Avenue Nursing Home & Rehabilitation Centre v. Shah

112 A.D.3d 1178, 977 N.Y.S.2d 774

This text of 112 A.D.3d 1178 (Avenue Nursing Home & Rehabilitation Centre v. Shah) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Avenue Nursing Home & Rehabilitation Centre v. Shah, 112 A.D.3d 1178, 977 N.Y.S.2d 774 (N.Y. Ct. App. 2013).

Opinion

Garry, J.

Cross appeals from two judgments of the Supreme Court (McGrath, J.), entered June 19, 2012 in Albany County, which, among other things, partially granted petitioners’ applications, in two proceedings pursuant to CPLR article 78, to annul determinations of the Department of Health adjusting petitioners’ Medicaid reimbursement rates.

Pursuant to Public Health Law article 28, residential health care facilities, also known as nursing homes, are reimbursed through the Medicaid program for the costs incurred per patient, per day with respect to their Medicaid-eligible patients (see 10 NYCRR 86-2.10 [a] [6]). The costs are generated pursuant to a statutory base period and are subject to a “case mix” adjustment with respect to the facilities’ particular patient needs (see 10 NYCRR 86-2.10 [a] [5]; 86-2.30), and are further adjusted to account for inflation that has occurred since the base year (see 10 NYCRR 86-2.10 [a] [8]). There are four components that make up a facility’s rate: direct, indirect, noncomparable and capital costs (see 10 NYCRR 86-2.10 [a] [6]; [b] [1] [ii]). The direct, indirect and noncomparable costs are trended for inflation by application of the “roll factor” and, as so calculated, constitute a facility’s operating costs (see 10 NYCRR 86-2.10 [a] [7]). The roll factor reflects the cumulative effect of inflation from the base year to the rate year and is calculated by multiplying each yearly rate of inflation, known as a “trend factor,” during that period (see 10 NYCRR 86-2.10 [a] [8]).

The Department of Health is required to notify facilities such as petitioners of their annual rates at least 60 days before those rates go into effect (see Public Health Law § 2807 [7]). Accord[1179]*1179ingly, in order to calculate the impending year’s rates, the Department relies on an estimated rate of inflation for the coming year as determined by the federal Consumer Price Index (hereinafter CPI) (see Public Health Law § 2807-c [10] [c] [2]). After that calendar year has passed, and the actual rate of inflation for that year can be determined, the difference between the estimated rate of inflation and the final rate of inflation is reconciled and a “banking adjustment” is applied to the current year’s rates (see Public Health Law § 2807-c [10] [c] [3]). Additionally, that final trend factor is included in the roll factor in order to calculate current and future reimbursement rates (see Public Health Law § 2807-c [10] [c] [4]).

The Legislature amended Public Health Law § 2808 in 2006, changing the base year for calculating rates from 1983 to 2002 (see L 2006, ch 109, § 1, part C, § 47; Public Health Law § 2808 [2-b] [b] [i]). This provision, commonly known as the “rebasing law,” was intended to go into effect January 1, 2009 (see L 2006, ch 109, § 1, part C, § 47). In 2007, Public Health Law § 2808 was further amended to provide that the case mix classification system would only consider Medicaid patients, as opposed to the facility’s entire population, beginning with the time period on or after April 1, 2009 (see L 2007, ch 58, § 1, part C, § 36; Public Health Law § 2808 [2-b] [g]). Rebasing was expected to result in increased costs to the Medicaid program; these costs would be offset in part by the savings achieved through the case mix amendment.

In August 2008, among other deficit reduction measures, the Legislature passed part F of section 1 of chapter 497 of the Laws of 2008, providing that, in determining rates of payments for services provided on or after January 1, 2009, respondent was to “apply a trend factor projection equal to the otherwise applicable trend factor projection attributable to the period January 1, 2009 through December 31, 2009 in accordance with [Public Health Law § 2807-c (10) (c)] less one percentage point” (L 2008, ch 497, § 1, part F, § 5 [1]). In February 2009, the Legislature postponed the effective date of the rebasing law, moving it from January 1, 2009 to April 1, 2009 (see L 2009, ch 2, § 1, part I, §§ 2, 3). Subsequently, in April 2009, the Legislature reduced the 2009 trend factor to zero with respect to “services provided on and after April 1, 2009,” notwithstanding Public Health Law § 2807-c (10) (c) (L 2009, ch 58, § 1, part B, § 48). Additionally, in December 2009, the reduction to zero of the trend factor was extended to cover the period from January 1, 2010 through March 31, 2010 (see L 2009, ch 503, § 1, part C, § 2).

[1180]*1180In April 2009, the Legislature also enacted part D of section 1 of chapter 58 of the Laws of 2009, known as the “scale back law” (see L 2009, ch 58, § 1, part D, § 2). This law provided that, notwithstanding the rebasing law, or any other contrary provision of law, “with regard to adjustments to [M]edicaid rates of payment for inpatient services provided by residential health care facilities for the period April 1, 2009 through March 31, 2010, made pursuant to [the rebasing law],” respondent was permitted to make proportional adjustments to the reimbursement rates in order to ensure that the aggregate increase in rates did not exceed, nor fall below, $210 million (L 2009, ch 58, § 1, part D, § 2). The reduction to zero of the trend factor was also continued through 2010 (see L 2010, ch 109, § 1, part B, § 1). Since the scale back law constituted a change to the Medicaid State Plan, federal approval was required to enforce this provision (see 42 CFR 447.256). Such approval, sought in 2009, was granted in 2011, after which the Department apprised facilities of their rates for various periods between April 1, 2009 and January 1, 2011.

In December 2008, the Department notified facilities, including petitioners, of their 2009 Medicaid reimbursement rates. The 2009 rates were calculated to include the changes due to rebasing from 1983 to 2002 and the adjustment of the case mix classification system. The initial trend factor for 2009, according to the CPI, was 3.1% and, after deducting one percentage point (see L 2008, ch 497, § 1, part F, § 5), the trend factor applied to petitioners’ 2009 rates was 2.1%. After rebasing was postponed to April 1, 2009, the Department had to recalculate petitioners’ rates for the first three months of 2009 and, in the meantime, the Department based the rates on those for December 31, 2006, as adjusted for inflation in accordance with Public Health Law § 2807-c (10) (c) (see L 2009, ch 2, § 1, part I, §§ 2, 3). Subsequently, in September 2009, the Department notified petitioners of their new 2009 rates, which were derived from the 1983 base costs trended for inflation. At that time, the rates continued to reflect an initial trend factor of 2.1%, which was incorporated into the roll factor.

In 2010, the final trend factor for 2009 was determined to be -.4%; however, this trend factor only applied to the first quarter of 2009, as the remainder of the year was subject to a zero trend factor (see L 2009, ch 58, § 1, part B, § 48). The Department reconciled the final trend factor with the initial trend factor of 2.1% and again deducted one percentage point (see L 2008, ch 497, § 1, part F, § 5), thus arriving at a final trend factor of -3.5% for the first quarter of 2009. The rate periods on and af[1181]*1181ter April 1, 2009 were not subject to any trends (see L 2009, ch 503, § 1, part C, § 2).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Nazareth Home of the Franciscan Sisters v. Novello
858 N.E.2d 1131 (New York Court of Appeals, 2006)
New Franklin Center for Rehabilitation & Nursing v. Novello
64 A.D.3d 1132 (Appellate Division of the Supreme Court of New York, 2009)
Reconstruction Home and Health Care Center, Inc. v. Daines
65 A.D.3d 786 (Appellate Division of the Supreme Court of New York, 2009)
County of St. Lawrence v. Daines
81 A.D.3d 212 (Appellate Division of the Supreme Court of New York, 2011)
Signature Health Center, LLC v. State
92 A.D.3d 11 (Appellate Division of the Supreme Court of New York, 2011)
James v. Lubin
188 A.D.2d 40 (Appellate Division of the Supreme Court of New York, 1993)
Kennedy v. Novello
299 A.D.2d 605 (Appellate Division of the Supreme Court of New York, 2002)

Cite This Page — Counsel Stack

Bluebook (online)
112 A.D.3d 1178, 977 N.Y.S.2d 774, Counsel Stack Legal Research, https://law.counselstack.com/opinion/avenue-nursing-home-rehabilitation-centre-v-shah-nyappdiv-2013.