June 26, 2012
Partial Funding for Connecticut Nursing Facility Property Improvements in SFY 2013 Budget
>Budget implementation language for SFY 2013 that was adopted by the General Assembly on June 12, 2012, allows the Department of Social Services (DSS), within available funding, to revise Medicaid nursing facility rates prospectively for a portion of facility improvements made between cost years 2008 and 2011. Both the for-profit (CAHCF) and not-for-profit (Leading Age) nursing home associations advocated for a reinstatement of rate adjustments for all property improvements, not just those relating to major projects subject to Certificate of Need (CON) review and approval. Beginning in SFY 2010, rate adjustments were limited to CON projects only whereas prior to SFY 2010 all increases in allowable property reimbursement qualified for a Medicaid rate adjustment.
The statutory language that passed on June 12, 2012, is permissive and states that rate adjustments are for facilities, "which have undergone a material change in circumstances". The term, "material change in circumstances" is not defined but presumably DSS will deem certain property improvements to be immaterial and ineligible for a rate adjustment. Consequently, whether and how rates are adjusted in SFY 2013 will be determined by DSS.
The General Assembly added $1.0 million to the SFY 2013 budget for nursing facility rate adjustments relating to property improvements not otherwise included in rates. The effective date of the property reimbursement section of the budget legislation is January 1, 2013; consequently, DSS may make annualized rate adjustments of approximately $2.0 million. It is estimated that the Medicaid cost of full recognition of property allowances or "fair rent" associated with over $90 million in investments for non-CON improvements made between 2008 and 2011, would be between $5.8 and $7.0 million on an annual basis. Based on $2.0 million in annualized funding, it can be speculated that DSS would make rate adjustments of between 28% and 34% of allowable property reimbursement amounts. For example, a facility with $3.00 per day in allowable property reimbursement related to 2008 through 2011 improvements may receive a rate adjustment of approximately $1.00 per day or 33% of the full amount effective January 1, 2013.
To the extent that DSS deems that some facility property improvements are immaterial, additional funding would be available for facilities determined to have material property increases with realization of a greater percentage of the property allowance related to improvements put in service between 2008 and 2011.
The following is the legislation related to Medicaid rate adjustments for nursing facilities in SFY 2013 (Section 16 of HB 6001):
For the fiscal year ending June 30, 2013, the commissioner may, within available appropriations, provide pro rata fair rent increases for facilities which have undergone a material change in circumstances related to fair rent additions placed in service in cost report years ending September 30, 2008, to September 30, 2011, inclusive, and not otherwise included in rates issued. For the fiscal year ending June 30, 2013, the commissioner shall add fair rent increases associated with an approved certificate of need pursuant to section 17b-352, 17b-353, 17b-354 or 17b-355.