| (a) Cost reports. Cost reporting requirements vary
depending on whether the provider participates in the Direct Care
Staff Rate enhancement program. All providers who participate in the
rate enhancement program must file a cost report, as described in §355.308
of this title (relating to Direct Care Staff Rate Component). A provider
that is not participating in the rate enhancement program must file
a cost report unless:
(1) the provider meets one or more of the conditions
in §355.105(b)(4)(D) of this title (relating to General Reporting
and Documentation Requirements, Methods, and Procedures); or
(2) the cost report would represent costs accrued during
a time period immediately preceding a period of decertification, if
the decertification period was greater than either 30 calendar days
or one entire calendar month.
(b) Exclusion of and adjustments to certain reported
expenses. Providers are responsible for eliminating unallowable expenses
from the cost report. HHSC reserves the right to exclude any unallowable
costs from the cost report and to exclude entire cost reports from
the reimbursement determination database if there is reason to doubt
the accuracy or allowability of a significant part of the information
reported.
(1) Cost reports included in the database used for
reimbursement determination.
(A) Individual cost reports will not be included in
the database used for reimbursement determination if:
(i) there is reasonable doubt as to the accuracy or
allowability of a significant part of the information reported; or
(ii) an auditor determines that reported costs are
not verifiable.
(B) In the event that all cost reports submitted for
a specific facility are disqualified through the application of subparagraph
(A)(i) and/or (ii) of this paragraph, the facility will not be represented
in the reimbursement database for the cost report year in question.
(2) Adjustments and exclusions of cost report data
include, but are not necessarily limited to:
(A) Fixed capital asset costs.
(i) HHSC staff determine fixed capital asset costs
as detailed in this section.
(ii) Fixed capital asset costs are reimbursed in the
form of a use fee calculated as described in §355.307 of this
title (relating to Reimbursement Setting Methodology). The following
fixed capital charges are excluded from the reimbursement base:
(I) building and building equipment depreciation and
lease expense;
(II) mortgage interest;
(III) land improvement depreciation; and
(IV) leasehold improvement amortization.
(B) Limits on other facility and administration costs.
To ensure that the results of HHSC's cost analyses accurately reflect
the costs that an economic and efficient provider must incur, HHSC
may place upper limits or caps on expenses for specific line items
and categories of line items included in the rate base for the administration
and facility cost centers. HHSC sets upper limits at the 90th percentile
in the array of all costs per unit of service or total annualized
cost, as appropriate for a specific line item or category of line
item, as reported by all contracted facilities, unless otherwise specified.
The specific line items and categories of line items that are subject
to the 90th percentile cap are:
(i) total buildings and equipment rental or lease expense;
(ii) total other rental or lease expense for transportation,
departmental, and other equipment;
(iii) building depreciation;
(iv) building equipment depreciation;
(v) departmental equipment depreciation;
(vi) leasehold improvement amortization;
(vii) other amortization;
(viii) total interest expense;
(ix) total insurance for buildings and equipment;
(x) facility administrator salary, wages, and/or benefits
with the cap based on an array of nonrelated-party administrator salaries,
wages, and/or benefits;
(xi) assistant administrator salary, wages, and/or
benefits with the cap based on an array of nonrelated-party assistant
administrator salaries, wages, and/or benefits;
(xii) facility owner, partner, or stockholder salaries,
wages, and/or benefits (when the owner, partner, or stockholder is
not the facility administrator or assistant administrator), with the
cap based on an array of nonrelated-party administrator salaries,
wages, and/or benefits;
(xiii) other administrative expenses including the
cost of professional and facility malpractice insurance, advertising
expenses, travel and seminar expenses, association dues, other dues,
professional service fees, management consultant fees, interest expense
on working capital, management fees, other fees, and miscellaneous
office expenses; and
(xiv) total central office overhead expenses or individual
central office line items. Individual line item caps are based on
an array of all corresponding line items.
(C) Occupancy adjustments. HHSC adjusts the facility
and administration costs of providers with occupancy rates below a
target occupancy rate. The target occupancy rate is the lower of:
(i) 85%; or
(ii) the overall average occupancy rate for contracted
beds in facilities included in the rate base during the cost reporting
periods included in the base.
(D) Cost projections. HHSC projects certain expenses
in the reimbursement base to normalize or standardize the reporting
period and to account for cost inflation between reporting periods
and the period to which the prospective reimbursement applies as specified
in §355.108 of this title (relating to Determination of Inflation
Indices).
(3) When material pertinent to proposed reimbursements
is made available to the public, the material will include the number
of cost reports eliminated from reimbursement determination for the
reason stated in paragraph (1)(A)(i) of this subsection.
(c) Reimbursement determinations and allowable costs.
Providers are responsible for reporting only allowable costs on the
cost report, except where cost report instructions indicate that other
costs are to be reported in specific lines or sections. Only allowable
cost information is used to determine recommended reimbursement. HHSC
excludes from reimbursement determinations any unallowable expenses
included in the cost report and makes the appropriate adjustments
to expenses and other information reported by providers.
(d) General information. In addition to the requirements
of this section, cost reports will be governed by the information
in §355.101 of this title (relating to Introduction), §355.102
of this title (relating to General Principles of Allowable and Unallowable
Costs), §355.103 of this title (relating to Specifications for
Allowable and Unallowable Costs), §355.104 of this title (relating
to Revenues), §355.105 of this title (relating to General Reporting
and Documentation Requirements, Methods, and Procedures), §355.106
of this title (relating to Basic Objectives and Criteria for Audit
and Desk Review of Cost Reports), §355.107 of this title (relating
to Notification of Exclusions and Adjustments), §355.108 of this
title (relating to Determination of Inflation Indices), §355.109
of this title (relating to Adjusting Reimbursement When New Legislation,
Regulations, or Economic Factors Affect Costs), and §355.110
of this title (relating to Informal Reviews and Formal Appeals).
(e) Final cost reports for change of ownership. When
a facility changes ownership, for a provider who participates in the
rate enhancement program, the prior owner must submit a final Staffing
and Compensation Report as described in §355.308 of this title.
When a facility changes ownership, for a provider not participating
in the rate enhancement program, the prior owner is excused from submitting
a final cost report and, if its prior year's cost report is pending
audit completion, the audit will be suspended and the cost report
excluded from the final cost report database.
(f) Requirements for cost report completion. A completed
nursing facility cost report must:
(1) meet the definition of completed cost report specified
in §355.105(b)(4)(A) of this title;
(2) have attached the property appraisal used to determine
the allowable appraised property value as described in subsection
(g) of this section;
(3) not report figures for days of service and number
of beds that reflect occupancy of greater than 100%;
(4) have a management contract attached, if applicable;
and
(5) have a lease agreement attached, if applicable.
(g) Allowable appraised property values. Allowable
appraised property values are determined as follows:
(1) Proprietary facilities. The allowable appraised
values of proprietary facilities to be reported on Texas Medicaid
cost reports are determined from local property taxing authority appraisals.
The year of the property appraisal must be the calendar year within
which the provider's cost report fiscal year ends, or the prior calendar
year.
(2) Tax exempt facilities. The allowable appraised
property values for tax exempt facilities are determined as follows.
(A) Tax exempt facilities provided an appraisal from
their local property taxing authority. Tax exempt facilities provided
an appraisal from their local property taxing authority must report
this appraised value on their Texas Medicaid cost report. The year
of the property appraisal must be the calendar year within which the
provider's cost report fiscal year ends, or the prior calendar year.
(B) Tax exempt facilities not provided an appraisal
from their local property taxing authority. Tax exempt facilities
not provided an appraisal from their local property taxing authority
because of an "exempt" status must provide documentation received
from the local taxing authority certifying exemption for the current
reporting period and must contract with an independent appraiser to
appraise the facility land and improvements. These independent appraisals
must meet the following criteria.
(i) The appraisal must value land and improvements
using the same basis used by the local taxing authority under Texas
laws regarding appraisal methods and procedures.
(ii) The appraisal must be updated every five years
with the initial appraisal setting the five-year interval.
(I) Facilities achieving exempt status during their
fiscal year ending in calendar year 1997 or a subsequent year must
submit an initial appraisal to HHSC's Rate Analysis Department as
part of their cost report for the fiscal year during which the exempt
status was achieved. This appraisal must be reflective of the facility's
appraised value during that fiscal year.
(II) If a facility is reappraised due to improvements
or reconstruction as defined in clause (iii) of this subparagraph,
a new five-year interval will be set.
(iii) Facilities making capital improvements, or requiring
reconstruction due to fire, flood, or other natural disaster, when
the improvements or reconstruction cost more than $2,000 per licensed
bed, may contract with an independent appraiser to have land and improvements
reappraised within the cost reporting period in which the improvement(s)
is placed into service.
(iv) If for any reason an appraisal becomes available
from the local taxing authority for a provider who previously lacked
such an appraisal, the provider must report, on the next Texas Medicaid
cost report submitted, the local taxing authority's appraised values
instead of the independent appraisal values.
(3) Governmental facilities. Governmental facilities
are exempt from the requirement to report an appraised property value.
(h) In addition to the requirements of §355.102
and §355.103 of this title, the following apply to costs for
the nursing facilities (NF) program.
(1) Medical costs. The costs for medical services and
items delineated in 40 TAC §19.2601 (relating to Vendor Payment)
are allowable. These costs must also comply with the general definition
of allowable costs as stated in §355.102 of this title.
(2) Chaplaincy or pastoral services. Expenses for chaplaincy
or pastoral services are allowable costs.
(3) Voucherable costs. Except as detailed in subparagraphs
(A) and (B) of this paragraph, any expenses directly reimbursable
to the provider through a voucher payment and any expenses in excess
of the limit, or ceiling, for a voucher payment system are unallowable
costs.
(A) The ventilator dependent supplemental voucher system
and the children with tracheostomies supplemental voucher system are
not subject to the cost reporting restrictions described in this paragraph.
(B) Select voucher systems, when indicated by department
procedures, are not subject to the cost reporting restrictions described
in this paragraph. To avoid the possibility of providers being reimbursed
through the voucher system and the daily rate for the same expenses,
the department may not waive the cost reporting restrictions described
in this paragraph unless the following criteria are met:
(i) the voucher system is a temporary system;
(ii) the costs represent ongoing costs; and
(iii) the costs are not represented in the payment
rate until after the voucher system has been discontinued.
(4) Preferred items. Costs for preferred items which
are billed to the recipient, responsible party, or the recipient's
family are not allowable costs.
(5) Preadmission Screening and Annual Resident Review
(PASARR) expenses. Any expenses related to the direct delivery of
specialized services and treatment required by PASARR for residents
are unallowable costs.
(6) Advanced Clinical Practitioner (ACP) or Licensed
Professional Counselor (LPC) services. Expenses for services provided
by an ACP or LPC are unallowable costs.
|
| Source Note: The provisions of this §355.306 adopted to be effective October 1, 1990, 15 TexReg 5220; amended to be effective May 15, 1991, 16 TexReg 2009; amended to be effective September 1, 1996, 21 TexReg 7861; transferred effective September 1, 1997, as published in the Texas Register October 17, 1997, 22 TexReg 10311; amended to be effective May 1, 2000, 25 TexReg 3517; amended to be effective July 23, 2002, 27 TexReg 6501; amended to be effective January 9, 2005, 29 TexReg 12121; amended to be effective December 14, 2010, 35 TexReg 10944; amended to be effective September 1, 2011, 36 TexReg 4652; amended to be effectiveNovember 25, 2012, 37 TexReg 9086 |
