All of us now have had several days to read the contents of the Government Accountability Office report titled “Medicaid Assisted Living Services: Improved Federal Oversight of Beneficiary Health and Welfare is Needed” and ponder what the findings might mean for assisted living.

The study, released a week ago, found that 26 state Medicaid offices were not able to report the number of “critical incidents” — such as abuse, neglect or exploitation — that occurred in the assisted living communities located in their states. Additionally, states had varying definitions of what they considered to be critical incidents, and 14 state Medicaid agencies did not make information on critical incidents available to the public. The GAO made recommendations to the Centers for Medicare & Medicaid Services on ways it could help states improve their monitoring and reporting of deficiencies and critical incidents in assisted living, including standardizing Medicaid reporting requirements.

The report isn’t an indictment of the quality of care and services provided to Medicaid beneficiaries in assisted living communities. Rather, it is an assessment of the gaps in reporting by state Medicaid offices to the federal government about care and services provided to Medicaid beneficiaries living in assisted living communities.

That’s an important distinction and one that right now seems to be lost on some consumer advocates and lawmakers promising to pursue legislation and other actions to address “serious health and safety risks” and “troubling issues” that they say the report uncovered in assisted living.

Although the increased attention may be uncomfortable for those in the industry in the short term, the health policy experts with whom I spoke suggest that the report ultimately could be good news for assisted living operators.

For instance, according to Andrew Carle, MHSA, an adjunct professor and founding director of the Program in Senior Housing Administration at George Mason University in Washington, D.C., having easily accessible data via Medicaid reporting could silence industry critics.

“I think you’d be hard-pressed to find folks who are not monitoring and measuring medication errors and elopements and any number of other clinical outcomes,” he said. “There’s no indication here that senior housing operators … wouldn’t be perfectly willing to report them if asked. Politicians might be pleasantly surprised at how good of a job we do.” In fact, Carle noted, all of the major national associations representing providers have expressed approval of the report’s recommendations.

Additionally, the implementation of consistent reporting requirements across states would make it easier for multi-state operators to meet Medicaid reporting requirements, Carle said. “Do you know how hard it is to run communities in 20 different states and have to fill out 20 different forms?” he asked.

And increased reporting requirements and the transparency that comes with it could result in improved quality of life for older adults, according to David C. Grabowski, Ph.D., professor of healthcare policy at Harvard Medical School, Boston, “if it sheds further light into what quality is being provided in these communities, allowing individuals to find those communities that are providing better quality and avoid those that are potentially providing lower quality.”

The bigger issue

Increased reporting requirements will never erase all of the industry’s challenges, Carle said. “There’s no amount of regulations that will ever result in perfection when it comes to healthcare,” he said. “We’re not a Six Sigma manufacturing company. That’s not how it works in healthcare.”

The importance of data, however, will only grow over time. And that’s the larger issue facing the industry, he said.

Consumers, Carle said, “have become more sophisticated shoppers — in addition to the fact that a large portion of baby boomers have not saved enough to cover their projected out-of-pocket healthcare costs in retirement. They will expect data that will allow them to make dollar-value-added decisions on their healthcare spending.”

And accountable care organizations, Medicare Advantage plans and other players in the healthcare system, Carle said, “will almost certainly place a much larger focus on the ‘bundled’ costs of care. As hospitalizations represent, by far, the largest component of these costs, the gatekeepers of these systems will be seeking to not only reduce rehospitalizations but keep seniors from being hospitalized in the first place.”

But that desire also presents an opportunity for assisted living — and even independent living, he said. “Because we care for seniors who represent the target audience for avoiding hospitalizations, senior housing could become among the most powerful players in a gatekeeper continuum, not just for post-acute, but for pre-acute care.”

Still to be determined

All of this potential good news for the industry doesn’t necessarily mean everything is rosy, of course.

It remains to be seen, for instance, how exactly CMS and the states will implement the report’s recommendations. “What if I’m an operator that largely plays in the private-pay space? Are these rules going to be apply to me …  or are they going to be applied specifically to those communities that are caring for Medicaid recipients?” Grabowski said.

State Medicaid agencies spent more than $10 billion in federal and state funds on assisted living services in 2014, according to the GAO, and those programs served more than 330,000 beneficiaries. That’s a significant amount of money and a significant number of people, Grabowski noted.

But any regulation that applied only to communities with Medicaid beneficiaries would not affect the majority of the industry, he said. Approximately 47% of assisted living communities are Medicaid-certified (although that doesn’t necessarily mean they have residents who are Medicaid beneficiaries), and 15% of assisted living residents rely on Medicaid to cover assisted living services, according to the National Center for Assisted Living.

Regardless, key for the industry will be maintaining the characteristics that drew consumers to assisted living as an alternative to nursing homes in the first place, while recognizing that measurement and reporting of quality metrics as well as transparency related to adverse events may need to increase due to the rising acuity levels in many communities, whether or not they accept Medicaid funding, Grabowski said.

“I think we can all agree that nobody wants ‘nursing home level of regulations 2.0′ here, because that’s just not the right level of regulation,” he said. “We really want to tailor the regulations to assisted living and recognize that consumers want a high quality of life. They want autonomy. They don’t want some of the restrictions that could potentially come with increased regulation.”

A market-based approach 

Fortunately for the industry, the Trump administration has indicated a preference for fewer federal regulations, noted Vincent Mor, M.Ed., Ph.D., professor of health services, policy and practice and the Florence Pirce Grant University Health Professor in the Brown University School of Public Health, Providence, RI.

“And CMS doesn’t even have the capacity to actually review every single waiver report on every single waiver from all 50 states, plus Guam and Puerto Rico,” he said. “I can’t imagine that they have the appetite or capacity from a staffing perspective to take on regulating an entirely new industry.”

Properly framed, however, increased reporting “could be consistent with a more market-based approach, to say ‘We’re doing quality measurement reporting oversight to improve decision-making on the part of older adults and their advocates and really wanting to make this a better-functioning marketplace,’ ” Grabowski said. “I think that’s consistent with this administration’s stance on opening up and decreasing regulation. I don’t think it’s the kind of regulation where you have to provide this set of services or you have to do this. It’s more about transparency here and letting consumers make informed decisions.”

Lois A. Bowers is senior editor of McKnight’s Senior Living. Follow her on Twitter at @Lois_Bowers. Email her at [email protected].