Prospective Reimbursement Plan for Nonstate-Operated Facilities for ICF/IID Services

PURPOSE: This rule establishes a payment plan for nonstateoperated intermediate care facility for individuals with intellectual disabilities services. The plan describes principles to be followed by Title XIX intermediate care facility for individuals with intellectual disabilities providers in making financial reports and presents the necessary procedures for setting rates, making adjustments, and auditing the cost reports. (1) Objectives. This rule establishes a payment plan for nonstate-operated intermediate care facility for individuals with intellectual disabilities (ICF/IID) services. (2) General Principles. (A) The MO HealthNet program shall reimburse qualified providers of ICF/IID services based solely on the individual MO HealthNet participant’s days of care (within benefit limitations) multiplied by the facility’s Title XIX per diem rate less any payments made by participants. (B) Effective November 1, 1986, the Title XIX per diem rate for all ICF/IID facilities participating on or after October 31, 1986, shall be the lower of— 1. The Medicare per diem rate, if applicable; or 2. The reimbursement rate as determined in accordance with this regulation. (C) This plan has an effective date of November 1, 1986, at which time prospective per diem rates shall be calculated for the remainder of the state’s FY-87 and future fiscal years. Per diem rates established by updating facilities’ base years to FY-85 may be subject to retroactive and prospective adjustment based on audit of the facilities’ new base year period. (D) The Title XIX per diem rates as determined by this plan shall apply only to services furnished on or after November 1, 1986. (E) All illustrations and examples provided throughout this rule are for illustration purposes only and are not meant to be actual calculations. (3) Definitions. (A) “Allowable Cost Areas” means those cost areas that are allowable for allocation to the MO HealthNet program based upon the principles established in this rule. The allowability of cost areas, not specifically addressed in this rule, will be based upon criteria of the Medicare Provider Reimbursement Manual (HIM-15) and section (6) of this rule. (B) “Average Private Pay Charge” means the usual and customary charge for non-MO HealthNet patients determined by dividing total non-MO HealthNet days of care into total revenue collected for the same service that is included in the MO HealthNet per diem rate, excluding negotiated payment methodologies with the Veterans Administration and the Missouri Department of Mental Health. (C) “Cost Report” means a report detailing the cost of rendering covered services for the fiscal reporting period. Providers must file the cost report on forms provided by and in accordance with the procedures of the Department of Social Services. (D) “Department” means the Missouri Department of Social Services, unless otherwise specified. (E) “Director” means the director of the Missouri Department of Social Services, unless otherwise specified. (F) “Effective Date” means November 1, 1986. (G) “ICF/IID” means nonstate-operated facilities certified to provide intermediate care for individuals with intellectual disabilities under the Title XIX program. (H) “Medicare Rate” means the allowable cost of care permitted by Medicare standards and principles of reimbursement. (I) “New Construction” means newly built facilities or parts, for which an approved Certificate of Need (CON) or applicable waivers were obtained and which were newly completed and operational on or after November 1, 1986. (J) “New Owners” means the original owners of new construction. (K) “Providers” means, under the Prospective Reimbursement Plan, a nonstate-operated ICF/IID facility with a valid participation agreement, in effect on or after October 31, 1986, with the Missouri Department of Social Services for the purpose of providing long-term care (LTC) services to Title XIX-eligible participants. Facilities certified to provide intermediate care services to individuals with intellectual disabilities under the Title XIX program may be offered a MO HealthNet participation agreement on or after January 1, 1990, only if 1) the facility has no more than fifteen (15) beds for individuals with intellectual disabilities, and 2) there is no other licensed residential living facility for individuals with intellectual disabilities within a radius of one-half (1/2) mile of the facility seeking participation in the MO HealthNet program. (L) “Reasonable and Adequate Reimbursement” means reimbursement levels which meet the needs of an efficiently and economically operated facility and which in no case exceed normal market costs. (M) “Related Parties” means— 1. An individual or group, regardless of the business structure of either, where, through their activities, one (1) individual’s or group’s transactions are for the benefit of the other and the benefits exceed those which are usual and customary in the dealings; 2. One (1) or more persons have an ownership or controlling interest in a party, and the person(s) or one (1) or more relatives of the person(s) has an ownership or controlling interest in the other party. For the purposes of this paragraph, ownership or controlling interest does not include a bank, savings bank, trust company, building and loan association, savings and loan association, credit union, industrial loan and thrift company, investment banking firm, or insurance company unless the entity, directly or through a subsidiary, operates a facility; or 3. As used in section (3), the following terms mean: A. “Indirect Ownership” or “Indirect Interest” means an ownership interest in an entity that has an ownership interest in another entity. This term includes an ownership interest in any entity that has an indirect ownership interest in an entity; B. “Ownership Interest” means the possession of equity in the capital, in the stock, or in the profits of an entity; C. “Ownership Interest” or “Controlling Interest” means a person or corporation(s)— (I) Has an ownership interest totaling five percent (5%) or more in an entity; (II) Has an indirect ownership interest equal to five percent (5%) or more in an entity. The amount of indirect ownership interest is determined by multiplying the percentages of ownership in each entity; (III) Has a combination of direct and indirect ownership interest equal to five percent (5%) or more in an entity; (IV) Owns an interest of five percent (5%) or more in any mortgage, deed of trust, note, or other obligation secured by an entity, if that interest equals at least five percent (5%) of the value of the property or assets of the entity. The percentage of ownership resulting from the obligations is determined by multiplying the percentage of interest owned in the obligation by the percentage of the entity’s assets used to secure the obligation; (V) Is an officer or director of an entity; or (VI) Is a partner in an entity that is organized as a partnership; D. “Relative” means persons related by blood or marriage to the fourth degree of consanguinity; and E. “Entity” means any person, corporation, partnership, or association. (N) “Rural” means those counties that are not defined as urban. (O) “Urban” means counties that are standard metropolitan statistical areas including Andrew, Boone, Buchanan, Cass, Christian, Clay, Franklin, Greene, Jackson, Jasper, Jefferson, Newton, Platte, Ray, St. Charles, St. Louis, and St. Louis City. (4) ICF/IID Rate Computation. Except in accordance with other provisions of this rule, the provisions of this section shall apply to all providers of ICF/IID services certified to participate in Missouri’s MO HealthNet program. Rate determination shall be based on reasonable and adequate reimbursement levels for allowable cost items described in this rule which are related to ordinary and necessary care for the level-of-care provided for an efficiently and economically operated facility. All providers shall submit documentation of expenses for allowable cost areas. The department shall have authority to require those uniform accounting and reporting procedures and forms as it deems necessary. A reasonable and adequate reimbursement in each allowable cost area will be determined. (A) Prospective Reimbursement Rate Determination through December 31, 2018. 1. The Title XIX prospective per diem reimbursement rate for the remainder of state Fiscal Year 1987 shall be the facility’s per diem reimbursement payment rate in effect on October 31, 1986, as adjusted by updating the facility’s allowable base year to its 1985 fiscal year. Each facility’s per diem costs as reported on its Fiscal Year 1985 Title XIX cost report will be determined in accordance with the principles set forth in this rule. If a facility has not filed a 1985 fiscal year cost report, the MO HealthNet Division will use the most current cost report on file with the department to set a facility’s per diem rate. Facilities with less than a full twelve- (12-) month 1985 fiscal year will not have their base year rates updated. 2. For state FY-88 and dates of service beginning July 1, 1987, the negotiated trend factor shall be equal to two percent (2%) to be applied in the following manner: Two percent (2%) of the average per diem rate paid to both state- and nonstateoperated ICF/IID facilities on June 1, 1987, shall be added to each facility’s rate. 3. For state FY-89 and dates of service beginning January 1, 1989, the negotiated trend factor shall be equal to one percent (1%) to be applied in the following manner: One percent (1%) of the average per diem rate paid to both state- and nonstateoperated ICF/IID facilities on June 1, 1988, shall be added to each facility’s rate. 4. For state FY-91 and dates of service beginning July 1, 1990, the negotiated trend factor shall be equal to one percent (1%) to be applied in the following manner: One percent (1%) of the average per diem rate paid to both state- and nonstateoperated ICF/IID facilities on June 1, 1990, shall be added to each facility’s rate. 5. Prospective payment adjustment (PPA). A FY92 PPA will be provided prior to the end of the state fiscal year for nonstateoperated ICF/IID facilities with a current provider agreement on file with the MO HealthNet Division as of October 1, 1991. A. For providers that qualify, the PPA shall be the lesser of— (I) The provider’s facility peer group factor (FPGF) times the projected patient days (PPD) covered by the adjustment year times the prospective payment adjustment factor (PPAF) times the nonstate-operated intermediate care facility for individuals with intellectual disabilities ceiling (ICFIIDC) on October 1, 1991 (FPGF × PPD × PPAF × ICFIIDC). For example: A provider having nine hundred twenty (920) paid days for the period May 1991 to July 1991 out of a total paid days for this same period of twentyeight thousand five hundred sixty-one (28,561) represents an FPGF of three and twenty-two hundredths percent (3.22%). So using the FPGF of 3.22% × 114,244 × 24.5% × $156.01 = $140,607; or (II) The provider FPGF times one hundred forty-five percent (145%) of the amount credited to the intermediate care revenue collection center (ICRCC) of the State Title XIX Fund (STF) for the period October 1, 1991 through December 31, 1991. B. FPGF—is determined by using each ICF/IID facility’s paid days for the service dates in May 1991 through July 1991 as of September 20, 1991, divided by the sum of the paid days for the same service dates for all providers qualifying as of the determination date of October 16, 1991. C. ICFIIDC—is one hundred fifty-six dollars and one cent ($156.01) on October 1, 1991. D. PPAF—is equal to twenty-four and one half percent (24.5%) for fiscal year 1992 which includes an adjustment for economic trends. E. PPD—is the projection of one hundred fourteen thousand two hundred forty-four (114,244) patient days made on October 1, 1991, for the adjustment year. 6. FY-92 trend factor and Workers’ Compensation. All facilities with either an interim rate or a prospective per diem rate in effect on September 1, 1992, shall be granted an increase to their per diem rate effective September 1, 1992, of eight dollars and eighty-six cents ($8.86) per patient day related to the continuation of the FY-92 trend factor and the Workers’ Compensation adjustment. This adjustment is equal to seven and one-half percent (7.5%) of the March 1992 weighted average per diem rate of one hundred eighteen dollars and fourteen cents ($118.14) for all nonstate-operated ICF/IID facilities. 7. FY-93 negotiated trend factor. All facilities with either an interim rate or prospective per diem rate in effect on September 1, 1992, shall be granted an increase to their per diem rate effective September 1, 1992, of one dollar and sixtysix cents ($1.66) per patient day for the negotiated trend factor. This adjustment is equal to one and four-tenths percent (1.4%) of the March 1992 weighted average per diem rate of one hundred eighteen dollars and fourteen cents ($118.14) for all nonstate-operated ICF/IID facilities. 8. FY-96 negotiated trend factor. All nonstate-operated ICF/IID facilities shall be granted an increase to their per diem rates effective for dates of service beginning January 1, 1996, of six dollars and seven cents ($6.07) per patient day for the negotiated trend factor. This adjustment is equal to four and six-tenths percent (4.6%) of the weighted average per diem rates paid to nonstate-operated ICF/IID facilities on June 1, 1995, of one hundred and thirty-one dollars and ninety-three cents ($131.93). 9. State FY-99 trend factor. All nonstate-operated ICF/IID facilities shall be granted an increase to their per diem rates effective for dates of service beginning July 1, 1998, of four dollars and forty-seven cents ($4.47) per patient day for the trend factor. This adjustment is equal to three percent (3%) of the weighted average per diem rate paid to nonstate-operated ICF/IID facilities on June 30, 1998, of one hundred forty-eight dollars and ninety-nine cents ($148.99). 10. State FY-2000 trend factor. All nonstate-operated ICF/ IID facilities shall be granted an increase to their per diem rates effective for dates of service beginning July 1, 1999, of four dollars and sixty-three cents ($4.63) per patient day for the trend factor. This adjustment is equal to three percent (3%) of the weighted average per diem rate paid to nonstate-operated ICF/IID facilities on April 30, 1999, of one hundred fifty-four dollars and forty-three cents ($154.43). This increase shall only be used for increases for the salaries and fringe benefits for direct care staff and their immediate supervisors. 11. State FY-2001 trend factor. All nonstate-operated ICF/ IID facilities shall be granted an increase to their per diem rates effective for dates of service beginning July 1, 2000, of four dollars and eighty-one cents ($4.81) per patient day for the trend factor. This adjustment is equal to three percent (3%) of the weighted average per diem rate paid to nonstate-operated ICF/IID facilities on April 30, 2000, of one hundred sixty dollars and twenty-three cents ($160.23). This increase shall only be used for increases for salaries and fringe benefits for direct care staff and their immediate supervisors. 12. State FY-2007 trend factor. All nonstate-operated ICF/ IID facilities shall be granted an increase of seven percent (7%) to their per diem rates effective for dates of service billed for state fiscal year 2007 and thereafter. This adjustment is equal to seven percent (7%) of the per diem rate paid to nonstateoperated ICF/IID facilities on June 30, 2006. 13. State FY-2008 trend factor. Effective for dates of service beginning July 1, 2007, all nonstate-operated ICF/IID facilities shall be granted an increase to their per diem rates of two percent (2%) for the trend factor. This adjustment is equal to two percent (2%) of the per diem rate paid to nonstate-operated ICF/IID facilities on June 30, 2007. 14. State FY-2009 trend factor. Effective for dates of service beginning July 1, 2008, all nonstate-operated ICF/IID facilities shall be granted an increase to their per diem rates of three percent (3%) for the trend factor. This adjustment is equal to three percent (3%) of the per diem rate paid to nonstateoperated ICF/IID facilities on June 30, 2008. 15. State FY-2009 catch up increase. Effective for dates of service beginning July 1, 2008, all nonstate-operated ICF/IID facilities shall be granted an increase to their per diem rates of thirteen and ninety-five hundredths percent (13.95%). This adjustment is equal to thirteen and ninety-five hundredths percent (13.95%) of the per diem rate paid to nonstate-operated ICF/IID facilities on June 30, 2008. This increase is intended to provide compensation to providers for the years where no trend factor was given. The catch up increase was based on the CMS PPS Skilled Nursing Facility Input Price Index (four- (4-) quarter moving average). 16. State FY-2012 trend factor. Effective for dates of service beginning October 1, 2011, all nonstate-operated ICF/IID facilities shall be granted an increase to their per diem rates of one and four tenths percent (1.4%) for the trend factor. This adjustment is equal to one and four tenths percent (1.4%) of the per diem rate paid to nonstate-operated ICF/IID facilities on September 30, 2011. 17. State FY-2014 trend factor. Effective for dates of service beginning January 1, 2014, all nonstate-operated ICF/IID facilities shall be granted an increase to their per diem rates of three percent (3%) for the trend factor. This adjustment is equal to three percent (3%) of the per diem rate paid to nonstateoperated ICF/IID facilities on December 31, 2013. 18. State FY-2016 trend factor. Effective for dates of service beginning February 1, 2016, all nonstate-operated ICF/IID facilities shall be granted an increase to their per diem rates of one percent (1%) for the trend factor. This adjustment is equal to one percent (1%) of the per diem rate paid to nonstate-operated ICF/IID facilities on January 31, 2016. 19. State FY-2017 trend factor. Effective for dates of service beginning September 1, 2016, all nonstate-operated ICF/IID facilities shall be granted an increase to their per diem rates of two percent (2%) for the trend factor. This adjustment is equal to two percent (2%) of the per diem rate paid to nonstateoperated ICF/IID facilities on August 31, 2016. 20. State FY-2018 per diem adjustment. Effective for dates of service beginning September 1, 2017, all nonstate-operated ICF/IID facilities shall be subject to a decrease to their per diem rates of two and eighty-two hundredths percent (2.82%). This adjustment is equal to two and eighty-two hundredths percent (2.82%) of the per diem rate paid to nonstate-operated ICF/IID facilities on August 31, 2017. (B) Per Diem Rate Calculation Effective for Dates of Service Beginning January 1, 2019. Effective for dates of service beginning January 1, 2019, the MO HealthNet Division shall rebase nonstate-operated ICF/IID facilities’ per diem rates using the facilities’ 2017 fiscal year-end cost reports. The rebased rates are contingent upon approval of the state plan amendment by the Centers for Medicare and Medicaid Services. 1. Prospective Rate Calculation. A. Each nonstate-operated ICF/IID shall have its prospective rate recalculated based on its 2017 fiscal year end cost report using the same principles and methodology as detailed throughout sections (1)-(13) of this regulation. (I) The costs from the 2017 fiscal year end cost reports shall be trended using the indices from the most recent publication of the Healthcare Cost Review available to the division using the “CMS Nursing Home without Capital Market Basket” table. The costs shall be trended using the four- (4-) quarter moving average. The costs shall be trended for the years following the cost report year, up to and including the state fiscal year corresponding to the effective date of the rates. For SFY 2019, the trends are as follows: (a) 2018=3.025% (b) 2019=2.65% (II) If a facility’s total calculated per diem set forth in this section is less than the facility’s current rate, the facility shall continue to receive its current rate. (III) The division will use the FY 2017 cost report to determine the ICF/IID prospective rate, set forth as follows: (a) Total Routine Service Cost. Total routine service cost includes patient care, ancillary, dietary, laundry, housekeeping, plant operations, and administration. Each ICF/ IID’s Title XIX Routine Service Cost per diem shall be calculated as follows: I. The total routine service costs as reported on the cost report shall be adjusted for minimum utilization, if applicable, trended to the current state fiscal year, and divided by the total patient days to determine the per diem. The minimum utilization adjustment will be determined by applying the unused capacity percent to the sum of the laundry, housekeeping, plant operations, and administration expenses. The following is an illustration of how this item (4) (B)1.A.(III)(a)I. is calculated: Licensed/Certified Bed Days (9 beds x 365 days) 3,285 Total Patient Days 2,900 Percent Occupied (2,900/3,285) 88% Bed Days @ Minimum Occupancy of 90% (3,285 x 90%) 2,957 Unused Capacity (90% of Bed Days Less Total Patient Days) 57 Unused Capacity Percent for Minimum Utilization Adjustment (Unused Capacity/90% of Bed Days) 1.93% Minimum Utilization Days for Return on Owner’s Equity (Greater of 90% of Bed Days or Total Patient Days) 2,957 *Minimum Utilization Adjustment Laundry $ 5,000 Housekeeping $ 8,000 Plant Operations $ 46,000 Administration $165,000 Total Expense $224,000 Unused Capacity Percent 1.93% Minimum Utilization Adjustment (Unused Capacity Percent x Total Expense) $ 4,323 Patient Care $400,000 Ancillary $ 10,000 Dietary $ 25,000 Laundry $ 5,000 Housekeeping $ 8,000 Plant Operations $ 46,000 Administration $165,000 Total Routine Service Cost $659,000 Less: Minimum Utilization Adjustment* ($ 4,323) Routine Service Cost, Adjusted for Minimum Utilization $654,677 SFY 2018 Trend 3.025% SFY 2019 Trend 2.65% Trended Routine Service Cost $692,355 Total Patient Days 2,900 Routine Service Cost Per Diem $ 238.74 (b) Intermediate Care Facility for Individuals with Intellectual Disabilities Federal Reimbursement Allowance (ICF/IID FRA). The SFY 2019 ICF/IID FRA provider assessment as determined in accordance with 9 CSR 10-31.030 is divided by total patient days to determine the ICF/IID FRA per diem. I. The following is an illustration of how the ICF/ IID FRA assessment is calculated: SFY 2019 ICF/IID FRA Assessment $40,000 Total Patient Days 2,900 ICF/IID FRA Per Diem $ 13.79 (c) Return on Equity. An owner’s net equity consists of investment capital and working capital as indicated in subsection (6)(S). Each ICF/IID’s Return on Equity per diem is calculated as follows: I. Investment Capital. Investment capital includes the investment in building, property, and equipment (cost of land, mortgage payments toward principal, and equipment purchase less the accumulated depreciation). II. Working Capital. Working capital represents the amount of capital which is required to ensure proper operation of the facility and shall be calculated as 1.1 months of the total expenses less depreciation. III. The total net equity shall be multiplied by the rate of return as set forth in subsection (6)(S) to determine the return on equity. The return on equity is subject to the minimum occupancy percent of ninety percent (90%) in determining the per diem. IV. The following is an illustration of how this subpart (4)(B)1.A.(III)(c) is calculated: Investment Capital Equipment Building Total Cost $130,000 $300,000 $430,000 Less: Prior Years Depreciation ($120,000) ($225,000) ($345,000) Less: Current Year Depreciation ($2,400) ($8,500) ($10,900) Total Investment Capital $7,600 $66,500 $74,100 Working Capital Total Expenses $659,000 Less: Current Year Depreciation Expense ($10,900) $648,100 Divided by 12 Months 12 $ 54,008 Times 1.1 Months 1.1 Total Working Capital $ 59,409 Net Equity (Investment Capital + Working Capital) $133,509 Rate of Return 5.125% Return on Equity $ 6,842 Minimum Utilization Days 2,957 Return on Equity Per Diem $ 2.31 (c) Rebased Per Diem Rate. The total calculated per diem is the sum of the Routine Service Cost per diem, the ICF/IID FRA per diem and the Return on Equity per diem. To determine the rebased per diem rate, the total calculated per diem is compared to the current per diem rate and the facility will be held harmless if the total calculated per diem is less than the current per diem rate (i.e., if the total calculated per diem is less than the current per diem rate, the facility would receive the current per diem). Routine Service Cost per diem $238.74 ICF/IID FRA per diem $ 13.79 Return on Equity per diem $ 2.31 Total Calculated Per Diem $254.84 Current Per Diem Rate $200.00 Rebased Per Diem Rate $254.84 (If the total calculated per diem is less than the current per diem rate, the facility would receive the current per diem rate) B. Effective for dates of service beginning October 1, 2022, each nonstate-operated ICF/IID shall have its prospective rate recalculated based on its 2020/2021 fiscal yearend cost report using the same principles and methodology as detailed throughout sections (1)-(13) of this regulation and as set forth in subparagraph (4)(B)1.A. (I) The nonstate-operated ICF/IID shall have its prospective rate recalculated based on their 2021 fiscal year-end cost report unless they do not have a full twelve- (12-) month 2021 fiscal year end cost report in which case the 2020 fiscal year-end cost report shall be used to calculate the prospective rate. (II) The costs from the 2020 and 2021 fiscal year-end cost reports shall be trended using the indices from the most recent publication of the Healthcare Cost Review available to the division using the “CMS Nursing Home without Capital Market Basket” table. The costs shall be trended using the four- (4-) quarter moving average. The costs shall be trended for the years following the cost report year, up to and including the state fiscal year corresponding to the effective date of the rates. For SFY 2023, the trends are as follows: (a) 2021=2.825% (b) 2022=2.500% (c) 2023=3.3800% (III) The current year depreciation will not be deducted from the working capital to determine Return on Equity. 2. Interim Rate Calculation. A. In the case of a newly certified facility where a valid Title XIX participation agreement has been executed, a request for an interim rate must be submitted in writing to the MO HealthNet Division. (I) The interim rate shall be determined based on the projected estimated operating costs. The facility’s request must specifically and clearly identify the interim rate and be supported by complete and accurate documentation satisfactory to the single state agency. Documentation submitted must include a budget of the projected estimated operating costs. Other documentation may also be required to be submitted upon the request of the division. (II) The establishment of the prospective rate for all new construction facility providers shall be based on the second full facility fiscal year cost report (i.e., rate setting cost report) prepared in accordance with the principles of this rule. This cost report shall be based on actual operating costs and shall be prepared and submitted in accordance with the reporting requirements in section (7) of this rule. (III) Prior to establishment of a prospective rate for newly certified facility providers, the cost reports may be subject to an on-site audit by the Department of Social Services or authorized representative to determine the facility’s actual allowable costs. Allowability of costs will be determined as described in subsection (3)(A) of this rule. (IV) The cost report, audited or unaudited, will be reviewed by the MO HealthNet Division, and a prospective reimbursement rate shall be determined on the allowable per diem cost as set forth in section (4) of this rule. The prospective reimbursement rate shall be effective on the first day of the facility’s rate setting cost report and payment adjustments shall be made for claims paid at the interim rate. 3. Adjustments to rates. The prospectively determined reimbursement rate may be adjusted only under the following conditions: A. When information contained in a facility’s cost report is found to be fraudulent, misrepresented, or inaccurate, the facility’s reimbursement rate may be reduced, both retroactively and prospectively, if the fraudulent, misrepresented, or inaccurate information as originally reported resulted in establishment of a higher reimbursement rate than the facility would have received in the absence of this information. No decision by the MO HealthNet agency to impose a rate adjustment in the case of fraudulent, misrepresented, or inaccurate information in any way shall affect the MO HealthNet agency’s ability to impose any sanctions authorized by statute or rule. The fact that fraudulent, misrepresented, or inaccurate information reported did not result in establishment of a higher reimbursement rate than the facility would have received in the absence of the information also does not affect the MO HealthNet agency’s ability to impose any sanctions authorized by statute or rules; B. Extraordinary circumstances. A participating facility that has a prospective rate may request an adjustment to its prospective rate due to extraordinary circumstances. This request should be submitted in writing to the division within one (1) year of the occurrence of the extraordinary circumstance. The request should clearly and specifically identify the conditions for which the rate adjustment is sought. The dollar amount of the requested rate adjustment should be supported by complete and accurate documentation satisfactory to the division. If the division makes a written request for additional information and the facility does not comply within ninety (90) days of the request for additional information, the division shall consider the request withdrawn. Requests for rate adjustments that have been withdrawn by the facility or are considered withdrawn because of failure to supply requested information may be resubmitted once for the requested rate adjustment. In the case of a rate adjustment request that has been withdrawn and then resubmitted, the effective date shall be the first day of the month in which the resubmitted request was made providing that it was made prior to the tenth day of the month. If the resubmitted request is not filed by the tenth of the month, rate adjustments shall be effective the first day of the following month. Conditions for an extraordinary circumstance are as follows: (I) When the provider can show that it incurred higher costs due to circumstances beyond its control, and the circumstances are not experienced by the nursing home or ICF/IID industry in general, and the circumstances have a substantial cost effect; and (II) Extraordinary circumstances, which are beyond the reasonable control of the ICF/IID and are not a product or result of the negligence or malfeasance of the ICF/IID, include— (a) Unavoidable acts of nature are natural wildfire, earthquakes, hurricane, tornado, lightning, flooding, or other natural disasters for which no one can be held responsible, that are not covered by insurance and that occur in a federally declared disaster area; or (b) Vandalism, civil disorder, or both that are not covered by insurance; or (c) Replacement of capital depreciable items not built into existing rates that are the result of circumstances not related to normal wear and tear or upgrading of existing system; C. When an adjustment is based on an Administrative Hearing Commission or court decision; D. New, expanded, or terminated services may be subject to rate review; E. Disallowance of federal financial participation; and F. The following will not be subject to review: (I) The negotiated trend factor; (II) The use of prospective reimbursement rate; and (III) The cost base for the per diem rates except as specified in this rule. (5) Covered Services and Supplies. (A) ICF/IID services and supplies covered by the per diem reimbursement rate under this plan, and which the ICF/IID must provide, as required by federal or state law or rule and include, among other services, the regular room, dietary and nursing services, or any other services that are required for standards of participation or certification. Also included are minor medical and surgical supplies and the use of equipment and facilities. These items include but are not limited to the following: 1. All general nursing services including but not limited to administration of oxygen and related medications, handfeeding, incontinency care, tray service, and enemas; 2. Items that are furnished routinely and relatively uniformly to all participants, for example, gowns, water pitchers, soap, basins, and bed pans; 3. Items such as alcohol, applicators, cotton balls, bandaids, and tongue depressors; 4. All nonlegend antacids, nonlegend laxatives, nonlegend stool softeners, and nonlegend vitamins. Any nonlegend drug in one (1) of these four (4) categories must be provided to residents as needed and no additional charge may be made to any party for any of these drugs. Facilities may not elect which nonlegend drugs in any of the four (4) categories to supply; facilities must provide all as needed within the existing per diem rate; 5. Items which are utilized by individual participants but which are reusable and expected to be available, such as ice bags, bed rails, canes, crutches, walkers, wheelchairs, traction equipment, and other durable, nondepreciable medical equipment; 6. Additional items as specified in the appendix to this plan when required by the patient; 7. Special dietary supplements used for tube feeding or oral feeding, such as elemental high nitrogen diet, including dietary supplements written as a prescription item by a physician; 8. All laundry services except personal laundry, which is a noncovered service; 9. All general personal care services that the facility furnishes routinely and relatively uniformly to all participants for their personal cleanliness and appearance shall be covered services, for example, necessary clipping and cleaning of fingernails and toenails, basic hair care, shampoos, and shaves to the extent necessary for reasonable personal hygiene. The provider shall not bill the patient or his/her responsible party for this type of personal service; 10. All consultative services as required by state or federal law or regulation or for proper operation by the provider. Contracts for the purchase of these services must accompany the provider cost report. Failure to do so will result in the penalties specified in section (8) of this rule; 11. Semiprivate room and board and private room and board when necessary to isolate a participant due to a medical or social condition, such as contagious infection, irrational loud speech, and the like. Unless a private room is necessary due to a medical or social condition, a private room is a noncovered service, and a MO HealthNet participant or responsible party may therefore pay the difference between a facility’s semiprivate charge and its charge for a private room. MO HealthNet participants may not be placed in private rooms and charged any additional amount above the facility’s MO HealthNet per diem unless the participant or responsible party in writing specifically requests a private room prior to placement in a private room and acknowledges that an additional amount not payable by MO HealthNet will be charged for a private room; 12. Twelve (12) days per any period of six (6) consecutive months during which a participant is on a temporary leave of absence from the facility. The provider shall specifically provide for temporary leave of absence days in the participant’s plan of care. Periods of time during which a participant is away from the facility because s/he is visiting a friend or relative are considered temporary leaves of absence; and 13. Days when participants are away from the facility overnight on facility-sponsored group trips under the continuing supervision and care of facility personnel. (6) Allowable Cost Areas. (A) Compensation of Owners. 1. Allowance of compensation of services of owners shall be an allowable cost area, provided the owner actually performs the services and the services are necessary. 2. “Compensation” means the total benefit to the owner, within the limitations set forth in this rule, of the services s/he renders to the facility. Compensation includes direct payments to the owner for managerial, administrative, professional, and other services; amounts paid by the provider for the personal benefit of the owner; the cost of assets and services that the owner receives from the provider; and additional amounts determined to be the reasonable value of the services rendered by sole proprietors or partners and not paid by any method previously described. 3. MO HealthNet auditors may determine the reasonableness of compensation by reference to or in comparison with compensation paid for comparable institutions or it may be determined by other appropriate means such as the Medicare and Medicaid Provider Reimbursement Manual (HIM-15) or by other means. 4. Necessary services refers to those services that are pertinent to the operation and sound conduct of the facility, had the provider not rendered these services, then employment of another person(s) to perform the service would be necessary. (B) Covered services and supplies as defined in section (5) of this rule. (C) Depreciation. 1. An appropriate allowance for depreciation on buildings, furnishings, and equipment that are part of the operation and sound conduct of the provider’s business is an allowable cost item. Finder’s fees are not an allowable cost item. 2. The depreciation must be identifiable and recorded in the provider’s accounting records, based on the basis of the asset and prorated over the estimated useful life of the asset using the straight-line method of depreciation from the date initially put into service. 3. The basis of assets at the time placed in service shall be the lower of— A. The book value of the provider; B. Fair market value at the time of acquisition; C. The recognized Internal Revenue Service (IRS) tax basis; and D. In the case of the change in ownership, the cost basis of acquired assets of the owner of record on or after July 18, 1984, as of the effective date of the change of ownership; or in the case of a facility which entered the program after July 18, 1984, the owner at the time of the initial entry into the MO HealthNet program. 4. The MO HealthNet Division will allow the basis of donated assets to the extent of the recognized income resulting from the donation of the asset. Should a dispute arise between a provider and the Department of Social Services as to the fair market value at the time of acquisition of a depreciable asset and an appraisal by a third party is required, the appraisal cost will be shared proportionately by the MO HealthNet program and the facility in ratio to MO HealthNet participant reimbursable patient days to total patient days. 5. Allowable methods of depreciation shall be limited to the straight-line method. The depreciation method used for an asset under the MO HealthNet program need not correspond to the method used by a provider for non-MO HealthNet purposes; however, useful life shall be in accordance with the American Hospital Association’s Guidelines. Component part depreciation is optional and allowable under this plan. 6. “Historical cost” means the cost incurred by the provider in acquiring the asset and preparing it for use, except as provided in this rule. Usually, historical cost includes costs that would be capitalized under generally accepted accounting principles. For example, in addition to the purchase price, historical cost would include architectural fees and related legal fees. Where a provider has elected, for federal income tax purposes, to expense certain items such as interest and taxes during construction, the historical cost basis for MO HealthNet depreciation purposes may include the amount of these expensed items. However, where a provider did not capitalize these costs and has written off the costs in the year they were incurred, the provider cannot retroactively capitalize any part of these costs under the program. For Title XIX purposes and this rule, any asset costing less than five hundred dollars ($500) or having a useful life of one (1) year or less, may be expensed and not capitalized at the option of the provider, or in the case of a facility which entered the program after July 18, 1984, the owner at the time of the initial entry into the MO HealthNet program. 7. When an asset is acquired by trading in an existing asset, the cost basis of the new asset shall be the sum of the undepreciated cost basis of the traded asset plus the cash paid. 8. For the purpose of determining allowance for depreciation, the cost basis of the asset shall be as prescribed in paragraph (6)(C)3. 9. Capital expenditures for building construction or for renovation costs which are in excess of one hundred fifty thousand dollars ($150,000) and which cause an increase in a provider’s bed capacity shall not be allowed in the program or depreciation base if these capital expenditures fail to comply with any other federal or state law or regulation, such as Certificate of Need (CON). 10. Amortization of leasehold rights and related interest and finance costs shall not be allowable costs under this plan. (D) Interest and Finance Costs. 1. Necessary and proper interest on both current and capital indebtedness shall be an allowable cost item excluding finder’s fees. 2. Interest is the cost incurred for the use of borrowed funds. Interest on current indebtedness is the cost incurred for funds borrowed for a relatively short term. This is usually for those purposes as working capital for normal operating expenses. Interest on capital indebtedness is the cost incurred for funds borrowed for capital purposes, such as the acquisition of facilities and capital improvements, and this indebtedness must be amortized over the life of the loan. 3. Interest may be included in finance charges imposed by some lending institutions or it may be a prepaid cost or discount in transactions with those lenders who collect the full interest charges when funds are borrowed. 4. To be an allowable cost item, interest (including finance charges, prepaid costs, and discounts) must be supported by evidence of an agreement that funds were borrowed and that payment of interest and repayment of the funds are required, identifiable in the provider’s accounting records, relating to the reporting period in which the costs are claims, and necessary and proper for the operation, maintenance, or acquisition of the provider’s facilities. 5. Necessary means that the interest be incurred for a loan made to satisfy a financial need of the provider and for a purpose related to participant care. Loans that result in excess funds or investments are not considered necessary. 6. Proper means that the interest be incurred at a rate not in excess of what a prudent borrower would have had to pay in the money market existing at the time the loan was made, and provided further the department shall not reimburse for interest and finance charges any amount in excess of the prime rate current at the time the loan was obtained. 7. Interest on loans to providers by proprietors, partners, and any stockholders shall not be an allowable cost item because the loans shall be treated as invested capital and included in the computation of an allowable return on owner’s net equity. If a facility operated by a religious order borrows from the order, interest paid to the order shall be an allowable cost. 8. If loans for capital indebtedness exceed the asset cost basis as defined in subsection (6)(C) of this rule, the interest associated with the portion of the loan(s) which exceed the asset cost basis as defined in subsection (6)(C) of this rule shall not be allowable. 9. Income from a provider’s qualified retirement fund shall be excluded in consideration of the per diem rate. 10. A provider shall amortize finance charges, prepaid interest, and discount over the period of the loan ratably or by means of the constant rate of interest method on the unpaid balance. 11. Usual and customary costs, excluding finder’s fees, incurred to obtain loans shall be treated as interest expense and shall be allowable costs over the loan period ratably or by means of the constant interest applied method. 12. Usual and customary costs shall be limited to the lender’s title and recording fees, appraisal fees, legal fees, escrow fees, and closing costs. 13. Interest expense resultant from capital expenditures for building construction or for renovation costs which are in excess of one hundred fifty thousand dollars ($150,000) and which cause an increase in a bed capacity by the provider shall not be an allowable cost item if the capital expenditure fails to comply with other federal or state law or rules such as CON. (E) Rental and Leases. 1. Rental and leases of land, buildings, furnishings, and equipment are allowable cost areas if the rented items are necessary and not in essence a purchase of those assets. Finder’s fees are not an allowable cost item. 2. Necessary rental and lease items are those that are pertinent to the economical operation of the provider. 3. In the case of related parties, rental and lease amounts cannot exceed the lesser of those that are actually paid or the costs to the related party. 4. Determination of reasonable and adequate reimbursement for rental and amounts, except in the case of related parties that is subject to other provisions of this rule, may require affidavits of competent, impartial experts who are familiar with the current rentals and leases. 5. The test of necessary costs shall take into account the agreement between the owner and the tenant regarding the payment of related property costs. 6. Leases subject to CON approval must have that approval before a rate is determined. 7. If rent or lease costs increase solely as a result of change in ownership, the resulting increase which exceeds the allowable capital cost of the owner of record as of July 18, 1984, or in the case of a facility which entered the program after July 18, 1984, the owner at the time of the initial entry into the MO HealthNet program, shall be a nonallowable cost. (F) Taxes. Taxes levied on or incurred by providers shall be allowable cost areas with the exceptions of the following items: 1. Federal, state, or local income and excess profit taxes including any interest and penalties paid; 2. Taxes in connection with financing, refinancing, or refunding operations, such as taxes on the issuance of bond, property transfer, issuance of transfer of stocks; 3. Taxes for which exemptions are available to the provider; 4. Special assessments on land that represent capital improvements. These costs shall be capitalized and depreciated over the period during which the assessment is scheduled to be paid; 5. Taxes on property which are not a part of the operation of the provider; 6. Taxes which are levied against a resident and collected and remitted by the provider; and 7. Self-employment Federal Insurance Contributions Act (FICA) taxes applicable to individual proprietors, partners, or members of a joint venture to the extent the taxes exceed the amount which would have been paid by the provider on the allowable compensation of the persons had the provider organization been an incorporated rather than unincorporated entity. (G) Issuance of Revenue Bond and Tax Levies by District and County Facilities. Those nursing home districts and county facilities whose funding is through the issuance of revenue bonds, that interest which is paid per the revenue bond will be an allowable cost item. Depreciation on the plant and equipment of these facilities also shall be an allowable cost item. Any tax levies which are collected by nursing home districts or county homes that are supported in whole or in part by these levies will not be recognized as a revenue offset except to the extent that the funds are used for the actual operation of the facility. (H) Value of Services of Employees. 1. Except as provided for in this rule, the value of services performed by employees in the facility shall be included as an allowable cost area to the extent actually compensated, either to the employee or to the supplying organization. 2. Services rendered by volunteers, such as those affiliated with the American Red Cross, hospital guilds, auxiliaries, private individuals, and similar organizations, shall not be included as an allowable cost area, as the services have traditionally been rendered on a purely volunteer basis without expectation of any form of reimbursement by the organization through which the service is rendered or by the person rendering the service. 3. Services by priests, ministers, rabbis, and similar type professionals shall be an allowable cost area; provided, that the services are not of a religious nature. An example of an allowable cost area under this section would be a necessary administrative function performed by a clergyman. The state will not recognize building costs on space set aside primarily for professionals providing any religious function. The MO HealthNet Division considers costs for wardrobe and similar items likewise nonallowable. (I) Fringe Benefits. 1. Life insurance. A. Types of insurance that the MO HealthNet Division does not consider an allowable cost area; premiums related to insurance on the lives of officers and key employees are not allowable cost areas under the following circumstances: (I) Where, upon the death of an insured officer or key employee, the insurance proceeds are payable directly to the provider. In this case, the provider is a direct beneficiary. Insurance of this type is referred to as key-man insurance; and (II) Where insurance on the lives of officers is voluntarily taken out as part of a mortgage loan agreement entered into for building construction and, upon the death of an insured officer, the proceeds are payable directly to the lending institution as a credit against the loan balance. In this case, the provider is an indirect beneficiary. B. Types of insurance which are considered an allowable cost area— (I) Where credit life insurance is required as part of a mortgage loan agreement. An example would be insurance on loans granted under certain federal programs; and (II) Where the relative(s) or estate of the employee, excluding stockholders, partners, and proprietors, is the beneficiary. The MO HealthNet Division considers this type of insurance a fringe benefit and is an allowable cost area to the extent that the amount of coverage is reasonable. 2. Retirement plans. A. Contributions to qualified retirement plans for the benefit of employees excluding stockholders, partners, and proprietors of the provider shall be allowable cost areas. Facilities shall exclude interest income from funded pensions or retirement plans from consideration in determining the allowable cost area. B. Amounts funded to pension and retirement plans, together with associated income, shall be recaptured if not actually paid when due, as an offset to expenses on the cost report form. 3. Deferred compensation plans. A. Contributions for the benefit of employees, excluding stockholders, partners, and proprietors, under deferred compensation plans shall be all allowable cost areas when, and to the extent that, the costs are actually paid by the provider. Deferred compensation plans must be funded. Provider payments under unfunded deferred compensation plans will be considered as an allowable cost area only when paid to the participating employee and only to the extent considered reasonable. B. Amounts paid by tax-exempt organizations to purchase tax-sheltered annuities for employees shall be treated as deferred compensation actually paid by the provider. C. Amounts funded to deferred compensation plans, together with associated income if not actually paid when due, as an offset to expenses on the cost report form. (J) Education and Training Expenses. 1. The cost of on-the-job training that directly benefits the quality of health care or administration at the facility shall be allowable. Off-the-job training involving extended periods exceeding five (5) continuous days is an allowable cost item only when specifically authorized in advance by the department. 2. Cost of education and training shall include incidental travel costs, but will not include leaves of absence or sabbaticals. (K) Organizational Cost Items. 1. Organizational cost items may be included as an allowable cost area on an amortized basis. 2. Organizational cost items include the following: legal fees incurred in establishing the corporation or other organizations, necessary accounting fees, expenses of temporary directors, and organizational meetings of directors and stockholders, and fees paid to states of incorporation. 3. The provider shall amortize organizational costs ratably over a period of sixty (60) months beginning with the date of organization. When the provider enters the program more than sixty (60) months after the date of organization, no organizational costs shall be recognized. 4. Where a provider did not capitalize organizational costs and has written off those costs in the year they were incurred, the provider cannot retroactively capitalize any part of these costs under the program. 5. Where a provider is organized within a five- (5-) year period prior to entering the program and has properly capitalized organizational costs using a sixty- (60-) month amortization period, no change in the rate of amortization is required. In this instance the unamortized portion of organizational costs is an allowable cost area under the program and shall be amortized over the remaining part of the sixty- (60-) month period. 6. For change in ownership after July 18, 1984, allowable amortization will be limited to the prior owner’s allowable unamortized portion of organizational cost. (L) Advertising Costs. Advertising costs that are reasonable, appropriate, and helpful in developing, maintaining, and furnishing services shall be an allowable cost area. The costs must be common and accepted occurrence in the field of the activity of the provider. (M) Cost of Suppliers Involving Related Parties. Costs applicable to facilities, goods, and services furnished to a provider by a supplier related to the provider shall not exceed the lower of the cost to the supplier or the prices of comparable facilities, goods, or services obtained elsewhere. A provider shall identify suppliers related to it in the uniform cost report and the type-quantity and costs of facilities, goods, and services obtained from each supplier. (N) Utilization Review. Incurred cost for the performance of required utilization review for ICF/IID is an allowable cost area. The expenditures must be for providing utilization review on behalf of a Title XIX participant. The provider shall apportion utilization review costs incurred for Title XVIII and Title XIX based on reimbursable participant days recorded for each program during the reporting period. (O) Minimum Utilization. In the event the occupancy of a provider is below ninety percent (90%), the provider will calculate the following cost centers as if the provider experienced ninety percent (90%) occupancy: laundry, housekeeping, general, administrative, and plant operation costs. In no case may the provider carry forward costs disallowed under this provision to succeeding periods. (P) Nonreimbursable Costs. 1. Bad debts, charity, and courtesy allowances are deductions from revenue and are not to be included as allowable costs. 2. Those services that are specifically provided by Medicare and MO HealthNet must be billed to those agencies. 3. Any costs incurred that are related to fund drives are not reimbursable. 4. Costs incurred for research purposes shall not be included as allowable costs. 5. The cost of services provided under the Title XX program, by contract or subcontract, is specifically excluded as an allowable item. 6. Attorney fees related to litigation involving state, local, or federal governmental entities and attorneys’ fees which are not related to the provision of LTC services, such as litigation related to disputes between or among owners, operators, or administrators. 7. Costs, such as legal fees, accounting and administration costs, travel costs, and the costs of feasibility studies, which are attributable to the negotiation or settlement of the sale or purchase of any capital asset by acquisition of merger for which any payment has been previously made under the program. (Q) Other Revenues. Other revenues, including those listed that follow and excluding amounts collected under paragraph (5)(A)8. will be deducted from the total allowable cost and must be shown separately in the cost report by use of a separate schedule if included in the gross revenue: income from telephone services; sale of employee and guest meals; sale of medical abstracts; sale of scrap and waste food or materials; rental income; cash, trade, quantity time, and other discounts; purchase rebates and refunds; recovery on insured loss; parking lot revenues; vending machine commissions or profit; sales from drugs to other than participants; income from investments of whatever type; and room reservation charges for temporary leave of absence days which are not covered services under section (5) of this rule. Failure by the provider to, in a readily ascertainable manner, separately account for any of the revenues specifically set out previously in this rule, shall result in the provider’s termination from the program. 1. Interest income received from a funded depreciation account will not be deducted from allowable operating costs if interest is applied to the replacement of the asset being depreciated. 2. Cost centers or operations specified by the provider in subsection (6)(R) of this rule shall not have their associated cost or revenues included in the covered costs or revenues of the facility. 3. Restricted and unrestricted funds. A. “Restricted funds,” as used in this rule, mean those funds, cash or otherwise, including grants, gifts, taxes, and income from endowments, which the provider shall only use for a specific purpose designated by the donor. Those restricted funds that are not transferred funds and are designated by the donor for paying operating costs will be offset from the total allowable expenses. If an administrative body has the authority to re-restrict restricted funds designated by the donor for paying operating costs, the provider will not offset the funds from the total allowable expenses. B. “Unrestricted funds,” as used in this rule, mean those funds, cash or otherwise, including grants, gifts, taxes, and income from endowments, that a donor gives to a provider without restriction as to their use. The provider can use these funds in any manner. However, those unrestricted funds that are not transferred funds and that the provider uses to pay operating costs will be offset from total allowable expenses. C. Transferred funds, as used in this rule, are those funds appropriated through a legislative or governmental administrative body’s action, state or local, to a state or local government provider. The transfer can be state-to-state, stateto-local, or local-to-local provider. The MO HealthNet Division does not consider these funds a grant or gift for reimbursement purposes, so have no effect on the provider’s allowable cost under this plan. (R) Apportionment of Costs to MO HealthNet Participant Residents. 1. Providers shall apportion their allowable cost areas between MO HealthNet program participant residents and other residents so that the share of allowable cost areas borne by the MO HealthNet program is based upon actual services received by MO HealthNet program participants. 2. To accomplish this apportionment, providers shall apply the ratio of patient days for MO HealthNet participants to the total patient days. 3. Average cost per diem for general routine services means the amount computed by dividing the total allowable patient costs for routine services by the total number of patient days of care rendered by the provider in the cost-reporting period. 4. A patient day of care is that period of service rendered a patient between the census-taking hours on two (2) consecutive days, including the twelve (12) temporary leave of absence days per any period of six (6) consecutive months as specifically covered under section (5) of this rule, the day of discharge being counted only when the patient was admitted the same day. The provider shall maintain a census log in the facility for documentation purposes. Census shall be taken daily at midnight. A day of care includes those overnight periods when a participant is away from the facility on a facility-sponsored group trip and remains under the supervision and care of facility personnel. 5. ICF/IID facilities that provide intermediate care services to MO HealthNet participants may establish distinct part cost centers in their facility provided that adequate accounting and statistical data required to separately determine the nursing care cost of each distinct part is maintained. Each distinct part may share the common services and facilities, such as management services, dietary, housekeeping, building maintenance, and laundry. 6. In no case may a provider’s allowable costs allocated to the MO HealthNet program include the cost of furnishing services to persons not covered under the MO HealthNet program. (S) Return on Equity. 1. A return on a provider’s net equity shall be an allowable cost area. 2. The amount of return on a provider’s net equity shall be calculated using the nursing home allowable percentage as defined in 13 CSR 70-10.015 Prospective Reimbursement Plan for Nursing Facility Services. 3. An owner’s net equity is comprised of investment capital and working capital. Investment capital includes the investment in building, property, and equipment (cost of land, mortgage payments toward principle, and equipment purchase less the accumulative depreciation). Working capital represents the amount of capital that is required to ensure proper operation of the facility. 4. The return on owner’s net equity shall be payable only to proprietary providers. 5. The provider shall apportion its return on the owner’s net equity to the MO HealthNet program based on the provider’s MO HealthNet program reimbursable participant resident days of care to total resident days of care during the cost-reporting period. For the purpose of this calculation, total resident days of care shall be the greater of ninety percent (90%) of the provider’s certified bed capacity or actual occupancy during the cost year. (T) Intermediate Care Facility for Individuals with Intellectual Disabilities Federal Reimbursement Allowance (ICF/IID FRA). The fee assessed to ICF/IIDs in the state of Missouri for the privilege of doing business in the state will be an allowable cost. (7) Reporting Requirements. (A) Annual Cost Report. 1. Each provider shall establish a twelve- (12-) month fiscal period which is to be designated as the provider’s fiscal year. The provider shall submit an annual cost report for the fiscal year to the department on forms to be furnished by the department for that purpose. Each provider shall submit the completed cost report by the first day of the sixth month following the close of the fiscal period. 2. Unless the provider has previously filed adequate and current documentation in the following areas with the department, authenticated copies of the following documents must be submitted by the provider with the cost reports: authenticated copies of all leases related to the activities of the facility; all management contracts, all contracts with consultants; federal and state income tax returns for the fiscal year; and documentation of expenditures, by line item, made under all restricted and unrestricted grants. For restricted grants, a statement verifying the restriction as specified by the donor. 3. The facility shall maintain adequate documentation for all line items on the uniform cost reports and must submit the document to the department upon request. 4. If a cost report is more than ten (10) days past due, payment may be withheld from the facility until the cost report is submitted. Upon receipt of a cost report prepared in accordance with this regulation, the department will release the withheld payments to the provider. For cost reports which are more than ninety (90) days past due, the department may terminate the provider’s MO HealthNet participation agreement and if terminated, retain all payments which have been withheld pursuant to this provision. 5. If a provider notifies, in writing, the director of the Institutional Reimbursement Unit of the division prior to the change of control, ownership, or termination of participation in the MO HealthNet program, the division may withhold all remaining payments from the selling provider until the provider files the cost report. The fully completed cost report with all required attachments and documentation is due the first day of the sixth month after the date of change of control, ownership, or termination. Upon receipt of a cost report prepared in accordance with this regulation, the department will release any withheld payment to the selling provider. (B) Certification of Cost Reports. 1. The facility must certify the accuracy and validity of any cost report. Certification must be made by one (1) of the following persons (who must be authorized by the governing body of the facility to make the certification and will furnish proof of the authorization): an incorporated entity, an officer of the corporation; for a partnership, a partner; for a sole proprietorship or sole owner, the owner; or for a public facility, the chief administrative officer of the facility. The cost report must also be notarized by a licensed notary public. 2. Certification statement. Form of Certification Misrepresentation or falsifications of any information contained in this report may be punishable by fine, imprisonment, or both, under state or federal law. Certification by officer or administrator of provider: I hereby certify that I have read the above statement and that I have examined the accompanying cost report and supporting schedules prepared by ____________________________________ ________________________________________________________ (Provider’s name(s) and number(s)) for the cost report period beginning, _______________________, 20______ and ending _________________, 20_____, and that to the best of my knowledge and belief, it is a true, correct, and complete statement prepared from the books and records of the provider in accordance with applicable instructions, except as noted. ________________________________ _____________ __________ (Signature) (Title) (Date) (C) Adequacy of Records. 1. The provider must make available to the department or its duly authorized agent, including federal agents from Health and Human Services (HHS), at all reasonable times, the records as are necessary to permit review and audit of provider’s cost reports. Failure to do so may lead to sanctions available in section (8) of this rule. 2. The provider shall retain all records associated with the preparation and documentation of the data associated with the cost report for seven (7) years from the cost report filing date. (D) Accounting Basis. 1. The provider shall base the submitted cost report on the accrual basis of accounting. 2. Governmental institutions that operate on a cash or modified cash basis of accounting may continue to use those methods, provided the governmental institution treats capital expenditures appropriately. (E) Audits. 1. The provider shall base cost reports upon the provider’s financial and statistical records that must be capable of verification by audit. 2. If the provider has included the cost of a certified audit of the facility as an allowable cost item to the plan, a copy of that audit report and accompanying letter shall be submitted without deletions. 3. The annual cost report for the fiscal year of the provider may be subject to audit by the Department of Social Services or its contracted agents. Twelve- (12-) month cost reports for new construction facilities required to be submitted under section (4) of this rule may be audited by the department or its contracted agents prior to establishment of a permanent rate. 4. The department or authorized agent will conduct a desk review of all cost reports after submission by the provider and shall provide for on-site audits of facilities wherever their personnel notes a cost variance or exception. 5. The department shall retain the annual cost report and any working papers relating to the audits of those cost reports for a period of not less than seven (7) full years from the date of submission of the report or completion of the audit. 6. Those providers having an annual Title XIX bed-day ratio on total bed days or certified beds of greater than sixty percent (60%) or an annual Title XIX payment of two hundred thousand dollars ($200,000) or more, or both, shall be required, for at least the first two (2) fiscal years of participation in the plan, to have an annual audit of their financial records by an independent certified public accountant. The auditor may issue a qualified audit report stating that confirmations of accounts receivable and accounts payable are not required by the plan. For the purposes of the paragraph, the Department of Social Services will accept unqualified opinions only if they are from a certified public accounting firm. A copy of the audit report must be submitted to the department to support the annual cost report of the facility. (8) Sanctions and Overpayments. (A) The department may impose sanctions against a provider in accordance with 13 CSR 70-3.030 and other federal or state statutes and regulations. (B) In the case of overpayments to providers based on but not limited to field or audit findings or determinations based on a comprehensive operational review of the facility, the provider shall repay the overpayment in accordance with the provisions as set forth in 13 CSR 70-3.030. (9) Exceptions. (A) For those MO HealthNet-eligible participant patients who have concurrent Medicare Part A skilled nursing facilities benefits available, MO HealthNet reimbursement for covered days of stay in a qualified facility will be based on the coinsurance as may be imposed under the Medicare Program. (B) The Title XIX reimbursement rate for out-of-state providers shall be set by one (1) of the following methods: 1. For providers which provided prior authorized services of fewer than one thousand (1,000) patient days for Missouri Title XIX participants, the reimbursement rate shall be the rate paid for comparable services and level-of-care by the state in which the provider is located; and 2. For providers that provide prior authorized services of one thousand (1,000) or more patient days for Missouri Title XIX participants, the reimbursement rate shall be the lower of— A. The rate paid for comparable services and level-ofcare by the state in which the provider is located; or B. The rate calculated in section (4) of this rule. (10) Payment Assurance. (A) The state will pay each provider, which furnished the services in accordance with the requirements of the state plan, the amount determined for services furnished by the provider according to the standards and methods set forth in these rules. (B) Where third-party payment is involved, MO HealthNet will be the payor of last resort with the exception of state programs such as Vocational Rehabilitation and the Missouri Crippled Children’s Service. Procedures for remitting thirdparty payments are provided in the MO HealthNet program provider manuals. (11) Provider Participation. Payments made in accordance with the standards and methods described in this rule are designed to enlist participation of a sufficient number of providers in the program so that eligible persons can receive medical care and services included in the state plan at least to the extent these services are available to the general public. (12) Payment in Full. Participation in the program shall be limited to providers who accept as payment in full for covered services rendered to MO HealthNet participants, the amount paid in accordance with these rules and applicable copayments. (13) Plan Evaluation. The provider will maintain documentation to effectively monitor and evaluate experience during administration of this rule. APPENDIX A Routine Covered Medical Supplies and Services ABD Pads A & D Ointment Adhesive Tape Aerosol Inhalators, Self-Contained Aerosol, Other Types Air Mattresses Air P.R. Mattresses Airway Oral Alcohol Alcohol Plasters Alcohol Sponges Antacids, Nonlegend Applicators, Cotton-Tipped Applicators, Swab-Eez Aquamatic K Pads (water-heated pad) Arm Slings Asepto Syringes Baby Powder Bandages Bandages (elastic or cohesive) Bandaids Basins Bed Frame Equipment (for certain immobilized bed patients) Bed Rails Bedpan, Fracture Bedpan, Regular Bedside Tissues Benzoin Bibs Bottle, Specimen Canes Cannula Nasal Catheter Indwelling Catheter Plugs Catheter Trays Catheter (any size) Colostomy Bags Composite Pads Cotton Balls Crutches Customized Crutches, Canes, and Wheelchairs Decubitus Ulcer Pads Deodorants Disposable Underpads Donuts Douche Bags Drain Tubing Drainage Bags Drainage Sets Drainage Tubes Dressing Tray Dressings (all) Drugs, Stock (excluding Insulin) Enema Can Enema Soap Enema Supplies Enema Unit Enemas Equipment and Supplies for Diabetic Urine Testing Eye Pads Feeding Tubes Female Urinal Flotation Mattress or Biowave Mattress Flotation Pads, Turning Frames, or both Folding Foot Cradle Gastric Feeding Unit Gauze Sponges Gloves, Unsterile and Sterile Gowns, Hospital Green Soap Hand-Feeding Heat Cradle Heating Pads Heel Protector Hot Pack Machine Ice Bags Incontinency Care Incontinency Pads and Pants Infusion Arm Boards Inhalation Therapy Supplies Intermittent Positive Pressure Breathing Machine (IPPB) Invalid Ring Irrigation Bulbs Irrigation Trays I.V. Trays Jelly, Lubricating Laxatives, Nonlegend Lines, Extra Lotion, Soap, and Oil Male Urinal Massages (by nurses) Medical Social Services Medicine Cups Medicine Dropper Merthiolate Aerosol Mouthwashes Nasal Cannula Nasal Catheter Nasal Catheter, Insertion and Tube Nasal Gastric Tubes Nasal Tube Feeding Nebulizer and Replacement Kit Needles (hypodermic, scalp, vein) Needles (various sizes) Nonallergic Tape Nursing Services (all) regardless of level including the administration of oxygen and restorative nursing care Nursing Supplies and Dressing (other than items of personal comfort or cosmetic) Overhead Trapeze Equipment Oxygen Equipment (such as IPPB machines and oxygen tents) Oxygen Mask Pads Peroxide Pitcher Plastic Bib Pump (aspiration and suction) Restraints Room and Board (semiprivate or private if necessitated by a medical or social condition) Sand Bags Scalpel Sheepskin Special Diets Specimen Cups Sponges Steam Vaporizer Sterile Pads Stomach Tubes Stool Softeners, Nonlegend Suction Catheter Suction Machines Suction Tube Surgical Dressings (including sterile sponges) Surgical Pads Surgical Tape Suture Removal Kit Suture Trays Syringes (all sizes) Syringes, Disposable Tape (for laboratory test) Tape (nonallergic or butterfly) Testing Sets and Refills (S & A) Tongue Depressors Tracheostomy Sponges Tray Service Tubing I.V. Trays, Blood Infusion Set, I.V. Tubing Underpads Urinary Drainage Tube Urinary Tube and Bottle Urological Solutions Vitamins, Nonlegend Walkers Water Pitchers Wheelchairs AUTHORITY: sections 208.153, 208.159, 208.201, and 660.017, RSMo 2016.* This rule was previously filed as 13 CSR 40-81.083. Original rule filed Aug. 13, 1982, effective Nov. 11, 1982. Rescinded: Filed July 12, 1984, effective Oct. 11, 1984. Readopted: Filed July 3, 1986, effective Nov. 1, 1986. Amended: Filed Dec. 16, 1986, effective April 26, 1987. Emergency amendment filed June 19, 1987, effective July 1, 1987, expired Oct. 29, 1987. Amended: Filed Aug. 18, 1987, effective Oct. 25, 1987. Emergency amendment filed Feb. 5, 1988, effective Feb. 15, 1988, expired June 13, 1988. Amended: Filed Feb. 5, 1988, effective June 11, 1988. Emergency amendment filed Dec. 16, 1988, effective Jan. 1, 1989, expired May 1, 1989. Amended: Filed Dec. 5, 1988, effective Feb. 24, 1989. Amended: Filed Dec. 16, 1988, effective March 11, 1989. Amended: Filed Aug. 16, 1989, effective Nov. 11, 1989. Amended: Filed Dec. 1, 1989, effective Feb. 25, 1990. Rescinded and readopted: Filed March 5, 1990, effective June 11, 1990. Amended: Filed May 30, 1990, effective Sept. 28, 1990. Emergency amendment filed Nov. 15, 1991, effective Dec. 3, 1991, expired April 1, 1992. Emergency amendment filed March 13, 1992, effective April 2, 1992, expired July 30, 1992. Amended: Filed Nov. 15, 1991, effective April 9, 1992. Emergency amendment filed July 17, 1992, effective Sept. 1, 1992, expired Dec. 29, 1992. Emergency amendment filed Dec. 8, 1992, effective Dec. 31, 1992, expired April 28, 1993. Amended: Filed July 17, 1992, effective April 8, 1993. Amended: Filed Dec. 14, 1992, effective June 7, 1993. Amended: Filed Nov. 21, 1994, effective June 30, 1995. Emergency amendment filed Dec. 15, 1995, effective Jan. 1, 1996, expired June 28, 1996. Amended: Filed Oct. 10, 1995, effective May 30, 1996. Amended: Filed Oct. 16, 1995, effective May 30, 1996. Emergency amendment filed Feb. 23, 1999, effective March 5, 1999, expired Aug. 31, 1999. Amended: Filed May 27, 1999, effective Nov. 30, 1999. Emergency amendment filed Sept. 20, 1999, effective Oct. 1, 1999, expired March 29, 2000. Amended: Filed Feb. 14, 2001, effective Aug. 30, 2001. Emergency amendment filed Jan. 24, 2007, effective Feb. 3, 2007, expired Aug. 1, 2007. Amended: Filed Jan. 16, 2007, effective July 30, 2007. Emergency amendment filed June 20, 2007, effective July 1, 2007, expired Dec. 27, 2007. Amended: Filed June 20, 2007, effective Jan. 30, 2008. Emergency amendment filed June 18, 2008, effective July 1, 2008, expired Dec. 28, 2008. Amended: Filed July 1, 2008, effective Jan. 30, 2009. Emergency amendment filed Sept. 20, 2011, effective Oct. 1, 2011, expired March 29, 2012. Amended: Filed Sept. 20, 2011, effective March 30, 2012. Amended: Filed Dec. 13, 2013, effective June 30, 2014. Emergency amendment filed Aug. 15, 2016, effective Sept. 1, 2016, expired Feb. 27, 2017. Amended: Filed Aug. 15, 2016, effective March 30, 2017. Emergency amendment filed Aug. 22, 2017, effective Sept. 1, 2017, expired Feb. 27, 2018. Amended: Filed Aug. 22, 2017, effective Feb. 28, 2018. Emergency amendment filed Oct. 25, 2019, effective Nov. 8, 2019, expired May 5, 2020. Amended: Filed Oct. 25, 2019, effective May 30, 2020. Emergency amendment filed March 16, 2023, effective March 30, 2023, expired Sept. 25, 2023. Amended: Filed March 16, 2023, effective Oct. 30, 2023. *Original authority: 208.153, RSMo 1967, amended 1967, 1973, 1989, 1990, 1991, 2007, 2012; 208.159, RSMo 1979; 208.201, RSMo 1987, amended 2007; and 660.017, RSMo 1993, amended 1995.