SOCIAL AND HEALTH SERVICES
NURSING FACILITY MEDICAID PAYMENT RATE METHODOLOGY
These changes were the subject of a notice published in Issue 06-11 of the Washington state register, distributed on June 7, 2006. No comments were received in response to the notice.
Chapter 258, Laws of 2006, makes several changes in the Medicaid nursing facility rate methodology, including:
1) A "rebasing" of costs used to calculate the direct care and operations component rates to the 2003 cost report;
2) Elimination of the minimum occupancy assumption in the calculation of the direct care component;
3) Elimination of the minimum occupancy assumption in the calculation of the direct care component rate for nursing facilities returning previously "banked" beds to active status;
4) A "freezing" of the variable return rate component for all facilities at the June 30, 2006, variable return rate allocation;
5) Revision of case mix weights whenever direct care component rates are cost-rebased under RCW 74.46.431(4);
6) Use of the 90% threshold for calculation of the quarterly case mix index; use of the facility average case mix index throughout the cost-rebasing period; and use of the average facility average case mix index from the four calendar quarters of the cost rebase year;
7) A rise in the "lid" for the cost per case mix unit used in the calculation of the direct care component rate, from 110% to 112% of the peer group median; and elimination of the "floor" for the cost per case mix unit used in the calculation of the direct care component rate;
8) Clarification that the 90% minimum occupancy threshold is to be used in calculation of the operations component median "lid;"
9) Creation of a new category of nursing facility to be known as a "vital local provider," defined as a nursing facility reporting a home office address located in Washington state, where the sum of Medicaid days for all Washington facilities reporting that address as their home office was greater than 215,000 in 2003; and
10) Granting a "hold harmless" provision to vital local providers. For a vital local provider, the sum of the facility's direct care and operations component rates calculated as of July 1, 2006 (the effective date of chapter 258, Laws of 2006) will be compared to the sum of those same two component rates as of June 30, 2006 (the last day under chapter 74.46 RCW as it existed before the new law). If the sum as of July 1, 2006, is lower than the sum as of June 30, 2006, then the vital local provider will continue to receive the direct care and operations component rate allocations calculated as of June 30, 2006. In setting economic trends and conditions adjustment factors (sometimes called vendor rate increases) for the direct care and operations components rate allocations, the legislature may define different adjustment factors for vital local providers whose rates are set equal to their June 30, 2006, rates.