The Honorable Dave Heaton by 15kX36D


									ICF/MR Rates

    Between 1980 and 1990, Iowa ICF/MR consumer average per diem’s rose from $76.05 to $187.73. This
     represents a 246.9 percent increase during the 10-year period. Without cost restraint mechanisms, the
     Department projected future years of similar ICF/MR cost increases.

    In 1991 Iowa Acts, Chapter 267, Section 103, Subsection 14 required the Department to work to adopt
     rules “to develop cost containment measures for intermediate care facilities for the mentally retarded
     which are permitted under federal Medicaid requirements.

    ICF/MR Rate Changes implemented:
      Requiring new facility start-up costs to be amortized over 5 years.
      Placing cost and utilization limits on new facilities during the first year of operation.
      Limiting annual cost increases for existing facilities to the rate of the Consumer Price Index (CPI)
        for all urban consumers.
      Limiting allowable administrative cost to 20% total facility cost.
      Providing a financial incentive or reward to facilities that hold cost increases to less than the CPI.
      Changing from a semi-annual to an annual cost-reporting basis for facility cost reports.
      Establishing state fiscal year 1992 as the base year for existing facility costs with re-basing of costs
        to occur every 4 years.

 The maximum allowable cost ceiling is set at the eightieth percentile of all participating community based
  ICF’s/MR based on the “Unaudited Compilation of Various Costs and Statistical Data.” The eightieth
  percentile maximum rate is adjusted July 1 of each year. This type of system is market driven as it captures
  the costs of all providers and rates them accordingly.

 The incentive for providers is to stay as close as possible to the 80th percentile.

 DHS believes that this reimbursement methodology has kept ICF/MR costs and quality at a reasonable level
  and paid providers for the reasonable cost of providing services to Medicaid beneficiaries.

The following is a table comparing the ICF/MR costs and maximum payment rate changes from the Annual
Compilation of Costs and Statistical Data. Data is unavailable for the weighted average for 1993 through 1995.

Compilation        Weighted           Annual Percent     Maximum Rate       Annual Percent
Date               Average Cost       Change                                Change
12/31/93           N/A                N/A                $254.09
12/31/94           N/A                N/A                $257.81             1.46%
12/31/95           N/A                N/A                $255.47            -0.91%
12/31/96           $212.64            N/A                $256.63             0.45%
12/31/97           $215.78            1.48%              $255.13            -0.58%
12/31/98           $221.42            2.61%              $255.61             0.19%
12/31/99           $226.99            2.52%              $260.54             1.93%
12/31/00           $232.74            2.53%              $271.60             4.24%
12/31/01           $238.22            2.35%              $266.47            -1.88%
12/31/02           $241.23            1.26%              $275.92             3.54%
12/31/03           $248.53            3.02%              $289.17             4.80%

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