1. (a) Using the NIS database in accordance with this subsection and § 1187.91 (relating to database), the Department will set prices for the resident care cost category.

   1. (1) The Department will use each nursing facility’s cost reports in the NIS database to make the following computations:

      1. (i) The total resident care cost for each cost report will be divided by the total facility CMI from the available February 1 picture date closest to the midpoint of the cost report period to obtain case-mix neutral total resident care cost for the cost report year.
      2. (ii) The case-mix neutral total resident care cost for each cost report will be divided by the total actual resident days for the cost report year to obtain the case-mix neutral resident care cost per diem for the cost report year.
      3. (iii) The Department will calculate the 3-year arithmetic mean of the case-mix neutral resident care cost per diem for each nursing facility to obtain the average case-mix neutral resident care cost per diem of each nursing facility.
   2. (2) The average case-mix neutral resident care cost per diem for each nursing facility will be arrayed within the respective peer groups, and a median determined for each peer group.
   3. (3) {Reserved}.
   4. (4) The median of each peer group will be multiplied by 1.17, and the resultant peer group price assigned to each nursing facility in the peer group.
   5. (5) The price derived in paragraph (4) for each nursing facility will be limited by § 1187.107 (relating to limitations on resident care and other resident related cost centers) and the amount will be multiplied each quarter by the respective nursing facility MA CMI to determine the nursing facility resident care rate. The MA CMI picture date data used in the rate determination are as follows: July 1 rate—February 1 picture date; October 1 rate—May 1 picture date; January 1 rate—August 1 picture date; and April 1 rate—November 1 picture date.

   6. (6) Except for a new nursing facility, the resident care rate used to establish the nursing facility case-mix per diem rate will be a blended rate for the following rate quarters:

      1. (i) Rate quarter April 1, 2026, through June 30, 2026.
      2. (ii) Rate quarter July 1, 2026, through September 30, 2026.

      3. (iii) Rate quarter October 1, 2026, through December 31, 2026.

         (6.1) The blended rates under paragraph (6) shall be determined as follows:

      4. (i) For rate quarter April 1, 2026, through June 30, 2026, the nursing facility’s blended rate will equal 75% of the nursing facility’s RUG-III resident care rate plus 25% of the nursing facility’s PDPM resident care rate.
      5. (ii) For rate quarter July 1, 2026, through September 30, 2026, the nursing facility’s blended rate will equal 50% of the nursing facility’s RUG-III resident care rate plus 50% of the nursing facility’s PDPM resident care rate.
      6. (iii) For rate quarter October 1, 2026, through December 31, 2026, the nursing facility’s blended rate will equal 25% of the nursing facility’s RUG-III resident care rate plus 75% of the nursing facility’s PDPM resident care rate.

      7. (iv) For the purposes of this paragraph, the following applies:

         1. (A) The RUG-III resident care rate is the average of the October 1, 2025, through December 31, 2025, quarter rate and the January 1, 2026, through March 31, 2026, quarter rate.
         2. (B) The Department will calculate a nursing facility’s PDPM resident care rate under this paragraph in accordance with paragraphs (1)—(5). The CMI values the Department will use to determine each nursing facility’s total facility CMI and facility MA CMI, computed in accordance with § 1187.93 (relating to CMI calculations), will be the PDPM nursing component case-mix group values as set forth in Appendix D (relating to patient driven payment model for case-mix adjusted nursing categories in the nursing facility reimbursement system). The resident assessment that will be used for each resident will be the most recent comprehensive resident assessment.
   7. (7) Beginning with rate quarter January 1, 2027, through March 31, 2027, and thereafter, the Department will calculate each nursing facility’s resident care rate in accordance with the PDPM. The CMI values used to determine each nursing facility’s total facility CMI and facility MA CMI, computed in accordance with § 1187.93, will be the PDPM nursing component case-mix group values as set forth in Appendix D. The resident assessment that will be used for each resident will be the most recent classifiable resident assessment of any type.

2. (b) Using the NIS database in accordance with this subsection and § 1187.91, the Department will set prices for the other resident related cost category.

   1. (1) The Department will use each nursing facility’s cost reports in the NIS database to make the following computations:

      1. (i) The total other resident related cost for each cost report will be divided by the total actual resident days for the cost report year to obtain the other resident related cost per diem for the cost report year.
      2. (ii) The Department will calculate the 3-year arithmetic mean of the other resident related cost for each nursing facility to obtain the average other resident related cost per diem of each nursing facility.
   2. (2) The average other resident related cost per diem for each nursing facility will be arrayed within the respective peer groups and a median determined for each peer group.
   3. (3) {Reserved}.
   4. (4) The median of each peer group will be multiplied by 1.12, and the resultant peer group price assigned to each nursing facility in the peer group. This price for each nursing facility will be limited by § 1187.107 to determine the nursing facility other resident related rate.

3. (c) Using the NIS database in accordance with this subsection and § 1187.91, the Department will set prices for the administrative cost category.

   1. (1) The Department will use each nursing facility’s cost reports in the NIS database to make the following computations:

      1. (i) The total actual resident days for each cost report will be adjusted to a minimum 90% occupancy, if applicable, in accordance with § 1187.23 (relating to nursing facility incentives and adjustments).
      2. (ii) The total allowable administrative cost for each cost report will be divided by the total actual resident days, adjusted to 90% occupancy, if applicable, to obtain the administrative cost per diem for the cost report year.
      3. (iii) The Department will calculate the 3-year arithmetic mean of the administrative cost for each nursing facility to obtain the average administrative cost per diem of each nursing facility.
   2. (2) The average administrative cost per diem for each nursing facility will be arrayed within the respective peer groups and a median determined for each peer group.
   3. (3) {Reserved}.
   4. (4) The median of each peer group will be multiplied by 1.04, and the resultant peer group price will be assigned to each nursing facility in the peer group to determine the nursing facility’s administrative rate.

4. (d) Using the NIS database in accordance with this subsection and § 1187.91, the Department will set a rate for the capital cost category for each nursing facility by adding the nursing facility’s fixed property component, movable property component and real estate tax component and dividing the sum of the three components by the nursing facility’s total actual resident days, adjusted to 90% occupancy, if applicable.

   1. (1) The Department will determine the fixed property component of each nursing facility’s capital rate as follows:

      1. (i) The Department will multiply the total number of the nursing facility’s allowable beds as of April 1, immediately preceding the rate year, by $26,000 to determine the nursing facility’s allowable fixed property cost.
      2. (ii) The Department will multiply the result by the financial yield rate.
   2. (2) The Department will determine the movable property component of each nursing facility’s capital rate based on the audited actual costs of major movable property as set forth in the most recent audited MA-11 cost report available in the NIS database in accordance with § 1187.91. This amount is referred to as the nursing facility’s allowable movable property cost.
   3. (3) The Department will determine the real estate tax cost component of each nursing facility’s capital rate based on the audited actual real estate tax cost as set forth in the most recent audited MA-11 cost report available in the NIS database.

5. (e) The following applies to the computation of nursing facilities’ per diem rates:

   1. (1) The nursing facility per diem rate will be computed by adding the resident care rate, the other resident related rate, the administrative rate and the capital rate for the nursing facility.
   2. (2) {Reserved}.
   3. (3) {Reserved}.

Authority

The provisions of this § 1187.96 amended under sections 201(2), 206(2), 403(b), 443.1(5) and (7) and 454 of the Human Services Code (62 P.S. § § 201(2), 206(2), 403(b), 443.1(5) and (7) and 454).

Source

The provisions of this § 1187.96 amended February 8, 2002, effective July 1, 2001, 32 Pa.B. 734; amended November 11, 2005, effective July 1, 2005, 35 Pa.B. 6232; amended June 23, 2006, effective July 1, 2006, 36 Pa.B. 3207; amended November 26, 2010, effective November 27, 2010, 40 Pa.B. 6782; amended August 26, 2011, effective retroactive to July 1, 2010, 41 Pa.B. 4630; corrected February 3, 2012, effective February 5, 2011, 42 Pa.B 673; amended August 1, 2025, effective August 2, 2025, 55 Pa.B. 5119. Immediately preceding text appears at serial pages (381346), (358355) to (358358), (360205) to (360206) and (372913).

Notes of Decisions

Nursing facilities alleged that legislative bill authorizing Department of Public Welfare to adopt regulations to control increases in payment rates to nursing facilities was unconstitutional and Department regulations adopted under such authority were void; legislative standards in the State Welfare Code and Federal Medicaid Act properly delegate lawmaking power to Department and are adequate to guide and restrain its discretion in establishing payment methodology. Christ v. Department of Public Welfare, 911 A.2d 624, 642—643 (Pa. Cmwlth. 2006).

Cross References

This section cited in 55 Pa. Code § 1187.80 (relating to failure to file an MA-11); 55 Pa. Code § 1187.93 (relating to CMI calculations); 55 Pa. Code § 1187.91 (relating to database); 55 Pa. Code § 1187.95 (relating to general principles for rate and price setting); 55 Pa. Code § 1187.97 (relating to rates for new nursing facilities, nursing facilities with a change of ownership, reorganized nursing facilities, and former prospective payment nursing facilities); 55 Pa. Code § 1187.104 (relating to limitations on payment for reserved beds); and 55 Pa. Code § 1187.141 (relating to nursing facility’s right to appeal and to a hearing).