California Code of Regulations › Title 22 - Social Security › Division 3 - Health Care Services › Subdivision 1 - California Medical Assistance Program › Chapter 3 - Health Care Services › Article 9 - Quality Assurance Fee and Long Term Care Reimbursement Methodology › Section 52505 - Capital Costs Category

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The Fair Rental Value System (FRVS) shall be used to
						reimburse capital costs associated with the use of a space as determined by the
						base value for each facility. The FRVS methodology establishes a facility's
						base value as determined by the FRVS calculation.
(a) The Department shall determine the
					 facility's fair rental value based on a calculation consisting of the following
					 factors: estimated building value, estimated equipment value, depreciation
					 value, current facility value, estimated land value and the rental factor.
(1) The estimated building value shall be
					 determined annually by a calculation based on a standard facility size of 400
					 square feet times the number of licensed beds times the R.S. Means Building
					 Construction Cost Data times the location factor. The estimated building value
					 shall be trended forward annually to the mid-point of the rate year using the
					 R.S. Means Building Construction Cost Index.
(2) The estimated equipment value shall be
					 determined by multiplying the number of facility beds by $4,000; this value
					 shall be added to the estimated building value.
(3) The depreciation value shall be
					 determined in subparagraphs (A) or (B). For the purposes of computing the
					 depreciation as determined in subparagraphs (A) or (B) the Department shall
					 determine the age of each facility by calculating the difference between the
					 midpoint of the current rate year, and one of the following: a facility's
					 original license date, the year of construction, initial loan documentation or
					 similar documentation.
(A) If a facility's age
					 is at or over 34 years, the facility is fully depreciated and the depreciation
					 is calculated based on a 1.8 percent annual depreciation rate times 34 years
					 times the combined total of the estimated building and estimated equipment
					 value.
(B) If a facility's age is
					 less than 34 years, the facility is not fully depreciated and the depreciation
					 is calculated based on a 1.8 percent annual depreciation rate times the
					 facility's age times the combined total of the estimated building and estimated
					 equipment value.
(4) The
					 current facility value shall be determined by subtracting the depreciation
					 value from the combined total of the estimated building and estimated equipment
					 value.
(5) The estimated land value
					 shall be determined by an assessment equal to ten percent of the estimated
					 building value as determined in subsection (a)(1).
(6) The fair rental value shall be determined
					 by the combined total of the current facility value as determined in subsection
					 (a)(4) and estimated land value as determined in subsection (a)(5). The fair
					 rental value shall then be multiplied by the rental factor.