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DDES Memo Series 2004-09

June 28, 2004

STATE OF WISCONSIN
Department of Health and Family Services
Division of Disability and Elder Services

To:
Area Administrators/Assistant Area Administrators
Bureau Directors
County Department of Community Programs Directors and Financial Managers
County Department of Aging Directors and Financial Managers
County Departments of Public Health Directors and Financial Managers
County Department of Developmental Disability Services Directors
   and Financial Managers
County Departments of Human Services Directors
County Departments of Social Services Directors
County Medicaid-certified Providers
County Treasurers
Licensing Chiefs/Section Chiefs
Tribal Chairpersons/Human Services Facilitators

From: 
Sinikka Santala, Administrator
Division of Disability and Elder Services

Mark Moody, Administrator
Division of Health Care Financing

Re:  Required Cost Reporting for County Provided Medicaid Services and Impact on Community Aids and CBMAC

Document Summary

The Department of Health and Family Services (DHFS) is in the process of implementing Wisconsin Medicaid Cost Reporting (WIMCR) to claim additional federal funding for the Wisconsin Medicaid program. The federal Centers for Medicare and Medicaid Services requires that the additional claiming be made based on actual allowable and documented county costs. Because of this federal requirement, counties must submit cost reports to DHFS for all covered services provided by county providers. Cost reports for services provided in CY 2003 must be submitted by September 3, 2004.

DHFS will substantially modify the Community Based Medicaid Administrative Claiming (CBMAC) program. Through the WIMCR, the Department will hold counties harmless for revenues they expected to receive through CBMAC and the Community Services Deficit Reduction Benefit (CSDRB).

The Department of Health and Family Services (DHFS) recently received approval from the federal Centers for Medicare and Medicaid Services (CMS) to implement a cost-based payment system for counties certified as Medicaid providers of community-based services. State enabling legislation was also recently enacted as 2003 Wisconsin Act 318. Under the new program, referred to as Wisconsin Medicaid Cost Reporting (WIMCR), DHFS will make Medicaid payment adjustments to counties based on actual costs incurred, as reported by the counties, for services provided in calendar years 2003 through 2005. Payment increases resulting from the adjustments will be funded by General Purpose Revenue (GPR) and federal Medicaid matching funds.

DHFS will also reduce each county’s Community Aids Basic County Allocation (BCA) to offset the Medicaid payment increases the county will receive. For each county, the BCA reduction will equal the amount of the Medicaid payment increases, offset by the amount of payments the county received through the Community Services Deficit Reduction Benefit (CSDRB) and the Community Based Medicaid Administrative Claiming (CBMAC) initiative. Act 318 suspends CSDRB through CY 05. Please see below a discussion of the effect of the Wisconsin Medicaid Cost Reporting Initiative on CBMAC.

Medicaid cost-based payment adjustments under Act 318 sunset at the close of calendar year 2005, thereby restoring Community Aids funding to current levels and reinstating CSDRB. This initiative is expected to result in an additional $53.2 million in funding for base Medicaid benefit costs in FY 05. At the same time, the initiative will be cost neutral for counties.

This initiative includes Medicaid-covered services provided by county agencies for dates of service on and after January 1, 2003 through December 31, 2005. These services include case management services, child/adolescent day treatment, community support program services, home health services, medical day treatment services, mental health crisis intervention services, outpatient mental health and substance abuse services, including evaluation, psychotherapy, substance abuse counseling and intensive in-home mental health services for children under HealthCheck, outpatient mental health and substance abuse services provided in the home and community, personal care services, prenatal care coordination services, and substance abuse day treatment.

CMS requires that the Medicaid payment adjustments be made based on actual county allowable and documented costs. Because of this federal requirement, counties must submit cost reports to DHFS for all covered services provided by county providers under the following timetable:

• In September 2004 for services provided in CY 2003.
• In March 2005 for services provided in CY 2004.
• In March 2006 for services provided in CY 2005.

Counties will be required to submit a separate cost report for each service area. Generally this means that a separate cost report is required for each Medicaid provider number. However, if multiple services are billed under one provider number, then one cost report must be submitted for each service. For example, two reports are required if a home health agency also bills for personal care. Cost reports are not required for any service area for which Medicaid payments were not received, for the applicable time period. Medicaid will prepare a list of all certified county providers for review and certification by the county.

The required cost reports will be virtually identical to CSDRB cost reports, although a few additional services have been added. The report format and submission will be web-based. DHFS will present regional training sessions for counties on the cost reporting tool and the impact on the BCA the week of July 12, 2004. All counties are urged to attend this training.

In CY02, the Department began the Community-Based Medicaid (CBMAC) initiative with counties to capture federal funding for county administrative activities related to county delivery of Medicaid-covered services. The funding is claimed using monthly financial reports from counties and time and task data collected via the Human Services Random Moment Time Study. The Department began claiming CBMAC federal revenue in CY03, although federal approval of the initiative is pending. Through a statutory change adopted in 2003 Act 33, counties receive 50% of CBMAC revenue and the remainder is used by the state.

DHFS has recently determined that the costs to be reported under WIMCR substantially duplicate the costs reported under CBMAC. In order to avoid any overlapping reporting of allowable costs, the CBMAC initiative will be substantially modified. This approach will allow counties to continue to use cost reporting methods similar to those used under CSDRB and will allow the state to claim federal Medicaid matching funds based on an approved rate setting methodology.

Counties that received CY 03 CBMAC payments will keep those payments. A hold harmless payment equal to the actual and projected county shares of CBMAC revenues for CY 04 and CY 05 will be instituted to ensure that there is no negative fiscal effect on counties due to the modification of CBMAC. This payment will take the form of an adjustment to the amount by which the Department will reduce the BCA in CY 04 and CY 05 to offset the new Medicaid payment increases counties will receive. The CBMAC hold harmless adjustment will be in addition to the hold harmless adjustment counties will receive to compensate for the loss of CSDRB revenue.

A revised consolidated time study methodology for claiming federal IV-E funds and CBMAC was implemented as part of the current CBMAC initiative. This consolidated time study will continue through at least the July to September 2004 quarter. The information from that quarter is needed to calculate the CBMAC hold harmless amounts for the future and to determine the IV-E claim. The Department will, as appropriate, implement a more streamlined time study for IV-E claiming and any administrative costs not covered by WIMCR. The CBMAC/IV-E consolidated time study will be in effect as currently structured at least through September 30^th, 2004, although claiming will be limited to only those costs that are not duplicative (IV-E, for example).

The attached table summarizes the schedule for implementing the initiative, including the timing of the Medicaid payment increases, adjustments to the BCA, and cost reporting deadlines.

REGIONAL OFFICE CONTACT: 
Area Administrator

CENTRAL OFFICE CONTACT: 
Diane Waller
OSF Area Administration
(608) 267-8929
WALLEDJ@dhfs.state.wi.us

MEMO WEB SITE: 
http://www.dhfs.wisconsin.gov/partners/local.htm

______________________________________________________________________

Attachment:

WISCONSIN MEDICAID COST REPORTING (WIMCR) WORKPLAN

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