Title of Regulation: 22VAC40-25. Auxiliary Grants Program (amending 22VAC40-25-10 through 22VAC40-25-70; adding 22VAC40-25-15).

Statutory Authority: §§ 63.2-217 and 63.2-800 of the Code of Virginia.

Public Hearing Information: No public hearings are scheduled.

Public Comment Deadline: April 16, 2010.

Agency Contact: Paige McCleary, Adult Services Program Consultant, Department of Social Services, 801 East Main Street, Richmond, VA 23219, telephone (804) 726-7536, FAX (804) 726-7895, or email paige.mccleary@dss.virginia.gov.

Basis: Sections 63.2-217 and 63.2-800 of the Code of Virginia provide general authority for the development of regulations for program operation and mandatory authority for the development of regulations for the Auxiliary Grant (AG) Program, respectively.

Purpose: Amending this regulation will enhance the health, safety, and welfare of vulnerable adults age 60 and over and individuals age 18 to 59 who have a disability and reside in assisted living facilities (ALFs) throughout Virginia. The annual certification will provide sufficient assurances that the personal funds of individuals residing in an ALF are maintained appropriately and not commingled with facility funds. Implementing use of an annual certification form instead of the costly and complicated annual audit requirement in the current regulation will reduce burdensome reporting requirements that may hinder providers' willingness to continue to accept individuals who receive AG.

Establishing a residency requirement will ensure that more AG beds are available to low-income Virginia residents in need of ALF placements and reduce the number of out-of-state residents who relocate to Virginia in order to take advantage of the AG Program.

Clarifying assessment procedures for emergency admissions to ALFs and the ALF providers' responsibilities associated with discharging residents will improve communication between local departments of social services (LDSS) and ALF providers regarding individuals who are receiving AG payments. These clarifications will also ensure conformity with current licensing regulations.

Substance: The proposed regulation amends the ALFs' financial reporting standards, adds AG residency requirements, clarifies assessment and discharge requirements, changes language to ensure that the AG regulation comports with licensing regulations, clarifies conditions of ALFs' participation in the AG Program, and promotes person-centered language when referring to individuals who apply for AG or live in ALFs. Substantive provisions include:

1. Changing annual audit report requirements to an annual certification requirement thereby minimizing the administrative burden while still ensuring ALFs appropriately manage the funds of the residents.

2. Adding a 90-day residency requirement for AG eligibility to ensure AG funds are available for Virginia residents.

3. Clarifying the assessment requirements associated with emergency placements to comport with licensing regulations.

4. Clarifying conditions of ALF providers' participation in the AG Program, including maintenance of residents' personal needs allowances in a separate bank account and issuance of monthly account statements.

5. Introducing person-centered language by removing references to applicant, recipient, and resident.

Issues: 1. ALF providers in the Commonwealth have expressed concerns that the annual audit requirements in the current regulation are costly, complicated, and burdensome and that without changes to this requirement some providers may withdraw from the AG Program, thus reducing the number of available AG beds. Replacing the annual audit requirement with an annual certification requirement will provide sufficient information to assure that personal funds of individuals residing in ALFs are properly maintained and not commingled with facility funds.

2. Creating a residency requirement will ensure that AG beds are available to low-income Virginia residents in need of ALF placements and reduce the number of out-of-state residents who relocate to Virginia to take advantage of the AG Program. AG Program payments are comprised of 80% state and 20% local funds. Implementation of a residency requirement may mean that localities supporting a large number of out-of-state individuals with AG would see a reduction in their large local match requirements. However some ALF providers with a majority of AG residents from out-of-state may express concern about the limitations imposed by an AG residency requirement.

3. Clarifying the current regulation regarding conditions of ALF providers' participation in the AG Program, particularly with regard to admissions and discharges, will improve communication between LDSS and providers, reduce possible errors in AG payments, and remove current disparities between the AG regulation and department licensing regulations.

4. Use of person-centered language in the regulation promotes personal dignity by recognizing that everyone is unique and removes labels that categorize, and sometimes stigmatize, individuals who use state services and benefits.

The Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The State Board of Social Services proposes to 1) add a 90-day Virginia residency requirement for Auxiliary Grant eligibility, 2) replace the annual audit requirement with an annual certification requirement, and 3) clarify several existing requirements.

Result of Analysis. The benefits likely exceed the costs for all proposed changes.

Estimated Economic Impact. These regulations establish rules for the Auxiliary Grant (AG) program. The program provides supplemental financial assistance to Social Security Income recipients and aged, blind, or disabled individuals residing in a licensed assisted living facility (ALF) or an adult foster care (AFC) home. The program, funded by 80% state and 20% local monies, absorbs the difference between the ongoing provider reimbursement rate and the Social Security Income and provides a personal needs allowance. The current reimbursement rate for nine Northern Virginia localities is $1,279 per month while the rate for the rest of the state is $1,112. The current personal needs allowance is $81 per month. In fiscal year 2008, the amount of assistance provided to a monthly average caseload of 5,425 individuals was approximately $29.7 million.

With this regulatory action, the State Board of Social Services (the board) proposes to 1) add a 90-day Virginia residency requirement for Auxiliary Grant eligibility, 2) replace the annual audit requirement with an annual certification requirement, and 3) clarify several existing requirements.

The current AG policy allows a non-Virginia resident to move into an ALF located in Virginia and establish Virginia residency immediately for the AG benefit. This easy access to the AG benefit has created incentives to move into Virginia from neighboring states where similar benefits do not exist or are less than the AG benefits. According to Department of Social Services, 60 percent of cases sampled in Bristol were found to be former Tennessee residents prior to receiving AG benefits. Similarly, 64 out of 206 (31 percent) September 2008 cases in Washington County resided in Tennessee prior to receiving AG benefits. Given the $515 Washington County's average monthly AG benefit, approximately $395,520 per year is estimated to be expended on individuals who were not Virginia residents immediately prior to residing in an ALF. While the size of the abuse at the state level is probably much greater, no reliable statewide estimate is available at this time.

The proposed regulations will require a minimum of 90-day Virginia residency immediately prior to receiving AG benefits. This proposed change is expected to reduce significantly the number of out-of-state residents who relocate to Virginia in order to take advantage of the AG program. Since the program is funded by 80 percent state funds and 20 percent local funds, state and local governments where the abuse currently occur most are expected to gain the most from this proposed change. An accurate description of the benefits of the reduced AG spending will depend on where the expected savings in state and local funds will be spent.

Also, if the move of needy people into Virginia is made less attractive by the proposed residency requirement, there may be other avoided costs in government spending in some other areas.

The main cost of the proposed residency requirement, on the other hand, is expected to fall on the individuals who would have moved into a Virginia ALF without having at least a 90-day residency prior to their move. The size of this cost is estimated to be about three times the average monthly AG benefit. For example, if a Tennessee resident moves into a Washington County ALF, he or she would not receive, under the proposed changes, the AG benefit for the first 90 days which would amount to approximately $1,545.

In addition, the ALF facilities that are currently enjoying heightened admission requests from non-Virginia residents will likely see a reduction in demand for their services. Reduced excess demand for ALFs will likely cause a reduction in free market price of ALF care and an increase in the number of empty beds.

The proposed regulations will also replace the annual audit requirement with an annual certification requirement. The main goal of the audit or the certification is to make sure that facilities maintain personal funds of residents appropriately and do not commingle these funds with other facility funds. The board amended regulations which became effective in 2007 to require the facilities to have an annual financial audit to make sure personal funds are maintained separately. According to DSS, later it was determined that the financial audit requirement was overly burdensome and also did not correctly reflect the original intent of the board. Instead, an annual certification prepared by the facilities is found to be sufficient. Thus, the financial audit requirement has never been enforced in reality. Since the proposed change merely reflects what is being enforced in practice, no significant economic effect is expected other than improving the clarity of the regulations.

Similarly, the board proposes to clarify requirements regarding an ALF's participation in the AG program; submission of the provider agreement; assessment process for emergency ALF placements; procedures for discharging residents from facilities. The board also proposes to use person centered language throughout the regulation. While all of these clarifications are expected to improve the clarity of the regulations and reduce possible misunderstandings, no other significant economic effect is expected.

Businesses and Entities Affected. The proposed regulations apply to 323 ALFs that accept AG recipients and 68 approved AFC homes. These facilities provided services to a monthly average caseload of 5,425 individuals in fiscal year 2008.

Localities Particularly Affected. The proposed regulations is expected to affect the most localities where non-Virginia residents are moving to in ALFs without establishing residency in Virginia first. These localities are believed to be counties of Bristol, Washington, Scott, Russel, Smyth, and Lee.

Projected Impact on Employment. The proposed residency requirement is expected to reduce the demand for beds in ALFs and consequently have a negative impact on demand for labor providing assisted living services. On the other hand, a corresponding increase in the demand for other goods and services are expected elsewhere depending on where the realized savings are spent. Thus, the statewide net impact on employment is unknown, but likely to be small.

Effects on the Use and Value of Private Property. The expected reduction in demand for ALF beds is likely to reduce revenues and consequently asset values of facilities providing services to AG recipients. While the asset values of businesses where the expected savings may be spent are expected to increase, it may be spread over many types of goods and services to be significant.

Small Businesses: Costs and Other Effects. The proposed regulations are expected to reduce revenues of ALFs most of which are believed to be small businesses.

Small Businesses: Alternative Method that Minimizes Adverse Impact. There is no alternative method under these regulations that would minimize the impact.

Real Estate Development Costs. The proposed regulations are not expected to have any effect on real estate development costs.

Legal Mandate. The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Administrative Process Act and Executive Order Number 36 (06). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

Agency's Response to the Department of Planning and Budget's Economic Impact Analysis: The Department of Social Services concurs with the economic impact analysis prepared by the Department of Planning and Budget.

Summary:

The proposed amendments (i) add a 90-day Virginia residency requirement for auxiliary grant eligibility; (ii) replace the annual audit reporting requirement with an annual certification requirement; (iii) clarify requirements for program participation and the submission of the provider agreement; (iv) modify the assessment process for emergency assisted living facility placements; and (v) clarify procedures surrounding resident discharges from facilities.

22VAC40-25-10. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"Adult foster care (AFC)" means a locally optional program that provides room and board, supervision, and special services to an adult who has a physical or mental health need. Adult foster care may be provided for up to three adults by any one provider who is approved by the local department of social services.

"Applicant" means an adult currently residing or planning to reside in an assisted living facility or in adult foster care and who has applied for financial assistance under the Auxiliary Grants Program.

"Assisted living care" means a level of service provided by an assisted living facility for adults who may have physical or mental impairments and require at least moderate assistance with the activities of daily living. Included in this level of service are individuals who are dependent in behavior pattern (i.e., abusive, aggressive, disruptive) as documented on the uniform assessment instrument Uniform Assessment Instrument.

"Assisted living facility (ALF)" means, as defined in § 63.2-100 of the Code of Virginia, any congregate residential setting that provides or coordinates personal and health care services, 24-hour supervision, and assistance (scheduled and unscheduled) for the maintenance or care of four or more adults who are aged, infirm or disabled and who are cared for in a primarily residential setting, except (i) a facility or portion of a facility licensed by the State Board of Health or the Department of Mental Health, Mental Retardation and Substance Abuse Behavioral Health and Developmental Services, but including any portion of such facility not so licensed; (ii) the home or residence of an individual who cares for or maintains only persons related to him by blood or marriage; (iii) a facility or portion of a facility serving infirm or disabled persons between the ages of 18 and 21, or 22 if enrolled in an educational program for the handicapped pursuant to § 22.1-214 of the Code of Virginia, when such facility is licensed by the department as a children's residential facility under Chapter 17 (§ 63.2-1700 et seq.) of Title 63.2 of the Code of Virginia, but including any portion of the facility not so licensed; and (iv) any housing project for persons 62 years of age or older or the disabled that provides no more than basic coordination of care services and is funded by the U.S. Department of Housing and Urban Development, by the U.S. Department of Agriculture, or by the Virginia Housing Development Authority. Included in this definition are any two or more places, establishments or institutions owned or operated by a single entity and providing maintenance or care to a combined total of four or more aged, infirm or disabled adults. Maintenance or care means the protection, general supervision and oversight of the physical and mental well-being of an aged, infirm or disabled individual.

Assuming responsibility for the well-being of individuals residing in an ALF, either directly or through contracted agents, is considered "general supervision and oversight."

"Audit report" is an annual report prepared by the assisted living facility's private auditor. The auditor shall determine that the financial statements of the auditee are presented fairly and in conformity with generally accepted accounting principles.

"Auxiliary Grants (AG) Program" means a state and locally funded assistance program to supplement income of a an individual receiving Supplemental Security Income (SSI) recipient or adult who would be eligible for SSI except for excess income, who resides in an assisted living facility ALF or in adult foster care AFC with an approved established rate.

"Certification" means a form provided by the department and prepared by the ALF annually certifying that the ALF has properly managed the personal funds and personal needs allowances of individuals residing in the ALF and is in compliance with program regulations and appropriate licensing regulations.

"Department" means the Virginia Department of Social Services.

"Established rate" means the auxiliary grant rate as set forth in the appropriation act or as set forth to meet federal maintenance of effort requirements.

"Newly licensed assisted living facility" means a facility that has been licensed for 12 months or less.

"Other operating expense" means expenses incurred by the provider for activities that are not directly related to the care of residents.

"Other operating revenue" means income earned by the provider for activities that are not directly related to the care of residents.

"Operating costs" means the allowable expenses incurred by a provider for activities directly related to the care of residents.

"Personal needs allowance" means an amount of money reserved for meeting the adult's personal needs when computing the amount of the auxiliary grant AG payment.

"Personal representative" means the person representing or standing in the place of the recipient individual for the conduct of his affairs. This may include a guardian, conservator, attorney-in-fact under durable power of attorney, next-of-kin, descendent, trustee, or other person expressly named by the recipient individual as his agent.

"Personal toiletries" means hygiene items provided to the individual by the ALF or AFC home including deodorant, razor, shaving cream, shampoo, soap, toothbrush, and toothpaste.

"Program" means the Auxiliary Grant Program.

"Provider" means an assisted living facility ALF that is licensed by the Department of Social Services or an adult foster care AFC provider that is approved by a local department of social services.

"Provider agreement" means a document that the assisted living facility ALF must complete and submit to the department when requesting to be licensed as an assisted living facility provider and approved for admitting auxiliary grant recipients individuals receiving AG.

"Qualified assessor" means an individual who is authorized by 22VAC40-745 to perform an assessment, reassessment, or change in level of care for an applicant to or resident of individual applying for AG or residing in an assisted living facility ALF.

"Rate" means the approved auxiliary grant established rate.

"Recipient" means an adult approved to receive financial assistance under the Auxiliary Grants Program when residing in a licensed assisted living facility or an approved adult foster care provider with an approved rate.

"Residential living care" means a level of service provided by an assisted living facility ALF for adults who may have physical or mental impairments and require only minimal assistance with the activities of daily living. Included in this level of service are individuals who are dependent in medication administration as documented on the uniform assessment instrument Uniform Assessment Instrument (UAI).

"Uniform assessment instrument Assessment Instrument (UAI)" means the department-designated assessment form. It is used to record assessment information for determining the level of service that is needed.

"Virginia Department of Medical Assistance Services (DMAS)" means the single state agency designated to administer the Medical Assistance Program in Virginia.

22VAC40-25-15. Residency requirement.

A. Individuals applying for AG must have resided in Virginia voluntarily for a minimum of 90 days with the intent to remain.

1. Individuals applying for AG must submit a written statement of intent to remain in Virginia on a form provided by the department.

2. Individuals applying for AG also must provide verification of Virginia residency using one of the following documents:

a. Postmarked letters;

b. Public utility records or credit accounts;

c. Voter registration records;

d. Home or apartment lease;

e. Real property records;

f. Medical bills; or

g. State or federal tax records.

B. Exceptions to the 90-day residency requirement.

1. Individuals who have moved to Virginia to join a close relative who has lived in Virginia for at least 180 days. A close relative is limited to the individual's parent, grandparent, grandchild, brother, sister, spouse, or child. The close relative shall furnish verification of kinship at the time of application using one of the following documents:

a. Birth certificate;

b. Proof of marriage; or

c. Notarized affidavit.

2. The close relative shall furnish proof of residency as specified in subdivision A 2 of this section.

C. Virginia locality of residence.

1. An individual who is a resident of Virginia shall apply for AG in the locality in which he resides.

2. The Virginia locality where the individual last resided prior to entering a Virginia-based institution, including but not limited to a nursing home, intermediate care facility, correctional facility, rehabilitation center, psychiatric facility, or medical facility, is the individual's place of residence for purposes of applying for AG.

22VAC40-25-20. Assessment.

A. In order to receive payment from the Auxiliary Grants Program program for care in an assisted living facility ALF or in adult foster care AFC, applicants an individual applying for AG shall have been assessed by a qualified assessor using the uniform assessment instrument UAI and determined to need residential or assisted living care or adult foster care AFC.

B. As a condition of eligibility for the Auxiliary Grants Program program, a uniform assessment instrument UAI shall be completed on a recipient an individual prior to admission, except for an emergency placement as documented and approved by a Virginia adult protective services worker or when an individual residing in an ALF who was formerly private pay needs to apply for AG, at least once annually, and whenever there is a significant change in the individual's level of care, and a determination is made that the individual needs residential or assisted living care in an assisted living facility ALF or adult foster care AFC.

C. The assisted living facility ALF or adult foster care AFC provider are is prohibited from charging a security deposit or any other form of compensation for providing a room and services to the recipient individual. The collection or receipt of money, gift, donation or other consideration from or on behalf of a recipient an individual for any services provided is prohibited.

22VAC40-25-30. Basic services.

The rate established under the Auxiliary Grants Program program shall cover the following services:

1. Room and board.

a. Provision of a furnished room;

b. Housekeeping services based on the needs of the recipient individual;

c. Meals and snacks provided in accordance with 22VAC40-72 including, but not limited to food service, nutrition, number and timing of meals, observance of religious dietary practices, special diets, menus for meals and snacks, and emergency food and water. A minimum of three well-balanced meals shall be provided each day. When a diet is prescribed for a resident individual by his physician, it shall be prepared and served according to the physician's orders. Basic and bedtime snacks shall be made available for all residents individuals desiring them and shall be listed on the daily menu. Unless otherwise ordered in writing by the resident's individual's physician, the daily menu, including snacks, for each resident individual shall meet the guidelines of the U.S. Department of Agriculture's Food Guide Pyramid, taking into consideration the age, sex, and activity of the resident. Second servings shall be provided, if requested, at no additional charge. At least one meal each day shall include a hot main dish.; and

d. Clean bed linens and towels as needed by the recipient individual and at least once a week.

2. Maintenance and care.

a. Minimal assistance with personal hygiene including bathing, dressing, oral hygiene, hair grooming and shampooing, care of clothing, shaving, care of toenails and fingernails, arranging for haircuts as needed, and care of needs associated with menstruation or occasional bladder or bowel incontinence;

b. Medication administration as required by licensing regulations including insulin injections;

c. Provision of generic personal toiletries including soap and toilet paper;

d. Minimal assistance with the following:

(1) Care of personal possessions;

(2) Care of personal funds if requested by the recipient individual and provider policy allows this practice, and are in compliance with 22VAC40-72-440 through 22VAC40-72-460 22VAC40-72-140 and 22VAC40-72-150, Standards for Licensed Assisted Living Facilities;

(3) Use of the telephone;

(4) Arranging transportation;

(5) Obtaining necessary personal items and clothing;

(6) Making and keeping appointments; and

(7) Correspondence;

e. Securing health care and transportation when needed for medical treatment;

f. Providing social and recreational activities; and

g. General supervision for safety.

22VAC40-25-40. Personal needs allowance.

A. The personal needs allowance is included in the monthly auxiliary grant AG payment to the resident individual and must be used by the auxiliary grant recipient individual for personal items. These funds shall not be commingled with the funds of the provider and shall be maintained in a separate bank account. The personal needs allowance for the recipient shall not be charged by the provider for any item or service not requested by the recipient individual. The provider shall not require an auxiliary grants recipient individual or his personal representative to request any item or service as a condition of admission or continued stay. The provider must inform the recipient individual or his personal representative of a charge for any requested item or service not covered under the auxiliary grant AG and the amount of the charge. The personal needs allowance is expected to cover the cost of the following items and services:

1. Clothing;

2. Personal toiletries not included in those to be provided by the provider or if the recipient individual requests a specific type or brand of toiletries toiletry;

3. Personal items including tobacco products, sodas, and snacks beyond those required in subdivision 1 c of 22VAC40-25-30;

4. Hair care services;

5. Over-the-counter medication, medical copayments and deductibles, insurance premiums;

6. Other needs such as postage stamps, dry cleaning, laundry, direct bank charges, personal transportation, and long distance telephone calls;

7. Personal telephone, television, or radio;

8. Social events and entertainment offered outside the scope of the activities program; and

9. Other items agreed upon by both parties except those listed in subsection B of this section.

B. The personal needs allowance shall not be encumbered by the following:

1. Recreational activities required by licensing regulations (including any transportation costs of those activities);

2. Administration of accounts (bookkeeping, account statements);

3. Debts owed the provider for basic services as outlined by regulations; or

4. Provider laundry charges in excess of $10 per month.

22VAC40-25-45. Conditions of participation in the Auxiliary Grants Program program.

A. Provider agreement for assisted living facilities ALF.

1. As a condition of participation in the Auxiliary Grants Program program, the assisted living facility ALF provider is required to complete and submit to the department a signed provider agreement as stipulated below. The agreement is to be submitted with the application to be a licensed assisted living facility prior to the ALF accepting AG payment for qualified individuals. A copy of the ALF's current license must be submitted with the provider agreement.

2. The assisted living facility ALF provider shall agree to the following conditions in the provider agreement to participate in the Auxiliary Grants Program program:

a. Provide services in accordance with all laws, regulations, policies, and procedures that govern the provision of services in the facility;

b. Submit an annual financial audit certification form by June 30 October 1 of each year;

c. Care for auxiliary grant recipients individuals with AG in accordance with the requirements herein at the current established rate;

d. Refrain from charging the recipient individual, his family, or his authorized personal representative a security deposit or any other form of compensation as a condition of admission or continued stay in the facility;

e. Accept the auxiliary grant payment established rate as payment in full for services rendered, except as permitted herein;

f. Account for the resident's personal needs allowance allowances in a separate bank account and apart from other facility funds and issue a monthly statement to each individual regarding his account balance;

g. Provide the local department of social services a 60-day written notice when a recipient is to be discharged from the facility;

h. g. Provide a 60-day written notice to the department regional licensing office in the event of the facility's closure or ownership change; and

h. Provide written notification of the date and place of an individual's discharge or the date of an individual's death to the local department of social services determining the individual's AG eligibility and to the qualified assessor within 10 days of the individual's discharge or death; and

i. Return to the local department of social services determining the individual's AG eligibility, all auxiliary grant AG funds received after the death or discharge date of an auxiliary grant recipient individual in the facility.

B. As a condition of participation in the Auxiliary Grants Program program, the adult foster care AFC provider shall be approved by a local department of social services and comply with the requirements set forth in 22VAC40-770 22VAC40-771.

22VAC40-25-50. Establishment of rate.

A. Submission of an audit report to the department is required for an assisted living facility to accept residents who receive an auxiliary grant.

B. The rate shall be valid unless the assisted living facility is required to submit a new audit report as a result of (i) significant operational changes as defined by department policy, (ii) the assisted living facility changes ownership, (iii) the assisted living facility changes location, or (iv) the adult foster care provider is no longer approved by the local department of social services.

C. The auxiliary grant established rate for recipients individuals authorized to reside in an assisted living facility ALF or in adult foster care AFC is the established rate as set forth in the appropriation act, or as set forth by changes in the federal maintenance of effort formula. The AG payment is determined by adding the rate plus the personal needs allowance minus the recipient's individual's countable income. The effective date is the date of the individual's approval for AG by the local department of social services for an auxiliary grant.

D. Assisted living facilities that have been in licensed operation in excess of 12 months shall submit an annual audited financial report by June 30 for the preceding calendar year. In lieu of an audited financial report, facilities that are licensed for 19 or fewer beds may submit an audited report that includes only the following: validation that resident funds are held separately from any other funds of the facility; number of resident beds occupied during the reporting period; operating revenue and expenses; and average monthly cost per resident. The audit report shall be reviewed by the department. The approved rate shall be the established rate as set forth in the appropriation act or as set forth by changes in the federal maintenance of effort formula. The approved rate will be retroactive to the first month of the calendar year. If a provider fails to submit an annual audit report for a new calendar year, the provider will not be authorized to accept new auxiliary grant recipients.

22VAC40-25-60. Reimbursement.

A. Any moneys in excess of the provider's established rate contributed toward the cost of care pending public pay AG eligibility determination shall be reimbursed to the recipient individual or contributing party by the assisted living facility ALF or adult foster care AFC provider once eligibility for public pay AG is established and that payment received. The auxiliary grants payment shall be made payable to the recipient individual, who will then reimburse the provider for care. If the recipient individual is not capable of managing his finances, his personal representative is responsible for reimbursing the provider.

B. In the event an assisted living facility ALF is closed or sold, the facility shall provide verification that all recipient funds, including auxiliary grants funds, have been transferred and shall obtain a signed receipt from the new owner or new facility prorate the rate up to the date of the individual's discharge and return the balance to the local department of social services that determined the individual's eligibility for the grant. If the facility maintained the individual's personal needs allowance, the facility shall provide a final accounting of the individual's personal needs allowance account within 60 days of the individual's discharge. Verification of the accounting and of the reimbursement to the individual shall be mailed to the case management agency responsible for the individual's annual reassessment. In the event of a recipient's the individual's death or discharge, the provider shall give to the resident's individual's personal representative a final accounting of the recipient's individual's funds within 30 60 calendar days of the event. All auxiliary grants AG funds received after the death or discharge date shall be returned to the local department of social services responsible for determining the individual's AG eligibility as soon as practicable. Providers who do not comply with the requirements of this regulation may be subject to adverse action.

22VAC40-25-70. Audits Certification.

A. ALFs shall submit an annual certification form by October 1 of each year for the preceding state fiscal year. The certification shall include the following: identifying information about the ALF, census information including a list of individuals who resided in the facility and received AG during the reporting period, and personal needs allowance accounting information. If a provider fails to submit an annual certification form, the provider will not be authorized to accept additional individuals with AG.

A. B. All financial information reported by an assisted living facility ALF on the annual audit report shall be reconcilable to the residence's general ledger system or similar records. The audit shall account separately for the personal needs allowance of auxiliary grant recipients. All reports are subject to audit by the department certification form shall be subject to audit by the department. Financial information that is not reconcilable to the provider's general ledger or similar records could result in retroactive adjustment of the rate and establishment of a liability to the provider. Records shall be retained for three years after the end of the reporting period or until audited by the department, whichever is first.

B. C. All records maintained by an adult foster care AFC provider, as required by 22VAC40-770 22VAC40-771, shall be made available to the department or the approving local department of social services upon request. All records are subject to audit by the department. Financial information that is not reconcilable to the provider's records could result in retroactive adjustment of the rate and establishment of a liability to the provider. Records shall be retained for three years after the end of the reporting period or until audited by the department, whichever is first.

FORMS (22VAC40-25)

Auxiliary Grant Program Provider Agreement, 032-02-0747-00-eng (rev. 5/09).

Auxiliary Grant Certification, 032-02-0745-01-eng (rev. 4/09).