Information Letter 08-XX: TILE to RUGs Hold Harmless Feature

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Texas HealthandHumanServices Commission

ALBERT HAWKINS

EXECUTIVE COMMISSIONER

October 1, 2008

To:Nursing Facility Providers

Subject: Texas Department of Aging and Disability Services (DADS)

Information Letter No. 2008-151

Texas Index for Level of Effort (TILE) to Resource Utilization Groups (RUGs) Hold Harmless Feature

The purpose of this information letter is to notify providers of the TILE to RUGs Hold Harmless feature.

Overview

The TILE to RUGs Hold Harmless feature is intended to ensure that no Texas Medicaid nursing facility receive a lower average Medicaid per diem payment under RUGs in state fiscal year (FY) 2009 then it received under TILE in FY 2008. This feature will be in effect during FY 2009 (September 1, 2008 through August 31, 2009) only.

The Hold Harmless feature will incorporate in accordance with HHSC rules at 1 TAC §355.307(f) two hold harmless payments and a settle up as follows:

•An interim hold harmless payment covering September 2008 through February 2009. This payment will be made in April 2009.

•An interim hold harmless payment covering March – August 2009. This payment will be made in October 2009.

•A final hold harmless settle-up covering the entire fiscal year. This payment / recoupment will occur in January 2010.

First Hold Harmless Payment

Step 1: For each facility, HHSC will calculate the average TILE direct care staff rate (with no enhancements) and other recipient care rate based on the TILE rates in effect on August 31, 2008 and the facility’s Medicaid days of service by TILE from January 1, 2008 - June 30, 2008.

Step 2: For each facility, HHSC will calculate the sum of the average RUG direct care staff rate (with no enhancements) and other recipient care rate based on the RUG rates in effect on September 1, 2008 and the facility’s Medicaid days of service by RUG for those recipients paid under RUG from September 1, 2008 - February 28, 2009.

Step 3: For each facility, HHSC will compare the average payment under TILE from January - June 2008 to the average payment under RUG from September 2008 - February 2009. If the average TILE payment is greater then the average RUG payment, DADS will pay the facility an interim hold harmless payment of 80% of the difference times the facility’s Medicaid days of service for those recipients paid under RUG from September 1, 2008 – February 28, 2009. This payment will be made in April 2009.

Second Hold Harmless Payment

Step 1: For each facility, HHSC will calculate the sum of the average RUG direct care staff rate (with no enhancements) and other recipient care rate based on the RUG rates in effect on September 1, 2008 and the facility’s Medicaid days of service by RUG for those recipients paid under RUG from March 1 – August 31, 2009.

Step 2 : For each facility, HHSC will compare the average payment under TILE from January - June 2008 to the average payment under RUG from March - August 2009. If the average TILE payment is greater then the average RUG payment, DADS will pay the facility 80% of the difference times the facility’s Medicaid days of service for those recipients paid under RUG from March 1 – August 2009. This payment will be made in October 2009.

Hold Harmless Settle-up

Step 1: For each facility, HHSC will calculate the sum of the average RUG direct care staff rate (with no enhancements) and RUG other recipient care rate for the entire 2009 fiscal year. This calculation will be made 120 days after the end of the fiscal year to allow for billing files to become complete.

Step 2: For each facility, HHSC will compare the average payment under TILE from January - June 2008 to the average payment under RUG for fiscal year 2009. If the average TILE payment is greater then the average RUG payment, DADS will pay the facility the difference times the facility’s Medicaid days of service for those recipients paid under RUG during the fiscal year less any monies paid to the facility as a result of the two interim hold harmless payments. If the monies paid as a result of the two interim payments total more than the hold harmless calculated for the entire fiscal year, excess monies paid to the facility will be recouped. This settlement will occur in January 2010.

Information and Data Pull for Hold Harmless

Information and Data Pulls for Hold Harmless will be conducted in accordance with the rule at

1 TAC §355.307(f)(4).

In terms of Hold Harmless, once the state does the data pull, no other pulls will be made for the purpose of calculating the values described in this information letter. This means that once the paid days of service for a Step have been determined for purposes of calculating the TILE to RUG-III hold harmless transition, they will not be updated for late Minimum Data Set (MDS) submissions, Utilization Review RUG-III changes, retroactive eligibility or any other reason.

Summary

•Hold harmless payments will be made through Administrative Payments by DADS.

•The first batch of hold harmless payments will be made in April, 2009.

•The second batch of hold harmless payments will be made in October 2009.

•Hold harmless ends August 31, 2009.

•Final settle-up will occur in January 2010. For contracts which terminate prior to 2010, final settle-up will occur upon termination; last month’s payment will be held until settle-up is complete.

Should you have any questions concerning this letter, please contact Cheryl Jablonski, Senior Rate Analyst, at or 512-491-1764.

Sincerely,

- signature on file -

Pam McDonald, Director

Rate Analysis for Long Term Care, Mail Code H-400

512-491-1373; FAX: 512-491-1998

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