LTC Watch: Oops!

A continuing care retirement community (CCRC) may offer residents contracts that gives residents access to what amounts to free or discounted long-term care (LTC) services if they ending up needing those services.

See also: Continuing care retirement communities: What could go wrong?

That kind of contract amounts to a type of narrow-network LTC health maintenance organization (HMO). Through the contract, the community says it will provide the necessary services via its own facilities, just as an HMO says it will provide acute health care services through its own facilities (or the facilities in its own provider network) if the member needs those services.

Of course, all sorts of independent professionals and businesses set up HMO equivalents, without quite understanding that they’re setting up HMO equivalents.

Veterinarians, fitness centers and physicians with concierge medical practices may have a contract that offers the buyer all of the pet care services, weight lifting equipment access or routine, office-based medical care that the buyer needs throughout the course of a year.

All of those arrangements face the same two dangers: death due to low sales, or death due to strong sales that end up swamping the plan issuer with an unexpected high demand for services.

The swamped veterinarian may rush through procedures and kill pets. The swamped fitness center may get terrible Yelp reviews. The owner of the concierge practice may have to pay to hire partners, or send patients to other care providers.

The demand forecasting challenge is even tougher for a CCRC, which must try to estimate how much need residents will have for LTC services years in the future.

Some states have tough CCRC reserving laws and regulations. Some don’t. In some states, CCRC managers may assume that, if they have enough cash to pay the bills today, that’s good enough.