Connecticut Seal

General Assembly

 

Bill No. 32

February Session, 2008

 

LCO No. 700

 

*00700__________*

Referred to Committee on Human Services

 

Introduced by:

 

SEN. MCKINNEY, 28th Dist.

REP. CAFERO, 142nd Dist.

 

AN ACT CONCERNING THE FINANCIAL CONDITION OF NURSING HOMES.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 17b-352 of the 2008 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) For the purposes of this section and section 17b-353 of the 2008 supplement to the general statutes, "facility" means a residential facility for the mentally retarded licensed pursuant to section 17a-277 of the 2008 supplement to the general statutes and certified to participate in the Title XIX Medicaid program as an intermediate care facility for the mentally retarded, a nursing home, rest home or residential care home, as defined in section 19a-490 of the 2008 supplement to the general statutes.

(b) Any facility [which] that intends to (1) transfer all or part of its ownership or control; [prior to being initially licensed;] (2) introduce any additional function or service into its program of care or expand an existing function or service; or (3) terminate a service or decrease substantially its total bed capacity, shall submit a complete request for permission to implement such transfer, addition, expansion, increase, termination or decrease with such information as the department requires to the Department of Social Services, provided no permission or request for permission to close a facility is required when a facility in receivership is closed by order of the Superior Court pursuant to section 19a-545 of the 2008 supplement to the general statutes. The Office of the Long-Term Care Ombudsman pursuant to section 17b-400 shall be notified by the facility of any proposed actions pursuant to this subsection at the same time the request for permission is submitted to the department and when a facility in receivership is closed by order of the Superior Court pursuant to section 19a-545 of the 2008 supplement to the general statutes.

(c) An applicant, prior to submitting a certificate of need application, shall request, in writing, application forms and instructions from the department. The request shall include [: (1) The] the name of the applicant or applicants [; (2)] and a statement indicating whether the application is for [(A)] (1) a transfer of ownership or control, (2) a new, additional, expanded or replacement facility, service or function, [(B)] (3) a termination or reduction in a presently authorized service or bed capacity, or [(C)] (4) any new, additional or terminated beds and their type. [; (3)] Applications, other than those seeking transfer of ownership or control, shall include (A) the estimated capital cost; [(4)] (B) the town where the project is or will be located; and [(5)] (C) a brief description of the proposed project. Such request shall be deemed a letter of intent. No certificate of need application shall be considered submitted to the department unless a current letter of intent, specific to the proposal and in accordance with the provisions of this subsection, has been on file with the department for not less than ten business days. For purposes of this subsection, "a current letter of intent" means a letter of intent on file with the department for not more than one hundred eighty days. A certificate of need application shall be deemed withdrawn by the department, if a department completeness letter is not responded to within one hundred eighty days. The Office of the Long-Term Care Ombudsman shall be notified by the facility at the same time as the letter of intent is submitted to the department.

(d) Any facility acting pursuant to subdivision (3) of subsection (b) of this section shall provide written notice, at the same time it submits its letter of intent, to all patients, guardians or conservators, if any, or legally liable relatives or other responsible parties, if known, and shall post such notice in a conspicuous location at the facility. The notice shall state the following: [(A)] (1) The projected date the facility will be submitting its certificate of need application, [(B)] (2) that only the department has the authority to either grant, modify or deny the application, [(C)] (3) that the department has up to ninety days to grant, modify or deny the certificate of need application, [(D)] (4) a brief description of the reason or reasons for submitting a request for permission, [(E)] (5) that no patient shall be involuntarily transferred or discharged within or from a facility pursuant to state and federal law because of the filing of the certificate of need application, [(F)] (6) that all patients have a right to appeal any proposed transfer or discharge, and [(G)] (7) the name, mailing address and telephone number of the Office of the Long-Term Care Ombudsman and local legal aid office.

(e) The department shall review a request made pursuant to subsection (b) of this section to the extent it deems necessary, including, but not limited to, in the case of a proposed transfer of ownership or control, [prior to initial licensure,] the financial viability of the applicant, the impact on the facility rate and the financial condition of the applicant, the financial responsibility and business interests of the transferee and the ability of the facility to continue to provide needed services, or in the case of the addition or expansion of a function or service, ascertaining the availability of the function or service at other facilities within the area to be served, the need for the service or function within the area and any other factors the department deems relevant to a determination of whether the facility is justified in adding or expanding the function or service. The commissioner shall grant, modify or deny the request within ninety days of receipt thereof, except as otherwise provided in this section. Upon the request of the applicant, the review period may be extended for an additional fifteen days if the department has requested additional information subsequent to the commencement of the commissioner's review period. The director of the office of certificate of need and rate setting may extend the review period for a maximum of thirty days if the applicant has not filed in a timely manner information deemed necessary by the department. The applicant may request and shall receive a hearing in accordance with section 4-177 if aggrieved by a decision of the commissioner.

(f) The Commissioner of Social Services shall not approve any requests for beds in residential facilities for the mentally retarded which are licensed pursuant to section 17a-227 of the 2008 supplement to the general statutes and are certified to participate in the Title XIX Medicaid Program as intermediate care facilities for the mentally retarded, except those beds necessary to implement the residential placement goals of the Department of Developmental Services which are within available appropriations.

(g) The Commissioner of Social Services shall adopt regulations, in accordance with chapter 54, to implement the provisions of this section. The commissioner shall implement the standards and procedures of the Office of Health Care Access concerning certificates of need established pursuant to section 19a-643, as appropriate for the purposes of this section, until the time final regulations are adopted in accordance with said chapter 54.

Sec. 2. Section 19a-491a of the general statutes is amended by adding subsection (d) as follows (Effective from passage):

(NEW) (d) On and after July 1, 2008, the Commissioner of Public Health shall issue or renew a nursing home license only if the applicant establishes that a single entity owns both the nursing home business and the real estate on which the nursing home is located, except that the commissioner may issue or renew such license if the commissioner, in consultation with the Commissioner of Social Services, finds that such license is necessary to protect the health and safety of nursing home residents.

Sec. 3. Section 19a-546 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) A receiver may not be required to honor any lease, mortgage, secured transaction or other contract entered into by the owner of the facility if, upon application to the Superior Court, said court determines that: (1) The person seeking payment under the agreement was an owner or controlling stockholder of the facility or was an affiliate of such owner or controlling stockholder at the time the agreement was made; or (2) the rental, price or rate of interest required to be paid under the agreement was substantially in excess of a reasonable rental, price or rate of interest at the time the contract was entered into.

(b) If the receiver is in possession of real estate or goods subject to a lease, mortgage or security interest [which] that the receiver is permitted to avoid under subsection (a) of this section and if the real estate or goods are necessary for the continued operation of the facility under this section, the receiver may apply to the court to set a reasonable rental, price or rate of interest to be paid by the receiver during the duration of the receivership. No allowance for such property costs set by the court shall exceed the fair rental value allowance determined pursuant to the regulations adopted pursuant to section 17b-238. The court shall hold a hearing not later than fifteen days after application is made. Any known owners of the property involved shall receive notice of such application from the receiver at least ten days prior to the hearing. Payment by the receiver of the amount determined by the court to be reasonable is a defense to any action against the receiver for payment or for possession of the goods or real estate subject to the lease, security interest or mortgage involved by any person who received such notice, but the payment does not relieve the owner of the facility of any liability for the difference between the amount paid by the receiver and the amount due under such lease, security interest or mortgage involved.

(c) The provisions of this section shall not apply to a lease, mortgage, secured transaction or other contract entered into with any financial institution regulated by a state or federal agency.

Sec. 4. Section 17b-339 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) There is established a Nursing Home Financial Advisory Committee to examine the financial solvency of nursing homes on an ongoing basis and to support the Departments of Social Services and Public Health in their mission to provide oversight to the nursing home industry [which promotes] on issues concerning the financial solvency of and quality of care provided by nursing homes. The committee shall consist of [seven members: The] the Commissioner of Social Services, or his designee; the Commissioner of Public Health, or his designee; the Secretary of the Office of Policy and Management, or his designee; [the director of the Office of Fiscal Analysis, or his designee;] and the executive director of the Connecticut Health and Education Facilities Authority, or his designee. [; and one representative of nonprofit nursing homes and one representative of for-profit nursing homes appointed by the Governor.

(b)] The Commissioner of Social Services and the Commissioner of Public Health shall be the chairpersons of the committee. [Any vacancy shall be filled by the appointing authority.]

[(c)] (b) The committee, upon receipt of a report relative to the financial solvency of and quality of care provided by nursing homes in the state, shall recommend appropriate action [for improving the financial condition of any nursing home that is in financial distress] to the Commissioner of Social Services and the Commissioner of Public Health.

[(d)] (c) Not later than January 1, [1999] 2010, and annually thereafter, the committee shall submit a report on its activities to the joint standing committees of the General Assembly having cognizance of matters relating to appropriations, human services and public health and to the select committee of the General Assembly having cognizance of matters relating to aging, in accordance with the provisions of section 11-4a.

Sec. 5. (NEW) (Effective from passage) (a) Each nursing home facility, as defined in section 19a-521 of the general statutes, shall submit a quarterly report of accounts payable by vendor and by days outstanding to the Commissioner of Social Services in a format prescribed by the commissioner. If such reports indicate a facility may be experiencing financial distress, the commissioner shall require the nursing home facility to submit annual audited financial statements and may require a nursing home facility to report specific financial information, including, but not limited to, debt agreements and interim financial statements. In the case of a nursing home facility that is owned or managed by an entity that owns or manages multiple nursing home facilities, the commissioner may require the entity to report information concerning the financial condition of any such nursing home facility in a format prescribed by the commissioner.

(b) If the Commissioner of Social Services determines, based on a review of the information provided pursuant to subsection (a) of this section, that a nursing home facility has undergone an adverse change in financial condition, the commissioner shall notify the Commissioner of Public Health and shall require the nursing home facility to report monthly its cash availability and the status of vendor payments and employee payrolls. The Commissioner of Social Services may require the reporting of other financial information to assist in measuring the financial condition of the nursing home facility.

(c) The criteria to be used by the Commissioner of Social Services pursuant to subsection (b) of this section to determine whether a nursing home facility has undergone an adverse change in financial condition shall include, but not be limited to, (1) the frequency of Medicaid advances granted in accordance with section 119 of public act 07-1 of the June special session; (2) unfavorable working capital ratios of assets to liabilities; (3) a high proportion of accounts receivable more than ninety days old; (4) a high proportion of accounts payable more than ninety days old; (5) significant increases in accounts payable, unpaid state or municipal taxes, state user fees or payroll-related costs; (6) minimal equity or reserves or decreasing equity or reserves; (7) high levels of debt and high borrowing costs; (8) significant increases in the level of debts and borrowing costs; and (9) significant operating losses for two or more consecutive years.

(d) If the Commissioner of Social Services determines that a nursing home facility is in financial distress that may lead to the facility having insufficient resources to meet its operating costs, the commissioner shall issue a report of such findings to the Nursing Home Financial Advisory Committee, established pursuant to section 17b-339 of the general statutes, as amended by this act.

Sec. 6. (NEW) (Effective from passage) Each entity that manages nursing home facilities for which rates paid by the state are set pursuant to section 17b-340 of the 2008 supplement to the general statutes shall annually report its costs to the Commissioner of Social Services on a form prescribed by the commissioner. Costs shall be reported on a fiscal year basis ending on the thirtieth day of September and submitted on or before the thirty-first day of December.

Sec. 7. (NEW) (Effective from passage) The Commissioner of Social Services, in consultation with the Banking Commissioner and the executive director of the Connecticut Health and Educational Facilities Authority, shall establish reasonable rates of indebtedness for chronic and convalescent nursing homes and rest homes with nursing supervision. No chronic and convalescent nursing home or rest home with nursing supervision licensed in this state, or any related owner of the property of any such home, shall increase its indebtedness beyond the amount established pursuant to this section or increase its real property lease payments without the permission of the Commissioner of Social Services. A request for such permission shall be made in a manner prescribed by the commissioner. The commissioner may request information as necessary to evaluate the request and shall approve, deny or modify the request not later than sixty days after submission of any such requested information.

Sec. 8. Section 19a-543 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

The court shall grant an application for the appointment of a receiver for a nursing home facility upon a finding of any of the following: (1) Such facility is operating without a license issued pursuant to this chapter or such facility's license has been suspended or revoked pursuant to section 19a-494; (2) such facility intends to close and adequate arrangements for relocation of its residents have not been made at least thirty days prior to closing; (3) such facility has sustained a serious financial loss or failure which jeopardizes the health, safety and welfare of the patients or there is a reasonable likelihood of such loss or failure; (4) such facility has made inappropriate use of state or federal funds that may jeopardize the financial solvency of the facility, as determined by the Commissioner of Social Services; or [(4)] (5) there exists in such facility a condition in substantial violation of the Public Health Code, or any other applicable state statutes, or Title XVIII or XIX of the federal Social Security Act, 42 USC 301, as amended, or any regulation adopted pursuant to such state or federal laws.

Sec. 9. Subdivision (1) of subsection (b) of section 19a-493 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(b) (1) A nursing home license may be renewed biennially after (A) an unscheduled inspection conducted by the department, (B) submission of the information required by subsections (a), [and] (c) and (d) of section 19a-491a, as amended by this act, and any other information required by the commissioner pursuant to subsection (b) of said section, and (C) submission of evidence satisfactory to the department that the nursing home is in compliance with the provisions of this chapter, the Public Health Code and licensing regulations.

Sec. 10. Section 17b-4 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) The Department of Social Services shall plan, develop, administer, operate, evaluate and provide funding for services for individuals and families served by the department who are in need of personal or economic development. In cooperation with other social service agencies and organizations, including community-based agencies, the department shall work to develop and fund prevention, intervention and treatment services for individuals and families. The department shall: (1) Provide appropriate services to individuals and families as needed through direct social work services rendered by the department and contracted services from community-based organizations funded by the department; (2) collect, interpret and publish statistics relating to individuals and families serviced by the department; (3) monitor, evaluate and review any program or service which is developed, operated or funded by the department; (4) supervise the establishment of pilot programs funded by the department in local communities which assist and support individuals and families in personal and economic development; (5) improve the quality of services provided, operated and funded by the department and increase the competency of its staff relative to the provision of effective social services by establishing and supporting ongoing staff development and training; and (6) encourage citizen participation in the development of social service priorities and programs.

(b) The Department of Social Services shall study continuously the conditions and needs of elderly and aging persons in this state in relation to nutrition, transportation, home-care, housing, income, employment, health, recreation and other matters. It shall be responsible in cooperation with federal, state, local and area planning agencies on aging for the overall planning, development and administration of a comprehensive and integrated social service delivery system for elderly persons and the aged. The department shall: (1) Measure the need for services; (2) survey methods of administration of programs for service delivery; (3) provide for periodic evaluations of social services; (4) maintain technical, information, consultation and referral services in cooperation with other state agencies to local and area public and private agencies to the fullest extent possible; (5) develop and coordinate educational outreach programs for the purposes of informing the public and elderly persons of available programs; (6) cooperate in the development of performance standards for licensing of residential and medical facilities with appropriate state agencies; (7) supervise the establishment, in selected areas and local communities of the state, of pilot programs for elderly persons; (8) coordinate with the Department of Transportation to provide adequate transportation services related to the needs of elderly persons; and (9) cooperate with other state agencies to provide adequate and alternate housing for elderly persons, including congregate housing, as defined in section 8-119e.

[(c) The Department of Social Services, in conjunction with the Department of Public Health, may adopt regulations in accordance with the provisions of chapter 54 to establish requirements with respect to the submission of reports concerning financial solvency and quality of care by nursing homes for the purpose of determining the financial viability of such homes, identifying homes that appear to be experiencing financial distress and examining the underlying reasons for such distress. Such reports shall be submitted to the Nursing Home Financial Advisory Committee established under section 17b-339.]

This act shall take effect as follows and shall amend the following sections:

Section 1

from passage

17b-352

Sec. 2

from passage

19a-491a

Sec. 3

from passage

19a-546

Sec. 4

from passage

17b-339

Sec. 5

from passage

New section

Sec. 6

from passage

New section

Sec. 7

from passage

New section

Sec. 8

from passage

19a-543

Sec. 9

from passage

19a-493(b)(1)

Sec. 10

from passage

17b-4

Statement of Purpose:

To implement the Governor's budget recommendations.

[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]