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Nursing Home Rate Setting

The Division sets Medicaid payment rates for services provided in Vermont licensed nursing homes (also referred to as nursing facilities) participating in the Medicaid program. The rates are set prospectively, based on each nursing home's costs which are annually reviewed by the Division's auditors for allowability.

The Division of Rate Setting sets Medicaid rates for approximately 40 nursing homes (also referred to as nursing facilities) in Vermont. Vermont Medicaid nursing home rates are set according to rules adopted in accordance with the Vermont Administrative Procedures Act (3 V.S.A. §836), Methods, Standards and Principles for Establishing Payment Rates for Long-Term Care Facilities. In addition to the rules, the Division has implemented certain practices and procedures for the application of the rules.

The Medicaid payment rates for privately owned homes are set prospectively for each quarter, based on the historic costs of providing service in a base year, with certain limits on the amount of costs recognized in each category. The Nursing Care category is adjusted by the home's average Medicaid case-mix score. An annual inflation factor is added to the base year costs to trend the rates forward to the current rate period. Costs are rebased periodically. Property and related costs and ancillary costs are up-dated annually based on the home's settled cost report.

State owned or operated homes are paid retrospectively, based on allowable costs for the state fiscal year.

In addition to the per diem rates paid for each day of service, Medicaid participating homes receive certain supplemental payments. Each year five homes that meet certain criteria will receive quality incentive awards.