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Long-term care providers in New York and New Jersey are questioning new state mandates that will limit how much operators can profit from resident care in an effort to address problems local leaders say were exposed during the COVID-19 pandemic. 

New Jersey, New York and Massachusetts are three states that have implemented or have proposed requirements for nursing homes on direct care spending and how much they can profit, a new analysis by Kaiser Health News explores. 

New York’s requirement, which goes into effect next year, mandates that nursing homes must use at least 70% of their revenue, including payments from Medicaid, Medicare and private insurers, on direct resident care and at least 40% of that on resident staffing. The move has been widely criticized by providers who have said the state has failed to address longtime Medicaid underfunding issues. 

“I don’t think there’s any doubt that it will end up in court,” said Jim Clyne, president and CEO of LeadingAge New York, who questioned pieces of the mandate.

“Philosophically, if a payer wants to tell the provider how to use their funds within certain parameters, I understand that, but that’s not what the [New York] law does,” Clyne told KHN. “The law goes beyond that. The state is telling the provider how much of other people’s money they have to spend on care also, not just the state’s money.” 

The Massachusetts mandate requires nursing homes to spend at least 75% of all revenue on revenue care, while New Jersey’s proposal requires providers to spend at least 90% of revenue on patient care. 

“The actual effect will be just the opposite,” Andrew Aronson, president and CEO of the Health Care Association of New Jersey, noted. “By trying to force providers to put more money into direct care, you’re creating a disincentive for people to invest in their buildings, which is going to drive the quality down.”

He added that the regulation is based on the “misconception” that COVID-19 could have been prevented in nursing homes “if they had only marshaled their resources properly.”

“As long as COVID is in our communities, it will also find its way into our facilities,” he said.