PURPOSE: This rule establishes a methodology for determination of per diem rates for pediatric long-term care facilities. PUBLISHER’S NOTE: The secretary of state has determined that the publication of the entire text of the material which is incorporated by reference as a portion of this rule would be unduly cumbersome or expensive. Therefore, the material which is so incorporated is on file with the agency who filed this rule, and with the Office of the Secretary of State. Any interested person may view this material at either agency’s headquarters or the same will be made available at the Office of the Secretary of State at a cost not to exceed actual cost of copy reproduction. The entire text of the rule is printed here. This note refers only to the incorporated by reference material. The forms mentioned in this rule follow 13 CSR 70-10.010. (1) Authority. This rule is established pursuant to the authorization granted to the Department of Social Services, Division of Medical Services to promulgate rules. (2) Purpose. This rule establishes a methodology for determination of per diem rates for pediatric nursing care facilities. (3) General Principles.

1. (A) Provisions of this reimbursement plan shall apply only to pediatric nursing facilities

2. (NFs) certified for participation in the Missouri Medical Assistance (Medicaid) Program.

   1. (B) The per diem rates determined by this regulation shall apply only to services provided on or after July 1, 1989.
   2. (C) The effective date of this plan shall be July 1, 1989.
   3. (D) The Missouri Medical Assistance (Medicaid) Program shall provide reimbursement for pediatric nursing care services based solely on the individual Medicaid-eligible recipient’s covered days of care (within benefit limitations) multiplied by the facility’s Medicaid per diem rate. No payments may be collected or retained in addition to the Medicaid per diem rate for covered services. Where third-party payment is involved, Medicaid will be the payer of last resort with the exception of state programs such as Vocational Rehabilitation and the Missouri Crippled Children’s Services. A provider participating under this rule shall not be eligible for participation under any other Missouri Medicaid plan for the provision of nursing care services.

   4. (E) The Medicaid per diem rate shall be the lesser of—

      1. 1. The average private pay rate;
      2. 2. The Medicare (Title XVIII) per diem

rate, if applicable;

1. 3. The per diem rate as determined in

accordance with section (11); or

1. 4. The level-of-care ceiling. Effective

July 1, 1999, the level-of-care ceiling shall be the weighted average Medicaid allowable cost for all participating pediatric nursing facilities as determined from their 1992 cost reports adjusted by the same percentages stated in 13 CSR 70-10.015 for 1992 cost reports and any negotiated trend factors effective through July 1, 1999. The weighted average rate is three hundred twenty-one dollars and forty-five cents ($321.45) as of July 1, 1999. Effective January 1, 2002, the level-of-care ceiling will be split for that portion related to the patient care and general and administrative per diems and for that portion related to the capital per diem. The level-of-care ceiling for patient care and general and administrative per diems effective January 1, 2002, is three hundred eighteen dollars and sixty-three cents ($318.63) and the capital per diem level-ofcare ceiling is seven dollars and forty-four cents ($7.44). For any facility which the capital per diem rate is calculated based on subparagraph (11)(A)3.B., the fair rental value system, the capital per diem level-of-care ceiling will not be applied. The level-of-care ceiling shall be adjusted by the negotiated trend factor given in subsection (13)(A) or any global adjustment in section (13) of 13 CSR 70-10.015.

1. (F) For a change in ownership, management, control, operation or leasehold interest by any form for any facility certified for participation in the Medicaid program at any time, increased capital costs for the successor owners, management or leaseholder shall not be recognized for purposes of reimbursements.
2. (G) Medicaid reimbursements shall not be paid for services provided to Medicaid-eligible recipients during any time period in which the facility failed to have a Medicaid participation agreement in effect. A per-diem reimbursement rate may not be established for a facility if a Medicaid participation agreement is not in effect.
3. (H) Upon execution of a Medicaid participation agreement, a qualified facility not previously certified for participation in the Medicaid program shall be assigned a provider number by the Division of Medical Services. Facilities previously certified shall retain the same provider number regardless of any change in ownership, management, control, operation or leasehold interest in any form.
4. (I) Regardless of changes of ownership, management, control, operation or leasehold interests by whatever form for any facility 13 CSR 70-10

certified for participation in the Medicaid Program, the division will issue allowable reimbursements to the facility identified in the current Medicaid participation agreement, and recover from that entity liabilities, sanctions and penalties pertaining to the Medicaid Program.

1. (J) A facility’s allowable costs shall be apportioned between Medicaid recipients and other patients so that the share borne by the Medicaid Program is based upon services actually provided to Medicaid recipients. A facility’s allowable costs allocated to the Medicaid Program in no case may include costs incurred in providing services for persons who are not Medicaid eligible.
2. (K) A facility that also is certified for participation in the Title XVIII (Medicare) Program shall meet the requirements of Title XVIII of the Social Security Act. Any facility which is terminated from participation in the Medicare Program also shall be terminated from participation in the state’s Medicaid Program.
3. (L) No restrictions or limitations shall be placed on a recipient’s right to select providers of his/her own choice.

1. (4) Definitions.

   1. (A) Allowable cost. Those costs which are allowable for allocation to the Medicaid Program based upon the principles established in this rule. The allowability of costs not addressed specifically in this rule shall be determined by the Division of Medical Services. This determination may be based upon criteria such as the Medicare Provider Reimbursement Manual (HIM-15) and section (7) of this rule.
   2. (B) Asset value. The asset value is the per bed cost of construction used in calculating a facility’s capital per diem utilizing the fair rental value system as set forth in subparagraph (11)(A)3.B. The cost of construction is based on the RS Means Building Construction Cost Data to determine specific cost information for current, historical and projected costs. The initial asset value was based on 1994 costs utilizing the median total cost per bed of the national average cost of construction for nursing home beds from the Square Foot Table, adjusting it for the Missouri cities indexes from the City Cost Indexes Table, and adding the per bed land cost determined by the division. This initial asset value will be adjusted annually using the estimated Historical Cost Indexes from the RS Means publication for each subsequent year. The resulting asset values are included in Appendix C.
   3. (C) Average private pay rate. The usual and customary charge for non-Medicaid patients determined by dividing total non-Medicaid days of care into revenue collected from the same service that is included in the Medicaid per-diem rate, excluding negotiated payment methodologies with state or federal agencies, such as the Veterans Administration and the Missouri Department of Mental Health.
   4. (D) Cost report. The Financial and Statistical Report for Nursing Facilities, required attachments as specified in subsection (10)(A) of this rule and all worksheets supplied by the division for this purpose. The cost report shall detail the cost of rendering both covered and noncovered services for the fiscal reporting period in accordance with the procedures prescribed by the division.
   5. (E) Department. The department, unless otherwise specified, refers to the Missouri Department of Social Services.
   6. (F) Desk review. The Division of Medical Services’ review of a provider’s cost report without on-site audit.
   7. (G) Director. The director, unless otherwise specified, refers to the director, Missouri Department of Social Services.
   8. (H) The Division of Aging. The division of the Department of Social Services responsible for survey, certification and licensure of LTC facilities.
   9. (I) The Division of Medical Services. Unless otherwise designated, division as used in this regulation refers to the Division of Medical Services, the division of the Department of Social Services charged with administration of Missouri’s Medical Assistance (Medicaid) Program.
   10. (J) Entity. Any natural person, corporation, not-for-profit corporation, professional corporation, business, partnership or something that exists as a particular and distinct unit.
   11. (K) Facility fiscal year. A facility’s twelve (12)-month fiscal reporting period covering the same twelve (12)-month period as its federal tax year.
   12. (L) Generally accepted accounting principles (GAAP). Accounting conventions, rules and procedures necessary to describe accepted accounting practice at a particular time promulgated by the authoritative body establishing these principles.
   13. (M) Long-term care (LTC) facility. A licensed skilled nursing facility (SNF), intermediate care facility (ICF), ICF/mentally retarded (MR), SNF/ICF, residential care facility I (RCF I), residential care facility II (RCF II) or other provider of LTC services.
   14. (N) New facility. A newly built facility, for which an approved CON or applicable waiver was obtained and which was newly completed and operational on or after July 1, 1989, and which was originally certified for participation as an SNF.
   15. (O) Occupancy. A facility’s total actual patient days divided by the total licensed bed days for the same period.
   16. (P) Patient day. The period of service rendered to a patient between the census-taking hour on two (2) consecutive days. Census shall be taken in all facilities at midnight each day and a census log maintained in each facility for documentation purposes. Patient day includes the twelve (12) temporary leave of absence days per any period of six (6) consecutive months for which the Medicaid Program will reimburse the provider. The day of discharge is not a patient day for reimbursement purposes unless it is also the day of admission.

   17. (Q) Pediatric nursing care (facility). Either a new facility with all of the following attributes, or an LTC facility with a valid Medicaid participation agreement in effect on June 30, 1989, with all of the following attributes on or before June 30, 1990:

       1. 1. The facility must be licensed under

Chapter 198, RSMo and must have any other licenses, permits, or both, which may be required by applicable state and local laws;

1. 2. The facility must have one hundred

percent (100%) of all licensed beds certified by the Division of Aging as meeting the conditions for participation in the Medicaid Program as an SNF;

1. 3. The facility cannot be either attached

to or a distinct part of any other LTC facility or hospital. Distinct part means any portion of any LTC facility or hospital, less than the total beds of the LTC facility or hospital;

1. 4. The facility must serve only persons

under the age of twenty-one (21);

1. 5. The facility must be located in Mis-

souri; and

1. 6. The facility must have a valid partici-

pation agreement in effect with the Missouri Division of Medical Services.

1. (R) Provider. Either a new facility with all of the following attributes, or an LTC facility with a valid Medicaid participation agreement in effect on June 30, 1989, with all of the following attributes on or before June 30, 1990:

   1. 1. The facility must be licensed under

Chapter 198, RSMo and must have any other licenses, permits, or both, which may be required by applicable state and local laws;

1. 2. The facility must have one hundred

percent (100%) of all licensed beds certified by the Division of Aging as meeting the conditions for participation in the Medicaid Program as an SNF;

1. 3. The facility cannot be either attached

to or a distinct part of any other LTC facility or hospital. Distinct part means any portion of any LTC facility or hospital, less than the total beds of the LTC facility or hospital;

1. 4. The facility must serve only persons

under the age of twenty-one (21);

1. 5. The facility must be located in Mis-

souri; and

1. 6. The facility must have a valid partici-

pation agreement in effect with the Missouri Division of Medical Services.

1. (S) Related parties. Parties are related when any one (1) of the following circumstances apply:

   1. 1. An entity where, through its activi-

ties, one (1) entity’s transactions are for the benefit of the other and the benefits exceed those which are usual and customary in those dealings;

1. 2. An entity has an ownership or con-

trolling interest in another entity and the entity, or one (1) or more relatives of the entity, has an ownership or controlling interest in the other entity. 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

1. 3. As used in this section, the following

terms mean:

1. A. Indirect ownership/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;

1. B. Ownership interest means the pos-

session of equity in the capital, in the stock or in the profits of an entity;

1. C. Ownership or controlling interest

is when an entity—

1. (I) Has an ownership interest

totalling five percent (5%) or more in an entity;

1. (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;

1. (III) Has a combination of direct

and indirect ownership interest equal to five percent (5%) or more in an entity;

1. (IV) Owns an interest of five per-

cent (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 these 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;

1. (V) Is an officer or director of an

entity; or

1. (VI) Is a partner in an entity that is

organized as a partnership; and

1. D. Relative means person related by

blood, adoption or marriage to the fourth degree of consanguinity.

1. (T) Replacement beds/facility. A newly constructed pediatric nursing care facility, or any part thereof, built to replace beds that were located in a pediatric nursing care facility that are no longer used to provide pediatric nursing care facility services.
2. (U) Restricted funds. Funds, cash or otherwise, including grants, gifts, taxes and income from endowments which must only be used for a specific purpose designated by the donor.
3. (V) Second prior year cost report. The cost report for the facility fiscal year which ends in the second calendar year prior to the calendar year in which the state’s fiscal year ends. For example, for state Fiscal Year 1990, the second prior year cost report would be the cost report for a facility fiscal year which ends any time in calendar year 1988.
4. (W) Skilled nursing facility (SNF). An LTC facility licensed and certified by the Division of Aging as meeting the conditions for participation in the Medicaid Program as an SNF.
5. (X) Unrestricted funds. Funds, cash or otherwise, including grants, gifts, taxes and income from endowments, that are given to a provider without restriction by the donor as to their use.

1. (5) Covered Supplies, Items and Services. All supplies, items and services covered in the per-diem rate must be provided to the resident as necessary, and the facility may not charge the resident, any entity or any other payer any additional amounts for these items, except that supplies and services which would otherwise be covered in a per-diem rate but which are also billable to the Title XVIII Medicare Program must be billed to that program. Covered supplies, items and services include, but are not limited to, the following:

   1. (A) Services, items and supplies which must be provided by SNFs as set forth in Title 42 Code of Federal Regulations;
   2. (B) Semiprivate room and board;
   3. (C) Private room and board when it is necessary to isolate a recipient due to a medical or social condition, examples of which may be contagious infection, loud irrational speech and the like;
   4. (D) Temporary leave of absence days, not to exceed twelve (12) days per any period of six (6) consecutive months;
   5. (E) Provision of nursing services;
   6. (F) Provision of personal hygiene and routine care services;
   7. (G) All laundry service, including personal laundry;
   8. (H) All dietary services, including special dietary supplements used for tube feeding or oral feeding. Dietary supplements prescribed by a physician are also covered items;
   9. (I) All consultative services required by federal or state law or rule;
   10. (J) All therapy services required by federal or state law or rule;
   11. (K) All routine care items, including disposables and including, but not limited to, those items specified in Appendix A to this rule;
   12. (L) All nursing care services and supplies, including disposables, and including, but not limited to, those items specified in Appendix A to this rule; and
   13. (M) Any and all nonlegend antacids, nonlegend laxatives, nonlegend stool softeners and nonlegend vitamins. Providers may not elect which nonlegend drugs in any of the four (4) categories to supply; any and all must be provided to residents as needed and are included in a facility’s per-diem rate.

2. (6) Noncovered Supplies, Items and Services. All supplies, items and services which are not either covered in a facility’s per-diem rate, billable to another program in the Missouri Medical Assistance (Medicaid) Program, or billable to Medicare or other third-party payors. Noncovered supplies, items and services include, but are not limited to, the following:

   1. (A) Private room and board unless it is necessary to isolate a recipient due to a medical or social condition, examples of which may be contagious infection, loud irrational speech, etc.;
   2. (B) Bed reservations for recipients who are away from the facility for any reason other than a temporary leave of absence day. Temporary leave of absence days in excess of twelve (12) per any period of six (6) consecutive months are noncovered;
   3. (C) Supplies, items and services for which payment is made under Missouri Medical Assistance (Medicaid) Program directly to a provider or providers other than providers of the pediatric nursing care services, including, but not limited to, those set forth in Appendix B to this rule; and
   4. (D) Supplies, items and services provided nonroutinely to residents for personal comfort or convenience, including, but not limited to, those set forth in Appendix B to this rule.

3. (7) Allowable Cost Areas.

   1. (A) Compensation of Owners.

      1. 1. Compensation of services of owners

shall be an allowable cost area, provided the services are actually performed, are necessary and are reasonable.

1. 2. Compensation shall mean the total

benefit, within the limitations set forth in this rule, received by the owner for the services s/he renders to the facility, including direct 13 CSR 70-10

payments for managerial, administrative, professional and other services, amounts paid for the personal benefit of the owner, the cost of assets and services which 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 in this rule. Compensation must be paid (whether in cash, negotiable instrument or in kind) within seventy-five (75) days after the close of the period in accordance with the guidelines published in the Medicare Provider Reimbursement Manual (PRM), Part 1, Section 906.4.

1. 3. Reasonableness of compensation shall

be limited as prescribed in subsection (8)(T).

1. 4. Necessary services refers to those

services that are pertinent to the operation and sound conduct of the facility; had the owner not rendered these services, then employment of another entity to perform the service would be necessary.

1. (B) Covered services and supplies as defined in section (5) of this rule.
2. (C) Real Estate and Personal Property Taxes. Taxes levied on or incurred by a facility.
3. (D) Value of Services of Employees. Except as provided for in this rule, the value of services performed by employees or contractors in the facility shall be included as an allowable cost area to the extent actually compensated, either to the employee or to the contractor.

4. (E) Fringe Benefits.

   1. 1. Retirement plans.

      1. A. Contributions to retirement plans

for the benefit of employees excluding stockholders, partners and proprietors of the provider shall be allowable cost areas provided these plans meet the qualifications established in the Internal Revenue Code of 1985, as amended in the requirements for Title XVIII. Interest income from funded pension or retirement plans shall be excluded from consideration in determining the allowable costs area.

1. 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.

1. 2. Deferred compensation plans.

   1. 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, these 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.

1. B. Amounts paid by tax-exempt orga-

nizations to purchase tax-sheltered annuities for employees shall be treated as deferred compensation actually paid by the provider.

1. C. Amounts funded to deferred com-

pensation plans together with associated income shall be recaptured, if not actually paid when due, as an offset to expenses on the cost report form.

1. (F) Education and Training Expenses.

   1. 1. The cost of on-the-job training which

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 in writing by the division.

1. 2. Costs of education and training shall

include incidental travel costs but will not include leaves of absence or sabbaticals.

1. (G) Advertising Costs. Advertising costs which are reasonable and appropriate.
2. (H) Cost of Supplies Involving Related Parties. Costs of goods and services furnished by related parties shall not exceed the lower of the cost to the supplier or the prices of comparable goods or services obtained elsewhere. In the uniform cost report, a provider shall identify related-party suppliers and the type, quantity and costs of goods and services obtained from each supplier.

3. (I) Interest and Borrowing Costs on Capital Asset Debt.

   1. 1. Interest and borrowing costs related

to necessary loans associated with capital asset debt are accounted for in the capital cost component and are subject to debt and interest rate restrictions. Determination of allowable interest and borrowing costs is detailed in parts (11)(A)3.B.(III) and (11)(A)3.B.(IV).

1. 2. Loans must be supported by evidence

of a written agreement that funds were borrowed and repayment of the funds are required, identifiable in the provider’s accounting records, related to the reporting period in which the costs are claimed, and necessary for the operation, maintenance or acquisition of the provider’s facility.

1. 3. Necessary means that the loan be

incurred to satisfy a financial need of the provider and for a purpose related to recipient care. Loans which result in excess funds or investments are not considered necessary.

1. 4. A provider shall capitalize borrowing

costs and amortize them over the life of the loan on a straight line basis. Borrowing costs include loan costs (i.e. lender’s title and recording fees, appraisal fees, legal fees, escrow fees, and other closing costs), prepaid interest and discounts. Finder’s fees are not allowed.

1. (J) Utilization Review. Costs incurred for the performance of required utilization review.

1. (8) Nonallowable Costs. Cost not reasonably related to pediatric nursing care facility services shall not be included in a provider’s costs. In accordance with this section, contractual allowances, courtesy discounts, charity allowances and similar adjustments or allowances are offsets to revenue and are not included in allowable costs. Nonallowable cost areas include, but are not limited to, the following:

   1. (A) Amortization on intangible assets;
   2. (B) Attorney fees related to litigation;
   3. (C) Bad debts;
   4. (D) Capital cost increases due solely to changes in ownership, management, control, operation or leasehold interest;
   5. (E) Central office or pooled costs not reasonably attributed to the efficient and economical operation of the facility;
   6. (F) Charitable contributions;
   7. (G) Compensation paid to a relative or an owner through a related party to the extent it exceeds the limitations established under subsection (7)(A) of this rule;
   8. (H) Cost arising from joint use of resources (including central office and pooled cost) not directly related to patient care;
   9. (I) Cost not directly related to the provision of patient care;
   10. (J) Cost of ancillary services covered by Medicare Part B;
   11. (K) Cost (for example, legal fees, accounting and administration costs, travel costs and the costs of feasibility studies) which is attributable to the negotiation or settlement of the sale or purchase of any capital asset by acquisition or merger for which any payment has been previously made under the program;
   12. (L) Directors’ fees from any source;
   13. (M) Federal, state or local income and excess profit taxes, including any interest and penalties paid on them;
   14. (N) Finders’ fees;
   15. (O) Franchise taxes;
   16. (P) Fund-raising expenses;
   17. (Q) Interest expense on intangible assets;
   18. (R) Life insurance premiums for officers and owners and related parties except the amount relating to a bona fide nondiscriminatory employee benefits plan;
   19. (S) Noncovered supplies, services and items as defined in section (6);
   20. (T) Owners’ compensation in excess of the high range of the most recent survey of administrative salaries paid to individuals other than owners for proprietary and nonproprietary providers as published in the updated Medicare Provider Reimbursement Manual (PRM) Part 1, Section 905.2.;
   21. (U) Prescription drugs;
   22. (V) Religious items or supplies or services of a primarily religious nature performed by priests, rabbis, ministers or other similar types of professionals. Cost associated with portions of the physical plant used primarily for religious functions are also nonallowable;
   23. (W) Research costs;
   24. (X) Resident personal purchases;
   25. (Y) Return on equity;
   26. (Z) Salaries, wages or fees paid to nonworking officers, employees or consultants;
   27. (AA) Self-employment taxes;
   28. (BB) Stockholder relations or stock proxy expenses;
   29. (CC) Taxes or assessments for which exemptions are available;
   30. (DD) Value of services (imputed or actual) rendered by nonpaid workers or volunteers; and
   31. (EE) Vending machines and related supplies.

2. (9) Revenue Offsets.

   1. (A) Other revenues must be identified separately in the cost report if included in gross revenues. These revenues include, but are not limited to, the following:

      1. 1. Income from telephone services;
      2. 2. Sale of employee and guest meals;
      3. 3. Sale of medical abstracts;
      4. 4. Sale of scrap and waste food or

materials;

1. 5. Rental income;
2. 6. Cash, trade, quantity, time and other

discounts;

1. 7. Purchase rebates and refunds;
2. 8. Recovery on insured loss;
3. 9. Parking lot revenues;
4. 10. Vending machine commissions or

profits;

1. 11. Sales from drugs to individuals

other than Medicaid recipients;

1. 12. Interest income to the extent of

interest expense;

1. 13. Any income from investments;
2. 14. Room reservation charges in excess

of covered therapeutic home leave days;

1. 15. Private room differential; and
2. 16. Reimbursement for nurse-aid train-

ing which is not provided as part of the perdiem rate.

1. (B) Interest income received from a funded depreciation account will not be deducted from allowable operating costs if the interest is applied to the asset being depreciated.
2. (C) Restricted funds designated by the donor prior to the donation for payment of operating costs will be offset from the associated cost.
3. (D) Restricted funds designated by the donor for future capital expenditures will not be offset from allowable expenses at any time.
4. (E) Unrestricted funds not designated by the provider for future capital expenditures will be offset from allowable cost.
5. (F) Unrestricted funds received from endowments will not be offset from allowable cost.
6. (G) As applicable, restricted and unrestricted funds will be offset in each cost category, except capital, in an amount equal to each category’s proportionate share of allowable expense. The applicable categories are patient care costs and general and administrative costs as defined in section (11).
7. (H) 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.

1. (10) Provider Reporting and Record Keeping Requirements.

   1. (A) Annual Cost Report.

      1. 1. Each provider shall adopt the same

twelve (12)-month fiscal period for completing its cost report as is used for federal income tax reporting.

1. 2. Each provider is required to complete

and submit to the Division of Medical Services an annual cost report, including all worksheets, attachments, schedules and requests for additional information from the division. The cost report shall be submitted on forms provided by the division for that purpose.

1. 3. All cost reports shall be completed in

accordance with the requirements of this rule and the cost report instructions. Financial reporting shall adhere to GAAP except as otherwise specifically indicated in this rule.

1. 4. The cost report submitted must be

based on the accrual basis of accounting. Governmental institutions operating on a cash or modified-cash basis of accounting may continue to report on that basis, provided appropriate treatment under GAAP of capital expenditures is made.

1. 5. Cost reports shall be submitted by the

first day of the sixth month following the close of the fiscal period.

1. 6. If a cost report is more than ten (10)

days past due, payment will be withheld from the facility until the cost report is submitted. Upon receipt of a cost report prepared in accordance with this rule, the payments that were withheld will be released to the provider. For cost reports which are more than ninety (90) days past due, the department may terminate the provider’s Medicaid participation and retain all payments which have been withheld pursuant to this provision.

1. 7. Authenticated copies of signed agree-

ments and other significant documents related to the provider’s operation and provision of care to Medicaid recipients must be attached to the cost report at the time of filing unless current and accurate copies have already been filed with the division. Material which must be submitted includes, but is not limited to, the following:

1. A. Audit, review or compilation state-

ment prepared by an independent accountant, including disclosure statements and management letter or SEC Form 10-K;

1. B. Contracts or agreements involving

the purchase of facilities or equipment during the last seven (7) years;

1. C. Contracts or agreements with own-

ers or related parties;

1. D. Contracts with consultants;
2. E. Documentation of expenditures, by

line item, made under all restricted and unrestricted grants;

1. F. Federal and state income tax

returns for the fiscal year, within ten (10) days of filing the returns;

1. G. Leases, rental agreements, or

both, related to the activities of the provider;

1. H. Management contracts;
2. I. Medicare cost report;
3. J. Statement verifying the restriction

as specified by the donor, prior to donation, for all restricted grants; and

1. K. Working trial balance actually

used to prepare cost report with line number tracing notations or similar identifications.

1. 8. Cost reports must be fully, clearly

and accurately completed, all required attachments must be submitted and any requests for additional information or clarification must be provided before a cost report is considered complete. If any additional information, documentation or clarification requested by the division or its authorized agent is not provided within fourteen (14) days of the date of receipt of the request, payments will be withheld from the facility until the information is submitted. If information requested is not received by June 1 prior to the rate determination date, rate increases based upon the cost report will not be effective until sixty (60) days after receipt of requested information, and rate decreases based upon the cost report will be retroactive to the July 1 rate determination date.

1. 9. The division will not accept amended

cost reports for rate determination unless they are received by March 31 prior to the rate determination date. Under no circumstances will the division accept amended cost reports for rate redetermination after the rate has been established.

1. (B) Certification of Cost Reports.

   1. 1. The accuracy and validity of the cost

report must be certified by the provider. Certification must be made by one (1) of the following persons authorized by the governing body of the provider to make the certification: for an incorporated entity, an officer of the corporation; for a partnership, a partner; for a sole proprietorship or sole owner, the 13 CSR 70-10

owner or licensed operator; or for a public facility, the chief administrative officer of the facility. Proof of the authorization shall be furnished upon request.

1. 2. Cost reports must be notarized by a

licensed notary public.

1. 3. The following statement must be

signed on each cost report to certify its accuracy and validity:

Certification Statement: Misrepresentation

or falsification of any information contained in this cost report may be punishable by fine, imprisonment, or both, under state or federal law. 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 name(s) and number(s)) for the cost report period beginning _______________, 19________ and ending _______________, 19________, 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)

1. (C) Adequate Records and Documentation.

   1. 1. A provider must keep records in

accordance with GAAP and maintain sufficient internal control and documentation to satisfy audit requirements and other requirements of this rule, including reasonable requests by the division or its authorized agent for additional information.

1. 2. Each of a provider’s funded accounts

must be maintained separately with all account activity clearly identified.

1. 3. Adequate documentation for all line

items on the cost report shall be maintained by a provider. Upon request, all original documentation and records must be made available for review by the division or its authorized agent at the same site at which the services were provided. Copies of documentation and records shall be submitted to the division or its authorized agent upon request.

1. 4. A provider must retain all records and

documentation for seven (7) years from the cost report filing date. All current providers, regardless of length of participation in the Medicaid Program, are responsible for providing access to the facility’s records and documentation for seven (7) years.

1. (D) Audits.

   1. 1. Any cost report submitted may be

subject to field audit by the division or its authorized agent.

1. 2. A provider shall have available at the

field audit location one (1) or more knowledgeable persons authorized by the provider and capable of explaining the provider’s accounting and control system and cost report preparation, including all attachments and allocations.

1. 3. If a provider maintains any records or

documentation at a location which is not the same as the site where services were provided, the provider shall transfer the records to the same facility at which the Medicaid services were provided or to another instate location that is acceptable to the division or its authorized agent. The provider must reimburse the division or its authorized agent for reasonable travel costs necessary to perform the field audit in any out-of-state location, if the location is acceptable to the division.

1. (E) Change in Provider Status.

   1. 1. Upon termination of participation in

the Medicaid Program or change of ownership, the provider is required to submit a cost report for the period ending with the date of termination or change, regardless of its tax period. The fully completed cost report with all required attachments and documentation is due within forty-five (45) days after the date of termination or change.

1. 2. If a cost report is more than ten (10)

days past due, payments will be withheld from the facility until the cost report is submitted. Upon receipt of a cost report prepared in accordance with this rule, the payments that were withheld will be released to the provider.

1. (F) Joint Use of Resources.

   1. 1. If a provider has business enterprises

in addition to the pediatric nursing care facility, the revenues, expenses, statistical and financial records of each separate enterprise shall be clearly identifiable.

1. 2. When the facility is owned, con-

trolled or managed by an entity(ies) that owns, controls or manages one (1) or more other facilities, records of central office and other costs incurred outside the facility shall be maintained so as to separately identify revenues and expenses of, and allocations to, individual facilities. Allocation of central office or pooled costs to individual facilities shall be consistent from year-to-year. If a desk review or field audit establishes that records are not maintained so as to clearly identify information required by this rule, none of the commingled cost shall be recognized as allowable cost in determining the facility’s Medicaid per-diem rate. Allowability of these costs shall be determined in accordance with the provisions of this rule.

1. 3. Certain home office or related man-

agement company costs that would otherwise be reported in the patient care component of the cost report if the facility performed the services or purchased the services independently, may be reported in the patient care cost category, if services were actually rendered at the individual facility. Allocation of these costs must be based on the hours worked on-site in an individual facility. Direct patient service cost not meeting these requirements shall be reported in the general and administrative cost category.

1. (11) Rate Determination.

   1. (A) Except as provided in subsection (11)(B), and subject to the timely filing provisions of section (10), a facility’s per-diem rate shall be determined on July 1 of each state fiscal year, beginning July 1, 1989, or the qualification date, whichever is later, based upon the data contained in the deskreviewed or field-audited second prior year cost report, or both; provided, the reported costs are allowable, covered, properly apportioned, properly allocated and properly classified as prescribed elsewhere in this rule. A facility’s per-diem rate shall be the sum of the patient care per-diem rate, the general and administrative per-diem rate and the capital per-diem rate. Applicable trend factors shall be applied only to the patient care component of the per-diem rate. Applicable trend factors as used in this section are the trend factors that were authorized subsequent to the last day of the facility fiscal year covered by the second prior year cost report, up to and including the trend factor adjustment which may be authorized on July 1 when the annual rate is determined. Procedures for determination of the per-diem rates in each cost category are as follows:

      1. 1. Patient care. From the Financial and

Statistical Report for Nursing Facilities portion of the applicable cost report, accumulate patient care costs from lines forty-five through sixty (45–60), and sixty-two through seventy-five (62–75), seventy-seven through eighty-five (77–85), eighty-seven through ninety-five (87–95), ninety-seven through one hundred three (97–103), line one hundred five (105) and lines one hundred thirteen through one hundred twenty (113–120). The accumulated patient care costs will be divided by the patient days for the reporting period identified from line eight (8), item six (6), column eight (8). The result of this procedure will be the Patient Care Per-Diem Rate;

1. 2. General and administrative. From the

Financial and Statistical Report for Nursing Facilities portion of the applicable cost report, accumulate general and administrative costs from line one hundred nine (109), line one hundred eleven (111), line one hundred twelve (112) and lines one hundred twentytwo through one hundred fifty (122–150). The accumulated general and administrative costs will be divided by the greater of patient days for the reporting period from line eight (8), item six (6), column eight (8) or ninety percent (90%) of the total bed days for the reporting period from line eight (8), item five (5), column eight (8). The General and Administrative Per-Diem Rate shall be the lesser of—

1. A. The results of the procedure

described in paragraph (11)(A)2.; or

1. B. Fifteen percent (15%) times the

results of the procedure described in paragraph (11)(A)1.; and

1. 3. Capital.

   1. A. For LTC facilities which were cer-

tified for participation in the Medicaid Program at any time prior to June 30, 1989, and with valid participation agreements in effect on June 30, 1989, and which satisfy all the qualifications necessary for participation in the pediatric nursing care program described in this rule, the per-diem rate for capital under this rule shall be the sum of lines one hundred and six (106), one hundred seven (107), one hundred eight (108) and one hundred ten (110) from the Financial and Statistical Report for Nursing Facilities portion of the applicable cost report, divided by the greater of patient days for the reporting period from line eight (8), item six (6), column eight (8) or ninety-three percent (93%) of the total bed days for the reporting period from line eight (8), item five (5), column eight (8). The capital cost per-diem rate shall be fixed and will not be adjusted except as may be authorized under section (12) or (13). If a facility replaces all beds with a new facility, the capital per-diem rate will be determined by subparagraph (11)(A)3.B.

1. B. For new facilities, replacement

beds/facility and additional beds, the perdiem rate for capital shall be determined using the fair rental value system (FRV), which consists of four (4) elements: rental value, return, computed interest, and borrowing costs. The determination of the per diem for each element is as follows:

1. (I) Rental value. The rental value is

a computed figure determined as follows:

1. (a) Determine the total asset

value.

1. I. Determine facility size from

the rate setting cost report;

1. II. Determine the number of

increased licensed beds through the end of the rate setting period;

1. III. Determine the bed equiva-

lency for renovations/major improvements by taking the cost of the renovations/major improvements divided by the asset value per bed for the year of the renovation/major improvement rounded to the nearest whole bed. For a rate setting cost report, the renovation/major improvement must be completed by the end of the rate setting period. The cost must be at least the asset value per bed for the year of the renovation/major improvement.

1. IV. Determine the number of

decreased licensed beds through the end of the rate setting period;

1. V. Determine the total facility

size which is the sum of items I., II., III. less IV; and

1. VI. Determine the total asset

value which is the total facility size multiplied by the asset value relating to the rate setting cost report as set forth in subsection (4)(B).

1. (b) Determine the reduction for

age by multiplying the age of the beds by one percent (1%). The result of the reduction for age by multiplying the age of the beds by one percent (1%).

1. I. The age of the beds for mul-

tiple licensing dates is calculated on a weighted average method rounded to the nearest whole year. For example, a facility with original licensure in 1979 of sixty (60) beds, an additional licensure of sixty (60) beds in 1984, and an additional licensure of ten (10) beds in 1998, with a rate setting cost report ending in 2000, the reduction is calculated as follows: Licensure Age times Year Age Beds Beds 1979 21 60 1,260 1984 16 60 960 1998 2 10 20 Total 130 2,240

Weighted Average Age—2,110/130 beds =

17.23 years rounded to 17 years. This results in a reduction for age of the beds at 17%.

1. II. The age of the beds for

replacement beds is calculated on a weighted average method rounded to the nearest whole year as set forth in the Certificate of Need (CON). For example, a facility with one hundred twenty (120) beds licensed in 1978 with replacement of sixty (60) beds in 1998, the reduction is calculated as follows:

Licensure Age times Year Age Beds Beds 1978 22 60 1,320 1998 2 60 120 Total 120 1,440

Weighted Average Age—1440/120 beds =

12.00 years. This results in a reduction for age of the beds at 12%.

1. III. The age of the beds for

reductions in licensed beds is calculated on a weighted average method rounded to the nearest whole year as set forth in the CON. For example, a facility with original licensure in 1979 of sixty (60) beds, an additional licensure of sixty (60) beds in 1984, an additional licensure of ten (10) beds in 1998 and a reduction of ten (10) beds in 1989, the reduction percentage is calculated as follows:

Licensure Age times Year Age Beds Beds 1979 21 60 1,260 1984 16 60 960 1998 2 10 20 1989* 21 (10) (210) Total 120 2,030 *reduction of 1979 beds

Weighted Average Age—2,030/120 =

16.92 years rounded to seventeen (17) years. This results in a reduction for age of the beds at 17%.

1. IV. The age of the bed equiva-

lents for renovations/major improvements is calculated on a weighted average method rounded to the nearest whole year. For example, a one hundred twenty (120) bed facility licensed in 1979 undertakes two (2) renovations: $200,000 in 1983 and $100,000 in 1993. The asset value per bed is $25,250 for 1983 and $32,039 for 1993. The bed equivalency is eight (8) beds for 1983 and three (3) beds for 1993; the reduction percentage is calculated as follows:

Licensure/ Construction Age times Year Age Beds Beds 1979 21 120 2,520 1983 17 8 136 1993 7 3 21 Total 131 2,677

Weighted Average Age—2,677/131= 20.44 year rounded to twenty (20) years. This results in a reduction for age of the beds at 20%.

1. (c) Determine the facility asset

value. The facility asset value is the total asset value per part (11)(A)3.B.(I) less the reduction for age per part (11)(A)3.B.(II).

1. (d) Determine the rental value.

Multiply the facility asset value by two and one-half percent (2.5%) to determine the rental value. The two and one-half percent (2.5%) is based on a forty (40)-year life.

1. (e) The following is an illustration

of how parts (11)(A)3.B.(I), (II), (III) and (IV) determine the rental value.

1. I. Assumptions:

2000 Rate Setting Cost Report Licensed beds 120 Bed Equivalents 4 Weighted average age of the beds 23 years Asset value—2000 $ 34,797

1. II. The total asset value is the

product of the total facility size times the asset value: Total facility size 124 Asset value × $ 34,797 Total asset value $4,314,828 13 CSR 70-10

1. III. The facility asset value is the

total asset value less the reduction for age of the beds: Total asset value $4,314,828 Reduction for age (23%) $ 992,410 Facility asset value $3,322,418

1. IV. The rental value is the facili-

ty asset value multiplied by 2.5%. Facility asset value $3,322,418 × 2.5% Rental value $ 83,060

1. (II) Return. The return is a com-

puted figure, subject to rate limitations, as set forth below:

1. (a) Reduce the facility asset

value by the capital asset debt, but not less than zero (0), times the rate of return. The rate of return is the yield for the thirty (30)- year Treasury Bond as reported by the Federal Reserve Board and published in the Wall Street Journal at the end of the first week in September, plus two (2) percentage points.

1. (b) The debt associated with

increases in licensed beds or renovations/major improvements for rate setting cost reports as set forth in items (11)(A)3.A.(I)(a)II. and III., will be added to the capital asset debt from the rate setting cost report. The facility shall provide adequate documentation to support the additional debt as required in subsection (7)(I). If adequate documentation is not provided to support the additional capital asset debt, it will be assumed to equal zero (0).

1. (c) The following is an illustra-

tion of how subpart (11)(A)3.A.(II)(a) is calculated continuing the example from above in (11)(A)3.A.(I) and assuming capital asset debt of $1,371,094: Facility asset value $3,322,418 Capital asset debt ($1,371,094) $1,951,324 Rate of Return × 9.18% Return $ 184,986

1. (III) Computed interest. The inter-

est is a computed figure, subject to capital debt and interest rate limitations, as set forth below:

1. (a) Interest will be calculated by

multiplying the lesser of the necessary outstanding capital asset debt or the facility asset value as determined in subpart (11)(A)3.B.(I)(c) by the Chase Manhattan prime rate in effect on the first business day in September, as published in the Wall Street Journal, plus two (2) percentage points. The interest rate in effect at the end of the rate setting period shall be used.

1. (b) The following is an illustra-

tion of how interest is calculated: Assumptions: Example A: Example B: Facility Asset Facility Asset Value<Debt Value>Debt Facility asset value $3,322,418 $3,322,418 Outstanding capital asset debt $3,500,000 $1,951,324 Term of debt 25 years 25 years Prime rate— September 1, 1999 8.25% 8.25% Interest calculation: The lesser of the facility asset value or the outstanding capital asset debt multiplied by the allowable interest rate (prime rate + 2%) Example A Example B Facility asset value $3,322,418 Outstanding capital debt $1,951,324 Interest rate ×10.25% × 10.25% Computed interest $ 340,548 $ 200,011

1. (IV) Borrowing costs.

   1. (a) A provider shall capitalize

borrowing costs and amortize them over the life of the loan on a straight line basis.

1. (b) If loans for capital asset debt

exceed the facility asset value, the borrowing costs associated with the portion of the loan or loans which exceeds the facility asset value shall not be allowable.

1. (c) The following is an illustra-

tion of how allowable borrowing costs are calculated: Assumptions: Loan costs $120,000 Discount costs $125,000 Borrowing costs $245,000 Example A Example B Facility asset value $3,322,418 $3,322,418 Outstanding capital asset debt /$3,500,000 /$1,951,324 Percent of borrowing costs allowed 95% 100% Borrowing costs × $ 245,000 × $ 245,000 Allowable portion to be amortized $ 232,750 $ 245,000 Term of debt / 25 yrs / 25 yrs Allowable borrowing costs $ 9,310 $ 9,800

1. (V) Capital per-diem calculation.

Two (2) per diems are calculated using the above computed figures and summed to determine the total capital per-diem rate, as set forth below.

1. (a) FRV per diem. A per diem

is calculated by dividing the sum of the rental value, the return and the computed interest by the annualized patient days. Annualized patient days equals the total facility size determined in item (11)(A)3.B.(I)(a)V. times three hundred sixty-five (365) adjusted by the greater of ninety percent (90%) or the facility’s occupancy from the rate setting cost report. The following is an illustration of how this is calculated:

Rental Value $ 83,060 Return $184,986 Computed interest (from Exhibit B) $200,011 Total $468,057 Divided by annualized patient days / 40,734* FRV per diem $ 11.49

* Annualized patient days: Total facility size 124 Times 365 × 365 Subtotal 45,260 Greater of minimum utilization or facility occupancy × 90%** Annualized patient days 40,734

** Assumption: facility occupancy from the rate setting cost report below 90%.

1. (b) Borrowing costs per diem. A

per diem is calculated by dividing the sum of the borrowing costs by the greater of ninety percent (90%) of the total bed days from the rate setting cost report or the facility’s patient days from the rate setting cost report. The following is an illustration of how this is calculated: Borrowing costs (from Ex. B) $9,800 Patient Days / 39,420* Borrowing cost/pass through per diem $ .25

* Patient days—greater of: 90% of bed days = 120 beds × 365 days × 90% = 39,420 Facility patient days = 37,890 (Assumption)

1. (c) The capital per diem is the

sum of subparts (11)(A)3.B.(V)(a) and (11)(A)3.B.(V)(b). FRV per diem $11.49 Borrowing cost/pass through per diem $ .25 Total capital $11.74 The capital cost per-diem rate shall be fixed and will not be adjusted except as may be authorized under section (12) or (13.)

1. (B) New Facilities.

   1. 1. Initial per-diem rates. A new facility

shall submit to the division a written request for establishment of an initial per-diem rate. The request shall include all documentation necessary to determine the allowable capital in accordance with procedures described in subparagraph (11)(A)3.B. The initial perdiem rate shall become effective on the date the new facility satisfies all licensing and certification requirements of the Division of Aging for participation in the Medicaid Program as an SNF and any additional requirements of this rule for participation in the pediatric nursing care program. The initial per-diem rate shall be established as the lower of the level-of-care ceiling in effect on the effective date of the initial per-diem rate or the average private pay rate, or the Medicare (Title XVIII) per-diem rate, if applicable.

1. 2. Interim rate. The new facility shall

file a cost report in accordance with all applicable requirements of this rule by the first day of the fourth month following the close of the new facility’s first full facility fiscal year. Based upon the data contained in the deskreviewed or field-audited first full facility fiscal year cost report, or both; provided, the reported costs are allowable, covered, properly apportioned, properly allocated and properly classified as prescribed elsewhere in this rule, an interim per-diem rate shall be established. The interim per-diem rate shall be the sum of the patient care per-diem rate and the general and administrative per-diem rate, applying the procedures described in paragraphs (11)(A)1. and 2., plus the capital perdiem rate as originally fixed per subparagraph (11)(A)3.B. The interim rate shall be established retroactive to the first day of the first full facility fiscal year and prospectively up to the July 1 following the last day of the facility’s second full facility fiscal year. On the July 1 following the last day of the facility’s second full facility fiscal year, the facility will become eligible for the annual rate determination described in subsection (11)(A). New facilities are eligible for trend factors applied only to the patient care portion of the per-diem rate which may be authorized between the effective date of the interim rate and the date the facility becomes eligible for annual rate determination.

1. (12) Rate Reconsideration.

   1. (A) A provider may request reconsideration of the per-diem rate only under the following circumstances:

      1. 1. 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 industry in general, the request must have a substantial cost effect. These circumstances include, but are not limited to:

1. A. Acts of nature, such as fire, earth-

quakes and flood, that are not covered by insurance;

1. B. Vandalism, civil disorder, or both;

or

1. C. Replacement of capital depreciable

items not built into the existing rate that are the result of circumstances not related to normal wear and tear or upgrading of existing systems;

1. 2. A provider may request a rate adjust-

ment for replacement beds/facility. The facility must obtain an approved certificate of need or applicable waiver for the replacement beds/facility. The facility shall provide all documentation requested by the division relating to the replacement beds/facility.

1. A. The capital per diem is calculated

for the replacement beds/facility as set forth in subparagraph (11)(A)3.B. using the asset value, rate of return, and interest rate in effect for the date the replacement beds/facility are placed in service. The rate adjustment will be calculated as the difference between the facility’s capital per diem prior to the replacement beds/facility being placed in service and the capital per diem including the replacement beds/facility.

1. B. The rate adjustment will be incor-

porated into the facility’s per-diem rate by replacing its capital per diem prior to the replacement beds with the capital per diem including the replacement beds.

1. 3. A provider may request a rate adjust-

ment additional beds. The facility must obtain an approved certificate of need or applicable waiver for the additional beds. The facility shall provide all documentation requested by the division relating to the additional beds.

1. A. The capital per diem is calculated

for the additional beds as set forth in subparagraph (11)(A)3.B. using the asset value, rate of return, and interest rate in effect for the date the additional beds are placed in service. The rate adjustment will be calculated as the difference between the facility’s capital per diem prior to the additional beds being placed in service and the capital per diem including the additional beds.

1. B. The rate adjustment will be incor-

porated into the facility’s per-diem rate by replacing its capital per diem prior to the additional beds with the capital per diem including the additional beds.

1. 4. The request for rate reconsideration

must be submitted in writing to the division, must specifically and clearly identify the reason for the request, must include sufficient documentation evidencing that the costs were actually incurred, must be in detail sufficient for the division to determine whether or not the costs were or were not included in the rate, and must include the amount requested;

1. 5. The division will make a recommen-

dation to the director of the Department of Social Services within sixty (60) days following the receipt of all documentation required or necessary, or both, to evaluate the request. The director’s or his/her designee’s final decision on each request shall be issued in writing to the provider within fifteen (15) working days from receipt of the division’s recommendation; and

1. 6. The director’s or his/her designee’s

final determination on the division’s recommendation shall become effective on the first day of the month in which the request was made providing that it was made prior to the tenth of the month. If the request is not filed by the tenth of the month, adjustments shall be effective on the first day of the following month.

1. (13) Rate Adjustments.

   1. (A) Unless specifically provided elsewhere in these rules, the division may increase or decrease the per-diem rate both prospectively and retrospectively only under the following conditions:

      1. 1. Pursuant to a court decision; or
      2. 2. Pursuant to an Admin istrative Hear -

ing Com mis sion decision or order.

1. (B) Unless specifically provided elsewhere in these rules, the division may decrease the per-diem reimbursement rate both prospectively and retrospectively only under the following conditions:

   1. 1. If the information contained in or

attached to a cost report on which a per-diem rate has been based is found to be fraudulent, misrepresented or inaccurate, and if the fraudulent, misrepresented or inaccurate information as originally reported resulted in establishment of a higher per-diem rate than the facility would have received in the absence of this information;

1. 2. When the facility’s Medicaid per-

diem rate is higher than either its private pay rate or its Medicare (Title XVIII) rate; or

1. 3. When a determination through desk

audits, field audits and other means establishes that unallowable costs were included in a cost report used to establish the per-diem rate.

1. (C) Global Per-Diem Rate Adjustments. A facility with either an interim rate or a prospective rate may qualify for the global per-diem rate adjustments. Global per-diem rate adjustments shall be added to the level of care ceiling.

   1. 1. Minimum wage adjustment. All facil-

ities with either an interim rate or a prospective rate in effect on November 1, 1996, shall be granted an increase to their per diem effective November 1, 1996, of two dollars 13 CSR 70-10

forty-five cents ($2.45) to allow for the change in federal minimum wage. Utilizing Fiscal Year 1995 cost report data, the total industry hours reported for each payroll category was multiplied by the fifty cent ($.50) increase, divided by the patient days for the facilities reporting hours for that payroll category and factored up by 8.67% to account for the related increase to payroll taxes. This calculation excludes the director of nursing, the administrator and assistant administrator.

1. 2. Minimum wage adjustment. All facil-

ities with either an interim rate or a prospective rate in effect on September 1, 1997, shall be granted an increase to their per diem effective September 1, 1997, of one dollar ninety-eight cents ($1.98) to allow for the change in minimum wage. Utilizing Fiscal Year 1995 cost report data, the total industry hours reported for each payroll category was multiplied by the forty cent ($.40) increase, divided by the patient days for the facilities reporting hours for that payroll category and factored up by 8.67% to account for the related increase to payroll taxes. This calculation excludes the director of nursing, the administrator and assistant administrator.

1. (D) Special Per-Diem Rate Adjustments. Special per-diem rate adjustments may be added to a qualifying facility’s rate without regard to the level of care ceiling if specifically provided as described below.

   1. 1. Quality Assurance Incentive.

      1. A. Each pediatric nursing facility

with an interim or prospective rate on or after July 1, 2000, shall receive a per-diem adjustment of $3.20. The Quality Assurance Incentive adjustment will be added to the facility’s current rate.

1. B. The Quality Assurance Incentive

per-diem increase shall be used to increase the expenditures to a nursing facility’s direct patient care costs. Direct patient care costs include all expenses in the patient care cost component (i.e., lines 45 through 60 and lines 77 through 85 of Schedule B in the Title XIX Cost Report version MSIR-1 (7-93)). Any increases in wages and benefits already codified in a collective bargaining agreement in effect as of July 1, 2000, will not be counted towards the expenditure requirements of the Quality Assurance Incentive as stated above. Nursing facilities with collective bargaining agreements shall provide such agreements to the division.

1. (14) Sanctions and Overpayments.

   1. (A) In addition to the sanctions and penalties set forth in this rule, the division may also impose sanctions against a provider in accordance with 13 CSR 70-3.030 Sanctions for False or Fraudulent Claims for Title XIX Services, or any other sanction authorized by state or federal law or regulation.
   2. (B) Overpayments due the Medicaid Program from a provider shall be recovered by the division in accordance with 13 CSR 70- 3.030 Sanctions for False or Fraudulent Claims for Title XIX Services.
2. (15) Appeals. In accordance with sections 208.156 and 621.055, RSMo, providers may appeal final decisions of the director, Department of Social Services or the Division of Medical Services to the Administrative Hearing Commission.
3. (16) Transition. Cost reports used for rate determination shall be adjusted by the division in accordance with the applicable cost principles provided in this rule for those facilities with Medicaid participation agreements in effect on June 30, 1989, which also qualify on July 1, 1990, for participation in the pediatric nursing care program. APPENDIX A 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 Alternating Pressure Pads 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 Bedpans (all types) Beds, Manual, Electric, Clinitron Bedside Tissues Benzoin Betadine Bibs Blood Infusion Sets Bottle, Specimen Canes (all types) Cannula—Nasal Catheter Indwelling Catheter Plugs Catheter Trays Catheter (any size) Colostomy Bags Combs Commodes (all types) Composite Pads Cotton Balls Crutches (all types) Decubitus Ulcer Pads/Dressings Denture Cleaner/Soak Denture Cups Deodorants Diapers Disposable Underpads Donuts Douche Bags Drain Tubing Drainage Bags Drainage Sets Drainage Tubes Dressing Tray Dressings (all types) Drugs, Stock (excluding Insulin) Enema Soap Enema Supplies Enema Unit Equipment and Supplies for Diabetic Blood and Urine Testing Eye Pads Feeding Tubes Fingernail Clipping and Cleaning Flotation Mattress or Biowave Mattress Flotation Pads, Turning Frames, or both Foot Cradle (all types) Gastric Feeding Unit (including bags) Gauze Sponges Gloves, Unsterile and Sterile Gowns, Hospital Green Soap Hairbrushes Hair Care, Basic Hand-Feeding Heat Cradle Heating Pads Heel Protector Hot Pack Machine Hydraulic Patient Lifts Hypothermia Blanket Ice Bags Incontinency Care Incontinency Pads and Pants Infusion Arm Boards Infusion Pumps, Enteral and Parenteral Inhalation Therapy Supplies Irrigation Bulbs Irrigation Trays I.V. Needles I.V. Trays I.V. Tubing Jelly—Lubricating Laxatives, Nonlegend Lines, Extra Lotion, Soap and Oil Massages (by facility personnel) Mattresses (all types) Medical Social Services Medicine Cups Medicine Dropper Merthiolate Aerosol Mouthwashes Nasal Catheter Nasal Catheter, Insertion and Tube Nasal Gastric Tubes Nasal Tube Feeding and Feeding Bags Nebulizer and Replacement Kit Needles (hypodermic, scalp, vein) Needles (various sizes) Nursing Services (all) regardless of level, including the administration of oxygen and restorative nursing care Nursing Supplies and Dressing Ostomy Supplies (adhesive, appliance, belts, face plates, flanges, gaskets, irrigation sets, night drains, protective dressings, skin barriers, tail closures) Overhead Trapeze Equipment Oxygen, Gaseous and Liquid Oxygen Concentrators Oxygen Delivery Systems, Portable or Stationary Oxygen Mask Pads Peroxide Pitcher Plastic Bib Pump (aspiration and suction) Pumps for Alternating Pressure Pads Respiratory Equipment (Ambu Bags, cannulas, compressors, humidifiers, IPPB Machines and circuits, mouth pieces, nebulizers, suction catheters, suction pumps, tubing) Restraints Room and Board (semiprivate or private if necessitated by a medical or social condition) Sand Bags Scalpel Shampoo Shaves Shaving Cream Sheepskin Side Rails Soap Special Diets Specimen Cups Sponges Steam Vaporizer Sterile Pads Sterile Saline for Irrigation Sterile Water for Irrigation 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 tests) Tape (nonallergic or butterfly) Testing Sets and Refills (S & A) Therapy Services Toenail Clipping and Cleaning Tongue Depressors Toothbrushes Toothpaste Tracheostomy Sponges Trapeze Bars Tray Service Underpads Urinals, Male and Female Urinary Drainage Tube Urinary Tube and Bottle Urological Solutions Vitamins, Nonlegend Walkers (all types) Water Circulating Pads Water Pitchers Wheelchairs (amputee, geriatric, heavy duty, hemi, lightweight, one-arm drive, reclining, rollabout, semireclining, standard) APPENDIX B Noncovered Supplies, Items and Services Audiology Services Barber and Beauty Shop Services Cigarettes, Cigars, Pipes and Tobacco Clothing Cosmetics Dental Services Dry Cleaning Eye Examinations Eye Glasses Hearing Aids Home Parenteral Nutrition/Total Parenteral Nutrition Solutions, Additives, Supplies Hospital Services Laboratory Services Optical Services Orthotic Devices Pharmacy Physician Podiatry Services Prosthetic Devices Ventilators Wheelchair Batteries Wheelchairs, Customized (chairs that are fitted/fabricated to a specific individual that cannot be used by any other person) Wheelchairs, Electric APPENDIX C Year Asset Value 1994 $ 32,330 1995 $ 32,723 1996 $ 32,921 1997 $ 33,355 1998 $ 33,829 1999 $ 34,205 2000 $ 34,797 AUTHORITY: sections 208.153, 208.159 and 208.201, RSMo 2000.* Original rule filed Sept. 26, 1989, effective Feb. 11, 1990. Emergency amendment filed Oct. 5, 1992, effective Nov. 1, 1992, expired Feb. 28, 1993. Emergency amendment filed Feb. 16, 1993, effective Feb. 28, 1993, expired June 27, 1993. Amended: Filed Oct. 5, 1992, effective May 6, 1993. Amended: Filed Oct. 16, 1995, effective May 30, 1996. Emergency amendment filed Oct. 15, 1996, effective Oct. 25, 1996, expired April 22, 1997. Emergency amendment filed Oct. 22, 1996, effective Nov. 1, 1996, expired April 29, 1997. Emergency amendment filed Aug. 12, 1997, effective Sept. 1, 1997, expired Feb. 27, 1998. Amended: Filed Aug. 12, 1997, effective Feb. 28, 1998. Amended: Filed May 27, 1999, effective Nov. 30, 1999. Emergency amendment filed, Sept. 20, 1999, effective Oct. 1, 1999, expired March 29, 2000. Emergency amendment filed July 18, 2000, effective July 28, 2000, expired Jan. 24, 2001. Amended: Filed June 30, 2000, effective Feb. 28, 2001. Amended: Filed Nov. 15, 2001, effective May 30, 2002. *Original authority: 208.153, RSMo 1967, amended 1967, 1973, 1989, 1990, 1991; 208.159, RSMo 1979; and 208.201, RSMo 1987.