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.

The Arizona Long Term Care System.

The Arizona Long Term Care System (ALTCS) is the first statewide capitated managed care system that combines Medicaid acute and long-term-care services. ALTCS provides institutional, residential, and in-home services to elderly and disabled Medicaid recipients who meet the criteria for placement in a nursing facility. The capitation payment structure creates incentives for contractors to serve members in their own homes or in residential settings rather than in nursing facilities. Regular monitoring, case management oversight, and member satisfaction surveys assure that services are provided when needed in a cost-effective manner. As a result of the success of the 6-year-old program, a cap on the number of members who can receive home and community-based services, imposed at the program's inception in 1989 at 5%, has been increased to 40% in 1995. Despite this expansion of home and community care, an independent evaluation found that ALTCS expenditures are 17% lower than would have been incurred in a fee-for-service system.

State health reform.

Health care reform has continued to proceed in a number of different directions at the state level. The likelihood of significant limits on future federal spending for Medicaid and Medicare points to continuing challenges for state health care policy makers.