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

Last reviewed: 2026-09-10

The Tennessee Health Facilities Commission (HFC) licenses Assisted Care Living Facilities (ACLFs) to provide housing, personal care, and medical services, which are funded for Medicaid beneficiaries through the TennCare CHOICES 1115 managed care demonstration. The state distinguishes ACLFs from Residential Homes for the Aged (RHAs), as ACLFs are permitted to provide a higher level of care, including the administration of medical services, and are the specific facility type eligible for Medicaid reimbursement under the CHOICES program.

Securing an HFC license and enrolling as a TennCare provider are mandatory baseline steps, but the actual authorization to serve and bill for Medicaid members is gated by Managed Care Organization (MCO) network contracting. Enrollment with TennCare does not guarantee participation in an MCO network; providers must independently secure credentialing and active contracts with the specific TennCare MCOs operating in their region before they can receive Medicaid reimbursement.

1. Service Definition and Scope

In Tennessee, Medicaid covers assisted living services exclusively within licensed Assisted Care Living Facilities (ACLFs) for members enrolled in the TennCare CHOICES program. These facilities provide personal care, homemaker services, medication oversight, and supervision in a congregate residential setting.

The state explicitly separates the cost of Medicaid waiver services from room and board. Medicaid reimburses the facility for the care provided, while the resident is responsible for room and board costs out of their personal income, subject to strict state-mandated caps.

2. Regulatory and Oversight Agencies

The Tennessee Health Facilities Commission (HFC) is the primary regulatory body responsible for licensing health care facilities, including ACLFs, and serves as the CMS-designated State Surveying Agency. The HFC was formed by merging the former Health Services and Development Agency (HSDA) and the Department of Health’s Office of Health Care Facilities (OHCF).

The Bureau of TennCare manages the Medicaid program and oversees the CHOICES 1115 waiver, while the Department of Disability and Aging (DDA) handles specific provider credentialing protocols for HCBS providers.

3. Gatekeeping Prerequisites: Who Can Even Apply

Tennessee imposes strict structural prerequisites before an ACLF can actively bill Medicaid. The most absolute precondition is Managed Care Organization (MCO) contracting; TennCare operates under a managed care model, and providers must be accepted into the closed networks of the regional MCOs.

Additionally, providers must hold an active ACLF license from the HFC before applying for Medicaid enrollment, and must complete specific DDA credentialing prerequisites prior to submitting a credentialing application.

4. Licensure and Certification Requirements

ACLFs must be licensed by the Tennessee Health Facilities Commission. The licensure process ensures the facility meets state standards for physical environment, life safety, and operational policies.

Facilities providing specialized care, such as dementia care, must meet additional licensing rules specified for those settings.

5. Medicaid Provider Enrollment

Medicaid enrollment is governed by TennCare Policy PRO 16-001, which establishes provider screening requirements based on categorical risk levels. Enrollment is a prerequisite for MCO participation.

Providers must undergo screening before enrollment, during revalidation, and through ongoing monitoring. High-risk designations may apply to providers with previous exclusions or specific changes of ownership.

6. Staffing, Training and Background Checks

Tennessee does not mandate strict numerical staff-to-resident ratios for ACLFs, requiring instead that facilities maintain a sufficient number of staff to meet residents' needs. However, specific leadership and attendant roles are required.

Administrators must meet ongoing continuing education requirements, and all staff must receive mandatory annual safety training.

7. Documentation, Policies and Records

Providers applying through the DDA credentialing process must submit a comprehensive packet of organizational and policy documents. Failure to properly label each uploaded document can delay the credentialing process.

Facilities must maintain specific operational policies, including those for background checks and incident reporting, to meet state standards.

8. Billing, Rates and Claims

Medicaid reimbursement for ACLF services is processed through the contracted MCOs, not directly by the state. Providers must bill the specific MCO in which the resident is enrolled.

The state strictly regulates the amount an ACLF can charge a CHOICES member for room and board, ensuring it does not exceed a set percentage of the personal needs allowance.

9. Approval Sequence and Timeline

The approval sequence begins with obtaining the physical facility license from the HFC. Once licensed, the provider submits a credentialing application to the DDA.

After DDA credentialing and TennCare enrollment, the provider must negotiate and execute contracts with the regional MCOs. The DDA advises providers to allow 30 calendar days before requesting the status of a credentialing application.

10. Common Denials and Survey Findings

Applications are frequently delayed or denied due to administrative errors, such as failing to properly name uploaded documents in the DDA credentialing submission or submitting graphic files (JPEG/TIFF) which are not accepted.

TennCare enrollment may be denied or terminated for failure to complete required screening, exclusion from federal health care programs, or failure to report required changes.

11. Key Contacts and Resources

The Health Facilities Commission handles all physical licensure and Certificate of Need inquiries. The Department of Disability and Aging manages the HCBS provider credentialing intake.

Providers should direct credentialing application submissions and status inquiries to the dedicated DDA email address.

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