Haw. Code R. § tit. 17, Department of Human Services, ch. 1739.2, exh. A
A new price based reimbursement system with three components (direct care, administrative and capital) will determine the rates paid to nursing facilities. The direct care component will be acuity based (adjusted for the average acuity of all of the patients in each facility).
The case mix system is based on the thirty-four III classification methodology similar to that which will be employed to calculate the acuity based portion of the long term care reimbursement rates. The system is price-based, with periodic evaluation of the price level of the rate components. An adjustment for case mix will be applied periodically to the direct care price component.
The acuity based portion of the reimbursement system applies the average case mix of all of the patients in each provider's facility to the direct care price to arrive at an acuity adjusted direct care component for each provider. The resulting acuity adjusted direct care component will be combined with the other price components to establish the rate for that provider. This rate will be adjusted periodically when the acuity scores are compiled. The rate established will be used for all patient days billed to Medicaid for that period. After the initial phase in period there will no longer be a distinction between level A and level C acuity as the new thirty-four group RUG-III system will replace the old classification system. The standard price components for direct care, general and administrative, and capital were derived from the most current Medicare cost reports available on June 30, 2001 and inflated using from the midpoint of the cost report period to the midpoint of the FY 03 rate year using DRI. A statewide standard price for the direct care component is calculated using the cost reports for all facilities and their respective case mix indices.
Calculation of the facility specific case mix index is based on data from the Minimum Data Set (MDS), a component of the federally mandated Resident Assessment Instrument, to classify residents into one of thirty-four mutually exclusive groups representing the residents' relative direct care resource requirements. The average case mix index of all of the residents of the facility at various points in time (snapshots) is then applied to the direct care component for each facility. The facility's Medicaid acuity based reimbursement rate is the direct care component adjusted by the facility's case mix index for all residents, to which is added the general and administrative component, and the capital component.
Parameters of the New Rate Setting Methodology
The new rate setting methodology uses a price based system with the following parameters:
| Rate Component | Component Price set at | Myers & Stauffer calculated amount for rate period ending 6/30/2003 | Case - Mix Adjusted |
| Direct care | 110% of Median | $102.19 | Yes |
| Administrative & General | 103% of Median | $61.83 | No |
| Capital | Median | $13.04 | No |
The price parameters listed above (110% of median for direct care, 103% of the median for administrative and general and the median for capital) will remain constant for all future rate setting periods. The prices listed above ($102.19 for direct care, $61.83 for administrative and general and $13.04 for capitol) reflect prices that relate to the rate period beginning July 1, 2002 and ending June 30, 2003. Therefore, those prices will need to be updated for each subsequent rate period before they can be used in the rate setting process for those periods. They will be updated by the full inflation factor for each period, as determined by the inflation adjustment.
Haw. Code R. tit. 17, Department of Human Services, ch. 1739.2, exh. A