NY Puts Moratorium on Applications for Licensed Home Care Services Agencies

June 14, 2018 | Karen E. Sosler | Ada Janocinska | Health Services

The Department of Health issued guidance in May 2018, about a law, which took effect on April 1, 2018, that places a two-year moratorium on the processing and approval of applications for Licensed Home Care Services Agencies (LHCSAs). The moratorium applies to applications that have not yet been submitted as well as to those that have been submitted and are pending review with the New York Department of Health (DOH). The moratorium will continue through March 31, 2020.

During the moratorium period, DOH will not process or approve any LHCSA applications, unless an application falls under one of the following limited exceptions:

1.         Application Associated with an ALP Application:

The first exception to the moratorium permits DOH to process applications for LHCSAs that are submitted in conjunction with an application to operate an Assisted Living Program (ALP) under Social Services Law §461-1. In order to qualify for this exception, the following requirements must be met:

(i)          the ALP application has already been submitted to DOH and an application number has been issued;

(ii)        ownership of the LHCSA is identical to the ownership of the ALP; and

(iii)      the LHCSA application includes an attestation that the LHCSA’s authority to provide home care services will be limited to only serving residents of the ALP. In this regard, the application may designate a specific county where the ALP is located as the county the LHCSA will serve.

2.         Application for Change of Ownership and Consolidation:

The second exception to the moratorium permits the approval of changes in ownership of a LHCSA that is in connection with the consolidation of two or more existing LHCSAs. The LHCSA(s) to be acquired must be currently operational and have been operational for the past five years. If the purchaser is a LHCSA, it also must be operational at the time of application. In addition, the application must include an attestation and data report to verify the operations of each LHCSA.

An example of a transaction that would qualify for this exception is when an existing LHCSA purchases another LHCSA, the selling LHCSA surrenders its license, and the selling LHCSA’s sites become the sites of the purchasing LHCSA. In addition, existing LHCSAs may be purchased by an entity that is not yet licensed as a LHCSA but would become licensed upon approval of the sale.

DOH guidance provides that the following are non-qualifying LHCSA ownership changes that will not be processed during the moratorium:

  • A new proposed operator seeks to replace the current operator;
  • A new controlling entity (i.e., a “controlling person”) is to be established at a level above the current operator; and
  • A partial change in ownership that require the approval of the Public Health and Health Planning Council.

3.         Application Addressing a Serious Concern:

The third and final exception to the moratorium applies to LHCSA applications that can demonstrate that the approval of the new LHCSA will address a “serious concern.” Examples of a “serious concern” include a lack of access to home care services in a particular geographic area or a lack of access due to inadequate language, cultural or special population competence among existing LHCSAs.

Under the new law, an applicant seeking to qualify for this exception must demonstrate that the proposed LHCSA will address a serious concern “to the satisfaction of the Commissioner of Health.” DOH has since issued guidance clarifying that data-driven evidence must be submitted and imposing a high burden of proof for applicants seeking to qualify for this exception. First, DOH will presume that adequate access to home care services exists in a designated area if two or more LHCSAs are currently operational, or approved by DOH but not yet operational, in the same county. If two or more LHCSAs exist in the county, then the applicant must meet the following additional requirements:

(i)          specify the population that would be served for which there is inadequate access to home care services;

(ii)        submit substantial, data-driven proof that such inadequate access exists for the designated population. Such proof may include demographic information relating to cultural disposition, referral sources, level of care required by the population, and payor mix; and

(iii)      provide satisfactory documentation that no existing LHCSA can provide such services to the designated population and that the applicant can address the concern.

Applicants filing under this exception may request to operate a LHCSA in up to five counties, but they must submit sufficient documentation to meet the requirements set forth above for each requested county. Approval will be restricted to the specifically identified area or population.

DOH has issued a guidance document and new LHCSA application to be used during the moratorium, both of which can be found at www.health.ny.gov/facilities/cons/. Applicants with pending LHCSA applications, or those considering a transaction involving an LHCSA, are encouraged to speak with their consultants and attorneys on how best to proceed in light of the moratorium.


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