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

6/25/14 N.Y. St. Reg. HLT-15-14-00011-A

NEW YORK STATE REGISTER

VOLUME XXXVI, ISSUE 25

June 25, 2014

RULE MAKING ACTIVITIES

DEPARTMENT OF HEALTH

NOTICE OF ADOPTION

 

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

Filing No. 488

Filing Date. Jun. 10, 2014

Effective Date. Jul. 01, 2014

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 action:

Action taken:

Addition of Subpart 86-10 to Title 10 NYCRR.

Statutory authority:

Social Services Law, section 363-a; 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.

Text or summary was published

in the April 16, 2014 issue of the Register, I.D. No. HLT-15-14-00011-P.

Final rule as compared with last published rule:

No changes.

Text of 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]

Assessment of Public Comment

1. COMMENT: 86-10.3(c)(1)(xxviii) State Wide Budget Neutrality Adjustment - In addition to describing the calculation of the Budget Neutrality Adjustment, the actual value of the adjustment should be published as part of the regulation in order for providers to be able to calculate its rate from reading the regulations. Also, the Budget Neutrality Adjustment is permanently fixed because it is calculated using the sum of all provider rate sheets “in effect on June thirtieth, two thousand fourteen.” This language should be modified to indicate that this value will be revised annually to include the value of services expansion and other funding increases added after June 30, 2014.

RESPONSE: The Department has decided that no change to the regulation is necessary at this time in response to the comment. However, the comment will be taken under advisement for consideration when subsequent amendments are made to the regulation.

2. COMMENT: 86-10.2(h)(1), (2), (3), (4) DOH Regions - The use of DOH regions to align providers is predicated on the anticipated move to managed care. However, since the predominance of funding for people with developmental disabilities is in fact related to OPWDD funded services and not health or other long term care services we question not using regions that are driven by OPWDD services.

RESPONSE: Although DOH regions are slightly different from OPWDD regions, the Department of Health feels that the regions are closely aligned and are appropriate for use in the methodology. The regions were chosen to align with long term managed care regions currently being used by the Department.

3. COMMENT: 86-10.2(n) Initial Period - The “initial period” is defined as “July first, two thousand fourteen through December thirty-first, two thousand fourteen for providers reporting on a calendar year basis or July first, two thousand fourteen through June thirtieth, two thousand fifteen for providers reporting on a fiscal year basis”. However, in 641-1-6 (Transition Period and reimbursement), there is no reference to the “initial period” but rather to the “base operating rate” which as defined in 641-1.2(d) has a different meaning.

RESPONSE: The “initial period” will be July one, two thousand fourteen through June thirty, two thousand fifteen and refers to the first year of operation under the new methodology, while the “base operating rate” refers to the reimbursement amount calculated by dividing the annual reimbursement by applicable annual units of service in effect on June thirtieth, two thousand fourteen. The Department has decided that no change to the regulation is necessary at this time in response to the comment. However, the comment will be taken under advisement for consideration when subsequent amendments are made to the regulation.

4. COMMENT: 86-10.3(c)(1)(i)-(vi), 86-10.3(d)(1)(i)-(vi) and 86-10.3(e)(1)(i)-(vi) Regional Averages - The regulations refer to various “regional averages” for various components of the operating rate and the method for calculating such “regional averages” and the resulting values should be published as part of the regulations in order for providers to be able to calculate its rate from reading the regulation.

RESPONSE: The regional averages will be posted on the Department’s website and therefore will be accessible to providers.

5. COMMENT: 86-10.3(c)(1)(xiv) Statewide Average Direct Hours Per Provider - We previously raised serious concerns about IRA methodology and the health, safety and community inclusion implications of using statewide averages, E-Scores and acuity based upon the developmental disabilities profile (DDP) which has not been validated. The instrument also lacks inter-rater reliability. The proposed methodology will result in approximately 120 providers receiving revenue reductions for direct support hours that they actually provided while 127 providers will receive increased funding for direct support staffing hours without any prior documentation that additional direct support hours are required. See attached letters (A and B) to CMS which illuminate these concerns.

The use of DDP scores to adjust hours was not included in the ICF or day habilitation methodologies because of insufficient statistical validity. We believe that the statistical validity to use DDP score to adjust hours in ICFs and day habilitation programs should have confirmed that the DDP has no place in the new rate setting methodology.

In our view, the appropriate solution is to not discriminate against people who live in IRA’s by amending the regulation to allow all IRA providers to be funded for the actual direct support hours that they actually provided in the same manner as is proposed for ICFs/DD and day habilitation programs. The solution is to await implementation of the new CAS assessment tool next year and ensure not-discriminatory treatment of all individuals receiving OPWDD supported services.

RESPONSE: The Department is confident in the results of a regression analysis utilizing DDP for the Supervised and Supportive IRA, which yielded strong regression models with r-squared values between 30 and 40%. The findings for Day Hab and ICF yielded r-squared values below an acceptable level, and therefore were not used. Risk assessment tools currently used in acute care payment methodologies on average have lower r-squared values ranging between 15 percent and 30 percent.

6. COMMENT: 86-10.3(c)(3)(i)-(iii) and 86-10.3(d)(3)(i)-(iii) Facility Cost Component - We strongly object to the methodology being utilized to calculated residential facility costs. We believe that the calculation is not consistent with the federal Social Security Administration regulations and expectations on the use of Supplemental Security Income (SSI). Our objection centers on the proposed methodology related to the calculation of the provider’s room and board costs.

The proposed rate methodology proposes to take a provider’s actual board costs and apply a budget neutrality factor that will in effect reduce each provider’s board costs; then add in the approved room costs to generate adjusted total room and board costs. From this adjusted figure Supplemental Security Income (SSI) and the Supplemental Nutrition Assistance Program (SNAP) funding is subtracted to generate a net (reduced) room and board value. In a number of instances, the value of the combination of the SSI and SNAP benefits will exceed this net (reduced) room and board value which will falsely result in “excess” SSI/SNAP benefits which can then be used to reduce a provider’s rate funded under Medicaid. Meanwhile, the individuals who reside in IRA settings are not able to have their SSI/SNAP benefits fully utilized to first cover their actual room and board costs.

In doing the calculation in this manner it will result in the unintentional misuse of the SSI and the SNAP benefits of the people with developmental disabilities who live in these settings. Both of these federal programs are designed for very specific purposes under federal law. According to Social Security’s website, SSI provides cash to help aged, blind, and disabled people, who have little or no income, meet basic needs for food, clothing and shelter. Also, according to the NYS Office of Temporary Disability and Assistance, SNAP benefits can help low-income working people, seniors, the disabled and others feed themselves and their families.

By determining that some portion of the SSI will not be used to cover the full room and board costs for a person, in other words only pays those costs in part, it could have an adverse impact and result in the person’s SSI benefit reduced by up to one third.

It is also clear in federal regulation that it is the responsibility of the representative payee to know the person’s needs and to use the SSI benefits in the person’s best interest to meet their maintenance needs. Federal regulation does not permit a State to “in essence” make this decision either on behalf of the person or their representative payee. It is only when the State is the representative payee can it make such a decision.

Although CMS insists that Medicaid does not pay for room and board costs and that SSI and earned and unearned income should pay for room and board, the proposed rate methodology for facility costs property could take a portion of a person’s SSI, even though all of their room and board costs have not been covered, and use it reduce the cost of a Medicaid funded waiver residential habilitation service.

We understand the potential need for DOH to include a budget neutrality calculation but it should occur at the very end of the calculation when the State can decide how much of the true (actual) excess room and board costs over SSI/SNAP benefits it wants to supplement providers.

RESPONSE: The Department has decided that no change to the regulation is necessary at this time in response to the comment. However, the comment will be taken under advisement for consideration when subsequent amendments are made to the regulation.

7. COMMENT: 86-10.3(c)(5)(i)-(iv), 86-10.3(d)(5)(i)-(iv) and 86-10.3(e)(5)(i)-(iv) Capital Component - The capital thresholds included in the proposed regulations are more than 6 years old (adopted April 1, 2008) and minimally should be made current. This issue is especially problematic for the downstate regions of the State where affordable housing continues to be a significant problem. There needs to be a provision for amendments to the cap and threshold values for capital acquisitions, new construction and leases to be updated on at least a periodic basis based upon an appropriate housing index.

The State and the nonprofit providers have made significant investments in real property to support thousands of individuals yet there is no provision to exceed the threshold values:

• especially as homes are reviewed by OPWDD against fire safety guidelines that could require providers to make significant capital investments to meet code;

• for developing new homes that can satisfactorily meet the needs of individuals with significant challenging behaviors and/or medical issues; and

• in order to meet money follows the person goals which require 4 persons or less to live together.

The inclusion of language that “DOH may retroactively adjust the capital component” in (i) General Principles is problematic for providers whose capital cost has already been approved by OPWDD in that the draft regulation appear to permit DOH to reduce capital reimbursement approved under proposes to limit reimbursement at the lower of the amount Subpart 745-6 if it exceeds reimbursement under the new proposed regulations. The language in the proposed regulation needs to be amended as follows “(i) General principles.” Capital costs shall be included in the rate at the lower of the amount determined pursuant to Subpart 635-6 of this Title or thresholds as determined pursuant to subparagraph (iv) of this paragraph. However, capital costs approved by OPWDD prior to July 1, 2014 through the formal prior property approval process shall only be subject to Subpart 635-6 of this Title. DOH may retroactively adjust the capital component to reflect capital costs approved pursuant to Subpart 635-6 or pursuant to this paragraph.

The language in “(ii) Initial rate” needs to be amended to make clear that the new regulations on capital costs only apply to new residential and day programs and that the new proposed capital cost rules do not apply to capital costs approved by OPWDD prior to July 1, 2014 and such capital costs shall only be subject to Subpart 635-6.

The short term interest time limit (“k”) should be increased from 12 months to 18 months without limitation between acquisition or renovation phases given the delays in receiving prior property approvals as well the delays in the ability to obtain building permits from local municipalities.

RESPONSE: The Department has decided that no change to the regulation is necessary at this time in response to the comment. However, the comment will be taken under advisement for consideration when subsequent amendments are made to the regulation.

8. COMMENTS: 86-10.5 Trend Factor - The regulation states that “for years in which DOH does not update the base year, subject to the approval of the Director of the Budget, DOH may use a compounded trend factor to bring base year costs forward to the appropriate rate period”. However, the regulation fails to describe the use of a trend factor when the base year is being updated.

RESPONSE: The Department’s language as stated is correct. Trend factors will not be applied in years in which the methodology is rebased.

9. COMMENTS: 86-10.6(b)(1)-(3) Therapeutic Leave Days - The regulations indicate that Therapeutic Leave Days shall be reimbursed at zero dollars to start and reimbursed after a period of time. This will have major cash flow implications on providers and was recognized by both DOH and OPWDD after the regulation was proposed. There was misunderstanding by DOH that an edit in E-MedNY was needed before reimbursing providers which is not the case. It is our understanding that OPWDD/DOH plans to correct this through an emergency regulation, to be filed by June 30, 2014, which will indicate that the provider will be reimbursed for therapeutic leave days at its residential habilitation rate starting July 1, 2014.

Finally, since reimbursement for therapeutic leave days will commence July 1, 2014, this section needs to be amended to exclude reference to therapeutic leave days.

RESPONSE: The Department has made system changes in order to allow providers to be paid for therapeutic leave days as they are reported. With respect to the remainder of the comment, the Department has decided that no change to the regulations is necessary at this time in response to the comment. However, the comment will be taken under advisement for consideration when subsequent amendments are made to the regulation.

10. COMMENTS: 86-10.6(b)(3) Vacant Bed Days. The last sentence in this section needs to be amended as follows: “Providers will be paid for vacant bed days at seventy five percent of the daily operating rate as calculated pursuant to paragraph (1) of subdivision (c) of section 641-1.3 of this Subpart up to a maximum of ninety consecutive vacancy days per vacancy”.

We also recommend that the following two items be added to the proposed regulations:

• The regulations should provide for at least a 90 day correction period for errors made in the computation of the rate.

• Template funding/rates is clearly not addressed in the Waiver regulations. We recommend that the funding of template rates under Balancing Incentive Program (BIP) funds be specifically included in the rate setting methodology.

RESPONSE: The vacant bed language is correct as written. The maximum allowable vacant bed days for the initial period will be limited to a maximum of ninety days per bed.

• OPWDD regulations 14 NYCRR 686.13(h) already allow for a 90-day review period for any rates promulgated. This regulation when promulgated will not supersede the previous approved regulation.

• Template funded individuals are not included in the new methodology as yet. These individuals will continue to receive their current level of funding until 10/1/15 at which time consideration will be given to the needs of these individuals.