Using Medicaid to Cover Services for Elderly Persons in Residential Care Settings: State Policy Maker and Stakeholder Views in Six States. General Comments on the Residential Care System


Comments about the residential care system generally were, for the most part, unique to each state and are summarized first, followed by a summary of comments about one issue raised by respondents in all six states.

Florida. The increase in the cost of liability insurance was cited by most respondents as the biggest problem facing the assisted living industry in Florida, and a major barrier to assuring the availability of residential care options for older persons who do not want to live in a nursing home. Recently, assisted living facilities (ALFs) with Extended Congregate Care (ECC) or Limited Nursing Services (LNS) licenses have been notified by insurers that they will be charged the same liability insurance rates as nursing homes. The rate increase is based on insurers' views that these facilities are equally at risk for lawsuits because they are licensed to serve waiver clients who meet the state's nursing home level-of-care criteria.

One provider stated that her annual liability insurance premium had increased from $7,000 three years ago to $55,000 this year. One respondent stated that since January 2002, ALFs with ECC and LNS licenses could not obtain liability insurance at all. Although the legislature authorized a state insurance program that can provide insurance for up to 800 ALFs, two respondents felt that this program would not solve the liability insurance crisis in the absence of tort reform. Most respondents recommended tort reforms that would set a limit on compensatory and punitive damages.

Minnesota. Minnesota's assisted living program is a service model that can be provided in virtually any type of housing, and respondents mentioned a number of issues related to this model. Because admission and discharge decisions in Minnesota's system are solely within the housing providers' discretion, two respondents felt that a resident's bill of rights and an appeals process were needed, particularly to address involuntary discharges. Another felt that a minimum level of care should be required of all settings.

North Carolina. Two respondents felt that the state's Certificate of Need (CON) program for ALFs needed to be better targeted. One noted that the current CON program has a cap by county, but there is a shortage of beds for people who are difficult to place, such as those with AIDS and behavior problems. Another noted that a county could have only two very old facilities with physical plants that no one wants to live in, but if someone wanted to build a better adult care home in that county, the permit would be denied as long as there were vacancies in the existing facilities. Others criticized the state's nursing home moratorium and CON program, stating that they had a negative impact on consumers because they led to an insufficient supply of beds. Consequently, "people who should be in nursing homes wind up in adult care homes."

Oregon. The only major concern, expressed by all respondents, was the effect of budget cuts on the state's residential care system. Nearly all agreed that proposed budget cuts to the waiver program, if enacted, would cause some providers to go out of business, particularly those that serve a high proportion of Medicaid residents.

Texas. The only major concern, expressed by a few respondents, was that the state could be facing a liability insurance crisis in the near future. One noted that an error in the regulations had led to increased liability for providers, and another noted that the 2003 legislative session was going to address tort reform. However, Texas does not currently require ALFs to have liability insurance.

Two respondents mentioned that the federal SSI payment was too low to cover provider costs for room and board and that a state supplement was needed. However, both acknowledged that it was unlikely the state would provide a state supplement given current budget shortfalls.

Wisconsin. A consensus existed that the state was not adequately enforcing its residential care regulations and the primary reason was lack of funding to do so. One respondent felt that the state needed more adult family care homes, i.e., adult foster care homes.

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