NYS Budget Update – Final Budget Provisions (Distributed 4-22-24)

This past weekend, the state Legislature finished passing the roughly $237 billion final state budget. The final bill was voted on by the Assembly at 4:15 p.m. on Saturday, April 20 – nearly three weeks after the March 31 deadline.

The budget included the following with respect to hospitals: 

  • Hospital Rate Increases: The final budget adds $525 million in aggregate Medicaid payments to hospitals, ($262.5 million state share). The language does not differentiate between inpatient and outpatient service payments and authorizes payments to be made as rate adjustments, lump sum payments, managed care payments or state directed payments.
  • Nursing Home Rate Increases: The final budget adds $285 million in aggregate Medicaid payments to nursing homes ($142.5 million state share). Payments are authorized to be made as rate adjustments, lump sum payments, managed care payments or state directed payments. 
  • MCO Tax: The final budget authorizes an application to the CMS for a Medicaid waiver to create an MCO tax on Medicaid managed care to draw down increased federal funding. Revenue from the tax will be deposited into a Healthcare Stability Fund. The Healthcare Stability Fund could be used to fund the non-federal share of increased Medicaid managed care capitation payments, the non-federal share of the Medicaid program, for reimbursement to the general fund for expenditures incurred for the Medicaid program, and to transfer to the capital projects fund or any other capital projects fund to support the delivery of health care services. 
  • Hospital Budgeted Capital Related Expense Add-On Reduction: The final budget accepts the Executive proposal to increase, from 10 percent to 20 percent, the current cut to the capital related expenses on October 1, 2024.
  • Nursing Home Case Mix Rate Freeze: The final budget accepts the Executive proposal to freeze the case mix adjustment of the operating component of the rates for Nursing Homes to the rates in effect as of July 1, 2023. 
  • Nursing Home Capital Rate Reduction: The final budget modifies the Executive proposal to reduce the Nursing Home capital component by an additional 10 percent for periods on and after April 1, 2024. 
  • Nursing Home Vital Access Provider Assistance Program (“VAPAP”): The final budget accepts the Executive proposal to reduce the Nursing Home VAPAP program by $75 million state share, $150 million gross spending.
  • Doctors Across New York (“DANY”): The final budget accepts the Executive proposal to provide level funding of $15.9 million for the Doctors Across New York physician loan repayment program. 
  • Nurses Across New York (“NANY”): The final budget accepts the Executive proposal to provide level funding of $3 million for the Nurses Across New York loan repayment program. 
  • Diversity in Medicine: The final budget modifies the Executive proposal to provide $1.2 million for the program by providing an additional $1.25 million for total program funding of $2.45 million. 
  • Area Health Education Centers (“AHEC”): The final budget modifies the Executive proposal to provide $2.2 million for the AHEC program by providing an additional $1.6 million for total program funding of $3.8 million. 
  • New York State Workforce Innovation Center: The final budget accepts the Executive proposal to provide level funding of $10 million for the Workforce Innovation Center.
  • Healthcare Safety Net Transformation Program: The final budget modifies the Executive proposal to authorize DOH to spend $300 million for the purposes of establishing the Healthcare Safety Net Transformation Program.
    • Requiring applications under the program to contain numerous informational requirements, including:
      • Key organizational information, including the organizational structure of the safety net hospital and partner organization (including any parent or subsidiary, and the interrelationship between all such organizations), and the names, business addresses, and biographies of each director and officer of the safety net hospital, the partner, and other organizations within either the safety net hospital’s or the partner’s organizational structure;
      • The type of collaborative model proposed, which may include (but is not limited to) a merger, acquisition, management services contract, or clinical integration; 
      • A five-year strategic and operational plan outlining the roles and responsibilities of the safety net hospital and partner organization; 
      • A timeline of key metrics and goals; 
      • Regulatory flexibilities required to implement such plan, including the justification for why such flexibilities are necessary for the transformation plan to achieve an improved financial outlook for the safety net hospital and improved health outcomes for the communities it serves; 
      • The amount of funding requested for the first five years and projected needs thereafter, including the rationale for why such funding is necessary for the transformation plan to achieve an improved financial outlook for the safety net hospital and improved health outcomes for the communities it serves; and 
      • Detailed plans for any operational surplus after reaching financial sustainability. 
  • Modernization of SUNY Downstate: The final budget adds language creating a Community Advisory Board for The Modernization and Revitalization of SUNY Downstate health sciences university. 
    • The board is charged with considering: (1) Overall healthcare service delivery trends and models; (2) Historic and projected financials for the hospital and the campus; (3) Current state of building infrastructure and capital needs; (4) Community healthcare needs, outcomes, and health disparities; (5) Existing inpatient and outpatient service offerings and health outcomes; (6) Capacity and availability of inpatient and outpatient services in the broader primary and secondary service areas; (7) Efficiency of operations and quality of healthcare services benchmarking; and (8) Training needs for students and employment outcomes. 
  • Sunset of COVID-19 Sick Leave Law: The Enacted Budget sunsets the COVID-19 Sick Leave Law on July 31, 2025, one year later than initially proposed in the Executive Budget. The original law, enacted in 2020, requires employers to provide sick leave benefits, paid family leave, and benefits due to disability for employees subject to a mandatory or precautionary order of quarantine or isolation due to COVID-19. 
  • Paid Prenatal Leave: The final budget modifies the Executive proposal to provide paid prenatal leave to eligible pregnant employees for prenatal medical appointments by shifting the requirement from a Paid Family Leave benefit to a Sick Leave benefit; and by reducing the minimum number of hours of paid prenatal personal leave from 40 hours to 20 hours, within a 52-week period. The paid prenatal leave is to be provided in addition to existing sick leave benefits and the current 12 weeks of Paid Family Leave or 26 weeks of disability leave, available for eligible employees. Such leave for prenatal visits may be taken, and must be paid for, in hourly installments. This law will take effect on January 1, 2025.
  • Hospital Medical Debt Protections: The final budget modifies the Executive proposal to amend the Hospital Financial Assistance Law to require participating hospitals to extend assistance to both uninsured and underinsured persons, offer assistance to individuals with incomes up to 400 percent of the federal poverty level (“FPL”), and notify patients of potential assistance in writing by including language that prohibits “immigration status” from being a criterion for determining eligibility for financial assistance.
  • Patient Billing Protections: The final budget accepts the Executive proposal to require that a patient’s consent for treatment be obtained separately from consent for payment; and to prohibit providers from requiring that a patient pre-authorize their credit card, or have a card on file, prior to treatment.
  • Physician’s Excess Medical Malpractice: The final budget modifies the Executive proposal to extend the Hospital Liability Pool and the Excess Medical Malpractice Insurance Program through June 30, 2025, by rejecting proposals to reform payment timing and increase physician contribution to payments for excess medical malpractice coverage. It also restores funding to last year’s level of $78.5 million.

We will keep you updated with any further information as it becomes available.