2013-14 State Budget Summary

Esq. Stephen B. Hanse in Legislative

On March 24th the Governor and the Legislature reached agreement on the final provisions of the 2013-14 State Budget. The Senate completed passage of the budget during the early hours of March 27th and the Assembly finished passing the budget March 28th. With the State’s fiscal year beginning April 1st, this is the third consecutive year that the State has enacted an on-time budget.

Standard Wage for Nursing Homes Defeated

As you are well aware, the budget bills initially proposed by the Governor and the Assembly included statutory language that would require managed care contracts for in-patient nursing home services to provide “standard” (i.e. prevailing) rates of compensation “to ensure the retention of a qualified workforce.” These budget proposals sought to legislatively establish a floor for nursing home wage compensation throughout the State, but without a commitment to provide the necessary funding.

These unfunded budget mandates threatened the operation of existing skilled nursing facilities, diminished access to necessary care by prohibiting admissions in certain circumstances, and failed to recognize the significant financial hardships presently facing New York’s long term care providers. Consequently, NYSHFA immediately and vigorously opposed these proposals.

Beginning on January 22nd (the day the Governor unveiled his proposed budget) and continuing right through March 24th, NYSHFA worked tirelessly with legislators, policymakers and affected associations in an effort to exclude this proposal from the final 2013-14 budget. From numerous meetings, discussions, legislative visitation efforts, telephone calls, to letter writing campaigns, opposition memos, and many other proactive efforts, NYSHFA employed all possible means to exclude this damaging proposal from being enacted. We are delighted to report that the standard wage proposal was excluded from the 2013-14 enacted budget!

2013-14 Enacted Budget Summary

The following is a summary of the major provisions impacting NYSHFA and NYSCAL members included within the enacted 2013-14 New York State Budget.

Trend Factor: The final budget rejected the Governor’s original proposal to eliminate the Legislature’s ability to set trend factor adjustments for nursing homes, assisted living program beds and other Medicaid sectors but continues the 0 percent trend factor for the 2013 and 2014 calendar years.

Restoration of the 2 Percent Across the Board Cut: The final budget authorizes the restoration of the 2 percent across-the-board cut at any period between April 1, 2013 and March 31, 2015. This restoration language is included within the section of the budget providing for the establishment of the “Mental Hygiene Stabilization Fund” to plug the $1.1 billion budget shortfall the State is facing in the 2013-14 fiscal year as a consequence of its longstanding history of overbilling Medicaid for the institutional care of individuals with developmental disabilities.

Medicaid Global Spending Cap: The final budget continues the Medicaid Global Spending Cap through the 2014-15 fiscal year.

Financially Disadvantaged Facilities: The final budget directs $30 million in financially disadvantaged facility funding to establish rate adjustments for facilities undergoing merger, acquisition or closure plans pursuant to existing DOH regulations.

4,500 Additional Assisted Living Program Beds: The final budget adds up to 4,500 additional assisted living program beds for the newly identified 49 “Transitional Adult Home” providers affected by the recent regulations published by the Department of Health. Eligible adult homes are those homes in New York with a certified capacity of 80 beds or more as of September 1, 2012 in which 25% or more of the resident population has a serious mental illness.

Assisted Living Program Capital: The final budget bill provides for the inclusion of capital construction costs in the assisted living program rate for facilities exclusively housing assisted living beds.

Health Home Infrastructure: The final budget includes up to $15 million in state monies to develop and enhance health home operations including assignments, workflow and transmission of data.

Amendments to Existing Contracts: The final budget authorizes the Commissioner of Health to amend or modify any contract entered into by the DOH prior to January 1, 2013 without the need for competitive bidding or an RFP. Such amendments or modifications are to allow for additional personnel or services for the limited purpose of assisting the DOH with implementing the Balancing Incentive Program, the Fully Integrated Duals Advantage Program, the Vital Access Provider Program, the Medicaid waiver amendment associated with the public hospital transformation, the addition of behavioral health services as a managed care plan benefit, and the establishment of certain workgroups.

Report Audit Authority: The final budget extends audit authority for calendar year 2002 cost reports filed by nursing homes through December 31, 2018.

Reconciliation: The final budget eliminates the requirement that certain rate adjustments for 2007 and 2008 for nursing homes be subject to reconciliation.

DOH Appointment of a Temporary Operator: The final budget authorizes the Commissioner of Health to appoint a temporary operator of an adult care facility, an assisted living residence, a general hospital, a diagnostic and treatment center, or a chemical dependence treatment program certified by OASIS on a temporary basis in certain circumstances of financial instability or when the Commissioner finds there are conditions within the facility that endanger the life, health and safety of the residents.

SUNY Downstate Hospital Sustainability Plan: The final budget requires the SUNY Chancellor to submit a “sustainability plan” on or before June 1, 2013 setting forth recommendations for restructuring SUNY Downstate for the purpose of achieving fiscal viability while preserving its status as a teaching hospital. The sustainability plan is subject to the approval of the Commissioner of Health and the Director of the Division of the Budget, and the Chancellor is required to initiate the implementation of the plan by June 15, 2013.

The following initiatives advanced by the Governor in his original budget proposal were among those that were rejected in the final budget agreement:

  • Authorizing the DOH to establish capital reimbursement methodologies for nursing homes through regulation (including emergency regulation);
  • Eliminating the cap on the maximum number of managed long-term care plans that can be authorized (the cap is currently at 75); 
  • Developing a pricing reimbursement methodology for specialty nursing homes; and 
  • Requiring spousal support for the costs of community-based long term care.

Minimum Wage: The final budget increased the minimum wage in three steps starting with an increase to $8.00 on December 31, 2013, $8.75 on December 31, 2014, and $9.00 on December 31, 2015.

The final budget provides a “minimum wage reimbursement credit” for “eligible employers” employing “eligible employees”. Pursuant to the terms of the law, an “eligible employer” is a corporation (including a New York S corporation), a sole proprietorship, a limited liability company or a partnership.

An “eligible employee” is an individual who is:

  1. employed by an eligible employer in New York;
  2. paid at the minimum wage during the taxable year by the eligible employer;
  3. between the ages of 16 and 19 during the period in which he or she is paid the minimum wage; and
  4. a student during the period in which he or she is paid the minimum wage.

The “minimum wage reimbursement credit” is equal to the following:

  • For the taxable year 1/1/14 – 12/31/14: the product of the total number of hours worked during the taxable year and 75 cents.
  • For the taxable year 1/1/15 – 12/31/15: the product of the total number of hours worked during the taxable year and $1.31.
  • For taxable years beginning on 1/1/16 – 12/31/19: the product of the total number of hours worked during the taxable year and $1.35.

The law provides that if the federal minimum wage is increased above 85 percent of the New York minimum wage, the amount of the tax credit will be reduced to the difference between New York’s minimum wage and the federal minimum wage. Additionally, the law includes language stating that an employer shall not discharge an employee and hire an eligible employee solely for the purpose of qualifying for the minimum wage reimbursement credit.

Stephen B. Hanse, Esq.
Vice President, Governmental Affairs
518-462-4800 x25