HLT-22-12-00012-P Limits on Executive Compensation and Administrative Expenses in Agency Procurements

5/30/12 N.Y. St. Reg. HLT-22-12-00012-P

NEW YORK STATE REGISTER

VOLUME XXXIV, ISSUE 22

May 30, 2012

RULE MAKING ACTIVITIES

DEPARTMENT OF HEALTH

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. HLT-22-12-00012-P

Limits on Executive Compensation and Administrative Expenses in Agency Procurements

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed Action:

Addition of Part 1002 to Title 10 NYCRR.

Statutory authority:

Social Services Law, section 363-a(2); and Public Health Law, sections 201(1)(o), (p), 206(3) and (6)

Subject:

Limits on Executive Compensation and Administrative Expenses in Agency Procurements.

Purpose:

Ensure state funds and state authorized payments are expended in the most efficient manner and appropriate use of funds.

Substance of proposed rule (Full text is posted at the following State website:www.health.ny.gov):

The Department proposes regulations to implement Governor Cuomo's Executive Order 38, which sets forth standards for executive compensation paid by, and administrative expenses paid to, covered providers receiving state funds or state authorized payments. The regulations define key terms including “administrative expenses,” “program services expenses,” and “covered provider,” and provide standards to be used in determining whether a covered provider's executive compensation and administrative costs are within certain limits. The regulations further provide means for waivers with regard to the executive compensation and administrative cost limits under limited circumstances and subject to specific criteria. Finally, the regulations provide for review of decisions denying requests for waiver, penalties for failure to comply with applicable limitations, and covered entity reporting obligations.

Text of proposed rule and any required statements and analyses may be obtained from:

Katherine Ceroalo, DOH, Bureau of House Counsel, Reg. Affairs Unit, Room 2438, ESP Tower Building, Albany, NY 12237, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

45 days after publication of this notice.

This action was not under consideration at the time this agency's regulatory agenda was submitted.

Regulatory Impact Statement

Statutory Authority:

The authority for the promulgation of these regulations is contained section 363-a(2) of the Social Services law and in sections 201(1)(o), 201(1)(p), 206(3) and 206(6) of the Public Health Law.

Legislative Objectives:

This rule furthers the proper use of funds in furtherance of the Department's oversight of the various programs and procurements for which it pays, or authorizes payment.

Needs and Benefits:

The New York State Department of Health is proposing to adopt the following regulation because the State of New York directly or indirectly funds with taxpayer dollars a large number of tax exempt organizations and for-profit entities that provide critical services to New Yorkers in need and the goal is to ensure that taxpayers' dollars are used properly, efficiently, and effectively to improve the lives of New Yorkers. In certain instances, providers of services that receive State funds or State-authorized payments have used such funds to pay for excessive administrative costs or inflated compensation for their senior executives, rather than devoting a greater proportion of such funds to providing direct care or services to their clients. Such abuses involving public funds harm both the people of New York who are paying for such services, and those persons who must depend upon such services to be available and well-funded. These regulations, which are required by Executive Order No. 38, will ensure that State funds or State-authorized payments paid by this agency to providers are not used to support excessive compensation or unnecessary administrative costs.

Costs:

The costs of implementing this rule to affected providers is anticipated to be minimal as most, if not all, of the information that must be reported by such providers is already gathered or reported for other purposes. The costs to the agency of such implementation is expected to be very limited as well, and efforts to ensure efficient centralization of certain aspects of such implementation are underway.

Paperwork/Reporting Requirements:

The proposed regulatory amendments will require limited additional information to be reported to the agency by providers receiving State funds or State-authorized payments. To the extent feasible, such reporting shall be made electronically to avoid unnecessary paperwork costs.

Local Government Mandates:

The proposed regulatory amendments do not anticipate any additional mandates.

Duplication:

This proposed rule does not duplicate, overlap, or conflict with any State or federal statute or rule. However, the proposed rule seeks to minimize the reporting requirements faced by providers by building upon those requirements in the federal internal revenue code that require certain tax-exempt organizations to report information concerning their executive compensation and administrative costs.

Alternatives:

Executive Order #38 requires the adoption of this proposed regulation.

Federal Standards:

These amendments do not conflict with federal standards.

Compliance Schedule:

This rule takes effect January 1, 2013.

Regulatory Flexibility Analysis

A Regulatory Flexibility Analysis for Small Businesses and Local Governments is not being submitted with this notice because the proposed rule will not impose any adverse economic impact on small businesses, nor will it impose new reporting, recordkeeping or other compliance requirements on small businesses or local governments.

Rural Area Flexibility Analysis

A Rural Area Flexibility Analysis is not being submitted with this notice because the proposed rule will not impose any adverse economic impact on rural areas.

Job Impact Statement

A Job Impact Statement is not being submitted with this notice because it is evident from the subject matter of the regulation that it will have no impact on jobs and employment opportunities.