New York Department of Health Proposes Rule to Amend Licensed Home Care Services Agencies Regulations

November 18, 2019


A proposed rule was issued on November 6, 2019 to amend regulations regarding the approval of Licensed Home Care Service Agencies (“LHCSAs”). To comply with changes made to the Public Health Law in 2018, Subpart 765-1 of Title 10 NYCRR must be updated to include the new requirements of public need review and financial feasibility review. This Rule, effective April 1, 2020, would require the following:

Applicants Must Show Public Need and Financial Resources.
The amended Section 765-1.2 would provide that, in addition to existing requirement of a character and competence review, applications for licensure as a LHCSA must include information on the public need for new LHCSAs and the financial resources of the proposed agency. Public need for a new LHCSA would be determined based on the time and place, and on the circumstances outlined in the newly added Section 765-1.16. Review of the LHCSA’s financial resources would consist of (i) an examination of the sources of available working capital of the operator(s), which must, at a minimum, equal to at least two (2) months of estimated operating expenses; (ii) the passing of a reasonableness test with respect to the financial capability of the agency or sources for start-up funding; and (iii) an examination of the agency’s financial feasibility or of the projections indicating that its operating revenues will be equal to or greater than projected expenditures over time.

Standard of Review: Applicants Must “Satisfactorily Demonstrate” the Above Requirements.
As amended, Section 765-1.3 would provide that to be approved for licensure, applicants must “satisfactorily demonstrate” to the Public Health and Health Planning Council (the “PHHPC”) that there is a public need for the LHCSA, pursuant to the methodology laid out in the new Section 765-1.16, and that there are adequate finances and sources of future revenue to properly establish and operate the LHCSA. Additionally, the proposed operator must demonstrate “satisfactory” character and competence and standing in the community in the PHHPC’s review.

Changes to Principals, Patient Capacity, and Operating Budget Would Now Be Considered Amendments.
The current Section 765-1.4 provides that changes to services and changes in the principals of the applicant are considered amendments to applications. This Rule would amend the foregoing to state that any “significant” change in the principals constitutes an amendment. Further, the Rule adds that (i) any “significant change” to the agency’s patient capacity, (ii) any change in the agency’s proposed service area, and (iii) any “significant change” in the proposed annual operating budget would also be considered amendments to the application and require approval by PHHPC.

In addition, this Section is amended to add that failure to disclose information that qualifies as an amendment shall be “grounds for the revocation, limitation, or annulment of the approval” for licensure.

The Public Need Methodology.
This newly added Section 765-1.16 details the methodology to be used in determining public need and the review and describes the hearing process for applications that are disapproved solely on the basis that there is a lack of public need.

Factors to be Considered in Determining Public Need

  • Population demographics and health status of residents in the planning area
    The number of patients who have been on waiting lists and who cannot be served elsewhere
  • The number, capacity, quality of services, and cultural competency of already existing LHCSAs
  • Availability of the workforce
  • The agency’s ability to dedicate personnel and resources to training and adding more members to the workforce
  • The existence of subpopulations that require specialty services

When a Public Need Review Would Not Be Necessary

  • There would be a presumption of no need for new LHCSAs in a planning area (defined by county) that already has five or more LHCSAs actively serving patients in that planning area.
  • Applications for licensure based on change of ownership for LHCSAs “actively serving” at least twenty-five (25) patients would only be evaluated based on financial feasibility and the character and competence of the proposed operator, and would not have to demonstrate public need.
  • Finally, LHCSAs that share common ownership with Assisted Living Programs or Programs of All-Inclusive Care for the Elderly do not have to undergo a determination of need.

Additionally, new LHCSAs must agree to serve population groups in the planning area that have difficulty gaining access to appropriate LHCSA care due to minority status, age, medical history, case complexity, or payment source.

These regulations would affect all agencies applying for licensure as a home care services agency or for changes of ownership on or after April 1, 2020. A new application form will be provided.

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Should you have any questions regarding the above, please contact the Garfunkel Wild attorney with whom you regularly work.