Imminent amendments to New York’s Public Health Law have the potential for SIGNIFICANT impact on nursing home operators.
Effective April 14, 2020:
PHL 2803-d, as amended, requires all facility employees and contractors, including those who do not provide patient care services, to report resident abuse, neglect and/or theft of property to DOH, both by phone and in writing within 48 hours. DOH will make forms available for reporting. Consider whether your facility will need to update its compliance plan to make employees and contractors aware of this obligation , which is broader than existing obligations under the regulations.
PHL 2803-w allows DOH to require a facility that has demonstrated certain specified deficiencies to contract (at no small expense) with an independent quality monitor to assure compliance with written corrective action plans. These monitors will be selected by and furnish reports directly to DOH.
PHL 2803-x:
Requires facility disclosure to DOH of any affiliates (such as family members) providing services to the operator. This shall be attested to annually on a form to be provided by DOH. This includes disclosure of affiliate vendors.
Prohibits a nursing home operator from guaranteeing a debt or obligation of any 3rd parties (such as an affiliated real estate owner entity) that has not received DOH establishment approval. Interestingly, on its face, this permits HUD-financing, which requires an operator to grant a security interest in its assets but does not require that an operator give a guaranty. Unless of course, DOH attempts to take the position that a security interest is a guaranty, which is a hard argument to make, particularly given the broader language including “encumbrances” included in the notice requirement below. Also on its face, this does not appear to prohibit an Opco being a co-borrower with a Propco. However, one critical issue is how this new law affects operators who are currently guarantying 3rd party debt, and whether they ought to be working with lenders now to restructure their financing to comply with this law by the effective date. DOH’s position on these issues is not known at this time.
Requires 90 days advance notice to DOH prior to executing a letter of intent or contractual agreement related to any sale, mortgage or encumbrance of facility property. Note this is a very puzzling provision because it requires an operator to anticipate 90 days in advance that it might sign a contract or a letter of intent relating to the foregoing. Also, while this is limited to sales, mortgages, or encumbrances on assets of an Opco, not a Propco entity, this would, for example, require giving notice 90 days prior to an operator signing anything in connection with a Propco HUD financing.
Provides that where a facility is sold, and no longer used for a health care purpose, the operator shall pay DOH the amount of undepreciated value of capital assets for which it received reimbursement by the state. It is critical that a facility seller seeking to avoid risk of forfeiting proceeds of sale include a provision in its purchase agreement, requiring buyer to covenant that they will continue to use the property for the purpose of providing health care services.
PHL 2803-y requires facilities to notify prospective residents of the terms of the admission agreement, including the rates charged to residents. Also requires a facility to post its admission agreement, including its non-governmental rates, on the facility’s website.
Effective February 20, 2020, PHL 2803-c requires facilities to provide potential residents with the facility’s policy regarding granting privileges to physicians prior to a new resident signing the facility’s admission agreement.