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PA Bulletin, Doc. No. 05-1056


Recognition of Allowable Costs Incurred by County Nursing Facilities as Medical Assistance Program Expenditures

[35 Pa.B. 3185]

   This notice announces that the Department of Public Welfare (Department) intends to amend the Commonwealth's Title XIX State Plan provisions to change the method by which costs incurred by county nursing facilities are recognized as Medical Assistance (MA) Program expenditures.

   Currently the Department determines the MA allowable costs and MA payment rates of county nursing facilities in accordance with conditions and limitations specified in 55 Pa. Code Chapter 1187 (relating to nursing facility services) and the Commonwealth's approved State Plan. The Department receives Federal matching funds to cover a portion of the MA payments made to county nursing facilities. If a county nursing facility incurs costs that exceed its MA payments, the ''excess'' costs are not recognized or reimbursed as allowable costs under the Department's current payment methods and standards. As a result, the costs are not MA Program expenditures that qualify for Federal matching funds.

   Effective July 1, 2005, the Department intends to change its payment methods and standards to recognize the ''excess'' costs that are incurred by county nursing facilities to provide nursing facility services to MA eligible residents as MA Program expenditures so long as: (i) the costs would be allowable under Department regulations but for the application of conditions and limitations in the Department's rate-setting methodology; and (ii) the costs are reported and certified by the county nursing facilities in a form and manner specified by the Department.

   If approved, the State Plan Amendment will effectively allow the Department to recognize allowable MA costs incurred by county nursing facilities as MA Program expenditures. This change will enable the Commonwealth to draw down additional Federal matching funds on county costs that are now considered unallowable solely because of the operation of the Department's rate-setting methodology. The State Plan Amendment, however, will not affect the payment rates calculated for and paid to county nursing facilities. If the State Plan Amendment is approved, the Department will continue to make payments to county nursing facilities for services provided on or after July 1, 2005, based upon rates determined in accordance with section 443.1 of the Public Welfare Code (62 P. S. § 443.1) and the Department's case-mix regulations in 55 Pa. Code Chapter 1187. The counties will remain responsible for the allowable costs incurred in excess of those payments. In addition, the county nursing facilities' MA cost reports will continue to be audited.

   This change in the Department's methods and standards is subject to the enactment of amendments to sections 443.1 and 472 of the Public Welfare Code (62 P. S. §§ 443.1 and 472) to authorize the recognition of these additional county nursing facility costs as allowable MA Program expenditures and to fix the Commonwealth's and counties' obligation for these additional costs.

Fiscal Impact

   The amount of county expenditures exceeding the reimbursement limitations of the Department, which are incurred by county nursing facilities to provide nursing facility services to MA eligible residents, is estimated at $25.431 million for Fiscal Year 2005-2006. These expenditures are expected to be matched by $14 million in Federal funds upon approval of the Department's State Plan Amendment.

Public Comment

   Interested persons are invited to submit written comments regarding this notice to Gail Weidman, Chief, Program Analysis and Review Section, Department of Public Welfare, Division of Long-Term Care Client Services, P. O. Box 2675, Harrisburg, PA 17105. Comments received within 30 days will be reviewed and considered for any subsequent revision of the notice.

   Persons with a disability who require an auxiliary aid or service may submit comments using the AT&T Relay Service at (800) 654-5984 (TDD users) or (800) 654-5988 (voice users).


   Fiscal Note:  14-NOT-424. No fiscal impact; (8) recommends adoption. Claiming Federal match on the certified public expenditures for MA eligible costs in public nursing facilities is estimated to result in an annual General Fund savings of $14 million.

[Pa.B. Doc. No. 05-1056. Filed for public inspection May 27, 2005, 9:00 a.m.]

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