Understanding Medicaid Home and Community Services: A Primer, 2010 Edition. Licensing and Contracting Issues


State licensing rules set the minimum requirements for Medicaid providers; for example, state regulations may establish certain staff-to-resident ratios or may specify awake overnight staff. However, the Medicaid program may set more stringent standards if desired. For example, if licensing rules do not include sufficient provider requirements for residential care settings that serve people with dementia, Medicaid contracting requirements may specify additional training or other requirements. Similarly, while a state may allow residential care facilities to offer rooms shared by two, three, or more residents, the Medicaid programs can choose to contract only with facilities that offer private occupancy unless the resident chooses to share a room or unit.

In states that are considering covering services in “assisted living” facilities for older adults, it is important to recognize that “assisted living” can mean more than just a setting for potentially cost-effective service delivery. It can refer to a philosophical approach to residential care that supports privacy, autonomy, and consumer choice. States that want to offer residential care services that comport with the assisted living philosophy will need to ensure that their regulations and payment policies support its basic tenets, most notably privacy and autonomy. Several states do so--including North Dakota, Oregon, and Washington--by requiring residential care facilities that call themselves “assisted living,” and want to contract with Medicaid, to offer apartment-style units rather than bedrooms.34

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