Illinois Administrative Code › Title 89 - SOCIAL SERVICES › Part 140 - MEDICAL PAYMENT › Subpart E - GROUP CARE › Section 140.570 - Capital Rate Component Determination

Current through Register Vol. 48, No. 28, July 12, 2024
a) Capital rates for all long term care
				facilities - except State Institutions, Specialized Living Centers and campus
				facilities, shall be reimbursed in the manner described in Sections
				140.570
				through
				140.573.
				Capital rates for Specialized Living Centers are set forth in
				140.579.
				Campus facilities are reimbursed in accordance with
				140.583.
b) The terms used in Sections
				140.570
				through
				140.574
				are defined as follows.
1) "Arm's-length
				transaction" means a transaction between a buyer and a seller both free to act,
				each seeking his own best economic interest. A transaction between related
				parties as defined in Section
				140.537
				is not considered to be an arm's-length transaction.
2) "Base Year" refers to the weighted average
				year of investment in the actual construction of the building. The Base Year is
				determined using the components of the building cost, which are included in the
				Original Building Base Cost, and the corresponding years of acquisition or
				construction. The year of each component of the total investment is multiplied
				by the cost of each year's investment. The sum of these products is then
				divided by the total Original Building Base Cost to yield an average year of
				construction. Any fractional portion of the Base Year derived from this
				calculation will be truncated. The Base Year will not change due to sale or
				lease of the building subsequent to January 1, 1978.
3) "Capital Days" are used to convert all
				capital items to per diem amounts unless otherwise specified. If a facility's
				occupancy rate is above 93 percent, then capital days shall be equal to the
				actual patient days. If occupancy is below 93 percent, then 93 percent of
				available bed days (the number of licensed beds multiplied by the number of
				calendar days in a period) shall be the capital days.
4) Building Basis:
A) "Original Building Base Cost" means either
				the cost of construction or the cost of the latest purchase of the building in
				an arm's-length transaction prior to January 1, 1978. The allowable cost of
				subsequent improvements to the building will be included in the original
				building base cost. The original building base cost will not change due to
				sales or leases of the facility after January 1, 1978. In the case of a nursing
				home building constructed after January 1, 1978, the allowable construction
				cost plus the cost of subsequent improvements will be the original building
				base cost.
B) If a portion of the
				building is vacant or is used for functions other than a nursing home, then a
				portion of the building's original building base cost will not be used in the
				rate calculation. This cost allocation will be based upon the proportion of the
				total square feet in the building being used for nursing home
				functions.
5) "Rate of
				Return" will be 11.0 percent for base years which are 1979 and later and 9.13
				percent for base years which are 1978 and earlier.
6) "Means Construction Index" means the index
				of changes in construction costs from year-to-year developed from the annual
				publication Means Building Construction Cost data as published by R.S. Means
				Company, Inc.
7) "Means New
				Construction Cost Per Square Foot" is defined as the costs published by the
				R.S. Means Company, Inc. Data will come from the most recent edition of the
				Means Square Foot Costs publication. The cost used per square foot for new
				construction is based upon nursing home construction projections using 40,000
				square foot category with face brick with concrete block back-up and steel
				joists. The Means New Construction Cost Per Square Foot will be adjusted where
				necessary to ensure an increase of at least a three percent from the previous
				year but no more than a seven percent increase.
8) "Square Feet Per Bed" is defined as 316
				square feet per bed. This was the average for existing long term care
				facilities in Illinois.
9)
				"Location". The long term care facilities will be separated into one of the
				following areas:
Northeast area - HSAs 6, 7, 8, 9
Downstate area - HSAs 1, 2, 3, 4, 5, 10, 11
10) "Uniform Building Value" is calculated
				using the following steps:
A) The Means New
				Construction Cost Per Square Foot is multiplied by 316 square feet per bed to
				obtain a preliminary cost per bed. For example, $68.65 cost per square foot
				times 316 equals a $21,693 preliminary cost per bed.
B) The preliminary cost per bed is multiplied
				by an adjustment factor to obtain the revised cost per bed for new
				construction. The adjustment factor is
				1.30 for the
				northeast area and 1.19 for the downstate area. For example, a $21,693
				preliminary cost per bed times the
				1.30 factor
				equals a $28,200 revised cost per bed for the northeast area.
C) The revised cost per bed for new
				construction will be the uniform building value for any facility for which the
				base year is the same as the current year. The current year is the calendar
				year in which the rate year starts. The uniform building value for facilities
				with a base year which is older than the current year will have the revised
				cost per bed for new construction discounted by a three percent obsolescence
				factor for each year between the base year and the current year. The uniform
				building value will be no lower than ten percent of the revised cost per bed
				for new construction. For example:
Base Year
Factor
Uniform Building Value
1991
100%
$28,200
1990
97%
$27,354
1989
94%
$26,508
1988
91%
$25,662
1987
88%
$24,816
1986
85%
$23,970
-
1975
52%
$14,664
-
1960
10%
$ 2,820
11) "Building Specific Historical Cost Per
				Bed" is the inflated original building base cost divided by the number of
				licensed beds on the cost report used to calculate rates for the rate year. If
				licensed beds changed during the cost report period, the licensed beds on the
				last day of the cost report period will be used as the divisor. The original
				building base cost is inflated based upon the Means Construction Index and the
				base year.
12) The "ERVWC" factor
				relates to equipment, rent, vehicle and working capital cost. The ERVWC factor
				will be the greater of $1.75
				per diem or the amount from the following calculation based upon a sample of 50
				percent or more of all long term care facilities:
A) Working Capital: Allowable support costs,
				nursing or program costs and administrative costs will be updated for inflation
				and be divided by capital days and multiplied by 60 days to yield two months of
				working capital investment on a per diem basis.
B) The per diem investment in equipment and
				vehicle will be added to the working capital investment on a per diem basis
				(the vehicle investment is limited to fifty cents per diem). This total
				investment is multiplied by 9.13 percent.
C) The result of Step B is added to the per
				diem equipment rent cost to obtain an ERVWC base factor.