AGING AND DISABILITY SERVICES ADMINISTRATION

2006 NH "Dear Administrator" Letters

November 3, 2006

ADSA: NH #2006-027
CHARGING A RESIDENT DIRECTLY OR THROUGH HIS OR HER TRUST FUND ACCOUNT FOR ITEMS COVERED BY THE MEDICAID PER DIEM RATE

Dear Nursing Facility/Home Administrator:

There seems to be a number of interpretations about allowable charges to a resident or the resident’s trust fund account for items and services that the NH contractor is paid for through its Medicaid per diem rate.

For example, the nursing home provides “X” brand of incontinent briefs. A resident wants “Y” brand. Practice has been to charge the Medicaid client’s trust fund for the difference between the price of “X” brand and the price of “Y” brand. This practice is prohibited by federal regulations.

42 CFR 483.10(c) (8) [”Limitation on charges to personal funds”] states, in part:

"The facility may not impose a charge against the personal funds of a resident for any item or service for which payment is made under Medicaid or Medicare (except for applicable deductible and coinsurance amounts).”

This is a hard and fast categorical rule followed by a period. If the item is covered under Medicaid no charge can be made to personal funds because the facility is limited to receiving what the state Medicaid agency pays, plus the resident financial participation required by the state’s Medicaid rules and state plan. Under 42 CFR 483.10(c)(8)(i)(E) lists the items and services specifically included in Medicaid and Medicare “payment” e.g., “incontinence care and supplies”.

The key question an analyst must answer in evaluating a charge to a resident’s account, or a request for reimbursement from a resident’s family or personal representative, for any item or service provided by the facility to the resident is: Could the cost of that item or service be included in the facility’s cost report for computing the facility’s Medicaid payment rate under the states payment methodology? If the answer is yes, no charge can be made to the resident.

If the item is more expensive than what the facility normally provides, nothing prevents the provider from claiming the cost on its cost report. Under RCW 70.129, a nursing home contractor must reasonably accommodate each resident’s choices, and allow the resident an opportunity to participate in his or her own care planning.

Effective immediately, nursing home contractors should follow the above policy.

Sincerely,

Kenneth Callaghan, Chief
Office of Rates Management