N.J. Admin. Code § 8:85-3.7

Current through Register Vol. 56, No. 11, June 3, 2024

Section 8:85-3.7 - Case mix rate components

(a) Effective for dates of service on or after July 1, 2010, for Class I and Class II NFs, each facility's rate shall be comprised of:

1. The facility's direct care case mix rate component and direct care non-case mix rate component;

2. The operating and administrative price;

3. The facility-specific fair rental value (FRV) allowance; and

4. The provider tax pass-through per diem provided by 26:2H-92 et seq. and 8:85-3.12.

(b) The NF's direct care case mix rate component shall be based on the following costs:

1. RN nursing salaries, payroll taxes and general benefits;

2. LPN nursing salaries, payroll taxes and general benefits; and

3. Nurse aides salaries, payroll taxes and general benefits.

(c) The NF's direct care non-case mix rate component shall be based on the following costs:

1. Medical director salaries, payroll taxes and general benefits;

2. Patient activities salaries, payroll taxes and general benefits;

3. Pharmaceutical consultant salaries, payroll taxes and general benefits;

4. Non-legend drugs;

5. Routine medical supplies;

6. Social services salaries, payroll taxes and general benefits; and

7. Routine oxygen.

(d) For purposes of (b) and (c) above for cost reports ending on or after December 31, 2010, if these services are acquired through a contract, only the actual wages, payroll taxes and general employee benefits associated with those individuals providing direct care services for the nursing facility may be included in the direct care rate component, and all of the contracting entity's overhead, other costs and fees charged to the nursing facility shall be reported as other general services costs on the cost report. Such contracts shall include a requirement for a detailed breakdown of the costs as follows:

1. Wages paid to the contract staff performing the direct care services for the nursing facility;

2. Payroll taxes of the contract staff performing the direct care services for the nursing facility;

3. General employee benefit expense for the staff performing the direct care services for the nursing facility;

4. Special employee benefit expense for the staff performing the direct care services for the nursing facility; and

5. The contractor's costs for all other costs, including overhead related costs and service fees.

i. If the contractor is a related party, all other costs, including overhead related costs, shall be identified separately from service fees.

(1) Failure to provide these cost breakdowns shall result in the entire contract cost being disallowed for reimbursement purposes, and these cost breakdowns shall be part of the cost report when filed.

ii. If the contractor is not a related party, the costs listed under (d)1, 2 and 3 above may be reported as a lump sum for each contract, and costs listed under (d)4 above and this paragraph may be reported as a second lump sum for each contract.

(e) The operating and administrative price shall be based on all allowable costs that are not directly recognized in the direct care rate component, the provider tax pass-through or the FRV allowance and shall include the costs of the following listed items:

1. Management;

2. Administrator;

3. Assistant administrator;

4. Other administrative;

5. Home office and/or management company costs properly allocated to the NF;

6. Dietary;

7. Food;

8. Laundry and linen;

9. Housekeeping;

10. Other general services costs, including contract staffing costs other than those reported costs listed in (b) and (c) above;

11. Maintenance (non capital portion);

12. Utilities;

13. Property insurance;

14. Other property operating costs;

15. Property taxes for the land and building; and

16. All other allowable costs not directly recognized in the direct care case mix adjusted or non-case mix adjusted cost center or reimbursed through the FRV allowance.

(f) The facility-specific FRV allowance shall reimburse an NF on the basis of the estimated depreciated value of its capital assets in lieu of direct reimbursement for allowable depreciation, amortization, capital related interest, rent expenses and lease expenses.

1. The Department shall establish an NF's bed value based on the age of the NF re-aged to reflect replacements, major renovation or additions placed into service since the NF's facility was built, to the extent those replacements, renovations and additions are reported to the Department and documented by the NF.

2. A nursing facility shall provide documentation to the Department upon request for these items to be considered in the calculation of the initial effective age and annual re-age calculations.

3. The FRV allowance for dates of service July 1, 2010 through June 30, 2011, shall be based on the FRV Data Report, provided there is sufficient documentation to support the historical information.

4. The FRV allowance for dates of service after June 30, 2011, shall incorporate any capitalized assets placed into service during the prior year and submitted on the FRV Re-age Request.

i. A nursing facility shall submit a Fair Rental Value Re-age Request to the Department by June 15th to be considered in the next July 1st annual rate setting process.

ii. Requests received by the Department after June 15th shall be considered in the rate setting process the following year.

N.J. Admin. Code § 8:85-3.7

As amended, R.1984 d.573, effective 12/16/1984.
See: 16 N.J.R. 2484(a), 16 N.J.R. 3437(a).
(a)7: substituted "county" for "country."
Amended by R.1987 d.6, effective 1/5/1987.
See: 18 N.J.R. 257(a), 19 N.J.R. 126(a).
Recodified from 10:63-3.6 and amended by R.1994 d.624, effective 1/3/1995.
See: 26 N.J.R. 3614(a), 27 N.J.R. 156(a).
Amended by R.1995 d.174, effective 3/20/1995 (operative April 1, 1995).
See: 27 N.J.R. 281(a), 27 N.J.R. 1307(a).
Amended by R.1996 d.147, effective 3/18/1996.
See: 27 N.J.R. 3314(a), 28 N.J.R. 1535(a).
Recodified from N.J.A.C. 10:63-3.7 and amended by R.2005 d.389, effective 1/17/2006.
See: 36 N.J.R. 4700(a), 37 N.J.R. 1185(a), 38 N.J.R. 674(a).
Made technical changes throughout; changed references N.J.A.C. 10:63 to N.J.A.C. 8:85.
Repeal and New Rule, R.2011 d.121, effective 4/18/2011.
See: 42 N.J.R. 1793(a), 43 N.J.R. 961(c).
Section was "Property operating expenses".