405 Ind. Admin. Code 1-14.7-6

Current through January 8, 2025

Section 405 IAC 1-14.7-6 - Rate calculation

Authority: IC 12-15-1-10; IC 12-15-21-3

Affected: IC 4-21.5-3; IC 6-8.1-10-1; IC 12-13-7-3; IC 12-15-13-4

Sec. 6.

(a) This section prescribes the detailed rate methodology calculation for each rate component.

(b) Until June 30, 2024, the rate effective date of the annual rebase shall be the first July 1 after the first calendar quarter after a provider's fiscal year end. Beginning July 1, 2024, the annual rebase shall be each July 1 using the most recently desk or field audited cost reports, with a fiscal year ending not less than eighteen (18) months before the rate effective date.

(c) The annual Medicaid per patient day rate shall be calculated as the sum of the:

(1) prospective system rate calculated under subsection (d), multiplied by the system's rate percentage; and

(2) legacy system rate calculated under subsection (e), multiplied by the system's rate percentage; as shown in the following table:

Rate Effective Date	Prospective System Rate Percentage	Legacy System Rate Percentage
Before January 1, 2025	0%	100%
January 1, 2025	17%	83%
July 1, 2025	33%	67%
January 1, 2026	50%	50%
July 1, 2026	67%	33%
January 1, 2027	83%	17%
July 1, 2027, and later	100%	0%

(d) The prospective system is as follows:

(1) The prospective system rate is calculated as the sum of the following:

(A) Direct care component. This component is price based with a limit (floor) placed on provider profit, calculated as follows:

Table D.1 - Direct Care Component Calculation
A.	Direct Care Per Patient Day Cost for CMI Adjustment	Value as determined in Table D.2 (F)
B.	Facility Average CMI	The facility average CMI is based on the all-resident time-weighted resident CMI, during the cost reporting period as described in the MDS and Case Mix Index Calculation Supportive Documentation Manual.
C.	Normalized Direct Care Per Patient Day Costs	A/B
D.	Average CMI for Medicaid Residents	The facility average Medicaid CMI is based on the Medicaid resident time-weighted resident CMI, for the applicable rate effective date period as described in 405 IAC 1-15-1 and the MDS and Case Mix Index Calculation Supportive Documentation Manual for additional calculation details.
E.	Total CMI Adjusted Direct Care Per Patient Day Costs	C*D
F.	Non-CMI Adjusted Direct Care Per Patient Day Cost	Valued as determined in Table D.4 (E)
G.	Total Direct Care Per Patient Day Cost	E+F
H.	Determination of the Statewide Price for the Normalized Direct Care Per Patient Day Cost and Non-CMI Adjusted Direct Care Per Patient Day Cost	The normalized direct care per patient day costs and the non-CMI adjusted direct care per patient day costs (C + F) for each provider are used for the percentile array. The allowable cost of the provider identified as the 85^th percentile of the Medicaid day-weighted direct care component costs shall be selected as the statewide price for the two components, under subdivision (4).
I.	Average CMI for Medicaid Residents	The facility average Medicaid CMI is based on the Medicaid resident time-weighted resident CMI, for the applicable rate effective date period as described in 405 IAC 1-15-1 and the MDS and Case Mix Index Calculation Supportive Documentation Manual for additional calculation details.
J.	CMI Adjusted Direct Care Per Patient Day Cost Ceiling	Statewide Normalized Direct Care Price determined in H * I
K.	Total Direct Care Per Patient Day Ceiling	J + Statewide Non-CMI Adjusted Direct Care Price determined in H
L.	Allowable Profit	K * 0.05
M.	Direct Care Plus Profit Per Patient Day	G+L
N.	Direct Care Component	Lesser of K or M

Table D.2 - Direct Care Per Patient Day Cost for CMI Adjustment Calculation
A.	Total Direct Care Costs for CMI Adjustment	Allowable direct care costs for CMI adjustment as described in the IMPRM
B.	Direct Care Costs for CMI Adjustment Pro Rata Employee Benefits	Allowable direct care salaries for CMI adjustment / total allowable salaries * allowable employee benefits as described by the IMPRM
C.	Excess Medical Equipment Rental Cost (negative value)	Value as determined in Table D.3 (G)
D.	Allowable Direct Care Costs for CMI Adjustment	A+B+C
E.	Patient Days or Minimum Occupancy	Patient days or 70% * bed days available, whichever is greater
F.	Direct Care Per Patient Day Cost for CMI Adjustment	D/E

Table D.3 - Excess Medical Equipment Rental Limitation Calculation
A.	Medical Equipment Rental	Medical equipment rental cost as described in the IMPRM
B.	Patient Days
C.	Medical Equipment Rental Per Patient Day Cost	A/B
D.	Maximum Medical Equipment Rental Per Patient Day Cost	1.50
E.	Excess Medical Equipment Rental Per Patient Day Cost	If D - C < 0, then D - C. If D - C > 0, then 0.
F.	Patient Days
G.	Excess Medical Equipment Rental Cost	E*F

Table D.4 - Non-CMI Adjusted Direct Care Per Patient Day Cost Calculation
A.	Total Non-CMI Adjusted Direct Care Cost	Allowable non-CMI adjusted direct care costs as described in the IMPRM
B.	Non-CMI Adjusted Direct Care Pro Rata Employee Benefits	Allowable non-CMI adjusted direct care salaries / total allowable salaries * allowable employee benefits as described by the IMPRM
C.	Allowable Non-CMI Adjusted Direct Care Costs	A+B
D.	Patient Days or Minimum Occupancy	Patient days or 70% * bed days available, whichever is greater
E.	Non-CMI Adjusted Direct Care Per Patient Day Costs	C/D

(B) Therapy component. This is a provider specific component based on allowable provider Medicaid per patient day cost, calculated as follows:

Table D.5 - Therapy Component Calculation
A.	Total Therapy Costs	Allowable therapy cost as described in the IMPRM
B.	Therapy Pro Rata Employee Benefits	Allowable therapy salaries / total allowable salaries * allowable employee benefits as described by the IMPRM
C.	Direct Ancillary Cost Adjustment (negative value)	Value as determined in Table D.6 (L)
D.	Allowable Therapy Costs	A+B+C
E.	Patient Days
F.	Therapy Component	D/E

Table D.6 - Therapy Direct Ancillary Adjustment Calculation
A.	Medicaid Ancillary Revenue	Medicaid Ancillary Revenue as described in the IMPRM
B.	Total Ancillary Revenue	Total Ancillary Revenue as described in the IMPRM
C.	Medicaid Utilization Ratio	A/B
D.	Direct Ancillary Cost from Medicaid Cost Report	Direct ancillary costs as described in the IMPRM
E.	Direct Ancillary Employee Benefits from Medicaid Cost Report	Allowable therapy salaries / total allowable salaries * allowable employee benefits as described by the IMPRM
F.	Total Direct Ancillary Costs	D+E
G.	Medicaid Direct Ancillary Costs	C*F
H.	Medicaid Patient Days
I.	Medicaid Direct Ancillary Costs Per Patient Day	G/H
J.	Patient Days
K.	Allowable Direct Ancillary Costs	I*J
L.	Direct Ancillary Cost Adjustment	K-F

The therapy direct ancillary adjustment calculation in Table D.6 is performed by each therapy discipline as described by the IMPRM.

(C) Indirect component. This is a statewide price based component, calculated as follows:

Table D.7 - Indirect Care Component Calculation
A.	Total Indirect Cost	Allowable indirect care cost as described in the IMPRM
B.	Indirect Care Pro Rata Employee Benefits	Allowable indirect care salaries / total allowable salaries * allowable employee benefits as described by the IMPRM
C.	Indirect Ancillary Cost Adjustment (negative value)	Value as described in Table D.8 (L)
D.	Allowable Indirect Care Costs	A+B+C
E.	Patient Days or Minimum Occupancy	Patient days or 85% * bed days available, whichever is greater
F.	Indirect Care Per Patient Day Cost	D/E
G.	Determination of the Statewide Price for the Indirect Care Per Patient Day Cost	Indirect care per patient day costs (F) for each provider are used for the percentile array. The allowable cost of the provider identified at the specified percentile shall be selected as the statewide price under subdivision (4). The specified percentile shall be set each July 1 at the percentile of the Medicaid day-weighted indirect care component costs necessary to achieve the estimated aggregate prospective system spending equivalent to the estimated payments calculated in the legacy system under subsection (e).
H.	Indirect Care Component	G

Table D.8 - Indirect Ancillary Cost Adjustment Calculation
A.	Total Ancillary Costs Per Medicare Cost Report	Ancillary costs per the Medicare cost report as described in the IMPRM
B.	Capital Costs Per Medicare Cost Report	Capital costs per the Medicare cost report as described in the IMPRM
C.	Ancillary Costs without Capital	A-B
D.	Direct Ancillary Costs Plus Employee Benefits Per Medicare Cost Report	Direct ancillary costs + (allowable ancillary salaries / total allowable salaries * allowable employee benefits). All costs are from the Medicare cost report as described by the IMPRM.
E.	Indirect Costs per Medicare Cost Report	C-D
F.	Indirect Costs as a Percentage of Direct Costs	E/D
G.	Indirect Care Component Adjustment	Value determined in Table D.6 (L) * F
H.	Total Indirect Care Costs Excluding Dietary	Table D.7 (A + B) - ((allowable dietary cost) + (allowable dietary salaries / total allowable salaries * allowable employee benefits)). All costs are described by the IMPRM.
I.	Total Administrative Costs	Table D.9 (A + B)
J.	Allocation Statistic for Indirect Care Component	(H / (H + I))
K.	Allocation Statistic for Administrative Component	(I / (H + I))
L.	Indirect Care Component Adjustment (negative value)	G*J
M.	Administrative Component Adjustment (negative value)	G*K
N.	Excess Owner, Related Party, Management (ORPM) Compensation	Value as determined in Table D.10 (I)
O.	Ratio of Excess to Administrative Costs	N/I
P.	Excess ORPM Adjustment	M*O

The indirect ancillary cost adjustment calculation in Table D.8 is performed by each ancillary cost center as described by the IMPRM. For providers not required by the Medicare administrative contractor to file a full Medicare cost report (low-utilization cost report), an adjustment resulting from the indirect ancillary cost adjustment shall not be made, and the provider shall be excluded from the administrative and indirect percentile calculation.

(D) Administrative component. This component reimbursement rate is established at a statewide price based on the allowable administrative component cost of the selected Medicaid day-weighted percentile, calculated as follows:

Table D.9 - Administrative Component Calculation
A.	Total Administrative Cost	Allowable administrative cost as described in the IMPRM
B.	Administrative Pro Rata Employee Benefits	(Allowable administrative salaries / total allowable salaries * allowable employee benefits) + owners' benefits as described by the IMPRM
C.	Owner, Related Party, Management (ORPM) Compensation Limitation (negative value)	Value as determined in Table D.10 (I)
D.	Ancillary Adjustment (negative value)	Value as determined in Table D.8 (M + P)
E.	Allowable Administrative Cost	A+B + C+D
F.	Patient Days or Minimum Occupancy	Patient days or 85% * bed days available, whichever is greater
G.	Administrative Per Patient Day Cost	E/F
H.	Determination of the Statewide Price for the Administrative Care Per Patient Day Cost	Administrative per patient day costs (G) calculated with uninflated working capital interest for each provider are used for the percentile array. The allowable cost of the provider identified as the 50^th percentile of the Medicaid day-weighted administrative component costs shall be selected as the statewide price under subdivision (4).
I.	Administrative Component	H

Table D.10 - Owner, Related Party, Management (ORPM) Limitation Calculation
A.	ORPM Cost	ORPM costs as described in the IMPRM
B.	Plus Director Fees	Director Fees as described in the IMPRM
C.	Total Compensation Subject to Limitation	A+B
D.	Patient Days
E.	ORPM Per Patient Day Cost	C/D
F.	ORPM Per Patient Day Cost Ceiling	$2.75 * Inflation Factor. Inflation shall be applied from 1/1/23 to the midpoint of the applicable rate year.
G.	Excess ORPM Per Patient Day Cost	If F - E < 0, then F - E. If F - E >= 0, then 0.
H.	Patient Days
I.	Excess ORPM Compensation	G*H

(E) Capital component. This component is calculated using a fair rental value allowance statewide price and provider specific other capital costs, based on an overall cost limitation, calculated as follows:

Table D.11 - Capital Component Calculation
A.	Capital Per Patient Day Cost	Value determined in Table D.12 (F)
B.	Median Capital Cost	The capital per patient day cost (A) for each provider is used in the median calculation. The capital per patient day cost of the median provider shall be selected under subdivision (5).
C.	Profit Ceiling	B * 100%
D.	Tentative Profit Add-on	If C - A > 0, then 60% * (C - A). If (C - A) < 0, then 0.
E.	Total Quality Score Percentage	Calculated using the scale provided in the quality program manual
F.	Allowed Profit Add-on	D*E
G.	Capital Costs Plus Profit	A+F
H.	Overall Rate Component Limit	B * 100%
I.	Capital Component	Lesser of G or H

Table D.12 - Capital Per Patient Day Cost Calculation
A.	Total Other Capital Costs	Allowable capital costs as described in the IMPRM
B.	Interest, Depreciation, Amortization, and Rent (negative value)	Allowable interest, depreciation, amortization, and rent costs as described in the IMPRM
C.	Fair Rental Value Allowance	Value as determined in Table D.13 (E)
D.	Allowable Capital Costs	A+B+C
E.	Patient Days or Minimum Occupancy	Patient days or 95% * bed days available, whichever is greater
F.	Capital Per Patient Day Cost	D/E

Table D.13 - Fair Rental Value Allowance Calculation
A.	Average Inflated Historical Cost of Property of the Median Bed	The average historical cost of property per bed for each provider is used in the median calculation. The average historical cost of property per bed of the median provider shall be selected under subdivision (6).
B.	Total Nursing Facility Beds	Total nursing facility beds as described in the IMPRM
C.	Fair Rental Value Amount	A*B
D.	Rental Rate	Value as described in subdivision (2)
E.	Fair Rental Value Allowance	C*D

(2) The Medicaid reimbursement system and rate component calculations in the tables in subdivision (1) are based on the provider's allowable nursing facility costs, which are annualized to a full year cost report period, recognizing the provider's allowable costs as described in the IMPRM.

(3) The allowable rate component costs as identified in the tables in subdivision (1) shall be adjusted using the inflation factor. This inflation adjustment shall apply from the midpoint of the cost reporting period to the midpoint of the rate year, unless specifically identified otherwise.

(4) The allowable cost of the Medicaid patient day-weighted percentile as identified in the tables in subdivision (1) shall be calculated on a statewide basis each July 1 for the direct care, indirect care, and administrative components as follows:

(A) Providers are arrayed in ascending order based on the applicable per patient day rate component costs as identified in the component calculations in the tables in subdivision (1), which include the impact of minimum occupancy adjustments, as applicable.

(B) Cumulative Medicaid patient days are calculated for each provider within the array, by adding that provider's Medicaid patient days to the total of the Medicaid patient days within the array for preceding providers.

(C) The percentage of total cumulative Medicaid patient days for each provider within the array is calculated by dividing their cumulative Medicaid patient days by total Medicaid patient days within the array.

(D) If no provider is exactly equal to the Medicaid day-weighted percentile, the provider within the array, whose percentage of total cumulative Medicaid patient days is equal to or immediately less than the rate component Medicaid day-weighted percentile, is selected as the allowable cost of the Medicaid patient day-weighted percentile.

(5) The allowable cost of the median patient day as identified in the tables in subdivision (1) shall be calculated on a statewide basis each July 1 for the capital component from the most recently desk reviewed or field audited cost report as follows:

(A) Providers are arrayed in descending order based on the applicable per patient day rate component costs, as identified in the component calculations in the tables in subdivision (1), which include the impact of minimum occupancy adjustments, as applicable.

(B) Cumulative total patient days are calculated for each provider within the array, by adding that provider's patient days to the total of the patient days within the array for preceding providers.

(C) The median patient day within the array is calculated by dividing the cumulative patient days by two (2).

(D) The provider within the array, whose total cumulative patient days is equal to or immediately greater than the median patient day, is selected as the allowable cost of the median patient day.

(6) The average historical cost of property of the median bed in Table D.13 shall be calculated on a statewide basis for facilities not acquired through an operating lease arrangement each July 1 as follows:

(A) Land, building, and improvements shall be adjusted for changes in valuation by inflating the reported allowable patient related historical cost of property from the later of July 1, 1976, or the date of facility acquisition to the present, based on the change in the RSMeans Construction Index.

(B) Inflated land and building historical costs are added to equipment and other historical property costs, which are divided by beds, to calculate the average inflated historical costs of property per bed.

(C) Providers are arrayed in descending order based on the average inflated historical costs of property per bed.

(D) Cumulative beds are calculated for each provider within the array, by adding each provider's beds to the total of the beds within the array for preceding providers.

(E) The median bed is calculated by dividing the total cumulative beds by two (2).

(F) The provider within the array, whose total cumulative beds is equal to or immediately greater than the median bed, is selected as the average inflated historical costs of property per bed median.

(7) Beginning July 1, 2024, after the annual rebase, the direct care component of the Medicaid rate shall be adjusted biannually to reflect changes in the provider's CMI for Medicaid residents. If the facility has no Medicaid residents during a six (6) month period, the facility's average CMI for each resident shall be used instead of the CMI for Medicaid residents. This adjustment shall be effective on January 1 after the effective date of the annual rebase. The CMI for Medicaid residents in each facility shall be:

(A) updated each January 1; and

(B) used to adjust the direct care component that becomes effective on the six (6) month period after the updated CMI for Medicaid residents.

In addition, each facility's total quality score shall be redetermined biannually based on the criteria in the quality program manual.

(8) The rate setting parameters and components used to calculate the annual rebase, except for the CMI for Medicaid residents in that facility and the total quality score, shall apply to the calculation of any change in the Medicaid rate authorized under subdivision (7).

(9) Providers shall pay interest on overpayments, consistent with IC 12-15-13-4. The interest charge shall not exceed the percentage set forth in IC 6-8.1-10-1(c). The interest shall:

(A) accrue from the date of the overpayment to the provider; and

(B) apply to the net outstanding overpayment during the periods in which that overpayment exists.

(10) Whenever the number of nursing facility beds licensed by IDOH is changed, the provider may notify the office of these changes under the following requirements:

(A) For the July 1 rebase, the notification of the licensed bed change shall be in writing and submitted before January 31 preceding the July 1 annual rebase.

(B) For the January 1 biannual update, the notification of the licensed bed change shall be in writing and submitted before July 31 preceding the January 1 biannual update.

(C) For notifications received by the due date, the July 1 annual rebase and January 1 biannual rate shall be calculated using the new number of nursing facility licensed beds.

(e) The legacy system is as follows:

(1) The legacy system rate is calculated as the sum of the following:

(A) Direct care component. This component is calculated using provider specific costs based on an overall cost limitation, calculated as follows:

Table E.1 - Direct Care Component Calculation (Non-Children's Nursing Facilities)
A.	Direct Care Per Patient Day Cost	Value as determined in Table E.3 (K)
B.	Facility Average CMI	The facility average CMI is based on the all-resident, time-weighted resident CMI, during the cost reporting period as described in the MDS and Case Mix Index Calculation Supportive Documentation Manual.
C.	Normalized Direct Care Per Patient Day Costs	A/B
D.	Average CMI for Medicaid Residents	The facility average Medicaid CMI is based on the Medicaid resident time-weighted resident CMI, for the applicable rate effective date period as described in 405 IAC 1-15-1 and the MDS and Case Mix Index Calculation Supportive Documentation Manual for additional calculation details.
E.	Medicaid Case Mix Adjusted Cost	C*D
F.	Median Direct Care Cost Per Case Mix Point	The direct care per patient day cost (A) for each provider is used in the median calculation. The direct care per patient day cost of the median provider shall be selected under subdivision (4).
G.	Profit Ceiling	(F * 110%) * D
H.	Tentative Profit Add-on	If G - E > 0, then 30% * (G - E). If G - E < 0, then 0.
I.	Total Quality Score Percentage	Calculated using the scale provided in the quality program manual
J.	Allowed Profit Add-on	H*I
K.	Overall Profit Limit	F * 10%
L.	Medicaid Case Mix Adjusted Costs Plus Profit	E + Lesser of J or K
M.	Overall Rate Component Limit	(F * 120%) * D
N.	Direct Care Component	Lesser of L or M

Table E.2 - Direct Care Component Calculation (Children's Nursing Facilities Only)
A.	Direct Care Per Patient Day Cost	Value as determined in Table E.3 (K)
B.	Facility Average CMI	The facility average CMI is based on the all-resident, time-weighted resident CMI, during the cost reporting period as described in the MDS and Case Mix Index Calculation Supportive Documentation Manual.
C.	Normalized Direct Care Per Patient Day Costs	A/B
D.	Average CMI for Medicaid Residents	The facility average Medicaid CMI is based on the Medicaid resident time-weighted resident CMI, for the applicable rate effective date period as described in 405 IAC 1-15-1 and the MDS and Case Mix Index Calculation Supportive Documentation Manual for additional calculation details.
E.	Medicaid Case Mix Adjusted Cost	C*D
F.	Median Direct Care Cost Per Case Mix Point	The direct care per patient day cost (A) for each provider is used in the median calculation. The direct care per patient day cost of the median provider shall be selected under subdivision (4).
G.	Profit Ceiling	(F * 110%) * D
H.	Profit Add-on	If G - E > 0, then 30% * (G - E). If G - E < 0, then 0.
I.	Medicaid Case Mix Adjusted Costs Plus Profit	E+H
J.	Overall Rate Component Limit	(F * 120%) * D
K.	Direct Care Component	Lesser of I or J

Table E.3 - Direct Care Per Patient Day Cost Calculation
A.	Total Direct Care Costs	Allowable direct care costs as described in the IMPRM
B.	Direct Care Pro Rata Employee Benefits	Allowable direct care salaries / total allowable salaries * allowable employee benefits as described by the IMPRM
C.	Excess Medical Equipment Rental Cost (negative value)	Value as determined in Table E.4 (G)
D.	Allowable Direct Care Costs	A+B+C
E.	Variable Direct Care Costs (75% of allowable direct care costs are considered variable)	D * 75%
F.	Patient Days
G.	Variable Direct Care Costs Per Patient Day	E/F
H.	Fixed Direct Care Costs (25% of allowable direct care costs are considered fixed)	D * 25%
I.	Patient Days or Minimum Occupancy	For nursing facilities with greater than 50 beds, patient days or 90% * bed days available, whichever is greater.
I.	Patient Days or Minimum Occupancy	For nursing facilities with less than 51 beds, patient days or 85% * bed days available, whichever is greater.
J.	Fixed Direct Care Costs Per Patient Day	H/I
K.	Direct Care Per Patient Day Cost	G+J

Table E.4 - Excess Medical Equipment Rental Limitation Calculation
A.	Medical Equipment Rental	Medical equipment rental cost as described in the IMPRM
B.	Patient Days
C.	Medical Equipment Rental Per Patient Day Cost	A/B
D.	Maximum Medical Equipment Rental Per Patient Day Cost	1.50
E.	Excess Medical Equipment Rental Per Patient Day Cost	If D - C < 0, then D - C. If D - C >= 0, then 0.
F.	Patient Days
G.	Excess Medicaid Equipment Rental Cost	E*F

(B) Therapy component. This is a provider specific component based on allowable provider Medicaid per patient day cost, calculated as follows:

Table E.5 - Therapy Component Calculation
A.	Total Therapy Costs	Allowable therapy cost as described in the IMPRM
B.	Therapy Pro Rata Employee Benefits	Allowable therapy salaries / total allowable salaries * allowable employee benefits as described by the IMPRM
C.	Direct Ancillary Cost Adjustment (negative value)	Value as determined in Table E.6 (L)
D.	Allowable Therapy Costs	A+B+C
E.	Patient Days
F.	Therapy Component	D/E

Table E.6 - Therapy Direct Ancillary Adjustment Calculation
A.	Medicaid Ancillary Revenue	Medicaid Ancillary Revenue as described in the IMPRM
B.	Total Ancillary Revenue	Total Ancillary Revenue as described in the IMPRM
C.	Medicaid Utilization Ratio	A/B
D.	Direct Ancillary Cost from Medicaid Cost Report	Direct ancillary costs as described in the IMPRM
E.	Direct Ancillary Employee Benefits from Medicaid Cost Report	Allowable therapy salaries / total allowable salaries * allowable employee benefits as described by the IMPRM
F.	Total Direct Ancillary Costs	D+E
G.	Medicaid Direct Ancillary Costs	C*F
H.	Medicaid Patient Days
I.	Medicaid Direct Ancillary Costs Per Patient Day	G/H
J.	Patient Days
K.	Allowable Direct Ancillary Costs	I*J
L.	Direct Ancillary Cost Adjustment	K-F

The therapy direct ancillary adjustment calculation in Table E.6 is performed by each therapy discipline as described by the IMPRM.

(C) Indirect component. This component is calculated using provider specific costs based on an overall cost limitation, calculated as follows:

Table E.7 - Indirect Care Component Calculation
A.	Indirect Care Per Patient Day Cost	Value as determined in Table E.8 (K)
B.	Median Indirect Care Cost	The indirect care per patient day cost (A) for each provider is used in the median calculation. The indirect care per patient day cost of the median provider shall be selected under subdivision (4).
C.	Profit Ceiling	B * 105%
D.	Tentative Profit Add-on	If (C - A) > 0, then 60% * (C - A). If (C - A) <= 0, then 0.
E.	Total Quality Score Percentage	Calculated using the scale provided in the quality program manual
F.	Allowed Profit Add-on	D*E
G.	Indirect Care Cost Plus Profit	A+F
H.	Overall Rate Component Limit	B * 115%
I.	Indirect Care Component	Lesser of G or H

Table E.8 - Indirect Care Per Patient Day Cost
A.	Total Indirect Cost	Allowable indirect care cost as described in the IMPRM
B.	Indirect Care Pro Rata Employee Benefits	Allowable indirect care salaries / total allowable salaries * allowable employee benefits as described by the IMPRM
C.	Indirect Ancillary Adjustment (negative value)	Value as described in Table E.9 (L)
D.	Allowable Indirect Care Costs	A+B+C
E.	Variable Indirect Care Costs (63% of allowable indirect care costs are considered variable)	D * 63%
F.	Patient Days
G.	Variable Indirect Care Costs Per Patient Day	E/F
H.	Fixed Indirect Care Costs (37% of allowable indirect care costs are considered fixed)	D * 37%
I.	Patient Days or Minimum Occupancy	For nursing facilities with greater than 50 beds, actual patient days or 90% * bed days available, whichever is greater.
I.	Patient Days or Minimum Occupancy	For nursing facilities with less than 51 beds, actual patient days or 85% * bed days available, whichever is greater.
J.	Fixed Indirect Care Costs Per Patient Day	H/I
K.	Indirect Care Per Patient Day Cost	G+J

Table E.9 - Indirect Ancillary Cost Adjustment Calculation
A.	Total Ancillary Costs Per Medicare Cost Report	Ancillary costs per the Medicare cost report as described in the IMPRM
B.	Capital Costs Per Medicare Cost Report	Capital costs per the Medicare cost report as described in the IMPRM
C.	Ancillary Costs without Capital	A-B
D.	Direct Ancillary Costs Plus Employee Benefits Per Medicare Cost Report	Direct ancillary costs + (allowable ancillary salaries / total allowable salaries * allowable employee benefits)
D.		All costs are from the Medicare cost report as described by the IMPRM.
E.	Indirect Costs per Medicare Cost Report	C-D
F.	Indirect Costs as a Percentage of Direct Costs	E/D
G.	Indirect Care Component Adjustment	Value determined in Table E.6 (L) * F
H.	Total Indirect Care Costs Excluding Dietary	Table E.7 (A + B) - ((allowable dietary cost) + (allowable dietary salaries / total allowable salaries * allowable employee benefits)). All costs are described by the IMPRM.
I.	Total Administrative Costs	Table E.10 (A + B)
J.	Allocation Statistic for Indirect Care Component	(H / (H + I))
K.	Allocation Statistic for Administrative Component	(I / (H + I))
L.	Indirect Care Component Adjustment (negative value)	G*J
M.	Administrative Component Adjustment (negative value)	G*K
N.	Excess Owner, Related Party, Management (ORPM) Compensation	Value as determined in Table E.11 (I)
O.	Ratio of Excess to Administrative Costs	N/I
P.	Excess ORPM Adjustment	M*O

The indirect ancillary cost adjustment calculation in Table E.9 is performed by each ancillary cost center as described by the IMPRM. For providers not required by the Medicare administrative contractor to file a full Medicare cost report (low-utilization cost report), the following ratios shall be used instead of the Indirect Costs as a Percentage of Direct Costs (F) as described in Table E.9:

Physical Therapy	Speech Therapy	Occupational Therapy	Respiratory Therapy	X-Ray	Laboratory	Pharmacy
23.11%	28.84%	22.15%	5.49%	2.50%	2.75%	1.60%

(D) Administrative component. This component reimbursement rate is established at a statewide price based on the allowable administrative component cost of the median, calculated as follows:

Table E.10 - Administrative Component Calculation
A.	Total Administrative Cost	Allowable administrative cost as described in the IMPRM
B.	Administrative Pro Rata Employee Benefits	(Allowable administrative salaries / total allowable salaries * allowable employee benefits) + owners' benefits as described by the IMPRM
C.	Owner, Related Party, Management Compensation Limit (negative value)	Value as determined in Table E.11 (I for applicable rate effective date)
D.	Ancillary Adjustment (negative value)	Value as determined in Table E.9 (M + P)
E.	Allowable Administrative Cost	A+B + C+D
F.	Variable Administrative Costs (16% of allowable administrative costs are considered variable)	E * 16%
G.	Patient Days
H.	Variable Administrative Costs Per Patient Day	F/G
I.	Fixed Administrative Costs (84% of allowable administrative costs are considered fixed)	E * 84%
J.	Patient Days or Minimum Occupancy	For nursing facilities with greater than 50 beds, patient days or 90% * bed days available, whichever is greater.
J.	Patient Days or Minimum Occupancy	For nursing facilities with less than 51 beds, patient days or 85% * bed days available, whichever is greater.
K.	Fixed Administrative Costs Per Patient Day	I/J
L.	Administrative Per Patient Day Cost	H+K
M.	Determination of the Statewide Price for the Administrative Per Patient Day Cost	The administrative per patient day cost of the median provider calculated with uninflated working capital interest shall be selected under subdivision (4).
N.	Administrative Component	M

Table E.11 - Owner, Related Party, Management (ORPM) Limitation Calculation
A.	ORPM Cost	ORPM costs as described in the IMPRM
B.	Plus Director Fees	Director Fees as described in the IMPRM
C.	Total Compensation Subject to Limitation	A+B
D.	Patient Days
E.	ORPM Per Patient Day Cost	C/D
F.	ORPM Per Patient Day Cost Ceiling	$2.75 * Inflation Factor. Inflation shall be applied from 1/1/23 to the midpoint of the applicable rate year.
G.	Excess ORPM Per Patient Day Cost	If F - E < 0, then F - E. If F - E >= 0, then 0.
H.	Patient Days
I.	Excess ORPM Compensation	G*H

(E) Capital component. This component is calculated using a fair rental value allowance statewide price and provider specific other capital costs based on an overall cost limitation, calculated as follows:

Table E.12 - Capital Component Calculation
A.	Capital Per Patient Day Cost	Value determined in Table E.13 (F)
B.	Median Capital Cost	The capital per patient day cost (A) for each provider is used in the median calculation. The capital per patient day cost of the median provider shall be selected under subdivision (4).
C.	Profit Ceiling	B * 100%
D.	Tentative Profit Add-On	If C - A > 0, then 60% * (C - A). If (C - A) <= 0, then 0.
E.	Total Quality Score Percentage	Calculated using the scale provided in the quality program manual
F.	Allowed Profit Add-On	D*E
G.	Capital Costs Plus Profit	A+F
H.	Overall Rate Component Limit	B * 100%
I.	Capital Component	Lesser of G or H

Table E.13 - Capital Per Patient Day Cost Calculation
A.	Total Other Capital Costs	Allowable capital costs as described in the IMPRM
B.	Interest, Depreciation, Amortization, and Rent (negative value)	Allowable interest, depreciation, amortization, and rent costs as described in the IMPRM
C.	Fair Rental Value Allowance	Value as determined in Table E.14 (E)
D.	Allowable Capital Costs	A+B+C
E.	Patient Days or Minimum Occupancy	Patient days or 95% * bed days available, whichever is greater
F.	Capital Per Patient Day Cost	D/E

Table E.14 - Fair Rental Value Allowance Calculation
A.	Average Inflated Historical Cost of Property of the Median Bed	The average historical cost of property per bed for each provider is used in the median calculation. The average historical cost of property per bed of the median provider shall be selected under subdivision (5).
B.	Total Nursing Facility Beds	Total nursing facility beds as described in the IMPRM
C.	Fair Rental Value Amount	A*B
D.	Rental Rate	Value as described in subdivision (2)
E.	Fair Rental Value Allowance	C*D

(2) The Medicaid reimbursement system and rate component calculations in the tables in subdivision (1) are based on the provider's allowable nursing facility costs, which are annualized to a full year cost report period recognizing the provider's allowable costs, as described in the IMPRM.

(4) The allowable cost of the median patient day as identified in the tables in subdivision (1) shall be calculated on a statewide basis each July 1 for the direct care, indirect care, administrative, and capital component from the most recently desk reviewed or field audited cost report as follows:

(C) The median patient day within the array is calculated by dividing cumulative patient days by two (2).

(D) The provider within the array whose total cumulative patient days is equal to or immediately greater than the median patient day is selected as the allowable cost of the median patient day.

(5) The average historical cost of property of the median bed in Table E.14 shall be calculated on a statewide basis for facilities not acquired through an operating lease arrangement each July 1 as follows:

(C) Providers are arrayed in descending order based on the average inflated historical costs of property per bed.

(D) Cumulative beds are calculated for each provider within the array, by adding each provider's beds to the total of the beds within the array for preceding providers.

(E) The median bed is calculated by dividing the total cumulative beds by two (2).

(F) The provider within the array whose total cumulative beds is equal to or immediately greater than the median bed is selected as the average inflated historical costs of property per bed median.

(6) Until June 30, 2024, after the annual rebase, the direct care component of the Medicaid rate shall be adjusted quarterly to reflect changes in the provider's CMI for Medicaid residents. If the facility has no Medicaid residents during a quarter, the facility's average CMI for each resident shall be used instead of the CMI for Medicaid residents. This adjustment shall be effective the first day of each of the following three (3) calendar quarters beginning after the effective date of the annual rebase. The CMI for Medicaid residents in each facility shall be:

(A) updated each calendar quarter; and

(B) used to adjust the direct care component that becomes effective on the second calendar quarter after the updated CMI for Medicaid residents.

(A) updated each January 1; and

(B) used to adjust the direct care component that becomes effective on the six (6) month period after the updated CMI for Medicaid residents.

In addition, each facility's total quality score shall be redetermined biannually based on the criteria in the quality program manual.

(9) For rates effective until June 30, 2024, retroactive payment or repayment shall be required if an audit verifies an underpayment or overpayment due to:

(A) an intentional misrepresentation;

(B) billing or payment errors;

(C) a misstatement of historical financial or statistical data; or

(D) resident assessment data that caused a lower or higher rate than would have been allowed had the data been true and accurate. On discovery that a provider has received overpayment of a Medicaid claim from the office, the provider shall complete the appropriate Medicaid billing adjustment form prescribed by the office and reimburse the office for the amount of the overpayment, or the office shall make a retroactive payment adjustment, as appropriate.

(10) Providers shall pay interest on overpayments, consistent with IC 12-15-13-4. The interest charge shall not exceed the percentage set forth in IC 6-8.1-10-1 (c). The interest shall:

(A) accrue from the date of the overpayment to the provider; and

(B) apply to the net outstanding overpayment during the periods in which that overpayment exists.

(11) Until January 31, 2024, whenever the number of nursing facility beds licensed by IDOH is changed after the cost reporting period, the provider may request in writing, before the effective date of their next annual rebase, an additional rebase effective the first day of the calendar quarter on or after the date of the change in licensed beds. This additional rebase shall be determined using the rate setting parameters in effect at the provider's latest annual rebase, but the number of beds and associated bed days available for the calculation of the rate setting limitations shall be based on the newly licensed beds.

(12) Beginning February 1, 2024, whenever the number of nursing facility beds licensed by IDOH is changed, the provider may notify the office of these changes under the following requirements:

(A) For the July 1 rebase, the notification of the licensed bed change shall be in writing and submitted before January 31 preceding the July 1 rebase.

(B) For the January 1 biannual update, the notification of the licensed bed change shall be in writing and submitted before July 31 preceding the January 1 biannual update.

(C) For notifications received by the due date, the July 1 annual rebase and January 1 biannual rate shall be calculated using the new number of nursing facility licensed beds.

405 IAC 1-14.7-6

Office of the Secretary of Family and Social Services; 405 IAC 1-14.7-6; filed 8/20/2024, 9:11 a.m.: 20240918-IR-405240088FRA