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SB-707 Continuing care contracts.(2021-2022)

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Date Published: 04/08/2021 10:00 AM
SB707:v98#DOCUMENT

Amended  IN  Senate  April 08, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 707

Introduced by Senator Cortese

February 19, 2021

An act to amend Sections 1778 and 1793.13 of the Health and Safety Code, relating to continuing care contracts, and making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


SB 707, as amended, Cortese. Continuing care contracts.
Existing law regulates continuing care contracts and imposes certain reporting and reserve requirements on continuing care communities. Existing law establishes the Continuing Care Provider Fee Fund, which consists of specified fees from continuing care providers and which is continuously appropriated to the State Department of Social Services to oversee the continuing care provider program. Existing law requires the department to adjust the fees to reduce the amounts collected when the balance of the fund is projected to exceed $500,000 for the next budget year.
This bill would rename the fund as the CCRC Oversight Fund. The bill would also remove the requirement that the department reduce the amounts collected when the fund is projected to reach $500,000 and would, instead, require the department to, as needed, adjust the fees on continuing care providers to ensure that the balance in the fund is adequate to fund the reasonable regulatory costs of the program for the year and does not exceed an amount adequate to fund those costs. By authorizing additional amounts to be deposited into a continuously appropriated fund, the bill would make an appropriation. The bill would require a link to the approved budget for the Continuing Care Contracts Section to be posted on the department’s internet website.
Existing law authorizes the department to require a continuous care provider to submit a financial plan in specified circumstances, including when the department has reason to believe that the provider is insolvent, is in imminent danger of becoming insolvent, is in a financially unsound or unsafe condition, or that its condition is such that it may otherwise be unable to fully perform its obligations pursuant to continuing care contracts. Existing law requires the plan to explain how and when the provider will rectify the problems and deficiencies identified by the department.
This bill would authorize the department to require a provider to submit a financial plan and quarterly financial reports in the above circumstances, and if two specified additional circumstances exist for at least 30 days. The bill would require the financial plan and the quarterly financial reports to be distributed as specified, including to the facility’s resident council. The bill would require the approved financial plan and the most recent quarterly report to be shared with a prospective or incoming resident if the person will likely become a resident before the remediation of the problems and deficiencies.
Vote: MAJORITY   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 1778 of the Health and Safety Code is amended to read:

1778.
 (a)  There is hereby created in the State Treasury a fund which shall be known as the CCRC Oversight Fund. The fund shall consist of fees received by the department pursuant to this chapter. Notwithstanding Section 13340 of the Government Code, the CCRC Oversight Fund is hereby continuously appropriated to the department, without regard to fiscal years.
(b)  Use of the funds appropriated pursuant to this section shall include funding of the following:
(1)  Program personnel salary costs, including, but not limited to, the following:
(A)  A Continuing Care Contracts Program Manager at a level consistent with other management classifications that direct a regulatory program with statewide impact. The position shall require skills and knowledge at the highest level with responsibility for work of the most critical or sensitive nature as it relates to the department’s mission, including protecting vulnerable elderly persons, supervising technical staff with oversight of highly complex operations, and responsibility for policy and program evaluation and recommendations.
(B) A full-time legal counsel with a working knowledge of all laws relating to the regulation of continuing care retirement communities and residential care facilities for the elderly.
(C) A financial analyst with working knowledge of generally accepted accounting principles and auditing standards.
(D) Other appropriate analytical and technical support positions.
(2)  Contracts with technically qualified persons, including, but not limited to, financial, actuarial, and marketing consultants, as necessary to provide advice regarding the feasibility or viability of continuing care retirement communities and providers.
(3)  Other program costs or costs directly supporting program staff.
(4)  The department shall use no more than 5 percent of the fees collected pursuant to this section for overhead costs, including facilities operation and indirect department and division costs.
(c)   As needed, the department shall adjust the calculations for the application fees under Section 1779.2 and annual fees under Section 1791 to ensure that the balance in the CCRC Oversight Fund is adequate to fund the reasonable regulatory costs of the program, as specified in subdivision (b), for the year. (b). If the balance in the CCRC Oversight Fund exceeds an amount adequate to fund the reasonable regulatory costs of the program, as specified in subdivision (b), for the year, (b), the department shall adjust the calculations for the application fees under Section 1779.2 and annual fees under Section 1791 to reduce the amounts collected. The A link to the approved budget for the Continuing Care Contracts Section shall be posted on the department’s internet website.
(d)  The intent of the Legislature is to empower the program administrator with the ability and authorization to obtain necessary resources or staffing to carry out the program objectives.

SEC. 2.

 Section 1793.13 of the Health and Safety Code is amended to read:

1793.13.
 (a) The department may require a provider to submit a financial plan and quarterly financial reports, if any of the following apply:
(1) A provider fails to file a complete annual report as required by Section 1790.
(2) The department has reason to believe that the provider is insolvent, is in imminent danger of becoming insolvent, is in a financially unsound or unsafe condition, or that its condition is such that it may otherwise be unable to fully perform its obligations pursuant to continuing care contracts.
(3) Both of the following occur and continue for at least 30 days:
(A) The provider fails to maintain the minimum reserve required pursuant to Section 1792.
(B) (i) For a provider with mortgage financing from a third-party lender or public bond issue, the coverage ratio of the provider’s debt service, as described in Section 1792.3, is less than 1:1 and the provider has less than 90 days’ cash on hand in the reserve account calculated and described in Section 1792.4.
(ii) For a provider without mortgage financing from a third-party lender or public bond issue, the provider has less than 90 days’ cash on hand in the reserve account calculated and described in Section 1792.4.
(b) (1) A provider shall submit its financial plan to the department within 60 days following the date of the department’s request. The financial plan shall explain how and when the provider will remedy the problems and deficiencies identified by the department.
(2) A provider shall submit quarterly updates to the financial plan to the department. Quarterly reports shall explain the provider’s progress toward remedying the problems and deficiencies identified by the department.
(c)  The department shall approve or disapprove the plan within 30 days of its receipt.
(d)  If the plan is approved, the provider shall immediately implement the plan and distribute a copy of the plan to the facility’s resident council. All quarterly reports required by this section shall also be distributed to the facility’s resident council immediately following submission to the department.
(e)  If the plan is disapproved, or if it is determined that the plan is not being fully implemented, the department may consult with its financial consultants to develop a corrective action plan at the provider’s expense, or require the provider to obtain new or additional management capability approved by the department to solve its difficulties. A reasonable period, as determined by the department, shall be allowed for the reorganized management to develop a plan that, subject to the approval of the department, will reasonably ensure that the provider will meet its responsibilities under the law. A corrective action plan or a plan for reorganization shall be shared with the facility’s resident council within a reasonable period of time.
(f) The provider shall share its approved financial plan and its most recent quarterly report with a prospective or incoming resident if that person will likely become a resident within 60 days and before the remediation of the problems and deficiencies identified by the department.
(g) If the provider fails to correct deficiencies by the expiration of the financial plan, the department may initiate delinquency proceedings, take further actions consistent with Section 1793.50.