N.J. Admin. Code § 10:52-5.14

Current through Register Vol. 56, No. 9, May 6, 2024

Section 10:52-5.14 - Capital facilities

(a) Capital Facilities, as defined in 10:52-6.18, shall be included in the rate in the following manner:

1. Building and fixed equipment:

i. The yearly Capital Facilities Allowance is computed using information provided by the Share Cost Reports. For hospitals on a calendar year basis, this amount will be its 1992 depreciation and interest expense, excluding any portion associated with major moveable equipment and any interest income reported as an expense recovery. For those hospitals on a fiscal year basis, actual year's depreciation and interest applicable to rate year 1992 shall be used excluding any portion associated with major moveable equipment and any interest income reported as an expense recovery.

ii. Effective for services provided on or after October 1, 1996, all building and fixed depreciation and interest capital costs as defined in 10:52-6.18 related to GME programs shall be determined based on the 1992 audited Medicare Cost Report (HCFA-2552) and shall be excluded from the base year cost used to calculate the Medicaid DRG inpatient rates.

2. Major Moveable Equipment: For the purpose of calculating the Price Level Depreciation Allowance, Major Moveable Equipment is grouped into four categories based on the cost center function where the equipment is utilized: Beds and nursing equipment; Diagnostic and therapeutic equipment; General service equipment; and Business service equipment.

i. The following rules shall apply in calculating the Price Level Allowance for a given year:

(1) Only equipment which has not been fully depreciated at the start of the fiscal year is to be used in the calculation of the Price Level Allowance.

(2) The depreciation recorded and reported on all equipment subject to the Price Level Allowance must be calculated by the straight-line method, using at the time of the cost filing the most recent approved American Hospital Association (AHA) Recommended Useful Life (that is, 1978 revision) or Asset Depreciation Range (ADR).

(3) Only capitalized equipment and related capitalized costs can be used in the calculation of the Price Level Allowance.

(4) The price level factors for each of the four categories will be developed by the Division. For years prior to current cost base year, the factors to be used for price leveling depreciation are as follows:

Category	Proxy
Beds and Nursing Equipment	Marshall and Swift Hospital Equipment
Cost Index
Diagnostic and Therapeutic Equipment	Marshall and Swift Hospital Equipment
Cost Index
General Service Equipment	Producer Price Index (PPI) 1161, Food
Products Machinery (41.18%), PPI
1241.02, Laundry Equipment (23.53%).
PPI 113 less 1134 and 1136,
Metalworking Machinery less Industrial
Furnaces and Abrasive Products
(35.29%).
Business Service Equipment	PPI 1193 less 1193.06, Business and
Store equipment (less Coin Operated
Vending Machines) and PPI 122,
Commercial Furniture.

(5) Assets retired before the close of the fiscal year are not to be used in the calculation of the Price Level Allowance.

(6) The amount of the Price Level Allowance shall be calculated as follows:

(A) Current year straight-line depreciation of each asset being depreciated is multiplied by the price level factor corresponding to the year the asset was acquired to determine price level depreciation. Straight-line depreciation is then subtracted from price level depreciation and the result totaled to determine the amount of the Price Level Allowance provided by the following calculation: Algebraically the calculation is as follows:

D ...	(equals) Current year depreciation, ordered by the year
of acquisition of the asset being depreciated.
F ...	(equals) Price level factor for the year the asset was
acquired.
PLA ...	(equals) Price Level Allowance.
PLA ...	(equals) (D x F) - D.

(7) The interest component of cash disbursements relative to capitalized Major Moveable Equipment leases is to be classified as interest expense, in accordance with GAAP, and not used as a basis for calculating the price level depreciation premium.

(8) The total Price Level Allowance will be allocated to cost centers based upon the accumulated depreciation of all Major Moveable Equipment not fully depreciated.

(b) Any new capital facilities construction with a valid certificate of need from the New Jersey Department of Health may request a capital facilities adjustment in rates through the review and appeal process as described in N.J.A.C. 10:52-9, except that a hospital which meets the requirements of (b)1 below may request a capital facilities adjustment in accordance with (b)2 below.

1. A hospital may submit an appeal specific to its CFA without going through the full rate review process, if:

i. The appeal is for a single capital project in excess of $ 20 million which is for replacement beds which reduce the number of hospital beds available in the State and as of September 15, 1997, the hospital has an approved certificate of need for this project;

ii. The hospital receives no direct State appropriation; and

iii. The hospital has a 1995 percentage of low income revenue greater than 50 percent. The low-income revenue percentage shall be based on revenue data as reported on the submitted 1995 New Jersey Hospital Cost Report, after desk audit. The low-income revenue percentage shall be based on the sum of the Medicaid/NJ FamilyCare revenue as reported on Forms E-5 and E-6, line 1, column E, plus the Charity Care revenue as reported on Forms E-5 and E-6, line 1, column J, divided by the sum of the total revenue as reported on Forms E-5 and E-6, line 1, column M.

2. If all of the conditions in (b)1 above are met, the hospital shall submit all supporting documentation to the Department of Human Services, Division of Medical Assistance and Health Services, Office of Hospital Reimbursement, PO Box 712, Mail Code #44, Trenton, New Jersey 08625-0712. The Division shall issue a written determination once the supporting documentation is reviewed and the hospital may appeal the determination pursuant to 10:52-9.1(d).

3. In addition to an adjustment to its rates, a hospital that meets the condition of (b)1 above shall receive an additional payment for its Capital Project Funding related to its Medicaid/NJ FamilyCare-Plan A managed care utilization.

i. Payments to eligible hospitals shall begin upon project completion and facility operation.

ii. The hospital-specific Capital Project Funding annual amount shall be equal to the principal and interest cost associated with the capital project, multiplied by the Medicaid/NJ FamilyCare-Plan A managed care percent for inpatient services, less any capital costs included in the managed care rates.

N.J. Admin. Code § 10:52-5.14

Amended by 50 N.J.R. 1261(a), effective 5/21/2018