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.
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.
After a I wrote an article about CCRCs earlier this week, Bett Martinez, a California LTC planner whose book gave me the idea, emailed to tell me about a local article about a “senior housing project” that mentions that it’s a CCRC only at the end and offers no disclosure about how the care contracts might work.
Of course, some CCRCs should do a better job with their disclosures, and some states’ regulators should probably divert more of the energy they have devoted to policing insurance and securities’ marketing materials to policing CCRC marketing materials.
Then, perhaps, the regulators should turn their attention to state capitals and the U.S. government, because one of the biggest CCRCs in the world is the United States of America. It’s unnerving to think what vigilant state consumer protection regulators might do to the managers of a private-sector CCRC that did as poor a job with reserving as CCRC USA. I suspect that the results might involve a large number of lawyers and a substantial order for orange jumpsuits.
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