Is “Voluntary Accreditation” for CCRCs and Life Plan Communities an Important but Under-utilized Resource?

State regulatory agencies often struggle to “keep up” with the flow of information that accompanies oversight for financially complex enterprises such as Continuing Care Retirement Communities (CCRCs), also sometimes called Life Plan Communities (LPCs).

The oversight role is typically assigned to a state’s Insurance Department, which makes some sense in terms of seeking accountability for present value of dollars paid in connection with future services. In 1984, for example, Pennsylvania legislators concluded that in light of the history of a number of insolvent operations, “providers [of CCRC services} should be regulated” by the state, adopting a set of “minimum requirements” with the title “Continuing Care Provider Registration and Disclosure Act,” See 40 P.S. Insurance Section 3202 (1984).

The Act specified details to be included in pre-admission and annual Disclosure Statements (see 40 P.S. Section 3207) and directed the Commissioner of Insurance to “publish and distribute a Consumers Guide” and an “Annual Directory of Continuing Care Facilities.”

At the same time, the law of many states, including Pennsylvania, included a disclaimer. For example, in Pennsylvania the mandatory disclosure statements are required to caution users that the grant of authority to operate “does not constitute approval, recommendation or endorsement of the facility” by the Insurance Department.” See 40 P.S. Section 3207(a)(12).

My work with residents over the last 20 years makes it clear to me that they are often hungry for reliable information from a reliable source — and any lack of transparency is frustrating.

Therefore, let’s look at the type of information provided through a voluntary system of “accreditation” by CARF International.

CARF, an acronym which used to stand for Commission on Accreditation of Rehabilitation Facilities, describes itself as an “independent, nonprofit accreditor” for various forms of health and human services including CCRCs and LPCs. Once upon a time, this voluntary accreditation process for CCRCs was provided by LeadingAge, under its former name, American Association of Home and Services for the Aging (AAHSA). AAHSA spun off the accreditation function to CARF in 2003.

Approximately 2,000 (probably less) of CCRCs and LPCs currently operate in the United States and they offer a unique position in the “senior living” marketplace as they typically involve a robust array of housing, services, and care. I’m not sure of how many CCRCs were accredited at the peak of the voluntary movement, but during a recent discussion with CARF representatives, I learned there are now about 77 CCRCs/LPCs accredited by CARF International.

The CARF International accreditation process for CCRCs happens on 5-year intervals, involving a survey process that examines “Business Practices (including financial standards) and Care Delivery.” I learned that accredited operations are required to report financial distress to CARF which, I am also told, triggers CARF follow-up.

CARF International has its own Consumer Guide, updated regularly, and it is in plain language (even as it tackles sophisticated topics). The current guide is dated 2023. I was pleased to see the fairly detailed coverage for “assessing financial strengths” of CCRCs and LPCs (pages 23-35 of the 2023 Guide), although perhaps these pages should be required reading for Elder Law attorneys and financial advisors, working alongside of prospective residents.

Even more detailed and important information, although also more daunting to digest, is provided by CARF International on an annual basis in the form of “Financial Ratios & Trend Analysis of CARF-Accredited Continuing Care Retirement Communities.” The “complimentary” copies of the publication can be “requested” on the CARF-International website.

Is there a more robust future for CARF International in providing independent evaluation of the business practices, financial standards and care policies of CCRCs and LPCs? It can be argued that state regulators have sometimes been complacent about the benefit of “disclosure” rules, while failing to commit to substantive analysis of the collected (or missing) data. Residents seem to be saying to be saying that greater accountability is needed in the wake of periodic insolvencies, especially when promised “refunds” of high-dollar entrance fees are at risk. Can CCRCs and LPCs “afford” not to commit to external evaluations of their performance?