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Medicaid Case Mix Changes Rock the Industry

By Robert Nasso, on October 18th, 2019

The New York State (NYS) Department of Health recently shocked the nursing home industry with the release of the July 1, 2019 Medicaid rates. The rates reflect the change in case mix methodology moving from a predetermined picture date assessment to an average of all Medicaid assessments for a six-month period.

Why did this happen?

The change in case mix methodology has been contemplated since the State budget included a $246M rate reduction, dubbed “Case Mix Rationalization.” The State submitted a State Plan Amendment to CMS in June that has yet to be approved.

How was the case mix calculated?

DOH calculated an average RUGS score based on Medicaid only resident assessments (MDS) submitted for the period 8/8/18 – 3/31/19. Unfortunately, the State did not provide the detailed resident data to allow facilities to validate the case mix information as they had in the previous methodology.

How bad are the rates?

Facilities are just beginning to assess the financial impact of the rates, but we’re seeing an average rate decrease of approximately $10/day with some as high as $30/day. To make matters worse, the State removed the 5 percent cap on case mix changes that could have temporarily limited the rate reduction. For many nursing homes the annual impact is estimated to be well in excess of $1M. Amounts will be paid or recouped in the November 6, 2019 check release date. Repayments are expected to be recouped at 15 percent of each Medicaid check.

Does this impact MLTC members as well?

Yes. Fortunately, most MLTC contracts do not allow for retroactive adjustments, so your rate will only be impacted from the time the benchmark rates are posted (10/18/19) and going forward. Be sure to review your contracts to see if this applies!

Is there anything we can do?

We recommend that you try and verify the CMI data. We have found that several facilities have struggled to reconcile the CMI that DOH used in the rates to their own MDS data. Therefore, we are recommending that facilities submit a request to DOH for the specific resident data that was used in the July 1, 2019 rate.

Many nursing homes are evaluating the legality of the change in the case mix methodology and are considering potential litigation. You may want to contact your association or attorney for further information. As always, reach out to any of our healthcare and long-term care industry experts today if you have any questions or would like to further discuss.

This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.

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Written By

Rob Nasso April 2020
Robert Nasso
Senior Counsel

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