13-001 Code Vt. R. 13-010-001-X
The purpose of these rules is to implement state and federal reimbursement policy with respect to nursing facilities providing services to Medicaid eligible persons. The methods, standards, and principles of rate setting established herein reflect the objectives set out in 33 V.S.A. § 901 and balance the competing policy objectives of access, quality, cost containment and administrative feasibility. Rates set under this payment system are consistent with the efficiency, economy, and quality of care necessary to provide services in conformity with state and federal laws, regulations, quality and safety standards, and meet the requirements of 42 U.S.C. §1396 a (a)(13)(A).
These rules apply to all privately owned nursing facilities and state nursing facilities providing services to Medicaid residents. Long-term care services in swing-bed hospitals, and Intermediate Care Facilities for the Mentally Retarded are reimbursed under different methods and standards. Swing-bed hospitals are reimbursed pursuant to 42 U.S.C. §13961(b)(1). Intermediate Care Facilities for the Mentally Retarded are reimbursed pursuant to the Regulations Governing the Operation of Intermediate Care Facilities for the Mentally Retarded adopted by the Agency and are subject to the Division's Accounting Requirements ( Section 2 ) and Financial Reporting ( Section 3 ).
These rules are promulgated pursuant to 33 V.S.A. §§ 904(a) and 908(c) to meet the requirements of 33 V.S.A. Chapter 9, 42 U.S.C. §§1396 a(a)(13)(A) and § 1396a(a)(30).
A prospective case-mix payment system for nursing facilities is established by these rules in which the payment rate for services is set in advance of the actual provision of those services. A per diem rate is set for each facility based on the historic allowable costs of that facility. The costs are divided into certain designated cost categories, some of which are subject to limits. The basis for reimbursement within the Nursing Care cost category is a resident classification system that groups residents into classes according to their assessed conditions and the resources required to care for them. The costs in some categories are adjusted to reflect economic trends and conditions, and the payment rate for each facility is based on the per diem costs for each category.
The owner of a nursing facility shall prudently manage and operate a residential health care program of adequate quality to meet its residents' needs. Neither the issuance of a per diem rate, nor final orders made by the Director or a duly authorized representative shall in any way relieve the owner of a nursing facility from full responsibility for compliance with the requirements and standards of the Agency of Human Services.
The owner of a nursing facility, or a duly authorized representative shall:
If any part of these rules or their application is held invalid, the invalidity does not affect other provisions or applications which can be given effect without the invalid provision or application, and to this end the provisions of these rules are severable.
With respect to the allocation of costs to the nursing facility and within the nursing facility, the following rules shall apply:
The cost effect of transactions that have the effect of circumventing the intention of these rules may be adjusted by the Division on the principle that the substance of the transaction shall prevail over the form.
In determining the allowability or reasonableness of costs or treatment of any reimbursement issue, not addressed in these rules, the Division shall apply the appropriate provisions of the Medicare Provider Reimbursement Manual (CMS-15, formerly known as HCFA or HIM-15). If neither these regulations nor CMS-15 specifically addresses a particular issue, the determination of allowability will be made in accordance with Generally Accepted Accounting Principles (GAAP). The Division reserves the right, consistent with applicable law, to determine the allowability and reasonableness of costs in any case not specifically covered in the sources referenced in this subsection.
For rate setting purposes, a cost must satisfy criteria, including, but not limited to, the following:
Basis of the assets recognized by the Division, plus a proportionate share of other costs allowed pursuant to paragraph (g), or the principal amount of the loan, whichever is the lower:
Less: The provider's cash and cash equivalents in excess of 60 days needs, per subparagraph (b)(2) of this subsection.
Equals: The limits on borrowings related to fixed assets.
Leasing arrangements for property, plant and equipment must meet the following conditions:
The reasonable and necessary expense of newspaper or other public media advertisement for the purpose of securing necessary employees is an allowable cost. No other advertising expenses are allowed.
The direct costs of barber and beauty services are not allowable for purposes of Medicaid reimbursement. However, the fixed costs for space and equipment related to providing these services and overhead associated with billing for these services are allowable.
Bad debts, charity and courtesy allowances are deductions from revenues and are not to be included in allowable costs.
Reasonable and necessary costs incurred for the provision of day care services to children of employees performing resident related functions will be allowable. Costs will be adjusted by any revenues received for the provision of care provided to employees' children. The direct and indirect expenses related to providing these services to non-employee children are not an allowable expense. Costs must be accumulated in a separate cost center. Revenues earned from providing day care must be identified for employees and non-employees in a separate account.
As an incentive for nursing home providers to furnish needed services (i.e., meals-on-wheels, adult day and certain respite care, etc.) to local communities, with the prior permission of the Division, only direct identifiable incremental costs will be adjusted (i.e., food, direct labor and fringe benefits, transportation). Overhead costs will not be apportioned for adjustment unless there is a significant expansion to a program resulting from community service involvement. The provider must maintain auditable records for all incremental direct costs associated with providing a community service.
Costs incurred for services performed in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth will not be allowed for the purposes of calculating the per diem rate. Dental services for Medicaid eligible individuals are covered pursuant to the Medicaid Covered Services Rules. However, the fixed costs for space and equipment related to providing these services and overhead associated with billing for these services may be allowable.
Necessary, ordinary, and reasonable legal fees incurred for resident-related activities will be allowable.
Cost of operation of a motor vehicle necessary to meet the facility needs is an allowable cost. Where the vehicle is used for personal and business purposes, the portion of vehicle costs associated with personal use will not be allowed. If the provider does not document personal use and business use under a pre-approved method, DRS reserves the right to disallow all vehicle costs in question. All costs in excess of the cost of a similar size mid-price vehicle are not allowable.
Amounts paid to the seller of an on-going facility by the purchaser for an agreement not to compete are considered capital expenditures. The amortized costs for such agreements are not allowable.
Reasonable and necessary membership dues, including any portions used for lobbying activities, shall be considered Medicaid allowable costs, provided the organization's function and purpose are directly related to providing resident care.
The allowability of costs of certain benefits which may be available to retired personnel shall be governed by CMS-15, except that all such costs shall be included in fringe benefits and shall be allocated accordingly.
Costs incurred for services, activities and events that are determined by the Division to be for public relations purposes will not be allowed.
Expenses otherwise allowable shall not be included for purposes of determining a prospective rate where such expenses are paid to a related party unless the provider identifies any such related party and the expenses attributable to it and demonstrates that such expenses do not exceed the lower of the cost to the related party or the price of comparable services, facilities or supplies that could be purchased elsewhere. The Division may request either the provider or the related party, or both, to submit information, books and records relating to such expenses for the purpose of determining their allowability.
Where a facility reports operating and non-operating revenues related to goods or services, the costs to which the revenues correspond are not allowable. If the specific costs cannot be identified, the revenues shall be deducted from the most appropriate costs. If the revenues are more than such costs, the deduction shall be equal to such costs.
Only reasonable and necessary costs of meals, lodging, transportation and incidentals incurred for purposes related to resident care will be allowed. All costs determined to be for the pleasure and convenience of the provider or providers' representatives will not be allowed.
Allowable costs shall not include the cost of services to individual residents which are ordinarily billable directly to Medicaid irrespective of whether such costs are payable by Medicaid.
The Director shall use the most recent publication of the Health Care Cost Service available June 1 in the calculation of inflation factors, whether for rebase inflation calculations or annual inflation calculations. Different inflation factors are used to adjust different rate components. Subcomponents of each inflation factor are weighted in proportion to the percentage of actual allowable costs incurred by Vermont facilities for specific subcomponents of the relevant cost component. For example, if a cost in the Nursing Care cost component is 83.4 percent attributable to salaries and wages and 16.6 percent attributable to employee benefits, the weights for the two subcomponents of the Nursing Care inflation factor shall be 0.834 and 0.166 respectively. The weights for each inflation factor shall be recalculated no less frequently than each time the relevant cost category is rebased.
In the case-mix system of reimbursement, allowable costs are grouped into cost categories. The accounts to be used for each cost category shall be prescribed by the Director. The Base Year costs shall be grouped into the following cost categories:
Allowable costs for the Resident Care component of the rate shall include reasonable costs associated with expenses related to direct care. The following are Resident Care costs:
Allowable costs associated with the position of Director of Nursing shall include reasonable salary for one position and associated fringe benefits, including child day care.
Per diem costs for each cost category, excluding the Nursing Care and Ancillary cost categories, are calculated by dividing allowable costs for each case-mix category by the greater of actual bed days of service rendered, including revenue generating hold/reserve days, or the number of resident days computed using the minimum occupancy at 90 percent of the licensed bed capacity during the cost period under review calculated pursuant to subsection 5.7.
There are 48 case-mix resident classes. Each case-mix class has a specific case-mix weight as follows:
Display Table
Group Code | Case-Mix Weight | Description |
ES3 | 3.00 | Extensive Services |
ES2 | 2.23 | Extensive Services |
ES1 | 2.22 | Extensive Services |
RAE | 1.65 | Rehabilitation |
RAD | 1.58 | Rehabilitation |
RAC | 1.36 | Rehabilitation |
RAB | 1.10 | Rehabilitation |
RAA | 0.82 | Rehabilitation |
HE2 | 1.88 | Special Care High |
HE1 | 1.47 | Special Care High |
HD2 | 1.69 | Special Care High |
HD1 | 1.33 | Special Care High |
HC2 | 1.57 | Special Care High |
HC1 | 1.23 | Special Care High |
HB2 | 1.55 | Special Care High |
HB1 | 1.22 | Special Care High |
LE2 | 1.61 | Special Care Low |
LE1 | 1.26 | Special Care Low |
LD2 | 1.54 | Special Care Low |
LD1 | 1.21 | Special Care Low |
LC2 | 1.30 | Special Care Low |
LC1 | 1.02 | Special Care Low |
LB2 | 1.21 | Special Care Low |
LB1 | 0.95 | Special Care Low |
CE2 | 1.39 | Clinically Complex |
CE1 | 1.25 | Clinically Complex |
CD2 | 1.29 | Clinically Complex |
CD1 | 1.15 | Clinically Complex |
CC2 | 1.08 | Clinically Complex |
CC1 | 0.96 | Clinically Complex |
CB2 | 0.95 | Clinically Complex |
CB1 | 0.85 | Clinically Complex |
CA2 | 0.73 | Clinically Complex |
CA1 | 0.65 | Clinically Complex |
BB2 | 0.81 | Behavioral Symptoms Plus Cognitive Performance |
BB1 | 0.75 | Behavioral Symptoms Plus Cognitive Performance |
BA2 | 0.58 | Behavioral Symptoms Plus Cognitive Performance |
BA1 | 0.53 | Behavioral Symptoms Plus Cognitive Performance |
PE2 | 1.25 | Reduced Physical Function |
PE1 | 1.17 | Reduced Physical Function |
PD2 | 1.15 | Reduced Physical Function |
PD1 | 1.06 | Reduced Physical Function |
PC2 | 0.91 | Reduced Physical Function |
PC1 | 0.85 | Reduced Physical Function |
PB2 | 0.70 | Reduced Physical Function |
PB1 | 0.65 | Reduced Physical Function |
PA2 | 0.49 | Reduced Physical Function |
PA1 | 0.45 | Reduced Physical Function |
The Department of Disabilities, Aging and Independent Living's Division of Licensing and Protection shall compute each facility's average case-mix score.
Resident Care Base Year rates shall be computed as follows:
Indirect Base Year rates shall be computed as follows:
The Director of Nursing Base Year per diem rates shall be computed as follows:
The Property and Related per diem rate shall be computed as follows:
Once a final order has been issued for all facilities' Base Year cost reports, notwithstanding any subsequent changes to the cost report findings, resulting from a reopening, appeal, or other reason, the limits set pursuant to sub sections 7.2(d)(2), 7.3(d), and 7.4(d) will not change until nursing home costs are rebased pursuant to 5.6(b), except for annual adjustment by the inflation factors or a change in law necessitating such a change.
The Division, on application by a provider, may make an adjustment to the prospective case-mix rate for additional costs which are directly related to:
The Division may make or a provider may apply for an adjustment to a facility's prospective case-mix rate for additional costs that are a necessary result of complying with changes in applicable federal and state laws, and regulations, or the orders of a State agency that specifically requires an increase in staff or other expenditures.
The Division, on application by a provider, may make an adjustment to a prospective case-mix rate for additional costs which are directly related to the installation of energy conservation devices or the implementation of other efficiency measures, if they have been previously approved by the Division.
Providers may not apply for a rate adjustment under this section for the sole reason that actual costs incurred by the facility exceed the rate of payment.
The per diem rate of reimbursement consists of the following rate components:
The total per diem rate in effect for any nursing facility shall be the sum of the rates calculated for the components listed in Subsection 9.1, adjusted in accordance with the Inflation Factors, as described in Subsection 5.8.
Certain awards shall be made annually to facilities that provide a superior quality of care in an efficient and effective manner.
The following criteria will be applied to facility data up to March 31 each year to determine eligibility for the award to be presented in May. In order to be eligible for the award, a facility must participate in the Vermont Medicaid program and meet all of the following criteria. All eligible facilities will be ranked according to their quality of care by the Department of Disabilities, Aging and Independent Living based on these basic quality criteria. The five facilities with the highest quality of care will receive an award. If, based on the basic criteria, there are ties which would cause more than five facilities to be equally qualified, the tied facilities will be ranked according to the efficiency criteria set out below in paragraph (6), to determine those facilities that will receive an award.
In order to protect Medicaid recipients from the closing of a nursing facility in which they reside, this section establishes a process by which nursing homes that are in immediate danger of failure may seek extraordinary financial relief. This process does not create any entitlement to rates in excess of those required by 33 V.S.A. Chapter 9 or to any other form of relief.
Payment for services, other than Rehabilitation Center services, provided to Vermont Medicaid residents in long-term care facilities in another state shall be at the per diem rate established for Medicaid payment by the appropriate agency in that state. Payment of the per diem rate shall constitute full and final payment, and no retroactive settlements will be made.
No Medicaid payments will be made for services provided to Vermont pediatric residents in out-of-state long-term care facilities without the prior authorization of the Commissioner of the Department of Vermont Health Access.
Intermediate Care Facilities for the Mentally Retarded (ICF/MRs) are paid according to Medicaid principles of reimbursement, pursuant to the Regulations Governing the Operation of Intermediate Care Facilities for the Mentally Retarded adopted by the Agency.
The Division's Accounting Requirements ( Section 2 ) and Financial Reporting ( Section 3 ) shall apply to this program.
Payment for swing-bed and other long-term care services provided by hospitals, pursuant to 42 U.S.C. § 13961(a), shall be made at a rate equal to the average rate per diem during the previous calendar year under the State Plan to nursing facilities located in the State of Vermont. Supplemental payments made pursuant to section 14 and subsection 9.5 shall not be included in the calculation of swing-bed rates.
A special rate equal to 150 percent of a nursing facility's ordinary Medicaid rate shall be paid for care provided to Medicaid eligible furloughees of the Department of Corrections.
The independent appeals officer shall make an order which recites the action taken at the conference, including any agreements made by the parties.
Proceedings under this section shall be initiated, pursuant to the Vermont Rules of Appellate Procedure, as follows:
De novo review is available in the Superior Court of the county where the nursing facility is located. Such proceedings shall be initiated, pursuant to Rule 74 of the Vermont Rules of Civil Procedure, as follows:
The Director may agree to settle reviews and appeals taken pursuant to Sub sections 15.3 and 15.5, and, with the approval of the Secretary, may agree to settle other appeals taken pursuant to 33 V.S.A. § 909 and any other litigation involving the Division on such reasonable terms as she or he may deem appropriate to the circumstances of the case.
For the purposes of these rules the following definitions and terms are used:
Accrual Basis of Accounting: an accounting system in which revenues are reported in the period in which they are earned, regardless of when they are collected, and expenses are reported in the period in which they are incurred, regardless of when they are paid.
Agency: the Agency of Human Services.
AICPA: American Institute of Certified Public Accountants.
Allowable Costs or Expenses: costs or expenses that are recognized as reasonable and related to resident care in accordance with these rules.
Base Year: a calendar year for which the allowable costs are the basis for the case-mix prospective per diem rate.
Case-Mix Weight: a relative evaluation of the nursing resources used in the care of a given class of residents.
Centers for Medicare and Medicaid Services(CMS) (formerly called the Health Care Financing Administration (HCFA)): Agency within the U.S. Department of Health and Human Services (HHS) responsible for developing and implementing policies governing the Medicare and Medicaid programs.
Certificate of Need (CON): certificate of approval for a new institutional health service, issued pursuant to 18 V.S.A. § 2403.
Certified Rate: the rate certified by the Division of Rate Setting to the Department of Vermont Health Access.
Common Control: where an individual or organization has the power to influence or direct the actions or policies of both a provider and an organization or institution serving the provider, or to influence or direct the transactions between a provider and an organization serving the provider. The term includes direct or indirect control, whether or not it is legally enforceable.
Common Ownership: where an individual or organization owns or has equity in both a facility and an institution or organization providing services to the facility.
Companion Aide: a Licensed Nurse Aide (LNA) with specialized training in person-centered dementia care.
Cost Finding: the process of segregating direct costs by cost centers and allocating indirect costs to determine the cost of services provided.
Cost Report: a report prepared by a provider on forms prescribed by the Division.
Direct Costs: costs which are directly identifiable with a specific activity, service or product of the program.
Director: the Director of Rate Setting.
Division: the Division of Rate Setting, Agency of Human Services.
Donated Asset: an asset acquired without making any payment in the form of cash, property or services.
Facility or nursing facility: a nursing home facility licensed and certified for participation in the Medicaid Program by the State of Vermont.
Fair Market Value: the price an asset would bring by bona fide bargaining between well-informed buyers and sellers at the date of acquisition.
FASB: Financial Accounting Standards Board.
Final Order of the Division: an action of the Division which is not subject to change by the Division, for which no review or appeal is available from the Division, or for which the review or appeal period has passed.
Free standing facility: a facility that is not hospital-affiliated.
Funded Depreciation: funds that are restricted by a facility's governing body for purposes of acquiring assets to be used in rendering resident care or servicing long term debt.
Fringe Benefits: shall include payroll taxes, workers' compensation, pension, group health, dental and life insurances, profit sharing, cafeteria plans and flexible spending plans, child care for employees, employee parties, and gifts shared by all staff. Fringe benefits may include tuition for college credit in a discipline related to the individual staff member's employment or costs of obtaining a GED.
Generally Accepted Accounting Principles (GAAP): those accounting principles with substantial authoritative support. In order of authority the following documents are considered GAAP:
Generally Accepted Auditing Standards (GAAS): the auditing standards that are most widely recognized in the public accounting profession.
Health Care Cost Service: publication, by Global Insight, Inc., of national forecasts of hospital, nursing home (NHMB), and home health agency market baskets and regional forecasts of CPI (All Urban) for food and commercial power and CPIU-All Items.
Hold Day: a day for which the provider is paid to hold a bed open is counted as a resident day.
Hospital-affiliated facility: a facility that is a distinct part of a hospital provider, located either at the hospital site or within a reasonable proximity to the hospital.
Incremental Cost: the added cost incurred in alternative choices.
Independent Public Accountant: a Certified Public Accountant or Registered Public Accountant not employed by the provider.
Indirect Costs: costs which cannot be directly identified with a particular activity, service or product of the program. Indirect costs are apportioned among the program's services using a rational statistical basis.
Inflation Factor: a factor that takes into account the actual or projected rate of inflation or deflation as expressed in indicators such as the New England Consumer Price Index.
Interim Rate: a prospective Case-Mix rate paid to nursing facilities on a temporary basis.
Look-back: a review of a facility's actual costs for a previous period prescribed by the Division.
Medicaid Resident: a nursing home resident for whom the primary payor for room and board is the Medicaid program.
New England Consumer Price Index (NECPI-U): the New England consumer price index for all urban consumers as published by the Health Care Cost Service.
New Health Care Project: A project requiring a certificate of need (CON) pursuant to 18 V.S.A.§ 9434(a) or projects which would require a CON except that their costs are lower than those required for CON jurisdiction pursuant 18 V.S.A.§ 9434(a).
OBRA 1987: the Omnibus Budget Reconciliation Act of 1987.
Occupancy Level: the number of paid days, including hold days, as a percentage of the licensed bed capacity.
Paid feeding/dining assistants: persons (other than the facility's administrator, registered nurses, licensed practical nurses, certified or licensed nurse aides) who are qualified under state law pursuant to 42 C.F.R. §§483.35(h)(2), 483.160 and 488.301 and who are paid to assist in the feeding of residents.
Per Diem Cost: the cost for one day of resident care.
Prescription Drugs: drugs for which a physician's prescription is required by state-or federal law.
Person-Centered Dementia Care: care that includes the following elements: an individualized approach to care planning that uses the perspective of the person with dementia as the primary frame of reference; values the personhood of the individual with dementia; and provides a social environment that supports psychological needs.
Prospective Case-Mix Reimbursement System: a method of paying health care providers rates that are established in advance. These rates take into account the fact that some residents are more costly to care for than others.
Provider Reimbursement Manual, CMS-15: a manual published by the U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services, used by the Medicare Program to determine allowable costs.
Rate year: the State's fiscal year ending June 30.
Related organization or related party: an individual or entity that is directly or indirectly under common ownership or control or is related by family or other business association with the provider. Related organizations include but are not restricted to entities in which an individual who directly or indirectly receives or expects to receive compensation in any form is also an owner, partner, officer, director, key employee, or lender, with respect to the provider, or is related by family to such persons.
Resident Assessment Form: Vermont version of a federal form, which captures data on a resident's condition and which is used to predict the resource use level needed to care for the resident.
Resident Day: any day of services for which the facility is paid. For example, a paid hold day is counted as a resident day.
Restricted Funds and Revenue: funds and investment income earned from funds restricted for specific purposes by donors, excluding funds restricted or designated by an organization's governing body.
RUG IV: A systematic classification of residents in nursing facilities based upon a broad study of nursing care time required by groups of residents exhibiting similar needs.
Secretary: the Secretary of the Agency of Human Services.
Special hospital-based nursing facility: a facility that meets the following criteria:
Standardized Resident Days: Base Year resident days multiplied by the facility's average Case-Mix score for the base year.
State nursing facilities: facilities owned and/or operated by the State of Vermont.
Swing-Bed: a hospital bed used to provide nursing facility services.
The Companion Aide Pilot Project will provide a per diem rate adjustment to selected facilities to develop additional knowledge and experience in the area of person-centered dementia care through the use of Companion Aides. Companion Aides will be Licensed Nurse Aides with specialized training in person-centered dementia care to provide an individualized approach that uses the perspective of the person with dementia as the primary frame of reference.
The work of the Companion Aides funded by this pilot program must comply with the job description detailed in the Companion Aide application. The selected nursing facilities may have the Companion Aide work any shift.
The pilot project will be for 2.5 years beginning January 1, 2015 and ending on June 30, 2017.
The original per diem adjustment for Companion Aides will be inflated on July 1, 2015 and July 1, 2016 using the same methodology as detailed in Subsection 5.8 of these rules.
The selected facilities shall complete an annual Companion Aide Pilot Project Outcome Report. This report will be sent to the providers with the Companion Aide application so nursing facility staff will understand the data reporting requirement when they apply for the pilot. These reports will be due by November 10, 2015 and November 10, 2016. The Division may end the Companion Aide rate adjustment for a facility that does not comply with the ongoing reporting requirements.
13-001 Code Vt. R. 13-010-001-X
AMENDED: January 4, 1995 Secretary of State Rule Log #95-6; January 1, 1996 Secretary of State Rule Log #95-83; January 1, 1997 Secretary of State Rule Log #96-78; July 1, 1998 Secretary of State Rule Log #98-36; November 1998 [Technical Revision only]; July 8, 1999 Secretary of State Rule Log #99-29; July 9, 1999 Secretary of State Rule Log #99-28; August 1, 1999 Secretary of State Rule Log #99-37; July 14, 2001 Secretary of State Rule Log #01-38; November 1, 2002 Secretary of State Rule Log #02-36; May 1, 2004 Secretary of State Rule Log #04-12; July 7, 2004 Secretary of State Rule Log #04-27; July 1, 2005 Secretary of State Rule Log #05-20; October 29, 2007 Secretary of State Rule Log #07-042; August 25, 2008 Secretary of State Rule Log #08-035; April 1, 2011 Secretary of State Rule Log #11-016; September 17, 2012 Secretary of State Rule Log #12-032; September 9, 2013 Secretary of State Rule Log #13-026; March 6, 2015 Secretary of State Rule Log #15-002