Illinois Administrative Code › Title 89 - SOCIAL SERVICES › Part 356 - RATE SETTING › Section 356.50 - Determining Rate Reimbursement Levels

Current through Register Vol. 48, No. 28, July 12, 2024
This Section applies to those situations where the Department
				promulgates standard or individual rates identified in Section
				356.30(b)(2) and
				(3).
a) Forms - Financial reporting forms shall be
			 used in establishing rates of reimbursement, regardless of the type of service
			 provided.
b) For-Profit Agencies -
			 Contracts with for-profit agencies must clearly identify any profit factor that
			 must directly correspond to units of services provided. Profit will be
			 categorized as an administrative cost and will be limited to 9% of the total
			 contract amount. Profit will also be included in calculating the overall
			 administrative cost standard.
c)
			 Reasonable Cost Standards - Reasonable cost standards shall be applied to
			 certain categories of costs except that program and transportation costs may be
			 exempted if warranted by the special needs of the clientele. The reasonable
			 cost standards establish reimbursement ceilings for categories of costs. The
			 standards are derived from the median costs of all agencies providing similar
			 services. Fringe benefits above 25% of salaries shall not be reimbursed by the
			 Department. Administrative costs may not exceed 20% of the costs for other
			 services. Reimbursement may exceed the reasonable cost standards if a higher
			 rate is negotiated as a result of a rate appeal or rate enhancement that
			 clearly demonstrates that costs in excess of the standards are the result of a
			 necessary level of resources purchased in a prudent manner. However,
			 administrative costs may not exceed 20% of the costs of other
			 services.
d) Revenues to be Offset
			 - Revenues to be offset shall include grants, other non-purchase-of-service
			 revenue from other governmental agencies, revenues from the school lunch
			 program, and revenues from local education agencies. All revenues to be offset
			 shall be reported by the provider. These revenues will be considered as part of
			 the resources available to the provider in determining reasonable costs. The
			 Department will not reimburse a provider for the proportion of services or
			 administrative charges that have been paid, wholly, or in part, by such
			 revenues.
e) Units of Service and
			 Provider Capacity - Reimbursement rates shall be determined on the basis of
			 actual units of service provided or the median utilization for all agencies
			 providing similar services, whichever is greater. However, significant
			 deviations from the utilization level may be used in rate-setting if unusual
			 circumstances beyond the control of the provider directly caused a significant
			 change in occupancy rates.
f)
			 Special Provisions for Calculating Individual Rate Reimbursement including
			 Child Care Institutions, Group Homes, Maternity Centers, and Shelter Programs -
			 For State Fiscal Year 2000 (from July 1, 1999 through June 30, 2000), the rates
			 for all child care institutions, group homes, maternity centers, independent
			 living, specialized foster care, treatment foster care and shelter programs
			 will be calculated as outlined in this Section except that programs that would
			 receive reductions will be held harmless at State Fiscal Year 1999 levels if
			 both Fiscal Year 1998 cost reports and a program budget for State Fiscal Year
			 2000 are submitted within 30 days after notice to the program. If a program
			 fails to submit a cost report within the 30-day period, the rate will be
			 adjusted to 80% of the applicable State Fiscal Year 1999 rate. If a program
			 files a cost report but not a budget, the rate will not be held harmless and
			 will be adjusted downward based on the rate calculation methodology, but in no
			 instance shall the rate be less than 80% of the program's State Fiscal year
			 1999 rate. This rate adjustment for State Fiscal Year 2000 applies regardless
			 of the other provisions of this Part.
1) The
			 Department will conduct a joint rate calculation with the Illinois Department
			 of Human Services.
2) Reimbursement
			 rates shall be determined on the basis of actual units of service provided, or
			 the median utilization level for all similar providers, whichever is greater.
			 The maximum utilization level that will be used to determine reimbursement
			 rates shall be 98% of licensed or approved program capacity. For the purpose of
			 establishing the median utilization level, residential programs will be grouped
			 into two categories:
A) Child Care
			 Institutions and Group Homes; and
B) Maternity Homes and approved Shelter
			 programs.
3) The
			 reasonable cost standards for support and ownership costs shall be 120% of the
			 median costs of all similar providers. Providers shall be deemed dissimilar,
			 and subject to an adjusted cost standard if one or more of the following
			 conditions has occurred on or after July 1, 1983:
A) the provider has built an entirely new
			 building used directly by clients of the program,
B) the provider has renovated a building used
			 directly by program clients and the annual depreciation and/or interest costs
			 are $20,000 or more, or
C) the
			 provider has entered a first-time lease for a building used directly by program
			 clients.
4) These costs
			 shall be demonstrated by an annual audit cost report and accompanying notes as
			 prescribed by 89 Ill. Adm. Code
			 357.120
			 (Purchase of Service Fiscal Reports and Records). The reasonable cost standards
			 shall include a geographic differential factor to reflect the differences in
			 costs due to geographic location when such cost differentials exist. The
			 existence of such differentials is determined by measurement of the audited
			 costs reported by providers and the application of generally accepted
			 statistical tests to these costs. Any geographic differential factor that
			 results from these tests is included in the Department's rate notices sent to
			 providers.
5) Historical costs,
			 except depreciation, interest and amortization of allowable pre-operating
			 expenses shall be increased by inflation adjustment factor to reflect the
			 increases in costs caused by general inflation. The maximum increase in a
			 facility's reimbursement rate shall be 150% of the inflation adjustment factor
			 for the most current year. The percentage limitation shall be applied to the
			 most recent rate unless that rate declined due to a combination of both reduced
			 utilization and reduced costs. In such case, the next most recent rate shall be
			 used to determine the allowable maximum increase. This limitation will not be
			 applied to cost increases mandated by regulatory agencies or program changes
			 approved by the Department Director.
6) New programs not having historical costs
			 shall have a rate set via a process that begins with completion of a projected
			 historical cost budget in the same format used to set historical cost rates.
			 The Regional Office developing the contract shall negotiate costs based on a
			 comparison of the budget with levels of staffing generally needed for similar
			 programs; with prevailing wage rates; and with levels of supply, ownership,
			 support and other costs common to similar programs. The Department shall review
			 the results and shall engage in further negotiations when an examination of
			 submitted data determines an anomaly or disparity in the data in comparison to
			 other data submitted by other providers. A new start rate shall then be set
			 using the reasonable cost standards applying to the particular program under
			 the terms of this Part with one exception: To allow for the phase-in placement
			 of clients, the divisor applied to costs will be the greater of:
A) the number five percentage points lower
			 than the median utilization level applying to ongoing programs of the same
			 type; or
B) the projected
			 utilization agreed to by the Department and the provider.