Ala. Admin. Code r. 560-X-56-.03 - Definitions

(1) Accrual Method of Accounting - Revenues must be allocated to the accounting period in which they are earned and expenses must be charged to the period in which they are incurred. This must be done regardless of when cash is received or disbursed.

(2) Chapter - This Chapter (Chapter Fifty-Six) of the Alabama Medicaid Agency Administrative Code.

(3) Costs Not Related to Patient Care - Costs not related to patient care are costs which are not appropriate or necessary and proper in developing and maintaining the operation of patient care facilities and activities. Such costs are not allowable in computing reimbursable costs.

(4) Costs Related to Patient Care - These include all necessary and proper costs which are appropriate and helpful in developing and maintaining the operation of patient care facilities and activities.

(5) Covered Costs - Allowable direct and indirect costs that are reasonable and necessary in rendering covered health care services. To be recognized, costs (as indicated in the State Plan) must be identified in auditable accounting records and allocated on a reasonable basis between the delivery of covered type services and all other center activities.

(6) Depreciation - That amount which represents a portion of the depreciable asset's cost or other basis which is allocable to a period of operation.

(7) Encounters - Encounters are face-to-face contacts between a patient and a health professional for the provision of medically necessary services.

(a) Ancillary Encounter - Face-to-face contact between a patient and a health professional for lab or x-ray services only.

(b) Dental Encounter - Face-to-face contact between a patient and a health professional for the provision of dental services.

(c) Medical Encounter - Face-to-face contact between a patient and a health professional for the provision of medical services (i.e., physician, physician assistant, nurse practitioner).

(d) EPSDT, Family Planning, or Prenatal Encounter -Face-to-face contact to receive services within the parameters of the program guidelines.

(8) Fair Market Value - The bona fide price at which an asset would change hands or at which services would be purchased between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having a reasonable knowledge of the relevant facts.

(9) Federally Qualified Health Center - Facilities or programs which meet one of the following requirements:

(a) receives a grant under Section 329, 330, or 340 of the Public Health Act;

(b) meets the requirements for receiving such a grant as determined by the Secretary based on recommendations of the Health Resources and Services Administration within the Public Health Service; or

(c) qualifies through waivers of the requirements described above as determined by the Secretary for good cause.

(d) outpatient health programs or facilities operated by a tribe or tribal organization under the Indian Self-Determination Act ( Public Law 93-638).

(10) Fiscal Year - The 12 month period upon which providers are required to report their costs, also called the reporting period.

(11) Fringe benefits - Fringe benefits are amounts paid to, or on behalf of, an employee, in addition to direct salary or wages, and from which the employee or his beneficiary derives a personal benefit before or after the employee's retirement or death.

(12) Full Time Equivalents (FTE) - The result of a calculation which determines the average number of employees per position working the customary work week full time.

(13) CMS - The Centers for Medicare & Medicaid Services, an agency of the U. S. Department of Health and Human Services.

(14) HIM-15 - The title of the Medicare Provider Reimbursement Manual, a publication of CMS.

(15) Home Office Costs - See Rule 560-X-56-.12 for the in-depth discussion and treatment of home office costs.

(16) Interest - Cost incurred for the use of borrowed funds.

(a) Necessary Interest - Incurred to satisfy a financial need of the provider on a loan made for a purpose directly related to patient care. Necessary interest cannot include loans resulting in excess funds or investments.

(b) Proper Interest - Must be necessary as described above, incurred at a rate not in excess of what a prudent borrower would have to pay in the money market at the time the loan was made, and incurred in connection with a loan directly related to patient care or safety.

(17) Interim Encounter Rate - A rate intended to approximate the provider's actual or allowable costs of services furnished until such time as actual allowable costs are determined.

(18) Medicaid - The Alabama Medicaid Agency.

(19) Medicaid Reimbursement Principles - A combination of generally accepted accounting principles, principles included in the State Plan, Medicare (Title XVIII) Principles of Reimbursement, and procedures and principles published by Medicaid to provide reimbursement of provider costs which must be incurred by efficiently and economically operated FQHCs.

(20) Medicare Economic Index (MEI) - A measure of inflation faced by physicians with respect to their practice costs and general wage levels. The MEI is used to inflate the FQHC's prospective payment system (PPS) rate from the previous year.

(21) Necessary Function - A function being performed by an employee which, if that employee were not performing it, another would have to be employed to do so, and which is directly related to providing FQHC services.

(22) Pension Plans - A pension plan is a type of deferred compensation plan which is established and maintained by the employee primarily to provide systematically for the payment of definitely determinable benefits to its employees usually over a period of years, or for life, after retirement.

(23) Proprietary Provider - Provider, whether a sole proprietorship, partnership, or corporation, organized and operated with the expectation of earning profit for the owners as distinguished from providers organized and operated on a nonprofit basis.

(24) Provider - A person, organization, or facility who or which furnishes services to patients eligible for Medicaid benefits.

(25) Prudent Buyer Concept - The principle of purchasing supplies and services at a cost which is as low as possible without sacrificing quality of goods or services received.

(26) Reasonable Compensation - Compensation of officers and/or employees performing a necessary function in a facility in an amount which would ordinarily be paid for comparable services by a comparable facility.

(27) Reasonable Costs - Necessary and ordinary cost related to patient care which a prudent and cost-conscious businessman would pay for a given item or service.

(28) Related - The issue of whether the provider and another party are "related" will be determined under the HIM-15 rules as to classification as "related" parties. (See HIM-15.)

(29) Secretary - "Secretary" means the Secretary of Health and Human Services or his delegate.

(30) Sick Leave - A benefit granted by an employer to an employee to be absent from their job for a stipulated period of time without loss of pay.

(31) State Plan - The State Plan published by the State of Alabama under Title XIX of the Social Security Act Medical Assistance Program.

(32) Unallowable Costs - All costs incurred by a provider which are not allowable under the Medicaid Reimbursement Principles.

(33) Vacation Costs - A vacation benefit is a right granted by an employer to an employee (a) to be absent from his job for a stipulated period of time without loss of pay or (b) to be paid an additional salary in lieu of taking the vacation.

Notes

Ala. Admin. Code r. 560-X-56-.03

Rule effective April 15, 1993. Amended: Filed November 12, 2008; effective December 17, 2008.

Author: Sandra Johnson, Associate Director, Provider Audit, Q/A Reimbursement

Statutory Authority: State Plan; Title XIX, Social Security Act, 42 C.F.R. § 405.2401 - .2429.