Providing Care at Home

As we reported in our annual series highlighting the various healthcare related provisions of the 2018-19 New York State Budget (here), the Enacted Budget reflects the state’s overall policy towards consolidation of the home care marketplace.  Nowhere is the effort to force consolidation more apparent than in the Licensed Home Care Services Agencies (LHCSA) space.  The Enacted Budget has imposed a two-year moratorium on new approvals, a limit on the number of LHCSAs with which Managed Long Term Care Plans (MLTCP) can contract and a new requirement that in the future LHCSA applicants will need to demonstrate “public need” and “financial feasibility” for a post-moratorium certificate of need.  As explained below, however, there may yet be hope for LHCSA applicants and projects that were in the pipeline prior to the moratorium if they fit within one of the three narrow statutory exceptions to the moratorium.  In this article we explore the recent history of LHCSAs in New York, as well as the recent guidance offered by the New York State Department of Health (“DOH”) on how these new restrictions will be implemented.

LHCSAs were subject to a prior moratorium until 2010, when that moratorium was ended by DOH.  The rapid growth in number of LHCSAs since that time can be attributed to a number of factors, including New York’s aging population, the trend away from inpatient long-term care, the “age in place” movement, and the fact that, up until this year, there was no “public need” or “financial feasibility” requirements in order to obtain a certificate of need for a LHCSA.  There are currently over 1,400 LHCSAs authorized to provide hourly nursing care, assistance with activities of daily living and other health and social services to New York’s low-income elderly and disabled populations – though the number actually providing services is unknown.  As noted by Crain’s Health Pulse on April 23, 2018, the most recent employment figures for the home care industry, which includes Certified Home Health Agencies (CHHA), show the sector has been growing at a breakneck pace.  In the past five years alone, home health employers have added 72,600 jobs in New York.  And, for the first time ever, the number of people employed in the home health sector in New York City (167,000) has surpassed the number employed by private hospitals in New York City (166,300).  In contrast, and highlighting the increasing demand for homecare services over inpatient long term care services, nursing home employment is on the decline.

As a result of this growth, the general sentiment among DOH officials appears to be that there are once again too many LHCSAs; hence the reforms included in the 2018-19 Enacted Budget.  Ostensibly, DOH believes that fewer providers will reduce waste, inefficiency, and the opportunity for fraud.  Industry advocates, on the other hand, maintain that efforts to consolidate the industry ignore the fact that home care is provided locally and should therefore be locally run, and that various cultural and special needs communities require individualized boutique services that larger consolidated firms may not be able to accommodate.

While the general effort to consolidate the LHCSA marketplace and home care in general was not unexpected, the rather abrupt implementation of these provisions has clearly caught the industry’s major stakeholders off guard.  If the colloquy among the members of the Public Health and Health Planning Committee’s (PHHPC) Establishment and Project Review Committee (EPRC) at its April 12, 2018 meeting is any indicator (click here for the video and transcript), neither the EPRC nor the estimated 350 or so LHCSAs with applications pending before the PHHPC or in the pipeline were aware that these changes were forthcoming.  Indeed, less than three weeks earlier, at a meeting of the EPRC on March 22, 2018, the EPRC approved some 22 LHCSA applications for presentation to the full PHHPC for final approval.  On April 12, however, the EPRC was asked to consider a motion withdrawing that approval and deferring action on those applications, and 12 additional applications, until the DOH had time to consider them in the context of the moratorium.  After some confusion, the motion was withdrawn without comment and the 22 previously approved applications were sent to the full PHHPC, where they were ultimately deferred pending evaluation under then yet-to-be drafted guidelines on exceptions to the moratorium.  There was one new piece of information offered at the meeting – in response to concern that the two-year period of the moratorium seems arbitrary, Deputy Commissioner Sheppard noted the period was “specifically determined as the period of time that the Department would need to develop and promulgate regulations establishing a full need methodology for the approval of LHCSAs, including a determination of public need and financial feasibility.”  It is also clear that DOH intends to use the two-year period to collect data under the Enacted Budget’s new registration and cost reporting provisions, which went into effect to “better understand” the existing LHCSA marketplace and as part of its public need and financial feasibility formula moving forward.

It is worth noting that this is not the first time that a moratorium affecting submitted and future applications has been imposed.  The DOH imposed a moratorium on CHHAs between 1994-2000, as well as a moratorium on LHCSAs between 2008-2010 (as noted).  In 2000, the DOH imposed a moratorium on the processing of all pending nursing home applications which had yet to receive final approval and begin construction in order to study public need in light of perceived oversupply.  The nursing home moratorium was challenged multiple times in State Supreme Court by aggrieved applicants and repeatedly upheld by the Second and Third Departments.  See, e.g., Matter of Urban Strategies v. Novello, 297 A.D.2d 745 (2d Dept. 2002) and Jay Alexander Manor Inc. v. Novello, 285 A.D.2d 951 (3d Dept. 2001).  One interesting distinction between previous moratoria on LHCSAs, CHHAs and nursing homes and the instant moratorium on LHCSAs is that the former were imposed by the DOH under its discretionary enforcement and regulatory authority, whereas the latter was enacted by the Legislature through its inherent power to regulate health and welfare.  Whether the instant moratorium, which will arguably be more difficult to defeat given its origin, will face a court challenge remains to be seen.

Until the expiration of the LHCSA moratorium on March 31, 2020, however, only those applications which fit within one of three exceptions will be processed: (1) the ALP Related Exception; (2) the Change of Ownership Related Exception; and (3) the Serious Need Exception.  In early May, the DOH released guidance documents, as well as new applications and instructions related to these three statutory exceptions.  The statutory language containing the exceptions and the recent guidance provided by DOH are summarized below.

  • ALP Related Exceptions.

Statutory Language:

(a) an application seeking licensure of a licensed home care services agency that is submitted with an application for approval as an assisted living program authorized pursuant to section 461-l of the social services law.

Additional information from DOH Guidance and Revised Application:

  • The ALP application must have been submitted to the Department and an application number issued, that number must be included in the applicant’s submission.
  • Ownership of the LHCSA must be identical to the ownership of the ALP.
  • Approval will be limited to serving the residents of the associated ALP. Therefore, the application may request only the county in which the ALP resides as the county to be served.
  • The application must include an attestation acknowledging that the approval will be limited to serving the residents of the associated ALP.

 

  • Change of Ownership Related Exceptions.

Statutory Language:

(b)  an  application seeking  approval  to  transfer  ownership for an existing licensed home care services agency that has been licensed and operating for a  minimum of  five years for the purpose of consolidating ownership of two or more licensed home care services agencies.

Additional information from DOH Guidance and Revised Application:

  • Only changes in ownership that consolidate two or more LHCSAs may be accepted during the moratorium. Consolidate means reducing the number of LHCSA license numbers, not a reduction in the number of sites operated under a license number.  A LHCSA license number, for this purpose, is the first four digits, before the “L”.  The application must include all sites of the to‐be‐acquired agency.
  • LHCSAs to be acquired must be currently operational and have been in operation at least five years.
  • The application must request approval to acquire all of the sites of the existing agency.
  • The application must include an attestation and statistical report data verifying the seller(s) is/are operational and has/have been for a minimum of five years, which shall include:
    • the number of patients served in each county for which they are approved to serve and the number and types of staff employed, currently and in each of the previous five years.
    • A statement that reads “In accordance with the requirements of 10 NYCRR 765-2.3 (g) {Agency Name} will promptly surrender their Licensed Home Care Services Agency license(s) to the NYS Department of Health when they cease providing home care services.”
    • A statement that that indicates the operator understands that the actual transfers of ownership interest may not occur until after all necessary approvals are acquired from the DOH and the PHHPC
  • If an existing LHCSA is purchasing one or more LHCSAs, the buyer must also currently be operational per 10 NYCRR Section 765‐3(g).  The application must include an attestation and statistical report data verifying the buyer is currently operational, which shall include:
    • the number of patients served in each county for which they are approved to serve and the number and types of staff employed, currently and in each of the previous five years.

Examples of Qualifying Change of Ownership Applications  

  • An existing LHCSA purchases one or more separately licensed existing LHCSAs. Upon approval, the purchased LHCSAs licenses must be surrendered and their sites become additional sites of the purchasing LHCSA.
  • A new corporation (not currently licensed as a LHCSA) purchases two or more existing LHCSAs. One new license is issued, with the purchased LHCSAs licenses being surrendered and their sites becoming sites of the newly licensed LHCSA.

Examples of Non‐Qualifying Changes in Ownership Applications  

  • A new proposed operator replaces the current operator of a LHCSA.
  • A new controlling entity is established at a level above the current operator.
    • During the moratorium, the change or addition of controlling persons above the operator does not qualify under the exception criteria. As such, if the controlling person/entity chooses to submit an affidavit attesting they will refrain from exercising control over the LHCSA (see 10 NYCRR Section 765-1.14(a)(2) for required affidavit language) until the moratorium is lifted and an application can be submitted, processed, and approved, then the corporate transaction may proceed. Within 30 days of the moratorium being lifted, the agency must submit an application for PHHPC approval of the controlling person.
  • A partial change in ownership requiring Public Health and Health Planning Council approval.
    • Transfers of ownership (full or partial) due to the death of an owner, partner, stockholder, member without the consolidation of LHCSA licenses, does not qualify under the exemption criteria. However, in accordance with section 401 of the State Administrative Procedure Act (SAPA), the LHCSA may continue to operate until the Moratorium is lifted and an application may be submitted, unless other sections of regulation or law require otherwise.
  • Serious Concern Exceptions:

Statutory Language:

(c)  an  application  seeking licensure  of  a  home  care  services agency where the applicant demonstrates  to  the  satisfaction  of  the  commissioner  of  health   that submission  of  the application to the public health and health planning council for consideration would  be  appropriate  on  grounds  that  the application addresses a serious concern such as a lack of access to home care services in the geographic area or a lack of adequate and appropriate  care,  language and cultural competence, or special needs services.

Additional information from DOH Guidance and Revised Application:

  • There is a presumption of adequate access if there are two or more LHCSAs already approved in the proposed county.
  • Approved LHCSAs include those that are operational and those approved but not‐yet‐
  • If there are two or more LHCSAs in the requested county:
  • the applicant must articulate the population to be served for which there is a lack of access to licensed home care services;
  • the applicant must submit substantial, data‐driven proof of lack of access to the population (demographics, disposition and referral source for targeted patient population, level of care and visits required, payor mix, etc.);
  • the applicant must provide satisfactory documentation that no existing LHCSA in the county can provide services to the population;
  • if more than one county is requested, the application must include all required material for each county individually;
  • the applicant may request to operate in up to five counties, only.

 

The first round of applications to be processed under this framework occurred at the May 17, 2018 meeting of the PHHPC  (Link to video and agenda).  Those of us looking for additional insight on how the new guidance would be applied by DOH and evaluated by the PHHPC in practice were left wanting, as the entire discussion regarding LHCSAs encompassed less than two minutes of the nearly three-hour meeting.  Notably, the five applications considered and approved at the hearing (as a batch) were all within the ALP Related Exception.  They included:

Elderwood Home Care at Wheatfield

Elderwood Home Care at Williamsville

Western NY Care Services, LLC

Home Care for Generations, LLC

Magnolia Home Care Services

While it may be coincidence, this suggests that DOH and PHHPC have either prioritized LHCSA applications fitting within the ALP Related Exception, or that these types of applications are the simplest to identify and review.

In addition to the guidance on exceptions to the moratorium, DOH has also recently released guidance on the Enacted Budget’s limitations on the number of LHCSAs with which MLTCPs can contract.  As noted in our previous post (here), beginning October 1, 2018, the Commissioner of Health may limit the number of LHCSAs with which an MLTCP may contract, according to a formula tied to (1) MLTCP region, (2) number of MLTCP enrollees,  and (3) timing (the number changes on October 1, 2019).  Exceptions are allowed if necessary to (a) maintain network adequacy, (b) maintain access to special needs services, (c) maintain access to culturally competent services, (d) avoid disruption in services, or (e) accede to an enrollee’s request to continue to receive services from a particular LHCSA employee or employees for no longer than three months.

DOH guidance issued on April 26 to plan administrators (link here), explains the formula that will be used to calculate the number of LHCSAs with which an MLTCP can contract. MLTCPs operating in the City of New York and/or the counties of Nassau, Suffolk, and Westchester may enter into contracts with LHCSAs in such region at a maximum number calculated based upon the following methodology:

  1. As of October 1, 2018, one contract per seventy-five members enrolled in the plan within such region; and
  2. As of October 1, 2019, one contract per one hundred members enrolled in the plan

within such region.

MLTCPs operating in counties other than those in the city of New York and the counties of Nassau, Suffolk, and Westchester may enter into contracts with LHCSAs in such region at a maximum number calculated based upon the following methodology:

  1. As of October 1, 2018, one contract per forty-five members enrolled in the plan within such region; and
  2. As of October 1, 2019, one contract per sixty members enrolled in the plan within such region.

Additionally, the DOH confirmed that in instances where limits on contracts may result in the enrollee’s care being transferred from one LHCSA to another, and in the event the enrollee wants to continue to be cared for by the same worker(s), the MLTC plan may contract with the enrollee’s current LHCSA for the purpose of continuing the enrollee’s care by that worker(s). These types of contracts shall not count towards the limits mentioned above for a period of three months.

The next big revelation expected from the DOH vis a vis LHCSA restrictions are the parameters by which “financial feasibility” and “public need” will be determined for purposes of issuing certificates of need once the moratorium is over.  As those regulations become available, we will provide a further update.  If you have questions about whether your project may satisfy the requirements of one of the above exception, or you would like to be part of the conversation with the DOH as the framework for the new CON methodology is developed, contact Farrell Fritz’s Regulatory & Government Relations Practice Group at 518.313.1450 or NYSRGR@FarrellFritz.com.

New York State healthcare policymakers have always had a lukewarm relationship with for-profit providers.  While in some sectors the for-profit provision of care is common (e.g., nursing homes and home care), in others, there are few to no for-profit providers (e.g., hospitals and primary care clinics).  In fact, some in the industry are under the impression that in some areas of healthcare the State has actually prohibited for-profit providers (for the most part it hasn’t, although the scope of state regulation can sometimes create that impression).  At the same time, there is more and more public scrutiny of not-for-profit providers, and as not-for-profit mega-systems continue to grow in New York and elsewhere it is sometimes difficult to distinguish them from for-profit enterprises in many ways.

Certainly, both for-profit and not-for-profit providers can be driven by a real sense of mission, and even the most mission-driven not-for-profit needs to be conscious of the bottom line (the oft-heard refrain being, “no margin, no mission”).  Thus, patients and potential employees in search of a mission-focused entity need to scrutinize both types of providers in some detail when looking for care or employment.  Similarly, new providers selecting the model they want to use need to take into account the unique characteristics of both models.

There is another model which might afford providers, patients and employees exactly the right mix of mission focus and profit-driven efficiency they are looking for.  While it has not received much attention in New York State healthcare to date, the worker cooperative model, in which the employees are the owners, provides an interesting alternative.  Article 5-A of the New York Cooperative Corporation Law (“CCL”) was enacted in 1985 to promote the creation of worker cooperatives and provide a means by which businesses may be democratically controlled and operated by their own workers.  The legislature expected that cooperative ownership would result in increased economic benefits to the worker owners, as well as the creation of new jobs (CCL § 80).

New York permits the formation of for-profit worker cooperatives to conduct any lawful business.  The model has been used in a variety of industries, including child care, cleaning, consulting, education, media, and restaurants (an interesting list can be found here), and it has been actively supported by the administration of New York City Mayor Bill DiBlasio (see here).  However, it is uncommon in the healthcare space – while the model was pioneered by a home health care agency based in the Bronx with more than 2,000 worker owners that says that it is the largest worker cooperative in the nation, it is not in wide use.  Nonetheless, under the right circumstances, it offers some intriguing possibilities.

Any corporation organized under the New York Business Corporation Law (BCL) may elect to become a worker cooperative by so stating in its certificate of incorporation or amending it (CCL § 82).  The election may be revoked by an amendment approved by two-thirds of the cooperative’s members (CCL § 86).  Curiously, a worker cooperative may not be classified as a non-profit or not-for-profit corporation (CCL § 83); thus, a worker cooperative is inherently a for-profit enterprise.

Members are individuals who are employed by the cooperative and own voting stock in the form of one membership share each (CCL §§ 81, 88).  All full- and part-time employees are offered membership after completing a probationary period.  The cooperative issues membership shares for a fee, the amount and payment terms of which are set in the by-laws (CCL § 88).  The certificate of incorporation or by-laws establish the qualifications for acceptance and termination of members (CCL § 88).  Only membership shares have voting power, except that non-member stockholders (apparently stockholders who are not workers and who owned stock at the time of the corporation’s election to become a cooperative) may vote on amendments to the certificate of incorporation that would adversely affect their rights as stockholders (CCL §§ 88, 89).

Members receive wages and profit distributions at the end of the calendar or fiscal year of the cooperative.  Profits are allocated to members on the basis of their “patronage”, a defined term meaning the amount of work performed by a member measured in accordance with the certificate of incorporation and by-laws.  Profits are apportioned based on the ratio of each member’s patronage to the total patronage of all members during the applicable period of time.  Profit distributions may be in cash, credits, written notices of allocation or capital stock issued by the cooperative (CCL § 90).  The cooperative may establish a system of internal capital accounts to reflect the book value and determine the redemption price of membership shares (CCL § 92).

The majority of the board of directors of the worker cooperative must be members, although non-members may serve on the board.  Non-members may serve as president, first vice president and other officers.  The by-laws contain the governance provisions for the worker cooperative, including election, terms, classification and removal of directors and officers consistent with the CCL or the BCL (CCL § 91).

A host of unique legal and practical issues are created by the model in general, and by its use in healthcare, in particular.  For instance, how is the confluence of employment and ownership handled for purposes of licensure and certificate of need?  Thus far, the Department of Health has been willing to limit character and competence review to board members only, but that may change if the model were to proliferate.  Similarly, the termination of a sufficiently large group of employees would presumably trigger certificate of need review if those employees represented 10% or more of the ownership of the provider.  In regard to practical concerns, a worker cooperative needs to be very careful in choosing the right leadership – it is a rare corporate executive who possesses the necessary business acumen, but is still comfortable in a setting where his/her employees are, in a very real sense, his/her bosses.

In spite of these challenges, the worker cooperative model may be attractive in settings with a union workforce, where it would represent the next step in the empowerment of workers.  Or, it might serve as an alternative to unionization for a non-unionized workforce looking to become more active.  But either way, it changes the traditional dynamics of the employer/employee relationship – and requires careful consideration before implementation.

If you have any questions about the worker compensation model in the context of healthcare, please do not hesitate to contact Marty Bunin at 646-329-1982 or mbunin@farrellfritz.com or Mark Ustin at 518-313-1403 or mustin@farrellfritz.com.

EDNY Judge Brian Cogan recently addressed the False Claims Act public disclosure bar and original source rule in a decision based on a qui tam Relator’s claims that defendants marketed a test to measure the levels of a certain hormone knowing that the test was flawed. In United States ex rel. Patriarca v. Siemens Healthcare Diagnostics, Inc., Relator alleged that Medicare suffered significant losses because medical professionals ordered treatments based on the test’s inaccurate results.

The Background of PTH Testing

Judge Cogen started his opinion with a lengthy discussion of the medicine that led to Relator’s complaint. Patients with chronic kidney disease may have high levels of parathyroid hormone (“PTH”), which can lead to bone disease. Vitamin D analogs are used to treat high levels of PTH, but overdosing of these analogs can lead to serious health consequences. Accurate diagnosis of PTH levels is therefore critical.

In 1987, Nichols Diagnostics produced a PTH test, the “IRMA Test,” that was performed manually and required a several-hour long incubation period. The test was approved by the FDA and became the industry standard.

The Siemens Test, used to measure PTH levels, was a Second Generation PTH test, measuring the whole PTH molecule and large fragments of the molecule. The Siemens Test was purportedly aligned with the IRMA test. Third Generation tests report only the level of whole PTH molecules and omit the fragments, so Second Generation tests report PTH levels roughly twice that of Third Generation tests.

Later versions of the Nichols Tests “drifted” upward, consistently overstating patient’s PTH levels, leading to medically unnecessary prescriptions and surgeries. After a qui tam action relating to the tests’ inaccuracy and a substantial settlement with the government, Nichols withdrew its tests from the market.

In his qui tam complaint, filed in 2011, Relator alleged the Siemens Test had materially “drifted” from the IRMA test. Relator based his allegation primarily on separate parallel experiments he conducted. Relator compared the Siemens Test to the PTH test developed by his own company, the Scantibodies Test, a Third Generation test.

Public Disclosures of PTH Testing Issues

In the 2006 Souberbielle Study, European scientists studied various PTH tests, including the Siemens Test, compared them to the IRMA Test, and published their findings. The study concluded, among other things, that the values yielded by Second Generation tests varied widely. The study also determined that clinicians should monitor a patient’s PTH levels over a series of tests, as opposed to making clinical decisions on the basis of a single finding. The study also showed a significant differential between the Siemens and Scantibodies Tests.

An article published in 2007 noted that: (1) industry guidelines were based on the IRMA Test; (2) the absolute results obtained from various PTH tests varied from those of the IRMA Test; and (3) the 2006 Souberbielle Study documented this variability. Based on these observations, the author recommended that nephrologists use a single laboratory for results and look at trends in PTH as opposed to single values.

A 2009 study published by the relator who brought the successful Nichols qui tam action disclosed the results of parallel testing of various PTH tests. The study concluded that the Siemens Test generated results that were on average 36% higher than the Scantibodies Test. This was nearly the same differential as that disclosed in the 2006 Souberbielle Study.

Relator argued in his qui tam complaint that the upward drift he observed in the Siemens Test caused physicians to prescribe hundreds of millions of dollars of medically unnecessary Vitamin D, and to conduct untold numbers of medically unnecessary parathyroidectomies. Relator also alleged that Medicare paid for a portion of the cost of the Siemens Test, for prescribed Vitamin D and its analogs, and for surgeries related to elevated PTH levels.

The Public Disclosure Bar

Judge Cogan first addressed the FCA’s public disclosure bar, which bars claims for conduct that has already been made public. The bar discourages “opportunistic plaintiffs” with no significant information of their own who may bring “parasitic lawsuits.”

Prior to the 2010 FCA amendments, the public disclosure bar applied where a qui tam action was “based upon the public disclosure of allegations or transactions.” The Second Circuit and the majority of circuits had held that a relator’s claim was “based upon” the public disclosure if the allegations in the complaint were “substantially similar” to the publicly disclosed information. The 2010 FCA amendment generally followed this majority approach and identified the inquiry as whether “substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed.”

The Second Circuit has applied a broad view of the public disclosure bar. Under that standard, earlier disclosures will bar a relator’s claim if they were sufficient to set the government squarely upon the trail of the alleged fraud. The bar is triggered if material elements of the fraud have been publicly disclosed, and does not require that the alleged fraud, itself, have been disclosed. Also, merely providing more specific details about what happened or translating technical information into digestible form does not negate substantial similarity. Public disclosures under the FCA include the news media and disclosures in scientific and scholarly journals.

After summarizing this caselaw, the Court held that before the Relator filed his complaint: (1) the variation between PTH tests was widely known; (2) physicians were advised to adjust their course of treatment accordingly; (3) Second Generation tests, such as the Siemens Test, were known to yield higher absolute results than Third Generation tests, such as the Scantibodies Test; and 4) the average difference between the Siemens and Scantibodies tests had been published in several studies. As a result, the public disclosure bar applied to Relator’s claims.

The Original Source Rule

Having decided that the public disclosure bar applied, the Court examined whether Relator qualified as an “original source” despite the earlier public disclosures. The FCA definition of “original source” was amended in 2010.

Under the pre-amendment version of the FCA, an original source was “an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information.” Under the 2010 version, an “original source” is an individual who “has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section.”

Judge Cogan outlined various approaches Courts have taken in deciding whether a Relator is an original source: the new information “materially adds to what has already been revealed through public disclosures” (First Circuit); the Relator’s “key facts” are not “already thoroughly revealed” (Eighth Circuit); Relator’s information must “add value” (D.C. Circuit); Relator must bring “more than expertise or a novel analysis to the table” (S.D.N.Y.).

The Court determined that Relator was not an original source. First, over the course of years, the Siemens and Scantibodies tests had been repeatedly compared to each other in a number of published studies. Second, Relator’s findings did not materially depart from earlier ones and were not sufficiently or qualitatively different from the publicly disclosed information. The Court dismissed Relator’s complaint.

The last several years have brought increasing numbers of qui tam actions brought by Relators who are aware of the potentially significant recoveries those actions can bring. The public disclosure bar and the original source rule provide qui tam defendants with arguments to fend off these cases if they are brought by opportunistic relators who are seeking to trade on public information.

As we have discussed in an earlier blog post, the federal administrative agencies have been placing greater emphasis on being more transparent and promoting “interoperability”.

As such, on April 24, 2018, the Centers for Medicare & Medicaid Services (“CMS”) proposed changes to its Inpatient Prospective Payment System and Long-Term Care Hospital Prospective Payment System to promote better access to patient electronic health information and increase pricing transparency. For example, while hospitals are already required to make pricing information publicly available, the proposed rules impose more stringent guidelines, including a requirement that hospitals post pricing information on the internet. Seema Verma, the CMS Administrator, stated “[t]oday’s proposed rule demonstrates our commitment to patient access to high quality care while removing outdated and redundant regulations on providers. We envision a system that rewards value over volume and where patients reap the benefits through more choices and better outcomes.”

Critical to the proposed changes is a complete overhaul of the Medicare and Medicaid Electronic Health Records Incentive Programs, which is commonly known as the “Meaningful Use” program, by executing on the following core principles:

  1. Having a program that is more flexible and less burdensome;
  2. Placing greater emphasis and encouraging the exchange of health information between providers and patients; and
  3. Incentivizing providers to streamline the process for patients to be able to access their medical records electronically.

A rebranding would not be complete without, of course, a name change; in fact, CMS has proposed changing the “Meaningful Use” program to “Promoting Interoperability”. Interoperability, which means “the ability of computer systems or software to exchange and make use of information,” has been missing from the healthcare industry as technology has been advancing at an unprecedented rate. In a system where healthcare is central to our lives, it appears the final goal is to have a system where patients could have access to a virtual portal where all of their health information from various providers would be available, thus promoting patient-centered care where providers have greater insight into their patient’s medical history—invariably resulting in more thoughtful care. It is refreshing to see government, which is commonly known to always be a step behind private industry, taking the initiative to modernize its infrastructure. At this point in history a patient should be able to obtain his health information on a whim via his mobile device or even see a new physician while not having to deal with the administrative nightmares associated therewith.

While it is unclear if the final goal of “interoperability” will be reached, CMS’ proposed changes are definitely an encouraging step forward.

For more information, please see the CMS fact sheet.

 

 

With so much happening in the cannabis industry we thought we’d take this time to highlight some of the industry’s most recent happenings.

  • Increasing Support for Decriminalization of Marijuana (Federal): On April 20, 2018, Senate Minority Leader Chuck Schumer of New York said he’ll introduce a bill taking marijuana off the federal list of controlled substances — in effect decriminalizing its use at the federal level. The bill is expected to be similar to the one proposed by Senator Cory Booker (D-NJ) in 2017. In a tweet to his Twitter followers Chuck Schumer stated: “The time has come to decriminalize marijuana. My thinking – as well as the general population’s views – on the issue has evolved, and so I believe there’s no better time than the present to get this done.”

FDA Approves Marijuana-Derived Drug (Federal): On April 19, 2018, advisers for the Food and Drug Administration unanimously supported the first-ever government approval of a medication made from cannabis. The drug, Epidiolex, is made from a purified ingredient in cannabis called cannabidiol, or CBD. It is intended to treat severe seizures in children caused by rare forms of epilepsy called Lennox-Gastaut and Dravet syndromes.

Cole Memorandum Update (Federal): On January 5, 2018, we discussed the rescission of the Cole Memorandum by the federal government. The Cole Memorandum outlined the federal government’s general policy prohibiting federal prosecutors from pursuing cases against people following marijuana laws in states that have legalized the drug. The rescission of the Cole Memorandum created much concern and confusion at the state level. In a change of direction, President Donald Trump stated on April 13, 2018, that he will support legislation protecting the marijuana industry in states that have legalized the drug. Republican Sen. Cory Gardner (D-CO) said that President Trump made the assurance to him during a conversation. “President Trump assured me that he will support a federalism-based legislative solution to fix this states’ rights issue once and for all,” Gardener said in a statement.

Marijuana Key Issue in Governorship Race (New York): In February 2018, we discussed Governor Cuomo’s statement during his annual budget address that New York should undertake a study of the possible impacts of legalizing recreational marijuana. The issue of legalization recreational marijuana at a state level is becoming a key issue for his campaign, especially in light of Cynthia Nixon’s recent comments. Ms. Nixon, who is challenging Governor Cuomo in a Democratic primary for the governorship, supports the decriminalization of marijuana. “I believe it’s time for New York to follow the lead of eight other states and D.C. and legalize the recreational use of marijuana,” says Ms. Nixon in a video she posted to Twitter.

New Medical Marijuana Dispensaries Poised to Open (New York): In Medical Marijuana 102 we reviewed New York medical marijuana dispensaries and the issuance by the NYS Department of Health (“DOH”) of licenses to five new companies in addition to the original five companies chosen by the DOH to manufacture and sell medical cannabis. The five new companies will be opening up a total of six New York City dispensaries, one of which will be in Manhattan, bringing the total number of medical marijuana dispensaries to nine.

Number of Certified Patients and Practitioners Continues to Rise (New York): In Medical Marijuana 103, we noted that 1,184 practitioners had registered with the DOH for the purpose of certifying patients for medical marijuana use and that 28,077 patients had been certified for such use. That number has grown exponentially since then – the DOH reports that as of April 17, 2018, there are now over 1,500 registered practitioners and over 50,000 certified patients.

New York’s FY 2019 Executive Budget includes new legislation aimed at combatting sexual harassment in the workplace.  According to the Governor, the legislation purports to be the “most comprehensive anti-sexual harassment protections in the nation….”  Here are the highlights:

  • Effective Immediately:  The new legislation prohibits sexual harassment of “non-employees in the employer’s workplace,” including “contractors, subcontractors, vendors, consultants or other persons providing services pursuant to a contract in the workplace or who is an employee of such contractor, subcontractor, vendor, consultant or other person providing services pursuant to a contract in the workplace. July 11, 2018:  Any settlement, agreement or other resolution directly relating to sexual harassment claims may not include language that prevents the disclosure of the underlying facts unless the plaintiff (1) has been given 21 days to consider the confidentiality/non-disclosure provision and 7 days to revoke the agreement after signing.
  • Effective July 11, 2018:  Mandatory arbitration agreements with respect to sexual harassment claims will no longer be enforceable and shall be deemed null and void.  Worth noting, mandatory arbitration agreements that include sexual harassment disputes remain enforceable with respect to all other claims.
  • Effective October 9, 2018:  Employers must establish a sexual harassment prevention policy and conduct annual interactive sexual harassment training.  The Department of Labor has been charged with consulting with the Division of Human Rights and producing a model training program.  The new rules also mandate written sexual harassment policies that include a standard complaint form, examples of prohibited conduct, and a procedure for timely investigations.

Going Forward . . . Watch for information on the Department of Labor’s model sexual harassment prevention policy and training program as well as Farrell Fritz’s Master Class for those responsible for sexual harassment training initiatives!

If you have questions concerning the development or implementation of these new employer obligations, contact Domenique Camacho Moran, Farrell Fritz’s Labor and Employment Practice Group at 516.227.0626 or dmoran@FarrellFritz.com.

 

The Broadest Impact:  2018-19 NYS Managed Care Budget Highlights

This, the last of our posts on the 2018-19 New York State Health Budget (the “Enacted Budget”), focuses on an area of healthcare that has perhaps the broadest impact of the sector as a whole — managed care.  A prior post in the series (here) discussed the central role that hospitals have traditionally played in healthcare reform efforts, but even they have less influence (at least, as a matter of policy) than managed care, which controls the funding that fuels virtually every other part of the healthcare system.  For purposes of this article, “managed care” really means Medicaid managed care in all its various guises, since that is the funding most directly controlled by the State – while the various forms of Medicare managed care (Medicare Advantage, Medicare Part D, etc.) and commercial managed care are important, and even critical, to the healthcare system in New York, they are generally not a focus of State budgeting (at least directly).  So this post will focus on the various forms of Medicaid managed care, including managed long term care (MLTC) that provide long term care services, fiscal intermediaries for consumer-directed consumer assistance, mainstream managed care plans that provide acute and primary care services, health homes that coordinate care for people with chronic illnesses, and others.  Note that one species of Medicaid managed care, Development Disabilities Individual Support and Care Coordination Organizations, are not addressed in this post, but were addressed in a prior one (here).

Just a quick word before examining the key provisions impacting managed care:  this series has not pretended to be a comprehensive analysis of all the healthcare provisions in the 2018-19 New York State Health Budget.  It has merely provided a survey of the highlights of certain key areas in the healthcare space.  Inevitably, some areas have not been directly addressed; particular ones that come to mind include primary care, professional practice, life science research and others.  In part, this was due to the lack of significant reforms in those areas; however, it was also true that the sectors we did address often included references to those other sectors.  Nowhere is this truer than in regard to managed care, which, as noted, touches on every other area of healthcare.  Key provisions in the managed care space are summarized below.

Managed Long Term Care & Fiscal Intermediaries

Managed Long Term Care (MLTC) Eligibility.  Since 2012, adults have been eligible for MLTC enrollment if they require community-based care for more than 120 days.  The Enacted Budget provides that, effective April 1, such individuals are only eligible if that 120 days is a continuous, not aggregate, period.

Changing MLTC Plans.  Effective October 1, 2018, the Enacted Budget allows MLTC enrollees to switch plans without cause anytime within 90 days of notification or the effective date of enrollment (whichever is later), but thereafter, the Department of Health (DOH) is authorized to prohibit changing plans more than once every 12 months, except for good cause.  “Good cause” includes poor quality of care, lack of access to covered services, and lack of access to providers “experienced in dealing with the enrollee’s care needs,” and may include other categories identified by the Commissioner of Health.

Nursing Home Resident Eligibility.  Effective April 1, 2018, the Enacted Budget provides that individuals who are permanently placed in a nursing home for a consecutive period of three months or more will not be eligible for MLTC, but instead will receive services on a fee-for-service basis.  In a side letter, DOH has promised to provide guidance highlighting information about an individual’s rights as a nursing home resident, nursing home and MLTC plan responsibilities, and supports for individuals who wish to return to the community.

Plan Mergers.  Effective April 1, 2018, surviving plans in a plan merger, acquisition or similar arrangement must submit a report to DOH within 12 months providing information about the enrollees transferred, a summary of which DOH will make available to the public.

Licensed Home Care Services Agency (LHCSA) Contracting.  As discussed in a prior post (here), beginning October 1, 2018, the Commissioner of Health may limit the number of LHCSAs with which an MLTC plan may contract, according to a formula tied to region, number of enrollees and timing (before or after October 1, 2019), with some exceptions.  In a side letter, DOH has indicated that it will issue guidance to assist both MLTC programs and LHCSAs in minimizing the disruption of care for Medicaid members and the impacted workforce from this initiative.

Fiscal Intermediary Advertising.  The Enacted Budget includes provisions that limit the advertising practices of fiscal intermediaries under the Consumer Directed Personal Assistance Program (CDPAP).  CDPAP provides chronically ill and/or physically disabled Medicaid enrollees receiving home care services with more flexibility and freedom of choice to obtain such services.  Fiscal intermediaries help consumers facilitate their role as employers by: providing wage and benefit processing for consumer directed personal assistants; processing income tax and other required wage withholdings; complying with workers’ compensation, disability and unemployment requirements; maintaining personnel records; ensuring health status of assistants prior to service delivery; maintaining records of service authorizations or reauthorizations; and monitoring the consumer’s/designated representative’s ability to fulfill the consumer’s responsibilities under the program (in this regard, they are not truly managed care, although there are some similarities).  The Enacted Budget prohibits false or misleading advertisements by fiscal intermediaries.  Furthermore, fiscal intermediaries are now required to submit proposed advertisements to DOH for review prior to distribution, and are not permitted to disseminate advisements without DOH approval.  The DOH is required to render its decision on proposed advertisements within 30 days.  In the event DOH has determined the fiscal intermediary has disseminated a false or misleading advertisement, or if an advertisement has been distributed without DOH approval, the fiscal intermediary has 30 days to discontinue use and/or remove such advertisement.  If DOH determines a fiscal intermediary has distributed two or more advertisements that are false or misleading or not previously approved by DOH, the entity will be prohibited from providing fiscal intermediary services and its authorization will be revoked, suspended or limited.  Additionally, DOH will maintain a list of these entities and will make this list available to local departments of social service, health maintenance organizations, accountable care organizations and performing provider systems.  These limitations apply to marketing contracts entered into after April 1, 2018.

Fiscal Intermediary Reporting.  The Enacted Budget allows the Commissioner of Health to require fiscal intermediaries to provide additional information regarding the direct care and administrative costs of personal assistance services.  DOH may determine the type and amount of information that will be required, as well as the regularity and design of the reports.  These cost reports must be certified by the owner, administrator, chief administrative officer or public official responsible for the operation of the provider.  The DOH must provide at least 90 days’ notice of this report deadline.  If DOH determines the cost report is not complete or inaccurate, it must notify the provider in writing and specify the correction needed or information required.  The provider will have 30 days to respond to DOH’s request for supplementary information.  In the event a provider cannot meet this filing deadline, DOH may provide an additional 30 day extension if the provider sends written notice prior to the report due date which details acceptable reasons beyond their control which justify their failure to meet the filing deadline.

Mainstream Managed Care and Health Homes

Quarterly Meetings on Medicaid Managed Care Rates.  In a side letter, the Executive has committed to providing quarterly updates to the Legislature regarding Medicaid managed care rates, including the actuarial memorandum which, pursuant to statute, is provided to managed care organizations 30 days in advance of submission to the federal Centers for Medicare and Medicaid Services (CMS).  This is intended to increase the transparency of Medicaid managed care rates.

Separate Rate Cells or Risk Adjustments for Specific Populations.  In a side letter, DOH has committed to exploring separate rate cells or risk adjustments for the nursing home, high cost/high need home and personal care, and Health and Recovery Plan (HARP) populations.  DOH will re-engage CMS regarding this reimbursement methodology with the assistance of health care industry stakeholders impacted by these changes (e.g. advocates, providers and managed care organizations).  This will hopefully lead to a fairer rate structure for plans serving higher-risk patients.

Health Homes Targets.  The Enacted Budget requires the Commissioner of Health to establish reasonable targets for health home participation by enrollees of special needs plans and other high risk enrollees of managed care plans to encourage plans and health homes to work collaboratively to achieve such targets.  The DOH was also empowered to assess penalties for failure to meet such participation targets where they believe such failure is due to absence of good faith and reasonable efforts.

Health Home Criminal History Checks.  The Enacted Budget requires criminal history checks for employees and subcontractors of health homes and any entity that provides community-based services to individuals with developmental disabilities or to individuals under 21 years old.

Health Home Reporting.  Similar to fiscal intermediaries (above) and LHCSAs (here), the Enacted Budget allows the Commissioner of Health to require health homes to report on the costs incurred to deliver health care services to Medicaid beneficiaries.

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So that concludes our series on the 2018-19 New York State Healthcare Budget.  If you have any questions or would like additional information on any of the above referenced issues, or any of the other items covered (or not covered) in the series, please do not hesitate to contact Farrell Fritz’s Regulatory & Government Relations Practice Group at 518.313.1450 or NYSRGR@FarrellFritz.com.

 

 

Small Issues with Big Impacts:  2018-19 NYS Hospital Budget Highlights

There are probably few in the healthcare community in New York State who would disagree that, among provider types, hospitals have typically received the most attention from policymakers.  The hospitals themselves might argue the point, or point out that having the attention of policymakers is not always a good thing (e.g., the attention on pharmaceutical manufacturers in this year’s budget, discussed here).  Payors might argue that they are more frequently the focus of policy efforts.  And of course, patient advocates would be quick to point out that the real focus of healthcare policy should be on patients (a principle with which no one disagrees, at least in theory).  But it is hard to argue against the contention that, more than any other provider, hospitals have been the focus of policy reform efforts since there was such a thing as healthcare policy.

With that in mind, one of the more interesting aspects of the 2018-19 New York State Enacted Budget is the relative lack of hospital-focused reform efforts.  To be sure, hospitals were, as always, a significant part of the debate, and several hospital reform initiatives were discussed that did not make it into the final budget agreement.  And, of course, the hospitals were a major force behind, and are expected to be major beneficiaries of, two huge funding pools established in the final agreement:  the third iteration of the Statewide Health Care Facility Transformation Program (discussed here) and the Health Care Transformation Fund being funded in connection with the acquisition of a New York-based payor (discussed here).  But beyond that, there are no huge system-wide reforms in the Enacted Budget that directly impact hospitals.

However, there are two relatively small items that are likely to have significant long-term impacts:  a series of provisions related to indigent care funding, and a new requirement regarding sexual assault kits.  Both are discussed below.

Indigent Care Funding:  DSH and ICP

2018 began with a great deal of uncertainty regarding the fate of New York’s safety net hospitals.  This uncertainty was fueled in part by wariness over potential cuts to Medicaid Disproportionate Share Hospital (DSH) subsidies at the federal level, as well as sustained pressure from advocacy groups demanding changes in the state’s Indigent Care Pool (ICP) reimbursement methodology, which opponents claim inequitably favors large financially stable providers serving predominantly insured patients over hospitals that provide the greatest amount of charitable care to the neediest populations.  Thanks in part to a last-minute decision by the Federal Government not to cut DSH payments this year, the Enacted Budget largely maintains the status quo with respect to DSH payments and the ICP methodology – however, the Department of Health has agreed in a side letter with Senate Health Committee leadership to convene a working group on DSH reform.  The Enacted Budget also provides $100 million dollars in enhanced Medicaid payments to a specific subset of safety net hospitals.

Critics claim that the current ICP reimbursement methodology, which reimburses hospitals for charitable health spending through a combination of state surcharges on health insurance and a portion of federally funded Medicaid DSH dollars, has consistently failed to adequately reimburse the institutions which actually provide the most free care to the poorest populations.  Part of the reason for this imbalance is the formula used to calculate ICP distributions.  The ICP, and its prior iteration, the Hospital Bad Debt and Charity Care Pool, traditionally allowed hospitals to seek reimbursement for both “charity care” (free medical services provided to the poor) and “bad debt” (including unpaid copayments and deductibles of commercially insured patients).   Challengers of the current system claim that this results in some of the largest reimbursement payments going to the least charitable hospitals.

In 2013, and in response to provisions in the federal Affordable Care Act penalizing states that allowed DSH dollars to be used for the reimbursement of bad debt, the Legislature amended the ICP’s reimbursement formula to a “needs based calculation.”  However, the 2013 amendment also included a “transition adjustment”, which severely limited the amount each hospital’s grant could be increased or decreased from its pre-2013 levels – in its current version payments may not decrease by more than 2.5% year over year.   As noted in a September 2017 Report by the Empire Center, the transition adjustment has stymied the intended redistributive effect of the needs based formula, and “[t]here [remains] a negative correlation between the overall poverty of a hospital’s patients and the relative size of its indigent care grant.”

The Enacted Budget does not alter the current ICP or DSH frameworks, but rather extends the existing framework through March 31, 2020, and maintains previous funding rates through 2019 of: (a) $139,400,000 as Medicaid DSH payments to major public general hospitals; and, (b) $994,900,000 as Medicaid DSH payments to eligible general hospitals other than major public general hospitals.  Additionally, the Enacted Budget increases the cap on reductions in ICP payments for the calendar year beginning January 1, 2019 from the prior rate of 15% to 17.5%.  In a side letter agreement with Senate Health Committee Leaders, the Department of Health has agreed to establish a temporary workgroup on hospital indigent care methodology which will make recommendations regarding DSH and ICP funding.  The workgroup will convene no later than June 1, 2018 and create a report on its findings no later than December 1, 2018.

While the Enacted Budget does not tackle the larger issues plaguing the ICP methodology, it does provide for $100 million in enhanced Medicaid rate payments – which are administered outside of the ICP and DSH – to a newly-designated class of Enhanced Safety Net Hospitals (“ESNH”).  A hospital will qualify as ESNH if it falls into any of the following categories:

  1. It serves a high percentage of Medicaid and uninsured patients (specifically, in any of the last three years: (a) not less than 50% of the patients treated receive Medicaid or are medically uninsured; (b) not less than 40% of its inpatient discharges are covered by Medicaid; (c) 25% or less of its discharged patients are commercially insured; (d) not less than 3% of the patients it provides services to are attributed to the care of uninsured patients; and, (e) it provides care to uninsured patients in its emergency room, hospital based clinics and community based clinics including the provision of important community services such as dental care and prenatal care).
  2. It is a public hospital (operated by a county, municipality, public benefit corporation or the State University of New York).
  3. It is a federally-designated Critical Access Hospital (CAH).
  4. It is a federally-designated Sole Community Hospital (SCH).

Payments made under the ESNH program may be added to rates of payment or made as aggregate payments to eligible general hospitals.  The 2018-19 Enacted Budget appropriated $50 million under the ESNH program for high Medicaid/uninsured and public hospitals, and another $50 million for CAHs and SCHs.

It remains to be seen how the current ICP framework will hold up in the event that Federal DSH payments are cut at the federal level, whether the $100 million ESNH program will provide sufficient funds to shore up the state’s most vulnerable facilities, and what the indigent care workgroup will recommend for a more permanent solution.  But these various elements could ultimately result in a fundamental change in the way indigent care is reimbursed in New York State

Sexual Assault Kits

The Enacted Budget includes significant amendments surrounding the responsibilities of hospitals with respect to the collection and storage of sexual assault evidence.  Most significantly, beginning April 1, 2018, hospitals are responsible for ensuring that sexual offense evidence is kept locked and secure – refrigerated where necessary – until April 1, 2021.  After April 1, 2021 (or earlier if deemed feasible by the Director of the Budget), the evidence will be turned over to a state appointed custodian.  The state appointed custodian will be responsible for storing the evidence until twenty years from the date of its collection. The new provisions also spell out specific chain of custody requirements (marking and identification of evidence). Hospitals will have the option of entering into third-party contracts for the storage of sexual assault evidence off site between now and the appointment of a state custodian.  After April 2, 2021, new sexual assault evidence must be transferred to the state appointed custodian within ten days of collection.

The Enacted Budget further mandates that hospitals are responsible for ensuring sexual assault survivors are not billed for sexual assault forensic exams and are notified orally and in writing of the option to decline to provide private health insurance information and have the office of victim services reimburse the hospital for the exam. Nonetheless, a sexual assault survivor may voluntarily assign any private insurance benefits to the hospital, in which case the hospital may not charge the office of victim services for the exam, provided, however, that such health insurance coverage shall not be subject to annual deductibles or coinsurance or balance billing by the hospital.  Additional provisions in the Health Insurance Law clarify that such treatments shall not be subject to annual deductibles or coinsurance.

Alone, these changes in the manner in which hospitals handle and are paid for work with sexual assault victims do not seem to have the same kind of systemic impact as changes in the way indigent care is funded.  However, they represent the latest addition to the panoply of standards governing hospital record-keeping – and in an area that can have extremely significant consequences if a hospital fails to meet the applicable standard.  It is not hard to envision litigation resulting from the mishandling of evidence under the new statute, and the agreed upon need for a more permanent solution in 2021 promises additional regulation in this space in the future.

So in short, while both reforms are relatively small in the short term, they may have significant impacts in the long term.  Hospitals are faced with the choice of waiting to see what those impacts might be, working to adjust operations to anticipate those impacts, or actively engaging with the State to try to affect the outcome.  If you have any questions concerning either of those issues, or are interested in engaging with the State to impact them, please do not hesitate to contact Farrell Fritz’s Regulatory & Government Relations Practice Group at 518.313.1450 or NYSRGR@FarrellFritz.com.

 

 

A Renewed Focus: 2018-19 NYS Intellectual and Developmental Disabilities Budget Highlights

Since the beginning of the administration of Governor Andrew Cuomo, there has been a strong emphasis on reform of the acute, primary, and long term care systems, and, particularly with the recent focus on the opioid crisis, that attention has extended to the behavioral care system, as well.  In contrast, reforms in the developmental disabilities system have been slower in coming, attributable to a variety of factors, including historical issues surrounding service mix and reimbursement, and legitimate concerns about client safety and quality of life. In some ways, the developmental disabilities provisions in the 2018-19 Enacted Budget represent a return of focus on the developmental disabilities sector, with several provisions concentrating on how larger reform efforts – including the movement toward managed care, health homes, and telehealth – intersect with the developmental disabilities community. Highlights of key provisions follow.

Managed Care. The Enacted Budget includes language updating existing provisions related to the movement of developmental disabilities clients and services into managed care. First, it expands the list of individuals who may be required to enroll in managed care and revises provisions regarding eligibility to include individuals with developmental or physical disabilities who receive services via a federal 1115 waiver, and authorizes the Commissioner of Health, in consultation with the Commissioner of Developmental Disabilities, to submit an application for such waiver. The Enacted Budget also extends authority of the Office for People with Developmental Disabilities (OPWDD) to require enrollment in managed care from 2019 to 2023, and makes technical corrections to that authority. The OPWDD Commissioner will also assess the quality, outcomes, experience and satisfaction of managed care for individuals with developmental disabilities, and report to the Legislature by December 31, 2022.

Health Homes. The Enacted Budget amends the Public Health Law to require criminal history checks for employees and subcontractors of health homes and any entity that provides community based services to individuals with developmental disabilities or to individuals under 21 years old.

Telehealth. The Enacted Budget amends the Public Health Law to allow the use of telehealth by certified and non-certified day or residential health care facilities operated by OPWDD, residential health care facilities serving special needs populations, credentialed alcoholism and substance abuse counselors, and early intervention providers. Further, the Commissioner of the Department of Health, in consultation with the Commissioners of Office of Mental Health, OPWDD and the Office of Alcoholism and Substance Abuse Services may identify other providers that should be permitted to provide telehealth services. Additionally, DOH, OMH, OPWDD and OASAS will coordinate on a single guidance document that will identify the discrepancies in regulations and policies by state agencies, and assist consumers, providers and health plans to better understand and facilitate the use of telehealth to address barriers to care.

First Responder Training. The Enacted Budget agreement includes language to require the Commissioner of Mental Health, in consultation with the Department of Health, Office of Fire Prevention and Control, Municipal Police Training Council, and the Superintendent of the State Police, to develop a training program and educational materials to provide instruction and information to firefighters, police officers, and emergency medical personnel on appropriate recognition and techniques for handling emergency situations involving individuals with autism spectrum disorder and other developmental disabilities.

Care at Home Waivers. The Enacted Budget extends the Care at Home I and II waivers until March 31, 2023. These waivers provide community-based services to physically disabled children who require hospital or skilled nursing home level of care.

Extension of OMH Inpatient Psychiatry Demonstration. The Enacted Budget extends this demonstration program, which allows for three or more time-limited demonstration programs to test and evaluate new methods or arrangements for organizing, financing, staffing and providing services for individuals with intellectual or developmental disabilities, through March 31, 2021.

Independent Practitioner Services. The Enacted Budget amends Section 367-a of the Social Services Law to include independent practitioner services for individuals with developmental disabilities as covered services for insurance reimbursement.

Residents Use of Funds for Care and Treatment. The Enacted Budget extends Chapter 111 of the Laws of 2010 and Chapter 58 of the Laws of 2015 to extend the authority of state facility directors that act as federally appointed representative payees to use funds for the cost of a resident’s care and treatment in facilities through June 30, 2018.

For additional information on any of the above-referenced issues, please do not hesitate to contact Farrell Fritz’s Regulatory & Government Relations Practice Group at 518.313.1450 or NYSRGR@FarrellFritz.com.

Responding to the Opioid Crisis and More:  2018-19 NYS Behavioral Health Budget Highlights

Several provisions in the recently adopted 2018-19 New York State Budget (the “Enacted Budget”) are intended to address the ongoing opioid crisis.  As discussed in a prior post (here), some were focused on pharmaceutical manufacturers.  Some of the most significant provisions, however, relate to the behavioral health services available to patients, including both mental health and substance use disorder (SUD) services.  Other provisions will affect behavioral health services more generally. Key provisions are summarized below.

Substance Use Disorder and Mental Health Ombudsman.  The Enacted Budget establishes the Office of the Independent Substance Use Disorder and Mental Health Ombudsman, which will be operated or selected by the Office of Alcoholism and Substance Abuse Services (OASAS), in conjunction with the Office of Mental Health (OMH).  The Ombudsman will assist individuals with SUD and/or mental illness to ensure they receive appropriate health insurance coverage.  The Ombudsman will identify, investigate, refer and resolve complaints that are made by or on behalf of consumers and treatment providers regarding health insurance coverage and network adequacy for substance use disorder and mental health care services.  The Enacted Budget appropriated $1.5 million for this program.

Prohibit Prior Authorization for Outpatient Substance Abuse Treatment.  The Enacted Budget amends several provisions of the Insurance Law to prohibit prior authorization for outpatient, intensive outpatient, outpatient rehabilitation and opioid treatment provided by OASAS-certified facilities that are within the insurer’s provider network.  The coverage provided cannot be subject to concurrent review for the first two weeks of treatment if the facility notifies the insurer of the patient’s initial start date of treatment and the treatment plan within 48 hours.  The facility is also required to perform a patient clinical assessment at each visit and consult with the insurer to ensure the facility is using the appropriate evidence-based/peer reviewed clinical tool utilized by the insurer and designated by OASAS to ensure treatment is medically necessary.  Insurers may deny coverage for any portion of the initial two weeks of treatment if the treatment was deemed not medically necessary and contrary to the insurer-designated, OASAS-approved, evidence-based/peer reviewed tool.  If such coverage is denied by the insurer, the patient is liable for the copayment, coinsurance, or deductible required pursuant to the insurance contract.

Children and Recovering Mothers Program.  The Enacted Budget authorizes the Department of Health (DOH), in consultation with OASAS, to establish the Children and Recovering Mothers Program to provide health care providers, hospitals, and midwifery birth centers with guidance, education and assistance when providing care to expectant mothers with SUD.  The program will provide information to health care providers and expectant mothers on medication-assisted treatment, a referral list of SUD providers in the area, and information on other benefits and services they may be eligible for while expecting or after birth.  The program will develop a statewide system for rapid consultation and referral linkage services for obstetricians and primary care providers who treat expectant mothers.  Additionally, the DOH, in consultation with OASAS, will convene a workgroup of stakeholders, including hospitals, local health departments, obstetricians, midwives, pediatricians and substance use disorder providers, to study and evaluate the obstacles in identifying and treating expectant mothers, newborns and new parents with SUD.  The workgroup is required to submit a report of its findings to DOH, OASAS and the Legislature by April 2019.   The Enacted Budget appropriated $1 million for this initiative and $350,000 to establish an infant recovery pilot program to support up to four recovery centers in NYS.

Peer Recovery Advocate Services.  The Enacted Budget establishes the Certified Peer Recovery Advocate Services Program which builds upon the existing NYS Peer Recovery program.

The program provides patient-centered services that emphasize knowledge and wisdom obtained through life experience, where peers share their own personal journey with SUD to support the recovery goals of others.  The program standards, training and certification process will be developed and administered by OMH.  Certified peer recovery advocate services may include: developing recovery plans; raising awareness and linking participants to existing social and formal recovery support services; working with individuals to model coping skills and develop individual strengths; assisting individuals applying for benefits; attending medical appointments and court appearances; educating program individuals about the various modes of recovery; providing non-crisis support; and working with hospital emergency services, law enforcement departments, fire departments and other first responders to assist patients that have been administered an opioid antagonist establish connections to treatment and other support services.   

Opioid Stewardship Act.  As previously discussed, the Enacted Budget establishes an “Opioid Stewardship Fund” which imposes a “stewardship payment” (essentially a tax) on manufacturers and distributors that sell or distribute opioids in New York.  More detail can be found here.

Opioid Treatment Plans. The final budget includes language which prohibits prescribing opioids beyond three months, unless the patient’s medical record contains a written treatment plan that follows generally accepted national professional or governmental guidelines.  Exceptions are provided for patients being treated for cancer or palliative care.  More detail can be found here.

Social Work, Psychology and Mental Health Practitioners Scope of Practice.  The Enacted Budget includes provisions to clarify the activities and services that may be performed by licensed practitioners and those that do not require licensing.  These provisions eliminate the need to continue the licensure exemption which has been in place for persons employed by programs regulated or operated by OMH, OPWDD, OASAS, DOH, the State Office for Aging, the Office of Children and Family Services, the Office of Temporary and Disability Assistance, the Department of Corrections and Community Supervision, and local government or social services districts since 2002.

Behavioral Health/Primary Care Integration.  The Enacted Budget includes provisions building on the State’s prior efforts to integrate the licensure of behavioral health and primary care services. Prior state regulations established standards to determine how a facility offering integrated mental health, SUD and/or primary care services must be licensed.  Unfortunately, the ability to streamline such licensure was restricted in part by applicable statutes.  The Enacted Budget revises those statutes to clarify that primary care services providers licensed by Article 28 of the Public Health Law, mental health service providers licensed by Article 31 of the Mental Hygiene Law, and SUD providers licensed by Article 32 of the Mental Hygiene Law can each provide the other types of services so long as they are authorized to provide integrated services in accordance with DOH, OMH and OASAS regulations, without obtaining additional operating certificates.

Significant Appropriations

School Mental Health Resource and Training Center.  The Enacted Budget includes $1 million to create a Resource Center to help schools provide mental health education as part of their kindergarten through 12th grade curriculum, as required by Chapter 390 of 2016.

Children’s Mental Health.  The Enacted Budget includes $10 million for services and expenses of not-for-profit agencies licensed, certified or approved by OMH to support the preservation, restructuring or expansion of children’s behavioral health services.

Jail-Based SUD Treatment and Transition.  The enacted budget includes $3.75 million for jail-based SUD and transition services.  The Commissioner of Mental Health, in consultation with local government units, county sheriffs and other stakeholders, will implement a jail-based program that supports the initiation, operation and enhancement of SUD services for individuals incarcerated in county jails.

Mental Health Facilities Capital Improvement Fund.  The enacted budget includes $50 million for the acquisition of property, construction, and rehabilitation of new facilities, to develop   residential crisis programs.  Funds may be used for the renovation of existing community mental health facilities under the auspice of municipalities, and other public or not-for-profit agencies, as approved by the Commissioner of Mental Health.

OASAS Treatment Funding.  The enacted budget includes $30 million for the development, expansion, and operation of treatment, recovery, and/or prevention services for persons with heroin and opiate use and addiction disorders. This funding will be distributed by the Commissioner of Office of Substance Abuse Services, subject to the approval of the Budget Director.

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If you have any questions or would like additional information on any of the above referenced issues, please do not hesitate to contact Farrell Fritz’s Regulatory & Government Relations Practice Group at 518.313.1450 or NYSRGR@FarrellFritz.com.