OMH-29-13-00010-EP Medical Assistance Rates of Payment for Residential Treatment Facilities for Children and Youth

7/17/13 N.Y. St. Reg. OMH-29-13-00010-EP

NEW YORK STATE REGISTER

VOLUME XXXV, ISSUE 29

July 17, 2013

RULE MAKING ACTIVITIES

OFFICE OF MENTAL HEALTH

EMERGENCY/PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. OMH-29-13-00010-EP

Filing No. 700

Filing Date. Jun. 28, 2013

Effective Date. Jun. 28, 2013

Medical Assistance Rates of Payment for Residential Treatment Facilities for Children and Youth

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

Proposed Action:

Amendment of Part 578 of Title 14 NYCRR.

Statutory authority:

Mental Hygiene Law, sections 7.09 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 specific reasons underlying the finding of necessity for emergency filing are as follows:

The amendments to 14 NYCRR Part 578 remove the trend factor from the 2013-14 Medicaid rate calculation for residential treatment facilities (RTF) for children and youth, which are identified as a subclass of hospitals under Section 31.26 of the Mental Hygiene Law. As a result, the rate of growth in Medicaid expenditures is slowed, yet the RTF’s quality and availability of services are maintained. The amendments also include an adjustment to the imputed occupancy rates, which will mitigate the potential impact of vacant beds caused by reducing the lengths of stay in the program.

The amendments are an Administrative Action consistent with the 2013-2014 enacted State Budget, and with actions taken by the Department of Health for other inpatient services. They reflect the serious fiscal condition of the State. It is estimated that this action will result in an annual reduction in Medicaid growth of approximately $1.0 million State share of Medicaid ($2.0 million gross Medicaid). Existing regulations provide for a trend factor effective July 1, 2013; therefore, it is imperative that this rule be adopted on an Emergency basis until such time as it has been formally adopted through the SAPA rule promulgation process.

Subject:

Medical Assistance Rates of Payment for Residential Treatment Facilities for Children and Youth.

Purpose:

To remove the trend factor from the 2013-14 Medicaid rate calculation and adjust the occupancy rates.

Text of emergency/proposed rule:

1. Paragraph (4) of subdivision (a) of Section 578.8 of Title 14 NYCRR is amended to read as follows:

(4) The allowable costs, as set forth in paragraph (1) of this subdivision, that meet the requirements stated in paragraphs (2) and (3) of this subdivision, shall be trended by the applicable Medicare inflation factor for hospitals and units excluded from the prospective payment system except for the rate periods effective July 1, 1996 through June 30, 1997, and July 1, 2009 through June 30, 2010, where the inflation factor used to trend costs will be limited to the inflation factor for the first year of the two-year period. No trend shall be applied to allowable costs for the rate period effective July 1, 2013 through June 30, 2014.

2. Subdivision (d) of Section 578.9 of Title 14 NYCRR is amended to read as follows:

(d) For a currently certified residential treatment facility decreasing certified bed capacity by 20 percent or more, the rate of payment may be computed using the facility's existing reimbursement adjusted by the budgeted variable costs associated with the decrease in certified capacity. Rate(s) of payment may be calculated to reflect a phase down period, and a budget based period thereafter. Each period may not exceed 12 months.

(1) Rates of payment calculated for the phase down period shall be developed from the residential treatment facility's existing reimbursement, adjusted by any variable cost decreases or extraordinary cost increases, and adjusted by the phase down utilization. More than one rate of payment may be calculated to coincide with the facility's phase down period, which shall be determined at the commissioner's discretion.

(i) The existing rate of payment is multiplied by the patient days used in the calculation of that rate of payment, resulting in a dollar amount of reimbursement.

(ii) The amount of reimbursement is adjusted by the applicable amount of variable cost decrease and the amount of any extraordinary cost associated with the phase down.

(iii) The total reimbursement is then divided by the product of the targeted certified capacity for the applicable period of the phase down, multiplied by the number of days in the period and by a minimum utilization of [97] 96 percent.

(2) The rate of payment for the subsequent budget based period shall be developed from the residential treatment facility's existing reimbursement, adjusted by any variable cost decreases or extraordinary cost increases, adjusted for inflation as appropriate, and adjusted to the staffing standards for medical/clinical and nursing categories, as approved by the commissioner.

(i) The existing rate of payment is multiplied by the patient days used in the calculation of that rate of payment, resulting in a dollar amount of reimbursement. The reimbursement is then increased by an appropriate inflation factor, as determined by the commissioner.

(ii) The amount of reimbursement is adjusted by the applicable amount of variable cost decrease and the amount of any extraordinary cost associated with the phase down.

(iii) Costs for the medical/clinical and nursing categories are deleted, and are substituted as follows. Medical/clinical and nursing costs are computed using the full time equivalent staffing standards, as approved by the commissioner, multiplied by the facility's salary and fringe benefit cost experience. The resulting combined amount is subject to the average salary and fringe benefit screens, as specified in section 578.8(a)(2)(ii) and (iii) of this Part, multiplied by the approved staffing standards. The cost data is made comparable by applying the appropriate trend factors as determined by the commissioner.

(iv) Capital costs shall be updated in accordance with the approved costs as specified in section [578.8(a)(6)] 578.8(a)(5) of this Part.

(v) The total reimbursement (the sum of immediately preceding subparagraphs (i) through (iv) of this paragraph) is then divided by the product of the certified capacity for the phased down budget based period, multiplied by the number of days in the period and by a minimum utilization of [97] 96 percent.

3. Subdivision (a) of Section 578.13 of Title 14 NYCRR is amended to read as follows:

(a) For purposes of determining a rate of payment, allowable patient days shall be computed using the higher of allowable days pursuant to section 578.4(b) of this Part or a minimum utilization of [95] 93 percent of certified bed capacity, provided that the number of allowable days shall not exceed a maximum utilization of [98] 96 percent of certified bed capacity.

This notice is intended:

to serve as both a notice of emergency adoption and a notice of proposed rule making. The emergency rule will expire September 25, 2013.

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

Sue Watson, NYS Office of Mental Health, 44 Holland Avenue, Albany, NY 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.

Regulatory Impact Statement

1. Statutory authority: Section 7.09 of the Mental Hygiene Law grants the Commissioner of the Office of Mental Health the authority and responsibility to adopt regulations that are necessary and proper to implement matters under his or her jurisdiction.

Section 43.02 of the Mental Hygiene Law provides that the Commissioner has the power to establish standards and methods for determining rates of payment made by government agencies pursuant to Title 11 of Article 5 of the Social Services Law for services provided by facilities, including residential treatment facilities for children and youth licensed by the Office of Mental Health.

2. Legislative objectives: Article 7 of the Mental Hygiene Law reflects the Commissioner’s authority to establish regulations regarding mental health programs. The amendments to Part 578 are needed to reduce the growth rate of Medicaid reimbursement associated with residential treatment facilities for children and youth regulated by the Office of Mental Health (OMH) thereby ensuring consistency with the enacted 2013-2014 state budget. The amendments also reflect adjustments to the imputed occupancy rates used to calculate the Medicaid rates, thereby more accurately reflecting the impact of reduced lengths of stay in the programs.

3. Needs and benefits: The amendments remove the trend factor from the 2013-14 Medicaid rate calculation for residential treatment facilities (RTF) for children and youth, which are identified as a subclass of hospitals under Section 31.26 of the Mental Hygiene Law. As a result, the rate of growth in Medicaid expenditures is slowed, yet the RTF’s quality and availability of services are maintained. This is an Administrative Action consistent with the 2013-2014 enacted State Budget, and with actions taken by the Department of Health for other inpatient services. It reflects the serious fiscal condition of the State. The amendments also include an adjustment to the imputed occupancy rates, which will mitigate the potential impact of vacant beds caused by reducing the lengths of stay in the program.

4. Costs:

(a) cost to State government: It is estimated that this action will result in an annual reduction in Medicaid growth of approximately $1.0 million State share of Medicaid ($2.0 million gross Medicaid).

(b) cost to local government: These regulatory amendments will not result in any additional costs to local government.

(c) cost to regulated parties: This regulatory amendment will not result in any additional cost to regulated parties, but will reduce the rate of growth in Medicaid payments that the RTF providers receive.

5. Local government mandates: These regulatory amendments will not result in any additional imposition of duties or responsibilities upon county, city, town, village, school or fire districts.

6. Paperwork: This rule should not substantially increase the paperwork requirements of affected providers.

7. Duplication: These regulatory amendments do not duplicate existing State or federal requirements.

8. Alternatives: As noted above, this amendment is consistent with the 2013-2014 enacted State Budget and the budgetary constraints included therein. OMH has determined that the elimination of the trend factor for RTFs would not affect the ability of those programs to continue to function and serve the children and youth who are receiving services there, and that the change in the occupancy rates used to impute patient days in the rate calculation will more accurately reflect the operation of the program and the reduced lengths of stay. The only alternative to this rule making would have been to make budgetary cuts to another program which would not have been as sustainable as the residential treatment facilities, and to leave the current occupancy rates unchanged thereby not reflecting the changes observed in lengths of stay. Therefore, that alternative was not considered.

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

10. Compliance schedule: The regulatory amendments would become effective immediately upon adoption.

Regulatory Flexibility Analysis

The proposed rule amending 14 NYCRR Part 578 removes the trend factor from the 2013-2014 Medicaid rate calculation for residential treatment facilities for children and youth, and as a result, slows the rate of growth in Medicaid payments while maintaining the program’s quality and availability of services. The amendments are the result of an Administrative Action consistent with the 2013-2014 enacted State Budget and with actions taken by the Department of Health for other inpatient services. In addition, the rule includes an adjustment to the occupancy rates used to impute patient days in the rate calculation to more accurately reflect the operation of the program and the reduced lengths of stay. There will be no adverse economic impact on small business or local governments; therefore a Regulatory Flexibility Analysis for Small Business and Local Governments has not been submitted with this notice.

Rural Area Flexibility Analysis

A Rural Area Flexibility Analysis is not submitted with this notice because the amendments will not impose any adverse economic impact on rural areas. The proposed rule removes the trend factor from the 2013-2014 Medicaid rate calculation for residential treatment facilities for children and youth, and as a result, slows the rate of growth in Medicaid payments while maintaining the program’s quality and availability of services. In addition, the rule includes an adjustment to the occupancy rates used to impute patient days in the rate calculation to more accurately reflect the operation of the program and the reduced lengths of stay.

Job Impact Statement

A Job Impact Statement is not submitted with this notice because the purpose of the rule is to remove the trend factor from the 2013-2014 Medicaid rate calculation for residential treatment facilities for children and youth regulated by the Office of Mental Health. This is an Administrative Action consistent with the 2013-2014 enacted State budget and with actions taken by the Department of Health for other inpatient services. The rule includes an adjustment to the occupancy rates used to impute patient days in the rate calculation to more accurately reflect the operation of the program and the reduced lengths of stay. The result of this rule making is the rate of growth in Medicaid expenditures is slowed, but a program’s quality and availability of services is maintained. There will be no adverse impact on jobs and employment opportunities.