Indiana Nursing Facility Medicaid Reimbursement Update “Phase II”

By Robert Thomas


The Select Joint Commission on Medicaid Oversight (SJCMO) approved the Family & Social Services Administration (FSSA) “Phase II” changes at its October 20, 2009, meeting. The rule which was published as LSA Document No. 09-215 in the May 2009 Indiana Register, received the support of all three long-term care trade associations at the September 30 meeting of the SJCMO. FSSA has indicated January 1, 2010, as the anticipated effective date of “Phase II.” Key elements of “Phase II” are:

Rebasing of the report card score add-on per diem based on each nursing facility’s latest published report card score as of the end of each state fiscal year (June 30). The revised add-on amounts are:

Report Card Score (RCS)Report Card Score Add-on Per Diem
0 - 82 $ 5.75
83 - 265 $5.75 – ((RCS – 82) x $0.03125)
266 & above $0

Note: The report card score add-on will not be subject to the Maximum Annual Increase (MAI) limitation.

Rebasing of the special care unit (Alzheimer’s unit) add-on per diem from $10.80 to $12.00 for each Medicaid resident day in the special care unit. The add-on per diem will be based on the resident assessment data (MDS) on file as of March 31 of each year and will be effective July 1 of each year.

Note: The special care unit add-on is subject to the MAI limitation.

For nursing facilities that qualify for the ventilator add-on payment, the add-on increases from $8.79 per day to $11.50 per day for all Medicaid resident days.

Increasing the minimum occupancy penalty from 85% to 90% for direct care and indirect care costs for facilities with greater than 50 beds.

Payment of a flat “price-based” amount for administrative costs versus the current cost-based methodology. The per diem will be 100% of the average allowable cost of the median patient day.

Reduction or elimination of efficiency rate incentives for the direct care, indirect care and capital components based on quality report card scores. Children’s facilities are exempt from this provision as it relates to direct care. The efficiency incentive percentages prior to the application of penalties for poor report card scores are as follows:

Direct Care – 30%Indirect Care – 60%Capital – 60%
The actual percentage incentive is based on the report card score and the following sliding scale:

Year One
Report Card Score (RCS) Allowed Efficiency %
0 - 82 100%
83 - 357 100% – ((RCS – 82) x 0.36232%)
358 & above 0%

Year Two
Report Card Score (RCS) Allowed Efficiency %
0 - 82 100%
83 - 279 100% – ((RCS – 82) x 0.50505%)
280 & above 0%

Establishes a ceiling on the efficiency rate incentive for direct care at 10% of the direct care median.

Note: The ceiling is not case-mix adjusted.

The direct care component will be excluded from the MAI limitation calculation.
Reduction of the Medicaid case-mix index (CMI) for certain residents falling into the lowest four Resource Utilization Group (RUG) categories (PB2, PB1, PA2 & PA1). The revised case-mix scores are phased-in over a two-year period. The reductions are not clinically based but are rather an economic disincentive for nursing facilities to admit such residents. When fully phased-in, the reductions represent a decrease of approximately 58% compared to the original clinically based case-mix score. The CMI changes are as follows:

RUG-III Current CMI Year One CMI Year Two CMI Year Three CMI
PB2 0.73 0.48 0.41 0.30
PB1 0.66 0.44 0.38 0.28
PA2 0.56 0.38 0.32 0.24
PA1 0.50 0.33 0.28 0.21

Note: Existing residents are grandfathered and will not have their case-mix scores reduced.

Likewise, new residents who are incontinent and have a cognitive performance score other than zero, 1 or 2, will retain the current CMI scores.

Revisions to the annual cost report submission requirements, including:
An electronic copy (ECR file) of the Medicare cost report is no longer required to be submitted. A written copy must still be submitted.

A copy of the trial balance crosswalk used to prepare the Medicare cost report is no longer required to be submitted.

A copy of the trial balance/general ledger crosswalk used to prepare the Medicaid annual report is required to be submitted.

Need additional information?
Contact your BKD Health Care advisor with questions or for assistance in assessing the impact of these changes on your organization.

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