Fees/Payment

RCH rates are set in accordance with Section 17b-340 (h) CGS and Section 17-311-52 of the Regulations of Connecticut State Agencies. DSS utilizes the LTC Cost Report for privately operated RCH rate setting purposes. The annual rate period is July 1 through June 30, unless modified by the legislature. There are 97 RCH facilities with a total capacity of 2,770 licensed beds that provide services to approximately 2,100 AABD eligible residents. The average rate is approximately $93.00 per day and rates range from a minimum of $35.54 to $140.91 per day. In SFY 2014, AABD program expenditures for RCH services were approximately $40 million. If a facility does not file a cost report, it receives the minimum rate per Sec. 17-311-54 state regulations.

2013 Cost Year Calculation
2014 Cost Year Calculation

Allowed Costs- Inflation Update
Allowed costs for the reporting period (Oct.-Sept.) are inflated forward to the rate period (July through June unless delayed and/or capped). For example, cost-based rate computations for rates set effective July 1, 2010 were based on the 2009 annual cost report (Oct. 2008 - Sept. 2009). Under the method, allowed costs for the report period are increased by an update factor (GDP Deflator) to account for inflation.

Occupancy Standards for Rate Setting
For rate computation purposes, allowable costs are divided by the higher of reported total resident days for the year or for facilities with 26 or more beds- 90% of licensed capacity/25 or fewer beds- 85% of licensed capacity.

Salary Limits and Cost Categories
The cost-based system includes limits on allowable salaries for the facility administrator and owners/related parties. In addition, the system includes year-to- year cost increase limits for the housekeeping, laundry and dietary expense categories. If costs on a per day basis in any of these categories increase by more than inflation, allowable costs are limited to prior year costs plus inflation.

Efficiency Incentives
Facilities may also qualify for efficiency payments if per day costs in any of these categories are below the 80th percentile of per day costs for all RCH. The efficiency payment is 20% of the difference between the facility cost per day for the expense category and the cost per day at the 80th percentile of all facilities.

Fixed Asset Reimbursement
Reimbursement for property/fixed assets is based on a fair rental value method in lieu of associated interest and depreciation costs. The fair rent allowance is determined by amortizing the cost of the asset over its useful life with application of rate of return (ROR). For example, renovation costs of $150,000 with a useful life of 25 years completed in year with an applicable ROR of 4.515% (2009 ROR) would yield $10,131 in allowable reimbursement per year.

Rate Limitations
Due to budget constraints from time to time the General Assembly has imposed fixed increases, rate increase maximums and rate increase delays. The following summarizes RCH rate setting since July 1, 2003.

Data utilized to calculate Residential Care Homes cost year includes: GDP Deflator Lag Factor, GDP Deflator Inflation Factor, Dietary Efficiency Floor per Bed, Laundry Efficiency Floor per Bed, Housekeeping Efficiency Floor per Bed. 

For the SFY 2014 and subsequent years, RCH’s receive a rate increase for any capital improvement made for the health and safety of residents.

For the SFY 2015, and subsequent years, costs of less than $10,000 for any land, building or non-movable equipment repair or improvement shall not be capitalized for more than five years; the inflation allowance factor does not exceed a maximum of five per cent (subsection (c) of section 17-311-52 of the regulations of Connecticut state agencies); RCH’s receive a 5% minimum rate of return applied to real property; waive the standard rate of return under subsection (f) of section 17-311-52 of the regulations of Connecticut state agencies for ownership changes or health and safety improvements that exceed one hundred thousand dollars and that are required under a consent order from the Department of Public Health; and waive the rate of return adjustment under subsection (f) of section 17-311-52 of the regulations of Connecticut state agencies to avoid financial hardship.

For the SFY 2016 and SFY 2017 RCH rates do not exceed rates in effect on June 30, 2015, except that RCH’s may also receive pro rata fair rent increases for capital improvements. 

For the SFY 2018, RCH rates do not exceed rates in effect on June 30, 2017, except that RCH’s may also receive pro rata fair rent increases for capital improvements. 

For the SFY 2019, RCH rates do not exceed rates in effect on June 30, 2018, except that RCH’s may also receive pro rata fair rent increases for capital improvements. 

For the SFY 2020, RCH rates do not exceed rates in effect on June 30, 2019, except that RCH’s may also receive pro rata fair rent increases for capital improvements. 

For the SFY 2021, RCH rates do not exceed rates in effect on June 30, 2020, except that RCH’s may also receive pro rata fair rent increases for capital improvements.

Rate Period	Adjustment
SFY 2004	Cost Based
SFY 2005	2.25% Fixed
SFY 2006	Cost Based - Delay
10/01/2006 - 6/30/2007	4% Increase Max and Delay
SFY 2008	Cost Based
SFY 2009	Cost Based
SFY 2010	No Increase
SFY 2011	No Increase*
SFY 2012	No Increase
SFY 2013	2012 rate or Cost Based Increase
SFY 2014	2013 rate of Cost Based Increase
SFY 2015	2013 rate of Cost Based Increase
SFY 2016	No Increase, Fair Rent Adjustment
SFY 2017	No Increase, Fair Rent Adjustment
SFY 2018	No Increase, Fair Rent Adjustment
SFY 2019	No Increase, Fair Rent Adjustment
SFY 2020	No Increase, Fair Rent Adjustment
SFY 2021	No Increase, Fair Rent Adjustment

*Medication Administration training costs are an allowed add-on per PA 09-5, SSS (Section 44).