§ 46:2742 — Case mix reimbursement

§2742. Case mix reimbursement
A. The Louisiana Department of Health shall establish a case mix reimbursement
methodology for nursing homes.
B. No later than October 1, 2010, the department shall promulgate rules and
regulations in accordance with the Administrative Procedure Act to provide for a case mix
reimbursement system. The rules and regulations shall include, at a minimum, the following:
(1) A payment commensurate with the resource requirements of patients through the
use of an acuity-based system such as Resource Utilization Groups III (RUGs III) or an
acuity-based system with nursing resource predictability comparable to RUGs. The payment
and resource requirements shall be adjusted quarterly based on the case mix score for all
patients of the nursing facility. Individual nursing facility rates shall be adjusted quarterly
based on the overall case mix. The direct care costs, as determined in this Section, shall be
re-established when the rates are re-based in accordance with the provisions of this Section.
(2) A payment for direct care costs at a level to achieve quality outcomes for patients
and which is no less than one hundred twelve and four-tenths percent of the median of direct
care costs for all facilities. The system establishes a spending floor of no more than
ninety-four percent of the median direct care costs. If the department implements, through
properly promulgated rules, reductions decreasing the average rate established under this
system before any inflationary adjustments, the direct care spending floor shall be decreased
in accordance with Subsection C of this Section.
(3) Incentives to encourage the admission and care of heavy-care patients.
(4) A rate for administrative and operating costs that is no less than one hundred and
seven and one-half percent of the median administrative and operating costs of all facilities
that provides facilities the resources to:
(a) Recruit qualified employees.
(b) Expand training and education.
(c) Implement competency standards.
(d) Develop the organizational capacity to implement quality management systems
and practice guidelines.
(5) A rental system for payment of property costs that:
(a) Differentiates payment based upon the size, age, and condition of the facility.
The system establishes a minimum of three hundred square feet per licensed bed and a
maximum of four hundred and fifty square feet per licensed bed provided that the maximum
square feet per licensed bed may be waived for consideration of private rooms.
(b) Provides the capital for renovation, improvement, and replacement of facilities
by establishing a minimum rate of return of nine and one-quarter percent, a maximum annual
depreciation rate of one and one-quarter percent and a maximum depreciable life of thirty
years. The system will utilize current construction costs, indexed for inflation, adjusted by
the facility's age and renovations and improvements to determine the facility's value.
(c) Encourages investment in physical plant upgrades and renovations by reducing
the effective age, on a quarterly basis, of the facility for physical plant upgrades and
renovations placed in service during the quarter. The reduction in the effective age will
result in the facility value increasing by the cost of the renovation.
(d) Encourages long-term ownership by limiting the minimum occupancy penalty
to no more than eighty-five percent of the licensed bed capacity and by reimbursing on the
basis of the facility value as opposed to reimbursing on accounting cost.
(6) A rate pass-through for property taxes, property insurance, and provider fees.
(7) Utilization of the most current cost reports which shall be either audited or given
an estimated audit adjustment factor based on historical audits for rate rebasing, at a
minimum, biennially.
(8) Utilization of inflation factors that are predictive of actual nursing home cost
increases during the rate year. At a minimum, the inflation factor to be applied shall be the
Skilled Nursing Home without Capital Market Basket Index, published by Data Resources
Incorporated, or a comparable index, if this index ceases to be published. The inflation
factors shall be applied to the costs from the mid-point of the cost report year and projected
to the mid-point of the rate year.
(9) A method for providing interim adjustments to the rates for unanticipated
changes in costs.
(10) A provision for cost reports that shall be prepared in accordance with the cost
reporting instructions adopted by the Medicare program using the definition of allowable and
non-allowable costs contained in the Medicare/Medicaid provider reimbursement manual,
with the exception that the department shall determine due dates and extensions.
(11) Rebasing of rates shall occur, at a minimum, biennially.
C. In the event the Louisiana Department of Health is required to implement
reductions in the nursing home program as a result of a budget shortfall, a budget reduction
category shall be created. This category shall reduce the statewide average Medicaid rate,
without changing the parameters established in this Section, by reducing the reimbursement
rate paid to each nursing home using an equal amount per patient per day. The direct care
spending floor shall be decreased one percentage point for each thirty-cent reduction in the
average Medicaid rate computed under this system not to be reduced to below ninety percent
of the median.
D. Repealed by Acts 2018, No. 612, §22, eff. July 1, 2020.

Legislative History

Acts 2001, No. 694, §1, eff. July 1, 2001; Acts 2006, No. 848, §1; Acts 2009, No. 244, §1, eff. July 1, 2009; Acts 2010, No. 150, §1, eff. July 1, 2011; Acts 2010, No. 891, §1; Acts 2018, No. 612, §22, eff. July 1, 2020; Acts 2019, No. 404, §1, eff. July 1, 2020; Acts 2022, No. 271, §5.