Nf: Occupancy Adjustment Factor

The Department makes adjustments to equitably allocate fixed costs for patients when a NF fails to maintain reasonable occupancy levels. No occupancy adjustment is made against costs used to calculate a property rental rate. Adjustments are made against all other property costs: (7-1-26) 01. Occupancy Levels. If a NF maintains an average occupancy of less than eighty percent (80%) of capacity, the total property costs not including cost paid under a property rental rate, are prorated based upon an eighty percent (80%) occupancy rate. A NF's average occupancy percentage is subtracted from eighty percent (80%) and the result is multiplied by the total fixed costs to determine nonallowable fixed costs. When a NF changes designed capacity, average occupancy for the period before and after the change is computed for each period. (7-1-26) 02. Occupancy Adjustment. NF capacity is computed based on the greater of the largest number of beds under a NF’s license during the reporting period, except when a portion of the NF was converted to use for non- routine NF activities, or a newly constructed facility enters the Medicaid Program. If a NF's designed capacity changes, the number of beds used to determine occupancy is lowered by the capacity amount converted to non- routine NF activities. New NF capacity is based on the number of beds approved by the certificate of need process minus any capacity converted to non-routine NF activities. (7-1-26) 03. Fixed Costs. Occupancy adjustments to fixed costs are considered allowable and reimbursable costs when reported under property cost categories. (7-1-26) 04. Adjustment Exemption. An increase in number of beds and new NFs are not subject to an adjustment for the first six (6) months of licensure or operation. (7-1-26)