Administrative Rules of the State of Montana

BEFORE THE DEPARTMENT OF PUBLIC

HEALTH AND HUMAN SERVICES OF THE

STATE OF MONTANA

In the matter of the amendment of ARM 37.40.307 and 37.40.361 pertaining to nursing facility reimbursement

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NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT

TO: All Concerned Persons

1. On July 16, 2012, at 10:30 a.m., the Department of Public Health and Human Services will hold a public hearing in the auditorium of the Department of Public Health and Human Services Building, 111 North Sanders, Helena, Montana, to consider the proposed amendment of the above-stated rules.

2. The Department of Public Health and Human Services will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact Department of Public Health and Human Services no later than 5:00 p.m. on July 9, 2012, to advise us of the nature of the accommodation that you need. Please contact Kenneth Mordan, Department of Public Health and Human Services, Office of Legal Affairs, P.O. Box 4210, Helena, Montana, 59604-4210; telephone (406) 444-4094; fax (406) 444-9744; or e-mail [email protected].

3. The rules as proposed to be amended provide as follows, new matter underlined, deleted matter interlined:

37.40.307 NURSING FACILITY REIMBURSEMENT (1) through (2)(c) remain the same.

(d) The total payment rate available for the period ~~July 1, 2011~~ September 1, 2012 through ~~June 30, 2012~~ June 30, 2013 will be the rate as computed in (2), plus any additional amount computed in ARM 37.40.311 and 37.40.361.

(3) Providers who, as of July 1 of the rate year, have not filed with the department a cost report covering a period of at least six months participation in the Medicaid program in a newly constructed facility shall have a rate set at the statewide median price as computed on ~~July 1, 2011~~ September 1, 2012. Following a change in provider as defined in ARM 37.40.325, the per diem rate for the new provider shall be set at the previous provider's rate, as if no change in provider had occurred.

(4) through (12) remain the same.

AUTH: 53-2-201, 53-6-113, MCA

IMP: 53-6-101, 53-6-111, 53-6-113, MCA

37.40.361 DIRECT CARE AND ANCILLARY SERVICES WORKERS' WAGE REPORTING/ADDITIONAL PAYMENTS INCLUDING LUMP SUM PAYMENTS FOR DIRECT CARE AND ANCILLARY SERVICES WORKERS' WAGE AND BENEFIT INCREASES (1) Effective for the period ~~July 1, 2011~~ September 1, 2012 and for the six months thereafter, nursing facilities must report to the department actual hourly wage and benefit rates paid for all direct care and ancillary services workers or the lump sum payment amounts for all direct care and ancillary services workers that will receive the benefit of the increased funds. The reported data shall be used by the department for the purpose of comparing types and rates of payment for comparable services and tracking distribution of direct care wage funds to designated workers.

(2) remains the same.

(a) The department will determine the lump sum payments, twice a year commencing ~~July 1, 2011~~ September 1, 2012, and again in six months from that date as a pro rata share of appropriated funds allocated for increases in direct care and ancillary services workers' wages and benefits or lump sum payments to direct care and ancillary services workers.

(b) through (3) remain the same.

AUTH: 53-2-201, 53-6-113, MCA

IMP: 53-2-201, 53-6-101, 53-6-111, 53-6-113, MCA

4. STATEMENT OF REASONABLE NECESSITY

The Department of Public Health and Human Services (the department) is proposing amendments to ARM 37.40.307 and 37.40.361.

SUMMARY OF POLICY CHANGE:

The proposed changes to the Medicaid nursing facility reimbursement rules are:

1. Implement proposed legislative funding for nursing facility reimbursement for state fiscal year (SFY) 2013. This calculation is updated to include new estimates of patient days and patient contribution amounts and to incorporate new case mix indices into the rate calculation for SFY 2013.

2. Continue the funding for wage increases or lump sum payments for nursing facility direct care and ancillary services workers for SFY 2013. Funding from House Bill 2 (HB 2) provides funding for a one time only (OTO) direct care/ancillary worker wage or lump sum payment increase. Rate increase is for direct care and ancillary staff for the 2013 biennium only.

3. Incorporate date changes where appropriate for SFY 2013.

The rule continues the methodology of implementing legislative funding for nursing facility reimbursement, including updated estimated patient days, patient contribution amounts and case mix indices (CMI) (acuity) into the rate calculation for SFY 2013.

RATIONALE:

The department will provide rate sheets to all providers in advance of the rule hearing for verification purposes and in order to facilitate comments. These sheets will distribute the funding available in order to meet the department goals for a price-based system of reimbursement and will incorporate legislatively appropriated funding levels.

Changes for direct care wages:

Funding will continue to be available from HB 2 to provide for a one time direct care worker wage increase for nursing facility providers. This direct care wage increase is for direct care and ancillary staff for 2013 only and continues the funding that was available in SFY 2012 for this purpose. Total funding of approximately $3,981,106 will be available to provide for a one time only direct care/ancillary worker wage or lump sum payment increase. This funding will be paid to nursing facilities as a lump sum payment twice a year using the methodology that was adopted in 2010/2011 and can only be used to provide worker wage or lump sum payment increases. These funds are one time only and as such will not be an ongoing reimbursement source after 2013. Providers will need to be aware that any funds put into their wage structure may not be available in future years after this biennium.

Price-Based Reimbursement:

The department proposes to continue a price-based reimbursement approach to help mitigate conditions affecting nursing facilities. Statewide occupancy rates are at 69% in Montana nursing facilities at the current time. At the same time, the care needs of the typical nursing facility resident are increasing. Residents are being admitted at an older age with medically fragile and complex care needs that can no longer be met in home or community settings. As these trends towards lower occupancy and increased acuity continue, it becomes more important than ever that nursing facility providers receive rates that are reflective of the cost of doing business. Without a price-based reimbursement approach, increased costs due to lower occupancy levels and unpredictability of the system of reimbursement are more likely to be passed on to the private pay residents.

Intergovernmental Transfer Program:

The 2011 Legislature continued approval for the use of local county matching funds as a source of additional revenue for nursing facility providers. The intergovernmental fund transfer (IGT) program is an important component of overall reimbursement that helps maintain access to, and the quality of, nursing facility services. IGT will be available for fiscal year 2013.

SPECIFIC CHANGES BEING PROPOSED:

For rate year 2013 (September 1, 2012 - June 30, 2013) the nursing facility per diem rate will be computed as follows:

1. The Medicaid per diem rates will include two components. The operating component (includes both operating and capital combined) is the same rate for all nursing facilities and represents 80% of the overall price. The nursing component will be adjusted for individual nursing facility acuity and is 20% of the overall price.

2. Medicaid per diem rates will be established September 1, 2012.

3. The minimum data set (MDS) case mix assessment data will be used in the computation of each facility's resident acuity. Each nursing facility's case mix index will be calculated quarterly based upon a set point in time, using the most recent annual or quarterly MDS information. Medicaid case mix for annual rate setting will be based on the most recent four quarter average of Medicaid CMIs for each nursing facility.

ESTIMATED FINANCIAL/BUDGET IMPACTS:

These proposed rule changes are necessary to implement legislative funding for nursing facility reimbursement for SFY 2013. The total state and federal funding available for SFY 2013 for rate calculation purposes is currently projected at $137,745,206 which is comprised of $15,445,871 in state special revenue, $31,745,637 in state general funds and $90,553,698 in federal funds. The additional funding of lump sum payments to providers for direct care workers and ancillary staff of $1,363,926 of state special revenue and $2,617,180 in federal funds for a total appropriation of $3,981,106 for the nursing facility program. The estimated total funding available for SFY 2013 for nursing facility reimbursement is estimated at approximately $170,212,529 of combined state funds, federal funds, and $32,467,323 in patient contributions. These numbers do not include at risk provider funds or direct care wage funding. Anticipated days for SFY 2013 are estimated at 1,047,333 using estimates of caseload adopted by the Legislature.

The estimated total funding impact of the onetime payments to 'at-risk' nonstate governmental providers and other nursing facilities not determined to be 'at risk', has been appropriated at $8,614,173 in total funds of which $2,951,216 comes from state special revenue funds and approximately $5,662,957 comes from federal funding sources.

Eighty-two nursing facility providers participated in the Medicaid nursing facility payment program and approximately 4,755 recipients received services in SFY 2012 in nursing facilities under Medicaid. Proposed rates have been adjusted to incorporate changes from 2012 to 2013 in the areas of case-mix indices, Medicaid bed days, and funding levels. Some individual providers are projected to have a rate decrease as a result of these changes in acuity and occupancy levels. It is estimated that approximately 21 providers will see a rate reduction due to these changes and the remaining providers will see varying levels of rate increases.

The analysis of Medicaid nursing facility rates that is annually conducted by Myers and Stauffer, LC shows that in SFY 2011 (report dated 2/27/2012) Montana Medicaid on average is reimbursing 96.90% of the cost of providing nursing facility services. Even if some individual rates decrease on average the current reimbursement rate methodology is covering nearly 97% of the costs being incurred in Montana nursing facilities. The department considered the impact of the rate changes on efficiency, economy, quality of care, and access to Medicaid services and concluded that the rates are still sufficient to meet the requirements of 42 USC 1396a(a)(30(A) even with these decreases.

5. The department intends the proposed rule changes to be applied effective September 1, 2012.

6. Concerned persons may submit their data, views, or arguments either orally or in writing at the hearing. Written data, views, or arguments may also be submitted to: Kenneth Mordan, Department of Public Health and Human Services, Office of Legal Affairs, P.O. Box 4210, Helena, Montana, 59604-4210; fax (406) 444-9744; or e-mail [email protected], and must be received no later than 5:00 p.m., July 19, 2012.

7. The Office of Legal Affairs, Department of Public Health and Human Services, has been designated to preside over and conduct this hearing.

8. The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to the contact person in 6 above or may be made by completing a request form at any rules hearing held by the department.

9. An electronic copy of this proposal notice is available through the Secretary of State's web site at http://sos.mt.gov/ARM/Register. The Secretary of State strives to make the electronic copy of the notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered. In addition, although the Secretary of State works to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.

10. The bill sponsor contact requirements of 2-4-302, MCA, do not apply.

/s/ John Koch /s/ Mary E. Dalton acting for

Rule Reviewer Anna Whiting Sorrell, Director

Public Health and Human Services

Certified to the Secretary of State June 11, 2012.