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


In the mid-1980s, after a nursing home moratorium had been in effect for several years, the State was increasingly concerned that many frail elderly persons, who once would have lived in nursing homes, were now living in a variety of unregulated out-of-home residential settings that lacked supportive services. In order to assure that they were receiving appropriate and adequate services, the Minnesota Department of Health proposed that many of these settings be regulated as residential care homes, with requirements modeled after nursing homes. In response, the Residential Care Home Licensing Act (RCHLA) was enacted. Due to opposition to the act, implementation was postponed while an alternative act, the Housing with Services Contract Act,13 was considered.

After reviewing the institutional type of regulatory system proposed in the RCHLA, the Minnesota Health & Housing Alliance met with hundreds of providers, consumers, and others and concluded that a consumer-driven model, using the well-understood concept of a legal contract, was a preferable regulatory model.

Both consumers and providers identified choice as a value that should be a dominant aspect of any quality assurance system for housing-with-services providers. Important aspects of choice identified were:

  • People have a right to make choices for themselves.

  • People should be assumed to be competent to make their own choices. Those who may not be competent should receive assistance.

  • Consumers have a right to be educated and informed about providers' policies and procedures and the services they are purchasing.

  • Any system focusing on choices must consciously accept that choices entail risks and that consumers will sometimes make decisions that others perceive as "bad choices."

The Housing-with-Services Contract Act was developed by the MHHA over a four-year period and was passed in 1995, effective in 1996. The Act covers a broad spectrum of senior housing in Minnesota called "Housing-With-Services Establishments." The term was chosen because of its general nature, which can be applied to a wide range of settings and levels of services. Different types of residential care settings market themselves as "assisted living," but there is no category of licensure called "assisted living facility."

With the passage of the Housing-with-Services Contract Act, Minnesota initiated an innovative approach toward assuring quality in residential care settings by making a conscious decision to avoid a detailed, prescriptive regulatory system. Instead, Minnesota adopted a more flexible, consumer-driven model, which is based on the concepts of consumer choice and negotiated risk. This approach gives consumers a choice of a variety of physical settings and service packages, and permits providers to develop innovative housing with services models.

13, Minnesota Statute 144D.

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