PDD-16-11-00015-A Personal Services Surpluses Adjustment for Prevocational Services

6/29/11 N.Y. St. Reg. PDD-16-11-00015-A

NEW YORK STATE REGISTER

VOLUME XXXIII, ISSUE 26

June 29, 2011

RULE MAKING ACTIVITIES

OFFICE FOR PEOPLE WITH DEVELOPMENTAL DISABILITIES

NOTICE OF ADOPTION

 

I.D No. PDD-16-11-00015-A

Filing No. 524

Filing Date. Jun. 14, 2011

Effective Date. Jul. 01, 2011

Personal Services Surpluses Adjustment for Prevocational Services

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

Action taken:

Amendment of section 635-10.5(e) of Title 14 NYCRR.

Statutory authority:

Mental Hygiene Law, sections 13.09(b) and 43.02

Subject:

Personal services surpluses adjustment for Prevocational Services.

Purpose:

To modify reimbursement methodology for Prevocational Services effective July 1, 2011.

Text of final rule:

Subdivision 635-10.5(e) is amended by the addition of a new paragraph (6) as follows and existing paragraphs (6)-(10) are renumbered to be (7)-(11):

(6) Effective July 1, 2011, prevocational services prices shall be reduced according to the measures outlined in this paragraph. This personal services action addresses provider surpluses in funding for direct care, clinical and support staff and the associated fringe benefits.

(i) Applicability. The price reduction shall apply to all providers except for those which meet the criteria for exemption.

The first criterion, in order for any provider to be exempt from the impact of the reduction on any basis, is a cost report requirement. Region I providers must have filed a 2008-2009 cost report and Regions II and III providers must have filed a 2008 cost report on or before December 23, 2010, except that a provider may submit the cost report after December 23, 2010 if the cost report represents an original submission or a resubmission specifically requested by OPWDD due to identified inaccuracies or insufficiencies. Cost reports submitted after December 23, 2010 must be submitted by May 1, 2011 unless the Commissioner exercises or has exercised his or her discretion to extend the May 1, 2011 deadline. Providers with cost reports submitted in accordance with the deadlines in this subparagraph (i) may qualify for exemption pursuant to subparagraph (ii) of this paragraph. Providers which did not submit cost reports in accordance with the deadlines in this subparagraph (i) shall be subject to price reductions pursuant to subparagraph (vii) of this paragraph. OPWDD shall employ data extracted from the most recent 2008/2008-2009 cost report submitted by a provider on or before December 23, 2010, except that data from a 2008/2008-2009 cost report submitted after December 23, 2010 representing an original submission or a resubmission specifically requested by OPWDD due to identified inaccuracies or insufficiencies and submitted by May 1, 2011 or a later deadline extended by the Commissioner shall also be utilized.

(ii) Exemptions.

(a) FTE personal services loss. OPWDD compared each provider's actual FTEs for direct care, clinical care and support as reported in its 2008/2008-2009 cost report to the maximum reimbursable FTEs designated for direct care, clinical care and support as reflected in the corresponding price. This analysis included the FTE equivalents for contracted services. OPWDD identified a subset of providers which demonstrated an excess of actual FTEs over reimbursable FTEs. They are exempt.

(b) Providers with a loss in personal services and associated fringe benefits combined are exempt. OPWDD examined 2008/2008-2009 cost reports for those providers not exempted by virtue of clause (a) of this subparagraph. OPWDD compared each provider's actual expenses for direct care, clinical care and support and the associated fringe benefits to the total reimbursable costs reflected in the corresponding price and designated for direct care, clinical care and support and the associated fringe benefits cost categories. This analysis included contracted services. OPWDD identified a subset of providers which demonstrated an excess of actual expenses for direct care, clinical care and support and the associated fringe benefits over reimbursable costs reflected in the corresponding price and designated for direct care, clinical care and support and the associated fringe benefits. They are exempt.

(iii) Providers subject to prevocational services price reduction are those providers which are not specifically exempted pursuant to subparagraph (ii) of this paragraph.

(iv) Untrended gross surplus. A provider is identified as having an untrended gross surplus when the analysis as conducted and described in clause (b) of subparagraph (ii) demonstrated an excess of reimbursable costs as reflected in the price for the respective reporting period and designated for direct care, clinical care and support and the associated fringe benefits over actual expenses for direct care, clinical care and support and the associated fringe benefits as reported in the provider's 2008/2008-2009 cost report. The amount of this excess is the untrended gross surplus.

(v) Untrended tentative gross reduction. The untrended gross surplus multiplied by 40 percent is referred to as the untrended tentative gross reduction.

(vi) Tentative gross reduction. The tentative gross reduction equals the untrended tentative gross reduction pursuant to subparagraph (v) of this paragraph trended to June 30, 2011 dollars.

(vii) Total impact limitation. Before OPWDD revises a provider's prevocational services price, it shall assess the total impact on a provider of all the tentative gross reductions and tentative aggregate gross reductions pursuant to this paragraph 635-10.5(e)(6) and sections 635-10.5(b)(18)(iv), 635-10.5(c)(16), and 671.7(a)(13) of this Title, combined with the final price and fee reductions pursuant to sections 635-10.5(b)(18)(iii), 635-10.5(d)(6), 635-10.5(h)(3)(iii)(d), 635-10.5(ab)(12)(iii)(b) and 671.7(a)(12) of this Title. The total impact to an individual provider shall be limited to an amount not to exceed 6.5 percent of the aggregated total gross reimbursable operating costs as reflected in a provider's June 30, 2011 prices and the aggregated total gross allowable reimbursement reflected in a provider's June 30, 2011 fees for the provider's programs and/or services subject to the price and fee revisions. The lesser of the amount of the total impact or the amount of the total impact as limited by the 6.5 percent provision represents the final impact. For providers for which no 2008/2008-2009 cost reports were available because the conditions established in subparagraph (i) of this paragraph were not met, the total impact is calculated as follows: The aggregated total gross reimbursable operating costs as reflected in a provider's June 30, 2011 prices and the aggregated total gross allowable reimbursement as reflected in a provider's June 30, 2011 fees for the provider's programs and/or services subject to the price and fee revisions are summed. The total is multiplied by 6.5 percent. The product is the final impact for these providers.

(viii) Allocation of final impact. Before allocation, the final impact on a provider shall be reduced by the final price and fee reductions pursuant to sections 635-10.5(b)(18)(iii), 635-10.5(d)(6), 635-10.5(h)(3)(iii)(d), 635-10.5(ab)(12)(iii)(b) and 671.7(a)(12) of this Title because those reductions are not subject to any further revisions. The remainder of the final impact on a provider shall be distributed equitably across the reimbursable operating costs in that provider's prevocational, supervised residential habilitation, group day habilitation, and supplemental group day habilitation services in proportion to the amount of reduction each of these programs would have incurred had the reductions been calculated separately.

(ix) Final prevocational services price reduction percentage. The allocation of the final impact to a provider's prevocational services shall be expressed as a percentage of the total gross reimbursable operating costs reflected in the price in effect on June 30, 2011.

(x) The final prevocational services price shall be the prevocational services price in effect on June 30, 2011 reduced by the final prevocational services price reduction percentage pursuant to subparagraph (ix) of this paragraph applied to that price.

(xi) For the purposes of requesting a price adjustment, the effects of this price reduction shall not be construed as a basis for loss. In processing a price adjustment, any revised price will be offset by the monetary impact, prorated as appropriate, of the adjustment as calculated pursuant to this paragraph.

(xii) The commissioner, at his or her discretion, may waive all or a portion of this adjustment for a provider upon the provider demonstrating that the imposition of the reduction would jeopardize the continued operation of the prevocational services.

Subdivision 635-10.5(e) is amended by the addition of new paragraphs (12) and (13) as follows and existing paragraph (12) is renumbered to be (14).

(12) Revenues realized by providers from reimbursement attributable to components of the price other than the administrative component shall not be used to fund administrative expenses.

(13) The price determined through the application of this subdivision may be appealed. Such appeal shall be pursuant to section 686.13(i) of this Title, except that the determination following such first level appeal process shall be the commissioner's final decision. At the conclusion of the first level appeal process, OPWDD shall notify the provider of any revised price or denial of the request. Once OPWDD has informed the provider of the appeal outcome, a provider which submits a revised cost report for the period reviewed shall not be entitled to an increase in the award determination based on that resubmission.

Final rule as compared with last published rule:

Nonsubstantial changes were made in section 635-10.5(e)(6).

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

Barbara Brundage, Director, Regulatory Affairs Unit, OPWDD, 44 Holland Avenue, Albany, NY 12229, [phone], email: [e-mail]

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.

Revised Regulatory Impact Statement, Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement

Minor changes were made to the proposed regulation to remove extraneous commas and to correct underlining.

These changes do not necessitate revisions to the previously published Regulatory Impact Statement, Regulatory Flexibility Analysis for Small Business and Local Governments, Rural Area Flexibility Analysis or Job Impact Statement.

Assessment of Public Comment

OPWDD received one comment from a voluntary provider as follows.

Comment: An agency urged that the amendments (this one among others) be withdrawn because the proposed changes depart from the three "core principles" that define the relationship between the State and voluntary providers. It asserted that efficient providers reserve funds to accommodate special needs as they arise; that providers need a safety net in the form of the appeal mechanism to address "unforeseen operating losses;" and that interchange allows providers to reallocate funds between cost centers and programs to meet changing needs and compensates for a reimbursement system that is "neither scientific nor accurate." It contended that "these three principles have been violated by the proposed regulations."

Response: OPWDD will not be withdrawing the regulations. The amendments were designed to encourage operating efficiencies. Aspects of the regulations were formulated to reduce surplus funding by more closely aligning reimbursement with actual costs. The appeals process was amended to be better synchronized with OPWDD's prospective reimbursement methodologies. OPWDD has a long established tradition of reaching out to stakeholders for their input before instituting systemic changes to programs and payments. Providers through provider associations participated in numerous discussions during the development stage of these amendments. With respect to the interchange restriction, OPWDD is responding to providers by repealing this aspect of the amendments in order to avoid negative consequences to those providers already demonstrating the greatest levels of efficiency. This will occur through a separate emergency rule making action that is timed to coincide with the adoption of these regulations.