Subsection 144-101-III-107-16 - 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 costs for the routine cost component shall be the routine costs defined in Principle 1.4 for these costs listed in Principle 16, except for facilities whose MaineCare rates are based on pro forma cost reports in accordance with Principle 23. Subsequent years will be based on the most recently audited fiscal year. The routine cost component is determined by adjusting routine costs pursuant to Principles 23.
16.1Principle. All expenses which providers must incur to meet state licensing and federal certification standards are allowable.16.2Inventory 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.16.3Allowable 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.16.4Allowable costs for the routine component of the rate. 16.4.1 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;(j) office supplies/telephone;(k) conventions and meetings within the state of Maine;(l) EDP bookkeeping/payroll;(m) fringe benefits, to include:(2) qualified retirement plan contributions;(3) group health, dental, and life insurance;(o) one (1) association dues, the portion of which is not related to lobbying; and(p) food, vitamins and food supplements. For a more complete description of allowable costs in each cost center, see the explanations in Principles 16.4.1 - 16.4.2.10.
16.4.2Administration 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:16.4.2.1 Central 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.16.4.2.2Policy 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.16.4.2.3Compliance. Compliance with all other regulations specific to administrative functions in PRTFs that are included in State Licensing Regulations and all other State and Federal regulations.16.4.2.4Dividends 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.16.4.2.5Management fees. Management fees charged by a parent company or by an unrelated organization or individual are not allowable costs.16.4.2.6Corporate 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.16.4.2.7Central 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.16.4.2.8Laundry services including personal clothing for MaineCare residents.16.4.2.9Net 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: registration fees, salary of the staff member if replaced, and meals and lodging as appropriate.16.4.2.10Dues. Dues are allowed only if the PRTF 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.16.4.2.11 Reimbursement for a facility administrator is capped at $80,170 per year including salary, employment taxes, paid time off, and benefits.16.5Principle. Research Costs are not includable as allowable costs.16.6Grants, Gifts, and Income from Endowments16.6.1Principle. 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.16.6.2Donations 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.16.6.3Donation 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.16.7Purchase Discounts and Allowances and Refunds of Expenses16.7.1Principle. 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.16.7.2Reduction 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.16.7.3Application 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.16.7.4Discounts, 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.16.8Principle. 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.16.9Legal 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.16.10Costs 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.16.11Bad 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-107, subsec. 144-101-III-107-16