Current through Register Vol. 49, No. 13, September 23, 2024
Subpart
1.
Allowable costs.
Only costs determined to be allowable under parts
9553.0010 to
9553.0080 may be used to compute
the total payment rate for facilities participating in the medical assistance
program.
Subp. 2.
Licensure and certification costs.
The costs of meeting the applicable licensure and certification
standards listed in items A to E are allowable costs for the purpose of setting
the facility's total payment rate unless otherwise provided in parts
9553.0010 to
9553.0080. The standards
are:
A. federal regulations for ICF/DD
services provided by Code of Federal Regulations, title 42, sections 442.400 et
seq.;
B. requirements established
by the commissioner for meeting program standards under parts
9525.0210 to
9525.0430 and standards for
aversive and deprivation procedures established according to Minnesota
Statutes, section
245.825;
C. requirements established by the Department
of Health for meeting health standards as set out by state rules and federal
regulations;
D. requirements to
comply with changes in federal or state laws and regulations; and
E. other requirements for licensing under
federal or state law, state rules, federal regulations, or local standards that
must be met to provide ICF/DD services.
Subp. 3.
Service costs.
The costs of services including program, maintenance,
administrative, payroll taxes and fringe benefits, and property-related costs
as defined in part
9553.0040, are allowable costs for
the purpose of setting the facility's total payment rate unless otherwise
provided in parts
9553.0010 to
9553.0080.
Subp. 4.
Applicable credits.
Applicable credits must be used to offset or reduce the
expenses of the facility to the extent that the cost to which the credits apply
was claimed as a facility cost. This cost principle does not apply to items A
and B:
A. payments made by the
commissioner to the provider for approved services for very dependent persons
with special needs pursuant to Minnesota Statutes, section
256B.501,
subdivision 8, and parts
9510.1020 to
9510.1140; and
B. gifts and donations from nongovernmental
sources.
Subp. 5.
Adequate documentation.
A facility shall keep adequate documentation.
A. In order to be considered adequate,
documentation must:
(1) be maintained in
orderly, well-organized files;
(2)
not include documentation of more than one facility in one set of files unless
transactions may be traced by the department to the facility's annual cost
report;
(3) include a paid invoice
or copy of a paid invoice with date of purchase, vendor name and address,
purchaser name and delivery address, listing of items or services purchased,
cost of items purchased, account number to which the cost is posted, and a
breakdown of any allocation of costs between accounts or facilities. If any of
the information to be listed on the invoice is not available, the providers
shall document their good faith attempt to obtain the information;
(4) include copies of all written agreements
and debt instruments to which the facility is a party and any related
mortgages, financing statements, and amortization schedules to explain the
facility's costs and revenues;
(5)
if a cost or revenue item is not documented under subitem (3) or (4), the
facility must document the amount, source, and purpose of the item in its books
and ledgers following generally accepted accounting principles and in a manner
providing an audit trail; and
(6)
be retained by the facility to support the five most recent annual cost reports
submitted to the commissioner. The commissioner may extend the period of
retention if the field audit was postponed because of inadequate record keeping
or accounting practice as in part
9553.0041, subpart
12, or if the records are
necessary to resolve a pending appeal.
B. Providers must document all consultant,
professional, or purchased service contracts. They must maintain copies of all
contracts and invoices relating to consultant, professional, or purchased
services. These documents must include the name and address of the vendor or
contractor, the name of the person who actually performed the services, the
dates of service, a description of the services provided, the unit cost, and
the total cost of the service.
C.
Payroll records must be maintained by a facility and must show the amount of
compensation paid to each employee and the days and hours worked. Complete and
orderly cost allocation records must be maintained for cost allocations made
among cost categories or facilities as specified in part
9553.0030.
D. Documentation of mileage must be
maintained in a motor vehicle log. Except for motor vehicles exclusively used
for facility business, the facility or related organization must maintain a
motor vehicle log for each vehicle used by the facility that shows personal and
facility mileage for the reporting year. Mileage paid for the use of a private
vehicle must be documented.
Subp.
6.
Compensation for services performed by
individuals.
Compensation for services performed by individuals includes all
the remuneration paid currently, accrued or deferred, for services rendered by
the provider or employees of the facility. Only compensation costs for the
reporting period are allowable.
A.
Compensation includes:
(1) salaries, wages,
bonuses, vested vacation, vested sick leave, and employee benefits paid for
managerial, administrative, professional, and other services;
(2) amounts paid by the provider for the
personal benefit of the provider or employees;
(3) deferred compensation and individual
retirement accounts (IRA's);
(4)
the costs of capital assets, supplies, services, or any other in kind benefits
the provider or employees receive from the facility or related organization,
except the cost of capital assets, supplies, services, or other in kind
benefits incurred as a necessary cost for an employee who is required to
supervise resident activities or to reside in the facility as a condition of
employment; and
(5) payments to
organizations of nonpaid workers that have arrangements with the facility for
the performance of services by the nonpaid workers.
For purposes of this item, in kind benefit means benefit
received in a medium other than cash as identified in parts
3315.0200 to
3315.0220 for personal services
performed.
B.
The facility must have a written policy for payment of compensation for
services performed by individuals. The policy must:
(1) relate the individual's compensation to
the performance of specified duties and to the number of hours worked by the
individual. Only the compensation of persons employed by the hour must be
stated in terms of an hourly wage. The number of hours worked by salaried
employees may be stated in terms of the average annual hours worked for each
facility.
(2) result in
compensation payable under the policy which is consistent with the compensation
paid to persons performing similar duties in the ICF/DD industry. Employees
covered by collective bargaining agreements are not required to be covered by
the policy if the collective bargaining agreement otherwise meets the
essentials of the policy required by this item.
(3) specify the nature and cost to the
provider or provider group of any in kind benefits included in the
compensation.
C. Only
services which are necessary services shall be compensated.
D. Except for accrued vested vacation and
accrued vested sick leave, compensation must be actually paid, whether by cash
or negotiable instrument, within 121 days after the close of the reporting
year. If payment is not made within 121 days, the unpaid compensation must be
disallowed in that reporting year. Payments made after the 121-day period are
allowable in the reporting year made.
Subp. 7.
Limitations on related
organization costs.
Related organization costs are subject to items A to D.
A. Costs applicable to services, capital
assets, or supplies directly or indirectly furnished to the provider by any
related organization may be included in the allowable cost of the facility at
the purchase price paid by the related organization for capital assets or
supplies and at the cost incurred by the related organization for the provision
of services to the facility if these prices or costs do not exceed the prices
of comparable services, capital assets, or supplies that could be purchased
elsewhere. For this purpose, the related organization's costs must not include
an amount for mark up or profit, except as provided in the following paragraph.
Except for the rental or leasing of facilities, if the related
organization in the normal course of business sells services, capital assets,
or supplies to nonrelated organizations, the allowable cost to the provider
shall be no more than the price charged to the nonrelated organization provided
that sales to nonrelated organizations constitute at least 50 percent of total
annual sales of comparable services, or capital assets, or supplies.
B. Lease or rental costs paid to
or by a related organization shall be allowed according to part
9553.0060, subpart
7.
C. The cost of ownership of a capital asset
owned by a related organization and used by the facility may be included in the
allowable cost of the facility. When the capital asset is sold or otherwise
disposed of by the related organization and the depreciation on the asset has
been claimed as a facility cost, any gain realized from the sale by the related
organization must be transferred to the facility as an offset in the facility's
property-related cost category. The amount of gain to be offset shall be
determined as in part
9553.0060, subpart
1, item D.
D. A provider that sells, leases, or provides
goods or services to a related organization or nonrelated organization shall
allocate the cost of the goods or services to the related organization or
nonrelated organization and identify the allocations in the facility's cost
report. Costs shall be allocated as provided in part
9553.0030, subpart
5.
Subp. 8.
Capitalization.
For rate years after September 30, 1986, the cost of purchasing
or repairing capital assets shall be capitalized under items A to D, subject to
part
9553.0060, subpart
1.
A. The cost of purchasing a capital asset
listed in the depreciation guidelines must be capitalized. The cost of
purchasing any other capital asset not included in the depreciation guidelines
must be capitalized if the asset has a useful life of more than two years and
costs more than $500. For costs incurred after September 30, 1992, a capital
asset listed on the depreciation guidelines shall not be capitalized when the
unit cost of that capital asset is $200 or less.
B. Repairs that cost $500 or less may be
treated as an expense. Repairs that cost more than $500 and that extend the
estimated useful life of the asset by at least two years must be capitalized.
Improvements made solely for the purpose of making an asset useful for purposes
other than those for which it was originally used or more useful for the same
purposes must also be capitalized if the cost exceeds $500. Except for repairs
necessitated solely as a result of destructive resident behavior, repairs
treated as an expense must be classified in the maintenance operating cost
category. Repairs necessitated solely as a result of destructive resident
behavior and treated as an expense must be classified as a program operating
cost.
C. Construction period
interest expense, feasibility studies, and other costs related to the
construction period must be capitalized and depreciated in accordance with part
9553.0060, subpart
1.
D. Items, such as land improvements whose
maintenance or construction are not the responsibility of the provider, land,
and goodwill, are not considered depreciable capital assets.
Subp. 9.
Working capital
interest expense.
Working capital interest expense is allowed subject to the
requirements of items A and B.
A.
Working capital interest expense on working capital debt incurred prior to
January 1, 1986, is allowed under 12 MCAR SS 2.05301-2.05315
[Temporary].
B. Working capital
interest expense for facilities constructed or established after January 1,
1986, must be limited under subitems (1) and (2).
(1) For the interim and settle-up payment
rates the total amount of working capital interest expense allowed must not
exceed 2.5 percent of the facility's allowable historical operating costs
during the interim reporting period.
(2) For the rate year which follows the
settle-up, the total amount of working capital interest expense allowed must
not exceed 80 percent of the allowable working capital interest expense as
determined in the settle-up cost report.
Subp. 10.
Retirement
contributions.
Retirement contributions for each employee must be limited to
either a qualified pension plan or a qualified profit sharing plan submitted
to, and approved by, the Internal Revenue Service.
Subp. 11.
Therapeutic overnight trips,
camping, and vacations for residents.
The provider may use facility staff, supplies, equipment, and
vehicles ordinarily provided as part of the facility program for therapeutic
overnight trips, camping, and vacations for residents. In addition, up to $300
per year per resident may be allowed for fees, tickets, travel, lodging, and
meals while residents are away from the facility. Other costs may be paid from
other funding sources such as voluntary contributions from residents,
relatives, and fund raisers.
Subp.
12.
Preopening costs.
Preopening costs of newly established facilities shall be
allowable as in items A to C.
A.
Preopening operating costs of newly established facilities which are incurred
within 30 days prior to admission of residents must be included in the
facility's interim and settle-up cost reports.
B. Preopening costs of newly established
facilities which are incurred more than 30 days prior to admission of residents
must be capitalized as deferred charges and amortized over a period of not less
than 60 consecutive months beginning with the month in which the first resident
is admitted for care.
C. Preopening
costs do not include property-related costs.
Subp. 13.
Respite care.
The provider must report the costs associated with providing
respite care as an allowable cost in the cost report and count respite care
days as resident days.
Subp.
14.
Top management compensation.
For establishment of the allowable historical operating cost,
annual compensation for top management personnel who perform necessary services
shall be limited according to items A to F. Documentation of all necessary
service performed must be maintained according to subparts
5 and
6.
A. In no case shall the total compensation
reimbursed according to parts
9553.0010 to
9553.0080 to an individual, any
portion of whose compensation is reimbursed as top management compensation,
exceed $53,820. A person who is included in top management personnel who
performs necessary services for the facility or provider group on less than a
full-time basis, may receive as allowable compensation no more than a prorated
portion of $53,820 based on time worked.
B. If a person compensated for top management
functions in a facility or organization is compensated for providing consultant
services to that facility or organization, the compensation for consultant
services however designated shall be subject to the top management compensation
limitation.
C. Top management
compensation shall not include, within the limits of items A and B, the
benefits of group health or dental insurance, group life insurance, pensions or
profit sharing plans, and governmentally required retirement plans.
D. If the fringe benefits paid to top
management personnel are not provided to all or substantially all of the
facility's employees at the same benefit level, that portion of the fringe
benefits paid to top management personnel which is not provided to all or
substantially all of the facility's employees, shall be disallowed.
E. An individual compensated for top
management services on a less than full-time basis for a facility or provider
group may be compensated for performing other necessary services which the
individual is qualified to perform. Compensation for another necessary service
must be at the pay rate for that service except that the total compensation
paid to an individual cannot exceed the limit in item A.
F. The percentage difference between the
previous two Januarys prior to the beginning of the rate year, the all urban
consumer price index (CPI-U) for Minneapolis-Saint Paul, as published by the
Bureau of Labor Statistics, new series index (1967=100) shall be used to
increase the top management compensation limitation in item A. The consumer
price index is incorporated by reference. It is available through the Minitex
Interlibrary Loan System. It is subject to frequent change. The adjustment
required by this formula shall be effective for the reporting year beginning on
January 1, 1986, and each January 1 thereafter.
Subp. 15.
General cost
principles.
The commissioner shall use the cost principles in this subpart
to determine allowable costs:
A. the
cost is ordinary, necessary, and related to resident care;
B. the cost is what a prudent and cost
conscious business person would pay for the specific good or service in the
open market in an arm's length transaction;
C. the cost is for goods or services actually
provided to the facility and the cost is actually paid for by the facility
within 180 days after the close of the reporting year except as provided in
subpart
6, item D;
D. the cost effects of transactions that have
the effect of circumventing parts
9553.0010 to
9553.0080 are not allowable under
the principle that the substance of the transaction must prevail over its form;
and
E. costs that are incurred due
to management inefficiency, unnecessary care or facilities, agreements not to
compete, or activities not commonly accepted in the ICF/DD industry, are not
allowable.
Subp. 16.
Pass through of training and habilitation services costs.
Training and habilitation services costs shall be paid as a
pass through payment at the lowest rate paid to the training and habilitation
services vendor by the county for comparable services at that site under
Minnesota Statutes, sections
252.40 to 252.47. The
pass through payments for training and habilitation services are paid
separately by the commissioner and are not included in the computation of the
total payment rate.
Statutory Authority: MS s
256B.501
