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By Laura Morgan

Recently we reported on the movement of long-term services and supports (LTSS) into managed care (see The Growth Of Managed Long-Term Services And Supports Programs). A reader responded with a follow-up question on where adult foster care fits along the LTSS care continuum. Adult foster care is regulated by the states under as many as 25 different names, including assisted living facilities, assisted living residences, adult family homes, adult group homes, personal care homes, and residential care homes. So, what defines adult foster care, and where does this service model fit?

Adult foster care (AFC) is provided in small home-like non-medical residential settings – usually serving from two to six residents. Residents in AFCs are elderly or adults with physical, mental, or intellectual and developmental disabilities (IDD). Residents need assistance with activities of daily living (ADLs), but do not require full-time nursing care. Services provided include meals, personal care and chore support, supervision, medication assistance, and transportation to appointments, as needed. AFCs are one step removed from aging in place service delivery models on the long-term care continuum that stretches from home care to institutional care.

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Funding is a mix of private pay and Medicaid (with some state general assistance funding). Residents pay out-of-pocket for room and board – defined as housing, food, utilities, and household supplies. Medicaid – for those eligible – covers personal care and supportive services. The services covered (and Medicaid authority used) varies by state.

So what is the importance of adult foster care programs for provider organizations? The answer is, it depends upon the state. States are increasingly on the look-out for ways to rebalance their long-term care spending away from institutional settings to community-based settings. AFCs align neatly with that objective, but they are currently only a very small piece of the LTSS market.

Based on an OPEN MINDS survey of state-licensed AFC facilities (and their functional look-alikes), there are currently almost 30,000 AFC licensed settings in the United States with the capacity to serve over 168,000 individuals. AFCs are concentrated in a few states: Michigan, California, Minnesota, and Washington account for almost 70%.

The growth picture for AFCs is mixed. Since 2008, 20 states saw a decline in the number of licensed AFC facilities, and 14 states saw an increase. Increases are concentrated in four states (Michigan, Minnesota, Georgia, and New York), but new programs have launched in another four states: Alabama, Delaware, Hawaii, and Maine.

Despite their small size (in number and function), AFCs will remain on stakeholder radars. Two factors will raise their service profile:

  1. The Centers for Medicare and Medicaid Services’ (CMS) final rule on settings eligible for Medicaid reimbursement for home and community-based waiver services (HCBS) narrowed the window for what counts as community-based (see How The New HCBS Rules Will Reshape Community-Based Services)
  2. The projected increase in demand for LTSS services and state efforts to meet those needs while keeping costs under control (see Rising Demand For Long-Term Services & Supports For Elderly People)

AFCs address both those pressures. As a home-like environment, AFCs are less likely to fail the “institutional” test for HCBS waiver setting, and program costs for adult foster care are less than the cost of meeting an individual’s care needs in an institutional environment. A sampling of rates in just two states – Massachusetts and Rhode Island – places nursing home care at more than twice the public expense of care in adult foster care home.

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For a more detailed look at the adult foster care service delivery model, premium members can access our recent Market Intelligence Report: What Is Adult Foster Care?.


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