Unlike most other types of employment arrangements involving physicians, physicians acting as a medical director are compensated purely for the performance of administrative services related to patient care services. That is not to say that a medical director does not play a crucial role in the operation of a health care provider. In fact, the New York State Department of Health recommends, or even requires, medical directors be put in place for certain types of providers, and federal law similarly requires medical directors for certain types of services and facilities.

 

Because medical directors are not performing medical services, many physicians feel comfortable entering into medical directorship with little or no written documentation. However, physicians should proceed with caution when undertaking a medical director role. In particular, medical director arrangements are often scrutinized by the Office of the Inspector General (“OIG”) of the U.S. Department of Health and Human Services to determine whether the arrangement is, in reality, being used as a vehicle to provide remuneration to physicians for patient referrals. For this reason, where the contracting provider participates with federal payors and the physician may refer patients to the contracting provider, the physician should enter into a written medical director agreement that is structured to fall within an exception (or safe harbor) to the federal Stark and anti-kickback statutes.

Most often, the exception used under both Stark and anti-kickback laws will be the “personal services” safe harbor. Although slightly different under each statute, some key elements in complying with the “personal services” safe harbor are as follows:

 

  • Written Agreement: The agreement between the physician and the provider should be in writing, with a term of not less than one year. [1]
  • Duties: The agreement should provide for all of the services which the physician is expected to perform.[2]
  • Commercially Reasonable: The services provided by the medical director should be necessary to the provider and not exceed the amount of services required by the provider. This analysis is focused not only on whether the contracting physician’s services in and of themselves are necessary, but also whether there are other medical directors and whether numerous medical directors are performing duplicative services.[3]
  • Compensation: [4]
    • Fair Market Value – The physician should be paid fair market value for the services provided. To this end, it might be helpful to obtain a fair market value analysis, taking into account the geographic location, the experience of the physician, the certification of the physician, and they type of facility. While having such an analysis is not an absolute defense in an investigation, it is useful to demonstrate that fair market value was analyzed and that the remuneration falls within what was believed to be an acceptable range.
    • Hourly Rate – It is recommended that the medical director be paid on an hourly basis, with such hourly rate being paid at the fair market value rate.
    • Cap on Compensation – it is also recommended that the aggregate compensation a physician can earn for his documented hours be capped, to further ensure reasonableness.[5]
  • Documentation: The physician should keep daily time logs of services performed and the time spent on each service. This shows that the physician is performing real work, for which he or she is being paid fair market value, and also can be used to demonstrate that the services being performed are necessary for the facility.

While it is always best to consult with an experienced professional before entering into medical director arrangement, adhering to the criteria set forth above can offer protection for both the physician and the facility.

[1] 42 CFR 1001.952(d)(1): “The agency agreement is set out in writing and signed by the parties.” 42 CFR 1001.952(d)(4): “The term of the agreement is for not less than one year.” 42 U.S.C. 1395nn(e)(3)(A)(i): “the arrangement is set out in writing, signed by the parties, and specifies the services covered by the arrangement.” 42 U.S.C. 1395nn(e)(3)(A)(iv): “the term of the arrangement is for at least 1 year.”

[2] 42 CFR 1001.952(d)(2): “The agency agreement covers all of the services the agent provides to the principal for the term of the agreement and specifies the services to be provided by the agent.” 42 U.S.C. 1395nn(e)(3)(A)(ii): “the arrangement covers all of the services to be provided by the physician.”

[3] 42 U.S.C. 1395nn(e)(3)(A)(iii): “the aggregate services contracted for do not exceed those that are reasonable and necessary for the legitimate business purposes of the arrangement.”

[4] 42 CFR 1001.952(d)(5): “The aggregate compensation paid to the agent over the term of the agreement is set in advance, is consistent with fair market value in arms-length transactions and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part under Medicare, Medicaid or other Federal health care programs.” 42 U.S.C. 1395nn(e)(3)(A)(v): “the compensation to be paid over the term of the arrangement is set in advance, does not exceed fair market value, and . . . is not determined in a manner that takes into account the volume or value of any referrals of other business generated between the parties.”

[5] In OIG Advisory Opinion No. 01-17 (2001), the OIG said that even though total aggregate compensation over the contract has not be set in advance, the totality of facts and circumstances in the specific circumstances at hand yield a conclusion that there is no significant increase in risk of fraud and abuse – however, this finding was likely due to the presence of a monthly payment cap. In 2003, in Advisory Opinion 03-8, the OIG found that a proposed arrangement does not qualify for protection under the safe harbor because the aggregate compensation paid under a management agreement would not be set in advance.

This post marks the end of our series on recent activity by the New York State Legislature in the health sector (introduced here), and follows posts on legislation impacting the pharmaceutical industry (here), hospitals (here), long term care and aging (here), behavioral health (here), and intellectual/developmental disability services (here).  As the last entry in the series, it serves as a bit of a catch-all for significant bills that have not been included in previous posts.  We have brought those bills together under the rubric of “public health.”

The challenges tackled by the Legislature in this space were wide and varied.  As is typical of public health legislation year after year, the bills largely focus on restricting unhealthy behaviors, shifting the cost of screening and prevention, deploying resources more efficiently and effectively, and educating the public and healthcare providers on the State’s various existing and newly created public health programs.  The following public health bills passed both houses of the Legislature and were either already signed into law (where noted) or currently await the Governor’s signature (more information on the legislative process can be found here).

Living Donor Protection Act (A297C Assemblymember Gunther /  S2496B Senator Hannon):  This bill, entitled the “Living Donor Protection Act of 2018” (the “Act”), seeks to encourage live organ donation, protect those who choose to donate their organs from insurance discrimination and provide paid family leave benefits to organ donors.  The Commissioner of Health, in cooperation with the Transplant Council and other interested parties, would be tasked with developing and distributing (online and in paper format) informational material expressing the benefits of live organ and tissue donation, including the impact on the donor’s access to insurance and assistance, the available state and federal tax credits for live organ donors, and the protections and benefits granted pursuant to the Act.

With respect to discrimination by insurers, the bill would make it unlawful for insurers who are authorized to provide life, accident, or health insurance to discriminate against a live organ donor by: declining or limiting insurance coverage under any life or accident and health insurance policy; or in the premium rating offering, issuance cancellation, amount of coverage or any other condition based solely on the donor’s status; or from precluding or preventing any individual from donating all or part of an organ or tissue as a condition of receiving or continuing to receive life or accident and health insurance coverage.

The bill further amends § 201(18) of the Workers Compensation Law to include transplantation and recovery from surgery related to organ or tissue donation one of the “serious health conditions” covered under paid family leave.

Smoking in Private Homes Licensed for Child Care (A397B Assemblymember Gunther / S7522-A Hannon):  This bill takes aim at reducing the harmful effects of “third hand smoke” – “residual contamination from cigarette smoke toxicants that can linger on surfaces” on children.  The bill would prohibit smoking at all times in private homes that are required to be licensed or registered for child care services, including but not limited to, registered, certified or licensed care in family day care homes, group family day care homes, school-age child care programs; head start programs, day care centers; child care which may be provided without a permit, certificate or registration in accordance with this statute; early childhood education programs approved by the state education department; and care provided in a children’s camp, regardless of whether or not children receiving such services are present.

Smoking Near Public Libraries (S169B Senator Rivera / A330-B Assemblymember Dinowitz):  This bill prohibits smoking within 100 feet of an entrance or exit of a public or association library (as defined in § 253(2) of the Education Law); unless such area falls within the boundaries of a private home or property, in which case, the prohibition shall not apply within the boundaries of such home or property.   

Marketing of Electronic Cigarettes to Minors (S1223 Senator Akshar / A8014 Assemblymember Rosenthal):  This bill prohibits the distribution of free electronic cigarettes to persons who appear to be less than 25 years old without first demanding proof of identification establishing the recipient is at least 18 years old.  This legislation was signed by the Governor on April 18, 2018, and became effective immediately.

Use of Tanning Facilities by Minors (A7218A Assemblymember Jaffee / S5585-A Senator Boyle):  Citing evidence that the use of tanning booths before the age of 35 increases the risk of melanoma by 59%, squamous cell carcinoma by 67% and basal cell carcinoma by 29%, the Legislature passed this bill to prohibit minors from using indoor tanning facilities, and eliminate the procedures under § 3555(2) of the Public Health Law that currently allow 16 and 17 year olds to access tanning facilities where the facility witnesses a parent or guardian sign a consent form in person at the facility.

Prostate Cancer Screening (S6882A Senator Tedisco / A8683A Assemblymember Gottfried):  This bill seeks to eliminate barriers to prostate cancer screening by providing diagnostic screening at no cost to certain populations of men considered to be at risk, and would require the Commissioner of Health to develop and distribute information about these no-cost screenings.  More specifically, the bill requires insurance companies to provide diagnostic testing for prostate cancer at no cost to men with a prior history of prostate cancer, to those men who are over 40 with a family history of prostate cancer, and men 50 and over who are asymptomatic.  A similar measure was passed in 2015 regarding women’s access to breast cancer screening.

Lyme and Tick-Borne Disease Work Group (S7170A Senator Serino / A8900-A Assemblymember Hunter):  This bill would create a Lyme and Tick-Borne Disease Work Group under the auspices of the Executive.  The work group will be made up of the Commissioners of the Department of Health, the Office of Mental Health, and the Department of Environmental Conservation, the Superintendent of Financial Services, six additional members to be appointed by the Governor at his sole discretion, and eight additional members on the recommendation of the Legislature (three by the Temporary President of the Senate, three by the Speaker of the Assembly, and one each by the Senate and Assembly Minority leaders).  The membership of the work group must include an infectious disease specialist, general practitioner, mental health practitioner, entomologist, epidemiologist, health insurance representative, and a representative of a tick-borne disease advocacy organization; all of whom must have prior experience working with tick-borne illness.

The work group would be required to meet at least bi-annually, and shall have the following powers and responsibilities:

  • Review  current  best  practices for the diagnosis, treatment and prevention of Lyme and tick-borne diseases, as well as  any  reports  or recommendations  from  the  Twenty-first  Century Work Group for Disease Elimination and Reduction, which is charged with  reviewing existing vaccines, international research and development for vaccines, as well as health threats which could be addressed by the development of vaccines;
  • Provide recommendations including, but not limited to:
    • Improvements to the delivery of care for patients and suspected patients of Lyme and tick-borne diseases, particularly those from endemic areas of the state;
    • Collaborations among county departments of health to promote effective  strategies to combat Lyme and tick-borne diseases, including best practices for prevention and reporting;
    • Collaborate with other agencies to streamline state efforts to combat the spread of Lyme and tick-borne diseases;
    • Identifying opportunities to collaborate with the federal government, non-profit entities, or private organizations on projects addressing these diseases;
    • Data collection and reporting requirements of Lyme and tick-borne disease, including but not limited to those for healthcare providers; and
    • Any other regulations or guidelines concerning Lyme and tick-borne diseases.

The work group would be required to submit a report detailing its findings and recommendations to the Governor and Legislature by May 1, 2019.

Lupus Education (A2788B Assemblymember Peoples-Stokes / S5489-B Senator Parker):  This bill would establish the Lupus Education and Prevention Fund, and would allow the fund to be financed by optional contributions through a taxpayer check-off on New York State corporate and personal income tax forms.

Lymphedema Education (A8819B Assemblymember Rosenthal L / S7765-B Senator Golden):  The Legislature has expressed concern that despite the fact that lymphedema afflicts 10 million people in the United States, the disease is relatively unknown – even among medical providers.  Accordingly, this bill would require every hospital or general hospital to distribute information to patients at high risk of developing lymphedema.  The information will assist patients to understand and identify the signs and symptoms of lymphedema and provide instructions on how to seek appropriate care.

The bill defines high risk patients as those with:

    • Any significant injury to soft tissue that could reasonably be expected to compromise or cause to be ineffective the drainage of the lymphatic system;
    • Recurrent or persistent bacterial infections that could reasonably be expected to compromise or cause to be ineffective the drainage of the lymphatic system; or
    • Have had corrective surgical procedures performed that may have interfered with the lymph drainage by severing local lymphatics in a manner that may jeopardize reconstitution and recovery of lymph drainage.

Lead Poisoning (S7295 Senator Alcantara / A8992 Assemblymember Dinowitz):  Section § 1373 of the Public Health Law permits the Commissioner of Health to designate any geographic area within the State as having a high risk of lead contamination, and upon written notice, may demand that lead abatement be conducted on any building within such area within a specified time period.  This bill amends § 1373 to also allow the Commissioner of Health to “take enforcement action as deemed appropriate by the Commissioner or his or her representative” in the event that such abatement is not undertaken.  Formal action may include a formal hearing and/or penalties not to exceed $500.  This bill was signed by the Governor on April 18, 2018.

Testing for Cytomegalovirus in Newborns (A587C Assemblymember Rosenthal / S2816-B Senator Hannon):  Cytomegalovirus is four times more prevalent than Zika virus in the United States and is the leading non-genetic cause of deafness in children.  Parents infected with the disease may not show any signs or symptoms, making it difficult to prevent the passing of this infection to their newborn babies.  This bill seeks to prevent the spread of this virus by educating pregnant women regarding the manner in which the disease is transmitted, and promote earlier detection of the disease in infants by requiring infants suspected of having hearing impairment to undergo a urine polymerase chain reaction test, unless the parent objects.

New Born Safe Sleep Study (S7408 Senator Hannon / A8957 Assemblymember Simotas):  This bill makes technical amendments to Chapter 401 of the Laws of 2017, which established the Newborn Health and Safe Sleep Pilot Program under the Department of Health (DOH).  This pilot program would have required the Department of Health to provide baby sleeping boxes in areas of NYS with high infant mortality rates or poor birth outcomes.  However, the 2018 bill instead amends § 2508 of the Public Health Law to require the Department of Health, in consultation with health care providers, hospitals, safe sleep product manufacturers, provider groups, the New York State Office of Children and Family Services, and other interested parties to conduct a study on the effectiveness of existing safe sleep practices that reduce infant mortality rates, as well as review baby boxes and other products designed to encourage safe and healthy sleeping among infants.  The Department will be required to utilize the study to conduct a pilot program aimed at improving caregiver education and continued safe sleep practices in counties or areas with high infant mortality rates, and to pursue public private partnerships and funding opportunities to obtain donations for these purposes.  This legislation was signed into law by the Governor on April 18, 2018.

Blood Drive Support (A2381 Assemblymember Gottfried / S2701 Senator Parker):  This bill would authorize the Commissioner of Health to issue grants to not-for-profits and elementary, secondary and post-secondary schools to help pay for the costs of conducting local blood drives.  This legislation was also passed by the Legislature in 2015 but was vetoed by the Governor due to the “increased and unbudgeted costs” the measure would inflict on the Department of Health.  This version of this bill is exactly the same as the prior version.

Physical Fitness Education Campaign (A4426 Assemblymember Cusick / S8716 Senator Sepulveda):  In an attempt to reduce the public health costs associated with obesity and obesity related illness (estimated to be $117 billion annually nationwide), this bill would create the New York Physical Fitness and Activity Education Campaign to increase awareness regarding the health and economic problems associated with obesity and to promote recreational and physical fitness activities within the State.  The Campaign would utilize social and mass media, including the internet, radio, and print advertising and recruit public ambassadors to promote the message, including professional and amateur athletes, fitness experts, and celebrities.  The Campaign would focus on seniors, youth, and other populations at high-risk for obesity.

Emerging Contaminant Education (S6655 Senator Hannon / A10927 Assemblymember Gottfried):  As part of the 2017-18 Enacted Budget, the Department of Health was instructed to create certain information and educational materials related to emerging contaminates and notification levels for emerging contaminants within the public water system.  Emerging contaminants are defined as any physical, chemical, microbiological or radiological substance listed as an emerging contaminant pursuant to §1112 (3) (c) of the Public Health Law.  The current list of contaminants includes: 1,4-dioxane, perfluorooctanesulfonic acid, and perfluorooctanoic acid.  This bill would build on the former educational material requirements to direct the Department to post this information on their website so it is easily accessible to the public and public water systems.

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If you have any questions concerning the foregoing legislation, please do not hesitate to contact Farrell Fritz’s Regulatory & Government Relations Practice Group at 518.313.1450 or NYSRGR@FarrellFritz.com.

Our series highlighting recent activity by the NYS Legislature (introduced here) continues with a recap of bills passed in 2018 that relate to intellectual and developmental disabilities (I/DD). This synopsis follows previous summaries we have done concerning the pharmaceutical industry (here), hospitals (here), long term care and aging (here), and behavioral health (here).

In a session characterized by intermittent paralysis in the Senate, the Legislature was still able to come together on several key initiatives in the I/DD space. Many of these create additional burdens on the Executive (e.g., requiring the Executive to create identification cards for individuals with I/DD).  Others focus on curtailing Executive authority in the I/DD space (e.g., prohibiting any change of auspice in state-operated individualized residential alternatives or setting a statutory minimum for reinvestment of facility sale proceeds).  In particular, an increasing amount of legislative activity in the I/DD space focuses on the identification of and services for autism spectrum order.

The following bills in the I/DD space currently await action by the Governor:

Identification Cards (A249C by Assemblymember Santabarbara/S2565C by Senator Helming):  This bill would require the Commissioner of the Office for People with Developmental Disabilities (OPWDD) to develop an identification card denoting that a person has been medically diagnosed with a developmental disability, which can be presented to law enforcement, firefighters and medical services personnel as necessary.  The front of the card would have to indicate that it was issued by OPWDD and include the bearer’s name, address, date of birth, and a specific statement that the bearer has a developmental disability, may have difficulty following directions, and may become physically agitated.  The reverse of the card would have to include, at the bearer’s discretion, a contact name and phone number, and a space for inclusion of additional information.  OPWDD may charge a fee for the card.

Same Gender Transportation (A10708 by Assemblymember Gunther/S8592 by Senator Ortt):  Under a current law adopted in 1927, a female patient receiving services for mental disability who is being transported to or from a facility must be accompanied by another female, unless accompanied by her father, brother, husband or son.  This bill, which was introduced at the request of OPWDD, would amend that law to make it gender-neutral, make it permissive rather than mandatory, and provide that it is conditioned upon applicable staffing limitations and upon request.

Care Demonstration Program (A8990 by Assemblymember Gunther/S7291 by Senator Ortt):  This bill is an agreed-upon chapter amendment (see discussion of chapter amendments in our introductory post here) to Chapter 491 of the Laws of 2017, which was intended to codify OPWDD care demonstration programs originally developed and implemented in 2015, pursuant to which members of the state workforce provide community-based care to individuals with developmental disabilities.  The services provided by such programs include, but are not limited to, community habilitation, in-home respite, pathways to employment, supported employment, and community prevocational services.  The original bill requires OPWDD to monitor the quality and effectiveness of these programs, requires OPWDD to issue a report by December 31, 2020, and expires March 31, 2021.  This bill would eliminate the reporting requirement, make the selection of services provided by those programs permissive rather than mandatory, and change the expiration date to March 31, 2020.

Change of Auspice of State-Operated Individualized Residential Alternatives (A10442 by Assemblymember Gunther/S8200 by Senator Marcellino):  Current law imposes expansive notice requirements on any effort by OPWDD to close or transfer a state-operated individualized residential alternative (IRA), which is a type of community residence that provides room, board and individualized service options.  This bill would prohibit any change of auspice of any IRA currently operated by OPWDD, thus completely preventing OPWDD from outsourcing such IRAs to private entities.

Reinvestment of Sale Proceeds (A10951 by Assemblymember Lentol/S8633 by Senator Ortt):  This bill would require that 85% of the proceeds from the sale of any property that was previously used, operated or maintained by OPWDD be used exclusively to increase funding for state-operated residential or community-based services.

Study on Early Diagnosis and Long-Term Treatment of Autism (A261 by Assemblymember Abinanti/S3895 by Senator Parker):  This bill would require the Commissioner of OPWDD, the Commissioner of the State Education Department, the Commissioner of the Department of Health, the Commissioner of the Office of Children and Family Services, and the Commissioner of the Office of Mental Health to conduct a study to be performed on the future costs to the state for the early diagnosis and long-term treatment of autism spectrum disorder.  The report, along with legislative recommendations, is due to the Governor and the Legislature on or before April 1, 2021.

Autism Outreach to Minorities (A7976 by Assemblymember De La Rosa/S5534-A by Senator Hamilton):  This bill would require the Autism Spectrum Disorders Advisory Board established in 2016 to identify strategies and methods of improving coordination of services associated with autism spectrum disorders for minority group members, including but not limited to African American, Latino and Asian children.

Autism Screening for Children Aged 3 and Under (A9868A by Assemblymember Santabarbara/S8955 by Senator Ortt):  Current law requires the Commissioner of Health to establish best practice protocols for the early screening of children for autism screening disorder, which must incorporate standards and guidelines established by the American Academy of Pediatrics.  This bill would provide that those standards must include developmental screening for children aged 3 and under, and must be updated at least once every two years.

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

The latest installation in our series on legislation recently passed by the New York State Legislature (introduced here) addresses legislation in the long term care and aging space.  It follows upon descriptions of legislation in the pharmacy space (here) and hospital space (here).  Like those areas, the long term care area was impacted by the same political turmoil that limited the number of bills passed – but some significant legislation was enacted nonetheless.

One of the more interesting aspects of the long term care and aging space is that it tends to be comprised of two very different regulatory regimes.  The first, primarily overseen by the Department of Health (DOH), regulates licensed long term healthcare providers like nursing homes, assisted living residences, home care and others.  The second, overseen by the State Office for the Aging (SOFA), focuses on the elderly more generally.  Sometimes, it can seem like these two agencies occupy two entirely different worlds; other times, they coordinate comprehensively and effectively.  Bills passed this year by the Legislature affect both agencies.

Except where otherwise indicated, these bills all await action by the Governor.

Assisted Living Programs and Hospice (A10459-A by Assemblymember Lupardo/S8353-A by Senator Hannon):  Continuing the State’s recent focus on expansion of assisted living program services (see our post on long term care provisions in the State Budget, here), this bill would allow hospice services to be delivered to individuals residing in assisted living programs.  Current Medicaid policy does not allow the delivery of hospice services in an assisted living program, requiring many residents to transfer to a nursing home in their last few weeks of life, compounding the issues they already face at the end of their lives.

Adult Care Facility Temporary Operators (A8159 by Assemblymember Wright/S766 by Senator Stewart-Cousins):  This bill would require the DOH to provide written notice when a temporary operator is appointed at any adult home, enriched housing program, residence for adults or assisted living program.  Temporary operators are entities appointed by DOH to operate a facility where an operator’s license has been suspended.

Deaths in Adult Care Facilities (A9034 by Assemblyman Gottfried/S7282 by Senator Alcantara):  This bill is a chapter amendment (see discussion of chapter amendments in our introductory post here) to Chapter 459 of the Laws of 2017, which added enriched housing programs to the list of adult care facilities that must report the death or attempted suicide of a resident or any felony committed against a resident to DOH, and to the Justice Center for the Protection of People with Special Needs, if they are receiving mental hygiene services.  That bill also reduced the time within which facilities must make such a report from 48 to 24 hours.  This bill eliminates the statutory time period in which a report must be made.  The bill was signed by the Governor on June 1, 2018.

Long Term Care Ombudsman (A11050 by Assemblymember Lupardo/S9002 by Senator Dilan):  This bill would make various changes to bring the provisions of state law establishing the Long Term Care Ombudsman Program (LTCOP) in line with federal statute and regulations.  The LTCOP investigates and resolves complaints made by or on behalf of residents, promotes the development of resident and family councils, and informs government agencies, providers and the general public about issues and concerns impacting residents of long term care facilities.  The bill would clarify (1) the structure of the LTCOP and the relationship between the LTCOP and the SOFA; (2) the required qualifications of the state ombudsman and assistant ombudsmen; (3) the state ombudsman’s duty to refer complaints to appropriate investigative agencies; (4) the state ombudsman’s duty to comment on actions pertaining to the health, safety, welfare, and rights of the residents of long term care facilities and services; (5) the state ombudsman’s duty to provide timely access to LTCOP services; (6) the state ombudsman’s duty to recommend changes to law, regulation and policy; (7) the state ombudsman’s duty to develop a certification training program and continuing education for ombudsmen; (8) the state ombudsman’s duty to provide administrative and technical assistance to ombudsmen; (9) the state ombudsman’s duty to support citizen organizations, resident and family councils, and other statewide systems advocacy efforts; and (10) the state ombudsman’s duty to advise SOFA in regard to plans or contracts governing local ombudsman entity operations.  The bill requires the state ombudsman to develop a grievance process to offer an opportunity for reconsideration of any decision regarding the appointment of any local ombudsman, and any decision of an ombudsman.  The bill also clarifies (a) the records to which ombudsmen must have access and the limitations on the use and further disclosure of such records; (b) that ombudsmen must be granted access to and cooperation from long term care facilities, and facilities may not retaliate against anyone for cooperating with ombudsmen; and (c) the conflict of interest rules applicable to the LTCOP.

Informal Caregiver Best Practices (A3958 by Assemblymember Dinowitz/S8730 by Senator Sepulveda):  This bill would require SOFA to develop a guide for businesses containing best practices for retaining employees who are also informal caregivers (i.e., who care for elders at home), and make that guide available on the agency’s website or via paper copy.

Veterans in Nursing Homes (A9981-A by Assemblymember Wallace/S8968 by Senator Helming):  This bill would add “assisted living” (presumably assisted living programs), assisted living residences, and adult care facilities to the list of entities which may report to SOFA on the veteran status or veteran spouse status of residents, so that SOFA may link them to counselors for review and potential linkage to veteran services.  SOFA would be required to include the number of such reports within its annual report.

Locator Technology Businesses (A1118-A by Assemblymember Rosenthal/S5221-A by Senator Stavisky):  This bill would require DOH to develop a list of businesses that manufacture, distribute or otherwise offer locator technology services designed to assist in the expedited location of individuals afflicted with Alzheimer’s disease or dementia who become lost or disoriented.  DOH must make the list available to physicians and the general public.  “Locator technology” includes, e.g., wrist transmitter tracking systems, software programs, data bases and products like necklaces and bracelets that contain identifying information.

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

During a year in which legislative activity was restrained by a variety of factors, most notably the Senate’s inability to maintain a consistent majority, the New York State Legislature nonetheless still passed 641 bills, several of which would affect the pharmaceutical sector. While the Governor has until the end of the year to consider and act on these proposals, we wanted to provide a brief summary of this legislation as it currently stands.

Drug Take Back Act (S.9100 by Senator Hannon / A.9576-B Assemblywoman Gunther): This bill would establish a statewide pharmaceutical take back program that would be overseen by the Department of Health. Pharmaceutical manufacturers engaged in the manufacture of covered drugs sold in New York would be required to either individually or jointly develop, and fully fund all administrative and operational fees associated with this take back program.

Under this legislation, the definition of “covered drugs” includes substances recognized under 21 USC §321 (g) (1) that are sold or offered for sale in NYS, but does not include:

  •  drugs used in the clinical setting;
  •  biological drugs if the manufacturer already provides a take back program;
  •  drugs that are already part of a manufacturer FDA managed Risk Evaluation and Mitigation Strategy (REMS) program;
  •  emptied injector products or emptied medical devices and their component parts or accessories;
  • vitamins, supplements and herbal remedies;
  • cosmetics;
  • soaps and shampoos;
  • household cleaning products;
  • sunscreens;
  • personal care products;
  • pet pesticide products contained in collars, powders, shampoos or other topical applications.

Affected manufacturers would be required to submit a proposed drug take back plan to the Department of Health (DOH) for approval which specifies their intent to either:

  • operate a program individually or jointly with other manufacturers;
  • enter into an agreement with a take back organization to operate and implement a take back program; or
  • enter into an agreement with DOH to operate a program on its own behalf.

Manufacturers of covered drugs must submit their proposed plan to DOH within 180 days after the bill is signed into law. The proposed plan must:

  • ensure the program will take back all covered drugs, regardless of who produces them;
  • include contact information for the person charged with submitting and overseeing the manufacturer take back initiative;
  • detail how the program will provide convenient, geographically distributed, ongoing collection services to all individuals wishing to dispose of such items;
  • describe other collection efforts by which covered drugs are collected;
  • explain how covered drugs will be safely and securely tracked and handled during the collection, disposal and destruction process;
  • outline the public education and outreach activities, including advertising of locations on a website, signage, other written materials and how effectiveness will be evaluated;   
  • detail how the cost of pharmacy collection will be reimbursed, retroactive to the effective date of legislation, and if there is more than one manufacturer involved in the take back program, a plan for fair and reasonable allocation of costs that is reasonably related to the volume or value of covered drugs sold in NY.

The DOH, in consultation with the Department of Environmental Conservation, will review and determine if the manufacturer take back plan meets the program requirements within 60 days of receipt and will notify the manufacturer of their decision in writing.  If the plan is not approved, the manufacturer will have 30 days to submit a revised plan to DOH. If a subsequent plan is rejected by DOH, the manufacturer(s) will be out of compliance with take back statutory requirements and will be subject to enforcement provisions. The DOH will put a list on their website of all manufacturers that are participating in an approved drug take back program and will update this website annually.    

Moreover, affected manufacturers are required to update their drug take back program at least once every three years and to submit an updated proposal to DOH.  Any proposed change to the take back program must be submitted in writing and approved by DOH.

Additionally, a manufacturer who begins to offer a covered drug after the effective date of this bill, is required to notify the DOH they have joined an existing approved take back program or submit a proposal to operate a take back program within 90 days after the initial sale of the covered drug.

Each approved take back program is required to submit a report, at a date and in a manner set forth by DOH. The DOH is then required to submit an annual report to the Legislature which details:

  • all drug take back program activities;
  • the weight collected by each program;
  • a description of collection activities;
  • the name and location of all collection sites;
  • public education and outreach activities;
  • evaluation of efficacy of the program and each collection method; and
  • manufacturers that are out of compliance or subject to penalties.

This legislation would also require all pharmacy chains that operate 10 or more establishments and all registered non-resident pharmacies that provide covered drugs to state residents by mail, to offer one or more of the following take back options to consumers:

  • on-site collection,
  • drop box or receptacle;
  • mail back collection by voucher for a prepaid envelope; or
  • any other federal DEA approved collection methods.

Participation in the drug take back program by other authorized collectors is voluntary. All program costs incurred by pharmacies and other authorized collectors will be paid or reimbursed by the affected manufacturers, either jointly or individually.

Additionally, the Commissioner of Health will establish a drug take back distribution plan by regulation for cities with a population of 125,000 or more that ensures collection receptacle placement is accessible yet provides for program cost efficiency.

Lastly, this legislation preempts any county/municipal action on drug take back and includes language to clarify the jurisdiction of all matters relating to drug disposal is vested at the State level.   

Reclassification of Controlled Substances by Regulation (A.10468-B by Assemblymember Ryan / S.8275-B by Senator Jacobs): This bill would allow the Commissioner of Health to reclassify any drug (compound, mixture or preparation) containing any substance listed in Schedule I of §3306 of the Public Health Law as a Schedule II, III, IV, or V substance, or exempt it from the schedules entirely, by regulation or emergency regulation instead of through the enactment of legislation, as is currently required.  The Commissioner of DOH would only be able to reclassify or delete drugs that have been similarly reclassified or deleted under the federal Controlled Substances Act. The Commissioner would be permitted to reclassify drugs to the same numbered schedule or a higher numbered schedule. This bill seeks to increase treatment options for those seeking compassionate care, and corrects a long-standing barrier that sometimes resulted in inconsistencies between the federal and state schedules.

Medical Marihuana as Alternative Treatment for Pain and Substance Use Disorder (S8987-A by Senator Amedore / A. 11011-B by Assemblymember Gottfried (Rules): This legislation would help provide alternative treatment options for pain management and substance use disorder by including “pain that degrades health and functional capability where the use of medical marihuana is an alternative to opioid use” and “substance use disorder” to the list of qualifying conditions for patients to access medical marihuana.

*  *  *  *  *  *  *  *  * * *

It is unclear when and how the Governor will act on these bills.  However, all of these issues have been the focus of increased attention and advocacy this year.  As discussed in our previous post, the Governor must consider and act upon these bills by the end of 2018.  The Governor may also negotiate any additional language or “chapter amendments” he believes may be necessary to fully implement such provisions.

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

The scheduled 2018 New York State Legislative Session concluded last week amid many of the same speculations and controversies that have characterized all of the Legislature’s activities in recent years.  Once again, much of the activity turned on the Legislature’s tense relationship with the Governor, ongoing questions about control of the Senate, and a backdrop of corruption trials that continue to erode public confidence in State government.  This year, legislative activity was more constrained than usual, owing to the Senate’s inability to maintain a commanding majority on a consistent basis, which was attributable to the recent dissolution of the Independent Democratic Conference and the absence of one majority Senator serving in the United States Navy.  While the Senate was not entirely paralyzed, and at one point even accomplished a rare override of a gubernatorial veto, many legislative initiatives that were anticipated to move did not.

But even in this challenging year, many bills were passed in the health and mental hygiene space.  Examples include:

  •  Pharmacy:  The Legislature passed bills requiring manufacturers engaged in the manufacture of covered drugs sold in New York State to develop and operationalize a statewide pharmaceutical take back program, and authorizing the reclassification of controlled substances by regulation rather than by statute.
  •  Hospitals:  Legislation was passed that would require the Department of Health (DOH) to establish a sexual assault victim bill of rights, which hospitals must provide to every sexual offense victim presenting at the hospital.  Other legislation would authorize hospitals to establish standing orders for nurses caring for newborns, allow a nurse practitioner to witness and serve as a health care proxy, establish new standards for clinical laboratory supervision, and require the Office of Mental Health to supply educational materials to hospitals regarding discharge planning for individuals with mental health disorders.
  • Long Term Care:  Bills were passed related to virtually all aspects of the long term care continuum, including bills allowing residents of an assisted living program to access hospice services, requiring DOH to provide written notice to residents of adult care facilities when a temporary operator has been appointed, and clarifying the scope of the long term care ombudsman program.
  • Behavioral Health:  The Legislature approved bills related to maternal depression, the mental health impacts of tick-borne diseases, geriatric mental health services, and suicide prevention, among other mental health issues.  Bills passed in the substance use disorder space include a bill making it a crime for providers of substance abuse services to offer or accept kickbacks in exchange for patient referrals, a bill requiring the Office of Alcoholism and Substance Abuse Services to provide information to school districts regarding the misuse and abuse of alcohol, tobacco, prescription medication and other drugs, and a bill allowing the use of medical marijuana as an alternative to opioids.
  • Intellectual/Developmental Disabilities:  Bills passed in this space include bills to establish identification cards for individuals with developmental disabilities, to allow individuals with developmental disabilities to be accompanied by staff of the same gender when utilizing transportation, to require 85% of the proceeds from the sale of Office for People with Developmental Disabilities (OPWDD) property to be used for state-operated residential or community services, to prohibit OPWDD from changing the auspice of any individualized residential alternative that is operated by the state, and to study and improve outreach concerning autism spectrum disorder.
  • Public Health: A number of the bills passed this session did not deal with specific types of providers, but rather addressed more general public health concerns.  Among these bills were a bill prohibiting discrimination in the provision of insurance based on the fact that an insured is a living organ or tissue donor and authorizing family leave to provide care during transplant preparation and recovery, bills prohibiting smoking in private homes where licensed child care services are provided or within 100 feet of library entrances, further restricting minors’ access to tanning facilities, a bill restricting minors’ access to electronic cigarettes, and bills addressing prostate cancer, Lyme disease, lupus, lymphedema, and lead poisoning.

Each of the bills mentioned above, and many others, now await action by the Governor, and it remains possible that the Legislature will return this year – possibly even in the very near future – to act on additional priority legislation that could not be moved before the conclusion of the scheduled session.  Once a bill is passed by the Legislature, it can be sent to the Governor for action at any point prior to the end of the calendar year, and in practice the bills are sent in several batches over the remainder of the year.  The Governor and Legislature work together to coordinate the timing of those batches, to ensure that the Governor’s staff has adequate time to review each bill and brief the Governor on it.

Once a bill is sent, the Governor has ten days to either approve it or veto it (not including Sundays); if by some chance the Governor fails to act (a very rare occurrence), the bill becomes law.  The only exception to these rules occurs at the end of the year, when the Governor is given thirty days to act, and the failure to act constitutes a veto (the so-called “pocket veto”).

If he vetoes a bill, the Governor will produce a veto message explaining his position.  He may also provide an approval message explaining his position on bills he has approved.  Where a bill comes close to something that the Governor could approve, but the Governor does not want to approve it in its current form, it is not uncommon for the Governor to negotiate “chapter amendments” with the Legislature, pursuant to which the Governor agrees to sign the bill in return for a promise from the Senate and Assembly that they will pass additional legislation at the next available opportunity to amend the bill language to address the Governor’s concerns.

This article represents the first in a series that will review the key bills in each of the foregoing categories in more detail, including both the bills listed above and others.  At this time, in most cases it is impossible to say with certainty how the Governor will act on each bill, but where appropriate, we will provide our best guess.  In the meantime, if you have any questions concerning the foregoing, please do not hesitate to contact Farrell Fritz’s Regulatory & Government Relations Practice Group at 518.313.1450 or NYSRGR@FarrellFritz.com.

 

Earlier this month the New York State Department of Health released the first results of its recently adopted Medicaid redesign efforts, the Delivery System Reform Incentive Payment (“DSRIP”), in four core areas: (1) metric performance, (2) success of projects, (3) total Medicaid spending and (4) managed care expenditures.   The passing scores stem from the collaborative efforts of the Performing Provider Systems comprised of New York hospitals, providers and other key stakeholders.

In April 2014, New York State and the federal government agreed to a DSRIP framework, pumping approximately $8 billion in state health care savings to target Medicaid reforms. The goal of the DSRIP waiver is to reduce patient hospital usage by 25% over 5 years while improving patient-centered care. The program includes $6.42 billion for DSRIP Planning Grants, Provider Incentive Payments, and administrative costs.

The Centers for Medicaid and Medicare Services did find, however, that New York still needs to show improvement in certain areas, including preventable hospital readmissions and emergency room visits as well as access to timely appointments.

Speaking on the results, Donna Frescatore, the New York State Medicaid Director, said “[a] passing grade on all four of the milestones proves that we are making monumental progress toward improving care for millions of New Yorkers….While we are on a clear path to success, our work is far from over. In the months and years ahead, we will shift our focus toward improving performance metrics and health outcomes as we work to change the culture of health care.”

Even though New York received passing scores on its first report card, the state must continue to demonstrate improvement going forward to avoid financial penalties associated with failing to meet the requisite benchmarks.  It will be interesting to see if New York meets the 25% hospital usage reduction by March 31, 2020, the date the DSRIP waiver ends.

The full report can be found here.

While there has been discussion of the potential proliferation of telemedicine for quite some time, telemedicine is finally positioned to take off thanks to the latest federal budget. The Bipartisan Budget Act of 2018 incorporated the text of the CHRONIC Care Act,[1] which facilitates Medicare reimbursement for telemedicine services by – among other things – allowing Medicare accountable care organizations to build broader telehealth benefits into Medicare Advantage plans and expand the use of virtual care for stroke and dialysis patients. While many providers are eager to take the leap into telemedicine, there are still some things to look out for:

Not all states have caught up – while the vast a majority of states have enacted legislation mandating private insurers provide some degree of parity of insurance coverage between in-person and telehealth services, at least a dozen states have enacted no such legislation at all.

Beware of Stark, Anti-Kickback and private inurement violations, as telemedicine often involves complex arrangements between physicians and healthcare facilities. To that end, make sure the terms of any compensation arrangement are commercially reasonable and/or consistent with fair market value. And be vigilant when evaluating market data, as pricing may vary widely due to participants coming into a market at low cost for strategic reasons. Market data may also be impacted by accessibility to healthcare services in certain localities. The Office of Inspector General of the Department of Health and Human Services (OIG) has issued Advisory Opinions related to telemedicine compensation arrangements that should be considered when reviewing such arrangements. Additionally, in April of this year OIG issued a report highlighting instances of improper billing for telemedicine services.

One area on which practitioners have particularly set their sights is telemedicine for opioid addiction treatment. However, unlike the popular telemedicine practices of dialysis and stroke treatment, substance abuse treatment via telemedicine has its own set of constraints.

  • Providers of Medication-Assisted Treatment to reduce opioid use disorders have restrictions on the number of patients they may treat at any given time, with a limitation of 30 patients for their first certification year and the opportunity to increase to 100 in the subsequent year upon fulfilment of certain criteria.
  • Additionally, restrictions on a provider’s ability to prescribe certain controlled substances used to treat opioid use disorder over telemedicine exist under both state and federal laws.

In sum, while the CHRONIC Care Act facilitates further foray into the expanding world of telemedicine, there are many pitfalls to be aware of in both ensuring compliance with applicable laws and ensuring the ability to set up a profitable business.  Always consult with an experienced professional before expanding your practice.

[1] The Creating High-Quality Results and Outcomes Necessary to Improve Chronic Care Act.

The New York State Department of Health (DOH), in consultation with the Department of Labor (DOL), recently announced a Request for Applications for the Health Workforce Retraining Initiative (HWRI).  This program was established pursuant to NYS Public Health Law §2807-g and is funded through the State’s Health Care Reform Act.  The 2018-19 Enacted New York State Budget included $9 million for this initiative and DOH anticipates an additional $9 million to be available for this grant in SFY 2019-20.

The DOH is soliciting applications from eligible organizations that seek to train or retrain health industry workers for new or emerging positions in the health care delivery system.  The purpose of this initiative is to:

  • Assist health care workers in the development of new skills to maintain employment and achieve licensing/certification requirements;
  • Enable health care workers to pursue new career opportunities created due to market changes, new employment for displaced health care workers and those at risk of displacement;
  • Provide health care workers with the education and training necessary to utilize emerging health technologies and data analytics to support population health management and delivery of high quality, cost effective care;
  • Address current and future occupational shortages;
  • Provide expertise to support integrated and interdisciplinary team-based care;
  • Meet increased demand for home and community-based long-term care services; and
  • Ensure health care workers can effectuate appropriate care transitions, reduce avoidable hospital readmissions and emergency room visits.

Funding is based on the total amount available in each region and will be awarded on a competitive basis by project and region.  Interested organizations may submit up to 50 applications for multiple projects.  Below please find further information regarding the counties included in this initiative, as well as the amount of funding available per region.

Maximum Funding Levels by Region

Western

Rochester

Central

Utica/ Watertown

Northeastern

Northern Metropolitan

New York City

Long Island

Allegany

Livingston

Broome

Chenango

Albany

Columbia

Bronx

Nassau

Cattaraugus

Monroe

Cayuga

Franklin

Clinton

Delaware

Kings

Suffolk

Chautauqua

Ontario

Chemung

Hamilton

Essex

Dutchess

New York

Erie

Seneca

Cortland

Herkimer

Fulton

Orange

Queens

Genesee

Wayne

Schuyler

Jefferson

Greene

Putnam

Richmond

Niagara

Yates

Steuben

Lewis

Montgomery

Rockland

Orleans

Tioga

Madison

Rensselaer

Sullivan

Wyoming

Tompkins

Oneida

Saratoga

Ulster

Onondaga

Otsego

Schenectady

Westchester

Oswego

Schoharie

St.

Warren

Lawrence

Washington

$526,458

$1,045,833

$561,481

$66,643

$483,425

$861,535

$12,866,527

$1,908,098

Maximum Regional Funding Amounts

$67,784

$135,110

$73,280

$8,015

$63,662

$109,920

$1,588,115

$244,114

The following organizations may apply for funding under this initiative:

  • Health worker unions;
  • General hospitals;
  • Long term care facilities;
  • Certified home health agencies, licensed home care services agencies, long term health care programs, hospices, ambulatory care facilities, diagnostic and treatment facilities;
  • Office of Mental Health or the Office of Alcohol and Substance Abuse Services licensed providers;
  • Health care facilities trade associations;
  • Labor-management committees;
  • Joint labor-management training funds established by the Federal Taft-Hartley Act; and
  • Educational institutions.

Additionally, applicants must:

  • Be a legally established organization located in NYS;
  • Have a minimum of two years of training experience with health care workers;
  • Be capable of entering into a master contract with DOH; and
  • Identify a need for training in one or more areas:
    • Occupations with known shortages;
    • Educational opportunities in shortage occupations;
    • Provide training to affected health care workers who have experienced or will likely experience job loss/displacement due to changes in health care delivery;
    • New job certification or licensing requirements; and
    • Knowledge and use of emerging technologies.

Applicants that are able to thoroughly demonstrate a need for such training will be given higher scores.  Additionally, preference points will be provided to projects that increase workforce supply in the following professions:

    • Clinical laboratory technologists;
    • Registered Nurses and Licensed Practical Nurses;
    • RN Care coordinators;
    • Certified Nursing Aides;
    • Nurse Practitioners and Psychiatric Nurse Practitioners;
    • Nurse Managers and Directors;
    • Physician Assistants;
    • Licensed Master Social Workers and Licensed Clinical Social Workers;
    • Minimum Data Set Coordinators;
    • Home Health Aides;
    • Emergency Technicians and Paramedics;
    • Physical Therapists;
    • Occupational Therapists; and
    • Diagnostic Medical Sonographers.

Applicants must also clearly demonstrate an ability to:

    • Develop and manage the structure necessary to implement proposed projects;
    • Develop project curriculum and select program participants within three months of contract execution;
    • Ensure assessment, training and placement services for proposed program participants;
    • Provide DOH with monthly or quarterly outcome and expenditure reports, as well as a two year final report; and
    • Cooperate with DOH and DOL during the program review process and provide supporting documentation regarding outcomes, expenditures and any other information required to evaluate programmatic progress.

Interested organizations must submit applications via the NYS Grants Gateway on or before June 22, 2018 by 4:00 pm.

*  *  *  *  *  *  *  *  * * *

For additional information on this and other DOH initiatives, please do not hesitate to contact Farrell Fritz’s Regulatory & Government Relations Practice Group at 518.313.1450 or NYSRGR@FarrellFritz.com.

 

 

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.