Mid-Year FRV Requests: An Opportunity Va. Nursing Facilities Should Not Overlook

BySam Phillips

Many Virginia nursing facilities invest significant resources in renovations, building improvements, and bed additions, yet fail to take advantage of an opportunity that may increase Medicaid reimbursement before the next annual rate cycle. Under Virginia Medicaid regulations, nursing facilities that place qualifying major renovations or new beds into service may be eligible to request a mid-year Fair Rental Value (FRV) rate adjustment, allowing reimbursement to more quickly reflect the facility’s capital investment.

Who Qualifies?

A facility may apply for a mid-year FRV rate determination when it:

  • Is a new facility which obtained a certificate of occupancy; or
  • Completes and places into service a qualifying major renovation project.

Facilities should note that only one mid-year FRV rate change is permitted during a State Fiscal Year (SFY).

What Is Considered a Major Renovation?

For purposes of a mid-year FRV adjustment, a renovation generally qualifies as a major renovation when the project results in an increase in capital expenditures of at least $3,000 per licensed bed. This threshold is intended to distinguish significant capital improvements from routine maintenance and repair activities.

Examples may include:

  • Major resident room renovations
  • Building additions or expansions
  • Significant HVAC, plumbing, or electrical system replacements
  • Structural improvements
  • Large-scale modernization projects that extend the useful life of the facility
Filing Requirements

To receive consideration for a mid-year FRV adjustment, the nursing facility must submit complete pro forma documentation at least 60 days prior to the effective occupancy date. The revised FRV rate generally becomes effective at the beginning of the month following the expiration of the 60-day review period, subject to verification that the renovated beds or project are operational.

Facilities should carefully maintain supporting documentation, including:

  • Construction contracts
  • Capital asset schedules
  • Certificates of occupancy, when applicable
  • Detailed project cost records
  • Financing documentation
  • Other information requested by DMAS
Important Timing Considerations

Timing is critical. Virginia Medicaid regulations provide that no mid-year FRV rate changes may be made for an effective date after April 30 of the State Fiscal Year. Facilities planning significant renovations should therefore evaluate filing opportunities as early as possible to avoid delaying potential reimbursement increases.

Practical Takeaway

A mid-year FRV filing can provide meaningful additional Medicaid reimbursement for facilities making substantial capital investments. Nursing facilities that are completing major renovations or adding beds should proactively review project costs and filing deadlines to determine eligibility. Early planning and timely submission can help ensure that Medicaid reimbursement appropriately recognizes investments made to enhance the quality, safety, and comfort of the resident care environment.