Source: https://www.housingonline.com/councils/national-council-housing-market-analysts/resources/discussion-papers-evolving-issues/affordable-assisted-living-new-frontiers-aging-place/
Timestamp: 2019-04-23 12:07:51+00:00

Document:
This paper was approved by the NCHMA Membership & Education and Executive Committees in April 2016.
In some states, Medicaid Waivers pay for assisted living services in home or community settings. By separating the services from housing, it allows multifamily developers to build senior Low-Income Housing Tax Credit (LIHTC) rental housing projects and bring in separate service providers to allow seniors to age in place. This is an emerging program and can vary dramatically from state to state based on each state’s Medicaid structure. It also depends on the state allocation agency to structure tax credit award criteria that enables these projects to receive tax credits. Investors are generally unfamiliar with this newer concept, complicating the path to implementation. As market analysts, we are trying to capture some information about this program and understand how we evaluate tax credit rental housing properties with assisted living services.
This paper details some of the issues associated with assisted living programs implemented in senior tax credit multifamily properties. It is expected that the content of the paper will evolve over time as programs expand and as demand analysis techniques are refined to address some of the unanswered questions.
Appendix A: Who pays for healthcare?
Market analysts are well acquainted with the impact of the Baby Boomer generation reaching the age of retirement and eligibility for Medicaid and Medicare; see the NCHMA white paper Overview of Senior Housing Options by Bob Rogers. Some market analysts also have substantial experience in developing market analyses for assisted living and skilled nursing facilities in the market-rate arena. However, the marriage of assisted living services with tax credit senior rental housing properties is relatively new and offers challenges for analysts trying to reconcile these programs.
The assisted living business is dominated by the private pay industry. The majority of low-income seniors cannot afford private pay assisted living, so they have no alternative other than to enter a skilled nursing facility that accepts Medicaid Waivers for services. Assisted living is a home model in which residents manage their own apartments and receive assistance as needed. In contrast, skilled nursing facilities follow a medical model in which skilled healthcare professionals are on staff and provide constant care and assistance. The transition for a primarily independent senior from a home to a skilled nursing facility is overwhelmingly difficult, and according to representatives from Mia Senior Living Solutions (MSLS) evidence suggests that seniors in this situation deteriorate faster than those who transition from assisted living.
One of MSLS’s hallmark projects involved licensing a public housing facility in Miami, the Helen Sawyer Building, and bringing assisted living services to the residents at the facility through Medicaid Waivers. The 1998 transition allowed the residents to stay in their apartments rather than move to a nursing home. In the Congressional record in September 2006, Senator Mel Martinez spoke about Conchy Bretos of MSLS noting how the project inspired similar projects in dozens of public housing projects across the country. For example, The Marigold at 11th Street Assisted Living opened in central Washington DC in October 2013. It is a project from the District of Columbia Housing Authority and provides assisted living services through Medicaid Waivers.
Some state allocation agencies are receiving applications from developers intending to build senior tax credit projects and work with service providers to offer assisted living services to seniors in need of the next level of care.
The Medicaid Waiver program makes the affordable assisted living concept possible.
Medicaid is the federal program established in 1965 that provides healthcare and related services to some qualified, low-income people. It is jointly funded by states and each state administers their implementation and management of the Medicaid program. Therefore, eligibility requirements vary from state to state.
The Medicaid Waiver program was established in 1981 to provide services in home or community-based settings, waiving the previous requirement that a person be admitted to an institution to receive the services.
In general, there are some key differences in the fee structure for a tax credit property that operates as an assisted living property and a non-tax credit assisted living property.
Rent and services are separate fees. One fee for room, board, and services. The fee generally varies by level of services needed.
The provider of the facility is usually not the provider of the services. The provider of the facility and the services are the same entity.
Limited to states where Medicaid Waivers can be used to pay for the services. Available in any state.
Note that the details of these programs may change from year to year and any market analyst starting an assisted living project needs to evaluate current regulations in the relevant state.
Supportive Living Facilities (SLFs) differ from other Illinois assisted living facilities as they offer affordable assisted living to persons of almost any income, whereas other assisted living facilities generally rent to only individuals with the ability to pay high monthly fees. Medicaid Waivers only cover assisted living services provided in SLFs and not in other assisted living facilities. Such Medicaid coverage of assisted living services provided by certified SLFs to eligible individuals is provided for by the Illinois Supportive Living Home and Community Based Services Waiver (SL Waiver, also referred to as Supportive Living Program or SLP). Individuals eligible for the SL Waiver are individuals age 65 years and over and persons with physical disabilities ages 22-64 who are in need of assistance with activities of daily living.
The SL Waiver does not currently have a waitlist as the Waiver provides for the entrance of all eligible persons.
Although the SL Waiver does not currently have a waitlist, the certification process for entering SLFs is very competitive, thereby limiting the number of entering providers. Indeed, provider applications for certification are only accepted during limited application periods, and an application period is not expected in the near future. However, if a provider is able to obtain certification as an SLF, it appears there will be continued need by SL Waiver participants as there is not a cap to the number of participants in the Waiver receiving assisted living services in SLFs.
Indiana’s Division of Aging has two Medicaid Waivers: the Aged and Disabled Waiver (A&D) and the Traumatic Brain Injury Waiver (TBI). Indiana includes assisted living services as a Medicaid Home and Community Based Service (HCBS) benefit under its Aged and Disabled Waiver (A&D Waiver). Assisted Living services are reimbursable under the A&D Waiver when provided to eligible waiver participants residing in qualified residential care facilities.
For home and community-based service waivers, a person must qualify for institutional care in order to be eligible for the waiver. Information on the Indiana Medicaid website indicates that the best way to know if a person is eligible is to apply.
However, the general guideline is that an income-eligible senior may earn up to 300% of the maximum SSI benefit. As of January 2014, the maximum is $2,163 per month and the amount changes annually. There are also asset tests that may impact eligibility.
Indiana uses a standardized Level of Service Assessment/Evaluation for Assisted Living form that rates an individual in 20 areas. The areas include memory, receptive communication, wandering, night needs, and others. Points are assigned to different levels of ability in each area and the total points indicate if the person is eligible for Level I, II, or III services. Each level also has a corresponding per diem to pay for services.
Based on recent discussions with a representative of the Division of Aging, the A&D Waiver does not currently have a waitlist. However, the TBI Waiver currently has 120 individuals on the waitlist. There are approximately 74 waiver certified assisted living facilities in Indiana. Of the 13,000 A&D Waiver clients, approximately 1,400 clients utilize assisted living services, whereas of the 190 TBI Waiver clients, only 3 clients utilize these services. Based on previous discussions with the Division of Aging, there is always room for another quality provider.
Because there is not a waiting list for the A&D Waiver, there is an expressed need for additional quality assisted living providers in Indiana, and there are no barriers or limitations on new assisted living providers, a Medicaid assisted living facility would likely be profitable in Indiana. However, an owner or operator of a new assisted living facility will want to ensure it provides an assisted living facility that meets the above Federal HCB setting requirements in order to ensure the assisted living facility can continue to provide services under the A&D Waiver.
An Assisted Living Waiver (ALW) program was piloted in 2006 in three counties. Since 2009, the waivers are available to expand into more counties. The purpose of the ALW program is to move Medi-Cal eligible seniors from skilled nursing facilities into community home settings and use the ALW program to provide assistance services. It also intends to provide existing seniors in a community home setting with assistance services.
The program provides assisted care services to persons who reside in publicly subsidized housing (PSF) which, in the language of this waiver program, is not necessarily public housing but also includes any affordable housing development financed or regulated through subsidy funding sources and includes LIHTC, HUD 202, and HUD 811 properties. Medi-Cal reimburses service providers for assisted living services provided to seniors with the waivers. Some seniors are still responsible for paying for their room and board, depending on their income.
Elder Focus Consulting helps organizations integrate services, health care, and housing to allow low-income seniors to stay in their homes and communities; they regularly discuss the ALW program and its integration into housing communities in their ElderFocus publications.
Jessica Keith, NC Department of Health and Human Services, Raleigh, indicated that North Carolina does not have Medicaid Waivers available for seniors needing assistance. The Medicaid Waiver program in North Carolina is limited to medically fragile children and adults with intellectual disabilities.
Ohio has an Assisted Living Program that includes a Medicaid component (a Medicaid Waiver) and a state-funded component. The Ohio Department of Medicaid (ODM) created the Medicaid-funded component of the Assisted Living Program, which is administered by the Ohio Department of Aging (ODA). This Medicaid-funded component is operated as the Assisted Living Waiver Program (known as an AL Waiver). The state-funded component appears to provide reimbursement services provided to individuals while they are awaiting determination of whether they are eligible to participate in the AL Waiver.
According to our discussions with a representative at ODA, there is not a waitlist for the AL Waiver itself. Rather, the challenge is finding available rooms at a facility that is available to house the individual. Therefore, there is a waitlist for resident spots in assisted living facilities. The number of individuals requiring care is always greater than the available providers. The ODA representative further stated that there is a need for additional providers statewide, and once a potential provider determines an area in which the potential provider would like to establish an assisted living facility, the provider can call the local Passport Administrative Agency to determine need.
Part of the Ohio assisted living landscape is the Integrated Care Delivery System (ICDS), a three-year demonstration project. The state rolled out this program in March 2014 to provide integrated and coordinated services to people who are enrolled in both Medicare and Medicaid.
The market for providing Assisted Living services to individuals under the AL Waiver appears positive. Because there is a continued need for new assisted living providers and not limitations on provider entry besides normal licensing and certification requirements, it appears a potential assisted living provider could establish a business providing assisted living services to individuals eligible for the AL Waiver. However, with the current ICDS Waiver demonstration moving toward a managed care model, the assisted living landscape may be changing in the coming years. Although the ICDS Waiver currently is only for dual eligible individuals in certain counties, if the ICDS Waiver is expanded to be statewide, assisted living providers providing assisted living services to dual eligible individuals would be affected.
Supplemental Security Income (SSI) Congregate Care Level III (or private pay) for room and board.
Only licensed ALP providers accept Medicaid and SSI to pay for the services and room and board, which distinguishes ALP providers from other Assisted Living Residences (ALR) or Facilities (ALF) which only accept private payment for residential services. See Appendix C: States that offer Medicaid Waivers to pay for assisted living services for the 2013 Medicaid rates for assisted living services provided under the New York ALP.
The ALP was limited to 4,200 residents (approximately 85 percent are Medicaid recipients). However, in 2009 and 2012, the New York Legislature authorized the Commissioner to establish up to 6,000 new ALP beds. Based on the review of the ALP website, the addition of the 6,000 beds was to occur over a five year period, which began in April 2009, and ended March 31, 2014. Opportunity for Development (OFD) Applications for this 6,000 bed initiative were due by July 18, 2012. By Statute, the Commissioner is also authorized to add up to 4,500 ALP beds to the number available as of April 1, 2012, however, applicants eligible to add beds must have certain statutorily prescribed characteristics and the application process does not appear to be established yet. The only applicants eligible to add beds under the 2012 law authorizing the addition of 4,500 beds are adult homes established pursuant to NY Social Services Law 461-b with, as of September 1, 2012, a certified capacity of eighty beds or more in which 25% or more of the resident population are persons with serious mental illness. Therefore, new providers will likely not be able to add ALP beds under the 2012 law, once the application process is announced.
Based on our discussion with representatives of Connecticut’s Private Assisted Living Pilot, the Pilot is the only program that is currently open to entering private providers of assisted living services. The other three programs are either state or municipal run or are not accepting new providers into the demonstration.
4th Tier (Most Amount of Time Required) – $71.02/day.
The Pilot is currently capped at 125 assisted living participants (total for Medicaid and State Funded reimbursement), all slots of which are currently filled. There are approximately 400 individuals on the waitlist for the Pilot, on a first come first serve basis. According to discussions with the Pilot representatives, new providers are able to enter the market and provide services in the Pilot after the providers are licensed by the Connecticut Department of Public Health, and then apply to participate in the Pilot. However, due to the number of participants being limited to 125 and the long waiting list, it appears opening an all-Medicaid assisted living facility in Connecticut is not currently a viable option. Although new assisted living facilities are allowed to be established, a new assisted living facility will be able to provide assisted living services reimbursed by Medicaid or the State under the Pilot only if an individual on the waiting list chooses to live at the new facility and then moves into a Pilot slot, when a slot becomes available. These circumstances create a situation where it would be highly unlikely to profitably operate an all-Medicaid assisted living facility that is solely dependent on providing services to individuals participating in the Pilot due to the lack of current access to the Pilot.
Sometimes the best way to grasp new types of housing projects is to review various examples. This section offers a brief description of how some states have implemented tax credit assisted living projects.
Illinois has a program known as Supportive Living Facilities (SLF) and projects were placed in service starting in 2001. The QAP lists several requirements and exceptions for projects that are SLFs. For example, frailty estimates are required and employment information is not required.
The state lists all IHDA multifamily production and the following are projects that were funded at least in part by either tax credits or tax exempt bonds.
Affirmative Investments of Boston developed the first tax credit affordable assisted living project in the state, Silver Sky Assisted Living, which opened its doors in 2006. The project used land donated by the Bureau of Land Management and grants from various entities including one from Harrah’s Entertainment.
The Iowa Finance Authority has a number of affordable assisted living projects that operate under the tax credit program. They also provide rent subsidy vouchers for residents using the Home and Community Based Services Medicaid voucher. The first project under the IFA program opened in September 2003. In 2008, the agency included a set-aside in the QAP of 7% for affordable assisted living projects. The 2014-2015 QAP does not have the affordable assisted living set aside.
The current list of properties constructed at least in part with tax credit award included in the following.
For more information, see http://www.iowafinanceauthority1.com/IowaAffordableAssistedLivingIndex.asp.
The Developer’s Toolkit provided by IFA is extensive and includes case studies, a financing guide, a financial feasibility analysis model, and various checklists. It is available at this site: http://www.iowafinanceauthority1.com/AALDevelopersToolkit.asp.
The Affordable Assisted Living Basics PowerPoint presentation at the Developer’s Toolkit site says a 2006 survey by the Iowa Health Care Association indicated 81% of tenants in assisted living properties are private pay.
The QAP mentions assisted living units as needing to follow the minimum square footage requirements, but there are no other explicit mentions of assisted living projects. A tax credit market study needs to evaluate the project as an independent living senior project.
One project was proposed in a bond round in the summer of 2013 and was given a tax credit award in August. Problems lining up financing for the unusual project caused delays and the developer, Integral Development of Atlanta, GA, was forced to submit another application in early 2014. The project, in Indianapolis, broke ground in the fall of 2014. It is new construction of 124 one-bedroom units with the units restricted to tenants with incomes below 50% AMI and 60% AMI. Assisted living services will be provided by Mia Senior Living Solutions and reimbursed by Medicaid Waivers. The property is known as the Oasis at 30th.
He acknowledged that the service provider linked to the project is likely to be a key to the success. Mr. Rakowski said there have been some phone calls from other developers expressing interest in similar projects but no other applications have been submitted yet.
Another implementation of a senior home community with assisted living services is available in the Villas of Guerin Woods in Georgetown, Indiana. Owned and operated by Guerin Inc., a Community Housing Development Organization, the Villas consist of ten 7,100-SF buildings. Each building has ten private one-bedroom, one-bathroom units with multiple common areas including a common dining area. The community also has Guerin Woods, 22 two-bedroom units for seniors 62 and older and the Meadows of Guerin, which is a HUD 202 property with 24 units.
In determining demand for assisted living at tax credit projects, we may leverage lessons from the market analysts who specialize in private pay assisted living facilities. However, this section describes some of the challenges specific to a tax credit project.
The first step in analyzing demand is to determine a Primary Market Area. The tasks involved in determining a primary market area remain the same for an affordable assisted living property and the reader is urged to review the NCHMA White Paper, “Determining Market Area,” by Prior and Scepaniak and published July 2012.
Before one can assess the demand for any senior project, it is important to have an understanding of both the eligible market and the potential market for the specific proposal. The two groups may be quite different. Quantifying the eligible market based on income, age, and other restrictions is important, but it is equally important to determine how many of these eligible people actually have a reasonable potential to live at the property proposed. For example, while the eligible age may be 62, the typical resident may not move in until they are well over 75. Or, while there are numerous eligible two-person households, how many would truly consider a senior residence – especially one with services that a spouse may be quite capable of performing. Therefore, it is key to gather as much detail as possible about the likely residents from managers at similar properties.
Market or draw areas for assisted living properties may differ from senior housing without services, especially if subsidies and/or Medicaid Waivers are involved. In areas where few such opportunities exist, the market areas could be considerably larger than for projects without these subsidies or Medicaid Waivers.
Typical age range at entry?
Household size and relationships? (If two people – couples, siblings, etc.). The percent of two-person HHs is critical.
In assisted living – is the resident single or is there a spouse at home or elsewhere?
Location – exact towns, neighborhoods, or ZIP Codes, etc. (and is this impacted by how they market?). Which nearby areas do they never move from?
Type – owned or rented home, or with family.
Age, condition, and layout of former home.
What made them move from former home and into current residence? Reasons for moving into senior housing without services include affordability, manageability, mobility, loneliness (especially if widowed), to be near adult offspring, to be nearer to local amenities, and more.
Which specific assisted living and other services are predominantly needed at this property?
Why did they choose this particular property?
Do they have to turn away prospects who don’t qualify? If so, why don’t they qualify?
What portion of residents move from beyond the immediate area to be near adult offspring?
What portion of residents are strongly influenced by adult offspring in their choice of property?
What portion of residents get financial assistance from adult offspring?
Any other notable reasons for moving to their property?
If it is possible to gather a reasonable amount of such anecdotal information from a number of similar properties, a profile of the likely resident base can be formed. Based on this, the universe of eligible households/persons can be refined to produce a more accurate assessment of true demand.
After the income and age eligibility for the proposed program and the demographic and other characteristics most likely to be the market for the project have been established, the number of people who fall into the appropriate categories in the market or draw area(s) needs to be estimated.
However, calculating the specific number of people or households that are income- and age-qualified plus have a need for affordable assisted living can be a difficult task. There are no sources of data that cross tabulate income, age, and need for assistance with activities of daily living (ADL) or other needs that require assistance. The impact of adult children of those with such needs on the market is also difficult to assess. For example, how many adult children are able and willing to take over the care of their senior parent?
Although one could calculate the qualified income and age population using existing household data and apply ratios of those needing assistance from other data sources, the result is unlikely to produce reliable results as such needs can be found in all income levels – probably to varying degrees. Such needs are also more likely to be found among individuals, but income data is only available by households.
Due to this lack of reliable methods for calculating demand with any precision, it is necessary to focus on those individual items that are considered to be Indicators of Demand. High numbers or percentages among these items would indicate sufficient demand, while low figures across the board would indicate less need.
To determine income- and age-qualified households, use data from Ribbon Demographics, Nielsen, Esri and other private vendors for most recent current estimates.
Lacking more precise tools, this example uses household data, standard income qualification analysis, and ACS data on seniors with an independent living disability.
Various articles, papers, and organizations appear to be focusing on the marriage between community development and improving health.
David Erickson, Federal Reserve Bank of San Francisco, prepared testimony for the Robert Wood Johnson Foundation Commission to Build a Healthier America in June 2013. He makes a well-supported argument for the wholesale benefits of integrating the efforts of community development and health organizations. Erickson uses an argument made by UC Berkeley professor and pediatrician Dr. Doug Jutte that public health departments focus on infection outbreaks, air and water quality, and other traditional health threats. Population health groups focus on the health issues common to a population and look to social determinants such as poverty, overcrowding, poor schools, and lack of access to nutritious foods.
Erickson points to heat maps created by the LA County Department of Public Health that compared areas with higher percentages of poverty and areas with higher percentages of childhood obesity. The maps are startlingly similar leading the Robert Woods Johnson Commission to conclude that your zip code is more important than your genetic code in determining your health.
Erickson points out that the community development industry is in the business of improving ZIP Codes. He cites the success of the LIHTC program, building more than 3 million homes for low income families since 1987. This represents more housing than other federal programs combined dating back to 1937. Erickson said it is natural to leverage the resources and infrastructure in place in the community development industry to move towards goals of improving health.
Erickson’s paper also discusses the involvement of new finance vehicles such as the Healthy Futures Fund offered by Morgan Stanley, the Kresge Foundation, and the Local Initiatives Support Corporation. Public policy will also contribute with Choice and Promise Neighborhoods programs, as well as a new generation of Federally Qualified Health Centers.
Findings presented by the Robert Wood Johnson Foundation in Overcoming Obstacles to Health in 2013 and Beyond showed that despite spending more on health care per person than any other industrialized country, the United States has poorer health. By far, the largest determinants are income and education. It also makes the connection to geography, showing maps of the Washington D.C. metropolitan area. Residents in affluent suburbs in Montgomery County have a life expectancy of nearly seven years more than the residents of the District of Columbia. Residents in middle class Prince George County have a life expectancy of six months more than the residents of Washington D.C.
As Erickson observed in his paper, this is a time of “wet cement” for community developers and the housing industry; it may signal a significant shift in the landscape for low income seniors. Market analysts are challenged to fulfill obligations to appropriately and clearly define the analytical techniques necessary for this type of project. But the resources available and the previous experiences of market analysts, as well as senior housing and service providers, will play a pivotal role in this new landscape.
A draft of this paper was presented at the June 2014 conference of NCHMA. The paper represents contributions from Mary Ellen Shay, Al Forsythe, Julia LaVigne, Kay Kauchick, and Jennifer Atkinson. We thank Valerie Kretchmer and Margaret Sowell for their contributions. We also thank multiple reviewers including Tad Scepaniak, Andrew Mazak, and Elizabeth Beckett.
To understand the healthcare landscape, a brief overview of the entities that pay for healthcare and the terminology associated with each is presented.
Medicaid and Medicare are two governmental programs that provide medical and health-related services to specific groups of people in the United States. Although the two programs are very different, they are both managed by the Centers for Medicare and Medicaid Services, a division of the U.S. Department of Health and Human Services. Both programs were created when President Lyndon B. Johnson signed amendments to the Social Security Act on July 30, 1965.
Medicaid is a “means-tested” health and medical service program for certain individual and families with low incomes and few resources. Although it varies by state, it usually means the household has less than $25,000 in annual income.
There are some mandatory federal requirements that must be met by the states in order to receive federal matching funds. Those that relate to senior assistance include home health care for persons eligible for skilled care services and federally qualified health-center (FQHC) services and ambulatory services. States may also provide optional services and still receive federal matching funds. This could include transportation services, home and community based care to certain persons with chronic impairments and rehabilitation and physical therapy services; to name a few of the more common and relevant services.
Some skilled nursing facilities, also known as nursing homes, have beds designated as Medicaid beds and these beds are set aside for residents eligible for Medicaid. Some states also have assisted living facilities with Medicaid beds. A large provider is North Carolina’s based Meridian Senior Living.
The important aspect of the Medicaid Program is to understand that each state has their own eligibility standards and payment rates.
Using Medicare requires a hospital stay. Medicare is a federal health insurance program that pays for hospital and medical care for elderly and certain disabled Americans. Every person 65 and older qualifies for Medicare. The program has two main parts for hospital and medical insurance (Part A and Part B) and two additional parts that provide flexibility and prescription drugs (Part C and Part D).
There are limitations imposed on the duration of stay allowed in a hospital or nursing home for Part A coverage. Typical coverage outside of a hospital is 20 days within a skilled care facility for rehabilitation services. Between 20 and 100 days there is a co-payment required. Part A is typically not available past 100 days.
Medicare Part B is also called Supplementary Medical Insurance (SMI). It helps pay for medically necessary physician visits, outpatient hospital visits, home health care costs, and other services for the aged and disabled.
Medicare Part B pays for rehabilitation. It is not a Payor source for long-term care.
Long-term care insurance is an insurance product and is typically a supplement utilized for health insurance, Medicare or Medicaid. Long-term care insurance will typically be allowed to cover the cost of basic activities of daily living (ADLs). Each policy is different in the healthcare that is covered.
Home Healthcare services are provided to individuals in their home. The cost of the service is borne by the individual or their Payor. Medicare will pay for skilled nursing services in the home if the resident qualifies. Therapy services and some medical supplies and equipment will be covered. This is for persons who will be recovering from a healthcare event and is not long-term in duration.
Medicaid will cover some skilled care-type services within an individual’s home. The individual must qualify for Medicaid to receive these benefits.
Private Pay is typically required for assisted living services provided by home healthcare services. There are benefits for Veterans that will cover some home healthcare services.
The Affordable Care Act is forcing the delivery of services to the lowest qualified provider. There is pressure and legal mandates to acute care providers (typically hospital networks), to utilize the lowest cost setting for the delivery of care.
The lowest cost environment will typically be in the home. As such, Home Healthcare agencies are delivering services to individuals in a variety of settings. This is particularly common in homes and independent living setting.
A demographic tidal wave is hitting the US as the post-World War II Baby Boomer generation ages. Older adults are living longer, which means they are more likely to have disabilities and need additional services. They will require modified housing and increased medical costs. The increased medical costs and longer life spans will likely result in more financially dependent households as seniors will increasingly outlive their savings.
The private sector has responded to the need of providing care for aging seniors. This is available via assisted living, memory care, independent living with services, and private-pay home health. Seniors of modest means and low income households who may not qualify for Medicaid have few options.
The vast majority of seniors will require long-term services and support (LTSS). Many states are evaluating the cost effectiveness of Home and Community-based services (HCBS) as a way to balance their resources. In essence, they will use HCBS to deliver care to residents in their home rather than an institutional setting.
Private-sector industry is recognizing the need for providing services to seniors. There is a trend toward Private Pay Adult Day Care. These are free-standing centers where seniors have the opportunity to spend a day. Each center varies but services will often include transportation (sometimes at a fee), meals (breakfast/lunch), medical oversight (care provided based on individual plans and through various Payor sources), activities and social programs. The senior is returned to his or her home in the afternoon.
Personal Care/Assisted Living services are regulated and each state has their own set of rules. As such, a private apartment owner would not be allowed to provide these services unless they are licensed. States are different in their regulations with respect to the arrangement of services. In most states, the provider of the care and service must be licensed.
Typically, housing and healthcare must be separate. As such, partnerships with home healthcare providers and community-based services is the way services can be delivered to seniors.
In understanding the need for assisted living, the term Activities of Daily Living (ADL) is often used. There is not a universally accepted understanding of the specific tasks included in this list and it will vary from state to state depending on their Medicaid program. To qualify for a Medicaid Waiver for assisted living services, it is likely a person will go through a functional assessment by a geriatrician that includes a review of the Activities of Daily Living and the Instrumental Activities of Daily Living.
Bathing: The objective of this service is to allow the senior to maintain as much of their independence and dignity as possible. The service provider helps the senior adjust the bathwater to a comfortable temperature and, if necessary, will help them into the bath or shower. The aide will then close the curtain and give the senior privacy to bathe and, if necessary, help them out of the bath or shower and help them dry off.
Grooming: This service ensures teeth are brushed, hair is combed, and all clothes are put on properly. It may also include guiding the senior to appropriate clothing.
Toileting: The objective is to help the senior remain as independent as possible while helping them manage the challenges of incontinence and maintaining appropriate hygiene.
Walking and transferring: Such as rising from a chair or bed and using a cane or walker.
Food service: Grocery shopping, preparation of nutritionally and texturally appropriate meals, and cleaning up after meals.
Housekeeping: This service provides general apartment up-keep and maintenance.
Medication management: This service does not involve the actual administration of medication, which necessitates a certified nurse or doctor. Instead, the service provider reminds the resident to take the medicine and maintains a record of the medication’s use. If a healthcare professional is needed, the service provider calls in a certified nurse or doctor.
Managing finances and schedules: This includes the ability to pay bills and managing the scheduling of appointments. It may also include the ability to determine if a bill is an actual payment due or a request to send money to a charity or lottery.
Using communication devices: The ability to use a telephone or other similar communication device is key to maintaining an independent life.
Handling transportation: This may include maintaining a safe driving record or navigating public transit.
References for states that offer Medicaid Waivers to pay for assisted living services are available here.
In order to participate in the SL Waiver, SLFs must be certified by the Illinois Department of Healthcare and Family Services (Medicaid agency) and enrolled to participate in the Illinois Medicaid program. The Medicaid agency evaluates each application for certification according to factors including, but not limited to, geographic distribution, waiver limits, market feasibility, the needs of the population being served, the compliance histories of other facilities owned or operated in the State of Illinois by the applicant or a related party, community support from local government, environmental issues, operational experience with assisted living and financial stability. Due to the consideration of these factors, it is a very competitive process for an entering provider to be certified. In a telephone call with the Supportive Living Program Coordinator, the Coordinator stated there is a window for new providers to submit applications for certification; however there has not been an application window in quite some time and there is likely not going to be an application window in the near future. Regardless, providers that are interested in becoming certified can provide their contact information to the Supportive Living Program Coordinator to be put on the contact list for when the next application period is established.
Certification occurs initially when an SLF becomes operational and can admit waiver participants. It continues on an annual basis through an on-site review process. Initial certification by the Medicaid agency involves the review and approval of resident contracts, facility policies and procedures, emergency plans and quality assurance plans. Additionally, an on-site visit allows for the examination of approved local inspections, as well as the identification of compliance with required structural components, facility maintenance and cleanliness, working building systems, staff background checks, qualifications and training. Final certification requires a review of waiver participant records.
Room and Board is paid by resident and assumes that the resident’s income is no greater than the maximum Supplemental Security Income (SSI) amount and is determined after a deduction of $90 personal allowance for each resident. Illinois also allows for Supplemental Nutrition Assistance Program (SNAP) allotments to be allocated from residents.
SLFs are allowed to charge a different rate for private pay residents than the SLF is normally reimbursed for SL Waiver residents.
Illinois delivers care coordination and waiver services through a mandatory managed care delivery system for those 1915(c) waiver participants enrolled in the Integrated Care Program (“ICP”), which is a program for older adults and adults with disabilities who are eligible for Medicaid, but not eligible for Medicare. ICP is implemented in the Illinois areas of suburban Cook (all zip codes that do not begin with 606), DuPage, Kane, Kankakee, Lake, and Will counties. Beginning February 1, 2013, ICP added long-term services and supports (LTSS) to the services package, including nursing facility and HCBS waivers. Therefore, all ICP enrollees in these areas will have their waiver services, including assisted living services received at SLFs, administered through their Managed Care Plan (“Plan”). With the transition to managed care, the same approved waiver services are available through the Plans and service delivery will remain the responsibility of the providers. Plans will recruit providers and are required to contact with any willing and qualified providers currently approved to provide waiver services. Provider qualifications under the ICP will remain the same as described above.
In order for a provider to provide assisted living services reimbursable under the A&D or TBI Waiver, the provider must be first be licensed as a residential care facility by the Indiana State Department of Health,  approved by the Indiana Division of Aging to provide assisted living waiver services,  and enrolled in Indiana Medicaid (Indiana Health Coverage Program or IHCP). In addition, the provider must register with the Division of Aging as a housing with services establishment.
The A&D Waiver provides the assisted living per diem rates based on the level of service provided to the individual (excluding room and board). The following are the A&D Waiver assisted living rates for the past several years.
No additional payments will be made for homemaker, respite, environmental modifications, vehicular modifications, transportation, personal emergency response systems, attendant care, adult family care, adult day services, home delivered meals, nutritional supplements, pest control, or structured family caregiving services furnished to an individual. The Division of Aging states these activities are integral to and inherent in the provision of the assisted living services.
Room and Board is paid by resident at a rate no higher than the Supplemental Security Income (SSI) rate less the $52 personal needs allowance.
On January 16, 2014, the Centers for Medicare and Medicaid Services (CMS) published a final rule regarding §1915(c) HCBS Waiver Programs, setting forth a new definition of “home and community-based settings” (HCBS) that must be met in order for a facility to be an eligible site for the delivery of HCBS (known as the Final Rule).
receive services in the community, to the same degree of access as individuals not receiving Medicaid HCBS.
an option for a private unit in a residential setting.
Ensures an individual’s rights of privacy, dignity and respect, and freedom from coercion and restraint.
Facilitates individual choice regarding services and supports, and who provides them.
Individuals have the freedom to furnish and decorate their sleeping or living units within the lease or other agreement.
Any modification of the additional conditions, described directly above, must be supported by a specific assessed need and justified in the person-centered service plan.
An institution for mental diseases (IMD).
An intermediate care facility for individuals with intellectual disabilities (ICF/IID).
CMS has issued the following additional guidance regarding what type of settings have the effect of isolating individuals receiving Medicaid HCBS from the broader community.
Multiple settings co-located and operationally related that congregate a large number of people with disabilities together and provide for significant shared programming and staff, such that people’s ability to interact with the broader community is limited.
CMS also issued Exploratory Questions to Assist States in Assessment of Residential Settings, which sets for characteristics that are expected to be present in HCB settings and associated traits that individuals in those settings might experience.
Based on the above elements, it appears that assisted living facilities may meet the HCB setting definition, depending on each State’s regulations and each facility’s layout/policies. In support of this, the preamble to the Final Rule stated “[o]ne commenter appreciates CMS noting in the preamble to the proposed rule the other authorities for providing Medicaid services in certain institutional care settings (such as SNFs and ICFs), but notes that this should not be construed to mean that assisted living can or should be lumped with SNFs simply because both provide regulated services in a congregate setting. The commenter does not support the premise that residents of assisted living settings should ‘‘fall back’’ on the institutional model in order to access Medicaid services.” CMS responds: “It is not our intent to imply that all congregate settings should be categorized as nursing facilities and/or intermediate care facilities for individuals with intellectual disabilities. State plan HCBS must be delivered in a setting that meets the HCB setting requirements as set forth in this rule…” In addition, the preamble of the Final Rule states that “[a]ssisted living facilities are not excluded from being considered home and community-based if they are structured and operate in a manner that adheres to the requirements set forth in this rule.” Based on this guidance, assisted living facilities will not automatically be considered Nursing Facilities prohibited from being considered HCB settings. Rather, each assisted living facility will be reviewed to see if it meets the HCB setting requirements.
CMS also clarified that under the Final Rule there is not a limit on the specific number of people in an individual setting. CMS stated in the preamble to the Final Rule that “[w]e do not believe there is a maximum number beneath which we could determine with certainty that the setting would meet the requirements of HCB settings. The focus should be on the experience of the individual in the setting. …Our experience through our work with other federal Departments and current research indicates that size can play an important role in whether a setting has institutional qualities and may not be home and community-based.” However, it should be noted that the Final Rule does require HCB settings provide individuals the option for a private unit in a residential setting.
The Final Rule was effective March 17, 2014, however, the Final Rule allows states a transition/phase-in period for current approved §1915(c) HCBS Waiver Program to demonstrate compliance with these new requirements. For each approved §1915(c) HCBS Waiver subject to renewal or submitted for amendment without one (1) year after the effective date of the Final Rule (March 17, 2014), the State must submit a transition plan at the time of the Waiver renewal/amendment, regarding how the State will bring the waiver into compliance with the Final Rule. For States that do not have a §1915(c) HCBS Waiver due for renewal or proposed for amendments within one (1) year after the effective date of the Final Rule, the State must submit a transition plan within one (1) year after the effective date of the Final Rule (March 17, 2014). According to the preamble to the Final Rule, CMS expects a transition plan that facilitates a brief transition period, however, CMS will afford states the opportunity to propose a transition plan that encompasses a period up to five (5) years after the March 17, 2014 effective date, if that State can demonstrate the need for such a period of time.
Because the Indiana Aged & Disabled Waiver is a §1915(c) HCBS Waiver, that will not be due for renewal before March 2015, Indiana will have to submit a transition plan to bring the A&D Waiver in compliance with the Final Rule by March 2015 (unless Indiana amends the A&D Waiver before that time). In addition, assisted living facilities in Indiana that provide assisted living services under the A&D Waiver will have to ensure the assisted living facility meets the above requirements to be considered a HCB setting by the end of the transition period, in order to continue providing services under the A&D Waiver. Indiana has not yet published a transition plan for the A&D Waiver.
Indiana has already drafted its proposed preliminary transition plan for the Community Integration and Habilitation (CIH) Waiver, which is administered by the Division of Disability and Rehabilitative Services (“DDRS”), and published it on the FSSA website for a public comment period that ended on August 7, 2014. However, the CIH Waiver does not provide for assisted living services, so the transition plan for the CIH waiver is likely not a true reflection of what the A&D Waiver transition plan will look like.
In order for a provider to be eligible to provide assisted living services reimbursed by the AL Waiver or State Funded Component, the provider shall be licensed as a residential care facility by the Department of Health and certified by the ODA. Therefore, potential assisted living providers are free to enter the assisted living marketplace without any additional statutory or regulatory need-based limitations.
In December 2012, Ohio reached an agreement with the Centers for Medicare and Medicaid Services (CMS) on a new initiative to better coordinate care for individuals eligible for both Medicare and Medicaid (known in the industry as dual eligible individuals). This initiative is only in effect in certain counties in Ohio and is implemented through the Integrated Care Delivery System 1915(b)/(c) Waiver (ICDS Waiver, also referred to as a MyCare Waiver). Participating counties include: Fulton, Lucas, Ottawa, Wood, Lorain, Cuyahoga, Lake, Geauga, Medina, Summit, Portage, Stark, Wayne, Trumbull, Mahoning, Columbiana, Union, Delaware, Franklin, Pickaway, Madison, Clark, Green, Montgomery, Butler, Warren, Clinton, Hamilton and Clermont.
When individuals transition from the AL Waiver to the ICDS Waiver, ICDS plans are required to first contract with each individual’s established provider upon enrollment in the ICDS demonstration, at the rate approved under the individual’s currently approved waiver service plan. This rate will then be effective for the life of the demonstration. The previously described requirements for assisted living providers apply to providers under the ICDS Waiver as well.
Generally, NY Medicaid pays the facility at the rate of 50% of the rate that would be applicable if the resident were in a nursing home, based on his her care category. Room & Board paid by resident; assumes that the resident’s income is no greater than the maximum Supplemental Security Income (SSI) amount and is determined after a deduction of personal allowance for each resident.
valid authorization as a long term home health care program.
In order to operate an ALP, the applicant must submit an application. One of the requirements regarding the application review and approval process is that the application for the ALP “shall not be approved unless the commissioner is satisfied as to … the public need for the [ALP].” In order to ensure public need for ALP beds, the Commissioner of Health (“Commissioner”) establishes periods for submission of ALP applications, rather than allowing ALP applications by new providers at any time.
 See the presentation from the June 2014 NCHMA conference by Susannah Myerson, ProMatura.
 Mia Senior Living Solutions provides assisted living services to seniors in home models.
 SSA.gov, accessed April 29, 2014.
 According to the 2014 Genworth Long Term Care Costs Survey, the median monthly cost for an assisted living facility in Illinois is $3,805.
 Illinois Supportive Living Program, 1915(c) HCBS Waiver (2/1/13), available at http://www2.illinois.gov/hfs/MedicalPrograms/HCBS/Documents/waiver0326.pdf.
 Illinois Supportive Living Program, 1915(c) HCBS Waiver at 5.
 Illinois Supportive Living Program, 1915(c) HCBS Waiver at 26.
 Member.indianamedicaid.com/am-i-eligible, accessed April 29, 2014.
 Per email from Debbie Pierson with FSSA (Aug. 1, 2014).
 Interview with Jessica Keith at the North Carolina Housing Conference, October 15, 2014.
 The Medicaid component laws are found at Ohio Revised Code (“ORC”) 173.54. Rules are found at OAC 173-38.
 The State Funded component laws are found at ORC 173.543. Rules are found at OAC 173-51.
 Ohio Assisted Living 1915(c) HCBS Waiver (7/1/14).
 Per telephone phone call with Sheronda Sly, ODA Manager, at 1-866-243-5678 (Aug. 4, 2014).
 Passport agencies can be found at www.ohioaging.org, Area Agencies. – All certifications go through these agencies.
 See information from the Ohio Governor’s Office Health Transformation at healthtransformation.ohio.gov.
 Medicaid Assisted Living Programs (ALP) in NYS, NY Healthaccess, available at http://www.wnylc.com/health/entry/150/ (last visited Aug. 6, 2014).
 Department of Health, Assisted Living Program website, https://www.health.ny.gov/health_care/medicaid/program/longterm/alps.htm (last visited Aug. 1, 2014).
 Department of Health, Assisted Living Program Initiative Plan, http://www.health.ny.gov/health_care/medicaid/redesign/docs/alp_initiative_plan.pdf (last visited Aug. 4, 2014).
 Department of Health, Assisted Living Program Application website, http://www.health.ny.gov/facilities/assisted_living/program_application/ (last visited Aug. 4, 2014).
 NY Social Services Law 461-L(3)(j).
 Interview with Jennifer Atkinson, April 29, 2014.
 For more information, see Instrumental Activities of Daily Living on page 18.
 You can download the report from http://www.rwjf.org/en/research-publications/find-rwjf-research/2013/06/linking-community-development-and-health.html.
 Highlights and the full paper are available from http://www.rwjf.org/en/research-publications/find-rwjf-research/2013/06/overcoming-obstacles-to-health-in-2013-and-beyond.html.
 89 ILCS 146.215(c) and Illinois Supportive Living Program, 1915(c) HCBS Waiver at 54.
 Telephone call on Aug. 11, 2014 with Kara Helton, Supportive Living Program Coordinator, at (217) 782-1868.
 Kara Helton, Supportive Living Program Coordinator, at (217) 782-1868.
 Illinois Supportive Living Program, 1915(c) HCBS Waiver at 54.
 Illinois Supportive Living Program, Provider Fact Sheet, available at http://www.slfillinois.com/factsheetprovider.html (last visited Aug. 7, 2014).
 Illinois Supportive Living Program, 1915(c) HCBS Waiver at 1.
 Integrated Care Program: Frequently Asked Questions, available at http://www2.illinois.gov/hfs/SiteCollectionDocuments/ICPFAQs.pdf (last visited Aug. 7, 2014).
 Illinois Supportive Living Program, 1915(c) HCBS Waiver at 2.
 Licensure statutes are located at IC 16-28-2 and rules are located at 410 IAC 16.2-5.
 As a Medicaid Waiver recipient, the recipient is responsible to pay a monthly liability of $721 each month. Then Medicaid will pay a daily rate (based on the elder’s level of care needed) for room and board (meals). In addition to the monthly liability the elder is responsible to pay for any therapy and pharmacy co-pays as well as ancillary supply items like briefs, wipes, gloves, syringes, insulin testing strips, etc.
 Indiana Health Coverage Programs (IHCP) BT201355 (Nov. 26, 2013).
 79 Fed. Reg. 2948 (Jan. 16, 2014).
 And any other qualities as the Secretary determines to be appropriate.
 The setting options are identified and documented in the person-centered service plan and are based on the individual’s needs, preferences, and, for residential settings, resources available for room and board.
 For settings in which landlord tenant laws do not apply, the State must ensure that a lease, residency agreement or other form of written agreement will be in place for each HCBS participant and that the document provides protections that address eviction processes and appeals comparable to those provided under the jurisdiction’s landlord tenant law.
 A state may only include such a setting in its Medicaid HCBS programs if CMS determines through a heightened scrutiny process, based on information presented by the state and input from the public that the state has demonstrated that the setting meets the qualities for being home and community-based and does not have the qualities of an institution.
 CMS, Exploratory Questions to Assist States in Assessment of Residential Settings, available at http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Long-Term-Services-and-Supports/Home-and-Community-Based-Services/Downloads/Exploratory-questions-re-settings-characteristics.pdf (last visited Aug. 19, 2014).
 79 Fed. Reg. at 2968.
 79 Fed. Reg. at 2979.
 Indiana Preliminary Transition Plan for Assessing DDRS’ HCBS Setting Compliance (July 7, 2014), available athttp://www.in.gov/fssa/files/HCBS_Transition_Plan_FINAL_7_3_2014.pdf .
 Licensure requirements are found at OAC 3701-17-50 to 3701-17-68, available at http://codes.ohio.gov/oac/3701-17.
 OAC 173-38-4, available athttp://codes.ohio.gov/oac/173-38. The ODA Certification requirements regarding assisted living providers are described in OAC 173-39-02, OAC 173-39-02.16 and OAC 173-39-03, available at http://codes.ohio.gov/oac/173-39.
Rates effective as of July 1, 2013, as provided at: http://www.ohioassistedliving.org/al_medicaid_waiver.html and confirmed on telephone call with Mindy Sadler, Division of Aging (614-644-1737).
 Ohio Integrated Care Delivery System Waiver at Section 4 (3/1/14).
 Ohio Integrated Care Delivery System Waiver at Section 2 (3/1/14).
 Waivers included in the demonstration include: PASSPORT, Choices, Assisted Living, Ohio Home Care, and Transitions Carve out. Ohio Integrated Care Delivery System (ICDS) (for Assisted Living Providers) at 5 (Mar. 2014), available at http://medicaid.ohio.gov/Portals/0/For%20Ohioans/Programs/MyCareOhio/Forums/assisted-living-pres.pdf.
 Ohio Assisted Living 1915(c) HCBS Waiver at Attachment #1 (7/1/14).
 Ohio Integrated Care Delivery System Waiver at Attachment #1 (3/1/14).
 Ohio Integrated Care Delivery System (ICDS) (for Assisted Living Providers) (Mar. 2014), Available at http://medicaid.ohio.gov/Portals/0/For%20Ohioans/Programs/MyCareOhio/Forums/assisted-living-pres.pdf.
 Ohio Integrated Care Delivery System Waiver at Appendix C-1/C-3 (3/1/14).
 New York Assisted Living Program (ALP) Rates, available athttps://www.health.ny.gov/facilities/long_term_care/reimbursement/alp/ (last visited Aug. 4, 2014).
 A valid license as a home care services agency is issued pursuant to New York Public Health Law § 3605.
 A valid certificate of approval as a certified home health agency is issued pursuant to New York Public Health Law §3606.
 A valid authorization as a long term home health care program is issued pursuant to New York Public Health law §3610.
 NY Social Services Law 461-L(1)(a) and 18 NYCRR 485.6(n)(1).
 NY Social Services Law 461-L(4)(a).
 NY Social Services Law 461-L(4)(c)(v).

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