Election Fallout, NY Nonprofit Sales and Other Recent News

 Election Fallout

With Democrats in control of the New York State Senate for the first time in nearly a decade, it remains to be seen what the fallout might be for the health care industry.  But one area where you can be sure to expect to see a push is legislation for mandatory staffing minimums in health care facilities. The State Assembly has repeatedly pushed for such legislation which has been thwarted for some time by a Republican controlled Senate.  Stay tuned to see if that changes, with significant ramifications for New York facilities, compounded by minimum wage increases.  At the Federal level, with Democrats now in control of the House of Representatives, we may also see a Federal push for minimum staffing requirements.   However, the chances of the Federal government pushing to shift Federal Medicaid funding to block grants has likely gone down with the new Congress.

NY AG Updated Guidelines on Sales of Nonprofit Nursing Homes

In light of an uptick of nonprofit nursing home sales to for profit operators over recent years  (some of which, to the chagrin of the AG, resulted in conversions of properties to other commercial uses), the Charities Bureau of the New York State Attorney General’s Office recently issued new guidance on the sale of nonprofit nursing homes, particularly sales to for-profit operators.  This is relevant both to potential sellers and purchasers.  Specifically, in submitting a bid to a nonprofit seller, a proposed purchaser should be mindful of and be sure to proactively address the criteria that the AG is requiring the seller to account for as part of its bid review process, including in its diligence and contract negotiations.

When a nonprofit petitions the AG’s office for approval,  the nonprofit submits a Statement to the Charities Bureau.  The AG in its new guidance highlights a number of items that should be addressed in such Statement.  Among those highlighted are criteria relating to whether the seller has made efforts to assure that  continuity of the same level of care at the facility after the transaction is completed (including evaluating star ratings of other facilities owned by the proposed purchaser), that staffing will not be materially reduced, and that there are contractual provisions to assure such commitment from the purchaser post-closing.

A copy of the new guidance can be found here: https://www.charitiesnys.com/pdfs/NursingHomeSales.pdf

Telehealth in Nursing Homes

CMS is now accepting comments through the end of 2018 before finalizing its new rule that will include telehealth services as reimbursable to Medicare Advantage plans.  The new rule is expected to take effect in 2020 and should have a significant impact on increasing use of telehealth in nursing homes.  Further, many industry experts believe this new rule could potentially open the door to expansion by Medicare to include telehealth as a reimbursable service under its traditional reimbursement model as well. 

CMS Demo - Inpatient Mental Health Services

CMS has announced a new Medicaid demonstration opportunity for States, expanding coverage of inpatient mental health services.  In States that are approved to participate, a provider will receive Medicaid reimbursement for short-term residents in Institutions for Mental Disease (IMDs) primarily to receive mental health treatment.

A copy of the full press release can be found here: https://www.cms.gov/newsroom/press-releases/cms-announces-new-medicaid-demonstration-opportunity-expand-mental-health-treatment-services

A Follow-Up on Executive Compensation

In response to a question we received on the New York State executive compensation rules and the impact of the recent Court of Appeals decision, discussed in our prior blog post, please be aware that if a shareholder or member of an operator who receives distributions in excess of his or her pro rata share, and such person provides services for the operator, such distributions could be deemed to be compensation, to be calculated in determining whether the compensation cap is exceeded.  Please consult with us if you think this may be an issue impacting your organization.