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Conference Speaker: New Rules and Regulations on the Horizon for Healthcare Facilities

S.J. Steinhardt
Published Date:
Sep 28, 2022

Lourdes Martinez, a partner in the Government Contracts, Investigations and International Trade Practice Group of law firm Sheppard Mullin, provided a detailed overview of the legal and regulatory landscape from both the state and federal perspectives at the Foundation for Accounting Education’s Healthcare Conference on Sept. 22.

She started with a presentation of the latest updates to New York's Certificate of Need (CON) process that governs the establishment, construction, renovation and major medical equipment acquisitions of healthcare facilities, such as hospitals, nursing homes, home care agencies and diagnostic and treatment centers.

A new law brings a big change to the CON application process that covers hospitals, nursing homes and other facilities that submit applications for the construction, establishment, change in the establishment, merger, acquisition, elimination or substantial reduction, expansion, or addition of a service. Facilities subject to that law will be required to include a Health Equity Impact Assessment, as of June 2023.

Martinez emphasized that, given this requirement, the CON application must demonstrate how it will serve underserved groups. She then posed the rhetorical question, “Will you be able to effectively communicate [that]?”

She then moved on to an update on nursing home litigation.

“There is so much going on in the nursing home area that we could have an all-day session and still not scratch the surface,” she said.

There have been “dozens of lawsuits … filed in state courts” asserting claims of malfeasance against nursing homes and alleging violations of the state law governing public health, negligence, gross negligence and malpractice in the nursing homes’ responses to the COVID-19 pandemic, she said.

“These cases coming fast and furious,” she said. “This is an area for us to keep our eyes on.”

She discussed the June 2021 repeal of a 2012 executive order that imposed limits on executive compensation and administrative expenses on entities that receive state funds through Medicaid, and then she reviewed proposed rules governing nursing homes.

In August, the State Department of Health (DOH) revised its proposed rules regarding nursing home minimum direct care spending, redefining the definition of revenue, which originally excluded only the capital portion of the Medicaid reimbursement rate from the prior three years. Under the proposed rule, the capital per diem portion of the reimbursement rate for facilities with four- and five-star ratings, and federal grant funds for reimbursement of COVID-19 pandemic-related expenses, would also be excluded.

Martinez pointed out that the latter proposed rule gave these facilities an incentive to attain a four- or five-star rating.

Proposed rules for the minimum staffing of nursing homes have also been revised. These rules apply to forward-facing staff, such as nurses and certified nurse assistants. They will govern daily average staffing hours “equal to 3.5 hours of care per resident per day by a certified nurse aide, a licensed nurse or a nurse aide, provided that out of such 3.5 hours, no less than 2.2 hours of care per resident per day must be provided by a certified nurse aide or a nurse aide, and no less than 1.1 hours of care per resident per day must be provided by a licensed nurse.”

Martinez warned that there is a practical obstacle to meeting these rules: It is “extremely difficult to hit three and a half hours, because there are not a lot of people who want to do this [type of work].”

Earlier this summer, New York State's Office of the Medicaid Inspector General (OMIG) posted proposed regulations relating to provider compliance programs, Medicaid managed care fraud, waste and abuse prevention programs and OMIG’s self-disclosure program.

Martinez then highlighted a new proposed requirement of these proposed rules: the designation of a compliance committee, which must have a charter that is reviewed and updated annually.

She then pointed out what she called the most important part of this in her view: that providers must publicize the lines of communication to the compliance officer, and make them available to all affected individuals and all Medicaid recipients receiving service from the provider.

“You must be auditing or monitoring or no one will say that you had a compliance program,” she said.

“What happens when the government gives away a lot of money?” she asked, rhetorically, adding that the government has been “ferreting out fraud and abuse.”

She then concluded with an update on federal policies, including a review of the CARES Act, which appropriated $150 billion to state, local and tribal governments for COVID testing; the Paycheck Protection Program (PPP); and the Economic Injury Disaster Loan (EIDL) Program; some cases of COVID-related fraud prosecutions; and an Office of the Inspector General (OIG) fraud alert on telehealth schemes.

“There is a new focus” on investigations such as these, she noted, as well as an OIG audit of skilled nursing facilities' Medicare payments to related parties, followed by an increased federal effort to increase these facilities’ transparency, oversight and enforcement.

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