Section 147.150  Minimum Data Set (MDS) Based Reimbursement System  

a)         Public Act 94-0964 requires the Department to implement, effective January 1, 2007, a payment methodology for the nursing component of the rate paid to nursing facilities.  Except for nursing facilities that are defined as Class I Institutions for Mental Diseases (IMDs) pursuant to 89 Ill. Adm. Code 145.30, reimbursement for the nursing component shall be calculated using the Minimum Data Set (MDS).  Increased reimbursement under this payment methodology shall be paid only if specific appropriation for this purpose is enacted by the General Assembly. 

b)         Except as referenced in subsection (c)(1)(E)(iv) of this Section, the nursing component of the rate shall be calculated and adjusted quarterly.  The determination of rates shall be based upon a composite of MDS data collected from each eligible resident in accordance with Section 147.Table A for those eligible residents who are recorded in the Department's Medicaid Management Information System as of 30 days prior to the rate period as present in the facility on the last day of the second quarter preceding the rate period.  Residents for whom MDS resident identification information is missing or inaccurate, or for whom there is no current MDS record for that quarter, shall be placed in the lowest MDS acuity level for calculation purposes for that quarter.

c)         Per diem reimbursement rates for nursing care in nursing facilities consist of three elements:  variable time reimbursement; fringe benefit reimbursement; and reimbursement for supplies, consultants, medical directors and nursing directors.

1)         Variable Time Reimbursement. 

Variable nursing time is that time necessary to meet the major service needs of residents that vary due to their physical or mental conditions.  Each need level or specific nursing service measured by the Resident Assessment Instrument is associated with an amount of time and staff level (Section 147.Table A).  Reimbursement is developed by multiplying the time for each service by the wages of the type of staff performing the service except for occupational therapy, physical therapy and speech therapy.  If more than one level of staff are involved in delivering a service, reimbursement for that service will be weighted by the wage and number of minutes allocated to each staff type.  In calculating a facility's rate, the figures used by the Department for wages will be determined in the following manner:  

A)        The mean wages for the applicable staff levels (RNs, LPNs, certified nursing assistants (CNAs), activity staff, social workers), as reported on the cost reports and determined by regional rate area, will be the mean wages.

B)        Fringe benefits will be the average percentage of benefits to actual salaries of all nursing facilities based upon cost reports filed pursuant to 89 Ill. Adm. Code 140.543.  Fringe benefits will be added to the mean wage.

C)        The base wage, including fringe benefits, will then be updated for inflation from the time period for which the wage data are available to the midpoint of the rate year to recognize projected base wage changes.

D)        Special minimum wage factor.  The process used in subsection (c)(1)(A) of this Section to determine regional mean wages for RNs, LPNs and CNAs will include a minimum wage factor.  For those facilities below 90% of the Statewide average, the wage is replaced by 90% of the Statewide average. 

E)         Beginning January 1, 2007, facilities shall be paid a rate based upon the sum of the following:

i)          the facility MDS-based rate multiplied by the ratio the numerator of which is the quotient obtained by dividing the additional funds appropriated specifically to pay for rates based upon the MDS nursing component methodology above the December 31, 2006 funding by the total number of Medicaid patient days utilized by facilities covered by the MDS-based system and the denominator of which is the difference between the weighted mean rate obtained by the MDS-based methodology and the weighted mean rate in effect on December 31, 2006.

ii)         the facility rate in effect on December 31, 2006, which is defined as the facility rate in effect on December 31, 2006 plus the exceptional care reimbursement per diem computed in 89 Ill. Adm. Code 140.569(a)(1), multiplied by one minus the ratio computed in Section 147.150(c)(1)(E)(i).  The exceptional care reimbursement per diem effective January 1, 2007 computed in 89 Ill. Adm. Code 140.569 shall be included in the nursing component of the June 30, 2006 rate unless the total variable nursing time for a rate quarter as calculated in subsection (c)(1) of this Section is more than a five percent drop from the total variable nursing time calculated for the June 30, 2006 rate quarter.  Then the facility will receive for the rate period zero percent of the exceptional care reimbursement per diem computed in 89 Ill. Adm. Code 140.569.

iii)         Until October 1, 2009, for facilities in which the number of ventilator care residents in any quarter has increased over the number used to compute the exceptional care per diem as specified in 89 Ill. Adm. Code 140.569(a)(1), the rate computed in subsections (c)(1)(E)(i) and (c)(1)(E)(ii) shall add the sum of total variable time reimbursement for the ventilator care add-on, vacation time, the average facility special patient need factors, and supply, consultant, and Director of Nursing factors for each resident receiving ventilator care in excess of the number used to compute the exceptional care per diem as specified in 89 Ill. Adm. Code 140.569(a)(1) divided by the total number of residents used to compute the MDS portion of the paid rate for that quarter.  The resulting ventilator add-on shall be multiplied by one minus the ratio computed in Section 147.150(c)(1)(E)(i).  This addition to the rate shall apply for each quarter regardless of the facility's eligibility for use of that quarter's MDS rate for computation of the paid facility rate as defined in subsection (b) of this Section.

iv)         The calculations referenced in subsections (c)(1)(E)(i) and (ii) of this Section shall only change annually.

F)         The annual amount of new funds allocated for MDS reimbursement methodology beginning January 1, 2007 is $60 million.  The annual amount of new funds allocated for MDS reimbursement methodology beginning January 1, 2008 is $50 million.  The annual amount of new funds for MDS reimbursement methodology beginning January 1, 2009 is $84 million.  Subject to approval by the Centers for Medicare and Medicaid Services of the U.S. Department of Health and Human Services, the annual amount of new funds for MDS reimbursement methodology, beginning May 1, 2011, is $222.5 million.

2)         Vacation, Sick Leave and Holiday Time. 

The time to be added for vacation, sick leave, and holidays will be determined by multiplying the total of variable time by 5%. 

3)         Special Supplies, Consultants and the Director of Nursing.

Reimbursement will be made for health care and program supplies, consultants required by the Department of Public Health (including the Medical Director), and the Director of Nursing by applying a factor to variable time and vacation, sick leave and holiday time. (A list of consultants required by the Department of Public Health can be found in 77 Ill. Adm. Code 300.830.)

A)        Supplies will be updated for inflation using the General Services Inflator (see 89 Ill. Adm. Code 140.551).  Health care and program salaries shall be updated for inflation using the Nursing and Program Inflator (see 89 Ill. Adm. Code 140.552).  A factor for supplies will be the Statewide mean of the ratio of total facility health care and programs supply costs to total facility health care and programs salaries.

B)        The Director of Nursing and the consultants will be updated for inflation using the Nursing and Program Inflator (see 89 Ill. Adm. Code 140.552).  A factor for the Director of Nursing and consultant costs shall be the Statewide mean of the ratio of all facilities' Director of Nursing and consultant costs to total facility health care and programs salaries. 

C)        These costs shall be updated pursuant to cost reports as referenced in 89 Ill. Adm. Code 153.125(f).  

d)         Determination of Facility Rates.

An amount for each resident will be calculated by multiplying the number of minutes from the assessment by the appropriate wages for each assessment item (see subsection (c)(1) of this Section), adding the amounts for vacation, sick and holiday time (see subsection (c)(2) of this Section), and supplies, consultants, and the Director of Nursing (see subsection (c)(3) of this Section).  The average of the rates for eligible residents assessed will become the facility's per diem reimbursement rate for each eligible resident in the facility. 

e)         A transition period from the payment methodology in effect on June 30, 2003 to the payment methodology in effect July 1, 2003 shall be provided for a period not exceeding December 31, 2006, as follows:

1)         MDS-based rate adjustments under this Section shall not be effective until the attainment of a threshold.  The threshold shall be attained at the earlier of either:

A)        when all nursing facilities have established a rate (sum of all components) which is no less than the rate effective June 30, 2002, or

B)        January 1, 2007.

2)         For a facility that would receive a lower nursing component rate per resident day under the payment methodology effective July 1, 2003 than the facility received June 30, 2003, the nursing component rate per resident day for the facility shall be held at the level in effect on June 30, 2003 until a higher nursing component rate of reimbursement is achieved by that facility.

3)         For a facility that would receive a higher nursing component rate per resident day under the payment methodology in effect on July 1, 2003 than the facility received June 30, 2003, the nursing component rate per resident day for the facility shall be adjusted based on the payment methodology in effect July 1, 2003.

4)         Notwithstanding subsections (e)(2) and (3) of this Section, the nursing component rate per resident day for the facility shall be adjusted in accordance with subsection (c)(1)(E) of this Section.

(Source:  Amended at 35 Ill. Reg. 19514, effective December 1, 2011)