On August 2, 2012, fifteen (15) nursing homes successfully appealed assessments of the Franchise Permit Fee (bed tax) assessed on beds that were de-licensed pending transfer through an approved certificate of need. Nearly $700,000 in assessed bed taxes were at stake in the appeals. However, ODJFS’ modified position is reportedly being applied to parties similarly affected even if they did not appeal.

In 2011, Section 3721.531, Ohio Revised Code, was revised to provide for the re-determination of each nursing home’s and hospital’s franchise permit fee (bed tax) by the Ohio Department of Job and Family Services (ODJFS) if one or more nursing home bed surrenders occur during the period beginning May 1 and ending January 1. The effect of the re-determination of the bed tax was to exclude the nursing home beds that were surrendered during that time period from a facility’s bed tax calculation effective January 1 rather than waiting until the following July 1.

However, third- and fourth-quarter invoices for SFY 2012 included a bed tax on beds that were surrendered and being redeveloped pursuant to approved certificates of need. ODJFS had interpreted “bed surrenders” to mean only those beds that were permanently surrendered and not being redeveloped under approved certificates of need. Jim Flynn, chair of the Bricker & Eckler Health Care Group, headed the appeal effort on behalf of 15 nursing home providers who expected to have their bed tax on the surrendered beds cease on January 1. All of the surrendered beds from these 15 nursing homes were being redeveloped under an approved certificates of need.

A decision on the appeal was rendered August 2, 2012, and provided that in re-determining the amount of the bed tax, ODJFS did not exclude from the determination calculation that number of beds which the facilities removed from their licenses pursuant to certificates of need and that ODJFS will adjust the bed tax for the second half of SFY 2012 to exclude these surrendered beds.