PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Amendment of section 681.14 of Title 14 NYCRR.
Statutory authority:
Mental Hygiene Law, sections 13.09(b) and 43.02
Subject:
Reimbursement of ICF/DDs.
Purpose:
To modify reimbursement methodology and make associated changes.
Substance of final rule:
With this regulation, OPWDD changes its methodology for reimbursing ICF/DD facilities that have a certified capacity of under 31 beds. Traditionally, reimbursement has taken the form of site-specific prospective rates. The operating components of those rates have been based on actual costs from providers' annual cost reports in a chosen year to which inflationary multipliers are periodically applied-usually annually. Absent cost year data, approved budgets are utilized in creating the rate. The rates cannot exceed statistically derived screens that represent maximum reimbursement ceilings for each of the operating cost categories reflected in the rate.
These regulations change the methodology for under 31-bed sites to hold rates to the lower of 2008/ 2008-2009 costs (depending on whether the provider reports on a calendar or fiscal year basis) or screen values. For sites that opened after the beginning of the cost reporting period, budgeted costs will be compared to the screens. For the purposes of the rate calculations, OPWDD assumed that providers allocated all expenses matched to their HCE I-III revenues to the fringe benefit costs category in the 2008/ 2008-2009 cost reports. Administrative, clinical and fringe benefit screens are modified to make them compatible with the new methodology. Once the site-specific rates are recalculated, the regulations consolidate the site-specific rates for each provider resulting in a single weighted average ICF/DD rate for each provider applicable to all its sites. The methodology ensures that the operating funding level reflected in the consolidated rate for each provider will range between an amount equal to the June 30, 2011 operating funding level and an amount equal to the June 30, 2011 operating funding level reduced by 10 percent.
The regulations also add the option for OPWDD to set new site rates for under 31-bed facilities opening after July 1, 2011, using either the current agency rate, agency submitted budgeted costs, or historical data for similar facilities. New site specific rates shall be incorporated into the single weighted average rate for the provider.
In conjunction with these changes for under 31-bed facilities, OPWDD adopts other measures in its amendments. The additional provisions with respect to appeals apply to all ICF/DDs regardless of capacity (both under 31-bed and over 30-bed ICF/DDs). Appeals which have been previously allowed for cost overruns occurring due to a variety of circumstances will be limited to bed vacancies. The loss threshold criterion for providers who submit applications due to bed vacancies increases from $1000 to $5000. Once OPWDD notifies a provider of an appeal outcome, a provider which resubmits its annual cost report corresponding to that rate appeal year, is not entitled to an increase in that award based on that resubmission. In addition to the vacancy appeals, OPWDD will continue to make corrections to rates in the event of material errors in computations and cost data upon which the rate is predicated as well as adjustments for capacity changes, capital cost changes and audit findings.
A final provision applicable to the under 31-bed facilities prohibits providers from using revenues realized from reimbursement attributable to components of the rate other than the administrative component to fund administrative expenses.
The regulations are effective July 1, 2011. The new methodology applies to services delivered on or after that date. Changes to the appeals methodology apply to rates calculated for rate periods beginning July 1, 2011 and thereafter.
Final rule as compared with last published rule:
Nonsubstantive changes were made in section 681.14(d), (4), (8) and (i)(11).
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, (518) 474-1830, email: barbara.brundage@opwdd.ny.gov
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 correct grammar, spelling, underlining, and to change a number from text to Arabic numeral.
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.
