Payment for Nursing Facility Services Provided by Nonpublic and County Nursing Facilities Notice of Change in Methods and Standards of Setting Payment Rates
[39 Pa.B. 4179]
[Saturday, July 18, 2009]
Purpose of Notice
The purpose of this notice is to announce that the Department of Public Welfare (Department) is proposing to adopt regulations and amend the Commonwealth's Title XIX State Plan to change its methods and standards for payment of Medical Assistance (MA) nursing facility services provided by nonpublic and county nursing facilities beginning Fiscal Year 2009-2010.
Act 2008-44 (Act 44) was enacted in Pennsylvania on July 4, 2008. Act 44 amended, among other things, provisions of the Public Welfare Code relating to payment for nursing facility services under the MA Program. To comply with Act 44 the Department is proposing amendments to 55 Pa. Code Chapters 1187 and 1189 (relating to nursing facility services; and county nursing facility services). In addition to the changes directed by Act 44, the Department is proposing to make other revisions to streamline and simplify rate-setting for nonpublic nursing facilities and to eliminate obsolete regulatory provisions.
Act 44 Revisions:
1. Phase-out of County Costs in Nonpublic Nursing Facility Rate Setting--§§ 1187.96, 1187.97 and 1187.98 (relating to price--and rate-setting computations; rates for new nursing facilities with a change of ownership, reorganized nursing facilities, and former prospective payment nursing facilities; and phase-out median determination).
Effective January 1, 1996, the Department began setting payment rates for both county and nonpublic MA nursing facility providers using the case-mix payment methodology in 55 Pa. Code Chapter 1187. Under the case-mix payment methodology, nursing facilities, other than special rehabilitation facilities and hospital-based nursing facilities, are classified into peer groups based upon their size and geographic location. The MA audited allowable costs of the facilities in the peer group are used to establish prices for the net operating components of the facilities' case-mix per diem rates. The prices are used to cap the net operating rates components.
Beginning July 1, 2006, the Department established a new payment methodology for county nursing facility providers, which is based on the counties' certified public expenditures to provide nursing facility services to MA recipients. In establishing this separate payment methodology, the Department recognized that the county nursing facilities' MA audited allowable costs would no longer be included in the rate-setting database used to calculate peer group prices for nonpublic facilities, and that as a result the rates for these facilities could decline. To mitigate any adverse impact of this change on nonpublic nursing facilities, the Department adopted amendments to Chapter 1187 authorizing the continued use of county costs in the rate-setting process for nonpublic nursing facilities for a 2-year period, which ended June 30, 2008.
Act 44 directs the Department to include county costs in calculating rates for nonpublic nursing facilities for an additional rate year, and to propose regulations to phase-out the use of county costs over a 3-year period beginning July 1, 2009, and ending June 30, 2012. To comply with Act 44, the Department is proposing to revise the rate-setting methodology in §§ 1187.96, and 1187.98, and to make a related change to § 1187.97.
The Department is proposing to revise § 1187.96 to specify that it will use phase-out medians, as determined in accordance with § 1187.98 to set prices for the net operating cost centers (resident care, other resident related and administrative) for each peer group that contains a county nursing facility for the 3-year phase out period, rate years 2009-2010, 2010-2011 and 2011-2012.
The Department is proposing to revise § 1187.98 to specify how phase-out medians will be calculated for the 3-year phase-out period. Under the proposed revisions, the Department will continue to include county nursing facilities in determining peer group in accordance with § 1187.94(1) (relating to peer grouping for price setting) for rate years 2009-2010, 2010-2011 and 2011-2012. Once peer groups have been determined, the Department will calculate an interim median by adding each county nursing facility's costs from the three most recent audited cost reports to a noncollapsed peer group based on bed size and Metropolitan Statistical Area (MSA) group. The Department will then calculate the phase-out median as follows:
For rate year 2009-2010, the phase-out median will equal 75% of the interim median plus 25% of the median calculated in accordance with § 1187.96.
For rate year 2010-2011, the phase-out median will equal 50% of the interim median plus 50% of the median calculated in accordance with § 1187.96.
For rate year 2011-2012, the phase-out median will equal 25% of the interim median plus 75% of the median calculated in accordance with § 1187.96.
For rate year 2012-2013 and thereafter, county nursing facility MA allowable costs will not be used in the rate-setting process for nonpublic nursing facilities.
The 3-year phase-out of the use of county nursing facility costs should provide a transition period for nonpublic nursing facilities to adjust their business practices accordingly.
In addition to providing authority for calculation and use of phase-out medians, the Department is proposing to make a related change to § 1187.97 to extend application of this provision, which specifies how payments for county nursing facilities that privatize are calculated, to coincide with the phase-out of the county nursing facility costs in setting nonpublic nursing facility payment rates.
2. Bed Hold Day, Otherwise Referred to as a Hospital Reserved Bed Day--§§ 1187.97, 1187.104 and 1189.103 (relating to limitations on payment for reserved beds).
Currently, the Department pays nonpublic and county nursing facilities a maximum of 15 consecutive reserved bed days per hospitalization to hold a bed for a resident who requires hospitalization. The payment is made at a rate of 1/3 of the nursing facility's per diem rate on file with the Department at the time of the hospitalization, and is paid regardless of the nursing facility's overall total occupancy rate.
Act 44 directs the Department to propose regulations to establish minimum occupancy requirements as a condition for MA nonpublic and county nursing facilities to receive reserved bed day payments for MA residents, and to phase-in the use of these requirements over a period of 2 rate years beginning July 1, 2009, and ending June 30, 2011. To comply with Act 44, the Department is proposing to revise the rate-setting methodology in §§ 1187.97, 1187.104 and 1189.103 as follows:
Beginning July 1, 2009, and ending June 30, 2010, the Department is proposing to amend §§ 1187.104 and 1189.103 to specify that it will only pay a nonpublic or county MA nursing facility for a hospital reserved bed day if the facility's overall total occupancy for the applicable picture date is equal to or greater than 75%. Beginning July 1, 2010, and thereafter, the Department is proposing to pay a facility for a hospital reserved bed day only if the facility's overall total occupancy for the applicable picture date is equal to or greater than 85%. The Department is also proposing to amend §§ 1187.97 and 1189.103 to exempt a new nursing facility from these occupancy requirements until Case-Mix Index Reports for the three picture dates used to calculate overall occupancy are available for the rate quarter.
The intent of these proposed changes is to ensure that MA recipients continue to receive access to medically necessary nursing facility services while encouraging nursing facility efficiency and economy associated with nursing facility occupancy levels.
3. Other revisions:
a. Fixed property component of a nonpublic nursing facility's capital rate--§§ 1187.2, 1187.51, 1187.57, 1187.91, 1187.96 and 1187.112.
Currently under the case-mix payment system, the Department annually computes a facility-specific capital rate for each nursing facility. The nursing facility's capital rate consists of a fixed property component, a movable property component, and a real estate tax component. The fixed property component is based on the fair rental value of the nursing facility's fixed property which is determined by an appraisal completed by an independent appraisal firm under contract with the Department. The nursing facility's fair rental value is adjusted by the appraised depreciated replacement cost of the nursing facility's fixed property to account for the per bed limitation of $26,000 and the bed moratorium provision contained in § 1187.113 (relating to capital component payment limitation). The adjusted amount is then multiplied by the financial yield rate.
For Fiscal Year 2008-2009, only six of the 595 nonpublic nursing facilities participating in the MA program were appraised at a fair rental value under $26,000. Therefore, the Department determined that to continue the use of an appraisal process in the establishing of a nonpublic nursing facility's fixed property component of their capital rate is unnecessarily burdensome and costly. Beginning in Fiscal Year 2009-2010, the Department is proposing to amend §§ 1187.51, 1187.57, 1187.91 and 1187.96 to eliminate references to the use of appraisals in the establishment of the fixed property component of a nonpublic nursing facility's capital rate, and to specify instead that the fixed property component of a nonpublic nursing facility's capital rate will be based on the number of MA allowable beds multiplied by an assigned per bed cost of $26,000. The result of this calculation will then be multiplied by the financial yield rate. The Department will also add a new definition of ''allowable bed'' to § 1187.2 (relating to definitions).
The elimination of the use of appraisals in the establishment of the fixed property component of a nonpublic nursing facility's capital rate will make certain terms and other provisions of Chapter 1187 obsolete. Specifically, the terms, ''appraisal,'' ''bed cost limitation,'' ''FRV-fair rental value,'' ''initial appraisal,'' ''limited appraisal,'' ''movable property appraisal,'' ''reappraisal'' and ''updated appraisal'' will no longer be used in the payment methodology. In addition, because all allowable beds will be assigned a fixed value of $26,000, the cost per bed maximum limitation in § 1187.112 (relating to cost per bed limitation adjustment) will be obsolete. Therefore, the Department is proposing to remove these definitions from § 1187.2, and delete § 1187.112 in its entirety.
b. Obsolete moveable property provisions--§§ 1187.57, 1187.91, 1187.96 and 1187.97.
The Department is also proposing to delete the major movable property provisions that relate to cost report periods prior to January 1, 2001, contained in §§ 1187.57, 1187.91, 1187.96 and 1187.97. All nursing facility cost reports contained in the database used for rate setting are for a period beginning after January 1, 2001; therefore, the provisions related to the cost report periods prior to January 1, 2001, are obsolete. This deletion does not change the method used by the Department to determine a nonpublic nursing facility's major movable component of their capital rate. In accordance with current regulation a nonpublic nursing facility's major movable property component will be based on the nursing facility's audited cost of major movable property. Each nursing facility shall report the acquisition cost of all major movable property on the major movable property line of its MA-11, Financial and Statistical Report Schedules (uniform nursing facility cost report), and shall report the cost of minor movable property and the cost of supplies as net operating costs in accordance with § 1187.51 (relating to scope) and instructions for the MA-11.
As a result of these changes, no fiscal impact is anticipated.
Interested persons are invited to submit written comments regarding the BAF formulas to the: Department of Public Welfare, Office of Long-Term Living, Attention: Tom Jayson, 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 Services at (800) 654-5984 (TDD users) or (800) 654-5988 (voice users).
ESTELLE B. RICHMAN,
Fiscal Note: 14-NOT-613 No fiscal impact; (8) recommends adoption.
[Pa.B. Doc. No. 09-1295. Filed for public inspection July 17, 2009, 9:00 a.m.]
No part of the information on this site may be reproduced for profit or sold for profit.
This material has been drawn directly from the official Pennsylvania Bulletin full text database. Due to the limitations of HTML or differences in display capabilities of different browsers, this version may differ slightly from the official printed version.