PDD-18-11-00018-P Changes to Prescribed Uses of Health Care Adjustment/Health Care Enhancement Funds

5/4/11 N.Y. St. Reg. PDD-18-11-00018-P

NEW YORK STATE REGISTER

VOLUME XXXIII, ISSUE 18

May 04, 2011

RULE MAKING ACTIVITIES

OFFICE FOR PEOPLE WITH DEVELOPMENTAL DISABILITIES

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. PDD-18-11-00018-P

Changes to Prescribed Uses of Health Care Adjustment/Health Care Enhancement Funds

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

Proposed Action:

Amendment of sections 635-10.5, 671.7, 679.6, 681.14, 686.13 and 690.7 of Title 14 NYCRR.

Statutory authority:

Mental Hygiene Law, sections 13.09(b) and 43.02

Subject:

Changes to prescribed uses of Health Care Adjustment/Health Care Enhancement funds.

Purpose:

To allow providers to exercise broader discretion in the allocation of these funds.

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

Beginning in 2006, OPWDD developed a series of six initiatives to support provider agencies in addressing the health care needs of their staff and promulgated regulations to effectuate the initiatives. These initiatives were known as Health Care Enhancements (HCE) or Health Care Adjustments (HCA).

The regulations stipulated that providers which received the HCE/HCA funds based on approved applications had to agree to conform to specific requirements for the use of funds. In fee-based services, regulatory language suggested that the funds be used for specified purposes.

Services which were required to conform to specific requirements for the use of the funds included Residential Habilitation, Day Habilitation, Prevocational Services, Respite, Community Residences, ICF/DDs, and Day Treatment. For these services, the proposed regulations would modify the original stipulations regarding the use of the funds attributable to the various HCA/HCE initiatives. They would give non-benchmark providers broader discretion to determine how best to allocate these funds. Non-benchmark providers shall use these funds for purposes currently described in regulation and/or for any other options that continue and/or enhance existing health care benefits and/or improve the recruitment and/or retention of the provider's lower paid employees. Moreover, providers may establish which priorities serve the needs of such employees in the selection of the funding allocations. For fee-based programs (Plan of Care Support Services, Family Education and Training, and Supported Employment), the regulatory language that suggested that the funds be used for specific purposes would be removed by the proposed regulations.

The proposed regulations would apply to non-benchmark providers and the revenue derived from the initiatives attributable to reimbursement of services delivered on or after the effective date. For revenues derived from the initiatives received on or after the effective date, in payment for earlier billing periods, the original requirements remain in force.

The proposed regulations also specify that HCA/HCE funding shall be included in the reimbursable cost category of fringe benefits in the prices and rates of the specific services.

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

Barbara Brundage, Director, Regulatory Affairs Unit, OPWDD, 44 Holland Avenue, Albany, New York 12229, [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.

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 objectives: These proposed amendments further the legislative objectives embodied in sections 13.09(b) and 43.02 of the Mental Hygiene Law. The proposed amendments concern provisions for the utilization of health care adjustment/health care enhancement funds by providers.

3. Needs and benefits: The Health Care Enhancements (HCE)/Health Care Adjustments (HCA) were comprised of a series of six distinct initiatives which were designed to assist providers in enhancing health care related benefits of their employees. To ensure that the funds were used appropriately, regulations generally imposed stringent requirements regarding the use of the funds on those providers which applied for them. In order to document compliance with the requirements, providers continue to track revenues and related expenses separately for each initiative. In some instances, providers document expenses incurred on behalf of specific employees. Because the initiatives were open-ended, each successive one increased and compounded the benefits derived from the initiatives which were already in place and which carried forward. This further complicated the administrative tracking necessary to document the expenditures in accordance with regulatory requirements.

The proposed regulations would place greater control in the hands of providers by allowing them to exercise broader discretion in the allocation of these funds although continuing to constrain the use of funds for health care benefits and for purposes that support providers' efforts at recruitment and retention of the provider's lower paid employees. Providers are empowered to choose wisely regarding the expenditures of these funds and to achieve increased effectiveness and operational efficiencies. Providers should realize relief from the administrative burden of the increasingly complex recordkeeping that was required by the mandates.

The proposed regulations would apply to non-benchmark providers and revenue derived from the initiatives attributable to reimbursement of services delivered on or after the effective date. For revenues derived from the initiatives received on or after the effective date, in payment for earlier billing periods, the original requirements remain in force.

4. Costs:

a. Costs to the Agency and to the State and its local governments: New York State and OPWDD will not incur any new costs as a result of these amendments. There will be no additional costs to local governments as a result of these specific amendments.

b. Costs to private regulated parties: There are no initial capital investment costs nor initial non-capital expenses. There are no additional costs associated with implementation and continued compliance with the rule. The proposed amendments will result in modest savings for providers of services by reducing existing documentation requirements and thereby also reducing the amount of paperwork for providers. OPWDD is unable to quantify these savings.

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 proposed regulations do not require any additional paperwork to be completed by providers. Conversely, the amendments will reduce existing documentation requirements and thereby also reduce the amount of paperwork for providers.

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 initially considered the continuation of existing requirements that providers allocate funds derived from the HCE/HCA initiatives exclusively to the health care benefits of their employees. However, OPWDD considered that it would be beneficial to offer the flexibility of allowing providers to exercise broader discretion in the allocation of these funds. Providers would also benefit from the relief resulting from the elimination of the increasingly complex documentation requirements.

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

10. Compliance schedule: OPWDD expects to finalize the proposed amendments at the earliest possible date consistent with the timeframes in the State Administrative Procedure Act. There are no additional compliance activities associated with these amendments.

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 400 agencies that will be affected by the proposed regulations. OPWDD is unable to estimate the portion of these providers that may be considered to be small businesses.

The proposed amendments have been reviewed by OPWDD in light of their impact on small businesses. These amendments concern provisions for the utilization of Health Care Enhancement and Health Care Adjustment funds by providers. OPWDD has determined that these amendments will not result in increased costs for additional services or increased compliance requirements. Conversely, these amendments may result in a minor savings for providers since they will reduce existing documentation requirements and thereby also reduce the amount of staff time devoted to tracking expenditures and associated paperwork.

2. Compliance requirements: The proposed amendments do not impose any additional compliance requirements on providers. The proposed regulations instead reduce existing documentation requirements.

The amendments will have no effect on local governments.

3. Professional services: There are no additional professional services required as a result of these amendments, and the amendments will not add to the professional service needs of local governments.

4. Compliance costs: There are no compliance costs since the proposed amendments will not impose any additional compliance requirements on providers. The amendments will reduce documentation requirements which will result in a reduction of compliance costs for providers.

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

6. Minimizing adverse economic impact: There will not be any adverse impacts on small business providers and local governments as a result of the proposed regulations. The proposed regulations will reduce paperwork costs and compliance activities which will provide minor economic relief for providers.

7. Small business participation: The proposed regulations were discussed originally with representatives of providers, including the New York State Association of Community and Residential Agencies (NYSACRA), on February 23 and March 8, 2011. In addition, the proposed regulations were discussed at a meeting of the Fiscal Sustainability Team, also on March 8. NYSACRA was part of the Fiscal Sustainability Team. Some of the members of NYSACRA have fewer than 100 employees. Since the February and March meetings, the proposal has been modified. Although it contains many of the same provisions, it does not convey unfettered license to providers regarding the use of the funds. It does represent a compromise that retains the intent of the HCE/HCA incentives but still significantly broadens and eases the approaches for distributing the funding allowed to providers. Finally, OWPDD will be mailing these proposed amendments to all affected providers, including small business providers.

Rural Area Flexibility Analysis

A rural area flexibility analysis for these proposed amendments is not being submitted because the amendments will not impose any adverse impact or reporting, recordkeeping or other compliance requirements on public or private entities in rural areas. There will be no professional services, capital, or other compliance costs imposed on public or private entities in rural areas as a result of the proposed amendments.

The proposed amendments provide mandate relief concerning the utilization of Health Care Adjustment/Health Care Enhancement funds by providers. The proposal relaxes existing restrictions pertaining to the utilization of health care adjustment/health care enhancement funds by providers and will allow providers to exercise broader discretion in the allocation of these funds.

Job Impact Statement

A Job Impact Statement for these proposed amendments is not being submitted because OPWDD does not anticipate a substantial adverse impact on jobs and employment opportunities. The proposed amendments provide mandate relief concerning the utilization of health care adjustment/health care enhancement funds by providers. The proposal relaxes existing restrictions pertaining to the utilization of health care adjustment/health care enhancement funds by providers and will allow providers to exercise broader discretion in the allocation of these funds.

There is a possibility that providers may choose to use these funds for the recruitment and retention of employees. In these instances, the proposed amendments may have a favorable impact on jobs.