Department of Health and Human Services

OFFICE OF

INSPECTOR GENERAL

HOME AND COMMUNITYBASED SERVICES IN ASSISTED

LIVING FACILITIES 

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 
 

Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360) 1

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).
 

Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360) 2

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) Statewideness—States may 

cover services in only a portion of the State, rather than in all geographic jurisdictions; 

(2) comparability of services—States may limit HCBS waiver services to individuals in 

State-selected target groups who require an institutional level of care; and (3) certain 

financial eligibility requirements—States 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 Children’s Health Insurance Programs. CMS, 

1115 Waiver Basics. Accessed at http://medicaid.gov/Medicaid-CHIP-ProgramInformation/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) 3

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 CMS’s 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. 
 

Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360) 4

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:

o 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 ,

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 State’s 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 State’s ALF licensure or certification 

requirements or specified in the Medicaid program’s 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.
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360) 5

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 include—among other things—record 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). 
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360) 6

under both Medicaid and Medicare—dual eligibles—CMS 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 CMS’s 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.
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360) 7

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. 
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360) 8

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 programs—directly or through 

contact with other entities—develop 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. 
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360) 9

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.
Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360) 10

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 

care—for example, living independently. “Interventions” refer to the steps that the ALF 

will take if the beneficiary is not reaching the goal. 
 

Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360) 11

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.
 

Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360) 12

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) 13

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 providers—including 

ALFs—that 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) 14

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 

ALFs Received Percentage of Resident Medicaid Beneficiaries 

Failing to furnish services outlined in 

residents’ plans of care 23%

Failing to dispense or administer 

medication as prescribed by a 

physician

23%

Failing to complete initial assessments 

of residents 18%

Lacking a current plan of care for at 

least one resident 16%

Failing to ensure that staff had the 

required education and training prior to 

furnishing services to residents

16%

Failing to ensure that medication was 

administered by appropriately qualified 

staff

8%

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) 15

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) 16

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) 17

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) 18

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 CMS’s

comments. 

For the full text of CMS’s comments, see Appendix B. 

 
 

Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360) 19

APPENDIX A 

Confidence Intervals

Estimate Descriptions Sample 

Size

Point 

Estimate

95-percent 

Confidence 

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 

requirements

133 77.4% 68.5%–83.5%

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 

furnishing services to residents

133 15.8% 10.0%–23.1%

Beneficiaries residing in ALFs that received citations for failing to 

ensure that medication was administered by appropriately 

qualified staff

133 7.5% 3.7%–13.4%

Medicaid beneficiaries receiving home and community-based 

services (HCBS) in ALFs that did not have the required plans of 

care 150 9.2% 4.2%–15.7% 

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. 
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 l 915(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
 

Home and Community-Based Services in Assisted Living Facilities (OEI-09-08-00360) 23

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. 
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 OIG’s 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.