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Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

April 16, 2021

NYS Health and Mental Hygiene Budget Legislation Summary

With the federal American Rescue Plan Act providing relief funds for state governments and with the projected reopening of the New York State economy, many proposed funding cuts in NYS Governor Cuomo’s initial budget were not enacted. However, the Medicaid Global Cap and the authority of the Division of the Budget to establish Medicaid savings allocations and reduce Medicaid payments where revenues and expenditures do not meet projections is continued for another year.

In a rebuke of the nursing home industry, legislation authorizes the NYS Department of Health to require, beginning January 2022, that nursing homes expend at least 70 percent of their revenue on direct resident care, including 40 percent on resident-facing staffing. If these targets are not achieved, a nursing home must pay New York State the difference between the actual spending and the required minimum spending amounts. Further, revenue that exceeds total operating and non-operating expenses by more than 5 percent must be paid to the state. Narrow exceptions apply. Funds received by the state will be allocated to the Nursing Home Quality Pool. This initiative is subject to federal approval.

The carve-out of the Medicaid pharmacy benefit from managed care to fee-for-service is deferred for two years, and establishment of a new reimbursement methodology for providers under the federal 340b program is deferred to 2025. No regulation of pharmacy benefit managers was enacted. For additional information, see our April 9, 2021, alert.

Authorized telemedicine sites for the delivery and receipt of services are expanded. Medical respite programs are authorized for homeless persons not requiring hospital care in need of medical care and temporary shelter. The Family Health Plus Program is renamed the Basic Health Program, and dental and vision services are added. The legislation authorizes the establishment of crisis stabilization centers for the treatment of persons experiencing mental or substance abuse crises; the centers will be under joint regulation of the NYS Office of Mental Health and the Office of Substance Abuse and Support Services.

In response to numerous provider complaints about the administration by the NYS Department of Health of a request-for-offers process to select fiscal intermediaries as contractors under the Consumer Directed Personal Assistance Program, the Department of Health is directed to select additional contractors meeting specific criteria. For additional information, see our April 15, 2021, alert.

If you have any questions regarding the content of this alert, please contact Eugene Laks, of counsel, at; Melissa Zambri, Health Care Practice Area co-chair, at; Susan Benz, Health Care Practice Area co-chair, at; Linda Clark, Health Care Controversies Practice Area chair, at; or another member of the firm’s Health Care or Health Care Controversies Practice Areas.

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