Ohio Budget — Medicaid Overview

As expected, this year’s biennial state budget bill, House Bill (H.B. 66), will have a major impact on the operations and profitabilit y of many health care providers in the state of Ohio. As many trade associations have stated, the new catch phrase is "Rebalancing," which is a shifting of public dollars from "institutional" care to home and communit y-based care (HCB). The following are some of the highlights of H.B. 66 that will shape the future of the continuing care industry.

Nursing Home Reimbursement FY2006:

• FY2006 rates will be frozen at the 6/30/05 facilit y rate. This means for 7/1/05 - 6/30/06 dates of service, the facilit y’s Medicaid rate will be the same rate as on 6/30/05.
• No acuit y adjustment will be made during FY2006. The facilit y’s 12/31/04 case-mix score used to set the 6/30/05 rate will continue without any adjustment for changes in acuity.
• The franchise permit fee will be increased by $1.95, to $6.25. Nursing facilities will receive a $1.95 add-on in addition to the 6/30/05 frozen Medicaid rate.
• H.B. 66 allows for rate adjustments in FY2006 (however, ODJFS still needs to write the rules governing the rate adjustments) in certain situations for capital expenditures not ref lected in the provider’s June 30, 2005 rate. Some examples include:
  • A change of provider (CHOP) that was completed on or before June 30, 2005.
  • A capital project for which a certificate of need (CON) was required, if the application was filed on or before 6/30/05 and money was expended for the project by 6/30/05.
  • A capital project for which a CON is not required, if the ODH issued a determination of nonreviewability for the project on or before June 30, 2005, with money being expended for the project before that date.
• Except as listed above, H.B. 66 provides for the following situations:
  • For a CHOP occurring in FY2006, the new provider will be paid the previous provider’s rate.
  • For a capital project completed during FY2006, the provider will continue to receive the same rate as before the project was completed.
  • A new nursing facilit y entering the program in FY2006 will receive the statewide median rate.

Nursing Home Reimbursement FY2007:

• FY2007 will begin the transition toward the new pricing system. Providers will be limited to a 2 percent
• increase or decrease.
• Acuit y adjustments will be made semi-annually.
• No rate adjustments will be made for CHOPs or capital projects occurring during FY2007.
• A new nursing facility will receive the price for its peer group

Nursing Home Reimbursement FY2008 and Beyond:

• Continued transition to the new pricing system with the methodology to be defined by the General Assembly in the future.
• ODJFS has proposed a continued phase-in of a rate adjustment limited to an increase/decrease of 5 percent for 2008, 7 percent for 2009, 10 percent for 2010, with full implementation in 2011.

ICF/MR Reimbursement:

• ICF/MR rates will be frozen at the June 30, 2005 rate.
• There will be no adjustments for acuit y in FY2006 or FY2007.
• There are no provisions for rate adjustments for CHOPs or capital projects during FY2006.
• New ICF’s/MR in FY2006 will receive the statewide median rate.
• Due to the elimination of the CAFS program, facilities will receive an add-on of approximately $32.00 per day to assist in covering these additional costs.
• While Governor Taft proposed to eliminate the ICF/MR benefit and establish a waiver program, the final version of House Bill 66 creates a pilot program. There will be a three year pilot waiver program which will include 200 beds. The pilot can not be expanded into a statewide program without approval from the General Assembly along with the federal government.

Miscellaneous items:

• Medicaid may recover overpayments up to five years after the fiscal year in which they were made.
• The certificate of need (CON) moratorium is continued. Projects may not be approved for facilities with life safet y code waivers or violations unless the proposed project will eliminate those violations or waivers.
• The ODH may revoke licenses of operators with a "pattern of noncompliance" and prohibit those operators from receiving the transfer of additional beds.
• Require ODJFS to apply for a federal waiver to allow a 5-year look-back period for asset transfers. Also, to expand the definition of estate for purposes of estate recovery to include assets that pass outside of probate.
• There will be 1,800 slots available for the assisted living waiver program. The program is expected to start in FY2007. Currently any licensed residential care facilit y (RCF) is eligible to serve as a provider in the waiver program; however restrictions or requirements will be forthcoming. Only nursing facilit y residents are eligible to participate; RCF residents are not eligible.
• Depreciation recapture will be 100 percent regardless of the how long the seller owned the facility.

As further details become available we will pass those along to you. If you have any specific questions please contact Patrick McCormick or Denise Gadomski at 216.523.1010.