Using Medicaid to Cover Services for Elderly Persons in Residential Care Settings: State Policy Maker and Stakeholder Views in Six States. 4. Concluding Remarks


This report is the first to examine in depth the issues with which states are dealing when using Medicaid to cover services in residential care settings. In each of the six states, there is very strong interest in developing affordable residential alternatives to nursing homes that will provide quality care. All of the respondents we interviewed believed that their states' decision to use Medicaid to provide services in residential care settings was the right one. In states using the personal care option in their state plan, respondents felt that Medicaid had brought much needed revenues to a residential care sector that historically had been under-funded for SSI recipients. In states using the waiver program, respondents felt that by providing an alternative to nursing homes for waiver clients who cannot be served at home, Medicaid funding had both afforded consumers additional long term care options and had saved the states money.

The individuals interviewed for this report were typically quite candid in their comments, which frequently reflected their frustration in coping with the challenges of developing affordable residential care. State staff, in particular, find themselves grappling with a number of issues that require the reconciliation of what appear to be inherently contradictory goals. These issues are:

  • finding ways to cover the actual costs of serving frail older individuals with chronic care needs in residential care settings, when Medicaid is not permitted to pay for room and board and the payment sources available to cover room and board are insufficient;

  • finding ways to meet expectations for privacy, amenities, and quality services that have been set by the private pay dominated model of "assisted living" when Medicaid cannot afford to pay private pay rates;

  • finding ways to make it possible for individuals to "age in place" without making residential care settings into de facto nursing homes by virtue of having to meet the needs of ever older and more impaired residents;

  • finding ways to give consumers a sense of what they should reasonably be able to expect from a setting that calls itself "assisted living" or "adult foster care" or some other name, without imposing uniform definitions through state regulation; and

  • finding ways to assure a minimally acceptable quality of care without imposing rules that stifle improvements and without the regulated "floor" becoming the "ceiling."

The appropriate balance point between these goals will vary depending on the unique characteristics of each state's long term care system and residential care systems. While the states may face the same challenges, the tradeoffs in attempting to reach the balance will also differ based on the states' characteristics. However, states can gain valuable insights by examining the experiences of other states as they work to develop affordable residential care alternatives to nursing homes for low income and Medicaid-eligible elderly persons.

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