New York Gov. Kathy Hochul (D)
New York Gov. Kathy Hochul (D) Credit: Lev Radin/Pacific Press/LightRocket via Getty Images

New York’s long-term care providers could have to come up with $500 million to comply with the state’s new profit capping law — and the true number might be even higher. 

Hundreds of providers in the state have brought a federal lawsuit to challenge New York’s new law requiring nursing homes to spend a minimum of 70% of revenue on direct patient care. At least 40% of that would have to go to direct-care staffing.

The providers presented an analysis estimating they would have to spend about $511 million total to comply with those stipulations for a year.  

“That’s [using] 2019 data,” Stephen Hanse, Esq., president and CEO of the New York State Health Facilities Association/New York State Center for Assisted Living, told McKnight’s Long-Term Care News Wednesday. “If you went into 2020 data, I would say it would cost providers close to $1 billion based on the losses resulting from COVID.” 

Consumer advocates have argued that the estimation, instead, shows how much excess profit nursing homes are taking in, according to a report by WBFO.

“That money is if the law was in effect, what would it cost each nursing home to meet the requirement of the law,” Hanse clarified. 

The law was set to go into effect on Jan. 1 until New York Gov. Kathy Hochul (D) issued a 30-day stay of a law prior to that. The stay has since been extended another 30 days through March 1.

Hanse added that the law has “tremendous” financial implications for New York’s long-term care providers. He said he hopes the lawsuit results in the recognition that the state shouldn’t subsidize its Medicaid program with federal Medicare dollars.

“It’s critical as we continue to fight the COVID-19 pandemic that the [state’s] Department of Health work in partnership with providers to address over 14 years of state disinvestment in New York’s long-term care system,” Hanse said. 

“Under the prior administration, Medicaid has been cut for 14 years in a row. We have not received a cost-of-living increase in that time,” he added. “The current administration recognizes this and has prioritized the workforce crisis New York is facing as well as the severe nation-leading underfunding of Medicaid in New York state.”