NYS DOH Releases New Application Requirements for Licensed Home Care Services Agencies

NY State Government: Week in Review

On August 17, 2022, the New York State (NYS) Department of Health (DOH) released a long-awaited Dear Administrator Letter (DAL) setting forth application changes for licensed home care services agencies (LHCSAs) in New York, a new application required for LHCSA licensure and a Frequently Asked Questions (FAQ) document regarding application requirements. This memorandum provides a brief overview of the statutory and regulatory provisions underlying the changes in the LHCSA licensure process in New York, an overview of the new application process, and important next steps and considerations for LHCSA providers.

I. Background

Effective April 1, 2018, a moratorium on the processing and approval of applications seeking LHCSA licensure was implemented, in part, due to policy concerns regarding the growth of LHCSAs as well as its potential interplay with Medicaid Managed Long Term Care (MLTC) enrollment in New York (the LHCSA moratorium). The LHCSA moratorium was implemented through statutory changes included in the enacted 2018–19 NYS Budget. Prior to these changes, the Public Health and Health Planning Council (PHHPC) was only permitted to consider character and competence in review of applications for LHCSA licensure, and there was no public need review or financial feasibility review, which are requirements for licensure of other types of health care providers governed by New York’s Public Health Law.

The LHCSA moratorium officially expired on March 31, 2020, after which time, the law required PHHPC, to consider, in addition to character and competence, the following factors: public need, the financial resources of a proposed LHCSA, sources of financial revenue and “ . . . such other matters that it shall deem pertinent.”1 The DOH subsequently amended its regulations to include these requirements, and the updated regulations were effective on April 2, 2020. However, despite the promulgation of new regulations, until the release of the new LHCSA application, organizations were constrained in their ability to actually file an application for initial licensure, change of ownership or control, or an expansion of a “restricted license” (meaning a license that is issued for the sole purpose of operating a special program, like a Medicaid Assisted Living Program (ALP) or Program of All-Inclusive Care for the Elderly (PACE), Nurse-Family Partnership (NFP) or Continuing Care Retirement Community (CCRC)).2

II. Overview of New LHCSA Licensure Application and Process

Applications for LHCSA licensure now require an updated application process, which includes both new public need and financial feasibility standards, in addition to the character and competence review that existed as part of the previous LHCSA licensure process. This licensure application process applies to organizations seeking to establish a new LHCSA,3 obtain required approval for a change of ownership or control,4 or expand a restricted license. Set forth below is a description of the new process and requirements pertaining to public need, financial feasibility, and character and competence review.

a. Application Process. Applications for LHCSA licensure should be submitted electronically through the New York State Electronic Certificate of Need (NYSE-CON) system and continue to require an application fee of $2,000. Applications will be reviewed by DOH and then evaluated by the PHHPC. If an application receives approval from PHHPC, the applicant will be required to submit a policy and procedure manual to the appropriate Home Care Regional Office for review prior to issuance of a new license. However, DOH reminds applicants that in a change of ownership application, the applicant (buyer) may choose to adopt a previously approved policy and procedure manual in order to expedite the licensure process.

b. New Public Need Methodology Requirements. A new public need methodology will apply to all applications for licensure submitted on or after April 1, 2020.

  • Rebuttable Presumption of No Need. The new public need methodology includes a rebuttable presumption of no need for additional LHCSAs in a county if there are five or more LHCSAs actively serving patients within the county. The date utilized by DOH to determine need has been adjusted to April 1, 2022. Counties with need are identified in the LHCSA County No Need Report. Despite the determination of no need, the regulations permit a LHCSA applicant to overcome a presumption of no need based on local factors related to an applicant’s service or planning area (e.g., the demographics and/or health status of the patients in the planning area, availability and accessibility of workforce, subpopulations requiring specialty services).
  • Exception for Change of Ownership Applications. Applications for licensure based on a change of ownership for LHCSAs “actively serving” at least 25 patients will not be subject to public need review.5
  • Special Program Exemptions. LHCSAs affiliated with an ALP, PACE, NFP or CCRC will be exempt from the public need methodology if the agency exclusively serves patients within those programs.

c. New Financial Feasibility Requirements. The standards for financial feasibility have been updated to better align with the financial review of other health care providers undergoing certificate of need review in New York, though there are important variations that are unique to the new LHCSA review process, including input from a certified public accountant (CPA). Specifically, the financial review will require review of:

  • Sources of Working Capital and Two Months of Estimated Year One Operating Expenses. Applicants will be required to submit a written plan and financial documentation of available resources in order to ensure available working capital, with a minimum requirement equal to at least two months of estimated operating expenses for the agency. If the applicant intends to utilize existing financial resources (e.g., savings, investments, approved loan or awarded grant), a CPA must evaluate the amount of working capital available to the applicant. The entity’s most recent balance sheet and written confirmation provided by a CPA on letterhead must be included in the application. If the applicant intends to provide working capital by equity contributions, personal financial statements must be submitted for each member contributing equity, and these documents must also be on CPA letterhead, signed and dated by each member shareholder, and included in the application. Similarly, if funding will be provided by a related entity/parent organization, the applicant must provide a letter from the entity’s CPA that confirms the amount of funding to be provided.
  • Projected Operating Costs. Applicants will also be required to provide projected operating costs, similar to other certificate of need applications in New York.

The DAL indicates that the application will be required to pass a “reasonableness test” with respect to the financial capability of the agency or sources for startup funding. As part of this review, DOH will examine the financial feasibility of the agency or projections to ensure the agency’s revenues will be equal to or greater than projected expenditures over time.

d. Character and Competence Requirements. While the character and competence requirements have not changed as part of this new licensure process, procedurally, DOH has indicated that compliance reports for out-of-state affiliated health facilities (known as “Schedule 2Ds”) must be submitted to DOH at the time of submission of the LHCSA licensure application.

III. Important Next Steps and Considerations for Providers

Set forth below are important considerations and next steps for providers.

a. Pending Applications. Organizations that submitted LHCSA applications for licensure that were not acknowledged by DOH during the 2018–2020 moratorium period are now required to submit a new application using the new application in order to obtain licensure. However, if an application was accepted and acknowledged by DOH during this time frame (e.g., as a result of an exception to the moratorium for a special program, serious concern or consolidation),6 DOH has indicated that it will review the pending application and reach out for additional information, as needed.

b. Corporate Transactions Accomplished During The LHCSA Moratorium Using an Affidavit of No Control Require Submission of a New LHCSA Application Within 30 Days. During the moratorium, a new controlling entity was permitted to be established at a level above the current operator, so long as an affidavit was submitted to DOH stating that the new controlling entity would refrain from exercising control over the LHCSA.7 However, pursuant to DOH guidance, the agency is required to submit an application for approval of the controlling entity no later than 30 days after the release of the new application (September 16, 2022). The affidavit originally submitted to DOH must be included in the application.

c. New Establishment Applications. If an organization is considering filing an application for establishment as a new LHCSA, it will be important to first review the counties that DOH has identified as being presumed to have “no need,” in order to determine whether there is a basis to rebut this presumption based on local factors.

d. Existing LHCSAs Seeking to Add a New Service, Expand Into New Counties, Add Additional Sites or Close Are Not Subject to the New Licensure Process. Pursuant to a recent DAL, setting forth the procedure for LHCSA Administrative Licensure Amendments (DAL DHCBS 22-02), these changes can be accomplished by completing a required DOH checklist and submitting a written request to the appropriate regional office and to LHCSA@health.ny.gov.

e. Transfer of Ownership Notices. Transfers of ownership interest to existing partners or members of limited liability companies (LLCs) already approved by PHHPC, transfers of less than 10% interest to new partners or new members of LLCs, and transfers of stock or voting rights in business corporations to persons already approved by PHHPC for the agency may still proceed upon a filing of the required notice with DOH, at least either 90 or 120 days prior to the intended effective date of the transaction, depending on the type of corporation.8

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If you have any questions about the DAL or the new LHCSA application process, please contact Meghan McNamara at mmcnamara@manatt.com in our Albany office.

1 NY PHL Section 3605(4).

2 The use of the term “restricted license” is newly utilized in the updated LHCSA application to refer to LHCSA licenses issued pursuant to 10 NYCRR 765-1.16(c)(3), with a limited scope of providing services to an ALP, PACE, NFP or CCRC.

3 See NY PHL Section 3605.

4 See NY PHL Section 3611-a. In addition, application requirements for Article 36 transfers of ownership can be found in the DOH “Transfers of Ownership” matrix.

5 “Actively serving” means an agency has a plan of care in place for the patient and is providing services to the patient in their home. See FAQ document.

6 See LHCSA Moratorium Guidance for a description of exceptions that would have allowed an applicant to file a LHCSA application either during the moratorium or preceding the release of this new application process.

7 Pursuant to DOH Guidance, during the moratorium, if the controlling person/entity submitted an affidavit attesting they will refrain from exercising control over the LHCSA until the moratorium was lifted and an application could be submitted, processed and approved, then the corporate transaction can proceed. However, DOH required that within 30 days of the moratorium being lifted, the agency submit an application for PHHPC approval of the controlling person.

8 See NY PHL 3611-a (1)(c)(i)–(ii) and 3611-(2)(c).



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