Report 2017-109 Recommendation 12 Responses

Report 2017-109: Skilled Nursing Facilities: Absent Effective State Oversight, Substandard Quality of Care Has Continued (Release Date: May 2018)

Recommendation #12 To: Health Care Services, Department of

Health Care Services should use current data to revise and update the peer groups it uses to set Medi-Cal rates. In doing so, it should take into consideration the consolidation of the nursing facility industry.

Annual Follow-Up Agency Response From December 2023

The CSA Final Audit Report recommended DHCS revise the peer groups and in doing so, DHCS take into consideration the consolidation of the nursing facility industry. Refer to Attachments 1 through 4, also provided in the 2022 update. The attachments were provided to demonstrate, following CSA's recommendation, DHCS engaged with nursing facility industry and labor representatives on revising the peer groups effective 2020. During these discussions, the nursing facility industry and labor representatives had the opportunity to provide input regarding consolidation in the nursing home industry for DHCS's consideration. Following discussions with the nursing facility industry and labor representatives, the peer groups were revised and implemented in August 2020.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Annual Follow-Up Agency Response From October 2021

DHCS received federal approval for SPA 20-0023, effective August 1, 2020, which included the revised peer grouping required by Assembly Bill 81. The approved peer groups are based on common facility characteristics. DHCS will continue to periodically review and revise the number and assignment of peer groups and the peer group placement of an individual facility.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

We requested evidence that DHCS considered the consolidation of the nursing home industry in its development of its peer groups. However, DHCS did not respond by the deadline we set for it to provide this information.

Annual Follow-Up Agency Response From November 2020

DHCS is currently in the process of obtaining federal approval for SPA 20-0023 to renew and modify the reimbursement methodology for Skilled Nursing Facility Level-B and Freestanding Subacute facilities in accordance with AB 81 (Chapter 13, Statutes of 2020). The modifications include the revision of the peer grouping, as required by AB 81. DHCS established specific geographic peer groups based on common facility characteristics in consultation with stakeholders. DHCS also has the ability to periodically review and revise the number and assignment of peer groups and the peer group placement of an individual facility. Upon federal approval, the renewal and modification of the reimbursement methodology, including updated peer groupings, for Skilled Nursing Facility Level-B and Freestanding Subacute facilities, will be effective retroactively to August 1, 2020.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Implementation of this recommendation is pending Health Care Services updating its peer groups.

Annual Follow-Up Agency Response From October 2019

DHCS has begun negotiations with the nursing facility industry and interested stakeholders to reauthorize the Assembly Bill 1629 Program, currently mandated to sunset on July 31, 2020, including the possible revision of the peer grouping methodology. DHCS believes that a holistic approach, to include any revisions to the peer grouping methodology as part of the reauthorization, is the most effective approach.

Given that negotiations are ongoing, DHCS will continue to coordinate our oversight efforts with CDPH and OSHPD, through our monthly workgroup meetings.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Implementation of this recommendation is pending Health Care Services updating its peer groups.

1-Year Agency Response

Currently DHCS is in the beginning stages of stakeholder engagement process for the reauthorization of the Assembly Bill 1629 Program, currently mandated to sunset on July 31, 2020, in its entirety. DHCS believes that a holistic approach, to include any revisions to the peer grouping methodology as part of the reauthorization, is the most effective approach.

DHCS will continue to coordinate our oversight efforts with CDPH and OSHPD, through our monthly workgroup meetings.

California State Auditor's Assessment of 1-Year Status: Pending

This recommendation is pending Health Care Services updating its peer groups.

6-Month Agency Response

DHCS is currently developing draft models to potentially replace the current peer group designation utilized for the Freestanding Nursing Facility Level-B reimbursements. DHCS recently obtained 2016 audit data, which allows the department the opportunity to replicate the Navigant cluster analysis utilized for the development of the peer group designation. Additionally, DHCS has begun initial conversations with stakeholders regarding recommendations.

DHCS has also identified existing authorities and policy provisions that may require an update (California Code of Regulation, Title 22, section 52508 and Medi-Cal Provider Bulletins) in order to implement a new peer group designation.

Upon final determination of an alternate peer group methodology, DHCS will conduct the required stakeholder engagement process.

DHCS, CDPH, and OSHPD have formed a workgroup and are meeting monthly to coordinate our oversight efforts regarding collection of ownership and financial information. The goal of the work group is to reduce duplicate efforts and improve the sharing of information between the agencies.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

DHCS continues to explore alternate methods to revise and

update the current peer group designation utilized for the

Freestanding Nursing Facility Level-B and Freestanding Subacute Nursing Facility Level-B facility types. Following a determination of an appropriate approach, to update the peer groups using the current method or use an alternate method altogether, DHCS will comply with the stakeholder engagement requirement. Additionally, DHCS proceeds to identify the relevant authorities that would require updating, should a new method of peer grouping be utilized.

DHCS is committed to coordinating our oversight efforts with CDPH and OSHPD. The first workgroup meeting to discuss cost reporting information and audit processes is scheduled for July 12, 2018.

California State Auditor's Assessment of 60-Day Status: Pending

This recommendation is pending Health Care Services' determining the method for revising and updating its current peer groups.

All Recommendations in 2017-109

Agency responses received are posted verbatim.