1. COMMENT: 86-11.3(c)(1)(xxvi) State Wide Budget Neutrality Adjustment - In addition to describing the calculation of the Budget Neutrality Adjustment, the actual value of the adjustment should be published as part of the regulation in order for providers to be able to calculate its rate from reading the regulations. Also, the Budget Neutrality Adjustment is permanently fixed because it is calculated using the sum of all provider rate sheets “in effect on June thirtieth, two thousand fourteen.” This language should be modified to indicate that this value will be revised annually to include the value of services expansion and other funding increases added after June 30, 2014.

RESPONSE: The Department has decided that no change to the regulation is necessary at this time in response to the comment. However, the comment will be taken under advisement for consideration when subsequent amendments are made to the regulation.

2. COMMENT: 86-11.2(e) (1) (2) (3) (4) DOH Regions - The use of DOH regions to align providers is predicated on the anticipated move to managed care. However, since the predominance of funding for people with developmental disabilities is in fact related to OPWDD funded services and not health or other long term care services we question not using regions that are driven by OPWDD services.

RESPONSE: Although DOH regions are slightly different from OPWDD regions, the Department of Health feels that the regions are closely aligned and are appropriate for use in the methodology. The regions were chosen to align with long term managed care regions currently being used by the Department.

3. COMMENT: 86-11.2(i) Initial Period - The “initial period” is defined as “July first, two thousand fourteen through December thirty-first, two thousand fourteen for providers reporting on a calendar year basis or July first, two thousand fourteen through June thirtieth, two thousand fifteen for providers reporting on a fiscal year basis”. However, in 641-1-6 (Transition Period and reimbursement), there is no reference to the “initial period” but rather to the “base operating rate” which as defined in 641-1.2(d) has a different meaning.

RESPONSE: The “initial period” will be July one, two thousand fourteen through June thirty, two thousand fifteen and refers to the first year of operation under the new methodology, while the “base operating rate” refers to the reimbursement amount calculated by dividing the annual reimbursement by applicable annual units of service in effect on June thirtieth, two thousand fourteen. The Department has decided that no change to the regulation is necessary at this time in response to the comment. However, the comment will be taken under advisement for consideration when subsequent amendments are made to the regulation.

4. COMMENT: 86-11.3(c)(1)(i-vi) Regional Averages - The regulations refer to various “regional averages” for various components of the operating rate and the method for calculating such “regional averages” and the resulting values should be published as part of the regulations in order for providers to be able to calculate its rate from reading the regulation.

RESPONSE: The regional averages will be posted on the Department’s website and therefore will be accessible to providers.

5. COMMENT: 86-11.3(c)(4)(i-iv) Capital Component - The capital thresholds included in the proposed regulations are more than 6 years old (adopted April 1, 2008) and minimally should be made current. This issue is especially problematic for the downstate regions of the State where affordable housing continues to be a significant problem. There needs to be a provision for amendments to the cap and threshold values for capital acquisitions, new construction and leases to be updated on at least a periodic basis based upon an appropriate housing index.

The State and the nonprofit providers have made significant investments in real property to support thousands of individuals yet there is no provision to exceed the threshold values:

• especially as homes are reviewed by OPWDD against fire safety guidelines that could require providers to make significant capital investments to meet code;

• for developing new homes that can satisfactorily meet the needs of individuals with significant challenging behaviors and/or medical issues; and

• in order to meet money follows the person goals which require 4 persons or less to live together.

The inclusion of language that “DOH may retroactively adjust the capital component” in (i) General Principles is problematic for providers whose capital cost has already been approved by OPWDD in that the draft regulation appear to permit DOH to reduce capital reimbursement approved under proposes to limit reimbursement at the lower of the amount Subpart 745-6 if it exceeds reimbursement under the new proposed regulations. The language in the proposed regulation needs to be amended as follows “(i) General principles.” Capital costs shall be included in the rate at the lower of the amount determined pursuant to Subpart 635-6 of this Title or thresholds as determined pursuant to subparagraph (iv) of this paragraph. However, capital costs approved by OPWDD prior to July 1, 2014 through the formal prior property approval process shall only be subject to Subpart 635-6 of this Title. DOH may retroactively adjust the capital component to reflect capital costs approved pursuant to Subpart 635-6 or pursuant to this paragraph.

The language in “(ii) Initial rate” needs to be amended to make clear that the new regulations on capital costs only apply to new residential and day programs and that the new proposed capital cost rules do not apply to capital costs approved by OPWDD prior to July 1, 2014 and such capital costs shall only be subject to Subpart 635-6.

The short term interest time limit (“k”) should be increased from 12 months to 18 months without limitation between acquisition or renovation phases given the delays in receiving prior property approvals as well the delays in the ability to obtain building permits from local municipalities.

RESPONSE: The Department has decided that no change to the regulation is necessary at this time in response to the comment. However, the comment will be taken under advisement for consideration when subsequent amendments are made to the regulation.

6. COMMENTS: 86-11.6 Trend Factor - The regulation states that “for years in which DOH does not update the base year, subject to the approval of the Director of the Budget, DOH may use a compounded trend factor to bring base year costs forward to the appropriate rate period”. However, the regulation fails to describe the use of a trend factor when the base year is being updated.

RESPONSE: The Departments language as stated is correct. Trend factors will not be applied in years in which the methodology is rebased.

7. COMMENTS: The regulations should provide for at least a 90-day correction period for errors made in the computation of the rate.

RESPONSE: OPWDD regulations 14 NYCRR 686.13(h) already allow for a 90-day review period for any rates promulgated. This regulation when promulgated will not supersede the previous approved regulation.