BILL NUMBER: S4336

SPONSOR: RIVERA
 
TITLE OF BILL:

An act to amend the public health law, in relation to directing the
commissioner of health to establish a direct patient care ratio report-
ing and rebate requirement for nursing homes

 
PURPOSE:

The purpose of the bill is to direct the Commissioner of Health to
establish direct care ratio reporting and rebates by nursing homes to
ensure that facilities who have been authorized to provide care to the
frail, elderly and disabled are investing an appropriate amount of
revenue into the direct care of residents and not excessively profiting
at the expense of quality and direct care.

 
SUMMARY OF PROVISIONS:

Section 1 of the bill amends section 206 of the public health law by
              

adding a new subdivision 29 directing the Commissioner to establish a
direct care ratio reporting and rebate requirement by July 1, 2021
pursuant to which nursing homes shall be required to report total reven-
ues collected, along with the portion of revenues that are expended on
direct care staff wages, other staff wages, taxes, administrative costs
including management agreement and staffing agency contracts, invest-
ments in improvements to the facilities' equipment and physical plant,
profits and any other factors identified by the Commissioner. The ratio
shall require seventy percent or such higher percentage as the commis-
sioner may establish by regulation of a facilities' aggregate revenue in
a fiscal year to be expended on the direct care of residents.

The Commissioner shall have the authority to conducts financial audits
necessary to ensure the accuracy of information provided. When the
direct care ratio fails to substantially comply with the ratio require-
ment established pursuant to this subsection, the nursing home shall
issue a pro rata dividend or credit to all individuals and entities
making payments to the nursing home for resident services to ensure they
have met the mandatory ratio for the previous calendar year All divi-
dends and credits shall be distributed by June 30th of the year follow-
ing the calendar year in which the ratio requirements were not satis-
fied.

Section 2 of the bill provides an effective date

 
JUSTIFICATION:

During the August 2020 Joint Legislative hearings on COVID-19 in resi-
dential health care facilities, legislators and the public heard heart-
breaking testimony about this virus ravaging facilities, with both resi-
dents and staff contracting the virus and in far too many cases,
succumbing to it. While many facilities and staff worked to do their
best with limited resources in response to the pandemic, among the
testimony were repeated concerns of facilities with poor quality of care
and understaffed homes even before the virus. Often these same facili-
ties, or the operators, managers or investors of the facilities, are
making large profits at the expense of residents and staff. This bill
seeks to ensure that New York State's nursing homes, which all rely on
public funding through Medicaid and Medicare, are not driven to exces-
sive profits at the expense of the care they are paid to provide, by
establishing a Direct Care Ratio (DCR).

For the past decade New York State has had a similar system for health
insurers. The state requires regulated health insurers to provide a
minimum amount of revenues to pay for actual care, also referred to as
the Medical Loss Ratio (MLR). Shortly after New York adopted an MLR
(Chapter 107 of 2010), the Federal Affordable Care Act also adopted an
MLR for health insurers. This MLR requirement ensures that every year
health insurers report the actual loss ratio for the previous calendar
year to the Superintendent of the Department of Financial Services based
on the ratio of claims to premiums. If the MLR is not met, the Super-
intendent can direct the insurer to take corrective actions which may
include the submission of a rate filing to reduce future premiums, or to
issue dividends, premium refunds or credits, or any combination of
these. The Superintendent may also use the MLR in reviewing a proposed
premium rate increase and determine it should be modified or disap-
proved.

In response to COVID-19 in nursing homes, the New Jersey Department of
Health engaged Manatt Health to undertake an assessment and make recom-
mendations to improve the long-term care system. In June Manatt Health
released its report "Recommendations to Strengthen the Resilience of New
Jersey's Nursing Homes in the Wake of COVID-19".  Creating a DCR for
nursing homes was one of the report's recommendations and New Jersey
quickly adopted a DCR by statute in September, 2020. New York must
quickly follow New Jersey's lead.

Establishing a DCR for nursing homes, and requiring nursing homes to
rebate excessive profits back to the residents and public health care
systems that pay them, will provide a tool to make sure that profits and
administrative costs are not excessively high at the expense of care for
the frail, elderly and disabled. Like the state's MLR for health insur-
ers a DCR for nursing homes makes clear that excessive profits at the
expense of caring for people's health is no longer tolerated and instead
encourages that funding be used to support good quality care and appro-
priate staffing levels.

 
LEGISLATIVE HISTORY:

New Bill

 
FISCAL IMPLICATIONS:

None to state as the intent is not to have rebates paid, but to have
nursing homes reinvest excess profits into providing better quality and
care.

 
EFFECTIVE DATE:
This act shall take effect immediately.