Dual pieces of legislation are circulating in New York proposing to block the entry of new for-profit hospices and limit expansion of existing entities in the state. The bills are aimed at addressing rising concerns related to evolving trends in tax status and ownership in the industry.

One bill has passed in the New York State Assembly. The state’s Senate Committee on Health has completed its review of the bill, which is now set for a vote by the full chamber. A companion bill introduced in the Senate is undergoing its third reading.

If enacted, the bills would prohibit the establishment of new for-profit hospices in New York. They also propose to ban existing for-profit hospices from increasing their capacity across the state.

“No hospice shall be approved for establishment, incorporation or construction if it is to be operated on a for-profit basis or by a for-profit entity, in whole or in part,” the bill’s language stated. “No increase in capacity shall be approved for any existing hospice that is operated on a for-profit basis or by a for-profit entity, in whole or in part. This paragraph applies to any approval on or after the date on which it takes effect.”

Similar legislation rolled out roughly two years ago in the state, which was ultimately vetoed by New York Governor Kathy Hochul. However, the current bill may have a better chance of passing, according to Jeanne Chirico, president and CEO if the Hospice and Palliative Care Association of New York State.

“Momentum has grown significantly, driven in part by mounting concerns about the rapid proliferation of for-profit hospices in other states and the implications for care quality and integrity,” Chirico told Hospice News in an email. “Governor Hochul previously vetoed this legislation with a request that the issue be more fully examined within the framework of the New York State Master Plan for Aging. That process, which included broad stakeholder engagement from across the state, ultimately recommended stronger safeguards to complement New York’s Certificate of Need (CON) process.”

The new legislation was in part fueled by rising concerns that proliferation of new for-profits in New York may challenge the state Department of Health’s certificate of need CON process. Nonprofit organizations represent the majority of hospice care providers in New York. The two known for-profit hospices operating in New York have both been under the supervision of the state’s Department of Health, which to date has not found any issues with fraud or quality of care at either company.

Despite growing demand, hospice utilization runs low in the Empire State. Hospice utilization rates reached 26.34% among Medicare decedents in 2022, reported the National Alliance for Care at Home. This fell below the national average of 49.1% that year.

“Data suggest that hospice care is underutilized in New York compared to other states, straining other elements of the health care system,” Hochul previously wrote in the veto.

Scrutiny of for-profit providers extends across the broader health care continuum, as certain types of owners — notably private equity entities — have come under probes from lawmakers. For-profit business and operational infrastructures can differ from nonprofit hospices, which have historically represented much of the providers in the industry.

Researchers have sought to untangle the potential impacts of these industry shifts. For-profit hospices have been associated with higher rates of live discharges, hospitalizations and negative caregiver-reported outcomes, according to a recent study published in the Journal of American Medical Association (JAMA) Network.

Nearly one-third (31.1%) of for-profit hospices scored 3 or more points below the national hospice average of overall performance in a study from Rand Corp. The study gauged the caregiver experiences of for-profit entities as reported in Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey data.