On July 19, 2018, the New York State Department of Health (“DOH”) released a Request for Information (“RFI”) seeking input from home health care industry stakeholders for the development of a public need methodology that will be used by the DOH and the Public Health and Health Planning Council (“PHHPC”) as of April 1, 2020, to evaluate applications involving the establishment of Licensed Home Care Services Agencies (“LHCSAs”).[1] The RFI comes on the heels of a recent statutory moratorium that prohibits the DOH from processing applications relating to the establishment of new LHCSAs, and the change of ownership of most existing LHCSAs (subject to limited exceptions), until April 1, 2020. Not only does the RFI provide stakeholders an opportunity to shape the DOH’s policies regarding the review of LHCSA establishment and change of ownership applications as of April 1, 2020, it also sheds light on how the state may otherwise reform the approval process for LHCSAs. Responses to the RFI are due no later than October 12, 2018.
Background
The issuance of the RFI follows enactment of the 2018-2019 New York State Budget (“Budget”) on April 12, 2018, which included seismic legislative reform that, among other things, modified the approval process for LHCSA establishment applications and imposed a two-year moratorium on the establishment of new LHCSAs and the transfer of ownership of existing LHCSAs (subject to limited exceptions).[2]
In New York, applications for LHCSA licensure are submitted to the DOH and are subject to the approval of the PHHPC—a regulatory body charged with, among other things, making decisions concerning the establishment and transfer of ownership of certain health care facilities and agencies. The amended LHCSA licensing law materially modifies how the PHHPC will review LHCSA applications going forward.
Prior to the enactment of the Budget, the PHHPC could not consider “public need” in its review of LHCSA applications. The determination of public need was only applicable in other contexts (e.g., hospitals, nursing homes, etc.) and required the PHHPC to consider a variety of factors when reviewing applications, including population demographics, service utilization patterns, epidemiology of selected diseases and conditions, and access to services. According to the DOH, the inability to consider public need has led to the drastic, unnecessary proliferation of LHCSAs throughout the state. Currently, there are approximately 1,100 approved LHCSA operators statewide. Amendments to the LHCSA licensing laws seek to remedy this perceived problem by expressly requiring the PHHPC to consider public need in new LHCSA applications.
DOH Contemplates New LHCSA Licensing Regulations
In addition to “public need,” the Budget amended the law to require the PHHPC to consider the financial resources of the applicants, as well as other factors that the DOH may establish by regulation. The DOH is considering the following:
- How it will designate LHCSA “planning areas”—i.e., the geographic area in which public need for new LHCSAs will be assessed
- How it should consider the experience requirements of proposed new LHCSA operators
- Whether quality measures should be considered in applications for new LHCSAs and/or ownership changes
- Whether it should set a cap on the number of LHCSAs in a given county
- Whether any special considerations should be considered, such as giving preference to applicants that provide training programs to personal care aides and home health aides
- Whether the provisions of specific services or participation in certain regulatory programs should be considered as part of the public need methodology (e.g., Medicaid enrollment or participation in the DOH’s Traumatic Brain Injury Waiver Program)
- Whether to consider agencies that are only providing personal care services discretely or under separate licensure from LHCSAs
- Whether the public need analysis should apply to existing LHCSA operators seeking to expand their services locations
The RFI seeks input from industry stakeholders on these criteria to address the perceived unnecessary proliferation of LHCSAs, while also avoiding regulatory obstacles that would burden current and prospective LHCSA operators. Nonetheless, the RFI clearly suggests that the DOH will be broadly expanding the LHCSA application review process in a manner that is similar to the review process currently utilized for other health care facilities.
Moratorium, New Cost-Reporting Requirements, and Other Changes
The RFI does not, however, suggest any contemplated regulations concerning the statutory moratorium in place until April 1, 2020. This has led to some negative feedback from industry stakeholders, particularly from those who are parties to pending or contemplated transactions involving the ownership of LHCSAs. While the moratorium may disrupt current operators and prospective investors, industry stakeholders should be mindful of several exceptions to the moratorium, including:
- Applications for LHCSA licensure submitted in concert with an application to establish an Assisted Living Program
- Applications seeking to transfer/change ownership of an existing LHCSA that has been licensed and operating for a minimum of five years, but solely for the purposes of consolidating the licenses of two or more such LHCSAs
- Applications that address a serious concern, such as the lack of access to home care services in a geographic area or the lack of appropriate care, language, and cultural competence or special needs services
These exceptions leave room for interpretation and seemingly intend to allow the PHHPC to approve certain applications in order to avoid unintended negative consequences that are contrary to public policy (e.g., ensuring access to care in a particular locality). The limited nature of these exceptions, however, clearly weighs in favor of the state’s new public policy—to reduce the number of new and existing LHCSAs.
The amended law also imposes a new cost-reporting requirement on LHCSAs that render services to Medicaid beneficiaries.[3] The DOH is tasked with implementing the cost-reporting requirement and has the discretion to specify the format of such cost reports, as well as their frequency and the data to be included.
Furthermore, the amended law authorizes the DOH, as of October 1, 2018, to limit the number of LHCSAs that may contract with any single managed long-term care plan (“MLTCP”). The maximum number of LHCSAs participating with one MLTCP will vary by region, as follows:
|
MLTCP’s County(ies) of Operation |
As of October 1, 2018 |
As of October 1, 2019 |
|
New York City, Nassau County, Suffolk County, |
1 LHCSA per 75 beneficiaries |
1 LHCSA per 100 beneficiaries |
|
Other Counties |
1 LHCSA per 45 beneficiaries |
1 LHCSA per 60 beneficiaries |
To avoid inadequate access to services, the DOH may increase an MLTCP’s number of participating LHCSAs beyond the maximum amounts in the table above on a county-by-county basis and may also consider the need for special services and the need for service providers with particular cultural and language capabilities.
Conclusion
Although there is no indication that the moratorium and other restrictions will be lifted or reversed in the foreseeable future, the RFI presents an opportunity for industry stakeholders to potentially shape the factors considered by the DOH and the PHHPC in new applications after the moratorium is lifted. Given the importance of these issues, Epstein Becker Green is working with our clients to submit comments in response to this RFI.
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This Client Alert was authored by Arthur J. Fried, Leonard Lipsky, and Yulian Shtern. For additional information about the issues discussed in this Client Alert or if you are interested in submitting comments in response to the RFI, please contact one of the authors or the Epstein Becker Green attorney who regularly handles your legal matters.
ENDNOTES
[1] The RFI is available at https://www.health.ny.gov/funding/rfi/lhcsa/docs/lhcsa_rfi_public_need_method.pdf.
[2] See L. 2018, ch. 57, § 9-b (Part B), eff. Apr 12, 2018; Public Health Law § 3605.
[3] See Public Health Law § 3612(8).
