How Michigan Medicaid Pays for Adult Day Health: MI Choice Waiver Agencies, Negotiated Rates, and a Second Payer for Dual Eligibles

Michigan does not license adult day centers, does not publish an adult day rate, and does not pay adult day centers directly. Under the MI Choice waiver, the state pays nineteen regional waiver agencies a monthly capitation, each agency contracts with the adult day providers in its region at a rate the two of them negotiate, and the center bills the agency. Since January 1, 2026, dual-eligible members in four regions have had a second payer — the MI Coordinated Health plans that replaced MI Health Link — with a statewide expansion expected January 1, 2027. Here is how the money flows, what the waiver requires of a center in place of a license, and what the state's $3.40-an-hour direct care wage add-on means for your adult day units.

ElderSuite serves adult day care centers nationwide. This piece is Michigan-specific — Adult Day Health under the MI Choice waiver and the Adult Day Program under MI Coordinated Health, for seniors and adults with physical disabilities, not skill-building under the developmental disabilities waivers.

Managed care, with the waiver agency as your payer

The MI Choice waiver, MI.0233, runs December 1, 2023 through November 30, 2028, and describes itself plainly: “MI Choice is a Medicaid managed care program.” The waiver agencies are prepaid ambulatory health plans; MDHHS contracted with 19 of them in fiscal 2025 — mostly Area Agencies on Aging, alongside organizations such as Reliance Community Care Partners, Easterseals MORC, CareWell Services, and A&D Home Health Care — covering every region of the state. Each agency “uses an open bid process to contract with qualified providers in their service area,” and must keep at least two providers for every service, with capacity for 125 percent of expected use, within 30 miles or 30 minutes of each member.

The Medicaid Provider Manual draws the payment line in its MI Choice chapter: waiver agencies “determine the status of the qualifications and certifications (if applicable) for all direct service providers, negotiate and enter into contracts with the providers, and reimburse providers.” Providers bill the agency; the agency verifies the bill against the person-centered service plan, pays it, and reports the encounter to the state within 180 days. The program is not small — the state appropriated $557.6 million for the waiver in fiscal 2026, up from $500.3 million, and enrollment stood at 12,827 in November 2024 — but adult day is a thin slice of it: the waiver's own cost model assumes about 290 adult day health users a year.

That thinness shows up in the state's quality review. The SFY 2025 External Quality Review found four waiver agencies non-compliant with the two-provider standard for adult day health and nine more compliant only through an approved exception. A licensed-quality center in a thin county has leverage.

Adult day health as MI Choice defines it

The manual defines Adult Day Health as services “furnished four or more hours per day on a regularly scheduled basis, for one or more days per week, or as specified in the PCSP, in a non-institutional, community-based setting, encompassing both health and social services needed to ensure the optimal functioning of the participant.” Each program must provide or arrange transportation, personal care, nutrition — one hot meal per eight-hour day providing a third of the recommended daily allowances, and a second meal for participants attending eight to fourteen hours — and recreation; therapies may be included as component parts. MDHHS's service code list carries three units — S5100 per 15 minutes, S5101 per half day, S5102 per diem — each with a remark code stating whether transportation is included, and the manual limits the half-day and per-diem codes to one unit per day. A member cannot receive community living supports while at the center, and “payment for Adult Day Health services includes all services provided while at the center.”

The manual also tells the center what not to do: a referral from a waiver agency “must replace any screening or assessment activities” the center would otherwise perform. The center accepts the MI Choice assessment and plan rather than building its own.

No license — the waiver agency verifies you

The approved waiver lists the provider qualifications for an Adult Day Health Center with “License: N/A” and “Certificate: N/A.” What it requires instead is verified by the contracting waiver agency “prior to delivery of service and annually thereafter”: a full-time program director with a bachelor's degree in a health or human services field, or a qualified health professional; support staff “at a ratio of no less than one staff person for every 10 participants”; health support services provided only under the supervision of a registered nurse; basic first-aid training for staff and a person knowledgeable in first aid and CPR present whenever participants are; emergency drills every six months; written medication-assistance procedures reviewed by a pharmacist, physician, or RN; and documented compliance with barrier-free design, fire safety, and public health codes. Every adult day provider must also comply with the federal home- and community-based settings rule.

Centers that also serve Older Americans Act participants through an Area Agency on Aging work under a second rulebook. The ACLS Bureau's operating standards for adult day services, updated June 21, 2024, require at least two staff on the premises whenever two or more participants are present and one staff person for every five participants, reassessment every six months, and twice-yearly in-service training with one session on dementia. A center holding both kinds of contract staffs to the stricter one.

Who qualifies, and who authorizes

MI Choice serves people 65 and older and adults 18 and older with disabilities who are categorically eligible for Medicaid as aged or disabled, who meet nursing-facility level of care under the online Michigan Medicaid Nursing Facility Level of Care Determination, and who need at least two waiver services, one of them supports coordination. The special income limit is 300 percent of the SSI benefit rate, $2,982 a month in 2026, with no spend-down. There is a waiting list, worked in four priority tiers — young adults aging out of private duty nursing, nursing facility residents, people facing imminent nursing facility admission including Adult Protective Services cases, and everyone else in order of inquiry — and the waiver caps point-in-time enrollment between 13,400 and 14,300 across its five years.

The waiver agency's supports coordinator builds the person-centered service plan within 90 days of enrollment, and the plan is the authorization: it states the amount, frequency, and duration of each service, units per visit and per week, cost per unit, and start and stop dates, and the agency pays “only for services authorized within the PCSP and delivered to the participant.” Planning meetings recur every 180 days.

Rates: negotiated, plus $3.40 an hour

The manual leaves no ambiguity about who sets your rate: “The process of rate determination for providers resides in the contract negotiation between the waiver agency and the provider. MDHHS does not play a role in this process.” Agencies are directed to secure “competitive, per unit rate agreements,” and rates “must be adequate to ensure access to services.” The only state figure is an assumption in the waiver's cost-neutrality model — about $3.98 per 15-minute unit in the first waiver year — which is a planning number, not a fee schedule.

One piece of the rate is not negotiable. Michigan's direct care wage add-on, continued in every budget since 2021, applies to adult day health. MDHHS Letter L 25-78, issued January 12, 2026, lists MI Choice codes S5100, S5101, and S5102 among the services the increase covers, sets it at “$3.40 per hour for DCWs and an additional $0.44 per hour for agencies” — $0.85 and $0.11 per 15-minute unit — and requires that the entire $3.40 go to direct care worker wages, with documentation retained for the state on request. It “cannot cover costs associated with minimum wage increases.” The fiscal 2027 budget signed this summer keeps the $3.40 in place and adds $351.8 million in supplemental funding for minimum-wage and paid-sick-leave costs for direct care workers.

A second payer for dual eligibles

On January 1, 2026 the MI Health Link demonstration ended and MI Coordinated Health began — highly integrated dual-eligible special needs plans that cover long-term services and supports under their own 1915(c) waiver, including an Adult Day Program defined the same way MI Choice defines Adult Day Health. It launched in four regions: the Upper Peninsula, Southwest Michigan, Macomb, and Wayne. MDHHS's bulletin says that “on January 1, 2027, the program is expected to extend to the entire State, contingent upon budget approval.” The plans use the same adult day codes and the same $3.40 add-on; contracting, authorization, and rates sit with the plan. A member is in one long-term care program at a time — MI Choice, MI Coordinated Health, PACE, a nursing facility, or Home Help — so the question for a dual-eligible client is which one, and therefore who you bill.

Billing the waiver agency, and the records behind it

There is no state claim for adult day health in Michigan. Under the manual, “providers of MI Choice services submit bills to the waiver agency detailing the date of service, the type of service, the unit cost, and the total number of units provided for each MI Choice participant served”; the agency sets in its contract how long after the date of service a bill may be sent, matches it against the plan, and pays. The agency's payment is payment in full — a provider “must not seek nor receive payment other than payment from the waiver agency” for covered services. Electronic visit verification does not apply: Michigan's EVV chapter lists community living supports and respite as the MI Choice services on EVV, not adult day.

Because the bill goes to the agency under its contract rather than through a clearinghouse, the software job in Michigan is the unit record behind the invoice — the days and units delivered, matched to the plan the agency authorized. Your attendance tracking and nursing documentation are what the agency verifies before it pays.

The record requirements are explicit. Each program's participant file must hold the referral details, intake records, a copy of the MI Choice assessment and reassessments, a copy of the service plan, “listing of participant contacts and attendance,” progress notes at least monthly, a log of every medication taken on the premises with dose, date, time, and staff initials, and signed releases of information. Every waiver agency and direct service provider must keep records “for not less than 10 years.” Critical incidents go to the waiver agency within 30 calendar days, and the agency reports them to the state within two business days.

Where to check

• The Michigan Medicaid Provider Manual (MI Choice Waiver chapter — Adult Day Health at Section 4.1.A; billing and records at Sections 8–9; MI Coordinated Health chapter)
• MDHHS's MI Choice program page (waiver agencies by region) and MI Choice provider page (approved waiver, service codes, monitoring tool)
• Bulletin MMP 25-47 on MI Coordinated Health and Letter L 25-78 on the direct care wage add-on
• The SFY 2025 MI Choice External Quality Review (network adequacy by agency)