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SPONSOR: |
Gonzales |
DATE TYPED: |
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HB |
871 |
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SHORT TITLE: |
Continuing Care Reporting Requirements |
SB |
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APPROPRIATION
Appropriation
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Additional Impact |
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FY03 |
FY04 |
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NFI |
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(Parenthesis
( ) Indicate Expenditure Decreases)
Responses
Received From
State
Agency on Aging (SAA)
SUMMARY
Synopsis
of Bill
HB 871 amends the Continuing Care Act as
follows:
Significant
Issues
Continuing Care
Communities (CCCs) are retirement facilities that
furnish, pursuant to a contract, independent living and health or
health-related services. These services may be provided in the community, in
the resident’s independent living unit or in another setting, designated by the
continuing care contract, and include, at a minimum, priority access to a
nursing facility or hospital either on site or at a site designated by the
contract. In other words, a CCC offers a resident the ability to “age in place”
– from independent living through nursing home care. Generally, but not always,
the prospective resident pays a large up-front entrance fee. There are also
monthly fees for rent and a variety of other services. There are currently 9 CCCs in
Deletion of the
requirement for disclosure of an annual audit or balance sheet, as proposed in
HB 871, is of significant concern to the SAA.
Of even greater concern to the SAA is the deletion of the requirement
that financial documents are prepared in compliance with generally accepted accounting
principles (GAAP). Without audits and without compliance with GAAP, financial
statements are unreliable and essentially useless. While the Continuing Care
Act falls far short of protecting residents against financially unstable
providers or ones that make excessive profit, at least the Act requires full
disclosure and reasonable fee increases. It is important to residents to know
the financial status of the CCC since they have likely invested a large portion,
if not all, their life savings in entrance and other fees and may not have the
financial resources to move elsewhere. Also, their intent in entering such an
arrangement is the security of knowing they will not have to move out of their
“community” if and when they require assisted living or nursing home care.
SAA also opposes the deletion of criteria for
allowable fee increases. Skofield vs. The Evanelical Lutheran Good
Samaritan Society dba Manzano
del Sol Good Samaritan Village was a class action
case decided December 2002 in New Mexico District Court. The plaintiffs were
awarded over $360,000 in compensatory damages for excessive fees charged to residents,
in violation of New Mexico’s Continuing Care Act, when annual increases were
found to be in excess of what could be justified under a reasonable return on
investment – a provision that HB 871 proposes to delete. If the criteria for
allowable fee increases were deleted from the Continuing Care Act, excessive
increases could be imposed on residents without any protection or recourse.
OTHER SUBSTANTIVE ISSUES
Almost all other states with statutes governing CCCs require, at a minimum, full financial disclosure,
consistent with
BD/yr