Using Medicaid to Cover Services for Elderly Persons in Residential Care Settings: State Policy Maker and Stakeholder Views in Six States. Home and Community-Based Services Waiver Option


States have had the option of covering services in residential care settings through the HCBS waiver program since 1981 when Congress first established the waiver authority. This option is limited only by a state's ability to serve residents who meet the state's nursing home level-of-care criteria under current licensing and regulatory provisions for residential care settings. States can either amend an existing waiver to add services provided in residential care settings, or they can apply for a new separate waiver to cover services in residential care settings.

Adding to an existing waiver program is simple and minimizes reporting and tracking requirements. However, advocates for home and community services may perceive the addition of services in residential care settings as increased competition for a limited number of slots available for home services more generally.

The option to use the waiver program to cover services in residential care settings was rarely used until the late eighties and early nineties, when the introduction and popularity of the private pay model of assisted living led to increased state interest in providing this option for waiver clients who could not be safely cared for at home. In response to this increased interest, the Centers for Medicaid & Medicare Services (CMS)11 added assisted living to the standardized waiver format as one of two types of service under the heading of Adult Residential Care. It is defined as:

Assisted living: Personal care and services, homemaker, chore, attendant care, companion services, medication oversight (to the extent permitted under state law), therapeutic social and recreational programming, provided in a home-like environment in a licensed (where applicable) community care facility, in conjunction with residing in the facility. This service includes 24 hours on-site response staff to meet scheduled or unpredictable needs in a way that promotes maximum dignity and independence, and to provide supervision, safety and security. Other individuals or agencies may also furnish care directly, or under arrangement with the community care facility, but the care provided by these other entities supplements that provided by the community care facility and does not supplant it.

Personalized care is furnished to individuals who reside in their own living units (which may include dually occupied units when both occupants consent to the arrangement, which may or may not include a kitchenette and/or living room, and which contain bedrooms and toilet facilities. The consumer has a right to privacy. Living units may be locked at the discretion of the consumer, except when a physician or mental health professional has certified in writing that the consumer is sufficiently cognitively impaired as to be a danger to self or others if given the opportunity to lock the door. (This requirement does not apply where it conflicts with a fire code.)

Each living unit is separate and distinct from each other. The facility must have a central dining room, living room or parlor, and common activity center(s) (which may also serve as living rooms or dining rooms). The consumer retains the right to assume risk, tempered only by the individual's ability to assume responsibility for that risk. Care must be furnished in a way which fosters the independence of each consumer to facilitate aging in place. Routines of care provision and service delivery must be consumer-driven to the maximum extent possible, and treat each person with dignity and respect.

This definition incorporates the central tenets of the assisted living philosophy -- privacy, autonomy, and choice -- but states have the option to use a different definition. Medicaid will pay for services provided in adult residential care settings as long as a "homelike environment" is preserved; thus, it will not pay for services in a facility that is located in the wing of a nursing home.

If states do not currently license residential care settings to provide services to persons with a nursing home level of need, they have two options. They can amend licensing and regulatory requirements for existing residential care settings to allow them to serve a more highly impaired and chronically ill population, or they can create a new category of residential care settings that is licensed to cover this population.

11, Formerly known as the Health Care Financing Administration (HCFA).

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