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CALIFORNIA SKILLED NURSING FACILITIES: NEW MEDI-CAL RATES AND RATE SETTING METHODOLOGY – July 2020

Tiffany Karlin

September 14, 2020

The alert is to update you from our Client Alert sent 2/17 New SNF Medi-Cal Rates- New Proposed Methodology.

Recently the state of California approved a two-year extension of AB-1629 beginning this August 2020 and ending December 2022. This system overall is good financial news for skilled nursing providers with about $900 million is being allocated to providers over the next two years.

Points of Interest:

  1. State to transition to calendar year rate period vs. a fiscal year-end
    1. 5-Month transition rates effective August through December 2020
  2. Rate Increases:
    1. August 2020: 3.62% rate increase
    2. January 2021: 3.5% rate increase
    3. January 2022: 2.4% rate increase
  3. Peer group re-allocation from currently 7 peer groups to 12 per groups
  4. Change to 95th percentile cap for Direct Labor and In-Direct Care rate component
  5. Rather than as originally proposed to include quality indicators in the new rate system, the current quality program (QASP) add-on remains intact as under the current law
    1. About $84 million ($6 for the past payment errors) to be distributed in 2021 and 2022
  6. More oversight and authority to the State to collect on unpaid Quality Assurance Fees
  7. Increased penalties for not complying with 3.5/2.4 nursing ratio requirements

For those who are current cost report clients to Mueller Prost, our Reimbursement Team will be revising our Rate Estimates to reflect these new changes and re-issuing these to you in the coming few weeks. Further, we will be reaching out regarding interim rate projections for the 2020 year. If you are not a current cost report client but would like us to preform a rate estimate for you due to these new changes, please contact me.

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