BILL NUMBER: S755

SPONSOR: MONTGOMERY
 
TITLE OF BILL:

An act in relation to exempting monthly assessments due from residential
health facilities located in any area designated as a Health Profes-
sional Shortage Area or serving a medically underserved population and
experiencing a medical assistance utilization rate of eighty-five
percent or greater from interest or penalties for any period prior to
October 1, 2020

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill would provide an opportunity for residential health facilities
which are otherwise unable to satisfy their obligations to New York
State to fulfill their responsibility.

 
SUMMARY OF SPECIFIC PROVISIONS:

This bill would allow a residential health facility which is located in
              

a federally designated Health Professional Shortage Area or a medically
underserved population area and which is paid by Medicaid or Medicare
for more than 85% of its patients, to negotiate an agreement with the
Commissioner of Health to enter into reasonable payment schedule on
allowed taxes and fees, including all accumulated interest and penal-
ties.

 
JUSTIFICATION:

The Health Facilities Cash Receipts Assessment requires hospitals and
nursing homes to pay an assessment on gross receipts on a monthly basis.
This assessment was enacted in 2002 in order to close gaps in the State
spending plan.

Under this tax, nursing homes and hospitals pay 6% of their gross reven-
ue to the State, including revenue from Medicaid and Medicare patients.
Those facilities then apply to the federal government to be compensated
for the tax, a process which takes months. Health facilities which have
a high proportion of Medicaid. and Medicare patients have found it espe-
cially difficult to balance their books because of the delay inherent in
this system.

This difficulty has been exacerbated by a state policy which is designed
to encourage prompt payment of the tax by assessing a 25% penalty on
overdue payments. There is no exception made for the delay caused by the
reimbursement from the federal health care programs. As a result there
are nursing homes and hospitals, particularly those with high Medicare
and Medicaid caseloads, which owe as much in penalties and fees as they
do under the original Cash Receipts Assessment.

Each month, as the penalties and fees compound, it becomes less feasible
to make the payment to the State while providing health care services to
the community. The recession has caused costs for medical supplies and
the like to escalate, which consumes a greater share of the gross reven-
ues which the Cash Receipts Assessment is based upon.  The situation is
untenable. If current trends continue, and there is no reason to expect
that they will not, these facilities will be forced to enter receiver-

ship or bankruptcy within months, the State's prospects at collecting
these, funds will dim, and the people of New York will suffer.

This bill gets at the heart of the problem by requiring these facilities
to pay their tax bill in full, including all interest and other penal-
ties, which brings needed revenue into the state, but it also allows the
Department of Health to negotiate with these facilities to come up with
a payment plan which prevents these facilities from having to shutter
their doors. The bill is narrowly tailored to those facilities which a)
receive more than 65% of their revenue from Medicaid and Medicare, b)
are in a health professional shortage or medically underserved area,
which means that their costs are likely substantially higher. These are
the facilities that are, at this instant, on the precipice of disaster,
unless this legislature steps in and addresses this problem.

 
PRIOR LEGISLATIVE HISTORY:

A3626 of 2014

A318 of 2012

A9232 of 2010

 
FISCAL IMPLICATIONS:

This bill, if enacted will earn money for the State, which will collect
the cash receipts tax from hospitals which cannot currently meet their
obligation.

 
EFFECTIVE DATE:
Immediately.