United States General Accounting Office

GAO Report to Congressional Requesters

January 1997 HEALTH CARE

SERVICES

How Continuing Care

Retirement

Communities Manage

Services for the Elderly

GAO/HEHS-97-36

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-274820 

January 23, 1997

The Honorable Thomas J. Bliley, Jr.

Chairman, Committee on Commerce

House of Representatives

The Honorable James C. Greenwood

House of Representatives

The Congress has shown interest in various models of managed care as a

way to both control the rapidly rising cost of health care services for the

elderly and ensure quality care.1

 Managed care is intended to channel and

coordinate individuals’ use of health services to achieve appropriate

utilization of those services and improve health outcomes. Risk-based

managed care, such as that offered by health maintenance organizations

(HMO) to over 50 million people, is also expected to control costs through

arrangements in which the organization is responsible for providing or

arranging health care for beneficiaries in exchange for payment of a fixed

fee. Such arrangements are intended to create strong incentives for

managed care organizations to manage care effectively and to help

beneficiaries maintain health and functioning. The focus of managed care,

however, has been primarily on serving working-age adults and children.

In contrast, continuing care retirement communities (CCRC) focus almost

exclusively on managing various forms of care for the elderly to help them

remain healthy and functioning. CCRCs offer retirement living in

combination with a range of health and other services that vary by CCRC.

The services a CCRC may provide—often in a campus-like setting—include

housing; long-term care, such as skilled nursing facility care and assisted

living; various medical services, including physician services and physical

therapy; and services such as meals, housekeeping, and recreational

activities. Most CCRCs are private, nonprofit agencies, and many have

religious affiliations. Currently about 350,000 residents live in

approximately 1,200 CCRCs. About one-third of CCRCs provide long-term

care for their residents under lifetime contracts in which the CCRC assumes

the residents’ risk for the cost of long-term care services.2

 These CCRCs

have incentives to encourage residents to use medical care to maintain or

improve their health and functioning and to manage residents’ use of both

1

See, for example, the Medicare Preservation Act of 1995, H.R. 2425, which was included as title XV of

the Balanced Budget Reconciliation Act of 1995, H.R. 2491.

2

Typically these contracts are intended to last for the lifetime of the resident, although some can be

canceled at the option of the resident. In some cases the contract may be for a shorter period and

renewable at the option of the resident.

Page 1 GAO/HEHS-97-36 Care Management Practices in CCRCs
B-274820 

acute medical and long-term care services even though these CCRCs are

generally only at risk for the cost of long-term care.

You asked us to review the processes of managed care in CCRCs and how

these relate to health care costs. In response to your request, we examined

(1) CCRC practices for promoting wellness, (2) practices for managing care

for elderly people with chronic conditions, and (3) evidence regarding the

possible effect of these practices on health status and costs.

To conduct our work, we reviewed literature on CCRCs and the clinical and

cost effects of various health practices; interviewed CCRC experts,

physicians in geriatrics, and officials from the Health Care Financing

Administration’s (HCFA) Office of Managed Care; and visited 11 CCRCs to

examine their practices. We chose these CCRCs because they assume most

residents’ financial risk for the cost of long-term care, are accredited by

the Continuing Care Accreditation Commission, and represent some

geographic variation. During visits and follow-up contacts with these

CCRCs, we interviewed executive officers, administrative officials, and

medical staff. We also collected documentation from the CCRCs on health

promotion, medical screening, and chronic disease management practices.

For a complete description of our scope and methodology, see appendix I.

Results in Brief To serve their elderly residents, CCRCs we examined manage care to meet

the needs of both healthy individuals and those who have chronic

conditions. They use active strategies to promote health, prevent disease,

and detect health problems early by encouraging exercise, proper

nutrition, social contacts, immunizations, and periodic medical exams and

assessments for all residents. Many of these CCRCs also have

multidisciplinary teams of nurses, social workers, rehabilitation

specialists, physicians, dieticians, or others to plan and manage residents’

care. These teams meet periodically to discuss residents’ health and

functional status; determine whether services are needed; and decide on

the types of treatment, services, and supports that will be provided. CCRC

staff coordinate a wide range of health and other services—whether

provided on or off site—to enhance their benefit to the individual resident.

Active monitoring of the health and functioning of residents who have

chronic conditions—such as arthritis, hypertension, and heart disease—is

an integral part of this coordinated, multidisciplinary approach to

managing care.

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B-274820 

Many of these CCRCs’ practices are considered to be effective in improving

the health and functioning of the elderly, although their effect on health

care costs is largely undemonstrated. Regular medical exams and health

assessments, immunizations, and counseling to encourage exercise,

proper nutrition, and social interaction are all recommended by experts

and the literature as effective health promotion and disease prevention

strategies for the elderly. In addition, geriatric experts recommend a

coordinated and multidisciplinary approach to manage chronic conditions

among the elderly because their care may involve many modes of

treatment and disciplines. While the health benefit of these practices has

been demonstrated, little evidence exists to demonstrate health cost

savings from either the CCRC package of services or most of the practices

individually.

Background CCRCs represent one form of managed care for the elderly. Many CCRCs

have managed both acute medical and long-term care services for the

elderly for decades. CCRCs plan, administer, and often provide these

services, in combination with housing and other services, frequently in a

campus-like setting.3

 The number of residents in a CCRC varies, but

averages about 300, most of whom are elderly people leading active

lifestyles and living in independent housing units. Some residents receive

personal care, such as assistance in bathing and dressing, either in their

own residential units or in special assisted living units, and some receive

skilled nursing facility care. Residents may also receive physician,

laboratory, and other care on site. Expenses for these and other medical

services are reimbursable by Medicare on the same basis as for the elderly

who do not live in CCRCs.

CCRCs assess prospective residents’ health and financial status to ensure a

fit with services offered and required fees. Residents commonly pay an

entry fee to join the community and a monthly fee thereafter. These fees

vary considerably depending on factors such as the level of CCRC financial

risk for long-term care services, the size of the residential unit chosen,

whether fees are for single individuals or couples, and the kinds of

additional services and amenities provided. (See app. II for a description

of the different financial risks CCRCs assume.) In the 11 CCRCs we

visited—all of which assume residents’ risk for long-term care

costs—entry fees ranged from a low of $34,000 for a studio apartment for

one individual to a high of $439,600 for a two-bedroom home for a couple.

3

See The Consumers’ Directory of Continuing Care Retirement Communities (Washington, D.C.:

American Association of Homes and Services for the Aging, 1994) for a discussion of the philosophy of

CCRCs and profiles of more than 500 individual communities.

Page 3 GAO/HEHS-97-36 Care Management Practices in CCRCs
B-274820 

Monthly fees in the 11 communities ranged from $1,383 for an individual to

$4,267 for a couple.

CCRCs Use a Variety

of Practices to

Promote Wellness

The CCRCs we visited use a variety of practices for health promotion,

disease prevention, and early detection of health problems to help

residents maintain their health and functioning. These practices are part of

an approach to care that encourages CCRC residents to adopt or maintain a

lifestyle that is believed to promote good health. Providing activities and

services, usually on site, encourages residents to take advantage of them.

CCRCs Encourage

Exercise, Proper Nutrition,

and Social Involvement

Many of the CCRCs we visited promote good health for their residents by

encouraging exercise, proper nutrition, and social involvement.

Encouraging regular exercise is a common practice that CCRCs we visited

use to maintain or improve residents’ health and functioning. CCRC efforts

include having swimming pools and fitness equipment on site, providing

staff for exercise programs, and sponsoring lectures and information on

the value of exercise. Exercise classes and activities include aerobics,

flexibility and strength exercises, swimming, yoga, lawn bowling, and

square dancing. Residents may participate through a formal program or on

an informal basis. Several CCRCs also strongly encourage walking. The

campus-like designs of some CCRCs encourage walking by locating

residential buildings within walking distance of commonly used services.

Some campuses also incorporate nature trails or other attractive walks.

Another common health promotion practice at CCRCs we visited is the

encouragement of proper nutrition. Residents at many of these CCRCs are

offered three meals a day in common dining rooms, which encourages

adequate consumption of healthy foods. Some CCRCs require residents to

have at least one of their meals each day in these settings. For other meals,

residents may cook at home or eat elsewhere. The foods offered and

nutrition information provided encourage residents to eat appropriately

for weight and other health considerations. Special diets may be provided.

At most of the CCRCs we visited dieticians are often available for

consultation and can help residents develop individual diet plans. CCRC

officials told us that on-site dietary counseling and nutritionally balanced

meals in congregate, attractively decorated dining areas help encourage

adequate nutrition and healthy eating habits.

Encouraging residents to interact socially is also a common practice

among the CCRCs we visited. CCRC officials told us that they encourage

Page 4 GAO/HEHS-97-36 Care Management Practices in CCRCs
B-274820 

interaction because social isolation is associated with poorer health and

functioning among the elderly. They also said that the physical layout of

CCRCs fosters social interaction and is an integral part of the CCRC model.

Residents live next door to each other and may see each other frequently

through visits or while eating in congregate settings, checking mail, and

engaging in a wide range of CCRC activities. Recreational, educational,

cultural, and volunteer activities are frequently initiated, planned, and

organized by residents. Officials said that arranging and participating in

these kinds of activities are an important part of residents’ social

interaction in the community. Activities may include on-campus lectures,

movies, musical performances, woodworking, flower arranging,

photography, and civic and charitable activities.

Disease Prevention and

Early Detection Activities

Include Immunizations and

Periodic Medical Exams

and Assessments

Many of the CCRCs we visited attempt to maintain their residents’ health

and functioning through disease prevention and early detection of health

problems. These activities are carried out by nurses, social workers and

physicians who may be either affiliated with or independent of the CCRC.

Most CCRCs we visited encourage immunizations against common

preventable diseases, such as flu and pneumonia, to reduce illness and

possible fatalities. They may encourage immunization in a number of

ways, including inoculation clinics, seminars, distribution of printed

materials, and reminders from medical staff when a resident makes an

outpatient visit or has a medical examination.

Most of the CCRCs we visited encourage early detection of health problems

through periodic medical exams and other health assessments. CCRC

officials told us that these exams and assessments help staff and residents

to be more proactive in using effective medical treatments and changing

lifestyles to slow or reverse the loss of good health and function.

A combination of physicians, nurse practitioners, and social workers may

conduct elements of these exams and assessments, which may include

periodic inventories of prescription drugs used by a resident to assess

potential unwanted side effects from drug interactions, examination of an

individual’s ease in walking or getting out of a chair, and observation of

changes in an individual’s mental state. CCRC medical exams may include

testing blood pressure for hypertension and blood glucose levels for

diabetes. They may also include tests for colon, breast, and prostate

cancer as well as vision and hearing impairments. Residents’ medical

Page 5 GAO/HEHS-97-36 Care Management Practices in CCRCs
B-274820 

records and staff are usually on site, making the periodic exams and

assessments convenient for residents.

The CCRCs we visited typically encourage periodic medical exams through

seminars, written materials, and reminders such as notices sent to

residents on their birthdays asking them to schedule an exam. Some CCRCs

follow up by telephone or other means when residents do not schedule or

appear for medical exams. If a resident does not come for an exam after

follow-up, some CCRC officials told us that this information is tracked and

an exam conducted when the resident next comes in for outpatient care

because of illness.

CCRCs Use a

Multidisciplinary,

Coordinated

Approach to Manage

Chronic Conditions

CCRCs we visited use a multidisciplinary, coordinated approach to manage

care for their residents with chronic conditions such as hypertension and

heart disease. Essential elements of this approach include a wide range of

on-site services, coordination of services to ensure residents receive them

in an appropriate and timely manner, and active monitoring of residents

with chronic conditions. The prevalence of chronic conditions increases

substantially with age, and CCRC officials told us that properly managing

these conditions helps maintain residents’ functioning while delaying or

reducing use of costly services such as hospital care.

CCRCs Offer a Wide Range

of Health and Other

Services on Site

CCRCs we visited offer a wide range of services on site to manage care for

residents with chronic conditions. These services may include primary

health care, care by specialists, skilled nursing care, and laboratory

testing. Other services may include physical therapy, social work, personal

care, dietary counseling, home chore service, and transportation. Various

combinations of services may be provided across a range of settings,

including an outpatient clinic, a skilled nursing facility, or a resident’s own

home.

In addition, some of the CCRCs we visited adapt their health promotion and

wellness programs to help meet the needs of residents with chronic

conditions. For example, they may modify a regular exercise program to

help people with arthritis retain the ability to walk. Similarly, these CCRCs

may encourage and help those with chronic conditions to continue regular

social interaction through special arrangements. For example, a resident

who can no longer walk to recreational events and congregate eating areas

may be provided with an electric cart so that he or she can remain

independent.

Page 6 GAO/HEHS-97-36 Care Management Practices in CCRCs
B-274820 

CCRC officials told us that having a wide range of services on site makes it

possible to manage most of the care of residents with chronic conditions

within the community even when the needs are intense. CCRC officials said

that residents less frequently need care at hospital emergency rooms or as

many days of hospital care when admitted because they have access to

physicians, nursing care, and other services at the CCRC. The availability of

a skilled nursing facility where residents can easily be admitted from the

hospital or from home for short stays may also help return residents more

quickly to their homes, according to these officials.

Coordination and Active

Monitoring Used to Meet

Residents’ Needs

CCRCs we visited typically coordinate services to enhance their benefit for

residents. CCRC staff coordinate various services provided by both CCRC

staff and other providers whether on site or off. For example, a CCRC may

coordinate an arthritic resident’s pain relief medication, specialized

exercise program, home modifications, the availability of walkers or other

ambulatory aides, and periodic assistance with dressing or bathing to help

the resident stay as functional as possible and to reduce or delay the use of

more intensive services. Multidisciplinary teams may facilitate

coordination through joint team assessments and the development of a

plan of care. Teams meet regularly to reassess needs and services. CCRC

officials told us that nursing staff generally serve as the focal point for

convening teams and providing ongoing coordination of services between

team meetings. Some CCRC officials said that nursing and social work staff

usually have day-to-day responsibility for coordinating services and

troubleshooting when problems arise.

CCRC officials told us that they actively monitor residents with chronic

conditions. Staff oversees the plan of care developed for each resident

with chronic conditions to ensure that the resident is receiving needed

services. Monitoring can include simply verifying that a resident has

visited the clinic as prescribed or kept a scheduled appointment with the

physical therapist. Or professional care staff may review medical records,

visit or call the resident at home, or call other service providers to verify

that care was received. Frequent monitoring is necessary in some cases

because a resident’s physical and mental condition can change quickly and

require different services. For example, CCRC staff may check more

frequently if episodes of pain may impair an arthritic resident’s ability to

walk or dress unassisted.

CCRC officials told us that nonmedical staff and the residents themselves

can also be important in the monitoring process. Some CCRCs we visited

Page 7 GAO/HEHS-97-36 Care Management Practices in CCRCs
B-274820 

train food services staff, residential and grounds crews, and other staff to

recognize potentially serious problems that residents may have and to

report this information to clinical or social work staff. For example, a

housekeeper may inform clinical staff that an individual with some

memory loss has burned pots on the stove or that a resident with arthritis

is unable to get out of bed on a particular day. In addition, some CCRCs

encourage residents to notify them when they see or suspect that another

resident may need assistance. In some CCRCs, buddy systems are

developed in which two residents agree to contact or watch out for each

other regularly. When problems are reported, clinical staff call or visit

residents to investigate and respond as needed.

CCRC Practices May

Provide Health

Benefits but Effect on

Costs Is Largely

Undemonstrated

Many of the practices we identified in CCRCs for health promotion, disease

prevention, and early detection of health problems are credited by experts

and the literature with reducing the risk of disease and disability and

improving health and functioning among the elderly.4

 Among the measures

considered to be effective are regular physical exams that include

screening for early detection of conditions such as hypertension, colon

cancer, breast cancer, and vision and hearing loss, and immunization

against flu and pneumonia. Education and counseling to encourage

exercise and proper nutrition are also recommended. Regular aerobic or

conditioning exercise reduces the risk of coronary heart disease, diabetes,

and obesity, and exercises to improve strength, flexibility, and balance

may reduce the risk of falls and fractures. Encouraging social interaction

may also reduce isolation, which is associated with poorer health and

functioning among the elderly.

The coordinated, multidisciplinary approach to chronic disease

management used by the CCRCs we visited is also consistent with the

recommendations of geriatric care experts and is supported in the

literature as effective in slowing the progression of disease and restoring

loss of function. Multiple interventions are often used in managing many

chronic conditions that are common among the elderly, such as

hypertension, cardiovascular disease, and arthritis. These methods may

include drug therapy, physical and occupational therapy, behavior

modification, counseling, and use of special medical equipment. Experts

told us that because care for older people with chronic conditions may

involve many modes of treatment and disciplines, it needs to be organized,

4

See R.L. Berg and J.S. Cassells (eds.), The Second Fifty Years: Promoting Health and Preventing

Disability (Washington, D.C.: Institute of Medicine, Division of Health Promotion and Disease

Prevention, 1990). See also U.S. Preventive Services Task Force, Guide to Clinical Preventive Services,

2nd ed. (Baltimore, Md.: Williams and Wilkins, 1996).

Page 8 GAO/HEHS-97-36 Care Management Practices in CCRCs
B-274820 

coordinated, and managed. Crucial to effective care management, they

said, is providing periodic monitoring and follow-up both to ensure that

the chronic condition is being controlled and to minimize any negative

effects of treatment.

While evidence exists for the effectiveness of many of the practices we

found in these CCRCs, their effect on health care costs and use of health

services has not been conclusively demonstrated. With the exception of flu

immunizations and medical screening for certain forms of cancer, such as

breast and colon cancer, little evidence exists to demonstrate clearly the

cost-effectiveness of most of the individual health promotion and chronic

disease management practices used by the CCRCs.5

 Furthermore, CCRC

residents tend to be very different from the general elderly population on a

number of important sociodemographic, health, and other measures. No

studies have been conducted that adequately consider these factors in

assessing the effect of the CCRC package of services on health costs.6

Agency Comments Because no federal agency or program was the focus of our review, we did

not seek agency comments. We did, however, have a number of experts in

geriatric medicine and continuing care retirement communities review a

draft of this report. They generally agreed with its contents and provided

technical comments that we incorporated as appropriate.

We are sending copies of this report to the Secretary of Health and Human

Services; the Administrator, Health Care Financing Administration; and

other interested parties. Copies of this report will also be made available

to other interested parties on request.

5

The Second Fifty Years and Guide to Clinical Preventive Services.

6

People choosing a CCRC tend to be better educated and wealthier than the general elderly population

and are healthier when moving into the CCRC than others their age. The full effect of these differences

has not been accounted for in studies comparing CCRC residents’ use of health services with that of

elderly residents living in non-CCRC settings.

Page 9 GAO/HEHS-97-36 Care Management Practices in CCRCs
B-274820 

If you or your staff have any questions, please call me at (202) 512-7119 or

Bruce D. Layton, Assistant Director, at (202) 512-6837. Other major

contributors to this report are James C. Musselwhite, Eric R. Anderson,

Ron Viereck, and Carla Brown.

William J. Scanlon

Director, Health Financing and Systems Issues

Page 10 GAO/HEHS-97-36 Care Management Practices in CCRCs
Page 11 GAO/HEHS-97-36 Care Management Practices in CCRCs
Contents

Letter 1

Appendix I 

Scope and

Methodology

14

Appendix II 

CCRC Risk

Arrangements for

Long-Term Care Costs

16

Table Table I.1: CCRCs Visited by GAO 15

Abbreviations

CCRC continuing care retirement community

HCFA Health Care Financing Administration

HMO health maintenance organization

Page 12 GAO/HEHS-97-36 Care Management Practices in CCRCs
Page 13 GAO/HEHS-97-36 Care Management Practices in CCRCs
Appendix I 

Scope and Methodology

We focused our work on practices that 11 continuing care retirement

communities (CCRCs) use to maintain or improve the health and

functioning of their elderly residents and to manage the use of health and

other services by residents with chronic conditions. We also examined

what is known about the possible health and cost effects of these

practices. To address our study objectives, we (1) visited 11 CCRCs to

examine care management practices, (2) reviewed the literature on CCRCs

and on health and cost effects of CCRCs’ practices, and (3) interviewed

experts on CCRCs and geriatric medicine as well as officials from HCFA’s

Office of Managed Care.

The 11 CCRCs we visited in California, Maryland, Pennsylvania, and Virginia

(see table I.1) were selected primarily for three reasons. First, they assume

most residents’ financial risk for the cost of long-term care (see app. II for

a description of CCRC financial risk arrangements for long-term care costs).7

These financial arrangements provide incentives to manage health and

other services so that residents remain healthy and functioning as

independently as possible and so that costs are controlled. Second, these

CCRCs are accredited by the Continuing Care Accreditation Commission.8

Third, they represent some range of geographic variation. Our findings

from this sample of CCRCs, however, cannot be generalized to all CCRCs, to

CCRCs that are at financial risk for most residents’ long-term care costs, or

to those that are accredited.

7

In a 1995 survey of CCRCs by the American Association of Homes and Services for the Aging,

35 percent of the 456 respondents reported that they offer contracts placing them at full risk for a

resident’s long-term care not otherwise reimbursed by third parties such as Medicare.

8

See Accreditation Handbook (Washington, D.C.: Continuing Care Accreditation Commission,

1994) for a description of the accreditation process.

Page 14 GAO/HEHS-97-36 Care Management Practices in CCRCs
Appendix I 

Scope and Methodology

Table I.1: CCRCs Visited by GAO

Name of community Location

California

Casa Dorinda Montecito

Mt. San Antonio Gardens Pomona

The Sequoias-San Francisco San Francisco

The Tamalpais Greenbrae

Maryland

Broadmead Cockeysville

Collington Mitchellville

Fairhaven Sykesville

Pennsylvania

Foulkeways at Gwynedd Gwynedd

Kendal at Longwood Kennett Square

Pennswood Village Newtown

Virginia

Goodwin House Alexandria

We conducted structured interviews to obtain information from CCRC

executive officers, administrative officials, and medical staff regarding the

practices used for health promotion, disease prevention, medical

screening, and management of chronic conditions. In addition, we

collected documentation on services provided and residents’ contracts,

and we directly observed some CCRC activities, programs, campus

buildings, and grounds used by residents. We conducted telephone

follow-ups to obtain additional information from CCRC officials as needed.

To examine the potential health and cost effects of CCRC practices, we

reviewed the literature and interviewed selected experts in geriatric

medicine regarding generally accepted practices or guidelines for health

promotion, disease prevention, medical screening, and management of

chronic conditions. We also interviewed officials from HCFA’s Office of

Managed Care.

We conducted our review between June and November 1996 in

accordance with generally accepted government auditing standards.

Page 15 GAO/HEHS-97-36 Care Management Practices in CCRCs
Appendix II 

CCRC Risk Arrangements for Long-Term

Care Costs

CCRCs assume different levels of financial risk for the costs of their

residents’ long-term care services, such as nursing home care and assisted

living services. These long-term care services are provided in combination

with housing, residential services such as cleaning and meals, and related

services. CCRCs’ financial risks for residents’ care are defined in lifetime

contracts between the CCRC and the individual resident.9

 A CCRC may offer

more than one type of long-term care risk arrangement from which

residents may choose.

Full Risk Some CCRCs are at full financial risk for the cost of long-term care services.

This means that the CCRC must pay all the costs of long-term care services

residents need except for those costs that may be reimbursed by third

parties such as Medicare. These CCRCs typically require that residents pay

an entrance fee and a monthly fee that includes prepayment for long-term

care costs, similar to an insurance arrangement. The monthly fee can

increase based on changes in operating costs and inflation adjustments

but not because of the use of long-term care services. As a result, residents

having these agreements are not at risk for covered long-term care costs.

This kind of agreement is sometimes known as a life care agreement or an

extensive or Type A contract.

Partial Risk Some CCRCs are at partial financial risk for the cost of long-term care

services. These CCRCs must pay some, but not all, of the costs of long-term

care services for residents beyond those reimbursed by third parties such

as Medicare. The financial risk of these CCRCs is limited by a cap on the

amount of long-term care services for which the CCRC will pay. For

example, for each resident, a CCRC may pay for a maximum of 30 or 60

days of nursing home care per year, whatever limit is specified in the

resident’s contract. Under these arrangements, CCRCs typically require that

residents pay an entry and monthly fee, which may be lower than the fees

for arrangements under which CCRCs assume full financial risk for the

costs of long-term care. Until the cap on long-term care services is

reached, residents’ monthly fees under the partial risk agreement can

increase based on changes in operating costs and inflation adjustments

but not as a result of the use of long-term care services. If the contract cap

is reached, however, the resident is at risk for the cost of all additional

long-term care services not reimbursed by third parties. This kind of

9

Typically these contracts are intended to last for the lifetime of the resident, although some can be

canceled at the option of the resident. In some cases the contract may be for a shorter period and

renewable at the option of the resident.

Page 16 GAO/HEHS-97-36 Care Management Practices in CCRCs
Appendix II 

CCRC Risk Arrangements for Long-Term

Care Costs

agreement is sometimes known as a modified, limited services, or Type B

contract.

No Risk Some CCRCs are not at risk for the cost of long-term care services. These

CCRCs require residents to pay for services they use either through a

combination of an entry fee and a monthly fee or through a monthly fee

alone. Monthly fees in either payment arrangement can increase based on

operating costs, inflation adjustments, and the use of long-term care

services. As a result, residents are at risk for all long-term care service

costs not reimbursed by third parties such as Medicare. When this kind of

risk arrangement is based on a combination of an entrance fee and a

monthly fee it is sometimes known as a Type C contract. When it is based

only on a monthly fee it is sometimes known as a Type D contract. Under

either Type C or D contracts, residents typically pay lower fees than under

Type A or B contracts unless long-term care services are needed.

(101509) Page 17 GAO/HEHS-97-36 Care Management Practices in CCRCs
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