1967 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 from July 1, 2011, through November 14, 2011

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 from July 1, 2011, through November 14, 2011

[41 Pa.B. 6175]
[Saturday, November 12, 2011]

 The Department of Public Welfare (Department) is correcting the Prospective Payment System (PPS) notice published at 41 Pa.B. 3307 (June 25, 2011).

 Specifically, payment rates for providers of Consolidated Waiver, Person/Family Directed Support Waiver (P/FDS) and base funded services for a waiver service location identified as cost based services in Fiscal Year (FY) 2010-2011 will continue to have the same payment rates as the FY 2010-2011 final payment rate for the period of July 1, 2011, through November 14, 2011. This correction is applicable for transportation per diem and trip cost based services, nontransportation cost based services, Supports Coordination and Targeted Service Management rates.

Background

 Beginning in 2008, the 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 Transportation Per Diem and Trip Cost-based Services

 The payment rates for the period July 1, 2011, through November 14, 2011, for Per Diem and Trip transportation services were developed from the data in the Year 2 transportation cost reports (Version 5.0 FY 2008-2009 Historical Expense Period) submitted by providers and approved in the desk review process, where the procedure codes in the transportation cost reports were the same as those entered in the Service and Supports Directory (SSD) as of February 2010. 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 2009-2010 and did not have historical FY 2008-2009 experience, the area average rate was assigned.

Rate-Setting Methodology for Nontransportation Cost-based Services (Excluding Supports Coordination and Targeted Service Management)

 For rates effective July 1, 2011, through November 14, 2011, the payment rates for nontransportation cost-based services were developed from the data in the Year 2 cost reports (Version 5.0—FY 2008-2009 Historical Expense Period) submitted by providers and approved in the desk review process, when available, where the procedure codes and service locations in the cost reports were the same as those entered in the SSD as of December 31, 2009. Procedure codes and service locations included in the cost reports, but not entered in the SSD as of December 31, 2009, were not included in calculating payment rates.

 Final payment rates effective July 1, 2011, through November 14, 2011, include the -2.50% rate adjustment factor (RAF) calculated for FY 2010-2011.

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. The total expenses are listed as follows 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 23 of the cost reports.

 • 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 23, less Line 17.

 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 following two allowable cost parameters were used:

 • Salary and Employee Related Expenses (ERE) unit cost—The combined impact of a provider's staffing levels and salary and ERE expense levels for direct care staff (calculated using the data reported on the cost report's Schedule A, Lines 1 and 2, adjusted to account for adjustments reported, and divided by the reported utilization, as modified to correct errors).

 • Administration expense percentage—The administration expenses as a percentage of the total expenses (calculated using the data reported on the cost report's Schedule A, Lines 6, 7, 9, 10, 13, 14 and 15 of the cost report divided by the reported utilization, as modified to correct errors).

 After calculating the adjusted unit costs and allowable cost parameters for each procedure code for the services delivered by each provider, the Department identified and adjusted for outliers at the total unit cost level for each of the providers' cost-based services submitted in Year 2 approved cost reports. For all services with 20 or more unique unit costs, 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 2 cost report data.

 • Total unit costs that were greater than the average plus one SD were flagged as outliers

 • For total unit costs that were flagged as outliers and were within +/- 5% of the provider's FY 2009-2010 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 2009-2010 payment rate for the procedure code, the total unit cost did undergo a review, as described as follows.

 • For total unit costs that were not identified as outliers, the allowable cost parameters underwent a review, as described as follows.

Total Unit Cost Review

 The Department performed a review of the total unit costs and allowable cost parameters for each procedure code and adjusted outliers, applying the following principles:

 • Total unit cost outliers that were between one SD and two SD above the average unit cost were adjusted to the maximum unit cost value within one SD above the average unit cost for the procedure code.

 • Total unit cost outliers that were more than two SD above the average unit cost were reviewed by the Department in the following manner.

 • For Residential—Eligible services, the review consisted of an evaluation of the Individual Support Plans (ISPs) for waiver participants receiving services at the 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 cost report submission and historical expenses. Based on the review, the Department applied the following principles:

 ◦ A unit cost justified by the needs of the waiver participants at the service location for residential services and by the enhanced review for nonresidential services was not adjusted.

 ◦ A unit cost not justified by the needs of the waiver participants at the service location for residential services and by the review for nonresidential services was adjusted to the maximum unit cost value within two SD above the average unit cost for the procedure code.

 The average unit cost, the maximum unit cost below one SD above the average unit cost and the maximum unit cost below two SD above the average unit cost are set forth in the Department's Statistical Unit Cost Analysis Summary for Rates Effective July 1, 2011, through November 14, 2011. 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.

Allowable Cost Parameter Review

 For procedure codes with total unit costs that were not identified as outliers, the Department reviewed the allowable cost parameters for each procedure code to determine if either of the allowable cost parameters were more than two SD above the average allowable cost parameter for the procedure code and adjusted the allowable cost parameters as follows:

 • In the vast majority of cases, the Department identified either an error or a misclassification of the data in the cost report and most allowable cost parameters that were flagged as outliers were not adjusted.

 • For those that were adjusted based on a review of the provider's cost report and allocation methodology, the allowable cost parameter was adjusted down to the maximum allowable cost parameter within two SD above the average allowable cost parameter for the procedure code.

 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 RAF

 After the unit costs for each procedure code were adjusted as previously described, a total cost of living increase of 0% (0% for FY 2008-2009 and 0% for FY 2009-2010) was applied to the FY 2008-2009 unit costs for each procedure code to establish each provider's proposed payment rates for FY 2010-2011.

 The Department then compared projected FY 2010-2011 State and Federal expenditures to the corresponding FY 2010-2011 budget appropriation for the Consolidated and P/FDS waiver programs to determine if a RAF was necessary for the FY 2010-2011 rates. State and Federal expenditures were projected using the draft payment rates and projected utilization, which was based on actual FY 2009-2010 utilization and utilization trend factors determined by the Department. Based on this analysis, the Department determined a RAF of -2.50% was necessary to ensure projected expenditures would not exceed the available appropriation in FY 2010-2011. 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 process for providers who submitted their Year 2 cost report and passed the desk review process:

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

 (1) The provider signed up for both the service and service location in the SSD as of December 31, 2009.

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

 • Assigned the average of their cost report rates for an existing service at a new service location, if they had a cost-based 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 2008-2009).

 Providers who submitted their Year 2 cost report whose resubmission 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 a provider's rate as the lowest rate 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.

Rate-Setting Methodology for Supports Coordination and Targeted Service Management Cost-based Services

 Providers reported several difficulties in completing their cost report, including identifying units, allocating administration expenses and allocating staff time between waiver SC services and Targeted Services Management. The Department determined it was not possible to use the data to develop FY 2010-2011 payment rates because the reported difficulties undermined the reliability and accuracy of the cost report data.

 Therefore, the payment rates for FY 2010-2011 and FY 2011-2012 for the period July 1, 2011, through November 14, 2011 were based on each provider's FY 2009-2010 payment rates instead of the FY 2008-2009 cost report data. To establish each provider's FY 2010-2011 payment rates, the Department first applied a cost of living increase of 0% to each FY 2009-2010 rate. The Department then projected total FY 2010-2011 waiver expenditures using the proposed payment rates and projected utilization for all waiver services and compared those projected expenditures to the adjusted budget amounts. A rate adjustment factor of -2.50% was applied to the adjusted unit costs for all waiver services except fee schedule, outcome-based, and vendor services, so that the estimated waiver expenditures would not exceed the available waiver appropriation.

Fiscal Impact

 There is no anticipated fiscal impact.

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 Program or 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-731. No fiscal impact; (8) recommends adoption.

[Pa.B. Doc. No. 11-1967. Filed for public inspection November 11, 2011, 9:00 a.m.]