BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 601| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 601 Author: Eggman (D), et al. Amended: 8/31/15 in Senate Vote: 21 SENATE HUMAN SERVICES COMMITTEE: 5-0, 6/23/15 AYES: McGuire, Berryhill, Hancock, Liu, Nguyen SENATE APPROPRIATIONS COMMITTEE: 6-1, 8/27/15 AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza NOES: Nielsen ASSEMBLY FLOOR: 66-7, 5/18/15 - See last page for vote SUBJECT: Residential care facilities for the elderly: licensing and regulation SOURCE: Author DIGEST: This bill requires an applicant for licensure of a residential care facility for the elderly (RCFE) to disclose specified additional information related to other facilities owned, managed or operated by the licensee or a parent organization of the licensee, as well as information related to individuals or entities holding a beneficial ownership interest of 10 percent or more in the licensed facility. Additionally requires licensees to disclose individuals or entities who have control of the facility, as defined, and other information. Further requires the California Department of Social Services (CDSS) to cross-check all disclosed applicant information with the California Department of Public Health (CDPH), as specified and, to the extent the department's computer system can accommodate the information, to post specified information on its Internet website. Requires licensees to report any changes AB 601 Page 2 to the disclosed information within specified timeframes. ANALYSIS: Existing law: 1)Establishes the Residential Care Facilities for the Elderly Act, which provides for CDSS to license and regulate RCFEs as a separate category within the department's existing residential care licensing structure. (HSC 1569 et seq.) 2)Requires applicants for an RCFE license to submit a criminal record clearance, employment history, character references, evidence of certification, and disclosure of previous service in other RCFEs, outpatient health clinics, health facilities (including hospitals, skilled nursing facilities or intermediate care facilities), or a community care facility, among other requirements. (HSC 1569.15) 3)Requires, if the licensee applicant is a firm, association, organization, partnership, business trust, corporation, or company, like evidence to be submitted regarding the members or shareholders and for the person in charge of the facility. (HSC 1569.15) This bill: 1)Specifies that an applicant for an RCFE license who is a firm, association, organization, partnership, business trust, corporation, or company shall file evidence that individuals or entities holding a beneficial ownership interest of 10 percent or more, and the person who has operational control of the facility are of reputable and responsible character. 2)Provides that an applicant or licensee is not required to AB 601 Page 3 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. 3)Requires applicants for an RCFE license to disclose specified additional information including disclosure of others facilities owned, managed or operated by the applicant or a parent organization; persons or entities that control the applicant; the relationships of persons or entities that are part of a chain; and persons, organizations or entities that own real property associated with facilities owned, managed or operated by the applicant or parents organization; and specified petitions for bankruptcy relief involving operating or closure of a health, residential or community care and other information. 4)Requires CDSS to cross-check information pertaining to the prior service of a person with operational control in another RCFE or health related facility with the CDPH, if electronically available. 5)Provides that the required information shall be provided upon initial application for licensure, that changes be updated within 30 calendar days, except as specified. 6)Permits the department, subsequent to licensure, to assess a civil penalty of one thousand dollars for a material violation of the above licensure disclosure requirements. 7)Provides that the department shall post specified information on its Internet website including the licensee's name, business address, and telephone number, the name of the owner and any parent organization, the licensed capacity of the facility, the capacity for nonambulatory residents, whether the facility is permitted to accept residents receiving hospice care, whether the facility has a special care unit or AB 601 Page 4 program for people with Alzheimer's disease, the name, address, license number and licensing agency of other health, residential or community care facilities owned, managed or operated by the applicant or by any parent organization. 8)Permits CDSS to prohibit any person from being a licensee, owning a beneficial ownership interest of 10 percent or more in a licensed facility, or being an administrator, officer, member or manager of a licensee or entity controlling a licensee under specified conditions. Background According to the author, there has been a marked increase in corporate ownership of RCFEs. Facilities may be operated by one business but owned by another. The author states that complex ownership structures make it difficult for consumers to determine who in fact is the owner and/or licensee and can lead a consumer to unknowingly transfer their loved one from one troubled facility to another without knowing the facilities are part of the same chain. The author further states that current law does not require new RCFE license applicants to disclose their history of operating other licensed facilities. Therefore, CDSS is often unaware of other facilities that may be owned and operated by the same licensee. The author cites the example last year of Valley Springs Manor in Castro Valley, where 19 RCFE residents were abandoned by the owner and staff to the care of a part-time cook and janitor. The owner had a history of hundreds of thousands of dollars in fines owed to the federal and state licensing agencies for deficiencies and citations when she owned four California nursing homes. The author states that had CDSS known of her prior regulatory history, her RCFE licenses would not have been granted. Additionally, the author states that consumers of RCFEs are AB 601 Page 5 currently only able to obtain very basic information online about an RCFE, including the facility name, address, a contact person, the facility's license status, and a district office number that a consumer may call if they have a question about a particular facility. However, the author states that a consumer does not have access to more substantive public information that may help them make a more informed choice when selecting a facility. According to the author, the additional information required to be disclosed to the CDSS and the public will increase accountability and transparency, and allow the public to make more informed decisions when choosing an RCFE facility for a loved one. Residential Care Facilities for the Elderly Within California's continuum of long term care, situated between in-home care and skilled nursing facilities, is the RCFE, also commonly called Assisted Living, Board and Care, or Residential Care. There are approximately 8,000 Assisted Living, Board and Care, and Continuing Care Retirement homes that are licensed as RCFEs in California. These residences are designed to provide homelike housing options to seniors and other adults who need some help with activities of daily living, such as cooking, bathing, or getting dressed, but otherwise do not need continuous, 24-hour assistance or nursing care. Increasingly residents are entering RCFEs with significant health needs including diabetes, bedsores, or the need for oxygen tanks, catheters or colostomies. Financial Structure More than 90 percent of RCFE licenses in California are held by for-profit providers, and the majority of those facilities have six or fewer beds. Most residents pay privately or with long-term care insurance since there is very little public funding available through Medi-Cal, Supplemental Security Income (SSI/SSP) or Medicare, and fees can range from $2,500 to more than $8,000 per month. Increasingly, complex corporate mergers AB 601 Page 6 and acquisitions have meant that many RCFEs are owned by national corporate chains that control more than one facility. Administrators employed by these chains may also oversee multiple facilities. This development has led to regulatory challenges since Community Care Licensing citations and other licensing reports are facility-specific, and management problems common to multiple RCFEs with the same owner may easily go unnoticed. Licensee and administrator requirements California statute differentiates between facility licensees, who often are the business owners and may be property owners, and administrators, who are charged with overseeing the quality of the day-to-day operations and are generally required to be present at the facility during normal working hours. State law requires RCFE licensees to provide evidence of "reputable and responsible character" including a criminal background clearance, employment history and character references. Licensees must document sufficient financial resources to maintain the standard of care required by law, must disclose any prior role as an administrator or owner of any community care facility and any prior disciplinary action. Licensees must receive a one-time department-approved certification involving 40 hours of classroom instruction covering relevant laws and regulations, staff management, the needs of elderly residents, and other issues. Facility administrators are also required to hold a department-approved certificate, similar to the licensee certificate, which must be renewed every two years. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee, this bill will incur workload costs to CDSS, potentially in excess of $150,000 (General Fund), to cross-check information electronically AB 601 Page 7 against CDPH information and to compile and analyze the additional information provided by all RCFE licensees. Additionally, this bill will incur minor and absorbable workload costs to post and update the RCFE information on the CDSS website. Additionally, Senate Appropriations states there is potential future cost pressure (General Fund) to update the automation system to accommodate all of the specified RCFE profile information and likely minor ongoing enforcement costs (General Fund), offset to a degree by penalty revenue, to the extent CDSS assesses civil penalties for material violations of the provisions of this bill. SUPPORT: (Verified8/28/15) Asian Law Alliance California Advocates for Nursing Home Reform California Alliance for Retired Americans California Commission on Aging California Elder Justice Coalition California Long-Term Care Ombudsman Association California Senior Legislature California State Retirees Consumer Attorneys of California Consumer Federation of California County of San Diego Disability Rights California Formation Capitol Jewish Family Service of Los Angeles National Association of Social Workers, California Chapter 10 individuals OPPOSITION: (Verified8/28/15) None received ASSEMBLY FLOOR: 66-7, 5/18/15 AYES: Achadjian, Alejo, Baker, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chau, Chávez, Chiu, Chu, Cooley, AB 601 Page 8 Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Hadley, Roger Hernández, Holden, Irwin, Jones-Sawyer, Lackey, Levine, Linder, Lopez, Low, Maienschein, McCarty, Medina, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Waldron, Weber, Wilk, Williams, Wood, Atkins NOES: Travis Allen, Beth Gaines, Grove, Harper, Mayes, Patterson, Wagner NO VOTE RECORDED: Bigelow, Brough, Chang, Jones, Kim, Mathis, Melendez Prepared by:Sara Rogers / HUMAN S. / (916) 651-1524 8/31/15 12:47:55 **** END ****