This article originally appeared in Ruth F. Martin’s column “Seniors’ Choices” in the Register-Pajaronian newspaper as a two-part series.
When Betty was unable to function without supervision, her family knew the time had come to look for a different environment. They decided on an assisted living facility, and Betty lived there for three years. Then due to financial losses in the stock market, the family was no longer able to pay for the facility. They met with Betty’s physician, and she was moved to a skilled nursing home after spending down her assets. For a short time Medi-CARE paid the skilled nursing home; then Medi-CAL provided reimbursement.
Monthly costs for nursing homes is about 40 percent higher than costs for assisted living facilities; nonetheless, Medi-CARE/Medi-CAL is not paying for residents in assisted living facilities. Betty’s health would have allowed her to stay in assisted living, but lacking funds, she is now occupying an expensive bed in a nursing home.
What Is Assisted Living?
Assisted living has different names: board and care home, residential care home, residential care facility, community care facility or congregate home. Assisted living is defined by the Assisted Living coalition as ”a congregate residential setting that provides or coordinates personal service, 24-hour supervision and assistance, activities and health-related services; designed to minimize the need to move; designed to accommodate individual residents’ changing needs and preferences; designed to maximize residents’ dignity, autonomy, privacy, independence and safety; and designed to encourage family and community involvement.”
When the Social Security Act passed in 1935 for seniors in the U.S., no one could foresee the changes we face today.
When assisted living was developed it was exclusively for the private payer. In 1981, Oregon became the first state to receive a waiver to permit use of Medic-AID dollars to deliver care to people in community-based settings.
With the growing population of seniors — currently 2.6 million in California — it us a controversial issue whether the government should spend Medic-AID assets for assisted living.
Medi-CARE is a federal program that assists Americans 65 and older. It has two parts: Part A covers hospitalization and some bills for a limited stay in a skilled nursing home. Part B pays for doctors and outpatient medical care.
If you are 65 years or older and eligible for Social Security benefits, you are automatically enrolled in Part A, with a few exceptions. For a monthly premium, anyone over 65 can enroll in Part B, whether or not they are eligible for Part A.
Medi-CAL, as it is called in California (Medic-AID in the U.S.), is the health insurance for Americans without employer or private insurance should they become sick or disabled at any age. Medi-CAL is longterm health insurance coverage for Americans 65 years and older and also covers people who have a low income/SSI and few assets. Federal and state requirements regulate the eligibility for Medi-CAL with special rules for nursing home patients. Medi-CAL has a strict policy about the definition of assets and income.
Medi-CARE pays for service/care, room and board in a skilled nursing home for up to 100 days, if the patient was admitted after a hospitalization, with the required physician’s order. If the patient needs further care in a nursing home and has assets, those assets must be spent down first before the recipient can apply for Medi-CAL. Medi-CAL will cover the costs of health-related services and room/board in a nursing home after the recipient has spent down his or her assets.
Medi-CAL pays for skilled nursing home residents only if they are low-income. If a particular resident could stay in an assisted living facility based on a medical assessment, Medi-CAL still could not pay under the current laws and regulations.
Currently (in 2003), a day in a nursing home costs approximately $140 in Santa Cruz County and $155 in Monterey County, which includes all services (room/board/care). A day in an average assisted living facility costs approximately $100 to $120 including room/board/care (on the Central Coast, costs can be up to $200 a day). Medi-CAL currently pays $115 per day/per patient in a skilled nursing home. A comparison between all assisted living and nursing homes is difficult because assisted living has no nursing care.
Also, while some assisted living facilities are upscale retirement communities, others are more average facilities.
Should California join other states?
How can California receive federal Medic-AID reimbursement for residents in assisted living facilities? California could work on different models to spend Medi-CAL dollars for assisted living residents. One model California could follow would be to fund the services for assisted living through Medicaid Home and Community-Based Care Waivers. Another model could be the Medicaid State Plan Service.
The services for assisted living may be reimbursed through Medic-AID Home and Community-Based Waiver or as State Plan Services, also called Personal Care. More states use the Waiver Program than the State Plan, but states using the State Plan have higher participation than states using the Waiver Program. The Waiver Program and the State Plan differ in three ways.
The Waiver Program:
- Limited spending for services by state
- the level of care criteria for nursing homes must meet the state’s criteria and
- California must set up eligibility to 300 percent of the federal standard of SSI payment.
The State Plan:
- State must provide services to all people who qualify for Medicaid
- a person must need the services covered and
- a person must be on SSI or another eligibility for Medicaid.
Nursing home eligibility is not required for beneficiaries using State Plan services. All people who meet the criteria must be served by the State Plan; the beneficiary must be on SSI or another form of eligibility of Medic-AID.
In the Waiver Program special requirements on the state level set limits on the number of people who can be served. These limits are defined as “expenditure caps” that are part of the cost neutrality formula required for approval.
The Waiver Program is available to people who meet the state’s nursing home level-of-care criteria. They would be eligible for a nursing home stay if they apply (basically everyone after a hospital stay is eligible with a doctor’s order). Under the Waiver Program, states may use a category that allows people with an income of less than 300 percent of the federal SSI benefit ($530 a month in 2001) to be eligible and receive all Medic-AID/Medi-CAL services. Using this program, states can pay for assisted living services. Fro example: If a prospective resident for an assisted living facility has less than 300 percent of the federal SSI benefit monthly income, he or she should be eligible for reimbursement.
Another benefit is that those who meet skilled nursing home criteria could be come eligible for Medi-CAL without spending down all their assets.
In assisted living, people may spend their assets for room and board and Medi-CAL covers the services. Currently, 30 states cover service (Waiver Program or State Plan) in assisted living facilities through Medic-AID. California passed a bill (A.B. 499) in 2002 approving a Medi-CAL Waiver for assisted living as a pilot project. The program itself has yet to begin.
A criterion for reimbursement for assisted living is room and board. Under a special section (1915 c) it is written that Medic-AID cannot pay for room and board outside a hospital or nursing home — except in limited circumstances as for respite care and meals that are served as part of a day care program and for hospice care at home and/or in assisted living facilities.
Medi-CAL pays the costs for services, meals and housing in skilled nursing homes in California.
If the Medi-CAL program will work for assisted living, housing should not be an issue. The whole program should be carefully analyzed and discussed, and it should not laterally request to receive equal reimbursement for assisted living.
Medi-CAL typically limits how much facilities may charge for room and board. This is tied to the state’s SSI program for a single elderly person. Since Medi-CAL cannot pay for housing in assisted living, this needs not be addressed. This should be left to the resident and the facility to determine. The resident should pay the costs for room/board in assisted living and the service/care would be reimbursed by Medi-CAL.
I’m sure Betty, from the beginning of this article, would have had another year in assisted living. She would have been moved to a nursing home later, due to health and not financial reasons.
What part would a physician play in these changes? Would they have more work through the requirements of Medi-CAL? How is it dealt with in assisted living.
Voices from the assisted living community
When I went deeper into this subject, I contacted assisted living facility administrators and directors in Santa Cruz, Monterey and San Benito counties for their input.
- Almost all assisted living facilities owned by corporations, their administrators are very concerned about overhead costs, when Medic-AID/Medi-CAL is involved. Sending monthly invoices to the Medi-CAL office and dealing with new requirements would dramatically increase the costs. It would not be long before more staff would be needed. The tenor from administrators and directors is that this would automatically raise monthly costs.
- Some assisted living facilities have one lump sum paid every month, covering room/board and services/care. To separate this sum into room/board on one side and services/care on the other should be an easy calculation. This should not be a criterion to be used against Medi-CAL reimbursements. Some voices are concerned that care will be less than it is currently; some facilities may save costs giving less care. I think care should not be different whether residents pay directly, privately to the facility, or Medi-CAL reimburses. We are talking about the hands-on care in the daily process of living and not the expensive or less expensive surroundings of a facility.
- Privately owned assisted living facilities welcome the program in general; these facilities, on average, have fewer beds and the clientele may be different. It is more a family-style environment and they are less concerned about the requirements for reimbursements.
The majority of the answers to my question, “Should Medi-CAL pay the full amount of the daily costs in assisted living” are “no”. The answers would support an appropriate co-payment from the Medi-CAL office.
The question of whether every senior should be eligible for the Medi-CAL reimbursement split the administrators and directors (those who support the idea) into three answers: 1) Everyone should be eligible, 2) Only people who have spent their money and need the reimbursement to continue to stay in assisted living and 3) Only people who have no sources to pay for assisted living.
The administrators and directors of exclusively assisted living facilities have shown less familiarity and experience in general about Medi-CARE and Medi-CAL, especially about reimbursement, than those experienced with skilled nursing homes. Very few would prefer to remain with the current private payment of residents. An interesting thought is that assisted living is a social program and if Medi-CAL is involved it could change to a health program. Nearly 100 percent of the answers assumed between one and 10 states have a contract for Medic-AID reimbursement, but the majority had never heard of it.
Voices from seniors and their families
Through my lecturing at the Adult School in Watsonville and the Adult School in Santa Cruz, I have been in contact with a variety of people. I have submitted these same questionnaires to seniors and children of the elderly. The answers are not surprisingly the opposite from the answers of administrators of assisted living facilities. All, old and young, would support a change of the current system. The financial “help” of reimbursement from Medi-CAL would allow more seniors to stay longer in assisted living facilities. Some would even consider moving sooner to an assisted living facility if they could have help paying the bills. Their own savings/assets would be stretched and the majority would support a reimbursement for the care/services and would be willing to pay for room and board.
I opened a small window in the large house of Medi-CARE, Medic-AID (Medi-CAL). I addressed the most important issues about reimbursements for services in assisted living facilities. We have no federal requirements for assisted living and each state has its own rules and laws. Today, there are nearly 30,000 assisted living facilities in the U.S. with more than 1.15 million residents. by the year 2025, there will be more than 2.1 million residents; an increase of 70 percent. But, with all the Medi-CAL requirements, is California able to come up with a plan allowing coverage for services in assisted living (or a different program) without changing the requirements given by the Social Services Department of California for assisted living facilities?
We cannot close our eyes to the fact that despite the ever-increasing population of seniors, in some states the rates for the Medic-AID reimbursement are too low to allow facilities to serve residents who meet the waiver requirements. That is, residents must meet the state’s criteria to enter a nursing home.
I think each assisted living facility must make its own policy whether it wants to participate in the Medi-CAL program or not. At the moment — with more requests than beds — it will not be an issue. But if needs change and facilities struggle to maintain occupancy rates, they may be more likely to sign a contract with Medi-CAL to retain residents who have spent their resources and cannot afford the monthly fee.
But we all know the poorest of our seniors, the elders on SSI, could never participate in this achievement of our society. If it turns out a senior on SSI can no longer safely live at home, the only way to receive necessary care is a bed in a skilled nursing home, whether the level of health requires it or not. Medi-CAL is the only source of payments and so far it pays exclusively for skilled nursing home stays. The total costs for assisted living would be by far much less than the total costs in a nursing home. But as long as Medi-CAL is not covering room and board costs in assisted living facilities, those seniors have no choice but to go to a skilled nursing home.
I am aware that we are going through difficult times in our economy. I am also aware the government and the state are reducing spending dramatically. But whatever decision is made, it will have an impact on our increasing senior population today, tomorrow and for the next 20 to 30 years — maybe longer.
Assisted Living Quality Coalition, 1988: Assisted Living Quality Initiative: Building a Structure that Promotes Quality. Washington, DC.
The Coalition is a group representing the Alzheimer Association, the AARP, the American Association of Homes and Services for the Aging, the Assisted Living Federation of America, the America Senior Housing Association, and the American Health-Care Association — National Center for Assisted Living.
Senate Hearings 1999: Special Committee on Aging. United States Senate, April 26, 1999.
Senate Hearings 2002: Special Committee on Aging. United States Senate, April 16, 2002.
Zimmerman, Sloane, Eckert, (Mollica): Assisted Living: Needs, Practices, and Policies in Residential Care for the Elderly. The Johns Hopkins University Press, Baltimore and London, 2001.