| (ii) For cost-reporting purposes, allowable employee-related
paid claims, such as health insurance and workers' compensation costs,
may either be directly charged to the business component in which
the employee worked or may be allocated across all business components
as an administrative expense. The method chosen to report these costs
must remain consistent each year. Changes in the method for reporting
those costs must be approved in accordance with §355.102(j) of
this title.
(C) Determining self-insurance or purchased commercial
insurance. There may be situations in which there is a fine line between
self-insurance and purchased or commercial insurance. This is particularly
true of "cost-plus" type arrangements. As long as there is at least
some shifting of risk to the unrelated party, even if limited to situations
such as provider bankruptcy or employee termination, the arrangement
will not be considered self-insurance. Contributions to a special
risk management fund or pool that is operated by a third party that
assumes some of the risk and that has an annual actuarial review are
allowable costs. Examples of such special risk management funds and
pools include the Texas Council Risk Management Fund and the Texas
Municipal League Intergovernmental Risk Pool.
(D) Reporting of insurance costs. All allowable insurance
premium costs should be reported on cost reports, with amounts accrued
for premiums, modifiers, and surcharges during the cost-reporting
period being adjusted by any refunds and discounts actually received
or settlements paid during the same cost-reporting period.
(E) Losses in excess of coverage. When a contracted
provider is not fully insured by a purchased commercial insurance
policy, i.e., the provider's coverage includes coinsurance provisions
and/or deductibles, the amount of allowable insurance costs reported
for each cost-reporting period is subject to a cost ceiling.
(i) The cost ceiling for employee-related insurance,
such as health insurance, or workers' compensation coverage, is either
the amount that would have been incurred had the provider purchased
full coverage for its entire business entity through a commercial
insurance policy or an amount equal to 10% of the payroll for employees
eligible for such coverage. This cost ceiling is applied separately
to employee-related insurance and to workers' compensation coverage.
(ii) The cost ceiling for non-employee-related insurance,
such as malpractice insurance, comprehensive general liability insurance,
or property insurance, is the amount that would have been incurred
had the provider purchased full coverage for its entire business entity
through a commercial insurance policy.
(iii) If, during a cost-reporting period, a provider
incurs allowable paid claims in excess of the applicable cost ceiling,
the provider reports on its current cost report allowable insurance
costs up to the amount of the applicable cost ceiling, with the allowable
costs in excess of the applicable cost ceiling being carried forward
to future cost-reporting periods. When, during a future cost-reporting
period, a provider incurs allowable insurance costs in an amount less
than the applicable cost ceiling, the provider reports on its cost
report the allowable insurance costs (paid claims) incurred during
that cost-reporting period plus any allowable carry forward amount
up to the amount of the applicable cost ceiling, with any excess carry
forward being carried forward to future cost reporting periods.
(iv) Documentation requirements are stated in §355.105(b)(2)(B)(ix)
of this title.
(F) Absence of coverage. Where a contracted provider,
other than a governmental provider, has no insurance protection, the
reporting of the provider's paid claims must follow the guidelines
stated in subparagraph (E) of this paragraph. For governmental providers,
allowable paid claims for cost-reporting purposes include all claims
paid during the cost-reporting period only if the provider demonstrates
that it has a claims management and risk management program.
(G) Life insurance costs.
(i) In general, premiums related to insurance on the
lives of owners, officers, and key employees where the contracted
provider is a direct or indirect beneficiary are unallowable costs.
(ii) Life insurance costs are allowable if:
(I) a contracted provider is required by a lending
institution or other lender to purchase such insurance to guarantee
the outstanding loan balance;
(II) the lending institution or other lender must be
designated as the beneficiary of the insurance policy; and
(III) upon the death of the insured, the proceeds are
restricted to paying off the balance of the loan.
(iii) Allowable insurance premiums are limited to premiums
equivalent to that of a decreasing term life insurance policy needed
to pay off the outstanding loan balance or that portion of the premium
which can be equated to the premium for a similar face amount of a
decreasing term life policy. In addition, the loan must be reasonable
and necessary and must meet the criteria for allowable loans and interest
expense as stated in subsection (b)(11) of this section.
(iv) Provider-paid premiums related to insurance on
the lives of owners-employees, officers, and key employees where the
individual's relatives or his estate are the beneficiary are considered
to be employee benefits to the individual and are allowable costs
to the extent such employee benefits are allowable. Provider-paid
premiums related to insurance on the lives of owners-employees, officers,
and key employees where required by a financial institution and the
financial institution is the beneficiary is allowable.
(H) Insurance costs pertaining to unallowable costs.
Insurance costs pertaining to items of unallowable costs are themselves
unallowable costs.
(I) Board of directors' or trustees insurance. Errors
and omissions insurance (liability) on members of boards of directors
or trustees is an allowable cost.
(14) Dues or contributions to organizations.
(A) Allowable dues and contributions to organizations.
Costs are allowable for membership in professional associations directly
and primarily concerned with the provision of services for which the
provider is contracted. Allowable costs of memberships in such organizations
include initiation fees, dues, and subscriptions to related professional
periodicals. Allowable costs related to meetings and conferences whose
primary purpose is to disseminate information for the advancement
of contracted client care or the efficient operation of the contracted
program include reasonable travel costs in accordance with paragraph
(15)(B) of this subsection and reasonable registration fees and other
costs incidental to those functions. Travel costs incurred by members
of the board of directors of professional associations that are directly
and primarily concerned with the provision of services for which the
provider has contracted are allowable in accordance with paragraph
(15)(B) of this subsection. Dues or licensing fees related to maintaining
the professional accreditation or license of an employee are allowable
to the extent that the professional accreditation or license is directly
related to and necessary for the performance of that employee's functions.
(B) Unallowable dues and contributions to organizations.
Dues to nonprofessional organizations are unallowable. Assessments
whose purpose is to fund lawsuits or any legal action against the
state or federal government are unallowable. Portions of dues based
on revenue or for the purposes of lobbying, or campaign contributions
are unallowable costs. Costs of membership in civic organizations
whose primary purpose is the promotion and implementation of civic
objectives are unallowable. Dues or contributions made to any type
of political, social, fraternal, or charitable organization are unallowable.
Chamber of Commerce dues are unallowable. Franchise fees are not considered
dues or contributions to organizations.
(C) Dues to purchasing organizations or buying clubs.
Allowable dues to purchasing organizations or buying clubs are limited
to the pro-rata amount representing purchases made for use in providing
contracted services.
(15) Training and travel costs.
(A) Staff training costs.
(i) Staff training costs refer to costs associated
with educational activities for provider staff. To qualify as an allowable
staff training cost, the training must:
(I) have a direct relationship with the employee's
job responsibilities, thereby increasing the quality of contracted
client care or the efficient operation of the contracted provider.
Management training, if it is designed to enhance quality or improve
administration and is relevant to the contracted service, is an allowable
cost. The following apply to staff training costs.
(-a-) Non-related party staff. Costs of tuition, books,
and related fees for courses required to complete the designated degree
or certification are allowable. The degree or certification must be
necessary to the provision of contracted client services of the contracted
provider. An example Cont'd... |
