5101:3-29-05 Reimbursement.

(A) Methods and standards for establishing payment rates

Payment for authorized services in an outpatient health facility (OHF) is calculated on a prospective reasonable cost-related basis from cost reports filed by each participating clinic. Rates are calculated on a clinic's cost of allowable items and services, and thus may vary from clinic to clinic, subject to the tests of reasonableness described in paragraphs (C) to (F) of this rule. While payments under a prospective system are not subject to audit and retroactive settlement or adjustment, the historical costs upon which prospective rates are based are audited AS described in paragraph (I) of this rule. Adjustments to the paid rates will be made if costs are found to be overstated or misrepresented in a manner which resulted in an overstatement of the previously determined prospective rate.

(1) Rates will be established for each of the following types of services rendered by a participating OHF:

(a) Medical services

(b) Laboratory services

(c) Radiological services

(d) Dental services

(e) Speech therapy and audiology services

(f) Mental health services

(g) Physical therapy services

(h) Transportation services

(i) Vision care services

(2) Cost of items which were not requirements during the period covered by the base line cost report but which became requirements or were imposed by federal court orders during the prospective rate year are met on a retroactive basis based on cost reports filed at the conclusion of the prospective year. Only those expenses associated with the new requirements, which require the addition of new personnel or equipment, are subject to the one-time retroactive settlement. Thereafter, such costs become recognized according to the methodology described in this rule.

(B) New facilities

Rates for new facilities will be computed as follows: Rates will be granted based on the average rates of all participating OHFs. Ongoing rates will be calculated from a cost report filed after one complete calendar year of experience. Ongoing rates will be computed according to the criteria set forth in paragraphs (C) to (F) of this rule (with no inflationary allowance) For purposes of reimbursement provisions contained in this paragraph, a "new facility" is defined as a health care provider meeting all of the qualifications delineated in rule 5101:3-29-01 of the Administrative Code.

(C) General provisions-allowable and reasonable costs

"Costs which are reasonable and related to patient care" are those contained in the following reference material in the following priority: "Health Insurance Manual 15 Provider Reimbursement Manual," "Health Insurance Manual 5 Principles of Reimbursement for Provider Costs," available at www.cms.hhs.gov/manuals/cmstoc.asp dated May 1, 2005 and "Generally Accepted Accounting Principles"; except that:

(1) Costs related to patient care and services that are not covered under the OHF program as described in rules 5101:3-29-01 to 5101:3-29-04 of the Administrative Code are not allowable.

(2) The straight line method of computing depreciation is A requirement for cost filing purposes, and it must be used for all depreciable assets.

(3) For purposes of determining allowable and reasonable cost in the purpose of goods and services from a related party, the following definition of related shall be used: "related" is one who enjoys, or has enjoyed within the previous five years, any degree of another business relationship with the owner or operator of the facility, directly or indirectly, or one who is related by marriage or birth to the owner or operator of the facility. Upper limits for costs associated with related party transactions are set forth in paragraph (F) of this rule.

(4) Tests of reasonableness include those identified in paragraphs (D) to (F) of this rule.

(5) ODJFS reserves the right to establish other tests of reasonableness which may be necessary to assure effective and efficient program administration.

(D) Ceiling on administrative and general costs

Administrative and general costs for each clinical site cannot exceed fifteen per cent of the site's total allowable costs.

(E) Tests of reasonableness on indirect costs

For each of the services identified in paragraph (A)(1) of this rule except for paragraph (A)(1)(a) of this rule, otherwise allowable costs allocated as shown in for indirect costs listed on the JFS 03421 as revised on July 1, 2001, will be adjusted in instances when hours of operation of the service component are less than thirty per week on an annualized basis. Any adjustment would be computed based on application of the ratio of actual hours of operation of the service component to a base of thirty hours per week on an annualized basis, not to exceed one hundred per cent.

(F) Tests of reasonableness-professional services

Costs recognized for rate setting purposes will be adjusted based on minimum required efficiency standards calculated as encounters per hour. Prospective rates established for any of the following service components will not exceed the lower of either the reported otherwise allowable cost divided by reported encounters of service or the reported allowable cost divided by the product of hours worked by a professional and the encounters per hour as shows below:

(1) Medical services- 2.4 encounters per hour (medical services include services of physicians, physician assistants, advanced practice nurses, and registered nurses)

(2) Dental services- 1.85 encounters per hour

(3) Mental health services-.8 encounters per hour

(4) Vision care services- 2.3 encounters per hour

(5) Speech and hearing services- 1.8 encounters per hour

(6) Physical medicine services- 2.0 encounters per hour

These efficiency standards may be periodically adjusted at the discretion of ODJFS based on efficiency standards established by the medicare fiscal intermediary for federally qualified health centers.

(G) Inflationary factor

An OHF's unit rates are calculated from historical cost information as reported in cost reports filed by each participating clinic for a prior cost-reporting period. Allowable and reasonable costs determined in accordance with this rule will be updated by an inflation factor as described in this paragraph. For allowable costs recognized in the cost report year, an inflationary factor will be added for various categories of cost equal to the total of the actual inflationary factor between the midpoint of the cost report year and the midpoint of the following year as established by the bureau of labor statistics and an estimated inflationary factor from the midpoint of the preceding year to the midpoint of the year for which the prospective rate is calculated based upon the preceding twelve-month average. For each calendar year for each of the following categories of costs, an inflationary factor will be computed using the monthly statistical data for the following areas from the bureau of labor statistics (unless otherwise specified):

(1) Personnel (e.g., nurses, administration, legal, accounting, management, data services, employee fringe benefits, medical records, operation and maintenance services, housekeeping, and laundry).

(2) Medical supplies subject to cost-related reimbursement and expenses.

(3) Nondurable goods (e.g., office supplies and printing).

(4) Fuel and utilities.

(5) Transportation services.

(6) Medical and rehabilitation professional personnel.

(7) Insurance.

(8) Real estate taxes.

(H) Cost report filing

As a condition for participation in the Title XIX program, all OHFs must submit cost reports on form JFS 03421 as specified in paragraphs (A) to (D) of this rule.

(1) Annual cost reports must be filed, except for initial program year as provided in paragraph (B) of this rule, by April first of each year for the period beginning January first and ending December thirty-first of the preceding calendar year.

(2) Failure to file an annual cost report by April first of each year will result in termination of the OHF's provider agreement, with such termination to be effective within thirty days unless a complete and adequate cost report is submitted by the OHF within that thirty-day period.

(3) If an incomplete or inadequate cost report is received prior to April first, ODJFS will notify the OHF that information is lacking. A corrected cost report is to be submitted within forty-five days of notification of inadequacy. Any resubmission of an inadequate cost report within the forty-five-day period or any failure to resubmit within forty-five days indicates a lack of good-faith effort and will result in immediate termination.

(4) The accrual method of accounting shall be used for all cost reports filed except that governmental institutions operating on a cash method may file on the cash method of accounting. The "accrual method of accounting" means that revenue is reported in the period when it is earned, regardless of when it is collected, and expenses are reported in the period in which they are incurred, regardless of when they are paid. The "cash method of accounting" means that revenues are recognized only when cash is received, and expenditures for expenses and asset items are not recorded until cash is disbursed for them.

(5) OHFs are required to identify all related organizations; i.e., related to the OHF by common ownership or control. The cost claimed on the cost reports for services, facilities, and supplies furnished by the related organization shall not exceed the lower of (a) the cost to the related organization or (b) the price of comparable services, facilities, or supplies generally available.

(I) Audits

(1) The prospective rates for services established for an OHF are not subject to subsequent adjustments except in instances of rate adjustments specified in paragraph (A) of this rule. The difference between the cost reported by a clinic in a cost report used for calculating the various prospective rates and those costs established by a field or on-site audit are subject to recovery in full by means of a retroactive rate adjustment of the prospective rates. Audit exceptions will apply to the various rates established for the prospective year upon which the cost report is based, if the errors in the cost report increase the various unit rates which otherwise would have been paid. All overpayments found in on-site audits not repaid within thirty days after the audit is finalized shall be certified to the state auditor and/or attorney general for collection in accordance with the provisions of state law.

(2) Audits will be conducted by ODJFS for services rendered by OHFs participating in Title XIX (medicaid). These audits are made pursuant to federal regulatory law and are empowered to ODJFS through section 5101.37 of the Revised Code. The examination of OHF costs will be made in accordance with generally accepted auditing standards necessary to fulfill the scope of the audit. To facilitate this examination, providers are required to make available all records necessary to fully disclose the extent of services provided to program recipients. The principal objective of the audit is to enable the department or its designee to determine that payments which have been made, or will be made, are in accordance with federal, state, and agency requirements. Based on the audit, adjustments will be made as required. Records necessary to fully disclose the extent of services provided and costs associated with those services must be maintained for a period of three years (or until the audit is completed and every exception is resolved). These records must be made available, upon request, to ODJFS and the U.S. department of health and human services for audit purposes. No payment for outstanding unit rates can be made if a request for audit is refused.

(3) There are basically two types of audits.

(a) The first is a desk audit of cost reports filed each year and subsequent calendar quarterly reports to ensure that no mathematical error occurs, that the cost calculations are consistent with the rate-setting formula as established by the department, and to identify categories of reported costs which, because of their exceptional nature, bear further contact with the OHF for clarification/amplification.

(b) The second is a field audit. These are performed on-site or where the necessary disclosure information is maintained to assure the OHF has complied with both cost principles and program regulations.

Cost reports shall be retained for at least three years. Summary reports for all on-site audits shall be maintained for public review in the Ohio department of job and family services for a period of one year. The depth of each on-site audit may vary depending upon the findings of computerized risk analysis profiles developed by the department taking into consideration such factors as cost category screens (cost categories above median), location, level of services provided medicaid recipients, occasions or frequency of services, and multi-shared costs. The depth of each on-site audit shall be at least sufficiently comprehensive in scope to ascertain, in all material respects, whether the costs as reported and submitted by the OHF are true, correct, and representative to the best of the facility's ability. Failure to retain or provide the required financial and statistical records renders the OHF liable for monetary damages equal to the difference between:

(i) Established categorical unit rates paid to the provider for the prospective year in question; and

(ii) The lowest categorical unit rates for like services paid in the state of Ohio to an OHF similar in structure.

Eff 11-10-83; 11-1-01; 5-1-05
Promulgated Under: 119.03
Statutory Authority: 5111.02
Rule Amplifies: 5111.01 , 5111.02 , 5111.04
R.C. 119.032 review dates: 11/17/2004 and 05/01/2010