| for commercial
alternatives.
(16) Advertising and public relations.
(A) Allowable advertising and public relations include:
(i) costs of advertising to meet statutory or regulatory
requirements, such as program standards, rules, or contract requirements;
(ii) informational listings of contracted providers
in a telephone directory, including yellow page listings up to one-eighth
of a page per telephone directory in the provider's service area or
in a directory of similar facilities in a given area are allowable
if the listings are consistent with practices that are common and
accepted in the industry;
(iii) costs of advertising for the purpose of recruiting
necessary personnel are allowable costs. Refer to the definition of
necessary in §355.102(f)(2) of this title;
(iv) costs of advertising for procurement of items
related to contracted client care, and for sale or disposition of
surplus or scrap material are treated as adjustments of the purchase
or selling price; and
(v) costs of advertising incurred in connection with
obtaining bids for construction or renovation of the contracted provider's
facilities should be included in the capitalized cost of the asset.
Refer to paragraph (10) of this subsection.
(B) Unallowable advertising and public relations include:
(i) costs of advertising of a general nature designed
to invite physicians to utilize a contracted provider's facilities
in their capacity as independent practitioners;
(ii) costs of advertising incurred in connection with
the issuance of a contracted provider's own stock, or the sale of
stock held by the contracted provider in another corporation considered
as reductions in the proceeds from the sale;
(iii) costs of advertising to the general public which
seeks to increase client utilization of the contracted provider's
facilities;
(iv) public relations costs;
(v) any business promotional advertising; and
(vi) costs of the development of logos or other company
identification.
(17) Promotional and fundraising activities. Promotional
refers to any activity whose intent is to advertise or aid in the
development of the business. Expenses relating to fundraising and
promotional activities 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 these
unallowable activities and as such not be reported on the cost report.
Other expenses associated with these activities are also unallowable,
including advertising, publicity, travel, and meals.
(18) Grants, gifts, and income from endowments and
operating revenue.
(A) Restricted grants, gifts, and income from endowments
from private sources used to purchase allowable program costs should
not be deducted and offset from allowable costs prior to reporting
on the cost report.
(B) Grants and contracts from federal, state or local
government, such as transportation grants, United States Department
of Agriculture grants, education grants, Housing and Urban Development
grants, and Community Service Block Grants, should be offset, prior
to reporting on the cost report, against the particular cost or group
of costs for which the grant was intended. If federal funds are paid
for the care of a specified client, those federal funds should not
be offset prior to reporting on the cost report, unless otherwise
specified in the program-specific reimbursement methodology rules.
(C) Unrestricted grants, gifts, and income from endowments
from private sources used to purchase allowable program items should
not be offset by the contracted provider prior to reporting on the
cost report. All unrestricted funds which are properly allocable to
the cost report should be reported on a contracted provider's cost
report, as well as any allowable costs to which the unrestricted funds
were applied.
(D) Nonroutine revenues such as income from operations
not associated with providing contracted services, including, but
not limited to, beauty and barber shops, vending machines, gift shops,
canteen stores, and meals sold to employees or guests should be offset
or reduced by the related expenses prior to reporting the revenue
on the cost report. Expenses related to providing these types of non-contracted
operations are unallowable costs. If nonroutine operating expenses,
including overhead costs incurred to generate nonroutine operating
revenue, exceed nonroutine operating revenues, the net nonroutine
operating expenses are unallowable costs. Routine operating revenue
received as payments for the contracted services, such as income from
private clients, private room and board, or other sources of routine
contracted services are not to be offset. Refer to §355.102(k)
of this title for further guidelines on reporting net expenses.
(19) In-kind donations.
(A) Allowable in-kind donations.
(i) Depreciation of in-kind donations is limited to
donated buildings and donated vehicles used in the direct provision
of contracted client services, where title has been transferred to
the provider entity by a third party in an arm's-length transaction.
Depreciation must be reported in accordance with subsection (b)(10)
of this section. The historical cost basis used to depreciate vehicles
must be consistent with the retail price of the National Automobile
Dealers Association (NADA) listings; or, in the case of a new vehicle,
the documented historical cost to the donor or NADA may be used. The
historical cost basis used to depreciate donated buildings must be
the lower of:
(I) the most recent tax appraisal of the building prior
to donation, unless the donor was exempt from tax appraisal, in which
case an independent appraisal made by a third-party appraiser at the
time of donation may be used in place of the tax appraisal (for donations
made prior to the provider's 1997 fiscal year, a current appraisal
from an independent third-party appraiser may be used to establish
the historical cost); or
(II) the documented historical cost to the donor.
(ii) Expenses actually incurred to maintain a donated
asset for use in providing contracted client care to clients are allowable.
(iii) If a provider receives a donation of the use
of space owned by another organization and if the provider and the
donor organization are both part of a larger organizational entity
(such as units of a state or county government), the space is not
considered a related-party donation, but rather treated as allowable
costs requiring allocation between the provider and the other organization.
For example, if a county home health agency is given space to use
in the county office building, costs associated with the use of the
space (such as depreciation, janitorial services, maintenance, and
repairs) must be allocated from the county to the county home health
agency. Allocation of costs must be in compliance with §355.102(j)
of this title.
(B) Unallowable in-kind donations. The value of unallowable
in-kind donations may be collected for specific programs at the discretion
of HHSC for statistical purposes only, on a schedule separately identified
for such purpose. The value of in-kind donations to a contracted provider,
such as produce, supplies, materials, services, equipment, or other
items used by the contracted provider which the contracted provider
did not purchase, is an unallowable cost. The value of in-kind donations
of buildings or vehicles when the title is not transferred to the
provider is an unallowable cost. The value of in-kind donations to
a contracted provider which are not arm's-length transactions are
unallowable costs. The contracted provider may not treat as an allowable
cost the imputed value for unallowable in-kind donations.
(20) Miscellaneous costs.
(A) Employee relations expenses. Costs relating to
employee relations are different from fringe benefits, as specified
in paragraph (1)(A)(iii) of this subsection, in that employee relations
expenses incurred are for employees as a group rather than as a fringe
benefit for an individual employee. Examples of allowable employee
relations costs, which are reported as administrative costs for cost-reporting
purposes, include a staff party, an employee outing, or other such
staff expenses intended to boost employee morale and in turn increase
the efficiency and quality of care provided. Other examples of allowable
employee relations expenses are plaques or awards presented to employees
for certain achievements or honors. Employee relations cost which
discriminates in favor of certain employees, such as employees who
are officers, stockholders, related parties, or the highest paid individual(s)
in the organization are unallowable. Employee relations costs are
limited to a ceiling of $50 per employee eligible to participate per
year. If a staff party includes nonemployees, an allocation must be
made such that only the portion of costs relating to employees and
their families in attendance is reported Cont'd... |
