BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 648|
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THIRD READING
Bill No: SB 648
Author: Mendoza (D), et al.
Amended: 1/26/16
Vote: 21
SENATE HEALTH COMMITTEE: 7-2, 4/15/15
AYES: Hernandez, Hall, Mitchell, Monning, Pan, Roth, Wolk
NOES: Nguyen, Nielsen
SENATE JUDICIARY COMMITTEE: 5-1, 4/28/15
AYES: Jackson, Hertzberg, Leno, Monning, Wieckowski
NOES: Anderson
NO VOTE RECORDED: Moorlach
SENATE APPROPRIATIONS COMMITTEE: 5-2, 1/21/16
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
SUBJECT: Health and care facilities: referral agencies
SOURCE: Consumer Federation of California
DIGEST: This bill adds referrals to residential care facilities
for the elderly (RCFFs) 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.
ANALYSIS:
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Existing law:
1) Licenses and regulates 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) 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
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.
3) 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.
4) 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) Requires any person, partnership, firm, corporation, or
association desiring to obtain a license to refer persons to
RCFEs to file an application with DSS, as specified.
Specifies that DSS is not required to conduct an onsite
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licensing inspection, but may require the applicant to submit
a copy of the disclosure statement that referral agencies are
required to provide pursuant to this bill.
3) Excludes from the definition of "referral agency" all of the
following:
a) An RCFE that either provides discounts or other
remuneration to residents or their families for referring
new or prospective clients, or provides remuneration to
staff for marketing or sales offers; and
b) A resident who refers a new or prospective resident
and receives a discount or other remuneration from an
RCFE, or an RCFE staff member who receives remuneration
from the facility for sales or marketing efforts.
4) Prohibits any person, association, or corporation from
conducting a referral agency, or referring any person for
remuneration to an RCFE, if that facility does not meet
licensing standards, as specified, and permits the referral
agency to satisfy this requirement by obtaining and relying
on the licensing status information for an RCFE that is
published on the Internet Web site of DSS.
5) Prohibits any extended care facility, SNF, ICF, or RCFE,
from paying a commission or fee to a referral agency that
does not have a license from DPH or DSS, as appropriate.
6) Requires all licensed referral agencies, prior to referring
a person to any facility, to provide the person with a
disclosure statement containing all of the following:
a) Whether the licensee has an agreement or contract with
the facility to which the person is being referred;
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 gift or exchange of monetary value between the
facility and the licensee that is in addition to, or in
lieu of, a commission or fee;
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.
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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 provided
as an Internet Web site link consistent with specified
provisions of existing law;
f) The date of the referral agency's most recent tour or
visit to the facility and, as appropriate, a hyperlink to,
or a copy of, the most recent DSS evaluation report for an
RCFE to which the person is being referred, 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 type of facility and the
services offered by the facility;
h) The contact information, including address and
telephone number, of DSS or DPH, as appropriate, and the
contact information for filing consumer complaints,
including contact information for the local long-term care
ombudsman; Permits the contact information, if the
disclosure statement is provided electronically, to be
provided as a hyperlink.
7) Requires the above disclosure statement to be dated and to
contain the name of the person being referred.
8) Requires the disclosure statement, if provided in written
form, to be printed in 16-point bold type, and if provided
electronically, to be consistent with specified provisions of
existing law regarding electronic records, and to be
displayed on a secured Internet Web site in a larger type
than the surrounding text.
9) Requires a referral agency to provide the written disclosure
statement required by this bill in the same language in which
the referral agency negotiates any referral services with the
person receiving services.
10)Requires the disclosure statement to be signed or otherwise
acknowledged by the person being referred, or his or her
conservator, guardian, family member, or agency under a power
of attorney, stating that the disclosure statement required
by this bill was received. Requires this acknowledgement to
be executed with one of the following:
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a) The signature of the person being referred, or his or
her conservator, guardian, family member, or agent under a
power of attorney on the exact disclosure statement;
b) An electronic signature that is consistent with
specified provisions of existing law, and that includes
the date, time, and Internet provider address and displays
the exact disclosure statement document; or,
c) A faxed confirmation that includes the date, time, and
fax number and displays the exact disclosure statement
document.
11)Requires the above signed acknowledgement to be retained for
a period of no less than three years.
12)Requires a referral agency, if the disclosure statement or
any other referral-related document is provided
electronically, to provide a written copy, in a 16-point bold
type, to the person being referred, or his or her
conservator, guardian, family member, or agent under power of
attorney, following any referral. Permits this written copy
to be provided by fax, email, or other means of electronic
communication, if appropriate.
13)Specifies that any violation of the provisions of this bill
relating to the disclosure statement with the intent to
directly or indirectly mislead the public on the nature of
services provided by the referral agency will constitute
unfair competition which includes unlawful, unfair, or
fraudulent business acts or practices and unfair, deceptive,
untrue, or misleading advertising. Specifies that any person
or entity that engages in unfair competition is liable for a
civil penalty not to exceed $2500 for each violation.
14)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, unless
expressly authorized, as specified.
15)Permits the person being referred, or his or her
conservator, guardian, family member, or agent under power of
attorney, before making a referral to any facility, to
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authorize the referral agency to share his or her personal
information, as well as the name and a description of the
care or services needed by the individual being referred,
with a facility or facilities, for purposes of the referral.
Limits the personal information, or other information shared,
to only that information which is necessary to complete the
referral process.
16)Requires the above authorization for sharing information to
be obtained in either of the following ways:
a) As a separate authorization form that clearly
discloses that the individual is consenting to the
disclosure of his or her personal information to a
facility or facilities to which they are being referred,
and requires this acknowledgement to include the name and
location of the facilities that will receive the personal
information and the format in which the personal
information will be shared; or,
b) As part of the disclosure statement required by this
bill, if it clearly indicates that the individual is
consenting to the referral agency's disclosure of his or
her personal information to facilities for which he or she
is being referred. Requires this authorization to include
the name and location information of the facilities that
will receive the personal information and the format in
which the personal information will be shared.
17)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.
18)Requires, on and after July 1, 2016, all licensed referral
agencies to maintain liability insurance coverage in an
amount of at least $1 million per person occurrence and $3
million in the total annual aggregate, for negligent acts or
omissions by the referral agency.
Comments
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
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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, or DSS, as appropriate. 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 information of
their client.
RCFEs. 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
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
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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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to Senate Appropriations Committee, minor, one-time
costs to update existing regulations by the Department of Social
Services (special fund). One-time costs of about $2.5 million
over two years for initial licensure of additional referral
agencies by the Department of Social Services (special fund).
The total number of referral agencies that are referring
consumers to residential care facilities for the elderly is not
known, as there are not current licensing requirements for this
segment of the referral agency market. It is estimated that
there are about 2,000 such agencies statewide. Under this
assumption, it will require about $2.5 million in staff costs
over two years to complete the initial licensing process. After
that, ongoing licensing and enforcement costs are anticipated to
be minor.
SUPPORT: (Verified 1/26/16)
Consumer Federation of California (source)
AARP
AFSCME
California Alliance for Retired Americans
California Chapter National Association of Social Workers
California Long-Term Care Ombudsman Association
CALPIRG
Institute on Aging
Older Women's League of Sacramento Capitol
6Beds, Inc.
OPPOSITION: (Verified 1/26/16)
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None received
ARGUMENTS IN 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 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
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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.
Prepared by:Vince Marchand / HEALTH /
1/26/16 16:39:34
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