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



Nursing Homes
Waiver Program
Personal Care Option
Long Term Care Programs Funded with State Revenues Only
Family Care Program
Adult Family Homes
Community Based Residential Facilities
Residential Care Apartment Complexes
General Comments About the State's Residential Care System
General Comments on Medicaid's Role in Residential Care Settings
Licensing and Regulatory Requirements
Admission and Retention Requirements, and Aging in Place
Barriers to Serving Medicaid Clients in RCACs and CBRFs
Suggested Changes to Improve the Medicaid-Funded Residential Care System
Future Plans
Recommendations for Other States
Formal and Informal Interviews

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

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.


Nursing Homes

Historically, nursing homes have been the predominant provider of long term care in Wisconsin. In 1981, the State instituted a moratorium for nursing facilities which remained in effect through 1998. The State no longer reviews the building of new facilities that are replacement beds; it has a Certificate of Need program for bed applications that would add to the total.

Over the past 20 years, the state has made an effort to reduce nursing home utilization by developing home and community service options. Between 1996 and 2001, the number of staffed licensed beds in Wisconsin nursing homes declined 12 percent from 47,200 to 41,500. However, even after a decade of decline, the nursing home bed rate in Wisconsin is still higher than the national average.1

Currently, about 10 percent of Wisconsin's nursing homes are in bankruptcy. The state does not know the current distribution of nursing home beds and whether it matches need. Nursing home closures have created several transition issues, for example, finding alternative housing for residents required to move.

Financial Criteria

Spousal Protections

Family Supplementation

Families may pay the difference in cost between a semi-private and private room directly to the nursing home without jeopardizing Medicaid eligibility. In Wisconsin, these payments are called voluntary family contributions.

Level of Care Criteria

To receive Medicaid coverage of nursing home care, individuals must meet all of the following eligibility criteria:

Waiver Program

Wisconsin has several waiver programs. The Aged and Disabled waiver program provides services to persons residing in their homes, supported apartments, and all types of residential care facilities: Adult Family Homes, Community Based Residential Facilities, and Residential Care Apartment Complexes.

Financial Criteria

Spousal Protections

Cost Sharing Requirements

Persons in Group B who are receiving waiver services must share the cost of services if income remains after certain deductions. These deductions are:

  1. A Personal Maintenance Allowance, which is a combination of three items:

  2. A Family Maintenance Allowance.

  3. Exempt income (e.g., to pay court ordered expenses such as child support).

  4. Health insurance premiums.

  5. Out-of-pocket medical remedial expenses.

Allowable deductions cannot exceed $1,114. Income over this amount is the cost sharing obligation.

Individuals residing in Community Based Residential Facilities or Residential Care Apartment Complexes are permitted to keep a discretionary allowance to cover incidental personal expenses.5 The counties determine the amount they are allowed to keep. The minimum and typical amount is $65 per month, the maximum permitted is $240 per month.

Family Supplementation

Anyone who is eligible for SSI is automatically eligible for Medicaid. If the family of a resident in a Community Based Residential Facility makes a payment directly to the facility for a private room, the SSI payment will be reduced by one third, and the family must make up this difference as well as paying the additional cost for the private room.

If someone is not eligible for SSI, the Medicaid program does not consider money paid to a Community Based Residential Facility for a private room to be in-kind income to the Medicaid beneficiary because the payment is not made in return for a service. Medicaid only considers in-kind payments to be income to the beneficiary if they are "regular, predictable, and in return for a service."

In Wisconsin, family members often make voluntary contributions to cover room and board, or the cost of a private room in residential care facilities, or to provide service enhancements, i.e., to pay for something individuals would not be getting under Medicaid, such as monthly hairdressing services.

There is some disagreement at the county level about allowing voluntary family contributions. Some counties fear that it can set a precedent and an expectation, and that some Community Based Residential Facilities and Residential Care Apartment Complexes might start to require it. Even though federal law prohibits such requirements, there is no way for the counties to monitor facility practices. If a family chooses to contribute, some counties require documentation in writing that if the contribution stops, it will not be picked up by any other public funding source.

Level of Care Criteria

Waiver applicants have to meet the same level of care criteria as nursing home applicants.

Personal Care Option

In 1988, personal care was added to the Medicaid state plan. Medicaid personal care services may be provided in a person's home or in a residential care facility--including Community Based Residential Facilities and Residential Care Apartment Complexes and Adult Family Homes. However, services may not be provided in a Community Based Residential Facility that has more than 20 beds.

To be reimbursed for the provision of personal care services, Community Based Residential Facilities and Residential Care Apartment Complexes may employ people to provide the care that is then billed by a Medicaid certified provider (i.e., independent living centers, county or home health agencies). Alternatively, the county may secure services through an agency that provides personal care. Even if the facilities directly employ people to provide personal care, the county, home health agencies or independent living centers still has to bill for the pre-authorized hours provided because Medicaid does not allow Community Based Residential Facilities or Residential Care Apartment Complexes to be certified providers. If a residential care facility wants to be reimbursed for Medicaid personal care, it must have a billing partner, typically a county. The rationale for this restriction is that it ensures county oversight of the care recipient's entire care plan and assures that duplication of services does not occur.

In FY 2002 Medicaid provided personal care through the state plan to 10,408 individuals at a cost of $105.6 million. The FY 2003 personal care budget is $115.4 million. Data on the number of persons receiving personal care in residential care settings are not available.

Financial Criteria

Spousal Protections

There are no spousal income and asset protections for community spouses of persons receiving personal care services in their home or in Community Based Residential Facilities, Residential Care Apartment Complexes, and Adult Family Homes. Only the spouses of nursing home residents and waiver participants receive income and asset protections.

Service Criteria

Covered personal care services include assistance with activities of daily living (e.g., bathing, dressing, grooming, toileting), assistance with housekeeping, shopping and meal preparation, accompanying the recipient to medical appointments, and providing assistance with medically oriented tasks that are assigned to a trained personal care worker supervised by an RN.

To be eligible for personal care, an individual's physician must provide a written order that such services are medically necessary. Services must also be based on a plan of care and supervised by a Registered Nurse. Amounts over 50 hours per year must be pre-authorized.

Family Supplementation

The policy regarding voluntary family contributions is the same as for the waiver program.

Long Term Care Programs Funded with State Revenues Only

Community Options Program

Services are provided through the state's Community Options Program (COP) only if they cannot be provided through the waiver program or the Medicaid state plan. The purpose of the state COP program is to divert or relocate persons of all ages and target groups from nursing homes. The COP program is funded through state and county revenues. The state also has a program that provides help for caregivers of persons with Alzheimer's disease or other causes of dementia.

In some instances, COP funding may be used to pay for room and board in Community Based Residential Facilities. Policies regarding room and board payment vary by county and depend, in part, on whether the county has state-only funds available at the time they are needed for this purpose. One study found that the average COP payment for room and board for a waiver client in a CBRF was $147 per month.

COP funding may not be used to pay for room and board in RCACs per state law because these costs are perceived as too high and paying for them would disproportionately reduce the amount of money available for home care services.

Financial Criteria

Eligibility for the program is restricted to those who are financially eligible for Medicaid or are expected to be eligible within six months of spend-down in a nursing home. Individuals who would be eligible under this latter criterion can receive COP services if they pay part of the cost of those services. COP recipients are permitted to retain $29,193 in assets, an amount equal to six months of nursing home care plus $2,000.

People with incomes over the allowed amounts can become eligible by sharing the cost of their services. Those with incomes over the cost of their services are generally not eligible, because they are assumed able to pay for services themselves.

Spousal Protection

The community spouse of a COP recipient has the same income and asset protections as the spouse of a waiver client.

Service Criteria

Eligibility for the program is restricted to those who meet the state's nursing home level of care criteria.

Family Care Program

The Family Care Program is a pilot managed long term care program currently operating in five counties. It is based on the philosophy that service dollars should follow the client. People enrolled in Family Care who meet the nursing home level of care criteria have a choice of home care, Residential Care Apartment Complexes, Community Based Residential Facilities, Adult Family Homes, and nursing homes.

The Family Care program replaces/combines waiver programs and other sources of funding for long term care. It provides greater flexibility in the use of funds and improved access through shorter waiting periods.


Wisconsin has three types of residential care settings (RCS) and separate licensing and regulatory requirements for each of them: Adult Family Homes (AFHs), Community Based Residential Facilities (CBRFs), and Residential Care Apartment Complexes (RCACs). The state has never had a moratorium on, or a certificate of need program for, RCS.

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. The state also provides Medicaid state plan personal care services in residential care settings, but relatively few people in these settings receive these services compared to the number who receive Medicaid personal care services in their own homes.8

Residents in all settings may be able to receive waiver services or personal care state plan services, as long as the facilities meet the regulatory requirements for providing these services and applicable COP and Waiver policies are met. Residents of CBRFs and AFHs may also receive COP state funded services.

In 2001, 76.8 percent of people receiving waiver & COP services received them in their own homes, 13.6 percent in CBRFs, 5.2 percent in AFHs, and .7 percent in RCACs. The remainder are served in other types of facilities such as supervised apartment living. There are no data on how many personal care clients receive services in these settings.

Adult Family Homes

Adult Family Homes (AFHs) serve up to 4 residents. Those serving up to 2 residents need to be certified by county certifying agencies and those serving 3 or 4 residents need to be licensed by the state to be reimbursed for waiver services.

Community Based Residential Facilities

General Description

Physical Plant Requirements

Room and Board


CBRFs serve people who do not require care above an intermediate level of nursing care and need no more than 3 hours of nursing services per week. Nursing care includes anything that is covered by the state's nurse practice act, including tasks that can be delegated, e.g., dressing changes. Assistance with ADLs is not considered a nursing task. Nurses do not have to be on site to supervise delegated tasks. Nurses can be paid hourly or on retainer for a certain number of hours per week. Exceptions to the hourly limits are made for temporary conditions lasting no more than 90 days or longer with department approval.

Sources of Public Funding for Services in CBRFs

General Revenue Funded Community Options Program

The Community Options Program (COP) was originally designed as a home care program in 1982 and there was no separate funding source for individuals in residential care who required long term care services. Once the state approved funding of services in CBRFs through COP and the waiver program (in the mid-eighties) and established new regulatory requirements for receipt of this funding (see below), the industry responded with a growth in new facilities that met the regulatory requirements.

Consequently, greater and greater amounts of COP and waiver funding went for residential care--80 to 90 percent in some counties. In response, the state set a statewide maximum amount of COP and waiver funding that could be spent in CBRFs. This maximum was set at 25 percent of a county's COP and waiver allocation. Because it was recognized that a statewide cap did not accommodate local needs, the policy was changed. Counties now set their own maximum amount of COP and waiver allocations that will be used for CBRF care.


This change occurred because many providers, residents, and counties wanted to expand residential options for county clients and no longer felt that size was an appropriate way to define "institutional."

Family Care

Wisconsin's pilot program to redesign long term care financing pays for CBRF services provided to enrollees in the five participating counties. Family Care pays for services in RCACs only in pilot counties where there is a care management organization (CMO) and when the facility is included in the CMO's provider network.

Food Stamps

Persons who live in group community living arrangements, such as RCACs that house no more than 16 persons, can receive food stamps if they are either blind or disabled and meet the program's financial eligibility criteria.

Residential Care Apartment Complexes

Initial Development

Effective March 1997, the state carved out a portion of the residential care market that was most suitable for deregulation and created a new category of residential care setting (RCS), called assisted living, with its own specific regulations. The state's intent was to reduce regulatory burden, give providers the flexibility to be creative in developing quality residential environments, and permit residents to have maximum control over their daily lives. Residential Care Apartment Complexes (RCACs) were intended to be a less regulated type of RCS than CBRFs and to increase residential care choices for older persons.

This new category of RCS required that each unit be a separate lockable apartment with a private bath and kitchenette. The statute clearly defines RCACs in accordance with the assisted living philosophy, with specific provisions to assure privacy, autonomy, and the ability to age in place. The statute says that RCAC residents retain control over their personal space, care decisions, and daily routines, and that services are individually tailored to each resident's capacities and preferences.

Because the new assisted living regulatory category required private rooms, other RCSs were prohibited from using the term assisted living. Because many AFHs and CBRFs called themselves assisted living or used the term in marketing, they lobbied the state to allow them to use the term. The state agreed but wanted to distinguish the new model from other CBRFs and AFHs. Consequently, in March 1997, the state issued a new rule changing the name of the new model from assisted living to residential care apartment complex.

RCACs are frequently described as "nice assisted living facilities," but they vary with regard to the availability of amenities, e.g., some have washers and dryers in each unit while others have laundry rooms; some have more common space, such as private dining rooms for family parties, libraries, and computer rooms.

RCACs that do not serve Medicaid waiver clients need only to register with the state. Those that wish to receive Medicaid waiver funding must be certified. Standards for both are the same, but certified facilities are subject to a higher level of regulatory oversight and enforcement, including yearly site visits, and a full range of enforcement actions. One respondent noted that the state's policy is to visit certified facilities once a year, but in actual practice, there are not enough regulatory staff to do so. Registered facilities are reviewed only in response to complaints and the state cannot levy fines or impose other "intermediate sanctions."

Wisconsin has 129 RCACs. Forty six percent are registered because they do not plan to admit Medicaid waiver clients. Sixteen registered facilities have become certified, generally because residents have spent down to Medicaid eligibility.

Over 5000 units have been built in the last 5 years. The newer ones are real apartments with separate bedrooms and living areas; the older ones are more like a large studio apartment.

General Description

Physical Plant Requirements

Room and Board


Service Rates

Admission, Retention, and Discharge Criteria, and Aging in Place

Sources of Public Funding for Services in RCACs


Family Care

Wisconsin's pilot program to redesign long term care financing pays for RCAC services provided to enrollees in the five participating counties. Family Care pays for services in RCACs only in pilot counties where there is a care management organization (CMO) and when the facility is included in the CMO's provider network.

Food Stamps

Persons who live in group community living arrangements such as RCACs, which house no more than 16 persons can receive food stamps if they are either blind or disabled and meet the program's financial eligibility criteria.

Requirements and Funding Sources for Residential Care Facilities in Wisconsin
Facility Type Who Regulates Size and Care Limits Available Funding Sources
Adult Family Home (AFH)
  • County certifies homes for 1 or 2 residents
  • State licenses homes for 3 or 4 residents
  • Standards for certified and for licensed homes are different. Certification or license required for COP or MA Waiver funding
  • Maximum nursing care: 7 hrs. per resident per week in 3-4 bed AFHs. No limit on personal care.
  • Sponsor may arrange but not provide nursing care in 1-2 bed AFHs. No limit on personal care.
  • Private income and/or assets, SSI, SSI-E & insurance
  • Community Options Program (COP)
  • Community Integration Program (CIP) IA and IB
  • COP-W and CIP II / Brain Injury Waiver (BIW)
  • MA card, when service is provided by an MA-certified provider (e.g., home health or personal care agency). AFHs are not an MA provider type under the MA state plan and cannot bill MA directly.
  • Family Care & County funds/Community Aids
Community Based Residential Facility (CBRF)
  • State licenses facilities
  • Minimum # resident "beds": 5
  • No maximum # of "beds"
  • Minimum sleeping room size: 60-100 sq. ft. per resident
  • Max. amount nursing care: 3 hours/resident/week. Residents with temporary conditions may receive more than 3 hrs. of nursing care/week for up to 90 days or longer with DHFS approval.
  • No limit on personal or supportive care
  • Private income and/or assets, SSI and insurance
  • SSI-E (Exceptional Expense Supplement) in CBRFs with 20 or fewer beds and/or certified as independent apartment CBRFs
  • COP and COP-W/CIP II in CBRFs with < 20 beds and in CBRFs with over 20 beds when facility is a certified independent apartment CBRF or has DHFS approval.
  • CIP IA/IB and BIW: only when variance has been granted and CBRF has 8 or fewer beds.
  • MA card, when the service is provided by a MA-certified provider (e.g., HH or PC agency). CBRFs are not an MA provider type under the MA state plan and cannot bill MA directly. The MA card cannot be used for personal care in CBRFs with > 20 beds.
  • Family Care & County funds/Community Aids
Residential Care Apartment Complex (RCAC)
  • State registration or certification is required.
  • Facilities serving only private pay residents are registered. Certification is needed for a facility to receive MA Waiver reimbursement. Standards are the same for both; the regulatory process and level of oversight differ
  • Minimum # units: 5
  • No maximum # units
  • Units must be apartments with full private bath and full kitchen
  • Min. unit size: 250 sq. ft., excluding closets
  • Max. amount of care: 28 hours/resident/week of personal, supportive and nursing services combined.
  • Private income and/or assets, SSI, and insurance.
  • SSI-E in Certified RCACs
  • COP-W and CIP II in certified facilities
  • Family Care
  • MA card, when service is provided by an MA certified provider (e.g., HH or PC agency). RCACs are not a provider under the state plan & cannot bill MA directly.
  • County funds (not including Community Aids)
  • Note: COP funds may not be used to supplement Waiver funds or pay room and board costs.


In addition to consulting with eleven state staff and policy makers regarding the technical details of the state's programs, we also interviewed four of them. In addition, we interviewed eleven stakeholders, including representatives of residential care provider associations, residential care providers, consumer advocates, the state ombudsman program, aging service providers, and a county agency that administers 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 many of the same residential care facilities serve both private pay and Medicaid residents, most respondents expressed views about the industry as a whole.

Confusion Among Consumers

Several expressed concerns that the residential care system was very confusing for the public.

General Comments on Medicaid's Role in Residential Care Settings

There was a consensus among the respondents that the state's home and community services program -- both the state funded portion and the Medicaid portion -- were exceptionally good. Most felt that the state's goal in using Medicaid to cover services in residential care settings is to provide an alternative to nursing homes for people who can not live at home, and that CBRFs are fulfilling this goal.

However, some thought that the state has not done a good job of developing facilities that are alternatives to nursing homes for the Medicaid population.

With regards to RCACs, there was agreement that the state had met its objective for facilitating the development of apartment style assisted living, given that 5000 RCAC units were built since 1997. This model, however, was not developed specifically to serve Medicaid clients; only 189 RCAC residents are receiving waiver funded services.

Licensing and Regulatory Requirements

No one felt that regulations posed a major obstacle to affordable assisted living in Wisconsin.

Several respondents had concerns about too much regulation in the CBRFs and too little in the RCACs, particularly given that RCACs certified to serve waiver clients are less regulated than CBRFs, even though they are permitted to provide up to 28 hours of care per week, including nursing care. One provider felt that the CBRF regulations were more stringent than nursing home regulations, and another expressed concern that the state will adopt a nursing home enforcement approach in assisted living settings, noting that this approach is not working in nursing homes.

One respondent expressed concerns that the state regulates facilities that serve very different types of people under the same rules.

Oversight and Enforcement

The majority felt that the regulatory requirements for oversight in both CBRFs and RCACs were inadequate, and as a result the state was not enforcing regulatory standards.

A number of respondents mentioned that when the RCAC regulations were being developed, the industry opposed oversight by the ombudsman program.

Several noted that the way in which RCACs are regulated reflects a compromise among the industry, state staff and consumer advocates; but some felt that the industry had the upper hand.

One respondent noted that after four and a half years of a consultative approach to RCAC regulation, Wisconsin is now citing and fining violators for the first time: three citations have been issued in the last 6 months, and 11 complaints are currently under investigation.

Staffing Requirements

Many felt that insufficient regulations inevitably lead to problems and if the media picks up on it and reports the problems, then the pendulum swings the other way with a demand for regulation to address the problems, such as a need to assure a higher quality of staff in CBRFs and RCACs.

On respondent stated that there were major concerns about quality, based on a six-month investigative report by a major newspaper, which reviewed 460 assisted living facilities (CBRFs and RCACs) and found numerous citations for violations over the past 4 years relating to untrained staff, medication errors, not calling the doctor when a resident got sick, leaving residents alone, and abuse. Other respondents felt that there are always a few bad providers, which get the media's attention, but that most providers do their best to provide good care.

A number felt that the major causes of poor quality were inadequately trained staff, a lack of training requirements and competency testing, and lack of enforcement of existing training requirements.

One provider related the inadequacies of staff, in part, to the increased needs of the typical resident.

Outcome-Based Regulations

Some respondents, both providers and those representing consumer interests, felt that the industry needs more outcome-based regulations.

While many expressed dissatisfaction and at times conflicting views about the state's regulations, there was a consensus that the nursing home regulatory model is not appropriate for residential care settings.

Dementia Care

A number of respondents felt that the state needed better standards for dementia care. One stated that the industry opposes regulation in this area, but another disagreed:

One respondent noted that cognitive impairment is a real problem in RCACs, because while the regulations prohibit the admission of people who are incompetent, it's possible to be competent but be incompetent at managing medications.

National Standards

With few exceptions, respondents agreed that national or model standards for assisted living would not be helpful. One respondent felt that model standards are intended to be minimum standards, but in many instances become maximum standards. Most felt that each state's long term care system is unique and what is appropriate for one state is not appropriate for another.

Admission and Retention Requirements, and Aging in Place

No one interviewed raised issues about admission requirements, but many had concerns about retention requirements. Some were concerned about their affect on the ability to age in place.

Several raised the issue of inadequate guidance in the RCAC regulations regarding the retention of people who develop cognitive impairment and dementia while in an RCAC. One commented that the state needs to expand the options for people with dementia, and noted that the general public does not know what to do about family members with dementia.

One provider stated that the hours of care needed is not the only indicator of the amount of care needed.

Negotiated Risk Agreements

Respondents varied considerably in their views about these agreements. Some felt that such agreements can be useful for both providers and residents, enabling a less "paternalistic" approach to service delivery. Some felt they should not be mandated, while others that they should be required in all residential care settings.

One respondent felt strongly that the existence of such agreements were a sign of ageism in service delivery because they required older persons to negotiate the right to be autonomous rather than have it assumed.

Another noted that a major issue in risk agreements is the lack of an accepted method for determining the competency of individuals to enter into them. One respondent raised the issue of liability concerns and mentioned that liability insurance problems are starting in Wisconsin. Another noted that there has not yet been any litigation related to risk agreements, but there is a need for more individualized agreements, noting that there are too many "cookie cutter" agreements than is desirable.

Barriers to Serving Medicaid Clients in RCACs and CBRFs

Respondents noted a number of barriers, but overall, the consensus was that the costs are too high and that it is not possible to get assisted living costs low enough for people with low incomes to pay for themselves.

Insufficient Capacity in the Waiver Program

There was a consensus that the major barrier to providing affordable assisted living in Wisconsin is insufficient capacity in the statewide waiver program. Even though the Medicaid waiver program provides services in residential care settings, few people benefit because of the long waiting lists. There are over approximately 9000 elderly and working age disabled on waiting lists for state COP and waiver services.

Room and Board Charges are Unaffordable for Waiver Clients

There was general agreement that room and board costs in RCACs and many CBRFs were unaffordable for waiver clients.

One respondent 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 COP (the state's general revenue funded HCBS program). Others felt that each facility should be able to afford to take a few Medicaid residents. Some counties opt to use COP funding to pay for room and board for a few waiver clients in smaller CBRFs.

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 states HCBS funds to the residential care industry.

Several respondents discussed the need to develop a greater supply of affordable assisted living facilities and stated that state and federal policy needs to create incentives to build more affordable units.

There was disagreement about whether the state should cap the amount that can be charged to Medicaid clients for room and board. Some felt that without a cap, Medicaid clients would never have access to "real" assisted living, meaning a facility with private rooms and baths and sufficient services to age in place. One noted that the issue had been discussed but rejected by the state's legislators, who wanted the market alone to decide the rates.

Philosophy of Home Care

A few respondents stated that many of the counties did not want to use public funding in residential care settings, because they subscribed to a philosophy that favored homecare. One stated that many counties thought some CBRFs, particularly larger ones, were more like institutions. Given that the COP and waiver program are intended to provide alternatives to institutions, they do not want to use limited funds in what they see as quasi-institutional settings.

Geographic Variation in the Distribution of Facilities

A few respondents commented that access can be limited due to maldistribution of assisted living facilities.

Service Rates

There were major differences in views regarding service rates and whether they constituted a barrier to serving Medicaid clients. Some, but not all, providers felt the state's rates were too low or "wholly inadequate." Most other respondents felt that the RCAC and CBRF combined market rate (room, board, and services) was too high and that the variation in these charges did not appear to be correlated with the quality of care.

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:

Several respondents expressed concerns that people who spend down in RCACs will not be able to stay in their RCAC apartments because the facility will not accept the waiver rate, and a number of providers specifically cited the state's payment policies as a problem.

Others stated that counties do not have the expertise to enforce the limit, and that many facilities exceed the 10 percent profit limit.

A few respondents expressed concerns about the effect of high rates on the overall amount of funding available for HCBS.

One respondent noted that with so Waiver participants living in RCACs (189 out of about 13,500 individuals), many RCAC providers have little experience working with counties and vice versa. Counties are afraid they will be charged too much and providers are concerned that they won't be paid enough. Another noted that the state does not have a cost-effective method for reimbursing services in CBRFs and RCACs, noting that these settings should offer economies of scale but, in fact, it costs more to serve people in these settings than it does to provide services in their homes.

One respondent noted that the state is aware of these issues and is taking steps to address them.

A few respondents stated that the rates are not just for the services themselves, but that they need to cover other costs, particularly those incurred to meet regulatory requirements such as training. At that same time, most recognize that the state does not have the money.

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.

Suggested Changes to Improve the Medicaid-Funded Residential Care System

Most respondents suggested changes to address the specific issues and barriers they had identified.

With very few exceptions, the respondents cited the state's pilot Family Care Program as the solution to many of the current issues regarding accessibility and believe that the program should be expanded statewide. However, most recognized that expansion was unlikely due primarily to the state's budget crisis, but also because many counties do not yet have the capability of implementing the program.

A few respondents expressed concern that the cost of expanding Family Care statewide would "bankrupt" the state because it treats home and community services as an entitlement.

Others felt that the fear was unwarranted or could be dealt with.

Several respondents expressed more general concerns about the ability of the publicly funded long term care system to meet the needs of the Baby Boom cohort, and made suggestions to address this concern.

Future Plans

A number of respondents mentioned state activities aimed at addressing the shortage of affordable assisted living for low income persons.

Several respondents mentioned that the state had a grant from the Robert Wood Johnson Foundation's Coming Home Program to develop affordable assisted living in rural areas, and 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.

Recommendations for Other States

We asked the respondents to make recommendations for other states interested in using Medicaid to fund services in residential care settings, based on their experience doing so in their own state. The majority of recommendations related to assuring a method to pay for room and board for low income persons, assuring adequate funding, and recognizing that different licensing and more restrictions are needed to serve the Medicaid population, particularly those who meet the criteria for a nursing home level of care.



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

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.

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. [Full Report]

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.


Adult Family Homes

Aged, Blind and Disabled Medicaid Eligibility Survey

Assisted Living Facilities

Board on Aging and Long Term Care

Community Based Residential Facilities Rules and Regulations

Community Waivers Program

Elderly, Blind and Disabled,%20Blind,%20and%20Disabled

Medicaid Deductible Fact Sheet (Medically Needy)

Patient Liability or Cost of Care

Residential Care Apartment Complexes

Spousal Impoverishment Fact Sheet

The Ombudsman Program

Wisconsin Administrative Code, Community Services

Wisconsin Medicaid

Wisconsin Updated Statutes and Annotations

Formal and Informal Interviews

Irene Anderson, Supervisor
Department of Health and Family Services

Sunny Archambault, President
Wisconsin Association of Aging Unit Directors
Director, Aging Resource Center of Brown County

John Bechly, President
Wisconsin Association of Residential Facilities

D'Anna Bowman, State Director
Wisconsin AARP

Jeff Brikowski, Food Stamp Policy Analyst
Department of Health and Family Services

Rita Cairns, Financial Eligibility Specialist
Department of Health and Family Services

Beth Christie, Executive Vice President
The Laureate Group

Wendy Fearnside, Program and Policy Analyst
Bureau of Aging and Long Term Care Resources
Department of Health and Family Services

Tom Frazier
The Coalition of Wisconsin Aging Groups

Neil Gebhart, Assistant Legal Counsel.
Department of Health and Family Services

Marge Hannon Pifer
Division of Health Care Financing
Department of Health and Family Services

James Jones
Deputy Director
Bureau of Health Care Eligibility
Department of Health and Family Services

Carrie Molke
Residential Policy Specialist
Bureau of Aging and Long Term Care Services
Department of Health and Family Services

Jim Murphy, Executive Director
Wisconsin Assisted Living Association

George Potaracke, Executive Director
Board on Aging and Long term care

Brian Purtell
Director of Legal Services
Wisconsin Health Care Association

Tom Ramsey, Director of Government Affairs*
Wisconsin Association of Homes and Service for the Aging

Allan Reinhard
Program and Policy Analyst
Division of Health Care Financing
Department of Health and Family Services

David Slautterback
AARP volunteer / lobbyist

Janice Smith
Assistant Director
Bureau of Aging and Long Term Care Services
Department of Health and Family Services

Stefanie Stein, Director
Milwaukee County Department on Aging

Jeff Ulanski, Medicaid Program Policy Analyst
Department of Health and Family Services


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

  2. The state is currently revising the formula for determining the amount of assets that can be retained.

  3. The state does not use any of the options for less restrictive income or resource methodologies for determining financial eligibility in the medically needy program.

  4. The state is currently revising the formula for determining the amount of assets that can be retained.

  5. The discretionary allowance is not in addition to a personal maintenance allowance.

  6. Prior to 1995, a person could be eligible for the state supplement without being eligible for SSI.

    Since 1995, a person must be eligible for some federal benefit to be eligible for the supplement. Persons ineligible under current law who were receiving the state supplement in 1995 continue to receive it under a grandfathering provision.

    The state does not use less restrictive income disregards when determining eligibility than it does when determining eligibility for SSI. It uses the following Section 1902(r)(2) less restrictive resource methodologies for this group: income used to pay court ordered fees and guardianship and guardian ad litem fees is excluded.

  7. The state does not use Section 1902(r)(2) less restrictive income or resource methodologies for this group.

  8. Personal communication from state staff. Data on the number of persons receiving Medicaid personal care in residential care settings are not available.

  9. While there are no data on how many were receiving personal care services through the state plan, given that the number receiving COP and waiver services was 2,363, only about .5 percent of the 11.5 percent could have been receiving services through the personal care state plan option.

  10. The SSI-E benefit (a state SSI supplement for persons with high needs) also used to be limited to persons in CBRFs no larger than eight beds.

  11. Most county contracts are for cost-based rates. Allowable cost distinguishes between what costs can be paid for with state/federal funds and what cannot; it says nothing about how much the rate is. The State requires an audit where publicly purchased services cost more than $25,000 per year. If the audit shows costs that were not allowable, which have been paid for in the rate, they must be returned.

  12. Some facilities have an arrangement with a Medicaid-certified home health or personal care agency to either (1) provide and bill Medicaid for these services or (2) "lease" their staff to the Medicaid-certified agency in order to be able to bill Medicaid. In 2001, eight percent of waiver recipients living in RCACs had personal care services billed to the Medicaid card (state plan), averaging $367/month. The state does not have comparable data for CBRF or AFH residents at this time.

Return to:
  • Main Report Table of Contents
  • APPENDIX A. Methodology
  • APPENDIX B. Florida
  • APPENDIX C. Minnesota
  • APPENDIX D. North Carolina
  • APPENDIX E. Oregon
  • APPENDIX F. Texas
  • APPENDIX H. Factors for States to Consider When Choosing to Cover Medicaid Services in Residential Care Settings