Subsection 144-101-III-67-17 - ROUTINE COST COMPONENTAll allowable costs not specified for inclusion in another cost category pursuant to these rules shall be included in the routine cost component subject to the limitations set forth in these Principles.
The base year costs for the routine cost component shall be the base year routine costs defined in Principle 1.4 for these costs listed in Principle 17, except for facilities whose MaineCare rates are based on pro forma cost reports in accordance with Principles 22.5 and 22.6. The routine cost component is determined by adjusting routine costs pursuant to Principles 22.4.
17.1Principle. All expenses which providers must incur to meet state licensing and federal certification standards are allowable.17.2Inventory Items. All inventory items used in the provision of routine services to residents are required to be expensed in the year used. Inventory items shall include, but are not limited to: linen and disposable items.17.3Allowable Costs. Allowable costs shall also include all items of expense efficient and economical providers incur for the provision of routine services. Routine services mean the regular room, dietary services, and the use of equipment and facilities.17.4Allowable costs for the routine component of the rate.17.4.1 The rate shall include but not be limited to costs reported in the following functional cost centers on the facility's cost report.(b) administrative services and professional fees, including administrative functions,(c) plant operation and maintenance including utilities,(g) subscriptions related to resident care,(i) motor vehicle operating expenses,(k) transportation, (excluding depreciation),(l) office supplies/telephone,(m) conventions and meetings within the state of Maine,(n) EDP bookkeeping/payroll,(o) fringe benefits, to include: (2) qualified retirement plan contributions,(3) group health, dental, and life insurance,(4)* health savings accounts,(5)* flexible spending accounts, and(q) one (1) association dues, the portion of which is not related to lobbying,(r) food, vitamins and food supplements,(s) director of nursing, and fringe benefits,(t) social services, and fringe benefits,(u) pharmacy consultant and dietary consultant, and medical director,(v)* background checks, and(w)* software costs and licensing fees. *The Department shall submit to CMS and anticipates approval for a State Plan Amendment related to these provisions.
For a more complete description of allowable costs in each cost center, see the explanations in Principles 17.4.1 - 17.4.2.11.
17.4.2Administration Functions. The administration functions include those duties that are necessary to the general supervision and direction of the current operations of the facility, including, but not limited to, the following:17.4.2.1Central Office Operational Costs for business managers, controllers, reimbursement managers, office managers, personnel directors and purchasing agents are to be according to an allocation of those costs on the basis of all licensed beds operated by the parent company.17.4.2.2Policy Planning Function. The policy planning function includes the policy-making, planning and decision-making activities necessary for the general and long-term management of the affairs of the facility, including, but not limited to the following:a) financial management, including accounting fees,b) establishment of personnel policies,c) planning of resident admission policies,d) planning of expansion and financing.17.4.2.3Compliance. Compliance with all other regulations specific to administrative functions in Nursing Facilities that are included in State Licensing Regulations and all other State and Federal regulations.17.4.2.4Dividends and Bonuses. Bonuses, dividends, or accruals for the express purpose of giving additional funds to the administrator or owners of the facility will not be recognized as allowable costs by the Department.17.4.2.5Management fees. Management fees charged by a parent company or by an unrelated organization or individual are not allowable costs.17.4.2.6* Purchased Central Office Services. Central office services purchased from another provider will be limited to the actual costs of the service, and will be treated as a service performed by a related party. Any nursing facility providing this service to another nursing facility will not be reimbursed directly by MaineCare, through cost settlement, for any of the costs of providing this service. *The Department shall submit to CMS and anticipates approval of a State Plan Amendment for this provision.
17.4.2.7Corporate Officers and Directors. Salaries paid to corporate officers and directors are not allowable costs unless they are paid for direct services provided to the facility such as those provided by an administrator or other position required by licensing regulations and included in the staffing pattern which are necessary for that facility's operation.17.4.2.8Central Office Operational Costs. Central office bookkeeping costs and related clerical functions may be allocated to each facility on the basis of total resident census limited to the reasonable cost of bookkeeping services if they were performed by the individual facility.(1) All other central office operational costs other than those listed above in this principle are considered unallowable costs.17.4.2.9Laundry services including personal clothing for MaineCare residents.17.4.2.10Net Cost. The net cost means the cost of an activity less any reimbursement for them from grants, tuition and specific donations. These costs may include: transportation (mileage), registration fees, salary of the staff member if replaced, and meals and lodging as appropriate.17.4.2.11Motor Vehicle Allowance. Cost of operation of one (1) motor vehicle necessary to meet the facility's needs is an allowable cost less the portion of usage of that vehicle that is considered personal. For this principle, "facility" includes all levels of care. A log that clearly documents that portion of the automobile's use for business purposes is required. Prior approval from the Division of Audit is required if additional vehicles are needed by the nursing facility.17.4.2.12Dues. Dues are allowed only if the nursing facility is able to provide auditable data that demonstrates what portion of the dues is not used for lobbying efforts by the agency receiving the dues payments.17.4.2.13Consultant ServicesThe following types of consultative services will be considered as part of the allowable routine costs and be built into the base year routine cost component subject to the limitations outlined in Principle 17.4.2.12(1) - 17.4.2.12(3).
(1)Pharmacist ConsultantsPharmacist consultant fees paid directly by the facility in the base year, will be included in the routine cost component. In addition to any pharmacist consultant fees included in the base year rate, up to $2.50 per month per resident shall be allowed for drug regimen review.
(2)Dietary ConsultantsDietary Consultants, who are professionally qualified, may be employed by the facility or by the Department. The allowable amounts paid by the nursing facility to Dietary Consultants in the base year, when reasonable and non-duplicative of current staffing patterns, will be included in the routine cost component.
(3)Medical DirectorsThe base year cost of a Medical Director, who is responsible for implementation of resident care in the facility, is an allowable cost.
The base year allowable cost will be established and limited to $10,000.
17.5Principle. Research Costs are not includable as allowable costs.17.6Grants, Gifts, and Income from Endowments17.6.1Principle. Unrestricted grants, gifts and income from endowments should not be deducted from operating costs in computing reimbursable costs. However, unrestricted Federal or State grants or gifts received by a facility will be used to reduce the operating costs of that facility. Grants, gifts, or endowment income designated by a donor for paying specific operating costs should be deducted from the operating costs or group of costs. (1) Unrestricted grants, gifts, income from endowment. Unrestricted grants, gifts, and income from endowments are funds, cash or otherwise, given to a provider without restriction by the donor as to their use.(2) Designated or restricted grants, gifts and income from endowments. Designated or restricted grants, gifts and income from endowments are funds, cash or otherwise, which must be used only for the specific purpose designated by the donor. This does not refer to grants, gifts or income from endowments which have been restricted for a specific purpose by the provider.17.6.2Donations of Produce or Other Supplies. Donations of produce or supplies are restricted gifts. The provider may not impute a cost for the value of such donations and include the imputed cost in allowable costs. If an imputed cost for the value of the donation has been included in the provider's costs, the amount included is deleted in determining allowable costs.17.6.3Donation of Use of Space. A provider may receive a donation of the use of space owned by another organization. In such case, the provider may not impute a cost for the value of the use for the space and include the imputed cost in allowable costs. If an imputed cost for the value of the donation has been included in the provider's cost, the amount included is deleted in determining allowable costs.17.7Purchase Discounts and Allowances and Refunds of Expenses17.7.1Principle. Discounts and allowances received on purchases of goods or services are reductions of the costs to which they relate. Similarly, refunds of previous expense payments are reductions of the related expense. (1)Discounts. Discounts, in general, are reductions granted for the settlement of debts.(2)Allowances. Allowances are deductions granted for damages, delay, shortage, imperfections, or other causes, excluding discounts and returns.(3)Refunds. Refunds are amounts paid back or a credit allowed on account of an over-collection.17.7.2Reduction of Costs. All discounts, allowances, and refunds of expenses are reductions in the cost of goods or services purchased and are not income. When they are received in the same accounting period in which the purchases were made or expenses were incurred, they will reduce the purchases or expenses of that period. However, when they are received in a later accounting period, they will reduce the comparable purchases or expenses in the period in which they are received.17.7.3Application of Discounts. Purchase discounts have been classified as cash, trade, or quantity discounts. Cash discounts are reductions granted for the settlement of debts before they are due. Trade discounts are reductions from list prices granted to a class of customers before consideration of credit terms. Quantity discounts are reductions from list prices granted because of the size of individual or aggregate purchase transactions. Whatever the classification of purchase discounts, like treatment in reducing allowable costs is required. In the past, purchase discounts were considered as financial management income. However, modern accounting theory holds that income is not derived from a purchase, but rather from a sale or an exchange, and the purchase discounts are reductions in the cost of whatever was purchased. The true cost of the goods or services is the net amount actually paid for them. Treating purchase discounts as income would result in an overstatement of costs to the extent of the discount.17.7.4Discounts, Allowances, and Rebates. All discounts, allowances, and rebates received from the purchases of goods or services and refunds of previous expense payments are clearly reductions in costs and must be reflected in the determination of allowable costs. This treatment is equitable and is in accord with that generally followed by other governmental programs and third-party organizations paying on the basis of costs.17.8Principle. Advertising Expenses. The reasonable and necessary expense of newspaper or other public media advertisements for the purpose of securing necessary employees is an allowable cost. No other advertising expenses are allowed.17.9Legal Fees. Legal fees to be allowable costs must be directly related to resident care. Fees paid to the attorneys for representation against the Department of Health and Human Services are not allowable costs. Retainers paid to lawyers are not allowable costs. Legal fees paid for organizational expenses, are to be amortized over a sixty-month period.17.10Costs Attributable to Asset Sales. Costs attributable to the negotiation or settlement of a sale or purchase of any capital asset (by acquisition or merger) are not allowable costs. Included among such unallowable costs are: legal fees, accounting and administrative costs, appraisal fees, costs of preparing a certificate of need, banking and broker fees, good will or other intangibles, travel costs and the costs of feasibility studies.17.11Bad debts, charity, and courtesy allowances are deductions from revenue and are not to be included in allowable cost. C.M.R. 10, 144, ch. 101, ch. III, 144-101-III-67, subsec. 144-101-III-67-17