Policy Positions

Private Provider Position Proposal on the “Median Plus” Rate Setting Policy

Department of Human Resources Draft position on Room and Board and Watchful Oversight

 

 

 

 

 

 

 

 

 

 

 

 

 

GAHSC Position Proposal on the “Median Plus” Rate Setting Policy

PROVIDERS POSITION PAPER
Room and Board and Watchful Oversight 
August 10, 2006 

Issue:              Room and Board and Watchful Oversight 

Background:  Georgia has over 300 licensed programs in Georgia that care for its at risk children.  These providers represent the whole continuum of care from home and community based services, foster care, group homes, therapeutic foster care, intermediate group homes and psychiatric facilities.

It is in the interests of both providers and the State that a comprehensive policy for rate setting be developed that will serve the children of Georgia.  We support the development of a policy that can inform the budgetary processes of the State and providers for years to come.   It is in the interests of all that tools are developed that support a rate setting methodology.  The current cost reports and time studies leave much be to be desired.  Cost reports and time studies must be established in accordance with reasonable criteria for each cost center to be measured. 

Position:

The Basic Principles of reimbursement policy for room and board and watchful oversight for child placing, child caring institutions and other provider categories should include:

·          Room and Board and Watchful Oversight should be any allowable cost other than treatment (services of medical necessity) and educational services.

·         Reimbursement should be based on costs by provider groups*, i.e. – group homes, foster care, therapeutic foster care, assessment and stabilization centers.

·          The system should reimburse for costs plus an inflation index.

·          The system should recognize the need for reasonable margin.

·          The system should define allowable and non-allowable costs.

·          The system should determine which costs 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 mechanism to prevent unrestrained average costs of care.

·         The system should have an appeals process for providers who are being reimbursed at the incorrect or contestable amount.    

·         A rate reimbursement system should be implemented with enough lead time to preserve the financial and program integrity of the providers that the State needs.

·         Specialty Hospitals shall be defined as Psychiatric Residential Treatment Facilities with bundled rates. 

Providers support the Provider and Placement Grouping Categories with some additions.

·         Residential – mostly group homes and children’s homes ( Present Levels 1-4)

·         Residential – Stabilization and Assessment Centers ( Present Levels 3)

·         Residential – Intermediate ( Present Levels 4 and 5)

·         Residential – ILP

·         Child Placing Agencies – basic foster care agencies ( Present Levels 1 and 2)

·         Child Placing Agencies – Intermediate ( Present Level three)

·         Child Placing Agencies – Therapeutic Foster Care ( Present Levels 4-6)

·         Child Placing Agencies – Medically Fragile Foster Care / Developmentally Disabled

Issue:              “Median Plus” Rate Setting Policy 

Background:
In January, 2006, DHR proposed a variation of the rate setting policy, which has been used by the Department of Community Health for over 20 years for the Nursing Homes Industry.  Reimbursement is based on cost reports with the rate limit being set by the medium plus a percentage or a percentile on six cost centers.  DHR’s proposal for reimbursing child-serving agencies was to establish six cost centers with reimbursement based on the combination of the allowable costs in each of the cost centers.  Providers would be paid their cost or the upper limit of the cost center, whichever is lower.  This cost methodology is well established.  It has shown to hold costs down while at the same time providing incentives for quality and fiscal outcomes.  Its long history is testimony to it’s acceptance by the health care industry and the state.  

Position:

Providers support cost reports that have integrity.  The current cost reports and time studies leave much be to be desired.  Cost reports and time studies must be established in accordance with reasonable criteria for each cost center to be measured.  The codes used for treatment (E-F) were identified by CMS as mostly foster care services and not performed by qualified licensed staff in order to qualify as treatment services.  According to the CMS report on Providers dated July 2006; few Medicaid eligible services can be captured by those codes used to identify treatment.  Only code G and H come close to capturing the treatment costs but only marginally. 

Providers support three cost centers.

·          Room and Board and Watchful Oversight (all cost except treatment and education) R&B and Watchful Oversight will include all costs other than those services billed directly to Medicaid for treatment.  Included are such items as occupancy, depreciation, direct care costs, life skills training, recreation, food and transportation.

·         Treatment ( billable services to DCH in codes G and H )

·         Education

Providers support parity with the nursing home industry.  Child-serving agencies should have upper limit caps set no lower than the nursing home community.  Because operations and direct care determine most of the variability of rates between provider agencies, the upper limit caps should be set no lower than the 90 percentile.  Direct Care for nursing homes is now reimbursed at the 90th percentile.  This translates into a median plus rate of 30%.   

Providers support the development outcome measures for determining effectiveness of various programs.  We support the development of incentives built into the rate structure (similar to the nursing homes system) that would reward agencies for meeting desired lengths of stay, permanency, positive behavioral change, psychological/emotional, educational, social and developmental improvements as well as financial outcomes. Providers pledge their support in helping to develop and achieve these outcomes.    

Providers support “growth rates” or “inflationary rates” comparable to the nursing home community built into the cost reports to reflect the aging of the data.  For 2006, this growth rate should be about 4.5%.  The cost report year to be used in any system should be explicitly stated and the inflation factor adjusted to reflect the age of the cost report year.  The 4.5% inflation factor is what we think facilities have experienced each year in the last two or three. If the 2004 cost reports are used, 4.5% would be reasonable. If the 2003 cost reports are used, the growth factor needs to be higher. 

Providers support special consideration for specialty service providers.  Most notably medically fragile foster care and services to developmentally disabled children represent certain challenges to “provider category” cost averaging.  Medically fragile providers and Developmentally Disabled Service providers cover the whole of the continuum where even basic care must be provided by highly trained foster parents or direct care staff.  The very highest care approaches that of facility based care.  Special negotiations with providers concerning rates need to be an option. 

Providers support continued refinement of any reimbursement methodology and an appeals process.  No state ever gets the financing of their child welfare system reform right the first time.  It takes a continued commitment of the State working together with the private provider community to get a financing system that meets the needs of the children and allows the State and providers to achieve desired outcomes. Programmatic changes should be made in concert with rate reimbursements.  A poorly funded system based upon inadequate data has already seriously compromised some of our best and most respected agencies and threatens to put them out of business.  Allowances need to be made to help some agencies who experience a substantial rate reduction to continue to operate while the methodology is refined.

Providers support a hold harmless for the first year of new rate implementation.  No agency will be paid less than they are presently being paid. 

Providers support paying new providers at the cap for each cost center until the next cost reporting period. 

Providers support the Department developing a formal process with providers by which rate setting methodologies are reviewed on a yearly basis prior to the reissue of contracts  for appropriateness and effectiveness in meeting the needs of children and families at risk.  The Georgia Association of Homes and Services for Children with other providers look forward to working with the Department concerning a rate policy for providers of services to at risk children.  It is our hope that a policy can be developed that will inform the State and providers for years to come.  Refinement will always be necessary.  Stability in the system and building stable capacity with providers depends on a policy that will allow planning, budget prediction and expected capacity.  It is our hope that any finance system will develop the very best resources for Georgia’s at risk children.

* For children with intense medical needs, or have other intense supervisory needs like many developmentally disabled children, room and board and watchful oversight must be considered from a "what will it cost to provide these services" framework.  The traditional provider categories historically have not caught the specific costs related to serving these children.