Background
Oregon’s Community First Choice State Plan Option, known as the K Plan, provides Medicaid-funded community living supports to qualifying adults with developmental disabilities. The challenged rules make a person ineligible for those particular benefits when the person lives in a dwelling owned, rented, controlled, or operated by the paid service provider, unless the provider is a family member.
Specialty Family Homes LLC and Joan Schrader, providers serving unrelated adults with developmental disabilities, brought a facial rule challenge under ORS 183.400. They argued that the rules exceeded the Oregon Department of Human Services’ statutory authority by restricting an individual’s choice of home and provider, and that the rules violated state and federal constitutional antidiscrimination protections. Individuals living with unrelated providers may still receive developmental-disability services, but the provider-controlled setting must be licensed as an adult foster home.
The Court’s Holding
The Court of Appeals held OAR 411-450-0060(6) and OAR 411-450-0020(34) and (35) valid. Oregon statutes promoting individual choice and integrated community living do not require ODHS to fund community living supports in every setting or through every provider an individual prefers. Reading those provisions alongside statutes requiring ODHS to license and regulate adult foster homes, the court concluded that ODHS could exclude unlicensed, provider-controlled homes from eligibility for this Medicaid program.
The rules also did not facially conflict with federal Medicaid law or the Fair Housing Act. Federal Medicaid provisions facilitate individual choice but do not require states to approve every preferred living arrangement regardless of licensing requirements, and the challenged rules turn on provider control and licensure rather than disability. The court further held that the rules did not violate state or federal constitutional antidiscrimination provisions because they are rationally related to the legitimate governmental interest in protecting the health and safety of people with disabilities receiving services.
Key Takeaways
- Statutory rights to choice and community integration do not guarantee Medicaid funding in every preferred home or from every preferred provider.
- ODHS may distinguish between related providers and unrelated providers who own, rent, or control a recipient’s dwelling.
- An unrelated provider may deliver services in a provider-controlled home if the setting satisfies applicable adult-foster-home licensing requirements.
- The court rejected the facial statutory, Fair Housing Act, and constitutional challenges and upheld all three rule provisions.
Why It Matters
The decision confirms ODHS’s authority to condition K Plan benefits on the separation of housing control from paid caregiving unless the provider is related to the recipient or the setting is appropriately licensed. It also illustrates the narrow scope of an ORS 183.400 facial challenge: questions about how a rule affects particular individuals or whether a specific provider-controlled home is appropriate require a fact-specific proceeding.