PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Proposed Action:
Amendment of Subpart 635-6 of Title 14 NYCRR.
Statutory authority:
Mental Hygiene Law, sections 13.07 and 13.09(b)
Finding of necessity for emergency rule:
Preservation of public health, public safety and general welfare.
Specific reasons underlying the finding of necessity:
The emergency adoption of these amendments, which amend provisions on the allowable costs of real property, is necessary to protect the health, safety, and welfare of individuals receiving services in the OPWDD system.
Existing regulations include provisions that place limits on allowable costs when a previous owner of a property had costs funded in whole or in part by New York State. The existing regulations do not, however, address circumstances in which OPWDD, a court, or someone else has designated a substitute service provider to operate a program at the same physical location where the previous owner or lessee was funded by OPWDD, but ceased to provide the OPWDD funded services.
Recent events will require OPWDD to quickly designate substitute providers for a number of facilities and programs that are currently operated by Non-State provider agencies and certified by OPWDD. These facilities include certified residential programs that are homes to individuals receiving services.
The emergency/proposed regulations include provisions that allow for a substitute provider to take the place of the previous owner under the terms of OPWDD’s approval of the previous owner’s costs of ownership of the real property. These regulations also allow OPWDD to pay for a property sold to a substitute provider, where a previous owner of the property had costs funded in whole or in part by OPWDD, using an alternative historical cost to exceed the seller’s net book value should OPWDD determine that allowing such cost is an economic and efficient use of resources and is necessary to protect the health, safety, or welfare of individuals receiving services at the location. The emergency/proposed regulations also allow lease costs greater than the fair market rent of a facility under those circumstances where OPWDD has designated a substitute provider to operate a program at the location.
The emergency/proposed regulations are necessary because it may not be possible to secure substitute providers for all of the facilities and programs in need of substitute providers without paying lease or property costs in excess of those currently allowed or to relocate services to an alternate location.
The emergency adoption of these amendments is necessary to preserve the health, safety, and welfare of individuals receiving services by providing them with continuity of the services they currently receive.
Subject:
Costs of Real Property.
Purpose:
To allow OPWDD to pay lease or property costs not otherwise allowed in existing regulations.
Text of emergency/proposed rule:
• Paragraph 635-6.3(a)(5) is amended to read as follows:
(5) The commissioner may, upon application from a provider, allow lease costs in an amount equal to contract rent and greater than fair market rent if all of the [following] conditions in subparagraph (i) or (ii) are met.
(i) The commissioner will allow such lease costs only for as long as it is necessary for the provider to relocate the program or services located on the lease property[.]; and
[(i)](a) [T]the lease is a renewal [which] that is not pursuant to an option to renew;
[(ii)](b) [T]the lease is a renewal of a lease for an existing program or services[.]; and
[(iii)](c) [T]the provider has shown that:
[(a)](1) the provider has made diligent efforts to negotiate a lease renewal for fair market rent or less;
[(b)](2) the provider has been unable to negotiate a lease renewal for less than the current rent;
[(c)](3) the parties to the lease renewal are not related; and
[(d)](4) allowance of lease costs in the amount of contract rent is necessary to ensure the continued operation of the program [of] or services[.]; or
(ii) A substitute provider (see subdivision 635-99(bp) of this Part) is designated to operate the program at the same physical location, and OPWDD determines that allowing such lease costs:
(a) is an economic and efficient use of resources; and
(b) is necessary to protect the health, safety, or welfare of the persons who are receiving or will receive services at the facility or program in question.
• Paragraph 635-6.4(h)(4) is amended to read as follows:
(4) Where the previous owner of the real property had the costs of such property funded, in whole or in part, by OPWDD,
(i) the historical cost of the property shall be the least of:
[i](a) the acquisition cost of the property to the new owner;
[ii](b) the seller's net book value (see glossary, section 635-99 of this Part)[,]; or
[iii](c) fair market value[.]; or
(ii) notwithstanding the provisions of subparagraph (i) of this paragraph, where the previous owner of the real property had its costs of ownership of the real property approved by OPWDD, and a substitute provider is designated to operate the program at the same physical location, the substitute provider may take the place of the previous owner under the terms of OPWDD’s approval of the previous owner’s costs.
• Subdivision 635-6.4(h) is amended with the addition of a new paragraph (9) as follows:
(9) Alternative historical cost for a substitute provider. Where the previous owner of the real property had the costs of the property funded, in whole or in part, by OPWDD, and a substitute provider is designated to continue operation of a program at the same physical location, OPWDD may allow an alternative historical cost of the property to exceed the seller’s net book value (see glossary, section 635-99 of this Part). The alternative historical cost may not exceed the acquisition cost of the property to the new provider as approved and determined to be reasonable by OPWDD. The alternative historical cost allowed under this paragraph is only available if OPWDD determines that allowing such alternative historical cost:
(i) is an economic and efficient use of resources; and
(ii) is necessary to protect the health, safety, or welfare of the persons who are receiving or will receive services at the facility or program in question.
• Subdivision 635-99(bp) is amended as follows:
(bp) Provider. For the purpose of this Part:
(1) Provider. Someone or an organization licensed or otherwise approved by OMRDD to provide goods, services, or property to [consumers] individuals receiving services.
(2) Provider, Substitute. A provider designated by OPWDD or a court, or designated by another entity and approved by OPWDD, to take the place of another provider.
This notice is intended:
to serve as both a notice of emergency adoption and a notice of proposed rule making. The emergency rule will expire August 15, 2015.
Text of rule and any required statements and analyses may be obtained from:
Regulatory Affairs Unit, OPWDD, 44 Holland Avenue, Albany, NY 12229, (518) 474-7700, email: RAU.unit@opwdd.ny.gov
Data, views or arguments may be submitted to:
Same as above.
Public comment will be received until:
45 days after publication of this notice.
Additional matter required by statute:
Pursuant to the requirements of the State Environmental Quality Review Act, OPWDD, as lead agency, has determined that the action described will have no effect on the environment, and an E.I.S. is not needed.
Regulatory Impact Statement
1. Statutory Authority:
a. OPWDD has the authority to assure and encourage the development of programs and services in the area of care, treatment, rehabilitation, education and training of persons with developmental disabilities, as stated in the New York State Mental Hygiene Law Section 13.07.
b. OPWDD has the authority to adopt rules and regulations necessary and proper to implement any matter under its jurisdiction as stated in the New York State Mental Hygiene Law Section 13.09(b).
c. OPWDD has the statutory authority to adopt regulations concerning the operation of programs and provision of services pursuant to the New York State Mental Hygiene Law Section 16.00.
2. Legislative Objectives: These emergency/proposed amendments further the legislative objectives embodied in sections 13.07, 13.09(b), and 16.00 of the Mental Hygiene Law. The emergency/proposed regulations amend provisions on the allowable costs of real property in a manner that will allow OPWDD to pay lease or property costs not otherwise allowed in existing regulations when a substitute provider is designated to operate an existing OPWDD certified program.
3. Needs and Benefits: OPWDD has longstanding regulations on allowable costs for lease arrangements and property ownership that are applicable to programs and services funded by OPWDD.
Existing regulations include provisions that place limits on allowable costs when a previous owner of a property had costs funded in whole or in part by New York State. The existing regulations do not, however, address circumstances in which a substitute provider has been designated to operate a program at the same physical location where the previous owner or lessee was funded by OPWDD, but ceased to provide the OPWDD funded services.
Recent events will require OPWDD to quickly designate substitute providers for a number of facilities and programs that are currently operated by Non-State provider agencies and certified by OPWDD. These facilities include certified residential programs that are homes to individuals receiving services.
The emergency/proposed regulations include provisions that allow for a substitute provider to take the place of the previous owner under the terms of OPWDD’s approval of the previous owner’s costs of ownership of the real property. These regulations also allow OPWDD to pay for a property sold to a substitute provider, where a previous owner of the property had costs funded in whole or in part by OPWDD, using an alternative historical cost to exceed the seller’s net book value should OPWDD determine that allowing such cost is an economic and efficient use of resources and is necessary to protect the health, safety, or welfare of individuals receiving services at the location. The emergency/proposed regulations also allow lease costs greater than the fair market rent of a facility under those circumstances where a substitute provider has been designated to operate a program at the location.
The emergency/proposed regulations are necessary because it may not be possible to secure substitute providers for all of the facilities and programs in need of substitute providers without paying lease or property costs in excess of those currently allowed.
4. Costs:
a. Costs to the Agency and to the State and its local governments:
Allowing an alternative historical cost for real property, and allowing greater than fair market value rent for leased properties, where a substitute provider has been designated to operate a program or facility previously operated by another provider, will result in some additional costs to the State. However, OPWDD believes that designating substitute providers to operate existing programs in their current locations will result in savings compared with costs associated with developing new locations to provide the same or similar services.
There will be no costs to local governments associated with these emergency/proposed regulations. There will be no savings or costs to local governments as a result of these regulations because pursuant to Social Services Law sections 365 and 368-a, either local governments incur no costs for these services or the State reimburses local governments for their share of the cost of Medicaid funded programs and services. In addition, even if the amendments lead to an increase in Medicaid expenditures in a particular county, these amendments will not have any fiscal impact on local governments, as the contribution of local governments to Medicaid has been capped. Chapter 58 of the Laws of 2005 places a cap on the local share of Medicaid costs and local governments are already paying for Medicaid at the capped level.
b. Costs to private regulated parties: The proposed amendments will not result in any cost to providers. On the contrary, they will allow substitute providers to be reimbursed at cost (contract rent or acquisition cost) where OPWDD has determined such allowance is an economic and efficient use of resources and is needed to protect the individuals in the program.
5. Local Government Mandates: There are no new requirements imposed by the rule on any county, city, town, or village, or school, fire or other special district.
6. Paperwork: Read in isolation, these amendments will impose some paperwork requirements on regulated parties. A substitute provider will have to submit proof of lease costs or acquisition costs. However, the substitute provider would have to submit the same paperwork if it opened the program at a new location.
7. Duplication: The emergency/proposed amendments do not duplicate any existing State or Federal requirements.
8. Alternatives: The course of action allowed in these emergency/proposed regulations presents what OPWDD believes to be a fiscally prudent, cost-effective way to enable substitute providers to operate existing programs where individuals reside and receive services, and to avoid the costs and disruption of individuals’ lives that would result from closing the existing programs and developing new locations to provide the same or similar services.
9. Federal Standards: The emergency/proposed amendments do not exceed any minimum standards of the federal government for the same or similar subject areas.
10. Compliance Schedule: The emergency regulations are effective May 20, 2015. OPWDD has concurrently filed a Notice of Proposed Rule Making, and intends to finalize the regulations as soon as possible within the time frames mandated by the State Administrative Procedure Act. These amendments do not impose any new compliance requirements on regulated parties.
Regulatory Flexibility Analysis
A Regulatory Flexibility Analysis is not submitted for this rulemaking because the amendments will not impose any adverse impact or significant reporting, record keeping, or other compliance requirements on public or private entities that are small businesses employing fewer than 100 employees or on local governments. The emergency/proposed regulations amend provisions on the allowable costs of real property in a manner that will allow OPWDD to pay lease or property costs not otherwise allowed in existing regulations when a substitute provider is designated to operate an existing OPWDD certified program. The emergency/proposed regulations will increase reimbursement to substitute providers in certain situations described in the amendments, and will therefore not impose an adverse economic impact on providers that are small businesses. The emergency/proposed regulations will not increase costs to local governments and will therefore not impose an adverse economic impact on local governments. Although the regulations require a substitute provider to submit proof of lease costs or acquisition costs, the provider would have to submit the same paperwork if it opened the program at a new location. Therefore, the regulations will not impose reporting, recordkeeping or compliance requirements on providers.
Rural Area Flexibility Analysis
A Rural Area Flexibility Analysis is not submitted for this rulemaking because the amendments will not impose any adverse impact or significant reporting, record keeping, or other compliance requirements on public or private entities in rural areas. The emergency/proposed regulations amend provisions on the allowable costs of real property in a manner that will allow OPWDD to pay lease or property costs not otherwise allowed in existing regulations when a substitute provider is designated to operate an existing OPWDD certified program. The emergency/proposed regulations will increase reimbursement to substitute providers in certain situations described in the amendments, and will therefore not impose an adverse economic impact on providers that are small businesses in rural areas. The emergency/proposed regulations will not increase costs to local governments and will therefore not impose an adverse economic impact on local governments in rural areas. Although the regulations require a substitute provider to submit proof of lease costs or acquisition costs, the provider would have to submit the same paperwork if it opened the program at a new location. Therefore, the regulations will not impose reporting, recordkeeping or compliance requirements on providers.
Job Impact Statement
A Job Impact Statement is not submitted for this rulemaking because OPWDD determined that the emergency/proposed regulations will not cause a loss of more than 100 full time annual jobs State wide. The emergency/proposed regulations amend provisions on the allowable costs of real property in a manner that will allow OPWDD to pay lease or property costs not otherwise allowed in existing regulations when a substitute provider is designated to operate an existing OPWDD certified program. OPWDD expects that a substitute provider would maintain the same or a similar staffing arrangement compared with that of the previous provider agency operating the program at that location.
