Montana Administrative Register Notice 37-989 No. 12   06/24/2022    
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BEFORE THE Department of Public

health and human services of the



In the matter of the amendment of ARM 37.40.307 pertaining to nursing facility reimbursement






TO: All Concerned Persons


1. On April 29, 2022, the Department of Public Health and Human Services published MAR Notice No. 37-989 pertaining to the public hearing on the proposed amendment of the above-stated rule at page 590 of the 2022 Montana Administrative Register, Issue Number 8.


2. The department has amended the above-stated rule as proposed.


3. The department has thoroughly considered the comments and testimony received. A summary of the comments received and the department's responses are as follows:


COMMENT #1: A commenter states the rates proposed are totally inadequate and do not consider cost increases due to the ongoing pandemic, the crisis-level workforce shortage, and greatly increased labor costs. The commenter also states the proposed rate fails to consider cost, quality, and access issues, which are factors that necessitate the need for a significant rate increase.


RESPONSE #1: ARM 37.40.307(2)(c) sets forth a non-exhaustive list of factors that may be considered in the establishment of the nursing facility reimbursement rate. Section 53-6-113, MCA, also sets forth a non-exhaustive list of factors, including the availability of appropriated funds the department may consider in establishing the rate. Actual cost of services and access to services are also factors the department may consider in establishing the rate.


Access to services was considered primarily by reviewing facility reports showing the percentage of beds paid by Medicaid and other payors, as well as any changes in the number of beds in facilities and the number of open facilities. Actual cost of services was considered primarily by reviewing provider reports submitted to the department and applying processes outlined in ARM 37.40.307.


In balancing the factors that may be considered, the department's primary consideration was the availability of appropriated funds. The department acknowledges the commenter's statements and the supporting materials provided, but believes the rate proposed is appropriate, given the factors that may be considered under the law, which includes availability of funds.


COMMENT #2: A commenter states the department provided two perfunctory spreadsheets with information that is not fully explained. The commenter also refers to 42 CFR 447.250 and states there is no information available regarding the data and methodology used by the department to determine that the proposed rates are reasonable and adequate to meet the costs that must be incurred by efficiently and economically operated facilities to provide services in conformity with state and federal laws, regulations, and quality and safety standards. The commenter notes the rule notice states that the department's primary consideration in establishing the proposed rates was the availability of appropriated funds.


RESPONSE #2: The information provided in the rule notice is sufficient to enable comment on the proposed rule. The rule notice specifically references how to access the publicly available Medicaid reimbursement rates for each facility. The quality component spreadsheet specifically explains that the 5-star ratings data was obtained from the previous four quarters (1st Quarter of 2022, 4th Quarter of 2021, and so on), with an average of those four quarterly data amounts used for the quality and staffing ratings scores used in the rate setting calculation.


Please also see the response to comment #1.


COMMENT #3: A commenter states analysis of Montana Medicaid rates by the department's own contractor, Myers & Stauffer, CPAs, dated May 4, 2022, indicates that the average Medicaid cost per day as of December 31, 2020 was $277.93 per day. The commenter states the department is proposing a rate that is $65.36 less than the average costs in December 2020 and indicates that increasing costs of labor alone has pushed nursing home costs far beyond the December 2020 costs.


RESPONSE #3: Please see the response to comment #1.


COMMENT #4: A commenter states the proposed rate does not comply with 53-6-113(3), MCA. The commenter acknowledges that state law authorizes the department to consider appropriate factors in setting rates but takes issue with the department looking primarily at the availability of appropriated funds. The commenter believes the proposed rates fail to take into account the factors required by federal law, allowed by state law, and necessary to support quality nursing home services. Lastly, the commenter states it appears the department may be using funding intended for nursing homes to fill in other holes in their budget.


RESPONSE #4: Please see the response to comment #1. The proposed rate fully utilizes funding appropriated by the legislature for nursing homes.


COMMENT #5: A commenter states that access to nursing home services is compromised as facilities throughout the state are turning away admissions because of the workforce shortage and high labor costs. For example, the commenter states that individuals requiring post-hospital care are remaining in hospitals longer because they are having trouble finding a skilled nursing facility to discharge to and that COVID-19 regulations and cases continue to adversely affect facility operations, occupancy, and staffing levels. The commenter also states that three skilled nursing facilities have closed due to financial issues, and they received notice of another closure coming in August 2022. The commenter states that one facility has delayed closure for the time being because they are receiving help from their local community and local hospital. The commenter also states that even with low occupancy and empty beds, many facilities are declining new admissions and that part of the solution to the access problem would be Medicaid rates that pay for the cost of care and the new reality of very high labor costs.


RESPONSE #5: The department acknowledges the commenter's statements that facility closures, regardless of the reason, adversely impact access to care for Montanans. The department will continue to evaluate barriers and solutions to successful service delivery. The department is committed to strong collaboration with stakeholders over the near and long-term to: (1) modernize skilled nursing facility operations, service delivery, and payment models; (2) ensure sufficient access to skilled nursing facilities that provide quality care to Montanans; and (3) promote the long-term sustainability of skilled nursing facilities in Montana, particularly in frontier regions. The department is working closely with stakeholders, as part of Montana's provider rate study and modernization efforts, to further evaluate sustainable data-driven solutions. Please also see the response to comment #1.


COMMENT #6: A commenter specifically asks the department to consider and evaluate: (1) the information and data the commenter attached; (2) cost increases experienced by facilities including labor costs; (3) the most recent cost reports filed by nursing facilities; (4) costs necessary to be in full compliance with federal regulations and to provide high quality services; and (5) access to nursing home services, and federal and state requirements related to nursing home rate setting.


RESPONSE #6: The department acknowledges and has considered the supporting documentation provided by the commenter and the recommendations outlined therein, but believes the rate as proposed is appropriate, as explained under the response to comment #1.


COMMENT #7:  A commenter expresses concern with the proposed rate and states that skilled nursing facilities have been inadequately reimbursed for too many years and immediate help is needed because facilities are closing due to lack of funding. The commenter provides an example of a county-owned facility that is being partially supported by their local taxpayers and fears future closure. The commenter states that due to rising costs of care, difficulty obtaining qualified staff and retaining them, cost of contract staff, increased regulations, and a low rate of reimbursement, it is increasingly more difficult for nursing facilities to accept Medicaid and stay in business.


RESPONSE #7: Please see the responses to comments #1 and #5.


COMMENT #8: A commenter states that while it may sound like a great idea to have people stay in their home and receive care, it is not realistic for everyone. The commenter states that even if services at home are available, they can be cost-prohibitive. The commenter states that skilled nursing facilities and assisted living facilities are usually the last resort for individuals who are ill and can no longer stay at home. The commenter states that many assisted living facilities no longer accept Medicaid because the rates compared to cost of care are too low resulting in limited access to individuals who are middle to low income, which is where skilled nursing facilities come in.


RESPONSE #8: Please see the response to comment #5.


COMMENT #9: A commenter states that with COVID-19 expenses being taken into consideration, the skilled nursing facility it operates has a daily cost of $551.42 per day per Medicaid resident. The commenter states the facility recently had to partially shut down due to lack of staffing and that fewer residents equates to less revenue, while high overhead costs remain. The commenter indicates that even with increases in staff pay and bonuses recruitment and retention of staff remains an ongoing issue. The commenter states that inflation has led to the cost of everything increasing with no end in sight and that a recent study facilitated by the Montana Health Care Association, indicated labor costs have increased over 40%, and the overall average cost per day of care has increased approximately 26%.


RESPONSE #9: Please see the responses to comments #1 and #5.


COMMENT #10: Several commenters state that the quality component to the rate ($3.59 per Medicaid day) is somewhat helpful, but the rate add-on still does not come close to assisting facilities in covering costs.


RESPONSE #10: Please see the responses to comments #1 and #5.


COMMENT #11: Several commenters state that the base rate of $209.34 per day per Medicaid resident does not even come close to covering skilled nursing facility costs. One commenter states that Medicaid reimbursement is an all-inclusive rate intended to cover not only room and board, but also ancillary costs such as personal hygiene items, continence products, OTC (over the counter) medications, wheelchairs/walkers, air beds, cushions, etc.

One of these commenters states that a facility in fiscal year 2018 had an average Medicaid cost of $282.76 per patient per day.


RESPONSE #11: Please see the responses to comments #1 and #5.


COMMENT #12: A commenter who has served Montanans since 1978, states facilities have been under reimbursed for too many years (since at least year 2000). The commenter indicates that rising costs associated with operations and staffing, governmental mandates, and increased regulation will only widen the gap and compound problems associated with low reimbursement rates. The commenter states rural communities will be negatively impacted by facility closures as individuals will have to relocate 25 to 50 plus miles to access needed care. In turn, this will harm individuals, families, communities, and businesses dependent on the services the skilled nursing facility provides and supports.


RESPONSE #12: Please see the responses to comments #1 and #5.


COMMENT #13: A commenter states that a fragile senior care environment exists due to inflation, low reimbursement rates, and the risk of facility closures. The commenter states that local access has the potential to be diminished if facilities close, which will force individuals to have to relocate from their communities and possibly even out-of-state.


RESPONSE #13: Please see the responses to comments #1 and #5.


COMMENT #14: Several commenters state that the proposed rate compromises access to nursing home services because facilities are turning away admissions and/or partially closing due to a workforce shortage and high labor costs. One of these commenters asks that the department reconsider the extraordinary costs nursing homes have endured.


RESPONSE #14: Please see the responses to comments #1 and #5.


COMMENT #15: A commenter who operates a skilled nursing facility states that the facility currently has eight agency staff, including two licensed practical nurses, one registered nurse, and five certified nursing assistants. The commenter states that in the past, the facility had an average of one or two agency staff. The commenter states that the facility has done everything they can to retain staff including raising wages and maintaining flexible scheduling.


RESPONSE #15: Please see the responses to comments #1 and #5.


COMMENT #16: A commenter states nursing facility administrators are under great pressure both financially and in dealing with the day-to-day activities of nursing homes. The commenter believes that without a significant rate increase many administrators will choose to leave this profession. The commenter states that research has shown changes in administrators lead to decreased quality of care of residents as well as increased deficiencies on future surveys.


RESPONSE #16: Please see the responses to comments #1 and #5.


COMMENT #17: A commenter references a 2018 lawsuit and settlement between the department and the Montana Health Care Association. The commenter expresses disappointment that a rate study has not occurred sooner, although the commenter expresses understanding of the impact COVID-19 had on timelines. The commenter indicates that had the rate study occurred earlier the resulting data could have been applied in setting the current nursing facility reimbursement rate.


RESPONSE #17: Please see the responses to comments #1 and #5.


COMMENT #18: A commenter states their organization owns and operates four nursing homes within Montana. The commenter also states the recent decisions regarding Medicaid rates are having a direct negative effect on the organization's ability to operate and care for residents within their facilities. Additionally, the commenter states the cost to care for those in need of nursing homes has dramatically increased over the years, but especially since the beginning of the COVID-19 pandemic. The commenter urges reevaluation of the proposed rates and budgets and for better understanding by the state of the long-lasting effects of such low reimbursement, coupled with incredibly high costs, that plague the industry.


RESPONSE #18: Please see the responses to comments #1 and #5.


            4. These rule amendments are effective July 1, 2022.



/s/ Robert Lishman                                      /s/ Adam Meier                                            

Robert Lishman                                           Adam Meier, Director

Rule Reviewer                                             Public Health and Human Services



Certified to the Secretary of State June 14, 2022.



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