(1)
Scope. EOHHS will include in each provider's rate a
variable cost allowance to compensate for variable costs.
(2)
Base Year Variable Cost
Per Diem. EOHHS will calculate the base year
variable cost per diem for each provider by dividing the total
allowable base year variable costs by the greater of base year resident days or
90% of the mean licensed bed capacity in the base year times the days in the
base year. For providers that are organized as sole proprietors, EOHHS will
include an imputed amount of $104,205 for the personal services of an
owner.
(3)
Cost
Adjustment Factor. EOHHS will apply a cost adjustment factor of
13.18% to 2021 base year costs. If there has been a change of ownership in the
base year, and the rates are based on the new owner's reported base year costs,
EOHHS will modify the cost adjustment factor to reflect the number of months
from the midpoint of the new owner's reporting period to the midpoint of the
prospective rate period.
(4)
Variable Cost Allowance. The variable cost allowance
equals the lower of base year variable cost per diem or
$154.85, which is further adjusted by the cost adjustment factor.
(5)
Special
Provisions.
(a)
Accrued Expenses. EOHHS will not allow accrued
expenses that remain unpaid for more than 120 days after the close of the
reporting year, excluding vacation and sick time accruals. If the provider
submits evidence of satisfactory payment to the Center, EOHHS may reverse the
adjustment and include that cost, if otherwise allowable, in the applicable
rates.
(b)
Accounting
and Auditing Expenses. Reasonable and necessary accounting and
auditing expenses in matters directly related to providing adequate care to
publicly aided residents are included, provided that the books and records of
the provider are maintained in accordance with generally accepted accounting
principles.
(c)
Staff
Training Expenses. The net cost, which is the cost of required
staff training activities less any reimbursement from grants, tuition, specific
donations, employee contributions, or other sources is included, only if the
training is
1. conducted within the
Commonwealth of Massachusetts;
2.
directly related to improving resident care to publicly aided residents;
and
3. conducted by a recognized
school, other authorized organization, or a qualified professional as required
in 105 CMR 150.000: Standards for Long-term Care
Facilities.
(d)
Advertising Expenses. The reasonable and necessary
expense of newspaper or other public media advertisements for the purpose of
hiring necessary employees.
(e)
Generally Available Employee Benefits. The extent of
the facility's contribution to the cost of generally available fringe benefits
are included so long as they are nondiscriminatory.
(f)
Membership Dues.
Reasonable and necessary membership dues are included if the organization's
function and purpose are directly related to the development and operation of
the facility and providing adequate resident care.
(g)
Services of Volunteer
Workers. Services performed under an agreement between the
organization and the provider for the performance of the services without
direct payment. The value of services normally provided on a voluntary basis,
such as distribution of magazines and newspapers to residents, does not
constitute a reasonable variable cost. The net value of services for unpaid
persons in positions customarily held by paid employees, performing such
services on a regular basis as unpaid members of religious or other
organizations, is allowable as a variable cost if
1. the amount allowed does not exceed that
which would be paid others for similar work;
2. the amount paid by the provider to the
organization is identifiable in the records of the provider as a legal
obligation; and
3. the services are
performed on a regular, scheduled basis and are necessary for the provision of
adequate resident care to publicly aided residents and for the efficient
operation of the provider.
(h)
Non-legend
Drugs. The reasonable and necessary costs of providing the
non-legend drugs, including non-legend drugs ordered by a doctor. Non-legend
drugs must not be billed directly to any governmental unit or charged against
the personal care funds of any resident.
(i)
Pension Plans.
Reasonable and necessary expenses incurred by a provider relating to a pension
plan are included as a generally available employee benefit. Reimbursable
pension plans must provide for either a fixed determinable amount to be
contributed by the employer on a regular basis or for a fixed determinable
benefit to be received by the employee at retirement. Reimbursement of pension
costs is subject to the following specific provisions.
1.
Required by State
Statute. Providers required by enabling statute to make payments
to municipal or county pension funds will be reimbursed for the compensation
paid by the plan, provided that the provider submits detail of the allocations
provided to the Public Employees Retirement Administration Commission, and for
funded pension plans, a schedule of the individuals associated with the
resident care facility, to the Center.
2.
Not Required by State
Statute. Providers not required by state statute to make payments
to a municipal pension fund will be reimbursed for expenses incurred to the
extent that
a. the claimed expenses represent
an amount based on fair, reasonable, and necessary compensation for services
performed by employees;
b. the
claimed expenses are costs incurred on current year payroll and do not include
payments for prior year payroll;
c.
the plan does not provide for contributions by the employer based on the
contingency of profit or is at the discretion of the employer;
d. the pension plan must have met the current
requirements of and, if applicable, received the approval of the Internal
Revenue Service. All applicable Internal Revenue Service forms documenting
Internal Revenue Service approval must be filed with the Center along with
copies of the plan;
e. the
employer's contribution to a pension plan will be included, along with other
increments in the calculation of limits to the reimbursement of individual
employee compensation as referred to in
101 CMR 204.00;
and
f. any forfeiture by an
employee must be applied against the cost to reduce the premiums paid by the
employer. A forfeiture is considered to have occurred when any employee who
participated in the pension plan terminates employment prior to becoming
vested. This reduction in the claim for reimbursement must be made
notwithstanding the terms or lack of terms in the pension
plan.