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With the Covid-19 Pandemic underway and stay-at-home orders in place over most of America, everything has changed.  That includes how much television I watch. Between binge watching the latest shows on Netflix, I was watching the news today hoping for some sign that life was going to get back to normal soon.  During the commercial break I saw an ad from A Place for Mom that made me so upset, I felt the need to write about it to expose the ugly truth behind this otherwise innocuous company.  I especially feel the need to call out Joan Lunden and expose the boondoggle known as A Place for Mom because they are actually hurting seniors.

A Place for Mom is a company that is a nursing home referral service. As the name implies, A Place for Mom will help people find a facility to place their parent when the parent needs long-term care. This is a “free” service to the user … or at least is inaccurately billed as free by the company. If the company were a true non-profit that used donations to help guide people in time of crisis, that would be great.  That’s basically how they present themselves to the public.  But A Place for Mom is not the virtue of altruism – not even close.

This issue came up a few days ago as well when I was talking with an attorney in northern California who approached me about mentoring him to help add Medi-Cal Planning to his longstanding law practice. During the call he said that he talked with a nursing home placement specialist, known at A Place for Mom as a “Senior Living Advisor,” who said that it was hard to do placement in a facility that accepted Medicaid because of how few beds were available.

I had to chuckle and told him he needed to consider the source. I let him know that the high-end nursing homes pay these placement specialists a referral fee. The going rate for referral fee is one month’s expense at the facility.  Most of those facilities charge over $10,000 per month. This placement specialist only gets paid when she refers someone to a facility that pays a referral fee and each placement is a big payday. In most markets, independent referral agents can easily make a quarter of a million dollars a year referring only a couple dozen people. They make no money referring the family to a facility that doesn’t pay a referral fee or if the patient is Medicaid/Medi-Cal eligible.

A Place for Mom is no different. They only refer people to nursing homes within their “network,” which excludes less expensive facilities and many facilities that accept Medicaid-eligible patients. You say, though, “Aren’t they only excluding a few of the crummiest nursing homes that service Medicaid patients?” One would think that was true, but Medicaid pays for a majority of nursing home expenses in the US and the vast majority of nursing homes accept Medicaid.  But most cannot afford to spend big sums on referral fees to placement specialists like A Place for Mom and the anti-kickback laws seem to prohibit paying referral fees for referral of an authentically benefit-eligible patient (See: OIG Advisory Opinion No. 14-01).

The result of this is staggering. First, A Place for Mom arguably misrepresents itself as a one-stop shop to find a care facility that is appropriate for a senior in need.  But in reality, it will only refer people to a handful of high-priced facilities that, in turn, line A Place for Mom’s pockets. Additionally, like selling you a high-priced automobile, the placement specialist makes more if the patient spends more. The placement specialists are incentivized to push more expensive facilities on unsuspecting seniors and their families who are reaching out during a time of crisis.  If you deceptively take advantage of people in crisis, you are a profiteer that is preying on the most vulnerable seniors.

And Joan Lunden the profiteer-in-chief.  She is called by A Place for Mom an “advocate for seniors,” but she is nothing more than a paid spokesperson using her once-held clout as a Good Morning America talk show host to give legitimacy to A Place for Mom’s offering to seniors. This costs people real money.  Lots of people.  And drives up the cost of care.

A Place for Mom addresses the cost issue on their website.  In the FAQ section it says: “WILL THE COMMUNITY CHARGE ME MORE IF I USE YOUR SERVICES?” The answer provided by A Place for Mom is enlightening:

This is our favorite question!  We offer our personalized, time-saving service at no charge to you or your family. How is that possible, you ask? A Place for Mom is paid by our participating providers and communities, so we are able to offer you a completely cost-free service with no hidden fees. 

Furthermore, each community that partners with us specifically agrees that it will charge a family the same rate as all other consumers who move in, including being eligible for the same discounts as other families, and it will not charge or try to recover any of APFM’s fee from the family. In short, you should not be charged any additional amounts because you used our services.

This answer is intellectually dishonest and betrays the real mission A Place for Mom company should be about (helping seniors instead of exploitation of the elderly). Of course, nursing homes don’t charge you more if you come in through A Place for Mom, they charge EVERYONE more! The referral placement service is not “cost-free” in any way whatsoever.  The patient doesn’t pay the fee to A Place for Mom, the facility does.  Who does A Place for Mom owe their allegiance? It is clearly owed to the nursing homes that butter their bread. The net result of not charging someone for placement services is that the cost is spread out over all residents in the facility. That raises the cost of care for everyone – even those who do not come into the nursing home through a placement service.

But there is something far more insidious that is a by-product of this “no-cost” approach to nursing home placement. It’s my understanding that A Place for Mom does not do a full financial workup on the people needing care.  This has two disastrous side effects. The first is erosion of the community spouse’s protected share and the second is the secondary transition when the patient spends all of their funds on the over-priced nursing home that was recommended by A Place for Mom.

To understand the first part is to understand the Medicaid spenddown.  When a couple places one souse in the nursing home while the other spouse remains home, Medicaid rules carve out a protected share of the couple’s assets that are protected for the at-homes spouse, called the “community spouse” in the Medicaid rules. The protected share is called the Community Spouse Resource Allowance (“CSRA”), which for 2020 is set at a maximum of $128,640 (ignoring all the viable Medicaid Planning techniques we could use to protect even additional resources). So if the couple has $250,000 in assets, they would only need to spend down about $120,000 in assets.  If A Place for Mom refers the couple to a high-priced nursing home that costs $12,000 a month, then the couple would have spent down assets to the protected share within about 10 to 11 months – a relatively short period of time.

To keep the institutionalized spouse in the high-priced nursing home, the couple would be forced to privately pay beyond the Medicaid spenddown because the facilities typically do not accept Medicaid, or in the case of some assisted living facilities, they accept Medicaid but require the patient to privately pay for 18 or 24 months until the facility will release a Medicaid bed. This forces the couple to spend down the community spouse’s protected share – leaving the healthy spouse extremely vulnerable and using up the funds that should be saved for the community spouse’s future retirement needs.

Once the couple spends resources down to the CSRA, they have the choice of either spending the protected share or moving the patient to one of the majority of nursing homes that accept long-term care Medicaid coverage. The couple would be Medicaid eligible once they had spent down to the CSRA limit but not access the benefit because the facility that A Place for Mom sent them does not accept Medicaid payment.  To move to a Medicaid-approved nursing home can be problematic.  Medicaid-approved nursing homes can take private-pay patients ahead of Medicaid-eligible patients in the admissions process. This could cause the patient to not get into the facility of his or her choice when they need to move and forces the patient to stay longer at the non-Medicaid nursing home.

This brings us to the second issue which is the fact that once a patient has completely depleted their financial resources in most of these A Place for Mom nursing homes, they are forced to move out of the facility to a new facility that accepts Medicaid. Because they are in the more expensive facility that A Place for Mom referred them to, they will likely have spent down their assets in that nursing home at a faster rate than they would have otherwise – hence why I refer to it as A Place for Mom to Go Broke – faster.

The patient will ultimately be discharged to a facility that accepts Medicaid.  Because most conditions requiring nursing home care are degenerative. That means the patient will be forced to re-locate at a time in their life when they are worse off than when they entered the high-priced nursing home and that kind of transition to a new environment is highly traumatic to the elderly patient. Had the patient be placed in a proper facility from the start, the likelihood of transfer will be minimal. What’s in the best interest of the patient is at odds with what’s in the best interest of A Place for Mom and their cadre of costly nursing homes.

Finding someone a nursing home that works well for them is not something anyone would pay $10,000 to purchase as a service. Geriatric care managers do the same service in an unbiased and patient-centered way for usually less than $2,000 on average. These so-called placement specialists are merely extended sales agents for the upper-crust nursing homes and they disguise this as a “cost-free service” to unsuspecting seniors and their family members needing help. When someone appears to owe you a duty to give you proper advice about your best housing alternatives, but the advice is tainted by the referral fees paid by the nursing homes they refer you to, in the law we call that a conflict of interest. And there is virtually nothing regulating this.

I believe that everyone in a facility that pays kickbacks to A Place for Mom or their ilk would be ideal representative class members for a class action suit against the whole lot of them for lack of full disclosure and the resulting higher cost of care.  Additionally, states should enact prohibitions against these kickback referral programs and leave placement to patient-centered geriatric care managers or truly philanthropic organizations that believe in helping seniors rather than bilking them through the back door.  And lastly, Joan Lunden should be ashamed of herself for perpetuating this kickback scheme, resign from involvement in A Place for Mom and donate what is likely to be her exorbitant fees to a fund that can help seniors who truly need placement help – unbiased and genuine placement help. If she truly wants to help seniors she should stop being a disingenuous shill for high-priced nursing homes and actually find a way to help seniors get the real care they need.