North Dakota Long Term Care Association Issue Briefs 2003

Study of North Dakota’s Medicaid Nursing Facility Payment System

Purpose & Background of Nursing Facility Payment System Study

The North Dakota 57^th Legislative Assembly passed House Bill No. 1196 in 2001.  Section 29 of this bill authorized a study of the nursing facility payment system and the state’s equalized rate policy.  The study was to include an evaluation of the existing system and any recommendations for change.  A Request For Proposal from the North Dakota Department of Human Services (DHS) was issued as a result of this authorization.  Myers and Stauffer LC submitted a proposal and was awarded the contract in January 2002.

Consultant Recommendations

90% Occupancy Incentive
      1) Myers and Stauffer recommends North Dakota retain a minimum occupancy program of 90%. 

Rebasing Frequency
       1) Based on our evaluation of the current payment system, our recommendations would not change the following:  1) The flexibility to establish limit levels based on current facility spending patterns and Medicaid budget limitations, 2) Efficiency incentive on Indirect costs, 3) Operating margin on Direct and Other Direct care costs categories or 4) Current method of basing efficiency incentives and operating margins on the prior year per diems and limits.

       2) We do recommend establishing a maximum number of years between rebasing.  We suggest that rebasing occur no less frequently than every four years, with the opportunity to rebase more frequently if spending patterns change significantly.  Annual rebasing, while practiced in many states, subjects Medicaid programs to less control in managing their systems.

       3) Myers and Stauffer recommends a change from the percentile method to the “median plus” method of calculating limits.

Equalized Rate Policy
      1) Myers and Stauffer does not recommend any changes to the current rate equalization policy of limiting private pay and other non-government payers in semiprivate rooms to the comparable Medicaid rate.

      2) We recommend that the Department consider adopting a limit on charges for private pay residents in private rooms.  While we do not believe that North Dakota facilities have taken advantage of this current exception on any wide-scale basis, a private room limit for private pay residents would be a means of curtailing any future overpriced charges for private rooms.  We have seen no evidence to suggest that nursing facilities have increased their private room rates excessively, we believe that this differential would provide a reasonable basis to establish a private room equalized rate cap.

      3) We recommend a change to the current Medicaid property calculation to encompass the growing proportion of private rooms to semiprivate accommodations when reporting property costs. 

Case Mix Payment System
       1) We recommend that the Department implement a permanently-funded MDS accuracy audit program defined in administrative rule. 

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