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PA Bulletin, Doc. No. 16-337


Payments for Nursing Facility Services Provided by County Nursing Facilities

[46 Pa.B. 1099]
[Saturday, February 27, 2016]

 This notice announces that the Department of Human Services (Department) intends to modify payments to county nursing facilities by increasing Medical Assistance Day One Incentive (MDOI) payments and by eliminating the existing certified public expenditure (CPE) process.


 Beginning with Fiscal Year (FY) 2005-2006 the Department implemented a CPE process for county nursing facilities. If the facility's reported allowable costs exceed its Medical Assistance (MA) payments, the Department claims a Federal match on the excess allowable costs. The Department is proposing to amend the Commonwealth's State Plan to adopt a prospective payment methodology for county nursing facilities that does not rely on CPEs, but continues to ensure that county nursing facilities receive appropriate payments under the MA program.

Proposed Revisions to County Nursing Facility Payments

 Federal regulations specify that Medicaid payments for nursing facility services may not exceed a reasonable estimate of what Medicare would pay for those services. This is known as the Medicare upper payment limit (UPL). Federal regulations require calculation of a separate UPL for three classes of nursing facilities—state owned and operated facilities, non-state government owned and operated facilities and private facilities. The calculated difference between what Medicaid pays and the estimate of what Medicare would pay is called the UPL room.

 In this Commonwealth, county nursing facilities are the only nursing facilities in the non-State government owned and operated nursing facility class. Historically, they have served as critical safety net providers for the MA population in this Commonwealth. When compared to other nursing facilities, county nursing facilities have significantly higher overall MA occupancy rates and MA day-one admission rates, and frequently admit individuals with behavioral or other issues who otherwise experience difficulty gaining access to services.

 The cost of operating a county nursing facility often imposes a significant financial strain on the county's budget. Even with the funding received through the CPE process, Medicaid payments made to county nursing facilities do not always cover the entire cost of operations. This situation has led many county administrators to seek to sell their facilities to eliminate this financial burden. Since 2005, the number of county nursing facilities has steadily decreased from 39 to 23 facilities. Given this trend, the Department is concerned that the continued privatization of county nursing facilities will reduce the number of safety net providers and may jeopardize the ability of MA beneficiaries to access necessary nursing facility services on day one.

 The Department has determined that there is sufficient UPL room in the non-State government owned and operated nursing facility class to allow for additional payments to be made to county nursing facilities. The Department intends to increase the current MDOI payments to county nursing facilities to a level that will bring reimbursement for these services up to the Medicare UPL. In addition to this payment adjustment, the Department intends to eliminate the current CPE process. The combination of these changes will result in additional funding for county nursing facility services thus reducing the counties' incentive to privatize and helping to preserve the safety net for the MA population, while at the same time reducing the burdens and uncertainties associated with the CPE process.

Fiscal Impact

 The increase in estimated aggregate expenditures during FY 2015-2016 is $63.375 million in State funds.

Public Comment

 Interested persons are invited to submit written comments regarding this notice to the Department of Human Services, Office of Long-Term Living, Bureau of Policy and Regulatory Management, Attention: Frank Butcher, P. O. Box 8025, Harrisburg, PA 17105-8025. 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 Pennsylvania AT&T Relay Service at (800) 654-5984 (TDD users) or (800) 654-5988 (voice users).


Fiscal Note: 14-NOT-991. (1) General Fund; (2) Implementing Year 2015-16 is $63,375,000; (3) 1st Succeeding Year 2016-17 through 5th Succeeding Year 2020-21 are $63,375,000; (4) 2014-15 Program—$810,545,000; 2013-14 Program—$820,409,000; 2012-13 Program—$770,903,000; (7) Long-Term Care; (8) recommends adoption. Funds have been included in the budget to cover this increase.

[Pa.B. Doc. No. 16-337. Filed for public inspection February 26, 2016, 9:00 a.m.]

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