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January 18, 2024

The New York Fiscal Year 2025 Executive Budget Takes Aim at Long-Term Care

The budget will discontinue wage parity, impact reimbursement for nursing homes, and encourage robust auditing and oversight of long-term care providers.
New York State Governor Kathy Hochul released the Fiscal Year 2025 Executive Budget on January 16, 2024. The 299-page Health and Mental Hygiene Bill (HMH Bill), incorporated into the proposed budget legislation as part of the Article VII Bills, if passed in its current form, will bring a number of changes to long-term care in New York State, some of which will be unwelcome. The HMH Bill weaves a theme, which Governor Hochul sets out in the Governor’s Message, centered on cutting costs and balancing the budget without cutting services. 

Nursing Homes Face Rate Freeze and Reduction

The HMH Bill proposes an amendment to Public Health Law (PHL) § 2808 that will freeze the operating component of nursing facility rates at January 2024 rates until the Department of Health (DOH) develops and fully implements a case-mix methodology based upon the Patient Driven Payment Model (PDPM). The PDPM was a new case-mix classification model implemented at the federal level by the Centers for Medicare and Medicaid Services (CMS) in 2019 to replace the prior Resource Utilization Group, Version IV (RUG-IV). The PDPM was designed, in part, to de-emphasize the importance of therapy services volumes on reimbursement.

An additional amendment to PHL § 2808 will also cut the capital-cost component of nursing facilities’ rates by 10 percent, effective April 1, 2024. The Memorandum in Support and DOH Agency Appropriations documents clarify that nursing facilities are expected to maximize existing resources and that this is a pure cost-cutting measure. The state expects the capital reimbursement reduction, along with similar changes to hospital capital reimbursement, to save the state $50 million in fiscal year 2025. This new setback may make it more difficult for nursing facilities to plan for the future and seemingly disregards the industry’s repeated calls for increased rates to cover the actual costs of providing care. 

Consumer Directed Personal Assistance Program (CDPAP) Wage Parity to Be Terminated and RFO #20039 Remains Unchanged

In 2017, PHL § 3614-c was amended to extend home care worker wage parity to personal assistants providing personal assistance services in the CDPAP. The HMH Bill will, less than seven years later, discontinue wage parity for CDPAP personal assistants in New York City as well as Nassau, Suffolk, and Westchester Counties. Governor Hochul’s administration expects this amendment will save New York State $200 million in fiscal year 2025.

The HMH Bill exhibits no intent by Governor Hochul’s administration to change course on CDPAP RFO #20039. The RFO was initiated as a result of 2019 amendments to Social Services Law (SSL) § 365-f, which eliminated the prior two-part process in which fiscal intermediaries (FIs) were permitted to participate in the CDPAP program upon being authorized by the DOH and entering into a contract with a local department of social services or managed care entity. The RFO, which was amended multiple times to modify the RFO process and its requirements, is still in process and continues to threaten the existence of hundreds of nonawarded FIs throughout the state. As the DOH previously announced in MLTC Policy 21.01, nonawarded FIs will be required to cease providing services to CDPAP consumers within 90 days after the DOH publishes the list of lead FIs with contracts executed by the Office of the New York State Comptroller.

Electronic Visit Verification (EVV) Enforcement 

The DOH reports in its Agency Appropriations document that the budget will result in increased penalties for managed Medicaid plans that fail to enforce EVV requirements. Under proposed amendments to SSL § 364-j, the DOH will be authorized to collect liquidated damages or actual financial losses from managed care organizations that fail to meet contractual obligations and performance standards under their model contracts. EVV, a federally mandated program, requires real-time verification of in-home visits by providers of Medicaid personal care services and home health services. These services include CDPAP personal assistance services and Home and Community-Based Services (HCBS) Waiver services such as Nursing Home Transition and Diversion (NHTD) Program services, Traumatic Brain Injury (TBI) Program services, and OPWDD HCBS Waiver services. This announcement is undoubtedly designed to incentivize enhanced EVV auditing and enforcement of home care providers. 

Assisted Living Residences (ALR) Oversight and Reporting

Amendments to PHL § 4656 under the HMH Bill will require ALRs of all types to report annually on certain quality measures beginning in January 2025. The specific quality measures and form and format of reporting will be determined by the DOH. The DOH will score ALRs based on their annual reports and use those scores to determine survey frequency, with the highest scoring facilities being designated with an “advanced standing classification.” The scores may also be made public on the DOH’s website beginning January 2025. Facilities dually licensed as an adult care facility and to provide assisted living services will be authorized to seek accreditation by nationally recognized accrediting agencies and, at the discretion of the DOH, avoid duplicative DOH inspections. 

Mirroring pandemic-era rules for nursing homes, the HMH Bill will also require ALRs to post in a conspicuous place on the facility’s website and in a public space within their facilities information about the monthly rate, staffing complement, admission and residency agreement, and a “consumer-friendly summary of all services fees.” The HMH Bill will also effectuate a slight amendment to SSL § 461-l, which is intended to make the Special Needs ALR (SNALR) program permanent. The Memorandum in Support of the HMH Bill states that the change is designed to enable the DOH “to promulgate regulations to clearly define the expectations [of participating SNALR facilities], ensure uniformity, and allow more New Yorkers to age in place.”

All Long-Term Care Providers May See Stepped-Up OMIG Auditing and Possible Cuts

The DOH Agency Appropriations document states that the budget proposes an increase to the Medicaid audit target and is based upon the assumption that, due to the growth in Medicaid claims, there will be a corresponding additional $100 million in savings to the Medicaid program. This seemingly reflects the administration’s expectation that the Office of the Medicaid Inspector General (OMIG) will obtain an additional $100 million in savings in 2025. This proposal should be considered along with the recently released 2024 OMIG Work Plan (which our Health Care Controversies Team reported on last week), promising OMIG’s continued focus on HCBS, personal care services, nursing homes, and assisted living programs.

Both the Budget Briefing Book and the DOH Agency Appropriations document report that the state will identify at least $200 million in additional, recurring savings “across New York’s many long-term care programs.” This target is in addition to the $200 million the state seeks to save in other areas of Medicaid spending growth.

There are multiple and varied other proposed amendments that will impact long-term care providers in as many ways, including an amendment that will fund New York State’s Enhanced Multidisciplinary Teams, which are designed to respond to elder abuse and exploitation; an amendment that mandates reporting of substantiated reports of abuse or neglect to OMIG; and an amendment that would permit New York State to join the Nurse Licensure Compact and simplify the process for nurses duly licensed in other states to practice in New York State. Governor Hochul’s administration has three weeks (and up to 30 days if necessary) to submit amendments before the budget undergoes the legislative review process, which brings yet more opportunity for amendments before the HMH Bill is enacted. 

If you have any questions regarding the content of this alert, please contact Linda Clark, Health Care Controversies Team co-leader, at; Michael Scott-Kristansen, special counsel, at; or another member of the firm’s Health Care Controversies Team.

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