Current through Register Vol. 42, No. 11, August 30, 2024
(1)
General.
(a) All payments to providers for
services rendered must be based on the reasonable cost of such services covered
by the Alabama State Plan. It is the intent of the program that providers will
be reimbursed the reasonable costs which must be incurred in providing quality
resident care. Implicit in the intent that reasonable costs be paid are the
expectations that the provider seeks to minimize costs and that costs do not
exceed what a prudent and cost-conscious buyer pays for a given item of service
or product. If costs are determined to exceed the level that prudent buyers
incur in the absence of clear evidence that the higher costs were unavoidable,
the excess costs are not allowable.
(b) Costs related to resident care include
necessary and proper costs involved in developing and maintaining the efficient
operation of resident care facilities. Necessary and proper costs related to
resident care are those which are usual and accepted expenses of similar
providers.
(2) Costs
that are covered by other State and/or Federal programs will not be allowed,
and costs which are covered by other Alabama Medicaid Agency programs will not
be reimbursed under the ICF/IID Program. Examples of such costs include, but
are not limited to:
(a) Prescription Drugs
(which can be billed by a state owned provider to the Pharmacy
Program).
(b) Dental Expense
(except consultant fees).
(c)
Physicians' Fees other than the Medical Director.
(d) Laboratory Expense for Residents (which
can be billed by a laboratory to the Alabama Medicaid Laboratory
Program).
(3)
Administrative Costs Items which will not be allowed are listed below. This
listing is not intended to be all inclusive. Other administrative costs which
violate the prudent buyer concept or are not related to resident care will not
be reimbursed by the Alabama Medicaid Agency.
(a) Management Fees
1. Management firms, individuals and
consultants which duplicate services already provided, or in a facility in
which a full-time licensed administrator is employed.
(c) Compensation to owners and other
personnel not performing necessary functions (See Rule
560-X-42-.07).
(d) Salaries which are paid personnel
performing overlapping or duplicate functions.
(e) Legal Fees and Expenses
2. Relating to informal conferences and fair
hearings.
3. Relating to issuance
and sale of capital stock and other securities.
4. Relating to creation of corporations and
partnerships.
5. Relating to
business reorganization.
6.
Services for benefits of stockholders.
7. Acquisition of ICF/IID facilities or other
business enterprises.
8. Relating
to sale of ICF/IID facilities and other enterprises.
9. In connection with criminal actions
resulting in a finding of guilt or equivalent action or plea.
10. Other legal services not related to
resident care.
(f)
Outside Accounting and Audit Fees and Expenses.
3. Relating to informal conferences and fair
hearings.
4. Relating to issuance
and sale of capital stock and other securities.
5. Relating to creation of corporations or
partnerships.
6. Relating to
business reorganization.
7.
Services for the benefits of stockholders.
8. Acquisition for ICF/IID facilities or
other business enterprises.
9.
Relating to sale of ICF/IID facilities and other enterprises.
10. In connection with participation in
criminal actions resulting in guilt or equivalent action or plea.
11. Feasibility studies, however, such fees
may be capitalized as a Construction Cost under Rule
560-X-42-.11.
12. Other Accounting services not related to
resident care.
(g) Taxes
2. Property not related to patient
care
(h) Dues
4. Professional organization dues for
individuals
5. Non-resident care
related organization,
(i) Insurance
2. Personal property not used in resident
care
3. On real estate not used in
providing resident care
4. Group
life and health insurance premiums which favor owners of a provider or are for
personnel not bona fide employees of the facility.
(j) Advertising in excess of the limitations
of Rule 560-X-42-.07 of this
Chapter.
(k) Chaplains/Spiritual
Advisors.
(l) Bad debts and
associated collection expenses,
(m)
Employees relocation expenses,
(n)
Penalties:
2. Late payment charges. (Note: If a facility
can fully document that a late payment charge is directly due to late Medicaid
payments, the amount of the late payment charge will be an allowable
cost.)
(o) Certain Real Estate Expenses.
1. Appraisals obtained in connection with the
sale or lease of an ICF/IID facility (unless required by Medicaid)
2. Costs associated with real estate not
related to resident care.
(p) Interest Expense.
1. Interest associated with real estate in
excess of ICF/IID facility needs or real estate not related to resident
care.
2. Interest paid to unrelated
parties on working capital loans will be limited to no more than 90 days
interest on an amount not in excess of two months average allowable cost per
cost reporting period.
3. Interest
expenses applicable to penalties.
4. Construction Interest (must be
capitalized).
5. Interest paid to a
related party.
6. Interest on
personal property not related to resident care.
7. Interest on loans not associated with
resident care.
8. Interest expense
generated by the refinancing of any long term debt that exceeds the amount
which would have been allowed had refinancing not occurred unless such excess
interest meets the necessary and reasonableness tests of Rule
560-X-42-.08.
(q) Licenses.
2. Professional personnel.
(r) Donations and
Contributions,
(s) Accreditation
Surveys,
(t) Telephone Services.
1. Mobile telephones, beepers (except for
Directors of Nursing or Maintenance personnel), telephone answering and
recording devices, telephone call relays, automated dialing services
2. Long distance telephone calls of a
personal nature.
(u)
Organizational and Start-up Costs - All costs related to the issuance and sale
of shares of capital stock, including underwriters' fees and commissions,
accounting or legal fees incurred in establishing the business organization,
costs of qualifying with the appropriate Federal or State Authorities, stamp
taxes, etc., expenses of temporary directors, costs of organizational meetings
of directors and/or stockholders and incorporation fees.
(v) Any costs associated with corporate stock
records maintenance.
(w) Medicaid
administrative fee.
(4)
Prior Period Costs and Accounts Payable
(a)
The Medicaid reimbursement rate is calculated to provide adequate funds to pay
business expenses in a timely manner. Costs incurred in prior periods but not
paid must be accrued and reported in that period during which the costs were
incurred. Payment of prior period cost in the current year is not an allowable
cost.
(b) Short-term liabilities
must be paid within ninety (90) days from the date of invoice; otherwise, the
expense will not be allowed unless the provider can establish to the
satisfaction of Medicaid that the payment was not made during 90 days for a
valid business reason.
(c) Actual
payment must be made by cash or negotiable instrument. For this purpose, an
instrument to be negotiable must be in writing and signed, must contain an
unconditional promise or order to pay a certain sum of money on demand or at a
fixed and determinable future time, and must be payable to order of or to
bearer. All voided instruments, whether voided in fact or by device, are
considered void from inception.
(5) Non-covered Services
(a) The costs of providing personal services
and costs associated with income producing activities are not allowable and
must be eliminated from cost. If all costs associated with the service or
activity cannot be, or are not identified separately on the cost report, then
the total income which was generated must be used to offset total reported
costs.
(b) Examples of these
services or activities are laundry and dry cleaning of personal apparel
(subject to the provisions of Rule
560-X-42-.09, radio, television,
telephone, and vending machines).
(c) The following are examples of costs
associated with non-covered services or activities which are not reimbursable:
3. Salaries and Employee Benefits
4. Depreciation, interest, rent utilities,
and insurance on space and equipment.
(6) Beauty and Barber Services.
(a) If the ICF/IID facility makes no charge
to the resident for beauty and barber services, and if this service is
performed by employees of the facility or by volunteers, then the costs
associated with the service are allowable for Medicaid reimbursement
purposes.
(b) If the ICF/IID
facility makes a charge to the resident for beauty and barber services and if
all costs associated with the service or activity cannot be, or are not
identified separately on the cost report, then the total income which was
generated from the service must be used to reduce or offset total reported
costs.
(7) Miscellaneous
or Other Non-allowable Expenses. The following is a list of expenses which have
previously been submitted in cost reports that are unallowable. It is intended
to typify unallowable transactions and is not intended to be all-inclusive.
(a) Nursing consultants, except those
required as condition to participation in the ICF program.
(b) Additional wages paid as a result of an
audit by the Wage and Hour Administration which relate to a prior period.
However, additional payments made as the result of Workman's Compensation
audits conducted after the end of the relevant fiscal year will be considered
allowable costs for the fiscal year in which such payments are made.
(c) Newspaper or magazine subscriptions for
individual residents.
(d)
Off-premise telephone service.
(f) Real Estate costs
associated with real estate ownership in excess of ICF/IID facility needs and
not related to resident care.
(g)
Sitter services or private duty nurses.
(h) Cost of meals served to guests and
employees.
(i) Fund raising
expenses.
(j) Other expenses not
appropriate in developing and maintaining adequate resident care
facilities.
(k) Any expenses for
service or supplies not routinely available to all residents as needed.
(l) Payments to doctors, dentists,
etc., for services provided individual residents.
(8) Gifts. The cost of gifts made by a
provider in excess of $20.00 per bona fide facility employee per fiscal year is
an unallowable expense.