With interest rates and construction costs on the rise, many senior living renovations have slowed or stalled. Yet the need for modern, safe, and comfortable facilities has never been greater. Across South Carolina, North Carolina, and Georgia, aging infrastructure is straining providers’ ability to meet the demands of a growing senior population. Fortunately, Medicaid’s Fair Rental Value (FRV) reimbursement model offers a powerful but often overlooked way to fund these improvements, helping facility owners offset costs and move forward with critical upgrades.
In the blog, you’ll learn:
What the Medicaid FRV reimbursement model is and how it works.
How FRV applies specifically to senior living facility renovations in South Carolina, North Carolina and Georgia.
Why investing in upgrades now makes financial and operational sense for senior living providers.
Key design, renovation and capitalization strategies that can enhance your FRV reimbursement potential.
Practical steps to partner with advisors and design professionals to navigate the FRV process and maximize your return.
What You Need to Know About Medicaid’s FRV Reimbursements
What Is FRV and How Does It Work?
Medicaid’s FRV system reimburses facilities based on the imputed rental value of their building and equipment, instead of traditional cost-based methods. States use this formula to calculate a fair “rent” payment tied to the size, age, and quality of a facility. This means that the better the building, the more reimbursement you could receive.
Key features of Medicaid’s FRV system typically include:
- Construction cost per square foot (based on annual RSMeans updates)
- Depreciation and facility age adjustments
- Allowances for equipment and land
- A standard rental rate (ex. 7.5%) applies to the total value
This model directly rewards upgrades like renovating wards into private and semi-private rooms, replacing HVAC systems, and expanding therapy space with a higher Medicaid rate.
How FRV Applies to Senior Living Renovations in SC, NC, and GA
FRV South Carolina
South Carolina adopted FRV in 2019. Senior living facilities submit annual capital surveys and receive updated rates each October. To keep their full FRV rate (85%), facilities must spend at least $500 per Medicaid-certified bed annually on capital improvements. Otherwise, their FRV rate drops to 60%, reducing reimbursement for renovations.
Why It Matters: Upgrading a 30-year-old building can shift your reimbursement from a depreciated base to one that reflects your investment, allowing you to improve the level of care and cash flow.
FRV North Carolina
North Carolina has used FRV since 2007. Senior living facilities must submit an annual Capital Data Survey (due Dec. 31) to capture upgrades and maintain FRV eligibility. Unlike SC, there is no per-bed spending minimum, but older facilities face capped FRV increases if they don’t renovate.
Why It Matters: If you don’t report your renovations and upgrades, you are leaving money on the table. The FRV system is structured to help you recoup capital costs over time. Upgrade before your facility is too old to qualify.
FRV Georgia
Georgia operates an event-driven FRV system. Approved renovations, replacements, or bed additions trigger FRV rate increases that are effective in the next quarter. There is no annual reset, but approved projects and quality-based incentives directly improve reimbursement.
Why It Matters: GA’s process allows owners to plan projects knowing they will be compensated through higher per diem rates, making the financial model for improvements more sustainable.
Why It Makes Sense to Plan the Renovations You’ve Been Delaying
According to population data, comparing growth from 2020 to 2040, the 65 and older senior population is expected to nearly double in both North Carolina and Georgia within two decades.
- The aging population keeps growing and so does the urgent need for safe, modern facilities
- Construction costs are high, but delayed improvements could cost you more.
- FRV reimbursement is one of the few tools that actually grows with your investment
- Improved senior living facilities not only receive more funding, but they are more marketable and better equipped to provide quality care
- Renovating wards into private rooms is more marketable to the current and future generations who prefer private living spaces.
How We Can Help You Receive FRV Funding for Your Renovation Projects
Navigating Medicaid regulations and optimizing design for reimbursement is complex. An experienced partner can make all the difference by:
- Incorporating FRV-eligible design strategies
- Knowing square footage and facility age thresholds
- Long-term ROI through phased renovation plans
- Knowing how to maximize value with thoughtful additions and replacements
- Calculating future rates based on improvements
