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From Health Law Daily, December 20, 2013

$53 million adjustments to reimbursements rates for nursing home upheld, re-calculated

By Melissa Skinner, JD

On cross-appeals, a New York appellate court found the New York Department of Health’s (the Department) Medicaid reimbursement rate adjustment in light of provisions that reduced typical inflation rate factors and legislation that made proportional adjustments in certain years was warranted based on New York law. In turn, the methodology employed by the state, resulting in a $53 million reduction in Medicaid reimbursements, was proper. However, the court held that one adjustment was incorrectly listed as a miscellaneous adjustment and, therefore, the calculation of the rates required recalculation (Avenue Nursing Home and Rehabilitation Center v Shah, December 19, 2013, Garry, E).

Background. The New York Medicaid reimbursement rates are determined using several factors some of which are trended to inflation by application of a “roll factor.” The roll factor reflects the cumulative effect of inflation from a base year to the specific rate year. According to the provision of the New York Medicaid law, the Department must notify facilities of at least 60 days before annual rates go into effect, therefore, the department relies on estimations of the inflation rate as set by the federal consumer price index (CPI). At the end of the year the state makes a “banking adjustment” to account for the difference between the estimated inflation and the actual inflation. Between 2008 and 2010, the state legislature enacted several provisions to reduce the factors that determine the roll factor and to make proportional adjustments at time to ensure the aggregate increase in rates did not exceed or fall below $210 million. The petitioner, Avenue Nursing Home and Rehabilitation Center (Avenue Nursing Home), filed this matter to contest the adjustments to their 2010 Medicaid rates. The lower court annulled the Department’s calculation but continued to apply certain adjustments, including the banking adjustment. While Avenue Nursing Home appealed the court’s decision to apply the banking adjustment, the Department appealed the court’s calculation of the inflation factor.

Holding. The court found that the Avenue Nursing Home failed to meet its burden to show that the methods the Department used in applying adjustments and determining the reimbursement rates were not supported by the evidence. Notably, the court opined that the provisions enacted between 2008 and 2010 were efforts by the legislature “to reduce the costs associated with Medicaid reimbursement during a particularly trying economic period.” However, the court did find that the classification of the banking adjustment as a miscellaneous adjustment was incorrect under New York law.

The case number is 516272.

Attorneys: Cornelius D. Murray (O'Connell & Aronowitz, Albany) for Absolut Center for Nursing and Rehabilitation LLC, et al. Eric T. Schneiderman, Attorney General Office, for Nirav Shah, as the Commissioner of Health.

Companies: Absolut Center for Nursing and Rehabilitation LLC; Avenue Nursing Home and Rehabilitation Center; New York Department of Health

MainStory: TopStory MedicaidNews MedicaidPaymentNews SNFNews NewYorkNews

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