News

Monday, May 15, 2017

News From Trenton

The Senate Health, Human Services and Senior Citizens Committee met Monday, May 15, to discuss S-182. Sponsored by Sen. Bateman, the bill “Limits time continuing care retirement communities may retain refundable entrance fee after resident vacates facility to no more than one year.” 

Sen. Vitale posted the bill for discussion only; hence, it was clear no vote was to be taken. In LeadingAge New Jersey President & CEO Michele Kent’s testimony, she urged—among other points—that the Bill not be supported for fear of rather dire consequences in financially challenged CCRCs.  

In addition to Kent’s testimony, Keith Robertson, Managing Director at Ziegler; Gary Baldwin, an active ORANJ Board member; Sen. Bateman; and Mr. Nagel, the individual whose personal experience prompted the Senator to sponsor this Bill, also addressed the committee.

Committee members were engaged, asking many questions, generally just to try to understand the many complexities in and variations of CCRC contracts.  Sen. Singer and Sen. Allen, who have much experience with CCRCs spoke, underscoring the funding complexities. Sen. Allen, a co-sponsor of the Bill, noted that if a solution to long wait times is needed, that LANJ, in concert with Ziegler and ORANJ, could pursue a solution that did not threaten the viability of any CCRC.

 

Kent's Testimony:

"S-182 Testimony

Senate Health, Human Services and Senior Citizens Committee

May 15, 2017

Good afternoon, Mr. Chairman and all members of this Committee.  I am Michele Kent, President/CEO, of LeadingAge NJ (LANJ), a non-profit trade association representing communities serving seniors across this State, including nursing homes, assisted living, affordable housing and, germane to today’s hearing, Continuing Care Retirement Communities (CCRCS).  Actually, we are fortunate to count among our membership the preponderance of NJ’s CCRCs, with 21 in LANJ.

On first blush, there is no way one cannot understand Mr. Nagel’s anger and dogged determinism.  Frankly, a cursory reading about his family’s story, and the unacceptable wait for the refund due them, makes one easily conclude that this proposed legislative “fix” is more than understandable.

Continuing Care Retirement Communities (CCRCs) deliver a residential and care model for seniors, one in which residents are assured of increasing levels of care (including nursing home beds) through the balance of their lives.  In NJ, approximately 17,000 individuals live in CCRCs.  We are proud of our CCRCs and invite you to visit these beautiful communities.  The financing of a CCRC, however, is complicated.  There are various types of contracts with varying requirements.  Virtually all CCRCs require an often-substantial entrance fee be paid up front.  On top of that, there is a monthly assessment. 

Most CCRCs offer refundable contracts, with some portion of the entrance fee due back to family when the vacated unit is resold.  And therein lies the rub: the unit must be resold before a refund is due. 

In a moment, I shall be turning over my comments to Keith Robertson, Managing Director of one of the country’s most respected underwriters of CCRC financing, Ziegler.  Keith will detail how critical it is to the ongoing viability of a CCRC, and hence to its residents, that financial ratios are maintained, that liquidity meets certain thresholds.

Suffice it to say, some units are less desirable than others….for a whole host of reasons.  That may significantly delay their resale and, in turn, delay the issuance of a refund.

Not so many years ago, the housing market in NJ, not to mention across the country, hit major doldrums.  People’s homes weren’t selling and, for those expecting to move into a CCRC, that slowdown significantly impacted their ability to cover required entrance fees.  Hence, many delayed or even cancelled their plans to move.

So, as you can imagine, as this occurred, the vacancy rates in CCRCs escalated.  This then affected their cash flow.  And so, more and more units took much longer to resell and families began to experience much-longer than anticipated refunds….some quite extraordinarily long.  Particularly when the community was not particularly flush, its ability to pay refunds in a timely way was crippled. Again, this was a phenomenon not unique to NJ. 

Last year, after more and more attention was brought to the issue and to Sen. Bateman’s proposed legislative solution, I surveyed the LANJ CCRCs to get a sense of how many “old” refunds each had pending.  The survey was simple and quite unscientific but, nonetheless, gave me a good sense of the scope of the issue.  This was in May of 2016.  I redid the survey in August of the same year and saw a significant and healthy improvement.  My contention was that, to the extent this issue was resultant from a housing slow down, things should improve as the housing market improved.  I redid the survey a third time in March of this year and was delighted to see that the numbers again showed a significant improvement.  The point is that, as vacancy rates decrease and individual units are resold, CCRCs can refund entrance fees much more quickly.

As mentioned, I would like, if I may, to turn the testimony to Keith Robertson from Ziegler who can detail the damage that would ensue from the passage of this clearly well-intentioned bill.  The current financing model has and continues to work well in virtually all circumstances EXCEPT where a CCRC is already in precarious financial straits.

I leave you with this sincere recommendation:  if, indeed, you believe a “solution” is required to address delayed repayments, please know this is not the right course.  Passage of S-182 would do grave harm not only to the communities’ financial stability but, more importantly, would threaten the refunds for every current resident and, in the most dire of circumstances, require them to find a new home, surely not something any of us want for our aged citizens.

Thank you for the opportunity to speak with you today."


May 2017

MAAC QUARTERLY ASSISTANCE ADVISORY COMMITTEE (MAAC)

The MAAC held its quarterly meeting on April 13, 2017. An update of the MLTSS program noted the continuing growth of the program with enrollment totaling 49,995 as of March 2017. Private Duty Nursing continues to top the list of service utilization followed by nursing facility and home based services.

According to the Office of Legislative Services (OLS), the MLTSS program is expected to continue its growth, adding over 4,000 new enrollees in FY 2018 raising total enrollment above 53,000. The number of nursing home residents is expected to remain just above 28,000 with recommended appropriations increasing slightly to $1.78 billion.

Enrollment in MLTSS has been rapidly increasing since the program began in FY 2015, in part to the NJH FamilyCare managed care plans identifying non-MLTSS clients who may be eligible for the program and encouraging enrollment.

FY2018 BUDGET HEARINGS

Medical coverage for nursing home residents that includes capitation payments to managed care organizations on behalf of nursing facility residents enrolled in MLTSS, suggests that actual spending is expected to increase from approximately $1.76 billion in FY 2017 to $1.79 billion in FY 2018. Costs for nursing homes services are expected to decrease slightly. This suggests that the difference in spending may be attributable to increases in other care received by these individuals.

LEGISLATION

S.2563 – Clarifies DCA rulemaking authority over free-standing residential health care facilities, and prohibits eviction of residents from such facilities, except for good cause.
Released from the Senate Health, Human Services and Senior Citizens Committee with amendments on May 1, 2017.

S.468/A.837 – Establishes ‘Hazardous Drug Safe Handling Act;’ requires promulgation of standards and regulations concerning safe handling of hazardous drugs by certain health care personnel.
Passed by the Assembly on March 16, 2017 and sent to the Governor.

A.4729 – Eliminates certificate of need requirement for special care nursing facilities.
Introduced and referred to Assembly Health and Senior Services Committee on March 20, 2017.

A.4467 – Establishes ‘Affordable Housing Obligation Study Commission.’
Introduced and referred to Assembly Housing and Community Development Committee on March 6, 2017.

A.4425 – Eliminates certificate of need requirement for inpatient hospital beds for treatment of psychiatric and substance use disorder dual diagnosis.
Unanimously reported from the Assembly Health and Senior Services Committee on February 27, 2017.

A.3601/S.2209 – Concerns regulation of guaranteed asset protection waivers by DOBI.
Substituted for A.3601 and passed in the Senate 38-0 on February 13, 2017.

A.680 – Requires emergency action plans for delivery of oxygen to patient residences during health public health emergency.
Passed in the Assembly 70-0-0. Received in Senate and referred to Senate Health, Human Services and Senior Citizens Committee.

A.4139 – Requires health care facilities to test for and remediate lead in drinking water, and disclose test results.
Unanimously released by the Assembly Environment and Solid Waste Committee on February 13, 2017.

S.1018 – Establishes minimum Medicaid reimbursement rate for personal care services.
Reported out of the Senate Health, Human Services and Senior Citizens Committee with amendments on January 30, 2017. Referred to Senate Budget and Appropriations Committee.

S.1058 – Requires Commissioner of Health to take certain actions to ensure that residential units are available in assisted living facilities for individuals with special needs.
Reported out of the Senate Health, Human Services and Senior Citizens Committee on January 30, 2017. Referred to Senate Budget and Appropriations Committee.

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