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National Continuing Care Residents Association

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Model Standards and Laws

Below is a table of the proposed standards and laws that are now exposed for public scrutiny.  Comments are welcome and can be submitted either through the contact tab above or by e-mail to registrar@naccrau.com.  Click on the square symbol in the lower right corner of the video to display it full screen.

 

These Standards and Model Laws were presented on April 6, 2013 to a group of CCRC residents gathered in Lakeland, FL for the National Continuing Care Residents Association Annual Meeting. The seven minute video introduction will explain the rationale leading to our proposal of these Model Laws.

The spontaneous dialogue after the presentation which can be found following the table of laws will give a measure of how residents view these proposals.  The full presentation that preceded this dialogue (an hour in length), together with the Question and Answer session, plus a spontaneous reaction by the Reverend Bob Nicholson from Seattle can be found below the catalog table that follows this short seven minute video introduction.

Click on the topics below to access content

Proposed Standard Purpose and Rationale Link to Model Law Elaboration (if any)
Governance CCRC provider Boards of Directors should balance the interests of residents with those of other stakeholders, including executives and employees, in keeping with the purpose and well-being of the enterprise and the composition of the Board should reflect this balance. Model CCRC Governance Act Click here for a lively, impromptu discussion among a group of residents on this topic.
Financial Guarantee Residents of CCRCs should have the same financial protection in the event of provider impairment as that which life and annuity insurance policyholders already have.  This requires legislation like that proposed here which is adapted from the insurance precedent. Model Financial Guarantee Act  
Financial Responsibility Some contracts leave more of the future financial risk with residents than do others. Entering residents are expected to have sufficient assets (in addition to any Entrance Fees) or other guarantees to ensure that they can pay future provider fees as they come due and that resident asset threshold is higher when providers shift risk to residents.  This standard and model law establishes benchmarks to ensure that entering residents who do not have care-inclusive (Type A) contracts can afford the added risk they thereby assume. Model Financial Responsibility Act  
CCRC Fiduciary Act Residents in CCRCs and participants in Continuing Care at Home (CCAH) programs constitute a class of elderly citizens who are often more vulnerable and gullible than are younger people in the prime of life.  Accordingly, those who serve this class should be held to a high standard of duty and conduct. Model CCRC Fiduciary Act  
Financial Viability and Rehabilitation Act Residents in CCRCs and participants in Continuing Care at Home (CCAH) programs are particularly vulnerable to provider financial impairment and other impacts and should have protections similar to those accorded to insurance company policyholders. This resident protection requires legislation like that proposed here which is adapted from the insurance precedent. Model Financial Viability and Rehabilitation Act  
CCRC Standard Valuation In order for there to be some assurance that funding for deferred services promised to CCRC residents -- in return for current payments including Entrance Fees -- will be there later when needed, it is important that such commitments be valued currently together with projections of expected future income.  For insurance companies analogous valuations are conducted by actuaries.  This standard extends to CCRCs a similar standard for financial integrity.  This requires legislation like that proposed here which is adapted from the insurance precedent. Model CCRC Standard Valuation Act  
Prepaid Medical Reserve Many CCRCs advise their residents that a portion of their Entrance Fees may be currently tax deductible as prepaid medical expenses.  There is not now, however, any requirement that those funds be earmarked for the intended purpose.  This places the related tax deductions in jeopardy. This standard calls for the CCRC to establish a reserve item for amounts designated for prepaid medical expenses to ensure that such amounts are in fact used for that purpose.  Model Prepaid Medical Reserve Act  
Investment Regulation Entrance Fee Continuing Care Contracts like single premium annuities bring in cash in return for long deferred promises.  That requires trust and prudence in the investment of funds.  Of course, investment in the Continuing Care facility itself is an appropriate investment, assuming that the facility is operated to ensure a fair investment return.  Insurance companies have long had regulated investments to avoid speculative investments that can undermine their risk averse mission.   This Model Law extends similar investment protections to Continuing Care contract holders that life and annuity insurance policyholders already have. Model CCRC Investment Act  
Nonforfeiture There is no required correlation currently between Continuing Care Contract forfeiture provisions and the value of the services provided thereunder.  This standard would correct that imbalance.  There has also been controversy about a widespread industry practice in which payments of promised refund or death benefits are dependent on successor residents.  This has led to delays in the payments of funds and denial by providers of liability for promised refunds.  This standard would apply to CCRCs nonforfeiture principles comparable to those that have long applied to the life and annuity insurance industry. The legislation modeled here is adapted from the insurance precedent. Model CCRC Standard Nonforfeiture Act   Click here for further explanation.
Contracts Continuing Care Contracts are now written by providers and must be accepted before a person eligible for residence is allowed to move in. The result is that some contracts are one sided and there is a need to balance the interests of residents with those of the executives and of the enterprise which they lead.  Moreover, Continuing Care Contracts can be quite complex and difficult for ordinarily educated people to understand.  This can lead to confusion and disappointment.  The standard proposed in the accompanying model law applies to Continuing Care Contracts concepts analogous to those governing life and annuity insurance contracts. Model CCRC/CCAH Standard Contract Provisions Law  
Transfers Some CCRCs penalize internal transfers by only crediting a transferring resident with the Entrance Fee originally paid for the apartment relinquished and then reselling that same apartment at current market Entrance Fee rates.  This discourages internal transfers which can be positive in allowing a resident to adapt to the losses that inevitably accompany aging.  This standard and model law encourages transfers as an adaptive mechanism. Model CCRC Transfer Act  
Continuing Care at Home There is a movement to encourage Continuing Care at Home (CCAH) programs as an adjunct to CCRCs or in place of CCRC residence. By their nature such programs involve more enterprise risk than do brick and mortar CCRCs, and they verge on becoming very liberal long term care insurance, but without the regulatory oversight applicable to insurance.  This standard would limit such programs to what is reasonable given the constructive purposes that such CCAH programs can meet. Model Continuing Care at Home Authorization Act Video Discussion of Continung Care at Home at a NaCCRA Meeting
Conversion to Enable Resident Ownership A few CCRCs have an ownership model.  The condominium form, which involves fee simple ownership, creates transfer delays and difficulties at the death of a resident.  These difficulties can be avoided with specifically tailored cooperative ownership models.  Moreover, such models can enable the gradual conversion of existing CCRCs to an ownership model that is more compatible with the large Entrance Fees that are often required.  Existing residents can retain their existing arrangements for life if they wish, while those residents who choose ownership, and new residents who may prefer ownership, can purchase an commensurate interest in the cooperative corporation together with a lifetime lease to occupy a specified unit.  This law is adapted from laws that have allowed New York City apartments to convert from rental to cooperative ownership.  Model CCRC Cooperative Conversion Law  Click here for an Explanatory Paper.

Many residents of Entrance Fee CCRCs are confused about Ownership. Click here for a discussion by Bob Nagele of Connecticut of this confusion.
Self-Certification Highly detailed, reactive regulatory requirements for advance approval of facilities etc. inhibit providers responsiveness to changing needs and run up costs, though they are intended as a protection for the public. Since capital investment often lies fallow awaiting inspection or approval, excess regulation involves considerable cost for providers which drives up the cost of housing and services provided for the aging.  Regulation also inhibits innovation which might otherwise improve the services offered. 

Such oversight, approval, and inspection is redundant for the most responsible providers who are regularly voluntarily in compliance with all requirements.  This legislation would allow a provider to earn a Trusted status facilitating the certification and inspection process by allowing self-certification for those providers who achieve and maintain an exemplary record.  While this legislation is proposed at the state level, Federal legislation is also involved because of Federal oversight of Medicare, Medicaid and the Patient Protection and Affordable Care Act of 2010.
Model CCRC Self-Certification Act  
Federal Trusted Provider Status Because CCRCs are subject to oversight by the Federal Centers for Medicare and Medicaid and other Federal Agencies, Federal legislation is needed to fully implement a targeted oversight program allowing responsible providers to earn Trusted Status.  Accordingly this model Federal enactment is included in this portfolio of proposed standards and legislation. Model Federal Trusted Providers Act  
Federal End of Life Palliation Once it is clear that the end of life is approaching, care needs shift from restoration to comfort.  Recent hospice legislation has moved in this direction.  The model law suggested here would clarify personal rights of choice as life's end approaches.  Model Federal End of Life Palliation Act  

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Walt Boyer: Financial Soundness Committee and Review of the Standards and Model Laws April 6, 2013
Questions and Answers for Financial Soundness Committee Chair, Walt Boyer April 6, 2013
Reverend Bob Nicholson responds spontaneously
to Walt Boyer's presentation of the Model Laws
 
Walt Boyer reports on the Model Laws at the April 2014 NaCCRA General Membership meeting in Mystic, CT.