Governor Cuomo’s Executive Budget Proposes Changes to Healthcare Laws
January 23, 2015 |On Wednesday Governor Andrew Cuomo laid out his proposed 2015-16 executive budget in his State of the State address. The executive budget proposes multiple changes to New York’s current healthcare laws, most notably regarding diagnostic and treatment centers (“DTC”), urgent care facilities, office-based surgery centers (“OBS”), and revisions to the Certificate of Need (“CON”) process.
This year’s executive budget contains amendments to the Public Health Law that would create “Limited Services Clinics” (“LSCs”); entities similar to retail clinics already seen in many other states. While the provisions in last year’s budget that would have created LSCs did not pass, they are proposed again in a similar form. LSCs would be considered a subset of DTCs which are allowed to operate in retail spaces, stores open to the general public, and employer health clinics. The executive budget leaves the approval process for the establishment of such clinics to the Department of Health (“DOH”) and the Public Health and Health Planning Council (“PHHPC”), however it does provide that limited service clinics would be exempt from many of the aspects of CON review (including a finding of public need and a character and competency review for the shareholders or members). In addition, LSCs would be exempted from the certain ownership prohibitions seen in similar healthcare entities, particularly “second-level members” (the owners of an entity which owns a healthcare facility) would not have to be natural persons as is currently required for all other Article 28 facilities.
The budget also addresses urgent care facilities; the proposed legislation would prohibit the use of the term “urgent care” in an office or entity’s name unless it has been accredited as an urgent care facility by a nationally-recognized accreditation agency and has received approval from the DOH. The proposed legislation would leave the delineation of the services to be provided by urgent care centers and the standards for services at such centers up to regulations promulgated by PHHPC and DOH.
In addition to modifying the requirements for urgent care facilities, the budget also proposes minor changes to OBS practice oversight. The definition of “office-based surgery” would be expanded to include neuraxial anesthesia and major extremity regional nerve blocks. Podiatrists and chiropractors would be added to the list of licensees that can provide OBS, and the DOH would be granted oversight of such practices. Adverse event reporting would be expanded to any emergency room visit or required observation period that occurs within 72 hours of an OBS procedure.
The proposed legislation would also reduce the CON burden on certain types of facilities. Hospitals and DTCs that would apply to construct a facility providing “primary care services” would no longer need to demonstrate a public need for the construction in order to proceed. The budget legislation leaves the precise definition of “primary care services” to regulation. Further modifying CON requirements, the group of individuals subject to character and competency review in the CON approval process would also be expanded, and the standard of review for owners receiving a transfer of greater than 10% of a facility’s ownership interest would be raised. The budget would also add home care service agency and certified home health agency owners to the list of those subject to PHHPC review upon a transfer of ownership interest over 10%.
The budget addresses many other topics in healthcare: it proposes legislation that would allow the State to more broadly negotiate costs with payors and suppliers to further the implementation of Medicaid Redesign Team recommendations; it would implement the necessary changes to allow for value-based payment reimbursement systems, a key component of the State’s ongoing DSRIP program; the Nurse Practice Act would be revised to allow certain individuals to perform advanced healthcare tasks in home care and hospice settings with appropriate training and supervision.
Finally, as was included last year, the budget proposes a pilot program for private capital investments in hospitals. The pilot program would allow up to five private corporations (that are not publicly traded) approved by PHHPC to affiliate with and invest in a hospital. Hospitals would retain their not-for-profit status under the proposal, but funding provided by the private corporations could be directed to establish new facilities or otherwise improve the healthcare institutions. The effectiveness of the pilot program would be reported by DOH back to the Governor and Legislature for possible expansion (or sunset) of the limited pilot program.
The executive budget as submitted will go to the Senate Finance Committee and the Assembly Ways and Means Committee for consideration, deliberation, and hearings. Over the next few months, the Committees work in conference, as well as with the Governor, to amend and finalize the budget. Any portion of the executive budget can be adopted by the Legislature or removed piecemeal; and it is therefore possible that only some of the proposals discussed herein become law. The budget, in a form mutually agreed upon by the Governor, Senate, and Assembly, then passes through the Legislature. Provisions that pass through the Legislature unchanged from the executive budget become law; additions made by the Legislature remain subject to a line-item veto by Governor Cuomo. The budget is required to be passed by the beginning of the State’s fiscal year, which begins on April 1st.
