| (C) if a direct cost, it bears a significant relationship
to contracted client care. To qualify as significant, the elimination
of the expenditure would have an adverse impact on client health,
safety, or general well-being;
(D) the direct or indirect expense was incurred in
the purchase of materials, supplies, or services provided to clients
or staff in the normal conduct of operations to provide contracted
client care;
(E) the direct or indirect costs are not allocable
to or included as a cost of any other program in either the current,
a prior, or a future cost-reporting period;
(F) the costs are net of all applicable credits;
(G) allocated costs of each program are adequately
substantiated; and
(H) the costs are not prohibited under other pertinent
federal, state, or local laws or regulations.
(3) Direct costs are those costs incurred by a provider
that are definitely attributable to the operation of providing contracted
client services. Direct costs include, but are not limited to, salaries
and nonlabor costs necessary for the provision of contracted client
care. Whether or not a cost is considered a direct cost depends upon
the specific contracted client services covered by the program. In
programs in which client meals are covered program services, the salaries
of cooks and other food service personnel are direct costs, as are
food, nonfood supplies, and other such dietary costs. In programs
in which client transportation is a covered program service, the salaries
of drivers are direct costs, as are vehicle repairs and maintenance,
vehicle insurance and depreciation, and other such client transportation
costs.
(4) Indirect costs are those costs that benefit, or
contribute to, the operation of providing contracted services, other
business components, or the overall contracted entity. These costs
could include, but are not limited to, administration salaries and
nonlabor costs, building costs, insurance expense, and interest expense.
Central office or home office administrative expenses are considered
indirect costs. As specified in §355.8443 of this title, SHARS
providers use an unrestricted indirect cost rate to determine indirect
costs.
(g) Unallowable costs. Unallowable costs are expenses
that are not reasonable or necessary, according to the criteria specified
in subsection (f)(1) - (2) of this section and which do not meet the
requirements as specified in subsections (i), (j), and (k) of this
section or which are specifically enumerated in §355.103 of this
title or program-specific reimbursement methodology. Providers must
not report as an allowable cost on a cost report a cost that has been
determined to be unallowable. Such reporting may constitute fraud.
(Refer to §355.106(a) of this title (relating to Basic Objectives
and Criteria for Audit and Desk Review of Cost Reports)).
(1) For nursing facilities, placement as an allowable
cost on a cost report of a cost which has been determined to be unallowable
may result in vendor hold as specified in §355.403 of this title.
(2) For Intermediate Care Facilities for Individuals
with an Intellectual Disability or Related Conditions (ICF/IID), Home
and Community-based Services (HCS), Service Coordination/Targeted
Case Management, Rehabilitative Services, and Texas Home Living (TxHmL)
programs, placement as an allowable cost on a cost report a cost,
which has been determined to be unallowable, 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.
(3) For SHARS providers, submission of a cost that
has been determined to be unallowable may result in an administrative
contract violation as specified in §355.8443 of this title.
(4) For all other programs, submission of a cost, which
has been determined to be unallowable, 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.
(h) Other financial and statistical data. The primary
purpose of the cost report is to collect allowable costs to be used
as a basis for reimbursement determination. In addition, providers
may be required on cost reports to provide information in addition
to allowable costs to support allowable costs, such as wage surveys,
workers' compensation surveys, or other statistical and financial
information. Additional data requested may include, when specified
and in the appropriate section or line number specified, costs incurred
by the provider which are unallowable costs. All information, including
other financial and statistical data, shown on a cost report is subject
to the documentation and verification procedures required for an audit
desk review and/or field audit.
(1) For nursing facilities, inaccuracy in providing,
or failure to provide, required financial and statistical data may
result in vendor hold as specified in §355.403 of this title.
(2) For ICF/IID, HCS, Service Coordination/Targeted
Case Management, Rehabilitative Services, and TxHmL programs, inaccuracy
in providing, or failure to provide, required financial and statistical
data 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.
(3) For SHARS, inaccuracy in providing, or failure
to provide, required financial and statistical data may result in
an administrative contract violation as specified in §355.8443
of this title.
(4) For all other programs, inaccuracy in providing,
or failure to provide, required financial and statistical data 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.
(i) Related party transactions.
(1) In determining whether a contracted provider organization
is related to a supplying organization, the tests of common ownership
and control are to be applied separately. Related to a contracted
provider means that the contracted provider to a significant extent
is associated or affiliated with, has control of, or is controlled
by the organization furnishing the services, equipment, facilities,
leases, or supplies. Common ownership exists if an individual or individuals
possess any ownership or equity in the contracted provider and the
institution or organization serving the contracted provider. Control
exists if an individual or an organization has the power, directly
or indirectly, to significantly influence or direct the actions or
policies of an organization or institution. If the elements of common
ownership or control are not present in both organizations, then the
organizations are deemed not to be related to each other. The existence
of an immediate family relationship will create an irrefutable presumption
of relatedness through control or attribution of ownership or equity
interests where the significance tests are met. The following persons
are considered immediate family for cost-reporting purposes:
(A) husband and wife;
(B) natural parent, child, and sibling;
(C) adopted child and adoptive parent;
(D) stepparent, stepchild, stepsister, and stepbrother;
(E) father-in-law, mother-in-law, sister-in-law, brother-in-law,
son-in-law, and daughter-in-law;
(F) grandparent and grandchild;
(G) uncles and aunts by blood or marriage;
(H) nephews and nieces by blood or marriage; and
(I) first cousins.
(2) A determination as to whether an individual (or
individuals) or organization possesses ownership or equity in the
contracted provider organization and the supplying organization, so
as to consider the organizations related by common ownership, will
be made on the basis of the facts and circumstances in each case.
This rule applies whether the contracted provider organization or
supplying organization is a sole proprietorship, partnership, corporation,
trust or estate, or any other form of business organization, proprietary
or nonprofit. In the case of a nonprofit organization, ownership or
equity interest will be determined by reference to the interest in
the assets of the organization, e.g., a reversionary interest provided
for in the articles of incorporation of a nonprofit corporation.
(3) The term control includes any kind of control,
whether or not it is legally enforceable and however it is exercisable
or exercised. It is the reality of the control which is decisive,
not its form or the mode of its exercise. The facts and circumstances
in each case must be examined to ascertain whether legal or effective
control exists. Since a determination made in a specific case represents
a conclusion based on the entire body of facts and circumstances involved,
such determination should Cont'd... |
