Arkansas Administrative Code › Agency 016 - DEPARTMENT OF HUMAN SERVICES › Division 29 - Division of Medical Services › Rule 016.29.22-001 - Skilled Nursing Facility Payment Methodology

Current through Register Vol. 49, No. 6, June, 2024
Medical Assistance Program Manual Of Cost Reimbursement
				Rules For Long Term Care Facilities
Introduction
This manual is for use by providers, their accountants and the
				Department of Human Services in determining the allowable and reasonable cost
				of Long Term Care services furnished to Medicaid recipients. The manual
				contains procedures to be used by each provider in accounting for its
				operations and in reporting the cost of care and services to the Department of
				Human Services.
The Long Term Care Program is administered by the Division of
				Medical Services. The program herein adopted is in accordance with Federal
				Statute in the Social Security Act § 1902 (a) (13) (A) and
				Public
				Law 105-33. The applicable Federal Regulations
				begin at 42 Code of Federal Regulations § 430. Each Long Term Care
				Facility which has contractually agreed to participate in the Title XIX Program
				will adopt the procedures set forth in this manual and must file the required
				cost reports.
As interpretations and changes of this program are made,
				appropriate revisions of the manual will be furnished to each provider and
				interested party. Care should be taken to insure that revisions to the manual
				are promptly inserted.
Questions relating to this program or relating to the
				interpretation of any of the provisions included in this manual should be
				addressed to:
Department of Human Services
Division of Medical Services
P. O. Box 1437, Slot S535
Little Rock, AR 72203-1437
Chapter
			 1
- Principles and Procedures
1-1
General
			 Principles
All Long Term Care Facilities will be reimbursed according to
				the principles and procedures specified in these regulations. Allowable costs
				are those costs necessary and reasonable for performance of covered services
				required by Medicaid recipients.
A facility's direct and indirect allowable costs related to
				covered services will be considered in the findings and allocation of costs to
				the Medical Assistance Program for its eligible recipients. Total allowable,
				reasonable costs after removal of direct Medicare ancillary cost of a facility
				shall be apportioned on a per resident day basis between third-party payers and
				other residents so that the share borne by Medicaid under Title XIX is based
				upon actual services and costs related to Medical Assistance recipients.
Costs included in the per diem rate will be those necessary to
				be incurred by efficiently and economically operated facilities to comply with
				all requirements of participation in the Medicaid program.
1-2
Record Keeping
Providers are required to maintain adequate financial records
				and statistical data for proper determination of costs payable under the
				program. The cost report is to be based on financial and statistical records
				maintained by the facility. Cost information must be current, accurate and in
				sufficient detail to support costs set forth in the report. This includes all
				ledgers, books, records, and original evidence of cost (purchase requisitions
				for supplies, invoices, paid checks, inventories, time cards, payrolls, bases
				for apportioning costs, etc.) which pertain to the determination of reasonable
				costs. A provider must make available (within the state) all financial and
				statistical records to the Department or its representatives for the purpose of
				determining compliance with the provisions of this program. Providers who find
				it difficult to provide home office records at the audit or review site can at
				their option, reimburse the Department for all costs associated with the travel
				of Department employees or their representatives in accordance with state laws
				and rules for the reimbursement of travel for state employees.
The Financial and Statistical Report/Cost Report and Schedules
				sets forth information to be reported. The report must be prepared on the
				accrual basis of accounting in accordance with instructions for completion of
				the Cost Report. Government facilities have the option to use the cash basis of
				accounting for reporting.
All financial and statistical records, including cost reports,
				must be retained for a period of five years after submission to the
				Department.
1-3
Activities Not Related to Resident Care
If the provider conducts activities not related to resident
				care, additional accounts must be added to accommodate those
				activities.
1-4
Accrual and Cash Basis of Accounting
For non-governmental providers, the Financial and Statistical
				Report must be filed using information stated on the accrual method of
				accounting. The Chart of Accounts is designed to be used in a complete accrual
				accounting system.
Financial information stated on an accrual basis is essential
				to insure that the proper reimbursement is made to providers. The measurement
				of the cost of services performed must include all supplies, salaries, services
				and other expenses incurred, regardless of whether or not those items have been
				paid.
Many providers will find that the accounting for all
				transactions on a pure accrual basis may create undue workloads. Also, many
				providers account for their activities on a strict cash basis and they are
				satisfied with the management information produced from their existing system.
				Therefore, in lieu of accounting for all transactions on an accrual basis, the
				provider may maintain his records on a cash basis during the year and convert
				to an accrual basis at the beginning and end of the year for reporting
				purposes.
1-5
Chart of Accounts
The applicable Chart of Accounts shall be used by all Long Term
				Care Facilities participating in the Title XIX Program. Each Chart of Accounts
				provides for the basic classifications of all assets, liabilities, income and
				expense necessary for the preparation of the Cost Report. Providers may take
				some latitude in assigning account numbers but must maintain the basic Chart of
				Accounts.
1-6
Cost Reporting Requirements
All providers in operation under a valid Medicaid agreement for
				long term care services must file a Financial and Statistical Report (commonly
				referred to as a Cost Report or FSR). In addition to the annual reporting
				requirement nursing facilities will be required to submit a limited cost report
				containing direct care cost information for the period January 12, 2001 to June
				30, 2001, in order that the direct care per diem can be rebased after this
				initial period. Nursing facilities that have been newly constructed or a newly
				enrolled provider that did not previously participate in Medicaid, will be
				required to prepare and submit a cost report for the period beginning their
				first day of operation through the end of the month which includes their sixth
				month of operation. This report is essential in establishing rates for a new
				provider. If the facility was not certified for Medicaid participation at date
				of first opening or acquisition, then the reporting period shall begin at
				official certification date rather than the date of acquisition. Nursing
				Facilities that are newly purchased or leased shall submit a cost report for
				the period beginning with their first day of operation through the end the
				State Fiscal Year unless the cost reporting period would be less than three
				months of operation. Facilities that change ownership after April 1 of a State
				Fiscal Year would not submit a cost report from the date of initial operation
				to the end of the State Fiscal Year. Facilities changing ownership after April
				1 of a State Fiscal Year will prepare and submit a cost report for the period
				beginning their first day of operation through the end of the month which
				includes their sixth month of operation.
A. When To File
Nursing facilities will report cost on a fiscal year ending
				June 30. Cost reports will be due within ninety (90) days after the end of the
				reporting period. Under sixteen (16) Bed ICF/IID providers will report cost on
				a calendar year basis. The cost report will be due within ninety (90) days of
				the end of the reporting period. The Arkansas Health Center Nursing Facility
				and the sixteen (16) bed and over ICF/IID providers will report cost
				semi-annually (January 1 - June 30) and (July 1 - December 31) with the cost
				reports being due within sixty (60) days of the end of the reporting period.
				Should the due date fall on a Saturday, Sunday, or State of Arkansas holiday or
				federal holiday, the due date shall be the following business day. Nursing
				Facility cost reports are to be electronically submitted through the LTC cost
				report web application on or before the applicable due date. ICF/IID reports
				are to be delivered, postmarked or electronically uploaded, to the web portal
				on or before the applicable due date.
Providers who fail to submit cost reports and other required
				schedules and information by the due date or extended due date have committed a
				Class D Violation of Arkansas Code
				20-10-205.
				Civil penalties associated with failure to timely submit a cost report for Long
				Term Care Facilities are detailed in Section 1-11 of this
				Manual.
B. Extensions for
			 Filing
If a written request for an extension is received by the
				Division of Medical Services in advance of the report due date and a written
				extension is granted, a penalty will not be applied, provided the extended due
				date is met. Each request for extension will be considered on its merit. No
				extension will be granted unless the facility provides written evidence of
				extenuating circumstances beyond its control, which causes a late report. In no
				instance will an extension be granted for more than thirty (30) days.
C. What to Submit
In addition to the applicable cost report forms, providers must
				submit the following:
1. Most recently
			 completed Medicare Cost Report,
2.
			 Working trial balance and related working papers identifying the cost report
			 line each account is included on,
3. Detailed depreciation schedule,
4. Any work papers used to compute
			 adjustments made on the cost report,
5. A copy of any new or amended contracts for
			 management services by a related party, home office or a third party which
			 includes the basis used to allocate the costs to providers of the group and to
			 non-provider activities, if applicable.
6. Copy of new or amended lease agreement if
			 a leased facility.
When it is determined, upon initial review for completeness by
				the Division of Medical Services, that a cost report has been submitted without
				all required information, providers will be allowed a specified amount of time
				to submit the requested information without incurring the penalty for a
				delinquent cost report. For cost reports which are submitted by the due date,
				ten (10) working days from the date of the provider's receipt of the request
				for additional information will be allowed for the provider to submit the
				additional information. For cost reports which are submitted by an extended due
				date, five (5) working days from the date of the provider's receipt of the
				request for additional information will be allowed for the provider to submit
				the additional information. If requested additional information has not been
				submitted by the specified date, the cost report will be subject to the penalty
				provisions for delinquent submission. An exception exists in the event that the
				due date (or extended due date when an extension has been granted) comes after
				the specified number of days for submission of the requested information. In
				these cases, the provider will be allowed to submit the additional requested
				information on or before the due date (or extended due date if an extension has
				been granted) of the cost report.
D. Where to Submit
Nursing facility cost reports and additional information should
				be submitted through the LTC cost report web application. ICF/IID cost reports
				and additional information may be submitted to the address below or uploaded to
				the contractor's web portal.
Arkansas Department of Human Services Division of Medical
				Services
P. O. Box 1437 - Slot S535
Little Rock, AR 72203-1437
E. Amended Cost Reports
Providers can submit amended cost reports to the Department up
				to one hundred, eighty (180) days after the close of the cost reporting
				period.
1-7
Desk Reviews
The Department will review all cost reports to verify that all
				facilities have submitted reports properly and in compliance with this manual.
				Providers will be notified in writing of the results of the desk review.
A provider's cost report can be adjusted for any errors or
				unallowable costs identified on a provider's cost report after the initial desk
				review has been completed up to the last day of the rate year for which rates
				are based on the adjusted cost report.
Financial and Statistical Reports, financial records,
				statistical records, and any other pertinent documents will be analyzed to
				verify that:
A. Cost reports are
			 complete, accurate, and consistent with previous periods and in compliance with
			 program policy.
B. The allowable
			 costs are necessary, allocable, and reasonable for the performance of covered
			 services required by Medicaid recipients.
C. The costs are authorized and are not
			 prohibited under Federal and State laws and regulations.
D. The costs are accorded consistent
			 treatment through the application of accounting principles and practices
			 appropriate to the circumstances.
E. The costs are related to resident
			 care.
F. The costs and statistics
			 included in the Financial and Statistical Report are accurate and applicable to
			 the current period.
G. The costs
			 are net of all applicable credits.
1-8
Audits of Financial
			 Records
The Department will provide for periodic audits of some or all
				cost reports and supporting records. The Department may also conduct limited
				reviews of cost data and/or client statistics reported in the cost
				reports.
The auditors will issue a report upon completion of each audit
				or review. The report will reflect cost and statistical information as
				submitted in the cost report and any adjustments the auditors recommend, such
				that the information complies with the criteria listed above. All audit reports
				will state the auditor's opinion as to whether, in all material respects, the
				cost information reported on the Schedule of Expenses (DHS 750, Form 5 or DOM
				400, Form 6) and total actual resident days reported on the Statistical Data
				Schedule (DHS 750, Form 2 or DOM 400, Form 3), with audit adjustments, is
				presented fairly and in compliance with program policy and
				regulations.
1-9
Unauditable Situations
If a facility is unable or unwilling to provide necessary
				documentation to support the financial or statistical records contained in
				their cost report, the auditors will issue a "disclaimer" report signifying
				that the audit could not be accomplished. The Office of Long Term Care will
				advise the facility of the disclaimer in writing. A period of 90 days from the
				date of the letter of notification will be allowed to permit the facility to
				accumulate necessary documentation. A follow-up audit will be attempted upon
				expiration of the 90 day period or sooner if requested by the facility. If the
				audit can not be completed on the second attempt, the facility will be advised,
				in writing, that their agreement to participate in the Medicaid program will be
				terminated effective immediately. A period of 30 days from the date of such
				notification will be allowed to permit the orderly relocation of Medicaid
				recipients. The appeals procedures specified in Section 1-10 of this Manual are
				available to providers.
1-10
Appeal Procedures
A.
			 Time Limit for Appeals
1. Any Long Term Care
			 Facility may appeal the facility's reimbursement rate, a recoupment, a cost
			 disallowance, a fine, a sanction, the imposition of a civil money penalty or
			 suspension or termination from the program, by submitting a written notice of
			 appeal to the Director of the Department of Human Services within thirty
			 calendar days following the date of the appealed action. The appeal must
			 clearly state the basis for appeal and must be accompanied by supporting
			 documentation. If the facility wishes to utilize the "MEDIATION PROCESS" as
			 contained in this section, it must so state in its written Notice of
			 Appeal.
2. If an appeal is filed
			 the DHS Director or his designee will appoint an independent hearing officer to
			 hear the appeal. The hearing officer will schedule all appeals within 60 days
			 of receipt of written notice of appeal by the Division and will notify the
			 parties in writing of the hearing schedule. Provided that if the appealing
			 facility states in its written Notice of Appeal that it wishes to utilize the
			 "MEDIATION PROCESSES" and the department agrees, then the time for the DHS
			 Director or his designee to appoint a Hearing Officer is waived. However, the
			 appealing facility and the DHS Director or his designee shall implement the
			 mediation process within the sixty days. Upon the termination of the mediation
			 process, if any dispute stated in the notice of appeal remains unresolved, the
			 DHS Director or his designee will appoint the Independent Hearing Officer
			 within sixty days of the termination. The hearing officer will set a discovery
			 schedule if requested by either party. Either party may request a continuance
			 for good cause. The hearing officer may grant a continuance for good cause upon
			 motion of either party or on the hearing officer's own motion. The hearing
			 officer will render a written decision within 30 days of the hearing and
			 furnish a copy of the decision to the parties or their representatives.
Any objection requesting disqualification of the hearing
				officer upon allegations of personal interest or bias must be made in writing,
				supported by good faith affidavit, and submitted to the DHS Director at least
				fifteen days before the scheduled hearing. The DHS Director will consider the
				objection promptly and rule on it in a timely manner.
B. Administration of Appeal
1. The appellant may be present at the
			 hearing, may be represented by counsel, and may call witnesses. DHS may appear
			 by such officials as the Division may deem necessary, may be represented by
			 counsel, and may call witnesses.
2.
			 All testimony shall be under oath. Each party shall have the right to call and
			 examine parties and witnesses; to introduce exhibits; to question opposing
			 witnesses and parties on any matter relevant to the issue; and to rebut
			 opposing evidence. The appellant shall have the burden of proving whatever
			 facts it must establish to sustain its position by a preponderance of the
			 evidence.
3. The Hearing Officer
			 shall conduct himself in an impartial manner, and may question any party or
			 witness at any time during the hearing.
C. Decisions
1. All decisions rendered shall be submitted
			 by the Hearing Officer in writing to the Director, DHS, for his review and
			 final determination. At his discretion and for good cause the Director shall
			 have the right to reverse a Decision, or to return the issue to the Hearing
			 Officer for further consideration or additional findings of law or fact. All
			 decisions by the Hearing Officer and the Director shall contain findings of
			 fact and law in accordance with applicable State and Federal laws and
			 regulations. The final decision shall be rendered in writing to the
			 appellant.
D. Mediation
			 Process
1. If a long term care facility in its
			 written Notice of Appeal states it desires to utilize the mediation process in
			 attempt to resolve the dispute(s) between the facility and the DHS as stated in
			 the notice of appeal, and the DHS agrees to the mediation process, then
			 mediation shall be utilized to clarify, narrow or resolve the dispute(s). The
			 DHS shall maintain a list of mediators supplied by the Arkansas Commission on
			 Alternative Dispute Resolution Commission. The objective of the mediation
			 process is to help each side in the dispute(s) understand the other's point of
			 view, with a goal of narrowing, clarifying, or resolving issues in dispute. If
			 the dispute(s) is/are resolved as a result of mediation, then a written
			 statement signed by both parties will be filed with the DHS Director or his
			 designee, shall substitute for a decision in the case, and shall not be
			 appealable.
2. The Chief Counsel's
			 Office of the Department of Human Services shall submit a list of available
			 mediators from which a mediator agreed to by both parties will be selected. The
			 mediator shall restrict his discussions to the designated representatives of
			 the appealing facility and the designated representative of the Department.
			 Designated representatives include each party's attorneys. The mediation shall
			 not bind the parties. The mediation shall not add anything to the record except
			 a final written agreement. The parties may add to the record, but only to the
			 extent they both agree. The mediation shall not unduly delay the process of a
			 case. Time limits for appointing a Hearing Officer and a decision shall be
			 temporarily suspended during the mediation. The mediator shall insure the
			 parties are continuing to work towards resolution of the dispute. The
			 negotiations shall be confidential and shall not be communicated to any
			 decision makers who may serve as future Hearing Officers. If the mediation
			 fails to produce and agreement, or if mediation is not proceeding toward
			 resolving the dispute, then the mediator or either party may so notify the DHS
			 Director or his designee. The DHS Director or his designee will terminate the
			 mediation whereupon the appeal will proceed as outlined in this
			 Section.
3. The appealing facility
			 and the Department of Human Services shall equally share the cost of the
			 mediator's fee.
1-11
Penalties for Failure to
			 Comply with the Medicaid Long Term Care Program
A. By agreeing to participate in the Long
			 Term Care program, providers must abide by these regulations. Participation in
			 the program may be terminated should the provider:
1. Fail to keep and maintain auditable
			 records.
2. Fail to disclose or
			 make available to the Department, or its authorized agent, records concerning
			 the operation of the facility, including home office records, if
			 applicable.
3. Breach the terms of
			 the Medicaid Provider Agreement or failure to comply with the terms of the
			 provider's certifications set out on the Medicaid claim form.
4. Charge or attempt to charge Medicaid
			 recipients for Medicaid covered services over and above that paid by the
			 Department.
5. Rebate or accept a
			 fee or portion of a fee or charge for a Medicaid resident referral.
6. Present, or cause to be presented, false
			 information.
7. Submit, or cause to
			 be submitted, false information for the purpose of obtaining greater
			 compensation to which the provider is legally entitled.
In addition to the above listing of causes for termination,
				State or Federal laws or rules may create requirements, the violation of which
				may cause adverse action.
B. Arkansas Code
			 20-10-205
			 classifies violations relating to the administration of Long Term Care
			 Facilities. Administrative and reporting requirements are classified as Class C
			 and Class D Violations. A description of each follows:
Class C Violations: Providers who fail to comply with
				administrative and reporting requirements that do not directly threaten the
				health, safety, or welfare of a resident have committed a Class C Violation.
				Violations of this nature would include but are not limited to:
1. Failure to provide resident assessment
			 instruments in accordance with the prescribed submission policy. The resident
			 assessment instrument must be complete to be considered submitted.
2. Failure to maintain accurate census
			 records in accordance with this Manual.
3. Failure to maintain accurate resident
			 trust fund records in accordance with this Manual.
4. Submission on the facility's Cost Report
			 as allowable, costs determined by the DHS audit staff to have been claimed
			 under circumstances identical in all material respects to costs that have been
			 disallowed by final desk review or audit. A desk review or audit is final if no
			 timely appeal has been filed, or, if a timely appeal has been filed, there is a
			 final appeal decision disallowing the cost. An appeal decision is final if no
			 additional appeal is provided for by law, or if the time to file an additional
			 appeal has expired. Any facility submitting as allowable costs, costs
			 previously disallowed by a desk review or audit decision that is not final must
			 identify each such cost and reference the pending appeal.
Class C Violations are subject to a civil money penalty to be
				set by the DHS Director or his designee, in an amount not to exceed five
				hundred dollars ($500.00) for a single violation. A single erroneous
				administrative or reporting practice will be considered a single violation
				regardless of the number of resident records affected by the practice.
Class D Violation: Failure to timely submit the Cost Report for
				Long Term Care Facilities. Cost Reports must be postmarked on or before the due
				date or the extended due date in order to avoid a penalty. The failure to
				timely submit a cost report shall be considered a separate Class D Violation
				during any month or part thereof of noncompliance.
Class D Violations are subject to a civil money penalty to be
				set by the Director, DHS, or his designee, in an amount not to exceed two
				hundred fifty dollars ($250.00) for each violation.
In addition to any civil money penalty which may be imposed,
				the Director of the OLTC is authorized after the first month of a Class D
				Violation to withhold any further reimbursement to the Long Term Care Facility
				until the Cost Report is received by the Office of Long Term Care.
Any violation repeated within six months subjects the facility
				to double civil money penalties up to a maximum of one thousand dollars
				($1,000.00) per violation.
Assessment of civil money penalties does not limit the right of
				the OLTC to take such other action as may be authorized by law or
				regulation.
Providers violating this section may be referred to the
				Attorney General's office.
1-12
Overpayments and
			 Underpayments
Administrative errors on the part of the Division or the
				Facilities may result in erroneous payments. These errors most commonly result
				from: failures to report a death, discharge, or transfer; system error in
				resident classification; and miscalculations of recipient incomes.
				Overpayments/Underpayments resulting from these errors will be corrected when
				discovered. Overpayments will be recouped by the Division and underpayments
				will be reimbursed to the Facility.