Updates for Michigan Providers of Long Term Care Services (November 2007)


Medicaid Updates

Budget and Rate Setting

As a result of the significant efforts of providers and the industry associations, along with the support of Senator Roger Kahn, the State Budget was finalized without cuts to skilled nursing facilities. Therefore, rates for the year beginning October 1, 2007 will be calculated based on the existing reimbursement methodology without additional limitations. Providers should receive their rate letters later this month with the rate determination computed based on the cost report that ended during calendar 2006.

Following are the various limits that apply to rates for the period October 1, 2007 through September 30, 2008:

Hospital Leave Day rate increased to $88.56 from $84.88

Support To Base Ratio Limits:

As noted, above there was a significant increase in both the variable cost limit and the classwide average cost. Most providers would agree that costs have been increasing, particularly in the areas of employee benefits, utility costs, and costs associated with regulatory compliance. However, it should also be noted the significant increase in the Class I VCL may be partially due to declining occupancy levels for some providers which results in an increase in per resident day operating costs at these facilities.

The Budget also included provisions for the Department of Community Health (DCH) to evaluate the implementation of a case mix system and assess the feasibility of providing services in a managed care environment. Reports on these topics, as well as a report on the progress of the pilot Long Term Care Connection programs, are due to DCH in 2008. Future implementation of these initiatives will increase the need for providers to demonstrate both a high quality of services delivered and an operationally efficient cost structure.

Rate Relief Opportunities

Facilities that are under the variable cost limit and have incurred significant increases in operating expenses in 2007 may be eligible for rate relief. Rate relief allows for accelerated rebasing (utilizing cost data from 2007 to establish October 1, 2007 rates in lieu of cost data from 2006) and is granted on a prospective basis. There are certain eligibility criteria that must be met. If you believe your facility could be a candidate for this opportunity, please contact Betsy Rust at 248.223.3437.

Non-Available Bed Plans

The Long Term Care Manual issued April 1, 2005 established more stringent guidelines in the ability of providers to temporarily escrow beds. Under the guidelines, non-available bed plans expiring on or after April 1, 2005 will be limited to two 12 month extensions. When a provider’s initial or extended non-available bed plan ends, the nursing facility must return the beds to service or decertify the beds from Medicaid participation. Under these rules, some providers may have non-available bed plans that will not be renewable under the regulations. However, there is a provision that a provider may request a grace period after the final extension period if the provider can demonstrate progress to place the non-available beds into resident care service. The request for a grace period must be made to LTC Services 30 calendar days prior to the expiration of the final extension period.

We may soon begin seeing beds returning to the State as the escrow periods expire. Therefore, it may be wise to be prepared for the opportunity to acquire additional beds for your facility, if it would be beneficial. Planning in advance will allow time to consider the many possible configurations to ultimately find the best plan for your campus.

Provider Tax Rates

The provider tax rates will be determined by DCH after all of the Medicaid rates and related Quality Assurance Supplements have been calculated.

Medicare Updates

As we noted in a previous e-bulletin, the Medicare rates for October 1, 2007 were favorable for Michigan facilities. Subsequent to the original final rule, minor corrections were published. The attached schedule includes the corrected rates.