Long-Term Care: Facts on Adult Day Care

CRS Report for Congress
Long-Term Care: Facts on Adult Day Care
July 31, 2006
Sarah C. Kaufman
Research Associate
Domestic Social Policy Division
Carol O’Shaughnessy
Specialist in Social Legislation
Domestic Social Policy Division

Congressional Research Service ˜ The Library of Congress

Long-Term Care: Facts on Adult Day Care
Summary
Adult day care programs provide health and social services in a group setting
on a part-time basis to frail elderly persons and other younger persons with physical,
emotional, or mental impairments. The prevalence of these programs has grown
rapidly over the last four decades, from a handful in the late 1960s to approximately
3,400 in 2002. As federal financing for long-term care services has shifted from
institutional care to home and community-based care, adult day care services have
become an important component in home and community-based services. These
services can play a role in preventing or delaying institutionalization for some
participants. Adult day care also offers family caregivers the opportunity to continue
working and/or to have respite from full-time caregiving responsibilities.
Adult day care is supported by a variety of federal funding sources, as well as
state and local government, private funds, and out-of-pocket participant fees. In
2002, the Partners in Caregiving survey found that federal funding is the largest
source of revenue for adult day care centers (38%). The primary sources of federal
funding for adult day care include Medicaid (Section 1915(c) home and community-
based (HCBS) waivers and the personal care state plan option), Title III of the Older
Americans Act, and Social Services Block Grant programs.
There are no federal standards for adult day care, although national voluntary
standards have been developed as a model for care practice. State requirements for
licensure and/or certification vary, and often are designed for the purpose of assessing
a center’s eligibility for particular funding sources.
The Deficit Reduction Act of 2005 (P.L. 109-171), enacted in February of 2006,
establishes a new optional Medicaid benefit that allows states to cover home and
community-based services (HCBS), including adult day care, for persons whose
income does not exceed 150% of the federal poverty level. The Centers for Medicare
and Medicaid Services (CMS) is in the process of developing guidance and
regulations for states to implement the HCBS state plan option. A number of bills
pertaining to adult day care have been introduced in the 109^th Congress. This report
will be updated as needed.

Contents
In troduction ......................................................1
Background on Adult Day Care.......................................1
Adult Day Care Funding............................................4
Licensure Requirements.............................................8
Federal Legislation Concerning Adult Day Care..........................9
Legislation in the 109^th Congress.....................................10
List of Tables
Table 1. Adult Day Center Revenue Sources, FY2001-FY2002..............4
Table 2. Third-Party Public Reimbursement, FY2001-FY2002..............7
This report was written by Sarah C. Kaufman, a National Academy of Social
Insurance Intern, under the supervision of Carol O’Shaughnessy, Specialist in
Social Legislation in the Domestic Social Policy Division of the Congressional
Research Service.

Long-Term Care: Facts on Adult Day Care
Introduction
Adult day care is a structured, comprehensive program that provides health,
social, and other related support services in a protective community setting, on a less
than 24-hour-per-day basis, to persons with physical or cognitive impairments who
require assistance, supervision, and rehabilitation to restore or maintain optimal
functioning.¹ Services generally provided include client assessment; nursing
services; social services; therapeutic activities; personal care; physical, occupational,
and speech therapies; nutrition; counseling; and transportation to and from the center.
Most adult day care centers offer programs during regular business hours Monday
through Friday, although some offer programs in the evenings and on weekends.²
Programs are supported by a variety of federal funding sources, as well as state
and local government, private funds, and out-of-pocket participant fees. There are
no federal standards for adult day care although national voluntary standards have
been developed as a model for care practice. This report describes the emergence
and growth of adult day care services; outlines the sources of funding available to
adult day care centers, specifically addressing federal funding sources; and discusses
the licensure and certification requirements for adult day care centers.
Background on Adult Day Care
Adult day care in the United States was inspired by European psychiatric day
hospitals in the 1940s and influenced by the British geriatric day hospital model in
the 1950s. Adult day care began in psychiatric day hospitals in the United States in
the late 1940s, mainly assisting patients who were released from psychiatric facilities.
The concept of day care was expanded to include supportive health and social
services for impaired persons residing in the community in the 1960s.³ The
approximately 3,400 adult day care centers in the United States as of 2002⁴ grew

¹ National Adult Day Services Association (NADSA), Adult Day Services: The Facts —
What are ADS? at [http://www.nadsa.org/adsfacts/what/default.asp], visited July 27, 2006
(Hereafter cited as NADSA, The Facts).
² Ibid.
³ W. Kelly and L. C. Webb, The Development of Adult Day Care in America. In L.C. Webb
(Eds.), Planning and Managing Adult Day Care. Maryland: National Health Publishing.
pp. 9-17, 1989.
⁴ Partners in Caregiving, Wake Forest University School of Medicine, National Study of
(continued...)

from a handful of federally supported research and demonstration projects in the late
1960s and early 1970s. These projects served as the impetus for the development of
adult day care under state-administered social and health services programs. Efforts
by states to create and expand access to home and community-based care, which
most frail elderly persons and persons with disabilities prefer to institutional care,
spurred much of the growth in the adult day care sector.
Programs may be structured under one of three models of care: a social model,
a medical model, or a combination model. The classification depends on the type of
services offered by a provider. The adult day social care model offers social
activities, meals, recreation, and some health-related services to participants.⁵ The
adult day health care model offers intensive health, therapeutic, and social services
for individuals with severe medical problems and for those at risk of placement in a
nursing home. The combination model offers all of these services. Another facet of
adult day care models is day habilitation⁶ programs for people with mental
retardation/developmental disabilities (MR/DD). States may fund day habilitation
services under a Section 1915(c) home and community-based services (HCBS)
waiver or through a state Medicaid plan.⁷ (This report excludes a full discussion of
day habilitation and other types of programs for individuals with MR/DD).
In 2002, Partners in Caregiving of the Wake Forest University School of
Medicine conducted a survey, funded by the Robert Wood Johnson Foundation, of
1,755 adult day centers across the country. It found that 21% (369) of the centers
surveyed were operating under a medical model, 37% (649) under a social model,
and 42% (737) under a combination of the social and medical models of care.⁸ Of
all the centers surveyed, about 20% reported offering specific social and health
services to persons with Alzheimer’s disease or a related dementia.⁹
Since most people with disabilities who need long-term care have a preference
for home and community-based services rather than institutional care, adult day care

⁴ (...continued)
Adult Day Services: Key Findings 2001-2002, at [http://www.rwjf.org/files/newsroom/
adultdayPowerPt.ppt#318,1,Slide 1] visited July 27, 2006 (Hereafter cited as Partners in
Caregiving, Key Findings).
⁵ ARCH National Respite Network, Factsheet Number 54 — Adult Day Care: One Form of
Respite for Older Adults, 2002, at [http://www.archrespite.org/archfs54.htm#] visited July

27, 2006 (Hereafter cited as ARCH Factsheet).

⁶ Section 1915(c)(5) of the Social Security Act defines habilitation services as those services
designed to assist individuals in acquiring, retaining, and improving the self-help,
socialization, and adaptive skills necessary to reside successfully in home and community-
based settings, including pre-vocational, education, and supported employment services.
In 2001, 138,264 individuals were served in day habilitation programs. CRS analysis of
Institute for Community Inclusion, StateData.info. 2001, at [http://www.statedata.info]
visited July 27, 2006.
⁷ For more information, see the Adult Day Care Funding section of this report.
⁸ Partners in Caregiving, Key Findings.
⁹ Ibid.

plays an important role in the broad spectrum of long-term care services. By
providing a protective environment during regular working hours to persons with
long-term care needs who need supervision, adult day care can allow some frail
elderly persons and younger persons with disabilities to remain at home or in another
community setting with a family caregiver, in paid home care, or both. In part, this
can be attributed to the respite that adult day care affords caregivers, allowing them
to 1) continue working outside the home; 2) receive help with the physical care of a
family member; and 3) have a break from what would otherwise be a 24-hour
responsibility. Programs may also be designed to create opportunities for
socialization and recreation, preventing some participants from becoming inactive
and isolated in their homes and improving their quality of life.
The Partners in Caregiving survey found that while many communities have
adult day care programs, many are underserved.¹⁰ According to the survey, of the
3,141 counties in the United States, 37% (1,162) appeared to meet the population’s
demand for centers, while 7% (220) appeared to have excess capacity.¹¹ The survey
concluded that 56% (1,759) of counties were underserved, indicating a demand in
each of these counties for at least one new adult day care center with the capacity to
serve at least 38 people per day. The survey indicated that 5,415 new adult day care
centers are needed nationwide.
Of the approximately 3,400 adult day care centers operating in the United States,
78% are operated by non-profit, private, or public organizations.¹² Each day, these
centers care for approximately 150,000 participants.¹³ Of the total number of adult
day care center enrollees, about 67% are women.¹⁴ The population served ranges in
age from 18-91; however, the average enrollee is 72 years old.¹⁵ Typically, adult day
centers serve an older frail population; 30% of centers reported the average age of
their participants at 80 years or older.
According to the National Adult Day Services Association, most participants
have fairly significant impairments; 59% of participants require assistance with two

¹⁰ Partners in Caregiving, Wake Forest University School of Medicine, National Study of
Adult Day Services Report: Shortage of Adult Day Services in Most U.S. 2002, at
[ h t t p : / / www.r wj f .org/newsroom/ f eat u r e Det a i l . j s p?f e at ur eID=183&page Num= 1&t ype=3] ,
visited July 27, 2006 (Hereafter cited as Partners in Caregiving, Report).
¹¹ The survey based adult day center capacity on availability gaps and utilization gaps.
Calculations factored in an average adult day center size of 38 and an average utilization rate
of 66 percent (as determined by this study). Demand was estimated using a conservative
model developed specifically for the adult day services field. This model determined that

1.25% of the population over the age of 65 is in need and likely to choose adult day services.

¹² NADSA, The Facts.
¹³ Ibid.
¹⁴ Ibid.
¹⁵ Partners in Caregiving: The Adult Day Services Program, Wake Forest University School
of Medicine, National Study of Adult Day Services: Adult Day Center Survey 2001-2002,
at [http://www.rwjf.org/files/newsroom/adultdayPowerPt1.ppt#782,1,Slide 1], visited July

27, 2006 (Hereafter cited as Partners in Caregiving: Survey).

or more activities of daily living (ADLs); and 41% require assistance with three or
more ADLs.¹⁶ Across all centers, the Partners in Caregiving survey found that the
two most prevalent conditions among all participants were dementia (52%) and “frail
elderly” (41%) — i.e., those individuals aged 60 and older in need of supervision
and/or at-risk of social isolation; no dementia. Almost one-fourth (24%) of
participants served were diagnosed with mental retardation/developmental disability,
while almost another fourth (23%) were physically disabled but cognitively intact
(e.g., stroke, Parkinson’s disease, multiple sclerosis). About one-third (30%) of the
population had been diagnosed with a chronic mental illness, HIV/AIDs, or a brain
injury.¹⁷
Adult Day Care Funding
Adult day care is supported by a variety of federal funding sources, including
Medicaid, the Older Americans Act, and Social Services Block Grants programs.
Additional funding for adult day care is available from state and local governments,
private insurance, and out-of-pocket participant fees. Data on the total amount of
federal funding for adult day care are not available. The Partners in Caregiving
survey found that third-party public reimbursement (federal and state funding) is the
largest source of revenue for adult day centers (38%), followed by private
payment/participant fees (35%), and other revenue (27%). (Table 1).
Table 1. Adult Day Center Revenue Sources, FY2001-FY2002
Percentage of
SourceTotal Revenue
Third-party public reimbursements38%
Private pay/ participant fees35%
Other revenue27%
(e.g., grants, donations, ancillary services, private
insurance)
Total100%
Source: Partners in Caregiving: The Adult Day Services Program, Wake Forest University
School of Medicine, National Study of Adult Day Services: Adult Day Center Survey, 2001-

2002.

¹⁶ ADLs are activities necessary to carry out basic human functions, and include the
following: bathing, dressing, eating, getting around inside the home, toileting, and
transferring from a bed to a chair.
¹⁷ Note that participants may have been included in one or more condition/diagnosis
categories; and therefore, these proportions do not sum to 100%.

The following describes federal programs that provide funding for adult day
care.
^!Medicaid Home and Community-Based Services Waivers. Section
1915(c) of the Medicaid statute allows the Secretary to waive certain
federal requirements in order to allow states to cover a wide range
of home and community-based services.¹⁸ In 2003, 44 state
Medicaid programs provided reimbursement for adult day care
through 1915(c) waivers.¹⁹
^!Medicaid Personal Care State Plan Option. States have the option
to cover personal care services (PCS) under their Medicaid
programs. PCS are defined as services furnished to an individual at
home or in another location (excluding hospitals, nursing facilities
or intermediate care facilities for the mentally retarded (ICF-MR),
or institutions for mental diseases) that are authorized by a physician
or, at state option, otherwise authorized under a plan of care.²⁰
Variation exists among states in terms of the type and amount of
services provided under this option.²¹ As of 2005, 2 states offering
PCS benefits in their Medicaid state plans included adult day care
servi ces.²²
^!Program of All-Inclusive Care for the Elderly (PACE). PACE
provides a comprehensive array of acute and long-term care services
to frail elderly persons living in the community, who would
otherwise require institutional care. The PACE model of care is a
permanent entity within the Medicare program and enables states to
provide PACE services to Medicaid beneficiaries as a state option.
At its core, the model provides adult day health care and

¹⁸ Day habilitation, a facet of the adult day care model, may be provided under this funding
stream for individuals with MR/DD. See footnote 6 for definition of habilitation. For
further information see CRS Report RL31163, Long-Term Care: A Profile of Medicaid
1915(c) Home and Community-Based Services Waivers, by Carol O’Shaughnessy and
Rachel Kelly.
¹⁹ CRS analysis of CMS Section 1915(c) waiver database, June 2003. Data on the amount
of spending under waiver programs, specifically for adult day care, is not available.
However, FY2005 spending for Section 1915(c) waiver services was at $22.7 billion,
representing about 65% of all Medicaid financed community-based long-term care spending.
Medstat, Medicaid Expenditures in FY 2005, by Brian Burwell, Kate Sredl and Steve Eiken.
²⁰ See CRS Report RL31163, Long-Term Care: A Profile of Medicaid 1915(c) Home and
Community-Based Services Waivers, by Carol O’Shaughnessy and Rachel Kelly.
²¹ Day habilitation, a facet of the adult day care model, may be provided under this funding
stream for individuals with MR/DD. See footnote 6 for definition of habilitation.
²² Laura L. Summer and Emily S. Ihara, The Medicaid Personal Care Services Benefit:
Practices in States that Offer the Optional State Plan Benefit. 2005.

interdisciplinary case management.²³ As of March 2005, PACE
programs existed in 22 states.²⁴
^!Medicaid Home and Community-Based Services State Plan Option.
(Not yet implemented).²⁵ See Deficit Reduction Act of 2005 in the
Legislation in the 109^th Congress section of this report.
^!U.S. Department of Agriculture/Child and Adult Care Food Program
(USDA/CACFP). Private or public nonprofit adult day care centers
may participate in CACFP as independent or sponsored centers.
For-profit centers may be eligible for CACFP funding if at least 25%
of their participants receive benefits under Title XIX (Medicaid) or
Title XX (Social Services Block Grant) of the Social Security Act.
Meals served to adults receiving care are reimbursed at rates based
on a participant’s eligibility for free, reduced price, or paid meals.
As of June 2006, approximately 86,000 adults participate in CACFP
through adult day care programs each day.²⁶
^!Title III of the Older Americans Act. Title III authorizes grants to
states and area agencies on aging to act as advocates on behalf of,
and to coordinate programs for, older persons. The Administration
on Aging (AoA) allots funds to states for supportive services and
centers, congregate and home-delivered nutrition services, and
disease prevention/health promotion services based on each state’s
relative share of the total population aged 60 years and over. In
FY2004, 8.1 million older persons received a range of services under
Title III programs, including 26,755 individuals who participated
nationwide in adult day care programs. About $9.4 million of Title
III funds were expended on adult day care services in 2004.²⁷
^!Title XX of the Social Services Block Grant (SSBG). The SSBG,
a federal grant to states, provides a flexible source of funds that
states may use to support a wide variety of social services. Title XX
of the Social Security Act permanently authorizes the SSBG as a
“capped” entitlement to states. In other words, states are entitled to
a share of the nationwide funding ceiling or “cap” based on the
state’s relative population size.²⁸ States may choose to pay for adult
day care both for elderly and for younger persons with disabilities

²³ National PACE Association, at [http://www.npaonline.org/website/article.asp?id=4]
visited July 27, 2006.
²⁴ CMS, Medicaid At-a-Glance 2005: A Medicaid Information Source. 2005.
²⁵ For more information, see CRS Report RS22448, Medicaid’s Home and Community-
Based Services State Plan Option: Section 6086 of the Deficit Reduction Act of 2005, by
Karen Tritz.
²⁶ USDA Food and Nutrition Service, Child and Adult Care Food Program: About CACFP

2006, at [http://www.fns.usda.gov/cnd/Care/CACFP/aboutcacfp.htm] visited July 27, 2006.

²⁷ U.S. Administration on Aging, Estimated Unduplicated Count of Persons Served Under
Title III of the OAA: FY2004.
²⁸ For further information, see CRS Report 94-953, Social Services Block Grant (Title XX
of the Social Security Act), by Melinda Gish.

using SSBG funds. In 2004, $12.4 million of SSBG funds were
spent on adult day care services.²⁹
Medicaid 1915(c) HCBS waivers are the most commonly reported source of
third-party public funding. Sixty percent of adult day care centers reported receiving
these funds. State and local programs account for the second most common source
of funding (50% of centers).³⁰ (See Table 2.)
Table 2. Third-Party Public Reimbursement, FY2001-FY2002
Percentage of Centers
SourceReporting Funding
Medicaid 1915(c) HCBS Waiver60%
State or local program50%
(does not include Title III or Title XX dollars)
USDA/CACFP (food program)43%
Title III Older Americans Act26%
Veteran’s Administration22%
Medicaid Personal Care21%
Title XX Social Services Block Grant19%
Medicare4%
Other city, county, state, and federal funding sources14%
Source: Partners in Caregiving: The Adult Day Services Program, Wake Forest University
School of Medicine, National Study of Adult Day Services: Key Findings, 2001-2002.
Note: A total of 1,755 adult day care centers were surveyed. Sample sizes were provided
for individual questions and ranged from n= 862-1,449. Numbers vary due to item
nonresponse.
In addition to public funding, most centers charge sliding-scale fees based on the
participant’s income, with remaining costs paid from contributions, donations and
grants received by the centers. On average in 2002, adult day centers served 25
people per day (with an overall enrollment of 42) at an average cost of $56/day and³¹
an average daily fee of $46. In general, rates depend on the types and quantity of
the services provided, their costs, and availability of public and other private funds.

²⁹ Ibid.
³⁰ Partners in Caregiving: Survey.
³¹ Partners in Caregiving, Report.

Despite the popularity of adult day care as a means to assist frail older persons
and younger persons with disabilities to remain in their own homes, some believe
that the fragmented nature of funding sources hampers the development of new
centers.³² Programs must arrange for multiple sources of funding, ranging from
reimbursement based on an individual’s eligibility for specific programs (e.g.,
Medicaid and Medicare) to project grants (e.g., Older Americans Act).
Licensure Requirements
There are no federal standards for adult day care centers. Requirements for
licensure and/or certification are often designed by states for the purpose of assessing
a center’s eligibility for particular sources of funding. However, these requirements
for adult day centers vary widely across states. In the Partners in Caregiving survey,

79% of centers (1,385) reported that they are certified or licensed by the state, 13%

of centers (228) indicated that certification or licensure does not exist in their state,
and 7% (122) reported that licensure or certification exists, but they are not certified³³
or licensed because their center is not required to be. The remaining 1% of centers
(18) reported that they were not currently licensed or certified, but had applied to the³⁴
state.
The National Adult Day Services Association, in conjunction with the
Commission on Accreditation of Rehabilitation Facilities (CARF), has developed
and recommended voluntary national standards, referred to as the Standards and
Guidelines for Adult Day Care.³⁵ Accreditation for adult day care centers is designed
to assist families, consumers, and health and social service providers in choosing
those centers that offer higher quality programs. According to the Partners in
Caregiving survey, 6% (99) of adult day care centers reported that they obtained
CARF accreditation, while 66% (1088) reported that they had not and had no plans³⁶
to do so. The remaining 28% (462) of centers had applied or were planning to
apply for CARF accreditation.³⁷ Federal, state, and local laws, ordinances,
regulations, and requirements that exist take precedence over these recommended
voluntary standards.

³² Ibid.
³³ Partners in Caregiving, Survey.
³⁴ Ibid.
³⁵ According to the NADSA, the standards were intended to: assist and encourage
development of new centers; improve the quality and efficiency of existing centers; and
provide national direction for policy formation. For further information, see Standards and
Guidelines for Adult Day Services by Mary Brugger Murphy and the National Adult Day
Services Association, 1997.
³⁶ Partners in Caregiving, Survey.
³⁷ Ibid.

Federal Legislation Concerning Adult Day Care
Over the years Congress has established various funding sources, tax incentives,
and other mechanisms of support for the development of home and community-based
services. Many of these initiatives have been used to cover adult day care services
for people with long-term care needs.
The first major federal support for adult day care in the United States began in
1972 when Congress passed P.L. 92-603, the Social Security Act Amendments of
1972. This legislation supported research and demonstration projects in adult day
care. During the early 1970s, other demonstration projects were established by the
Medical Services Administration (now the Centers for Medicare and Medicaid
Services, CMS, which administers the Medicare and Medicaid programs) and the
AoA. These research and demonstration efforts served as an impetus for the
expansion of day care in the late 1970s under existing state-administered social and
health service programs, primarily the Social Services Block Grant, Title 333 of the
Older Americans Act, and Medicaid.
In 1981, Congress supported continued expansion of adult day care under³⁸
Medicaid, through the enactment of section 1915(c) of the Social Security Act. As
previously noted, this provision authorized the Secretary of HHS to waive certain
federal Medicaid requirements in order to allow states to expand home and
community-based services. Under these waivers, state Medicaid programs may
reimburse for adult day care services provided to persons who meet the state’s
eligibility requirements for nursing home care but are living in the community.
In the Economic Recovery Tax Act of 1981 (P.L. 97-34), Congress extended use
of the dependent care tax credit to situations in which the incapacitated spouse or
adult dependent of an employed taxpayer receives care outside the home, including
adult day care, provided the spouse or dependent continues to live in the household.
Prior to this legislation, the credit applied only to expenses outside the home for
individuals under age 15 (i.e., only for child care). The act also authorized a new tax
exclusion for employer dependent care assistance programs that could apply to those
expenses.
The Veterans Healthcare Act of 1983 (P.L. 98-160), initiated an Adult Day
Health Program in selected VA Medical Centers. Today the Department of Veterans
Affairs, awards contracts to community-based adult day programs.
The Older Americans Act Amendments of 1987 (P.L. 100-175) authorized
assistance under the USDA/CACFP to eligible nonprofit adult day care centers.
The Balanced Budget Act of 1997 (BBA97, P.L. 105-33), included an option for
states, known as Program of All-Inclusive Care for the Elderly (PACE), which
provides a comprehensive array of acute and long-term care services to certain frail

³⁸ For further information, see CRS Report RL31163, Long-Term Care: A Profile of
Medicaid 1915(c) Home and Community-Based Services Waivers, by Carol O’Shaughnessy
and Rachel Kelly.

elderly persons living in the community, who would otherwise require institutional
care. BBA97 made PACE a permanent benefit category under Medicare, and a state
plan optional benefit under Medicaid.³⁹ At its core, the PACE model provides adult
day health care, and interdisciplinary case management. Adult day care, in particular,
is the key service used for monitoring plan participants and coordinating and
delivering all medical and social service benefits.
The Older Americans Act Amendments of 2000 (P.L. 106-501), authorized
grants to state agencies on aging to carry out the National Family Caregiver Support
program, which provides assistance and services to families who care for the frail
elderly. Adult day care may be provided to frail older persons, as an option by states,
under this program.
The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act
(BIPA) of 2000 (incorporated in the Consolidated Appropriations Act of 2001 (P.L.
106-554) amended the Medicare home health benefit requirements to allow home
health recipients to attend adult day care programs without losing their eligibility for
the Medicare home health benefit. Specifically, BIPA clarified that Medicare
beneficiaries receiving health care treatment, including therapeutic, psychosocial, or
medical treatment in a licensed or accredited adult day care program, shall not be
disqualified from receiving Medicare home health as a result of the eligibility
requirement that an individual be “homebound.” Under Medicare, a homebound
individual is defined as one who cannot leave home without a considerable and
taxing effort, or who requires the aid of a supportive device (such as crutches, a cane,
a wheelchair, or a walker), or who has a condition such that leaving the home is
medically contraindicated.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(MMA, P.L. 108-173) established the Medical Adult Day Care Services
Demonstration, which encourages home health agencies to partner with medical adult
day care facilities to provide medical adult day care services to Medicare
beneficiaries as a substitute for a portion of home health services otherwise provided
in the home. An evaluation of the clinical and cost-effectiveness of medical adult
day care services as an alternative approach to the delivery of Medicare home health
services will be conducted by the Secretary of the Department of Health and Human
Services. Five home health agencies have been selected to participate in the three-
year demonstration project, which was expected to begin in June 2006.⁴⁰
Legislation in the 109^th Congress
The Deficit Reduction Act of 2005 (DRA, P.L. 109-171) established a new
optional Medicaid benefit that allows states to cover HCBS for persons whose

³⁹ See CRS Report RL30813, Federal and State Initiatives to Integrate Acute and Long-term
Care: Issues & Profiles, by Edward A. Miller.
⁴⁰ HHS Public Affairs Office, CMS Announces New Home Health Demonstration, 2006, at
[ h t t p : / / www.cms.hhs.gov/ De mo P r o j e c t s E va l R p t s / downl oads/ MMA703_PRSi t e Sel e ct i o n
.pdf] visited July 27, 2006.

income does not exceed 150% of the federal poverty level without having to request
a Section 1915(c) or 1115 waiver from the Secretary of HHS.⁴¹ States may use this
option to cover adult day care, as well as a range of other long-term care services in
the community, for people of all ages who meet state-defined functional needs
criteria. States that include this benefit in their package of state plan services may
provide adult day care to Medicaid beneficiaries served under this option.
A number of other bills have been introduced in the 109^th Congress. As of July
2006, no legislative action had been taken on any of the bills. The bills described
below reflect interests by a variety of Members to make changes to federal coverage
of adult day care. The compilation is not comprehensive. A number of other bills
not included below have been introduced to address broader aspects of the long term
care system and propose changes that may also affect the nation’s adult day care
system.
H.R. 1981, introduced by Representative Lloyd Doggett, would amend Medicare
law to cover substitute adult day care services for eligible beneficiaries. Substitute
adult day care services are those items and services furnished to an individual by an
adult day care facility as part of a plan that substitutes such services for portions of
items and services furnished by a home health agency. The bill would permit
qualified adult day care service providers to receive Medicare reimbursement
equivalent to amounts paid under the home health care benefit.
S. 835, introduced by Senator Larry Craig, would amend the Internal Revenue
Code of 1986 to allow a nonrefundable income tax credit for 50% of expenses
exceeding $1,000 for the care of chronically ill individuals (who have attained
normal retirement age). Eligible expenses would include payments for adult day
care, among other long-term care services. S. 1826, introduced by Senator Herb
Kohl, would expand the credit for dependent care expenses to cover eldercare
expenses, which may include adult day care. In addition, the definition of “qualifying
individual” would be amended to include an individual who 1) has attained
retirement age (as defined in Section 216(l)(1) of the Social Security Act); 2) is the
spouse of or bears a certain relationship to the taxpayer; and 3) is a chronically ill
individual.
S. 2620, introduced by Senator Hillary Clinton, would amend the Older
Americans Act and authorize the Assistant Secretary for Aging to allot states funds
to provide older individuals with financial assistance to select a flexible range of
home and community-based long-term care services or supplies, including adult day
services (i.e., health and social day care services). State allotments would be based
on the number of individuals who are age 60 or older and whose income does not
exceed 100% of the federal poverty level.

⁴¹ See CRS Report RL33251, Side-by-Side Comparison of Medicare, Medicaid, and SCHIP
Provisions in the Deficit Reduction Act of 2005, by Karen Tritz, Sibyl Tilson, Julie Stone,
Chris L. Peterson, Jennifer O’Sullivan, Paulette C. Morgan, Elicia J. Herz, Jean Hearne, Jim
Hahn, April Grady, Hinda Chaikind, and Evelyne P. Baumrucker.