Report to the Legislature: Assisted Living Facility Rates Methodology
November 30, 2017 | Resources
The 2017 Legislature directed the Department of Social and Health Services (the Department) to facilitate a stakeholder workgroup review of the Medicaid payment methodology for contracted assisted living, adult residential care, and enhanced adult residential care. The initial methodology originates from the early to mid-2000s and for several reasons, a documented methodology to support assisted living Medicaid payments no longer exists (See Background and Appendix B for details).
In accordance with federal regulations, the Centers for Medicare and Medicaid Services (CMS) rely on states to help assure the sufficiency of rates and compliance with the Social Security Act 1902(1)(30)(A) – efficiency, economy, quality of care, and payments that are sufficient to enlist enough providers that Medicaid beneficiaries have access to services.
Following CMS guidelines for ensuring rate sufficiency, the stakeholder work group:
- Reviewed changes in assisted living Medicaid client capacity;
- Established benchmarks for comparable services;
- Developed rate assumptions using available data; and
- Analyzed and incorporated feedback from stakeholder work group participants.
As required by Chapter 1, Laws of 2017, 3rd special session, (SSB 5883, Section 206), this report provides stakeholder recommendations to the Legislature to redesign the Medicaid assisted living payment methodology.
The work group recommendations fall into the following categories: system architecture; payment methodology for client services, operations, room and board; and timeline for implementation and rebasing. It is important to note that while the nursing facility Medicaid methodology has considerations for budgetary responsiveness built in, this proposed methodology does not. Budgetary actions would need to be either built in or addressed outside of the methodology components.
Final Recommendations
The work group recommends the 2018 Legislature provide the framework and rule-making authority in RCW 74.39A to establish a new Medicaid payment methodology for Assisted Living Medicaid rates. Beginning July 1, 2019, the Department would adopt the new data-driven payment methodology. An implementation schedule will be provided to the 2019 Legislature.
The work group recommends an updated rate methodology be implemented for multiple reasons, including the need for rates to reflect the contemporary cost of providing services and the desire to promote the least restrictive and most cost-efficient living options for clients. This work stands to impact the more than 6,000 Medicaid clients who live in assisted living facilities and the approximately 300 providers that serve them.
Recommendations for further review
Given the compressed timeline, the workgroup was not able to thoroughly address all areas of the payment system. The workgroup recommends additional research and discussion on two areas over the 2018 interim before the recommended implementation date of July 1, 2019:
- Review of the physical plant requirements by Medicaid contract type compared to Room and Board rates.
- Review of the various Medicaid contract types and the overlap between these for potential adjustments up or down from the base payment methodology.