Cal. Code Regs. Tit. 22, § 52505 - Capital Costs Category

The Fair Rental Value System (FRVS) shall be used to reimburse capital costs associated with the use of a space as determined by the base value for each facility. The FRVS methodology establishes a facility's base value as determined by the FRVS calculation.

(a) The Department shall determine the facility's fair rental value based on a calculation consisting of the following factors: estimated building value, estimated equipment value, depreciation value, current facility value, estimated land value and the rental factor.

(1) The estimated building value shall be determined annually by a calculation based on a standard facility size of 400 square feet times the number of licensed beds times the R.S. Means Building Construction Cost Data times the location factor. The estimated building value shall be trended forward annually to the mid-point of the rate year using the R.S. Means Building Construction Cost Index.

(2) The estimated equipment value shall be determined by multiplying the number of facility beds by $4,000; this value shall be added to the estimated building value.

(3) The depreciation value shall be determined in subparagraphs (A) or (B). For the purposes of computing the depreciation as determined in subparagraphs (A) or (B) the Department shall determine the age of each facility by calculating the difference between the midpoint of the current rate year, and one of the following: a facility's original license date, the year of construction, initial loan documentation or similar documentation.

(A) If a facility's age is at or over 34 years, the facility is fully depreciated and the depreciation is calculated based on a 1.8 percent annual depreciation rate times 34 years times the combined total of the estimated building and estimated equipment value.

(B) If a facility's age is less than 34 years, the facility is not fully depreciated and the depreciation is calculated based on a 1.8 percent annual depreciation rate times the facility's age times the combined total of the estimated building and estimated equipment value.

(4) The current facility value shall be determined by subtracting the depreciation value from the combined total of the estimated building and estimated equipment value.

(5) The estimated land value shall be determined by an assessment equal to ten percent of the estimated building value as determined in subsection (a)(1).

(6) The fair rental value shall be determined by the combined total of the current facility value as determined in subsection (a)(4) and estimated land value as determined in subsection (a)(5). The fair rental value shall then be multiplied by the rental factor.

(b) The Department shall determine the capital rate component for each facility by dividing the facility's fair rental value by the greater of actual resident days for the cost reporting period or adjusted resident days, based on the statewide average occupancy rate. Days from partial year cost reports shall be annualized in the calculation.

(c) The Department shall determine the costs incurred for capital improvements, modifications, replacement projects or renovations equal to or greater than $500 per bed on a total licensed-bed basis by converting the costs incurred into an equivalent number of new beds. The equivalent number of new beds shall be averaged in with the age of the original beds, and the weighted average age of all beds shall represent the facility's age. The facility's age shall be used in the depreciation as calculated in subsection (a)(3).

(d) Capital costs calculated under this section shall be limited to the maximum annual increase for the capital cost category for all facilities in the aggregate and shall not exceed 8 percent of the prior rate year's FRVS cost component.

Notes

Cal. Code Regs. Tit. 22, § 52505

1. New section filed 7-22-2010 as an emergency; operative 7-22-2010 (Register 2010, No. 30). A Certificate of Compliance must be transmitted to OAL by 1-18-2011 or emergency language will be repealed by operation of law on the following day. Any rules issued by provider bulletin by the Department of Health Care Services that are covered by or inconsistent with these emergency regulations are superseded as of the effective date of these emergency regulations.
2. New section refiled 1-10-2011 as an emergency; operative 1-18-2011 (Register 2011, No. 2). A Certificate of Compliance must be transmitted to OAL by 4-18-2011 or emergency language will be repealed by operation of law on the following day. Any rules issued by provider bulletin by the Department of Health Care Services that are covered by or inconsistent with these emergency regulations are superseded as of the effective date of these emergency regulations.
3. Certificate of Compliance as to 1-10-2011 order, including amendment of section, transmitted to OAL 4-5-2011 and filed 5-17-2011 (Register 2011, No. 20).

Note: Authority cited: Sections 20, 1324.20, 1324.21 and 1324.23, Health and Safety Code; and Sections 10725, 14105, 14124.5 and 14126.027, Welfare and Institutions Code. Reference: Sections 14105, 14109.5, 14110.1, 14110.6, 14170 and 14171, Welfare and Institutions Code.

1. New section filed 7-22-2010 as an emergency; operative 7-22-2010 (Register 2010, No. 30). A Certificate of Compliance must be transmitted to OAL by 1-18-2011 or emergency language will be repealed by operation of law on the following day. Any rules issued by provider bulletin by the Department of Health Care Services that are covered by or inconsistent with these emergency regulations are superseded as of the effective date of these emergency regulations.
2. New section refiled 1-10-2011 as an emergency; operative 1-18-2011 (Register 2011, No. 2). A Certificate of Compliance must be transmitted to OAL by 4-18-2011 or emergency language will be repealed by operation of law on the following day. Any rules issued by provider bulletin by the Department of Health Care Services that are covered by or inconsistent with these emergency regulations are superseded as of the effective date of these emergency regulations.
3. Certificate of Compliance as to 1-10-2011 order, including amendment of section, transmitted to OAL 4-5-2011 and filed 5-17-2011 (Register 2011, No. 20).