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ANNOUNCEMENTS > ODP Implements "Prudent Pay" for Non-State ICF/MR

Effective April, 2008
23 Feb 2008

On February 21, 2008, ODP issued correspondence "to inform you a change is being made to the way claims are processed for all NonState ICF/MR programs."     Citing Federeal Regulation at 42 CFR Part 447.45(d)--Payment for services (relating  timely processing of claims) and attaching Medical Assistance Bulletin 99-06-04, "Prudent Payment of Claims," the letter explains that NonState ICFs/MR had been previously excluded. 

"The Department of Public Welfare has made the decision to begin implementing prudent pay for the NonState ICF/MR program effective April, 2008."


What does this really mean?  According to staff in the Office of Development Programs, there should not be significant change for most ICF/MR providers, depending on what your previous billing practice was.   ICF/MR providers may bill on the first of each month for the previous month's services.  Assuming that the claims are "clean"--i.e.,acceptable and not requiring additional information--the Commonwealth will hold the claim for 21 days, then put the claim into the system, so that providers will see a check on Day 30.   The 21 days begins on the day the claim is received.  No one will receive reimbursement sooner than 30 days, so if you bill on the 15th of the month, you should expect reimbursement  about the 15th of the following month. 

Interest expense has always been an allowable cost for ICFs/MR, and many providers have considered submitting waiver requests for increased interest expense due to the delays in annual rate setting.  A request for unforeseen circumstance, due to increased interest expense, should be very detailed comparing the prior year's actual interest expense to the current year's combination of actual/projected interest expense.   Given that the Prudent Pay will not be implemented until April, 2008, and also that many providers received their FY 2007-2008 interim rates earlier this year than last year, the overall effect in FY 2007-2008 costs is not expected to be that significant per program.   

The annual impact in FY 2008-2009 may be significant, however, and all providers should monitor these costs carefully, with detailed supporting documentation.  If you want to submit a waiver request for the current year, you should do so as soon as possible, given that ODP considers 30 days to be the limitation for such submissions.  (This does not preclude you from submitting a request after the 30 days, however.)  

If you wish to submit a waiver request for FY 2008-2009, the request will be due October 31, 2008.  Keep in mind, also, that the inflationary factor for FY 2008-2009 may not be the usual 2%. 

Click here for the complete correspondence and bulletin.