California AB-1629 Rate Update

January 24, 2019
    The rates for the 2018-19 rate year for Freestanding Skilled Nursing (NF/B) and Freestanding Subacute (FSSA) facilities expected to be published by the end of February.

    Delays in these rates were due to several reasons. Modifications to the Fair Rental Value System (FRVS), Adjustments to the add-ons for the 2018-19 rate year to reflect increases in the cost of labor due to the changes in minimum wages across the state, the implementation of new required nursing ratios 3.5/2.4, Requirements of Participation (ROP) add-on to reflect the cost increases for infection control processes in skilled nursing facilities, and increases for the implementation of recently passed LBGT legislation.

    Currently, the 3.5/2.4 add-on will be given to only facilities that are nursing only facilities will receive the add-on and subacute facilities will not receive the facility specific add-on for the subacute portion of their facility. CA Association of Health Facilities (CAHF) continue to work with both CDPH and DHCS to resolve this and if successful, this policy change will require an adjustment to 2018-19 rates at some point during the 2019 calendar year. 

    FRVS for the 2018-19 rate year will be modified to reflect increased reimbursement for newly constructed or significantly renovated facilities. Firstly, beginning in the 2018-19 rate year, if a facility is at the maximum depreciation age of 34 years, the weighted average age calculation for effective facility age after improvements will be based on a base facility age of 34 years rather than the actual facility age to determine the new effective facility age. Secondly, beginning in the 2018-19 rate year, any skilled nursing or subacute facility built on or after January 1, 2016 will have an estimated building value based on a standard facility size of 500 square feet per bed, each facility’s licensed beds, and the “R.S. Means Building Construction Cost Data”, increased by 20%.

    When facilities are over 60 days past due in their QAF payments and the facility does not have a written repayment agreement in place with the Third Party Liability (TPL) branch, DHCS is exercising its authority to deduct unpaid QAF from Medi-Cal reimbursement payments in accordance with Health & Safety Code Section 1324.22(e)(1). Section 1324.22(e)(1) provides that “[w]hen a skilled nursing facility fails to pay all or part of the quality assurance fee within 60 days of the date that payment is due, the department may deduct the unpaid assessments and interest owed from any Medi-Cal reimbursement payments to the facility until the full amount is recovered.”

    DHCS is applying this authority to erroneous payment corrections (EPCs) for prior year’s rate adjustments (2017-18 or earlier) which result in payments to facilities that have outstanding QAF debt. 

Mueller Prost will issue an updated client alert when rates are published with all final determinations.  In the meantime, feel free to contact us with any questions or to start a conversation.

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