BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON HEALTH
                          Senator Ed Hernandez, O.D., Chair

          BILL NO:                    SB 648    
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          |AUTHOR:        |Mendoza                                        |
          |---------------+-----------------------------------------------|
          |VERSION:       |April 7, 2015                                  |
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          |HEARING DATE:  |April 15, 2015 |               |               |
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          |CONSULTANT:    |Vince Marchand                                 |
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           SUBJECT  :  Health and care facilities:  referral agencies

           SUMMARY  :  Adds referrals to residential care facilities for the elderly  
          to the body of law requiring anyone who refers someone to a  
          skilled nursing or intermediate care facility for compensation  
          to be licensed as a referral agency, and establishes new  
          requirements on referral agencies, including written disclosure  
          of any agreement with the facilities clients are being referred  
          to, any commissions or fees received, and a requirement for  
          liability insurance.
          
          Existing law:
          1.Licenses and regulates residential care facilities for the  
            elderly (RCFEs) by the Department of Social Services (DSS) as  
            a separate category within the existing community care  
            licensing structure of DSS. RCFEs are defined as a housing  
            arrangement chosen voluntarily by persons 60 years of age or  
            over, or their authorized representative, where varying levels  
            and intensities of care and supervision, protective  
            supervision, personal care, or health-related services are  
            provided.


          2.This bill requires RCFEs, by July 1, 2015, to maintain  
            liability insurance in an amount of at least $1 million  
            dollars per occurrence and $3 million in the annual aggregate  
            for the purpose of covering injury to residents and guests  
            caused by the negligence of the licensee or its employees.


          3.Licenses and regulates skilled nursing facilities (SNFs) and  
            intermediate care facilities (ICFs) by the Department of  
            Public Health (DPH). SNFs are defined as a health facility  







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            that provides skilled nursing care and supportive care to  
            patients who primary need is for availability of skilled  
            nursing care on an extended basis. ICFs are defined as a  
            health facility that provides inpatient care to ambulatory or  
            non-ambulatory patients who have recurring need for skilled  
            nursing supervision and need supportive care, but who do not  
            require availability of continuous skilled nursing care.


          4.Prohibits any person, association, or corporation to  
            establish, conduct, or maintain a referral agency or to refer  
            any person for remuneration to any extended care, skilled  
            nursing home or ICF, or a distinct part of a facility  
            providing extended care, skilled nursing home care, or  
            intermediate care, without being licensed as a referral agency  
            by DPH.

          5.Prohibits a licensed referral agency from having a direct or  
            indirect financial interest in any medical facility doing  
            business with the licensee.
          
          This bill:
          1.Adds referrals to RCFEs to the body of existing law requiring  
            licensure as a referral agency in order to refer persons for  
            remuneration to skilled nursing or ICFs. 

          2.Prohibits a referral agency from referring any person to an  
            RCFE if that RCFE does not meet state licensing standards, as  
            specified.

          3.Requires all licensed referral agencies to provide each person  
            receiving services from the agency with written notice, in  
            16-point bold type, of all of the following:

                  a.        Whether the licensee has an agreement or  
                    contract with the referral facility for client  
                    referrals;
                  b.        That a commission or fee will be received by  
                    the agency from the facility as a result of the  
                    referral, if applicable;
                  c.        Any exchange of monetary value, including, but  
                    not limited to, a fee, commission, or gift received,  
                    between the facility personnel or staff and the  
                    referral agency and the purpose for the exchange, if  
                    applicable; 








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                  d.        Any fee charged to the person or persons by  
                    the referral agency, and requires this notice to  
                    include a description of the services being rendered  
                    for that fee and the referral agency's refund policy.
                  e.        The referral agency's contact information,  
                    including address and telephone number, and the  
                    referral agency's privacy policy. Requires the privacy  
                    policy to be placed clearly and prominently at the  
                    front of the written notice;
                  f.        The date of the referral agency's most recent  
                    tour or visit to the facility and, as appropriate, a  
                    review or summary of the most recent DSS evaluation  
                    report for an RCFE prepared pursuant to specified  
                    existing law that requires annual unannounced DSS  
                    inspections for certain RCFEs, and random inspections  
                    each year on 20 percent of the RCFEs not subject to  
                    annual inspections.
                  g.        Information regarding the health care services  
                    the referred facility offers, including, but not  
                    limited to, intermittent skilled nursing care, memory  
                    care, assistance with and distribution of medication,  
                    and other health care services, if applicable;
                  h.        The contact information, including address and  
                    telephone number, of the DSS or DPH, as appropriate,  
                    and the contact information for filing consumer  
                    complaints, including contact information for the  
                    local long-term care ombudsman;

          4.Requires a referral agency to provide the written notification  
            required by this bill in the same language in which the  
            referral agency negotiates any referral services with the  
            person receiving services.

          5.Requires a referral agency to retain a signed acknowledgement  
            from the person being referred, or his or her conservator,  
            guardian, family member, or agency under a power of attorney,  
            stating that the written notice required by this bill was  
            received, and requires this acknowledgment to be retained for  
            a period of no less than four years. 

          6.Requires a referral agency, if a person moves to a facility as  
            a result of a referral, to make a scheduled visit to the  
            facility at a time designated by the referral agency and  
            client within a reasonable time after the move is completed.









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          7.Prohibits a referral agency from sharing any personal  
            information, including, but not limited to, the name, address,  
            age, gender, or medical information of the person receiving  
            services with any unauthorized person or third-party affiliate  
            of the referral agency.

          8.Prohibits a referral agency from holding any power of attorney  
            for a person receiving placement referral services from that  
            agency, or to receive or hold a client's property in any  
            capacity.

          9.Requires, on or after July 1, 2016, all licensed referral  
            agencies to maintain liability insurance coverage in an amount  
            of at least $1 million per referred person and $3 million in  
            the total annual aggregate, for negligent acts or omissions by  
            the referral agency.

           FISCAL  
          EFFECT  :  This bill has not been analyzed by a fiscal committee.

           COMMENTS  :
          1.Author's statement.  According to the author, a gap in  
            licensing requirements has allowed RCFE referral agencies to  
            operate without oversight in California. Current licensing  
            requirements do not include agencies that make referrals to  
            RCFE's. This bill requires all referral agencies in California  
            to be licensed and subject to oversight by DPH. This bill also  
            expands consumer protections by requiring referral agencies to  
            provide written notification to the senior, or their families,  
            when the agency has a motivated interest in a referral to a  
            specific care facility. For example, the agency receives a  
            commission or finder's fee from the specific care facility.  
            Seniors and their families have a right to know whether a  
            referral agency is recommending a care facility based on the  
            client's needs, or if they are recommending a care facility  
            because they are receiving a commission or finder's fee.  SB  
            648 will require all elder care referral agencies, which  
            perform a useful and important service for seniors, to be  
            licensed and therefore subject to oversight, that they  
            disclose the financial interest they may have in a facility  
            they recommend, and that they provide adequate privacy  
            protections for the medical information of their client.

          2.RCFEs. There are approximately 8,000 Assisted Living, Board  
            and Care, and Continuing Care Retirement homes that are  








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            licensed as RCFEs in California. These residences are designed  
            to provide home-like housing options to residents 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. The RCFE  
            licensure category includes facilities with as few as six beds  
            to those with hundreds of residents, whose needs may vary  
            widely. More than 90 percent of RCFEs in California are  
            for-profit homes, the majority of which are small facilities.   
            Most residents pay privately or with long-term care insurance,  
            and fees can range from $1,500 to more than $8,000 per month. 

          In recent years, there have been several high-profile incidents  
            and investigative articles that have drawn attention to  
            questions about the adequacy of DSS oversight of RCFEs. In  
            July 2013, ProPublica and Frontline reporters wrote and  
            produced a series of stories on Emeritus, the nation's largest  
            RCFE provider.  Featured in the stories was a woman who died  
            after receiving poor care at a facility in Auburn, California.  
             The series documented chronic understaffing and a lack of  
            required assessments and substandard care. In late October  
            2013, 19 frail seniors were abandoned at Valley Springs Manor  
            in Castro Valley by the licensee and all but two staff after  
            the state began license revocation proceedings for the  
            facility.  DSS inspectors, noting the facility had been  
            abandoned, left the two unpaid service staff to care for the  
            abandoned residents with insufficient food and medication,  
            handing them a $3,800 citation before leaving for the weekend.  
             The next day sheriff's deputies and paramedics sent the  
            patients to local hospitals.
          
          3.Referral agencies. Any person or entity engaged in the  
            business of referring persons for remuneration to any SNF or  
            ICF is required to be licensed by DPH as a referral agency.  
            According to DPH, there are currently only three licensed  
            referral agencies in California. The proposed 2015-16  
            licensing fee for a referral agency is $2,795. DPH reports  
            that it does not have any current enforcement statistics on  
            referral agencies, as there are no open, pending or closed  
            complaint cases against a referral agency at this time.

          4.Double referral. This bill is double referred. Should it pass  
            out of this committee, it will be referred to the Senate  
            Judiciary Committee.









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          5.Prior legislation. SB 1153 (Leno), Chapter 706, Statutes of  
            2014, permitted DSS to order a suspension of new admissions  
            for an RCFE when the facility has violated applicable laws and  
            regulations that present a direct risk to the health and  
            safety or residents, or if the facility has failed to pay  
            existing fines.

          AB 1523 (Atkins and Weber), Chapter 205, Statutes of 2014,  
            required RCFEs to maintain liability insurance covering injury  
            to residents and guests in the amount of $1 million per  
            occurrence and $3 million in the aggregate.

          AB 2171 (Wieckowski), Chpater 702, Statutes of 2014, established  
            a bill of rights for residents of RCFEs and required  
            facilities to inform residents of these rights as specified.

          AB 313 (Monning), Chapter 365, Statutes of 2011, requires each  
            RCFE to provide residents, their responsible party, and the  
            local long-term care ombudsman with a 10 day written notice  
            when DSS commences proceedings to suspend or revoke its  
            license, or a criminal action relating to health or safety of  
            the residents is brought against the facility, and makes other  
            changes related to these actions.

            AB 2066 (Monning), Chapter 643, Statutes of 2012, requires  
            RCFEs to provide a 60-day written notice to residents or the  
            responsible person within 24 following receipt of DSSs order  
            of revocation.  Permits the licensee to secure an alternative  
            manager, as specified. Requires RCFEs to refund all or a  
            portion of preadmission fees to residents transferring as the  
            result of a license revocation, as specified.

            SB 897 (Leno), Chapter 376, Statutes of 2011, requires  
            licensed RCFEs to notify DSS, the Office of the State  
            Long-Term Care Ombudsman and the facility's residents when the  
            property is subject to foreclosure or certain other events  
            occur due to financial distress.

          6.Support.  This bill is sponsored by the Consumer Federation of  
            California (CFC), which states that this bill would require  
            all referral agencies that assist seniors and their families  
            in finding the right elder care options to obtain a license,  
            and to provide their client with disclosure of the commissions  
            they will receive for the referral. CFC states that the  
            referral agencies that make referrals to RCFEs operate without  








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            oversight, and that this is a significant gap in current law  
            as the number of RCFEs has grown exponentially in California.  
            According to CFC, referral agency services are generally  
            offered at no charge to seniors, and that instead, the  
            agencies receive a commission or finders' fee from the care  
            facility after they have successfully referred a senior for  
            care and housing. CFC states that the commission is typically  
            calculated as a percentage of the seniors' monthly rent,  
            creating an incentive for the referral agent to place the  
            senior in a specific facility or one where the agency has an  
            exclusive referral contract, even if it is more expensive for  
            the senior. The California Long-Term Care Ombudsman  
            Association states in support that its members often work with  
            residents and their loved ones on complaints where the  
            resident is harmed because of a bad or inappropriate  
            placement, and that this bill's requirement for referral  
            agencies to maintain liability insurance would provide  
            recourse for these residents. The Institute on Aging states in  
            support that it has experienced problems with referral  
            agencies and agents misrepresenting themselves to its  
            organization's intake and fiduciary departments, and asserts  
            that seniors and families have a right to know when they are  
            dealing with salespeople who may have ulterior motives.  
            6Beds.Inc, an association representing 1,100 RCFEs, states in  
            support that the practice of referral agencies in senior  
            placement is inherently flawed and seniors and their families  
            are being misled by the current practices of some of the  
            larger agencies that dominate this space. 

          7.Oppose unless amended. A Place for Mom describes itself as an  
            internet information service company that receives payment  
            from communities and providers in exchange for providing  
            information, consultation in local areas, and referrals to  
            families to assist them in finding possible senior living  
            options. A Place for Mom's requested amendments include the  
            following:
          
               a.     Delete the font size and bold requirement for the  
                 disclosure notice in this bill, and permit the notice to  
                 be delivered in an email or web form; A Place for Mom  
                 states that font requirements are inapplicable for  
                 disclosures delivered through email or internet browsers  
                 because of the user's browser and email settings.

               b.     Permit the notice to include a hyperlink to the  








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                 privacy policy, rather than this bill's requirement that  
                 the privacy policy be placed clearly and prominently at  
                 the front of the written notice.

               c.     Delete the requirement that a client sign an  
                 acknowledgement that the written disclosure was received,  
                 and that this signed acknowledgement be retained for four  
                 years. A Place for Mom notes that its services are  
                 initiated online, and a "signed acknowledgement" is more  
                 applicable to a paper-based service.

               d.     Delete the requirement that the referral agency make  
                 a scheduled visit to the facility after a client has  
                 moved into a facility as a result of a referral within a  
                 reasonable time after the move is completed. A Place for  
                 Mom notes that referral agencies often work with the  
                 adult child, rather than the senior directly, and that  
                 for the senior to be visited by the referral agency would  
                 be an unusual interaction and potentially disturbing or  
                 confusing. A Place for Mom supports visiting the  
                 facilities in advance of referrals.

               e.     Delete the prohibition on referral agencies sharing  
                 personal information of the person receiving services  
                 from the referral agency with any unauthorized person. A  
                 Place for Mom states that this provision would prohibit  
                 referral agencies from sharing the senior's name with the  
                 facility, and this is in the very nature of how referral  
                 agencies operate.
            
          8.Technical amendments and drafting concerns.

               a.     Under existing law, a licensed referral agency is  
                 prohibited from having a direct or indirect financial  
                 interest in any  medical  facility doing business with the  
                 licensee. Now that this bill is adding RCFEs to the  
                 referral agency licensure law, this provision of law  
                 (Health and Safety Code Section 1404) should be amended  
                 to delete the word "medical" so that it includes both  
                 health care facilities and RCFEs, which are not  
                 considered medical facilities. 

               b.     On page 4, line 10, this bill requires disclosure  
                 regarding the "health care services the referred facility  
                 offers?." The author may wish to consider deleting the  








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                 words "health care" so that this disclosure includes all  
                 types of services offered, not just strictly health care  
                 services. 

               c.     On Page 3, lines 22-23, this bill requires the  
                 notice to include whether the referral agency has an  
                 agreement or contract with the "referral facility" for  
                 client referrals. This should be rephrased to clearly  
                 distinguish between a facility where a client has been  
                 referred and a "referral agency."

               d.      On Page 3, lines 25-26, this bill requires  
                 disclosure as to whether a fee or commission will be  
                 received by the referral agency.  However, the next  
                 paragraph (lines 28-31) requires disclosure of "any  
                 exchange of monetary value, including, but not limited  
                 to, a fee, commission, or gift received?." This paragraph  
                 should be rephrased to avoid duplication and to clarify  
                 that the intent is to require disclosure of "any gift  
                 received or exchange of monetary value in addition to, or  
                 in lieu of, a commission or fee."
           
          SUPPORT AND OPPOSITION  :
          Support:  Consumer Federation of California (sponsor)
                    California Alliance for Retired Americans
                    California Chapter National Association of Social  
                    Workers
                    California Long-Term Care Ombudsman Association
                    CALPIRG
                    Institute on Aging
                    6Beds, Inc.
          
          Oppose:   A Place for Mom (unless amended)



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