State Residential Care and Assisted Living Policy: 2004. Cost-Based Reimbursement and Fee-for-Service Rates

03/31/2005

Cost-based reimbursement pays the facility for aggregate costs incurred for Medicaid eligible residents for allowable services.

Fee-for-service rates are determined by the number of hours of service identified in a care plan or a point system based on an assessment. For example, Kansas treats assisted living facilities as providers of home care services, and reimburses for the services delivered. This approach may be cumbersome for some facilities to implement because they are used to receive a regular monthly payment and providing resident services as needed pursuant to a plan of care. If services are reimbursed on a fee-for-service basis, facilities must track service delivery and prepare and submit bills to the payment agency. Depending on the pricing structure, assisted living facilities may not be set up to prepare and submit itemized bills for each increment of service delivered to each resident.

Service delivery in assisted living facilities also differs significantly from in-home service programs. Participants in home care programs typically receive services in block authorizations (e.g., 2 hours of care, 5 days a week). Assisted living residents typically receive services in 15-minute increments at various times 7 days a week including nights. Home care programs typically do not cover services at night, and, of course, cannot meet unscheduled needs.

Tracking, aggregating, and billing can become cumbersome and time consuming, especially for facilities used to charging a single all-inclusive service fee. However, the pricing structure of many facilities includes a basic package of services with additional charges based on the increments of service used by residents. Facilities with this policy for private-pay residents may be better able to participate in Medicaid programs that reimburse using a fee-for-service approach.

Eleven states use fee-for-service rates, examples of which are described below.

  • Arkansas allows personal care services to be provided through the state plan in a person's home "or other setting" such as a residential care facility (RCF). RCFs can be reimbursed for up to 64 hours of personal care per month.

  • In Missouri, personal care and advanced personal care services are reimbursed as a Medicaid state plan service in RCFs. Facilities are reimbursed at an hourly rate for the number of hours authorized in the care plan. The hourly payment rate is $13.16 for personal care aides, $15.20 for advanced personal care aide services, and $28.07 for nursing visits. The maximum payment is $2,368 a month, which is equal to the state's Medicaid cost for nursing home care. No more than one nursing visit a week can be authorized. Very few residents receive advanced personal care and nursing visits.

    The state limits the room and board rate for Medicaid beneficiaries to the federal SSI payment plus the state supplement, also called a "cash grant," which varies depending on the type of facility. Type I facilities provide room and board, supervision, and protective oversight and receive a monthly payment of $695, comprising the SSI payment and a state supplement of $131. Type II facilities provide personal care, dietary supervision, and health care in addition to Type I services, and receive a combined monthly payment of $826, comprising the SSI payment and a state supplement of $262.

  • Montana uses a payment system that have elements of a tiered system but lack the structure and limited number of payment levels of tiered approaches. The payment amount varies widely based on the number and type of impairments, a structure more like a fee-for-service reimbursement approach. Montana's payment is based on a point system. Agency field staff determine the number of points based on an assessment of impairments, and the provider receives $33 a month per point. Residents with severe impairments, totally dependent in more than three ADLs, can receive $44 a month for each point.

    Monthly waiver reimbursement rates for personal care facilities vary between $520 (the basic service rate) and $1,800, depending on the residents' level of care needs. Additional payments are calculated based on ADL and other impairments. The points determine the actual payment within the range. The state limits monthly room and board payments for Medicaid beneficiaries to $564. The total monthly amount facilities receive (for services, room and board) ranges from $1,084 to $2,363, although very few participants have been approved at the highest service rate.

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