DEPARTMENT OF HEALTH AND SOCIAL SERVICES

Division of Medicaid and Medical Assistance

Statutory Authority: 31 Delaware Code,

Section 512 (31 Del.C. §512)

ORDER

Long Term Care Nursing Facilities

Nature of the Proceedings

Delaware Health and Social Services (“Department”) / Division of Medicaid and Medical Assistance (DMMA) initiated proceedings to amend the Title XIX Medicaid State Plan regarding the reimbursement methodology for nursing facilities. Additionally, the proposed rule is technical in nature to change a reference from the HCFA (Health Care Financing Administration) to the CMS (Centers for Medicare and Medicaid Services). The Department’s proceedings to amend its regulations were initiated pursuant to 29 Delaware Code Section 10114 and its authority as prescribed by 31 Delaware Code Section 512.

The Department published its notice of proposed regulation changes pursuant to 29 Delaware Code Section 10115 in the October 2005 Delaware Register of Regulations, requiring written materials and suggestions from the public concerning the proposed regulations to be produced by October 31, 2005 at which time the Department would receive information, factual evidence and public comment to the said proposed changes to the regulations.

Summary of Proposed Amendment

Title of Regulation

Methods and Standards for Establishing Payment Rates – Prospective Reimbursement System for Long Term Care Facilities

Statutory Authority

42 CFR Part 447, Subpart C – Payment for Inpatient Hospital and Long-Term Care Facility Services

Amending the Following State Plan Pages

Attachment 4.19-D and Attachments

Summary of Proposed Changes

• Clarifies the calculation of primary patient care reimbursement policy regarding the placement of costs for administrative nurses on the cost report.

• Clarifies the policy regarding the calculation of the rate for “Incentive add-ons”, such as the level of care classifications of Rehabilitative, Psychological/Social and Rehab/Psych Preventive and Treatments.

• Changes the reimbursement rate year from October 1 to January 1 for private facilities.

• Clarifies the policy regarding the calculation of the base rate portion of the reimbursement rate.

• Clarifies the policy regarding the calculation of the capital rate component of the base rate portion of the reimbursement rate.

• Changes the source of the inflator applied to the rate. The inflator source was the University of Delaware. New source for the inflator will be a recognized source based on an appropriate index for the primary cost center and the cost centers that make up the base rate.

• Changes the period for rebasing the rates. Current policy indicates a rebase every three years; new policy changes rebase cycle to every fourth year.

• Changes the next rebase year. Currently, the rebase year would have taken place for rates effective October 1, 2006, new policy indicates the next rebase will take place for rates effective January 1, 2008.

• Changes the federal agency reference from HCFA to CMS.

• Clarifies that the reimbursement methodology for super skilled prior to 4/1/93 and after is the same.

• Removes the estimate of the cost increases due to OBRA ‘87.

• Removes the Nursing Facility Cost Report and Instructions from the State Plan.

Summary of Comments Received with Agency Response and Explanation of Changes

The Delaware Developmental Disabilities Council (DCCC); the Governor’s Advisory Council for Exceptional Citizens (GACEC); the State Council for Persons with Disabilities (SCPD); the Delaware Health Care Facilities Association (DHCFA); the Long Term Care Corporation (LTCC); and, the Delaware Healthcare Association (DHA) offered the following observations and recommendations summarized below. DMMA has considered each comment and responds as follows:

SCPD, GACEC & DDDC

The Councils have the observations given that it lacks specific background in nursing home finances and generally recommends that the proposed changes not reduce overall reimbursement rates for Medicaid beneficiaries seeking long-term care residence.

Agency Response: The Division of Medicaid and Medical Assistance (DMMA) does not anticipate a reduction in the overall reimbursement rates for Medicaid beneficiaries seeking long-term care residence. The expected savings are a result of changing the rate year from October 1st to January 1st.

First, it appears that some changes may reduce reimbursement to nursing homes. For example, “rebasing” rates every 4 years instead of every 3 years and postponing the “rebase” date from October 1, 2006 to January 1, 2008. These changes delay a rate increase. However, DMMA plans to apply an inflation factor annually. This will at least partially offset the effect of delays in “rebasing” rates.

Agency Response: The language has been changed to clarify that the rebasing takes place every fourth year, with three years in between. This is not a change in the DMMA policy, merely a clarification of existing policy.

Second, the formula for calculating enhanced reimbursement based on patients receiving active rehabilitation is changed from reimbursement “at the next higher patient class” to “an additional 20% of the primary care rate component”. Without specific knowledge of nursing home finances, it is difficult to assess whether this will generally result in more or less compensation.

Agency Response: This policy has been in place since the implementation of the Patient Index Reimbursement System (PIRS) reimbursement methodology in 1990. It does not change the reimbursement methodology.

Third, there is a favorable sentence added at page 513 to authorize a payment enhancement for “disruptive” patients: Patients exhibiting disruptive psychosocial behaviors on a frequent basis as defined by the Department and are receiving an active rehabilitation/preventive program as defined and approved by the Department shall be reimbursed an additional 10% of the rehabilitative/preventive primary care rate component.

Agency Response: This policy has been in place since the implementation of the Patient Index Reimbursement System (PIRS) reimbursement methodology in 1990. It does not change the reimbursement methodology.

Historically, some nursing homes have used civil commitment process or other means to try to have “disruptive” Medicaid patients removed from home. Once the bed hold period lapses, the patient may lose his/her slot and be unable to return. This circumvents the Bill of Rights Act protections against transfer. See Title 16 Del.C. §1121(18). We endorse the 10% enhancement for “disruptive” residents to deter facilities from seeking discharge based on such behavior.

Agency Response: The DMMA thanks the Councils for their endorsement.

DHCFA (letter dated 10/14/05)

Section II, B – Primary Care Administrative Nurses

In the summary of proposed changes, this change is described as a clarification of policy regarding the placement of costs for administrative nurses on the cost report. What is the effective date of when this policy was put into place by the Division? Do the current payment ceilings used to limit the costs for administrative nurses include administrative nurse costs? Or was this change made after the last “rebasing” of these ceilings? Does the State intending on making any accommodations to ensure providers they will be paid for these costs, which were incurred, provide services in conformity with applicable State and Federal laws, regulations and quality and safety standards?

Agency Response: This is a clarification of policy regarding the placement of administrative nursing costs. The effective date of this policy was for the cost report period ending June 30, 2004. The current payment ceilings used to limit the costs for administrative nurses include the administrative nurse costs up to the administrative cost center cap. This change was made after the last “rebasing”. The Division of Medicaid and Medical Assistance (DMMA) has no plans to make any accommodation for changing the administrative cost center cap.

Section II, D, 2 – Incentive Add-ons for Rehabilitative Services

In the summary of proposed changes this change is described as a clarification of policy regarding the incentive add-ons for rehabilitative, psychological/social and rehab./psych preventive and treatments. This particular paragraph only refers to the rehabilitative services. What is the effective date of when this policy was put into place by the Division?

Agency Response: This policy has been in place since the implementation of the Patient Index Reimbursement System (PIRS) reimbursement methodology in 1990. It does not change the reimbursement methodology.

Section II, D, 4 – Reimbursement Rate Year Change [Primary Care]

The State intends on changing the effective date on which the Medicaid reimbursement rates are paid to providers. These rates are annually updated to account for information reported on both the annual wage surveys [typically performed in June] and the fiscal year ending June 30th cost reports of the previous reimbursement year. The reported costs are then inflated to account for the time variance between when the costs are incurred and when the rates are set. The appropriate inflation methodology would apply an inflation rate for the number of months from the midpoint of the cost reporting year to the midpoint of the rate setting year. Since facilities will still be reporting onáa June 30tháyear-end and the rate year is now based on a calendar year the inflation period would go from January 1 of the cost reporting year to July 1 of the rate setting year - an 18 month period.

It is our understanding that the State has already received the inflation factors that would have been used to inflate the costs had the rates been effective October 1 of this current year. It is the DHCFA’s position that these inflation factors need to be updated to account for the change in the reimbursement year to January 1. In order for Delaware Medicaid to use rates that are reasonable and adequate to meet costs that must be incurred by providers to provide services in conformity with applicable State and Federal laws, regulations and quality and safety standards, these inflation factors must account for this extension in time.

The association strongly opposes this change unless assurances are made that the inflation factors will be revised to account for date change.

Agency Response: The DMMA thanks the Delaware Health Care Facilities Association (DHCFA) for their comments. Regarding DHCFA’s concern about the inflation factor, DMMA intends to use the annual inflation factors as supplied by the University of Delaware for the time period January 1, 2006 through December 31, 2006. Annual inflation factors to be applied in the future will cover inflation from January 1st – December 31st. However, the DMMA intends to explore alternative sources for the inflation factor.The DMMA would welcome any suggestions from the DHCFA regarding alternative sources. Once the DMMA has made a determination regarding the source, it is the DMMA’s intention to use that source indefinitely. If the source is changed, the DMMA will notify the providers of any change in the source.

Section II, D, 4 – Incentive Add-ons for Rehabilitative and Rehab./Psych Services.

In the summary of proposed changes this change is described as a clarification of policy regarding the incentive add-ons for rehabilitative, psychological/social and rehab./psych preventive and treatments. These two particular paragraphs only refer to the rehabilitative and Rehab/Psych services. What is the effective date of when this policy was put into place by the Division?

Agency Response: This policy has been in place since the implementation of the PIRS reimbursement methodology in 1990. It does not change the reimbursement methodology. The PIRS reimbursement methodology was developed with industry input.

Section II, E – Reimbursement Rate Year Change [Base Rate] [Non-Primary]

The same comments that were made for Section II, D, 4 – Reimbursement Rate Year Change [Primary Care] apply to this section as well.

The State intends on changing the effective date on which the Medicaid reimbursement rates are paid to providers. These rates are annually updated to account for information reported on both the annual wage surveys (typically performed in June) and the fiscal year ending June 30th cost reports of the previous reimbursement year. The reported costs are then inflated to account for the time variance between when the costs are incurred and when the rates are set. The appropriate inflation methodology would apply an inflation rate for the number of months from the midpoint of the cost reporting year to the midpoint of the rate setting year. Since facilities will still be reporting on a June 30th year end and, the rate year is now based on a calendar year, the inflation period would go from January 1 of the cost reporting year to July 1 of the rate setting year – an 18 month period.

It is our understanding that the State has already received the inflation factors that would have been used to inflate the costs had the rates been effective October 1 of this current year. It is the DHCFA’s position that these inflation factors need to be updated to account for the change in the reimbursement year to January 1. In order for Delaware Medicaid to use rates that are reasonable and adequate to meet costs that must be incurred by providers to provide services in conformity with applicable State and Federal laws, regulations and quality and safety standards, these inflation factors must account for this extension in time.

The association strongly opposes this change unless assurances are made that the inflation factors will be revised to account for date change.

Agency Response: The DMMA thanks the DHCFA for their comments. Regarding DHCFA’s concern about the inflation factor, DMMA intends to use the annual inflation factors as supplied by the University of Delaware for the time period January 1, 2006 through December 31, 2006. Annual inflation factors to be applied in the future will cover inflation from January 1st – December 31st. However, the DMMA intends to explore alternative sources for the inflation factor. The DMMA would welcome any suggestions from DHCFA regarding alternative sources. Once the DMMA has made a determination regarding the source, it is the DMMA’s intention to use that source indefinitely. If the source is changed, the DMMA will notify the providers of any change in the source.

Section II, E – Occupancy Limitation for Base Rate Calculations

In the summary of proposed changes, this change is described as a clarification of policy regarding the calculation of the base rate. In essence, what this change does is put in to wording the Divisions policy regarding the application of the occupancy limitation and how it applies to capital costs. It is our memberships understanding that there was no occupancy limitation applied to capital since these costs already have a 95% stop/loss application and were not subject to inflation, even though providers are required to report costs that fluctuate with inflation, such as RE Taxes, equipment rentals and property insurance. When did the State implement this policy and what was the methodology behind it? What was the date in which the Division made the public aware of this policy change?

Additionally, we object to any cap being applied for agency personnel, since nursing home operators have no alternative but to use agency to meet staffing requirements when there is a shortage.

Agency Response: The 90% occupancy limitation has been applied to the capital cost center since the creation of the PIRS Reimbursement methodology, which was designed with the assistance of the industry. The policy has not changed and is only clarified with this new wording. The cap that is applied to agency personnel was raised when Eagles Law was implemented. The DMMA does not have plans at this time to change the 30% cap placed on the usage of agency nursing. The DMMA is concerned with the continuity of care, as well as the quality of care being given to Delaware’s nursing home patients. We thank the Delaware Health Care Facilities Association for their comment.

Section II, I, 3 – Source of the Inflation Factor Applied to Rates

This section currently details exactly how and where the Division will obtain its inflation factor that is to be applied to the rates. The proposed change eliminates this completely and replaces it with generalizations and ambiguity. By removing any form of detail of exactly where these inflation factors come from and how they are used, allows the State unrestrained freedom to select whatever inflation index they choose for any given year. To our membership’s knowledge, there is no other State Plan filed with the Federal Government that does not explicitly state the source and means in which an inflation factor is applied.

Historically, the State has retained the University of Delaware to calculate inflationary rates for a wide array of matters, including the calculation of its Medicaid rates. By changing this source for this one division’s purpose can and will lead to inconsistencies in applications such as the State’s budgets, forecasts and analytical review processes.

The association strongly opposes this change and feels that any type of change made to this process must be laid out in a precise and accurate manner in which all nursing facilities providing services to the State’s Medicaid patients can understand and substantiate. In its current form, this change makes it impossible for anyone to know what source of the inflation factor is and what it will be in the future and is completely unacceptable.

Agency Response: The DMMA thanks the DHCFA for their comments. Regarding DHCFA’s concern about the inflation factor, DMMA intends to use the annual inflation factors as supplied by the University of Delaware for the time period January 1, 2006 through December 31, 2006. Annual inflation factors to be applied in the future will cover inflation from January 1st – December 31st. However, the DMMA intends to explore alternative sources for the inflation factor. The DMMA would welcome any suggestions from DHCFA regarding alternative sources. Once the DMMA has made a determination regarding the source, it is the DMMA’s intention to use that source indefinitely. If the source is changed, the DMMA will notify the providers of any change in the source.

Section II, I, 3 – Rebasing Periods

In the summary of proposed changes, this change is described as a change in policy regarding the period in which cost reports will be rebased. Specifically, the summary indicates the State’s old policy was to rebase every three years and now will be every fourth year. Please clarify the difference between these policies. Historically the State has been rebasing every fourth year, not every three years. As identified by the summary, if the State’s policy was to rebase every three years, then the State is currently off on its rebasing cycles. If this is the case, how does the State plan on setting forth corrections to this oversight?

In order to avoid any future confusion, please identify when the next two rebasing cycles will occur? It is already indicated in the proposed changes that the next change will be January 1, 2008; does this mean the cycle after this would be January 2012?

Agency Response: This is a clarification of current policy and does not result in a change. The State has been rebasing every fourth year and intends to continue rebasing every fourth year. The clarification is in the wording of the State Plan. The next rebase will be for the rate year starting January 1, 2008, then January 1, 2012.

Section IV. Rate Reconsideration

The threshold on patient reclassification re-determinations is too high.

The Medicaid programs allow a seller's basis to be indexed by marshall swift.

Agency Response: This section of the State Plan was developed originally by the joint State-Provider group, which determined this process to be appropriate. Currently, the DMMA has no information, which supports a change in this language. However, certainly, if a typographical error occurred in entering the level of care, the DMMA would correct this when the provider identifies it. The Department plans to proceed with the amendment as published. No change will be made to the State Plan because of this comment.

Section VI. Audit

We also object to recalculating the ceilings for a provider based on that provider's disallowed. We know of no other State that does this.

Agency Response: The DMMA will recalculate the payment caps, floors, ceilings and incentive payments after a field audit. However, it is not the intention of the DMMA to have those revisions affect providers that have not been audited. The Department plans to proceed with the amendment and no change will be made to the State Plan Amendment because of this comment.

DHCFA (letter dated 10/25/05 following 10/24/05 meeting with DMMA)

Primary issues – There is one primary issue, which has basically two aspects to it. That issue relates to how Delaware Medicaid will set providers rates now that the rate setting year is a Calendar year as opposed to the previous October 1st to September 30th rate setting year. Of primary importance to us is the inflation of the cost reports for the rate setting year follow encompasses the proper number of months from the mid-point of the cost reporting year to the mid-point of the rate setting year. It is our understanding that cost reports will still be filed on a June 30th year end. Therefore, we feel rates should be inflated from the mid-point of the cost report year, which would be January 1st for a June 30th cost reporting year to the mid-point of the rate setting year, which would be July 1st for the new calendar rate setting year. This encompasses an 18 month time frame. We feel this is equitable to both the long term care industry and the Division of Medical Assistance since the mid-point of the cost report year represents a logical starting point for applying inflation and the mid-point of a rate setting year is a logical ending point for the application of that inflation.

In addition, we feel it very important that the inflation index used in the rate setting process be clearly defined. For many years, the University of Delaware Economic Index has been used and accepted by the Division of Medicaid and Medical Assistance and by the provider community. To change to an unknown and undefined index either immediately or in the future, will cause an inconsistency with the application of inflation to provider incurred cost and more importantly, will create a great amount of uncertainty as to how the rates will be set each year. We, therefore, request that the University of Delaware Economic Index be used going forward. If the Division of Medical Assistance desires consideration for a change of that index, we are requesting that the provider community and the Division meet to discuss any changes before implementation, and that any changes decided upon, be clearly defined.

The re-basing of cost in the past has shown that the current inflation index is reasonably conservative since re-basing has, for the most part, resulted in an increase in provider ceilings. Therefore, we would conclude that the index currently in use is the appropriate index.

Agency Response: The DMMA thanks the Delaware Health Care Facilities Association (DHCFA) for their comments. Regarding DHCFA’s concern about the inflation factor, DMMA intends to use the annual inflation factors as supplied by the University of Delaware for the time period January 1, 2006 through December 31, 2006. Annual inflation factors to be applied in the future will cover inflation from January 1st – December 31st. However, the DMMA intends to explore alternative sources for the inflation factor. The DMMA would welcome any suggestions from DHCFA regarding alternative sources. Once the DMMA has made a determination regarding the source, it is the DMMA’s intention to use that source indefinitely. If the source is changed, the DMMA will notify the providers of any change in the source.

Secondary issues – There are four issues, which fall in this category:

1. The application of the agency caps as indicated on Page 6 of the proposed regulations we feel is not justified and is inconsistent with the mandate for providers to fully staff their facilities to meet “ppds” as well as staff to patient ratios. All providers desire that professional nurses and nursing assistants be employees of the facility and not agency staff. As you know, however, with shortages over the years, it has been necessary for the provider community to contract agency staff for periods of time. This is always a last resort for providers and only after they have made extensive attempts to recruit staff for their facilities. Moreover, the opening of 4 new facilities in Delaware will further exacerbate the shortage that exists. Therefore, we feel there is no logic to the application of the limitation on agency cost for a facility or for the entire industry. Therefore, we would request that any limitation on nurse agency cost as indicated by the proposed regulations be eliminated.

Agency Response: The cap that is applied to agency personnel was raised when Eagles Law was implemented. The DMMA does not have plans at this time to change the 30% cap placed on the usage of agency nursing. The DMMA is concerned with the continuity of care, as well as the quality of care being given to Delaware’s nursing home patients. We thank the Delaware Health Care Facilities Association for their comment.

2. On Page 14 (A1) of the proposed regs, there is a methodology in place for when reconsideration of a patient classification can be made. That reconsideration indicates a threshold of at least 10% of the Medicaid revenue for the facility for a month in order for the State to consider reconsideration. We feel this limitation is too high and will prevent providers from ever being able to request reconsideration. We are asking that this threshold be lowered and be based on a percentage of Medicaid patients for the facility where a reconsideration is deemed appropriate.

Agency Response: This section of the State Plan was developed originally by the joint State-Provider group, which determined this process to be appropriate. Currently, the DMMA has no information, which supports a change in this language. However, certainly, if a typographical error occurred in entering the level of care, the DMMA would correct this when the provider identifies it. The Department plans to proceed with the amendment as published. No change will be made to the State Plan because of this comment.

3. On Page 16 (B) regarding audits, the paragraph indicates that payment ceilings and incentive payments for other facilities within a peer group will not be altered by audit revisions. We would request the words “and incentive payments for other facilities within the peer group” be removed.

Agency Response: The DMMA will recalculate the payment caps, floors, ceilings and incentive payments after a field audit. However, it is not the intention of the DMMA to have those revisions affect providers that have not been audited. The Department plans to proceed with the amendment and no change will be made to the State Plan Amendment because of this comment.

4. On Page 13 (J) under Medicare Aggregate Upper Limitations proposed language reads for any change of ownership after July 18, 1984, the state will not increase payments to providers for depreciation interest and capital and return on equity. We know that Medicaid regulations permit state Medicaid programs to increase seller’s basis by a recognized construction index to partially reflect current replacement cost. In the States of Wisconsin, Georgia, and Virginia, a percentage of the Dodge construction index has been applied to the original seller’s basis to index that basis up to the audit period year in order to have a basis more reflective of current replacement costs for the facility. We are requesting that Delaware give consideration to this same methodology for seller asset basis.

Agency Response: The DMMA acknowledges and has considered the commenter's concerns but declines the suggestion. The Department plans to proceed with the amendment as published. No change will be made to the State Plan because of this comment.

LTCC

Incorporating new language in the capital reimbursement element of the plan stipulating an occupancy reimbursement adjustment will be of grave concern. Also, this provision could potentially have a very negative effect on the new Veteran’s Home.

It is requested that a new reimbursement adjustment for occupancy not be applied to capital reimbursement for any facility that has applied for and received a Certificate of Public Review as of December 31, 2005.

Moving forward, as it relates to new facilities, if the department is insistent upon implementing an occupancy adjustment, the following is suggested as a fair compromise:

Year 1 40%

Year 2 70%

Year 3 90%.

The last new facility opened in 1996. The reason NO new facilities have opened in Delaware despite the obvious severe demand for new nursing home beds is a function of the reimbursement plan and the very strict regulatory environment.

Agency Response: The 90% occupancy limitation has been applied to the capital cost center since the creation of the PIRS Reimbursement methodology, which was designed with the assistance of the industry. The policy has not changed and is only clarified with this new wording. The Division of Medicaid and Medical Assistance thanks Long Term Care Corp. for its comments. The Department plans to proceed with the amendment as published. No change will be made to the State Plan because of this comment.

DHA

We have one overall concern that are included in the proposed regulation are current practice and apparently have been for some time. This is consistent with our comments on the proposed regulation for inpatient facilities that we made last month.

Our two overwhelming concerns are those contained in Section 2.D.4, which changes the reimbursement year from October 1st through September 30th to January 1st through December 31st; and, Section 2.I.3., which eliminates the very detailed language regarding generation of the inflation indices and replaces the detail with a very vague “inflation indices will be obtained from a recognized source and based on an appropriate index for the primary cost center and the following cost centers: secondary, support and administrative.”

There apparently is substantial variation in inflation factors for long-term care facilities, depending on whether capital is included. If the factors were used for budgetary purposes, then our members would urge you to consider that one source should be identified and used consistently and that the source is appropriately the University of Delaware.

It is our conclusion that once again the State is intending to pass on another portion of its financial shortfalls to all long-term care facilities. Additionally, by means of this proposed regulation, DMMA is seeking a formal retroactive approval for practices that have already been implemented without amendment to its State Plan.

Therefore, we strongly oppose Sections 2.D.4 and 2.I.3 and suggest that the reimbursement year remain and the Department of Economics at the University of Delaware continue to provide the inflation factors for the State.

Agency Response: The DMMA thanks the Delaware Healthcare Association (DHA) for their comments regarding the change in rate year and the inflation factor. The DMMA intends to change the rate year as specified. The annual inflation factors will be supplied by the University of Delaware for the time period January 1, 2006 through December 31, 2006. Annual inflation factors to be applied in the future will cover inflation from January 1st – December 31st. However, the DMMA intends to explore alternative sources for the inflation factor. The DMMA would welcome any suggestions from the DHA regarding alternative sources. Once the DMMA has made a determination regarding the source, it is the DMMA’s intention to use that source indefinitely. If the source is changed, the DMMA will notify the providers of any change in the source. The Department plans to proceed with the amendment and no change will be made to the State Plan Amendment because of this comment.

Additionally, the DMMA initiated a few changes to correct grammatical and typographical errors. These changes are indicated by [bracketed bold type] and [bracketed bold strikethrough].

Findings of Fact

The Department finds that the proposed changes as set forth in the October 2005 Register of Regulations should be adopted.

THEREFORE, IT IS ORDERED, that the proposed regulation to amend the Title XIX Medicaid State Plan regarding the reimbursement methodology for Long Term Care Nursing Facilities is adopted and shall be final effective December 10, 2005.

Vincent P. Meconi, Secretary, DHSS, November 17, 2005

DSS FINAL ORDER REGULATION #05-73

REVISIONS: ATTACHMENT 4.19-D

Page 1

State Plan Under Title XIX of the Social Security Act

STATE OF DELAWARE

Methods and Standards for Establishing Payment Rates

Prospective Reimbursement System for Long Term Care Facilities

I. General Provisions

A. Purpose

This plan establishes a reimbursement system for long-term care facilities that complies with federal requirements, including but not limited to:

• Requirements of the Omnibus Reconciliation Act of 1981 that nursing facility provider reimbursements be reasonable and adequate to assure an efficient and economically operated facility.

• The requirement that Medicaid payments in the aggregate do not exceed what would have been paid by Medicare based on allowable cost principles.

• Limitations on the revaluation of assets subsequent to a change of ownership since July 18, 1984.

• Requirements of the Omnibus Reconciliation Act of 1987 to establish one level of nursing care, i.e., Nursing Facility Care, to eliminate the designation of Skilled and Intermediate Care, and to provide sufficient staff to meet these requirements.

• The requirement to employ only nurse aides who have successfully completed a training and competency evaluation program or a competency evaluation program.

B. Reimbursement Principles

1. Providers of nursing facility care shall be reimbursed prospectively determined per diem rates based on a patient based classification system. Providers of ICF-MR and ICF-IMD services shall be reimbursed prospectively determined per diem rates.

ATTACHMENT 4.19-D

Page 2

2. The Delaware Medicaid Program shall reimburse qualified providers of long-term care based on the individual Medicaid recipient's days of care multiplied by the applicable per diem rate for that patient's classification less any payments made by recipients or third parties.

II. Rate Determination for Nursing Facilities

A. Basis for Reimbursement

Per Diem reimbursement for nursing facility services shall be composed of five prospectively determined rate components that reimburse providers for primary patient care, secondary patient care, support services, administration, and capital costs.

The primary patient care component of the per diem rate is based on the nursing care costs related specifically to each patient's classification. In addition to assignment to case mix classifications, patients may qualify for supplementary primary care reimbursement based on their characteristics and special service needs. Primary care component reimbursement for each basic patient classification will be the same for each facility within a group. A schedule of primary rates, including rate additions, is established for each of three groups of facilities:

• Private facilities in New Castle County

• Private facilities in Kent and Sussex Counties

• Public facilities

Payment for the secondary, support, administrative, and capital costs comprise the base rate, and is unique to each facility. Provider costs are reported annually to Medicaid and are used to establish rate ceilings for the secondary, support, and administrative cost centers in each provider group.

The sections that follow provide specific details on rate computation for each of the five rate components.

B. Rate components

Payment for services based on the sum of five rate components. The rate components are defined as:

• Primary Patient Care. This cost center encompasses all costs that are involved in the provision of basic nursing care for nursing home patients and is inclusive of nursing staff salaries, fringe benefits, and training costs. Costs of completing Resident Assessment and Plans of Care will be covered in this cost center. All nurses salaries, fringe benefits, and training for staff with duties that count[s[ towards the minimum staff requirements will be included in this cost center.

ATTACHMENT 4.19-D

Page 3

• Secondary Patient Care. This cost center encompasses other patient care costs that directly affect patient health status and quality of care and is inclusive of clinical consultants, social services, raw food, medical supplies, and non prescription drugs, dietitian services, dental services (in public facilities only), and activities personnel.

• Support Services. This cost center includes costs for departments that provide supportive services other than medical care and is inclusive of dietary, operation and maintenance of the facility, housekeeping, laundry and linen, and patient recreation.

• Administrative. This category includes costs that are not patient related and is inclusive of owner/administrator salary, medical and nursing director salary (excluding such time spent in direct patient care), administrative salaries, medical records, working capital, benefits associated with administrative personnel, home office expenses, management of resident personal funds, and monitoring and resolving patient’s rights issues.

• Capital. This category includes costs related to the purchase and lease of property, plant and equipment and is inclusive of lease costs, mortgage interest, property taxes and depreciation.

C. Excluded Services

Those services to residents of private long term care facilities that are ordinarily billed directly by practitioners will continue to be billed separately and are not covered by the rate component categories. This includes prescription drugs, Medicare Part B covered services, physician services, hospitalization and dental services, laboratory, radiology, and certain ancillary therapies.

For public facilities, laboratory, radiology, prescription drugs, physician services, dental services, and ancillary therapies [are maybe] included in the per diem.

Costs of training and certification of nurse aides are billed separately by the facilities as they are incurred, and reimbursed directly by Medicaid.

D. Primary Payment Component Computations

The primary patient care rate component is based on a patient index system in which all nursing home patients are classified into patient classes. The lowest resource intensive clients are placed in the lowest class.

ATTACHMENT 4.19-D

Page 4

The Department will assign classes to nursing home patients. Initial classification of patients occurs through the State's pre-admission screening program. These initial classifications will be reviewed by Department nurses within 31 to 45 days after assignment. Patient classification will then be reviewed twice a year. Facilities will receive notices from the Department concerning class changes and relevant effective dates.

1. In order to establish the patient classification for reimbursement, patients are evaluated and scored by Medicaid review nurses according to the specific amount of staff assistance needed in Activity of Daily Living (ADL) dependency areas. These include Bathing, Eating, Mobility/Transfer/Toileting. Potential scores are as follows:

0 - Independent

1 - Supervision (includes verbal cueing and occasional staff standby)

2 - Moderate assistance (requires staff standby/physical presence)

3 - Maximum Assistance

Patients receiving moderate or maximum assistance will be considered "dependent" in that ADL area. Patients receiving supervision will not be considered dependent.

Reimbursement is determined by assigning the patient to a patient classifications based on their ADL scores or range of scores.

Each patient classification is related to specific nursing time factors. These time factors are multiplied by the 75th percentile nurse wage in each provider group to determine the per diem rate for each classification.

2. Patients receiving an active rehabilitative/preventive program as defined and approved by the Department shall be reimbursed at the next higher patient class. For qualifying patients at the highest level, the facility will receive an additional IO percent of the primary care rate component. an additional 20% of the primary care rate component.

To be considered for the added reimbursement allowed under this provision, a facility must develop and prepare an individual rehabilitative/preventive care plan. This plan of care must contain rehabilitative/preventive care programs as described in a Department approved list of programs. The services must seek to address specific activity of daily living and other functional problems of the patient. The care plan must also indicate specific six month and one-year patient goals, and must have a physician's approval.

6 DE Reg. 964 (2/1/03)

ATTACHMENT 4.19-D

Page 5

The Department will evaluate new facility-developed rehabilitative/preventive care plans during its patient classification reviews of nursing homes.

Interim provisional approval of plans can be provided by Department review nurses. When reviewed, the Department will examine facility documentation on the provision of rehabilitative/preventive services to patients with previously approved care plans as well as progress towards patient goals.

3. Patients exhibiting disruptive psycho social behaviors on a frequent basis as defined and classified by the Department shall receive an additional 10 percent of the primary care rate component for the appropriate classification.

The specific psychosocial behaviors that will be considered for added reimbursement under this provision are those that necessitate additional nursing staff intervention in the provision of personal and nursing care. Such behaviors include: verbal and physically disruptive actions, inappropriate social behavior, non-territorial wandering, and any other similar patient problems as designated by the Department.

Facilities must have complete documentation on frequency of such behaviors in a patient's chart for the Department to consider the facility for added reimbursement under this provision. This documentation will be evaluated during patient classification reviews of a nursing home.

4. Patient class rates are determined based on the time required to care for patients in each classification, and nursing wage, fringe benefit, and training costs tabulated separately for private facilities in New Castle County, private facilities in Kent and Sussex Counties, and public facilities statewide.

Primary rates are established by the following methodology:

• Annual wage surveys and cost reports required of each provider are used to determine 75th percentile hourly nursing wages.

The cost report used in the calculations will represent the fiscal year ending June 30th of the previous reimbursement year. The Delaware reimbursement year, for purposes of rate setting, is from October 1 through September 30 January 1 through December 31 for private facilities and October 1 through September 30 for State facilities.

ATTACHMENT 4.19-D

Page 6

This is calculated by first dividing total pay by total hours for each nursing classification (RN, LPN, Aide) in each facility, then arraying the representative 75th percentile wages of each facility them to determine the 75th percentile within each provider group. Based on cost data from each provider group, hourly wage rates are adjusted to include hourly training and fringe benefit costs within each provider group.

• In each of the three provider groups (private facilities in New Castle County, Kent and Sussex Counties, and public facilities), the rates are established in the same manner.

The primary component of the Medicaid nursing home rate is determined by multiplying the 75th percentile hourly nursing wage for RNs, LPNs, and Aides by standard nursing time factors for each of the base levels of patient acuity.

• Providers will be reimbursed for agency nurse costs if their use of agency nurses does not exceed the allowable agency nurse cap determined each year by the Delaware Medicaid staff. Any nursing cost incurred in excess of the allowable cap will not be included in the nursing cost calculation.

• Within each of the patient classes, Medicaid provides "Incentive add-ons" to encourage rehabilitative and preventive programs. Rehabilitative and preventive services shall be reimbursed at the same rate as the next highest patient class. In the case of patients in the highest class, the facility will receive an additional 10 percent of the primary care rate component. an additional 20% of the primary care rate component. Incentive payments discourage the deterioration of patients into higher classifications.

• Patients exhibiting disruptive psychosocial behaviors on a frequent basis as defined by the Department and are receiving an active rehabilitation/preventive program as defined and approved by the Department shall be reimbursed an additional 10% of the rehabilitative/preventive primary care rate component.

E. Non-primary Rate Component Computations

Facility rates for the four non-primary components of secondary, support, administrative, and capital are computed from annual provider cost report data on reimbursable costs. Reimbursable costs are defined to be those that are allowable based on Medicare principles, according to HIM 15. Costs applicable to services, facilities, and supplies furnished to a provider by commonly owned, controlled or related organizations shall not exceed the lower cost of comparable services purchased elsewhere.

ATTACHMENT 4.19-D

Page 7

The cost report used in the calculations will represent the fiscal year ending June 30th of the previous reimbursement year. The Delaware reimbursement year, for purposes of rate setting is from October 1 through September 30 January 1 through December 31 for private facilities and October 1 through September 30 for State facilities.

• Individual allowable cost items from cost reports for each facility comprising the base rate component are summed and divided by patient days. For established facilities, the patient day amount used in this computation equal actual patient days or estimated days based on a 90 percent occupancy of Medicaid certified beds, whichever is greater. The day amount for new facilities╣ equals actual patient days for the period of operation, or estimated days based on a 75 percent occupancy of Medicaid certified beds, whichever is greater. This applies to cost centers comprising the basic rate.

The discussion that follows explains rate computation for the secondary, support, administrative and capital payment centers.

1. Secondary patient care rates are reimbursed according to the cost of care determined prospectively up to a calculated ceiling (115 percent of median per diem costs). Three steps are required:

• Facilities are grouped into three peer groups – private facilities in New Castle County, private facilities in Kent and Sussex Counties, and public facilities.

• Individual allowable cost items from cost reports for each facility comprising the secondary care component are summed and divided by patient days. For established facilities, the patient day amount used in this computation equals actual patient days or estimated days based on a 90 percent occupancy of Medicaid certified beds, whichever is greater. The day amount for new facilities╣ equals actual patient days for the period of operation, or estimated days based on a 75 percent occupancy of Medicaid certified beds, whichever is greater.

• The median per diem cost is determined for each category of facility and inflated by 15 percent. The secondary care per diem assigned to a facility is the actual allowable cost up to a maximum of 115 percent of the median.

2. Support service component rates are determined in a manner that parallels the secondary component rate calculation process. However, the ceiling is set at 110 percent of median support costs per day for the appropriate category of facility. In addition, facilities, which maintain costs below the cap, are entitled to an incentive payment 25 percent of the difference between the facility’s actual per day cost and the applicable cap, up to a maximum incentive of 5 percent of the cap amount.

* “New facility” is defined as: (1) New construction built to provide a new service of either intermediate or skilled nursing care for which the existing facility has never before been certified, or (2) construction of an entirely new facility totally and administratively independent of an existing facility.

ATTACHMENT 4.19-D

Page 8

3. Administrative component rates are determined in a manner parallel to the secondary component. However, the ceiling is set at 105 percent of median costs per day. A facility is entitled to an incentive payment of 50 percent of the difference between its actual costs and the cap. The incentive payment is limited to 10 percent of the ceiling amount.

4. Capital component rates are determined prospectively and are subject to a rate floor and rate ceiling. The dollar amounts representing the 20th percentile of actual per diem capital cost (floor) and the 80th percentile of actual per diem capital cost (ceiling) are calculated. If the facility's costs are greater than or equal to the floor, and less than or equal to the ceiling, the facility's prospective rate is equal to its actual cost. If the facility's costs are below the floor, the prospective rate is equal to the lower of the floor or actual cost plus twenty-five percent of actual cost. If the facility's costs are greater than the ceiling, the prospective rate is equal to the higher of the ceiling or ninety-five percent of actual cost. Costs associated with revaluation of assets of a facility will not be recognized.

The capital component is also subject to the occupancy standards as set forth in section II.E. of State Plan Amendment 4.19-D. The capital component rate is calculated on a statewide basis.

5. Where services are currently contracted by the nursing facility to a practitioner, additional services may be billed directly. These services are not covered by the rate component categories for private facilities, but may be included in the rate for public facilities. These services include therapies, physician services, dental services and prescription drugs.

F. Computation of Total Rate from Components

A facility's secondary, support, administrative, and capital payments will be summed and called its basic rate. The total rate for a patient is then determined by adding the primary rate for which a patient qualifies to the facility's basic rate component. The basic payment amount will not vary across patients in a nursing home. However, the primary payment [depend] will depend on a patient's class and qualification for added rehabilitative/preventive and/or psychosocial reimbursement.

G. OBRA '87 Additional Costs

1. Nurse Aide Training and Certification

Providers of long-term care services will be reimbursed directly for the reasonable costs of training, competency testing and certification of nurse aides in compliance with the requirements of OBRA '87. The training and competency testing must be in a program approved by the Delaware Department of Health and Social Services, Division of Public Health. A "Statement of Reimbursement Cost of Nurse Aide Training" is submitted to the state by each facility quarterly.

ATTACHMENT 4.19-D

Page 9

Costs reported on the Statement of Reimbursement Cost are reimbursed directly and claimed by the State as administrative costs. They include:

• Costs incurred in testing and certifying currently employed nurse aides, i.e., testing fees, tuition, books, and training materials.

• Costs of providing State approved training or refresher training in preparation for the competency evaluation testing to employed nurse aides who have not yet received certification.

• Salaries of in-service [instructions instructors] to conduct State approved training programs for the portion of their time involved with training, or fees charged by providers of a State approved training program.

• Costs of transporting nurse aides from the nursing facility to a testing or training site.

The following costs of nurse aide training are considered operational, and will be reported annually on the Medicaid cost report. These costs will be reimbursed through the Primary cost component of the per diem rate:

• Salaries of nurse aides while in training or competency evaluation.

• Costs of additional staff to replace nurse aides participating in training or competency evaluation.

• Continuing education or of nurse aides following certification.

2. Additional Nurse Staff Requirements

Additional nurse staff required by a nursing facility to comply with the requirements of OBRA '87 will be reimbursed under the provisions of the Delaware Medicaid Patient Index Reimbursement System (PIRS). This system makes no distinction between levels of care for reimbursement. Nursing costs are derived from average hourly wage, benefit, and training cost data provided on the Nursing Wage Survey submitted by each facility. Prospective rates for each patient acuity classification are calculated by these costs by the minimum nursing time factors. Although representative of actual costs incurred, these prospectively determined rates are independent of the number employed or the number of staff vacancies at any given time.

ATTACHMENT 4.19-D

Page 10

3. Additional Non-Nursing Requirements

The Delaware Medicaid reimbursement system will recognize the incremental costs of additional staff and services incurred by nursing facilities to comply with the mandates of OBRA '87. Prospective rate calculations will be adjusted to account for costs incurred on or after October 1, 1990.

Where services are currently contracted by the nursing facility to a practitioner, additional services may be billed directly. These services are not covered by the rate component categories (for private facilities, but may be included in the rate for public facilities.) These services include therapies, physician services, dental services, and prescription drugs.

A supplemental schedule to the Statement of Reimbursement Costs (Medicaid Cost Report) will be submitted by each facility to demonstrate projected staff and service costs required to comply with OBRA'87. For the rate year beginning October 1, 1990, facilities may project full year costs onto prior year reported actual costs to be included in the rate calculation.

The supplemental schedule will be used to project costs incurred for programs effective October 1, 1990 into the prospective reimbursement rates. Where nursing care facilities indicate new and anticipated staff positions, those costs will be included with the actual SFY '90 costs when calculating the reimbursement rates effective October 1, 1990.

Additional staff requirements include dietitian, medical director, medical records, activities personnel, and social worker.

H. Hold Harmless Provision

For the first year under the patient index reimbursement system the Department will have in effect a hold-harmless provision. The purpose of the provision is to give facilities an opportunity to adjust their operations to the new system. Under this provision, no facility will be paid less by Medicaid under the patient index system than it would have been paid had Federal Fiscal Year 1988 rates, adjusted by an inflation factor, been retained.

For the period October 1, 1990 to September 30, 1991, the Department will have in effect a hold-harmless provision with respect to capital reimbursement rates. The purpose of this provision is to give facilities an opportunity to adjust their operations to the new system. Under this provision, facilities will be paid the greater of the rate under the prospective capital rate methodology or the rate based on reimbursable costs. Beginning October 1, 1991, all facilities will be subject to the prospective capital rate methodology described in Section II, E.4.

ATTACHMENT 4.19-D

Page 11

I. Annual Rate Recalculation

1. Primary Payment Component

Rates for the primary patient care component will be rebased annually. Two sources of provider-supplied data will be used in this rate rebasing:

• An annual nursing wage and salary survey that the Department will conduct of all Medicaid-participating nursing facilities in Delaware.

• Nursing home cost report data on nurses’ fringe benefits and training costs.

The 75th percentile wages will be redetermined annually from the wage and salary survey, and the standard nurse time factors will be applied for each patient classification. The cost report and wage and salary survey will be for the previous year ending June 30.

2. Non-Primary Payment Components

The payment caps for the secondary, support, and administrative components will be rebased every fourth year using the computation methods specified in Section E above. For the interim periods between rebasing, the payment caps will be inflated annually based on reasonable inflation estimates as published by the Department. Facility-specific payment rates for these cost centers shall then be calculated using these inflated caps and cost report data from the most recently available cost reporting period.

The capital floor and ceiling will be rebased annually.

ATTACHMENT 4.19-D

Page 12

3. Inflation Adjustment

Per Diem caps for primary, secondary, support and administrative cost centers will be adjusted each year by inflation indices. The inflation indices are obtained from the Department of Economics of the University of Delaware and include both regional and national health care-specific economic trends. The inflation forecast is based on the U.S. Consumer Price Indexed. Factors reviewed on the demand side include recent growth rates in the money supply, employment, and business and government debt, as well as the state of the business cycle. Current capacity utilization rates and new capital spending plans, production delivery delays, employment to population ratios, wages, and trends in energy, housing, and food are studies on the supply side. The forecast is also confirmed by reviewing the Consumer Estimates and Columbia University Leading Index of Inflation, interest rates in the futures markets, the Commodity Research Bureau’s Index of Future Prices, and the trade weighted price of the dollar. will be obtained from a recognized source and based on an appropriate index for the primary cost center and the following cost centers: secondary, support and administrative.

The inflation factors are applied to the actual nursing wage rates to compensate for the annual inflation in nursing costs. This adjustment is made before the nurse training and benefits are added and the wages are multiplied by the standard nurse time factors.

Cost center caps are used to set an upper limit on the amount a provider will be reimbursed for the costs in the secondary, support, and administrative cost centers. Initially, these caps are computed by determining the median value of the provider’s actual daily costs, then adjusting upwardly according to the particular cost center. The Secondary cost center cap is 115% of the provider group median, and Administrative costs are capped at 105% of the median. Delaware Medicaid will recalculate non-primary cost center caps every three years fourth year. The next rebase will be for rates effective January 1, 2008. In interim rate years, these cost center caps will not be recomputed. Instead, cost center caps will be adjusted by inflation factors. The inflation index provided by the University of Delaware a recognized source will be applied to the current cap in each cost center in each provider group to establish the new cap. The actual reported costs will be compared to the cap. Facilities with costs above the cap will receive the amount of the cap.

ATTACHMENT 4.19-D

Page 13

J. Medicare Aggregate Upper Limitations

The State of Delaware assures HCFA CMS that in no case shall aggregate payments made under this plan, inclusive of DEFRA capital limitations, exceed the amount that would have been paid under Medicare principles of reimbursement. As a result of a change of ownership, on or after July 18, 1984, the State will not increase payments to providers for depreciation, interest on capital and return on equity, in the aggregate, more than the amount that would be recognized under section 1861(v)(1)(0) of the Social Security Act. Average projected rates of payment shall be tested against such limitations. In the event that average payment rates exceed such limitations, rates shall be reduced for those facilities exceeding Medicare principles as applied to all nursing facilities.

III. Rate Determination ICF/MR and ICF/IMD Facilities

Delaware will recalculate the prospective per diem rates for ICF/MRs and ICF/IMDs annually for the reimbursement year, of October through September 30 January 1 through December 31 for private facilities and October 1 through September 30 for public facilities. ICF/MR and ICF/IMD facilities shall be reimbursed actual total per diem costs determined prospectively up to a ceiling. The ceiling is set at the 75th percentile of the distribution of costs of the facilities in each class. There are four (4) classes of facilities, which are:

1. Public ICF/MR facilities of 8 beds or less.

2. Public ICF/MR facilities of greater than 8 beds.

3. Private ICF/MR facilities of 60 beds or less.

4. Public ICF/IMD facilities.

An inflation factor (as described in II.H.3 above) will be applied to prior year’s costs to determine the current year’s rate.

IV. Rate Reconsideration

A. Primary Rate Component

Long-term care providers shall have the right to request a rate reconsideration for alleged patient misclassification relating to the Department’s assignment of the case mix classification. Conditions for reconsideration are specified in the Department’s nursing home appeals process as specified in the long-term care provider manual.

ATTACHMENT 4.19-D

Page 14

1. Exclusions from Reconsideration

Specifically excluded from patient class reconsiderations are:

• Changes in patient status between regular patient class reviews.

• Patient classification determinations, unless the loss of revenues for a month’s period of alleged misclassification equals ten percent or more of the facility’s Medicaid revenues in that month.

2. Procedures for Filing

Facilities shall submit requests for reconsiderations within sixty days after patient classifications are provided to a facility. All requests shall be submitted in writing and must be accompanied by supporting documentation as required by the Department.

3. Patient Reclassifications

Any reclassification resulting from the reconsideration process will become effective on the first day of the month following such reclassification.

B. Non-Primary Rate Components

Long-term care providers shall have the right to request a rate reconsideration for any alleged Department miscalculation of one or more non-primary payment rates. Miscalculation is defined as incorrect computation of payment rates from provider supplied data in annual cost reports.

1. Exclusions from Reconsideration

Specifically excluded from rate consideration are:

• Department classification of cost items into payment centers.

• Peer-group rate ceilings.

• Department inflation adjustments.

• Capital floor and ceiling rate percentiles.

ATTACHMENT 4.19-D

Page 15

2. Procedures for Filing

Rate reconsiderations shall be submitted within sixty days after payment rate schedules are provided to a facility. All requests shall be submitted in writing and must be accompanied by supporting documentation as requested by the Department.

3. Rate Adjustments

Any rate adjustments resulting from the reconsideration process will take place on the first day of the month following such adjustment. Rate adjustments resulting from this provision will only affect the facility that had rate miscalculations. Payment ceilings and incentive amounts for other facilities in a peer group will not be altered by these adjustments.

V. Reimbursement for Super Skilled Care

A higher rate will be paid for individuals who need a greater level of skilled care than that which is currently reimbursed in Delaware nursing facilities. For patients in the Super Skilled program prior to 4/1/93, the rate will be determined as follows:

A summary of each individual who qualified under the Medicaid program’s criteria for a “Super Skilled” level of care will be sent to local nursing facilities, which have expressed an interest in providing this level of care. They will be asked to submit bids, within a specific time frame, for their per diem charge for caring for the individual. The Medicaid program will review the bids and select the one that most meets the needs of the patient at the lowest cost.

Effective 4/1/93, all new patients who would have formerly been placed in a super skilled level will be placed in one of the patient class levels and reimbursed as any other client. The Medicaid program will pay outside of the per diem rate for the exceptional costs of their care, such as ventilator equipment and special supplies required.

VI. Reporting and Audit Requirements

A. Reporting

All facilities certified to participate in the Medicaid program are required to maintain cost data and submit reports on the form and in the format specified by the Department. Such reports shall be filed annually. Cost reports are due within ninety days of the close of the state fiscal year. All Medicaid participating facilities shall report allowable costs on a state fiscal year basis, which begins on July 1 and ends the following June 30. The allowable costs recognized by Delaware are those defined by Medicare principles.

ATTACHMENT 4.19-D

Page 16

In addition, all facilities are required to complete and submit an annual nursing wage survey on a form specified by the Department. All facilities must provide nursing wage data for the time periods requested on the survey form.

For patients in the Super Skilled program, prior to 4/1/93 annual Super Skilled bids will be considered the cost report for Super Skilled services. The nursing facility cost report must be adjusted to reflect costs associated with care for Super Skilled patients.

Failure to submit timely cost reports or nursing wage surveys within the allowed time periods when the facility has not been granted an extension by the Department, shall be grounds for suspension from the program. The Department may levy fines for failure to submit timely data as described in Section II.D. of the General Instructions to the Medicaid nursing facility cost report.

B. Audit

The Department shall conduct a field audit of participating facilities, in accordance with Federal regulation and State law. Both cost reports and the nursing wage surveys will be subject to audit.

Overpayments identified and documented as a result of field audit activities, or other findings made available to the Department, will be recovered. Such overpayments will be accounted for on the Quarterly Report of Expenditures as required by regulation.

Rate revisions resulting from field audit will only affect payments to those facilities that had an identified overpayment. Payment ceilings and incentive payments for other facilities within a peer group will not be altered by these revisions.

C. Desk Review

All cost reports and nursing wage surveys shall be subjected to a desk review annually. Only desk reviewed cost report and nursing wage survey data will be used to calculate rates.

VII. Reimbursement for Out-of-State Facilities

Facilities located outside of Delaware will be paid the lesser of the Medicaid reimbursement rate from the state in which they are located or the highest rate established by Delaware for comparably certified non-state operated facilities as specified above.

ATTACHMENT 4.19-D

Page 17

VIII. Reimbursement of Ancillary Service for Private Facilities

Oxygen, physical therapy, occupational therapy, and speech therapy will be reimbursed on a fee-for-service basis. The rates for these services are determined by a survey of all enrolled facilities’ costs. The costs are then arrayed and a cap set at the median rate. Facilities will be paid the lower of their cost or the cap. The cap will be recomputed every three years based on new surveys.

The Delaware Medicaid Program’s nursing home rate calculation, the Patient Index Reimbursement System, complies with requirements found in the Nursing Home Reform Act and all subsequent revisions. A detailed description of the methodology and analysis used in determining the adjustment in payment amount for nursing facilities to take into account the cost of services required to attain or maintain the highest practicable physical, mental and psychosocial well-being of each resident eligible for benefits under Title XIX is found in Attachment A.

DELAWARE MEDICAID PROGRAM

ESTIMATE OF THE COST INCREASES INCURRED BY NURSING FACILITY

IN MEETING THE REQUIREMENTS OF OBRA '87

I. TRAINING, CERTIFICATION AND CONTINUING EDUCATION FOR NURSE AIDES

   

# Aides

 

Cost/Aide

Total Cost

A.

Prior to October 1, 1990

       
 

Competency Evaluation

2041

 

$50

$102.050

 

75 hour Training (10%)

204

Average fee for training

$160

$32,640

 

Staff Salaries – Testing

2041

Average $6.82/hr x 6 hrs

$41

$83,681

 

Staff Salaries – Training

204

Average $6.82/hr x 75 hrs x 80%

$409

$83,436

 

Travel Costs

700

$.30/mi x 34 mi / 5 persons

$3

$2,100

 

Total Cost

     

$303.907

 

Cost per Aide

     

$149

 

Avg # Aides per facility

     

33

 

Avg Cost per facility

     

$4,914

Information from DE Office of Licensing and Certification indicates that most currently employed nurse aides were able to take the certification examination prior to October 1, 1990 without the 75 hour training program. An estimate of 10% requiring the training is used here.

Average staff salaries are derived from the Nurse Wage Survey, July 1989, and projected forward to 1990.

Nurse aide training and certification costs will be reimbursed directly as administrative costs from billing submitted by each nursing facility.

   

# Aides

 

Cost/Aide

Total Cost

B.

After October 1, 1990

       
 

Competency Evaluation

680

33% Turnover / year

$50

$34,000

 

75 hour Training (100%)

680

Average fee for training

$160

$108,800

 

Staff Salaries – Testing

680

Average $6.82/hr x 6 hrs

$41

$27,880

 

Staff Salaries – Training

680

Average $6.82/hr x 75 hrs x 80%

$409

$278,120

 

Travel Costs

230

$.30/mi x 34 mi / 5 persons

$3

$690

 

Total Costs

 

 

$449,490

 

Cost per Aide

     

$661

 

Avg # Aides per facility

     

33

 

Avg Cost per facility

     

$21,813

Continuing education for nurse aides will be reported on the annual cost report and will be reimbursed as part of the per diem.

Annual staff turn-over estimate of 33Z is derived from staffing experience of facilities.

II. ADDITIONAL NURSE STAFF REQUIREMENTS

A. Nursing Staff

1. RN on Day Shift # Facilities Currently Meeting Requirement

# Facilities That Must Increase Staff to Comply With Requirement

o No financial impact of this additional staff requirement because all facilities are currently meeting minimum staffing requirement.

2. RN/LPN on all shifts #Facilities Currently Meeting Requirement 29

#Facilities That Must Increase Staff to Comply With Requirement

3 Total Cost per Facility 1.7 FTE x 2080 hrs/FTE x $15.30/hr Salary/Benefit/Training $54,101

Current reimbursement under the Delaware Patient Index Reimbursement System makes no distinction between Skilled and Intermediate levels of care. The three facilities which must increase their staff to comply with the new regulations have always been paid on the same basis as those facilities which exceeded the new staffing requirement. The nursing time factors in the Medicaid time matrix are sufficient to reimburse for the required staffing.

Three of 29 private facilities in Delaware must increase their nursing staff in order to meet the new requirements. Two of the three facilities will continue to receive reimbursement exceeding their costs providing that they maintain their current patient mix. The third facility currently has costs exceeding reimbursement due to several factors. Significant factors include their corporate policy to accept low care patients, their 72% occupancy rate, and higher than average nursing salaries. By making only minor adjustments to the patient mix, this facility could increase the. average daily reimbursement per patient from $20.94 to $26.75. Their costs will increase from $22.62 to $26.62 as a result of the additional nursing staff required.

Resident Assessment

Avg 87 pts/facility x 25 minutes/pt/year @ $16.98/hr= $615.53 per Facility

o The PIRS nursing time requirements matrix has been adjusted to account for the additional nursing time required to conduct Resident Assessment. Time for assessment and documentation was originally included in the nursing time requirements for RN and LPN at each level of patient accuity. Additional time will be included when calculating the Oct 1, 1990 rates to account for the new requirements. The amount of time added to the matrix was calculated by estimating the time required for assessment per patient per year and dividing by the number of annual available patient days per patient.

C. Plans Of Care

Avg 87 pts/facility x 30 minutes/pt/year @ $16.98/hr = $738.63 per Facility

The PIRS nursing time requirements matrix has been adjusted to account for the additional nursing time required to conduct Plans of Care. Time for plans of care and documentation was originally included in the nursing time requirements for IN and LPN at each level of patient acuity. Additional time will be included when calculating the Oct 1, 1990 rates to account for the new requirements. The amount of time added to the matrix was calculated by estimating the time required for plans of care per patient per year and dividing by the number of annual available patient days per patient.

III. EXTENDED PATIENT SERVICES

A. Dietary: No cost increase is expected as a result of the new

No cost increase is expected as a result of the new requirements

Current State certification standards require the level of

Dietary standards required by OBRA.

The PIRS reimbursement system will reflect any increase in staffing.

B. Pharmacy: No cost increase is expected as a result of the new requirements

Current State certification standards require the level of Pharmacy standards required by OBRA. The FIRS reimbursement system will reflect any increase in staffing.

C. Dental Services: Delaware does not currently cover Dental Care under the State Plan. No cost impact is expected.

D. Medical Records: Nursing time for conducting Patient Assessment and coordinating Plans of Care will has been expanded in the Nursing Time Requirements Matrix. This accounts for the additional time required to manage medical records.

Please refer to the explanation of the Additional Nursing Staff Requirements above.

E. Activities Personnel: 8 Facilities - P.T. Activities Director @ $23,400 annually

8 facilities expect to expand their activities staff, although they currently employ an Activities Director.

All Delaware facilities currently meet this requirement by employing an an qualified Activities Director on staff. Many facilities also have activities personnel in addition to the Director. The estimates of the number of facilities effected by this requirement and the cost of a part time Activities Director were derived from a telephone survey of 9 facilities and information from the state nursing facilities association.

F. Social Worker: > 120 beds 4 Facilities - F.T. Social Worker @ $31,200 annually

< 120 beds 11Facilities - P.T. Social Worker @

$23,400

4 of 10 facilities over 120 beds will incur costs to upgrade their social work activities.

11 of 22 facilities under 120 beds must upgrade their social work program by increasing their social work staff.

The estimates of the number of facilities effected by this requirement and the cost of Social Workers were derived from a telephone survey of 9 facilities and information from the state nursing facilities association.

G. Physical Therapy: 1753 ICI beds x 90% occupancy = 1578 patients x 20% increase = 316 patients Therapist treats 6 pts/hr @ avg $35/hr x 2 times/week/pt = $11.67/pt/week Total Cost 316 patients x $11.67/pt/week = $3,688/week total

Average Cost per Facility 11 pts @ $11.67/pt/week = $128.37/wk = $6,675/yr.

On-site therapy will continue to be billed directly as a contracted ancillary service, and will not be part of the per diem reimbursement rate.

ICF as well as SNF patients are currently receiving therapy as needed. An increase of about 20% utilization is anticipated, primarily for ICF patients.

Estimates of additional costs were derived from information from the Delaware Division of Public Health, Office of Health Facilities Licensing and Certification, and a review of therapy reimbursement.

IV. MEDICAL DIRECTOR

Average $66/hour for contractual services x 5 hours per month

$330 per month x 12 months = $3,960 per year for Medical Director

All Delaware nursing facilities are currently required to have Medical Director. Many will need to expand the responsibilities of the designated position.

12 facilities to increase Medical Director hours under contract from an average of $720/ mo to $1050/ mo. Increase represents $3,960 per facility per year.

The cost estimate for the Medical Director was based on information from the Medicaid review nurse, who projected the number of hours required and the average hourly reimbursement, and called a number of facilities to determine how this requirement would be met. The number of facilities effected was estimated by the state nursing facilities association.

V. RESIDENT’S RIGHTS

A. Resident Personal Funds: 8 hours/day x 1.5 days/mo x 12 mo/yr x $12.50/hr = $1,800 per year

Estimated 20 facilities will increase their bookkeeping staff to maintain records of interest bearing accounts, calculate interest, and produce quarterly statements.

Most likely approach to this requirement will be to employ temporary bookkeeping services.

Other facilities will absorb this requirement into their current bookkeeping staff.

This is the estimate of the Medicaid review nurse, who contacted a number of facilities to determine how this requirement would be met.

B. Other Resident’s Rights:

The following patient’s rights are not expected to result in additional costs for the nursing facilities:

1. Notice of Rights and Services

2. Rights of Incompetent Residents

3. Transfer and Discharge Rights

4. Access and Visitation Rights

5. Equal Access to Quality Care

6. Admissions Policy

No additional costs are anticipated for nursing facilities to implement other resident’s rights. Most state regulations concerning specific patient’s rights are the same as or more stringent than the Federal requirements. Those rights that are not addressed specifically as individual requirements in the state regulations, are protected by the Delaware’s Patient Bill of Rights.

STATE OF DELAWARE

STATEMENT OF REIMBURSEMENT COST FOR SKILLEDAND INTERMEDIATE CARE NURSING FACILITIES TITLE XIX

1. FOR THE PERIOD: TO:

2. NAME OF FACILITY

STREET ADDRESS

CITY, STATE, ZIP CODE

3. Name and telephone number of person to contact in case of questions concerning this report:

NAME:

TITLE:

TELEPHONE NUMBER:

4. TYPE OF ENTITY: (check one only)

A. Corporation

B. Individual Proprietorship

C. Non-Profit Organization

D. Partnership

E. State Facility

F. Other (Describe)

Under penalties of perjury, I declare that I have examined this Statement of Reimbursement Cost, including accompanying schedules, statements and adjustments and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than facility personnel) is based on all information of which preparer has any knowledge.

5. Your signature: Date: Title:

6. Preparer's signature: Date: Company or Organization Name:

Street address:

City, State, Zip Code:

9 DE Reg. 978 (12/01/05)(Final)