BILL ANALYSIS Ó
SB 648
Page 1
Date of Hearing: June 21, 2016
ASSEMBLY COMMITTEE ON AGING AND LONG-TERM CARE
Cheryl Brown, Chair
SB
648 (Mendoza) - As Amended January 26, 2016
SENATE VOTE: 27-12
SUBJECT: Health and care facilities: referral agencies.
SUMMARY: SB 648 adds referrals to residential care facilities
for the elderly (RCFEs) 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.
Specifically, this bill:
1)Adds referrals to RCFEs 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.
2)Prohibits a referral agency from referring any person to an
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RCFE if that RCFE does not meet state licensing standards.
3)Prohibits any extended care facility, skilled nursing home,
intermediate care facility, or a residential care facility for
the elderly from paying a commission or fee to a referral
agency that is not licensed.
4)This bill requires a referral agency to provide a disclosure
statement to each person receiving its services, and to
retain, for 3 years, a signed acknowledgment stating that the
disclosure statement was received. The disclosure statement
among other things must include:
a) Whether the referral agency has an agreement or contract
with the facility to which the person is being referred.
b) If a commission or fee will be received by the referral
agency from the facility as a result of the referral, if
applicable.
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c) Any gift or exchange of monetary value between the
facility and the referral agency 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 a notice to include a description of
the services being rendered for that fee and the referral
agency's refund policy.
5)States that failure to provide the disclosure statement or
retain the acknowledgment, constitutes unfair competition
which includes unlawful, unfair, or fraudulent business acts
or practices and unfair, deceptive, untrue, or misleading
advertising and is subject to a civil penalty of up to $2,500.
6)Limits the personal information of a consumer that a referral
agency can share with other parties or from disclosing any
personal information of a person receiving services, unless
authorized to do so.
7)Prohibits a referral agency from holding any power of attorney
for a person receiving placement referral services, or
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receiving or holding their property in any capacity.
8)Requires referral agencies to maintain liability insurance
coverage in an amount of at least one million dollars
($1,000,000) per person occurrence and three million dollars
($3,000,000) in the total annual aggregate, for negligent acts
or omissions.
EXISTING LAW:
1)Licenses and regulates extended care, skilled nursing home or
intermediate care facilities by the Department of Public
Health.
2)Licenses and regulates residential care facilities for the
elderly (RCFEs).
3)Licenses and regulates referral agencies of extended care
facilities, skilled nursing homes, and intermediate care
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facilities.
4)Defines "referral agency" to mean a private, profit or
nonprofit agency which is engaged in the business of referring
persons for remuneration to any extended care, skilled nursing
home or intermediate care facility or a distinct part of a
facility providing extended care, skilled nursing home care,
or intermediate care.
5)Prohibits a licensee from having a direct or indirect
financial interest in any medical facility doing business with
the licensee.
FISCAL EFFECT:
According to the 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
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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.
COMMENTS:
Author's statement: According to the author, "Elder care
referral agencies are mostly unregulated, in spite of the fact
that they can be deeply involved in the decision making of a
senior or their family when determining care options. Consumers
rely heavily on the advice and recommendations of referral
agencies, especially since seniors and their families typically
seek the assistance of a referral agency following a decline in
independence or a significant health event, which can be a
stressful and traumatic time. Given the significance of these
health and life decisions, California should ensure that
referral agencies are at least meeting minimal standards."
What are 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
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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 Department of Social Services
(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.
Arguments in Support: Writing as the sponsor of the bill, the
Consumer Federation of California states, "generally, referral
agency services are offered at no charge to seniors. Instead,
referral agencies receive a commission or finders' fee from the
care facility after they have successfully referred a senior for
care and housing. The commission or finders' fee is typically
calculated as a percentage of the seniors monthly rent, creating
an incentive for the referral agent to place the senior in a
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specific facility or one where the agency has an exclusive
referral contract. Oftentimes these are more expensive for the
senior, even if the senior doesn't need a high level of care or
may have difficulty affording it."
Previous Legislation:
AB 1863 (Jones) of 2014 would have established "domestic home
care aide referral organizations" as a new licensure category
under the Home Care Services Consumer Protection Act overseen by
the Department of Social Services (DSS), as specified.. AB 1863
was held in the Senate Appropriations Committee.
SB 398 (Romero) of 2003 would have, among other things, made the
licensing and regulation provisions of the Employment Agency,
Employment Counseling, and Job Listing Services Act applicable
to health care employment agencies, as defined. SB 398 was held
in the Senate Appropriations Committee.
SB 70 (Murray) of 1999 would have established licensing and
regulations for residential care facilities for the elderly
referral agencies. SB 70 was held in the Assembly
Appropriations Committee.
REGISTERED SUPPORT / OPPOSITION:
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Support
Consumer Federation of California - Sponsor
Area Agency on Aging Advisory Council - Support with Amendment
AARP
American Federation of State, County and Municipal Employees
(AFSCME), AFL-CIO
California Alliance for Retired Americans
California Long-Term Care Ombudsman Association
California Public Interest Research Group (CALPIRG)
Consumer Attorneys of California
Elder & Dependent Adult Abuse Prevention Council of Santa
Barbara County - Support with
Amendment
Institute on Aging
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National Association of Social Workers-California Chapter
(NASW-CA)
Older Women's League Sacramento Capitol
Opposition
Caring.com - Oppose Unless Amended
Analysis Prepared by:Barry Brewer / AGING & L.T.C. / (916)
319-3990