To establish standards for the certification, operation & reimbursement of clinic treatment programs serving adults and children.
Substance of proposed rule (Full text is posted at the following State website:www.omh.state.ny.us):
Summary
This rulemaking will establish a new Part 599 of Title 14 NYCRR, governing the licensing, operation, and Medicaid fee-for-service funding of mental health clinics. The new rule will establish a modernized, more person-centered service delivery system, and a more equitable system of finances to properly support those services and create incentives for the delivery of high quality clinic care. The complete text of the rulemaking is available on the Office of Mental Health's website at www.omh.state.ny.us.
Overview
New York State's mental health clinic system faces numerous and pressing financial and programmatic challenges. To address these challenges, the Office of Mental Health has been engaged in a multi-year initiative to restructure the way the State delivers and reimburses publicly supported mental health services. This clinic restructuring plan, which has been developed with input from numerous stakeholders, addresses the challenges by creating a defined and expanded range of clinic services; restructuring Medicaid rates to provide comparable payments for similar services; incentivizing services provided off-site, after hours, in languages other than English and by physicians and nurse practitioners in psychiatry; complying with Federal HIPAA billing requirements; and establishing a pool to compensate clinics for providing indigent care. These changes are necessary to improve service delivery and ensure the survival of a quality mental health clinic system in New York.
Requirements
The proposed rule would replace the existing requirements of Part 587 of Title 14 NYCRR, and phase out the existing requirements of Parts 588 and 592 of Title 14 NYCRR, insofar as they pertain to mental health clinic services. The proposed rule will establish the following:
1. A redefined and more responsive set of clinic treatment services with greater accountability for outcomes. Clinics will be required to offer services such as outreach, crisis response, and complex care management, which will enhance consumer engagement and support quality treatment.
2. A redesigned financing structure. Medicaid payment rates will be based on the efficient and economical provision of services to Medicaid clients. Payments will be comparable for similar services delivered by similar providers across service systems. Payments will also include adjustments for factors which influence the cost of providing services. Reimbursement under the previous methodology, including payment supplements under the Comprehensive Outpatient Provider (COPS) methodology, will be phased out over a four-year period.
3. A HIPAA-compliant procedure based payment system with modifiers to reflect variations in cost. Federal law requires the use of a HIPAA-compliant billing system. Services will be billed using HIPAA-compliant procedure codes with modifiers to reflect differences in resources and related costs for the various services.
4. Provisions for indigent care. New York State is requesting a Federal waiver that would expand reimbursement for indigent care to include freestanding OMH-licensed mental health clinics.
Text of proposed rule and any required statements and analyses may be obtained from:
Joyce Donohue, NYS Office of Mental Health, 44 Holland Avenue, Albany, NY 12229, (518) 474-1331, email: cocbjdd@omh.state.ny.us
Data, views or arguments may be submitted to:
Same as above.
Public comment will be received until:
45 days after publication of this notice.
Regulatory Impact Statement
1. Statutory authority: Sections 7.09 and 31.04 of the Mental Hygiene Law grant the Commissioner of Mental Health the power and responsibility to adopt regulations that are necessary and proper to implement matters under his or her jurisdiction, and to set standards of quality and adequacy of facilities, equipment, personnel, services, records and programs for the rendition of services for adults diagnosed with mental illness or children diagnosed with emotional disturbance, pursuant to an operating certificate.
Section 31.02 of the Mental Hygiene Law prohibits the operation of outpatient programs providing services for persons with mental illness unless an operating certificate has been obtained from the Commissioner.
Sections 31.07, 31.09, 31.13 and 31.19 of the Mental Hygiene Law further authorize the Commissioner or his or her representatives to examine and inspect such programs to determine their suitability and proper operation. Section 31.16 authorizes the Commissioner to suspend, revoke or limit any operating certificate.
Section 31.11 of the Mental Hygiene Law requires every holder of an operating certificate to assist the Office of Mental Health in carrying out its regulatory functions by cooperating with the Commissioner in any inspection or investigation, permitting the Commissioner to inspect its facility, books and records, including recipients' records, and making such reports, uniform and otherwise, as are required by the Commissioner.
Section 31.06 of the Mental Hygiene Law requires every holder of an operating certificate to develop policies and training programs in regard to reporting child abuse or neglect.
Section 43.02(b) of the Mental Hygiene Law gives the Commissioner authority to request from operators of facilities licensed by the Office of Mental Health such financial, statistical and program information as the Commissioner may determine to be necessary.
Article 33 of the Mental Hygiene Law establishes basic rights of persons diagnosed with mental illness.
Section 364-j of the Social Services Law requires the establishment of managed care programs throughout the State and provides for the provision of special care services to enrollees in Medicaid managed care programs who require such services.
Sections 364 and 364-a of the Social Services Law give the Office of Mental Health responsibility for establishing and maintaining standards for medical care and services in facilities under its jurisdiction, in accordance with cooperative arrangements with the Department of Health.
Section 43.01 of the Mental Hygiene Law gives the Commissioner authority to set rates for outpatient services at facilities operated by the Office of Mental Health. Section 43.02 of the Mental Hygiene Law provides that payments under the medical assistance program for outpatient services at facilities licensed by the Office of Mental Health shall be at rates certified by the Commissioner of Mental Health and approved by the Director of the Budget.
Title XIX of the Federal Social Security Act, as identified in section 502.2(c) of such Title, authorizes Federal grants to states to fund medical assistance to needy persons in accordance with a State plan approved by the Federal Department of Health and Human Services.
2. Legislative objectives: Chapter 57 of the Laws of 2006 directed OMH to conduct a study of the mental health reimbursement system. The 2006-2007 enacted state budget language appropriated funds "[f]or services and expenses associated with a study to review the current system of financing and reimbursement of mental health services provided by clinic, continuing day treatment and day treatment programs licensed under article 31 of the mental hygiene law, and to make recommendations for changes designed to ensure that the financing and reimbursement system provides for the equitable reimbursement of providers of mental health services and is conducive to the provision of effective and high quality of services. Such study shall be coordinated by the commissioner of the Office of Mental Health and shall be completed and submitted to the legislature no later than March 1, 2007." Public Consulting Group, Inc. (PCG) was engaged by OMH to conduct this study.
In addition, the proposed rule furthers the legislative policy of providing high quality outpatient mental health services to individuals with mental illness in a cost-effective manner. The rule establishes a redefined, more responsive set of clinic treatment services and greater accountability for outcomes from providers. The new rule will establish a modernized, more person-centered service delivery system, and a more equitable system of finances to properly support those services and create incentives for the delivery of high quality clinic care.
3. Needs and benefits: New York State's mental health clinic system faces numerous and pressing financial and programmatic challenges. Many of the issues were identified in the 2007 PCG report, entitled, "State of New York Office of Mental Health Provider Reimbursement System". The report explained that New York State uses a funding and reimbursement methodology for clinic, continuing day treatment (CDT) and day treatment programs that includes the use of a regional fee schedule for recognized services (the base rate) with the addition of provider-specific supplemental payments (known as add-ons) to compensate providers for the costs of providing services. This system was established in 1991, and at the time it served as a creative solution that provided the funding needed to meet the growing demand for and cost of these services. With the passage of time, however, the existing funding and reimbursement system has become antiquated and is not able to keep pace adequately with the needs of the providers and their consumers.
Based on this study, PCG concluded that the current system of financing outpatient mental health services using an add-on structure should be replaced with a more equitable system of payment. The current system is outdated, inequitably funded and is based on a rate structure that has outlived its usefulness.
The financing structure that has been used for nearly two decades has resulted in provider payments that vary considerably, and these payment variations cannot be uniformly explained by differences in case mix or service intensity. At times the same service is reimbursed at different rates based solely on a facility's license. Overall, reimbursement for facilities licensed by OMH is divorced from reimbursement for facilities providing the same or similar services under licenses from the Department of Health (DOH), the Office of Alcoholism and Substance Abuse Services (OASAS) or the Office of Mental Retardation and Developmental Disabilities (OMRDD). This discrepancy in reimbursement methodology is striking given that, in some instances, the same individuals are served by all of these facilities. The report concluded that the nature of the current reimbursement system is in part of a function of reimbursement and licensing freezes around which providers have learned to work. The report further concluded that a complete overhaul of the current payment system is necessary.
To address these challenges, the Office of Mental Health has been engaged in a multi-year initiative to restructure the way the State delivers and reimburses publicly supported mental health services. This clinic restructuring plan, which has been developed with input from numerous stakeholders, addresses the challenges by creating an expanded range of clinic services and restructuring Medicaid rates to provide comparable payments for similar services. In addition, the proposal adjusts rates of payments to encourage the provision of mental health clinic services off-site, after regular business hours, in languages other than English and by physicians and nurse practitioners in psychiatry. The proposal also allows for clinics to participate with diagnostic and treatment centers licensed by the New York State Department of Health in a Federally-participating pool of funds to compensate for the provision of indigent care. The new reimbursement structure accompanying the program restructuring will help bring New York State into compliance with Federal HIPAA billing requirements. These changes are necessary to improve service delivery and ensure the survival of a quality mental health clinic system in New York.
The proposed rule would replace the existing requirements of Part 587 of Title 14 NYCRR, and phase out the existing requirements of Parts 588 and 592 of Title 14 NYCRR, insofar as they pertain to mental health clinic services. The proposed rule will establish the following:
A redefined and more responsive set of clinic treatment services with greater accountability for outcomes. Clinics will be required to offer services such as outreach, crisis response, and complex care management, which will enhance consumer engagement and support quality treatment.
A redesigned financing structure. Medicaid payment rates will be based on the efficient and economical provision of services to Medicaid clients. Payments will be comparable for similar services delivered by similar providers across service systems. Payments will also include adjustments for factors which influence the cost of providing services. Reimbursement under the previous methodology, including payment supplements under the Comprehensive Outpatient Provider (COPS) methodology, will be phased out over a four-year period.
A HIPAA-compliant procedure based payment system with modifiers to reflect variations in cost. Federal law requires the use of a HIPAA-compliant billing system. Services will be billed using HIPAA-compliant procedure codes with modifiers to reflect differences in resources and related costs for the various services.
Provisions for indigent care. New York State is requesting a Federal waiver that would expand reimbursement for indigent care to include freestanding OMH-licensed mental health clinics.
4. Costs:
a. Costs to regulated parties: The costs, benefits, and impact on regulated parties will vary considerably. For some providers, there may be a modest and time-limited cost associated with modification of the Medicaid billing system to accommodate the new procedure codes being implemented. For other providers, their current system will already accommodate these changes. The significant cost and cost-related elements affecting the impact of the rulemaking on providers of clinic services, and their opportunity to offset any negative impact of the rulemaking, include: (1) the provider's costs; (2) the average annual volume of procedures delivered by each clinical staff person; (3) the provider's supplemental COPS rate (per Part 592 of Title 14 NYCRR); and (4) the provider's willingness and ability to respond to the incentives and disincentives offered by the new rule. Modeling of the impact of the regulations on providers with different profiles of behavior revealed the following:
Scenario 1: Assuming no change in behavior, an average provider (in terms of cost/unit of service and productivity) with a COPs reimbursement of $80/visit or less will break even financially under the new clinic model.
Scenario 2: Assuming no change in behavior, a low cost, high productivity provider with a COPs reimbursement of $80/visit or less will break even financially under the new clinic model.
Scenario 3: Assuming no change in behavior, a high cost, low productivity provider with a COPs reimbursement of $80/visit or less - a provider that loses money under the existing clinic model - will continue to lose money but at no greater rate than they currently are losing money.
Scenario 4: Assuming no change in behavior, a low cost, high productivity provider with a low COPs rate will see revenues increase under the new clinic model. Such providers would eliminate their current financial loss.
Scenario 5: Assuming no change in behavior, a high cost, low productivity provider with a high COPs rate will see revenues decline under the new clinic model.
Scenario 6: Assuming no change in behavior, a low cost, high productivity provider with a low COPs rate and low Medicaid Fee-for-Service (FFS) percentage will see revenues increase under the new clinic model. Such providers would eliminate their current financial loss.
Scenario 7: Assuming no change in behavior, providers with high cost, low productivity, a high COPs rate, and a low Medicaid FFS percentage will see revenues decline under the new clinic model.
Scenario 8: Assuming no change in behavior, a low cost, high productivity provider with a low COPs rate and high Medicaid FFS percentage will see revenues increase under the new clinic model. Such providers will almost entirely eliminate their current financial loss.
Scenario 9: Assuming no change in behavior, providers with high cost, low productivity, a high COPs rate, and a high Medicaid FFS percentage will see revenues decline under the new clinic model.
As is demonstrated above, the only groups that lose financially have low productivity (scenarios 5, 7, 9). Therefore, providers in these groups have the chance to significantly mitigate their losses by improving their productivity. This is an outcome OMH wishes to encourage.
b. Costs to the agency and the state: The future cost to OMH and the state will be minimal. OMH has nearly completed an adaptation of its existing rate history and transmittal system to conform to HIPAA billing requirements for clinics. The costs to complete system modifications, to train OMH field staff to monitor regulatory compliance by non-state clinics, to train OMH's outpatient clinical staff to comply with the proposed rulemaking and to convert OMH's own billing system to submit Medicaid clains under the new system will not require additional state appropriations. The Department of Health is already reprogramming the state's eMedNY system to accommodate a similar system for hospitals and Diagnostic and Treatment Centers. OMH will need to convert its own billing system to comply with the new payment mechanism, but the cost will be minimal and time limited.
c. Costs to local governments: Counties must be classified by their roles with regard to mental health services to determine financial impact.
i. Counties as Local Governmental Units. There is no financial impact.
ii. Counties as funders of mental health services. There is no financial impact.
iii. Counties as providers. Counties can choose to operate licensed mental health clinics. Currently there are 39 counties serving as mental health clinic operators, with a wide variation in the rates paid to providers for comparable services provided to similar populations. The proposed regulations will phase in a reimbursement structure that more rationally reimburses providers by paying similar rates for similar services. As a result, the financial impact varies. Under clinic restructuring, some county-operated clinics will receive higher reimbursement than under the current system. Other clinics will see their rates reduced. Some counties that lose revenues may offset or eliminate these losses by increasing productivity or by delivering various new services allowed and funded under clinic restructuring. System-wide, however, counties should break even as the service prices for county-operated clinics are approximately the average unit cost for the efficiently operating programs.
5. Local government mandates: This regulatory proposal will not result in any additional imposition of duties or responsibilities upon county, city, town, village, school or fire districts.
6. Paperwork: There should not be additional paperwork requirements associated with this rulemaking.
7. Duplication: There are no duplicate, overlapping or conflicting mandates which may affect this rule.
8. Alternatives: The alternative that was considered was maintaining the current system of mental health clinic financing and delivery. That alternative was rejected because the structure of the finance system ensured that the cost would exceed what is permissible under Federal Medicaid law. This would have necessitated across-the-board reductions in Medicaid fees which would have had a negative impact upon the ability of some providers to continue operation and provide quality mental health services. Further, the services available under the existing system were not responsive to the needs of the service population. In addition, the current system is non-compliant with the requirements of HIPAA, which mandates the use of procedure codes for billing systems.
9. Federal standards: The regulatory amendment does not exceed any minimum standards of the federal government for the same or similar subject areas.
10. Compliance schedule: The regulatory amendment would be effective immediately upon adoption.
Regulatory Flexibility Analysis
1. Effect of rule: The rulemaking will have statewide impact. Currently there are 176 providers operating 516 OMH-licensed clinic programs. Of these providers, 39 are counties. In addition, there are 137 non-county not-for-profit clinic providers across New York State. Counties have three major roles with regard to mental health services - oversight, administration of state and county funding, and direct service delivery. Their role as a local governmental unit gives them responsibility for the oversight of their county mental health system, coordination with other county health, human services and legal systems and planning for countywide mental health needs. Many counties also choose to fund and/or directly provide community mental health services. County roles must be separated in order to determine the financial impact of these proposed new clinic regulations.
Counties as Local Governmental Units. There is no financial impact as clinic restructuring does not impact state aid grants.
Counties as funders of mental health services. There is no financial impact (for the same reason as noted above). This regulation does not impose any additional Medicaid costs upon the counties. First, the regulation is not anticipated to increase the overall costs of mental health services provided. Second, the county share of Medicaid is capped, so any unanticipated increase in overall costs would not be borne by the counties.
Counties as providers. Counties can choose to operate licensed mental health clinics. The costs, benefits, and impact among counties operating clinics will vary considerably. For some counties, there may be a modest and time-limited cost associated with modification of their data collection and Medicaid billing systems to accommodate the new procedure codes being implemented. For other counties, their current systems are already configured to accommodate the standardized CPT procedure coding. These costs are not quantifiable, but are not truly a cost of the regulation. Rather, they are a required cost in order for providers to become HIPAA compliant. Such costs would have been incurred regardless of the promulgation of this rule.
The most significant financial impact of these regulations pertains to the county's status as a provider of mental health services, and the revenues associated with the provision of such services. The main factors influencing the impact of the rulemaking on counties, and their opportunity to offset any negative impact include:
The county's operating costs (and average cost per procedure);
The average annual volume of procedures delivered by each clinical staff person (productivity);
The value of the county's supplemental COPS rate (per Part 592 of Title 14 NYCRR); and
The county's willingness and ability to respond to the incentives and disincentives offered by the rule.
2. Compliance requirements: There will be no additional recordkeeping or compliance requirements as a result of this rulemaking.
3. Professional services: Professional services may be required for some providers to comply with new billing provisions. It is expected that such costs, if any, will be modest and time limited.
4. Compliance costs: There will be no capital costs associated with this rulemaking. There may be modest cost savings as a result of increased flexibility in the use of space permitted under this rule.
5. Economic and technological feasibility: Some providers may be required to implement modest modifications to their Medicaid billing system to accommodate the new procedure codes being implemented. For other providers, their current system will already accommodate these changes.
6. Minimizing adverse impact: These regulations are designed to minimize adverse impacts on clinic operators by facilitating compliance with federal Medicaid laws and by increasing consistency with current private insurance/managed care and Medicaid billing practices. Additionally the new system will be financially phased in over several years to give providers time to adapt.
7. Small business and local government participation: Clinic restructuring and the development of this proposed rulemaking has taken place over a two-year period of time. During this time, to engage the stakeholder community, OMH established a Clinic Restructuring Advisory Workgroup consisting of a broadly representative range of local government officials, mental health providers, and mental health advocates. The workgroup met approximately 40 times and involved the active participation and input of 14 stakeholder groups and 55 stakeholders.
Rural Area Flexibility Analysis
1. Types and estimated numbers of rural areas: The proposed rulemaking will have statewide applicability.
2. Reporting, recordkeeping and other compliance requirements; and professional services: There will be no additional recordkeeping or compliance requirements as a result of this rulemaking. Professional services may be required for some providers to comply with new billing provisions. It is expected that such costs, if any, will be modest and time limited.
3. Costs: Costs are impossible to quantify, since the impact will vary by provider. For some providers, there may be a modest and time limited cost associated with modification of the Medicaid billing system to accommodate the new procedure codes being implemented. For other providers, their current system will already accommodate these changes. Any increased costs associated with this rule will be more than offset by the increase in rates for rural providers that will be established.
4. Minimizing adverse impact: The Medicaid base rate for rural providers will be increased from $63.55 to approximately double the current rate. Additionally, the Office of Mental Health (OMH) has held several trainings and webinars to prepare stakeholders for the transition. OMH has also released a projection model to enable providers to plan their financial and programmatic transitions. OMH has done several trainings around the State to assist providers in understanding and using this tool.
5. Rural area participation: Clinic restructuring and the development of this proposed rulemaking has taken place over a two-year period of time. During this time, to engage the stakeholder community, OMH established a Clinic Restructuring Advisory Workgroup consisting of a broadly representative range of local government officials, mental health providers, and mental health advocates, including representation by numerous individuals from rural areas. The workgroup met approximately 40 times and involved the active participation and input of 14 stakeholder groups and 55 stakeholders.
Job Impact Statement
A Job Impact Statement is not submitted with this notice because the purpose of rulemaking is to establish an improved mental health delivery system and a more equitable system of financing. There will be no adverse impact on jobs and employment opportunities as a result of this rulemaking.
