Nursing Home Reimbursement Update
During a meeting with LeadingAge NY and other associations, Department of Health (DOH) staff reported that the Centers for Medicare and Medicaid Services (CMS) has approved the State Plan Amendment (SPA) to supplement nursing home rates by $140 million in this state fiscal year. This and other issues discussed at the meeting are outlined below.
Rate Supplement. Federal approval has paved the way for DOH to make a reinvestment into nursing home Medicaid rates using funds that the State collects through a 0.8 percent non-reimbursable assessment. Since 2011, nursing homes have been paying the 0.8 percent assessment, which was enacted in lieu of a 2 percent across-the-board cut imposed on most other Medicaid providers. While the across-the-board cut was eliminated in April 2014, nursing homes have continued to pay the assessment, which totals approximately $70 million annually. A portion of the assessment is used to help fund the Universal Settlement, with the State committing several years ago to reinvest the rest of the 0.8 percent assessment collected since 2014 into nursing homes rates. A provision was included in the most recent state spending plan to make two years worth of supplemental payments during each of the next four state fiscal years (i.e., $140 million annually).
The supplemental payments will be distributed proportionately to all homes, including specialty units, based on Medicaid revenue. While the exact amount is difficult to calculate, the supplement each provider will receive in each of the next four fiscal years will be approximately 2 percent of annual Medicaid revenue. For this purpose, DOH intends to calculate Medicaid revenue by multiplying a provider’s Medicaid rate by their number of Medicaid fee-for-service and Medicaid managed care days. The $140 million payment that will be made in the 2018-19 fiscal year will be based on a combination of Medicaid revenue from 2015 (37.5 percent), 2016 (50 percent), and 2017 (12.5 percent).
DOH will make the payment as a lump sum and intends to pay it in the same Medicaid payment cycle as the Nursing Home Quality Initiative (NHQI) adjustment.
NHQI Payment Adjustment. With the resolution of the legal challenge to the NHQI, DOH is poised to make quality pool payment adjustments attributable to calendar years 2013 through 2017. Because the NHQI is a $50 million per year, self-funded pool, these adjustments will redistribute $250 million in Medicaid payments. Members will recall that NHQI payment adjustments vary by quintile, with each home assigned to a quintile based on their total NHQI score. Homes that place in the top three quintiles receive a net positive adjustment, while those in the bottom two quintiles face a negative adjustment.
DOH has calculated facility-specific amounts for each of the five NHQI years and intends to make the payment adjustment in one lump sum. To help mitigate the impact on homes facing a large negative adjustment, DOH intends to make the NHQI adjustment in the same Medicaid rate cycle as the rate supplement payments discussed above. DOH expects this to occur in September after federal approval of the 2017 NHQI is received and the Division of the Budget (DOB) greenlights the payments.
We are pleased that both the supplemental payments and the NHQI adjustments are being made through fee-for-service Medicaid. This includes reconciliation of NHQI adjustments that had been included in 2015 through 2017 managed care benchmark rates.
July 2018 Rate. DOH has updated the nursing home Medicaid rates effective July 1st and has posted new rate sheets and the associated Dear Administrator Letter (DAL) on the Health Commerce System (HCS). This marks the first time in many years that DOH has begun paying the rate on its effective date. The update incorporates the January 2018 picture date-based Case Mix Index (CMI) into the rates. DOH expects to post the July 2018 benchmark rate list to the Medicaid Reimbursement web page soon. Because specialty rates are not subject to case mix adjustments, no updated rate sheets are posted for specialty units.
Although not mentioned in the DAL, DOH has updated the assessment reimbursement per-diem amount that is paid through fee-for-service Medicaid from the 2014 reconciled amount to the 2016 reconciled amount. This adjustment retroactive to Jan. 1, 2018 (positive for some, negative for others) should have been reflected in payment cycle 2131, which was released on July 11th. Members should keep in mind that this is just an update to the “placeholder” assessment reimbursement and that the 2018 assessment reimbursement and payment will eventually be reconciled. The next assessment reconciliation will be for 2017 and is likely to occur in December.
Case Mix. DOH is working with the State’s actuary, Deloitte, to develop an alternative to the predictable “picture date” methodology for case mix adjustment. Members will recall that the state budget requires DOH to achieve $15 million in case mix-related Medicaid savings. The Department will convene a workgroup to review the actuary’s recommendations. While it is unclear what changes Deloitte will recommend, it is unlikely that the State will return to predictable case mix picture dates.
Managed Long Term Care (MLTC) Nursing Home Benefit Time Limit. There are no new developments regarding the shift from MLTC to fee-for-service Medicaid for permanent nursing home residents after three months of MLTC enrollment. DOH has held two stakeholder workgroup meetings and is making changes to key Medicaid forms while awaiting CMS approval.
Advanced Training Initiative (ATI). ATI funding is being passed through to eligible nursing homes by managed care plans (primarily MLTC plans) this year. After a DOH-imposed delay, MLTC plans have been advised by DOH to distribute the funding by Aug. 11th. Each ATI recipient has been paired with a single managed care organization that will pass through the entire funding amount to them.
Universal Settlement. The State is preparing the fourth installment of the Universal Settlement with the expectation that the funds will be transferred to Trustees for distribution by early fall.
Intergovernmental Transfer (IGT). DOH filed the required Medicaid SPA on June 22, 2018 and is currently working with CMS to finalize the Medicare Upper Payment Limit (UPL) calculation for 2018. The State anticipates making IGT payments to public homes for the 2018-19 fiscal year in two installments, with the first planned for September 2018 and the second for March 2019. DOH indicated that the amounts should generally be slightly higher than they were last year.
We will keep you posted on additional developments. The LeadingAge NY Financial Professionals Conference will provide a well-timed opportunity to learn more about these and the many other reimbursement and funding issues of concern to long term care organizations. The conference will be held in Albany from Aug. 28th to 30th. DOH staff will present on Aug. 28th.
Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841