North Dakota Administrative Code
Title 75 - Department of Human Services
Article 75-02 - Economic Assistance
Chapter 75-02-06 - Ratesetting for Nursing Home Care
Section 75-02-06-16 - Rate determinations for cost
Universal Citation: ND Admin Code ยง 75-02-06-16
Current through Supplement No. 394, October, 2024
1. This section is applicable for establishing a cost rate for direct care, other direct care, and indirect care for the June 30, 2021, report year.
2. Rate determination.
a. For the direct cost category, the actual
rate is calculated using allowable historical operating costs and adjustment
factors provided for in subsection 5 divided by standardized resident days. The
actual rate as calculated is compared to the limit rate to determine the lesser
of the actual rate or the limit rate. The lesser rate is given the rate weight
of one. The rate weight of one for direct care is then multiplied times the
weight for each classification in subsection 5 of section
75-02-06-17 to establish the
direct care rate for that classification.
b. For the other direct cost category, the
actual rate is calculated using allowable historical operating costs and
adjustment factors provided for in subsection 4 divided by resident days. The
actual rate as calculated is compared to the limit rate to determine the lesser
of the actual rate or the limit rate.
c. For the indirect cost category, the actual
rate is calculated using allowable historical operating costs and adjustment
factors provided for in subsection 4 divided by resident days subject to the
adjustments provided for in subdivision g of subsection 4. The actual rate as
calculated is compared to the limit rate to determine the lesser of the actual
rate or the limit rate.
d. For the
passthrough costs category, the actual rate is calculated using allowable
historical operating costs divided by resident days subject to the adjustments
provided for in subdivision g of subsection 4.
e. The property rate must be the greater of
the fair rental value rate or the rate calculated using allowable property
costs. The property rate must be calculated using resident days subject to the
adjustments provided for in subdivision g of subsection 4. The fair rental
value rate must be the rate established under subdivision e of subsection 1 of
section 75-02-06-16.3.
f. The lesser of the actual rate or the limit
rate for other direct care and indirect care, the passthrough rate, the
property rate, and the adjustments provided for in subsections 3 and 4 are then
added to the direct care rate for each classification to arrive at the
established rate for a given classification.
3.
a. For a
facility with an actual rate below the limit rate for indirect care costs, an
incentive amount equal to seventy percent times the difference between the
actual rate, exclusive of the adjustment factor, and the limit rate in effect
at the end of the year immediately preceding the rate year, up to a maximum of
two dollars and sixty cents or the difference between the actual rate,
inclusive of the adjustment factor and the limit rate for indirect care costs,
whichever is less, must be included as part of the indirect care cost rate.
b. A facility shall receive an
operating margin of four and four-tenths percent, effective January 1, 2020,
through December 31, 2021, and four and four-tenths percent effective January
1, 2022, through December 31, 2023, based on the lesser of the actual direct
care and other direct care rates, exclusive of the adjustment factor, or the
limit rate in effect at the end of the year immediately preceding the rate
year. The operating margin must be added to the rate for the direct care and
other direct care cost categories.
4. Limitations.
a. The department shall accumulate and
analyze statistics on costs incurred by facilities. Statistics may be used to
establish reasonable ceiling limitations and incentives for efficiency and
economy based on reasonable determination of standards of operations necessary
for efficient delivery of needed services. Limitations and incentives may be
established on the basis of cost of comparable facilities and services and may
be applied as ceilings on the overall costs of providing services or on
specific areas of operations. The department may implement ceilings at any time
based upon information available.
b. The department shall review, on an ongoing
basis, aggregate payments to facilities to determine that payments do not
exceed an amount that can reasonably be estimated would have been paid for
those services under Medicare payment principles. If aggregate payments to
facilities exceed estimated payments under Medicare, the department may make
adjustments to rates to establish the upper limitations so that aggregate
payments do not exceed an amount that can be estimated would have been paid
under Medicare payment principles.
c. All facilities except those nongeriatric
facilities for individuals with physical disabilities or units within a nursing
facility providing geropsychiatric services described in North Dakota Century
Code section 50-24.4-13 must be used to establish a limit rate for the direct
care, other direct care, and indirect care cost categories. The base year is
the report year ended June 30, 2021. The limit rates for the direct care, other
direct care, and indirect care cost categories must be established using the
June 30, 2021, base year. Base year costs may not be adjusted in any manner or
for any reason not provided for in this subsection.
d. The limit rate for each of the cost
categories must be established as follows:
(1)
Historical costs for the report year ended June 30, 2020, as adjusted, must be
used to establish rates for all facilities in the direct care, other direct
care, and indirect care cost categories. The rates as established must be
ranked from low to high for each cost category.
(2) For the rate year beginning January 1,
2021, the limit rate for each cost category is:
(a) For the direct care cost category, two
hundred four dollars and eighty-four cents;
(b) For the other direct care cost category,
twenty-nine dollars and eighty-four cents; and
(c) For the indirect care cost category,
eighty-four dollars and fifty-one cents.
e. A facility with an actual rate that
exceeds the limit rate for a cost category shall receive the limit
rate.
f. The cost rate for the
January 1, 2023, rate year must be the previous rate year's cost rate increased
by the adjustment factor.
g. The
actual rate for indirect care costs, passthrough costs, and the fair rental
value rate must be the lesser of the rate established using:
(1) Actual census for the report year;
or
(2) Ninety percent of licensed
bed capacity available for occupancy as of June thirtieth of the report year:
(a) Multiplied times three hundred
sixty-five; and
(b) Reduced by the
number of affected beds, for each day any bed is not in service during the
report year, due to a remodeling, renovation, or construction
project.
h.
The department may waive or reduce the application of subdivision g if the
facility demonstrates that occupancy below ninety percent of licensed capacity
results from the use of alternative home and community services by individuals
who would otherwise be eligible for admission to the facility and:
(1) The facility has reduced licensed
capacity; or
(2) The facility's
governing board has approved a capacity decrease to occur no later than the end
of the rate year which would be affected by subdivision g.
i. The department may waive the application
of paragraph 2 of subdivision g for nongeriatric facilities for individuals
with disabilities or geropsychiatric facilities or units if occupancy below
ninety percent is due to lack of department-approved referrals or
admissions.
5. An adjustment factor shall be used for purposes of adjusting historical costs for direct care, other direct care, and indirect care under subsection 2 and for purposes of adjusting the limit rates for direct care costs, other direct care costs, and indirect care costs under subsection 4, but may not be used to adjust passthrough costs and the fair rental value under either subsection 2 or 4. The adjustment factor for the January 1, 2023, rates must be reduced by one-half percent.
6. Rate adjustments.
a. Desk audit rate.
(1) The cost report must be reviewed taking
into consideration the prior year's adjustments. The facility must be notified
by electronic mail of any adjustments based on the desk review. Within seven
working days after notification, the facility may submit information to explain
why the desk adjustment should not be made. The department shall review the
information and make appropriate adjustments.
(2) The desk audit rate must be effective
January first of each rate year unless the department specifically identifies
an alternative effective date and must continue in effect until a final rate is
established.
(3) Until a final rate
is effective, pursuant to paragraph 3 of subdivision b, private-pay rates may
not exceed the desk audit rate except as provided for in section
75-02-06-22 or subdivision
c.
(4) The facility may request a
reconsideration of the desk rate for purposes of establishing a pending
decision rate. The request for reconsideration must be filed with the
department's medical services division within thirty days of the date of the
rate notification and must contain the information required in subsection 1 of
section 75-02-06-26. No decision on the
request for reconsideration of the desk rate may be made by the department
unless, after the facility has been notified that the desk rate is the final
rate, the facility requests, in writing within thirty days of the rate
notification, the department to issue a decision on that request for
reconsideration.
(5) The desk rate
may be adjusted for special rates or one-time adjustments provided for in this
section.
(6) The desk rate may be
adjusted to reflect errors, adjustments, or omissions for the report year that
result in a change of at least the rate adjustment percentage per
day.
b. Final rate.
(1) The cost report may be field audited to
establish a final rate. If no field audit is performed, the desk audit rate
must become the final rate upon notification from the department. The final
rate is effective January first of each rate year unless the department
specifically identifies an alternative effective date.
(2) The final rate must include any
adjustments for nonallowable costs, errors, or omissions that result in a
change from the desk audit rate of at least the rate adjustment percentage per
day that are found during a field audit or are reported by the facility within
twelve months of the rate yearend.
(3) The private-pay rate must be adjusted to
the final rate no later than the first day of the second month following
receipt of notification by the department of the final rate and is not
retroactive except as provided for in subdivision c.
(4) The final rate may be revised at any time
for special rates or one-time adjustments provided for in this
section.
(5) If adjustments,
errors, or omissions are found after a final rate has been established, the
following procedures must be used:
(a)
Adjustments, errors, or omissions found within twelve months of establishment
of the final rate, not including subsequent revisions, resulting in a change of
at least the rate adjustment percentage per day must result in a change to the
final rate. The change must be applied retroactively as provided for in this
section.
(b) Adjustments, errors,
or omissions found later than twelve months after the establishment of the
final rate, not including subsequent revisions, that would have resulted in a
change of at least the rate adjustment percentage per day had they been
included, must be included as an adjustment in the report year that the
adjustment, error, or omission was found.
(c) The two report years immediately
preceding the report year to which the adjustments, errors, or omissions apply
may also be reviewed for similar adjustments, errors, or omissions.
c. Pending decision
rates for private-pay residents.
(1) If a
facility has made a request for reconsideration, taken an administrative
appeal, or taken a judicial appeal from a decision on an administrative appeal,
and has provided information sufficient to allow the department to accurately
calculate, on a per day basis, the effect of each of the disputed issues on the
facility's rate, the department shall determine and issue a pending decision
rate within thirty days of receipt of the request for reconsideration,
administrative appeal, or judicial appeal. If the information furnished is
insufficient to determine a pending decision rate, the department, within
thirty days of receipt of the request for reconsideration, shall inform the
facility of the insufficiency and may identify information that would correct
the insufficiency.
(2) The
department shall add the pending decision rate to the rate that would otherwise
be set under this chapter, and, notwithstanding North Dakota Century Code
section 50-24.4-19, the total must be the rate chargeable to private-pay
residents until a final decision on the request for reconsideration or appeal
is made and is no longer subject to further appeal. The pending decision rate
is subject to any rate limitation that may apply.
(3) The facility shall establish and maintain
records that reflect the amount of any pending decision rate paid by each
private-pay resident from the date the facility charges a private-pay resident
the pending decision rate.
(4) If
the pending decision rate paid by a private-pay resident exceeds the final
decision rate, the facility shall refund the difference, plus interest accrued
at the legal rate from the date of notification of the pending decision rate,
within sixty days after the final decision is no longer subject to appeal. If a
facility fails to provide a timely refund to a living resident or former
resident, the facility shall pay interest at three times the legal rate for the
period after the refund is due. If a former resident is deceased, the facility
shall pay the refund to a person lawfully administering the estate of the
deceased former resident or lawfully acting as successor to the deceased former
resident. If no person is lawfully administering the estate or lawfully acting
as a successor, the facility may make any disposition of the refund permitted
by law. Interest paid under this subsection is not an allowable cost.
d. The final rate as established
must be retroactive to the effective date of the desk rate, except with respect
to rates paid by private-pay residents. A pending decision rate is not subject
to adjustment or refund until a decision on the disputed amount is
made.
7. Rate payments.
a. The rate as established must be considered
as payment for all accommodations and includes all items designated as
routinely provided. No payments may be solicited or received from the resident
or any other person to supplement the rate as established.
b. The rate as established must be paid by
the department only if the rate charged to private-pay residents for
semiprivate accommodations equals the established rate. If at any time the
facility discounts rates for private-pay residents, the discounted rate must be
the maximum chargeable to the department for the same bed type, i.e., hospital
or leave days.
c. If the
established rate exceeds the rate charged to a private-pay resident, on any
given date, the facility shall immediately report that fact to the department
and charge the department at the lower rate. If payments were received at the
higher rate, the facility shall, within thirty days, refund the overpayment.
The refund must be the difference between the established rate and the rate
charged the private-pay resident times the number of medical assistance
resident days paid during the period in which the established rate exceeded the
rate charged to private-pay residents, plus interest calculated at two percent
over the Bank of North Dakota prime rate on any amount not repaid within thirty
days. The refund provision also applies to all duplicate billings involving the
department. Interest charges on these refunds are not allowable
costs.
d. Peer groupings,
limitations, or adjustments based upon data received from or relating to more
than one facility are effective for a rate period. Any change in the data used
to establish peer groupings, limitations, or adjustments may not be used to
change such peer groupings, limitations, or adjustments during the rate period,
except with respect to the specific facility or facilities to which the data
change relates.
e. The established
rate is paid based on a prospective ratesetting procedure. No retroactive
settlements for actual costs incurred during the rate year that exceed the
established rate may be made unless specifically provided for in this
section.
8. Partial year.
a. Rates for a facility changing
ownership during the rate period are set under this subdivision.
(1) The rates established for direct care,
other direct care, indirect care, passthrough, operating margins, and
incentives for the previous owner must be retained through the end of the rate
period and the rates for the next rate period following the change in ownership
must be established:
(a) For a facility with
six or more months of operation under the new ownership during the report year,
through use of a cost report for the period;
(b) For a facility with less than six months
of operation under the new ownership during the report year, by indexing the
rates established for the previous owner forward using the adjustment factor in
subsection 5; or
(c) If the change
of ownership occurred after the report year end, but prior to the beginning of
the next rate year, and the previous owner submits and allows audit of a cost
report, by establishing a rate based on the previous owner's cost
report.
(2) The fair
rental value rate established for property for the previous owner must be
retained.
b. For a new
facility placed into service before December 31, 2022, the department shall
establish a rate equal to the limit rates for direct care, other direct care,
and indirect care in effect for the rate year in which the facility begins
operation, plus the projected property rate. The projected property rate is
subject to subdivision d of subsection 8. For the rate period following
submission of any partial year cost report by a facility, census used to
establish rates for property and indirect care costs must be the greater of
actual census, projected census, or census imputed at ninety-five percent of
licensed beds.
(1) If the effective date of
the rate is on or after January first and on or before June thirtieth, the rate
must be effective for the remainder of that rate year and must continue through
June thirtieth of the subsequent rate year. The facility shall file by March
first a cost report for the period ending December thirty-first of the year in
which the facility first provides services. The cost report is used to
establish the actual rate effective July first of the subsequent rate year. The
partial year rate established based on the cost report must include applicable
incentives, margins, phase-ins, and adjustment factors and may not be subject
to any cost settle-up.
(2) If the
effective date of the rate is on or after July first and on or before December
thirty-first, the rate must remain in effect through the end of the subsequent
rate year. The facility shall file a cost report for the partial report year
ending June thirtieth of the subsequent rate year. This cost report must be
used to establish the rate for the next subsequent rate year. The facility
shall file by March first a cost report for the period July first through
December thirty-first of the subsequent rate year.
(3) The final rate for direct care, other
direct care, and indirect care costs established under this subdivision must be
limited to the lesser of the limit rate for the current rate year or the actual
rate.
c. For a facility
terminating its participation in the medical assistance program, whether
voluntarily or involuntarily, the department may authorize the facility to
receive continued payment until medical assistance residents can be relocated
to facilities participating in the medical assistance program.
d. For a projected property rate in place
before January 1, 2023, at such time as twelve months of property costs are
reflected in the report year, the difference between a projected property rate
and the property rate that would otherwise be established based on historical
costs must be determined. The property rate paid in each of the twelve years,
beginning with the first rate year following the use of a projected property
rate reduced by one-twelfth of that difference.
9. One-time adjustments.
a. Adjustments to meet certification
standards.
(1) The department may provide for
an increase in the established rate for additional costs incurred to meet
certification standards. The survey conducted by the department's public health
division must clearly require that the facility take steps to correct
deficiencies dealing with resident care. The plan of correction must identify
the salary and other costs that must be increased to correct the deficiencies
cited in the survey process.
(2)
The facility shall submit a written request to the medical services division
within thirty days of submitting the plan of correction to the department's
public health division. The request must:
(a)
Include a statement that costs or staff numbers have not been reduced for the
report year immediately preceding the department's public health divsion's
certification survey;
(b) Identify
the number of new staff or additional staff hours and the associated costs
required to meet the certification standards; and
(c) Provide a detailed list of any other
costs necessary to meet survey standards.
(3) The department shall review the submitted
information and may request additional documentation or conduct onsite visits.
If an increase in costs is approved, the established rate must be adjusted to
an amount not to exceed the limit rate.
(4) Any additional funds provided must be
used in accordance with the facility's written request to the department and
are subject to audit. If the department determines the funds were not used for
the intended purpose, an adjustment must be made in accordance with subsection
6.
b. Adjustments for
unforeseeable expenses.
(1) The department may
provide for an increase in the established rate for additional costs incurred
to meet major unforeseeable expenses. The expenses must be resident related and
must be beyond the control of those responsible for the management of the
facility.
(2) Within sixty days
after first incurring the unforeseeable expense, the facility shall submit a
written request to the medical services division containing the following
information:
(a) An explanation as to why the
facility believes the expense was unforeseeable;
(b) An explanation as to why the facility
believes the expense was beyond the managerial control of the facility;
and
(c) A detailed breakdown of the
unforeseeable expenses by expense line item.
(3) The department shall base its decision on
whether the request clearly demonstrates that the economic or other factors
that caused the expense were unexpected and arose because of conditions that
could not have been anticipated by management based on its background and
knowledge of nursing care industry and business trends.
(4) The department shall review the submitted
information and may request additional documentation or conduct onsite visits.
If an increase in costs is approved, the established rate must be adjusted
upward not to exceed the limit rate.
(5) Any additional funds provided must be
used to meet the unforeseeable expenses outlined in the facility's request to
the department and are subject to audit. If the department determines that the
funds were not used for the intended purpose, an adjustment must be made in
accordance with subsection 6.
c. Adjustment to historical operating costs.
(1) A facility may receive a one-time
adjustment to historical operating costs when the facility has been found to be
significantly below care-related minimum standards described in subparagraph a
of paragraph 2 and when it has been determined the facility cannot meet the
minimum standards through reallocation of costs and efficiency
incentives.
(2) The following
conditions must be met before a facility can receive the adjustment:
(a) The facility shall document, based on
nursing hours and standardized resident days, the facility cannot provide a
minimum of one and two-tenths nursing hours per standardized resident
day;
(b) The facility shall
document all available resources, including efficiency incentives, if used to
increase nursing hours, are not sufficient to meet the minimum standards;
and
(c) The facility shall submit a
written plan describing how the facility will meet the minimum standard if the
adjustment is received, including the number and type of staff to be added to
the current staff and the projected cost for salary and fringe benefits for the
additional staff.
(3)
The adjustment must be calculated based on the costs necessary to increase
nursing hours to the minimum standards less any operating margins and
incentives included when calculating the established rate. The net increase
must be divided by standardized resident days and the amount calculated must be
added to the rate. This rate is subject to any rate limitations that may
apply.
(4) If the facility fails to
implement the plan to increase nursing hours to one and two-tenths hours per
standardized resident day, the amount included as the adjustment must be
adjusted in accordance with the methodologies set forth in subsection
6.
(5) If the cost of implementing
the plan exceeds the amount included as the adjustment, no retroactive
settlement may be made.
d. Adjustments for disaster recovery costs
when evacuation of residents occurs.
(1) A
facility may incur certain costs when recovering from a disaster such as a
flood, tornado, or fire. If evacuation of residents was necessary because of
the disaster, actual recovery costs during the evacuation period, net of
insurance recoveries, may be considered as deferred charges and allocated over
a number of periods that benefit from the costs.
(2) When a facility has evacuated residents
and capitalizes recovery costs as a deferred charge, the recovery costs must be
recognized as allowable costs amortized over sixty consecutive months beginning
with the sixth month after the first resident is readmitted to the
facility.
(3) Recovery costs must
be identified as startup costs and included as passthrough costs for report
purposes. Recovery costs are not subject to any limitations except as provided
in paragraph 4.
(4) If a facility
evacuates residents, the ninety percent occupancy limitation may not be applied
during the recovery period or for the first six months following the month the
facility readmits the first resident.
(5) Insurance recoveries relating to the
disaster recovery period must be reported as a reduction of recovery costs.
Insurance recoveries received after the first month of the sixty-month
amortization period must be included as a reduction of deferred charges not yet
amortized, except that the reduction for insurance recoveries may occur only at
the beginning of a rate year.
10. Under no circumstances, including an appeal or judicial decision to the effect a rate was erroneously established, may a rate adjustment be made to any rate established under this chapter, unless the cumulative impact of all adjustments not already included in the established rate equals or exceeds the rate adjustment percentage per day.
General Authority: NDCC 50-24.1-04, 50-24.4-02
Law Implemented: NDCC 50-24.4; 42 USC 1396a(a)(13)
Disclaimer: These regulations may not be the most recent version. North Dakota may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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