7 AAC 150.170 - Allowable reasonable operating costs
(a) Allowable costs
for prospective per-day and percentage of charges rates are the costs from the
appropriate base year's Medicare cost report, in accordance with Medicare
requirements and regulations, as audited or adjusted in accordance with this
section. The department will consider only costs that are consistent with
efficient, cost-effective management and operations. Only operating costs that
are directly related to the delivery of health care services to Medicaid
patients will be allowed for the purpose of rate setting.
(b) Operating costs are the costs of
providing health care services to Medicaid patients that are necessary and
reasonable and that are not excluded by this section. The following costs are
excluded or otherwise limited as set out in this subsection:
(1)
advertising cost: the cost
of advertising, which includes marketing, is allowable only to the extent that
the advertising is directly related to the care of patients at the facility;
the reasonable cost of only the following types of advertising and marketing is
allowable:
(A) announcing the opening of or
change of name of a facility;
(B)
recruiting for personnel;
(C)
advertising for the procurement or sale of items;
(D) obtaining bids for construction or
renovation;
(E) advertising for a
bond issue;
(F) informational
listing of the provider in a telephone directory;
(G) listing a facility's hours of
operation;
(H) advertising
specifically required as part of a facility's accreditation process;
(2)
nursing cost: the
cost of nursing staff in a long-term care facility is allowable as a routine
cost only; the cost of nursing personnel is not an allowable ancillary cost
even if the nursing personnel are working under the supervision of a licensed
patient care provider;
(3)
physician cost: physician compensation costs and charges
associated with providing care to patients are not allowable for purposes of
calculating a prospective payment rate;
(4)
medical service cost:
medical services, including those services described in
7
AAC 145.650(c) (5), that a long-term
care unit or facility is not licensed to provide, are not an allowable
long-term care unit or facility ancillary cost;
(5)
management fees: a facility
must file with its year-end report, as described in
7
AAC 150.130, any management agreement, or change to a
management agreement with a firm that, or an individual other than an employee
who, will manage the facility during the period the prospective rate is
effective; management fees paid to a firm or to an individual who is not an
employee of the facility or of the facility's home office are allowable costs
only if the
(A) fees are paid in accordance
with the terms of a written management agreement that creates a principal/agent
relationship between the facility and the manager, and sets out the items,
services, and activities to be provided by the manager;
(B) facility documents the actual delivery of
management services;
(C) services
do not duplicate management services otherwise provided to the facility;
and
(D) management fees are
reasonably attributable to the management of the local facility;
(6)
costs are authorized by
a certificate of need: costs authorized by a certificate of need are
allowable as follows:
(A) interest,
depreciation, and other capital costs will not be recognized on the entire
basis of assets purchased after January 18, 1990, if a certificate of need was
required and the facility did not secure one; recognition of interest,
depreciation, and other capital costs for which a certificate of need was
required will be no greater than the amounts described and approved in the
certificate of need application and other information the applicant provided as
a basis for approval of the certificate of need;
(B) prospective payment rates for facilities
that are calculated and paid on a per diem rate basis will be no greater than
the per diem rates proposed in the certificate of need application and other
information the applicant provided as a basis for approval of the certificate
of need for the first year during which the following listed items are
available for use and for the two years immediately following that first year:
(i) opening of the new or modified health
care facility;
(ii) alteration of
the bed capacity; or
(iii) the
implementation date of a change in offered categories of health service or bed
capacity;
(C) in
determining whether interest, depreciation, and other capital costs exceed
those amounts approved under a certificate of need, and for determining the
maximum prospective per diem rate approved under a certificate of need, the
department will consider the
(i) terms of
issuance describing the nature and extent of the activities authorized by the
certificate; and
(ii) facts and
assertions presented by the facility in the application and certificate of need
review record, including purchase or contract prices, the rate of interest
identified or assumed for any borrowed capital, lease costs, donations,
development costs, staffing and administration costs, and other information the
facility provided as a basis for approval of the certificate of need;
(D) if a certificate is issued
authorizing only part of the activities proposed in a certificate of need
application, the limitation of rates will be based upon the factors noted under
(C) of this paragraph;
(E) costs to
inpatient hospital providers are limited to costs not reimbursed under the
Diagnosis Related Groups (DRG) methodology set out under
7
AAC 150.250;
(7)
pharmaceutical supplies and
materials: pharmaceutical supplies and materials for patients who are
residents of a long-term care facility, or an intermediate care facility for
the mentally retarded, are paid in accordance with
7
AAC 145.650(c) and
7
AAC 145.660(c); these costs and
charges, with the exception of the costs of nonprescription drugs dispensed as
ordered by a physician, are excluded from facility prospective payment rates;
all costs associated with the administration and delivery of prescription
pharmacy supplies and material costs are not ancillary;
(8)
intergovernmental transfers:
an intergovernmental transfer of money is not an allowable cost for purposes of
calculating a prospective payment rate;
(9)
costs of certified registered nurse
anesthetists: costs of certified registered nurse anesthetists are
allowable costs under this section if those costs are not covered under a
separate provider payment program;
(10)
swing-bed costs: swing-bed
costs, determined by multiplying the base year total swing-bed days by the
swing-bed rate in effect for that period, are not allowable costs under this
section;
(11)
ancillary
costs: ancillary costs covered under a separate provider agreement or
alternate resources are not allowable costs under this section;
(12)
allowable home office
costs: allowable home office costs may not exceed the most recent
Medicare-audited Medicare home office cost statement available in the
department's files 60 days before the beginning of a re-based prospective rate
year; if the Medicare-audited Medicare home office cost statement is not from
the same year as the facility's base year, the costs will be inflated to the
facility's base year using the methodology described in
7
AAC 150.150;
(13)
provider-based clinic
costs: the department will not allow provider-based clinic costs; for
purposes of this paragraph, provider-based clinic costs include
(A) capital costs for a clinic,
administrative costs for a clinic, general health care or nursing services in a
clinic, and any other allocated overhead costs for a clinic; and
(B) items reported under a "clinic" component
or a "clinic" cost center of a hospital; for purposes of this subparagraph, the
department will consider a component or cost center to be a "clinic" component
or "clinic" cost center if that component or cost center is established
primarily for the provision of outpatient physicians' or nurse practitioners'
services;
(14)
advocacy and lobbying activity expenses: advocacy expenses,
lobbying activity costs and special assessments to fund the preparation of
advocacy and position papers are not allowable costs; for dues, meetings,
conference fees, and memberships in trade organizations and associations, a
facility may claim up to 75 percent as allowable costs; health care training
expenses will not be considered unallowable solely because a trade organization
or association sponsors the training;
(15)
nonallowable cost related to a
court or administrative proceeding initiated by a facility: costs
incurred by a facility related to a court or administrative proceeding
originally initiated by a facility are not allowable under this section, except
that costs incurred on an issue in a court or administrative proceeding
originally initiated by a facility are allowable operating costs under this
section if the facility is the prevailing party on the issue under a final
order, and the rules governing the proceeding make no provision for award of
fees and costs to a prevailing party; allowable operating costs under this
paragraph related to a court or administrative proceeding originally initiated
by the facility are limited to expenses incurred in the base year.
Notes
Authority: AS 47.05.010
AS 47.07.070
AS 47.07.071
AS 47.07.073
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.