New York State Budget Brings Sweeping Changes to the Home Health Care Industry

Governor Hochul signed the New York State Budget for fiscal year 2023-2024 into law on May 3, 2023, bringing with it sweeping changes to the way home health care agencies and home care staffing agencies in the state will operate. The Budget includes important legislation that modifies the home care worker minimum wage, including the wage parity benefit portion of the minimum wage, establishes new oversight standards to be administered by the New York State Department of Health (NY DOH) regarding the payment of wages, compensation and benefits to home care workers, implements a new Managed Long-Term Care (MLTC) oversight standard, and creates additional requirements and hurdles for home care staffing agencies.

Home Care Worker Minimum Wage

Wage Parity Benefit Portion

Beginning January 1, 2024, the wage parity benefit portion of the home care worker minimum wage will be reduced from $4.09/hour in NYC to $2.54/hour and from $3.22/hour in Long Island and Westchester to $1.67/hour. The hourly wage portion of the home care worker minimum wage, however, will be increasing as set forth below.

Hourly Wage Portion

Notably, the FY 2023-2024 Budget supersedes the prior plan to increase by $1.00/hour the home care worker minimum hourly wage rate to $18.00/hour on October 1, 2023. Instead, wage increases are now scheduled as follows:

Further, at no point will the home care worker minimum wage rate exceed $3.00/hour more than the minimum wage applicable to non-home health care workers in the state. As reported earlier, however, the Budget also establishes a new statutory minimum wage rate schedule for non-home health care workers with the Downstate minimum rising to $17.00/hour and the remainder of the state minimum rising to $16.00/hour by 2026.

NY DOH Increased Oversight Over Payment of Wages and Benefits

The Budget also amends Section 3614-f of the Public Health Law by adding a new subsection permitting the NY DOH to address an inquiry requesting records and information concerning wages, compensation, and other benefits to home care aides, among other things, to any employer of home care aides (including Personal Assistants in the Consumer Directed Personal Assistance Program). Such an inquiry may require the production of payroll reports and other wage, compensation, and benefits information. Every entity or person to whom such an inquiry is addressed must respond in writing within 15 business days and may be required to certify under penalty of perjury that the information provided is accurate. Failure to respond to the NY DOH’s inquiry in the time required will result in the imposition of civil penalties. Each subsequent day in which the agency or individual fails to respond will be considered by the NY DOH as a separate and subsequent violation. The law provides that information submitted to the NY DOH in response to an inquiry will be deemed confidential, will not contain information identifying any individual responder in any reports issued, and will not be subject to the Freedom of Information Law (FOIL). The purpose of this amendment is to assist the NY DOH and other governmental agencies in monitoring home health care.

MLTC Oversight Standard

The Budget also significantly weakens the MLTC oversight standard that was initially proposed by Governor Hochul. The law now provides that each MLTC plan currently authorized to operate in the state must have an active Medicare Dual Eligible Special Needs Plan that has a CMS Quality Star Rating of three stars or higher on or before January 1, 2024. The MLTC plan must also “sufficiently demonstrate success” in the following categories:

1. a commitment to contract with an “adequate” number of Licensed Home Care Services Agencies (LHCSAs) and Fiscal Intermediaries needed to provide “necessary” personal care services to the “greatest practicable” number of enrollees;
2. readiness to implement timely and adhere to the maximum wait time criteria for key categories of service;
3. a commitment to “quality improvement”;
4. accessibility and geographic distribution of network providers;
5. cultural and language competencies specific to the enrollees;
6. the ability to “serve enrollees across the continuum of care”; and
7. value-based readiness and experience.

MLTC plans with a Medicare Dual Eligible Special Needs Plan in operation with a current CMS Quality Star Rating of less than 3 stars must establish and implement a performance improvement plan. Many of the terms used in the legislation are undefined and, as such, it remains unclear the extent to which the NY DOH will implement and enforce these new MLTC standards.

Registration and Other New Requirements for Temporary Health Care Services Agencies and Health Care Technology Platforms

The Budget amends the Public Health Law to include a new Article 29-K requiring, among other things, that Temporary Health Care Services Agencies (THCSAs) register with the NY DOH on an annual basis, provide full reports of charges and compensation for all services provided, and disclose entire contracts with the health care entities that they service. This takes effect on August 17, 2023.

Definitions

THCSAs are defined as a person or entity “in the business of providing or procuring temporary employment of health care personnel for health care entities.” The term includes nurses’ registries and mobile applications or other technology-based platforms to provide temporary placement or procurement of health care personnel. LHCSAs and individuals who only provide their own services on a temporary basis to health care entities are exempt from the definition.

Health care personnel are “nurses, CNAs, and licensed or unlicensed direct care staff provided to administer temporary health care services in a health care entity.”

Direct care staff are defined as “an individual who is responsible for patient/resident handling or assessment as a regular part of their services, including any licensed or unlicensed health care worker.”

Health care entity is defined as “an agency, corporation, facility, or individual providing medical or health care services.”

The term controlling person includes “a person, officer, program administrator, or director whose responsibilities include the direction of the management or policies of a” THCSA, as well as “an individual who directly owns at least ten percent voting interest in a corporation, partnership, or other business entity that is a controlling person.”

Registration

While the NY DOH will publish further regulations that establish the forms and procedures concerning the annual registration of THCSAs, the operator of a THCSA will, at a minimum, be required to:

• provide the name(s) and address(es) of any controlling person(s) of the THCSA;
• provide the name(s) and address(es) of any health care entities in which any of the THCSA’s controlling person(s) or their family members direct the management or policies and/or have an ownership relationship;
• verify its state of incorporation/organization;
• demonstrate that “the applicant is of good moral character and able to comply with all applicable state laws and regulations relating to the activities in which it intends to engage under the registration”; and
• make a payment of $1,000 to cover registration and annual renewal fees.

Once issued by the NY DOH, the THCSA’s registration will be effective for one year, unless:

• the registration is revoked or suspended; or
• the ownership interest of 10% or more, or management of the THCSA, is sold or transferred, in which case the registration would expire at the sooner of 30 days after the transfer of the THCSA to the new owner or operator or the date on which the new owner or operator is granted or denied a new registration.

Continuous Requirements

In addition to any other requirements that the NY DOH deems necessary, the THCSA, at a minimum, must:

1. document that each healthcare personnel provided to or contracted with health care entities meets the minimum licensing, training, and continuing education standards for the position in which the healthcare personnel will work;
2. comply with all pertinent requirements and qualifications for personnel employed in health care entities;
3. retain all health care personnel records for six years and make them available to the NY DOH upon request;
4. comply with any requests made by the NY DOH to examine the books and records of the THCSA, subpoena witnesses and documents, and if the NY DOH has reason to believe that the books or records do not accurately reflect the financial condition or financial transactions of the THCSA, make such other investigation as is necessary;
5. for each of its separate locations, appoint an administrator who is qualified by training, experience or education to operate the THCSA;
6. maintain a written agreement or contract with each health care entity to which it assigns or refers health care personnel, which must include, among other things, the maximum rates that can be billed or charged by the THCSA, the actual rates to be charged by the THCSA, procedures for notice from health care entities of failure of medical personnel to report to assignments, procedures for the investigation and resolution of complaints about the performance of THCSA personnel, and any requirement for minimum advance notice in order to ensure prompt arrival of assigned health care personnel;
7. submit to the NY DOH executed copies of all contracts that it has with health care entities within five business days of the effective date of each contract (although protected from disclosure under the FOIL); and
8. submit to the NY DOH copies of all invoices to health care entities’ personnel.

Moreover, the THCSA is prohibited from restricting in any manner the employment opportunities of its health care personnel, such as by requiring personnel to enter into non-compete agreements and from requiring the payment of liquidated damages, employment fees, or other compensation, through contract or any other method, if the health care personnel is hired as a permanent employee of a health care entity where the individual was placed to work.

Quarterly Reports of Charges and Compensation Rates for Services

On a quarterly basis, THCSAs will be required to report to the NY DOH a full disclosure of charges and compensation, including a schedule of all hourly billing rates per category of health care personnel, a full description of administrative charges, and a schedule of rates of all compensation per category of health care personnel, including all of the following information, as well as any other information prescribed by the NY DOH:

1. hourly regular pay rate, overtime, holiday pay, travel or mileage pay, shift differential, weekend differential, hazard pay, charge nurse add-on, and any health or other fringe benefits provided;
2. the percentage of health care entity dollars that the THCSA expended on temporary personnel wages and benefits compared to the THCSA’s profits and other administrative costs;
3. a list of the states and zip codes of the primary residences of their health care personnel;
4. the names of all health care entities that they have contracted within New York; and
5. the number of health care personnel of the THCSA working at each entity.

Violations and Penalties

If a THCSA fails to comply with Article 29-K or any guidelines, rules, or regulations promulgated pursuant to this law, the NY DOH may, after appropriate notice and hearing, suspend, revoke, or refuse to issue or renew any registration of a THCSA, and/or issue penalties and fines.

Upon the request of the DOH, the New York Attorney General may bring an action or an injunction against any individual or entity that violates this law.

Each violation committed by any health care personnel of a THSCA will be considered a separate violation subject to penalties and fines, in addition to other remedies available by law.

Conclusion

The 2023-2024 Budget contains many new requirements for the home health care industry, as well as changes to what the industry had previously expected, especially with respect to wages and wage parity. The Budget did not make any changes to the previous fiscal intermediary request for offers (FI RFO) as the governor had originally proposed; it is unclear whether Quality Incentive Vital Access Provider Pool (QIVAPP) funding will be increased and if so to what extent. After recently dealing with the one increase to the minimum wage as per the previous budget, the industry—after planning for a second increase this coming October, which is not taking place—must plan for a major change in how the industry will prepare for a larger increase in the minimum wage and a decreased wage parity requirement (and thus less to spend on benefits) in 2024. Agencies should start reviewing the new Budget laws and commence planning how to implement these new requirements.