On August 28, the Wisconsin Department of Health held its final meeting to lay out changes to the Medicaid nursing home reimbursement formula which became effective July 1, 2003. Below are the key issues and changes.

• Price-based phase-in. The phase-in of a price-based system for other direct care, support services, administrative, fuel/utilities, and over-the-counter drugs continues, with payment now based on 75 percent price, 25 percent cost. Direct-care nursing, property tax, and property remain 100 percent cost-based.
  
• Direct-care cost shift. The direct-care nursing cost center now includes only salaries, wages, and benefits of direct-nursing staff. This includes RNs, LPNs, nurse aides, and single-task nursing workers. For July 1, 2002, this cost center had also included costs for social service and activities, however those items have been carved out and included in the other direct-care cost center, and are now subject to price-based reimbursement. To compensate for this, the price for other direct care has been increased and the maximum on direct-care nursing decreased proportionally.
  
• Bedhold payments. Historically, nursing homes received a payment for a bedhold day equal to 85 percent of the Medicaid rate for the appropriate level of care of the bedhold resident. Due to a system change at EDS which only allows for one bedhold rate for therapeutic bedholds and one bedhold rate for hospital bedholds, they will now pay bedholds at an amount equal to one of the following:
  
  • Skilled nursing facilities will receive an amount equal to the facilities’ ICF2 rate  
  • ICF-MR facilities will receive an amount equal to the facilities’ DD3 rate

This will create an additional savings in the budget of approximately $446,000. This savings will be put back into the formula through an increase in the direct-care nursing (cost-based) maximum.

• Labor regions. The labor region indexes used to adjust the direct-care maximum were updated to reflect changes in the Medicare MSA indexes. The Eau Claire area came out the big loser, with its index dropping 1.9 percent. Dane County was the big winner with a 1.9 percent increase, while rural facilities had a 1 percent increase. All other areas of the state changed less than 1 percent up or down. In addition, St. Croix, Pierce, and Douglas counties will continue to use the Medicare wage indexes rather than the state’s Medicaid index, as granted through legislation in the July 1, 2003, budget bill.
• Central office. The central office cost limitation of $6.36 per day, which has been in place for over 10 years, was raised to $7.36 per day. This was Dave Lund’s “consolation prize” to the for-profit chain homes who objected to the additional bedhold savings being put into direct care.
• Ventilator dependant rates. The rate paid per day for Medicaid ventilator dependant residents was increased from $375 to $400 per day.
• Targets. All other targets and prices were increased proportionally in order to spend all monies available for rate increases. Early modeling done by the state estimates that county homes can expect an average rate increase of 2.5 percent; for-profit homes, 3 percent; not-for-profit homes, 2.2 percent; and other governmental homes, 3.7 percent.