Embroiled in an ongoing scandal about the state’s handling of COVID-19 in nursing homes, New York Gov. Andrew Cuomo announced reform legislation that would require full disclosure of facility ownership and place caps on both profits and executive pay.
“Facilities have put profits over care for far too long and as we look forward, we must learn from the past and prepare for the future,” Cuomo said in the press release announcing the legislation. “These facilities must be transparent and we have to have the tools necessary for holding bad actors accountable — that is the only way families will have peace of mind and I won’t sign a budget that doesn’t include these common-sense reforms.”
The announcement comes after Cuomo hinted that he would be targeting for-profit nursing homes for reforms, with an eye to mandating them to invest income into facility operations.
In terms of that goal, the reforms would include:
- A requirement that nursing homes spend a minimum of 70% of revenue on direct patient care and a minimum of 40% on resident staffing
- A profit cap for nursing homes with limitations on “certain unscrupulous transactions” such as related-party transactions over fair-market value, and compensation for employees who are not “actively engaged in or providing services at the nursing home.”
- Capping management and executive salaries via regulation, depending on the size of the facility, and limiting the overall proportion of such salaries
The announcement comes after a wave of bad press for Cuomo that has grown since a report from attorney general Letitia James alleged deaths from COVID-19 in the Empire State’s nursing homes may have been undercounted by as much as 50%. The criticism grew when reports surfaced that Cuomo’s administration might have held back the data due to fear of political reprisals.
The controversy itself stems from the earliest days of the pandemic. The New York Department of Health sent out an advisory on March 25, 2020, telling nursing home administrators, directors of nursing, and hospital discharge planners that admission to a nursing home could not be based on a confirmed or suspected COVID-19 diagnosis, while banning operators from requiring a COVID-19 test prior to admission.
Transparency for nursing homes is a prong of the reforms announced on Friday. Those reforms would include:
- A requirement that nursing homes post rates for each payer source on a public website, with the rates updated each year.
- A requirement to post all facility owners
- A requirement to post a list of all contracts or agreements for the provision of goods or services that are paid for by any portion of Medicare or Medicaid, within 30 days of execution of the agreement.
- Mandating that staff information be included in the application to establish a nursing home
A group of experts earlier this month called for ownership transparency as one of the tools to improve assessment of nursing home finances and performance in the wake of COVID-19, in a commentary published in the journal Health Affairs.
“Quality issues persist as policy makers are unable to oversee how nursing homes spend Medicare and Medicaid payments,” the authors wrote. “The growth in complex nursing-home ownership structures has limited financial transparency by allowing nursing homes to hide public payments and stint on direct resident care.”
In terms of accountability, the proposed reforms would increase civil monetary penalties to $25,000 for Public Health Law violations, including increasing penalties for willful violations of Public Health Law or regulation — and streamline the process of appointing a receiver. It would also remove the requirement to give adult care facilities a 30-day period to fix violations before imposing a penalty.
The reforms would additionally require any nursing home with repeat infection control deficiencies to work with the Quality Improvement Organization, or an independent quality monitor designated by the state, to resolve the issues, at the facility’s own expense.
In the release from Cuomo’s office announcing the proposed reforms, 1199SEIU United Healthcare Workers East president George Gresham praised the fact that nursing home reform would form a part of New York’s upcoming budget negotiations.
“Governor Cuomo has introduced a strong proposal that will significantly increase the accountability of nursing home owners and require them to invest their revenues in providing quality resident care rather than diverting taxpayer dollars to excessive profits, including those hidden in transactions with related corporations,” he said.