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PA Bulletin, Doc. No. 09-1166


Prospective Payment System for the Consolidated and Person/Family Directed Support Waivers and Targeted Services Management for Persons with Mental Retardation

[39 Pa.B. 3243]
[Saturday, June 27, 2009]


   This notice is to announce that the Department of Public Welfare (Department) intends to implement a Statewide Prospective Payment System (PPS), effective July 1, 2009, for community-based services, including Supports Coordination, provided under the Consolidated and Person/Family Directed Support (P/FDS) waivers (waivers) and for Targeted Service Management (TSM) provided to persons with mental retardation who are eligible for Medical Assistance (MA) but not eligible to participate in the waivers. This notice also describes the rate-setting methodology used to develop payment rates in the PPS, excluding payment rates for the select waiver services added to the MA Program Fee Schedule.

Rate-Setting Methodology

   As a condition of approving renewal of the waivers, the Centers for Medicare and Medicaid Services directed the Department to develop a Statewide rate-setting methodology for both waivers. After seeking input from consumer, provider and county stakeholders, the Department determined to use a PPS, a payment methodology in which provider rates are established on a prospective basis for a specified period and are not cost settled at the end of the specified period. Based on input from its stakeholders, the Department is including two payment approaches in the PPS: a fee schedule approach and a cost-based approach. Payment rates for select services would be placed on the fee schedule. Payment rates for the remaining services, specific to each provider and procedure code, would be developed using a cost-based approach based on allowable historical cost data submitted by providers in cost reports developed by the Department. The historical cost data would be trended forward to a prospective period.

   Specifically, the Department developed the proposed payment rates for State Fiscal Year (SFY) 2009-2010 using SFY 2007-2008 cost data submitted by providers, adjusted to account for anticipated changes in provider responsibilities from SFY 2007-2008 to SFY 2009-2010. Cost data for Supports Coordination were also adjusted against productivity parameters calculated from the average productivity in approved cost reports submitted by providers and through rate modeling.

   The Department analyzed the resulting adjusted unit costs to calculate the average unit cost and standard deviation for each procedure code, using standard statistical formulas. Unit cost outliers for each procedure code (defined as unit costs that deviated from the average unit cost for the procedure code by more than one standard deviation) were then adjusted to reduce but not eliminate the differences from average unit cost. After each provider's unit cost for each procedure code was so adjusted, a total cost of living increase of 1% (1% for SFY 2008-2009 and 0% for SFY 2009-2010) was applied to each provider's SFY 2007-2008 unit cost for each procedure code to establish the provider's proposed payment rates for SFY 2009-2010.

   Finally, total SFY 2009-2010 waiver expenditures were projected using the proposed payment rates and projected utilization, and those expenditures were compared to the total estimated waiver appropriation. A rate adjustment factor of -3.17% was applied to the unit costs for all cost-based services except outcome-based, vendor, and Supports Coordination services, so that the estimated waiver expenditures would not exceed the SFY 2009-2010 waiver appropriation.

   Payment rates for TSM for providers that also deliver Supports Coordination were established by assigning the same rates for TSM as were developed for Supports Coordination. Review of the cost data showed that unit costs for both types of service were similar. Payment rates for TSM for providers that do not deliver Supports Coordination were developed in accordance with the methodology described in this notice, without comparison to Supports Coordination costs.

   For cases in which approved cost report data were not available for a procedure code at a specific service location, the Department assigned a payment rate based on guidelines established for that purpose.

   A more detailed description of the methodology used to develop the payment rates in the PPS is available on the Department's web site at Copies may also be obtained at your local Mental Health/Mental Retardation (MH/MR) County Program/Administrative Entity (AE) or regional Office of Developmental Programs in the corresponding regions:

   Western Region: Room 302, Pittsburgh State Office Building, 300 Liberty Avenue, Pittsburgh, PA 15222, (412) 880-0535

   Northeast Region: Room 315, Scranton State Office Building, 100 Lackawanna Avenue, Scranton, PA 18503, (570) 963-3166

   Southeast Region: Room 306, Philadelphia State Office Building, 1400 Spring Garden Street, Philadelphia, PA 19130, (215) 560-2245

   Central Region: Room 430, Willow Oak Building, P. O. Box 2675, Harrisburg, PA 17105, (717) 772-6507

   Individuals who need contact information for the local MH/MR County Program/AE, contact the appropriate regional office listed previously.

Fiscal Impact

   There is no anticipated fiscal impact.

Public Comment

   Interested persons are invited to submit written comments regarding the rate-setting methodology described in this notice to the Department at the following addresses:

By E-mail:

   Use subject header ''PN PPS'' to the Office of Developmental Programs rate-setting mailbox at ra-ratesetting

By postal mail:

Department of Public Welfare
Office of Developmental Programs
Division of Provider Assistance and Rate Setting
4th Floor, Health and Welfare Building
Harrisburg, PA 17120

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


   Fiscal Note: 14-NOT-608. No fiscal impact; (8) recommends adoption.

[Pa.B. Doc. No. 09-1166. Filed for public inspection June 26, 2009, 9:00 a.m.]

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