Ohio Skilled Nursing Facility Medicaid Budget Update


in this issue:


State Budget Update and 7/1/09 Rate Settings

Governor Strickland signed Amended Substitute House Bill 1 (H.B. 1) into law on Friday, July 17, 2009.  The provisions of the bill relating to Medicaid reimbursement for skilled nursing facilities remained relatively unchanged from the “framework” version adopted by the Conference Committee.   Unfortunately, most of the increases suggested by the House and/or Senate were eliminated due to an additional state budget shortfall of $3.2 billion.

A summary of important H.B. 1 provisions are as follows: 

  • Phase In: The stop gain/stop loss methodology will be used to calculate rates, with a 1.75% stop gain and 1% stop loss in FY 2010 and a 2.25% stop gain and 1% stop loss in FY 2011.   A significant change is that once a provider is in “price”, they are no longer subject to the stop loss/gain calculation for interim or fiscal year end rate calculations. They will remain in price and any future case mix changes (positive or negative) will result in adjustments in the provider’s rate and will not be subject to further stop loss/gain provisions.
  • Prices: No inflation to peer group prices but may increase based upon FPF - see below.
  • Franchise Permit Fee (FPF): FPF increase of $5.70 (referred to as "Work Force Development Payment") is added to the rate after stop gain/loss calculations. Total FPF is $11.95 (6.25 + 5.70) per day.  The franchise permit fee amount is subject to change once ODJFS uses the 2008 Medicaid cost report data to determine if the franchise fee can be increased further under federal guidelines. Any increase will be used to increase prices. Therefore, final skilled nursing facility rates will not be known until October, 2009 at which time there will be a retroactive adjustment to 7/1/09.
  • Capital:   No capital provisions (hold harmless or capital compensation add-on) are included in the price; however, 6/30/09 rate used for stop gain/loss calculation does include the H.B. 562 capital compensation add-on for previously qualified facilities. Price will not include the capital hold harmless to the 6/30/05 rate as called for in earlier budget versions.
  • Bundling: Consolidated Service Payment (the "bundling" of certain ancillary Medicaid services into the SNF rate) of $3.91 will be added to the rate after stop gain/loss calculation and will no longer be separately billed to Medicaid by the supplier, effective 8/1/09. These ancillaries include Oxygen ($.33), Therapies ($1.75), Transportation ($1.14), certain OTC Pharmacy ($.03) and Wheelchairs ($.66). The cost incurred by the SNF will now be reported on the annual cost report. It is important to note that the facility will incur additional expenses related to these items. See separate article for more information.

In a change from prior years, the July 1, 2009 Medicaid rates will not be paid until October. Until that time, each facility will continue to receive their current rate until the new rate is finalized, and then a lump sum adjustment retroactive to 7/1/09 will be made. Please contact us if you have not previously received your facility’s 7/1/09 Final Estimated Rate Setting. This analysis will include the just-released detail of your facility's 7/1/09 quality add-on calculation.

For illustration purposes, we have prepared a sample analysis of the 7/1/09 & 7/1/10 Estimated Rate Setting providing the rate and revenue impact to a sample over-price, at-price, and under-price facility. Click here for sample rate calculation. The goal of ODJFS has been to move providers toward price.   As you can see in the chart below that goal is being accomplished as only 18% of providers were at price for FY 2009 while 39% are estimated to be at price for FY 2011.


Actual 7/1/08

Estimate 7/1/09

Estimate 7/1/10

Facilities at Price




Facilities Over Price (Stop Loss)




Facilities Under Price (Stop Gain)









Positive Impact on Rate




Negative Impact on Rate








Please note that the estimates for FY2010 and FY2011 are based on calculations from information obtained from the most recent data available from ODJFS public information files, including use of actual, updated case mix scores that will be used to set 7/1/09 rate.

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Bundling - Do We Pay or Do They Pay?

H.B. 1 includes provisions for the "bundling" of certain ancillary Medicaid services (listed below) into the skilled nursing facility (SNF) per diem rate through a $3.91 “consolidated services payment” rate add-on. Effective for dates of service on or after August 1, 2009, the Ohio Department of Job Family Services (ODJFS) will no longer process claims for the bundled items. This is a significant change for providers and there continues to be much confusion in this area. Previously, these consolidated services were billed directly to ODJFS and either reimbursed directly to the SNFs or the outside vendors. Nursing facilities will now be responsible for providing these services to Medicaid residents and will need to monitor and manage the related expenses.  The $3.91 add-on to SNF per diem rate is intended to cover the cost of these services.   The following items are included in consolidated Medicaid services:

  • Custom Wheelchairs
  • Certain Over the Counter (OTC) Medications
  • Oxygen (Concentrators and Tanks)*
  • Therapy Services (Occupational, Physical, and Speech)*
  • Transportation Services (Ambulance and Ambulette)*

*Please note this is not just for Medicaid-only residents, but also includes the 20% Medicare Part B co-insurance for Medicaid-eligible residents.


Click the links below to access the ODJFS information:

ODJFS has provided the current fee schedules for 4 of the 5 categories which may be helpful in contract negotiations with vendors. However, they do not solely form the basis for the $3.91 add-on which was determined as follows:

  • Oxygen is based on $50 per month for concentrators and assumes a Medicaid utilization of 20% of the SNF patients.
  • Therapy is the total of Medicaid therapies and the Medicare Part B coinsurance claims PAID divided by 18,500,000 Medicaid days less two cents per day.
  • Over the counter medications are based on the total PAID for the included OTC drugs less the $3.00 dispensing fee.
  • Custom wheelchairs are based on the amount BILLED to ODJFS for the custom chairs, parts, and repairs divided by the 18,500,000 days less 9 cents per day.
  • Transportation services are based on the fiscal year 2008 ODJFS SPENDING for SNF patients divided by the 18,500,000 Medicaid days.

Since the consolidated billing services will be paid as part of the SNF per diem, it will not require any special billing mechanism to be performed by the nursing facility.   Costs associated with the five consolidated billing services will be included on the cost report in either the direct care (oxygen, OTC drugs and therapy) or ancillary/support (transportation and wheelchair) cost center.

Claims with a date of service on or after August 1, 2009, that electronically cross over from Medicare Part B will not be paid. However, ODJFS cannot tell us what to expect to see on the remittance advices or if we will see the claims at all. All claims with dates of service prior to and including July 31, 2009 should be billed as normal to Medicaid for reimbursement (i.e. Medicaid therapy only and Medicare Part B coinsurance). Medicaid recipients cannot be billed for any deductibles and/or coinsurance amounts. Since ODJFS pays supplemental insurance premiums for dual eligibles, providers may want to encourage residents to maintain private Medicare supplemental insurance which covers coinsurance amounts.

H.B. 1 does not provide detail as to how much or when SNFs must pay for bundled services nor defines which services must be provided. Providers need to continue to provide services needed by residents and remain in compliance with state and federal survey guidelines. Providers may need to enter into new contracts or renegotiate existing contracts with vendors for these services and include safeguards to ensure only necessary services are provided. It may be necessary to consult with legal counsel especially if vendor contracts include provisions regarding waiving deductible and coinsurance which may violate Safe Harbor rules. In addition, each provider should analyze how these services are currently provided and determine if there is a more cost effective method while remaining aware of potential case mix impacts that could negatively impact their facility's Medicaid per diem rate. Reviewing operations relative to these "bundled" items and monitoring and controlling these costs will be critical to managing through these payment system changes.

While it is possible that injunctions or restraining orders could be drafted to try to delay or postpone the implementation of the consolidated billing services, as of July 31, 2009, consolidated billing services for the Medicaid SNF residents are to be effective August 1, 2009.

ODJFS has published a Frequently Asked Questions tool for clarification on Nursing Facility Billing Transition in regard to bundling. In addition, Governor Strickland signed an Executive Order on July 31, 2009, for Immediate Amendment of Rules Regarding Medicaid Reimbursement to Nursing Facilities.

Stay tuned as more information and clarification becomes available...

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Quality Add-On

ODJFS recently released the 7/1/09 Quality add-on calculation and benchmarks. The price per point for FY2010 will be $.80. Facilities can earn up to 8 quality add-on points. Benchmarks for determining points are as follows:


Quality Component





No health deficiencies on most recent standard survey

Actual Facility

Actual Facility

Actual Facility


No deficiencies above level E on most recent standard survey

Actual Facility

Actual Facility

Actual Facility


Nursing hours above state-wide average





Employee retention above peer group average

















Occupancy rate above state-wide average





Medicaid utilization rate above state-wide average





Case-mix score above state-wide average





Resident satisfaction above state-wide average

n/a in FY10


n/a in FY08


Family satisfaction above state-wide average


n/a in FY09


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Understanding the RAC Audit Program and Its Impact on SNFs/LTC

Howard, Wershbale & Co. and Dart Chart Systems, LLC, a leading provider of documentation and reimbursement management technology, invites you to attend this complimentary webinar.

The RACs Program is in the rollout phase right now and its impact on Medicare reimbursement will be far reaching. The best defense against the RACs is knowledge of how they work and what they focus on. This session will give you extremely valuable insight you will need.


Tuesday, August 11, 2009  -- 2:00pm - 3:00pm EST






* The Changing Medicare Landscape
* Overview of the RAC Program

* Results of the RAC Demonstration

* The RAC Appeals Process




We hope you are able to be part of this valuable session. If you have questions prior to the event, please direct them to kmiller@dartchart.com.

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