New York increases Assisted Living Beds in 2018-19 Enacted Budget

While much of the public attention this year on healthcare budget negotiations in New York State was drawn to the pharmaceutical and managed care sectors, the Enacted Budget for 2018-19 also includes some very significant reforms in the long term care space. Continuing its ongoing efforts to rationalize what even the most ardent supporters of New York’s long term care system acknowledge to be an unnecessarily complicated structure, provisions in the Enacted Budget related to Licensed Home Care Service Agencies, Assisted Living Programs, Residential Health Care Facilities and Hospice reflect New York State’s continued efforts to combat fragmentation, inconsistent quality of services and waste across the continuum of care. This year, that has yielded policy outcomes that to the untrained eye can appear inconsistent, or even contradictory – but there is a method to the madness. The following is a list of some the key long term care reforms included in the 2018-19 Enacted Budget.

HOME CARE

Licensed Home Care Services Agencies (LHCSAs) appear to be on the frontline of the battle for consolidation of the community based long term care marketplace in New York. The 2018-19 Enacted Budget clearly articulates a policy in favor of encouraging fewer, larger LHCSAs instead of the current, heavily fragmented LHCSA market, via measures such as:

Limitations on MLTCP Contracting

Beginning October 1, 2018, the Commissioner of Health may limit the number of LHCSAs with which a Managed Long Term Care Plan (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.

For more about MLTCPs, look for our upcoming blog analysis of the overall Managed Care provisions in the 2018-19 Enacted Budget.

Moratorium on New LHCSAs

Effective April 1, 2018, there is a new statutory moratorium on the awarding of new LHCSA licenses until March 31, 2020.  This will not apply to:  (i) LHCSA applications submitted as part of an Assisted Living Program application; (ii) application for transfers of LHCSAs licensed for at least five years for the purposes of consolidating one or more LHCSAs; or (iii) applications that address a serious concern reflecting that same considerations that would justify an exception to the new MLTCP contract rule.

Expanded Certificate of Need for LHCSAs

The Public Health and Health Planning Council (PHHPC) must now consider public need, financial feasibility and other factors in addition to character and competence when evaluating a LHCSA application (previously, LHCSAs were technically exempt from those considerations).

Registration Requirements for Existing LHCSAs

Existing LHCSAs must register with the Department of Health, and presumably meet those new CON requirements, by January 1, 2019, and any failing to register for two years may have their licenses revoked.

The question remains whether these regulations will produce the desired effect, i.e., a consolidation of the LHCSA marketplace, and whether that consolidation will occur through large providers formally acquiring smaller providers, or the gradual disappearance of smaller providers altogether as they struggle to maintain market share.

Cost Reporting Requirements for Existing LHCSAs

Under the new provision, the Commissioner is authorized to require LHCSAs to report on costs incurred by the LHCSA in rendering health care services to Medicaid beneficiaries. The commissioner must give the LHCSA 90 days’ notice of the need for the report, and an additional 30 days to correct any perceived inaccuracies. LHCSAs must certify the accuracy and completeness of the reports.

ASSISTED LIVING PROGRAMS

Assisted Living Programs (“ALP”) appear to be the biggest winner among long term care providers in the Enacted Budget. In contrast to the state’s efforts to consolidate and centralize the LHCSA providers, the Enacted Budget authorizes a general expansion of existing ALP providers and encourages the establishment of new beds. Key provisions include:

New ALP Beds at Existing ALP Providers

Each existing ALP provider may apply to DOH for approval of up to nine additional ALP beds. To be eligible, the existing ALP provider must: (a) be in good standing with the DOH; (b) be in compliance with applicable state and local requirements; (c) not require any major renovation or construction to accommodate the new beds; and (d) agree to dedicate new beds to serve only individuals receiving Medicaid.

The number of new ALP beds approved under this program will be based on the total number of previously awarded beds either withdrawn by applicants or which were previously denied. The commissioner is obligated to approve applications under this section on an expedited basis – specifically, within 90 days of the receipt of a satisfactory application.

ALP providers licensed on or before April 1, 2018 will be eligible to apply during a time period to begin no later than June 30, 2018 and ALP providers licensed on or after April 1, 2018 will be eligible to apply during a time period to begin no later than June 30, 2020.

New ALP Beds in Counties with Few ALP Providers or High Utilization

The Commissioner of Health is authorized to create up to 500 new ALP beds in counties where there are one or fewer existing ALP Providers based on criteria to be determined by the Commissioner. The Commissioner is also authorized to solicit and award applications for an additional 500 ALP beds in counties where utilization of existing ALP beds exceeds 85%. To be eligible, the applicant must commit to: (a) dedicate the beds to serve only individuals receiving medical assistance; (b) develop and execute collaborative agreements with at least one of each of the following entities: an adult care facility; a residential health care facility; or a general hospital, within 24 months of applying to DOH; and (c) enter into an agreement with an existing managed care entity. ALP beds sought by, but not awarded to, providers in counties with one or fewer ALP providers may be issued to ALP providers in counties where utilization exceeds 85%.

New ALP Beds Based On Public Need

After April 1, 2023, the Commissioner of Health is authorized to approve additional new beds on a case by case basis wherever a public need exists. In determining whether a public need exists, the Commissioner may consider, but is not limited to, regional occupancy rates for adult care facilities and ALP occupancy rates and the extent to which the project will serve individuals receiving Medicaid. Existing ALP Providers will be eligible for up to 9 additional beds under this provision.

ALP for Individuals with Alzheimer’s or Dementia

The Commissioner is authorized to issue up to two hundred vouchers for Medicaid ineligible people living with Alzheimer’s or dementia covering up to 75% of the cost of ALP based on the average private pay rate in the respective region.

RESIDENTIAL HEALTH CARE FACILITIES

The Enacted Budget includes a mix of quality control and increased support measures directed at Residential Health Care Facilities (RHCFs):

Medicaid Reduction for Underperforming Facilities

The Enacted Budget includes a provision directing the Commissioner to reduce Medicaid revenue to any RHCF in a given payment year by 2%, where that RHCF performed in the lowest two quintiles of facilities based on its nursing home quality initiative data in each of the two most recent payment years for which data is available, and was ranked in the lowest quintile in the most recent payment year. The Commissioner has the authority to waive this provision in the event the Commissioner deems the facility to be in “financial distress”.

Funding For Capital Projects

As discussed in greater detail in our earlier post regarding the Statewide Health Care Facility Transformation Program (SHCFTP), $45 million is dedicated to RHCFs to increase the quality of resident care or experience, or to improve their health information technology infrastructure, including telehealth, to strengthen the acute, post-acute and long-term care continuum, but not for general operating expenses.

Telehealth

The Enacted Budget also expands the definition of an “originating site” for purposes of telehealth to include RHCFs treating populations with special needs.

HOSPICE

The Enacted Budget requires the Commissioner to establish a methodology as of July 1, 2018, subject to federal financial participation, that will ensure a 10% increase in the Medicaid reimbursement rates for hospice providers for services provided on or after April 1, 2018. Furthermore, the Enacted budget carves hospice providers out of the Opioid Drug provisions requiring a care plan for pain lasting more than three months (discussed here).

Hospice facilities shall be eligible for up to $60 million in funding dedicated to community-based providers through SHCFTP (discussed here).

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