Federal Assisted Living Regulation May Now Be Inevitable, Could Bring Industry Benefits

The Covid-19 pandemic has accelerated the integration of senior living communities within the broader U.S. health care system, which has opened new business opportunities but also increases the likelihood of federal regulations for assisted living.

“I think it’s inevitable that we’re going to start to see a regulatory framework at the federal level,” Anne Tumlinson, founder and CEO of ATI Advisory, said Wednesday at the National Investment Center for Seniors Housing & Care (NIC) virtual fall conference.

Avalere Health Founder and former CEO Dan Mendelson emphasized that assisted living providers could ultimately benefit from federal regulations — but only if the industry mobilizes now and plays an active role in shaping the framework. Tumlinson concurred that being complacent now and then reactive after regulations materialize will lead to industry pain.


“I understand the fear but just want to emphasize that Dan and I have never seen a 100% defensive strategy work,” Tumlinson told Senior Housing News following the NIC panel. “The industry must be ready with what it thinks is in the best interests of the residents and the overall health of the industry.”

The prospect of an overarching federal system has hovered over the industry at various points in the past but has not come to fruition, leaving assisted living providers regulated at the state level. But Covid-19 is a turning point, Mendelson and Tumlinson argued.

One factor is that federal lawmakers and policymakers have become more acutely aware of the role that assisted living communities play in caring for vulnerable older adults, and how that care affects rates of hospitalization and health care spending. Industry leaders themselves have been educating federal officials about these aspects of assisted living, in part to make the case for why companies in the sector urgently need financial support from the Department of Health and Human Services (HHS) and other channels. That support has now begun to flow.


“You can’t ask for federal dollars in a public health emergency and then say you’re not health care,” Tumlinson pointed out.

That point is pertinent to the discussion about regulations because every other major sector of health care — from providers to pharmaceuticals to insurance — is regulated federally, Mendelson noted.

Other trends are also pointing toward coming federal regulations, including the fact that Medicaid officials are starting to question whether nursing homes should be the only setting to receive board and care funding, Tumlinson said. If Medicare or Medicaid begins to pay for assisted living room and board as a nationwide policy, then a uniform definition of assisted living becomes a necessity.

There are potential upsides to federal regulation of assisted living, she and Mendelson emphasized.

For one, definitions of assisted living currently vary from state to state. This has contributed to enormous consumer confusion over what “assisted living” means and what to expect when walking into an assisted living community.

“It’s a nightmare for consumers,” Tumlinson said during Wednesday’s panel.

Having a uniform definition of assisted living would also help “clarify and stabilize” the asset class for investors, Mendelson believes. He has particular insight into the investment side of the equation, given that he is a partner at private equity firm Welsh, Carson, Anderson & Stowe.

And, being defined and recognized as a component of the health care system at the federal level could also help drive the integration — already underway — between assisted living providers and physician groups, health systems, insurance plans and other players.

But, these advantages to regulation may be outweighed by complications and burdens if the assisted living industry does not take a proactive role in creating the framework.

“I think the industry has a chance to shape the regulations in a way that make sense,” Mendelson told SHN.

And, from his perspective, having lighter regulations than nursing homes or home health would make sense, given the characteristics of assisted living communities and the residents they serve.

“I remain optimistic that we would not likely see a repeat of the nursing home regulatory structure, if for no other reason than that the nursing home care setting has relied almost exclusively on Medicare and Medicaid funding, whereas assisted living relies almost exclusively on private pay,” Tumlinson told SHN.

She thinks that most likely, the federal approach would be to overlay certain uniform standards on existing state regulations, mainly to create consistency in how assisted living is defined. The federal government might create guidelines around issues such as staffing ratios, with incentives for states to adopt these guidelines.

And, she echoed Mendelson on the need for the industry to be proactive. The nursing home industry has done this well in recent years and could provide a valuable example — for instance, the nursing home industry recently collaborated productively with the Centers for Medicare & Medicaid Services (CMS) on quality measurement approaches.

“The industry has to decide what it is, or the federal regulators are going to decide for them,” Tumlinson said.

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