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Residential Treatment Facility Rate Review Advisory
December 21, 2004

In response to issues and questions raised by PCPA members who operate psychiatric residential treatment facilities, the association wrote to the Office of Medical Assistance Programs (OMAP). The leadership of OMAP responded by scheduling a conference call between PCPA and key leadership and staff of OMAP, Bureau of Fee for Service, Division of Rate Setting. Following is the information and advice provided by OMAP.

Rate Setting and Rate Review

  • OMAP conducts rate setting and rate review for new and existing programs on a case-by- case basis.
  • New programs must have construction and licensure completed (including the results of the site visit by licensing staff) prior to submitting an enrollment package, service description, and rate request.
  • New facility rate setting is completed as quickly as possible with a limited staff of two assigned to all behavioral health rate setting.
  • It is recommended that new programs attempt to anticipate when construction, renovation, and licensure will be completed and request a rate setting process be started on the expected date of full readiness.
  • After commencement of Residential Treatment Facility (RTF) services and a full fiscal year has elapsed, an audit may be conducted by the Bureau of Financial Operations to affirm or adjust the initial rate.
  • Existing programs must submit an annual cost report and may be audited, but this does not necessarily lead to a rate review or rate revision. However, this fiscal history is part of the documentation used in determining if a requested rate increase should be considered for review.
  • While OMAP develops an annual work plan for program audits, there is no regulatory standard calling for the Department of Public Welfare to review and revise rates on a regular or routine basis.
  • Programs who conclude that a rate review and adjustment is needed must request in writing that a cost/rate review be conducted. Such requests should be sent to:

Mr. William Miller, Director
Department of Public Welfare
Office of Medical Assistance Programs
Bureau of Fee for Service, Division of Rate Setting
1401 North 7th Street,
3rd Floor Bertolino Building
Harrisburg, PA 17102

Annual Cost Reports
OMAP regulations require that RTF programs file an annual cost report every year in both fee-for-service and HealthChoices regions. PCPA was informed that some programs have not filed these reports. All members are encouraged to prepare and submit these reports. Cost reporting will not result in a rate review for individual providers, but is important for regulatory compliance and enabling OMAP to track cost trends. Submission of this report does not routinely result in a review or change in rates.

Allowable Cost Determination
OMAP determines allowable program costs by applying the standards put forth by Medicare in the Health Insurance Manual, publication 15 (Pub-15). This information can be obtained free at the Centers for Medicare & Medicaid Services web site (www.cms.hhs.gov/manuals/cmsindex.asp). Once at this site scroll to Publication 15, Provider Reimbursement Manual (PRM), which is then downloadable to your computer (it is in two parts).

Allowable Cost Discrepancies
Allowable cost discrepancies have been reported to PCPA from time to time. These are situations in which a previously allowable program cost has been deemed non-allowable or where providers discover that a cost seems to be allowed in the rate of another provider program, but not their program. OMAP works to apply a consistent standard to all programs across the commonwealth. OMAP requested that PCPA provide examples of cost allocation discrepancies to enable them to review and address apparent variations in rate determinations. PCPA requests that members bring any perceived discrepancy to its attention by contacting Connell O'Brien.

Future Activity
PCPA will:

  • Explore the process for promoting the development of a regulatory requirement calling for the routine review and revision of RTF rates;
  • Continue to track and provide input to the Department of Public Welfare in regards to the concept of relocating various behavioral health Medical Assistance (MA) activities from OMAP to the Office of Mental Health and Substance Abuse Services;
  • Monitor and provide recommendations regarding the department’s MA realignment efforts to increase the integration of behavioral health services with child welfare and juvenile justice and maximize the use of MA as the payer for these services; and
  • Inform OMAP of occurrences of perceived discrepancies in allowable cost determinations to facilitate clarification and resolution of these issues.

Contact Connell O’Brien at PCPA with any questions.

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