6516.1 The following categories of expense shall be excluded from allowable operating costs because they are not normally incurred in providing resident care:

1. (a) Fundraising expenses in excess of ten percent (10%) of the amount raised;
2. (b) Parties and social activities not related to resident care;
3. (c) Personal telephone, radio, and television services;
4. (d) Gift, flower and coffee shop expenses;
5. (e) Vending machines;
6. (f) Interest expenses and penalties due to late payment of bills or taxes, or for licensure violations;
7. (g) Prescription drug costs;
8. (h) Personal resident purchases; and
9. (i) Beauty and barber shop costs.

6516.2 The following expenditures shall reduce allowable costs:

1. (a) The greater of the revenues generated from employee and guest meals or the cost of the meals;
2. (b) The greater of the revenues generated from rental space in the facility or the cost of the rental space;
3. (c) Purchase discounts and allowances;
4. (d) Investment income for unrestricted funds to the extent that it exceeds interest expense on investments;
5. (e) Recovery of an insured loss;
6. (f) Grants, gift and income from endowments designated by the donor for specific operating expenses; and
7. (g) Any other income or expense item determined to reduce allowable costs pursuant to the Medicare Principles of Reimbursement. DHCF shall not

offset performance based payments made to nursing facilities participating in the Nursing Facility Quality Improvement Program and add-on payments for ventilator care, bariatric care, and care for the behaviorally complex against allowable costs.

SOURCE: Final Rulemaking published at 53 DCR 1370 (February 24, 2006); as amended by Final Rulemaking published at 66 DCR 13663 (October 18, 2019).