DOH Issues PMPM Guidelines for MLTC and FFS CDPAP

Yesterday, the New York State Department of Health (“DOH”) published guidelines for “Implementation of Fiscal Intermediary (FI) Rate Structure Enacted in the SFY 2019-2020 NYS Budget.” These guidelines (the “Guidance”) explain the Department’s recent reimbursement changes to Per Member Per Month (“PMPM”) for CDPAP. The Department published two Guidance documents, one for fee-for-service CDPAP providers (available HERE), and the other document for providers whose consumers are in managed care (available HERE). However, the documents are essentially identical.  As discussed below, the Guidance explains the process for billing “direct care costs” and “administrative costs” associated with providing CDPAP services under PMPM. Importantly, the Guidance is relevant to providers that bill MLTCs for CDPAP. Contrary to common misconceptions, the principles discussed in the Guidance are not just applicable to direct-Medicaid/fee-for-service (“FFS”) CDPAP providers.

Background on PMPM

As we had reported in January, the Department has finalized the PMPM regulations, which establish that CDPAP providers will be reimbursed a PMPM flat monthly rate for the provider’s “administrative” costs associated with providing CDPAP. The PMPM administrative costs will be paid to providers in addition to reimbursement for “direct care” costs that the providers incur. Since the outset of the PMPM concept for reimbursement for fiscal intermediary services, there have been many questions as to what the “administrative” costs entail versus “direct care” costs. These questions remain. Even in the Guidance issued yesterday, the Department does not directly address whether payroll taxes, workers’ compensation, and unemployment insurance are included, if at all, in the State’s reimbursement under the direct care or the administrative cost component.

Effective Date

The Guidance applies to FIs for services provided on or after April 1, 2021 for consumers in the Medicaid fee for service (FFS) program.  The PMPM methodology is not mandatory for MLTCs. Providers that bill MLTCs for CDPAP will not be automatically reimbursed for CDPAP in accordance with PMPM as of April 1. Rather, a plan would have to make a change to the provider’s reimbursement methodology, per the parties’ contract, before any changes to the reimbursement rate or method can take effect. Indeed, the Guidance states that managed care plans may, but not are not required to, reimburse FIs using the PMPM rate structure, or plans “may negotiate administrative rates using a PMPM or an alternative structure with FIs pursuant to their contracts.” However, per the PMPM Guidance, “MCO capitation rates paid by the DOH will be adjusted, subject to actuarial soundness certification by the independent actuary, to reflect the change in Medicaid FFS reimbursement policy.” Thus, even though plans are not required to use PMPM, they may have no choice but to restructure how and how much they reimburse providers because their own reimbursement from New York State will be adjusted per these PMPM principles. It is unclear if this restructuring will, effectively, result in an overall rate reduction.

Guidance Specifics

Reimbursement for FI administrative costs will be made based on three tiers (“Tier”). Each Tier represents a range of authorized direct care hours of CDPAP services for that consumer in the month for which the FI PMPM is being billed. The Tiers are as follows:

Tier 1 $145

1-159 hours

Tier 2 $384

160-479 hours

Tier 3 $1,036

480+ hours

The Guidance does not impact the requirements of the FI to bill Medicaid FFS the approved hourly rate for direct care services. DOH will reduce the current hourly CDPAP rates to exclude the administrative costs included in the PMPM. Per the Guidance, the following are considered non-direct service costs that will be continue to be paid by the State along with the “direct care” reimbursement: (a) capital costs; (b) up to 2% allowance for profit or reserves; (c) workforce recruitment and retention supplements; and (d) minimum wage supplements. The Guidance further states that providers will continue to be reimbursed for wage and “wage related requirements for CDPAP…including State law or regulatory requirements related to minimum wage, overtime pay, or wage parity, where applicable.” However, the Guidance does not expressly state that the costs of workers’ compensation, unemployment, and payroll taxes will be included in either the direct wage or administrative cost components.

Logistics of Billing and Reimbursement under PMPM

For FFS providers, to claim reimbursement for PMPM, providers will have to submit a claim to the Department for its PMPM each month through eMedNY, that is based on:

  1. the greatest number of authorized direct care hours of CDPAS, authorized by the LDSS during the month for which the PMPM is being claimed; and
  2. based on the monthly hours determined under the Tier of utilization for each consumer.

Service authorizations can be entered in eMedNY in various formats based on the needs of the consumer. A specific number of hours may be approved per day for all days of the week, or only certain days of the week. Or, a total number of hours can be approved for a specific period, such as a week, month or longer, without specifying the days of the week or the number of hours per day.

The Department recommends in the Guidance that FIs should first compute the average number of hours of direct care services per day and per week based on a seven-day week. The average number of direct care service hours per day is then multiplied by a 31-day month to arrive at a total number of hours per month, which then translates to the FI PMPM Tier to bill. Where multiple authorizations are issued in a calendar month (e.g., there is a change in the consumer’s condition) or a consumer begins receiving CDPAP services in the month, the FI should compute the FI PMPM Tier using the service authorization with the greatest number of hours and apply those hours over the entire month. This method of computing average hours and hours per month is only to be used for the purpose of determining the FI PMPM Tier and rate code. FIs must continue to bill direct care hours based on the actual hours and dates rendered.

Timing of Claims Submission

For fee for service claims, FIs will submit FI PMPM claims no earlier than the first day of the month immediately following the month for which reimbursement for services is being claimed. Accordingly, per the Guidance, FIs should start billing under this new methodology on or after May 1, 2021 for FI administrative services performed on or after April 1, 2021.

While FI PMPM claims will be processed regardless of the date of service inputted on the claim for the month in which FI services were performed, the Department strongly encourages FIs to submit the FI PMPM claims using the first day of the month in which FI services were performed. For example, a FI will submit a PMPM claim on or after May 1, 2021 for FI administrative services performed in April 2021. On the claim form, the FI is encouraged to input April 1, 2021 for the date of service, which aligns with the capitated nature of these payments.

In order to submit a PMPM claim, the FI must have also billed for at least one hour of direct care services for the consumer during the month for which the FI PMPM is being billed. This requirement verifies that the consumer is receiving CDPAS services during the month for which the PMPM is being billed. For example, for services rendered in April 2021, the FI will submit at least one claim for direct care services in April 2021, and on or after May 1, 2021 may submit an FI PMPM claim for April.

eMedNY will not accept more than one PMPM claim submitted by an FI for a consumer for any given month.

There is no restriction on how an FI submits PMPM claims, the FI may submit individual claims or batched claims. There is also no need to separate FI PMPM claims by county while batching the claims.

Please let us know if you have any questions about the PMPM.