DOH Publishes Proposed Regulation Modifying Executive Compensation Limits
The Department of Health (DOH) published a notice of proposed rulemaking in the Sept. 4, 2019 State Register that implements revisions to the regulations implementing Executive Order #38 (EO #38), issued by Governor Andrew Cuomo in 2012. EO #38 required DOH and other State agencies to promulgate regulations limiting the executive compensation and administrative costs for providers receiving State funds and State-authorized payments while allowing certain waivers from such limitations. EO #38 established restrictive caps on the use of State resources commonly known as the “Hard Cap and Administrative Expense Cap” and the “Soft Cap.”
On Oct. 18, 2018, the New York State Court of Appeals issued an opinion in LeadingAge New York et al v. Shah which upheld the Hard Cap and Administrative Expense Cap while striking down the Soft Cap. While the Hard Cap applies exclusively to the use of State funds and State-authorized payments to pay executive compensation, the Soft Cap prohibited executive compensation in excess of $199,000 from all sources of revenue unless the compensation was within the 75th percentile of comparable providers and had been approved by the provider’s governing board, including at least two independent directors or voting members.
These proposed regulations would align the compliance requirements with the State Court of Appeals decision which invalidated the Soft Cap regulations while continuing DOH’s regulatory authority to administer the remaining applicable provisions of EO #38. The proposed rule is open for public comment through Nov. 4, 2019.
Contact: Dan Heim, email@example.com, 518-867-8866