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Nursing Home Reimbursement Update

In a meeting with LeadingAge NY and other associations earlier today (July 11th) on nursing home Medicaid issues, Department of Health (DOH) Bureau of Long Term Care Rate Setting staff shared the State’s intent to move away from a Resource Utilization Group (RUG)-based case mix adjustment and shift to a methodology more in line with the Patient-Driven Payment Model (PDPM) used by Medicare. The Centers for Medicare and Medicaid Services (CMS) will provide limited support for RUG-based methodologies when significant updates to the Minimum Data Set (MDS) are implemented on Oct. 1, 2023. While the State could have opted to continue using RUGs for some additional time by requiring providers to collect assessment items that are being eliminated from the MDS form by completing an additional Optional State Assessment (OSA), NY has decided to shift to a new methodology. However, because that shift requires time to implement, the Department expects that it will need to suspend case mix adjustments for some period of time to facilitate the transition.

This likely means that once established, the January 2024 operating rate will be frozen until the new methodology is implemented. The case mix adjustment in the January 2024 rate will be based on assessments with reference dates spanning April 1st through Sept. 30, 2023. This makes it especially critical that providers ensure that assessments submitted during this final catchment timeframe are complete and accurate.

DOH stressed that while the State has decided not to use the OSA and is in the initial stages of planning a transition to a PDPM-like methodology, key decisions are still under discussion with little additional information available at this time. Given the complexity of implementing a new case mix methodology, we have urged DOH to work with an experienced vendor and to make open, two-way communication with stakeholders a key component of the effort. While avoiding the additional administrative work on the part of nursing staff that the OSA would have required is a positive step, we expressed concern about an open-ended freeze and stressed the need for a clear and predictable timeframe. If done well, the change offers an opportunity to better align payments with actual care costs and incentivize desired outcomes. We welcome member comments and will seek additional input as more information becomes available.

DOH confirmed that it has submitted the State Plan Amendment (SPA) requests related to nursing home and Assisted Living Program (ALP) rate increases to CMS. The amendments implement a 7.5 percent increase to nursing home and Adult Day Health Care (ADHC) rates and a 6.5 percent increase to ALP rates. While DOH is not able to make advance payment of the State share of this increase while the amendment request is pending with CMS, the Department has developed and submitted a rate package for executive review. This will help to expedite payment of the rate increases once federal approval is received. We will monitor progress and keep members informed.

In addition to these announcements, DOH provided status updates on several other issues:

  • July 2023 rates are under development, with an expected release later this summer.
  • Intergovernmental Transfer (IGT) SPA for 2022-23 is still awaiting final CMS approval.
  • No additional insight on when CMS may approve the $187 million safe staffing initiative or 2022-23 CINERGY, which will facilitate payment of the federal share of this funding.
  • No further update is available on hospital-based nursing home safe staffing funding (which is being handled in a different unit).
  • Reminder that Residential Health Care Facility (RHCF) Medicaid cost reports are due Aug. 9th.

Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841