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Starting an ADHC/ CBAS Center in CA: 3 Funding Options You May Not Have Considered

A lot of people with whom I speak about opening an Adult Day Health Care Center, focus only on being reimbursed by Medi-Cal – not knowing that there are other avenues of reimbursement streams available.  Although Medi-Cal reimbursement may end up being your center’s primary income source, diversifying revenue is vital to a center’s long-term success. Below are three more revenue streams you may not have considered:

1. Veteran’s Administration
   • In general, in order to receive funds from the Veteran’s administration, your center will, at a minimum, need at least a full-time RN on the center premises daily.
   • A contract with the VA is required.
   • The VA may have differing requirements for staffing and site than the regulations of your state require, be sure to check these when determining if your center will have a contract with the VA.
   • The VA may pay more per participant/per hour than Medi-Cal reimbursement for the same.
2. Private Pay
   • This is one area of income, that in my experience, has been vastly undervalued.  I can’t stress enough, when opening an Adult Day Program, to plan for this source of revenue. There is a massive untapped market need for serving those who do not receive Medicaid– and who need the services of an Adult Day Program.
   • It may be less expensive to run a “social” day program within the Adult Day Health Care Program as you don’t have to follow the “certification” regulations, only the licensing regulations, which will generally have fewer professional staffing requirements. (Click here for blog post regarding the distinction between California’s ADHC /CBAS licensing and certification regulations)
   • Create a fee structure.  Because a center only has to follow licensing regulations and not certification, a center does not have to follow the Medi-Cal reimbursement structure either.  I’ve helped centers develop membership, hourly and daily reimbursement structures.  I’ve worked with centers to develop add-on services to their private pay participants based on the participant’s activities of daily living (ADL) and personal needs (such as showers, transportation, salon services, etc.)
3. Long-Term Care Insurance
   • Adult Day Services are covered by long-term care insurance.
   • If you have a participant who is private pay, ask if they have this type of insurance during the center tour, or your first contacts.
   • Use the fact that long-term care insurance is a payer for Adult Day Services as a marketing tool.
   • For long-term care insurance reimbursement, you will bill the participant, and they will receive reimbursement from their long-term care insurance carrier.