Nursing Home Case Mix Workgroup Submits Recommendations

At the third and final Nursing Home Acuity Workgroup meeting last week, workgroup members presented the Department of Health (DOH) with a set of consensus recommendations that would update how Medicaid rates are adjusted for case mix over a period of several years. The plan calls for case mix updates to be frozen at the January 2019 level for the purposes of calculating July 2019 and January 2020 rates, with a transition to a RUG-IV-based model starting in January 2021. A stakeholder workgroup would continue to meet to help guide the process.

The workgroup was authorized by the 2019-20 State Budget and tasked with making recommendations on the methodology utilized to calculate case mix adjustments to nursing home rates by the end of June. Although the DOH stated position remains that the July 2019 methodology has been determined and that they do not have the authority to modify it, discussions with key policymakers continue on the potentially catastrophic financial implications of proceeding with the intended July change. The financial plan reflects savings of $123 million to the State ($246 million total impact, inclusive of federal funds) during State Fiscal Year (SFY) 2019-20 from the change.

Along with highlighting concerns about the financial impact, objecting to the retroactive nature of the change, and noting the lack of transparency regarding the July calculations, the workgroup recommends:

• Freezing and utilizing the same case mix used in January 2019 rates for developing July 2019 and January 2020 rates;
• Utilizing all Medicaid Minimum Data Set (MDS) assessments from July 2019 through December 2019 to calculate the case mix index (CMI) used in July 2020 rates;
• Continuing the acuity adjustment workgroup to assist DOH in developing and implementing a RUG-IV-based case mix methodology;
• Transitioning to a RUG-IV, 48-group model that would rely less on therapy minutes and more on need for nursing care to classify residents starting in January 2021;
• Recalculating case mix weights for the RUG-IV methodology using STRIVE staff time and New York State wage data along with a review of a possible update to wage equalization factors and base year costs used to calculate statewide prices;
• Reviewing the basis, need, and adequacy of special population add-ons while studying the implementation of the Medicare Patient-Driven Payment Model (PDPM) to determine whether elements could be used to inform the rate setting process in New York; and
• Establishing a phase-in period to facilitate a smooth transition to RUG-IV.

The current DOH intention is to calculate the CMI used to adjust July 2019 rates by averaging all MDS assessments submitted during the period Aug. 8, 2018 through March 31, 2019. An MDS filed during that period will be used in the calculation whether the resident remains in the home or is discharged. DOH will only use MDS assessments showing Medicaid as the payer (including Medicaid-pending and Medicaid managed care) and only those that collect sufficient information to allow a RUG category to be assigned.

While we and others continue to engage with top officials in an effort to reverse this and mitigate the fiscal impact, we urge members to be aware of the proposed methodology and to have an understanding of the potential impact it could have on their Medicaid funding.

The workgroup recommendations letter is available here.

Contacts: Dan Heim, dheim@leadingageny.org, 518-867-8383 or Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841