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RCFEs: Rate Increases and New Charges: What's Permitted?
Some RCFEs are trying to pass along increased costs from the COVID-19 pandemic to their residents. The higher costs can take the form of a rate increase for current items and services, or charges for new items and services. Whether it is legal for the RCFE to increase a resident’s rates or add new charges depends on several factors discussed below.
Unfortunately, there is no prohibition against RCFEs passing along COVID-related costs. For example, if a RCFE proposes to increase the monthly fee for all residents by $200 a month to cover the cost of PPE for residents, staff and visitors, the increase would be legal if it complies with the written notice requirements discussed above, and any additional protections set forth in the admission agreement.
1) Read the Admission Agreement! When it comes to RCFE rates and rate increases, there is nothing more important than the admission agreement. If the item or service and corresponding charge is not included in the agreement, or not adequately described, it may be disputed. (Health & Safety Code section 1569.884; Cal. Code of Regulations, Title 22, section 87507.). Also, check to see whether the admission agreement include additional protections involving rate increases, and make sure that the RCFE has complied with these requirements.
2) Review the Rate Increase Notice. As discussed above, all rate increases require written notice, and are subject to limits based on percentage and frequency. (Health & Safety Code section 1569.655; Civil Code section 1947.12.). Review the rate increase notice to determine whether it complies with these resident protections.
3) Is Withholding Payment an Option? If a resident has a good faith dispute over a rate increase, refusing to pay the increase may be an option. The facility could then sue the resident to obtain payment or, more likely, pursue an eviction for nonpayment. However, evictions for nonpayment are limited to failure to pay for “basic services,” and basic services are broadly defined under California law to include living accommodations, meals, personal assistance and care, observation and supervision. (Cal. Code of Regulations, Title 22, sections 87224, 87464.) If a charge is related to a non-basic service, nonpayment should not be grounds for an eviction. The resident may still have to pay pursuant to the terms of the admission agreement, but the RCFE should not be able to evict the resident for nonpayment.
*Unlike general rate increases, a RCFE that offers different levels/tiers of care may increase a resident’s rate due to a change in the level of care by providing written notice within two business days after initially providing services at the new level of care. The notice must include a detailed explanation of the additional services to be provided at the new level of care and an itemization of the charges. Health & Safety Code section 1569.657(a).
Page Last Modified: September 10, 2021