Current through Register Vol. 46, No. 12, March 20, 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.