1100 Rate-setting methodology for consolidated and person/family directed support waiver-funded and base-funded services for individuals participating in the Office of Developmental Programs service system

Rate-Setting Methodology for Consolidated and Person/Family Directed Support Waiver-Funded and Base-Funded Services for Individuals Participating in the Office of Developmental Programs Service System

[46 Pa.B. 3386]
[Saturday, June 25, 2016]

 The purpose of this notice is to announce the methodology used in the Prospective Payment System to develop rates, effective July 1, 2016, for residential habilitation eligible and transportation trip services, funded through the Consolidated and Person/Family Directed Support waivers and for the same service that is provided with base funding in a waiver-funded service location.

Rate-Setting Methodology for Residential Habilitation Eligible Services

 Two methodologies were used to develop rates for residential habilitation eligible proposed payment rates. One applies to providers that chose to sign the addendum to the waiver provider agreement (addendum). The other applies to providers that chose not to sign the addendum.

 The following methodology applies to the residential habilitation eligible proposed payment rates for providers that chose to sign the addendum. The Fiscal Year (FY) 2016-2017 proposed rates for the residential habilitation eligible services were developed from expenses reported in the approved Year 8 cost reports (based on the FY 2014-2015 Historical Expense Period) and authorizations included in the Home and Community Services Information Systems (HCSIS) as of December 31, 2015.

 The following methodology applies to the residential habilitation eligible proposed payment rates for providers that chose not to sign the addendum. The FY 2016-2017 proposed rates for the residential habilitation eligible services were developed from expenses and utilization data reported in approved Year 8 cost reports (FY 2014-2015 Historical Expense Period), submitted by providers and approved in the desk review process, when the procedure codes and service locations in the cost reports were the same as those entered in the HCSIS Services and Supports Directory (SSD) as of December 31, 2015.

 The FY 2016-2017 residential habilitation eligible proposed rates will be effective for services delivered on or after July 1, 2016, are subject to the adjustments described as follows, and are assigned at the Master Provider Index (MPI)—Service Location Code—Procedure Code/Modifier level based on the methodology outlined as follows.

Residential Outlier Review Process

 For providers that chose to sign the addendum, the ''total unit cost'' for a provider and service is defined as the total expenses reported in the approved cost report for that provider and service divided by the total authorized units for that provider and service, including any applicable utilization adjustments. The total expenses are equal to Schedule A, Line 18 of the cost report. The total authorized units are equal to Schedule A, Line 19 (HCSIS Units Authorized) of the cost report, including any applicable utilization adjustments based on a review of the available HCSIS and Provider Reimbursement and Operations Management Information System (PROMISe) data, where available.

 For providers that chose not to sign the addendum, the ''total unit cost'' for a provider and service is defined as the total expenses reported in the approved cost report for that provider and service divided by the total available units reported in the approved cost report for that provider and service, including any applicable utilization adjustments. The total expenses are equal to Schedule A, Line 18. The total available units are equal to Schedule A, Line 21 (Units Available) of the cost report, including any applicable utilization adjustments based on a review of the cost report data compared to available HCSIS and PROMISe data, where available.

 For all providers, the Department of Human Services (Department) identified and adjusted for outliers at the total unit cost level for each of the providers' residential habilitation eligible services submitted in the Year 8 approved cost reports, as applicable. For all residential habilitation eligible services with 20 or more unique unit costs (unit costs by provider and service from separate, approved Year 8 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 8 cost report data.

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

 • Total unit costs that were flagged as outliers underwent a review, as described as follows.

Total Unit Cost Review

 For all providers, the Department performed a standardized review of all total unit cost outliers to ensure consistency across this Commonwealth. The review consisted of an evaluation of the Individual Support Plans (ISP) for waiver participants receiving services at the service locations impacted by the outlier unit cost. The review allowed the Department to determine whether the outlier unit cost was justified (such as an individual with complex needs) and the following was applied:

 • Total unit cost outliers that were supported by the ISP reviews were not adjusted.

 • Total unit cost outliers that were greater than the average unit cost plus one SD and were not supported by the ISP reviews were adjusted to the maximum unit cost from an approved Year 8 cost report below the average plus one SD for that service.

 • Total unit cost outliers that were less than the average minus two SD and that were not supported by the ISP reviews were adjusted to the minimum unit cost from an approved Year 8 cost report above the average minus two SD for that service.

 For all residential habilitation eligible services with fewer than 20 unique unit costs, the Department did not perform the standardized outlier review on the total unit costs since there were not enough data points available to produce statistically valid ranges. However, the Department did perform a review of the unit costs for these services in an effort to standardize payment rates across services. The review consisted of a comparison of the following:

 • Other unit costs for that service, as applicable.

 • The average unit cost and range of unit costs for similar services with 20 or more unit costs.

 • The FY 2015-2016 Statewide average unit cost for that service based on FY 2015-2016 approved cost report data and any utilization adjustment made.

 If a unit cost appeared unreasonably high or low based on this review, the Department reviewed the ISP for the individual receiving services at the service location impacted by the high/low unit cost to determine if the unit cost was justified. Based on these reviews, no adjustments were made.

Retention Factor

 The retention factor solely applies to providers that chose to sign the addendum. The retention factor is a percentage addition to the provider's calculated FY 2016-2017 residential habilitation eligible rates. The retention factor can be up to a maximum of 2% of the difference between FY 2016-2017 unit cost and FY 2015-2016 unit costs, if the total unit cost for a service decreased from the provider's FY 2015-2016 unit cost. The application of the retention factor cannot cause the provider's FY 2016-2017 rate to exceed the provider's prior year's PROMISe paid rate.

Vacancy Factor

 An adjusted vacancy factor was incorporated into the FY 2016-2017 proposed rates to recognize that providers may not deliver services at full capacity. The vacancy factor adjusts the full capacity rate to account for days when the residential provider cannot bill due to a participant not receiving services. The provider cannot bill for days where a participant is not receiving services, but rather is paid a higher rate for days when the participant is receiving services.

 The following vacancy factor applies to providers that chose to sign the addendum. After the unit costs for each residential habilitation eligible service were adjusted through the outlier review process a vacancy factor of 96% was applied to provider's payment rates to reflect payment to providers for an average number of vacant days. For example, a unit cost of $100 (after the outlier review) would be adjusted to a unit cost of $104.17 ($100/0.96) after the vacancy factor was applied.

 The following vacancy factor applies to providers that chose not to sign the addendum. After the unit costs for each residential habilitation eligible service were adjusted through the outlier review process, a vacancy factor of 97% was applied to reflect payment to providers for an average number of vacant days. For example, a unit cost of $100 (after the outlier review) would be adjusted to a unit cost of $103.09 ($100/0.97) after the vacancy factor was applied. The 97% vacancy factor was based on an analysis of historical PROMISe utilization data.

Enhanced Communication Services

 The Enhanced Communication Services modifier, U1, is available for residential habilitation eligible services. Enhanced Communication Services can be provided to individuals who meet all of the following:

 • Enrolled in the Consolidated Waiver.

 • Deaf.

 • Determined to need services that are provided by staff who are proficient in sign language.

 Providers who wish to receive the Enhanced Communication Services Rate must be approved to do so by the Department. Requests for enhanced rates should be directed to the Deaf Services Coordinator at [e-mail].

Transportation Trip Services

 The FY 2016-2017 proposed rates for transportation trip services were developed from expenses and utilization data reported in approved Year 8 transportation cost reports that are based on the FY 2014-2015 historical expense period, when the procedure codes submitted by providers are the same as those entered in the SSD as of March 31, 2015. The FY 2016-2017 transportation trip proposed rates will be effective for services delivered July 1, 2016, through June 30, 2017, are subject to the adjustments described as follows, and are assigned at the MPI—Service Location Code—Procedure Code/Modifier level based on the methodology outlined as follows.

Transportation Trip Outlier Review Process

 The ''total unit cost'' for a provider and transportation trip service is defined as total expenses reported in the approved transportation cost report for that provider and service divided by the total utilization reported in the approved transportation cost report for that provider and service. The total expenses are equal to Schedule A, Line 12 (total net expenses). The total utilization is equal to Schedule A, Line 13. These proposed rates reflect consideration for trips with and without aides (as reported by the provider), which means each provider will be paid one payment rate for each trip service (that is, there will not be separate rates for trips with an aide versus without an aide).

 The Department reviewed the development of each transportation trip unit cost submitted in approved transportation cost reports for accuracy, reasonableness and to ensure compliance with the Department's allowable cost policies. To support the Department's efforts to continue to standardize rates for similar services, the Department performed a more detailed review of unit costs that were at the upper or lower end of the range of unit costs for each transportation trip service.

Cost of Living Adjustment (COLA)

 After the unit costs for each residential habilitation eligible and transportation trip service were adjusted as previously described, a total COLA of 0.00% was applied to establish each provider's proposed rates for FY 2016-2017 (prior to application of the rate adjustment factor).

Rate Adjustment Factor (RAF)

 The Department did not apply a RAF to the residential eligible proposed rates.

Rate Assignment Process

 For the FY 2016-2017 residential eligible and transportation trip services, the Department assigned proposed payment rates to providers with approved Year 8 cost reports and Year 8 transportation cost reports using the following methodology:

 • The provider's cost-based payment rate for existing services and service locations submitted in the cost reports, based on the methodology previously described.

 • The average of the provider's cost-based payment rates for an existing service at a new service location if the provider submitted cost report data for that service at other service locations.

 • The area adjusted average payment rate calculated based on all approved cost reports for a new service for which the provider did not deliver at any service location in FY 2014-2015.

 The Department assigned payment rates to existing providers who do not have approved Year 8 cost reports based on the following methodology:

 • The lowest payment rates calculated based on all approved cost reports for providers using the methodology previously described for an existing service which the provider delivered at any service location in FY 2014-2015.

 • The area adjusted average payment rate calculated based on all approved cost reports for providers using the methodology previously described for a new service which the provider did not deliver at any service location in FY 2014-2015.

 The Department assigned to new providers who did not provide any services in FY 2014-2015 the area adjusted average payment rate calculated based on all approved cost reports for providers using the methodology previously described.

 All proposed payment rates for all waiver-funded services are contingent on the final budget enacted by the General Assembly. The proposed payment rates should be used to process claims submitted to PROMISe in electronic format for services provided until a notice announcing final rates is published.

Fiscal Impact

 It is anticipated that there will be an approximate cost to the Commonwealth of $69.563 million ($33.939 million in State funds) in Fiscal Year 2016-2017.

Public Comment

 Copies of this notice may be obtained at the local Mental Health/Intellectual Disability (MH/ID) 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/ID 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 Human Services, Office of Developmental Programs, Division of Provider Assistance and Rate Setting, 4th Floor, Health and Welfare Building, 625 Forster Street, Harrisburg, PA 17120. Comments can also be sent to [e-mail], use subject header ''PN PPS Methodology.''

 Persons with a disability who require an auxiliary aid or service may submit comments using the Pennsylvania AT&T Relay Service by dialing 711 or by using one of the following toll free numbers:

 [phone] (TDD users)

 [phone] (voice users)

 [phone] (Speech-to-Speech)

 [phone] (Spanish)

THEODORE DALLAS, 
Secretary

 Fiscal Note: 14-NOT-1048. (1) General Fund;

 (7) Intellectual Disabilities—Community Waiver Program; (2) Implementing Year 2016-17 is $33,099,000; (3) 1st Succeeding Year 2017-18 through 5th Succeeding Year 2021-22 are $17,398,000; (4) 2015-16 Program—$1,202,000,000; 2014-15 Program—$1,074,000,000; 2013-14 Program—$1,026,000,000;

 (7) Intellectual Disabilities—Community Based Program; (2) Implementing Year 2016-17 is $840,000; (3) 1st Succeeding Year 2017-18 through 5th Succeeding Year 2021-22 are $840,000; (4) 2015-16 Program—$148,229,000; 2014-15 Program—$149,681,000; 2013-14 Program—$150,918,000;

 (8) recommends adoption. Funds have been included in the budget to cover this increase.

[Pa.B. Doc. No. 16-1100. Filed for public inspection June 24, 2016, 9:00 a.m.]