Level of Care Cost Reports
and Contract Negotiations

Provider Update - January 02, 2005 - DHR Proposes New Providers Rates 

Two weeks ago DHR pulled their proposed Level of Care rates because of concerns expressed by providers.  They wanted to do a more detailed review of the cost reports and develop new assumptions about the data.  The Commissioner said that she wanted to develop a rate reimbursement policy that was transparent and understandable.   

Two weeks have passed and DHR has developed their policy position.  The general approach favored by DFCS for the immediate future is to pay providers based on their individual costs by category of provider (ie-residential, shelter, intensive, etc) with upper payment limits. In setting the individual provider rate, DFCS will look at the provider costs for therapeutic costs (which are billed to Medicaid) and non therapeutic cost (which are billed to state funds or IV-E.)  Upper payment limits by category of provider will be established.   

They have grouped Providers by Type:

Residential – mostly group homes and children’s homes
Residential – Shelter
Residential – Intermediate
Residential – Intensive
Residential – ILP
Child Placing Agencies – foster care agencies
Child Placing Agencies Intermediate – Therapeutic Foster Care

Their Basic Principles around reimbursement policy for Level of Care and Therapeutic Residential Intervention Services are as follows:

• The system can reimburse for cost.
• The system should define allowable and non-allowable costs. 
• The system should determine which cost can be reimbursed up to 100% of costs, up to a reasonable limit (upper payment limits).
• The system should acknowledge that there are some justifiable variations among costs between providers.
• The system should have a control mechanism to prevent over-development of services and unrestrained average costs of care.
• The system should have some kind of appeal process for providers who are being reimbursed at the wrong level.    

DHR is proposing a variation of the rate setting policy used by Georgia’s nursing home industry for over 20 years.  Reimbursement is based on cost reports with the rate limit being set by the medium plus a percentage or a percentile on certain cost centers.  DHR’s proposal for reimbursing child serving agencies is to establish six cost centers with reimbursement based either on the median or percentile.  Provider’s rates would be determined by the addition of their costs in each of the cost centers.  Providers would be paid their cost or the upper limit of the cost center, whichever is lower.   

Cost Center – Upper Limit Proposal

Administration – median plus 10%
Direct treatment – Therapeutic services – median plus 18%
Direct Room and Board – 75th percentile
Property – brick and mortar – 75th percentile
Occupancy – median plus 15%
Education – 80^th percentile  
Unallowable – no reimbursement

Policy Implications for Service Providers:

No provider would get paid more than cost.
Children service providers are have rate caps less than that of nursing homes.
Median or the percentile would determine the upper limit.
In succeeding years, providers would only get higher rates if the median cost went up.
No “growth rate or inflation factor” is built into DHR’s proposal to allow for old cost report data.
This system guarantees that at least 20% of providers do not get paid their allowable costs. 
DHR believes that this system spells the end of the Level of Care System (GAHSC does not.)

Everything is still on the table and DHR has solicited our input.  Please let us know of your questions, concerns, and comments.  GAHSC has developed an analysis of their proposal which will be posted to the website.  DHR will NOT go to the Department of Community Health with their recommendations on January 12th.

Negotiated Contract except for Rates
Cost reports can be found at these links. 
 
( call GAHSC for documents)
Median Plus Proposal by DHR and Proposed Ratespprateproposal20060130.doc
Comparison with DHR's Proposal (pprateproposalcomparison20060219.doc)
DHR's 12/28/05 proposal spreadsheet
Cost Reports, html format (summary which is more readable than the Excel Spreadsheet format)
Complete Cost Report Chart
Provider Cost Reports Tracking Document (lists the agencies compliance with cost reports)
Supporting Spreadsheet for Advocacy
Original Rates Advocated by GAHSC
DHR Budget Proposal
Nursing Home Rate Manual
Nursing Home Rate Setting Methodology
 

Any questions should be directed to Normer Adams at normer@gahsc.org or 404 572 6170.