Chapter DHS 122

LONG-TERM CARE FACILITY BED ADDITIONS AND CAPITAL EXPENDITURES REVIEW

DHS 122.01   Authority and purpose.

DHS 122.02   Applicability.

DHS 122.03   Definitions.

DHS 122.04   Statewide bed limit.

DHS 122.05   Bed allocation methodology.

DHS 122.06   Request for applications.

DHS 122.07   Review criteria and selection process.

DHS 122.08   Hearing process.

DHS 122.09   Enforcement.

Ch. DHS 122 Note Note: Chapter HSS 122 was created as an emergency rule effective January 1, 1984. Chapter HSS 122 was renumbered chapter HFS 122 under s. 13.93 (2m) (b) 1., Stats., and corrections made under s. 13.93 (2m) (b) 6. and 7., Stats., Register, September, 1999, No. 525. Chapter HFS 122 was renumbered chapter DHS 122 under s. 13.92 (4) (b) 1., Stats., and corrections made under s. 13.92 (4) (b) 7., Stats., Register January 2009 No. 637.

DHS 122.01 DHS 122.01 Authority and purpose. This chapter is promulgated under the authority of s. 150.03, Stats. It provides definitions, criteria and procedures to implement subchs. I and II of ch. 150, Stats., concerning containment of health care costs through the biennial establishment of a limit on the number of nursing home beds permitted in the state, interim adjustments to that limit and approval by the department of projects proposing to add to the supply of nursing home beds and of other projects proposing capital expenditures for nursing homes in excess of $600,000.

DHS 122.01 History History: Cr. Register, March, 1985, No. 351, eff. 4-1-85.

DHS 122.02 DHS 122.02 Applicability.

DHS 122.02(1) (1) This chapter applies to all activities described in s. 150.21, Stats., undertaken by or on behalf of any nursing home including any facility for the developmentally disabled (FDD).

DHS 122.02(2) (2) The following activities are subject to review and approval under this chapter as the construction or total replacement of a nursing home within the meaning of s. 150.21 (1), Stats., or an increase in the bed capacity of a nursing home within the meaning of s. 150.21 (2), Stats.:

DHS 122.02(2)(a) (a) The conversion of a skilled nursing facility under 42 CFR 442 Subpt. D or an intermediate care facility under 42 CFR 442 Subpt. F to an intermediate care facility for individuals with intellectual disabilities under 42 CFR 442, Subpt. G, for purposes of medical assistance certification;

DHS 122.02(2)(b) (b) The conversion of an intermediate care facility for individuals with intellectual disabilities under 42 CFR 442 Subpt. G to a skilled nursing facility under 42 CFR 442 Subpt. D or an intermediate care facility under 42 CFR 442 Subpt. F, for purposes of medical assistance certification;

DHS 122.02(2)(c) (c) A conversion described in par. (a) or (b) of part of a facility; and

DHS 122.02(2)(d) (d) Any other activity which would increase the statewide number of beds in FDDs or beds in nursing homes exclusive of FDDs.

DHS 122.02 History History: Cr. Register, March, 1985, No. 351, eff. 4-1-85; emerg. renum. to be (1), cr. (2), eff. 1-1-87; renum. to be (1), cr. (2), eff. 5-31-87; renum. to be (1), cr. (2), Register, October, 1987, No. 382, eff. 11-1-87; 2019 Wis. Act 1: am. (2) (a), (b) Register May 2019 No. 761, eff. 6-1-19.

DHS 122.03 DHS 122.03 Definitions. In this chapter:

DHS 122.03(1) (1) “Affected party” means:

DHS 122.03(1)(a) (a) The applicant;

DHS 122.03(1)(b) (b) Other persons providing similar services in the applicant’s planning area;

DHS 122.03(1)(c) (c) Members of the public to be served by the project;

DHS 122.03(1)(d) (d) Local planning agencies, including area agencies on aging and zoning authorities;

DHS 122.03(1)(e) (e) Other applicants undergoing concurrent review;

DHS 122.03(1)(f) (f) Local units of government, including county boards of supervisors and city councils, and the administrative agencies serving those units of government; and

DHS 122.03(1)(g) (g) Third-party payers.

DHS 122.03(2) (2) “Applicant” means a person who requests an approval or for whom an approval is requested.

DHS 122.03(3) (3) “Approval” means a written statement from the department authorizing a person to commence implementation of a reviewed project.

DHS 122.03(4) (4) “Approval holder” means a person to whom an approval has been issued.

DHS 122.03(5) (5) “Biennium” means a 2-year period beginning on July 1 of an odd-numbered year.

DHS 122.03(6) (6) “Capital expenditure” means an expenditure by or on behalf of a nursing home or FDD which is not properly chargeable as an expense of operations or maintenance. A capital expenditure does not include an expenditure for a housing project or a day care center or for a community-based residential facility not participating in the medical assistance program.

DHS 122.03(7) (7) “Center for the developmentally disabled” or “center” has the meaning specified in s. 51.01 (3), Stats.

DHS 122.03(8) (8) “Community-based residential facility” or “CBRF” has the meaning specified in s. 50.01 (1), Stats.

DHS 122.03(9) (9) “Concurrent review” means the review of competing applications for new beds in the same planning area.

DHS 122.03(10) (10) “Cost overrun” has the meaning prescribed in s. 150.01 (9), Stats., namely, an obligation exceeding the maximum capital expenditure authorized by an approval.

DHS 122.03(11) (11) “Date of notification” means the date on which the department publishes in a newspaper of general circulation and in the department’s office of management and policy ch. 150, Stats., newsletter notice of receipt of and the proposed period for review of all applications being reviewed.

DHS 122.03(12) (12) “Day care center” means a facility where a person other than a relative or guardian provides care and supervision to adults or children on a nonresidential basis.

DHS 122.03(13) (13) “Department” means the department of health services.

DHS 122.03(14) (14) “Facility for the developmentally disabled” or “FDD” means a Wisconsin center for the developmentally disabled licensed under ch. DHS 134 or a type of nursing home which, for the purpose of establishing and adjusting bed limits, is distinguishable from other nursing homes by primarily serving residents whose diagnosis is a long-term, chronic, developmental disability. Except as otherwise provided in rule by the department, “primarily serving,” in this subsection, means that the facility’s resident census, calculated on an annual basis, consists of the following minimum proportion of residents who have a developmental disability as their diagnosis and who require and receive active treatment:

DHS 122.03(14)(a) (a) Fifty-one percent or greater for facilities licensed before April 1, 1985; and

DHS 122.03(14)(b) (b) Eighty percent or greater for facilities newly licensed on or after April 1, 1985.

DHS 122.03(15) (15) “Health planning area” or “planning area” means one of the areas of the state with the boundaries indicated in Appendix A, except that in reference to centers for the developmentally disabled“health planning area” or “planning area” means the entire state.

DHS 122.03(16) (16) “Long-term care facility” means a facility for the developmentally disabled or other nursing home.

DHS 122.03(17) (17) “Long term care services” means services provided by nursing homes and services provided by community agencies to persons diverted or relocated from nursing home placement under a medical assistance waiver.

DHS 122.03(18) (18) “Material change in project scope” means the inclusion of beds not originally part of the application or a significant design change in the project which has a financial impact on the project.

DHS 122.03(19) (19) “Medical assistance” or “MA” means an assistance program under 42 USC 1396 and ss. 49.43 to 49.49, Stats.

DHS 122.03(20) (20) “New beds” means beds allocated for addition to the current licensed bed capacity of any planning area.

DHS 122.03(21) (21) “Nursing home” has the meaning specified in s. 50.01, Stats.

DHS 122.03(22) (22) “Person” means an individual, trust or estate, partnership, corporation, state or a political subdivision or agency of a state or local government unit.

DHS 122.03(23) (23) “Replacement” means, in reference to a project, the construction of beds or related space to take the place of an equal or greater number of beds or related space in the same planning area.

DHS 122.03(24) (24) “Secretary” means the secretary of the department of health services.

DHS 122.03(25) (25) “Statewide bed limit” means the maximum number of nursing home beds or FDD beds allowed to be licensed under ch. 50, Stats., as set out in s. 150.31 (1), Stats., with any adjustments made by the department under s. 150.31 (2) to (6), Stats.

DHS 122.03(26) (26) “Total replacement” or “totally replace” means the closing of a facility and the construction or licensure of an equal or lesser number of beds and ancillary space designed to replace that facility within the planning area.

DHS 122.03 History History: Cr. Register, March, 1985, No. 351, eff. 4-1-85; cr. (17m), Register, January, 1987, No. 373, eff. 2-1-87; am. (1) (d), (11) and (15), r. (16) and (23), renum. (17), (17m), (24) and (25) to be (16), (17), (23) and (24), cr. (25), Register, January, 1991, No. 421, eff. 2-1-91; corrections in (13), (14) and (24) made under s. 13.92 (4) (b) 6. and 7., Stats., Register January 2009 No. 637.

DHS 122.04 DHS 122.04 Statewide bed limit.

DHS 122.04(1) (1) Department recommendation.

DHS 122.04(1)(a) (a) Nursing homes exclusive of FDDs. The department shall biennially update and submit to the legislature statewide recommended bed limits for nursing homes exclusive of FDDs, taking into account programs the purpose of which is to reduce institutionalization of persons in long-term care facility settings. In developing the recommendation for a new statewide bed limit, the department shall add the following numbers for nursing homes exclusive of FDDs:

DHS 122.04(1)(a)1. 1. The number of beds licensed under subch. I of ch. 50, Stats., exclusive of beds in FDDs;

DHS 122.04(1)(a)2. 2. The number of new beds approved under s. 150.29, Stats.; and

DHS 122.04(1)(a)3. 3. An allotment for new beds which shall be derived by dividing medical assistance reimbursement funds available for new beds as proposed in the following biennial budget by an estimated medical assistance allowable skilled care per diem rate. The resulting patient days shall be divided by the most recent available 3-year average percentage ratio of medical assistance residents to total residents. The patient days shall then be divided by the number of days in the year. This figure is the new allotment. Separate allotments shall be developed for nursing homes exclusive of FDDs. The new bed allotment shall be the maximum number of new nursing home beds exclusive of FDDs which may be approved during the biennium for which the new bed limit is approved by the legislature.

DHS 122.04(1)(b) (b) Facilities for the developmentally disabled.

DHS 122.04(1)(b)1. 1. The department shall biennially update and submit to the legislature statewide recommended bed limits for FDD beds, taking into account programs whose purpose is to reduce institutionalization of developmentally disabled persons. The new statewide bed limit for FDDs shall be established in the same manner as for nursing homes under par. (a) except that the new bed allotment for FDDs may not exceed the number of beds determined to be needed under s. DHS 122.05 (2) (a) and (b).

DHS 122.04(1)(b)2. 2.

DHS 122.04(1)(b)2.a. a. Except as provided in subd. 2. b., the department shall limit approvals for conversions to FDDs under s. DHS 122.02 (2) (a) and (c) to a total of 1,600 beds statewide by December 31, 1989, no more than 1,000 of which may be approved by December 31, 1987.

DHS 122.04(1)(b)2.b. b. Notwithstanding the bed limit under subd. 2. a., the department may in addition approve the total conversion of a facility to an FDD if the conversion would be the result of relocating developmentally disabled residents from 2 or more facilities operated by one county, the new FDD will serve only residents who are developmentally disabled and the department determines that there is a compelling need for the conversion.

DHS 122.04(2) (2) Interim adjustments by the department. Interim adjustments to the statewide bed limit may be made by the department for:

DHS 122.04(2)(a) (a) Conversion of community-based residential facilities. The department shall adjust the total statewide bed limit, on a bed-for-bed basis, for each community-based residential facility currently certified as a medical assistance provider which obtains nursing home or FDD licensure in order to retain medical assistance certification. The effect of the adjustment may be to increase the statewide bed limit. If the number of licensed and approved nursing home beds is less than the statewide bed limit, the department shall count the CBRF beds under this paragraph toward the originally established statewide bed limit;

DHS 122.04(2)(b) (b) Code violations. The department may decrease the statewide bed limit, on a bed-for-bed basis, to account for nursing home or FDD beds which are licensed but which are not set up or staffed due to life-safety or physical plant code violations. The department shall determine whether the situation is likely to be corrected within the forthcoming biennium. If the beds are not likely to be reopened within the forthcoming biennium, the department shall reduce the statewide bed limit by the number of beds currently out of circulation due to code violations;

DHS 122.04(2)(c) (c) Medical assistance waivers. The department shall decrease the statewide bed limit, on a bed-for-bed basis, to account for nursing home or FDD beds closed under the medical assistance waiver specified in 42 USC 1396n (c) or under other medical assistance waivers specified in 42 USC 1396 to 1396n; and

DHS 122.04(2)(d) (d) Wisconsin center reductions. The department shall decrease, on a bed-for-bed basis, the statewide bed limit for FDDs by each bed removed at the Wisconsin centers for the developmentally disabled as a result of the department’s community integration program under s. 46.275, Stats.

DHS 122.04(2)(e) (e) Other allowable bed reduction criteria.

DHS 122.04(2)(e)1. 1. The department may decrease the statewide bed limit, on a bed-for-bed basis, to account for beds made available by the reduction of licensed beds not included in pars. (b) to (d). The department may decrease the statewide bed limit under this paragraph only if:

DHS 122.04(2)(e)1.a. a. The county in which the beds were located had more than 125% of the statewide average number of nursing home beds per 1,000 persons 65 years of age or older, as determined under subd. 2., prior to the reduction in that county; and

DHS 122.04(2)(e)1.b. b. No decrease under this paragraph may result in the county in which the bed reduction occurred having fewer than the statewide average number of nursing home beds per 1,000 persons 65 years of age or older.

DHS 122.04(2)(e)2. 2. The statewide average number of nursing home beds per 1,000 persons 65 years of age or older in subd. 1. is calculated by dividing the total current number of licensed nursing home beds exclusive of FDD beds in the state, as reported by the department’s bureau of quality compliance, by the total current estimated population of persons 65 years of age or older, as determined by the Wisconsin department of administration, and multiplying that result by 1,000.

DHS 122.04(2)(f) (f) Conversion of nursing homes and FDDs. The department shall adjust the statewide bed limits to account for the partial or total conversion of nursing homes to facilities primarily serving the developmentally disabled or of facilities primarily serving the developmentally disabled to nursing homes that have received approval under this chapter.

DHS 122.04(3) (3) Publication of adjustments. The department shall publish any adjustments to the statewide bed limit in the ch. 150 newsletter of the department’s office of management and policy and in a newspaper of general circulation. This publication shall occur by the 20th day of the month following the adjustment date.

DHS 122.04 History History: Cr. Register, March, 1985, No. 351, eff. 4-1-85; emerg. cr. (1) (b) 2., eff. 1-1-87; cr. (2) (e), Register, January, 1987, No. 373, eff. 2-1-87; emerg. cr. (1) (b) 2., eff. 5-31-87; cr. (1) (b) 2., Register, October, 1987, No. 382, eff. 11-1-87; r. (1) (a) 2., renum. (1) (a) 3. and 4. to be 2. and 3. and am. 3., cr. (2) (f), am. (3), Register, January, 1991, No. 421, eff. 2-1-91; emerg. renum. (2) (d) to be (2) (d) 1. and am., cr. (2) (d) 2., eff. 9-27-91.

DHS 122.05 DHS 122.05 Bed allocation methodology.

DHS 122.05(1) (1) Nursing home beds exclusive of FDD beds.

DHS 122.05(1)(a) (a) Distribution of the statewide allotment of new beds. In distributing among planning areas new nursing home beds exclusive of FDD beds from the allotment under s. DHS 122.04 (1) (a) 3., the department shall proceed as follows:

DHS 122.05(1)(a)1. 1. Calculate for each planning area the population growth for the age cohorts under 65, 65 to 74, 75 to 84 and over 84 years of age for a 3-year period beginning in the calendar year for which the most current data on utilization of nursing homes are available;

DHS 122.05(1)(a)2. 2. Divide each planning area’s population growth for each age cohort by the state growth in population for each cohort for those years to obtain the percentage that a planning area’s growth represents of the total state growth by cohort;

DHS 122.05(1)(a)3. 3. Ascertain the statewide nursing home utilization percentage for each of the age cohorts in subd. 1. and multiply these by the new bed allotment for nursing homes exclusive of FDDs calculated pursuant to s. DHS 122.04 (1) (a) 3. to get the statewide allotment for each age cohort;