The status was announced Jan. 2.

“The dedicated leadership of our two entities ensures not only the expansion of services for aging adults but also a commitment to excellence in healthcare and housing for everyone we serve,” Knute Nelson CEO Mark Anderson said in an online post. “We are also strategically positioning ourselves to grow our technological capabilities and broaden our mission of enhancing lives to reach more people across our geographical regions.”

Anderson became the new president and CEO of the newly joined entity effective Jan. 1. He had led Knute Nelson for almost 20 years. Scott Riddle, former Walker Methodist CEO, retired Dec. 31.

The merger will expand the services each company provides across an integrated continuum of care, including home- and community-based services, housing options and rehabilitation/skilled nursing.

The combined entity now provides services in more than 58 counties in Minnesota, North Dakota and Wisconsin, with a portfolio of 34 communities that offer assisted living, memory care, home healthcare, wellness, a therapy continuum and hospice care. 

Before the merger, Knute Nelson operated in 43 counties in Minnesota and eastern North Dakota, whereas Walker Methodist owned and managed 19 senior living communities in Minnesota and western Wisconsin.

Assisted living operators that provide home- and community-based services to residents who are Medicaid beneficiaries could be affected as states continue to come into compliance with the provisions of the HCBS settings final rule, suggests the results of a KFF survey of state Medicaid HCBS programs.

One expert said that even providers that don’t provide HCBS would benefit from becoming familiar with its provisions.

The HCBS settings final rule in part is meant to protect beneficiaries’ autonomy in making choices and controlling decisions that affect their lives. Senior living industry advocates, however, had warned that the regulation could lead assisted living communities to stop accepting Medicaid as a payment source, causing some residents to need to move to nursing homes or other settings.

In 2023, 47 states provided HCBS through a combination of 1915(c) waivers — used by assisted living operators to provide such services — and 1115 waivers. Currently, 18% of assisted living residents rely on Medicaid to pay for daily services, and 61% of all assisted living communities are Medicaid-certified, according to the National Center for Assisted Living.

In their analysis, the KFF researchers included challenges for states and anticipated effects on those served, and they referenced a white paper released by LeadingAge that was issued this summer and recommended a two-year enforcement moratorium on the rule.

Alice Burns, associate director of the KFF Program on Medicaid and the Uninsured, told McKnight’s Senior Living that the assisted living communities that would be helped the most by the KFF report are those located in states that have not finished implementing the Medicaid HCBS settings final rule.

But even settings that aren’t affected by the final rule might want to become familiar with its provisions, as they could be a preview of what might be coming with an update to Section 504 of the Rehabilitation Act, which Burns calls a “what to watch” rule.

That update could have implications for assisted living providers, she said, because it addresses discrimination and would apply to any provider that takes federal money. So even providers that aren’t paid through a Medicaid waiver could be affected if they provide home health or personal care services. 

The comment period on Section 504 is now closed, but Burns said that the Section 504 rule is so broad that it could affect most assisted living communities. 

“It’s one of those things that if facilities are already in compliance with the HCBS settings rule, the 504 rule probably is not going to add a whole lot more challenges,” Burns said. “But for those who don’t take money from a waiver, or they’re in a state that is not yet in compliance, this rehabilitation rule could be a bigger deal.”

Profile of LTSS users

Another KFF report Burns said would be of interest to both assisted living communities and nursing homes looked at the age distribution of people using long-term services and supports. According to KFF, 6 million people receive Medicaid LTSS.

People aged fewer than 65 years tend not to live in assisted living and are served in their homes or in the greater community. But for adults aged more than 65 years — the assisted living target population — healthcare care plays a much bigger role in long-term care needs fulfillment, Burns said. 

The researchers found that 56% of Medicaid LTSS users are aged fewer than 65 years and are using HCBS, whereas most older adults who use LTSS services are in institutional settings such as nursing homes. Most (62%) of Medicaid enrollees who use LTSS also are enrolled in the Medicare program or are dually eligible for both Medicare and Medicaid. The data, the authors concluded, suggest a consistent unmet need for services, contributing to the risk of unnecessary institutionalization for people with disabilities.

“It points to the fact that one of the barriers to moving more older people into HCBS is that it’s harder to have Medicaid coverage when you’re in assisted living,” Burns said. “You talk about demographics and this interesting age pattern emerges.”

With the prospective resident demographic almost doubling in size in the coming decade, a panel of senior living thought leaders on Thursday discussed how not-for-profit providers should plan to respond to increasing consumer needs.

In a webinar Thursday hosted by marketing firm Love & Company, experts said that the not-for-profit senior living sector experienced a slowdown brought on by the Great Recession and the COVID-19 pandemic, which led to further effects from increased construction and operating costs. In the past four years, in fact, only 34 new not-for-profit continuing care retirement / life plan community locations were developed across the nation.

Affiliations, acquisitions and expansions of existing communities have been the story for the not-for-profit sector in the recent past.

But with the “profound” demographics — particularly the growth of the 75-and-older population — the sector has the opportunities to serve more prospective residents.

“We challenge you to be thinking about new locations in the form of satellite communities, smaller communities you can expand while pursuing affiliations, as well as acquisitions and expansions,” Dan Hermann, president and CEO of specialty investment bank Ziegler.

Not-for-profit CCRCs used to serve the top 30% of the market in terms of age and income-qualified households, said John Spooner, co-CEO of Greystone Communities. Elevated interest rates, construction costs and wage rates mean that those communities now serve the top 15% of the market.

And consumers in that slice of the market are looking for something different: a service-rich, choice-driven environment, he said.

“Choice, to them, means control,” Spooner said, adding that repeatedly offering the same programming gets stale. “It’s important to change and upgrade your product points of differentiation.“

HCBS as a revenue stream

To compete for the coming “unlimited demand,” Ohio Living CEO Larry Gumina said, operators need a strategic focus on where to put “precious resources” that are challenged in the post-COVID recovery by workforce shortages, diminished access to capital and margin pressures.

For Ohio Living, he said, that focus landed on the organization’s home- and community-based services vertical after it almost abandoned the offering 12 years ago. Gumina said that the organization was losing money on HCBS but knew that they provided a value-added degree of mission support. By partnering with physician-owned accountable care organizations and hospitals, Ohio Living turned its HCBS arm into a profitable revenue stream.

Approximately 50% of the organizations on the LeadingAge Ziegler 200 list are working in the HCBS area, many getting into the business in the early 2000s by organically setting up service lines by offering home care to individuals within their communities or setting up hospice services. Others bought a home care or home health company, which came with existing staff and licensing. 

HCBS, Hermann said, can be a great additional revenue stream for operators because their residents already know their brand. And hospice can offer a better position for fundraising from families and individuals.

Gumina said that HCBS create opportunities to develop relationships early with those they want to serve. And although some eventually may move into a CCRC, others will continue to seek services in the home — and that’s OK.

“We don’t have enough bricks and sticks to house the growing demographic,” Gumina said. “We need to expand our reach out to the community.”

Spooner said he has seen more success among providers — in terms of service levels and resident satisfaction and trust — who have control over the HCBS system and deliver services in their own communities rather than depending on outside providers to come onto a campus.

Affordable housing through partnerships

Affordable or subsidized housing is another area that can present challenges and opportunities for operators, the speakers said.

Approximately half of the multi-facility systems on the LeadingAge Ziegler 200 list have at least one affordable or subsidized housing project. The majority of those projects are Section 202 Supportive Housing for the Elderly programs under the US Department of Housing and Urban Development.

But Hermann said that the “vibrant” government program dramatically slowed and shifted over to tax credit structures, making it difficult for anyone not already in the business to enter it. 

Affordable housing, Gumina said, is another avenue for partnerships. When Ohio Living couldn’t secure its own development credits, it partnered with National Church Residences. Ohio Living contributed the land for a project, and National Church Residences lent its expertise, which resulted in Broadway Park opening in Youngstown, OH. 

“We don’t have to be everything to everybody,” Gumina said. “We can use partnerships to bring services and care lines to communities.”

He was one of the experts who during a webinar shared predictions of trends that will shape aging services providers in the coming year.

The decline in the number of long-term care deals is “most likely due to the Fed policy of having raised rates continuously since March of 2022 in an effort to curb inflation, though a slower recovery in occupancy, increased operating costs and challenging labor markets have added to seniors becoming a less desirable commodity,” Branin said.

Higher capitalization rates are partly to blame as well, he added.

“As capital becomes constrained, the potential to invest resources, whether they be financial or human, into turnarounds becomes limited,” Branin said.

It might be a good time to divest of assets that have been a drain on resources and have had a negative effect on a provider’s bottom line, according to Branin.

“Regional team alignment can provide growth opportunities as well as ensuring that you have the right person in the right seat,” he said.

Funds move away from nursing homes

Another trend affecting aging services providers is “the transformation of Medicaid funding for home- and community-based services,” HDG CEO and Principal Erin Shvetzoff Hennessey said. 

The shift of Medicaid funding from institutional settings such as nursing homes to HCBS settings such as the home and assisted living communities is not new, according to John Capasso, executive adviser of senior care at HDG. 

“I think it’s important to note that this has been a trend over the past 20 years or so … [and] has continued to escalate” since the pandemic, he said. Additionally, he said, there has been an increase in Medicaid funding directed toward HCBS.

“The convergence of factors resulting in increased home- and community-based services has … decreased the occupancies of nursing homes,” Capasso said. “There are a lot of factors that could contribute to declines in occupancy, but the transition to patients being cared for in their homes rather than in institutions is an important factor and related to this Medicaid funding that’s occurring.”

He also noted that many states used American Rescue Plan Act of 2021 funds to transition care from institutions such as nursing homes to HCBS settings.

Older adults, particularly the baby boomers — those born between 1946 and 1964 — prefer to age in place in their own homes until it is medically necessary to move to a care setting, Hennessey stated. They tend to wait until they have chronic health issues or difficulty with activities of daily living, she added.

“What we have seen from that is assisted living really shifting from a safe apartment with some meals and minor assistance to a really comprehensive care environment that’s taking care of the whole person,” Hennessey said.

Half of assisted living residents have three or more chronic conditions, and more than 40% have Alzheimer’s disease or dementia, she said.

‘We really recommend watching’ active adult

Hennessey noted that 2022 was a turning point for the relatively new active adult segment. That’s when the National Investment Center for Seniors Housing & Care developed a definition for the community type. And the trend is not going away, she said.

“This is an area that we really recommend watching in the year ahead. While we’re seeing increased acuity in other settings, this is really a place for younger seniors to age and enjoy life,” Hennessey said. “This is also a great option as you’re balancing out how to provide care with much less staffing. So this setting really lends itself to a younger, healthier group of seniors.”

Among other long-term care industry trends discussed by the panelists were the changing aging services employment landscape in light of CMS’ proposed minimum staffing rule for nursing homes, growth in Programs of All-Inclusive Care for the Elderly, skilled nursing facilities challenges and the evolution of hospitals’ post-acute strategies.

For more coverage of the webinar, see McKnight’s Senior Living and McKnight’s Long-Term Care News.

The majority of those funds are being used to help providers retain, recruit and train care workers as well as to provide bonuses and pay increases for such workers.

The provision for HCBS “has ended up being the most significant down payment on the efforts to our vision of quality home- and community-based care for all Americans,” White House American Rescue Coordinator Gene Sperling said Tuesday during a panel discussion.

Not everyone has the financial means to provide the best in HCBS for their loved ones, Health and Human Services Secretary Xavier Becerra noted.

“That’s what this American Rescue Plan initiative is all about. It is elevating those we care about most so they can spend their last years, or maybe it’s last decades, in comfort with those they love most at home or in a community-based setting,” he said. 

Regarding direct care workers, Becerra said, “We want you to make more money than the folks that are flipping burgers in that hamburger joint down the street. But we know that we have to do better, and that’s why it’s so important that we do the work together.”

At the state level, for example, according to the White House, Colorado is using ARP funds to substantially raise base wages for as many as 60,000 HCBS workers. The state not only raised wages for those workers; it also has provided grants to boost training.

And Maine’s government provided bonuses to more than 24,000 direct care workers in every county in the state, at $3,429 per worker.

North Carolina used 80% of its ARP funds to give raises to direct caregivers and to establish a Direct Care Jobs Innovation Fund to support initiatives that improve recruitment and retention among the direct care workforce.

The Centers for Medicare & Medicaid Services also released new guidance outlining how states can use worker registries for Medicaid-funded HCBS “to ensure beneficiaries have awareness of and access to qualified workers to deliver these critical services,” Vice President Kamala Harris said in a related press release.  

“The registry will help families locate that excellent caregiver without having to go through all the headaches and not know where to navigate,” Beccera said. “This registry will help so many people understand who is out there and qualify.”

Certification of a class-action lawsuit against New Hampshire’s home- and community-based services waiver program could be the catalyst for elevating assisted living as a viable Medicaid option, according to one senior living organization.

A federal judge certified a class-action lawsuit last week against the New Hampshire Department of Health and Human Services for placing recipients of its HCBS waiver program at “serious risk of unjustified institutionalization” by failing to ensure those services are provided.

Choices for Independence, New Hampshire’s Medicaid waiver program, provides HCBS to nearly 3,800 adults who would otherwise be Medicaid-eligible for nursing home care. Some assisted living providers provide HCBS to residents under the waiver program. 

A lawsuit against the program was filed in January 2021 in US District Court in New Hampshire by New Hampshire Legal Assistance, the Disability Rights Center-New Hampshire and the AARP Foundation. After initially denying a motion for class certification, Judge Paul J. Barbadoro ruled on Nov. 27 that there was evidence that hundreds of people could face “unjustified institutionalization” due to CFIs failure to ensure eligible individuals received eligible community-based long-term services and supports.

Earlier this year, agencies that provide HCBS services through the CFI program — including assisted living providers — told lawmakers they could no longer afford to participate in the program without significant rate increases. 

State legislators passed a state budget in June that gave providers a 3% increase in Medicaid payments in July, with additional raises coming in January. But the groups filing the lawsuit said the increase would address only workforce shortage issues, and would not correct the program’s shortcomings, including its failure to ensure CFI recipients receive approved services. 

The suit could shine a light on assisted living as a viable HCBS option, according to Brendan Williams, president and CEO of the New Hampshire Health Care Association. He told McKnight’s Senior Living that too few providers are willing to take on Medicaid contracts because the “rates are just so terrible.”

“Too often, assisted living is treated as a middle child when it comes to home care and nursing homes — it’s the Jan Brady of long-term care,” Williams said.

And while the state made “solid progress” in the last legislative session on funding in home care, it only made “marginal progress” in improving funding for assisted living. 

“We really do need a game-changer when it comes to placing a greater priority on making assisted living an option for Medicaid residents,” Williams said. “I hope that will emerge from this litigation.”

The state recently embarked on a gap analysis of its HCBS system to improve and promote community integration, independence and a robust system of LTSS for older adults and people living with disabilities.

As the state of New Hampshire embarks on a gap analysis of its home- and  community-based services system, one senior living organization leader is cautioning against a “Hunger Games” scenario that pits one setting over another.

The nonprofit Human Services Research Institute and the University of New Hampshire’s Center on Aging and Community Living are conducting an assessment and gap analysis of the state’s HCBS system, with a goal of providing recommendations for improvements that promote community integration, independence and a robust system of long-term services and supports for older adults and people living with disabilities. 

Through public forums, the organizations will look at the availability of HCBS services across the state, use rates for those services, HCBS provider capacity, nursing facility usage, and the experiences and preferences of those using HCBS services. 

Brendan Williams, president and CEO of the New Hampshire Health Care Association, said that the COVID-19 pandemic led to historic federal and state resources for Medicaid programs, including providing that care in assisted living communities through HCBS waivers. But assisted living’s role in the state’s “fragile long-term care system” must be recognized, he added.

“While the influx of funding for in-home care has been a positive, assisted living is a very rare Medicaid option, given low state payments,” Williams said. “If assisted living is to be a meaningful Medicaid option, as much attention must be paid to it as is being paid to in-home care.”

He added that although NHHCA supports HCBS, he’s wary of any “Hunger Games” scenario where any long-term care setting could be disadvantaged over another.

“We view the system as fragile and interdependent,” Williams said. 

New Hampshire passed a state budget in June that gave providers a 3% increase in Medicaid payments. It began in July, with additional raises coming in January. A portion of those increases were targeted at the Choices For Independence, or CFI, waiver program, which provides almost 3,800 individuals from the Granite State with help at home or in a small community setting, according to the New Hampshire Bulletin. 

Chris Kelliher, the administrator at the Villager Assisted Living Home in Goffstown, NH, said that assisted living operators are looking for an increase in CFI rates that comes closer to covering their costs. Those rates will be announced by the state in December and will go into effect in January.

The operator of the small assisted living community said all residents move into the community as paying with private funds, but once they run out of resources and turn to Medicaid or the CFI waiver, he accepts that payment, knowing he will lose approximately $500 every month per resident.

“It does put places in a precarious position,” he said, adding that he has an almost two-year waiting list. “It’s a big gamble that a lot of facilities take when they do CFI. A lot of facilities aren’t willing to gamble, because they’re gambling on their future.”

Assisted living operators, Kelliher said, aren’t asking for an “astronomical” rate increase, just something closer to the private-pay rates.

Using funding from the Centers for Medicare & Medicaid Services’ Money Follows the Person Demonstration Expansion award, the state plans to evaluate its long-term services and supports system, including the CFI waiver. A final report is expected in June.

State Medicaid home- and community-based services program waiting lists could force difficult decisions for some assisted living operators with residents who have spent down their resources but now must wait for HCBS access. 

A new KFF analysis of survey data from state Medicaid HCBS programs found that almost one-fourth of individuals on waiting lists are older adults and people with physical disabilities. HCBS programs operating under the 1915(c) waiver are most commonly associated with assisted living providers.

KFF estimated that more than 4 million Medicaid enrollees use HCBS, and a state’s ability to cap the number of people enrolled via HCBS waivers can result in waiting lists — more than 692,000 individuals across 39 states were on HCBS waiting lists in 2023. 

According to the National Center for Assisted Living, 18% of assisted living residents rely on Medicaid to pay for daily services, and 61% of assisted living communities as Medicaid-certified. A small minority of state Medicaid programs do not cover services in assisted living, according to NCAL.

Alice Burns, associate director of KFF’s Program on Medicaid and the Uninsured, told McKnight’s Senior Living that assisted living residents on those waiting lists could be waiting for more care, whether that is personal care needs, music or art therapy, or adult day services. And that could put some providers in a situation of providing those services at a loss while residents wait for access to Medicaid HCBS — or not providing those services at all.

“Waiting lists may result from insufficient funding, but they may also result from insufficient staff,” Burns said.

Although states reported increasing provider payment rates and other efforts to bolster the workforce, the KFF researchers found that challenges remain and that some state policies addressing those challenges ended with the conclusion of the COVID-19 public health emergency. 

The KFF analysis provides state data, allowing operators to determine whether a state in which they operator has a waiting list, and what services residents might be eligible for while they wait for Medicaid HCBS placement, Burns said. 

Between 2021 and 2023, the total enrollment on HCBS waiting lists and interest lists — individuals who are interested but may not enroll in services — increased by 6%, according to KFF. And although people living with intellectual or developmental disabilities made up almost three-fourths (72%) of the total waiver waiting list population, older adults and adults living with physical disabilities accounted for 25% of those on waiting lists.

In 2023 overall, people on Medicaid HCBS waiting or interest lists waited an average of 36 months to receive services, an amount of time that is down from 45 months in 2021. But older adults only waited an average of five months for services, according to the KFF data.

The researchers said that it remains to be seen how policy changes enacted during the pandemic will affect the provision of HCBS in the future and whether HCBS investments will result in capacity increases even after federal funding ends. They also noted that state funding challenges in this area may be particularly relevant given the potential minimum staffing requirements for nursing homes, which could lead to increased state spending on institutional long-term services and supports.