Industry Insights

Texas Quality Incentive Payment Program

December 2015
Author:  Jon Unroe

Jon Unroe

Partner

Audit

Health Care

2800 Post Oak Boulevard, Suite 3200
Houston, TX 77056-6167

Houston
713.499.4600

Background

On October 1, 2013, Texas allowed nursing home providers whose operating license was owned by a non-state government-owned entity to participate in an Upper Payment Limit (UPL) Supplemental Payment Program. That program allowed participating facilities to receive additional payments for their Medicaid residents up to an amount they otherwise would have been paid by Medicare Part A for the same service. Participating entities would make Intergovernmental Transfer (IGT) payments to the state, which would subsequently draw down federal matching dollars based on the Texas Federal Medical Assistance Percentages (FMAP). These funds then would be redistributed to the participating facilities.

In March 2015, Texas nursing facilities were carved into the Texas STAR+PLUS program. This required Medicaid services provided to nursing facilities in Texas to transition from a fee-for-service reimbursement system to a managed care reimbursement system. Due to this change, the IGT program was replaced by the Minimum Payment Amount Program (MPAP), which essentially allowed for comparable reimbursement. However, these additional reimbursement dollars had to flow through managed care organizations (MCO) before they ultimately were paid to the nursing facility providers.

During its 84th session, the Texas Legislature included a Health and Human Services Commission (HHSC) Budget Rider (Rider 97) to the General Appropriations Act for the 2016‑2017 Biennium, which directed HHSC to transition MPAP to a new Quality Incentive Payment Program (QIPP).

MPAP Versus QIPP

MPAP participants can receive additional funding approximately equal to the difference between the normal Medicaid rates established by the state and the amount the facility would have received if those Medicaid residents would have been covered by Medicare Part A. Participants must meet these requirements:

  • Be a non-state governmental entity with a source of IGT
  • Sign up to participate in the program
  • Make IGT payments in a timely manner as established by the state

Although facilities likely will be able to receive additional funding under QIPP similar to what was available under MPAP, this additional reimbursement no longer will be tied directly to Medicaid and Medicare reimbursement rates. QIPP will require participating facilities meeting certain qualifying criteria to submit projects to HHSC requesting the additional funding as supported in the individual projects. These facility projects are expected to describe specific facility goals for the coming year to meet the intent of Rider 97; according to the bill summary, this includes:

… improv[ing] quality and innovation in the provision of nursing facility services, including but not limited to payment incentives to establish culture change, small house models, staffing enhancements and outcome measures to improve the quality of care and life for nursing facility residents.

Each project proposal will include an overall “value” that represents, monetarily, the project’s potential benefit to residents or others as they might relate to the intent of Rider 97. These valuations will be the basis for determining potential additional funding to the provider as long as the provider meets various goals or metrics throughout the year as defined in each approved project. A portion of this value will be funded through IGT payments from each participating provider. These payments then will be used to draw down federal matching dollars based on FMAP and these matching amounts will fund the remaining portion of each project’s value.

Where We Are Now

The new QIPP program will begin September 1, 2016, and will be available to qualifying MPAP participants, as well as new facilities that want to join QIPP, as long as they also meet certain eligibility criteria.

Current MPAP Participants – Current MPAP participants that want to participate in QIPP are required to submit projects to HHSC by February 1, 2016. Prior to submission to HHSC, the projects must already be approved by a Medicaid MCO with which the provider has an existing contract; therefore, the projects likely will need to be submitted to the MCOs in early January 2016 at the latest.

During the first year of QIPP, there also will be an opportunity for existing MPAP participants to receive 50 percent of the old MPAP additional reimbursement, following the old MPAP rules, without submitting a separate QIPP project. This option is designed to help ease the transition to the new program and only will be available during the first year of QIPP. This option does include some potential cash flow delays compared to QIPP, which should be considered.

New QIPP Participants – Eligible nursing facilities that would like to enter QIPP will be required to submit their projects to HHSC by March 1, 2016. Similar to current MPAP participants, these projects will be required to have been approved by a Medicaid MCO prior to submission to HHSC.

What to Do Now

To meet the timelines described above, facilities must move quickly and consider the following.

  • MPAP Nonparticipants
    • Find eligible IGT partners and begin discussions that include:
      • Negotiating management and lease agreements
      • Completing change-of-ownership paperwork, if applicable
  • Current MPAP Participants as well as MPAP Nonparticipants
    • Begin discussions with MCOs about timing requirements of project submission to the MCOs to meet HHSC deadlines
    • Prepare computations, based on current census data, of project valuations necessary to obtain adequate funding
    • Generate cash flow models based on current census data that will help current and potential partners evaluate the program benefits and related cash flow implications
    • Develop actual projects for submission

For more information regarding this program, contact Jon Unroe at 713.499.4600 or Michael Oatman at 254.766.8244.

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