Ariz. Admin. Code § R9-25-1106 - Rate of Return Setting Considerations (A.R.S. Sections 36-2232, 36-2239)

A. In determining the rate of return on gross revenue in A.R.S. § 36-2239(I)(4), the Director shall consider a ground ambulance service's:

1. Direct costs for operating the ground ambulance service within its service area, including the costs of supplies and equipment;

2. Indirect costs for operating the ground ambulance service within its service area, such as costs that do not include the costs of supplies or equipment;

3. Financial statements;

4. Cash flow statement;

5.4. Ratio between variable and fixed costs on the financial statements;

6.5. Method of indirect costs allocation to specific cost-center areas;

7.6. Return on equity;

8.7. Reimbursable and non-reimbursable charges;

9.8. Type of business entity;

10.9. Monetary amount and type of debt financing;

11.10. Replacement and expansion costs;

12.11. Number of calls, transports, and billable miles;

13.12. Costs associated with rules, inspections, and audits;

14.13. Substantiated prior reported losses;

15.14. Medicare and AHCCCS settlements, the difference between the general public rate a ground ambulance service assesses a patient and what a ground ambulance service receives from Medicare or AHCCCS as an allowable rate; and

16.15. Any other information or documents needed by the Director to clarify incomplete or ambiguous information or documents.

B. In determining the rate of return on gross revenue in A.R.S. § 36-2239(I)(4), the Director shall not consider:

1. Depreciation of the portion of ground ambulance vehicles and equipment obtained through Department funding,

2. The certificate holder's travel and entertainment expenses that do not directly relate to providing the EMS or transport;

3. The monetary value of any goodwill accumulated by the certificate holder, that is, the difference between the purchase price of a ground ambulance service and the fair market value of the ground ambulance service's identifiable net assets;

4. Any penalties or fines imposed on the certificate holder by a court or government agency; and

5. Any financial contributions received by the certificate holder.

C. In determining just, reasonable, and sufficient rates in A.R.S § 36-2232(A)(1), the Director shall establish rates to provide for a rate of return that is at least 7% of gross revenue, calculated using the accrual method of accounting according to generally accepted accounting principles, unless the certificate holder requests a lower rate of return.

D. The Department shall calculate the rate of return on gross revenue by dividing net income, as specified according to R9-25-909(A)(16) or (C)(14) as applicable, by gross revenue, as specified according to R9-25-909 ((A)(3)(b) or (C)(3)(b) as applicable.

Notes

Ariz. Admin. Code § R9-25-1106

New Section adopted by final rulemaking at 7 A.A.R. 1098, effective February 13, 2001 (Supp. 01-1). Amended by final rulemaking at 30 A.A.R. 581, effective 3/7/2024.