NYSRA News: State, CMS Agree on Phasedown

Dear NYSRA Member,

New York State has reached an agreement with federal officials which will see some rates for state-delivered DD services in New York be phased down over the next five years.

A notice regarding the phase-down appears in the New York State Register published earlier today. You can view the notice by visiting the following link. The relevant notice begins on page 104 of the Register (the second page of this particular file:

http://www.dos.ny.gov/info/register/2012/jun27/pdfs/miscellaneous.pdf

The notice does not indicate the size of the rate phase-down for services operated by OPWDD. It does, however, indicate the reduction will affect rates the state receives for services in ICF/DD sites, residential and day hab programs operated by OPWED, and state-delivered Medicaid Service Coordination.

OPWDD has indicated this phase-down of state rates should not have any "direct impact" on voluntary providers and the notice indicates that MSC services supplied by voluntary providers will not see a change. Commissioner Burke indicated to provider associations that OPWDD believes the agreement to see this phase-down occur as one that is "a reasonable outcome for all sides." The agreement is the culmination of a negotiation between the state and CMS regarding past rates paid to the state and CMS approval of a new rate structure proposed by New York.

Earlier this year, the Office of the Inspector General at Health & Human Services released a report in which it concluded that rates received by New York in several previous years may have been excessive in that they were not closely tied to actual costs of state-delivered services. And, indeed, the note in today's State Register states the reason for the proposed changes going forward "is to more closely align rates and prices with the costs of providing these services."

New York's rates are said to have been the result of several State Plan Amendments that were approved by CMS in past years. The OIG report acknowledges this. In its report, the OIG indicates:

"This growth occurred because CMS did not adequately consider the impact of State plan amendments on the developmental centers' Medicaid daily rate. Specifically, CMS approved more than 35 State Plan Amendments related to the ICF rates, including some that pertained only to developmental centers. CMS reviewed the proposed amendments and, in some cases, asked the State for additional information to address concerns CMS had about the rate-setting methodology. However, CMS's efforts did not prevent the rate from increasing to its current level, which might not be consistent with efficiency and economy."

The OIG report suggests that the "excess" in federal dollars paid to New York State may have been approximately $700 million. As mentioned above, no dollar amount appears in today's State Register Notice.

The HHS OIG report can be viewed here:

http://oig.hhs.gov/oas/reports/region2/21101029.pdf

State officials estimate that there will be no increase or decrease in annual aggregate expenditures as a result of this change, but no details beyond that are yet known.