(A) For each fiscal year, the department of developmental disabilities shall determine each ICF/IID's per medicaid day direct care costs component rate. An ICF/IID's rate shall be determined as follows:

1. (1) Determine the product of the following:

   1. (a) The ICF/IID's quarterly case-mix score determined or assigned under section 5124.193 of the Revised Code for the following calendar quarter:

      1. (i) For the rate determined for fiscal year 2019, the calendar quarter ending December 31, 2017;
      2. (ii) For the rate determined for each subsequent fiscal year, the calendar quarter ending on the last day of March of the calendar year in which the fiscal year begins.

   2. (b) The lesser of the following:

      1. (i) The ICF/IID's cost per case -mix unit for the applicable cost report year as determined under division (B) of this section;
      2. (ii) The maximum cost per case-mix unit for the ICF/IID's peer group for the fiscal year for which the rate is determined as determined under division (C) of this section.
2. (2) Adjust the product determined under division (A)(1) of this section by the inflation rate estimated under division (D) of this section.

(B) To determine an ICF/IID's cost per case-mix unit for a cost report year, the department shall determine the quotient of the following:

1. (1) The ICF/IID's desk-reviewed, actual, allowable, per diem direct care costs for the cost report year;
2. (2) The ICF/IID's annual average case-mix score as determined under section 5124.193 of the Revised Code for the fiscal year for which the rate is determined.

(C)

1. (1) The maximum cost per case-mix unit for a peer group for a fiscal year, other than peer group 5-A, is the following percentage above the peer group's median cost per case-mix unit for that fiscal year:

   1. (a) For peer group 1-A, sixteen per cent;
   2. (b) For peer group 2-A, fourteen per cent;
   3. (c) For peer group 3-A, eighteen per cent;
   4. (d) For peer group 4-A, twenty-two per cent.
2. (2) The maximum cost per case-mix unit for peer group 5-A for a fiscal year is the ninety-fifth percentile of all ICFs/IID in peer group 5-A for the applicable cost report year.
3. (3) In determining the maximum cost per case-mix unit for a peer group under division (C)(1) of this section, the department shall exclude from its determination the cost per case-mix unit of any ICF/IID in the peer group that participated in the medicaid program under the same provider for less than twelve months during the applicable cost report year.
4. (4) In determining the maximum cost per case-mix unit for a peer group under division (C)(1) or (2) of this section, the department shall exclude from its determination the cost per case-mix unit of any ICF/IID in the peer group that has a case- mix score that was assigned by the department to the ICF/IID under division (B) of section 5124.193 of the Revised Code.
5. (5) The department shall not reset a peer group's maximum cost per case-mix unit for a fiscal year under division (C)(1) or (2) of this section based on additional information that the department receives after it sets the maximum for that fiscal year. The department shall reset a peer group's maximum cost per case-mix unit for a fiscal year only if it made an error in setting the maximum for that fiscal year based on information available to the department at the time it originally sets the maximum for that fiscal year.

(D) The department shall estimate the rate of inflation for the eighteen-month period beginning on the first day of July of the applicable cost report year and ending on the last day of December of the fiscal year for which the rate is determined, using the following:

1. (1) Subject to division (D)(2) of this section, the employment cost index for total compensation, health care and social assistance component, published by the United States bureau of labor statistics;
2. (2) If the United States bureau of labor statistics ceases to publish the index specified in division (D)(1) of this section, the index that is subsequently published by the bureau and covers the staff costs of ICFs/IID.