# COMAR Title 10 — Maryland Department of Health

## Subtitle 08 — Health Facilities Grants

### Chapter 01 — Construction Funds for Public and Nonprofit Nursing Homes

**Authority:** Health-General Article, §2-104(b), Annotated Code of Maryland; Ch. 228, Acts of 1990

**Administrative History:** Effective date:

**Administrative History:** Regulations .01—.09 adopted as an emergency provision effective November 13, 1985 (12:25 Md. R. 2469); emergency status expired March 13, 1986

**Administrative History:** Regulations .01—.09 adopted as an emergency provision effective April 2, 1986 (13:9 Md. R. 1019) (Emergency provisions are temporary and not printed in COMAR)

**Administrative History:** Regulations .01—.09 adopted effective July 12, 1986 (13:13 Md. R. 1491)

**Administrative History:** Chapter recodified from COMAR 10.08.19 to 10.08.01 and amended effective February 23, 1987 (14:4 Md. R. 417)

**Administrative History:** Regulations .01 and .03—.10 amended effective December 5, 1994 (21:24 Md. R. 1988)

**Administrative History:** Regulation .02 repealed effective December 5, 1994 (21:24 Md. R. 1988)

**Administrative History:** Regulation .03B amended effective March 26, 2018 (45:6 Md. R. 319)

**Administrative History:** Regulation .04A amended effective March 26, 2018 (45:6 Md. R. 319)

**Administrative History:** Regulation .06A amended effective March 26, 2018 (45:6 Md. R. 319)

**Administrative History:** Regulation .08B amended effective March 26, 2018 (45:6 Md. R. 319)

**Administrative History:** Regulation .09C amended effective March 26, 2018 (45:6 Md. R. 319)

**Administrative History:** Annotation: The following chapters were originally adopted to govern the administration of construction funds for public and non-profit nursing homes. These chapters were repealed effective February 23, 1987 (14:4 Md. R. 417) and replaced by the current COMAR 10.08.01:

**Administrative History:** 10.08.01 (1968) effective February 17, 1969; amended effective June 30, 1969 and June 11, 1975 (2:13 Md. R. 930)

**Administrative History:** 10.08.02 (1972) effective April 5, 1973; amended effective June 11, 1975 (2:13 Md. R. 930)

**Administrative History:** 10.08.03 (1975) effective September 17, 1975 (2:21 Md. R. 1340)

**Administrative History:** 10.08.08 (1977) effective March 24, 1978 (5:6 Md. R. 465)

**Administrative History:** 10.08.11 (1978) effective April 20, 1979 (6:8 Md. R. 656)

**Administrative History:** 10.08.13 (1980) effective as an emergency provision August 11, 1980 (7:20 Md. R. 1872); effective permanently December 12, 1980 (7:25 Md. R. 2336)

#### Regulation .01 Scope.

*COMAR 10.08.01.01*

A. These regulations govern the administration of construction funds for public and nonprofit nursing homes made available by the Nursing Home Loan Act of 1990, and subsequent similar Loan Acts. In addition, these regulations govern the administration of the assurances, residual requirements, and the State's right of recovery for those applicants that received construction funds under the Nursing Home Loan Acts of 1972, 1975, 1977, 1978, 1980, and 1985.

B. It is the intent of the Department that State grant funds be used:

  (1) To assist applicants for the construction, expansion, renovation, and equipping of nursing home eligible under the Nursing Home Loan Act of 1990 and subsequent similar Loan Acts in accordance with these regulations; and

  (2) After the applicant has secured all funds available from other sources.

#### Regulation .02 Repealed.

*COMAR 10.08.01.02*

#### Regulation .03 Definitions.

*COMAR 10.08.01.03*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Applicant” means a county, municipal corporation or nonprofit organization that seeks to obtain State grant funds under the Loan Acts.

  (2) “Certificate of Need” means a certificate issued by the Maryland Health Care Commission under Health-General Article, §19-101 et seq., Annotated Code of Maryland, for a health care project.

  (3) Construction.

    (a) “Construction” means construction of new buildings or additions to existing buildings and initial capital equipment, including plans, specifications, site improvements, surveys, and applicable engineers' and architects' fees.

    (b) “Construction” does not include the cost of land acquisition or the cost of off-site improvements.

  (4) “Department” means the Maryland Department of Health.

  (5) “Facility” means a nursing home that is wholly owned by and operated under the authority of a:

    (a) County or municipal corporation; or

    (b) Nonprofit organization.

  (6) “Grantee” means a county, a municipal corporation, or a nonprofit organization for which State grant funds under the Loan Act are approved by the Board of Public Works.

  (7) Initial Capital Equipment.

    (a) “Initial capital equipment” means items which:

      (i) Are necessary to furnish and initially operate a facility;

      (ii) With normal maintenance, have a life expectancy of at least 15 years; and

      (iii) Are of durable construction.

    (b) “Initial capital equipment” does not include items which:

      (i) Could be easily lost, damaged, or destroyed during normal usage;

      (ii) Could be easily stolen;

      (iii) Are likely to be technically obsolescent within 15 years; or

      (iv) Are intended to replace similar items already on hand.

  (8) “Loan Act” means:

    (a) The Nursing Home Loan Act of 1972, Chapter 119, Acts of 1972;

    (b) The Nursing Home Loan Act of 1975, Chapter 656, Acts of 1975;

    (c) The Nursing Home Loan Act of 1977, Chapter 703, Acts of 1977;

    (d) The Nursing Home Loan Act of 1978, Chapter 904, Acts of 1978;

    (e) The Nursing Home Loan Act of 1980, Chapter 713, Acts of 1980;

    (f) The Nursing Home Loan Act of 1985, Chapter 304, Acts of 1985;

    (g) The Nursing Home Loan Act of 1990, Chapter 228, Acts of 1990; and

    (h) All subsequent similar legislation.

  (9) “Nonprofit nursing home” means a nursing home which is or will be wholly owned by and operated under the authority of a nonprofit organization.

  (10) “Nonprofit organization” means:

    (a) A bona fide religious organization, or a chartered nonprofit corporation which is classified under §501(c)3 of the Internal Revenue Code as a nonprofit; and

    (b) That no part of the organization's or corporation's earnings inures to the benefit of an individual or is used for any purpose other than the maintenance and operation of the nursing home, the purchase of equipment to be used in the nursing home, or the expansion of the nursing home.

  (11) “Nursing home” means a comprehensive care facility as set forth in COMAR 10.07.02.

  (12) “Nursing Home Loan Act of 1972” means Chapter 119, Acts of 1972.

  (13) “Nursing Home Loan Act of 1975” means Chapter 656, Acts of 1975.

  (14) “Nursing Home Loan Act of 1977” means Chapter 703, Acts of 1977.

  (15) “Nursing Home Loan Act of 1978” means Chapter 904, Acts of 1978.

  (16) “Nursing Home Loan Act of 1980” means Chapter 713, Acts of 1980.

  (17) “Nursing Home Loan Act of 1985” means Chapter 304, Acts of 1985.

  (18) “Nursing Home Loan Act of 1990” means Chapter 228, Acts of 1990.

  (19) “Office of Capital Planning, Budgeting, and Engineering Services” means the office within the Department designated by the Secretary to administer this chapter.

  (20) “Public nursing home” means a nursing home that is wholly owned and operated under the authority of a county or a municipal corporation.

  (21) “Renovation” means the work required to restore or modernize, or both, most or all of a nursing home.

  (22) “Secretary” means the Secretary of Health, or a designated representative.

  (23) “Wholly owned” includes leased property, if the project proposed by the applicant includes:

    (a) A lease agreement with the State for a State-owned building or State-owned property; or

    (b) A lease agreement:

      (i) Which is for a minimum of 15 years following the project completion or extends the right of purchase to the lessee, and

      (ii) In which the lessor consents to the recording of a notice of the State's right of recovery, under the Nursing Home Loan Act of 1990, Section 1, Paragraph (9), in the land records of the county or Baltimore City in which the facility is located.

#### Regulation .04 Eligibility of Applicant for State Funds.

*COMAR 10.08.01.04*

A. To be eligible for State funds under the Loan Act of 1990 and subsequent similar Loan Acts, an applicant:

  (1) Shall be a county, a municipal corporation, or a nonprofit organization;

  (2) That is a nonprofit organization shall verify its nonprofit status to the Department through its articles of incorporation, or appropriate documentation from the Internal Revenue Service classifying the organization as nonprofit;

  (3) Shall have a Certificate of Need from the Maryland Health Care Commission, if a Certificate of Need is required for the project;

  (4) Shall be eligible for certification to participate in the Medical Assistance Program and shall agree to participate;

  (5) Shall certify that the nursing home meets the requirements of 42 U.S.C. §12101 et seq.; and

  (6) Shall be approved by the Secretary to receive a grant award.

B. In determining the site or location of a facility, an applicant may not make a selection with the effect of excluding individuals from, denying them the benefits of, or subjecting them to discrimination under any programs to which this chapter applies, on the grounds of race, color, religion, disability, or national origin, or with the purpose or effect of defeating or substantially impairing the accomplishment of the objectives of the Loan Act of 1990 or this chapter.

#### Regulation .05 Priority of Eligible Projects.

*COMAR 10.08.01.05*

The Department shall determine the priority of applicants for State grant funds under the Loan Act of 1990 and subsequent similar Acts after consideration of:

A. All eligible applications;

B. The availability of unallocated State funds at the time an application is received; and

C. Priorities established by the Department.

#### Regulation .06 Application Procedure.

*COMAR 10.08.01.06*

A. An applicant shall direct an application for State grant funds authorized by the Loan Act of 1990 and subsequent similar Loan Acts to the Office of Capital Planning, Budgeting, and Engineering Services.

B. The Department shall provide notice and information to the State Clearinghouse for intergovernmental review in accordance with COMAR 14.24.04.

C. At the time of filing the application required by §A of this regulation, the applicant shall file a written statement with the Department containing the following material:

  (1) Current or intended program of services;

  (2) Admission policies for the nursing home;

  (3) Agreement to admit patients without discrimination on the basis of race, religion, national origin, creed, or color;

  (4) The number of personnel employed or to be employed at the nursing home, by occupation, and all perquisites, salaries, and any other funds paid or to be paid to these personnel;

  (5) Expenses incurred or to be incurred in operating the nursing home;

  (6) The schedule of rates charged or to be charged for services rendered;

  (7) If the nursing home is operating, a current, certified profit-and-loss statement and balance sheet for the most current fiscal year; and

  (8) If the applicant is applying for poverty funding under Regulation .09D of this chapter, an agreement that the majority of the individuals served by the applicant shall be poverty-designated clients, as defined in Regulation .09D of this chapter, for each year for a period of 15 years following the completion of the nursing home.

D. If the application meets all pertinent criteria, the Secretary, in the Secretary's discretion, may approve that application and, if approved, shall recommend the application to the Board of Public Works, together with a written report stating that:

  (1) Notice and information have been provided to the State Clearinghouse;

  (2) The application has been approved by the Secretary, and when a federal grant is involved, the application has also been approved by the Secretary of Health and Human Services or other appropriate federal authority; and

  (3) The Secretary recommends that the Board of Public Works make available to the applicant State grant funds.

#### Regulation .07 Assurances from Grantee.

*COMAR 10.08.01.07*

A. The following assurance in this section applies to all grantees receiving construction funds under the Loan Acts of 1972, 1975, 1977, and 1978: For a period of 15 years following the completion of a project, the grantee shall operate the nursing home as a public or nonprofit nursing home and the nursing home may not be sold, bargained, or transferred to a person, agency, or organization not qualified under these regulations without prior written approval of the Department and the Board of Public Works.

B. The following assurance in this section applies to all grantees receiving construction funds under the Loan Act of 1980: For a period of 15 years following the completion of a project, the grantee shall operate the nursing home as a public or nonprofit nursing home and the nursing home may not be sold, bargained, or transferred to a person, agency, or organization not qualified under these regulations without prior written approval of the Secretary.

C. The following assurance in this section applies to all grantees receiving construction funds under the Loan Acts of 1985, 1990, and subsequent similar Acts: For a period of 15 years following the completion of a project, the grantee shall operate the nursing home as a public or nonprofit nursing home and the nursing home may not be sold, bargained, or transferred to a person, agency, or organization not qualified under these regulations without prior written approval of the Board of Public Works.

D. The following assurance in this section applies to all grantees receiving construction funds under the Loan Acts of 1972, 1975, 1977, 1978, 1980, 1985, 1990, and subsequent similar Acts: The grantee shall operate and maintain the completed nursing home in accordance with all applicable State and federal regulations and standards for comprehensive care facilities.

E. The following assurance in this section applies to all grantees receiving construction funds under the Loan Acts of 1972, 1975, 1977, and 1978: Patients shall be admitted without discrimination on the basis of race, creed, color, sex, national origin, age, marital status, or handicap.

F. The following assurance in this section applies to all grantees receiving construction funds under the Loan Acts of 1978, 1980, 1985, 1990, and subsequent similar Acts: The nursing home shall apply the same admissions standards to all persons. A Medicaid recipient shall receive the same consideration as any other candidate for admission. Quotas by class of payor are not allowed.

G. For those grantees receiving State funds under the Loan Acts of 1972, 1975, 1977, and 1978, the grantee shall agree to provide uncompensated care annually at one of the following levels:

  (1) A grantee may advise the State that it does not intend to deny an individual admission to the facility because of the individual's inability to pay;

  (2) A grantee may advise the State that its level of uncompensated care for individuals unable to pay shall be equal to 10 percent annually of all State funds received under the applicable Nursing Home Loan Act;

  (3) A grantee may advise that the proposed level of uncompensated care shall be equal to 3 percent of the difference between the facility's annual operating cost and the sum of the annual Medicare and Medicaid reimbursements.

H. For those grantees that received State funds under the Loan Act of 1980, the grantee shall agree to provide uncompensated care annually at one of the following levels:

  (1) The grantee shall advise the Department that its level of uncompensated care for individuals unable to pay shall be equal to 10 percent annually of all State funds received under the Nursing Home Loan Act of 1980;

  (2) The grantee shall advise the Department that the proposed level of uncompensated care shall be equal to 3 percent of the difference between the facility's annual operating cost and the sum of the annual Medicare and Medicaid reimbursements.

I. If the grantee finds that the options in §G or H of this regulation are not feasible, the grantee shall propose an alternate option to the Department. This alternate proposal shall be reviewed by the Secretary in consultation with the grantee, and a determination shall be made as to its acceptability.

#### Regulation .08 Residual Requirements of the Grantee.

*COMAR 10.08.01.08*

A. Annual Requirements.

  (1) For a period of 15 years following the completion of a project involving these grant funds, a grantee that received funds under the Loan Acts of 1972, 1975, 1977, 1978, 1980, 1985, 1990, and subsequent similar Loan Acts shall file written statements annually with the Department containing the following material:

    (a) The number of personnel employed at the nursing home, by occupation, and all perquisites, salaries, and any other funds currently paid to these personnel;

    (b) Fees or retainers paid directly or under contract to persons rendering services at the nursing home;

    (c) A current, certified, audited profit-and-loss statement and balance sheet for the nursing home;

    (d) Rates and fees charged for services at the nursing home;

    (e) Gifts or endowments received during the current year;

    (f) Patient days of service rendered, showing separately the days of service rendered to patients in the following classifications:

      (i) Self-paying;

      (ii) Below cost;

      (iii) Medicare;

      (iv) Medicaid;

      (v) Public assistance; and

    (g) Other supplemental information required by the Secretary.

  (2) For a period of 15 years following the completion of a project that receives poverty funding under Regulation .09D of this chapter, the grantee shall submit annually a quantitative statement of its performance in serving poverty clients defined in Regulation .09D of this chapter.

B. Insurance Requirements.

  (1) The applicant shall provide builders’ risk insurance during the entire period of project construction or renovation as follows:

    (a) The policy shall name the State as a loss payee;

    (b) The policy shall be endorsed to protect the State's interest in the nursing home;

    (c) The coverage shall be for an amount at least equal to the replacement cost of the nursing home; and

    (d) The grantee shall submit evidence of this insurance to the Office of Capital Planning, Budgeting, and Engineering Services.

  (2) Upon completion of a project, the grantee shall maintain for a period of 15 years all-risk insurance coverage as follows:

    (a) The coverage shall be for an amount at least equal to the replacement cost of the nursing home;

    (b) The policy shall name the State as a loss payee;

    (c) The policy shall be endorsed to protect the State's interest in the project;

    (d) The policy shall be endorsed to notify the Office of Capital Planning, Budgeting, and Engineering Services, 201 West Preston Street, Baltimore, Maryland 21201 of any:

      (i) Notification of cancellation of policy;

      (ii) Material loss covered by the policy; and

      (iii) Material changes in the policy; and

    (e) The grantee shall submit evidence of this insurance annually to the Office of Capital Planning, Budgeting, and Engineering Services and to the State Treasurer’s Office, Insurance Division.

C. A grantee receiving grant funds under the Loan Acts of 1972, 1975, 1977, 1978, 1980, 1985, 1990, and subsequent similar Loan Acts, shall make available business records of the nursing home for verification by representatives of the Department or its designated agents during the entire period of work on the project and for a period of 15 years after the project has been completed.

D. Extension of Time for Completion, and Other Changes.

  (1) The applicant shall promptly notify the Secretary if the applicant is unable to encumber funds:

    (a) In the manner approved by the Secretary; or

    (b) Within 2 years of the appropriation by the Maryland legislature.

  (2) The Secretary may grant a request by the applicant for a change in the manner or time of encumbrance of funds, including an extension of time, for good cause.

E. Expenditures. State funds may not be expended until the grantee is in compliance with §B(1) of this regulation, and a notice of the right of recovery is recorded in the land records of the political jurisdiction in which the property is located.

F. Penalties. If the grantee does not comply with §§A, B, and C of this regulation, the Secretary may:

  (1) Refuse to consider the grantee for any future funding under a Loan Act; and

  (2) Require an audit of the grantee.

#### Regulation .09 Grant Limitations and Provisions.

*COMAR 10.08.01.09*

A. The provisions of these regulations apply to applicants for grants under the Loan Act of 1990 and subsequent similar Loan Acts.

B. Use of Federal Grants. Federal grants available for a project shall be applied first to the cost of construction, expansion, renovation, and equipping of an eligible nursing home, before a State grant is expended.

C. Limits on State Grant.

  (1) For a project without federal participation, a State grant may not be more than:

    (a) 50 percent of eligible costs, unless the project is approved for poverty funding; or

    (b) 75 percent of eligible costs, if a project is approved for poverty funding.

  (2) For a project with federal participation, a State grant may not be more than:

    (a) 50 percent of the eligible costs remaining after the federal grant has been applied, unless the project is approved for poverty funding; or

    (b) 75 percent of the eligible costs remaining after the federal grant has been applied, if a project is approved for poverty funding.

  (3) An applicant may not be eligible for retroactive participation in the cost of acquisition, construction, renovation, or purchase of equipment.

  (4) The grant shall include only those expenditures incurred or contracted for after the grant award is approved by the Board of Public Works, except as provided in §E of this regulation.

D. Poverty Funding. An applicant is eligible for poverty funding for a nursing home, if the majority of individuals served by the nursing home:

  (1) Are certified by a local department of social services as eligible for the Disability Assistance and Loan Program (DALP) or Medical Assistance;

  (2) Are eligible for Supplemental Security Income benefits; or

  (3) Have income levels which do not exceed 150 percent of the federal poverty level.

E. Application Costs.

  (1) An applicant shall pay the costs necessary to file the application, such as the costs for appraisals, architects' fees, surveys, and test borings.

  (2) If the project is recommended for funding by the Department, the Department shall review the costs expended under §E(1) of this regulation, and may recommend those costs to the Board of Public Works for inclusion in the grant award.

F. Matching Funds.

  (1) An applicant shall provide from other sources matching funds equal to the total eligible cost of the project less the State grant award.

  (2) An applicant may not expend matching funds before the State grant award, unless the Board of Public Works approves otherwise.

  (3) The Department may not consider real or personal property, in-kind contributions, or funds expended before the date a grant award is approved by the Board of Public Works as matching funds.

G. Prohibition Against Use of Funds for Religious Purposes.

  (1) A grantee may not use any portion of the proceeds of a State grant:

    (a) For the furtherance of sectarian religious instruction; or

    (b) In connection with the design or construction of any building used or to be used as a place of sectarian religious worship or instruction, or in connection with any program or department of divinity for any religious denomination.

  (2) Upon the request of the Board of Public Works, the grantee shall submit evidence satisfactory to the Board that none of the proceeds of the grant has been or is being used for a purpose prohibited by the Loan Act.

#### Regulation .10 Right of Recovery.

*COMAR 10.08.01.10*

A. In the event of default under the terms of the Loan Acts and this chapter, nursing homes which received funds from the Loan Acts of 1975, 1977, 1978, 1980, 1985, 1990, and all subsequent Loan Acts are subject to the State's right of recovery as set forth in the Loan Acts.

B. Grant funds received by nursing homes from the Loan Act of 1972 shall be recovered proportionably and in the same manner as federal funds are recovered under the provisions of Subchapter IV—Construction of Hospitals and Other Facilities, 42 U.S.C. §291 et seq., as set forth in that Loan Act.