N.M. Admin. Code § 8.313.3.12

Current through Register Vol. 36, No. 1, January 14, 2025

Section 8.313.3.12 - ESTABLISHMENT OF PROSPECTIVE PER DIEM RATES

Prospective per diem rates will be established as follows and will be the lower of the amount calculated using the following formulas, or any applicable ceiling:

A. Base year:

(1) For implementation year one (effective September 1, 1990), the providers base year will be for cost reports filed for base year periods ending no later than June 30, 1990. Since these cost reports will not be audited at the time of implementation, an interim rate will be calculated and once the audited cost report is settled, a final prospective rate will be determined. Retrospective settlements of over or under payments resulting from the use of the interim rate will be made.

(2) Re-basing of the prospective per diem rate will take place every three years. Therefore, the operating years under this plan will be known as year one, year two, and year three. Since rebasing is done every three years, operating year four will again become year one.

(3) Costs incurred, reported, audited or desk reviewed for the provider's last fiscal year which falls in the calendar year prior to year one will be used to re-base the prospective per diem rate. Re-basing costs in excess of one hundred and ten percent of the previous year's reported cost per diem times the index (as described further on in these regulations) will not be recognized for calculation of the base year costs.

B. Inflation factor to recognize economic conditions and trends during the time period covered by the facility's prospective per diem rate. Pursuant to budget availability and at the HCA's discretion, an inflation factor may be used to recognize economic conditions and trends. A notice will be sent out every September informing each provider that:

(1) MBI will or will not be authorized for determining rates for the year; and

(2) the percentage increase if the MBI is authorized;

(3) if utilized, the index used to determine the inflation factor will be the center for medicare and medicaid services (CMS) market basket index (MBI);

(4) each provider's operating costs will be indexed to a mid-year point of February 28 for operating year 1;

(5) if utilized, the inflation factor will be the actual MBI for the previous calendar year.

C. Incentive to reduce increases in cost:

(1) As an incentive to reduce the increases in the administrative and general (A&G) and room and board (R&B) cost center, the HCA will share with the provider the savings below the A&G/R&B ceiling in accordance with the formula described below:

A = [1/2 (B-C)] < $1.00

(2) Where:

A = allowable Incentive per diem

B = A&G/R&B ceiling per diem

C = allowable A&G/R&B per diem from the base year's cost report

D. Cost centers for rate calculation: For the purpose of rate calculation, costs will be grouped into four major cost centers. These are:

(1) direct patient care (DPC)

(2) administration and general (A&G)

(3) room and board (R&B)

(4) facility costs (FC)

E. Case-mix adjustment:

(1) In assuring the prospective reimbursement system addresses the needs of residents of ICF-MR facilities, a case mix adjustment factor will be incorporated into the reimbursement system. The case-mix index (CMI) will be used to adjust the reimbursement levels in the direct patient care cost center. The key objective of the CMI is to link reimbursement to the acuity level of residents in a facility. To accomplish this objective, the HCA utilizes level of care criteria which classify ICF-MR residents into one of three levels, with level I representing the highest level of need. Corresponding to each level of care, the relative values are as follows:

level I	1.077
level II	0.953
level III	0.768

(2) Using these level specific relative values, a provider specific base year CMI will be calculated. The CMI represents the weighted average of the residents' level of care divided by the total number of residents in the facility. The CMI is calculated as follows:

[(A x 1.077)+(B x .953)+(C x .768)]/N = CMI

(3) WHERE: A = number of level I residents

B = number of level II residents

C = number of level III residents

N = total number of provider's residents

F. Calculation of the prospective per diem rate:

(1) A prospective per diem rate for each of the three levels of ICF-MR classification will be determined for each provider. Payment will be made based on the rate for the level of classification of the recipient.

(2) The provider's direct patient care (DPC) allowable cost will be divided by the provider's CMI to determine the cost at a value of 1.00 for the base year. The adjusted DPC is then multiplied by the relative value of the level of classification to determine the DPC component of the rate. To this, will be added the allowable A & G and R & B amount and the allowable facility cost. The formula for the rates will be as follows:

(3) The formula for year one is: (A1 x RV) + C1 + D + E = PR (year 1)

(4) The formula for year two is: [(A1 x RV) + C1) x (1 + MBI)] + D + E = PR (year 2)

(5) The formula for year three is: [(A2 x RV) + C2) x (1 + MBI)] + D + E = PR (year 3)

(6) Where:

A = allowable DPC per diem adjusted to a value of 1.00

B = the relative value of the level of classification.

C = allowable A&G and R&B per diem

D = allowable incentive per diem

E = allowable facility cost per diem

MBI = market basket index

PR = prospective rate

RV = the relative value for the level

"1"= the numerical subscript means the date of the data used in the formula; for example, "A1" means the base direct patient care costs established in the base year, while "A2" would refer to the base direct patient care costs adjusted by the MBI.

G. Effective dates of prospective rates: Rates will be effective September 1 of each year for each facility.

H. Calculation of rates for existing providers that do not have actuals as of June 30, 1990, and for new providers entering the program after September 1, 1990. For existing and for new providers entering the program that do not have actuals, the provider's interim prospective per diem rate will become the sum of:

(1) the state wide average patient care cost per diem for each level plus;

(2) the A&G and R&B ceiling per diem plus;

(3) facility cost per diem as determined by using the medicare principles of reimbursement;

(4) after six months of operation or at the provider's fiscal year end, whichever comes later, the provider will submit a completed cost report; this will be audited to determine the actual allowable and reasonable cost for the provider; a final prospective rate will be established at that time, and retroactive settlement will take place.

I. Changes of provider by sale of an existing facility: When a change of ownership occurs, the provider's prospective rate per diem will become the sum of:

(1) the patient care cost per diem for each level, established for the previous owner plus;

(2) the A&G and R&B per diem established for the previous owner; plus

(3) allowable facility costs determined by using the medicare principles of reimbursement.

J. Changes of ownership by lease of an existing facility: When a change of ownership occurs, the provider's prospective per diem rate will become the sum of:

(1) the patient care cost per diem for each level established for the previous owner; plus

(2) the A&G and R&B per diem established for the previous owner; plus

(3) the lower of allowable facility cost or the ceiling on lease cost as described by this plan.

K. Sale/leaseback of and existing facility: When a sale/ leaseback of an existing facility occurs, the provider's prospective rate will remain the same as before the transaction.

N.M. Admin. Code § 8.313.3.12

2-1-95; 8.313.3.12 NMAC - Rn, 8 NMAC 4.MAD.732.D.IV & A, 11-1-00; A, 9-1-02, Adopted by New Mexico Register, Volume XXXV, Issue 12, June 25, 2024, eff. 7/1/2024