Unless the context clearly
requires otherwise, the definitions in this section apply
throughout this chapter.
(1) "Accrual method of accounting" means a method of
accounting in which revenues are reported in the period when they
are earned, regardless of when they are collected, and expenses
are reported in the period in which they are incurred, regardless
of when they are paid.
(2) "Appraisal" means the process of estimating the fair
market value or reconstructing the historical cost of an asset
acquired in a past period as performed by a professionally
designated real estate appraiser with no pecuniary interest in
the property to be appraised. It includes a systematic, analytic
determination and the recording and analyzing of property facts,
rights, investments, and values based on a personal inspection
and inventory of the property.
(3) "Arm's-length transaction" means a transaction resulting
from good-faith bargaining between a buyer and seller who are not
related organizations and have adverse positions in the market
place. Sales or exchanges of nursing home facilities among two
or more parties in which all parties subsequently continue to own
one or more of the facilities involved in the transactions shall
not be considered as arm's-length transactions for purposes of
this chapter. Sale of a nursing home facility which is
subsequently leased back to the seller within five years of the
date of sale shall not be considered as an arm's-length
transaction for purposes of this chapter.
(4) "Assets" means economic resources of the contractor,
recognized and measured in conformity with generally accepted
accounting principles.
(5) "Audit" or "department audit" means an examination of
the records of a nursing facility participating in the medicaid
payment system, including but not limited to: The contractor's
financial and statistical records, cost reports and all
supporting documentation and schedules, receivables, and resident
trust funds, to be performed as deemed necessary by the
department and according to department rule.
(6) "Bad debts" means amounts considered to be uncollectible
from accounts and notes receivable.
(7) "Beneficial owner" means:
(a) Any person who, directly or indirectly, through any
contract, arrangement, understanding, relationship, or otherwise
has or shares:
(i) Voting power which includes the power to vote, or to
direct the voting of such ownership interest; and/or
(ii) Investment power which includes the power to dispose,
or to direct the disposition of such ownership interest;
(b) Any person who, directly or indirectly, creates or uses
a trust, proxy, power of attorney, pooling arrangement, or any
other contract, arrangement, or device with the purpose or effect
of divesting himself or herself of beneficial ownership of an
ownership interest or preventing the vesting of such beneficial
ownership as part of a plan or scheme to evade the reporting
requirements of this chapter;
(c) Any person who, subject to (b) of this subsection, has
the right to acquire beneficial ownership of such ownership
interest within sixty days, including but not limited to any
right to acquire:
(i) Through the exercise of any option, warrant, or right;
(ii) Through the conversion of an ownership interest;
(iii) Pursuant to the power to revoke a trust, discretionary
account, or similar arrangement; or
(iv) Pursuant to the automatic termination of a trust,
discretionary account, or similar arrangement;
except that, any person who acquires an ownership interest or
power specified in (c)(i), (ii), or (iii) of this subsection with
the purpose or effect of changing or influencing the control of
the contractor, or in connection with or as a participant in any
transaction having such purpose or effect, immediately upon such
acquisition shall be deemed to be the beneficial owner of the
ownership interest which may be acquired through the exercise or
conversion of such ownership interest or power;
(d) Any person who in the ordinary course of business is a
pledgee of ownership interest under a written pledge agreement
shall not be deemed to be the beneficial owner of such pledged
ownership interest until the pledgee has taken all formal steps
necessary which are required to declare a default and determines
that the power to vote or to direct the vote or to dispose or to
direct the disposition of such pledged ownership interest will be
exercised; except that:
(i) The pledgee agreement is bona fide and was not entered
into with the purpose nor with the effect of changing or
influencing the control of the contractor, nor in connection with
any transaction having such purpose or effect, including persons
meeting the conditions set forth in (b) of this subsection; and
(ii) The pledgee agreement, prior to default, does not grant
to the pledgee:
(A) The power to vote or to direct the vote of the pledged
ownership interest; or
(B) The power to dispose or direct the disposition of the
pledged ownership interest, other than the grant of such power(s)
pursuant to a pledge agreement under which credit is extended and
in which the pledgee is a broker or dealer.
(8) "Capitalization" means the recording of an expenditure
as an asset.
(9) "Case mix" means a measure of the intensity of care and
services needed by the residents of a nursing facility or a group
of residents in the facility.
(10) "Case mix index" means a number representing the
average case mix of a nursing facility.
(11) "Case mix weight" means a numeric score that identifies
the relative resources used by a particular group of a nursing
facility's residents.
(12) "Certificate of capital authorization" means a
certification from the department for an allocation from the
biennial capital financing authorization for all new or
replacement building construction, or for major renovation
projects, receiving a certificate of need or a certificate of
need exemption under chapter 70.38 RCW after July 1, 2001.
(13) "Contractor" means a person or entity licensed under
chapter 18.51 RCW to operate a medicare and medicaid certified
nursing facility, responsible for operational decisions, and
contracting with the department to provide services to medicaid
recipients residing in the facility.
(14) "Default case" means no initial assessment has been
completed for a resident and transmitted to the department by the
cut-off date, or an assessment is otherwise past due for the
resident, under state and federal requirements.
(15) "Department" means the department of social and health
services (DSHS) and its employees.
(16) "Depreciation" means the systematic distribution of the
cost or other basis of tangible assets, less salvage, over the
estimated useful life of the assets.
(17) "Direct care" means nursing care and related care
provided to nursing facility residents. Therapy care shall not
be considered part of direct care.
(18) "Direct care supplies" means medical, pharmaceutical,
and other supplies required for the direct care of a nursing
facility's residents.
(19) "Entity" means an individual, partnership, corporation,
limited liability company, or any other association of
individuals capable of entering enforceable contracts.
(20) "Equity" means the net book value of all tangible and
intangible assets less the recorded value of all liabilities, as
recognized and measured in conformity with generally accepted
accounting principles.
(21) "Essential community provider" means a facility which
is the only nursing facility within a commuting distance radius
of at least forty minutes duration, traveling by automobile.
(22) "Facility" or "nursing facility" means a nursing home
licensed in accordance with chapter 18.51 RCW, excepting nursing
homes certified as institutions for mental diseases, or that
portion of a multiservice facility licensed as a nursing home, or
that portion of a hospital licensed in accordance with chapter 70.41 RCW which operates as a nursing home.
(23) "Fair market value" means the replacement cost of an
asset less observed physical depreciation on the date for which
the market value is being determined.
(24) "Financial statements" means statements prepared and
presented in conformity with generally accepted accounting
principles including, but not limited to, balance sheet,
statement of operations, statement of changes in financial
position, and related notes.
(25) "Generally accepted accounting principles" means
accounting principles approved by the financial accounting
standards board (FASB).
(26) "Goodwill" means the excess of the price paid for a
nursing facility business over the fair market value of all net
identifiable tangible and intangible assets acquired, as measured
in accordance with generally accepted accounting principles.
(27) "Grouper" means a computer software product that groups
individual nursing facility residents into case mix
classification groups based on specific resident assessment data
and computer logic.
(28) "High labor-cost county" means an urban county in which
the median allowable facility cost per case mix unit is more than
ten percent higher than the median allowable facility cost per
case mix unit among all other urban counties, excluding that
county.
(29) "Historical cost" means the actual cost incurred in
acquiring and preparing an asset for use, including feasibility
studies, architect's fees, and engineering studies.
(30) "Home and central office costs" means costs that are
incurred in the support and operation of a home and central
office. Home and central office costs include centralized
services that are performed in support of a nursing facility.
The department may exclude from this definition costs that are
nonduplicative, documented, ordinary, necessary, and related to
the provision of care services to authorized patients.
(31) "Imprest fund" means a fund which is regularly
replenished in exactly the amount expended from it.
(32) "Joint facility costs" means any costs which represent
resources which benefit more than one facility, or one facility
and any other entity.
(33) "Lease agreement" means a contract between two parties
for the possession and use of real or personal property or assets
for a specified period of time in exchange for specified periodic
payments. Elimination (due to any cause other than death or
divorce) or addition of any party to the contract, expiration, or
modification of any lease term in effect on January 1, 1980, or
termination of the lease by either party by any means shall
constitute a termination of the lease agreement. An extension or
renewal of a lease agreement, whether or not pursuant to a
renewal provision in the lease agreement, shall be considered a
new lease agreement. A strictly formal change in the lease
agreement which modifies the method, frequency, or manner in
which the lease payments are made, but does not increase the
total lease payment obligation of the lessee, shall not be
considered modification of a lease term.
(34) "Medical care program" or "medicaid program" means
medical assistance, including nursing care, provided under RCW 74.09.500 or authorized state medical care services.
(35) "Medical care recipient," "medicaid recipient," or
"recipient" means an individual determined eligible by the
department for the services provided under chapter 74.09 RCW.
(36) "Minimum data set" means the overall data component of
the resident assessment instrument, indicating the strengths,
needs, and preferences of an individual nursing facility
resident.
(37) "Net book value" means the historical cost of an asset
less accumulated depreciation.
(38) "Net invested funds" means the net book value of
tangible fixed assets employed by a contractor to provide
services under the medical care program, including land,
buildings, and equipment as recognized and measured in conformity
with generally accepted accounting principles.
(39) "Nonurban county" means a county which is not located
in a metropolitan statistical area as determined and defined by
the United States office of management and budget or other
appropriate agency or office of the federal government.
(40) "Operating lease" means a lease under which rental or
lease expenses are included in current expenses in accordance
with generally accepted accounting principles.
(41) "Owner" means a sole proprietor, general or limited
partners, members of a limited liability company, and beneficial
interest holders of five percent or more of a corporation's
outstanding stock.
(42) "Ownership interest" means all interests beneficially
owned by a person, calculated in the aggregate, regardless of the
form which such beneficial ownership takes.
(43) "Patient day" or "resident day" means a calendar day of
care provided to a nursing facility resident, regardless of
payment source, which will include the day of admission and
exclude the day of discharge; except that, when admission and
discharge occur on the same day, one day of care shall be deemed
to exist. A "medicaid day" or "recipient day" means a calendar
day of care provided to a medicaid recipient determined eligible
by the department for services provided under chapter 74.09 RCW,
subject to the same conditions regarding admission and discharge
applicable to a patient day or resident day of care.
(44) "Professionally designated real estate appraiser" means
an individual who is regularly engaged in the business of
providing real estate valuation services for a fee, and who is
deemed qualified by a nationally recognized real estate appraisal
educational organization on the basis of extensive practical
appraisal experience, including the writing of real estate
valuation reports as well as the passing of written examinations
on valuation practice and theory, and who by virtue of membership
in such organization is required to subscribe and adhere to
certain standards of professional practice as such organization
prescribes.
(45) "Qualified therapist" means:
(a) A mental health professional as defined by chapter 71.05 RCW;
(b) A mental retardation professional who is a therapist
approved by the department who has had specialized training or
one year's experience in treating or working with the mentally
retarded or developmentally disabled;
(c) A speech pathologist who is eligible for a certificate
of clinical competence in speech pathology or who has the
equivalent education and clinical experience;
(d) A physical therapist as defined by chapter 18.74 RCW;
(e) An occupational therapist who is a graduate of a program
in occupational therapy, or who has the equivalent of such
education or training; and
(f) A respiratory care practitioner certified under chapter 18.89 RCW.
(46) "Rate" or "rate allocation" means the medicaid
per-patient-day payment amount for medicaid patients calculated
in accordance with the allocation methodology set forth in part E
of this chapter.
(47) "Real property," whether leased or owned by the
contractor, means the building, allowable land, land
improvements, and building improvements associated with a nursing
facility.
(48) "Rebased rate" or "cost-rebased rate" means a
facility-specific component rate assigned to a nursing facility
for a particular rate period established on desk-reviewed,
adjusted costs reported for that facility covering at least six
months of a prior calendar year designated as a year to be used
for cost-rebasing payment rate allocations under the provisions
of this chapter.
(49) "Records" means those data supporting all financial
statements and cost reports including, but not limited to, all
general and subsidiary ledgers, books of original entry, and
transaction documentation, however such data are maintained.
(50) "Related organization" means an entity which is under
common ownership and/or control with, or has control of, or is
controlled by, the contractor.
(a) "Common ownership" exists when an entity is the
beneficial owner of five percent or more ownership interest in
the contractor and any other entity.
(b) "Control" exists where an entity has the power, directly
or indirectly, significantly to influence or direct the actions
or policies of an organization or institution, whether or not it
is legally enforceable and however it is exercisable or
exercised.
(51) "Related care" means only those services that are
directly related to providing direct care to nursing facility
residents. These services include, but are not limited to,
nursing direction and supervision, medical direction, medical
records, pharmacy services, activities, and social services.
(52) "Resident assessment instrument," including federally
approved modifications for use in this state, means a federally
mandated, comprehensive nursing facility resident care planning
and assessment tool, consisting of the minimum data set and
resident assessment protocols.
(53) "Resident assessment protocols" means those components
of the resident assessment instrument that use the minimum data
set to trigger or flag a resident's potential problems and risk
areas.
(54) "Resource utilization groups" means a case mix
classification system that identifies relative resources needed
to care for an individual nursing facility resident.
(55) "Restricted fund" means those funds the principal
and/or income of which is limited by agreement with or direction
of the donor to a specific purpose.
(56) "Secretary" means the secretary of the department of
social and health services.
(57) "Support services" means food, food preparation,
dietary, housekeeping, and laundry services provided to nursing
facility residents.
(58) "Therapy care" means those services required by a
nursing facility resident's comprehensive assessment and plan of
care, that are provided by qualified therapists, or support
personnel under their supervision, including related costs as
designated by the department.
(59) "Title XIX" or "medicaid" means the 1965 amendments to
the social security act, P.L. 89-07, as amended and the medicaid
program administered by the department.
(60) "Urban county" means a county which is located in a
metropolitan statistical area as determined and defined by the
United States office of management and budget or other
appropriate agency or office of the federal government.
(61) "Vital local provider" means a facility that meets the
following qualifications:
(a) It reports a home office with an address located in
Washington state; and
(b) The sum of medicaid days for all Washington facilities
reporting that home office as their home office was greater than
two hundred fifteen thousand in 2003; and
(c) The facility was recognized as a "vital local provider"
by the department as of April 1, 2007.
The definition of "vital local provider" shall expire, and
have no force or effect, after June 30, 2007. After that date,
no facility's payments under this chapter shall in any way be
affected by its prior determination or recognition as a vital
local provider.
[2007 c 508 § 7; 2006 c 258 § 1; 2001 1st sp.s. c 8 § 1; 1999 c 353 § 1; 1998 c 322 § 2; 1995 1st sp.s. c 18 § 90; 1993 sp.s. c 13 § 1; 1991 sp.s. c 8 § 11; 1989 c 372 § 17; 1987 c 476 § 6; 1985 c 361 § 16; 1982 c 117 § 1; 1980 c 177 § 2.]
NOTES:
Effective date -- 2007 c 508: See note following RCW 74.46.410.
Effective date -- 2006 c 258: "This act takes effect July 1, 2006." [2006 c 258 § 8.]
Severability -- 2001 1st sp.s. c 8: "If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected." [2001 1st sp.s. c 8 § 21.]
Effective dates -- 2001 1st sp.s. c 8: "(1) Sections 1
through 19 of this act are necessary for the immediate
preservation of the public peace, health, or safety, or support
of the state government and its existing public institutions, and
take effect July 1, 2001.
(2) Section 20 of this act is necessary for the immediate
preservation of the public peace, health, or safety, or support
of the state government and its existing public institutions, and
takes effect June 29, 2001." [2001 1st sp.s. c 8 § 22.]
Effective dates -- 1999 c 353: "This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions. Section 11 of this act takes effect immediately [May 17, 1999], and sections 1 through 10 and 12 through 17 take effect July 1, 1999." [1999 c 353 § 18.]
Conflict with federal requirements -- Severability -- Effective date -- 1995 1st sp.s. c 18: See notes following RCW 74.39A.030.
Effective date -- 1993 sp.s. c 13: "This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1993." [1993 sp.s. c 13 § 21.]
Effective date -- 1991 sp.s. c 8: See note following RCW 18.51.050.
Savings -- 1985 c 361: "This act shall not be construed as affecting any existing right acquired or any obligation or liability incurred under the statutes amended or repealed by this act or any rule, regulation, or order adopted under those sections, nor as affecting any proceeding instituted under those sections." [1985 c 361 § 20.]