Capital Restructuring Finance Program Application and Applicant Conference

As we reported last week, the application for the Capital Finance Restructuring Program (CRFP) is now available. An applicant conference was held last week on Fri., Nov. 21.

The CRFP is a competitive process to access funds for projects that support the objectives of the Delivery System Reform Incentive Payment (DSRIP) program. Applications for capital can be submitted through the DSRIP Performing Provider Systems (PPS) or, for those eligible entities not engaged in DSRIP PPS, through a separate process. Those projects that fall under the latter category must also support the objectives of DSRIP; that is, to reduce unnecessary hospitalizations and emergency room visits.

The CRFP application is due on Mon., Dec. 22, 2014 by 3:00 p.m. Questions regarding the application can be submitted in writing to: CRFP@health.ny.gov by tomorrow, Nov. 26. To the extent possible, each inquiry should cite the RFA section and paragraph to which it refers. Late questions will be not be addressed, so we urge members to review the application now to ensure you get the necessary clarifications. Answers will be published by Fri., Dec. 5.

Applicant Eligibility Criteria
The minimum eligibility requirements for entities responding to this RFA have been established in accordance with PHL §2825[2][a]. This language reflects our advocacy, and specifically includes residential health care facilities, assisted living providers, home care providers certified or licensed under Public Health Law Article 36. Preferred Eligibility Criteria includes applicants committing matching funds to the proposed project; applicants with projects that demonstrate transformational change to the health care delivery system from a fee-for-service system to a value based system; and, applicants who demonstrate significant financial need.

Eligible Projects
The most fundamental, yet murky, question, is what constitutes capital costs for the purposes of this initiative? Unfortunately, there is conflicting direction regarding use of capital funds to make information technology investments. LeadingAge NY has been advocating persistently for funds to be made available to Long Term and Post-acute Care (LTPAC) providers to enable the health information technology and exchange requirements outlined in the DSRIP Domain 2 projects. The verbal answer we received about the appropriateness of this expense conflicts with the Frequently Asked Questions document that was updated this week. DOH representatives promised to follow up with appropriate clarification in the written question and answer process.

Some of the possible types of eligible projects listed in the application include, but are not limited to:

asset acquisitions;
capital projects that support consolidation of service lines among providers;
improvements to infrastructure;
capital projects that support closures, mergers and/or restructurings;
capital projects that support development of tele-health infrastructure;
capital projects leading to integrated delivery systems that strengthen and protect continued access to essential health care services; and,
other transformational capital projects which further DSRIP Program Goals as described in Section I[B].

At the applicant conference, a variety of disallowable uses were noted, including mergers, working capital, general operating costs, rent payments, utility payments, payroll, supplies, loan payments, debt service, debt repayment and lease payments. There was discussion about retiring debt incurred to acquire property to support DSRIP project. Eligibility of expenses to retire short-term credit facilities will be clarified in the Q&A. Retiring debt to reconfigure a facility or to demolish a facility in order to build a new one could be considered capital. Retiring debt in order to pay routine operating costs is not capital, however. Cleaning a balance sheet is not appropriate for this funding source.

Dormitory Authority of the State of New York (DASNY) representatives also warned that facilities that have been renovated through tax exempt debt, such as the IDA, should talk with an expert on tax exempt projects to ensure there is no conflict between that project and this opportunity.

Here are some additional clarifications that may be useful:

Providers in multiple PPSs: Applicants should submit only one application. If an organization is in multiple PPSs, it should pick the PPS for which the project is the best fit and apply through that PPS, even if the project will benefit more than one PPS.
Process A vs. Process B: A facility must select one process for a capital application. If the facility is in a PPS, all projects must go through PPS (Process A). If the entity is not in a PPS, then use Process B. In the DSRIP Capital application process (A), the PPS must rank the capital projects submitted in terms of priority.
Matching funds: A letter of interest or commitment from financial institution or DSRIP partner is required to demonstrate matching funds. Essentially, they are looking for documentation that a source of equity is available. If the facility has revenue to support a capital project, it should be contributing. Other State grants can be used to satisfy the match.
Preferred eligibility criteria: Both financial need and the ability to provide matching funds provide additional points in the application.
Pre-Qualification: The Grants Gateway will be used for submission of applications. The process to register with the gateway can be expedited by DOH.
Additional funding rounds: This will be the only funding solicitation that is contemplated. Funds will be distributed over six years.

LeadingAge NY encourages members to review this opportunity quickly and submit questions this week. We urge you to work closely with your DSRIP PPS to ensure you are a listed as a priority project, or take advantage of Process B to otherwise submit an application. Please let us know if we can be of support in this process.

Contact: Diane Darbyshire, ddarbyshire@leadingageny.org, 518-867-8828