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The Rotenberg Report – Managing Changes in the Medicaid Reimbursement System for Nursing Homes

From “Rebasing” to Statewide Pricing After several tumultuous years of rebasing uncertainty the Medicaid reimbursement system achieved one major accomplishment – CERTAINTY! After many meetings of the Joint Association Task Force (JATF) and the Department of Health, the Statewide Pricing was implemented for 2012. Although hardly any nursing homes were totally satisfied, we finally had a rate that we could count on. The update of the base period methodology from 1983 to 2002 that was processed in 2011 resulted in major changes to the system and large retroactive adjustments for many facilities. These changes created an extremely tentative and uncertain environment where facilities had no way of knowing what their Medicaid rates were currently or what they were going to be in the future – causing paralysis in the industry. The Statewide Pricing system changed this and established a six year transition that will allow facilities to effectively plan for the changes in their revenue stream and effectively manage their operations. What is Statewide Pricing? The Statewide Pricing methodology is a pricing system based upon a 2007 base period that utilizes both regional and facility specific data to bring rates closer together within a region. Hospital- based and 300 bed-plus facilities still receive a partially enhanced rate. Stability is achieved through a six year phase in where rates cannot go up or down by more than 1.75%, 2.5%, 5%, 7.5% or 10% with the full implementation in year 6 (2017). What’s in store for 2013? Year two of Statewide Pricing moves the transition process from a corridor of 1.75% to 2.5%, so facilities should receive very minor adjustments to their rates from 2012 to 2013. After updating for 2013 capital, facilities should be able to take their 2011 rate and adjust for the 2013 impacts that were published last year to arrive at their 2013 rates. In addition, facilities need to be aware that 2013 will be the first year for “Pay for Performance” through Medicaid’s Quality Pool program. Included in the 2012 and 2013 rates is approximately $1.70 per day that represents “Quality Pool” money. Facilities need to be aware that they can either increase or decrease this amount based upon how they perform according to the Quality Pool criteria. What can I do to increase my rate? By far the biggest driver in the current methodology is a facility’s Medicaid only case mix. Although, the CMI for the first half of 2013 is already set with the July, 2012 CMI, the second six months will utilize the January, 2013 CMI. Facilities should remain diligent in properly documenting and capturing the resources utilized through the MDS process. This will be especially important as RUGS creep and possibly scale-back issues may surface again. What should I be worried about? DOH will be rolling out an MDS audit process sometime in 2013 as they begin to deal with escalating case mix indices. Be prepared to justify your hard earned case mix gains. In addition, 2013 looks like another challenging year for budget issues, so it probably makes sense to establish reserves for potential global budget cuts. Look for Rotenberg HeathCare Consulting, LLC updates on a variety of issues including Medicaid reimbursement, rate appeals, cost reporting and grant opportunities. If you have any questions, please feel free to email or call us at: Rob Nasso (585)295-0540 Rnasso@efprgroup.com Kathleen Angelone (585)295-0570 Kangelone@efprgroup.com Rotenberg HealthCare Consulting 280 Kenneth Drive Rochester, NY 14623

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