§ 2801-e. Voluntary residential health care facility rightsizing
demonstration program. 1. The voluntary residential health care facility
rightsizing demonstration program is intended to be a flexible and
innovative approach to dealing with excess capacity in residential
health care facilities due to changes in care delivery and other
factors. The demonstration is designed to promote the development of
less restrictive and less institutional long-term care programs and
services; discourage inappropriate nursing home placements; generate
medicaid savings to the state and localities; and assist residential
health care facilities with the financial implications of declining
occupancies.

2. Notwithstanding any inconsistent provision of law or regulation to
the contrary, a residential health care facility, as defined in section
twenty-eight hundred one of this article, may apply to temporarily
decertify or permanently convert a portion of its existing certified
beds to another type of program or service under the voluntary
residential health care facility rightsizing demonstration program. The
commissioner may approve temporary decertifications and permanent
conversions of beds totaling no more than five thousand residential
health care facility beds on a statewide basis under this program. Such
approvals shall reflect, to the extent practicable, participation by a
variety of residential health care facilities based on geography, size
and other pertinent factors.

3. For this purpose, a residential health care facility may submit, in
a format and within timeframes specified by the commissioner, an
application to temporarily decertify beds, or to permanently convert
beds under this demonstration. Each such application shall include an
estimate of the cost savings to the Medicaid program that would result
from the proposal within the applicant facility. The commissioner shall
begin soliciting applications within one hundred eighty days of the
effective date of this section, provided however that multiple
solicitations for proposals may be issued. In considering such
applications, the commissioner shall take into account:

(a) the potential for improved quality of care and quality of life for
consumers;

(b) the likelihood that the proposal would result in cost savings to
the Medicaid program;

(c) residential health care facility capacity and estimated public
need in the planning area in which the applicant is located;

(d) the availability of less restrictive and less institutional
long-term care programs and services, as defined in this section, in the
planning area; and

(e) the potential for improving the financial viability of the
applicant facility or facilities.

4. Any reductions in the number of operational residential health care
facility beds resulting from this demonstration shall not be considered
to create additional public need for residential health care facility
beds under this article.

5. (a) Subject to the approval of the commissioner and the director of
the budget, a residential health care facility may temporarily decertify
beds for up to five years. Such beds will remain on the facility's
license during and after the five-year period. Temporarily decertified
beds may, with the prior approval of the commissioner and the director
of the budget be reactivated in whole or in part at any time on or after
one year after the effective date of temporary decertification by the
facility and may be reactivated with the prior approval of the
commissioner and the director of the budget after the five-year period
has ended. A residential health care facility that reactivates
temporarily decertified beds may not temporarily decertify such beds
again during the demonstration. The commissioner may require the
immediate reactivation of such beds if necessary to respond to emergency
situations and/or facility closures. In the event the commissioner
requires such reactivation, the prohibition on temporarily decertifying
beds after a reactivation of beds shall not apply.

(b) Notwithstanding any inconsistent provision of law or regulation to
the contrary, for purposes of determining medical assistance payments by
government agencies for residential health care facility services
provided pursuant to title eleven of article five of the social services
law for facilities that have temporarily decertified beds:

(i) the facility's capital cost reimbursement shall be adjusted to
appropriately take into account the new bed capacity of the facility;

(ii) the facility's peer group assignment for indirect cost
reimbursement shall be based on its total certified beds less the number
of beds that have been temporarily decertified; and

(iii) the facility's vacancy rate shall be calculated on the basis of
its total certified beds less the number of beds that have been
temporarily decertified for purposes of determining eligibility for
payments for reserved bed days for residents of residential health care
facilities, provided, however, that such payments for reserved bed days
for facilities that have temporarily decertified beds shall be in an
amount that is fifty percent of the otherwise applicable payment amount
for such beds.

6. (a) Subject to the approval of the commissioner, a residential
health care facility may permanently convert beds to less restrictive
and less institutional long-term care beds, units or slots, including,
but not limited to, assisted living program, adult care facility, adult
day health care, long-term home health care program and managed
long-term care demonstration beds, units or slots. For this purpose,
residential health care facility beds may be converted to beds, units or
slots in the selected program or service on a one-to-one or other ratio
or basis. A residential health care facility that permanently converts
beds under this subdivision relinquishes its license for the converted
beds.

(b) If the facility seeks to permanently convert beds and neither the
facility nor its sponsoring organization is licensed to provide the
program or service, it must obtain the written approval of the public
health council, if required, pursuant to section twenty-eight hundred
one-a of this article or article thirty-six of this chapter to initiate
the new program or service.

(c) The commissioner may, as necessary, waive existing methodologies
for determining public need under this article, article thirty-six of
this chapter and article seven of the social services law, as well as
enrollment limitations under section forty-four hundred three-f of this
chapter, to accommodate permanent conversions of beds to other programs
or services on the basis that any such increases in capacity are linked
to commensurate reductions in the number of residential health care
facility beds.

(d) For purposes of adjusting the capital component of residential
health care facility rates of payment determined pursuant to this
article for facilities that have permanently converted beds, the
commissioner shall appropriately take into account the new bed capacity
of the facility.

7. No later than January first, two thousand seven, the commissioner
shall provide the governor, the majority leader of the senate and the
speaker of the assembly with a written evaluation of the program. Such
evaluation shall address the overall effectiveness of the program in
reducing costs, encouraging placements in appropriate long-term care
settings and enhancing the availability of less restrictive and less
institutional long-term care programs and services, and contain
recommendations relative to extending and/or expanding the program.