N.Y. Public Health Law § 2828: Residential health care facilities; minimum direct resident care spending

* § 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) (i) Except as provided in subparagraph (ii) of this paragraph,

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 twenty-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 twenty-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.

(ii) Notwithstanding the requirements prescribed by subparagraph (i)

of this paragraph, the provisions of a demonstration project established

pursuant to a chapter of the laws of two thousand twenty-three that

amended this subparagraph shall apply to those residential health care

facilities who qualify for such demonstration project.

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 capital portion of the Medicaid reimbursement rate;

(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; and

(iii) 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