PDD-42-11-00008-EP Provider Allocation of OPWDD Funding

10/19/11 N.Y. St. Reg. PDD-42-11-00008-EP

NEW YORK STATE REGISTER

VOLUME XXXIII, ISSUE 42

October 19, 2011

RULE MAKING ACTIVITIES

OFFICE FOR PEOPLE WITH DEVELOPMENTAL DISABILITIES

EMERGENCY/PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. PDD-42-11-00008-EP

Filing No. 865

Filing Date. Sept. 29, 2011

Effective Date. Sept. 29, 2011

Provider Allocation of OPWDD Funding

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

Proposed Action:

Amendment of sections 635-10.5, 671.7 and 681.14 of Title 14 NYCRR.

Statutory authority:

Mental Hygiene Law, sections 13.09(b) and 43.02

Finding of necessity for emergency rule:

Preservation of public health, public safety and general welfare.

Specific reasons underlying the finding of necessity:

This emergency rule is being promulgated on September 29, 2011 to rescind a specific provision in various rules concerning efficiency adjustments in rate setting methodologies that were adopted on July 1, 2011. The implementation of the provision had been postponed by a previous emergency rule which expired on September 28.

The rules concerning efficiency adjustments reduce the operating components of reimbursement to providers of supervised residential habilitation services, group day habilitation and supplemental group day habilitation services, prevocational services, and under 31-bed ICF/DDs.

These rules concerning efficiency adjustments contain a stipulation that would restrict providers from allocating funds to administrative expenses if they were not designated for administrative costs in the price or rate. Subsequent to publication of the proposed regulations, providers claimed that, in the context of the various July 1, 2011 price and rate reductions, such restrictions could have a severe impact on those providers already demonstrating the greatest level of administrative efficiencies in their operations. For some providers, the restriction could compound and/or exacerbate the effects of the administrative aspects of reductions.

OPWDD is rescinding this provision because it could potentially hamper a provider's ability to sustain necessary administrative aspects of operations, and the restriction, if left intact could potentially compromise a provider's ability to provide services and continue operations. Thus, it is necessary for the health, welfare and safety of individuals these providers serve to rescind the restriction.

Subject:

Provider allocation of OPWDD funding.

Purpose:

To repeal a provision that restricts providers' abilities to allocate revenues to administrative expense.

Text of emergency/proposed rule:

Paragraph 635-10.5(b)(22) is deleted as follows:

[(22) Effective September 30, 2011, revenues realized by providers from reimbursement attributable to components of the price other than the administrative component shall not be used to fund administrative expenses.]

Paragraph 635-10.5(c)(17) is deleted as follows:

[(17) Effective September 30, 2011, revenues realized by providers from reimbursement attributable to components of the price other than the administrative component shall not be used to fund administrative expenses.]

Paragraph 635-10.5(e)(12) is deleted as follows and paragraphs (13) and (14) are renumbered to (12) and (13):

[(12) Effective September 30, 2011, revenues realized by providers from reimbursement attributable to components of the price other than the administrative component shall not be used to fund administrative expenses.]

Paragraph 671.7(a)(14) is deleted as follows:

[(14) Effective September 30, 2011, revenues realized by providers from reimbursement attributable to components of the price other than the administrative component shall not be used to fund administrative expenses.]

Subparagraph 681.14(d)(1)(iii) is deleted as follows:

[(iii) Effective September 30, 2011, revenues realized by providers from reimbursement attributable to components of the rate other than the administrative component shall not be used to fund administrative expenses.]

This notice is intended:

to serve as both a notice of emergency adoption and a notice of proposed rule making. The emergency rule will expire December 27, 2011.

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

Barbara Brundage, Director, OPWDD, Regulatory Affairs Unit, 44 Holland Avenue, Albany, New York 12229, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

45 days after publication of this notice.

Additional matter required by statute:

Pursuant to the requirements of the State Environmental Quality Review Act, OPWDD, as lead agency, has determined that the action described herein will have no effect on the environment, and an E.I.S. is not needed.

Regulatory Impact Statement

1. Statutory Authority:

a. OPWDD has the statutory 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).

b. OPWDD has the statutory responsibility for setting Medicaid rates and fees for services in facilities licensed or operated by OPWDD, as stated in section 43.02 of the Mental Hygiene Law.

2. Legislative Objectives: These emergency/proposed amendments further the legislative objectives embodied in sections 13.09(b) and 43.02 of the Mental Hygiene Law. The emergency/proposed amendments concern the way in which providers may allocate revenues to administrative expenses.

3. Needs and Benefits: Four regulations adopted on July 1, 2011 implemented efficiency adjustments and impacted supervised Individual Residential Alternatives (IRAs), supervised community residences (CRs), group day habilitation, supplemental group day habilitation, prevocational services, and ICF/DDs with bed capacities of 30 or less. Possible reductions in operating reimbursement ranged from zero to ten percent.

All four of these regulations contain a provision that prohibits providers from allocating funding to administrative expenses that was designated in the price or rate for other than administrative expenses. Emergency amendments filed on July 1, 2011 delayed the implementation this provision effective July 1, 2011 and thereby temporarily prevented the restriction from taking effect. The purpose of the delay was to afford OPWDD more time to conduct a dialogue with providers and to assess the potential consequences of this amendment to providers. The emergency regulations expired on September 28, 2011. This emergency/proposed regulation rescinds the provision; however, alternatives to address the unrestricted nature of provider interchange flexibility related to agency administration will be further explored (see Section 8, "Alternatives").

89 public comments were submitted which expressed concerns and/or opposition to the provision which is being rescinded by these emergency/proposed regulations. Providers have claimed that, in the context of the July 1, 2011 reductions in reimbursement, a restriction on the application of funding to administrative expenses could have a severe impact on those providers already demonstrating the greatest efficiencies in their operations. For some, this would compound and/or exacerbate the effects of the reductions, especially when those reductions targeted the administrative component of reimbursement. To avoid harmful effects that could threaten a provider's ability to continue operations, OPWDD is rescinding this provision, but will consider alternatives to address the unrestricted nature of provider interchange flexibility related to agency administration (see Section 8, "Alternatives").

OPWDD anticipates that, due to the repeal of the allocation restriction, providers will be enabled to exercise flexibility and autonomy in adapting to the reimbursement reductions and will be better able to sustain the administrative aspects of operations.

4. Costs:

a. Costs to the agency and to the State and its local governments:

The emergency/proposed amendments do not change reimbursement levels. There is therefore no cost to OPWDD, to the State, or to local governments. The emergency/proposed amendments eliminate the potential to recover monies OPWDD allocates to other categories and that providers spend on administrative expenses. However, it is impossible to know how much money, if any, would have been spent in violation of the interchange restriction and subsequently recovered.

b. Costs to private regulated parties: There are neither initial capital investment costs nor initial non-capital expenses. There are no additional costs associated with implementation and continued compliance with the rule.

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: The emergency/proposed amendments do not require any additional paperwork to be completed by providers.

7. Duplication: The emergency/proposed amendments do not duplicate any existing State or Federal requirements that are applicable to services for persons with developmental disabilities.

8. Alternatives: OPWDD considered leaving the provision regarding interchange intact by not promulgating this emergency/proposed regulation. However, OPWDD decided to further delay the effective date of the restriction on interchange, in response to claims from providers that they will be harmed by the restriction. OPWDD will be considering alternatives which would be effectuated by the proposal of regulations in the future. A work team consisting of stakeholders, Division of the Budget staff, Office for People with Developmental Disabilities staff and Governor's Office staff is to be established to develop an alternative proposal to address the unrestricted nature of provider funding interchange flexibility related to agency administration. This work team is expected to complete its work within 60 days of the promulgation of this emergency regulation.

9. Federal Standards: The emergency/proposed amendments do not exceed any minimum standards of the federal government for the same or similar subject areas.

10. Compliance Schedule: The emergency amendments are effective September 29, 2011. OPWDD expects to finalize the proposed amendments as soon as possible in conformance with the timeframes established in the State Administrative Procedure Act. There are no compliance activities associated with these amendments.

Regulatory Flexibility Analysis

1. Effect on small business: The emergency/proposed regulations apply to providers of residential habilitation delivered in supervised Individualized Residential Alternative (IRAs) and Community Residences (CRs), group and supplemental group day habilitation services, prevocational services, and under 31-bed ICF/DD services. OPWDD has determined, through a review of the certified cost reports, that most providers are non-profit agencies which employ more than 100 people overall. However, some smaller agencies which employ fewer than 100 employees overall would be classified as small businesses. Currently, there are approximately 255 providers that offer supervised residential habilitation; 290 that offer group and supplemental group day habilitation; 100 that offer prevocational services; and 102 that operate ICF/DDs. Providers which offer a combination of services may be represented in more than one of these counts. OPWDD is unable to estimate the portion of these providers that may be considered to be small businesses.

The emergency/proposed amendments have been reviewed by OPWDD in light of their impact on small businesses. By rescinding a restrictive provision, the emergency/proposed amendments allow providers to retain the flexibility they have in allocating their OPWDD funding and to avoid any negative impact this provision, if allowed to become effective, might have engendered. Because it essentially precludes a negative impact from occurring, there is a positive impact to providers.

OPWDD has determined that these amendments do not create any increased costs for additional services or increased compliance requirements.

2. Compliance requirements: The emergency/proposed amendments do not impose any additional compliance requirements on providers.

The amendments will have no effect on local governments.

3. Professional services: There are no additional professional services required as a result of these amendments and the amendments do not add to the professional service needs of local governments.

4. Compliance costs: There are no compliance costs since the emergency/proposed amendments do not impose any additional compliance requirements on providers.

5. Economic and technological feasibility: The emergency/proposed amendments do not impose the use of any new technological processes on regulated parties.

6. Minimizing adverse impact: The purpose of these emergency/proposed amendments is to repeal the provisions in OPWDD's July 1, 2011 regulations that would have restricted the ability of providers to use resources for administrative expenses and, thereby, to maintain the flexibility providers have experienced in the process of allocating resources. With respect to resource allocation, this amendment preserves the status that existed on June 30, 2011.

7. Small business participation: The elimination of the restriction was recommended by representatives of providers, including the New York State Association of Community and Residential Agencies (NYSACRA), at a meeting that occurred on April 18, 2011. Some of the members of NYSACRA have fewer than 100 employees. Finally, OWPDD mailed similar emergency amendments which were promulgated on July 1 to all providers, including providers that are small businesses. OPWDD received 89 comments on the previous emergency regulations all which expressed serious reservations and/or opposition to the imposition of the restriction. Some of these comments may have been from providers which are considered to be small businesses.

Rural Area Flexibility Analysis

A rural area flexibility analysis for these emergency/proposed amendments is not being submitted because the amendments do not impose any adverse impact or reporting, record keeping or other compliance requirements on public or private entities in rural areas. There are no professional services, capital, or other compliance costs imposed on public or private entities in rural areas as a result of the emergency/proposed amendments.

The emergency/proposed amendments rescind a provision contained in regulations that were adopted effective July 1, 2011 that would have limited providers' abilities to allocate resources and could have had a negative impact on some providers. This provision was, however, temporarily suspended until September 29, 2011 by virtue of emergency regulations. These emergency/proposed amendments with an effective date of September 29, 2011 prevent the provision from being implemented and keep the revenue allocation process intact, unaltered and undisturbed. The impact to providers, including providers in rural areas, will be positive because it simply prevents any negative impact from the restriction from occurring.

Job Impact Statement

OPWDD is not submitting a Job Impact Statement for this emergency/proposed rule making because the rule making does not have a substantial adverse impact on jobs or employment opportunities.

The emergency/proposed rule rescinds a provision contained in four regulations that impact providers of residential habilitation in supervised Individual Residential Alternatives (IRAs) and supervised Community Residences (CRs), group and supplemental group day habilitation services, prevocational services, and under 31-bed ICF/DDs. Upon adoption of those four regulations on July 1, 2011, the provision limited a provider's ability to allocate resources. An emergency regulation filed on July 1, 2011 postponed the provision's effective date leaving the status of providers' allocation process temporarily unaltered and undisturbed until its expiration. This emergency amendment temporarily rescinds the provision and proposes the promulgation of regulations to permanently rescind the provision.

The impact to providers is positive as it precludes any negative impact from the restriction from occurring and therefore prevents any potential negative impact on jobs and employment opportunities.