Wisconsin Administrative Code › Department of Health Services › DHS 110-199 - Health › Chapter DHS 122 - Long-Term Care Facility Bed Additions And Capital Expenditures Review › Section DHS 122.07 - Review criteria and selection process

Current through June 24, 2024
(1) REVIEW
				CRITERIA. The department shall use the criteria set out in this subsection in
				its review of all applications for project approval. Cost containment shall be
				the first priority in applying these criteria. The department may not approve a
				project unless the applicant has demonstrated that:
(a) The project is consistent with the state
				health plan and other long-term care support plans developed by the
				department.
(b) Medical assistance
				funds appropriated are sufficient to reimburse the applicant for providing
				nursing home or FDD care.
(c) The
				cost of renovating or replacing the facility or adding new beds is consistent
				with the cost of similar nursing home or FDD projects recently approved by the
				department and is reasonable based on independent analyses using
				industry-recognized cost-estimating techniques, and:
1. The proposed cost per bed for total
				facility replacement or for new facilities and beds does not exceed the
				following per bed cost expressed in the formula for nursing homes and FDDs,
				that C is less than or equal to 1.4 (S) (F).
a. "C" in this formula means maximum cost per
				bed using the capitalized project costs, including site improvements,
				buildings, fixed equipment, interest during construction and professional and
				financing fees, calculated to the midpoint of construction.
b. "S" equals $31,000.
Note: $31,000 is the statewide cost per bed for the base year
				  1983.
c. "F" in this
				formula means inflation factor.
Note: The department uses the inflation estimates published
				  in Engineering News Record's Building Cost Index.
2. The proposed equivalent cost per bed for
				renovation and partial replacement projects does not exceed the per bed cost as
				expressed in the formulae for nursing homes and FDDs, that Ce is less than
				1.4(S) (F) /35
a. "Ce"
				in this formula means the maximum equivalent per bed cost, calculated as
				follows:
See PDF
				  for table
b. "S"
				and "F" in this formula are as defined in subd. 1.
Note: The maximum capital allowances calculated pursuant to
				  par. (c) are not to be used by applicants as the expected cost of projects.
				  Applicants are encouraged to seek less costly alternatives to the state
				  maximums and all applications will have to meet all review criteria before
				  undergoing the selection process in sub. (2).
(d) The project represents the
				most cost-effective, reasonable and feasible alternative for renovation or
				replacement of a facility, for the addition of beds to a facility or for the
				construction of a new facility.
1. The
				applicant shall provide an analysis which clearly defines all other reasonable
				alternatives such as:
a. Variations in
				functional program;
b. Renovation
				instead of replacement;
c.
				Reductions in bed capacity;
d.
				Variations in facility design; and
e. Variations in methods or materials of
				construction.
2. The
				analysis shall include an evaluation of the existing physical plant.
3. The analysis shall include a life-cycle
				cost analysis for each alternative studied, using forms provided by the
				department. In this subsection "life cycle" means the number of years for which
				alternatives are compared, and "life-cycle cost" means all relevant costs
				associated with a project during the project's defined life cycle.
Note: Copies of the life-cycle cost analysis form are
				  included in the application materials. They may be obtained from the Resource
				  Allocation Program, Division of Health Care Access and Accountability, P.O. Box
				  309, Madison, Wisconsin 53701.
4. The department may independently develop
				its own alternatives to compare with those developed by the
				applicant.
(e) A need
				for additional beds exists in the planning area in which the project would be
				located. No new beds may be approved in any planning area if their addition
				would exceed the planning area's adjusted allocation, calculated pursuant to s.
				DHS
				122.05.
(f) The project is consistent with local
				plans for developing community-based long-term care services. These plans shall
				include those developed by local units of government.
(g) Necessary health care personnel, and
				capital and operating funds for provision of the proposed nursing home services
				are available, as follows:
1. The project
				will meet minimum staffing and financial requirements developed by the
				department pursuant to ch. DHS 132 or 134;
2. The facility will be located to assure
				reasonable access to nursing staff, emergency medical care, physician coverage,
				acute care services and ancillary services; and
3. Sufficient cash resources and cash flow
				exist to pay operating and initial start-up costs.
(h) The project is financially feasible,
				capable of being undertaken within one year of approval and completed within a
				reasonable period of time beyond the one-year approval period, as evidenced by:
1. The applicant's demonstration of ability
				to secure adequate funds to finance the project. The applicant shall have
				adequate capacity to incur the debt associated with the project. Applicants
				shall have the ability to pay long-term debt through their present and future
				cash flow and profitability positions;
2. The availability of financing at average
				or below market rates for the class of home during the period of validity of
				the approval. Classes of homes are governmental, proprietary and nonprofit.
				Projects relying on sources of financing which historically take longer to
				process than the period of validity of an approval shall be rejected unless
				there is clear and definite proof supplied by the applicant that the funding
				source will be able to make adequate funds available within the period of
				validity of the approval; and
3.
				The reasonableness and attainability of the applicant's construction
				schedule.
(i)
				Appropriate alternative methods for providing nursing home or FDD care are
				unavailable in the planning area. Alternative methods shall be deemed
				unavailable if the project is consistent with long-term care initiatives
				developed by the department.
(j)
				The existing and proposed quality of care is satisfactory, as determined by:
1. The department's investigations. No
				approvals may be granted to any person who owns or operates a facility with one
				or more uncorrected class A or class B violations unless the project is
				specifically designed to remedy those violations, or to any person who owns or
				operates a facility against which a medical assistance or medicare
				decertification action is pending;
2. The department's review of materials
				submitted by the applicant, which may include an independent performance
				evaluation of an existing facility, an evaluation of other homes owned and
				operated by an applicant seeking approval for a new facility, and patient
				satisfaction surveys, where available;
3. Recommendations or comments from affected
				parties regarding the quality of care in facilities owned and operated by the
				applicant; and
4. For applications
				proposing replacement or relocation of beds, approval by the department of a
				plan for the placement or relocation of persons residing in those beds, based
				on the census of the FDD or other nursing home at the time of submission of the
				application.
(k) The
				project is consistent with all applicable federal, state and local licensing,
				physical plant, zoning and environmental laws.
(L) Applications for renovation proposals,
				replacement facilities and capital expenditures over $600,000 which do not
				affect bed capacity and which meet all criteria in sub. (1) shall be approved
				unless the per diem rates proposed as a result of the project are inconsistent
				with those of similar FDD or other nursing home projects recently approved by
				the department.