BILL NUMBER: S4883
SPONSOR: GOUNARDES
 
TITLE OF BILL:
An act to amend the public health law, in relation to minimum direct
resident care spending by residential health care facilities
 
PURPOSE OR GENERAL IDEA OF BILL:
To conform the calculation of revenue for the 5% profit cap test for
nursing homes with the 70/40 minimum spend test for staffing funding
eligibility.
 
SUMMARY OF PROVISIONS:
Section 1 amends Public Health Law Section 2828 to clarify that COVID-19
pandemic-related expenses and such other one-time federal assistance
should be excluded from the definition of total operating revenue for
purposes of the 5% profit cap test.
Section 2 provides for an immediate effective date; provided, however,
for purposes of distribution of the supplemental payment to nursing
homes authorized by chapter 53 of the laws of 2022 (Aid to Localities)
and pursuant to the Medicaid State Plan Amendment 22-0007, this act
shall be deemed to have taken effect on January 1, 2020.
 
JUSTIFICATION:
The 2022-23 State Budget included $187 million in funding to help defray
the cost of the nursing home staffing mandate. The distribution of this
"safe staffing" funding required federal approval of the associated
Medicaid State Plan Amendment. In March of 2023, the Department of
Health released the state share of that funding to eligible free-stand-
ing nursing homes. To determine eligibility for this additional funding,
the state used provisions of the law to distribute funding to providers
that spend at least 70 percent of revenue on direct care and 40 percent
or more on resident facing staffing based on 2020 Medicaid Cost Report
Data (the "minimum funding statute" or "70/40 test").
CMS approved the safe staffing Medicaid State Plan Amendment in 2024.
As approved by CMS, the calculation of funding eligibility includes both
the 70/40 test, as well as the 5% profit cap test included in the mini-
mum spending statute. While COVID-19 relief and other one-time federal
funding (e.g. FEMA funds) is excluded for the 70/40 calculation, it is
unclear whether the one-time funding is to also be excluded from the 5%
profit cap test.
CMS and DOH determined that the COVID-19 relief and FEMA were not
excluded from the definition of "operating revenue" for purposes of the
5% margin cap. Due to this determination, many not for profit nursing
homes who historically experience operating losses actually exceeded the
5% profit cap test in 2020 due to the one-time federal COVID-related
assistance. As a result, these nursing homes incurred a reduction and
recoupment of the staffing assistance funds. Nursing homes in New York
State are in dire need of funding due to years of inadequate Medicaid
rates, healthcare staffing shortages, and little new investment in long-
term care by the State. This bill will ensure that no nursing home loses
the financial assistance they so desperately need, solely due to the
inadvertent consequences of receiving one-time funding during the
COVID-19 pandemic.
 
PRIOR LEGISLATIVE HISTORY:
None
 
FISCAL IMPLICATIONS:
Amending the calculation of the "safe staffing" funding will increase
the number of nursing homes eligible for such assistance. Preliminary
estimates reflect that 11 not for profit nursing homes are subject to
the increased payment totaling approximately $2.7 million.
 
EFFECTIVE DATE:
Immediately; provided, however, for purposes of distribution of the
supplemental payment to qualified facilities authorized by chapter 53 of
the laws of 2022 (Aid to Localities) and pursuant to the Medicaid State
Plan Amendment 22-0007, this act shall be deemed to have taken effect on
January 1, 2020.

Statutes affected:
S4883: 2828 public health law, 2828(1) public health law, 2828(2) public health law