Prospective Reimbursement Plan for HIV Nursing Facility Services

PURPOSE: This rule establishes a payment plan for HIV nursing facility services. The plan describes principles to be followed by Title XIX HIV nursing facility providers in making financial reports and presents the necessary procedures for setting rates, making adjustments, and auditing the cost reports. PUBLISHER’S NOTE: The secretary of state has determined that the publication of the entire text of the material which is incorporated by reference as a portion of this rule would be unduly cumbersome or expensive. This material as incorporated by reference in this rule shall be maintained by the agency at its headquarters and shall be made available to the public for inspection and copying at no more than the actual cost of reproduction. This note applies only to the reference material. The entire text of the rule is printed here. (1) Authority. This regulation is established pursuant to the authorization granted to the Department of Social Services (department), MO HealthNet Division (division), to promulgate rules and regulations. (2) Purpose. This regulation establishes a methodology for determination of reimbursement rates for human immunodeficiency virus (HIV) nursing facilities, operated exclusively for persons with HIV that causes acquired immunodeficiency syndrome (AIDS). Subject to limitations prescribed elsewhere in this regulation, a facility’s reimbursement rate shall be determined by the division as described in this regulation. Any reimbursement rate determined by the division shall be a final decision and will be implemented as set forth in the division’s decision letter. The decisions of the division may be subject to review upon properly filing a complaint with the Administrative Hearing Commission (AHC). A nursing facility seeking review by the AHC must obtain a stay from the AHC to stop the division from implementing its final decision if the AHC determines the facility meets the criteria for a stay and so orders. If the facility appeals the division’s decision, it is the responsibility of the nursing facility to notify any interested parties, including but not limited to hospice providers, that the rate being received is not a final rate and is subject to change. Federal financial participation is available on expenditures for services provided within the scope of the Federal Medicaid Program and made under a court order in accordance with 42 CFR 431.250. (3) General Principles. (A) Provisions of this reimbursement regulation shall apply only to HIV nursing facilities certified for participation in the Missouri Medical Assistance (Medicaid) Program. (B) The reimbursement rates determined by this regulation shall apply only to services for HIV residents provided on or after December 1, 1995. (C) The effective date of this regulation shall be December 1, 1995. (D) The Medicaid Program shall provide reimbursement for HIV nursing facility services based solely on the individual Medicaid-eligible recipient’s covered days of care, within benefit limitations as determined in subsections (5)(D) and (5) (M) multiplied by the facility’s Medicaid reimbursement rate. No payments may be collected or retained in addition to the Medicaid reimbursement rate for covered services, unless otherwise provided for in this plan. Where third-party payment is involved, Medicaid will be the payor of last resort with the exception of state programs such as Vocational Rehabilitation and the Missouri Crippled Children’s Services. (E) The Medicaid reimbursement rate shall be the lower of: 1. The Medicare (Title XVIII) rate, if applicable; or 2. The reimbursement rate as determined in accordance with sections (11), (12), and (13) of this rule. (F) Medicaid reimbursements shall not be paid for services provided to Medicaid-eligible recipients during any time period in which the facility failed to have a Medicaid participation agreement in effect. A reimbursement rate may not be established for a facility if a Medicaid participation agreement is not in effect. (G) When an HIV nursing facility is found not in compliance with federal requirements for participation in the Medicaid Program, sections 1919(b), (c), and (d) of the Social Security Act (42 U.S.C. 1396r), it may be terminated from the Medicaid Program or it may have imposed upon it an alternative remedy, pursuant to section 1919(h) of the Social Security Act (42 U.S.C. 1396r). In accordance with section 1919(h)(3)(D) of the Social Security Act, the alternative remedy, denial of payment for new admission, is contingent upon agreement to repay payments received if the corrective action is not taken in accordance with the approved plan and timetable. It is also required that the HIV nursing facility establish a directed plan of correction in conjunction with and acceptable to the Division of Aging. (H) Upon execution of a Medicaid participation agreement, a qualified facility not previously certified for participation in the Medicaid Program shall be assigned a provider number by the division. Facilities previously certified shall retain the same provider number and interim or prospective rate regardless of any change in ownership. (I) Regardless of changes in control or ownership for any facility certified for participation in the Medicaid Program, the division shall issue payments to the facility identified in the current Medicaid participation agreement. Regardless of changes in control or ownership for any facility certified for participation in Medicaid, the division shall recover from the entity identified in the current Medicaid participation agreement, liabilities, sanctions, and penalties pertaining to the Medicaid Program, regardless of when the services were rendered. (J) Changes in ownership, management, control, operation, leasehold interest by whatever form for any facility previously certified for participation in the Medicaid Program at any time that results in increased capital costs for the successor owner, management, or leaseholder shall not be recognized for purposes of reimbursement. (K) A facility with certified and noncertified beds shall allocate allowable costs related to the provision of HIV nursing facility services on the cost report, in accordance with the cost report instructions. The methods for allocation must be supported by adequate accounting and/or statistical data necessary to evaluate the allocation method and its application. (L) Any facility which is involuntarily terminated from participation in the Medicare Program shall also be terminated from participation in the Medicaid Program on the same date as the Medicare termination. (M) No restrictions nor limitations shall, unless precluded by federal or state regulation, be placed on a recipient’s right to select providers of his/her own choice. (N) Rebasing. Effective July 1, 2004, HIV nursing facility rates shall be rebased on an annual basis, as set forth in section (20). (O) The reimbursement rates authorized by this regulation may be reevaluated at least on an annual basis in light of the provider’s cost experience to determine any adjustments needed to assure coverage of cost increases that must be incurred by efficiently and economically operated providers. (P) Covered supplies, such as, but not limited to, food, laundry supplies, housekeeping supplies, linens, medical supplies, must be accounted for through inventory accounts. Purchases shall be recorded as inventory and shall be expensed in the fiscal year the items are used. Inventory shall be counted at least annually to coincide with the facility’s fiscal year or the end of the cost report period, if different. Expensing of items shall be recorded by adding purchases to the beginning period inventory and subtracting the end of the period inventory. This inventory control shall begin the first fiscal year ending after the effective date of this plan. (Q) Medicaid reimbursement will not be paid for a Medicaideligible resident while placed in a noncertified bed in an HIV nursing facility. (R) All illustrations and examples provided throughout this regulation are for illustration purposes only and are not meant to be actual calculations. (S) Each state fiscal year the department shall submit to the Office of Administration for consideration a budget item based on the HCFA Market Basket Index for Nursing Homes representing a statistical measure of the change in costs of goods and services purchased by HIV nursing facilities during the course of one (1) year. The submission of the budget item by the department has no correlation to determining the costs that are incurred by an efficiently and economically operated facility. Any trend factor granted shall be applied to the patient care, ancillary, and administration cost components. (T) Effective for dates of service beginning April 1, 2010, reimbursement of Medicare/Medicaid crossover claims (crossover claims) for Medicare Part A and Medicare Advantage/ Part C inpatient skilled nursing facility benefits in an HIV nursing facility shall be as follows: 1. Crossover claims for Medicare Part A inpatient skilled nursing facility benefits in which Medicare was the primary payer and the MO HealthNet Division is the payer of last resort for the coinsurance must meet the following criteria to be eligible for MO HealthNet reimbursement: A. The crossover claim must be related to Medicare Part A inpatient skilled nursing facility benefits that were provided to MO HealthNet participants also having Medicare coverage; and B. The crossover claim must contain approved coinsurance days. The amount indicated by Medicare to be the coinsurance due on the Medicare allowed amount is the crossover amount eligible for MO HealthNet reimbursement. The coinsurance amount is based on the days for which Medicare is not the sole payer. These days are referred to as coinsurance days and are days twenty-one (21) through one hundred (100) of each Medicare benefit period; and C. The Other Payer paid amount field on the claim must contain the actual amount paid by Medicare. The MO HealthNet provider is responsible for accurate and valid reporting of crossover claims submitted to MO HealthNet for payment. Providers submitting crossover claims for Medicare Part A inpatient skilled nursing facility benefits to the MO HealthNet program must be able to provide documentation that supports the information on the claim upon request. The documentation must match the information on the Medicare Part A plan’s remittance advice. Any amounts paid by MO HealthNet that are determined to be based on inaccurate data will be subject to recoupment; and D. The nursing facility’s Medicaid reimbursement rate multiplied by the approved coinsurance days exceeds the amount paid by Medicare for the same approved coinsurance days; 2. Crossover claims for Medicare Advantage/Part C (Medicare Advantage) inpatient skilled nursing facility benefits in which a Medicare Advantage plan was the primary payer and the MO HealthNet Division is the payer of last resort for the copay (coinsurance) must meet the following criteria to be eligible for MO HealthNet reimbursement: A. The crossover claim must be related to Medicare Advantage inpatient skilled nursing facility benefits that were provided to MO HealthNet participants who also are either a Qualified Medicare Beneficiary (QMB Only) or Qualified Medicare Beneficiary Plus (QMB Plus); and B. The crossover claim must be submitted as a Medicare UB-04 Part C Institutional Crossover claim through the division’s online Internet billing system; and C. The crossover claim must contain approved coinsurance days. The amount indicated by the Medicare Advantage plan to be the coinsurance due on the Medicare Advantage plan allowed amount is the crossover amount eligible for MO HealthNet reimbursement. The coinsurance amount is based on the days for which the Medicare Advantage plan is not the sole payer. These days are referred to as coinsurance days and are established by each Medicare Advantage plan; and D. The Other Payer paid amount field on the claim must contain the actual amount paid by the Medicare Advantage plan. The MO HealthNet provider is responsible for accurate and valid reporting of crossover claims submitted to MO HealthNet for payment. Providers submitting crossover claims for Medicare Advantage inpatient skilled nursing facility benefits to the MO HealthNet program must be able to provide documentation that supports the information on the claim upon request. The documentation must match the information on the Medicare Advantage plan’s remittance advice. Any amounts paid by MO HealthNet that are determined to be based on inaccurate data will be subject to recoupment; and E. The nursing facility’s Medicaid reimbursement rate multiplied by the approved coinsurance days exceeds the amount paid by the Medicare Advantage plan for the same approved coinsurance days; 3. MO HealthNet reimbursement will be the lower of— A. The difference between the nursing facility’s Medicaid reimbursement rate multiplied by the approved coinsurance days and the amount paid by either Medicare or the Medicare Advantage plan for those same coinsurance days; or B. The coinsurance amount; and 4. HIV nursing facility providers may not submit a MO HealthNet fee-for-service nursing facility claim for the same dates of service on the crossover claim for Medicare Part A and Medicare Advantage inpatient skilled nursing facility benefits. If it is determined that a MO HealthNet fee-for-service nursing facility claim is submitted and payment is made, it will be subject to recoupment. (4) Definitions. (A) Additional beds. Newly constructed beds never certified for Medicaid or never previously licensed by the Division of Aging. (B) Administration. This cost component includes the following lines from the cost report version MSIR-1 (3-95): lines 111–131, 133–149, 151–158. (C) Age of beds. The age is determined by subtracting the initial licensing year from 1995 or the current year, if later. (D) Allowable cost. Those costs which are allowable for allocation to the Medicaid Program based upon the principles established in this regulation. The allowability of costs shall be determined by the Division of Medical Services and shall be based upon criteria and principles included in this regulation, the Medicare Provider Reimbursement Manual (HIM-15) and Generally Accepted Accounting Principles (GAAP). Criteria and principles will be applied using this regulation as the first source, the Medicare Provider Reimbursement Manual (HIM-15) as the second source and GAAP as the third source. (E) Ancillary. This cost component includes the following lines from the cost report version MSIR-1 (3-95): lines 71–89, 91–100. (F) Asset value. The asset value is thirty-two thousand seven hundred twenty-three dollars ($32,723) and is used in calculating the fair rental value system. (G) Average private pay rate. The usual and customary charge for private patient determined by dividing total private patient days of care into private patient revenue net of contractual allowances and bad debt expense for the same service that is included in the Medicaid reimbursement rate. This excludes negotiated payment methodologies with state or federal agencies such as the veteran’s administration or the Missouri Department of Mental Health. (H) Capital. This cost component will be calculated using a fair rental value system. The fair rental value is reimbursed in lieu of the costs reported on lines 102–109 of the cost report version MSIR-1 (3-95) except for amortization of organizational costs. (I) Capital asset. A facility’s building, building equipment, major moveable equipment, minor equipment, land, land improvements, and leasehold improvements as defined in HIM-15. Motor vehicles are excluded from this definition. (J) Capital asset debt. The debt related to the capital assets as determined from the desk audited and/or field audited cost report. (K) Ceiling. The ceiling is determined by applying a percentage to the median per diem for the patient care, ancillary and administration cost components. The percentage is one hundred twenty percent (120%) for patient care, one hundred twenty percent (120%) for ancillary and one hundred ten percent (110%) for administration. (L) Certified bed. Any HIV nursing facility bed that is certified by the Division of Aging to participate in the Medicaid Program. (M) Change of ownership. A change in ownership, control, operator or leasehold interest, for any facility certified for participation in the Medicaid Program. (N) Cost components. The groupings of allowable costs used to calculate a facility’s per diem rate. They are patient care, ancillary, capital, and administration. In addition, a working capital allowance is provided. (O) Cost report. The Financial and Statistical Report for Nursing Facilities, required attachments as specified in paragraph (10) (A)8. of this regulation and all worksheets supplied by the division for this purpose. The cost report shall detail the cost of rendering both covered and noncovered services for the fiscal reporting period in accordance with this regulation, cost report instruction and on forms or diskettes provided by or as approved by the division or both. (P) Data bank. The data from the desk audited and/or field audited rate setting cost report for HIV nursing facilities. (Q) Department. The department, unless otherwise specified, refers to the Missouri Department of Social Services. (R) Desk audit. The Division of Medical Services’ or its authorized agent’s audit of a provider’s cost report without a field audit. (S) Director. The director, unless otherwise specified, refers to the director, Missouri Department of Social Services. (T) Division of Aging. The division of the Department of Social Services responsible for survey, certification, and licensure as prescribed in Chapter 198, RSMo. (U) Division. Unless otherwise specified, division refers to the MO HealthNet Division, the division of the Department of Social Services charged with administration of Missouri’s MO HealthNet Program. (V) Entity. Any natural person, corporation, business, partnership or any other fiduciary unit. (W) Facility asset value. Total asset value less adjustment for age of beds. (X) Facility fiscal year. A facility’s twelve (12)-month fiscal reporting period covering the same twelve (12)-month period as its federal tax year. (Y) Facility size. The number of licensed HIV nursing facility beds as determined from the desk audited and/or field audited cost report. (Z) Fair rental value system (FRVS). The methodology used to calculate the reimbursement of capital. (AA) Field audit. An on-site audit of the HIV nursing facility’s records performed by the department or its authorized agent. (BB) Generally Accepted Accounting Principles (GAAP). Accounting conventions, practices, methods, rules, and procedures necessary to describe accepted accounting practice at a particular time as established by the authoritative body establishing such principles. (CC) HCFA Market Basket Index. An index showing nursing home market basket indexes. The index is published quarterly by DRI/McGraw Hill. The table used in this regulation is titled “DRI Health Care Cost—National Forecasts, HFCA Nursing Home Without Capital Market Basket.” (DD) HIV nursing facility. Any facility licensed under Chapter 198, RSMo granted an exemption from Certificate of Need under section 197.316, RSMo and certified by the Division of Aging. (EE) HIV nursing facility resident. A person that resides in a HIV nursing facility that has the HIV that causes AIDS. (FF) Interim rate. The interim rate shall be based upon the budgeted cost report (version MSIR-1 (3-95)) that has been submitted to the division. The interim rate shall be the sum of one hundred percent (100%) of the budgeted patient care costs, ninety percent (90%) of the budgeted ancillary costs and administration costs, ninety-five percent (95%) of the capital cost, and the working capital allowance using the interim rate cost components. (GG) Licensed bed. Any skilled nursing facility or intermediate care facility bed meeting the licensing requirement of the Division of Aging. (HH) Median. The middle value in a distribution, above and below which lie an equal number of values. This distribution is based on the databank. (II) Nursing facility (NF). Effective October 1, 1990, skilled nursing facilities, filled nursing facilities/intermediate care facilities, and intermediate care facilities as defined in Chapter 198, RSMo, participating in the Medicaid Program will all be subject to the minimum federal requirements found in section 1919 of the Social Security Act. (JJ) Occupancy rate. A facility’s total actual patient days divided by the total bed days for the same period as determined from the desk audited and/or field audited cost report. For a distinct part facility that completes a worksheet one (1) of cost report, version MSIR-1 (3-95), determine the occupancy rate from the total actual patient days from the certified portion of the facility divided by the total bed days from the certified portion for the same period, as determined from the desk audited and/or field audited cost report. (KK) Patient care. This cost component includes the following lines from the cost report version MSIR-1 (3-95): lines 46–69. (LL) Patient day. The period of service rendered to a patient between the census-taking hour on two (2) consecutive days. Census shall be taken in all facilities at midnight each day and a census log maintained in each facility for documentation purposes. “Patient day” includes the allowable temporary leave-of-absence days per subsection (5)(D) and hospital leave days per subsection (5)(M). The day of discharge is not a patient day for reimbursement unless it is also the day of admission. (MM) Per diem. The daily rate calculated using this regula tion’s cost components and used in the determination of a fa cility’s prospective and/or interim rate. (NN) Provider or facility. An HIV nursing facility with a valid Medicaid participation agreement with the Department of Social Services for the purpose of providing HIV nursing facility services to Title XIX-eligible recipients. (OO) Prospective rate. The rate determined from the rate setting cost report. (PP) Rate setting cost report. The desk audited and/or field audited cost report relating to a facility’s rate setting period. (QQ) Rate setting period. The period for which a facility’s prospective rate is determined. The rate setting period shall apply to the annual rebasing of rates as set forth in (3)(N) as well as to facilities who have an interim rate and whose initial prospective rate is being set. For interim rate facilities, the rate setting period is the second full twelve (12)-month cost report following the facility’s initial date of Medicaid certification. (RR) Reimbursement rate. A prospective or interim rate. (SS) Related parties. Parties are related when any one (1) of the following circumstances apply: 1. An entity where, through its activities, one (1) entity’s transactions are for the benefit of the other and such benefits exceed those which are usual and customary in such dealings. 2. An entity has an ownership or controlling interest in another entity; and the entity, or one (1) or more relatives of the entity, has an ownership or controlling interest in the other entity. For the purposes of this paragraph, ownership or controlling interest does not include a bank, savings bank, trust company, building and loan association, savings and loan association, credit union, industrial loan and thrift company, investment banking firm or insurance company unless the entity directly, or through a subsidiary, operates a facility. 3. As used in this regulation, the following terms mean: A. Indirect ownership/interest means an ownership interest in an entity that has an ownership interest in another entity. This term includes an ownership interest in any entity that has an indirect ownership interest in an entity; B. Ownership interest means the possession of equity in the capital, in the stock, or in the profits of an entity. Ownership or controlling interest is when an entity: (I) Has an ownership interest totaling five percent (5%) or more in an entity; (II) Has an indirect ownership interest equal to five percent (5%) or more in an entity. The amount of indirect ownership interest is determined by multiplying the percentages of ownership in each entity; (III) Has a combination of direct and indirect ownership interest equal to five percent (5%) or more in an entity; (IV) Owns an interest of five percent (5%) or more in any mortgage, deed of trust, note, or other obligation secured by an entity if that interest equals at least five percent (5%) of the value of the property or assets of the entity. The percentage of ownership resulting from these obligations is determined by multiplying the percentage of interest owned in the obligation by the percentage of the entity’s assets used to secure the obligation; (V) Is an officer or director of an entity; or (VI) Is a partner in an entity that is organized as a partnership. C. Relative means person related by blood, adoption, or marriage to the fourth degree of consanguinity. (TT) Replacement beds. Newly constructed beds never certified for Medicaid or previously licensed by the Division of Aging or the Department of Health and put in service in place of existing Medicaid beds. The number of replacement beds being certified for Medicaid shall not exceed the number of beds being replaced. (UU) Renovations/major improvements. Capital cost incurred for improving a facility excluding replacement beds and additional beds. (VV) Restricted funds. Funds, cash, cash equivalents, or marketable securities, including grants, gifts, taxes, and income from endowments which must only be used for a specific purpose designated by the donor. (WW) Total facility size. Facility size plus increases minus decreases of licensed HIV nursing facility beds plus calculated bed equivalents for renovations/major improvements. (XX) Unrestricted funds. Funds, cash, cash equivalents, or marketable securities, including grants, gifts, taxes, and income from endowments, that are given to a provider without restriction by the donor as to their use. (YY) Incorporation by Reference. This rule adopts and incorporates by reference the provisions of the— 1. Financial and Statistical Report for Nursing Facilities (version MSIR-1 (3-95)) and the cost report instructions (revised 3/95) published by the Missouri Department of Social Services, MO HealthNet Division, 615 Howerton Court, Jefferson City, MO 65109, August 1, 2008. This rule does not incorporate any subsequent amendments or additions; 2. MO HealthNet Nursing Home Manual, which is published by the Department of Social Services, MO HealthNet Division, 615 Howerton Court, Jefferson City, MO 65109, at its website www.dss.mo.gov/mhd, August 1, 2008. This rule does not incorporate any subsequent amendments or additions. (5) Covered Supplies, Items, and Services. All supplies, items, and services covered in the reimbursement rate must be provided to the resident as necessary. Supplies and services which would otherwise be covered in a reimbursement rate but which are also billable to the Title XVIII Medicare Program must be billed to that program for facilities participating in the Title XVIII Medicare Program. Covered supplies, items, and services include, but are not limited to, the following: (A) Services, items, and covered supplies required by federal or state law or regulation which must be provided by nursing facilities participating in the Title XIX Program; (B) Semi-private room and board; (C) Private room and board when it is necessary to isolate a recipient due to a medical or social condition, examples of which may be contagious infection, loud irrational speech, etc.; (D) Temporary leave of absence days for Medicaid recipients, not to exceed twelve (12) days for the first six (6) calendar months and not to exceed twelve (12) days for the second six (6) calendar months. Temporary leave of absence days must be specifically provided for in the recipient’s plan of care and prescribed by a physician. Periods of time during which a recipient is away from the facility visiting a friend or relative are considered temporary leaves of absence; (E) Provision of personal hygiene and routine care services furnished routinely and uniformly to all residents; (F) All laundry services, including personal laundry; (G) All dietary services, including special dietary supplements used for tube feeding or oral feeding. Dietary supplements prescribed by a physician are also covered items; (H) All consultative services required by federal or state law or regulations; (I) All therapy services required by federal or state law or regulations; (J) All routine care items including, but not limited to, those items specified in Appendix A to this regulation; (K) All nursing services and supplies including, but not limited to, those items specified in Appendix A to this regulation; (L) All nonlegend antacids, nonlegend laxatives, nonlegend stool softeners and nonlegend vitamins. Providers may not elect which nonlegend drugs in any of the four (4) categories to supply; any and all must be provided to residents as needed and are included in a facility’s reimbursement rate; and (M) Hospital leave days as defined in 13 CSR 70-10.070. (6) Noncovered Supplies, Items, and Services. All supplies, items, and services which are either not covered in a facility’s reimbursement rate or are billable to another program in Medicaid, Medicare, or other third party payor. Noncovered supplies, items, and services include, but are not limited to, the following: (A) Private room and board unless it is necessary to isolate a recipient due to a medical or social condition, examples of which may be contagious infection, loud irrational speech, etc. Unless a private room is necessary due to such a medical or social condition, a private room is a noncovered service and a Medicaid recipient or responsible party may therefore pay the difference between a facility’s semi-private charge and its charge for a private room. Medicaid recipients may not be placed in private rooms and charged any additional amount above the facility’s Medicaid reimbursement rate unless the recipient or responsible party specifically requests in writing a private room prior to placement in a private room and acknowledges that an additional amount not payable by Medicaid will be charged for a private room; (B) Supplies, items, and services for which payment is made under other Medicaid Programs directly to a provider or providers other than providers of the HIV nursing facility services; and (C) Supplies, items, and services provided nonroutinely to residents for personal comfort or convenience. (7) Allowable Cost Areas. (A) Compensation of Owners. 1. Compensation of services of owners shall be an allowable cost area. Reasonableness of compensation shall be limited as prescribed in subsection (8)(Q). 2. Compensation shall mean the total benefit, within the limitations set forth in this regulation, received by the owner for the services rendered to the facility. This includes direct payments for managerial, administrative, professional, and other services, amounts paid for the personal benefit of the owner, the cost of assets and services which the owner receives from the provider, and additional amounts determined to be the reasonable value of the services rendered by sole proprietors or partners and not paid by any method previously described in this regulation. Compensation must be paid (whether in cash, negotiable instrument, or in kind) within seventy-five (75) days after the close of the period in accordance with the guidelines published in the Medicare Provider Reimbursement Manual, Part 1, section 906.4. (B) Covered services and supplies as defined in section (5) of this regulation. (C) Capital Assets. 1. Capital Assets shall include historical costs that would be capitalized under GAAP. For example, historical costs would include, but are not limited to, architectural fees, related legal fees, interest and taxes during construction. 2. For purposes of this regulation, any asset or improvement having a useful life greater than one (1) year in accordance with American Hospital Association depreciable guidelines, shall be capitalized. 3. In addition to the American Hospital Association depreciable guidelines, mattresses shall be considered a capitalized asset and shall have a three (3)-year useful life. (D) Depreciation—Vehicle. 1. An appropriate allowance for depreciation on vehicles which are a necessary part of the operation of a HIV nursing facility is an allowable cost. One (1) vehicle per sixty (60) licensed beds is allowable. For example, one vehicle is allowed for a facility with zero to sixty (0–60) licensed beds, two (2) vehicles are allowed for a facility with sixty-one to one hundred twenty (61–120) licensed beds, etc. Depreciation is treated as an administration cost and is reported on line 133 of the cost report, version MSIR-1 (3-95). 2. The depreciation must be identifiable and recorded in the provider’s accounting records, based on the basis of the vehicle and prorated over the estimated useful life of the vehicle in accordance with American Hospital Association depreciable guidelines using the straight line method of depreciation from the date initially put into service. 3. The basis of vehicle cost at the time placed in service shall be the lower of: A. The book value of the provider; B. Fair market value at the time of acquisition; or C. The recognized Internal Revenue Service (IRS) tax basis. 4. The basis of a donated vehicle will be allowed to the extent of recognition of income resulting from the donation of the vehicle. Should a dispute arise between a provider and the division as to the fair market value at the time of acquisition of a depreciable vehicle, an appraisal by a third party is required. The appraisal cost will be the sole responsibility of the HIV nursing facility. 5. Historical cost will include the cost incurred to prepare the vehicle for use by the HIV nursing facility. 6. When a vehicle is acquired by trading in an existing vehicle, the cost basis of the new vehicle shall be the sum of undepreciated cost basis of the traded vehicle plus the cash paid. (E) Insurance. 1. Property insurance. Insurance cost on property of the HIV nursing facility used to provide HIV nursing facility services. Property insurance should be reported on line 107 of the cost report version MSIR-1 (3-95). 2. Other insurance. Liability, umbrella, vehicle, and other general insurance for the HIV nursing facility should be reported on line 136 of the cost report version MSIR-1 (3-95). 3. Workers’ Compensation insurance should be reported on the applicable payroll lines on the cost report for the employee salary groupings. (F) Interest and Finance Costs. 1. Interest will be reimbursed for necessary loans for capital asset debt at the Chase Manhattan prime rate on July 3, 1995, plus two percentage (2%) points. For replacement beds, additional beds, and new facilities placed in service after June 30, 1996, the prime rate will be updated annually on the first business day of each July based on the Chase Manhattan prime rate plus two percentage (2%) points. 2. Loans (including finance charges, prepaid costs, and discounts) must be supported by evidence of a written agreement that funds were borrowed and repayment of the funds are required. The loan costs must be identifiable in the provider’s accounting records, must be related to the reporting period in which the costs are claimed, and must be necessary for the operation, maintenance, or acquisition of the provider’s facility. 3. Necessary means that the loan be incurred to satisfy a financial need of the provider and for a purpose related to recipient care. Loans which result in excess funds or investments are not considered necessary. 4. A provider shall capitalize loan costs (for example lender’s title and recording fees, appraisal fees, legal fees, escrow fees, and other closing costs), finance charges, prepaid interest, and discounts. The loan costs shall be amortized over the life of the loan on a straight line basis. 5. If loans for capital asset debt exceed the facility asset value, the interest associated with the portion of the loan or loans which exceeds the facility asset value shall not be allowable. 6. The following is an illustration of how allowable interest is calculated: Outstanding Capital Asset Debt $2,500,000 Term of Debt 25 years Interest Rate (Chase Manhattan prime + 2%) 10 percent Facility Asset Value $2,000,000 Discount $125,000 Loan Costs $120,000 Allowable interest calculation—use the lesser of the facility asset value or the outstanding capital asset debt. Other Allowable Borrowing Costs: Discount— $2,000,000/$2,500,000 × $125,000 = $100,000 Loan Cost— $2,000,000/$2,500,000 × $120,000 = $ 96,000 Allowable Interest— $2,000,000 × 10% = $200,000 Discount— $100,000/25 years = $ 4,000 Loan Cost— $96,000/25 years = $ 3,840 Allowable Interest and Other Borrowing Costs $207,840 7. Interest cost on vehicle debt for allowable vehicles per paragraph (7)(D)1. is treated as an administration cost and reported on line 134 of the cost report version MSIR-1 (3-95). (G) Rental and Leases. 1. Capitalized leases, as defined by GAAP, will be reimbursed in accordance with subsections (7)(C) and (7)(E). 2. Lease cost related to allowable vehicles per paragraph (7) (D)1. shall be treated as an administrative cost and be reported on line 135 of the cost report version MSIR-1 (3-95). 3. Operating leases, as defined by GAAP, will be part of the fair rental value system. (H) Real Estate and Personal Property Taxes. Taxes levied on or incurred by a facility used to provide HIV nursing facility services. (I) Value of Services of Employees. 1. Except as provided for in this regulation, the value of services performed by employees in the facility shall be included as an allowable cost area to the extent actually compensated, either to the employee or to the supplying organization. 2. Services rendered by volunteers such as those affiliated with the American Red Cross, hospital guilds, auxiliaries, private individuals, and similar organizations shall not be an allowable cost, as the services have traditionally been rendered on a purely volunteer basis without expectation of any form of reimbursement by the organization through which the service is rendered or by the person rendering the service. 3. Services by priests, ministers, rabbis, and similar type professionals shall be an allowable cost, provided that the services are not of a religious nature and are compensated. Costs of wardrobe and similar items shall not be allowable. (J) Employee Benefits. 1. Retirement plans. A. Contributions to IRS qualified retirement plans shall be an allowable cost. B. Amounts funded to pension and qualified retirement plans, together with associated income, shall be recaptured, if not actually paid when due, as an offset to expenses on the cost report. 2. Deferred compensation plans. A. Contributions shall be allowable costs when, and to the extent that, these costs are actually paid by the provider. Provider payments for unfunded deferred compensation plans will be considered an allowable cost only when paid to the participating employee. B. Amounts paid by organizations to purchase taxsheltered annuities for employees shall be treated as deferred compensation actually paid by the provider. C. Amounts funded to deferred compensation plans together with associated income shall be recaptured, if not actually paid when due, as an offset to expenses on the cost report. 3. Types of insurance which are considered an allowable cost: A. Credit life insurance (term insurance), if required as part of a mortgage loan agreement. An example, would be insurance on loans granted under certain federal programs. B. Where the relative(s) or estate of the employee, excluding stockholders, partners and proprietors, is the beneficiary. This type of insurance is considered to be an employee benefit and is an allowable cost. This cost should be reported on the applicable payroll lines on the cost report for the employees salary groupings. C. Health, disability, dental, etc., insurances for employees/owners shall be allowable costs. (K) Education and Training Expenses. 1. The cost of on-the-job training which directly benefits the quality of health care or administration at the facility shall be allowable, except for costs associated with Nurse Aide Training and Competency Evaluation Program. 2. Costs of education and training shall include travel costs but will not include leaves of absence or sabbaticals. (L) Organizational Costs. 1. Organizational cost items include the following: legal fees incurred in establishing the corporation or other organizations; necessary accounting fees; expenses of temporary directors and organizational meetings of directors and stockholders; and fees paid to states for incorporation. 2. Organizational costs shall be amortized ratably over a period of sixty (60) months beginning with the date of organization. When the provider enters the program more than sixty (60) months after the date of organization, no organizational costs shall be recognized. 3. Where a provider is organized within a five (5)-year period prior to its entry into the program and has properly capitalized organizational costs using a sixty (60)-month amortization period, no change in the rate of amortization is required. In this instance the unamortized portion of organizational costs is an allowable cost under the program and shall be amortized over the remaining part of the sixty (60)-month period. 4. For change in ownership after July 18, 1984, allowable amortization will be limited to the prior owner’s allowable unamortized portion of organizational cost. (M) Advertising Costs. Advertising costs which are reasonable and appropriate are allowable. The costs must be a common and accepted occurrence for providing HIV nursing facility services. (N) Cost of Supplies and Services Involving Related Parties. Costs of goods and services furnished by related parties shall not exceed the lower of the cost to the supplier or the prices of comparable goods or services obtained elsewhere. In the cost report a provider shall identify related party suppliers and the type, the quantity, and costs to the related party for goods and services obtained from each such supplier. (O) Minimum Utilization. In the event the occupancy rate of a facility is below eighty-five percent (85%), the administration and capital cost components will be adjusted as though the provider experienced eighty-five percent (85%) occupancy. In no case may costs disallowed under this provision be carried forward to succeeding periods. (P) Central Office/Home Office or Management Company Costs. The allowability of the individual cost items contained within central office/home office or management company costs will be determined in accordance with all other provisions of this regulation. The total of central office/home office and/ or management company costs, as reported on lines 121 and 122 of the cost report, version MSIR-1 (3-95), are limited to seven percent (7%) of gross revenues less contractual allowances. (Q) Start-Up Costs. Expenses incurred prior to opening, as defined in HIM-15 as start-up costs, shall be amortized on a straight line method over sixty (60) months. The amortization shall be reported on the same line on the cost report as the original start-up costs are reported. For example, RN salary prior to opening would be amortized over sixty (60) months and would be reported on line 51 of the cost report, version MSIR-1 (3-95), RN. (R) Reusable Items. Costs incurred for items, such as linen and bedding, but not limited to, shall be classified as inventory when purchased and expensed as the item is used. (S) Nursing Facility Reimbursement Allowance (NFRA). Effective October 1, 1996, the fee assessed to nursing facilities in the state of Missouri for the privilege of doing business in the state will be an allowable cost. (8) Nonallowable Costs. Costs not reasonably related to HIV nursing facility services shall not be included in a provider’s costs. Nonallowable costs include, but are not limited to, the following: (A) Amortization on intangible assets, such as goodwill, leasehold rights, covenants, and purchased certificates of need; (B) Bad debts, contractual allowances, courtesy discounts, charity allowances, and similar adjustments or allowances are offsets to revenues and, therefore, not included in allowable costs; (C) Capital cost increases due solely to changes in ownership; (D) Charitable contributions; (E) Compensation paid to a relative or an owner through a related party to the extent it exceeds the limitations established under subsection (7)(A) of this regulation; (F) Costs such as legal fees, accounting and administrative costs, travel costs, and the costs of feasibility studies, which are attributable to the negotiation or settlement of the sale or purchase of any capital asset by acquisition or merger for which any payment has been previously made under the program; (G) Directors’ fees included on the cost report in excess of two hundred dollars ($200) per month, per individual; (H) Federal, state, or local income and excess profit taxes, including any interest and penalties paid thereon; (I) Late charges and penalties; (J) Finder’s fees; (K) Fund-raising expenses; (L) Interest expense on loans for intangible assets; (M) Legal fees related to litigation involving the department and attorneys fees which are not related to the provision of HIV nursing facility services, such as litigation related to disputes between or among owners, operators, or administrators; (N) Life insurance premiums for officers and owners and related parties except the amount relating to a bona fide nondiscriminatory employee benefits plan; (O) Noncovered supplies, services, and items as defined in section (6); (P) Owner’s compensation in excess of the applicable range of the most recent survey of administrative salaries paid to individuals other than owners for proprietary and nonproprietary providers as published in the updated Medicare Provider Reimbursement Manual Part 1, section 905.2 and based upon the total number of working hours. 1. The applicable range will be determined as follows: A. Number of licensed beds owned or managed; and B. Owner/administrators will be adjusted on the basis of the high range. Owners included in home office costs or management company costs will be adjusted on the high range. All others will be calculated on the median range. 2. The salary identified above will be apportioned on the basis of hours worked in the facility(ies), home office, or management company as applicable to total hours in the facility(ies), home office, or management company; (Q) Prescription drugs; (R) Religious items or supplies or services of a primarily religious nature performed by priests, rabbis, ministers, or other similar types of professionals; (S) Research costs; (T) Resident personal purchases provided nonroutinely to residents for personal comfort or convenience; (U) Salaries, wages, or fees paid to nonworking officers, employees or consultants; (V) Cost of stockholder meetings or stock proxy expenses; (W) Taxes or assessments for which exemptions are available; (X) Value of services (imputed or actual) rendered by nonpaid workers or volunteers; (Y) All costs associated with Nurse Aide Training and Competency Evaluation Program; and (Z) Losses from disposal of assets. (9) Revenue Offsets. (A) Other revenues must be identified separately in the cost report. These revenues are offset against expenses. Such revenues include, but are not limited to, the following: 1. Income from telephone services; 2. Sale of employee and guest meals; 3. Sale of medical abstracts; 4. Sale of scrap and waste food or materials; 5. Cash, trade, quantity, time, and other discounts; 6. Purchase rebates and refunds; 7. Recovery on insured loss; 8. Parking lot revenues; 9. Vending machine commissions or profits; 10. Sales from supplies to individuals other than HIV nursing facility recipients; 11. Room reservation charges other than covered therapeutic home leave days and hospital leave days; 12. Barber and beauty shop revenue; 13. Private room differential; 14. Medicare Part B revenues. A. Revenues received from Part B charges through Medicare intermediaries will be offset. B. Seventy-five percent (75%) of the revenues received from Part B charges through Medicare carriers will be offset; 15. Personal services; 16. Activity income; and 17. Revenue recorded for donated services and commodities. (B) Restricted funds designated by the donor prior to the donation for payment of operating costs will be offset from the associated cost. (C) Restricted funds designated by the donor for capital expenditures will not be offset from allowable expenses. (D) Unrestricted funds not designated by the provider for future capital expenditures will be offset from allowable cost. (E) As applicable, restricted and unrestricted funds will be offset in each cost component, excluding capital, in an amount equal to the cost component’s proportionate share of allowable expense. (F) Any tax levies which are collected by nursing home districts or county homes that are supported in whole or in part by these levies, will not be offset. (G) Gains on disposal of assets will not be offset from allowable expenses. (10) Provider Reporting and Record Keeping Requirements. (A) Annual Cost Report. The cost report (version MSIR-1 (395)) and cost report instructions (revised 3/95) are incorporated by reference and made a part of this rule as published by the Department of Social Services, MO HealthNet Division, 615 Howerton Court, Jefferson City, MO 65109, August 1, 2008. This rule does not incorporate any subsequent amendments or additions. 1. Each provider shall adopt the same twelve (12)-month fiscal period for completing its cost report as is used for federal income tax reporting. 2. Each provider is required to complete and submit to the division an annual cost report, including all worksheets, attachments, schedules, and requests for additional information from the division. The cost report shall be submitted on forms provided by the division for that purpose. Any substitute or computer generated cost report must have prior approval by the division. 3. All cost reports shall be completed in accordance with the requirements of this regulation and the cost report instructions. Financial reporting shall adhere to GAAP, except as otherwise specifically indicated in this regulation. 4. The cost report submitted must be based on the accrual basis of accounting. Governmental institutions operating on a cash or modified cash basis of accounting may continue to report on that basis, provided appropriate treatment for capital expenditures is made under GAAP. 5. Cost reports shall be submitted by the first day of the fourth month following the close of the fiscal period, unless an extension has been granted. 6. If requested in writing and postmarked prior to the first day of the fourth month following the close of the fiscal period, one (1) thirty (30)-day extension of the filing date may be granted. 7. If a cost report is more than ten (10) days past due, payment shall be withheld from the facility until the cost report is submitted. Upon receipt of a cost report prepared in accordance with this regulation, the payments that were withheld will be released to the provider. For cost reports which are more than ninety (90) days past due, the department may terminate the provider’s Medicaid participation agreement and, if terminated, retain all payments which have been withheld pursuant to this provision. 8. Copies of signed agreements and other significant documents related to the provider’s operation and provision of care to Medicaid recipients must be attached (unless otherwise noted) to the cost report at the time of filing unless current and accurate copies have already been filed with the division. Material which must be submitted or available upon request includes, but is not limited to, the following: A. Audit prepared by an independent accountant, including disclosure statements and management letter or SEC Form 10-K; B. Contracts or agreements involving the purchase of facilities or equipment during the last seven (7) years if requested by the division, the department, or its agents; C. Contracts or agreements with owners or related parties; D. Contracts with consultants; E. Documentation of expenditures, by line item, made under all restricted and unrestricted grants; F. Federal and state income tax returns for the fiscal year, if requested by the division, the department, or its agents; G. Leases and/or rental agreements related to the activities of the provider if requested by the division, the department, or its agents; H. Management contracts; I. Medicare cost report, if applicable; J. Review and compilation statement; K. Statement verifying the restrictions as specified by the donor, prior to donation, for all restricted grants; L. Working trial balance actually used to prepare the cost report with line number tracing notations or similar identifications; and M. Schedule of capital assets with corresponding debt. 9. Cost reports must be fully, clearly, and accurately completed. All required attachments must be submitted before a cost report is considered complete. If any additional information, documentation, or clarification requested by the division or its authorized agent is not provided within fourteen (14) days of the date of receipt of the division’s request, payments may be withheld from the facility until the information is submitted. 10. Under no circumstances will the division accept amended cost reports for rate determination or rate adjustment after the date of the division’s notification of the final determination of the rate. (B) Certification of Cost Reports. 1. The accuracy and validity of the cost report must be certified by the provider. Certification must be made by a person authorized by one (1) of the following: for an incorporated entity, an officer of the corporation; for a partnership, a partner; for a sole proprietorship or sole owner, the owner or licensed operator; or for a public facility, the chief administrative officer of the facility. Proof of such authorization shall be furnished upon request. 2. Cost reports must be notarized by a commissioned notary public. 3. The following statement must be signed on each cost report to certify its accuracy and validity: Certification Statement: Misrepresentation or falsification of any information contained in this cost report may be punishable by fine and/or imprisonment under state or federal law. I hereby certify that I have read the above statement and that I have examined the accompanying cost report and supporting schedules prepared by (provider name and number) for the cost report period beginning (date/year) and ending (date/ year), and that to the best of my knowledge and belief, it is a true, correct, and complete statement prepared from the books and records of the provider in accordance with applicable instructions, except as noted. ___________________________ _________________ ___________ (Signature) (Title) (Date) (C) Adequate Records and Documentation. 1. A provider must keep records in accordance with GAAP and maintain sufficient internal control and documentation to satisfy audit requirements and other requirements of this regulation, including reasonable requests by the division or its authorized agent for additional information. 2. Each of a provider’s funded accounts must be separately maintained with all account activity clearly identified. 3. Adequate documentation for all line items on the cost report shall be maintained by a provider. Upon request, all original documentation and records must be made available for review by the division or its authorized agent at the same site at which the services were provided or at the central office/home office if located in the state of Missouri. Copies of documentation and records shall be submitted to the division or its authorized agent upon request. 4. Each facility shall retain all financial information, data, and records relating to the operation and reimbursement of the facility for a period of not less than seven (7) years. (D) Audits. 1. Any cost report submitted may be subject to field audit by the division or its authorized agent. 2. A provider shall have available at the field audit location one (1) or more knowledgeable persons authorized by the provider and capable of explaining the provider’s accounting and control system and cost report preparation, including all attachments and allocations. 3. If a provider maintains any records or documentation at a location which is not the same as the site where services were provided, other than central offices/home offices not located in the state of Missouri, the provider shall transfer the records to the same facility at which the Medicaid services were provided, or the provider must reimburse the division or its authorized agent for reasonable travel costs necessary to perform any part of the field audit in any off-site location, if the location is acceptable to the division. 4. Those providers initially entering the program shall be required to have an annual independent audit of the financial records, used to prepare annual cost reports covering at a minimum the first two (2) full twelve (12)-month fiscal years of their participation in the Medicaid Program, in accordance with GAAP and generally accepted auditing standards. The audit shall include, but may not be limited to, the Balance Sheet, Income Statement, Statement of Retained Earnings, and Statement of Cash Flow. For example, a provider begins participation in the Medicaid Program in March and chooses a fiscal year of October 1 to September 30. The first cost report will cover March through September. That cost report may be audited at the option of the provider. The October 1 to September 30 cost report, the first full twelve (12)-month fiscal year cost report, shall be audited. The next October 1 to September 30 cost report, the second full twelve (12)-month cost report, shall be audited. The audits shall be done by an independent certified public accountant. (E) Change in Provider Status. 1. If a provider notifies, in writing, the director of the Institutional Reimbursement Unit of the division prior to the change of control, ownership, or termination of participation in the Medicaid Program, the division will withhold all remaining payments from the selling provider until the cost report is filed. The fully completed cost report with all required attachments and documentation is due the first day of the fourth month after the date of change of control, ownership, or termination. Upon receipt of a cost report prepared in accordance with this regulation, any payment that was withheld will be released to the selling provider. 2. If the director of the Institutional Reimbursement Unit does not receive, in writing, notification of a change of control or ownership and a cost report ending with the date of the change of control or ownership, upon learning of a change of control or ownership, thirty thousand dollars ($30,000) of the next available full month Medicaid payment, after learning of the change of control or ownership, will be withheld from the provider identified in the current Medicaid participation agreement until a cost report is filed. If the Medicaid payment is less than thirty thousand dollars ($30,000), the entire payment will be withheld. Once the cost report, prepared in accordance with this regulation, is received the payment will be released to the provider identified in the current Medicaid participation agreement. (F) Joint Use of Resources. 1. If a provider has business enterprises in addition to the HIV nursing facility, the revenues, expenses, statistical, and financial records of each separate enterprise shall be clearly identifiable. 2. When the facility is owned, controlled, or managed by an entity or entities that own, control, or manage one (1) or more other facilities, records of central office and other costs incurred outside the facility shall be maintained so as to separately identify revenues and expenses of, and allocations to, individual facilities. Direct allocation of cost, such as RN consultant, which can be directly identifiable in the central office/home office cost and directly allocated to a facility by actual amounts or actual time spent. These direct costs shall be reported on the appropriate lines of the cost report. Allocation of central office/home office or management company costs to individual facilities should be consistent from year-to-year. If a desk audit or field audit establishes that records are not maintained so as to clearly identify information required by this regulation, those commingled costs shall not be recognized as allowable costs in determining the facility’s Medicaid reimbursement rate. Allowability of these costs shall be determined in accordance with the provisions of this regulation. (11) Cost Components and Per-Diem Calculation. The division will use the HIV nursing facility rate setting cost report. (A) Patient Care. Each HIV nursing facility’s patient care per diem shall be the lower of— 1. Allowable cost per patient day for patient care as determined by the division from the rate setting cost report; or 2. The per diem ceiling of one hundred twenty percent (120%) of the patient care median determined by the division from the data bank. (B) Ancillary. Each HIV nursing facility’s ancillary per diem will be the lower of— 1. Allowable cost per patient day for ancillary as determined by the division from the rate setting cost report; or 2. The per diem ceiling of one hundred twenty percent (120%) of the ancillary median determined by the division from the data bank. (C) Administration. Each HIV nursing facility’s administration per diem shall be the lower of— 1. Allowable cost per patient day for administration as determined by the division from the rate setting cost report and adjusted for minimum utilization, if applicable, as described in subsection (7)(O); or 2. The per diem ceiling of one hundred ten percent (110%) of the administration median determined by the division from the data bank. (D) Capital. Each HIV nursing facility’s capital per diem shall be determined using the fair rental value system as follows: 1. Rental value. A. Determine the total asset value. (I) Determine facility size from the rate setting cost report. (II) Determine the number of increased licensed beds after the rate setting cost report. (III) Determine the bed equivalency for renovations/ major improvements after November 30, 1995, by taking the cost of the renovations/major improvements divided by the asset value per bed for the year of the renovation/major improvement rounded to the nearest whole bed. The cost must be at least the asset value per bed for the year of the renovation/major improvement. For example, a renovations/ major improvements cost of two hundred thousand dollars ($200,000) is equal to six (6) beds. ($200,000/$32,723 equals 6.11 beds rounded to 6 beds). (IV) Determine the number of decreased licensed beds after the rate setting cost report. (V) Sum of (I), (II), (III) less (IV) times the asset value is the Total Asset Value. B. Determine the reduction for age by multiplying the age of the beds by one percent (1%) up to forty percent (40%). For multiple licensing dates, the result of the weighted average age calculation will be limited to forty percent (40%). (I) The age of the beds for multiple licensing dates is calculated on a weighted average method rounded to the nearest whole year. For example, a facility with original licensure in 1977 of sixty (60) beds and an additional licensure of sixty (60) beds in 1982 and ten (10) beds in 1993, the reduction is calculated as follows: Licensure Year Age Beds Age × Beds 1977 17 60 1020 1982 12 60 720 1993 1 10 10 Total 130 1750 Weighted Average Age—1750/130 beds = 13.5 years rounded to 14 years. This results in a reduction for age of the beds of fourteen percent (14%). (II) The age of the beds for replacement beds is calculated on a weighted average method rounded to the nearest whole year with the oldest beds always being replaced first. For example, a facility with one hundred twenty (120) beds licensed in 1978 with replacement of sixty (60) beds in 1988, the reduction is calculated as follows Licensure Year Age Beds Age × Beds 1978 16 60 960 1988 6 60 360 Total 120 1320 Weighted Average Age—1320/120 = 11 years. This results in a reduction for age of the beds of eleven percent (11%). (III) The age of the beds for reductions in licensed beds is calculated on a weighted average method rounded to the nearest whole year with the oldest beds always being delicensed first. For example, a facility with original licensure in 1977 of sixty (60) beds, additional licensure of sixty (60) beds in 1982 and ten (10) beds in 1993 and a reduction of ten (10) beds in 1985, the reduction percentage is calculated as follows: Licensure Year Age Beds Age × Beds 1977 17 60 1020 1982 12 60 720 1993 1 10 10 1985* 17 (10) (170) Total 120 1580 *reduction of 1977 beds Weighted Average Age—1580/120 beds = 13.2 years rounded to 13 years. This results in a reduction for age of the beds of thirteen percent (13%). (IV) The age of the beds equivalents for renovations/ major improvements is calculated on a weighted average method rounded to the nearest whole year. For example, a one hundred twenty (120)-bed facility licensed in 1978 undertakes two (2) renovations: two hundred thousand dollars ($200,000) in 1983 and one hundred thousand dollars ($100,000) in 1993. The asset value per bed is thirty-two thousand seven hundred twenty-three dollars ($32,723). The bed equivalency is six (6) beds for 1983 and three (3) beds for 1993, the reduction percentage is calculated as follows: Licensure/ Construction Year Age Beds Age × Beds 1978 16 120 1920 1983 11 6 66 1993 1 3 3 Total 129 1989 Weighted Average Method—1989/129 = 15.42 years rounded to 15 years. This results in a reduction for age of beds of fifteen percent (15%). C. The facility asset value is subparagraph (11)(D)1.A. less subparagraph (11)(D)1.B. D. Multiply the facility asset value by two and one-half percent (2.5%) to determine the rental value. The two and onehalf percent (2.5%) is based on a forty (40)-year life. E. The following is an illustration of how subparagraphs (11)(D)1.A., (11)(D)1.B., and (11)(D)1.C., (11)(D)1.D. determines the rental value: (I) Total Facility Size 174 beds Weighted Average Age of the Beds 23 years Capital Asset Debt $2,371,094 Asset Value $ 32,723 (II) The Total Asset Value is the product of the Total Facility Size times the Asset Value; Total Facility Size 174 Asset Value × $32,723 Total Asset Value $5,693,802 (III) Facility Asset Value is Total Asset Value less the Reduction for Age of the Beds; and Reduction for Age (23%) $1,309,574 Facility Asset Value $4,384,228 (IV) Rental Value is the Facility Asset Value multiplied by 2.5%. Rental Value × 2.5% $ 109,606 2. Rate of return. A. Reduce the Facility Asset Value by the Capital Asset Debt, but not less than zero (0), times the percentage of return. The percentage of return is the yield for the thirty (30)-year Treasury Bond as reported by the Federal Reserve Board and published in the Wall Street Journal for the week ending June 30, 1995, plus two (2) percentage points. The rate is 6.58% for the week ending June 30, 1995, plus 2% for a total of 8.58%. B. The debt associated with increases in licensed beds or renovations/major improvements after the end of the facility’s rate setting cost report and will be added to the capital asset debt from the rate setting cost report. The facility shall provide adequate documentation to support the additional debt as required in paragraph (7)(E)2. If adequate documentation is not provided to support the additional asset debt, it will be assumed to equal the facility asset value. C. The following is an illustration of how subparagraph (11)(D)2.A. is calculated: Facility Asset Value $4,331,573 Capital Asset Debt $2,371,094 $1,960,479 Percentage of Return × 9.48% Rate of Return $ 185,853 3. Computed interest and pass through expenses. A. Add property insurance (line 107) and property taxes (lines 108 and 109). Also add interest subject to limits identified in subsection (7)(F). These lines are found in the cost report, version MSIR-1 (3-95). B. The following is an illustration of how subparagraph (11)(D)3.A. is calculated: Computed Interest $207,840 Insurance $ 7,594 Property Taxes $ 40,548 Pass Through Expenses $ 48,142 4. Capital Component Per Diem Calculation. A. A per diem is calculated by dividing the sum of rental value, rate of return, and computed interest by the number of beds determined in subparagraph (11)(D)1.A. times three hundred sixty-five (365) adjusted by the greater of the minimum utilization as determined in subsection (7)(O) or the facility’s occupancy from the rate setting cost report. The following is an illustration of how subparagraph (11)(D)4.A. is calculated: Rental Value $108,289 Rate of Return $185,853 Computed Interest $207,840 Total $501,982 Divided by Annualized Patient Days 56,077 Capital Per Diem $ 8.95 B. A per diem is calculated by dividing the pass through expenses by the greater of the minimum utilization as determined in subsection (7)(O) or the facility’s patient days from the rate setting cost report. The following is an illustration of how subparagraph (11)(D)4.B. is calculated: Pass Through Expenses $48,142 Patient Days 55,146 Pass Through Per Diem $ .87 C. The capital component per diem is the sum of subparagraph (11)(D)4.A. and (11)(D)4.B. Capital Per Diem $ 8.95 Pass-Through Per Diem $ .87 Total Capital Component Per Diem $ 9.82 (E) Working Capital Allowance. Each HIV nursing facility’s working capital per diem shall be equal to one and one-tenth (1.1) months of each facility’s per diem for patient care, ancillary, and administration times the Chase Manhattan prime rate on July 3, 1995, plus two (2) percentage points. The following is an illustration of how subsection (11)(E) is calculated: Patient Care $30.00 Ancillary $ 7.00 Administration $20.00 Total Per Diem $57.00 divided by 12 months 12 $ 4.75 Times 1.1 months 1.1 $ 5.23 Times Prime + 2% (Chase Manhattan plus 2%) 11% Working Capital Allowance per day $ .58 (F) The following is an illustration of how subsections (11)(A), (11)(B), (11)(C), (11)(D), and (11)(E) determine the per diem rate: Allowable Cost Ceiling Per Diem Patient Care $38.00 $40.00 $38.00 Ancillary $ 8.00 $ 6.00 $ 6.00 Administration $12.00 $11.00 $11.00 Capital (FRV) $ 9.82 Working Capital Allowance $ .58 Total Per Diem $65.40 (12) Reimbursement Rate Determination. An HIV nursing facility’s reimbursement rate shall be determined by the division as described in sections (11), (12), (13), and (14), subject to limitations prescribed elsewhere in this regulation. (A) A facility entering the Medicaid Program after November 30, 1995, shall receive an interim rate as defined in subsection (4)(FF) to be effective on the initial date of Medicaid certifica tion. A prospective rate shall be determined in accordance with section (11) from the desk audited and/or field audited facili ty fiscal year cost report which covers the second full twelve (12)-month fiscal year following the facility’s initial date of Medicaid certification. This prospective rate shall be retroac tively effective and shall replace the interim rate for services beginning on the first day of the facility’s second full twelve (12)-month fiscal year. (B) A facility with a valid Medicaid participation agreement in effect after November 30, 1995, which either voluntarily or involuntarily terminates its participation in the Medicaid Program and which re-enters the Medicaid Program, shall have its prospective rate established as the rate in effect on the day prior to the date of termination from participation in the program plus rate adjustments which may have been granted with effective dates subsequent to the termination date but prior to re-entry into the program as described in subsection (13)(A). This prospective rate shall be effective for service dates on and after the effective date of the re-entry following a voluntary or involuntary termination. (13) Adjustments to the Reimbursement Rates. Subject to the limitations prescribed elsewhere in this regulation, a facility’s reimbursement rate may be adjusted as described in this section and 13 CSR 70-10.016. (A) Global Per Diem Rate Adjustments. A facility with either an interim rate or a prospective rate may qualify for the global per diem rate adjustments as set forth in 13 CSR 7010.016. Global per diem rate adjustments shall be added to the specified cost component ceiling. (B) Special Per Diem Rate Adjustments. Special per diem rate adjustments may be added to a qualifying facility’s rate without regard to the cost component ceiling if specifically provided as described below. 1. Replacement beds. A facility with a prospective rate in effect on or after November 30, 1995, may request a rate adjustment for replacement beds that resulted in the same number of beds being delicensed with the Division of Aging. The facility shall provide documentation from the Division of Aging that verifies the number of beds used for replacement have been delicensed from that facility. The rate adjustment will be calculated as the difference between the capital component per diem (fair rental value, FRV) prior to the replacement beds being placed in service and the capital component per diem FRV including the replacement beds placed in service as calculated in subsection (11)(D) including the replacement beds placed in service. The capital component is calculated for the replacement beds using the asset value per licensed bed as determined using the R. S. Means Construction Index for nursing facility beds adjusted for the Missouri indexes for the date the replacement beds are placed in service. 2. Additional beds. A facility with a prospective rate in effect on or after November 30, 1995, may request a rate adjustment for additional beds. The facility must obtain an approved certificate of need or applicable waiver for the additional beds. The rate adjustment will be calculated as the difference between the capital component per diem FRV prior to the additional beds being placed in service and the capital component per diem FRV including the additional beds as calculated in subsection (11)(D) including the additional beds placed in service. The capital component is calculated for the additional beds using the asset value per licensed bed as determined using the R. S. Means Construction Index for nursing facility beds adjusted for the Missouri indexes for the date the additional beds are placed in service. 3. Extraordinary circumstances. A participating facility which has a prospective rate may request an adjustment to its prospective rate due to extraordinary circumstances. This request must be submitted in writing to the division within one (1) year of the occurrence of the extraordinary circumstance. The request must clearly and specifically identify the conditions for which the rate adjustment is sought. The dollar amount of the requested rate adjustment must be supported by complete, accurate, and documented records satisfactory to the division. If the division makes a written request for additional information and the facility does not comply within ninety (90) days of the request for additional information, the division shall consider the request withdrawn. Requests for rate adjustments that have been withdrawn by the facility or are considered withdrawn because of failure to supply requested information may be resubmitted once for the requested rate adjustment. In the case of a rate adjustment request that has been withdrawn and then resubmitted, the effective date shall be the first day of the month in which the resubmitted request was made providing that it was made prior to the tenth day of the month. If the resubmitted request is not filed by the tenth of the month, rate adjustments shall be effective the first day of the following month. Conditions for an extraordinary circumstance are as follows: A. When the provider can show that it incurred higher costs due to circumstances beyond its control, the circumstances were not experienced by the nursing home industry in general and the costs have a substantial cost effect; B. Extraordinary circumstances include: (I) Natural disasters such as fires, earthquakes, and floods that are not covered by insurance and that occur in a federally declared disaster area; and (II) Vandalism and/or civil disorder that are not covered by insurance; and C. The rate increase shall be calculated as follows: (I) The one (1) time costs (costs that will not be incurred in future fiscal years): (a) To determine what portion of the incurred costs will be paid, the division will use the patient occupancy days from latest available quarterly occupancy survey from the Division of Aging for the time period preceding when the extraordinary circumstances occurred; and (b) The costs directly associated with the extraordinary circumstances will be multiplied by the above percent. This amount will be divided by the paid days for the month the rate adjustment becomes effective per paragraph (13)(B)8. This calculation will equal the amount to be added to the prospective rate for only one (1) month, which will be the month the rate adjustment becomes effective. For this one (1) month only, the ceiling will be waived. (II) For ongoing costs (costs that will be incurred in future fiscal years): Ongoing annual costs will be divided by the greater of: annualized (calculated for a twelve (12)-month period) total patient days from the latest cost report on file or eighty-five percent (85%) of annualized total bed days. This calculation will equal the amount to be added to the respective cost center, not to exceed the cost component ceiling. The rate adjustment, subject to ceiling limits will be added to the prospective rate. (III) For capitalized costs, a capital component per diem FRV will be calculated as determined in subsection (11) (D). The rate adjustment will be calculated as the difference between the capital component per diem FRV prior to the extraordinary circumstances and the capital component per diem FRV including the extraordinary circumstances. 4. Quality Assurance Incentive. A. Each HIV nursing facility with an interim or prospective rate on or after July 1, 2000, shall receive a per diem adjustment of $3.20. The Quality Assurance Incentive adjustment will be added to the facility’s current rate. B. The Quality Assurance Incentive per diem increase shall be used to increase the expenditures to a nursing facility’s direct patient care costs. Direct patient care costs include all expenses in the patient care cost component (i.e., lines 46 through 69 of Schedule B in the Title XIX Cost Report). Any increases in wages and benefits already codified in a collective bargaining agreement in effect as of July 1, 2000, will not be counted towards the expenditure requirements of the Quality Assurance Incentive as stated above. Nursing facilities with collective bargaining agreements shall provide such agreements to the division. (C) Conditions for Prospective Rate Adjustments. The division may adjust a facility’s prospective rate both retrospectively and prospectively under the following conditions: 1. Fraud, misrepresentation, errors. When information contained in a facility’s cost report is found to be fraudulent, misrepresented, or inaccurate, the facility’s prospective rate may be both retroactively and prospectively reduced if the fraudulent, misrepresented, or inaccurate information as originally reported resulted in establishment of a higher, prospective rate than the facility would have received in the absence of such information. No decision by the division to impose a rate adjustment in the case of fraudulent, misrepresented, or inaccurate information shall in any way affect the division’s ability to impose any sanctions authorized by statute or regulation. The fact that fraudulent, misrepresented, or inaccurate information reported did not result in establishment of a higher prospective rate than the facility would have received in the absence of this information also does not affect the division’s ability to impose any sanctions authorized by statute or regulation; 2. Decisions of the Administrative Hearing Commission, or settlement agreements approved by the Administrative Hearing Commission; 3. Court Order; and 4. Disallowance of federal financial participation. (14) Exceptions. (A) For those Medicaid-eligible recipients who have concurrent Medicare Part A skilled nursing facility benefits available, Medicaid reimbursement for covered days of stay in a qualified facility will be based on this coinsurance as may be imposed under Title XVIII. (15) Sanctions and Overpayments. (A) In addition to the sanctions and penalties set forth in this regulation, the division may also impose sanctions against a provider in accordance with state regulation 13 CSR 70-3.030, Sanctions for False or Fraudulent Claims for Title XIX Services, or any other sanction authorized by state or federal law or regulations. (B) Overpayments due the Medicaid Program from a provider shall be recovered by the division in accordance with state regulation 13 CSR 70-3.030, Sanctions for False or Fraudulent Claims for Title XIX Services. (16) Appeals. In accordance with sections 208.156 and 622.055, RSMo, providers may seek hearing before the Administrative Hearing Commission of final decisions of the director or the division. (17) Payment in Full. Participation in the program shall be limited to providers who accept as payment in full, for covered services rendered to Medicaid recipients, the amount paid in accordance with these regulations and other applicable payments. (18) Provider Participation. Payments made in accordance with the standards and methods described in this regulation are designed to enlist participation of a sufficient number of providers in the program so that eligible persons can receive the medical care and services included in the regulation at least to the extent these services are available to the general public. (19) Transition. Cost reports used for rate determination shall be adjusted by the division in accordance with the applicable cost principles provided in this regulation. (20) Rebasing of HIV Nursing Facility Rates. (A) Effective July 1, 2004, HIV nursing facility rates shall be rebased on an annual basis. The rebased rates shall be phased in as set forth below in subsection (20)(B). Each HIV nursing facility shall have its prospective rate recalculated using the same principles and methodology as detailed throughout sections (1)–(19) of this regulation, unless otherwise noted in this section (20). The following items have been updated to reflect the rebase: 1. HIV nursing facility rates shall be rebased on an annual basis using the cost report year that is three (3) years prior to the effective date of the rate change. For example, for SFY 2005, the effective date of the rate change is for dates of service beginning July 1, 2004 and the cost report year used to recalculate rates shall be 2001; for SFY 2006, the effective date of the rate change is for dates of service beginning July 1, 2005 and the cost report year used to recalculate rates shall be 2002; etc. A. A new databank shall be developed from the cost reports for each rebase year in accordance with paragraph (20) (A)1. and subsection (4)(P). B. The costs in the databank shall be trended using the indices from the most recent publication of the Health-Care Cost Review available to the division using the “CMS Nursing Home without Capital Market Basket” table. The costs shall be trended using the second quarter indices for each year. The costs shall be trended for the years following the cost report year, up to and including the state fiscal year corresponding to the effective date of the rates. For SFY 2005, the trends are from the First Quarter 2004 publication of the Health-Care Cost Review and include the following: (I) 2002:2 = 3.2% (II) 2003:2 = 3.4% (III) 2004:2 = 2.3% (IV) 2005:2 = 2.3% (V) The total trend applied to the 2001 cost report data is 11.2%. C. The medians and ceilings shall be recalculated each year, based upon the trended costs included in the new databank that is developed each year. D. The costs, beds, days, renovations/major improvements, loans, etc. from each facility’s cost report included in the databank shall be used to recalculate each facility’s rate. The costs reflected in each facility’s cost report shall be trended as detailed above in (20)(A)1.B. 2. The asset value used to determine the capital cost component, as set forth in subsection (11)(D), shall be updated each year based upon the RS Means Building Construction Cost Data for the year coinciding with the effective date of the rates. The asset value is determined by using the median, total cost of construction per bed for nursing homes from the “S.F., C.F., and % of Total Costs” table and adjusting it by the total weighted average index for Missouri cities from the “City Cost Indexes” table. For SFY 2005, the asset value shall be forty-one thousand seven hundred twenty-eight dollars ($41,728). 3. The age of the beds shall be calculated from the year coinciding with the effective date of the rates. 4. The interest rate used in determining the capital cost component and working capital allowance, as set forth in subsections (7)(F), (11)(D), and (11)(E), shall be updated to reflect the prime rate as reported by the Federal Reserve and published in the Wall Street Journal on the first business day of June for the year coinciding with the effective date of the rates plus two percent (2%). For SFY 2005, the interest rate shall be the prime rate of four percent (4%), as published June 1, 2004, plus two percent (2%) for a total of six percent (6%). 5. The rate of return used in determining the capital cost component, as set forth in subsection (11)(D), shall be updated to reflect the interest (i.e., coupon) rate for the most recent issue of thirty (30)-year Treasury Bonds in effect on the first business day of June for the year coinciding with the effective date of the rates plus two percent (2%). For SFY 2005, the rate of return shall be the thirty (30)-year Treasury Bond rate of 5.375%, effective June 1, 2004, plus two percent (2%) for a total of 7.375%. 6. The administration cost component per diem calculation shall not be adjusted for minimum utilization. 7. The capital cost component per diem calculation shall be adjusted for minimum utilization using the Department of Health and Senior Services’ (DHSS) Intermediate Care Facility/ Skilled Nursing Facility Certificate of Need Quarterly Survey (CON Quarterly Survey) for the most recent quarter available to the division relative to the effective date of the rates. The occupancy data from the CON Quarterly Survey shall be adjusted by the division using total licensed beds rather than available beds as is used by DHSS. For SFY 2005, the minimum utilization percent for the capital component is the adjusted industry average from the October–December 2003 CON Quarterly Survey and shall be seventy-three percent (73%). 8. Since rates are being recalculated each year, rate adjustment requests for replacement beds, additional beds, and/or extraordinary circumstances as set forth in paragraphs (13)(B)1., (13)(B)2., and (13)(B)3. are no longer allowed. (B) The rebased rates shall be phased in, as set forth below: 1. A preliminary rebased rate shall be calculated using the same principles and methodology as detailed throughout sections (1)–(19) of this regulation and the updated items detailed above in paragraphs (20)(A)1.–8. 2. The total increase resulting from the rebase each year shall be calculated as follows: A. Each facility’s current rate as of June 30 of each year shall be compared to the preliminary rebased rate effective July 1 of the following SFY. For example, for SFY 2005, the facility’s rate as of June 30, 2004 shall be compared to the preliminary rebased rate effective July 1, 2004; for SFY 2006, the facility’s rate as of June 30, 2005 shall be compared to the preliminary rebased rate effective July 1, 2005; etc. (I) The NFRA shall not be included in the current rate or the preliminary rebased rate for comparison purposes in determining the total increase. (II) The current NFRA shall be added to the rate determined below in subparagraph (20)(B)2.B. B. If the preliminary rebased rate is greater than the current rate, the difference between the two (2) shall represent the total increase that will be phased in by granting one-third (1/3) of the total increase each year. For SFY 2005, one-third (1/3) of the total increase shall be added to the facility’s current rate as of June 30, 2004, less the reduction in the nursing facility operations adjustment of fifty-four cents (54¢) effective July 1, 2004 as set forth in (13)(A)5. The current NFRA shall be added to that total and shall be the facility’s prospective rate for SFY 2005. C. If the preliminary rebased rate is less than the current rate, the facility shall continue to receive its current rate including the current NFRA for the SFY. (C) Effective for dates of service beginning April 1, 2005, the rebased rates for SFY 2005 shall be calculated as follows: 1. The audited 2001 cost report data shall continue to be used to develop the databank and to determine each nursing facility’s rebased rate. The audited 2001 cost report data; the licensed beds data; and the bed equivalencies data used to determine each nursing facility’s final rate paid for dates of services effective July 1, 2004 shall be deemed final. This finalized data will be used as the base to calculate the rates effective April 1, 2005. The following items have been revised for the April 1, 2005 rate calculation: A. A new databank shall be developed using the audited 2001 cost report data set forth above in paragraph (20)(C)1. for nursing facilities enrolled in the Medicaid program as of March 15, 2005 in accordance with subsection (4)(S). B. The administration and capital cost components shall be adjusted for minimum utilization at eighty-five percent (85%) occupancy, rather than as set forth in paragraphs (20) (A)6.–7. (21) Per Diem Rate Calculation Effective for Dates of Service Beginning July 1, 2005. Effective for dates of service beginning July 1, 2005, the rebase provisions set forth in section (20) shall not apply. Effective for dates of service beginning July 1, 2005, the per diem rates shall be calculated using the same principles and methodology as detailed throughout sections (1)–(19) of this regulation, except that the data indicated in this section (21) shall be used. (A) The audited 2001 cost report data shall be used to develop the databank and to determine each nursing facility’s per diem rate. The audited 2001 cost report data; the licensed beds data; and the bed equivalencies data used to determine each nursing facility’s final rate paid for dates of services effective July 1, 2004 shall be deemed final. This finalized data will be used as the base to calculate the rates effective July 1, 2005. 1. A new databank shall be developed using the audited 2001 cost report data set forth above in subsection (21)(A) for nursing facilities enrolled in the Medicaid program as of March 15, 2005 in accordance with subsection (4)(S). 2. The costs in the databank shall be trended using the second quarter indices from the First Quarter 2004 publication of the Health-Care Cost Review using the “CMS Nursing Home without Capital Market Basket” table. The costs shall be trended for the years following the cost report year, up to and including SFY 2005. The trends applied to the 2001 cost report data include the following: A. 2002:2 = 3.2% B. 2003:2 = 3.4% C. 2004:2 = 2.3% D. 2005:2 = 2.3% E. The total trend applied to the 2001 cost report data is 11.2%. 3. The medians and ceilings shall be recalculated, based upon the trended costs included in the new databank. 4. The costs, beds, days, renovations/major improvements, loans, etc. from each facility’s cost report included in the databank shall be used to calculate each nursing facility’s rate. The costs reflected in each facility’s cost report shall be trended as detailed above in paragraph (21)(A)2. (B) The asset value used to determine the capital cost component, as set forth in subsection (11)(D), shall be based upon the 2004 publication of the RS Means Building Construction Cost Data. The asset value is determined by using the median, total cost of construction per bed for nursing homes from the “S.F., C.F., and % of Total Costs” table and adjusting it by the total weighted average index for Missouri cities from the “City Cost Indexes” table. The asset value shall be forty-one thousand seven hundred twenty-seven dollars and fifty cents ($41,727.50). (C) The age of the beds shall be calculated from 2004. (D) The interest rate used in determining the capital cost component and working capital allowance, as set forth in subsections (7)(F), (11)(D), and (11)(E), shall be the prime rate as reported by the Federal Reserve and published in the Wall Street Journal on the first business day of June 2004 plus two percent (2%). The interest rate shall be the prime rate of four percent (4%), as published June 1, 2004, plus two percent (2%) for a total of six percent (6%). (E) The rate of return used in determining the capital cost component, as set forth in subsection (11)(D), shall be the interest (i.e., coupon) rate for the most recent issue of thirty (30)-year Treasury Bonds in effect on the first business day of June 2004 plus two percent (2%). The rate of return shall be the thirty (30)-year Treasury Bond rate of 5.375%, effective June 1, 2004, plus two percent (2%) for a total of 7.375%. (F) The administration and capital cost components shall be adjusted for minimum utilization at eighty-five percent (85%) occupancy. (G) Rate adjustment requests for replacement beds, additional beds, and/or extraordinary circumstances as set forth in paragraphs (13)(B)1., (13)(B)2., and (13)(B)3. are no longer allowed. (H) The rates effective for dates of service beginning July 1, 2005 shall be determined as set forth below: 1. A preliminary rate for July 1, 2005 shall be calculated using the same principles and methodology as detailed throughout sections (1)–(19) of this regulation and the updated items detailed above in subsections (21)(A)–(G). 2. The total increase resulting from the July 1, 2005 preliminary rate calculation shall be calculated as follows: A. Each facility’s rate as of June 30, 2004, less the reduction in the nursing facility operations adjustment of fiftyfour cents (54¢) effective July 1, 2004 as set forth in paragraph (13)(A)5., shall be compared to the July 1, 2005 preliminary rate calculation. (I) The high volume adjustment, if applicable, and the NFRA shall not be included in the June 30, 2004 rate or the July 1, 2005 preliminary rate for comparison purposes in determining the total increase. (II) The high volume adjustment, if applicable, and the current NFRA shall be added to the rate determined below in subparagraphs (21)(H)2.B. and (21)(H)2.C. B. If the July 1, 2005 preliminary rate is greater than the June 30, 2004 rate including the reduction in the nursing facility operations adjustment of fifty-four cents (54¢) effective July 1, 2004 as set forth in paragraph (13)(A)5., the difference between the two (2) shall represent the total increase. Effective for dates of service beginning July 1, 2005, one-third (1/3) of the total increase shall be added to the facility’s rate as of June 30, 2004 including the reduction in the nursing facility operations adjustment of fifty-four cents (54¢) effective July 1, 2004 as set forth in paragraph (13)(A)5. The high volume adjustment, if applicable, and the current NFRA shall be added to that total and shall be the facility’s prospective rate for dates of service beginning July 1, 2005. C. If the July 1, 2005 preliminary rate is less than the June 30, 2004 rate including the reduction in the nursing facility operations adjustment of fifty-four cents (54¢) effective July 1, 2004 as set forth in paragraph (13)(A)5., the facility’s prospective rate shall be the facility’s rate as of June 30, 2004 including the reduction in the nursing facility operations adjustment of fiftyfour cents (54¢) effective July 1, 2004 as set forth in paragraph (13)(A)5. plus the high volume adjustment, if applicable, and the current NFRA. APPENDIX A COVERED SUPPLIES AND SERVICES PERSONAL CARE Baby powder Bedside tissues Bibs, all types Deodorants Disposable underpads of all types Gowns, hospital Hair care, basic including washing, cuts, sets, brushes, combs, nonlegend shampoo Lotion, soap, and oil Oral hygiene including denture care, cups, cleaner, mouthwashes, toothbrushes, and toothpaste Shaves, shaving cream, and blades Nail clipping and cleaning-routine EQUIPMENT Arm slings Basins Bathing equipment Bed frame equipment including trapeze bars and bedrails Bed pans, all types Beds, manual, electric Canes, all types Crutches, all types Foot cradles, all types Glucometers Heat cradles Heating pads Hot pack machines Hypothermia blanket Mattresses, all types Patient lifts, all types Respiratory equipment: compressors, vaporizers, humidifiers, IPPB machines, nebulizers, suction equipment, and related supplies, etc. Restraints Sand bags Specimen container, cup or bottle Urinals, male and female Walkers, all types Water pitchers Wheelchairs, standard, geriatric, and rollabout NURSING CARE/PATIENT CARE SUPPLIES Catheter, indwelling and nonlegend supplies Decubitus ulcer care: pads, dressings, air mattresses, aquamatic K pads (water heated pads), alternating pressure pads, flotation pads, and/or turning frames, heel protectors, donuts and sheepskins Diabetic blood and urine testing supplies Douche bags Drainage sets, bags, tubes, etc. Dressing trays and dressings of all types Enema supplies Gloves, nonsterile and sterile Ice bags Incontinency care including pads, diapers, and pants Irrigation trays and nonlegend supplies Medicine droppers Medicine cups Needles including, but not limited to, hypodermic, scalp, vein Nursing services: regardless of level, administration of oxygen, restorative nursing care, nursing supplies, assistance with eating and massages provided by facility personnel Nursing supplies: lubricating jelly, betadine, benzoin, peroxide, A and D ointment, tapes, alcohol, alcohol sponges, applicators, dressings and bandages of all types, cottonballs, and aerosol merthiolate, tongue depressors Ostomy supplies: adhesive, appliance, belts, face plates, flanges, gaskets, irrigation sets, night drains, protective dressings, skin barriers, tail closures, and bags Suture care including trays and removal kits Syringes, all sizes and types including ascepto Tape for laboratory tests Urinary drainage tube and bottle THERAPEUTIC AGENTS AND SUPPLIES Supplies related to internal feedings I.V. therapy supplies: arm boards, needles, tubing, and other related supplies Oxygen (portable or stationary), oxygen delivery systems, concentrators, and supplies Special diets AUTHORITY: sections 208.153 and 208.201, RSMo Supp. 2009.* Original rule filed Aug. 1, 1995, effective March 30, 1996. Emergency amendment filed Oct. 15, 1996, effective Oct. 25, 1996, expired April 22, 1997. Emergency amendment filed Aug. 12, 1997, effective Sept. 1, 1997, expired Feb. 27, 1998. Amended: Filed Aug. 12, 1997, effective Feb. 28, 1998. Emergency amendment filed Sept. 19, 1997, effective Oct. 1, 1997, expired March 29, 1998. Amended: Filed Sept. 25, 1997, effective March 30, 1998. Emergency amendment filed Sept. 21, 1998, effective Oct. 1, 1998, expired March 29, 1999. Amended: Filed Sept. 21, 1998, effective May 30, 1999. Emergency amendment filed Sept. 20, 1999, effective Oct. 1, 1999, expired March 29, 2000. Amended: Filed Aug. 30, 1999, effective March 30, 2000. Emergency amendment filed July 18, 2000, effective July 28, 2000, expired Jan. 24, 2001. Amended: Filed June 30, 2000, effective Feb. 28, 2001. Emergency amendment filed Sept. 22, 2003, effective Oct. 1, 2003, terminated Oct. 29, 2003. Amended: Filed Sept. 22, 2003, effective May 30, 2004. Emergency amendment filed June 18, 2004, effective July 1, 2004, expired Dec. 15, 2004. Amended: Filed Aug. 16, 2004, effective Feb. 28, 2005. Emergency amendment filed March 21, 2005, effective April 1, 2005, expired Sept. 27, 2005. Emergency amendment filed June 20, 2005, expired Dec. 27, 2005. Amended: Filed March 29, 2005, effective Sept. 30, 2005. Emergency amendment filed June 15, 2006, effective July 1, 2006, expired Dec. 28, 2006. Amended: Filed May 15, 2006, effective Nov. 30, 2006. Emergency amendment filed Sept. 17, 2007, effective Oct. 1, 2007, expired March 28, 2008. Amended: Filed March 30, 2007, effective Nov. 30, 2007. Amended: Filed July 1, 2008, effective Jan. 30, 2009. Amended: Filed March 11, 2010, effective Sept. 30, 2010. *Original authority: 208.153, RSMo 1967, amended 1967, 1973, 1989, 1990, 1991, 2007 and 208.201, RSMo 1987, amended 2007.