Michigan AFC Licensing News and MI Choice Waiver Updates – 2025

Overview

Michigan’s adult foster care (AFC) facilities and the MI Choice Medicaid Waiver program have seen significant developments in the past year. Facility owners, administrators, and healthcare professionals should be aware of new regulatory changes, funding updates, compliance requirements, and efforts to improve service access. This 2025 update provides a comprehensive look at Michigan’s AFC licensing news, MI Choice Waiver program updates, and related topics such as Medicaid compliance and LARA (Licensing and Regulatory Affairs) rule changes in Michigan’s long-term care sector.

LARA Regulatory Changes Impacting Adult Foster Care

Licensing Rules Overhaul: Michigan’s Department of Licensing and Regulatory Affairs (LARA) is modernizing the rules for Adult Foster Care homes. In 2024, LARA convened an AFC advisory committee to comprehensively review and update the licensing rules – the first major overhaul in years. The goal is to consolidate multiple rule sets (for family homes, small and large group homes, etc.) into a single, consistent rule set that reflects today’s practice standards across all facility types. This means outdated or redundant provisions will be eliminated, and requirements will be more uniform except where differences are truly necessary. For example, proposed rules redefine key terms (such as what constitutes an “incident”) and standardize procedures across AFC homes of all sizes.

Incident Reporting Requirements: One noteworthy change is how AFC facilities must handle incident reporting. Under the revised rules, when any notable incident occurs (from resident injuries to unusual deaths or a resident elopement), the home must document it on a state-approved form and retain that record for at least two years. The AFC Incident/Accident Report (BCAL-4607) form is to be kept on file, and LARA inspectors can review these reports during license renewal inspections or upon request, instead of requiring facilities to submit every minor incident to the department in real time. Facility administrators should ensure they notify residents’ authorized representatives within 48 hours of a serious incident (as required by rule) and maintain an organized incident log. This streamlined approach reduces paperwork while still allowing regulators to audit incident handling for compliance.

Quality Assurance Programs: LARA is also introducing quality assurance (QA) requirements for certain AFC providers. Following the model already in place for Homes for the Aged (assisted living facilities), larger adult foster care homes will be expected to implement an internal quality assurance program to continuously monitor and improve care. This entails proactive self-audits, tracking of key quality metrics (like medication errors or falls), and having a corrective action process. By mandating QA programs, LARA aims to foster a culture of continuous improvement and early issue detection in adult foster care settings – a practice that ultimately benefits resident safety and care quality. Owners and administrators should start developing QA policies and training staff on these protocols in anticipation of the new rule’s final approval.

Legislative Updates: Recent legislation has reinforced these regulatory shifts. In late 2024, Michigan lawmakers passed a package of bills (e.g. Senate Bill 695) amending the Adult Foster Care Facility Licensing Act. One change was to establish clearer enforcement standards: LARA can now deny, suspend, or revoke an AFC license if the licensee is found in “willful noncompliance” or “substantial noncompliance” with licensing requirements. Previously, the law required “willful and substantial” violation together, but the updated language makes it easier for regulators to act on either willful misconduct or repeated/serious violations. “Substantial noncompliance” is defined to include either repeated rule violations or any violation that jeopardizes a resident’s health or safety. In practice, this means facilities with patterns of non-compliance or a single egregious incident can face swift penalties even if the owner didn’t knowingly break the rules. AFC administrators must therefore tighten their compliance efforts – minor violations left uncorrected could accumulate into a substantial noncompliance finding under the new standards.

Another statutory change created the Adult Foster Care Licensing Fee Fund within LARA. License fees that AFC homes pay will go into this dedicated fund to support licensing operations and oversight. This funding change is essentially budget-neutral (the fee schedule itself isn’t changing), but it ensures the fees are reinvested into inspecting and regulating AFC facilities. Consistent funding for oversight may lead to more timely inspections and robust enforcement, so facilities should expect LARA to be well-resourced in monitoring compliance. Finally, the legislation also clarified the scope of what is considered an AFC facility – exempting certain “camp” settings. Specifically, adult care camps licensed under the new Camp Licensing Act will no longer be categorized as adult foster care homes. This separates adult foster care from adult/children camp programs and means camp operators will follow a different licensing process. While the camp provision is niche, it’s important for any providers running adult respite camps or similar programs to know they might fall under a new regulatory scheme instead of AFC licensing.

Takeaway: These regulatory and legislative updates from LARA constitute major Michigan AFC licensing news. Facility owners should stay tuned for the final promulgation of the unified AFC rules in 2025 and adjust their policies accordingly. Expect new requirements around incident documentation, internal quality assurance, and more stringent compliance enforcement. Proactively updating your facility’s procedures now – training staff on incident reporting protocols, conducting self-audits, and addressing any recurring violations – will position your AFC home for a smoother license renewal in this new regulatory environment.

MI Choice Waiver Program Updates 2025

The MI Choice Waiver Program (often called “My Choice”) is Michigan’s Medicaid home-and-community-based services (HCBS) waiver that enables eligible seniors and adults with disabilities to receive long-term care services outside of nursing homes. In 2025, there have been several important updates and trends in MI Choice relevant to providers and care managers:

Waiver Renewal and Policy Changes: Michigan’s MI Choice waiver operates in five-year cycles. The current waiver was last renewed effective July 2019, and the state has been preparing for its 2024 renewal cycle. Many of the policy changes implemented in recent years stem from federal approvals during these renewals. For instance, the 2019 waiver renewal brought numerous policy updates to the program, which Michigan codified in the Medicaid Provider Manual (MI Choice chapter) effective December 1, 2019. These included clarifications to service definitions and processes to align with federal HCBS rules. As we move into 2025, providers should be aware that any 2024 waiver renewal may similarly introduce tweaks to eligibility processes, service offerings, or reporting requirements. It’s wise to review MDHHS bulletins and provider manual updates around the renewal period to stay current on MI Choice policy.

Electronic Visit Verification (EVV) Implementation: A significant 2024 development is the rollout of Electronic Visit Verification (EVV) for certain MI Choice services. EVV is a federally mandated system (under the 21st Century Cures Act) that electronically verifies when and where personal care services are delivered. Michigan has now integrated EVV requirements into the MI Choice program. As of September 2024, any personal care services (PCS) provided through MI Choice must comply with EVV tracking and reporting. Providers delivering in-home services (like caregiving, respite, or homemaker services under the waiver) need to use an approved EVV system to log each visit’s date, time, location, and tasks. MDHHS updated the Medicaid Provider Manual in October 2024 to include this new requirement, and waiver agencies have communicated EVV go-live details to their provider networks. For AFC homes and home care agencies serving MI Choice clients, this means investing in training staff on the EVV app/devices and adjusting workflows to ensure every billable visit is properly verified. EVV compliance is not only a regulatory requirement but also a condition for Medicaid payment – missing or inconsistent EVV records could lead to denied claims or audit findings. While EVV may be an adjustment for longtime caregivers, it ultimately helps prevent fraud and ensure clients receive the scheduled care, which strengthens overall Medicaid compliance for home-based care.

Expanded Access Initiatives: Service access under MI Choice has been a priority, as demand often exceeds available slots. The program is funded to serve a limited number of participants in each region (via regional waiver agencies), which historically led to waiting lists in many areas. In fact, after an initial intake and screening, applicants in some parts of Michigan may go on a waitlist until a waiver slot opens up. This remains true in 2025 – if all MI Choice slots are filled, new applicants must wait even if they are otherwise eligible. Recognizing this bottleneck, Michigan has piloted an innovative solution: presumptive eligibility for MI Choice. In 2022, the state legislature (via Public Act 9 of 2022) set aside $5 million of federal American Rescue Plan (ARPA) funds to create a MI Choice Waiver Presumptive Eligibility Risk Pool. This allows participating waiver agencies to temporarily enroll applicants who likely meet eligibility, so they can start receiving services while their formal Medicaid application is finalized. By mid-2023, eight waiver agencies were using presumptive eligibility to expedite access for individuals in need. This initiative effectively fast-tracks services for at-risk seniors, preventing unnecessary nursing home placements while paperwork is pending. From a provider perspective, presumptive eligibility means you might see referrals for new clients more quickly. However, it also requires coordination – if someone is presumed eligible and later found not financially eligible for Medicaid, the risk pool covers the interim costs. Providers should verify with the waiver agent that a new client’s services are authorized under presumptive funding to avoid billing issues. Overall, this policy is a positive development to improve access: fewer vulnerable adults languish on waiting lists without care. As Michigan continues to evaluate the success of presumptive eligibility, we may see it become a permanent feature or even expand, so staying informed through your waiver agency’s updates is key.

Program Scale and Future Outlook: Currently, 20 regional waiver agencies administer MI Choice statewide, collectively serving thousands of participants. The income and asset eligibility limits are updated annually (for example, in 2024 a single individual can earn up to $2,829/month which is 300% of SSI, and have $2,000 in countable assets to qualify). In terms of services, MI Choice offers a broad menu – from personal care, adult day care, and respite to home modifications and skilled nursing – to support individuals living in the community. Looking into 2025 and beyond, Michigan is working on “rebalancing” long-term care spending to favor home- and community-based services like MI Choice. The cost-effectiveness is clear: the average annual cost per MI Choice participant is much lower than a year of nursing home care. State policymakers and advocates continue to push for expanded funding that could increase the number of MI Choice slots available and boost provider reimbursement rates. Any future state budgets may contain provisions to raise the caps or infuse more dollars into waiver services, so providers should watch the budget process each year. Moreover, integration with other programs is on the horizon – there’s ongoing coordination between MI Choice and MI Health Link (the integrated Medicare-Medicaid demonstration) to ensure smooth transitions for dually eligible individuals. In summary, MI Choice Waiver updates in 2025 center on making the program more accessible and accountable: new tech like EVV improves accountability, while initiatives like presumptive eligibility improve accessibility.

Medicaid Compliance for Adult Care Homes and Waiver Providers

Operating an adult foster care home or providing services under the MI Choice waiver means navigating a complex landscape of Medicaid compliance. Regulators at both the state and federal level are placing increased emphasis on accountability, proper documentation, and quality of care standards in community-based settings. Here are key compliance considerations for 2025:

HCBS Rules Compliance: All providers participating in Medicaid HCBS waivers (like MI Choice) must adhere to the Home and Community-Based Services (HCBS) Settings Rule. These federal regulations ensure that non-institutional settings offer full community integration, respect residents’ rights, and foster independence. Michigan’s MDHHS is responsible for oversight of waiver programs to ensure they meet the HCBS rules. For AFC homes serving Medicaid waiver clients, this means you should have policies guaranteeing things like resident choice (in daily schedule, food, activities), privacy (lockable doors, privacy for visits), and community access (opportunities for outside activities). Over the past few years, MDHHS and LARA have surveyed providers and required corrective action where settings didn’t fully comply with these standards. By March 2023, states had to be in full compliance with the HCBS rule. In 2025, expect ongoing audits or site visits to verify continued compliance. If your home made changes (for example, removing restrictive house rules or installing locks on bedroom doors) as part of the HCBS compliance process, maintain those changes and be prepared to demonstrate compliance if asked. Non-compliance could jeopardize a home’s ability to serve waiver clients. Thankfully, resources and technical assistance have been provided – MDHHS has published HCBS transition guidelines and surveys to help facilities self-assess. It’s prudent for administrators to review those guidelines periodically and ensure their facility’s environment and policies remain person-centered as intended by the HCBS regulations.

Medicaid Provider Manual & Policy Bulletins: Michigan’s Medicaid Provider Manual is updated quarterly, and it contains the rules providers must follow when delivering waiver services. Staying compliant means staying current. For example, as noted, the October 2024 update to the manual added the EVV requirement for MI Choice providers. Other recent policy bulletins have clarified billing codes, service documentation requirements, and COVID-19 flexibilities ending. All AFC and home care providers who bill Medicaid (either directly or via a waiver agency) should subscribe to MDHHS bulletins or regularly check the manual revisions. Key sections to monitor include general requirements, record-keeping standards, and any service-specific criteria (e.g. medication administration rules or caregiver training mandates). By integrating these policy updates into your facility’s procedures, you can avoid inadvertent non-compliance. Many providers find it useful to designate a compliance officer or lead caregiver to review bulletins and ensure any changes (like a new form or assessment tool) are implemented promptly.

Audits and Record-Keeping: Proper documentation is not just best practice – it’s your best defense in an audit. Medicaid-funded AFC homes and MI Choice service providers are subject to audits by various entities. LARA licensing consultants will review resident records, medication logs, incident reports, etc., at inspections. Additionally, MDHHS’s Office of Audit or external auditors may conduct Medicaid program integrity audits focusing on billing and care documentation. If your facility bills Medicaid for personal care or supplemental services, ensure that progress notes, service logs, and time sheets match the claims. For MI Choice waiver agencies, MDHHS conducts External Quality Reviews annually, which often include visiting a sample of provider sites. Common pitfalls that lead to audit findings include: missing documentation of delivered services, care plans that aren’t up-to-date or not signed by the participant, lack of evidence for staff training or qualifications, and failure to document incidents or complaints and their resolution. To bolster compliance, AFC administrators should implement routine internal chart audits – for example, reviewing a couple of resident files each month for completeness against licensing and Medicaid requirements. Maintaining organized records for at least 10 years (depending on the record type and requirement) is critical. Michigan requires, for instance, that incident/accident reports be kept for a minimum of 2 years, and Medicaid billing records typically for 10 years. In the event of an audit, having well-kept records readily available will make the process far smoother and demonstrate your commitment to transparency.

Licensing and Medicaid Coordination: It’s important to recognize that state licensing compliance and Medicaid compliance often intersect. An adult foster care home with Medicaid waiver residents essentially operates under two oversight umbrellas – LARA licensing and MDHHS Medicaid rules. The vast majority of licensing rules (health, safety, staffing ratios, training, etc.) dovetail with quality requirements for Medicaid as well. If LARA finds serious violations (e.g. abuse/neglect, unsafe conditions) and takes action, it could affect your ability to accept new Medicaid clients or remain a waiver network provider. Conversely, if Medicaid authorities find fraudulent billing or consistently poor care outcomes, they could suspend payments or terminate provider agreements even if your state license is still active. Thus, full compliance in both realms is non-negotiable. Recently, with the new enforcement definitions mentioned earlier, LARA can act on “substantial noncompliance” – it’s conceivable that a pattern of Medicaid audit issues might contribute to such a finding. The best strategy for providers is a proactive compliance program: regular staff training on both licensing rules and Medicaid requirements, prompt correction of any violations or deficiencies, and a cooperative attitude with regulators. Not only does this avoid penalties, it also builds a positive reputation for your facility, which can be a selling point to families and referral sources.

In summary, Medicaid compliance for adult care homes in Michigan involves a multilayered effort – adhering to federal HCBS standards, following state Medicaid manual policies, and keeping robust documentation to withstand audits. Facility owners and administrators should cultivate an organizational culture that values compliance as part of quality care. The investment in good record-keeping, staff education, and internal oversight pays off in avoiding costly fines, recoupments, or even loss of licensure. In 2025, with regulators empowered by clearer rules and better data (EVV, etc.), compliance is truly the name of the game for sustainable operation in the AFC and waiver arena.

Funding and Workforce Updates

Financial sustainability and staffing remain pressing concerns for AFC homes and community care providers. Recent funding developments aim to address some of these issues:

Direct Care Worker Wage Increases: Michigan’s ongoing challenge in long-term care is the shortage of direct care workers (DCWs) – the frontline caregivers who assist residents with daily living. Low wages have been a primary culprit for high turnover. In the FY 2024 and FY 2025 state budgets, lawmakers have included funds to boost DCW wages, albeit modestly. For Fiscal Year 2025, the Michigan Legislature approved a $28.7 million investment specifically to increase direct care worker wages, which translates to roughly a $0.20 per hour raise for these workers. This wage increase applies to DCWs in various Medicaid-funded settings, including those working in adult foster care homes, home health aides serving waiver clients, and staff in other community-based programs. While any raise is welcomed (“better than nothing,” as one advocate noted), providers and industry groups have voiced that this increment is insufficient to solve the staffing crisis. Even after the increase, many DCWs in Michigan earn around $16 an hour on average, and agencies report difficulty recruiting and retaining staff at those wages. From the provider perspective, this means continued pressure to do more with limited staff, stretching overtime or having administrators cover shifts. It also means advocacy efforts are ongoing – many provider associations are pushing for higher wage floors (e.g., a move toward a $18–$20/hour starting wage) to stabilize the workforce. Owners should budget accordingly for the mandated wage passthrough and also recognize that competitive wages are key to retaining quality caregivers in a tight labor market. Additionally, keep an eye on legislative developments: there is broad recognition that without sufficient caregivers, service capacity (and compliance) suffers, so future supplemental funding or policy changes (like training incentives or career ladder programs) may emerge to support the workforce.

Medicaid Rate Adjustments: Alongside worker wages, Medicaid reimbursement rates determine a facility’s financial health. In recent times, Michigan has incrementally adjusted MI Choice capitation rates and provider payment rates to account for wage increases and inflation. For example, the MI Choice waiver agencies’ rates for FY 2024 included funding specifically earmarked for the direct care wage increases. Some waiver agencies have passed along rate hikes to contracted providers (like AFC homes that provide waiver services), but margins remain slim. It’s crucial for AFC providers to engage with their waiver agencies during contract negotiations – ensure that any state-funded increases for wages or services are reflected in the per diem or hourly rates you receive. On the licensing side, as mentioned, LARA’s new AFC Licensing Fee Fund centralizes how licensing fees are used, but it did not raise the fees at this time. Thus, licensing costs remain stable, and the focus is on using those funds efficiently for facility oversight.

ARPA and One-Time Investments: Michigan received a substantial amount of federal funding through the American Rescue Plan Act (ARPA) of 2021 earmarked for HCBS enhancements. We’ve already discussed one use – the presumptive eligibility pilot – but there are other initiatives funded by ARPA that could indirectly benefit providers. For instance, Michigan allocated ARPA HCBS dollars toward direct care workforce training and retention programs, and to bolster telehealth and infrastructure for home care. Some providers may access grants for infection control improvements or technology upgrades. The state’s ARPA HCBS spending plan (as of late 2023) includes proposals for things like caregiver training academies and long-term care informational campaigns. Providers should stay alert for grant opportunities or pilot programs announced by MDHHS or workforce agencies. Participating in a funded pilot (for example, a fall-prevention program or a specialized dementia training) can not only improve your services but also potentially provide stipends or equipment at no cost.

Financial Audits and Accountability: With increased funding comes increased scrutiny. The State is keen to ensure that funds – especially those earmarked for wages – are used as intended. AFC operators should be prepared to document that direct care wage funds are passed through to employees (e.g., maintain payroll records showing the wage hike). Medicaid billing will also be under the microscope; any irregular claim could be flagged by advanced analytics MDHHS now employs. Ensure that you bill only for services actually delivered and that your staff qualifications meet the requirements for the rate billed. Misuse of Medicaid funds can lead to recoupment or worse, so financial integrity is a must.

Bottom Line: The funding landscape in 2025 offers a mix of small improvements and ongoing challenges. Medicaid compliance and financial viability go hand in hand – by advocating for better rates and utilizing available funds properly, providers can sustain their operations and continue delivering quality care. Be sure to leverage state resources (training funds, technology grants) when available to offset costs. And on the workforce front, treat your direct care staff as the valuable asset they are: even as we push for systemic wage increases, retaining staff through appreciation, flexibility, and supportive work culture is something every individual provider can do. A stable, well-trained team not only improves compliance and care outcomes but also positions your facility for success in the evolving adult care landscape.

Conclusion

The adult foster care and MI Choice waiver sectors in Michigan are navigating a period of significant change and opportunity. Regulatory updates from LARA are raising the bar on quality and safety in AFC homes, while Medicaid policy changes aim to enhance service access and ensure accountability in how care is delivered. For facility owners and administrators, staying informed is half the battle – use this information as a springboard to review your own operations for any needed adjustments. Update your compliance checklists to align with new rules, invest in staff training for areas like EVV and person-centered care, and don’t hesitate to reach out to state agencies or industry associations for guidance on new programs or requirements.

Despite challenges such as tight budgets and workforce shortages, the trajectory is toward improvement and innovation. Increased oversight and audits, while daunting, ultimately help weed out bad actors and elevate the reputation of community care. Funding boosts, though modest, acknowledge the value of direct care workers and pave the way for future investments. And initiatives like presumptive eligibility demonstrate Michigan’s commitment to making care more accessible to those who need it most, which can also translate into new clientele for providers ready to grow and adapt.

As we move further into 2025, keywords like “Medicaid compliance for adult care homes” and “MI Choice Waiver updates 2025” will continue to trend in our industry discussions – reflecting exactly these ongoing changes in rules, policies, and best practices. By optimizing your operations for compliance and quality (think “LARA regulatory changes Michigan” and what they require) and by capitalizing on new opportunities (think “Michigan AFC licensing news” and how it can benefit your facility’s standing), you can enhance both your facility’s performance and the care experience of your residents. In the end, adapting to change is what AFC and HCBS providers do best – it’s in our DNA as community-based caregivers. With proactive effort and a focus on continuous improvement, Michigan’s adult foster care homes and waiver services will thrive under the new standards, delivering safe, compassionate, and person-centered care to our most vulnerable citizens.

Sources:

• Michigan Legislature, SB 695 Analysis, Adult Foster Care Facility Licensing Act amendments (enforcement standards, licensing fee fund, camp exclusion).

• LARA Annual Regulatory Plan 2024-2025, proposed AFC rule revisions (unifying rules, modernizing standards).

• Michigan Administrative Code Draft, AFC Incident Reporting rule update (incident definition and recordkeeping).

• MDHHS Medicaid Provider Manual Update, EVV requirement for MI Choice personal care services (effective Sept 2024).

• Michigan Advance News, Direct care worker wage increase in FY 2025 budget (~$0.20/hour raise, $28.7M investment).

• Michigan Dept. of Health and Human Services, HCBS Compliance Oversight for waiver programs (ensuring AFC/HFA meet federal settings rule).

• Medicaid.gov – Michigan HCBS ARPA Plan Update (Jul 2023), MI Choice Presumptive Eligibility pilot funding and implementation.

• Michigan Elder Justice Initiative, MI Choice waitlist information (limited slots and waiting lists by region).