10- 144 C.M.R. ch. 115, § 30

Current through 2024-49, December 4, 2024

Section 144-115-30 - ROUTINE COSTS

30.1Allowable Costs

Routine costs are those items of expense that providers must incur in order to provide room and board to members receiving medical and remedial services, providing the sum of the expenses, in whole or in part, are reasonable and necessary. Allowable routine costs include:

30.1.1 Maintenance wages, payroll taxes and fringe benefits.

30.1.2 Other room and board expenses, such as food and supplies (except medical supplies), fuels for heating and cooking, towels, linens, costs associated with repairs and maintenance, insurance (other than fire), utilities (except water and sewer) and electricity.

30.1.3 General and administrative costs, excluding the administrative allowance which is part of the fixed/capital component, but including reasonable support costs. Examples of allowable general and administrative costs include telephone, dues and subscriptions, vehicle or transportation costs (other than interest and depreciation), office supplies, legal and accounting, bookkeeping, software and associated ongoing support costs, and interest on current indebtedness.

30.1.4 Allowable costs shall also include the following taxes and benefits applicable to routine service staff: pay roll taxes, unemployment, health insurance, dental insurance, employer term life/disability insurance, and qualified retirement contributions.

30.1.5 The PNMI's facility-specific routine services rate will be reduced by the actual amount of wages, taxes, and benefits of laundry, housekeeping, and dietary direct services covered under Section 97, PNMI Services as of July 1, 2002.

For a new facility, the routine component will initially be determined by including all laundry, housekeeping and dietary direct service wages, taxes and benefits and applying those costs against the routine upper limit. Once the laundry, housekeeping and dietary direct service costs are removed, the routine rate will be reduced accordingly.

30.1.6 For the state fiscal year ending June 30, 2019, a special supplemental allowance must be made to Appendix C PNMIs to provide for increases in wages and wage-related benefits in the routine cost component. An amount equal to ten percent (10%) of wages and associated benefits and taxes in the routine cost component as reported on each facility's as-filed cost report for its fiscal year ending in calendar year 2016 must be added to the cost per resident day in calculating each facility's prospective rate, notwithstanding any otherwise applicable caps or limits on reimbursement. This supplemental allowance must also be allowed and paid at final audit to the full extent that it does not cause reimbursement to exceed the facility's allowable cost per day in the routine cost component in that fiscal year.

30.2Interest

Interest on current indebtedness is an allowable routine cost. Interest on working capital loans for normal operating expenses is allowable provided the funds are borrowed for a relatively short term, usually one (1) year or less, but in no event more than fifteen (15) months. Interest must be necessary and proper as defined in Section 20.4. Allowable interest does not include interest and penalties charged for failure to pay accounts when due.

30.3Bad Debts, Charity, and Courtesy Allowance

Bad debts, charity, and courtesy allowances are deductions from revenue and are not to be included in allowable costs.

30.4Cost of Educational Activities

30.4.1 Orientation, on-the-job training, in-service education and similar instruction are recognized as normal routine costs when related to room and board (routine costs). Reasonable registration fees and transportation costs of relevant in-state training programs are allowed if included as employee benefits in a written personnel policy. The cost of relief staff to replace employees whose wages are considered room and board are also an allowable routine cost. Costs associated with out-of-state training programs are not allowed as room and board costs.

30.4.1(a) Orientation is training provided to new employees who provide room and board services to acquaint them with the facility's philosophy, goals, organization, programs, and practices, and to familiarize new employees with the tasks they will be expected to perform.

30.4.1(b) On-the-Job Training is competency-based hands-on training provided to new employees who provide room and board to teach and enhance skills related to the performance of their duties.

30.4.1(c) In-service education and similar instruction is an organized educational program for updating, maintaining, and improving employees' skills and competencies, and is based on the expressed job-related needs of the employees who provide room and board services.

30.5Research Costs

Costs that are incurred for research purposes over and above usual provision of room and board to members are not an allowable routine cost.

30.6Grants, Gifts, and Income from Endowments

30.6.1 Gifts, grants, or endowment income designated by a donor for paying specific room and board or operating costs shall be deducted from the particular operating cost or group of costs. Any portion to the above cited grants or gifts will not be offset until such time as it is used. Unrestricted Federal or State grants or gifts received by a facility, without designation for their usage, will be used to reduce the total operating costs of the facility.

30.6.2 All (gross) investment income (not net investment income) from unrestricted grants, gifts or endowment funds will be used first to offset any differential between the facility's room and board rate and its room and board costs, up to the Departmental upper limit on routine services. Any remaining investment income shall then be used to reduce interest expense.

30.6.2(a) Unrestricted grants, gifts, and income from endowments are funds, cash or otherwise, given to the provider without restriction by the donor as to their use.

30.6.2(b) 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.

30.7Life Contracts

The Department will not participate in the cost of providing room and board to members in non-profit facilities whose care is covered by negotiated life contracts. The term life contract means a negotiated agreement that commits a facility to provide care for an individual for the remainder of that person's life.

30.8Unrestricted Income

Unrestricted income from sources such as unrestricted grants, gifts, or endowments are expected to be used to improve the quality of the environment and services to the member. The unrestricted income will be used to decrease the total operating costs of the facility.

30.9Donations 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 that 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 shall be deleted in determining allowable costs.

30.10Donation 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 of 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 shall be deleted in determining allowable costs.

30.11EXTRAORDINARY CIRCUMSTANCE ALLOWANCE

Effective November 1, 2017, facilities which experience unforeseen and uncontrollable events during a year that result in unforeseen or uncontrollable increases in routine cost expenses may request an adjustment to a prospective rate in the form of an extraordinary circumstance allowance (ECA).

Unforeseen means that a provider did not have sufficient notice of the change to make changes to their operations that would have avoided the cost of the event.

Uncontrollable means that the event occurred as a result of forces unrelated to the discretionary management authority exercised by the provider's organization. Business decisions are not considered uncontrollable.

Extraordinary circumstances may include, but are not limited to:

* events of a catastrophic nature (fire, flood, etc.);

* unforeseen increase in minimum wage, Social Security, or employee retirement contribution expenses in lieu of Social Security expenses;

* changes in the number of licensed beds, which excludes any requests by providers to change licensed beds;

* changes in licensure or accreditation requirements.

If the Department concludes that an extraordinary circumstance existed, and the increased routine costs are considered reasonable and necessary, an adjustment will be made by the Department in the form of a supplemental allowance.

The Department will determine from the nature of the extraordinary circumstance whether it would have a continuing impact and therefore whether the allowance should be included in the computation of the base rate for the succeeding year. Reimbursement to a residential care facility for additional routine costs arising from extraordinary circumstance must be paid via a supplemental payment that is added to the per diem reimbursement rate until the Department adjusts the routine limit, as applicable, to fairly and properly reimburse a facility for these costs.

A request for an ECA must be made in writing and addressed to:

Department of Health and Human Services

Director of Rate-Setting

11 State House Station

Augusta, ME 04333

The written request must include:

1. The reason(s) for the ECA request;

2. The dollar amount of the ECA request;

3. The expected/anticipated duration of the need for the ECA;

4. An explanation of how the ECA request is both unforeseen and uncontrollable; and

5. All documentation supporting the ECA request.

The Department may require additional documentation to review and process the ECA request. A facility requesting an ECA shall provide all documents requested by the Department. The Department shall deny any ECA requests from facilities who refuse to supply requested documentation.

10- 144 C.M.R. ch. 115, § 30