BEFORE THE DEPARTMENT OF PUBLIC

HEALTH AND HUMAN SERVICES OF THE

STATE OF MONTANA

 

In the matter of the amendment of ARM 37.40.830, 37.85.104, 37.85.105, 37.86.610, 37.86.705, 37.86.805, 37.86.1101, 37.86.1105, 37.86.1406, 37.86.1807, 37.86.2005, 37.86.2605, 37.86.2803, 37.86.2806, 37.86.2905, 37.86.2912, 37.86.3007, 37.86.3109, 37.86.3205, and 37.87.1226 pertaining to updating the effective dates of non-Medicaid and Medicaid fee schedules to January 1, 2018

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NOTICE OF AMENDMENT

 

TO: All Concerned Persons

 

1. On July 7, 2017, the Department of Public Health and Human Services published MAR Notice No. 37-788 pertaining to the public hearing on the proposed amendment of the above-stated rules at page 1006 of the 2017 Montana Administrative Register, Issue Number 13.

 

2. The department has amended the following rules as proposed: ARM 37.86.610, and 37.87.1226.

 

3. The department has amended the following rules as proposed, but with the following changes from the original proposal, new matter underlined, deleted matter interlined:

 

37.40.830 HOSPICE, REIMBURSEMENT (1) through (11) remain as proposed.

            (12) The hospice fee schedules are effective October 1, 2017 January 1, 2018. Copies of the department's current fee schedules are posted at http://medicaidprovider.mt.gov and may be obtained from the Department of Public Health and Human Services, Health Resources Division, 1401 East Lockey, P.O. Box 202951, Helena, MT 59602-2951.

 

AUTH: 53-6-113, MCA

IMP: 53-6-101, MCA

 

            37.85.104 EFFECTIVE DATES OF PROVIDER FEE SCHEDULES FOR MONTANA NON-MEDICAID SERVICES (1) The department adopts and incorporates by reference the fee schedule for the following programs within the Addictive and Mental Disorders Division and Developmental Services Division on the dates stated:

            (a) Mental health services plan provider reimbursement, as provided in ARM 37.89.125, is effective October 1, 2017 January 1, 2018.

            (b) 72-hour presumptive eligibility for adult-crisis stabilization services reimbursement for services, as provided in ARM 37.89.523, is effective October 1, 2017 January 1, 2018.

            (c) Youth respite care services, as provided in ARM 37.87.2203, is effective October 1, 2017 January 1, 2018.

            (d) Substance use disorder services provider reimbursement, as provided in ARM 37.27.908, is effective October 1, 2017 January 1, 2018.

            (2) remains as proposed.

 

AUTH: 53-2-201, 53-6-101, 53-6-113, MCA

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

 

            37.85.105 Effective dates, CONVERSION FACTORS, POLICY ADJUSTERS, AND COST-TO-CHARGE RATIOS of Montana Medicaid Provider Fee Schedules (1) remains as proposed.

            (2) The department adopts and incorporates by reference, the resource-based relative value scale (RBRVS) reimbursement methodology for specific providers as described in ARM 37.85.212 on the date stated.

            (a) remains as proposed.

            (b) Fee schedules are effective October 1, 2017 January 1, 2018. The conversion factor for physician services is $36.23 $36.53. The conversion factor for allied services is $24.17 $24.29. The conversion factor for mental health services is $23.95 $24.07. The conversion factor for anesthesia services is $28.73 $28.87.

            (c) remains as proposed.

            (d) The payment-to-charge ratio is effective October 1, 2017 January 1, 2018 and is 45.37% 45.59% of the provider's usual and customary charges.

            (e) through (h) remain as proposed.

            (i) Reimbursement for physician-administered drugs described in ARM 37.86.105 is determined in 42 CFR 414.904 (2016). The department adopts 102.32% 102.83% of the Average Sale Price (ASP), effective October 1, 2017 January 1, 2018.

            (j) Reimbursement for vaccines described at ARM 37.86.105 is effective October 1, 2017 January 1, 2018.

            (3) The department adopts and incorporates by reference, the fee schedule for the following programs within the Health Resources Division, on the date stated.

            (a) The inpatient hospital services fee schedule and inpatient hospital base fee schedule rates including:

            (i) the APR-DRG fee schedule for inpatient hospitals as provided in ARM 37.86.2907, effective October 1, 2017 January 1, 2018; and

            (ii) the Montana Medicaid APR-DRG relative weight values, average national length of stay (ALOS), outlier thresholds, and APR grouper version 34 are contained in the APR-DRG Table of Weights and Thresholds effective October 1, 2017 January 1, 2018. The department adopts and incorporates by reference the APR-DRG Table of Weights and Thresholds effective October 1, 2017 January 1, 2018.

            (b) The outpatient hospital services fee schedules including:

            (i) remains as proposed.

            (ii) the conversion factor for outpatient services on or after October 1, 2017 January 1, 2018 is $54.67 $54.95;

            (iii) remains as proposed.

            (iv) the bundled composite rate of $243.26 $244.47 for services provided in an outpatient maintenance dialysis clinic effective on or after October 1, 2017 January 1, 2018.

            (c) The hearing aid services fee schedule, as provided in ARM 37.86.805, is effective October 1, 2017 January 1, 2018.

            (d) The Relative Values for Dentists, as provided in ARM 37.86.1004, reference published in 2017 resulting in a dental conversion factor of $32.61 $32.77 and fee schedule is effective October 1, 2017 January 1, 2018.

            (e) remains as proposed.

            (f) The outpatient drugs reimbursement, dispensing fees range as provided in ARM 37.86.1105(3)(b) is effective October 1, 2017 January 1, 2018:

            (i) for pharmacies with prescription volume between 0 and 39,999, the minimum is $3.41 and the maximum is $14.48 $14.55;

            (ii) for pharmacies with prescription volume between 40,000 and 69,999, the minimum is $3.41 and the maximum is $12.55 $12.61; or

            (iii) for pharmacies with prescription volume greater than 70,000, the minimum is $3.41 and the maximum is $10.62 $10.67.

            (g) remains as proposed.

            (h) The outpatient drugs reimbursement, vaccine administration fee as provided in ARM 37.86.1105(6), will be $20.58 $20.68 for the first vaccine and $12.55 $12.61 for each additional administered vaccine, effective October 1, 2017 January 1, 2018.

            (i) remains as proposed.

            (j) The home infusion therapy services fee schedule, as provided in ARM 37.86.1506, is effective October 1, 2017 January 1, 2018.

            (k) Montana Medicaid adopts and incorporates by reference the Region D Supplier Manual, effective October 1, 2017 January 1, 2018, which outlines the Medicare coverage criteria for Medicare covered durable medical equipment, local coverage determinations (LCDs), and national coverage determinations (NCDs) as provided in ARM 37.86.1802, effective October 1, 2017 January 1, 2018.  The prosthetic devices, durable medical equipment, and medical supplies fee schedule, as provided in ARM 37.86.1807, is effective October 1, 2017 January 1, 2018.

            (l) Fee schedules for private duty nursing, nutrition, children's special health services, and orientation and mobility specialists as provided in ARM 37.86.2207(2), are effective October 1, 2017 January 1, 2018.

            (m) and (n) remain as proposed.

            (o) The ambulance services fee schedule, as provided in ARM 37.86.2605, is effective October 1, 2017 January 1, 2018.

            (p) The audiology fee schedule, as provided in ARM 37.86.705, is effective October 1, 2017 January 1, 2018.

            (q) The therapy fee schedules for occupational therapists, physical therapists, and speech therapists, as provided in ARM 37.86.610, are effective October 1, 2017 January 1, 2018.

            (r) The optometric fee schedule provided in ARM 37.86.2005, is effective October 1, 2017 January 1, 2018.

            (s) The chiropractic fee schedule, as provided in ARM 37.85.212(2), is effective October 1, 2017 January 1, 2018.

            (t) The lab and imaging fee schedule, as provided in ARM 37.85.212(2) and 37.86.3007, is effective October 1, 2017 January 1, 2018.

            (u)  The Federally Qualified Health Center (FQHC) and Rural Health Clinic (RHC) fee schedule for add-on services, as provided in ARM 37.86.4412, is effective October 1, 2017 January 1, 2018.

            (v) The Targeted Case Management for Children and Youth with Special Health Care Needs fee schedule, as provided in ARM 37.86.3910, is effective October 1, 2017 January 1, 2018.

            (w) The Targeted Case Management for High Risk Pregnant Women fee schedule, as provided in ARM 37.86.3415, is effective October 1, 2017 January 1, 2018.

            (x) The mobile imaging fee schedule, as provided in ARM 37.85.212, is effective October 1, 2017 January 1, 2018.

            (y) The licensed direct entry midwife fee schedule, as provided in ARM 37.85.212, is effective October 1, 2017 January 1, 2018.

            (4) The department adopts and incorporates by reference, the fee schedule for the following programs within the Senior and Long Term Care Division on the date stated:

            (a) Home and community-based services for elderly and physically disabled persons fee schedule, as provided in ARM 37.40.1421, is effective October 1, 2017 January 1, 2018.

            (b) Home health services fee schedule, as provided in ARM 37.40.705, is effective October 1, 2017 January 1, 2018.

            (c) Personal assistance services fee schedule, as provided in ARM 37.40.1135, is effective October 1, 2017 January 1, 2018.

            (d) Self-directed personal assistance services fee schedule, as provided in ARM 37.40.1135, is effective October 1, 2017 January 1, 2018.

            (e) Community first choice services fee schedule, as provided in ARM 37.40.1026, is effective October 1, 2017 January 1, 2018.

            (5) The department adopts and incorporates by reference, the fee schedule for the following programs within the Addictive and Mental Disorders Division on the date stated:

            (a)  Mental health center services for adults reimbursement, as provided in ARM 37.88.907, is effective October 1, 2017 January 1, 2018.

            (b)  Home and community-based services for adults with severe disabling mental illness, reimbursement, as provided in ARM 37.90.408, is effective October 1, 2017 January 1, 2018.

            (c) Substance use disorder services reimbursement, as provided in ARM 37.27.908, is effective October 1, 2017 January 1, 2018.

            (6) The department adopts and incorporates by reference, the fee schedule for the following programs within the Developmental Services Division, on the date stated: Mental health services for youth, as provided in ARM 37.87.901 in the Medicaid Youth Mental Health Services Fee Schedule, is effective October 1, 2017 January 1, 2018.

 

AUTH: 53-2-201, 53-6-113, MCA

IMP: 53-2-201, 53-6-101, 53-6-125, 53-6-402, MCA

 

            37.86.705 AUDIOLOGY SERVICES, REIMBURSEMENT (1) remains as proposed.

            (2) Subject to the requirements of this rule, the Montana Medicaid program pays the following for audiology services:

            (a) For patients who are eligible for Medicaid, the lowest of:

            (i) and (ii) remain as proposed.

            (iii) 96.53% 97.01% of the Medicare Region D allowable fee; or

            (iv) remains as proposed.

 

AUTH: 53-2-201, 53-6-113, MCA

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

 

            37.86.805 HEARING AID SERVICES, REIMBURSEMENT (1) The department will pay the lowest of the following for covered hearing aid services and items:

            (a) and (b) remain as proposed.

            (c) 96.53% 97.01% of the Medicare Region D allowable fee.

            (2) For items or services where no Medicare allowable fee is available, the fee schedule amount in (1)(b) will be calculated using the following methodology: 

            (a) remains as proposed.

 (b) For supplies or equipment, reimbursement will be set at 72.4% 72.8% of the manufacturer's suggested retail price. For items without a manufacturer's suggested retail price, the charge will be considered reasonable if the provider's acquisition cost from the manufacturer is at least 50% of the charge amount. For items that are custom-fabricated at the place of service, the amount charged will be considered reasonable if it does not exceed the average charge of all Medicaid providers by more than 20%.

            (c) and (3) remain as proposed.

 

AUTH: 53-2-201, 53-6-113, MCA

IMP: 53-2-201, 53-6-101, 53-6-111, 53-6-113, 53-6-141, MCA

 

            37.86.1101 OUTPATIENT DRUGS, DEFINITIONS (1) and (2) remain as proposed.

            (3) "Allowed ingredient cost" means the "Average Acquisition Cost (AAC)" or "submitted ingredient cost," whichever is lower. If AAC is not available, drug reimbursement is determined at the lesser of "Wholesale Acquisition Cost (WAC) minus 3.47% 2.99%," "Federal Maximum Allowable Cost (FMAC)," or the "submitted ingredient cost."

            (4) through (15) remain as proposed.

 

AUTH: 53-2-201, 53-6-113, MCA

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

 

            37.86.1105 OUTPATIENT DRUGS, REIMBURSEMENT (1) through (12) remain as proposed.

            (13) Specialty pharmacies, hemophilia treatment centers, or centers of excellence that dispense clotting factors:

            (a) not purchased through the 340B program will be reimbursed at the lesser of the usual and customary charge, submitted ingredient cost, or wholesale acquisition cost minus 3.47% 2.99%, plus the professional dispensing fee; or

            (b) when purchased through the 340B program, will be reimbursed the lesser of the usual and customary charge or wholesale acquisition cost minus 3.47% 2.99%, plus the professional dispensing fee.

 

AUTH: 53-2-201, 53-6-113, MCA

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

 

            37.86.1406 CLINIC SERVICES, REIMBURSEMENT (1) Ambulatory surgical center (ASC) services as defined in ARM 37.86.1401(2) provided by an ASC will be reimbursed on a fee basis as follows:

            (a) 96.53% 97.01% of the Medicare allowable amount. For purposes of determining the Medicare allowable amount for ASC services to Medicaid members under this rule, the department adopts and incorporates by reference the methodology at 42 CFR part 416, subpart F, and the schedule listing the allowable amounts for ASC services in the Medicare Claims Processing Manual. The cited authorities are federal regulations and manuals specifying the methods and rules used to determine reasonable cost for purposes of the Medicare program. The Medicare Claims Processing Manual can be found on the Centers for Medicare and Medicaid website at www.cms.gov. The Code of Federal Regulations can be found at www.gpo.gov.

            (i) through (2) remain as proposed.

 

AUTH: 53-2-201, 53-6-113, MCA

IMP: 53-6-101, 53-6-141, MCA

 

            37.86.1807 PROSTHETIC DEVICES, DURABLE MEDICAL EQUIPMENT, AND MEDICAL SUPPLIES, FEE SCHEDULE (1) and (2) remain as proposed.

            (3) The department's DMEPOS Fee Schedule for items other than those billed under generic or miscellaneous codes as described in (1) will include fees set and maintained according to the following methodology:

            (a) 96.53% 97.01% of the Medicare region D allowable fee;

            (b) Except as provided in (4), for all items for which no Medicare allowable fee is available, the department's fee schedule amount will be 72.4% 72.8% of the provider's usual and customary charge.

            (i) remains as proposed.

            (ii) Items having no product retail list price, such as items customized by the provider, will be reimbursed at 72.4% 72.8% of the provider's usual and customary charge as defined in (3)(b)(i).

            (4) The department's DMEPOS Fee Schedule, referred to in ARM 37.86.1807(2), for items billed under generic or miscellaneous codes as described in (1) will be 72.4% 72.8% of the provider's usual and customary charge as defined in (3)(b)(i). 

 

AUTH: 53-2-201, 53-6-113, MCA

IMP: 53-2-201, 53-6-101, 53-6-111, 53-6-113, 53-6-141, MCA

 

            37.86.2005 OPTOMETRIC SERVICES, REIMBURSEMENT (1) remains as proposed.

            (2) For items or services where no RBRVS or Medicare is available, the fee schedule amount in (1)(c) will be calculated using the following methodology:

            (a) remains as proposed.

            (b) For supplies or equipment, reimbursement will be set at 72.4% 72.8% of the manufacturer's suggested retail price. For items without a manufacturer's suggested retail price, the charge will be considered reasonable if the provider's acquisition charge from the manufacturer is at least 50% of the charge amount. For items that are custom-fabricated at the place of service, the amount charged will be considered reasonable if it does not exceed the average charge of all Medicaid providers by more than 20%.

            (c) and (3) remain as proposed.

 

AUTH: 53-6-113, MCA

IMP: 53-6-101, 53-6-113, 53-6-141, MCA

 

            37.86.2605 AMBULANCE SERVICES, REIMBURSEMENT (1) through (3) remain as proposed.

(4) For supplies or equipment, where there is no Medicare or Medicaid set fee, the provider's usual and customary charge in (1)(a) will be considered reasonable if set at 72.4% 72.8% of the manufacturer's suggested retail price. For items without a manufacturer's suggested retail price, the charge will be considered reasonable if the provider's acquisition cost from the manufacturer is at least 50% of the charge amount.

            (5) remains as proposed.

 

AUTH: 53-2-201, 53-6-113, MCA

IMP: 53-6-101, 53-6-113, 53-6-141, MCA

 

            37.86.2803 ALL HOSPITAL REIMBURSEMENT, COST REPORTING

            (1) Allowable costs will be determined in accordance with generally accepted accounting principles as defined by the American Institute of Certified Public Accountants.

            (a) through (c) remain as proposed.

            (d) For cost report periods ending January 1, 2006 through September 30, 2017 December 31, 2017, for each hospital which is a critical access hospital, as defined in ARM 37.86.2901, reimbursement for reasonable costs of inpatient and outpatient hospital services shall be limited to 101% of allowable costs, as determined in accordance with (1).

            (e) For cost report periods ending on or after October 1, 2017 January 1, 2018, for each hospital which is a critical access hospital, as defined in ARM 37.86.2901, reimbursement for reasonable costs of inpatient and outpatient hospital services will be limited to 97.50% 97.98% of allowable costs, as determined in accordance with (1).

            (2) and (3) remain as proposed.

 

AUTH: 53-2-201, 53-6-113, MCA

IMP: 53-2-201, 53-6-101, 53-6-111, 53-6-113, 53-6-149, MCA

 

37.86.2806 COST-BASED HOSPITAL, GENERAL REIMBURSEMENT 

(1) Cost-based reimbursement shall be applied as follows:

           (a) Critical access hospital (CAH) interim reimbursement is based on a hospital specific Medicaid inpatient cost-to-charge ratio (CCR), not to exceed 100%. For dates of service on or after October 1, 2017 January 1, 2018, critical access hospital (CAH) interim reimbursement is based on a hospital-specific Medicaid inpatient cost-to-charge ratio (CCR), less 3.47% 2.99%, not to exceed 100%.

           (b) For cost report periods ending on or prior to September 30, 2017 December 31, 2017, CAH final reimbursement is for reasonable costs of hospital services limited to 101% of allowable costs, as determined in accordance with ARM 37.86.2803(1). For cost report periods ending on or after October 1, 2017 January 1, 2018, CAH final reimbursement is for reasonable costs of hospital services limited to 97.50% 97.98% of allowable costs as determined in accordance with ARM 37.86.2803(1).

            (2) through (8) remain as proposed.

 

AUTH: 53-2-201, 53-6-113, MCA

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

 

            37.86.2905 INPATIENT HOSPITAL SERVICES, GENERAL REIMBURSEMENT (1) remains as proposed.

            (2) Interim reimbursement for cost-based facilities is based on a hospital-specific Medicaid inpatient cost-to-charge ratio, not to exceed 100%. For dates of service on or after October 1, 2017 January 1, 2018, the interim reimbursement is based on a hospital-specific Medicaid inpatient cost-to-charge ratio, less 3.47% 2.99%, not to exceed 100%. Cost-based facilities will be reimbursed their allowable costs as determined according to ARM 37.86.2803. For cost report periods ending on or prior to September 30, 2017 December 31, 2017, final cost settlements for CAH facilities will be reimbursed at 101% of allowable costs. For cost report periods ending on or after October 1, 2017 January 1, 2018, final cost settlements for CAH facilities will be reimbursed at 97.50% 97.98% of allowable costs.

            (3) through (5) remain as proposed.

AUTH: 53-2-201, 53-6-113, MCA

IMP: 53-2-201, 53-6-101, 53-6-111, 53-6-113, 53-6-141, MCA

 

            37.86.2912 INPATIENT HOSPITAL PROSPECTIVE REIMBURSEMENT, CAPITAL-RELATED COSTS (1) remains as proposed.

            (2) The interim payment made to CAHs is based on the hospital-specific cost-to-charge ratio and includes capital costs. For dates of service on or after October 1, 2017 January 1, 2018, the interim payment made is based on the hospital-specific cost-to-charge ratio, less 3.47% 2.99%, and includes capital costs.

            (3) remains as proposed.

 

AUTH: 2-4-201, 53-2-201, 53-6-113, MCA

IMP: 2-4-201, 53-2-201, 53-6-101, 53-6-111, 53-6-113, MCA

 

37.86.3007 OUTPATIENT HOSPITAL SERVICES, PROSPECTIVE PAYMENT METHODOLOGY, CLINICAL DIAGNOSTIC LABORATORY SERVICES

            (1) Clinical diagnostic laboratory services, including automated multichannel test panels (commonly referred to as "ATPs") and lab panels, will be reimbursed on a fee basis as follows with the exception of hospitals reimbursed under ARM 37.86.3005 and specific lab codes which are paid under ARM 37.86.3020:

            (a) The fee for a clinical diagnostic laboratory service is the applicable percentage of the Medicare fee schedule as follows:

            (i) 57.918% 58.206% of the prevailing Medicare fee schedule for a birthing center or where a hospital laboratory acts as an independent laboratory, i.e., performs tests for persons who are nonhospital patients;

            (ii) 59.8486% 60.1462% of the prevailing Medicare fee schedule for a hospital designated as a sole community hospital as defined in ARM 37.86.2901; or

            (iii) 57.918% 58.206% of the prevailing Medicare fee schedule for a hospital that is not designated as a sole community hospital as defined in ARM 37.86.2901.

            (b) through (3) remain as proposed.

 

AUTH: 53-2-201, 53-6-113, MCA

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

 

37.86.3109 OUTPATIENT CARDIAC AND PULMONARY REHABILITATION REIMBURSEMENT (1) Critical access hospital (CAH) interim reimbursement is based on a hospital-specific Medicaid outpatient cost-to-charge ratio, not to exceed 100%. For dates of service on or after October 1, 2017 January 1, 2018, the interim reimbursement is based on the hospital specific Medicaid outpatient cost-to-charge ratio (CCR), less 3.47% 2.99%, not to exceed 100%. CAHs will be reimbursed their actual allowable costs determined according to ARM 37.86.2803.

(2) and (3) remain as proposed.

 

AUTH: 53-2-201, 53-6-111, MCA

IMP: 53-2-201, 53-6-101, MCA

 

            37.86.3205 NONHOSPITAL LABORATORY AND RADIOLOGY (X-RAY) SERVICES, REIMBURSEMENT (1) through (3) remain as proposed.

            (4) For clinical laboratory services, the department pays the lower of:

            (a) remains as proposed.

            (b)  57.918% 58.206% of the Medicare fee schedule for physician offices and independent labs and hospitals functioning as independent labs; or

            (c) remains as proposed.

 

AUTH: 53-6-113, MCA

IMP: 53-6-113, 53-6-141, MCA

 

4. The department has thoroughly considered the comments and testimony received. A summary of the comments received and the department's responses are as follows:

 

Comment 1: The department received many comments opposing the 3.47% reduction in Medicaid provider rates.

 

Response 1: The department has lowered the rate reduction from 3.47% to 2.99%, which will be effective January 1, 2018. The lowered rate reduction was achieved by implementing legislatively mandated funding reductions in Senate Bill (SB) 261 §§ 12 and 21. SB 261 § 12 included a 0.5% reduction to Medicaid benefits of $1,423,827, which is part of the rate reduction.  The SB 261 § 21 reduction for Health Resources Division of $3,500,000 is included in the calculation of the rate reduction.

 

Comment 2:  On July 26, 2017, the Legislative Children, Families, Health and Human Services Interim Committee (committee) notified the department that members of the committee objected to the proposal notice, pursuant to 2-4-305(9), MCA, although the committee did so without articulating any basis for its objection. On November 8, 2017, the committee adopted a formal written objection to the proposal notice, pursuant to 2-4-406(1), MCA, which set forth its reasons for objecting.

 

Response 2: As originally proposed, the effective date of the rate change would have been October 1, 2017. The department delayed the filing of its final notice in light of the committee's objection pursuant to 2-4-305(9), MCA. The committee first set forth the bases for its objection in its formal objection adopted November 8, 2017, pursuant to 2-4-406(1), MCA. Pursuant to 2-4-406(2), MCA, the department is permitted to submit to the committee its response to the written objection, after which the committee may withdraw its objection.

 

Comment 3:  The department received comments that its interpretation of House Bill 2 of the regular session (HB 2) and SB 261 is contrary to legislative intent. 

Response 3: The department decreased the rate reduction from the proposed 3.47% cut to a 2.99% cut. The department does not agree with the commenters that its interpretation of HB 2 or SB 261 is contrary to legislative intent.

 

Legislative Intent:

 

Section 17-7-138(1)(a), MCA, provides: "Expenditures by a state agency must be made in substantial compliance with the budget approved by the legislature. Substantial compliance may be determined by conformity to the conditions contained in the general appropriations act and to legislative intent as established in the narrative accompanying the general appropriations act." 

 

The department considered the following factors while calculating the 2.99% provider rate decrease:

 

a. Legislative intent as adopted in the legislative fiscal analyst narrative (Legislative Fiscal Report) located at http://leg.mt.gov/content/Publications/fiscal/Budget-Books/2019/fiscal-publications.asp;

 

b. Conditions contained in Senate Bill (SB) 261 (Note: In the special session the legislature amended and revised HB 2 by incorporating legislative changes from the 2017 regular session that were made by several bills, including SB 261. In doing so, the legislature intended the incorporated changes to reflect current law before the special session commencing November 14, 2017.); and

 

c. The amount of time available to achieve the required spending reductions.

 

The department's proposed provider rates were based on legislative appropriations:

The department calculated the 2.99% rate decrease based on the money the legislature appropriated to spend for the following programs: Medicaid provider services (MAR Notice No. 37-788); targeted case management services (MAR Notice No. 37-801); developmental disabilities program services that were available through the 1915c, 0208 and 0667 Home and Community Based Waiver programs (MAR Notice No. 37-802); and nursing facility reimbursement rates (MAR Notice No. 37-805).

 

SB 261

 

SB 261 revised Montana's state budgeting law. SB 261 reduced appropriations if actual state revenue was less than thresholds the legislature established in SB 261.

 

Section 21(1) of SB 261 provides as follows: If the amount of the certified unaudited state general fund revenue and transfers into the general fund received at the end of fiscal year 2017 is less than $2,192,000,000, as determined by the state treasurer on or before August 15, 2017, and if House Bill No. 2 is passed and approved, then the department of public health and human services general fund appropriation for "Health Resources Division" in House Bill No. 2 is reduced by $3,500,000 in fiscal year 2018 and $3,500,000 in fiscal year 2019.

 

Section 21(3) of SB 261 provides as follows: The legislature intends that the appropriation reduction in subsections (1) and (2) be used to reduce Medicaid provider rates over the 2019 biennium.

 

Section 21(4) of SB 261 provides as follows: The appropriation reductions in subsections (1) and (2) are in addition to the across-the-board reduction in general fund appropriations in [section 12].

 

Section 12(1) of SB 261 provides as follows: If the amount of the certified unaudited state general fund revenue and transfers into the general fund received at the end of fiscal year 2017 is less than $2,204,000,000, as determined by the state treasurer on or before August 15, 2017, and if House Bill No. 2 is passed and approved [section 11 of House Bill No. 2] must be amended as follows:

 

Section 11. Appropriations -- reduced appropriations for certain fiscal year 2019 general fund appropriations. (1) All general fund appropriations in this section for fiscal year 2019, excluding the appropriations for K-12 BASE Aid, Reimbursement Block Grants, State Tuition Payments, Transportation, Natural Resource Development K-12 School Facilities Payment, Special Education, and the Coal-Fired Generating Unit Closure Mitigation Block Grant are reduced by 0.5%.

 

The 2.99% decrease in provider rates is calculated as follows:

 

Appropriation reductions in SB 261

 

SB 261, Section 12, amends HB 2, §11 to reduce Medicaid

general fund appropriations by 0.5% or                                                  -$1,423,827

 

SB 261, Section 21, reduces the appropriation for

the Health Resources Division by                                                            -$3,500,000

Total reduction                                                                                         -$4,923,827

 

Total federal funds lost due to general fund

appropriation reduction                                                                              -$9,331,608

 

Total required cost reduction in SFY 2018                                               -$14,255,435

 

Projected expenditures for impacted Medicaid

provider types                                                                                           $954,922,507

 

Rate reduction required to achieve 

reduction in 12 months                                                                                           1.49%

Rate reduction required to achieve

reduction in 6 months                                                                                             2.99%

 

The earliest the department can implement the rate reductions is January 1, 2018. Therefore the rate reduction implemented in this notice, in accordance with legislative intent as previously described, is 2.99%.

 

Comment 4: Instead of cutting Medicaid rates, why doesn't the department cut employees, facilities, programs, and operating costs?

 

Response 4: The department has numerous cost reduction measures in place including staff reductions. The Legislature reduced the department's total personnel services budget by 6.3% in HB 2 and SB 261. The department has limited its hiring to essential positions since April of 2017 to achieve this cost constraint. In addition, there is a 1.7% reduction in non-Medicaid general fund appropriations included in HB 2. Cost constraints in operating costs, facilities, and other department programs have been implemented to achieve this requirement. These appropriation reductions and corresponding cost constraints are separate and distinct from the proposed Medicaid provider rate reduction discussed in this notice.

 

The department continues to look for cost savings in facilities, programs, and operating costs, but it has not identified any additional savings that would not adversely impact citizens.

 

Comment 5: Provider rate reductions will increase Medicaid expenditures in higher cost usages, such as emergency room visits, inpatient hospitalizations, and the state psychiatric facility.

 

Response 5: The department does not agree that an across-the-board 2.99% rate reduction will significantly impact access. See response to comment 7. The department's analysis shows that Medicaid members will continue to receive medical care and services despite the rate reduction; therefore the rate reduction will not cause increased use of higher cost services.

 

Comment 6: Why did the department reduce all rates by a uniform amount instead of evaluating each program's reimbursement rates?

 

Response 6:  Evaluating and adjusting each program's reimbursement rates would have been time consuming and costly and would not result in rate changes that were significantly different than the uniform reduction. Instead of evaluating each program, the department calculated a uniform rate reduction based on the amount of the budget reductions in SB 261, the time needed to recover the amount of the budget reductions, and the specific instructions in SB 261, Section 21. Acting promptly is important because the reduction must be made during SFY 2018. A percentage rate reduction can be smaller if the total is recovered over a longer period of time. The uniform reduction is a reasonable, non-biased solution.

 

Comment 7:  The department received several comments stating that rate reductions will cause more providers to refuse Medicaid patients, reducing access to services, and affecting quality of care.

 

Response 7: The new rates are consistent with efficiency, economy, and quality of care. The rates are sufficient to enlist enough Medicaid providers so that care and services through the Montana Medicaid program are available to the extent that such care and services are available to the general population in the geographic area.

 

Comment 8:  The department received several comments that rate reductions will detrimentally impact small businesses.

 

Response 8: The department agrees that all rate reductions detrimentally impact providers, including small businesses; however the requirements of 2-4-111, MCA, are not triggered by the rate change. Section 2-4-111, MCA, requires state agencies to determine if a proposed rule will significantly and directly impact small businesses. For purposes of 2-4-111, MCA, a small business is defined as "a business entity, including its affiliates, that is independently owned and operated and that employs fewer than 50 full-time employees." Section 2-4-102(13), MCA.  The Governor's Office of Economic Development (GOED) has interpreted "small business" to mean privately owned, for-profit entities. (July 22, 2013, memorandum from GOED).

 

Although the proposed rate decreases do not significantly and directly impact small businesses, as defined in statute, the department included statements of the fiscal impact on providers in its notice of proposed amendment.  Because the rate decrease is required by law there are no alternatives to identify.

 

Comment 9: The department received comments that the legislature intended the provider rate cut in SB 261 to be 1%.

 

Response 9: The department does not agree that a 1% Medicaid provider rate reduction represents the entirety of legislative intent.  Section 21 of SB 261 requires a provider rate reduction evenly spread across applicable providers to achieve a $3,500,000 annual general fund cost reduction. If implemented over a 12-month period, the $3,500,000 reduction in Section 21 alone would result in an approximate 1% provider rate reduction. Section 21, however, is just one of several components of reductions in SB 261. In addition to Section 21, this notice also implements other reductions mandated by SB 261. See response to comment 1.

 

Comment 10: A commenter suggested the department follow the standard of care and allow eye exams for Medicaid members once every two years instead of annually. The commenter stated a policy of annual eye exams and yearly frame and lens benefits exceeds recommended standards of care and coverage provided by some private sector vision insurance plans. 

 

Response 10: The department is evaluating the proposal that would reduce Medicaid member eye exams and eyeglass benefits from once per year to once every two years. If approved, the department will move forward with rule changes to implement the benefit change. If the department proposes the change, it must provide public notice and an opportunity for comment.

 

Comment 11:  A commenter expressed concerns over Medicaid members having both Medicaid and commercial vision coverage and that some members are using their commercial vision insurance discount plans in addition to Medicaid.

 

Response 11: Medicaid is the payer of last resort when another insurance policy is available. In general, Medicaid pays allowable charges up to the Medicaid allowed amount after the primary insurance has adjudicated the claim. The department will release additional guidance to providers through a provider notice to ensure that providers understand that in this circumstance a claim should be submitted to private insurance as the primary insurer and that Medicaid is the payer of last resort.

 

Comment 12: Assisted living facilities realize a higher rate reduction due to the method used for reimbursement for these facilities.

 

Response12: The department is currently developing a strategy to restructure the reimbursement methodology to bring about a more consistent and fair rate computation for assisted living facilities.

 

Comment 13:  A commenter expressed concern that the department is updating the schedule of weights in the inpatient hospital DRG grouper and the outpatient APC schedule at the same time it proposes a fee schedule reduction.

 

Response 13: The department has followed the same process since the implementation of the APR-DRG methodology in 2009.  As part of the standard annual process of developing hospital payment rates, the department adopted a new grouper version, DRG weights and thresholds, and reviewed other factors of inpatient pricing.  The department decreased base rates, added an adult policy adjustor, and increased the outlier threshold as we attempt to limit outlier payments to 5%.  These changes were completed to meet the appropriated budget for inpatient hospitals.  The department does not take into consideration weight changes when establishing the conversion factor for outpatient hospitals; therefore a 2.99% reduction is applied only to the APC conversion factor.

 

Comment 14:  A commenter requested that the department provide the underpinning financial worksheets and other materials regarding inpatient hospitals to allow providers to more clearly understand the department's calculations supporting the proposed rules.

 

Response 14: The department modeled claims data utilizing version 34 of the DRG grouper. As part of the department's standard annual process, the modeling completed the following:  re-centered the national APR-DRG weights to a case mix of 1.0; reduced the hospital base rates equally; added a new adult policy adjustor which reduced payment for services for adults age 18 or over (excluding OB and Rehab) by 10%; and increased the outlier threshold from $60,000 to $75,000. These steps are necessary to establish the annual inpatient payment parameters to meet the appropriated budget.

 

Comment 15: A commenter expressed concern with the proposed rule language in ARM 37.86.2803, 37.86.2806, and 37.86.2905. The commenter was concerned the department would implement those rules in a manner that penalized critical access hospitals that use cost reporting periods that overlapped the change in the final cost settlement percentage. 

 

Response 15: The department understands the issue raised in the comment.  The proposed rules will not penalize critical access hospitals that have cost reporting periods that overlap the change in final cost settlement percentages.  The department will only reimburse at the reduced rate and cost settle at the lower amount for the services provided after January 1, 2018.

 

Comment 16: A commenter proposed that the department consider repealing the special and enhanced payments made to hospitals located outside of Montana and retain the savings within the payment system inside Montana.

 

Response 16: The majority of hospitals outside Montana receive the same inpatient base rate as in-state hospitals. The two exceptions to the standard base rates are for long term acute care hospitals and centers of excellence.  Eliminating the increased base rate for centers of excellence would detrimentally affect Montana Medicaid members' access to care because services provided in out-of-state centers of excellence are not available in Montana. These facilities provide a higher level of multi-specialty comprehensive care that is unavailable in Montana. Ensuring access to these providers is critical for our members.

 

5. These rule amendments are effective January 1, 2018.

 

 

/s/ Brenda K. Elias                                       /s/ Sheila Hogan                                         

Brenda K. Elias, Attorney                            Sheila Hogan, Director

Rule Reviewer                                             Public Health and Human Services

 

Certified to the Secretary of State November 27, 2017.