I appreciate the opportunity to address how current assisted living regulations disproportionately burden assisted living facilities, particularly those serving Auxiliary Grant (AG) recipients. JLARC’s own findings confirm what small providers have experienced for years: the regulatory framework has evolved into a medically intensive model that is fundamentally misaligned with the original intent, purpose, and capacity of residential?level care homes.

Adult Care Residences were established to support individuals transitioning from institutions under the Olmstead Act. Our role was never medical treatment; it was maintenance, support, and community integration for individuals with mental health needs and disabilities. However, beginning in 2005, the industry shifted. Larger, medically oriented facilities entered the DSS system to benefit from lighter regulations compared to nursing homes, and in doing so, reshaped the regulatory landscape. Residential?level providers were swept into a medical model that does not reflect our mission, our training, or our funding.

Despite these intensified requirements, AG reimbursement has not kept pace with inflation, cost of living, or market value, as JLARC clearly stated. Today, small AG?serving facilities receive less than $80 per day to care for residents—. We are capped, restricted, and expected to absorb every new regulatory cost without any corresponding increase in funding.

This imbalance is economically and financially infeasible. It undermines our ability to:

• Pay competitive wages
• Maintain safe buildings
• Manage rising liability
• Stay compliant with medical?model regulations that exceed our scope

To preserve residential?level care and prevent the collapse of small AG facilities, several regulations must be amended or separated so that AG?serving beds are classified as Residential Care Only, not grouped with nursing?home?like facilities that receive Medicaid, private pay, reverse mortgages, and other financial supports.

Below are the specific regulations requiring amendment and considerations

One of the most critical issues we must confront is the need for a formal reclassification of Residential?Only Care Facilities and a separate licensing track under the Division of Licensing — or, at minimum, a substantial and enforceable increase in Auxiliary Grant funding. Without one of these two structural changes, small AG?serving homes cannot survive.

• We are funded like residential homes,
• but regulated like medical facilities,
• and licensed under a system designed for nursing?home?like operations.

This is not just a mismatch — it is a structural failure.

Regulations Requiring Amendment

1. 2VAC40?73?45 — Liability Insurance

The newly mandated liability insurance tiers — ranging from $250,000 to $1,000,000 — were imposed without any funding mechanism, despite JLARC’s findings that Auxiliary Grant reimbursement is already far below market value. Small AG facilities operating on less than $80 per day cannot absorb these massive insurance increases. These requirements were built for medical?model facilities, not for residential?care homes whose purpose and risk profile are entirely different.

The core issue is this: Medical?model regulations are being applied to residential?care facilities, and insurers are responding by classifying us as medical providers — even though we are not funded, staffed, or licensed to operate as such.

This regulatory shift has intensified our liability exposure in dangerous ways:

• Medical oversight requirements artificially inflate our risk category. When regulations require licensed health care professionals, dietitians, medication reviews, and Board?registered medication aides, insurers treat us as clinical environments — raising premiums beyond what residential facilities can sustain.

• ? Medical documentation mandates increase legal vulnerability. ISP coordination with multiple medical professionals, dietitian certifications, and clinical medication reviews create documentation that insurers interpret as medical records. Any deviation becomes a liability threat.
• ? Medical?model staffing requirements imply clinical responsibility. Requiring Board?registered medication aids or licensed health care professionals signals to insurers that we are performing medical tasks, even though our residents already receive medical oversight through physicians, therapists, and insurance care coordinators.
• ? Medical diet oversight places us in a clinical nutrition category. Dietitian?mandated reviews every six months classify us closer to skilled nursing or medically intensive assisted living — dramatically increasing liability costs.

These regulations force small AG facilities to operate outside the scope of our intended purpose, which is residential care — not medical treatment. They create a semi?quasi nursing environment that we were never designed to function in and never funded to sustain.

For these reasons, all regulations that impose medical oversight on residential?care facilities must be amended or revoked. This is not optional — it is necessary to:

• reduce liability insurance costs
• prevent insurers from misclassifying residential homes as medical facilities
• protect small AG providers from financial collapse
• restore the original intent and purpose of residential?level care

Liability requirements must be scaled to residential?level risk, not medical?model expectations. Without these changes, small AG facilities will continue to be regulated out of existence.

2. 22VAC40?73?80 — Management of Resident Funds

The regulation prohibits charging AG residents for account administration. However, when a resident has a representative payee who charges a fee, the facility is forced to absorb that cost. This is fiscally unfair and economically harmful. Amendment requested: The department of social service must adjust for clients fees to be paid, just as they do for conservators and guardians.

3. 22VAC40?73?490 — Health Care Oversight

Requiring a licensed health care professional to conduct on?site oversight every six months is a medical?model requirement inappropriate for residential?level care. Residents already receive oversight from physicians, therapists, and insurance care coordinators. Amendment requested: Revoke this requirement for residential?only facilities.

4. 22VAC40?73?620 — Oversight of Special Diets

Dietitians oversight every six months is a medical?nutrition requirement that belongs under Medicaid, not AG housing. Amendment requested: Exempt residential?only facilities unless the resident’s insurance or Medicaid covers the service.

5. 22VAC40?73?670 — Qualifications and Supervision of Staff Administering Medications

This regulation requires staff administering medications to be licensed or registered with the Virginia Board of Nursing, or to complete the full 68?hour medication aide course with clinicals. While this may be appropriate for medically intensive facilities, it is not appropriate for residential?only Auxiliary Grant homes, and it is not aligned with the original purpose of Adult Care Residences.

Other AG?serving industries do NOT require 68 hours of training to hand out medication.

Group homes, sponsored residential homes, and other community?based programs serving AG recipients routinely administer medications with far less training, often relying on:

• Basic medication administration courses
• Provider?specific training modules
• Electronic medication systems
• Direct oversight from case managers and care coordinators

these programs are not required to complete 68 hours of coursework, clinical rotations, or Board of Nursing registration — yet they serve the same population and operate under the same AG funding constraints.

Technology has dramatically reduced medication?administration errors.

Modern computerized systems — including eMARs, pharmacy?linked medication logs, barcode scanning, and automated refill alerts — have transformed medication administration. These systems:

• Reduce human error
• Provide real?time alerts
• Allow pharmacists and physicians to monitor medication changes
• Automatically flag discrepancies
• Track compliance electronically

Technology itself has become the safeguard. The regulation has not kept up with the reality.

training costs have skyrocketed — creating an impossible burden for small AG facilities.

Medication aide classes that once cost $100 now cost:

• $675 on the low end
• $900–$1,000 on the high end

This is for a single 68?hour course, not including:

• Clinical fees
• Testing fees
• Retake fees
• Transportation
• Lost staffing hours
• Overtime to cover shifts

For small AG facilities operating on less than $80/day per resident, these costs are devastating. We cannot compete with larger facilities that pay higher wages and can absorb training costs. We cannot recruit or retain staff when the entry barrier is so high. And we cannot sustain operations when every regulatory change increases our liability and our expenses.

This regulation forces residential?care facilities into a medical?model environment.

Requiring Board?registered medication aids implies:

• Clinical responsibility
• Medical oversight
• nursing?level liability
• Higher insurance premiums
• Increased legal exposure
• Insurers classify us as medical providers because the regulation looks like a nursing?home requirement, not a residential?care requirement. This drives liability costs upward and pushes small AG facilities outside their intended scope.

This regulation must be amended or revoked for residential?only facilities.

• Residential?care facilities should be allowed:
• Use staff who complete the 68?hour training without Board of Nursing registration
• Use shorter, residential?appropriate medication courses
• Rely on modern computerized medication systems
• Train staff according to residential?level risk, not medical?model expectations
• Revoking or amending this regulation for residential?only facilities will:

Reduce liability insurance costs

Prevent misclassification as medical providers

Increase the pool of available staff

Reduce training expenses

Restore the original purpose of AG?serving homes

Protect small facilities from closure

6. 22VAC40?73?690 — Medication Review

Annual medication reviews by licensed health care professionals are redundant. Modern electronic systems already allow pharmacists and physicians to review medications directly. Amendment requested: Remove or modify this requirement for residential?only facilities.

Unfortunately, Small AG?serving Adult Care Residences are being regulated out of existence. The current framework forces us to operate outside our intended scope while receiving a fraction of the funding available to medical?model facilities. Without regulatory relief and proper classification, Virginia risks losing the very residential homes that support Olmstead compliance and provide stable, community?based housing for vulnerable adults.

I respectfully and urgently request that these amendments be taking seriously and take immediate action to amend these regulations and establish a Residential?Only classification for Auxiliary Grant beds. This change is not simply a matter of administrative preference — it is a matter of fairness, sustainability, and survival for the small residential?care facilities that serve Virginia’s most vulnerable citizens.

The Auxiliary Grant was never designed for medical?model environments. It was created to support individuals living at home, where no medical regulations exist. It is also used in supportive housing programs, where regulations are minimal, flexible, and aligned with community?based living. Yet DSS places small AG?serving residential facilities under the maximum level of regulation, while paying us the least amount of funding.

This is an impossible contradiction.

We are being held to the highest regulatory burden with the lowest financial support. We are being treated like medical facilities without medical funding. We are being regulated like nursing homes without Medicaid reimbursement. We are being forced into a medical model that does not match our mission, our training, or our purpose.

For the sake of the residents who depend on us — individuals with mental disabilities, individuals transitioning from institutions, individuals who need community?based living — we must be removed from the medical?model regulatory structure. We must be recognized as Residential?Only facilities, with regulations that reflect our actual scope and purpose.

Without this change, small AG facilities will continue to close. And when they close, residents lose their homes, their stability, and their place in the community. Virginia loses the very system that makes Olmstead compliance possible.

I ask you to act now — not later — to protect the future of residential?care homes and the people who rely on them. Establish a Residential?Only classification for AG beds, amend the medical?model regulations, and restore fairness to the system that has become unbalanced, unsustainable, and unjust.

Thank you for your time and consideration.