Current through Register Vol. 46, No. 52, December 24, 2024
For purposes of this Part:
(a) Administrative expenses are those
expenses authorized and allowable pursuant to applicable agency regulations,
contracts or other rules that govern reimbursement with State funds or
State-authorized payments that are incurred in connection with the covered
provider's overall management and necessary overhead that cannot be attributed
directly to the provision of program services.
(1) Such expenses include but are not limited
to the following expenses, if otherwise authorized and allowable pursuant to
applicable agency regulations, contracts or other rules that govern
reimbursement with State funds or State-authorized payments:
(i) that portion of the salaries and benefits
of staff performing administrative and coordination functions that cannot be
attributed to particular program services, including but not limited to the
executive director or chief executive officer, financial officers such as the
chief financial officer or controller and accounting personnel, billing,
claiming or accounts payable and receivable personnel, human resources
personnel, public relations personnel, administrative office support personnel,
and information technology personnel, where such expenses cannot be attributed
directly to the provision of program services;
(ii) that portion of legal expenses that
cannot be attributed directly to the provision of program services;
and
(iii) that portion of expenses
for office operations that cannot be attributed directly to the provision of
program services, including telephones, computer systems and networks,
professional and organizational dues, licenses, permits, subscriptions,
publications, audit services, postage, office supplies, conference expenses,
publicity and annual reports, insurance premiums, interest charges and
equipment that is expensed (rather than depreciated) in cost reports, where
such expenses cannot be attributed directly to the provision of program
services.
(2)
Administrative expenses do not include:
(i)
capital expenses, including but not limited to non-personal service
expenditures for the purchase, development, installation, and maintenance of
real estate or other real property; or
(ii) property rental, mortgage or maintenance
expenses; or
(iii) taxes, payments
in lieu of taxes, or assessments paid to any unit of government; or
(iv) equipment rental, depreciation and
interest expenses, including expenditures for vehicles and fixed, major movable
and adaptive equipment that is expensed (rather than depreciated) in cost
reports; or
(v) expenses and
equipment that is expensed rather than depreciated in cost reports of an amount
greater than $10,000 that would otherwise be administrative, except that they
are either non-recurring (no more frequent than once every five years) or not
anticipated by a covered provider (e.g., litigation-related expenses). Such
expenses shall not be considered administrative expenses or program expenses
for purposes of this regulation; or
(vi) that portion of the salaries and
benefits of staff performing policy development or research.
(b) Covered executive
is a compensated director, trustee, managing partner, or officer whose salary
and/or benefits, in whole or in part, are administrative expenses, and any key
employee whose salary and/or benefits, in whole or in part, are administrative
expenses and whose executive compensation during the reporting period exceeded
$199,000. For the purposes of this definition, the terms director, trustee,
officer, and key employee shall have the same meaning as such terms in the
Internal Revenue Service's instructions accompanying Form 990, Part VII. If the
number of key employees employed by the covered provider who meet this
definition exceeds 10, then the covered provider shall report only those 10 key
employees whose executive compensation is the greatest during the reporting
period and no other key employees shall be considered covered executives.
Clinical and program personnel in a hospital or other entity providing program
services, including chairs of departments, heads of service, chief medical
officers, directors of nursing, or similar types of personnel fulfilling
administrative functions that are nevertheless directly attributable to and
comprise program services shall not be considered covered executives for
purposes of limiting the use of State funds or State-authorized payments to
compensate them. In the event that a covered provider pays a related
organization to perform administrative or program services, the covered
executives of the related organization shall also be considered covered
executives of the covered provider for purposes of reporting and compliance
with these regulations if more than 30 percent of such a covered executive's
compensation is derived from State funds or State-authorized payments received
from the covered provider. In such a circumstance, the related organization
shall not be subject to the limitations on the use of State funds or
State-authorized payments for administrative expenses in section
1002.2 of this regulation solely
as a result of having covered executives.
(c) Covered operating expenses shall mean the
sum of program services expenses and administrative expenses of a covered
provider as defined in this section.
(d) Covered provider is an entity or
individual that:
(1) has received pursuant to
contract or other agreement with the department, or with another governmental
entity, including county and local governments, or an entity contracting on its
behalf, to render program services, State funds or State-authorized payments
during the covered reporting period and the year prior to the covered reporting
period, and in an average annual amount greater than $500,000 during those two
years; and
(2) at least 30 percent
of whose total annual in-state revenues for the covered reporting period and
for the year prior to the covered reporting period were from State funds or
State-authorized payments. This percentage shall be calculated as a percentage
of the total annual revenues derived from and in connection with the provider's
activities within New York State, irrespective of whether the provider derives
additional revenues from activities in another state. The source of such
revenues shall include those from sources outside New York State if such
revenues were derived from or in connection with activities inside New York
State, including, for example, contributions by out-of-state individuals or
entities for in-state activities. Where applicable, a provider's method of
calculating in-state revenues for purposes of determining tax liability or in
connection with completion of its financial statements shall be deemed
acceptable by the department for the purpose of applying this
paragraph.
(3) For purposes of
these regulations, the term covered provider shall exclusively mean the
following facilities and entities: hospitals and nursing homes, both as defined
in Public Health Law article 28; home care services agencies, licensed home
care agencies, certified home health agencies, residential health care
facilities, long term home health care programs, AIDS home care programs, all
as defined in Public Health Law article 36; hospice residences as defined in
Public Health Law article 40; assisted living residences and enhanced assisted
living residences as defined in Public Health Law article 46-B; ambulance
services and advanced life support first response services as defined in Public
Health Law article 30; adult day health care as defined in 10 NYCRR part 425;
health maintenance organizations, as defined in article 44 of the Public Health
Law and other entities approved to operate by the department under article 44
of the Public Health Law; intermediate care facilities as defined in article
one of the Social Services Law; entities conducting evaluations or providing
services in the early intervention program established in title II-A of article
25 of the Public Health Law; and assisted living programs as defined in section
461-l of
the Social Services Law; or an independent practice association or a management
contractor, as such terms are defined in 10 NYCRR Part 98, that is a related
organization to a covered provider. A facility or entity listed in this
definition shall not be considered a covered provider unless such provider
meets the requirements in paragraph (2) of this subdivision and has received
State funds or State-authorized payments to provide program services during the
most recent reporting period and in the year prior to that period, and in an
average annual amount greater than $500,000 during those two years.
(4) For purposes of this Part, the method of
accounting used by the entity or individual in the preparation of its annual
financial statements shall be used, except that an entity or individual that
otherwise reports to the department using a different method of accounting
shall use such method.
(5) An
entity or individual that receives State funds or State-authorized payments
directly from a managed care organization subject to the oversight of the
department shall be deemed to receive State funds or State-authorized payments
pursuant to contract or other agreement with the department, or with another
governmental entity, to render program services.
(6) The following providers shall not be
considered covered providers:
(i) State,
county, and local governmental units in New York State, and tribal governments
for the nine New York State recognized nations, and any subdivisions or
subsidiaries of the foregoing entities;
(ii) individuals or entities providing child
care services who are in receipt of child care subsidies pursuant to title 5-C
of article 6, or section
410 of the
Social Services Law, except that such providers may be considered a covered
provider if it also receives State funds or State-authorized payments that are
not child care subsidies pursuant to title 5-C of article 6, or section
410, of the
Social Services Law and would otherwise satisfy the criteria in this
definition;
(iii) individual
professional(s), partnerships, S corporations, or other entities, at least 75
percent of whose program services paid for by State funds or State-authorized
payments are provided by the individual professional(s), by the partner(s), or
by the owner(s) of the corporation or entity, rather than by employees or
independent contractors employed or retained by the entity, as determined by
the amounts obtained in State funds or State-authorized payments for such
program services;
(iv) individuals
or entities providing primarily or exclusively products, rather than services,
in exchange for State funds or State-authorized payments, including but not
limited to pharmacies and medical equipment suppliers. For the purpose of
applying this exception, the percentage of revenues derived from products
rather than from services shall be used; and
(v) entities within the same corporate family
as a covered provider, including parent or subsidiary corporations or entities,
except where such a corporation or entity would otherwise qualify as a covered
provider but for the fact that it has received its State funds or
State-authorized payments from a covered provider rather than directly from a
governmental agency.
(e) Covered reporting period shall mean the
provider's most recently completed annual reporting period, as defined herein,
commencing on or after July 1, 2013.
(f) Department means the New York State
Department of Health.
(g) Executive
compensation shall include all forms of cash and noncash payments or benefits
given directly or indirectly to a covered executive, including but not limited
to salary and wages, bonuses, dividends, distributions to a shareholder/partner
from the current reporting period's earnings where such distributions represent
compensatory or guaranteed payments or compensatory partnership profits
allocation or compensatory partnership equity interest for services rendered
during such reporting period, and other financial arrangements or transactions
such as personal vehicles, housing, below-market loans, payment of personal or
family travel, entertainment, and personal use of the organization's property,
reportable on a covered executive's W-2 or 1099 form, except that mandated
benefits (e.g., Social Security, worker's compensation, unemployment insurance
and short-term disability insurance), and other benefits such as health and
life insurance premiums, and retirement and deferred compensation plan
contributions that are consistent with those provided to the covered provider's
other employees shall not be included in the calculation of executive
compensation. For the purposes of this definition, such benefits shall be
considered consistent with those provided to other employees where the intended
value of the benefit is substantially equal, even where the cost to the covered
provider to provide such a benefit may differ. With respect to employer
contributions to retirement and deferred compensation plans that are not
consistent with those provided to other employees, executive compensation shall
be deemed to include only those amounts contributed or accrued during the
reporting period for the benefit or intended benefit of the covered executive,
even if not reported on the executive's W-2 or 1099 for that reporting period
(but not those amounts that vested during such period but were contributed or
accrued prior to the period).
(h)
Program services are those services rendered by a covered provider or its agent
directly to and for the benefit of members of the public (and not for the
benefit or on behalf of the State or the awarding agency) that are paid for in
whole or in part by State funds or State-authorized funds. Program services
shall not include:
(1) policy development or
research; or
(2) staffing or other
assistance to a State agency or local unit of government in such agency's or
government's provision of services to members of the public.
(i) Program services expenses are
those expenses authorized and allowable pursuant to applicable agency
regulations, contracts or other rules that govern reimbursement with State
funds or State-authorized payments that are incurred by a covered provider or
its agent in direct connection with the provision of program services.
(1) Such expenses include but are not limited
to the following expenses, if otherwise authorized and allowable pursuant to
applicable agency regulations, contracts or other rules that govern
reimbursement with State funds or State-authorized payments:
(i) that portion of the salaries and benefits
of staff providing particular program services, including for example,
employees or contractors providing direct care to individuals receiving
services, and supervisory personnel and support personnel whose work is
attributable to a specific program in whole or in part and contributes directly
to the quality or scope of the program services provided;
(ii) that portion of the salaries and
benefits of quality assurance and supervisory personnel whose work is
attributable in whole or in part to particular programs and contributes to the
quality or scope of the program services provided by other personnel and
related expenses; and
(iii) that
portion of expenses incurred in connection with and attributable to the
provision of particular program services, including for example, travel costs
to and from the residences of individuals receiving services, direct care
supplies, public outreach or education or personnel training to facilitate
program services delivery, information technology and computer services and
systems directly attributable to program services such as, for example,
electronic patient records systems to facilitate improved patient care or
computer systems used in program services delivery or documentation of program
services provided, quality assurance and control expenses, and legal expenses
necessary to accomplish particular program service objectives.
(2) Program services expenses do
not include:
(i) capital expenses, including
but not limited to non-personal service expenditures for the purchase,
development, installation, and maintenance of real estate or other real
property; or
(ii) property rental,
mortgage or maintenance expenses, except where such expenses are made in
connection with providing housing to members of the public receiving program
services from the covered provider; or
(iii) taxes, payments in lieu of taxes, or
assessments paid to any unit of government; or
(iv) equipment rental, depreciation and
interest expenses, including expenditures for vehicles and fixed, major movable
and adaptive equipment that is expensed (rather than depreciated) in cost
reports; or
(v) expenses of an
amount greater than $10,000 that would otherwise be administrative, except that
they are either non-recurring (no more frequent than once every five years) or
not anticipated by a covered provider (e.g., litigation-related expenses). Such
expenses shall not be considered administrative expenses or program expenses
for purposes of this regulation; or
(vi) that portion of the salaries and
benefits of staff performing policy development or research.
(j) Related
organization shall have the same meaning as the same term in Schedule R of the
Internal Revenue Service's Form 990 except that for purposes of this regulation
a related organization must have received or be anticipated to receive State
funds or State-authorized payments from a covered provider during the reporting
period.
(k) Reporting period shall
mean, at the provider's option, the calendar year or, where applicable, the
fiscal year used by a provider. However, where a provider is required to file
an annual cost report with the State, reporting period shall mean the reporting
period applicable to said cost report, and the date required for timely
submission of said cost report shall control and be the date required for the
submission of the EO No. 38 disclosure form in the event such form is required
to be filed pursuant to section
1002.5 of this Part.
(l) State-authorized payments refer to those
payments of funds that are not State funds but which are distributed or
disbursed upon a New York State agency's approval or by another governmental
unit within New York State upon such approval, including but not limited to the
Federal and county portions of Medicaid program payments approved by the State
agency. The department shall publish a list of government programs whose funds
shall be considered State-authorized payments prior to the effective date of
this regulation. For purposes of this regulation, State-authorized payments
shall not include any payments solely for the following purposes:
(1) procurement contracts awarded on a lowest
price basis pursuant to section
163 of the
State Finance Law;
(2) awards to
State or local units of government except to the extent such funds or payments
are used by such government unit to pay covered providers to provide program
services through a contract or other agreement;
(3) capital expenses, including but not
limited to non-personal service expenditures for the purchase, development,
installation, and maintenance of real estate or other real property, or
equipment;
(4) direct payments of
State funds or State-authorized payments, or provision of vouchers or other
items of monetary value that may be used to secure specific services selected
by the individual, or health insurance premiums including but not limited to
New York State Health Insurance Program (NYSHIP) premium payments, or
Supplemental Security Income (SSI) payments, to or on behalf of individual
members of the public;
(5) wage or
other salary subsidies paid to employers to support the hiring or retention of
their employees;
(6) awards to
for-profit corporations or other entities engaged exclusively in commercial or
manufacturing activities and not in the provision of program
services;
(7) policy development or
research; or
(8) funds expressly
intended to pay exclusively for administrative expenses, including but not
limited to Community Service Program core contract funding for HIV/AIDS
services programs.
(m)
State funds are those funds appropriated by law in the annual State budget
pursuant to article VII, section 7 of the New York State Constitution. The
department shall publish a list of government programs whose funds shall be
considered State funds prior to the effective date of this regulation. For
purposes of this Part, State funds shall not include any payments solely for
the following purposes:
(1) procurement
contracts awarded on a lowest price basis pursuant to section
163 of the
State Finance Law;
(2) awards to
State or local units of government except to the extent such funds or payments
are used by such government unit to pay covered providers to provide program
services through a contract or other agreement;
(3) capital expenses, including but not
limited to non-personal service expenditures for the purchase, development,
installation, and maintenance of real estate or other real property, or
equipment;
(4) direct payments of
State funds or State-authorized payments, or provision of vouchers or other
items of monetary value that may be used to secure specific services selected
by the individual, or health insurance premiums including but not limited to
New York State Health Insurance Program (NYSHIP) premium payments, or
Supplemental Security Income (SSI) payments, to or on behalf of individual
members of the public;
(5) wage or
salary subsidies paid to employers to support the hiring or retention of their
employees;
(6) awards to for-profit
corporations or other entities engaged exclusively in commercial or
manufacturing activities and not in the provision of program
services;
(7) policy development or
research; or
(8) funds expressly
intended to pay exclusively for administrative expenses, including but not
limited to Community Service Program core contract funding for HIV/AIDS
services programs.
