Managed care and assisted living: trends and future prospects

With its emergence as a new, residential long-term care option, more than half of the states have established policy on assisted living. In 1996, over 30 states had created a state licensure category or passed legislation authorizing development of regulations. Known primarily as a resource for wealthy elders needing assistance with activities of daily living and health care needs, assisted living is increasingly being covered as a service under state Medicaid programs. Assisted living is widely seen as a resource for managed care organizations enrolling Medicare beneficiaries. Flexible capitation payments and incentives to substitute services create opportunities for assisted living facilities and HMOs to form partnerships. Enrollment of beneficiaries in Medicare HMOs has reached 4.5 million and is growing over 30% a year. In addition, state Medicaid agencies are developing programs to enroll elders, most of whom are also Medicare beneficiaries, in managed care programs that include long-term care. The move toward managed care and the increasing interest in integrating acute and long-term care for dual eligibles signals a growing role for assisted living facilities as a major resource for elders who need a supportive and service-rich residential living environment.