HLT-15-14-00011-P Rate Rationalization-Community Residences (CRs)/Individualized Residential Alternatives (IRAs) Habilitation and Day Habilitation

4/16/14 N.Y. St. Reg. HLT-15-14-00011-P

NEW YORK STATE REGISTER

VOLUME XXXVI, ISSUE 15

April 16, 2014

RULE MAKING ACTIVITIES

DEPARTMENT OF HEALTH

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. HLT-15-14-00011-P

Rate Rationalization-Community Residences (CRs)/Individualized Residential Alternatives (IRAs) Habilitation and Day Habilitation

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

Proposed Action:

Addition of Subpart 86-10 to Title 10 NYCRR.

Statutory authority:

Social Services Law, section 363-a; and Public Health Law, section 201(1)(v)

Subject:

Rate Rationalization-Community Residences (CRs)/Individualized Residential Alternatives (IRAs) Habilitation and Day Habilitation.

Purpose:

To establish new rate methodology effective July 1, 2014.

Substance of proposed rule (Full text is posted at the following State website:www.health.ny.gov):

This regulation establishes a new reimbursement methodology for Supervised and Supportive Community Residences (including Individualized Residential Alternatives) and Day Habilitation programs which will be effective July 1, 2014.

The methodology for these programs will include the following elements:

1) The use of a base period Consolidated Fiscal Report (CFR) for the period of January 1, 2011 – December 31, 2011 for calendar year filers or the period of July 1, 2010 through June 30, 2011 for fiscal year filers.

2) The assignment of geographic location, based on CFR information and consistent with Department of Health regions.

3) Operating, facility and capital components. The operating component recognizes a blend of actual provider costs and average regional costs. The facility component recognizes actual provider costs. The methodology for the capital component has not been significantly changed from that of the previous reimbursement methodology. One adjustment to the methodology for the capital component is that initial reimbursement will only remain in the rate for two years from the date of site certification unless actual costs are verified with the Office for People With Developmental Disabilities. The other adjustment to the methodology is that the thresholds identified are the maximum allowable amounts and will not be exceeded.

4) Wage Equalization factors.

5) A Budget Neutrality factor.

6) A three year phase-in period for transition to the methodology.

For Supervised and Supportive Community Residences (including IRAs) only, the methodology will include:

An acuity factor developed through a regression analysis and based on Developmental Disabilities Profile information.

For Supervised Community Residences (including IRAs) only, the methodology will incorporate:

1) A change in the unit of service from monthly to daily. Commensurate with that change, the methodology will recognize retainer days, therapeutic leave days and vacant bed days.

2) The recognition of an evacuation score factor.

For Day Habilitation programs only, the methodology will include:

The recognition of actual provider to-from transportation costs.

Text of proposed 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, [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.

This rule was not under consideration at the time this agency submitted its Regulatory Agenda for publication in the Register.

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 proposed regulations further the legislative objectives embodied in section 363-a of the Social Services Law and section 201(1)(v) of the Public Health Law. The proposed regulations concern changes in the methodology for reimbursement of residential habilitation services delivered in Community Residences (CRs) and Individualized Residential Alternatives (IRAs), and for day habilitation services.

Needs and benefits:

The Office for People With Developmental Disabilities (OPWDD) and the Department of Health (DOH) are seeking to implement a new reimbursement methodology which complements existing OPWDD requirements concerning residential and day habilitation services, and satisfies commitments included in OPWDD’s transformation agreement with the federal Centers for Medicare and Medicaid Services (CMS).

The methodology, which combines regional average cost components, provider specific cost experiences, and other factors, including the needs of individuals served, is expected to result in rates that are consistent with efficiency and economy, and that lead to quality outcomes for individuals receiving services. The purpose of the methodology change is to move from budget to cost-based reimbursement, to provide a clear and transparent method of reimbursement, to move toward consistency in rates across the system, and to provide a more stable system of reimbursement.

Costs:

Costs to the Agency and to the State and its local governments:

The proposed regulations will be cost neutral to the state as the monies appropriated for such services will remain constant and only the distribution of such monies will be subject to change.

The new methodologies 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.

Costs to private regulated parties:

The proposed regulations will implement a new reimbursement methodology for residential habilitation delivered in CRs and IRAs and day habilitation. Application of the new methodology is expected to result in increased rates for some non-state operated providers and decreased rates for others. However, overall reimbursement to providers will not be changed.

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 proposed amendments will require additional paperwork be completed by providers. The proposed regulations change the unit of service for residential habilitation in supervised CRs and supervised IRAs from a monthly to a daily unit of service. The monthly unit of service required documentation of service delivery on at least twenty-two days each month; the new methodology will require daily documentation. In addition, providers will need to bill for each day that services are delivered, rather than billing on a monthly basis. In addition, the regulations require that providers determine and report retainer days, therapeutic leave days, and vacant bed days.

Duplication:

The proposed regulations do not duplicate any existing State or federal requirements that are applicable to services for persons with developmental disabilities.

Alternatives:

OPWDD developed the methodology in collaboration with DOH and discussed the methodology with representatives of provider associations and with CMS. A variety of factors, including alternate transition plans, were considered; however, the proposed regulations represent the results of decisions made from those discussions and collaboration with DOH.

Federal standards:

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

Compliance schedule:

OPWDD and DOH are planning for the regulations to be effective July 1, 2014. All necessary information, training, and guidance regarding the new service documentation requirements and billing procedures will be provided to agencies in advance of the effective date of regulations. The planned provider training will explain all components, calculations, and provisions of these regulations.

Regulatory Flexibility Analysis

Effect of Rule:

The proposed rule will shift resources across agencies, resulting in some agencies obtaining a higher reimbursement rate and others a lower reimbursement rate. The Department will determine actual costs of such agencies and to appropriately reflect such costs in agency reimbursement rates. The proposed rule primarily affects the operating cost component of agency reimbursement; however, there are changes to the capital cost component as well.

The new operating cost component will reflect actual costs of services to individuals receiving day and residential habilitation services. Such costs will be averaged according to region and across the State. The various averages will be adjusted and weighted for maximum accuracy. The methodology incorporated an acuity adjustment for residential habilitation services. The final operating rate will incorporate actual costs of an agency, the average regional costs of all agencies in such region and the average statewide costs for such services.

The capital cost component of the rate will be the lesser: actual costs, fair market value and threshold rates. Threshold rates will now be the maximum allowable reimbursement costs. The Department will retain the system of prior property approval and attendant system of estimated costs and cost verification processes. However, estimated costs will not exceed two years and the cost verification process shall be amended to place the onus of verification upon the provider agency. The Department recommends such changes as an incentive for such agencies to comply with the cost verification process, where such compliance has been difficult to obtain. A further consequence of the failure to submit actual cost data within the two years prescribed by this rule will be the reduction of the capital cost component to zero until such time as the agency complies.

Compliance Requirements:

The proposed regulations change the unit of service for residential habilitation for supervised IRAs from a monthly to a daily unity of service, effective July 1, 2014. The monthly unit of service required documentation of service delivery on at least twenty-two days each month; the new methodology will require daily documentation. In addition, providers will need to bill for each day that services are delivered, rather than billing on a monthly basis. Providers must also determine and report retainer days and therapeutic leave days.

The proposed rule does not require any additional paperwork requirements for the capital cost component, but changes the consequences of non-compliance.

Professional Services:

No new professional services are required as a result of this amendment.

Compliance Costs:

The proposed rule imposes no new costs on regulated entities.

Economic and Technological Feasibility:

There are technical issues related to units of service that will be managed during the transition to the new methodology. Previously, providers of residential habilitation services used a monthly billing system that required twenty-two days of service delivery. Agencies will now provide the Department with data regarding therapeutic leave days, service days and retainer services provided to individuals. The proposed rule provides two transition periods. The first transitions the monthly unit of service to a daily unit of service, while the second transitions the old methodology to the new regional/cost based approach. The Department does not anticipate that regulated entities will require new professional services as a result of this new rule.

Minimizing Adverse Impact:

The transition to the new methodology may involve significant disruptions to certain providers. Rate rationalization will provide a clear, transparent method of reimbursement that will normalize rates across the industry and make for a more stable system of reimbursement across the services affected. The proposed regulations minimize adverse economic impact in several ways. First, there is a multi-year phase-in period for transition to the new methodology. For providers that will experience a decrease in reimbursement, this will help to smooth the effects of the reduction in revenue. In addition, the inclusion of several factors in the methodology, such as the acuity factor and the E-score factor, will enhance reimbursement for providers who serve individuals with greater needs and/or who require richer staffing than would otherwise be warranted.

Small Business and Local Government Participation:

The methodology was discussed with representatives of providers, including those members of New York State Association of Community and Residential Agencies (NYSACRA) who have fewer than 100 employees, at numerous meetings and conferences. The Department has conveyed its objective to promulgate these amendments to providers, at six meetings/conferences between August 2013 and January 2014. Further, the department is committed to the transparency of this methodology by posting the results by provider on its website.

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. Forty three 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 proposed amendments have been reviewed by the Department in light of their impact on rural areas. The proposed amendments establish standards for the provision and funding of residential and day habilitation service under the Home and Community Based Services (HCBS) waiver and make minor technical changes in existing regulations.

Reporting, Recordkeeping and Other Compliance Requirements and Professional Services:

There are technical issues related to units of service that will be managed during the transition to the new methodology. Previously, providers of residential habilitation services used a monthly billing system that required twenty-two days of service delivery. Agencies will now provide the Department with data regarding therapeutic leave days, service days and retainer days provided to individuals. The proposed rule provides two transition periods, the first transitions the monthly unit of service to a daily unit of service while the second transitions the old methodology to the new regional/cost based approach. The Department does not anticipate that regulated entities will require new professional services as a result of this new rule.

Costs:

The proposed rule imposes no new costs on regulated entities.

Minimizing Adverse Impact:

The transition from rates to rates set according to a standardized methodology may involve significant disruptions to certain providers. Rate rationalization will provide a clear, transparent method of reimbursement that will normalize rates across the industry and make for a more stable system of reimbursement across the services affected.

The proposed regulations minimize adverse economic impact in several ways. First, there is a multi-year phase-in period for transition to the new methodology. For providers that will experience a decrease in reimbursement, this will help to smooth the effects of the reduction in revenue. In addition, the inclusion of several factors in the methodology, such as the acuity factor and the E-score factor, will enhance reimbursement for providers who serve individuals with greater needs and/or who require richer staffing than would otherwise be warranted. OPWDD has also been working with providers to develop strategies to assist providers in achieving efficiencies in service provision. This will help providers accommodate a reduction in revenue without compromising the quality of services provided.

Rural Area Participation:

The Department has conveyed its objective to promulgate these amendments to providers, at six meetings/conferences between August 2013 and January 2014. The methodology was discussed with representatives of providers, including providers in rural areas, such as NYSARC, the NYS Association of Community and Residential Agencies, NYS Catholic Conference and CP Association of NYS, some who have fewer than 100 employees, at numerous meetings and conferences. Further, the department is committed to the transparency of this methodology by posting the results by provider on its website.

Job Impact Statement

A job impact statement is not being submitted for these proposed amendments because the Department determined that they will not cause a loss of more than 100 full time annual jobs State wide. The proposed regulations will implement a new reimbursement methodology for residential habilitation delivered in CRs and IRAs and day habilitation. Application of the new methodology is expected to result in increased rates for some non-state operated providers and decreased rates for others. However, overall reimbursement to providers will not be changed.

Some providers will experience a decrease in reimbursement as a result of these amendments. The Department expects that most providers in this situation will be able to accommodate the reduction in revenue by making programs more efficient without compromising the quality of services. However, some providers may effectuate a modest reduction in employment opportunities as a result of the decrease in revenue. At the same time, other providers that experience an increase in reimbursement may commensurately increase employment opportunities. Therefore, the Department expects that there will be no overall effect on jobs and employment opportunities as a result of these amendments.