441—185.112 (234) Determination of rates. Rules 441—185.102(234) to 441—185.107(234), 185.109(234) and 185.110(234) shall be held in abeyance for purposes of establishing rates effective January 1, 1998, unless otherwise provided for in these rules. Rates for a service to be effective on or after February 1, 1998, shall be established based on the payment rate negotiated between the provider and the department. This negotiated rate shall be based upon the historical and future reasonable and necessary cost of providing that service, other payment-related factors and availability of funding. Negotiated rates may be increased without negotiation if funds are appropriated for an across-the-board increase. A rate in effect as of December 31, 1997, shall continue in effect until a negotiated rate is established in accordance with the requirements of subrules 185.112(1) to 185.112(3), 185.112(6), or 185.112(12), or a rate is established in accordance with subrule 185.112(14), or until the service is terminated in accordance with subrule 185.112(4).
	 185.112(1) Negotiation of rates. Rates for services to be made effective on or after February 1, 1998, must be established in accordance with this subrule except as provided for at subrule 185.112(12) or 185.112(14).
	  a.   	 On or after January 1, 1998, the department shall begin negotiating payment rates with providers of rehabilitative treatment and supportive services to be effective for services provided on or after February 1, 1998.
	  b.   	 The scope of these negotiations is limited solely to the rate to be paid for each service.
	 (1) 	 No other items, such as, but not limited to, changes in staff qualifications, service definition, required components, allowable costs or any licensing, certification or any contract requirement can be the subject of negotiations or used as a basis for changing rates except as provided for at subparagraph 185.112(1)“f”(7).
	 (2) 	 The initial negotiation of rates pursuant to rule 441—185.112(234) shall encompass all of the services in the existing rehabilitative treatment and supportive services contract.
	  c.   	 The service area manager of the host area is responsible for the negotiation of rates for each provider whose contract for rehabilitative treatment and supportive services is administered by the host area, regardless of where services are provided.
	 (1) 	 The host area shall take into consideration the other service areas served by a provider when negotiating a rate for a service provided in multiple service areas.
	 (2) 	 When a service is provided only in a nonhost area, the two service area managers shall determine which service area will negotiate the rate for that service.
	  d.   	 The service area manager of the host area and the provider are mutually responsible for initiating the rate negotiation process. Negotiations should begin no later than May 1, 1998. Negotiations may be conducted in a manner acceptable to both parties but shall be conducted face to face upon the request of either party.
	  e.   	 The provider must disclose any and all relevant subcontractual and related party relationships related to the provision of rehabilitative treatment or supportive services at the initiation of the rate negotiation process.
	 (1) 	 This disclosure shall include all current and any proposed subcontracts that relate to the direct provision of rehabilitative treatment or supportive services for which rates are being negotiated. The provider shall make a written statement disclosing any current or proposed subcontracts that may relate to the rehabilitative treatment and supportive services for which rates are being negotiated.
	 (2) 	 This disclosure shall include all transactions with related parties as defined at paragraph 185.105(11)“c” or 441—subrule 152.2(18) that may relate to the rehabilitative treatment and supportive services for which rates are being negotiated. The provider shall make a written statement disclosing any current related party transactions that may relate to the rehabilitative treatment and supportive services for which rates are being negotiated. This disclosure is only required when either the department or the provider seeks to establish a rate different than the rate used as the starting point for rate negotiations.
	 (3) 	 Failure by a provider to comply with these requirements shall be considered a violation in accordance with subrule 185.12(6) and may result in sanctions being imposed or the withholding of payments.
	  f.   	 For those services with a nonzero payment rate in effect on December 31, 1997, the rate in effect on December 31, 1997, shall be used as the starting point for rate negotiations. For rates to be effective on or after February 1, 1998, the department and the provider by mutual written agreement may either leave the rate in effect as of December 31, 1997, at its current level or they may raise or lower the rate in effect as of December 31, 1997. Adjustment of the rate in effect as of December 31, 1997, shall be based on the following factors:
	 (1) 	 Changes in the Consumer Price Index for all Urban Consumers (CPI-U). Any adjustment based on changes in the CPI-U shall not exceed the amount by which the CPI-U increased during the previous calendar year.
	 (2) 	 Changes in a provider’s allowable costs based on current actual cost data or documented projections of cost. Allowable costs are those costs not excluded pursuant to rule 441—185.104(234).
	 (3) 	 Changes in program utilization that impact the per unit cost of a program. Rates shall not be adjusted based on utilization levels that are below the minimum effective utilization of 80 percent or actual (whichever is higher) of the licensed or staffed capacity (whichever is less) of the program. If actual utilization is used as a basis for adjusting a rate, the actual effective utilization for the 12-month period immediately preceding the initiation of rate negotiations shall be used.
	 (4) 	 Changes in the department’s expectations of where a service must be delivered.
	 (5) 	 Changes proposed by a provider and agreed to by the department of where a service must be delivered.
	 (6) 	 Loss of a grant by a provider when the grant amount had previously been used to offset expenses which had resulted in a lower rate for rehabilitative treatment and supportive services.
	 (7) 	 Changes in state or federal laws, rules or regulations that result in a change in the costs attributable to the services in question, including minimum wage adjustments.
	 (8) 	 Competitive factors between providers.
	 (9) 	 Department funding availability.
	  g.   	 Existing providers who currently have a contract to provide a service where the payment rate has been established at zero prior to January 1, 1998, may use the weighted average rate established pursuant to paragraph 185.112(2)“c” for that service in lieu of their existing rate as the starting point for negotiations unless they have a nonzero rate for a similar service. If a provider has a nonzero rate for a similar service, the starting point for rate negotiations shall be established pursuant to paragraph 185.112(2)“a” or “b.”
	  h.   	 Negotiated rates are subject to the following additional limitations.
	 (1) 	 For public agencies, profit or other increment above cost is not allowed (see subrule 185.112(5)). For private entities there is no provision for or prohibition of profit in these rules.
	 (2) 	 Rates for cotherapy services continue to be subject to the limitations specified at subparagraph 185.106(4)“c”(2).
	 (3) 	 Rates shall not exceed any rate ceiling established or authorized by the legislature.
	 (4) 	 Rates to be paid may not exceed the limits established by 441—subrule 152.2(17).
	  i.   	 The basis for any and all changes from the rate used as the starting point for negotiations shall be documented. A copy of all documentation shall be attached to the Rehabilitative Treatment and Supportive Services Negotiated Rate Establishment Amendment, Form 470-3404, when it is submitted to the bureau of purchased services for implementation.
	  j.   	 Only the service area manager of the host area may approve the rates negotiated for a provider.
	 (1) 	 This approval shall be based upon the historical cost basis used for establishing those rates and the documented factors justifying variation from those historical costs.
	  1. 	 Payment rates in effect as of December 31, 1997, shall be considered to be sufficiently documented and no justification is required for continuing a rate in effect as of December 31, 1997.
	  2. 	 Payment rates set at the weighted average rate for a service shall be considered to be sufficiently documented and no justification is required for establishing or maintaining a rate at the weighted average level.
	 (2) 	 After both the provider and the service area manager of the host area have signed the Rehabilitative Treatment and Supportive Services Negotiated Rate Establishment Amendment, Form 470-3404, it shall be submitted to the bureau of purchased services along with the written disclosure required at paragraph 185.112(1)“e” and any necessary documentation to support changes in the rate from the historical cost base as required by paragraph 185.112(1)“h.”
	 (3) 	 The effective date of the rate for a new service shall be the effective date of a new contract or the effective date of the contract amendment adding that new service to an existing contract unless a later effective date is agreed to by both parties.
	 (4) 	 The effective date of the rate for an existing service shall be the first of the month following the month in which the Rehabilitative Treatment and Supportive Services Negotiated Rate Establishment Amendment, Form 470-3404, and all necessary supportive documentation and disclosures are received by the bureau of purchased services by the fifteenth of the month.
	  k.   	 Once a negotiated rate is established based on the provisions of this subrule, it shall not be changed or renegotiated during the period of this rule except in the following circumstances:
	 (1) 	 By mutual consent of the provider and the service area manager of the host area based upon the factors delineated at paragraph 185.112(1)“f,” except that rates shall not be changed or renegotiated for the period of July 1, 2000, through June 30, 2009.
	 (2) 	 In accordance with paragraph 185.112(6)“b,” except that rates shall not be changed or renegotiated for services not assumed by a new provider for the period of July 1, 2000, through June 30, 2009.
	 (3) 	 Rates may be changed when funds are appropriated for an across-the-board increase. A 1 percent cost-of-living adjustment will be applied to those rates in effect as of June 30, 2008.
	 185.112(2) New services. When a new provider contracts to provide a rehabilitative treatment or supportive service or an existing provider adds a new rehabilitative treatment or supportive service on or after January 1, 1998, the rate for the new service shall be established based on a payment rate negotiated in accordance with subrule 185.112(1) using the weighted average rate for that service in lieu of an existing rate as the starting point for negotiations.
	  a.   	 If an existing provider already has a rate for a similar service and wishes to establish a second rate for that service, the starting point for rate negotiations for the second rate shall be the starting point used in negotiations for the provider’s already established rate for that similar service.
	  b.   	 If an existing provider has more than one rate for a similar service and wishes to establish an additional rate for that service, the starting point for rate negotiations shall be established by the service area manager of the host area and shall be one of the following: the starting point of that provider’s established rate for the similar service most closely resembling the proposed service, or the simple average of the starting points of all of the provider’s established rates for similar services.
	  c.   	 The weighted average rate is the weighted average rate for each service as of July 1, 1997, as previously established in accordance with subrule 185.109(1).
	  d.   	 For those services where no weighted average rate has been established because there are less than four rates existing for that service or for newly developed rehabilitative treatment and supportive services, the department shall determine the cost of that service by requiring financial and statistical reports reflecting the costs for the new service to be submitted in accordance with rules 441—185.102(234) to 441—185.107(234). Initial projected rates established in accordance with this subrule shall become effective in accordance with subrule 185.107(2).
The report of actual costs pursuant to paragraph 185.103(1)“b” shall be used only to establish the historical costs of the new service which shall be used as the starting point in the rate negotiation process. The negotiated rate established in accordance with subrule 185.112(1) based upon the actual cost report shall become effective in accordance with paragraph 185.112(1)“j.”
	 185.112(3) Rate resolution process. The rate resolution process may be used when the department and a provider are unable to agree upon a rate for a service within 60 days of initiating rate negotiations.
	  a.   	 This process involves obtaining an independent mediator who is agreeable to both parties.
	  b.   	 The cost of the mediator shall be borne equally by the provider and the department. Neither party to the mediation shall be liable for paying for more than that party’s share of the cost for eight hours of mediation unless this is mutually agreed upon prior to initiation of the mediation process.
	  c.   	 The rate resolution process must be concluded within 60 days of its initiation.
	  d.   	 The mediator shall not make rate-setting decisions. The role of the mediator is to facilitate discussions between the parties in an effort to help the parties reach a mutual agreement.
	 185.112(4) Failure to reach agreement on rates. In the event the department and the provider are unable to reach agreement on a rate, the following procedures apply:
	  a.   	 If the department and an existing provider are unable to reach agreement on a negotiated rate for an existing service with a published rate within 60 days of initiating negotiations or by June 30, 1998, whichever comes first, the rate resolution process may be used.
	 (1) 	 Whether or not the rate resolution process is used, if agreement is not reached by September 30, 1998, the service shall be deleted from the provider’s rehabilitative treatment and supportive services contract no later than November 30, 1998.
	 (2) 	 If agreement is reached, the rate shall become effective in accordance with the provisions of paragraph 185.112(1)“i.”
	  b.   	 In the event the department and an existing provider are unable to reach agreement on a rate for a new service or an existing service without a published rate within 60 days of initiating rate negotiations, the rate resolution process may be used.
	 (1) 	 If the rate resolution process is not used, and agreement is not reached within 120 days of initiating negotiations, no rate shall be established.
	  1. 	 For new services, any contract amendment associated with that rate shall be denied.
	  2. 	 For existing services without a rate, the contract shall be amended to delete this service from the contract.
	 (2) 	 If the rate resolution process is used and no rate is agreed upon within 60 days of referral to the rate resolution process, no rate shall be established.
	  1. 	 For new services, any contract amendment associated with that rate shall be denied.
	  2. 	 For existing services without a rate, the contract shall be amended to delete this service from the contract.
	  3. 	 If agreement is reached within the required time frames in either of the above situations, the rate shall become effective in accordance with the provisions of paragraph 185.112(1)“i.”
	  c.   	 In the event the department and a new provider are unable to reach agreement on a rate for a service within 60 days of initiating rate negotiations, the rate resolution process may be used. If no rate is agreed upon within 60 days of initiation of the rate resolution process, no rate shall be established and the services in question shall not be a part of any approved contract for rehabilitative treatment and supportive services. In the event that the department and a new provider cannot reach agreement on any rates, the contract shall be denied.
	  d.   	 In all cases, a service for which a negotiated rate has not been established in accordance with subrule 185.112(1), except as provided for at subrule 185.112(12), on or before September 30, 1998, shall be terminated from the provider’s contract for rehabilitative treatment and supportive services no later than November 30, 1998.
	  e.   	 The department shall not be liable for payment for any rehabilitative treatment or supportive service that does not have a rate established in accordance with subrule 185.112(1), except as provided for at subrule 185.112(12), that is provided after November 30, 1998.
	 185.112(5) Public agencies. Public agencies shall be required to demonstrate their compliance with paragraph 185.106(3)“d.”
	 185.112(6) Interruptions in a program.
	  a.   	 If a provider assumes the delivery of a program from a related party provider as defined at paragraph 185.105(11)“c” or 441—subrule 152.2(18), the rate for the new provider shall remain the same as the rate established for the former provider. The rate for the new provider shall also remain the same as for the former provider if the difference between the former and the new provider is a change in name or a change in the legal form of ownership (i.e., a change from sole proprietorship to corporation).
	  b.   	 Except as provided in paragraph “a” above, when a new provider assumes the delivery of a program from another provider, all rates for the services previously provided by either provider shall need to be reviewed and may be renegotiated at the request of either party.
	  c.   	 If a provider ceases to contract for and provide a service or program on or after July 1, 1996, and prior to establishing a negotiated rate in accordance with subrule 185.112(1), decides to again contract for and provide that program or service, the nonzero rate in effect when the contract ceased shall be used as a starting point in negotiating a new rate in accordance with subrule 185.112(1) for that service.
	  d.   	 If an existing provider ceases to contract for and provide a service or program for which a zero rate has been established, and decides to again contract for and provide that program or service, the rate shall be established in accordance with subrule 185.112(2) and the starting point for negotiations shall be the weighted average rate.
	  e.   	 If a provider ceases to contract for and provide a service or program after a rate has been established in accordance with subrule 185.112(1) and decides to again contract for and provide that program or service, the rate shall be established at the rate in effect when service was interrupted.
	  f.   	 Rates for services interrupted prior to July 1, 1996, shall be treated as a new service in accordance with subrule 185.112(2).
	 185.112(7) Maintenance of fiscal records. Subrules 185.102(1) to 185.102(3), rule 441—185.104(234), subrules 185.105(11) and 185.106(1), paragraph 185.106(3)“d,” and subrule 185.106(4) shall be used as the basis for maintenance of fiscal records.
	 185.112(8) Certified audits. Certified audits shall be conducted and the reports submitted to the department as set forth in subrule 185.102(4).
	 185.112(9) Billing. Subrule 185.106(4) remains in effect for billing purposes.
	 185.112(10) Rates for services provided on or after July 1, 2000. Rescinded IAB 12/1/99, effective 2/1/00.
	 185.112(11) Liability for payment. The department shall not be liable for payment for any programs or services prior to the contract effective date or the effective date for the rate for the program or service.
	 185.112(12) Providers under an exception to policy for establishing rates. When a provider has been granted an exception to rules 441—185.102(234) to 441—185.107(234) or 441—185.109(234) by the director of the department prior to January 1, 1998, the exception shall continue in effect as written for any provider not located in the state of Iowa and for which the exception was based upon another state’s requirement that providers be paid the same rate they are paid for clients from the provider’s home state. The exceptions for all other providers shall terminate and the conditions leading to the exceptions being approved shall be considered in the rate establishment negotiations.
	 185.112(13) Review of rate negotiations. Rate negotiations are considered rate determinations and shall be handled in accordance with the provisions for rate determinations at rule 441—152.3(234). Requests for review of rate determinations shall be granted only if the rate resolution process as defined at subrule 185.112(3) has been used.
	 185.112(14) Establishment of statewide fixed rates. Rescinded IAB 7/2/08, effective 7/1/08.