BILL NUMBER: S5949

SPONSOR: HINCHEY
 
TITLE OF BILL:

An act to amend part B of chapter 58 of the laws of 2007 amending the
elder law and other laws relating to authorizing the adjustment of the
Medicaid nursing home capital reimbursement cap, in relation to effectu-
ating a Medicaid rate enhancement for Valley Health Services of the
Bassett Healthcare Network

 
PURPOSE OR GENERAL IDEA OF BILL:

To allow for the Department of Health to effectuate a Medicaid rate
enhancement for Valley Health Services.

 
SUMMARY OF PROVISIONS:

Amends section 19 of part B of chapter 58 of the laws of 2007 to allow
for the Department of Health to effectuate a Medicaid rate enhancement,
net of any and all Medicaid reimbursement rate adjustments, for Valley
              

Health Services.

 
JUSTIFICATION:

Valley Health Services, a 160-bed not-for-profit nursing home, serves a
vast number of at-risk communities throughout the Mohawk Valley and
Central New York regions, including especially the many at-risk communi-
ties in the counties of Fulton, Herkimer, Montgomery, Oneida and Otsego
(Five County Region), which collectively rank among the worst for low
per capita income and seniors, 60 years of age or older, living below
the poverty line. The Five County Region has one of the fastest aging
populations in New York State with approximately 23% of the individuals
60 years of age or older. The bed need assessment for the immediate
service area (Herkimer County) shows a current need for an additional 76
nursing home beds, making the continued viability of Valley Health
Services and its 160 beds essential to frail elder care in the Mohawk
Valley and Central New York regions.

As of December 2020, Valley Health Services was one of only three not-
for-profit nursing homes in the Five County Region, one of only three
CMS 5-Star nursing homes (the other facilities are 1-Star or 2-Stars) in
the Five County Region, and the only nursing home in the Five County
Region that is connected to a larger health system, offering the full
continuum of care, and committed to the NYS Age Friendly Health System
initiative. As a not-for-profit, Valley Health Services is dedicated to
its mission and serves a high Medicaid population. In fact, 76% of its
residents are covered by Medicaid, with 90&. upon admission being either
Medicaid - or Medicaid/Medicare eligible. Demand for Valley Health
Services' skilled nursing services is high with an occupancy rate e
facility through February of 2020 of 95.

Unfortunately, Valley Health Services is scheduled to lose control of s
current antiquated facility -- a converted hospital constructed in 1923
-- when it reverts back to the local municipality in 2022, forcing alley
Health Services to either close its facility or construct a new activity
that would inevitably bankrupt Valley Health Services due to the inade-
quate Medicaid reimbursement, it would receive under the current method-
ology for such a new facility, the cost of which has been reduced to the
lowest amount possible through value engineering and other cost-- eying
measures.

Even if the reversion could be avoided, and it appears that it cannot,
Valley Health Services is currently housed in a facility that has
outlived its useful life. The facility is landlocked and is not energy
efficient or conducive to modern standards of care delivery.  There are
shared rooms and shared bathing and toilet facilities creating infection
control challenges, along with small rooms and hallways, making the care
of larger patients and use of patient lift systems difficult. Given
these factors, Valley Health Services seeks to build a new nursing home
facility on a nearby property owned by its sister organization, Valley
Residential Services, a newly constructed enriched housing/assisted
living facility. Adding the new nursing home to this site will create a
modern residential senior living campus, offering the full array of care
and living options, allowing individuals to age in place as their care
needs advance. The new facility will also address unmet need in the Five
County Region for dementia care and subacute care in an innovative on
figuration that is designed to prevent communicable disease spread among
residents. Importantly, the new nursing home will offer neurobehavioral.
care, a service that is currently unavailable in the Mohawk Valley and
Central New York regions and otherwise offered at only eight distant
locations in the State.

The total project cost of the new nursing home is approximately $51.5
million (value engineering and other cost-saving measures reduced the
initial total project cost by nearly $7 million). Current financing for
the project includes a Bassett Healthcare Network equity investment of
$10 million, charitable donations of about $600,000, and debt financing
of about $41 million. With this financing plan, however, Valley Health
Services projects a Year 1 operating loss of $709,345 and significant
declining operating losses in subsequent periods, all driven in large
part by the inadequate Medicaid reimbursement Valley Health Services
would receive fora new nursing home. Simply put, to make the new nursing
home financially feasible, Valley Health Services requires an annual
Medicaid reimbursement rate enhancement of $500,000, net of any and all
Medicaid reimbursement rate reductions, over a thirty-year period to
offset its projected operating Losses.

The Medicaid reimbursement methodology necessitates an enhancement for
this vital and innovative new nursing home. Specifically, Medicaid pays
nursing home providers largely on a facility-specific basis, utilizing
the facility's costs and circumstances to determine reimbursement
levels. Each facility in New York State is paid a daily rate for each
day a resident spends in the facility. The daily rate is intended to
cover all room, board and care services. Valley Health Services, however
or, has not received an adequate increase in its Medicaid reimbursement
rates in almost 14 years despite inflation and rising wage and benefit
costs, resulting in Medicaid rates that cannot support the construction
of a necessary new facility using even the most austere financing plan
for the project.  Additionally, under current Department of Health daily
rate calculations, nursing home bed CAPS represent the maximum Total
Project Cost per bed allowed by the CON program for nursing home new
construction, major renovation and expansion, for the purposes of Medi-
caid capital cost reimbursement. Capital cost reimbursement calculations
are entirely based on the facility's allowable costs.  However, under
the Department of Health's current policy, a ceiling capital reimburse-
ment is effectively imposed at the front-end of a CON submission, mean-
ing that capital project CONS either have a cost below the applicable
per-bed cap, a rarity, or else are not approved at that cost, thus
effectively making construction impossible because the cost will not be
Reimbursed.

Since the policy was adopted, the number of for nursing home capital
projects approved by the Department has decreased dramatically, primari-
ly because the CAPS have not been increased or updated since 2007
despite the fact that construction costs have increased since then by at
least an average of 4$, per year. With this dynamic, it is virtually
impossible to construct a project within the CAPS anywhere in New York
State and especially not in the Mohawk Valley and Central New York
regions where the CAPS are completely unworkable.

The combination of the inadequate Medicaid daily rate and the current
outdated CAPS restrict Medicaid reimbursement for innovative projects
that may exceed the per-bed cap for costs, even though they may deliver
desirable and cost-effective innovation to the nursing home industry.
Authorizing the Department of Health to effectuate a Medicaid reimburse-
ment rate enhancement for certain facilities is necessary to incent and
sustain high quality and desirable construction projects throughout the
state, particularly where such facilities will address unmet community
need for neurobehavioral care in the Mohawk Valley and Central New York
regions.

 
PRIOR LEGISLATIVE HISTORY:

N-n

 
FISCAL IMPLICATIONS:

None for the 2021-22 Fiscal Year.

 
EFFECTIVE DATE:
This act shall take effect immediately.