The methodology for this program 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, day services 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 day services component is based on the existing units of service from the provider rate sheet in effect on June 30, 2014 and the July 1, 2014 rate for the service. 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.

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 Intermediate Care Facilities for Persons with Developmental Disabilities (ICFs/DD).

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 ICFs/DD, 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 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 ICFs/DD. 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 are not expected to increase paperwork to be completed by providers.

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 expects to finalize the proposed regulations effective July 1, 2014. 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 ICFs/DD are operated 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 108 providers of ICFs/DD. 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 ICFs/DD. 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. 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: There are no new compliance activities imposed by these amendments.

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: There are no compliance costs since there are no new compliance activities imposed by these amendments.

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. 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.

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 that 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.

OPWDD will be mailing these proposed regulations to all providers, including providers that are small businesses.

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 services delivered in ICFs/DD. 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. 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: There are no new compliance activities imposed by these amendments.

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: There are no costs associated with compliance activities, as no new compliance activities are imposed by these amendments.

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. 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 do not impose any new compliance activities.

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.

OPWDD will be mailing these proposed regulations to all providers, including providers from rural areas.

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 ICFs/DD. 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.