Payment Rates for Nonpublic and County Nursing Facilities
With the implementation of CHC, the way nonpublic and county nursing facilities are paid will change.
What is changing?
Instead of the Department of Human Services (DHS) paying a fee directly to providers for providing items or services, DHS will pay each of the three managed care organizations (MCOs) a monthly capitated rate for each CHC participant. Think of this like a monthly premium for insurance.
In turn, each CHC-MCO will contract with providers and pay each provider for items or services provided to CHC participants. Provider payment rates will be negotiated between each provider and each CHC-MCO.
What isn’t changing?
The fee-for-service (FFS) payment system for nursing facility services will remain in effect during and after implementation of CHC. DHS will continue to set quarterly per diem rates for each nonpublic nursing facility provider under 55 Pa. Code Chapter 1187, Subchapter G (relating to rate setting) and 62 P.S. § 443.1(7)(iv) (relating to the budget adjustment factor) and annual per diem rates for each county nursing facility provider under Chapter 1189, Subchapter D (relating to rate setting). These rates will be used to pay FFS claims during the phase-in of CHC. In addition, these rates will be used to pay a limited number of FFS claims expected after implementation of CHC for residents not enrolled in HealthChoices or waiting to be enrolled in CHC. The MA portion of the Health Care-associated Infection surcharge and legislative additions such as the nonpublic Medical Assistance Day One Incentive payment will remain under FFS.
What is the CHC nursing facility rate floor?
For the first 36 months following the implementation date of each CHC phase, the CHC-MCO will be required to contract with nursing facilities at facility specific per diem rates no lower than the floor, except as noted below.
The rate floor will not limit the CHC-MCOs or nursing facilities from agreeing to higher rates if necessary based on acuity, provider supply, or alternative payment methodologies. Any alternative payment methodology that would result in an initial rate that is lower than the established rate floor must be agreed to in writing by both the nursing facility and the CHC-MCO.
This rate floor will maintain access to nursing facility care, provide certainty for consumers, and allow for negotiations by CHC-MCOs and participating nursing facilities for higher rates as necessary based on resident acuity and the availability of nursing facility care.
How is the rate floor determined?
For each CHC phase, the rate floor shall be established at the facility level as the average of each nursing facility’s per diem rates in effect for the four quarters prior to implementation; supplemental payments are not part of this calculation. The payments funded through Appendix 4 of the agreement between the department and each CHC-MCO (relating to nursing facility access to care payments) shall be in addition to the rate floor. And, the CHC-MCOs must provide a separate payment for exceptional durable medical equipment in addition to the rate floor.
For nonpublic nursing facilities, a change in ownership (CHOW) will not impact the rate quarters used to determine the floor. For county nursing facilities, a CHOW may impact the rate quarters used to determine the floor. If a county nursing facility has a change of ownership from county ownership to a nonpublic nursing facility provider and one or more nonpublic rates are in effect at the time of implementation, the nonpublic rates will be used to determine the floor.
• SW (Phase 1 - January 1, 2018) (CY 2017 Quarters)
•SE (Phase 2 - July 1, 2018) (FY 2017-2018 Quarters)
• LC, NW & NE (Phase 3 - January 1, 2019) (CY 2018 Quarters)
What is the timeframe of the rate floor?
• SW (Zone 1) – January 1, 2018 thru December 31, 2020
• SE (Zone 2) – July 1, 2018 thru June 30, 2021
• LC, NW & NE (Zones 3-5) – January 1, 2019 thru December 31, 2021
Will the rate floor be adjusted?
No, the rate floor will not be adjusted over the 36 month timeframe. However, DHS will take into account FFS rate increases and assumed increases to nursing facility costs caused by subsequent mandates on staffing, wages or related cost drivers enacted following implementation when calculating CHC’s capitated rates. These increases can then be negotiated between the CHC-MCOs and the nursing facilities.
Need more information?
For more information on capitated rates for CHC-MCOs, see the PowerPoint related to CHC capitation rate development dated June 7, 2017 located on the department’s website at
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