Senior Referral Agencies Slammed by FTC

A recent article by a senior housing industry blogger discussed a Washington Post article where the FTC cracked down on CarePatrol and ABCSP.

These elder care referral agencies claimed to have done extensive research on long-term care facilities and offered recommendations to consumers based on their alleged legwork. Their claims included uncovering citations or violations the facilities may have received.

Both charge substantial referral fees to the facilities, the FTC said. These charges are often 100% of a monthly care fee. CarePatrol and ABCSP agreed to settle charges from the FTC that they misled consumers on how much work they actually do in monitoring the care facilities.

Nearly all placement and referral agencies advertise that their "senior care consultants" offer consumer placements in care facilities based on extensive research, and often claim that among other things, their "Certified Advisers" look beyond the appearances to monitor each community's care history and state violations so they can "recommend the safest options for your loved one."

The blogger believes that for the most part referral agencies are a drain on the senior housing industry and that consumers rarely have a clear understanding of the financial relationship between the referral or placement agency and the communities they recommend.

To back his point of view, he highlights several key points about how referral and placement agencies work:

1. Recommended facilities are only those that are on the referral agency's contracted list and exclude all other communities, even if they would really fit the senior's best interest.
2. The higher the monthly fee a facility charges the resident, the higher the commission is. Commissions are typically 100% of the monthly care fee. So there is a powerful incentive to bring prospective residents to communities that are at the top end of their budget, even though there may be other more appropriate or less expensive communities.
3. If a prospective resident receives Medicaid assistance, the agency will not help because it cannot collect a placement fee. Since referral fees collected are often in the $3000 to $6000 range, a model based on charging consumers for placement services is not financially attractive.
4. It is extremely difficult for any referral agency to monitor care facilities closely, let alone for agencies that are internet-based. It is simply not feasible or cost-effective.

In 2011 Washington State implemented the "elder and vulnerable adult referral agency act." The act makes an attempt at protecting consumers, however, it is in its infancy and fails to address key concerns, some of which are discussed in this article.

We strongly advise consumers to do their own due diligence when choosing a care facility, just as they would when choosing any important service.

Consider engaging the services of a Geriatric Care Manager; as client-paid advisers, you're assured of an unbiased approach to finding communities and care services that will benefit you most. Make sure the geriatric care manager doesn't sub-contract the placement service.

You can also visit AdultFamilyHomesCentral to find a FREE database listing of all adult family homes in Washington State. The site also offers free articles to help you understand and guide you thru your care options.