Medicaid Nursing Home Reimbursement

1. Medicaid Nursing Home Reimbursement Mark A. Leeds, Director Long Term Care and Community Support Services Maryland Department of Health and Mental Hygiene Oversight Committee on Quality of Care in Nursing Homes and Assisted Living Facilities December 14, 2010

2. Nursing Home Reimbursement • The FY 2011 budget request did not allow for a rate increase for nursing facility services. • A 2 percent rate increase was enabled due to adoption of the increase in the Quality Assessment. • Base rates remained frozen and new data were not used to calculate rates. FY 2009 ceilings and rates remained in effect, and the 2 percent rate increase was achieved by reducing the adjustment to net payments in the administrative/routine, other patient care, and capital cost centers from 7.796 percent to 4.158 percent.

3. Nursing Home Reimbursement • Nursing Cost Center (SB 794, 2000) • Initiative of the Nursing Home Quality Task Force. • Made available $60 million to enhance nursing services during fiscal years 2002-2003. • Providers had flexibility to spend funds on direct care wages, staffing, or benefits. • To the extent that providers spent the money, it stayed in the reimbursement system.

4. Nursing Services Trends (since SB 794) • Nursing staff hours per resident increased during the first three years after SB 794 but have since stabilized. • Wages have increased for nursing staff. • Agency staff utilization has decreased.

8. Nursing Facility Quality Assessment • In order to restore prior cost containment reductions, the General Assembly adopted legislation (SB 101, 2007) to initiate an assessment on nursing facilities in Maryland based on non-Medicare patient days. • The amount assessed is not to exceed 2 percent of the operating revenue for all nursing facilities. • CCRCs and facilities with fewer than 45 beds are not subject to the assessment.

9. Nursing Facility Quality Assessment • HB 151/SB 141 — Budget Reconciliation and Financing Act of 2010 • Authorized increasing Quality Assessment to 4 percent of revenue. • Nursing homes will pay $46.1 million in additional assessments compared to FY 2010. • $15.5 million will provide the State share for partial reimbursement of increased facility assessment costs ($31 million total funds). • $12.2 million will provide the State share for a 2 percent rate increase ($24.4 million total funds). • $18.5 million in savings to the State. Approximately $1.3 million will fund the State share for the first year of the pay for performance (P4P) implementation.

10. Nursing Facility Quality Assessment • Assessment rates per diem increased in FY 2011 from $6.62 to $14.01 for most providers. • Certain nursing homes are negatively affected from this increase and are not retrieving sufficient additional funding through increased reimbursement to offset their assessment costs.

11. Pay for Performance (P4P) • SB 101 (2007) stated that 25% of the revenue from the Quality Assessment is to be distributed to nursing facilities “based on accountability measures that indicate quality of care or a commitment to quality care.” • SB 677/HB 809 (2008) delayed implementation of accountability measures and required the Department to develop a plan for accountability measures to use in a P4P program. • The plan was submitted to the General Assembly on December 1, 2008 • In accordance with HB 782/SB 664, 50 percent of the amount designated for P4P is to be distributed in FY 2011; 100 percent of the P4P funds is to be distributed in FY 2012.

12. Pay for Performance (P4P) • Components of the P4P model: • Staffing (40%) • Staffing levels and staff stability/turnover • Responses on Maryland Health Care Commission Family Satisfaction Survey (40%) • MDS Quality Indicators (16%) • e.g., percent of residents with pressure sores. • Employment of Infection Control Coordinator (2%) • Staff Immunizations (2%)

13. Pay for Performance (P4P) • For FY 2011, $2,560,000 will be paid to providers who qualified under P4P criteria. • A portion of this funding will be awarded to facilities based upon improvement from the previous fiscal year’s P4P evaluation.

14. Long Term Care Payment Advisory Committee (L-PAC) • The General Assembly, under HB 782/SB 664, required the Department, in conjunction with nursing home representatives and other stakeholders to assess the State’s long term care reimbursement methodology. • The assessment was to include recommendations to be reported to the General Assembly by October 1, 2010. • The L-PAC met on a monthly basis from September 2009 through June 2010 and evaluated long term care payment methodologies across the spectrum of services from home and community based services to nursing facility services.

15. Long Term Care Payment Advisory Committee (L-PAC) - Recommendations • The nursing facility payment methodology recommendations were as follows: • Move to a prospective payment system with no cost settlements. • Keep the current four cost centers; • Adjust for acuity utilizing RUGs; • Rebase annually for the nursing cost center and the other cost centers will be rebased less frequently; • Consider add-ons for HIV/AIDS and ventilator care; and • Continue to pay separately for therapies.