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.