Indiana Administrative Code
Title 405 - OFFICE OF THE SECRETARY OF FAMILY AND SOCIAL SERVICES
Article 1 - MEDICAID PROVIDERS AND SERVICES
Rule 14.6 - Rate-Setting Criteria for Nursing Facilities
Section 14.6-2 - Definitions
Current through March 20, 2024
Authority: IC 12-15-1-10; IC 12-15-21-2
Affected: IC 12-13-7-3; IC 12-15
Sec. 2.
(a) The definitions in this section apply throughout this rule.
(b) "Administrative component" means the portion of the Medicaid rate that shall reimburse providers for allowable administrative services and supplies, including prorated employee benefits based on salaries and wages. Administrative services and supplies include the following:
(c) "Allowable per patient day cost" means a ratio between allowable variable cost and patient days using each provider's actual occupancy from the most recently completed desk reviewed annual financial report, plus a ratio between allowable fixed costs and patient days using the greater of:
(d) "Allowed profit add-on payment" means the portion of a facility's tentative profit add-on payment that, except as may be limited by application of the overall rate ceiling as defined in this rule, shall be included in the facility's Medicaid rate, and is based on the facility's total quality score.
(e) "Annual financial report" refers to a presentation of financial data, including appropriate supplemental data and accompanying notes, derived from accounting records and intended to communicate the provider's economic resources or obligations at a point in time, or changes therein for a period of time in compliance with the reporting requirements of this rule.
(f) "Average allowable cost of the median patient day" means the allowable per patient day cost (including any applicable inflation adjustment) of the median patient day from all providers when ranked in numerical order based on average allowable cost. The average allowable variable cost (including any applicable inflation adjustment) shall be computed on a statewide basis using each provider's actual occupancy from the most recently completed desk reviewed annual financial report. The average allowable fixed costs (including any applicable inflation adjustment) shall be computed on a statewide basis using an occupancy rate equal to the greater of:
The average allowable cost of the median patient day shall be maintained by the office with revisions made four (4) times per year effective January 1, April 1, July 1, and October 1.
(g) "Average historical cost of property of the median bed" means the allowable patient-related property cost per bed for facilities that are not acquired through an operating lease arrangement, when ranked in numerical order based on the allowable patient-related historical property cost per bed that shall be updated each calendar quarter. Property shall be considered allowable if it satisfies the conditions of section 14(a) of this rule.
(h) "Calendar quarter" means a three (3) month period beginning January 1, April 1, July 1, or October 1.
(i) "Capital component" means the portion of the Medicaid rate that shall reimburse providers for the use of allowable capital-related items. Such capital-related items include the following:
(j) "Case mix index" or "CMI" means a numerical value score that describes the relative resource use for each resident within the groups under the resource utilization group (RUG-IV) classification system prescribed by the office based on an assessment of each resident. The facility CMI shall be based on the resident CMI, calculated on a facility-average, time-weighted basis for the following:
(k) "Children's nursing facility" means a nursing facility that, as of January 1, 2009, has:
(l) "Cost center" means a cost category delineated by cost reporting forms prescribed by the office.
(m) "Delinquent MDS resident assessment" means an assessment that is greater than one hundred thirteen (113) days old, as measured by the date defined by CMS for determining delinquency or an assessment that is not completed within the time prescribed in the requirement for use in determining the time-weighted CMI under section 9(e) of this rule. This determination is made on the fifteenth day of the second month following the end of a calendar quarter.
(n) "Department head" means an individual(s) responsible for the supervision and management of a nursing facility department. Home office personnel responsible for the supervision and oversight of facility department heads qualify as general line personnel.
(o) "Desk review" means a review and application of these regulations to a provider submitted annual financial report including accompanying notes and supplemental information.
(p) "Direct care component" means the portion of the Medicaid rate that shall reimburse providers for allowable direct patient care services and supplies, including prorated employee benefits based on salaries and wages. Direct care services and supplies include all of the following:
(r) "Field audit" means a formal official verification and methodical examination and review, including the final written report of the examination of original books of accounts and resident assessment data and its supporting documentation by auditors.
(s) "Fixed costs" means the portion of each rate component that shall be subjected to the minimum occupancy requirements as contained in this rule. The following percentages shall be multiplied by total allowable costs to determine allowable fixed costs for each rate component:
Rate Component |
Fixed Cost Percentage |
Direct Care |
25% |
Indirect Care |
37% |
Administrative |
84% |
Capital |
100% |
(t) "Forms prescribed by the office" means either of the following:
(u) "General line personnel" means management personnel above the department head level who perform a policymaking or supervisory function impacting directly on the operation of the facility.
(v) "Generally accepted accounting principles" or "GAAP" means those accounting principles as established by the Financial Accounting Standards Board.
(w) "Indirect care component" means the portion of the Medicaid rate that shall reimburse providers for allowable indirect patient care services and supplies, including prorated employee benefits based on salaries and wages. Indirect care services and supplies include the following:
(x) "Medical and nonmedical supplies and equipment" includes those items generally required to assure adequate medical care and personal hygiene of patients.
(y) "Minimum data set" or "MDS" means a core set of screening and assessment elements, including common definitions and coding categories, that form the foundation of the comprehensive assessment for all residents of long-term care facilities certified to participate in Medicaid. The items in the MDS standardize communication about resident problems, strengths, and conditions within facilities, between facilities, and between facilities and outside agencies. The Indiana system will employ the MDS 3.0 or subsequent revisions as approved by CMS.
(z) "Normalized allowable cost" means total allowable direct care costs for each facility divided by that facility's average CMI for all residents.
(aa) "Nursing home report card score" means a numerical score developed and published by ISDH that quantifies each facility's key survey results.
(bb) "Ordinary patient-related costs" means costs of allowable services and supplies that are necessary in delivery of patient care by similar providers within the state.
(cc) "Patient/member care" means those Medicaid program services delivered to a Medicaid enrolled member by a provider.
(dd) "Reasonable allowable costs" means the price a prudent, cost-conscious buyer would pay a willing seller for goods or services in an arm's-length transaction, not to exceed the limitations set out in this rule.
(ee) "Related party/organization" means that the provider:
the organization furnishing the service, facilities, or supplies, whether or not such control is actually exercised.
(ff) "Routine care" means care that does not treat or ameliorate a specific defect or specific physical or mental illness or condition.
(gg) "RUG-IV resident classification system" means the resource utilization group used to classify residents. When a resident classifies into more than one (1) RUG-IV group, the RUG-IV group with the greatest CMI will be utilized to calculate the facility-average CMI for all residents and facility-average CMI for Medicaid residents.
(hh) A nursing facility with a "special care unit (SCU) for Alzheimer's disease or dementia" means a nursing facility that meets all of the following:
(ii) "Tentative profit add-on payment" means the profit add-on payment calculated under this rule before considering a facility's total quality score.
(jj) "Therapy component" means the portion of each facility's direct costs for therapy services, including any employee benefits prorated based on total salaries and wages, rendered to Medicaid residents that are not reimbursed by other payors, as determined by this rule.
(kk) "Total quality score" means the sum of the quality points awarded to each nursing facility for all eight (8) quality measures as determined in section 7(m)(1) through 7(m)(8) of this rule.
(ll) "Unit of service" means all patient care included in the established per diem rate required for the care of an inpatient for one (1) day (twenty-four (24) hours).
(mm) "Unsupported MDS resident assessment" means an assessment where one (1) or more data items that are required to classify a resident pursuant to the RUG-IV resident classification system: