ICF/MR Reimbursement Update

With the passing of House Bill 66 (H.B. 66), the MR/DD industry was thrown yet another change to the funding of services for individuals with MR/DD. Just recently, the conversion of the Residential Facility Waiver (RFW) to Individual Options (I/O) Waiver occurred. Then the elimination of the Community Alternative Funding System (CAFS) happened at the same time H.B.66 was passed. Needless to say, the MR/DD industry is going through some changes, and by the looks of it, will continue to experience change into the next biennial budget.

Summary of H.B. 66 and Implications for ICF/MR Providers

• FY2006 and FY2007 rate settings will be frozen based on rates paid as of June 30, 2005. These rates are also based on the December 31, 2004 IAF score (or case mix score).
• Rates paid will be increased by ODJFS to reimburse facilities for active treatment day programming because of the termination of CAFS. This add-on is approximately $32.00 per day and varies depending on which county providers operate in.
• Changes of ownership after July 1, 2005 will receive the same rate paid to the existing operator.
  • Any transactions that occur regarding a change of ownership through a sale will be subject to depreciation recapture of 100%. What this means is if a provider sells their facilit y and there is a gain on the sale, the provider must pay back to ODJFS the amount of depreciation that ODJFS reimbursed the facility through the Medicaid rate, limited to the gain on the sale.
• There will be no rate adjustments for non-extensive renovations, new facilit y additions, etc. Currently the Ohio Health Care Association (OHCA) has filed a class action law suit to allow for capital rate adjustments due to capital projects that have been approved and started prior to July 1, 2005. Both nursing homes and ICF/MRs are included in this law suit.
• The frozen rates for FY2006 and FY2007, which were based on the 2003 Medicaid cost report, may be adjusted due to audit adjustments to the 2003 Medicaid cost report. This may result in more audits of the 2003 cost reports by ODJFS, and perhaps increased scope of the audits, thus it will be very important to make sure all records that support the costs on the cost reports have been kept and are readily available.
• H.B. 66 also enacted a pilot program to evaluate transitioning ICF/MRs into a waiver t ype system. This pilot program will consist of 200 beds (individuals) and will be conducted over three years. The pilot must be accepted by the General Assembly and the Centers for Medicare and Medicaid Services (CMS) before the new system can be placed in service.

Day Programming Environment
As mentioned on the cover, the state eliminated the CAFS program and created an add-on to the ICF/MR’s Medicaid rate that is approximately $32.00 per day and varies by county. This funding relates to the day programming for active treatment that was previously reimbursed by the CAFS program to the county boards. The challenge for providers is how to structure contracts with county boards or determine how to provide the day programming services themselves. The new rule states that the add-on for day programming is for "off-site" services. Because the money is being directly distributed to ICF/MR providers, it allows more options for both the providers and the individuals receiving the services. A provider basically has two options, 1) continue day programming through the county boards, or 2) provide the day programming themselves. With either option, there are several items that must be addressed.

• Contracts may be negotiated to ref lect the add-on through the Medicaid rate.
• Consider the effect of half-days or sick days where an individual may not attend the workshop. How is this handled in the contract?
• How is transportation covered? What about emergencies?

• Determining what is "off-site" still needs to be clarified in rule by the Ohio Department of Mental Retardation and Developmental Disabilities (ODMRDD). The following scenarios can help determine if you have an "offsite" location:
  • On the same campus as ICF/MR — if the building in which services are being provided is not licensed or certified, this may be considered off-site
  • Not on same campus but located "next door" — may be considered "off site" if the buildings are not licensed or certified
  • Building attached to ICF/MR — this is more unclear, however, if there is a clear separation between the ICF/MR and the other building, i.e. firewall separation, and that section is not licensed or certified, it may be considered "off-site"
• If the IP (individual plan) indicates that off-site day programming could be detrimental to the individual and in-house day programming is better suited for them, then this may allow in-house day programming to qualify for the services.

• ODJFS has added account 6700 to the Medicaid cost report in order to have costs relating to the day program services be reported.
• This may be the contract costs that a provider has with a county board.
• This may be any costs relating to services provided by the provider for day programming, including:
  • Wages, fringes, and payroll taxes
  • Transportation costs
  • Depreciation expenses relating to assets purchased for the use of the day program
  • Administrative overhead

There are currently no rules that indicate there will be a reconciliation of the costs in account 6700 to the rate received through the add-on. However, this does not mean there won’t be analysis of day programming costs and establish future add-on rates based on costs reported in account 6700.

Truly these times are historical with the number of changes that the MRDD industry has to endure. As further details become available we will pass those along to you. If you have any specific questions, please contact Pat McCormick at 216.523.1010 or Roy Cherry at 419.842.6108.