medicaid-Funded Residential Care System: State and Stakeholder Views

Suggestions for Improvement

Those we interviewed had numerous suggestions for improving the Medicaid funded residential care system. Across the six states, there was general agreement about the most important areas to address. We present respondents' suggestions for these areas first, followed by suggestions specific to each state's system.

Increased Funding

Respondents agreed that additional revenue was needed to fund all components of the states' long term care system and that states needed to make more extensive use of the Medicaid program. However, given the current budget crisis in the states, virtually all realized that increased state funding was highly unlikely. Since many of the specific suggestions for improving the residential care system require funding, most were not optimistic that suggested changes would happen. However, several respondents in Florida felt that Medicaid coverage of services in residential care lowered nursing home utilization, and so saved the state money.

Increase the Availability of Residential Care

To expand the availability of affordable residential care, several suggested using other resources, such as HUD subsidies, social service block grant funding, food stamps, and any other public benefits for which elderly persons might be eligible. Some noted the difficulty of doing this when responsibility for the waiver program was in a separate agency that had few, if any, connections with the agencies handling other benefits.

Because Wisconsin does not limit the amount that residential care providers can charge for room and board, several respondents felt that the state needed to address this barrier in order to increase the availability of residential care for the Medicaid population.

Money Follows the Person Funding

Several respondents felt that states should allow long term care funding to "follow the person." Texas is using this approach by allowing money from its nursing home budget to pay for waiver services for people transitioned to home and community settings. State staff in Wisconsin are working on a similar "money follows the person" measure, which they plan to submit to the General Assembly for consideration.

Quality

Another area of consensus across all six states was the need to pay more attention to quality of care issues generally, and staffing issues specifically. To increase the recruitment and retention of direct care staff, many respondents noted a need for better pay and benefits, more training, career ladders, improved management, and better work environments.

In light of the older ages, higher levels of impairment, and chronic health conditions characteristic of residential care residents, several noted the need to increase both the quantity and quality of health and nursing services provided in residential care settings. However, one person in Oregon cautioned that what was needed was not more direct nursing services, but more nursing being taught and appropriately delegated.

Two respondents noted that more research is needed to help develop systems that assure quality in residential care settings that do not have nursing services available 24 hours a day. In particular, more information is needed to develop effective training for medication administration and management, and to identify methods to teach unlicensed personnel about disease management.

Several said that more outcome-oriented regulations would better assure quality, and that comprehensive standardized assessment instruments tied to quality indicators would help providers identify areas where improvement was needed. A number suggested a quality assurance approach that focused on identifying and fixing problems.

In Wisconsin, many said that the state needed to do a much better job of overseeing residential care settings, particularly Residential Care Apartment Complexes, and that greater enforcement of the state's regulations were needed. At the same time, they acknowledged that scarce resources were responsible for the state's falling short on enforcement.

Education

In Texas and North Carolina, some felt that physicians and hospital discharge planners needed to be educated about the differences between residential care settings and nursing homes. At least one person in each state felt that the state needed to help consumers better understand the long term care system generally, and the differences between different services options. Several said that consumers and their families needed a method to help them compare residential care options and choose those that were best suited to their needs and preferences.

Retention/Discharge

One person suggested that providers needed incentives to keep residents longer and disincentives for discharging them too soon. One respondent suggested denying additional Medicaid admissions to providers who "creamed" by discharging Medicaid residents too soon.

Service Rates

Rates were a major concern among respondents in all states, with agreement among state staff, providers, and consumer advocates that service rates must reflect actual costs. In states with relatively high rates, such as Wisconsin, some were concerned that providers are making too much of a profit. In states with relatively low rates, such as Florida and North Carolina, there are concerns about inadequate care.

In North Carolina, many said that the state needed to move to a case mix system, which the state hopes to do when it gets sufficient cost data and automated assessment data, sometime in 2004. In Florida, many said that the rates were insufficient to cover costs, and that the state needed to use tiered or case mix rates that were tied to nursing home rates and adjusted annually to account for increases over which providers had no control, such as liability insurance.

One respondent in North Carolina said that adequate rates for dementia care were a particular concern. The state recently enacted new regulations for dementia special care units in residential care settings, but did not authorize funding for it. As a result, few Medicaid clients with dementia are served in these units.

Family Supplementation

Oregon prohibits family supplementation and North Carolina allows it only in nursing homes. Florida, Minnesota, Texas, and Wisconsin allow it in residential care settings. Some respondents in Oregon and North Carolina recommended that families be allowed to subsidize the cost of a private room for people who spend down in residential care because it can improve the quality of life for Medicaid clients who otherwise would have to move from private to shared living quarters.

In addition to the general areas discussed above, respondents in each state also made suggestions for improving various aspects of the residential care system specific to their state.

Florida

Nearly every respondent believed that unless the liability insurance crisis was addressed, there was little possibility of expanding the waiver program, because facilities accepting waiver clients were getting increases in their insurance premiums in the 500 percent and higher range. Agreement on the solution was lacking. Some felt that the state should increase reimbursement rates to cover the additional insurance costs, while others felt the issue could not be resolved without major tort reform.

Minnesota

Several felt that the state should require all residential care settings to provide 24 hour oversight and supervision. Others believe that a home care bill of rights is needed for residential care residents, who are considered by the state to be living in their own homes.

North Carolina

Several respondents said the state should require adult care homes to serve distinct populations (e.g., frail elderly, persons with developmental disabilities, working age adults with serious mental illness), and should develop separate licensing standards and regulations to assure the quality of specialized services to address distinct population needs. Some said that the physical plant of the state's large stock of adult care homes needs to be upgraded.

Oregon

One respondent said that assisted living facilities built with low interest loans obtained from state bond financing should be required to serve a certain percentage of Medicaid residents for the duration of the loan. Another felt that the state should permit family supplementation for private or larger rooms in adult foster homes and residential care facilities. (Assisted living facilities have only private apartments.)

Texas

One respondent said that the state needs to use an aggregate rather than a per capita cap for waiver expenditures. Another said that the state needs to market the waiver program to residential care providers because some do not understand how the program operates, and others feel there is a stigma in taking Medicaid residents. Another felt that Texas needs to continue authorizing its "money follows the person" initiative, which allows funding from the state's nursing home budget to pay for waiver services for people who transition from nursing homes to the community.

Wisconsin

One said that the use of the term "assisted living" should be restricted to RCACs, which provide only private apartments. Several said the state should authorize the operation of the ombudsman program in RCACs. Several also said that the state should expand the pilot Family Care program statewide, recognizing that it may be difficult during the current budget crisis.

Recommendations for Other States

We asked our respondents, particularly those who worked for the state, if they had recommendations for other states seeking to use or expand Medicaid funding in residential care settings. Most of the recommendations came from Oregon state staff, in large part because their program has been in effect for a long time. Oregon's system is often held up as an ideal because over 80 percent of Medicaid clients receiving long term care services are served in home and residential care settings.

The recommendations provide guidance for other states who want to offer a range of residential care options for both the low income private pay market as well as the Medicaid population. Virtually all of these recommendations assume that a state will be using a waiver program to pay for services in residential care settings. Key points made in all the recommendations are summarized below.

Development

Determine how Medicaid-funded services in residential care settings will fit within the overall publicly funded long term care system. Decide what target population to serve at what level of care, and be sure that all the pieces of the long term care system work together.
Secure buy-in from providers, including nursing home providers, and consumer advocates. Don't sell assisted living as saving money by taking people out of nursing homes or diverting them from nursing homes. Even if there are no cost savings, it is still better to have more options than just the home and the nursing home.

Room and Board

It is not possible to provide residential care options for the Medicaid population unless the room and board component is affordable. States need to figure out a method to make room and board costs affordable for the Medicaid population and low income persons.

Services

Services must address not only functional limitations but the health and nursing needs of an increasingly older population with chronic health problems. If the program is going to allow people to age in place, a "light care" model is not going to work for waiver clients.
A good case management system is essential, as is a system of nurse consultation and teaching, nurse supervision, and nurse delegation.

Quality Assurance

Build in an adequate quality assurance system from the outset. Start with a well-defined idea of what the service package will be and what quality outcomes are expected.
Assure that the state's regulatory agency subscribes to the planned service philosophy.
Recognize that different licensing and regulatory provisions may be needed to serve the Medicaid population, particularly those who meet the criteria for a nursing home level of care.
Special training requirements and other rules may be needed for facilities that market themselves as special care units for people with dementia.
Residential care settings providing services to waiver clients need to be surveyed on a regular basis with a similar but different focus than nursing homes. Residential care needs a different model of quality, one focused on protection, service needs being met, and livability.
Provide flexible oversight and quality improvement activities that are designed to take more of a teaching role rather than an inspection and sanction role.

Administration

If at all possible, have the responsibility for policy in one administrative agency that designs programs, pays for Medicaid, regulates the entire long term care system, and encourages development of the residential care sector. Having a single administrative agency can help to ensure that licensing rules will be effective for both private pay and Medicaid clients.
Good lines of communication between the program and licensing staff are essential when developing the licensing requirements and establishing program operating procedures.

Financing

Given the budget crises facing most states, if a state is planning to start covering services in residential care settings through Medicaid, they should consider using a separate waiver program for assisted living only and limiting the number of slots. This approach will enable the state to fine tune the program and keep spending under control. Additionally, if funding is limited, home care will not wind up competing with residential care for the same funds.

Public Education

Assure that individuals and their families have sufficient information about the different types and levels of care provided in different types of residential care settings. Both private pay and Medicaid clients need to understand the limits. States need to set strong disclosure requirements so that prospective residents understand they may have to move if the setting cannot meet all their needs.

4. Concluding Remarks

This report is the first to examine in depth the issues with which states are dealing when using Medicaid to cover services in residential care settings. In each of the six states, there is very strong interest in developing affordable residential alternatives to nursing homes that will provide quality care. All of the respondents we interviewed believed that their states' decision to use Medicaid to provide services in residential care settings was the right one. In states using the personal care option in their state plan, respondents felt that Medicaid had brought much needed revenues to a residential care sector that historically had been under-funded for SSI recipients. In states using the waiver program, respondents felt that by providing an alternative to nursing homes for waiver clients who cannot be served at home, Medicaid funding had both afforded consumers additional long term care options and had saved the states money.

The individuals interviewed for this report were typically quite candid in their comments, which frequently reflected their frustration in coping with the challenges of developing affordable residential care. State staff, in particular, find themselves grappling with a number of issues that require the reconciliation of what appear to be inherently contradictory goals. These issues are:

finding ways to cover the actual costs of serving frail older individuals with chronic care needs in residential care settings, when Medicaid is not permitted to pay for room and board and the payment sources available to cover room and board are insufficient;
finding ways to meet expectations for privacy, amenities, and quality services that have been set by the private pay dominated model of "assisted living" when Medicaid cannot afford to pay private pay rates;
finding ways to make it possible for individuals to "age in place" without making residential care settings into de facto nursing homes by virtue of having to meet the needs of ever older and more impaired residents;
finding ways to give consumers a sense of what they should reasonably be able to expect from a setting that calls itself "assisted living" or "adult foster care" or some other name, without imposing uniform definitions through state regulation; and
finding ways to assure a minimally acceptable quality of care without imposing rules that stifle improvements and without the regulated "floor" becoming the "ceiling."

Appendixes

Appendix A. Selection of States

We used a number of criteria to determine which six states to include in the study:

Diversity in state options for covering Medicaid services in residential care settings: through the waiver, the state plan, or both;
Length of experience using Medicaid to pay for services in residential care settings;
A significant number of people served;
Geographic/regional diversity; and
Program diversity.

To inform the final selection, we also reviewed published information about each state's residential care systems and consulted several experts. Based on their input and our review of the literature, we selected Florida, Minnesota, North Carolina, Oregon, Texas, and Wisconsin.

Key features of the six states that were considered in making our selection are listed below.

Florida Southeast region	Covers services in residential care through both the waiver program and the personal care option. State uses the 300 percent special income option. The state sets rates for services only and allows family supplementation of room and board costs. State uses flat rates and pays $28 a day. Nursing home/waiver level-of-care criteria are not stringent. The state has major litigation problems.
Minnesota Midwest region	Covers services in residential care through the waiver program. Approximately 3190 participants. State uses the 300 percent special income option. The state sets rates for services and room and board and does not allow family supplementation. Most states define and regulate residential care facilities. Minnesota defines assisted living as a service and not a place. The housing component is more like rental housing and is licensed like hotels. Other entities provide the services. The state has a housing subsidy program to help Medicaid clients pay for room and board.
North Carolina Mid-Atlantic region	Covers services in assisted living through the personal care option. Approximately 18,533 Medicaid beneficiaries in residential care settings, the largest number of any state. The state allows family supplementation in nursing homes and is currently looking at allowing it in residential care settings.
Oregon Northwest region	Covers services through the waiver program since the early 1980s. Approximately 2572 participants. State uses the 300 percent special income option. The state sets rates for services and room and board and does not allow family supplementation. The state uses nurse delegation extensively. They've enacted recent regulatory changes related to negotiated risk agreements.
Texas Southern region	Covers services in assisted living through the waiver program. State uses the 300 percent special income option. The state also uses the state plan to cover personal care in small group homes under very specific circumstances. The state legislature has authorized a "money follows the person" initiative, which allows funding from the state's nursing home budget to pay for waiver services for people who transition from nursing homes to the community.
Wisconsin Midwest region	Covers services in residential care settings through the waiver program and the personal care option, and serves approximately 1018 participants. State uses the 300 percent special income option. State does not allow family supplementation. Counties negotiate rates with providers, which include a basic payment and variable payments based on client care needs. The state has two different models of residential care, one highly regulated and the other not.

Sources of Information

Written Documents

We reviewed information about each state's Medicaid program and residential care systems that we obtained from the states' websites and from documents sent to us by state staff. We also reviewed published sources of information about each state from standard references. Sources of information for each state are included at the end of each state's description in Appendices B through G.

Consultation with State Staff and Policy Makers

We consulted with Medicaid program staff and policy makers and other key staff to obtain information not otherwise available and to clarify information obtained through the Internet and other sources. We asked the most knowledgeable staff person in each state to review the state description for accuracy. In some states, more than one person reviewed particular sections of the report, depending on their expertise.

Interviews

We consulted with experts to obtain the names of knowledgeable people in each state to interview. We also identified individuals from each state's website, for example, directors of state provider associations. We then used a "snowball" approach to identify other individuals to interview. To obtain a range of views, we conducted interviews with several types of stakeholders: (1) current and former state Medicaid staff and policy makers as well as key state staff in relevant areas such as housing and licensing, (2) residential care providers and representatives of professional associations that represent providers, (3) representatives of consumer interests, including ombudsman and consumer advocacy groups, and (4) academic experts and independent policy analysts.

Appendix B. Florida

The information in this appendix is presented in three major sections:

The first section provides an overview of the state's long term care system, with a primary focus on the Medicaid program. Although a state may pay for services in residential care settings through the Medicaid program, the program's financial eligibility criteria and related financial provisions for home and community services can present barriers to serving Medicaid clients in these settings. Thus, the first section of each state's description presents detailed information about rules related to financial eligibility, spousal financial protections, and cost sharing requirements.
The second section describes the state's residential care system.
The final section presents the views of respondents interviewed for this study on a range of issues related to Medicaid coverage of services in residential care settings in their state.

Because the information in the first two sections is intended to serve as a reference, some information is presented under more than one heading to reduce the need for readers to refer back to other sections for relevant information.

Unless otherwise cited in endnotes, all information presented here was obtained from the sources listed at the end. Supplemental Security Income levels, the federal poverty level, federal spousal protection provisions, state supplemental payments, and state reimbursement rates are for 2003, unless otherwise noted.

I. Overview of Long Term Care System

Nursing Homes

Florida has two types of nursing homes--Skilled Nursing Facilities and Skilled Nursing Units. Skilled Nursing Facilities (SNFs) are either freestanding or part of a continuing care retirement community (CCRC) and are governed through special contracts. Skilled Nursing Units (SNUs) are based in hospitals. They typically provide only short term care and rehabilitation services. The skilled nursing unit is licensed as part of the hospital.¹ The state has a moratorium on nursing home construction, effective July 1, 2001 through July 1, 2006.

Medicaid reimburses for nursing facility services for Medicaid clients who meet Florida's Institutional Care Program (ICP) eligibility requirements. There are three levels of nursing facility care--Skilled, Intermediate 1, and Intermediate 2. Approximately 77 percent of the state's 2002-03 long term care budget is for nursing home services.

1. There were 703 SNFs (including SNUs) in the year 2000 in Florida, with 81,163 beds; 52,649 were Medicaid beds. (Personal communication, Jennifer Salmon)

Waiver Programs

Florida has twelve home and community-based waiver programs, including several that serve substantial numbers of elderly persons or only elderly persons.³ The two major waiver programs that serve older persons are:

The Aged/Disabled Adult (ADA) waiver, which was implemented statewide on April 1, 1982. Generally, it does not serve people in residential care settings, only eligible individuals in their own homes.
The Assisted Living for the Elderly (ALE) Waiver serves recipients who reside in qualified Assisted Living Facilities (ALFs). The waiver program was implemented in 1995 as a small pilot and was expanded to statewide waiver status in 1997.

When the ALE waiver was initiated in 1995, the State planned to serve 220 individuals with a $2.3 million appropriation, averaging $10,454 per person a year. In 2001, the state served 3,179 ALE recipients receiving an average annual ALE reimbursement of $9,937.

3. Two additional waiver programs that serve elderly persons are:

The Consumer-Directed Care Research and Demonstration Waiver is an 1115 waiver program, which is available in certain counties for individuals receiving services through the Aged/Disabled Adult and other waivers. Individuals chosen to participate in the experimental group are allowed to "cash out" services on their current care plans and receive a monthly benefit through a fiscal intermediary to purchase services directly from a provider of their choice. The program was implemented in 2000. There was difficulty in getting CMS to approve operational protocols related to coverage of services in assisted living facilities.
The Medicaid Nursing Home Diversion (NHD) Waiver provides services to 868 functionally impaired elderly persons age 65 and over who are at risk of nursing home placement in Palm Beach and the Orlando area. Dual eligible (Medicare and Medicaid) individuals that meet clinical eligibility criteria may choose to receive both long-term care and acute care services under the NHD Waiver. Managed care providers that have contracted with the state under the NHD Waiver are responsible for Medicare co-payments and deductibles. Providers are reimbursed at a capitated rate, on a per member, per month basis to enrolled Medicaid providers.

Personal Care Option

Personal care services were added to the Medicaid state plan in 2001 and are provided through a program called Assistive Care Services. Persons who live in their own homes are not eligible to receive personal care services through the Assistive Care Services program. Only persons who need an integrated set of services on a 24-hour basis and who live in licensed assisted living facilities or licensed adult family care homes may receive Medicaid funded personal care services. These services are also available to residents of some mental health residential treatment facilities, which serve primarily younger adults with mental illness. Services must be based on need as confirmed by an assessment and provided in accordance with an individual service plan for each resident.

Prior to the addition of personal care services to the Medicaid state plan, the state paid for some personal care services in residential care settings with a state supplement through the Optional State Supplementation (OSS) program, which is funded by general revenue funds. (OSS is not provided to individuals who live in their own homes.) Once personal care services were added to the Medicaid program, the state reduced the OSS payment and used the money saved to provide the state match for Medicaid personal care services.

Prior to Medicaid coverage of personal care services, residential care facilities that provided room and board and some personal care could receive up to $730 a month (the combined SSI+OSS payment level). Although the maximum OSS payment has been reduced,⁶ with the addition of Medicaid personal care service payments, residential care providers can now receive up to $847.80 per month to cover room and board and personal care services. This amount includes $569.40 paid from the resident's income for room and board, plus $9.28 per day for personal care services paid by Medicaid.

6. The maximum payment is $78.40 per month.

Long Term Care Programs Funded with State Revenues Only

The state has three major programs for elderly persons funded solely by state general revenues, namely, Alzheimer's Disease Initiative, Community Care for the Elderly, and Home Care for the Elderly.⁹ Local areas, called Planning and Service Areas, provide a range of services that are instrumental in keeping frail elders out of nursing homes, including: Personal Care, Homemaker, Chore, Respite, Case Management, Skilled Nursing, Home Health Aide, Home Delivery Meals, Transportation, Adult Day Care, Emergency Alert Response, and Home Repair and Modifications.

Alzheimer's Disease Initiative (ADI) provides services to people with Alzheimer's Disease and other types of dementia who do not meet Medicaid financial criteria or who are waitlisted for HCBS waiver services. Respite services are provided to caregivers in all 67 counties of the state, with a service limit of 30 consecutive days for extended (24 hour) respite.

Although there is no income eligibility ceiling for ADI, cost sharing is required, beginning at 150 percent of FPL and ending at 300 percent FPL, at which point the consumer pays 100 percent of costs. If assets are over $2,000, 5 percent of the value divided by 12 is added to the monthly income amount. The maximum cost-sharing amount that an individual pays is 15 percent of adjusted monthly income.

Community Care for the Elderly (CCE) is a program for frail elderly persons, age 60 and older, who do not meet Medicaid financial or service criteria, or who are waitlisted for HCBS waiver services. Eligibility is based, in part, on a client's inability to perform certain daily tasks essential for independent living, such as meal preparation, bathing, or grooming. This program provides case management along with additional home and community services. Financial eligibility criteria are the same as for the ADI program and cost sharing is required on the same sliding scale basis. Agencies may use the CCE program while waiting for a waiver slot, but sometimes the CCE program also has a waiting list.

Home Care for the Elderly (HCE) provides a subsidy ($104 per month in 2002) to help relatives keep a low-income elderly person in their own home or in the home of a caregiver. There is also a special subsidy available as a supplement for specialized health care needs. The program serves individuals aged 60 or older who do not meet Medicaid service criteria. HCE has an income eligibility ceiling of $1,635 per month (300 percent of SSI) with an asset limit of $2,000 in countable assets. An eligible HCE participant must be at risk of nursing home placement.¹⁰

The financial and service eligibility information is taken from Kassner, E. and Williams, L., Taking Care of their Own: State-funded Home and Community-based Care Programs for Older Persons, AARP, September 1997. Other details of the programs are from the Department of Elder Affairs website and personal communications.
One respondent felt that this program is more cost effective than the waiver program in preventing nursing home placement because many caregivers become financially dependent on the subsidy, which while not large, can be critical for a poor family. If this situation occurs, it may not always be in the best interests of the elderly person who needs services that the family can not provide.

II. Residential Care Settings

Florida has two major types of residential care settings primarily for elderly persons: assisted living facilities (ALFs), which were called adult congregate living facilities until 1997, and adult family-care homes (AFCHs). Each type of setting has similar but separate licensing and regulatory requirements. ALFs that meet basic license requirements may apply for a special license for specific purposes, as described below.

Residents in AFHCs and ALFs can receive personal care state plan services as long as they meet Medicaid's eligibility requirements and the facilities meet the regulatory requirements for providing these services.

Residents in only two types of ALFs--those with a Limited Nursing Services (LNS) license and those with an Extended Congregate Care (ECC) license--can receive Medicaid waiver services, as long as they meet the nursing home level-of-care criteria and the facilities meet the regulatory requirements for providing these services.

Adult Family Care Homes (11)

Adult family-care homes (AFCHs) are defined as a family-type living arrangement in a private home providing room, board, and personal care for no more than five disabled adults or frail elderly persons. Persons who provide room, board and personal care services in their own homes must obtain an AFCH license unless they are caring for one or two adults who do not receive a state supplement, or they are caring only for relatives. Persons who wish to care for more than five disabled adults or frail elders must obtain an assisted living facility license. A maximum of two residents may share a room.

AFCHs are an alternative to more restrictive, institutional settings for individuals who need housing and supportive services, but who do not need 24-hour nursing supervision. The personal care available in these homes, which may be provided directly or through contract or agreement, is intended to help residents remain as independent as possible in order to delay or avoid placement in a nursing home or other institution. A terminally ill resident who no longer meets the criteria for residency may continue to reside in the AFCH if receiving hospice services from a licensed provider who coordinates any additional care needed. In 2002, the state had 416 adult family care homes with 1784 beds.¹²

The information in this section draws heavily from Manard, B. et al., op.cit., with some additional comments from personal interviews with current state staff. Adult Family Care Homes were originally called Adult Foster Home (AFHs), a licensing category created in 1968 to provide a community housing alternative for mental hospital patients being de-institutionalized. While some de-institutionalized mental health clients were also sent to Adult Congregate Living Facilities, proportionally more were in Adult Foster Homes. Over time the program evolved to serve elderly persons almost exclusively.
Personal communication.

Adult Congregate Care Facilities/Assisted Living Facilities

Adult Congregate Living Facilities (ACLFs) have operated in Florida since 1975. In 1992, the state had 1500 facilities (most of which had 16 or fewer beds) serving approximately 50,000 people a year, most of them private pay. These facilities provided room and board, assistance with one ADL plus personal services, and supervision of self-administered medication.¹⁴

In 1993, a new licensing category of ACLF was implemented, called Extended Congregate Care (ECC).¹⁵ The rationale for the creation of this new category was that the state did not have a residential care option for people who needed substantial levels of personal or home health care, but not the level of skilled nursing care provided in nursing homes. Consequently, individuals with this level of impairment had to enter a nursing home, at a much greater expense to the state. The ECC licensing category addressed this gap.

The ECC licensure category was designed to allow residents to age in place but was not intended to be a scaled down nursing home license. Rather, it was intended to create a residential care entity that incorporated the values of the state's in-home programs: autonomy, privacy, dignity and aging-in-place in the least restrictive environment.
Initially, ECC services were only available to private pay residents. Few facilities serving lower-income residents applied for the license until the Assisted Living for the Elderly (ALE) waiver program was implemented as a small pilot in 1995 and was then expanded statewide in 1997.

In 1995, adult congregate living facilities were renamed assisted living facilities (ALFs). ALFs are defined as a residential care setting that provides housing, meals, personal care services, and supportive services to one or more adults of all ages who are typically unable to live independently and are not related to the owner or administrator by blood or marriage. ALFs are for elderly or disabled persons who do not need 24-hour nursing supervision, except for those receiving hospice services from a licensed hospice, who may continue to reside in an assisted living facility.

Four ALF licensure types are available: standard, limited nursing service, limited mental health, and extended congregate care. Facilities applying for a specialty license must first meet the criteria for a standard license.
In 2002, Florida had 2307 ALFs with 77,369 beds; of these, 3,207 were ALE waiver beds. In 2002, ALFs reported 13,338 potential beds for persons eligible for OSS and ACS, though as of June 2002, not all were filled.¹⁶ During the state fiscal year 2001-2002, the Assisted Living for the Elderly waiver program served 3,982 individuals.

Manard, B. et al., op.cit.
The information on the creation of the ECC licensing category is drawn from a report prepared for the Commission on Long Term Care in Florida, Assisted Living and Extended Congregate Care: The Florida Experience, by Larry Polivka, Victoria M. Sims and Jennifer R. Salmon, Florida Policy Exchange Center on Aging, August, 1996, with additional comments from a number of personal interviews conducted in October 2002.
Salmon, J. R., et al., Affordable Assisted Living Facilities: Government-Sponsored Benefits for Reimbursing Assisted Living Services, Room, and Board, Florida Policy Exchange Center on Aging, Tampa, Florida, September 15, 2002.

III. Summary of Interviews

In addition to consulting with thirteen state staff and policy makers regarding the technical details of the state's programs, we also interviewed seven of them. In addition, we interviewed seven key stakeholders, including representatives of residential care provider associations, residential care providers, consumer advocates, a consumer association, the state ombudsman program, and the agencies that administer the state's home and community services programs.

The interviews focused on respondents' views about several key areas and issues. This section summarizes their views and provides illustrative examples of their responses. These comments are not verbatim quotes, but have been paraphrased to protect the respondents' anonymity and edited for brevity. A list of information sources for the state description and the individuals interviewed can be found at the end of this summary.

General Comments About the State's Residential Care System

Because residential care facilities serve both private pay and Medicaid residents, a few respondents expressed views about the industry as a whole.

There is confusion among the public about long term care options.
One study showed that the most satisfied folks were those in assisted living, whereas people at home were not doing so well, primarily because there is a tremendous amount of unmet need at home.
Adults receiving HCBS services at home are like latch-key adults, they should be in an ALF, where we provide emotional security.

A number felt that the state was achieving its goals and being responsive to stakeholders.

I have been writing regulations since 1990 and supervising statewide training, and implementing the ACS program. It takes a long time but you do get to see some goals accomplished.
I am pleased with the willingness of the state to look at ideas and experiment and come up with different concepts, to listen to providers, and to be flexible; there is a good dialogue.

Comments about privacy in residential care settings indicated disagreement among providers and other respondents.

It is very clear that people want private rooms; it is so important in terms of their dignity. But sometimes, there are more than four in a room in an ALF, it looks like a ward.
The ECC regulations define "privacy" as encompassing dual-occupancy with a choice of roommate where possible. This is the stated philosophy of "privacy."
Sometimes when we're conducting surveys we see more than four individuals sharing a room in ALFs. In our work, we have found that the issue of privacy is very important to consumers, and single rooms are definitely preferred.
Some elderly people prefer to have a roommate as it gives them a sense of security.

There was disagreement about the need for additional adult foster care homes.

We should expand the use of adult foster care homes. They have slightly less stringent regulations, and are very successful in Oregon. In Florida the AFCH program has been shown to have good outcomes.
I disagree 100 percent that adult foster care homes should be expanded because they do not have enough oversight.

General Comments on Medicaid's Role in Residential Care Settings

On the whole, most respondents were pleased with the success of the Assisted Living for the Elderly waiver program and the more recently introduced Assistive Care Services (ACS) program. They felt that these Medicaid programs have made a real contribution to long term care options for low-income elderly.

The state added Medicaid funded personal care services because the state supplement was woefully inadequate to cover services.
People were becoming more frail and needing more services, but not qualifying for a nursing home, and couldn't afford a private ALF. Under ACS they can now get some services.
The waiver program has achieved the primary goals of cost saving, reduction in the nursing home bed base, and more humane alternatives. Each dollar spent on the waiver would have cost $2.70 cents in the nursing home. The Nursing Home Medicaid average cost is $2,835 per month.
More exciting than the ALE waiver was the inclusion of personal care in the Medicaid state plan and the creation of the Assistive Care Services program. It is the key to the state's efforts to provide additional revenues to ALFs.
ACS has been instrumental in attracting providers who were reluctant to take state supplement recipients in the past and provides Medicaid funding for frail elders who are not as impaired as waiver clients.
We have made some real strides, even in the last 5 years; it was a big step to get Medicaid funds into assisted living.

However, there were criticisms regarding unequal treatment for those with mental health diagnoses, and other inequities.

The biggest barriers in Medicaid are for those with serious mental illness (SMI). A high percentage of people receiving state supplements have SMI and have not been able to access Medicaid-funded services.
There is an arbitrary definition of mental illness according to income. In the statute it specifically states that persons with "certain psychiatric impairments who receive a state supplement" must be served in a facility with a Limited Mental Health (LMH) license. Because facilities that serve private pay residents did not want to meet LMH requirements, only poor people get a mental health diagnosis.
The waiting list for waiver services is prioritized by acuity levels. Based on acuity some people can wait two years for waiver services and others can be served straight away.

Licensing and Regulatory Requirements

Respondents had conflicting views about licensing and regulatory requirements. Many expressed concerns that the combination of ECC licensing and Medicaid waiver funding is moving some assisted living facilities more towards a medical model.

ECCs should be regulated because they are providing nursing services. The only difference between nursing homes and ALFs is that nursing homes are an entitlement program. But many people served in both settings have the same needs.
Really sick people are being served in Extended Congregate Care ALFs, but you can find nursing home residents having a drink in a bar. Some nursing home residents have cars, one man was running his business from the nursing home.
ECC ALFs do not want to become mini nursing homes, we want to be part of home and community services. But in most peoples' eyes we are considered institutions; we need to get out of our 400 chapter, and into the 430 chapter.²⁰
My biggest concerns about all these studies is that they will lead to additional requirements. We need to be aware of the diversity of ALFs in Florida. Prescriptive regulations do not help anyone. We need to be creative and respond to needs. Making facilities take more impaired people isn't a good idea either.

One had very strong recommendations about licensing and regulation.

We should abolish specialty licenses, that is, limited nursing services, limited mental health, and extended congregate care. ALFs are the residents' home and we should apply the same approach that is used when relatives can no longer provide proper care in the home, i.e., acquire more services through alternate resources. The individual should have a choice and the caregiver should have a choice. Delivery of care should be based upon the agreed tenets of shared risk or negotiated risk.

By moving ALFs out of Chapter 400 (Public Health, Nursing Homes and Related Health Care Facilities) and into Chapter 430 (Social Services, the Department of Elder Affairs), there would be more sharing of resources and consumers could be offered a greater selection of programs. I also suggest amending Chapter 430 to allow the governor to appoint an additional member to the Department of Elderly Affairs Advisory Council from the Florida Assisted Living Association. This would allow the assisted living industry to represent this continuum within the department's structure.

Several expressed concerns about specific licensing and regulatory requirements that were considered unnecessary and in some cases, added unnecessarily to costs.

We are in the people profession and we are being controlled by the politicians. You cannot legislate heart and caring, only criminal intent. How do you keep a homelike environment with all these signs on the walls?
Regulations should not get in the way of quality of life; they should address health and safety issues but not constrain the facility's ability to meet residents' preferences.
Rigid nutrition regulations are one of the industry's pet peeves. Facilities are required to prepare meals based on the pyramids, but nutritious meals may not provide the food that people like to eat.
I had a diabetic on medicine, she was in her 80s. The inspector wanted to know why she was eating chocolate cake. The question is, "Whose choice is it, the frail elder who requires services, the provider of the service, or the Government who is paying for the service?"
The rules state that a stock supply of over-the-counter medications for multiple resident use is not permitted in any facility and non-prescription drugs, when centrally stored, must be labeled with the resident's name. In practice, this means that I cannot give a resident an aspirin for a headache from a stock bottle.

One noted that regulations were always needed to deal with bad providers, and said that the best regulations can do is to require the key indicators of health and safety and then "get out of the way" and let providers deliver care. Another noted that the ombudsman program used to take a problem solving approach, but recently have adopted an adversarial approach.

A number expressed concerns about the proliferation of unlicensed (i.e., illegal) facilities.

There are many unlicensed board and care homes providing services for private pay. It is an underground network; you can see them all around the neighborhood; they are family businesses, Filipino and Hispanic, which provide services to members of their communities.
There are board and care homes, unlicensed, that are not supposed to provide personal care services. But they do and try to get away with it. Residents with incomes higher than SSI will pay for services. But OSS and Medicaid won't pay for anyone in a facility that is not licensed.

20. Florida Statutes, Chapter 400 is the "institutional" chapter and covers nursing homes, adult day care centers, adult family care homes, and assisted living facilities. Chapter 430 covers the community based services, such as Community Care for the Elderly, Home Care for the Elderly, Alzheimer's clinics, Respite for elders, and others.

Admission and Retention Requirements, and Aging in Place

Most respondents were satisfied with admission and retention regulations, but several raised concerns.

They are about right, I would like minor variations for standard ALFs. For example, under current regulations, if a resident's doctor orders support hose, that person needs to go into an ECC. Also, portable oxygen is controversial, but you see people in the supermarkets with it, so why not in a standard ALF?
I think the regulations for retention are fair, but when residents deteriorate staff may not pick up on it. The press have reported horror stories of people in ALFs who did not get the care they needed.
Mixing old and young folks in the same facility can work but can also cause problems between residents and there are no regulations for discharging an undesirable resident. Facilities need to give notice of 30 to 45 days, and it must be an appropriate discharge.

Barriers to Serving Medicaid Clients in Residential Care Settings

Respondents noted a number of barriers.

Suggested Changes to Improve the Medicaid-Funded Residential Care System

Most of the recommendations were tied to funding and eligibility issues.

I would like to see greater expansion of assisted living by tapping into all the potential funding sources. We need to have Housing and Elder services talking to each other.
People should be able to get the state supplement and remain in their homes. Sometimes, a nursing home resident is discharged to a homeless shelter because they don't have enough money to pay rent.
I would raise the financial eligibility to 400 percent of SSI. There are many people who are middle class and have a parent who can pay $1,000 a month for an ALF, but they have no extra money to pay for medications, etc. I recommend a sliding scale for cost sharing.
The budgetary and insurance barriers could be overcome through cost of living adjustments and tying waiver reimbursement to a percentage of nursing home costs in each area. We also need tiered rates, and reimbursement that covers the extra cost of liability insurance.
The number one reason that people go into nursing homes is that they don't have a caregiver. I would change the Aged and Disabled Adult waiver, because it does not pay a caregiver subsidy like the state programs do, which is significant in keeping frail elders out of a nursing home.
I wish there were more targeting of the lower income folks. Right now, one-third of the folks on the waiver qualify at the 88 percent Poverty Level, and the other two-thirds are above that threshold. The waiting list should not be prioritized by acuity but by income.
The reimbursement for providers participating in the Assisted Living Waiver should be adjusted annually to cover increases in expenses, including liability insurance costs.
You need a program that says here is a pot of money, not earmarked for nursing homes, tie the money to the individual not to the program. Tie the Medicaid to an individual care plan, not to a program
We need tiered rates and we require a case manager to assess on a semi-annual basis, so the provider can report changes in levels of care.

Future Plans

Most respondents were optimistic about the future of assisted living, although realistic about the barriers to Medicaid funding as noted in the previous section.

Assisted living has to expand because it is cost effective. It is the best option for nursing home diversion.²²
State plans to expand have not been articulated in writing, but are being discussed. There is a work group now trying to control the growth of nursing home beds. There is a moratorium on new beds, but some were already planned before the moratorium went into effect.
Right now there is a task force meeting to study ways to reduce the nursing home bed base. The nursing home industry doesn't want more Medicaid clients because the reimbursement is well below real costs. They are making money with Medicare, but they can't expand because of the moratorium.
Expansion of publicly-funded assisted living is inevitable. The future looks great, we have to look at how we spend our dollars because there are going to be less of them.

Other reasons given for optimism is that the ALE waiver is popular with the legislature and Assistive Care Services has received real support.²³ One respondent was very optimistic about expansion in rural areas.

The Robert Wood Johnson Coming Home program has helped to develop affordable assisted living in rural areas where before there was only the nursing home option. Grant dollars are available to develop programs that are maybe a little different then what we have seen already.

One respondent reported that the state could expand in-home services.

There is an amendment to the state constitution which would exempt from zoning regulations people applying for the conversion of single family residences to two family homes, so they can keep an elderly relative at home. It will be significant. It would not need licensing if it was only for relatives, and services could be funded through some of the State programs or the Aged and Disabled Adult waiver.

The Nursing Home Transition Program, which began last year, provides funding for eligible nursing home residents who can be cared for under the ALE Medicaid Waiver. Separate funding for these residents was again provided for the 2002-2003 fiscal year at $2,300,000. The Capitated Nursing Home Diversion Program increased funding to $30,916,013 and will create approximately 100 additional slots for this program. The state also directed AHCA and DOEA to jointly develop a plan to expand the opportunities for diversion projects in rural and underserved areas of the state.
The Assisted Care Services (ACS) State Plan Amendment maintained current funding for the 2002-2003 fiscal year at $32,871,249, which includes $3,200,000 for program growth. The Assisted Living for the Elderly (ALE) Medicaid Waiver maintained current funding for the 2002-2003 fiscal year at $30,754,351.

Sources

Publications

Gibson, M. J. and Gregory, S. R., Across the States 2002: Profiles of Long-Term Care, AARP, 2002.

Kassner, E. and Williams, L., Taking Care of their Own: State-funded Home and Community-based Care Programs for Older Persons, AARP, September 1997.

Kassner, E. and Shirley, L., Medicaid Financial Eligibility for Older People: State Variations in Access to Home and Community-Based Waiver and Nursing Home Services, AARP, April 2000.

Manard, B. et. al., Policy Synthesis on Assisted Living for the Frail Elderly: Final Report, submitted to Office of the Assistant Secretary for Planning and Evaluation, December 16, 1992.

Mollica, R.L., State Assisted Living Policy: 1998, Report (ASPE and RTI) June 1998.

Mollica, R.L., State Assisted Living Policy: 2000, National Academy for State Health Policy; funded by The Retirement Research Foundation (LTC13). August 2000.

Mollica, R.L., and Jenkens, R., State Assisted Living Practices and Options: A Guide for State Policy Makers, A publication of the Coming Home Program, funded under a grant from The Robert Wood Johnson Foundation, September 2001.

O'Keeffe, J., People with Dementia: Can They Meet Medicaid Level-of-Care Criteria for Admission to Nursing Homes and Home and Community-Based Waiver Programs?, AARP, August 1999.

Polivka, L., et. al., Long Term Care for the Frail Elderly in Florida: Expanding Choices, Containing Costs, Long-Term Care Policy Series, Volume I, prepared for the Commission on Long-Term Care in Florida, Florida Policy Exchange Center on Aging, 1996.

Polivka, L., et. al., Assisted Living and Extended Congregate Care: The Florida Experience, Long-Term Care Policy Series, Volume II, prepared for the Commission on Long-Term Care in Florida, Florida Policy Exchange Center on Aging, 1996.

Salmon, J., et. al., Affordable Assisted Living Facilities: Government-Sponsored Benefits for Reimbursing Assisted Living Services, Room, and Board, conducted for the Department of Elder Affairs, Committee on Affordable Assisted Living Facilities, Florida Policy Exchange Center on Aging, 2002.

Smith, G. et. al., Understanding Medicaid Home and Community Services: A Primer, U.S. Department of Health and Human Services, Office of the Assistant secretary for Planning and Evaluation, October 2000.

State Assistance Programs for SSI Recipients, January 2001, Social Security Administration, Office Of Policy, Office Of Research, Evaluation, and Statistics, Division Of SSI Statistics and Analysis.

Stone, J.L., Medicaid: Eligibility for the Aged and Disabled, Congressional Research Service Report for Congress, updated July 5, 2002.

Websites

Aged, Blind and Disabled Medicaid Eligibility Survey http://www.masterpiecepublishers.com/eligibility/

Agency for Health Care Administration, Alternatives to Nursing Homes http://www.fdhc.state.fl.us/nhcguide/alternatives.cfm

Agency for Health Care Administration, Assisted Living Facilitieshttp://www.fdhc.state.fl.us/MCHQ/Health_Facility_Regulation/Assisted_li…

Agency for Health Care Administration, Assistive Care Services http://www.fdhc.state.fl.us/Medicaid/asc/index.shtml

Assistive Care Services And Assisted Living For The Elderly Waiver Services Coverage And Limitations Handbook, http://floridamedicaid.consultec-inc.com/html/Florida_Medicaid/Provider… Assistive_Care_Services_and_Assisted_Living_for_the_Elderly_Waiver_Services.pdf

Department of Children and Families, SSI-Related Programs, Fact Sheet, July 2002 http://www5.myflorida.com/cf_web/myflorida2/healthhuman/ess/ssifactshee…

Department of Elder Affairs, Adult Family Care Homes http://www7.myflorida.com/doea/healthfamily/learn/elderservices/doeaafc…

Department of Elder Affairs, Assisted Living http://www7.myflorida.com/doea/healthfamily/learn/elderservices/doeaalf…

Department of Elder Affairs, Programs and Serviceshttp://www7.myflorida.com/doea/healthfamily/learn/elderprograms/doeapro…

Florida Assisted Living Association (FALA), Member Legislative Update-May 15 http://www.falausa.com/legupdates/legupdate14.php4

Florida Administrative Code, Chapter 58A-5, Assisted Living Facilities and Chapter 58A-14, Adult Family Care Homeshttp://fac.dos.state.fl.us/faconline/chapter58.pdf

Florida Health and Human Services, Adult Family Care Homes http://www9.myflorida.com/Environment/facility/group/afch.htm

Florida Health and Human Services, Assisted Living Facilities http://www9.myflorida.com/Environment/facility/group/alf.htm

Florida Medicaid Program Summary of Services, 2002 http://www.fdhc.state.fl.us/Medicaid/sos.pdf

2002 Florida Statutes, Title XXIX Chapter 400, Nursing Homes And Related Health Care Facilities, Part III, Assisted Living Facilities http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=Ch0400/ch0400.htm

2002 Florida Statutes, Title XXX Chapter 409.212, Social and Economic Assistance, Optional Supplementation http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=Ch0409/SEC212.HTM&Title=-%3E2001-%3ECh0409-%3ESection%20212

Task Force on the Availability and Affordability of Long-term Care, House Bill 1993 http://www.fpeca.usf.edu/Task%20Force/Background/Legislation.htm

Recommendations from the Florida Assisted Living Association (FALA) http://www.fpeca.usf.edu/Task%20Force/Public%20Recommendations/recommen…

Recommendations from the Florida Association of Homes for the Aging (FAHA) http://www.fpeca.usf.edu/Task%20Force/Public%20Recommendations/recommen…

Recommendations from the Florida Life Care Residents' Association (FLiCRA) http://www.fpeca.usf.edu/Task%20Force/Public%20Recommendations/recommen…

Recommendations from Larry Sherberg, Member http://www.fpeca.usf.edu/Task%20Force/Public%20Recommendations/recommen…

Formal and Informal Interviews

Shelly Brantley, Bureau Chief for Medicaid
Health Systems Development
Agency for Health Care Administration

Kathy Chisolm, Medicaid Waiver Specialist
Division of Statewide Community-Based Services
Department of Elder Affairs

Frank Ciotti, Program Specialist
SSI-Related Programs
Department Of Children and Families

Gayle Culpepper, Program Specialist
SSI-Related Programs
Department Of Children and Families

Martie Daemy, Florida Interim State Ombudsman
Department of Elder Affairs

Catherine M. Drompp, Program Specialist
Adult Services
Department of Children and Families

Mary Ellen Early
Senior Vice President of Public Policy
Florida Association of Homes for the Aging

Alberta G. Granger, Manager
Assisted Living Unit
Bureau of Health Facility Regulation

Julie G'Vitale, RN,
Owner and Administrator
Cambridge Inn Inc, ALF with ECC license, 46 beds

Bill Hiepe, Program Specialist
SSI-Related Programs
Department Of Children and Families

Bill Lupo, Executive Director
Rocky Creek Retirement Village

Larry Polivka, Director
Florida Policy Exchange Center on Aging

Jennifer R. Salmon, Assistant Director
Florida Policy Exchange Center on Aging

Larry Sherberg, President, FALA
Owner and Administrator
Lincoln Manor, ALF with LMH license, 55 beds

Victoria M. Sims, Medical Health Care Program Analyst
Health Systems Development
Agency for Health Care Administration

Horacio Soberon-Ferrer, Director of Planning and Evaluation
Department of Elder Affairs

Henry Taylor, Contract Management Administrator
Statewide and Community Based Services
Department of Elder Affairs

Jeannie Taunton, Supervisor
Comprehensive Assessment and Review for Long Term Care Services (CARES)
North West Florida Office

Keith Young, Medical/Health Care Program Analyst
Health Systems Development
Agency for Health Care Administration

e-mail respondent, not actually spoken to:

Bennett Napier, Executive Director
Florida Life Care Residents Association

Endnotes

There were 703 SNFs (including SNUs) in the year 2000 in Florida, with 81,163 beds; 52,649 were Medicaid beds. (Personal communication, Jennifer Salmon)
Due to state budget shortfalls, the income eligibility criteria was reduced in April 2002 from 90 percent to 88 percent of FPL (from $662 to $651), which resulted in a loss of Medicaid eligibility for an estimated 5,000 people in Florida.
Two additional waiver programs that serve elderly persons are:
- The Consumer-Directed Care Research and Demonstration Waiver is an 1115 waiver program, which is available in certain counties for individuals receiving services through the Aged/Disabled Adult and other waivers. Individuals chosen to participate in the experimental group are allowed to "cash out" services on their current care plans and receive a monthly benefit through a fiscal intermediary to purchase services directly from a provider of their choice. The program was implemented in 2000. There was difficulty in getting CMS to approve operational protocols related to coverage of services in assisted living facilities.
- The Medicaid Nursing Home Diversion (NHD) Waiver provides services to 868 functionally impaired elderly persons age 65 and over who are at risk of nursing home placement in Palm Beach and the Orlando area. Dual eligible (Medicare and Medicaid) individuals that meet clinical eligibility criteria may choose to receive both long-term care and acute care services under the NHD Waiver. Managed care providers that have contracted with the state under the NHD Waiver are responsible for Medicare co-payments and deductibles. Providers are reimbursed at a capitated rate, on a per member, per month basis to enrolled Medicaid providers.
Due to state budget shortfalls, the income eligibility criteria was reduced in April 2002 from 90 percent to 88 percent of FPL (from $662 to $651), which resulted in a loss of Medicaid eligibility for an estimated 5,000 people in Florida.
Cost sharing is required in only three waivers: Long Term Care Diversion Project (Nursing Home Diversion Waiver), Assisted Living for the Elderly and Cystic Fibrosis. There is no cost sharing required in other waiver programs, unless the individual qualified under an income trust.
The maximum payment is $78.40 per month.
Florida Statutes, Title XXX, Chapter 409.212.
Chapter 59G-1.010, Florida Administrative Code, defines medical necessity as medical or allied care, or services furnished or ordered that must be necessary to protect life, to prevent significant illness or significant disability, or to alleviate severe pain.
The financial and service eligibility information is taken from Kassner, E. and Williams, L., Taking Care of their Own: State-funded Home and Community-based Care Programs for Older Persons, AARP, September 1997. Other details of the programs are from the Department of Elder Affairs website and personal communications.
One respondent felt that this program is more cost effective than the waiver program in preventing nursing home placement because many caregivers become financially dependent on the subsidy, which while not large, can be critical for a poor family. If this situation occurs, it may not always be in the best interests of the elderly person who needs services that the family can not provide.
The information in this section draws heavily from Manard, B. et al., op.cit., with some additional comments from personal interviews with current state staff. Adult Family Care Homes were originally called Adult Foster Home (AFHs), a licensing category created in 1968 to provide a community housing alternative for mental hospital patients being de-institutionalized. While some de-institutionalized mental health clients were also sent to Adult Congregate Living Facilities, proportionally more were in Adult Foster Homes. Over time the program evolved to serve elderly persons almost exclusively.
Personal communication.
One respondent stated that providers do not seem to understand that the rate is a little higher based on the assumption that residents will be away from time to time.
Manard, B. et al., op.cit.
The information on the creation of the ECC licensing category is drawn from a report prepared for the Commission on Long Term Care in Florida, Assisted Living and Extended Congregate Care: The Florida Experience, by Larry Polivka, Victoria M. Sims and Jennifer R. Salmon, Florida Policy Exchange Center on Aging, August, 1996, with additional comments from a number of personal interviews conducted in October 2002.
Salmon, J. R., et al., Affordable Assisted Living Facilities: Government-Sponsored Benefits for Reimbursing Assisted Living Services, Room, and Board, Florida Policy Exchange Center on Aging, Tampa, Florida, September 15, 2002.
The maximum OSS payment is $78.40 per month.
One respondent stated that providers do not seem to understand that the rate is a little higher based on the assumption that residents will be away from time to time.
Staff must receive four hours of initial training covering understanding Alzheimer's disease; characteristics of the disease; communicating with residents; family issues; resident environment; and ethical issues. An additional four hours of training must be obtained within nine months of employment covering behavior management; assistance with ADLs; activities for residents; stress management for the caregiver; and medical information. Four hours of annual training must be obtained on topics specified by the Department of Elder Affairs (DOEA).
Florida Statutes, Chapter 400 is the "institutional" chapter and covers nursing homes, adult day care centers, adult family care homes, and assisted living facilities. Chapter 430 covers the community based services, such as Community Care for the Elderly, Home Care for the Elderly, Alzheimer's clinics, Respite for elders, and others.
F.A.C. 58A.5.0185(7)(f) states: "The facility shall make every reasonable effort to ensure that prescriptions for residents who receive assistance with self-administration or medication administration are refilled in a timely manner." The respondent was not sure if the rule is actually interpreted this way and if facilities are doing it or making sure families understand that this is a reason for discharge (i.e., not paying their medication bills).
The Nursing Home Transition Program, which began last year, provides funding for eligible nursing home residents who can be cared for under the ALE Medicaid Waiver. Separate funding for these residents was again provided for the 2002-2003 fiscal year at $2,300,000. The Capitated Nursing Home Diversion Program increased funding to $30,916,013 and will create approximately 100 additional slots for this program. The state also directed AHCA and DOEA to jointly develop a plan to expand the opportunities for diversion projects in rural and underserved areas of the state.
The Assisted Care Services (ACS) State Plan Amendment maintained current funding for the 2002-2003 fiscal year at $32,871,249, which includes $3,200,000 for program growth. The Assisted Living for the Elderly (ALE) Medicaid Waiver maintained current funding for the 2002-2003 fiscal year at $30,754,351.

Appendix C. Minnesota

The information in this appendix is presented in three major sections:

The first section provides an overview of the state's long term care system, with a primary focus on the Medicaid program. Although a state may pay for services in residential care settings through the Medicaid program, the program's financial eligibility criteria and related financial provisions for home and community services can present barriers to serving Medicaid clients in these settings. Thus, the first section of each state's description presents detailed information about rules related to financial eligibility, spousal financial protections, and cost sharing requirements.
The second section describes the state's residential care system.
The final section presents the views of respondents interviewed for this study on a range of issues related to Medicaid coverage of services in residential care settings in their state.

I. Overview of Long Term Care System

Nursing Homes

Minnesota has relied extensively on the institutional model of long term care since the 1960s, when the availability of federal funds for nursing home care spurred considerable growth in the state's nursing home industry. Nursing homes provide a more medical model of long term care than many elderly persons need or want, but have often been the only option available.

A moratorium on new nursing home beds has been in effect since 1983, and even though the elderly population is increasing, nursing home utilization has dropped. Because projected utilization indicates that Minnesota's current bed supply will be adequate through 2025, the moratorium on new nursing home beds will continue, except in situations of "extreme hardship," e.g., when a county's ratio of beds per 1,000 is very low.¹

Because Minnesota still has the 6th highest number of beds per 1,000 persons age 85 and over in the nation, two recent initiatives have been undertaken to reduce the number of beds. First, in 2000, the state created the nursing home bed layaway program, permitting nursing homes to take licensed beds temporarily out of service and have those beds treated as though they were de-licensed. In the 18 months since enactment about 2,350 beds have been put in layaway and the occupancy level of remaining beds has reportedly increased substantially. Given the nursing home moratorium, without this program, nursing homes would be reluctant to de-license beds.

Second, in 2001, with the goal of accelerating the re-balancing of the state's long term care system, the state provided incentives for the closure of up to 5,140 nursing home beds during fiscal years 2002 and 2003. This program was combined with initiatives to conduct local long term care systems planning and to develop and expand home and community service programs. As of June 30, 2003, Minnesota had already closed 2,500 beds and had received applications to close another 2,000.

1. Long term Care Task Force: Reshaping Long term Care in Minnesota.

Waiver Program

Minnesota has had an Elderly Waiver program since 1988, which funds home and community services not normally covered under Medicaid for seniors who are at risk of nursing facility placement. The waiver program covers two types of services: those necessary to avoid institutionalization that are not offered in Minnesota's state plan, and those that are extensions of Minnesota's state plan services--"extended" to avoid institutionalization. Extended services allow more than the state plan in terms of type, amount, duration and scope of services and are only available to people eligible for waiver services.

The program is administered by the counties, and has a set number of slots. To date there has been no waiting list for waiver services in Minnesota. In the event that the state sees that the waiver slots are filling up, the state amends the waiver to include additional slots because it believes that the waiver services will save money by keeping people in the community. In FY 2002, the state served 12,208 waiver clients.

The Elderly Waiver program covers a wide range of services in a person's home or in certain residential care settings. Residential care settings include adult foster homes, both family and corporate, board and lodging homes, non-certified board and care homes, and apartment complexes called residential centers. Services include: skilled nursing, home health aide, homemaker, companion services, personal care assistants, adult day care, case management, home-delivered meals, respite care, supplies and equipment, transportation, limited modifications to the home and training for caregivers.

There are two packages of waiver services called Assisted Living and Assisted Living Plus, both of which are provided in approved residential care settings.

Personal Care Option

Minnesota covers personal care services under the Medicaid state plan through the Personal Care Assistance program. This program provides services to individuals who need help with daily activities to allow them be more independent in their own home. A personal care assistant is an individual who is trained to help with some basic daily routines for individuals who have a physical, emotional or mental disability, a chronic illness or an injury.

Long Term Care Programs Funded with State Revenues Only

The state has a Long Term Care Consultation Services (LTCCS) program that is funded by a combination of federal, state, and privately paid funds. Formerly called Preadmission Screening, the purpose of LTCCS is to assist persons with long term or chronic care needs in making long term care decisions and selecting options that meet their needs and reflect their preferences. The availability of, and access to, information and other types of assistance is also intended to prevent or delay certified nursing facility placements, thereby containing costs associated with unnecessary nursing facility admissions. In FY 2001, LTCCS conducted 62,570 assessments.

The state's Alternative Care program is funded solely with state revenues. It was implemented in 1991 and provides certain home and community services for persons age 65 and over, who are at risk of nursing home placement, have low levels of income and assets, but do not meet Medicaid financial criteria. The program is administered by counties, which may offer consumer-directed service options. The state caps the monthly cost of Alternative Care services at 75 percent of the average state Medicaid payment made for persons age 65 and older with the same case mix classification residing in nursing facilities.

The program offers a comprehensive array of home and community services including home modifications, adult day care, adult foster care, assisted living and residential care services

II. Residential Care Settings

Background

In the mid-1980s, after a nursing home moratorium had been in effect for several years, the State was increasingly concerned that many frail elderly persons, who once would have lived in nursing homes, were now living in a variety of unregulated out-of-home residential settings that lacked supportive services. In order to assure that they were receiving appropriate and adequate services, the Minnesota Department of Health proposed that many of these settings be regulated as residential care homes, with requirements modeled after nursing homes. In response, the Residential Care Home Licensing Act (RCHLA) was enacted. Due to opposition to the act, implementation was postponed while an alternative act, the Housing with Services Contract Act,¹³ was considered.

After reviewing the institutional type of regulatory system proposed in the RCHLA, the Minnesota Health & Housing Alliance met with hundreds of providers, consumers, and others and concluded that a consumer-driven model, using the well-understood concept of a legal contract, was a preferable regulatory model.

Both consumers and providers identified choice as a value that should be a dominant aspect of any quality assurance system for housing-with-services providers. Important aspects of choice identified were:

People have a right to make choices for themselves.
People should be assumed to be competent to make their own choices. Those who may not be competent should receive assistance.
Consumers have a right to be educated and informed about providers' policies and procedures and the services they are purchasing.
Any system focusing on choices must consciously accept that choices entail risks and that consumers will sometimes make decisions that others perceive as "bad choices."

The Housing-with-Services Contract Act was developed by the MHHA over a four-year period and was passed in 1995, effective in 1996. The Act covers a broad spectrum of senior housing in Minnesota called "Housing-With-Services Establishments." The term was chosen because of its general nature, which can be applied to a wide range of settings and levels of services. Different types of residential care settings market themselves as "assisted living," but there is no category of licensure called "assisted living facility."

With the passage of the Housing-with-Services Contract Act, Minnesota initiated an innovative approach toward assuring quality in residential care settings by making a conscious decision to avoid a detailed, prescriptive regulatory system. Instead, Minnesota adopted a more flexible, consumer-driven model, which is based on the concepts of consumer choice and negotiated risk. This approach gives consumers a choice of a variety of physical settings and service packages, and permits providers to develop innovative housing with services models.

13, Minnesota Statute 144D.

Overview of Residential Care Settings

Minnesota envisions assisted living as a service not as housing. Assisted living services are available in multiple settings, including senior housing, foster care, purpose built settings and other congregate housing. In this way the state provides an option for people who are unable to remain in their own home and need supportive services to avoid nursing home placement. The state does not regulate a specific category of facilities called assisted living. Instead, the state regulates services provided in residential care settings through the various home care provider licenses described above.

Not all residential care settings are considered Housing-With-Services Establishments. The state specifically excludes the following residential care settings from the Housing-with-Services establishment category:

nursing homes licensed under chapter 144A;
certified boarding care homes licensed under sections 144.50 to 144.56;¹⁷
board and lodging establishments licensed under chapter 157.17; (they are excluded because they have their own regulations and serve a predominantly non-elderly population);
family adult foster care homes licensed by the Department of Human Services; and
private homes in which the residents are related by kinship, law, or affinity with the providers of services.

Not all Housing-With-Services Establishments have to be separately licensed in some way. For example, an apartment building with separate units has only to comply with local building codes. However, buildings with a central kitchen may be required to have a food license.

In most cases, an "umbrella requirement" of Housing with Services registration is superimposed over the separate regulation of services and facilities. The state requires any establishment providing sleeping accommodations to one or more adult residents, at least 80 percent of whom are 55 years of age or older, and offering or providing, for a fee, one or more regularly scheduled health-related services or two or more regularly scheduled supportive services, to register with the Minnesota Department of Health as a Housing with Services establishment.¹⁸

Supportive services are defined to include only the following: help with personal laundry; handling or assistance with personal funds of residents; or arranging for medical services, health-related services, social services, or transportation to medical or social services appointments.¹⁹
Health-related services are defined to include professional nursing services; nursing services delegated to aides (such as medication administration), bathing and other personal care; and other services that may be performed by paraprofessional staff (stand-by assistance with dressing or grooming); and central storage of medications.

Services provided in Housing-With-Services Establishments must be provided through licensed home care provider agencies. The Housing with Services entity may obtain such a license or contract with a licensed agency. Services usually include some combination of supportive and health-related services. The various service programs may or may not have caregivers or other staff on-site 24 hours a day. Residents can contract for services with the owner of the building if the owner has a home care provider license or they can obtain services from an outside agency that has a Medicaid license.

Buildings registered as a Housing with Services Establishment may vary in size and type and include corporate adult foster care settings, board and lodging establishments (without individual kitchens), non-certified boarding care homes, and apartment buildings. Consumers choose the housing-with-services setting that they believe will best meet their needs. Medicaid pays for services through the Elderly Waiver and the Personal Care option for eligible individuals in all of these settings, which are described in the following sections.²⁰

Certified Boarding Care Homes are considered nursing homes and are eligible to receive Medicaid payments. However, these homes may only provide "light" care and cannot provide skilled nursing home care.
When the Housing-with-Services Contract Act was passed in 1995, it was designed to apply to various types of buildings serving seniors, rather than settings serving other groups, such as persons with developmental disabilities. To distinguish which buildings served seniors, the state used the definition from the federal Fair Housing Act, which requires that 80 percent of the residents be age 55 or older.
The state purposely excluded housekeeping services, meal programs, routine van transportation to shopping or recreational activities from the definition of supportive services so that the providers of these services would not have to meet all the requirements of the Contract Act.
There is an erroneous belief that Minnesota's Medicaid waiver program only provides assisted living services to elderly persons living in private apartments with a full kitchen. It stems from the fact that when the Elderly Waiver service packages were first created, the package of services that were provided in apartment settings (where there were individual kitchens) was labeled "assisted living" while a very similar package covering essentially the same services could be provided in settings where residents did not have individual kitchens. The latter package was given a different name--residential care services. Both service packages covered the same types of personal care and health-related services, but they had two different labels. Consequently, many people made the assumption that because the service package labeled assisted living could only be provided in apartments with kitchens that these kinds of services could not be provided in other types of settings. (Personal communication)

Types of Residential Care Settings

Physical Plant Requirements for Residential Care Settings

Each type of residential care setting must meet its own licensing and regulatory requirements, which can include physical plant requirements. For example, adult foster care and boarding care establishments have physical plant requirements and rules regarding shared rooms. Minnesota does not require residential care settings registered as housing-with-services establishments to meet any additional specific physical plant requirements.

Regarding the provision of private rooms for low-income, publicly supported individuals, their availability depends on the residential care setting and its location. Some market-rate projects--whether apartments or board and lodges--can provide private rooms or apartments for Medicaid waiver clients, particularly where the state's Group Residential Housing (GRH) supplement (see Room and Board Payment below) is adequate or where the private pay rental revenue from other residents can help subsidize the costs of the low-income resident.

The Medicaid waiver program strongly supports the provision of private rooms and counties will negotiate placements with residential care settings in order to provide Medicaid clients with privacy. A few settings have private foundations that can help low-income residents pay the shortfall between what they (or the GRH supplement) can pay and the actual costs.

However, in many board and lodging or adult foster care settings, Medicaid wavier clients may share a room with another resident, while private pay residents may have the option of paying higher rents for a private room. A GRH client living in a shared room could move to a more expensive private room if the family was willing and able to pay the difference between the GRH rate and the rent.

Room and Board Payments

Residents who receive services through the Elderly Waiver program, the Personal Care option, or the state's Alternative Care program must pay rent and raw food costs from their income. Room and board or rental rates are not defined or controlled directly by Medicaid or the Alternative Care program. However, Medicaid's financial eligibility rules do limit the amount of income that Elderly Waiver or Personal Care clients will have available to pay rent or room and board. If the client has inadequate income for room and board, the client may be eligible for the state's Group Residential Housing program.

Services Provided in Residential Care Settings

Reimbursement

III. Summary of Interviews

In addition to consulting with eleven state staff and policy makers regarding the technical details of the state's programs, we also conducted more in-depth interviews with four of them. In addition, we interviewed seven stakeholders, including representatives of residential care provider associations, consumer advocates, the state ombudsman program, and an academic expert.

General Comments About the State's Residential Care System

Respondents raised a number of issues that they believed constituted existing or potential problems with the residential care systems generally.

The system is confusing for the typical consumer. There is a perception by residents and families that the assisted living services constitute 'nursing home lite'--or getting all the services of nursing homes, but a la carte. However, that is not the case. Twenty four-hour supervision cannot be assumed, although family members and residents are surprised to learn that it is not available when they are receiving assisted living services and not the assisted living plus package. Many families are surprised to hear that although a residence is licensed it is not regulated. They don't understand the system. Some refer to a residence as an "assisted living nursing home" and are surprised to learn that the assisted living model is licensed as a home care provider. We need education, education, and more education for consumers, their families and physicians.
We have more folks taking advantage of these services and avoiding a nursing home--and that's good--but we have some egregious situations and they will increase if we don't respond in a responsible manner. The Department of Health has been upfront about the fact that many of these places have not had onsite inspections and they are frustrated about the lack of staff to conduct these inspections. The tools in place to address poor providers are not adequate. There are discussions within the long term care task force to assure quality--there is recognition that a problem exists. But the state lacks adequate oversight of residential settings.
We don't have assisted living that focuses on dementia, but do have some foster homes that provide a high level of care.

Some respondents expressed concerns about lack of funds to build housing, and the impact of converting senior housing to assisted living.

On the housing side--we are flat broke. We cannot afford to build assisted living for low income seniors. We already have a large stock of housing that serves seniors--so there is no point in putting money into purpose built assisted living. We need to look at what we have and enhance it when needed; provide services in the existing housing stock and remain solvent.
I'm concerned about the impact of providing the assisted living service package on the character of low income public housing and congregate housing. This is an issue that is likely to be somewhat unique to Minnesota, however, it is worth noting. People are struggling with how far the state should go with the level of support before adversely affecting the living climate or environment for the other residents. Or, how far can services go in providing coverage for increasing levels of acuity and support, and where should the line be drawn? When should people move to other settings that can better meet their needs? This is a work in progress--we are implementing a philosophy.
It is complex when trying to turn subsidized senior housing into assisted living; it has not panned out. Many seniors in these settings are doing fine and not signing up for services. When there are vacancies and you bring in people who need services and supervision it changes the mix and character of the setting, although in some small towns it works out fine. You then change your stock of low and moderate income housing and turn it into assisted living. So for those who are poor and need housing you've limited their choice--an unintended consequence.
We have buildings where people who are being served don't need a lot of the services but they get the entire package.

General Comments on Medicaid's Role in Residential Care Settings

Overall satisfaction was expressed with the program; there was pride in the lack of a waiting list and in the fact that many people have been served in settings outside the nursing home.

It's worked pretty well--providers have been happy.
We're really happy with our program--it provides flexibility for the community to build a program that is right for them.
On the housing side, because Minnesota did not have the resources to build assisted living for low income seniors, the waiver assisted living program was built on the idea that assisted living services would be mobile. There was already a large stock of housing where low income seniors resided so that the Minnesota approach to assisted living was viewed as a successful way to deal with the housing piece of residential care.
Originally we thought housing with services establishments would be for people headed to nursing homes--to provide another option for people who didn't feel that they could stay in their own home or when services could not be delivered in their home settings. We do find that nursing home admissions have decreased and people are staying in their homes longer. Assisted living is another option for people whose needs cannot be met in their own homes.
Minnesota generally has pretty good delivery--many of the providers are religious organizations--church related entities are major real-estate holders and provider entities. A climate where the care is good--many are nursing home managers trying to avoid the over regulation, but they are concerned about assuring quality in these looser entities.
Minnesota has senior housing stock that has been subsidized--now they are attempting to introduce varying levels of services to enable aging in place--through Assisted Living Plus. Adding assisted living waiver services to these settings mean that buildings stay occupied, the state does not have to subsidize purpose built facilities, and the people served are able to remain in their apartments.
The cooperation between housing and services is due to the fact that human services is all under one big umbrella. An individual who was hired to straddle housing and services sits on joint committees and understands both perspectives. I believe this makes a difference in terms of coordination.
The most successful part is that we are not creating senior Medicaid ghettos. In an assisted living place, if the residents aren't talking to each other about who's paying--you don't know who is private and who is Medicaid. Of course, rich seniors will live in nicer places. Medicaid coverage provides more options for seniors. One of the goals of covering assisted living services through the waiver program is to allow seniors who have spent down in assisted living to stay there as long as their needs can be met.

Licensing and Regulatory Requirements

Minnesota is one of the few states that does not have a licensing category for assisted living. There were differing points of view regarding this. While those representing the providers voiced that from their perspective there is an adequate regulatory structure and they did not see anything that needs to be added, this sentiment was not consistently shared by others.

We need to license administrators of assisted living to assure a minimum skill set or knowledge base for dealing with this vulnerable population.
Licensing the services but not the property or building is not sufficient.
Many providers of assisted living are former nursing home managers that are trying to avoid what they perceive as the-over regulation that is found in the nursing home industry. They understand that to avoid this type of over-regulation they need to self-impose quality standards.
We think there is an adequate regulatory structure--we don't see that anything needs to be added. Home care entities can be surveyed, and anyone receiving waiver or alternative care services has to go through the counties, so that's another vehicle for oversight.
Quality assurance--the people who do the surveying of the home care agencies are very concerned about the frail elders who are not getting adequate care. There is concern that licensure of the services--but not the building--is not sufficient. The owner can obtain a home care provider license, which is not a big deal, but an outside home care agency needs to have a home care Medicaid license, which is a big deal.
Housing with services registration has been in place since '95 or '97. It was promoted by long term care trade associations because state regulations to set up assisted living were not available and the industry wanted some regulations. Over time, this has worked fairly well and is supported by private and public entities. One of the non-profit long term care associations has a quality initiative. They want to keep what Minnesota has: flexibility without extensive regulation.
Right now, assisted living is primarily private pay--80 percent or more. The way it works in Minnesota is that there is a presumption in the Housing with Services Act that two competent parties enter an agreement: the provider and the resident. We think this creates the best opportunity to create maximum choices. We fear that as more and more waiver dollars flow into assisted living, there will be pressure to create a regulatory scheme that will look like nursing homes. We do not regulate assisted living to the worst case scenario like nursing homes do and don't think we should have to.
Minnesota doesn't have very specific regulations, e.g., about how and when meals are to be provided. We operate under the assumption--whether it's private pay or Medicaid--that you have two competent parties entering an agreement. There is a 17 point contract that must be signed by both parties. This eliminates the need for lots of regulations. Alterra had a problem at one of their places and the state attorney general had them in court over a contract violation and it was in the paper. This is a faster way to address quality problems than lots of regulations.
The state should not have approved Assisted Living Plus in the Elderly Waiver program without additional standards.

Admission and Retention Requirements, and Aging in Place

Because Medicaid's assisted living program is not tied to a particular type of housing, admission and discharge decisions are left up to the housing owner or manager. Respondents had conflicting views about this approach.

The county case manager determines eligibility for assisted living services under the waiver and the hours of service needed, however, it is the property owner that decides whether the resident's needs can be met in their property. If a resident's condition deteriorates and more care is needed, then the property owner can claim that the increased need for services cannot be met, requiring the resident to leave that setting.

Currently, there is no bill of rights that enables the resident or family to appeal this decision. Once the decision to terminate is made the resident is given a ten day termination notice and a list of other providers.
We need a resident bill of rights to give a right of appeal when discharged.
Giving the property owner discretion over discharge is not a problem because typically a lease addendum gets executed at the time the property is leased. This addendum informs the resident what services are available with the rent, services that are available a la carte and who can provide these, as well as information about when the resident would need to move on to a different residence.
Families are often unaware that a setting does not have the capability to provide 24 hour a day coverage. There needs to be a resident bill of rights that would support an appeal process. The resident in these settings is under a home care bill of rights which is much more limited than a nursing home bill of rights. This bill of rights was written when it was assumed that the individual receiving services was in their own home so that privacy and termination issues were not applicable.
When retention issues arise they are more typically due to an inability to pay the rent portion of the housing because the services can always be provided under the waiver.
To be honest it is an open question whether assisted living serves those headed for a nursing home. For some it does, but it tends to be for those who are not as disabled. When you have people who are very disabled or have a lot of incontinence, or get to the point that they can't be sustained in the assisted living setting, then they tend to end up in a nursing home.
Termination of lease requires only a 10 day notice, not a 30 day notice, and there is no appeal, the provider just gives you a list of other providers. This is not an eviction, it never gets to that point because once the services are stopped the person has to move to a nursing home. There are no appeal rights for service termination--even if you are a public assistance client and the case manager authorizes the services. But the home care provider can determine that they cannot meet your needs in that setting and the consumer is stuck.
If a provider accepts a Medicaid client and is providing services, and the resident begins to have other needs that the provider can't meet, the provider should not be required to use his or her capital and money to bring the services in for one person at the expense of other residents. The providers who keep people because they don't want to give up the money are the ones that will get into trouble.

Providers have to fully disclose up front what they do and do not provide. Anyone moving in has to do so with the knowledge that at some point they may not be able to stay. If someone is receiving home health services but can no longer be served safely at home, he has to move. Someone living in a housing with services establishment is still considered to be living in his own home.
The biggest complaint in Minnesota is "they're making me move" not "they're not taking care of me."

Barriers to Serving Medicaid Clients in Residential Care Settings

Suggested Changes to Improve the Medicaid-Funded Residential Care System

Respondents views on needed changes focused on quality of care and rights issues, as well as the need to help counties determine appropriate service rates.

Two things are needed. One is a specific bill of rights for residents of assisted living and the second may be a requirement for a licensing of administrators of assisted living to have a minimum skill set or knowledge base for dealing with this vulnerable population.

Consumers living in their home, whether its their own home or a congregate residence considered as a home, have fewer rights than residents of nursing homes. There are substantial federal requirements for rights in nursing homes for non-discrimination. The home care bill of rights is much more limited.
There are specific problems with the landlord / tenant contract where we will need to plug holes--assisted living is in the gray area so that the rights of the resident are not clear. The rights of the resident versus the rights of the landlord. I would like to see a specific bill of rights for residents of assisted living facilities.
Because the regulatory scheme was built on a home care model we do need to do some thinking in three areas:
1. We need to come up with a universal bill of rights for long term care. The current one does not provide an appeal process or due process prior to termination.
2. The current assisted living regulations are poorly written in terms of supervision--consumers think that monitoring means 24 hour availability of a nurse. The state needs to 'clean up' supervision and to clarify communication with the consumer so individuals clearly understand what they are getting. Someone should be available 24 hours a day. The current requirement: they have to have someone in the building with no specificity as to ratio, sleep or awake, who this person is. This is the case under Assisted Living Plus as well--with no ratio required. "Present and aware" but no requirement to be awake.
3. The number and training of staff needs to be addressed. The little training that assistants receive is not directed toward the type of residents they will be taking care of. Resident assistants are not required to complete a nursing aide course.
We need to give county health departments tools with which to determine the hours of service needed for a particular level of care. To have better model procedures that the state can provide to the counties as to what they can do before a person can be placed in a particular setting. The state needs to give the county some model language and enforcement language if quality is not adequate. In addition to licensing, the county needs to have a greater role to ensure that waiver clients are actually getting their needs safely met over time.
In Minnesota we have folks on Medicaid who are elderly who need to be in a managed care situation--it is still being developed in some counties--the PMAP program--it's supposed to provide all benefits, but if someone is eligible for the waiver they refer them to the county. If you're at risk for institutionalization and meet income guidelines you get moved to the waiver--otherwise you get PMAP (and Medicaid state plan services).

This creates an incentive for PMAP to move people to the waiver but they should keep them and use Medicaid Home Health. Once they move to the waiver, care coordination is lost.

You have these perverse incentives and you have these two programs that go back and forth--we would get more bang for our bucks if we could coordinate both acute and long term care for this population. Minnesota's managed care program should be giving 90 days post acute care, but it's not working. There was a desire to move the waiver patients to PMAP but counties did not want that because they wanted to hold on to the case management dollars but can only do that if they manage Elderly Waiver. There are reasons to think about a more integrated model--if political and financial realities could be overcome then another more integrated model would be possible and would have a positive effect on assisted living services.

Future Plans

Most respondents agreed that the State is likely to continue the model of assisted living that is currently in place. While the budget is not having an impact on the availability of waiver services in the short term it is not clear what will happen in the long term, particularly if theAssisted Living Plus service continues to grow at its current rate.

We need to examine the Assisted Living Plus option carefully to understand its rapid rate of growth.
From the advocacy side, we need to advocate for a bill of rights and develop requirements for staffing and supervision.
We want to make affordable assisted living available as an option. We need to make sure that assisted living provides only the services that people need. To do this we are planning to help the counties to figure out how to set rates. Providers can't expect to be paid for a package of services, when some of them are not included in a person's plan of care. We're going to give the counties tools and training for setting rates in 2003.

Recommendations for Other States

Think through the need for both regulation and flexibility. It is a challenge to design a regulatory system that provides safety and quality for the consumer but does not impose a nursing home like regulatory environment.
Consider the Minnesota approach and disaggregate housing from services, particularly if there is an existing stock of elderly low income housing.
The biggest challenge is to design a regulatory system that provides safety for residents without bringing in the entire nursing home regulatory system.
Defer to folks in human services. From the housing vantage point--people were looking for capital to build affordable assisted living but it simply was not there. Section 202 HUD projects that provide housing and services--we have a high number of these, have a resource already--from our vantage point it was not practical to use a site specific, purpose built assisted living program.
I'd advise them that whatever the system--it needs to be consumer driven--consumers making choices--deciding whether services are adequate--that they focus on the contract between the individual and provider and let that be the guiding regulatory principle. Require lots of disclosure and transparency of information.

Sources

Publications

Gibson, M. J. and Gregory, S. R., Across the States 2002: Profiles of Long-Term Care, AARP, 2002.

Kassner, E. and Williams, L., Taking Care of their Own: State-funded Home and Community-based Care Programs for Older Persons, AARP, September 1997.

Kassner, E. and Shirley, L., Medicaid Financial Eligibility for Older People: State Variations in Access to Home and Community-Based Waiver and Nursing Home Services, AARP, April 2000.

Manard, B. et. al., Policy Synthesis on Assisted Living for the Frail Elderly: Final Report, submitted to Office of the Assistant Secretary for Planning and Evaluation, December 16, 1992.

Minnesota House of Representatives Research Department, Information Brief, Medical Assistance Treatment of Assets and Income, September 2000.

Minnesota House of Representatives Research Department, Information Brief, Assisted Living/Housing with Services in Minnesota, February 2001.

Mollica, R.L., State Assisted Living Policy: 1998, Report (ASPE and RTI) June 1998.

Mollica, R.L., State Assisted Living Policy: 2000, National Academy for State Health Policy; funded by The Retirement Research Foundation (LTC13). August 2000.

Mollica, R.L., State Assisted Living Policy: 2002, National Academy for State Health Policy, November 2002.

O'Keeffe, J., People with Dementia: Can They Meet Medicaid Level-of-Care Criteria for Admission to Nursing Homes and Home and Community-Based Waiver Programs?, AARP, August 1999.

Stone, J.L., Medicaid: Eligibility for the Aged and Disabled, Congressional Research Service Report for Congress, updated July 5, 2002.

Websites

Aged, Blind and Disabled Medicaid Eligibility Survey http://www.masterpiecepublishers.com/eligibility/

Aging Initiative: Group Residential Housing http://www.dhs.state.mn.us/Agingint/Services/grh.htm

Aging Initiative: Alternative Care Program: Services and Provider Standards http://www.dhs.state.mn.us/Agingint/ltc/ACServPS.htm#als

Aging Initiative: Community Resource Development: Affordable Housing and Service Optionshttp://www.dhs.state.mn.us/Agingint/Services/housing.htm

Aging Initiative: Elderly Waiver Program Services Provider Definition and Standardshttp://www.dhs.state.mn.us/Agingint/ltc/EWServPS.htm.

Alternative Care Program helps seniors access programs. http://www.dhs.state.mn.us/Agingint/ltc/acfacts.htm

Bulletin #00-24-4, "Assisted Living Plus" service available for qualified Housing with Services Establishments and "Assisted Living" service name expands to additional settings, http://www.dhs.state.mn.us/FMO/LegalMgt/Bulletins/pdf/2000/00-25-04.pdf

Bulletin #02-25-07, Legislation Affects Rate Limits and Monthly Service Caps for Elderly Waiver (Elderly Waiver) and Alternative Care (AC) Programs, http://www.dhs.state.mn.us/fmo/LegalMgt/bulletins/pdf/2002/02-25-07.pdf

Children and Family Services: Minnesota Supplemental Aid http://www.dhs.state.mn.us/ecs/Program/msa.htm

Elderly Waiver helps low-income seniors access services and remain in their homes. http://www.dhs.state.mn.us/newsroom/Facts/EWfs.htm

Long term Care Task Force: Reshaping Long term Care in Minnesota. http://www.dhs.state.mn.us/agingint/ltctaskforce/reportsum.htm

Minnesota Department of Human Service Info Center: Services for Senior Citizens http://www.dhs.state.mn.us/infocenter/senior.htm

Minnesota Health and Housing Alliance, Assisted Living in Minnesota, May 2000 http://www.mhha.com/cons/al.html

Minnesota Rules, Chapters 9500 to 9585, Department of Human Services http://www.revisor.leg.state.mn.us/arule/9505/0290.html

Minnesota Senior Health Options (Minnesota DHS), February 2002 http://www.dhs.state.mn.us/agingint/Services/mshosumm.htm

Minnesota Statutes, Health, Chapters 144 to 159 http://www.revisor.leg.state.mn.us/stats/144.html

Formal and Informal Interviews

Pat Callaghan, Supervisor
Eligibility Policy
Minnesota Department of Human Services

Suzana Cobic-Ivkovic, SSI Coordinator and Program Administrator
Department of Human Services
Minnesota Supplemental Aid and General Assistance

Duane Elg, Program Consultant
Group Residential Housing,
Minnesota Department of Human Services

Maren Hayes, Project Officer
Demonstration Project on Affordable Housing With Services for Older People,
Minnesota Department of Human Services

Walter Eisner, Housing and Alternative Services Specialist
Care Providers of Minnesota

Pat James, Elderly Waiver Program Administrator
Minnesota Department of Human Services

Neil Johnson, Director of Marketing and Member Services
Minnesota Home Care Association

Rosalie A. Kane, Professor
Division for Health Services Research & Policy
School of Public Health
University of Minnesota

LaRhae Knatterud, Planning Director
Aging Initiative/Continuing Care
Minnesota Department of Human Services

Gayle Kvenvold, Executive Director
Minnesota Health and Housing Alliance

Colleen Leach, Program Specialist
Program Assurance Unit
Minnesota Department of Health

Lisa Rotegard, Supervisor
Aging and Adult Services/Community Support
Minnesota Department of Human Services

Nancy Sailer, Director of Program Services
Minnesota and Dakotas Regional Chapter of the Alzheimer's Association

Julie Skoy, Supervisor
Eligibility Policy
Minnesota Department Of Human Services

Diane Sprague, Policy Analyst
Minnesota Housing Finance Agency

Darrell Shreve, Director of Research and Regulations
Minnesota Health and Housing Alliance

Mary E. Youle, Director of Housing & Community Services
Minnesota Health & Housing Alliance

Sharon Zoesh, State Ombudsman
Office of Ombudsman for Older Minnesotans
Minnesota Department of Human Services

Endnotes

Long term Care Task Force: Reshaping Long term Care in Minnesota.
The State applies the following §1902(r)(2) less restrictive resource methodologies for Group C: household/personal goods are excluded and a more liberal homestead exclusion is allowed for certain long term care residents.
Asset limits for the Minnesota Supplemental Aid program are lower, i.e., $2,000 for an individual and $3,000 for a couple.
"If the community or institutionalized spouse establishes that the community spouse needs income greater than the monthly maintenance needs allowance determined in this paragraph due to exceptional circumstances resulting in significant financial duress, the monthly maintenance needs allowance may be increased to an amount that provides needed additional income." (Minnesota Statutes 2003, Chapter 256B.058: Treatment of income of institutionalized spouse.)
O'Keeffe, J., People with Dementia: Can They Meet Medicaid Level-of-Care Criteria for Admission to Nursing Homes and Home and Community-Based Waiver Programs? AARP, August 1999.
The 300 percent of SSI rule is for the aged only. CRS Report for Congress, Medicaid: Eligibility for the Aged and Disabled, updated July 5, 2002.
The State applies the following §1902(r)(2) less restrictive resource methodologies for Group C: household/personal goods are excluded and a more liberal homestead exclusion is allowed for certain long term care residents.
Asset limits for the Minnesota Supplemental Aid program are lower, i.e., $2,000 for an individual and $3,000 for a couple.
"The commissioner shall seek to amend the federal waiver and the medical assistance state plan to allow spousal impoverishment criteria as authorized under United States Code, title 42, section 1396r-5, and as implemented in sections 256B.0575, 256B.058, and 256B.059, except that the amendment shall seek to add to the personal needs allowance permitted in section 256B.0575, an amount equivalent to the group residential housing rate as set by section 256I.03, subdivision 5." (Minnesota Statutes 2003, Chapter 256B.0915, subdivision 2: Spousal impoverishment policies)
CRS Report for Congress, Medicaid: Eligibility for the Aged and Disabled, updated July 5, 2002.
O'Keeffe, J., People with Dementia: Can They Meet Medicaid Level-of-Care Criteria for Admission to Nursing Homes and Home and Community-Based Waiver Programs? AARP, August 1999.
Asset limits for the Minnesota Supplemental Aid program are lower, i.e., $2,000 for an individual and $3,000 for a couple.
Minnesota Statute 144D.
Typically Board and Lodge with Special Services entities would not have a special care unit unless it registered as a Housing with Services Establishment to enable it to receive waiver payments. If it is not registered as a Housing with Services Establishment, it cannot serve waiver clients, but may be receiving GRH Supplemental Service payments for non-elderly clients who are ineligible for waiver services (usually dual diagnosed with mental illness and chemical dependency).
Minnesota Statues 2003, Chapter 144D.065, Establishments that serve persons with Alzheimer's disease or related disorders.
Under Minnesota law, most agencies or individuals regularly providing home care services to clients for a fee are required to have a Minnesota home care license. Some individuals do not need to be licensed or registered if they provide limited types of services for 14 or fewer hours a week to only one client. Family members and volunteers providing such services without charge generally do not need a license. When Minnesota's home care license requirements were implemented, only services provided in single-family homes and apartments were covered. Although the Housing with Services Contract Act created no new licensing program, it did extend the existing home care licensing requirements to additional types of residential settings--including, board and lodging establishments and corporate adult foster care homes, if they meet the Contract Act criteria.

The home care license requirements spell out the services the agency or individual is allowed to provide and other requirements such as those related to the training and supervision of unlicensed caregivers, assessment of client needs, and the development and implementation of clients' service plans. Some home care providers are also Medicare-certified and must meet federal Medicare requirements in addition to the state licensing requirements. Liability insurance is a requirement for licensure.
Certified Boarding Care Homes are considered nursing homes and are eligible to receive Medicaid payments. However, these homes may only provide "light" care and cannot provide skilled nursing home care.
When the Housing-with-Services Contract Act was passed in 1995, it was designed to apply to various types of buildings serving seniors, rather than settings serving other groups, such as persons with developmental disabilities. To distinguish which buildings served seniors, the state used the definition from the federal Fair Housing Act, which requires that 80 percent of the residents be age 55 or older.
The state purposely excluded housekeeping services, meal programs, routine van transportation to shopping or recreational activities from the definition of supportive services so that the providers of these services would not have to meet all the requirements of the Contract Act.
There is an erroneous belief that Minnesota's Medicaid waiver program only provides assisted living services to elderly persons living in private apartments with a full kitchen. It stems from the fact that when the Elderly Waiver service packages were first created, the package of services that were provided in apartment settings (where there were individual kitchens) was labeled "assisted living" while a very similar package covering essentially the same services could be provided in settings where residents did not have individual kitchens. The latter package was given a different name--residential care services. Both service packages covered the same types of personal care and health-related services, but they had two different labels. Consequently, many people made the assumption that because the service package labeled assisted living could only be provided in apartments with kitchens that these kinds of services could not be provided in other types of settings. (Personal communication)
A Rule 203 license for 5 people is only available if all residents are at least 60 years old and none have a serious and persistent mental illness or a developmental disability; otherwise the setting must be licensed as a board and lodge by the Minnesota Department of Health. (Source: DHS Bulletin #00-25-4.)
Ibid.
These settings were grandfathered in with the passing of the Housing with Services Contract Act. A moratorium was put into place so that no more settings of these types could be developed and there remain approximately 125 in the system. See section titled Background under Residential Care Facilities.
A personal needs allowance and any income allocated for a community spouse is disregarded.
The amount is based on the following formula: $552 (SSI payment) minus $20 disregard and $72 personal needs allowance + $81 (Minnesota Supplemental Aid (MSA) maximum) + $139 Food Stamps. The state does not get reimbursed from the Food Stamp program, but the state has a workgroup that is looking at how to get food stamps for persons in residential settings. The state uses the $139 figure to estimate what a person would need to live in the community, as that is the maximum Food Stamps benefit provided to a single person.
Supervision may not be provided by a resident who is receiving services.
Although this level receives the lowest reimbursement, the people in this category may in fact need extensive supervision. O'Keeffe, J. op.cit.
Rate equalization exists only in that the service payment rate for a "public-pay" client shall not exceed the service payment rate for a "private-pay" client.
The Alternative Care Program's monthly service cap is limited to 75 percent of the monthly service cap in effect for persons assigned the same case mix classification as persons receiving Elderly Waiver services.
Mollica, R. J., State Assisted Living Policy: 2002, National Academy for State Health Policy, 2002.

Appendix D. North Carolina

The information in this appendix is presented in three major sections:

The first section provides an overview of the state's long term care system, with a primary focus on the Medicaid program. Although a state may pay for services in residential care settings through the Medicaid program, the program's financial eligibility criteria and related financial provisions for home and community services can present barriers to serving Medicaid clients in these settings. Thus, the first section of each state's description presents detailed information about rules related to financial eligibility, spousal financial protections, and cost sharing requirements.
The second section describes the state's residential care system.
The final section presents the views of respondents interviewed for this study on a range of issues related to Medicaid coverage of services in residential care settings in their state.

I. Overview of Long Term Care System

Nursing Homes

North Carolina has had a Certificate of Need (CON) Program for nursing homes since 1981. Consequently, compared to other states, they have a lower number of nursing home beds per person age 65+ than the national average: 3.8 percent compared to 4.2 percent. The current occupancy rate is 87.9 percent compared to the national average of 82.9 percent.¹

1. Gregory, S.R. and Gibson, M.J., Across the States: Profiles of Long Term Care. Public Policy Institute, AARP, November 2002.

Waiver Program

The state's waiver program for elderly persons is called the Community Alternatives Program for Disabled Adults (CAP/DA). Only persons residing in their own or another's home can receive waiver services because North Carolina licensing rules do not permit any residential care settings to serve persons who need a nursing home level of care. Due to a nursing home bed shortage and other factors, some people who meet the state's nursing home level of care criteria do in fact reside in adult care homes. They are not eligible for waiver services but can receive some nursing care through Medicare or Medicaid Home Health services".

Personal Care Option

In the 1980's, the state added personal care services to the Medicaid State Plan. At that time, only Medicaid-eligible persons residing in their own homes could be eligible for personal care services. Personal care in people's homes includes assistance with activities of daily living (ADLs) and instrumental activities of daily living (IADLs), and is capped at 80 hours a month. Between July 2000 and June 2001, 23,661 people received Medicaid personal care in their own homes.

In 1995, the state expanded the settings in which care could be provided to adult care homes. In adult care homes, personal assistance includes assistance with ADLs and medications. Assistance with meal preparation, housekeeping, laundry, and money management is covered under the room and board payment. To be eligible for Medicaid covered personal care services, individuals must first meet Medicaid's financial eligibility criteria. However, these criteria differ for individuals in their own home and individuals in adult care homes.

Long Term Care Programs Funded with State Revenues Only

North Carolina combines some state funds with Older Americans Act funds into a program called the Home and Community Care Block grant that is distributed to the counties based on an intrastate formula.

II. Residential Care Settings

Background

For the past several decades, North Carolina has depended heavily on domiciliary care to meet the long term care needs of its population.⁷Domiciliary care was a term North Carolina used to define three types of residential care settings: Homes for the Aged (also called Adult Care Homes), Family Care Homes, and Group Homes for Adults with Developmental Disabilities. These homes are licensed by the Department of Human Resources' Division of Facility Services and monitored by county Departments of Social Services staff.

Domiciliary homes were defined in statute as any facility, by whatever name it is called, that provides residential care for aged or under 65 disabled persons whose principal need is a home that provides the supervision and personal care appropriate to their age or disability.

Personal care is defined as including bathing, dressing, and feeding and instrumental activities of daily living such as shopping and laundering clothes.
These homes are not permitted to provide medical care, except on an occasional or incidental basis, but they are expected to administer medications.
These homes are to be distinguished from nursing homes. Their license does not permit them to serve persons who meet the state's nursing home level of care criteria, and so the residents of these homes, even if they meet the state's HCBS waiver eligibility criteria, cannot receive waiver services in this setting. The homes provide custodial care, and if residents needed nursing care or skilled therapies, the state covers them through the Medicaid Home Health benefit.

Prior to 1995 when the state began paying for some personal care in these homes through the Medicaid program, domiciliary care was solely privately purchased. However a significant amount of the payments to residential care settings was publicly subsidized through the federal SSI program and the state's SSI supplement, called Special Assistance.

Persons eligible for SSI who live in domiciliary care homes are eligible for Special Assistance. Each month they receive a check, which is paid to the home. Monthly benefits for the combined SSI and Special Assistance benefit are established by the North Carolina General Assembly as the "rate" for domiciliary home care. Prior to the use of Medicaid to pay for some personal care in these homes, this rate covered room and board and custodial care provided by the home.

7. The information in this section draws heavily from Elise Bolda's report: Initial report on North Carolina domiciliary care policy. The Long Term Care Resources Program, Duke University Center for the Study of Aging and Human Development (1991).

Multi-Unit Assisted Housing with Services

Multi-Unit Housing with Services is a new type of residential care setting named by the 1995 legislation. However, it is more a housing model than a service model. The model was included in the legislation at the request of developers who were interested in a limited service model that did not have to be licensed or highly regulated, but could, nonetheless, be marketed as assisted living.

Because Multi-Unit Housing with Services facilities cannot have in-house personal assistance staff, they do not have to be licensed; they have only to register with the state. Although North Carolina statute defines assisted living as group housing with services that, at a minimum, include one meal a day, housekeeping, and personal care services, Multi-Unit Housing with Services facilities are required to provide protective oversight and social services only. They may choose to provide additional services such as meals and housekeeping, and they may arrange for hands-on personal care and nursing services provided by an outside agency.

Multi-Unit Housing with Services provide private residences--studios and one or two bedroom apartments with private baths and full kitchens or kitchenettes. Persons who live in Multi-Unit Housing with Services are considered to be legal tenants who live in their own rented units.

Persons living in Multi-Unit Housing with Services facilities could theoretically become eligible to receive Medicaid personal care or waiver services in this setting. However, persons who meet Medicaid's financial eligibility rules (those with incomes no higher than 100 percent of the federal poverty level or who spend down to eligibility) are unlikely to be able to afford the rent in these facilities. While some Multi-Unit Housing with Services facilities may set rents on a sliding scale, some facilities charge as much as $1500 a month as their base rate, which does not include any personal care services.

Adult Care Homes

There are three types of Adult Care Homes, all of which are licensed as assisted living facilities:

Family Care Homes, which are licensed to serve two to six residents. In most other states, these homes are licensed as adult foster care homes. Many are private homes in residential areas. They are required to provide room and board, personal care, supervision, housekeeping and laundry, and "meaningful" activities.
Adult Care Homes, which are licensed to serve seven or more residents over the age of 18. They provide room and board, personal care, supervision, housekeeping and laundry, and social activities.
Group Homes for Developmentally Disabled Adults, which are licensed to serve two to nine unrelated adults.

The remainder of this section will focus solely on the adult care homes licensed to serve seven or more residents.

III. Summary of Interviews

In addition to consulting with 9 state staff and policy makers regarding the technical details of the state's programs, we also interviewed four of them. In addition, we interviewed 9 stakeholders, including representatives of assisted living provider associations, consumer advocates, a former county service administrator, and two university-based policy analysts, one of whom previously worked for the NC Department on Aging.

General Comments About the State's Residential Care System

Because many of the same residential care facilities serve both private pay and Medicaid residents, most respondents expressed views about the industry as a whole.

A few stated that the state's residential care system provides options for those with the money to pay privately and for the very poor but not for elderly persons with low to moderate incomes.

There is a huge middle group of people who can't pay for the expensive places. There is a big unmet need for places between the high end and the low end. The new Multi-Unit Housing with Services model is for those who can't afford high end assisted living and it works well for people who can direct their own care or who have someone to provide oversight, and who can afford to pay extra for overnight unscheduled needs.
Assisted living for the private pay market responded to people's desire for options and control. If public funds are paying for the majority of long term care--we need to fund the system people want.

Two respondents expressed views about the state's Certificate of Need program for assisted living facilities, one noting that it needed to be better targeted.

The Certificate of Need program does not distinguish between different models of assisted living, or between non-profits and for-profits. There is a cap on beds by county, but there is a shortage of beds for people who are difficult to place, such as people with HIV AIDS or behavioral problems.
The industry supports the Certificate of Need program because it reduces competition; over-bedding is considered a problem by some in the industry because it costs a great deal of money to maintain unoccupied beds.
When the state established the moratorium on assisted living facilities, industry lobbyists supported it saying they didn't want competition, and it would save the state money. They got the moratorium, but a number of developers came in under the wire--with 14,000 beds. There is probably some overbuilding and bankruptcy--some facilities are struggling to find residents.
The Certificate of Need program does not distinguish between different types of beds. There could be a county that has only two very old facilities in which no one wants to live. If someone wanted to build a better adult care home in that county, as long as the existing facilities had vacancies, the permit would be denied.

One expressed concern about the lack of oversight of Multi-Unit Housing with Services facilities

No one in North Carolina knows how many Multi-Unit Housing with Services units there are and how many people are being cared for in them. They are required to be registered, but there is no oversight of these facilities.

Others criticized the state's moratorium and Certificate of Need program for nursing homes.

The nursing home Certificate of Need program has had a negative impact on consumers. There are not enough nursing home beds and people who should be in nursing homes wind up in adult care homes.
When North Carolina had the moratorium, for the better part of a decade there were no new nursing home beds in North Carolina. During that time there was a large increase in domiciliary care home beds. In effect, these beds substituted for nursing homes. Then in the early 1990's there was a large rush to build assisted living facilities that would cater to the private pay market. This was disconcerting to the traditional homes who depended on some private pay residents.

One mentioned that the overbuilding of market rate assisted living facilities could result in a larger number of Medicaid clients being served in these newer and "nicer' settings.

Very few market rate facilities take Medicaid clients. In one county, the developers had to pay such a steep price for land that their debt service is very high. They overbuilt the market--in one year over 20 facilities went up--now there are too many beds, which could lead to their taking Medicaid residents.

General Comments on Medicaid's Role in Residential Care Settings

Many respondents were very pleased that the state is using Medicaid funds to provide personal care to residents of adult care homes and felt it improved the quality of care. However, while there is a general sense that Medicaid coverage resulted in some quality improvement, some believe that the adult care home population is becoming more and more impaired, and that the homes are not able to provide the level of care residents need.

The introduction of Medicaid in 1995 did change things because more people are paying attention to people in these facilities. The residents are now seen by social workers and advocates--more people are in and out of the facilities--so the spotlight on these places has led to some improvement. The more people paying attention to very isolated residents with no family the better.
Introducing Medicaid personal care services into adult care homes was a cost- savings measure. It had very little to do with expanding services, options, or choice.
The primary purpose was to shift costs to the feds. It had the added benefit of increasing training and staffing requirements.
The advantage of having Medicaid in adult care homes is that is provides a dedicated revenue stream for the direct care part of adult care home costs. It allows the state to see if Medicaid dollars are being fairly utilized and if the rates are reasonable for the workload.
Bringing Medicaid into adult care homes was viewed as a means to keep people in domiciliary care safer, and some hoped, to bring more federal oversight of these homes, based on the Medicaid funding.
The state did the best it could at the time--putting more money into the homes to take care of the residents. Some in the state see it as only a temporary solution, and that the state needs to continue looking for better ways to serve the population in adult care homes.

Others are concerned that the state is using limited resources inefficiently by providing nursing care to this population through the Medicaid Home Health program.

Providing nursing care to assisted living residents through Medicare or Medicaid Home Health programs is an extremely inefficient way to provide nursing services to people in residential care facilities when large numbers of people need nursing services. This approach also does not meet all of the residents' nursing needs.

One respondent mentioned that the state had at one time looked into using the private pay model of assisted living for waiver clients.

The state's Housing Finance Agency received a grant under the Robert Wood Johnson's Coming Home Program. The purpose of the Coming Home Program is to encourage the development of affordable assisted living in rural areas. At that time, the Agency was interested in developing an affordable version of private pay assisted living with private rooms and baths and locked doors for persons eligible for SSI and Medicaid. To make this model financially feasible requires both housing subsidies to finance construction and Medicaid coverage to finance services for all the residents.

The plans were dropped when the state could not guarantee that everyone residing in the facility would be able to receive services, even if they met Medicaid eligibility criteria, due to waiting lists for services and the freeze at the time on North Carolina's waiver program.

One stated that she had opposed allowing waiver clients to receive care in assisted living.

If you use the waiver, then the residents must meet a nursing home level-of-care criteria. This would encourage the industry to operate unlicensed nursing homes.

One noted that not all facilities accept Medicaid residents and discussed some of the reasons for this.

There are three types of assisted living facilities (1) those that will take Medicaid if the person has spent down in the facility. A very small percentage will take folks who've spent down after 18 months in the facility; (2) those that have no interest in taking Medicaid and take private pay and once you can't afford it you're out; and (3) those that accept both spend down folks and Medicaid admissions--but the available beds are limited.

A disincentive to taking Medicaid residents is that the facilities have to provide cost reports to the state even if they have only one Medicaid resident in a 100 bed facility. Some providers have a huge number of buildings, but there is little movement to accept Medicaid to fill the beds. They are targeting a specific population--elderly folks with the means to pay. Facilities that take Medicaid generally set a percentage of Medicaid beds for their facility. About 35 percent is all you can have on Medicaid. Some facilities are 100 percent Medicaid but they can't provide anything above the bare minimum.

Licensing and Regulatory Requirements

Many respondents--both providers and consumer advocates--expressed concerns that the licensing category of assisted living was too broad and created problems, both for consumers and for facilities that provide the new model of assisted living.

The state's licensure category is too broad. In the battle that occurred before the new law put all types of adult care homes under one term, I was on the side that assisted living in its purest sense should have been for the frail elderly. If the state is going to use it for all adult care homes, then at least we need separate classifications for homes that serve different populations: the frail elderly, the seriously mentally ill (SMI), and the developmentally disabled (DD).
There was a push by some providers to call everything assisted living--now we have the same regulations for facilities that have 35 year old seriously mentally ill folks and for frail elderly playing bridge all day. Very generic rules; they don't work. It's a disservice to the general public who don't know what's going on. We get lots of inquiries asking about homes and they are given a list and not told that it's a mixed facility. Providers should be given the choice for different licensure requirements and marketing. Combining everyone into one category is a big disservice. I get calls from families who are looking for assisted living for their mothers, and they go to facilities with SMI and DD folks, and call me crying, saying I can't put my Mom there. Then we have to explain that there are some assisted living facilities that serve only the frail elderly.
The public is confused about long term care options. They don't understand the difference between residential care facilities, nursing homes, and assisted living. They also do not understand the difference between skilled and intermediate care, particularly the difference between eligibility requirements and staffing requirements.
In North Carolina, assisted living is nothing but a marketing term; a lot of so-called assisted living is just like institutional care. Many adult care homes look just like nursing homes. Most of the rooms are dual occupancy, few have private baths, and none have locked doors, but they can call themselves assisted living just like the $4000 a month Sunrise assisted living facility in Raleigh.
Assisted living in North Carolina does not necessarily mean a studio or apartment with a lock on the door. The domiciliary care industry decided that the words assisted living made them more marketable so they repainted their signs. There may be exceptions, but on the whole it's just a new name for an old program.
Assisted living should mean privacy plus a la carte service options plus the ability to stay and receive additional services as your care needs increase. You don't get that in adult care homes. The private pay folks get it in high end assisted living.
Some people in the state are interested in developing affordable models of assisted living that have private rooms and baths, but it can't be done without the assurance of Medicaid funding for services. With the freeze on the waiver program, it's simply not feasible at this time. If the time comes when we can do, given that North Carolina now uses the term assisted living generically to cover a wide range of facilities of varying levels of care and quality, we would not call it assisted living.

A few respondents raised serious concerns about quality and safety.

Regulations are always minimum health and safety. In the county where I worked, there was a home chronically doing terrible things--violating rights--didn't have food. We documented everything--breakfast--no one there--cook gone to get eggs and milk--nothing in larder--they are supposed to have several days supply of food. Even with media attention--change doesn't happen. People who care get burned out.
When the state authorized the use of the Medicaid Personal Care option in adult care homes, there were concerns about how the extra money was going to be used. The industry had gotten a 10 percent increase. Advocates felt that the extra money should be used to increase staffing (the regulations at the time only required one staff person per 20 residents and 1 to 50 at night).

Shortly after, there was a fire in a rest home and 7 men died of smoke inhalation (the staff were in the women's wing). There was no sprinkler system. A Governor's Committee was established to look at the issue. The media found out that the people who died were not ambulatory, and that the regulations really applied to a less impaired population. Consequently, there was an increased focus on this issue. Some members of the Governor's Committee insisted that there be a performance standard that if people couldn't evacuate, the facility had to have a sprinkler system, but it was not enacted. There was also a motion to reduce the number of high level needs folks in these homes, but it wasn't allowed to come up for a vote. A positive result of the Committee's works was that the staffing ratio was reduced from one to 50 to one to 30. But how can one person help 30 people to evacuate in the case of a fire? The new facilities have sprinklers, but a lot of older facilities without them were grandfathered.

Admission and Retention Requirements, and Aging in Place

One noted that the aging in place philosophy is not so easy to implement.

Aging in place policy is a conundrum. There will always be people who need to be in a nursing home and so we need a different model of care at the nursing home level--that's the ultimate goal to work towards: resident-centered models of care that can provide skilled care without the institutional and warehousing look and feel.

Some felt that while retention requirements needed fine-tuning, it was not a good idea to have rigid requirements as in nursing homes.

Discharge and transfer policy needs more work. I believe discharge regulations need to be more flexible than in nursing homes where they have rigid distinctions between an ICF and a SNF level of care. Some homes want only the frail and some market to those with more acute needs. It's important to remember that some facilities with a specific area of expertise want to market to a particular group. It's a private business. The advocacy groups and ombudsman want to rigidly define discharge requirements but I will oppose this. The variety and ability to be creative has made our assisted living good.
Many facilities have not bought into aging in place. To protect the public and families--we need to move away from the idea that everyone can age in place. You need full disclosure when someone enters a facility so there are no surprises down the road. There are limitations on tenancy. People have to choose a facility knowing that they many not be able to stay there forever. They just have to enjoy it as long as they can.

One felt that while flexibility is desirable, parameters are needed.

The assisted living umbrella is too big. The state needs to tighten up admission and retention requirements but not so much that consumers don't have choices. You need different types of licensing. The public is not served well--they have no idea what the umbrella term of assisted living covers. You want flexibility so people have choices, but you need parameters.

At the assisted living level, there is considerably more variation than at the nursing home level. There are very tight definitions of services at the independent living level and in nursing homes with most of the variation in the level of care at the assisted living level. They are given so much leeway. Some homes say they can do much more than they deliver. Some don't want residents to be too dependent, some will accept people with multiple needs, yet they are all licensed under the same standard. Mental health issues are major.

Many of the respondents expressed a wide range of concerns about the ability of adult care homes to meet the needs of its residents. Most concerns related to homes keeping people beyond the point where they should be discharged.

As the requirements for SNFs and ICFs have become more stringent, and nursing homes have become more focused on subacute residents, a lot of people wind up staying in lower levels of care far beyond the capability of those levels to provide the care that is needed. These places don't provide adequate staff training and don't have required coverage ratios. But they keep the residents in order to keep the beds filled and because it's difficult to find a nursing home bed for a Medicaid beneficiary. Nursing homes are under a Certificate of Need program--so nursing home growth has been constrained. So the situation is affected by two things--lack of beds and higher acuity hospital discharges.
The State does not have a good system in place to assess residents of Adult Care Homes to be sure their needs continue to be met as they age.
Adult care homes tend not to take people with certain disabilities. They want people they can manage with limited assistance and oversight. But as they age, their needs increase, and some homes do try to accommodate them to the best of their ability. But others take whoever they can get--and the residents get minimal custodial care.
I am particularly concerned about inappropriate placement of persons with SMI. Residents with serious psychiatric problems are retained because it is very difficult to get people into the geriatric wards in the state psychiatric hospitals. The state needs to conduct a study to determine the extent of inappropriate placement of people with SMI, particularly in response to Olmstead.
In some states the nursing home occupancy rate has been dramatically reduced but not here--we still don't have enough beds. The easiest way to get into a nursing home is from a hospital--paperwork is done--Medicare will pay. When we tried to place folks from home, like an Adult Protective Services case, it was very difficult--even if they had a bed--too difficult to admit. Coming from the hospital, they know what medications the person is on and whether they have a catheter. Nursing homes don't want to accept the unknown--maybe because they have had very difficult residents or very heavy care folks placed by county folks with no forewarning. It could have made them reluctant to trust the information provided on cases seeking admission from the community.
The adult care home client is basically the old ICF nursing home client. We have people in adult care homes in North Carolina that would be in nursing homes in other states.
Prior to 2000, assisted living residents did not have some of the same rights and protections that nursing home residents have. If you were a resident of assisted living, you could be discharged with no notice for no reason. A bill enacted in 2000 gave assisted living residents the same rights as nursing home residents: they can't be discharged without 30 days notice. Basically, the bill applied existing North Carolina law regarding nursing homes to assisted living residents. However, implementation has been problematic. The regulatory body has issued regulations and there has been a lot of discussion about changes in the level of care. Facilities are saying that when there is a change in the level of care designation by the MD on the eligibility assessment form, then it's immediate jeopardy and the 30 day notice doesn't apply.
Residents may desire to stay because it's a familiar setting. Most homes are for-profit businesses so occupancy rates play into this. If they have 100 percent then they look to skim the cream.

One made a distinction between the need for protections for residents with and without families.

Many discount the intelligence of family and residents but they are better regulators than the state. But residents without families who live in adult care homes need different standards.

Some expressed concerns about the level of nursing care needed by residents in adult care homes.

If Catherine Hawes' 1991 study was repeated today, it would find that people need two hours of care a day not one hour.
There are people in adult care homes who need nursing care and it is provided either through the Medicare or Medicaid Home Health benefit. However, providing nursing care through these benefits one-on-one is very expensive. But if you allow these homes to provide health care, then you will have unlicensed, substandard nursing homes. There is a lot of money in the system but it is not focused on getting needs met in the right way.
Many of the current residents of adult care homes in the past would have been in ICF nursing facilities. The old ICF nursing homes had LPNs and there was LPN supervision of aides, and nursing care was provided. Although Adult Care Homes are not licensed to provide nursing care, there is probably no difference in the type of residents they serve. People in private pay assisted living facilities may also be inappropriately placed from the perspective that they meet the nursing home level of care criteria. However, people in these places can pay for as much care as they can afford.

Service Rates

A few mentioned the need for a different rate system than the current one.

A case mix system would be preferable over what we have now: a fixed Special Assistance and Medicaid rate. The basic service rate is too low and the enhanced rate is minimal. There has been no increase this year and increases in the past year have not equaled what the cost reports said it should pay. With a case mix system, you could track expenditures to determine whether a resident did in fact get the service that the provider is reimbursed for.
We must assure that the public system supports and demands quality from providers. Medicaid payment is totally inadequate for the level of care required. It pays for one hour a day and the rate for that hour is too low. $270 per month for one hour a day, plus a little more if enhanced care. There is no direct requirement that all Medicaid money for direct care staffing be actually paid for direct staffing.
Rates are inadequate. Since 1995, the state has used a cost reimbursement method based on cost reports--averaging, a state wide average. Using one rate for the whole state has its plusses and minuses. There are no incentives for those who aspire to a higher level of quality care. We need a case mix system. Then you are paying for the amount of care someone needs. Under the current system, there is no incentive in the reimbursement system to take heavy care residents.
The biggest quality issue is staffing and the Medicaid rate for direct care workers is not adequate. We give the staff too heavy a workload, too many residents to care for in a limited amount of time. Is it fair to the workers and the residents? Medicaid should require that you have to pay staff adequately, using a case mix model to assure that residents' needs are met.

One mentioned that the Medicaid rates in adult care homes are not sufficient to provide care to persons with dementia.

The state does not pay a sufficient rate to take care of people with dementia in special care units. Special care residents don't qualify for the enhanced personal care rate--because Medicaid only pays for hands-on physical assistance. Cueing and set up takes more time than doing something for the resident. So we encourage dependence. Without a case system, we will not get designated funding for dementia and this population gets ignored.

Suggested Changes to Improve the Medicaid-Funded Residential Care System

Respondents had numerous suggestions for improving the state's residential care system generally, and Medicaid specifically.

We need adequate reimbursement for dementia care, more outcome oriented regulations, and providers need to give full disclosure about what is and is not provided.
We need more congregate housing with private rooms. We're looking how to convert existing bricks and mortar--we need specialized housing for persons with disabilities and those with cognitive impairment that is a notch above what's available in our adult care homes for persons on public assistance. We would like to provide private rooms with a bath and kitchenette and round the clock support.
We do not need more residential care beds in North Carolina. We need to upgrade the beds we have. There are a number of old facilities that are substandard.
We have plenty of beds and facilities, what we need now is better living conditions.
What North Carolina needs is a better mechanism for managing the long term care needs of all the populations we serve. Currently, our system is very fragmented. Too many agencies have responsibility for different pieces of the system: the Division of Facilities Services, the Division of Social Services, the Division on Aging. The state has been looking into ways to consolidate--trying different approaches--to manage funds on a need basis rather than program category, but it constantly faces opposition. There are too many players. No one argues with what needs to happen--they argue about who will do what and who will have control. Each department needs to be better consolidated. It will happen eventually, but not for at least five years.
The state needs a designated funding stream for dementia special care. There are very few Medicaid clients in these units because there is just not enough money. About three years ago there were new dementia regulations, which providers fully supported, and the state said that money would be available but it didn't happen. The model is so cost prohibitive that Medicaid folks can't be in it--so they get transferred to a nursing home because they can't afford a special care unit, which provides extensive cueing and supervision.

A few mentioned that adult care homes should serve homogeneous populations, and that the state needed different regulations to assure the quality of care for the different populations.

I don't believe in mixing diagnoses in one building. We need to separate the populations. Have separate licensing categories by type of population served.
The market should call for more specialization of clients in adult care homes, and hopefully the industry and policy makers will push it--create rules to not mix types of clients (e.g., putting the young SMI with the elderly.)
There should be separate licensing standards for adults with serious mental illness than for the frail elderly. These populations have very different needs.
Some homes serve a heterogeneous population: Younger SMI and DD and the elderly all together. There are still stories in the media about the non-vulnerable preying on the vulnerable--rapes and even murder.

A number stated that the state needed better assessment procedures and data for a number of purposes.

It is very difficult for the state to figure out exactly what it should be doing because they do not have sufficient data to make decisions. The state does not have a good assessment procedure. The form currently used is only two pages and is not appropriate for care planning. The state needs an appropriate assessment instrument to better understand the needs of those being served.
The State's Department of Social Services has been working to develop and automate an assessment form for three years. It is costing millions and it is still not completed, but the General Assembly will be cutting funding for this project.
There are two questions in North Carolina--are adult care homes being paid enough and what are they doing with the payments they receive? Getting data from the homes after they started getting Medicaid money was like pulling teeth.
The Department of Human Services has consultants who are looking at reimbursement for all long term care facilities. They're having no problem making recommendations for nursing homes and ICF-MRs because they have the data for these facilities. But they don't know what to recommend for residential care because they do not have adequate data. The state hopes to have the data from adult care homes computerized by 2004.

Two respondents said the that the state needed to better utilize Medicaid funding, noting that North Carolina has a 64 percent match, and the Special Assistance payment is all state and county money.

The state should use Medicaid to broaden coverage, specifically for the MRDD, SMI and dementia folks.
If the type of care that could be provided in assisted living facilities were increased, then they could fund more of the care costs under Medicaid.

Another expressed concern about cuts in the state's Medicaid budget.

The most important issue we are dealing with now is opposing proposed cuts in the Medicaid program, specifically, a proposed across the board decrease in the service rates for all providers.

A number said that the state needed to better support home care.

People shouldn't have to go into an adult care home to get Special Assistance and Medicaid.
North Carolina has rules allowing spousal separation of income that make it relatively easy for a moderate income household to qualify one member for nursing home benefits without impoverishing the community spouse. Similar generosity is not provided for those applying for waiver services.

Several noted that the state should permit family supplementation in assisted living settings to pay for private rooms.

It would be great if families were permitted to pay the difference in cost between a semi-private and private room in assisted living for folks on Medicaid. But there are concerns about equity. Providers may give priority in admissions to those whose families can supplement.
There are an increasing number of requests for information about SSI/Medicaid and family supplementation from market rate assisted living facilities who have residents who have spent down and they want to see if they can figure out some way to keep them.
Provider associations are getting more calls about this issue than ever before. People have spent down in market rate assisted living and they have to move to an adult care home and the family wants to supplement their income to pay for a private room.
When private pay folks with dementia are in special care units and their resources run out--families often pay the difference in cost between the regular rate and the special unit rate, which is about $600 a month.

One noted that even continuing care retirement communities (CCRC) have requested information on how to keep private pay residents who have spent down.

A CCRC called the other day and wanted to know how to deal with spend downs. We told them that they have to become a Medicaid Provider and be licensed by DSS, then their residents will be eligible for a state supplement if they meet asset and income tests.

Future Plans

The state is planning to move from a tired rate for Medicaid personal care in adult care homes to a case mix reimbursement system that will be based on assessed needs. The state wants an assessment to determine what someone needs and how much the state should be paying for services. The state thinks it is paying too much for some and not enough for others. The state is waiting to get the assessments of Medicaid enhanced care (required since 1996) computerized to do the data analysis needed to support a case mix reimbursement methodology.
A number of stakeholders are working with the General Assembly on a bill to allow family supplementation in assisted living facilities.

Recommendations for Other States

The boundaries between the new model of assisted living and old forms of residential care are very squishy. How do you regulate a philosophy? What Keren Brown Wilson did in Oregon when she was a hands-on manager is one thing. But when it goes beyond mission driven entrepreneurs into the market place it turns into something else. North Carolina has played it out and we haven't done it well. The Keyes amendment is the only way the feds can weigh in.
North Carolina provides a good example of what not to do. Don't put people who should be in nursing homes into assisted living settings that can't meet their needs.
The big issue states have to think about is that we don't' know how to care for very impaired people without a professional component. We don't know how to regulate the settings that provide this care. We don't know what to replace the current regulations with.
In looking at what the states are doing in residential care with Medicaid you have to realize that states are starting from very different places. Oregon was very serious about deinstitutionalization, but its very important to remember that because of the nursing home moratorium, North Carolina had a very low nursing home supply--maybe 35 beds per 1000 people age 65 and older. When Oregonstarted, they had more than the average--approximately 50 per 1000. When Oregon started to change their system, they had less than 5000 domiciliary care beds; at the same time, North Carolina had 30,000.

North Carolina had already bifurcated the population--the people in nursing homes were very impaired, and the ones in rest homes--while they may have started out less impaired--were getting more and more impaired. So in effect, North Carolina already had the situation that Oregon was aiming for. North Carolina had difficulty discharging folks from hospitals due to lack of nursing home beds. But people in North Carolina and consumers--older people with family looking for nursing home care--they have not been in favor of decreasing nursing home beds--so consumers said: give us something besides nursing homes--if the occupancy rates are so low--how low can you go and still give consumers a choice. We had virtually 100 percent occupancy. No consumer choice. The nursing homes were going to take some heavy needs patients but not that many. So for a heavy needs person to get placed, someone else had to expire or be transferred. The only place where there was movement was on the adult care home side.

Theoretically, people who meet the nursing home level of care criteria should not be in domiciliary care. There are big issues to consider on the health care side. Moving to a lower level of care shouldn't mean abandonment of health care standards. You need to keep costs manageable, but you also need to assure that people receive the health care and medication management that they need. North Carolina provides a good example of what happens when you serve a lot of folks in a lower level of care than the nursing home. You might have a private room, but if you don't pay enough for services, then people will not get good quality care. Other states should understand all these things before they move forward.

Sources

Publications

Bolda, E., Initial report on North Carolina domiciliary care policy. The Long Term Care Resources Program, Duke University Center for the Study of Aging and Human Development (1991).

Gregory, S.R. and Gibson, M.J., Across the States: Profiles of Long Term Care. Public Policy Institute, AARP, November 2002.

Hawes, C., Lux, L., Wildfire, J., Green, R., Packer, L. E., Lannacchione, V., and Phillips, C., Study of North Carolina domiciliary care home residents. (February 15, 1995). Report submitted to the North Carolina Department of Human Resources.

Kassner, E. and Williams, L., Taking Care of their Own: State-funded Home and Community-based Care Programs for Older Persons, AARP, September 1997.

Kassner, E. and Shirley, L., Medicaid Financial Eligibility for Older People: State Variations in Access to Home and Community-Based Waiver and Nursing Home Services, AARP, April 2000.

Manard, B. et. al., Policy Synthesis on Assisted Living for the Frail Elderly: Final Report, submitted to Office of the Assistant Secretary for Planning and Evaluation, December 16, 1992.

Mollica, R.L., State Assisted Living Policy: 1998, Report (ASPE and RTI) June 1998.

Mollica, R.L., State Assisted Living Policy: 2000, National Academy for State Health Policy; funded by The Retirement Research Foundation (LTC13). August 2000.

Mollica, R.L., State Assisted Living Policy: 2002, National Academy for State Health Policy, November 2002

O'Keeffe, J., People with Dementia: Can They Meet Medicaid Level-of-Care Criteria for Admission to Nursing Homes and Home and Community-Based Waiver Programs?, AARP, August 1999.

Stone, J.L., Medicaid: Eligibility for the Aged and Disabled, Congressional Research Service Report for Congress, updated July 5, 2002.

Websites

Aged, Blind and Disabled Medicaid Eligibility Survey http://www.masterpiecepublishers.com/eligibility/

Department of Health and Human Services http://www.dhhs.state.nc.us/

DHHS Division of Aging http://www.dhhs.state.nc.us/aging/

DHHS Division of Facility Services http://facility-services.state.nc.us/gcpage.htm

DHHS Division of Medical Assistance http://www.dhhs.state.nc.us/dma/

DHSS Division of Social Services http://www.dhhs.state.nc.us/dss/cty_cnr/depts.htm#top

North Carolina Administrative Rules, Aging: Program Operations http://ncrules.state.nc.us/ncadministrativ_/title10ahealtha_/chapter06a…

North Carolina Administrative Rules, Licensing of homes for the aged and infirm http://ncrules.state.nc.us/ncadministrativ_/title10healthan_/chapter42i…

North Carolina Assisted Living Association http://www.ncassistedliving.org/

Formal and Informal Interviews

Elise Bolda, PhD, Research Assistant Professor
Institute for Health Policy, Muskie School of Public Service
University of Southern Maine

Jerry Cooper, Executive Director
NC Assisted Living Association

Jackie Franklin, Special Assistance Program Manager
Adult Social Services Section, Division of Aging

Bill Hottell, Manager
Adult Care Homes

Bill Lamb
UNC Institute on Aging

Sandra Crawford Leak, Associate Program Director
Long Term Care Resources Program
Center for the Study of Aging and Human Development
Duke University

Mary Jo Littlewood, Manager
Community Alternative Program

Lou Morton, Program Consultant
Adult Care Homes

Beverly Patnaik
Long Term Care Resources Program
Center for Study on Aging and Human Development
Duke Medical Center

Lynn Perrin, Section Chief
Medicaid Policy and Institutional Services

Helen Savage
AARP--NC Chapter

Dennis Streets,
Division of Aging

Carol Teal, Executive Director
Friends of Residents in Long Term Care

Mary Reca Todd, Supportive Housing Team Leader
North Carolina Housing Finance Agency

Judy Walton, Administrator of Managed Care for Seniors
Division of Medical Assistance
Office of the Director
NC Department of Health and Human Services

Susan Williamson, President and CEO
North Carolina Association of Nonprofit Homes for the Aging

Andy Wilson, Project Coordinator
Medicaid Eligibility Unit
N.C. Division of Medical Assistance.

Lou Wilson, Executive Director / Facility Operator
North Carolina Association Long Term Care Facilities

Endnotes

Gregory, S.R. and Gibson, M.J., Across the States: Profiles of Long Term Care. Public Policy Institute, AARP, November 2002.
Prior to 1995, North Carolina (North Carolina) was a 209(b) state and had the option of using more restrictive financial eligibility criteria than that of the Supplemental Security Income (SSI) program to determine financial eligibility for Medicaid. During this time, persons who were eligible for SSI, either because they were disabled or 65 years or older, were not automatically eligible for Medicaid, as they were in most states.

Individuals could become eligible for Medicaid by spending down to $242, or $317 for a couple. Resource limits were also more restrictive than SSI. The one exception to this income standard was linked to receipt of the SSI state supplement, called Special Assistance (SA), which was provided only to individuals residing in adult care homes.

In January 1995, the state began covering all SSI recipients under Medicaid, and in 1999 increased the income standard to 100 percent of the federal poverty standard. This standard is used to determine eligibility for all long term care services in the state, including nursing homes. The state also has a medically needy program.
As permitted under the §1902(r)(2) less restrictive income methodologies, the state excludes wages paid by the Census Bureau for temporary employment; it also does not count the following: personal effects & household goods; life estate interest and tenancy in common interest (except for optional state supplements); burial plots; cash value of life insurance if the total face value does not exceed a specified amount.
At a county's option, blind and disabled adults who are not eligible for SSI may also receive a supplement in a private living arrangement. They are covered under "certain disabled" provisions but receipt of the SA does not confer Medicaid eligibility as it does to individuals residing in Adult Care Homes.
In August 1995, the combined SSI/SA payment was lowered from $982 to $800. The savings were used to provide the state match for the new Medicaid personal care benefit. The reduction resulted in some people in adult care homes not meeting the Special Assistance income eligibility criteria, and thus losing Medicaid eligibility. However, the state grand-fathered them for continued coverage.
There are some exceptions, a discussion of which is beyond the scope of this report.
The information in this section draws heavily from Elise Bolda's report: Initial report on North Carolina domiciliary care policy. The Long Term Care Resources Program, Duke University Center for the Study of Aging and Human Development (1991).
Hawes, C., Lux, L., Wildfire, J., Green, R., Packer, L. E., Iannacchione, V., and Phillips, C. Study of North Carolina domiciliary care home residents. (February 15, 1995). Report submitted to the North Carolina Department of Human Resources.
One respondent noted that some owners believe a minimum of 60 beds are needed to make a profit.
One respondent stated that people on Medicaid could not afford private rooms because Medicaid only pays for services, not for lodging.
Elise Bolda's report: Initial report on North Carolina domiciliary care policy. The Long Term Care Resources Program, Duke University Center for the Study of Aging and Human Development (1991).

Appendix E. Oregon

The information in this appendix is presented in three major sections:

The first section provides an overview of the state's long term care system, with a primary focus on the Medicaid program. Although a state may pay for services in residential care settings through the Medicaid program, the program's financial eligibility criteria and related financial provisions for home and community services can present barriers to serving Medicaid clients in these settings. Thus, the first section of each state's description presents detailed information about rules related to financial eligibility, spousal financial protections, and cost sharing requirements.
The second section describes the state's residential care system.
The final section presents the views of respondents interviewed for this study on a range of issues related to Medicaid coverage of services in residential care settings in their state.

I. Overview of Long Term Care System

Oregon requires most elderly and disabled Medicaid beneficiaries to enroll in managed care. They receive their Medicaid-covered acute care services through a managed care plan, as well as certain services, such as home health care. Nursing home care, residential care, and most in-home services are carved out of the managed care initiative and remain in the fee-for-service system.

Nursing Homes

Oregon has a statewide nursing home pre-admission screening process. Individuals who enter a nursing home are approved for varying lengths of stay, depending upon the reason for admission and the likelihood of, and timetable for, improvement, and are reviewed periodically to evaluate their potential for discharge to the community.¹ Because the state has a "mature" long term care system that is widely known among community organizations, service providers, referral sources, families and consumers, it has a strong capacity to divert people from nursing homes.²

Nursing Home Relocation Services, begun in 1982, are still an important part of Oregon's long term care system, though the average nursing home resident in 2002 is much more impaired. Because HCBS care coordination staff caseloads are high, some Area Agencies on Aging have created relocation specialist positions. Relocation costs may be paid by exempting resident income generally paid to the nursing home, or through the HCBS waiver program.
Mollica, R.L. and Jenkens, R., State Assisted Living Practices and Options: A Guide for State Policy Makers, Coming Home Program, Robert Wood Johnson Foundation, September 2001.

Waiver Program

In 1981, Oregon received the very first Section 2176 Medicaid Home and Community-Based Waiver. At that time, the state decided that home and community services would be treated as an entitlement, which meant that no waiting lists would be developed except for lack of providers.⁷

Oregon's waiver program provides in-home nursing, personal care, and housekeeping services, adult day services, and assisted living services. About three quarters of all in-home services are provided through a consumer-directed program--the Client Employed Home Care Program--which allows clients to hire, supervise, and fire, if necessary, their own workers, who can be friends, relatives or home care professionals. The state provides clients with administrative support (including the actual payment of wages, unemployment insurance and FICA), and will also help the client find suitable in-home workers.

A key feature of Oregon's waiver program is the use of nurse delegation, which has played an important role in its success. In 1987, the state enacted legislation directing the Board of Nursing to adopt rules allowing licensed registered nurses to delegate basic and special nursing tasks to unlicensed personnel. These tasks include almost all nursing tasks except injections. Nurse delegation has enabled home and community services to be provided at much lower cost than if licensed nurses had to provide all nursing care. The use of nurse delegation has been particularly important in the development of the state's adult foster homes and assisted living facilities.⁸

Sparer, M. op. cit.
Kane, R. L., et. al., Oregon's LTC System: A Case Study by the National LTC Mentoring Program, University of Minnesota, April 1996.

Personal Care Option

The state covers Medicaid state plan personal care services only in private homes and not in residential care settings.

Long Term Care Programs Funded with State Revenues Only

The state's Oregon Project Independence program provides in-home services and adult day care to persons who do not meet the financial eligibility criteria for Medicaid. Project Independence serves individuals over 60 years of age, and people under 60 with Alzheimer's or other dementias, who meet the same criteria as for nursing home and waiver services.

II. Residential Care Settings

Background

In 1981, the state mandated that long term care services be delivered in the least restrictive setting possible, and that nursing homes be reserved as the placement of last resort.¹⁰ Apart from the 1981 legislation, six other state initiatives were instrumental in reconfiguring Oregon's long term care system, which paved the way for the growth of assisted living and other residential care options:¹¹

In 1981, Oregon was the first state to obtain a 1915(c) waiver.
Use of a nursing home certificate-of-need program to limit nursing home growth.
Relatively low nursing home reimbursement has minimized the incentive for nursing homes to accept Medicaid entrants.
Expansion of the home and community services infrastructure, focused on developing adult foster care, assisted living, and other non-medical residential settings.
Enactment of the most liberal nurse delegation act in the nation, enabling more individuals to be cared for in home and community settings at an affordable cost.
Development of a strong case management system that enabled clients to receive the care they needed in their homes or community settings.
The 1981 legislation also stated: "…. that the elderly and disabled citizens of Oregon will receive the necessary care and services at the least cost and in the least confining situation. (and) that savings in nursing home...allocations...be reallocated to alternative care services…"¹²
These new concepts led to the development of a different approach to service delivery in congregate settings, one where safety is not considered the most important value, but one of several equal values including dignity, independence, choice, privacy and individuality.¹³

The success of Oregon's approach is reflected in the numbers of people served in residential care settings compared to those in nursing homes. In July 2002, the state's Medicaid long term care caseload was distributed as follows:

In-Home Care Services clients = 14,556
Nursing Facility clients = 5,782;
Adult Foster Care clients = 5,399
Assisted Living Facility clients = 3,662
Residential Care Facility clients = 1,867.¹⁴

Oregon has three major types of residential care facilities and separate licensing and regulatory requirements for each of them: Adult Foster Homes (AFHs), Residential Care Facilities (RCFs), and Assisted Living Facilities (ALFs). The state also has a number of Specialized Living Facilities of varying sizes that are targeted to serve special populations, e.g., persons with head injuries, quadriplegia, and persons with AIDS. Each of these facilities is unique and has its own reimbursement system. These facilities were developed both because of the desire of these clients to have focused services, and the difficulty in caring for them in regular home and community care programs.¹⁵

Residents of the three major types of residential care facilities can receive Medicaid waiver services as long as the facilities meet the regulatory requirements for providing these services.

Kane, 1996, and Sparer, 1999, op. cit. It designated the newly created Senior Services Department (later renamed the Senior and Disabled Services Division and now called Seniors and People with Disabilities) as the state agency responsible for supervising and coordinating the various long term care programs for elderly persons. The legislation also delegated to the local Area Agencies on Aging (AAAs) the responsibility for developing a single point of entry for persons seeking long term care services.
Kane, 1996, and Sparer, 1999.
Oregon Revised Statutes 410.010.
Kane, 1996.
Oregon's Long Term Care Medicaid Caseload by Care Setting, July 2002, cited in Executive Summary of Governor's Task Force on the Future of Services to Seniors and People with Disabilities, Initial Report, September 2002.
Kane, 1996.

Adult Foster Homes

Adult Foster Homes (AFHs) are private residences licensed to provide care to five or fewer residents. They offer room and board and personal care from a caregiver who lives in the home 24 hours a day. Planned activities and medication management are available, and some homes provide transportation services, private rooms, and nursing services.
During the 1980s, state officials vigorously promoted adult foster care as an alternative to nursing home care by recruiting families willing to convert their homes into an adult foster care setting. In some cases, case managers negotiated deals under which facilities received higher reimbursement than was technically allowed under state law. A new system, implemented in March 1998, raises the standard foster care reimbursement rates but makes it harder for case managers to negotiate exceptions to those rates.¹⁶
Residents of AFHs have varying needs, from minimal personal assistance to assistance with all ADLs and skilled nursing services. The care provided depends on the client's needs and the skills, abilities, and training of the provider.
Oregon's AFH Program includes Relative Adult Foster Homes. These homes permit relatives (excluding the spouse) to become adult foster home providers and care for the client. They are usually limited to one client who must be eligible for Medicaid.¹⁷
By 1996, Oregon had approximately 6,500 adult foster care facilities serving approximately 15,000 persons, with roughly one-third of these persons being supported by Medicaid through the waiver program, making Oregon the only state in which adult foster care was a mainstream long term care option. Some analysts believe that the program probably grew too fast with insufficient attention paid to quality assurance. By 1999, state audits confirmed some problems with quality and the state legislature demanded greater regulatory oversight.
The private pay market for Adult Foster Homes declined as adults who needed and could afford care gravitated toward assisted living facilities, and the supply of foster care began to exceed demand. Consequently, many facilities became increasingly reliant on Medicaid dollars, although 60 percent of residents remain private pay.¹⁸ Shared rooms are not exclusively for Medicaid residents, but Medicaid residents are more likely to reside in shared rooms than are private pay residents.

Sparer, 1999.
Kane, 1996.
Kane, 1996, and Sparer, 1999.

Residential Care Facilities

Assisted Living Facilities

III. Summary of Interviews

We consulted with three state staff and policy makers regarding the technical details of the state's programs and interviewed two of them. In addition, we interviewed the founding director and a former director of Oregon's Senior and Disabled Services Division (SDSD) (since renamed Seniors and People with Disabilities (SPD). These two respondents are now private long term care policy consultants. In addition, we interviewed six stakeholders, including representatives of residential care provider associations, residential care providers, consumer advocates, the state ombudsman program, a nurse who works in the program, and a county agency that administers the Medicaid waiver program.

General Comments About the State's Residential Care System

Most felt that people in Oregon who need long term care have a wide choice of community residential options, depending on their preferences.

If you like bed and breakfasts, you'll probably prefer an adult foster home. If you like hotels, you'll prefer assisted living.

Several noted that because ALFs offered private apartments and were newer relative to many residential care facilities (RCFs) and adult foster homes (AFHs), not surprisingly they were the preferred option for many private pay and Medicaid eligible individuals.

Some of the older adult foster homes and residential care facilities (RCFs) are not as desirable to consumers who have a choice. Very few RCF's offer private rooms and if they have them, they are generally kept for private pay residents.

A few mentioned variation in the physical setting of RCFs and AFHs, some being "very nice" and others less so. The most important feature, most agreed, was that there is a sufficient supply of all types of facilities to guarantee a choice of residence for consumers, with two caveats. First, there is some geographic maldistribution of ALFs, with some areas of the stated being overbuilt and others' not having an optimal supply. Second, most felt that with the budget cuts in 2003, many facilities would go bankrupt.

One noted that the state had a certificate of need program only for new nursing facilities, and did not have the methodology to determine appropriate capacity for ALFs. However, data on the current population receiving services--their level of impairment and needs--and projections of population growth would give some idea of future need.

Respondents agreed that the state was right in limiting the use of the term assisted living to facilities that offered private apartments. Compared to the other five states, no one mentioned public confusion about the different types of residential care as an issue.

General Comments on Medicaid's Role in Residential Care Settings

Everyone interviewed agreed that Oregon's primary goals in using Medicaid in residential care settings were (1) to reduce nursing home utilization, and in so doing, save money, and (2) to increase community alternatives to nursing homes, thereby providing consumers with more choice. In particular, respondents felt that the program's success lay in its offering Medicaid waiver clients the same residential care options available to the private pay market. As one said, "if the private pay market gets privacy and independence, then so should the Medicaid client." All believed that the state had met its goals and that assisted living had filled a gap in the continuum of care between Adult Foster Homes and Residential Care Facilities, and nursing homes.

The state wanted a balanced long term care system, where nursing homes were caring for skilled patients who could not be cared for in any other setting, mostly hospital discharges that still need sub-acute care. It wanted to get to the point where nursing homes were not a high-priced alternative to community care. Assisted living became another tool in the goal--it fit a good niche.
When the state started expanding home and community services in the early eighties, it depended primarily on adult foster homes for residential care. There was a big push to recruit adult foster homes. It made sense because the economy was down and people were out of work. We could sell the concept of using your own home or buying one and taking in older people, combining a social good with a way to make money. For the state, it was a really quick way to increase residential care capacity.
There was a real desire on behalf of program planners to come up with a model that afforded predominantly seniors with a more private and independent residence outside the home. We had lots of experience with adult foster homes and congregate settings--where common space is shared and most residents share bedrooms. We wanted a more private and independent model.
We saw assisted living as another alternative to the nursing home. We were already using Medicaid in adult foster care and residential care facilities. Assisted living was one more option. We knew we could both save money and give people what they wanted by providing more options in the community. Services in AFHs and RCFs had been covered from when the state first got a waiver, so we just added assisted living to the existing waiver by developing rules for ALFs, thereby getting around the need for legislative approval. The state views assisted living as just another form of residential care that it wanted consumers to have as an option.
We used the waiver rather than the personal care option because you could qualify people for the waiver under a higher income standard (300 percent rule) and you have more flexibility under the waiver.
Initially the state needed to save money and private pay folks needed to save money--and the nursing home model back then was very institutional and people didn't like it. So the rationale was to improve quality of life for people who needed long term care and to contain costs. Both were equally important. We figured, we can do this in a different way, give people more control--greater independence and choice. We can do both.
The public has a lot more options and because Medicaid participates in the funding of residential care services, it is a more egalitarian system. Giving people private rooms has been very successful. The downside is that the state has not invested in the physical upgrading of nursing homes--which are stuck in the 50's and 60s.
We have RCFs that look like assisted living but because they do not exactly meet the physical plant requirements, they cannot call themselves assisted living--e.g., you need to have a roll in or flat shower. In every other area they could be identical to assisted living. The good thing about the assisted living physical plant requirements is that there is a greater degree of accessible housing for persons with disabilities. These facilities have offered a housing option for the younger disabled who want privacy and independence but need some oversight and services. Assisted living has been very good for them.
A large number of facilities participate in the Medicaid program, which means there is no access issue for low income persons. Of course, providers with many Medicaid residents will be more vulnerable if reimbursements are cut.

Everyone interviewed agreed that there are no barriers to serving Medicaid waiver clients in all residential care settings, including apartment style assisted living settings. They felt that Oregon had an adequate supply of ALFs, and that access was good for both Medicaid-eligible and private pay individuals. However, many felt that the impact of the budget cuts on rates and eligibility for waiver services could put some facilities out of business, especially those with a higher proportion of Medicaid residents.

Licensing and Regulatory Requirements

Very few felt that licensing and regulatory requirements posed a major obstacle to affordable assisted living in Oregon.

There were varying views on whether the licensing requirements and regulations assured quality. Most acknowledged that quality problems had been a major issue in the program's early years.

The state did a poor job in the eighties and has been catching up ever since. The quality now is good--certainly compared to states like Texas and North Carolina. The state of Washington does the best on quality assurance because they looked at Oregon's mistakes and learned from them and did it right. They bring everyone into the quality assurance system--case workers and surveyors. They also have new training rules but their budget crisis may slow down implementation.

Some thought the regulations were good overall but felt some fine tuning was needed.

The RCF rules are outdated and are being updated by the state--they will be more like the assisted living rules when completed. Many changes will be to administrative requirements, e.g., the need for signatures on specific forms. Others will address major issues such as staffing requirements.
The assisted living regulations are good. The last revision minimized the aging in place requirements and the rules now recognize that individual facilities may have limits on what services they can provide. The state sets the minimum and facilities are permitted to have different ceilings. A small facility may have only one staff person for 8 clients and be unable to do two person transfers.

A few thought that there were ongoing quality issues and that a lot more work on quality needs to be done in all three types of residential care.

There's nothing about Oregon's model that provides better care. What it provides is a wonderful environment that is conducive to a better quality of life. Our track record regarding care is no better than anywhere else--we have individual providers with problems like everywhere else.

A number had complaints about the regulations and varying views on enforcement.

I think Oregon has a good regulatory structure. What's lacking is consistent enforcement.
There is enforcement about silly things like storage and sign placement--things which don't equate to good care. New staffing regulations may also not be related to better care. Nursing homes are over regulated and that hasn't equaled good care.
Increasing the choices tenants have and letting care be directed by the client are good things but new regulations are making it more difficult. They give more responsibility and liability to the provider. For example, there is a prohibition on restraints and bed rails are considered restraints, but some residents may want bed rails because they've had them at home and it makes them feel safer.
I'm very concerned that given the high cost of new prescriptive regulations, Medicaid clients will end up in double occupancy RCFs and assisted living will be only for the private pay market. With the current cut-backs, most providers have stopped taking Medicaid clients until they see what's going to happen.

Admission and Retention Requirements, and Aging in Place

The state does not subscribe to a continuum of care model, where those with the most severe impairments are cared for only in nursing homes. There is a strong belief that unless a person needs 24-hour medical/nursing oversight, they should be able to be served in the their home or the community if that is their choice. While the state's goal is to serve people with a high level of need in residential care facilities, some felt that this goal is met more by AFHs, and RCFs than ALFs.

Oregon's experience is the same as Washington's--the AFHs take care of sicker and more impaired folks. Why? In general, assisted living is run by large corporations. They're good at creaming; they don't want to be in the position of taking care of very impaired people, don't want to hire the staff, and don't want to be exposed to the risk of fines and bad publicity.
A lot of providers try to skim; they try to get rid of the high level folks. Regulations are too permissive--they only require disclosure about discharge. I don't know if there is a regulatory solution. The goal of aging in place is problematic given the insurance and lawsuit issues. Oregon's idea was to do a nursing home replacement model with a better living environment. If assisted living is a replacement model, then assisted living should do all it can to care for residents until they need 24 hour nursing oversight. Aging in place used to be a key factor, but now the state is getting away it.

If providers are going to get Medicaid money, they should be prepared to provide as much care as possible. Small facilities with 30 beds can't do three person lifts. But there needs to be a commitment to keep people as long as possible.
Oregon is not like New Jersey and Florida--saying that when you reach a particular level of need you have to go to a nursing home. Admission is not an issue, but retention and discharge requirements are--determining when people in assisted living have become impaired or have greater medical needs and need to be moved to a higher level of care.

Some providers have difficulty finding a higher care setting that will take a particular resident. Some people in assisted living do not want to move. A facility may be able to take care of one or two people with greater needs but not five or six.

Service Rates

A few noted that because Oregon set a cap on room and board rates for Medicaid eligibles--particularly for ALFS, which provide private apartments--the state has to pay enough for services to attract providers. In general, most felt that ALF rates were high relative to rates for ACHs and RCFs.

Setting the initial assisted living rate at 80 percent of the nursing home payment was a clear signal to the industry that the state was encouraging this model.
The state gave a generous rate structure to providers to encourage assisted living development and the availability of assisted living for Medicaid eligibles. This policy has come under attack every legislative session because the rate is higher than what is paid to other residential care settings. The high service rate has always been an eyebrow raiser in Oregon.
Oregon spends more on services in assisted living settings than any other residential care setting. The lobby for assisted living is the same as for nursing homes--AHCA and AHSA. The persons representing foster care can not compete. The lowered flat rate being proposed for assisted living during the current budget crisis would certainly narrow the payment gap between assisted living and adult foster care.
Oregon is thinking about paying the same set service fee dependent on level of impairment to all three types of residential care but this will be difficult politically.
Rates were OK for a while but they have not kept pace with inflation. We get insurance increases every year, but no rate increase. With the coming cuts, some facilities will close--especially those that are highly dependent on Medicaid.

A few noted that if the state wants people to age in place, the reimbursement rate structure has to take into account that certain people take more time to take care of.

Those with behavioral problems or who need a 2-person transfer cost more. If the state won't pay it, they will wind up in institutions when they could have been served in the community.
The state has chronically under-funded providers in order to let case loads grow. We need to fund them adequately. Assisted living has had a reasonable rate but not AFHs. You can't starve one side of the system to serve another. The state does not require AFHs, RCFs, and ALFs to have cost reports. The rates bear no relationship to the delivery of services. Initially they were generous enough to get providers to participate. But acuity levels have gone up but not the rates.
The state has starved nursing homes. All of the parts of the long term care continuum used to fight each other for funding but we then realized that the entire continuum needs adequate funding. If the proposed budget cuts go through there will be a complete collapse of the Oregon long term care system.

Suggested Changes to Improve the Medicaid-Funded Residential Care System

A number of respondents made specific suggestions for improving the system:

The state should allow family supplementation for private or larger rooms for Medicaid residents in AFHs and RCFs. Washington state allows families to contribute the difference in cost between a studio and a one bedroom.
Get away from prescriptive regulations. Tell facilities that if they kick Medicaid folks out too early they won't get any more residents. Give providers incentives to keep people as long as possible. Give them enough money--the amounts in the past were sufficient, but recently have not kept pace with inflation, especially the increases in insurance.
What I would do is move to a standardized assessment tool for providers and develop quality indicators for this tool. You can't track quality without it. The current assessment is not a facility tool. It is used to determine Medicaid eligibility.
We need a quality assurance system that moves to the culture of patient safety--where you identify problems and then try to fix them.
Other than getting higher service rates--rates that accurately reflect costs--I would like the program to have a chronic disease management focus to save money on both the acute and long term care side. The length of stay in nursing homes and hospitals are so short, we have more people in the community with significant health issues. We need to look at the provision of health services in the community. There is a lack of health care in the service component. We need to know what are good outcomes. What level of falls are acceptable in the community. We can't have the same expectations as in nursing homes--that no one will ever fall or develop a decubiti. I'd also like to address the polypharmacy issue. There are too many people on 8 or more medications. I'd also like to replace physicians with nurse practitioners in all settings. The physicians do not understand the setting. They think they can call a nurse and have something done like in a hospital.
We need research on systems for assuring quality in community settings. We need information on best practices. How to teach unlicensed personnel about disease management? How to manage the non-compliant diabetic? How to provide palliative care? How to provide care to the anxious COPD patient with air hunger? All when you don't have nurses available on a 24 hour basis. We need special training for medication administration. We spend a lot of money on training using a train the trainer approach. But reimbursement needs to recognize the need for substitute staff when the regular staff are out of the facility to obtain training.
We need a career ladder for direct care workers.

One respondent noted that one of the reasons the number of assisted living facilities grew so fast was because the state had a financing mechanism through the housing agency, but the state should have placed requirements on the providers who received these loans.

Loans were made with general obligation bonds. About 25-30 percent of assisted living facilities a few years ago were all financed with these bonds. If the state gives a provider a low interest loan, the provider should be required to take a certain proportion of Medicaid clients until the loan is paid off.

One respondent said that consumers needed more information about the quality of services in each facility. Even though the state has a website, this respondent felt it did not provide sufficient information for consumers to make an informed choice.

Future Plans

One respondent stated that in the absence of a budget crisis Oregon would probably want to expand and improve the current HCBS system, noting that the state is pretty close to a balanced system. Another said that the state's program has changed since its inception and it will continue to change, noting that it is important for the state to continually assess the strengths and weaknesses of its program and make changes accordingly. For example, the State is currently updating its RCF rules and is examining the role of community nurses in all residential care setting. They are also working on initiatives related to person-centered planning.

Another noted that the state's 18 categories of level-of-care criteria has been helpful in times of budget cuts in that it provides a mechanism for the state to reduce the number of people being served based on level of need. However, the respondent said that it's not perfect and that the state wants to revise the criteria to incorporate more risk factors, such as chronic care needs and acuity.

Recommendations for Other States

Reflecting Oregon's extensive experience covering Medicaid services in a range of residential care settings, respondents had many specific recommendations. Many felt that Oregon's experience could provide guidance for state's looking to make a range of residential care options available for both the private pay market and the Medicaid client. Most did not mention the importance of making the room and board component affordable, because they assumed it was a given. When specifically asked about room and board, they agreed that it is not possible to provide assisted living to the Medicaid population unless the room and board component is affordable.

Several mentioned the importance of addressing quality assurance from the outset.

Pay attention to quality assurance from the outset. ALFs need to be surveyed on a regular basis--not the same focus as nursing homes but similar. You have to use a different model of quality--look at protection, service needs being met, and livability.
The state should have paid as much attention to quality assurance as to the requirements for the physical plant. It would have taken a few more steps to assure quality and it would have slowed down provider interest in the beginning, and the state would not have met its obligation to save money. The state stayed in this mode until the mid-eighties, and then we had horror stories, and started to pay more attention to quality. Now Oregon has good quality overall. States should start with a well defined idea of what the service package will be and what quality outcomes are expected.
In the beginning, providers didn't know--even though it was in the rules--exactly what services they needed to provide. They did have a better sense of service needs than in some other states, where the providers getting into assisted living come from the housing world--they don't know services. Assisted living has been sold as a light care model and staffing capacity was based on this--that there would not be highly impaired residents. But you would expect that with aging in place, there would always be a portion of heavy care clients, and you need to plan for this.
One problem when the state started was they it did not fully appreciate quality issues and chronic care needs--and how to put in systems to assure that quality was assured and needs were met. It was not an intentional oversight--it was naïve. They believed that ADLs were the key. But chronic care management and acuity are just as important.

One respondent said that the state was very concerned about dementia care and had issued special rules for facilities that market themselves as special care units.

A number stressed the importance of not paying for services in assisted living by the hour.

Some states fund assisted living like they do home care--they provide so many hours of services and treat it like home care. They do that in Georgia. But you can't grow it that way. States shouldn't pay for services on an hourly basis. Set tiered levels--treat assisted living like a nursing home without room and board. Set it up as a reimbursable entity under the waiver.

Some mentioned the need to address legislators' concerns about induced demand.

There will definitely be an increase in clients when you expand HCBS but you can handle this if you set it up right. HCBS can save money if you target it right. Indiana has twice as many folks in nursing homes as in HCBS. But even though Indiana's per capita spending is lower than Washington's, Indiana's costs are higher than Washington's because Indiana serves more people in nursing homes than in HCBS, whereas Washington does the reverse.

One respondent said that if the state were starting over, it would probably be willing to compromise on each apartment having a full kitchen, because most people don't use them.

You could require a refrigerator and microwave and sink--but most kitchens are quite small. You do need to put some minimums in regulations, however, to ensure that at least the minimum is provided.

One respondent stated that an immense advantage the State had in setting up its system was that their authority for long term care policy rests in one administrative agency that designs and regulates the entire system and pays for Medicaid.

This is a huge advantage in making sure that licensing rules will be effective for both private pay and Medicaid clients. The most important thing is the ability to manage things collectively under one agency--which allows us to implement our vision--to work with advocates--because we control licensing and everything else about the system. The only thing we didn't control was the Oregon Board of Nursing. But we worked extensively with them to get what we needed. You need to put a lot of energy into these efforts to make them happen.

One respondent said that states wanting to use Medicaid to fund services in residential care needed four things: (1) a method to make room and board affordable for Medicaid eligibles; (2) a funding stream to buy the services you want; (3) a regulatory agency that subscribes to your philosophy; and (4) flexible oversight and quality improvement activities that are designed to take more of a teaching role rather than an inspection and sanction role.

With regard to the third requirement, this respondent noted:

Regulatory agencies are often not connected to Medicaid--they're concerned about health and safety and often have a strict continuum of care approach. They don't think you should be putting impaired folks in residential care facilities.

States need to enable all settings to provide care and to write regulations to support them to do so. To design and develop a complete system--you need both strong home care and congregate care for the people who can't live alone. Another important approach is to design purchasing to buy things that can also be bought by the private sector. There should be no special programs for Medicaid--with the rest of the public stuck in an old model.

One respondent stressed the importance of having the public understand the various options.

Be sure that clients have sufficient information about the different types and levels of care provided in different types of facilities; that they understand the limits; that they can not have unfettered expectation of staying on one level for ever. There is a continuum of care. You can sometimes stretch what's provided in a community setting but not always.

Another addressed more political issues:

Don't bash nursing homes to promote assisted living. Don't sell assisted living as saving money by taking people out of nursing homes or diverting them from nursing homes. Even if there are no cost savings, it's still better to have more options. You also need a good case management system in place to support home and community care and it's expensive. The reason to do assisted living is that consumers want it and it's good for them.

Finally, given the current budget crisis in Oregon, which will cause some Medicaid clients in ALFs to be dropped from the waiver program, one person said that if a state is planning to use Medicaid to cover services in residential care facilities, it should use a separate waiver program for assisted living only and limit the number of slots. This will help to assure that during a budget cutback there will be less pressure to take away services from people who are already receiving them.

Sources

Publications

Gibson, M. J. and Gregory, S. R., Across the States 2002: Profiles of Long-Term Care, AARP, 2002.

Kane, R. L., et. al., Oregon's LTC System: A Case Study by the National LTC Mentoring Program, University of Minnesota, April 1996.

Kassner, E. and Williams, L., Taking Care of their Own: State-funded Home and Community-based Care Programs for Older Persons, AARP, September 1997.

Kassner, E. and Shirley, L., Medicaid Financial Eligibility for Older People: State Variations in Access to Home and Community-Based Waiver and Nursing Home Services, AARP, April 2000.

Manard, B. et. al., Policy Synthesis on Assisted Living for the Frail Elderly: Final Report, submitted to Office of the Assistant Secretary for Planning and Evaluation, December 16, 1992.

Mollica, R.L., State Assisted Living Policy: 1998, Report (ASPE and RTI) June 1998.

Mollica, R.L., State Assisted Living Policy: 2000, National Academy for State Health Policy; funded by The Retirement Research Foundation (LTC13). August 2000.

Mollica, R.L., State Assisted Living Policy: 2002, National Academy for State Health Policy, November 2002.

O'Keeffe, J., People with Dementia: Can They Meet Medicaid Level-of-Care Criteria for Admission to Nursing Homes and Home and Community-Based Waiver Programs?, AARP, August 1999.

Sparer, M., Health Policy for Low-Income People in Oregon, Urban Institute, September, 1999.

Stone, J.L., Medicaid: Eligibility for the Aged and Disabled, Congressional Research Service Report for Congress, updated July 5, 2002.

Websites

2003 Information Memorandum: Medicaid contract insurance requirements for Assisted Living and Residential Carehttp://www.dhs.state.or.us/policy/spd/transmit/im/2003/im03093.pdf

2003 Legislative Session http://www.dhs.state.or.us/publications/reports/03sessionwrapup/stories…

Administrative Rules, Seniors and People with Disabilities http://www.dhs.state.or.us/policy/spd/alpha.htm

Administrative Rules, Chapter 411, Division 056, Assisted Living Facilities http://www.dhs.state.or.us/policy/spd/rules/411-056.pdf

Aged, Blind and Disabled Medicaid Eligibility Survey http://www.masterpiecepublishers.com/eligibility/

Department of Human Services http://www.dhs.state.or.us/seniors/

DHS Community-based Care http://www.dhs.state.or.us/seniors/choosing_care/comm_care.htm

Governor's Task Force on the Future of Services to Seniors and People with Disabilities http://www.dhs.state.or.us/spd/publications/gtf.htm

Oregon Project Independence http://www.dhs.state.or.us/seniors/publications/opi.htm

Oregon Revised Statutes http://www.leg.state.or.us/ors

Oregon Supplemental Income Program http://www.dhs.state.or.us/seniors/publications/osip_2003.htm

Spousal Impoverishment Law http://www.dhs.state.or.us/seniors/publications/sp_impov_2003.htm

The Oregon Model, presentation by Roger Auerbach, Administrator, SDSD, Oregon Department of Human Resources, 1998 http://www.sdsd.hr.state.or.us/about/oregon_model.htm

Formal and Informal Interviews

Roger Auerbach, President
Auerbach Consulting, Inc.
Former Director, DHS Senior and Disabled Services Division

Margaret Carly, Deputy Director and Legal Counsel
Oregon Health Care Association

Michael DeShane, President and CEO
Concepts in Community Living, Inc.

Barry Donenfeld, Director
Area Agency on Aging
District 3 Office
Mid-Willamette Valley Senior Services Agency

Ruth Gulyas, Executive Director
Oregon Alliance of Senior and Health Services

Cindy Hannum, Administrator
Oregon Department of Human Services
Office of Licensing and Quality of Care for Seniors and People with Disabilities

Dolores Hubert, Chair
Health and Long Term Care Committee
Governor's Committee on Senior Services

Richard Ladd, Long Term Care Policy Consultant
Ladd & Associates
Former Director, DHS Senior and Disabled Services Division

Jeff Miller, Policy Analyst
Oregon Department of Human Services
Seniors and People with Disabilities

Margaret Rickles, R.N.
Preadmission Screening Nurse
Clackamus County

Dennett Taber
Assisted Living Program Coordinator
Oregon Department of Human Services
Seniors and People with Disabilities

Endnotes

Nursing Home Relocation Services, begun in 1982, are still an important part of Oregon's long term care system, though the average nursing home resident in 2002 is much more impaired. Because HCBS care coordination staff caseloads are high, some Area Agencies on Aging have created relocation specialist positions. Relocation costs may be paid by exempting resident income generally paid to the nursing home, or through the HCBS waiver program.
Mollica, R.L. and Jenkens, R., State Assisted Living Practices and Options: A Guide for State Policy Makers, Coming Home Program, Robert Wood Johnson Foundation, September 2001.
Prior to February 2003, the state had a Medically Needy Program for the aged, blind and disabled, which covered only prescription drugs and mental health services, but not long term care. The program was terminated due to budget constraints.
Sparer, M., Health Policy for Low-Income People in Oregon, Urban Institute, September, 1999.
The state plans to increase the amount in 2003.
A computerized scoring system weights and adds multiple measures of physical and mental functioning to determine if the criteria are met. The scoring system is also used to determine reimbursement levels for services provided through the waiver program.
Sparer, M. op. cit.
Kane, R. L., et. al., Oregon's LTC System: A Case Study by the National LTC Mentoring Program, University of Minnesota, April 1996.
The income amount will be increased in July 2003.
Kane, 1996, and Sparer, 1999, op. cit. It designated the newly created Senior Services Department (later renamed the Senior and Disabled Services Division and now called Seniors and People with Disabilities) as the state agency responsible for supervising and coordinating the various long term care programs for elderly persons. The legislation also delegated to the local Area Agencies on Aging (AAAs) the responsibility for developing a single point of entry for persons seeking long term care services.
Kane, 1996, and Sparer, 1999.
Oregon Revised Statutes 410.010.
Kane, 1996.
Oregon's Long Term Care Medicaid Caseload by Care Setting, July 2002, cited in Executive Summary of Governor's Task Force on the Future of Services to Seniors and People with Disabilities, Initial Report, September 2002.
Kane, 1996.
Sparer, 1999.
Kane, 1996.
Kane, 1996, and Sparer, 1999.
Mollica, R.L., State Assisted Living Policy 2000, National Academy for State Health Policy; funded by The Retirement Research Foundation (LTC13). 2000.
The state's SSI supplement is $1.70 per month, the minimum amount required by federal law as state maintenance of effort when the SSI program was first enacted in the early 1970's.
Federal SSI limitations apply except that the transfer of a home may render a person ineligible for a state supplement for up to 30 months, based on the amount of uncompensated value.
The state's SSI supplement is $1.70 per month, the minimum amount required by federal law as state maintenance of effort when the SSI program was first enacted in the early 1970's.
Federal SSI limitations apply except that the transfer of a home may render a person ineligible for a state supplement for up to 30 months, based on the amount of uncompensated value.
Managed risk: OAR 411-056-0015(2)(i) - (L) The facility must document the information set forth in (j) of this rule.

Appendix F. Texas

The information in this appendix is presented in three major sections:

The first section provides an overview of the state's long term care system, with a primary focus on the Medicaid program. Although a state may pay for services in residential care settings through the Medicaid program, the program's financial eligibility criteria and related financial provisions for home and community services can present barriers to serving Medicaid clients in these settings. Thus, the first section of each state's description presents detailed information about rules related to financial eligibility, spousal financial protections, and cost sharing requirements.
The second section describes the state's residential care system.
The final section presents the views of respondents interviewed for this study on a range of issues related to Medicaid coverage of services in residential care settings in their state.

I. Overview of Long Term Care System

Nursing Homes

The state has a process for determining where new nursing home beds will be allowed based on the nursing home occupancy rate in a given county. The statewide occupancy rate is approximately 72 to 74 percent.¹ The state also has a process for determining the proportion of nursing home beds allocated for Medicaid.

1. Gibson, M. J. and Gregory, S. R., Across the States 2002: Profiles of Long-Term Care, AARP, 2002.

Waiver Program

Personal Care Option--Primary Home Care Program

Community Attendant Services Program

In the 1980s, Texas implemented a demonstration waiver program called the Frail Elderly Program, which provided only attendant services. Texas was the only state that participated in the demonstration and in the early 1990s when the program ended, federal law permitted Texas to retain the program as a personal care option under 1929(b) regulations, which essentially allow higher income eligibility criteria (300 percent of SSI) than is used for other Medicaid state plan services. However, clients served under the program are not eligible for any other Medicaid services, e.g., primary and acute medical care, prescription drugs, and home health services.

Although the program was called Frail Elderly, the statute allowed the program to serve persons of all ages. In 2003, the State changed the name of the program to the Community Attendant Services Program. The program's eligibility criteria and services are the same as for the Primary Home Care program. It currently serves 30,000 persons.

STAR+Plus

There are two types of Medicaid in Texas: traditional and STAR. People in both programs get the same benefits. Under the traditional program, individuals get medical care from any doctor or provider who accepts Medicaid. Under the STAR program, the enrollee has one provider who coordinates and manages their care.

The STAR+Plus pilot program is a Medicaid pilot project operating since 1998. It is designed to integrate delivery of acute and long term care services through a managed care system. The project requires two Medicaid waivers--1915(b) and 1915 (c)--in order to mandate participation and to provide home and community services.

The project serves approximately 55,000 SSI aged and disabled Medicaid recipients in Harris County (Houston). STAR+PLUS provides a continuum of care with a wide range of options and increased flexibility to meet individual needs. The program has increased the number and types of providers available to Medicaid clients.

Participants may choose from two health maintenance organizations. Certain participants have a primary care case management option in addition to the two HMO choices. The HMO provides both acute and long term care services. STAR+PLUS Medicaid Only clients are required to choose an HMO and a Primary Care Provider (PCP) in the HMO's network. These clients receive all services--both acute and long term care--from the HMO.

Those also eligible for Medicare choose an HMO but not a PCP because they receive acute care from their fee-for-service Medicare providers. The STAR+PLUS HMO provides only Medicaid long term care services to dual eligible clients. Of the approximately 55,000 STAR+PLUS eligibles in Harris County, about half are "dually eligible" for both Medicaid and Medicare. The program has demonstrated significant savings, but there are no plans currently to expand it.

Long Term Care Programs Funded with State Revenues Only

Community Care for Aged and Disabled (CCAD) is a state program that provides services in a person's own home or community for aged or disabled persons who are not able to take care of themselves, and who might otherwise be subject to unnecessary institutionalization or to abuse, neglect, or exploitation.

In addition to services provided through the waiver program and the personal care option, CCAD includes a number of home and community service programs funded by state general revenue funds and Title XX funds. Two of these programs cover services in residential care settings: Adult Foster Care (AFC) and Residential Care(RC). The state program serves approximately 200 people in AFC and 800 in RC each year. Reimbursement rates for services are less than those paid for waiver clients.

To be eligible for the Adult Foster Care and Residential Care programs through CCAD, individuals must be financially eligible for Title XX services or must meet the income criteria for Medicaid waiver services (300 percent SSI), and not have assets exceeding $5,000 for an individual and $6,000 for a couple. In calculating financial eligibility, a number of exclusions from income and resources are permitted. Clients keep a monthly allowance for room and board and personal and medical expenses, and the remainder of their income is contributed to the total cost of care. Applicants/clients must also score at least 18 on the Clients Needs Assessment Questionnaire and have the approval of the CCAD led unit supervisor. The applicant's needs may not exceed the facility's capability under its licensed authority.

II. Residential Care Settings

Overview

Historically, personal care facilities (sometimes called personal care homes) and adult foster care were the primary residential care options in Texas. In 1999, personal care facilities were renamed assisted living facilities, which are defined as any facility that serves four or more adults who are unrelated to the proprietor. Adult Foster Care homes that serve four or more persons are also required to be licensed as an assisted living facility.

In the mid-1990's, the state became interested in supporting residential care alternatives to nursing homes for individuals who met a nursing home level of care but could not be safely cared for at home. The Department of Human Services worked with providers and advocates to develop a 1915(c) waiver program to provide services in both private homes and residential care settings. The new waiver program, called Community Based Alternatives (CBA), was implemented in 1994. Initially, the cost of CBA waiver services was capped at 90 percent of nursing home cost, but the state has now raised the cap to 100 percent.

The primary goal of the CBA waiver program is to offer home and community alternatives to institutional care and to provide the opportunity for those in institutions to transition to the community. In keeping with this goal, the state made efforts to bring about a "culture change" among hospital discharge planners, doctors and families regarding the appropriateness of home and community care alternatives to nursing homes. One respondent noted that these efforts appear to have been successful, given that 95 percent of those receiving CBA waiver services have never been in a nursing facility.

When the CBA waiver program was developed, it was anticipated that 50 percent of waiver clients would be served in personal care facilities, particularly elderly persons who did not need a high level of care. This expectation fueled the development--and some respondents said--the over-development of personal care facilities and other types of residential care settings.

In 1987, Texas had 4,200 beds in personal care facilities. In 2002 there were over 40,000 licensed assisted living beds (including adult foster care homes licensed as Type C assisted living facilities), of which only 67 percent (26,000) were occupied, primarily by private pay residents. The main reason for the low occupancy is that the majority of waiver clients choose to live in their own homes. In 2002, approximately 2,500 CBA waiver clients received services in assisted living facilities through 320 contracts with providers across the state--less than seven percent of the 32,000 clients receiving CBA waiver services.

Adult Foster Care Homes

Adult Foster Care Homes provide a 24-hour living arrangement with supervision for individuals 18 years of age and older who, because of physical or mental limitations, are unable to continue independent functioning in their own homes.
Providers may serve up to three adult clients in a Department of Human Services (DHS) enrolled adult foster home. These homes do not have to be licensed but those accepting Medicaid clients have to meet Medicaid contracting requirements. Homes with four or more residents are called Small Group Homes and must be licensed under the assisted living licensing rules as a Type C facility, in addition to being enrolled with DHS. Providers must serve no more than eight adult clients in an enrolled Small Group Home. The CBA waiver program contracts with both licensed and unlicensed adult foster care homes.
Services reimbursed through the CBA waiver include meal preparation, housekeeping, personal care and nursing tasks, supervision, and the provision or arrangement of transportation. Nursing tasks may be delegated by a registered nurse to a foster care provider based on the provider's abilities and the needs of the participant.
The client pays the provider for room and board from their own income. Texas limits the amount that can be charged for room and board for Medicaid waiver clients in adult foster care to an amount equal to the SSI federal benefit rate minus a personal needs allowance of $85.00 which equals $467. There are no restrictions on the amount adult foster care homes can charge private pay residents.
CBA waiver clients can be served in private or shared rooms depending on availability and the preference of the client. Adult foster care homes cannot have more than two beds in any room and must provide at least 80 square feet of floor space in a single occupancy room, and at least 60 square feet of floor space per client in a double occupancy room.
There are three care levels in adult foster care homes, and as of September 2003, the payment rates are $18.71, $32.27 and $65.52 per day. The level of care required is based on an assessment and the recommendations of a Home and Community Support Services nurse.
Adult foster care providers cannot terminate services to a resident without the prior approval of the adult foster care caseworker or supervisor, unless the resident creates a serious or immediate threat to the health, safety, or welfare of the provider or the other residents of the foster home.

Assisted Living Facilities

In Texas, assisted living is a service delivery model not an architectural model. It is defined as a housing plus services arrangement for persons who, because of a physical or mental limitation, are unable to live their own homes. Assisted living settings provide food, shelter and personal care services to four or more persons who are unrelated to the proprietor of the establishment.

There are five types of licensed ALFs, but there are two primary licensing designations, which are based on residents' physical and mental ability to evacuate the facility in an emergency, and whether nighttime attendance is necessary.⁸ They are:

Type A facilities, whose residents must be capable of evacuating the facility unassisted, who must not require routine attendance during night time hours, and who must be capable of following directions under emergency conditions. This may include persons who are non-ambulatory but mobile, such as persons in wheelchairs or who use electric carts, and have the capacity to transfer and evacuate themselves in an emergency.
Type B facilities, whose residents may require staff assistance to evacuate, may not be able to follow directions, who require attendance during the night, and who, while not permanently bedfast, may require assistance in transferring to and from a wheelchair. Facilities that advertise, market, or otherwise promote their capacity to provide personal care services for people with dementia must be certified as a Type B facility.⁹

Only licensed facilities may use the term assisted living, and the statute requires careful monitoring to detect and report unlicensed facilities. An assisted living facility must be licensed to participate in the CBA waiver program.

Type C facilities are Adult Foster Care Homes with four or more beds. In 1999, when personal care facilities were renamed assisted living facilities, the state required AFC homes with four or more beds to be licensed as an assisted living facility. Type D facilities are operated by the Department of Mental Health and Mental Retardation for persons with serious mental illness and developmental disabilities. Type E facility residents are the same as Type A except that they do not require assistance with ADLs, but only with medication administration.
Use of advertising terms such as "medication reminders or assistance," "meal and activity reminders," "escort service," or "short-term memory loss, confusion, or forgetfulness" will not trigger a requirement for certification as an Alzheimer's facility. (Source: Texas Administrative Code, Title 40, Chapter 92)

III. Summary of Interviews

In addition to consulting with ten state staff and policy makers regarding the technical details of the state's programs, we also interviewed four of them. In addition, we interviewed nine stakeholders, including representatives of residential care provider associations, consumer advocates, the state ombudsman program, aging services providers, the state agency that administers the home and community services program, the state office of a national advocacy association for seniors, and a former state administrator (now a long term care policy consultant.)

General Comments About the State's Residential Care System

Because residential care facilities serve both private pay and Medicaid residents, a few respondents expressed views about the industry as a whole, and about particular issues the long term care system is facing, including a liability insurance crisis.

Litigation has been occurring more and more in the nursing homes and is starting in assisted living facilities. Texas is usually named alongside Florida as being in the same litigation crisis. ALF licensure does not require liability insurance, but nursing facilities will be required to have liability insurance as of September 2003.
Providers will challenge the State on liability issues. The 2003 legislative session is going to address tort reform.
An error in the regulations has led to increased liability for providers. The current regulation states that assisted living providers are responsible for care and services. It is supposed to say that providers are responsible for coordinating all care and services. Often, assisted living facilities do not provide the services themselves, but arrange for them to be provided by outside entities.

Several expressed satisfaction with the state's efforts to involve all stakeholders in the regulatory process and for keeping them informed.

The State was very inclusive in seeking input before it promulgated the assisted living rules. Agencies, providers, and advocates/consumers have always had the opportunity to discuss their concerns about regulations. Consequently, the regulations reflect the intent of the legislation because of the good communication. The State has built a framework for assisted living in terms of regulations and has built in accountability.
The state operates an informative website for providers that is very good at keeping them current on new policy and regulatory changes. Providers also appreciate the availability of training sessions. There are some concerns about the quality of training for CBA wavier case managers.

One respondent expressed concerns about unlicensed assisted living facilities.

There are approximately 3,000 small unlicensed facilities that are receiving SSI payments. Some are operating legally by not providing services, but others are offering and providing substandard services illegally.

Another was very pleased with the state's approach to nurse delegation.

The state has been very progressive in moving towards nurse delegation. This is very important given the nursing shortage, the higher cost of nurses, and the potential for over-medicalization in ALFs.

General Comments on Medicaid's Role in Residential Care Settings

There was a consensus among all those interviewed that the CBA waiver program was a very good program and that coverage of assisted living was a success for a variety of reasons.

The assisted living program has made extraordinary progress and is considered a model for other states. For example, our mandated disclosure statements are being used by other states.
The state has met its goals of supporting individuals' desires to live in an integrated community setting under the CBA waiver program and in Community Care (which covers those receiving personal care services not under the CBA waiver). For some advocates, living in an ALF is not considered to be a true choice because clients overwhelmingly prefer their own home. However, because some individuals may not have homes, the ALF option is still necessary.
The State and legislature put forth a good effort to meet the Olmstead requirements through Rider 37, which has enabled those in nursing facilities to transition into the community and to receive CBA waiver services. We felt very strongly that efforts to move those in nursing homes into community settings--including ALFs--was critical.
There were fears that the nursing home industry might fight the continuation of Rider 37. However, the state has to support the Olmstead decision, giving some "teeth" to the State agencies' support for the continuance of Rider 37.
The most successful aspect of the program is the ability of individuals to age in place, the stability of the CBA waiver program staff, the ease in managing the CBA waiver program compared with other states, and the willingness of CBA waiver staff to listen to provider concerns and to address them whenever possible.

Two respondents mentioned that the room and board payment for Medicaid waiver clients was not sufficient to cover the costs and needed to be addressed.

Many of the non-profit providers receive supplemental funding and contributions from members of churches, faith-based organizations and foundations. The state has asked for a state supplement for room and board to be funded in recent legislative sessions, but has not been successful. It's not likely to be approved in the next legislative session due to the large budget deficit.
The state should adopt a state supplement for room and board as exists in other states, which could lead to an expansion of providers if additional CBA waiver slots were funded.

Licensing and Regulatory Requirements

There were some issues among those interviewed regarding the content of the state's licensing and regulatory requirements for ALFs, although no one felt that regulations posed a major obstacle to affordable assisted living in Texas.

The legislature has moved to set up a more punitive environment related to the assignment of administrative penalties (fines), in part because the legislature has come under increasing pressure from advocacy groups concerned about care and searching for more complete regulations.
Over the past three legislative sessions, we have advocated for quality standards and enforcement tools.
I am concerned that ALFs are moving too much towards the medical model, with the result that the facilities will turn into nursing homes, much like the old intermediate care facilities we had pre-OBRA 87.
There is a need for regulations that focus on the services people need. The current licensing standards are too focused on life/safety code distinctions.
Many providers do not have well developed and realistic plans for how they would care for someone in an emergency

Admission and Retention Requirements and Aging in Place

A number of respondents expressed concerns about admission practices and the need to assure that people can age in place.

Fire and safety regulations have made it possible for facilities to deny residence to individuals in wheelchairs. One provider claimed he couldn't admit people in wheelchairs, because they would "knock down" other residents, especially in an emergency.
Some ALFs might be creaming the lesser impaired because they don't want to take care of people with higher levels of care needs.
Some providers are willing to take clients who need higher levels of care, but they don't want to deal with more accountability standards.
Providers are required to make an assessment decision within 72 hours, which is too short a time. Facility managers and staff want to meet a prospective client in person to make decisions, which is difficult to arrange within 72 hours, especially if the client lives in another area. Another problem is that facilities are pressured to take clients that "don't fit" with the current facility population or that have heavier care needs than is desirable for a particular facility at a particular point in time. For example, one facility was pressured to take a 350 pound man prone to falls who also had a very large service dog.

The CBA waiver contract managers recognize that some clients have particularly difficult needs or problem behaviors, but the CBA waiver requirements--not licensing and regulation--require their admittance. I admit, though, that if the requirements were not there, and providers had full choice in admittance decisions, discrimination would likely occur.

With regard to discharge policy, one respondent reported that it was hard to discharge people from assisted living facilities, but noted that the state was getting better about supporting facilities who had really difficult cases.

There is a need for regulatory support for aging in place. I strongly promote the chance for individuals to age in place, but I also recognize that facilities who serve individuals needing higher levels of care are required to pay more attention to fire and safety standards.
CBA waiver clients with Alzheimer's are most at risk for not being able to age in place in assisted living facilities due to extreme problem behaviors and the inability for Medicaid to pay for full-time private sitters that some of the private pay clients have. Caring for these people is so expensive that most facilities don't want them and they wind up in nursing homes.

Respondents felt that the issues related to aging in place were far from settled, with some providers liking the concept and others not. Most supported the concept but had concerns about its implementation.

The state recently instituted new regulations that will allow more people to age in place by allowing short term nursing services to be provided (24 hour skilled nursing is not provided normally). Aging in place is a relatively new concept and providers are still learning the consequences and benefits.
I have concerns that some providers might not have the capacity to really support aging in place.
There have been a few cases of residents inappropriately kept in an ALF, although these were mostly small providers that might not have had a full understanding of how to safely maintain clients.
It's easier to age in place in an ALF that is part of a continuing care retirement community.
CBA waiver case managers fairly often pressure facilities to retain a client even though the client's behaviors or conditions allow the facility to remove that individual under current licensing and regulations.
Several respondents remarked that some providers felt that their facilities would be stigmatized by accepting CBA waiver clients. One has spoken with providers not involved in the program who cited "red tape", financial risks, and fear that the facilities will be known as the "Medicaid house" as reasons for not accepting waiver clients.

Barriers to Serving Medicaid Clients in Residential Care Settings

Respondents noted a number of barriers, which are discussed in turn.

Suggested Changes to Improve the Medicaid-Funded Residential Care System

A few respondents did not make specific suggestions about Medicaid, but instead noted that there were general areas that the state needed to pay more attention to.

With increased emphasis on aging in place, more attention to quality might be needed in ALFs. There have been some reports that the quality issues in ALFs--regarding food, activities, and staffing--are similar to those in nursing homes.

Others had very specific recommendations.

CBA waiver cost-neutrality should be determined on an aggregate rather than individual basis. Therefore, if one individual's cost for remaining in the community in an integrated setting was higher than the nursing home payment, that individual could remain eligible because overall cost neutrality would be upheld.
More education is needed for discharge planners so they will present the full range of options for living in an integrated community setting. While assisted living services should be part of the CBA waiver program, they should be alternatives to nursing homes, not the wing of a nursing home.
More staff are needed in ALFs. Greater attention to quality and oversight is given to nursing homes than assisted living facilities due to resource constraints and the need to give priority to clients in higher levels of care.
The state needs to improve the screening process to make sure that clients are set up for the most appropriate services based on their needs. It also needs to increase coordination to support a streamlined point of access into the CBA waiver program. Administrative and contracting processes should be simplified so that the grandmother seeking and receiving CBA waiver services and the child and mother seeking and receiving TANF assistance could go into the "same door" to seek and receive services.
The state needs to do a better job marketing and promoting the CBA waiver program to providers. It also needs to reduce the duplication of effort that results from multiple agencies being involved (licensing/regulation and CBA waiver program staff). The state could also be more flexible in its paperwork requirements. For example, the state requires hand-written ledger forms whereas a company may operate a computerized form. Similarly, the state requires a daily service delivery record whereas a company authorizes a service plan for each client that identifies the service and how many times a week it will be provided.
The state should develop an extensive comprehensive assessment process that all providers would use. Some providers do not know what they are looking for when conducting pre-admission assessments. This is more an issue for private pay clients, because for CBA waiver clients, the DHS managers and home health nurses are involved in the admission decision process with the providers.

Future Plans

A number of respondents mentioned ongoing activities related to the Olmstead decision.

There are many advisory boards operating at the state level that are discussing long term care and Olmstead issues, with providers, consumers and advocates working together.
The appropriations Rider 37 has supported the Olmstead decision and allowed more than 900 nursing home residents to move into their own homes and ALFs. The state is asking for more CBA waiver slots in this next legislative session a continuation of Rider 37.
There is a pilot study using Olmstead relocation specialists to provide individuals in nursing homes with information on the full range of community options.

A number of respondents mentioned regulatory issues that the state is planning to address.

The state is aware of provider concerns with the 120 day bed hold rule and draft new rules are coming out shortly. Stakeholders are appreciative that the state shares draft rules to obtain input.
Draft CBA waiver rules were due to be circulated to providers months ago. The focus of these regulations is to increase the ability of assisted living residents to age in place, and to develop a monitoring process that involves more site visits and interviews rather than just fiscal and process reviews. While more operationally difficult, this type of review would yield more information on service outcomes. The licensing staff are more used to surveying facilities, but the State CBA waiver program staff are less familiar with this type of review. Both they and the providers are going to need training on the review process.
The state is developing a standardized care assessment process.

Another mentioned the state's ongoing data monitoring activities.

The state is tracking individuals transitioning out of nursing facilities into the CBA waiver program. Because their funding is supported by the nursing home budget, the state wants to see if there are cost savings, or whether those leaving the nursing facilities are merely replaced by new Medicaid clients.