Common use of LIMITATION OF EXPENSES Clause in Contracts

LIMITATION OF EXPENSES. Certain expenses that are not normally incurred in providing resi- dent care shall be eliminated or limited according to the following rules. a. Federal and state income taxes are considered in computing the fee for services for proprietary institutions. b. Fees paid directors and nonworking officer’s salaries are not allowed as reimbursable costs. c. Bad debts are not an allowable expense. d. Charity allowances and courtesy allowances are not an allowable expense. e. Personal travel and entertainment are not allowable as reimbursable costs. Certain expenses such as rental or depreciation of a vehicle and expenses of travel which include both business and per- xxxxx costs shall be prorated. Amounts which appear to be excessive may be limited after consider- ation of the specific circumstances. Records shall be maintained to substantiate the indicated charges. (1) Commuter travel by the owner(s), owner-administrator(s), administrator, nursing director or any other employee is not an allowable cost (from private residence to facility and return to residence). (2) The expense of one car or one van or both designated for use in transporting patients shall be an allowable cost. All expenses shall be documented by a sales slip, invoice or other document setting forth the designated vehicle as well as the charges incurred for the expenses to be allowable. (3) Each facility which supplies transportation services as defined in Iowa Code section 324A.1, subsection 1, shall provide current documentation of compliance with or exemption from public transit coordination requirements as found in Iowa Code chapter 324A and 761—Chapter 910 of the depart- ment of transportation rules at the time of annual contract renewal. Failure to cooperate in obtaining or in providing the required documentation of compliance or exemption after receipt from the Iowa de- partment of transportation, public transit division, shall result in disallowance of vehicle costs and oth- er costs associated with transporting residents. (4) Expenses related to association business meetings, limited to individual members of the asso- ciation who are members of a national affiliate, and expenses associated with workshops, symposiums, and meetings which provide administrators or department heads with hourly credits required to com- ply with continuing education requirements for licensing, are allowable expenses. (5) Travel of an emergency nature required for supplies, repairs of machinery or equipment, or building is an allowable expense. (6) Travel for which a patient must pay is not an allowable expense. (7) Allowable expenses in subparagraphs (2) to (5) above are limited to 6 percent of total adminis- trative expense.

LIMITATION OF EXPENSES. Certain expenses that are not normally incurred in providing resi- dent resident care shall be eliminated or limited according to the following rules. a. Federal and state income taxes are considered in computing the fee for services for proprietary institutions. b. Fees paid directors and nonworking officer’s salaries are not allowed as reimbursable costs. c. Bad debts are not an allowable expense. d. Charity allowances and courtesy allowances are not an allowable expense. e. Personal travel and entertainment are not allowable as reimbursable costs. Certain expenses such as rental or depreciation of a vehicle and expenses of travel which include both business and per- xxxxx personal costs shall be prorated. Amounts which appear to be excessive may be limited after consider- ation consideration of the specific circumstances. Records shall be maintained to substantiate the indicated charges. (1) Commuter travel by the owner(s), owner-administrator(s), administrator, nursing director or any other employee is not an allowable cost (from private residence to facility and return to residence). (2) The expense of one car or one van or both designated for use in transporting patients shall be an allowable cost. All expenses shall be documented by a sales slip, invoice or other document setting forth the designated vehicle as well as the charges incurred for the expenses to be allowable. (3) Each facility which supplies transportation services as defined in Iowa Code section 324A.1, subsection 1, shall provide current documentation of compliance with or exemption from public transit coordination requirements as found in Iowa Code chapter 324A and 761—Chapter 910 of the depart- ment department of transportation rules at the time of annual contract renewal. Failure to cooperate in obtaining or in providing the required documentation of compliance or exemption after receipt from the Iowa de- partment department of transportation, public transit division, shall result in disallowance of vehicle costs and oth- er other costs associated with transporting residents. (4) Expenses related to association business meetings, limited to individual members of the asso- ciation association who are members of a national affiliate, and expenses associated with workshops, symposiums, and meetings which provide administrators or department heads with hourly credits required to com- ply comply with continuing education requirements for licensing, are allowable expenses. (5) Travel of an emergency nature required for supplies, repairs of machinery or equipment, or building is an allowable expense. (6) Travel for which a patient must pay is not an allowable expense. (7) Allowable expenses in subparagraphs (2) to (5) above are limited to 6 percent of total adminis- trative administrative expense. f. Entertainment provided by the facility for participation of all residents who are physically and mentally able to participate is an allowable expense except entertainment for which the patient is required to pay is not an allowable expense. g. Loan acquisition fees and standby fees are not considered part of the current expense of patient care, but should be amortized over the life of the related loan. h. A reasonable allowance of compensation for services of owners is an allowable cost, provided the services are actually performed in a necessary function. Adequate time records shall be maintained. Adjustments may be necessary to provide compensation as an expense for nonsalaried working proprietors and partners. Members of religious orders serving under an agreement with their administrative office are allowed salaries paid persons performing comparable services. When maintenance is provided these persons by the facility, consideration shall be given to the value of (1) Compensation means the total benefit received by the owner or immediate relative for services rendered. Compensation includes all remuneration, paid currently or accrued, for managerial, administrative, professional and other services rendered during the period. Compensation shall include all items that should be reflected on IRS Form W-2, Wage and Tax Statement, including, but not limited to, salaries, wages, and fringe benefits; the cost of assets and services received; and deferred compensation. Fringe benefits shall include, but are not limited to, costs of leave, employee insurance, pensions and unemployment plans. If the facility’s fiscal year end does not correlate to the period of the W-2, a reconciliation between the latest issued W-2 and current compensation shall be required to be disclosed to the Iowa Medicaid enterprise provider cost audit and rate setting unit. Employer portions of payroll taxes associated with amounts of compensation that exceed the maximum allowed compensation shall be considered unallowable for reimbursement. All compensation paid to related parties, including payroll taxes, shall be required to be reported to the Iowa Medicaid enterprise provider cost audit and rate setting unit with the submission of the financial and statistical report. If it is determined that there have been undisclosed related-party salaries, the cost report shall be determined to have been submitted incomplete and the facility shall be subject to the penalties set forth in paragraph 54.3(3)“d.” (2) Reasonableness requires that the compensation allowance be such an amount as would ordinarily be paid for comparable services by comparable facilities, and depends upon the facts and circumstances of each case. (3) Necessary requires that the function be such that had the owner not rendered the services, the facility would have had to employ another person to perform the service, and be pertinent to the operation and sound conduct of the facility. (4) The maximum allowed compensation for the administrator is $1,250 per month plus $13 per month per bed licensed capacity for each bed over 60 not to exceed $1,775 per month. (5) The maximum allowed compensation for employees as set forth in subparagraph 54.3 (11) “h”(4) shall be adjusted by the percentage of the average work week that the employee devoted to business activity at the residential care facility for the fiscal year of the financial and statistical report. The time devoted to the business shall be disclosed on the financial and statistical report and shall correspond to any amounts reported to the Medicare fiscal intermediary. If an owner’s or immediate relative’s time is allocated to the facility from another entity (e.g., home office), the compensation limit shall be adjusted by the percentage of total costs of the entity allocated to the facility. In no case shall the amount of salary for one employee allocated to multiple facilities be more than the maximum allowed compensation for that employee had the salary been allocated to only one facility. i. Management fees shall be computed on the same basis as the administrator’s salary but shall have the amount paid the resident administrator deducted. When the parent company can separately identify accounting costs, such costs are allowed. j. Depreciation based upon tax cost using only the straight-line method of computation, recognizing the estimated normal life of the asset, may be included as a resident cost. When accelerated methods of computation have been elected for income tax purposes, an adjustment shall be made. For change of ownership, refer to 54.3(12)“b” and “c.” k. Necessary and proper interest on both current and capital indebtedness is an allowable cost. (1) Interest is the cost incurred for the use of borrowed funds. Interest on current indebtedness is the cost incurred for funds borrowed for a relatively short term. Interest on capital indebtedness is the cost incurred for funds borrowed for capital purposes. (2) “Necessary” requires that the interest be incurred on a loan made to satisfy a financial need of the provider, be incurred on a loan made for a purpose reasonably related to resident care.

LIMITATION OF EXPENSES. Certain expenses that are not normally incurred in providing resi- dent resident care shall be eliminated or limited according to the following rules. a. Federal and state income taxes are considered in computing the fee for services for proprietary institutions. b. Fees paid directors and nonworking officer’s salaries are not allowed as reimbursable costs. c. Bad debts are not an allowable expense. d. Charity allowances and courtesy allowances are not an allowable expense. e. Personal travel and entertainment are not allowable as reimbursable costs. Certain expenses such as rental or depreciation of a vehicle and expenses of travel which include both business and per- xxxxx personal costs shall be prorated. Amounts which appear to be excessive may be limited after consider- ation consideration of the specific circumstances. Records shall be maintained to substantiate the indicated charges. (1) Commuter travel by the owner(s), owner-administrator(s), administrator, nursing director or any other employee is not an allowable cost (from private residence to facility and return to residence). (2) The expense of one car or one van or both designated for use in transporting patients shall be an allowable cost. All expenses shall be documented by a sales slip, invoice or other document setting forth the designated vehicle as well as the charges incurred for the expenses to be allowable. (3) Each facility which supplies transportation services as defined in Iowa Code section 324A.1, subsection 1, shall provide current documentation of compliance with or exemption from public transit coordination requirements as found in Iowa Code chapter 324A and 761—Chapter 910 of the depart- ment department of transportation rules at the time of annual contract renewal. Failure to cooperate in obtaining or in providing the required documentation of compliance or exemption after receipt from the Iowa de- partment department of transportation, public transit division, shall result in disallowance of vehicle costs and oth- er other costs associated with transporting residents. (4) Expenses related to association business meetings, limited to individual members of the asso- ciation association who are members of a national affiliate, and expenses associated with workshops, symposiums, and meetings which provide administrators or department heads with hourly credits required to com- ply comply with continuing education requirements for licensing, are allowable expenses. (5) Travel of an emergency nature required for supplies, repairs of machinery or equipment, or building is an allowable expense. (6) Travel for which a patient must pay is not an allowable expense. (7) Allowable expenses in subparagraphs (2) to (5) above are limited to 6 percent of total adminis- trative administrative expense. f. Entertainment provided by the facility for participation of all residents who are physically and mentally able to participate is an allowable expense except entertainment for which the patient is required to pay is not an allowable expense. g. Loan acquisition fees and standby fees are not considered part of the current expense of patient care, but should be amortized over the life of the related loan. h. A reasonable allowance of compensation for services of owners is an allowable cost, provided the services are actually performed in a necessary function. Adequate time records shall be maintained. Adjustments may be necessary to provide compensation as an expense for nonsalaried working proprietors and partners. Members of religious orders serving under an agreement with their administrative office are allowed salaries paid persons performing comparable services. When maintenance is provided these persons by the facility, consideration shall be given to the value of (1) Compensation means the total benefit received by the owner or immediate relative for services rendered. Compensation includes all remuneration, paid currently or accrued, for managerial, administrative, professional and other services rendered during the period. Compensation shall include all items that should be reflected on IRS Form W-2, Wage and Tax Statement, including, but not limited to, salaries, wages, and fringe benefits; the cost of assets and services received; and deferred compensation. Fringe benefits shall include, but are not limited to, costs of leave, employee insurance, pensions and unemployment plans. If the facility’s fiscal year end does not correlate to the period of the W-2, a reconciliation between the latest issued W-2 and current compensation shall be required to be disclosed to the Iowa Medicaid enterprise provider cost audit and rate setting unit. Employer portions of payroll taxes associated with amounts of compensation that exceed the maximum allowed compensation shall be considered unallowable for reimbursement. All compensation paid to related parties, including payroll taxes, shall be required to be reported to the Iowa Medicaid enterprise provider cost audit and rate setting unit with the submission of the financial and statistical report. If it is determined that there have been undisclosed related-party salaries, the cost report shall be determined to have been submitted incomplete and the facility shall be subject to the penalties set forth in paragraph 54.3(3)“d.” (2) Reasonableness requires that the compensation allowance be such an amount as would ordinarily be paid for comparable services by comparable facilities, and depends upon the facts and circumstances of each case. (3) Necessary requires that the function be such that had the owner not rendered the services, the facility would have had to employ another person to perform the service, and be pertinent to the operation and sound conduct of the facility. (4) The maximum allowed compensation for the administrator is $1,250 per month plus $13 per month per bed licensed capacity for each bed over 60 not to exceed $1,775 per month. (5) The maximum allowed compensation for employees as set forth in subparagraph 54.3(11)“h”(4) shall be adjusted by the percentage of the average work week that the employee devoted to business activity at the residential care facility for the fiscal year of the financial and statistical report. The time devoted to the business shall be disclosed on the financial and statistical report and shall correspond to any amounts reported to the Medicare fiscal intermediary. If an owner’s or immediate relative’s time is allocated to the facility from another entity (e.g., home office), the compensation limit shall be adjusted by the percentage of total costs of the entity allocated to the facility. In no case shall the amount of salary for one employee allocated to multiple facilities be more than the maximum allowed compensation for that employee had the salary been allocated to only one facility. i. Management fees shall be computed on the same basis as the administrator’s salary but shall have the amount paid the resident administrator deducted. When the parent company can separately identify accounting costs, such costs are allowed. j. Depreciation based upon tax cost using only the straight-line method of computation, recognizing the estimated normal life of the asset, may be included as a resident cost. When accelerated methods of computation have been elected for income tax purposes, an adjustment shall be made. For change of ownership, refer to 54.3(12)“b” and “c.” k. Necessary and proper interest on both current and capital indebtedness is an allowable cost. (1) Interest is the cost incurred for the use of borrowed funds. Interest on current indebtedness is the cost incurred for funds borrowed for a relatively short term. Interest on capital indebtedness is the cost incurred for funds borrowed for capital purposes. (2) “Necessary” requires that the interest be incurred on a loan made to satisfy a financial need of the provider, be incurred on a loan made for a purpose reasonably related to resident care.

LIMITATION OF EXPENSES. Certain expenses that are not normally incurred in providing resi- dent resident care shall be eliminated or limited according to the following rules. a. Federal and state income taxes are considered in computing the fee for services for proprietary institutions. b. Fees paid directors and nonworking officer’s salaries are not allowed as reimbursable costs. c. Bad debts are not an allowable expense. d. Charity allowances and courtesy allowances are not an allowable expense. e. Personal travel and entertainment are not allowable as reimbursable costs. Certain expenses such as rental or depreciation of a vehicle and expenses of travel which include both business and per- xxxxx personal costs shall be prorated. Amounts which appear to be excessive may be limited after consider- ation consideration of the specific circumstances. Records shall be maintained to substantiate the indicated charges. (1) Commuter travel by the owner(s), owner-administrator(s), administrator, nursing director or any other employee is not an allowable cost (from private residence to facility and return to residence). (2) The expense of one car or one van or both designated for use in transporting patients shall be an allowable cost. All expenses shall be documented by a sales slip, invoice or other document setting forth the designated vehicle as well as the charges incurred for the expenses to be allowable. (3) Each facility which supplies transportation services as defined in Iowa Code section 324A.1, subsection 1, shall provide current documentation of compliance with or exemption from public transit coordination requirements as found in Iowa Code chapter 324A and 761—Chapter 910 of the depart- ment department of transportation rules at the time of annual contract renewal. Failure to cooperate in obtaining or in providing the required documentation of compliance or exemption after receipt from the Iowa de- partment department of transportation, public transit division, shall result in disallowance of vehicle costs and oth- er other costs associated with transporting residents. (4) Expenses related to association business meetings, limited to individual members of the asso- ciation association who are members of a national affiliate, and expenses associated with workshops, symposiums, and meetings which provide administrators or department heads with hourly credits required to com- ply comply with continuing education requirements for licensing, are allowable expenses. (5) Travel of an emergency nature required for supplies, repairs of machinery or equipment, or building is an allowable expense. (6) Travel for which a patient must pay is not an allowable expense. (7) Allowable expenses in subparagraphs (2) to (5) above are limited to 6 percent of total adminis- trative administrative expense. f. Entertainment provided by the facility for participation of all residents who are physically and mentally able to participate is an allowable expense except entertainment for which the patient is required to pay is not an allowable expense. g. Loan acquisition fees and standby fees are not considered part of the current expense of patient care, but should be amortized over the life of the related loan. h. A reasonable allowance of compensation for services of owners is an allowable cost, provided the services are actually performed in a necessary function. Adequate time records shall be maintained. Adjustments may be necessary to provide compensation as an expense for nonsalaried working proprietors and partners. Members of religious orders serving under an agreement with their administrative office are allowed salaries paid persons performing comparable services. When maintenance is provided these persons by the facility, consideration shall be given to the value of these benefits and this amount shall be deducted from the amount otherwise allowed for a person not receiving maintenance. (1) Compensation means the total benefit received by the owner for the services rendered to the facility. It includes salary amounts paid for managerial, administrative, professional, and other services; amounts paid by the facility for the personal benefit of the proprietor; the cost of assets and services which the proprietor receives from the facility; and deferred compensation. (2) Reasonableness requires that the compensation allowance be such an amount as would ordinarily be paid for comparable services by comparable facilities, and depends upon the facts and circumstances of each case. (3) Necessary requires that the function be such that had the owner not rendered the services, the facility would have had to employ another person to perform the service, and be pertinent to the operation and sound conduct of the facility. (4) The maximum allowed compensation for the administrator is $1,250 per month plus $13 per month per bed licensed capacity for each bed over 60 not to exceed $1,775 per month. i. Management fees shall be computed on the same basis as the administrator’s salary but shall have the amount paid the resident administrator deducted. When the parent company can separately identify accounting costs, such costs are allowed. j. Depreciation based upon tax cost using only the straight-line method of computation, recognizing the estimated normal life of the asset, may be included as a resident cost. When accelerated methods of computation have been elected for income tax purposes, an adjustment shall be made. For change of ownership, refer to 54.3(12)“b” and “c.” k. Necessary and proper interest on both current and capital indebtedness is an allowable cost. (1) Interest is the cost incurred for the use of borrowed funds. Interest on current indebtedness is the cost incurred for funds borrowed for a relatively short term. Interest on capital indebtedness is the cost incurred for funds borrowed for capital purposes. (2) “Necessary” requires that the interest be incurred on a loan made to satisfy a financial need of the provider, be incurred on a loan made for a purpose reasonably related to resident care.