C.R.S.A. § 25.5-6-202

Providers-nursing facility reimbursement-rules-repeal

Medicaid certified class I nursing facilities must be reimbursed on a per diem basis for the costs of direct and indirect health care costs and food.  Therefore, the state department must establish an annually readjusted schedule to pay each nursing facility provider the actual amount of the costs.  The payment may not exceed 125% of the median direct and indirect costs of the health care services and food. 

For each fiscal year, any increase in the direct and indirect costs of health care services and food cannot exceed 8% per year.  The 8% will be calculated based on costs as reported and may be subject to an audit. 

In order to calculate the per diem costs, each nursing facility must submit an annual cost report to the State Department, with actual days of care being counted.  The median cost will be determined by a case-mix neutral cost of direct health care.  The State Department will redetermine the median per diem cost based on the most recent cost reports that are filed.  The State Department must adjust  and pay the per diem rate for the direct cost of health care services based on the acuity or case-mix of the nursing facility provider residents to provide for the resource utilization of the residents.  The law specifies exactly how the adjustment is calculated, taking into account resident status and nursing facility case-mix using calculated nursing weights. 

Subject to available appropriations, in order to reimburse a Medicaid certified class I nursing facility on a per diem basis, the State Department must establish an annually readjusted pay schedule to pay each nursing facility a reasonable price for its costs.  The reasonable price is a percentage of the median per diem cost of administrative and general services for an array of nursing facility providers.  For facilities with 60 licensed beds or fewer, the reasonable price will be 110% of the median per diem cost for all class I facilities.  For facilities with 61 or more beds, the reasonable price will 105% of the median per diem cost.  For fiscal years July 1, 2008-2014, the State Department will compare the nursing facility’s per diem rates to those prior to June 31, 2008, and will pay the nursing facility the higher per diem amount for each fiscal year.  For July 1, 2009-2014, if a reallocation of management costs  between administrative and general costs and direct and indirect health care costs causes a nursing facility to exceed the reasonable price, a nursing facility may receive the higher per diem rate for administrative and general services.  Nursing facilities may also be paid a per diem rate for fair rental allowance of capital –related assets. 

Nursing facilities with better care and higher quality of residents will receive a supplemental Medicaid payment from the State Department.  The amount will be determined based on performance measures determined by the state board, and will be determined annually.  These payments are subject to the availability of funds.  Supplemental payments may also be made to nursing facilities with residents with moderate to severe mental health conditions, based on the availability of funds.  Additionally, with available funds, the State Department can make supplemental payments to offset the payment of provider fees. 

The per diem payment for direct and indirect health care services and administrative and general services must include an allowance for inflation.  The general fund share of the aggregate statewide average of the per diem rate net of patient payments is limited to an annual increase of 3%.  The state’s share of the reimbursement rate may be funded through the provider fees and federal funds.  If the aggregate statewide average of the per diem rate exceeds the general fund portion of the per diem rate, the amount of the statewide average per diem rate that exceeds the general fund will be paid as a supplemental payment, using the provider fees.  If the provider fees are not enough to cover the supplemental payment, the supplemental payment will be reduced proportionately to all providers.  However, if the provider fees are insufficient to fund the supplemental payments, the State Department may eliminate or reduce the supplemental payments. 

The law also outlines the reductions in the general fund portions of the per diem rates from 2010-2013. 

Nursing facilities must only report reasonable, necessary and patient-related costs for reimbursement.