eligible for receipt of this benefit.
(III) Providers who self insure must also maintain
documentation that supports the amount of claims paid each year and
any allowable costs to be carried forward to future cost-reporting
(x) Providers who self insure for all or part of their
coverage for nonemployee-related insurance, such as malpractice insurance,
comprehensive general liability, and property insurance, must maintain
documentation for each cost-reporting period to establish what their
premium costs would have been had they purchased commercial insurance
for total coverage. The documentation should include, at a minimum,
bids from two commercial carriers. Bids must be obtained no less frequently
than every three years. Providers who self insure must also maintain
documentation that supports the amount of claims paid each year and
any allowable costs to be carried forward to future cost-reporting
periods. Governmental providers must document the existence of their
claims management and risk management programs.
(xi) Regarding compensation of owners and related parties,
providers must maintain the following documentation, at a minimum,
for each owner or related party: a detailed written description of
actual duties, functions, and responsibilities; documentation substantiating
that the services performed are not duplicative of services performed
by other employees; time sheets or other documentation verifying the
hours and days worked; the amount of total compensation paid for these
duties, with a breakdown detailing regular salary, overtime, bonuses,
benefits, and other payments; documentation of regular, periodic payments
and/or accruals of the compensation, documentation that the compensation
is subject to payroll or self-employment taxes; and a detailed allocation
worksheet indicating how the total compensation was allocated across
business components receiving the benefit of these duties.
(I) Regarding bonuses paid to owners and related parties,
the provider must maintain clearly defined bonus policies in its written
agreements with employees or in its overall employment policy. At
a minimum, the bonus policy must include the basis for distributing
the bonuses including qualifications for receiving the bonus, and
how the amount of each bonus is calculated. Other documentation must
specify who received bonuses, whether the persons receiving bonuses
are owners, related parties, or arm's-length employees, and the bonus
amount received by each individual.
(II) Regarding benefits provided to owners and related
parties, the provider must maintain clearly defined benefit policies
in its written agreements with employees or in its overall employment
policy. At a minimum, the documentation must include the basis for
eligibility for each type of benefit available, who is eligible to
receive each type of benefit, who actually receives each type of benefit,
whether the persons receiving each type of benefit are owners, related
parties, or arm's-length employees, and the amount of each benefit
received by each individual.
(xii) Regarding all forms of compensation, providers
must maintain documentation for each employee which clearly identifies
each compensation component, including regular pay, overtime pay,
incentive pay, mileage reimbursements, bonuses, sick leave, vacation,
other paid leave, deferred compensation, retirement contributions,
provider-paid instructional courses, health insurance, disability
insurance, life insurance, and any other form of compensation. Types
of documentation would include insurance policies; provider benefit
policies; records showing paid leave accrued and taken; documentation
to support hours (regular and overtime) worked and wages paid; and
mileage logs or other documentation to support mileage reimbursements
and travel allowances. For accrued benefits, the documentation must
clearly identify the period of the accrual. For example, if an employee
accrues two weeks of vacation during 20x1 and receives the corresponding
vacation pay during 20x3, that employee's compensation documentation
for 20x3 should clearly indicate that the vacation pay received had
been accrued during 20x1.
(I) For staff required to maintain continuous daily
time sheets as per §355.102(j) of this title and subclause (II)
of this clause, the daily timesheet must document, for each day, the
staff member's start time, stop time, total hours worked, and the
actual time worked (in increments of 30 minutes or less) providing
direct services for the provider, the actual time worked performing
other functions, and paid time off. The employee must sign each timesheet.
The employee's supervisor must sign the timesheets each payroll period
or at least monthly. Work schedules are unacceptable documentation
for staff whose duties include multiple direct service types, both
direct and indirect service component types, and both direct hands-on
support and first level supervision of direct care workers.
(II) For the Intermediate Care Facilities for Individuals
with an Intellectual Disability or Related Conditions (ICF/IID), Home
and Community-based Services (HCS) and Texas Home Living (TxHmL) programs,
staff required to maintain continuous daily timesheets include staff
whose duties include multiple direct service types, both direct and
indirect service component types and/or both direct hands-on support
and first-level supervision of direct care workers.
(xiii) Management fees paid to related parties must
be documented as to the actual costs of the related party for materials,
supplies, and services provided to the individual provider, and upon
which the management fees were based. If the cost to the related party
includes owner compensation or compensation to related parties, documentation
guidelines for those costs are specified in clause (xi) of this subparagraph.
Documentation must be maintained that indicates stated objectives,
periodic assessment of those objectives, and evaluation of the progress
toward those objectives.
(xiv) For central office and/or home office costs,
documentation must be maintained that indicates the organization of
the business entity, including position, titles, functions, and compensation.
For multi-state organizations, documentation must be maintained that
clearly defines the relationship of costs associated with any level
of management above the individual Texas contracted entity which are
allocated to the individual Texas contracted entity.
(xv) Documentation regarding depreciable assets includes,
at a minimum, historical cost, date of purchase, depreciable basis,
estimated useful life, accumulated depreciation, and the calculation
of gains and losses upon disposal.
(xvi) Providers must maintain documentation clearly
itemizing their employee relations expenditures. For employee entertainment
expenses, documentation must show the names of all persons participating,
along with classification of the person attending, such as employee,
nonemployee, owner, family of employee, client, or vendor.
(xvii) Adequate documentation substantiating the offsetting
of grants and contracts from federal, state, or local governments
prior to reporting either the net expenses or net revenue must be
maintained by the provider. As specified in §355.103(b)(18) of
this title, such offsetting is required prior to reporting on the
cost report. The provider must maintain written documentation as to
the purpose for which the restricted revenue was received and the
offsetting of the restricted revenue against the allowable and unallowable
costs for which the restricted revenue was used.
(xviii) During the course of an audit or an audit desk
review, the provider must furnish any reasonable documentation requested
by HHSC auditors within ten working days of the request or a later
date as specified by the auditors. If the provider does not present
the requested material within the specified time, the audit or audit
desk review is closed, and HHSC automatically disallows the costs
(xix) Any expense that cannot be adequately documented
or substantiated is disallowed. HHSC is not responsible for the contracted
provider's failure to adequately document and substantiate reported
(xx) Any cost report that is determined unauditable
through a field audit or that cannot have its costs verified through
a desk review will not be used in the reimbursement determination
(3) Cost report and methodology certification. Providers
must certify the accuracy of cost reports submitted to HHSC in the
format specified by HHSC. Providers may be liable for civil and/or
criminal penalties if the cost report is not completed according to
HHSC requirements or is determined to contain misrepresented or falsified
information. Cost report preparers must certify that they read the
cost determination process rules, the reimbursement methodology rules,
the cost report cover letter and cost report instructions, and that
they understand that the cost report must be prepared in accordance
with the cost determination process rules, the reimbursement methodology
rules and cost report instructions. Not all persons who contributed
to the completion of the cost report must sign the certification page.
However, the certification page must be signed by a responsible party
with direct knowledge of the preparation of the cost report. A person
with supervisory authority over the preparation of the cost report
who reviewed the completed cost report may sign a certification page
in addition to the actual preparer.
(4) Requirements for cost report completion.
(A) A completed cost report must:
(i) be completed according to the cost determination
rules of this chapter, program-specific allowable and unallowable
rules, cost report instructions, and policy clarifications;
(ii) contain a signed, notarized, original certification
page or an electronic equivalent where such equivalents are specifically
allowed under HHSC policies and procedures;
(iii) be legible with entries in sufficiently dark
print to be photocopied;
(iv) contain all pages and schedules;
(v) be submitted on the proper cost report form;
(vi) be completed using the correct cost reporting
(vii) contain a copy of the state-issued cost report
training certificate except for cost reports submitted through the
State of Texas Automated Information and Reporting System (STAIRS).
(B) Providers are required to report amounts on the
appropriate line items of the cost report pursuant to guidelines established
in the methodology rules, cost report instructions, or policy clarifications.
Refer to program-specific reimbursement methodology rules, cost report
instructions, or policy clarifications for guidelines used to determine
placement of amounts on cost report line items.
(i) For nursing facilities, placement on the cost report
of an amount, which was determined to be inaccurately placed, may
result in vendor hold as specified in §355.403 of this title
(relating to Vendor Hold).
(ii) For School Health and Related Services (SHARS),
placement on the cost report of an amount, which was determined to
be inaccurately placed, may result in an administrative contract violation
as specified in §355.8443 of this title (relating to Reimbursement
Methodology for School Health and Related Services (SHARS)).
(iii) For all other programs, placement on the cost
report of an amount, which was determined to be inaccurately placed,
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.
(C) A completed cost report must be filed by the cost
report due date.
(i) For nursing facilities, failure to file a completed
cost report by the cost report due date may result in vendor hold
as specified in §355.403 of this title.
(ii) For SHARS, failure to file a completed cost report
by the cost report due date 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 §355.8443 of this title.
(iii) For all other programs, failure to file a completed
cost report by the cost report due date 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.
(D) HHSC may excuse providers from the requirement
to submit a cost report. A provider that is not enrolled in Attendant
Compensation Rate Enhancement as described in §355.112 of this
title (relating to Attendant Compensation Rate Enhancement) for a
specific program or the Nursing Facility Direct Care Staff Rate enhancement
as described in §355.308 of this title (relating to Direct Care
Staff Rate Component) during the reporting period for the cost report
in question, is excused from the requirement to submit a cost report
for such program if the provider meets one or more of the following
(i) For all programs, if the provider performed no
billable services during the provider's cost-reporting period.
(ii) For all programs, if the cost-reporting period
would be less than or equal to 30 calendar days or one entire calendar
(iii) For all programs, if circumstances beyond the
provider's control, such as the loss of records due to natural disasters
or removal of records from the provider's custody by a regulatory
agency, make cost-report completion impossible.