Cost allocation

1. Direct costing of allowable facility costs must be used whenever possible. If direct costing is not possible, the allocation methods for facility and nonfacility operations described in this subsection must be used. a. Salaries for direct care employees, which cannot be reported based on direct costing, must be allocated using time studies. Time studies must be conducted at least semiannually for a two-week period or quarterly for a one-week period. The time study must represent a typical period of time when employees are performing normal work activities in each of their assigned areas of responsibility. Allocation percentages based on the time studies must be used starting with the next pay period following completion of the time study or averaged for the report year. b. Salaries of supervisory personnel must be allocated based on full-time equivalents of the employees supervised or on a ratio of salaries. c. Fringe benefits must be allocated based on the ratio of salaries to total salaries. d. Plant and housekeeping expenses must be allocated based on square footage. e. Property costs must be allocated based on square footage. f. Administration costs must be allocated on the basis of the percentage of total costs, excluding the allocable administration, property, and utility costs. g. Dietary costs must be allocated based on meals served. h. Laundry costs must be allocated on the basis of pounds of laundry or in-house resident days. i. Vehicle expenses must be allocated based on mileage logs. Mileage logs must include documentation for all miles driven and purpose of travel. If sufficient documentation is not available to determine which cost category vehicle expenses are to be allocated, vehicle expenses must be allocated in total to administration. j. Costs not direct costed or allocable using methods identified in subdivisions a through i must be included as administration costs. 2. If the facility cannot use any of the allocation methods described in subsection 1, a waiver request may be submitted to the department's medical services division. The request must include an adequate explanation as to why the referenced allocation method cannot be used by the facility. The facility shall also provide a rationale for the proposed allocation method. Based on the information provided, the department shall determine the allocation method used to report costs.