(a) Property Rental
Rate. Nursing facilities will be paid a price-based per diem rate based on the
age of each provider's building. The property rental rate is paid in lieu of
reimbursement for capital costs defined at Section
9(c). The property rental
rate does not reimburse for property taxes and property insurance. Property
taxes and property insurance will be reimbursed as an exempt cost as defined at
Section
9(d).
(b) The property rental rates for each
building age were calculated in 2015. 2015 will serve as the base year for each
provider's building age and rental rates effective July 1, 2015 through June
30, 2016. Base year 2015 rental rate per diems by building age are shown in the
table below.
| Age |
Rate |
Age |
Rate
|
Age |
Rate |
Age |
Rate |
| 0 |
15.55 |
11 |
14.20
|
22 |
12.85 |
33 |
11.50 |
| 1 |
15.43 |
12 |
14.08
|
23 |
12.73 |
34 |
11.38 |
| 2 |
15.30 |
13 |
13.95
|
24 |
12.60 |
35 |
11.25 |
| 3 |
15.18 |
14 |
13.83
|
25 |
12.48 |
36 |
11.13 |
| 4 |
15.06 |
15 |
13.71
|
26 |
12.36 |
37 |
11.01 |
| 5 |
14.94 |
16 |
13.59
|
27 |
12.24 |
38 |
10.89 |
| 6 |
14.81 |
17 |
13.46
|
28 |
12.11 |
39 |
10.76 |
| 7 |
14.69 |
18 |
13.34
|
29 |
11.99 |
40 |
10.64 |
| 8 |
14.57 |
19 |
13.22
|
30 |
11.87 |
40+ |
10.64 |
| 9 |
14.45 |
20 |
13.10
|
31 |
11.74 |
| 10 |
14.32 |
21 |
12.97
|
32 |
11.62 |
(c)
The rates in the table above will be used for rate setting. Building ages will
all increase by one (1) year every July 1, beginning on July 1, 2016,
regardless of the original construction date.
(d) Annual Property Rental Rate Adjustment.
Annually on July 1, subject to legislative funding, the prior year rates for
each building age will be adjusted up or down by the percentage change
published in the Marshall Swift index. The percentage change will be determined
using the "Annual Cost Changes" published in the "Current Building Cost
Indexes" section of the Marshall Swift Valuation service publication, or its
successor. The Annual Cost Changes category used will be for the Western
Region, Class D, Nursing Home (convalescent hospital) group. The most recent
publication available at the time of rate setting will be used for the annual
rate adjustment.
(e) Age of the
building. Facilities that existed and participated in Medicaid as of March 2015
were assigned a facility age as of 2015 based on the results of a capital cost
survey that was held in 2013 and updated in 2015. The base year ages will not
be adjusted due to lack of provider participation or cooperation in the
survey.
(f) Buildings with an
adjusted age greater than 40 years will be reimbursed as a 40-year old
building.
(g) New providers that do
not have an existing building age. The age of the building will be determined
based on a request for documentation relating to the historical construction
date, square footage, and costs of material capital additions.
(i) Adequate documentation will include, but
not be limited to, such documents as copies of building permits, tax assessors'
records, receipts, invoices, building contract, and original notes of
indebtedness, total square feet, depreciation schedule, and any other document
deemed necessary.
(ii) If adequate
information is not submitted by the facility by thirty (30) days prior to the
beginning of the next rate quarter to document that the facility, or portion
thereof, is newer than forty (40) years, the age will be set at forty (40)
years. If adequate documentation is provided later, and if it results in a
revised age, the age will be reflected on the first day of the next rate
quarter after the documentation is reviewed.
(h) Re-age Adjustment. For rates paid after
the July 1, 2015 calendar quarter, the effective age of a facility may be
further adjusted when the cost of major repairs, replacement, remodeling, or
renovation of a building results in the change in age by at least one (1) year
when applied to the formula in Section 18(h)(iv) of this chapter.
(i) It is the provider's responsibility to
notify the Department and document costs, square footage, and any other item
needed for the review. The Department may adjust the age after a review of the
documented costs and construction is made.
(ii) Re-age adjustments of one (1) year will
become effective with the next July 1 rate effective date. Re-age adjustments
of two (2) or more years will be effective on the first day of the following
rate quarter after the re-age calculation is completed. At no time will the
re-age adjustment be made retrospectively or mid-rate quarter.
(iii) Projects will not qualify for a re-age
adjustment until all of the costs have been capitalized and the project has
been placed into service.
(iv)
Re-age adjustment formula. The re-age adjustment is calculated using the
following formula: R = 40 x E / S x C, where
|
R =
|
Re-age adjustment.
|
The reduction of age of the facility in
years.
|
|
E =
|
Actual expenses for the construction
|
Expenses related to capitalized assets for fixed
assets including landscaping, sidewalks, egresses, retaining walls, and parking
lots.
The total costs must have been incurred within
twenty-four (24) months of the completion of the construction. For larger
construction projects or additions, 36 months may be granted at the State's
discretion.
|
|
S =
|
Total square footage in the building
|
Gross square feet including common area at the end
of the construction.
|
|
C =
|
The cost of construction for the building in the
year the construction was completed.
|
Source is from costs published by Marshall &
Swift Valuation Service or its successor. Costs reflect current construction
costs for average Class D Nursing Home (convalescent hospital) using the most
current publication. If the publication is late at the time of rate setting,
the prior year amount will be inflated forward using the "Annual Cost Changes"
figure identified in Section 18(d).
|
(v)
If the result of this calculation, "R" is equal to or greater than 1.0, the age
of the building in years will be reduced by this number, rounded to the nearest
whole number for rate setting purposes. In no case will the age be less than
zero (0).
(vi) Re-age Adjusted
Building Age. The beginning age of the building minus the re-age adjustment is
defined as the "re-age adjusted building age." This age is used to select the
rental rate based on the age of the building.
(i) Funding Limit Property Rental Rate
Rebase. If at the time the July 1 rates are being calculated using the base
year property adjusted to the current rate year results in total property
reimbursement equating to more than ten percent (10%) of the total legislative
budget, the property rental rates will be rebased to a lower amount as
determined by the state to shift those legislative dollars from the property
category to the health care and operating rate categories.
