Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
H C -
 OME AND  OMMUNITY
 
B S A
ASED  ERVICES IN  SSISTED 
 
 
L F  
IVING  ACILITIES 
 
 
 
 
Daniel R. Levinson  
Inspector General 
 
December 2012 
OEI-09-08-00360   
   
EXECUTIVE SUMMARY:  HOME AND COMMUNITY-BASED 
SERVICES IN ASSISTED LIVING FACILITIES, OEI-09-08-00360 
 
 
WHY WE DID THIS STUDY  
 
Under the 1915(c) waiver, the Centers for Medicare & Medicaid Services (CMS) may waive 
certain requirements to allow State Medicaid programs to cover home and community-based 
services (HCBS) for beneficiaries residing in assisted living facilities (ALF).  However, little 
information exists about the HCBS furnished to beneficiaries in ALFs, the costs of those 
HCBS, or the extent to which those HCBS are furnished in compliance with Federal and 
State requirements.     
 
HOW WE DID THIS STUDY 
 
To identify the costs and types of HCBS covered under 1915(c) waivers for Medicaid 
beneficiaries residing in ALFs, we surveyed and collected claims data from 35 State 
Medicaid programs.  From these 35 States, we selected the 7 States with the highest numbers 
of beneficiaries receiving these services in ALFs:  Georgia, Illinois, Minnesota, New Jersey, 
Oregon, Texas, and Washington.  Using claims data from these 7 States, we selected a 
random sample of 150 beneficiaries.  To determine the extent to which Medicaid programs 
complied with Federal and State requirements for HCBS furnished under the waiver, we 
reviewed State survey agency inspection reports for ALFs in which beneficiaries from our 
sample resided.  We also reviewed plans of care associated with the sampled beneficiaries.  
The period of our review was 2009. 
 
WHAT WE FOUND 
 
In 2009, 35 Medicaid programs reported that, under 1915(c) waivers, they covered various 
HCBS for beneficiaries in ALFs at an annual cost of $1.7 billion.  Each State had federally 
mandated provider standards; however, ALFs in the seven selected States did not always 
comply with them, and federally required plans of care did not always meet Federal 
requirements.  In the seven States, 77 percent of beneficiaries received HCBS under the 
waiver in ALFs cited for a deficiency with regard to (i.e., noncompliance with) at least one 
State licensure or certification requirement.  Nine percent of beneficiaries records did not 
include plans of care required by the States.  Further, 42 percent of the federally required 
plans of care did not include the frequency of HCBS furnished, as required.  Five of the 
seven States also required that plans of care specify the beneficiaries goals and the 
interventions to meet them.  In these 5 States, 69 of 105 plans of care for beneficiaries 
receiving these services in ALFs did not meet that requirement.  Two of the seven States also 
required that plans of care be signed by beneficiaries or their representatives.  In these 
2 States, 12 of 25 plans of care for beneficiaries receiving HCBS in ALFs did not meet that 
requirement.  
 
WHAT WE RECOMMEND  
 
We recommend that CMS issue guidance to State Medicaid programs emphasizing the need 
to comply with Federal requirements for covering HCBS under the 1915(c) waiver.  CMS 
concurred with our recommendation.
   
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 
Background ..................................................................................................1 
Methodology ................................................................................................6 
Findings......................................................................................................12 
In 2009, 35 State Medicaid programs reported that they  
covered HCBS for beneficiaries in ALFs at an annual cost of 
$1.7 billion .....................................................................................12 
Provider standards existed in the 35 States; however, ALFs in  
the 7 States with the highest numbers of beneficiaries receiving 
HCBS in ALFs did not always comply with those standards, and   
plans of care did not always comply with Federal requirements ...13 
Recommendation .......................................................................................17 
Agency Comments and Office of Inspector General Response .....18 
Appendixes ................................................................................................19 
A:  Confidence Intervals ................................................................19 
B:  Agency Comments ...................................................................20 
Acknowledgments......................................................................................23 
 
   
   
OBJECTIVES 
1.  To identify the costs and types of home and community-based services 
(HCBS) covered under the 1915(c) waiver for Medicaid beneficiaries 
residing in assisted living facilities (ALF). 
2.  To determine the extent to which State Medicaid programs complied 
with selected Federal and State requirements for HCBS furnished 
under the 1915(c) waiver. 
BACKGROUND  
In recent years, State Medicaid programs have attempted to expand 
long-term care options for beneficiaries while reducing spending for 
institutional long-term care, which is provided primarily in nursing 
facilities.1  ALFs can provide a housing alternative to institutional care for 
individuals who prefer to live independently but need assistance to 
maintain their independence. 
State Medicaid programs cover HCBS for beneficiaries residing in ALFs 
under several authorities.  Although ALFs are not defined in Federal health 
care law and regulations, a congressional workgroup2 defined them as 
State regulated and monitored residential long-term care options that 
provide or coordinate oversight and services to meet the residents 
individualized scheduled needs, based on the residents assessments and 
service plan and their unscheduled needs as they arise.3  The term ALF 
may include facilities referred to as adult foster homes or residential 
care facilities.  Residents of ALFs may include Medicaid beneficiaries as 
well as nonbeneficiaries (i.e., private payers).   
HCBS may include case management services, homemaker services, 
personal care services, home health aide services, and other services 
necessary to avoid institutionalization.4  Homemaker services consist of 
housekeeping, laundry, and meal preparation, whereas personal care 
 
1 U.S. Department of Health and Human Services, Assistant Secretary for Planning and 
Evaluation, Understanding Home and Community Services:  A Primer, October 2000.  
Accessed at http://aspe.hhs.gov/daltcp/reports/primer.htm on January 16, 2009. 
2 In 2001, at the request of the U.S. Senate Special Committee on Aging, approximately 
50 organizations representing providers, consumers, long-term care and health care 
professionals, and regulators formed the Assisted Living Workgroup to develop 
recommendations to ensure quality in assisted living. 
3 Assisted Living Workgroup, Assisted Living Workgroup Report to the U.S. Senate 
Special Committee on Aging, 2003, p. 12.  Accessed at 
http://www.theceal.org/assets/PDF/ALWReport-Definition-and-Core-Principles.pdf on 
May 7, 2010. 
4 42 CFR  440.180(b). 
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services consist of assistance with activities of daily living and 
supervision.  Activities of daily living typically include, but are not limited 
to, bathing, dressing, using the toilet, and walking.  Home health aide 
services consist of some nursing assistance, such as medication 
management and checking pulses and blood sugar levels.  These services 
are designed to help older individuals and individuals with disabilities to 
continue living at home or in other noninstitutional residential community 
settings, such as ALFs.5  HCBS may be furnished by individual providers 
and/or agency providers, such as ALFs.6   
State Medicaid programs cover HCBS for beneficiaries residing in ALFs 
under their State Medicaid plans, 1915(c) waivers,7 or section 1115 
research and demonstration waivers.8  Of the three methods, the 
1915(c) waiver is the most common.  In 2009 (the period of our review), 
37 Medicaid programs covered HCBS in ALFs under the 1915(c) waiver, 
13 programs used their Medicaid State plans, and 4 used the section 1115 
research and demonstration waiver.9, 10 
Between 2002 and 2009, the number of beneficiaries receiving HCBS in 
ALFs under the 1915(c) waiver and section 1115 research and 
 
5 HCBS may also be furnished in noninstitutional settings, such as adult day health 
centers and day treatment centers.  
6 Centers for Medicare & Medicaid Services (CMS), Application for a  1915(c) Home 
and Community-Based Waiver [Version 3.5]:  Instructions, Technical Guidance and 
Review Criteria (Application), January 2008, p. 136. 
7 The 1915(c) waivers allow State Medicaid programs the flexibility to cover a wide 
range of HCBS through the waiver of certain State plan requirements.  Under section 
1915(c), CMS may waive the following requirements:  (1) StatewidenessStates may 
cover services in only a portion of the State, rather than in all geographic jurisdictions; 
(2) comparability of servicesStates may limit HCBS waiver services to individuals in 
State-selected target groups who require an institutional level of care; and (3) certain 
financial eligibility requirementsStates may use more liberal income requirements for 
persons receiving HCBS.  See Social Security Act (SSA)  1915(c)(3); CMS, 
Application, January 2008, pp. 5-6.  
8 Waivers under section 1115 of SSA allow Medicaid programs the flexibility to design 
and improve their Medicaid and Childrens Health Insurance Programs.  CMS, 
1115 Waiver Basics.  Accessed at http://medicaid.gov/Medicaid-CHIP-Program-
Information/By-Topics/Waivers/1115/Section-1115-Demonstration.html  
on June 15, 2012. 
9 Robert L. Mollica, State Medicaid Reimbursement Policies and Practices in Assisted 
Living (prepared for the National Center for Assisted Living and the American Health 
Care Association), September 2009, p. 7.  Accessed at 
http://www.ahcancal.org/ncal/resources/Documents/MedicaidAssistedLivingReport.pdf 
on October 19, 2011.   
10 The total number of State Medicaid programs exceeds 50 because 6 of the programs 
cover HCBS in ALFs both under their State plans and under waivers.   
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360)  2 
   
   
demonstration waiver increased 122 percent.11  Although the population of 
Medicaid beneficiaries in ALFs has seen significant growth in recent 
years, little information exists about HCBS furnished to beneficiaries 
residing in ALFs and the costs of those HCBS.  In addition, little is known 
about the extent to which HCBS are furnished in compliance with Federal 
and State requirements. 
HCBS furnished under the 1915(c) waiver.  The 1915(c) waiver allows 
State Medicaid programs flexibility through CMSs waiver of certain State 
plan requirements.  Specifically, it allows these programs to cover a wide 
range of HCBS (other than room and board) for individuals who meet the 
Medicaid eligibility requirements for institutional care.12  Any Medicaid 
program that chooses to implement a waiver program must submit a 
waiver application to CMS for review and approval.13 
Federal and State Requirements 
Pursuant to Federal requirements, to be granted a 1915(c) waiver, a State 
Medicaid program must include certain provisions in its waiver 
application.  These include, but are not limited to, assurances that 
necessary safeguards have been taken to protect the health and welfare of 
beneficiaries and that providers will furnish HCBS under written plans of 
care.14, 15  Among other things, these provisions require the following: 
  The safeguards must specify adequate standards for all types of 
providers16 that furnish HCBS under the waiver.17, 18  In addition, 
Medicaid programs must use existing State ALF licensure or  
 
 
11 Because these data were available only in the aggregate, the increase in the percentage 
of beneficiaries who received HCBS in ALFs under the 1915(c) waiver also includes 
beneficiaries who received HCBS under the 1115 research and demonstration waiver.  
Robert L. Mollica, State Medicaid Reimbursement Policies and Practices in Assisted 
Living (prepared for the National Center for Assisted Living and the American Health 
Care Association), September 2009, p. 7.  Accessed at 
http://www.ahcancal.org/ncal/resources/Documents/MedicaidAssistedLivingReport.pdf 
on October 22, 2010. 
12 SSA  1915(c)(1). 
13 Initial waivers are approved for a 3-year period and may be extended for additional 
5-year periods.  42 CFR  441.304(a) and (b). 
14 42 CFR  441.301(a)(1) and 441.301(b)(1)(i). 
15 In their waiver applications, Medicaid programs designate an agency and/or type of 
provider (e.g., registered nurse) that will complete the plan of care.   
16 Provider refers to any individual or entity that furnishes Medicaid services under an 
agreement with a Medicaid program.  42 CFR  400.203.   
17 42 CFR  441.302(a)(1). 
18 CMS, Application, January 2008, p. 137.  
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certification requirements as the provider standards.19, 20   
  The written plan of care21 is to be based on an assessment22 of the 
individual to determine the services needed to prevent 
institutionalization.23  Each plan of care must identify, at a 
minimum: 
  the medical and other services to be provided,  
o
  the frequency of these services, and 
o
  the type of provider expected to furnish them.24, 25  
o
State Medicaid programs additional waiver requirements.  In their 
applications for 1915(c) waivers, State Medicaid programs may specify 
additional requirements for what a plan of care must include.  Such 
additional requirements include, but are not limited to:  
  the beneficiaries specific goals and interventions to meet them 
and 
  the signatures of beneficiaries or their representatives. 
Medicaid programs must implement their waivers as specified in their 
approved applications, including any additional requirements related to 
plans of care.26 
State licensure or certification requirements.  Generally, a States licensure 
or certification requirements address the health and welfare of facility 
residents, physical plant requirements, staff qualifications and training, 
and State-required plans of care.  States licensure or certification 
 
19 CMS, Application, January 2008, p. 136. 
20 Employees of an ALF furnishing HCBS on behalf of the ALF may also be required to 
possess qualifications mandated under the States ALF licensure or certification 
requirements or specified in the Medicaid programs approved 1915(c) waiver.  
21 42 CFR  441.301(b)(1)(i). 
22 The term assessment means an examination of an individual who has been 
determined (through an evaluation) to meet the level of care requirements for 
participation in a waiver, to determine what waiver services are needed to prevent 
institutionalization or whether waiver services constitute an acceptable alternative to 
institutional care.  CMS, State Medicaid Manual, Pub. 45, ch. 4 (Services),  4442.6, 
p. 4-455.  
23 Ibid. 
24 Ibid. 
25 CMS, Application, January 2008, p. 55. 
26 Ibid., p. 6. 
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requirements mandate that facilities develop and maintain plans of care as 
part of residents records.27   
States use a variety of agencies (survey agencies) to monitor compliance 
with State licensure or certification requirements.  Survey agencies are 
State entities authorized to set and enforce standards for Medicaid 
providers.28  These agencies periodically inspect facilities to determine 
whether they comply with State licensure or certification requirements.  
When survey agencies determine that facilities such as ALFs do not 
comply with these requirements, they typically document such 
noncompliance as a deficiency, in the form of a citation. 
State Medicaid program assessment of compliance with 1915(c) waiver 
requirements.  In their waiver applications, State Medicaid programs must 
describe how they will monitor the furnishing of HCBS under the 
approved waivers to ensure that each assurance is met.   
State Medicaid programs must describe the types of data they will collect, 
which may includeamong other thingsrecord reviews, interviews with 
beneficiaries and providers, and the results of licensure or certification 
reviews.  Medicaid programs must also describe their methods for 
correcting any problems they find.  The processes that Medicaid programs 
use to monitor operations under the waiver are referred to as discovery, 
and the methods used to address areas of noncompliance are referred to as 
remediation.29 
 
CMS Oversight of HCBS Under the Waiver 
CMS is responsible for determining whether State Medicaid programs 
comply with the Federal requirements for covering HCBS under the 
1915(c) waiver.  CMS reviews the programs applications for waivers to 
determine whether the applications:  (1) are complete,30 (2) include the 
required provisions, and (3) describe how State Medicaid programs will 
monitor HCBS furnished under the waiver.31  If CMS determines that the 
application includes the required provisions and describes adequate 
monitoring systems, it may approve the waiver for a 3-year period.32  For 
those waivers that allow services to be furnished to individuals covered 
 
27 CMS, State Operations Manual, January 7, 2011, Appendix PP, F279  483.20(d) and 
483.20(k).  These plans of care are required in addition to those developed by State 
Medicaid programs pursuant to the Federal requirements.   
28 SSA  1902(a)(9) and 1902(a)(33). 
29 CMS, Application, January 2008, pp. 10-11. 
30 Ibid., p. 6. 
31 CMS, Interim Procedural Guidance for Conducting Community-Based Services 
(HCBS) Waiver Programs, 2007. 
32 42 CFR  441.304(a).  See also 42 CFR  430.25(h)(2)(i).   
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under both Medicaid and Medicaredual eligiblesCMS may approve 
them for a 5-year period.33  Existing waivers may be renewed for 
additional 5-year periods.34     
CMS quality reviews of HCBS under 1915(c) waivers.  CMS conducts 
quality reviews of HCBS covered by State Medicaid programs under 
1915(c) waivers to determine whether the programs are complying with 
the Federal requirements.  For waivers becoming eligible for renewal on 
or after January 1, 2010, CMS begins to conduct quality reviews of HCBS 
covered under the waivers 24 months prior to the waivers expiration.35  As 
part of these quality reviews, CMS requests that programs provide 
documentation that the Federal requirements are being met.  The 
documentation covers programs monitoring activities, including any 
actions taken to correct noncompliance.  CMS reports its findings from 
these reviews to the Medicaid programs at least 1 year prior to the 
waivers expiration.  This gives the Medicaid programs time to correct any 
noncompliance prior to the waivers expiration.36 
Other Studies 
The Office of Inspector General (OIG) conducted a separate evaluation on 
1915(c) HCBS waiver programs that examined CMSs oversight of State 
efforts to ensure the quality of care furnished under such programs.37  
METHODOLOGY 
Scope 
This evaluation focused on 35 Medicaid programs that covered HCBS 
under the waiver for aged and/or disabled Medicaid beneficiaries residing 
in ALFs.38   
The period of our review was 2009.39  We identified the extent to which 
the 35 programs covered HCBS under the 1915(c) waiver and the cost of 
 
33 The Patient Protection and Affordable Care Act of 2010 (the Affordable Care Act),  
P.L. 111-148, section 2601 (amending section 1915(h) of the SSA).  See also 77 Fed. 
Reg. 26362 (May 3, 2012) (proposed rule to revise 42 CFR  430.25 to implement 
section 2601 of the Affordable Care Act).   
34 42 CFR  441.304(b).  See also 42 CFR  430.25(h)(2)(i).   
35 CMS, Interim Procedural Guidance for Conducting Community-Based Services 
(HCBS) Waiver Programs, 2007, p. 3. 
36 Ibid., p. 4. 
37 OIG, Oversight of Quality of Care in Medicaid Home and Community-Based Services 
Waiver Programs, OEI-02-08-00170, June 2012. 
38 Although 37 States covered HCBS under the 1915(c) waiver, 2 States did not cover 
HCBS during our period of review because their waiver programs were in the early 
implementation stage. 
39 Although the period of our review was 2009, we did not complete our site visits to 
ALFs until March 2010. 
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those HCBS to Medicaid.  We assessed Medicaid programs compliance 
with selected Federal requirements relating to beneficiary health and 
welfare and plans of care.  For programs that specified additional 
requirements in their approved 1915(c) waivers, we also assessed 
compliance with those requirements.    
However, we did not conduct a medical review to determine whether 
HCBS were furnished in accordance with a plan of care, nor did we assess 
the appropriateness of the HCBS.  
Compliance with selected Federal and State requirements.  For HCBS 
covered under the 1915(c) waiver, we assessed the State Medicaid 
programs compliance with (1) the provider standards and (2) the plan of 
care requirements.  For the latter, we focused on whether the plans of care 
identified:      
  the medical and other services to be provided in ALFs, 
  the expected frequency of these services, and 
  the type of provider expected to furnish them. 
For State Medicaid programs with approved 1915(c) waivers that 
specified additional requirements relating to plans of care, we also focused 
on whether they included:  
  the beneficiaries specific goals and interventions to meet them and 
  the signatures of beneficiaries or their representatives. 
We also determined whether ALFs maintained (had on the premises) the 
plans of care as mandated by State licensure or certification requirements. 
Data Collection and Sample Selection 
Survey of State Medicaid programs.  We surveyed State Medicaid 
programs in 49 States and the District of Columbia40 to collect information 
about HCBS furnished to beneficiaries who resided in ALFs.  Our survey 
determined that 35 programs covered HCBS for aged and/or disabled 
beneficiaries in ALFs under 40 1915(c) waivers.41  The information 
collected from the 35 States includes, but is not limited to, what types of 
HCBS are furnished, how many beneficiaries receive HCBS as ALF 
 
40 For the purpose of this report, we include the District of Columbia as one of the States.  
Arizona was excluded from the survey because Arizona operates its Medicaid program 
under a section 1115 research and demonstration waiver. 
41 Thirty-seven Medicaid programs covered HCBS for beneficiaries residing in ALFs; 
however, claims data did not exist for two of those States during our period of review 
because their waiver programs were in the early implementation stage.  Some States 
operate under more than one 1915(c) waiver; as a result, the number of waivers exceeds 
the number of States with waivers.   
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residents, what the annual cost of furnishing those HCBS is, and whether 
documentation of provider standards existed. 
Medicaid claims data for HCBS furnished in ALFs.  We collected 
Medicaid claims data from 35 States that covered HCBS for beneficiaries 
residing in ALFs.  Using these data, we selected a purposive sample of 
seven States with the highest numbers of beneficiaries receiving HCBS in 
ALFs:  Georgia, Illinois, Minnesota, New Jersey, Oregon, Texas, and 
Washington.  We then created a database of 2009 claims data from these 
7 States,42 containing 191,673 claims for 33,652 beneficiaries.  Nationally, 
the seven States represented 62 percent of all beneficiaries receiving 
HCBS under the 1915(c) waiver in ALFs and accounted for 64 percent of 
all 1915(c) waiver spending for HCBS furnished in ALFs over a 3-month 
period.   
State licensure or certification inspection reports for ALFs.  To determine 
the extent to which ALFs that furnish HCBS to Medicaid beneficiary 
residents comply with State licensure or certification requirements, we 
requested State survey agencies inspection reports.  From the database of 
Medicaid claims for the 7 States, we selected a simple random sample of 
150 Medicaid beneficiaries (sampled beneficiaries) who resided in 
141 ALFs and who received HCBS.43  From the 7 States, we requested 
inspection reports for these 141 ALFs, receiving complete reports for 
124 of them.44  Our analysis thus includes 124 ALFs in which 133 of the 
sampled beneficiaries resided.   
Plans of care developed by State Medicaid programs.  To meet Federal 
plan of care requirements, State Medicaid programsdirectly or through 
contact with other entitiesdevelop a plan of care for each beneficiary 
who is eligible for HCBS.  To determine whether plans of care were 
developed by the Medicaid programs45 and whether they included (1) the 
documentation specified under the Federal requirements for HCBS and 
(2) the documentation specified by any additional requirements in the 
programs approved 1915(c) waivers, we requested from the programs 
(and received) plans of care for the 150 sampled beneficiaries.   
 
42 The timeframe for ALFs to submit claims varies among States.  Therefore, to collect 
claims data from each State for a comparable 3-month period, we collected the data over 
the period of January through June 2009. 
43 Some ALFs had more than one resident Medicaid beneficiary.         
44 We tried to collect complete inspection reports for the remaining 17 of the 141 ALFs.  
However, the applicable Medicaid programs reported at the time of our review that 
additional information was not available.  Therefore, we excluded the inspection reports 
for those 17 ALFs from our analysis.   
45 The plan of care could be developed by or on behalf of the Medicaid program.    
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Plans of care developed by ALFs.  Medicaid providers, such as ALFs, 
independently develop their own plans of care for all residents.  We 
conducted site visits to determine whether ALFs had the plans of care that 
are required by the State licensure or certification agencies.  Specifically, 
we visited ALFs in our purposive sample of 7 States and reviewed the 
medical records of our 150 sampled beneficiaries.      
Data Analysis 
Our findings are based on analysis of the data we collected from:  
(1) 35 Medicaid programs, (2) the State licensure or certification 
inspection reports associated with 133 of the 150 sampled beneficiaries, 
(3) plans of care from the Medicaid programs associated with the 
150 sampled beneficiaries, and (4) plans of care from the ALFs associated 
with those 150 sampled beneficiaries.  Our findings related to compliance 
with Federal requirements and State ALF licensure or certification 
requirements are projected to the population of beneficiaries (33,652) who 
resided and received HCBS in 4,811 ALFs in the 7 States.  However, our 
findings related to compliance with Medicaid programs additional 
documentation requirements in their waivers are not intended to be 
projected because those requirements do not apply to all of the seven 
States.  The estimates and 95-percent confidence intervals for the statistics 
in this report are listed in Appendix A. 
HCBS covered by State Medicaid programs.  We analyzed State Medicaid 
program survey data from the 50 States to identify which programs 
covered HCBS for Medicaid beneficiaries residing in ALFs and to 
determine the annual cost of furnishing those HCBS.46  We determined the 
latter by calculating the total annual cost that each State Medicaid program 
reported paying to ALFs for HCBS furnished to resident beneficiaries.  
Additionally, using the same survey data, we determined the number of 
beneficiaries who resided in ALFs and the number of ALFs that furnished 
HCBS to beneficiaries. 
Documentation of provider standards.  To determine whether provider 
standards existed in the 35 State Medicaid programs that covered HCBS in 
ALFs under 1915(c) waivers, we determined the number of States that 
provided documentation of their provider standards.  
State licensure or certification inspection reports.  We analyzed State 
survey agencies inspection reports for the 124 ALFs associated with 
 
46 To obtain the most current information regarding the number of Medicaid programs 
that covered HCBS in ALFs under the waiver, we collected this information directly from 
programs.  For example, although 37 programs had approved waivers to cover HCBS in 
ALFs, only 35 programs had actual claims data or annual spending data for such HCBS 
during the time of our review. 
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133 of the sampled beneficiaries.  We calculated the percentage of 
beneficiaries from the seven States who resided in ALFs that received at 
least one citation from survey agencies.  We also determined the number 
of those ALFs that received citations for deficiency with regard to 
(noncompliance with) multiple State licensure or certification 
requirements governing the health and welfare of residents47 or staff 
qualifications and training requirements.48 
Plans of care developed by State Medicaid programs.  To determine 
whether plans of care developed by State Medicaid programs for HCBS 
under the 1915(c) waiver included the documentation specified by Federal 
requirements, we reviewed the State-developed plans of care for the 
150 sampled beneficiaries.  This included determining the number of plans 
of care that identified: 
  the medical and other services to be provided in ALFs, 
  the expected frequency of these services, and 
  the type of provider expected to furnish them. 
Of the seven States, five had 1915(c) waivers that required Medicaid 
programs plans of care to include additional documentation.  We 
reviewed plans of care from these five States to determine whether they 
included this additional documentation.  All five States had 1915(c) 
waivers requiring that plans of care include Medicaid beneficiaries 
specific goals and the interventions to meet them.49  In addition, two of the 
five States had waivers requiring that plans of care include the signatures 
of the beneficiaries (or their designated representatives) as an 
acknowledgment of the services and the conditions under which they are 
to be provided.  We determined the number of plans of care that included 
the beneficiaries specific goals and the interventions and the number of 
plans that included the signatures of the beneficiaries (or their designated 
representatives).  
Plans of care developed by ALFs.  To determine whether ALFs had 
developed the plans of care required for the sampled beneficiaries under 
State licensure or certification requirements, we reviewed 150 beneficiary 
 
47 ALFs are subject to State agency inspection regardless of whether the residents are 
Medicaid beneficiaries.   
48 Although ALFs were cited for deficiencies in (i.e., noncompliance with) a variety of 
State licensure or certification requirements, we focused on deficiencies related to health 
and safety.   
49 Goal refers to the desired outcome of receiving the services outlined in the plan of 
carefor example, living independently.  Interventions refer to the steps that the ALF 
will take if the beneficiary is not reaching the goal.       
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medical records during our onsite visits to ALFs.  We then determined the 
number of records that included such plans. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency. 
 
   
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FINDINGS 
In 2009, 35 State Medicaid programs reported that they 
covered HCBS for beneficiaries in ALFs at an annual 
cost of $1.7 billion  
Thirty-five State Medicaid programs covered a variety of HCBS for 
beneficiaries residing in ALFs at a total annual cost of $1.7 billion.50  
These HCBS were furnished to more than 54,000 beneficiaries residing in 
approximately 12,000 ALFs.  We visited different types of ALFs:  private 
residences where beneficiaries were taken care of by relatives;51 
single-family homes that served 6 or fewer individuals; and multiunit 
residences, some of which served more than 200 individuals. 
The HCBS covered included homemaker services, personal care services, 
and home health aide services.  All 35 programs reported that their 
1915(c) waivers cover homemaker services and personal care services.  
Twenty-five programs reported that their 1915(c) waivers also cover home 
health aide services.   
Less than 10 percent of Medicaid beneficiaries who received HCBS under 
the 35 States 1915(c) waivers resided in ALFs.  The cost of those HCBS 
represented 12 percent of the total annual cost to furnish HCBS under the 
1915(c) waiver.  The average annual cost to furnish these services to 
beneficiaries residing in ALFs is approximately $31,000 per beneficiary, 
compared to $17,000 per beneficiary when the services are furnished in 
other settings.  The disparity in costs may result from beneficiaries 
receiving more HCBS when residing in ALFs.  For example, beneficiaries 
residing in ALFs may receive HCBS 24 hours a day, whereas those 
services may be furnished on a limited basis in other settings, such as adult 
day health centers or senior day care centers.     
 
50 This figure represents the total collective annual costs reported by 35 States during our 
period of review.  Although two additional States also covered HCBS under their 
respective waivers, their waiver programs were in the early implementation stage and 
thus their annual costs to furnish HCBS were not yet available.   
51 In some States, Medicaid beneficiaries resided in their own homes or in their families 
homes and received HCBS from family members.  In most such cases, the beneficiary 
was a parent being taken care of by his/her child(ren). 
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360)  12 
   
   
Provider standards existed in the 35 States; however, 
ALFs in the 7 States with the highest numbers of 
beneficiaries receiving HCBS in ALFs did not always 
comply with those standards, and plans of care did 
not always comply with Federal requirements 
State Medicaid programs provided assurances in their 1915(c) waiver 
applications that they had standards for all types of providersincluding 
ALFsthat furnish HCBS under such waivers.  Each of the 35 programs 
had established provider standards, as required, and ALFs were State 
licensed or certified as required.  However, in the seven States that had the 
highest number of beneficiaries receiving HCBS via the 1915(c) waiver 
while residing in ALFs, most such beneficiaries were in ALFs that were 
cited for one or more deficiencies with regard to (i.e., instances of 
noncompliance with) State licensure or certification requirements.  In 
addition, our review of beneficiary medical records and plans of care in 
the seven States found that the ALF-developed plans of care required 
under State licensure or certification requirements did not always exist.  
Furthermore, plans of care developed by State Medicaid programs did not 
always comply with Federal requirements or with the additional 
documentation requirements specified in the programs respective 
approved 1915(c) waivers. 
Provider standards existed in each of the 35 States 
Provider standards existed in each of the 35 States that covered HCBS for 
Medicaid beneficiaries in ALFs.  Each of the 35 Medicaid programs 
reported that, to comply with the Federal requirement that standards be 
established for providers furnishing HCBS under the 1915(c) waiver, the 
program uses the provider standards identified in its State licensure or 
certification requirements.  As part of the ALF licensure or certification 
requirements, each State had specific standards for ALF employees based 
upon the type and level of care provided to the beneficiary.  For example, 
to be licensed or certified as an ALF, a State may require that the ALF use 
only personal care attendants who have 40 hours of training and are State 
certified.  The provider standards are part of the quality assurance 
measures that survey agencies verify during their inspections of ALFs.   
In the seven States, 77 percent of the Medicaid beneficiaries 
resided in ALFs that were cited for one or more deficiencies 
with regard to State licensure or certification requirements 
In the seven States, citations from survey agency inspections indicate that 
Medicaid programs covered HCBS furnished to resident beneficiaries in 
ALFs that did not comply with all State licensure or certification 
requirements.  In 2009, 77 percent of beneficiaries receiving HCBS in 
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360)  13 
   
   
ALFs resided in ALFs that were cited for a deficiency with regard to (i.e., 
an instance of noncompliance with) at least one State licensure or 
certification requirement.52  Sixty-eight percent of beneficiaries resided in 
ALFs that received multiple citations.   
The types of deficiencies cited could compromise the health and welfare 
of the beneficiaries.  For example, some of the deficiencies were related to 
failing to furnish services outlined in residents plans of care and 
failing to dispense or administer medication as prescribed by a 
physician.  Table 1 lists the percentage of beneficiaries residing in ALFs 
cited for various deficiencies. 
Table 1:  Percentages of Medicaid Beneficiaries in the Seven States Who 
Resided in ALFs Cited for Deficiencies53 
 
 
Types of Deficiency Citations That 
Percentage of Resident Medicaid Beneficiaries  
  ALFs Received  
Failing to furnish services outlined in 
23% 
  residents plans of care 
Failing to dispense or administer 
 
medication as prescribed by a  23% 
physician 
 
Failing to complete initial assessments 
18% 
  of residents 
Lacking a current plan of care for at 
16% 
  least one resident 
Failing to ensure that staff had the 
  required education and training prior to  16% 
furnishing services to residents 
 
Failing to ensure that medication was 
administered by appropriately qualified  8% 
 
staff 
 Source:  OIG analysis of seven States ALF inspection reports, 2010. 
 
   
 
52 A Medicaid beneficiary resided in each of these facilities.  However, because residents 
of ALFs may consist both of Medicaid beneficiaries and nonbeneficiaries (i.e., private 
payers), citations issued to these ALFs may not directly apply to the care of a Medicaid 
beneficiary.   
53 The percentage of sampled beneficiaries exceeds 100 percent because a sampled 
beneficiary may have resided in an ALF that was cited for more than one type of 
deficiency.   
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360)  14 
   
   
In the seven States, records for 9 percent of Medicaid 
beneficiaries receiving HCBS in ALFs did not include the 
required plans of care 
Independently of survey agencies inspection reports, our onsite review of 
Medicaid beneficiaries records in the seven States indicated that ALFs did 
not have required plans of care for all beneficiaries receiving HCBS in 
ALFs.  Although all ALFs had records for each beneficiary, 
ALF-maintained records for 9 percent of beneficiaries in the seven States 
lacked plans of care as required by State licensure or certification 
requirements.54  Of the records that lacked the required plans of care, 
62 percent were from one State. 
In the seven States, the plans of care for 42 percent of 
Medicaid beneficiaries receiving HCBS in ALFs did not comply 
with the Federal documentation requirements 
Federal requirements for HCBS mandate that each plan of care developed 
by a State Medicaid program identify (1) the medical and other services to 
be provided, (2) their frequency, and (3) the type of provider to furnish 
them.  In the seven States, we collected plans of care for sampled 
beneficiaries and reviewed them.  This review found that each plan of care 
identified the type of HCBS to be furnished and the type of provider to 
furnish them.  However, the plans of care for 42 percent of sampled 
beneficiaries did not include the frequency of HCBS to be furnished, as 
required.  Of these plans of care, 73 percent were from one State.   
In five of the seven States, plans of care did not comply with 
the additional documentation requirements specified in the 
State Medicaid programs approved 1915(c) HCBS waivers 
State Medicaid programs may specify additional documentation 
requirements in their approved HCBS 1915(c) waivers.55  Of the seven 
States, five had waivers that specified that the plans of care would identify 
the beneficiaries specific goals and the interventions to meet them.  The 
purpose of this requirement is to ensure that beneficiaries receive the 
appropriate care.  However, in those 5 States, plans of care developed by 
Medicaid programs for 69 of 105 sampled beneficiaries (66 percent) did 
not meet this requirement.  Also, two of the seven States had waivers that 
 
54 We could not determine whether a deficiency citation was directly related to HCBS 
furnished to a Medicaid beneficiary residing in the ALF.  Therefore, we could not 
determine where the results from the State survey agency inspections were mutually 
exclusive of the results from our onsite reviews of the records of sampled beneficiaries.    
55  In States that have 1915(c) waivers that impose additional requirements, Medicaid 
programs must also meet these requirements to be considered in compliance with the 
Federal waiver requirements. 
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360)  15 
   
   
specified an additional requirement for the plans of care to be signed by 
beneficiaries or their representatives, as an acknowledgment of the 
services and the conditions under which they are to be provided.  
However, in those 2 States, plans of care for 12 of 25 beneficiaries 
(48 percent) receiving these services in ALFs did not meet this 
requirement.56 
 
   
 
56 Our findings related to compliance with Medicaid programs additional documentation 
requirements in their 1915(c) waivers are not intended to be projected because they do 
not apply to all seven of the States in our purposive sample.   
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360)  16 
   
   
RECOMMENDATION 
During our period of review, 35 State Medicaid programs covered a 
variety of HCBS for Medicaid beneficiaries residing in ALFs at a cost of 
$1.7 billion.  Provider standards existed in each of the 35 States, and the 
ALFs were State licensed or certified, as required.  However, some ALFs 
in the seven States with the highest numbers of beneficiaries receiving 
HCBS in ALFs were cited for deficiencies with regard to (i.e., 
noncompliance with) State licensure or certification requirements.  
Seventy-seven percent of beneficiaries in these seven States resided in 
ALFs that were cited for one or more deficiencies with regard to State 
ALF licensure or certification requirements, and 9 percent of the sampled 
beneficiaries records did not include plans of care required under State 
licensure or certification.  In addition, the plans of care for 42 percent of 
beneficiaries in the seven States did not include the frequency of HCBS to 
be furnished, as mandated by the Federal requirements.  Furthermore, for 
5 of the 7 States, 69 of 105 plans of care (66 percent) that we reviewed did 
not include the beneficiaries goals and interventions as required by the 
States approved 1915(c) waivers.  For 2 of the 7 States, 12 of 25 plans of 
care (48 percent) we reviewed did not include appropriate signatures as 
required by the States approved 1915(c) waivers. 
We recommend that CMS:   
Issue guidance to State Medicaid programs emphasizing the 
need to comply with Federal requirements for covering HCBS 
under the 1915(c) waiver 
Because waivers are broad and include a number of different settings in 
which providers furnish HCBS, guidance should be issued specific to 
HCBS furnished under the 1915(c) waiver to Medicaid beneficiaries in 
ALFs.  CMS could issue a State Medicaid Directors Letter emphasizing 
that Medicaid programs must meet assurances in their 1915(c) waivers to 
comply with Federal requirements for providers to furnish HCBS under 
the waiver.  The guidance should address the assurances related to State 
licensure or certification requirements, Federal plan of care requirements, 
and any additional requirements specified in the programs approved 
waivers. 
   
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360)  17 
   
   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
In its written comments on our draft report, CMS concurred with our 
recommendation to issue guidance to State Medicaid programs 
emphasizing the need to comply with Federal requirements for covering 
HCBS under the 1915(c) waiver.  CMS stated that it will issue guidance 
reminding States of their responsibilities in operating under all waivers 
and specifically those serving Medicaid beneficiaries residing in ALFs.  
However, on the basis of its initial analysis, CMS did not believe that such 
guidance would require a State Medicaid Directors Letter, as OIG 
suggested.   
CMS stated that by December 2012, it will review with its technical 
assistance contractors any opportunities to emphasize methods by which 
States may better comply with all requirements and will authorize them to 
do so.  CMS also stated that in reviewing applications for waivers that 
cover HCBS for Medicaid beneficiaries in ALFs, it will immediately begin 
to examine quality measures for issues raised in this report.  
We made technical corrections to the report on the basis of CMSs 
comments.     
For the full text of CMSs comments, see Appendix B. 
   
 
 
 
 
 
 
 
 
 
 
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360)  18 
   
   
APPENDIX A 
Confidence Intervals 
95-percent 
Sample  Point 
Estimate Descriptions   Confidence 
Size  Estimate 
Interval 
Medicaid beneficiaries residing in assisted living facilities (ALF) 
that were cited for one or more deficiencies with regard to (i.e., 
instances of noncompliance with) State licensure or certification  133  77.4%  68.5%83.5% 
requirements 
Beneficiaries residing in ALFs that received multiple citations  133  68.4%  59.7%76.2% 
Beneficiaries residing in ALFs that received citations for failing to 
furnish services outlined in residents plans of care  133  22.6%  15.8%30.6% 
Beneficiaries residing in ALFs that received citations for failing to 
dispense or administer medication as prescribed by a physician  133  22.6%  15.8%30.6% 
Beneficiaries residing in ALFs that received citations for failing to 
complete an initial assessment   133  18.0%  11.9%25.6% 
Beneficiaries residing in ALFs that received citations for lack of 
current plans of care for at least one resident  133  15.8%   10.0%23.1% 
Beneficiaries residing in ALFs that received citations for failing to 
ensure that staff had the required education and training prior to  133  15.8%  10.0%23.1% 
furnishing services to residents 
Beneficiaries residing in ALFs that received citations for failing to 
ensure that medication was administered by appropriately  133  7.5%  3.7%13.4% 
qualified staff 
Medicaid beneficiaries receiving home and community-based 
services (HCBS) in ALFs that did not have the required plans of  150  9.2%  4.2%15.7% 
care 
Plans of care for Medicaid beneficiaries receiving HCBS in ALFs 
that did not comply with Federal documentation requirements  150  42.0%  33.9%-50.3% 
Source:   Office of Inspector General analysis of documentation review, 2010. 
 
 
 
 
 
 
 
 
 
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360)  19 
  APPENDIXB 
Agency Comments 
DEPARTMENT OF HEALTH & HUMAN SERVICES  Centers tor Med1care & Medicaid Servicos 
- ---------------------
AdmiJlistrator 
Wasllinglon. DC 20?.01 
DATE:  SEP !  5 2Clli 
TO: 	 Daniel R. Levinson 
lnspecio! General 
FROM: 	 Marilyn Tavenner 
Acting A'dmillistrator 
SUB.JECT: 	 Office of Inspector Clcneral (01(]) Draft Report:  "I lome and Community-Based 
Services in Assisted Living Facilities" (OEI-09-08-00360) 
Thank you for the opportunity to review and comment on the OIG dratt report entitled, "Home 
and Community-Based Services in Assisted Living Facilities" (OEl-09-08-00360). The purpose 
of this report was to better understand Medicaid home and community-based services (HCBS) 
provided in assisted living facilities (ALFs), the cost associated with those s.:rvices, and the 
extent to which those HCRS are furnished in compliance with federal and state requirements. 
Under section 1915(c) of the Social Security Act, the Centers for Medicare & Medicaid Services 
(CMS) may waive certain Medicaid requirements to enable state Medicaid programs to cover 
HCBS for individuals who have institutional levels of need.  States may elect to offer l915(c) 
waiver HCBS to Medicaid beneficiaries residing in ALFs.  Medicaid does not reimburse for 
room and board; rather, i.t covers long-tenn care services and supports that ALF residents 
require. 
OIG Findings 
In 2009, 35 state Medicaid programs reported that-under the l915(c) waiver authority .._ they 
covered a variety of HCBS for Medicaid beneficiaries in ALFs at an annual cost of$ I. 7 billion. 
Provider standards existed in each of the 35 States as mandated by the federal requirements; 
however, OlG reports that ALfs in the seven states with the highest number of beneficiaries 
receiving HCBS in ALFs did not always comply wi th those standards, and plans of care did not 
always comply with federal requirements.  In these seven states, 77 percent of !33 waiver 
enrollees sampled received HCBS under the 1915(c) waiver in ALFs that were cited for 
deficiencies with regard to at least one state licensure or certification requirement. Nine percent 
of !50 beneficiaries sampled had records that did not include plans of care required by the state 
licensure or certification requirements. Furthermore, 42 percent of the plans of care mandated by 
the federal requirements did not include the frequency ofHCBS furnished , as required.  Five of 
the .~even states had specified additional optional requirements in the 19l5(e) waiver for plans of 
care to identify the beneficiaries' specific goals and the interventions to meet those goals.  In 
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360)  20   
   
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360)  21 
   
   
 
 
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360)  22 
   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Timothy Brady, Regional 
Inspector General for Evaluation and Inspections in the San Francisco 
regional office, and Michael Henry, Deputy Regional Inspector General.  
Loul Alvarez served as the team leader for this study, and 
Veronica Gonzalez served as lead analyst.  Other Office of Evaluation and 
Inspections staff from the San Francisco regional office who conducted 
the study include Rob Gibbons, Camille Harper, Scott Hutchison, 
Christina Lester, and Marcia Wong.  Central office staff who provided 
support include Kevin Farber, Kevin Manley, and Christine Moritz. 
We would also like to acknowledge the contributions of other Office of 
Evaluation and Inspections regional office staff, including Sarah Ambrose, 
Jaime Durley, Starr Kidda, Abigail Lopez, Rachel Siman, and 
Holly Williams.   
 
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360)  23 
   
Office of Inspector General 
http://oig.hhs.gov 
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits 
examine the performance of HHS programs and/or its grantees and contractors in carrying 
out their respective responsibilities and are intended to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and 
mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud, waste, or abuse and promoting 
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 
of fraud and misconduct related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI utilizes its resources 
by actively coordinating with the Department of Justice and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to criminal 
convictions, administrative sanctions, and/or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support for OIGs internal operations.  OCIG represents OIG in all civil and 
administrative fraud and abuse cases involving HHS programs, including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program guidance, publishes fraud alerts, and provides other 
guidance to the health care industry concerning the anti-kickback statute and other OIG 
enforcement authorities.