Hochul weakens Covid-era nursing home law

Jan 02, 2024

Presented by Healthcare Education Project

Good morning and welcome to the Weekly New York Health Care newsletter, where we keep you posted on what's coming up this week in health care news, and offer a look back at the important news from last week.

Beat Memo

New year, new rules. Among the bundle of health care bills signed by Gov. Kathy Hochul in the last days of 2023 was legislation that weakens spending requirements for nursing homes if they reduce their use of temporary staffing agencies.

As a reminder, state lawmakers enacted the spending requirements in 2021 as a response to the devastation Covid wrought inside New York’s nursing homes.

The law mandates that nursing homes spend a minimum of 70 percent of revenue on direct patient care, including 40 percent on resident-facing staffing. It also caps profits at 5 percent.

Noncompliant facilities were supposed to remit excess profit or amount underspent on patient care to the state. Now, under a four-year demonstration program established by the new law, they can significantly minimize what they owe by cutting back on temporary staff.

The changes were the product of a collaboration between the health care union 1199SEIU — which fought for the original spending law — and the nursing home industry, bolstered by a $24,000 lobbying effort.

The bill, carried by state Assemblymember Amy Paulin and Sen. Gustavo Rivera, passed the legislature in its end-of-session rush in June.

About a month later, executives of for-profit nursing homes poured over $100,000 into Hochul’s campaign war chest, POLITICO previously reported. (A Hochul campaign spokesperson said contributions do not affect her decision-making.)

Hochul wrote in a Dec. 22 approval memo, “I support the goals of this bill, which aims to ensure residents receive high-quality care and nursing homes are not forced to rely on costly staffing agencies.”

The Empire Center, an Albany-based think tank, has questioned that logic: “Using contract workers is typically much more expensive than hiring full-time staff – so it’s unclear why operators would need a further financial incentive to use them as little as possible,” Bill Hammond, its senior fellow for health policy, wrote in June.

Next up, the law is receiving some technical changes to “ensure it could be implemented effectively and achieve its stated goals,” Hochul wrote in her approval memo.

It’s not yet clear what those are.

A message from Healthcare Education Project:

Imagine. Less hospital staff. Services cut. Packed ERs. Well, it’s a reality for many in New York. If we don’t fix Medicaid underpayments to hospitals, the crisis will get worse – some hospitals may not survive. Medicaid underfunds hospital care by 30%, already causing deep cuts to mental health services and maternity care. All New Yorkers need equal access to quality healthcare, no matter their income or zip code. Tell Albany: End the Medicaid Funding Crisis.

IN OTHER NEWS:

— UnitedHealthcare has officially dropped Mount Sinai's hospitals from its network, after the insurance giant and health system failed to agree on a deal to renew their contract expiring Jan. 1. The rupture means that about 1.3 million New Yorkers are losing in-network access to care at Mount Sinai Beth Israel, Mount Sinai Brooklyn, Mount Sinai Morningside, Mount Sinai South Nassau, Mount Sinai West and the New York Eye and Ear Infirmary of Mount Sinai.

The Mount Sinai Hospital, Mount Sinai Queens and their associated outpatient locations will remain in-network for all patients until at least March 1. Emergency care will still be covered at in-network benefit levels at all hospitals, in accordance with state law, and some United members who are in the middle of treatment will be able to continue receiving covered services for a specified period of time.

The dispute, which was first reported by POLITICO in December, stemmed from disagreement over the rates United would pay Mount Sinai for services at its hospitals. United said Mount Sinai was demanding substantial price hikes that would make its hospitals “the most expensive in New York City by a considerable margin," while Mount Sinai said United was paying the health system 30 percent less than it pays competing hospitals.

Last year Mount Sinai hospitals, clinics and physicians stopped accepting UnitedHealthcare’s publicly funded managed care plans, which cover low-income New Yorkers.

— The Grieving Families Act, a much-watch bill to amend the state statute governing who can file a wrongful death lawsuit and how long they have to file it, was vetoed by the governor for a second year in a row.

The latest version of the bill “again introduces the potential for significant unintended consequences” that had “not been ameliorated,” Hochul wrote in a Dec. 29 veto memo. She cited concerns about increased insurance premiums for consumers and health care institutions, namely public hospitals that serve disadvantaged communities.

“While I remain open to working collaboratively to find holistic solutions that support impacted families without introducing potential unintended consequences, I believe that further deliberations are needed,” Hochul wrote in a Dec. 29 veto memo.

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A message from Healthcare Education Project:

What you may have missed

— One year after New York launched recreational cannabis sales, the highly anticipated legal market still faces numerous challenges, POLITICO’s Mona Zhang reports. There are now 40 adult-use retail dispensaries across the state. The state's first dispensary licensed to serve both medical and adult-use customers opened its doors in Albany on Friday.

Meanwhile, there are thousands of unlicensed storefronts. State Assemblymember Jenifer Rajkumar introduced a bill Friday aimed at giving municipalities more authority to crack down on unlicensed sales.

State cannabis regulators are focusing on opening up more licensed dispensaries to compete with illicit shops. But members of the Cannabis Control Board disagree with how to prioritize the rollout.

Odds and Ends

NOW WE KNOW — The new Covid JN.1 variant is now driving nearly half of cases.

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STUDY THIS — The key to slowing long-term weight gain? Eating more whole grain foods and fewer animal-based fats and proteins, according to this recent study.

What We're Reading

— Pregnancy resource centers spark funding row between Biden administration and anti-abortion groups, The Wall Street Journal reports.

— Warnings grow about risky IV drips and injections at unregulated med spas, NBC News reports.

— Drugmakers set to raise U.S. prices on at least 500 drugs in January, Reuters reports.

— UnitedHealth used secret rules to restrict rehab care for seriously ill Medicare Advantage patients, STAT reports.

Around POLITICO

— Via Carmen Paun: “Mental hospitals warehoused the sick. Congress wants to let them try again.”

— Hospitals and insurers are racing to find new AI tools for billing and processing medical expenses, Daniel Payne reports.

— FTC temporarily blocks pharma-focused ad tech deal, Josh Sisco reports.

MISSED A ROUNDUP? Get caught up on the New York Health Care Newsletter.

A message from Healthcare Education Project:

All New Yorkers deserve equal access to quality healthcare, no matter their income or ZIP code. Yet today, Medicaid provides New York’s hospitals 30% less than the actual cost of care for the low-income individuals the program covers, including children, the disabled, and seniors. But hospitals and caregivers give all of their patients 100%, each and every day. Medicaid underpayments have already meant cuts to mental health services and maternity care. If we don’t fix Medicaid underpayments to hospitals, the crisis will get worse – some hospitals may not survive.

Albany can end this injustice: Stop Medicaid underpayments and help hospitals stay open. The federal government will pay half the cost of closing the Medicaid funding gap, so it’s a savings for New York. Tell Albany: End the Medicaid funding crisis now.