Rate Rationalization

Issue:         

Rate Rationalization is the current methodology by which reimbursement rates are calculated for providers in New York state. Rate rationalization has significantly restricted the interchange of funds between various OPWDD-funded programs. This flexibility is essential to maintaining program continuity and viability. In many instances, providers are being held to revenue levels that are lower than actual cost. Rate rationalization also acts as a disincentive to providers that might otherwise wish to operate more efficiently, because if the provider achieves program savings, these savings will simply be stripped away in the next round of rebasing.  

Prior to cost-based rate rationalization, providers were funded under a budget-based methodology for their largest programs (i.e. Individualized Residential Alternatives (IRA); Prevocational Programs; Day Habilitation; and Intermediate Care Facilities). Such methodology provided the flexibility necessary to generate an operating surplus in one program and use it to support another program in the midst of a financial challenge.

Unless these issues with Rate Rationalization are addressed, this reimbursement methodology will adversely affect the delivery of necessary services to people with intellectual and developmental disabilities.

Position:    

The Arc New York will continue to work with DOH and OPWDD to resolve a growing number of problems with the reimbursement methodology. We also recognize that legislative action may be necessary. We propose the following:

• apply annual trend factors. OPWDD and DOH have been unable to identify our field for selective receipt of annual trend factors, as was done in the past;
• incorporate a vacancy factor into the day program methodology to recognize that costs cannot be avoided on days when facilities are forced to close and/or attendance and billing is limited by external factors such as flu quarantines, or inclement weather;
• eliminate use of budget neutrality factors lower than 1;
• increase retainer days. The annual IRA limit of 14 retainer days for hospitalization is tied to the state’s nursing home retainer day limit and applied per CMS requirement. We need to address this to obtain funding, as hospitalization days continue to increase for our aging population;
• increase Article 16 and 28 clinic fees. Two-thirds of these clinics operate in deficit and are at risk of being closed. DOH and OPWDD are open to further consideration of the need to increase such clinic fees;
• adopt a policy that supports proactive auspice change and access to “higher of rates” rather than waiting for a provider to fail financially and be consolidated in crisis circumstances; and
• consider discontinuing rate rebasing, to stabilize rates, afford greater flexibility and efficiency, and support the continued operation of all OPWDD-funded programs.