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Update on Nursing Home Reimbursement Issues

In a meeting with LeadingAge NY and other associations, Department of Health (DOH) staff provided an update on various nursing home reimbursement issues and discussed their intent to complete rate setting activities earlier than in prior years to ensure that rates are published as close to their effective date as possible. Highlights of the discussion are summarized below.

Budget Provisions

To ensure that state government operations would continue unimpeded as the Legislature worked to finalize the 2017-18 State Budget, the Legislature passed an extender bill in the first days of April. Along with authorizing last year’s spending to continue, the extender also included several changes to laws on which the Legislature and Governor had come to an agreement. For nursing homes, this included the elimination of hospitalization bed hold effective April 1, 2017, which DOH staff said results in a $20.5 million reduction. Therapeutic leave remains unchanged: residents continue to be able to receive 10 days of therapeutic leave per 12-month period that is paid at 95 percent of the Medicaid rate. The existing bed hold-related adjustment that appears on line 14 of the Medicaid rate sheet will continue as is. DOH clarified that there is no change to bed hold rules nor payments as they apply to residents under the age of 21. The change requires regulations to be modified, and DOH will provide additional guidance on implementation details as well as the requirements homes must meet for residents out on unpaid leave. The Department indicated that while homes are not required to hold a specific bed, they must offer the returning resident the first available bed.

The legislation also extended the requirement that managed care plans pay the Medicaid benchmark rate through the end of 2020 while authorizing DOH to require value based payment arrangements as part of the extension. While not memorialized in legislation, the Legislature and Governor agreed in a side letter that DOH would explore using separate rate cells in managed care rate-setting for several high cost populations, including a separate nursing home rate cell. In prior discussions, DOH had found the Centers for Medicare and Medicaid Services (CMS) to be resistant to a nursing home rate cell for Managed Long Term Care (MLTC), despite such a rate cell being used in the mainstream managed care rate setting process. As part of the agreement, DOH will revisit the idea with CMS. A separate rate cell would help address concerns that the MLTC premium does not adequately reflect the costs of providing nursing home care.

Detailed information on these and other budget provisions of interest to nursing home providers are in the forthcoming LeadingAge NY State Budget summary.

Medicaid Rate Setting Schedule

As part of the effort to publish Medicaid rates prior to their effective dates, DOH has developed timeline estimates for various pieces of the rate setting process that will occur earlier in the year than is customary. Staff is finalizing the 2016 Medicaid cost report, which is expected to have just a few minor changes, with the hope of making it available in April. The anticipated due date will be July 1st, two weeks earlier than last year. DOH hopes that this will provide sufficient time for notice rates to be issued on Sept. 1st, with providers given 30 days to review their capital calculation and submit attestations requesting corrections or agreeing to their accuracy. DOH will require all homes to submit attestations, whether they identify needed corrections or not. This timeline, along with a smooth picture date roster submission process for CMI calculation, should make it possible for final 2018 rates to be published by Jan. 1, 2018.

Capital Component of the Medicaid Rate

DOH continues working to finalize the 2017 capital components for those homes whose capital attestations they were not able to review by the rate issuance date, and anticipates having those completed and sent to the Division of the Budget (DOB) for approval in early May. While DOH will ask DOB to approve the rates quickly, staff did caution that recent DOB approvals had been slower than usual.

The state is concerned about the amount of staff time required to process capital corrections and appeals, especially if homes file an accepted attestation and then proceed to file a rate appeal. In most cases, when a rate appeal is filed, the attestation is negated, and the capital calculation reverts to the one originally done by DOH. Staff is preparing a webinar to review capital issues and the attestation process, and they are requesting that suggestions be sent to the bureau’s mail log, nfrates@health.ny.gov, on specific capital rate setting issues to cover that providers would find beneficial.

Case Mix Collection

The submission of the January case mix index (CMI) “picture date” census rosters has gone extremely well. DOH reports that 583 homes have submitted rosters that matched fully with the federal MDS data base. We have contacted the handful of members that need to complete the process and urge all members to make sure that everything, including the required certifications, are finalized and submitted no later than this Fri., April 14th. Any home that fails to submit by that time will be subject to rate update delays and a potential default to a lower CMI, which can result in a lower Medicaid rate.

Beginning with January 2015 MDS assessments, the Office of the Medicaid Inspector General (OMIG) will no longer be doing MDS audits. DOH is in the process of issuing a Request for Proposals seeking a contractor that will perform this function as well as various other functions, such as cost report reviews for Medicaid providers.

Medicaid Lag

All Medicaid providers receive their Medicaid payment two weeks after the check issuance date, a statutory requirement referred to as the "Medicaid lag." Providers under financial stress have had the opportunity to request to be “removed from the lag,” and DOH reports that over the years, a number of nursing homes have made this request. DOH is making it a priority to reinstate the lag for these homes and recently sent a communication to affected providers asking whether there was a compelling reason why that should not be done. DOH is evaluating the responses they received and will make case-by-case determinations for extending lag waivers for six months.

DOH intends to put those homes that did not respond to the communication back on the lag, meaning providers would not receive Medicaid checks for two consecutive payment cycles. If Medicaid payments to your home are not subject to the two-week lag and you have not responded to the DOH request for information, you should do so as soon as possible.

Equity Withdrawals

DOH has noted that based on their analysis of 2014 cost reports, $124 million in equity withdrawals was made by homes that failed to request DOH authorization. The requirement to seek DOH approval for such transactions is provided in a 2009 Dear Administrator Letter (DAL). While such transfers are more common in for-profit organizations, they can include certain transfers that not-for-profit homes may make, such as those from a foundation. DOH included a reminder of this requirement in Appendix G of the 2017 Rate DAL and has sent a letter requesting a response to homes that they have identified as possibly having made an unauthorized transfer. If any members receive these letters, they should respond promptly. DOH indicated that they are happy to review their finding if a facility receives a letter but does not agree that they made a transfer. While no penalty is being assessed at this time, the state is still discussing whether and what type of sanctions may be applied to these violations. DOH is finalizing a new transfer authorization form, but until that work is completed, the old form should be used.

Advanced Training Initiative (ATI) Survey

Homes that received Year One (i.e., SFY 2015-16) Advanced Training Initiative (ATI) funding should have received a note from DOH on Thursday requesting that they complete an online survey providing some general information on the training instituted using ATI funding. There are two parts to the survey. The first part is to be completed by the administrator, the second by five employees who participated in the training. The collected data will be used to advocate for CMS to approve continued federal funding. State funding for the program is included in the state spending plan. Please note that those who received Year One funding but fail to complete the survey may be ineligible for future awards. To access the survey, click here. If you desire a printed copy, print the completed survey prior to submitting. Surveys are due by Fri., April 21st.

Rate Supplement

DOH is awaiting CMS approval and finalizing state regulations necessary to increase the Medicaid direct and indirect prices by approximately 1 percent retroactive to April 2014. This will represent reinvestment of funds that the state continues to collect from nursing homes through the 0.8 percent non-reimbursable cash receipts assessment. The increased assessment was instituted in lieu of a provider-wide Medicaid payment cut that expired for all other providers on April 1, 2014. CMS sent several additional questions to DOH on the Medicaid State Plan Amendment (SPA) filed by the state to implement this provision. DOH intends to respond to the questions by the end of this week.

Shared Savings from Refinancing

DOH signaled that instructions and guidance for the CMS-approved initiative to allow homes to share in the savings that accrue from mortgage refinancing are nearing completion. Homes whose refinancing arrangements closed on or after April 1, 2015 will be eligible to apply. Homes seeking to participate in the program will likely access the program by filing a rate appeal, and DOH envisions performing a preliminary shared savings calculation when a home requests authorization from DOH to enter into a refinancing arrangement.

Other Issues

DOH reported that litigation that has stalled quality pool rate adjustments is being actively argued in court. The carve-out of transportation from the nursing home rate retroactive to April 1, 2016 has been approved by CMS. DOH has not indicated when the change will be made. There is no set date as to when the third Universal Settlement payment that is due prior to the end of the 2017-18 State Fiscal Year (i.e., March 31, 2018) will be made. Homes that are receiving minimum wage funding in their 2017 rate (shown on line 13, “Misc. Per Diem Adjustments”) should track and document use of these funds. DOH intends to require supplemental cost reporting to ensure that all funding is used in line with instructions provided in the Dear Administrator Letter that accompanied 2017 Medicaid rates.

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