(a) General reporting. Except where otherwise specified under
this title, the Texas Department of Human Services (DHS) follows the requirements,
methods, and procedures set forth in subsections (b)-(g) of this section to
determine costs appropriate for use in the reimbursement determination process.
(b) Cost report requirements. Unless specifically stated in
program rules, each provider must submit financial and statistical information
on cost report forms provided by DHS, or on facsimiles which are formatted
according to DHS specifications and are pre-approved by DHS staff, or electronically
in DHS-prescribed format in programs where these systems are operational.
The cost reports must be submitted to DHS in a manner prescribed by DHS. The
cost reports must be prepared to reflect the activities of the provider while
delivering contracted services during the fiscal year specified by the cost
report. Cost reports or other special surveys or reports may be required for
other periods at the discretion of DHS. Each provider is responsible for accurately
completing any cost report or other special survey or report submitted to
DHS.
(1) Accounting methods. All financial and statistical information
submitted on cost reports must be based upon the accrual method of accounting,
except where otherwise specified in §355.102 and §355.103 of this
title (relating to General Principles of Allowable and Unallowable Costs,
and Specifications for Allowable and Unallowable Costs) and in the case of
governmental entities operating on a cash or modified accrual basis. For cost-reporting
purposes, accrued expenses must be incurred during the cost reporting period
and must be paid within 180 days after the end of that cost reporting period.
In situations where a contracted provider, any of its controlling entities,
its parent company/sole member, or its related-party management company has
filed for bankruptcy protection, the contracted provider may request an exception
to the 180-day requirement for payment of accrued allowable expenses by submitting
a written request to the Rate Analysis Department of DHS. The written request
must be submitted within 60 days of the date of the bankruptcy filing or at
least 60 days prior to the due date of the cost report for which the exception
is being requested, whichever is later. The contracted provider will then
be requested by the Rate Analysis Department to provide certain documentation,
which must be provided by the specified due date. Such exceptions due to bankruptcy
may be granted for reasonable, necessary and documented accrued allowable
expenses that were not paid within the 180-day requirement. Accrued revenues
must be for services performed during the cost reporting period and do not
have to be received within 180 days after the end of that cost reporting period
in order to be reported as revenues for cost-reporting purposes. Except as
otherwise specified by the cost determination process rules of this chapter,
cost report instructions, or policy clarifications, cost reports should be
prepared consistent with generally accepted accounting principles (GAAP),
which are those principles approved by the American Institute of Certified
Public Accountants (AICPA). Internal Revenue Service (IRS) laws and regulations
do not necessarily apply in the preparation of the cost report. In cases where
cost reporting rules differ from GAAP, IRS, or other authorities, DHS rules
take precedence for provider cost-reporting purposes.
(2) Recordkeeping and adequate documentation. There is a distinction
between noncompliance in recordkeeping, which equates with unauditability
of a cost report and constitutes an administrative contract violation or,
for nursing facilities, may result in vendor hold, and a provider's inability
to provide adequate documentation, which results in disallowance of relevant
costs. Each is discussed in the following paragraphs.
(A) Recordkeeping. Each provider must maintain records according
to the requirements stated in 40 TAC §69.205 (Contractor's Records) and
according to DHS's prescribed chart of accounts, when available. Providers
must ensure that records are accurate and sufficiently detailed to support
the legal, financial, and other statistical information contained in the cost
report. Providers must maintain all workpapers and any other records that
support the information submitted on the cost report relating to all allocations,
cost centers, cost or statistical line items, surveys, and schedules. DHS
may require supporting documentation other than that contained in the cost
report to substantiate reported information.
(i) For nursing facilities, failure to maintain all workpapers
and any other records that support the information submitted on the cost report
relating to all allocations, cost centers, cost or statistical line items,
surveys and schedules may result in vendor hold as specified in §355.403
of this title (relating to Vendor Hold).
(ii) For all other programs, failure to maintain all workpapers
and any other records that support the information submitted on the cost report
relating to all allocations, cost centers, cost or statistical line items,
surveys and schedules constitutes an administrative contract violation. In
the case of an administrative contract violation, procedural guidelines and
informal reconsideration and/or appeal processes are specified in §355.111
of this title (relating to Administrative Contract Violations).
(B) Adequate documentation. To be allowable, the relationship
between reported costs and contracted services must be clearly and adequately
documented. Adequate documentation consists of all materials necessary to
demonstrate the relationship of personnel, supplies, and services to the provision
of contracted client care or the relationship of the central office to the
individual service delivery entity level. These materials may include, but
are not limited to, accounting records, invoices, organizational charts, functional
job descriptions, other written statements, and direct interviews with staff,
as deemed necessary by DHS auditors to perform required tests of reasonableness,
necessity, and allowability. For the 1997 cost report only, DHS will accept
documentation to retrospectively support expenses which were incurred in the
provider's 1997 fiscal year prior to the adoption of these rules and reported
on the provider's 1997 cost report.
(i) The minimum allowable statistical duration for a time study
upon which to base salary allocations is four weeks per year, with one week
being randomly selected from each quarter so as to assure that the time study
is representative of the various cycles of business operations. One week is
defined as only those days the contracted provider is in operation during
seven continuous days. The timestudy can be performed for one continuous week
during a quarter, or it can be performed over five or seven individual days,
whichever is applicable, throughout a quarter. The time study must be a 100%
time study, accounting for 100% of the time paid the employee, including vacation
and sick leave.
(ii) To support the existence of a loan, the provider must
have available a signed copy of the loan contract which contains the pertinent
terms of the loan, such as amount, rate of interest, method of payment, due
date, and collateral. The documentation must include an explanation for the
purpose of the loan and an audit trail must be provided showing the use of
the loan proceeds. Evidence of systematic interest and principal payments
must be available and supported by the payback schedule in the note or amortization
schedule supporting the note. Documentation must also include substantiation
of any costs associated with the securing of the loan, such as broker's fees,
due diligence fees, lender's fees, attorney's fees, etc. To document allowable
interest costs associated with related party loans, the provider is required
to maintain documentation verifying the prime interest rate in accordance
with §355.103(b)(8)(C) of this title (relating to Specifications for
Allowable and Unallowable Costs) for a similar type of loan as of the effective
date of the related party loan.
(iii) For ground transportation equipment, a mileage log is
not required if the equipment is used solely (100%) for provision of contracted
client services in accordance with program requirements in delivering one
type of contracted care. However, the contracted provider must have a written
policy which states that the ground transportation equipment is restricted
to that use and that policy must be followed. For ground transportation equipment
that is used for several purposes (including for personal use) or multiple
programs or across various business components, mileage logs must be maintained.
Personal use includes, among other things, driving to and from a personal
residence. At a minimum, mileage logs must include for each individual trip
the date, the time of day (beginning and ending), driver, persons in the vehicle,
trip mileage (beginning, ending, and total), purpose of the trip, and the
allocation centers (the departments, programs, and/or business entities to
which the trip costs should be allocated). Flight logs must include dates,
mileage, passenger lists, and destinations, along with any other information
demonstrating the purpose of the trips so that a relationship to contracted
client care in Texas can be determined. For the purpose of comparison to the
cost of commercial alternatives, documentation of Cont'd... |