Overview

The proposed regulations use a two-step process to adjust the current methodology for reimbursing continuing day treatment programs for persons with serious mental illness. The first step will consist of implementing a reduction in the fees paid to continuing day treatment programs for services provided on or after January 1, 2009 and before April 1, 2009. The second step consists of modifying the reimbursement methodology from one based upon hours of attendance in program to one utilizing a modified threshold approach for services provided on or after April 1, 2009.

Requirements

The first phase of the proposal effectuates a modest rate reduction for services provided on or after January 1, 2009, but continues the current reimbursement methodology, in which the amount of reimbursement for a given visit is based upon the number of hours of an individual's attendance, until April 1, 2009 to allow providers sufficient time to implement the systems changes necessary to operate under the new reimbursement methodology. Under the second phase of the proposal, for services provided on or after April 1, 2009, providers will be reimbursed using a modified threshold fee. Under a threshold fee, a provider receives a fee when an individual receives a reimbursable service, regardless of the duration of the visit. The proposed regulation establishes a methodology in which there are two threshold fees-a half-day fee and a full-day fee. A half-day fee will be paid when an individual attends the program for at least 2 hours and receives at least one reimbursable service. A full-day fee will be paid when an individual attends the program for at least 4 hours and receives at least three reimbursable services.

Current regulations call for a different fee to be paid to providers based upon the number of hours of attendance, up to 5 hours, so long as at least one reimbursable service is provided during the visit. On average, individuals receive between two and three services during a five-hour visit. The proposed regulations ensure that individuals will receive at least this level of service across all providers.

The proposed regulations also continue the current pass through methodology for reimbursing the capital costs of continuing day treatment programs operated by general hospitals, which allows for an add-on to the individual provider's fee based upon the capital costs incurred by the provider. The proposed regulations also specify that outpatient mental health services provided by general hospitals are not considered specialty services within the meaning of the Public Health Law.

1. Statutory Authority: Subdivision (b) of Section 7.09 of the Mental Hygiene Law grants the Commissioner of the Office of Mental Health the authority and responsibility to adopt regulations that are necessary and proper to implement matters under his or her jurisdiction.

Subdivision (a) of Section 31.04 of the Mental Hygiene Law empowers the Commissioner to issue regulations setting standards for licensed programs for the provision of services for persons with mental illness.

Subdivision (a) of Section 43.02 of the Mental Hygiene Law grants the Commissioner the power to set rates for facilities licensed under Article 31 of the Mental Hygiene Law.

Sections 364 and 364-a of the Social Services Law give the Office of Mental Health responsibility for establishing and maintaining standards for care and services eligible for Medicaid reimbursement in facilities under its jurisdiction, in accordance with cooperative arrangements with the Department of Health.

2. Legislative Objectives: Articles 7 and 31 of the Mental Hygiene Law reflect the Commissioner's authority to establish regulations regarding mental health programs. The amendments to Part 588 are consistent with the goals and objectives of the Medicaid program to ensure that individuals with serious mental illness receive effective services to address their illness and that providers receive adequate reimbursement to pay for such care.

3. Needs and Benefits: The proposed regulations modify the current methodology for reimbursing continuing day treatment programs for persons with serious mental illness from one based upon hours of attendance in program to one utilizing a modified threshold approach. The proposed regulations are also needed to effect savings in the operation of the Medicaid program.

The first phase of the proposal effectuates a modest rate reduction for services provided on or after January 1, 2009, but continues the current reimbursement methodology until April 1, 2009 to allow providers sufficient time to implement the systems changes necessary to operate under the new reimbursement methodology. Under the second phase of the proposal, for services provided on or after April 1, 2009 providers will be reimbursed using a modified threshold fee.

Under a threshold fee, a provider receives a fee when an individual receives a reimbursable service, regardless of the duration of the visit. The proposed regulation establishes a methodology in which there are two threshold fees-a half-day fee and a full-day fee. A half-day fee will be paid when an individual attends the program for at least 2 hours, and receives at least one reimbursable service. A full-day fee will be paid when an individual attends the program for at least 4 hours, and receives at least three reimbursable services.

Current regulations call for a different fee to be paid to providers based upon the number of hours of attendance, up to 5 hours, so long as at least one reimbursable service is provided during the visit. On average, individuals receive between two and three services during a five-hour visit. The proposed regulations ensure that individuals will receive at least this level of service across all providers.

The proposed regulations also continue the current methodology for reimbursing the capital costs of continuing day treatment programs operated by general hospitals, and specify that outpatient mental health services provided by general hospitals are not considered specialty services within the meaning of the Public Health Law.

4. Costs:

a) Costs to regulated parties: The reduction of Medicaid payments will impact all non-State operated continuing day treatment programs (approximately 150 programs) and approximately 6 mental health day treatment programs. The impact of these reductions totals approximately $23 million in gross Medicaid funds for the providers impacted by the reductions.

b) Costs to State and Local government and the agency: Medicaid services typically involve both a state and county share in matching the federal portion. The state share of these outpatient initiatives is $11.5 million, with no impact to local governments. The decrease is being implemented after the local share Medicaid cap is already in place. (The local share Medicaid cap was an initiative included in the enacted State budget for 2005-2006, under which the state pays for increases in the local share of Medicaid after January 1, 2006.). The proposed changes to reduce the reimbursement to these programs shall be effective January 1, 2009.

5. Local Government Mandates: These regulatory amendments will not involve or result in any additional imposition of duties or responsibilities upon county, city, town, village, school or fire districts.

6. Paperwork: This rule should not substantially increase the paperwork requirements of affected providers.

7. Duplication: These regulatory amendments do not duplicate existing State or federal requirements.

8. Alternatives: To address the serious fiscal condition of New York State, the Financial Management Plan of the enacted 2008-09 State Budget, along with the August Special Economic Session of the Legislature included reductions in rates of payments for the impacted programs. Further, the Office of Mental Health has proposed changes to the reimbursement methodology from hourly fees to half day/full day reimbursement, with a minimum number of services required for each reimbursement category. This simplifies the billing structure, while ensuring that individuals receive at least a standard level of services across providers. The reduction in payment rates was required by the State Budget. Consideration was given to not changing to a half day/full day reimbursement methodology, but the proposed methodology was determined to be preferable to the existing methodology due to the fact that it is less confusing, and more amenable to the establishment of a uniform standard for services.

9. Federal Standards: The regulatory amendments do not exceed any minimum standards of the federal government for the same or similar subject areas.

10. Compliance Schedule: This rulemaking is effective upon adoption.

The proposed rule adjusts the Medicaid reimbursement for continuing day treatment programs consistent with the 2008-09 State budget. Medicaid services typically involve both a state and county share in matching the federal portion. The state share of these outpatient initiatives is $11.5 million, with no impact to local governments. The decrease is being implemented after the local share Medicaid cap is already in place. Further, the rule also modifies the current reimbursement methodology, but in order to give providers sufficient time to implement the system changes necessary to operate under the new reimbursement methodology, that restructuring will not take effect until April 1, 2009. For these reasons, a regulatory flexibility analysis is not submitted with this notice.

The proposed rule adjusts the Medicaid reimbursement for continuing day treatment programs consistent with the 2008-09 State budget. Medicaid services typically involve both a state and county share in matching the federal portion. The state share of these outpatient initiatives is $11.5 million, with no impact to local governments. The decrease is being implemented after the local share Medicaid cap is already in place. A Rural Area Flexibility Analysis is not submitted with this notice because the proposed rule will not impose any adverse economic impact on rural areas.

A Job Impact Statement is not submitted with this notice because the proposed rule adjusts the Medicaid reimbursement for continuing day treatment programs consistent with the 2008-09 State budget and modifies the current reimbursement methodology. The restructuring will not take effective until April 1, 2009, in order to give providers sufficient time to implement the system changes necessary to operate under the new reimbursement methodology. There will be no adverse impact on jobs and employment opportunities as a result of this rulemaking.