Current through Register Vol. 46, No. 39, September 25, 2024
(a) Interdepartmental services. The following
represent areas for which costs must be directly assigned to the functional
reporting center operating such costs. The term interdepartmental services, for
the purposes of this Article, is defined as the direct cost of utility provided
by one residential health care facility department to another. The objective of
accounting for interdepartmental services is to establish a proper distribution
of direct costs prior to any cost allocation process.
(1) For the purposes of this Article, the
following are costs which should be so treated:
(i) Plant maintenance.
(a) All direct costs incurred in the routine
maintenance, repair and service of buildings and equipment are included in the
Plant Operation and Maintenance reporting center.
(b) However, the cost of noncapitalizable
nonroutine maintenance and repairs directly assignable to a single reporting
center (such as a major repair of an X-ray machine) must be transferred to the
reporting center receiving the service. These costs include all direct expenses
incurred by the Plant Operation and Maintenance cost center in performing such
services.
(c) When such nonroutine
maintenance and repairs are performed by nonfacility personnel, the cost
related to these purchased services must be either transferred from Plant
Operation and Maintenance or charged directly to the reporting center receiving
the service. In the event that such costs are charged directly to the recipient
reporting center, such costs must be segregated under the new natural
classification provided, i.e., Repairs and Maintenance--Purchased Services
Directly Assignable.
(d) It is
recommended that identification of direct costs be accomplished by developing a
work order system. Written work orders identifying the requesting reporting
center should be prepared upon receipt of the request for services. Upon
completion of the service, the direct cost of labor and materials would be
entered on the work order. Completed work orders should be sent to general
accounting on a regular basis so that interdepartmental costs can be
recorded.
(ii) Employee
benefits. Employee benefits must be reported in the functional reporting
centers which include the applicable employee's compensation. This can be
accomplished by accumulating all fringe benefit costs in one account and
assigning the expenses to the appropriate reporting center at year-end as a
preliminary adjustment prior to cost finding. This assignment can be performed
on an actual basis or upon the following basis:
(a) FICA and tuition refunds--actual expense
by department.
(b) Pension and
health insurance.
(1) Union--gross salaries
of participating individuals by department.
(2) Nonunion--gross salaries of participating
individuals by department.
(c) All other benefits--the remaining
benefits may be allocated to the various departments based upon gross salaries
of the departments.
(iii) Major movable depreciation. Major
movable depreciation must be reported in the reporting center established
entitled, "Depreciation--Major Movable Equipment". Such depreciation must be
assigned to the department (as a cost allocation basis later explained) where
the equipment is located and utilized. However, those providers who are not
able to allocate historical costs and depreciation for major movable equipment
acquired prior to January 1, 1978 may use square feet, net, to allocate
depreciation by department. All additions to major movable equipment as of
January 1, 1978 and thereafter will be functionalized.
(b) Residential health care
facility research and education costs. All direct costs incurred in conducting
residential health care facility research and formal educational activities (as
opposed to inservice education) must be reported in the appropriate
unrestricted or restricted fund reporting center.
(c) Grant accountability. When separate
accounting is required by law, grant, contract, or donation restricted for
research and educational activities, such grants should be reported separately.
Transfers from restricted funds to match the expenditures for these activities
must also be segregated. Thus, accountability is maintained for all restricted
research and educational activities. Grants that represent deficit financing
should be reported as a reduction of the appropriate contractual allowances
when used rather than, in the case of other grants, as other operating
revenue.
(d) Grant overhead
allocation.
(1) No allocation of overhead
should be made prior to cost finding unless such allocation is required by
grant agreement. When a grant contract calls for the payment of direct costs
plus an overhead factor, the overhead factor should be used in billing
only.
(2) If indirect overhead
must, by grant contract, be recorded in the unrestricted fund cost centers used
for the recording of the direct costs of the grant activity, the natural
expense classification (other direct expenses) must be used. Such overhead
allocations should be accumulated separately in the unrestricted fund. For
reporting to the New York State Department of Health, this amount must be
offset against grant activity costs, so such remaining costs are direct costs
only.
(e) Overhead
allocation between facilities. An allocation of overhead should be made prior
to cost finding for facilities which share services or receive services from a
service corporation. Statistical bases utilized for such allocation must be
approved by the New York State Department of Health.
(f) Affiliated school contracts. Education
costs incurred relative to affiliated school contracts, including salaries,
wages and stipends paid to students on approved programs and fees paid to
physicians involved primarily in approved education programs, must be reflected
in the appropriate education reporting center in the Unrestricted
Fund.
(g) Inservice
education--nursing.
(1) Nursing inservice
education activities are defined as educational activities conducted within the
residential health care facility for residential health care facility nursing
personnel. The cost of time spent by nursing personnel as students in such
classes and activities must remain in the reporting center in which their
normal salary and wage costs are charged (i.e., the reporting center in which
they work). However, the cost (defined as salary, wages and payroll-related
fringe benefits) of time spent in such classes and activities by those
instructing and administering the programs must be included in the Nursing
Administration reporting center.
(2) If instructors do not work full-time in
the inservice education program, the cost (as defined above) of the portion of
time they spend working in the inservice education program must be included in
the "Nursing Administration" reporting center. This may be accomplished by
direct distribution of these costs (by natural classification of expense
category) each payroll period, or by reclassification (based upon time spent)
at year end.
(3) The costs of
nursing inservice education supplies (such as cassettes, books, medical
supplies, etc.) and outside lecturers must also be reflected in the Nursing
Administration reporting center.
(h) Inservice education--other. All costs
relative to nonnursing inservice education activities should be included in the
reporting center to which they apply (e.g.,Physical Therapy, Radiology, etc.),
as such inservice education activities will rarely apply to more than one
functional activity.
(i) Physician
remuneration. Due to the numerous types of financial and work arrangements
between residential health care facilities and physicians, comparability of
costs between residential health care facilities may be significantly impaired.
This section deals with the methods to be used in reporting costs and revenues
related to the services of physicians.
(1)
Financial arrangements. Although the variations in financial arrangements
between residential health care facilities and physicians are endless, there
are five general types of such arrangements:
(i) Attending physician. Under this
arrangement, the physician bills both Medicare, part B, and patients in his
name for professional services provided. The residential health care facility
reflects no operating revenue or expense relative to the professional
component.
(ii) House physician.
The residential health care facility bills Medicare, part B, in its name and
receives payment, or bills in the physician's name and receives payment from
the physician. The physician is paid a salary by the residential health care
facility which is included in the facility's expense. Amounts received by the
residential health care facility from Medicare may be operating revenue to the
facility or may be a liability to Medicaid or the patient, depending upon the
extent of the reimbursement ceiling in effect.
(iii) Normal arrangement. The residential
health care facility bills patients for the physician's contractual
professional services, including this amount as facility revenue. All
department expenses are paid by the residential health care facility. The
residential health care facility remits a fee to the physician which is
included in facility expense.
(iv)
Rental department. The physician bills the patients for certain of the part A
and part B component (as defined by Medicare) and incurs all substantial direct
expenses. The physician remits a fee to recover certain residential heath care
facility expenses. This fee is recorded an nonoperating revenue in the
appropriate department.
(v)
Independent/separate department. The department functions are provided by an
independent physician or group of physicians. Neither revenues nor expenses are
incurred by the residential health care facility. The residential heath care
facility refers patients and/or specimens to the physician or group, which is
usually located on separate premises. No costs are incurred and no revenue is
received under this arrangement.
(2) Work arrangement.
(i) The services provided by residential
health care facility-based physicians may be categorized into five general
types:
(a) professional component--providing
direct patient care;
(b)
education--teaching and supervising student activity in educational
programs;
(c) research--working in
research projects;
(d)
administration--administering overall activities; and
(e) department supervision--supervising
activities of the department.
(ii) When physicians are involved in more
than one of the above functional activities, their remuneration, if any, should
be recorded in the reporting center for which services they are paid. Prior to
cost finding, their remunerations are to be reclassified to the appropriate
reporting center on the residential health care facility's records.
(j) Periodic Interim
Payments (PIP). Periodic interim payments are made biweekly to a residential
health care facility on the PIP program and are based on the facility's
estimate of applicable Medicare reimbursement for the current cost report
period. When such payments are received, a cash account in the Unrestricted
Fund is debited and a PIP clearing account is credited for the amount of the
payment. When applicable, Medicare charges are billed to the intermediary, the
PIP clearing account is debited and patient accounts receivable is credited. At
year end, adjustments must be made to eliminate any remaining balance in the
PIP clearing account and to reflect the amount receivable from, or due to, the
Medicare intermediary.
(k) Patient
trust funds. Patient trust funds consist of amounts deposited on behalf of the
patient which are to be used for the personal care and expenditure of that
patient. In most cases, these funds consist of social security funds which are
received by the patient or by the residential health care facility on behalf of
the patient. In most instances, the facility must give the patient an allowance
each month out of these funds. Since patient trust funds are administered by a
facility, these funds should be accounted for as agency funds by governmental
and voluntary facilities. For proprietary facilities, these funds should be
accounted for as noncurrent assets and noncurrent liabilities.
