To qualify for Medicaid reimbursement of assisted-living services, states are toughening up industry rules and regulations.
"Assisted living is going to become subject to more regulation, (just) as nursing homes are," predicted Stephen Monroe, a partner with Irving Levin Associates, a New Canaan, Conn.-based investment firm.
Some states are creating specific licensing categories for assisted living and shoring up operating requirements.
In January, for example, Massachusetts Gov. William Weld signed legislation regulating assisted-living facilities. The new law requires state review of all assisted-living facilities every two years, sets certain facility standards and establishes residents' rights. Under the law, sponsors must file annual statements regarding the "fiscal soundness" of their facilities.
Massachusetts health officials are seeking the state General Assembly's approval to allow the low-income elderly and disabled to use their Supplemental Security Income to help pay for assisted living.
Whether states will begin requiring assisted-living operators to obtain certificate-of-need approval remains unclear.
A number of observers assume "we're going to go down the CON path," but that's wrong, said Paul Klaassen, president and chief executive officer of Sunrise Assisted Living. At least three states-Connecticut, Massachusetts and New Jersey-have moved away from requiring CON approvals for assisted-living facilities, he said.
State regulation of the industry should contribute to quality of care, said Carol Fraser Fisk, executive director of the Assisted Living Facilities Association of America. "But the people we have to answer to are the customers. Living up to the promise" of assisted living is one of the biggest challenges facing the association's members, she said.
"I'm one of those middle-aged daughters," she confided. "I'm a tough customer."