OMH-32-11-00004-P Medical Assistance Rates of Payment for Residential Treatment Facilities for Children and Youth

8/10/11 N.Y. St. Reg. OMH-32-11-00004-P

NEW YORK STATE REGISTER

VOLUME XXXIII, ISSUE 32

August 10, 2011

RULE MAKING ACTIVITIES

OFFICE OF MENTAL HEALTH

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. OMH-32-11-00004-P

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 proposed rule:

Proposed Action:

Amendment of Part 578 of Title 14 NYCRR.

Statutory authority:

Mental Hygiene Law, sections 709 and 43.02

Subject:

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

Purpose:

Amend reimbursement methodology for eligible pharmaceutical costs and freeze rates of payment for RTFs effective 7/1/11.

Text of proposed rule:

1. Subdivision (a) of section 578.8 of Title 14 NYCRR is amended to read as follows:

(a) The rate of payment shall consist of an operating cost per diem and a capital cost per diem, computed from allowable costs and subject to cost category standards. The rate year shall be the 12-month period from July 1st through June 30th. The rate of payment effective July 1, 1995 through June 30, 1996 shall be a continuance of the rate of payment effective July 1, 1994 through June 30, 1995. The rate of payment effective July 1, 2011 through June 30, 2012 shall be a continuance of the rate of payment in effect on June 30, 2011, except to the extent necessary to adjust such payments pursuant to the provisions of subdivision (o) of Section 578.14 of this Part.

2. Subdivision (o) of section 578.14 of Title 14 NYCRR is amended to read as follows:

(o) Effective on or after January 1, 2011, and contingent upon federal approval, allowable operating costs shall not include the costs of pharmaceuticals listed on the New York State Medicaid formulary, except for such costs incurred during the first 90 days after admission to the residential treatment facility or until Medicaid eligibility is established for the recipient, whichever comes first. [Such costs] Pharmaceuticals for which the cost is so excluded may be reimbursed, as appropriate, on a fee-for-service basis by the Medicaid program.

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

Joyce Donohue, 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 (Office).

2. Legislative objectives: Article 7 of the Mental Hygiene Law reflects the Commissioner's authority to establish regulations regarding mental health programs. Allowable operating costs are subject to the review and approval of the Office, including eligible pharmaceutical costs. The rule provides for a change in the reimbursement methodology for eligible pharmaceutical costs for Residential Treatment Facilities (RTF) for children and youth. In addition, this rule provides consistency with the enacted State budget by freezing the rate of payments received by RTF providers for the year July 1, 2011 through June 30, 2012.

3. Needs and benefits: This rulemaking addresses two separate provisions within 14 NYCRR Part 578. The first amendment reflects a freeze of the rates paid to RTF providers for the year July 1, 2011 through June 30, 2012. This continuation of current rates is consistent with the 2011-2012 enacted State budget and is the result of the serious fiscal condition of the State.

The other amendment concerns costs of pharmaceuticals for residents of an RTF. On February 2, 2011, the Office adopted as final amendments to this Part which specified that, on or after January 1, 2011, and contingent upon federal approval, allowable operating costs for RTFs for children and youth licensed by the Office shall not include the costs of pharmaceuticals listed on the New York State Medicaid formulary. The regulation further stated that, "Such costs may be reimbursed, as appropriate, on a fee-for-service basis by the Medicaid program." After this rule was promulgated, it was determined that a change is necessary due to the fact that when children are admitted to an RTF, there may be a significant lag of up to 90 days before they are deemed to be Medicaid eligible. In order to ensure that children receive their necessary medications, the Office is amending this regulation to provide that allowable operating costs for the RTFs will include pharmaceutical costs incurred during the first 90 days after a child's admission to an RTF or until Medicaid eligibility is established for the individual, whichever comes first. It is important to note that this provision is effective upon federal approval.

4. Costs:

(a) cost to State government: These regulatory amendments will not result in any additional costs to State government. It is anticipated that the rate freeze will result in a full annual savings to State government in the amount of $1,169,951, and that the pharmaceutical carve out will result in a full annual savings to State government in the amount of $375,000.

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

(c) cost to regulated parties: The gross estimated reimbursable costs to providers for the lag in Medicaid eligibility could be as much as $1,000,000. Providers will be reimbursed for all but approximately $350,000 of this increase through adjustments to their reimbursement rates.

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 rulemaking serves two purposes. The first amendment serves to freeze the rates paid to providers for the period July 1, 2011 through June 30, 2012. This amendment is consistent with the enacted State budget and is a reflection of the serious fiscal condition of the State. The second amendment provides, upon federal approval, for an exception to the exclusion of the costs of pharmaceuticals from the allowable operating costs of providers for 90 days after an individual's admission to an RTF or until Medicaid eligibility is established, whichever occurs first. This amendment will serve to ensure that children who have been admitted to an RTF will continue to have a means for having their medications reimbursed while their Medicaid eligibility is being established. While providers will initially incur the costs associated with these medications, those costs will be reimbursed by a subsequent adjustment in their rate of payment over the following two years, assuming the providers' overall administration maintenance and support costs do not surpass allowable amounts. Currently, it is anticipated that four providers may exceed these amounts, thereby resulting in the $350,000 amount in the "cost to regulated parties" section above. No other alternative was 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 rule provides consistency with the 2011-2012 enacted State budget by freezing the rate of payments received by residential treatment facilities for children and youth, effective July 1, 2011. The rule also amends the reimbursement methodology for eligible pharmaceutical costs by permitting an exemption to the exclusion of the costs of pharmaceuticals from the allowable operating costs of RTF providers for 90 days after an individual’s admission to an RTF, or until Medicaid eligibility is established, whichever comes first. While providers will initially incur costs associated with these medications, those costs will be reimbursed by a subsequent adjustment in their rate of payment over the following two years, assuming the providers’ overall administration maintenance and support costs do not surpass allowable amounts. It is expected that the majority of RTF providers will not exceed allowable amounts; therefore, it is anticipated that the majority of providers will be reimbursed for the pharmaceutical costs by a rate adjustment over the subsequent two years. As no adverse economic impact upon small businesses or local governments is anticipated, a regulatory flexibility analysis is not submitted with this notice.

Rural Area Flexibility Analysis

The purpose of this rulemaking is twofold. The rule freezes the rate of payments received by residential treatment facilities for children and youth, effective July 1, 2011. This amendment is consistent with the 2011-2012 enacted State budget and reflects the serious fiscal condition of the State. The rule also amends the reimbursement methodology for eligible pharmaceutical costs by permitting an exemption to the exclusion of the costs of pharmaceuticals from the allowable operating costs of RTF providers for 90 days after an individual’s admission to an RTF, or until Medicaid eligibility is established, whichever comes first. While providers will initially incur costs associated with these medications, those costs will be reimbursed by a subsequent adjustment in their rate of payment over the following two years, assuming the providers’ overall administration maintenance and support costs do not surpass allowable amounts. It is expected that the majority of RTF providers will not exceed allowable amounts; therefore, it is anticipated that the majority of providers will be reimbursed for the pharmaceutical costs by a rate adjustment over the subsequent two years. As there is not expected to be an adverse economic impact upon rural areas, a rural area flexibility analysis is not included in this rulemaking.

Job Impact Statement

A Job Impact Statement is not submitted with this notice because it is evident from the subject matter of the rulemaking that there will be no impact upon jobs and employment opportunities. The rule serves two purposes. First, it provides consistency with the enacted State budget by freezing rates of payments to providers of residential treatment facilities (RTF) for children and youth, effective July 1, 2011. Secondly, it amends the reimbursement methodology for eligible pharmaceutical costs for RTFS, effective on or after January 1, 2011 and pending federal approval.