TITLE 405 OFFICE OF THE SECRETARY OF FAMILY AND SOCIAL SERVICES

Amends 405 IAC 1-12-1, 405 IAC 1-12-2, 405 IAC 1-12-4, 405 IAC 1-12-21, 405 IAC 1-12-24, and 405 IAC 1-12-25 to revise rate-setting criteria for nonstate-owned intermediate care facilities for the mentally retarded and community residential facilities for the developmentally disabled. Effective 30 days after filing with the Publisher.

SECTION 1. 405 IAC 1-12-1 IS AMENDED TO READ AS FOLLOWS:

Affected: IC 6-8.1-10-1; IC 12-13-7-3; IC 12-15-13-4

Sec. 1. (a) This rule sets forth procedures for payment for services rendered to Medicaid recipients by duly certified nonstate-operated intermediate care facilities for the mentally retarded (ICF/MR), with the exception of those facilities operated by the state, nonstate-operated ICFs/MR licensed as comprehensive rehabilitative management needs facilities (CRMNF), and nonstate-operated community residential facilities for the developmentally disabled (CRF/DD). Reimbursement for facilities operated by the state is governed by 405 IAC 1-17. All payments referred to within this rule for the provider groups and levels of care are contingent upon the following:

(b) The procedures described in this rule set forth methods of reimbursement that promote quality of care, efficiency, economy, and consistency. These procedures recognize level and quality of care, establish effective accountability over Medicaid expenditures, provide for a regular review mechanism for rate changes, and compensate providers for reasonable, allowable costs. The system of payment outlined in this rule is a prospective system. Cost limitations are contained in this rule which establish parameters regarding the allowability of costs and define reasonable allowable costs.

(c) Retroactive repayment will be required by providers when an audit verifies overpayment due to discounting, intentional misrepresentation, billing or payment errors, or misstatement of historical financial or historical statistical data which caused a higher rate than would have been allowed had the data been true and accurate. Upon discovery that a provider has received overpayment of a Medicaid claim from the office, the provider must complete the appropriate Medicaid billing adjustment form and reimburse the office for the amount of the overpayment, or the office shall make a retroactive payment adjustment, as appropriate.

(d) The office may implement Medicaid rates and recover overpayments from previous rate reimbursements, either through deductions of future payments or otherwise, without awaiting the outcome of the administrative appeal process, in accordance with IC 12-15-13-4(e).

(e) Providers must pay interest on all overpayments, consistent with IC 12-15-13-4. The interest charge shall not exceed the percentage set out in IC 6-8.1-10-1(c). The interest shall accrue from the date of the overpayment to the provider and shall apply to the net outstanding overpayment during the periods in which such overpayment exists.

SECTION 2. 405 IAC 1-12-2 IS AMENDED TO READ AS FOLLOWS:

Affected: IC 12-13-7-3; IC 12-15

Sec. 2. (a) The definitions in this section apply throughout this rule.

(b) "All-inclusive rate" means a per diem rate that, at a minimum, reimburses for all nursing or resident:

(c) "Allowable cost determination" means a computation performed by the office or its contractor to determine the per patient day cost based on a review of an annual financial report and supporting information by applying this rule.

(d) "Allowable per patient or per resident day cost" means a ratio between total allowable costs and patient or resident days.

(e) "Annualized" means restating an amount to an annual value. This computation is performed by multiplying an amount applicable to a period of less or greater than three hundred sixty-five (365) days, by a ratio determined by dividing the number of days in the reporting period by three hundred sixty-five (365) days, except in leap years, in which case the divisor shall be three hundred sixty-six (366) days.

(f) "Annual or historical financial report" refers to a presentation of financial data, including appropriate supplemental data and accompanying notes derived from accounting records and intended to communicate the provider's economic resources or obligations at a point in time, or changes therein for a period of time in compliance with the reporting requirements of this rule, which shall constitute a comprehensive basis of accounting.

(g) "Average historical cost of property of the median bed" means the allowable resident-related property per bed for facilities that are not acquired through an operating lease arrangement, when ranked in numerical order based on the allowable resident-related historical property cost per bed that shall be updated each calendar quarter. Property shall be considered allowable if it satisfies the conditions of section 16(a) of this rule.

(h) "Average inflated allowable cost of the median patient day" means the inflated allowable per patient day cost of the median patient day from all providers when ranked in numerical order based on average inflated allowable cost. The average inflated allowable cost shall be maintained by the office and revised four (4) times per year effective April 1, July 1, October 1, and January 1 and shall be computed on a statewide basis for like levels of care, with the exceptions noted in this subsection, as follows:

(i) "Change of provider status" means a bona fide sale, lease, or termination of an existing lease that for reimbursement purposes is recognized as creating a new provider status that permits the establishment of an initial interim rate. Except as provided under section 17(f) of this rule, the term includes only those transactions negotiated at arm's length between unrelated parties.

(j) "Comprehensive rehabilitative management needs facility" or "CRMNF" has the meaning set forth in 460 IAC 9-1-2(5).

(j) (k) "Cost center" means a cost category delineated by cost reporting forms prescribed by the office.

(k) (l) "CRF/DD" means a community residential facility for the developmentally disabled.

(l) (m) "DDRS" means the Indiana division of disability and rehabilitative services.

(m) (n) "Debt" means the lesser of the original loan balance at the time of acquisition and original balances of other allowable loans or eighty percent (80%) of the allowable historical cost of facilities and equipment.

(n) (o) "Desk audit" review" means a review of a written audit report and its supporting documents by a qualified auditor, together with the auditor's written findings and recommendations. and application of these regulations to a provider submitted financial report including accompanying notes and supplemental information.

(o) (p) "Equity" means allowable historical costs of facilities and equipment, less the unpaid balance of allowable debt at the provider's reporting year-end.

(p) (q) "Fair rental value allowance" means a methodology for reimbursing extensive support needs residences for adults for the use of allowable facilities and equipment, based on establishing a rental rate, and a rental valuation on a per bed basis of the facilities and equipment.

(q) (r) "Field audit" means a formal official verification and methodical examination and review, including the final written report of the examination of original books of accounts by auditors.

(r) (s) "Forms prescribed by the office" means:

(s) (t) "General line personnel" means management personnel above the department head level who perform a policymaking or supervisory function impacting directly on the operation of the facility.

(t) (u) "Generally accepted accounting principles" or "GAAP" means those accounting principles as established by the American Institute of Certified Public Accountants.

(u) (v) "ICF/MR" means an intermediate care facility for the mentally retarded. individuals with intellectual disabilities commonly referred to as "ICF/IID".

(v) (w) "Like levels of care" means care:

(w) (x) "Non-rebasing year" means the year during which nonstate operated ICFs/MR and CRFs/DD annual Medicaid rate is not established based on a review of their annual financial report covering their most recently completed historical period. The annual Medicaid rate effective during a non-rebasing year shall be determined by adjusting the Medicaid rate from the previous year by an inflation adjustment. The following years shall be non-rebasing years:

(x) (y) "Office" means the Indiana office of Medicaid policy and planning.

(y) (z) "Ordinary patient or resident-related costs" means costs of services and supplies that are necessary in delivery of patient or resident care by similar providers within the state.

(z) (aa) "Patient or resident/recipient care" means those Medicaid program services delivered to a Medicaid enrolled recipient by a certified Medicaid provider.

(aa) (bb) "Profit add-on" means an additional payment to providers in addition to allowable costs as an incentive for efficient and economical operation.

(bb) (cc) "Reasonable allowable costs" means the price a prudent, cost conscious buyer would pay a willing seller for goods or services in an arm's length transaction, not to exceed the limitations set out in this rule.

(cc) (dd) "Rebasing year" means the year during which nonstate operated ICFs/MR and CRFs/DD Medicaid rate is based on a review of their annual financial report covering their most recently completed historical period. The following years shall be rebasing years:

(dd) (ee) "Related party/organization" means that the provider:

(ee) (ff) "Routine medical and nonmedical supplies and equipment" includes those items generally required to assure adequate medical care and personal hygiene of patients or residents by providers of like levels of care.

(ff) (gg) "Unit of service" means all patient or resident care at the appropriate level of care included in the established per diem rate required for the care of a patient or resident for one (1) day (twenty-four (24) hours).

(gg) (hh) "Use fee" means the reimbursement provided to fully amortize both principal and interest of allowable debt under the terms and conditions specified in this rule, for all providers, except for providers of extensive support needs residences for adults.

SECTION 3. 405 IAC 1-12-4 IS AMENDED TO READ AS FOLLOWS:

Affected: IC 12-13-7-3; IC 12-15

Sec. 4. (a) Each provider shall submit an annual financial report to the office not later than ninety (90) days after the close of the provider's reporting year. The annual financial report shall coincide with the fiscal year used by the provider to report federal income taxes for the operation unless the provider requests in writing that a different reporting period be used. Such a request shall be submitted within sixty (60) days after the initial certification of a provider. This option may be exercised only one (1) time by a provider. If a reporting period other than the tax year is established, audit trails between the periods are required, including reconciliation statements between the provider's records and the annual financial report.

(b) The provider's annual financial report shall be submitted using forms prescribed by the office. All data elements and required attachments shall be completed so as to provide full financial disclosure and shall include the following as a minimum:

(c) Extension of the ninety (90) day filing period shall not be granted unless the provider substantiates to the office or its representatives circumstances that preclude a timely filing. Requests for extensions shall be submitted to the office or its representatives prior to the date due, with full and complete explanation of the reasons an extension is necessary. The office or its representatives shall review the request for extension and notify the provider of approval or disapproval within ten (10) days of receipt. If the request for extension is disapproved, the report shall be due twenty (20) days from the date of receipt of the disapproval from the office or its representatives.

(d) Failure to submit an annual financial report within the time limit required shall result in the following actions:

SECTION 4. 405 IAC 1-12-21 IS AMENDED TO READ AS FOLLOWS:

Affected: IC 12-13-7-3; IC 12-15

Sec. 21. (a) The procedures described in this section are applicable to intermediate care facilities for the mentally retarded with nine (9) or more beds only, notwithstanding the application of standards and procedures set forth in sections 1 through 20 of this rule.

(b) The per diem rate for intermediate care facilities for the mentally retarded:

(c) Costs related to staffing shall be limited to seven (7) hours worked per patient day.

(d) Any ICFs/MR that is licensed as a CRMNF will be paid at a rate of six hundred thirty-nine dollars and eighteen cents ($639.18) per resident day. This per diem rate is available only upon certification as a Medicaid ICF/MR and licensure by the division of disability and rehabilitative services. ICFs/MR that are licensed as CRMNFs will not receive a base rate nor be subject to the base rate reporting requirements at section 5 of this rule.

SECTION 5. 405 IAC 1-12-24 IS AMENDED TO READ AS FOLLOWS:

Affected: IC 12-13-7-3; IC 12-15-32-11

Sec. 24. (a) CRF/DD and ICF/MR facilities that are not operated by the state will be assessed an amount that is based on total annual facility revenue. In determining total annual revenue when the financial report period is other than three hundred sixty-five (365) days, the total revenue shall be annualized based on the number of days in the reporting period. The assessment percentage applied to total annual revenue shall be five and one-half percent (5.5%) for the period January 1, 2008, through September 30, 2011. Beginning October 1, 2011, the assessment percentage applied to total annual revenue shall be six percent (6%). In no event shall the assessment percentage exceed the percentage determined to be eligible for federal financial participation under federal law.

(b) The assessment on provider total annual revenue authorized by IC 12-15-32-11 shall be an allowable cost for cost reporting and audit purposes. Total annual revenue is defined determined as revenue from the provider's: follows:

(c) If federal financial participation to match the assessment becomes unavailable under federal law after the implementation date, the authority to impose the assessment terminates on the date that the federal statutory, regulatory, or interpretive change takes place, and such termination will apply prospectively. In addition, prospective termination of the assessment as described in this subsection will result in the simultaneous termination of the assessment being considered as an allowable cost for rate setting purposes.

(d) Notwithstanding all other provisions of this rule, all annual and base Medicaid rates in effect from the effective date of this rule through September 30, 2011, shall be reduced by the following amounts:

Licensure Type	Rate Reduction Amount
Sheltered living	$1.34
Intensive training	$1.55
Child rearing	$1.89
Developmental training	$1.66
Child rearing with a specialized program	$2.01
Small behavior management residence for children	$2.37
Basic developmental	$2.00
Small extensive medical needs residences for adults	$2.76
Extensive support needs residences for adults	$4.13
Nonstate-operated ICF/MR	$1.38

(e) Notwithstanding all other provisions of this rule, all initial interim Medicaid rates established on or after the effective date of this rule through the end of the first calendar quarter following the effective date of this rule shall be reduced by the following amounts and shall remain reduced for the entire interim rate period:

Licensure Type	Rate Reduction Amount
Sheltered living	$1.34
Intensive training	$1.55
Child rearing	$1.89
Developmental training	$1.66
Child rearing with a specialized program	$2.01
Small behavior management residence for children	$2.37
Basic developmental	$2.00
Small extensive medical needs residences for adults	$2.76
Extensive support needs residences for adults	$4.13
Nonstate-operated ICF/MR	$1.38

(f) For all annual and base rates calculated under this rule effective from the effective date of this rule through September 30, 2011, each provider's assessment costs reported on the cost report and included in allowable costs will be adjusted to reflect assessment costs at five and one-half percent (5.5%) of total annual facility revenue. Beginning October 1, 2011, each provider's assessment costs reported on the cost report and included in allowable costs will be adjusted to reflect assessment costs at six percent (6%) of total annual facility revenue. In no event shall the allowable cost for the assessment exceed the percentage determined to be eligible for federal financial participation under federal law.

(d) For an ICFs/MR that is licensed as a CRMNF, the total annual revenue on which the assessment is based shall be determined as follows:

SECTION 6. 405 IAC 1-12-25 IS AMENDED TO READ AS FOLLOWS:

Affected: IC 12-13-7-3; IC 12-15

Sec. 25. For ICF/MR and CRF/DD facilities, the all-inclusive per diem rate shall include reimbursement for all day habilitation services. Costs associated with day habilitation services shall be reported to the office on the annual or historical financial report form using forms prescribed by the office. Allowable day habilitation costs shall be included in determining a provider's allowable costs for rate setting purposes in accordance with all sections of this rule.

DIN: 20130925-IR-405120637FRA

Composed: Apr 23,2024 2:34:17PM EDT

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