NOTICES

Rate-Setting Methodology for Consolidated and Person/Family Directed Support Waiver- and Base-Funded Services for Individuals Participating in the Office of Developmental Programs Service System

[42 Pa.B. 3826]
[Saturday, June 30, 2012]

 Effective July 1, 2012, the Department of Public Welfare (Department) is revising the methodology used in the Prospective Payment System (PPS) to develop rates for residential habilitation eligible and transportation trip services, funded through the Consolidated and Person/Family Directed Support waivers and for the same service that is provided with base funding in a waiver funded service location.

Background

 Beginning in 2008, the Department began implementation of a Statewide rate setting system to establish provider payment rates consistently across this Commonwealth. The Department continues to move in a direction to align rates and rate-setting methodologies across programs.

Rate-Setting Methodology for Residential Habilitation Eligible Cost-based Services

 The following methodology applies to the residential habilitation eligible proposed payment rates. The proposed payment rates were developed from expenses and utilization reported in approved Year 4 cost reports (Version 7.0—FY 2010-2011 Historical Expense Period), submitted by providers and approved in the desk review process, where the procedure codes and service locations in the cost reports were the same as those entered in the Services and Supports Directory (SSD) as of January 13, 2012. Procedure codes and service locations included in the cost reports, but not entered in the SSD as of January 13, 2012, were not included in calculating the proposed payment rates. The residential habilitation eligible proposed payment rates, effective for services delivered on or after July 1, 2012, are subject to the adjustments described as follows, and are assigned at the Master Provider Index (MPI)—Service Location Code—Procedure Code/Modifier level based on the methodology outlined as follows.

Residential Outlier Review Process

 The ''total unit cost'' for a provider and service is defined as the total expenses reported in the approved cost report for that provider and service divided by the total available units reported in the approved cost report for that provider and service. The total utilization included adjustments based on a review of the cost report data compared to available Home and Community Services Information System and Provider Reimbursement and Operations Management Information System in electronic format (PROMISe) data.

 The Department identified and adjusted for outliers at the total unit cost level for each of the providers' residential habilitation eligible services submitted in the Year 4 approved cost reports. For all residential habilitation eligible services with 20 or more unique unit costs (unit costs by provider and service from separate, approved Year 4 cost reports), the Department applied the following process for each service:

 • The average and standard deviation (SD) values were calculated, excluding extreme outliers, based on the total unit costs for all providers from the Year 4 cost report data.

 • Total unit costs that were greater than the average plus one SD or were less than the average minus two SD were flagged as outliers.

 • Total unit costs that were flagged as outliers were subject to a review, as described as follows.

 To support the Department's efforts to continue to standardize rates, the Department no longer compared total unit costs flagged as outliers to the providers' Fiscal Year (FY) 2011-2012 average rate for the applicable service location and service.

Total Unit Cost Review

 The Department staff performed a standardized review of all total unit cost outliers. The review consisted of an evaluation of the Individual Support Plans (ISPs) for waiver participants receiving services at the service locations impacted by the outlier unit cost. The review allowed the Department to determine whether the outlier unit cost was justified (such as an individual with complex needs) and the following was applied:

 • Total unit cost outliers that were supported by the ISP reviews were not adjusted.

 • Total unit cost outliers that were greater than the average unit cost plus one SD and that were not supported by the ISP reviews were adjusted to the maximum unit cost below the average plus one SD for that service.

 • Total unit cost outliers that were less than the average minus two SD and that were not supported by the ISP reviews were adjusted to the minimum unit cost above the average minus two SD for that service.

 For all residential habilitation eligible services with fewer than 20 unique unit costs, the Department did not perform the standardized outlier review on the total unit costs because there were not enough data points available to produce statistically valid ranges. The Department, however, did review the unit costs for these services in an effort to standardize rates across services. The review consisted of a comparison of the following:

 • Other unit costs for that service, as applicable.

 • The average unit cost and range of unit costs for similar services with 20 or more unit costs.

 • The FY 2011-2012 Statewide average unit cost (without the Rate Adjustment Factor) for that service based on FY 2011-2012 approved cost report data. For those unit costs that were unreasonably high or low based on this review, the Department performed a review of the ISPs for the individuals at the service locations impacted by the high/low unit cost to determine if the unit costs were justified. Based on these reviews, no adjustments were made.

Vacancy Factor applicable to Residential Services

 A vacancy factor was incorporated into the residential habilitation rates to recognize that providers may not deliver services at full capacity. The vacancy factor adjusts the full capacity rate to account for days where the residential provider cannot bill due to a participant not receiving services. The provider is prohibited to bill for days where a participant is not receiving services, but rather would be paid a higher rate for days when the participant is receiving services.

 After the unit costs for each residential habilitation eligible service were adjusted through the outlier review process, a single, standardized vacancy factor of 97% (based on data analyses using PROMISe utilization data and approved cost report data) was applied to reflect payment to providers for an average number of vacant days. For example, a unit cost of $100 (after the outlier review) would be adjusted to a unit cost of $103.09 ($100 / 0.97) after the vacancy factor was applied.

Transportation Trip Cost-based Services

 The proposed payment rates for transportation trip services were developed from data submitted by providers in the Year 4 transportation cost report (dated January 2012 for the FY 2010-2011 Historical Expense Period) and approved in the desk review process, where the procedure codes submitted by providers were the same as those entered in the SSD as of January 13, 2012. Procedure codes included in the transportation cost reports, but not entered in the SSD as of January 13, 2012, were not included in calculating the proposed payment rates. The FY 2012-2013 transportation trip proposed rates effective for services delivered July 1, 2012, through June 30, 2013, are subject to the adjustments described as follows, and are assigned at the MPI—Service Location Code—Procedure Code level based on the methodology outlined as follows.

Transportation Trip Outlier Review Process

 The ''total unit cost'' for a provider and transportation trip service is defined as the total expenses reported in the approved transportation cost report for that provider and service divided by the total utilization reported in the approved transportation cost report for that provider and service. The total expenses are equal to Schedule A, Line 12 (total net expenses) plus Line 20 (projected costs for transportation aides) of the cost report. The total utilization is equal to Schedule A, Line 13 of the cost report. These rates reflect consideration for trips with and without aides (as reported by the provider), which means each provider will be paid one payment rate for each trip service (that is, there will not be separate rates for trips with an aide versus without an aide).

 The Department reviewed the development of each transportation trip unit cost submitted in approved transportation cost reports for accuracy, reasonableness and to ensure compliance with the Department's allowable cost policies.

Cost of Living

 After the unit costs for each residential eligible and transportation trip service were adjusted as previously described, a total Cost of Living Adjustment (COLA) of 0.00% was applied (0.00% for FY 2010-2011 and 0.00% for FY 2011-2012), to establish each provider's proposed payment rates for FY 2012-2013 (prior to consideration of application of a rate adjustment factor).

Rate Adjustment Factor

 The Department performed an analysis of aggregate provider expenditures compared to the amount appropriated for the Waiver program to determine if a rate adjustment factor (RAF), would need to be applied prospectively to the residential habilitation eligible and transportation trip rates. Based on this analysis, the Department determined that an RAF was not necessary for developing the proposed payment rates.

 Proposed payment rates were calculated using the following formulas:

 • Proposed Payment Rate for residential eligible services = (Unit Cost (after applicable utilization adjustments and outlier review) / (0.97 (vacancy factor)) × (1 + COLA).

 • Proposed Payment Rate for transportation trip services = (Unit Cost (after outlier review)) × (1 + COLA).

Rate Assignment Process

 For residential habilitation eligible and transportation trip services, the Department assigned proposed payment rates to providers with approved Year 4 cost reports using the following methodology:

 • The provider's cost-based rate for existing services and service locations submitted in the cost reports, based on the methodology previously described.

 • The average of the provider's cost-based rates for an existing service at a new service location if the provider submitted cost report data for that service at other service locations.

 • The area adjusted average rate calculated based on all approved cost reports for a new service for which the provider did not deliver at any service location in FY 2010-2011.

 The Department assigned proposed payment rates to existing providers who do not have approved Year 4 cost reports based on the following methodology. Providers were assigned:

 • The lowest rates calculated based on all approved cost reports for an existing service for which the provider delivered at any service location in FY 2010-2011.

 • The area adjusted average rate calculated based on all approved cost reports for a new service for which the provider did not deliver at any service location in FY 2010-2011.

 The Department assigned the area adjusted average rate calculated based on all approved cost reports to new providers who did not provide any services in FY 2010-2011.

 All proposed payment rates for all waiver-funded services are contingent on the final budget enacted by the General Assembly. The proposed payment rates should be used to process claims submitted to the Provider Reimbursement and Operations Management Information System (PROMISe^TM) in electronic format for services provided until a notice announcing final rates is published.

Fiscal Impact

 It is anticipated that there will be an approximate cost to the Commonwealth of $67.720 million ($30.828 million State funds) in FY 2012-2013 and subsequent years.

Public Comment

 Copies of this notice may be obtained at the local Mental Health/Mental Retardation (MH/MR) County Program, Administrative Entity (AE) or regional Office of Developmental Programs (ODP) in the corresponding regions:

 • Western region: Piatt Place, Room 4900, 301 5th Avenue, Pittsburgh, PA 15222, (412) 565-5144

 • Northeast region: Room 315, Scranton State Office Building, 100 Lackawanna Avenue, Scranton, PA 18503, (570) 963-4749

 • Southeast region: 801 Market Street, Suite 5071, Philadelphia, PA 19107, (215) 560-2242 or (215) 560-2245

 • Central region: Room 430, Willow Oak Building, P. O. Box 2675, DGS Annex Complex, Harrisburg, PA 17105, (717) 772-6507

 Contact information for the local MH/MR County Program or AE may be found at https://www.hcsis.state.pa. us/hcsis-ssd/pgm/asp/PRCNT.ASP or contact the previously referenced regional ODP.

 Interested persons are invited to submit written comments regarding this notice to the Department at the Office of Developmental Programs' rate-setting mailbox at ra-ratesetting@state.pa.us, use subject header ''PN PPS Methodology,'' or Department of Public Welfare, Office of Developmental Programs, Division of Provider Assistance and Rate Setting, 4th Floor, Health and Welfare Building, Forster and Commonwealth Avenues, Harrisburg, PA 17120.

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

GARY D. ALEXANDER, 
Secretary

 Fiscal Note: 14-NOT-771. (1) General Fund:

(2) Implementing Year 2012-13 is $30,828,000
(3) 1st Succeeding Year 2013-14 is $30,828,000 2nd Succeeding Year 2014-15 is $30,828,000 3rd Succeeding Year 2015-16 is $30,828,000 4th Succeeding Year 2016-17 is $30,828,000 5th Succeeding Year 2017-18 is $30,828,000
		ID—Community Waiver Program	ID—Community Base Program	Human Services Development Fund
(4) 2011-12 Program—		$854,863,000	$166,520,000	$14,956,000
	2010-11 Program—	$672,376,000	$155,958,000	$23,243,000
	2009-10 Program—	$622,849,000	$156,619,000	$33,346,000
Prior to FY 2012-13, ID—Community Base Services were provided through the ID—Community Base Program appropriation. Beginning in FY 2012-13, ID—Community Base Services are provided through the Human Services Development Fund.
(7) ID—Community Waiver Program; (8) recommends adoption. Funds have been included in the budget to cover this increase.

[Pa.B. Doc. No. 12-1227. Filed for public inspection June 29, 2012, 9:00 a.m.]

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