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RFCE Reform Act 2014 Part 1

RCFE Reform 2014

Throughout March and April 2014, the bills that comprise the RCFE Reform Act were heard for the first time by legislative committees. The bills in the act are designed to protect the health, safety, and security of the Residential Care Facilities for the Elderly (RCFE). There are twelve bills within the act, and if passed, will cause a serious, direct impact in the RCFE community in California and a potentially far reaching impact on neighboring states such as Oregon, Nevada, Arizona and even Washington, Idaho, Colorado. Over time, this could ripple all the way down to Texas and to the east coast in Florida. The bills are as follows:

SB 894 (Corbett) RCFE Suspension/Revocation of Licenses

Up to this point, the suspension and revocation laws for RCFE licenses have been too vague. This is leaving the Department of Social Services (DSS) unable to adequately protect the health and safety of elder and dependent adults living in residential care facilities whose licenses have been suspended or revoked. If passed, SB 894 strengthens the obligations of the DSS and said licensee and includes adequate relocation timelines for the safety of the residents.

SB 895 (Corbett) Inspections/Evaluations of RCFEs

Evaluations of RCFEs are crucial to ensure proper laws and procedures are being followed daily. Unfortunately, in 2004, California’s Community Care Licensing Division (CCL) started checking facilities only once every five years. They had trouble maintaining even this schedule. If passed, SB 895 would require the CCL to comprehensively check all RCFEs at least annually, unannounced.

According to the latest report from The National Center for Assisted Living, many of the facilities in operation today will not meet the state-mandated requirements for staffing levels and quality care. As a potential result, many assisted living facilities might find themselves up for sale if their licenses are revoked due to neglect and abuse issues that have surfaced during the long gaps in CCL inspections.

SB 911 (Block) Training and Qualifications of RCFE Staff

SB 911 would strengthen the training requirements and qualifications for all RCFE staff and for staff that work directly with at-risk residents. Currently, these standards are woefully inadequate, requiring little more than a GED and between four and forty hours of mandatory training, with six to forty hours of annual training.

SB 1153 (Leno) Ban on Admissions

SB 1153 would impose penalties for non-compliance of RCFE laws and procedures. This bill would authorize DSS to suspend the admission of new residents until complaints can be proved.

What This Means for You

Overall, these changes are necessary and a step in the right direction for RCFE reform. Unfortunately, many facilities may be forced to sell their residential care facility due to inadequate funds to cover new fees and penalties incurred as a result. For more information about how these bills may affect you in your state, please talk to a brokerage firm who is knowledgable in the healthcare industry and who is dedicated to the improvement of Senior Care.

3 Main Reasons Why Skilled Nursing Homes File Chapter 11 Bankruptcy

When Nursing Homes File Chapter 11 Bankruptcy

There are three primary reasons a skilled nursing home ends up filing for Chapter 11 Bankruptcy. Although not the most ideal situation for the owners, the employees, and their patients, stringent federal and state requirements, fines, and lawsuits are hampering facilities’ ability to yield a profitable nursing home that can still afford skilled staffing needed for quality care.

Strict Federal and State Requirements

New guidelines enforced by the government are requiring skilled nursing homes to make mandatory regulation investments. These investments include updated training or new certifications for direct aides and staff. Direct aides are required to meet minimum educational hour regulations. Staff member requirements have been elevated as well. Failure to adhere to these regulations results in significant fines and fees.

Lawsuits and Claims

We recently reported on 19 skilled nursing facilities that filed Chapter 11 in California. Country Villa Service Corp’s claimed a need to file Chapter 11 on individual assets in order to seek protection from a number of class action lawsuits filed against them. The lawsuits range from poor quality care of their patients to medication misuse and missing wages and hours for employees.

Filing Chapter 11 on these specific locations freezes their assets, making them unavailable to the plaintiffs should they win their cases and staves off creditors temporarily. It does not, however, affect all of Country Villa Service Corp’s operational facilities. CEO Stephen Reissman claimed in his telephone interview that the bankruptcy won’t affect operations or treatment of patients at the company’s nursing homes in question, either.

Medicare Withholdings and Fines from CMS

Smaller nursing home corporations financially unable to separate their operational holdings from their business holdings are in a more precarious situation should lawsuits or fines arise. According to official reports, Medicare spent almost $32 billion on skilled nursing facilities in 2011 through their Nursing Home Quality Control Program. With the sequestration resulting from budget cuts in FY2013, many nursing homes are claiming they still haven’t received payments from the Centers for Medicare & Medicaid Services (CMS) as required. Coupling that with what some nursing home owners are claiming that they have received erroneous fines from CMS, and as a result they are forced to declare bankruptcy.

In Iowa, All-American Care owner, Jerry Rhoades, claims his locally-owned operation has to file bankruptcy in part because of all the fee injunctions CMS placed upon his business. CMS’s audits of the company yielded these results and fines nearing $100,000. Rhoades claims the fees have crippled their business and Chapter 11 was the only way out.

If you are considering filing Chapter 11 Bankruptcy, there may be other options available to you. Talk to a knowledgeable skilled nursing brokerage about these options. A reputable brokerage will have a large pool of qualified buyers and participants either in a 1031 Exchange, straight sale or sale and leaseback transaction. Check back frequently for more information on this, and related, subjects.