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Medicaid Nursing Facility Payment Policy Landscapes - MichiganNote: Data is based on publicly available policy documentation identified in March, April, May of 2014.Follow-up contact was made with state Medicaid employees (primarily policy staff) to clarify policies which could not be found or were unclear.Every attempt was made to find the most recent and up-to-date data, however, not all recent data was publicly available and many of the policies may have been developed years earlier and may not be in current practice.Policy details are generally in the state's own words, copied from the state's Medicaid State Plan Attachment 4.19-D, State Plan Amendments, state regulations and administrative codes, provider manuals and bulletins, Medicaid agency website, and contact with state officials.Many of the sources are best accessed through Internet Explorer.Any errors or changes, please contact MACPAC at 202-350-2000.Source: Data collected by George Washington University for MACPACBack to SummarySummaryDocumentationDateDate LastSearchedCost-based4/1/20144/2/2014Facility specific4/1/20144/2/2014CR - Medicaid3/15/2006,2/8/20125/16/2014Rebasing frequencyMI State Plan Amendment, Attachment 4.19-D, Section IV, Page 15:The base cost component will be rebased (recalculated) annually to reflect the more current costs of both the resource needs http://www.mdch.state.mi.us/dchof patients and the business expenses associated with nursing atePlan.pdfAnnually3/15/20065/16/2014Inflation adjustmentsThe basis for the cost index is the Global Insight Health Care Cost Review, DRI-WEFA Skilled Nursing Facility Market Basketwithout Capital Care Cost Review.The annual economic inflationary rate for Class I and Class III facilities is 0%.Economics and Country Risk3/15/20065/16/2014Peer groupingThere are six classes of long term care facilities and one special type of patient for which there are separate reimbursementmethods:Class I: proprietary and nonprofit nursing facilities.Class II: proprietary nursing facilities for the mentally ill or developmentally disabledClass III: proprietary and nonprofit nursing facilities that are county medical care facilities, hospital long term care units orstate owned nursing facilitiesClass IV: state owned and operated institutions certified as ICF/MR facilities.MI State Plan Amendment, Attachment 4.19-D, Section IV, Page 1:Class V: facilities that are a distinct part of special long term care facilities for ventilator-dependent patients.http://www.mdch.state.mi.us/dchClass VI: hospitals with programs for short-term nursing care (swing tatePlan.pdfYes11/15/20104/2/2014Charge capFor dates of service on or after June 1, 1981, providers of nursing care will be reimbursed under this plan on the basis of thelower of customary charge to the general public or a payment rate determined in accordance with this section of the StatePlan.MI State Plan Amendment, Attachment 4.19-D, Section IV, Page MichiganStatePlan/MichiganStatePlan.pdfNTE charges11/15/20105/30/2014Payment for capital(Cost, FRV, flat)Medicaid reimburses nursing facilities for costs associated with capital asset ownership. The costs are referred to as plantcosts and are reimbursed as the Plant Cost Component of the per diem reimbursement rate. The Plant Cost Component isbased on the cost report data submitted by the nursing facility for the previous calendar year.Michigan Medicaid Provider Manual, Nursing Facility Cost Reporting &Reimbursement Appendix, Page ichiganGeneralDetailsSourceThe Medicaid nursing facility reimbursement rate is prospectively determined based on the nursing facility's historical orMichigan Medicaid Provider Manual, Nursing Facility Cost Reporting &Reimbursement Appendix, Page /medicaidprovidermanual.pdfMichigan Medicaid Provider Manual, Nursing Facility Cost Reporting &Reimbursement Appendix, Page /medicaidprovidermanual.pdfBasic payment policy/per diem acquisition costs, which are subject to limitations put forth in policy.approachThe per diem reimbursement rate for Class I and Class III nursing facility providers is made up of three components: a plantcost component, a variable cost component, and add-ons.(Cost-based or price-based)Basis of rates(Facility specific, residentspecific, statewide)Basis of costs(Medicare or Medicaid costreports)The Medicaid nursing facility reimbursement rate is prospectively determined based on the nursing facility's historical oracquisition costs, which are subject to limitations put forth in policy.All participating skilled nursing and intermediate care providers are required to submit to the state agency an annual costreport.Title XIX per patient day cost, for a designated cost component, is the total inpatient cost for that cost component, divided bytotal inpatient days, as determined from the provider’s Medicaid cost report.MI State Plan Amendment, Attachment 4.19-D, Section 1, Page 1,Section III, Page /MichiganStatePlan/MichiganStatePlan.pdfMI State Plan Amendment, Attachment 4.19-D, Section IV, Page /MichiganStatePlan/MichiganStatePlan.pdfMichigan

DetailsSourceSummaryDocumentationDateDate LastSearchedOccupancy rate minimumThe occupancy that will be used in per patient day cost determinations, for all but Class II facilities, is the greater of the paidoccupancy including paid held-bed days excluding hospital leave days or 85 percent of (certified) bed days available duringthe cost reporting period for which cost information is reported, including new facilities.MI State Plan Amendment, Attachment 4.19-D, Section III, Page 64/2/2014Bed hold policyMedicaid reimburses a nursing facility to hold a bed for up to ten days during a beneficiary’s temporary absence from thefacility due to admission to the hospital for emergency medical treatment only when the facility’s total available bedoccupancy is at 98 percent or more on the day the beneficiary leaves the facility.If the beneficiary has a temporary absence from the nursing facility for therapeutic reasons as approved by a physician,Medicaid reimburses the facility to hold the bed open for up to a total of 18 days during a 365-day period.Michigan Medicaid Provider Manual, Nursing Facility Coverages, Page 66,Page 68:http://www.mdch.state.mi.us/dchH: 10 daysmedicaid/manuals/medicaidprovidermanual.pdfT: 18 days4/1/20144/2/2014New nursing facility/owner(A) New Facility: A "new facility" is defined as a LTC provider in a facility that does not have a Medicaid historical cost basis.The new provider's initial- period plant cost component will be the provider's certified and agency approved plant cost perpatient day (per Section IV.B.4.a.) up to the plant cost limit, where the plant cost limit is determined using update methods.(B) Variable Cost Component.a. New FacilityDuring the first two cost reporting periods, rates for providers defined in Sections a. and b. above will be calculated using avariable rate base equal to the class average of variable costs.(A) (B) MI State Plan Amendment, Attachment 4.19-D, Section IV, Page12, Page s/MichiganStatePlan/MichiganStatePlan.pdf(A) 3/15/2006New facility: peer group average (B) 5/17/20125/30/2014Out-of-stateThe routine nursing care per diem rate for the out-of-state nursing facility is the lesser of the individual provider's homestate Medicaid rate or the Michigan Medicaid out-of-state provider ceiling rate. The ceiling rate is effective for the timeperiod coinciding with the State fiscal year rate period October 1 through September 30. The ceiling rate is the sum of threecomponents: 1) Class I nursing facility Variable Cost Limit (VCL) for the corresponding rate year, 2) Economic InflationaryUpdate, and 3) most recent Plant Cost 80th percentile per diem amount. Out-of-state nursing facility rates do not participatein the Quality Assurance Assessment program.Michigan Medicaid Provider Manual, Nursing Facility Cost Reporting &Reimbursement Appendix, Page ls/medicaidprovidermanual.pdfLesser of in-state rate or other4/1/20144/2/2014Reimbursement of room and board for Medicaid-eligible beneficiaries was discontinued effective October 1, 2013, for all newadmissions to hospice residences with licensed-only nursing facility beds. However, impacted facilities may continue to billand receive reimbursement for room and board services for Medicaid beneficiaries admitted prior to October 1, 2013, and thisarrangement will continue through September 30, 2014. Reimbursement for all other hospice services, including careMichigan Provider Bulletin:rendered in the home, skilled nursing facility and hospice residence settings will continue SA 14-01 446216 7.pdf Yes1/30/20144/2/2014Variable costs include the total allowable base and support costs in a facility's routine nursing service units.Base costs cover activities associated with direct patient care. Major activities under these categories are payroll and payrollrelated costs for departments of nursing, nursing administration, dietary, laundry, diversional therapy and social services,food, linen (excluding mattress and mattress support unit), workers compensation, utility costs, consultant costs from relatedparty organizations for services relating to base cost activity, nursing pool agency contract service for direct patient carenursing staff, and medical and nursing supply costs included in the base cost departments.Class Variable Cost Limit (VCL): A limit set at the 80th percentile of the Indexed Variable Costs (IVC) for facilities in aparticular class during the current calendar year. The 80th percentile is determined by rank ordering facilities from the lowestto the highest IVC, then accumulating Medicaid resident days of the rank-ordered facilities, beginning with the lowest, until80% of the total Medicaid resident days for the class are reached. The Variable Cost Limit for the class of facilities equals theIVC of the nursing facility in which the 80th percentile of accumulated Medicaid resident days occurs. A VCL is calculated forClass I and Class III nursing facilities.4/1/20145/30/2014MichiganRecent or planned changesPrimary Cost CentersDirect careMichigan Medicaid Provider Manual, Nursing Facility Cost Reporting &Reimbursement Appendix, Page a58, /medicaidprovidermanual.pdfMichiganCost-based, ceiling 80%ile ofpeer group costs

DetailsSourceSummaryDocumentationDateDate LastSearchedIndirect careVariable costs include the total allowable base and support costs in a facility's routine nursing service units.Base costs cover activities associated with direct patient care. Major activities under these categories are payroll and payrollrelated costs for departments of nursing, nursing administration, dietary, laundry, diversional therapy and social services,food, linen (excluding mattress and mattress support unit), workers compensation, utility costs, consultant costs from relatedparty organizations for services relating to base cost activity, nursing pool agency contract service for direct patient carenursing staff, and medical and nursing supply costs included in the base cost departments.Class Variable Cost Limit (VCL): A limit set at the 80th percentile of the Indexed Variable Costs (IVC) for facilities in aparticular class during the current calendar year. The 80th percentile is determined by rank ordering facilities from the lowestto the highest IVC, then accumulating Medicaid resident days of the rank-ordered facilities, beginning with the lowest, until80% of the total Medicaid resident days for the class are reached. The Variable Cost Limit for the class of facilities equals theIVC of the nursing facility in which the 80th percentile of accumulated Medicaid resident days occurs. A VCL is calculated forClass I and Class III nursing facilities.Michigan Medicaid Provider Manual, Nursing Facility Cost Reporting &Reimbursement Appendix, Page a58, /medicaidprovidermanual.pdfCost-based, ceiling 80%ile ofpeer group costs4/1/20145/30/2014AdministrationVariable costs include the total allowable base and support costs in a facility's routine nursing service units.Support costs cover allowable activities not associated with direct patient care. Major items under these categories arepayroll and payroll-related costs for the departments of housekeeping, maintenance of plant operations, medical records,medical director, and administration, administrative costs, all consultant costs not specifically identified as base, allequipment maintenance and repair costs, purchased services, and contract labor not specified as base costs. Contract servicescosts for these departments are also support costs.Class Variable Cost Limit (VCL): A limit set at the 80th percentile of the Indexed Variable Costs (IVC) for facilities in aparticular class during the current calendar year. The 80th percentile is determined by rank ordering facilities from the lowestto the highest IVC, then accumulating Medicaid resident days of the rank-ordered facilities, beginning with the lowest, until80% of the total Medicaid resident days for the class are reached. The Variable Cost Limit for the class of facilities equals theIVC of the nursing facility in which the 80th percentile of accumulated Medicaid resident days occurs. A VCL is calculated forClass I and Class III nursing facilities.Michigan Medicaid Provider Manual, Nursing Facility Cost Reporting &Reimbursement Appendix, Page a58, a59, /medicaidprovidermanual.pdfCost-based, ceiling 80%ile ofpeer group costs4/1/20145/30/2014Plant Cost Component (for Class I and II facilities): Effective for cost reporting periods beginning on or after April 1, 1985, theprospectively established plant cost component for Class I and Class II facilities will be the sum of four components: the taxcomponent, the interest expense component, the lease/rental component and the return on current asset valuecomponent.Current value asset upper limitation is a limit placed upon current asset value per bed above which values are notrecognized for reimbursement purposes. The per bed value of the upper limit is based upon a survey of construction andother purchase costs per bed of Class I and Class II nursing homes(A) MI State Plan Amendment, Attachment 4.19-D, Section IV, Page 2,Page 6, ichiganStatePlan/MichiganStatePlan.pdfCost-based, ceiling none found3/27/19924/2/2014None foundSee notes belowNone foundNA5/30/2014None foundSee notes belowNone foundNA5/30/2014None foundSee notes belowNone foundNA5/30/2014None foundSee notes belowNone foundNA5/30/2014None foundSee notes belowNone foundNA5/30/2014The Complex Care Prior Approval-Request/Authorization for Nursing Facilities form (MSA-1576) is used to request priorapproval (PA) for the placement of a Medicaid beneficiary for whom placement from a hospital has been, or could be,hindered due to the cost and/or complexity of nursing care or special needs. The authorization covers an individuallynegotiated reimbursement rate for the placement. Special individualized placement requests and payment arrangements arebased on medical necessity and/or service/supply needs exceeding those covered by Medicaid reimbursement for routinenursing facility care. Examples include, but are not limited to: Ventilator dependent care (for nursing facilities not contracted Michigan Medicaid Provider Manual, Nursing Facility Coverages, Page 72:with MDCH to provide ventilator dependent care); Multiple skin decubiti utilizing several treatment modalities; Tracheostomy http://www.mdch.state.mi.us/dchwith frequent suctioning needs; Beneficiaries who require intensive nursing care or pdfYes4/1/20145/30/2014Michigan Medicaid Provider Manual, Hospital Reimbursement Appendix,If a claim is a high day outlier and review shows that the beneficiary required less than acute continuous medical care during Page A14:the outlier day period, Medicaid payment is made at the statewide nursing facility (NF) per diem rate for the continuous sub http://www.mdch.state.mi.us/dchacute outlier days if nursing care was medically pdfYes4/1/20144/2/2014None mentsAcuity systemBed sizeGeographicLower care patientsSpecialized careOutlier paymentsPayments related to providertaxesSee notes belowMichiganNone found

MichiganVentilatorHead traumaAIDSBehavioral add-onMental health/cognitiveimpairmentPublic facilitiesMedicaid volumeOtherSupplemental PaymentsPublic facilitiesPayments related to providertaxesOtherIncentive PaymentsQuality/pay for performanceBed cumentationDateDate LastSearched(A) The payment rates for all special facilities for ventilator-dependent patients shall be a flat per patient day prospectiverate determined by the single State agency.(B) Factors used by the single State agency in the determination of the per patient day prospective rate shall include auditedcosts at facilities providing similar services, expected increases in the appropriate inflationary adjustor over the effectiveperiod of the prospective rate, the supply response of providers and the number of patients for whom beds are demanded.The prospective rate will not exceed 85 percent nor fall below 15 percent of an estimate of the average inpatient hospital ratefor currently placed acute care Medicaid patients who are ventilator dependent. The prospective rate shall be periodically reevaluated (no more than annually) to ensure the reasonableness of the rate and the appropriate balance of supply anddemand for special care is met.(A) (B) MI State Plan Amendment, Attachment 4.19-D, Section IV, Page21b, s/MichiganStatePlan/MichiganStatePlan.pdfYes(A) 7/16/2008(B) 3/15/20104/2/2014None foundSee notes belowNone foundN/A5/30/2014None foundSee notes belowNone foundN/A5/30/2014None foundSee notes belowNone foundN/A5/30/2014Class II facilities, being proprietary nursing facilities for the mentally ill or mentally retarded, are reimbursed an all-inclusiveprospective payment rate negotiated with the MDCH State Mental Health Agency on an annual basis. Final reimbursementis a retrospective cost settlement, not to exceed a ceiling limit. The provider may be eligible for a reimbursement efficiencyallowance in the final rate if total allowable costs do not exceed the prospectively established ceiling limit.Michigan Medicaid Provider Manual, Nursing Facility Cost Reporting &Reimbursement Appendix, Page ecial Payments to County Medical Care Facilities (CMCF) for Un-reimbursed Medicaid Costs: A special payment to countygovernment-owned nursing facilities will be established and renewed annually. The purpose of the payment is to compensate MI State Plan Amendment, Attachment 4.19-D, Section IV, Page 25:CMCFs for incurred un-reimbursed routine costs. Allocations for individual facilities will be determined based upon unhttp://www.mdch.state.mi.us/dchreimbursed routine costs certified as public expenditures in accordance with 42 CFR StatePlan.pdfYes1/23/20125/12/2014None foundSee notes belowNone foundN/A4/2/2014The Coverages portion of this chapter, Dietary Services and Food subsection, provides for program reimbursement to nonprofit nursing facilities for special dietary needs for religious reasons. Interim payment reimbursement to the nursing facilitywill be made by inclusion of a per diem rate add-on amount to the nursing facility routine nursing care rate. The total specialdietary add-on reimbursement to the nursing facility during the reimbursement year will be adjusted through the annual costreport reimbursement settlement.Certification, Survey & Enforcement Appendix, Staff Certification section provides for nursing facility Medicaid reimbursementfor Medicaid's share of costs incurred by the nursing facility for approved Nursing Aide Training and Competency EvaluationProgram (NATCEP) expenditures. Interim payment reimbursement to the nursing facility will be made by inclusion of a perdiem rate add-on amount to the nursing facility routine nursing care rate. The total NATCEP add-on reimbursement paid tothe nursing facility during the nursing facility's cost report reimbursement year will be adjusted through the annual cost reportreimbursement settlement.Michigan Medicaid Provider Manual, Nursing Facility Cost Reporting &Reimbursement Appendix, Page a104, one foundSee notes belowNone foundN/A5/30/2014Quality Assurance Assessment Program (QAAP)- Effective September 24, 2011, Class I, and Class III nursing facilities receive a MI State Plan Amendment, Attachment 4.19-D, Section IV, Page 20a:monthly payment as part of the Quality Assurance Assessment Program (QAAP). A facility’s QAAP payment is based on thehttp://www.mdch.state.mi.us/dchfacility’s Medicaid utilization multiplied by a Quality Assurance Supplement (QAS) iganStatePlan.pdfYes5/17/20124/2/2014None foundSee notes belowNone foundN/A5/30/2014None foundSee notes belowNone foundN/A5/30/2014None foundSee notes belowNone foundN/A5/30/2014If a Class II provider cost settles below the ceiling rate, they will be paid a per patient day efficiency incentive of 50 percent of MI State Plan Amendment, Attachment 4.19-D, Section IV, Page 21:the difference between actual per diem cost and the ceiling, not to exceed 2.50 per patient day. Class II providers will not be http://www.mdch.state.mi.us/dchpaid any other ganStatePlan.pdfYes7/16/20085/12/2014Facility Innovative Design Supplemental (FIDS) Incentive: Providers actively participating in the Facility Innovative DesignMI State Plan Amendment, Attachment 4.19-D, Section IV, Page 21:Supplemental (FIDS) program on and after October 1, 2007 are eligible to receive a payment incentive not to exceed 5.00 per http://www.mdch.state.mi.us/dchMedicaid day over a consecutive 20 year StatePlan.pdfYes7/16/20085/12/2014Michigan

MichiganDetailsSourceSites Searched for None Found include:MichiganSummaryDocumentationDateDate LastSearched

nursing staff, and medical and nursing supply costs included in the base cost departments. Class Variable Cost Limit (VCL): A limit set at the 80th percentile of the Indexed Variable Costs (IVC) for facilities in a particular class during the current calendar year. The 80th percentile