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PA Bulletin, Doc. No. 07-1874

NOTICES

DEPARTMENT OF
PUBLIC WELFARE

Payment for Nursing Facility Services Provided by County and Nonpublic Nursing Facilities; Notice of Change in Methods and Standards of Setting Payment Rates

[37 Pa.B. 5571]
[Saturday, October 13, 2007]

Purpose

   The purpose of this announcement is to provide additional and updated information regarding the budget adjustment factors (BAFs) that the Department of Public Welfare (Department) will apply to Medical Assistance (MA) nonpublic nursing facility payment rates and to MA county nursing facility payment rates for Fiscal Year (FY) 2007-2008.

Background

   On June 30, 2007, a notice was published announcing that the Department intended to change its payment methods and standards, and amend the Commonwealth's Title XIX Medicaid State Plan to continue the use of a BAF in setting MA nonpublic and county nursing facility payment rates for FY 2007-2008. In that notice, the Department described how the Department would calculate the BAFs and apply them in the rate-setting process. The Department also identified the BAFs that would be used if the General Assembly appropriated the level of funding requested in the Governor's Executive Budget. See 37 Pa.B. 3036 and 3037 (June 30, 2007).

   After the Department submitted the notice to the Legislative Reference Bureau, the Pennsylvania General Assembly enacted two laws that affect MA nursing facility payment rates and the BAF for FY 2007-2008: The act of June 30, 2007 (P. L. 49, No. 16) (Act 16); and the General Appropriation Act of 2007, (Act 8A).

   Act 16 amended section 443.1 of the Public Welfare Code (code) (62 P. S. § 443.1) to establish statutory standards for payments to county and nonpublic nursing facilities beginning with FY 2007-2008. As amended by Act 16, section 443.1 of the code requires the Department to determine ''payments to county and nonpublic nursing facilities . . . in accordance with the methodologies for establishing payment rates for county and nonpublic nursing facilities specified in the department's regulations and the Commonwealth's approved Title XIX State Plan for nursing facility services in effect after June 30, 2007.'' (62 P. S. § 443.1(7)). It further directs that,

''For the fiscal year 2007-2008, the Department shall apply a revenue adjustment neutrality factor and make adjustments to county and nonpublic nursing facility payment rates for medical assistance nursing facility services. The revenue adjustment factor shall limit the estimated aggregate increase in the Statewide day-weighted average payment rate over the 3-year period commencing July 1, 2005, and ending June 30, 2008, from the Statewide day-weighted average payment rate for medical assistance nursing facility services in FY 2004-2005 to 6.912% plus any percentage rate of increase permitted by the amount of funds appropriated for nursing facility services in the General Appropriations Act of 2007. Application of the revenue adjustment neutrality factor shall be subject to Federal approval of any amendments as may be necessary to the Commonwealth's approved Title XIX State Plan for nursing facility services.'' See 62 P. S. § 443.1(7)(i).

   As noted in the June 30, 2007 notice, two State Plan Amendments (SPA 07-007 and SPA 07-008) were submitted to amend the Commonwealth's Title XIX Plan to specify the formula that the Department intends to use to determine the BAFs for FY 2007-2008. See 37 Pa.B. 3036. Consistent with section 443.1(7)(i) of the code and 55 Pa. Code §§ 1187.96(e)(2)(iii) and (iv) and 1189.91 (relating to price- and rate-setting computations; and per diem rates for county nursing facilities), the SPAs, if approved by the Centers for Medicare and Medicaid Services (CMS), will authorize such adjustments to FY 2007-2008 rates as are necessary to ensure that the increase in payment rates during the 3-year period from July 2005 to June 2008, is limited to the amounts appropriated in the General Fund Budgets for payment for nursing facility services provided to MA recipients.

   When the Department published the June 30, 2007 notice and submitted the SPAs to CMS, the General Appropriations Act of 2007 had not yet been enacted. In preparing the notice and the SPAs, the Department calculated estimated BAFs to limit the aggregate increase for the 3-year period using the 2% rate of increase proposed in the Governor's Executive Budget. The Department advised, both in its notice1 and its submission to CMS, that it would recalculate the BAFs, as necessary, once the General Appropriation Act was enacted. Having reviewed the level of funding appropriated in the General Appropriations Act, the Department determined that it permits a different rate of increase, and the Department recalculated the BAFs as described as follows.

FY 2007-2008 BAFs

   As set forth in SPA 07-007 (nonpublic nursing facilities) and SPA 07-008 (county nursing facilities), the Department will use the following formulas to determine the BAFs for nonpublic and county nursing facilities respectively.

   For rate-setting year 2007-2008, the BAFs that will be applied to county and nonpublic nursing facility payment rates for MA nursing facility services shall limit the estimated aggregate increase in the Statewide day-weighted average payment rate over the 3-year period commencing July 1, 2005, and ending June 30, 2008, from the Statewide day-weighted average payment rate for MA nursing facility services in FY 2004-2005 to 10.12%.

   Based on the 3% rate of increase permitted by the General Appropriations Act of 2007 and the updated projected revenues, the estimated Statewide day-weighted average rate will increase from $166.37 to $183.21, a 3-year aggregate increase of 10.12%.

   The following formula will be used to determine the BAF which the Department will apply in setting rates for nonpublic nursing facilities:

   *  (nonpublic nursing facilities' share of total appropriated funds + estimated annual patient pay amount) divided by

   *  estimated acuity-adjusted annual payments.

   Based on the level of funding set forth in the General Appropriations Act of 2007, the nonpublic BAF produced by this formula will be .93194.2 This BAF was applied in computing the proposed per diem rates for rate year 2007-2008. The proposed per diem rates will be announced in a separate notice published in this Pennsylvania Bulletin.

   A nonpublic nursing facility's case-mix per diem rate for an MA resident day will be the sum of the nursing facility's three net operating components and its capital rate component, multiplied by the BAF.

   The formula for this BAF as it applies to county nursing facilities is as follows:

   *  BAF = 1.00 + the percent increase permitted by the General Appropriations Act of 2007.

   Based on the level of funding set forth in the General Appropriations Act of 2007, the county BAF produced by this formula will be 1.03.

   A county nursing facility's per diem rate for an MA resident will be the facility's July 1, 2006, per diem rate as calculated under Chapter 1189, Subchapter D (relating to rate setting), § 1189.91(b) multiplied by the BAF.

   Application of the BAFs in FY 2007-2008 is subject to Federal approval of the amendments to the Commonwealth's State Plan.

Fiscal Impact

   These changes will result in an estimated cost of $75.794 million ($34.746 million in State funds) for nonpublic nursing facilities and $17.251 million ($7.908 million in State funds) for county nursing facilities in 2007-2008 compared to the final April 1, 2007 rates. Funding for these changes has been included in the Medical Assistance Long-Term Care appropriation.

Public Comment

   Interested persons are invited to submit written comments regarding the BAF formula to the Department at the following address: Department of Public Welfare, Office of Long-Term Living, Attention: Gail Weidman, P. O. Box 2675, Harrisburg, PA 17105. Comments received within 30 days will be reviewed and considered for any subsequent revision of the notice.

   Persons with a disability who require an auxiliary aid or service may submit comments using the AT&T Relay Services at (800) 654-5984 (TDD users) or (800) 654-5988 (voice users).

ESTELLE B. RICHMAN,   
Secretary

   Fiscal Note: 14-NOT-529. (1) General Fund; (2) Implementing Year 2007-08 is $42,654,000; (3) 1st Succeeding Year 2008-09 is $46,532,000; 2nd Succeeding Year 2009-10 is $46,532,000; 3rd Succeeding Year 2010-11 is $46,532,000; 4th Succeeding Year 2011-12 is $46,532,000; 5th Succeeding Year 2012-13 is $46,532,000; (4) 2006-07 Program--$695,279,000; 2005-06 Program--$817,890,000; 2004-05 Program--$476,116,000; (7) Medical Assistance--Long-Term Care; (8) recommends adoption. Funds have been included in the budget to cover these increases.

[Pa.B. Doc. No. 07-1874. Filed for public inspection October 12, 2007, 9:00 a.m.]

_______

1  37 Pa.B. 3037 (June 30, 2007).

2  In updating the calculations based on the final appropriated amounts, the Department determined that the estimated BAF identified in the June 30, 2007, notice was understated. Based on the funding requested in the Governor's Executive Budget and the estimated patient pay amounts used in determining that funding level, the correct amount of that BAF should have been .92359.


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