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CMS Guidance on ODP’s Payment System
March 10, 2011

PCPA Executive Director George Kimes received clarification from the Centers for Medicare and Medicaid Services (CMS) regarding issues presented to them by the Behavioral Health/Intellectual Disability/Autism Coalition (previously the MH/MR Coalition) pertaining to providers’ issues with the Office of Developmental Program’s (ODP) Prospective Payment System. Pennsylvania’s Consolidated and Person/Family Directed Support Waivers, which receive federal funding, must assure the health and safety of persons served, financial accountability in the operation of the waiver, that providers are qualified to provide services, and waiver requirements are met.

While the state may develop the rate setting methodology to fund service providers, it must be consistently implemented. Per the CMS letter, “Federal law and regulations require that payments are consistent with efficiency, economy and quality of care and that they are sufficient to enlist enough providers”. Based on these requirements, CMS has determined that ODP may not implement retroactive rate adjustments (rate reductions) for services include in the service plan that are authorized and delivered, regardless of the state’s financial resources. Provider rates should be determined in advance of providing services and not reduced once the service is authorized and delivered.

If the state determines the rate methodology needs to be modified, it must submit an amendment of the waiver to CMS. These amendments could not be retroactive and would not be allowed to be implemented until the date of CMS’ approval of the amendment.

CMS is also aware that ODP is examining its outlier rates. In order to modify this process, the state must provide clear standards, policies and procedures for providers to understand the criteria used to adjust outlier rates. CMS indicates, “The state is permitted to do so as long as the approved waiver describes this process.”

PCPA will continue to work with the coalition, ODP, and CMS to resolve issues related to implementation of the Prospective Payment System and promote the system’s financial stability. The letter from CMS providing this clarification is available.

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