Sec. 10.09.10.25. New Nursing Facilities, Replacement Facilities, and Change of Ownership

A. The Department shall establish rates for new nursing facilities, replacement facilities, and nursing facilities with a change of ownership as outlined in §§B-D of this regulation.

B. New Nursing Facilities.

(1) Until such time as an appraisal for the new facility is available as set forth in Regulation .11B(1)(b) of this chapter, the fair rental value per diem rate shall be based on the lower of the facility’s construction costs plus the assessed land value divided by the number of licensed beds, or the maximum appraised value per bed in Regulation .11B(1)(g) of this chapter.

(2) A new nursing facility shall be assigned the Statewide average Medicaid CMI until assessment data submitted by the nursing facility is used in a quarterly rate determination.

(3) The nursing facility shall be assigned to the appropriate geographic region, as specified under Regulation .30 of this chapter, for purposes of assigning the Nursing Service rate, the Other Patient Care price, and the Administrative and Routine price.

(4) The geographic region price for Nursing Service costs shall be multiplied by the new nursing facility’s Medicaid CMI until there is a nursing facility cost report used in the rebasing process.

(5) The fair rental value per diem rate shall use days as the greater of total estimated resident days or days at full occupancy times an occupancy standard calculated under Regulation .09B(4) of this chapter and the maximum bed value identified in Regulation .11B(1)(g) of this chapter. For the period of time the facility is operating under a waiver of occupancy granted in accordance with Regulation .26F of this chapter, the fair rental value per diem rate shall be calculated using estimated resident days. At the completion of the waiver period, either the State or the facility may initiate a settlement payment should the estimate vary from the actual by more than 10 percent.

(6) Upon providing the real estate bills to the State which incorporate the new construction at least 15 days before the start of operations or at least 15 days before the beginning of any calendar quarter, the real estate tax per diem rate shall be calculated in accordance with Regulation .11B(1)(l) of this chapter. This amount shall be used for the period from the time of submission until the next facility cost report is filed. For the period of time the facility is operating under a waiver of occupancy granted in accordance with Regulation .26F of this chapter, the real estate tax per diem rate shall be calculated using estimated resident days. At the completion of the waiver period, either the State or the facility may initiate a settlement payment should the estimate vary from the actual by more than 10 percent.

(7) For the first 2 State fiscal rate setting years, or portions thereof, new nursing facilities that are required to pay an assessment in accordance with COMAR 10.01.20.02 shall receive a Quality Assessment add-on calculated as follows:

(a) Estimate the assessed days to be reported on the Nursing Facility Quality Assessment Payment Reporting Forms for the quarters covering the upcoming State fiscal rate setting year or portion thereof;

(b) Multiply the estimated assessed days by the assessment rate anticipated for the rate quarters; and

(c) Divide the total estimated assessed amount by the sum of the total estimated patient days. At the completion of either of these first two rate setting periods, either the State or the facility may initiate a settlement payment should the estimates vary from the actual by more than 10 percent.

C. Replacement Facilities.

(1) Until such time as an appraisal for the replacement facility is available as set forth in Regulation .11B(1)(b) of this chapter, the fair rental value per diem rate shall be based on the lower of the facility’s construction costs plus the assessed land value divided by the number of licensed beds, or the maximum appraised value per bed in Regulation .11B(1)(g) of this chapter.

(2) The fair rental value per diem rate shall use days as the greater of total estimated resident days or days at full occupancy times an occupancy standard calculated as the Statewide average under Regulation .09B(4) of this chapter. For the period of time the facility is operating under a waiver of occupancy granted in accordance with Regulation .26F of this chapter the fair rental value per diem rate shall be calculated using estimated resident days. At the completion of the waiver period either the State or the facility may initiate a settlement payment should the estimate vary from the actual by more than 10 percent.

(3) Upon providing the real estate bills to the State, which incorporate the new construction, at least 15 days before the start of operations or at least 15 days before the beginning of any calendar quarter, the real estate tax per diem rate shall be calculated in accordance with Regulation .11B(1)(l) of this chapter. This amount shall be used for the period from the time of submission until the next facility cost report is filed. For the period of time the facility is operating under a waiver of occupancy granted in accordance with Regulation .26F of this chapter, the real estate tax per diem rate shall be calculated using estimated resident days. At the completion of the waiver period either the State or the facility may initiate a settlement payment should the estimate vary from the actual by more than 10 percent.

(4) The replacement facility fair rental value rate shall be effective beginning on the date the replacement facility meets the requirements in Regulations .02 and .03 of this chapter.

(5) Except for the fair rental value portion of the Capital rate, the replacement facility shall be paid exactly as the original facility.

(6) The replacement facility rates shall be based on the original facility’s average Medicaid case mix index and cost report costs.

D. Change of Ownership.

(1) Except when the Program agrees to a shorter notification period, when there is an anticipated change of ownership of a provider, not less than 30 days before the date of the change of ownership:

(a) The provider shall:

(i) Notify the Program of the anticipated change of ownership; and

(ii) If the provider has not filed for bankruptcy, post an indemnity bond or a standby letter of credit, or provide assurance satisfactory to the Program that the purchaser shall assume and be responsible for all financial obligations of the existing provider; and

(b) The purchaser shall:

(i) Notify the Program of the intent to engage in a change of ownership and the desire to enroll in the Program;

(ii) Submit a provider application and execute a provider agreement with the Department; and

(iii) If the provider has filed for bankruptcy, post an indemnity bond or a standby letter of credit, or provide some assurance satisfactory to the Program that the purchaser shall assume and be responsible for all financial obligations of the existing provider.

(2) Indemnity Bond or Standby Letter of Credit.

(a) The indemnity bond or standby letter of credit required by §D(1)(a)(ii) or (b)(iii) of this regulation shall be in the amount of:

(i) 10 percent of the Program billings for each unsettled fiscal period prior to January 1, 2015 outstanding;

(ii) All unpaid amounts due and owing the Program for each settled fiscal period before January 1, 2015;

(iii) 5 percent of the Program billings for the most recent annual fiscal period; and

(iv) All debt owed by the provider to the Interim Working Capital Fund under Regulation .08 of this chapter.

(b) The indemnity bond or standby letter of credit obligation under §D(2)(a) of this regulation shall remain in effect until all financial liabilities are resolved.

(c) If a court of competent jurisdiction discharges the debt of a bankrupt provider, the Program shall release to the purchaser the difference between the indemnity bond or standby letter of credit required under §D(1)(b)(iii) of this regulation and the amount of the financial obligation discharged by the court.

(3) The purchaser shall submit a provider application and execute a provider agreement with the Department before being assigned a prospective rate.

(4) The new owner shall assume the old owner’s facility average Medicaid case mix index and cost reports.

(5) The new owner shall be paid at the same rates as the old nursing facility provider except for the period of time the facility is operating under a waiver of occupancy granted in accordance with Regulation .26F of this chapter in which the Capital rate shall be calculated using estimated resident days. At the completion of the waiver period either the State or the facility may initiate a settlement payment should the estimate vary from the actual by more than 10 percent.