MRD-41-07-00019-P Reimbursement Methodologies for Various Facilities and Services

10/10/07 N.Y. St. Reg. MRD-41-07-00019-P

NEW YORK STATE REGISTER

VOLUME XXIX, ISSUE 41

October 10, 2007

RULE MAKING ACTIVITIES

OFFICE OF MENTAL RETARDATION AND DEVELOPMENTAL DISABILITIES

PROPOSED RULE MAKING

HEARING(S) SCHEDULED

 

I.D No. MRD-41-07-00019-P

Reimbursement Methodologies for Various Facilities and Services

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed action:

Amendment of sections 635-10.5, 671.7, 679.6, 680.12, 681.14, 686.13 and 690.7 of Title 14 NYCRR.

Statutory authority:

Mental Hygiene Law, sections 13.07, 13.09(b) and 43.02

Subject:

Reimbursement methodologies for various facilities and services.

Purpose:

To implement the third phase of a funding initiative that will enable agencies which operate facilities and provide services under the auspices of OMRDD to address the health care costs of their employees.

Public hearing(s) will be held at:

10:30 a.m., Nov. 26, 2007 at Office of Mental Retardation and Developmental Disabilities, 44 Holland Ave., Conference Rm. B, 4th Fl., Albany, NY; and 10:30 a.m., Nov. 27, 2007 at Office of Mental Retardation and Developmental Disabilities, 44 Holland Ave., Counsel's Office Conference Rm., 3rd Fl., Albany, NY.

Accessibility:

All public hearings have been scheduled at places reasonably accessible to persons with a mobility impairment.

Interpreter Service:

Interpreter services will be made available to deaf persons, at no charge, upon written request submitted within reasonable time prior to the scheduled public hearing. The written request must be addressed to the agency representative designated in the paragraph below.

Substance of proposed rule (Full text is posted at the following State website: www.omr.state.ny.us):

OMRDD has been working for several years to improve recruitment and retention of direct care staff. The proposed regulations implement the third phase of an employee health care enhancement initiative (HCE III) to support and sustain provider agencies and their staff, including direct care staff who are essential to the service delivery system, by directly addressing the high cost of employee health care. This funding initiative will enable agencies to address the health care costs of their employees and to enhance the ability of providers to hire and retain direct care staff.

The 2007–2008 New York State Budget appropriates funding for the HCE III initiative. Effective January 1, 2008, the proposed regulations implement the appropriation by making HCE III funding available to agencies which operate or provide services as OMRDD authorized or funded Individualized Residential Alternatives (IRAs) and Home and Community-based (HCBS) Waiver Services, Specialty Hospitals, Community Residence Facilities, Clinic Treatment Facilities, Intermediate Care Facilities, and Day Treatment Facilities. Based on a survey of providers' historical data as of January 1, 2005, OMRDD determined a benchmark of health care benefits offered to employees by providers. By September 30, 2007, OMRDD notified providers eligible for HCE III funding at the benchmark level and mailed applications and instructions to providers eligible for HCE III funding below the benchmark level. HCE III funding is determined both by the facility/program type and by status with respect to the benchmark.

Providers that only operate ICF/DD and IRA facilities and provide HCBS waiver services which are identified by OMRDD as eligible for HCE III funding at the benchmark level will automatically receive an amount equaling 3.0 percent of the operating costs contained in the rate, fee or price in effect on January 1, 2008. Providers that operate ICF/DD and IRA facilities and provide HCBS waiver services which are identified by OMRDD as eligible for HCE III funding below the benchmark level may apply to OMRDD to receive an amount equaling 1.0 percent of the operating costs contained in the rate, fee or price in effect on January 1, 2008.

Providers that only operate Community Residences, Clinic Treatment facilities, and Day Treatment programs identified by OMRDD as eligible for HCE III funding at the benchmark level will automatically receive an amount equaling 1.0 percent of the operating costs contained in the fee in effect on January 1, 2008. Providers that operate Community Residences, Clinic Treatment facilities, and Day Treatment programs identified by OMRDD as eligible for HCE III funding below the benchmark level may apply to OMRDD to receive an amount equaling 1.0 percent of the operating costs contained in the fee in effect on January 1, 2008.

Providers that operate multiple programs and services including both ones eligible for the 3.0 percent funding and ones eligible for the 1.0 percent funding at the benchmark level will receive only the 3.0 percent funding on the eligible programs and services, or, if they so elect, will receive instead 1.0 percent on all their programs and services eligible for HCE III.

The Specialty Hospital is identified by OMRDD as eligible for HCE III funding below the benchmark level and may apply to OMRDD to receive an amount equaling 1.0 percent of the operating costs contained in the rate in effect on January 1, 2008.

Day Treatment facilities and the Specialty Hospital will receive HCE III funds in the form of variable trend factor increases established according to the above criteria.

In all instances, providers deemed by OMRDD to be below the benchmark will need to apply to OMRDD for HCE III funding. The application includes an attestation that the funds will be used to establish or enhance employee health care benefits and/or to reduce employee out-of-pocket health care expenses and/or to offset the portion of premium increases paid by the provider which exceeds the portion of the trend factor or COLA applicable to those premium increases. Each provider's governing body will need to pass a board resolution authorizing use of the HCE III funds according to the attestation. Each provider will need to maintain on file the resolution and also records detailing the distribution of these funds.

Providers eligible for HCE III funding will also receive an amount that would have been paid if the HCE III initiative had been in effect on April 1, 2007.

Text of proposed rule and any required statements and analyses may be obtained from:

Barbara Brundage, Director, Regulatory Affairs Unit, Office of Mental Retardation and Developmental Disabilities, 44 Holland Ave., Albany, NY 12229, [phone]; e-mail: [e-mail]

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

five days after the last scheduled public hearing.

Additional matter required by statute:

Pursuant to the requirements of the State Environmental Quality Review Act (SEQRA) and in accordance with 14 NYCRR Part 622, OMRDD has on file a negative declaration with respect to this action. Thus, consistent with the requirements of 6 NYCRR Part 617, OMRDD, as lead agency, has determined that the action described herein will not have a significant effect on the environment, and an environmental impact statement will not be prepared.

Regulatory Impact Statement

1. Statutory authority:

a. The New York State Office of Mental Retardation and Developmental Disabilities' (OMRDD) statutory responsibility to assure and encourage the development of programs and services in the area of care, treatment, rehabilitation, education and training of persons with mental retardation and developmental disabilities, as stated in the New York State Mental Hygiene Law Section 13.07.

b. OMRDD's authority to adopt rules and regulations necessary and proper to implement any matter under its jurisdiction as stated in the New York State Mental Hygiene Law Section 13.09(b).

c. OMRDD's responsibility, as stated in section 43.02 of the Mental Hygiene Law, for setting Medicaid rates and fees for services in facilities licensed or operated by OMRDD.

2. Legislative objectives:

These proposed amendments further the legislative objectives embodied in the 2007–2008 New York State Budget and in sections 13.07, 13.09(b), and 43.02 of the Mental Hygiene Law by making revisions to the reimbursement methodologies for Home and Community-based (HCBS) Waiver Services, Specialty Hospitals, Community Residence Facilities, Clinic Treatment Facilities, Intermediate Care Facilities, and Day Treatment Facilities. The proposed amendments will enhance reimbursement of providers of the referenced programs and services so as to enhance employee health care benefits and/or to help their employees defray the ever increasing costs of health care.

3. Needs and benefits:

Direct care staff are the backbone of the delivery of services for people with mental retardation and developmental disabilities. These vital staff meet the grassroots, hands-on, person-to-person needs of each individual requiring care. The direct care staff person may provide assistance to individuals who need help with daily living skills such as getting ready for the day, preparing meals or eating. Other activities of direct care staff are aimed at building life skills such as job coaching, activity development and training in social interaction.

OMRDD has been working for several years to improve recruitment and retention of lower paid employees such as direct care staff. Among other efforts, OMRDD has implemented annual trend factor or COLA enhancements for most programs, which have enabled voluntary provider agencies to give salary increases to direct care and other staff. However, the rising costs of health care have disproportionately impacted workers like direct care staff with more modest salaries. For some workers, the increase in out-of-pocket health care costs may have actually exceeded recent salary increases.

The proposed regulations implement the third phase of an employee health care enhancement initiative (HCE III) to support and sustain provider agencies and their staff, including direct care and other staff that are essential to the service delivery system by directly addressing the high cost of employee health care. This funding initiative will enable agencies to address the health care costs of their employees and enhance the ability of providers to hire and retain direct care and other staff.

The 2007–2008 New York State Budget appropriates funding for the HCE III initiative. The proposed regulations implement the appropriation by making additional funding available to providers of the referenced OMRDD authorized or funded developmental disabilities facilities or services effective January 1, 2008. OMRDD conducted a survey of providers' historical data as of January 1, 2005 to determine a benchmark of health care benefits offered to employees by providers. By September 30, 2007, OMRDD notified providers eligible for HCE III funding at the benchmark level and mailed applications and instructions to providers eligible for HCE III funding below the benchmark level. HCE III funding is determined both by the facility/program type and by status with respect to the benchmark.

Providers that only operate ICF/DD and IRA facilities and provide HCBS waiver services which are identified by OMRDD as eligible for HCE III funding at the benchmark level will automatically receive an amount equaling 3.0 percent of the operating costs contained in the rate, fee or price in effect on January 1, 2008. Providers that operate ICF/DD and IRA facilities and provide HCBS waiver services which are identified by OMRDD as eligible for HCE III funding below the benchmark level may apply to OMRDD to receive an amount equaling 1.0 percent of the operating costs contained in the rate, fee or price in effect on January 1, 2008.

Providers that only operate Community Residences, Clinic Treatment facilities, and Day Treatment programs identified by OMRDD as eligible for HCE III funding at the benchmark level will automatically receive an amount equaling 1.0 percent of the operating costs contained in the fee in effect on January 1, 2008. Providers that operate Community Residences, Clinic Treatment facilities, and Day Treatment programs identified by OMRDD as eligible for HCE III funding below the benchmark level may apply to OMRDD to receive an amount equaling 1.0 percent of the operating costs contained in the fee in effect on January 1, 2008.

Providers that operate multiple programs and services including both ones eligible for the 3.0 percent funding and ones eligible for the 1.0 percent funding at the benchmark level will receive only the 3.0 percent funding on the eligible programs and services, or, if they so elect, will receive instead 1.0 percent funding on all their programs and services eligible for HCE III.

The Specialty Hospital is identified by OMRDD as eligible for HCE III funding below the benchmark level and may apply to OMRDD to receive an amount equaling 1.0 percent of the operating costs contained in the rate in effect on January 1, 2008.

Day Treatment facilities and the Specialty Hospital will receive HCE III funds in the form of variable trend factor increases established according to the above criteria.

In all instances, providers deemed by OMRDD to be below the benchmark will need to apply to OMRDD for HCE III funding. The application includes an attestation that the funds will be used to establish or enhance employee health care benefits and/or to reduce employee out-of-pocket health care expenses and/or to offset the portion of premium increases paid by the provider which exceeds the portion of the trend factor or COLA applicable to those premium increases. Each provider's governing body will need to pass a board resolution authorizing use of the HCE III funds according to the attestation. Each provider will need to maintain on file the resolution and also records detailing the distribution of these funds.

Providers eligible for HCE III funding will also receive an amount that would have been paid if the HCE III initiative had been in effect on April 1, 2007.

4. Costs:

a. Costs to the Agency and to the State and its local governments: If there is full provider participation, the amendments will result in an annual aggregate increase of approximately $30.4 million in reimbursements to affected providers of developmental disabilities services. This approximate $30.4 million cost in Medicaid will be evenly shared by the State (approximately $15.2 million) and the federal (approximately $15.2 million) governments. For affected HCBS waiver services the estimated cost will be approximately $22.4 million; for specialty hospitals, approximately $150,000; for community residence facilities, approximately $300,000; for clinic treatment facilities, approximately $714,000; for intermediate care facilities, approximately $6.6 million; and for day treatment facilities, approximately $274,000.

There will be no additional costs to local governments as a result of these particular amendments because Chapter 58 of the Laws of 2005 places a cap on the local share of Medicaid costs.

b. Costs to private regulated parties: There are no initial capital investment costs nor initial non-capital expenses. There may be some administrative costs associated with implementation and continued compliance with the amendments. However, overall, the change will have a positive fiscal impact on providers of services because the revisions are designed to provide them with additional funds to be utilized to enhance the health care benefits and/or reduce the health care expenditures of their employees.

5. Local government mandates:

There are no new requirements imposed by the rule on any county, city, town, village; or school, fire, or other special district.

6. Paperwork:

For providers which are below the benchmark there will be some paperwork associated with the preparation and forwarding of applications and attestations and the associated governing body resolutions. They will also need to maintain records documenting the distribution of the HCE III funds. In instances where the provider intends to use HCE III funds to offset premium increases not covered by yearly trend factor or COLA increases, the provider will need to document its calculation of the offset as well as the resulting expenditure of the HCE III funds.

7. Duplication:

The proposed amendments do not duplicate any existing State or Federal requirements that are applicable to the above cited facilities or services for persons with developmental disabilities.

8. Alternatives:

The proposed rule making represents what OMRDD believes to be the most effective way to provide funding increases designed to address health care costs. The proposed amendments have been developed with the participation and input of the service provider community to facilitate application of the funding directly for employee health care or where it is most needed by an agency which already provides employee health care at the benchmark level. The alternative would be to revise the current reimbursement methodologies by giving all providers a general increase in funding which would not necessarily address health care benefits in agencies which are below the benchmark. Also, without the agency application and attestation procedure and associated governing body resolutions for providers which are below the benchmark there would be no guarantee that the added funds would be applied to the intended purpose.

9. Federal standards:

The proposed amendments do not exceed any minimum standards of the federal government for the same or similar subject areas.

10. Compliance schedule:

OMRDD expects to adopt the proposed amendments as soon as possible within the time frames mandated by the State Administrative Procedure Act so as to enable an effective date of January 1, 2008. As with similar targeted funding initiatives previously adopted by OMRDD, this agency will be available to provide guidance.

Regulatory Flexibility Analysis

1. Effect on small businesses and local governments: These proposed regulatory amendments will apply to agencies that are providers of Home and Community-based (HCBS) Waiver Services, Specialty Hospitals, Community Residence Facilities, Clinic Treatment Facilities, Intermediate Care Facilities, and Day Treatment Facilities. The OMRDD has determined, through a review of providers' certified cost reports, that the organizations which operate such facilities or provide such services employ fewer than 100 employees at the discrete certified or authorized sites and would therefore be classified as small businesses. OMRDD estimates that approximately 570 provider agencies could be affected by the proposed amendments.

The proposed amendments have been reviewed by OMRDD in light of their impact on these small businesses and on local governments. OMRDD has determined that these amendments will not have any negative effects on these small business service providers. In fact, the proposed amendments to the various reimbursement methodologies have been developed to increase funding provided to these small business service providers in order to enhance their capacity to provide adequate health care benefits for their employees.

Direct care staff are the backbone of the delivery of services for people with mental retardation and developmental disabilities. These vital staff meet the grassroots, hands-on, person-to-person needs of each individual requiring care. The direct care staff person may provide assistance to individuals who need help with daily living skills such as getting ready for the day, preparing meals or eating. Other activities of direct care staff are aimed at building life skills such as job coaching, activity development and training in social interaction.

OMRDD has been working for several years to improve recruitment and retention of lower paid employees such as direct care staff. Among other efforts, OMRDD has implemented annual trend factor or COLA enhancements for most programs, which have enabled voluntary provider agencies to give salary increases to direct care and other staff. However, the rising costs of health care have disproportionately impacted workers like direct care staff with more modest salaries. For some workers, the increase in out-of-pocket health care costs may have actually exceeded recent salary increases.

The proposed regulations implement the third phase of an employee health care enhancement (HCE III) initiative to support and sustain provider agencies and their staff, including direct care and other staff that are essential to the service delivery system by directly addressing the high cost of employee health care. This funding initiative will enable agencies to address the health care costs of their employees and enhance the ability of providers to hire and retain indispensable direct care and other staff.

The 2007–2008 New York State Budget appropriates funding for the HCE III initiative. The proposed regulations implement the appropriation by making additional funding available to providers of the referenced OMRDD authorized or funded developmental disabilities facilities or services effective January 1, 2008. OMRDD conducted a survey of providers' historical data as of January 1, 2005 to determine a benchmark of health care benefits offered to employees by providers. By September 30, 2007, OMRDD notified providers eligible for HCE III funding at the benchmark level and mailed applications and instructions to providers eligible for HCE III funding below the benchmark level. HCE III funding is determined both by the facility/program type and by status with respect to the benchmark.

Providers that only operate ICF/DD and IRA facilities and provide HCBS waiver services which are identified by OMRDD as eligible for HCE III funding at the benchmark level will automatically receive an amount equaling 3.0 percent of the operating costs contained in the rate, fee or price in effect on January 1, 2008. Providers that operate ICF/DD and IRA facilities and provide HCBS waiver services which are identified by OMRDD as eligible for HCE III funding below the benchmark level may apply to OMRDD to receive an amount equaling 1.0 percent of the operating costs contained in the rate, fee or price in effect on January 1, 2008.

Providers that only operate Community Residences, Clinic Treatment facilities, and Day Treatment programs identified by OMRDD as eligible for HCE III funding at the benchmark level will automatically receive an amount equaling 1.0 percent of the operating costs contained in the fee in effect on January 1, 2008. Providers that operate Community Residences, Clinic Treatment facilities, and Day Treatment programs identified by OMRDD as eligible for HCE III funding below the benchmark level may apply to OMRDD to receive an amount equaling 1.0 percent of the operating costs contained in the fee in effect on January 1, 2008.

Providers that operate multiple programs and services including both ones eligible for the 3.0 percent funding and ones eligible for the 1.0 percent funding at the benchmark level will receive only the 3.0 percent funding on the eligible programs and services, or, if they so elect, will receive instead 1.0 percent funding on all their programs and services eligible for HCE III.

The Specialty Hospital is identified by OMRDD as eligible for HCE III funding below the benchmark level and may apply to OMRDD to receive an amount equaling 1.0 percent of the operating costs contained in the rate in effect on January 1, 2008.

Day Treatment facilities and the Specialty Hospital will receive HCE III funds in the form of variable trend factor increases established according to the above criteria.

In all instances, providers deemed by OMRDD to be below the benchmark will need to apply to OMRDD for HCE III funding. The application includes an attestation that the funds will be used to establish or enhance employee health care benefits and/or to reduce employee out-of-pocket health care expenses and/or to offset the portion of premium increases paid by the provider which exceeds the portion of the trend factor or COLA applicable to those premium increases. Each provider's governing body will need to pass a board resolution authorizing use of the HCE III funds according to the attestation. Each provider will also need to maintain on file the resolution and records detailing the distribution of these funds.

Providers eligible for HCE III funding will also receive an amount that would have been paid if the HCE III initiative had been in effect on April 1, 2007.

There will be no additional costs to local governments as a result of these particular amendments because Chapter 58 of the Laws of 2005 places a cap on the local share of Medicaid costs.

2. Compliance requirements: For providers which are deemed by OMRDD to be below the benchmark, there will be some compliance activities associated with the submission of applications and attestations for the additional funds and the associated governing body resolution that will ensure their appropriate expenditure. The provider is also required to maintain records documenting the distribution of these funds. In some instances where the provider intends to use HCE III funds to offset premium increases not covered by yearly trend factor or COLA increases, the provider will need to document its calculation of the offset as well as the resulting expenditure of the HCE III funds.

3. Professional services: Depending on the labor situation of the individual provider, there may be some need for the advice of a labor relations professional to implement the benefit. The amendments will not add to the professional service needs of local governments.

4. Compliance costs: There are no additional compliance costs to small business regulated parties or local governments associated with the implementation of, and continued compliance with, these proposed amendments.

5. Economic and technological feasibility: The proposed amendments are concerned with fiscal and administrative issues, and do not impose on regulated parties the use of any new technological processes.

6. Minimizing adverse economic impact: As discussed in the Regulatory Impact Statement, the amendments will have only positive economic impacts.

7. Small business and local government participation: The proposed amendments continue to address an area of concern for both the providers and OMRDD. During the initial phase of this funding initiative, OMRDD surveyed all voluntary provider agencies regarding their various health insurance benefit plans and worked closely with the provider community in the development of the regulations. The funding initiative and the regulatory structure surrounding its implementation were discussed with provider representatives on OMRDD's Provider Council composed of over 40 providers and representatives of provider associations. Membership on the Provider Council is diverse and representative of agencies both large and small from various geographic locations throughout New York State. The particulars were also discussed with the Health Insurance Committee of the Provider Council including representatives of provider associations such as the NYS Association of Community and Residential Agencies, the NYS ARC, and the Cerebral Palsy Association of NYS.

The first two phases of the funding initiative which became effective January 1, 2006 and January 1, 2007 were well received by the provider community. HCE III, as implemented by the proposed amendments, merely builds upon the first two installments of the health care enhancement initiative. Therefore, providers will already be familiar with the basic concepts and requirements contained in these proposed regulations.

Rural Area Flexibility Analysis

A rural area flexibility analysis for these amendments is not being submitted because the proposed amendments will not impose any adverse economic impact on rural areas. The proposed amendments will revise the reimbursement methodologies for the referenced facilities and services to implement the third phase of a funding initiative (HCE III) that will enable agencies which operate facilities and provide services under the auspices of OMRDD to address the health care costs of their employees. The amendments provide additional funding and will only have positive fiscal impacts for providers.

There will be no additional costs to local governments as a result of these particular amendments because Chapter 58 of the Laws of 2005 places a cap on the local share of Medicaid costs.

As discussed in the Regulatory Flexibility Analysis for Small Businesses and Local Governments, there will be some compliance activities associated with submission of applications and attestations for the additional funds, the associated governing body or board resolution that will ensure their appropriate expenditure, and record keeping relative to the distribution of these funds. OMRDD will provide any necessary guidance.

Finally, the amendments will have no adverse impact on providers as a result of the location of their operations (rural/urban) because OMRDD's reimbursement methodologies are primarily based upon costs or budgeted costs of services. Thus, OMRDD's reimbursement methodologies have been developed to reflect variations in cost and reimbursement which could be attributable to urban/rural and other geographic and demographic factors.

Job Impact Statement

A Job Impact Statement for these amendments is not being submitted because it is apparent from the nature and purposes of the amendments that they will not have an adverse impact on jobs and employment opportunities. The proposed amendments will revise the reimbursement methodologies for the referenced facilities and services to implement the third phase (HCE III) of a funding initiative that will enable agencies which operate facilities and provide services under the auspices of OMRDD to address the health care costs of their employees and enhance their ability to hire and retain indispensable direct care staff. While the amendments do provide additional funding for the stated purposes, they will not result in any changes to current staffing levels of the affected facilities and services. There will therefore be no effect on the numbers of jobs and employment opportunities in New York State.