Nursing Home Moratorium Exception Frequently Asked Questions
General questions
Commence construction within 18 months.
The owner has 18 months to commence construction, see Minnesota Statutes, section144A.071, subdivision 1a, paragraph (d).
Applicants are required to provide an estimated value for the entire facility after completion of the project. There is not an appraisal requirement for the application. The estimated appraisal value is an important limiting factor in the final reimbursement for an approved project. Supporting documentation is requested to ensure the applicant has made reasonable assumptions about value but not as a requirement that an actual appraisal be completed.
There is no requirement that a marketing study be conducted. The applicant must respond thoroughly to all of the criteria for review in Minnesota Statutes, section 144A.073, Subdivision 4a. The applicant is making its case for investment in a project that is needed and sustainable. It is important for the review committee to know that the applicant has done its due diligence in planning the project – is there a need, how much of a need, how long will the need be and how might that need change based on demographics, etc.
There is an opportunity to articulate the extent to which the applicant has researched its proposal and is willing to invest in state-of-the-art equipment and design that might exceed baseline code requirements to further enhance the quality of life for residents and working conditions for staff Minnesota Statutes, section 144A.073, Subd. 4a(4)(6). While all criteria are to be given equal weight in the decision-making process, highlighting innovation in technology or design features that are not reflected in current code requirements might distinguish the project from other proposals.
Questions can be submitted to health.nhm@state.mn.us.
No. Projects that have not been approved in a previous round must reapply.
No. MDH has that information.
No. Survey follow the state and federal regulations.
No. The Minnesota Department of Health asks for a letter of intent to plan accordingly.
No. The moratorium prohibits additional licensure of beds to the overall system capacity. The only way that additional licensed beds could be added to the system capacity would be through specific legislation permitting this. A nursing home may acquire additional beds to add to an existing facility as part of a moratorium exception project, but it would need to acquire those from some other facility. Bed relocation always requires pre-approval from MDH and is done either via a threshold construction project or moratorium exception project. See Minnesota Statutes, section 144A.073, subdivision 3 (c).
Physical plant questions
The preliminary drawings should be as complete as needed to give you and the reviewers adequate information to make a decision about the proposal. This will depend to some extent on the type and scale of the project. However, the rule requires that the drawings be prepared by a registered architect, and it is recommended that these drawings be done to scale. It is generally in your interest to make your drawings as clear and complete as possible to describe your proposal accurately. Typically, drawings are submitted in the design development phase.
Minnesota Rules, part 4658.3005, subpart 2, states that “compliance with the standards for new construction for existing facilities must be for the areas involved and to the extent that the existing structure will permit.” Proposals will be reviewed on an individual basis to determine to what extent this will be required, but you should aim at new construction standards if possible.
Generally, yes. The new wings or new buildings will be required to comply with the standards for new construction.
If the project upgrades a physical plant to nursing home standards, or builds a new wing on a nursing home, replaces a facility, or extensively remodels a nursing home, it is necessary to have a nursing station on each floor. Please see Minnesota Rules, part 4658.5000.
Generally, no. New elements constructed as part of a project must meet new construction standards, i.e., cannot require waivers. If some elements of the room(s) are now waivered, and are not changed due to the project, it will generally be possible to maintain the waiver if it would have been maintained in any case.
Generally, no. As long as the rooms in the old facility are only remodeled as part of a project, it is not required that the facility provide the five percent single rooms. This assumes that no new beds are added and that the facility’s renovations do not involve adding new structures.
If those conflicts are identified early in the application process, the MDH Engineering Section and the Minnesota Department of Labor and Industry (DLI) building code staff can review the conflicts and generally reach a compromise. Contact DLI.
At least five percent of the rooms in a new wing or building must be single rooms with private toilet rooms. See
Minnesota Rules, part 4658.4100. If extensive remodeling is part of the project, it is recommended that the five percent applies to remodeled areas as well.
Cost analysis questions
The number of proposals funded are determined by a number of factors, such as the appropriation amount set forth by the legislative process, the number of proposals received, and project costs.
Minnesota Statutes, section 144A.073 allows for amendments to approved projects, following specific criteria, which is shown below. Keep in mind that for facilities with moratorium projects approved under Fair Rental Value (FRV), actual project costs do not directly affect the reimbursement.
Project design amendments cannot be approved if it results in a decrease in project costs from the amount specified in the original proposal previously approved under the competitive application process.
- (a) Nursing facilities that have received approval on or after July 1, 1993, for exceptions to the moratorium on nursing homes through the process described in this section may request amendments to the designs of the projects by writing the commissioner within 15 months of receiving approval. Applicants shall submit supporting materials that demonstrate how the amended projects meet the criteria described in paragraph (b).
- (b) The commissioner shall approve requests for amendments for projects approved according to the following criteria.
- (1) the amended project designs must provide solutions to all of the problems addressed by the original application that are at least as effective as the original solutions.
- (2) the amended project designs may not reduce the space in each resident's living area or in the total amount of common space devoted to resident and family uses by more than five percent.
- (3) the costs of amended project designs shall be the cost estimate associated with the project as originally approved, t, except under conditions described in clause (4).
- (4) total costs of the amendment are no greater than ten percent of the cost estimate associated with the project as initially approved if the proposer can document that one of the following circumstances is true:
- (i) changes are needed due to a natural disaster.
- (ii) conditions that affect the safety or durability of the project that could not have reasonably been known prior to approval are discovered.
- (iii) state or federal law require changes in project design.
- (iv) documentable circumstances occur that are beyond the control of the owner and require changes in the design.
- (c) Approval of a request for an amendment does not alter the expiration of approval of the project according to subdivision 3.
- (d) Reimbursement for amendments to approved projects is independent of the actual construction costs and based on the allowable appraised value of the completed project. An approved project may not be amended to reduce the scope of an approved project.
Generally, the proposals can be structured in whatever way is most advantageous to the facility. It is permissible to divide a project into distinct phases. Each phase must be able to be cleared by MDH for occupancy. Without such clearance, there is no phase and no rate adjustment for a phase. If a project is not identified in a proposal as being completed in distinct phases, rate adjustments will not be implemented in phases as each part of a project is completed; the rate adjustment would not be granted until after all phases are completed.
Yes, assuming that MDH approves the preliminary drawings and that the project meets other applicable regulations (for example, those in Minnesota Statutes, chapter 144A and Minnesota Rules, chapter 4658). Under Minnesota Statutes, section 144A.071, Subdivision 4a(b), beds can be moved within a facility provided that the total costs of associated remodeling do not exceed the maximum threshold. A facility may not seek reimbursement beyond the maximum threshold except through the Moratorium Exception Process.
No. Moveable equipment, such as furniture, and technology that is not an attached component of the building are not considered cost items for the purpose of this exceptions process.
A facility may submit a project proposal that is underway and not yet completed. Applicants must identify in their application the portion of the project that is already complete. However, the submission of an application for a partially completed project does not guarantee approval, as the process is competitive. Proposals for projects already completed, will not be considered.
No. Costs for either property or changes in operating costs should be projected in terms of current dollars, irrespective of projected inflation.
The impact on MA cost is one criterion for evaluating proposals. However, the proposals will all have to be evaluated by the other criteria as well. Therefore, even though the low MA cost of a proposal is an advantage, it does not by itself guarantee selection, nor does high MA cost guarantee rejection.
When determining the cost of the facility’s project, these costs will be capitalized and included as soft costs when determining the cost of the building project to meet the minimum cost requirement for moratorium applications. If a facility’s moratorium exception project is approved, these costs will not be used to determine their building project rate adjustment. Rate adjustments will be based upon an appraised valuation.
The following information needs to be supplied:
- The number of beds to be transferred and/or delicensed.
- The facility’s historic community placement level for the last quarter. If a full year’s worth of placement is a better representation, that information may be supplied.
- The facility’s estimate of additional community placements.
- If the transferring facility is below 96% occupancy, estimated annual leave days.
Information regarding the facility occupancy percentage, MA occupancy, total resident days, weighted average operating rate, number of licensed beds, and average number of resident days will be taken from the facility’s cost report.
For purposes of the application, the Minnesota Department of Human Services only needs the nursing home costs. The proposal should identify how costs are allocated between the two parts of the project and any shared area(s).
“Undepreciated replacement cost” (URC) means the undepreciated replacement cost determined by the appraisal for building and fixed equipment using the commercial valuation system and appraisal firm. “Depreciated replacement cost” or (DRC) means the depreciated replacement cost determined by an appraisal using the commercial valuation system selected by the commissioner. DRC excludes costs related to parking structures. Moratorium projects are being approved for reimbursement under Minnesota Statutes, section 256R.26 which is a Fair Rental Value (FRV) formula. Final reimbursement for the completed project will be based upon the actual appraised value of the building (by a state-contracted appraiser), subject to the formula limitations in effect at the time. While this amount cannot be known exactly at the time of approval the state will apply the FRV formula to the approved final building valuation to estimate the state share of the program. Final approved projects reimbursement is subject to the lesser of the final appraised limited building valuation DRC or 105% of that approved amount from the moratorium application. The actual project costs do not affect the FRV calculation directly, but the DRC limitation is designed to allow for reimbursement of only the approved project.
Last Updated: 09/24/2024