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


Reflecting Oregon's extensive experience covering Medicaid services in a range of residential care settings, respondents had many specific recommendations. Many felt that Oregon's experience could provide guidance for state's looking to make a range of residential care options available for both the private pay market and the Medicaid client. Most did not mention the importance of making the room and board component affordable, because they assumed it was a given. When specifically asked about room and board, they agreed that it is not possible to provide assisted living to the Medicaid population unless the room and board component is affordable.

Several mentioned the importance of addressing quality assurance from the outset.

  • Pay attention to quality assurance from the outset. ALFs need to be surveyed on a regular basis--not the same focus as nursing homes but similar. You have to use a different model of quality--look at protection, service needs being met, and livability.

  • The state should have paid as much attention to quality assurance as to the requirements for the physical plant. It would have taken a few more steps to assure quality and it would have slowed down provider interest in the beginning, and the state would not have met its obligation to save money. The state stayed in this mode until the mid-eighties, and then we had horror stories, and started to pay more attention to quality. Now Oregon has good quality overall. States should start with a well defined idea of what the service package will be and what quality outcomes are expected.

  • In the beginning, providers didn't know--even though it was in the rules--exactly what services they needed to provide. They did have a better sense of service needs than in some other states, where the providers getting into assisted living come from the housing world--they don't know services. Assisted living has been sold as a light care model and staffing capacity was based on this--that there would not be highly impaired residents. But you would expect that with aging in place, there would always be a portion of heavy care clients, and you need to plan for this.

  • One problem when the state started was they it did not fully appreciate quality issues and chronic care needs--and how to put in systems to assure that quality was assured and needs were met. It was not an intentional oversight--it was naïve. They believed that ADLs were the key. But chronic care management and acuity are just as important.

One respondent said that the state was very concerned about dementia care and had issued special rules for facilities that market themselves as special care units.

A number stressed the importance of not paying for services in assisted living by the hour.

  • Some states fund assisted living like they do home care--they provide so many hours of services and treat it like home care. They do that in Georgia. But you can't grow it that way. States shouldn't pay for services on an hourly basis. Set tiered levels--treat assisted living like a nursing home without room and board. Set it up as a reimbursable entity under the waiver.

Some mentioned the need to address legislators' concerns about induced demand.

  • There will definitely be an increase in clients when you expand HCBS but you can handle this if you set it up right. HCBS can save money if you target it right. Indiana has twice as many folks in nursing homes as in HCBS. But even though Indiana's per capita spending is lower than Washington's, Indiana's costs are higher than Washington's because Indiana serves more people in nursing homes than in HCBS, whereas Washington does the reverse.

One respondent said that if the state were starting over, it would probably be willing to compromise on each apartment having a full kitchen, because most people don't use them.

  • You could require a refrigerator and microwave and sink--but most kitchens are quite small. You do need to put some minimums in regulations, however, to ensure that at least the minimum is provided.

One respondent stated that an immense advantage the State had in setting up its system was that their authority for long term care policy rests in one administrative agency that designs and regulates the entire system and pays for Medicaid.

  • This is a huge advantage in making sure that licensing rules will be effective for both private pay and Medicaid clients. The most important thing is the ability to manage things collectively under one agency--which allows us to implement our vision--to work with advocates--because we control licensing and everything else about the system. The only thing we didn't control was the Oregon Board of Nursing. But we worked extensively with them to get what we needed. You need to put a lot of energy into these efforts to make them happen.

One respondent said that states wanting to use Medicaid to fund services in residential care needed four things: (1) a method to make room and board affordable for Medicaid eligibles; (2) a funding stream to buy the services you want; (3) a regulatory agency that subscribes to your philosophy; and (4) flexible oversight and quality improvement activities that are designed to take more of a teaching role rather than an inspection and sanction role.

With regard to the third requirement, this respondent noted:

  • Regulatory agencies are often not connected to Medicaid--they're concerned about health and safety and often have a strict continuum of care approach. They don't think you should be putting impaired folks in residential care facilities.

    States need to enable all settings to provide care and to write regulations to support them to do so. To design and develop a complete system--you need both strong home care and congregate care for the people who can't live alone. Another important approach is to design purchasing to buy things that can also be bought by the private sector. There should be no special programs for Medicaid--with the rest of the public stuck in an old model.

One respondent stressed the importance of having the public understand the various options.

  • Be sure that clients have sufficient information about the different types and levels of care provided in different types of facilities; that they understand the limits; that they can not have unfettered expectation of staying on one level for ever. There is a continuum of care. You can sometimes stretch what's provided in a community setting but not always.

Another addressed more political issues:

  • Don't bash nursing homes to promote assisted living. Don't sell assisted living as saving money by taking people out of nursing homes or diverting them from nursing homes. Even if there are no cost savings, it's still better to have more options. You also need a good case management system in place to support home and community care and it's expensive. The reason to do assisted living is that consumers want it and it's good for them.

Finally, given the current budget crisis in Oregon, which will cause some Medicaid clients in ALFs to be dropped from the waiver program, one person said that if a state is planning to use Medicaid to cover services in residential care facilities, it should use a separate waiver program for assisted living only and limit the number of slots. This will help to assure that during a budget cutback there will be less pressure to take away services from people who are already receiving them.

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