(ii) Subject to the availability of federal financial participation, for services provided on and after July 1, 2012, to patients 21 years old or older, Medicaid payments for reserved bed days, as defined in paragraph (2) of this subdivision, which do not involve the patient's hospitalization and which are (a) related to a patient's therapeutic leave of absence for visits to a health care professional that is expected to improve the patient's physical condition or quality of life and that is consistent with a plan of care ordered by such patient's treating health care professional, or (b) are other leaves of absences, shall be made at 95% of the Medicaid rate otherwise payable to the facility with regard to such days of care.

Paragraph (2) of subdivision (ac) of section 86-2.40 of Subpart 86-2 of 10 NYCRR is amended, to read as follows:

(2) For rate computation purposes, "patient days" shall include "reserved bed days", defined as the unit of measure denoting an overnight stay away from the facility for which the patient, or the patient's third-party payor, provides per diem reimbursement when the patient's absence is due to hospitalization or therapeutic leave consistent with a plan of care ordered by such patient's treating health care professional or due to other leaves of absences.

Statutory Authority:

The statutory authority for this regulation is contained in Public Health Law (PHL) section 2808(25)(c), as enacted by section 34 of part D of Chapter 56 of the laws of 2012, which authorizes the Commissioner to promulgate regulations, including emergency regulations, with regard to Medicaid reimbursement rates for reserved bed days for residential health care facilities. Such rate regulations are set forth in Subpart 86-2 of Title 10 (Health) of the Official Compilation of Codes, Rules, and Regulation of the State of New York.

Legislative Objectives:

For periods prior to July 1, 2012, PHL section 2808(25)(b), provided that Medicaid reimbursement to nursing homes for reserved bed days – days during which residents aged 21 years or older were absent due to temporary hospitalizations or other leaves of absence – would be limited to 95 percent of the otherwise applicable Medicaid rate. Payments were available for no more than 14 reserved bed days due to hospitalization and no more than 10 days due to non-hospitalization leaves in a 12 month period.

PHL section 2808(25)(c), enacted as part of the 2012-13 budget, requires the Commissioner of Health to amend the reserved bed day methodology by promulgating regulations establishing Medicaid rates for reserved beds days for periods on and after July 1, 2012. The statute requires that payments for absences, applicable to nursing home residents over 21 years of age, may be made for up to 14 days in the aggregate for hospitalizations and therapeutic leaves of absences (which must be consistent with a plan of care ordered by the resident’s treating health care professional) and up to 10 days for other types of leave within in a 12 month period.

The objective of the statute is to discourage hospitalization of nursing home residents, recognize the need for therapeutic and other leaves of absence, and achieve savings in the Medicaid program. The statute also requires the Commissioner to establish a prospective per diem adjustment in rates in the event that the amended reserved bed day methodology does not achieve $40 million of “gross” savings (i.e., combined Federal and State shares of Medicaid costs).

Needs and Benefits:

The proposed regulations support the objectives of PHL section 2808(25)(c). By amending the reserved bed day methodology to implement a reduction from 95 percent to 50 percent of the Medicaid rate for temporary hospitalizations and maintaining the 95 percent reduction for other types of absences, the regulation reflects the statutory intent to encourage nursing homes to help residents avoid hospitalization while recognizing that other types of leave are appropriate within reason. In particular, the proposed regulations define a therapeutic leave of absence as a visit to a health care professional, authorized by a health care professional, for purposes of improving the resident’s physical condition or quality of life in accordance with a plan of care. In addition, the proposed regulation will implement a per diem rate reduction for nursing homes which will, when combined with the annual savings achieved from the reserved bed day methodology, equals $40 million in gross Medicaid savings as required by the statute.

The limitations on payment for reserved bed days and the per diem reduction in payments that will be implemented by this proposed regulation do not apply to pediatric patients, for which bed reserve days continue to be paid at 100 percent of the facility’s Medicaid rate.

Costs to Private Regulated Parties:

The proposed regulation will implement changes to the reserve bed payment methodology and a statutorily authorized per diem rate reduction, which will reduce Medicaid revenues to proprietary nursing homes. The regulation itself does not result in additional costs to private regulated parties.

Costs to State Government:

Amendments to the reserve bed day reimbursement methodology and the per diem rate adjustment will reduce gross Medicaid expenditures by $40 million ($20 million Federal, $20 million State), as required by statute. The regulation itself does not result in additional costs to private regulated parties.

Costs to Local Government:

Local districts’ share of Medicaid costs is statutorily capped; therefore, there will be no additional costs to local governments as a result of this proposed regulation. Amendments to the reserve bed day reimbursement methodology and the per diem rate adjustment will reduce gross Medicaid expenditures by $40 million ($20 million Federal, $20 million State), as required by statute, which will reduce Medicaid revenues to publicly operated nursing homes. The regulation itself does not result in additional costs to publicly operated nursing homes.

Costs to the Department of Health:

There will be no additional costs to the Department of Health as a result of this proposed regulation.

Local Government Mandates:

The proposed regulation does not impose any new programs, services, duties or responsibilities upon any county, city, town, village, school district, fire district or other special district.

Paperwork:

The proposed regulation does not impose any additional paperwork.

Duplication:

The proposed regulation does not duplicate existing state or federal regulations.

Alternatives:

Given the requirements of PHL section 2808(25)(b), the only other alternative approach to the proposed regulation would be to reduce the reserved bed day payment for hospitalizations to something other than 50 percent, reduce the reserved bed day payment from 95 percent of the Medicaid rate to a lower percentage for therapeutic or other leaves of absence, and/or increase the per diem adjustment that will be made to reach $40 million (gross) in savings. The approach taken by the proposed regulation is the most consistent with the statutory provisions, which clearly evidenced an interest in providing incentives to reduce hospitalizations of nursing home residents while permitting a certain level of therapeutic absences aimed at improving the resident’s physical health or quality of life. The per diem reduction will be reconciled to ensure that the combined savings of both the reduction in payments for hospitalizations from 95% to 50% of the Medicaid rate and the per diem reduction is not less than or more than $40 million. In addition, the Department provided the nursing home industry with the opportunity to make recommendations on the approaches taken to implement both the amendment to the bed hold methodology and per diem reduction, and no feasible alternatives were suggested.

Federal Standards:

The proposed regulation does not exceed any minimum standards of the federal government for the same or similar subject area.

Compliance Schedule:

The new methodology will be implemented by the eMedNY system. There are no additional compliance efforts required by the nursing homes.

Effect of Rule:

For the purpose of this regulatory flexibility analysis, small businesses were considered to be residential health care facilities with 100 or fewer employees. Based on recent financial and statistical data extracted from residential health care facility cost reports, approximately 60 residential health care facilities were identified as employing fewer than 100 employees.

The regulation will implement a statutorily authorized per diem rate reduction and changes to the reserve bed payment methodology, which will reduce Medicaid revenues to publicly-operated and small business nursing homes. Local districts’ share of Medicaid costs is statutorily capped; therefore, there will be no additional costs to local governments as a result of this proposed regulation.

The Department provided the nursing home industry, which represents small business and county nursing homes, with the opportunity to make recommendations on the approaches taken to implement the proposed amendment to the bed hold methodology and the per diem reduction to achieve the savings required by the statute.

Compliance Requirements:

There are no new compliance requirements.

Professional Services:

No additional professional services are required in order to comply with the proposed amendments.

Compliance Costs:

The proposed regulation will implement a statutorily authorized per diem rate reduction and changes to the reserve bed payment methodology which will reduce Medicaid revenues to publicly operated nursing homes. The regulation itself will not result in additional costs to publicly operated nursing homes.

Economic and Technological Feasibility:

The proposed rule does not require additional technological or economic requirements.

Minimizing Adverse Impact:

The Department provided the nursing home industry with the opportunity to make recommendations on the approaches taken to implement both the amendment to the bed hold methodology and per diem reduction to achieve the savings required by the statute.

The per diem reduction will be reconciled to ensure that the combined savings of both the reduction in payments for hospitalizations from 95 percent to 50 percent of the Medicaid rate and the per diem reduction is not less than or more than $40 million.

Small Business and Local Government Participation:

The Department provided the nursing home industry with the opportunity to make recommendations on the approaches taken to implement both the amendment to the bed hold methodology and per diem reduction to achieve the savings required by the statute.

The State filed a Federal Public Notice, published in the State Register, prior to the effective date of the change. The Notice provided a summary of the action to be taken and instructions as to where the public, including small businesses and local governments, could locate copies of the corresponding proposed State Plan Amendment. The Notice further invited the public to review and comment on the related proposed State Plan Amendment. In addition, contact information for the Department was provided for anyone interested in further information.

Effect on Rural Areas:

Rural areas are defined as counties with populations less than 200,000 and, for counties with populations greater than 200,000, include towns with population densities of 150 persons or less per square mile. The following 43 counties have populations of less than 200,000:

The following nine counties have certain townships with population densities of 150 persons or less per square mile:

Compliance Requirements:

There are no additional compliance requirements as a result of the proposed rule.

Professional Services:

No additional professional services are required in order for providers in rural areas to comply with the proposed amendments.

Compliance Costs:

The proposed regulation will implement a statutorily authorized per diem rate reduction and changes to the reserve bed payment methodology, which will reduce Medicaid revenues to publicly operated nursing homes. The regulation itself will not result in additional costs to publicly operated nursing homes.

Minimizing Adverse Impact:

The Department provided the nursing home industry with the opportunity to make recommendations on the approaches taken to implement both the amendment to the bed hold methodology and per diem reduction to achieve the savings required by the statute.

The per diem reduction will be reconciled to ensure that the combined savings of both the reduction in payments for hospitalizations from 95 percent to 50 percent of the Medicaid rate and the per diem reduction is not less than or more than $40 million.

Rural Area Participation:

The Department provided the nursing home industry with the opportunity to make recommendations on the approaches taken to implement both the amendment to the bed hold methodology and per diem reduction to achieve the savings required by the statute. In addition, a Federal Public Notice, published in the New York State Register invited comments and questions from the general public.

A Job Impact Statement is not required pursuant to Section 201-a(2)(a) of the State Administrative Procedure Act. It is not expected that the proposed rule to revise the Medicaid reimbursement methodology for the payment of certain nursing home reserved bed days to help reduce temporary hospitalizations for residential nursing home facility patients and to implement a per diem rate reduction will have a material impact on jobs or employment opportunities across the nursing home industry.