N.D. Admin. Code 75-02-09-08

Current through Supplement No. 395, January, 2025

Section 75-02-09-08 - [Effective until 1/1/2025] Nonallowable costs

Nonallowable costs include:

1. Promotional, publicity, and advertising expenses, exclusive of personnel procurement;

2. Political contributions;

3. Salaries or expenses of a lobbyist;

4. Basic research;

5. Fines or penalties including interest charges on the penalty, bank overdraft charges, and late payment charges;

6. Bad debts;

7. Compensation and expenses for officers, directors, or stockholders, except as provided for in section 75-02-09-15;

8. Contributions or charitable donations;

9. Costs incurred for activities directly related to influencing employees with respect to unionization;

10. Costs of membership or participation in health, fraternal, or social organizations such as eagles, country clubs, or knights of columbus;

11. Corporate costs such as organization costs, reorganization costs, costs associated with acquisition of capital stock, costs relating to the issuance and sale of capital stock or other securities, and other costs not related to resident services;

12. Home office costs that would be nonallowable if incurred directly by the facility;

13. Stockholder servicing costs incurred primarily for the benefit of stockholders or other investors, including annual meetings, annual reports and newsletters, accounting and legal fees for consolidating statements, stock transfer agent fees, and stockbroker and investment analyses;

14. The cost of any equipment, whether owned or leased, not exclusively used by the facility except to the extent the facility demonstrates to the satisfaction of the department that any particular use of equipment was related to resident care;

15. Costs, including by way of illustration and not by way of limitation, for legal fees, accounting and administrative costs, travel costs, and the costs of feasibility studies, attributed to the negotiation or settlement of the sale or purchase of any capital assets, whether by sale or merger, when the cost of the asset has been previously reported and included in the rate paid to any facility;

16. Depreciation expense for facility assets not related to resident care;

17. Personal expenses of owners and employees for items or activities including vacation, boats, airplanes, personal travel or vehicles, and entertainment;

18. Costs not adequately documented (adequate documentation includes written documentation of date of purchase, vendor name, listing of items or services purchased, cost of items purchased, account number to which the cost is posted, and a breakdown of any allocation of costs between accounts or facilities);

19. The following taxes, when levied on a facility:

a. Federal income and excess profit taxes, including any interest or penalties paid thereon;

b. State or local income and excess profit taxes;

c. Taxes in connection with financing, refinancing, or refunding operations such as taxes in the issuance of bonds, property transfers, issuance or transfer of stocks, etc., which are generally either amortized over the life of the securities or depreciated over the life of the asset, but not recognized as tax expense;

d. Taxes such as real estate and sales tax for which exemptions are available to the facility;

e. Taxes on property not used in the provision of covered services; and

f. Taxes such as sales taxes, levied, collected, and remitted by the facility;

20. The unvested portion of a facility's accrual for sick or annual leave;

21. Expenses or liabilities established through or under threat of litigation against the state of North Dakota or any of its agencies, provided that reasonable insurance expenses may not be limited by this subsection;

22. Fringe benefits, not within the definition of that term, which have not received written prior approval of the department;

23. Fringe benefits that discriminate in favor of certain employees, excluding any portion that relates to costs that benefit all employees;

24. Fundraising costs, including salaries, advertising, promotional, or publicity costs incurred for such a purpose;

25. Funeral and cemetery expenses;

26. Travel not directly related to professional conferences, state or federally sponsored activities, or resident services;

27. Items or services such as telephone, television, and radio located in a resident's room and furnished solely for the convenience of the resident;

28. Value of donated goods and services;

29. Religious salaries, space, and supplies;

30. Miscellaneous expenses not related to resident services;

31. Premiums for top management personnel life insurance policies, except that the premiums shall be allowed if the policy is included within a group policy provided for all employees, or if a policy is required as a condition of a mortgage or loan and the mortgagee or lending institution is listed as the beneficiary;

32. Travel costs involving the use of vehicles not exclusively used by the facility unless:

a. Vehicle travel costs do not exceed the amount established by the internal revenue service;

b. The facility supports vehicle costs related to resident care with sufficient documentation, including mileage logs for all miles, purpose of travel, and receipts for purchases; and

c. The facility documents all costs associated with a vehicle not exclusively used by the facility;

33. Vehicle and aircraft costs not directly related to facility business or resident services;

34. Nonresident-related operations and the associated administrative costs;

35. Costs related to income-producing activities regardless of the profitability of the activity;

36. Costs incurred by the facility's subcontractors or by the lessor of property the facility leases, and which become an element in the subcontractor's or lessor's charge to the facility, if such costs would not have been allowable had they been incurred by a facility directly furnishing the subcontracted services or owning the leased property;

37. All costs for services paid directly by the department to an outside facility;

38. Depreciation on the portion of assets acquired with government grants;

39. Costs incurred due to management inefficiency, unnecessary care or services, agreements not to compete, or activities not commonly accepted in the industry;

40. The cost of consumable food products, in excess of income from employees, guests, and nonresidents offset in accordance with subsection 1 of section 75-02-09-16, consumed by persons other than residents or direct care personnel;

41. Payments to residents, whether in cash or in kind, for work performed or for bonuses or rewards based on behavior; and

42. In-house education costs including:

a. Compensation for teachers and teacher aides who provide academic training to residents in-house;

b. Property and plant operation expenses for space used to provide in-house academic training to residents; and

c. The cost of supplies and equipment used in a classroom normally provided by a school district as part of the academic training.

N.D. Admin Code 75-02-09-08

Effective May 1, 1994; amended effective October 1, 2011.

General Authority: NDCC 50-24.1-04

Law Implemented: 42 USC 1396 a(a)(30)(A)