State Residential Care and Assisted Living Policy: 2004. Medicaid Coverage Options

03/31/2005

States have several options for using Medicaid to fund services in residential care settings (see Table 1-8): the Medicaid state plan, HCBS waivers (also called 1915(c) waivers), Section 1115 demonstration programs, and 1915(b) managed care initiatives. States most often use the HCBS waiver. See Table 1-9 for the sources of funding each state uses to pay for services in residential care settings.

  • 36 states have CMS approval to cover services under a 1915(c) waiver;
  • 14 states use the Medicaid state plan;
  • 10 states use solely state-funded long-term care programs;
  • 8 states use both Medicaid waivers and the state plan;
  • 3 states use all three sources;
  • Arizona uses a managed care program authority under an 1115 waiver; and
  • Utah uses a 1915(a) state plan amendment managed care authority.
  Waiver (29)     Personal Care (6)     Waiver & Personal Care (8)  
TABLE 1-8. States Using Medicaid to Cover Services in Residential Care Facilities
Alabama*
Alaska
Arizona
Colorado
Connecticut
Delaware
District of Columbia*  
Georgia
Hawaii
Illinois
Indiana
Iowa
Kansas
Maryland
Mississippi
Montana
Nebraska
Nevada
New Hampshire  
New Jersey
New Mexico
Oregon
Pennsylvania
Rhode Island
South Dakota
Texas
Washington
West Virginia
Wyoming
Massachusetts
Missouri
New York
North Carolina
South Carolina  
Utah
Arkansas
Florida
Idaho
Maine
Michigan
Minnesota  
Vermont
Wisconsin
* Alabama and the District of Columbia have not yet implemented approved 1915(c) waivers.

Congress authorized HCBS waivers in 1981 under Section 1915(c) of the Social Security Act. Under this provision, states may apply to the U.S. Department of Health and Human Services for a waiver of certain federal requirements to allow states to provide home and community services to individuals who would otherwise require services in an institution.

Under the HCBS waiver authority, states can provide services that are not covered by a state's Medicaid program, such as personal care not covered by the state plan, home delivered meals, adult day care, personal emergency response systems, respite care, environmental accessibility adaptations, and other services that are required to keep a person from being institutionalized. The waiver authority also allows states to provide waiver participants a greater amount, duration, and scope of services than are provided under the state plan.

TABLE 1-9. Sources of Public Funding for Services in Residential Care Settings
State Source of Funding State Source of Funding
  Medicaid  
Waiver
  Medicaid  
State
Plan
State
  Funds  
  Medicaid  
Waiver
  Medicaid  
State
Plan
State
  Funds  
Alabama 1915 (c)     Missouri   X  
Alaska 1915 (c)     Montana 1915 (c)    
Arizona 1115     Nebraska 1915 (c)    
Arkansas 1915 (c) X   Nevada 1915 (c)    
California Planned     New Hampshire   1915 (c)    
Colorado 1915 (c)   X New Jersey 1915 (c)    
Connecticut 1915 (c)   X New Mexico 1915 (c)    
Delaware 1915 (c)     New York   X  
District of Columbia 1915 (c)     North Carolina   X  
Florida 1915 (c) X   North Dakota 1915 (c)    
Georgia 1915 (c)     Oregon 1915 (c)    
Hawaii 1915 (c) X   Pennsylvania 1915 (c)    
Idaho 1915 (c) X X Rhode Island 1915 (c)    
Illinois 1915 (c)     South Carolina   X  
Indiana 1915 (c)   X South Dakota 1915 (c)   X
Iowa 1915 (c)     Texas 1915 (c)    
Kansas 1915 (c)     Utah   X  
Maine 1915 (c) X X Vermont 1915 (c)    
Maryland 1915 (c)   X Virginia     X
Massachusetts     X   Washington 1915 (c)    
Michigan 1915 (c) X   West Virginia 1915 (c)    
Minnesota 1915 (c) X X Wisconsin 1915 (c) X X
Mississippi 1915 (c)     Wyoming 1915 (c)    
  Total 39 14 10

The waiver authority also allows states to limit services to specific counties or regions of a state and to target services to certain groups--strategies that are not normally allowed under Medicaid. State Medicaid agencies must ensure that waiver programs have provisions to assure the health and welfare of participants. In addition, states must establish in advance how many people they will serve during the course of a year. Thus, in contrast to the regular Medicaid program, states may establish waiting lists for waiver programs.

Finally, average expenditures for waiver beneficiaries must be the same or less than they would have been without the waiver (no more than average Medicaid nursing home costs).25 Importantly, while services may be covered in residential care facilities, room and board may not. Medicaid can cover room and board only in institutions, such as nursing homes, ICFs-MR, and hospitals.

From the inception of the waiver program, states have used waivers to pay for services in residential care settings as an alternative to ICFs-MR. In 1981, Oregon became the first state to use the waiver program to fund services in residential care settings for elderly persons, but few states followed suit until the 1990s.

CMS has streamlined the waiver process, allowing applicants to fill in a pre-printed application form by checking off essential aspects of its proposal. On the waiver application form, CMS defines assisted living as:

"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 hour 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 kitchenette and/or living rooms 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 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.

Assisted living services may also include
Medication administration
Intermittent skilled nursing services  
Transportation
Periodic nursing evaluations
Home health care
Physical therapy
Occupational therapy  
Speech therapy

"However, nursing and skilled therapy services (except periodic nursing evaluations if specified above) are incidental, rather than integral to the provision of assisted living services. Payment will not be made for 24-hour skilled care or supervision. Federal financial participation is not available for the cost of room and board furnished in conjunction with residing in an assisted living facility."

States that want to provide waiver services in residential care settings do not have to conform their programs to the CMS definition, but may submit different definitions of assisted living in their application, which are subject to CMS approval. States may also choose to provide waiver services in congregate housing even if the waiver does not specifically cover a service category called "assisted living."

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