SubPart 86-5 - Long-term Home Health Care Programs

Effective Date: 
Wednesday, March 11, 1992
Doc Status: 
Complete
Statutory Authority: 
Public Health Law, Sections 3612(4), 3614

Section 86-5.1 - Definitions

Section 86-5.1 Definitions. As used in this Subpart:

(a) The term long-term home health care program (LTHHCP) shall mean an organization defined in article 36 of the Public Health Law possessing a valid operating certificate or valid certificate of approval issued by the State Commissioner of Health to operate a LTHHCP.

(b) The term AIDS Home Care Program (AHCP) shall mean a LTHHCP possessing a valid operating certificate or valid certificate of approval issued by the State Commissioner of Health to operate an AHCP.

(c) The term related organization shall be defined as any entity which the LTHHCP is in control of or is controlled by, either directly or indirectly, or where an association of material interest exists in an entity which provides goods and/or services to the LTHHCP, or any entity which is controlled directly or indirectly by the immediate family of the operator. Immediate family shall include each parent, child, spouse, brother, sister, first cousin, aunt and uncle, whether such relationship arises by reason of birth, marriage or adoption.
 

Effective Date: 
Monday, November 6, 1989
Doc Status: 
Complete

Section 86-5.2 - Financial and statistical data required

86-5.2 Financial and statistical data required.

(a) Each LTHHCP shall complete and file, with the New York State Department of Health and/or its agent, annual financial and statistical report forms supplied by the department and/or its agent. LTHHCP certified for title XVIII of the Federal Social Security Act (Medicare) shall use the same fiscal year for title XIX of the Federal Social Security Act (Medicaid) as is used for title XVIII. All LTHHCP's must report their operations from January 1, 1978 forward on a calendar-year basis. For a LTHHCP also certified as an AHCP, a combined annual financial and statistical report shall be submitted for both programs.

(b) Based on the financial report, the facility will be required to convert all allowable costs to a visit/hourly cost basis for the services it will be providing.

(c) All required financial and statistical reports shall be submitted to the department. Such reports shall indicate the time period within which such report shall be filed.

(d) In the event an LTHHCP fails to file the required financial and statistical reports on or before the due dates, or as the same may be extended by the department, the State Commissioner of Health shall reduce the current rate paid by state governmental agencies by two percent for a period beginning on the first day of the caledar month following the due date of the required reports and continuing until the last day of the calendar month in which the required reports are filed.

(e) In the event that any information or data which an LTHHCP has submitted to the State Department of Health on required reports, budgets or appeals for rate revisions, intended for use in establishing rates, is inaccurate or incorrect, whether by reason of subsequent events or otherwise, such agency shall forthwith submit to the department a correction of such information or data which meets the same certification requirements as the document being corrected. Failure to do so shall subject the LTHHCP to the provisions of subdivision (d) of this section.

(f) A cost report shall be filed in accordance with this section by each new program with budget based rates for the first six-month period during which the program has achieved 75 percent of the approved patient case load. This report shall be filed and properly certified within 120 days following the end of the six-month period covered by the report. All new programs shall follow the requirements of subdivision (a) of this section, and complete and file a report at the end of the first full calendar year after admission of its first patient. Facilities that have filed cost reports in accordance with the provisions of this subdivision shall be deemed to have adequate cost experience for the purpose of establishing a prospective cost-based rate.

(g) If the financial and statistical reports required by this Subpart are determined to be incomplete, inaccurate or incorrect, the LTHHCP will have 30 days from date of receipt of notification to provide the corrected or additional data. Failure to file the corrected or additional data within 30 days, or within such period as extended by the Commissioner, will result in application of subdivision (d) of this section.

(h) Each LTHHCP shall file with the New York State Department of Health a complete copy of the Department of the Treasury, Internal Revenue Service Form 990, for that facility. The Form 990 shall be submitted to the department no later than 30 days following the annual filing with the Internal Revenue Service. Failure to submit the Form 990 shall result in application of the provisions set forth in subdivision (d) of this section.
 

Effective Date: 
Thursday, February 25, 1993
Doc Status: 
Complete

Section 86-5.3 - Patient assessment

86-5.3 Patient assessment.

(a) Long-term home health care program participation. The direct costs for patient assessments and reassessments to the LTHHCP shall be included in the administrative costs of the LTHHCP and shall be included in the program's conversion of its cost report to an hourly or visit cost basis. These costs shall be limited to LTHHCP staff participation in the patient assessment.

(b) The cost of hospital/RHCF staff participating in patient assessment and discharge planning is included in the Medicaid rate of the facility and may not be added to the costs of the long-term home health care program.

(c) The cost of staff of the local social services district may not be included in the cost of the patient assessment.

(d) Physician participation. (1) If the patient is in a hospital/RHCF and the physician is not on the staff of that facility, reimbursement for the physician's initial assessment is included in his visit fee in accordance with the Medicaid fee schedule.

(2) If the patient is in the community:

(i) and the assessment takes place in a clinic, reimbursement for the initial assessment is included in the clinic rate for medical or social care provided;

(ii) and the assessment takes place in the home, reimbursement for the initial assessment is included in the physician's home visit fee;

(iii) and the assessment takes place in the nonfacility-related physician's office, reimbursement for the initial assessment is included in the physician's office visit fee.

(e) Initial assessments for Medicaid patients shall be conducted only with authorization of the local social services district unless arrangements for patient admission have been made pursuant to section 3616 of the State Public Health Law.

(f) If an assessment of the person's needs demonstrates that he/she requires services the payment for which would exceed the monthly maximum, but it can be reasonably anticipated that total expenditures for required services for such person will not exceed such maximum calculated over a one-year period, the social services official may authorize payment for such services.

(g) If a change in the patient's level of care occurs between required patient assessment periods, the LTHHCP must formally notify the local social services district with justification for change. A new plan of care must be submitted in writing to the local social services district for their review and approval.

(h) If the patient requires unanticipated services but not a change of level of care between assessment periods, the program may provide such services if:

(1) the patient's budget is below the 75-percent ceiling and/or there are accrued savings and the costs of the needed services are equal to or less than 10 percent of the current budget for the services provided by the program; or

(2) the additional services exceed the 75-percent ceiling and there is not an accrued savings, providing that the additional cost does not exceed the patient's budget by more than 10 percent. This contingency provision may only be used when it can be reasonably anticipated that total expenditures for required services for such person will not exceed such maximum calculated over a one-year period.
 

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Section 86-5.4 - Generally accepted accounting principles

86-5.4 Generally accepted accounting principles. The completion of the financial and statistical report forms shall be in accordance with generally accepted accounting principles as applied to the LTHHCP, unless the reporting instructions authorize specific variation in such principles.

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Section 86-5.5 - Accountant's certification

86-5.5 Accountant's certification. The financial and statistical reports shall be certified by an independent licensed public account or an independent certified public accountant.

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Section 86-5.6 - Certification by operator or officer

86-5.6 Certification by operator or officer.

(a) The financial and statistical reports shall be certified by the operator of a proprietary medical facility, an officer of a voluntary medical facility or the public official responsible for the operation of a public medical facility.

(b) The form of the certification required in subdivision (a) of this section shall be as prescribed in the annual fiscal and statistical report forms provided by the State Commissioner of Health.
 

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Section 86-5.7 - Audits

86-5.7 Audits.

(a) All fiscal and statistical records and reports shall be subject to audit. In this respect, any rate of payment certified by the State Commissioner of Health based on the initial submission of base-year data and reports will be construed to represent a provisional rate until such audit is performed and completed, at which time such rate or adjusted rate will be construed to represent the final rate. In addition to verifying costs as reports, this audit will determine if the cost per visit or hour presented by the provider have, in fact, been those used in monthly chart billings.

(b) Subsequent to the filing of required fiscal and statistical reports, field audits shall be conducted of the records of LTHHCP in a time and manner to be determined by the department.

(c) The required fiscal and statistical reports shall be subject to audit for a period of six years from the date of their filing with the department. This limitation shall not apply to situations in which fraud may be involved.

(d) Upon completion of the audit, the LTHHCP shall be afforded a closing conference. The LTHHCP may appear in person or by anyone authorized in writing to act on behalf of the LTHHCP. The LTHHCP shall be afforded an opportunity at such conference to produce additional documentation in support of any modifications requested in the audit.

(e) The LTHHCP shall be provided with the final audit report, the rate computation sheet and any resulting revision of the rate of reimbursement, which shall be final unless, within 30 days of receipt of the final audit report, the long-term home health care program initiates a bureau review of such final audit report by notifying the Division of Health Care Financing, by registered or certified mail, detailing the specific items of the audit report with which the provider disagrees and such other material as the provider wishes to submit in its behalf, and forwarding all material documentation in support of the LTHHCP's position.

(f) The LTHHCP shall be notified in writing of the determination of the controverted items of the final audit report, including a statement of the reasons for such adjustments and the appropriate citation to applicable law, regulation or policy. The rate as adjusted in accordance with the determination of the bureau review shall be final, except that the LTHHCP may, within 30 days of receipt of the determination of the bureau review, initiate a hearing to refute those items of the audit report adverse to the interests of the LTHHCP presenting a factual issue by serving on the commissioner, by certified or registered mail, a notice containing a statement of the legal authority and jurisdiction under which the hearing should be held, a reference to the particular sections of the statutes and rules involved, and a statement of the controverted items of the audit report and bureau determination, together with copies of any documentation relied on by the LTHHCP in support of its position.

(1) Upon receipt of such notice, the commissioner shall:

(i) designate a hearing officer to hear and recommend;

(ii) establish a time and place for such hearing; and

(iii) notify the LTHHCP of the time and place of such hearing at least 15 days prior thereto. The issues and documentation presented by the LTHHCP at such hearing shall be limited to the factual issues and documentation presented at the bureau review.

(2) The final audit report shall be presumptive evidence of its content. The burden of proof at any such hearing shall be upon the LTHHCP to prove by substantial evidence that the items therein contained are incorrect.

(3) The hearing shall be conducted in conformity with section 12-a of the Public Health Law and the State Administrative Procedure Act.

(4) At the conclusion of the hearing, the LTHHCP may submit memoranda on any legal issues which it deems relevant to the proceeding. Such memoranda shall become part of the official record of hearing.

(g) Rate revisions resulting from the procedure set forth in this section shall be made retroactive to the period or periods during which the rates based on the periods audited were established.
 

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Section 86-5.8 - Patient visits/hourly rate

86-5.8 Patient visits/hourly rate.

(a) A patient visit or an hourly rate are the units of measure by which an LTHHCP may bill for services provided.

(b) Nursing, therapeutic and related services will be billed per visit.

(c) Home health aides, personal care aides, homemaker and housekeeper services will be billed on an hourly basis.

(d) The hourly/visit rate will include an amount for the indirect costs of the LTHHCP as defined in section 86-5.17 of this Subpart.

(e) No provider of an LTHHCP shall establish charges for such program in excess of the higher of those rates established pursuant to section 3614 of the Public Health Law and rules and regulations adopted pursuant to section 3612 of the Public Health Law (Medicaid) or subchapter XVIII of the Federal Social Security Act (Medicare).
 

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Section 86-5.9 - Determining patient eligibility

86-5.9 Determining patient eligibility.

(a) At the time of the initial assessment, and at the time of each subsequent assessment performed for a long-term home health care program, or more often if the person's need requires it, the local social services district shall establish a monthly budget in accordance with which payment shall be authorized.

(1) The budget shall include all of the services to be provided in accordance with the coordinated health plan of care by the long-term home health care program.

(2) Total monthly expenditures made for a long-term home health care program for an individual who is the sole member of his/her household in the program shall not exceed a maximum of 75 percent of the average monthly rates payable for nursing home services or health-related services in an intermediate care facility in the social services district, whichever is the appropriate level for the individual. Total monthly expenditures made for a long-term home health care program for two members of the same household shall not exceed a maximum of 75 percent of the average monthly rates payable for both members of the household for nursing home services or health-related services in an intermediate care facility in the social services district, whichever is the appropriate level for each person.

(3) When the monthly budget prepared for an individual who is the sole member of his/her household in the program is for an amount less than 75 percent of monthly rates payable for nursing home services or health-related services, a "credit" may be accrued in behalf of the individual. If a continuing assessment of the individual's needs demonstrates that he/she requires increased services, the local social services department may authorize any amount accrued during the previous 12 months over the 75-percent maximum. When the monthly budget prepared for two members of the same household is for an amount less than 75 percent of monthly rates payable for nursing home services or health-related services, "credit" may be accrued in behalf of the household. If a continuing assessment of the household's needs demonstrates that he/she/they require increased services, the local social services department may authorize any amount accrued during the previous 12 months over the 75-percent maximum.

(4) When the monthly budget prepared for an individual or a household is for an amount less than 75 percent of monthly rates payable for nursing home services or health-related services, and the continuing assessment of the person's needs demonstrates that he/she/they require increased services in an amount less than 10 percent of the prepared monthly budget, but totaling no more than 75 percent of the monthly rates payable for nursing home services or health-related services, the long-term home health care program may provide such services without prior approval of the local department of social services.

(5) If an assessment of the person's or household's needs demonstrates that he/she/they require services, the payment for which would exceed such monthly maximum, but it can be reasonably anticipated that total expenditures for required services for such person or household will not exceed such maximum calculated over a one-year period, the social services official may authorize payment for such services.

(b) If a joint assessment by the local social services district and the provider of services indicates that the maximum expenditure permitted under paragraph (4) of this subdivision is not sufficient to provide long-term home health care program (LTHHCP) services to individuals with special needs, social services officials may authorize maximum monthly expenditures for such individuals, not to exceed 100 percent of the average skilled nursing or health-related facility rate established for that district (see 367-c(3-a) of the Social Services Law). In addition, if a continuing assessment of a person with special needs demonstrates that he/she requires increased services, a social services official may authorize the expenditure of any amount which has accrued under this section during the previous 12 months as a result of the expenditures for a person participating in the LTHHCP not having exceeded such maximum. If an assessment of a person with special needs demonstrates that he/she requires increased services, the payment for which would exceed such monthly maximum, the social services official may authorize payment for such services if it can reasonably be anticipated that the total expenditures for the required services for such a person will not exceed the maximum calculated over a one-year period.

(1) As used in this subdivision, the term person with special needs means a person for whom a plan of care has been developed (see subdivision (2) of section 367-c of the Social Services Law): (i) who needs care including but not limited to respiratory therapy, tube feeding, decubitus care or insulin therapy which cannot be appropriately provided by a provider of personal care services as defined in section 505.14(d) of this Part;

(ii) who has one or more of the following conditions: a mental disability (see section 1.03 of the Mental Hygiene Law), acquired immune deficiency syndrome, or dementias, including Alzheimer's disease.

(2) The number of persons with special needs for whom a social services official may authorize payment for services pursuant to this paragraph is limited to 25 percent of the total number of LTHHCP clients which a social services district is authorized to serve, provided that in any district containing a city having a population of one million or more, such limit is 15 percent.

(3) In the event that a district reaches the limitation specified in this subdivision, the social services official may, upon approval by the social services commissioner, authorize payment for services pursuant to this subdivision for additional persons with special needs.

(4) The social services official must seek approval for authorization to serve additional persons with special needs by submitting to the State Commissioner of Social Services a written request which demonstrates that the provisions of this paragraph have

(i) met the needs of individuals who could not otherwise be served through the LTHHCP;

(ii) diverted clients from residential health care facility admission; or

(iii) permitted the admission of clients on alternate care status into the LTHHCP.

(c) The provisions of this section shall not apply to patients diagnosed with Acquired Immune Deficiency Syndrome as defined by ICD-9 codes 042, 043 and 044 if such patient is receiving services through a designated AHCP.
 

Effective Date: 
Monday, November 6, 1989
Doc Status: 
Complete

Section 86-5.10 - Computation of average monthly nursing home rates

86-5.10 Computation of average monthly nursing home rates.

(a) Computation of average monthly nursing home service (SNF) or health related services in an intermediate care facility (HRF) rates used to establish patient eligibility caps pursuant to section 86-5.9 of this Subpart shall be based on average Medicaid rates for each social services district for SNF or HRF levels of care weighted by patient days.

(b) Average monthly rates calculated pursuant to subdivision (a) of this section shall be based on skilled nursing facility or health related facility rates in effect on January 1, 1992 trended forward to the rate year by the trend factor for the facilities in each social service district. Such trend factors shall be established pursuant to section 86-2.12 of this Part. The average monthly rates established pursuant to subdivision (a) of this section will be adjusted annually utilizing the latest January 1, 1992 rate available, including any rate adjustments made prior to the calculation of the patient eligibility caps for the following year. No other adjustments will be made to the average monthly rates established pursuant to subdivision (a) of this section.
 

Effective Date: 
Wednesday, December 27, 1995
Doc Status: 
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Section 86-5.11 - Computation of individual hourly or per-visit service rate

86-5.11 Computation of individual hourly or per-visit service rate.

(a) Individual service rates, except for rates established pursuant to section 86-1.46(b) of this Subpart, shall be computed on the basis of allowable fiscal and statistical data submitted by the LTHHCP. The computed rates shall be all-inclusive rates, taking into consideration total allowable costs.

(b) To the allowable basic rate based on actual LTHHCP cost, there shall be added a factor to adjust allowable costs during the effective period of the cost-based reimbursement rate. Such adjustments shall not be made to rates based on budgeted costs. This adjustment shall be determined as follows:

(1) The elements of a long-term home health care program's cost shall be weighted based upon data for the following categories:

(i) salaries;

(ii) employee health and welfare expense;

(iii) nonpayroll administrative and general expense;

(iv) nonpayroll housekeeping and maintenance expense; and

(v) nonpayroll professional care expense.

(2) Each weight shall be adjusted by the appropriate price index for each category noted in paragraph (1) of this subdivision.

(3) Geographic differentials may be established, where appropriate.
 

Effective Date: 
Monday, November 6, 1989
Doc Status: 
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Section 86-5.12 - Cost guidelines for reimbursement purposes

86-5.12 Cost guidelines for reimbursement purposes.

(a) For the purpose of promulgating cost-based rates or rates based on budget, the department shall establish regional guidelines to be applied to the rate for each service to be provided. The cost guidelines shall be computed on a regional basis and based on the most recent annual cost data available to the department. For this purpose, LTHHCPs shall be grouped on the following basis:

(1) Downstate: Putnam, Rockland, Westchester, Nassau, Suffolk, Kings, New York, Richmond, Queens and Bronx Counties.

(2) Upstate: All other New York State counties.

(b) The cost guidelines shall be established by:

(1) calculating a group average cost;

(2) centering the cost of any provider whose costs are not between 75 percent and 125 percent of the group average by raising or lowering the provider's cost, as appropriate, to the 75-percent and 125-percent limits;

(3) recalculating the group average; and

(4) multiplying the recalculated group average by 110 percent.

(c)(1) For the purposes of review of initial rates based on budget, the cost guidelines shall be 115 percent of the recalculated group average cost.

(2) If the rate based on cost or budget is at or below the cost guideline, such a rate shall be promulgated.

(3) If the initial rate based on budget is in excess of the cost guideline, the department shall contact the LTHHCP prior to promulgation of the initial rate and determine if the rate is justified based on a written submission by the LTHHCP. If the department determines that the initial rate based on budget in excess of the guidelines is justified, the department shall promulgate such a rate for the applicable rate period. If the department determines that the initial rate based on budget in excess of the cost guideline is not justified, a rate set at the guideline amount shall be promulgated for the applicable rate period.

(d)(1)(i) If the rate based on cost is in excess of the cost guideline, a rate set at the actual cost shall be promulgated. For each rate year, within 90 days of notification of the rate, the LTHHCP may submit written documentation justifying a rate in excess of the cost guideline. If a program whose cost-based rates exceed the cost guideline fails to submit written documentation justifying the rate within 90 days of notification of the rate, that program's rates which exceed the guideline shall revert to the guideline level on a retrospective basis.

(ii) The written documentation submitted by a LTHHCP may indicate what conditions have resulted in a rate in excess of the cost guideline or describe what steps the LTHHCP shall take in pursuing a less expensive alternative way of delivering the service, or both.

(2) If the department determines that the written documentation justifies a rate based on cost in excess of the guideline, such a rate shall remain at the actual cost amount for the applicable rate year only.

(3) If the department determines that the written documentation does not justify a rate based on cost in excess of the guideline amount, the promulgated rate shall revert to the guideline amount on a retrospective basis.

(4)(i) If the written documentation outlines steps to be taken by the LTHHCP in pursuing a less expensive alternative way of delivering a service, the LTHHCP shall be required to submit an application for prospective revision of a rate. The promulgated rate shall remain as it is promulgated pursuant to this subdivision until the rate is revised pursuant to the department's written approval of the LTHHCP's application for revision of the rate.

(ii) A justification which outlines a plan of action to be taken by the LTHHCP must contain a time frame within which that plan of action shall be implemented. The LTHHCP can use such a justification only once and cannot use such a justification to justify rates in excess of the cost guideline in rate years which do not fall within the specified time frame for implementation of the plan of action.

(5) In making determinations pursuant to this subdivision, the commissioner shall consider generally applicable factors, including but not limited to:

(i) allowable costs;

(ii) geographical differences in elements of cost;

(iii) geographical differences in availability and cost of personal services;

(iv) economic factors in the area in which the LTHHCP is located;

(v) factors associated with program capacity, patient census, and service to special populations; and

(vi) the need for incentives to improve services and institute economies.

(e) The department shall establish a cap on reimbursable base year administrative and general costs equal to 30% of total reimbursable base year operational costs of a provider of services, excluding a provider of services reimbursed on an initial budget basis, and a new provider, excluding changes in ownership or changes in name, who begins operations in the year prior to the year which is used as a base year in determining rates of payment. The cap on administrative and general costs shall be applied after the application of the cost guidelines described in this section.

Effective Date: 
Tuesday, December 20, 1994
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Section 86-5.13 - Adjustments to provisional rates based on errors

86-5.13 Adjustments to provisional rates based on errors.

(a) Errors resulting from submission of fiscal and statistical information by a LTHHCP may be corrected if brought to the attention of the State Commissioner of Health within 120 days of receipt of the commissioner's initial rate computation sheets. Errors on the part of the State Department of Health resulting from the rate computation process may be corrected if brought to the attention of the commissioner within 120 days of receipt of the commissioner's initial rate computation sheet. Subsequent errors on the part of the State Department of Health resulting from the revision of a rate may be corrected if brought to the attention of the commissioner within 30 days of receipt of the commissioner's revised rate computation sheet. In no event, however, shall a facility have less than 120 days from receipt of the initial rate computation sheets to bring errors to the attention of the commissioner.

(b) Rate appeals pursuant to this section, if not commenced within 120 days of receipt of the commissioner's initial rate computation sheet, may be initiated at time of audit. Such rate appeals shall be recognized only to the extent that they are based upon errors in the cost and/or statistical data submitted by the LTHHCP or, in the case of a governmental facility, by the sponsor government, or errors made by the Department of Health.
 

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Section 86-5.14 - Revisions in certified rates

86-5.14 Revisions in certified rates.

(a) The State Commissioner of Health may consider only those applications for revisions of certified rates which are based on:

(1) six-month cost reports filed pursuant to subdivision (e) of section 86-5.2 of this Subpart. Such rate shall become effective on the first day of the six-month period referred to in section 86-5.2(f) of this Subpart;

(2) errors made by the department in the rate calculation process and errors in data submitted by a medical facility which have been brought to the attention of the commissioner within the time limits prescribed in section 86-5.13 of this Subpart;

(3) significant increases in the overall operating costs of the LTHHCP resulting from the implementation of additional programs, staff or services specifically mandated for the program by the commissioner;

(4) requests for waivers of any provisions of this Subpart for which waivers may be granted by the commissioner as prescribed in specific sections; and

(5) changes in the method of providing services which result in a lower overall cost for the services provided.

(b) An application by a LTHHCP for review of a certified rate is to be submitted on forms provided by the department and shall set forth the basis for the appeal and issues of fact. Documentation shall accompany the application, where appropriate, and the department may request such additional documentation as determined necessary. An application based on error shall be submitted within the time limit set forth in section 86-5.13 of this Subpart. The commissioner shall act upon properly documented applications for rate appeals within one year of the end of the 120-day period referred to in section 86-5.13(a) of this Subpart or the receipt of the applications, whichever date is later. In the event the department requests additional documentation, the one-year time limit shall be extended for a mutually agreed upon time period for receipt of the documentation established by the commissioner in conjunction with the LTHHCP. The deadline will be set according to the nature and quantity of documentation necessary.

(1) The affirmation or revision of the rate upon such staff review shall be final, unless within 30 days of its receipt a hearing is requested, by registered or certified mail, before a rate review officer on forms supplied by the department. The request shall contain a statement of the factual issues to be resolved. The facility may submit memoranda on legal issues which it deems relevant to the appeal.

(2) Where the rate review officer determines that there is not factual issue, the request for a hearing shall be denied and the facility notified of such determination. No administrative appeals shall be available from this determination. The rate review officer, where he/she determines that there is factual issue, shall issue a notice of hearing establishing the date, time and place of the hearing and setting forth the factual issues as determined by the officer. The hearing shall be held in conformity with the provisions of Public Health Law, section 12-a, and the State Administrative Procedure Act.

(3) The recommendation of the rate review officer shall be submitted to the Commissioner of Health for final approval or disapproval and recertification of the rate where appropriate.

(c) Any modified rate certified under paragraphs (3) and (5) of subdivision (a) of this section shall be effective on the first day of the month in which the respective change is operational.

(d) In reviewing appeals for revisions to certified rates, the commissioner may refuse to accept or consider an appeal from a LTHHCP:

(1) providing an unacceptable level of care as determined after review by the State Hospital Review and Planning Council;

(2) operated by the same management when it is determined by the department that this management is providing an unacceptable level of care as determined after review by the State Hospital Review and Planning Council in one of its facilities;

(3) where it has been determined by the commissioner that the operation is being conducted by a person or persons not properly established in accordance with the Public Health Law; or

(4) where a fine or penalty has been imposed on the facility and such fine or penalty has not been paid.

In such instances, the provisions of subdivision (c) of this section shall not be effective until the date the appeal is accepted by the commissioner.

(e) Any LTHHCP determined after review by the State Hospital Review and Planning Council to be providing an unacceptable level of care shall have its current reimbursement rates reduced by 10 percent as of the first day of the month following 30 days after the date of the determination. This rate reduction shall remain in effect for a one-month period or until the first day of the month following 30 days after a determination that the level of care has been approved to an acceptable level, whichever is longer. Such reductions shall be in addition to any revision of rates based on audit exceptions.

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Section 86-5.15 - Rates for LTHHCP without adequate cost experience

86-5.15 Rates for LTHHCP without adequate coat experience.

(a) This subdivision shall apply where the fiscal and statistical data of the facility are unavailable through no fault of the provider or its agents, and due to circumstances beyond its control, or where there is a new facility without adequate cost experience as set forth in section 86-5.2 of this Subpart.

(b) The rates certified for such LTHHCH's as set forth in subdivision (a) of this section shall be determined on the basis of generally applicable factors, including but not limited to the following:

(1) cost guidelines as defined in section 86-5.12 of this Subpart; and

(2) allowable costs as defined in section 86-5.17 of this Subpart.

(c) All rates of reimbursement certified pursuant to this section will be subject to audit pursuant to section 86-5.7 of this Subpart.
 

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Section 86-5.16 - Less expensive alternatives

86-5.16 Less expensive alternatives. Reimbursement for the cost of providing services may be the lesser of the actual costs incurred or those costs which could reasonably be anticipated if such services had been provided by operation of joint central services or use of facilities or services which could have served effective alternatives or substitutes for the whole or any part of such services.

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Section 86-5.17 - Allowable costs

86-5.17 Allowable costs.

(a) To be considered as allowable in determining reimbursement rates, costs shall be properly chargeable to necessary patient care. Except as otherwise provided in this Subpart, or in accordance with specific determination by the commissioner, allowable costs shall be determined by the application of the principles of reimbursement developed for determining payments under title XVIII of the Federal Social Security Act (Medicare) program.

(b) Allowable costs shall include a monetary value assigned to services provided by religious orders and for services rendered by an owner and operator of a LTHHCP.

(c) Allowable costs shall not include amounts in excess of reasonable or maximum title XVIII of the Federal Social Security Act (Medicare) costs or in excess of customary charges to the general public. This provision shall not apply to services furnished by public providers free of charge or at a nominal fee.

(d) Allowable costs shall not include expenses or portions of expenses reported by individual LTHHCP which are determined by the commissioner not to be reasonably related to the efficient production of long-term home health care services because of either the nature or the amount of the particular item.

(e) Allowable costs shall not include costs not properly related to patient care or treatment which principally afford diversion, entertainment or amusement to owners, operators or employees of LTHHCPs.

(f) Allowable costs shall not include any interest charged related to rate determination or penalty imposed by governmental agencies or courts, and the costs of policies obtained solely to insure against the imposition of such a penalty.

(g) Allowable costs shall not include costs of contributions or other payments to political parties, candidates or organizations.

(h) Allowable costs shall include only that portion of the dues paid to any professional association which has been demonstrated, to the satisfaction of the commissioner, to be allocable to expenditures other than for public relations advertising or political contributions.

(i) Allowable costs shall not include the interest paid to a lender related through control, ownership, affiliation, or personal relationship to the borrower, except in instances where the prior approval of the Commissioner of Health has been obtained.

(j) Allowable costs shall be reduced by income earned for Medicare Part B eligible services.

(k) Allowable costs shall include those costs allocated to the LTHHCP from a related organization to the extent that:

(1) those costs are reasonably related to the efficient production of long-term home health care services; and

(2) the bases of allocation of such costs are consistent with regulations applicable to the cost reporting of the related organization.
 

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Section 86-5.18 - Recoveries of expense

86-5.18 Recoveries of expense.

(a) Operating costs shall be reduced by the costs of services and activities which are not properly chargeable to patient care. In the event that the Commissioner of Health determines that it is not practical to establish the costs of such services and activities, the income derived therefrom may be substituted for costs of these services and activities. Examples of activities and services covered by this provision include, but are not limited to, the following:

(1) discount on purchases;

(2) tuitions and other payments for educational service, and other services not directly related to LTHHCP services; and

(3) lease of office and other space to concessionaires providing services not related to LTHHCP service.

(b) Operating costs shall be reduced by the actual revenue received from services and activities which are provided to employees at less than cost, as a form of fringe benefit. Examples of activities and services covered by this provision include, but are not limited to, drugs and supplies sold or provided to employees.
 

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Section 86-5.19 - Depreciation for voluntary and public LTHHCP

86-5.19 Depreciation for voluntary and public LTHHCP.

(a) Reported depreciation based on approved historical cost of buildings, fixed equipment and capital improvements made thereto is recognized as a proper element of cost for voluntary and public LTHHCPs. Useful lives shall be the higher of the reported useful life or those useful lives from Estimated Useful Lives of Depreciable Hospital Assets, 1983 edition. Copies of this publication are available from the American Hospital Association, 840 North Lake Shore Drive, Chicago, IL 60611, and a copy is available for inspection and copying at the offices of the records access officer of the Department of Health, Corning Tower, Empire State Plaza, Albany, NY 12237.

(b) In the computation of the rates effective for voluntary LTHHCPs, depreciation shall be included on a straight-line method on plant and nonmovable equipment. Depreciation shall be funded unless the Commissioner of Health shall have determined, upon application by the LTHHCP, and after inviting written comments from interested parties, that the requested waiver of the requirements for funding is a matter of public interest and necessity. In instances where funding is required, such fund may be used only for capital expenditures with approval as required or for the amortization of capital indebtedness. Funding for plant and fixed equipment shall mean that the transfer of monies to the funded accounts shall occur by the end of the fiscal period in which the depreciation is recorded. Board-designated funds and the accrual of liabilities to the funded depreciation accounts (due to/from accounts) shall not be recognized as funding of depreciation. Deposits to the funded depreciation accounts must remain in such accounts to be considered as valid funding transactions unless expended for the purpose for which it was funded.

(c) In the computation of rates for public LTHHCPs, depreciation is to be included on a straight-line method on plant and nonmovable equipment.
 

Effective Date: 
Wednesday, March 11, 1992
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Section 86-5.20 - Interest for all LTHHCPs

86-5.20 Interest for all LTHHCPs.

(a) Necessary interest on both current and capital indebtedness is an allowable cost for all LTHHCPs.

(b) To be considered as an allowable cost, interest shall be incurred to satisfy a financial need, and at a rate not in excess of what a prudent borrower would have had to pay in the money market at the time the loan was made. Also, the interest shall be paid to a lender not related through control, ownership, affiliation or personal relationship to the borrower except in instances where the prior approval of the Commissioner of Health has been obtained. Financial need for capital indebtedness relating to a specific project shall exist when all available restricted funds designated for capital acquisition of that type have been considered for equity purposes.

(c) Interest expense shall be reduced by investment income, with the exception of income from funded depreciation, qualified pension funds, trusteed malpractice insurance funds or in instances where income from gifts or grants is restricted by donors. Interest on funds borrowed from a donor-restricted fund or funded depreciation is an allowable expense. Investment income shall be defined as the aggregate net amount realized from dividends, interest, rental income, interest earned on temporary investment of withholding taxes, as well as all gains and losses. If the aggregate net amount realized is a loss, the loss is not allowable. Rate year investment income shall reduce rate year interest expense allowed for reimbursement as follows:

(1) For all LTHHCPs, investment income shall first be used to reduce operating interest expense for that year; and

(2) any remaining amount of investment income, after application of paragraph (1), shall be used to reduce capital interest expense reimbursed that year for LTHHCP's; and

(3) any remaining amount of investment income after application of paragraph (2) shall not be considered in the determination of allowable costs.

(d) Interest on current indebtedness shall be treated and reported as an operating administrative expense.

(e) Where a public finance authority has established a mortgage rate of interest such that sufficient cash flows exist to retire the mortgage prior to the stated maturity, the amount of the mortgage to be forgiven, at the time of such forgiveness, shall be capitalized as deferred asset and amortized over the remaining mortgage life, as a reduction of the facility's capital expense.

(f) Voluntary facilities shall report mortgage obligations financed by public finance authorities for their benefit and which they are responsible to repay, as liabilities in the general fund when such mortgage obligations are incurred.
 

Effective Date: 
Thursday, September 10, 1992
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Section 86-5.21 - Capital cost reimbursement for proprietary LTHHCPs

86-5.21 Capital cost reimbursement for proprietary LTHHCPs.

(a) Reimbursement for capital costs shall be allowable in determining rates for proprietary LTHHCPs. These costs shall be included as such costs are allocated from a related organization to the extent that:

(1) those costs are reasonably related to the efficient production of long-term home health care services; and

(2) the bases of allocation of such costs are consistent with regulations applicable to the cost reporting of the related organization.

(b) Any capital expenditures associated with non-arms length leases shall be approved and certified to, if required, pursuant to Article 28 of the Public Health Law. In the computation of rates for non-arms length leases, the capital cost shall be included in allowable costs only to the extent that it does not exceed the amount which the LTHHCP would have included in allowable costs if it had legal title to the asset (the cost of ownership), such as straight-line depreciation, insurance, and interest. Accelerated depreciation on these assets may not be included in allowable costs under any circumstances.
 

Effective Date: 
Wednesday, March 11, 1992
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Section 86-5.22 - Return on investment for proprietary LTHHCPs

86-5.22 Return of investment for proprietary LTHHCPs.

(a) In computing the allowable costs of a proprietary LTHHCP, there shall be included a reasonable return on average equity capital. The percentage to be used in computing this allowance shall be a rate determined annually by the commissioner as reasonably related to the then current money market.

(b) The average equity capital associated with the LTHHCP shall be that amount that is allocated from a related organization to the extent that the bases of allocation of average equity capital to the LTHHCP are consistent with regulations applicable to cost reporting of the related organization.
 

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Section 86-5.23 - Movable equipment

86-5.23 Movable equipment.

Necessary and reasonable expenses related to movable equipment (depreciation computed on a straight-line method or accelerated under a double declining balance on sum-of-the-years-digits method, interest on indebtedness, lease, etc. pursuant to sections 86-5.17, 86-5.19, 86-5.20 and 86-5.22 of this Subpart) are considered to be allowable costs for LTHHCPs.
 

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Section 86-5.24 - Research

86-5.24 Research.

(a) All research costs shall be excluded from allowable costs in computing reimbursement rates.

(b) Research includes those studies and projects which have as their purpose the enlargement of general knowledge and understanding, are experimental in nature and hold no prospect of immediate benefit to the program or its patients.
 

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Section 86-5.25 - Education activities

86-5.25 Education activities.

The costs of educational activities, less tuition and supporting grants, shall be included in the calculation of the basic rates, provided such activities are directly related to patient care services.
 

Effective Date: 
Monday, November 6, 1989
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Section 86-5.26 - Termination of services

86-5.26 Termination of services.

(a) The Division of Health Care Financing in the Department of Health shall be notified immediately of the deletion of any previously offered service or of the withholding of services from patients paid for by government agencies. Such notification shall include a statement indicating the date of the deletion or withholding of such service and the cost impact on the LTHHCP of such action. Any overpayments by reason of such deletion of previously offered service shall be subject to such penalties as the Commissioner of Health may impose in the amount of up to 25 percent of the overpayment for negligent incorrect completion or negligent failure to file such notification, and up to 100 percent of the overpayment for willful incorrect completion or negligent failure to file such notification. The penalties assessed under this section are separate from, and shall not be construed to be in mitigation of, damages which may be recovered pursuant to section 145-b of the Social Services Law.
 

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Section 86-5.27 - AIDS home care programs

86-5.27 AIDS home care programs.

Payment for services provided by LTHHCPs certified as AHCPs shall be at rates established pursuant to this Subpart provided, however, that nursing services provided by any LTHHCP to patients diagnosed with Acquired Immune Deficiency Syndrome (AIDS) as defined by ICD-9 codes 042, 043 and 044 shall be reimbursed pursuant to section 86-1.46(b).
 

Effective Date: 
Monday, November 6, 1989
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Section 86-5.28 - Related organizations.

86-5.28 Related organizations.

(a) A related organization shall be defined as any entity which the LTHHCP is in control of or is controlled by, either directly or indirectly, or an organization, or institution whose actions or policies the LTHHCP has the power, directly or indirectly, to significantly influence or direct the actions or policies of an organization or institution or a special purpose organization or where an association of material interest exists in an entity which supplies goods and/or services to the LTHHCP, or an entity which is controlled directly or indirectly by the immediate family of the operator. Immediate family shall include each parent, child, spouse, brother, sister, first cousin, aunt and uncle, whether such relationship arises by reason of birth, marriage or adoption. A special purpose organization shall be defined as an organization which is established to conduct certain of the provider's patient-care-related or non-patient-care-related activities. The special purpose organization is considered to be related if:

(1) The LTHHCP controls the special purpose organization through contracts or other legal documents that allow direct authority over the organization's activities, management and policies; or

(2) The LTHHCP is, for all practical purposes, the sole beneficiary of the special organization's activities. The LTHHCP shall be considered the special purpose organization's sole beneficiary if one or more of the three following circumstances exist:

(i) a special purpose organization has solicited funds in the name of and with the expressed or implied approval of the LTHHCP, and substantially all the funds solicited by the organization were intended by the contributor or were otherwise required to be transferred to the provider or used at its discretion or direction;

(ii) the LTHHCP has transferred some of its resources to a special purpose organization, substantially all of whose resources are held for the benefit of the provider; or

(iii) the LTHHCP has assigned certain of its functions (such as the operation of a dormitory) to a special purpose organization that is operating primarily for the benefit of the LTHHCP.

(b) The costs of goods and/or services furnished to a LTHHCP by a related organization are includable in the computation of the basic rate at the lower of the cost to the related organization or the market price of comparable goods and/or services available in the LTHHCP's region within the course of normal business operations.

(c) If the LTHHCP has incurred any costs in connection with a related organizaton, the final payment rate shall include the costs of such goods and/or services.
 

Effective Date: 
Wednesday, March 11, 1992
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