Current through Register Vol. 43, No. 02, November 27, 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
patient 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 patient care include
necessary and proper costs involved in developing and maintaining the efficient
operation of patient care facilities. Necessary and proper costs related to
patient care are those which are usual and accepted expenses of similar
providers.
(2) Overhead
costs which will not be allowed are listed below. This listing is not intended
to be all inclusive. Other overhead costs which violate the prudent buyer
concept or are not related to patient care will not be reimbursed by the
Alabama Medicaid Agency.
(a) Management Fees.
Management firms, individuals and consultants which duplicate services already
provided, or in a clinic in which a full-time administrator is employed.
Excluded from this rule are those management contracts required incident to a
bond issue for a valid business purpose.
(c) Compensation to owners and other
personnel not performing necessary functions
(d) Salaries which are paid to 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 or
partnerships
5. Relating to
business reorganization
6. Services
for benefits of stockholders
7.
Acquisition of clinics or other business enterprises
8. Relating to sale of clinics 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 patient 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 clinics or other business enterprises
9. Relating to sale of clinics and other
enterprises
10. In connection with
participation in criminal actions resulting in guilt or equivalent action or
plea
11. Other accounting services
not related to patient care
(g) Taxes
2. Property not related to patient
care
(h) Dues
4. Professional organization dues for
individuals
5. Non-patient care
related organization
(i)
Insurance
2. Personal property not used in patient
care
3. On real estate not used in
providing patient care
4. Group
life and health insurance premiums which favor owners of a clinic or are for
personnel not bonafide employees of the clinic
(j) Special assessments from Primary Health
Care Association
(k) Bad debts and
associated collection expenses
(l)
Employees relocation expenses
(m)
Penalties
2. Late payment charges. (None: If a clinic
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.)
(n) Certain Real Estate Expenses
1. Appraisals obtained in connection with the
sale or lease of a clinic (unless required by Medicaid)
2. Costs associated with real estate not
related to patient care
(o) Interest Expense
1. Interest associated with real estate in
excess of clinic needs or real estate not related to patient care.
2. Interest expenses applicable to
penalties
3. Construction Interest
(must be capitalized)
4. Interest
paid to a related party
5. Interest
on personal property not related to patient care
6. Interest on loans not associated with
patient care
(p)
Licenses
2. Professional personnel
(q) Donations and
Contributions
(r) Accreditation
Surveys
(s) Telephone Services
1. Mobile telephones, beepers, telephone call
relays, automated dialing services
2. Long distance telephone calls of a
personal nature
(t) Any
costs associated with corporate stock records maintenance
(u) Any expenses associated with political
activities or lobbying efforts are not allowable
(3) 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. Exceptions will be
allowed, based on reasonableness, for small invoices which, in total, do not
exceed $500.00 per fiscal period. These invoices must be as a result of no
fault of the provider. Any pattern of abuse will cause the costs in question to
be automatically disallowed by the Agency.
(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 the 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 devise, are considered void from
inception.
(d) A provider who files
for and is awarded protection under Chapter 11 of the Federal Bankruptcy Code
may be given consideration in a current year cost report for actual payment of
prior period allowable costs which have been disallowed in prior period cost
reports due to failure to make actual payment of the cost claimed. In order for
payment of these prior year allowable costs to be considered under a current
year cost report, they must have been paid pursuant to a court approved plan
for reorganization under Chapter 11 of the Federal Bankruptcy Code. The
allowable costs will not include any interest or penalty incurred for failure
to make payment in prior year. The Agency will not reimburse interest expense
generated from loans incurred to pay any such allowable prior period costs. Any
such (untrended) allowable cost shall be added to the encounter rate after the
normal rate setting process. It will be subject to the 80th percentile ceiling,
thus the providers cost must be below the ceiling rate for any possible
reimbursement of these prior period costs to occur.
(4) Bad Debts. Bad debts resulting from
beneficiaries' failure to pay are to be treated as noncovered costs. Hence,
such bad debts cannot be included in a computation of the average cost per
encounter.
(5) Research Costs
(a) Costs, incurred for research purposes,
over and above usual patient care, are not includable as allowable
costs.
(b) There are numerous
sources of financing for health-related research activities. Funds for this
purpose are provided under many Federal programs and by other tax-supported
agencies. Also, many foundations, voluntary health agencies and other private
organizations, as well as individuals, sponsor or contribute to the support of
medical and related research. Funds available from such sources are generally
ample to meet basic medical and clinic research needs.
(6) Luxury Items or Services
(a) Where clinic operating costs include
amounts that flow from the provision of luxury items or services, such amounts
are not allowable in computing reimbursable costs.
(b) Luxury items or services are those that
are substantially in excess of or more expensive than the usual items or
services rendered within a clinic's operation to the majority of patients.
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