Reporting Requirements

(1) Required Cost Reports. (a) Nursing Facility Cost Report. Each provider must complete and file a Nursing Facility Cost Report (SNF-CR) each calendar year with the Center. The Nursing Facility Cost Report must contain the complete financial condition of the provider, including all applicable management company, central office, and real estate expenses. If a provider has closed on or before November 30th, the provider is not required to file an SNF-CR report. (b) Realty Company Cost Report. A provider that does not own the real property of the nursing facility and pays rent to an affiliated or nonaffiliated realty company, trust, or other business entity must file or cause to be filed a separate Realty Company Cost Report with the Center. (c) Management Company Cost Report. A provider must file a separate Management Company Cost Report with the Center for each entity for which it reports management or central office expenses related to the care of Massachusetts publicly aided residents. If the provider identifies such costs, the provider must certify that costs are reasonable and necessary for the care of publicly aided residents in Massachusetts. (d) Financial Statements. The provider must file a complete copy of independent audited financial statements for each of the Nursing Facility, Realty Company, and Management Company Cost Reports with the Center that most closely correspond to the cost report fiscal period. If the Provider or its parent organization cannot obtain audited financial statements, the Provider must file with the Center a complete copy of its unaudited financial statements, including a balance sheet and income statement, for the period that most closely corresponds to the cost report fiscal period. Nothing in 101 CMR 206.08(1)(d) will be construed as an additional requirement that nursing homes complete audited financial statements solely to comply with the Center’s annual cost reporting requirements. (e) Clinical Data. EOHHS may require providers to submit patient level data for the purpose of measuring clinical performance in a format specified by EOHHS. EOHHS may designate required data, data specifications, and other data collection requirements by administrative bulletin. (f) CMS-2540 Reports. State operated nursing facilities that meet the definition in 42 CFR 433.50(a)(i) must file a CMS-2540 report with the Center annually. The state-operated nursing facility must report the final disposition made by the Medicare intermediary. (g) Ownership Disclosure Form. Each provider must complete and file an Ownership Disclosure Form each calendar year with EOHHS in the manner and by the deadline specified by EOHHS via administrative bulletin. (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 of a rate for the period covered by the report, whichever is later. Providers must maintain complete documentation of all of the financial transactions and census activity of the provider 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 reported costs. Providers must be able to document expenses relating to affiliated entities for which it has identified costs related to the care of Massachusetts publicly aided residents 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 expenses are reported, including location, date of purchase, 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 qualifications, duties, responsibilities, and time records such as time cards for all positions that the provider identifies as related to the care of Massachusetts publicly aided residents. Facilities organized as sole proprietors or partnerships in which the sole proprietor or partner functions as administrator with no reported administrator salary or benefits must maintain documentation to support the provision of administrator services by the sole proprietor or partner. (e) Indirect Restorative Therapy Services Record. Providers must maintain a record of indirect restorative therapy services documented by a written summary available for inspection in the nursing facility as required by 105 CMR 150.010(F): Records and Reports. (f) Other Cost Reporting Requirements. 1. Administrative Costs. a. The following expenses must be reported as administrative: i. all compensation, including payroll taxes and benefits, for the positions of administrator, assistant administrator, administrator-in-training, business manager, secretarial and clerical staff, bookkeeping staff, and all staff or consultants whose duties are primarily administrative rather than directly related to the provision of on-site care to residents or to the on-site physical upkeep of the nursing facility; ii. expenses related to tasks performed by persons at a management level above that of an on-site provider department head, that are associated with monitoring, supervising, and/or directing services provided to residents in a nursing facility as well as legal, accounting, financial, and managerial services or advice including computer services and payroll processing; and iii. expenses related to policy-making, planning, and decision-making activities necessary for the general and long-term management of the affairs of a nursing facility, including but not limited to the following: the financial management of the provider, including the cost of financial accounting and management advisory consultants, the establishment of personnel policies, the planning of resident admission policies, and the planning of the expansion and financing of the provider. b. Providers must report the cost of administrative personnel to the appropriate account. The cost of administrative personnel includes all expenses, fees, payroll taxes, fringe benefits, salaries, or other compensation. c. Providers may allocate administrative costs among two or more accounts. The provider must maintain specific and detailed time records to support the allocation. 2. Draw Accounts. Providers may not report or claim proprietorship or partnership drawings as salary expense. 3. Expenses that Generate Income. Providers must identify the expense accounts that generate income. 4. Fixed Costs. a. Additions. If the square footage of the building is enlarged, providers must report all additions and renovations as building additions. b. Allocation. Providers must allocate all fixed costs, except equipment, on the basis of square footage. A provider may elect to specifically identify equipment related to the nursing 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. c. Replacement of Beds. 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 identify associated expenses as related to the care of Massachusetts publicly aided residents. d. Fully Depreciated Assets. Providers must separately identify fully depreciated assets. Providers must report the costs of fully depreciated assets and related accumulated depreciation on all cost reports unless they have removed such costs and accumulated depreciation from the provider’s books and records. Providers must attach a schedule of the cost of the retired equipment, accumulated depreciation, and the accounting entries on the books and records of the provider to the cost report when equipment is retired. e. Major Repair Projects. Providers must report all expenditures for major repair projects whose useful life is greater than one year, including, but not limited to, wallpapering and painting as improvements. Providers may not report such expenditures as prepaid expenses. 5. Laundry Expense. Providers must separately identify the expense associated with laundry services for which non-publicly aided residents are billed. Providers must identify such expense as non-related to Medicaid patient care. 6. Mortgage Acquisition Costs. Providers must classify mortgage acquisition costs as other assets. Providers may not add mortgage acquisition costs to fixed asset accounts. 7. Nursing Costs. The costs must be associated with direct resident care personnel and be required to meet federal and state laws. 8. Related Parties. Providers must disclose salary expense 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. (g) Special Cost Reporting Requirements. 1. 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 exclude the expenses of such programs because they are not related to the provision of nursing facility care of Massachusetts publicly aided residents. a. If the provider converts a portion of the facility to another program, the provider must identify the existing equipment no longer used in nursing facility operations and remove such equipment from the nursing facility records. Related depreciation expense for these fixed assets is no longer an allowable expense. b. The provider must identify the total square footage of the existing building, the square footage associated with the program, and the equipment associated with the program. c. The provider must allocate all 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. 2. Hospital-based Nursing Facilities. A hospital-based nursing facility must file cost reports on a fiscal year basis consistent with the fiscal year used in the Massachusetts Hospital Cost Report. a. The provider must identify the existing building and improvement costs associated with the nursing facility. The provider must allocate such costs on a square footage basis. b. The provider must report major moveable equipment and fixed equipment in a manner consistent with the Hospital Cost Report. In addition, the provider must classify fixed equipment as either building improvements or equipment in accordance with the definitions contained in 101 CMR 206.02. The provider may elect to report major moveable and fixed equipment by one of two methods. i. A provider may elect to specifically identify the major moveable and fixed equipment directly related to the care of publicly aided residents in the nursing facility. The provider must maintain complete documentation in a fixed asset ledger that clearly identifies each piece of equipment and its cost, date of purchase, and accumulated depreciation. The provider must submit this documentation to the Center with its first Notification of Change in Beds. ii. If the provider elects not to identify specifically each item of major moveable and fixed equipment, EOHHS will allocate fixed equipment on a square footage basis. c. The provider must report additional capital expenditures directly related to the establishment of the nursing facility within the hospital as additions. EOHHS will allocate capital expenditures that relate to the total plant on a square footage basis. d. The provider must use direct costing whenever possible to obtain operating expenses associated with the nursing facility. The provider must allocate all costs shared by the hospital and the nursing facility using the statistics specified in the Hospital Cost Report instructions. The provider must disclose all analysis, allocations, and statistics used in preparing the Nursing Facility Cost Report. (3) General Cost Principles. In order to report a cost as related to Medicaid patient care, a cost must satisfy the following criteria. (a) The cost must be ordinary, necessary, and directly related to the care of publicly aided residents. (b) The cost must adhere to the prudent buyer concept. (c) Expenses otherwise allowable will not be included for purposes of determining rates under 101 CMR 206.00 where such expenses are paid to a related party unless the provider identifies any such related party and expenses attributable to it in the reports submitted under 101 CMR 206.00 and demonstrates that such expenses do not exceed the lower of the cost to the related party or the price of comparable services, facilities, or supplies that could be purchased elsewhere. The Center may request either the provider or the related party, or both, to submit information, books, and records relating to such expenses for the purpose of determining whether the expenses are allowable. (d) Only the provider’s contribution of generally available employee benefits will be deemed an allowable cost. Providers may vary generally available employee benefits by groups of employees at the option of the employer. To qualify as a generally available employee benefit, the provider must establish and maintain evidence of its nondiscriminatory nature. Generally available employee benefits include but are not limited to group health and life insurance, pension plans, seasonal bonuses, child care, and job related education and staff training. Bonuses related to profit, private occupancy, or directly or indirectly to rates of reimbursement will not be included for calculation of prospective rates. Benefits that are related to salaries will be limited to allowable salaries. Benefits, including pensions, related to non-administrative and non-nursing personnel must be included as part of operating costs. Benefits that are related to the director of nurses, including pensions and education, must be included as part of nursing costs. Providers may accrue expenses for employee benefits such as vacation, sick time, and holidays that employees have earned but have not yet taken, provided that these benefits are both stated in the written policy and are the actual practice of the provider and that such benefits are guaranteed to the employee even upon death or termination of employment. Such expenses may be recorded and claimed for reimbursement purposes only as of the date that a legal liability has been established. (e) The cost must be for goods or services actually provided in the nursing facility. (f) The cost must be reasonable. (g) The cost must actually be paid by the provider. Costs not considered related to the care of Massachusetts publicly aided residents include, but are not limited to, costs discharged in bankruptcy; costs forgiven; costs converted to a promissory note; and accruals of self-insured costs based on actuarial estimates. (h) A provider must report the following costs as non-allowable costs: 1. bad debts, refunds, charitable contributions, and courtesy allowances and contractual adjustments to the Commonwealth and other third parties; 2. federal and state income taxes, except the non-income related portion of the Massachusetts corporate excise tax; 3. expenses not directly related to the provision of resident care including, but not limited to, expenses related to other business activities and fund raising, gift shop expenses, research expenses, rental expense for space not required by the Department and expenditure of funds received under federal grants for compensation paid for training personnel and expenses related to grants of contracts for special projects; 4. compensation and fringe benefits of residents on a provider’s payroll; 5. penalties and interest, incurred because of late payment of loans or other indebtedness, late filing of federal and state tax returns, or from late payment of municipal taxes; 6. any increase in compensation or fringe benefits granted as an unfair labor practice after a final adjudication by the court of last resort; 7. expenses for purchased service nursing services purchased from temporary nursing agencies not registered with the Department under 105 CMR 157.000: The Registration and Operation of Temporary Nursing Service Agencies or paid for at rates greater than the rates established by EOHHS pursuant to 101 CMR 345.00: Temporary Nursing Services; 8. any expense or amortization of a capitalized cost that relates to costs or expenses incurred prior to the opening of the nursing facility; 9. all legal expenses, including those accounting expenses and filing fees associated with any appeal process; 10. prescribed legend drugs for individual patients; 11. recovery of expense items, that is, expenses that are reduced or eliminated by applicable income, including but not limited to, rental of quarters to employees and others, income from meals sold to persons other than residents, telephone income, vending machine income, and medical records income. Vending machine income will be recovered against other operating costs. Other recoverable income will be recovered against an account in the appropriate cost group category, such as administrative and general costs, other operating costs, nursing costs, and capital costs. The cost associated with laundry income that is generated from special services rendered to private patients must be identified and eliminated from the facility’s claim for reimbursement. Special services are those services not rendered to all patients (e.g., dry cleaning, etc.). If the cost of special services cannot be determined, laundry income will be recovered against laundry expense; 12. costs of ancillary services required by a purchasing agency to be billed on a direct basis, such as prescribed drugs and direct therapy costs; 13. accrued expenses that remain unpaid more than 120 days after the close of the reporting year, excluding vacation and sick time accruals, will not be included in the prospective rates. When the Center receives satisfactory evidence of payment, EOHHS may reverse the adjustment and include that cost, if otherwise allowable, in the applicable prospective rates; 14. interest expense from related-party loans or on long-term debt that was not used to finance the purchase of nursing facility fixed asset additions; and 15. expenses paid for using funds from any low-interest or forgivable loan administered by EOHHS. (4) Filing Deadlines. (a) General. Except as provided in 101 CMR 206.08(4)(a)1. and 2., 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 Nursing 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. 1. Hospital-based Nursing Facilities. Hospital-based nursing facilities must file cost reports no later than 90 days after the close of the hospital’s fiscal year. 2. 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 current reporting period or portion thereof, within 60 days of the receiver’s appointment. (b) Extension of Filing Date. The Center 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, and not by agent or other representative; 2. demonstrate exceptional circumstances that prevent the provider from meeting the deadline; and 3. file the request with the Center no later than 30 calendar days before the due date. (c) Administrative Bulletin. The Center may modify the filing deadlines by issuing an administrative bulletin 30 days prior to any proposed change. (5) Incomplete Submissions. If the cost reports are incomplete, the Center will notify the provider in writing within 120 days of receipt. The Center will specify the additional information that the provider must submit to complete the cost reports. The provider must file the required information within 25 days of the date of notification or by April 1st of the year the cost reports are filed, whichever is later. If the Center fails to notify the provider within the 120-day period, the cost reports will be considered complete and will be deemed to be filed on the date of receipt. (6) Audits. The Center and the MassHealth agency may conduct desk audits or field audits to ensure accuracy and consistency in reporting. Providers must submit additional data and documentation relating to the cost report, the operations of the provider and any related party as requested during a desk or field audit even if the Center has accepted the provider’s cost reports. (7) Penalties. If a provider does not file the required cost reports listed in 101 CMR 206.08(1)(a) through (g) by the due date, EOHHS may reduce the provider’s rates 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 may accrue cumulatively such that the rate reduction equals 5% for the first month late, 10% for the second month late, and so on. The rate will be restored effective on the first of the month following the date the cost report is filed.