Reporting Requirements

(1) Required Reports. (a) Resident Care Facility Cost Report. Each provider must complete and file a residential care cost report each calendar year with the Center, containing the facility’s claim for reimbursement and the complete financial condition of the facility, including all applicable management company, central office, and real estate expenses. (b) Realty Company Cost Report. A provider that does not own the real property of the facility, and pays rent to an affiliated or non-affiliated realty trust or other business entity, must file or cause to be filed a realty company cost report with the Center. If no report is filed, EOHHS will not reimburse the costs associated with the provider’s rental expense. (c) Management Company Cost Report. A provider that claims management or central office expenses must file a separate management company cost report with the Center for each entity for which it claims management or central office expense. If these costs are claimed for reimbursement, the provider must certify that costs are reasonable and necessary for the care of publicly aided residents in Massachusetts. (d) Financial Statements. Each provider must file any accompanying financial statements that most closely match the cost report year. (2) General Cost Reporting Requirements. (a) Accrual Method. Providers must complete all required reports using the accrual method of accounting. (b) Documentation of Reported Costs. Providers must maintain accurate, detailed, and original financial records to substantiate reported costs for a period of at least five years following the submission of required reports or until the final resolution of any appeal involving a rate for the period covered by the report, whichever occurs later. Providers must maintain complete documentation of all of the financial transactions and census activity of the facility and affiliated entities including, but not limited to, the books, invoices, bank statements, canceled checks, payroll records, governmental filings, and any other records necessary to document the provider’s claim for reimbursement. Providers must be able to document expenses relating to affiliated entities for which reimbursement is claimed whether or not they are related parties. (c) Fixed Asset Ledger. Providers must maintain a fixed asset ledger that clearly identifies each asset for which reimbursement is being claimed, including its location, the date of purchase, the cost, salvage value, accumulated depreciation, and the disposition of sold, lost, or fully depreciated assets. (d) Job Descriptions and Time Records. Providers and management companies must maintain written job descriptions including time records, qualifications, duties, and responsibilities for all positions for which reimbursement is claimed. EOHHS will not reimburse the salary and fringe benefits or the imputed amount for sole proprietors as specified in 101 CMR 204.04(2) for any individual for which the provider does not maintain a job description and time record. (e) Other Cost Reporting Requirements. 1. Expenses that Generate Income. Providers must identify the expense accounts that generate income. EOHHS will offset reported ancillary income if the provider does not identify the associated expense account. 2. Laundry Expense. Providers must separately identify the expense associated with laundry services not provided to all residents. Providers may not claim reimbursement for such expense. 3. Fixed Costs. a. Providers must allocate all fixed costs, except equipment, on the basis of square footage. Providers may elect to specifically identify equipment related to the facility. The provider must document each piece of equipment in the fixed asset ledger. If a provider elects not to identify equipment, it must allocate equipment on the basis of square footage. b. If a provider undertakes construction to replace beds, it must write off the fixed assets that are no longer used to provide care to publicly aided residents and may not claim reimbursement for the assets. c. Providers must separately identify fully depreciated assets. Providers must report the costs of fully depreciated assets and related accumulated depreciation on all reports unless they have removed such costs and accumulated depreciation from the provider’s books and records. Providers must attach to the cost report a schedule of the cost of the retired equipment, accumulated depreciation, and the accounting entries on the books and records of the facility when the equipment is retired. d. Providers may not report expenditures for major repair projects whose useful life is greater than one year as expenses. Providers must not report such expenditures as pre-paid expenses. 4. Mortgage Acquisition Costs. Providers must classify mortgage acquisition costs as other assets. Providers may not add mortgage acquisition costs to fixed asset accounts. 5. Related Parties. Providers must report salary expenses paid to a related party and must identify all goods and services purchased from a related party. If a provider purchases goods and services from a related party, it must disclose the related party’s cost of the goods and services. EOHHS will limit reimbursement for such goods and services to the lower of the related party’s cost or the cost determined using the prudent buyer concept. 6. Service of Non-paid Workers. The services must be fully disclosed in the footnotes and explanations section of the cost report. Both the total expense and the account(s) in which the expense is reported must be identified. 7. Facilities in Which Other Programs Are Operated. If a provider operates an adult day health program, an assisted living program, or provides outpatient services, the provider must not claim reimbursement for the expenses of such programs. If the provider converts a portion of the facility to another program, the provider must a. identify existing equipment no longer used in facility operations. Such equipment must be removed from the facility’s records; b. identify the square footage of the existing building and improvement costs associated with the program, and the equipment associated with the program; and c. allocate shared costs, including shared capital costs, using a well-documented and generally accepted allocation method. The provider must directly assign to the program any additional capital expenditures associated with the program. (3) Filing Deadlines. (a) General. Except as provided in 101 CMR 204.07(3)(b) and (c), or in accordance with alternative deadlines established by EOHHS or the Center through administrative bulletin or other written issuance, providers must file required cost reports for the calendar year within 60 days of the deployment of the annual Residential Care Facility Cost Report. If the 60th day falls on a weekend or holiday, the reports are due by 5:00 P.M. on the following business day. (b) Special Provisions. 1. Change of Ownership. The transferor must file cost reports with the Center within 60 days after a change of ownership. The Center will notify the Department of Transitional Assistance if required reports are not filed timely for payments to be withheld or other appropriate action by that agency. 2. New Facilities and Facilities with Major Additions. New facilities and facilities with major additions that become operational during the rate year must file year end cost reports with the Center within 60 days after the close of the first and second rate years. 3. Appointment of a Resident Protector Receiver. If a receiver is appointed pursuant to M.G.L. c. 111, § 72N, the provider must file cost reports for the pre-receivership reporting period or portion thereof with the Center within 60 days of the receiver’s appointment. 4. Closed Facilities. A facility that permanently closes is not required to file the reports cited in 101 CMR 204.07(1) for the year in which the facility closed. (c) Extension of Filing Date. The director of the Center’s pricing group may grant a request for an extension of the filing due date for a maximum of 30 calendar days. In order to receive an extension, the provider must 1. submit the request itself rather than through agents or other representatives; 2. demonstrate exceptional circumstances that prevent the provider from meeting the deadline; and 3. file the request no later than 15 calendar days before the due date. (4) Incomplete Submissions. If the cost reports are incomplete, the Center will notify the provider in writing within 120 days of the receipt. The Center will specify the additional information that the provider must submit to complete the cost reports. The provider must file the necessary information within 25 days of the date of notification. If the Center fails to notify the provider within the 120-day period, the cost reports will be considered complete and deemed to be filed on the date of receipt. (5) Additional Information. The Center may require the provider to submit additional data and documentation during a desk or field audit even if the Center has accepted the provider’s cost reports. In addition, the Center may request additional information and data relating to the operations of the provider and any related party. (6) Failure to File Timely. If the provider does not file the required cost reports by the due date, EOHHS may reduce the provider’s rate for current services by 5% on the day following the date the submission is due and 5% for each month of noncompliance thereafter. The reduction accrues cumulatively such that the rate reduction equals 5% for the first month late, 10% for the second month late, and so on. The reduction will be reversed effective on the date the cost reports are filed.