Legislature approves the Fair Reimbursement and Assisted Living Cost Reporting Act

The secretary of Human Services told lawmakers that the Arkansas Medicaid program would continue to reimburse assisted living facilities at the higher rate they were getting during the Covid-19 pandemic, at least until November. Meanwhile, the Department of Human Services (DHS) continues to review the entire Medicaid system and will recommend methods of ensuring the long-term sustainability of the program.

Last year during the fiscal session, legislators approved special language in the appropriation for DHS. The special language requires the Department to study and explore methods to increase reimbursement rates for assisted living facilities that care for people enrolled in Medicaid, under a program known as Living Choices Assisted Living Waiver. DHS hired a consultant, produced a detailed report later in 2022 with suggested new rates for assisted living facilities. The report takes into account staffing ratios of licensed practical nurses, certified nurse aides and personal care assistants who work directly with residents.

The study also takes into account the number of universal workers needed at a facility to clean, cook and perform other duties.

The report calculated how much is needed for salaries, as well as for utilities and building costs, and came up with a suggested reimbursement rate of $96.76 a day for each person in the Living Choices program who lives at the facility. However, that suggested rate has not been officially approved yet and assisted living facilities are still getting reimbursed at the rates set for the public health emergency caused by the Covid pandemic. That is $81.58 a day in urban areas and $85.67 in rural areas.

Owners of assisted living facilities have been asking for higher rates. They say that their costs have gone up, such as when voters approved a statewide increase in the minimum wage. According to the consultant hired by DHS, “because much of the staffing at assisted living facilities is paid at or near the minimum wage level, these increases have a direct and immediate effect on the cost of providing waiver services.”

Also, the pandemic increased demand for aides and nurses across the entire country, and many people on the direct care staff of assisted living facilities moved to other jobs. That led to staff shortages and increased pressure on wages. Also during the pandemic, staff had additional duties to maintain safety and disinfect surfaces more often.

The level of care at an assisted living facility is not as rigorous as at a nursing home, because the overall health of residents is better. The special language in Act 213 of 2022, the DHS appropriation that mandates a study of higher reimbursement rates, includes the possibility of setting rates for Living Choices as a percentage of the rates paid to nursing homes that care for Medicaid patients.

Before the pandemic, Arkansas paid $67.25 per day in reimbursement to facilities that care for people enrolled in the Living Choices program.

More than 1,100 people enrolled in Living Choices last year. That is a relatively small percentage of the state’s elderly population who receive Medicaid services, which is more than 45,000 people.

This year the legislature approved Act 198 of 2023 to establish how and when assisted living facilities are to report their costs. The legislature also approved Act 820 of 2023, known as the Fair Reimbursement and Assisted Living Cost Reporting Act. It requires DHS to consider costs incurred by facilities when it sets reimbursement rates for the Living Choices program.