Understanding Medicaid Home and Community Services: A Primer, 2010 Edition. Introduction


To reduce institutionalization--particularly for individuals who lack housing or cannot be served cost effectively in their own or a family member’s home--states offer services in residential care settings. This chapter deals with the provision of Medicaid services only in provider-owned and/or -operated residential care settings that are not institutions.

Using Medicaid to pay for services in residential care settings is of interest to states that want to decrease expenditures on institutional care. Compared to Medicaid-covered institutions--nursing homes, intermediate care facilities for persons with intellectual disabilities (ICFs/ID), hospitals, and some inpatient psychiatric facilities2--residential care settings have the potential to be more homelike and to provide residents greater autonomy and privacy. Compared to services delivered in individuals’ homes, they may also offer economies of scale as well as the opportunity for socialization.

For many individuals with disabilities and chronic illnesses--such as individuals with dementia who need considerable supervision but little nursing care--residential care settings can provide an alternative to institutionalization. The populations a state chooses to serve in these settings, much like the mix of facilities, depends on the state’s overall long-term care system and specific policy goals.

Residential care settings can be owned and/or operated by either individual service providers or agencies offering around-the-clock services. The level of staff support typically relates to the needs of residents as well as applicable state regulations. Staff are employed on either a live-in or come-in basis.3 They provide assistance with activities of daily living (ADLs), and help individuals to gain access to community activities. Depending on state regulations, individuals may share rooms or may have private rooms and share common public areas (dining and living rooms, and sometimes kitchens).

The size of residential care settings varies widely. In the system serving individuals with an intellectual disability or other developmental disability (ID/DD, hereafter referred to as developmental disabilities), some residential care settings may have more beds than a community ICF/ID.4 Although Medicaid regulations that apply to the provision of services in residential care settings do not specify an upper size limit for these settings, the Centers for Medicare & Medicaid Services (CMS) defines “larger” facilities as settings serving four or more unrelated individuals.5 CMS reviews proposed waiver services in residential care settings to ensure that

A home-like character is maintained in larger settings, that is, the facility is community-based, provides an environment that is like a home, provides full access to typical facilities in a home such as a kitchen with cooking facilities, small dining areas, provides for privacy, visitors at times convenient to the individual, and easy access to resources and activities in the community.6

Residential care settings and the services they provide are governed by state law and regulations, which vary greatly across states. They can be licensed or certified, or in some instances have only to meet Medicaid requirements if serving Medicaid-eligible persons. States typically license these settings, performing annual reviews to ensure that they meet required standards. Some states choose to use national accreditation bodies to qualify providers, in lieu of or in addition to state standards. While some states license particular settings to serve specific populations (e.g., older adults or individuals with developmental disabilities), some states, such as Minnesota , license facilities to serve many different populations. See Box for Minnesota’s definition of a Group Home.

Settings licensed to serve more than one population may choose to serve only one in order to tailor services to meet their needs--and most do. Additionally, if serving participants in Section (§)1915(c) Medicaid home and community-based services (HCBS) waivers (hereafter referred to as HCBS waivers), these settings will also have to meet the standards approved under the waiver for serving this population and be able to serve residents who meet institutional level-of-care criteria. Settings serving specific populations, such as individuals with dementia and those with developmental disabilities, may have specific licensing requirements to ensure that they have the specialized competencies needed to serve these populations.

Minnesota’s Definition of Group Homes: Group Residences for Adults with Disabilities

Group Residences for Adults with Disabilities are defined as “Agency-owned or -operated facilities that provide an alternative living environment for adults with developmental disabilities, sensory impairments, physical disabilities, emotional problems, multiple disabilities, or chronic illnesses such as AIDS, who are in need of personal services, supervision, and/or assistance essential for self-protection or for sustaining the ADLs, and consequently are unable to live with their own families or in a more independent setting. Group residences for adults with disabilities may be licensed by the State/province and may be distinguished according to the level of service residents require. Service levels depend on the self-care skills residents possess, their limitations in the areas of physical coordination and mobility, and the presence and extent of behavior problems, including disruptive or self-injurious behavior.”7

There are no applicable Federal statutes regarding licensing or certification standards for residential care settings other than §1616(e) of the Social Security Act (the Keys Amendment), which requires states to set their own standards for residences where “a substantial number of Supplemental Security Income (SSI) recipients” reside.8 If states wish to use Medicaid HCBS waivers to fund services in residential care settings, as discussed in more detail below, CMS requires as a condition of approval that they describe how they will ensure compliance with §1616(e).

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