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Fundamentals of Continuing Care Retirement Communities Presented by: Peter M. Mellette, Esq. Mellette PC

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Fundamentals of Continuing Care Retirement Communities Presented by: Peter M. Mellette, Esq. Mellette PC. Definition of a CCRC.

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Fundamentals of Continuing Care Retirement Communities Presented by: Peter M. Mellette, Esq.Mellette PC

Mellette PC


Definition of a CCRC

“A continuing care retirement community is an arrangement under which housing and health-related services are provided (or arranged) through an organization for the enrollee under an agreement that is effective for the life of the enrollee or for a specified period.”

42 CFR 422.133(b)(2)

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goals of ccrcs
Goals of CCRCs

■ Permit residents to live independently as long as possible

■ Delay entry to skilled nursing facilities by providing residents with at-home care

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Advantages of CCRCs

  • A 2002–2003 study found that seniors who live in CCRCs are more satisfied with daily lives and are more likely to be happier and healthier than their contemporaries who live in their own homes. (American Seniors Housing Association: Studies of Independent Living Residents and the Communities in Which They Reside)
  • A research analysis paper by the Office of Disability, Aging, and Long-Term Care for the US Department of Health and Human Services found that residents who live in CCRCs are healthier and live longer than people who do not live in CCRCs. The analysis found less risk of disease and disability.

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ownership and structure of ccrcs
Ownership and Structure of CCRCs

■ May be non-profit (often with for-profit manager) or for-profit

■ Sponsoring organizations may be religious, fraternal other non-profit community organizations

■ May be single site or multi-site

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Typical CCRC Components

  • ■ Independent Living
  • ■ Assisted Living
  • ■ Nursing Home

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independent living facilities
Independent Living Facilities

Independent living refers to living arrangements for elderly people who are able to safely maintain a healthy life in their own home and do not have significant daily care or medical needs. Independent living communities provide peer support and may have a wide range of support services available, but provide less care than assisted living facilities.

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assisted living facilities
Assisted Living Facilities

“Assisted Living Facility means a residential facility for independent living that is regulated by State or local government that provides continuous protective oversight and assistance with the activities of daily living to frail elderly persons or other persons needing such assistance. Continuous protective oversight may range from as little as awareness on the part of management staff of residents' whereabouts (and the ability to intervene in the event of crisis) to a higher level of services and assistance. Assistance with the activities of daily living may include, but is not limited to, bathing, dressing, eating, getting in and out of bed or chairs, walking, going outdoors, using the toilet, laundry, home management, meal preparation, shopping, supervision of medication, and housework.”

24 CFR 266.5

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nursing facilities
Nursing Facilities

“Nursing facility” means an institution (or a distinct part of an institution) which—

(1)is primarily engaged in providing to residents—

(A) skilled nursing care and related services for residents who require medical or nursing care,

(B) rehabilitation services for the rehabilitation of injured, disabled, or sick persons, or

(C) on a regular basis, health-related care and services to individuals who because of their mental or physical condition require care and services (above the level of room and board) which can be made available to them only through institutional facilities, and is not primarily for the care and treatment of mental diseases;

(2) has in effect a transfer agreement (meeting the requirements of section 1861(l)) with one or more hospitals having agreements in effect under section 1866; and

(3) meets the requirements for a nursing facility described in subsections (b), (c), and (d) of this section.

42 U.S.C. 1396r

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typically included services of ccrcs
Typically Included Services of CCRCs

■ Meals and special diets

■ Housekeeping

■ Transportation

■ Personal assistance (including daily living activities)

■ Emergency assistance

■ Recreational and social activities

■ Flexible, depending on current or future needs of resident; can opt to enroll in service at later time

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choosing a ccrc
Choosing a CCRC

Create an ideal model/plan and use it in conjunction with advice from certified Geriatric Care Managers to advise your clients

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possible entrance requirements
Possible Entrance Requirements

■ Age

■ Health requirements

■ Financial status sufficient to cover CCRC expenses

■ May require resident to have Medicare and/or Medi-gap coverage

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types of ccrc contracts
Types of CCRC Contracts

■ Type A: Comprehensive/Extensive/Life

■ Type B: Modified

■ Type C: Fee for Service

■ Rental

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type a comprehensive extensive life
Type A: Comprehensive/Extensive/Life
  • Entrance and monthly fee required
  • Most expensive contract
  • Guaranteed lodging, meals, personal care services, as well as necessary nursing care, at no additional cost
  • Traditional model, similar to long term care insurance
  • Least risk to the resident

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type b modified
Type B: Modified
  • Entrance and monthly fee required
  • Offers the same services as Type A but for a specified limited period of time (e.g., 45 days). Once that period had been reached, resident must pay for additional care
  • Moderate risk to resident

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type c fee for service
Type C: Fee For Service
  • Lower entrance and monthly fee required
  • Pay market rates for services as needed
  • Most risk to resident

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rental ccrcs
Rental CCRCs

→ Not a “true” CCRC

→ No or minimal entrance fee

→ Independent communities which offer some kind of additional care, pay market rate for services

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ccrc costs
CCRC Costs

■ Costs vary

  • Variance re terms of contracts
    • Need to review each contract individually
  • Dependent upon size of living arrangement

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ccrc costs1
CCRC Costs

Source: 2009 GAO Survey of Entrance and Monthly Fees for Selected CCRCs

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sample prices
Sample Prices

Chesterfield, MO

Lake Oswego, OR

Independent Living

$1,400-$2,900 per mo.

Entrance: $43,000-$306,000

Independent Living

  • $1,900 - $4,700 per mo.
  • Entrance: $210,000-$496,000

• Assisted Living

– $160-$248 per day

• Skilled nursing/dementia care

– $218 per day

Source: NY Times Blog, ”CCRC Fees: Prepare to be Bewildered,” Dec. 3, 2009.

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Potential Financial Advantages of CCRCs

  • Residents may receive on-campus health care services (such as skilled nursing care) at below-market rates
  • Residents may receive a number of included days of skilled nursing services each year at no charge above their current independent living or assisted living fees.
  • The IRS may recognize a percentage of entrance fees and monthly fees as deductible medical expenses. See Delbert L. Baker v. Commissioner, 122 TC 143 (2004).

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medicare medicaid payment
Medicare/Medicaid Payment

CCRCs must be certified to provide Medicare or Medicaid services, usually to cover skilled nursing care

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medicare coverage for skilled nursing facility services
Medicare Coverage for Skilled Nursing Facility Services

Resident must :

  • have been hospitalized for at least 3 days
  • enter facility within 30 days of hospitalization
  • have medical condition that falls within limited number of classifications requiring RN or rehab level services and supervision

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medicaid payment
Medicaid Payment

■ Not expected nor allowed in most CCRCs

■ For example, Virginia only allows Medicaid payment to certain Northern Virginia CCRCs due to a “carve out”

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impact of current economic situation
Impact of Current Economic Situation

CCRCs depend on high occupancy rates and quick filling of vacancies for financial viability.

Residents may move to CCRCs at a higher age, thus spending less time in independent living units, and moving to higher levels of care sooner after entrance, incurring higher cost to the CCRC.

Tightening credit markets reduce access to funds and CCRC liquidity.

Some CCRCs have sought bankruptcy protection, but there is usually advance notice due to lender covenant defaults; bondholders, not residents, usually at risk.

Source: GAO Report

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impact of current economic situation1
Impact of Current Economic Situation

Seniors may have difficulty selling their home or may have decreased wealth to pay for CCRC fees.

In response, CCRCs may offer discounts to residents and employee gift cards to encourage potential residents to join and to keep occupancy high. See DHHS OIG Advisory Opinion 10-05 (2010).

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qualified resident assistance policy
Qualified Resident Assistance Policy

Some states require CCRCs to have financial assistance policies to help residents remain in a CCRC despite an inability to pay or difficulty with payment.

For example:

Va. Code § 32.1-102.3:2

12 VAC 5-230-630

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beyond the ccrc
Beyond the CCRC

■ Moving To Another Level of Care

  • CCRC to develop internal determination on resident relocation
  • Resident appeals process
    • Disputes can arise
  • Check agreement

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State Regulation of CCRCs

  • 34 States collect and review the standard form contract that the CCRC enters with residents
  • Four out of every five CCRCs are located in states that collect and review CCRC contracts
  • 30 States require CCRC contracts include a period with a right to cancel a contract and receive a full refund
  • Source: GAO Report

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State Regulation of CCRCs

  • 38 States have some level of regulation specifically addressing CCRCs
  • 38 States license CCRCs
  • 12 States and DC have no CCRC – specific regulations
  • Types of regulatory departments:
    • Insurance
    • Financial Services
    • Banking
    • Social Services
    • Health Care Administration
    • Public Health
    • Elder or Community Affairs
  • Source: GAO Report

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State Regulation of CCRCs

  • Required Nonfinancial Disclosures
  • Source: GAO Report

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State Regulation of CCRCs

  • Required Financial Disclosures
  • Source: GAO Report

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State Regulation of CCRCs

  • Required Nonfinancial Disclosures
  • Source: GAO Report

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factors in choosing a ccrc
Factors in Choosing a CCRC

■ What is the community like?

■ Does this CCRC have the capacity to deal with any special requirements/needs the client may have?

■ What is the client’s budget?

What is refundable?

Is it pro-rated based on term of stay?

Does contract offer certain percentage of entry fee payable upon death depending on years of residence?

How will monthly fee increases be calculated? How often?

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factors in choosing a ccrc cont
Factors in Choosing a CCRC (cont.)

Is the facility certified to accept to Medicare? Medicaid?

Is there a resident assistance fund? What is the degree to which resident assistance funds can help defray the costs of care?

What is the facility’s resident assistance policy?

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Example: Virginia Regulation of CCRCs

  • Financial Regulation
  • All CCRCs in Virginia are required to register with the SCC and submit an annual disclosure statement and financial statement
  • Residents and potential residents must be provided this disclosure statement and financial information annually

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virginia regulation of ccrcs
Virginia Regulation of CCRCs

Bureau of Insurance Regulation

  • Retention and repayment of deposit rules addressed
  • Contract requirements addressed, including method for repayment
  • Provisions for notice of sale or transfer of ownership or management
  • Addresses SCC’s right to step in due to financial instability
  • Addressees advertising limits and civil liability of CCRCs to residents
  • Allows SCC right to enjoin or penalize for non-compliance

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licensure regulation requirements for virginia assisted living facilities
Licensure Regulation Requirements for Virginia Assisted Living Facilities
  • The Virginia Department of Social Services sends out survey teams on bi-annual basis depending on certification (is facility certified to receive Medicare and Medicaid?)
  • Required disclosure statement to residents per 22VAC40-72-60
  • Staff and Administrator requirements (22VAC40-72-191)
  • Resident rights (22VAC40-72-550)
  • Building code requirements and fire safety code compliance
  • Assessment prior to admission and annually (22VAC40-745-20)

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virginia nursing home definition
Virginia Nursing Home Definition

“Any facility or any identifiable component of any facility licensed … in which the primary function is the provision, on a continuing basis, of nursing services and health-related services for the treatment and inpatient care of two or more nonrelated individuals, including facilities known by varying nomenclature or designation such as convalescent homes, skilled nursing facilities or skilled care facilities, intermediate care facilities, extended care facilities and nursing or nursing care facilities.”


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Governed by Federal and state law

Must operate with a state license

Residents must be fully informed of rights and responsibilities

Must be inspected through unannounced on-site visits

Virginia Nursing Home Regulation

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■ State is responsible for licensing

Virginia Code §32.1-125

OLC inspects each facility as required by law

■ State agency performs certification (required to receive Medicare/Medicaid payments)

Virginia Nursing Home Regulation

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virginia nursing home requirements
Virginia Nursing Home Requirements

■ Meeting Resident needs:

  • Assessment of needs on admission
    • Must be done within 14 days of admission, review every 3 months, reassessment once a year
  • Develop and carry out care plans
  • Need specific quality and safety meetings
  • Provision of clean facility and healthy/safe food preparation

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virginia nursing home inspection
Virginia Nursing Home Inspection
  • Addresses the quality of resident care, staff/resident interaction, environment
  • Interviews: sample of residents and family members, caregivers and administrative staff. Review of clinical record
  • Building code requirements, including fire safety and back-up generators and disaster planning

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litigation involving ccrcs in virginia
Litigation Involving CCRCs in Virginia

Virginia Baptist Homes v. Botetourt County, 276 Va. 656; 668 S.E. 2d 119 (2008) (upholding a CCRC’s property tax-exempt status)

Sunrise Continuing Care v. Wright, 277 Va. 148, 671 S.E.2d 132 (2009 ) (residents of a CCRC were not entitled to the return of their entrance fee and monthly fees when they experienced a series of roof leaks that persisted for several years)

Keeney v. Littleton, 52 Va. Cir. 39 (2000) (contractual return of a CCRC entrance fee was a monetary account for purposes of decedent’s will)

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additional resources

GAO Report, “Older Americans: Continuing Care Retirement Communities Can Provide Benefits, but Not Without Some Risk.”

NY Times, ”CCRC Fees: Prepare to be Bewildered”

United States Senate Select Committee on Aging, Continuing Care Retirement Communities: Risks to Seniors, July 21, 2010 (majority staff summary).

CCRC Task Force, Today’s Continuing Care Retirement Community, AAHSA & ASHA, July 2010.

Additional Resources

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