1182 Rate-setting methodology for development of the payment rates for the Consolidated and Person/Family Directed Support Waivers and Targeted Services Management for persons with mental retardation?

Rate-Setting Methodology for Development of the Payment Rates for the Consolidated and Person/Family Directed Support Waivers and Targeted Services Management for Persons with Mental Retardation

Purpose of Notice

[40 Pa.B. 3632]
[Saturday, June 26, 2010]

 This notice announces that effective July 1, 2010, the Department of Public Welfare (Department) is revising the methodologies used in the Prospective Payment System (PPS) to develop rates for community-based services, including supports coordination, funded through the Consolidated and Person/Family Directed Support (P/FDS) waivers (waivers) and for Targeted Service Management (TSM) provided to persons with mental retardation who are eligible for Medical Assistance (MA) but not eligible to participate in the waivers. This notice describes the methodologies used to develop July 1, 2010, payment rates in the PPS, excluding payment rates for the select waiver services added to the MA program fee schedule.

Rate-Setting Methodology

 On July 1, 2009, the Department implemented the PPS, a payment methodology system in which rates are established on a prospective basis for a specified period and are not cost settled at the end of the specified period. The Department included two payment methodology approaches in the PPS: a fee schedule approach and a cost-based approach. Rates for select services were placed on the MA program fee schedule. Other rates for services specific to each provider and procedure code were developed using a cost-based approach, based on allowable historical cost data submitted by providers in cost reports developed by the Department. The historical cost data is then trended forward to a prospective period.

 The Department developed the proposed payment rates for waiver-funded services, excluding supports coordination, for Fiscal Year (FY) 2010-2011 (10-11) using FY 2008-2009 (08-09) cost report data submitted by providers, adjusted to account for changes in need and for changes in provider responsibilities for staffing and transportation due to service definitions revisions that took effect July 1, 2009. These adjustments were calculated based on data submitted by providers through the supplemental data request in December 2009 and January 2010, unless information submitted in the supplemental data request showed an adjustment to the submitted cost report data was unnecessary. The adjusted costs were then divided by the reported utilization (units of service available for residential services; units of service provided for nonresidential services) to calculate the unit cost for each procedure code. Utilization data in the cost reports were adjusted to correct errors or miscalculations such as incorrect unit size or inconsistency between reported utilization and reported program capacity.

 The Department analyzed the resulting adjusted unit costs for each procedure code to determine whether additional adjustments were needed. The methodology used to make that determination is further detailed and available through an internet link titled, Methodology for Calculating Unit Costs, on the Department's web site at: http://www.dpw.state.pa.us/PartnersProviders/Mental Retardation/003679539.htm.

 After the unit costs for each procedure code were adjusted, a total cost of living increase of 0% was applied to the FY 08-09 unit costs for each procedure code to establish each provider's proposed payment rates for FY 10-11. Total FY 10-11 waiver expenditures were projected using the proposed payment rate and projected utilization, and those projected expenditures were compared to the available proposed waiver appropriation for FY 10-11. Finally, the Rate Adjustment Factor (RAF) of -4.73%, which included a 1.0286% reduction in the Governor's executive budget relating to the waiver appropriation, was applied to the unit costs.

 Although the Department intended to utilize cost report data submitted by Supports Coordination Organization (SCO) providers to support the rate-setting process for FY 10-11, the proposed payment rates for supports coordination were not developed from the cost report data submitted by SCO providers in October 2009. Providers reported several difficulties in completing the cost report, including allocating administrative expenses, identifying units and allocating staff time between waiver-funded supports coordination and TSM. The FY 10-11 proposed payment rates for supports coordination are, therefore, based on each provider's FY 09-10 payment rates, instead of the FY 08-09 cost report data.

 To establish each SCO's proposed payment rate for supports coordination, the Department first applied a cost of living increase of 0% to each FY 09-10 rate. The Department then projected total FY 10-11 waiver expenditures using the proposed payment rates, projected utilization for all waiver-funded services and compared those projected expenditures to the available proposed FY 10-11 waiver appropriation, which included the 1.0286% reduction in the Governor's executive budget. Finally, the Rate Adjustment Factor (RAF) of -4.73% was applied to the adjusted unit costs.

 Rates for TSM providers that also deliver supports coordination were established by assigning the same rates for TSM as were developed for supports coordination. Review of the cost data showed that unit costs for both types of services are similar. Rates for TSM providers that do not deliver supports coordination were developed in accordance with the methodology described in this notice, without comparison to supports coordination costs.

 All proposed payment rates for all waiver-funded services, including supports coordination, are contingent on the final budget enacted by the General Assembly. Although the proposed payment rates will be used to process claims submitted to the Provider Reimbursement and Operations Management Information System in electronic format (PROMISe^TM) during FY 10-11, revenue reconciliation will determine final payments to providers in FY 10-11. The Department is currently reviewing the methodology for calculating revenue reconciliation targets and expects to be able to notify providers of when the targets will be issued.

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 through a link on the Internet at: http://www.dpw.state.pa.us/PartnersProviders/MentalRetardation/003679539.htm or contact the previously referenced ODP Regional office.

 Interested persons are invited to submit written comments regarding this notice to the Department at the following addresses:

By E-mail:

 Use subject header ''PN Fee Schedule'' to the Office of Developmental Programs' rate-setting mailbox at: [e-mail].

By postal mail:

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

 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).

HARRIET DICHTER, 
Secretary

 Fiscal Note: 14-NOT-644. No fiscal impact; (8) recommends adoption.

[Pa.B. Doc. No. 10-1182. Filed for public inspection June 25, 2010, 9:00 a.m.]