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Care Facility Distinctions and Long-Term Care Insurance – Keystone Elder Law – Mechanicsburg, PA

Last week’s article was the first of a series to review how Pennsylvania’s licensing regulations for long-term care facilities, revised in 2010 to create a unique category known as Assisted Living Residences, have caused unintended problems. The Assisted Living Residence category neither reflected consumer demand nor resulted in quantifiable improvements in long-term care.  A potential opportunity to expand the use of Medicaid in a wider variety of long-term care facilities remains unfunded. 

Less than 3% of Pennsylvania’s licensed intermediate custodial facilities now operate under the new regulations. Pennsylvania responded to the lack of interest by licensed care facilities in obtaining the new Assisted Living Residence licensure status by passing another law [62 P.S. §1057.3(i)].  That law says that “no person, organization, or program shall use the term ‘assisted living’ in any name or written material unless the person, organization, or program is an assisted living residence licensed in accordance with 55 Pa.Code Chapter 2800.”

A review of the marketing materials and websites of Personal Care Home licensees shows that enforcement of this law has been incomplete. Consumers have been confused.  Intermediate and custodial care facilities remain unmotivated to upgrade their licensure status from a Personal Care Home to an Assisted Living Residence.

Personal Care Homes offer a level of care that exceeds that of unlicensed “independent living communities,” which may not legally provide hands-on care. Independent living communities offer a viable but unlicensed senior living option, which we frequently recommend as an affordable alternative for a person whose general frailty caused by advancing  age might otherwise endanger or unnecessarily isolate them when they are living at home alone.   Often, independent living facilities facilitate supplemental care to be provided on-premises by a cooperating home care agency.

It is an unfortunate fact that independent living communities are often misunderstood by confused or misled caregivers who seek an “affordable senior care referral” from an internet search engine, or because of a television endorsement by a once-credible television journalist who promotes help in finding senior “care” options. In fairness to the independent living facilities, they do not generate misleading advertisements, although they do pay poorly-disclosed commissions to the unlicensed “free referral services” who wrongly recommend and endorse independent living facilities as “senior care facilities.”

The regulatory definition of a care facility is important for long-term care insurance.   Long-term care insurance should not pay for the room and board offered by an unlicensed independent living facility.  However, a long-term care policy with home care benefits could be used to pay for hands-on care even when needed by a resident of an independent living facility.

Since Act 105 of 1979 and before, Pennsylvania has regulated custodial and intermediate care facilities, nearly all of which are now licensed as Personal Care Homes. State regulations (Title 55 Chapter 2600.1.b) say “personal care homes are designed to provide safe, humane, comfortable and supportive residential settings for adults who do not require the services in or of a licensed long-term care facility, but who do require assistance or supervision with activities of daily living, instrumental activities of daily living, or both.”

A close reading of the regulation invites interpretation that a Personal Care Home is not a long-term care facility, implying that that a licensed Personal Care Home has little distinction from an unlicensed independent living facility. This interpretation has been wrongly used by some long-term care insurance companies, convincingly on occasion with the Pennsylvania Insurance Department, as justification to deny and/or renegotiate claims made for care and assistance with activities of daily living provided by a Personal Care Home.  Since 97% of Pennsylvania’s intermediate and custodial care facilities are licensed as Personal Care Homes, this is a significant issue.

Pennsylvania’s definition of a long-term care facility is not easy to find. It presently may be non-existent outside the context of a licensed skilled nursing facility.  However, prior to the Chapter 2800 regulations promoting the Assisted Living Residence category, the (then) Department of Public Welfare’s Office of Long Term Living occasionally referenced Personal Care Homes as a licensed provider of long-term care services. The Department of Human Services (formerly Welfare) does not have such a reference on its present website.

The problem caused by Pennsylvania’s regulations results from the difficulty of drafting language about a topic that meets the needs of multiple parties. The 2013 change of the Department of Public Welfare’s name to Human Services was opposed by the Department’s leadership as a waste of $8 million that could have been better spent on necessary computers.   Legislative supporters prevailed in the name change as a matter of politically correct compassion.

The Department’s name change highlights the difficulty of drafting regulations and confining policy to terms. The same regulations are used to enforce the long-term care standards in the same rooms of the same facilities, whether the resident is paying privately at a rate of nearly $400 per day or being fully subsidized by Medicaid.  A certain amount of vagueness within governmental regulations is needed for administrative flexibility; however, vagueness invites the unintended consequences of exploitation or manipulation.

As if the confusion within various regulations administered by the Department of Human Services is not enough to decipher, the Insurance Department must also consider the contract language of long-term care insurance policies written by many different companies. While it is outside the scope of this article to explain how such contract language is reviewed and approved by the Department, it is enough to say that policy language varies and has evolved for good reasons over several decades.

Clearly, the distinction when these policies were sold decades ago was to provide three categories of care: a licensed skilled nursing home; a licensed facility that provides an intermediate or custodial level of care; or care at home, which could also include care offered in an unlicensed rooming house or independent living facility.  Future articles will explain how regulatory changes in 2010 and 2011 have made long-term care insurance claims more difficult in some circumstances, especially for pre-admission determinations with licensed Personal Care Homes.

By Dave Nesbit, Attorney