BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 601 (Eggman) - Residential care facilities for the elderly:   
          licensing and regulation
          
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          |Version: June 29, 2015          |Policy Vote: HUMAN S. 5 - 0     |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: July 13, 2015     |Consultant: Jolie Onodera       |
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          This bill meets the criteria for referral to the Suspense File.




          Bill  
          Summary:  AB 601 would expand the scope of information that  
          prospective residential care facility for the elderly (RCFE)  
          licensees must provide to the Department of Social Services  
          (DSS). Additionally, this bill would require the DSS to  
          cross-check RCFE licensee applicant information with the  
          Department of Public Health (DPH) and post specified information  
          on the DSS website to the extent the automated system can  
          electronically accommodate additional information.


          Fiscal  
          Impact:  
           Increase in DSS workload, potentially in excess of $150,000  
            (General Fund), to cross-check information electronically  
            against DPH information and to compile and analyze the  
            additional information provided by all RCFE licensees. Ongoing  







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            workload to post and update the RCFE information on the DSS  
            website is estimated to be minor and absorbable.

           Potential future cost pressure (General Fund) to update the  
            automation system to accommodate all of the specified RCFE  
            profile information.   

           Likely minor ongoing enforcement costs (General Fund), offset  
            to a degree by penalty revenue, to the extent DSS assesses  
            civil penalties for material violations of the provisions of  
            this measure. 


          Background:  The Community Care Licensing Division (CCLD) of the DSS  
          administers the licensure and oversight of over 7,500 assisted  
          living, board and care, and continuing care retirement homes  
          that are licensed as RCFEs in California. These residences are  
          designed to provide home-like environment housing options to  
          elderly residents who need assistance with activities of daily  
          living but otherwise do not require continuous, 24-hour  
          assistance or nursing care. The RCFE licensure category includes  
          facilities with as few as six beds to facilities with hundreds  
          of residents whose needs may vary widely. 
          In response to numerous health and safety issues discovered at  
          facilities licensed by the CCLD, the 2014 and 2015 Budget Acts  
          include funding for a comprehensive plan to reform the CCLD  
          program. The 2014 Budget Act included an increase of $7.5  
          million ($5.8 million General Fund) and 71.5 positions to  
          improve the timeliness of investigations, ensure the CCLD  
          inspects all facilities at least once every five years, increase  
          staff training, and establish clear fiscal, program, and  
          corporate accountability. The 2014 Budget also increased  
          licensing and application fees by 10 percent. The recently  
          enacted 2015 Budget Act additionally includes $3 million General  
          Fund and 28.5 positions to address a backlog of complaint cases  
          and expand training and technical assistance. Beginning in  
          January 2017, DSS will begin increasing inspection frequency to  
          every three years for all facilities, every two years by 2018  
          for all facility types except child care, and annually by 2019  
          for adult day care and RCFEs.

          This bill seeks to provide consumers with greater transparency  
          related to RCFEs to enable a more informed choice when selecting  
          a facility. This bill also seeks to improve communication  








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          between the DSS and DPH with respect to information about the  
          management and operation of the facilities that each department  
          licenses.


          Proposed Law:  
           This bill would require prospective RCFE licensees to provide  
          the following information to DSS:
           If the applicant is a firm, association, organization,  
            partnership, business trust, corporation, or company, like  
            evidence must be submitted as to the individuals or entities  
            holding a beneficial ownership interest of 10 percent or more,  
            and the person who has operational control of the RCFE for   
            which the  application for issuance of license or special  
            permit is made. An applicant or licensee is not required to  
            disclose the names of investors in a publicly traded company  
            or investment fund if those investors are silent investors who  
            do not have influence or control over operations of the  
            company, fund, or facility. 
           If applicable, the following information:
                  o         Whether it is a for-profit or not-for-profit  
                    provider.
                  o         The name, address, license number, and  
                    licensing agency name of other health, residential, or  
                    community care facilities owned, managed, or operated  
                    by the same applicant or by any parent organization of  
                    the applicant.
                  o         The name and business address of any person or  
                    entity that controls, as defined, the applicant.
                  o         If part of a chain, as defined, a diagram  
                    indicating the relationship between the applicant and  
                    the persons or entities that are part of the chain,  
                    including those that are controlled by the same  
                    parties, and in a separate list, the name, address,  
                    and license number, if applicable, for each person or  
                    entity in the diagram.
                  o         The name and address of any persons,  
                    organizations, or entities that own the real property  
                    on which the facility seeking licensure and the  
                    licensed facilities are located.
                  o         The name and address of any management company  
                    serving the facility and the same information required  
                    of applicants for the management company.
           The name of the person with operational control of the  








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            applicant, such as the chief executive officer, general  
            partner, owner or like party, and state that person's prior or  
            present service as an administrator, chief executive officer,  
            general partner, director like role of, or as a person who has  
            held or holds a beneficial ownership interest of 10 percent or  
            more in any RCFE, outpatient health clinic, health facility  
            (including a hospital, skilled nursing facility, or  
            intermediate care facility), or a similarly licensed community  
            care facility in California or any other state within the past  
            10 years. 
           Any revocation, suspension, probation, exclusion order, or  
            other similar administrative disciplinary action that was  
            filed and sustained in California or any other state, or  in  
            the process of being adjudicated, against a facility  
            associated with a person so identified or by any authority  
            responsible for the licensing of health, residential, or  
            community care facilities within the past 10 years. 
                  o         Copies of final findings, orders, or both,  
                    issued by any health, residential, or community care  
                    licensing agency or any court relevant to the actions  
                    described.
                  o         Any petition for bankruptcy relief filed  
                    within five years of the date of application involving  
                    operation or closure of a health, residential, or  
                    community care facility licensed in California or any  
                    other state, the court, date, and case number of the  
                    filing, and whether a discharge was granted. If a  
                    discharge was not granted, the applicant shall provide  
                    copies of any court findings supporting denial of  
                    discharge.
                  o         Evidence of the right of possession of the  
                    facility prior to the time the license is granted,  
                    which may be satisfied by the submission of a copy of  
                    the entire lease agreement or deed.

          This bill requires the DSS to cross-check all applicant  
          information disclosed pertaining to operational control of other  
          facilities within the past 10 years, if electronically  
          available, with the DPH to determine if the applicant has a  
          prior history of operating, holding a position in, or having  
          ownership in, any entity specified. Additionally, this bill:
                 Requires the information to be provided to the DSS upon  
               initial application for licensure, and any change in the  
               information is to be provided to the DSS within 30 calendar  








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               days of that change unless a shorter timeframe is required  
               by the DSS. A licensee of multiple facilities may provide a  
               single notice of changes to the DSS on behalf of all  
               licensed facilities within the chain. Information  
               pertaining to facilities operated in other states may be  
               updated on an annual basis, except as specified.

                 In addition to the remedies provided under existing  
               law, authorizes DSS, subsequent to licensure, to assess a  
               civil penalty of $1,000 for a material violation of this  
               section.



                 Provides that to the extent that DSS's computer system  
               can "electronically accommodate" additional RCFE profile  
               information, requires DSS to post on its website the  
               current name, business address, and telephone number of  
               the licensee, the name of the RCFE owner, if not the same  
               as the licensee, the name of any parent organization, the  
               licensed capacity of the facility, including the capacity  
               for nonambulatory residents, whether the facility is  
               permitted to accept and retain residents receiving  
               hospice care services, whether the facility has a special  
               care unit or program for people with Alzheimer's disease  
               and other dementias and has a delayed egress or secured  
               perimeter system in place, or both, and the name,  
               address, license number, and licensing agency name of  
               other health, residential, or community care facilities  
               owned, managed, or operated by the same applicant or by  
               any parent organization of the applicant.




          Prior  
          Legislation:  AB 1571 (Eggman) 2014 would have expanded the  
          scope of information that prospective RCFE licensee applicants  
          must provide as a condition of licensure. This bill also  
          required the DSS to develop an RCFE ratings system and  
          cross-check all RCFE licensee applicant information against DPH  
          data. This bill was held on the Suspense File of this Committee.
          SB 895 (Corbett) Chapter 704/2014 requires RCFEs to correct  
          licensing violations within 10 days of notification, except as  








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          specified. This bill additionally requires DSS to make facility  
          inspection reports available on its internet website by January  
          1, 2020.




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