(1) The department shall establish for each medicaid nursing facility a financing allowance component rate allocation. The financing allowance component rate shall be rebased annually, effective July 1st, in accordance with the provisions of this section and this chapter.

     (2) The financing allowance is determined by multiplying the net invested funds of each facility by .04, and dividing by the greater of a nursing facility's total resident days from the most recent cost report period or resident days calculated on eighty-seven percent facility occupancy for essential community providers, ninety-two percent facility occupancy for small nonessential community providers, or ninety-five percent occupancy for large nonessential community providers. If a capitalized addition, renovation, replacement, or retirement of an asset will result in a different licensed bed capacity during the ensuing period, the prior period total resident days used in computing the financing allowance shall be adjusted to the greater of the anticipated resident day level or eighty-seven percent of the new licensed bed capacity for essential community providers, ninety-two percent facility occupancy for small nonessential community providers, or ninety-five percent occupancy for large nonessential community providers.

     (3) In computing the portion of net invested funds representing the net book value of tangible fixed assets, the same assets, depreciation bases, lives, and methods referred to in department rule, including owned and leased assets, shall be utilized, except that the capitalized cost of land upon which the facility is located and such other contiguous land which is reasonable and necessary for use in the regular course of providing resident care must also be included. Subject to provisions and limitations contained in this chapter, for land purchased by owners or lessors before July 18, 1984, capitalized cost of land is the buyer's capitalized cost. For all partial or whole rate periods after July 17, 1984, if the land is purchased after July 17, 1984, capitalized cost is that of the owner of record on July 17, 1984, or buyer's capitalized cost, whichever is lower. In the case of leased facilities where the net invested funds are unknown or the contractor is unable to provide necessary information to determine net invested funds, the secretary has the authority to determine an amount for net invested funds based on an appraisal conducted according to department rule.

     (4) The financing allowance rate allocation calculated in accordance with this section shall be adjusted to the extent necessary to comply with RCW 74.46.421.

[2011 1st sp.s. c 7 § 3; 2001 1st sp.s. c 8 § 8; 1999 c 353 § 11.]

NOTES:

     Purpose -- Findings -- Intent -- Severability -- Effective date -- 2011 1st sp.s. c 7: See RCW 74.48.005, 74.48.900, and 74.48.901.

     Analysis -- 2011 1st sp.s. c 7: See note following RCW 74.46.431.

     Severability -- Effective dates -- 2001 1st sp.s. c 8: See notes following RCW 74.46.020.

     Effective dates -- 1999 c 353: See note following RCW 74.46.020.