973 EXCLUSIONS FROM ALLOWABLE COSTS

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

1. (a) Salaries of officers not performing managerial duties;
2. (b) Fund raising expenses in excess of ten percent (10%) of the amount raised;
3. (c) Free care or discounted services;
4. (d) Parties and social activities not related to resident care;
5. (e) Personal telephone, radio, and telephone services;
6. (f) Gift, flower and coffee shop expenses;
7. (g) Vending machines;
8. (h) Organization Membership not related to resident cares
9. (i) All services covered by direct provider payments under Medicaid, Medicare Part B, CHAMPUS, Blue Cross/Blue Shield, various other insurers or third party resources;
10. (j) Interest expenses and penalties due to late payment of bills or taxes, or for licensure violations;
11. (k) District of Columbia provider tax cost. If the provider tax is enacted after March 31, 1996 it shall not be excluded from allowable costs; and
12. (l) Pharmacy expenses paid under the Point of Sale reimbursement system.

973.2 The following shall reduce allowable costs:

1. (a) Costs related to revenue from laundry and linen service;
2. (b) Employee and guest meals;
3. (c) Sale of drugs to other parties;
4. (d) Sale of medical and surgical supplies to parties other than customers;
5. (e) Sale of medical records and abstracts;

(f) Rental of quarters to employees and parties other than customers;

(g) Rental of space;

(h) Purchase discounts and allowances;

(i) Rebates and refunds of expenses;

(j) Investment income for unrestricted funds to the extent that it exceeds interest expense on investments;

(k) Recovery of an insured loss; and

(l) Grants, gift, and income from endowments designated by the donor for specific operating expenses.

SOURCE: Final Rulemaking published at 45 DCR 2333, 2346 (April 17, 1998).