HAR §17-1739.2-21. Acuity based reimbursement system

(a) Beginning with the effective date of these rules, UNOFFICIAL 1739.2-33 the department will implement a phased in transition approach from PPS to an acuity based reimbursement system. The phased approach will be completed by June 30, 2008. (b) The transition rate methodology uses a price based system with the following parameters: (1) For the direct care rate component, the component price is set at one hundred ten per cent of the day-weighted median. The rate that is calculated is subject to a case mix adjustment based upon the change on each facility’s overall case mix. (2) For the administrative and general rate component, the component price is set at one hundred three per cent of the day-weighted median. The rate is not subject to a case mix adjustment. (3) For the capital rate component, the component price is set at the day-weighted median. The rate is not subject to a case mix adjustment. (4) The Hawaii general excise tax is treated as a pass-through. The rate setting parameters will remain constant for all future rate setting periods. The prices calculated for direct care, administrative and general, and capital will reflect prices that relate to the rate period beginning July 1, 2002 and ending June 30, 2003. The component prices will be updated for each subsequent rate period by the inflation adjustment for each period. (c) Effective for rate periods starting the effective date of these rules and July 1, 2004, the annual cost increases shall be determined as follows: (1) Calculate the blended Acuity A and Acuity C rates for all eligible NF facilities using the inflation adjustment. (2) For each NF, compare the blended rates with the inflation adjustment to the rates that would have been reimbursed under the acuity based reimbursement system. (3) Apply the inflation adjustment only to the UNOFFICIAL 1739.2-34 NFs that would have received an increase under the acuity based reimbursement system. The rate as increased by the inflation adjustment for the NF shall not exceed the rate the provider would have been entitled to under the acuity based reimbursement system. Any NF not entitled to the inflation adjustment shall receive no rate increase or decrease. (4) For all NFs that are not entitled to an inflation adjustment, or whose rate is limited by the rate determined by the acuity based reimbursement system, calculate by facility the annual amount associated with the inflation adjustment based on the Medicaid bed days from the latest available cost report. (5) The total amount of inflation adjustments calculated in paragraph (4) shall be distributed to NFs whose rates with inflation adjustments are below the rate calculated under the acuity based reimbursement system. The total amount shall be divided by the number of Medicaid bed days for the NFs with rates below those calculated by the acuity based reimbursement system. A SNF and ICF bed day rate shall be calculated. (6) Each NF with rates below that calculated by the acuity based reimbursement system shall receive an additional adjustment to its rate. The adjustment shall be applied to each SNF and ICF bed day, provided the new bed day rate does not exceed the rate that would have been paid under the acuity based reimbursement system. (d) Effective for rate periods starting July 1, 2005, July 1, 2006, and July 1, 2007, the reimbursement methodology is adjusted each year as follows: (1) Effective July 1, 2005, seventy-five per cent of the NF’s rates for SNF and ICF are UNOFFICIAL 1739.2-35 based on the previous year’s rate adjusted for inflation. Twenty-five per cent of the SNF and ICF rates are based on the acuity based reimbursement system adjusted for inflation. (2) Effective July 1, 2006, fifty per cent of the NF’s rates for SNF and ICF are based on the previous year’s rates adjusted for inflation. Fifty per cent of the SNF and ICF rates are based on the acuity based reimbursement system adjusted for inflation. (3) Effective July 1, 2007, twenty-five per cent of the NF’s rates for SNF and ICF are based on the previous year’s rates adjusted for inflation. Seventy-five per cent of the SNF and ICF rates are based on the acuity based reimbursement system adjusted for inflation. (4) Effective July 1, 2008, one hundred per cent of the NF’s rates are based on the acuity based reimbursement system. [Eff 09/01/03 ] (Auth: HRS §346-59; 42 C.F.R. 431.10) (Imp: HRS §346-14(b))