BILL NUMBER:  S7253

 TITLE OF BILL :

An act to amend the not-for-profit corporation law, in relation to
approval of certificates of incorporation by the commissioner of
mental retardation and developmental disabilities; and repealing
section 16.07 of the mental hygiene law relating thereto


 PURPOSE OF THE BILL :

This bill would amend the Mental Hygiene Law (MHL) and the
Not-For-Profit Corporation Law (NFPCL) to repeal the redundant
requirement that the Office of Mental Retardation and Developmental
Disabilities (OMRDD) approve certificates of incorporation for certain
entities prior to filing with the Secretary of State and issuance of
an operating certificate.

 SUMMARY OF PROVISIONS :

Section 1 of the bill would repeal MHL § 16.07 to eliminate the
requirement that, the Commissioner of OMRDD approve certificates of
incorporation for purposes of establishing or operating a facility for
which an operating certificate is necessary or for fundraising for
such a facility.
              

Sections 2 and 3 of the bill would amend NFPCL §§ 404(q) and
804(a)(i), respectively, to remove the requirement that the
Commissioner of OMRDD must approve certificates of incorporation or
amendments to such certificates for such entities prior to filing with
the Secretary of State and issuance of an operating certificate.

Section 4 of the bill would provide for an immediate effective date.

 EXISTING LAW :

MHL § 16.03 requires certain providers of services to possess an
operating certificate.

MHL § 16.05 sets forth the procedure and criteria for the issuance of
operating certificates.

MHL § 16.07 requires the Commissioner of OMRDD to approve certificates
of incorporation for entities that intend to establish or operate
facilities that would also require an operating certificate issued by
OMRDD, such as community residences, or entities that wish to perform
fund raising activities for the facility.

NFPCL § 404(q) requires that every certificate of incorporation of a
facility that would require an operating certificate issued by OMRDD
or that would allow for fundraising for such a facility must have the
approval of OMRDD prior to filing with the Secretary of State.

NFPCL § 804 requires that amendments to any such certificate of
incorporation be approved by OMRDD prior to filing with the Secretary
of State.

 PRIOR LEGISLATIVE HISTORY :

This is a new proposal.

 STATEMENT IN SUPPORT :

Currently, the MHL requires OMRDD to perform a two-step review before
authorizing a provider agency to operate a new facility. The first
step is a review of the legal sufficiency of the certificate of
incorporation or amendment pursuant to MHL § 16.07.. After this first
step has been performed, the provider agency files the certificate of
incorporation or amendment with the Secretary of State, which also
reviews the certificate or amendment for legal sufficiency.

After the Secretary of State accepts the certificate of incorporation
or amendment, OMRDD again reviews the certificate of incorporation or
amendment pursuant to MHL §§ 16.03 and 16.05. As part of this process,
OMRDD must review and approve a provider's certificate of need
application and related construction plans; the character, competency
and standing in the community of the proposed provider, the public
need for the facility and its sources of future revenues and the
adequacy of the premises, equipment and program.

Because the Secretary of State reviews each certificate and OMRDD also
reviews each certificate in the context of the certificate of need
process after the certificate of incorporation has been accepted by
the Secretary of State, the initial OMRDD review is redundant and
imposes an unnecessary and costly administrative burden on the agency.
Moreover, the requirement that OMRDD perform the initial review is
often premature because not every provider agency proposes the
establishment or operation of a facility at the time they seek to
incorporate. In practice, providers sometimes file certificates of
incorporation and then never propose a facility. By delaying this
review until the corporation is actually ready to proceed with a new
or expanded facility, the number of reviews of the corporation which
OMRDD will need to conduct will be reduced.

The requirement that OMRDD be involved in the initial review of a
provider's certificate of incorporation is an historic relic from the
time when the Department of Mental Hygiene did not have a significant
oversight role over provider agencies. Today, the not-for-profit
agencies that provide services to persons with developmental
disabilities are among the most heavily regulated entities in the
State. The great majority of existing OMRDD services are
Medicaid-funded and OMRDD providers must undergo the Medicaid Provider
Agreement review and approval process overseen by the Department of
Health (DOH). This process includes review of any provide~ to make
sure they have not been excluded as a Medicaid provider by the federal
government or DOH for improper practices. Additionally, any providers
that provide contract-based services are also subject to the
procurement requirements of the State Finance Law with respect to
those services, including, where applicable, approval by the Office of
the State Comptroller.

All OMRDD providers are also subject to both federal and state
criminal background checks pursuant to MHL § 16.33 and the State
Central Register for Child Abuse (for employees who will serve
children). They are also subject to annual quality assurance surveys,
audits and claims review by OMRDD, DOH and the Office of the Medicaid
Inspector General, which review a variety of programmatic and fiscal
issues, such as whether appropriate and up-to-date Individual Service
Plans (ISPs) are done, whether a provider's ongoing fiscal practices
are sound and whether submitted Medicaid claims are accurate.

In light of the multiple layers of initial and ongoing review, the
initial review requirement is an unnecessary and duplicative step that
often delays a provider's ability to begin or expand their operations
and may result in increased costs.  While this bill seeks to
streamline OMRDD's approval process, the proposal will not reduce the
meaningful programmatic and fiscal reviews that service providers must
still undergo.

 BUDGET IMPLICATIONS :

This bill would have no fiscal impact.

 EFFECTIVE DATE :
This bill would take effect immediately.