New York Codes, Rules and Regulations
Title 10 - DEPARTMENT OF HEALTH
Chapter V - Medical Facilities
Subchapter A - Medical Facilities-minimum Standards
Article 9 - Residential Health Care Facility Uniform Reporting
Part 454 - Functional Reporting
Section 454.2 - Concepts for functional reporting
Universal Citation: 10 NY Comp Codes Rules and Regs ยง 454.2
Current through Register Vol. 46, No. 39, September 25, 2024
(a) In order to comply with the reporting requirements of the New York State Department of Health, residental health care facilities must adhere to the following basic concepts.
(1) Residential health care facilities must
follow the uniform accounting policies and practices as specified in Part 452
of this Article. Items such as methods of capitalization and depreciation of
assets and direct charging of maintenance repairs, and payroll-related benefits
to using centers are examples of important policies which must be adhered to
for the annual uniform financial report.
(2) The principles and concepts utilized in
the preparation of the annual uniform financial report will be based upon a
portrayal of the activities on a functional basis regardless of third-party
reimbursement practices.
(3)
Another concept affecting the preparation of the annual uniform financial
report is the requirement that costs will be measured at a level where
uniformity can be obtained and a standard statistical measurement applied. For
purposes of reporting, it was determined that standard units of measure would
not be applied to certain nonrevenue or general support services; however,
their total cost would be identifiable. The application of standard units of
measure for some support services and ancillary revenue centers and all program
centers would occur at the direct cost level. Standard units of measure may
also be applied to support services, ancillary revenue and program service
centers after cost allocation.
(4)
Uniform financial reporting for revenue and expense categories is divided into
three categories, as follows:
(i) nonrevenue
support services centers--includes those reporting centers which do not
normally produce patient service revenue and which tend to support the
activities and services provided by the patient care services or special
education, research or auxiliary programs. Reporting centers representing
functions not necessarily associated with services would also be included in
this category, such as insurance, etc;
(ii) ancillary service centers--includes
those reporting centers which provide diagnostic and treatment services for
inpatient and outpatient care; and
(iii) program and auxiliary service
centers--includes those patient care, education, research and auxiliary
programs for which the residential health care facility is ultimately organized
to provide. All effort within the facility is ultimately related to these final
program centers.
(b) Conversion from responsibility to functional reporting.
(1) A fundamental aspect
of the uniform financial reporting program is the portrayal of revenue and
expenses on a functional basis rather than following the organizational pattern
of the specific residential health care facility.
(2) The need for uniform functional reporting
practices occurs from the fact that facilities will identify costs and revenue
according to responsibility centers; that is, the reporting of costs according
to the operating units such as departments. Because of the significant
variation of the size and scope of residential health care facilities, there
may be variation in the assignment of costs within each chart of accounts.
Therefore, for uniform functional reporting of revenue and expenses, there may
be a need for reclassifications to convert costs from the responsibility
reporting format to a functional reporting format. Functional reporting may be
defined as the reporting of costs according to the type of
activities.
(3) Certain facilites
will be required to reclassify certain revenue and expenses to meet the
specifications for uniform reporting. Without this conversion from
responsibility to functional reporting, residential health care facilities
would not be reporting costs in a uniform manner, thus defeating the purposes
of the uniform financial reporting requirements within the State.
(4) To achieve uniform functional reporting,
all facilities will be required to reclassify revenue, expenses and statistics
according to the definition of the functional centers discussed in Part 455 of
this Article.
(i) Reclassifications, as
discussed in this Part are of two types:
(a)
To obtain the required level of reporting. This type of reclassification may be
necessary to reach the required level of reporting because the facility has
combined several departments. For instance, smaller facilities may be combining
the costs of housekeeping and maintenance in one reporting center. In such
cases, it is necessary to reclassify the total direct costs into the reporting
centers relating to these two types of services.
(b) To correct accumulation of costs. This
type of reclassification would be necessary when the expense associated with a
particular function is recorded in a reporting center different from the
functional description specified in this section. For instance, a
reclassification would be required if the Patient Food Services Department
recorded the costs associated with hand-feeding of patients, because these
costs should have been recorded in the nursing reporting center relating to
that patient program.
(ii) These reclassifications may be computed
on any one of the following bases:
(a)
analysis of direct expense, including time and cost studies;
(b) ratio of total charges to charges of a
specific cost center; or
(c) ratio
of total units of service to units of service reclassified in a specific
reporting center.
(iii)
(iii)
(a)
Reclassifications must be made for significant amounts of misplaced costs.
Significant is defined, for the purposes of this section, as an amount in
excess of:
(1) one full-time equivalent
employee within the functional center transferred to or from for salary costs;
or
(2) 10 percent of the direct
costs or $1,000, whichever is greater, of the functional center transferred to
or from, for other than salary costs.
(b) For the purposes of this Part, an
estimate may be utilized to determine the limination for salary costs. This
estimate should be based on an approximation of one employee's total paid
working hours during the year; e.g., 2,000 hours representing one full-time
employee.
(c) Pursuant to the above
criteria, the determination of the necessity for reclassification of salary
costs may be made based on time studies. A time study must be made of employees
who are performing activities related to more than one function. Time studies
would be performed for such employees for a two-week period per quarter, for
all four quarters in a year. The time study would result in a percentage of
employees' hours worked, by function, to total hours worked. These percentages
would, for each quarter, be applied to total hours paid for the same employees
to arrive at hours paid by function. The results would be totaled for all four
quarters and then compared to the estimate of one full-time equivalent of 2,000
hours to determine whether or not a reclassification is required.
(d) When reclassifying full-time equivalent
employees between cost centers, non-work hours, i.e., vacation, sick pay, etc.,
will also be reclassified.
(e) The
tests of significance indicated above do not apply to the areas described in
section 453.4 of this Article. These allocations must be classified as
described in that section. Also, in determining the segregation of costs
between the Cafeteria and Patient Food Service Reporting Centers, where joint
kitchen facilities are used, the criteria described in those functional
reporting centers is to be utilized.
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