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Virginia Administrative Code
Title 12. Health
Agency 30. Department Of Medical Assistance Services
Chapter 90. Methods and Standards for Establishing Payment Rates for Long-Term Care
10/27/2021

12VAC30-90-310. Normalized Case Mix Index (NCMI).

Appendix V
Normalized Case Mix Index

A. This appendix illustrates how a specialized care provider's Normalized Case Mix Index (NCMI) is used to adjust the prospective routine operating cost base rate and prospective operating ceiling.

B. Assumptions.

1. The nursing facility's fiscal years are December 31, 1996, and December 31, 1997.

2. The average allowable routine nursing labor and nonlabor base rate for December 31, 1996, is $205.

3. The average allowable indirect patient care operating base rate for December 31, 1996, is $90.

4. The allowance for inflation is 3.0% for the fiscal year end beginning January 1, 1997.

5. The nursing facility's statewide ceiling for the fiscal year end beginning January 1, 1997, is $300.

6. The nursing facility's normalized HCFA nursing wage index is 1.0941 for the fiscal year end beginning January 1, 1997.

7. The nursing facility's semiannual normalized NCMIs are as follows:

1996 First semiannual NCMI

1.2000

1996 Second semiannual NCMI

1.2400

1997 First semiannual NCMI

1.2600

C. Calculation of nursing facility's operating ceiling.

1. Period January 1, 1997, through June 30, 1997.

FYE 1997 Statewide Ceiling

$300

Nursing Labor Component Percentage

x 67.22%

= $201.66

Normalized Wage Index

x 1.0941

Adjusted Nursing Labor Ceiling Component

= $220.64

Nursing Nonlabor Ceiling Component

+ $11.49

Adjusted Nursing Labor and Nonlabor Ceiling

= $232.13

FYE 1996 Second semiannual NCMI

x 1.2400

= $287.84

Indirect Patient Care Ceiling Component

($300.00
- 201.66
- 11.49)

= $86.85

Total Facility Operating Ceiling

$287.84

= $374.69

2. Period July 1, 1997, through December 31, 1997.

Adjusted Nursing Labor and Nonlabor Ceiling per subdivision 1 of this subsection

$232.13

FYE 1997 First semiannual NCMI

x 1.2600

= $292.48

Indirect Patient Care Ceiling Component

+ 86.85

Total Facility Operating Ceiling

= $379.33

D. Calculation of nursing facility's prospective operating cost rate.

1. Prospective operating cost base rate.

FYE 1996 Nursing Labor and Nonlabor Operating Base Rate

$205

Allowance for Inflation - FYE 1997

x 1.03

Prospective Nursing Labor and Nonlabor Cost Rate

= $211.15

FYE 1996 Indirect Patient Care Operating Base Rate

$90.00

Allowance for Inflation - FYE 1997

x 1.03

Prospective Indirect Patient Care Operating Cost Rate

= $92.70

2. Calculation of FYE 1996 Average NCMI.

First semiannual Period NCMI

1.2000

Second semiannual Period NCMI

1.2400

Average FYE 1996 NCMI

1.2200

3. Calculation of FYE 1997 NCMI Rate Adjustments.

a. Rate adjustment for the period January 1, 1997, through June 30, 1997.

1996 Second semiannual NCMI

1.2400

1996 Average NCMI (from subdivision 2 of this subsection

1.2200

Calculation:

1.2400/1.2200

Rate Adjustment Factor

= 1.0164

Prospective Nursing Labor and Nonlabor Operating Cost Base Rate (from subdivision 1 of this subsection)

$211.15

x 1.0164

= $214.61

Prospective Indirect Patient Care Operating Cost Rate (from subdivision 1 of this subsection)

+ $92.70

Total Prospective Operating Cost Rate

= $307.31

b. Rate Adjustment for the Period July 1, 1997, through December 31, 1997.

1997 First semiannual NCMI

1.2600

1996 Average NCMI (from subdivision 2 of this subsection)

1.2200

Calculation:

1.2600/1.2200

Rate Adjustment Factor

= 1.0328

Prospective Nursing Labor and Nonlabor Operating Cost Rate (from subdivision 1 of this subsection)

$211.15

Rate Adjustment Factor

x 1.0328

Prospective Indirect Patient Care Operating Cost Rate (from subdivision 1 of this subsection)

$ 92.70

Total Prospective Operating Cost Rate

= $310.78

D. In this illustration the nursing facility's operating reimbursement rate for FYE 1997 would be as follows:

1. For the period January 1, 1997, through June 30, 1997, the operating reimbursement rate would be $307.31 since the prospective operating cost rate is lower than the nursing facility's NCMI adjusted ceiling of $374.69 (from subdivision C 1 of this section).

2. For the period July 1, 1997, through December 31, 1997, the operating reimbursement rate would be $310.78 since the prospective operating cost rate is lower than the nursing facility's NCMI adjusted ceiling of $379.33 (from subdivision C 2 of this section).

Statutory Authority

§ 32.1-325 of the Code of Virginia and Item 322(D)(2a) of Chapter 912 of the 1996 Acts of Assembly.

Historical Notes

Derived from Virginia Register Volume 14, Issue 1, eff. December 1, 1997.

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