Using Medicaid to Cover Services for Elderly Persons in Residential Care Settings: State Policy Maker and Stakeholder Views in Six States. Reasons for Using Specific Options in Six States (12)


As shown in Table 1, four of the six states use both the personal care option and the waiver program to pay for services in residential care settings, while one uses only the personal care option and another uses only the waiver option. The reasons for choosing the options -- as described by those we interviewed -- are unique to each state's long term care system, philosophy, and goals.

TABLE 1. Use of Medicaid Optoins to Pay for Services in Residential Care Settings

Medicaid Option State
Pays for services through Personal Care Option North Carolina
Pays for services through Personal Care Option and HCBS Waiver Program Florida
Pays for services through HCBS Waiver Program Oregon

However, there was consensus among the respondents that states' primary goals in using Medicaid to pay for services in residential care settings are (1) to provide an alternative to nursing homes for people who cannot live at home, thereby providing consumers with more choice; (2) to reduce nursing home utilization; and (3) to save money.

Nearly all respondents felt that their state's decision to use Medicaid to fund services in residential care settings was a positive development. The following comments are illustrative of their views.13

  • The most important feature of Medicaid paying for services in residential care facilities is that it provides the flexibility to provide services based on people's needs. If consumers can't live at home, it gives them a choice other than the nursing home. Some people choose to live in a residential care setting and it's also a safety net for people who wind up there because they have no other choice.

  • The use of Medicaid to support older persons with dementia in a residential care setting has been highly successful. A good residential care setting is highly preferable to a nursing home.

  • People were becoming more frail and needing more services, but not qualifying for a nursing home, and couldn't afford a private assisted living facility. Under the personal care option, they can now get some services.

  • The waiver program has achieved the primary goals of cost saving, reduction in the nursing home bed base, and more humane long term care alternatives. Each dollar spent on the waiver would have cost $2.70 in the nursing home.

  • Including personal care in the state plan was key to the state's efforts to provide additional revenues to assisted living facilities. It has been instrumental in attracting providers who were reluctant to take state supplement recipients in the past and provides Medicaid funding for frail elders who are not as impaired as waiver clients.

The state wanted to get to the point where nursing homes were not a high priced alternative to community care. Using Medicaid to pay for assisted living fit a niche.

The following descriptions illustrate both the commonalities among the six states in their reasons for choosing specific options and the unique features of their long term care systems influencing their choice of options.

  1. The information in this section is drawn from the state descriptions in Appendices B through G.

  2. Some comments are paraphrased to assure the anonymity of the respondent and edited for brevity.

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