Single Statewide Fiscal Intermediary (FI) Updates
Article 78 Proceeding Filed
Bond, Schoeneck & King have filed a challenge in Albany County Supreme Court under Article 78 of the Civil Practice Law and Rules contesting the Department’s new reimbursement methodology for FI services in Medicaid Managed Care. The respondents are State Commissioner of Health James McDonald and the State Department of Health.
At issue is the new FI reimbursement structure which introduces a two-part payment system: one for direct care costs and another fixed amount for administrative costs. These changes were communicated during meetings on May 9 and June 28, 2024, with Medicaid Managed Care plans, but no representatives from FIs or their organizations were included.
The new reimbursement plan will now use a “non-risk distribution methodology,” meaning FIs will bill according to a fee schedule set by Medicaid Fee-For-Service rates. This new method divides the payments into three tiers based on the number of direct care hours provided each month, rather than the previously authorized hours.
The new plan also includes a 9.5% to 13.4% reduction in administrative cost reimbursement, depending on the region. Despite these significant changes, the Department did not follow the required rule-making process, the lawsuit alleges, such as providing public notice and an opportunity for comments.
Parties to the challenge argue that the new payment system is not only unfair and arbitrary but also fails to provide adequate funding for administrative costs. They are seeking legal action to halt the implementation of this new system, claiming it violates existing regulations and could negatively impact the quality of care and financial sustainability of FIs.
Recall that HCP was one of the parties in a similar Article 78 proceeding filed by Bond, Schoeneck & King in 2019, which successfully challenged DOH’s reimbursement methodology related to the FI rate structure enacted in the 2019-2020 New York State Budget.
Under the NY Civil Practice Law and Rules, the Department’s response is due August 7, with reply papers due August 11. The matter will be fully briefed and considered ready for judicial determination as of August 12.
FI Administrative Reimbursement Changes
Starting August 1, 2024, FIs will bill managed care plans using a three-tier per member per month (PM/PM) schedule. Plans will then bill the state using newly established rate codes and pass the exact amount back to the FI according to this rate structure:
Tier 1: Rate Code 2443
1-159 Direct Care Hours RECEIVED Per Month Per Consumer
FI PMPM Reimbursement Effective 4.1.2022: $146.45
Tier 2: Rate Code 2444
160-479 Direct Care Hours RECEIVED Per Month Per Consumer
FI PMPM Reimbursement Effective 4.1.2022: $387.64
Tier 3: Rate Code 2445
480 and above Direct Care Hours RECEIVED Per Month Per Consumer
FI PMPM Reimbursement Effective 4.1.2022: $1,046.36
HCP has reached out to the Department to ascertain that the change from authorized hours to received hours was intentional but has not received a response. As previously reported, HCP made multiple requests to the Department for detailed information necessary to implement changes to FI payments on August 1. Michael Ogborn, DOH Medicaid Deputy Director, and DOH Medicaid Director Amir Bassiri asserted that plans had sufficient information to re-contract with FIs and that direct care wages are negotiated based on statutory minimum requirements.
HCP will continue requesting additional guidance before the new effective date.
Alliance to Protect Home Care: Next Steps
- On July 31, the Alliance to Protect Home Care, the organization formed to lead the campaign against the implementation of a single, statewide fiscal intermediary (FI), will hold a protest in Manhattan. All interested parties are invited to attend and should reach out to Laura Cardwell, Director of Operations & Events for CDPAANYS/CDANY for the location and other details.
- In addition, the public relations campaign will launch a new series of ads on August 8 featuring a consumer from the Rochester, NY area.
CMS Responds to HCP Concerns
HCP wrote a letter of concern to Daniel Tsai, Deputy Administrator and Director of the Center for Medicaid and CHIP Services at the Centers for Medicare and Medicaid Services (CMS) urging CMS to closely monitor the implementation of the single statewide FI. CMS responded to HCP’s letter indicating that it was in touch with the state and would request they review and respond to the questions and concerns we raised. HCP will follow up with CMS to track any response it receives from DOH.