Illinois Administrative Code
Title 89 - SOCIAL SERVICES
Part 144 - DEVELOPMENTAL DISABILITIES SERVICES
Section 144.325 - Capital Rate Calculation
Universal Citation: 89 IL Admin Code ยง 144.325
Current through Register Vol. 48, No. 38, September 20, 2024
a) Capital rates for ICF/MR facilities with four or six beds will be calculated by the Department according to this Section, which provides calculation methods for rates for various capital categories. Rate charts will be prepared each year based upon these provisions. The rate for an individual facility will be selected based upon the following criteria:
1) New construction or remodeled building. If
the facility is a remodeled building the base cost will be used to assign it to
a category.
2) Base Year
3) Location
b) The terms used in this Section are defined as follows:
1) "Arm's-length transaction"
means a transaction between a buyer and a seller both free to act, each seeking
his own best economic interest. A transaction between related parties as
defined in the Department of Public Aid's rule at 89 Ill. Adm. Code
140.537
is not considered to be an arm's-length transaction.
2) "Base Year" refers to the weighted average
year of investment in the actual construction of the building. The Base Year is
determined using the components of the building cost, which are included in the
Building Base Cost, and the corresponding years of acquisition or construction.
The year of each component of the total investment is multiplied by the cost of
each year's investment. The sum of these products is then divided by the total
Building Base Cost to yield an average year of construction. Any fractional
portion of the Base Year derived from this calculation will be truncated. The
Base Year will not change due to sale or lease of the building.
3) "Capital Days" are used to convert all
capital items to per diem amounts. A 93% occupancy standard is used in the rate
calculation.
4) Building Base Cost
refers to the cost to purchase the building to be first licensed as an
ICF/DD-16 facility with four or six beds. Only costs associated with
arms-length transactions between unrelated parties will be considered. The
allowable cost of subsequent improvements to the building will be included in
the building base cost. The building base cost will not change due to sales or
leases of the facility.
5) "Square
feet per bed" is defined as 445 square feet per bed for a four bed facility and
365 square feet per bed for a six bed facility.
6) "New Construction Cost Per Square Foot" is
defined as the costs published by the R.S. Means Company, Inc. Data will come
from the most recent edition of the Means Square Foot Costs publication. The
cost used per square foot for new construction is based upon average
residential one story construction. Factors are included for wood frame, wood
siding, central air, and two bathrooms.
7) Location. The facilities will be separated
into one of the following location groups:
A)
Group 1 - Cook, DuPage, Will and Lake counties.
B) Group 2 - Counties 175,000 to 1,000,000
population.
C) Group 3 - Counties
below 175,000 population.
8) New building construction refers to
construction of a complete building for the purpose of being licensed and
operated as an ICF/DD-16 facility with four or six beds.
9) Remodeled buildings refer to buildings
which previously existed for some other function and were remodeled to be
licensed and operated as an ICF/DD-16 facility with four or six beds.
c) The rates will be calculated for facilities constructed during the current rate year according to the following steps. These steps will result in six different rate categories. There is a four bed rate and a six bed rate within each of three different location categories.
1) Preliminary Cost Per
Bed - The new construction cost per square foot is multiplied by the square
feet per bed to get a preliminary cost per bed.
2) Revised Cost Per Bed
A) The preliminary cost per bed is multiplied
by a 120% adjustment factor and is then further increased by factors for a two
car garage and for sprinklers as follows:
i)
Garage - The R.S. Means Company, Inc. projected cost for an attached two car
garage is divided by four or six beds whichever is applicable to obtain a cost
per bed.
ii) Sprinklers - A $6,200
sprinkler cost is divided by four or six beds whichever is applicable to obtain
a cost per bed.
B) The
result of this step is a revised cost per bed for new construction.
3) Localized Cost Per Bed
A) The revised cost per bed is multiplied by
a locality adjustor for the applicable area of the State in which the facility
is located. A separate locality adjustor is calculated for the following areas:
i) Cook, DuPage, Will and Lake
counties.
ii) Counties 175,000 to
1,000,000 population (excluding DuPage, Will and Lake Counties).
iii) Counties below 175,000
population.
B) The
locality adjustors are calculated as the average of all locality factors for
each area in the most recent R.S. Means Company, Inc. publication.
C) The result of this step is the localized
cost per bed.
4) Total
Projected Investment Per Bed - Land is added to the localized cost per bed to
arrive at the total projected investment per bed. Land is based upon $25,000
for facilities located in the Cook, DuPage, Will and Lake counties. Counties
with a population of 175,000 to 1,000,000 will use a $18,750 total land cost.
Counties with a population below 175,000 will use a $12,500 total land cost.
The total land cost is divided by four or six beds to determine the land cost
per bed.
5) The total projected
investment per bed is divided by 339 client days (365 days X 93% = 339) to
arrive at a per diem investment.
6)
The per diem investment is multiplied by a 11% rate of return and further
increased by $3.01 per diem for equipment, working capital costs and vehicles
to obtain the rate.
7) The rates
for facilities with a base year which is older than the current rate year will
be calculated using the same steps as newly constructed facilities in
subsection (c) of this Section except for the localized cost per bed in
subsection (c)(3). The localized cost per bed is discounted by a 3%
obsolescence for each year between the base year and the current
year.
8) A table will be prepared
by the Department which will list all applicable rates for each rate year. The
rate for any facility will be looked up based upon the base year, bed size and
location of the facility.
9) Rates
for Remodeled or Existing Construction
A) To
recognize the potentially wide range of investment in existing facilities to be
converted into small scale ICF/MR facilities with four or six beds,
modifications have been made to the calculation of total projected investment
for subsection (c)(4) of this Section.
B) The buildings which were remodeled will be
separated into four categories using the lower of the actual land and building
purchase price plus remodeling cost per bed, or the appraisal cost of land and
building per bed. This assignment to categories is based upon comparison of the
facility's cost (lower of actual or appraisal) to the result of the following
percentages of the projected investment from subsection (c)(4) of this Section:
(Equipment cost is not included in this comparison.)
i) Category 1 - 77.5 % and above
ii) Category 2 - 62.5 % to 77.4 %
iii) Category 3 - 47.5 % to 62.4 %
iv) Category 4 - 47.4 % and less
C) The total projected investment
from subsection (c)(4) of this Section will be multiplied by the following
category percentages as applicable, and rates calculated based upon the
remaining provisions in subsection (c):
i)
Category 1 - 85%
ii) Category 2 -
70%
iii) Category 3 - 55%
iv) Category 4 - 40%
d) Rented facilities will have the capital rates calculated by the same procedures as are used for owned facilities.
e) Property Taxes
1) For four and six bed facilities which can
show they will be required to pay property taxes, the Department will have the
median property tax rate for their geographic area added to the capital
rate.
2) In subsequent years the
property tax portion of the capital rate will be calculated in accordance with
the Department of Public Aid's rule at 89 Ill. Adm. Code
140.578(b).
f) Combined Rate
1) Small scale ICF/MR facilities are
separately licensed facilities. However, reimbursement for capital costs is
based on the sixteen person capacity of a set of four 4-person facilities, or
one 4-person plus two 6-person facilities (see the Department of Public Aid's
rule at 89 Ill. Adm. Code
140.561(b)
). The set of small facilities used in computing the capital rate will be
identified in the provider agreements.
2) A separate capital rate will be calculated
for each licensed facility in the set of four facilities or one 4-person plus
two 6-person facilities. These rates will be combined to arrive at one average
capital rate for the set. The averaging of the capital rates will be weighted
according to the number of licensed beds in each of the four facilities in the
set.
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