BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 648
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|AUTHOR: |Mendoza |
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|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;
SB 648 (Mendoza) Page 3 of ?
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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