Lawsuit says new rules for NY nursing homes are unconstitutional

A lawsuit that has been building for months, was filed against the New York State Health Commissioner by hundreds of nursing home operators.

The federal lawsuit argues that recent changes by State lawmakers to how nursing homes operate are unconstitutional.

The State Legislature in April of this year, passed sweeping reforms on how nursing homes spend their money, following a huge outcry from advocates and lawmakers on how nursing homes were operating during the pandemic.

An investigation led by the Attorney General’s office into nursing home practices during the pandemic, revealed that some for-profit facilities with low staffing levels also had a higher number of resident deaths. This same report also showed that the former Governor Andrew Cuomo administration was undercounting nursing home deaths by more than 50 percent.

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In response, state lawmakers passed numerous bills in order to try and reform the health care system. Included in this, was legislation that will require that nursing homes spend at least 70 percent of their revenue on direct resident care. At least 40% of that must be spent on direct care-givers.

Now operators of over 250 nursing homes, including numerous trade associations, have filed a lawsuit in U.S. District Court in Albany, saying these changes "illegally superimposes obligations on the way facilities must spend money they have received or will receive from the Federal Government under the Medicare program for services already rendered to Medicare-eligible patients that are not paid for with state funds. And in order to subsidize New York State’s Medicaid program, it confiscates federal Medicare dollars meant to reimburse Plaintiffs."

Stephen Hanse, President of the New York State Health Facilities Association, says that many of these nursing homes just don’t have the money to hire additional staff, which could force many of these facilities to close.

"The number one issue we’re dealing with right now is a long term care staffing crisis," Hanse explained. "We don’t have the workers. Prior to the pandemic we didn’t have the workers and now the pandemic has only exacerbated the shortfall."

Around 80% of New York’s nursing home resident care is paid for through Medicaid, but the state has cut Medicaid reimbursements to these for facilities for over 12 years in a row.

"New York, under the prior administration, is the only state in the nation to cut Medicaid funding to nursing homes," Hanse said. "All other states except for four others, increased Medicaid, at least temporarily, to help nursing homes provide care to their residents and deal with the costs of fighting COVID."

The lawsuit also points to how the state health department will confiscate profits from nursing homes that exceed 5 percent and requires that any excess funds be directed to the state’s nursing home "quality pool." This quality pool was created over a 12 years ago to enhance the Medicaid reimbursement rates of nursing homes that provide high quality care to residents.

The 133-paged lawsuit lists dozens of nursing homes that would have to pay steep penalties if this law were to go into effect.

For example the Upper East Side Rehabilitation and Nursing Center Inc. would have been assessed a penalty of $12,910,436 if the 70%/40% spending mandate was in effect.

And the Boro Park Center for Rehabilitation & Health Care in Brooklyn would have been given a penalty of $8,640,255 under this staffing rule.

The State Health Department declined to comment on pending litigation at this time.

1199SEIU, which represents many of the nursing home workers in the state sent a statement saying "The Legislature acted in response to numerous concerns about low staffing and poor quality in our state’s nursing homes by passing a law to ensure that a largely for-profit industry spends the majority of its revenue on the residents in their care.  It is disappointing that the industry is focusing its energy and attention on fighting these reasonable standards rather than working with all stakeholders to address common challenges and improve quality of care."

Assemblyman Ron Kim, who fought hard for many of these reforms says oversight of these facilities is long overdue.

"This is what you signed up to do," Assemblyman Kim explained. "You are recipients of public benefit dollars. There has to be some sense of accountability that you’re spending money for care and if you can’t deliver such care you should definitely not be in this business."

The lawsuit also argues that the state still has not received approval from the federal government to enforce these new requirements which go into effect on Saturday, January 1st.