Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
42 C.F.R.
440.70,
447.325,
42 U.S.C.
1396a -d
NECESSITY, FUNCTION, AND CONFORMITY: The Cabinet for Health and
Family Services, Department for Medicaid Services, has responsibility to
administer the Kentucky Medicaid Program.
KRS
205.520(3) authorizes the
cabinet, by administrative regulation, to comply with any requirement that may
be imposed, or opportunity presented, by federal law for the provision of
medical assistance to Kentucky's indigent citizenry. This administrative
regulation establishes the method for determining amounts payable by the
Medicaid Program for home health agency services that are provided to
Kentucky's Medicaid-eligible recipients.
Section
1. Definitions.
(1) "Allowable
cost" means that portion of the home health agency's cost that shall be allowed
by the department in establishing reimbursement.
(2) "Cost report" means the Annual Medicaid
Home Health/HCB Cost Report.
(3)
"Cost report instructions" means the Annual Medicaid Home Health/HCB Cost
Report Instructions.
(4)
"Department" means the Department for Medicaid Services or its
designee.
(5) "Home health agency"
or "HHA" means an agency defined pursuant to
42 C.F.R.
440.70(d).
(6) "Interim rate" means a rate set for a
provider for tentative reimbursement, based on reasonable allowable cost of
providing a covered service, which may result in reimbursement adjustments
after an audit or review determines the actual allowable cost during an
accounting period.
(7) "Medicaid
upper limit" means the maximum amount the Medicaid Program shall reimburse, on
a facility-by-facility basis, for a unit of service.
(8) "Medically necessary" or "medical
necessity" means that a covered benefit is determined to be needed in
accordance with
907
KAR 3:130.
(9) "Medicare upper limit" means the maximum
reimbursement amount allowed by Medicare specific to:
(a) Each Medicare participating
provider;
(b) Each category of
service; and
(c) A unit of
service.
(10) "Necessary
function" means that if an owner of an agency had not provided the services
pertinent to the operation of the HHA, the facility would have had to employ
another person to perform the service.
(11) "Owner" means a person or a related
family member with a cumulative ownership interest of five (5) percent or
more.
(12) "Projected cost report"
means an Annual Medicaid Home Health/HCB Cost Report that reflects costs that
can reasonably be expected to be incurred by a provider for a specific period
of time ending in the future.
(13)
"Public agency" means an agency operated by a federal, state, county, city or
other local governmental agency or instrumentality.
(14) "Rate year" means a twelve (12) month
period beginning July 1 and ending the following June 30.
(15) "Related family member" means:
(a) Husband or wife;
(b) Natural or adoptive parent, child, or
sibling;
(c) Stepparent, stepchild,
stepbrother, stepsister;
(d)
Father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law;
(e) Grandparent or
grandchild;
(f) Spouse of
grandparent or grandchild;
(g) Aunt
or uncle; or
(h) Spouse of aunt or
uncle.
(16) "Settled" or
"settlement" means an amount by which a provider's interim Medicaid payment for
a specified period of time is adjusted based on an audited or desk reviewed
cost report for that same period of time.
(17) "Uniform desk review" or "UDR" means an
analysis of a provider's Annual Medicaid Home Health/HCB Cost Report to
determine if the data is adequate, complete, accurate, and
reasonable.
(18) "Usual and
customary charge" means the uniform amount which a medical provider charges the
general public for a specific service or procedure.
Section 2. Reimbursement Requirement. A home
health service shall be provided in accordance with
907 KAR
1:030 to be eligible for reimbursement.
Section 3. Payment to an In-state HHA.
(1) Except as provided in Section 14 of this
administrative regulation, the department shall reimburse a Medicaid
participating in-state HHA on the basis of an interim rate established pursuant
to subsection (2) of this section for the following services:
(a) Speech therapy;
(b) Physical therapy;
(c) Occupational therapy;
(d) Medical social services;
(e) Home health aide services; and
(f) Skilled nursing services.
(2) The interim rate for a service
pursuant to subsection (1) of this section shall be determined for each
individual HHA as follows:
(a) The department
shall use cost data for each category of service from an HHA's most recent
available Annual Medicaid Home Health/HCB Cost Report as of May 31 immediately
preceding the rate year to set the interim rate;
(b) Medicaid specific data for units of
service shall be adjusted using the Medicaid paid claims data;
(c) Total cost data shall be increased for
inflation using the most recent available HHA Market Basket National Forecast,
as published by Standard and Poor's, by:
1.
Trending the total cost data to the beginning of a rate year; and
2. Indexing cost data established pursuant to
subparagraph 1 of this paragraph for inflationary cost increases projected to
occur during the rate year;
(d) An average unit cost for a category of
service shall be established by dividing the indexed cost established pursuant
to paragraph (c)2 of this subsection by the total number of units of service
that are reflected in the cost report pursuant to paragraph (a) of this
subsection;
(e) If a
nonpublicly-operated HHA is eligible to receive a cost containment incentive
payment pursuant to Section 5 of this administrative regulation, the department
shall determine the "average unit cost plus incentive" by adding the "incentive
payment per visit amount" pursuant to Section 5(1) of this administrative
regulation to the average unit cost established pursuant to paragraph (d) of
this subsection;
(f) The interim
rate for a publicly-operated HHA shall be the lesser of:
1. The average unit cost pursuant to
paragraph (d) of this subsection; or
2. The Medicare upper limit as issued to the
provider through a Medicare letter; and
(g) The interim rate for a
nonpublicly-operated HHA shall be the lesser of the:
1. Maximum average unit cost as established
pursuant to paragraph (d) or (e) of this subsection that the provider is
eligible to receive;
2. Medicaid
upper limit pursuant to Section 7 of this administrative regulation;
or
3. Medicare upper
limits.
(3) The
department shall establish an interim payment not to exceed the allowable
billed charge for an item listed in paragraphs (a) and (b) of this subsection
by multiplying the provider's total cost to charge ratio for the items as
reflected in the provider's most recent available cost report as of May 31
immediately preceding the rate year by the provider's billed charge for:
(a) Disposable medical supplies;
and
(b) Enteral nutritional
products.
(4) For a
facility whose fiscal year ended on or after June 30, 2003, within eighteen
(18) months following the end of the facility's fiscal year, payments made
pursuant to subsection (3) of this section shall be:
(a) Settled to the lesser of the:
1. Allowable Medicaid cost, as established by
the Kentucky Medicaid Medical Supply Cost Settlement Worksheet, that the
department has:
a. Audited; or
b. Desk reviewed; or
2. Allowable billed charge reported by the
Medicaid Management Information System (MMIS), except that a publicly-operated
HHA furnishing services free of charge or at a nominal charge pursuant to
42
C.F.R. 413.13(f) shall be
settled pursuant to subparagraph 1 of this paragraph; and
(b) Settled utilizing aggregation of costs in
accordance with the Kentucky Medicaid Medical Supply Cost Settlement Worksheet
Instructions.
(5)
(a) If a settlement pursuant to subsection
(4) of this section indicates that the department has overpaid a provider, the
excess payment to the provider shall be recovered pursuant to
907
KAR 1:671, Section 2.
(b) If a settlement pursuant to subsection
(4) of this section indicates that the department has underpaid a provider, a
payout shall be issued to the provider through the MMIS during the next cycle
following the discovery of the underpayment.
Section 4. Payment to a New In-state HHA.
(1) An HHA that undergoes a change of
ownership during a rate year shall continue to be reimbursed at the rate
established for the previous owner for the remainder of the rate
year.
(2) An HHA pursuant to
subsection (1) of this section shall be reimbursed pursuant to Section 3 of
this administrative regulation after the provider submits a cost report
pursuant to Section 8 of this administrative regulation.
(3) An HHA that had not previously
participated in the Medicaid Program under the current ownership or a previous
ownership during the rate year shall be:
(a)
Considered a new HHA; and
(b)
Reimbursed at the interim rate equal to the lesser of:
1. Seventy (70) percent of the current
Medicaid upper limit as established pursuant to Section 7(2)(e) of this
administrative regulation; or
2.
The current Medicare upper limits.
(4) A new HHA shall be reimbursed pursuant to
subsection (3) of this section until a cost report is:
(a) Submitted pursuant to Section 8 of this
administrative regulation; and
(b)
Received by the department by May 31 preceding the rate year.
(5) If, during the initial period,
a provider pursuant to subsection (3) of this section requests a rate
adjustment, the department shall grant a rate change if the provider:
(a) Submits documentation indicating that the
cost of providing services is significantly higher than the reimbursement rate
that the provider is receiving; and
(b) Submits a projected cost
report.
(6) When a new
HHA's first cost report is received, interim payments for the cost report
period shall be adjusted pursuant to Section 3(4) of this administrative
regulation.
Section 5.
Incentive Payment.
(1) If a
nonpublicly-operated HHA's nonaggregated base year costs are below the Medicaid
upper limits pursuant to Section 7 of this administrative regulation for the
corresponding period of time, the HHA shall receive a cost containment
incentive payment, pursuant to Section 3(2)(e) of this administrative
regulation, in accordance with the following payment schedule:
INCENTIVE PAYMENT SCHEDULE |
Percentage of Per Unit Cost to Upper Limit
|
Incentive Payment Per Visit Amount
|
95.01% - 100%
|
--
|
90.01% - 95%
|
$1.00
|
85.01% - 90%
|
$1.50
|
80.01% - 85%
|
$2.00
|
80% and below
|
$2.50
|
(2) An
incentive payment shall:
(a) Be subject to
verification of visits;
(b) Bear an
inverse relationship to the current year basic per visit cost; and
(c) Be adjusted each July 1 during the
interim rate setting process pursuant to Section 3 of this administrative
regulation for the rate year.
(3) The portion of an interim rate equal to
the "incentive payment per visit amount" shall not be subject to retrospective
settlement pursuant to Section 3(4) of this administrative regulation.
Section 6. Payment to an
Out-of-state HHA.
(1) An out-of-state HHA
that provides a covered service inside the Commonwealth of Kentucky to an
eligible Kentucky Medicaid recipient shall be paid pursuant to Section 3 of
this administrative regulation.
(2)
Except as provided in subsection (3) of this section, an out-of-state HHA that
provides a covered service to an eligible Kentucky Medicaid recipient while the
recipient is outside the Commonwealth of Kentucky shall be reimbursed the
lesser of the agency's:
(a) Usual and
customary billed charge;
(b)
Medicare upper limit; or
(c)
Medicaid upper limit.
(3)
If an out-of-state HHA provides the following items to an eligible Kentucky
Medicaid recipient while the recipient is outside the Commonwealth of Kentucky,
reimbursement shall be paid at eighty (80) percent of the HHA's usual and
customary actual billed charges for:
(a)
Disposable medical supplies; and
(b) Enteral nutritional
products.
Section
7. Establishment of Medicaid Upper Limits.
(1) Medicaid upper limits for the services
pursuant to Section 3(1)(a) through (e) of this administrative regulation shall
be established each year to be effective on July 1 for a nonpublicly-operated
HHA.
(2) Medicaid upper limits
shall be determined by the department as follows:
(a) Based on the Standard Metropolitan
Statistical Area (SMSA) designation, a nonpublicly-operated HHA shall be
classified as:
1. Urban; or
2. Rural.
(b) Two (2) sets of arrays pursuant to
paragraph (a) of this subsection shall be established for each category of
service pursuant to subsection (1) of this section.
(c) Each HHA's average unit cost per service
as established pursuant to Section 3(2)(d) of this administrative regulation
shall be:
1. Grouped pursuant to paragraph (b)
of this subsection; and
2. Arrayed
from lowest to highest.
(d) The median per unit cost for each of the
ten (10) arrays pursuant to paragraph (c) of this subsection shall be based on
the median number of Medicaid units pursuant to Section 3(2)(b) of this
administrative regulation.
(e)
Medicaid upper limits for a nonpublicly-operated HHA shall be set at 105
percent of the median per unit cost as established pursuant to paragraph (d) of
this subsection.
(3) The
following HHAs shall be exempt from the Medicaid upper limits, but shall be
subject to the Medicare upper limits:
(a) A
publicly-operated HHA; or
(b) A new
HHA who does not have two (2) full years of operation.
(4) The Medicaid upper limit for skilled
nursing services shall be the Medicare upper limit for skilled nursing
services.
Section 8.
Financial Data and Cost Reporting Requirements.
(1) Except for a provider identified in
Section 6(2) of this administrative regulation, an HHA shall submit to the
department a completed cost report:
(a) That
includes workpapers utilized to prepare the cost report including:
1. Detail of how a reclassification or an
adjustment was calculated;
2. A
working trial balance; and
3.
Schedules tying the trial balance to the cost report;
(b) On an annual basis, within five (5)
months after the close of the HHA's fiscal year;
(c) Prepared in accordance with the Annual
Medicaid Home Health/HCB Cost Report Instructions; and
(d) Pursuant to
42 C.F.R.
413.24(a), (b), (c), and
(e).
(2) A thirty (30) day extension of time for
submitting a cost report pursuant to subsection (1) of this section may be
granted by the Director of the Division of Long Term Care and Disability
Services or his designee if:
(a) A provider's
operations are significantly adversely affected due to extraordinary
circumstances over which the provider has no control;
(b) The provider submits a request for the
extension in writing; and
(c) The
request is received by the department within five (5) months after the close of
the HHA's fiscal year.
(3) An HHA's payment shall be suspended if:
(a)
1. Time
for submitting a cost report pursuant to subsection (1) or (2) of this section
has lapsed; and
2. A cost report
has not been submitted to the department;
(b) The department determines that the HHA
does not maintain or no longer maintains records pursuant to subsection (4) of
this section; or
(c) The provider
fails to provide the department with access to records pursuant to:
1.
907
KAR 1:672, Section 2(6); or
2. Subsection (4) of this section.
(4) For a period of five
(5) years from the date that the department issues a letter to an HHA detailing
the Medicaid final settlement of a cost report, the HHA shall retain and make
available to the department:
(a) Records and
documents pursuant to
42 C.F.R. 413.20(a),
(c), and (d); and
(b) Documentation of work or services
performed if compensation is claimed by the:
1. Owner; or
2. A related family member of the:
a. Owner; or
b. Administrator.
(5) If during a twelve
(12) month period an HHA contracts with a subcontractor for the provision of
goods and services established pursuant to
907 KAR
1:030 costing or valued at $10,000 or more, the HHA
shall include a clause in the contract that requires a subcontractor to make
available to the department records and documents related to the provision of
services consistent with the requirements pursuant to subsection (4) of this
section.
(6) If the department is
denied access to a subcontractor's records pursuant to subsection (4) of this
section, the cost of goods or services furnished by the subcontractor shall
become a nonallowable cost reported on a cost report.
(7) If an HHA has been voluntarily or
involuntarily terminated from the Medicaid Program, reimbursement payments
shall be withheld until:
(a) A cost report is
received from the HHA provider for the period of time the provider participated
in the Medicaid Program:
1. Beginning with the
first day of the provider's fiscal year immediately preceding the provider's
termination date; and
2. Ending on
the date of termination of its provider agreement with the Medicaid Program;
and
(b) A final
settlement pursuant to Section 3(4) of this administrative regulation is
completed by the department.
Section 9. Allowable HHA Cost.
(1) Except as limited pursuant to Section 10
of this administrative regulation, cost pursuant to subsection (2) of this
section shall be allowable and eligible for reimbursement pursuant to this
administrative regulation if costs are:
(a)
Reflective of a provider's actual expenses of providing a service;
and
(b) Related to Medicaid patient
care pursuant to
42 C.F.R.
413.9.
(2) Except as limited by Section 10 of this
administrative regulation, and subsection (1) of this section, the following
costs shall be allowable:
(a) Allowable cost
to related organizations pursuant to
42 C.F.R.
413.17;
(b) Costs of educational activities pursuant
to
42
C.F.R. 413.85;
(c) Research costs pursuant to
42 C.F.R.
413.90;
(d) Value of services of nonpaid workers
pursuant to
42 C.F.R.
413.94;
(e) Purchase discounts and allowances, and
refunds of expenses pursuant to
42
C.F.R. 413.98; and
(f) Therapy and other services pursuant to
42
C.F.R. 413.106.
Section 10. Limitations on Allowable HHA
Cost.
(1) Board of directors' fees.
(a) The cost of board of director's fees
shall be limited annually to:
1.
a. Five (5) meetings for a single-facility
organization; or
b. Twelve (12)
meetings for a multiple-facility organization; and
2. $200 for each director of the board
attending each meeting, including the cost of attending the meeting.
(b) The cost associated with a
private club membership shall not be an allowable cost.
(2) Motor vehicles.
(a) An allowable motor vehicle cost shall be:
1. Limited to cost related to patient care;
and
2. Documented sufficiently to
support business use.
(b)
An allowable cost associated with HHA facility-owned vehicles and mileage
allowances shall be limited to the federal income tax mileage
allowance.
(c) The costs associated
with personal use of a facility-owned motor vehicle shall not be an allowable
cost unless the value of the personal use of the vehicle is:
1. Included in the employee's W-2 statement;
or
2. Reported on a Form 1099 in
accordance with Internal Revenue Service regulations.
(d) An allowable cost pursuant to paragraph
(c) of this subsection shall be considered compensation to the extent that:
1. Compensation to an owner does not exceed
the owner's compensation limits pursuant to Section 11 of this administrative
regulation; and
2. The total
compensation package to a nonowner is reasonable pursuant to
42 C.F.R.
413.9(b).
(3) The cost associated with political
contributions shall not be allowable.
(4) The following legal fees shall not be
allowable costs:
(a) A legal fee associated
with unsuccessful lawsuits against the Cabinet for Health and Family Services
or the department;
(b) A legal fee
incurred by the provider in an attempt to block the approval of a certificate
of need for another provider;
(c) A
legal fee associated with the acquisition of another HHA;
(d) A legal fee resulting from the commission
of an illegal act by an:
1. HHA;
2. HHA's owner; or
3. HHA's agent; or
(e) A legal fee unrelated to patient
care.
(5) Legal fees
associated with successful lawsuits against the cabinet shall be limited to
inclusion as allowable cost in the period:
(a)
In which a suit is settled after a final decision has been issued that the
lawsuit is successful;
(b) Agreed
to by involved parties; or
(c) As
ordered by the court.
(6)
Travel expenses. The cost of travel expenses shall be limited to:
(a) Activities related to the educational
needs of the:
1. Agency owners;
2. Directors; or
3. Staff;
(b) Reasonable and necessary cost pursuant to
42 C.F.R.
413.9(b) as determined in
evaluating the:
1. Number of trips
taken;
2. Expense associated with
each trip;
3. Number of persons
attending each function; and
4.
Appropriateness of the training; and
(c) Trips taken within the forty-eight (48)
contiguous United States.
Section 11. Owner's Compensation Limits.
(1) Compensation to an owner who is not an
administrator shall:
(a) Be considered an
allowable cost pursuant to
42 C.F.R.
413.102; and
(b) Exclude:
1. Board of directors' fees; and
2. Fringe benefits routinely provided to all
employees.
(2)
Compensation of a part-time owner-employee performing managerial functions
shall not exceed the percent of time worked times eighty (80) percent of the
applicable compensation limits for an owner administrator.
(3) A full-time owner-administrator or
full-time owner-employee who performs nonmanagerial functions in an HHA other
than the HHA with which he is primarily associated shall be limited to:
(a) Reasonable compensation from the
nonprimary agency for not more than fourteen (14) hours per week supported by:
1. The owner's proof of performance of a
necessary function; and
2.
Documentation of time claimed for compensation; and
(b) A salary from the agency with which the
person is primarily associated.
(4) Managerial functions performed in a
nonprimary agency by a full-time owner-administrator or a full-time
owner-employee of another agency shall not be considered an allowable
cost.
(5) Compensation to an
owner-administrator of a rural or urban HHA shall be:
(a) Limited to $60,579 beginning July 1,
1999;
(b) Increased on July 1 of
each year by the inflation factor index for wages and salaries of the Home
Health Agency Market Basket of Operating Cost as indicated by the National
Forecasts supplied by Standard and Poor's, Inc.; and
(c) Published annually through a notification
to all providers to advise of the revised limits for owner's compensation to be
effective July 1 of each year.
Section 12. Audit Functions.
(1) All HHA provider costs applicable to a
Medicaid beneficiary shall be subject to:
(a)
Review or audit by the department; and
(b) A final retroactive settlement based upon
an adjustment to an HHA provider's costs reported in a cost report for any
reporting period under review or audit.
(2) The department shall perform a uniform
desk review (UDR) of each provider's annual cost report.
(3) A summary of the UDR shall be used:
(a) To settle the cost report without audit;
or
(b) To determine the extent to
which audit verification is required.
(4) If indicated by the uniform desk review,
an audit shall be conducted in accordance with the "Government Auditing
Standards".
Section 13.
Payment Amounts Effective July 1, 2002. A participating HHA shall be reimbursed
for a home health service provided in accordance with
907 KAR
1:030 at the lesser of:
(1) The provider's usual and customary
charge; or
(2) The Medicaid fixed
upper payment limit per unit of service as established in Section 14 of this
administrative regulation.
Section
14. Fixed Upper Payment Limits. The following rates shall be the
fixed upper payment limits for home health services:
Service
|
Fixed Upper Payment Limit
|
Skilled Nursing
|
$87.15 per visit
|
Home Health Aide
|
$34.13 per visit
|
Speech Therapy
|
$85.05 per visit
|
Physical Therapy
|
$85.05 per visit
|
Occupational Therapy
|
$85.05 per visit
|
Medical Social Service
|
$68.25 per visit
|
Section
15. Supplemental Payments to Licensed County Health Departments.
(1) Beginning September 1, 2003, the
department shall make supplemental payment to a licensed county health
department home health agency equal to the difference between:
(a) Payments received for services on or
after November 1, 2002 in accordance with Section 14 of this administrative
regulation; and
(b) The estimated
cost of providing services during the same time period.
(2) Based on a provider's most recently
submitted annual cost report, estimated costs of providing services shall be
determined by multiplying the cost per unit by the number of units provided
during the period.
(3) If a
provider's cost as estimated from its most recently submitted annual cost
report is less than the payments received under Section 14 of this
administrative regulation, the department shall recoup any excess
payments.
Section 16.
Reimbursement Review and Appeal. An HHA may appeal a department decision as to
the application of this administrative regulation as it impacts the provider's
reimbursement in accordance with
907
KAR 1:671, Sections 8 and 9.
Section 17. Incorporation by Reference.
(1) The following material is incorporated by
reference:
(a) The "Annual Medicaid Home
Health/HCB Cost Report", Department for Medicaid Services, May 1991
edition;
(b) "The Annual Medicaid
Home Health/HCB Cost Report Instructions", Department for Medicaid Services,
May 1991 edition;
(c) The
"Government Auditing Standards", 1994 edition, as issued by the Comptroller
General of the United States;
(d)
The "Kentucky Medicaid Medical Supply Cost Settlement Worksheet", Department
for Medicaid Services, June 2003 edition; and
(e) The "Kentucky Medicaid Medical Supply
Cost Settlement Worksheet Instructions", Department for Medicaid Services, June
2003 edition.
(2) This
material may be inspected, copied, or obtained, subject to applicable copyright
law, at the Department for Medicaid Services, 275 East Main Street, Frankfort,
Kentucky 40621, Monday through Friday, 8 a.m. to 4:30 p.m.
STATUTORY AUTHORITY:
KRS
194A.030(2),
194A.050(1),
205.520(3)