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New York DOH Proposed New Licensure Regulations for LHCSAs to be Effective April 1, 2020

The New York Department of Health (DOH) proposed amendments and additions to 10 NYCRR 765 that would amend application processes for Licensed Home Care Services Agencies (LHCSA). These regulatory changes stem from the 2018 NY State budget, which established a two-year moratorium on LHCSA applications and required certain changes to licensure requirements. If finalized, the proposed regulations will create new public need and financial feasibility requirements to LHCSA applications, in addition to the existing character and competence requirement, and will change what constitutes an application amendment requiring the approval of the Public Health and Health Planning Council (PHHPC).

Public Need

The proposed regulations require applications for a LHCSA license to contain information related to the public need for the proposed agency. The burden will be on the applicant to demonstrate the public need based on a number of factors, including the demographics and/or health status of residents, patient waiting lists, the number and capacity of currently operating LHCSAs in the area, the quality of services, the availability and accessibility of the workforce and workforce training, existing LHCSA cultural competency, and subpopulations requiring specialty services. PHHPC will apply the multiple factors to determine whether a public need exists and to approve the application. There would be a presumption of no need for additional LHCSAs in a service area where there are 5 or more LHCSAs servicing patients.

Applications for licensures based on change of ownership of a LHCSA actively serving at least 25 patients will not be subject to the public need requirement. Such change of ownership applications will only be evaluated based on financially feasibility and character and competence of the proposed operator.

Financial Feasibility

In addition to the public need requirement, the new regulations would require applicants for licensure to satisfactorily demonstrate to PHHPC that “there are adequate finances and sources of future revenue to properly establish and operate the licensed home care service agency.” PHHPC will review these materials and available working capital to ensure reasonableness of financial capability and startup funding, and examine the feasibility of financial projections regarding operating revenue and projected expenditures.

Application Amendments

The new regulations would also add to the list of actions that would constitute an amendment to a pending application for licensure, requiring review and approval by PHHPC. Currently, changes to the services provided or the principals of the applicant are the only express instances constituting an amendment. The proposed regulation adds changes in proposed patient capacity, proposed service area, and proposed operating budget to the list of actions requiring PHHPC approval. Failure to disclose amendments prior to licensure is sufficient grounds for revocation, limitation, or annulment of the license, so applicants must remain diligent throughout the entire process. 

If finalized, the proposed regulatory changes will be effective as of April 1, 2020, when the LHCSA moratorium ends. Current LHCSAs and prospective operators should continue to monitor finalization of these regulations in anticipation of the new requirements.

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About this Author

Leslie Levinson Health Business Attorney
Partner

Leslie Levinson is co-chair of the firm's Transactional Health Law Group and a member of both the Health Law and Business Transaction Groups. He has represented private and public businesses throughout his more than 30-year career. Although Les maintains an active business law practice, he concentrates on the transactional, regulatory, and compliance representation of health care and life science clients, including home care and hospice companies, physician practices, hospitals, information technology and medical device companies, health care equipment providers, and health care investors...

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