1. 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.

2. B. Assumptions.

   1. 1. The nursing facility's fiscal years are December 31, 1996, and December 31, 1997.
   2. 2. The average allowable routine nursing labor and nonlabor base rate for December 31, 1996, is $205.
   3. 3. The average allowable indirect patient care operating base rate for December 31, 1996, is $90.
   4. 4. The allowance for inflation is 3.0% for the fiscal year end beginning January 1, 1997.
   5. 5. The nursing facility's statewide ceiling for the fiscal year end beginning January 1, 1997, is $300.
   6. 6. The nursing facility's normalized HCFA nursing wage index is 1.0941 for the fiscal year end beginning January 1, 1997.

   7. 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

3. C. Calculation of nursing facility's operating ceiling.

   1. 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. 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

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

   1. 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. 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. 3. Calculation of FYE 1997 NCMI Rate Adjustments.

      1. 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

      2. 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

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

   1. 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. 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).

Appendix V
Normalized Case Mix Index

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.