Lincoln – The Department of Health and Human Services (DHHS) Division of Medicaid and Long-Term Care (MLTC) has completed its annual update to nursing facility rates for State Fiscal Year (SFY) 2021 (July 1, 2020 – June 30, 2021). The nursing facility payment rates were communicated to all Nebraska nursing homes on May 28 and are effective July 1, 2020.
The statewide average per diem base rate across all levels of care for nursing facilities is estimated to increase by approximately 6.0%. While there is an increase in the overall statewide average per diem base rate, not all providers will receive a year-over-year rate increase, as the process for determining nursing facility rates is based on each specific facility’s costs and resident days. For SFY 2021, 178 nursing facilities will see an increase in their per diem base rates and 15 facilities will see a decrease in their per diem base rates.
Under this payment rate methodology, MLTC updates per diem rates annually using base year allowable costs and patient days as submitted by nearly 200 nursing facilities across the state, which are used to project the facility’s estimated spend for the upcoming SFY. The costs and projected spending from the nursing facility cost reports do not directly align to the amounts appropriated on a year-to-year basis. The payment methodology requires that MLTC apply an adjustment to the projected spend amount in order to align the projected spend to the amount appropriated; this is referred to as the “inflation factor.” The inflation factor used to develop the SFY 2021 nursing home rates is a positive 1.51%.
MLTC, with stakeholder collaboration, is implementing changes to modernize the payment methodology used to determine per diem Medicaid rates for Nebraska’s nursing facilities. Previously, MLTC expressed concern that the prior rate methodology in regulation did not take into consideration the quality of care and unintentionally disincentivised efficiency, creating a system in which some providers are being paid more than double than what other providers are for the same level of care. Modernizing the current cost-based methodology to one that incentivizes and rewards high-quality care and operational efficiency was, and continues to be, a top priority for MLTC.
MLTC’s newly modernized rate methodology introduces quality into the rates, creating a sliding scale rate add-on for facilities with higher quality scores from CMS, published at www.medicare.gov/nursinghomecompare/search.html. Additionally, the new methodology introduces other components that reduce rate variances between facilities providing the same levels of care. These components of the new methodology are being implemented over a two-year period to allow for sufficient time for providers to adjust to the new methodology. Even with a phased-in approach, the outcomes in the first year demonstrate significant progress, reducing the payment rate variance by more than 15% as compared to SFY 2020.
“Modernizing our payment model for nursing homes is a top priority for Medicaid, as noted in our DHHS Business Plan,” said Jeremy Brunssen, interim director of the Division of Medicaid and Long-Term Care. “This is a significant step in the right direction for our state, our providers, and beneficiaries. It is a direct result of great collaboration between our state team, Nursing Facility Providers, the Nebraska Legislature’s Health and Human Services Committee and other community stakeholders, who all were at the table driving this innovation for Nebraska.”