2015/2016 Biennial Budget Signed; Medicaid Price-Based Nursing Facility Payment System to Begin Phased Implementation July 1

Budget provisions related to Medicaid Nursing Facility payment have been finalized and approved by the General Assembly and the Governor.  As previously reported, the two-year budget contains an estimated $81.4 million in “new” Medicaid funding for nursing facilities over and above current funding levels.  

The Department of Medical Assistance Services (DMAS) will implement both the new rebased and inflation adjusted rates and the new price-based payment system effective this Tuesday (July 1, 2014).  The price-based payment will be blended with the cost-based rates according to a four year phase-in:

SFY 2015 Price Based (25%) + Cost Based (75%) = facility rate
SFY 2016 Price Based (50%) + Cost Based (50%) = facility rate
SFY 2017 Price Based (75%) + Cost Based (25%) = facility rate
SFY 2018 Price Based (100%) = facility rate [Note – this will also be a rebasing year]

DMAS provided the rate calculations last week (labeled "Unofficial", as the budget was not yet approved).  It is our understanding that this information has been placed in the GoFileRoom for each facility.

The July 1 rates reflect facility-wide case mix and are scheduled to be effective through October 31, 2014.  Effective November 1, 2014 going forward, each facility’s case-mix neutral base rate coupled with individual RUGs case weights will determine payment on a claim by claim basis (the case mix adjustment is applied to the Direct Care portion of the total rate).  These November 1 base rates were also provided last week and should be in each facility’s GoFileRoom.

DMAS recently developed a set of slides designed to assist providers in understanding the new price-based payment methodology.  We understand that this information is available through the GoFileRoom library and encourage our members to review this educational resource.

While cost reporting becomes less important in final payment since the new payment methodology is fully prospective for Medicaid (even during the phase-in), it is important to note that cost reports will remain the basis for rebasing rates every three years.