Subsection 144-101-III-50-4000 - VARIABLE COST COMPONENTVariable Costs include all allowable costs that are not defined as fixed costs, staff wages, salaries, or authorized staff benefits, and that are incurred in the efficient and economical operation of the facility.
4010Principle. All reasonable variable costs that providers mustincur to meet State Licensing and Federal Certification standards are allowable.4011 Allowable variable costs shall also include all items of expense that efficient and economical providers incur for the provision of routine services. 4011.1Allowable costs for routine services shall include but not be limited to: a. Supplies for activities, social services, maintenance, housekeeping, laundry, dietary, and office;b. food, plant operations, and plant repairs;c. help-wanted advertising;d. dues (net of lobbying);f. legal fees (related to resident care, see Sections 4160 & 4165);h. short-term working capital interest;i. in-state travel expenses;k. central office administrative and bookkeeping costs;l. auto expenses (see Section 4140);m. pharmacy, dietary, and social services consultants. 4011.2Professionally qualified dietary consultants may be employed by the facility or by the Department. If employed by the Department, dietary consultation services will be provided without any charge to the facilities.4011.3Physician participation in the Professional Policy Committee ICF's. Physicians participating in the semi-annual review meetings of the Professional Policy Committee of an Intermediate Care Facility are an allowable cost up to a maximum of forty-four dollars ($44) per hour. The allowable cost shall be pro-rated on the number of Title XIX residents.4011.4Social worker consultant. Social worker consultants may be provided by the Department or by the facility.4011.5Pharmacist consultants. Pharmacist consultants will be paid directly by the facility and reimbursed through the per diem rate. 4020Bad Debts, Charity, and Courtesy Allowance4021Principle. Bad debts, charity, and courtesy allowances are deductions from revenue and are not to be included in allowable cost. 4030Cost of Educational Activities4031Principle. An appropriate part of the net cost of education activities is an allowable cost.4032Definitions4032.1Educational Activities. Educational activities mean formally organized or planned workshops, seminars, or programs of study usually engaged in by staff members of a facility in order to enhance the quality of resident care within the facility. These continuing education activities are distinguished from and do not include orientation, basic education programs, on-the-job training, in-service education, and similar work learning programs.4032.2Net Cost. The net cost means the cost of educational activities less any reimbursement 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. Out-of-State programs will be reimbursed for registration fee only.4032.3Appropriate Part. Appropriate part means the net cost of the activity apportioned in accordance with the methods set forth in these Principles. Expense for educational activities may be evaluated by the the Department as to appropriateness, quality and cost, and may or may not be included as an allowable cost based on the findings. 4033Basic Education. Educational training programs which a staff member must successfully complete in order to qualify for a position or job shall be considered basic education. Costs related to this education is not within the scope of reimbursement. 4040Research CostsPrinciple. Costs incurred for research purposes, over and above usual patient care, are not includable as allowable costs.
4050Grants, Gifts, and Income from Endowments4051Principle. 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 particular operating costs or group of costs. 4051.1 DHHS funds designated for cash flow assistance, start-up costs, development costs, services/materials not reimbursable through other funding sources or related purposes that must be paid back out of operating funds shall not, for the purposes of determining MaineCare reimbursement, be deducted from operating costs or group of costs. 4052Definitions4052.1Unrestricted 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.4052.2Designated or restricted grants, gifts, and income from endowments. Designated or restricted grants, gifts, and income from endowments are funds, cash or otherwise that must be used only for the specific purpose designated by the donor. This does not refer to grants, gifts, or income from endowments that have been restricted for a specific purpose by the provider. 4060Donation 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. 4070Donation 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. 4080Value of Services of Nonpaid Workers4081Principle. The value of services in positions customarily held by full-time employees performed on a regular scheduled basis by individuals as nonpaid members of organizations, and a provider for the performance of such services without direct remuneration from the provider to such individuals, is an allowable cost subject to the limitation that such services are necessary. The amounts allowed are not to exceed those paid others for similar work. Such amounts must be identifiable in the records of the institutions as a legal obligation for operating expenses.4082Limitations; services of non-paid workers. The services must be performed on a regular scheduled basis in positions customarily held by full-time employees and necessary to enable the provider to carry out the functions of normal patient care and operation of the institution. The value of the services of a type for which providers generally do not remunerate individuals performing such services, is not allowable as a reimbursable cost under the program. For example, donated services of individuals in distributing books and magazines to patients, or in serving in a provider canteen or cafeteria or in a provider gift shop, would not be reimbursable. 4090Purchase Discounts and Allowances, and Refunds of Expenses4091Principle. 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.4092Definitions4092.1. Discounts, in general, are reductions granted for the settlement of debts.4092.2. Allowances are deductions granted for damages, delay, shortage, imperfections, or other causes, excluding discounts and returns.4092.3. Refunds are amounts paid back or a credit allowed on account of an over-collection. 4093Reduction of CostsAll 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.
4094Application4094.1 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. 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 for 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.4094.2 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. 4101Principle. 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.4102Marketing Expenses. Marketing expenses are not allowable costs. 4110Administration, Policy Planning, Bookkeeping, and Management Expenses4111Principle. If administrative, policy planning, bookkeeping, and management functions are performed at the facility site, then the hours must be approved by the Department. The wages and benefits related to the approved hours are reimbursed through the labor component. If these functions are performed at a location other than at the facility, these costs are to be included with the variable component.4112Administrative Functions. The administration function includes those duties which are necessary to the general supervision and direction of the current operations of the facility, including, but not limited to, the following: 4112.1 Hiring and Firing of personnel4112.2 Administrative supervision of the nursing, dietary, and other personnel.4112.3 Supervising the maintenance of patient records and other personnel, payroll, bookkeeping, etc. records of business.4112.4 Supervising the maintenance and repairs of the facility.4112.5 Procuring necessary supplies and equipment. Administrators, assistant administrators, business managers, controllers, office managers, personnel directors, and purchasing agents, typify those who are included in the administration function category.
4113Policy-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: 4113.1 The financial management of the facility.4113.2 The establishment of personnel policies.4113.3 The planning of patient admission policies.4113.4 The planning of expansion and financing thereof. 4114Bookkeeping Function. Bookkeepers, secretaries, clerks, telephone operators, etc., are included in this category. 4114.1 Central office bookkeeping costs may be allocated to each facility on the basis of licensed beds limited to the reasonable cost of bookkeeping services if they had been performed by the individual facility. 4115Management fees. Management fees charged by a parent company are not allowable costs. 4120Cost to Related Organizations4121 Costs of services, facilities, and supplies furnished to the provider by organizations related to the provider by common ownership or control are includable in the allowable costs of the provider at the cost to the related organization. However, such costs are allowable at the lower of; the cost to the provider or the price of comparable services, facilities, or supplies that could be purchased elsewhere.4122Compensation. Compensation means total benefit provided for the administration, policy-planning, bookkeeping, or other services rendered to the provider. It includes:4122.1 Salaries, wages, payroll taxes, fringe benefits, contributions to deferred compensation plan, and other increments paid to or for the benefit of those providing the administration, policy planning , bookkeeping, or other services.4122.2 Life insurance premiums related to insurance on the lives of officers and key employees, where the provider is a direct or indirect beneficiary, are not allowable costs. A provider is a direct beneficiary where, upon the 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 the provider does not receive the proceeds directly, but is, nevertheless, an indirect beneficiary since liability on the loan is reduced.
4123Dividends and Bonuses. Bonuses, dividends, or accruals for the express purpose of giving additional funds to the administrator or owner(s) of the facility are not allowable costs.4124 Salaries paid to corporate officers and directors are not allowable costs unless they are paid for direct services provided to the facility as required by licensing regulations such as those provided by the Chief Executive Officer, the administrator, or other staff member.4126Definitions4126.1Related to Provider. Related to the provider means that the provider to a significant extent is associated or affiliated with or has control of or is controlled by the organization furnishing the services, facilities, and supplies.4126.2Common Ownership. Common Ownership exists when an individual possesses significant ownership or equity in the provider and the institution or organization serving the provider.4126.3. Control exists where an individual or an organization has the power, directly or indirectly, to significantly influence or direct the actions or policies of an organization or institution.4126.4. Owners include any individual or organization with ten percent (10%) equity interest in the provider's operation and any members of such individual's family or his or her spouse's family. Owners also include all partners and all stockholders in the provider's operation and all partners and stock holders or organizations that have an equity interest in the provider's operation. 4140Motor Vehicle Allowance. Cost of operation of a motor vehicle necessary to meet the facility needs is an allowable cost less the portion of usage of that vehicle that is considered personal. Travel between an employee's home and the facility is considered personal usage and is not allowable. The provider must keep a mileage log to track vehicle usage with notations indicating personal or business usage. The facility is allowed one vehicle. Any additional vehicles must be approved by the Department of Health and Human Services, Office of Adults with Cognitive and Physical Disability Services. 4160Legal Fees. Legal fees and related costs incurred by a provider are allowable if related to the provider's furnishing of patient care, e.g., legal fees incurred in appeals. However, legal fees and related costs incurred by a provider related to actions including alleged civil fraud or indictment for a criminal act by the provider or its owners, employees, directors, etc., or legal fees for certain anti-union activities are not related to the furnishing of patient care, and therefore, are unallowable provider costs. 4165Costs Related to Union Activities. Legal fees or other costs incurred for activities directly related to influencing employees with respect to unionization or related to attempts to coerce employees or otherwise interfering with or restraining the exercise of employees rights under the NLRA (National Labor Relations Act) are not allowable costs for program purposes. Such costs are unallowable whether such activities are performed directly by the provider or through an independent contractor, consultant or outside attorney. Costs incurred for activities directly related to expressing management's opinions for purposes of influencing employees not to organize and to form a union are not allowable costs.
Consultants and/or attorneys fees associated with collective bargaining activities in violation of the NLRA are not allowable costs.
After an election is held and the employees have elected to be represented by a union, then all contract negotiations and any procedures that form enforcement of contract terms that are necessary and reasonable are allowable costs. If the contract period is for a period of several years, the costs of collective bargaining will be amortized over the life of the contract.
Within sixty (60) days after the close of their operating year all health care facilities shall submit a written report noting all costs involved in any form of union activity to the Office of MaineCare Services, Department of Health and Human Services, 11 State House Station, Augusta, Maine 04333-0011.
4170Day Habilitation Services Outside of the Facility4171 The staffing costs of the facility will not be allowed during the time members are attending outside Community Support programs, unless a member is unable to attend due to illness, etc., unless such staffing costs are approved by the DHHS Office of Adults with Physical and Cognitive Disabilities. If such a situation occurs, only a minimal amount of staffing required to assist the member not attending Community Support will be allowed.4172 The Department of Health and Human Services will reimburse Community Support services in accordance with Section 21, Chapters II & III, Home and Community Benefits for Members with Intellectual Disabilities or Autistic Disorder. The costs associated with Community Support are not included in the ICF/MR per diem rate. 4180Costs Attributable to Asset Sales. Costs attributable to the negotiation of settlement or 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, banking and broker fees, travel costs, and the cost of feasibility studies. C.M.R. 10, 144, ch. 101, ch. III, 144-101-III-50, subsec. 144-101-III-50-4000