Nursing Home Reimbursement Update
(June 18, 2024) In a meeting with LeadingAge NY and other associations representing nursing home providers, the Department of Health (DOH) announced that January 2024 Medicaid rates have been approved and updated the group on several other financial issues. Listed below are status updates for a number of items impacting Medicaid payments and adjustments.
2023 Medicaid Cost Report. DOH has posted the 2023 Nursing Home Cost Report software on the Health Commerce System (HCS). The report and associated certifications are due Aug. 19, 2024. The Dear Administrator Letter (DAL) is available here. In it, DOH points to some relevant resources and stresses that the use of third-party cost report software is NOT acceptable and may cause errors. If the cost report does not load correctly, it will be deemed unsubmitted by DOH, and the provider may be subject to penalty. We urge members, especially those with new Administrators or financial staff, to ensure that they have the necessary HCS permissions in place well in advance of the due date to allow for the timely submission and certification of the report.
Complete and accurate cost reports are always important for the correct calculation of the capital component of the Medicaid rate, which has updated annually based on a two-year lag. While cost report data has not been used to develop the operating component of the Medicaid rate since statewide pricing was implemented, given recent discussions of potential rebasing and/or methodology updates, members should ensure precision throughout the report given the possibility that the reported data may impact operating rates in the future. In addition, we urge members to provide complete and correct data on Schedule P (Staff Turnover), as it may impact eligibility for Advanced Training Initiative (ATI) funding.
When completing the report, members should also keep minimum spending requirements in mind and verify that costs are assigned to the appropriate cost centers. Although legislation enacted last year reduces the likelihood of penalties for homes that use low rates of contract nursing staff, the requirement that nursing homes spend at least 70 percent of revenue on direct care and at least 40 percent on resident-facing staff remain in effect. We expect that the vast majority of members will easily meet the 70 and 40 percent thresholds, especially when capital reimbursement is excluded from revenue.
Nursing Home Quality Initiative (NHQI). DOH has processed payment adjustments for the 2022 NHQI and has now posted the backup calculations on their website here. Payment adjustments will be made in Medicaid cycle 2444, to be released July 10, 2024. Outstanding Medicaid liabilities will be offset from positive adjustments. For those with negative adjustments, DOH will begin recoupment at 15 percent starting with cycle 2444. Please note that specialty facilities and Continuing Care Retirement Communities (CCRCs) are excluded from the NHQI. The associated DAL is here, and more information is here.
January 2024 Medicaid Rates. The January 2024 Medicaid rates have been approved and are making their way to eMedNY. We will notify members when a Medicaid payment cycle has been assigned. Given that the State Budget has frozen case mix at the level reflected in July 2023 rates pending the implementation of a replacement acuity adjustment methodology, the updates to operating rates are limited to existing adjustments. These include minimum wage as well as an update to those prior year increases that are calculated as a percentage of the non-capital rate: the 1.5 percent increase in place since November 2018, the 1.0 percent increase effective April 2022, and the 6.5 percent increase effective April 2023. The update will also update the capital component based on capital costs reported in 2022.
April 2024 Rate Increase. The State is not yet ready to announce the methodology that will be used to distribute up to $285 million in nursing home funding included in the Fiscal Year (FY) 2025 State Budget. Medicaid State Plan Amendments (SPAs) for Medicaid fee-for-service funding changes effective April 1st are due to the Centers for Medicare and Medicaid Services (CMS) by the end of June.
Rate Appeals. The 2023 rate appeals are in Executive review. There are no new developments regarding historic appeals submitted for rate years 2009 through 2021 that providers were asked to review earlier this year.
Replacement Case Mix System. DOH formally announced that the State has contracted with Myers and Stauffer to develop a replacement Medicaid case mix adjustment methodology based on the Patient-Driven Payment Model (PDPM) used in the Medicare payment system. While no project timeline is available, the Department reiterated that this initiative is a top priority.
Outstanding SPAs. The Department reported no further developments regarding the three pending Medicaid SPAs of greatest interest to nursing home providers: the remaining 1 percent rate increase effective April 2023, the federal share of 2023-24 CINERGY, and public nursing home Intergovernmental Transfer (IGT) payments for 2023-24.
Safe Staffing Funding. DOH has been targeting June for distribution of the federal share of so-called safe staffing funding. Homes that spent at least 70 percent of revenue on direct care and at least 40 percent of revenue on resident-facing staff in 2020 qualified for the State share distribution. The additional qualifier that DOH seems not to have applied previously, but is applying in advance of distributing the federal share, is the profit cap. Members will recall that the minimum spending law also limits profit to 5 percent, so it may be that a facility that received State share staffing funding but had an operating margin greater than 5 percent in 2020 may not qualify for the federal share. We are seeking confirmation of this dynamic, although it is unlikely to impact many, if any, members. The State share distribution provided roughly $1,000 per certified bed for eligible homes; the federal share should be comparable.
Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841