Fair rental systems: paying nursing homes for capital costs.
Fair rental systems pay an imputed rent for the housing a nursing home provides for its residents. The rent is paid in place of reimbursement for capital costs covered by the system--depreciation, interest, lease payments, and return on equity capital. It is an approach that is intended to overcome the inflationary incentives of cost-based reimbursement. Several state Medicaid programs have adopted fair rental systems using different approaches. And although it is too early to tell which approach is best, one point seems clear--a fair rental system can be a distinct improvement over cost-based reimbursement, depending on design and administration.
D002202:Capital Financing; D003862:Depreciation; D005376:Financial Management; D007860:Leasing, Property / Q000331:legislation & jurisprudence; D008484:Medicaid / Q000331:legislation & jurisprudence*; D012051:Reimbursement Mechanisms; D012866:Skilled Nursing Facilities / Q000191:economics*; D014481:United States