Kan. Admin. Regs. § 129-10-25 - Real and personal property fee
(a) A real and
personal property fee shall be developed by the agency in lieu of an allowable
cost for ownership or lease expense, or both. The fee shall be
facility-specific and shall not change as a result of change of ownership, a
change in lease, or reenrollment in the medicaid program by providers. An
inflation factor may be applied to the fee on an annual basis.
The real and personal property fee shall include an appropriate component for the following:
(1) Rent
or lease expense;
(2) interest
expense on a real estate mortgage;
(3) amortization of leasehold improvements;
and
(4) depreciation on buildings
and equipment.
(b)
(1) The real and personal property fee shall
be determined based on one of the following methodologies:
(A) For providers enrolled in the Kansas
medical assistance program with a real and personal property fee for each
facility, the real and personal property fee shall be the sum of the property
allowance and value factor.
(B)
For providers reenrolling in the Kansas medical assistance program or providers
enrolling for the first time but operating in a facility that was previously
enrolled in the program, the real and personal property fee shall be the sum of
the last effective property allowance and the last effective value factor for
the facility.
(C) The real and
personal property fee for a newly constructed nursing facility or a nursing
facility that enters the Kansas medical assistance program and has not had a
fee established previously shall be calculated based on the following
methodology:
(i) A projected real and
personal property fee shall be calculated using a projected cost report by
dividing the total of the four real and personal property fee components
reported in the ownership cost center by the greater of the total number of
resident days reported or 85 percent of the licensed capacity for the cost
report period.
(ii) A historical
real and personal property per diem shall be calculated using a historical cost
report by dividing the total of the four line items reported in the ownership
cost center by the greater of the total number of resident days reported or 85
percent of the licensed capacity for the cost report period.
(iii) A settlement between the projected and
historical rates, which shall include the real and personal property fee, shall
be made in accordance with K.A.R. 129-10-18 (e).
(2) The real and personal property
fee shall be subject to an upper payment limit. The upper payment limit for the
real and personal property fee shall be determined by the median real and
personal property fee plus a percentage of the median. The percentage factor
applied shall be determined by the secretary.
(c)
(1) The
depreciation and amortization component of the real and personal property fee
shall meet these criteria:
(A) Be
identifiable and recorded in the provider's accounting records;
(B) be based on the historical cost of the
asset as established in this regulation; and
(C) be prorated over the estimated useful
life of the asset using the straight-line method.
(2)
(A)
Appropriate recording of depreciation shall include the following:
(i) Identification of the depreciable assets
in use;
(ii) the assets'
historical costs;
(iii) the method
of depreciation;
(iv) the assets'
estimated useful life; and
(v) the
assets' accumulated depreciation.
(B) Each provider shall report gains and
losses on the sale of depreciable personal property on the cost report at the
time of the sale. The provider shall record trading of depreciable property in
accordance with the income tax method of accounting for the basis of property
acquired. Under the income tax method, gains and losses arising from the
trading of assets shall not be recognized in the year of trade but shall be
used to adjust the basis of the newly acquired property.
(3) The cost basis shall not include costs
attributable to the negotiation or final purchase of the facility, which may
include legal fees, accounting fees, travel costs, and the cost of feasibility
studies.
(d) Any
provider may request that the agency rebase the real and personal property fee.
Providers shall submit rebase requests for completed capital improvement
projects or phases of capital improvements projects. The following methodology
shall be used to determine a revised real and personal property fee based on
the rebase request.
(1) Rebase requests shall
be reviewed to determine a revised real and personal property fee if the
provider meets the following capital expenditure thresholds:
(A) $25,000.00 for facilities with 50 or
fewer beds; or
(B) $50,000.00 for
facilities with 51 or more beds.
(2) The per diem based on the interest
expense, depreciation expense, and amortization of leasehold improvements shall
be added to the real and personal property fee in effect on the date that the
rebase is made effective. Interest expense reported in the operating cost
center shall not be included in the request for a rebase of the real and
personal property fee. Interest on loans for real and personal property that is
included in a rebase shall be reported with mortgage interest in the ownership
cost center.
(3) The number of
resident days used in the denominator of the real and personal property fee
calculation shall be based on the total number of resident days from the most
recent desk-reviewed cost report to rebase the property fee. The resident days
shall be subject to the 85 percent minimum occupancy requirement, including any
new beds documented in the request for a rebase.
(4) The revised real and personal property
fee shall be subject to the upper payment limit in effect on the date the
rebase is made effective.
(5)
(A) If the number of beds of an existing
nursing facility is increased by the construction of a new addition to the
existing facility, the real and personal property fee established through the
rebase shall be effective according to either of the following schedules:
(i) On the first day of the month in which
the new beds were certified if the certification date was on or before the 15th
of the month; or
(ii) on the first
day of the month following the month in which the beds were certified if the
certification date is on or after the 16th of the month.
(B) If the capital expenditure that is the
basis for the rebase request is not related to an increased number of beds, the
real and personal property fee established through the rebase shall be
effective according to either of the following schedules:
(i) On the first day of the month in which
the complete documentation is received, if the request is received on or before
the 15th of the month; or
(ii) on
the first day of the month following the month in which the complete
documentation is received, if the request is received on or after the 16th of
the month.
(C) Complete
documentation shall include the following:
(i) The depreciation or amortization schedule
reflecting the expense, including the construction-in-progress subsidiary
ledger;
(ii) the loan agreement;
(iii) the amortization schedule
for interest;
(iv) invoices;
(v) receipts for contractor fees;
and
(vi) receipts for other costs
associated with the capital expenditure.
(6) Invoices or contractor statements dated
more than two years before the date the rebase request is received shall not be
allowed.
Notes
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