State Residential Care and Assisted Living Policy: 2004. Flat Rates

03/31/2005

Under a flat rate system, providers receive the same monthly payment regardless of the amount of services and staff assistance a resident requires. As in the health care system, flat rates for residential care create incentives for facilities to admit residents with lighter care needs, not those with multiple impairments in ADLs, cognitive impairments or health needs. Twelve states use flat rate reimbursements, examples of which are described below.

Flat Rates Tiered Rates Case-Mix Modified
Case-Mix
Cost-Based
and
Fee-for-Service
TABLE 1-13. State Rate Setting Approaches
Colorado
Florida
Georgia
Illinoisa
Massachusetts
Mississippi
Nebraska
New Hampshire  
New Jerseyb
New Mexico
Rhode Island
South Dakota
Alaska
Arizona
Arkansasc  
Delaware
Maryland
Nevada
Oregon
Texasc
Vermont
Minnesotad  
New York
Maine
North Carolinae  
Washingtona
Arkansasf
Idaho
Iowa
Kansas
Mainee
Michigan
Missouri
Montana
North Dakota  
Wisconsin
  1. Illinois' rates vary by region.
  2. New Jersey has flat rates that vary by setting.
  3. Texas has tiered rates that vary by setting.
  4. Minnesota uses a combined case-mix and cost-based approach. Counties have basic payment rates that are based on casemix, and a variable payment rate that is based on each client's service plan. The variable payment is negotiated with providers.
  5. Maine's reimbursement system combines fee-for-service and case-mix components, depending on the type of residential care setting. Assisted living programs are paid based on a service plan, and residential care facilities are paid on a cost-based system. North Carolina has a modified case-mix payment system.
  6. Arkansas uses tiered rates for its wavier program and a fee-for-service system for state plan services.
  • Florida pays facilities $28 a day for services provided through the waiver program and $9.28 a day for personal care services provide through the Medicaid state plan. Facilities may not charge Medicaid beneficiaries more than $588.40 for room and board, whether they are receiving waiver services or state plan services.

  • Massachusetts uses Group Adult Foster Care (GAFC)--a Medicaid state plan service--to cover services in residential care settings. Using the state plan to cover services allows Medicaid to serve people who are frail but are not eligible to enter a nursing home following a tightening of the level of care criteria. Massachusetts pays a flat daily service rate of $37.75 for Medicaid beneficiaries.

  • Colorado's Medicaid monthly rate for services is $1094.30 a month ($36.50 a day). The rate covers oversight, personal care, homemaker, chore, and laundry services. The state limits room and board charges for Medicaid beneficiaries to $518 a month.

  • Georgia pays a flat rate of $31.04 a day for waiver services provided to residents of group homes serving seven to 24 people. The state limits room and board charges for Medicaid beneficiaries to $475, for a combined monthly rate of $1,419.

  • Illinois has different daily service rates for each of its seven regions, ranging from $47.54 to $61.94. Rates are set at 60 percent of the weighted average nursing facility rate for the region and are adjusted annually to reflect changes in the rates paid to nursing homes.

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