Public Notice of Final Action for Setting Payment Rates for Long-term Care Facility Services

The South Carolina Department of Health and Human Services (SCDHHS), pursuant to the requirements of Section 1902(a)(13)(A) of the Social Security Act, gives notice of the following actions regarding its methods and standards for setting payment rates for long-term care facility services (excluding state-owned nursing facilities) under the State Plan under Title XIX of the Social Security Act Medical Assistance Program (Medicaid).

Effective for services provided on or after Oct. 1, 2022, SCDHHS will amend the South Carolina Title XIX reimbursement methodology for long-term care by:

1. Establishing the baseline starting point at the Oct. 1, 2021, SC Medicaid reimbursement rates which were based upon the fiscal year ending (FYE) Sept. 30, 2020, SC Medicaid cost reports. For those nursing facilities whose Oct. 1, 2021, Medicaid rate was limited to their Jan. 1, 2021, Medicaid reimbursement rate due to the nursing facility receiving Paycheck Protection Program funds during the FYE Sept. 30, 2020, Medicaid cost reporting period, this penalty will no longer be applied to the Oct. 1, 2022, Medicaid rate period. Therefore, these impacted nursing facilities will now start off with their computed Oct. 1, 2021, Medicaid rate based upon their FYE Sept. 30, 2020, Medicaid cost report.
2. The minimum occupancy factor used to determine individual Medicaid reimbursement rates effective Oct. 1, 2022, will be reduced from 90% to 85%. The cost of capital reimbursement calculation remains at the 90% minimum occupancy level. There will be no changes made to the ancillary adjustments due to the occupancy change. Due to the change in minimum occupancy, the cost center standards for rates effective Oct. 1, 2022, will be based upon the FYE Sept. 30, 2020 cost reports but will be set at 110% of the mean in lieu of 105%.
3. The percent skilled used in establishing each nursing facility’s Oct. 1, 2021, Medicaid reimbursement rate will remain the same unless the percent skilled increased based upon state fiscal year (SFY) 2022 Medicaid paid days. In the event a nursing facility’s percent skilled increased based upon SFY 2022 Medicaid paid days, the percent skilled will be updated for Medicaid rate setting purposes effective Oct. 1, 2022.
4. To account for another year of inflation to the base year Sept. 30, 2020 cost reporting period, the annual trend factor increased from 3.5% effective Oct. 1, 2021, to 6.81% ((1.035 x 1.032)-1.000) effective Oct. 1, 2022. The two trend rates were obtained from the Revenue and Fiscal Affairs Office. The trend factor rate of 6.81% does not apply to cost of capital, cost incentive/profits, profit cap of $1.75 Per Patient Day (PPD) or any add-on.
5. The cost of capital spending requirement will be waived for rates effective Oct. 1, 2022. However, the $500/bed spending requirement must be met during the Oct. 1, 2022, thru Sept. 30, 2023 cost reporting period that will be used for rates effective Oct. 1, 2024.
6. Based upon comments received on the proposed public notice, SCDHHS will apply a two percent (2%) General Services reimbursable cost add-on to each nursing facility’s rate to account for the significant increase in nursing/CNA/restorative salaries.

Based upon comments received on the proposed public notice, SCDHHS will update its “Lost COVID Occupancy” payment methodology effective for payments beginning Oct. 1, 2022. This will be achieved by reducing the Jan. 1, 2021, Medicaid payment rate used in the payment calculation as follows (assuming that the NHE is still in place):

• October – December 2022 Payment – 85% of January 1, 2021 rate;
• January – March 2023 Payment – 60% of January 1, 2021 rate;
• April – June 2023 Payment – 30% of January 1, 2021 rate.

The initial quarterly payment amount is expected to decrease by approximately ($2,700,000) (total dollars).

SCDHHS is proposing the above actions in order to determine Medicaid reimbursement rates that continue to be impacted by the national health emergency.

As a result of the actions relating to the Medicaid reimbursement methodology changes for nursing facilities effective for services provided on or after Oct. 1, 2022, the weighted average rate is projected to be $216.94. The weighted average Sept. 30, 2022 rate was $203.06. This represents a weighted average per diem increase of $13.88 per Medicaid patient day, or a 6.84% increase.

SCDHHS projects that based upon actions, 1 – 6, annual aggregate expenditures will increase by approximately $46.4 million total dollars, including Medicaid days paid while the recipient is under the Hospice benefit. In regard to action 7, it is anticipated that Medicaid payments will initially decrease by ($2.7) million total dollars beginning in quarter one of FFY 2023.

Copies of this notice are available at each South Carolina Healthy Connections Medicaid county office and at www.scdhhs.gov for public review. Additional information concerning these actions is available upon request at the address cited below.

Any written comments submitted may be reviewed by the public at SCDHHS, Division of Long-Term Care Reimbursements, Room 400-52, 1801 Main Street, Columbia, South Carolina, Monday through Friday between the hours of 9 a.m. and 5 p.m.