Home Care Service Providers Beware: Amendments to New York State Law Increase Transparency and Give State Agencies More Control Over Your Business

By Nicholas A. Pusateri, Associate

Recent amendments to New York’s Public Health Law have advanced the State’s agenda of increasing control over Licensed Home Care Services Agencies (LHCSAs),[1] improving the quality and availability of LHCSA services, and decreasing costs to the Medicaid program. Over the past few years, LHCSAs have gained greater recognition as a critical part of the overall health care continuum. With increased prominence, however, comes greater scrutiny by State agencies. Increased scrutiny may also be a function of sloppy business practices and inattention to compliance matters. LHCSAs have been cited by regulators for a variety of violations, including fraudulently billing Medicaid and failing to pay their employees strictly in accordance with the requirements of New York’s Labor Law. The Public Health Law amendments are aimed at providing New York regulators with a closer look at how these agencies run their businesses and limiting the number existing LHCSAs.

State Registration. A new provision added to the Public Health Law, Section 3605-b, requires all existing LHCSAs to annually register with New York’s Department of Health (DOH). The reporting period begins on January 1, 2019.

The penalties are severe for tardy filing or noncompliance. DOH will prohibit operations by any LHCSA that does not timely comply with the annual registration. This means that even innocent violations will effectively bar a noncompliant LHCSA from operating or providing nursing, home health aide, or personal care services, or from receiving payment for providing such services until the organization is duly registered (!). DOH will also impose a monthly fine of $500.00 on each LHCSA that does not submit a complete and accurate registration within the required time period. Even more remarkable is the fact that DOH can revoke a LHCSA’s license for failure to register for two annual registration periods, regardless of whether the failure to register happens in two consecutive years. In other words, two strikes and you’re out. Late registration in multiple years could also subject a LHCSA to license revocation by DOH.

The public will easily be able to discern if an LHCSA is in compliance with this new requirement as the DOH intends to post on its website a list of all New York LHCSAs and each agency’s current registration status.

Cost Reporting. Public Health Law Section 3612 was amended to authorize the DOH Commissioner to require LHCSAs to report costs incurred by the agencies when providing Medicaid beneficiaries with health care services.

Upon notice from the Commissioner, a LHCSA will now have 90 days to report such costs to DOH. DOH may grant an additional 30-day extension upon a written request that demonstrates sufficient rationale or support, in DOH’s discretion, that the LHCSA cannot submit the report by the due date for reasons beyond its control. Should DOH identify any perceived inaccuracies in the LHCSA’s cost report, the LHCSA will have up to 30 days to correct the report to the satisfaction of DOH, or provide evidence to corroborate that the report was correct as initially filed.

Contract Limitations. For the past several years, New York’s Medicaid program has been changing from a largely fee-for-service payment model to a managed care model. As part of the process, DOH has been moving Medicaid recipients that need LHCSA services to managed long term care plans (MLTCPs). MLTCPs are private organizations that receive Medicaid funds and then contract with providers such as LHCSAs to provide covered services to Medicaid recipients. MLTCPs, however, have been overwhelmed with requests from LHCSAs to become such contracted providers (for example, some MLTCPs have contracted with over 100 LHCSAs).

Effective October 1, 2018, an amendment to Public Health Law Section 4403-f (7) limits, for a period of two years, the total number of LHCSAs that a MLTCP can contract with. The number of allowable LHCSAs depends upon the MLTC plan’s enrollment and location: for New York City, Nassau, Suffolk and Westchester counties (“Downstate”), the ratio is one LHCSA per each 75 enrollees; for the rest of the State, the ratio is one LHCSA per each 45 enrollees. A year from now, on October 1, 2019, the ratios will be adjusted: for Downstate, the ratio will become one LHCSA per each 100 enrollees; and for the rest of the State, the new ratio will be one LHCSA per each 60 enrollees. An MLTCP operating throughout the State is required to comply with the appropriate requirements for each region.

DOH, however, can increase a MLTCP’s maximum number of contracted LHCSAs, on a county by county basis, if the increase is necessary to avoid disruption of services in the area, or to ensure adequate access to services in the area (including special needs services and services that are culturally and linguistically appropriate).

Moratorium on New LHCSAs. New provisions in Article 36 of the Public Health Law impose a moratorium on applications for LHCSA licensure. The moratorium expires on March 31, 2020, unless extended further. As a result, DOH presently cannot accept or process a LHCSA application unless it meets one of three exceptions:

  • Assisted Living Program.  An application for LHCSA licensure accompanied by an application for licensure of an Assisted Living Program (ALP) (pursuant to Social Services Law Section 461-a) may be granted an exception. The ownership of each the LHCSA and the ALP must be identical. If the exception is granted, the LHCSA can only provide services to the ALP residents.
  • Change of Ownership.   Applications requesting a transfer or change of ownership in an existing LHCSA that has been operating for at least five years, for the purpose of merging the ownership of at least two LHCSAs, may be exempt from the moratorium. The exception aims to reduce the number of existing LHCSA license numbers.
  • Serious Concern. DOH may grant an exception if an LHCSA applicant demonstrates, in DOH’s discretion, that licensure is appropriate because the proposed LHCSA would address a serious concern. Serious concerns include inadequate access to: home care services in a geographic region; adequate or appropriate care, language and cultural competence; or special needs services. A presumption of adequate access exists if at least two LHCSAs operate in a county.

A revised LHCSA application and instructions include additional information about each exception and the necessary information that must be included for DOH to consider an exception. Click here for access to the revised application and instructions.

We encourage existing and proposed LHCSAs to contact Nick Pusateri or Lawrence Ross of our office about these recent changes to the Public Health Law to determine how and to what extent their business will be affected by the new legislation.  We would be happy to discuss any questions or concerns you may have in person or over the telephone

[1] LHCSAs provide hourly nursing care and homemaker, housekeeper, personal-care attendants and other health and social services inside people’s places of residence. Generally, LHCSAs’ services are available to persons who have private insurance and those who pay privately. In other cases, LHCSAs contract with local social services departments or certified home health agencies to provide services to persons with Medicaid coverage.

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