The Minnesota Department of Human Services (DHS) announced on December 21, 2011, that DHS will issue new nursing facility rates for the January 1, 2012, RUG-IV conversion.

According to the DHS communication:
The Nursing Facility Rates and Policies (NFRP) Division had a few calls and e-mails about the conversion rates. NFRP has reviewed the conversion statute and the rate notice method and have found that the calculations do not conform to what is written in the law.

Some differences have no effect, such as the order of multiplying numbers (A * B * C instead of A * C * B). One difference is material and needs to be changed and the change will likely affect your conversion rates. The rate notice nursing facilities received has a percentage of the current rate that is case-mix adjusted. How this number is computed is not shown, but it is a percentage that reflects how the nursing facility’s rates have been computed going back to the case-mix conversion in 2006. The percent is multiplied by the current DDF operating rate, resulting in the case-mix portion of the rate. This rate is multiplied by the case-mix weights and the private-pay and medical assistance resident days to create the amount of RUG-III case-mix revenue.

However, the law (MS 256B.438, subdivision 8) clearly states the case-mix percentage is to be based on the 2010 cost report. Therefore, DHS will revise the rates by computing the case-mix percentage based on the direct care cost category over total operating costs from the 2010 cost report. DHS will also show more detail, as people had made comments that they could not follow some of the steps on the conversion rate notice they produced. DHS does not have a definite date as to when this will be done, but DHS will try to get them revised before the end of next week.

DHS is expecting to create new rate notices for all facilities.

Will each nursing facility's rate change, and by how much? DHS expects all facilities (except those participating in the ECPN program) to have a rate change by varying amounts. The question of how much depends on how different their 2010 case-mix percentage is from what is in the current conversion rates.

It is important to note that the RUG-IV resident classifications to be used on January 1, 2012, and provided by the Minnesota Department of Health, will not be impacted by the creation of the new conversion rates.

Please contact Todd Bergstrom at the Association office if you have any questions.

Todd Bergstrom
952.851.2486
tbergstrom@careproviders.org

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