Subchapter G. RATE SETTING
Sec.
1187.91. Database.
1187.92. Resident classification system.
1187.93. CMI calculations.
1187.94. Peer grouping for price setting.
1187.95. General principles for rate and price setting.
1187.96. Price- and rate-setting computations.
1187.97. Rates for new nursing facilities, nursing facilities with a change of ownership, reorganized nursing facilities and former prospective payment nursing facilities.
1187.98. Phase-out median determination.
Cross References This subchapter cited in 55 Pa. Code § 1189.91 (relating to per diem rates for county nursing facilities).
§ 1187.91. Database.
The Department will set rates for the case-mix payment system based on the following data:
(1) Net operating costs.
(i) The net operating prices will be established based on the following:
(A) Audited nursing facility costs for the 3 most recent years available in the NIS database adjusted for inflation. This database includes audited MA-11 cost reports that are issued by the Department on or before March 31 of each July 1 price setting period.
(B) If a nursing facility that has participated in the MA Program for 3 or more consecutive years has fewer than three audited cost reports in the NIS database that are issued by the Department on or before March 31 of each July 1 price setting period, the Department will use reported costs, as adjusted to conform to Department regulations, for those years not audited within 15 months of the date of acceptance, until audits have been completed and are available in the NIS database for price setting.
(C) If a nursing facility, that has not participated in the MA Program for 3 or more consecutive years, has fewer than three audited cost reports in the NIS database that are issued by the Department on or before March 31 of each July 1 price setting period, the Department will use all available audited cost reports in the NIS database.
(D) For net operating prices effective on or after July 1, 2001, the Department will revise the audited costs specified in clauses (A)—(C) by disregarding audit adjustments disallowing or reclassifying to capital costs, the costs of minor movable property (as defined in § 1187.2 (relating to definitions), effective on July 1, 2001) or linens reported as net operating costs on cost reports for fiscal periods beginning prior to January 1, 2001. The Department will not adjust the audited statistics when revising the nursing facility audited resident care, other resident care and administrative allowable costs to disregard the adjustments relating to minor movable property and linen costs. After revising the audited costs to disregard these adjustments, the Department will recalculate the maximum allowable administrative cost, and will disallow administrative costs in excess of the 12% limitation as specified in § 1187.56(1)(i) (relating to selected administrative cost policies).
(ii) Subparagraph (i)(B) does not apply if a nursing facility is under investigation by the Office of Attorney General. In this situation, the Department will use a maximum of the three most recent available audited cost reports in the NIS database used for price setting.
(iii) A cost report for a period of less than 12 months will not be included in the NIS database used for each price setting year.
(iv) Prior to price setting, cost report information will be indexed forward to the 6th month of the 12-month period for which the prices are set. The index used is the 1st Quarter issue of the CMS Nursing Home Without Capital Market Basket Index.
(v) Total facility and MA CMI averages from the quarterly CMI reports will be used to determine case-mix adjustments for each price-setting and rate-setting period as specified in § 1187.96(a)(1)(i) and (5) (relating to price- and rate-setting computations).
(2) Capital costs.
(i) Fixed property component. The fixed property component of a nursing facility’s capital rate will be based upon the total assigned cost of the nursing facility’s allowable beds.
(ii) Movable property component. The movable property component of a nursing facility’s capital rate will be based upon the audited costs of the nursing facility’s major movable property as set forth in the nursing facility’s most recent audited MA-11 cost report available in the NIS database.
(iii) Real estate tax cost component. The real estate tax component of a nursing facility’s capital rate will be based upon the nursing facility’s actual audited real estate tax costs as set forth in the nursing facility’s most recent audited MA-11 cost report available in the NIS database.
Authority The provisions of this § 1187.91 amended under sections 201(2), 206(2), 403(b) and 443.1(5) of the Public Welfare Code (62 P.S. § § 201(2), 206(2), 403(b) and 443.1(5)).
Source The provisions of this § 1187.91 amended February 8, 2002, effective July 1, 2001, except for the limited extent specified in paragraph (1)(iv)(D) applies to cost reports for fiscal period starting on or after January 1, 2001, 32 Pa.B. 734; amended June 23, 2006, effective July 1, 2006, 36 Pa.B. 3207; amended November 26, 2010, effective November 27, 2010, 40 Pa.B. 6782. Immediately preceding text appears at serial pages (320642) to (320644).
Cross References This section cited in 55 Pa. Code § 1187.96 (relating to price- and rate-setting computations); 55 Pa. Code § 1187.98 (relating to phase-out median determination); and 55 Pa. Code § 1187.107 (relating to limitations on resident care and other resident related cost centers).
§ 1187.92. Resident classification system.
(a) The Department will use the RUG-III to adjust payment for resident care services based on the classification of nursing facility residents into 44 groups.
(b) Each resident shall be included in the RUG-III category with the highest numeric CMI for which the resident qualifies.
(c) The Department will use the RUG-III nursing CMI scores normalized across all this Commonwealth’s nursing facility residents.
(d) The Department will announce, by notice submitted for recommended publication in the Pennsylvania Bulletin and suggested codification in the Pennsylvania Code as Appendix A, the RUG-III nursing CMI scores and the PA normalized RUG-III index scores.
(e) The PA normalized RUG-III index scores will remain in effect until a subsequent notice is published in the Pennsylvania Bulletin.
(f) Resident data for RUG-III classification purposes shall be reported by each nursing facility under § 1187.33 (relating to resident data reporting requirements).
§ 1187.93. CMI calculations.
The Pennsylvania Case-Mix Payment System uses the following CMI calculations:
(1) An individual resident’s CMI shall be assigned to the resident according to the RUG-III classification system.
(2) The facility MA CMI shall be the arithmetic mean of the individual CMIs for MA residents identified on the nursing facility’s CMI report for the picture date. The facility MA CMI shall be used for rate determination under § 1187.96(a)(5) (relating to price and rate-setting computations.) If there are no MA residents identified on the CMI report for a picture date, the Statewide average MA CMI shall be substituted for rate determination under § 1187.96(a)(5).
(3) The total facility CMI is the arithmetic mean of the individual resident CMIs for all residents, regardless of payor, identified on the nursing facility’s CMI report for the picture date. The total facility CMI for the February 1 picture date shall be used for price and rate setting computations as specified in § 1187.96(a)(1)(i).
(4) Picture dates that are used for rate setting beginning July 1, 2010, and thereafter will be calculated based on the RUG versions and CMIs set forth in Appendix A.
Authority The provisions of this § 1187.93 amended under sections 201(2), 206(2), 403(b) and 443.1(5) of the Public Welfare Code (62 P.S. § § 201(2), 206(2), 403(b) and 443.1(5)).
Source The provisions of this § 1187.93 amended June 23, 2006, effective July 1, 2006, 36 Pa.B. 3207; amended August 26, 2011, effective retroactive to July 1, 2010, 41 Pa.B. 4630. Immediately preceding text appears at serial pages (354214) to (354215).
Cross References This section cited in 55 Pa. Code § 1187.96 (relating to price- and rate-setting computations).
§ 1187.94. Peer grouping for price setting.
To set net operating prices under the case-mix payment system, the Department will classify the nursing facilities participating in the MA Program into 14 mutually exclusive groups as follows:
(1) Nursing facilities participating in the MA Program, except those nursing facilities that meet the definition of a special rehabilitation facility or hospital-based nursing facility, will be classified into 12 mutually exclusive groups based on MSA group classification and nursing facility certified bed complement.
(i) Effective for rate setting periods commencing July 1, 2004, the Department will use the MSA group classification published by the Federal Office of Management and Budget in the OMB Bulletin No. 99-04 (relating to revised definitions of Metropolitan Areas and guidance on uses of Metropolitan Area definitions), to classify each nursing facility into one of three MSA groups or one non-MSA group.
(ii) The Department will use the bed complement of the nursing facility on the final day of the reporting period of the most recent audited MA-11 used in the NIS database to classify nursing facilities into one of three bed complement groups.
(iii) The Department will classify each nursing facility into one of the following 12 peer groups:
Peer Group # MSA Group # Beds 1 A › or = 270 2 A 120—269 3 A 3—119 4 B › or = 270 5 B 120—269 6 B 3—119 7 C › or = 270 8 C 120—269 9 C 3—119 10 non-MSA › or = 270 11 non-MSA 120—269 12 non-MSA 3—119 (iv) A peer group with fewer than seven nursing facilities will be collapsed into the adjacent peer group with the same bed size. If the peer group with fewer than seven nursing facilities is a peer group in MSA B or MSA C and there is a choice of two peer groups with which to merge, the peer group with fewer than seven nursing facilities will be collapsed into the peer group with the larger population MSA group.
(v) For rate years 2009-2010, 2010-2011 and 2011-2012, county nursing facilities will be included when determining the number of nursing facilities in a peer group in accordance with subparagraph (iv).
(2) To set net operating prices under the case-mix payment system, the Department will classify the nursing facilities participating in the MA Program that meet the definition of a special rehabilitation facility into one peer group, peer group number 13. Regardless of the number of facilities in this peer group, the Department will not collapse the peer group of special rehabilitation facilities.
(i) Effective November 1, 2011, the Department will establish peer group medians and prices for facilities classified as special rehabilitation facilities on or before July 1, 2000, by using data from only the nursing facilities classified as special rehabilitation facilities on or before July 1, 2000.
(ii) Effective November 1, 2011, the Department will establish peer group medians and prices for facilities classified as special rehabilitation facilities after July 1, 2000, by using data from all nursing facilities classified as special rehabilitation facilities.
(3) To set net operating prices under the case-mix payment system, the Department will classify the nursing facilities participating in the MA Program that meet the definition of a hospital-based nursing facility into one peer group, peer group number 14. Regardless of the number of facilities in this peer group, the Department will not collapse the peer group of hospital-based nursing facilities.
(4) Once nursing facilities have been classified into peer groups for price setting, the nursing facility costs will remain in that peer group until prices are rebased, unless paragraph (5) applies.
(5) Paragraph (3) sunsets on the date that amendments are effective in Chapter 1163 (relating to inpatient hospital services), to allow for the inclusion of costs previously allocated to hospital-based nursing facilities. Subsequent to the effective date of the amendments to Chapter 1163, the Department will classify hospital-based nursing facilities in accordance with paragraph (1).
Authority The provisions of this § 1187.94 amended under sections 201(2), 206(2), 403(b), 443.1 and 454 of the Public Welfare Code (62 P.S. § § 201(2), 206(2), 403(b), 443.1 and 454).
Source The provisions of this § 1187.94 amended August 12, 2005, effective July 1, 2004, 35 Pa.B. 4612; amended November 26, 2010, effective November 27, 2010, 40 Pa.B. 6782; amended June 6, 2014, effective November 1, 2011, 44 Pa.B. 3322. Immediately preceding text appears at serial pages (358351) to (358353).
Cross References This section cited in 55 Pa. Code § 1187.97 (relating to rates for new nursing facilities, nursing facilities with a change of ownership, reorganized nursing facilities and former prospective payment nursing facilities); and 55 Pa. Code § 1187.98 (relating to phase-out median determination).
§ 1187.95. General principles for rate and price setting.
(a) Prices will be set prospectively on an annual basis during the second quarter of each calendar year and be in effect for the subsequent July 1 through June 30 period.
(1) Peer group prices will be established for resident care costs, other resident related costs and administrative costs.
(2) If a peer group has an even number of nursing facilities, the median peer group price determined will be the arithmetic mean of the costs of the two nursing facilities holding the middle position in the peer group array.
(3) If a nursing facility changes bed size or MSA group, the nursing facility will be reassigned from the peer group used for price setting to peer group based on bed certification and MSA group as of April 1, for rate setting.
(4) The Department will announce, by notice submitted for recommended publication in the Pennsylvania Bulletin and suggested codification in the Pennsylvania Code as Appendix B, the peer group prices for each peer group.
(b) Rates will be set prospectively each quarter of the calendar year and will be in effect for 1 full quarter. Net operating rates will be based on peer group prices as limited by § 1187.107 (relating to limitations on resident care and other resident related cost centers). The nursing facility per diem rate will be computed as defined in § 1187.96(e) (relating to price- and rate-setting computations). Resident care peer group prices will be adjusted for the MA CMI of the nursing facility each quarter and be effective on the first day of the following calendar quarter.
Authority The provisions of this § 1187.95 amended under sections 201(2), 206(2), 403(b) and 443.1(5) of the Public Welfare Code (62 P.S. § § 201(2), 206(2), 403(b) and 443.1(5)).
Source The provisions of this § 1187.95 amended May 30, 1997, effective May 31, 1997, and apply retroactively to January 1, 1996, 27 Pa.B. 2636; amended November 2, 2001, effective November 3, 2001, 31 Pa.B. 6048; amended June 23, 2006, effective July 1, 2006, 36 Pa.B. 3207. Immediately preceding text appears at serial pages (313026), (287611) to (287612) and (315067).
§ 1187.96. Price- and rate-setting computations.
(a) Using the NIS database in accordance with this subsection and § 1187.91 (relating to database), the Department will set prices for the resident care cost category.
(1) The Department will use each nursing facility’s cost reports in the NIS database to make the following computations:
(i) The total resident care cost for each cost report will be divided by the total facility CMI from the available February 1 picture date closest to the midpoint of the cost report period to obtain case-mix neutral total resident care cost for the cost report year.
(ii) The case-mix neutral total resident care cost for each cost report will be divided by the total actual resident days for the cost report year to obtain the case-mix neutral resident care cost per diem for the cost report year.
(iii) The Department will calculate the 3-year arithmetic mean of the case-mix neutral resident care cost per diem for each nursing facility to obtain the average case-mix neutral resident care cost per diem of each nursing facility.
(2) The average case-mix neutral resident care cost per diem for each nursing facility will be arrayed within the respective peer groups, and a median determined for each peer group.
(3) For rate years 2006-2007, 2007-2008, 2009-2010, 2010-2011 and 2011-2012, the median used to set the resident care price will be the phase-out median as determined in accordance with § 1187.98 (relating to phase-out median determination).
(4) The median of each peer group will be multiplied by 1.17, and the resultant peer group price assigned to each nursing facility in the peer group.
(5) The price derived in paragraph (4) for each nursing facility will be limited by § 1187.107 (relating to limitations on resident care and other resident related cost centers) and the amount will be multiplied each quarter by the respective nursing facility MA CMI to determine the nursing facility resident care rate. The MA CMI picture date data used in the rate determination are as follows: July 1 rate—February 1 picture date; October 1 rate—May 1 picture date; January 1 rate—August 1 picture date; and April 1 rate—November 1 picture date.
(6) For rate years 2010-2011, 2011-2012 and 2012-2013, unless the nursing facility is a new nursing facility, the resident care rate used to establish the nursing facility’s case-mix per diem rate will be a blended resident care rate.
(i) The nursing facility’s blended resident care rate for the 2010-2011 rate year will equal 75% of the nursing facility’s 5.01 resident care rate calculated in accordance with subparagraph (iv) plus 25% of the nursing facility’s 5.12 resident care rate calculated in accordance with subparagraph (iv).
(ii) The nursing facility’s blended resident care rate for the 2011-2012 rate year will equal 50% of the nursing facility’s 5.01 resident care rate calculated in accordance with subparagraph (v) and 50% of the nursing facility’s 5.12 resident care rate calculated in accordance with subparagraph (v).
(iii) The nursing facility’s blended resident care rate for the 2012-2013 rate year will equal 25% of the nursing facility’s 5.01 resident care rate calculated in accordance with subparagraph (v) and 75% of the nursing facility’s 5.12 resident care rate calculated in accordance with subparagraph (v).
(iv) For the rate year 2010-2011, each nursing facility’s blended resident care rate will be determined based on the following calculations:
(A) For the first quarter of the rate year (July 1, 2010—September 30, 2010), the Department will calculate each nursing facility’s blended resident care rate as follows:
(I) The Department will calculate a 5.12 resident care rate for each nursing facility in accordance with paragraphs (1)—(5). The CMI values the Department will use to determine each nursing facility’s total facility CMIs and facility MA CMI, computed in accordance with § 1187.93 (relating to CMI calculations), will be the RUG-III version 5.12 44 group values as set forth in Appendix A. The resident assessment that will be used for each resident will be the most recent classifiable resident assessment of any type.
(II) The Department will calculate a 5.01 resident care rate for each nursing facility in accordance with paragraphs (1)—(5). The CMI values the Department will use to determine each nursing facility’s total facility CMIs and facility MA CMI, computed in accordance with § 1187.93, will be the RUG-III version 5.01 44-group values as set forth in Appendix A. The resident assessment that will be used for each resident will be the most recent comprehensive resident assessment.
(III) The nursing facility’s blended resident care rate for the quarter beginning July 1, 2010, and ending September 30, 2010, will be the sum of the nursing facility’s 5.01 resident care rate multiplied by 0.75 and the nursing facility’s 5.12 resident care rate multiplied by 0.25.
(B) For the remaining 3 quarters of the 2010-2011 rate year (October 1 through December 31; January 1 through March 31; April 1 through June 30), the Department will calculate each nursing facility’s blended resident care rate as follows:
(I) The Department will calculate a quarterly adjusted 5.12 resident care rate for each nursing facility in accordance with paragraph (5). The CMI values used to determine each nursing facility’s MA CMI, computed in accordance with § 1187.93, will be the RUG-III version 5.12 44 group values as set forth in Appendix A. The resident assessment that will be used for each resident will be the most recent classifiable resident assessment of any type.
(II) The Department will calculate a quarterly adjusted 5.01 resident care rate for each nursing facility by multiplying the nursing facility’s prior quarter 5.01 resident care rate by the percentage change between the nursing facility’s current quarter 5.12 resident care rate and the nursing facility’s previous quarter 5.12 resident care rate. The percentage change will be determined by dividing the nursing facility’s current quarter 5.12 resident care rate by the nursing facility’s previous quarter 5.12 resident care rate.
(III) The nursing facility’s blended resident care rate for the 3 remaining quarters of the rate year will be the sum of the nursing facility’s quarterly adjusted 5.01 resident care rate multiplied by 0.75 and the nursing facility’s quarterly adjusted 5.12 resident care rate multiplied by 0.25.
(v) For rate years 2011-2012 and 2012-2013, each nursing facility’s blended resident care rate will be determined based on the following calculations:
(A) For the first quarter of each rate year (July 1—September 30), the Department will calculate each nursing facility’s blended resident care rate as follows:
(I) The Department will calculate a 5.12 resident care rate for each nursing facility in accordance with paragraphs (1)—(5). The CMI values used to determine each nursing facility’s total facility CMIs and facility MA CMI, computed in accordance with § 1187.93, will be the RUG-III version 5.12 44 group values as set forth in Appendix A. The resident assessment that will be used for each resident will be the most recent classifiable resident assessment of any type.
(II) The Department will calculate a 5.01 resident care rate for each nursing facility by multiplying the nursing facility’s prior April 1st quarter 5.01 resident care rate by the percentage change between the nursing facility’s current 5.12 resident care rate and the nursing facility’s prior April 1st quarter 5.12 resident care rate. The percentage change will be determined by dividing the nursing facility’s current 5.12 resident care by the nursing facility’s April 1st quarter 5.12 resident care rate.
(III) The nursing facility’s blended resident care rate for the quarter beginning July 1, 2011, and ending September 30, 2011, will be the sum of the nursing facility’s 5.01 resident care rate multiplied by 0.50 and the nursing facility’s 5.12 resident care rate multiplied by 0.50.
(IV) The nursing facility’s blended resident care rate for the quarter beginning July 1, 2012, and ending September 30, 2012, will be the sum of the nursing facility’s 5.01 resident care rate multiplied by 0.25 and the nursing facility’s 5.12 resident care rate multiplied by 0.75.
(B) For the remaining 3 quarters of each rate year (October 1 through December 31; January 1 through March 31; April 1 through June 30), the Department will calculate each nursing facility’s blended resident care rate as follows:
(I) The Department will calculate a quarterly adjusted 5.12 resident care rate for each nursing facility in accordance with paragraph (5). The CMI values used to determine each nursing facility’s MA CMI, computed in accordance with § 1187.93, will be the RUG-III version 5.12 44 group values as set forth in Appendix A. The resident assessment that will be used for each resident will be the most recent classifiable resident assessment of any type.
(II) The Department will calculate a quarterly adjusted 5.01 resident care rate for each nursing facility by multiplying the nursing facility’s prior quarter 5.01 resident care rate by the percentage change between the nursing facility’s current quarter 5.12 resident care rate and the nursing facility’s previous quarter 5.12 resident care rate. The percentage change will be determined by dividing the nursing facility’s current quarter 5.12 resident care rate by the nursing facility’s previous quarter 5.12 resident care rate.
(III) For the remaining 3 quarters of rate year 2011-2012 (October 1 through December 31; January 1 through March 31; April 1 through June 30), each nursing facility’s blended resident care rate will be the sum of the nursing facility’s quarterly adjusted 5.01 resident care rate multiplied by 0.50 and the nursing facility’s quarterly adjusted 5.12 resident care rate multiplied by 0.50.
(IV) For the remaining 3 quarters of rate year 2012-2013 (October 1 through December 31; January 1 through March 31; April 1 through June 30), each nursing facility’s blended resident care rate will be the sum of the nursing facility’s quarterly adjusted 5.01 resident care rate multiplied by 0.25 and the facility’s quarterly adjusted 5.12 resident care rate multiplied by 0.75.
(7) Beginning with rate year 2013-2014, and thereafter, the Department will calculate each nursing facility’s resident care rate in accordance with paragraphs (1)—(5). The CMI values used to determine each nursing facility’s total facility CMIs and facility MA CMI, computed in accordance with § 1187.93, will be the RUG-III version 5.12 44 group values as set forth in Appendix A. The resident assessment that will be used for each resident will be the most recent classifiable resident assessment of any type.
(b) Using the NIS database in accordance with this subsection and § 1187.91, the Department will set prices for the other resident related cost category.
(1) The Department will use each nursing facility’s cost reports in the NIS database to make the following computations:
(i) The total other resident related cost for each cost report will be divided by the total actual resident days for the cost report year to obtain the other resident related cost per diem for the cost report year.
(ii) The Department will calculate the 3-year arithmetic mean of the other resident related cost for each nursing facility to obtain the average other resident related cost per diem of each nursing facility.
(2) The average other resident related cost per diem for each nursing facility will be arrayed within the respective peer groups and a median determined for each peer group.
(3) For rate years 2006-2007, 2007-2008, 2009-2010, 2010-2011 and 2011-2012, the median used to set the other resident related price will be the phase-out median as determined in accordance with § 1187.98.
(4) The median of each peer group will be multiplied by 1.12, and the resultant peer group price assigned to each nursing facility in the peer group. This price for each nursing facility will be limited by § 1187.107 to determine the nursing facility other resident related rate.
(c) Using the NIS database in accordance with this subsection and § 1187.91, the Department will set prices for the administrative cost category.
(1) The Department will use each nursing facility’s cost reports in the NIS database to make the following computations:
(i) The total actual resident days for each cost report will be adjusted to a minimum 90% occupancy, if applicable, in accordance with § 1187.23 (relating to nursing facility incentives and adjustments).
(ii) The total allowable administrative cost for each cost report will be divided by the total actual resident days, adjusted to 90% occupancy, if applicable, to obtain the administrative cost per diem for the cost report year.
(iii) The Department will calculate the 3-year arithmetic mean of the administrative cost for each nursing facility to obtain the average administrative cost per diem of each nursing facility.
(2) The average administrative cost per diem for each nursing facility will be arrayed within the respective peer groups and a median determined for each peer group.
(3) For rate years 2006-2007, 2007-2008, 2009-2010, 2010-2011 and 2011-2012, the median used to set the administrative price will be the phase-out median as determined in accordance with § 1187.98.
(4) The median of each peer group will be multiplied by 1.04, and the resultant peer group price will be assigned to each nursing facility in the peer group to determine the nursing facility’s administrative rate.
(d) Using the NIS database in accordance with this subsection and § 1187.91, the Department will set a rate for the capital cost category for each nursing facility by adding the nursing facility’s fixed property component, movable property component and real estate tax component and dividing the sum of the three components by the nursing facility’s total actual resident days, adjusted to 90% occupancy, if applicable.
(1) The Department will determine the fixed property component of each nursing facility’s capital rate as follows:
(i) The Department will multiply the total number of the nursing facility’s allowable beds as of April 1, immediately preceding the rate year, by $26,000 to determine the nursing facility’s allowable fixed property cost.
(ii) The Department will multiply the result by the financial yield rate.
(2) The Department will determine the movable property component of each nursing facility’s capital rate based on the audited actual costs of major movable property as set forth in the most recent audited MA-11 cost report available in the NIS database in accordance with § 1187.91. This amount is referred to as the nursing facility’s allowable movable property cost.
(3) The Department will determine the real estate tax cost component of each nursing facility’s capital rate based on the audited actual real estate tax cost as set forth in the most recent audited MA-11 cost report available in the NIS database.
(e) The following applies to the computation of nursing facilities’ per diem rates:
(1) The nursing facility per diem rate will be computed by adding the resident care rate, the other resident related rate, the administrative rate and the capital rate for the nursing facility.
(2) For each quarter of the 2006-2007 and 2007-2008 rate-setting years, the nursing facility per diem rate will be computed as follows:
(i) Generally. If a nursing facility is not a new nursing facility or a nursing facility experiencing a change of ownership during the rate year, that nursing facility’s resident care rate, other resident related rate, administrative rate and capital rate will be computed in accordance with subsections (a)—(d) and the nursing facility’s per diem rate will be the sum of those rates multiplied by a budget adjustment factor determined in accordance with subparagraph (iv).
(ii) New nursing facilities. If a nursing facility is a new nursing facility for purposes of § 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) that nursing facility’s resident care rate, other resident related rate, administrative rate and capital rate will be computed in accordance with § 1187.97(1), and the nursing facility’s per diem rate will be the sum of those rates multiplied by a budget adjustment factor determined in accordance with subparagraph (iv).
(iii) Nursing facilities with a change of ownership and reorganized nursing facilities. If a nursing facility undergoes a change of ownership during the rate year, that nursing facility’s resident care rate, other resident related rate, administrative rate and capital rate will be computed in accordance with § 1187.97(2), and the nursing facility’s per diem rate will be the sum of those rates multiplied by a budget adjustment factor determined in accordance with subparagraph (iv).
(iv) Budget adjustment factor. The budget adjustment factor for the rate year will be determined in accordance with the formula set forth in the Commonwealth’s approved State Plan.
(3) For rate years 2010-2011, 2011-2012 and 2012-2013, unless the nursing facility is a new nursing facility, the nursing facility per diem rate will be computed by adding the blended resident care rate, the other resident related rate, the administrative rate and the capital rate for the nursing facility.
Authority The provisions of this § 1187.96 amended under sections 201(2), 206(2), 403(b), 443.1(5) and 454 of the Public Welfare Code (62 P. S. § § 201(2), 206(2), 403(b), 443.1(5) and 454).
Source The provisions of this § 1187.96 amended February 8, 2002, effective July 1, 2001, 32 Pa.B. 734; amended November 11, 2005, effective July 1, 2005, 35 Pa.B. 6232; amended June 23, 2006, effective July 1, 2006, 36 Pa.B. 3207; amended November 26, 2010, effective November 27, 2010, 40 Pa.B. 6782; amended August 26, 2011, effective retroactive to July 1, 2010, 41 Pa.B. 4630; corrected February 3, 2012, effective February 5, 2011, 42 Pa.B 673. Immediately preceding text appears at serial pages (358354) to (358361).
Notes of Decisions Nursing facilities alleged that legislative bill authorizing Department of Public Welfare to adopt regulations to control increases in payment rates to nursing facilities was unconstitutional and Department regulations adopted under such authority were void; legislative standards in the State Welfare Code and Federal Medicaid Act properly delegate lawmaking power to Department and are adequate to guide and restrain its discretion in establishing payment methodology. Christ v. Department of Public Welfare, 911 A.2d 624, 642—643 (Pa. Cmwlth. 2006).
Cross References This section cited in 55 Pa. Code § 1187.80 (relating to failure to file an MA-11); 55 Pa. Code § 1187.93 (relating to CMI calculations); 55 Pa. Code § 1187.91 (relating to database); 55 Pa. Code § 1187.95 (relating to general principles for rate and price setting); 55 Pa. Code § 1187.97 (relating to rates for new nursing facilities, nursing facilities with a change of ownership, reorganized nursing facilities, and former prospective payment nursing facilities); 55 Pa. Code § 1187.98 (relating to phase-out median determination); 55 Pa. Code § 1187.104 (relating to limitations on payment for reserved beds); and 55 Pa. Code § 1187.141 (relating to nursing facility’s right to appeal and to a hearing).
§ 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 and picture date reporting requirements) is used in a rate determination under § 1187.96(a)(5) (relating to price- and rate-setting computations). Beginning, July 1, 2010, the Statewide average MA CMI assigned to a new nursing facility will be calculated using the RUG-III version 5.12 44 group values in Appendix A and the most recent classifiable assessments of any type. When a new nursing facility has submitted assessment data under § 1187.33, the CMI values used to determine the new nursing facility’s total facility CMIs and MA CMI will be the RUG-III version 5.12 44 group values and the resident assessment that will be used for each resident will be the most recent classifiable assessment of any type.
(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. Beginning July 1, 2010, a new nursing facility will be assigned the peer group price for resident care that will be calculated using the RUG-III version 5.12 44 group values in Appendix A and the most recent classifiable assessments of any type.
(ii) 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.
(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.
(iii) 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).
(iv) A new nursing facility is exempt from the occupancy requirements in § 1187.104(1)(ii) (relating to limitations on payment for reserved beds) until a CMI Report for each of the three picture dates used to calculate overall occupancy as set forth in § 1187.104(1)(iii) is available for the rate quarter.
(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, except that, if a county nursing facility becomes a nursing facility between July 1, 2006, and June 30, 2012, the per diem rate for the nursing facility will be computed in accordance with § 1187.96, using the data contained in the NIS database. Net operating and capital rates for the old nursing facility provider will be assigned to the new nursing facility provider.
(ii) If a county nursing facility has a change of ownership from county ownership to a nonpublic nursing facility provider, the nursing facility will be assigned to the appropriate peer group in accordance with § 1187.94 (relating to peer grouping for price setting) and the per diem rate for the nursing facility will be calculated as follows:
(A) The net operating portion of the case-mix rate is determined in accordance with § 1187.96 using the peer group price for resident care, other resident related and administrative costs until a nursing facility’s cost report submitted by the new nursing facility provider is audited for use in the rebasing process.
(B) The capital portion is determined using only the fixed property component to the extent the facility is eligible for the capital portion of the case mix rate, in accordance with § 1187.96(d)(1), until a nursing facility’s cost report submitted by the new nursing facility provider is audited for use in the rebasing process.
(iii) Transfer of data. Resident assessment data will be transferred from the old nursing facility or the county nursing facility provider number to the new nursing facility provider number. The old nursing facility’s or county nursing facility’s MA CMI will be transferred to the new nursing facility provider.
(iv) Movable property cost policies.
(A) The acquisition costs of items acquired by the old nursing facility provider or county nursing facility on or before the date of sale are costs of the old nursing facility provider or county nursing facility, 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 or county nursing facility is not an allowable cost.
(C) If the new nursing facility provider purchases an item from the old nursing facility provider or county nursing facility, 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 or county nursing facility, 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.
Authority The provisions of this § 1187.97 amended under sections 201(2), 206(2), 403(b) and 443.1 of the Public Welfare Code (62 P. S. § § 201(2), 206(2), 403(b) and 443.1).
Source The provisions of this § 1187.97 amended February 8, 2002, effective July 1, 2001, 32 Pa.B. 734; amended June 23, 2006, effective July 1, 2006, 36 Pa.B. 3207; amended November 26, 2010, effective November 27, 2010, 40 Pa.B. 6782; amended August 26, 2011, effective retroactive to July 1, 2010, 41 Pa.B. 4630; corrected February 3, 2012, effective February 5, 2011, 42 Pa.B. 673; amended July 18, 2014, effective July 19, 2014, 44 Pa.B. 4498. Immediately preceding text appears at serial pages (360207) to (360209).
Cross References This section cited in 55 Pa. Code § 1187.96 (relating to price- and rate-setting computations).
§ 1187.98. Phase-out median determination.
(a) For rate years 2006-2007 and 2007-2008, the Department will determine a phase-out median for each net operating cost center for each peer group to calculate a peer group price. The Department will establish the phase-out median as follows:
(1) Peer groups will be established in accordance with § § 1187.91 and 1187.94 (relating to database; and peer grouping for price setting).
(2) County nursing facilities will be included when determining the number of nursing facilities in a peer group in accordance with § 1187.94(1)(iv).
(3) Audited county nursing facilities’ costs from the 3 most recent audited cost reports audited in accordance with this chapter, will be included in the established peer groups when determining a median in accordance with § 1187.96 (relating to price- and rate-setting computations).
(b) For rate years, 2009-2010, 2010-2011 and 2011-2012, the Department will determine a phase-out median for each net operating cost center for each peer group to calculate a peer group price. The Department will establish the phase-out median as follows:
(1) The Department will establish an interim phase out median for the rate year as specified in subsection (a).
(2) The phase-out median for the 2009-2010 rate year will equal 75% of the interim median calculated in accordance with paragraph (1) plus 25% of the median calculated in accordance with § 1187.96.
(3) The phase-out median for the 2010-2011 rate year will equal 50% of the interim median calculated in accordance with paragraph (1) plus 50% of the median calculated in accordance with § 1187.96.
(4) The phase-out median for the 2011-2012 rate year will equal 25% of the interim median calculated in accordance with paragraph (1) plus 75% of the median calculated in accordance with § 1187.96.
(c) For the rate year, 2012-2013 and thereafter, county nursing facility MA allowable costs will not be used in the rate-setting process for nonpublic nursing facilities.
Authority The provisions of this § 1187.98 issued under sections 201(2), 206(2), 403(b) and 443.1(5) of the Public Welfare Code (62 P. S. § § 201(2), 206(2), 403(b) and 443.1(5)).
Source The provisions of this § 1187.98 adopted June 23, 2006, effective July 1, 2006, 36 Pa.B. 3207; amended November 26, 2010, effective November 27, 2010, 40 Pa.B. 6782. Immediately preceding text appears at serial page (320655).
Cross References This section cited in 55 Pa. Code § 1187.96 (relating to price- and rate-setting computations).
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