Component plan. Continuing Care Retirement Community (CCRC) sheltered nursing homes

COMPONENT PLAN CONTINUING CARE RETIREMENT COMMUNITY
(CCRC) SHELTERED NURSING HOMES
Georgia State Health Policy Council and
Georgia State Health Planning Agency 4 Executive Park Drive, N.E. . Sui te 2100 Atlanta, Georgia 30329
January 1989

Joe Frank Harris
GOVERNOR

STATE OF GEORGIA
OFFICE OF THE GOVERNOR ATLANTA 30334

FEB 21 t989
STATE OF GEORGIA HEALTH PLANNING AGENCW
PLANNING SECTION

February 17, 1989

w. Douglas Skelton, M.D. Chairman State Health Policy Council Suite 2100 4 Executive Park East, N.E. Atlanta, Georgia 30329
Dear Doug:
In accordance with your request and with the authority granted me in Code Section 31-6-20 of the Official Code of Georgia Annotated, I have reviewed the Component Plan for Continuing Care Retirement Community Sheltered Nursing Homes and do hereby approve it. I would like to commend the~ council and the State Health Planning Agency on the time and effort which have gone into the development of this plan.
I am particularly pleased with the open, public participatory process which has been initiated by the council and the agency in the development of both the component plan and the certificate of need rules. If I can be of further assistance on this or any other matter of concern to you, please contact me.
with kindest regards, I remain
Q;;~ Joe Frank Harris
JFH:mbe

4 Executive Park Drive. N.E. Suite 2100
Atlanta. Georgia 30329 (404) 894-4899
February 6, 1989

STATE OF GEORGIA
HEALTH POLICY COUNCIL

The Honorable Joe Frank Harris, Governor The State of Georgia The State Capitol Atlanta, Georgia 30334
Honorable Sir:
It is with great pleasure that the State Health Policy Council transmits to you for your approval this Component Plan:
Continuing Care Retirement Community Sheltered Nursing Homes.
The Plan is a product of the Council and the State Health Planning Agency, which operate within the authority of Georgia Law 552, Code Title 31, Chapter 6 amended.
This Component Plan identifies and addresses issues related to Continuing Care Retirement Community Sheltered Nursing Homes and recommends goals, objectives and system changes to insure a statewide system of cost-effective and efficient care. The Plan is designed to achieve official state health policies relating to access to quality care and cost containment.
This Plan has been produced through an open, public participatory process initiated and monitored by the Policy Council. The Policy Council and the State Agency commend this Plan to you and urge your approval of it. It is believed that the Plan provides a rational basis for the development of needed Continuing Care Retirement Community Sheltered Nursing Homes.
Sincerely,
~~D.
Chairperson
WDS/kb/az
Enclosure

PREFACE
This Component Plan is a product of the Georgia State Health Policy Council and the Georgia State Health Planning Agency which are funded through and operated within the authority of Georgia Law Act 552 and formerly Federal Public Law 93641 and amendments. The purpose of this Plan is to identify and address health issues, and recommend goals, objectives and system changes to achieve official State Health Policies. Th is Pl an has been produced through an open, pub1ic part i ci patory process developed and monitored by the 25-member Governor-appointed State Health Policy Council. The Plan, once approved by the Governor, supersedes all related sections of the 1981, 1983 and 1987 editions of the State Health Plan, and any existing related Component Plan and is designed to be consistent with the overall State Health Policies. For purposes of the administration and implementation of the Georgia Certificate of Need (CON) Program, criteria and standards for review (as stated in the Rules, Chapter 272-1, 272-2 and 272-3) are derived from this Component Plan. The Rules, which are published separately from the Plan and which undergo a separate public review process, are an official interpretation of any official Component Plans which the review function has the legal authority to implement. The Rules are reviewed by the State Health Policy Council (prior to their adoption) for their consistency with the Plan. The Rules, as a legal document, represent the final authority for all review decisions. Any questions or comments on thi s Component Pl an shoul d be di rected to the Planning and Implementation Division of the State Health Planning Agency, 4 Executive Park Drive, H.E., Suite 2100, Atlanta, Georgia 30329; telephone: (404) 320-4829.

TABLE OF CONTENTS

I. INTRODUCTION

1. Evolution of Current Policy

1

2. The State Health Policy Council Retirement

Community Nursing Home subcommittee

2

3. Retirement Community Nursing Homes Technical

Advisory Committee

3

II. OVERVIEW OF CONTINUING CARE RETIREMENT COMMUNITY NURSING HOMES

4

1. Introduction

4

2. History

4

3. Definition

5

4. Financial, Actuarial and Contractual Characteristics

7

III. TRENDS AND ISSUES

9

1. Growth of CCRCs in the United States and Georgia

9

2. Financial Viability

10

3. The Role of long-Term Care Insurance

10

4. Consumer Protection legislation

11

IV. GOALS, OBJECTIVES AND RECOMMENDED ACTIONS

12

V. RECOMMENDED GUIDELINES FOR THE DEVELOPMENT OF CONTINUING

CARE RETIREMENT COMMUNITY SHELTERED NURSING HOME BEDS

13

1. Definitions

13

2. Avail abil ity

16

3. Access i bil i ty

23

4. Qual ity

25

5. Cost Containment

26

6. Acceptabil i ty

30

VI. REFERENCES

33

VII. APPENDIX

1. list of CCRC Technical Advisory Committee Members

35

Note: Numbers in parentheses in the text indicate references.

I. INTRODUCTION 1. Evolution of Current PolicY

The issues pertaining to Continuing Care Retirement Community (CCRC) Sheltered Nursing Homes were first addressed by the State Health Policy Council and the State Health Planning Agency in 1982. Staff prepared a special information paper in October 1982 which outlined the pertinent issues and how other states dealt with the issue. The paper was used by the Statewi de Health Coordi nat i ng Council (precursor of the State Health Policy Council) in preparing the long-term care section of the February 1983 State Health Plan.

The 1983 Pl an took the position that any request for CCRC nursing home beds should be judged competitively with all freestanding nursing home beds in assessing the appropriateness of new services for purposes of Certificate of Need (CON) review.

The issues were raised again in late 1985 during the process of revising the nursing home part of the 1983 Plan. The State Health Policy Council and the State Health Planning Agency called together a special Task Force on Retirement Community Nursing Homes which met on February 19, 1986. The Task Force consensus proposal recommended the following:

a. retirement communities must apply for nursing home beds subject to the general nursing home bed need formula;

b. the retirement community nursing homes must be open to the community and Medicaid certified;

c. retirement community nursing homes will be exempt from the minimum bed requirements for freestanding nursing homes, but can apply only for nursing home beds on a ratio of 1:4 nursing home beds to residential units; and

d. retirement communities will be considered as a special service under

CON standards, and demonstration will be required for proving need

for such services in the area, and the viability of operational

costs.

.

1

These recommendations were incorporated in the Component Plan - Long-Term Care: Nursing Home~~dated July 1986 and in the CON Rules and remain the official Agency policy until the adoption of this Component Plan. Hence, prior to the adoption of this Component Plan, new nursing home beds located in CCRCs were approved competitively with the general nursing home beds. Also, they were not required to be sheltered as a precondition for the issuance of a CON.
On numerous occasions, the Agency has been approached by interested parties/ developers and requested to reassess the current position on retirement community nursing home beds. Heretofore, the Agency has stressed previous and current positions in the Plan, and has not recommended reassessment. This led to the appointment of a Subcommittee of the State Health Policy Council's Plan Development Committee to further examine the issue.
2. ihe SHPC Retirement Community Nursing Home Subcommittee
The State Health Policy Council's Plan Development Committee appointed a Subcommittee at its July 1987 meeting to examine the feasibility of exempting ret i rement commun ities nurs i ng homes from the then app1icab1e cert i fi cate of need requirements for general nursing homes and to recommend strategies for any further examination of the issue. The Subcommittee held three meetings and made the following recommendations to the Policy Council:
HAll CCRC's applying for sheltered nursing home beds should be reviewed separately; be open to residents only, with the exception of non-resident spouses or intimate caretakers; must not participate in Medicare, with the exception that for facilities operating on a 'fee for service' basis only, Medicare participation would be optional; and must not participate in Medicaid. In addition, all CCRC applicants must show proof of financial viability.
Agency staff should recommend additional criteria for review in the following areas: definition of CCRCs; ratio of nursing home beds to living units; and whether all CCRC nursing homes should be required or allowed to be intermingled. Additionally, consumer protection legislation should be passed. A Technical Advisory Committee assisted by the Agency staff should be convened to make final recommendations on the criteria to implement
2

these recommendations. 3. Retirement Community Nursing Homes Technical AdvisorY Committee The appo i ntment of the Ret i rement Convnun ity Nurs i ng Home Techn ica1 Adv i sory Committee (TAC) was a result of the recommendations made by the Policy Council Subcommittee. The TAC consisted of 13 members and 2 ex-officio members (See Appendix 1 for a full list of members). The TAC held 5 meetings, all at the Agency Offices, on January 29, February 12, February 26, March 18, and April 18, 1988.
At the July 1988 meeting, the State Health Policy Council (SHPC) accepted the TAC reconunendations with the exception of the TAC recommendation that would exclude CCRCs from participating in Medicaid. The SHPC decision came as a result of a communication from the Department of Medical Assistance (DMA) to the Agency informing the State Health Planning Agency that it was DMA's policy that all nursing homes approved for Certificate of Need (CON) were also eligible for Medicaid certification. This implied that DMA, the agency charged with administering the Medicaid program in Georgia, would not decline to enroll CCRC nursing homes as Medicaid providers. However, it is still the SHPC's policy that CCRC nursing homes should not impact on the Medicaid program. To effect that policy, the SHPC directed Agency staff to put into the Plan and CON criteria safeguards that would ensure that the nursing home beds would remain sheltered and open only to the CCRC residents.
This Component Plan is based on the TAC recommendations regarding the development of CCRC sheltered nursing homes in Georgia.
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II. OVERVIEW OF CONTINUING CARE RETIREMENT COMMUNITY NURSING HOMES
1. Introduction
Continuing Care Retirement Communities (CCRCs) are residential complexes that feature health care and support services for residents of retirement age. Various terms used to describe this type of facility include life-care centers, retirement centers, and total care retirement centers, among others. The great majority of CCRCs offer nursing services within the complex. In exchange for paying a lump-sum entrance fee (also known as endowment fee) and monthly maintenance fees, the resident enters a long-term contract which specifies the CCRC's obligations to the resident which would ordinarily include room and board; health care, including long-term care; and other social services. The health care services will typically be for a minimum of one year and may be for as long as the life time of the resident.
In a CCRC, the costs of housing, services and health care are spread among the total group of residents thus minimizing an individual's risk of facing unmanageable bills, especially those associated with long-term care. The individual purchases a package of residential and health services and the CCRC uses the combined entrance fees and monthly payments to meet the needs of the community.
2. History
The concept of CCRC can be traced back to philanthropic shelters which existed before the 20th century. The shelters offered life-time care to elderly persons who in return gave all their personal property to the shelter.(3) This lifetime approach to the provision of care is the reason that CCRCs are sometimes referred to as "life Care Centers". This concept especially appealed to people who had given much of their lives in service, and were in many cases without secure, adequate retirement incomes(18), particularly missionaries retiring from overseas assignments. The first of these facilities were generally developed by religious organizations.
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3. Definition
While the earlier trend was to offer contracts that promised true life-care, i .e., care for the 1i fet ime of the res ident, today most fac il ities offer modified contracts with specified limits on covered health care. They provide increasing levels of care that meet the needs of individual residents as they age, beginning with independent 1iving and offering a variety of health and nursing services. At a minimum, literature shows that the CCRC community meets each of the following criteria:
a. It has independent living units and health care facilities, such as congregate living, personal care, and intermediate and/or skilled nursing care, or provides for such care, and
b. It offers a contract that 1asts for more than one year and guarantees shelter and various health care services, and
c. Its fees for health care utilization are less than the per diem charge for such services and have been partly prepaid by the resident. (1)
For purposes of this Component Plan, the CCRC Technical Advisory Committee developed a definition that incorporates two categories of CCRCs classified by the type of contract offered. Specifically, Type A CCRCs refer to facilities that offer 1i fe-t ime continuing care contracts while Type B CCRCs offer contracts that guarantee continuing care for a period in excess of one year but not for the life of the resident. The following are the definitions:
Continuing Care Retirement Community (CCRC) A Continuing Care Retirement Community (CCRC) is an organization which offers a contract to provide an individual of retirement status other than an individual related by consanguinity or affinity to the provider furnishing the care, with board and lodging; nursing care and medical or other health related services; or both. These services are provided at the same location for a minimum period of more than one year and may be for as long as the lifetime of the resident. Individuals entitled to receive continuing care in a Continuing Care Retirement Community must hold a contract with the CCRC and must have been a resident of a CCRC living unit, excluding assisted living or personal care unit, for a period of not less than 180 days, except in those cases where one spouse, or intimate caretaker as defined in this Plan, is admitted to a nursing care bed at the time the other spouse or intimate caretaker takes up
5

independent residence, or when the facility can certify that the disease or inj~ry causing the required nursing care was not present or known to exist at the time a person was admitted as a resident. Type A Continuing Care Retirement Community (Tvpe A CCRC) Type A CCRC is an organization which offers a contract to provide an individual of retirement status other than an individual related by consanguinity or affinity to the provider furnishing the care, with board and lodging; licensed nursing care and medical or other health related services; or both. These services are provided at the same location for the life of an individual, including mutually terminable contracts, and in consideration of the payment of an entrance fee with or without other periodic charges. Type A CCRCs offer long-term nursing care for a little or no substantial increase in monthly payments, except normal operating cost and inflation adjustments. Type B Continuing Care Retirement Community (Tvpe B CCRC) An organization which offers a contract to provide an individual of retirement status other than an individual related by consanguinity or affinity to the provider furnishing the care, board and lodging; licensed nurs i ng care, wi th medical or other health related servi ces ; or both. These services are provided at the same location for a period in excess of one year, including mutually terminable contracts, and in consideration of the payment of an entrance fee with other periodic charges. Type BCCRCs offer a specified amount of long-term nursing care for little or no substantial increase in monthly payments except normal operating cost and inflation adjustments. After the specified amount of nursing care is received, residents pay either a discounted rate or the full per diem rate for nursing care required. The definition excludes retirement facilities which, while offering nursing services, do not offer continuing care contracts that guarantee access to a nursing bed. Such a facility may offer a contract for the purpose of guaranteeing access to the nursing unit but only at the full per diem rate. Such facilities are strictly rental communities as they do not require the payment of an entrance fee.
Since all nursing homes which were in existence prior to the adoption of this Component Plan were approved specifically to be available to the public, they are not sheltered; therefore, they are covered under the Component Plan LongTerm Care: Nursing Homes. A CCRC which has obtained nursing home beds approved
6

under the Component Pl an Long Term-Care: Nurs i ng Homes does not qual ify for sheltered nursing home beds unless such a facility applies for a new Certificate of Need to convert its existing nursing home beds to sheltered nursing home beds under the standards contained in this Component Plan.
4. Financial. Actuarial and Contractual Characteristics As described by a financial consultant, a CCRe can be viewed as a business enterpri se cons i st i ng of four components. First, it is a hotel that offers apartment rentals, utilities, food, and maid service. Second, it is a healthcare facility that provides adjoining nursing center or custodial care. Third, it is a social club that provides meeting and activity rooms for a variety of funct ions frequently under the total or part ia1 superv is ion of man agement. Fourth, it is an insurance underwriter that offers services for the lifetime of its residents.(3)
Funding for CCRCs is done almost entirely through the lump-sum single entrance fee and the monthly "maintenance" fee. The two fees are based on the size of the living unit. However, there are built-in actuarial assumptions that go into setting the fees in general. For example, entry age is normally restricted to 62 years (1) and entrants are required to be in relatively good health. The entrance fee is a present payment for future services. A relatively higher entrance fee entails lower monthly fees. In 1986, the median entrance fee for a single resident ranged from $33,300 for a studio to $110,000 for a three bedroom unit. The monthly fees ranged from $608 for a studio to $807 for a three bedroom unit.(6) In the long-term, the monthly fee is usually adjusted upwards to reflect inflationary trends. Depending on the contract, some portion of the entrance fee is refundable if the resident vacates or dies within a specified period.
From a financial, actuarial and contractual standpoint, the most important service provided in a CCRC is health care. Depending on the contract's stipulations, the community is committed to provide future health care, in some instances, for the lifetime of a resident. This financing mechanism requires the community to make actuarially sound pricing decisions when setting fees.
7

The adverse effects of poor actuarial assumptions include financial failure and closure of th. CCRC, leaving residents impoverished and with nowhere to go. To protect residents from such eventualities, numerous states require CCRCs to set aside specific reserves necessary for fulfilling their commitments as well as requiring annual actuarial studies to ensure continuous financial soundness.
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III. TRENDS AND ISSUES
1. Growth of CCRCs in the U.S. and Georgia Substantial growth in CCRCs occurred in the U.S. during the late 1960's and throughout the 1970's from approximately 75 facilities in 1965 to 200 in 1980.(1) Today it is estimated that there are approximately 600 CCRCs serving 150,000 residents.(16) Today's typical facility has 200-250 residential units and 60-75 nursing care beds.(l6) Ninety-five percent of existing facilities are owned and operated by non-profit organizations, a large majority of which are affiliated with religious organizations.(16)
Today the greatest number of CCRCs are located in California, Florida and Pennsylvania. An overwhelming majority (77%) of the residents are female. The average age of all residents in 1986 was 81 while the average age at entry was 78.(6) For facilities built in 1975 and after, the average age at entry was 79 while the average for all residents was 82.(10)
Further, as the elderly population increases as expected in the near future, so will the demand for CCRCs and other alternative living arrangements for the elderly. By the year 2000, 20% of the population in the U.S. will be over 65. In contrast, that population was only 4% in 1900 and 11% in 1980.(10)
A concomitant growth in CCRCs is expected. It is estimated that nationally at least 50 new CCRCs per year will be developed in the near term, growing to an annual rate of 125 per year by the year 2000.(1)
In Georgia the CCRC industry is relatively small. There are approximately 14 retirement facilities with nursing homes. Of these, only 3 could be considered to be CCRCs as defined in this Plan. Those are: Canterbury Court, Lenbrook Square, and Christian City. It should be noted, however, that developers have shown considerable interest in future development of CCRCs in Georgia.
9

2. Financial Viability As discussed earlier, almost all financial resources of a CCRC come from the entrance fees and monthly service fees. These monies are used by the community to guarantee long-term health care, room and board, as well as other social services. The money is also used to service long-term debts. In addition, the facility must be financially prepared for any unforeseen circumstances, such as unusually large turn-over, unusually high utilization of health care, and the inabil ity of some residents to make monthly payments. CCRC managers must, therefore, make the correct assumptions in setting a fee amount to avoid the pitfalls that can lead to financial failure. Further, "it is a widely held belief in the industry that the lifestyles offered in CCRCs extend life".(2)
Furthermore, maintaining financial balance in a CCRC is difficult because most CCRCs are small with residential populations' mortality experience being potentially atypical of those predicted from actuarial tables which are based on data from very large numbers of people. In a small population such as that of a CCRC, small variations from the expected mortality can potentially lead to significant adverse financial effects. (1)
Wrong pricing decisions and poor financial management as well as dishonest developers can result in failure and ultimately bankruptcy. An investigation by Money magazine in 1985 identified 40 CCRCs that had gone bankrupt since the mid 1970's.(I2) Also, a 1987 study of 109 CCRCs revealed that 44 were losing money or owed more than they had in assets. An additional 20 had both problems. Interestingly, the facilities' annual reports revealed that those in the worst financial condition were offering the most comprehensive health care.(7) In cases of bankruptcy, residents who in most cases would have spent their lifelong savings to enter the community are left impoverished with nowhere to go.
3. The Role of Long-Term Care Insurance Long-Term care insurance is an emerging private financing mechanism for longterm care services. Currently, there are over 70 companies offering long-term care policies.(II) In Georgia, there are 39 companies (as of October, 1988) licensed to issue long-term care insurance policies.(I7) These companies are
10

now experimenting with policies that could be used along with actuarial reviews to ensure tnit CCRC contract holders get what they pay for. Such policies may include group policies sold to the CCRC or policies sold to individuals in CCRCs.
Possible approaches to the use of long-term care insurance in CCRCs include, as aforementioned, policies sold to individuals or groups that would cover all degrees of nursing care. Also, private insurers could assume some of a CCRC's financial risk in exchange for a portion of the residents' fees, much like reinsurance compani es take on part of other insurers' ri sks in return for premiums. (12) Long-Term care insurance is a relatively new entrant into the long-term care field. As the concept evolves, it offers a viable alternative financing mechanism for CCRCs long-term care services.
4. Consumer Protection Legislation To protect the CCRC resident, many states have adopted legislation to regulate the CCRCs. By January 1988, 21 states had adopted consumer protection legislation.(lS) In most cases, in recognition of the insurance implications of these communities, states have designated their respective insurance departments to be the principal administrative agency.
Most state statutes address such issues as reserve requi rements, fi nancia1 disclosure to residents, refund provisions and certification of providers. Georgia does not have a statute regulating CCRCs; however, the CCRC Technical Advi sory Committee recommended that the State Health Pol icy Council should advocate for the passage of such legislation as soon as possible.
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IV.

GOALS, OBJECTIVES AND RECOMMENDED ACTIONS

A. GOAL: Assuring the provision of quality health care, accessibility and availability of health services as assured in a CCRC continuing care contract.
OBJECTIVES: 1. CCRC sheltered nursing homes shall be developed based on the
guidelines presented in this Plan. 2. Consumer Protection legislation shall be enacted to assure financial
viability of CCRCs thereby ensuring availability of health care and other services. RECOMMENDED ACTIONS: The State Health Planning Agency should implement the CCRC Sheltered Nursing Home Component Plan by accomplishing the following:

By 1989 the SHPA should devise a data base forCCRC sheltered nursing homes, including availability, utilization, financial feasibil ity and other appropriate factors. A method for public disclosure of appropriate data shall also be devised and implemented.

By 1990, the SHPA and the SHPC should sponsor a meeting of consumer advocates, legislators, the Insurance Department and other state agencies to develop a legislative strategy for regulating CCRCs and protecting CCRC residents.

By 1991, legislation should be enacted for the regulation of CCRCs and for the protection of CCRC residents. Such legislation should identify a specific state agency to be the principal administrator of the requirements advocated by the . legislation. The legislation should identify specific requirements in the areas of disclosure, reserve requirements, contract enforcement, residents' rights for self organization and other specific requirements.

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VI. RECOMMENDED GUIDELINES FOR THE DEVELOPMENT OF CONTINUING CARE RETIREMENT COMMUNITY SHELTERED NURSING HOME BEDS
The following standards apply to sheltered nursing homes located in CCRC facil ities defined herein as Type A and Type B Continuing Care Retirement Communities and approved subsequent to the adoption of this Component Plan. All nursing homes which were in existence prior to the adoption of this Component Plan are not sheltered; therefore, those nursing homes are covered under the Component Plan Long-Term Care: Nursing Homes. A CCRC which has obtained nursing home beds approved under the standards contained in the Component Plan Long-Term Care: Nursing Homes does not qualify for sheltered nursing home beds; and to convert existing nursing home beds to sheltered nursing home beds such a CCRC must apply for a new Certi fi cate of Need. Converse1y, a CCRC which obtains sheltered beds under these standards may not qualify for beds under the Component Plan Long-Term Care: Nursing HOmeS.
1. DEFINITIONS i. -A Continuing Care Contract- is a contract to provide an individual of retirement status other than an individual related by consanguinity or affinity to the provider furnishing the care, with board and lodging; nursing care and medical or other health related services; or both.
The contract relates to services provided at the same location for the life of an individual or for a period in excess of one year. The contract may be terminable. The consideration may be the payment of an entrance fee, or the payment of an entrance fee and periodic charges.
The contract fall s into two categori es, Type A and Type B. Type A Continuing Care contract is a contract to provide care in a Type A Continuing Care Retirement Community; Type B ContinUing Care contract is a contract to provide care in a Type B Continuing Care Retirement Community.
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ii. 'Continuing Care Retirement Community (CCRC)
A Continuing Care Retirement Community (CCRC) is an organization which offers a contract to provide an individual of retirement status other than an individual related by consanguinity or affinity to the provider furnishing the care, with board and lodging; licensed nursing care and medical or other health related services; or both. These services are provided at the same location for a minimum period of more than one year and may be for as long as the lifetime of the resident. Individuals entitled to receive continuing care in a Continuing Care Retirement Community must hold a contract with the CCRC and must have been a resident of a CCRC living unit, excluding assisted living or personal care unit, for a period of not less than 180 days, except in those cases where one spouse, or intimate caretaker as defined in this Plan, is admitted to a nursing care bed at the time the other spouse or intimate caretaker takes up independent residence, or when the facility can certi fy that the disease or injury causing the required nursing care was not present or known to exist at the time a person was admitted as a resident.
iii. -Type A Continuing Care Retirement COmmunity (Type A CCRC)- is an organization which offers a contract to provide an individual of retirement status other than an individual related by consanguinity or affinity to the provider furnishing the care with board and lodging; licensed nursing care, medical or other health related services; or both. These servi ces are provi ded at the same 1ocation for the 1ife of an individual, including mutually terminable contracts, and in consideration of the payment of an entrance fee with or without other periodic charges.
Type A CCRC offers long-term nursing care for a little or no substantial increase in monthly payments, except normal operating cost and inflation adjustments.
iv. -Type B Continuing Care Retirement Community (Type B CCRC)- is an organization which offers a contract to provide an individual of retirement status other than an individual related by consanguinity or affinity to the provider furnishing the care with board and lodging; licensed nursing care, and medical or other health related services; or both. These services are provided at the same location for a period in excess of one year, including mutually terminable contracts, and in consideration of the payment of an entrance fee
14

with other periodic charges. Type B CCRC offers a specifie~ amount of long-term nursing care for little or no substantial increase in monthly payments except normal operating cost and inflation adjustments. After the specified amount of nursing care is received, residents pay either a discounted rate or the full per diem rate for nursing care required. v. -A Sheltered Nursing Home-, for purposes of these standards, is a nursing home which meets the definition of a nursing home as defined by Chapter 272-2- .09(9)(a) 1 of the Rul es of the State Heal th Planning Agency. However, a sheltered Nursing Home is only for the exclusive use of the residents of a Type A or B CCRC.

vi. -A Resident- is an individual entitled to receive continuing care in a Type A or Type B Continuing ~are Retirement Community.

vii. -Individual of Retirement Status- customarily refers to --:-an individual 60 years old or older.

viii. -Living Unit- is a room, apartment, cottage, or other area within a facility set aside for the exclusive use or control of one or more identified residents, excluding assisted 1iving or personal care units.

ix. -Intimate Caretaker- is a spouse or a person related by blood or a

legal guardian who had been living with, and/or was caretaker of,

a CCRC resident prior to the resident's being admitted into the

n.u.....rs-ing home
x. -Assisted Living-, in a CCRC includes services provided to otherwise

independent adults who, for convenience, may desire but not

necessarily require assistance in some activities of daily liVing

such as ambulation, bathing, dressing, eating (excluding tube

.'

feeding), and grooming; but do not require protective care and/or

15

watchful oversight, health care, supervision of self administered medications or any medication administration. Assisted living is provided in the recipient's self-contained residential unit. Assisted living may include activities normally provided in a group environment, such as congregate dining and transportation.
xi. Service Area' for CCRC sheltered nursing homes shall be the Health Service Areas (HSAs) established under P.L. 93-641 as amended. For purposes of these Standards, HSA I is considered part of HSA II.
2. AVAILABILITY Criterion I - Need for new and additional CCRC Nursing Home Beds. Standard 1 New CCRC Sheltered Nursing Home Beds shall be approved only if there is demonstrated need in the respective service area. The Health Service Areas (HSAs) shall be utilized as the service areas for the planning of CCRC nursing homes (with the exception of HSAs 1 and 2 which are combined into one HSA). Need shall be determined by firs~
determining the potential CCRC market in the area; and second, bi
determining the number of nursing home beds in the service area using a ratio of 1:8 (one nursing home bed for each 8 independent living units). Rationale for Standard The TAC recommended the use of HSA's as the most appropriate method for planning for CCRC sheltered nursing homes. For more discussion of the use of HSAs see the section titled ACCESSIBILITY and FIGURE 1.
The following is the method to be used for determining need for CCRC sheltered nursing home beds, followed by TABLE 1 which shows the 1991 need for each HSA and thus, statewide need. It should be noted that the population data used in determining neea already accounts for in-migration and out-migration.
a. Determining the CNI Population Age 65 and Over: The predominant target group in CCRCs is the population age 65 an~ older (see Column 1). It is also acknowledged,' however, that persons under 65 may have use for CCRCs. Further, the population in CCRCs is much older
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than 65. A 1986 nationwide survey of CCRCs found that, for --facilities built after 1974, the median age at entry was 79, and the med i an age of all res idents was 82. (6) Hence, the use of population 65 years old or older more than encompasses the predominant population currently entering CCRCs. Also, it should be noted, the use of this age group provides consistency with the SHPA's long-term care planning process. This age group is utilized by the Agency in planning nursing home and home health services. It is estimated that in this age group there are 1.77 persons per household.(21) (see Column 2.) b. Determining the Number of Households in the Primary Target Income Group: The primary target income group among the households with people 65 years old and older is those with annual income of $20,000 or more (in 1986 dollars, i.e., the 1991 equivalent of 1986 dollars). The use of the $20,000 or more income category in this method is not meant to imply that CCRCs are not or should not be accessible to all population groups. It is used as a guide for determining the demand for CCRCs in Georgia (the population data used in determining demand already accounts for in-migration and out-migration from Georgia). This is also the target income group for most CCRCs. (5) The TAC recommended thi s income category as representing a reasonable way of determining the target population. According to the U.S. Census Bureau data, 31.7% of all elderly households (65 years old and older) had this level of income in 1985.(6) Since no comparable rate was available for Georgia for 1985, the TAC recommended the use of thi s rate (31.7%) as a reasonable estimate of the primary target income population in Georgia. The u.S. Census data was utilized in recognition of the fact that it is a reputable reliable source of data. It is also consistent with other components of the need method; for example,
it is the source of the 1.77 factor used in estimating people per household (See Table I, Column 2).
17

However, it is also recognized that the rate of Georgia's 65 year --'old and older popu1 at ion wi th annual income of $20,000 or more is
less than the U.S. rate for similar population. Hence, it was deemed necessary to adjust the U.S. rate to estimate Georgia's rate. Data from the National Planning Data Corp's 1988 estmates, which showed the income of Georgia's 65 year old and older population to be 86.7% of the income of the U.S.'s similar population, were used to adjust the U.S. rate. That adjustment resulted in a rate of 27.5%, which is used in this Plan (see Table I, Column 3. (35)
c. Determining the Demand for CCRC Independent Living Units: Of those income eligible elderly population, it is estimated that 5% would choose to live in a CCRC (see Column 4). It is acknowledged that the CCRC industry is relatively young and has not yet developed a body of widely accepted demand generators for predicting demand on a national or statewide scale. Two recent studies indicate a wide variation in methods utilized for predicting demand. The estimates in these studies are based on varying characteristics of the population, such as the number of single person elderly households, income levels, home-owners versus home-renters, moving patterns, types of CCRC communities and competition among existing CCRCs. In one study which included CCRCs as well as rental and other senior housing projects, estimates of potential market ranged from 12 to 20 percent of income eligible elderly households (65 years old and older) (5). Another market study utilized 4 percent of incomeeligible elderly households (6). The TAC selected 5% as a reasonable representative of demand for CCRC independent 1iving units, given the present state of knowledge in the field, members' experience and judgement.
d. Determining the Ratio of Nursing Home Beds to Living Units: As a
public policy matter, CCRC nursing home beds obtained through these standards are sheltered, i.e., they are for the exclusive use of their residents. This may present the problem of unutilized nursing beds during the early stages of a community. In general, when a
18

community is newly opened, its resident population is relatively 'young and healthy. Over the years, this initial cohort of residents ages and.grows increasingly frail calling upon the various health care and health related services provided by a CCRC.(I)
Since all nursing homes located in CCRCs covered under this Component Plan (and standards thereof) are sheltered, to avoid the financial difficulties inherent in an unoccupied nursing unit, the TAC recommended an initial maximum ratio of 1:8, i.e., one nursing home bed to each 8 living units. A CCRC is eligible to expand the nursing home unit as demand for beds increases, to a maximum ratio of 1: 5 when all cri teria for estab11 shi ng and operat ing a CCRC continue to be met as substantiated by documentation submitted by the applicant.
Standard 2 A maximum of thirty (30) nursing home beds per CCRC shall be approved during a CCRC's application for a new sheltered nursing home.
Rationale for Standard Following the adoption of this Component Plan, need for CCRC sheltered nursing home beds will be allocated among HSAs using the need method delineated Criterion I, Standard 1. To assure that the beds will be distributed among the maximum number of CCRC applicants who meet Criterion I, Standard 1, the maximum number of nurs i ng home beds approved for a si ng1 e CCRC duri ng a CCRC' s application for a new sheltered nursing home will be thirty (30).
19

TABLE 1 ESTIMATED DEMAND FOR CCRC LIVING UNITS AND SHELTERED NURSING HOME BEDS IN GEORGIA
BY HSA, 1993

1

2

3

4

5

6

1993 CHI Population
Age 65+

EstilUted N...ber of Elderly (65+) Households Co1I.n 1';'1. 71

Esti-ated Number of Households In Prilllilry Target IncOIle Group of $20,000 + Annual
IncOIle
(in 1986 Dollars)
ColuRln 27.51

Estimated Number of CCRC Independent Living Units ColUllln 3x51

Ratio of Nursing
Home Beds To Living Units
1:8 ColUllln 4-:-8

Ratio of Nursing
HOlle Beds To living Units
1:5 Colullln 4-:-5

HSA 1

Na

alld 2 "" and

Appalachian

105,677

59,705

16,419

821

103

164

HSA 3 North Central

270,710

152,944

42,060

2,103

263

421

HSA 4

East

Central

73,576

41,568

11,431

572

72

114

HSA 5

Central

102,684

58,014

15,954

798

HSA 6

South

West

77 ,183

43,606

11,992

600

100

160

75

120

HSA 7

South

East

81,600

46,102

12,678

634

79

127

Georgia

711,430

401,939

110,534

5,528

692

1,106

SUMMARY OF METHOD FOR DETERMINING NEED FOR CCRC SHELTERED NURSING HOMES IN GEORGIA
a. Estimated Number of Elderly - These are the official data from the Georgia Office of planning and Budget (OPB) for civilian non-institutional population age 65 and over. While some people under age 65 enter CCRCs, the age 65 and over category is the predominate target group for CCRC residents.
b. People Per Household - The 1.77 is the estimated number of people per household where the householder is 65 years old or older. This is the figure from the U.s. Census Bureau for 1985. The TAC recommended the use of this rate in the need method.
c. Estimated Number of Elderly Households - This is obtained by dividing the number of people age 65 and over by the number of people per household (CNI population 1.77).
d. Estimated Percent/Number of Elderly Households in Primary Target Income Group (with Income of $20.000 or more) - It is estimated that in 1988, 27.5% of Georgia's population 65 years old and older had annual income of $20,000 or more. This estimate was determined by adjusting the 1985/86 U.S. rate of 31.7% to reflect the fact that Georgia's similar population had less income (see page 17). While some people in elderly households with incomes under $20,000 do enter or will be expected to enter CCRCs, the $20,000 and over income category is the predominant target group for CCRC residents. The use of the $20,000 and over category in this method is not meant to imply that CCRCs are not or should not be accessible to all population income groups.
e. Estimated Percent/Number Demand for CCRC Living Units in Target Income Households - The Technical Advisory Committee (TAC) determined that 5% is a logical and realistic prediction of demand for CCRC living units.
f. Estimated Number of CCRC Sheltered Nursing Home Beds - This is determined by applying a ratio of 1:8 (one nursing home bed to 8 living units) for initial application and a ratio of 1:5 for expansion.
21

Standard 3 . For a'CCRC's APPLICATION FOR ADDITIONAL SHELTERED NURSING HOME BEDS, i.e., expansion of the sheltered nursing home unit, beds shall be approved on a maximum ratio of 1:5 (one nursing home bed for each 5 independent living units) provided that the CCRC's existing nursing unit will have experienced an utilization rate of at least 85% during any three consecutive month period in the year preceding the application date. The maximum number of beds available for expansion shall be determined by taking the difference between the number of beds applicable to a 1:5 ratio minus the number of beds in operation. Beds approved for expansion shall reduce the total bed need in the service area in the same manner as do beds approved during initial applications. The applicant shall show proof of compliance with all other provisions of these guidelines during the period preceding application for expansion if the applicant's existing sheltered nursing home beds were obtained under the guidelines contained in this Component Plan.
Rationale for Standard This requirement decreases the cost of unused capacity and increases the possibility of CCRC compliance with the "sheltered bed" requirements; i.e., that CCRC nursing home beds approved under these standards are for the exclusive use of CCRC residents. To qualify for expansion, a CCRC must also furnish proof of compliance with all other provisions of these guidelines..(. if the applicant's existing sheltered nursing home beds were approved under the guidelines contained in this Component Plan. This requirement in effect assists the Agency in ensuring compliance to all guidelines. This requirement grants additional nursing home beds only to those CCRCs with a pattern of high utilization and thereby demonstrates a true need for additional beds rather than just a statistical need.
Standard 3 A CCRC must exhibit the capability and intent to provide care to people who need what has traditionally been called SKILLED CARE AND INTERMEDIATE CARE as defined in Chapter 272-2-.09(9)(a) of the Rules of the Georgia State Health Planning
22

Agency. Their financial standing and staffing and all other requirements must demonstrat~-that the applicant will provide that care and must provide it in a way as to meet the fluctuating needs of the residents.
Rationale for Standard The CCRC concept is based on the premise that it would meet the changing health care needs of an aging resident population fro~ independent living to skilled care. Qua1i fyi ng CCRC app1icants are granted a CON outs ide the bed need methodology for general nursing homes on the premise that the need exists within the fac 11 i ty for the prov is ion of th is conti nuum of care. Hence, it is important that all levels of nursing care be made available to the residents.
3. ACCESSIBILITY Criterion I - Geographic Accessibility Standard 1 The PLANNING AREAS for CCRC sheltered nursing homes shall be the Health Service Areas (HSAs) as shown on Figure 1. The need shall be determined for each HSA and each HSA will be allocated a number of nursing home beds using the method in Guideline 2: AVAILABILITY
Rationale for Standard The use of HSAs recognizes that CCRCs have the potential for serving large multi-county areas which are all within a reasonable distance of each other. A recent (1987) nationwide survey of CCRCs found that 81% of their residents came from within 25 miles of the CCRC.(6) The use of HSAs also recognizes that the facilities should be geographically accessible to all populations and therefore encourages such a distribution by allocating a finite number of sheltered nursing home beds for each service area.
23

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4. QUALITY Criterlon I - Disclosure Standard 1 The CCRC applicant shall provide a commitment to the State Health Pl anni ng Agency to DISCLOSE TO THE RESIDENTS AND/OR PROSPECTIVE RESIDENTS accurate information on a yearly basis about the CCRC including annual reports, maintenance of reserves, audit reports, and history of past fee increases.
Rationale for Standard
The TAC determined, following an extensive study of other states' requirements on disclosure as well as on TAC members' experience on the subject, that CCRCs should disclose to prospective residents and to residents all items 1isted above. Among the states surveyed were Florida, Maryland, Massachusetts, New Jersey, North Carolina, South Carolina, Tennessee, and Washington. The overall objective of the required disclosure is to assure that the information disclosed to the prospective residents and to residents is adequate enough so as to form an accurate basis for making informed decisions regarding the CCRC.
Criterion II - Licensure Requirements
Standard I
(i) A CCRC app1icant for sheltered nurs i ng home beds shall submi t indicators of its intent and ability to meet the REQUIREMENTS FOR LICENSURE by the Department of Human Resources, Office of Regulatory Services and to comply with the requirements of any other local, state or federal agency regulations; and
(ii) the applicant shall provide evidence that there are no uncorrected operational standards in any existing Georgia health care facility owned and/or operated by the applicant or by the parent company. Plans to correct any physical plant deficiencies must be included in the application. .
Rationale for Standard Qua1i ty is a measure of the degree to wh ich deli vered health serv ices meet established standards and judgments of value to the consumer. (22) The provisions of licensure Rules and Regulations for Nursing Homes (Chapter 290-58) and Intermediate Care Homes (Chapter 290-5-9) are to assure the minimal standards for servi ces del ivered . Qual i ty i sa funct ion of many vari ab1es,
25

including but not limited to: --education, experience and understanding of the health care providers; the process of service delivery, including the provision of appropriate level of care to meet specific patient care needs; institutional capacity to deliver services in an efficient and costeffective manner, via physical plant arrangement and safety considerations; licensure and certification (Medicare - S.S. Act Amendment, 1965) to survey compliance with established standards; the abil ity of the facH ity to satisfy the expectations of the community to deliver care of quality acceptable to established and community standards.
5. COST CONTAINMENT Criterion I - Financial Viability Standard 1 A CCRC appl icant for sheltered nursing home beds shall submit a FEASIBILITY STUDY based on Marketing Analysis, Actuarial Study, other relevant literature, and experience of other similar CCRCs. The applicant must address the following items in the Feasibility Study:
a. an explanation of methodology used, basis thereof, and purposes of the study;
b. defined service area including population demographics emphasizing senior adults with qualified incomes and other justification showing demand for the proposed service;
c. an economic/social survey including financial information necessary in determining average incomes in the service area and that there are sufficient people who can afford to utilize the proposed service;
d. detailed marketing management plans;
e. financial- information including: - escrowed funds - funded interest - reserve funds - ratio analysis;
26

f. contractual obligations to residents: - define care and cost - eviction plans - how to deal with resident who must be removed from community for care and/or lack of funds - refunds; and
g. evidence that applicant meets all appropriate federal, state and local provisions
Rationale for Standard
ACCRC Contract includes a commitment to provide long-term care. ACCRC nursing home unit is not a separate financial entity. Services are contracted, priced and paid for as a whole. The issue of cost containment therefore must be seen from the standpoint of the whole CCRC entity. The financial risk of CCRC failure falls on the individual residents as well as the public, since a CCRC failure may result in residents' "spending down" thus becoming eligible for Medicaid. An investigation by Money magazine in 1985 identified 40 CCRCs that had gone bankrupt in the middle 1970's.(12) Therefore, it is important that before approval, a CCRC provides proof of financial viability. The above list was based on TAC's study of other states' reqUirements on financial viability as well as their own experience. Among the states surveyed were Florida, Maryland, Massachusetts, New Jersey, North Carolina, South Carolina, Tennessee, and Washington.
Standard 2 (i) An eXisting CCRC applicant for sheltered nursing home beds must show proof that it has collected and/or intends to collect from each prospective resident and a new CCRC must show proof of intent to collect from each prospective resident, ENTRANCE FEES in the amount of $30,000 or 55% of the average project construction cost for each 1iving unit, whichever is higher, in exchange for a continuing care contract.
(ii) During construction, at least 55% of the average project construction cost for each living unit must be present as equity for the project. Equi ty, for purposes of these standards, refers to funds invested by the applicant and/or loans obtained by the applicant for the sole purpose of funding the proposed project.
(iii) The applicant shall prOVide a commitment to the State Health Planning Agency that after construction, all units will remain at least 55% invested to the account of the residents.
27

Rationale for Standard
i. The TAC recommended the minimum amount of entrance fee based on members' experience and in recognition of the fact that a minimum entrance fee provides a necessary distinction between a CCRC as defined in these standards and a purely rental community, which would not qualify for sheltered nursing home beds. In determining the required minimum, the TAC recognized that it is a necessary requirement from a financial standpoint and as a practical matter for a CCRC to provide the services specified in a continuing care contract. Further the $30,000 required minimum is a reasonable amount given statewide and national experiences. A 1987 survey of CCRCs in Georgia found that, of the 3 existing facilities considered to approximate the definition of a CCRC, entrance fees range from $28,000 to $130,000. (20) In a 1986 nationwide survey, the average ranged from $33,300 for a studio unit to $110,000 for a three bedroom unit.(6)
ii. This requirement assures that the developer makes available adequate funds to start the project and guards against over-indebtedness.
iii. Resident ownership of at least 55% of the living unit assists the resident in maintaining an interest in the proper management of the facility.
Standard 3 A CCRC applicant for sheltered nursing home beds shall demonstrate the existence of a HEALTH CARE LIABILITY FUND whose viability is documented by a relevant Actuarial Study and certified by a qualified actuary; or the existence of a LONG TERM CARE INSURANCE POLICY issued to individual residents; or a GROUP LONG TERM CARE INSURANCE POLICY issued to the CCRC for the coverage of all residents. An Individual or Group Insurance Pol icy must conform to all the requirements of Chapter 120-2-16 of the Rules and Regulations of the State of Georgia Insurance Department entitled "LongTerm Care Insurance Regulation". The period and scope of coverage must be identicaJ to the period and scope of coverage in the continuing care contract. All CCRCs shall file annual reports with the State health Planning Agency to demonstrate that they continue to meet the requirement of this standard. The State health Planning Agency shall make the reports available to the public.
Rationale for Standard The CCRC concept involves a large insurance effect. Traditionally, the entrance fee has been used to prepay for benefits and expenses with extensive cross-
28

subsidy among members of different ages or similar ages but differing health care needs . Deviations from the expected expenditures have often contributed to poor CCRC financial status and in some cases to ultimate default. The requirement that CCRCs should establish a health care fund and subsequent annual actuarial updates is aimed at ensuring that health care is available when needed as promised in a continuing care contract. A health care Letter of Credit may be one component of the health care fund. "Qualified actuary" is used to mean a member in good standing of the American Academy of Actuaries, or a person who has otherwise demonstrated his or her actuarial competence to the satisfaction of the appropriate regulatory official of the domiciliary state. (34)
Long Term care insurance is an emerging private financing mechanism for longterm care services. It is expected to playa vital role in the future of CCRC contracts. If the policy is consistent with the provisions of a continuing care contract, the policy can become a viable tool in the financing of health care in a CCRC. It is suggested that the CCRC should assume the responsibility for collecting the premiums in order to maintain consistency in coverage of residents. The required annual reporting is aimed at encouraging conformance with this standard.
Standard 4 A CCRC applicant for sheltered nursing home beds shall submit an ESCROW PLAN, including identification of an escrow agent, and a statement of anticipated application of all escrows.
i. For a CCRC which has been in operation for five years or less, the Escrow Plan should include the following commitments:
(a) during start up and construction, a minimum of 85% of the received deposits/entrance fees are to be escrowed or an irrevocable letter of credit for 85% of construction costs must be obtained, unt il the project is completed and operat i ng. The 85% of the received deposits/entrance fees can only be used for refunds. The remaining 15% of the received deposits/entrance fees may be used for an initial working capital reserve fund, escrowed into an institution insured by FDIC or FSLIC. Funds deposited in these institutions must not exceed the maximum amounts insured by FDIC or FSLIC; and
(b) upon completion of the construction and conrnencement of operations, 80% of all the received deposits and entrance fees must be escrowed and restricted for refunds, debt service, additional
29

working capital (to be considered a loan and repaid within 24 months), and plant, property and equipment replacement; ii. The Escrow Plan of a CCRC which has been in operation for five years or more should include the following commitments: (a) That the CCRC would escrow a minimum of 40% of received
deposits/entrance fees after which; (b) the restriction is l(b) would then apply. Rationale for Standard:
The TAC considered the escrow provisions to guard against the possibility of a CCRC failure. The escrow requirement assures that funds will be available to provide the services guaranteed in a continuing care contract. The financial ri sks of a CCRC fai 1ure fallon consumers, the faci 1ity operators and thei r lenders. Further, a CCRC failure leads to the possibility of the use of public funds, particularly Medicaid to provide health care and other services to residents who are left impoverished if a CCRC defaults.
6. ACCEPTABILITY Criterion I - Contractual Requirements Standard 1 The CCRC applicant for sheltered nursing home beds shall provide a model resident contract to the State Health Planning Agency which should specify in plain language at least the following: 1. Financial and other conditions required for a-person and spouse to continue as residents in the CCRC. 2. The total consideration to be paid by the resident to the CCRC; all fees and charges that will be imposed; the amount of the entrance fee or other initial payment(s) and the initial amounts of all periodic payments; and the policies, procedures and circum- stances under which the CCRC may change or add fees. 3. All health services to be provided by the CCRC, inclUding the extent to which personal care, intermediate nursing care and skilled nursing care will be furnished, and the costs of all such services. 4. Whether charges for health care paid in advance may be increased or changed during the duration of the agreed upon care. 5. The terms, conditions and procedures under which the resident may be transferred, on a temporary or permanent basis, from the living
30

unit to the personal care unit or nursing home; and financial --responsibility for the living unit and the health care services in the event of temporary or permanent transfer to the personal care unit or nursing home. 6. The terms and conditions under which a nursing home bed wi 11 be available, clearly stating any guarantee of availability; and what arrangements are to be made if a nursing home bed is not available when needed by a resident. 7. The terms, conditions and procedures under which resident may be transferred out of the CCRC for health services (to a hospital, mental health facility, etc.), the rights of the resident to return to the CCRC, and financial responsibilities for the living unit in the interim. 8. The circumstances under which resident will be permitted to remain in the CCRC if unable to pay fees, including any use of benevolent funds by the CCRC. 9. Arrangements that will be made for escrow or reserve accounts, including the purpose of these accounts, the terms under which they are held, the terms under which such funds will be released to the CCRC, the resident's rights in these accounts, and rights in accrued interest. 10. The term of the contract (e.g., whether for a designated time period for the life of the resident). 11. The grounds and procedures for termination of a contract (both prior to and after a resident's occupancy of a living unit) by the resident and by the CCRC. With respect to refunds in the event of termination, the contract shall specify the basis for establishing the amount of the refund and the time by which the refund payment will be made to the resident. 12. Refunds to be made by the CCRC in the event of the death of resident before occupancy of the living unit or after occupancy of the 1iving unit, including the basis for establishing the amount of the refund and the time by which the refund payment will be made. 13. The policies and circumstances under which changes can be made in scope of health services offered by CCRC, and what advance notice of such changes is to be given to residents. 14. Nothing in the contract shall be inconsistent with existing state laws, including but not limited to, the Long Term Care Facilities Residents 8ill of Rights. The CCRC applicant should document for SHPA how the applicant will disclose to prospective residents the standards to be met by the CCRC resident contracts.
31

The contract provisions shall be consistent with a characterization of the CCRC as either a--Type A or Type B CCRC as defined in these guidelines. Rationale for Standard The continuing care contract is the basis for the CCRCs commitment to provide services to the resident in exchange for the entrance fee and monthly fees. It is therefore an important document to the resident as the recipient of services, and the CCRC as the provider of services. The TAC recommended the above standard after extensive review of other states' requirements in this area and members' experience and judgement. Among the states surveyed were Florida, Maryland, Massachusetts, New Jersey, North Carolina, Tennessee and Washington.
32

VII. REFERENCES
1. Winklevoss, Howard and Powell, A.V.; Continuing Care Retirement COOlDunities; An Emoirical. financial and legal Analysis, Irwin, Illinois, 1984.
2. Laventhol &Horwath, Lifecare Industry 1983, Philadelphia. 3. laventhol &Horwath, Lifecare Industry 1984, Philadelphia.
4. Laventhol & Horwath, L1fecare Retirement Center Indystry 1985, Phil adel phia,
5. laventho1 &Horwath, The SID10r Living Indystry - 1986, Philadelphia. 6. laventho1 &Horwath, Retirement Housing Indystry - 1987, Philadelphia.
7. Ruch1in, Hirsch S. Continuing Care Retirement Communities; An Analysis of Financial Viability and Health Care Coverage, Ihe Gerontologist, Vol.28, No.2, 1988.
8. State Health Planning Agency, Component plan. Long-Ienn Care; Nursing Homes. 1985.
9. DHHS, Lifecare Centers; An Alternative Delivery System for the Elderly, DHHS, Health Resources and Services Administration, 1985.
10. Ernst &Whinney, Continuing Care Retirement COmmunities - An Industry in
Action - Analysis and Deyeloping Irends. 1987, Ernst and Whinney, 1987. 11. ConsYmer Reports, May 1988. 12. Ihe Broken Life-Care COOlDunities, MQnly, April 1985. 13. feinstein, Patrice Hirsch, et a1, long-Tenn Care Financing and Delivery
Systems: Exploring Same Alternatives. Conference Proceedings on longIerm Care held in January 1984, Washington, D.C. 14. ALPHA Centerpiece, Long-Ierm Care Alternatives: Continying Care Retirement COmmunities, January 1984. 15. Older American Report, October 9, 1987, AAHA. 16. InfOrMation obtained from Ms. Mary Webb of the American Association of Homes for t~e Aging, August 6, 1987. 17. Unpublished data, Georgia Insurance Department, October, 1988. 18. Raper, Ann. I., Editor, National Continuing Care Director, Scott, Foresman, and Company, Glenview, 111., 1984
33

19. Georg-iaDepartment of Medical Assistance, estimate by Alan Sacks, August, 1988
20. State Health Planning Agency, 1987. 21. u.S. Bureau of the Census, 1985. 22. Institute of Health Planning, A Glossary of Health Care Delivery and
planning Terms, August, 1981. 23. Raper, Ann T., Editor, National Continying Care Director, Scott, Foresman
and Company, Glenview, Illinois, 1984. 24. Fi11enbaum, Gerda G. Oya1ity of Life Among Lifecare Facility and Community
Residents: A Comparison;- Center, for t" Study of Aging and Human Development, Duke University Medical Cent~ 19815. 25. American Association of Homes for the Aging, Current Status of State Regulation of Continuing Care Retirement COmmunities. 1987, AAHA, 1987. 26. Lanahau, Michael B. "Retirement Centers are in strong demand; require careful planning", Modern Hea1thcare, August, 1981. 27. Lublin, Joann S. "Costly Retirement-Home Market Booms, Raising Concern for Aged,- The Wall Street Joyrna1, October 22, 19815. 28. "Public Retirement Systems: Crucial to Southeastern Economy?- Economic Reyiew, July, 1983, Federal Reserve Bank of Atlanta, p.63-70. 29. -Economic Influence of Retirees on Selected Southeastern Communities", Economic Review, June, 1984, Federal Reserve Bank of Atlanta. 30. "Sizing Up Lifecare", Changing Times, May, 1987. 31. FITCH Investors Service, Inc., Reqyirements for Rating ContinUing Care Retirement COmmunities. Fitch Investors Service, 1983. 32. State Health Plans from: Florida, Maryland, Massachusetts, New Jersey, North Carolina, South Carolina, Tennessee, Washington. 33. -Nearly 2000 Life care facilities should be built: Study.- Hospitals, November 16~ 1985.
34. Powell, Alwyn V., Tillinghast Company - Management Consultants and
Actuaries in a letter to James Kahiga, November 9, 1988. (See also Footnote'I). 35. National Planning Data Corp., ,1988
34

APPENDIX I RETIREMENT COMMUNITY NURSING HOME TECHNICAL ADVISORY COMMITTEE

lynne M. May Director of Marketing laventhol and Horwath 225 Peachtree Street, N.E. Suite 2100 South Tower Atlanta, Georgia 30303 Katherine (Kay) l. Wetherbee President Central Health Services 5357 Redfield Circle Dunwoody, Georgia Don Yates Reimbursement Director The Georgia Health Care Association 3735 Memorial Drive P.O. Box 36349 Decatur, Georgia 30032 Hamish A. Fraser Executive Director Kings Bridge Retirement Ctr, Inc. 3055 Briarcliff Road, N.E. Atlanta, Georgia 30329 Vickie Moody Beasley Executive Director GA Association of Homes 1
Services for the Aging 2719 Buford Highway, Suite 213 Atlanta, Georgia 30324 Gerald A. Bishop, President Retirement Community Services, Inc. 100 Pinnacle Way, Suite 130 Norcross, Georgia 30071 TOIl Satterfield Vice President/Treasurer Wesley Homes, Inc. 1817 Clifton Road Atlanta, Georgia 30029 Frank R. Shaw (Ex Officio) 2 Park Place, Suite III Atlanta, Georgia 30318
35

Joanne Meyer State Ombudsman . 878 Peachtree Street, N.E. Room 642 Atlanta, Georgia 30309
Frank McElroy, Administrator Presbyterian Village 2000 East-West Connector Austell, Georgia 30001 Tom Chapel, Manager Ernst 1 Whi nney 1800 Peachtree Center 225 Peachtree Street, N.E. South Tower Atlanta, Georgia 30303
Aaron J. Johnson (Ex-Officio) Commissioner, Department of
Medical Assistance 2 Ml King, Jr. Drive, S.E. Atlanta, Georgia 30334 Julian Rosenthal GA Chapter, American Association of Retired Persons 8 Kings Walk, N.E. Atlanta, Georgia 30307 Kim Roeder, Esq., Partner Dodd, Connell &Hughes 2900 Equitable BUilding 100 Peachtree Street Atlanta, Georgia 30303 Al Holbrook, Manager Pannell, Kerr, Forster 245 Peachtree Center Avenue 700 Marquis One Atlanta, Georgia 30303