Indiana Administrative Code
Title 405 - OFFICE OF THE SECRETARY OF FAMILY AND SOCIAL SERVICES
Article 1 - MEDICAID PROVIDERS AND SERVICES
Rule 12 - Rate-Setting Criteria for Nonstate-Owned Intermediate Care Facilities for the Mentally Retarded and Community Residential Facilities for the Developmentally Disabled
Section 12-3 - Accounting records; retention schedule; audit trail; accrual basis; segregation of accounts by nature of business and by location
Current through March 20, 2024
Authority: IC 12-15-1-10; IC 12-15-21-2
Affected: IC 12-13-7-3; IC 12-15
Sec. 3.
(a) The basis of accounting used under this rule is a comprehensive basis of accounting other than GAAP. All cost and charges reported on the provider's cost report must also be recorded on the provider's financial statements. Costs must be reported in the cost report in accordance with the following authorities, in the hierarchical order listed:
(b) Each provider must maintain financial records for a minimum period of three (3) years after the date of submission of financial reports to the office. Copies of any financial records or supporting documentation must be provided to the office upon request. The accrual basis of accounting shall be used in all data submitted to the office except for government operated providers that are otherwise required by law to use a cash system. The provider's accounting records must establish an audit trail from those records to the financial reports submitted to the office.
(c) The auditor shall schedule the field audit visit with the provider. If the auditor and provider are unable to reach an agreement on a scheduled field audit date, the auditor will assign a date for the field audit to begin no earlier than sixty (60) days after the date that the provider was initially contacted to schedule the field visit.
(d) When a field audit indicates that the provider's records are inadequate to support data submitted to the office or the additional requested documentation is not provided pursuant to the auditor's request, and the auditor is unable to complete the audit, the following actions shall be taken:
(e) In the event that the deficiencies in documentation are not corrected within the time limit specified in subsection (d), the following actions shall be taken:
(f) In the event that the documentation submitted is inadequate or incomplete, the following additional actions shall be taken:
(g) If a provider has business enterprises other than those reimbursed by Medicaid under this rule, the revenues, expenses, and statistical and financial records for such enterprises shall be clearly identifiable from the records of the operations reimbursed by Medicaid. If a field audit establishes that records are not maintained so as to clearly identify Medicaid information, none of the commingled costs shall be recognized as Medicaid allowable costs and the provider's rate shall be adjusted to reflect the disallowance effective as of the date of the most recent rate change.
(h) When multiple facilities or operations are owned by a single entity with a central office, the central office records shall be maintained as a separate set of records with costs and revenues separately identified and appropriately allocated to individual facilities. Each central office entity shall file an annual or historical financial report coincidental with the time period for any type of rate review for any individual facility that receives any central office allocation. Allocation of central office costs shall be reasonable, conform to GAAP, and be consistent between years. Any change of central office allocation bases must be approved by the office prior to the changes being implemented. Proposed changes in allocation methods must be submitted to the office at least ninety (90) days prior to the reporting period to which the change applies. Such costs are allowable only to the extent that the central office is providing services related to patient or resident care and the provider can demonstrate that the central office costs improved efficiency, economy, and quality of member care.
(i) The burden of substantiating that costs are patient or resident related lies with the provider.