Over 130 nursing homes are suing New York state over a law that would require them to designate 70 percent of their profits for care of residents, calling it unconstitutional in a lawsuit filed last week.
Nursing homes said that the law represents “the most serious regulatory threat” facing the industry, according to a report in the Times Union.
The New York State Department of Health law would force nursing home operators to follow a set of strict spending requirements, and turn over private and federal Medicare dollars to fund the state’s Medicaid program, the lawsuit alleges.
“The controversy centers around a 2021 law included in that year’s budget that required residential health care facilities to spend a minimum of 70 percent of their total operating revenue on direct care for their residents, including at least 40 percent of their revenue for resident-facing staff,” the Times Union wrote. The law was planned to take effect in January 2022, but was postponed by a series of executive orders and other regulatory hurdles.
Nursing home operators criticized a provision of the law that would require nursing homes that have profits over a 5-percent cap to turn those funds over to a state-managed fund, which would then disburse money as a reward to facilities that have met certain standards for high-quality care. Nursing homes would also face monetary penalties for failing to meet the 70/40 allocation rule.
“The problem with the state is they’re telling us what we have to do with other people’s money,” James Clyne of LeadingAge New York told the TImes Union. “They’re not a party to the contract that we have with either Medicare or with people who are private payers.”
Clyne also criticized a separate provision in the law which operators have taken issue with, which establishes minimum staffing standards of at least 3.5 hours of daily nursing care for each resident. Skilled Nursing News has reported that operators nationwide are concerned about staffing mandates unsupported by federal funds.
“One size does not fit all for every nursing home,” Clyne said of the legislation.
The lawsuit was filed late last week in state Supreme Court in Albany, and names state Department of Health Commissioner James McDonald and Budget Director Robert Megna as defendants.
