Home » 2014 Issues » November 19, 2014 » PDD-46-14-00003-EP Amendments to Rate Setting Methodology: Rates for Residential Habilitation Delivered in IRAs and CRs and for Day Habilitation
PDD-46-14-00003-EP Amendments to Rate Setting Methodology: Rates for Residential Habilitation Delivered in IRAs and CRs and for Day Habilitation
11/19/14 N.Y. St. Reg. PDD-46-14-00003-EP
NEW YORK STATE REGISTER
VOLUME XXXVI, ISSUE 46
November 19, 2014
RULE MAKING ACTIVITIES
OFFICE FOR PEOPLE WITH DEVELOPMENTAL DISABILITIES
EMERGENCY/PROPOSED RULE MAKING
HEARING(S) SCHEDULED
I.D No. PDD-46-14-00003-EP
Filing No. 925
Filing Date. Oct. 31, 2014
Effective Date. Nov. 01, 2014
Amendments to Rate Setting Methodology: Rates for Residential Habilitation Delivered in IRAs and CRs and for Day Habilitation
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Proposed Action:
Amendment of Subpart 641-1 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:
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 the rate methodology for residential habilitation provided in Individualized Residential Alternatives (IRAs) and Community Residences (CRs) and for day habilitation services.
On July 1, 2014, OPWDD and the Department of Health (DOH) implemented a new reimbursement methodology for residential habilitation in IRAs/CRs and day habilitation, which complements existing OPWDD requirements concerning these programs, 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 the State could not use SSI benefits in excess of the room and board costs to offset the Medicaid rate for residential habilitation, and that CMS would require changes in reimbursement for capital assets used in day habilitation programs. 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 regulations contain the methodology as described in the regulations adopted effective July 1, with changes to the SSI offset, day habilitation depreciation period and reporting for day habilitation capital costs, and with additional changes to the budget neutrality factor necessitated by the change in the SSI offset. In addition, the amendments contain provisions to reimburse IRA and CR providers for July 1 through November 1, 2014 for the difference between the November 1 rate and the July 1 rate, if the November 1 rate is higher.
OPWDD 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 a 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 OPWDD did not promulgate these regulations on an emergency basis, OPWDD would fail to meet its commitment to CMS and would risk loss of the substantial federal funding that is contingent on 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:
Amendments to Rate Setting Methodology: Rates for Residential Habilitation Delivered in IRAs and CRs and for Day Habilitation.
Purpose:
To amend the new rate setting methodology effective July 2014.
Public hearing(s) will be held at:
11:00 a.m., January 5, 2015 at Office for Persons with Developmental Disabilities, Counsel's Conference Rm., 3rd Fl., 44 Holland Ave., Albany, NY; 11:00 a.m., January 6, 2015 at Office for Persons with Developmental Disabilities, Counsel's Conference Rm., 3rd Fl., 44 Holland Ave., Albany, NY.
Interpreter Service:
Interpreter services will be made available to hearing impaired 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.
Accessibility:
All public hearings have been scheduled at places reasonably accessible to persons with a mobility impairment.
Substance of emergency/proposed rule (Full text is posted at the following State website:www.opwdd.ny.gov):
The emergency/proposed regulations amend the newly-adopted 14 NYCRR Subpart 641-1 concerning the rate methodology for Residential Habilitation delivered in IRAs and Community Residences and Day Habilitation. The amendments contain the methodology as described in the regulations adopted effective 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 the SSI offset with additional changes to the budget neutrality factor necessitated by the change in the SSI offset. The changes are:
1) A definition was added for “state supplement.” The definition of state supplement is the amount paid to a provider to cover room and board costs in excess of SSI/SNAP payments.
2) The “budget neutrality” formula was changed for supervised and supportive individualized residential alternatives (IRAs) and community residences (CRs). The method for calculating the budget neutrality factor for the “state supplement” was adjusted.
3) The “capital component” sections were revised to eliminate capital threshold schedules and require that capital costs must be depreciated over 25 years. The amendments require day habilitation 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.
4) The amendments also contain provisions to reimburse IRA and CR providers for July 1 through November 1, 2014 for the difference between the November 1, 2014 rate and the July 1, 2014 rate if the November 1 rate is higher.
5) Several non-substantive technical corrections were added to correct reference errors and grammatical errors.
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 January 28, 2015.
Text of rule and any required statements and analyses may be obtained from:
Regulatory Affairs Unit, Office for Persons with Developmental Disabilities (OPWDD), 44 Holland Avenue, 3rd floor, Albany, NY 12229, (518) 474-1830, email: RAU.Unit@opwdd.ny.gov
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, 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 other services in facilities licensed or operated by OPWDD, as stated in section 43.02 of the Mental Hygiene Law.
2. Legislative Objective: These emergency/proposed regulations further the legislative objectives embodied in sections 13.09(b) and 43.02 of the Mental Hygiene Law. The emergency/proposed regulations amend the newly adopted methodology for reimbursement of residential habilitation delivered in Individualized Residential Alternatives (IRAs) and Community Residences (CRs) and day habilitation services.
3. Needs and Benefits: On July 1, 2014, OPWDD and the Department of Health (DOH) implemented a new reimbursement methodology for residential habilitation in IRAs/CRs and day habilitation, which complements existing OPWDD requirements concerning these programs, 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 the State could not use SSI benefits in excess of the room and board costs to offset the Medicaid rate for residential habilitation and that CMS would require changes in reimbursement for capital assets used in day habilitation programs. These changes are that capital costs for day habilitation 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 are in response to these CMS requirements. The amended regulations contain the methodology as described in the regulations adopted effective July 1, with changes to the SSI offset, day habilitation depreciation period and reporting for day habilitation capital costs, and with additional changes to the budget neutrality factor necessitated by the change in the SSI offset. In addition, the amendments contain provisions to reimburse IRA and CR providers for July 1 through November 1, 2014 for the difference between the November 1 rate and the July 1 rate, if the November 1 rate is higher. Finally, these regulations make technical and clarifying changes to the regulations effective July 1, 2014.
These changes will increase reimbursement to providers, bring the methodology into compliance with current CMS policies regarding depreciation of capital assets and the treatment of individual benefits in HCBS waiver programs and provide information on capital costs required by CMS.
4. Costs:
a. Costs to the Agency and to the State and its local governments: The emergency/proposed regulations will result in an additional State share of Medicaid costs of approximately $29 million from July 2014 through June 2015. The regulations also 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.
b. Costs to private regulated parties: The regulations will amend the new reimbursement methodology for residential habilitation in IRAs/CRs and day habilitation. Application of the changes in the methodology for SSI and budget neutrality is expected to result in increased rates for all non-state operated providers. Overall reimbursement to providers will be increased by approximately $29 million from July 2014 through June 2015. Application of the changes in the methodology for capital costs to day habilitation will result in lower reimbursement per year, but full approved capital costs will be reimbursed over the 25 year depreciation period. Providers will incur costs preparing the capital assets schedule and having an independent auditor apply procedures to verify the accuracy and completeness of the capital assets schedule.
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 amendments increase paperwork to be completed by providers. They require providers of day habilitation services 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.
7. Duplication: The amendments do not duplicate any existing State or Federal requirements that are applicable to services for persons with developmental disabilities.
8. 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.
9. Federal Standards: The amendments do not exceed any minimum standards of the federal government for the same or similar subject areas.
10. Compliance Schedule: OPWDD is adopting the amendments on an emergency basis effective November 1, 2014. OPWDD expects to finalize the amendments as soon as possible within the timeframes established by the State Administrative Procedure Act.
Regulatory Flexibility Analysis
1. Effect on small business: OPWDD has determined, through a review of the certified cost reports, that most residential habilitation services delivered in Individualized Residential Alternatives (IRAs) and Community Residences (CRs) and most day habilitation services 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 348 providers of residential habilitation services delivered in IRAs and CRs and day habilitation services. OPWDD is 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 the State could not use SSI benefits in excess of the room and board costs to offset the Medicaid rate for residential habilitation, and that CMS would require changes in reimbursement for capital assets used in day habilitation programs. These changes are that capital costs for day habilitation 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 regulations contain the methodology as described in the regulations adopted in July 2014, with changes to the SSI offset, day habilitation depreciation period and reporting for day habilitation capital costs, and with additional changes to the budget neutrality factor necessitated by the change in the SSI offset. Application of the changes in the methodology regarding SSI offsets and budget neutrality is expected to result in increased rates for all providers, including providers that are small businesses. Overall reimbursement to providers will be increased by approximately $29 million for July 2014 through June 2015. Application of the changes in the methodology for capital costs to day habilitation will result in lower reimbursement per year, but full approved capital costs will be reimbursed over the 25 year depreciation period.
The changes also include an amendment to reimburse IRA and CR providers, including providers that are small businesses, for the difference between the November 1 rate and the July 1 rate, if the November 1 rate is higher. Finally, these regulations make technical and clarifying changes to the regulations effective July 1, 2014.
2. Compliance requirements: The amendments require providers of day habilitation services 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.
3. Professional services: Additional professional services will be required as a result of these regulations. The amendments require providers of day habilitation services 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.
4. Compliance costs: The amendments require providers of day habilitation services 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.
5. Economic and technological feasibility: The amendments do not impose on regulated parties the use of any new technological processes.
6. 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 to OPWDD that could result from non-compliance would have had far more serious consequences to providers than the minor decrease in yearly reimbursement for day habilitation capital costs that result from these changes.
7. Small business participation: OPWDD and DOH met with representatives of providers to discuss the SSI offset changes in the new methodology (including provider concerns) on July 21, August 18 and September 15, 2014. OPWDD and DOH also met with representatives of providers to discuss the capital changes 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 these meetings.
Rural Area Flexibility Analysis
1. 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 than 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, certain townships in 10 other counties 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, 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 the State could not use SSI benefits in excess of the room and board costs to offset the Medicaid rate for residential habilitation, and that CMS would require changes in reimbursement for capital assets used in day habilitation programs. These changes are that capital costs for day habilitation 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 regulations contain the methodology as described in the regulations adopted in July 2014, with changes to the SSI offset, day habilitation depreciation period and reporting for day habilitation capital costs, and with additional changes to the budget neutrality factor necessitated by the change in the SSI offset. Application of the changes in the methodology regarding SSI offsets and budget neutrality is expected to result in increased rates for all providers, including providers in rural areas. Overall reimbursement to providers will be increased by approximately $29 million for July 2014 through June 2015. Application of the changes in the methodology for capital costs to day habilitation will result in lower reimbursement per year, but full approved capital costs will be reimbursed over the 25 year depreciation period.
The changes also include an amendment to reimburse IRA and CR providers, including providers in rural areas, for the difference between the November 1 rate and the July 1 rate, if the November 1 rate is higher. Finally, these regulations make technical and clarifying changes to the regulations effective July 1, 2014.
2. Compliance requirements: The amendments require providers of day habilitation services 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.
3. 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.
4. Compliance costs: The amendments require providers of day habilitation services 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.
5. 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 to OPWDD that could result from non-compliance would have had far more serious consequences to providers than the minor decrease in yearly reimbursement for day habilitation capital costs that result from these changes.
6. Participation of public and private interests in rural areas: OPWDD and DOH met with representatives of providers to discuss the SSI offset changes in the new methodology (including provider concerns) on July 21, August 18 and September 15, 2014. OPWDD and DOH met with representatives of providers to discuss the capital changes on October 6, 2014. The New York State Association of Community and Residential Agencies (NYSACRA) (which represents some providers in rural areas) was included in these meetings.
Job Impact Statement
OPWDD is not submitting a Job Impact Statement 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.
All providers will experience an increase in funding as a result of the changes to the SSI offset and budget neutrality factor in these amendments. Application of the changes in the methodology for capital costs to day habilitation will result in lower reimbursement per year, but full approved capital costs will be reimbursed over the 25 year depreciation period.
The amendments are therefore expected to have no significant adverse impact on jobs and employment opportunities with providers.
