Calif. Model of Affordable Assisted Living: Solution to Future—and to State Budget Crisis?

Most states in the nation are facing a looming problem—how to pay for the care of the rapidly increasing senior population on budgets that are already strained—and California is no exception, but its slowly-developing Medicaid waiver for assisted living may help. 

The waiver has been years in the making, and even now, only of a handful of the state’s more than 211,000 licensed assisted living beds are occupied by beneficiaries. The potential, however, is there, says Mark Cimino, the CEO of California-based assisted living provider CiminoCare. His company is one of only “very few” vendors in the Program for All-inclusive Care for the Elderly (PACE), and has successfully joined the state’s nascent Medi-Cal Assisted Living Waiver program. 

Medicaid spending growth contributes heavily to many states’ budget issues and has been named as a “major fiscal threat” by the State Budget Crisis Task Force, assembled by Richard Ravitch and Paul A. Volcker to examine threats to near and long term fiscal sustainability in six states, including California.


Considering that about 60% of nursing home care is covered by Medicaid, the problem could get even worse as 10,000 Americans turn 65 each day for the next several years and more seniors end up in nursing homes. 

“Medicaid programs are growing rapidly because of increasing enrollments, escalating health care costs and difficulty in implementing cost reduction proposals. At recent rates of growth, state Medicaid costs will outstrip revenue growth by a wide margin, and the gap will continue to expand,” the task force wrote in a July report. 

In the past several years, assisted living has emerged as a cost-effective way to provide care for people who need help with more basic activities of daily living, but don’t require around-the-clock skilled nursing care. 


There’s an increasing trend toward allowing seniors more options for their care, including those that are home- and community-based. In some cases, states can actually save money because Medicaid beneficiaries are able to get the care they need in a less expensive setting. 

In California, it breaks down like this: the average MediCal reimbursement to nursing homes is about $175 per day, according to Cimino. Meanwhile, the average reimbursement to assisted living communities is much less, ranging between $50 and $80 a day.

“Imagine transferring 30,000 seniors to assisted living—that could represent half a billion dollars of savings a year,” he says. “This is a solution to the future that’s staring us in the face.”

California is not alone in having an affordable assisted living program, as about 30 other states have assisted living waivers as well. Perhaps most well-known is Illinois’ Supportive Living Facility (SLF) program. The state’s 100 or so SLFs are estimated to save Illinois “millions of dollars” each year, providing cost-effective care reimbursed at about 60% of what nursing homes get from Medicaid. 

However, the west coast state was “really slow-going” to develop its program, as its pilot program dragged for five years in only three counties, says Cimino. Even now, the pilot program has been completed and the process has progressed, but there are only between 1,500 to 1,800 people in the Medi-Cal assisted living waiver program, he says—a number that could potentially grow to 30,000—and the waiver is only in seven counties.

People interested in transferring from a nursing home to an assisted living community through the waiver program are supposed to work with care coordinators, who basically function as unpaid referral sources. 

“They don’t want us to cherry pick the “easy” patients,” Cimino says on the process of getting referrals.

Participating assisted living communities are required to provide services including a 24-hour awake staff to meet the needs of residents at all times and health-related services including medication management, treatments, and wound care, in addition to other services generally provided in residential care settings. However, the program also makes sure it doesn’t swing too far in the medical direction.

“The case managers and the facilities work together to make sure we’re taking on residents we can take care of, and they’re not forcing expensive, high-care people on us with complicated medical needs,” says Cimino. 

For now, the program has stated that it won’t add any more counties under the current Medicare fee-for-service model and is waiting until managed care spreads throughout the state.

The hope is that a managed care model will help reduce costs while providing better care—a necessary improvement considering the delays in Medicaid reimbursements that can happen when funds are stretched too tightly. 
Because of state budget issues, Cimino warns that it’s not a good idea to have too many residents relying on the assisted living waiver.
“If California doesn’t pass a budget, then we won’t get reimbursed until they do,” he says. “We’ll get retro-paid, but it could be a few months delayed. That’s why you don’t want to be over 20-30% [occupied by those using the waiver]; you have to have the financial capital to carry you through these times.” 
Despite some uncertainty about reimbursements, most agree that it’s better for facilities to be full rather than have empty beds.
“This program filled up our facility,” says Cimino. “We were working on making physical plant and operational improvements, and this Medi-Cal program helped rehabilitate a troubled facility. There’s a whole slew of [similar] success stories.” 
Written by Alyssa Gerace 

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