BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 648|
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UNFINISHED BUSINESS
Bill No: SB 648
Author: Mendoza (D), et al.
Amended: 8/19/16
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
SENATE FLOOR: 27-12, 1/27/16
AYES: Allen, Beall, Block, Cannella, De León, Galgiani, Glazer,
Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Jackson,
Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning,
Pan, Pavley, Roth, Wieckowski, Wolk
NOES: Anderson, Bates, Fuller, Gaines, Huff, Moorlach, Morrell,
Nguyen, Nielsen, Runner, Stone, Vidak
NO VOTE RECORDED: Berryhill
ASSEMBLY FLOOR: 73-0, 8/19/16 - See last page for vote
SUBJECT: Health and care facilities: referral agencies
SOURCE: Consumer Federation of California
DIGEST: This bill adds referrals to residential care facilities
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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, including
disclosure of any agreement with the facilities that clients are
being referred to, any commissions or fees received, and a
requirement for liability insurance.
Assembly Amendments (1) delete a provision that would have
deemed a violation of the provisions of this bill as unfair
competition, subject to civil penalties of up to $2,500 for each
violation; (2) add owners, operators, and employees of a
referral agency to the list of mandated reporters of elder or
dependent adult abuse; (3) require applications for a license to
refer persons to RCFEs to include a declaration that the
licensee will either conduct a suitability determination, as
specified, of each person who seeks a referral, or will provide
a disclosure, as specified, that informs the person being
referred that state law does not require that the referral
agency determine whether facilities are suitable for the person;
(4) require the Department of Social Services (DSS) to set the
annual licensing fee at an amount no greater than the amount
required to cover the reasonable and actual costs of
administering the program; and (5) made other clarifying and
technical changes.
ANALYSIS:
Existing law:
1) Licenses and regulates RCFEs by the 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
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Public Health (DPH).
3) Prohibits any person, association, or corporation to
establish, conduct, or maintain a referral agency or to refer
any person for remuneration to any SNF or ICF, 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
licensing inspection, but may require the applicant to submit
a copy of the disclosures that referral agencies are required
to provide pursuant to this bill. Requires DSS to set the
annual licensing fee at an amount no greater than the amount
required to cover the reasonable and actual costs of
administering the program.
3) Excludes from the definition of "referral agency," 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 a resident who refers a new or prospective
resident to an RCFE and receives a discount or other
remuneration from the RCFE, or an RCFE staff member who
receives remuneration from the facility for professional
services, including sales and marketing efforts for that
facility.
4) Requires applications for a license to refer persons to
RCFEs to include a declaration that the licensee will either
conduct a suitability determination of each person who seeks
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a referral, or will provide a disclosure, as specified, that
informs the person being referred that state law does not
require that the referral agency determine whether facilities
are suitable for the person.
5) Defines "suitability determination" as a determination made
by the licensee that the facility offers services to meet the
needs of the person seeking a referral because of specified
considerations, including the level of care, the cost of the
facility, the social needs and preferences of the person, and
the geographic location of the facility.
6) Requires applications for a license to refer persons to
RCFEs to include a declaration that the licensee trains all
employees who make referrals regarding all of the provisions
of this bill, state governance and administra5tive functions
of agency operations, the psychosocial and physical needs of
the elderly, and community supports, cultural competency and
sensitivity to resident's needs.
7) 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.
8) 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.
9) Prohibits an employee, independent contractor, or other
person who is acting on behalf of a government agency,
hospital, or other health care institution, including medical
professionals, to offer, provide, or accept a payment or
other form of compensation for referring patients, clients,
or customers to an RCFE or a licensed referral agency.
10)Requires all licensed referral agencies, prior to referring
a person to any facility, to disclose all of the following:
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a) Whether the licensee has an agreement or contract with
the facility to which the person is being referred;
b) Whether a commission or fee will be received by the
agency from the facility as a result of the referral;
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;
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; and,
f) 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.
11)Requires a referral agency, contemporaneous with a referral,
to provide the person with the date of the referral agency's
most recent visit to the facility and, as appropriate, a
hyperlink to, or a copy of, the most recent DSS evaluation
report for the facility.
12)Requires the disclosures 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 disclosures required by this
bill were received. Requires this acknowledgement to be
evidenced in one of several specified ways.
13)Requires a referral agency that refers a person to a
facility to obtain authorization, as specified, allowing the
referral agency to share 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
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purposes of the referral. Limits the personal information, or
other information shared, to only that information which is
necessary to complete the referral process.
14)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.
15)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.
16)Adds owners, operators or employees of a referral agency to
the list of mandated reporters of elder or dependent adult
abuse.
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, 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
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client.
2)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 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.: Yes Local: No
According to the Assembly Committee on Appropriations:
Significant one-time costs to DSS, potentially exceeding $1
million GF to establish the licensure program, as well as
significant ongoing costs in the range of $1.5 million or
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higher. Estimates of ongoing costs are subject to significant
uncertainty due to the varying size and complexity of referral
agencies, uncertainty about complaint volume, and number of
licensees. If complaint volume is high or significant
enforcement resources are necessary, costs could be higher.
SUPPORT: (Verified 8/24/16)
Consumer Federation of California (source)
AARP
AFSCME
California Alliance for Retired Americans
California Chapter National Association of Social Workers
California Commission on Aging
CALPIRG
Consumer Attorneys of California
Institute on Aging
Kern County
Office of the State Long-Term Care Ombudsman
Older Women's League of Sacramento Capitol
6Beds, Inc.
OPPOSITION: (Verified 8/24/16)
Caring.com
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
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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. 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.
ARGUMENTS IN OPPOSITION: Caring.com is opposed, stating that
while it supports a number of consumer protection provision in
this bill, it has been over-loaded with burdensome requirements
at a prohibitive cost of $7 million per year for the state to
monitor compliance without a showing of a need in the first
place, or that the protections and remedies currently in place
are insufficient to redress any potential problems should they
arise. Caring.com, supports disclosure of any commissions, and
other individual provisions, but states that proponents have
offered no evidence to support that consumer protection will be
served with the creation of an elaborate licensing and
regulatory scheme. Moreover, Caring.com states that DSS has no
expertise regulating referral agencies, and it would distract
DSS from their main mission to regulate facilities. Caring.com
states that the fee provision is a concern as well as it is
unknown how much it will be and what method will be used to
allocate the fee to referral agencies.
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ASSEMBLY FLOOR: 73-0, 8/19/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos,
Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh,
Dahle, Daly, Eggman, Frazier, Beth Gaines, Gallagher, Eduardo
Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove,
Hadley, Harper, Roger Hernández, Irwin, Jones, Jones-Sawyer,
Lackey, Levine, Linder, Lopez, Low, Maienschein, Mayes,
McCarty, Medina, Melendez, Mullin, Nazarian, O'Donnell, Olsen,
Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: Bigelow, Dodd, Cristina Garcia, Holden, Kim,
Mathis, Obernolte
Prepared by:Vince Marchand / HEALTH /
8/25/16 17:45:08
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