Section 144-115-31 - OTHER ALLOWABLE ROUTINE COSTS31.1Purchase Discounts and Allowances, and Refunds of Expenses31.1.1(a) 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.31.1.2(b)Reduction 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 comparable purchases or expenses in the 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.31.1.3(c)Application31.1.3(c)(1) 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.31.1.3(c)(2) All discounts, allowances, and rebates received from 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 generally followed by other governmental programs and third-party payment organizations that pay on the basis of cost.31.2Advertising ExpensesThe 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.
31.3Income31.3.1(a) All unrestricted income other than from members, except as specified in Section 30.6, received by facilities and that can be used in the over all operation of the facility will be used to decrease the total operating costs. This includes income from vending machines, sales of meals, sale of medical supplies, Federal or State grants or gifts, rental of facility space, etc. When restricted grants, gifts, or endowments are made to cover any of the overall operating costs, income from these shall be used to offset the respective costs. If the Department discovers that the income is not large enough to cover the expenses of rentals, meals, etc., then the expense, instead of income, will be removed from the total costs. The provider also has the right to remove from allowable costs the expenses, instead of the income, if they can be completely segregated from other expenses.31.4Cost to Related Organizations31.4.1(a) Costs applicable to services, facilities, and supplies furnished to the provider by organizations related to the provider by common ownership or control may be included in the allowable costs of the provider at the cost to the related organization. However, such costs must not exceed the price of comparable services, facilities, or supplies that could be purchased elsewhere.31.4.2(b) If any owner, other than the administrator, provides non-administrative services to the provider, the compensation for such services shall be allowed only after the Department has given advance written approval.31.5Motor Vehicle Allowance31.5.1(a) The cost of operating one (1) motor vehicle necessary to meet the needs of the facility is an allowable cost, less the portion of usage of that vehicle that is considered personal. Allowable routine costs include insurance and reasonable operating expenses.31.5.1(b) Costs for any additional vehicles must be requested in writing and prior approved in writing by the Department's Division of Licensing and Certification. Criteria for approval will include the number of members, effective utilization of the existing vehicle, and the reasonableness and practicality of the type/size of the additional vehicle requested.31.6Insurance31.6.1(a) Reasonable and necessary costs of insurance involved in operating a facility are considered allowable costs. Hospital insurance premiums paid on employees are an allowable cost, if reasonable.31.6.1(b) Life insurance premiums related to insurance on the lives of officers and key employees when the provider is a direct or indirect beneficiary are not allowable costs. A provider is a direct beneficiary when, upon death of the insured officer or key employee, the insurance proceeds are payable directly to the provider. An example of a provider as an indirect beneficiary is the case where insurance on the lives of officers is required as part of a mortgage loan agreement entered into for a building program, and, upon the death of an insured officer, the proceeds are payable to the lending institution as a credit against the loan balance. In this case, the provider is not a direct beneficiary because he/she does not receive the proceeds directly, but is, nonetheless, an indirect beneficiary, since his/her liability on the loan is reduced.31.6.1(c) Premiums paid to insure property not used or required for care of members is not allowed.31.7Legal Fees In order for legal fees to be allowable costs, they must be directly related to member care. Fees paid to the attorneys for representation against the Department are not allowable costs. Retainers paid to lawyers are not allowable costs.
10- 144 C.M.R. ch. 115, § 31