New disclosures about relationships and fee arrangements between assisted living communities and referral agencies must be made to prospective residents or their representatives under a new law in Arizona.
Gov. Doug Ducey signed H.B. 2529 on Wednesday.
The new law requires referral agencies to disclose the nature of the business relationship between the agency and a community, including whether the two entities share common ownership or control, as well as the fact that the community pays a fee to the agency for the referral. The amount of the fee that an assisted living community will pay the agency, or a good-faith estimate, must be disclosed before or at the time of a resident’s move-in.
Also under the new law, referral agencies must provide assisted living communities and residents or their representatives with electronic or paper copies of the disclosures, and assisted living communities must keep a copy of each disclosure on file. A community must wait to pay a referral fee until it has received the related disclosures.
Referral agencies that don’t comply with the law can be fined up to $1,000 per violation.
Representatives of the assisted living and referral industries told McKnight’s Senior Living that they support the law’s goals of full disclosure and transparency.
“It’s good public policy,” said David Voepel, executive director of the Arizona Health Care Association.
Assisted living communities already were required to inform families of referral relationships and placement fees, said Karen Barno, president and CEO of the Arizona Assisted Living Association.
“It’s just more transparency,” she said. “This way, the families find out that a fee was paid, and they find out if a referral agency is tied with any other group, whether it’s a doctor referring to his own homes or there are relationships out there that some people could say are conflicted.”
Both Voepel and Chuck Bongiovanni, president of the National Placement and Referral Alliance, credited LeadingAge Arizona CEO Pam Koester with being the force behind the bill’s passage.
Koester said the LeadingAge Arizona Policy Committee had been looking at the issue for approximately a year after hearing from members that residents were surprised to learn, when assisted living managers disclosed fees to them, that communities had relationships with referral agents.
“It really should be the referral agent’s responsibility upfront to let them know of that relationship, if there is any business relationship,” she said.
Koester said more work needs to be done on related matters, although she did not elaborate on what issues were outstanding.
“We have a policy committee meeting in mid-June and will be talking about our next steps,” she said.
Bongiovanni said the NPRA would like families to have “the choice to opt out and totally disengage from an ‘online referral service’ or agency if they are dissatisfied with the level of their level of service.”
“Giving the client and or family the power to name their ‘agency of record’ for representation is the next step to ensure families have a choice,” he added.
Bongiovanni, however, described the legislation signed Wednesday as “a victory for older adults and their families in respect to transparency and disclosure in the senior placement and referral industry.”
Lois A. Bowers