Arkansas - Assisted Living Facility — Licensing, Medicaid Enrollment and Startup Requirements

Last reviewed: 2026-08-15

In Arkansas, Assisted Living Facilities (ALFs) are licensed in two tiers: Level I and Level II. Level II facilities provide a higher level of care, including 24-hour response, limited nursing services, and assistance with activities of daily living for residents meeting a nursing home level of care. Only licensed Level II ALFs are eligible to enroll as Medicaid providers to receive reimbursement through the state's Living Choices Assisted Living Waiver.

The single biggest structural barrier to entry for a new assisted living provider in Arkansas is the Permit of Approval (P-o-A). Before the state will even accept an application for initial licensure, the applicant must secure a P-o-A from the Arkansas Health Services Permit Agency (HSPA). This acts as a strict Certificate of Need equivalent, meaning the state controls market entry based on a county-by-county bed need methodology, and will deny applications if no statistical need is projected.

1. Service Definition and Scope

Arkansas defines Assisted Living Facilities as congregate residential settings that provide housing, meals, laundry, and personal care. The state distinguishes between Level I and Level II facilities based on the acuity of residents and the scope of permitted medical services.

To participate in Medicaid, a facility must be licensed as a Level II ALF and enroll in the Living Choices Assisted Living Waiver. This waiver covers the cost of personal care, limited nursing, and supervision, but strictly prohibits Medicaid funds from being used to pay for the resident's room and board.

• Level I ALF: Provides basic personal care, assistance with activities of daily living (ADLs), and social activities, but is not permitted to provide nursing services.
• Level II ALF: Permits limited nursing services, medication administration, and serves residents who require a nursing facility level of care.
• Living Choices Waiver: The specific Arkansas Medicaid Home and Community-Based Services (HCBS) waiver that reimburses Level II ALFs for eligible adults aged 65 and older, or adults 21-64 with physical disabilities.
• Room and Board Exclusion: Medicaid reimbursement covers only the care portion of the service; room and board costs must be covered by the resident's private funds or Supplemental Security Income (SSI).

2. Regulatory and Oversight Agencies

The Arkansas Department of Human Services (DHS) is the primary umbrella agency overseeing both facility licensure and Medicaid enrollment. Within DHS, the Division of Provider Services and Quality Assurance (DPSQA) operates the Office of Long Term Care (OLTC), which is directly responsible for licensing, inspecting, and regulating ALFs.

Medicaid policy and waiver administration are handled by the DHS Division of Medical Services (DMS). Additionally, market entry is controlled by an independent regulatory body, the Health Services Permit Agency (HSPA), which evaluates regional bed need.

• DHS Office of Long Term Care (OLTC): Licenses ALFs, conducts life safety and health surveys, and enforces state regulations under 016.25.19 Ark. Code R. 005.
• Arkansas Health Services Permit Agency (HSPA): Evaluates regional bed need and issues the mandatory Permit of Approval (P-o-A) required for new facilities.
• DHS Division of Medical Services (DMS): Administers the Living Choices Assisted Living Waiver and oversees Medicaid reimbursement policy.
• Arkansas Medicaid Provider Enrollment Unit: Processes the Medicaid provider application, verifies credentials, and executes the Medicaid Provider Contract.

3. Gatekeeping Prerequisites: Who Can Even Apply

Arkansas strictly controls the supply of assisted living beds. The absolute structural precondition for any new ALF is obtaining a Permit of Approval (P-o-A) from the Health Services Permit Commission (HSPC) or Health Services Permit Agency (HSPA).

According to Arkansas Rule 402.1, the OLTC will not accept an initial licensure application for a newly constructed facility or an unlicensed existing structure without a current, valid P-o-A. This need-review process is the primary barrier to entry and blocks applicants before licensure review even begins.

• Permit of Approval (P-o-A): Mandatory need-based authorization from HSPA required before OLTC will accept any initial licensure application.
• HSPA Methodology Review: The state calculates county-by-county bed need; if no deficit is projected in the target county, a P-o-A application will be denied.
• Level II Designation Requirement: To eventually bill Medicaid, the facility must specifically apply for, build to, and meet the higher structural and operational standards of a Level II ALF.
• Waiver Slot Availability: The Living Choices waiver operates with an enrollment cap; facilities can only bill Medicaid if the admitted resident has secured an approved, funded waiver slot from DHS.

4. Licensure and Certification Requirements

Once the P-o-A is secured, providers apply to the OLTC for a Level II ALF license. This phase requires submitting detailed architectural plans, zoning approvals, and operational policies for state review.

Facilities must pass a life safety code inspection and an initial health survey before the license is issued. Licenses are valid for one year and must be renewed annually with the OLTC.

• Application Form: Submitted to OLTC with the distinctive facility name, ownership disclosure, and the valid P-o-A.
• Architectural Plan Review: Detailed blueprints must be submitted to and approved by the OLTC Plan Review Unit for compliance with physical environment and ADA standards.
• Life Safety Code Inspection: Conducted by OLTC or local fire authorities to ensure compliance with National Fire Protection Association (NFPA) standards.
• Initial Health Survey: An on-site inspection by OLTC surveyors to verify operational readiness, staffing plans, and policy compliance before residents are admitted.
• Licensure Fee: A required annual fee based on the number of licensed beds, submitted with the initial and renewal applications.

5. Medicaid Provider Enrollment

After obtaining the Level II ALF license, the facility must enroll in Arkansas Medicaid to bill for Living Choices waiver services. This is completed via the Arkansas Medicaid Provider Enrollment portal.

Applicants must submit the provider enrollment and contract package (AppMaterial), complete a CAQH ProView profile for credentialing, and sign the Arkansas Medicaid Provider Contract.

• Provider Type: Facilities must enroll specifically as a Living Choices Assisted Living provider under the applicable Medicaid provider type code.
• Arkansas Medicaid Portal: The online MMIS system where the AppMaterial package, W-9, and active Level II license are uploaded.
• CAQH ProView: The required credentialing database where providers must upload licenses, liability insurance, and ownership details for state and MCO review.
• Name Matching Rule: The exact legal name on the W-9, Level II license, and Medicaid application must match perfectly; mismatches result in automatic denial.
• Application Fee: Subject to the CMS institutional provider application fee and high-risk screening protocols, including fingerprinting for owners.

6. Staffing, Training and Background Checks

Level II ALFs must maintain sufficient staff to meet the 24-hour scheduled and unscheduled needs of residents. The facility must be managed by a qualified Administrator who oversees daily operations.

All personnel must pass strict criminal background checks and adult abuse registry screenings before providing direct care to vulnerable adults.

• Administrator Qualifications: Must hold a current Arkansas Nursing Home Administrator license or complete an OLTC-approved ALF Administrator certification program.
• Direct Care Staffing: Must have awake staff on-site 24/7; facilities with more than 16 residents require a designated relief staff person to cover emergencies.
• Nursing Services: Must employ or contract with a Registered Nurse (RN) to complete resident assessments and oversee limited nursing services.
• Background Checks: Mandatory fingerprint-based state and national criminal history checks processed via the Arkansas State Police.
• Registry Clearances: All staff must be cleared through the Arkansas Child Maltreatment and Adult Maltreatment Registries prior to employment.

7. Documentation, Policies and Records

Arkansas Rule 016.25.19 requires comprehensive documentation for both facility operations and resident care. Facilities must maintain a distinct, secure record for each resident.

Operational policies must cover admission and retention criteria, medication management, emergency preparedness, and the protection of resident rights.

• Resident Agreement: A written contract detailing services provided, base rates, and the explicit separation of room and board costs from Medicaid-covered care.
• Level of Care Assessment: Documentation verifying the resident meets the nursing facility level of care required for the Living Choices waiver.
• Service Plan: An individualized care plan developed by an RN within 30 days of admission, and updated annually or upon a significant change in condition.
• Medication Administration Records (MAR): Detailed logs of all medications administered by licensed nurses or trained medication assistants.
• Emergency Preparedness Plan: Written protocols for evacuation, sheltering in place, and ensuring staff coverage during natural disasters or emergencies.

8. Billing, Rates and Claims

Level II ALFs bill the Arkansas Medicaid program for services provided to Living Choices waiver participants. Claims are submitted electronically through the state's MMIS portal.

Reimbursement is based on a daily rate established by the Division of Medical Services (DMS). Providers must strictly separate Medicaid claims from private room and board charges.

• Daily Rate Reimbursement: Medicaid pays a flat per-diem rate for the assisted living service package, regardless of the specific daily interventions provided.
• Room and Board Exclusion: Facilities must collect room and board directly from the resident; billing Medicaid for these costs is strictly prohibited and constitutes fraud.
• Prior Authorization: Claims will only be paid if the resident has an active, approved Living Choices waiver slot and a prior authorization on file in the MMIS.
• Timely Filing: Claims must be submitted within 365 days of the date of service to be eligible for Medicaid reimbursement.
• Electronic Funds Transfer (EFT): Providers must set up EFT during the enrollment process to receive payments directly from Arkansas Medicaid.

9. Approval Sequence and Timeline

The pathway to becoming a Medicaid-enrolled Level II ALF in Arkansas is lengthy, primarily due to the initial need-review phase and construction requirements.

The entire process from P-o-A application to Medicaid enrollment can take 12 to 24 months, depending heavily on construction timelines and state review queues.

• Step 1: HSPA Permit of Approval (P-o-A): Submit application to HSPA; review and approval can take 3 to 6 months.
• Step 2: Architectural Review: Submit blueprints to OLTC Plan Review Unit; processing typically takes 30 to 60 days.
• Step 3: Construction/Renovation: Facility is built or modified to meet Level II physical standards (highly variable timeline).
• Step 4: OLTC Licensure Survey: Request initial inspection; license is issued upon passing Life Safety and Health surveys (30 to 60 days).
• Step 5: Medicaid Enrollment: Submit AppMaterial via the Medicaid portal; processing takes 60 to 90 days.

10. Common Denials and Survey Findings

Applications are frequently delayed or denied due to administrative errors or failure to prove bed need. During operations, OLTC surveys often cite facilities for documentation and staffing lapses.

Medicaid enrollment applications are notoriously sensitive to exact data matching across all submitted forms, leading to high initial rejection rates.

• P-o-A Denial: HSPA rejects the application because the county's bed need methodology shows no deficit for assisted living beds.
• Name Mismatch: Medicaid enrollment is denied because the legal name on the W-9 does not perfectly match the name on the Level II license.
• Incorrect W-9: Enrolling entities submit a W-9 with an individual's SSN instead of the facility's corporate Tax ID.
• Medication Errors: OLTC survey citations for incomplete MARs or unauthorized staff administering medications.
• Inadequate Assessments: Failure of the RN to complete or update the resident's individualized service plan within the required timeframes.

11. Key Contacts and Resources

Providers must interact with multiple divisions within the Arkansas Department of Human Services and the Health Services Permit Agency to maintain compliance.

Utilizing the official portals and maintaining contact with the specific units is essential for timely processing and issue resolution.

• DHS Office of Long Term Care (OLTC): Manages Level II ALF licensure, architectural review, and facility surveys (Phone: 501-682-8430).
• Arkansas Health Services Permit Agency (HSPA): Issues the mandatory Permit of Approval (P-o-A) for new facilities.
• Arkansas Medicaid Provider Enrollment Unit: Handles the AppMaterial package and portal submissions (Phone: 800-457-4454).
• Choices in Living Resource Center: Assists with resident waiver eligibility and slot allocation (Phone: 866-801-3435).
• CAQH ProView: The credentialing portal required for Medicaid provider enrollment data submission.

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