Current through Register Vol. 46, No. 39, September 25, 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 and 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.
(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
513.4
of this Part 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 subdivision (d) of this section.
(d) Covered provider.
(1) A covered provider is an entity or
individual that:
(i) has received pursuant to
contract or other agreement with the office, 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
(ii) 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 derived 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 office for the purpose of applying this
subparagraph.
(2) For
purposes of this Part:
(i) an entity or
individual that receives State funds or State-authorized payments directly from
a managed care organization that is subject to the oversight of the office or
another governmental entity shall be deemed to receive State funds or
State-authorized payments pursuant to contract or other agreement with the
office, or with another governmental entity, to render program services;
and
(ii) 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 office using a different method of accounting shall use such
method.
(3) 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 or section 410 of the Social Services Law, except that
such providers may be considered covered providers if they also receive State
funds or State-authorized payments that are not child care subsidies pursuant
to title 5-C 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) 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 for 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).
(g) Office means the New
York State Office of Mental Health.
(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 clients, 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 client residences,
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 and 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.
(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 office 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 office 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.
