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Adult Day Services: A Key Community Service for Older Adults

Publication Date
Jun 30, 2006
Janet O'Keeffe and Kristin Siebenaler
RTI International


U.S. Department of Health and Human Services

Executive Summary

July 2006

This report was prepared under contract #HHS-100-03-0025 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 this subject, you can visit the DALTCP home page at or contact the ASPE Project Officers, Gavin Kennedy and Emily Rosenoff, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, S.W., Washington, D.C. 20201. The Project Officers can be reach through email at: or

The opinions and views expressed in this report are those of the authors. They do not necessarily reflect the views of the Department of Health and Human Services or the Research Triangle Institute.


Over the past two decades, state and federal long-term care spending on home and community services has increased, primarily through Medicaid waiver programs. Most of the research and policy literature on home and community services for elderly persons has focused on home care and residential care, including adult foster care and assisted living. Little attention has been paid to adult day services (ADS)--a nonresidential community service provided outside the home. Three major adult day services models are generally recognized: a social model; a health or medical model, which is sometimes combined with the social model; and a specialized model. This report will refer to all models generically as ADS.

The first ADS program was a geriatric day hospital program established in 1960 in Greensboro, North Carolina. The program evolved to become a community service to meet caregivers’ need for respite in order to work, fulfill other obligations, and recover from the demands of continuous care. Many caregivers who use ADS are providing care to family members with dementia who need constant supervision to assure their safety.

The social model of ADS provides a secure environment, assistance with some activities of daily living (ADLs), and therapeutic activities aimed at helping participants to achieve optimal physical and mental functioning. In the health or medical model, ADS programs also provide skilled nursing and rehabilitation services and many programs combine both models. Specialized models are targeted to specific groups, such as individuals with HIV/AIDS, multiple sclerosis, acquired brain injuries, or mental illness. Most ADS programs serve a large proportion of participants with some degree of cognitive impairment, but some programs specialize in the care of individuals with dementia.

ADS programs are of interest to states because of their potential to delay or prevent nursing home placement, in large part by supporting informal caregiving. Informal caregivers are the backbone of the nation’s long-term care system. Over seven million Americans provide 120 million hours of care to about 4.2 million elderly persons with functional limitations each week. The estimated economic value of this care ranges from $45-$96 billion a year. Research has found that caregivers who experience stress and burden are more likely to institutionalize relatives suffering from dementia. Once the physical resources of caregivers decline and other home and community resources (paid or unpaid) are unavailable, nursing home placement is more likely.

States are also interested in the potential of ADS to reduce health care costs by providing health monitoring, preventive health care, and timely provision of primary care, particularly for individuals at risk for incurring high medical costs. These include elderly individuals who are dually eligible for Medicare and Medicaid--called dual eligibles--who comprised 18 percent of all Medicare beneficiaries in 2000 but accounted for 24 percent of total Medicare spending. Similarly, in 2002, they represented 16 percent of all Medicaid enrollees but 42 percent of program spending.

All states fund some form of ADS through either their Medicaid state plan or a waiver program, and in fiscal year 2005, Congress funded a Medicare demonstration of the provision of home health benefits in ADS programs.

However, little is known about the provision, use, or outcomes of ADS, particularly the medical model, and the ADS industry’s capacity to provide health services. Research has been hampered by the considerable variation in the characteristics of ADS programs both within and across states, and by a lack of data.

Purpose of Study

The purpose of this study is threefold: (1) to inform policymakers about the current and potential role of ADS in the health care and long-term care systems as determined by state regulation; (2) to identify operational and regulatory issues facing ADS providers under different ADS models and in different regulatory and financing environments; and (3) to provide information that can guide future research and policy analysis on ADS for elderly persons generally and on medically-oriented ADS specifically.


The study used several qualitative research methods, including: (1) an in-depth review of state approaches to regulating ADS; (2) consultation with a Technical Advisory Group, subject experts, state regulatory and Medicaid staff, and state provider associations; and (3) site visits to ADS providers in five states: Georgia, Illinois, Maryland, North Carolina, and Washington. See Appendix A for detailed information about the methods employed.

Regulatory Findings

States vary in their regulatory approaches. Half of the states license ADS providers, ten states certify them, four states require licensure for one ADS model and certification for another, and 13 states use some other type of regulation, such as contractual requirements for providers receiving public funding. The majority of states require inspections that often coincide with initial or annual certification or license renewal, and several stipulate that unannounced visits can be performed at any time. Providers of Medicaid-funded ADS must meet applicable state licensing and regulatory requirements and in over half of the states, must meet additional Medicaid requirements.

Most states regulate ADS to allow the provision of medical services. They provide general parameters for who may or may not be served but do not specify admission and discharge criteria. For example, they lack specific provisions regarding the types or level of functional or health needs that should prevent admission or trigger discharge.

Required and Optional Services

In most states, parameters regarding who can be served are determined indirectly through provisions regarding mandatory and optional services that indicate the level-of-care participants may receive. ADS providers are generally required to furnish assistance with ADLs and health monitoring. States that regulate adult day health care as distinct from adult day care require the former to furnish additional services, including skilled nursing services, medication administration, and physical, occupational, or speech/language therapy.

The majority of states require licensed personnel to administer medications. Some states permit unlicensed staff to so under nurse delegation provisions. Most states require written policies for medication management and administration and many have requirements related to self-administration of medications.

Staffing Requirements

Most states specify minimum mandatory staff-to-participant ratios. Nearly two-thirds require one staff person to every six or eight participants. The highest ratio is one staff person for every four participants and the lowest ratio is one staff person for every ten participants. Some states require different ratios for different types of ADS programs and/or specific types of participants, for example, those with dementia and those with extensive needs. Required staffing ratios for persons with dementia are generally 1:4, but Michigan requires 1:3. Several states do not have minimum staff-to-participant ratios and allow providers to determine the number of staff based on their own assessment of the number necessary to meet participants’ needs.

Virtually all states require specific types of staff for ADS programs, for example, a program, director, activities director and a nurse. Requirements for nurses vary from part-time to full-time, and whether they must be “available” or on-site at all times. Because most states require staffing consistent with participants’ needs, licensed nurses are always required if ADS providers are mandated to furnish skilled nursing services.

Training Requirements

Nearly all states have orientation, initial, and ongoing training requirements, but they are minimal. Some states’ requirements are general, while others specify the content of training and the number of hours required. Most states require at least one staff trained in first aid and CPR to be on duty at all times. About half of the states have special training requirements for staff who serve individuals with dementia.

Site Visit Findings

The ADS providers we visited are providing both health and long-term care services to impaired older persons, a high proportion of whom are unable to live alone. Informal care supplemented by ADS is enabling them to remain in their homes. The age range in the programs is 21 through 90-plus, but with the exception of the program serving persons with HIV/AIDS, all served a primarily elderly population.

Whether an ADS program serves younger adults--including those with mental retardation and other developmental disabilities and those with acquired brain injuries--depends on a combination of regulatory requirements and funding streams for these population.

The majority of program participants have extensive functional limitations, due to physical or mental impairments or a combination of both. Providers estimate that about 50-80 percent of older participants have cognitive impairment--with or without a diagnosis of dementia. Many have chronic health conditions requiring daily health monitoring and skilled nursing services. The licensed nurses employed by these ADS providers provide preventive and primary health care and coordinate this care with participants’ primary care physicians.

Most providers felt that participants’ functional and nursing needs have increased over the past few years and several providers felt that it was due to the increasing recognition of ADS as a viable alternative to nursing home and assisted living placement. Providers reported that they try to serve everyone who needs assistance, but the number of people with severe needs who can be served (e.g., individuals who need two persons to assist with toileting) is limited by the number of staff available.

Services Provided

Providers identified ADL assistance and medication administration as the most frequently provided services. Programs operating as combined or health/medical models also provided health monitoring, health education, and skilled nursing services.

Providers believe that their goals are to enable participants to remain in their homes as long as possible, and to maximize participants’ cognitive and physical functioning, both maintaining function and restoring function lost due to social isolation and lack of stimulation. Many providers said that the ability to simultaneously offer different types of programming according to functional level was essential to ensuring optimal functioning.

Operational and Policy Issues

None of the ADS providers could meet their costs solely through private payments and public program reimbursement. Nearly all of the providers receive a significant percentage of their operating revenue from Medicaid and other public funding sources and all said that the reimbursement rate did not cover their costs. Several programs use part-time, flex-time, and on-call staff so they do not have to carry staff overhead when the census is low.

Some providers set their private pay rate higher than cost to subsidize the lower than cost reimbursement from public programs. Several programs depend on a significant amount of in-kind contributions and volunteers, and many programs rely on subsidies from parent organizations and charitable organizations during budget shortfalls. To assure a daily census that will meet operating costs, providers have to continually market their services, and some have had to allocate a substantial amount of their budget to do so.

Because some states require ADS providers to furnish transportation and others do not, transportation issues varied among the states. Whether or not they were required to provide transportation, and apart from funding concerns, virtually all providers said that participants’ transportation needs posed a major logistical challenge and took up a great deal of staff time.

Several programs reported high retention rates for certified nursing assistants and other staff such as activity directors; others reported high turnover. Those that reported difficulty recruiting did so for professional staff--registered nurses (RNs) and rehabilitation therapists--noting that professional staff can earn more in other health care and long-term care settings.

For staff members who stay, providers attribute their retention to: (1) the work environment, which is less demanding than other long-term care settings; (2) higher staff-to-participant ratios than are found in assisted living and nursing facilities; (3) staff who value their role in a program that has a mission to serve the community; and (4) longstanding relationships with participants.

Regulatory Issues

Providers said that compared to other long-term care settings, ADS regulations set ideal rather than minimum standards. Providers felt that most state requirements regarding staffing and training were necessary to provide good care. They objected to requirements that they believed increased costs without increasing the quality of care, such as having to document staff arrival and departure times and some physical plant requirements. Providers noted other regulatory issues unique to their states.

Conclusions and Research Recommendations

Based on our study findings, we have drawn several conclusions.


  • The method states use to regulate ADS varies considerably, as does the content of the regulations. However, states generally distinguish between ADS and adult day health services, and have more extensive requirements for the health model. In general, staffing requirements are more stringent than those for residential care settings, particularly requirements for licensed nurse staffing in adult day health programs and programs that combine a social and medical model of care.

  • In some states, regulations appear to limit providers’ flexibility to provide services that meet caregivers’ needs, such as arbitrary restrictions on the number of service hours that may be provided on weekends.

  • It is likely that the considerable state variation in regulatory approaches will continue in the near future. In states without licensure, providers disagree about whether the industry should be licensed. One argument for doing so is that long-term care insurers will not reimburse ADS unless they are furnished by licensed entities. Providers in Washington noted this difficulty but those in Illinois did not.

    Some providers would support licensure if it led to an increase in reimbursement rates and others believe it would aid in their marketing efforts to recruit private pay participants. However, in states that do not license ADS providers, some fear that licensing would be added to Medicaid requirements rather than replacing them.

  • Adult day health services are part of the continuum of both health and long-term care services. In the states we visited, ADS providers are furnishing preventive care, health monitoring, and skilled nursing services to individuals with chronic illnesses and physical and cognitive impairments. Some providers are also serving adults under age 65, depending on regulatory requirements and the funding streams for this population.

    Because ADS providers must meet Medicaid state plan or waiver contracting requirements to furnish services to Medicaid beneficiaries--either in addition to or in lieu of state licensing or certification requirements--they are regulated at a level which allows them to furnish health-related and medical services as well as long-term care services to elderly persons with a high level of nursing and medical needs.

Program Models

  • The number of purely social ADS programs may decrease as more providers offer combined or health/medical models. Social programs appear to be at a disadvantage because many participants disenroll as they age and their health and functional needs increase. A combined program offering both a social and medical model appears to be the most financially viable.

    The literature on caregiver stress has pointed out the need to use a social model of ADS when people are not so impaired, to help prevent “burnout,” and many providers noted a need for this model. Others point out that specialized social programs are essential for individuals with dementia who do not have ADL impairments and medical needs. However, these programs may not survive due to: (1) the pressure to serve large numbers in order to meet fixed overhead costs and regulatory requirements, and (2) the need to meet the health and functional needs of increasingly older and more impaired participants, particularly if they want to be Medicaid providers.

Funding and Reimbursement

  • A unique feature of ADS relative to nursing homes and residential care settings is their reliance on multiple funding sources to cover operating costs. While Medicaid is the primary public funding source for ADS providers through either a waiver program or the state plan, in the five states we visited reimbursement rates were not sufficient to meet costs. To remain financially viable and serve nonMedicaid eligibles who cannot afford to pay for some or all of the services they need, ADS programs must find other sources of funding.

    Other funding sources include state and local program funds, Veterans Administration funds, the Social Services Block Grant, Older Americans Act funds, private payments--both out-of-pocket and from long-term care insurance, contributions from local service agencies such as United Way, and charitable contributions obtained through significant and ongoing fundraising efforts. Every ADS program we visited also relied extensively on in-kind contributions and numerous volunteers. The combination of funding sources, each with its own rules, greatly complicates the administration of ADS and can limit providers’ flexibility to meet consumer’s needs.

  • States that pay flat rates create a disincentive for providers to admit participants with severe impairments. Some states pay either hourly rates or have tiered rates for different levels of care.

  • The cost of ADS is relatively inexpensive compared to home care. Agencies charge as much as $20-$25 for an hour’s visit by a home health aide and $85 or more for a half-hour visit by an RN. The national average daily cost for the social model of ADS is about $54, for the medical model about $59, and for the combined model about $57.

    In the five states we visited, some providers furnished only the minimum number of hours required by public programs to receive the daily rate--never fewer than four. In other states, providers furnished up to 11 hours a day on the daily rate. Despite the relatively low cost of ADS, the five states we visited do not appear to be interested in expanding the availability of ADS generally--or medically-oriented ADS specifically.

Operational Issues

  • Lack of transportation and the high cost of transportation are major impediments to the use of ADS.

  • Without greater public recognition of the role ADS can play in maintaining adults of all ages with disabilities in home and community settings, it is unlikely that ADS programs will see an increase in private pay participants.

    Although some providers and experts feel that public knowledge about ADS has improved, all acknowledge that it lags far behind public knowledge and understanding of other long-term care options. Even though ADS allow significantly impaired nursing home-eligible participants to remain at home or living with family, providers believe that the public still thinks that ADS are the adult equivalent of child care. This perception would appear to be widespread, as evidenced by a 2002 article in the Wall Street Journal titled “When Your Parents Need a Baby-Sitter: Adult Day Care Centers in Short Supply.”

    Other erroneous perceptions are that ADS are only for the poor, only for the rich, only for “old people,” or only for people with dementia. To alter these perceptions, the industry may need to engage in public education efforts. While the national ADS association supports a change in the name from adult day care to ADS, providers need to use the terms that public programs use in order to qualify for funding.

Recommendations for Future Research and Policy Analysis

Based on anecdotal evidence from providers and families, ADS enable informal caregivers to continue providing care in the home, thereby delaying or preventing institutionalization.  More research is needed to document the long-term care cost-savings of these programs. Such research could guide state policymakers who have to carefully target expansions of home and community services to assure the cost-effectiveness of limited resources.

ADS also appear to offer a means to reduce health expenditures. Washington’s Medicaid agency is conducting a study examining clinical outcomes and medical expenditures for adult day health participants who reside in adult family homes. While the final results of this two-year study are not yet available, preliminary analysis has demonstrated overall cost-savings. Given the potential for health care cost-savings, particularly as the population ages, other states may want to consider analyzing Medicaid data to determine the cost-effectiveness of ADS.

Such research would provide much-needed documentation to determine whether an expansion of ADS that provide health services is warranted.

The Full Report is also available from the DALTCP website ( or directly at
Older Adults
Program of All-Inclusive Care for the Elderly (PACE)