Section 6.13 - Resident Care Facilities(1)Required Reports.(a)Resident Care Facility Cost Report. Each Resident Care Facility must complete and file a Residential Care Cost Report each calendar year with the Center, containing the Resident Care Facility's claim for reimbursement and the complete financial condition of the Resident Care Facility, including all applicable management company, central office, and real estate expenses.(b)Realty Company Cost Report. A Resident Care Facility that does not own the real property of the Resident Care Facility, and pays rent to an affiliated or non-affiliated realty trust or other business entity, must file or cause to be filed a realty company Cost Report with the Center. If no report is filed, the Center will recommend that EOHHS should not reimburse the costs associated with the Resident Care Facility's rental expense.(c)Management Company Cost Report. A Resident Care Facility that claims management or central office expenses must file a separate management company Cost Report with the Center for each entity for which it claims management or central office expenses. If these costs are claimed for reimbursement, the Resident Care Facility must certify that costs are reasonable and necessary for the care of Publicly-aided Residents in Massachusetts.(2)General Cost Reporting Requirements.(a)Accrual Method. Resident Care Facilities must complete all required reports using the accrual method of accounting.(b)Documentation of Reported Costs. Resident Care Facilities must maintain accurate, detailed, and original financial records to substantiate reported costs for a period of at least five years following the submission of required reports or until the final resolution of any appeal involving a rate for the period covered by the report, whichever occurs later. Resident Care Facilities must maintain complete documentation of all of the financial transactions and census activity of the Facility and affiliated entities, including but not limited to the books, invoices, bank statements, canceled checks, payroll records, governmental filings and any other records necessary to document the Resident Care Facilities' claim for reimbursement. Resident Care Facilities must be able to document expenses relating to affiliated entities for which reimbursement is claimed whether or not they are Related Parties.(c)Fixed Asset Ledger. Resident Care Facilities must maintain a fixed asset ledger that clearly identifies each asset for which reimbursement is being claimed, including its location, the date of purchase, the cost, salvage value, accumulated depreciation, and the disposition of sold, lost or fully depreciated assets.(d)Job Descriptions and Time Records. Resident Care Facilities and management companies must maintain written job descriptions including time records, qualifications, duties, and responsibilities for all positions for which reimbursement is claimed. The Center will recommend that EOHHS should not reimburse the salary and fringe benefits or the imputed amount for Sole Proprietors as specified in 101 CMR 204.04(2): Base Year Variable Cost for any individual for which the Resident Care Facilities does not maintain a job description and time record.(e)Other Cost Reporting Requirements. 1.Expenses that Generate Income. Resident Care Facilities must identify the expense accounts that generate income. The Center will recommend that EOHHS should offset reported ancillary income if the Resident Care Facility does not identify the associated expense account.2.Laundry Expense. Resident Care Facilities must separately identify the expense associated with laundry services not provided to all Residents. Resident Care Facilities may not claim reimbursement for such expense.3.Fixed Costs. a.Resident Care Facilities must allocate all Fixed Costs, except Equipment, on the basis of square footage. Resident Care Facilities may elect to specifically identify Equipment related to the Facility. The Resident Care Facilities must document each piece of Equipment in the fixed asset ledger. If a Provider elects not to identify Equipment, it must allocate Equipment on the basis of square footage.b.If a Resident Care Facility undertakes construction to replace beds, it must write off the fixed assets that are no longer used to provide care to Publicly-aided Residents and may not claim reimbursement for the assets.c.Resident Care Facilities must separately identify fully depreciated assets. Resident Care Facilities must report the costs of fully depreciated assets and related accumulated depreciation on all reports unless they have removed such costs and accumulated depreciation from the Resident Care Facilities' books and records. Resident Care Facilities must attach to the Cost Report a schedule of the cost of the retired Equipment, accumulated depreciation and the accounting entries on the books and records of the Facility when the Equipment is retired.d.Resident Care Facilities may not report expenditures for major repair projects whose useful life is greater than one year as expenses.e.Resident Care Facilities must not report such expenditures as pre-paid expenses.4.Mortgage Acquisition Costs. Resident Care Facilities must classify Mortgage Acquisition Costs as other Assets. Resident Care Facilities may not add Mortgage Acquisition Costs to fixed asset accounts.5.Related Parties. Resident Care Facilities must report salary expenses paid to a Related Party and must identify all goods and services purchased from a Related Party. If a Resident Care Facility purchases goods and services from a Related Party, it must disclose the Related Party's cost of the goods and services. The Center will recommend that EOHHS should limit reimbursement for such goods and services to the lower of the Related Party's cost or the cost determined using the Prudent Buyer Concept.6.Service of Non-paid Workers. The services must be fully disclosed in the Footnotes and Explanations section of the Cost Report. Both the total Expense and the account(s) in which the expense is reported must be identified.7.Facilities in which other Programs are Operated. If a Resident Care Facility operates an adult day health program, an assisted living program, or provides outpatient services, the Resident Care Facility must not claim reimbursement for the expenses of such programs. If the Resident Care Facility converts a portion of the Facility to another program, the Resident Care Facility must: a.identify existing Equipment no longer used in Facility operations. Such Equipment must be removed from the Facility's records;b.identify the square footage of the existing Building and improvement costs associated with the program, and the Equipment associated with the program; andc.allocate shared costs, including shared capital costs, using a well documented and generally accepted allocation method. The Resident Care Facility must directly assign to the program any additional capital expenditures associated with the program.(3)Filing Deadlines.(a)General. All Resident Care Facilities must file required Cost Reports for the calendar year by 5:00 P.M. April 1st of the following calendar year. If April 1st falls on a weekend or holiday, the reports are due by 5:00 P.M. of the following business day.(b)Special Provisions.1.Change of Ownership. The transferor must file Cost Reports with the Center within 60 days after a Change of Ownership. The Center will notify the Department of Transitional Assistance if required reports are not filed timely for payments to be withheld or other appropriate action by that agency.2.New Facilities and Facilities with Major Additions. New Facilities and Facilities with Major Additions that become operational during the Rate Year must file year end Cost Reports with the Center within 60 days after the close of the first and second Rate Years.3.Appointment of a Resident Protector Receiver. If a receiver is appointed pursuant to M.G.L. c. 111, § 72N, the Resident Care Facilities must file Cost Reports for the pre-receivership reporting period or portion thereof with the Center, within 60 days of the receiver's appointment.4.Closed Facilities. A Facility that permanently closes is not required to file the reports cited in 101 CMR 204.07(1): Required Reports for the year in which the Facility closed.(4)Incomplete Submissions. If the Cost Reports are incomplete, the Center will notify the Resident Care Facility in writing within 120 days of the receipt. The Center will specify the additional information that the Resident Care Facility must submit to complete the Cost Reports. The Resident Care Facility must file the necessary information within 25 days of the date of notification or by April 1st of the year the Cost Reports are filed, whichever is later. If the Center fails to notify the Resident Care Facility within the 120-day period, the Cost Reports will be considered complete and deemed to be filed on the date of receipt.(5)Amended Reports. Amended Reports will be accepted no later than August 15th of the year in which the Cost Reports are due. Amended Reports must be accompanied by a complete list of the corrections made to the reports with sufficient supporting documentation along with an explanation of the reasons therefore.Adopted, Mass Register Issue 1259, eff. 4/25/2014.