| (a) General reporting. Except where otherwise specified
under this title, the Texas Health and Human Services Commission (HHSC)
follows the requirements, methods, and procedures set forth in this
section to determine costs appropriate for use in the reimbursement
determination process.
(b) Cost report requirements. Unless specifically stated
in program rules or excused as described in paragraph (4)(D) of this
subsection, each provider must submit financial and statistical information
on cost report forms provided by HHSC, on facsimiles that are formatted
according to HHSC specifications and are pre-approved by HHSC staff,
or electronically in HHSC-prescribed format in programs where these
systems are operational. The cost reports must be submitted to HHSC
in a manner prescribed by HHSC. The cost reports must be prepared
to reflect the activities of the provider while delivering contracted
services during the fiscal year specified by the cost report. Cost
reports or other special surveys or reports may be required for other
periods at the discretion of HHSC. Each provider is responsible for
accurately completing any cost report or other special survey or report
submitted to HHSC.
(1) Accounting methods. All financial and statistical
information submitted on cost reports must be based upon the accrual
method of accounting, except where otherwise specified in §355.102
and §355.103 of this subchapter (relating to General Principles
of Allowable and Unallowable Costs and Specifications for Allowable
and Unallowable Costs) and in the case of governmental entities operating
on a cash or modified accrual basis. For cost-reporting purposes,
accrued expenses must be incurred during the cost-reporting period
and must be paid within 180 days after the end of that cost-reporting
period. In situations where a contracted provider, any of its controlling
entities, its parent company/sole member, or its related-party management
company has filed for bankruptcy protection, the contracted provider
may request an exception to the 180-day requirement for payment of
accrued allowable expenses by submitting a written request to the
HHSC Provider Finance Department. The written request must be submitted
within 60 days of the date of the bankruptcy filing or at least 60
days prior to the due date of the cost report for which the exception
is being requested, whichever is later. The contracted provider will
then be requested by the HHSC Provider Finance Department to provide
certain documentation, which must be provided by the specified due
date. Such exceptions due to bankruptcy may be granted for reasonable,
necessary, and documented accrued allowable expenses that were not
paid within the 180-day requirement. Accrued revenues must be for
services performed during the cost-reporting period and do not have
to be received within 180 days after the end of that cost reporting
period in order to be reported as revenues for cost-reporting purposes.
Except as otherwise specified by the cost determination process rules
of this chapter, cost report instructions, or policy clarifications,
cost reports should be prepared consistent with generally accepted
accounting principles (GAAP), which are those principles approved
by the American Institute of Certified Public Accountants (AICPA).
Internal Revenue Service (IRS) laws and regulations do not necessarily
apply in the preparation of the cost report. In cases where cost-reporting
rules differ from GAAP, IRS, or other authorities, HHSC rules take
precedence for provider cost-reporting purposes.
(2) Recordkeeping and adequate documentation. There
is a distinction between noncompliance in recordkeeping, which equates
with unauditability of a cost report and constitutes an administrative
contract violation or, for the Nursing Facility program, may result
in vendor hold, and a provider's inability to provide adequate documentation,
which results in disallowance of relevant costs. Each is discussed
in the following paragraphs.
(A) Recordkeeping. Providers must ensure that records
are accurate and sufficiently detailed to support the legal, financial,
and other statistical information contained in the cost report. Providers
must maintain all work papers and any other records that support the
information submitted on the cost report relating to all allocations,
cost centers, cost or statistical line items, surveys, and schedules.
HHSC may require supporting documentation other than that contained
in the cost report to substantiate reported information.
(i) For contracted providers subject to 40 TAC Chapter
49, each provider must maintain records according to the requirements
stated in 40 TAC §49.307 (relating to Record Retention and Disposition)
and according to the HHSC's prescribed chart of accounts, when available.
(ii) If a contractor is terminating business operations,
the contractor must ensure that:
(I) records are stored and accessible; and
(II) someone is responsible for adequately maintaining
the records.
(iii) For nursing facilities, failure to maintain all
work papers and any other records that support the information submitted
on the cost report relating to all allocations, cost centers, cost
or statistical line items, surveys, and schedules may result in vendor
hold as specified in §355.403 of this chapter (relating to Vendor
Hold).
(iv) For all other programs, failure to maintain all
work papers and any other records that support the information submitted
on the cost report relating to all allocations, cost centers, cost
or statistical line items, surveys, and schedules 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 subchapter (relating to Administrative
Contract Violations).
(B) Adequate documentation. The relationship between
reported costs and contracted services must be clearly and adequately
documented to be allowable. Adequate documentation consists of all
materials necessary to demonstrate the relationship of personnel,
supplies, and services to the provision of contracted client care
or the relationship of the central office to the individual service
delivery entity level. These materials may include but are not limited
to, accounting records, invoices, organizational charts, functional
job descriptions, other written statements, and direct interviews
with staff, as deemed necessary by HHSC auditors to perform required
tests of reasonableness, necessity, and allowability.
(i) The minimum allowable statistical duration for
a time study upon which to base salary allocations is four weeks per
year, with one week being randomly selected from each quarter so as
to assure that the time study is representative of the various cycles
of business operations. One week is defined as only those days the
contracted provider is in operation for seven continuous days. The
time study can be performed for one continuous week during a quarter,
or it can be performed over five or seven individual days, whichever
is applicable, throughout a quarter. The time study must be a 100%
time study, accounting for 100% of the time paid to the employee,
including vacation and sick leave.
(ii) To support the existence of a loan, the provider
must have available a signed copy of the loan contract, which contains
the pertinent terms of the loan, such as amount, rate of interest,
method of payment, due date, and collateral. The documentation must
include an explanation for the purpose of the loan, and an audit trail
must be provided showing the use of the loan proceeds. Evidence of
systematic interest and principal payments must be available and supported
by the payback schedule in the note or amortization schedule supporting
the note. Documentation must also include substantiation of any costs
associated with the securing of the loan, such as broker's fees, due
diligence fees, lender's fees, attorney's fees, etc. To document allowable
interest costs associated with related party loans, the provider is
required to maintain documentation verifying the prime interest rate
in accordance with §355.103(b)(11)(C) of this subchapter for
a similar type of loan as of the effective date of the related party
loan.
(iii) For ground transportation equipment, a mileage
log is not required if the equipment is used solely (100%) for the
provision of contracted client services in accordance with program
requirements in delivering one type of contracted care. However, the
contracted provider must have a written policy that states that the
ground transportation equipment is restricted to that use, and that
policy must be followed. For ground transportation equipment that
is used for several purposes (including for personal use) or multiple
programs or across various business components, mileage logs must
be maintained. Personal use includes, among other things, driving
to and from a personal residence. At a minimum, mileage logs must
include for each individual trip the date, the time of day (beginning
and ending), driver, persons in the vehicle, trip mileage (beginning,
ending, and total), purpose of the trip, and the allocation centers
(the departments, programs, and/or business entities to which the
trip costs should be allocated). Flight logs must include dates, mileage,
passenger lists, and destinations, along with any other Cont'd... |
