NOTICES
Payment for Nursing Facility Services; Change in Methods and Standards of Setting Payment Rates; Peer Grouping for Price Setting
[34 Pa.B. 1863] The purpose of this announcement is to provide advance notice that the Department of Public Welfare (Department) intends to publish proposed amendments to 55 Pa. Code Chapter 1187 (relating to nursing facility services) and to amend the Commonwealth's Title XIX State Plan provisions regarding the method by which peer groups are established under the case-mix payment system.
§ 1187.94 (relating to peer grouping for price setting)
The Department's case-mix payment system regulations specify that, in setting net operating prices under the current case-mix payment system, the Department classifies each nursing facility participating in the Medical Assistance (MA) Program, except those nursing facilities that meet the definition of a special rehabilitation facility or hospital-based facility, into 12 mutually exclusive peer groups based on Metropolitan Statistical Areas (MSA) group classification and the nursing facility's certified bed complement. See 55 Pa. Code § 1187.94(1). The regulations further state that ''the Department will use the most recent MSA group classification, as published by the Federal Office of Management and Budget (OMB) on or before April 1 of each year'' to make the peer group classifications. See 55 Pa. Code § 1187.94(1)(i).
Prior to 2003, the OMB categorized MSAs into three levels based on the total population of the counties in the MSA: Level A (areas with a total population of 1 million or more); Level B (areas with a total population of 250,000 to 999,999); and Level C (areas with a total population of 100,000 to 249,000). The Department's case-mix payment system regulations in 55 Pa. Code § 1187.94(1)(iii) make explicit reference to the three MSA groups (A, B and C) in identifying the 12 peer groups into which nursing facilities are classified under the case-mix payment system.1
On June 6, 2003, the OMB published revised definitions of MSAs. In publishing these revised MSA definitions, the OMB added definitions for Micropolitan Statistical Areas and Combined Statistical Areas based on Federal Census Bureau data derived from the 2000 census. However, the OMB eliminated the use of the MSA group levels A, B and C that are specifically referenced in 55 Pa. Code § 1187.94(1)(iii).
The OMB's elimination of the three MSA group levels from the most recently published OMB MSA definitions makes it impossible for the Department to apply the existing language of 55 Pa. Code § 1187.94(1) in classifying nursing facilities into peer groups. More specifically, the Department cannot use the most recent MSA group classifications published by the OMB, as required by 55 Pa. Code § 1187.94(1)(i), and also classify nursing facilities into the 12 peer groups identified in 55 Pa. Code § 1187.94(1)(iii). To address this problem, the Department has determined that the language of 55 Pa. Code § 1187.94 should be amended.
In evaluating the alternative ways in which 55 Pa. Code § 1187.94 might be amended, the Department considered the potential effects that adopting the new Federal definitions for MSAs might have on peer group prices and nursing facility rates. The Department's preliminary analyses indicate that a majority of nursing facility providers would be adversely affected (that is, the case-mix payment system would compute lower rates for the majority) if the Department were to adopt the new Federal MSA definitions.
Instead of adopting the new Federal definitions, the Department will propose to amend 55 Pa. Code § 1187.94(1)(i) and the Commonwealth's Title XIX State Plan to specify that the Department will use the MSA group classification published by the OMB in OMB Bulletin No. 99-04 (relating to revised statistical definitions of metropolitan areas and guidance on uses of metropolitan area definitions) to peer group nursing facilities. By using the MSA classification in OMB Bulletin No. 99-04, the Department will maintain the historical MSA groups and will continue to classify each MA nursing facility as MSA A, B or C or as non-MSA. Although the language of 55 Pa. Code § 1187.94 will change, the effect of this amendment will be to preserve the status quo. The Department believes that amending 55 Pa. Code § 1187.94 is in the best interest of both the Department and nursing facility providers. It will enable the Department to ensure that the case-mix payment system takes into account variables that may impact the cost of providing nursing facility services while the Department continues and completes its discussions with the nursing facility industry, consumers and other stakeholders on a more comprehensive overhaul of the case-mix payment system.
Fiscal Impact
This proposed policy change will not directly cause an increase in the annual aggregate expenditures for MA nursing facility services for FY 2004-2005.
Public Comment
A copy of this notice is available for review by contacting Gail Weidman, Long Term Care Policy Section, (717) 705-3705. Interested persons are invited to submit written comments about the changes to the case-mix payment system to the Department within 30 days of publication of this notice in the Pennsylvania Bulletin. Comments should be addressed to the Department of Public Welfare, Division of Long Term Care Client Services, Attention Gail Weidman, P. O. Box 2675, Harrisburg, PA 17105. Persons with a disability may use the AT&T Relay Service, (800) 654-5984 (TDD users) or (800) 654-5988 (voice users).
Following review and consideration of comments received in response to this notice, the Department intends to publish notice of proposed rulemaking in the Pennsylvania Bulletin announcing the proposed amendments to the Department's case-mix payment system regulations.
ESTELLE B. RICHMAN,
SecretaryFiscal Note: 14-NOT-383. No fiscal impact; (8) recommends adoption.
[Pa.B. Doc. No. 04-579. Filed for public inspection April 2, 2004, 9:00 a.m.]
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1 Nursing facilities that are located in counties that are not included in one of the three MSA group levels are classified in a ''non-MSA'' peer group under 55 Pa. Code
§ 1187.94(1)(iii).
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