Residential Care and Assisted Living Compendium: 2007. Cost-Based Reimbursement and Fee-for-Service Rates

11/30/2007

Cost-based reimbursement pays the facility for aggregate costs incurred by Medicaid eligible residents for allowable services.

Fee-for-service rates are determined by the number of hours of service identified in a care plan or a point system based on an assessment. For example, Kansas treats ALFs as providers of home care services, and reimburses for the services delivered. This approach may be cumbersome for some facilities to implement because they are used to receiving a regular monthly payment and providing resident services as needed pursuant to a plan of care. If services are reimbursed on a fee-for-service basis, facilities must track service delivery and prepare and submit bills to the payment agency. Depending on the pricing structure, ALFs may not be set up to prepare and submit itemized bills for each increment of service delivered to each resident.

Service delivery in ALFs also differs significantly from in-home service programs. Participants in home care programs typically receive services in block authorizations (e.g., two hours of care, five days a week). Assisted living residents typically receive services in 15-minute increments at various times seven days a week including nights. Home care programs typically do not cover services at night, and, of course, cannot meet unscheduled needs.

Tracking, aggregating, and billing can become cumbersome and time consuming, especially for facilities used to charging a single all-inclusive service fee. However, the pricing structure of many facilities includes a basic package of services with additional charges based on the increments of service used by residents. Facilities with this policy for private-pay residents may be better able to participate in Medicaid programs that reimburse using a fee-for-service approach.

Eleven states use fee-for-service rates, examples of which are described below.

  • Arkansas allows personal care services to be provided through the state plan in a person’s home “or other setting” such as a RCF. RCFs can be reimbursed for up to 64 hours of personal care per month at a rate of $13.84 an hour.

  • In Missouri, personal care and advanced personal care services are reimbursed as a Medicaid state plan service in RCFs. Facilities receive a unit rate (15 minutes) for services that are authorized in the care plan. The unit rate is $4.02 for personal care aides (PCAs), $5.03 for advanced PCA services, and $39.97 for nursing visits. The maximum payment is $2,379 a month, which is equal to the state’s Medicaid cost for nursing home care. No more than one nursing visit a week can be authorized. Very few residents receive advanced personal care and nursing visits.

    The state limits the room and board rate for Medicaid beneficiaries to the federal SSI payment plus the state supplement, also called a “cash grant,” which varies depending on the type of facility. Type I facilities provide room and board, supervision, and protective oversight and receive a monthly payment of $754, comprising the SSI payment and a state supplement. Type II facilities provide personal care, dietary supervision, and health care in addition to Type I services, and receive a combined monthly payment of $850 a month. Residents can retain $25 a month for their personal needs.

  • Montana uses a payment system that has elements of a tiered system but lacks the structure and limited number of payment levels of tiered approaches. The payment amount varies widely based on the number and type of impairments, a structure more like a fee-for-service reimbursement approach. Montana’s payment is based on a point system. Agency field staff determine the number of points based on an assessment of impairments, and the provider receives $33 a month per point.

    Monthly waiver reimbursement rates for personal care facilities vary depending on the residents’ LOC needs. Additional payments are calculated based on ADL and other impairments. The points determine the actual payment within a range. The state limits monthly room and board payments for Medicaid beneficiaries to $495. The maximum monthly payment for services is $63.34 per day or $1,900.20 for a 30 day month.

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