Changes to Prior Approval Review (PAR) Process: 60 day comment period

April 10, 2024

From Today’s New York State Register
LAW-12-23-00012-P March 22, 2023 March 21, 2024 

Office of Mental Health 
PROPOSED RULE MAKING NO HEARING(S) SCHEDULED 
Topic: Prior Approval Review Process I.D. No. OMH-15-24-00002-P PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, 
NOTICE is hereby given of the following proposed rule: Proposed Action: Repeal of Part 551; addition of new Part 551 to Title 14 NYCRR. Statutory authority: Mental Hygiene Law, sections 7.07, 7.09 and 31.04 Subject: Prior Approval Review Process. Purpose: To update the Prior Approval Review Process. 

Substance of proposed rule (Full text is posted at the following State website: https://omh.ny.gov/omhweb/policy_and_regulations/): 
In addition to technical updates and eliminating outdated terminology by repealing and replacing Part 551, the Proposed Rule provides as follows: 551.1 Background and intent. Updates language from the repealed Part 551 to establish minimum standards for seeking an operating certificate from the Office of Mental Health (office) which will meet appropriate criteria for quality, safety and fiscal viability and to support the efforts of local governmental units in the process of planning and funding local systems of mental health service. The language expedites the review of projects that are in conformance with the Statewide Plan and establishes an efficient and timely process for the initial licensure of a program. 

551.2 Legal base. No substantive changes from the repealed Part 551. 551.3 
Applicability.  Updates language from the repealed Part 551 to clarify applicability to any existing or proposed limited liability company, corporation or public or private agency proposing a project and that such does not apply to family care home providers or programs not required to obtain an operating certificate. 

551.4  Definitions. Removes outdated language and updates definitions from the repealed Part 551 for Capacity and Alteration to a capital project. Updates the definition of caseload to census. Removes an outdated definition for governing authority, and clarifies the definition of inpatient program, licensed housing and outpatient program. 

551.5  Project planning and consultation. Clarifies that the applicant may be required to obtain a Memorandum of Understanding (MOU) whenever a project is physically hosted by another service provider in the same building. Clarifies that EZ-PAR applicants will be required to obtain a letter of support from the local governmental unit of the county where the program is to be established or located and that the applicant will consult with designated staff of the office prior to the submission of an E-Z PAR or Comprehensive PAR application. 

551.6  Project subject to prior approval review. Clarifies that all projects subject to prior approval review will be classified as a comprehensive, E-Z PAR, or administrative action project and where a project consists of two or more components that fall within separate classifications, the entire project will be reviewed under the classification that is determined to be most appropriate by the office.

Clarifies the commissioner’s authority to charge a review fee to applicants for projects in accordance with a published fee schedule. 

Provides that a change of sponsor of a program licensed by the office, to a sponsor that does not currently operate a program licensed by the office or has been licensed for less than twelve months will be a comprehensive review project and where the agency ceasing operation of the program is separate from the agency that is assuming operation, an E-Z PAR to close is required of the agency ceasing operation.

Projects classified as E-Z PAR review projects are clarified to include outpatient program projects submitted by an applicant who currently operates one or more programs that are currently licensed by the office, including the expansion or reduction of a Mental Health Outpatient Treatment and Rehabilitative Services (MHOTRS) program that results in a staffing change greater than 5.5 full-time equivalent staff; licensed housing projects submitted by an applicant who currently operates a program which has been licensed by the office, including the relocation of licensed housing, excluding licensed apartment treatment units; all capital projects unless otherwise determined by the office and will require a site visit at the completion of the project; a project proposing either a change in ownership of the stock of a business corporation or membership certificates of a limited liability company, in any amount, that changes the controlling interest or a change in ownership of the stock of a business corporation or membership certificates of a limited liability company, in any amount, to a new stockholder, member or partner; and a project otherwise eligible for an administrative action or comprehensive PAR that is reclassified as an E-Z PAR review project pursuant to section 551.9(c) of this Part. 

Projects classified as administrative action review projects are clarified to include changes in the operation of a licensed program including but not limited to: expansion or reduction of a MHOTRS program that results in a staffing change less than 5.5 full-time equivalent staff and/or a change in physical space; a project proposing a change in ownership of the stock of a business corporation, in any amount, if that transfer is to an existing stockholder, member or partner and does not result in a change to the controlling interest of the corporation; approval of a certificate of incorporation, articles of organization, bylaws or any amendments; and actions pertaining to licensed programs or proposed programs in response to unplanned or emergency situations. 

Adds articles of organization into approval documents and provides that a business corporation, not-for-profit corporation or limited liability company which has been issued an operating certificate from the office, will submit a request to approve changes to its bylaws when such changes relate to any transfer, assignment or other disposition of 10 percent or more of the stock, membership interest, or voting rights. Additionally, any transfer, assignment, or other disposition of the stock or voting rights which results in the ownership or control of more than 10 percent of the stock, ownership, or voting rights of such entity, must also be approved by the office. 

551.7 Standards for approval of projects. No substantive changes from the repealed Part 551. 

551.8 Application for prior approval review – project scope. Clarifies that an applicant, currently licensed by the office, will be in good standing with the office and must demonstrate the ability to comply with regulatory requirements in currently licensed programs prior to the office approving such application. 

551.9  Review of application for prior approval. Clarifies that the office will review the application for completeness of information. For E-Z PAR applications, a completeness review will be made within three business days and the applicant will be notified of any lack of information within five business days of receipt of the application. The applicant has 10 business days to provide the additional information and failure to provide such information within 10 business days, without an approved extension, will constitute withdrawal of the application. Clarifies that upon the receipt of a complete application, the office will notify the applicant that review has begun. For projects undergoing comprehensive PAR or E-Z PAR review, the office will notify all reviewers the application is ready for review and where a review is not able to be conducted within the timeframes outlined above, the office may provide a written acknowledgment of the receipt of the application and provide a statement of the approximate date when the application will be reviewed. Provides that prior to issuing a decision, the office may reclassify a project for review. Unless otherwise specified, project approvals will be time limited to six months. Prior to the end of six months, an applicant may request in writing an extension of the approval. An applicant who asks for an extension of the six-month period must demonstrate to the commissioner’s satisfaction that the project under which the conditional approval was granted have not substantially changed and that the project is moving, or will move, forward toward implementation within one year from the requested extension. Clarifies that failure to respond on a timely basis to conditions of approval as required by this Part will result in the application being withdrawn. 

551.10 Review of physical facility. Provides where there is no substantial progress toward completion within six months from when conditional approval was issued or if a project falls six months behind the approved development schedule, conditional approval of a capital project may be rescinded or the application may be withdrawn at the discretion of the office unless an extension of the approval is requested in writing and granted. 

551.11 Licensed Housing. Removes the requirement of the establishment of licensed housing developed through the Office of Mental Health’s request for proposal (RFP) process by entities currently operating licensed housing will not require submission of a PAR application. 

551.12 Additional criteria for inpatient programs. Clarifies that no application for the issuance of an operating certificate of a psychiatric inpatient unit which is operated as part of a hospital as defined in article 28 of the Public Health Law, will be effective until such hospital is granted approval to admit patients in emergencies for immediate observation, care and treatment pursuant to Part 580. 

Text of proposed rule and any required statements and analyses may be obtained from: Sara Paupini, Office of Mental Health, 44 Holland Ave., Albany, NY 12229, (518) 474-1331, email: regs@omh.ny.gov Data, views or arguments may be submitted to: Same as above. Public comment will be received until: 60 days after publication of this notice.