DOC ID:  n00000284

Title: Talking Points on the 2007-08 budget cuts

Posted on: 02/23/2007

Doc. ID# 00000284                                                                                          February 2007

 

Talking Points for ADHCC Members – Budget Cuts

Adult day health care (ADHC) is a community-based long term care program that provides comprehensive health care in a congregate day setting to more than 12,000 frail elderly, chronically ill and disabled New Yorkers each year. 

  • Legislation enacted last year requires that ADHC programs that are currently budget based have their rates adjusted to a cost basis, in some cases as early as April 1, 2007. ADHC programs will move from a budget basis to a cost basis precipitated by the achievement of 90 percent occupancy. 
  • Eighty-five percent of ADHC programs would be moved from a budget-based rate to a cost-based rate by the end of 2009. Cost-based reimbursement will drastically reduce ADHC Medicaid rates and restrict access to care for consumers.
  • This legislation is destructive to ADHC – a vital community-based program at a time when government and policy-makers assert the need to decrease institutional-based care and increase community-based care.
  • In order to prepare for and adjust to cost-based reimbursement, many programs will have to downsize their capacity or discontinue providing services on weekends, thus shrinking access to community-based care for consumers.
  • ADHC rates will be calculated using outdated costs and statistics. For example, programs that achieved 90 percent occupancy at any time prior to 2004 will have their rates calculated using 2004 costs and visits imputed or projected at 90 percent occupancy even though their current occupancy may be lower than 90 percent. This lower occupancy may be the result of changes the program initiated to be responsive to consumers such as increasing the size of the program or the number of days of the week the program is open, but the application of 90 percent occupancy will not reflect current reality, will dilute costs and negatively impact rates.

  • In a number of instances, programs achieved 90 percent occupancy only once, years ago and neither the programs nor the Department of Health has accurate records of this fact.
  • Programs that did not achieve 90 percent occupancy prior to 2004 or between 2004 and 2008 will be required to do so by the end of 2009 or they will have their rates calculated using costs in 2009 and visits imputed at 90 percent occupancy. Programs that move to cost-based reimbursement in 2009 will be able to adjust for this change prospectively by aligning their costs with the number of visits the program has and thus lessen the impact of cost-based reimbursement.  The fact that some programs can prospectively adjust for this change while others can’t, creates an equity issue.
  • DOH has not begun to calculate cost-based rates for ADHC programs and has indicated that they will not do so until April 2007. The projected impact of $26 million provided as part of the SFY 2006-07 budget process is understated. Programs that have calculated the impact themselves indicate that the impact is higher, and sometimes double the amount indicated by the state in SFY 2006-07.
  • A loss of Medicaid funding of this magnitude will result in health and access problems for registrants since some ADHC programs will be forced to close. In addition, ADHC program closures will result in job loss or displacement for employees.
  • Talk about the impact of cost-based reimbursement to your program and what changes you will have to make to cope with it.
  • This year’s budget contains a proposal to eliminate the 2007 trend factor included as part of the ADHC rate beginning April 1, 2007.  It would not affect rates paid for the first quarter of 2007, which would continue to reflect the 2007 trend factor increase of 2.5 percent.  However, this change would also impact all rates after 2007 because the 2007 increase would be missing. This proposal would result in a loss of $6.2 million for ADHC programs statewide in SFY 2007-08. This is in addition to the financial loss many programs will experience when they move from a budget-basis to a cost-based reimbursement system. Talk about the impact of the trend factor cut to your program.
  • We respectfully request that lawmakers oppose the elimination of the 2007 trend factor from ADHC rates; and support a modification in the cost-based reimbursement legislation passed last year to allow ADHC programs to adjust to this change.  The proposal is included in the issue brief provided to legislators and calls for currently budget-based programs to begin to move from a budget-basis to a cost basis in 2007 rather than using 2004 as a starting point.