Nf And Icf/Iid Reimbursement

01. Reasonable Cost Principles. To be allowable, costs must be reasonable, ordinary, necessary, and related to patient care. Providers are expected to incur costs in such a manner that economical and efficient delivery of quality health care to participants results. (7-1-26) 02. Application of Reasonable Cost Principles. Reasonable costs of any services are determined under this rule and the PRM, as modified by exceptions contained herein, and used to identify cost items included on Idaho's Uniform Cost Report. (7-1-26) a. Reasonable costs account for both direct and indirect costs of provider services, including normal standby costs. (7-1-26) b. Costs may vary from one (1) facility to another due to a variety of factors. Medicaid intends to reimburse providers for the actual operating costs of providing high quality care, unless such costs exceed the applicable maximum base rate developed under provisions of Title 56, Idaho Code, or unallowable by application of promulgated regulation. (7-1-26) c. The expectation of reasonable actual operating costs is that providers seek to minimize costs and that actual operating costs do not exceed what a prudent and cost-conscious buyer pays for a given item or service. (7-1-26) d. The Department does not pay for costs determined to exceed a level that buyers incur in the absence of clear evidence that higher costs were unavoidable. (7-1-26) e. Form and substance of transactions prevails over the form. Financial transactions are disallowed to the extent that the substance of a transaction fails to meet reasonable cost principles or comply with rules and policy. (7-1-26) 03. Home Office Cost Principles. Reasonable cost principles extend to home office costs allocated to individual providers. In addition, the home office, through a provider, provides documentation on the basis used to allocate costs among the various entities it administers or directs. (7-1-26) 04. Application of Related Party Transactions. (7-1-26) IDAHO ADMINISTRATIVE CODE IDAPA 16.03.26 Department of Health & Welfare Medicaid Plan Benefits Section 050 Page 31 a. Charges to a provider from related organizations may not exceed the billing to a related organization for these services. (7-1-26) b. All home office costs unrelated to patient care are not allowable. (7-1-26) 05. Compensation to Relatives. Payment for relatives of owners or administrators is allowed only for actual services performed, when necessary, adequately documented, and reasonable. (7-1-26) a. Compensation billed to the Department must be included in compensation reported for tax purposes and actually paid. (7-1-26) i. When services are performed without pay, no cost may be reported. (7-1-26) ii. Time records documenting actual hours worked are required for compensation to allow for reimbursement. (7-1-26) iii. Compensation for undocumented work hours is not reimbursable. (7-1-26) b. Related persons are defined as these relationships with a provider: (7-1-26) i. Spouse; (7-1-26) ii. Child or a descendant of a child; (7-1-26) iii. Siblings, stepsiblings, or descendant thereof; (7-1-26) iv. Parent, stepparent, siblings thereof, and their ancestors; (7-1-26) v. Related by marriage; (7-1-26) vi. Any other person without an arm’s length relationship. (7-1-26) 06. Idaho Owner-Administrative Compensation. Allowable compensation to owners and related persons providing any administrative services is based on bed count and limited to a set amount adjusted annually based upon changes in average hourly earnings in nursing and personal care facilities as published by a nationally recognized forecasting firm. (7-1-26) a. Allowable compensation for providing administrative services is determined by: (7-1-26) i. All licensed beds in every facility administrative services are provided. (7-1-26) ii. More than fifty (50) beds being restricted to an upper limit for compensation based on bed count. (7-1-26) iii. Less than fifty-one (51) beds being reimbursed at an allowable hourly rate. Non-administrative services are allowable at the reasonable market rate. Hours for each service type is documented. In no event will the total compensation for administrative and non-administrative duties exceed the limit applicable for the same amount for providing administrative services to facilities with fifty-one (51) or more beds. (7-1-26) b. Compensation for persons related to an owner is evaluated in the same manner as for an owner. (7-1-26) c. When an owner provides services to more than one facility, compensation is distributed on the same basis as costs allocated for non-owners. (7-1-26) d. For more than one (1) owner or related party to receive compensation, services must be actually IDAHO ADMINISTRATIVE CODE IDAPA 16.03.26 Department of Health & Welfare Medicaid Plan Benefits Section 050 Page 32 performed, documented, and necessary. Total compensation must be reasonable, and no greater than an amount for which the same services could be obtained on the open market. Standard full-time compensation is measured as two thousand eighty (2,080) hours. Compensation of an owner or relative of an owner will not exceed the compensation determined from the Administrative Compensation Schedule, and, when paid on an hourly basis, will not exceed compensation determined by the Administrative Compensation Schedule divided by two thousand eighty (2,080.) (7-1-26) 07. Filing Dates. (7-1-26) a. Deadlines for annual cost reports are the last day of the third month following a fiscal year end or the deadline imposed by Medicare for providers required to file Medicare cost reports. (7-1-26) b. Waivers to delay filing by thirty (30) days may be granted for annual cost reports in unusual circumstances. Requests for waivers and reasons must be submitted prior to the deadline. A written decision is rendered within ten (10) days. (7-1-26) 08. Failure to File. Late reports result in reductions to the interim rate. Failure to file required cost reports, including required supplemental information, unless a waiver is granted, results in a reduction of ten percent (10%) of the provider's rate(s) the first day of the month following a deadline date. Continued failure to comply results in complete payment suspension on the first day of the following month. When suspension or reduction occurs and a provider filed the required cost reports, amounts accruing to the provider during a suspension or reduction period are restored. Loss of license or certification results in immediate termination of reimbursement, full scope audit, and settlement for the cost period. (7-1-26) 09. Accounting System. Providers must file reports using the accrual basis and conform with GAAP or within provisions of the specified guidelines. Recorded transactions must be capable of verification by Departmental audit. (7-1-26) 10. Audits. (7-1-26) a. All financial reports are subject to audit to: (7-1-26) i. Determine that transactions recorded in the books of record are substantially accurate and reliable as a basis to determine reasonable costs. (7-1-26) ii. Determine that facility internal controls are sufficiently reliable to disclose the results of a provider's operations. (7-1-26) iii. Determine that Medicaid participants received the required care based on economy and efficiency. (7-1-26) iv. Determine that GAAP is applied on a consistent basis in conformance with applicable federal and state regulations. (7-1-26) v. Ensure policies and practices sufficiently meet fiduciary responsibilities for patients, funds, and property. (7-1-26) vi. Effect final settlement when required. (7-1-26) b. Normally, all annual statements are audited within the following year. (7-1-26) c. Other statements and some annual audit recommendations are subject to limited scope audits evaluating provider compliance. (7-1-26) d. Additional audits are required for: (7-1-26) i. Significant changes of ownership. (7-1-26) IDAHO ADMINISTRATIVE CODE IDAPA 16.03.26 Department of Health & Welfare Medicaid Plan Benefits Section 050 Page 33 ii. Changes in management. (7-1-26) iii. When an overpayment of twenty-five percent (25%) or more resulted in a completed cost period. (7-1-26) e. Annual field audits are by appointment. Auditors identify themselves with a letter of authorization or Department I.D. cards. (7-1-26) 11. Audit Standards and Requirements. (7-1-26) a. Before making any program payments to a prospective provider, the intermediary reviews a provider's accounting system and its capability of generating accurate statistical cost data. When a provider's record keeping capability fails to meet program requirements, the intermediary offers limited consultative services or suggests revisions of a provider's system to enable compliance. (7-1-26) b. Examination of records and documents includes: (7-1-26) i. Corporate charters or other ownership documents including those for parent or related companies and attachments describing property. (7-1-26) ii. Minutes and memos of governing bodies, including committees and its agents. (7-1-26) iii. All contracts. (7-1-26) iv. Tax returns and records, including workpapers and other supporting documentation. (7-1-26) v. All insurance contracts and policies including riders and attachments. (7-1-26) vi. Leases. (7-1-26) vii. Fixed asset records (see Capitalization of Assets). (7-1-26) viii. Schedules of patient charges. (7-1-26) ix. Notes, bonds, and other evidence of liabilities. (7-1-26) x. Capital expenditure records. (7-1-26) xi. Bank statements, canceled checks, deposit slips, and bank reconciliations. (7-1-26) xii. Evidence of litigations involving a facility or its owners. (7-1-26) xiii. All invoices, statements, and claims. (7-1-26) xiv. Financial audit work papers prepared by any accounting firm a provider engages with are considered the provider’s property and must be available to the intermediary upon request, under PRM, Subparagraph 2404.4(Q). (7-1-26) xv. Ledgers, journals, all working papers, subsidiary ledgers, records, and documents relating to financial operation. (7-1-26) xvi. All patient records, including trust funds and property. (7-1-26) xvii. Time studies and other cost determining information. (7-1-26) xviii. All other sources of information needed to form an audit opinion. (7-1-26) IDAHO ADMINISTRATIVE CODE IDAPA 16.03.26 Department of Health & Welfare Medicaid Plan Benefits Section 050 Page 34 c. Adequate cost information developed by a provider must be current, accurate, and sufficient detail to support payments made for services rendered. This includes all ledgers, books, records, and original cost evidence including purchase requisitions, purchase orders, vouchers, requisitions for material, inventories, timecards, payrolls, bases for apportioning costs, and other documentation pertaining to determination of reasonable cost, capable of being audited under PRM, Section 2304. (7-1-26) d. Adequate expense documentation includes invoices or statements with invoices attached supporting the statement and must include: (7-1-26) i. Service or sale date; (7-1-26) ii. Terms and discounts; (7-1-26) iii. Quantity; (7-1-26) iv. Price; (7-1-26) v. Vendor name and address; (7-1-26) vi. Delivery address if applicable; (7-1-26) vii. Contract or agreement references; and (7-1-26) viii. Description including quantities, sizes, specifications, and brand names of services performed. (7-1-26) e. Minor movable equipment is not capitalized. The cost of fixed assets and major movable equipment is capitalized and depreciated over the estimated useful life of an asset under PRM, Section 108.1. This rule applies except for the provisions of PRM, Section 106 for small tools. (7-1-26) f. Completed depreciation records must include the following for each asset: (7-1-26) i. Description of the asset including serial number, make, model, accessories, and location. (7-1-26) ii. Cost basis supported by invoices for purchase, installation, etc. (7-1-26) iii. Estimated useful life. (7-1-26) iv. Depreciation method (straight line, double declining balance, etc.). (7-1-26) v. Salvage value. (7-1-26) vi. Method of recording depreciation consistent with GAAP. (7-1-26) vii. Additional information, such as additional first year depreciation, even when not an allowable expense. (7-1-26) viii. Reported depreciation expense for the year and accumulated depreciation tied to the asset ledger. (7-1-26) g. Depreciation methods are always acceptable. Methods of accelerated depreciation are only acceptable upon authorization by the Office of Audit or its successor organization. Additional first year depreciation is not allowable. (7-1-26) h. An asset’s depreciable life may not be shorter than the useful life stated in the publication, Estimated Useful Lives of Depreciable Hospital Assets, Guidelines. Deviation from these guidelines is allowable IDAHO ADMINISTRATIVE CODE IDAPA 16.03.26 Department of Health & Welfare Medicaid Plan Benefits Section 050 Page 35 only upon Department authorization. (7-1-26) i. Lease purchase agreements are generally recognized by any the following characteristics: (7-1-26) i. Lessee assumes normal ownership costs, such as taxes, maintenance, etc.; (7-1-26) ii. Intent to create security interest; (7-1-26) iii. Lessee acquires title by exercising a purchase option that requires little or no additional payment or, additional payments substantially less than the fair market value at purchase date; (7-1-26) iv. Non-cancelable or cancelable only upon occurrence of a remote contingency; and (7-1-26) v. Initial loan term significantly less than the useful life and lessee has the option to renew at a rental price substantially less than fair rental value. (7-1-26) j. Assets acquired under such agreements are viewed as contractual purchases and treated accordingly. Normal costs of ownership such as depreciation, taxes, and maintenance are allowable. Rental or lease payments are not reimbursable. (7-1-26) k. Complete personnel records including: (7-1-26) i. Employment applications. (7-1-26) ii. W-4 Forms. (7-1-26) iii. Authorizations for any deductions such as insurance, credit union, etc. (7-1-26) iv. Routine evaluations. (7-1-26) v. Pay raise authorizations. (7-1-26) vi. Statements of understanding of policies, procedures, etc. (7-1-26) vii. Fidelity bond applications (when applicable). (7-1-26) l. A system of internal control intended to provide a method of handling all routine and nonroutine tasks related to: (7-1-26) i. Safeguarding assets and resources against waste, fraud, and inefficiency. (7-1-26) ii. Promoting accuracy and reliability in financial records. (7-1-26) iii. Encouraging and measuring compliance with company policy and legal requirements. (7-1-26) iv. Determining the degree of efficiency related to various aspects of operations. (7-1-26) m. An adequate system of internal control over cash disbursements including: (7-1-26) i. Payment on invoices only, or statements supported by invoices. (7-1-26) ii. Authorizations for purchase; a purchase order. (7-1-26) iii. Verification of quantity received, description, terms, price, conditions, specifications, etc. (7-1-26) iv. Verification of freight charges, discounts, credit memos, allowances, and returns. (7-1-26) IDAHO ADMINISTRATIVE CODE IDAPA 16.03.26 Department of Health & Welfare Medicaid Plan Benefits Section 050 Page 36 v. Check of invoice accuracy. (7-1-26) vi. Invoice approval policy. (7-1-26) vii. Method of invoice cancellation to prevent duplicating payment. (7-1-26) viii. Adequate separation of duties between ordering, recording, and paying. (7-1-26) ix. System separation of duties between ordering, recording, and paying. (7-1-26) x. Signature policy. (7-1-26) xi. Pre-numbered checks. (7-1-26) xii. Statement of policy regarding cash or check expenditures. (7-1-26) xiii. Adequate internal control over recording transactions in the books of record. (7-1-26) xiv. An imprest system for petty cash. (7-1-26) n. Sound accounting practices including: (7-1-26) i. Documentation of accounting policies and procedures, including capitalization, depreciation, and expenditure classification criteria. (7-1-26) ii. Chart of accounts. (7-1-26) iii. Budget or operating plans. (7-1-26) 12. Patient Funds. The safekeeping of Medicaid patient funds is the responsibility of the provider. Administration of these funds requires scrupulous care when recording all patient transactions. (7-1-26) a. Funds provided for a patient’s personal needs are used at the patient's discretion. Providers agree to manage these funds and render an accounting of funds but may not use them in any way. (7-1-26) b. Providers are subject to legal and financial liabilities for committing any of the following acts and any other acts contrary to federal regulations: (7-1-26) i. Management fees are not charged to manage patient trust funds and constitute double payment as normally performed by a facility employee whose salary is included in reasonable cost reimbursement. (7-1-26) ii. Nothing is to be deducted from these funds, unless deductions are authorized by the patient or their agent in writing. (7-1-26) iii. Interest accruing to patient funds on deposit is the patient’s property and part of their personal funds. Interest from these funds is not available to the provider for any use, including patient benefits. (7-1-26) c. Fund Management. Proper management includes the following at a minimum: (7-1-26) i. Savings accounts, maintained separately from facility funds. (7-1-26) ii. An accurate system of supporting receipts and disbursements to patients. (7-1-26) iii. Written authorization for all deductions. (7-1-26) iv. Signature verification. (7-1-26) IDAHO ADMINISTRATIVE CODE IDAPA 16.03.26 Department of Health & Welfare Medicaid Plan Benefits Section 053 Page 37 v. Deposit of all receipts on the same day received. (7-1-26) vi. Minimal funds kept in a facility. (7-1-26) vii. All funds must always be locked. (7-1-26) viii. Policy statement regarding patient's funds and property. (7-1-26) ix. Periodic review of all policies with staff in training sessions and with all new employees upon employment. (7-1-26) x. System of periodic review and correction of policies and financial records for patient property and funds. (7-1-26) 13. Legal Consultant Fees and Litigation Costs. When these costs are incurred by a provider, they are handled as follows: (7-1-26) a. Legal consultant fees unrelated to preparation for or appealing of a Department audit, or costs incurred by a provider in an action unrelated to litigation with the Department are allowed as part of total per diem costs the Medicaid Program reimburses according to the percentage of Medicaid patient days. (7-1-26) b. Costs of the provider’s legal counsel when appealing findings of a Department audit are reimbursed by Medicaid only to the extent a provider prevails on the issues involved. Determination of the extent a provider prevails is based on the ratio of the total dollars at issue for an audit period under appeal to the total dollars ultimately awarded to a provider for that audit period. (7-1-26) c. All other litigation costs incurred by a provider for actions against the Department are not directly or indirectly reimbursable by Medicaid, unless court ordered. (7-1-26) 051. – 052. RESERVED