Virginia Administrative Code › Title 12 - HEALTH › Agency 30 - DEPARTMENT OF MEDICAL ASSISTANCE SERVICES › Chapter 90 - METHODS AND STANDARDS FOR ESTABLISHING PAYMENT RATES FOR LONG-TERM CARE › Part III - Nursing Home Payment System Appendices › Appendix II - Leasing of Facilities › Section 12VAC30-90-280 - Leasing of facilities

Current through Register Vol. 40, No. 24, July 15, 2024
The substance of this appendix shall apply only to
						Article 2 (12VAC30-90-30 et seq.) of Subpart
						II of Part II of this chapter.
I.
					 DETERMINATION OF ALLOWABLE LEASE COSTS.
A.
					 The provisions of this appendix shall apply to all lease agreements, including
					 sales and leaseback agreements and lease purchase agreements, and including
					 whether or not such agreements are between parties which are related (as
					 defined in
					 12VAC30-90-50 of the Nursing Home
					 Payment System (NHPS)).
B.
					 Reimbursement of lease costs pursuant to a lease between parties which are not
					 related shall be limited to the DMAS allowable cost of ownership as determined
					 in subsection I E of this section. Reimbursement of lease costs pursuant to a
					 lease between parties which are related (as defined in
					 12VAC30-90-50 ) shall be adjusted
					 to the DMAS allowable cost of ownership. Whether the lease is between parties
					 which are or are not related, the computation of the allowable annual lease
					 expense shall be subject to DMAS audit.
C. The DMAS allowable cost of ownership shall
					 be determined by the historical cost of the facility to the owner of record at
					 the date the lease becomes effective. When a lease agreement is in effect,
					 whether during the original term or a subsequent renewal, no increase in the
					 reimbursement shall be allowed as a result of a subsequent sale of the
					 facility.
D. When a bona fide sale
					 has taken place, the facility must have been held by the seller for a period of
					 no less than five years for a lease effected subsequent to the sale date to be
					 compared to the buyer's cost of ownership. Where the facility has been held for
					 less than five years, the allowable lease cost shall be computed using the
					 seller's historical cost.
E.
					 Reimbursement of lease costs pursuant to a lease between parties which are not
					 related (as defined in
					 12VAC30-90-50 ) shall be limited
					 to the DMAS allowable cost of ownership. The following reimbursement principles
					 shall apply to leases, other than those covered in
					 12VAC30-90-50 and subsection IV of
					 this appendix, entered into on or after October 1, 1990:
1. An "Allowable Cost of Ownership" schedule
					 shall be created for the lease period to compare the total lease expense to the
					 allowable cost of ownership.
2. If
					 the lease cost for any cost reporting period is below the cost of ownership for
					 that period, no adjustment shall be made to the lease cost, and a "carryover
					 credit" to the extent of the amount allowable for that period under the
					 "Allowable Cost of Ownership" schedule shall be created but not paid.
3. If the lease cost for a future cost
					 reporting period is greater than the "Cost of Ownership" for that period, the
					 provider shall be paid this "carryover credit" from prior period(s), not to
					 exceed the cumulative carryover credit or his actual lease cost, whichever is
					 less. At no time during the lease period shall DMAS reimbursement exceed the
					 actual cumulative "Cost of Ownership."
4. Once DMAS has determined the allowable
					 cost of ownership, the provider shall be responsible for preparing a verifiable
					 and auditable schedule to support cumulative computations of cost of ownership
					 vs. lease cost to support the "carryover credit" as reported in the "Allowable
					 Cost of Ownership" schedule, and shall submit such a schedule with each cost
					 report.