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PA Bulletin, Doc. No. 07-325



Nursing Facility Assessment Program for Fiscal Year 2006-2007

[37 Pa.B. 1000]
[Saturday, February 24, 2007]

   This notice announces the amount of the assessment that the Department of Public Welfare (Department) is implementing for Fiscal Year (FY) 2006-2007, provides an explanation of the assessment methodology that the Department is using in FY 2006-2007, and identifies the estimated aggregate impact on nursing facilities which will be subject to the assessment.


   The act of September 30, 2003 (P. L. 169, No. 25) (Act 25)1 , known as the Nursing Facility Assessment Law, directs the Department to ''implement a monetary assessment'' on nonpublic licensed nursing facilities beginning July 1, 2003, and ending June 30, 2007 (Assessment Program). See sections 802-A and 815-A of Act 25 (62 P. S. §§ 802-A and 815-A). Act 25 further specifies that the Department may implement an Assessment Program ''only to the extent that the revenues generated therefrom will qualify as the State share of Medical Assistance (MA) program expenditures eligible for Federal financial participation.'' See section 803-A of Act 25 (62 P. S. § 803-A). To guarantee that the assessment amounts qualify for matching Federal funds, Act 25 directs the Department to seek such waivers from the Federal Centers for Medicare and Medicaid Services (CMS) as may be necessary to implement the Assessment Program in conformity with Federal law. See section 812-A of Act 25 (62 P. S. § 812-A). The Department submitted a waiver request to the CMS and the CMS subsequently granted the waiver and approved implementation of the Assessment Program.

   For each fiscal year that the Assessment Program is implemented, the Secretary of the Department (Secretary), in consultation with the Secretary of the Budget, must determine the aggregate amount of the assessment and the annual assessment rate. See section 804-A of Act 25 (62 P. S. § 804-A). The aggregate amount and rate of assessment must be approved by the Governor's Office. The annual assessment rates must be sufficient to generate at least $50 million in additional revenue, subject to the maximum aggregate assessment amount that qualifies for Federal matching funds. See section 804-A of Act 25.

   Before implementing the Assessment Program in a fiscal year, the Secretary must publish a notice in the Pennsylvania Bulletin that specifies the amount of the assessment being proposed, provides an explanation of the assessment methodology and assessment amount and identifies the aggregate impact on nursing facilities subject to the assessment. See section 805-A of Act 25 (62 P. S. § 805-A). After consideration of any comments received during the 30-day comment period, the Secretary must publish a second notice announcing the rate of assessment for the fiscal year. Id.

   On August 19, 2006, the Secretary published a notice at 36 Pa.B. 4673 (August 19, 2006) announcing the proposed assessment rates, the aggregate amount and the impact for FY 2006-2007. The following is a summary of the comments that the Department received in response to the notice and the Department's responses to those comments.

Public Comment on the Proposed Assessment Program

   Only one commentator, which is a major nursing facility trade association, submitted comments in response to the Department's notice published at 36 Pa.B. 4673.

   Comment. The commentator stated that, although the Department informally provided association representatives with an estimate of the FY 2006-2007 supplemental per diem rate, the Department did not include the supplemental per diem rate as part of the published public notice so that providers would have an opportunity to assess the impact on their individual facilities.

   Response. Act 25 does not require publication of the supplemental pier diem rates with notice of the assessment rates. However, as in past years, once the supplemental per diem rates are finalized, the Department will post the rates on the Office of Medical Assistance Programs website at:

   Comment. The commentator asserted that although the number of facilities losing money under the Assessment Program will decrease from previous years, ''providers continue to lose ground in the capped rate environment for Medicaid nursing facility reimbursement under which they operate.''

   Response. Federal law requires that the State assure that payments made under its MA Program are ''consistent with efficiency, economy and quality of care.'' 42 U.S.C.A. § 1396a(a)(30)(A) (relating to state plans for medical assistance). Consistent with Federal law, the Department has moderated the rate of increase in nursing facility payment rates while taking into consideration both the projected need for nursing facility services and the fiscal resources of this Commonwealth. To the extent that the commentator is suggesting that the Assessment Program may result in the closure of nursing facilities, and therefore, create an access problem for MA recipients in need of nursing facilities services, the Department disagrees with such a suggestion. The MA Program possesses substantial unused capacity, and the withdrawal of any particular nursing facility from the program would not present an access problem. Individual nursing facilities occasionally terminate their participation in the MA Program. In the past, such terminations have not served to create an access problem, even in areas of this Commonwealth where there is a perceived shortage of nursing facility beds.

   Comment. The commentator asserts that the Assessment Program is flawed public policy and its continued existence may actually harm Pennsylvania's nursing facility residents by postponing the inevitable discussion concerning the development of a sustainable funding source for the delivery of nursing facility services.

   Response. Without the additional revenue from the assessment, which is in excess of $300 million per year, the MA program would not have the funding to maintain existing MA nursing facility rates. To offset the lost revenue, the Department would be required to decrease payments by approximately $500,000 for each of the facilities. A dramatic payment decrease would have significant impact to Pennsylvania's aged and disabled individuals who receive care funded by the MA program.

   The Department disagrees with the commentator's assertion that it has postponed any discussion concerning the development of a sustainable funding source for the delivery of nursing facility services. The Department is seeking other solutions to the MA funding crisis. In the FY 2006-2007 budget there is $414.8 million for home and community based services. This funding will allow the Department to provide consumers greater choice in where they receive long-term care. More consumers want to remain in their homes and the Department is continuing to expand its home and community based services, which provide a cost effective alternative to nursing facility care. In addition, the Department is in the process of developing program initiatives that will encourage nursing facilities to review their current delivery of long-term care services and adjust their delivery system to better meet the long-term care service needs of MA consumers.

Assessment Methodology and Rates for FY 2006-2007

   The Secretary published a notice at 36 Pa.B. 4673 (August 19, 2006) announcing the proposed nursing facility assessment methodology and rates for FY 2006-2007.

   The following nursing facilities will be exempt from the Assessment Program in FY 2006-2007:

   1.  Government owned and operated nursing facilities.

   2.  Veterans Administration nursing facilities.

   3.  Nursing facilities that have not been licensed and operated by the current or previous owner for the full calendar quarter prior to the calendar quarter for which an assessment is collected.

   4.  Nursing facilities that provide nursing facility services free of charge to all residents.

   As in the first 3 years of the Assessment Program, nonexempt nursing facilities will continue to be assessed on a quarterly basis during FY 2006-2007 based on the number of licensed beds in the facility, the nursing facility's Continuing Care Retirement Community (CCRC) status and the number of non-Medicare resident days during each calendar quarter immediately preceding the assessment quarter. During FY 2006-2007 the assessment rates for nonexempt facilities will be as follows:

   1.  The assessment rate for nonexempt nursing facilities that participate within a licensed CCRC or that have 50 licensed beds or less will be increased by $.43 to $1.97 per non-Medicare resident day.

   2.  The assessment rate for all other nonexempt nursing facilities will be increased by $4.40 to $20.35 per non-Medicare resident day.

   For FY 2006-2007, the Department will consider a nursing facility to qualify for the CCRC assessment rate if the nursing facility satisfies the following criteria:

   1.  The nursing facility is owned or controlled by an entity that is certified as a CCRC by the Insurance Department (for purposes of this guideline, ''control'' means the power to direct or cause to direct the management and policies of the nursing facility, whether through equitable ownership of voting securities or otherwise).

   2.  The CCRC provides a continuum of care during the assessment period that includes residential living units that are either occupied or available for immediate occupancy.

   3.  The nursing facility is: (a) located on the same campus as the CCRC's residential living units; or (b) identified in the CCRC's Disclosure Statement and Resident Agreement under the Continuing-Care Provider Registration and Disclosure Act (40 P. S. §§ 3201--3225) and located no more than 30 miles from the campus on which the CCRC's residential living units are located.

   Under these criteria, a nursing facility that is owned or controlled by a CCRC which is planning to construct residential living units in the future, or is constructing residential units, but which has no residential units occupied or available for immediate occupancy, would not qualify for the CCRC assessment rate. Additionally, the residential living units must be occupied or available for immediate occupancy for the entire assessment period for the nursing facility to qualify for the CCRC rate for that assessment period.

   If a nonexempt nursing facility either satisfies the previously listed criteria after the commencement of the Assessment Program or does not satisfy the criteria but believes that it otherwise qualifies for the CCRC rate, then the nursing facility may submit a written request to the Department that it be assessed at the CCRC rate. The written request should include supporting documentation demonstrating that the nursing facility participates within a licensed CCRC. The Department will not unilaterally classify nursing facilities for the CCRC rate without a written request.

   All requests relating to CCRC designation should be submitted to the Department of Public Welfare, Office of Long-Term Living, P. O. Box 2675, Harrisburg, PA 17105, Attention: NH Assessment Unit.

   Assessment payments are due the last day of the Assessment quarter or the 30th day from the date of publication of this final notice, whichever is later.

   The Assessment Program due dates, along with supplemental payment dates, will be available on the Department's website at:

Aggregate Assessment Amount and Fiscal Impact

   As a result of the implementation of the Assessment Program, the Department estimates that the annual aggregate assessment fees for nonexempt nursing facilities will total $339,839,170 for FY 2006-2007. All of the revenue derived from the assessment fees and associated Federal matching funds will be used to make payments to qualified MA nursing facility providers in accordance with applicable law and regulations.

Public Comment

   Interested persons are invited to submit written comments regarding this notice to the Department at the following address: 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-500. No fiscal impact; (8) recommends adoption. Implementation of this notice is expected to generate $339,839,170 in revenue for Fiscal Year 2006-2007.

[Pa.B. Doc. No. 07-325. Filed for public inspection February 23, 2007, 9:00 a.m.]


1  Act 25 is codified in Article VIII-A of the Public Welfare Code (62 P. S. §§ 801-A--815-A).

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