Assisted Living: A $10 Billion Industry With Little Oversight

For millions of older Americans, there’s nothing stronger than the desire to age in place, maintaining their independence and avoiding intensive institutional care for as long as possible. Increasingly, assisted living is filling the gap between home and a nursing facility.

States spend a reported $10 billion in federal and state money per year on Medicaid beneficiaries in assisted living facilities, averaging $30,000 per patient, per year. But it’s not clear whether governments are getting their money’s worth in terms of quality of care and, critically, the safety and well-being of the facilities’ residents.

Answers to some of those concerns came in a February report from the Government Accountability Office (GAO), which found significant shortcomings in oversight of assisted living facilities across the country. Forty-eight states receive some kind of Medicaid funding for assisted living facilities, but 26 of those states do not report “critical incidents” -- including unexplained deaths, abuse, neglect or financial exploitation -- to the federal government.

Yet for many who advocate for older Americans, the GAO report had shortcomings of its own. The advocacy group Justice in Aging put out a statement contending that the report “barely scratches the surface” of the lack of oversight and reporting requirements. And Eric Carlson, directing attorney for Justice in Aging, says that even for the 22 states that do collect data on serious infractions, the information isn’t easy enough for the public to obtain. “I’m not sure it would be all that useful,” he says.

There is little in the way of federal standards around Medicaid-funded assisted living facilities, leaving states mostly in charge of regulating them. So without clear guidance from the federal Centers for Medicare and Medicaid Services (CMS), these facilities largely operate under a hodgepodge of rules set by states’ long-term care departments.

A sad result of that lack of regulation was seen at Valley Springs Manor, a California assisted living facility that closed with no warning back in 2014, leaving 19 residents inside without care. The incident gained national attention when a cook and a janitor stayed behind until the residents were safely relocated, shining a light on how little is required of these facilities.

Most of the 48 states that receive some form of Medicaid funding for assisted living get that money only for patients who have needs equal to an institutional level of care, such as a hospital or nursing home. So most Medicaid-reliant assisted living facilities do not employ full-time nurses -- if they employ any nurses at all -- and instead rely on “caregivers,” a role that requires far less education.

Carlson acknowledges that he isn’t an expert in what every state is doing, but he says that based on a 2014 report he worked on for the National Senior Citizen Law Center, some of the Deep South states -- Alabama, Florida and, in particular, Arkansas -- have some of the most rigorous standards for their assisted living facilities. Arkansas, for example, has a tiered system, with higher-need residents living separately from more autonomous residents and nurses responsible for designing the care plan for those needier residents.

That’s a level of oversight the advocates would like to see nationwide, and there is some change on the horizon. In 2014, CMS issued new guidelines for all “community-based care” facilities, including those providing assisted living. The guidelines are still being phased in for many states, but advocates hope that as more states draw up transition plans, their assisted living facilities will finally be held to a higher standard.

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Assisted Living: A $10 Billion Industry With Little Oversight