N.M. Admin. Code § 8.313.3.11 - DETERMINATION OF ACTUAL, ALLOWABLE AND REASONABLE COSTS AND SETTING OF PROSPECTIVE RATES
A.
Adequate cost data:
(1) Providers
receiving payment on the basis of reimbursable cost must provide adequate cost
data based on financial and statistical records which can be verified by
qualified auditors. The cost data must be based on an approved method of cost
finding and on the accrual basis of accounting. However, where governmental
institutions operate on a cash basis of accounting, cost data on this basis
will be acceptable, subject to appropriate treatment of capital
expenditures.
(2) The cost finding
method to be used by ICF-MR providers will be the step-down method. This method
recognizes that services rendered by certain nonrevenue producing departments
or centers are utilized by certain other non-revenue producing centers. All
cost of non-revenue producing centers are allocated to all centers which they
serve, regardless of whether or not these centers produce revenue. The cost of
the non-revenue producing center serving the greatest number of other centers,
while receiving benefits from the least number of centers, is apportioned
first. Following the apportionment of the cost of the nonrevenue producing
center, that center will be considered "closed" and no further costs will be
apportioned to it. This applies even though it may have received some service
from a center whose cost is apportioned later. Generally when two centers
render services to an equal number, that center which has the greater amount of
expense will be allocated first.
B. Reporting year: For the purpose of
determining a prospective per diem rate related to cost for ICF-MR services,
the reporting year is the provider's fiscal year. The provider will submit a
cost report each fiscal year.
C.
Cost reporting:
(1) At the end of each fiscal
year the provider will provide to the state agency or its audit agent an
itemized list of allowable costs (financial and statistical report) on the N.M.
title XIX cost reporting form. This cost report must be submitted on an annual
basis to MAD or its designee within the time frames specified by medicare.
ICFs-MR will not be granted an extension to the cost report filing time frames.
Failure to file a cost report within the specified time frames will result in
suspension of title XIX payments.
(2) In the case of a change of ownership, the
previous provider must file a final cost report as of the date of the change of
ownership in accordance with reporting requirements specified in this plan. The
HCA will withhold the last two month's payment to the previous provider as
security against any outstanding obligations to the HCA. The provider must
notify the HCA 60 days prior to any change of ownership.
D. Retention of records:
(1) Each ICF-MR provider shall maintain
financial and statistical records of the period covered by a cost report for a
period of not less than four years following the date of submittal of the cost
report to the state agency. These records must be accurate and in sufficient
detail to substantiate the cost data reported. The provider shall make such
records available upon demand to representatives of the state agency, the state
audit agent, or the department of health and human services.
(2) The state agency or its audit agent will
retain all cost reports submitted by providers for a period of not less than
three years following the date of final settlement of such report.
E. Audits: Audits will be
performed in accordance with 42 CFR 447.202.
(1) Desk audit: Each cost report submitted
will be subject to a comprehensive desk audit by the state audit agent. This
desk audit is for the purpose of analyzing the cost report. After each desk
audit is performed, the audit agent will submit a complete report of the desk
review to the state agency.
(2)
Field audit: Field audits will be performed on all providers at least once
every three years. The purpose of the field audit of the provider's financial
and statistical records is to verify that the data submitted on the cost report
are in fact accurate, complete and reasonable. The field audits are conducted
in accordance with generally accepted auditing standards and of sufficient
scope to determine that only proper items of cost applicable to the service
furnished were included in the provider's calculation of its cost. The field
audit will also determine whether the expenses attributable to such proper
items of cost were reasonably and accurately determined. After each field audit
is performed, the audit agent will submit a complete report of the audit to the
state agency. This report will meet generally accepted auditing standards and
shall declare the auditor's opinion as to whether, in all material respects,
the costs reported by the provider are allowable, accurate and reasonable in
accordance with the state plan. These audit reports will be retained by the
state agency for a period of not less than three years from the date of final
settlement of such reports.
F. Overpayments: All overpayments found in
audits will be accounted for on the HCFA 64 report to HHS no later than the
second quarter following the quarter in which found.
G. Allowable costs: The following identifies
costs that are allowable in the determination of a provider's actual, allowable
and reasonable costs. All costs are subject to all other terms stated in the
medicare provider reimbursement manual (PRM 15-1) that are not modified by
these regulations.
(1) Cost of meeting
certification standards: These will include all items of expense that the
provider must incur under:
(a) 42 CFR 442
;
(b) Sections 1861(j) and
1902(a)(28) of the Social Security Act;
(c) standards included in
42 CFR
431.610;
(d) cost incurred to meet requirements for
licensing under state law which are necessary to provide ICF-MR
service.
(2) Costs of
routine services: Allowable costs shall include all items of expense that
providers incur to provide routine services, known as operating costs.
Operating costs include such things as:
(a)
regular room;
(b) dietary and
nursing services;
(c) medical and
surgical supplies (including but not limited to syringes, catheters, ileostomy,
and colostomy supplies);
(d) use of
equipment and facilities;
(e)
general services, including administration of oxygen and related medications,
hand feeding, incontinency care, tray service and enemas;
(f) items furnished routinely and relatively
uniform to all patients, such as patient gowns, water pitchers, basins and bed
pans;
(g) items stocked at nursing
stations or on the floor in gross supply and distributed or used individually
in small quantities, such as alcohol and body rubs, applicators, cotton balls,
bandaids, laxatives and fecal softeners, aspirin, antacids, OTC ointments, and
tongue depressors;
(h) items which
are used by individual patients but which are reusable and expected to be
available, such as ice bags, bed rails, canes, crutches, walkers, wheelchairs,
traction equipment, oxygen administration equipment, and other durable
equipment;
(i) special dietary
supplements used for tube feeding or oral feeding even if prescribed by a
physician;
(j) laundry services
other than for personal clothing;
(k) oxygen for emergency use--the HCA will
allow two options for the purchase of oxygen for patients for whom the
attending physician prescribes oxygen administration on a regular or on-going
basis:
(i) the provider may purchase the
oxygen and include it as a reimbursable cost in its cost report; this is the
same as the method of reimbursement for oxygen administration equipment;
or
(ii) the HCA will make payment
directly to the medical equipment provider in accordance with procedures
outlined in medical assistance manual Section 754, medical supplies, and
subject to the limitations on rental payments contained in that section.
(l) all services
delivered in relation to active treatment, such as physical therapy,
occupational therapy, speech therapy, psychology services, recreational
therapy, etc.;
(m) managerial,
administrative, professional and other services related to the providers
operation and rendered in connection with patient care.
(3) Facility cost, for the purpose of
specific limitations included in this plan, include only depreciation, lease
costs, and long term interest.
(a)
Depreciation is the systematic distribution of the cost or other basis of
tangible assets, less salvage value, over the estimated life of the assets.
(i) The basis for depreciation is the
historical cost of purchased assets or the fair market value at the time of
donation for donated assets.
(ii)
Historical cost is the actual cost incurred in acquiring and preparing an asset
for use.
(iii) Fair market value is
the price for which an asset would have been purchased on the date of
acquisition in an arms-length transaction between an informed buyer and seller,
neither being under any compulsion to buy or sell. Fair market value shall be
determined by a qualified appraiser who is a registered member of the American
institute of real estate appraisers (MAI) and who is acceptable to the
HCA
(iv) In determining the
historical cost of assets where an on-going facility is purchased, the
provisions of medicare provider reimbursement manual PRM 15-1 will
apply.
(v) Depreciation will be
calculated using the straight-line method and estimated useful lives
approximating the guidelines published in American hospital association useful
lives guide.
(b)
Long-term interest is the cost incurred for the use of borrowed funds for
capital purposes, such as the acquisition of facility, equipment, improvements,
etc., where the original term of the loan is more than one year.
(c) Lease term will be considered a minimum
of five years for purposes of determining allowable lease costs.
H. Non-allowable costs:
(1) Bad debts, charity, and courtesy
allowances: Bad debts on non-title XIX program patients and charity and
courtesy allowances shall not be included in allowable costs.
(2) Purchases from related organizations:
Cost applicable to services, facilities, and supplies furnished to a provider
by organizations related to the provider by common ownership or control shall
not exceed the lower of the cost to the related organization or the price of
comparable services, facilities or supplies purchased elsewhere. Providers
shall identify such related organizations and costs in the states' cost
reports.
(3) Return on equity
capital.
(4) Other cost and expense
items identified as unallowable in PRM 15-1.
(5) Interest paid on overpayments as per
MAD-702, Billing for Medicaid Services.
(6) Any civil monetary penalties levied in
connection with licensure, certification, or fraud regulations.
Notes
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