| (ii) For a new contract or program implemented by an
existing business, startup costs are related only to the development
of the provider's ability to furnish services according to the standards
of the new contract/program and should be accumulated up to the time
the first client receives services according to the contract/program
standards or the effective date of the contract, whichever occurs
first. Amortization of startup costs for a new contract/program implemented
by an existing business begins the month in which the first client
receives services according to contract/program standards or the effective
date of the contract, whichever occurs first. If a contracted provider
intends to prepare all portions of its entire program at the same
time, startup costs for all portions of the program should be accumulated
in a single account and should be amortized beginning either when
the first client is admitted or the effective date of the contract,
whichever occurs first. However, if a contracted provider intends
to prepare portions of its program on a piecemeal basis, startup costs
should be capitalized and amortized separately for the portion(s)
of the provider's program prepared during different time periods.
For example, a newly-formed corporation opens a senior citizen center
for private clients, serving its first client on April 4, 2014. Startup
costs would be those costs incurred prior to April 4, 2014, which
meet the above definition of startup costs. Amortization of the startup
costs for this newly-formed business would begin April 2014. If this
same corporation received a contract to provide Day Activity and Health
Services (DAHS) effective October 1, 2014 and if the corporation served
its first DAHS client on November 5, 2014, startup costs would be
those costs incurred to be able to deliver services according to DAHS
program standards. If the corporation was in compliance with the DAHS
standards from its beginning (April 2014), no new startup costs would
be allowable for amortization as a result of the implementation of
the new DAHS contract by the existing corporation. On the other hand,
if the corporation was required to incur additional costs to bring
the operation up to the DAHS program standards, those startup costs
incurred prior to October 1, 2014 (since the contract effective date
occurred prior to serving the first DAHS client) would be amortized
beginning with October 2014.
(E) Research and development costs. Research and development
costs, including, but not limited to, telephone costs, travel costs,
attorney fees, and staff salaries, must be segregated into separate,
individual accounts for each venture in the contracted provider's
general ledger. Should such a "venture" result in a contract for a
program, the allowable research and development costs would be incorporated
as startup costs for that program. Research and development costs
related to states other than Texas are not allowable costs for any
allocation to any contracted program.
(F) Medical supplies and medical costs. In general,
medical supplies and equipment required by the Occupational Safety
and Health Administration (OSHA), used for universal health and safety
precautions, or otherwise required to meet contracted program requirements
are allowable costs. Refer to program-specific reimbursement methodology
rules to determine program requirements for medical supplies and medical
costs.
(G) Fines and penalties. Fines and penalties for violations
of regulations, statutes, and ordinances of all types are unallowable
costs. Penalties or charges for late payment of taxes, utilities,
mortgages, loans or insufficient banking funds are unallowable costs.
(H) Business expenses not directly related to contracted
services. Business expenses not directly related to contracted services,
including business investment activities, stockholder and public relations
activities, and farm and ranch operations (unless farm and ranch operations
are specifically allowed by the contracted program as necessary to
the provision of client care), are unallowable costs.
(I) Litigation expenses and awards. Unless explicitly
allowed elsewhere in this chapter, no court-ordered award of damages
or settlements made in lieu thereof or legal fees associated with
litigation which resulted in any court-ordered award of damages or
settlements made in lieu thereof, or a criminal conviction, are allowable.
For workers' compensation litigation awards and settlements, the part
of the award or settlement that reimburses the injured employee for
lost wages and medical bills is an allowable cost.
(J) Lobbying costs. Lobbying costs are unallowable.
(i) Lobbying means the influencing or attempting to
influence an officer or employee of any governmental agency, an officer
or employee of Congress or the state legislature, or an employee of
a member of Congress or the state legislature in connection with any
of the following actions:
(I) the awarding of any governmental contract;
(II) the making of any governmental grant;
(III) the making of any governmental loan;
(IV) the entering of any cooperative agreement; and
(V) the extension, continuation, renewal, amendment,
or modification of any governmental contract, grant, loan or cooperative
agreement.
(ii) Costs associated with the following activities
are unallowable as lobbying costs:
(I) attempting to influence the outcomes of any governmental
election, referendum, initiative, or similar procedure, through in-kind
or cash contributions, endorsements, publicity, or similar activity;
(II) establishing, administering, contributing to,
or paying the expenses of a political party, campaign, political action
committee, or other organization established for the purpose of influencing
the outcomes of elections;
(III) attempting to influence the introduction of governmental
legislation, the enactment or modification of any pending governmental
legislation through communication with any member or employee of the
Congress or state legislature (including efforts to influence state
or local officials to engage in similar lobbying activity) or any
governmental official or employee in connection with a decision to
sign or veto enrolled legislation;
(IV) attempting to influence the introduction of governmental
legislation, or the enactment or modification of any pending governmental
legislation by preparing, distributing or using publicity or propaganda,
or by urging members of the general public, or any segment thereof,
to contribute to or participate in any mass demonstration, march,
rally, fund raising drive, lobbying campaign or letter writing or
telephone campaign; and
(V) performing legislative liaison activities, including
attendance at legislative sessions or committee hearings, gathering
information regarding legislation, and analyzing the effect of legislation,
when such activities are carried on in support of or in knowing preparation
for an effort to engage in unallowable lobbying.
(iii) The cost to contracted providers or their staff
to attend meetings with the staff of state agencies or to attend public
hearings or advisory committee meetings held by state agencies that
are involved in the regulation of contracted client care in the program
with which they are contracting and which meetings do not meet the
definition of lobbying stated above, are not considered lobbying and
are therefore allowable costs.
(iv) Expenses relating to lobbying are unallowable
including salaries, benefits, and payroll taxes for staff performing
these activities. If a staff member performs these activities along
with allowable activities, a portion of that staff member's salary
must be allocated to the unallowable activities and as such not be
reported on the cost report.
(K) Direct reimbursements. Unless specifically exempted
through program-specific reimbursement methodology rules, HHSC procedures
or cost report instructions, any expenses directly reimbursable to
the contracted provider that are considered outside the reimbursement
payment system are unallowable costs. Such expenses include but are
not limited to those associated with Medicare Part A and B ancillary
services, HHSC voucher payment systems and vendor drug coverage. For
guidelines on allowability of reporting costs in excess of those reimbursable
directly through a voucher payment system, refer to program-specific
reimbursement methodology rules.
(L) Losses resulting from theft or embezzlement. Losses
resulting from theft or embezzlement of property or funds of the contracted
provider or clients by the owners or employees of the contracted provider
are not allowable costs.
(M) A bad debt. A bad debt allowance is a reduction
in revenue resulting from unrecoverable revenue in uncollectible accounts
created or acquired in the provision of contracted client care. Bad
debt as an expense is unallowable.
(N) A charity or courtesy allowance. A charity allowance
is a reduction in normal charges due to the indigence of the client
or resident. A courtesy allowance is a reduction in charges granted
as a courtesy to certain individuals, such as physicians or clergy.
These allowances themselves are not costs since the costs of the services
rendered are already included in the contracted provider's costs.
(21) Medicaid as payor of last resort. Medicaid is
the payor of last resort. If a recipient has Medicare Part A or B
benefits, other third party payor benefits, or any other benefits
available those benefits must be accessed before Medicaid.
(22) For any individual eligible for Medicare Part
D, the cost of any drug that is in a category that is covered by Medicare
Part D is unallowable.
|
| Source Note: The provisions of this §355.103 adopted to be effective September 1, 1996, 21 TexReg 7866; duplicated effective September 1, 1997, as published in the Texas Register October 17, 1997, 22 TexReg 10311; amended to be effective December 29, 1997, 22 TexReg 12485; amended to be effective June 26, 2000, 25 TexReg 6089; amended to be effective August 31, 2004, 29 TexReg 8093; amended to be effective January 1, 2006, 30 TexReg 7721; amended to be effective September 1, 2011, 36 TexReg 4795; amended to be effective January 1, 2015, 39 TexReg 9193 |
