State Accepting Applications from Financially Distressed Nursing Homes

The Department of Health (DOH) has developed a process for nursing homes in severe financial distress to apply for funding dedicated for that purpose in the most recent State Budget. Members may recall that the Fiscal Year (FY) 2023 enacted State Budget included nursing homes in the Vital Access Provider Assurance Program (VAPAP), which was previously available only to hospitals. The same legislation allocated $100 million in funding specifically for nursing homes.

VAPAP is a program that provides assistance to facilities in severe financial distress. It is different from the Vital Access Provider (VAP) program, which is geared more toward helping providers redesign their health care delivery systems in order to assist in financial stability, but there is overlap. Both programs focus on helping the facility to achieve operational financial viability and should not be confused with the Statewide Health Care Facility Transformation Program grants, which are designed to fund capital projects.

In a briefing with provider associations late last week, DOH announced that it had established a formal process for nursing homes to apply for VAPAP and that it is now accepting applications. The Department has developed an updated VAPAP page on its website, which lays out eligibility criteria, timing, required information, and applicant responsibilities. The program allows nursing homes in severe financial distress to apply for financial relief dollars to maintain operations and vital services through March 31, 2023 while they implement longer-term solutions to achieve financial sustainability. The site, available here, contains complete information and links to the application.

Importantly, DOH indicated that homes that have been discussing financial relief with the Department should complete and submit the application by Aug. 1, 2022. Applications will be reviewed on a rolling basis and paid monthly, but DOH has established three application due dates:

Aug. 1, 2022 (which includes homes that have discussed financial relief with DOH)
Nov. 1, 2022
Feb. 1, 2023

To be eligible to apply, a provider must be an Article 28 residential health care facility (RHCF) and:

Have less than 20 days of cash as of Dec. 31, 2021

----- OR -----

Have had a negative operating margin within the last two complete calendar years.

In addition:

County-operated homes or those operated by a public benefit corporation are NOT eligible for VAPAP.
A facility that is currently the subject of known investigation or enforcement action by the Centers for Medicare and Medicaid Services (CMS), the Department of Justice (DOJ), the Department of Health and Human Services Office of Inspector General (HHS-OIG), the Office of the Attorney General, or the Office of the Medicaid Inspector General (OMIG) is NOT eligible.

Members should note that DOH is using this VAPAP application as the entry point to both VAPAP and VAP funding. The available funding may be awarded under the VAPAP (State-only) funding program or, if appropriate, under the VAP funding program, which includes federal financial participation. The initial application regardless of funding source is the same – DOH will inform applicants requesting funding if their request is suitable for VAP funding, in which case the applicant will be requested to submit a VAP mini-application and/or a full VAP application. As a result, even though county-operated facilities are excluded from VAPAP, it seems as though they would complete the application anyway as a screen for VAP funding eligibility. LeadingAge NY is seeking confirmation of the appropriate course of action for public homes.

Homes must submit 2021 annual financials as well as 2022 monthly financial data, and all applications must include the requested strategic initiatives plans and financial projections and key metrics that demonstrate a path to long-term sustainability and improved resident care and satisfaction.

Eligible expenses include costs directly related to the operation of a facility and specifically exclude retirement of long-term debt, consultant fees, and bankruptcy-related costs.

Criteria that DOH will take into account when evaluating applications include:

Quality of care, as reflected in CMS Star Ratings and Nursing Home Quality Incentive pool rankings;
The extent to which the RHCF's application and transformation plan addresses community service needs;
Alternative RHCF capacity, availability of other forms of long term care in the immediate region;
Special services and populations served;
Historical and projected financial sustainability; and
Amount and length of assistance required compared to the number of beds at risk of loss.

In addition, applicants must detail the extent to which the affected community has been engaged and consulted on potential projects of the application, as well as any outreach to stakeholders and health plans.

Please let us know if you have questions or submit them to DOH using the dedicated email, NHVAPAP@health.ny.gov.

LeadingAge NY Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841