DMAS Prepares for Transition to Price-Based Payment

The Department of Medical Assistance Services (DMAS) is preparing to implement a new prospective payment methodology for nursing facilities effective July 1, 2014.  Based upon a unanimous recommendation by the DMAS Nursing Facility Medicaid Payment Workgroup and assuming approval by the 2014 General Assembly, DMAS intends to begin a four-year transition from the current cost-based payment methodology to a fully prospective price-based payment system.  The 2014 launch of the Commonwealth Coordinated Care program which will bring the majority of Virginia nursing facilities under managed care is cited as a key factor in moving to price-based Medicaid payment.

DMAS has posted Frequently Asked Questions on the DMAS website.

There will be significant changes for operating rates, but no substantive changes to Fair Rental Value (FRV), Nurse Aide Training Competency and Evaluation Programs (NATCEPS), and criminal records checks.  However, in order to make FRV rates fully prospective, DMAS has to change the timing and procedures for determining the FRV rates.  The changes include the following:

  • FRV rates will be established for the upcoming state fiscal year rather than the current provider fiscal year.
  • All freestanding nursing facilities will submit calendar year FRV reports, which will be separate from the cost report
  • DMAS will set fiscal year rates using the prior calendar year report by

o    Aging the assets to the fiscal year,
o    Using RS Means factors for the fiscal year,
o    Using rental rates for the fiscal year.

In the next few days, every nursing facility will receive instructions from Myers and Stauffer LC on submitting the FRV report for calendar year 2013 that will be used to set FRV rates for fiscal year (FY) 2015 (rates effective for dates of service July 1, 2014 thru June 30, 2015).  The FRV report consists of Schedules R and R-1 from the current cost report plus additional demographic information.  This report will be due by March 31, 2014.  In future years, DMAS will send instructions at the beginning of January and the report will be due at the end of February.  Myers Stauffer will settle this report and notify each nursing facility of its FY2015 FRV rate by the end of May.  It is very important to complete this new report and return it to Myers and Stauffer LC (through GoFileRoom) by March 31, 2014.  Otherwise, the facility may be underpaid for capital-related expenditures on or after July 1, 2014.

In addition, DMAS will develop a process for mid-year FRV updates when new beds have been added or a major renovation has been put in service.  The Department plans to release additional information on these procedures later.  

DMAS will be establishing an electronic mailbox for questions about all the changes to the nursing facility payment methodology, including changes to FRV.  DMAS will notify nursing homes when the mailbox is available.