UPDATE: Public Advocate Releases Assisted Living Results

TRENTON — State Public Advocate Ronald K. Chen Thursday, April 16 unveiled the results of an investigation into the business practices of an assisted living facility in Cape May County which involuntarily discharged elderly residents once their savings were spent.
The Public Advocate has been investigating Assisted Living Concepts, Inc. after receiving allegations that the company has been involuntary discharging its residents. The Public Advocate’s Elder Advocacy Division contacted more than 500 current and former residents of a Wisconsin company’s eight southern New Jersey assisted living facilities as part of its investigation into the company’s involuntary discharge practices.
The policy of discharging residents who qualify to switch to Medicaid may violate ALC’s license provisions. Public Advocate Ronald K. Chen said that the Certificates of Need and Licenses issued by the Department of Health and Senior Services for all of ALC’s assisted living residences in New Jersey stated that as many as 30 percent of residents would be Medicaid eligible and that no resident would be discharged because they have exhausted their life savings and have become eligible for Medicaid.
On April 16, Chen said the company “broke its trust” with the elderly residents.
“Our investigation clearly demonstrates that Assisted Living Concepts broke its trust with dozens of elderly residents who believed they would be permitted to age in place once their private funds were exhausted,” said Chen. “In reality, from mid-2006 on, the company began to execute a business plan that attempted to ruthlessly remove anyone once they reached the point where they could no longer pay with private funds and needed to rely on Medicaid. This is a clear violation of their state license.”
“I want to thank the Public Advocate’s Office for its thorough investigation and for advocating on behalf of the state’s seniors,” said Department of Health and Senior Services Commissioner Heather Howard. “DHSS will closely review their recommendations and looks forward to working with the Public Advocate to make sure our assisted living system works well for consumers and their families.”
The New Jersey Department of the Public Advocate, Division of Elder Advocacy began investigating Assisted Living Concepts, Inc. more than a year ago after receiving allegations that the company was unlawfully involuntarily discharging elderly residents who had exhausted all of their life savings and need to rely on Medicaid to pay their monthly fees.
As part of this investigation, the Department recently interviewed 111 current and former residents of ALC facilities or their family members to determine the scope of the involuntary discharge problem and to make recommendations for changes in state policy that would better protect residents of assisted living facilities in New Jersey.
The investigation revealed that:
· ALC’s policy of discharging Medicaid-eligible residents forced dozens of senior citizens to leave their homes and suffer physical and psychological harm;
· Seniors who were too healthy or had too much monthly income to EVER qualify for Medicaid were led to believe that they would be allowed to convert to Medicaid. However, ALC administrators should have known that some of these individuals would not qualify for Medicaid. Instead, these seniors depleted their life savings and were forced to leave assisted living altogether.
· Family members were told to sign “guarantor” agreements that would make them financially liable for the cost of care of their loved one;
· State laws do not adequately protect the rights of people living in assisted living;
· The impact of the worsening economy and troubled financial markets on retirement savings may push more middle class senior citizens into Medicaid eligibility; and
* ALC went from being perhaps the most progressive assisted living company in the country – with a business model that welcomed low- and moderate-income people – to instituting a ruthless corporate policy that sought to drive out longtime residents because they had exhausted their savings and needed to convert to Medicaid, much to the dismay of the company’s founder, who sold it several years ago.
Out of 111 participants surveyed, fifty-three (53) reported that the facility administrator promised that the resident would be able to convert Medicaid upon spend-down, without condition. Participants report that administrators repeatedly promised conversion and told them to notify the facility when they have only six months of private pay resources left.
“Because of a change in corporate philosophy, ALC broke its promise to some elderly residents who believed they would be able to go on Medicaid and stay in their assisted living facility once they spent all of their private money,” said Chen. “In some cases, ALC led residents to believe they would be able to convert to Medicaid and failed to inform those residents that they might never be eligible for Medicaid because their monthly income was too high or they are deemed too healthy and active to qualify for a nursing facility level of care.”
“The bottom line is that ALC pursued a policy of keeping elderly residents until they drained their life savings – and they did it as part of a corporate strategy designed to extract the company from doing business with Medicaid and to drive out low- and moderate-income residents,” said Chen.
The report issued today calls for several changes in state oversight of the assisted living industry.
Recommendations include:
* Requiring all assisted living facilities in NJ to set aside 10 percent of their beds for resident relying on Medicaid and prohibiting discharges based solely on Medicaid eligibility.
* Creating a uniform disclosure form that seniors and their families can consult when shopping for an assisted living facility. This disclosure form should explicitly state the facility’s Medicaid policy.
* Convening a high-level workgroup to strengthen legal protections for people living in assisted living facing involuntary discharge.
* Outlawing the use of guarantor agreements by assisted living facilities.
· Modifying the Medicaid reimbursement formula, which currently provides for a room and board monthly rate paid by the resident and a Medicaid services daily rate paid by Medicaid (minus the resident cost share), to take into consideration resident acuity, or the level of a resident’s needs.
* Linking facilities with federal assistance programs, and offering tax incentives to facilities with a high Medicaid census.
* Continuing to implement a one-door entry system for assisted living which will simplify the process for seniors and their families.
* Enacting reforms to the Consumer Fraud Act to better protect seniors living in assisted living.
Throughout the investigation, the Public Advocate and DHSS worked in a coordinated fashion to ensure that residents who were Medicaid eligible and who wanted to remain could convert to Medicaid. On November 10, 2008, ALC announced that it would no longer voluntarily participate in the Medicaid program. After this announcement, ALC sought to discharge a resident who was Medicaid eligible, and DHSS imposed a $66,000 fine on the facility. ALC then agreed to accept her Medicaid payments.
ALC is currently in litigation with the state. From October of 2007 to roughly July of 2008, ALC was engaged in discussions with the Department of Health and Senior Services (DHSS) regarding an enforceable agreement that ALC had made as a pre-requisite to licensure that “residents will not be asked to move from the residence because of spend-down situations.” If binding, that provision would prevent ALC from engaging in the currently disputed discharge practices.
ALC believes that the agreement is not binding, while DHSS believes that it is. ALC has appealed DHSS’ determination to the Appellate Division of Superior Court. ALC and the Department of Health and Senior Services will be before the Appellate Division next month and the Public Advocate has entered this appeal amicus curiae, or “friend of the court,” to support the position taken by DHSS.
People with questions or concerns about Assisted Living should call the Public Advocate: Office of Citizen Relations at 609-826-5070.
Sen. Van Drew (D-1st), who took part in the announcement, said that he plans to push for swift consideration of that bill when the Senate reconvenes in May.
“New Jersey’s elderly residents are a precious resource, a living connection to our past, and are not a burden to be discarded once they’ve been bilked of their life savings,” said Van Drew. “The actions of Assisted Living Concepts are entirely inexcusable, particularly when Medicaid funding was available to offset the cost for these residents’ care. I applaud the Public Advocate for bringing these heinous and callous acts to light, and I promise to do more to protect seniors in New Jersey.”
In addition to the report unveiled by the Public Advocate today, Senator Van Drew has sponsored a bill, S-2066, which would amend State law to require that all licensed assisted living facilities in New Jersey maintain at least 10% of their beds for Medicaid-eligible residents. Under current law, only facilities that opened after September 1, 2001 are required to meet that standard.
Assisted Living Concepts is based in Wisconsin and has seven other facilities in New Jersey besides the Chapin House in Rio Grande.
Following the April 16 event, Van Drew issued the following comment:
“New Jersey’s senior citizens are a precious resource to be treasured – living connections to our shared past. They are our mothers and fathers, our aunts and uncles, and our grandparents. They have participated in the advancement of history, have fought in wars of principle, and have stood up to the very face of evil in order to protect a people from being exterminated because of their faith. They have struggled and sacrificed through depressions and recessions to provide for their families. They have seen the realization of one man’s dream of racial equality and marveled at another man’s small step which signaled a giant leap for the rest of us.
“Our seniors have borne witness to the triumphs and tragedies of humanity in a century that showcased the best and worst we have to offer. In their golden years, they deserve to be treated with the respect and reverence they have earned.
“However, there are those who would treat them as nothing more than a burden, ignoring their contributions to our society and taking advantage of them in their time of need. In a compassionate society, such callousness cannot be tolerated.
“That’s why I was shocked to learn about the business practices of Assisted Living Concepts, Inc., a Wisconsin-based corporation which owns and manages Chapin House in Cape May County. This company has routinely forced residents at Chapin House to be involuntarily discharged when their savings were used up.
“That’s not the respect for elders I was taught growing up. And I promise to work hard to make sure such heinous acts do not happen again.
“I first learned about the situation at Chapin House through the family of Betty Merklinger, who, after spending more than $300,000 of her life savings on care, was kicked out when she became eligible for the assisted living Medicaid wager. As the Public Advocate found out in his investigation, Mrs. Merklinger was not alone, and her situation represented a disturbing policy from the parent company, ALC, that put greater importance on a resident’s monetary worth than it did on their value as a human being.
“The actions of ALC were completely inexcusable, particularly when Medicaid funding was available to offset the cost for these residents’ care.
“Based on Mrs. Merklinger’s struggles with ALC and the other residents who were highlighted in the Public Advocate’s investigation, I introduced S-2066, which would guarantee that private-pay residents could stay in an assisted living facility after they have spent down their personal savings. The bill would also require all assisted living facilities in New Jersey to maintain at least 10% of their beds for Medicaid-eligible residents.
“I applaud the Public Advocate for making sure that the residents at ALC are not victimized in silence. We need to hold ALC and all assisted living facilities engaged in such disgusting business practices accountable for those actions. When the Senate reconvenes in May, I will push for swift consideration of my legislation, to make sure that in the future, such actions aren’t just immoral, but illegal under State law.”