Code of Massachusetts Regulations
114 CMR - DIVISION OF HEALTH CARE FINANCE AND POLICY
Title 114.1 CMR 40.00 - NON-ACUTE HOSPITAL PUBLICLY ASSISTED RATES OF PAYMENT AND THE FEE FOR RESIDENTIAL ALCOHOLISM TREATMENT PROGRAMS
Section 40.06 - Determination of Reasonable Financial Requirements (RFR)
Universal Citation: 114.1 CMR 40.00 MA Code of Regs 40.06
Current through Register 1531, September 27, 2024
(1) Purpose. The Division shall determine the Reasonable Financial Requirement (RFR) in accordance with CMR 114.1 40.06 for the purposes defined in 114.1 CMR 40.01.
(2) Method of Determination of RFR. The Division will determine the RFR for each non-acute hospital for a rate year by summing [a] the rate year operating requirements, [b] the rate year capital requirement, [c] the rate year working capital requirement, and then subtracting [d] the labor cost recovery pursuant to 40.08(2)(b). The calculation of these elements of RFR is described below.
(a) The rate year operating requirement is
the sum of:
1. The base year allowed operating
cost under 114.1 CMR 40.07(2), and
2. The adjusted base year to rate year
adjustments calculated pursuantto 114.1 CMR 40.08.
(b) The rate year capital requirement is the
sum of:
1. The base year allowed capital cost
under 114.1 CMR 40.07(3), and
2.
The adjusted base year to rate year adjustments pursuant to 114.1 CMR
40.08(6).
(c) The rate
year working capital requirement is calculated by multiplying the sum of the
rate year operating and capital requirements by 0.0055.
(3) The FY 1997 RFR.
(a) For hospitals with rate years beginning
7/1/96, the FY 1997 RFR is the RFR derived from the FY 1997 RSC-440 as reviewed
and adjusted by the Division.
(b)
For hospitals with rate years beginning 10/1/96, the FY 1997 RFR is the FY 1996
RFR approved by the Division. Therefore, the Division will not make adjustments
pursuant to 114.1 CMR 40.07 and/or 40.08 for changes affecting costs in FY
1997.
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