PDD-29-11-00006-E Provider Allocation of OPWDD Funding
7/20/11 N.Y. St. Reg. PDD-29-11-00006-E
NEW YORK STATE REGISTER
VOLUME XXXIII, ISSUE 29
July 20, 2011
RULE MAKING ACTIVITIES
OFFICE FOR PEOPLE WITH DEVELOPMENTAL DISABILITIES
EMERGENCY RULE MAKING
I.D No. PDD-29-11-00006-E
Filing No. 618
Filing Date. Jul. 01, 2011
Effective Date. Jul. 01, 2011
Provider Allocation of OPWDD Funding
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Amendment of sections 635-10.5, 671.7 and 681.14 of 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:
This emergency rule is being promulgated on July 1, 2011 to delay from July 1, 2011 to September 30, 2011 implementation of a specific provision in various rules concerning efficiency adjustments in rate setting methodologies that are being adopted on July 1, 2011.
The rules concerning efficiency adjustments reduce the operating components of reimbursement to providers of supervised residential habilitation services, group day habilitation and supplemental group day habilitation services, prevocational services, and under 31-bed ICF/DDs.
These rules concerning efficiency adjustments contain a stipulation that would restrict providers from allocating funds to administrative expenses if they were not designated for administrative costs in the price or rate. Subsequent to publication of the proposed regulations, providers indicated that, in the context of the various July 1, 2011 price and rate reductions, such restrictions could have a severe impact on those providers already demonstrating the greatest level of administrative efficiencies in their operations. For some providers, the restriction could compound and/or exacerbate the effects of the administrative aspects of reductions.
OPWDD is temporarily suspending this provision because it could potentially severely hamper a provider's ability to sustain necessary administrative aspects of operations, and the restriction, if left intact could potentially cripple a provider's ability to provide services and continue operations. OPWDD will use the delay in order to conduct an analysis of the possible negative impacts of this restriction on providers and to deliberate on whether to proceed with adoption, revocation or modification of this restriction. OPWDD is opting to err on the side of caution and to examine the feasibility of alternatives before imposing this restriction. Thus, it is necessary for the health, welfare and safety of individuals these providers serve to delay the effective date of the restriction.
Subject:
Provider allocation of OPWDD funding.
Purpose:
To delay implementation of a restriction on allocation of resources while OPWDD conducts impact assessments.
Text of emergency rule:
Paragraph 635-10.5(b)(22) is amended as follows:
(22) Effective September 30, 2011, 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.
• Paragraph 635-10.5(c)(17) is amended as follows:
(17) Effective September 30, 2011, 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.
• Paragraph 635-10.5(e)(12) is amended as follows:
(12) Effective September 30, 2011, 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.
• Paragraph 671.7(a)(14) is amended as follows:
(14) Effective September 30, 2011, 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.
• Subparagraph 681.14(d)(1)(iii) is amended as follows:
(iii) Effective September 30, 2011, revenues realized by providers from reimbursement attributable to components of the rate other than the administrative component shall not be used to fund administrative expenses.
This notice is intended
to serve only as an emergency adoption, to be valid for 90 days or less. This rule expires September 28, 2011.
Text of rule and any required statements and analyses may be obtained from:
Barbara Brundage, Director, OPWDD Regulatory Affairs Unit, 44 Holland Avenue, Albany, New York 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.
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 services in facilities licensed or operated by OPWDD, as stated in section 43.02 of the Mental Hygiene Law.
2. Legislative Objectives: These emergency amendments further the legislative objectives embodied in sections 13.09(b) and 43.02 of the Mental Hygiene Law. The emergency amendments concern changes in the way in which providers may allocate revenues to administrative expenses.
3. Needs and Benefits: Four regulations being adopted on July 1, 2011 implement efficiency adjustments and impact supervised Individual Residential Alternatives (IRAs), supervised community residences (CRs), group day habilitation, supplemental group day habilitation, prevocational services, and ICF/DDs with bed capacities of 30 or less. Possible reductions in operating reimbursement range from zero to ten percent.
All four of these regulations contain a provision that prohibits providers from allocating funding to administrative expenses that was designated in the price or rate for other than administrative expenses. Effective July 1, 2011, these emergency amendments delay the implementation of this provision until September 30, 2011 and thereby prevent the restriction from taking effect on July 1, 2011.
Providers have pointed out that, in the context of the July 1, 2011 reductions in reimbursement, a restriction on the application of funding to administrative expenses could have a severe impact on those providers already demonstrating the greatest efficiencies in their operations. For some, this would compound and/or exacerbate the effects of the reductions, especially when those reductions targeted the administrative component of reimbursement. To potentially avoid harmful effects that could threaten a provider's ability to continue operations, OPWDD is postponing the implementation of this restriction. OPWDD has opted to err on the side of caution. The temporary delay gives OPWDD the opportunity to conduct analysis in order to determine the degree to which implementation of the restriction might cause negative consequences for providers. Moreover, OPWDD will examine the alternatives including modifying the restriction, keeping it intact or repealing it altogether.
4. Costs:
a. Costs to the agency and to the State and its local governments: The emergency amendments do not change reimbursement levels. There is therefore no cost to OPWDD, to the State, or to local governments. The emergency amendments eliminate the potential to recover monies OPWDD allocates to other categories and that providers spend on administrative expenses. However, it is impossible to know how much money, if any, would have been spent in violation of the interchange restriction and subsequently recovered.
b. Costs to private regulated parties: There are neither initial capital investment costs nor initial non-capital expenses. There are no additional costs associated with implementation and continued compliance with the rule.
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: The emergency amendments do not require any additional paperwork to be completed by providers.
7. Duplication: The emergency amendments do not duplicate any existing State or Federal requirements that are applicable to services for persons with developmental disabilities.
8. Alternatives: OPWDD considered leaving the provision regarding interchange intact by not promulgating this emergency regulation. However, OPWDD recognized that some providers could have been severely impacted by retention of the provision and therefore decided to proceed with the emergency regulation to allow time for a more thorough examination of the consequences.
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 amendments are effective July 1, 2011. They delay compliance with the interchange restriction until September 30, 2011.
Regulatory Flexibility Analysis
1. Effect on small business: The emergency regulations apply to providers of residential habilitation delivered in supervised Individualized Residential Alternative (IRAs) and Community Residences (CRs), group and supplemental group day habilitation services, prevocational services, and under 31-bed ICF/DD services. OPWDD has determined, through a review of the certified cost reports, that most providers are non-profit agencies which employ more than 100 people overall. However, some smaller agencies which employ fewer than 100 employees overall would be classified as small businesses. Currently, there are approximately 255 providers that offer supervised residential habilitation; 290 that offer group and supplemental group day habilitation; 100 that offer prevocational services; and 102 that operate ICF/DDs. Providers which offer a combination of services may be represented in more than one of these counts. OPWDD is unable to estimate the portion of these providers that may be considered to be small businesses.
The emergency amendments have been reviewed by OPWDD in light of their impact on small businesses. By delaying the implementation of a restrictive provision, the emergency amendments allow providers to temporarily retain the flexibility they have in allocating their OPWDD funding and to avoid any negative impact this provision, if enacted, might have engendered. Because it essentially precludes a negative impact from occurring, there is a positive impact to providers. The purpose of the delay is to afford OPWDD time to conduct an analysis of the potential consequences the restriction might cause and, thereafter, to deliberate on the best approach—whether it is feasible to adopt or rescind the restriction or to modify it to reduce potential negative impacts.
OPWDD has determined that these amendments do not create any increased costs for additional services or increased compliance requirements.
2. Compliance requirements: The emergency amendments do not impose any additional compliance requirements on providers.
The amendments will have no effect on local governments.
3. Professional services: There are no additional professional services required as a result of these amendments and the amendments do not add to the professional service needs of local governments.
4. Compliance costs: There are no compliance costs since the emergency amendments do not impose any additional compliance requirements on providers.
5. Economic and technological feasibility: The emergency amendments do not impose the use of any new technological processes on regulated parties.
6. Minimizing adverse economic impact: The purpose of these emergency amendments is to temporarily suspend the provisions in OPWDD's July 1, 2011 regulations that would have restricted the ability of providers to use resources for administrative expenses and to maintain the flexibility providers have experienced in the process of allocating resources. With respect to resource allocation, this amendment preserves through September 29, 2011 the status that existed on June 30, 2011.
7. Small business participation: The elimination of the restriction was recommended by representatives of providers, including the New York State Association of Community and Residential Agencies (NYSACRA), at a meeting that occurred on April 18, 2011. Some of the members of NYSACRA have fewer than 100 employees. Finally, OWPDD has mailed these emergency amendments to all providers, including providers that are small businesses, and will be inviting public comment on the advisability of the restriction and possible modifications to it.
Rural Area Flexibility Analysis
A rural area flexibility analysis for these emergency amendments is not being submitted because the amendments do not impose any adverse impact or reporting, recordkeeping or other compliance requirements on public or private entities in rural areas. There are no professional services, capital, or other compliance costs imposed on public or private entities in rural areas as a result of the emergency amendments.
The emergency amendments postpone the implementation of a provision from an original effective date of July 1, 2011 until September 30, 2011. The provision is intended to limit providers’ abilities to allocate resources and could have a negative impact on some providers. From OPWDD’s perspective, these emergency amendments with an effective date of July 1, 2011 keep the revenue allocation process temporarily intact, unaltered and undisturbed. The temporary impact to providers will be positive because it simply prevents any negative impact from the restriction from occurring. OPWDD will use the delay to conduct an analysis of the potential consequences of this restriction in order to determine the feasibility of adopting, revoking or modifying it.
Job Impact Statement
OPWDD is not submitting a Job Impact Statement for this emergency rule making because the rule making does not have a substantial adverse impact on jobs or employment opportunities.
The emergency rule delays the implementation of a provision contained in four regulations that impact providers of residential habilitation in supervised Individual Residential Alternatives (IRAs) and Community Residences (CRs), group and supplemental group day habilitation services, prevocational services, and under 31-bed ICF/DDs. Upon adoption of those four regulations on July 1, 2011, the provision limits a provider’s ability to allocate resources. By postponing the provision’s effective date to September 30, 2011, the status of providers’ allocation process is temporarily unaltered and undisturbed.
The impact to providers is positive as it precludes any negative impact from the restriction from occurring. The purpose of the postponement is to afford OPWDD the time to conduct an analysis to determine potential negative consequences to providers and to deliberate on whether to adopt, revoke or modify the restriction.
