1966 Rate setting methodology for consolidated and person/family directed support waiver- and base- funded services for individuals participating in the Office of Developmental Programs service system effective November 15, 2011, through June 30, ...

Rate Setting Methodology for Consolidated and Person/Family Directed Support Waiver- and Base-Funded Services for Individuals Participating in the Office of Developmental Programs Service System Effective November 15, 2011, through June 30, 2012

[41 Pa.B. 6173]
[Saturday, November 12, 2011]

 The purpose of this notice is to announce the final payment rates for Fiscal Year (FY) 2011-2012 for Nontransportation Cost-based Services and Per Diem and Trip Transportation cost-based services funded through the Consolidated and Person/Family Directed Support (P/FDS) waivers. These rates also apply for services when they are provided with base funding at the waiver funded service location. These rates are effective November 15, 2011.

Background

 Beginning in 2008, the Department of Public Welfare (Department) began implementation of a Statewide rate setting system to establish provider payment rates consistently across this Commonwealth. The Department continues to move in a direction to align rates and rate-setting methodologies across programs.

Rate Setting Methodology for Per Diem and Trip Transportation Cost-based Services

 The final payment rates for the period November 15, 2011, through June 30, 2012, for Per Diem and Trip transportation services were developed from the data in the Year 3 transportation cost reports (Version 6.0 FY 2009-2010 Historical Expense Period) submitted by providers and approved in the desk review process, when available, where the procedure codes in the transportation cost reports were the same as those entered in the Services and Supports Directory (SSD) as of January 2011. The Department reviewed the transportation cost reports submitted by the transportation providers and compared the services where costs were allocated in the cost report to the services offered in the SSD.

 Where there was an exact match between the procedure code reported on the cost report and the procedure code in the SSD, the cost-based rate was assigned. If there was not an exact match between the cost report and SSD, the area-average rate was assigned to the services offered in the SSD but not reported on the cost report. If the transportation provider did not submit a cost report, the lowest rate was assigned for the services offered in the SSD. If there was a new provider that started services in FY 2010-2011 and did not have historical FY 2009-2010 experience, the area average rate was assigned. If a provider was signed up in the SSD to provide Per Diem and Trip transportation services but they are considered a vendor or a public carrier or are no longer providing Per Diem or Trip transportation services and have not yet been deleted from the SSD, $0.01 was assigned as the rate.

Rate-Setting Methodology for Nontransportation Cost-based Services

 The following methodology applies to the final FY 2011-2012 cost-based payment rates developed from expenses and utilization reported in approved Year 3 cost reports (that is, based on the FY 2009-2010 historical expense period), subject to the adjustments described as follows. The cost-based rates effective for services delivered between November 15, 2011, and June 30, 2012, are based on the FY 2011-2012 cost-based rates which were assigned at the Master Provider Index—Service Location Code—Procedure Code/Modifier level based on the following methodology.

 After the unit costs for each cost-based procedure code were adjusted, a total cost of living increase of 0% (0% for FY 2009-2010 and 0% for FY 2010-2011) was applied to the FY 2009-2010 unit costs for each procedure code to establish each provider's proposed payment rates for FY 2011-2012.

Outlier Review Process

 The ''total unit cost'' for a provider and service is equal to the total expenses for that provider and service divided by the total units for that provider and service. Note that total expenses and units are based on restated cost reports, where applicable (that is, when resubmitted to reflect adjustments that resulted in updated expenses). The following total expenses are listed by service type:

 • Licensed Respite Out-of-Home services: Total expenses are equal to the cost report's Schedule A, Line 18 plus Schedule A, Line 24.

 • Residential—Eligible, Nonresidential and all other Respite services: Total expenses are equal to the cost report's Schedule A, Line 18.

 • Residential—Ineligible services: Total expenses are equal to residential occupancy expenses on the cost report's Schedule A, Line 24, less use allowance (UA) expenses, less Schedule A, Line 17.

 o Based on an analysis conducted by the Department, Residential-Ineligible UA expenses in Column G on Schedules E, E-1 and E-2 of the cost report were removed from residential occupancy expenses on Schedule A, Line 24 of the cost report. (Note, the UA expenses were removed from the Residential-Ineligible procedure codes proportionately, based on the distribution of residential occupancy expenses on the cost report's Schedule A, Line 24).

 The total utilization for residential services is equal to the cost report's Schedule A, Line 19 (Units Available) and for all other services is equal to the cost report's Schedule A, Line 21 (Units Provided). Final utilization includes any applicable utilization adjustments based on a review of the cost report data compared to available Home and Community Services Information System and PROMISe data.

 The Department identified and adjusted for outliers at the total unit cost level for each of the providers' cost-based services submitted in Year 3 approved cost reports. For all services with 20 or more unique unit costs (that is, unit costs by provider and service from separate, approved Year 3 cost reports), the Department applied the following process for each service:

 • The average and standard deviation (SD) values were calculated, excluding extreme outliers, based on the total unit costs for all providers from the Year 3 cost report data.

 • Total unit costs that were greater than the average plus one SD or were less than the average minus two SD were flagged as outliers.

 • For total unit costs that were flagged as outliers and were within +/- 5% of the provider's FY 2010-2011 payment rate for the procedure code, the total unit cost was accepted and did not undergo a review.

 • For total unit costs that were flagged as outliers and were not within +/- 5% of the provider's FY 2010-2011 payment rate for the procedure code, the total unit cost did undergo a review.

Total Unit Cost Review

 The Department performed a review of all total unit cost outliers that were not within +/- 5% of the final FY 2010-2011 rate. The Department established a review process and review procedures to ensure consistency across the Commonwealth. For Residential—Eligible services, the review consisted of an evaluation of the Individual Support Plans (ISPs) for waiver participants receiving services at residential service locations impacted by the outlier unit cost. For all other services, a review (without evaluating specific ISPs) was performed. The review allowed the Department to determine whether the outlier unit cost was justified based on the provider cost report submission and historical expenses. Based on the findings of the review, the following criteria were applied:

 • Total unit cost outliers that were justified based on the ISP review or the review without ISPs were not adjusted.

 • Total unit cost outliers that were greater than the average unit cost plus one SD and not justified based on the ISP review or the review without ISPs were adjusted to the maximum unit cost below the average plus one SD for that service.

 • For Residential—Eligible services, total unit cost outliers that were less than the average unit cost minus two SD and not justified based on the ISP reviews were adjusted to the minimum unit cost above the average minus two SD for that service.

 o For all other services, no review was performed on outliers less than the average unit cost minus two SD and all were adjusted to the minimum unit cost above the average minus two SD for that service.

 The average unit cost, the maximum unit cost below the average plus one SD, and the minimum unit cost above the average minus two SD are set forth in the Department's Statistical Unit Cost Analysis Summary for Rates Effective November 15, 2011, through June 30, 2012. This summary can be found on the Department's web site at: http://www.dpw.state.pa.us/ucmprd/groups/webcontent/documents/feeschedule/s_002146.pdf.

 For all cost-based services with fewer than 20 unique total unit costs, there were not enough data points to produce statistically valid ranges, so the previously listed process could not be applied and the Department did not perform an outlier review on the total unit costs for those services.

Cost of Living Adjustment and Rate Adjustment Factor (RAF)

 After the unit costs for each cost-based procedure code were adjusted as previously described, a total cost of living increase of 0% (0% for FY 2009-2010 and 0% for FY 2010-2011) was applied to the FY 2009-2010 unit costs for each procedure code to establish each provider's payment rates for FY 2011-2012.

 The Department then compared projected FY 2011-2012 State and Federal expenditures to the corresponding FY 2011-2012 adjusted budget amounts for the Consolidated and P/FDS Waiver programs to determine if it was necessary to apply a RAF to the FY 2011-2012 proposed payment rates. State and Federal expenditures were projected using the payment rates effective July 1, 2011, through November 14, 2011, and proposed payment rates effective November 15, 2011, through June 30, 2012, and projected utilization, which was based on actual FY 2010-2011 utilization and utilization trend factors determined by the Department. Based on this analysis, the Department determined a RAF of -6.00% was necessary. Final payment rates were calculated using the following formula:

 Final Payment Rate = Proposed Payment Rate × (1 - RAF)

Rate Assignment Process

 The Department used the following rate assignment process for providers who submitted their Year 3 cost report and passed the desk review process:

 • Assigned their cost-based rate for existing services and service locations if completed both of the following:

 (1) The provider signed up for both the service and service location in the SSDs as of December 31, 2010.

 (2) The provider submitted both the service and service location in their approved Year 3 cost report.

 • Assigned the average of their cost report rates for an existing service at a new service location, if they had a cost-base rate assigned for that service at another service location on their approved cost report.

 • Assigned the area adjusted average of all providers' cost report rates for new services, if they did not submit cost report data for the service in their cost report (that is, the provider did not provide this service at any service location in FY 2009-2010).

 Providers who submitted their Year 3 cost report but whose resubmission still failed the desk review process were assigned the 25th percentile rate calculated based on all approved cost reports for all services.

 Providers who attempted to submit a cost report but failed to successfully upload the cost report to the online system before the deadline were assigned the 12.5 percentile rate calculated based on all approved cost reports for all services.

 The Department established the provider's rates as the lowest rates calculated based on all approved cost reports if a provider did not attempt a cost report submission by the deadline or if the provider successfully submitted a cost report but did not resubmit a corrected cost report as requested during the desk review process.

Fiscal Impact

 It is anticipated that there will be an approximate part-year savings of $62.384 million ($31.421 million State Funds) and full-year savings of $99.870 million ($50.301 million in State Funds) in FY 2012-2013.

Public Comment

 Copies of this notice may be obtained at the local Mental Health/Mental Retardation (MH/MR) County Program, Administrative Entity (AE) or regional Office of Developmental Programs (ODP) in the corresponding regions:

 • Western region: Piatt Place, Room 4900, 301 5th Avenue, Pittsburgh, PA 15222, [phone]

 • Northeast region: Room 315, Scranton State Office Building, 100 Lackawanna Avenue, Scranton, PA 18503, [phone]

 • Southeast region: 801 Market Street, Suite 5071, Philadelphia, PA 19107, [phone] or [phone]

 • Central region: Room 430, Willow Oak Building, P. O. Box 2675, DGS Annex Complex, Harrisburg, PA 17105, [phone]

 Contact information for the local MH/MR County Programor AE may be found at https://www.hcsis.state.pa.us/hcsis-ssd/pgm/asp/PRCNT.ASP or contact the previously referenced regional ODP.

 Interested persons are invited to submit written comments regarding this notice to the Department of Public Welfare, Office of Developmental Programs, Division of Provider Assistance and Rate Setting, 4th Floor, Health and Welfare Building, Forster and Commonwealth Avenues, Harrisburg, PA 17120. E-mail should be sent to ODP's rate-setting mailbox at [e-mail] (use ''PN PPS Methodology'' in the subject line).

 Persons with a disability who require an auxiliary aid or service may submit comments using the Pennsylvania AT&T Relay Service at [phone] (TDD users) or [phone] (voice users).

GARY D. ALEXANDER, 
Secretary

 Fiscal Note: 14-NOT-732. No fiscal impact; (8) recommends adoption.

[Pa.B. Doc. No. 11-1966. Filed for public inspection November 11, 2011, 9:00 a.m.]