2023 New York Laws › PBH - Public Health › Article 28 - Hospitals › 2808 - Residential Health Care Facilities; Rates of Payment.

§ 2808. Residential health care facilities; rates of payment.
1-a.  Notwithstanding  sections  one  hundred  twelve  and one hundred
sixty-three  of  the  state  finance  law  and  any  other  inconsistent
provision   of  law,  the  commissioner  shall  make  grants  to  public
residential health care facilities without a competitive bid or  request
for  proposal  process  for  the  purposes  of  addressing  the  overall
increases in input costs borne by such  facilities.  Such  modifications
shall  also  be  primarily  intended to promote the provision of quality
health care, quality operation, updated technology  and  improved  staff
development  and support by such facilities. Such grants shall be in the
following aggregate amounts for the following periods: five million  for
the period April first, two thousand six through March thirty-first, two
thousand seven; fifteen million for the period April first, two thousand
seven  through  March  thirty-first, two thousand eight; and ten million
for  the  period  April  first,  two  thousand   eight   through   March
thirty-first, two thousand nine.
The  amount  allocated to each eligible public residential health care
facility for each period shall be calculated as the result  of  (i)  the
total  payment  for  each period multiplied by (ii) the ratio of patient
days for patients eligible for  medical  assistance  pursuant  to  title
eleven of article five of the social services law provided by the public
residential  health  care facility, divided by the total of such patient
days summed for all eligible public residential health care  facilities.
Grants under this subdivision shall be made on a quarterly basis.
* 2.  (a)  The  commissioner,  with the approval of the state hospital
review  and  planning  council,  shall  promulgate  regulations  to   be
effective  the  first  day  of  January, nineteen hundred seventy-eight,
relating the rate of payment for each residential health  care  facility
to real property costs.
(b)  Such  regulations  may  differentiate  based  upon  the  form  of
ownership of the facility, and shall provide for consideration  of  such
factors as the age, size, location and condition of the facility.
(c)  For  facilities  granted  operating  certificates  prior to March
tenth, nineteen hundred seventy-five, the real property costs  shall  be
computed  upon  a  cost valuation basis of the facility as determined by
the commissioner, who, subject to the approval of the  director  of  the
budget,  may  provide  exceptions  in  circumstances where he finds that
application of the regulations would result in  excessive  reimbursement
or   in   severe  economic  hardship  to  the  facility  not  caused  by
circumstances reasonably under the control of the facility.
(d) For facilities granted operating certificates on  or  after  March
tenth, nineteen hundred seventy-five, recognition of real property costs
in such regulations shall be based upon historical costs to the owner of
the facility, provided that payment for real property costs shall not be
in  excess of the actual debt service, including principal and interest,
and payment with  respect  to  owner's  equity.  For  purposes  of  this
subdivision,  owner's  equity  shall be calculated without regard to any
surplus created by revaluation of assets and shall not  include  amounts
resulting from mortgage amortization where the payment therefor has been
provided by real property cost reimbursement.
(e)  All  transactions,  including leases and mortgages, which are not
bona fide and reasonable shall be disregarded.
* NB Expired December 31, 1978
2-a. (a) The commissioner, with the approval  of  the  state  hospital
review   and  planning  council,  shall  promulgate  regulations  to  be
effective the first  day  of  January,  nineteen  hundred  seventy-nine,
relating  the  rate of payment for each residential health care facility
to real property costs.
(b)  Such  regulations  may  differentiate  based  upon  the  form  of
ownership  of  the facility, and shall provide for consideration of such
factors as the age, size, location and condition of the facility.
(c)  For  facilities  granted  operating  certificates  prior to March
tenth, nineteen hundred seventy-five, the real property costs  shall  be
computed  upon  a  cost valuation basis of the facility as determined by
the commissioner, who, subject to the approval of the  director  of  the
budget,  may  provide  exceptions  in  circumstances where he finds that
application of the regulations would result in  excessive  reimbursement
or   in   severe  economic  hardship  to  the  facility  not  caused  by
circumstances reasonably under the control of the facility.
* (d) For facilities granted operating certificates on or after  March
tenth, nineteen hundred seventy-five, recognition of real property costs
in such regulations shall be based upon historical costs to the owner of
the facility, provided that payment for real property costs shall not be
in  excess of the actual debt service, including principal and interest,
and payment with respect to owner's equity, and further  provided  that,
subject  to federal financial participation, and subject to the approval
of the commissioner, effective April first, two  thousand  fifteen,  the
commissioner  may  modify  such  payments  for  real  property costs for
purposes of effectuating a shared savings  program,  whereby  facilities
share  a  minimum of fifty percent of savings, for facilities that elect
to refinance their mortgage loans. For  purposes  of  this  subdivision,
owner's equity shall be calculated without regard to any surplus created
by  revaluation  of  assets and shall not include amounts resulting from
mortgage amortization where the payment therefor has  been  provided  by
real property cost reimbursement.
* NB Effective until March 31, 2025
* (d)  For facilities granted operating certificates on or after March
tenth, nineteen hundred seventy-five, recognition of real property costs
in such regulations shall be based upon historical costs to the owner of
the facility, provided that payment for real property costs shall not be
in excess of the actual debt service, including principal and  interest,
and  payment  with  respect  to  owner's  equity.  For  purposes of this
subdivision, owner's equity shall be calculated without  regard  to  any
surplus  created  by revaluation of assets and shall not include amounts
resulting from mortgage amortization where the payment therefor has been
provided by real property cost reimbursement.
* NB Effective March 31, 2025
(e) All transactions, including leases and mortgages,  which  are  not
bona fide and reasonable shall be disregarded.
2-b.  Notwithstanding  any  inconsistent provision of this section, or
any other contrary provision of law and subject to the  availability  of
federal  financial  participation, the operating cost component of rates
of payment by governmental agencies for inpatient services  provided  on
and  after  January first, two thousand seven by residential health care
facilities shall be in accordance with the following:
(a) (i) Subject to the provisions of subparagraphs (ii)  through  (vi)
of  this paragraph, for the two thousand seven rate period the operating
cost component of rates of payment  shall  reflect  the  operating  cost
component  of  rates  effective  for October first, two thousand six, as
adjusted for inflation in accordance with paragraph (c)  of  subdivision
ten of section twenty-eight hundred seven-c of this article; and for the
January  first,  two  thousand  eight  through  March  thirty-first, two
thousand nine rate period the  operating  cost  component  of  rates  of
payment  shall  reflect  the operating cost component of rates effective
for December thirty-first, two thousand six, as adjusted  for  inflation

in   accordance  with  paragraph  (c)  of  subdivision  ten  of  section
twenty-eight hundred seven-c of this article.
(ii)  Rates  for the periods two thousand seven and two thousand eight
shall be further adjusted by a per diem add-on amount, as determined  by
the  commissioner, reflecting the proportional amount of each facility's
projected Medicaid benefit to the total projected Medicaid  benefit  for
all  facilities  of  the imputed use of the rate-setting methodology set
forth in paragraph (b) of this subdivision, provided, however, that  for
those  facilities  that  do  not  receive  a  per diem add-on adjustment
pursuant to this  subparagraph,  rates  shall  be  further  adjusted  to
include the proportionate benefit, as determined by the commissioner, of
the expiration of the opening paragraph and paragraph (a) of subdivision
sixteen  of this section and of paragraph (a) of subdivision fourteen of
this section, provided, further, however, that the  aggregate  total  of
the rate adjustments made pursuant to this subparagraph shall not exceed
one  hundred  thirty-seven million five hundred thousand dollars for the
two thousand seven rate period and one hundred sixty-seven million  five
hundred  thousand  dollars  for  the  two thousand eight rate period and
provided further, however, that such rate adjustments as  made  pursuant
to  this  subparagraph prior to two thousand twelve shall not be subject
to subsequent adjustment or reconciliation.
(iii) Revisions to two thousand  six  rates  occurring  on  and  after
January  first,  two  thousand  seven,  shall  be annually incorporated,
retroactively  and  prospectively,  into  two  thousand  seven  and  two
thousand  eight rates on or about November thirtieth, two thousand seven
and November thirtieth, two thousand eight, respectively.
(iv) The capital cost component of rates pursuant  to  this  paragraph
shall  fully  reflect the cost of local property taxes and payments made
in lieu of local property taxes, as reported  in  each  facility's  cost
report submitted for the year two years prior to the rate year.
(v)  Rates  for  the  two  thousand  seven and two thousand eight rate
periods, as computed pursuant to this paragraph, shall not be subject to
case  mix  adjustment,  provided,  however,  that  a  facility  may,  in
accordance  with  its  existing  full  house  schedule  of submission of
patient review instruments, submit data in support of a  request  for  a
rate  adjustment  to  reflect an increased facility case mix equal to or
greater than .05, provided further, however, that such a  facility  will
be  required  to  continue  to  make  such  full  house  submissions  in
accordance with its existing submission schedule  for  rate  periods  up
through December thirty-first, two thousand eight.
(vi) For the period January first, two thousand seven through December
thirty-first, two thousand eight, notwithstanding any contrary provision
of  law  or  regulation,  voluntary  facilities shall not be required to
deposit  reimbursement  received  for  depreciation  expenses   into   a
segregated depreciation fund account.
(b)  (i)  (A)  Subject to the provisions of subparagraphs (ii) through
(xiv) of this paragraph, for periods  on  and  after  April  first,  two
thousand  nine  the  operating  cost component of rates of payment shall
reflect allowable operating costs as reported in  each  facility's  cost
report for the two thousand two calendar year, as adjusted for inflation
on  an  annual  basis  in  accordance  with the methodology set forth in
paragraph (c) of subdivision ten of section twenty-eight hundred seven-c
of this article, provided, however, that for those facilities which  are
determined by the commissioner to be qualifying facilities in accordance
with  the  provisions of clause (B) of this subparagraph, rates shall be
further adjusted to include the proportionate benefit, as determined  by
the  commissioner,  of  the  expiration  of  the  opening  paragraph and
paragraph (a) of subdivision sixteen of this section  and  of  paragraph

(a)  of  subdivision fourteen of this section, and provided further that
the operating cost component of rates of payment  for  those  facilities
which  are determined by the commissioner to be qualifying facilities in
accordance  with the provisions of clause (B) of this subparagraph shall
not be less than the operating component such facilities received in the
two thousand eight rate period, as adjusted for inflation on  an  annual
basis  in  accordance with the methodology set forth in paragraph (c) of
subdivision ten of section twenty-eight hundred seven-c of this  article
and further provided, however, that rates for facilities whose operating
cost component reflects base year costs subsequent to January first, two
thousand   two  shall  have  rates  computed  in  accordance  with  this
paragraph, utilizing allowable  operating  costs  as  reported  in  such
subsequent  base  year  period,  and trended forward to the rate year in
accordance with applicable inflation factors.
(B) For the purposes of this subparagraph  qualifying  facilities  are
those  facilities  for  which  the  commissioner  determines  that their
reported two thousand two base year operating cost component, as defined
in accordance with the regulations of the department as set forth in  10
NYCRR   86-2.10(a)(7);   is  less  than  the  operating  component  such
facilities received in the two thousand eight rate period,  as  adjusted
by applicable trend factors.
(ii) (A) The operating component of rates shall be subject to case mix
adjustment  through  application  of  the  relative resource utilization
groups system  of  patient  classification  (RUG-III)  employed  by  the
federal government with regard to payments to skilled nursing facilities
pursuant  to  title XVIII of the federal social security act (Medicare),
as revised by regulation to reflect New  York  state  wages  and  fringe
benefits,  provided,  however,  that  such RUG-III classification system
weights shall be increased in the following amounts  for  the  following
categories of residents: (1) thirty minutes for the impaired cognition A
category,  (2)  forty minutes for the impaired cognition B category, and
(3) twenty-five minutes for the reduced physical functions  B  category.
Such  adjustments  shall  be  made  in January and July of each calendar
year. Such adjustments  and  related  patient  classifications  in  each
facility shall be subject to audit review in accordance with regulations
promulgated by the commissioner.
(B)  Effective  April  first,  two  thousand twenty-four, the case mix
adjustment from the operating component of the rates for skilled nursing
facilities  shall  remain  unchanged  from   the   July   two   thousand
twenty-three  rates during the development and until full implementation
of a case mix methodology using the Patient Driven Payment Model.
(iii) Specified adjustments to the operating  component  of  rates  in
effect  for  periods  prior  to  January  first, two thousand nine, with
regard to extended care for persons with traumatic brain injury and  for
the  cost  of  providing  hepatitis B vaccinations shall continue on and
after January first, two thousand nine.
(iv) The capital cost component of rates on and after  January  first,
two  thousand  nine  shall: (A) fully reflect the cost of local property
taxes and payments made in lieu of local property taxes, as reported  in
each  facility's  cost  report submitted for the year two years prior to
the rate year; (B) provided, however, notwithstanding  any  inconsistent
provision  of  this article, commencing April first, two thousand twenty
for rates of payment for patients eligible for payments  made  by  state
governmental   agencies,   the  capital  cost  component  determined  in
accordance with this subparagraph and inclusive of  any  shared  savings
for  eligible  facilities  that  elect to refinance their mortgage loans
pursuant to paragraph (d) of subdivision two-a of this section, shall be
reduced by the commissioner by five percent; and (C) provided,  however,

notwithstanding  any  inconsistent provision of this article, commencing
April first, two thousand twenty-four for rates of payment for  patients
eligible  for  payments made by state governmental agencies, the capital
cost  component  determined  in  accordance  with  this subparagraph and
inclusive of any shared savings for eligible facilities  that  elect  to
refinance  their mortgage loans pursuant to paragraph (d) of subdivision
two-a of this section, shall  be  reduced  by  the  commissioner  by  an
additional ten percent, provided, however, that such reduction shall not
apply  to  rates of payment for patients in pediatric residential health
care facilities as defined  in  paragraph  (c)  of  subdivision  two  of
section twenty-eight hundred eight-e of this article.
(v)  The  direct  component  of  the  operating  component of rates of
payment shall include allowable  direct  therapy  costs  and  associated
overhead  costs  and shall exclude administrative overhead costs related
to pharmacy  services  and  the  costs  of  non-prescription  drugs  and
supplies,  which  shall be reflected in facility rates as non-comparable
costs.
(vi) For purposes of computing peer group cost ceilings for the direct
and indirect component of the operating component of  rates,  facilities
shall  be  organized  into  peer groups consisting of: (A) free-standing
facilities with certified bed capacities  of  less  than  three  hundred
beds;  (B)  free-standing  facilities  with  certified bed capacities of
three hundred beds or more; and (C) hospital based facilities.
(vii) In determining the operating cost component of rates,  for  each
peer  group,  a  corridor  shall  be developed around the statewide mean
direct and indirect price per day, provided, however, that the  corridor
around  each mean direct and indirect price per day shall have a base no
less than eighty-five percent and no greater than ninety percent of each
mean direct and indirect price per day and a ceiling no greater than one
hundred fifteen percent and no less than one hundred ten percent of each
mean direct and indirect price per day, and further  provided,  however,
that  the total financial impact of the application of the ceiling shall
be substantially equal to the total financial impact of the  application
of the base.
(viii) The operating component of rates shall be adjusted to reflect a
per  diem  add-on  amount  of  eight dollars, trended forward to reflect
applicable inflation factors from two thousand six to two thousand  nine
and  prospectively thereafter, for each patient who: (A) qualifies under
both  the  RUG-III  impaired  cognition  and  the  behavioral   problems
categories,  or  (B)  has  been  diagnosed  with  Alzheimer's disease or
dementia, is classified in the reduced physical functions A, B or C,  or
in behavioral problems A or B categories, and has an activities of daily
living index score of ten or less.
(ix)  The  operating component of rates shall be adjusted to reflect a
per diem add-on amount of seventeen dollars, trended forward to  reflect
applicable  inflation factors from two thousand six to two thousand nine
and prospectively thereafter, for each patient whose body mass index  is
greater than thirty-five.
(x)  For  periods  on  and  after  January  first,  two thousand nine,
notwithstanding any contrary provision of law or  regulation,  voluntary
facilities  shall  not be required to deposit reimbursement received for
depreciation expenses into a segregated depreciation fund account.
(xi) Public facilities, and  non-public  facilities  with  fewer  than
eighty  certified  beds,  which have a facility specific direct adjusted
payment price per day equal to the ceiling direct price  per  day  shall
have such direct adjusted payment price per day further adjusted through
the  addition  of fifty percent of the difference between the facility's
specific direct cost per day and  the  ceiling  direct  price  per  day.

Public  facilities,  and  non-public  facilities  with fewer than eighty
certified beds, which have a facility specific indirect adjusted payment
price per day equal to the ceiling indirect price  per  day  shall  have
such  indirect  adjusted  payment price per day further adjusted through
the addition of fifty percent of the difference between  the  facility's
specific  indirect  cost per day and the ceiling indirect price per day.
Such adjustments to direct and indirect adjusted payment prices per  day
shall  be  increased  to  the rate year by application of the applicable
inflation factor and adjusted by the regional direct and indirect  input
price adjustment factors calculated pursuant to subdivision seventeen of
this section.
(xii)  Public  facilities shall receive rates that are consistent with
the provisions of this paragraph, provided, however, that  in  no  event
shall  such  rates,  in  aggregate,  exceed  the  amount permitted under
federal upper payment limits applicable to  public  facilities.  In  the
event such public facilities are, pursuant to this subparagraph, subject
to  limitations  on  such rates, the commissioner shall make grants from
state funds to such facilities  equal  to  one-half  of  the  additional
amount  that such facilities would have received if such limitations had
not been applied.
(xiii) The appointment of a receiver or the  establishment  of  a  new
operator  or  replacement  or  renovation  of an existing facility on or
after January first, two thousand seven shall not result in  a  revision
to  the  operating component of the facility's rates for any rate period
through December thirty-first, two thousand eleven,  provided,  however,
that  the  provisions of this subparagraph shall not apply to a facility
which has a certificate of need application filed with the department as
of December  thirty-first,  two  thousand  six,  which  is  subsequently
approved  and which otherwise meets existing department criteria for the
establishment of a new base year for rate-setting purposes.
(xiv) The commissioner may promulgate regulations, including emergency
regulations, to implement the provisions of this paragraph.
(c) In order to ensure that the quality of resident care is maintained
and improved for rate periods on and after January first,  two  thousand
seven,  no  less  than  sixty-five  percent  of  the additional Medicaid
reimbursement received by a residential health  care  facility  that  is
attributable   to  the  per-diem  add-on  amount  received  pursuant  to
subparagraph (ii) of paragraph (a) of  this  subdivision  or,  for  rate
periods  on  and after January first, two thousand nine, that is related
to utilization of two thousand two reported base year costs, as compared
to the reimbursement each such facility would  have  received  had  such
facility's  Medicaid  reimbursement rates continued to reflect base year
costs used with regard to such facility's two thousand six rates,  shall
be   allocated   for   the  purpose  of  recruitment  and  retention  of
non-supervisory  workers  or  any  worker  with  direct  resident   care
responsibility or for purposes authorized under the nursing home quality
improvement demonstration program as established by section twenty-eight
hundred  eight-d  of this article, provided, however, in no circumstance
shall facilities be required to spend more than seventy-five percent  of
such funds for these purposes, and provided further, the commissioner is
authorized  to  audit  each  such  facility  for the purpose of ensuring
compliance with the provisions of this paragraph and  shall  recoup  any
amount  determined  to have been in contravention of the requirements of
this paragraph, provided, however, that, upon application of a facility,
the commissioner  may,  after  determining  that  other  funds  are  not
available,  waive  the  application  of  this paragraph insofar as it is
determined by the commissioner that additional funds must be expended by

such facility to  correct  deficiencies  that  constitute  a  threat  to
resident safety.
(d)  Cost  reports submitted by residential health care facilities for
the  two  thousand  two  calendar  year  or  any  part  thereof   shall,
notwithstanding  any  contrary  provision  of  law,  be subject to audit
through December thirty-first,  two  thousand  eighteen  and  facilities
shall  retain  for the purpose of such audits all fiscal and statistical
records relevant to such cost reports, provided, however, that any  such
audit  commenced  on  or  before  December  thirty-first,  two  thousand
eighteen, may be completed and used for the  purpose  of  adjusting  any
Medicaid rates which utilize such costs.
(e)  For  rate  periods  subsequent to two thousand nine which utilize
reported costs from a base year subsequent  to  two  thousand  two,  the
following   categories   of   facilities,  as  established  pursuant  to
applicable regulations, shall  receive  rates  that  are  no  less  than
equivalent, as determined by the commissioner, to the rates that were in
effect  for  such facilities on December thirty-first, two thousand six,
trended forward for inflation to the applicable rate  period:  (A)  AIDS
facilities  or discrete AIDS units within facilities, (B) discrete units
for residents receiving care in a  long  term  inpatient  rehabilitation
program for traumatic brain injured persons, (C) discrete units for long
term  ventilator  dependent  residents,  (D)  discrete  units  providing
specialized programs for residents requiring  behavioral  interventions,
and  (E)  facilities  or  discrete  units within facilities that provide
extensive  nursing,  medical,  psychological  and   counseling   support
services solely to children.
(f)  The operating component of Medicaid rates of payment shall, by no
later than the two thousand twelve rate period, be  based  on  allowable
costs,  as  reported  on  annual facility cost reports, from a base year
period no earlier than three years prior to the initial rate  year,  and
then  trended  forward  by applicable inflation factors. Thereafter, the
base year utilized for rate-setting purposes  shall  be  updated  to  be
current  no less frequently than every six years provided, however, that
for the  purposes  of  this  paragraph,  current  shall  mean  that  the
operating  components  of  the  initial rate year utilizing such updated
base year shall reflect allowable costs as reported in  annual  facility
cost  reports  for  periods  no  earlier  than three years prior to such
initial rate  year  and  then  trended  forward  to  the  rate  year  in
accordance with applicable inflation factors.
(g)  Notwithstanding any contrary provision of this subdivision or any
other contrary provision of law, rule or regulation,  rates  of  payment
for  inpatient  services provided on and after April first, two thousand
nine by  residential  health  care  facilities  shall,  except  for  the
establishment  of  any statewide or any peer group base, mean or ceiling
prices per day, be calculated utilizing  only  the  number  of  patients
properly  assessed and reported in each patient classification group and
eligible for medical assistance pursuant to title eleven of article five
of the social services law.
(h) Notwithstanding any contrary provision of law and subject  to  the
availability  of  federal  financial participation, for the period April
first, two thousand eleven through June thirtieth, two thousand  eleven,
the  non-capital  components  of  rates  shall  be  subject to a uniform
percentage reduction sufficient to reduce such  rates  by  an  aggregate
amount  of  twenty-seven  million  one  hundred  thousand  dollars,  and
provided further, however, that such reductions shall be disregarded  in
computations  made  pursuant  to  section  two  of  part  D  of  chapter
fifty-eight of the laws of two thousand nine, as amended.
2-c. (a) Notwithstanding any inconsistent provision of this section or
any other contrary provision of law and subject to the  availability  of
federal  financial  participation, the non-capital component of rates of
payment by governmental agencies  for  inpatient  services  provided  by
residential  health  care  facilities  on  or  after  October first, two
thousand eleven, but no later than January first, two  thousand  twelve,
shall reflect a direct statewide price component, and indirect statewide
price  component,  and  a  facility  specific  non-comparable component,
utilizing allowable operating costs for a base year as determined by the
commissioner by regulation. Such rate components shall  be  periodically
updated to reflect changes in operating costs.
(b)  The  direct  and  indirect  statewide  price  components shall be
adjusted by a  wage  equalization  factor  and  such  other  factors  as
determined  to be appropriate to recognize legitimate cost differentials
and the direct statewide price component shall be subject to a case  mix
adjustment   utilizing  the  patients  that  are  eligible  for  medical
assistance pursuant to title  eleven  of  article  five  of  the  social
services  law.  Such  wage  equalization  factor  shall  be periodically
updated to reflect current labor market conditions.
(c) The non-capital component of the rates for: (i) AIDS facilities or
discrete AIDS units within facilities; (ii) discrete units for residents
receiving care in  a  long-term  inpatient  rehabilitation  program  for
traumatic   brain   injured  persons;  (iii)  discrete  units  providing
specialized programs for residents requiring  behavioral  interventions;
(iv)  discrete  units  for long-term ventilator dependent residents; and
(v)  facilities  or  discrete  units  within  facilities  that   provide
extensive   nursing,   medical,  psychological  and  counseling  support
services solely to children shall reflect the rates in effect  for  such
facilities  on  January  first,  two  thousand  nine,  as  adjusted  for
inflation and rate  appeals  in  accordance  with  applicable  statutes,
provided,   however,   that  such  rates  for  facilities  described  in
subparagraph (i) of this paragraph shall reflect the application of  the
provisions  of  section  twelve  of part D of chapter fifty-eight of the
laws of two thousand nine, and provided further, however,  that  insofar
as  such  rates reflect trend adjustments for trend factors attributable
to the two thousand eight and  two  thousand  nine  calendar  years  the
aggregate  amount  of  such trend factor adjustments shall be subject to
the provisions of section two of part D of chapter  fifty-eight  of  the
laws of two thousand nine, as amended.
(d)  The commissioner shall promulgate regulations, and may promulgate
emergency regulations, to implement the provisions of this  subdivision.
Such  regulations  shall  be  developed in consultation with the nursing
home  industry  and  advocates  for  residential  health  care  facility
residents  and,  further,  the  commissioner  shall provide notification
concerning such regulations to the chairs of  the  senate  and  assembly
health  committees,  the  chair  of the senate finance committee and the
chair of the assembly ways and means committee. Such  regulations  shall
include  provisions  for  rate  adjustments  or  payment enhancements to
facilitate  a  minimum  four-year  transition  of  facilities   to   the
rate-setting  methodology  established  by this subdivision and may also
include, but not be limited  to,  provisions  for  facilitating  quality
improvements  in  residential  health  care  facilities. For purposes of
facilitating quality improvements through the establishment of a nursing
home quality pool to be funded at the discretion of the commissioner  by
(i)  adjustments  in medical assistance rates, (ii) funds made available
through state appropriations, or  (iii)  a  combination  thereof,  those
facilities   that  contribute  to  the  quality  pool,  but  are  deemed
ineligible for quality pool payments due exclusively to a specific  case

of  employee  misconduct,  shall  nevertheless be eligible for a quality
pool payment if the facility properly reported  the  incident,  did  not
receive  a  survey  citation  from  the  commissioner or the Centers for
Medicare  and  Medicaid Services establishing the facility's culpability
with regard to such  misconduct  and,  but  for  the  specific  case  of
employee  misconduct,  the  facility  would  have  otherwise  received a
quality pool payment. Regulations  pertaining  to  the  facilitation  of
quality  improvement  may  be  made  effective  for periods on and after
January first, two thousand thirteen.
(e) With the exception of those enrollees covered under a payment rate
methodology  agreement  negotiated  with  a  residential   health   care
facility,  payments  for  inpatient  residential  health  care  facility
services provided to patients eligible for medical  assistance  pursuant
to  title  eleven  of  article  five  of the social services law made by
organizations operating in accordance with  the  provisions  of  article
forty-four  of  this  chapter  or  by  health  maintenance organizations
organized and operating in accordance with article  forty-three  of  the
insurance law, shall be the rates of payment that would be paid for such
patients  under the medical assistance program as determined pursuant to
this section and subdivision ten of section twenty-eight hundred seven-d
of this article and  as  in  effect  at  the  time  such  services  were
provided.  The  provisions of this paragraph shall not apply to payments
for patients whose placement in a residential health  care  facility  is
for the purpose of receiving time-limited rehabilitation, to be followed
by  discharge  from  the  facility,  during the period such time-limited
services are provided.
(f) The commissioner shall establish a prospective per diem adjustment
for all nursing homes,  other  than  nursing  homes  providing  services
primarily  to  children  under  the  age  of twenty-one, beginning April
first, two thousand seventeen and each  year  thereafter  sufficient  to
achieve eighteen million dollars in savings in each state fiscal year.
* (g)  Notwithstanding any other provision of law or regulation to the
contrary, any residential health care facility established  pursuant  to
this  article  located  in  a  county  with  a  population  of more than
seventy-two thousand and less then seventy-five thousand  persons  based
on  the  two  thousand  ten  federal  census,  and operating between one
hundred ten and  one  hundred  thirty  beds,  being  reimbursed  by  the
department on a fee-for-services basis, shall be reimbursed at a rate of
no  less  than one hundred seventeen percent of the fee-for-service rate
of reimbursement calculated pursuant to this section for  that  facility
for  inpatient  services  provided on or after March first, two thousand
eighteen.
* NB There are 2 par (g)'s
* (g) The commissioner shall reduce Medicaid revenue to a  residential
health  care facility in a payment year by two percent if in each of the
two most recent payment years for which  New  York  state  nursing  home
quality  initiative  data  is  available, the facility was ranked in the
lowest two quintiles of facilities based on  its  nursing  home  quality
initiative  performance,  and  was  ranked in the lowest quintile in the
most recent payment year. The commissioner shall waive  the  application
of  this paragraph to a facility if the commissioner determines that the
facility is in financial distress.
* NB There are 2 par (g)'s
2-d.  Residential  health   care   facility   supplemental   payments.
Notwithstanding  any  inconsistent  provision of law, rule or regulation
and subject to the availability of federal financial participation,  for
the  period May first, two thousand eleven through May thirty-first, two
thousand eleven, the commissioner shall adjust inpatient medicaid  rates

of payment established pursuant to this article for eligible residential
health care facilities in accordance with the following:
(a) Rate adjustments made pursuant to this subdivision shall be in the
form  of  rate  add-ons  and shall not exceed an aggregate amount of two
hundred twenty-one million three hundred thousand dollars.
(b) Eligible facilities are those facilities  which  the  commissioner
determines  have experienced a net reduction in their inpatient Medicaid
reimbursement for the period April  first,  two  thousand  nine  through
March thirty-first, two thousand eleven as a result of the following:
(i)  inpatient  rate  adjustments  made  pursuant  to paragraph (b) of
subdivision two-b of this section;
(ii) use of the case mix methodology described  in  paragraph  (g)  of
subdivision two-b of this section;
(iii)  inpatient rate adjustments made pursuant to section two of part
D of chapter fifty-eight of the laws of two thousand nine, as amended.
(c) The following eligible facilities shall receive  rate  adjustments
pursuant  to  this subdivision equal to one hundred percent of their net
reimbursement reduction as computed by the  commissioner  in  accordance
with paragraph (b) of this subdivision:
(i)  facilities that have been determined by the commissioner as being
eligible for distributions of amounts available  for  the  two  thousand
nine period as provided in subdivision twenty-one of this section;
(ii)  non-public  facilities  whose  total  operating  losses equal or
exceed five percent  of  total  operating  revenue  and  whose  medicaid
utilization equals or exceeds seventy percent, based on either their two
thousand  nine  cost  report  or  based  on  the otherwise most recently
available cost report, as determined by the commissioner;
(iii) facilities or distinct units of facilities  providing  inpatient
services primarily to children under the age of twenty-one.
(d)  Eligible  facilities, other than eligible facilities described in
paragraph (c)  of  this  subdivision,  shall  receive  rate  adjustments
pursuant  to  this  subdivision  equal  to  fifty  percent  of their net
reimbursement reduction as computed by the  commissioner  in  accordance
with paragraph (b) of this subdivision.
(e)  Eligible  facilities  as  described  in  paragraph  (d)  of  this
subdivision which, as determined by the commissioner, after  application
of the rate adjustments authorized by paragraph (d) of this subdivision,
remain  subject  to  a net reduction in their inpatient Medicaid revenue
that is in excess of  two  percent,  as  measured  with  regard  to  the
non-capital  components  of  facility inpatient rates in effect on March
thirty-first, two thousand nine as computed prior to the application  of
trend  factor adjustments attributable to the two thousand eight and two
thousand nine calendar years, shall have their  rates  further  adjusted
such that such net reduction does not exceed such two percent.
(f)  Eligible  facilities  as  described  in  paragraph  (d)  of  this
subdivision which, as determined by the commissioner, have experienced a
net reduction in their inpatient rates of more than six million  dollars
as  a  result of the application of the factor described in subparagraph
(iii) of paragraph (b) of this subdivision shall  after  application  of
the  provisions  of  paragraph (e) of this subdivision, have their rates
further adjusted such that any such net reduction  remaining  after  the
application  of  the  other provisions of this subdivision is reduced to
zero.
(g) In computing net reductions of medicaid reimbursement pursuant  to
paragraph (b) of this subdivision the commissioner shall:
(i)  disregard  the  impact  of  case  mix  adjustments  as  otherwise
scheduled for July first, two thousand ten; and,
(ii) disregard the impact of any rate adjustments issued on  or  after
January  first,  two  thousand  eleven,  including  adjustments  to rate
periods prior to January first, two thousand eleven.
(h) Payments made pursuant to this subdivision shall not be subject to
subsequent  adjustment  or  reconciliation and, further, the computation
and application of limitations on medicaid rates of payment as described
in section two of part D of chapter  fifty-eight  of  the  laws  of  two
thousand  nine,  as  amended,  and  as  applicable  to  the rate periods
described in paragraph (a) of this subdivision, shall disregard payments
made pursuant to this subdivision.
(i) Additional  rate  adjustments  shall  be  made  pursuant  to  this
subdivision  to  eligible facilities in the form of rate add-ons for the
period May first, two thousand  eleven  through  May  thirty-first,  two
thousand eleven which shall in aggregate be equal to twenty-five percent
of  the  aggregate amount described in paragraph (a) of this subdivision
and which shall be distributed to each eligible  facility  in  the  same
proportion  as  the  total  distributions  otherwise  received  by  each
facility pursuant to this subdivision.
(j) The commissioner may, with the approval of  the  director  of  the
budget,  and  subject  to  the identification of sufficient nursing home
related medicaid savings to offset the expenditures authorized  by  this
paragraph, make additional rate adjustments pursuant to this subdivision
to  eligible  facilities  in  the  form  of  rate add-ons for the period
December first, two thousand eleven through December  thirty-first,  two
thousand  eleven  which  shall  in  aggregate  be  equal  to  twelve and
five-tenths percent of the aggregate amount described in  paragraph  (a)
of  this  subdivision  and  which  shall be distributed to each eligible
facility in the same proportion as  the  total  distributions  otherwise
received by each facility pursuant to this subdivision.
3.  The  commissioner,  with the approval of the state hospital review
and planning council, shall promulgate regulations to be  effective  the
first day of January, nineteen hundred seventy-eight, which shall relate
the rate of payment to the efficient operation and program management of
the  facility, as well as to the quality of patient care provided by the
facility. Such regulations shall be consistent with the requirements  of
subdivision  three of section twenty-eight hundred seven of this chapter
and with federal laws and regulations.
4. The commissioner, in determining and certifying to the director  of
the  budget  the rates of payment to residential health care facilities,
shall exclude the following costs: (a) contributions or  other  payments
to  political  parties,  candidates  or  organizations;  (b)  direct  or
indirect costs incurred for advertising or promotion except  as  allowed
by the commissioner; (c) costs incurred for the promotion or opposition,
directly  or  indirectly, of the passage of bills or resolutions pending
before or passed by a legislative body of any  jurisdiction;  (d)  costs
which  principally afford diversion, entertainment or amusement to their
owners, operators or employees not properly related to patient  care  or
treatment;  (e)  any penalty imposed by governmental agencies or courts,
and the  costs  of  policies  obtained  solely  to  insure  against  the
imposition  of such a penalty; and (f) costs incurred by the residential
health  care  facility  to  obtain  the  security  required  under   the
provisions of section twenty-eight hundred nine of this chapter.
5.  (a)  Any  operator  withdrawing  equity  or assets from a hospital
operated for profit so as to create or increase a negative net worth  or
when  the  hospital  is  in  a  negative  net worth position, calculated
without regard to any surplus created by  revaluation  of  assets,  must
obtain  the  prior  approval  of  the  commissioner  in  accordance with
regulations promulgated by the commissioner with  the  approval  of  the

state  hospital review and planning council. The commissioner shall make
a determination to approve or disapprove a  request  for  withdrawal  of
equity or assets under this subdivision within sixty days of the date of
the  receipt  of  such  a  request.  Requests  shall  be  made in a form
acceptable to  the  department  by  certified  or  registered  mail.  In
addition  to  any  other remedy or penalty available under this chapter,
and after opportunity  for  a  hearing,  the  commissioner  may  require
replacement  of  the withdrawn equity or assets and may impose a penalty
for violation  of  the  provisions  of  this  subdivision,  relating  to
withdrawing equity or assets, or the regulations promulgated thereunder,
in  an  amount not to exceed ten percent of any amount withdrawn without
prior approval. No facility shall enter into a real property mortgage or
lease transaction without thirty days prior notice  in  writing  to  the
commissioner.
(b)  On  and  after  April  first,  two  thousand  ten,  no non-public
residential health care facility may withdraw equity or transfer  assets
which  in  the  aggregate  exceed three percent of such facility's total
reported  annual  revenue  for  patient  care  services,  based  on  the
facility's  most recently available reported data, without prior written
notification to the commissioner. Notification shall be made in  a  form
acceptable to the department by certified or registered mail.
(c) Notwithstanding any inconsistent provision of this subdivision, on
and  after  April  first,  two  thousand  ten, no non-public residential
health care facility, whether operated as a for-profit facility or as  a
not-for-profit facility, may withdraw equity or transfer assets which in
the  aggregate  exceed  three  percent of such facility's total reported
annual revenue for patient care services, based on the  facility's  most
recently  available reported data, without the prior written approval of
the commissioner. The commissioner shall make a determination to approve
or disapprove a request for withdrawal of equity or  assets  under  this
subdivision  within  sixty  days of the date of the receipt of a written
request from the facility. Requests shall be made in a  form  acceptable
to  the  department  by  certified or registered mail. In reviewing such
requests  the  commissioner  shall  consider  the   facility's   overall
financial  condition, any indications of financial distress, whether the
facility is delinquent in any payment owed to  the  department,  whether
the  facility  has  been  cited  for  immediate  jeopardy or substandard
quality of care, and  such  other  factors  as  the  commissioner  deems
appropriate.  In addition to any other remedy or penalty available under
this chapter, and after opportunity for a hearing, the commissioner  may
require  replacement  of the withdrawn equity or assets and may impose a
penalty for violation of the provisions of this subdivision in an amount
not to  exceed  ten  percent  of  any  amount  withdrawn  without  prior
approval.
* 6.  Prior  to the approval by the state hospital review and planning
council of any regulations promulgated pursuant  to  this  section,  the
commissioner  shall  convene  a public hearing, upon at least seven days
notice, to consider the proposed  regulations.  The  commissioner  shall
include  a  summary  of the comments made at such hearing in a report to
the state hospital review and planning council at the meeting  at  which
it considers the regulations for approval.
* NB Expired December 31, 1985
* 7.  The  commissioner  may  assess an annual fee on each residential
health care  facility  to  be  used  to  reimburse  any  first  instance
appropriation  for  the purpose of making payments to receivers pursuant
to subdivision  three  of  section  twenty-eight  hundred  ten  of  this
article.  Such  fee  shall  not  exceed thirty dollars per bed certified
pursuant to this article, and shall be a reimbursable  expense  for  the

purposes  of  determining  rates of payment made by government agencies.
The reimbursement rate for a facility  must  reflect  the  cost  of  the
annual  fee  prior  to  requiring  that  the  facility  pay the fee. The
commissioner  shall  seek to obtain federal approval to include such fee
as a reimbursable expense for purposes of computing reimbursement  rates
pursuant to title XVIII of the federal social security act.
* NB (Effective pending Federal Law - Expired December 31, 1983)
8.  Every lease or lease renewal executed on or after September first,
nineteen hundred eighty-six between a landlord and  the  operator  of  a
residential  health  care facility shall contain a provision terminating
any interest the operator of such facility may  have  in  any  lease  of
premises used for the operation of such facility after the public health
council has approved the establishment of a new operator. Nothing herein
shall  be construed to affect any interest such operator may have in any
movable equipment located on the premises of the facility. In the  event
any  lease  or  lease  renewal  executed  on  or  after September first,
nineteen hundred eighty-six fails to contain the  termination  provision
required by this subdivision, the lease or lease renewal shall be deemed
to  be  terminated  upon  the  public  health  council approval of a new
operator. The commissioner, the landlord, or the new operator  shall  be
entitled  to  maintain a summary proceeding to recover possession of the
real  property  in  any  court  of  competent  jurisdiction  upon   such
termination.
9.  Trend  factors.  (a)  The  commissioner,  in  accordance  with the
methodology developed by the consultants pursuant to  paragraph  (b)  of
this  subdivision,  shall  establish  trend  factors  to project for the
effect of inflation. The factors shall be  applied  to  the  appropriate
portion of reimbursable costs of residential health care facilities. The
methodology   for   developing   the  trend  factor  shall  include  the
appropriate external price indicators and shall also  include  the  data
from major collective bargaining agreements as reported quarterly by the
federal   department   of   labor,   bureau  of  labor  statistics,  for
nonsupervisory employees.
(b) The methodology shall be developed by four independent consultants
with  expertise  in  health  economics  appointed  by  the  commissioner
pursuant  to  paragraph  (b)  of subdivision ten of section twenty-eight
hundred seven-c of this chapter. On or about  September  first  of  each
year  following  the effective date of this subdivision, the consultants
shall provide to the commissioner and the council the methodology to  be
used  to  determine  the trend factors for subsequent rate periods only,
beginning with the nine month period commencing  April  first,  nineteen
hundred  ninety-one  and  for subsequent twelve month periods commencing
January  first,  nineteen  hundred  ninety-two   and   thereafter.   The
commissioner  shall  monitor  the  actual  price  movements during these
periods of the external price indicators used in the methodology,  shall
report  the  results  of  the  monitoring  to  the consultants and shall
implement the recommendations of the  consultants  for  one  prospective
interim  annual  adjustment  to  the trend factors to reflect such price
movements and to be effective on  January  first,  one  year  after  the
initial  trend  factor  was established and one prospective final annual
adjustment to the trend factors to reflect such price movements  and  to
be  effective on January first, two years after the initial trend factor
was established.
11. Residential health care facility reimbursement rate  promulgation.
With  regard  to  a  residential health care facility, the provisions of
subdivision seven of section twenty-eight hundred seven of this  article
relating to advance notification of rates shall not apply to prospective
or retroactive adjustments to rates that are based on rate appeals filed

by  such  facility,  audits,  changes  in  patient  conditions or acuity
levels, the correction of errors or omissions of data or errors  in  the
computations  of  such  rates,  the  submission of cost report data from
facilities  without an established cost basis, the judicial annulment or
invalidation of existing rates or changes in  the  methodology  used  to
compute  rates  which  changes  are  promulgated  following the judicial
annulment or invalidation of existing rates or as  otherwise  authorized
by law. Notwithstanding any inconsistent provision of law or regulation,
as of April first, two thousand nine, with regard to administrative rate
appeals,  the  department  will  only  review  such  appeals for (a) the
correction  of  computational  errors  or  omissions  of  data  by   the
department  in determining the operating rate based upon the information
provided to the department prior to the computation  of  the  rate,  (b)
capital  cost  reimbursement,  or  (c)  such reasons as the commissioner
determines  are  appropriate.  The  department  will  not  consider  any
revisions  made  to  a  facility's annual cost report for operating rate
adjustment  purpose  later  than  the  due  date  established   by   the
commissioner.
12.   (a)   Notwithstanding  any  inconsistent  provision  of  law  or
regulation, the commissioner shall increase rates of payment established
pursuant to this  article  for  non-state  operated  public  residential
health  care facilities in an aggregate amount not to exceed one hundred
million dollars in additional reimbursement for  payments  for  services
provided  during  the  period  July  first, nineteen hundred ninety-five
through   March   thirty-first,   nineteen   hundred   ninety-six.   The
commissioner may adopt rules and regulations necessary to implement this
paragraph.
(b)  Notwithstanding  any inconsistent provision of law or regulation,
the commissioner shall provide,  in  addition  to  payments  established
pursuant   to  this  article  prior  to  application  of  this  section,
additional payments under the medical  assistance  program  pursuant  to
title  eleven  of  article five of the social services law for non-state
operated public residential health  care  facilities,  excluding  public
residential  health  care facilities operated by a town or city within a
county, in an  aggregate  amount  of  two  hundred  fifty-seven  million
dollars  in  additional  payments  in  the period August first, nineteen
hundred  ninety-six  through  March   thirty-first,   nineteen   hundred
ninety-seven.
(c)  Notwithstanding  any inconsistent provision of law or regulation,
the commissioner shall provide,  in  addition  to  payments  established
pursuant   to  this  article  prior  to  application  of  this  section,
additional payments under the medical  assistance  program  pursuant  to
title  eleven  of  article five of the social services law for non-state
operated public residential health  care  facilities,  including  public
residential  health  care facilities located in the county of Nassau and
the county of Westchester, but excluding public residential health  care
facilities  operated  by a town or city within a county, in an aggregate
amount of $631.1 million in additional  payments  in  the  period  April
first,   nineteen   hundred  ninety-seven  through  March  thirty-first,
nineteen hundred ninety-eight, and a like amount  in  the  period  April
first,   nineteen   hundred  ninety-eight  through  March  thirty-first,
nineteen hundred ninety-nine.
(d) Notwithstanding any inconsistent provision of law  or  regulation,
the  commissioner  shall  provide,  in  addition to payments established
pursuant  to  this  article  prior  to  application  of  this   section,
additional  payments  under  the  medical assistance program pursuant to
title eleven of article five of the social services  law  for  non-state
operated  public  residential  health  care facilities, including public

residential health care facilities located in the county of  Nassau  and
the  county of Westchester, but excluding public residential health care
facilities operated by a town or city within a county, in  an  aggregate
amount  of  $914.5  million  in  additional payments in the period April
first, nineteen hundred  ninety-nine  through  March  thirty-first,  two
thousand.
(e)  Notwithstanding  any inconsistent provision of law or regulation,
the commissioner shall provide,  in  addition  to  payments  established
pursuant   to  this  article  prior  to  application  of  this  section,
additional payments under the medical  assistance  program  pursuant  to
title  eleven  of  article five of the social services law for non-state
operated public residential health  care  facilities,  including  public
residential  health  care facilities located in the county of Nassau and
the county of Westchester, but excluding public residential health  care
facilities  operated  by a town or city within a county, in an aggregate
amount of up to $991.5 million in additional payments each state  fiscal
year  for  the  period beginning April first, two thousand through March
thirty-first, two thousand five.
* (e-1)  Notwithstanding  any  inconsistent  provision   of   law   or
regulation,  the  commissioner  shall  provide,  in addition to payments
established pursuant to  this  article  prior  to  application  of  this
section,  additional  payments  under  the  medical  assistance  program
pursuant to title eleven of article five of the social services law  for
non-state  operated public residential health care facilities, including
public residential health care  facilities  located  in  the  county  of
Nassau,  the county of Westchester and the county of Erie, but excluding
public residential health care facilities operated by  a  town  or  city
within  a county, in aggregate annual amounts of up to one hundred fifty
million dollars  in  additional  payments  for  the  state  fiscal  year
beginning  April  first,  two thousand six and for the state fiscal year
beginning April first, two thousand seven and for the state fiscal  year
beginning  April  first,  two  thousand eight and of up to three hundred
million dollars in such aggregate annual  additional  payments  for  the
state  fiscal year beginning April first, two thousand nine, and for the
state fiscal year beginning April first, two thousand ten  and  for  the
state  fiscal  year  beginning April first, two thousand eleven, and for
the state fiscal years beginning April first, two  thousand  twelve  and
April  first,  two  thousand thirteen, and of up to five hundred million
dollars in such aggregate  annual  additional  payments  for  the  state
fiscal  years beginning April first, two thousand fourteen, April first,
two thousand fifteen and April first, two thousand sixteen and of up  to
five  hundred  million  dollars  in  such  aggregate  annual  additional
payments for the state fiscal years beginning April first, two  thousand
seventeen,  April  first,  two  thousand  eighteen, and April first, two
thousand nineteen, and of up to five hundred  million  dollars  in  such
aggregate   annual  additional  payments  for  the  state  fiscal  years
beginning April first, two thousand twenty, April  first,  two  thousand
twenty-one,  and April first, two thousand twenty-two, and of up to five
hundred million dollars in such aggregate annual additional payments for
the state fiscal years beginning April first, two thousand twenty-three,
April first, two thousand twenty-four, and  April  first,  two  thousand
twenty-five.  The  amount  allocated to each eligible public residential
health care facility for this period shall  be  computed  in  accordance
with  the  provisions  of  paragraph  (f) of this subdivision, provided,
however, that patient  days  shall  be  utilized  for  such  computation
reflecting  actual  reported  data  for  two  thousand  three  and  each
representative succeeding year  as  applicable,  and  provided  further,
however,  that,  in  consultation  with impacted providers, of the funds

allocated for distribution in the  state  fiscal  year  beginning  April
first,  two  thousand  thirteen, up to thirty-two million dollars may be
allocated in accordance with paragraph (f-1) of this subdivision.
* NB Effective until January 1, 2025
* (e-1)   Notwithstanding   any   inconsistent  provision  of  law  or
regulation, the commissioner shall  provide,  in  addition  to  payments
established  pursuant  to  this  article  prior  to  application of this
section,  additional  payments  under  the  medical  assistance  program
pursuant  to title eleven of article five of the social services law for
non-state operated public residential health care facilities,  including
public  residential  health  care  facilities  located  in the county of
Nassau, the county of Westchester and the county of Erie, but  excluding
public  residential  health  care  facilities operated by a town or city
within a county, in aggregate annual amounts of up to one hundred  fifty
million  dollars  in  additional  payments  for  the  state  fiscal year
beginning April first, two thousand six and for the  state  fiscal  year
beginning  April first, two thousand seven and for the state fiscal year
beginning April first, two thousand eight and of  up  to  three  hundred
million  dollars  in  such  aggregate annual additional payments for the
state fiscal year beginning April first, two thousand nine, and for  the
state  fiscal  year  beginning April first, two thousand ten and for the
state fiscal year beginning April first, two thousand  eleven,  and  for
the  state  fiscal  years beginning April first, two thousand twelve and
April first, two thousand thirteen, and of up to  five  hundred  million
dollars  in  such  aggregate  annual  additional  payments for the state
fiscal years beginning April first, two thousand fourteen, April  first,
two  thousand fifteen and April first, two thousand sixteen and of up to
five  hundred  million  dollars  in  such  aggregate  annual  additional
payments  for the state fiscal years beginning April first, two thousand
seventeen, April first, two thousand  eighteen,  and  April  first,  two
thousand  nineteen,  and  of  up to five hundred million dollars in such
aggregate  annual  additional  payments  for  the  state  fiscal   years
beginning  April  first,  two thousand twenty, April first, two thousand
twenty-one, and April first, two thousand twenty-two, and of up to  five
hundred million dollars in such aggregate annual additional payments for
the state fiscal years beginning April first, two thousand twenty-three,
and   from   April   first,  two  thousand  twenty-four  until  December
thirty-first, two  thousand  twenty-four,  and  for  the  calendar  year
January  first,  two thousand twenty-five through December thirty-first,
two thousand twenty-five, and for each  calendar  year  thereafter.  The
amount  allocated  to  each  eligible  public  residential  health  care
facility for this period  shall  be  computed  in  accordance  with  the
provisions of paragraph (f) of this subdivision, provided, however, that
patient  days  shall  be utilized for such computation reflecting actual
reported data for two thousand three and each representative  succeeding
year as applicable, and provided further, however, that, in consultation
with  impacted providers, of the funds allocated for distribution in the
state fiscal year beginning April first, two thousand  thirteen,  up  to
thirty-two million dollars may be allocated in accordance with paragraph
(f-1) of this subdivision.
* NB Effective January 1, 2025
(f)  The  amount  allocated to each eligible public residential health
care facility for each period shall be calculated as the result  of  (A)
the total payment for each period multiplied by (B) the ratio of patient
days  for  patients  eligible  for  medical assistance pursuant to title
eleven of article five of the social services law provided by the public
residential health care facility, divided by the total of  such  patient
days  summed for all eligible public residential health care facilities.

For the period August first, nineteen hundred ninety-six  through  March
thirty-first,    nineteen   hundred   ninety-seven,   nineteen   hundred
ninety-four patient days shall be utilized; for the period April  first,
nineteen  hundred  ninety-seven  through  March  thirty-first,  nineteen
hundred ninety-eight, nineteen hundred ninety-five patient days shall be
utilized; for the period  April  first,  nineteen  hundred  ninety-eight
through  March  thirty-first,  nineteen  hundred  ninety-nine,  nineteen
hundred ninety-six patient days shall be utilized; for the period  April
first,  nineteen  hundred  ninety-nine  through  March thirty-first, two
thousand, nineteen hundred ninety-seven patient days shall be  utilized;
for the period April first, two thousand through March thirty-first, two
thousand  one,  nineteen  hundred  ninety-eight  patient  days  shall be
utilized; for the period April first, two  thousand  one  through  March
thirty-first,  two  thousand  two,  nineteen hundred ninety-nine patient
days shall be utilized; for the period April  first,  two  thousand  two
through  March  thirty-first,  two  thousand three, two thousand patient
days shall be utilized; for the period April first, two  thousand  three
through  March thirty-first, two thousand four, two thousand one patient
days shall be utilized; for the period April first,  two  thousand  four
through  March thirty-first, two thousand five, two thousand two patient
days shall be utilized.
(f-1) Funds allocated by the provisions of  paragraph  (e-1)  of  this
subdivision  for  distribution  pursuant  to  this  paragraph,  shall be
allocated  proportionally  to  those  public  residential  health   care
facilities which were subject to retroactive reductions in payments made
pursuant  to  this  subdivision  for state fiscal year periods beginning
April first, two thousand six.
(g) Payments may be made based on adjustments to rates of payment  for
services  provided  during the applicable period or as lump sum payments
to an eligible residential health care facility.
13. Notwithstanding any inconsistent provision of law or regulation to
the  contrary,  residential  health  care  facility  rates  of   payment
determined  pursuant  to  this  article  for  governmental  agencies for
services provided on or after July first, nineteen  hundred  ninety-five
through March thirty-first, nineteen hundred ninety-six shall be reduced
by   the   commissioner,  to  reflect  the  elimination  of  operational
requirements  previously  mandated  by  law  or,  consistent  with   the
standards  specified in subparagraph (v) of paragraph (a) of subdivision
two of section twenty-eight hundred three of this article, regulation or
the commissioner or other governmental agency, by a factor determined as
follows:
(i) an aggregate reduction shall be calculated  for  each  residential
health  care  facility as the result of (A) fifty-six million dollars on
an annualized basis for nineteen hundred  ninety-five,  trended  to  the
rate  year  by  the trend factor for projection of reimbursable costs to
the rate year, multiplied by (B) the ratio of patient days for  patients
eligible  for  payments made by governmental agencies provided in a base
year two years prior to the rate  year  by  a  residential  health  care
facility,  divided  by  the  total  of  such patient days summed for all
residential health care facilities; and
(ii) the result for each residential health  care  facility  shall  be
divided  by  such  patient  days provided in the residential health care
facility, for a  per  diem  reduction  in  rates  of  payment  for  such
residential health care facility for patients eligible for payments made
by governmental agencies.
14.   (a)   Notwithstanding  any  inconsistent  provision  of  law  or
regulation to the  contrary,  for  purposes  of  establishing  rates  of
payment  by governmental agencies for residential health care facilities

for  services  provided  on  or  after  April  first,  nineteen  hundred
ninety-five through March thirty-first, nineteen hundred ninety-nine and
for   services  provided  on  or  after  July  first,  nineteen  hundred
ninety-nine  through  March  thirty-first, two thousand and on and after
April first, two thousand through March thirty-first, two thousand three
and  on  and  after  April  first,  two  thousand  three  through  March
thirty-first,  two  thousand  six  and  on  and  after  April first, two
thousand six  through  December  thirty-first,  two  thousand  six,  the
reimbursable  base  year  administrative  services  and  fiscal services
costs, as defined in the New York state residential health care facility
accounting and reporting manual, of a residential health care  facility,
excluding  a provider of services reimbursed on an initial budget basis,
shall, except as otherwise provided in this subdivision, not exceed  the
statewide  average  of  total  reimbursable base year administrative and
fiscal services costs of residential health  care  facilities.  For  the
purposes  of this subdivision, reimbursable base year administrative and
fiscal services costs shall mean  those  base  year  administrative  and
fiscal   services   costs  remaining  after  application  of  all  other
efficiency standards, including but not  limited  to,  peer  group  cost
ceilings or guidelines.
(b)  A  separate  statewide  average  of  total reimbursable base year
administrative and fiscal services costs shall be determined for each of
those facilities wherein eighty percent or  more  of  its  patients  are
classified with a patient acuity equal to or less than .83 which is used
as  the  basis for a facility's case mix adjustment. For the period July
first, two thousand through March thirty-first, two  thousand  one,  the
total reimbursable base year administrative and fiscal services costs of
such  facilities  shall  not exceed such separate statewide average plus
one and  one-half  percentage  points.  For  annual  periods  thereafter
through  December thirty-first, two thousand six, the total reimbursable
base year administrative and fiscal services costs  of  such  facilities
shall  not exceed such separate statewide average. In no event shall the
calculation of such separate statewide average result in a change in the
statewide average determined under paragraph (a) of this subdivision.
(c) The limitation on reimbursement for  provider  administrative  and
fiscal  expenses  provided  by  this subdivision shall be expressed as a
percentage reduction  of  the  operating  cost  component  of  the  rate
promulgated  by  the  commissioner  for  each  residential  health  care
facility.
15. Notwithstanding any inconsistent provision of law or regulation to
the  contrary,  for  services  provided  by  residential   health   care
facilities  for  the  period  April  first, nineteen hundred ninety-five
through   March   thirty-first,   nineteen   hundred   ninety-six,   the
commissioner shall not be required to revise a certified rate of payment
established  pursuant  to  this  article  based on consideration of rate
appeals filed by a residential health care facility. In cases where  the
commissioner determines that a significant financial hardship exists, he
or  she  may,  subject  to  the  approval of the director of the budget,
consider an  exemption  to  this  subdivision.  Beginning  April  first,
nineteen  hundred  ninety-six  and  thereafter,  the  commissioner shall
consider such rate appeals  within  a  reasonable  period.  After  April
first, nineteen hundred ninety-six, through March thirty-first, nineteen
hundred  ninety-seven,  the commissioner shall revise certified rates of
payment not to  exceed  an  aggregate  payment  of  forty-seven  million
dollars, state share medical assistance.
16. Notwithstanding any inconsistent provision of law or regulation to
the   contrary,  residential  health  care  facility  rates  of  payment
determined pursuant  to  this  article  for  governmental  agencies  for

services  provided  on or after April first, nineteen hundred ninety-six
through March thirty-first, nineteen hundred ninety-nine and on or after
July first, nineteen hundred ninety-nine through March thirty-first, two
thousand  and  on  and  after  April  first,  two thousand through March
thirty-first, two thousand three and  on  and  after  April  first,  two
thousand  three  through March thirty-first, two thousand six and on and
after April first, two thousand six through December  thirty-first,  two
thousand  six, shall be further reduced by the commissioner to encourage
improved productivity and efficiency by providers by a factor determined
as follows:
(a) an aggregate reduction shall be calculated  for  each  residential
health care facility commencing April first, nineteen hundred ninety-six
through March thirty-first, nineteen hundred ninety-nine and on or after
July first, nineteen hundred ninety-nine through March thirty-first, two
thousand  and  on  and  after  April  first,  two thousand through March
thirty-first, two thousand three and  on  and  after  April  first,  two
thousand  three  through March thirty-first, two thousand six and on and
after April first, two thousand six through December  thirty-first,  two
thousand  six  as  the  result  of  (i)  fifty-six million dollars on an
annualized basis multiplied by  (ii)  the  ratio  of  patient  days  for
patients eligible for payments made by governmental agencies provided in
a  base  year  two  years prior to the rate year by a residential health
care facility, or for residential health care facility beds not fully in
operation in such base year by an estimate of projected utilization  for
the  rate year, divided by the total of such patient days summed for all
residential health care facilities; and
(b) the result for each residential  health  care  facility  shall  be
divided  by  such  patient  days provided in the residential health care
facility, for a  per  diem  reduction  in  rates  of  payment  for  such
residential health care facility for patients eligible for payments made
by governmental agencies.
17.   (a)   Notwithstanding  any  inconsistent  provision  of  law  or
regulation to the contrary, for the period April first, nineteen hundred
ninety-seven through March thirty-first, nineteen hundred  ninety-eight,
the  commissioner  shall  not  be required to revise a certified rate of
payment established pursuant to this article based on  consideration  of
rate  appeals  filed by a residential health care facility or based upon
adjustments to capital cost reimbursement as a result of approval by the
commissioner  of  an  application   for   construction   under   section
twenty-eight  hundred  two  of this article. For the period April first,
nineteen hundred  ninety-eight,  through  March  thirty-first,  nineteen
hundred  ninety-nine,  the  commissioner shall revise certified rates of
payment in an aggregate amount not to  exceed  twenty  million  dollars,
state   share  medical  assistance.  In  cases  where  the  commissioner
determines that a significant financial hardship exists, he or she  may,
subject  to  the  approval  of  the  director of the budget, consider an
exemption to this subdivision. Beginning April first,  nineteen  hundred
ninety-nine  and  thereafter,  the commissioner shall consider such rate
appeals within a reasonable period.
(b) Notwithstanding any inconsistent provision of law or regulation to
the contrary, for the state fiscal  years  beginning  April  first,  two
thousand  ten  and  ending March thirty-first, two thousand twenty-five,
the commissioner shall not be required  to  revise  certified  rates  of
payment  established  pursuant to this article for rate periods prior to
April first, two thousand twenty-five, based on  consideration  of  rate
appeals  filed  by  residential  health  care  facilities  or based upon
adjustments to capital cost reimbursement as a result of approval by the
commissioner  of  an  application   for   construction   under   section

twenty-eight  hundred  two  of  this  article, in excess of an aggregate
annual amount of eighty million dollars for each such state fiscal  year
provided,  however, that for the period April first, two thousand eleven
through  March  thirty-first,  two thousand twelve such aggregate annual
amount shall be fifty million dollars. In  revising  such  rates  within
such  fiscal  limit,  the  commissioner shall, in prioritizing such rate
appeals, include consideration  of  which  facilities  the  commissioner
determines  are  facing  significant  financial hardship as well as such
other considerations as the commissioner deems appropriate and, further,
the commissioner is  authorized  to  enter  into  agreements  with  such
facilities  or  any  other  facility  to  resolve  multiple pending rate
appeals based upon a negotiated aggregate amount  and  may  offset  such
negotiated aggregate amounts against any amounts owed by the facility to
the  department, including, but not limited to, amounts owed pursuant to
section twenty-eight hundred seven-d of this article; provided, however,
that the commissioner's authority to negotiate such agreements resolving
multiple pending rate appeals as hereinbefore described  shall  continue
on  and  after  April  first, two thousand twenty-five. Rate adjustments
made pursuant to this paragraph remain fully subject to approval by  the
director  of the budget in accordance with the provisions of subdivision
two of section twenty-eight hundred seven of this article.
(c) Notwithstanding any other  contrary  provision  of  law,  rule  or
regulation,  for  periods  on and after April first, two thousand eleven
the  commissioner  shall  promulgate  regulations,  and  may  promulgate
emergency  regulations,  establishing  priorities  and  time  frames for
processing rate appeals, including rate appeals  filed  prior  to  April
first,  two  thousand eleven, within available administrative resources;
provided, however, that such regulations shall not be inconsistent  with
the provisions of paragraph (b) of this subdivision.
17-a.  Notwithstanding any inconsistent provision of law or regulation
to the contrary, for  purposes  of  establishing  rates  of  payment  by
governmental   agencies  for  residential  health  care  facilities  for
services  provided  on  and  after  January  first,   nineteen   hundred
ninety-eight,  the  regional  direct and indirect input price adjustment
factors to be applied to any such facility's rate calculation  shall  be
based  upon  the  utilization  of  either nineteen hundred eighty-three,
nineteen hundred eighty-seven or nineteen hundred ninety-three  calendar
year  financial  and  statistical  data  and for periods beginning April
first, two thousand four through March thirty-first, two  thousand  nine
based   on   either  nineteen  hundred  eighty-three,  nineteen  hundred
eighty-seven, nineteen hundred ninety-three or two thousand one calendar
year financial and statistical data; provided, however, the state  share
amount  for the utilization of two thousand one calendar year data shall
be no more than twenty-two million dollars  on  a  pro  rata  basis  per
calendar  year.  The  determination  of  which  calendar  year's data to
utilize shall  be  based  upon  a  methodology  that  ensures  that  the
particular  year chosen by each facility results in a factor that yields
no less reimbursement to the facility than would result from the use  of
any  of  the other three years' data. Such methodology shall utilize the
nineteen hundred eighty-three and nineteen hundred eighty-seven regional
direct and indirect input price adjustment factor  corridor  percentages
in  existence on January first, nineteen hundred ninety-seven as well as
nineteen hundred ninety-three regional direct and indirect  input  price
adjustment factor corridor percentage in existence on January first, two
thousand four as well as a two thousand one regional direct and indirect
input price adjustment factor corridor percentage calculated in the same
manner  as  the  nineteen hundred ninety-three direct and indirect input
price adjustment factor corridor percentages  in  existence  on  January

first,  two  thousand  four;  provided, however, for rate periods on and
after  April  first,  two  thousand  nine,  the  regional  input   price
adjustment factors shall be based on the case mix predicted staffing for
registered  nurses,  licensed  practical nurses, nurses' aides, licensed
therapists and therapist aides. For  the  rate  period  beginning  April
first,  two  thousand  nine through the day immediately prior to the day
the provisions of subdivision two-c of this  section  take  effect,  the
regional  direct  and  indirect  input  price  adjustment  factors to be
applied to a  facility's  rate  calculation  shall  be  based  upon  the
utilization  of two thousand two calendar year financial and statistical
data. Such methodology shall utilize two thousand  two  regional  direct
and   indirect   input  price  adjustment  factor  corridor  percentages
calculated in the same manner as the two thousand  one  regional  direct
and  indirect  input  price  adjustment  factor  corridor percentages in
existence on December thirty-first, two thousand six except  that  every
region shall receive a corridor to reflect the region's actual variation
subject  to  a maximum statewide average variable corridor percentage of
ten percent.
18. Residential health care  facility  recruitment  and  retention  of
health  care workers. Notwithstanding any inconsistent provision of law,
rule or regulation and subject to the availability of federal  financial
participation:
(a)  (i)  The  commissioner  shall adjust inpatient medical assistance
rates of payment established pursuant to  this  article  for  non-public
residential  health care facilities in accordance with subparagraph (ii)
of this paragraph for purposes of recruitment and  retention  of  health
care  workers  in  the  following  aggregate  amounts  for the following
periods:
(A) fifty-three million five hundred thousand dollars on an annualized
basis for the period April first,  two  thousand  two  through  December
thirty-first,  two  thousand  two;  eighty-three  million  three hundred
thousand dollars on an annualized basis for the  period  January  first,
two  thousand  three  through December thirty-first, two thousand three;
one hundred  fifteen  million  eight  hundred  thousand  dollars  on  an
annualized basis for the period January first, two thousand four through
December  thirty-first,  two  thousand  six;  fifty-seven  million  nine
hundred thousand dollars for the  period  January  first,  two  thousand
seven  through  June  thirtieth, two thousand seven, fifty-seven million
nine hundred thousand dollars for the period July  first,  two  thousand
seven  through  March  thirty-first,  two thousand eight, and fifty-nine
million four hundred thousand dollars for the period  April  first,  two
thousand eight through March thirty-first, two thousand nine.
(ii)  Such  increases  shall be allocated proportionally based on each
non-public residential  health  care  facility's  reported  total  gross
salary  and  fringe benefit costs on exhibit H of the 1999 RHCF - 4 cost
report or exhibit 11 of the 1999 institutional cost report submitted  as
of  November  first, two thousand one, where applicable, to the total of
such  reported  costs  for  all  non-public  residential   health   care
facilities, provided, however, that for periods on and after July first,
two  thousand  seven, fifty percent of such increases shall be allocated
proportionally,  based  on  each  non-public  residential  health   care
facility's  reported  total  gross  salary  and  fringe benefit costs on
exhibit H of the nineteen hundred ninety-nine RHFC - 4  cost  report  or
exhibit 11 of the nineteen hundred ninety-nine institutional cost report
submitted  to  the department prior to November first, two thousand one,
where applicable, to the total of such reported costs for all non-public
residential health care facilities, and fifty percent of such  increases
shall  be  allocated  proportionately,  based  on  each  such non-public

facility's reported Medicaid revenue, as reported in the applicable  two
thousand  five  cost  report  as  submitted  to  the department prior to
November first, two thousand six, to the total of such Medicaid  revenue
reported  by  all  such  non-public  facilities.  These amounts shall be
included as a reimbursable cost add-on to medical  assistance  inpatient
rates  of  payment  established  pursuant to this article for non-public
residential  health  care  facilities,  based  on   medical   assistance
utilization  data  in  each  facility's annual cost report submitted two
years prior to the rate year. Such amounts shall not  be  reconciled  to
reflect  changes  in medical assistance utilization between the year two
years prior to the rate year and the rate year.
(b) (i) Notwithstanding sections one hundred twelve  and  one  hundred
sixty-three  of  the  state  finance  law  and  any  other  inconsistent
provision  of  law,  the  commissioner  shall  make  grants  to   public
residential  health care facilities without a competitive bid or request
for proposal process for purposes of recruitment and retention of health
care workers in  the  following  aggregate  amounts  for  the  following
periods:
(A) seven million five hundred thousand dollars on an annualized basis
for   the   period  April  first,  two  thousand  two  through  December
thirty-first, two thousand two; eleven million  seven  hundred  thousand
dollars  on  an  annualized  basis  for  the  period  January first, two
thousand  three  through  December  thirty-first,  two  thousand  three;
sixteen  million two hundred thousand dollars on an annualized basis for
the  period  January  first,  two   thousand   four   through   December
thirty-first,  two  thousand six; and eight million one hundred thousand
dollars for the period January first, two thousand  seven  through  June
thirtieth,  two  thousand  seven,  eight  million  one  hundred thousand
dollars for the period July first,  two  thousand  seven  through  March
thirty-first,  two  thousand  eight,  six  million  six  hundred  ninety
thousand dollars for the period April first, two thousand eight  through
March thirty-first, two thousand nine.
(ii)  Such  grants  shall  be  allocated  proportionally based on each
public residential health care facility's reported  total  gross  salary
and  fringe  benefit costs on exhibit H of the 1999 RHCF - 4 cost report
or exhibit 11 of the 1999 institutional  cost  report  submitted  as  of
November first, two thousand one, where applicable, to the total of such
reported costs for all public residential health care facilities.
(c)  (i)  Non-public  and public residential health care facilities in
operation as of the effective date of  this  paragraph  which  have  not
submitted  1999  RHCF-4  cost reports or 1999 institutional cost reports
but which have submitted such reports for cost years subsequent to 1999,
shall have distributions authorized in subparagraph (i) of paragraph (a)
of this subdivision or in subparagraph (i)  of  paragraph  (b)  of  this
subdivision  allocated  based  on  total gross salary and fringe benefit
costs on exhibit H of the earliest subsequently  submitted  RHCF-4  cost
report   or   exhibit   11   of   the  earliest  subsequently  submitted
institutional cost report, as  trended  downward  to  1999  using  trend
factors   authorized  in  accordance  with  the  provisions  of  section
twenty-one of chapter one of the laws of nineteen hundred ninety-nine.
(ii) Non-public and  public  residential  health  care  facilities  in
operation  as  of  the  effective  date of this paragraph which have not
submitted 1999 or subsequent RHCF-4 cost reports or  institutional  cost
reports,  shall  have  distributions  authorized  in subparagraph (i) of
paragraph (a) of this subdivision or in subparagraph  (i)  of  paragraph
(b)  of  this  subdivision allocated based on imputed total gross salary
and fringe benefit costs reflecting the average of  such  costs  in  the
region  in  which each such facility is located, provided, however, that

for periods on and after July first, two thousand seven, facilities that
have  not  submitted  two  thousand  five  cost   reports   shall   have
distributions  allocated  based  on  imputed  days  of  care to patients
eligible for medical assistance, reflecting the average of such medicaid
days of care in the region in which such facilities are located.
(iii)  Non-public  and public residential health care facilities which
received allocations pursuant to subparagraph (ii) of this paragraph and
which subsequently submit RHCF-4  cost  reports  or  institutional  cost
reports  shall,  for  the purpose of setting medical assistance rates of
payment, have such allocations adjusted  to  reflect  costs  which  were
incurred  in connection with such allocations and which are contained in
such cost reports.
(d) Residential health care facilities which have their rates adjusted
or receive grants pursuant to  paragraphs  (a),  (b)  and  (c)  of  this
subdivision,  respectively,  shall  use  such  funds  for the purpose of
recruitment and retention of  non-supervisory  workers  at  health  care
facilities or any worker with direct patient care responsibility and are
prohibited from using such funds for any other purpose. Funds under this
subdivision  are  not  intended  to supplant support provided by a local
government. Each such residential health care facility shall submit,  at
a  time  and in a manner to be determined by the commissioner, a written
certification attesting that such funds will  be  used  solely  for  the
purpose  of  recruitment  and  retention  of  non-supervisory workers at
health  care  facilities  or  any  worker  with  direct   patient   care
responsibility. The commissioner is authorized to audit each residential
health care facility to ensure compliance with the written certification
required by this paragraph and shall recoup any funds determined to have
been   used  for  purposes  other  than  recruitment  and  retention  of
non-supervisory workers at health care facilities  or  any  worker  with
direct patient care responsibility. Such recoupment shall be in addition
to  applicable  penalties  under  sections  twelve  and twelve-b of this
chapter.
(e) Residential health care facilities which have their rates adjusted
or receive grants pursuant to  paragraphs  (a),  (b)  and  (c)  of  this
subdivision,  respectively,  shall  use  such  funds  for the purpose of
recruitment and retention of  non-supervisory  workers  at  health  care
facilities or any worker with direct patient care responsibility and are
prohibited from using such funds for any other purpose. Funds under this
subdivision  are  not  intended  to supplant support provided by a local
government. Each such residential health care facility shall submit,  at
a  time  and in a manner to be determined by the commissioner, a written
certification attesting that such funds will  be  used  solely  for  the
purpose  of  recruitment  and  retention  of  non-supervisory workers at
health  care  facilities  or  any  worker  with  direct   patient   care
responsibility. The commissioner is authorized to audit each residential
health care facility to ensure compliance with the written certification
required by this paragraph and shall recoup any funds determined to have
been   used  for  purposes  other  than  recruitment  and  retention  of
non-supervisory workers at health care facilities  or  any  worker  with
direct patient care responsibility. Such recoupment shall be in addition
to  applicable  penalties  under  sections  twelve  and twelve-b of this
chapter.
19. Notwithstanding any law, rule or regulation to the  contrary,  the
commissioner  shall  within amounts allocated pursuant to paragraph (hh)
of subdivision one of  section  twenty-eight  hundred  seven-v  of  this
article,  make adjustments to the medical assistance rates of payment to
residential  health  care  facilities  to  assist  certain   financially
disadvantaged nursing homes, in order to promote financial stability and

quality   improvement.  Such  adjustments  shall  be  made  pursuant  to
subdivision twenty-one of this section.
20.   a.  The  commissioner  shall  timely  develop  and  implement  a
standardized process for assessing the feasibility of  capital  mortgage
re-financings, including a standard formula for determining the net cost
benefit of re-financing, inclusive of all transaction and closing costs.
On  or  before  September first, two thousand three or thirty days after
the commissioner makes the standard  formula  available  to  facilities,
each residential health care facility established under this article and
certified  as  a  provider  pursuant  to title XIX of the federal social
security act (Medicaid), except for those facilities  established  under
the  nursing  home  companies law or the hospital loan construction law,
shall review its existing capital  debt  structure  using  the  standard
formula  to  evaluate  whether  or  not a material cost benefit could be
derived by re-financing its capital mortgage  or  mortgages,  and  shall
forward the results of such review to the commissioner. The commissioner
may  request  and  such facilities shall submit descriptions of existing
mortgage arrangements and  debt  service  reserve  funds  as  needed  to
implement  paragraph b of this subdivision. Facilities established under
the nursing home companies law or the  hospital  loan  construction  law
shall  submit  to  the  dormitory  authority, the housing finance agency
and/or the state of New York mortgage  agency  such  information  as  is
required  by  such  agency  to  evaluate  potential re-financing of such
capital mortgages.
b. the commissioner shall review each facility's submission and make a
written  determination  as  to  whether  or  not  the  facility   should
re-finance  its  capital  mortgage  or  mortgages,  and  if so, for what
amount, within sixty days of the date of the facility's submission based
on the following parameters:
(i) the mortgage re-financing must result  in  a  present  value  cost
benefit  that  "materially  exceeds",  as  such  term  is defined by the
commissioner, the amount of all transaction and closing costs associated
with the re-financing, including any  pre-payment  penalties  associated
with  the  current mortgage or mortgages. The commissioner shall do such
calculations in a manner consistent with comparable calculations in  the
state finance law;
(ii)  mortgages  may  be  re-financed  for  a  term  greater  than the
remaining term of the existing debt within certain limits, if  doing  so
would result in the present value cost benefit specified in subparagraph
(i) of this paragraph;
(iii)  mortgages  may  be re-financed utilizing variable rate mortgage
loans, if doing so would  result  in  the  present  value  cost  benefit
specified  in  subparagraph  (i)  of  this paragraph. In such cases, for
purposes  of  determining  the  reimbursable  capital  interest  expense
included  in  the  capital cost component of rates of payment determined
pursuant to this article, the average interest rate over the life of the
re-financed mortgage shall not exceed the interest rate in effect on the
previous mortgage debt immediately prior to the re-financing;
(iv)  not-for-profit  and   governmental   residential   health   care
facilities  may  utilize  taxable  mortgage  loans  to  re-finance their
existing debts, if doing so would  result  in  the  present  value  cost
benefit specified in subparagraph (i) of this paragraph;
(v)  moneys  contained  in  facility debt service reserve funds may be
considered in the evaluation of amounts necessary to be re-financed, but
only to the extent such moneys total more than the debt service reserves
needed to establish the successor capital mortgage financing;
(vi) in no event shall funded depreciation accounts, or building funds
accumulated  through  donor-restricted  contributions  or   unrestricted

contributions,  gifts,  bequests,  or  legacies,  be  considered  in the
evaluation of amounts necessary to be re-financed; and
(vii)  notwithstanding any inconsistent provision of law or regulation
to the contrary, the principal amount,  including  all  transaction  and
closing costs and any pre-payment penalties associated with the previous
mortgage   or   mortgages,  that  is  thereby  deemed  necessary  to  be
re-financed by the commissioner, as approved by the  public  authorities
control  board  and  the  United  States department of housing and urban
development where appropriate, shall be considered the  final,  approved
mortgage  amount  for  capital  cost  reimbursement  under  the relevant
provisions of this article.
c. Notwithstanding any inconsistent provision of law or regulation  to
the  contrary,  the  capital  cost  component  of  rates  of payment for
services provided for the period beginning October first,  two  thousand
three  or  one  hundred  eighty  days  after  the effective date of this
subdivision,  whichever  is  later,  through  March  thirty-first,   two
thousand  four  for residential health care facilities established under
this article and certified as providers pursuant to  title  XIX  of  the
federal  social  security  act  (Medicaid),  except for those facilities
established under the nursing home companies law or  the  hospital  loan
construction  law,  that  have  been  identified  by the commissioner as
refinancing candidates pursuant to paragraph b of this subdivision shall
reflect capital interest costs equivalent to the lower of the prevailing
market borrowing rates available on or about July  first,  two  thousand
three  or  ninety  days  after  the  effective date of this subdivision,
whichever  is  later,  for  refinancing  capital  mortgages  for   their
remaining term plus two hundred basis points, or the existing rate being
paid  by  the  facility  on its capital mortgage or mortgages as of that
date. The commissioner shall determine, in  consultation  with  mortgage
financing  experts,  the  prevailing market borrowing rates available to
not-for-profit and governmental residential health  care  facilities  to
re-finance  capital  mortgages  on a tax-exempt fixed rate basis, and to
proprietary residential health care  facilities  to  re-finance  capital
mortgages   on  a  tax-exempt  fixed  rate  basis,  and  to  proprietary
residential health care facilities to re-finance capital mortgages on  a
taxable  fixed  rate  basis, for this purpose. Exceptions to this policy
shall be provided  by  the  commissioner  to  each  such  facility  that
demonstrates,  prior to October first, two thousand three or thirty days
after receipt of the commissioner's written determination  specified  in
paragraph (b) of this subdivision, whichever occurs later, that:
(i)  it  has  initiated  or  completed the process of re-financing the
mortgage or mortgages in  question,  in  which  case  the  capital  cost
component of rates of payment shall be timely revised to reflect capital
interest  costs  associated with a re-financed mortgage that conforms to
the standards in paragraph (b) of this subdivision. For this purpose,  a
facility  that  has  applied for approval by the commissioner, the state
hospital review and planning council and/or the public health council to
re-finance its existing mortgage  debt  as  part  of  a  larger  project
involving  facility  replacement,  expansion,  renovation  or  change of
ownership is considered to have initiated the process  of  re-financing;
or
(ii)  it  can  not  re-finance  its  capital  mortgage or mortgages to
achieve  the  relevant  present  value   cost   benefit   specified   in
subparagraphs (i) and (ii) of paragraph (b) of this subdivision due to a
"lock  out"  or similar provision in its current mortgage agreement that
prevents re-financing; due to some other type  of  genuine  re-financing
obstacle, such as an inability of the facility to obtain credit approval
from  a  lender  or mortgage insurer, or due to an intervening change in

credit market conditions or other relevant circumstances, in which  case
the capital cost component of rates of payment shall continue to reflect
capital   interest  costs  associated  with  the  existing  mortgage  or
mortgages,  together  with  reasonable costs incurred in connection with
the facility's attempt to re-finance its existing mortgage debt.
d. Notwithstanding any contrary provision of law, rule or  regulation,
for  rate  periods  on  and  after April first, two thousand eleven, the
commissioner may reduce or eliminate the payment factor for return on or
return of equity in the capital cost  component  of  Medicaid  rates  of
payment for services provided by residential health care facilities, and
for  rate  periods  on and after April first, two thousand twenty, there
shall be no payment factor for  residual  equity  reimbursement  in  the
capital  cost  component  of  Medicaid  rates  of  payment  for services
provided by residential health care facilities.
e. Notwithstanding any other provision of law  or  regulation  to  the
contrary,  the  commissioner  shall adopt or amend on an emergency basis
any regulation the commissioner determines necessary  to  implement  any
provision of this subdivision.
21.   (a)   Notwithstanding  any  inconsistent  provision  of  law  or
regulation to the contrary, for the purposes  specified  in  subdivision
nineteen   of  this  section,  the  commissioner  shall  adjust  medical
assistance rates of payment established pursuant  to  this  article  for
services  provided on and after October first, two thousand four through
December thirty-first, two thousand four  and  annually  thereafter  for
services  provided on and after January first, two thousand five through
April thirtieth, two thousand eleven and on and  after  May  first,  two
thousand  twelve,  to  include  a  rate  adjustment to assist qualifying
facilities pursuant to this subdivision, provided, however, that  public
residential  health  care  facilities  shall  not  be  eligible for rate
adjustments pursuant to this subdivision for rate periods on  and  after
April   first,  two  thousand  nine,  provided  further,  however,  that
notwithstanding any  contrary  provision  of  law  and  subject  to  the
availability  of  federal  financial  participation,  each facility that
receives a rate adjustment pursuant to this subdivision for  the  period
May first, two thousand ten through April thirtieth, two thousand eleven
shall  have  its  medicaid  rates  reduced  for the rate period December
first, two thousand eleven through December thirty-first,  two  thousand
eleven  by  an  amount equal in aggregate to the aggregate amount of the
funds such facility received pursuant to this subdivision for the period
May first, two  thousand  ten  through  April  thirtieth,  two  thousand
eleven.
(b)  Eligibility  for such rate adjustments shall be determined on the
basis of each residential health care facility's operating  margin  over
the most recent three-year period for which financial data are available
from  the  RHCF-4  cost  report  or  the  institutional cost report. For
purposes of the adjustments made  for  the  period  October  first,  two
thousand   four   through  December  thirty-first,  two  thousand  four,
financial information for the calendar years two  thousand  through  two
thousand  two  shall  be  utilized.  For  each subsequent rate year, the
financial data for the three-year period ending two years prior  to  the
applicable rate year shall be utilized for this purpose.
(c)  Each  facility's operating margin for the three-year period shall
be calculated by subtracting total operating expenses for the three-year
period from total operating revenues  for  the  three-year  period,  and
dividing  the  result by the total operating revenues for the three-year
period, with the result expressed as a  percentage.  For  hospital-based
residential  health care facilities for which an operating margin cannot
be calculated on the basis of the submitted cost reports, the sponsoring

hospital's overall three-year  operating  margin,  as  reported  in  the
institutional  cost  report,  shall  be  utilized  for this purpose. All
facilities with negative operating margins calculated in this  way  over
the  three-year  period  shall  be  arrayed  into quartiles based on the
magnitude  of  the  operating  margin.  Any  facility  with  a  positive
operating  margin  for  the  most  recent  three-year period, a negative
operating margin that places the facility in the quartile of  facilities
with the smallest negative operating margins, a positive total margin in
the  most  recent  year of the three year period, or an average Medicaid
utilization percentage of fifty percent or less during the  most  recent
year  of  the  three-year period shall be disqualified from receiving an
adjustment pursuant to this subdivision,  provided,  however,  that  for
rate  periods  on  and  after  April  first,  two  thousand  nine,  such
disqualification:
(i) shall not be applied solely on the basis of a facility's having  a
positive total margin in the most recent year of such three-year period;
(ii)  shall  be  extended  to  those  facilities  in  the  quartile of
facilities with the second smallest negative operating margins; and
(iii) shall also be extended  to  those  facilities  with  an  average
Medicaid  utilization percentage of less than seventy percent during the
most recent year of the three-year period.
(d) For each facility remaining after the exclusions made pursuant  to
paragraph  (c) of this subdivision, the commissioner shall calculate the
average annual operating loss for the three-year period  by  subtracting
total  operating expenses for the three-year period from total operating
revenues for the three-year period, and dividing the  result  by  three,
provided,  however,  that  for  periods  on  and  after April first, two
thousand nine, the amount of such average annual operating loss shall be
reduced by an amount equal to  the  amount  received  by  such  facility
pursuant  to  subparagraph (ii) of paragraph (a) of subdivision two-b of
this section. For this purpose, for  hospital-based  residential  health
care  facilities  for  which the average annual operating loss cannot be
calculated on the basis of the submitted cost  reports,  the  sponsoring
hospital's  overall  average  annual  operating  loss for the three-year
period shall be apportioned to  the  residential  health  care  facility
based  on  the  proportion  the residential health care facility's total
revenues for the period bears to the  total  revenues  reported  by  the
sponsoring  hospital, and such apportioned average annual operating loss
shall then be reduced by an amount equal to the amount received by  such
facility  pursuant  to subparagraph (ii) of paragraph (a) of subdivision
two-b of this section.
(e) For periods prior to April first, two  thousand  nine,  each  such
facility's  qualifying operating loss shall be determined by multiplying
the facility's average annual operating loss for the  three-year  period
as  calculated  pursuant  to  paragraph  (d)  of this subdivision by the
applicable percentage shown in the tables below for the quartile  within
which the facility's negative operating margin for the three-year period
is assigned.
i.  For  a facility located in a county with a total population of two
hundred thousand or more as determined by the two thousand U.S. Census:
 
First Quartile (lowest operating margins): 30 percent
Second Quartile: 15 percent
Third Quartile: 7.5 percent
 
ii. For a facility located in a county with a total population of  fewer
than two hundred thousand as determined by the two thousand U.S. Census:

First Quartile (lowest operating margins): 35 percent
Second Quartile: 20 percent
Third Quartile: 12.5 percent
 
(f)  The  amount of any facility's financially disadvantaged residential
health care facility distribution calculated  in  accordance  with  this
subdivision  shall  be  reduced  by  the  facility's estimated rate year
benefit of the two thousand one  update  to  the  regional  input  price
adjustment  factors  authorized pursuant to former subdivision seventeen
of this section as amended by section 24 of part C of chapter 58 of  the
laws  of  2004,  or  as  authorized  by  subdivision seventeen-a of this
section, as added by section 56 of part C of chapter 58 of the  laws  of
2007,  if  any,  provided,  however,  that  such  reduction shall not be
applied with regard to rate  periods  on  and  after  April  first,  two
thousand  nine.  After all other adjustments to a facility's financially
disadvantaged residential health care facility  distribution  have  been
made  in accordance with this subdivision, the amount of each facility's
distribution shall be limited to no  more  than  four  hundred  thousand
dollars  during  the  period  October  first,  two thousand four through
December thirty-first, two thousand four and, on  an  annualized  basis,
for  rate  periods through March thirty-first, two thousand nine, and no
more than one million dollars for the period April first,  two  thousand
nine  through  December  thirty-first,  two  thousand  nine and for each
annual rate period thereafter.
(g)  The  adjustment  made  to  each  qualifying  facility's   medical
assistance  rate of payment determined pursuant to this article shall be
calculated  by  dividing  the   facility's   financially   disadvantaged
residential  health  care facility distribution calculated in accordance
with this subdivision by the facility's total medical assistance patient
days reported in the cost report submitted two years prior to  the  rate
year,  provided  however,  that  such  rate  adjustments  for the period
October first, two thousand  four  through  December  thirty-first,  two
thousand  four  shall be calculated based on twenty-five percent of each
facility's reported total medical assistance patient days as reported in
the applicable two thousand two cost report. Such amounts shall  not  be
reconciled  to reflect changes in medical assistance utilization between
the year two years prior to the rate year and the rate year.
(h) The total amount of funds  to  be  allocated  and  distributed  as
medical assistance for financially disadvantaged residential health care
facility  rate  adjustments  to eligible facilities for a rate period in
accordance with this subdivision shall be thirty million dollars for the
period October first, two thousand four through  December  thirty-first,
two  thousand four and thirty million dollars on an annualized basis for
rate periods on and after  January  first,  two  thousand  five  through
December  thirty-first, two thousand eight and thirty million dollars on
an annualized basis on and  after  January  first,  two  thousand  nine,
provided  that, subject to all necessary federal approvals, on and after
January  first,  two  thousand  thirteen  funds  allocated  under   this
paragraph  shall  be  distributed  pursuant  to  10  NYCRR  86-2.39. The
nonfederal share of such rate adjustments shall be paid  by  the  state,
with no local share, from allocations made pursuant to paragraph (hh) of
subdivision one of section twenty-eight hundred seven-v of this article.
In  the  event  the  statewide  total  of  the  annual  rate adjustments
determined pursuant to paragraph (g) of this subdivision varies from the
amounts set forth in this paragraph,  each  qualifying  facility's  rate
adjustment shall be proportionately increased or decreased such that the
total  of  the annual rate adjustments made pursuant to this subdivision

is equal to the amounts set forth  in  this  paragraph  on  a  statewide
basis.
(i)  This  subdivision  shall be effective if, and as long as, federal
financial  participation  is  available  for   expenditures   made   for
beneficiaries  eligible  for  medical  assistance under title XIX of the
federal social security act  for  the  rate  adjustments  determined  in
accordance with this subdivision.
(j)  For  periods  on  and  after  April  first,  two  thousand  nine,
residential health care facilities which are otherwise eligible for rate
adjustments pursuant to this subdivision shall also, as a condition  for
receipt  of  such rate adjustments, submit to the commissioner a written
restructuring plan that is acceptable to the commissioner and  which  is
in accord with the following:
(i)  such  an  acceptable  plan shall be submitted to the commissioner
within sixty days of the facility's receipt of rate adjustments pursuant
to this subdivision for a rate period subsequent to March  thirty-first,
two  thousand  eight,  provided,  however,  that  facilities  which  are
allocated four hundred thousand dollars or less on an  annualized  basis
shall  be  required to submit such plans within one hundred twenty days,
and  further  provided  that  these  periods  may  be  extended  by  the
commissioner by no more than thirty days, for good cause shown; and
(ii)  such  plan shall provide a detailed description of the steps the
facility will take to  improve  operational  efficiency  and  align  its
expenditures  with  its revenues, and shall include a projected schedule
of quantifiable benchmarks to be achieved in the implementation  of  the
plan; and
(iii) such plan shall require periodic reports to the commissioner, in
accordance with a schedule acceptable to the commissioner, setting forth
the progress the facility has made in implementing its plan; and
(iv)  such  plan  may  include the facility's retention of a qualified
chief restructuring officer to assist in the implementation of the plan,
provided,  however,  that  this  requirement  may  be  waived   by   the
commissioner,  for  good  cause  shown,  upon written application by the
facility.
(k)  If  a  residential  health  care  facility  fails  to  submit  an
acceptable  restructuring  plan  in  accordance  with  the provisions of
paragraph (j) of this subdivision, the facility shall,  from  that  time
forward,  be precluded from receipt of all further rate adjustments made
pursuant to this subdivision and shall be  deemed  ineligible  from  any
future re-application for such adjustments. Further, if the commissioner
determines  that  a  facility has failed to make substantial progress in
implementing its plan or in achieving the benchmarks set forth  in  such
plan,  then  the  commissioner  may,  upon  thirty  days  notice to that
facility, disqualify the facility from further participation in the rate
adjustments authorized by this  subdivision  and  the  commissioner  may
require  the  facility  to  repay  some  or  all  of  the  previous rate
adjustments.
22. Nursing home incentives for improved performance in patient  care.
Pursuant  to  such  program,  and  within  amounts  as  are appropriated
therefor, the commissioner shall investigate adjusted quality indicators
and quality measures including those defined by the federal centers  for
medicare and medicaid service (CMS) with respect to nursing home quality
and  quality  benchmarks. The commissioner shall award rate enhancements
to those residential health  care  facilities  who  demonstrate  to  the
satisfaction  of  the commissioner, they can meet or exceed such defined
quality measures. Such quality measures may include, but not be  limited
to,  outcomes from state survey data, performance measures, and resident
outcomes  based  upon  Minimum  Data  Sets  as  defined  by   CMS.   The

commissioner  shall  consult  with associations representing residential
health  care  facilities  and  associations  representing  nursing  home
residents,  and shall by July first, two thousand seven, adopt rules and
regulations that incorporate payment incentives, related to such quality
indicators  and  measures,  including,  but  not  limited to programs to
improve patient care outcomes and performance  outcomes.  Such  programs
may  include but not be limited to, clinician-centric electronic medical
records  implementation,  automation  of  assessments  and  care  plans,
improved  data  collection,  and  the  provision  of accessible consumer
information as well as patient satisfaction, into rates of payment.
22-a. Modifications. (a) Notwithstanding any inconsistent provision of
law or regulation to the contrary, effective April first,  two  thousand
six  and  thereafter,  residential health care facility rates of payment
determined pursuant to this section for payments  made  by  governmental
agencies  shall  not  contain  a  payment factor for interest on current
indebtedness  if  the  residential  health  care  facility  cost  report
utilized  to  determine  such  payment factor also shows a withdrawal of
equity, a transfer of assets, or a positive net income.
(b) Notwithstanding any inconsistent provision of law or regulation to
the contrary, for residential health  care  facility  rates  of  payment
determined  pursuant  to this article for services provided on and after
April first, two thousand six, the annual  cost  report  filed  by  each
residential health care facility for two thousand five and for each year
thereafter  shall  be  examined  and  in  the  event the operating costs
reported by each such facility in any such  cost  report  is  less  than
ninety  percent of the operating costs reported in the cost report which
is being utilized to set  such  facility's  existing  rates  of  payment
trended  to  two thousand five and each year thereafter, then such rates
of payment shall be recalculated  utilizing  the  more  recent  reported
operating cost data.
(c) Notwithstanding any inconsistent provision of law or regulation to
the  contrary, effective on and after April first, two thousand six, for
purposes of establishing rates of payment by governmental  agencies  for
residential  health  care  facilities licensed pursuant to this article,
the operating component of the rate  for  any  residential  health  care
facility  that  did  not  or  does not achieve ninety percent or greater
occupancy for any year within five  calendar  years  from  the  date  of
commencing  operation,  shall  be  recalculated utilizing the facility's
most recently available reported allowable costs divided by patient days
imputed at ninety percent occupancy. Such recalculated rates of  payment
shall  be  effective  January first of the sixth calendar year following
the date the facility commenced operations or April first, two  thousand
six, whichever is later.
(d)  (i)  Notwithstanding  any inconsistent provisions of subdivisions
two-b or two-c of this section or any other contrary provision  of  law,
and  subject to the availability of federal financial participation, for
inpatient services provided by residential health care facilities on and
after April first, two thousand eleven, the commissioner may, subject to
the approval of  the  director  of  the  budget,  grant  approval  of  a
temporary  adjustment  to  Medicaid  rates  for  eligible facilities, as
determined in accordance with this paragraph.
(ii) Eligible  facilities  shall  be  those  residential  health  care
facilities  which, as determined by the commissioner, require short-term
assistance  to  accommodate  additional  patient  services  requirements
stemming  from  the  closure of other facilities in the area, including,
but not  limited  to,  additional  staff,  service  reconfiguration  and
enhanced information technology capability.
(iii) Eligible facilities shall submit written proposals demonstrating
the  need  for  additional  short-term resources and how such additional
resources will result in improvements to:
(A) the cost effectiveness of service delivery;
(B) quality of care; and
(C) other factors deemed appropriate by the commissioner.
(iv)  Such  written  proposals shall be submitted to the department at
least sixty days prior to the requested effective date of the  temporary
rate  adjustment. The temporary rate adjustment shall be in effect for a
specified period of time as determined by the commissioner. At  the  end
of   the  specified  timeframe,  the  facility  will  be  reimbursed  in
accordance with otherwise  applicable  rate-setting  methodologies.  The
commissioner may establish, as a condition of receiving such a temporary
rate  adjustment, benchmarks and goals to be achieved in accordance with
the facility's approved proposals and may also require that the facility
submit  such  periodic  reports  concerning  the  achievement  of   such
benchmarks  and  goals  as  the commissioner deems necessary. Failure to
achieve satisfactory progress, as determined  by  the  commissioner,  in
accomplishing  such benchmarks and goals shall be a basis for ending the
facility's temporary rate adjustment prior to the end of  the  specified
timeframe.
23. Notwithstanding any inconsistent provision of law or regulation to
the contrary:
(a)  (i)  For  adult  day health care services provided by residential
health care facilities, effective April first, two  thousand  seven  and
thereafter,  the  operating component of the rate of payment established
pursuant to this article for an adult day health care program which  has
achieved  an  occupancy  percentage  of  ninety percent or greater for a
calendar year prior  to  April  first,  two  thousand  seven,  shall  be
calculated  utilizing allowable costs reported in the two thousand four,
two thousand five, or two thousand six calendar year residential  health
care  facility  cost  report  filed by the sponsoring residential health
care facility, whichever is the earliest  of  such  calendar  year  cost
reports  in  which  the  program has achieved an occupancy percentage of
ninety percent or greater,  except  that  programs  receiving  rates  of
payment  based on allowable costs for a period prior to April first, two
thousand seven shall continue to receive rates of payment based on  such
period.
(ii)  For  such  programs  which  achieved  an occupancy percentage of
ninety percent or greater prior to calendar year two thousand  four,  so
long  as  approved capacity in that year is the same as in calendar year
two thousand four, but  which  did  not  maintain  occupancy  of  ninety
percent  or  greater  in  calendar years two thousand four, two thousand
five, or two thousand six,  the  operating  component  of  the  rate  of
payment  established  pursuant  to  this  article  shall  be  calculated
utilizing allowable costs reported in the  two  thousand  four  calendar
year cost report divided by visits imputed at ninety percent occupancy.
(iii)   For  such  programs  which  have  not  achieved  an  occupancy
percentage of ninety percent or greater for a  calendar  year  prior  to
April  first, two thousand seven, the operating component of the rate of
payment  established  pursuant  to  this  article  shall  be  calculated
utilizing  allowable costs reported in the first calendar year after two
thousand six in which such a program achieves an occupancy percentage of
ninety percent or greater effective January first of such calendar  year
except  for  calendar year two thousand seven, effective no earlier than
April first of such year,  provided,  however,  that  effective  January
first,  two  thousand  nine,  for  programs  that  have  not achieved an
occupancy percentage of ninety percent or greater for  a  calendar  year

prior  to  January  first, two thousand nine, the operating component of
the rate of payment  established  pursuant  to  this  article  shall  be
calculated  utilizing  allowable costs reported in the two thousand nine
cost  report  filed  by  the sponsoring residential health care facility
divided by  visits  imputed  at  actual  or  ninety  percent  occupancy,
whichever  is  greater.  This  subparagraph shall also apply to programs
which achieved an occupancy percentage  of  ninety  percent  or  greater
prior  to  calendar  year  two  thousand  four  but  in such year had an
approved capacity that was not the same as in calendar year two thousand
four.
(b) For a residential health care  facility  approved  to  operate  an
adult  day  health  care  program  on or after April first, two thousand
seven, rates of payment for such programs shall be computed  based  upon
annual  budgeted allowable costs, as submitted by the residential health
care facility, and total estimated annual visits  by  adult  day  health
care  registrants of not less than ninety percent of licensed occupancy,
and in accordance with the following:
(i) Each program shall be required to  submit  an  individual  budget.
Multiple  programs operated by the same residential health care facility
shall submit a separate  budget  for  each  program.  Multiple  programs
operated  by  the  same  residential  health  care  facility  shall have
separate rates of payment.
(ii) Rates developed based upon budgets shall remain in effect for  no
longer than two calendar years from the earlier of:
(A) the date the program commences operations; or
(B) the date the sponsoring residential health care facility submits a
full calendar year residential health care facility cost report in which
the  program  has  achieved  ninety  percent  or greater occupancy. If a
sponsoring residential health care facility submits such a  cost  report
within  two  years  of  the  date the program commences operation, rates
shall then be computed utilizing such cost report.
(iii) If  a  program  fails  to  achieve  ninety  percent  or  greater
occupancy  within  two  calendar  years  of  the  date of its commencing
operations, rates shall be calculated utilizing allowable costs reported
in such second calendar year residential  health  care  facility's  cost
report  for  the  applicable sponsoring residential health care facility
divided by visits imputed at ninety percent occupancy.
(c) Effective January first, two thousand eight, allowable costs shall
not include the costs of transportation.
(d) All rates of payment established pursuant to this subdivision  are
subject  to  the  maximum daily rate provided by law. Such maximum daily
rate  of  payment  for  adult  day  health  care  programs  operated  by
residential  health  care  facilities that undergo a change of ownership
subsequent to nineteen hundred ninety shall be determined  by  utilizing
the  inpatient  rate  of  payment  of the prior operator as in effect on
January first, nineteen hundred  ninety.  In  the  event  a  residential
health  care  facility  establishes  an  off-site  adult day health care
program outside the regional input price adjustment region in  which  it
is  located,  the  computation  of the maximum daily rate of payment for
such program shall utilize the weighted average of the  inpatient  rates
of  payments  for  residential  health  care facilities in the region in
which the program is located, as in effect on  January  first,  nineteen
hundred  ninety,  in  place  of  the  sponsoring residential health care
facility's inpatient rate of payment.
(e)  Notwithstanding  any  inconsistent   provision   of   the   state
administrative  procedure  act  or  any  other  law or regulation to the
contrary, the commissioner shall adopt or amend on  an  emergency  basis

any  regulations the commissioner shall determine necessary to implement
any provision of this subdivision.
24. Notwithstanding any other provisions of this section and any other
law,  rule  or regulation to the contrary, for periods on and after July
first, two thousand seven, the  operating  component  of  all  rates  of
payment  made  by  governmental  agencies  for  services  to individuals
eligible for medical assistance pursuant to title eleven of article five
of the social services law and provided by  a  residential  health  care
facility  with  fewer  than  sixty  beds  as of July first, two thousand
seven, which provides  services  primarily  to  neurologically  impaired
individuals  and  is  located  in a county with a population between two
hundred ninety thousand and three hundred ten thousand as of July first,
two thousand seven shall be based solely  on  the  methodology  used  to
establish rates for facilities which provide extensive nursing, medical,
psychological  and  counseling  support  services  solely  to  children;
provided, however, this subdivision shall not apply if  the  application
would  result  in  a  lesser rate of payment than otherwise provided for
under this section. Nothing in this subdivision shall  be  construed  to
limit  the  application  to such facility of rate adjustments applied to
other residential health care facilities.
25. Reserved bed  days.  (a)  For  purposes  of  this  subdivision,  a
"reserved  bed  day"  is  a  day  for which a governmental agency pays a
residential health care facility to reserve a bed for a person  eligible
for  medical  assistance pursuant to title eleven of article five of the
social services law while he or she is on therapeutic leave  of  absence
from the facility.
(b)  Notwithstanding any other provisions of this section or any other
law or regulation to the contrary, for reserved  bed  days  provided  on
behalf of persons twenty-one years of age or older:
(i)  payments  for  reserved  bed  days  shall  be made at ninety-five
percent of the Medicaid rate  otherwise  payable  to  the  facility  for
services provided on behalf of such person; and
(ii) payment to a facility for reserved bed days provided on behalf of
such person for therapeutic leaves of absence may not exceed ten days in
any twelve month period.
25-a. Reserved bed days for state veterans' homes. (a) For purposes of
this subdivision, a "reserved bed day" is a day for which the state pays
New  York  State  Veterans' Home at Oxford, the New York State Veterans'
Home at St. Albans, the New York State Veterans' Home  at  Batavia,  the
New  York  State  Veterans'  Home  at  Montrose or the Long Island State
Veterans' Home to reserve a  bed  for  a  person  eligible  for  medical
assistance  pursuant  to  title  eleven  of  article  five of the social
services law while he or she is temporarily hospitalized.
(b) (i) Payments for reserved bed days shall be made at fifty  percent
of  the  Medicaid  rate  otherwise  payable to the facility for services
provided on behalf of the person.
(ii) Payment to a facility for reserved bed days provided on behalf of
the person for temporary hospitalizations may not exceed  fourteen  days
in any twelve-month period.
(iii)  The  person must have resided in the applicable State Veterans'
home for at least thirty days since the  date  of  his  or  her  initial
admission.
(iv)  Unless medically contraindicated, the applicable State Veterans'
home shall reserve the same bed and  room  the  person  occupied  before
being hospitalized or placed on a therapeutic leave of absence.
(v)  Reserved  bed  days  under  this  subdivision  are in addition to
reserve bed days for therapeutic  leave  of  absence  under  subdivision
twenty-five of this section.
(vi)  This  subdivision  shall  apply  subject  to the availability of
federal financial participation.
26.  Notwithstanding  any  inconsistent  provision  of  law,  for rate
periods on and after April first, two thousand ten,  residential  health
care  facility Medicaid rates of payment shall not include reimbursement
for the cost of prescription  drugs.  Such  reimbursement  shall  be  in
accordance with otherwise applicable provisions of section three hundred
sixty-seven-a of the social services law.
* 27. The commissioner is authorized to conduct an energy audit and/or
disaster preparedness review of residential health care facilities. Such
audit  or  review  shall  explore  the energy efficiency and/or disaster
preparedness of the real property capital aspects of each  facility  and
develop  a  cost/benefit  analysis  of  potential modifications for each
facility. Such audit or review shall serve as the basis  for  an  energy
efficiency  and/or  disaster preparedness program to be developed by the
department in regulations. Participation in such audit or  review  shall
be  a  condition  to  participation  in  any such program developed as a
result thereof, and shall also be a condition to receipt of any  funding
available  under such program. Such program shall only be implemented if
it is in the best financial interests of the state, as determined by the
commissioner. At  least  forty-five  days  prior  to  implementing  such
program,  the  department shall report to the senate and assembly health
committees, the assembly ways and means committee and the senate finance
committee the results of the energy  audit  authorized  herein  and  the
proposed  eligibility  criteria,  funding  sources,  the manner in which
savings may be shared between the state and  facilities  and  any  other
information requested by such committees about such program prior to the
transmittal of the report.
* NB Repealed July 1, 2027