Using Medicaid to Cover Services for Elderly Persons in Residential Care Settings: State Policy Maker and Stakeholder Views in Six States. Adult Foster Homes


  • Adult Foster Homes (AFHs) are private residences licensed to provide care to five or fewer residents. They offer room and board and personal care from a caregiver who lives in the home 24 hours a day. Planned activities and medication management are available, and some homes provide transportation services, private rooms, and nursing services.

  • During the 1980s, state officials vigorously promoted adult foster care as an alternative to nursing home care by recruiting families willing to convert their homes into an adult foster care setting. In some cases, case managers negotiated deals under which facilities received higher reimbursement than was technically allowed under state law. A new system, implemented in March 1998, raises the standard foster care reimbursement rates but makes it harder for case managers to negotiate exceptions to those rates.16

  • Residents of AFHs have varying needs, from minimal personal assistance to assistance with all ADLs and skilled nursing services. The care provided depends on the client's needs and the skills, abilities, and training of the provider.

  • Oregon's AFH Program includes Relative Adult Foster Homes. These homes permit relatives (excluding the spouse) to become adult foster home providers and care for the client. They are usually limited to one client who must be eligible for Medicaid.17

  • By 1996, Oregon had approximately 6,500 adult foster care facilities serving approximately 15,000 persons, with roughly one-third of these persons being supported by Medicaid through the waiver program, making Oregon the only state in which adult foster care was a mainstream long term care option. Some analysts believe that the program probably grew too fast with insufficient attention paid to quality assurance. By 1999, state audits confirmed some problems with quality and the state legislature demanded greater regulatory oversight.

  • The private pay market for Adult Foster Homes declined as adults who needed and could afford care gravitated toward assisted living facilities, and the supply of foster care began to exceed demand. Consequently, many facilities became increasingly reliant on Medicaid dollars, although 60 percent of residents remain private pay.18 Shared rooms are not exclusively for Medicaid residents, but Medicaid residents are more likely to reside in shared rooms than are private pay residents.

  1. Sparer, 1999.

  2. Kane, 1996.

  3. Kane, 1996, and Sparer, 1999.

View full report


"med4rcs.pdf" (pdf, 3.73Mb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®