Authority: IC 12-15-1-10; IC 12-15-21-3

Affected: IC 4-21.5-3; IC 12-13-7-3; IC 12-15

Sec. 3. (a) The basis of accounting under this rule is a comprehensive basis of accounting, other than GAAP. Costs and charges reported on the provider's cost report shall also be recorded on the provider's financial statements. Costs and charges shall be reported on the cost report under the following authorities, in the hierarchical order listed:

1. (1) This rule, the IMPRM, provider bulletins, and any other policy communications.
2. (2) 42 CFR 413 and the Medicare Provider Reimbursement Manual, CMS 15-1.
3. (3) GAAP.

The burden of supporting that costs are allowable and patient related, reasonable, and properly classified is on the provider.

(b) The provider's cost report shall be completed under the IMPRM and submitted using cost report forms prescribed by the office. The data elements and attachments identified in subdivisions (1) through (8) shall be completed to provide full financial disclosure. A complete cost report consists of the following items fully and properly completed:

1. (1) The Medicaid cost report and supporting schedules, as prescribed by the office.

2. (2) The Medicare cost report for Medicare certified providers, as prescribed by the office, as follows:

   1. (A) Providers with a Medicare cost report with a fiscal year end other than December 31 shall provide their most recently filed Medicare cost report with the Medicare administrative contractor.
   2. (B) Providers may elect to submit a Medicare/Medicaid reconciliation form approved by the office that provides modifications to the Medicare cost report as filed due to differences between Medicare and Medicaid allowable cost definitions and classification of costs between cost centers. A revised facility Medicare cost report that incorporates the modifications on the Medicare/Medicaid reconciliation form shall also be submitted with the Medicare/Medicaid reconciliation form and Medicare cost report as submitted.

3. (3) Certification by the provider that:

   1. (A) the data are true, accurate, and based on patient care; and
   2. (B) expenses not based on patient care have been clearly identified.
4. Amendments to the cost report require updated provider certifications.
5. (4) Certification by the preparer, if different from the provider, that the data were compiled from the information provided to the preparer by the provider, and are true and accurate to the best of the preparer's knowledge.
6. (5) A copy of the working trial balance that is a direct product of the accounting system for both the nursing facility and home office, if applicable, used in the preparation of their submitted cost report in the format described in the IMPRM. The working trial balance includes a summation of expense accounts that agree to the total expense amount used to prepare the trial balance crosswalk.
7. (6) A copy of the trial balance crosswalk document used to prepare the Medicaid cost report (facility and home office, if applicable) containing an audit trail documenting the cost report schedule, line number, and column where each general ledger account is reported on the cost report. Costs removed from the working trial balance and not reported on the cost report are to be clearly identified in a supporting document. Costs reported on the cost report and not verifiable on the working trial balance are to be clearly identified and supported with compelling documentation. The crosswalk shall be sorted and subtotaled by Medicaid line number and provided in the manner described in the IMPRM.
8. (7) A workpaper providing a detailed accounting of the amounts reported in column 24 – Provider Adjustments, by line and column number. The workpaper shall distinguish costs by source (e.g., home office, reclassification from another line, etc.). The workpaper shall also distinguish whether the cost is a personnel or nonpersonnel cost. Costs on lines with both columns 2 (personnel) and 3 (other) shall be treated as personnel unless clearly identified.
9. (8) Other documents considered necessary by the office to accomplish full financial disclosure of the provider's operation.

(c) For cost report periods ending March 31, 2023, or earlier, a provider shall submit a cost report to the office not later than the last day of the fifth calendar month after the end of the provider's reporting year. The cost report shall coincide with the fiscal year used by the provider to report federal income taxes. Nursing facilities certified to provide Medicare-covered skilled nursing facility services are required to submit a written copy of their Medicare cost report covering their most recently completed historical reporting period.

(d) For cost report periods ending April 1, 2023, or later, a provider is required to maintain a fiscal year end of December 31. Each provider shall submit a cost report to the office not later than May 31 after the end of the provider's reporting year. Requirements regarding short period cost reports are as set forth in section 9 of this rule. Nursing facilities certified to provide Medicare-covered skilled nursing facility services are required to submit a written copy of their Medicare cost report covering their most recently completed historical reporting period.

(e) The nursing facility census data collection form is required to be submitted monthly and is due thirty (30) days after the reporting month. The nursing facility census data collection form is required to be filed on the form prescribed by the office and in conformance with the instructions contained in that form.

(f) Whenever multiple facilities or operations are owned by a single entity with a central office, the central office records shall be maintained as a separate set of records, with costs and revenues separately identified and appropriately allocated to individual facilities. Each central office entity shall file a cost report coinciding with the period for any individual facility receiving central office allocations.

(g) A provider shall maintain financial records for at least three (3) years after the date of submission of cost reports to the office. Copies of financial records or supporting documentation shall be provided to the office on request. The accrual basis of accounting shall be used in the data submitted to the office, except for government operated providers otherwise required by law to use a different basis. The provider's accounting records shall establish a clear audit trail from their records to the costs reported on their cost reports submitted to the office.

(h) A cost report submission shall contain full disclosure and reporting of revenue, expenses, and property clearly separated between Medicaid, non-Medicaid, patient, and nonpatient, including the following:

1. (1) If a provider has business enterprises or activities other than those reimbursed by Medicaid under this rule, the revenues, expenses, and statistical and financial records for those enterprises or activities shall be clearly identified and distinguished from the revenues, expenses, and statistical and financial records of the operations reimbursed by Medicaid.

2. (2) The detailed basis for allocation of expenses between nursing facility services and other services in a facility shall remain a prerogative of the provider if the basis is reasonably based on the allocated costs and consistent between accounting periods. The following relationships are required:

   1. (A) Reported expenses and patient census information shall be for the same reporting period.
   2. (B) Nursing salary allocations shall be based on nursing hours worked or patient days for the reporting period, except when specific identification is used based on the actual salaries paid for the reporting period.
   3. (C) No allocation of costs between cost report line items shall be permitted.
   4. (D) Allocation methodologies shall have a reasonable relationship to the costs they are allocating.
   5. (E) For allocation of expenses between nursing facilities and other services, accumulated cost or patient days, or both, are presumed to be a reasonable allocation methodology.
   6. (F) The office shall approve any changes in the allocation or classification of costs before the changes are implemented, unless implementing earlier period audit adjustments. Proposed changes in allocation or classification methods shall be submitted to the office for approval not less than ninety (90) days before the provider's cost report due date.
3. (3) Costs and revenues shall be reported as required on the cost report forms. Allowable patient care costs shall be clearly identified.
4. (4) The provider shall report as patient care costs only costs that have been incurred in providing patient care services. The provider shall certify on the cost report that costs not based on patient care have been separately identified on the cost report and as prescribed in the IMPRM.

(i) A provider shall maintain detailed property documentation, including documentation from a related party property company, to provide a permanent record of the historical costs and balances of facilities and equipment. Summaries of that documentation shall be submitted with each cost report, and a complete copy of the documentation shall be submitted to the office on request.

(j) A provider shall report the patient related personnel costs and hours, as well as patient related contract costs, incurred to perform the function for which the provider was certified. Total personnel costs and total hours shall be reported for each employee. Hours for contracted staff are not required to be reported.

(k) Payroll records shall be maintained by a provider to justify the staffing costs reported to the office. These records shall indicate:

1. (1) each employee's:

   1. (A) classification;
   2. (B) hours worked; and
   3. (C) rate of pay; and
2. (2) the department or functional area to which the employee was assigned and actually worked. If an employee performs duties in more than one (1) department or functional area, the payroll records shall indicate the time allocations to the various assignments. These allocations are to be supported through time studies or actual time worked.

(l) Allocation of home office costs shall be reasonable, conform to GAAP, and be consistent between years. A change of central office allocation bases shall be approved by the office before the changes are implemented. Proposed changes in allocation methods shall be submitted to the office not less than ninety (90) days before the cost report due date. These costs are allowable only to the extent that the central office is providing services based on patient care, and the provider is able to demonstrate that the central office costs improved the efficiency, economy, and quality of member care.

(m) Costs from non-bona fide separate related organizations, such as from operating divisions of the provider organization or central office, shall be maintained as a separate set of records, with costs separately identified and appropriately allocated to individual facilities. Costs from these related organizations shall be documented and allocated using the Medicaid Home Office Cost Report Form.

(Office of the Secretary of Family and Social Services; 405 IAC 1-14.7-3; filed Aug 20, 2024, 9:11 a.m.: 20240918-IR- 405240088FRA)