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


In 1981, the state mandated that long term care services be delivered in the least restrictive setting possible, and that nursing homes be reserved as the placement of last resort.10 Apart from the 1981 legislation, six other state initiatives were instrumental in reconfiguring Oregon's long term care system, which paved the way for the growth of assisted living and other residential care options:11

  • In 1981, Oregon was the first state to obtain a 1915(c) waiver.

  • Use of a nursing home certificate-of-need program to limit nursing home growth.

  • Relatively low nursing home reimbursement has minimized the incentive for nursing homes to accept Medicaid entrants.

  • Expansion of the home and community services infrastructure, focused on developing adult foster care, assisted living, and other non-medical residential settings.

  • Enactment of the most liberal nurse delegation act in the nation, enabling more individuals to be cared for in home and community settings at an affordable cost.

  • Development of a strong case management system that enabled clients to receive the care they needed in their homes or community settings.

  • The 1981 legislation also stated: "…. that the elderly and disabled citizens of Oregon will receive the necessary care and services at the least cost and in the least confining situation. (and) that savings in nursing reallocated to alternative care services…"12

  • These new concepts led to the development of a different approach to service delivery in congregate settings, one where safety is not considered the most important value, but one of several equal values including dignity, independence, choice, privacy and individuality.13

The success of Oregon's approach is reflected in the numbers of people served in residential care settings compared to those in nursing homes. In July 2002, the state's Medicaid long term care caseload was distributed as follows:

In-Home Care Services clients = 14,556 
Nursing Facility clients = 5,782; 
Adult Foster Care clients = 5,399 
Assisted Living Facility clients = 3,662 
Residential Care Facility clients = 1,867.14

Oregon has three major types of residential care facilities and separate licensing and regulatory requirements for each of them: Adult Foster Homes (AFHs), Residential Care Facilities (RCFs), and Assisted Living Facilities (ALFs). The state also has a number of Specialized Living Facilities of varying sizes that are targeted to serve special populations, e.g., persons with head injuries, quadriplegia, and persons with AIDS. Each of these facilities is unique and has its own reimbursement system. These facilities were developed both because of the desire of these clients to have focused services, and the difficulty in caring for them in regular home and community care programs.15

Residents of the three major types of residential care facilities can receive Medicaid waiver services as long as the facilities meet the regulatory requirements for providing these services.

  1. Kane, 1996, and Sparer, 1999, op. cit. It designated the newly created Senior Services Department (later renamed the Senior and Disabled Services Division and now called Seniors and People with Disabilities) as the state agency responsible for supervising and coordinating the various long term care programs for elderly persons. The legislation also delegated to the local Area Agencies on Aging (AAAs) the responsibility for developing a single point of entry for persons seeking long term care services.

  2. Kane, 1996, and Sparer, 1999.

  3. Oregon Revised Statutes 410.010.

  4. Kane, 1996.

  5. Oregon's Long Term Care Medicaid Caseload by Care Setting, July 2002, cited in Executive Summary of Governor's Task Force on the Future of Services to Seniors and People with Disabilities, Initial Report, September 2002.

  6. Kane, 1996.

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