Title: Section 86-2.12 - Adjustments to basic rate
86-2.12 Adjustments to basic rate.
(a) To the allowable basic rate prior to the addition of capital costs and depreciation and interest related to movable equipment, there will be added a factor to project allowable cost increases during the effective period of the reimbursement rate. Such factor shall be determined as follows:
(1) The elements of a residential health care facility's cost shall be weighted based upon data for the following categories:
(ii) employee health and welfare expense;
(iii) nonpayroll administrative and general expense;
(iv) nonpayroll household and maintenance expense;
(vi) nonpayroll dietary expense; and
(vii) 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, as well as for subcategories. Included among these cost indicators are elements of the United States Department of Labor consumer and wholesale price indices and special indices developed by the State Commissioner of Health for this purpose.
(3) Geographic differentials may be established where appropriate.
(b) The cost indicators used in determining the projection factors shall be compared, on a semiannual basis with available data on such indicators, and any other economic indicators as deemed appropriate by the Commissioner of Health. Based upon such review the commissioner may, in his discretion, either certify new rates or adjust subsequent rates for any period or portion thereof when he determines that such new rates or adjusted rates are necessary to avoid substantial inequities arising from the use of previously certified rates.
(c) Beginning April 1, 1991, the commissioner, in accordance with the methodology developed pursuant to subdivisions (d), (e) and (f) of this section, shall establish trend factors for residential health care facilities to project allowable cost increases for the effects of inflation during the effective period of the reimbursement rate. The allowable basic rate prior to the addition of capital costs and depreciation and interest related to movable equipment shall be trended, beginning on April 1, 1991, to the applicable rate year by the trend factors developed in accordance with subdivisions (d) through (f) of this section.
(d) The methodology for developing the trend factors shall be established by a panel of four independent consultants with expertise in health economics appointed by the commissioner.
(f)(1) On or about September first of each year, the consultants shall provide to the commissioner and the state hospital review and planning council, the methodology to be used to determine the trend factors for the rate period, commencing on the next January first. The commissioner shall monitor the actual price movements during these periods of the external price indicators used in the methodology, shall report the results of the monitoring to the consultants and shall implement the recommendations of the consultants for one prospective interim annual adjustment to the initial trend factors to reflect such price movements and to be effective on January first, one year after the initial trend factors were established and one prospective final annual adjustment to the revised trend factors to reflect such price movements and to be effective on January first, two years after the initial trend factors were established.
(2) Notwithstanding the dates specified in paragraph (1), the consultants shall provide as soon as possible to the commissioner and the state hospital review and planning council, the methodology to be used to determine the trend factors for the rate period April 1, 1991 to December 31, 1991. One prospective interim annual adjustment for this rate period shall be made on January 1, 1992 and one prospective final annual adjustment for this rate period shall be made January 1, 1993.
VOLUME A-2 (Title 10)