Governor DeWine issued his biennium budget proposal for fiscal years 2024 and 2025 (FY24-25) in January 2023.  His initial proposal said little about Medicaid reimbursement for healthcare providers beyond a general statement of intent to support providers with rate increases to assist with the ongoing staffing and workforce crisis. The budget proposal was introduced as House Bill (HB) 33 in early February.

As with any biennium budget process, a lot can change over the coming months.  We will continue to provide updates as more information becomes available.

 Nursing Facilities

Ohio FY24-25 Biennium Budget

While Governor DeWine’s initial proposal mentioned possible rate increases for healthcare providers, HB 33 included no indication of any changes to the nursing facility reimbursement policy.  Just a month earlier, he signed HB 45 into law, which included “intent language” from legislators regarding the rebasing of nursing facility Medicaid rates to be effective July 1, 2023.

While the lack of nursing facility language came as a surprise to many, it does not mean rebasing and revisions to the Quality Incentive program are a lost cause.  The legislature retains significant power in the budgeting process as HB 33 will be crafted by the Ohio House and Ohio Senate over the coming months and sent to Governor DeWine in June 2023.  While the governor retains line-item veto power, he does not have the authority to place his own language into the bill passed by the legislature.

At this time, we do not know where the budgeting process will lead in terms of rebasing, reimbursement system changes or the amount of additional funding to be appropriated to nursing facilities, though we expect the rebasing to be approved.  The current Quality Incentive program technically sunsets on June 30, 2023, and we expect it to continue in some form and may very well be expanded to include additional quality measures.

 House Bill 45 – Relief Funding for Ohio Healthcare Providers

As mentioned above, Governor Mike DeWine recently signed HB 45, a significant appropriations bill that included relief funding for several types of healthcare providers.  The bill included $345 million for skilled nursing facilities and $40 million for assisted living facilities, with additional funding for other providers, including Medicaid waiver and hospice providers. Assisted living providers will be paid based on licensed residential care beds, similar to prior assisted living relief payments.  We estimate the payment to be approximately $600 per licensed bed.

The nursing facility funding will be determined using a calculation based on 2021 Medicaid days and July 1, 2022 quality points.  The funding is split 60% to the quality portion of the payment and 40% to the Medicaid days portion of the payment.  The quality points payment will use the July 1, 2022 points earned, with no exclusion for those under the 25th percentile.  In addition, facilities with occupancy in excess of 75% in 2021 will receive an additional 7.5 quality points for purposes of this calculation.

The funds will be paid by the Ohio Office of Budget Management (OBM).  In February 2023, OBM announced a portal for application would be opened with significant limitations on the use of the funds, resulting from guidelines for American Rescue Plan Act funds issued by the Department of the Treasury.  In response, long-term care trade associations indicated the limitations on the funds would make using the funds nearly impossible.  OBM has agreed to revisit the restrictions and the trade associations are pursuing possible legislative relief to ease the limitations on the use of the funds.

Intermediate Care Facilities (ICF/IID)

In response to the ongoing staffing and workforce crisis in the ID/DD provider community, Governor DeWine’s budget proposal included a historic $700 million of new funding for ID/DD providers.  The new funding is expected to be used, at least in part, to assist providers in raising wage rates for direct support personnel in ID/DD settings to at least $16 per hour.

HB 33, as proposed, includes a provision to allow the ICF/IID reimbursement system to calculate rates as intended with no consideration of a statewide average rate or roll-back.  In addition, the budget proposal includes a new direct care add-on to be calculated as 6.50% of each ICF/IID provider’s direct care costs to be effective on July 1, 2023.  The new add-on would be in addition to the existing Direct Support Personnel Payment, which is currently 2.04% of a provider’s direct care costs, and the Quality Incentive payment added to the reimbursement system on July 1, 2022.  The new add-on is being called the “professional workforce development payment” and is expected to be included in permanent law, which means the add-on would extend beyond the upcoming biennium, assuming no future legislative changes.

The budget proposal includes several other provisions relevant to ICF/IID providers, including additional funding in the second year of the budget, the possible creation of a new peer group for providers caring for youth with complex behavioral needs, and an increase in the add-on paid to ICF/IIDs providing ventilator care to be in line with ventilator rates paid to skilled nursing facilities.

Budget provisions impacting ID/DD waiver providers include significant increases in funding for both residential and adult day service rates, as well as additional funding for youth with complex needs being served in waiver settings.  As always, the budget proposal is not guaranteed to become law as it must work its way through both the Ohio House and the Ohio Senate before signature by the Governor.

Steve Anderson CPA