Cost Categories - (Rev. 1, 08-30-02)

90.9 - Cost Categories - (Rev. 1, 08-30-02) A1-1212.9, B1-4212.9 The contractor shall report costs as defined below unless defined differently in its contract. A. Salaries/Wages It shall include salaries, wages, bonuses, and incentive compensation payments to directors, officers, and employees. It shall include charges made by agencies furnishing temporary help and premium pay for time worked; overtime premium including premium for Saturdays, Sundays, and holidays; and shift premiums. It shall include pay for time not worked, i.e., rest periods, lunch periods, jury, and voting allowance. It shall include vacations, sick leave, holidays, and military leave. It shall report salaries and wages in accordance with the FAR 52.216-7(b). It shall report fringe benefits on the fringe benefit line. It shall include all employees' salaries and wages except as noted in §§90.9H (Overhead), 90.9I (General and Administrative), and 90.9P (Hours-Direct, Indirect, Subcontracts, and Overhead /G&A - Exception). B. Fringe Benefits It shall include payments made to, or for the benefit of, employees over and above normal salaries and wages. For example, contributions to employee insurance and pension plans, post retirement benefits other than pensions, payroll taxes, supplemental unemployment benefit plans, death benefits, and separation pay allowances. It shall include such costs for all employees except as noted in §§90.9H (Overhead), 90.9I (General and Administrative), and 90.9P (Hours-Direct, Indirect, Subcontracts, and Overhead/G&A - Exception). C. Electronic Data Processing (EDP) Equipment It shall include rental/leases, depreciation, or the cost of maintenance and repairs, insurance (if separately identifiable), systems software charges, personal property taxes, and use charges. It shall include costs of mainframe and mainframe peripherals, personal computers, local area networks (LAN), imaging equipment, printers, optical discs, optical character recognition (OCR) equipment, and lap top computers. It shall report facilities management (FM) subcontracts under subcontracts. D. Subcontracts It shall include all subcontract costs such as those involving computer operations, EDP software, data entry, and provider auditing which require notification per the Medicare contract/agreement. In addition, it shall include subcontracts in excess of $25,000 for services related to all functions and duties whether approval is required or not. It shall exclude services for janitorial, cafeteria, maintenance and other subcontracts such as leases and rentals (see Other Direct Costs). It shall exclude EDP equipment subcontracts that are charged to EDP equipment but include FM subcontracts and shared processing arrangements. E. Other Direct Costs It shall include all other costs not included in the categories described above. This includes, but is not limited to: leases for space and equipment, depreciation for company owned space and equipment (except EDP equipment), return on investment, taxes (except personnel taxes reported in fringe benefits), insurance (other than that reported in fringe benefits or EDP equipment), dues to professional, trade, and business associations, net food service costs (cafeteria and subsidized eating facilities), travel, communications, postage, office supplies, material, medical review consultants and other consultants under $25,000, printing costs excluding equipment, and general maintenance, janitorial and security activities. F. Other Costs It shall use this category only with the concurrence of CMS. Most contractors are not required to use this category. This category may include other indirect costs, excluding overhead and general and administrative costs that a contractor might propose. G. Non-COB Credits It shall include the applicable portion of any income, rebate, allowance, or other credits related to total operations. It shall not report COB credits in this category (See §190, Certification Form.) H. Overhead It shall include all personal and non-personal service costs related to service departments and financial, accounting, and statistical activities as described below. 1. Service Departments It shall include all data related solely to the following service areas which support other operations: • Personnel - Recruiting, testing, hiring, orientation, centralized training staff, maintaining employment files, administration of employee services such as library, recreation unit, cafeteria, health unit, and employee publications. • Methods and Procedures - Review and analysis of manual (non-EDP) systems. • Storeroom - Receipt, maintenance, and issuance of materials and supplies. It shall not include the cost of the materials or supplies. They are included in the areas where used. • Printing and Duplication - To the extent possible, it shall distribute the costs related to printing to the appropriate line item responsible for the end product. • Purchasing - If a separate unit, it shall include all activities related to procurement of materials, supplies, furniture, equipment, and services. This involves only the purchasing activity, not the cost of the purchases. • Switchboard - If a separate centralized unit, it shall not include the costs of telephone service identified with other operations. • Mailroom and Interoffice Messengers - It shall include the cost and other data related to the activity, unless they can be directly assigned to specific lines. It shall include the cost of activities such as incoming (receipt, open, sort, batch, and deliver) as well as outgoing mail. It shall not include the cost of postage identified with other operations. • Word Processing Centers 2. Financial, Accounting, and Statistical Departments Includes accounting for and control of benefits, record keeping, and other fiscal tasks. • Accounting for and Control of Benefits - It shall include benefit disbursements, reissued checks, bank reconciliations, postpayment review of benefit disbursements for internal control purposes, and overpayment recoupments relating to individual billings. • Record Keeping Tasks - It shall include general and cost accounting, payroll, inventories (financial, not bills), and receipt of other funds, maintenance of petty cash, and other non-benefit-related disbursements. • Other Fiscal Tasks - It shall include budget preparation and cost reporting, internal fiscal audits, company wide audit by CPA firms, and statistics maintained and reports prepared in this operation, and external audit liaison with the OIG and GAO. 3. Legal General corporate legal costs allowable and allocable to Medicare, excluding provider cost report appeals, and other activities directly identifiable to other operations (e.g., reconsiderations, reviews and hearings). I. General and Administrative It shall include total cost allocated to Medicare for the following: 1. General Management Individuals responsible for overall corporate or Medicare matters. It shall prorate the cost of individuals responsible for more than one operation, but not responsible for overall corporate or Medicare matters to the operations for which they are responsible. It shall charge the Medicare Coordinator (the person responsible for the overall Medicare operation) to General and Administrative. 2. Contractor Operations Specialist It shall include the cost of contractor operations specialists, CMS on-site representatives, including the cost of services and space furnished to CMS. J. Fee/Profit It shall include only if allowed by contract/agreement, but only when payable from the Government. (Also see Other Adjustments below.) K. Total Cost The sum of A-J above. Total cost excludes those accruals included in Other Adjustments and Forward Funding, as defined below. L. Other Adjustments It shall include items for which reimbursement is not yet due per 48 CFR 52.216-7(b), but which should be accrued to the period being reported. For example, it shall include subcontract costs for which services have been received, but payment has not been made to the subcontractor or fees which have been earned (non-COB credits and fee/profit), but for which payment is not payable by CMS. CMS will provide guidance as to which activity to report for fee/profit. M. Forward Funding It shall include the outstanding costs to be incurred for CMS-approved items for which funding has been received, but the services extend into the subsequent FY. As costs are incurred, these costs should be reported in A through J thus reducing the forward funding balance. This category is not applicable to the budget request. If CMS has approved projects for forward funding, then costs must be reported on the September IER and the FACP. N. Total Adjusted Cost The sum of K through M above. See Note in Chapter 2, §130 for instructions for administrative draws. O. Workloads 1-2-3 Some activities may not have discrete workloads; other activities may have several workloads and some only one workload. The contractor shall not fill in unless directed by CMS. Workloads for bills/claims, inquiries, and appeals will be pre-filled from workload reporting data drawn from Contractor Reporting of Operational and Workload Data (CROWD) reports. Other workloads will be input by the contractor as directed by CMS. See §100 for specific workloads to report. P. Hours-Direct, Indirect, Subcontracts, and Overhead/G&A It shall separately identify productive hours associated with salaries and wages and overhead/G&A. It shall compute estimated hours per employee in accordance with the Schedule of Net Hours Available, Form CMS-3258. (See §200.) It shall round net productive hours to the nearest hour. It shall use Indirect and Subcontracts Hours only with the concurrence of CMS. It shall include hours directly assigned or otherwise allocated to a particular activity during the FY. It shall include or exclude, as appropriate, personnel hours loaned and borrowed by each operation. It shall include hours incurred by temporary help furnished by outside organizations. For this reporting requirement, temporary help must meet all the following criteria: • Directly supervised by contractor personnel; • Services performed on contractor premises; • Used for limited time periods; and • Obtained from an outside agency. The contractor shall distinguish between temporary help and certain types of subcontractors, such as data entry, where the services are used as an interim measure to alleviate peak period workloads. Subcontract personnel provide a product or service, but do not meet the criteria for temporary help. Examples of subcontractors are: programmers who contract to provide software, but are not under direct control of contractor personnel, and clerical personnel working offsite. Exception: The contractor shall not report hours for employees assigned to general maintenance, janitorial and security activities as they relate to its facility's upkeep and protection. It shall include related personal service costs (salaries, wages, and fringe benefits) as part of Other Direct Costs.