PDD-16-16-00001-P Cost Report Submission and Penalty Changes

4/20/16 N.Y. St. Reg. PDD-16-16-00001-P

NEW YORK STATE REGISTER

VOLUME XXXVIII, ISSUE 16

April 20, 2016

RULE MAKING ACTIVITIES

OFFICE FOR PEOPLE WITH DEVELOPMENTAL DISABILITIES

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

I.D No. PDD-16-16-00001-P

Cost Report Submission and Penalty Changes

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

Proposed Action:

Amendment of section 635-4.4 of Title 14 NYCRR.

Statutory authority:

Mental Hygiene Law, section 13.09(b)

Subject:

Cost Report Submission and Penalty Changes.

Purpose:

To amend requirements for submission of cost reports and penalties for failure to submit cost reports to OPWDD.

Text of proposed rule:

635-4.4 Failure to file required financial and statistical reports.

(a) Each provider shall submit all cost reports in the form and format and by the method specified by OPWDD [to OPWDD] so that OPWDD receives them no later than [120 days after the last day of the reporting period] June 1st for providers reporting on the January 1st through December 31st period or December 1st for providers reporting on the July 1st through June 30th period.

(b) [A provider may apply for one 30 day extension for filing a cost report. An application for extension shall document in writing that the provider cannot file the cost report by the original due date specified in subdivision (a) of this section. In the event that the provider applies for an extension, the revised due date for filing a cost report shall be 150 days after the last day of the reporting period.]

[(c)] If the provider fails to file a cost report, in the form and format and by the method specified by OPWDD, on or before the [original or revised] due date, the provider shall be subject to a reduction in reimbursement under subdivision [(e)] (d) of this section.

[(d)](c) [If a] A provider [has applied for an extension, it] may make a written request for a waiver of reduction in reimbursement due to extraordinary and/or unforeseeable circumstances beyond its control, such as a natural disaster, which will prevent it from filing the cost report by the [revised] due date. The application must contain detailed facts supporting the request, describe the extraordinary and/or unforeseeable circumstances and explain why the provider believes such circumstances will prevent it from filing the cost report by the [revised] due date.

(1) Written requests for a waiver of the reduction in reimbursement must be received by OPWDD [within the timeframes specified in subparagraphs (i) and (ii) of this paragraph] no later than June 1st for providers reporting on the January 1st through December 31st period or December 1st for providers reporting on the July 1st through June 30th period.

[(i) For circumstances that occur prior to the original due date specified in subdivision (a) of this section (120 days after the last day of the reporting period), the request must be received prior to the original due date.]

[(ii) For circumstances that occur during the 30 day extension period, the request must be received no later than the revised due date specified in subdivision (b) of this section (150 days after the last day of the reporting period). In order to demonstrate that such circumstances occurred during the 30 day extension period, the written request must include the date of occurrence of the circumstances.]

(2) If the request is received on or before the due date specified in subdivision (a) of this section, OPWDD shall review the request and approve or deny the request based upon the facts and circumstances described in the application and any other relevant facts and circumstances. OPWDD shall approve the request if OPWDD determines that there are extraordinary and/or unforeseeable circumstances beyond the provider’s control that will prevent the provider from filing the cost report by the [revised] due date. OPWDD shall deny the request if OPWDD determines that there are not extraordinary and/or unforeseeable circumstances beyond the provider’s control or that such circumstances should not prevent the provider from filing the cost report by the [revised] due date. OPWDD shall notify the provider in writing of its approval or denial of the request. OPWDD’s determination shall be final.

(3) If OPWDD denies the request for a waiver of the reduction in reimbursement, the provider shall be subject to a reduction in reimbursement under subdivision [(e)] (d) of this section.

(4) If OPWDD approves the request for a waiver of the reduction in reimbursement, OPWDD shall determine a revised due date [(that is beyond the 30 day extension period)] and shall notify the provider in writing of the revised due date. If the provider does not submit the cost report by the revised due date, the provider shall be subject to a reduction in reimbursement under subdivision [(e)] (d) of this section.

[(e)](d) The reduction in reimbursement shall equal two percent of the total billed [but unremitted] price(s), rate(s) and/or fee(s) in the payment systems beginning on [the first day of the month following] the due date of the cost report, or the revised due date of the cost report if OPWDD has approved the provider’s request for a waiver of the reduction in reimbursement in accordance with subdivision (c)(4) of this section, and continuing until the next regularly scheduled payment cycle following the last day of the month in which the cost report is received. For a provider subject to this sanction, the reduction shall apply to reimbursements for the following services: Intermediate Care Facilities for Persons with Developmental Disabilities, Medicaid Service Coordination, Day Treatment, Clinic Treatment Facilities, residential habilitation in individualized residential alternatives (IRAs) and community residences (CRs), and all other HCBS waiver services.

(e) Additional penalty applicable to providers of HCBS waiver services. If the cost report is still outstanding on the first day of the second month following the due date, the two percent penalty will be replaced by a 50 percent penalty on the first day of the eighth month following the due date. This penalty will continue until the next regularly scheduled payment cycle following the due date of the providers’ cost report for the subsequent cost reporting period or the last day of the month in which the cost report is received, whichever is later. If OPWDD determines that a provider will likely be unable to meet its financial obligations with the imposition of the 50 percent penalty or if the provider fails to file the overdue cost report by the end of the provider’s next cost report period, OPWDD may request that the provider voluntarily surrender its operating certificate for the HCBS services(s) and/or take action to revoke the provider’s operating certificate in accordance with Article 16 of the Mental Hygiene Law.

(f) The following chart provides the dates described in subdivisions (d) and (e) of this section:

	January 1st through December 31st Filers	July 1st through June 30th Filers
Cost Report Due Date	June 1st	December 1st
2 Percent Penalty Starts	June 1st	December 1st
Due Date to Avoid 50 Percent Penalty	August 1st	February 1st *
50 Percent Penalty Starts	February 1st *	August 1st *
Due Date of Cost Report for Next Cost Report Period	June 1st*	December 1st

* These dates apply to the year subsequent to the year the cost report is due.

[(f)] (g) If the provider discovers that a cost report submitted to OPWDD is incomplete, inaccurate or incorrect, the provider must submit a revised cost report.

[(g)] (h) Upon OPWDD’s review of a provider’s cost report that has been submitted in accordance with the form and format specified in this subpart, [I]if OPWDD determines that a cost report is incomplete, inaccurate, incorrect or otherwise unacceptable, OPWDD shall send the provider a written notice. Such notice shall give the provider an opportunity to submit, within a 30 day period from receipt of such notice, a revised cost report or additional data, or a request for a waiver of reduction in reimbursement due to extraordinary and/or unforeseeable circumstances beyond the provider’s control that prevent it from filing a revised cost report or submitting additional data within the 30 day period. A request must contain detailed facts supporting it, describe the extraordinary and/or unforeseeable circumstances and explain why the provider believes such circumstances will prevent it from filing a revised cost report or submitting additional data within 30 days.

(1) If the provider files a revised cost report or submits additional data within the 30 day period, the provider shall not be subject to [a reduction in reimbursement] the penalties described under this subdivision.

(2) If the provider submits a written request within the 30 day period, OPWDD shall review the request and approve or deny the request based upon the facts and circumstances described in the application and any other relevant facts and circumstances. OPWDD shall approve the request if OPWDD determines that there are extraordinary and/or unforeseeable circumstances beyond the provider’s control that will prevent the provider from filing a revised cost report or submitting additional data within 30 days. OPWDD shall deny the request if OPWDD determines that there are not extraordinary and/or unforeseeable circumstances beyond the provider’s control or that such circumstances should not prevent the provider from filing a revised cost report or submitting additional data within 30 days. OPWDD shall notify the provider in writing of its approval or denial of the request. OPWDD’s determination shall be final. If OPWDD approves the request, OPWDD shall set a revised due date for the revised cost report or additional data and give the provider written notice of the revised due date.

(3) The provider shall be subject to a reduction in reimbursement if:

(i) it fails to submit, within the 30 day period, a revised cost report or additional data, or a written request; or

(ii) OPWDD denies the written request; or

(iii) OPWDD approves the written request and the provider does not submit a revised cost report or additional data by the revised due date.

(4) A reduction in reimbursement under paragraph (3) of this subdivision shall be in accordance with subdivision [(e)] (d) of this section, except that it shall begin on the applicable date specified in subparagraphs (i) - (iii) of this paragraph and continue until the next regularly scheduled payment cycle following the last day of the month in which OPWDD receives the revised cost report or additional data.

(i) If the provider fails to submit a revised cost report, additional data or a written request within the 30 day period, the reduction shall begin on the first day of the month following the end of the 30 day period.

(ii) If OPWDD denies the written request, the reduction shall begin on the first day of the month following the end of the 30 day period.

(iii) If OPWDD approves the written request and the provider does not submit a revised cost report or data by the revised due date, the reduction shall begin on the first day of the month following the revised due date.

[(h)] (i) Revised cost reports submitted under this section must be certified by the provider's chief executive officer and, if requested by OPWDD, a public accountant who meets all the requirements specified in section 635-4.3(c)(2) of this Subpart.

[(i)] (j) Calendar year 2014 cost reports.

(1) Any provider that requests an extension and fails to submit a complete calendar year 2014 cost report by May 30, 2015, shall be subject to a penalty under this section effective June 1, 2015.

(2) Any provider that would otherwise be subject to a penalty in accordance with the regulations that were immediately in effect prior to June 1, 2015, shall be subject to such penalty.

(k) Any penalty imposed pursuant to this section because of a delinquent cost report for the periods specified in paragraphs (1) and (2) of this subdivision, shall cease as of the effective date of these regulations.

(1) For providers reporting on the July 1st through June 30th period, delinquent cost reports for any periods prior to July 1, 2012 through June 30, 2013.

(2) For providers reporting on the calendar period, delinquent cost reports for any periods prior to January 1, 2013 through December 31, 2013.

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

Office of Counsel, Bureau of Policy and Regulatory Affairs, Office for People With Developmental Disabilities (OPWDD), 44 Holland Avenue, 3rd floor, Albany, NY 12229, (518) 474-7700, email: RAU.Unit@opwdd.ny.gov

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: 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).

2. Legislative Objectives: The proposed amendments further the legislative objectives embodied in Section 13.09(b) of the Mental Hygiene Law. The proposed amendments are concerning changes to requirements for submission of annual cost reports and the imposition of penalties on providers that fail to submit cost reports in accordance with such requirements.

3. Needs and Benefits: The submission of cost reports in a timely manner is imperative so that the Department of Health (DOH) can calculate rates of reimbursement for providers for future years and so that OPWDD can properly monitor the fiscal health of providers and be made aware of situations where providers may be unable to continue to provide essential services. Consequently, access to information contained in the cost reports will result in increased protection of individuals receiving services.

The proposed amendments make changes to the requirements for the submission of cost reports to OPWDD. The amendments require providers to submit their cost reports in the form and format prescribed by OPWDD on or before the specified date in the regulations and replace the time period requirements (e.g. 120 days to submit cost reports) in existing regulations with specific due dates. The amendments also extend the due date to incorporate the 30 day extension period in the current regulations and eliminate the requirements associated with making requests for an extension. The amendments also add a table that outlines the respective deadlines for cost report filers. OPWDD expects that this will reduce confusion among providers about due dates.

The proposed amendments add new penalties applicable to providers of Home and Community Based Services (HCBS) waiver services for failure to submit cost reports in accordance with the specified deadlines. If the cost report is still outstanding at the time specified in the regulations, the existing two percent penalty will be replaced by a 50 percent penalty. If a provider is unable to meet its fiscal obligations with such a penalty, the amendments allow OPWDD to request that the provider voluntarily surrender its operating certificate and/or revoke the operating certificate in accordance with Article 16 of the Mental Hygiene Law. OPWDD expects that the addition of these penalties will facilitate increased compliance with the regulations, thereby increasing protections for individuals receiving services. Further, OPWDD’s HCBS waiver, as approved by the federal government, eliminates federal funding for providers that fail to meet the required deadlines. Since the federal funding equates to 50 percent, this penalty is, in effect, an elimination of federal funding for the HCBS waiver services.

The proposed amendments also eliminate penalties for delinquent cost reports associated with time periods prior to those specified in the amendments. For providers filing on the July 1st through June 30th period, the specified time period is prior to July 1, 2012 through June 30, 2013. For providers filing on the calendar period, the specified time period is prior to January 1, 2013 through December 31, 2013. This new provision will protect providers from excessive penalties and undue hardship, and facilitate recovery from past penalties.

4. Costs:

a. Costs to the Agency and to the State and its local governments: The proposed amendments may result in costs to the State or OPWDD in its role in paying for Medicaid expenditures. The new penalties in the proposed amendments subject providers of HCBS waiver services that fail to submit cost reports to a 50 percent reduction in revenue and revocation of their operating certificate. OPWDD will incur administrative costs related to coordinating the surrender or revocation of an operating certificate. OPWDD cannot quantify such costs as it is uncertain as to how many providers will receive this penalty as a result of non-compliance with the required deadlines. OPWDD expects that in the long term the proposed amendments will result in better fiscal health and increased protections for individuals receiving services, which will ultimately result in savings to the State.

Local governments should incur no costs as a result of these amendments.

b. Costs to private regulated parties: There are no initial capital investment costs. The proposed amendments may result in a reduction in revenue for providers of HCBS waiver services that fail to submit cost reports as these providers could face a 50 percent reduction in revenue and revocation of their operating certificate. OPWDD expects that the potential for these penalties will motivate providers to minimize or eliminate non-compliance, which in turn would result in negligible penalties, if any. Additionally, the amendments eliminate penalties for past delinquent cost reports, which will increase revenue for providers.

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: There may be additional paperwork requirements imposed as a result of these amendments if providers do not submit their cost reports and there is a change of auspice from one provider to another. Such a change in auspice will require additional paperwork related to transferring property, operations, and staff to the new provider. However, OPWDD expects that the amendments will facilitate increased compliance with cost reporting requirements and, in turn, the new penalties and associated paperwork would not be imposed.

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

8. Alternatives: OPWDD did not consider any other alternatives to the proposed regulations since such changes were required by the Center for Medicare and Medicaid Services (CMS) and failure to adhere to the requirements could jeopardize federal funding for all HCBS waiver services.

9. Federal Standards: The proposed amendments do not exceed any minimum standards of the federal government for the same or similar subject areas. The amendments bring OPWDD requirements in line with federal standards.

10. Compliance Schedule: OPWDD is planning to adopt the proposed amendments on July 1, 2016. OPWDD will be mailing a notice of the proposed amendments to providers approximately three months in advance of their effective date.

Regulatory Flexibility Analysis

1. Effect on small business: OPWDD has determined, through a review of the certified cost reports, that most OPWDD-funded services are provided by 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 700 agencies providing services which are certified, authorized or funded by OPWDD. OPWDD is unable to estimate the portion of these providers that may be considered small businesses.

The proposed amendments have been reviewed by OPWDD in light of their impact on small businesses.

2. Compliance requirements: There are no additional compliance activities associated with these amendments. Providers are already required by regulation to submit cost reports by the specified due date, and compliance activities associated with submitting cost reports will not change as a result of the proposed amendments. The amendments merely provide specific due dates for cost report filers, require submission of cost reports in the form and format specified by OPWDD, add new penalties for providers of Home and Community Based Services (HCBS) waiver services for failure to submit cost reports by the respective deadlines, and eliminate the requirements associated with making requests for a cost report filing extension.

3. Professional services: Providers have to engage the services of public accountants to certify cost reports. However, there are no additional professional services required for providers as a result of these amendments. The amendments will not add to the professional service needs of local governments.

4. Compliance costs: While the proposed amendments will not impose any new compliance activities, there may a reduction in revenue for providers of HCBS waiver services who fail to submit cost reports as these providers could face a 50 percent penalty and revocation of their operating certificate. OPWDD expects that the potential for this penalty will motivate providers of HCBS waiver services to increase compliance, which in turn would result in the reduction or elimination of penalties. Additionally, the amendments eliminate penalties for past delinquent cost reports, which increases revenue for providers.

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

6. Minimizing adverse economic impact: As stated above in the section on compliance costs, the proposed amendments may result in an adverse economic impact on providers subject to a 50 percent penalty and revocation of their operating certificate when they fail to submit a cost report. However, as stated earlier, OPWDD expects that the potential for this penalty will motivate providers to increase compliance, and therefore reduce or eliminate penalties for providers.

OPWDD has reviewed and considered the approaches for minimizing adverse economic impact as suggested in section 202-b(1) of the State Administrative Procedure Act. OPWDD did not consider the exemption of small businesses from the proposed regulations, as the amendments were required by the Centers for Medicare and Medicaid (CMS) and were not intended to exclude any regulated parties. Further, OPWDD’s HCBS waiver does not allow for exemptions for small providers. Timely submission of cost reports is imperative so that the Department of Health (DOH) can calculate rates of reimbursement for providers for future years and so that OPWDD can properly monitor the fiscal health of providers in order to be aware of situations where providers may be unable to continue to provide essential services. Consequently, the amendments are necessary for the increased protection of individuals receiving services.

The proposed amendments still allow a provider to avoid penalties if it cannot meet a cost report deadline due to extraordinary and/or unforeseeable circumstances beyond its control. If the provider cannot meet its respective due date because of such circumstances, the provider can explain these circumstances to OPWDD. If OPWDD agrees with the provider, OPWDD will set a new due date for the cost report and the provider will not be subject to any penalties as long as it submits the report by the new due date.

7. Small business participation: The proposed regulations were discussed with representatives of providers, including the New York State Association of Community and Residential Agencies (NYSACRA), on March 21, 2016. Some of the members of NYSACRA have fewer than 100 employees. OPWDD will also be mailing these proposed amendments to all providers, including providers that are small businesses, three months in advance of the effective date.

8. For rules that either establish or modify a violation or penalties associated with a violation: The proposed amendments will modify penalties for failure to submit a cost report by adding a 50 percent reduction in revenue, subjecting providers to revocation of their operating certificate, and eliminating penalties for certain past delinquent cost reports. Requirements in existing regulations in 14 NYCRR Section 635-4.4 give providers the opportunity to take ameliorative action by requesting a waiver of penalties if extraordinary and/or unforeseeable circumstances beyond the provider’s control will prevent the provider from complying with the deadlines in the proposed regulations. If OPWDD accepts the provider’s reasons, OPWDD will determine a revised due date, and the provider will not be subject to any penalties as long as it submits the report by the revised due date.

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. 44 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, Saratoga, Schenectady, Schoharie, Schuyler, Seneca, Steuben, Sullivan, Tioga, Tompkins, Ulster, Warren, Washington, Wayne, Wyoming and Yates. 9 counties with certain townships have a population density of 150 persons or less per square mile: Albany, Broome, Dutchess, Erie, Monroe, Niagara, Oneida, Onondaga and Orange.

The proposed amendments have been reviewed by OPWDD in light of their impact on entities in rural areas.

5. Minimizing adverse impact: As stated above in the section on compliance costs, the proposed amendments may result in an adverse economic impact on providers subject to a 50 percent penalty and revocation of their operating certificate when they fail to submit a cost report. However, as stated earlier, OPWDD expects that the potential for this penalty will motivate providers to increase compliance, and therefore reduce or eliminate penalties for providers.

OPWDD has reviewed and considered the approaches for minimizing adverse economic impact as suggested in section 202-bb(2)(b) of the State Administrative Procedure Act. OPWDD did not consider the exemption of providers in rural areas from the proposed regulations, as the amendments were required by the Centers for Medicare and Medicaid (CMS) and were not intended to exclude any regulated parties. Further, OPWDD’s HCBS waiver does not allow for exemptions for providers in rural areas. Timely submission of cost reports is imperative so that the Department of Health (DOH) can calculate rates of reimbursement for providers for future years and so that OPWDD can properly monitor the fiscal health of providers in order to be aware of situations where providers may be unable to continue to provide essential services. Consequently, the amendments are necessary for the increased protection of individuals receiving services.

6. Participation of public and private interests in rural areas: The proposed regulations were discussed with representatives of providers, including NYSARC, NYS Catholic Conference, and Cerebral Palsy Associations of NYS, which represent providers in rural areas, on March 21, 2016. OPWDD will also be mailing these proposed amendments to all providers, including providers in rural areas, three months in advance of their effective date.

Job Impact Statement

A Job Impact Statement for these amendments is not being submitted because it is apparent from the nature and purposes of the amendments that they will not have a substantial adverse impact on jobs and/or employment opportunities.

The proposed amendments provide specific due dates for cost report filers, require submission of cost reports in the form and format specified by OPWDD, add new penalties for providers of Home and Community Based Services (HCBS) waiver services for failure to submit cost reports by the respective deadlines, and eliminate penalties for delinquent cost reports. There are no additional compliance activities or staffing costs imposed by the proposed regulations since providers are already required by regulation to submit cost reports by the specified due date, and compliance activities associated with submitting cost reports will not change as a result of the proposed amendments. OPWDD expects that, in the event that there is an auspice change from one provider to another as a result of the proposed amendments, staff will be transferred to the new provider to ensure continuity of care for individuals receiving services. Consequently, OPWDD expects that there will be no adverse effect on jobs or employment opportunities as a result of the proposed regulations.

PDD-16-16-00001-P Cost Report Submission and Penalty Changes

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