101 CMR, § 204.06 - Equity and Use and Occupancy Allowance

(1) General. EOHHS will include a return on average equity capital for proprietary providers. EOHHS will include a use and occupancy allowance for nonprofit providers.

(2) Average Equity Capital Allowance. Average equity capital is the difference between the provider's allowable book value of fixed assets, including land, at the beginning and end of the year, and the provider's allowable long-term liabilities at the beginning and end of the year. The average equity capital is then multiplied by a rate of 3.00%.

(a) EOHHS will reduce average equity capital by building, improvements, equipment, and software depreciation allowed in prior years.

(b) EOHHS will not include mortgage acquisition costs, such as capitalized legal fees and prepaid interest on long-term obligations, or equity in buildings or equipment not located at the resident care facility, in average equity capital.

(c) EOHHS will not reduce average equity capital by long-term loans for which interest has been excluded as a result of debt not supported by allowable fixed assets.

(d) If a facility replaces beds, reimbursable equity will be recalculated using the newly established allowable fixed assets and allowable debt.

(e) EOHHS will calculate the per diem average equity capital by multiplying the average equity capital by a rate of 3.00% then dividing by the constructed bed capacity times the days in the rate year times the greater of 90% or the actual utilization rate in the base year.

(3) Use and Occupancy Allowance. EOHHS will increase nonprofit providers' rates to reflect the cost of use and occupancy of net allowable fixed assets. The use and occupancy allowance equals A of the allowance calculated pursuant to 101 CMR 204.06(2).

Notes

101 CMR, § 204.06

Amended by Mass Register Issue 1297, eff. 6/1/2015. Amended by Mass Register Issue 1314, eff. 6/3/2016. Amended by Mass Register Issue 1358, eff. 2/9/2018. Amended by Mass Register Issue 1383, eff. 1/25/2019. Amended by Mass Register Issue 1410, eff. 11/15/2019. Amended by Mass Register Issue 1429, eff. 10/15/2020. Amended by Mass Register Issue 1432, eff. 10/15/2020. Amended by Mass Register Issue 1436, eff. 2/5/2021. Amended by Mass Register Issue 1463, eff. 2/4/2022 (EMERGENCY). Amended by Mass Register Issue 1468, eff. 4/29/2022. Amended by Mass Register Issue 1469, eff. 4/29/2022. Amended by Mass Register Issue 1483, eff. 11/10/2022 (EMERGENCY). Amended by Mass Register Issue 1489, eff. 11/10/2022 (EMERGENCY). Amended by Mass Register Issue 1495, eff. 11/10/2022 (EMERGENCY). Amended by Mass Register Issue 1500, eff. 7/7/2023 (EMERGENCY). Amended by Mass Register Issue 1506, eff. 7/7/2023 (COMPLIANCE).