New York Gov. Cuomo Proposes Nursing Home Reform Legislation to Cap Profits and Executive Pay
Knowledge

New York Gov. Cuomo Proposes Nursing Home Reform Legislation to Cap Profits and Executive Pay

Key Takeaways

  • Gov. Andrew Cuomo announced new reform legislation that would require full disclosure of facility ownership and would place caps on both profits and executive pay

  • The proposed legislation includes a profit cap for nursing homes with limitations on “certain unscrupulous transactions” such as related-party transactions over fair-market value, and compensation for employees who are not “actively engaged in or providing services at the nursing home”

  • It also includes a cap for management and executive salaries via regulation, depending on the size of the facility, and limiting the overall proportion of such salaries

 

New York Gov. Andrew Cuomo has faced sharp criticism of his handling of the COVID-19 pandemic in nursing homes since the release of the attorney general’s Jan. 28 report that pandemic-related nursing home deaths were nearly double than what was initially reported by his administration. On February 19, 2021, in response to growing criticism, Gov. Cuomo issued a press release announcing new reform legislation that would require full disclosure of facility ownership and would place caps on both profits and executive pay.

“Facilities have put profits over care for far too long and as we look forward, we must learn from the past and prepare for the future,” Gov. Cuomo said in a press release. “These facilities must be transparent and we have to have the tools necessary for holding bad actors accountable—that is the only way families will have peace of mind and I won’t sign a budget that doesn’t include these common-sense reforms.”

The proposed legislation includes:

  • A requirement that nursing homes spend a minimum of 70 percent of revenue on direct patient care and a minimum of 40 percent on resident staffing
  • A profit cap for nursing homes with limitations on “certain unscrupulous transactions” such as related-party transactions over fair-market value, and compensation for employees who are not “actively engaged in or providing services at the nursing home”
  • A cap for management and executive salaries via regulation, depending on the size of the facility, and limiting the overall proportion of such salaries

The legislation would also hold operators accountable for misconduct by increasing monetary penalties to $25,000 for violations of Public Health Law, removing the requirement that allows a 30-day period for facilities to rectify violations prior to imposing a penalty. It would also request any nursing home with repeat infection control deficiencies to work with the Quality Improvement Organization and independent quality monitoring company to resolve the issues, at the facility’s expense.

Overall, if enacted, nursing homes in New York will have a new set of regulations to follow, including required caps on profits and executive pay, new fines of up to $25,000, and less time to remedy deficiencies. The announcement is concerning to nursing home owners and operators who have already faced staffing difficulties during the pandemic and are already subject to significant regulations to operate and provide care to residents. This is a development that providers in New York will want to monitor and track closely.

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