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4/6/09
NY CMI Alert: Transition to
The New York State 2009 – 2010 state health and housing budget agreement contains a provision to replace the “rebased” nursing facility Medicaid payment system with a regional pricing methodology effective April 1, 2010. This memo serves to explain “price-based” concepts and the implications of the change on the “Picture Date” CMI collection cycles
Price-Based Payment
We have worked with providers operating under Medicaid CMI price-based reimbursement in Texas, Minnesota and Ohio. While the details of NY’s system are unknown to us at this time, simply stated, the state is divided into “regions” (NY is expected to contain eight distinct pricing regions). Regional provider cost reports are used to calculate average expenses for Direct and Indirect costs. A percentage of the average costs in the region is set as the regional “price” that is paid to each facility, regardless of individual operating expenses, with direct care expenses adjusted for acuity using the MDS/CMI system.
Price-based payment is favored by Medicaid programs for several reasons: First, it offers more cost certainty than traditional cost-based programs while limiting administrative cost report administration and appeals. More importantly, it creates global downward pressure for providers to control costs, as facilities will strive to keep expenses below the average to improve financial performance. By definition, of course, every provider cannot realize below average costs, thus the system creates distinct “winners and losers.”
Financial outcomes are driven by efficiency and cost control, which in turn reduces overall program expenses.
CMI Collection Schedule
Price-based payment is expected to utilize a slightly different RUG index. Due to the implementation timeline, the State has altered the collection/payment windows associated with the original January / July Picture Dates. Specifically, the July 2009 CMI collection will be used to adjust rates for the period July 1, 2009 through March 31, 2010. This nine-month window raises the stakes for the upcoming collection, making it imperative that providers realize the highest appropriate score. We remind our clients that the first MDS assessments to be included in the July 2009 collection will have reference dates beginning at the end of this month, thus you should be preparing now for the collection.
There will also be a January 2010 CMI collection, but the associated rate impact will not be implemented until (presumably) April 1, 2010, when it will be applied to the new price-based methodology. Thereafter, we expect the “normal” collection cycle to continue unabated, with Picture Dates in January and July of each year.
We will provide more information as it becomes available. In the meantime, feel free to call our CMI Advantage® Hotline (732-970-0733) with any questions.
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