Sec.17-313b-5. Computation of per diem room and board reimbursement rates for community living arrangements owned or leased by the licensee excluding units leased in multi-unit structures

The system for determining per diem rates for room and board payment by the Department of Income Maintenance for persons eligible pursuant to Chapter 302, Part III, G.S., who are residents of community living arrangements which are owned or leased by the licensee, excluding units leased in multi-unit structures which is computed in accordance with Sec. 17-313b-6, shall be an individual historical cost related prospective rate system derived from the documents filed pursuant to Secs. 17-313b-2 and -3, per diem room and board reimbursement rates shall be promulgated annually, effective July 1, based upon costs reported in the ACOR filed the preceding October.

Per diem room and board reimbursement rates for community living arrangements owned or leased by the licensee, excluding units leased in multi-unit structures, shall be calculated based upon:

(1) An amount of property costs based upon a fair rental value system.

(i) The fair rental value amount shall be in lieu of interest on mortgages, other property financing costs, depreciation on buildings and non-movable equipment and rental charges. The amount shall be computed in the same manner whether the living arrangement is owned or leased or whether the community living arrangement is operated by an individual owner/partnership or a corporation.

(ii) The fair rental value amount consists of a rental amount for use of land, buildings and non-movable equipment related to resident care.

(A) The annual fair rental value amount for the use of land shall be determined by multiplying the base value of the land by a rate of return which is equal to one-third of the Medicare rate of return for the contract year but not more than four percent nor less than two and one-half percent per annum.

(B) Real propety other than land consists of:

(1) Buildings and building improvements;

(2) All equipment attached to buildings and considered to be real property as distinguished from personal property; and

(3) Land improvements, including parking lots, driveways, sidewalks, sewerage systems, walls and pump houses.

The fair rental value amount is calculated to yield a constant amount each year in lieu of interest and depreciation costs. Such amount for the use of real property other than land shall be determined by amortizing the base value of such property over its remaining useful life and applying a rate of return on the unamortized base value. The base value of all real property other than land shall be the actual cost of the property less the accumulated depreciation from the date of acquisition to the date of first use as a licensed residence for persons with mental retardation. The remaining useful life is thirty years from the date of first use as a community living arrangement for mentally retarded persons. The annual rate of return shall be calculated in accordance with the procedures specified in Section 17-311-52-(f) (2) (b) of the Regulations of Connecticut State Agencies as amended, except for the factor which is applied to the medicare rate of return which shall be 1.5, not 1.0.

In any situation where book values are incomplete or questionable and therefore may not reflect the value on the date of acquisition. The commissioner may disallow any claim for such unsupported amount or may in his discretion establish a value based on property values of comparable properties and/or residences.

Upon a change of ownership of a community living arrangement the commissioner, in consultation with the Commissioner of Mental Retardation, may modify the base values of the property for the new owner if deemed in the best interest of the clients residing in the community living arrangement and is appropriate, equitable and does not prejudice the interests of the state.

For purposes of reimbursement, a minimum residual value is established for real property other than land at 10% of the cost of such property. The amount for the use of such property shall not be less than the amount determined by applying the appropriate Medicare rate of return to the minimum residual value.

(iii) In the event of an unforeseen or material change in allowable property costs, which are not reflected in the cost base, the community living arrangement may submit a request, in writing, to the Commissioner for an increase to reflect such change in the fair rental value amount.

Based on the consideration of the date presented and any other factors as the Commissioner deems pertinent, the Commissioner may decide that an adjustment in property basis is in the best interest of the clients residing in the community living arrangement and is appropriate, equitable, and does not prejudice the interest of the state.

(2) An amount for the reasonable cost of dietary, laundry, maintenance, housekeeping, transportation, utilities, fuel, property-related insurance, and property taxes.

(3) An amount for the reasonable cost of moveable equipment based upon depreciation and interest according to generally accepted accounting principles.

(4) An amount for reasonable interest expense required to obtain necessary working capital.

(5) Grants, gifts, fundraising, or endowment income specifically designated for payment of operating costs included in the room and board rate, based on actual cost or fair rental computations, shall be offset against those costs.

(6) Computation of a per diem reimbursement rate based upon the total cost as adjusted by the procedures referred to above divided by minimum allowable resident days or resident days whichever is greater for the applicable cost year.

A resident day is the unit of measurement for room and board provided and client-based services rendered to one client between the census taking hour on two successive days. In computing resident days, the first day of residence shall be counted but the last day of residence shall not. In computing resident days, reserve bed days for which payment is received shall be counted.

For purposes of computing minimum allowable resident days, utilization of a community living arrangement's licensed beds shall be determined at a minimum of 90% of capacity (excluding beds designated for respite care), except for newly licensed community living arrangements and existing community living arrangements which are licensed to serve additional clients which may be permitted a lower occupancy rate for the first three months of operation after the effective date of licensure. Minimum allowable resident days for beds designated for respite care shall be determined at a minimum of 50% capacity.

In the event that a bed designated for respite care is not suitable for full-time use for such purpose, the organization may request, in writing, a waiver of the 50% minimum occupancy for such bed in the affected community living arrangement. Based on consideration of the information presented and any other factors as the commissioner deems pertinent, the commissioner may grant a waiver. If such waiver is granted, actual respite days of care for the bed for which payment is received will be used in the computation of the community living arrangement's per diem reimbursement rate.

(7) An adjustment in the rate, for costs other than the property costs included in the fair rental value computation, for the time lag between the preceding contract year and the succeeding contract year.

This adjustment shall be the gross national product (GNP) deflator percentage increase or decrease for the twenty-four month time lag from the contract year ending the preceding June 30 to June 30 of the succeeding contract year. The GNP deflator is the implicit price deflator for the gross national product published in the "Economic Indicators" prepared for the Joint Economic Committee by the Council of Economic Advisors.

(8) Cost limitation.

For all community living arrangements, the aggregate total allowable costs shall not exceed the costs submitted by the organization, less unallowable costs.

(9) A statutory limitation on per diem rates.

Per diem rates paid by the state for care of persons eligible for assistance under the provisions of Chapter 302, Part III of the General Statutes shall not exceed the rate of payment for similar services to the general public.

(Effective June 24, 1988)