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Title: Section 1001.16 - Contracts

Effective Date

03/26/2008

1001.16 Contracts.

(a) In the event that an operator contracts with a separate entity to perform any aspect of the residence's operation or management, the provisions of section 485.10 of Title 18 of the NYCRR will apply. In addition, the operator must comply with the provisions of this section.

(b) Management contracts.

(1) For purposes of this Part, a management contract is an agreement between the operator and a management entity for the purpose of managing the day-to-day operations of a residence or any part thereof, subject to the direction and supervision of the operator. The following shall not be considered management contracts:

(i) a contract solely for the provision of professional or other services;

(ii) an employment contract; or

(iii) a contract for the provision of administrative, consulting or support services if all of the following factors are present:

(a)the residence’s operator retains responsibility for the day-to-day operations of the residence;

(b)the contracting entity has no authority to hire or fire any personnel working in the residence;

(c)the contracting entity does not exercise control of the books and records of the residence;

(d)the contracting entity has no authority to dispose of assets or to incur any liability on behalf of the residence; and

(e)the contracting entity has no authority to adopt or enforce policies regarding the operation of the residence.

(2) An operator may enter into a management contract if the requirements of this section are met. A management contract shall be effective only with the prior written consent of the Department. Management contracts shall include the following:

(i) a description of the proposed roles of the operator and managing entity during the period of the proposed management contract. The description shall clearly reflect retention by the operator of ongoing responsibility for compliance with all statutory and regulation requirements;

(ii) the method and amount of payment, expressed as a flat fee or, notwithstanding §1001.4(q)(4) of this Part, a percentage, for management services provided to the assisted living residence;

(iii) a provision which recognizes clearly that the responsibilities of the operator are in no way lessened by entering into the management contract, that the operator retains full legal authority over the operation of the residence, and that any powers not delegated specifically to the managing entity through the provisions of the contract remain with the operator.

(iv) provisions stating that, notwithstanding any other provision of the contract, the operator retains:

(a)direct, independent authority to hire or discharge any person working in the residence;

(b)independent control of the residence’s books and records;

(c)independent authority over the disposition of assets and the independent authority to incur liability on behalf of the residence;

(d)independent authority for the adoption and enforcement of policies affecting the delivery of services;

(e)independent approval of residence operating and capital budgets;

(f)independent approval of certificate of need applications filed by or on behalf of the residence;

(g)independent approval of residence contracts for home care or clinical services;

(h)independent approval of settlements of administrative proceedings or litigation to which the residence is party;

(i)its name on all residency agreements and disclosures entered into pursuant to this Part; and

(j)beneficial and legal control of any accounts relating to the operation of the residence.

(v) an express representation that any management contract approved by the Department is the sole agreement between the operator and the managing entity for the purpose of managing the day-to-day activities of the residence and that any amendments or revisions to the management contract which increase the amount or extent of authority delegated to the managing entity shall be effective only with the prior written consent of the Department.

(3) The operator shall retain sufficient authority and control to discharge its responsibilities under this Part. The following elements of control shall not be delegated to a managing entity:

(i) direct independent authority to hire and discharge any person working in the residence;

(ii) independent control of the residence’s books and records;

(iii) independent authority over the disposition of assets and the independent authority to incur liability on behalf of the residence;

(iv) independent authority for the adoption and enforcement of policies affecting the delivery of services;

(v) independent approval of residence operating and capital budgets;

(vii) independent approval of resident contracts for home care or clinical services;

(viii) independent approval of settlements of administrative proceedings or litigation to which the residence is party;

(ix) the right to have other than the operator’s name on residency agreements or disclosures as the licensed operator of the residence; and

beneficial and legal control of any accounts relating to the operation of the residence.

(4) The operator may use the Model Management Contract developed by the Department in consultation with appropriate stakeholders; provided, however, that the development of such model agreement shall not be a prerequisite for the implementation of the provisions of this section.

(5) An operator wishing to enter into a management contract shall submit a proposed written contract to the Department, at least 60 days prior to the intended effective date, unless a shorter period is approved in writing by the Department, due to extraordinary circumstances. In addition, the operator shall also submit, within the same timeframe, the following:

(i) documentation demonstrating that the proposed managing entity holds all necessary approvals to do business in New York State;

(ii) evidence of the managing entity’s financial stability; and

(iii) information necessary to determine that the character and competence of the proposed managing authority, and its principals, members, officers and directors, is satisfactory, including evidence that all facilities it has managed in any jurisdiction have provided a substantially consistent high level of care in accordance with section 485.6 of Title 18 of NYCRR, during the term of their management contract or operating certificate.

(6) During the period between an operator’s submission of a request for initial approval of a management contract and disposition of that request, an operator may not enter into any arrangement for management contract services other than a written interim consultative agreement with the proposed managing entity. Any interim agreement shall be consistent with the provisions of this section and shall be submitted to the Department no later than five days after its effective date.

(7) The term of a management contract shall be limited to five years and may be renewed for additional periods not to exceed five years only when authorized by the Department. The Department may approve a request for renewal provided that compliance with this section is demonstrated and that the quality of care provided by the facility during the term of the contract has been maintained or has improved.

(8) The Department shall provide a written response to a submitted proposed management agreement within 90 days of such submission, provided the Department has received all information necessary for its review of such proposed agreement.

(9) A contract for which the request for renewal has been submitted to the Department at least 60 days prior to its expiration may be extended on an interim basis until the Department approves or disapproves the request for renewal.

(10) Once a management contract has been approved by the Department, any subsequent proposed substantive change to such agreement relative to powers delegated, management fees, the term of the agreement, and any change in the management entity or its principals must receive the prior written approval of the Department.

(c) The Department may direct an assisted living residence operator to terminate a management agreement should the residence provide a severe and persistent substandard level of care as demonstrated by non-compliance with the provisions of this Part.

Volume

VOLUME E (Title 10)

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