101 C.M.R. 204.03 – General Rate Provisions

(1) General. EOHHS will determine a payment rate for dates of service on or after December 1, 2025, for each facility as follows.
1. (a) Preliminary Rate. The facility’s preliminary rate is equal to the sum of
  1. 1. allowable variable costs determined under 101 CMR 204.04; and
  2. 2. allowable capital and other fixed costs as determined under 101 CMR 204.05.
2. (b) DTA Days Percentage Adjustment . The preliminary rate as calculated in 101 CMR 204.03(1)(a) will be adjusted as follows.
  1. 1. For each facility, calculate its DTA days percentage by dividing its DTA days by the facility’s total resident days, as reported on the Resident Days schedule of the 2023 HCF- 4.
  2. 2. Each facility will receive a DTA days percentage adjustment equal to $5.39 multiplied by the percentage calculated in 101 CMR 204.03(1)(b)1.
3. (c) Payment Rate. Subject to the Payment Rate Maximum Increase as described in 101 CMR 204.03(1)(f) and the Resident Care Cost Quotient as described in 101 CMR 204.03(1)(e), the facility’s December 1, 2025, payment rate is equal to the greater of
  1. 1. the sum of the preliminary rate as determined in 101 CMR 204.03(1)(a) and the payment rate adjustments as determined in 101 CMR 204.03(1)(b), and capping the maximum decrease at 0% if applicable; or
  2. 2. $105.
4. (d) Resident Care Cost Quotient (RCC-Q). If the facility’s RCC-Q score is less than the RCC-Q threshold established pursuant to 101 CMR 204.10(1), the facility will receive a downward adjustment as described in 101 CMR 204.10.
5. (e) Resident Care Add-on Adjustment. Facilities that do not receive RCC-Q downward adjustments will receive a resident care add-on adjustment of $0.89 to the proposed rate as calculated in 101 CMR 204.03(1)(c).
6. (f) Payment Rate Maximum Increase. If the facility’s payment rate as calculated in 101 CMR 204.03(1)(e) is greater than the facility’s certified rate in effect on November 30, 2025, plus $0.89, the facility will receive a downward adjustment so that the total payment rate effective December 1, 2025, is equal to the facility’s certified rate in effect on November 30, 2025, plus $0.89.
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  Final Adoption
  Date Published in Mass. Register: April 24, 2026 (Effective December 1, 2025)
101 CMR 204.00: RATES OF PAYMENT TO RESIDENT CARE FACILITIES
1. (g) Annualization Adjustment. For the period from December 1, 2025, through December 31, 2025, EOHHS will apply an annualization adjustment of 196.77% of the difference between the facility’s December 1, 2025 rate as determined in 101 CMR 204.03(1)(c), (d), and (e) and its certified rate in effect on November 30, 2025, which accounts for the period October 1, 2025 through November 30, 2025.
(2) Other Provisions.
1. (a) Audits. EOHHS will establish rates after a comprehensive financial review of the base year cost report. The Center may also conduct desk audits or on-site field audits to ensure the accuracy of the claims for reimbursement and consistency in reporting. EOHHS will disallow any cost for which the provider does not produce adequate documentation requested by the Center during a desk or field audit.
2. (b) General Cost Principles. In order to be reimbursed, a cost must
  1. 1. be ordinary, necessary, and directly related to the care of publicly aided residents;
  2. 2. be consistent with the prudent buyer concept;
  3. 3. be for goods and services actually provided in the resident care facility;
  4. 4. not have the transaction effect of circumventing 101 CMR 204.00 under the principle that the substance of the transaction must prevail over form;
  5. 5. actually be paid by the provider. Examples of costs that are not considered paid for purposes of reimbursement include, but are not limited to, costs that are discharged in bankruptcy; forgiven; converted to a promissory note; and accruals of self-insured costs based on actuarial estimates; and
  6. 6. not be paid to a related party that has not been identified on the reports.
3. (c) Non-allowable Costs. Rates will not include those costs that are not reimbursable, as defined at 101 CMR 204.03(2)(c), are reimbursed through an allowance, or are for services that are billed directly.
  1. 1. Costs that are not reimbursable include
    1. a. bad debts, refunds, charity and courtesy allowances, and contractual adjustments to the Commonwealth and other third parties;
    2. b. recovery of expense items, that is, expenses that are reduced or eliminated by applicable income including, but not limited to, rental of quarters to employees and others, income from meals sold to persons other than residents, telephone income, vending machine income, and medical records income. Vending machine income will be recovered against the variable cost, included in the variable cost allowance;
    3. c. federal and state income taxes, except the non-income related portion of the Massachusetts corporate excise tax;
    4. d. expenses that are not directly related to the provision of resident care including, but not limited to, expenses related to other business activities and fundraising, gift shop expenses, research expenses, rental expense for space not required by the Department and expenditure of funds received under federal grants for compensation paid for training personnel, and expenses related to grants or contracts for special projects;
    5. e. compensation and fringe benefits for residents on a provider’s payroll;
    6. f. any amounts in excess of any schedule or limitation contained in 101 CMR 204.00;
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      Final Adoption
      Date Published in Mass. Register: April 24, 2026 (Effective December 1, 2025)
101 CMR 204.00: RATES OF PAYMENT TO RESIDENT CARE FACILITIES
1. g. penalties and interest incurred because of late payment of loans or other indebtedness, late filing of federal and state tax returns, or from late payment of municipal taxes;
2. h. any increase in compensation or fringe benefits granted as an unfair labor practice after a final adjudication by the court of last resort;
3. i. accrued expenses that remain unpaid more than 120 days after the close of the reporting year, excluding vacation and sick time accruals, are not included in the prospective rates. When the Center receives satisfactory evidence of payment, EOHHS may reverse the adjustment and include that cost, if otherwise allowable, in the applicable prospective rates. Except for costs that are not allowable as described at 101 CMR 204.03(2)(c), a cost must actually be paid by the provider in order to be reimbursable. Examples of costs that are not considered paid for purposes of reimbursement include, but are not limited to, costs that are discharged in bankruptcy; costs that are forgiven; costs that are converted to a promissory note; and accruals of self-insured costs that are based on actuarial estimates;
4. j. expenses for purchased service nursing services purchased from temporary nursing agencies that are not registered with the Department under 105 CMR 157.000: The Registration and Operation of Temporary Nursing Service Agencies;
5. k. any expense or amortization of a capitalized cost relating to costs incurred prior to the opening of the facility;
6. l. expenses relating to the financing of or otherwise supporting political or lobbying activities regarding legislation to affect reimbursement methods; campaign contributions; and advertising to create goodwill or otherwise affect payments made by governmental units;
7. m. all legal expenses; and those accounting expenses and filing fees associated with any appeal process;
8. n. additional rental payments or charges based upon receipts or income will not be considered as additional rental expense;
9. o. interest payments and charges based upon the provider’s receipts or income will not be considered as allowable interest expense;
10. p. any costs that were incurred in periods other than the base year;
11. q. an adjustment to base year costs to reflect the difference between the rates charged to private residents in the base year if those rates are less than the public rates certified in the base year. EOHHS will multiply the difference between the base year rate for publicly aided residents and the average rate charged private residents corresponding to the base year above. The adjustment is calculated as follows: [(private income/resident private patient days) - public base year rate per diem] x (base year resident private patient days/base year patient days) = the per diem amount by which the publicly aided rate will be reduced. In no instances will the certified rate be lower than the lowest private rate assigned to an individual for that period;
12. r. any costs, including rental and leasehold expenses, for buildings and equipment that are not located at the site of the resident care facility will not be allowable as fixed costs; and
13. s. costs of ancillary services that are required to be billed on a direct basis to the purchasing government agency.
14. 2. Other Recoverable Income. Costs reimbursed through an allowance or other specified methodology include other recoverable income. Other recoverable income will be
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  Final Adoption
  Date Published in Mass. Register: April 24, 2026 (Effective December 1, 2025)
101 CMR 204.00: RATES OF PAYMENT TO RESIDENT CARE FACILITIES
recovered against an account in the appropriate cost group category, such as variable cost allowance and fixed costs. 3. Costs for Services Billed Directly. The following supplies or services must be billed directly to the purchaser in accordance with the purchaser’s regulations or policies.
1. a. Physician. Direct physician services to individual residents, including emergency physician services required by 105 CMR 150.000: Standards for Long-term Care Facilities.
2. b. Medical Supplies. Direct medical services or supplies in accordance with the regulations or written policy of the governmental unit responsible for paying for such services or supplies in the per diem rates.
3. c. Prescriptions. Pharmacy costs related to legend drug prescriptions and prescribed legend drugs for individual residents.
4. d. Therapy. Direct restorative services provided upon written order of a physician.