Feds Want Their County Nursing Home (IGT) Money Back

by John W Rodat on May 25, 2012

The word is out that the Centers for Medicare and Medicaid Services has made a final decision and will be retroactively recovering “Intergovernmental Transfer” (IGT) funds from counties operating nursing homes in New York. This retroactive recovery goes all the way back to State fiscal year 2006-07. This will be partially counterbalanced by a small enhancement for more recent years. The numbers are preliminary but it appears the net effect statewide will be about $7.2 million, but there’s a lot of variation among the counties. That’s the result of a $46.5 million recovery less a $39.3 million enhancement for more recent years.

The legal crux of the issue is the distinction between calculations based on dates of service rather than calculations based on dates of payments. For some time, the understanding was that the Federal share for this program was based on dates of payment. However, CMS has recently argued that it should be based on dates of service.

The financial crux of the issue is that during the Great Recession, a key component of the ARRA (Federal stimulus) was an increase in the percentage (FMAP) of Medicaid costs that the Federal government would pay. While it varied somewhat depending on unemployment rates, that enhancement only applied during a specified period. So if counties claimed during periods when the FMAP was higher, they were financially advantaged. Unlike regular Medicaid reimbursement for individual services, however, IGT is rarely in place at the time of service. For State fiscal years 2006-07 through 2008-09, there wasn’t even a Federal approval of the entire program until after the fact. Then, counties with nursing homes were offered the opportunity to claim in a block for the entire retroactive period. Counties were also offered the option to take the entire amount in a single lump sum or to spread it over a period up to two and a quarter years.

Now the Federal government is saying that claims had to be based on date of service, so that the ARRA enhanced FMAP would not apply. Thus, there will now be a retroactive recovery. For more recent periods, this new interpretation will advantage counties. But in the meantime, there will be some pain.

The big net losers?

  • Albany, $3.7 million
  • Broome, $788 thousand
  • Delaware, $124 thousand
  • Erie, $5.3 million
  • Fulton, (which has since sold its nursing home), $298 thousand
  • Monroe, $586 thousand
  • Montgomery, $85 thousand
  • Niagara, $1.3 million
  • Sullivan, $982 thousand
  • Ulster, $1.5 million
  • Westchester, $2.1 million

Reportedly, counties will have to pay by the end of June, 2012 – yes, next month. Counties suffering from financial distress and limited cash may be able to spread some of this into the first quarter of 2013. That will be within the current State fiscal year, but would be in the next county fiscal years, allowing them to budget sufficient funds for the payment if they don’t have enough now.

It will be very interesting to see the list of counties that seek and are granted that deferral, won’t it?

There will be some interesting accounting issues as the revenue flowed to county nursing homes and into their enterprise funds, but the recoveries will be lump sum payments from the counties’ general funds. I would expect some guidance from the State Comptroller on how to account for that.

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