Home » 2014 Issues » November 19, 2014 » HLT-28-14-00015-ERP Rate Rationalization—Intermediate Care Facilities for Persons with Developmental Disabilities
HLT-28-14-00015-ERP Rate Rationalization—Intermediate Care Facilities for Persons with Developmental Disabilities
11/19/14 N.Y. St. Reg. HLT-28-14-00015-ERP
NEW YORK STATE REGISTER
VOLUME XXXVI, ISSUE 46
November 19, 2014
RULE MAKING ACTIVITIES
DEPARTMENT OF HEALTH
NOTICE OF EMERGENCY ADOPTION AND REVISED RULE MAKING
NO HEARING(S) SCHEDULED
I.D No. HLT-28-14-00015-ERP
Filing No. 922
Filing Date. Oct. 31, 2014
Effective Date. Nov. 01, 2014
Rate Rationalization—Intermediate Care Facilities for Persons with Developmental Disabilities
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action Taken:
Amendment of Subpart 86-11 of Title 10 NYCRR.
Statutory authority:
Public Health Law, section 201
Finding of necessity for emergency rule:
Preservation of public health, public safety and general welfare.
Specific reasons underlying the finding of necessity:
The emergency adoption of these amendments is necessary to protect the health, safety, and welfare of individuals receiving services in the OPWDD system.
The amendments are necessary to properly implement a new rate methodology for Intermediate Care Facilities for Persons with Developmental Disabilities (ICFs/DD).
On July 1, 2014, OPWDD and the Department of Health (DOH) implemented a new reimbursement methodology for ICFs/DD, which complements existing OPWDD requirements concerning this program, to satisfy commitments included in OPWDD’s transformation agreement with the federal Centers for Medicare and Medicaid Services (CMS).
After July 1, CMS informed OPWDD and DOH that CMS would require changes in reimbursement for capital assets used in ICFs/DD. These changes are that capital costs for day habilitation property acquisitions must be depreciated over 25 years and that providers must submit information for each capital asset that is verified by an independent auditor and identifies the differences, by asset, between the amounts reported on the cost report and amounts that were approved by OPWDD. The emergency/proposed regulations are in response to these CMS requirements. The amendments change the depreciation period and reporting for capital costs.
DOH was not able to use the regular rulemaking process established by the State Administrative Procedure Act because there was not sufficient time to develop and promulgate regulations within the necessary timeframes. The State Administrative Procedure Act (SAPA) sets forth timeframes for the promulgation of regulations (including mandatory public comment period) and prohibits the adoption of rules containing substantive changes in the terms of proposed regulations. SAPA requires additional rulemaking activities to make substantive changes through the regular rulemaking process which delays the effective date. The only way to adopt the substantive amendments necessary to implement the rate-setting methodology in accordance with CMS mandates is through the emergency rulemaking process.
If DOH did not promulgate these regulations on an emergency basis, the Department would fail to meet its commitment to CMS and would risk loss of the substantial federal funding that is contingent upon this commitment. The loss of this federal funding could jeopardize the health, safety, and welfare of individuals receiving services in the OPWDD system, as without it, individuals would be at risk of receiving services that are inadequate or insufficient in meeting their needs.
Subject:
Rate Rationalization—Intermediate Care Facilities for Persons with Developmental Disabilities.
Purpose:
To amend the new rate methodology effective November 1, 2014.
Substance of emergency/revised rule:
These emergency/proposed regulations amend the newly-adopted 10 NYCRR subpart 86-11 concerning the rate methodology for Intermediate Care Facilities for Persons with Developmental Disabilities (ICFs/DD). The amendments contain the methodology as described in the regulations adopted July 1, 2014 with changes required by the federal Centers for Medicare and Medicaid Services (CMS) subsequent to the adoption of those regulations. The amendments change reimbursement for capital assets used in ICFs/DD. The changes are:
1) The “capital component” sections were revised to require that capital costs must be depreciated over 25 years. The amendments require ICF/DD providers to submit a capital assets schedule to OPWDD as part of the annual cost report, to identify the differences, by asset, between the amount on the cost report and the amount approved by OPWDD, and to have an independent auditor apply procedures to verify the accuracy and completeness of the capital assets schedule.
2) The “capital component” section was revised to eliminate capital threshold schedules.
This notice is intended
to serve as both a notice of emergency adoption and a notice of revised rule making. The notice of proposed rule making was published in the State Register on July 16, 2014, I.D. No. HLT-28-14-00015-P. The emergency rule will expire December 29, 2014.
Emergency rule compared with proposed rule:
Substantial revisions were made in sections 86-11.1, 86-11.2, 86-11.3, 86-11.4 and 86-11.7.
Text of rule and any required statements and analyses may be obtained from:
Katherine Ceroalo, DOH, Bureau of House Counsel, Reg. Affairs Unit, Room 2438, ESP Tower Building, Albany, NY 12237, (518) 473-7488, email: regsqna@health.ny.gov
Data, views or arguments may be submitted to:
Same as above.
Public comment will be received until:
30 days after publication of this notice.
Revised Regulatory Impact Statement
Statutory Authority:
Social Services Law (SSL) section 363-a and Public Health Law (PHL) section 201(1)(v) provide that the Department is the single state agency responsible for supervising the administration of the State’s medical assistance (“Medicaid”) program and for adopting such regulations, not inconsistent with law, as may be necessary to implement the State’s Medicaid program.
Legislative Objective:
These emergency/proposed amendments further the legislative objectives embodied in sections 363-a of the Social Services Law and section 201(1)(v) of the Public Health Law. The amendments change the newly adopted methodology for reimbursement of Intermediate Care Facilities for Persons with Developmental Disabilities (ICFs/DD).
Needs and Benefits:
On July 1, 2014, the Office for People With Developmental Disabilities (OPWDD) and the Department of Health (DOH) implemented a new reimbursement methodology for ICFs/DD to satisfy commitments included in OPWDD's transformation agreement with the federal Centers for Medicare and Medicaid Services (CMS).
After July 1, CMS informed OPWDD and DOH that CMS would require changes in reimbursement for ICF/DD capital assets. These changes are that capital costs for property acquisitions must be depreciated over 25 years; that the provider must submit a schedule that identifies the differences, by capital asset, between the amounts reported on the cost report and the amounts that were prior approved by OPWDD; and that an independent auditor apply procedures to verify the accuracy and completeness of the schedule. The amendments are in response to these CMS requirements.
These changes will bring the methodology into compliance with current CMS policies regarding depreciation of capital assets and provide information on capital costs required by CMS.
Costs:
Costs to the Agency and to the State and its local governments:
The amendments require OPWDD or DOH to give each provider a schedule identifying (for each capital asset for which OPWDD approved the costs prior to July 1, 2014) total actual costs, reimbursable costs, total financing cost, allowable depreciation and interest for the remaining useful life, and allowable reimbursement for each year of the remaining useful life.
The new methodology and these accompanying amendments do not apply to the state as a provider of services.
There will be no savings or costs to local governments as a result of these regulations because pursuant to Social Services Law sections 365 and 368-a, either local governments incur no costs for these services or the State reimburses local governments for their share of the cost of Medicaid funded programs and services. In addition, even if the amendments lead to an increase in Medicaid expenditures in a particular county, these amendments will not have any fiscal impact on local governments, as the contribution of local governments to Medicaid has been capped. Chapter 58 of the Laws of 2005 places a cap on the local share of Medicaid costs and local governments are already paying for Medicaid at the capped level.
Costs to private regulated parties:
The emergency/proposed regulations will change the new reimbursement methodology for ICFs/DD. Application of the changes in the methodology may result in lower capital cost reimbursement per year, but full approved capital costs will be reimbursed over the 25 year depreciation period. In addition, providers will incur costs preparing capital assets schedules and having independent auditors apply procedures to verify the accuracy and completeness of the capital assets schedules.
Local Government Mandates:
There are no new requirements imposed by the rule on any county, city, town, village, school, fire or other special district.
Paperwork:
The amendments increase paperwork to be completed by providers. The amendments require providers to submit a capital assets schedule to OPWDD as part of the annual cost report, to identify the differences, by asset, between the amount on the cost report and the amount prior approved by OPWDD, and to have an independent auditor apply procedures to verify the accuracy and completeness of the capital assets schedule.
Duplication:
The amendments do not duplicate any existing State or federal requirements that are applicable to services for persons with developmental disabilities.
Alternatives:
Since the methodology changes in these amendments are required by CMS, OPWDD and DOH did not consider any alternatives, because any alternatives would not be in compliance with recently articulated CMS policy and requirements.
Federal Standards:
The amendments do not exceed any minimum standards of the federal government for the same or similar subject areas.
Compliance Schedule:
DOH is adopting the amendments on an emergency basis effective November 1, 2014. DOH expects to finalize the amendments as soon as possible within the timeframes established by the State Administrative Procedure Act.
Revised Regulatory Flexibility Analysis
Effect of Rule:
OPWDD and DOH have determined, through a review of the certified cost reports, that most services delivered in Intermediate Care Facilities for Persons with Developmental Disabilities (ICFs/DD) are provided by agencies that employ more than 100 people overall. However, some smaller agencies that employ fewer than 100 employees overall would be classified as small businesses. Currently, there are 108 ICF/DD providers. OPWDD and DOH are unable to estimate the portion of these providers that may be considered to be small businesses.
The emergency/proposed regulations, effective November 1, 2014, amend the rate setting methodology that was adopted in July 2014 in conformance with changes mandated by CMS after July 1, 2014.
After July 1, 2014, CMS informed OPWDD and DOH that it would require changes in reimbursement for ICF/DD capital assets. These changes are that capital costs for property acquisitions must be depreciated over 25 years; that the provider must submit a schedule that identifies the differences, by capital asset, between the amounts reported on the cost report and the amounts that were prior approved by OPWDD; and that an independent auditor apply procedures to verify the accuracy and completeness of the schedule. The amendments change the depreciation period and reporting requirements for capital costs. Application of the changes in the methodology for capital costs may result in lower reimbursement per year, but full approved capital costs will be reimbursed over the 25 year depreciation period.
Compliance Requirements:
The amendments require ICF/DD providers to submit a capital assets schedule to OPWDD as part of the annual cost report, to identify the differences, by asset, between the amount on the cost report and the amount prior approved by OPWDD, and to have an independent auditor apply procedures to verify the accuracy and completeness of the capital assets schedule.
Professional Services:
Additional professional services will be required as a result of these regulations. The amendments require independent auditors to apply procedures to verify the accuracy and completeness of the capital assets schedule. However, the regulations will not add to the professional service needs of local governments.
Compliance Costs:
The amendments require ICF/DD providers to submit a capital assets schedule to OPWDD as part of the annual cost report, to identify the differences, by asset, between the amount on the cost report and the amount prior approved by OPWDD, and to have an independent auditor apply procedures to verify the accuracy and completeness of the capital assets schedule.
Economic and Technological Feasibility:
The amendments do not impose on regulated parties the use of any new technological processes.
Minimizing Adverse Impact:
Since the methodology changes in these amendments are required by CMS, OPWDD and DOH did not consider any alternatives, because any alternatives would not be in compliance with recently articulated CMS policy and requirements.
The potential loss of federal funds that could result from non-compliance would have had far more serious consequences to providers than the minor decrease in annual reimbursement for capital costs that may result from this change.
Small Business and Local Government Participation:
OPWDD and DOH met with representatives of providers to discuss this change in methodology at a meeting held on October 6, 2014. The New York State Association of Community and Residential Agencies (NYSACRA), which represents some providers that have fewer than 100 employees, was included in this meeting.
Revised Rural Area Flexibility Analysis
Effect on Rural Areas:
Description of the types and estimation of the number of rural areas in which the rule will apply: OPWDD services are provided in every county in New York State. 43 counties have a population of less that 200,000: Allegany, Cattaraugus, Cayuga, Chautauqua, Chemung, Chenango, Clinton, Columbia, Cortland, Delaware, Essex, Franklin, Fulton, Genesee, Greene, Hamilton, Herkimer, Jefferson, Lewis, Livingston, Madison, Montgomery, Ontario, Orleans, Oswego, Otsego, Putnam, Rensselaer, St. Lawrence, Schenectady, Schoharie, Schuyler, Seneca, Steuben, Sullivan, Tioga, Tompkins, Ulster, Warren, Washington, Wayne, Wyoming and Yates. Additionally, 10 counties with certain townships have a population density of 150 persons or less per square mile: Albany, Broome, Dutchess, Erie, Monroe, Niagara, Oneida, Onondaga, Orange and Saratoga.
The emergency/proposed regulations, effective November 1, 2014, amends the rate setting methodology that was adopted in July 2014, in conformance with a change mandated by CMS after July 1, 2014.
After July 1, 2014, CMS informed OPWDD and DOH that CMS would require changes in reimbursement ICF/DD capital assets. These changes are that capital costs for property acquisitions must be depreciated over 25 years; that the provider must submit a schedule that identifies the differences, by capital asset, between the amounts reported on the cost report and the amounts that were approved by OPWDD; and that an independent auditor apply procedures to verify the accuracy and completeness of the schedule. The amendments change the depreciation period and reporting for capital costs. Application of the changes in the methodology may result in lower reimbursement per year, but full approved capital costs will be reimbursed over the 25 year depreciation period.
Reporting, Recordkeeping and Other Compliance Requirements and Professional Services:
There will be additional reporting, recordkeeping, and professional services imposed by these amendments. The amendments require ICF/DD providers to submit a capital assets schedule to OPWDD as part of the annual cost report, to identify the differences, by asset, between the amount on the cost report and the amount prior approved by OPWDD, and to have an independent auditor apply procedures to verify the accuracy and completeness of the capital assets schedule. However, the amendments will not add to the professional service needs of local governments.
Costs:
The amendments require ICF/DD providers to submit a capital assets schedule to OPWDD as part of the annual cost report, to identify the differences, by asset, between the amount on the cost report and the amount prior approved by OPWDD, and to have an independent auditor apply procedures to verify the accuracy and completeness of the capital assets schedule.
Minimizing Adverse Impact:
Since the methodology change in this amendment is required by CMS, OPWDD and DOH did not consider any alternatives, because any alternatives would not be in compliance with recently articulated CMS policy and requirements.
The potential loss of federal funds that could result from non-compliance would have had far more serious consequences to providers than the minor decrease in annual reimbursement that results for capital costs that result from these changes.
Rural Area Participation:
Participation of public and private interests in rural areas: OPWDD and DOH met with representatives of providers to discuss the capital changes in new methodology October 6, 2014. The New York State Association of Community and Residential Agencies (NYSACRA), which represents some providers in rural areas, was included in this meeting.
Revised Job Impact Statement
A Job Impact Statement is not being submitted for this emergency/proposed rulemaking because this rulemaking will not have a substantial adverse impact on jobs or employment opportunities.
The emergency/proposed regulations, effective November 1, 2014, amend the rate setting methodology that was adopted in July 2014, in conformance with changes mandated by CMS after July 1, 2014.
Application of the changes in the methodology may result in lower capital cost reimbursement per year, but full approved capital costs will be reimbursed over the 25 year depreciation period. The impact of additional recordkeeping associated with verification of those capital costs will be negligible.
The amendments are therefore expected to have no significant adverse impact on jobs and employment opportunities with providers.
