On August 17, 2022, the New York State Department of Health (DOH) released the long-awaited License Application for Licensed Home Care Service Agencies (LHCSA) seeking approval in one of the three categories: initial authorization, change of ownership and limited license expansion. The announcement included Frequently Asked Questions (FAQs) addressing anticipated questions related to the application process, as well as a Letter to the Dear Administrator briefly summarizing the new Public Needs Methodology and Financial Feasibility Standards. This Holland & Knight alert provides a brief overview of the key components of the application and the licensing process.
On April 1, 2018, the DOH issued a moratorium on processing and approving license applications for LHCSAs, with an expiration date of March 31, 2020. During the moratorium, Section 36 of the Public Health has been amended to consider public need and financial feasibility as part of the review process for applicants wishing to establish or own and operate an LHCSA. Although regulations were implemented to meet these requirements as of April 1, 2020 – concurrently with the expiration of the moratorium – the DOH was unable to issue a new request for authorization due to its focus on managing the COVID-19 pandemic. Thus, no new application for authorization has been filed for more than four years. In the meantime, the proposed buyers and sellers have entered into management agreements, which are subject to DOH approval, to bridge the gap until full legal title to the LHCSA can be transferred to the LHCSA. ‘Buyer. Those seeking to establish new LHCSAs had their hands tied. With the new LHCSA license application finally released, existing LHCSA operators can apply for permission to sell or expand their business, and proposed operators can apply for permission to establish a new LHCSA.
The new LHCSA app
The new LHCSA application applies to applicants seeking approval of an establishment as a new LHCSA, those wishing to change ownership or control, and those wishing to extend the scope of their existing license, c i.e. agencies affiliated with Continuing Care Retirement Communities (CCRC), Medicaid Assisted Living Programs (ALP), Nurse-Family Partnerships (NFP), and Programs of All-Inclusive Care for the Elderly (PACE) (each an LHCSA restricted), and who are now looking to serve patients outside of the CCRC, ALP or NFP programs. Like most certificate of need applications for provider licenses in New York, including hospitals, ambulatory surgery centers, and diagnostic and treatment centers, the new application requires applicants to meet three criteria: need audience, affordability, and character and competence, which was part of the original licensing process.
- public need. Applicants wishing to change ownership or control do not need to establish a public need if the LHCSA is actively serving at least 25 patients. In addition, a restricted LHCSA is exempt from demonstrating a public need if it only serves patients under its affiliated programs. All other applicants will need to overcome a rebuttable presumption that there is no public need for a new LHCSA or LHCSA extension where there are already at least five LHCSAs in the particular service area (i.e. say the county). Claimants can overcome the presumption by using evidence-based data to support their claim, such as “serious concern or difficulty accessing home care services due to minority status, age, medical history , the complexity of the case or the source of payment, as specified in [the regulations].”
- Financial feasibility. Each applicant’s financial feasibility is determined based on DOH’s review of two criteria: 1) its available sources of working capital, with a minimum requirement of at least two months of estimated operating expenses, and 2) expected operating costs. To comply with the first requirement, the applicant will be required to submit a written plan identifying all funding sources that will support the LHCSA for at least two months after licensing, along with a table or description of anticipated operating expenses. , including salaries, office space, utilities, supplies and miscellaneous operating costs. If the applicant uses existing financial resources, they must submit their most recent balance sheet. If the applicant intends to provide working capital through equity contributions, each equity contributing member – including non-individual members – must submit personal financial statements. Funding may also be provided by a related or parent entity. In each case, a certified public accountant should be involved to review and confirm funding. To comply with the second requirement, the applicant will need to summarize its current operating costs (if any), estimated operating costs for the first year of operation and estimated operating costs for the third year of operation. operation.
- Character and skill. The character and skills assessment consists of a detailed questionnaire that must be completed by all owners. The information disclosed includes educational background, work history, licenses held, affiliations with healthcare facilities inside and outside of New York City, and a legal action record. For applicants affiliated with out-of-state healthcare facilities, an out-of-state compliance review (i.e., review by the state agency overseeing the out-of-state entity State) must be completed and submitted to DOH.
Additional DOH Guidance
Many applicants submitted permit applications that were put on hold during the moratorium. These applicants will need to submit a new license application using the new application. In addition, new parent organizations that have been permitted to acquire an entity above the LHCSA operator during the moratorium using a no-control affidavit must submit a license application within 30 days of the publication of the application, together with the affidavit which was previously filed. with DOH.
Existing LHCSAs who wish to add or remove a service, service area, office address or undergo a name change do not need to file a new LHCSA application. Instead, they can complete a written request to the relevant regional office with a checklist for processing.
Some ownership transfers only require 90 or 120 days notice, depending on the type of entity undergoing the change. Specifically:
- In the case of a Limited Liability Company (LLC) or a Limited Liability Company (LLP):
- transfers of less than 10% to a New member or partner can be accomplished by submitting a notice 90 days prior to the effective date of the transfer
- transfers below or above 10% to a existing member or partner can also be accomplished with 90 days notice, unless the member or partner has not been pre-approved by the Public Health and Health Planning Council (PHHPC) and the transfer places them above the 10% threshold, in which case a full application must be made filed
- In the case of a company:
- transfers of less than 10% to a New the shareholder needs a courtesy notice
- transfers of less or more than 10% to an existing shareholder require 120 days notice unless the shareholder has not been pre-approved by PHHPC and the transfer places them above the 10% threshold, in which case a full application must be filed
Filing and review process
Applications must be filed electronically through the state’s Electronic Certificate of Need system (known as NYSE-CON) and still require a $2,000 non-refundable application fee. They are reviewed first by DOH staff and then by the PHHPC, whose members meet every two months in New York and Albany on a rotating schedule. According to the FAQ, applications are reviewed in the order in which they are recognized in the NYSE-CON system. If an application receives conditional approval from PHHPC, the applicant will be required to submit a policy and procedures manual to the appropriate regional office for review. Once deemed acceptable by the regional office, a pre-opening investigation will be scheduled and, if successful, a license will be issued. In the event of a change in ownership, the applicant can submit the LHCSA’s pre-approved Policy and Procedures Manual which the FAQ says will expedite the licensing process.
Given the years-long suspension of the LHCSA licensing process, it is reasonable to conclude that the DOH will have its hands full in the coming months to consider applications from existing and potential owners of new LHCSAs. That said, it is important that applicants carefully read all documents released by the DOH before filing to ensure that their application is as complete and raises as few questions as possible to avoid approval delays. The FAQs and other documents posted provide valuable guidance, and the DOH makes itself available to answer specific questions, all of which will go a long way in assisting applicants through this process.