N.Y. Comp. Codes R. & Regs. tit. 1 § 400.1

Current through Register Vol. 46, No. 50, December 11, 2024

Section 400.1 - Definitions

For purposes of this Part:

(a) Administrative expenses are those expenses authorized and allowable pursuant to applicable agency regulations, contracts or other rules that govern reimbursement with State funds or State-authorized payments that are incurred in connection with the covered provider's overall management and necessary overhead that cannot be attributed directly to the provision of program services.

(1) Such expenses include but are not limited to the following expenses, if otherwise authorized and allowable pursuant to applicable agency regulations, contracts or other rules that govern reimbursement with State funds or State-authorized payments:

(i) that portion of the salaries and benefits of staff performing administrative and coordination functions that cannot be attributed to particular program services, including but not limited to the executive director or chief executive officer, financial officers such as the chief financial officer or comptroller and accounting personnel, billing, claiming or accounts payable and receivable personnel, human resources personnel, public relations personnel, administrative office support personnel, and information technology personnel, where such expenses cannot be attributed directly to the provision of program services;

(ii) that portion of legal expenses that cannot be attributed directly to the provision of program services; and

(iii) that portion of expenses for office operations that cannot be attributed directly to the provision of program services, including telephones, computer systems and networks, professional and organizational dues, licenses, permits, subscriptions, publications, audit services, postage, office supplies, conference expenses, publicity and annual reports, insurance premiums, interest charges and equipment that is expensed (rather than depreciated) in cost reports, where such expenses cannot be attributed directly to the provision of program services.

(2) Administrative expenses do not include:

(i) capital expenses, including but not limited to non-personal service expenditures for the purchase, development, installation, and maintenance of real estate or other real property; or

(ii) property rental, mortgage or maintenance expenses; or

(iii) taxes payments in lieu of taxes, or assessments paid to any unit of government; or

(iv) equipment rental, depreciation and interest expenses, including expenditures for vehicles and fixed, major movable and adaptive equipment that is expensed (rather than depreciated) in cost reports; or

(v) expenses of an amount greater than $10,000 that would otherwise be administrative, except that they are either non-recurring (no more frequent than once every five years) or not anticipated by a covered provider (e.g., litigation-related expenses). Such expenses shall not be considered administrative expenses or program expenses for purposes of this regulation; or

(vi) that portion of the salaries and benefits of staff performing policy development or research.

(b) Covered executive is a compensated director, trustee, managing partner, or officer whose salary and/or benefits, in whole or in part, are administrative expenses, and any key employee whose salary and/or benefits, in whole or in part, are administrative expenses and whose executive compensation during the reporting period exceeded $199,000. For the purposes of this definition, the terms director, trustee, officer, and key employee shall have the same meaning as such terms in the Internal Revenue Service's instructions accompanying Form 990, Part VII. If the number of key employees employed by the covered provider who meet this definition exceeds 10, then the covered provider shall report only those 10 key employees whose executive compensation is the greatest during the reporting period and no other key employees shall be considered covered executives. Clinical and program personnel in a hospital or other entity providing program services, including chairs of departments, heads of service, chief medical officers, directors of nursing, or similar types of personnel fulfilling administrative functions that are nevertheless directly attributable to and comprise program services shall not be considered covered executives for purposes of limiting the use of State funds or State-authorized payments to compensate them. In the event that a covered provider pays a related organization to perform administrative or program services, the covered executives of the related organization shall also be considered covered executives of the covered provider for purposes of reporting and compliance with these regulations if more than 30 percent of such a covered executive's compensation is derived from State funds or State-authorized payments received from the covered provider. In such a circumstance, the related organization shall not be subject to the limitations on the use of State funds or State- authorized payments for administrative expenses in section 400.2 of this Part solely as a result of having covered executives.

(c) Covered operating expenses shall mean the sum of program services expenses and administrative expenses of a covered provider as defined in subdivision (d) of this section.

(d) Covered provider.

(1) A covered provider is an entity or individual that:

(i) has received pursuant to contract or other agreement with the department, or with another governmental entity, including county and local governments, or an entity contracting on its behalf, to render program services, State funds or State-authorized payments during the covered reporting period and the year prior to the covered reporting period and in an average annual amount greater than $500,000 during those two years; and

(ii) at least 30 percent of whose total annual in-State revenues for the covered reporting period and for the year prior to the covered reporting period were from State funds or State-authorized payments. This percentage shall be calculated as a percentage of the total annual revenues derived from and in connection with the provider's activities within New York State, irrespective of whether the provider derives additional revenues from activities in another state. The source of such revenues shall include those from sources outside New York State if such revenues were derived from or in connection with activities inside New York State, including, for example, contributions by out-of-state individuals or entities for in-State activities. Where applicable, a provider's method of calculating in-state revenues for purposes of determining tax liability or in connection with completion of its financial statements shall be deemed acceptable by the department for the purpose of applying this paragraph.

(2) For purposes of this Part, the method of accounting used by the entity or individual in the preparation of its annual financial statements shall be used, except that an entity or individual that otherwise reports to the department using a different method of accounting shall use such method.

(3) The following providers shall not be considered covered providers:

(i) State, county, and local governmental units in New York State, and tribal governments for the nine New York State recognized nations and any subdivisions or subsidiaries of the foregoing entities;

(ii) individuals or entities providing child care services who are in receipt of child care subsidies pursuant to title 5-C or section 410 of the Social Services Law, except that such providers may be considered a covered provider if it also receives State funds or State-authorized payments that are not child care subsidies pursuant to title 5-C or section 410 of the Social Services Law and would otherwise satisfy the criteria in this definition;

(iii) individual professional(s), partnerships, and S corporations, or other entities, at least 75 percent of whose program services paid for by State funds or State-authorized payments are provided by the individual professional(s), by the partner(s), or by the owner(s) of the corporation or entity, rather than by employees or independent contractors employed or retained by the entity, as determined by the amounts obtained in State funds or State-authorized payments for such program services;

(iv) individuals or entities providing primarily or exclusively products, rather than services, in exchange for State funds or State-authorized payments, including but not limited to pharmacies and medical equipment suppliers. For the purpose of applying this exception, the percentage of revenues derived from products rather than from services shall be used; and

(v) entities within the same corporate family as a covered provider, including parent or subsidiary corporations or entities, except where such a corporation or entity would otherwise qualify as a covered provider but for the fact that it has received its State funds or State-authorized payments from a covered provider rather than directly from a governmental agency.

(e) Covered reporting period shall mean the provider's most recently completed annual reporting period, as defined herein, commencing on or after July 1, 2013.

(f) Department means the New York State Department of Agriculture and Markets.

(g) Executive compensation shall include all forms of cash and noncash payments or benefits given directly or indirectly to a covered executive, including but not limited to salary and wages, bonuses, dividends, distributions to a shareholder/partner from the current reporting period's earnings where such distributions represent compensatory or guaranteed payments or compensatory partnership profits allocation or compensatory partnership equity interest for services rendered during such reporting period, and other financial arrangements or transactions such as personal vehicles, housing, below-market loans, payment of personal or family travel, entertainment, and personal use of the organization's property, reportable on a covered executive's W-2 or 1099 form, except that mandated benefits (e.g., Social Security, worker's compensation, unemployment insurance and short-term disability insurance), and other benefits such as health and life insurance premiums, and retirement and deferred compensation plan contributions that are consistent with those provided to the covered provider's other employees shall not be included in the calculation of executive compensation. For the purposes of this definition, such benefits shall be considered consistent with those provided to other employees where the intended value of the benefit is substantially equal, even where the cost to the covered provider to provide such a benefit may differ. With respect to employer contributions to retirement and deferred compensation plans that are not consistent with those provided to other employees, executive compensation shall be deemed to include only those amounts contributed or accrued during the reporting period for the benefit or intended benefit of the covered executive, even if not reported on the executive's W-2 or 1099 for that reporting period (but not those amounts that vested during such period but were contributed or accrued prior to the period).

(h) Program services are those services rendered by a covered provider or its agent directly to and for the benefit of members of the public (and not for the benefit or on behalf of the State or the awarding agency) that are paid for in whole or in part by State funds or State-authorized funds. Program services shall not include:

(1) policy development or research; or

(2) staffing or other assistance to a State agency or local unit of government in such agency's or government's provision of services to members of the public.

(i) Program services expenses are those expenses authorized and allowable pursuant to applicable agency regulations, contracts or other rules that govern reimbursement with State funds or State-authorized payments that are incurred by a covered provider or its agent in direct connection with the provision of program services.

(i) that portion of the salaries and benefits of staff providing particular program services, including for example, employees or contractors providing direct care to clients, and supervisory personnel and support personnel whose work is attributable to a specific program in whole or in part and contributes directly to the quality or scope of the program services provided;

(ii) that portion of the salaries and benefits of quality assurance and supervisory personnel whose work is attributable in whole or in part to particular programs and contributes to the quality or scope of the program services provided by other personnel and related expenses; and

(iii) that portion of expenses incurred in connection with and attributable to the provision of particular program services, including for example, travel costs to and from client residences, direct care supplies, public outreach or education or personnel training to facilitate program services delivery, information technology and computer services and systems directly attributable to program services such as, for example, electronic patient records systems to facilitate improved patient care or computer systems used in program services delivery or documentation of program services provided, quality assurance and control expenses, and legal expenses necessary to accomplish particular program service objectives.

(2) Program services expenses do not include:

(i) capital expenses, including but not limited to non-personal service expenditures for the purchase, development, installation, and maintenance of real estate or other real property; or

(ii) property rental, mortgage or maintenance expenses, except where such expenses are made in connection with providing housing to members of the public receiving program services from the covered provider; or

(iii) taxes, payments in lieu of taxes, or assessments paid to any unit of government; or

(vi) that portion of the salaries and benefits of staff performing policy development or research.

(j) Related organization shall have the same meaning as the same term in Schedule R of the Internal Revenue Service's Form 990 except that for purposes of this regulation a related organization must have received or be anticipated to receive State funds or State-authorized payments from a covered provider during the reporting period.

(k) Reporting period shall mean, at the provider's option, the calendar year or, where applicable, the fiscal year used by a provider. However, where a provider is required to file an annual cost report with the State, reporting period shall mean the reporting period applicable to said cost report.

(l) State-authorized payments refer to those payments of funds that are not State funds but which are distributed or disbursed upon a New York state agency's approval or by another governmental unit within New York State upon such approval, including but not limited to the Federal and county portions of Medicaid program payments approved by the State agency. The department shall publish a list of government programs whose funds shall be considered State-authorized payments prior to the effective date of this regulation. For purposes of this regulation, State-authorized payments shall not include any payments solely for the following purposes:

(1) procurement contracts awarded on a lowest price basis pursuant to section 163 of the State Finance Law;

(2) awards to State or local units of government except to the extent such funds or payments are used by such government unit to pay covered providers to provide program services through a contract or other agreement;

(3) capital expenses, including but not limited to non-personal service expenditures for the purchase, development, installation, and maintenance of real estate or other real property, or equipment;

(4) direct payments of State funds or State-authorized payments, or provision of vouchers or other items of monetary value that may be used to secure specific services selected by the individual, or health insurance premiums including but not limited to New York State Health Insurance Program (NYSHIP) premium payments, or Supplemental Security Income (SSI) payments, to or on behalf of individual members of the public;

(5) wage or other salary subsidies paid to employers to support the hiring or retention of their employees;

(6) awards to for-profit corporations or other entities engaged exclusively in commercial or manufacturing activities and not in the provision of program services;

(7) policy development or research; or

(8) funds expressly intended to pay exclusively for administrative expenses, including but not limited to Community Service Program core contract funding for HIV/AIDS services programs.

(m) State funds are those funds appropriated by law in the annual State budget pursuant to article VII, section 7 of the New York State Constitution. The department shall publish a list of government programs whose funds shall be considered State funds prior to the effective date of this regulation. For purposes of this Part, State funds shall not include any payments solely for the following purposes:

(1) procurement contracts awarded on a lowest price basis pursuant to section 163 of the State Finance Law;

(5) wage or salary subsidies paid to employers to support the hiring or retention of their employees;

(6) awards to for-profit corporations or other entities engaged exclusively in commercial or manufacturing activities and not in the provision of program services;

(7) policy development or research; or

(8) funds expressly intended to pay exclusively for administrative expenses, including but not limited to Community Service Program core contract funding for HIV/AIDS services programs.

N.Y. Comp. Codes R. & Regs. Tit. 1 § 400.1