Using Medicaid to Cover Services for Elderly Persons in Residential Care Settings: State Policy Maker and Stakeholder Views in Six States. Sources of Public Funding for Services in CBRFs


General Revenue Funded Community Options Program

The Community Options Program (COP) was originally designed as a home care program in 1982 and there was no separate funding source for individuals in residential care who required long term care services. Once the state approved funding of services in CBRFs through COP and the waiver program (in the mid-eighties) and established new regulatory requirements for receipt of this funding (see below), the industry responded with a growth in new facilities that met the regulatory requirements.

Consequently, greater and greater amounts of COP and waiver funding went for residential care--80 to 90 percent in some counties. In response, the state set a statewide maximum amount of COP and waiver funding that could be spent in CBRFs. This maximum was set at 25 percent of a county's COP and waiver allocation. Because it was recognized that a statewide cap did not accommodate local needs, the policy was changed. Counties now set their own maximum amount of COP and waiver allocations that will be used for CBRF care.


  • All Medicaid state plan services--e.g., personal care, medications, and skilled nursing and therapies through home health care--are provided in CBRFs. Both waiver funds and state plan funds can be used to pay for services in CBRFs. The primary reason for introducing Medicaid waiver payments for care in CBRFs was that it was a more cost-effective way of delivering services than the nursing home for people who, for whatever reason, could not live at home. In the nursing home, the state pays for everything--room and board and services, whereas in CBRFs, they pay only for services.

  • In 1988, personal care was added to the state plan. The date when personal care was first covered in Community Based Residential Facilities varies by county. The rationale for adding personal care to the state plan was that existing programs providing personal care were not sufficient to meet the demand, and many persons with disabilities did not qualify for these programs. Prior to coverage under the state plan, personal care provided in Community Based Residential Facilities was paid for through the waiver program, the state's Community Options Program, county funding, and federal block grant funding, e.g., Title XX dollars.

    Whereas people eligible for waiver services often face long waiting lists, there is no waiting list for personal care under the state plan because the services are an entitlement for Medicaid eligibles when medically necessary. Once personal care was a Medicaid state plan service, counties, home health agencies and Independent Living Centers could apply for a provider number, which allowed them to provide services.

  • In 2001, 2,473 residents in CBRFs were receiving services funded by COP, the Medicaid waiver or the state plan. Together these public pay residents occupy 11.5 percent of the state's total CBRF capacity of 21,468 beds. Only a very small proportion of these residents were receiving personal care services through the state plan.9

  • State plan personal care services and waiver services used to be limited to persons in CBRFs no larger than eight beds.10 The reason for this policy was that the state did not want to encourage the payment of public money intended to serve individuals in home-like settings, to quasi-institutional residential care facilities. Historically, the state has used small bed size as a proxy for "home-like." Consequently, residents who spent down to Medicaid eligibility in a facility that was larger than eight beds would have to move to a different facility to receive Medicaid, waiver, or COP covered services.

  • In 2002, the state revised the policy that limited Medicaid funding to CBRFs with eight beds or fewer. The state now allows waiver funding to be used in CBRFs with up to 20 beds, and more than 20 beds with Department approval. Residents receiving personal care through the state plan may not be served in CBRFs with more than 20 beds.

    Medicaid waiver coverage in CBRFs with more than 20 beds may be allowed when one of the following applies:

    1. The facility consists entirely of independent apartments. Independent apartment CBRFs have a separate kitchen, full bathroom, sleeping and living area within each unit.

    2. The Department has approved a variance, requested by the county, to provide COP and/or waiver funding for a specific facility. The variance request has documented how the facility design, environment and programming mitigate the effects of living in a large congregate setting.

This change occurred because many providers, residents, and counties wanted to expand residential options for county clients and no longer felt that size was an appropriate way to define "institutional."

Family Care

Wisconsin's pilot program to redesign long term care financing pays for CBRF services provided to enrollees in the five participating counties. Family Care pays for services in RCACs only in pilot counties where there is a care management organization (CMO) and when the facility is included in the CMO's provider network.

Food Stamps

Persons who live in group community living arrangements, such as RCACs that house no more than 16 persons, can receive food stamps if they are either blind or disabled and meet the program's financial eligibility criteria.

  1. While there are no data on how many were receiving personal care services through the state plan, given that the number receiving COP and waiver services was 2,363, only about .5 percent of the 11.5 percent could have been receiving services through the personal care state plan option.

  2. The SSI-E benefit (a state SSI supplement for persons with high needs) also used to be limited to persons in CBRFs no larger than eight beds.

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