Other Provisions

(1) Special Rate Provisions. (a) New Facilities and Major Additions. EOHHS will calculate projected rates for new facilities and facilities with major additions in the rate year. The provider must file a projected cost report that projects the reasonably anticipated costs and anticipated resident days for a 12-month period commencing with the first date of licensure. 1. New Facilities and Facilities with Major Additions Becoming Operational Prior to July 1st of the Rate Year. a. First Rate Year. EOHHS will calculate a projected rate based on the projected cost report. The effective date of the rate will be the first date of licensure through December 31st of the first rate year that the facility becomes operational. b. Second Rate Year. EOHHS will calculate the rate for the second rate year based on the projected cost report described in 101 CMR 204.07. c. Third Rate Year. The rate for the third rate year is based on the first calendar year cost report of actual expenditures. 2. New Facilities and Facilities with Major Additions Becoming Operational on or after July 1st of the Rate Year. a. First Rate Year. EOHHS will calculate the rates based upon the projected cost report as described in 101 CMR 204.07. The effective dates of the rate will be the first date of licensure through December 31st of the first rate year that the facility becomes operational. b. Second Rate Year. The rate for the second rate year is based on the same projected cost report that was used for the first rate year. c. Third Rate Year. EOHHS will calculate the rate for the third rate year based on the cost report of actual expenditures filed for the second calendar year. 3. Cost Ceilings. EOHHS will use the cost reports as described in 101 CMR 204.07(1) subject to appropriately inflated ceilings and limitations for each cost center. 4. EOHHS will recalculate projected rates based upon actual cost data, once a provider files a cost report(s) that covers the projected rate period. (b) Facilities Sold during the Base Year. If a provider is sold during the base year, EOHHS will use the buyer’s cost reports for the buyer’s period of ownership to determine allowable base year costs. If the Center determines that the buyer’s period of ownership was not long enough to ensure that it is representative of annualized costs, EOHHS may determine the rate using the seller’s cost report. (c) Facilities Closed after the Base Year. If a provider closed after the base year and subsequently reopened, EOHHS will use the base year cost report to calculate the rate. If no base year cost report was filed, EOHHS will calculate the rate using the latest filed cost report and increase the variable cost allowance by an appropriate cost adjustment factor. (d) Private Resident Care Facilities. A facility that was a private facility during the base year and subsequently signs a provider agreement to provide services to publicly aided residents must file a cost report for the latest full year prior to the date of the provider agreement. EOHHS will calculate allowable variable costs using the appropriate ceilings and cost adjustment factor. EOHHS may limit the rate to the amount of the facility’s average rate charges to private patients. (e) Facilities Purchased from a Receiver. If a facility is purchased from a receiver, the Center may use the cost report from a year different from the base year if it determines that the costs for that year more accurately reflect the reasonable and necessary costs of providing resident care, subject to approval of the Department of Transitional Assistance. In such cases, EOHHS will increase the variable cost allowance by an appropriate cost adjustment factor. (f) Rates for Special Programs. EOHHS may include an allowance for costs and expenses to maintain a special program if the provider has received prior written approval from the purchasing agency. (2) Administrative Adjustments. (a) Types of Administrative Adjustments. A provider may file a petition with the Center for an administrative adjustment during the rate year for the following reasons. 1. Substantial Capital Expenditures. A provider may petition for an administrative adjustment for a substantial capital expenditure of at least $10,000 for improvements and limited life assets and $5,000 for equipment if it has either made, or expects to make, a substantial capital expenditure that meets the criteria set forth in 101 CMR 204.08(2)(a)1.a. through f. a. Qualifying Expenses. The provider may petition for recognition of increased depreciation and interest expense as a result of the expenditure. The provider may not petition for mortgage acquisition costs or increased operating costs as a result of the expenditure. b. Expenditures Not Subject to Determination of Need. For improvements, the expenditure amount must be at least 1.5 times the end-of-year basis of building, improvements, and limited life assets. For equipment, the expenditure amount must be at least 1.5 times the end-of-year basis on equipment. A facility’s end-of-year basis is their starting allowable basis for that year, plus any additions and minus any deletions experienced in that year. c. Expenditures Subject to Determination of Need. If the expenditure is subject to determination of need approval, the provider may petition for an adjustment after the Department has determined that need exists for the project and after the time for making an appeal to the Health Facilities Appeals Board has expired or all administrative and judicial reviews of the Department’s determination have been concluded. The provider may petition for an adjustment before the Department has made a determination on the project if the Commissioner of Public Health requests that EOHHS determine the appropriate amount of an adjustment before a determination of need is made with respect to the provider’s proposed expenditure. d. Limitation on Capital. The maximum amount allowed for fixed costs for a facility is described in 101 CMR 204.08(2)(a)1.d. If the provider has not yet incurred the expenses, it must submit satisfactory evidence of its commitment to incur the expenditure. e. EOHHS will certify a temporary administrative adjustment of up to $37.60 upon receipt of the notification of the petition request for the substantial capital expenditure, rate adjustment request, and required supporting documentation. f. Whenever a capital petition is granted, the provider’s allowable basis will be adjusted by increasing the accumulated depreciation by the amounts included in the rates from the effective date of the petition. 2. New Governmental Requirements. A provider may petition for an administrative adjustment if it has incurred, or presents satisfactory evidence of a commitment to incur, substantially different costs necessary to satisfy new requirements of a governmental unit of the Commonwealth or the federal government. Such requirements must be related to provision of resident care. An increase in existing government requirements is not considered a new government requirement. EOHHS will not approve a petition for costs incurred to correct Department of Public Health resident care deficiencies. 3. Certain Increases in Operating Costs. A provider may petition for an adjustment if it has experienced unusual or unforeseen increases in operating costs that are not reflected Effective Date Payment Amount Prior to July 1, 2004 $17.29 July 1, 2004 to December 31, 2006 $22.56 January 1, 2007 to December 31, 2007 $25.82 January 1, 2008 to December 31, 2012 $27.30 January 1, 2013 to November 30, 2018 $28.06 December 1, 2018 Forward $37.60 in the rate. Unusual and unforeseen circumstances are events of a catastrophic nature (for example, fire, flood, or earthquake). The cost increases must gravely threaten the financial stability of the provider. In measuring the financial stability of the provider, EOHHS will consider all of the provider’s expenditures and revenues. 4. Receiver Fees. A receiver appointed under M.G.L. c. 111, § 72N may petition for a rate adjustment to reimburse reasonable receiver compensation and payment of his or her bond. a. The receiver must submit detailed invoices that document the hours expended, a brief description of each activity, and the hourly rate. EOHHS will limit the reimbursement to the reasonable and necessary cost to safeguard the health, safety, and continuity of care to residents and to protect them from adverse health effects of unsuitable transfer. b. EOHHS will limit reasonable receiver compensation to the lower of actual receiver fees or $10,000 for the first 30 days, $7,500 for the second 30 days, $2,500 for the third 30 days, and $1,500 for each 30-day period thereafter. EOHHS may include additional receiver compensation if both the Department of Public Health and the Department of Transitional Assistance approve additional compensation to the receiver due to unique circumstances. EOHHS, the Department, and the Department of Transitional Assistance will evaluate such requests for additional compensation for reasonableness. 5. Transfer of a Facility. If a facility is transferred during the first six months of the year subsequent to the base year, the buyer may file a petition requesting that EOHHS use the buyer’s cost report to determine its rate. The buyer must demonstrate that use of the seller’s base year cost report is not appropriate to project rate year costs. The Center will determine whether use of the buyer’s cost report is appropriate to reflect reasonable and necessary patient care costs. EOHHS will make the appropriate adjustments to reflect the use of a non-base year cost report. (b) General. A petition for an administrative adjustment must contain the following. 1. A petition must include the provider's name, address, a detailed explanation, under oath, of the basis of the petition and documentation supporting the amount requested including, but not limited to, invoices, canceled checks, loan documents, any construction contracts, and the project beginning and ending dates. 2. The provider must submit any other information that EOHHS requires within 30 days of the request. EOHHS will not allow the petition if the provider fails to timely submit the requested information. 3. EOHHS will suspend review of any petition if the provider has failed to submit reports or other information required by 101 CMR 204.00 in a timely manner. If the provider fails to file the required information within 60 days after notification by EOHHS, EOHHS will dismiss the petition for administrative adjustment. 4. EOHHS will suspend review of any petition if the Department notifies the provider that it has identified a quality of care problem. 5. The Center may require that the provider demonstrate that the changes in costs have actually occurred and that the year-end cost report substantiates the financial condition stated in the petition. If the provider fails to provide evidence of such costs within 45 days of the Center request, EOHHS may retroactively reverse the adjustment. (c) Effective Date. An administrative adjustment will be effective on the later of the date the petition is filed with EOHHS or the date on which the event that is the basis of the petition is completed. (d) Standard of Review. 1. In reviewing the petition, EOHHS will consider the following: a. whether the adjustment would result in a significant difference in the rate; b. the costs of other providers offering the same or comparable level of care; and c. the ability of the Department of Transitional Assistance to collect any overpayments that may result from the petition. EOHHS will notify the Department of Transitional Assistance of the petition. 2. EOHHS will review petitions in accordance with the criteria set forth in 101 CMR 204.00 in effect in the year in which they are received by EOHHS, notwithstanding the effective date. (3) Notice of Proposed Rate. EOHHS will send the provider a notice of the proposed rate as follows. (a) Desk Audit. Prior to certification of a prospective rate based upon a desk audit, EOHHS will send the provider a notice of the proposed rate and a copy of adjustments at least ten calendar days prior to the scheduled date of certification. The provider may comment, in writing, on the proposed rate and adjustments during the period between the notice and scheduled date of EOHHS action. Providers requiring additional time to respond may request that EOHHS postpone the scheduled certification. (b) Field Audit. EOHHS will not send a notice prior to certification of a proposed rate that is based upon a field audit if the rate is amended solely to incorporate field audit adjustments that have been discussed at an exit conference. The Center will provide a copy of the field audit adjustments to the provider following the exit conference. (4) Rate Filings. EOHHS will file certified rates of payment for resident care facilities with the Secretary of the Commonwealth. (5) Appeals. Any provider aggrieved by a rate of payment established pursuant to 101 CMR 204.00 may file an appeal with the Division of Administrative Law Appeals, established under M.G.L. c. 7, § 4H within 30 days of the filing of any such rate with the Secretary of the Commonwealth. (6) Administrative Bulletins. EOHHS may issue administrative bulletins to clarify provisions of 101 CMR 204.00, which will be deemed to be incorporated in 101 CMR 204.00. EOHHS will file with the Secretary of the Commonwealth, distribute copies to providers, and make the bulletins accessible to the public at EOHHS’s offices during business hours. (7) Severability. The provisions of 101 CMR 204.00 are severable. If any provision of 101 CMR 204.00 or the application of any provision of 101 CMR 204.00 is held invalid or unconstitutional, such provision will not be construed to affect the validity or constitutionality of any other provision of 101 CMR 204.00 or the application of any other provision. (101 CMR 204.09 Reserved)