Proposed new nursing home rule raises some industry concerns

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Florida nursing homes that care for the poor elderly and disabled saw their Medicaid rates increase by hundreds of millions this year but the money came with a catch. Lawmakers passed a bill in 2022 that requires, for the first time, nursing homes to provide the state with year-end audited financial data. 

The Agency for Health Care Administration (AHCA) held a rule development workshop Thursday to discuss proposed new regulations that must pass in order for the state to start collecting the data.

The Florida Health Care Association (FHCA) has a trio of concerns with the proposal, two of which are related to timing, said Tom Parker, senior director of policy and reimbursement for the association. 

Championed by House Appropriations Committee Chairman Jay Trumbull, the new law requires nursing homes to submit audited year-end financial data to the state within 120 days of the end of their fiscal year. The proposed regulation AHCA floated to would give nursing homes the ability to ask for a one-time 30-day extension to submit the data.

“We’ve requested that it be a 90-day extension rather than 30 days,” Parker told Florida Politics following the meeting.

FHCA is asking the agency to triple the length of the extension for at least two reasons. Parker said there aren’t many certified public accounting firms that prepare the types of audits that will now be required of the nursing home industry. With nearly 700 licensed facilities in need of audits, the availability of CPA firms, Parker predicted, “is going to be a problem.”

Additionally, Parker said, allowing a one-time, 90-day extension would bring the timeframes for the submission of audited financial reports in line with the timeframes nursing homes have to submit Medicaid cost reports.

Each Medicaid-participating nursing home is required to submit cost reports. The data within these cost reports is then used to establish the daily rates nursing homes are paid to provide care to the poor elderly and disabled.

Nursing homes are required to submit the Medicaid cost reports to the state within 150 days of the end of their fiscal years. AHCA’s rules give nursing homes the ability to ask for a one-time, 60-day extension. Parker said in essence nursing homes have 210 days following the end of their fiscal years to submit the Medicaid cost reports.

Changing the 30-day extension in the proposed rule to a 90-day extension would give the nursing homes 210 days to submit the audited financial data to the state.

“These financial reports are going to be very similar to the Medicaid cost reports,” Parker said. “So it makes sense.”

While the law mandating the audited data went into effect July 1, AHCA has just started to develop the requisite rules required to make it happen. Since rules can take months to promulgate, Parker said the association also wants “clarification” as to the effective date. 

Parker said “a lot” of nursing homes have fiscal years that begin in January and end in December. Parker worries that if the proposed rule becomes effective in the middle or end of December, nursing homes will have to scramble to be in compliance.

Parker said “many” of the licensed nursing homes have forgone audits because they haven’t been required to have them until now. Parker said the first-year audit for those facilities will most likely involve two years of review.

Ideally, the FHCA would like the rule to take effect in the first full fiscal year following its implementation, Parker said. That could translate to Jan. 1, 2024 for a nursing home with a January-to-December fiscal year.

“That would give providers subject to this time to work through a prior audit and all that kind of stuff,” Parker said.

The 2022 Session marked the second time in as many years that the Legislature altered the financial reporting requirements for state-licensed nursing homes.

Lawmakers in 2021 passed a bill requiring nursing homes to submit their financial experience and established the Nursing Home Uniform Reporting System (NHURS). Because the industry flagged concerns about the costs of the audits, the Legislature agreed to allow the industry to submit data that had been “certified to be complete and accurate by the chief financial officer of the nursing home.”

Trumbull, who is likely headed to the Florida Senate this November, pushed this year for the data to be audited. He also wanted to have data from a nursing home’s “home office.”  

Requiring the nursing homes to submit audited financial reports puts them on regulatory par with Florida hospitals. The hospital data is included in the Florida Hospital Uniform Reporting System (FHURS).

FHURS data is used for a variety of purposes, from research and analysis to determining a hospital’s Public Medical Assistance Trust Fund (PMATF) assessment. The state levies an assessment on hospitals operating revenues at a rate of 1.5% for inpatient services and 1% for outpatient services. Hospitals have long called the assessment a “sick tax.”

The new nursing home rule AHCA rolled out tracks the regulations in place for the hospitals including reporting requirements about midyear change of ownerships. The proposed regulations would require the new operator of a nursing home to file within 120 days of completion of the change of ownership an audited report capturing financial data from the beginning of the fiscal year up to the change of ownership. 

The rule does allow for the filing to be waived in certain circumstances but Parker said the FHCA would prefer for the provision to be removed from the rule.

Parker said that the requirement makes sense for hospitals given the potential PMATF liability. It makes less sense though, and is a burdensome and expensive requirement, for nursing homes which aren’t taxed on their operating revenue. 

“To task a new operator with trying to get the financials, get them pieced together, get them incorporated with their financials, and try to work through an audit when there is a change of ownership is really complicated,” Parker said. “And nursing homes change ownership a little more often than hospitals do. So it’s going to be really hard for a new operator to report financially and attest to financials from the prior operator.”

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