Dear Administrator: 2007 Initial Rates
October 31, 2006
Dear Administrator:
Enclosed please find a copy of the Medicaid reimbursement rate computation sheets for your nursing facility for the period January 1, 2007 through December 31, 2007. The rate is an all-inclusive rate for services provided by your facility. The rate enclosed is based on costs recognized as reimbursable in 2007 and the Patient Review Instrument (PRI) data collection reflected in the latest approved 2006 Medicaid rate.
The 2007 Medicaid rate methodology continues to employ a modified pricing system, which combines the aspects of a pure pricing system with the principles of a cost-based system. The direct and indirect components utilize the principles of both reimbursement systems by comparing a facility's allowable cost to a base (minimum) and ceiling (maximum) price. The facility would receive the higher of the base price or their cost up to the ceiling. The following provides additional details of specific aspects of the 2007 rate calculation:
Trend Factor
Pursuant to Chapter 109 of the Laws of 2006 effective April 1, 2006 the U.S. Consumer Price Index (CPI) utilized in the 2006 trend factor will be reduced by .25%. The 2007 roll factor incorporates the final 2005, initial 2006 adjusted by (.25%) and the initial 2007 trend factors of 2.5%. The final 2006 CPI adjusted by (.25%) will be utilized when calculating the revised 2007 roll factors and will be incorporated in the 2007 hotline rates.
2007 Trend Factor Tables on Health Provider Network (HPN)
Copies of the 2007 roll factor tables are not included in this correspondence. The Department of Health (Department) is utilizing the Changes have been made to the calculation to reflect the following statutory provisions of the 2006/2007 Budget: 1) In accordance with PHL 2808 Section 22-a, a facility will not receive working capital interest reimbursement if the facility's 2005 RHCF-4 shows a withdrawal of equity, a transfer of assets or a positive net income. 2) In accordance with PHL 2808 Section 2-b(a)(iv), the real estate taxes / payment in lieu of taxes are now being reimbursed based on the amounts reported in the 2005 RHCF-4 and are included in the capital component. 3) In accordance with PHL 2808 Section 2-b(a)(vi), funding of depreciation will not be required in the rates for voluntary facilities. Effective with the January 1, 2005 rates and continuing for 2007, traceback percentages used in the calculation of allowable capital costs on Schedule VI of the rate sheet will utilize the stepdown traceback percentage from the RHCF-4 cost report being used for that rate year. This is a result of the health care industry adding or converting beds for the specialty units where separate Medicaid rates are calculated. By using updated RHCF-4 cost report traceback percentages, allowable capital costs are properly distributed to the appropriate service by an acceptable statistical methodology. This also insures that the facility will not be reimbursed more than 100% of their historical cost. Chapter 109 of the Laws of 2006, Section 2808 of the PHL has been amended to add a new subdivision 2-b. Pursuant to subparagraph (a)(ii) of this section, rates for the periods 2007 and 2008 shall be further adjusted by a per diem add-on amount, as determined by the commissioner, reflecting the proportional amount of each facility's projected Medicaid benefit to the total projected Medicaid benefit for all facilities of the imputed use of the rate–setting methodology set forth in statute for the 2009 rates. For those facilities that do not receive a per diem add-on adjustment, pursuant to this subparagraph, rates shall be further adjusted to include the proportionate benefit, as determined by the commissioner, of the expiration of subdivision 16 of 2808 (Productivity and Efficiency Adjustment) and subdivision 14 of Section 2808 (Administrative and Fiscal Cap). The aggregate total of the rate adjustments made pursuant to Section 2808 shall not exceed $137,500,000 for 2007. The per diem add-on is included on schedule VII as 2007/08 Rebasing Transition Adjustment. The rate of return on net investment for 2007 is 5.07% based upon the 26 week U.S. Treasury bill rate in effect on September 14, 2006 in accordance with Part 86-2.28. The rate of return on real property equity, calculated pursuant to Part 86-2.21 is 4.90 % for 2007. Reimbursement for these reported costs are not included in the initial 2007 rates but will be included in the 2007 hotline rates. The 2006 health recruitment and retention payments and nursing home quality improvement demonstration grant awards are not included in the 2007 rates. These adjustments will, if possible, be included in the hotline rates. These are 24-month grants that have 8 months remaining for 2007. The eight-month grant amount has been included over the 12-month period ending December 31, 2007. In accordance with Part 86-2.9 of the Commissioner's Administrative Rules and Regulations, Adult Day Health Care per visit rates for 2007 have been held to a ceiling based upon 65% of the SNF rate in effect on January 1, 1990. The 2007 roll factors used to calculate the operating component of the Adult Day Health Care rate include the final 2005, initial 2006 adjusted by -.25% and initial 2007 factors. The final 2006 CPI adjusted by -.25% will be utilized when calculating revised 2007 roll factors and will be incorporated in the 2007 Hotline rates. As always, the Office of Health Systems Management has made every attempt to ensure that your rate calculation is complete and accurate. However, mistakes do occur and the Bureau of Long Term Care Reimbursement has again instituted an accelerated administrative process to correct any errors. This process, the "Rate Hotline," will be instituted again this year and will be in effect until December 8, 2006. Facilities may telephone the Bureau of Long Term Care Reimbursement with inquiries as to the accuracy of the rates; however, no rate change will be made unless the Bureau has received such inquiry, in writing, properly documented in accordance with Subpart 86-2. Any hotline appeal items that alter the 2005 cost data require that the annual reports be re-filed through the If you wish to appeal the initial 2007 rate computations, the appeal must be filed with this office and postmarked no later than March 15, 2007. All appeals should be on forms supplied by this office (copy enclosed). In order to file an appeal with this office, the following information should be provided: 1. A cover letter, signed by the Operator or Chief Executive Officer, containing a summary of the items of appeal. Cover letters from attorneys or fiscal consultants representing the nursing facility are not acceptable. 2. The appeal packet, form DOH-2466 (copy enclosed) must be completed. The facility should complete items 1-6 on page 1. Page 2 should be duplicated as many times as necessary so that only one item of appeal appears on each page of Section 10. If more space is needed, summarize the item of appeal on page 2 and attach any further detail on your own schedule. Make sure the facility name appears on each page 2. All information on the form should be typed. 3. Supporting schedules or any other pertinent data not related to the annual cost report may be attached. 4. Any item of appeal that alters the cost data for the operating base year report must meet the same certification requirements as the original document. (See Parts 86-2.5 and 86-2.6.) 5. Any item of appeal that alters the cost data for the 2005 annual cost report must be filed through When submitting an appeal, please be advised that the New York State Commissioner of Health may consider only those applications for revisions of certified rates which are set forth in Sections 86-2.13 and 86-2.14 of the Commissioner's Administrative Rules and Regulations. Issues raised in a request for appeal that do not meet the criteria of an acceptable appeal under 86-2.13 or 86-2.14 but rather pertain to the methodology used to promulgate Medicaid rates will be rejected. The Medicaid rate methodology is based on the provisions of Subpart 86-2 and objections to regulatory provisions are not issues that can be resolved through the administrative rate appeal process. Please be advised that the software for the 2006 RHCF-4 cost report will be available through the Health Provider Network by April 1, 2007. The deadline for filing the 2006 annual cost report will be May 31, 2007. This is to provide facilities with sufficient advance notice so that you may plan ahead and take the appropriate action necessary to ensure the timely filing of the report. If you have any questions relating to the calculations of your Medicaid rates Sincerely, Mark H. Van Guysling The following are instructions on how to access trend and roll factors from the Health Provider Network (HPN). The HPN is a secured Internet network which health providers will need to enroll in, to gain access to functions associated with this network. Individuals that have an HPN account will also need to receive access to the trend factor function. If you have an HPN individual account and do not have access to the trend factors, please complete the electronic access request form and access will be granted within (3) three days. A notice of access will be delivered to your e-mail address listed on the HPN network. Any questions on the access to the trend/roll factor tables should be directed to Mr. Russ Smith at (518) 473-4421.Capital
Rebasing Transition Adjustment – Effective January 1, 2007
Return on Investment and Real Property Equity for Proprietary Facilities
Hepatitis B Vaccine Costs and Measles & Rubella Immunization Expenses
Health Recruitment and Retention Payments & Nursing Home Quality Improvement Demonstration Grand Awards
Dementia Grants (if applicable)
Adult Day Health Care Rates
Rate Hotline
Appeals
2006 Annual Cost Report
Assistant Director
Division of Health Care Financing
Enclosure(s)Attachment 1 - Electronic Access to Trend Factor Tables Via Health Provider Network (HPN)
