PDD-28-14-00020-E Rate Setting for Non-State Providers—ICF/DD Facilities
7/16/14 N.Y. St. Reg. PDD-28-14-00020-E
NEW YORK STATE REGISTER
VOLUME XXXVI, ISSUE 28
July 16, 2014
RULE MAKING ACTIVITIES
OFFICE FOR PEOPLE WITH DEVELOPMENTAL DISABILITIES
EMERGENCY RULE MAKING
I.D No. PDD-28-14-00020-E
Filing No. 576
Filing Date. Jul. 01, 2014
Effective Date. Jul. 01, 2014
Rate Setting for Non-State Providers—ICF/DD Facilities
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Addition of Subpart 641-2 to Title 14 NYCRR.
Statutory authority:
Mental Hygiene Law, sections 13.09(b) and 43.02
Finding of necessity for emergency rule:
Preservation of public health, public safety and general welfare.
Specific reasons underlying the finding of necessity:
The emergency adoption of these amendments is necessary to protect the health, safety and general welfare of individuals receiving services in the OPWDD system. Working with the Federal government to transform its service delivery system, OPWDD made a number of commitments to the Centers for Medicare and Medicaid Services (CMS) as outlined in a transformation agreement. Among these commitments was a change in methodology for specified OPWDD services. However, it was not possible to promulgate regulations that achieve the required July 1, 2014 effective date using the regular rulemaking process established by the State Administrative Procedure Act (SAPA). If OPWDD did not promulgate these regulations on an emergency basis, OPWDD would fail to meet its commitment to CMS and would risk loss of the substantial federal funding that is contingent on this commitment. The loss of this federal funding could jeopardize the health, safety, and welfare of individuals receiving services in the OPWDD system, as without it, individuals would be at risk of receiving services that are inadequate or insufficient in meeting their needs.
Subject:
Rate Setting for Non-State Providers—ICF/DD facilities.
Purpose:
To establish a new rate methodology effective July 1, 2014.
Substance of emergency rule:
This regulation establishes a new reimbursement methodology for Intermediate Care Facilities for People with Developmental Disabilities (ICFs/DD) scheduled to be effective July 1, 2014.
The methodology for this program will include the following elements:
1) The use of a base period Consolidated Fiscal Report (CFR) for the period of January 1, 2011 – December 31, 2011 for calendar year filers or the period of July 1, 2010 through June 30, 2011 for fiscal year filers.
2) The assignment of geographic location, based on CFR information and consistent with Department of Health regions.
3) Operating, facility, day services and capital components. The operating component recognizes a blend of actual provider costs and average regional costs. The facility component recognizes actual provider costs. The day services component is based on the existing units of service from the provider rate sheet in effect on June 30, 2014 and the July 1, 2014 rate for the service. The methodology for the capital component has not been significantly changed from that of the previous reimbursement methodology. One adjustment to the methodology for the capital component is that initial reimbursement will only remain in the rate for two years from the date of site certification unless actual costs are verified with the Office for People With Developmental Disabilities. The other adjustment to the methodology is that the thresholds identified are the maximum allowable amounts and will not be exceeded for property approved by OPWDD on/or after July 1, 2014.
4) Wage Equalization factors.
5) A Budget Neutrality factor.
6) A three year phase-in period for transition to the methodology.
7) A new section is added governing funding for those individuals identified as qualifying for template or auspice funding. The funding for ICF/DD services provided to these individuals will be determined in accordance with that section instead of the methodology that is generally applicable.
This notice is intended
to serve only as an emergency adoption, to be valid for 90 days or less. This rule expires September 28, 2014.
Text of rule and any required statements and analyses may be obtained from:
Janet Felker, Regulatory Affairs Unit, Office for People With Developmental Disabilities, 44 Holland Ave., 3rd Floor, Albany, NY 12229, (518) 474-1830, email: RAU.Unit@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 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 objective: These emergency regulations further the legislative objectives embodied in sections 13.09(b) and 43.02 of the Mental Hygiene Law. The emergency regulations concern changes in the methodology for reimbursement of Intermediate Care Facilities for Persons with Developmental Disabilities (ICFs/DD).
3. Needs and benefits: OPWDD and the Department of Health (DOH) are implementing a new reimbursement methodology, which complements existing OPWDD requirements concerning ICFs/DD, and satisfies commitments included in OPWDD's transformation agreement with the federal Centers for Medicare and Medicaid Services (CMS).
The methodology, which combines regional average cost components, provider specific cost experiences, and other factors, including the needs of individuals served, is expected to result in rates that are consistent with efficiency and economy and that lead to quality outcomes for individuals receiving services. The purpose of the methodology change is to provide a clear and transparent method of reimbursement, to move toward consistency in rates across the system, and to provide a more stable system of reimbursement.
OPWDD filed proposed regulations on this topic which are being finalized July 2, 2014. The emergency regulations are being promulgated to apply to the reimbursement of services provided on July 1, 2014 only, in order for the new ratesetting methodology to be in effect seamlessly for the entire month of July. OPWDD’s commitment with CMS was that the new methodology would become effective July 1, 2014.
If OPWDD did not promulgate these regulations on an emergency basis, OPWDD would fail to meet its commitment to CMS and would risk loss of the substantial federal funding that is contingent on this commitment.
4. Costs:
a. Costs to the Agency and to the State and its local governments: The emergency regulation will have no fiscal effect on OPWDD and the State. The change in methodology for ICFs/DD will result in increased rates for some non-state providers and decreased rates for other non-state providers. However, there will be no change in the aggregate rates.
The new methodologies do not apply to the state as a provider of services.
There will be no savings or costs to local governments as a result of these regulations because there is no change in Medicaid expenditures as a result. In addition, pursuant to Social Services Law sections 365 and 368-a, either local governments incur no costs for these services or the State reimburses local governments for their share of the cost of Medicaid funded programs and services.
b. Costs to private regulated parties: The emergency regulation will implement a new reimbursement methodology for ICFs/DD. Application of the new methodology is expected to result in increased rates for some non-state operated providers and decreased rates for others. However, overall reimbursement to providers will not be changed. In any case, any adverse economic impact resulting from a decrease in rates for services delivered on a single day will be minor.
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 is no change in paperwork requirements.
7. Duplication: The emergency regulations do not duplicate any existing State or federal requirements that are applicable to services for persons with developmental disabilities.
8. Alternatives: There is no viable alternative to the promulgation of these emergency regulations as it is necessary for OPWDD to fulfill its commitment to CMS.
9. Federal standards: The emergency amendments do not exceed any minimum standards of the federal government for the same or similar subject areas.
10. Compliance schedule: The emergency regulations are effective July 1, 2014 only. OPWDD has finalized similar proposed regulations effective July 2, 2014 and has filed an emergency/proposed regulation to amend the finalized regulations on the same date (July 2). The text of the regulations, as amended by the emergency/proposed amendments, is the same as these emergency regulations, so that the implementation of the new methodology effective July 1 is designed to be seamless. All necessary information, training, and guidance regarding the new methodology have been provided to agencies in advance of the effective date of the emergency regulations. The provider training explained all components, and provisions of the new methodology implemented by these regulations.
Regulatory Flexibility Analysis
1. Effect on small business: OPWDD has determined, through a review of the certified cost reports, that ICFs/DD are operated by agencies that employ more than 100 people overall. However, some smaller agencies that employ fewer than 100 employees overall would be classified as small businesses. Currently, there are 108 providers of ICFs/DD. OPWDD is unable to estimate the portion of these providers that may be considered to be small businesses.
The emergency regulations concern changes in the methodology for reimbursement of ICFs/DD. The methodology, which combines regional average cost components, provider specific cost experiences, and other factors, including the needs of individuals served, is expected to result in rates that are consistent with efficiency and economy and that lead to quality outcomes for individuals receiving services. Application of the new methodology is expected to result in increased rates for some non-state operated providers and decreased rates for others. The overall reimbursement to providers will not change. In any case, the adverse economic impact of receiving reimbursement at a decreased rate for services delivered on a single day will be minor.
Finally, these amendments do not impose any requirements on local governments, and (as noted in the Regulatory Impact Statement) have no fiscal impact on local governments.
2. Compliance requirements: There are no new compliance activities imposed by these amendments.
3. Professional services: No additional professional services will be required as a result of these regulations and the regulations will not add to the professional service needs of local governments.
4. Compliance costs: There are no compliance costs since there are no new compliance activities imposed by these amendments.
5. Economic and technological feasibility: The emergency amendments do not impose on regulated parties the use of any new technological processes.
6. Minimizing adverse economic impact: As noted above, the fiscal effect of a change in reimbursement level for a single day of service will be minor. Further, overall funding to providers is not changed as a result of this regulation.
OPWDD has also reviewed and considered the approaches for minimizing adverse economic impact as suggested in section 202-b(1) of the State Administrative Procedure Act. OPWDD determined that the revision to reimbursement in this amendment is the most optimal approach to instituting the necessary change in rate methodology while minimizing any adverse impact on providers. As noted in the emergency justification, without the promulgation of these emergency regulations OPWDD risks the loss of significant federal funding, which would cause significant adverse economic impact on providers of services. This potential significant adverse impact on all providers far outweighs the minor adverse economic impact that may be experienced by some providers.
7. Small business participation: OPWDD and DOH met with representatives of providers to discuss the new methodology (including provider concerns) at numerous meetings beginning in August 2013, including the New York State Association of Community and Residential Agencies (NYSACRA) (which represents some providers that have fewer than 100 employees). OPWDD and DOH posted material about the original proposed regulations on the respective agencies’ websites, and OWPDD notified all providers affected by the proposed regulation of the materials posted. In addition, OPWDD and DOH conducted six training sessions for providers by videoconference throughout NYS during April-May 2014. DOH sent each provider affected by the new methodology the rate sheet and documents that described the impact of the new methodology on the specific provider. OPWDD and DOH received public comments on the original regulations and answered numerous questions. OPWDD is also posting materials about the new methodology on its website and is notifying all affected providers about the availability of these materials.
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. 43 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, Schenectady, Schoharie, Schuyler, Seneca, Steuben, Sullivan, Tioga, Tompkins, Ulster, Warren, Washington, Wayne, Wyoming and Yates. Additionally, certain townships in 10 other counties have a population density of 150 persons or less per square mile: Albany, Broome, Dutchess, Erie, Monroe, Niagara, Oneida, Onondaga, Orange, and Saratoga.
The emergency/proposed amendments make changes to the newly-adopted regulations that revise the rate methodology for ICF/DD facilities. The changes in these amendments clarify the new methodology and contain corrections that are necessary for its proper implementation.
Many of the amendments correct technical errors in the original text or add clarifying material. In general, these provisions do not change the impact of the original regulations on providers, including providers in rural areas, or have positive impacts. However, several technical amendments make changes to the original text that may translate into a minor increase or decrease in the rates and may have a modest negative impact on some providers of ICFs/DD in rural areas. For example, the change from “billed units” to “rate sheet capacities” in the methodology may result in immaterial positive or negative differences in the final rates. These immaterial differences will not impose an adverse economic impact on providers in rural areas and in any case, the overall funding to providers will remain the same because of budget neutrality. The amendments do not change any requirements for record-keeping or other compliance requirements that are contained in the original regulations.
Finally, these amendments do not impose any requirements on local governments, and (as noted in the Regulatory Impact Statement) have no fiscal impact on local governments, including local governments in rural areas.
2. Compliance requirements: There are no new compliance activities imposed by these amendments.
The amendments will have no effect on local governments.
3. Professional services: No additional professional services will be required as a result of these regulations and the regulations will not add to the professional service needs of local governments.
4. Compliance costs: There are no compliance costs since there are no new compliance activities imposed by these amendments.
5. Minimizing adverse economic impact: As noted above, some of the technical changes may affect the rates either positively or negatively. OPWDD does not expect that these immaterial differences would impose an adverse economic impact on providers in rural areas. In any case, the overall funding to providers will remain the same because of budget neutrality.
OPWDD has reviewed and considered the approaches for minimizing adverse impact on providers in rural areas as suggested in section 202-bb(2)(b) of the State Administrative Procedure Act. The emergency/proposed regulations minimize adverse economic impact in several ways. First, the anticipated fiscal impact of the amendments is expected to be slight because only minor changes in the rates result from the technical amendments. In addition, OPWDD notes that the rate sheets distributed to providers in June anticipated the promulgation of these amendments by incorporating the technical changes into the methodology underlying the rate calculation, and providers have therefore already been developing plans to implement the new rate methodology based on the incorporation of these amendments. Therefore, providers will not need to make any additional adjustments in fiscal plans as a result of the minor fiscal impact of the amendments.
The amendments also contain several changes that will be positive for providers. The amendments include changes which explicitly state that the new provisions related to the calculation of the capital component do not apply to capital approved prior to July 1, 2014. While this reflects the original intention and is not a change per se, the inclusion of this specific language helps providers to keep faith with financial institutions who can rest assured that anticipated capital reimbursement will continue to be received for projects. In addition, new language was added to explicitly address the correction of arithmetic or calculation errors. In the event that such errors occur, providers have a referenced mechanism to request corrections of these errors. Finally, related to the calculation of the capital component, new items were added to the chart of thresholds for “soft costs,” such as security and clerk of the works, which will permit the reimbursement of these items up to the threshold amount. This corrects the inadvertent exclusion of these items in the original proposed regulations.
6. Participation of public and private interests in rural areas: OPWDD and DOH met with representatives of providers to discuss the new methodology (including provider concerns) at numerous meetings beginning in August 2013, including providers in rural areas, such as NYSARC, the NYS Association of Community and Residential Agencies, NYS Catholic Conference, and CP Association of NYS. OPWDD and DOH posted material about the original proposed regulations on the respective agencies’ websites, and OWPDD notified all providers affected by the proposed regulation of the materials posted. In addition, OPWDD and DOH conducted six training sessions for providers by videoconference throughout NYS during April-May 2014. As noted above, DOH sent each provider affected by the new methodology the rate sheet and documents that described the impact of the new regulations (including the emergency/proposed amendments) on the specific provider. OPWDD and DOH received public comments on the original regulations and answered numerous questions. Many of the changes contained in these emergency/proposed amendments were made as a result of the concerns raised by the regulated parties through one or more of these vehicles. OPWDD is also posting materials about these emergency/proposed amendments on its website and is notifying all affected providers about the availability of these materials.
Job Impact Statement
A job impact statement is not being submitted for these emergency amendments because OPWDD determined that they will not cause a loss of more than 100 full time annual jobs State wide. The emergency regulations will implement a new reimbursement methodology for ICFs/DD. Application of the new methodology is expected to result in increased rates for some non-state operated providers and decreased rates for others. However, overall reimbursement to providers will not be changed. Further, the changes in the emergency regulations are only effective for one day and adverse economic impacts experienced by some providers as a result of decreased rates will be minor.
Therefore, OPWDD expects that there will be no overall effect on jobs and employment opportunities as a result of these amendments.
