[Federal Register Volume 84, Number 178 (Friday, September 13, 2019)]
[Proposed Rules]
[Pages 48321-48324]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19778]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 232

[Docket No. FR 6022-P-01]
RIN 2502-AJ46


Federal Housing Administration (FHA): Section 232 Healthcare 
Facility Insurance Program--Memory Care Residents

AGENCY: Office of the Assistant Secretary for Housing, HUD.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: HUD's Section 232 program insures mortgage loans to facilitate 
the construction, substantial rehabilitation, purchase, and refinancing 
of nursing homes, intermediate care facilities, board and care homes, 
and assisted-living facilities. Through this rule, HUD proposes changes 
to update the requirements for the location of bathrooms in board and 
care and assisted living facilities to allow providers to configure the 
facilities to meet the needs of memory care residents and allow for 
flexibility of the bathroom requirement when financing or refinancing 
existing facilities.

DATES: Comment due date: November 12, 2019.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule. All submissions must refer to the above docket 
number and title. There are two methods for submitting public comments.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW, Room 10276, 
Washington, DC 20410-0500.
    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt by HUD, and enables HUD to make them immediately available to 
the public. Comments submitted electronically through the 
www.regulations.gov website can be viewed by other commenters and 
interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.
    Note: To receive consideration as public comments, comments must be 
submitted through one of the two methods specified above. Again, all 
submissions must refer to the docket number and title of the rule.
    No Facsimile (FAX) Comments. FAX comments are not acceptable.
    Public Inspection of Public Comments. HUD will make available all 
properly submitted comments and communications for public inspection 
and copying between 8 a.m. and 5 p.m. weekdays at the above address. 
Due to security measures at the HUD Headquarters building, you must 
schedule an appointment in advance to review the public comments by 
calling the Regulations Division at 202-708-3055 (this is not a toll-
free number). Individuals with speech or hearing impairments may access 
this number via TTY by calling the Federal Relay Service at 800-877-
8339. Copies of all comments submitted are available for inspection and 
downloading at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: John M. Hartung, Director, Policy, 
Risk Analysis & Lender Relations Division, Office of Residential Care 
Facilities, Office of Healthcare Programs, Office of Housing, 
Department of Housing and Urban Development, 1222 Spruce Street, St. 
Louis, MO 63103-2836; telephone number 314-418-5238 (this is not a 
toll-free number). Persons with hearing or speech impairments may 
access this number through TTY by calling the toll-free Federal Relay 
Service at 800-877-8339 (this is a toll-free number).

SUPPLEMENTARY INFORMATION: 

I. Background

    Under Section 232, 223(a)(7), and 223(f) of the National Housing 
Act (12 U.S.C. 1715w, 12 U.S.C. 1715n(a)(7), and 12 U.S.C. 1715n(f)(4), 
respectively), FHA insures mortgages to finance the purchase or 
refinance of nursing homes, intermediate care facilities, board and 
care homes, and assisted living facilities (collectively, residential 
healthcare facilities). To meet the needs of residents living in the 
Section 232 program facilities and those seeking to insure projects 
under the Section 232 program, HUD proposes to revise the current 
regulation at Sec.  232.7 regarding bathroom requirements to meet the 
needs of memory care residents. Memory care residents are those 
patients in assisted living or board and care settings that have 
cognitive impairments, such as Alzheimer's disease and other dementias 
who require care in a secure setting. HUD proposes the revision to add 
flexibility for financing existing residential healthcare facilities.

A. Memory Care Residents

    Residents of assisted living facilities need assistance with their 
``activities of daily living'' (ADL). Activities of daily living 
include, but are not limited to, such things as bathing, dressing, 
eating, getting in or out of bed, using the toilet, preparing meals, 
taking medications,

[[Page 48322]]

and performing light housework. Memory care residents' care is often 
provided on a separate floor or wing to address the residents' specific 
needs. The health and safety of persons with dementia and other 
cognitive impairments can be enhanced by environments with features 
designed to accommodate cognitive and physical impairments. For 
example, Alzheimer residents' living environments have secured areas to 
prevent wandering--a common symptom of the disease. Memory care 
provides intensive, long-term medical care to seniors or others with 
serious health and dementia conditions in a fully-staffed and monitored 
facility.\1\
---------------------------------------------------------------------------

    \1\ Office of the Assistant Secretary for Planning and 
Evaluation, ``Measuring The Activities of Daily Living: Comparison 
Across National Surveys'' https://aspe.hhs.gov/basic-report/measuring-activities-daily-living-comparisons-across-national-surveys.
---------------------------------------------------------------------------

    The research shows the growing need for memory care specific 
services. Based on estimates from the Aging, Demographics, and Memory 
study of a nationally representative sample of older adults, 13.9% of 
people aged 71 and over in the United States have Alzheimer's disease 
or other types of dementia.\2\ A National Study of Long-Term Care 
Providers (NSLTCP) found that a sizeable portion of long-term care 
service users had a diagnosis of Alzheimer's disease or other 
dementias--almost one-third of adult day services center participants 
and home health patients, about four-tenths of residential care 
residents, and almost one-half of nursing home residents. The National 
Center for Assisted Living, a nonprofit entity within the American 
Health Care Association specializing in assisted living, developed a 
profile for the average resident of an assisted living facility \3\ 
which found the average resident of an assisted living facility to be 
nearly 87 years old. Whereas, Section 232 of the National Housing Act 
defines frail elderly to be individuals 62 years and older who are in 
need of support for three ADLs. The data and research suggest that 
Alzheimer's disease or other dementias is a common precipitating factor 
for using formal long-term care services.\4\
---------------------------------------------------------------------------

    \2\ Long-Term Care Services in the United States: 2013 Overview 
Vital and Heath Statistics, Series 2, no 37, Center for Disease 
Control and Prevention, National Center for Health Statistics, U.S. 
Department of Health and Human Services p.39 (citing Plassman BL, et 
al., Prevalence of Dementia in the United States: The aging, 
demographics, and memory study. Neuroepidemiology 29(1-2):125-32. 
2007).
    \3\ Overview of Assisted Living, published by the American 
Association of Homes and Services for the Aging, American Seniors 
Housing Association, Assisted Living Federation of American, 
National Center for Assisted Living, and National Investment Center 
for the Seniors Housing & Care Industry (2009).
    Overview of Assisted Living, published by the American 
Association of Homes and Services for the Aging, American Seniors 
Housing Association, Assisted Living Federation of American, 
National Center for Assisted Living, and National Investment Center 
for the Seniors Housing & Care Industry (2009). Assisted Living 
Regulations and Policy: 2015 Edition 06/15/2015, Office of The 
Assistant Secretary for Planning and Evaluation, U.S. Department of 
Health & Human Services, https://aspe.hhs.gov/basic-report/compendium-residential-care-and-assisted-living-regulations-and-policy-2015-edition.
---------------------------------------------------------------------------

B. State Regulation of Memory Care Facilities Bathing Arrangements

    Although many Federal laws affect assisted living, oversight 
generally occurs at the state level through state licensure, statutes, 
and standards. Federal regulations issued by the Centers for Medicare 
and Medicaid Services (CMS) for long-term care facilities simply 
require that each resident room must be equipped with or located near 
toilet and bathing facilities.\5\ State regulation is often much more 
precise, specifying minimum standards for toilet and bathing facilities 
locations and ratios. Thirty-five states have provisions for the 
physical features of dementia care units, including the residents' 
living units, access to bathrooms, and external locking doors or 
controlled methods of egress to prevent unsafe exits.\6\ It is 
important to also note that Federal civil rights laws and regulations 
also contain accessibility and nondiscrimination requirements that 
apply, including the Fair Housing Act (24 CFR part 100), the Americans 
with Disabilities Act (28 CFR parts 35 (Title II) and 36 (Title III)), 
and Section 504 of the Rehabilitation Act (24 CFR part 8), as 
applicable.

II. This Proposed Rule

    HUD's Section 232 regulation at Sec.  232.7 requires a specific 
number of bathrooms per residents and specifies the physical 
configuration of a board and care home or an assisted living facility. 
This regulation has not been updated in any substantial manner in over 
20 years.
    HUD is proposing to revise the regulations that govern the number 
and location of bathrooms in board and care homes and assisted living 
facilities currently insured or to be insured under the Section 232 
program. The revisions would allow providers to configure existing 
facilities to meet the needs of residents, such as frail elderly 
individuals who have Alzheimer's disease or related dementia, and who 
need specialized support, such as assistance with bathing. This 
revision will allow the financing of existing residential healthcare 
facilities that do not meet HUD's existing bathroom standards, but 
which are currently providing necessary care to residents with 
Alzheimer's disease or related dementia.
    This proposed rule would not be applicable to substantial rehab and 
new construction. A substantially rehabilitated or new facility would 
be constructed in a manner which allows it to provide services for 
assisted living residents and memory care residents and meet HUD's 
long-standing standards set forth in Sec.  232.7.

A. Configuration of Section 232 Insured Facilities To Meet Memory Care 
Residents' Needs

    Subpart A of part 232 codified regulations entitled ``Eligibility 
Requirements,'' contains requirements for the number of bathrooms per 
residents and access to those bathrooms for board and care homes and 
assisted living facilities in Sec.  232.7. Specifically, the 
regulations provide that not less than one full bathroom must be 
provided for every four residents of a board and care home or assisted 
living facility, and bathroom access from any bedroom or sleeping area 
must not pass through a public corridor or area.
    Generally, owners of assisted living facilities that apply for FHA 
mortgage insurance meet the requirements of Sec.  232.7, because those 
assisted living facilities serve seniors who seek an independent 
lifestyle and do not require the higher level of monitoring provided to 
memory care residents. Rather, these residents simply need assistance 
to meet ADLs. However, several facilities were unsuccessful when they 
sought HUD's assistance in refinancing their debt because they could 
not satisfy the bathroom requirements set forth in HUD's regulations, 
and several applicants have advised that the requirement regarding the 
number and location of bathrooms set forth in Sec.  232.7 presented 
barriers to properly serving memory care residents, who need 
specialized support, including assistance with bathing. Accordingly, 
some owners seeking Section 232 financing sought and received waivers 
from the current requirements in Sec.  232.7 to allow bathroom facility 
configurations that were better suited to meet the care of memory care 
residents. Over time, HUD realized that the current regulations are 
outdated and in need of revision.

B. Proposed Changes

    HUD's current prohibition on designs that allow residents to 
``[pass] through

[[Page 48323]]

public areas'' to a bathroom precludes insurance of existing facilities 
that meet the needs of memory care residents requiring assistance in 
bathing, and at which the physical redesign of the facility would be 
infeasible. Consequently, to provide flexibility in accepting the 
existing design of bedrooms and bathrooms to meet the greater care 
required for memory care residents, HUD proposes to revise Sec.  232.7 
to provide exceptions. Excepted facilities must still comply with any 
applicable State or local standards and requirements, including 
requirements specific to memory care facilities. See Sec.  232.2. State 
or local standards that are more stringent than these requirements 
would not be preempted by this rule.
Exemption for Facilities Insured Under Section 223(f) or 223(a)(7)
    The exemption would apply to memory care facilities whose financing 
is being insured pursuant to Section 223(f) or 223(a)(7) of the 
National Housing Act, only when four considerations are satisfied: (1) 
Memory care residents must reside in a separate secured locked area of 
the board and care home or assisted living facility; (2) any bathroom 
access from a memory care resident's bedroom or sleeping area that 
passes through a public corridor or area must be in that separate, 
secured, and locked area of the board and care home or assisted living 
facility; (3) memory care residents of such areas require full 
assistance or supervision when bathing; and (4) wards serving memory 
care residents have no more than two beds per unit and a half-bath in 
each unit. Note that the codified rule prohibits bathroom access from a 
public area, and this section provides limited conditions under which 
access from public areas is allowable.
    This exemption would not apply to new construction or substantial 
rehabilitation insured under Section 232, and those projects must 
continue to follow the long-standing bathroom requirements for board 
and care home or assisted living units.

III. Findings and Certifications

Regulatory Review--Executive Orders 12866 and 13563
    Under Executive Order 12866 (Regulatory Planning and Review), a 
determination must be made by the Office of Management and Budget 
regarding whether a regulatory action is significant and therefore 
subject to review in accordance with the requirements of the order. 
Executive Order 13563 (Improving Regulations and Regulatory Review) 
directs executive agencies to analyze regulations that are ``outmoded, 
ineffective, insufficient, or excessively burdensome, and to modify, 
streamline, expand, or repeal them in accordance with what has been 
learned.'' Executive Order 13563 also directs that, where relevant, 
feasible, and consistent with regulatory objectives, and to the extent 
permitted by law, agencies are to identify and consider regulatory 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public. This rule allows additional flexibility for the 
financing of residential healthcare facilities.
Executive Order 13771
    Executive Order 13771, entitled ``Reducing Regulation and 
Controlling Regulatory Costs,'' was issued on January 30, 2017. This 
proposed rule is expected to be an Executive Order 13771 deregulatory 
action by providing additional flexibility for healthcare facilities, 
as discussed above.
Environmental Review
    A Finding of No Significant Impact (FONSI) with respect to the 
environment has been made in accordance with HUD regulations at 24 CFR 
part 50, which implement Section 102(2)(C) of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The FONSI is 
available for public inspection between the hours of 8 a.m. and 5 p.m. 
weekdays in the Regulations Division, Office of General Counsel, 
Department of Housing and Urban Development, 451 7th Street SW, Room 
10276, Washington, DC, 20410-0500. Due to security measures at the HUD 
Headquarters building, please schedule an appointment to review the 
FONSI by calling the Regulations Division at 202-708-3055 (this is not 
a toll-free number). Individuals with speech or hearing impairments may 
access this number via TTY by calling the Federal Relay Service at 800-
877-8339.
Unfunded Mandates Reform Act
    The Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1531-
1538) establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on state, local, and tribal 
governments and on the private sector. This proposed rule does not 
impose any Federal mandate on any state, local, or tribal government, 
or on the private sector, within the meaning of UMRA.
Regulatory Flexibility Act
    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities.
    HUD believes that this proposed rule imposes no additional 
requirements on small businesses. Currently, HUD has a total of 3,673 
residential healthcare facilities in its portfolio and completes 
approximately 300 firm commitments each year for 223(f) and 223(a)(7) 
refinances. HUD is providing waivers on 3 percent of those applications 
and waiver requests continue to increase. As noted in the preamble of 
the proposed rule, applicants have advised that the requirement 
regarding the number and location of bathrooms presented barriers to 
properly serving memory care residents, who need specialize support. 
HUD believes this proposed rule will resolve the inadequacy of the 
current bathroom requirements, thus, easing the existing burden on 
those entities seeking to accommodate memory care residents and 
entities seeking to finance or refinance facilities. Additionally, both 
owners, small and large, and memory care residents will benefit from 
the opportunity to finance their facility in compliance with this new 
framework.
    Accordingly, the undersigned certifies that this proposed rule will 
not have a significant economic impact on a substantial number of small 
entities. Notwithstanding HUD's determination that this rule will not 
have a significant effect on a substantial number of small entities, 
HUD specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in the preamble to this rule.
Executive Order 13132, Federalism
    Executive Order 13132 (entitled ``Federalism'') prohibits to the 
extent practicable and permitted by law, an agency from publishing any 
rule that has federalism implications if the rule either imposes 
substantial direct compliance costs on state and local governments and 
is not required by statute, or preempts state law, unless the relevant 
requirements of Section 6 of the Executive Order are met. This rule 
does not have federalism implications and does not impose substantial 
direct compliance costs on state and local governments or preempt state 
law within the meaning of the Executive Order.

[[Page 48324]]

Catalogue of Federal Domestic Assistance
    The Catalogue of Federal Domestic Assistance Number for the 
Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board 
and Care Homes and Assisted Living Facilities is 14.129.

List of Subjects in 24 CFR Part 232

    Fire prevention, Health facilities, Loan programs-health, Loan 
programs-housing and community development, Mortgage insurance, Nursing 
homes, Reporting and recordkeeping requirements.

    Accordingly, for the reasons stated above, HUD proposes to amend 24 
CFR part 232 as follows:

PART 232--MORTGAGE INSURANCE FOR NURSING HOMES, INTERMEDIATE CARE 
FACILITIES, BOARD AND CARE HOMES, AND ASSISTED LIVING FACILITIES

0
1. The authority citation for part 232 continues to read as follows:

    Authority:  12 U.S.C. 1715b; 1715w; 1735d, and 1735f-19; 42 
U.S.C. 3535(d).

Subpart A--Eligibility Requirements

0
2. Revise Sec.  232.7 to read as follows:


Sec.  232.7   Bathroom.

    (a) General requirement. For a board and care home or assisted 
living facility to be eligible for insurance under this part:
    (1) The board and care home or assisted living facility must have 
no less than one full bathroom provided for every four residents; and
    (2) Bathroom access from any bedroom or sleeping area must not pass 
through a public corridor or area.
    (b) Exemption for existing projects providing memory care. The 
following applies to a board and care home or assisted living facility 
that provides housing for residents in need of memory care, i.e., care 
for residents who have cognitive impairments, such as Alzheimer's 
disease or other dementias:
    (1) Subject to paragraph (b)(2) of this section, a project seeking 
insurance under subpart E, pursuant to Section 223(f) or 223(a)(7) of 
the National Housing Act, may be eligible for insurance without meeting 
the general requirement in paragraph (a) of this section, if the 
project meets the following four requirements:
    (i) Memory care residents are in a separate, secured, and locked 
area of the board and care home or assisted living facility;
    (ii) Any bathroom access from a memory care resident's bedroom or 
sleeping area that passes through a public corridor or area is in a 
separate, secured, and locked area of the board and care home or 
assisted living facility prescribed in paragraph (b)(1)(i) of this 
section;
    (iii) Memory care residents receive full assistance or supervision 
while bathing; and
    (iv) Memory care residents reside in wards that contain no more 
than two beds per unit and have a half-bath in each unit.
    (2) If a facility serving memory care residents also serves 
residents who are not in a separate, secured, and locked area of the 
board and care home or assisted living facility, this exemption applies 
only to the separate, secured, and locked area in which solely memory 
care residents reside.

    Dated: August 9, 2019.
John L. Garvin,
General Deputy Assistant Secretary for Housing.
[FR Doc. 2019-19778 Filed 9-12-19; 8:45 am]
 BILLING CODE 4210-67-P