NYS DOH Releases New Application Requirements for Licensed Home Care Service Agencies | Manatt, Phelps & Phillips, LLP

I. Background

Effective April 1, 2018, a moratorium on the processing and approval of LHCSA license applications has been put in place, in part due to political concerns regarding the growth of LHCSA as well as its potential interaction with enrollment in Medicaid-managed long-term care (MLTC) in New York (LHCSA moratorium). The LHCSA moratorium was implemented through statutory amendments included in the 2018-2019 NYS budget. Prior to these changes, the Public Health and Health Planning Council (PHHPC) was only authorized to consider character and competence when considering applications for LHCSA permission, and it did not There was no public needs test or financial feasibility test, which are licensing requirements for other types of health care providers governed by New York public health law.

The LHCSA moratorium officially expired on March 31, 2020, after which the law required PHHPC to consider, in addition to character and competence, the following factors: public need, financial resources of a proposed LHCSA, sources of financial revenue and “ . . . any other questions it deems relevant.1 The DOH subsequently amended its regulations to include these requirements, and the updated regulations took effect on April 2, 2020. However, despite the enactment of new regulations, until the new LHCSA application was released, the organizations were limited in their ability to apply for an initial license, change of ownership or control, or extension of a “restricted license” (i.e. a license issued for the sole purpose of operating a special program, such as a Medicaid Assisted Living (ALP) program or an All-Inclusive Care for the Elderly (PACE), Nurse-Family Partnership (NFP), or Continuing Care Retirement Community (CCRC) program).2

II. Overview of the new LHCSA license application and process

LHCSA license applications now require an updated application process, which includes both the new public needs and financial feasibility standards, in addition to the character and proficiency review that existed as part of the licensing process. previous LHCSA license. This permit application process applies to organizations seeking to establish a new LHCSA,3 obtain the required approval for a change in ownership or control,4 or extend a restricted license. Below is a description of the new process and requirements relating to audience need, financial feasibility, and character and skill review.

a. Application process. LHCSA license applications must be submitted electronically through the New York State Electronic Certificate of Need System (NYSE-CON) and continue to require a $2,000 application fee. Applications will be reviewed by DOH and then evaluated by PHHPC. If an application is approved by PHHPC, the applicant will be required to submit a policy and procedures manual to the appropriate regional home care office for review prior to issuance of a new license. However, DOH reminds applicants that in a change of ownership application, the applicant (purchaser) may elect to adopt a pre-approved policy and procedures manual to expedite the permitting process.

b. New requirements of the public needs methodology. A new public need methodology will apply to all permit applications submitted beginning April 1, 2020.

  • Rebuttable presumption of non-necessity. The new public needs methodology includes a refutable presumption that there is no need for additional LHCSAs in a county if there are five or more The LHCSAs actively serve county patients. The date used by the DOH to determine need has been adjusted to April 1, 2022. Counties in need are identified in the LHCSA County No Need Report. Despite the determination of no need, the regulations allow an LHCSA applicant to overcome a presumption of no need based on local factors related to the applicant’s service or planning area (e.g., demographics and /or the health status of patients in the planning area, availability and accessibility of manpower, sub-populations requiring specialized services).
  • Exception for change of ownership requests. Licensure applications based on a change in ownership for LHCSAs “actively serving” at least 25 patients will not be subject to a public needs test.5
  • Exemptions from the special program. LHCSAs affiliated with an ALP, PACE, NFP or CCRC will be exempt from the Public Needs Methodology if the agency exclusively serves patients in these programs.

vs. New financial feasibility requirements. Financial feasibility standards have been updated to better align with the financial review of other healthcare providers undergoing Certificate of Need review in New York, although there are significant variations that are unique to the new LHCSA exam process, including input from a public certified accountant (CPA). Specifically, the financial review will require consideration of:

  • Sources of working capital and two months of estimated operating expenses for the first year. Applicants will be required to submit a written plan and financial documentation of available resources to ensure available working capital, with a minimum requirement equal to at least two months of estimated operating expenses for the agency. If the candidate intends to use existing financial resources (for example, savings, investments, an approved loan, or an awarded grant), a CPA should assess the amount of working capital available to the candidate. The entity’s most recent balance sheet and written confirmation provided by a CPA on letterhead must be included with the request. If the applicant intends to provide working capital through capital contributions, personal financial statements must be submitted for each capital contributing member, and these documents must also be on CPA letterhead, signed and dated by each shareholder member, and included in the application. Similarly, if funding is provided by a related entity/parent organization, the applicant must provide a letter from the entity’s CPA confirming the amount of funding to be provided.
  • Projected operating costs. Applicants will also be required to provide projected operating costs, similar to other Certificate of Need applications in New York.

The DAL says the application will need to pass a “reasonableness test” with respect to the agency’s financial capacity or seed funding sources. As part of this review, DOH will review the agency’s financial feasibility or projections to ensure that agency revenues will equal or exceed projected expenditures over time.

D. Character and skill requirements. Although the character and competence requirements have not changed under this new licensure process, procedurally the DOH has indicated that compliance reports for affiliated health care facilities outside of status (referred to as “Schedule 2D”) must be submitted to DOH. at time of submission of the LHCSA authorization request.

III. Important Next Steps and Considerations for Suppliers

Below are important considerations and next steps for vendors.

a. Pending requests. Organizations that have submitted LHCSA license applications that have been not recognized by the DOH during the 2018-2020 moratorium period are now required to reapply using the new application in order to be licensed. However, if a request has been accepted and recognized by DOH during this time (for example, as a result of a special program moratorium exception, serious issue, or consolidation),6 The DOH said it will review the pending request and request additional information, if needed.

b. Corporate transactions completed during the LHCSA moratorium using a No Control Affidavit require the submission of a new LHCSA application within 30 days. During the moratorium, a new controlling entity was permitted to be established at a higher level than the current operator, provided an affidavit was submitted to the DOH stating that the new controlling entity would refrain from exercising control. on the LHCSA.seven However, per DOH guidelines, the agency is required to submit an application for Screening Entity Approval no later than 30 days after the publication of the new application (September 16, 2022). The affidavit originally submitted to DOH must be included with the application.

vs. New applications for establishment. If an organization is considering filing for establishment as a new LHCSA, it will be important to first review the counties that the DOH has identified as presumptive to have “no need”, to determine if it there is a basis to rebut this presumption based on local factors.

D. Existing LHCSAs seeking to add new service, expand to new counties, add additional sites, or close are not subject to the new licensing process. In accordance with a recent DAL, setting out the procedure for LHCSA Administrative License Changes (DAL DHCBS 22-02), these changes can be accomplished by completing a required DOH checklist and submitting a written request to the appropriate regional office and to LHCSA. @health. ny.gov.

e. Notice of Transfer of Ownership. Transfers of interests to existing partners or members of limited liability companies (SARLs) already approved by PHHPC, transfers of less than 10% of interests to new partners or new members of SARLs, and transfers of shares or voting rights in corporations to persons already approved by PHHPC for agency may still file the required notice with the DOH, at least 90 or 120 days prior to the expected effective date of the transaction , depending on the type of company.8


1 New York State PHL Section 3605(4).

2 The use of the term “restricted license” is newly used in the updated LHCSA application to refer to LHCSA licenses issued pursuant to 10 NYCRR 765-1.16(c)(3), with a limited scope of providing services to a ALP, PACE, PFN or CCRC.

3 See NY PHL Section 3605.

4 See NY PHL Section 3611-a. In addition, requirements for Section 36 transfer of title applications can be found in the DOH’s “Transfers of Title” matrix.

5 “On active duty” means that an agency has a care plan in place for the patient and is providing services to the patient in their home. See Frequently Asked Questions.

6 See the LHCSA Moratorium Guidelines for a description of the exceptions that would have allowed an applicant to file an LHCSA application during the moratorium or before the publication of this new application process.

seven In accordance with DOH guidelines, during the moratorium, if the controlling person/entity has submitted an affidavit that they will refrain from exercising control over the LHCSA until the moratorium is lifted and a request can be submitted, processed and approved, then the business transaction can proceed. . However, the DOH required that within 30 days of lifting the moratorium, the agency submit a request for PHHPC approval of the controlling person.

8 See NY PHL 3611-a (1)(c)(i)–(ii) and 3611-(2)(c).

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