Universal Settlement Update

Esq. Carl J. Pucci and Stephen Hanse in Finance & Reimbursement

The Universal Settlement process is continuing as the DOH is currently reviewing facility appeal and litigation exclusion lists (NYSHFA has emailed members directly who have not yet responded, as the deadline is next Tuesday, March 31, 2015).

DOH recently provided clarification to certain questions from attorneys and associations as set forth below.  In addition, OMIG is also requiring that facilities submit an “Audit Discontinuation list” (see Q2 listed below).

Facilities must submit their Audit Discontinuation list directly to Richard Zahnleuter, (Director, Bureau of Litigation, DOH) at the following address:  richard.zahnleuter@health.ny.gov by March 31, 2015.

As a reminder, all Universal Settlement background information, including the term sheet, is located at NYSHFA.org (Homepage, under “What’s New”).

Questions and Answers:


Q1:  Could OMIG reviews, investigations and audits that would be discontinued under US be held in abeyance effective immediately pending execution of the US settlement agreement?

A: OMIG has agreed to suspend, as of Friday, February 27, 2015, pending audits through April 24, 2015 such that no new final audit reports will be issued in the interim. This suspension does not include investigations. However, it does mean that no final audit reports will be issued during this four week moratorium, while we work towards executing the Settlement Agreement.

Q2: Extending the Section 10 concept of an “exclusion list” for pending claims, rate appeals and litigation that would be excluded from US, could OMIG prepare a list that would be tantamount to an “inclusion list” or "audit discontinuation list," meaning a list of OMIG reviews, investigations and audits that OMIG would discontinue when US becomes effective.

A: Although an “inclusion list” for audits or an "audit discontinuation list" is not contemplated by Section 10, Section 10 provides a usable roadmap for handling this subject. The State requests that each nursing home provide, on or before March 31, 2015, an "audit discontinuation list," broken down by items or components that each nursing home believes should be discontinued by OMIG pursuant to Section 11.3. OMIG will then assess the lists and release OMIG's assessments on or before April 15, 2015.

Q3: The above request led to a discussion about whether nursing homes that had made hearing requests in OMIG audit contexts would withdraw their hearing requests.  A number of facilities have outstanding hearing requests concerning OMIG audits. Is it correct that these are neither included within the Settlement nor that they need to be listed on the exclusion list because they are neither rate appeals nor lawsuits (see Term Sheet, Section 11.5)?"

A: Hearing requests based on findings in OMIG audits constitute claims that must be withdrawn, discontinued and released if they fall within the “included” matters set forth in Section 1. However, there may be hearing requests challenging certain matters that are excluded. If that is the case, those matters may continue until adjudicated. It is for this reason that the State requests that the nursing homes include matters that are the subject of a hearing request, which they believe should be excluded from the settlement along with their discontinuation list referenced in response to question #2.


Q4.: Please describe the difference between Section 8.2 regarding a facility’s Medicaid rate appeals for the initial processing of 12 month cost reports for eligible rebasings, and Section 8.8 regarding a facility’s Medicaid rate appeals for initial base year operations.

A. The difference between Sections 8.2 and 8.8 is technical difference. The State contemplated in Section 8.2 that the initial processing of 12 month cost reports for eligible rebasings would be excluded. The State contemplated in Section 8.8 that any appeals arising from DOH’s initial processing of 12 month cost reports for eligible rebasings would be excluded.

Q5. Attorneys initiated a discussion regarding the use of a cut-off date to finalize the excluded list.  Suggested dates included March 1, 2015, the date that the nursing homes are expected to submit their exclusion list and December 19, 2014, the date the Term Sheet was distributed to the nursing homes.

A: Consistent with Section 10.2 ("Distributees shall identify, as of the effective date of the Settlement Agreement, any existing claims, rate appeals and litigation...,to be excluded ..."), we need to accomplish this process in two steps. March 31, 2015 should be the cut-off date for the first exclusion list. It will be necessary to revisit the exclusion list again a few days prior to execution of the Settlement Agreement to obtain an interim supplementation to make sure that all excluded matters are indeed identified.

Q6: There was a request that a process for negotiating A/R balances and debt repayment plans with the homes be identified.

A: DOH and OMIG have nearly completed the calculation of the updated A/R figures and will provide the figures to the Associations. Consistent with Section 4.8, please direct any request for a meet and confer on A/R balances and/or debt repayment plans to Matt Leonardo at matthew.leonardo@health.ny.gov. Such requests must be received by March 31, 2015 and such meetings will be set up between April 1 and April 15, 2015.

Q7: A concern was raised that some nursing homes may have filed a rate appeal seeking a cash receipts assessment reconciliation. In that event, should the nursing home put the rate appeal on the exclusion list, and if the nursing home does not put the rate appeal on the exclusion list, will the nursing home still be able to receive the benefit of the reconciliation?

A: Yes, the nursing home should put the rate appeal seeking a cash receipt assessment reconciliation on the exclusion list. The State contemplated that cash receipt assessments would be excluded matters specifically so that those nursing homes that had filed such rate appeals would not lose them through US.

Q8: What would occur if a nursing home intentionally left a "negative" rate appeal off of the nursing home's exclusion list.

A: The sixth Whereas clause provides that the State desires "to settle any claims or counter claims it may have against the Facilities State relating to the prior reimbursement methodology , unless specifically excluded as set forth in this Settlement Agreement ...." If the "negative" rate appeal falls within an excluded category in Sections 8 or 9, then the State reserves the right to process the "negative" rate appeal.

Q9: Why should facilities be required to affirmatively identify as 'excluded' any rate appeals or litigation that pertain to rate periods after 12/31/11, with the exception of the very limited types identified in Section 1.2 (i)-(iv) of the Term Sheet ?

A. There is no need for facilities to do so, provided that it is expressly understood that any rate appeals or litigation that pertain to the matters identified in Section 1.2(i)-(iv) of the Term Sheet are included, regardless of time period.

Q10: Please provide an update on discussions with CMS.

A. We (DOH) have had several discussions with CMS and have formally presented the proposal for approval. The most recent conference call occurred on February 26, 2015. We are expecting written comments from CMS very shortly. We expect that CMS will act expeditiously, as we have impressed upon CMS the dependent nature of US on CMS' approval and the need to execute US as quickly as possible.


Carl J. Pucci
Director, Finance & Reimbursement
518-462-4800 x36

Stephen B. Hanse, Esq.
Vice President & Counsel, Governmental Affairs
518-462-4800 x25