If your Residential Care Facility for the Elderly participates in California’s Assisted Living Waiver Program, or you are considering joining, you will hear a lot about “tiers.” A tier is the level of Assisted Living services assigned to a waiver participant. It also determines the daily rate Medi-Cal may pay the facility for those services.
This article explains what official Department of Health Care Services (DHCS) documents say about how tiers work. It is general information, not legal, clinical, or billing advice. DHCS makes the final determination. Always confirm current rules, rates, and procedures with DHCS and your Care Coordination Agency.
What a tier is
The federally approved Assisted Living Waiver application published by DHCS states that Assisted Living services are delivered in one of five possible tiers. Participants are assigned a tier based on their assessed care needs. As those needs change, the participant’s tier can change as well.
In official terms:
• Tier 1 is assigned to participants with the lowest level of support need. The same document describes Tier 1 as approximating Nursing Facility Level A (intermediate care) under the California Code of Regulations.
• Tiers 2, 3, and 4 are assigned to participants with more significant support needs, respectively. These tiers are described as gradations of Nursing Facility Level B (skilled nursing) level of care.
• Tier 5 is more specific. Official waiver language describes it as a community option for participants who need intense, focused attention with daily and instrumental activities because of a severe traumatic brain injury, and whose needs go beyond Tiers 1 through 4. Eligibility includes additional criteria in the waiver application. If you think a resident may fit this category, review the official criteria with your Care Coordination Agency rather than relying on a summary.
Eligible participants in all five tiers must still meet a nursing facility level of care, as determined through the program’s assessment process.
Who determines the tier
Your facility does not assign the tier, and a consultant cannot assign it either.
According to the approved waiver application, a registered nurse or social worker with an independent Care Coordination Agency administers the ALW Assessment Tool. The tool is based on the Minimum Data Set and is electronically scored. It measures the need for help with activities of daily living and instrumental activities of daily living, and the need for help in one or more of seven functional categories: cognitive patterns, behavioral symptoms, continence, communications, medications, skin conditions, or other treatments. The tool then calculates level-of-care eligibility and a tier of service.
The Care Coordination Agency submits the completed tool to DHCS. DHCS reviews 100 percent of assessments and reassessments and makes the final determination. Waiver participants are reassessed at least every six months, using the same tool. A clear, consistent record can help the people who complete that assessment see the resident’s needs. It cannot promise a particular tier.
What official rates look like
DHCS publishes a reimbursement rate sheet for the program. The sheet updated in December 2025, and posted as the 2026 rate sheet, lists these daily rates for Assisted Living services provided in an RCFE, an Adult Residential Facility, or a public housing setting served by a home health agency:
• Tier 1: $95.69 per participant per day
• Tier 2: $114.33 per participant per day
• Tier 3: $132.97 per participant per day
• Tier 4: $179.58 per participant per day
• Tier 5: $270.80 per participant per day
Rates, service codes, and modifiers can change. Confirm the current figures on the official DHCS rate sheet before you use them for planning or billing. Payment depends on enrollment, the approved tier, correct claims, and program rules. No rate is guaranteed simply because a resident lives in your facility.
The same official documents are clear on another point that often surprises new waiver providers: the Assisted Living Waiver does not pay for room and board. The resident is responsible for those payments.
Residential Habilitation is a separate waiver service. Official documents state that it is available to all tiers, requires prior approval from DHCS Nurse Evaluators, and provides additional, appropriate staff to help a participant acquire, retain, and improve self-help, socialization, and adaptive skills. That support may be one-to-one or another staff-to-participant ratio, depending on need. Approval is not automatic.
Practical habits for facility owners
These are organization tips, not DHCS rules. Keep care notes, assessments, and the service plan consistent so the record tells the same story. Ask your Care Coordination Agency how reassessments work and what documentation it needs from the facility. Remember that a tier can change at reassessment, and plan staffing with that possibility in mind. Before you bill, confirm that the person is enrolled in the waiver and that you are using the correct codes. A September 2026 DHCS policy letter reminds providers that claims must be for enrolled participants and approved services, and that claims that do not meet program standards can be denied. Do not send resident names, diagnoses, Medi-Cal numbers, or other health information through ordinary email or a website contact form. Use only secure methods approved by your facility and your Care Coordination Agency.
How RJ-RCFE Consulting can help
I am RJ Diaz, a California RCFE owner and operator in San Diego and a 21-year U.S. Navy veteran. RJ-RCFE Consulting is a Veteran-Owned business. I work remotely with facility owners across California, and I operate an Assisted Living Waiver Program-approved facility myself.
If you want help understanding how tier documentation is organized, our Tier Level Package is $500. That service is consulting and preparation support only. It does not include a promised tier, rate, or payment. For a broader conversation about the waiver, Assisted Living Waiver Program Consulting is $2,000. You can also start with a 60-minute Zoom Strategy Consultation for $250.
If you would like to talk through your situation, you can book a time here:
calendly.com/rjrcfeconsulting
Please do not send resident health information or personal identifiers through our contact form or ordinary email.