2000 Session

Budget Amendments - SB30 (Conference Report)

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Revise Nursing Home Capital Cost Payments (language only)

Item 319 #28c

Item 319 #28c

Health And Human Resources
Medical Assistance Services, Department of

Page 250, line 6, after "facility" strike "operating and".
Page 250, line 7, after "costs" strike "contingent upon actions taken by the".
Page 250, line 8, strike "General Assembly".
ACCOMPANYING BUDGET LANGUAGE:  “As a condition of this appropriation, beginning July 1, 2000, the Department of Medical Assistance Services (DMAS) shall increase the reimbursement rates in the current nursing facility operating payment system in order to:  (i) restore funding for the negative impact of the case mix adjustment resulting from the Patient Intensity Rating System (PIRS); (ii) reduce the occupancy standard to 90 percent for indirect and plant costs and remove the standard entirely from determination of direct care rates; and (iii) adjust the direct care cost ceilings to 125 percent of the peer group median.

The Department of Medical Assistance Services (DMAS) shall design and implement by January 1, 2001 a new nursing facility reimbursement system which shall incorporate the recommendations contained in the 1999 JLARC report on Virginia’s Medicaid Reimbursement to Nursing Facilities.  In designing and implementing the new reimbursement system, DMAS shall:  (i) continue the applicable changes to the current system as provided above; (ii) develop a price-based approach for the indirect care cost; (iii) utilize the federal case mix system, known as RUGS-III, for linking payment rates to the care needs of all nursing facility residents, including the specialized care residents; (iv) ensure that the methodology and calculations that use the case mix scores do not reduce the funding that is available system-wide; (v) ensure that the new reimbursement system includes peer groups based on bed size and geographic regions in determining Medicaid payment rates; (vi) develop a temporary hold-harmless provision during the phase-in period to ensure that nursing facilities do not receive less under the new system than under the old system for direct care operating costs; and (vii) develop a long-range plan to implement a totally prospective payment system which is tied directly to patient care needs, similar to the Medicare nursing facility reimbursement system.

As part of the ongoing process of administering and updating the new nursing facility reimbursement system, the Department of Medical Assistance Services (DMAS) shall: (i) review nursing facility cost data annually in order to adjust the upper payment ceilings for direct and indirect care operating costs; (ii) review the occupancy standard every two years to determine whether further reductions are needed based on statewide occupancy trends; (iii) develop a stronger validation process to help ensure that resident assessment data are not falsified in order to receive increased reimbursement; (iv) examine, in cooperation with the Department of Health and nursing facility providers, the management and operational practices of the facilities that consistently perform well on the nursing facility survey to identify best practices; (v) develop a work group with the Department of Health and the major stakeholders to develop a plan for implementing quality of care incentives; and (vi) combine its nursing facility cost and quality of care databases on a routine basis with the Department of Health to monitor the impact of Medicaid nursing facility level of reimbursement and reimbursement methodology on the provision of quality care.  The Department shall submit a report to the Governor, the Chairmen of the Senate Finance Committee, the House Appropriations Committee, and the Joint Commission on Health Care by September 15, 2000 on the implementation of the revised reimbursement rates and the status of the new reimbursement system.”

(This amendment modifies language in the introduced budget that required the Board of Medical Assistance Services to implement revised capital and operating reimbursement policies on July 1, 2000, contingent upon action by the General Assembly. This amendment requires revisions in capital reimbursement policies by that date. The reference to operating costs is deleted in this amendment. A separate companion amendment in Item 319 specifies reimbursement policies for direct care operating costs and provides additional funds for that purpose.)