Overview

The nursing facility Resource Allocation Program (RAP) was established under 1983 Wisconsin Act 27, which repealed and recreated Chapter 150, Wis. Stats. The RAP replaced the long term care section of the former Certificate of Need Program.

Under RAP, the Department of Health and Family Services (DHFS) is authorized to review and approve or disapprove the following:

• The construction or total replacement of a nursing facility;
• A capital expenditure that exceeds $1.0 million by or on behalf of a nursing facility;
• An expenditure that exceeds $600,000 for clinical equipment by or on behalf of a nursing facility;
• The partial or total conversion of a nursing facility to a facility primarily serving the developmentally disabled (FDD) or of a FDD conversion to a nursing home;
• An increase in the bed capacity of a nursing home (including increases involving the relocation of existing nursing facility beds).

Also, under s.150.31(1) of the statutes, the state has imposed a moratorium on the maximum number of nursing facility and FDD beds. The maximum number of nursing facility beds presently is 51,795 and for FDD beds is 3,704.

1997 AB 100/SB 77 Provision

The 1997-99 biennial budget would modify the RAP by: 1) Deleting the requirement that the total replacement of a nursing home be reviewed/approved by the DHFS; the review/approval process in this instance only would apply to the construction of a new nursing home; 2) Deleting a capital expenditure which is a renovation or replacement from the requirement that capital expenditures which exceed $1 million by or on behalf of a nursing home be reviewed/approved by the DHFS; and 3) Deleting an expenditure which is a renovation or replacement from the requirement that expenditures which exceed $600,000 for clinical equipment by or on behalf of a nursing home be reviewed/approved by the DHFS. In addition, the nursing home bed cap under s.150.31(1) Wis. Stats., would be decreased by the number of banked beds that ultimately are de-licensed under the bed banking program proposed under s.49.45(6m)(ap) of the biennial budget bill.

WAHSA Position: Support the modifications to the Chapter 150 RAP contained in AB 100/SB 77.

 

The RAP has never met its stated intent to contain nursing home growth and costs. Instead the program has become a bureaucratic nightmare which has increased costs to the Medicaid program rather than decreased costs.

Please consider:

• According to a June 8, 1993 Legislative Fiscal Bureau memo, facilities undergoing a RAP review spend between $8,000 - 13,000 for the accountants, lawyers and consultants needed to complete a RAP application.
• The DHFS has never denied the approval of a RAP applicant; they have at times required extensive and expensive modifications to the original project specifications before approval was given.
• All the costs alluded to above, as well as the RAP application fee and the time spent to secure State approval, are reimbursable under the Medicaid Nursing Home Payment Formula. The more hoops an applicant must jump through, the greater the cost to the Medicaid program.
• Since RAP applications never are denied, the program obviously has not controlled growth. When you combine the fact that applications are never denied with the fact the review process is lengthy, cumbersome and costly and those costs are reimbursed by Medicaid, the program also has failed to control costs.
• Costs have been contained through the capital component of the Nursing Home Payment Formula, which places strict payment limitations on nursing home capital expenditures. Medicaid will not pay for any capital expenditures which exceed the nursing home formula limits.

The cost-per-bed limitation contained in HFS 122, the RAP rule, stifles creativity and perpetuates the 1960s nursing home model of "semi-private" ("semi-public" is more accurate) rooms and shared bathrooms.

• A significant portion of Wisconsin’s 470 nursing homes were constructed in the 1960s and, not surprisingly, are in need of significant capital improvements or replacement. The intent of these facility modifications is to foster a more homelike atmosphere through innovative new designs aimed at enhancing a resident’s privacy and dignity.

• HFS 122 contains a cost-per-bed limitation formula. That formula, which is recalculated and revised every month, currently has set a cost-per-bed limit of $57,000. The DHFS will not approve any RAP project which exceeds this cost-per-bed limit.

• According to representatives of the DHFS Bureau of Quality Assurance (BQA), which is charged with enforcing nursing home quality standards, the RAP cost-per-bed formula limits the size of a nursing facility room to approximately 400 square feet of living space per resident. But according to those same BQA representatives, in order to meet the desire for greater privacy, more efficient staff utilization and resident preferences, a nursing facility should afford each resident, at a minimum, 500 square feet of living space. The RAP itself, therefore, denies the homelike atmosphere nursing home providers wish to provide and nursing home residents deserve.

Adoption of the AB 100/SB 77 RAP modifications will rectify these concerns by focusing the RAP process where it belongs: on significant capital expenditures for new construction or clinical equipment acquisitions which could result in substantial cost increases to the Medicaid program. WAHSA members urge your support for these modifications.

The Wisconsin Association of Homes and Services for the Aging (WAHSA) is a statewide membership organization of not-for-profit corporations principally serving the elderly and disabled. Membership is comprised of 187 religious, fraternal, private and governmental organizations which own, operate and/or sponsor 143 not-for-profit and 50 county-operated nursing homes, 23 facilities for the developmentally disabled, 56 community-based residential facilities, 10 licensed home health agencies, 91 independent living facilities, 40 adult day care programs and over 300 community service agencies which provide programs ranging from Alzheimer’s support, child day care, hospice and homecare to Meals on Wheels. For more information, please contact the WAHSA staff at (608) 255-7060: John Sauer, Executive Director; Tom Ramsey, Director of Government Relations; Brian Schoeneck, Financial Services Director.

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WAHSA 204 South Hamilton Street Madison, WI 53703
Telephone: (608)255-7060 FAX:(608)255-7064