Section 7 Determination of rates of payment
Section 7. The executive office (1) shall determine, after public hearing, at least annually for institutional providers, and at least biennially for non-institutional providers, the rates to be paid by each governmental unit to providers of health care services and social service programs; provided, however, that for the purposes of this section, social service program providers shall be treated as non-institutional providers; (2) shall determine, after public hearing, at least annually, the rates to be charged by each state institution for general health supplies, care or rehabilitative services and accommodations; (3) shall certify to each affected governmental unit the rates so determined; (4) shall determine, after public hearing, at least annually, and certify to the division of industrial accidents of the department of labor and industries, rates of payment for general health supplies, care or rehabilitative services and accommodations, which rates shall be paid for services under chapter 152; (5) shall, upon request of the division of insurance, assist the division of insurance in the performance of its duties as set forth in section four of chapter one hundred and seventy-six B; (6) may establish fair and reasonable classifications upon which any rates may be based for rest homes, nursing homes and convalescent homes; provided, however, that the executive office shall not cause a decrease in a rate or add a penalty to a rate because such home has an equity position which is less than zero.
Such rates for nursing homes and rest homes, as defined under section seventy-one of chapter one hundred and eleven, shall be established as of October first of each year for facilities whose rate is set on a retrospective basis and as of July first of each year for facilities whose rate is set on a prospective basis. In setting such prospective or retrospective rates of reimbursement, the executive office shall use as base year costs for rate determination purposes the reported costs of the calendar year not more than four years prior to the current rate year, adjusted for reasonableness and to incorporate any audit findings applicable to said base year costs; provided, however, that no base year cost shall be incorporated unless a comprehensive desk audit has been completed for the costs incurred in that base year. In any appeal of any matter arising out of the setting of such prospective rates of reimbursement, the aggrieved party shall not be permitted to introduce into the record of such an appeal evidence of costs for any year other than the base year used to establish the rate. Notwithstanding any other general or special law or regulation to the contrary, except as provided in chapter one hundred and eighteen E, each governmental unit shall pay to a provider of services and each state institution shall charge as a provider of health care services, as the case may be, the rates for general health supplies, care and rehabilitative services and accommodations determined and certified by the executive office.
In establishing rates of payment to providers of services, the executive office shall control rate increases and shall impose such methods and standards as are necessary to ensure reimbursement for those costs which must be incurred by efficiently and economically operated facilities and providers. Such methods and standards may include, but are not limited to the following: peer group cost analyses; ceilings on capital and operating costs; productivity standards; caps or other limitations on the utilization of temporary nursing or other personnel services; use of national or regional indices to measure increases or decreases in reasonable costs; limits on administrative costs associated with the use of management companies; the availability of discounts for large volume purchasers; the revision of existing historical cost bases, where applicable, to reflect norms or models of efficient service delivery; and other means to encourage the cost-efficient delivery of services. Rates produced using these methods and standards shall be in conformance with Title XIX, including the upper limit on provider payments.
In determining rates to be paid by governmental units to providers of services, the executive office shall include as an operating expense of a provider of services any contribution made in lieu of taxes by such provider of services to a city or town and shall establish by regulation those expenses treated as business deductions under the Internal Revenue Code, which shall be included as allowable operating expenses in determining rates of reimbursement. Except for ceilings or maximum rates of reimbursement, which are determined in accordance with rate determination methods imposed on nursing homes, any ceiling or maximum imposed by the division upon the rate of reimbursement to be paid to rest homes shall reflect the actual costs of rest home providers and shall not prevent any such rest home provider from receiving full payment for costs necessarily incurred in the provision of services in compliance with federal or state regulations and requirements.
In determining rates to be paid by governmental units to acute-care hospitals, as defined in section 25B of chapter 111, and any hospital or separate unit of a hospital that provides acute psychiatric services, as defined in said section 25B, the executive office shall include as an operating expense the reasonable cost of providing competent interpreter services as required by section 25J of said chapter 111 or section 23A of chapter 123.
No hospital shall receive reimbursement or payment from any governmental unit for amounts paid to employees, as salary, or to consultant or other firms, as fees, where the primary responsibility of the employees or consultants is, either directly or indirectly, to persuade or seek to persuade the employees of the hospital to support or oppose unionization. Attorney’s fees for services rendered in dealing directly with a union, in advising hospital management of its responsibilities under the National Labor Relations Act, or for services at an administrative agency or court or for services by an attorney in preparation for the agency or in court proceeding shall not be deemed to be support or opposition to unionization.
The executive office shall establish rates on a prospective basis, subject to rules and regulations promulgated by the executive office whenever possible; provided, however, that whenever the executive office by regulation provides that a final rate for a reporting period shall be computed on the actual cost of a provider of services, or a state institution, for such period, it shall establish an interim rate for said provider or institution within twenty-one days of the beginning of said interim rate period, from which interim rate said provider may appeal as provided under section thirty-six.
The executive office shall also adopt regulations to enable each provider or institution to secure adjustment in said interim rate from time to time to meet current reasonable costs. Said provider or institution shall have the right at any time to petition the division for an increase in said interim rate. A petition for an adjustment in an interim rate shall include a certified statement that such a petition is not interposed for delay, a detailed explanation, under oath, of the basis upon which said increase is sought, together with a sworn statement of an independent licensed accountant or independent certified public accountant that he has examined the pertinent data relative to the accounts forming the basis of the petition and that in his opinion, said accounts are as represented by the petitioner. The petitioner shall provide such other information as the executive office shall require. The executive office, subject to such rules and regulations as it may establish, may waive the required independent audit for non-institutional providers whenever the executive office determines that such audit would create a financial hardship. The commissioner shall report in writing his recommendations to the petitioner, giving his reasons therefore in detail, and the petitioner shall have ten days to file objections, arguments and comments to the executive office. The executive office shall thereupon make a rate determination which shall become effective when filed with the state secretary. No appeal under section nine of this chapter shall be allowed from an interim rate determined under the provisions of this paragraph.
Whenever a final rate for a filing period is to be determined after the end of such period, the executive office shall calculate a preliminary final rate within 60 days after receipt of a satisfactory financial and operating cost report from a provider of services or state institution for such filing period. If such reports provide all the information required by the executive office and are attested to by an independent licensed accountant or an independent certified public accountant in such a manner and form as the executive office may require, the executive office may, prior to a field audit, establish such preliminary final rate on the basis of such information submitted. No appeal may be taken from such preliminary final rate. Ninety per cent of the difference between the interim rate and said preliminary final rate shall become payable by or to governmental units when certified to the state secretary. Said preliminary final rate may be promulgated as the final rate of a provider of services or state institution if the division is satisfied with a provider’s report. In the event that a final rate is determined without a field audit, the executive office shall institute such procedures, including random field audits, as are required to assure accurate reporting by providers of health care services and state institutions. If the executive office is not satisfied with the provider’s report, the executive office shall within six months and after a field audit promulgate a different rate of payment.
In establishing rates for nursing pools pursuant to section 72Y of chapter 111, the executive office shall establish annually the limit for the rate for service provided by nursing pools to licensed facilities. The executive office shall establish industry-wide class rates for such services and shall establish separate class rates for services provided to nursing facilities and hospitals. The executive office shall establish separate rates for registered nurses, licensed practical nurses and certified nursing assistants. The executive office may establish rates by geographic region. The rates shall include an allowance for wages, payroll taxes and fringe benefits, which shall be based upon, and shall not exceed, median wages, payroll taxes and fringe benefits paid to permanent medical personnel of the same type at health care facilities in the same geographic region. The rates shall also include an allowance for reasonable administrative expenses and a reasonable profit factor, as determined by the executive office. The executive office may exempt from the rates certain categories, as defined by the executive office, of fixed-term employees that work exclusively at a particular health care facility for a period of at least 90 days and for whose services there is a contract between a facility and a nursing pool registered with the department of public health. The executive office shall establish procedures by which nursing pools shall submit cost reports, which may be subject to audit, to the executive office for the purpose of establishing rates. The executive office shall determine the nursing pool rate contained in this paragraph by considering wage and benefit data collected from cost reports received from nursing pools and from health care facilities, and other relevant information gathered through other collection tools or reasonable methodologies.
The executive office shall set rates for rest homes, nursing homes and convalescent homes, beginning with interim rates for the rate year beginning October first, nineteen hundred and eighty-nine, by recalculating the base year whenever estimated costs for payments to nursing pools are no longer reflective of or are higher than actual costs to such facilities for such payments.
Except as otherwise provided in this section any person aggrieved by any rate determination made under this section shall have a right of appeal as provided under section nine.
The executive office may enter into such contracts or agreements with the federal government, a political subdivision of the commonwealth, or any public or private corporation or organization, as it deems necessary; provided, however, that the executive office shall not enter into any contract or agreement with a private corporation or organization to furnish information and statistical data to be used by said executive office as its sole basis for setting rates, if such private corporation or organization is to make or receive payments based upon the rates so set.
Each governmental unit shall cooperate with the executive office at all times in the furtherance of the executive office’s purposes. Each state institution shall permit the division or any designated representatives thereof, to examine its books and accounts and shall file with the executive office from time to time or upon request such data, statistics, schedules or other information as the executive office may reasonably require.
Each rate established by the executive office shall be deemed a regulation and shall be subject to review as hereinafter provided. The executive office shall promulgate rules and regulations for the administration of its duties and the determination of rates as are herein required subject to the procedures prescribed by chapter thirty A. Every rate, classification and other regulation established by the division shall be consistent where applicable with the principles of reimbursement for provider costs in effect from time to time under Titles XVIII and XIX of the Social Security Act governing reimbursements or grants available to the commonwealth, its departments, agencies, boards, divisions or political subdivisions for general health supplies, care, and rehabilitative services and accommodations.
In the event that any aggregate rates certified by the executive office exceed the upper limit of payment in effect for any period under Titles XVIII or Title XIX of the Social Security Act or any other requirement of said Titles, where applicable, the executive office shall redetermine and recertify any such aggregate rates in order to bring them into compliance with such federal requirement for the entire period during which such upper limit is effective.
The provisions of this section shall not apply to acute or non-acute hospitals; provided, however, that the provisions of this section shall apply to acute and non-acute hospitals for services under the workers’ compensation act.