Iowa court OKs ruling on Medicaid reimbursement

DES MOINES – Nursing homes in Iowa can file certain costs under Medicaid reimbursement expenses that state health officials had previously nixed, according to an Iowa Supreme Court ruling on Friday that affirmed a lower court’s decision.

The Iowa Court of Appeals had ruled that nine long-term facilities in the state can be reimbursed for Medicaid costs that include expenses incurred for services that use Medicare for payment. The services at issue were prescription drugs, X-rays and lab work. The state Department of Human Services had argued these Medicare costs filed under Medicaid reimbursement expenses would result in “double-counting,” since Medicare provides a per diem payment to the nursing facilities.

The annual financial and statistical reports are used by the department to calculate Medicaid per diem reimbursement rates for the nursing homes. DHS deemed at the end of 2008 that costs incurred for Medicare-purchased services were not allowed, and excluded them from the reports.

The facilities said DHS regulations require the inclusion of these costs in the reports, and had done so for years. Up until reports submitted at the end of 2008, DHS had never objected to the reporting of these Medicare expenses, but had apparently excluded them from its calculations.

An administrative law judge agreed with the nursing homes, but the agency’s director eventually said the costs would not be allowed in the expense reports. A district court agreed, though the appeals court later reversed it.

The Iowa Supreme Court said in its ruling that the agency director interpreted the state’s regulation language incorrectly when determining whether the department should deny those costs in facilities’ annual reports. The court said there is no language that explicitly states Medicaid costs should not be included. The report should include all costs incurred and revenue received from all sources, the court said.

It’s unclear what kind of costs would be associated with reimbursing these facilities. Patrick White, an attorney for the nursing homes, said the case is complicated and each facility has different circumstances.

DHS has recently introduced administrative rules to address issues outlined in the case, said state Medicaid director Jennifer Vermeer. Additional information about the changes was not available.