Kan. Admin. Regs. § 30-10-24 - Compensation of owners, related parties, and administrators
(a) Non-working
owners and related parties. Remunerations paid to non-working owners or other
related parties, as defined in K.A.R. 30-10-1a, shall not be considered an
allowable cost regardless of the name assigned to the transfer or accrual or
the type of provider entity making the payment. Each payment shall be
separately identified and reported as owner compensation in the
non-reimbursable and non-resident-related expense section of the cost report.
(b) Services related to resident
care.
(1) If owners with five percent or more
ownership interest or related parties actually perform a necessary function
directly contributing to resident care, a reasonable amount shall be allowed
for such resident care activity. The reasonable amount allowed shall be the
lesser of the following:
(A) The reasonable
cost that would have been incurred to pay a non-owner employee to perform the
resident-related services actually performed by owners or other related
parties, limited by a schedule of salaries and wages based on the state civil
service salary schedule in effect when the cost report is processed until the
subsequent cost report is filed; or
(B) the amount of cash and other assets
actually withdrawn by the owner or related parties.
(2) The resident-related functions shall be
limited to those functions that are normally performed by non-owner employees
common to the industry and for which cost data is available. The job titles for
administrative and supervisory duties performed by an owner or related party
shall be limited to the work activities included in the schedule of the owner
or related party salary limitations.
(3) The salary limit shall be prorated in
accordance with subsection (c) of this regulation. The limitation shall not
exceed the highest salary limit on the civil-service-based chart.
(4) The owner or related party shall be
professionally qualified for those functions performed that require licensure
or certification.
(5) Cash and
other assets actually withdrawn shall include only those amounts or items
actually paid or transferred during the cost reporting period in which the
services were rendered and reported to the internal revenue service.
(6) The owner or related party shall pay any
liabilities established in cash within 75 days after the end of the accounting
period.
(c) Allocation
of owner or related party total work time for resident-related functions. When
any owner or related party performs a resident-related function for less than a
full-time-equivalent work week, defined as 40 hours per week, the compensation
limit shall be prorated. The time spent on each function within a facility or
within all facilities in which the owner or related party has an ownership or
management interest shall be prorated separately by function, but shall not
exceed 100 percent of that person's total work time. Time spent on other
non-related business interests or work activities shall not be included in
calculations of total work time.
(d) Reporting owner or related party
compensation on cost report. The provider shall report owner or related party
compensation on the owner compensation line in the appropriate cost center for
the work activity involved. Any compensation paid to employees who have an
ownership interest of five percent or more, including employees at the central
office of a chain organization, shall be deemed owner compensation. Providers
with any professionally qualified owner or related party employees performing
duties other than those for which they are professionally qualified shall
report the cost for these duties in the operating cost center.
(e) Owner-administrator compensation
limitation.
(1) Reasonable limits shall be
determined by the agency for owner-administrator compensation based upon the
current civil service salary schedule.
(2) This limitation shall apply to the
salaries of each administrator and coadministrator of that facility and to
owner compensation reported in the operating cost center. This limitation shall
apply to the salaries of the administrator and coadministrator, regardless of
whether they have any ownership interest in the business entity.
(3) Each salary in excess of the owner or
related party limitations determined in accordance with subsections (b) and (c)
of this regulation shall be transferred to the owner compensation line in the
operating cost center and shall be subject to the owner-administrator
compensation limitation. The provider shall include all owner-administrator
compensation in excess of the limitation in the administrative costs used to
compute the incentive factor.
(f) Management consultant fees. Fees for
consulting services provided by owners and related parties shall be deemed
owner's compensation subject to the owner-administrator compensation limit. The
provider shall report fees on the owner compensation line in the operating cost
center if the actual cost of the service is not submitted with the adult care
home financial and statistical report:
(1)
Related parties as defined in K.A.R. 30-10-1a;
(2) current owners of the provider agreement
and operators of the facility;
(3)
current owners of the facility in a lessee-lessor relationship;
(4) management consulting firms owned and
operated by former business associates of the current owners in this and other
states;
(5) owners who sell and
enter into management contracts with the new owner to operate the facility; and
(6) accountants, lawyers, and
other professional people who have common ownership interests in other
facilities, in this or other states, with the owners of the facility from which
the consulting fee is received.
(g) Costs not related to resident care. An
allowance shall not be made for costs related to investigation of investment
opportunities, travel, entertainment, goodwill, or administrative or managerial
activities performed by owners or other related parties that are not directly
related to resident care.
(h) This
regulation shall be effective on and after July 1, 2002.
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.