ODJFS Releases FY10 Ceilings and Rollback Percentage of 1.62%

After a roller coaster ride for ICFs/MR providers and three, week-long interim budgets, Governor Strickland signed Amended Substitute House Bill 1 (A.S.H.B. 1) into law on Friday, July 17, 2009. The provisions of the bill cover the period 7/1/2009-6/30/2011.  This was a difficult state budget that was only passed after interim budgets were implemented in response to unexpected revenue shortages and no overall consensus on how to fill an unexpected announcement by the Office of Budget and Management of a $3.2 billion dollar deficit. The end result was a very slight increase in ICFs/MR rates achieved primarily through an agreement to delay the last vendor payment (June 2011) of the biennium budget, which pushes the payment into the next fiscal year (FY) 2012. This action allowed the stated to save a month’s vendor payment in the FYs 2010-2011 Biennium and allowed those funds to support the ICFs/MR rate through an increase in the targeted statewide average (SWA) of $274.98 for FY2009 to $278.15 in FYs 2010-2011. The SWA is used to calculate the overall rollback percentage used which providers have been subject to since FY2005. 

Just to give a brief overview, Governor Strickland’s proposals that were ultimately defeated included the following:

• Implementation of a 108%/107% rate cap limit for FYs 2010 and 2011, respectively. This would have prohibited the increase of an ICFs/MRs Medicaid rate (before rollback calculation) for any single provider from one year to another by no more than the prescribed percentages.
• Removing from State law (with the “intent” of inclusion in Administrative rule) the specific inflation measuring index used to calculate the direct care, other protected, indirect and capital inflation adjustment. The proposal would have also removed from state law the requirement of a correction factor to adjust estimated inflation factors to actual in the subsequent fiscal year. This would have lead to unpredictability in the funding formula and the removal of legislative control.

A Summary of Major H.B. 1 Provisions Affecting ICFs/MRs are as Follows:

• ICFs/MR franchise permit fee (FPF) will fluctuate throughout the biennium. For July, 2009 the fee will remain at the current level of $11.98. For August, 2009 through June, 2010 the fee will increase by $2.77 to a total of $14.75 per day. For FY2011, the fee will be reduced to $13.55. 
• Movement of the June, 2011 vendor payment into July, 2011. There is no language in H.B. 1 addressing the payment delay or when the payment will be paid however, it was the intent of all stakeholders that the payment would only be delayed for a short period. Providers need to closely monitor cash flow and plan for any cash flow difficulties that may arise.
• A change from prior years, new rates (based on calendar year 2008 cost report) will not be effective until 8/1/09-6/30/10, providers will continue to receive their 6/30/09 rate for the period 7/1/09-7/31/09.
• While Skilled Nursing Facilities are no longer subject to depreciation recapture it remains for ICFs/MRs. There was discussion of possible budget correction language for ICFs/MRs in the fall. Please call your health care consultant if you are contemplating the sale of an ICFs/MR since there are strategies to avoid depreciation recapture that should be considered.
• Clarification of reporting off-site day programming costs in the direct care cost center whether or not the area which the day programming is provided is less than two-hundred feet away from the ICFs/MR facility.

Several items of interest to ICFs/MR providers that were subject to Governor Strickland’s line item veto include:

• Language reforming ODJFS’s practice of holding vendor payments when an ICF/MR is subject to a sale or change of provider. Although stakeholders had reached an understanding with ODJFS to reform the escrow process the final language of H.B. 1 did not accurately reflect this agreement. It is anticipated the agreed-upon language will be included in the budget correction bill in the fall. Please stay tuned to our website for additional updates as more information becomes available.
• Language stipulating the conditions and reimbursement of oxygen services for medically fragile children residing in ICFs/MRs.
• Language that would have created an ICFs/MR Reimbursement Study Counsel

In summary, as in previous years, the Ohio Department of Job and Family Services (ODJFS) will determine a rate for each provider using the 2008 cost report data. Once all costs have gone through the reimbursement formula, ODJFS will then calculate a mean total per diem for all ICFs/MR facilities in the state, weighted by the May, 2009 Medicaid days. This per diem is compared to the $278.15 targeted SWA to arrive at the roll-back percentage. The SWA per diem for FY2010 was $282.72 resulting in a fiscal year 2010 of 1.62% (FY2009 rollback was 4.27%). Although the inflation factors and ceilings are based on stipulated indices and costs, one unexpected outcome of these calculations is the indirect care index resulted in a negative inflation (deflation) of 10.91% for fiscal year 2010. The deflation factor is not only applied against filed costs but also used to calculate the indirect care ceilings.

To keep you updated regarding your FY2010 Medicaid rate setting, we will be sending you an email calculating your rate using the final ceilings and rollback percentages. Please contact us if you do not receive your rate setting email by September 1, 2009.

If you have any questions about your rates beforehand, please feel free to contact us.