Personal Care Service Homes – A Replacement for Residential Care Facilities in Maine?


Residential Care Facilities (RCFs) in the State of Maine (the State) have recently come under close scrutiny by the Centers for Medicare and Medicaid Services (CMS), the federal agency responsible for administrating health care policy and monitoring State activity in the deliverance of health care services by certified and licensed medical providers and professionals.  CMS is charged with the authority to disseminate Medicare policy and to approve and monitor individualized State health plans that provide Medicaid services for people that fall under certain federal poverty levels.

RCFs have been in existence in the State for quite some time.  During the mid-1990s the Maine Legislature approved a program that attempted to place low acuity nursing facility (NF) residents in a setting that was more appropriate to their staffing level and care needs.  At that time, NF eligibility criteria was set low and was relatively easy to qualify for services.  With an abundance of NF eligible residents and waiting lists for beds, the State made the move to raise the NF eligibility criteria while creating an RCF benefit for those that no longer would qualify at the new NF level under the revised guidelines.  And so, the industry was born.

While this adjustment was lauded as an efficient model that placed residents that required fewer resources to manage their care in a more appropriate setting, it also saved the State quite a bit of money.  RCF payments for MaineCare (Medicaid) patients was about half that of an NF payment.

Presently, there are 128 RCFs in Maine serving over 3,100 residents.  State regulations for RCFs are found under Private Non-Medical Institutions Appendix C in the MaineCare Benefits Manual (DHHS 10-144 Chapter 101) and the Principles of Reimbursement for Residential Care Facilities – Room and Board Costs (DHHS 10-144 Chapter 115).

During a routine audit of the program in the State during 2007 and 2008, CMS began to question the merits of RCFs and expanded the scope of their review.


The RCF program was popular with seniors because it provided a home-based setting option for their long-term care needs.  Prior to the advent of this service, there were limited options.  Usually, seniors only had one choice – the nursing home, which is considered to be institutionalized care by CMS.

The RCF design was so simple but, in the end, it became very complex to administer and support.  As the program became exposed and changes in federal acts were promulgated, challenges to the integrity of RCFs became a deep concern to the federal agency.

As the CMS focused review continued through 2011, legal questions surfaced and programmatic challenges were formed as to whether RCFs were constructed, operated and reimbursed in accordance with the Social Security Act, the Americans with Disability Act and the Olmstead Act.  Any potential violation of any of these acts can jeopardize the existence of any federal or state program.

At the center of the CMS argument is the design structure of NFs verses RCFs.

NFs are considered “medical” models, or “institutionalized” care.  State and Federal regulations governing the licensing and functioning of NFs are intense given that the patient population usually requires a number of different resources to assist with one’s activities of daily living, medication management, and nutrition and hydration management.

RCFs by design are “home-based” nonmedical models.  This patient population has fewer care needs than NFs and residents are free to leave the facility with proper notice.

As popularity in the RCF program grew, many NFs converted a portion of their licensed nursing home beds to RCF.  Facilities with both NF and RCF beds became known as Multi-Level Facilities because they provided both levels of care in the same building or campus.  The appeal of this model provided comfort to RCF residents that, should their care needs increasingly change, they would not have to move because a NF bed would be available within the facility.

However, as the popularity of the program grew, CMS took notice and discomfort developed at the expense of the Multi-Level Facilities model and RCFs, in general.  Their concern with Multi-Level Facilities was that the model included both RCF residents, that are supposed to be treated in a home-based noninstitutional, nonmedical model, residing in the same building or campus as NF residents that require an “institutionalized” medical level plan of care.

The message from CMS to the State was that they were not comfortable with commingling home based residents with others residing in an institutionalized setting.  The Acts mentioned above speak to congregating, segregating and isolating members from a home-based setting with institutionalized residents as a violation of the law.

Multi-Level Facilities were not limited in the criticism by CMS.  There were also problems with the design and reimbursement features of freestanding, or standalone, RCFs.


The Maine Department of Health and Human Services (DHHS) took direction from CMS quite seriously.  In the fall of 2011, DHHS began a series of meetings with stakeholders to discuss CMS concerns, the problems associated with change and to invoke their assistance in developing solutions that would continue to provide services for Maine seniors.

Stakeholder meetings continued over the next several months sponsored by DHHS that began to research how other states were providing services for the seniors that fit Maine’s RCF admission profile.  It was equally important to understand how those programs were funded.

After an exhaustive search and several recommendations, the State may be moving forward with a new program called Personal Care Service Agencies (PCSAs) that will provide coverage to many people now considered RCF eligible.  This is good news for Maine, and its seniors.

While funding may not be at the levels RCFs are used to, PCSAs will help ensure programming options for Multi-Level Facilities, provide another option for senior health care choices and, more importantly, allow them to reside in a home-based setting to receive care.  The PCSA model does not completely replace the RCF design, but it does support essential services such as nursing care and medication management.

The State is continuing to work with the provider community to look for ways to provide equal services, prevent the disruption of services to any current resident and to provide adequate funding for potential replacement programs.

Several years ago a moratorium was put in place to control costs and the expansion of institutionalized care while promoting the development of less costly consumer demanded home-based care.  As the PCSA model is being considered, the State is also looking at lifting its ban on new NF beds.

Today, most states opted for lower NF eligibility criteria that opened the door to provide other home-based care services that receive matching funds for creation of those programs from CMS.  The State is looking to move in this direction and long-term care reform suggests this is a national trend.  In federal year 2000, 57% of long-term care expenditures were dedicated to NFs, while today only 43% is spent for NFs.  In federal year 2000, only 18% of long-term care expenditures were spent on home and community based programs, while today 33% of the dollars are allocated to noninstitutional programs (CMS, Medicaid Statement of Expansion, 2011).

As the RCF program changes, it may be necessary for the State to re-examine the NF bed moratorium to take advantage of new programming and funding.  As times have changed and seniors have demanded more care options, states have been looking to move from traditional long-term care options to follow consumer demand.

Maine is presently exploring with CMS the possibility of bringing a PACE program to the State.  PACE is the Program for All Inclusive Care for the Elderly.  It’s a capitated comprehensive benefits program for persons that are at least 55 years or older and NF eligible.

Under this model, the PACE member actually resides in their home.  An individual centered care plan is developed to provide case managed coordinated medical services in the home or at the PACE Center.  If services need to be provided at the PACE Center, transportation is provided to the member as part of their benefits package.

Services provided are exhaustive including personal care support, home health agency coverage, all therapy disciplines, social services, activities, mental health, adult day health care, podiatry, dentistry, acute care and physician services to name a few.

Members can be Medicare or Medicaid eligible, dually eligible or private pay.  Nationally, 90% of members are dually eligible.  Under this scenario, the State pays a Medicaid negotiated per member capitated rate based upon a discounted upper payment limit that estimates the cost of a person’s health care needs as if they were not a PACE member.  Medicare would pay a sliding rate that moves up and down the payment scale in accordance with the needs of the patient.


DHHS and stakeholders will continue to meet over the next several months to ensure any program change provides an adequate transition for seniors to a new system.

And, while there will be some changes that we all need to get used to, Maine will now be set up for the future that will ensure a stable long-term care plan that will provide more seniors with the option to remain in their home to receive services.

For more information, please contact your BNN advisor at 1.800.244.7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, investment, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.

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