New York Nursing Home Reforms Take Shape

Manatt, Phelps & Phillips, LLP

Manatt, Phelps & Phillips, LLP

The 2021 New York State Legislative session resulted in the enactment of significant legislation impacting New York’s nursing home industry, including requirements that nursing homes maintain minimum spending levels on resident care and minimum levels of nursing hours per resident per day. In recent weeks, the Department of Health (DOH) has released draft proposed regulations to implement these significant reforms. While these regulations have yet to be formally proposed or adopted, these requirements are scheduled to take effect as of January 1, 2022. The following is a summary of these draft proposed regulations:

  • Minimum Direct Resident Care Spending: The draft proposed regulation implements the requirements of Public Health Law § 2828, which direct that, as of January 1, 2022, every nursing home must spend a minimum of 70% of revenue on direct resident care and 40% of revenue on resident-facing staffing, and establish a cap on any revenue over operating and nonoperating expenses at no more than 5% of those expenses. Facilities excluded from these requirements include continuing care retirement communities and facilities that primarily care for medically fragile children, persons with HIV/AIDS, persons requiring behavioral intervention, persons requiring neurodegenerative services, and other specialized populations deemed appropriate by the commissioner.

    Facilities that fail to meet the minimum spending requirements will be required to remit a penalty payment in the amount of the facility’s excessive total operating revenue, based on the amount of excess revenue or the difference between the minimum spending requirement and the actual amount of spending on resident-facing staffing or direct care staffing. Excess revenue must be remitted by November 1 of the following year, and any funding will be dedicated to the Nursing Home Quality Initiative (NHQI).

  • Minimum Nurse Staff Requirements: The draft proposed regulation implements the requirements of PHL § 2895-b to establish standard minimum levels of nurse staffing in nursing homes. These minimum standards, which take effect January 1, 2022, require every nursing home to maintain daily staffing hours equal to 3.5 hours of care per resident per day by a certified nurse aide (CNA), licensed practical nurse or registered nurse with at least 2.2 hours of care per resident per day being provided by a CNA or a nurse aide and at least 1.1 hours of care per resident per day provided by a registered professional nurse or licensed practical nurse. Beginning January 1, 2023, the 2.2 hours of care per resident per day must be provided by a CNA. Compliance with these requirements will be determined on a quarterly basis by comparing the daily average of the number of hours provided per resident per day using the most recent data available from the PBJ and the facility’s average daily census, on a daily basis.

    While penalties may not be assessed against nursing homes until April 1, 2022, the DOH will be required to impose a penalty of up to $2,000 per day for each day in a quarter that a facility fails to comply with the minimum nursing staff requirements. The commissioner may take into consideration several mitigating factors when issuing penalties, including declared disaster emergencies, the frequency of noncompliance, and regional labor supply shortages, but may not reduce the penalties to an amount lower than $300 per day in a quarter in which a facility is noncompliant.

  • Nursing Home Notice and Establishment Review Requirements: The draft proposed regulation implements new requirements related to the establishment and transfer of ownership of nursing homes, applying to any nursing home application subject to establishment review. The regulations require DOH to notify the LTC Ombudsman when it acknowledges receipt of an establishment application and when the application is scheduled for committee consideration. For change of ownership applications, the established operator is required to provide notice of the application to the residents of the nursing home and their representatives, and the staff of the nursing home, including union representatives, within 30 days of acknowledgment of the application. The established operator is also required to provide immediate notice when the application is scheduled for consideration by the Public Health and Health Planning Council (PHHPC), or a committee of PHHPC.

    The regulation also implements the heightened existing character and competence requirements for nursing home establishment applications. PHHPC is required to consider, in order to determine whether a substantially consistent high level of care was provided by the applicant, whether any affiliated facility has a Centers for Medicare & Medicaid Services (CMS) star rating of two stars or less; any instance in which an affiliated facility has been decertified by or terminated from Medicare or Medicaid; and any instance in which an affiliated facility has been designated a Special Focus Facility or Special Focus Facility candidate. When reviewing these factors, PHHCP is directed to weigh the gravity of any violation; the manner in which the applicant/operator exercised supervisory responsibility over the facility operation, and the remedial action, if any, taken after a violation was discovered; and the percentage of nursing homes in a portfolio with a rating of two stars or less.

In addition to these reforms, the Legislature enacted new notice and disclosure requirements for nursing homes. The following notice and disclosure requirements were recently enacted and take effect as of the date noted:

  • October 1, 2021: Include as part of the admission process a separate document in 12-point font that discloses to potential residents and their family members the websites where a list of complaints, citations, violations and penalties taken against the facility can be found.1
  • October 21, 2021: Include on any public website for the facility the following information:2
    - The rates charged by the facility for residency and services, detailed for each nongovernmental payer source (update this information annually by April 1 of each year);
    - All individuals with an ownership interest in the operator of the facility (update this information within 30 days of any change or transaction affecting ownership);
    - The name and business address of any landlord of the facility; and
    - A summary of all contracts for goods and services for which the facility pays with any portion of Medicaid or Medicare funds, or any other agreement entered into by the facility, within 30 days of execution of the agreement or contract.
  • October 21, 2021: Operators are required to notify DOH at least 90 days prior to entering into any new common or familial ownership of any entity providing services to the operator or the facility, and are required to provide at least 90 days’ notice to DOH prior to executing a contractual agreement with an entity to provide consulting services, operational services or staffing agency services at the facility. Operators are also required to update their residency agreement to include any existing common or familial arrangements, and notify residents and the LTC Ombudsman of any new arrangements.3
  • January 6, 2022: Update any public facility website to prominently display the most recent overall CMS rating and post the facility’s most recent overall CMS rating so that it is visible to residents and the public within the facility.4

1 Ch. 344 of the Laws of 2021.

2 Section 5, Ch. 141 of the Laws of 2021.

3 Section 2, Ch. 102 of the Laws of 2021.

4 Ch. 441 of the Laws of 2021.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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