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


A few noted that because Oregon set a cap on room and board rates for Medicaid eligibles--particularly for ALFS, which provide private apartments--the state has to pay enough for services to attract providers. In general, most felt that ALF rates were high relative to rates for ACHs and RCFs.

  • Setting the initial assisted living rate at 80 percent of the nursing home payment was a clear signal to the industry that the state was encouraging this model.

  • The state gave a generous rate structure to providers to encourage assisted living development and the availability of assisted living for Medicaid eligibles. This policy has come under attack every legislative session because the rate is higher than what is paid to other residential care settings. The high service rate has always been an eyebrow raiser in Oregon.

  • Oregon spends more on services in assisted living settings than any other residential care setting. The lobby for assisted living is the same as for nursing homes--AHCA and AHSA. The persons representing foster care can not compete. The lowered flat rate being proposed for assisted living during the current budget crisis would certainly narrow the payment gap between assisted living and adult foster care.

  • Oregon is thinking about paying the same set service fee dependent on level of impairment to all three types of residential care but this will be difficult politically.

  • Rates were OK for a while but they have not kept pace with inflation. We get insurance increases every year, but no rate increase. With the coming cuts, some facilities will close--especially those that are highly dependent on Medicaid.

A few noted that if the state wants people to age in place, the reimbursement rate structure has to take into account that certain people take more time to take care of.

  • Those with behavioral problems or who need a 2-person transfer cost more. If the state won't pay it, they will wind up in institutions when they could have been served in the community.

  • The state has chronically under-funded providers in order to let case loads grow. We need to fund them adequately. Assisted living has had a reasonable rate but not AFHs. You can't starve one side of the system to serve another. The state does not require AFHs, RCFs, and ALFs to have cost reports. The rates bear no relationship to the delivery of services. Initially they were generous enough to get providers to participate. But acuity levels have gone up but not the rates.

  • The state has starved nursing homes. All of the parts of the long term care continuum used to fight each other for funding but we then realized that the entire continuum needs adequate funding. If the proposed budget cuts go through there will be a complete collapse of the Oregon long term care system.

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