(F) "Related party" has the same meaning as in section
5165.01 of the Revised Code.
(1) The amount of indirect
ownership is determined by multiplying the percentage of ownership interest at
each level (e.g., forty per cent interest in corporation "A" which owns fifty
per cent of corporation "B" results in a twenty per cent indirect interest in
corporation "B").
(2) If a
provider transfers an interest or leases an interest in a facility to another
provider who is a related party, the capital cost basis shall be adjusted for a
sale of a facility to or a lease to a provider that is not a related party if
all of the following conditions are met:
(a)
For a NF transfer:
(i) The related party is a
relative of owner.
(ii) The
provider making the transfer retains no interest in the facility except through
the exercise of the creditor's rights in the event of default.
(iii) ODM determines that the transfer is an
arm's length transaction if all the following apply:
(a) Once the transfer goes into effect, the
provider that made the transfer has no direct or indirect interest in the
provider that acquires the facility or the facility itself, including interest
as an owner, officer, director, employee, independent contractor, or
consultant, but excluding interest as a creditor. If the provider making the
transfer maintains an interest as a creditor, the interest rate of the creditor
shall not exceed the lesser of:
(i) The prime
rate, as published by the "Wall Street Journal" (June 26,
2018) on the first business day of the calendar year, plus four per cent;
or
(ii) Fifteen per cent.
(b) The provider that made the
transfer does not reacquire an interest in the facility except through the
exercise of a creditor's rights in the event of a default. If the provider
reacquires an interest in the facility in this manner, ODM shall treat the
facility as if the transfer never occurred when ODM calculates its
reimbursement rates for capital costs.
(c) The provider transferring their facility
shall provide ODM with certified appraisal(s) at least ninety days prior to the
actual change of provider agreement(s). The certified appraisal(s) shall be
conducted no earlier than one hundred eighty days prior to the actual change of
provider agreement(s) for each facility transferred to a related party.
(iv) Except in the case
of hardship caused by a catastrophic event, as determined by ODM, or in the
case of a provider making the transfer who is at least sixty-five years of age,
not less than twenty years have elapsed since, for the same facility, the
capital cost basis was determined or adjusted most recently; or actual,
allowable cost of ownership was determined most recently.
(b) For a NF lease:
(i) The related party is a relative of the
owner.
(ii) The lessor retains an
ownership interest in only real property and any improvements on the real
property except when a lessor retains ownership interest through the exercise
of a lessor's rights in the event of default.
(iii) ODM determines that the lease is an
arm's length transaction if all the following apply:
(a) Once the lease goes into effect, the
lessor has no direct or indirect interest in the lessee or, except as provided
in this rule, the facility itself, including interest as an owner, officer,
director, employee, independent contractor, or consultant, but excluding
interest as a lessor.
(b) The
lessor does not reacquire an interest in the facility except through the
exercise of a lessor's rights in the event of a default. If the lessor
reacquires an interest in the facility in this manner, ODM shall treat the
facility as if the lease never occurred when ODM calculates its reimbursement
rates for capital costs.
(c) A
lessor that proposes to lease a facility to a relative of owner shall obtain a
certified appraisal(s) for each facility leased. The lessor of the facility
shall provide ODM with certified appraisal(s) at least ninety days prior to the
actual change of provider agreement(s). The certified appraisal(s) shall be
conducted no earlier than one hundred eighty days prior to the actual change of
provider agreement(s) for each facility leased to a related party.
(iv) Except in the case of
hardship caused by a catastrophic event, as determined by ODM, or in the case
of a lessor who is at least sixty-five years of age, not less than twenty years
have elapsed since, for the same facility, the capital cost basis was
determined or adjusted most recently; or actual, allowable cost of ownership
was determined most recently.
(v)
The provisions set forth in this paragraph do not apply to leases of specific
items of equipment.
(c)
The provider shall notify ODM in writing and shall supply sufficient
documentation demonstrating compliance with the provisions of this rule no less
than ninety days before the anticipated date of completion of the transfer or
lease. If the provider does not supply any of the required information, the
provider shall not qualify for a rate adjustment. ODM shall issue a written
decision determining whether the transfer meets the requirements of this rule
within sixty days after receiving complete information as determined by
ODM.
(d) Any rate adjustments which
result from the provisions contained in paragraph (G)(2) of this rule shall
take effect as specified in rule
5160-3-24 of the Administrative
Code, following a determination by ODM that the requirements of paragraph
(G)(2) of this rule are met.
