Over the years, federal policy has sought to accommodate people’s preference to avoid nursing homes, if possible. Programs such as Money Follows the Person and various “rebalancing” initiatives have enabled older people and people with disabilities to remain at home. Medicaid no longer spends most of its long-term care (now typically called long-term supports and services, or LTSS) dollars on care in nursing facilities. Since 2013, Medicaid has, in fact, spent more on home and community-based services (HCBS), provided through Medicaid waivers, than it has spent on nursing home care.[1] In 2014, 53% of Medicaid dollars on long-term care ($80.6 billion) were spent on HCBS.[2]
The assisted living industry capitalizes on the public’s interest in “non-nursing home care” and qualifies for Medicaid waivers under HCBS. As shown below, each year, the Medicaid program spends billions of dollars paying for hundreds of thousands of residents of assisted living facilities who are eligible for coverage under various HCBS waiver programs.
The Center for Medicare Advocacy understands and respects people’s interest in receiving non-institutional care. However, no federal regulatory standards govern the use of HCBS money in assisted living facilities. All direct regulation of licensing and oversight requirements is done at the state level; CMS’s involvement in assisted living is limited to reviewing reports submitted by states about their operation of HCBS waiver programs.[3] Moreover, since Medicaid beneficiaries who use HCBS waivers are, by definition, eligible for a nursing home level of care,[4] the lack of federal standards is especially troubling.
In March 2007, in a CMA Alert titled “Is It Time for Federal Regulation of the Assisted Living Industry?,”[5] the Center reported that federal regulation of assisted living would probably not occur until a considerable amount of federal money paid for assisted living or states failed to regulate the assisted living industry adequately – or both. The Center suggested, in 2007, that under either criterion, federal regulation was appropriate.
Fourteen years ago, although it was difficult to determine how much HCBS funding actually went to assisted living, the Center was able to determine that
- HCBS “more than doubled from 15 percent [of Medicaid funding] in 1992 to 31 percent in 2002.” [Note from above: HCBS accounted for 53% of Medicaid funding in 2014.]
- In 2002, Medicaid spent $16.9 billion on HCBS waivers, including assisted living, and served 487,877 elderly beneficiaries and beneficiaries with disabilities.
- Medicaid spending on HCBS waivers increased by nearly $8 billion (46%) between 1999 and 2002.
Federal Medicaid payments to HCBS have been considerably higher in later years, according to the most recent data available. In 2018, the Government Accountability Office (GAO) reported that in 2014, $10 billion of federal and state HCBS money (12.4% of total Medicaid HCBS spending in 2014 in all settings, which was $80.6 billion) was spent on 330,000 Medicaid beneficiaries living in assisted living facilities.[6]
In 2020, the Kaiser Family Foundation reported that in 2016, Medicaid spent 57% of all LTSS dollars (a total of $167 billion) on HCBS (compared to nursing facilities).[7] If 57% of Medicaid’s LTSS spending was for HCBS, then HCBS accounts for $95.19 billion of LTSS spending in 2016 (57% times $167 billion = $95.15 billion spent on HCBS). Applying the 12.4% statistic from the GAO’s 2018 report, we can estimate that $11.80 billion was spent on assisted living through HCBS in 2016 (12.4% times $95.15 billion = $11.80 billion).
The National Center on Assisted Living reports that almost 1 in 6 assisted living residents (16.5%) relies on Medicaid (Medicaid state plan authorities; §1915(c) HCBS waivers; concurrent §1915(b) managed care waiver, or §1115 research or demonstration projects).[8]
There is no question that Medicaid spends a large and growing portion of its HCBS waiver money on assisted living ($10 billion in 2014; $11.80 billion in 2016). As Medicaid spending increases and as more Medicaid beneficiaries rely on Medicaid for services in assisted living facilities, the need for a federal role in regulating assisted living facilities can no longer be ignored.
March 18, 2021 – T. Edelman
[1] Medicaid and CHIP Payment and Access Commission (MACPAC), “Home- and community-based services, https://www.macpac.gov/subtopic/home-and-community-based-services/
[2] Medicaid, Home & Community Based Services, https://www.medicaid.gov/medicaid/home-community-based-services/index.html (citing 2014 LTSS Expenditure Report)
[3] GAO, Medicaid Assisted Living Services: Improved Federal Oversight of Beneficiary Health and Welfare Is Needed, GAO-18-179, p. 10 (Jan. 2018), https://www.gao.gov/assets/690/689302.pdf
[4] 42 U.S.C. §1396a(a)(10)(C)(i)(III), https://www.medicaid.gov/medicaid/home-community-based-services/home-community-based-services-authorities/home-community-based-services-1915c/index.html
[5] “Is It Time for Federal Regulation of the Assisted Living Industry? (CMA Alert, Mar. 22, 2007), available at https://medicareadvocacy.org/is-it-time-for-federal-regulation-of-the-assisted-living-industry/
[6] GAO, Medicaid Assisted Living Services: Improved Federal Oversight of Beneficiary Health and Welfare Is Needed, GAO-18-179, p. 10 (Jan. 2018), https://www.gao.gov/assets/690/689302.pdf
[7] Kaiser Family Foundation, Medicaid Home and Community-Based Services Enrollment and Spending (Issue Brief, Feb. 4, 2020), https://www.kff.org/report-section/medicaid-home-and-community-based-services-enrollment-and-spending-issue-brief/ Figure 2
[8] American Health Care Association/National Center on Assisted Living (no date) https://www.ahcancal.org/Assisted-Living/Policy/Pages/Medicaid.aspx