Legislation
SECTION 2828
Residential health care facilities; minimum direct resident care spending
Public Health (PBH) CHAPTER 45, ARTICLE 28
* § 2828. Residential health care facilities; minimum direct resident
care spending. 1. (a) Notwithstanding any law to the contrary, the
department shall promulgate regulations governing the disposition of
revenue in excess of expenses for residential health care facilities
consistent with this section. Beginning on and after January first, two
thousand twenty-two, every residential health care facility shall spend
a minimum of seventy percent of revenue on direct resident care, and
forty percent of revenue shall be spent on resident-facing staffing,
provided that amounts spent on resident-facing staffing shall be
included as a part of amounts spent on direct resident care.
(b) Fifteen percent of costs associated with resident-facing staffing
contracted out by a facility for services provided by registered
professional nurses or licensed practical nurses licensed pursuant to
article one hundred thirty-nine of the education law or certified nurse
aides who have completed certification and training approved by the
department shall be deducted from the calculation of the amount spent on
resident-facing staffing and direct resident care.
(c) Such regulations shall further include at a minimum that any
residential health care facility for which total operating revenue
exceeds total operating and non-operating expenses by more than five
percent of total operating and non-operating expenses or that fails to
spend the minimum amount necessary to comply with the minimum spending
standards for resident-facing staffing or direct resident care,
calculated on an annual basis, or for the year two thousand twenty-two,
on a pro-rata basis for only that portion of the year during which the
failure of a residential health care facility to spend a minimum of
seventy percent of revenue on direct resident care, and forty percent of
revenue on resident-facing staffing, may be held to be a violation of
this chapter, shall remit such excess revenue, or the difference between
the minimum spending requirement and the actual amount of spending on
resident-facing staffing or direct care staffing, as the case may be, to
the state, with such excess revenue which shall be payable, in a manner
to be determined by such regulations, by November first in the year
following the year in which the expenses are incurred. The department
shall collect such payments by methods including, but not limited to,
bringing suit in a court of competent jurisdiction on its own behalf
after giving notice of such suit to the attorney general, deductions or
offsets from payments made pursuant to the Medicaid program, and shall
deposit such recouped funds into the nursing home quality pool, as set
forth in paragraph d of subdivision two-c of section two thousand eight
hundred eight of this article. Provided further that such payments of
excess revenue shall be in addition to and shall not affect a
residential health care facility's obligations to make any other
payments required by state or federal law into the nursing home quality
pool, including but not limited to medicaid rate reductions required
pursuant to paragraph g of subdivision two-c of section two thousand
eight hundred eight of this article and department regulations
promulgated pursuant thereto. The commissioner or their designees shall
have authority to audit the residential health care facilities' reports
for compliance in accordance with this section.
2. For the purposes of this section the following terms shall have the
following meanings:
(a) "Revenue" shall mean the total operating revenue from or on behalf
of residents of the residential health care facility, government payers,
or third-party payers, to pay for a resident's occupancy of the
residential health care facility, resident care, and the operation of
the residential health care facility as reported in the residential
health care facility cost reports submitted to the department; provided,
however, that revenue shall exclude:
(i) the average increase in the capital portion of the Medicaid
reimbursement rate from the prior three years;
(ii) funding received as reimbursement for the assessment under
subparagraph (vi) of paragraph (b) of subdivision two of section
twenty-eight hundred seven-d of this article, as reconciled pursuant to
paragraph (c) of subdivision ten of section twenty-eight hundred seven-d
of this article;
(iii) the capital per diem portion of the reimbursement rate for
nursing homes that have an overall four- or five-star rating assigned
pursuant to the inspection rating system of the U.S. Centers for
Medicare and Medicaid Services (CMS rating), provided however that such
exclusion shall not apply to any amount of the capital per diem portion
of the reimbursement rate that is attributable to a capital expenditure
made to a corporation, other entity, or individual, with a common or
familial ownership to the operator or the facility as reported under
subdivision one of section twenty-eight hundred three-x of this chapter;
and
(iv) any grant funds from the federal government for reimbursement of
COVID-19 pandemic-related expenses, including but not limited to funds
received from the federal emergency management agency or health
resources and services administration.
(b) "Expenses" shall include all operating and non-operating expenses,
before extraordinary gains, reported in cost reports submitted pursuant
to section twenty-eight hundred five-e of this article, except as
expressly excluded by regulations and/or this section. Such exclusions
shall include, but not be limited to, any related party transaction or
compensation to the extent that the value of such transaction is greater
than fair market value, and the payment of compensation for employees
who are not actively engaged in or providing services at the facility.
(c) "Direct resident care" includes the following cost centers in the
residential health care facility cost report: (i) Nonrevenue Support
Services - Plant Operation & Maintenance, Laundry and Linen,
Housekeeping, Patient Food Service, Nursing Administration, Activities
Program, Nonphysician Education, Medical Education, Medical Director's
Office, Housing, Social Service, Transportation; (ii) Ancillary Services
- Laboratory Services, Electrocardiology, Electroencephalogy, Radiology,
Inhalation Therapy, Podiatry, Dental, Psychiatric, Physical Therapy,
Occupational Therapy, Speech/Hearing Therapy, Pharmacy, Central Services
Supply, Medical Staff Services provided by licensed or certified
professionals including and without limitation Registered Nurses,
Licensed Practical Nurses, and Certified Nursing Assistant; and (iii)
Program Services - Residential Health Care Facility, Pediatric,
Traumatic Brain Injury (TBI), Autoimmune Deficiency Syndrome (AIDS),
Long Term Ventilator, Respite, Behavioral Intervention,
Neurodegenerative, Adult Care Facility, Intermediate Care Facilities,
Independent Living, Outpatient Clinics, Adult Day Health Care, Home
Health Care, Meals on Wheels, Barber & Beauty Shop, and Other similar
program services that directly address the physical conditions of
residents. Direct resident care does not include, at a minimum and
without limitation, administrative costs (other than nurse
administration), capital costs, debt service, taxes (other than sales
taxes or payroll taxes), capital depreciation, rent and leases, and
fiscal services.
(d) "Resident-facing staffing" shall include all staffing expenses in
the ancillary and program services categories on exhibit h of the
residential health care reports as in effect on February fifteenth, two
thousand twenty-one.
(e) "Cost Report" shall mean the annual financial and statistical
report submitted to the department pursuant to sections two thousand
eight hundred five-e and two thousand eight hundred eight-b of this
article, and regulations promulgated pursuant thereto, which includes
the residential health care facility's revenues, expenses, assets,
liabilities and statistical information.
3. For the purposes of this section, residential health care
facilities shall not include (a) facilities that are authorized by the
department to primarily care for medically fragile children, people with
HIV/AIDS, persons requiring behavioral intervention, persons requiring
neurodegenerative services, and other specialized populations that the
commissioner deems appropriate to exclude; and (b) continuing care
retirement communities licensed pursuant to article forty-six or forty
six-a of this chapter.
4. The commissioner may waive the requirements of this section on a
case-by-case basis with respect to a nursing home that demonstrates to
the commissioner's satisfaction that it experienced unexpected or
exceptional circumstances that prevented compliance. The commissioner
may also exclude from revenues and expenses, on a case-by-case basis,
extraordinary revenues and capital expenses, incurred due to a natural
disaster or other circumstances set forth by the commissioner in
regulation. At least thirty days before any action by the commissioner
under this subdivision, the commissioner shall transmit the proposed
action to the state office of the long-term care ombudsman and the
chairs of the senate and assembly health committees, and post it on the
department's website.
5. The commissioner shall issue regulations, seek amendments to the
state plan for medical assistance, seek waivers from the federal Centers
for Medicare and Medicaid Services, and take such other actions as
reasonably necessary to implement this section.
6. The commissioner shall, if necessary, update reporting forms
completed by residential health care facilities under section twenty-
eight hundred five-e of this article to include information to ensure
all items referred to in this section and organize such information
consistent with the terms of this section.
* NB There are 2 § 2828's
care spending. 1. (a) Notwithstanding any law to the contrary, the
department shall promulgate regulations governing the disposition of
revenue in excess of expenses for residential health care facilities
consistent with this section. Beginning on and after January first, two
thousand twenty-two, every residential health care facility shall spend
a minimum of seventy percent of revenue on direct resident care, and
forty percent of revenue shall be spent on resident-facing staffing,
provided that amounts spent on resident-facing staffing shall be
included as a part of amounts spent on direct resident care.
(b) Fifteen percent of costs associated with resident-facing staffing
contracted out by a facility for services provided by registered
professional nurses or licensed practical nurses licensed pursuant to
article one hundred thirty-nine of the education law or certified nurse
aides who have completed certification and training approved by the
department shall be deducted from the calculation of the amount spent on
resident-facing staffing and direct resident care.
(c) Such regulations shall further include at a minimum that any
residential health care facility for which total operating revenue
exceeds total operating and non-operating expenses by more than five
percent of total operating and non-operating expenses or that fails to
spend the minimum amount necessary to comply with the minimum spending
standards for resident-facing staffing or direct resident care,
calculated on an annual basis, or for the year two thousand twenty-two,
on a pro-rata basis for only that portion of the year during which the
failure of a residential health care facility to spend a minimum of
seventy percent of revenue on direct resident care, and forty percent of
revenue on resident-facing staffing, may be held to be a violation of
this chapter, shall remit such excess revenue, or the difference between
the minimum spending requirement and the actual amount of spending on
resident-facing staffing or direct care staffing, as the case may be, to
the state, with such excess revenue which shall be payable, in a manner
to be determined by such regulations, by November first in the year
following the year in which the expenses are incurred. The department
shall collect such payments by methods including, but not limited to,
bringing suit in a court of competent jurisdiction on its own behalf
after giving notice of such suit to the attorney general, deductions or
offsets from payments made pursuant to the Medicaid program, and shall
deposit such recouped funds into the nursing home quality pool, as set
forth in paragraph d of subdivision two-c of section two thousand eight
hundred eight of this article. Provided further that such payments of
excess revenue shall be in addition to and shall not affect a
residential health care facility's obligations to make any other
payments required by state or federal law into the nursing home quality
pool, including but not limited to medicaid rate reductions required
pursuant to paragraph g of subdivision two-c of section two thousand
eight hundred eight of this article and department regulations
promulgated pursuant thereto. The commissioner or their designees shall
have authority to audit the residential health care facilities' reports
for compliance in accordance with this section.
2. For the purposes of this section the following terms shall have the
following meanings:
(a) "Revenue" shall mean the total operating revenue from or on behalf
of residents of the residential health care facility, government payers,
or third-party payers, to pay for a resident's occupancy of the
residential health care facility, resident care, and the operation of
the residential health care facility as reported in the residential
health care facility cost reports submitted to the department; provided,
however, that revenue shall exclude:
(i) the average increase in the capital portion of the Medicaid
reimbursement rate from the prior three years;
(ii) funding received as reimbursement for the assessment under
subparagraph (vi) of paragraph (b) of subdivision two of section
twenty-eight hundred seven-d of this article, as reconciled pursuant to
paragraph (c) of subdivision ten of section twenty-eight hundred seven-d
of this article;
(iii) the capital per diem portion of the reimbursement rate for
nursing homes that have an overall four- or five-star rating assigned
pursuant to the inspection rating system of the U.S. Centers for
Medicare and Medicaid Services (CMS rating), provided however that such
exclusion shall not apply to any amount of the capital per diem portion
of the reimbursement rate that is attributable to a capital expenditure
made to a corporation, other entity, or individual, with a common or
familial ownership to the operator or the facility as reported under
subdivision one of section twenty-eight hundred three-x of this chapter;
and
(iv) any grant funds from the federal government for reimbursement of
COVID-19 pandemic-related expenses, including but not limited to funds
received from the federal emergency management agency or health
resources and services administration.
(b) "Expenses" shall include all operating and non-operating expenses,
before extraordinary gains, reported in cost reports submitted pursuant
to section twenty-eight hundred five-e of this article, except as
expressly excluded by regulations and/or this section. Such exclusions
shall include, but not be limited to, any related party transaction or
compensation to the extent that the value of such transaction is greater
than fair market value, and the payment of compensation for employees
who are not actively engaged in or providing services at the facility.
(c) "Direct resident care" includes the following cost centers in the
residential health care facility cost report: (i) Nonrevenue Support
Services - Plant Operation & Maintenance, Laundry and Linen,
Housekeeping, Patient Food Service, Nursing Administration, Activities
Program, Nonphysician Education, Medical Education, Medical Director's
Office, Housing, Social Service, Transportation; (ii) Ancillary Services
- Laboratory Services, Electrocardiology, Electroencephalogy, Radiology,
Inhalation Therapy, Podiatry, Dental, Psychiatric, Physical Therapy,
Occupational Therapy, Speech/Hearing Therapy, Pharmacy, Central Services
Supply, Medical Staff Services provided by licensed or certified
professionals including and without limitation Registered Nurses,
Licensed Practical Nurses, and Certified Nursing Assistant; and (iii)
Program Services - Residential Health Care Facility, Pediatric,
Traumatic Brain Injury (TBI), Autoimmune Deficiency Syndrome (AIDS),
Long Term Ventilator, Respite, Behavioral Intervention,
Neurodegenerative, Adult Care Facility, Intermediate Care Facilities,
Independent Living, Outpatient Clinics, Adult Day Health Care, Home
Health Care, Meals on Wheels, Barber & Beauty Shop, and Other similar
program services that directly address the physical conditions of
residents. Direct resident care does not include, at a minimum and
without limitation, administrative costs (other than nurse
administration), capital costs, debt service, taxes (other than sales
taxes or payroll taxes), capital depreciation, rent and leases, and
fiscal services.
(d) "Resident-facing staffing" shall include all staffing expenses in
the ancillary and program services categories on exhibit h of the
residential health care reports as in effect on February fifteenth, two
thousand twenty-one.
(e) "Cost Report" shall mean the annual financial and statistical
report submitted to the department pursuant to sections two thousand
eight hundred five-e and two thousand eight hundred eight-b of this
article, and regulations promulgated pursuant thereto, which includes
the residential health care facility's revenues, expenses, assets,
liabilities and statistical information.
3. For the purposes of this section, residential health care
facilities shall not include (a) facilities that are authorized by the
department to primarily care for medically fragile children, people with
HIV/AIDS, persons requiring behavioral intervention, persons requiring
neurodegenerative services, and other specialized populations that the
commissioner deems appropriate to exclude; and (b) continuing care
retirement communities licensed pursuant to article forty-six or forty
six-a of this chapter.
4. The commissioner may waive the requirements of this section on a
case-by-case basis with respect to a nursing home that demonstrates to
the commissioner's satisfaction that it experienced unexpected or
exceptional circumstances that prevented compliance. The commissioner
may also exclude from revenues and expenses, on a case-by-case basis,
extraordinary revenues and capital expenses, incurred due to a natural
disaster or other circumstances set forth by the commissioner in
regulation. At least thirty days before any action by the commissioner
under this subdivision, the commissioner shall transmit the proposed
action to the state office of the long-term care ombudsman and the
chairs of the senate and assembly health committees, and post it on the
department's website.
5. The commissioner shall issue regulations, seek amendments to the
state plan for medical assistance, seek waivers from the federal Centers
for Medicare and Medicaid Services, and take such other actions as
reasonably necessary to implement this section.
6. The commissioner shall, if necessary, update reporting forms
completed by residential health care facilities under section twenty-
eight hundred five-e of this article to include information to ensure
all items referred to in this section and organize such information
consistent with the terms of this section.
* NB There are 2 § 2828's