NOTICES
Payment for Nursing Facility Services; Change in Methods and Standards of Setting Payment Rates
[35 Pa.B. 3267] The Department of Public Welfare (Department) intends to make changes in its methods and standards for payment of Medical Assistance (MA) nursing facility services for Fiscal Year (FY) 2005-2006.
Background
Under the Department's current case-mix payment methodology,1 the Department establishes a new case-mix payment rate for each MA nursing facility provider once for each year. The rates take effect July 1, the start of the State fiscal year, and remain in effect until the close of the fiscal year on the following June 30. To set the annual case-mix payment rates, the Department extracts and inflates cost data from the three most recent audited cost reports on file for each MA nursing facility as of the March 31 immediately preceding the July 1 start of the rate-setting period. The Department adjusts each MA nursing facility's annual rate every quarter during the fiscal year based upon the particular case-mix index of the nursing facility's MA residents. The Department pays the MA nursing facility for nursing facility services provided to MA nursing facility residents during that quarter using the facility's adjusted quarterly case-mix payment rate.
Justification for the Proposed Change in Methodology
Since 2000, MA nursing facility case-mix payment rates have increased by approximately 5.6% each year, and by 29.4% overall. The Department expects that, if unchanged, case-mix payment rates will increase in FY 2005-2006 by an additional 5.6%. The Department has determined that it cannot sustain this pace of inflation in MA nursing facility case-mix payment rates. Consequently, the Department is proposing to place a cap on MA nursing facility case-mix payment rate increases beginning in FY 2005-2006. Unless rate increases are capped, the Department estimates that there will be insufficient funds available to continue to make case-mix payments to MA nursing facilities in accordance with the existing case-mix payment methodology in 55 Pa. Code Chapter 1187, Subchapter G for FY 2005-2006.
Proposed Change in Case-Mix Payment Methodology
Effective with July 1, 2005, rate setting, the Department is proposing to limit each MA nursing facility's adjusted quarterly case-mix per diem rate to the lower of one of the following:
* The nursing facility's quarterly case-mix per diem rate calculated in accordance with the rate setting methodology in 55 Pa. Code Chapter 1187, Subchapter G.
* 102% of the average of the nursing facility's final case-mix per diem rates for the 4 quarters of the immediately preceding fiscal year.
An MA nursing facility that changes ownership will be subject to the rate limit previously described. The Department will use the MA nursing facility's final case-mix per diem rates for the 4 quarters of the immediately preceding fiscal year to calculate the facility's average rate regardless of whether the facility had different owners during the fiscal year.
A new MA nursing facility will also be subject to the rate limit previously described. If the MA nursing facility was enrolled as a new MA nursing facility provider in FY 2004-2005, the Department will use only the final adjusted quarterly case-mix per diem rates for the quarters in which the facility was participating in the MA Program to determine the facility's average FY 2004-2005 case-mix per diem rate. If the nursing facility is enrolled as a new MA nursing facility provider on or after July 1, 2005, the Department will determine the final case-mix rates that would have been calculated for the facility under 55 Pa. Code § 1187.97(1) (relating to rates for new nursing facilities, nursing facilities with a change of ownership, reorganized nursing facilities, and former prospective payment nursing facilities) if the facility had participated in the MA Program during the 4 quarters of the immediately preceding fiscal year and will use those rates to calculate the facility's average rate.
The Department will use the final quarterly case-mix rates announced by notice in the Pennsylvania Bulletin to compute each MA nursing facility's average rate for a fiscal year. Payments made to an MA nursing facility, in addition to those payments made under the final quarterly case-mix rates, will be excluded from the calculation of the facility's average rate for the fiscal year.
Fiscal Impact
The change will result in a savings of $78.064 million in total funds ($42.738 million in Federal Funds, $35.326 million in State Funds) for FY 2005-2006.
Public Comment
A copy of this notice is available at the local county assistance office. Interested persons are invited to submit written comments regarding this notice to the Department of Public Welfare, Division of Long Term Care Client Services, Attention: Gail Weidman, P. O. Box 2675, Harrisburg, PA 17105. Comments received by June 24, 2005, will be reviewed and considered in the development of any State Plan amendments or regulatory changes which may be necessary to implement this cost containment measure.
Persons with a disability who require an auxiliary aid or service may submit comments using the AT&T Relay Service at (800) 654-5984 (TDD users) or (800) 654-5988 (voice users).
ESTELLE B. RICHMAN,
SecretaryFiscal Note: 14-NOT-428. No fiscal impact; (8) recommends adoption. As a result of this change, the General Fund will realize a savings of approximately $35.3 million in 2005-2006.
[Pa.B. Doc. No. 05-1097. Filed for public inspection June 3, 2005, 9:00 a.m.] _______
1 The case-mix rate-setting methodology in 55 Pa. Code Chapter 1187, Subchapter G (relating to rate setting). These regulations are available online at www.pacode.com/secure/data/055/chapter1187/chap1187toc.html.
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