13-002 Code Vt. R. 13-010-002-X
These rules apply to all private nonmedical institutions that are participating in the Vermont Medicaid program, providing services in licensed residential treatment programs and that have a contract with at least one of the placement authorizing departments (PAD) as defined in Section 13 of these rules. The purpose of these regulations is to establish the methods, standards and principles used to determine and calculate payment rates for these services consistent with efficiency, economy and quality of care, in compliance with Title XIX of the Social Security Act, and to ensure that no Medicaid reimbursement is made for non-covered services. These rules identify those costs that are allowable as the basis for setting rates.
These rules are promulgated pursuant to 33 V.S.A. § 1901(a) to meet the requirements of 33 V.S.A. Chapter 3, 42 U.S.C. § 1396a(a)(30), and 42 C.F.R. Part 434, Subpart B (relating to private nonmedical institutions.)
Payment rates are established prospectively for each program based on historic allowable costs of the program. A per diem rate is established for each major category of service provided by these facilities: medical treatment; room, board and supervision; and education. The approved rate is based on a funding application and financial statements submitted to the Division by the provider.
To be eligible to participate in the Medicaid program and receive Medicaid reimbursement, a program must be licensed by the Department for Children and Families' Residential Licensing and Special Investigations Unit, have an approved Medicaid provider agreement with Department of Vermont Health Access, and have an approved contract with at least one of the placement authorizing departments (PAD) as defined in Section 13 of these rules.
Prior authorization by a PAD is required for all admissions to residential treatment programs for which payment is anticipated from the State or a political subdivision thereof.
The owner of a residential treatment program shall prudently manage and operate a program of adequate quality to meet its residents' needs and comply with the rules and regulations or other requirements and standards of the Agency of Human Services and the Agency of Education, including the Department for Children and Families' Licensing Regulations for Residential Treatment Programs. Neither the issuance of a per diem rate, nor final orders made by the Director or a duly authorized representative of a PAD shall in any way relieve the owner of such a program from full responsibility for such compliance.
The owner of a residential treatment program participating in the Medicaid program, 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.
These rules are effective from July 25, 1995 (as amended August 1, 1999, August 1, 2003, August 5, 2008, February 24, 2014, September 8, 2015, and July 1, 2023).
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.
Providers shall submit the following documents for the purpose of establishing a Master file for each facility in the Vermont Medicaid program:
A funding application is settled if there is no request for reconsideration of the Division's findings or, if such request was made, the Division has issued a final order pursuant to subsection 12.3 of these rules.
In determining the allowability or reasonableness of cost 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 Publication 15, formerly known as HCFA-15), which is hereby incorporated by reference. If neither these regulations nor CMS Publication 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.
Preapproval is encouraged for providers anticipating a significant increase in program expenses. Providers should obtain pre-approval from the Division, in consultation with the PADs, before making commitments to any significant increase in expenditures in the current approved program costs or future allowable costs, since such increase may affect the suitability of the program and/or the ability of the PADs to continue to purchase the program services. Preapproved increases will not be subject to the cap limitation pursuant to sub sections 7.4(b) and 7.5(c).
Any reasonable and resident-related, non-capital cost that would increase the approved costs by two percent and is not expected to be a recurring cost in the ordinary operation of the facility, may be designated a "Non-Recurring Cost". A non-recurring cost shall be capitalized and amortized for a period of three years.
Property and related costs include:
Funding of depreciation is not required but it is strongly recommended that providers use this mechanism as a means of conserving funds for replacement of depreciable assets, and coordinate their planning of capital expenditures with area-wide planning of community and state agencies.
Leasing arrangements for property, plant and equipment must meet the following conditions:
The following costs are not allowable:
Bad debts, charity and courtesy allowances are not allowable costs.
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 are the actual cost to the related party without any markup or any additional negotiated fees. The Division may require 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, including the related party audited financial statements.
Where a program or central office of the program reports revenues other than those received from per diem rates, these revenues shall be applied to reduce the allowable direct program costs or central office allocation according to the following provisions.
Only the reasonable and necessary costs of meals, lodging, transportation and incidentals incurred for purposes related to resident care will be allowed. Costs determined to be for the pleasure and convenience of the provider or providers' representatives will not be allowed.
Costs of transportation incurred, other than ambulance services covered pursuant to the Vermont Medicaid Covered Services Rules, that are necessary and reasonable for the care of residents are allowable. Such costs shall include depreciation of vehicles, mileage reimbursement to employees for the use of their vehicles to provide transportation for residents, and any contractual arrangements for providing such transportation. Such costs shall not be separately billed for individual residents. Providers shall keep vehicle mileage logs and other similar records to track program costs for transportation.
In the PNMI system of reimbursement, allowable costs are first classified and then assigned to a service category. Costs are classified into cost categories as set forth by the Director on the funding application.
There are three service categories that are directly related to the provision of services to the residents and a fourth category which relates to the administration of the program. All allowable program costs shall be allocated to these four categories. To determine total allowable program costs, the administration category is reallocated to the three service categories.
Reimbursement may be available for temporary absences from the facility of up to fifteen days per episode in accordance with provider contract provisions, subject to preapproval by the appropriate child placement agency.
The Division shall cap the programs' increases by calculating a maximum increase from the prior base year to the current base year pursuant to this subsection.
The table below shows the factor to be applied to the occupancy adjusted prior base year per diem rate to calculate the cap on the current year per diem rate in accordance with paragraph (a)(4). This factor is on a scale that relates to the magnitude of the programs' prior base year allowable costs before revenue offset.
Prior Base Year Allowable Cost Before Revenue Offset | Allowed Percentage Change for Cost Increases |
Up to $ 600,000 | 6.0% |
$ 600,001 - $ 1,000,000 | 5.0% |
$ 1,000,001 - $ 1,800,000 | 4.0% |
$ 1,800,001 - $ 4,000,000 | 3.0% |
Over $ 4,000,000 | 2.0% |
Prior Base Year Allowable Cost Before Revenue Offset | Allowed Percentage Change for Cost Increases |
Up to $ 600,000 | 6.0% |
$ 600,001 - $ 1,000,000 | 5.0% |
$ 1,000,001 - $ 1,800,000 | 4.0% |
$ 1,800,001 - $ 4,000,000 | 3.0% |
Over $ 4,000,000 | 2.0% |
The calculation of the rates shall be based on total allowable base year costs determined by the Division pursuant to these rules.
For programs categorized by the PADs as crisis/stabilization programs with typical lengths of stay from 0--10 days, rates are set retroactively as follows:
The Division will review programs' audited financial statements and will recapture PNMI profit by applying the net revenue in excess of five percent against the current year's total allowable costs. The calculation of the recapture of net PNMI revenue in excess of five percent shall take into consideration the effect of the cap in subsection 6.7. Any amounts of revenue offset which are greater than the effect of the cap will be offset.
Applications for rate adjustments pursuant to this section shall be made as follows.
Providers may not apply for a rate adjustment under this section for the sole reason that actual costs incurred by the provider exceed the rate of payment.
Extraordinary financial relief may be available, at the discretion of the PADS, for a provider that the Division determines to be experiencing demonstrable and temporary financial difficulties. This provision does not create any entitlement to a rate in excess of that which the provider would receive under the normal operation of these rules or to any other form of relief.
Notwithstanding any other provision of these rules to the contrary, no provider shall be paid for services performed during the contract period any more than the maximum per diem rate or the maximum total amount specified in the contract.
At no time shall the total per diem rate for all service categories exceed the provider's customary charges to the general public for the same services.
Reimbursement shall not be made by the state of Vermont or any of its subdivisions for PNMI residential child care services provided to children placed in Vermont residential treatment programs by out-of-state child placement authorities. Support, as well as maintenance, of the child is required of the sending state as mandated by the Interstate Compact on the Placement of Children.
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.
AICPA: American Institute of Certified Public Accountants.
Allocable cost: A cost which is incurred for a service that is designed to achieve two or more objectives, not all of which are covered by the Medicaid program.
Allowable Costs or Expenses: those direct and indirect costs or expenses incurred for the provision of direct resident services and equipment used in the provision of such services. Direct resident services refers to room, board, care, rehabilitation and treatment, and may include educational services provided by programs to their residents.
AOE: the Vermont Agency of Education.
Approved Program Costs: the total allowable costs of a program in a base year.
Adjusted Allowable Costs: the net allowable costs of a program after the recapture of net PNMI revenue in excess of five percent.
Base Year: a program's fiscal year for which the allowable costs are the basis for the prospective per diem rate.
Certified Rate: the rate certified by the Division of Rate Setting to the PADs.
Centers for Medicare and Medicaid Services (CMS): Agency within the U.S. Department of Health and Human Services (HHS) responsible for developing and implementing policies governing the Medicare and Medicaid programs.
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.
Contract: a provider contract is a standard form contract or standard form grant between a PAD and a Private Nonmedical Institution, which describes the services to be provided and includes the per diem rate. A provider contract pursuant to these rules does not include a contract with a residential treatment program that provides services based on individualized budgets for each child or that includes a master grant case rate or per member per month funding mechanism that is applicable for a broad array of services beyond just residential treatment services.
Contract period: The twelve month period covered by the provider contract.
Direct Costs: costs which are directly identifiable with a specific activity, service or product of the program.
Director: the Director of Rate Setting, Agency of Human Services.
Division: the Division of Rate Setting, Agency of Human Services.
DMH: Department of Mental Health.
Donated Asset: an asset acquired without making any payment in the form of cash, property or services.
Facility: a residential treatment program, licensed as such by the Department for Children and Families' Residential Licensing and Special Investigations Unit, and enrolled in the Vermont Medicaid Program as a Private Nonmedical Institution for Child Care Services.
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: an action of the Division that is no longer subject to change by the Division and for which no further review or appeal is available from the Division.
Fringe Benefits: shall include payroll taxes, workers compensation, pension, group health, dental and life insurances, profit sharing, cafeteria plans and flexible spending plans.
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.
Funding Application: A cost report prepared by the provider in accordance with instructions and on forms prescribed by the Division.
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 market basket, home health agency market basket and regional forecasts of consumer price indexes.
Health Care Financing Administration (HCFA): Agency within the U.S. Department of Health and Human Services (HHS), now known as the Centers for Medicare and Medicaid Services (CMS), responsible for developing and implementing policies governing the Medicare and Medicaid programs.
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.
Interim Rate: a prospective rate paid to a program on a temporary basis.
Occupancy Level: the number of paid days, including temporary absence days, as a percentage of the total permitted number of total permitted resident capacity.
Occupancy Adjusted Per Diem: the prior year per diem, excluding any rate adjustments, adjusted for a decline in resident days from the prior base year to the current base year, subject to minimum occupancy limits.
Per Diem Cost: the cost for one day resident care.
Placement Authorizing Department (PAD): the State governmental entity responsible (solely or in conjunction with another State entity) for authorizing the placement of a child in a residential treatment program. PADs include but are not limited to the Department for Children and Families, the Department of Mental Health, the Department of Disabilities, Aging and Independent Living, Division of Alcohol and Drug Abuse Programs or the Agency of Education in coordination with the Local Education Agency.
Private Nonmedical Institution (PNMI): an organization or program that is not, as a matter of regular business, a health insuring organization, hospital, nursing home, or a community health care center, that provides medical care to its residents. A Private Nonmedical Institution for Residential Child Care Services must be licensed by the Department for Children and Families' Residential Licensing and Special Investigations Unit and have a Medicaid Provider Agreement in effect with the Department of Vermont Health Access.
Program: a residential treatment program, licensed as such by the Department for Children and Families' Residential Licensing and Special Investigations Unit, and enrolled in the Vermont Medicaid Program as a Private Nonmedical Institution for Child Care Services.
Provider Agreement: a provider agreement is an agreement to provide, and receive payment for, Medicaid services according to the terms and conditions established by the PADs. A provider agreement must be in effect and on file with the Department of Vermont Health Access for an organization to be considered authorized to bill and receive payments from the Medicaid program.
Provider Reimbursement Manual, CMS Publication 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: an individual who is receiving services in a Private Nonmedical Institution for Residential Child Care Facility.
Resident Day: the care of one resident for one day of services. The day of admission is counted as one day of care, but the day of discharge is not. A resident day also includes a temporary absence day.
Residential Treatment Program: a private or public agency or facility that is licensed by the Department for Children and Families' Residential Licensing and Special Investigations Unit under the "Licensing Regulations for Residential Treatment Programs".
Restricted Funds and Revenue: funds and investment income earned from funds restricted for specific purposes by the donors, excluding funds restricted or designated by an organization's governing body.
Secretary: the Secretary of the Agency of Human Services.
Temporary Absence Day: a day for which the provider is paid to hold a bed open and is counted as a resident day.
[Repealed.]
13-002 Code Vt. R. 13-010-002-X
July 25, 1995 Secretary of State Rule Log #95-45
AMENDED:
August 1, 1999 Secretary of State Rule Log #99-38; August 1, 2003 Secretary of State Rule Log #03-20; August 5, 2008 Secretary of State Rule Log #08-029; February 24, 2014 Secretary of State Rule Log #14-007; 7/1/2023 Secretary of State Rule Log #23-017
STATUTORY AUTHORITY:
33 V.S.A. § 1901