Alert! Licensing Enforcement

July 24, 2019

We recently received the notice of the anticipated publication of a guidance document concerning the expected measure of financial stability for providers; we plan to poll providers and develop a coordinated response when the public comment opens on August 5th. We have become aware that in at least some circumstances the Office of Licensing is today enforcing their interpretation of the regulation 12VAC35-105-210: “A. The provider shall document financial arrangements or a line of credit that are adequate to ensure maintenance of ongoing operations for at least 90 days on an ongoing basis. The amount needed shall be based on a working budget showing projected revenue and expenses.” Interpretation:  The provider shall have 90 days of operating expenses in cash or a line of credit – without consideration of any expected revenue [emphasis provided by this author]. We will continue to work with Licensing and other DBHDS officials to try to make the interpretation of the regulation reasonable in this era of stagnate rates,  increasing expectations, and significant challenges with MCOs paying claims in a timely manner. While we sympathize with the intent of the regulation and do not condone providers not meeting their payroll or paying their bills, we believe that the Code of Virginia provides options for Licensing to take appropriate action and not set the bar so high that providers will have to forgo wage increases or meeting other needs in order to protect cash balances or maintain a line of credit.