The State Budget: What LHCSAs Need to Know

Authors: Stephen E. Zweig, Phillip Davidoff, Eric Su

Executive Summary. The New York State Fiscal Year 2018-19 State Budget (“Budget”) includes significant changes for Licensed Home Care Services Agencies (“LHCSAs”), limiting the amount of contracts MTLCs can enter into, threatening the continued operation of many LHCSAs, and adding further regulatory requirements for LHCSAs.

Budget Highlights

MLTCs Limited to Certain Number of LHCSAs

  • Currently, MLTCs can contract with as many LHCSAs as they choose. Effective October 1, 2018, MLTCs are limited in how many LHCSAs they can contract with. However, the Budget does not restrict how many contracts
    LHCSAs can have or how many cases LHCSAs can service from an MLTC.
  • The MLTC contract limit is determined by a formula and will be different for each MLTC. MLTCs will have separate limits for two regions in the state: (1) downstate (NYC, Long Island and Westchester) and (2) upstate (the rest of the state). The formula is based on how many members the MLTC has in each of the regions. Members include all patients of an MLTC and is not limited only to patients receiving LHCSA care.
  • Beginning October 1, 2018, the downstate region limit is one LHCSA contract for every 75 MLTC members and the upstate region limit is one LHCSA contract for every 45 members. For example, an MLTC with 4,500 members downstate and 4,500 members upstate would be allowed to have 60 LHCSA contracts downstate and 100 LHCSA contracts upstate.
  • The limit decreases the next year, on October 1, 2019, to one LHCSA contract for every 100 MLTC members downstate and one LHCSA for every 60 members upstate. Using the same example as above, an MLTC with 4,500 members downstate and 4,500 members upstate would be allowed to have only 45 LHCSA contracts downstate and 75 LHCSA contracts upstate.
  • Exemptions are limited, available only for single case agreements in select circumstances and for other reasons only at the discretion of the DOH.

LHCSAs Required to “Register” Each Year

  • Beginning on January 1, 2019, in addition to being licensed, all LHCSAs will have to register with the DOH. The DOH has not yet issued any registration materials or guidelines.
  • A $500 fee will be charged for each month a LHCSA has failed to register. If a LHCSA fails to register for two consecutive years or has a pattern of late registration, the DOH can revoke the LHCSA’s license.

LHCSAs Required to Report “Costs” to DOH

  • The DOH can require a LHCSA to report on the “costs incurred” by the LHCSA in providing services, including direct care and administrative costs.
  • On 90 days’ notice, the DOH can request any “type or amount” of cost information, including supporting documentation.
  • The owner or top executive of the LHCSA will be required to certify that all cost information submitted is accurate and correct.

Moratorium on LHCSA Licenses

  • There is a moratorium on “the processing and approval of applications seeking licensure” for LHCSAs from April 1, 2018 to March 31, 2020. It is not clear if this includes non-merger transfer of ownership applications.
  • The only exemptions are for: (1) transfers of ownership where two or more LHCSAs are merging, (2) applicants filling a demonstrated geographic, cultural, linguistic or other gap in coverage, and (3) applications filed in conjunction with an assisted living program application.

Changes to Standards for Licensing

  • The public health and health planning council (“Planning Council”) previously considered only the competence and character of the owners and operators of the applicant as a licensing standard, and was forbidden from considering
    public need or other factors.
  • The Planning Council is now required to consider the public need for the LHCSA “at the time and place and under the circumstances proposed,” as well as the finances and financial sources of the applicant. The Planning Council also now has wide latitude to consider other factors it considers “pertinent”.

Conclusion. LHCSAs may be squeezed out as MLTCs have to limit the amount of LHCSAs they can contract with to stay under the legal limits. More regulatory obligations, especially the requirements that owners or top executives certify under penalty of perjury that all cost information submitted is accurate and correct, adds civil and potentially criminal penalties to audits of LHCSAs performed by OMIG and other agencies. LHCSAs need to prepare now to get their houses in order to comply with the new regulations and position themselves to keep their MLTC contracts.

FordHarrison LLP advises and counsels home care agencies on all labor, employment and benefit issues. If you have any questions regarding this Legal Alert or would like our advice about particular facts and circumstances at your agency, please contact one of the authors, Stephen Zweig at szweig@fordharrison.com, Phillip Davidoff at pdavidoff@fordharrison.com, or Eric Su, esu@fordharrison.com of the firm’s Homecare Industry Law Group in its New York City office at (212) 453-5900.

The State Budget: What CDPAP Fiscal Intermediaries Need to Know

Authors: Stephen E. Zweig, Phillip Davidoff, Eric Su

Executive Summary. The New York State Fiscal Year 2018-19 State Budget (“Budget”) includes significant changes for fiscal intermediaries (“FIs”) under the Consumer Directed Personal Assistance Program (“CDPAP”). Effective immediately, FIs must receive New York State Department of Health (“DOH”) approval for all advertising material and provide the DOH with cost reports upon request.

Budget Highlights

DOH Must Pre-Approve FI Advertising

  • FIs must submit all advertisements to the DOH prior to putting the advertisement into use.
  • “Advertisements” is defined broadly to include any material in any medium “that can reasonably be interpreted” as marketing the FI’s services.
  • FIs are not allowed to publish any “false or misleading” advertisements.
  • FIs must remove or stop using any unapproved or “false or misleading” advertisement within 30 days of receiving notice from the DOH.
  • If the DOH determines that an FI used two or more unapproved or “false or misleading” advertisements, the FI will be prohibited from providing services and its FI authorization will be revoked.

Overseeing advertising shows the DOH’s intent to more closely control the way FIs solicit clients. The DOH will have broad discretion in determining what is “false or misleading.” The DOH had already requested all advertising materials be submitted with the FI authorization application. The Budget now gives the DOH clear legal authority to require submission of marketing material prior to use by an FI and to revoke FI authorizations for two violations of its “false or misleading”
standard.

FIs Required to Report “Costs” to DOH

  • The DOH may require FIs to report on the “direct care and administrative costs” of providing personal care services, “as accounted for by the [FI].”
  • On 90 days’ notice, the DOH can request any “type or amount” of cost information, including supporting documentation.
  • The owner or top executive of the FI will be required to certify that all cost information submitted is accurate and correct.

Requiring certification of financial information and supporting documentation by owners or executives of FIs adds further civil and potentially criminal penalties for perjury to investigations and audits of FIs performed by OMIG or other state agencies, including Wage Parity Act audits. Also, as the DOH has recently stated, all fiscal intermediaries must have a Medicaid provider number, separate and apart from any Medicaid provider number they may have for a LHCSA or other line of business. Currently operating fiscal intermediaries should apply for a unique Medicaid provider number immediately.

Conclusion. The Budget continues the state’s efforts, begun with the authorization requirement and the application of the Wage Parity Act to CDPAP, to bring FIs under tighter control. You should work with an attorney versed in CDPAP and the Wage Parity Act to develop compliant marketing materials and structure administrative and benefit costs to comply with the Wage Parity Act and other laws.

FordHarrison LLP advises and counsels home care agencies on all labor, employment and benefit issues. If you have any questions regarding this Legal Alert or would like our advice about particular facts and circumstances at your agency, please contact one of the authors, Stephen Zweig at szweig@fordharrison.com, Phillip Davidoff at pdavidoff@fordharrison.com, or Eric Su, esu@fordharrison.com of the firm’s Homecare Industry Law Group in its New York City office at (212) 453-5900.