More than 130 nursing homes are suing the state of New York over a law that could cap profits and require spending allocation minimums, the Times Union reported April 14.
The law, passed in 2021, would require residential healthcare facilities to spend a minimum of 70 percent of their total operating revenue on direct patient care, including at least 40 percent on resident-facing staff. It also sets a 5 percent cap on earnings — anything more has to be turned over to the state. The money would then be disbursed to facilities that have met certain standards of care quality.
The law was set to go into effect in January 2022 but has been delayed by a series of executive orders and regulatory holdups, according to the report.
The lawsuit, filed in the state Supreme Court by hospital associations and nursing home facilities, claims the law violated several protections under the Constitution, including the contracts clause and supremacy clause, and seeks to bar the state health department from enforcing any penalties.
James Clyne, president of LeadingAge New York, said facilities want to ban the section of the law that demands funds over a 5 percent cap be turned over to the state and the penalties nursing homes would face for failing to meet the 70/40 allocation rule. Mr. Clyne called the law "fundamentally flawed," according to the report.
But advocates for the law disagree, saying it is intended to ensure accountability in how nursing homes spend Medicaid funds.
"All the law requires them to do is to sort of shift their priorities," Dennis Short, a policy analyst with 1199SEIU, told the Times Union. "If they're not meeting the standard, the easiest way to do so is to hire additional staff and spend more money on supplies, increase wages or benefits."