Massachusetts General Laws
Chapter 118e - Division of Medical Assistance
Section 14 - Nursing Home Negotiated Rate Contracts

Section 14. Pursuant to the second paragraph of section twelve, the division shall enter into negotiated rate contracts with nursing homes that recognize the acquisition cost, or portion thereof which exceeds the allowable basis under relevant regulations of the executive office of health and human services or a governmental unit designated by the executive office, as the allowable basis of fixed assets where there has been a change of ownership effective on or after January first, nineteen hundred and eighty-seven, provided that:
(a) (i) the new owner has received a determination letter from the Internal Revenue Service that it is an organization described in section 501(c)(3) of the Internal Revenue Code of 1986; and
(ii) the new owner is a nonprofit hospital within the commonwealth licensed by the department of public health, or is a nonprofit organization affiliated with a nonprofit hospital which is organized and operated for the benefit of, to perform one or more functions of, or to carry out one or more of the purposes of the nonprofit hospital it is affiliated with, including operation of freestanding nursing homes licensed by the department of public health; and
(iii) the new owner demonstrates that on average not less than eighty-five percent of its patient population is a recipient of medical assistance under this chapter; and
(iv) the new owner demonstrates that in the nonprofit hospital it operates it has an average of administratively necessary patient days that is fifty percent of the regional average of administratively necessary patient days as calculated by the division; and
(v) the new owner demonstrates that in the nonprofit hospital it operates that on average it has not less than eighty percent occupancy of medical or surgical beds; and
(vi) the change of ownership did not occur between a person or organization which is associated or affiliated with or has control of or is controlled by the new owner or is related to the new owner or any director, trustee, partner, shareholder or administrator of the new owner by common ownership or control or in a manner specified in section 267(b) and (c) of the Internal Revenue Code of 1986; and
(vii) the change of ownership was made for reasonable consideration; and
(viii) the change in ownership was a bona fide transfer of all powers and indicia of ownership; and
(ix) the change of ownership manifested an intent to sell the assets of the facility rather than implement a method of financing, or refinancing; and
(x) the department of public health certifies the need for additional beds for publicly-assisted residents in the geographical area; and
(xi) such geographical area is reasonably isolated which isolation creates difficulties in obtaining access to nursing home care; and
(xii) the new owner obtains at least two independent appraisals of the property; and
(xiii) the division and the department of public health have determined that the transaction is necessary to ensure the safety of patients as evidenced by current or anticipated delicensure or decertification proceeding against the current owner; provided however, that the provisions of clauses (xii) and (xiii) of paragraph (a) shall only apply to nursing homes acquired after July first, nineteen hundred and ninety; or
(b) (i) the new owner acquired the facility from an acute care hospital to operate the nursing home pursuant to relief granted to the acute care hospital by the acute care hospital conversion board pursuant to section one hundred and one of chapter six A; and
(ii) the acute care hospital conversion board approves the new owner's acquisition cost; and
(iii) the new owner demonstrates that on average, not less than eighty-five percent of its patient population is receiving medical assistance under this chapter.
If the division is unable to calculate regional averages for administratively necessary patient days pursuant to clause (a)(iv) of this section, the new owner shall be able to receive the acquisition cost, or the portion thereof which exceeds the allowable basis under relevant regulations of the executive office of health and human services or a governmental unit designated by the executive office, as the allowable basis of the fixed assets as a result of a change of ownership if the new owner otherwise complies with clauses (i) to (iii), inclusive, and clauses (v) to (xiii), inclusive of paragraph (a).

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