Medicaid, the Trojan horse of senior living

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John O'Connor
John O'Connor

Many senior living operators have long feared that the government might do to them what it did to nursing homes.

By that, I mean they were afraid Congress would turn this sector into a federally regulated business.

Yet for the most part, such concerns have been unfounded. For that, we can thank the sector's ability to sell this argument: Senior living is in many ways a different kind of business that is more suited to state-level oversight. Nursing homes are licensed. They are based on a medical model. And most tellingly, they are not a private-pay option.

Of course, all the while they were making these claims, savvy operators also were keeping a wary eye on Washington. For you just never know when one of those gals or fellas might get a cockeyed idea.

But overall, things generally have played out pretty well. The industry's talking points continued to stick. Besides, most federal lawmakers were too busy bashing the other side to take much notice of what was happening inside the nation's 30,000 or so assisted living communities.

But then something terrible happened, at least from a strategic standpoint. That something was the infusion of a new funding stream called Medicaid. And like the citizens of Troy who failed to realize a hollow wooden horse contained something terrible, operators ignored the real threat Medicaid might unleash: federal rules and regulations.

To be fair, it's not as if Medicaid ever was seen as some kind of panacea. To many operators, it was at best a good way to complement private-pay dollars. But hey, it was and is reliable money. So it gradually took hold, as more states approved waivers letting Medicaid help with the bills. These days, Medicaid funding for assisted living and other senior living services is practically universal.

But once communities decided to feed at the public trough, they hardly could expect to dictate how they'd be held accountable. As anyone who has had any experience trying to extract funding from the government can tell you, it usually doesn't work out that way.

So it should come as absolutely no surprise to anyone who has been paying attention that the Government Accountability Office released a report this week calling for increased federal oversight.

Old timers might even be forgiven for experiencing a sense of déjà vu when the GAO report was released. For it was an eerily similarly report blasting skilled care conditions more than three decades ago that led to a landmark federal law in 1987.

Does that mean history will repeat itself? Not necessarily.

But by any objective measure, the odds that federal rules will be put in place for senior living have never been higher.

The Trojan horse did its job. And for that, operators can blame Medicaid. Or to be more precise, themselves.

John O'Connor is editorial director of McKnight's Senior Living. Email him at john.oconnor@mcknights.com.

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