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

12/01/2003

The anticipated increase in the population aged 65 and older in the coming decades, particularly those aged 85 and older, will lead to an increase in the number of people who need long-term care services. Virtually all individuals who need long term care services prefer to receive them in their own homes. However, some people with long term care needs cannot live in their own homes, often because they live alone and need unscheduled assistance and protective oversight on a 24 hour basis.

Residential care settings have traditionally provided such assistance and oversight to persons with physical and mental impairments who cannot live at home alone but do not require a nursing home level of care. As such, residential care lies on the long term care continuum between home care and nursing home care.

Since the mid-seventies, states have had the option to use Medicaid to cover services in residential care settings under the personal care option, and since 1981, under the home and community-based services (HCBS) waiver program. Until the 1990s, most states used the waiver program to pay for services in residential care settings only for persons with mental retardation and other developmental disabilities, as an alternative to intermediate care facilities for persons with mental retardation. By 2002, however, 36 states had amended their Medicaid waiver programs to permit payment for services in residential care settings for elderly persons, and 13 states covered personal care in these settings under the state plan, together serving approximately 102,000 elderly Medicaid clients.

Historically, states have licensed two general types of residential care: (1) adult foster care, which typically serves five or fewer residents in a provider's home, and (2) congregate care, which typically serves six or more residents in a range of settings -- from large residential homes to settings that look like commercial apartment buildings or nursing homes. These settings have been in existence for a long time. But with Medicaid funding, they are getting increased attention.

To date, there has been little research on how states use Medicaid to pay for services for elderly persons in these settings. This report is intended to fill that gap, by describing in depth how six states use their Medicaid programs to fund residential care services for elderly persons. These states are Florida, Minnesota, North Carolina, Oregon, Texas, and Wisconsin.

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