Michael R. Pence, GovernOr State of Indiana Indiana, Family and Social ServicesAdministration 402 W. WASHINGTON STREET, FEO. BOX 7083 INDIANAPOLIS. EN 46207-7083 John J. Women. MD1 Secretary September 23, 2014 Mr. Alan Fteund. Acting Associate Regional Administrator Division of Medicaid and Children?s Health CMS Region 233 North Michigan Avenue, Suite 600 Chicago, IL 60601 RE: Companion Letter to TN TN it 13-005 Dear Mr. Freund: The Of?ce of Medicaid Policy and Planning is submitting its response to the Companion Letter received on July 15, 2014. The State has repeated your comments from the Companion Letter below. The State?s responses follow each comment in bold print. 1. Please provide example completed cost reports for a NF and the 860 hospital that operates the NF. OMPP Response: Attached is a 12/31/2012 cost report for nursing facility Lyons Health and Living Center. Also, attached is the hospital cost report for the NSGO hOSpital that operates the nursing facility, Riverview Hospital, for the same 12131/2012 time period. Riverview Hospital was one of the NSGO hospitals referenced in the February 15, 2014 Indianapolis Business Journal article. is it always the case with these partnerships that the NSGO hospitals only own the license of the NF, while another entity owns the property and equipment of the 0MPP No. Equal Opportunityt?Af?rmalive Action EmpIOyer IN TN I3 -- 005 State Respmises to Companion Letter Page 2 of4 3. Do any of the management compt-mies also own the property and equipment of the OMPP Response: Yes. Although some management companies may hold title to the property, they have transferred the rights to the operation of the facility to the NSGO through a lease agreement. 4. Are any of the management companies af?liated'with or related to the NFs or the NSGO hospitals that own the license ot'the OMPP Response: None of the management companies are af?liated with or related to the NSGO hospitals that own the license of the NFs. Some of the management companies were af?liated with or related to the NFs prior to the change of ownership to the NSGO hOSpital. 5. Please con?rm that any costs booked on the NF cost reports are not duplicated on the N800 hospital cost reports. OMPP Response: Medicare hospital cost reports are not audited by the state, thus, the state cannot con?rm non-duplication of costs. However, OMPP docs understand that Medicare hospital cost reports are subject to review, by Medicare. Further, hospitals submit cost reports to Indiana Medicaid using the Medicare hospital cost reporting form (CMS 2552-10). Hospitals complete the Medicare cost report form in accordance with Medicare cost reporting guidelines and allowable cost principles. 6. Please provide example audited ?nancial statements of the N800 hospital and the management company of the NF. OMPP Response: Attached is the 12/31/2012 audited ?nancial statement for Rivervicw Hospital. Audited ?nancial statements of the nursing facility management companies are not required under Indiana?s State Plan, so OMPP does not have such documents. 7. Please explain which entity is the enrolled provider with the state. For example, is the NSGO hospital enrolled as the NF provider? OMPP Response: The NSGO hospital is the enrolled provider. IN TN it [3 005 Store Responses to Companion Letter Page 3 of4 9. a. Please provide an example enrollment agreement of a NF that partners with a NSGO hospital. 0MPP Response: Attached is the provider agreement for Rivervicw Hospital dba Lyons Health and Living Center. . If the NI provider is related to the management company, then are the management services only recognized at cost on the NF's cost report? 0MPP Response: Yes. In addition, for management services provided by entities that were the formerly enrolled NF provider and that currently serve as the management company for the NSGO hospital, those management services are also only recognized at cost on the cost report. See 405 and indiana?s State Plan, Attachment 4.19D, Page 26. Please provide an explanation for how the management fee, which is a percentage based on net patient revenue, is incorporated in the NF per diem rate. 0MPP Response: Because 0MPP treats NSGO hospitals and the management companies that were the formerly enrolled NF provider as related parties for purposes of Medicaid cost reporting, the management fee is entirely backed out as an adjustment and replaced with the allowable cost to the management company on the appropriate cost report lines. These allowable costs, which are the actual costs to the management company for management and home/central of?ce expense pursuant to cost reporting rules, are then included in the calculation of the nursing facility per diem rate in the applicable rate component. 10. Please further explain the manner in which the hospital would receive the unspent Other Revenue (supplemental payments made to NSGO NFs) or Other Revenue Reserve Deposit (the portion of the supplemental payments paid to NSGO NFs restricted for use as additional Working Capital until the end ofthe NSGO hospital's Fiscal Year). Please fully explain this process and provide CMS with data on how o?en this occurs, what the amounts are (in total and per facility), and how this payment is claimed. 0MPP Response: Consistent with CMS guidance provided in Karl Longshore?s November 29, 2007, email to 0MPP (provided to you on June 13, 2014, in response to CMS questions dated June 5 and 10, 2014), 0MPP requires that supplemental payments be deposited into the operating accounts of the NSGO nursing facilities, and such funds are to be retained in those accounts for purposes of paying the nursing facility?s operating expenses until the close of its ?scal year end. The CMS guidance does not require 0MPP to track unspent NSGO NF supplemental IN I 3 005 State Responses to Companion Letter Page 4 0ft! payment funds, and 0MPP does not have the data necessary to explain the manner in which the hospital would receive such funds. The NSGO nursing facility supplemental payments are made on a quarterly basis, and are claimed on the CMS-64 quarterly report submitted after each payment. Please direct any questions regarding this material to Amber Swartzell at (317) 233-2 947. Thank you. Sincere}y. Joseph Moser Medicaid Director Enclosures