[32 Pa.B. 734]
[Continued from previous Web Page] § 1187.97. Rates for new nursing facilities, nursing facilities with a change of ownership, reorganized nursing facilities, and former prospective payment nursing facilities.
The Department will establish rates for new nursing facilities, nursing facilities with a change of ownership, reorganized nursing facilities and former prospective payment nursing facilities as follows:
(1) New nursing facilities.
(i) The net operating portion of the case-mix rate is determined as follows:
(A) A new nursing facility will be assigned the Statewide average MA CMI until assessment data submitted by the nursing facility under § 1187.33 (relating to resident data reporting requirements) is used in a rate determination under § 1187.96(a)(4) (relating to price and rate setting computations).
(B) The nursing facility will be assigned to the appropriate peer group. The peer group price for resident care, other resident related and administrative costs will be assigned to the nursing facility until there is at least one audited nursing facility cost report used in the rebasing process.
(ii) For nursing facilities enrolled in the MA Program prior to January 1, 2001, the three components of the capital portion of the case-mix rate are determined as follows:
(A) The fixed property component will be determined in accordance with § 1187.96 (d)(1) (relating to price and rate setting computations).
(B) The movable property component will be determined in accordance with § 1187.96 (d)(2).
(C) The real estate tax cost component will be determined based on the audited actual real estate tax cost.
(iii) For nursing facilities enrolled in the MA Program on or after January 1, 2001, the three components of the capital portion of the case-mix rate are determined as follows:
(A) Fixed property component. The fixed property component will be determined in accordance with § 1187.96 (d)(1).
(B) Movable property component. The movable property component will be determined as follows:
(I) The nursing facility's acquisition cost, as determined in accordance with § 1187.61(b) (relating to movable property cost policies), for any new items of movable property acquired on or before the date of enrollment in the MA program, will be added to the nursing facility's remaining book value for any used movable property as of the date of enrollment in the MA program to arrive at the nursing facility's movable property cost. If the nursing facility does not have a depreciation schedule for its used movable property, the allowable cost for those items will be the depreciated replacement cost as determined by qualified personnel of the Department's independent appraisal contractor.
(II) The nursing facility's movable property cost will then be amortized equally over the first 3 rate years that the nursing facility is enrolled in the MA program to determine the nursing facility's movable property component of the capital rate.
(III) After the first 3 rate years the nursing facility's movable property component will be based on the most recent audited MA-11 cost report available in the NIS database. If no MA-11 is available in the NIS database, the nursing facility will not receive the movable property component of the capital rate.
(C) Real estate tax component.
(I) For the first 3 rate years, the new nursing facility real estate tax component will be the nursing facility's annual real estate tax cost as of the date of enrollment in the MA program.
(II) After the first 3 rate years, the real estate tax component will be based on the audited MA-11 cost report available in the NIS database. If no audited MA-11 cost report is available in the NIS database, the nursing facility will not receive the real estate tax component of the capital rate.
(iv) Newly constructed nursing facilities are exempt from the adjustment to 90% occupancy until the nursing facility has participated in the MA Program for one full annual price setting period as described in § 1187.95 (relating to general principles for rate and price setting).
(2) Nursing facilities with a change of ownership and reorganized nursing facilities.
(i) New provider. The new nursing facility provider will be paid exactly as the old nursing facility provider. Net operating and capital rates for the old nursing facility provider will be assigned to the new nursing facility provider.
(ii) Transfer of data. Resident assessment data will be transferred from the old nursing facility provider number to the new nursing facility provider number. The old nursing facility's MA CMI will be transferred to the new nursing facility provider.
(iii) Movable property cost policies.
(A) The acquisition costs of items acquired by the old nursing facility provider on or before the date of sale are costs of the old nursing facility provider, and not the new nursing facility provider.
(B) Regardless of the provisions of any contract of sale, the amount paid by the new nursing facility provider to acquire or obtain any rights to items in the possession of the old nursing facility provider is not an allowable cost.
(C) If the new nursing facility provider purchases an item from the old nursing facility provider, the cost of that item is not an allowable cost for cost reporting or rate setting purposes.
(D) If the new nursing facility provider rents or leases an item from the old nursing facility provider, the cost of renting or leasing that item is not an allowable cost for cost reporting or rate setting purposes.
(3) Former prospective payment nursing facilities. A nursing facility that received a prospective rate prior to the implementation of the case-mix payment system will be treated as a new nursing facility under paragraph (1) for the purpose of establishing a per deim rate.
§ 1187.112. Cost per bed limitation adjustment.
(a) For year 1 of implementation the following cost per bed limitation adjustment will be made:
(1) The allowable capital costs will be limited to a maximum participation allowance cost per bed of $22,000. The cost per bed will be based on the capitalized cost of fixed property. The cost of movable property will not be included in the $22,000 per bed limit.
(2) When the appraisal value exceeds the cost per bed limitation, adjustment for the $22,000 per bed limitation will be made. The full appraisal value will not be recognized.
(b) For year 2 of implementation and year 3 of implementation and thereafter the following cost per bed limitation adjustment will be made:
(1) The allowable capital costs will be limited to a maximum participation allowance cost per bed of $26,000. The cost per bed will be based on the capitalized cost of fixed property. The cost of movable property will not be included in the $26,000 per bed limit.
(2) When the appraisal value exceeds the cost per bed limitation, adjustment for the $26,000 per bed limitation will be made. The full appraisal value will not be recognized.
§ 1187.113. Capital component payment limitation.
(a) Conditions. The capital component payment for fixed property is subject to the following conditions:
(1) The Department will make the capital component payment for fixed property on new or additional beds only if one of the following applies:
(i) The nursing facility was issued either a Section 1122 approval or letter of nonreviewability under 28 Pa. Code Chapter 301 (relating to limitation on Federal participation for capital expenditures) or a Certificate of Need or letter of nonreviewability under 28 Pa. Code Chapter 401 (relating to Certificate of Need Program) for the project by the Department of Health by August 31, 1982.
(ii) The nursing facility was issued a Certificate of Need or letter of nonreviewability under 28 Pa. Code Chapter 401 for the construction of a nursing facility and there was no nursing facility located within the county.
(2) The Department will not make the capital component payment unless the nursing facility substantially implements the project under 28 Pa. Code Chapter 401 within the effective period of the original Section 1122 approval or the original Certificate of Need.
(3) The capital component payment for replacement beds is allowed only if the nursing facility was issued a Certificate of Need or a letter of nonreviewability for the project by the Department of Health.
(4) The Department will not make the capital component payment unless written approval was received from the Department prior to the construction of the new beds.
(b) Capital cost reimbursement waivers. The Department may grant waivers of subsection (a) to permit capital cost reimbursement as the Department in its sole discretion determines necessary and appropriate. The Department will publish a statement of policy under § 9.12 (relating to statements of policy) specifying the criteria that it will apply to evaluate and approve applications for capital cost reimbursement waivers.
Subchapter K. EXCEPTIONAL PAYMENT FOR NURSING FACILITY SERVICES Sec.
1187.151. Definitions. 1187.152. Additional reimbursement of nursing facility services related to exceptional DME. 1187.153. Exceptional DME grants--process. 1187.154. Exceptional DME grants--general conditions and limitations. 1187.155. Exceptional DME grants--payments conditions and limitations. 1187.156. Exceptional DME notification and reporting requirements. 1187.157. Termination or suspension of exceptional DME grants and recovery of exceptional payments. 1187.158. Appeals. § 1187.151. Definitions.
The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise:
Exceptional DME grant or grant--Authorization permitting exceptional payments under specified terms to a nursing facility, in addition to the nursing facility's case-mix per diem rate, for nursing facility services that are provided to a specified resident and that involve the use of certain exceptional DME. The amount of the additional payment authorized by a grant is based upon the necessary, reasonable and prudent cost of the exceptional DME and the related services and items specified in the grant.
Resident--An MA eligible resident of a nursing facility enrolled in the MA Program who, in a request for an exceptional DME grant, is identified as needing exceptional DME.
§ 1187.152. Additional reimbursement of nursing facility services related to exceptional DME.
(a) The necessary, reasonable and prudent costs incurred by a nursing facility related to the purchase or rental, and the use of DME in providing nursing facility services to residents are allowable costs and included in the calculation of the case-mix per diem rates subject to this chapter. Any costs incurred in excess of the costs identified in a grant are not allowable costs under this chapter.
(b) When a nursing facility provides nursing facility services involving exceptional DME to an MA eligible resident, the nursing facility may, in addition to the submission of invoices for payment based upon the nursing facility's case-mix per diem rate, seek authorization for additional payment by requesting a grant from the Department in accordance with § 1187.153(a) (relating to exceptional DME grants--process).
(c) The Department will issue a grant to a nursing facility if the Department determines that all of the following conditions are met:
(1) The nursing facility's request for the grant complies with all applicable Department instructions.
(2) The specified DME is medically necessary as defined in § 1101.21 (relating to definitions).
(3) The DME specified in the nursing facility's request is exceptional DME as defined in § 1187.2 (relating to definitions).
(4) The nursing facility's physical plant, equipment, staff, program and policies are sufficient to insure the safe, appropriate and effective use of the exceptional DME.
(5) The nursing facility certifies to the Department in writing, on a form designated by the Department, that it has read and understands the terms of the grant.
§ 1187.153. Exceptional DME grants--process.
(a) Requests for exceptional DME grants.
(1) A nursing facility shall request a grant in writing on forms designated by the Department and completed in accordance with all applicable Department instructions. The request shall be accompanied by the necessary supporting documentation specified in the Department's instructions and submitted to the Department within 30 days from the date on which the nursing facility purchases or rents the DME for which the nursing facility is requesting the grant.
(2) The nursing facility shall provide copies of the nursing facility's request to the resident and the resident's authorized representative, if any, when the nursing facility submits the request to the Department.
(b) Notification by the Department. The Department will send written notice of the Department's decision to approve or deny a nursing facility's request for a grant to the nursing facility, the resident and the resident's authorized representative, if any.
§ 1187.154. Exceptional DME grants--general conditions and limitations.
(a) Scope and effect of an exceptional DME grant.
(1) A grant authorizes exceptional payments to a nursing facility in addition to the nursing facility's case-mix per diem payment rate for nursing facility services provided to the resident. The amount of the exceptional payments authorized by the grant is deemed to be the necessary, reasonable and prudent cost of the exceptional DME and the related services and items identified in the nursing facility's grant.
(2) A grant does not authorize exceptional payments for nursing facility services that are provided to MA residents other than the resident, nor does it limit costs that are, or must be, incurred by a nursing facility to provide services to any of the nursing facility's residents (including the resident) in accordance with applicable law and regulations.
(b) Applicability of laws. Nursing facility services provided by a nursing facility receiving a grant, including services paid by the grant, remain subject to applicable Federal and State laws and regulations, including the laws and regulations governing the MA Program.
(c) Reporting of exceptional DME costs and grant payments.
(1) The nursing facility shall report on the MA-11, the costs related to the acquisition of exceptional DME and related services and items paid by a grant. In identifying the nursing facility's allowable costs, the nursing facility shall adjust those reported costs to the necessary, reasonable and prudent cost amounts identified in the nursing facility's grant.
(2) The nursing facility shall offset all payments made by the Department under a grant against the allowable cost of the exceptional DME and related services and items paid by the grant.
(3) The nursing facility shall identify and report in the MA-11, the costs related to the acquisition of exceptional DME and related services and items, the adjustment to the amount identified in the grant, and the offset of the payment made by the Department under the grant using the accrual basis of accounting.
(d) Payment in full. A grant does not waive the preclusion on supplementation established by law. Payment made by the Department under a grant is payment in full for nursing facility services involving the exceptional DME and any related services and items. The entire payment for all MA nursing facility services provided to the resident, including the exceptional DME and any related services and items shall include both of the following:
(1) The nursing facility's case-mix per diem rate.
(2) The exceptional payments authorized by the grant.
(e) Utilization review. Nursing facility services paid by a grant are subject to utilization review by the Department, including assessments of the resident's continuing need for the exceptional DME.
(f) Dispute resolution. A dispute relating to a grant, including a dispute relating to payments which the nursing facility believes are authorized by the grant and a dispute arising from the termination, suspension or recovery actions taken under § 1187.157 (relating to termination or suspension of exceptional DME grants and recovery of exceptional payments), shall be brought initially and exclusively for adjudication to the Department's Bureau of Hearings and Appeals.
(g) Records. In addition to the nursing facility's existing obligations to maintain and provide documents and records, a nursing facility receiving a grant shall maintain and, upon request, provide to the Department additional documents and records as may be necessary for the Department to determine the nursing facility's compliance with this subchapter and the terms of the nursing facility's grant, including documents and records as may be necessary for the Department to determine the maximum allowable cost of the exceptional DME as specified in § 1187.155(b) (relating to exceptional DME grants-payment conditions and limitations).
(h) Term of the grant. A grant is effective on the date specified in the nursing facility's grant and ends on the date the grant is terminated under § 1187.157.
(i) Acquisition, maintenance, use and disposal of exceptional DME.
(1) A nursing facility shall obtain exceptional DME and related services and items paid by a grant at the lowest practicable cost and shall purchase by means of competitive bidding whenever required by law.
(2) Unless otherwise approved in writing by the Department, a nursing facility may use exceptional DME paid by a grant only as specified by the nursing facility's grant.
(3) Except as specified otherwise in paragraph (5), a nursing facility has title to any exceptional DME and related items purchased by the nursing facility under the grant.
(4) If an item of exceptional DME purchased under a grant is no longer necessary to provide care and services to the resident, and subject to paragraph (2), the nursing facility shall make the item available for the use, as necessary, in the care and treatment of other MA residents of the nursing facility unless directed by the Department to transfer the exceptional DME in accordance with paragraph (5).
(5) Upon termination of a grant, the Department may direct that the nursing facility transfer the exceptional DME and related items to another provider designated by the Department or to the resident. Title to the transferred exceptional DME and related items shall then vest in the designated provider or the resident. If a transfer is required under this paragraph, § 1187.61(c)(1) (relating to movable property cost policies) does not apply.
(6) A nursing facility shall, in accordance with sound business practice, maintain and administer a program for the maintenance, repair, protection, preservation and insurance of exceptional DME paid by a grant.
(7) If a nursing facility is indemnified, reimbursed or otherwise compensated for any loss, destruction or damage to exceptional DME paid by a grant, the nursing facility shall, at the Department's direction, use the proceeds to replace, repair or renovate the property involved.
§ 1187.155. Exceptional DME grants--payment conditions and limitations.
(a) Authorization of exceptional payments. Exceptional payments authorized by an exceptional DME grant will be paid as follows:
(1) Periodic payments. Unless the grant authorizes a lump sum payment under paragraph (2), the grant will authorize exceptional payments to the nursing facility on a specified periodic basis. Authorization for periodic payments will continue during the term of the nursing facility's grant except during a period of suspension as specified in § 1187.157 (relating to termination or suspension of exceptional DME grants and recovery of exceptional payments).
(2) Lump sum payment. The grant may authorize a lump sum exceptional payment to the nursing facility if the Department determines that a lump sum payment is in the best interest of the MA Program. The amount of this payment will be based upon and limited by the necessary, reasonable and prudent costs incurred by the nursing facility to purchase exceptional DME and related items.
(b) Maximum allowable payment. The maximum allowable exceptional payment authorized by an exceptional DME grant is limited to the lowest of the following:
(1) The lower of the nursing facility's costs to acquire the exceptional DME and related services and items; or, in the event the nursing facility is acquiring the exceptional DME or related services and items from a related party as defined in § 1187.2 (relating to definitions), the related party's cost to furnish the exceptional DME and related services and items to the nursing facility.
(2) The applicable MA outpatient fee schedule amount, if any.
(3) Eighty percent of the amount, if any, that would be approved by Medicare if the DME or service or item were a Medicare Part B covered service or item.
(c) Additional conditions and limitations. Exceptional payments made by the Department to a nursing facility under a grant are subject to the following:
(1) The conditions and limitations set forth in Chapter 1101 (relating to general provisions), including §§ 1101.64 and 1101.68 (relating to third-party medical resources; and invoicing for services).
(2) The terms of the nursing facility's grant.
§ 1187.156. Exceptional DME notification and reporting requirements.
(a) Status reports. A nursing facility receiving a grant shall submit periodic status reports to the Department as specified in the nursing facility's grant.
(b) Notices. A nursing facility receiving a grant shall notify the Department in writing within 5 days of any of the following occurrences:
(1) The resident dies.
(2) The resident ceases to be MA eligible.
(3) The resident is transferred or discharged from the nursing facility, whether or not there is intent to return.
(4) The nursing facility determines, or is advised by the resident's attending physician, that the exceptional DME is no longer medically necessary.
(5) The resident notifies the nursing facility in writing that he exercises his right to refuse use of the exceptional DME.
(6) The nursing facility ceases to use the exceptional DME or make that DME available to the resident in the course of providing nursing facility services to the resident.
§ 1187.157. Termination or suspension of exceptional DME grants and recovery of exceptional payments.
(a) Termination or suspension of an exceptional DME grant.
(1) Automatic termination. Any of the following conditions shall cause termination of a nursing facility's grant without further notice or action by the Department:
(i) The resident dies.
(ii) The resident ceases to be MA eligible.
(iii) The resident is transferred or discharged from the nursing facility with no intent to return.
(iv) The resident's attending physician notifies the nursing facility that the exceptional DME is no longer medically necessary.
(v) The resident notifies the Department or the nursing facility in writing that he exercises his right to refuse use of the exceptional DME.
(vi) The nursing facility is no longer enrolled in the MA Program.
(2) Termination upon notice. The Department may terminate a grant upon written notice to the nursing facility if any one or more of the conditions in subparagraphs (i)--(vi) occur. The Department will simultaneously provide a copy of the written notice to the resident and the resident's authorized representative, if any.
(i) The Department determines that the exceptional DME is no longer medically necessary.
(ii) The resident is temporarily discharged or transferred to a hospital or other health care provider.
(iii) There is a change in state or federal law or regulations governing payments to MA providers of nursing facility services.
(iv) Exceptional DME payments are no longer authorized under the Commonwealth's approved Medicaid State Plan.
(v) The nursing facility has violated the terms of the grant.
(vi) The nursing facility changes ownership.
(3) Suspension of grant payments. The Department may suspend payments under a grant upon written notice to the nursing facility if one or more of the conditions in subparagraphs (i) and (ii) occur. The Department will simultaneously provide a copy of the written notice to the resident and the resident's authorized representative, if any.
(i) The resident is temporarily discharged or transferred to a hospital or other health care provider.
(ii) The resident is absent from the nursing facility because of therapeutic leave.
(4) Termination or suspension date. A termination under paragraph (1) is effective as of the date on which the condition giving rise to the automatic termination first arises. A termination under paragraph (2) is effective on the date specified in the Department's written notice to the nursing facility. A suspension under paragraph (3) is effective on the date and for the period specified in the Department's written notice to the nursing facility.
(5) Effect of termination.
(i) Termination of an exceptional DME grant, whether automatic or by written notice, terminates the nursing facility's authorization to obtain exceptional payments for nursing facility services provided to the resident after the termination date.
(ii) Termination of the grant ends the nursing facility's grant and the nursing facility's duty and obligation to comply with the terms of the grant or the requirements of this subchapter, except as may be otherwise specified in the grant or in this subchapter.
(iii) Termination of a grant does not relieve the nursing facility of any of the nursing facility's duties and obligations relating to services provided to the resident or any other resident of the nursing facility.
(6) Effect of suspension.
(i) Suspension of payments under a grant terminates the nursing facility's authorization to obtain exceptional payments for nursing facility services provided to the resident for the period specified in the notice of suspension.
(ii) Suspension of payments under a grant does not terminate the nursing facility's grant or the nursing facility's duty and obligation to comply with the terms of the grant or the requirements of this subchapter.
(iii) Suspension of payments under a grant does not relieve the nursing facility of any of the nursing facility's duties and obligations relating to services provided to the resident or any other resident of the nursing facility.
(b) Recovery of exceptional DME grant payments.
(1) If a grant is terminated or if payments under a grant are suspended, the Department will recover any exceptional payments made to the nursing facility for services provided after the termination date or during the period of suspension.
(2) If the nursing facility violates this subchapter or the terms of its grant, the Department may recover exceptional payments made to the nursing facility in addition to or instead of terminating the nursing facility's grant.
(c) Rights and remedies. The rights and remedies available to the Department under this section are in addition to any rights, remedies and sanctions otherwise available to the Department under law and regulation.
§ 1187.158. Appeals.
(a) Appeals. An appeal may be filed by the resident or the resident's authorized representative, by the nursing facility, or by both, from the Department's decision to deny, terminate or suspend a grant, subject to the following:
(1) If the Department denies a grant because the DME is not exceptional DME, an appeal of the denial may be filed solely on the basis that the DME is exceptional DME as defined in § 1187.2 (relating to definitions).
(2) If the Department automatically terminates a grant under § 1187.157(a)(1) (relating to termination or suspension of exceptional DME grants and recovery of exceptional payments), an appeal of the termination may be filed solely on the basis that none of the conditions specified in § 1187.157(a)(1)(i)--(vi) has occurred.
(3) If a resident appeals the denial, termination or suspension of a grant, Chapter 275 (relating to appeal and fair hearing and administrative disqualification hearings) applies.
(4) If a nursing facility appeals the denial, termination or suspension of a grant, § 1187.141(b), (d) and (e) (relating to nursing facility's right to appeal and to a hearing) apply.
(5) An appeal from the Department's decision denying a request for a grant shall be received in the Department's Bureau of Hearings and Appeals within 30 days of the date of the Department's written notice.
(6) If the resident or the nursing facility timely appeals the Department's decision to deny, suspend or terminate a grant, the Department's decision is not final until the Department issues a final adjudication on the appeal.
(b) Effect of decisions.
(1) Effect on subsequent grant requests. The denial or termination of a grant, does not prohibit a nursing facility from submitting a new request for an exceptional DME grant for the same resident, if the nursing facility determines that there has been a change in the resident's condition since the denial or termination.
(2) Effect on services.
(i) If the Department determines that DME specified in the nursing facility's request is medically necessary but denies the request because the DME is not exceptional DME, the nursing facility shall, as a part of the nursing facility services that it provides to the resident, provide the DME to the resident, unless the resident refuses the DME, regardless of whether the nursing facility or resident appeals the Department's decision. If the resident refuses the DME, the nursing facility shall notify the Department in accordance with § 1187.22(17) (relating to ongoing responsibilities of nursing facilities).
(ii) If the Department determines that the DME specified in the nursing facility's request is exceptional DME but denies the request because the DME is not medically necessary, the nursing facility may provide the DME and charge the resident in accordance with and subject to applicable Federal and state requirements, including 42 CFR 483.10(c)(8) (relating to resident rights) and § 1101.63(a) (relating to payment in full), if, after receiving actual notice of the Department's denial, the resident requests that the nursing facility provide the DME. If the resident or nursing facility appeals the Department's determination to deny the exceptional DME grant and the appeal is sustained, the nursing facility shall refund any payment made by the resident within 60 days from the date of the Department's final adjudication sustaining the appeal.
(iii) If the Department terminates a grant or suspends payment under a grant under § 1187.157(a)(2) and (3) (relating to termination or suspension of exceptional DME grants and recovery of exceptional payments), and the resident or the resident's authorized representative appeals the termination or suspension within 10-calendar days of the date on which the Department's notice was mailed, the Department will continue to make payments under the grant pending the outcome of the hearing on the resident's appeal. If, after the hearing, the Department denies the resident's appeal, the Department will recover any payments made under the grant on or after the termination date or during the period of suspension specified in the Department's notice.
(iv) If the Department terminates a grant or suspends payment under a grant under § 1187.157(a)(2) and (3), and the resident or the resident's authorized representative does not appeal the termination or suspension, or appeals more than 10-calendar days from the date on which the Department's notice was mailed, the Department will cease payments under the grant on the termination date or during the period of suspension specified in the Department's notice.
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1 Although the Department audits nursing facilities' allowable costs for each fiscal period, unlike the process used by the prior, retrospective payment system, the Department does not reconcile each facility's prospective payments based upon the facility's final audited costs for the rate-setting period. Rather, the Department uses the audit to set the nursing facility's future payment rates. See § 1187.108(a) (relating to gross adjustments to nursing facility payments). Moreover, in some situations, the Department may use data from less than three audit reports or from unaudited cost.
[Pa.B. Doc. No. 02-212. Filed for public inspection February 8, 2002, 9:00 a.m.]
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