AGING AND DISABILITY SERVICES ADMINISTRATION
2009 NH "Dear Administrator" Letters
March 27, 2009
ADSA: NH # 2009-001
SUBJECT: APRIL 1, 2009 ADJUSTED MEDICAID PAYMENT RATE
Dear Nursing Home Administrator:
The Rate Computation Worksheet for your facility’s April 1, 2009 adjusted Medicaid payment rate is enclosed.
In addition to the normal contents of this letter, I would like to bring two issues to your attention:
Application of the “budget dial” under RCW 74.46.421
A “Notice of Adjustment of Medicaid Nursing Facility Rates Pursuant to RCW 74.46.421” was sent to all facilities on February 23, 2009. As explained in that notice, it was necessary for the Department to apply the so-called “budget dial” to the April 1 rates. The budget dial figure that governs these rates is the statewide weighted average payment rate of $163.72, which was set by the Legislature on February 18, 2009 when it amended the state’s supplemental budget. By law, the Department was required to ensure that, when considered over the entire State Fiscal Year 2009 (running from July 1, 2008 to June 30, 2009), Medicaid payments to nursing facilities did not exceed that figure.
To comply with the statute, the Department applied a “percentage reduction factor” (PRF) of 10.4025% to all rate components. The Department has calculated that implementation of this PRF will result in a statewide average payment rate of $163.72 for all of SFY 2009 – that is, for the entire fiscal year, Medicaid payments to nursing facilities will be at the budget dial, and the state’s appropriation for SFY 2009 will be spent.
Rate adjustments pursuant to RCW 74.46.421 can be made only prospectively. Given that, and given the legal requirements for notice to the facilities, April 1 was the earliest that the Department could apply the dial to rates. Accordingly, the entire twelve-month effect of the budget dial was telescoped into the rates for the three months beginning April 1.
The Department recognizes the challenge this poses for facilities, but there was literally no better alternative. Looked at over the entire course of SFY 2009, total Medicaid payments to nursing facilities will be less than 1% below the level set by the Legislature in the supplemental budget passed in 2008, where the budget dial was set at $165.04.
The PRF was applied to the rates of all facilities, even those whose rates were below the budget dial amount, as required by the statute.
The PRF was not applied to the low-wage worker add-on of $1.57 per Medicaid patient day, since that was paid as an add-on from a separate appropriation for that specific purpose.
Adjustment of rates in relation to the VRI issue
The February 23rd notice also explained that the Department was extending a ruling on vendor rate increases to all facilities as of July 1, 2008 rates. Originally, the intent was to amend facilities’ rates for the first six months of that period – that is, from July 1 to December 31, 2008 - on the basis of “for settlement only.” That meant facilities would not receive that money until the preliminary settlement process later this year. Rates for the quarter beginning January 1, 2009 have already been amended, and facilities should have seen those higher rates reflected in Remittance Advices sent beginning March 9 or so.
However, the Department has heard from several facilities, as well as both associations representing nursing facility operators in the state, that the proposed April 1 rate adjustment due to the budget dial would cause cash flow problems at some facilities. Accordingly, because of the circumstances the Department is making an exception to the method by which it will pay facilities the higher rates resulting from the VRI issue for the period from July 1 to December 31, 2008. Working with the Health and Recovery Services Administration, ADSA will do a “mass adjustment” to the rates of all facilities effective July 1, 2008. Instead of receiving their increased payments for the July 1 to December 31, 2008 period in the form of larger preliminary settlements later this year, facilities will see that additional money included in their Remittance Advices to be issued over the next 3 to 6 weeks. The Department hopes that during the April 1 quarter the additional payments in these Remittance Advices will help to mitigate the effects of the rate reduction made under RCW 74.46.421.
The department calculated your facility’s April 1, 2009 adjusted rate using your facility’s Medicaid Average Case Mix Index (with defaults) from the 4th quarter of 2008 (October through December 2008) final RUG report. The department calculated your facility’s July 1, 2008 rate using your facility’s Medicaid Average Case Mix Index (with defaults) from the 1st quarter of 2008 (January through March 2008) final RUG report.
If you wish to request an administrative review conference in relation to your April 1, 2009, or any subsequent adjusted rate, please keep in mind WAC 388-96-904, the regulation that controls such requests. The regulation provides in part:
- The contractor’s request for administrative review shall:
- Be signed by the contractor or by a partner, officer, or authorized employee of the contractor;
- State the particular issues raised; and
- Include all necessary supporting documentation or other information.
- After receiving a request for administrative review conference that meets the criteria in subsection (1) of this section, the department shall schedule an administrative review conference. The conference may be conducted by telephone.
- At least fourteen calendar days prior to the scheduled date of the administrative review conference, the contractor must supply any additional or supporting documentation or information upon which the
contractor intends to rely in presenting its case. In addition, the department may request at any time prior to issuing a determination any documentation or information needed to decide the issues raised, and the contractor must comply with such a request within fourteen calendar days after it is received…The department shall dismiss issues that cannot be
decided or resolved due to a contractor’s failure to provide requested documentation or information within the required period.
(emphasis added)
The department will enforce this regulation in responding to requests for administrative review. Requests that do not state the issues with particularity, or that are not supported by the required documentation or information, will be denied or dismissed.
Further, bear in mind that the entire appropriation for Medicaid payments to nursing facilities in SFY 2009 has now been committed. At present there are no funds to pay any increased rates for any portion of SFY 2009, and the Department will not enter any rate into the system that would result in overspending of the amount set by the Legislature.
The department is no longer mailing the RUG reports. You can access your 4th quarter 2008 final RUG report or any other RUG report on line by using the directions located at http://www.adsa.dshs.wa.gov/Professional/MDS/documents/RUGreportsOnline.doc.
Please call your Medicaid rate analyst or Edward Southon, Nursing Home Rates Section Manager, at (360) 725-2469 if you have any questions about this letter.
Sincerely,
Ken Callaghan, Chief
Office of Rates Management
ljb
Enclosures
