Our phones have been ringing nonstop over the past month with providers deeply concerned about their Medicaid rates this year. As you know, the additional one-time funds of $138 million included in the fiscal year 2018-2019 state budget were not renewed for the 2019-2020 fiscal year. These were special one-time funds appropriated to aid in the transition of Skilled Nursing Facilities (SNFs) to the Prospective Payment System implemented by the Agency for Health Care Administration (AHCA) October 1, 2018. The funds were used to increase the direct care component price to 105% of the median cost, increase the quality pool of dollars from 6% to 8.5% of total appropriations, and allow for the hold harmless clause to assist providers in maintaining sufficient funding to operate through the transition period to pure PPS by the year 2023. Those additional funds expired on June 30.
The nonrenewal of these funds will have a significant impact on calculated rates effective July 1. AHCA will not update Fair Rental Value portal data, quality scores, or hold harmless rates on July 1. The Direct Patient Care (DPC) price will decrease approximately $5-$6 per day and the quality point value will decrease from $1.23 to around $0.86 per point per day. These two changes will result in many more providers flipping over to their hold harmless rates July 1. For those providers who remain on their PPS calculated rate, the significant increase in the number of providers dropping to their hold harmless rate means the cap on gains for providers that saw an increase in their rates due to PPS will be all but eliminated. The cap on PPS gains is the way Florida funds those providers who saw a significant decrease in their rates due to PPS. That cap has been at slightly over 10% but now it is estimated that PPS rates will be capped at less than one-half of 1%. This means all providers will have July 1 rates somewhere between their hold harmless and one-half of 1% above their hold harmless rate.
Effective October 1, rates will again change as AHCA goes through the full rate setting process that will include updates to quality scores on all measures, recalculating the 20th percentile threshold for quality incentive eligibility, updating the FRV calculations with new information reported through the FRV portal by April 30 and implementing the new Nursing Home Assessment payment levels. AHCA will also update the hold harmless rates for any changes that impacted provider September 1, 2016 rates retroactively through a change of ownership that was pending on or before that date or results of a cost report audit on the report that was used to set the rate September 1, 2016.
Budget appropriations allow for an increase in funding of a $23.5 million ONE-TIME increase that will expire June 30, 2020. $15.5 million will come from the Lease Bond Trust Fund, and federal matching funds will be directed toward raising the quality incentive pool from 6% to 6.5% of non-property related funds. The other $8 million in federal matching funds from the Nursing Home Quality Assessment will go to the base rates. However, in order to remain budget neutral, the cap on PPS gains will likely increase very little, if at all, from the July 1 level. Therefore, providers should not expect to see a significant increase in their rates on October 1.