Proposed Action for Setting Payment Rates for Long Term Care Facility Services (Excluding State Owned Nursing Facilities)

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 proposed actions regarding its methods and standards for setting payment rates and Essential Public Safety Net payments 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 October 1, 2018, SCDHHS proposes to amend the South Carolina Title XIX reimbursement methodology for long term care by:

1. For all nursing facilities except for hospital based nursing facilities, the SCDHHS proposes to employ the use of worksheet A column #7, lines 3 through 30, of each provider's fiscal year end 2016 and fiscal year end 2017 Medicare cost reports (i.e. CMS-2540-10) to determine the annual percentage increase/(decrease) in occupancy adjusted per patient day costs of each nursing facility as it relates to its General Service Cost Centers and the Skilled Nursing Facility Routine Cost Center. Capital related costs reported via lines 1 and 2 of worksheet A column #7 are excluded from this computation.

2. For all hospital based nursing facilities, the SCDHHS proposes to employ the use of worksheet B Part I column #24, line 30, of each provider's fiscal year end 2016 and fiscal year end 2017 Medicare cost reports (i.e. CMS-2552-10) to determine the annual percentage increase/(decrease) in occupancy adjusted per patient day costs of each nursing facility as it relates to its Skilled Nursing Facility Routine Cost Center. The capital related costs that have been allocated throughout the stepdown process will be removed from this computation.

3. Removing costs that are reimbursed outside of the Medicaid per diem rate prior to determining the annual percentage increase/(decrease) in occupancy adjusted per patient day costs addressed in items #1 and #2 above (i.e. Hurricane Matthew costs, professional liability claim cost in excess of $50,000 on an individual claim basis, and Certified Nursing Assistant training and testing costs) from the fiscal year end 2016 and 2017 provider cost reports. 

4. Applying the SC Medicaid agency approved cost adjustment factor against each provider's September 30, 2018 Grand Total Computed Rate per diem amount.

5. To reimburse covered SC Medicaid ancillary services in the October 1, 2018 rate, the SCDHHS will replace covered SC Medicaid ancillary service costs for fiscal year end 2016 with covered SC Medicaid ancillary service costs for fiscal year end 2017. These costs will not be subject to the agency approved cost justification factor.  

6. Applying a 2.80% inflation factor against the September 30, 2018 Adjusted Grand Total Computed Rate per diem amount in the calculation of the October 1, 2018 payment rates.

7. Maintaining per diem reimbursement of cost of capital, profit and cost incentives for SC Medicaid rates effective October 1, 2018 at the September 30, 2018 per diem reimbursement levels.

The determination of the SC Medicaid agency approved cost adjustment factor will be impacted by the following provider scenarios:

• The amount of per patient day costs below the cost center standards as reflected in the September 30, 2018 payment rates;
• The amount of per patient day costs above the cost center standards as reflected in the September 30, 2018 payment rates;
• The weighted average percentage increase in the cost center standards by bed group based upon the last three payment rate cycles (October,1, 2015, October 1, 2016, and October 1, 2017);
• The impact of percent skilled changes resulting from the use of SFY 2018 Medicaid paid days as compared to the use of the SFY 2017 Medicaid paid days.
• Providers that did not file a SC Medicaid nursing facility cost report for September 30, 2016 due to actual/pending change in ownerships but filed a SC Medicaid nursing facility cost report for September 30, 2017.

SCDHHS is proposing the above actions in order to determine Medicaid reimbursement rates based upon the most recent cost report data available.