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PA Bulletin, Doc. No. 98-1806


Payments to Nursing Facilities; MDS 2.0 Transition Payments

[28 Pa.B. 5533]

   The purposes of this notice are to announce proposed changes in payment rates for nursing facilities and to provide advance notice of the Department's intent to make changes in its methods and standards for setting payment rates for Medical Assistance nursing facility services to provide MDS 2.0 Transition Payments. The Department is publishing this notice in accordance with 42 U.S.C.A. § 1902(a)(13)(A), as amended by section 4711 of the Balanced Budget Act of 1997, P. L. 105-33, § 4711, and 42 CFR 447.205.

   The Minimum Data Set (MDS) 2.0 is the Federal instrument for assessment of the physical, mental and psychosocial condition of nursing facility residents. HCFA mandates that states require nursing facilities to use the MDS 2.0 instrument, as modified by the states and approved by HCFA, to collect and report resident assessment data to the states. Nursing facilities in this Commonwealth began using the Federally approved Pennsylvania-specific MDS 2.0 to assess residents and to report resident data to the Department effective November 2, 1997. The Department uses the reported resident data to calculate case-mix indices (CMIs) for price and rate-setting purposes.

   The MDS 2.0 contains several changes from the prior assessment instrument, the MDS 1.2. Because of these changes, nursing facility trade associations expressed concerns to the Department that the MDS 2.0 instrument would negatively affect the CMIs used in setting prices and payment rates. When it announced its proposed July 1, 1998 nursing facility case-mix rates, the Department noted the associations' concerns and stated that it was evaluating the actual impact of the MDS 2.0 on rates to determine whether payment adjustments were necessary and appropriate. See 28 Pa.B. 2978 (June 27, 1998). Based upon its review and evaluation of the impact of the MDS 2.0 and its discussions with the associations, the Medical Assistance Advisory Committee and the Long Term Care Subcommittee, the Department has decided to provide additional payments to county and general nursing facilities, including hospital-based and special rehabilitation facilities, during a 3-year transition period to minimize the impact of the MDS 2.0 instrument on CMIs and nursing facility payment rates and prices.

   During the 3-year transition period, the Department will establish a quarterly base rate for each nursing facility. The quarterly base rate will equal the facility's April 1998 case-mix rate inflated by the HCFA Nursing Home without Capital Market Basket Index, according to the number of quarters between April 1998 and the rate-setting quarter. For each quarter during the transition period, the MDS 2.0 transition payment will equal the positive difference between the facility's quarterly base rate and the facility's quarterly case-mix rate multiplied by the number of Medical Assistance days of care paid through the Medical Assistance Management Information System (MAMIS) plus one-third of the positive difference between the facility's quarterly base rate and the facility's quarterly case-mix rate multiplied by the number of Medical Assistance hospital days paid through MAMIS. If the difference between the base rate and case- mix rate is zero or a negative number, the MDS 2.0 transition payment for the quarter will equal zero. During the first two quarters of FY 98-99, the MDS 2.0 transition payment will be made in a lump sum. In all subsequent quarters, the MDS 2.0 transition payment will be made as an add-on to the facility's case-mix per diem rate. Actual payment for resident days remains subject to applicable billing and payment requirements in regulations and the Nursing Facility Services Handbook.

   Each year of the 3-year transition period, nursing facilities will be given the option to accept or reject the MDS 2.0 transition payment for that year. A nursing facility that accepts the MDS 2.0 transition payment must agree to waive all issues and disputes relating to the calculation of its MA and total facility CMIs and the use of quarterly assessment data to set prices and quarterly payment rates for the year in which it will receive the MDS 2.0 transition payment.

   The estimated increase in annual aggregate expenditures for Medical Assistance nursing facility services for FY 1998-1999 is $55.995 million ($25.940 in State funds).

   A copy of this notice is available for review at the local County Assistance Offices throughout this Commonwealth. In addition, the proposed MDS 2.0 base rates and per diem add-ons for the first two quarters of FY 98-99 are available through the Bulletin Board System (BBS) at (800) 833-5091, at the local County Assistance Offices throughout this Commonwealth, or by contacting Connie Pretz in the Policy Section of the Bureau of Long Term Care Programs at (717) 772-2570.

   Interested persons are invited to submit written comments about the MDS 2.0 transition payment to the Department within 30 days of publication of this notice in the Pennsylvania Bulletin. Comments should be addressed to: Department of Public Welfare, Office of Medical Assistance Programs, Attention: Suzanne Love, Room 515 Health and Welfare Building, Harrisburg, PA 17105.

   Persons with a disability may use the AT&T Relay Services by calling (800) 654-5984 (TDD Users) or (800) 654-5988 (Voice Users). Persons who require another alternative should contact Thomas Vracarich in the Office of Legal Counsel at (717) 783-2209.


   Fiscal Note: 14-NOT-182. (1) General Fund; (2) Implementing Year 1998-99 is $26 million; (3) 1st Succeeding Year 1999-00 is $Unknown; 2nd Succeeding Year 2000-01 is $Unknown; 3rd Succeeding Year 2001-02 is $No fiscal impact; 4th Succeeding Year 2002-03 is $No Fiscal impact; 5th Succeeding Year 2003-04 is $No fiscal impact; (4) 1997-98 $617 million; 1996-97 $592 million; 1995-96 $649 million; (7) Medical Assistance--Long Term Care; (8) recommends adoption. Funds are included in the 1998-99 budget for this purpose. Costs for years two and three cannot be estimated at this time since the future CPI market based indices used to determine transition payment rates are unpredictable.

[Pa.B. Doc. No. 98-1806. Filed for public inspection October 30, 1998, 9:00 a.m.]

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