New Mexico Administrative Code › Title 8 - SOCIAL SERVICES › Chapter 312 - LONG TERM CARE SERVICES - NURSING SERVICES › Part 3 - COST RELATED REIMBURSEMENT OF NURSING FACILITIES › Section 8.312.3.13 - ESTABLISHMENT OF CEILINGS

Current through Register Vol. 35, No. 13, July 16, 2024
The following categories are used to establish ceilings for
				  calculating prospective per diem rates:
1) state-owned and operated NF,
2) non-state-owned and operated NF. The
				department determines the status of each provider for exclusion from or
				inclusion in any one category. Ceilings will be separately established for each
				category as described above, and separately established for the two areas of
				allowable costs, i.e. operating costs and facility costs. The operating cost
				ceiling will be calculated using the base year costs for year one. For years
				two and three, the operating cost ceiling will not be recalculated. It will be
				indexed forward using the appropriate inflation factor. The facility cost
				ceiling of $11.50 will be trended forward in year two beginning July 1, 1985,
				by MBI minus one percentage point and then annually by the MBI.
A.
Operating costs:
The ceiling
				for operating costs will be established at one hundred and ten percent of the
				median of allowable costs for the base year, indexed to 12/31 of base
				year.
B.
Facility
				costs:
For existing, replacement, and newly constructed facilities,
				including remodeling of a facility to become a long term care facility,
				facility costs will be limited as follows:
(1)
				Any facility that is participating in medicaid by July 1, 1984, or has been
				granted Section 1122 approval by July 1, 1984, for construction (including bed
				additions to such facilities) will be paid the lower of actual allowable
				facility costs or the applicable facility cost ceiling for implementation year
				one. The facility cost ceiling will be eleven dollars and fifty cents
				($11.50).
(2) Any new facility not
				approved July 1, 1984, under Section 1122 for construction (including bed
				additions to such facilities) will be paid the lower of actual allowable
				facility costs or the median of facility costs for all other existing
				facilities in the same category.
(3) Effective for leases executed and binding
				on both parties on or after January 1, 1988, total allowable lease costs for
				the entire term of the lease for each facility will be limited to an amount
				determined by a discounted cash flow technique which will provide the less or
				an annual rate of return on the fair market value of the facility equal to one
				time the average of the rates of interest on special issues of public debt
				obligations issued to the federal hospital insurance trust fund for the twelve
				months prior to the date the facility became a provider in the New Mexico
				medicaid program. The rates of interest for this fund are published in both the
				federal register and the commerce clearing house (CCH). The basis of the total
				investment will be subject to the limitations described in Paragraphs 1 and 2
				of Subsection B of 8.312.3.13 NMAC. The rate of return described above will be
				exclusive of any escalator clauses contained in the lease. The effect of
				escalator clauses will be considered at the time they become effective and the
				reasonableness of such clauses will be determined by the inflation factor
				described in Subsection B of
				8.312.3.12
				NMAC. Any appraisal necessary to determine the fair market value of the
				facility will be the sole responsibility of the provider and is not an
				allowable cost for reimbursement under the program. The appraisals must be
				conducted by an appraiser certified by a nationally recognized entity, and such
				appraiser must be familiar with the health care industry, specifically long
				term care, and must be familiar with the geographic area in which the facility
				is located. Prior to the appraisal taking place, the provider must submit to
				the department the name of the appraiser, a copy of his/her certification, and
				a brief description of the appraiser's relevant experience. The use of a
				particular appraiser is subject to the approval of the department.
(4) For newly constructed facilities,
				reconstruction of a facility to become a long term care facility, and
				replacement facilities entering the medicaid program on or after January 1,
				1988, the total basis of depreciable assets shall not exceed the median cost of
				construction of a nursing home as listed in the Robert S. Means construction
				index, adjusted for New Mexico costs and for inflation in the construction
				industry from the date of publication to the date the provider is expected to
				enter the New Mexico medicaid program. The costs of construction referred to
				herein is expected to include only the cost of the building and fixed
				equipment. A reasonable value of land and major moveable equipment will need to
				be added to obtain the value of the entire facility.
(5) When an existing facility is sold,
				facility costs per day will be limited to the lower of:
(a) allowable facility costs determined by
				using the medicare principles of reimbursement; or
(b) the facility cost ceiling.
(6) When an existing facility is
				leased, the facility costs per day will be limited to the lower of:
(a) actual allowable facility costs;
				or
(b) for facilities owned or
				operated by the less or for 10 years or longer, the applicable facility cost
				ceiling; or
(c) for facilities
				owned or operated by the lessor less than 10 years, one hundred and ten percent
				of the median of facility costs for all providers in the same
				category.
(7) When a
				replaced facility re-enters the medicaid program either under the same
				ownership as existed prior to the replacement or under different ownership,
				facility costs per day will be limited to the lower of:
(a) actual allowable facility costs;
				or
(b) the median of facility costs
				for all other existing facilities in the same category.