DAR File No. 27806

Health, Health Care Financing, Coverage and Reimbursement Policy

R414-7A

Medicaid Certification of New Nursing Facilities

NOTICE OF PROPOSED RULE

DAR File No.: 27806
Filed: 04/07/2005, 03:14
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rulemaking is necessary to comply with the requirements of Subsection 26-18-504(2). This rule establishes the administrative hearing process to review decisions by the director of the Division of Health Care Financing to deny additional bed capacity for an existing Medicaid nursing facility or to deny a new Medicaid nursing facility's participation in the program.

Summary of the rule or change:

The old rule language is eliminated because it was made obsolete by Title 26, Chapter 18, Part 5. The new language establishes that administrative proceedings under this part are informal.

State statutory or constitutional authorization for this rule:

Section 26-18-504

Anticipated cost or savings to:

the state budget:

There are no new costs to the state because the administrative hearing process mentioned in this rulemaking is already in place.

local governments:

There are no new costs to local governments because they are not responsible for the administrative hearing process mentioned in this rulemaking. If local governments operate nursing facilities, they are already using the hearing process mentioned in this rulemaking.

other persons:

No new costs will be incurred and there are no savings because the administrative hearing process contained in this rulemaking is already in place.

Compliance costs for affected persons:

No new costs will be incurred and there are no savings because the administrative hearing process contained in this rulemaking is already in place.

Comments by the department head on the fiscal impact the rule may have on businesses:

Designating the administrative process for this type of hearing as informal should have a neutral impact on businesses affected by this process. A. Richard Melton, Acting Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Direct questions regarding this rule to:

Ross Martin at the above address, by phone at 801-538-6592, by FAX at 801-538-6099, or by Internet E-mail at rmartin@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

05/31/2005

This rule may become effective on:

06/01/2005

Authorized by:

Richard Melton, Deputy Director

RULE TEXT

R414. Health, Health Care Financing, Coverage and Reimbursement Policy.

R414-7A. Medicaid Certification of New Nursing Facilities.

R414-7A-1. [Introduction and Authority]Administrative Proceedings.

[(1) The purpose of this rule is to control the supply of Medicaid nursing facility programs. The oversupply of nursing facility programs in the state has adversely affected the Utah Medicaid program and the health of the people within the state. This rule continues the prohibition against certification of new nursing facility programs that has been in place since January 13, 1989. This rule clarifies that prohibition and sets up policy to deal with the possible future need for additional Medicaid nursing facility programs in a service area. The July 1990 Report of the Governor's Task Force on Long Term Care recommended continuation of this prohibition. The Task Force concluded that "Market entry into the nursing home industry should be regulated to allow supply to come more in line with demand". This rule also supports the policy of the department to direct new resources into community based alternatives.

(2) Authority for this rule is found in Sections 26-18-2.3, 26-1-5, 26-1-30(2)(a), (b), and (w), and 26-18-3.]Adjudicative proceedings for decisions by the Division of Health Care Financing made pursuant to Section 26-18-504 are informal and conducted accordance with R410-14.

[R414-7A-2. Definitions.

For purposes of this rule the definitions in R414-1-1 apply. In addition:

(1) "Certified program" means a nursing facility program with Medicaid certification.

(2) "Critical Care Access Hospital" means a hospital that meets the criteria set forth in 42 U.S.C. 1395i-4(c)(2)(1998).

(3) "Medicaid certification" means the right to Medicaid reimbursement as a provider of a nursing facility program shown by a valid federal Health Care Financing Administration (HCFA) Form 1539 (7-84).

(4) "Nursing facility" means any Medicaid participating NF, SNF, ICF, ICF/MR, or a combination thereof, as defined in 42 USC 1396r(a) (1988), 42 CFR 440.150 and 442.12 (1993), and UCA 26-21-2(15).

(5) "Nursing facility program" means the personnel, licenses, services, contracts, and all other requirements that must be present for a nursing facility to be eligible for Medicaid certification as detailed in 42 CFR 442.1 through .119, 483.1 through .480, and 488.1 through .64 (1993), which are adopted and incorporated by reference.

(6) "Physical facility" means the building(s) or other physical structure(s) where a nursing facility program is operated.

(7) "Service area" means the boundaries of the distinct geographical area served by a type of certified program, the department to determine the exact area, based on fostering price competition and maintaining economy and efficiency in the Medicaid program.

R414-7A-3. Prohibition Against Medicaid Certification of Nursing Facility Programs.

The department finds that it is in the best interests of the state to prohibit Medicaid certification of nursing facility programs, except as authorized by this rule.

(1) Medicaid reimbursement of nursing facility programs is limited to certified programs as of January 13, 1989.

(2) The department shall not process initial applications for Medicaid certification or execute initial provider agreements with nursing facility programs, except as authorized by R414-7A-4 or R414-7A-5.

(3) The department shall not reinstate Medicaid certification for a previously certified provider whose Medicaid certification expires, or is terminated by action of the federal or state government, except as authorized by R414-7A-4 or R414-7A-5.

(4) The department shall not execute a Medicaid provider agreement with a certified program that moves its nursing facility program to a different physical facility, except as authorized by R414-7A-4 or R414-7A-5.

R414-7A-4. Authorization to Renew, Assign, or Transfer Medicaid Certification.

(1) The department may renew Medicaid certification of a certified program if the program, without any lapse in service to Medicaid recipients, has its nursing facility program certified by the department at the same physical facility.

(2) The department may certify a new nursing facility program if a certified program transfers all of its right to Medicaid certification to the new nursing facility program, and the new program meets all of the following conditions:

(a) The new nursing facility program operates at the same physical facility as the previous certified program.

(b) The new nursing facility program complies with 42 CFR 442.14 (1993).

(c) The new nursing facility program receives Medicaid certification within one year of the date the previously certified program ceased to provide medical assistance to a Medicaid recipient.

(3) The department may certify a previously certified program that moves to a different physical facility and meets all of the following conditions:

(a) On the last day that the certified program provided medical assistance to a Medicaid recipient in the original physical facility, it meets all applicable requirements to be a certified program.

(b) The different physical facility is in the same service area.

(c) The time between which the certified program ceases to operate in the original physical facility and begins to operate in the different physical facility is not more than three years.

(d) The provider operating the certified program gives written assurances satisfactory to the executive director or his designee that:

(i) no third party has a legitimate claim to operate a certified program at the previous physical facility;

(ii) the certified program agrees to defend and indemnify the department against any claims made by third parties who may assert a right to operate a certified program at the previous physical facility; and

(iii) if a third party is found, by a final agency action of the department after exhaustion of all administrative and judicial appeal rights, to be entitled to operate a certified program at the original physical facility, the certified program shall voluntarily comply with R414-7A-4(4).

(4) Upon a finding being made as set forth in R414-7A-4(3)(d)(iii), the certified program shall immediately surrender its Medicaid certification, cease billing Medicaid for all services to Medicaid recipients, and arrange for the orderly discharge of Medicaid recipients to a facility satisfactory to the department. If the third party found to be entitled to operate a certified program at the original physical facility requests Medicaid certification, and the previously certified program has surrendered its Medicaid certification, the department shall treat the request as a transfer of all its rights under R414-7A-4(2).

R414-7A-5. Certification of Additional Nursing Facility Programs.

The department may certify additional nursing facility programs if the executive director or his designee determines that there is insufficient capacity at certified programs in a service area to meet the public need.

(1) The department may certify an additional nursing facility program only if:

(a) after 30-day notice to the Department of Human Services of the department's finding that there is insufficient capacity at certified programs in a service area to meet the public need, the Department of Human Services cannot demonstrate that community-based services can meet the public need; and

(b) after the close of the 30-day notice to the Department of Human Services and a separate 30-day notice to all certified programs operating in the service area, the certified programs operating in the service area cannot demonstrate that they have tangible plans to add additional capacity to their nursing facility programs to meet the public need.

(2) If community-based services and existing certified programs operating in the service area cannot demonstrate that they can meet the public need, the department may select an additional nursing facility program through a request-for-proposal process.

(a) Each proposal must include sufficient information to allow the department to evaluate and rank it among all proposals according to the criteria in R414-7A-5(2)(b), as well as other information that the department solicits in its request-for-proposals. The department shall reject all proposals that offer to operate for a reimbursement rate higher than that paid to similar certified programs.

(b) The department shall evaluate and select from among the proposals based on maintaining price competition, economy, and efficiency in the Medicaid program; the ability of the proposed nursing facility program to deliver quality care; and how quickly the proposed nursing facility program can begin to operate.

(3) If a nursing facility program that the department selected under the request-for-proposal process fails to undertake the necessary steps to become Medicaid certified or fails to begin to provide medical assistance to Medicaid recipients as represented in its proposal, the department may reject that nursing facility program, and either select the next ranked nursing facility program or solicit new proposals without again complying with the requirements of R414-7A-5(1).

(4) If, after certifying an additional nursing facility program, the executive director or his designee determines that there is sufficient capacity at certified programs in a service area to meet the public need, the limitations set out in R414-7A-5(1) through (3) control the certification of nursing facility programs.

(5) The department hereby determines that there is insufficient capacity to meet the public need wherever a critical care access hospital is located and may certify a new nursing facility program that is directly related to the operation of a critical care access hospital, without the need to meet the requirements of subsections (1) to (4) above.

(6) The department hereby determines that there is insufficient capacity to meet the public need for those eligible for placement at the Utah State Veterans Nursing Home and may certify the Utah State Veterans Nursing Home,without the need to meet the requirements of subsections (1) to (4) above.

]KEY: Medicaid

[July 14, 2003]2005

Notice of Continuation November 8, 2004

26-1-5

[26-18-1

26-18-2.3

26-1-30(2)(a), (b), (w)

26-18-3]26-18-504(2)

ADDITIONAL INFORMATION

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For questions regarding the content or application of this rule, please contact Ross Martin at the above address, by phone at 801-538-6592, by FAX at 801-538-6099, or by Internet E-mail at rmartin@utah.gov

For questions about the rulemaking process, please contact the Division of Administrative Rules (801-538-3764). Please Note: The Division of Administrative Rules is NOT able to answer questions about the content or application of these administrative rules.