Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Administrative Rules
9549.0055 DETERMINATION OF OPERATING COST ADJUSTMENT FACTORS AND LIMITS.
Subpart 1.
Annual adjustment factors.
The annual adjustment factors must be determined according to items A and B.
A.
The annual adjustment factor for the case mix and other care related operating costs must be established according to subitems (1) to (7).
(1)
The components and indexes specified in the following table must be used to establish the case mix and other care related operating cost adjustment factor. These indexes are incorporated by reference as specified in subpart 4.
Case Mix and Care Related Components and Indexes
| Component | Weight | Index |
| Salaries | .7347 | Average hourly earnings of employees in nursing and personal care facilities (SIC 805). |
| Benefits | .1107 | Difference between movements in compensation and wages and salary index components of the Employment Cost Index for Service Workers. |
| Supplies and Drugs | .0363 | Consumer Price Index for nonprescription medical equipment and supplies. |
| Food | .1183 | Producer Price Index for consumer foods. |
| ______ | ||
| TOTAL | 1.0000 |
(2)
The average index value for calendar year 1983 for each component in subitem (1) must be determined by summing the quarterly index values for the component and dividing the results by four.
(3)
The average index value for the reporting year for each component in subitem (1) must be determined by summing the quarterly index values for the component and dividing the results by four.
(4)
The composite price index for the reporting year must be determined by:
(a)
dividing the amount in subitem (3) for each component by the corresponding amount in subitem (2) for that component;
(b)
multiplying each amount determined in unit (a) by the corresponding weight for that component in subitem (1); and
(5)
The forecasted average index value for the rate year for each component in subitem (1) must be determined by summing the forecasted quarterly index values for that component and dividing the result by four.
(6)
The forecasted composite price index for the rate year must be determined by:
(a)
dividing the amount in subitem (5) for each component by the corresponding amount in subitem (2) for that component;
(b)
multiplying each amount determined in unit (a) by the corresponding weight for that component in subitem (1); and
(7)
The forecasted adjustment factor is determined by dividing the forecasted composite price index for the rate year computed in subitem (6), unit (c) by the composite price index for the reporting year computed in subitem (4), unit (c).
B.
The annual adjustment factor for the other operating costs must be established according to subitems (1) to (7).
(1)
The components and indexes specified in the following table must be used to establish the other operating cost adjustment factor. These indexes are incorporated by reference as specified in subpart 4.
Other Operating Costs Components and Indexes
| Component | Weight | Index |
| Utilities | .1099 | Producer Price Index for natural gas (80 percent); and Producer Price Index for commercial power in west north central states (20 percent). |
| Salaries | .5864 | Average hourly earnings of employees in nursing and personal care facilities (SIC 805). |
| Benefits | .0799 | Difference between movements in compensation and wages and salaries index components of the Employment Cost Index for Service Workers. |
| Additional Professional Services | .1107 | Employment Cost Index for wages and salaries of professional and technical workers. |
| Additional Miscellaneous Service Purchases | .0322 | Consumer Price Index for maintenance and repair services. |
| Miscellaneous Purchases (Commodities) | .0809 | Consumer Price Index for maintenance and repair commodities. |
| ______ | ||
| TOTAL | 1.0000 |
(2)
The average index value for calendar year 1983 for each component in subitem (1) must be determined by summing the quarterly index values for the component and dividing the results by four.
(3)
The average index value for the reporting year for each component in subitem (1) must be determined by summing the quarterly index values for the component and dividing the results by four.
(4)
The composite price index for the reporting year must be determined by:
(a)
dividing the amount in subitem (3) for each component by the corresponding amount in subitem (2) for that component, except that the utilities component must be 80 percent of the natural gas component plus 20 percent of the commercial power component;
(b)
multiplying each amount determined in unit (a) by the corresponding weight for that component in subitem (1); and
(5)
The forecasted average index value for the rate year for each component in subitem (1) must be determined by summing the forecasted quarterly index values for that component and dividing the result by four.
(6)
The forecasted composite price index for the rate year must be determined by:
(a)
dividing the amount in subitem (5) for each component by the corresponding amount in subitem (2) for that component, except that the utilities component must be 80 percent of the natural gas component plus 20 percent of the commercial power component;
(b)
multiplying each amount determined in unit (a) by the corresponding weight for that component in subitem (1); and
(7)
The forecasted adjustment factor is determined by dividing the forecasted composite price index for the rate year computed in subitem (6), unit (c) by the composite price index for the reporting year computed in subitem (4), unit (c).
Subp. 2.
Base year limits.
For each geographic group established in part 9549.0052 the base year operating costs limits must be determined according to items A to E. No redetermination of the base year operating costs limits shall be made due to audit adjustments or appeal settlement.
A.
The commissioner shall compute 115 percent of the median of the array of the allowable historical case mix operating cost standardized per diems for the base year.
B.
The commissioner shall compute 115 percent of the median of the array of the allowable historical other care related operating cost per diems for the base year. For the purpose of establishing operating cost limits, the commissioner shall compute the allowable historical other care related per diems for the base year by dividing the allowable historical other care related operating costs by the greater of resident days or 90 percent of the number of licensed beds multiplied by the number of days in the reporting period. An exception to this calculation is made for a short length of stay facility. For a short length of stay facility, the allowable historical other care related operating costs must be divided by the greater of resident days or 80 percent of the number of licensed beds multiplied by the number of days in the reporting period.
C.
The total care related operating cost limit for each resident class must be determined by multiplying the amount determined in item A by the weight for each resident class and adding the amount determined in item B. The total care related operating cost limit for a short length of stay facility must be 125 percent of the total care related operating cost limit. A nursing facility licensed on June 1, 1983, by the commissioner to provide residential services for persons with physical disabilities under parts 9570.2000 to 9570.3600 is exempt from the total care related operating cost limit.
D.
The commissioner shall disallow any portion of the general and administrative cost category, exclusive of fringe benefits and payroll taxes, that exceeds 15 percent of the allowable expenditures in all operating cost categories except fringe benefits, payroll taxes, and general and administrative. For the purpose of computing the amount of disallowed general and administrative cost, the nursing facility's professional liability and property insurance must be excluded from the general and administrative cost category. For purposes of this item, the term property insurance means general liability coverage for personal injury incurred on the nursing facility property and coverage against loss or damage to the building, building contents, and the property of others on the premises of the nursing facility property insurance does not include any coverage for items such as automobiles, loss of earnings, and extra expenses.
E.
The other operating costs limits must be determined in accordance with subitems (1) to (5). For the purpose of establishing operating costs limits, the commissioner shall compute the allowable historical other operating costs per diems for the base year by dividing the allowable historical other operating costs by the greater of resident days or 90 percent of the number of licensed beds multiplied by the number of days in the reporting period. An exception to this calculation is made for a short length of stay facility. For a short length of stay facility, the allowable historical other operating costs must be divided by the greater of resident days or 80 percent of the number of licensed beds multiplied by the number of days in the reporting period.
(1)
For each geographic group in part 9549.0052, the commissioner shall group all hospital attached nursing facilities, short length of stay facilities, and nursing facilities licensed on June 1, 1983, by the commissioner to provide residential services for the physically disabled under parts 9570.2000 to 9570.3600.
(2)
The other operating cost limit for hospital attached nursing facilities in each geographic group in part 9549.0052 must be 105 percent of the median of the array of the allowable historical other operating cost per diem for each nursing facility in the group established under subitem (1) in the base year.
(3)
The other operating cost limit for all short length of stay facilities and nursing facilities licensed on June 1, 1983, by the commissioner to provide residential services for the physically disabled under parts 9570.2000 to 9570.3600 in each geographic group in part 9549.0052 must be 105 percent of the limit established in subitem (2).
(4)
For each geographic group in part 9549.0052, the commissioner shall group all nursing facilities not included in subitem (1).
(5)
The other operating cost limit for each group established in subitem (4) must be 105 percent of the median of the array of the allowable historical other operating cost per diems for each nursing facility in the group for the base year.
Subp. 3.
Indexed limits.
For a rate year beginning on or after July 1, 1987, the total care related operating cost limits and the other operating cost limits must be determined under items A and B.
A.
The total care related operating cost limits must be determined under subitems (1) and (2).
(1)
The composite price index for case mix and other care related operating costs for the current reporting year as determined in subpart 1, item A, subitem (4), must be divided by the corresponding composite price index for the previous reporting year.
(2)
The limit for each resident class in subpart 2, item C, must be multiplied by the amount determined in subitem (1) to establish the indexed total care related operating cost limits.
B.
The total other operating costs limits must be determined under subitems (1) and (2).
(1)
The composite price index for other operating costs for the current reporting year as determined in subpart 1, item B, subitem (4), must be divided by the corresponding composite price index for the previous reporting year.
(2)
Each limit in subpart 2, item E must be multiplied by the amount determined in subitem (1) to establish the indexed other operating cost limits.
History:
11 SR 1990; L 1992 c 513 art 7 s 136; L 2005 c 56 s 2; L 2014 c 262 art 4 s 9
Published Electronically:
August 8, 2014
Official Publication of the State of Minnesota
Revisor of Statutes