The methodology for these programs will include the following elements:

1) The use of a base period Consolidated Fiscal Report (CFR) for the period of January 1, 2011 – December 31, 2011 for calendar year filers or the period of July 1, 2010 through June 30, 2011 for fiscal year filers.

2) The assignment of geographic location, based on CFR information and consistent with Department of Health regions.

3) Operating, facility and capital components. The operating component recognizes a blend of actual provider costs and average regional costs. The facility component recognizes actual provider costs. The methodology for the capital component has not been significantly changed from that of the previous reimbursement methodology. One adjustment to the methodology for the capital component is that initial reimbursement will only remain in the rate for two years from the date of site certification unless actual costs are verified with the Office for People With Developmental Disabilities. The other adjustment to the methodology is that the thresholds identified are the maximum allowable amounts and will not be exceeded.

4) Wage Equalization factors.

5) A Budget Neutrality factor.

6) A three year phase-in period for transition to the methodology.

For Supervised and Supportive Community Residences (including IRAs) only, the methodology will include:

An acuity factor developed through a regression analysis and based on Developmental Disabilities Profile information.

For Supervised Community Residences (including IRAs) only, the methodology will incorporate:

1) A change in the unit of service from monthly to daily. Commensurate with that change, the methodology will recognize retainer days, therapeutic leave days and vacant bed days.

2) The recognition of an evacuation score factor.

For Day Habilitation programs only, the methodology will include:

The recognition of actual provider to-from transportation costs.

1. Statutory authority:

a. OPWDD has the statutory authority to adopt rules and regulations necessary and proper to implement any matter under its jurisdiction as stated in the New York State Mental Hygiene Law Section 13.09(b).

b. OPWDD has the statutory responsibility for setting Medicaid rates and fees for other services in facilities licensed or operated by OPWDD as stated in section 43.02 of the Mental Hygiene Law.

2. Legislative objective: These proposed regulations further the legislative objectives embodied in sections 13.09(b) and 43.02 of the Mental Hygiene Law. The proposed regulations concern changes in the methodology for reimbursement of residential habilitation services delivered in Community Residences (CRs) and Individualized Residential Alternatives (IRAs), and for day habilitation services.

3. Needs and benefits: OPWDD and the Department of Health (DOH) are seeking to implement a new reimbursement methodology, which complements existing OPWDD requirements concerning residential and day habilitation services, and satisfies commitments included in OPWDD's transformation agreement with the federal Centers for Medicare and Medicaid Services (CMS).

The methodology, which combines regional average cost components, provider specific cost experiences, and other factors, including the needs of individuals served, is expected to result in rates that are consistent with efficiency and economy and that lead to quality outcomes for individuals receiving services. The purpose of the methodology change is to move from budget to cost-based reimbursement, to provide a clear and transparent method of reimbursement, to move toward consistency in rates across the system, and to provide a more stable system of reimbursement.

4. Costs:

a. Costs to the Agency and to the State and its local governments: The proposed regulations will be cost neutral to the state as the monies appropriated for such services will remain constant and only the distribution of such monies will be subject to change.

The new methodologies do not apply to the state as a provider of services.

There will be no savings or costs to local governments as a result of these regulations because pursuant to Social Services Law sections 365 and 368-a, either local governments incur no costs for these services or the State reimburses local governments for their share of the cost of Medicaid funded programs and services.

b. Costs to private regulated parties: The proposed regulations will implement a new reimbursement methodology for residential habilitation delivered in CRs and IRAs and day habilitation. Application of the new methodology is expected to result in increased rates for some non-state operated providers and decreased rates for others. However, overall reimbursement to providers will not be changed.

5. Local government mandates: There are no new requirements imposed by the rule on any county, city, town, village, or school, fire, or other special district.

6. Paperwork: The proposed amendments will require additional paperwork to be completed by providers. The proposed regulations change the unit of service for residential habilitation in supervised CRs and supervised IRAs from a monthly to a daily unit of service. The monthly unit of service required documentation of service delivery on at least twenty-two days each month; the new methodology will require daily documentation. In addition, providers will need to bill for each day that services are delivered, rather than billing on a monthly basis. In addition, the regulations require that providers determine and report retainer days, therapeutic leave days, and vacant bed days.

7. Duplication: The proposed regulations do not duplicate any existing State or federal requirements that are applicable to services for persons with developmental disabilities.

8. Alternatives: OPWDD developed the methodology in collaboration with DOH and discussed the methodology with representatives of provider associations and with CMS. A variety of factors, including alternate transition plans, were considered; however, the proposed regulations represent the results of decisions made from those discussions and collaboration with DOH.

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

10. Compliance schedule: OPWDD is planning for the regulations to be effective July 1, 2014. OPWDD recognizes that the timeframes established by the State Administrative Procedure Act may preclude the adoption of final regulations effective on that date. If OPWDD is unable to adopt the final regulations effective July 1, it intends to file similar emergency regulations containing the new methodology that would be in effect from July 1 until the final regulations can be adopted.

All necessary information, training, and guidance regarding the new service documentation requirements and billing procedures will be provided to agencies in advance of the effective date of regulations. The planned provider training will explain all components, calculations, and provisions of these regulations.

1. Effect on small business: OPWDD has determined, through a review of the certified cost reports, that most residential habilitation services delivered in Individualized Residential Alternatives (IRAs) and Community Residences (CRs) and most day habilitation services are provided by agencies that employ more than 100 people overall. However, some smaller agencies that employ fewer than 100 employees overall would be classified as small businesses. Currently, there are 348 providers of residential habilitation services delivered in IRAs and CRs and day habilitation services. OPWDD is unable to estimate the portion of these providers that may be considered to be small businesses.

The proposed regulations concern changes in the methodology for reimbursement of residential habilitation services delivered in IRAs and CRs, and for day habilitation services. The methodology, which combines regional average cost components, provider specific cost experiences, and other factors, including the needs of individuals served, is expected to result in rates that are economic and efficient and that lead to quality outcomes for individuals receiving services. Application of the new methodology is expected to result in increased rates for some non-state operated providers and decreased rates for others. The overall reimbursement to providers will not change.

2. Compliance requirements: The proposed regulations change the unit of service for residential habilitation in supervised IRAs and supervised CRs from a monthly to a daily unit of service. The monthly unit of service required documentation of service delivery on at least twenty-two days each month (11 days for a half month); the new methodology will require daily documentation. In addition, providers will need to bill for each day that services are delivered, rather than billing on a monthly basis. Providers must also determine and report retainer days, therapeutic leave days, and vacant bed days.

3. Professional services: No additional professional services will be required as a result of these regulations and the regulations will not add to the professional service needs of local governments.

4. Compliance costs: The proposed regulations may require a minor amount of additional paperwork to be completed by providers associated with the change in the unit of service for residential habilitation in supervised IRAs and supervised CRs; however, any compliance costs are expected to be minimal.

5. Economic and technological feasibility: The proposed amendments do not impose on regulated parties the use of any new technological processes.

6. Minimizing adverse economic impact: The proposed regulations minimize adverse economic impact in several ways. First, there is a three year phase-in period for transition to the new methodology. For providers that will experience a decrease in reimbursement, this will help to smooth the effects of the reduction in revenue. In addition, the inclusion of several factors in the methodology, such as the acuity factor and the E-score factor, will enhance reimbursement for providers who serve individuals with greater needs and/or who require richer staffing than would otherwise be warranted. OPWDD has also been working with providers to develop strategies to assist providers in achieving efficiencies in service provision. This will help providers accommodate a reduction in revenue without compromising the quality of services provided.

OPWDD has also reviewed and considered the approaches for minimizing adverse economic impact as suggested in section 202-b(1) of the State Administrative Procedure Act. OPWDD determined that the revision to reimbursement proposed in this amendment is the most optimal approach to instituting the necessary change in rate methodology while minimizing any adverse impact on providers.

These amendments impose modest compliance response on regulated parties, associated with the conversion of the unit of service for residential habilitation in supervised CRs and supervised IRAs from monthly to daily. OPWDD considers that these compliance activities are needed to implement the change in the unit of service and cannot be further minimized.

7. Small business participation: The proposed regulations were discussed with representatives of providers at meetings held between August 2013 and January 2014, including the New York State Association of Community and Residential Agencies (NYSACRA) (which represents some providers who have fewer than 100 employees). OPWDD also included information on its plans to change the methodology in information about the Transformation Agreement posted on its website.

OWPDD will be mailing these proposed regulations to all providers, including providers that are small businesses, and will be holding public hearings on the proposed regulations.

1. Description of the types and estimation of the number of rural areas in which the rule will apply: OPWDD services are provided in every county in New York State. 43 counties have a population of less than 200,000: Allegany, Cattaraugus, Cayuga, Chautauqua, Chemung, Chenango, Clinton, Columbia, Cortland, Delaware, Essex, Franklin, Fulton, Genesee, Greene, Hamilton, Herkimer, Jefferson, Lewis, Livingston, Madison, Montgomery, Ontario, Orleans, Oswego, Otsego, Putnam, Rensselaer, St. Lawrence, Schenectady, Schoharie, Schuyler, Seneca, Steuben, Sullivan, Tioga, Tompkins, Ulster, Warren, Washington, Wayne, Wyoming and Yates. Additionally, certain townships in 10 other counties have a population density of 150 persons or less per square mile: Albany, Broome, Dutchess, Erie, Monroe, Niagara, Oneida, Onondaga, Orange, and Saratoga.

The proposed regulations concern changes in the methodology for reimbursement of residential habilitation services delivered in Community Residences (CRs) and Individualized Residential Alternatives (IRAs), and for day habilitation services. The methodology, which combines regional average cost components, provider specific cost experiences, and other factors, including the needs of individuals served, is expected to result in rates that are economic and efficient and that lead to quality outcomes for individuals receiving services. Application of the new methodology is expected to result in increased rates for some non-state operated providers and decreased rates for others. The overall reimbursement to providers will not change.

2. Compliance requirements: The proposed regulations change the unit of service for residential habilitation in supervised IRAs and supervised CRs from a monthly to a daily unit of service. The monthly unit of service required documentation of service delivery on at least twenty-two days each month (11 days for a half month); the new methodology will require daily documentation. In addition, providers will need to bill for each day that services are delivered, rather than billing on a monthly basis. Providers must also determine and report retainer days, therapeutic leave days, and vacant bed days.

The amendments will have no effect on local governments.

3. Professional services: No additional professional services will be required as a result of these regulations and the regulations will not add to the professional service needs of local governments.

4. Compliance costs: The proposed regulations may require a minor amount of additional paperwork to be completed by providers associated with the change in the unit of service for residential habilitation in supervised IRAs and supervised CRs; however, any compliance costs are expected to be minimal.

5. Minimizing adverse economic impact: The proposed regulations minimize adverse economic impact in several ways. First, there is a three year phase-in period for transition to the new methodology. For providers that will experience a decrease in reimbursement, this will help to smooth the effects of the reduction in revenue. In addition, the inclusion of several factors in the methodology, such as the acuity factor and the E-score factor, will enhance reimbursement for providers who serve individuals with greater needs and/or who require richer staffing than would otherwise be warranted. OPWDD has also been working with providers to develop strategies to assist providers in achieving efficiencies in service provision. This will help providers accommodate a reduction in revenue without compromising the quality of services provided.

OPWDD has also reviewed and considered the approaches for minimizing adverse economic impact as suggested in section 202-bb(2)(b) of the State Administrative Procedure Act. OPWDD determined that the revision to reimbursement proposed in this amendment is the most optimal approach to instituting the necessary change in rate methodology while minimizing any adverse impact on providers.

These amendments impose modest compliance response on regulated parties, associated with the conversion of the unit of service for residential habilitation in supervised IRAs and supervised CRs from monthly to daily. OPWDD considers that these compliance activities are needed to implement the change in the unit of service and cannot be further minimized.

6. Participation of public and private interests in rural areas: The proposed regulations were discussed at meetings with representatives of providers held between August 2013 and January 2014, including providers in rural areas, such as NYSARC, the NYS Association of Community and Residential Agencies, NYS Catholic Conference, and CP Association of NYS. OPWDD also included information on its plans to change the methodology in information about the Transformation Agreement posted on its website.

OWPDD will be mailing these proposed regulations to all providers, including providers from rural areas, and will be holding public hearings on the proposed regulations.

A job impact statement is not being submitted for these proposed amendments because OPWDD determined that they will not cause a loss of more than 100 full time annual jobs State wide. The proposed regulations will implement a new reimbursement methodology for residential habilitation delivered in CRs and IRAs and day habilitation. Application of the new methodology is expected to result in increased rates for some non-state operated providers and decreased rates for others. However, overall reimbursement to providers will not be changed.

Some providers will experience a decrease in reimbursement as a result of these amendments. OPWDD expects that most providers in this situation will be able to accommodate the reduction in revenue by making programs more efficient without compromising the quality of services. However, some providers may effectuate a modest reduction in employment opportunities as a result of the decrease in revenue. At the same time, other providers that experience an increase in reimbursement may commensurately increase employment opportunities. Therefore, OPWDD expects that there will be no overall effect on jobs and employment opportunities as a result of these amendments.