Opinion ID: 1238142
Heading Depth: 1
Heading Rank: 1

Heading: Reimbursement Process

Text: Under the Medicaid program the federal and state governments share the cost of nursing home care for the elderly. A state is not required to join the program, however, if a state chooses to participate it must submit a plan to the Secretary of Health and Human Services for approval. The state plan will not be approved under 42 U.S.C. § 1396a(b) unless it fulfills the conditions specified in 42 U.S.C. § 1396a(a). Section 1396a(a)(13)(A) requires that the state plan provide for payment to the skilled nursing facility under rates [w]hich the State finds, and makes assurances satisfactory to the Secretary, are reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities in order to provide care and services in conformity with applicable State and Federal laws, regulations and quality and safety standards. This particular code section was adopted by Congress as the Boren Amendment and codified at 42 U.S.C. § 1396a(a)(13)(A) to permit and encourage states to develop simpler, more efficient ways of paying for nursing home care, including budget-based and negotiated rates. Nebraska Health Care Ass'n, Inc. v. Dunning, 575 F. Supp. 176 (D.Neb. 1983) ( citing 126 Cong.Rec. S8927 (daily ed. June 30, 1980)). Legislative history demonstrates that Congress intended that states set their own reimbursement rates without stifling and expensive federal oversight of the methodology used. Coalition of Michigan Nursing Homes, Inc. v. Dempsey, 537 F. Supp. 451, 459 (E.D.Mich. 1982) ( citing 42 C.F.R. § 447.252(a)(1) and (2), § 447.255(a), (b)(2)). Title 56, chapter 1 of the Idaho Code governs the nursing home cost reimbursement system in Idaho. The Idaho Department of Health and Welfare implemented the plan by adopting those regulations set forth in the Idaho Department of Health and Welfare's Provider Reimbursement Manual, 16 IDAPA 03.10000. Individual medical care facilities [1] must contract with the Idaho Department of Health and Welfare (hereafter Department). Under the facility reimbursement program, interim payments are made based upon the facility's most recent audit or cost report which is projected forward. At the end of the fiscal year, the facility files a cost report which itemizes and lists all of its costs of doing business and makes a claim with the Department for reimbursement of allowable costs. The cost report is examined by the Bureau of Audit of the Department which issues a draft audit to the facility setting forth those costs which are considered allowable and those which are not allowed. All of the costs that are allowed are then aggregated and divided by the number of patient days that the facility provided. The Department then applies a percentile cap to this patient per diem amount to determine the amount to which the facility is entitled to be paid. Under the percentile cap concept, all similar nursing care facilities are analyzed by a computer and ranked on the basis of patient per diem costs. The Department then determines where the eightieth percentile falls, and if a facility's per diem costs exceed the cap those costs are disallowed. I.C. § 56-110(a). The facility is allowed to respond prior to the Department finalizing the audit, and a facility may appeal the final audit report if it disagrees with a certain disallowance. In order to be reimbursed for costs above the percentile cap, a provider must demonstrate that his facility was operated efficiently during the cost reporting period and that the costs incurred in excess of the percentile cap were beyond his control. 16 IDAPA 3.10254.07(f). An administrative hearing officer hears the appeal and recommends a decision to the director of the Department. A facility may file exceptions to that decision and request a post-hearing conference with the Department. In the final decision, the director may affirm or reject the hearing officer's recommendation in whole or in part. I.C. § 56-133.