Moratorium on Special Care Units
in Adult Care and Nursing Homes
Session Law 2017-57, Section 11G.3.(b)

Report to the
Joint Legislative Oversight Committee on Health and
Human Services
and
Fiscal Research Division
by
North Carolina Department of Health and Human Services
March 14, 2019

 Response to Legislative Request
In compliance with Section 11G.3.(b) of Session Law 2017-57, the North Carolina Department
of Health and Human Services (Department) is submitting this report to the Joint Legislative
Oversight Committee on Health and Human Services on the moratorium on the licensure of
special care units for residents with Alzheimer’s Disease and related disorders.
As required in Session Law 2017-57, this report contains the following information:
(1)
The number of licensed special care units in the State.
(2)
The capacity of the currently licensed special care units to serve people in need of
their services.
(3)
The anticipated growth in the number of people who will need the services of a
licensed special care unit.
(4)
The number of applications received from special care units seeking licensure as
permitted by this section and the number of those applications that were not
approved.
Background and Development
G.S. 131D-4.6, G.S. 131D-8, and G.S. 131E-114 authorize the licensure of special care units in
adult care, nursing home, and combination facilities.
General Statute 131D-4.6, G.S. 131D-8, and licensure rules 10A NCAC 13F.1301 et. seq. allow
for the special licensure designation of “Special Care Units for Alzheimer’s and Related
Disorders” (SCU) in adult care homes that meet specific criteria. Adult care homes are licensed
for seven or more beds and provide 24-hour care and services to assist residents with activities of
daily living (ADLs), medication management, and supervision. Currently, there are 595 licensed
adult care homes in North Carolina.
General Statute 131E-114 allows for the licensure designation of SCUs that provide “special care
for persons with Alzheimer’s disease or other dementias” (ADOD) in nursing and combination
homes. The combination homes licensed by the State operate both adult care and skilled nursing
beds. There are 438 nursing care and combination homes currently licensed in North Carolina,
and of these, 176 are combination homes.
North Carolina licensure rules for SCUs in adult, nursing and combination homes require that,
for admission to a unit, the individual must have a diagnosis of Alzheimer’s or one of six related
disorders as well as an assessment by the facility to determine if it can meet the needs of the
resident. Residents can be admitted to a SCU with such a diagnosis at various stages of the
disease.
Special Care Units within adult care, nursing, and combination homes subscribe to a philosophy
of dementia care that includes a safe, secure, familiar and consistent environment that promotes
mobility and minimal use of physical restraints or psychotropic medications; a structured but
flexible lifestyle through a well-developed program of care which includes activities appropriate
for each resident's abilities; individualized care plans that stress the maintenance of residents'

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 abilities and promote the highest possible level of physical and mental functioning; and methods
of behavior management which preserve dignity through design of the physical environment,
physical exercise, social activity, appropriate medication administration, proper nutrition and
health maintenance.
Session Law 2013-360, Section 12G.1, established a moratorium from July 31, 2013 through
July 1, 2016, on SCU licenses issued by the Department’s Division of Health Service Regulation
(Division). It included certain “exceptions” to the moratorium, specifically:
. . . . This prohibition shall not restrict the Department from doing any of the following:
(1) Issuing a license to a facility that is acquiring an existing special care unit.
(2) Issuing a license for a special care unit in any area of the State upon a
determination by the Secretary of the Department of Health and Human
Services that increased access to this type of care is necessary in that area
during the three-year moratorium imposed by this section.
(3) Processing all completed applications for special care unit licenses received
by the Division of Health Service Regulation along with the applicable license
fee prior to June 1, 2013.
Session Law 2014-100, Section 12G.5 changed the end date of the moratorium from July 1, 2016
to June 30, 2016 and added one additional “exception” to the moratorium, specifically:
(4) Issuing a license to a facility that was in possession of a certificate of need as
of July 31, 2013, that included authorization to operate special care unit beds.
In 2015, Session Law 2015-241 (Section 12G.2) extended the moratorium until June 30, 2017;
and in 2017, the moratorium was again extended until June 30, 2019 by Session Law 2017-57.
Since the law allows for exceptions to the moratorium, a process was developed and
implemented by Department for exemption requests. The process for facilities requesting an
exemption to the special care unit moratorium can be found on the DHSR website at
https://www2.ncdhhs.gov/dhsr/scumoratorium.html.
Findings
In accordance with S.L. 2017-57, 11G.3.(b) the findings of this report are outlined below.
The Number of Licensed Special Care Units in the State
As of January 1, 2019, adult care homes are operating 251 SCUs statewide with a total of 8,712
beds. Nursing and combination homes are operating 73 SCUs, which have a total of 1,791 SCU
beds. Of those, 1,427 are skilled nursing SCU beds and 364 are adult care SCU beds.

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 The Capacity of the Currently Licensed Special Care Units to Serve People in Need of
Their Services
Calculating occupancy of beds is one approach to assessing whether the current capacity is
meeting the need. Average occupancy rates of SCUs are based on data self-reported by facilities
on annual license renewal applications and reflect a one-day census “snapshot” of residents in
SCU beds. According to the latest occupancy data available, which corresponds to the one-day
census in 2017, there were 8,626 licensed adult care SCU beds in adult care and combination
homes in the State. The average occupancy of adult care beds in SCUs was approximately 79%
and has stayed relatively consistent over the past several years. Also, North Carolina had 1,279
licensed skilled nursing SCU beds in nursing and combination homes with an average occupancy
of 74%. Occupancy data was not captured for skilled nursing SCU beds for 2015 and 2016.
Table 1: Total Number of Licensed Special Care Unit Beds in Both Adult Care Homes and
Nursing Homes, 2015-2017
Data
Year

Licensed Adult Licensed Adult
Care SCU
Care SCU Beds
Beds in Adult
in Combination
Care Homes
Homes

2015
2016
2017

7,830
8,216
8,275

361
331
351

Licensed Skilled
Nursing SCU Beds in
Nursing and
Combination Homes
1,487
1,352
1,279

Total Number of
Licensed SCU
Beds
9,678
9,899
9,905

Data Sources: 2016 -2018 Adult Care Home and Nursing Home License Renewal Applications

Table 2: Occupancy of Licensed Adult Care Special Care Unit Beds, 2015-2017
Data
Year
2015
2016
2017

Total Licensed
Adult Care SCU
Beds
7,830*
8,547
8,626

Occupied Adult Care
SCU Beds
(one day census)
6,593*
6,913
6,817

Annual Occupancy Rate
for Adult Care SCU Beds
84.2%**
80.9%
79.0%

Data Sources: 2016 -2018 Adult Care Home and Nursing Home License Renewal Applications
* Occupancy is only for adult care SCUs in adult care homes
**For 2015, the Department had not yet begun collecting data on the occupancy of adult care SCU beds. Therefore,
the occupancy rate is based on 7,830 adult care SCU beds in adult care homes.

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 Table 3: Occupancy of Licensed Skilled Nursing Special Care Unit Beds, 2015-2017
Data
Year
2015
2016
2017

Total Licensed
Skilled Nursing
SCU Beds
1,487
1,352
1,279

Occupied Skilled
Nursing SCU Beds
(one day census)
n/a*
n/a*
951

Annual Occupancy Rate
for Skilled Nursing SCU
Beds
n/a*
n/a*
74.4%

Data Sources: 2016 -2018 Adult Care Home and Nursing Home License Renewal Applications
* Occupancy data was not captured for skilled nursing SCU beds for the 2015 and 2016 fiscal
years.

These recent SCU occupancy rates may indicate that need is being met. However, contextual
differences such as geographical distances, urban versus rural, need, and payor source can play a
role in whether need is being met throughout the State. Only 8,626 adult care special unit beds
were in operation in 2017 in adult care homes and nursing homes combined. Yet, there was a
total of 12,783 adult care residents diagnosed with ADOD in 2017 in both adult care homes and
nursing homes combined. That being said, not all people with ADOD will need or seek access to
SCU beds.
Table 4: Total Number of Residents Diagnosed with Alzheimer’s or Other Dementia in
Adult Care Homes and Nursing Care Homes, 2015-2017

Data
Year

2015
2016
2017

Number of Residents
with Alzheimer’s or
Related Diagnosis in
facilities with SCU*
8,207
8,573
8,904

Number of Residents
with Alzheimer’s or
Related Diagnosis in
facilities without
SCU

Total Number of
Residents with
Alzheimer’s or
Related
Diagnosis

Total Number
of Licensed
Adult Care
SCU Beds

4,879
5,051
3,879

13,086
13,624
12,783

8,191
8,547
8,626

Data Sources: 2016 -2018 Adult Care Home and Nursing Home License Renewal Applications
*
Patient totals are for licensed Adult Care beds in both Adult Care Homes and Nursing Homes.

The Anticipated Growth in the Number of People Who Will Need the Services of a
Licensed Special Care Unit
The Alzheimer’s Association reports that approximately 170,000 people lived with Alzheimer’s
disease in North Carolina in 2018. As shown in Table 5, that number is expected to increase to
210,000 by 2025. The projected increase by 2025 is 23.5%.

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 Table 5: Projected Number of People Aged 65 and Older with Alzheimer’s By Age in NC
Year
2018
2020
2025

Ages 65-74
28,000
31,000
35,000

Ages 75-84
74,000
79,000
100,000

Ages 85 and older
66,000
69,000
77,000

Total
170,000
180,000
210,000

Data Source: Alzheimer’s Statistics: North Carolina, 2018, Alzheimer’s Association, accessed 2/11/2019 at
https://www.alz.org/getmedia/c7acc0b8-0cea-42dc-bb03-a12d3811e9a3/statesheet_northcarolina).

It is difficult to accurately determine the anticipated growth in the number of people diagnosed
with ADOD who will need the services of an SCU due to a number of variables. The unique
characteristics of ADOD would need to be reflected in the methodology to account for both the
moderate and severe levels of cognitive impairment according to age group. This variable is
based, at least in part, on the assumption that symptoms at the varying levels of cognitive
impairment may correlate with increased elopement risk and the need for SCU services; but this
assumption would need to be supported by reliable clinical data.
Also, the spectrum of care provided to individuals with ADOD reflects that care for these
individuals is provided most often at home by caregivers, paid or unpaid, and also in adult care
homes and nursing homes. The reasons an individual with dementia moves through the
continuum of care varies from person to person, family to family. Typically, admission to an
adult care home or nursing home is the result of increased heath care or behavioral needs, or a
breakdown in the caregiver support structure (such as the caregiver’s own health issues or death
of a caregiver). However, certain individuals living with moderate to severe levels of cognitive
impairment may receive appropriate care in a traditional adult care or nursing home while others
may require SCU services.
In summation, the data supports that the number of individuals who will be diagnosed with
Alzheimer’s or other types of dementia is growing rapidly. While SCUs can help address the
expanding need for additional supports and services in the community for individuals diagnosed
with ADOD and their caregivers, as discussed previously, a number of variables make it difficult
to more precisely predict the future need for licensed SCUs.
The Number of Applications Received from Special Care Units Seeking Licensure as
Permitted by Law, and the Number of Those Applications that Were Not Approved.
Since July 1, 2017, 18 adult care homes have acquired already existing special care units under
the moratorium exception for that purpose, per Section 11G.3.(a)(1). of Session Law 2017-57,
which represents a total of 601 previously licensed SCU beds.
During the same time period, the Department also received 18 applications under the moratorium
exception, per Section 11G.3.(a)(2), on special care unit licenses that were evaluated to
determine if “increased access to this type of care is necessary in that area during the
moratorium[.]” Of these, 13 were submitted by adult care homes and 5 were submitted by
nursing and combination homes.

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 When reviewing applications, the Department assesses whether adult care and nursing homes in
the service area (i.e., county) with SCU beds are sufficient to serve the proportion of the
population that suffers from ADOD. Relevant criteria include: a) service area occupancy of
existing SCUs; b) SCUs in the service area for which licenses are pending; c) projected need
based on projected growth of the aging population in the service area in comparison to projected
state-level growth; d) current and projected SCU bed deficits in the service area; and e) the
proportion of projected bed deficit to bed need.
Of the adult care home exception requests, eleven were approved because the facilities were
located in areas where there was evidence that increased access to SCU beds was necessary
during the moratorium. These eleven approvals were for a total of 316 beds. Of these approvals,
seven facilities have been granted licenses for a total of 189 beds. Two adult care home
exemption applications were denied by the Department. These applications did not present
evidence that their service areas were unable to meet the current or projected needs of people
living with ADOD.
All five of the nursing and combination home applications were approved by the Department
because their proposals addressed an unmet need in the facilities’ respective service areas. One
of the applications that was approved was initially denied and approved only after the facility
provided additional evidence of the need for increased access to SCU beds in the area. The five
nursing and combination home applications exception requests that were approved were for a
total of 158 beds. To date, one license has been issued for 51 of those beds.
The Division has not licensed SCUs since July 1, 2017 for which applications along with
applicable license fees were received prior to June 1, 2013. N.C. Session Law 2017-57 (Section
11G.3.(a)(3)). Further, no facilities have received licenses to operate SCUs that had a certificate
of need to do so as of July 31, 2013. N.C. Session Law 2017-57 (Section 11G.3.(a)(4)).
Summary
Based on the information supplied in this report on the average occupancy of existing special
care unit beds in the State, there appears to be a sufficient number of licensed beds to meet the
current need for such services. However, as discussed, the projected number of individuals who
will be diagnosed with Alzheimer’s or other types of dementia is growing rapidly.
Unfortunately, projecting the number of these individuals that will need special care unit beds is
complicated by several variables. Continued attention to wide-ranging resources that may be
needed for those individuals as well as their caregivers, including facility-level support, is
necessary.

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