(1)
General
1. Enter the NF-1 Provider number as issued
by the Tennessee Department of Health and the NF-2 Provider number as issued by
Medicare. Providers with numbers other than NF-1 and NF-2 may include them on
the Level II line.
2. Enter name of
facility exactly as shown on the license (permit) to operate issued by the
Tennessee Department of Health.
3.
Cash basis accounting is not acceptable for purposes of this report. All
amounts must be reported in whole dollars.
4. Adequate financial records, statistical
data, and source documents must be maintained for proper determination of costs
under the program.
B.
Statistical
Data
5. All
statistics to be reported in this section will be for the same period as the
accounting period covered by this report.
6. Possible bed days
should be the sum of the count of the number of licensed beds for each day of
the accounting period.
7. An
inpatient day is that period of service rendered a
patient between the census taking hours on two successive days, the day of
discharge being counted only when the patient was admitted that same day. All
days charged for must be included in the patient day statistics including leave
days, reserved bed days, etc. A census will be recorded each day during the
accounting period. All such records must be available for verification by the
Comptroller's Office. All inpatient days must be identified by the categories
indicated.
8. Report all meals
provided to patients, employees, guests, and owners. The cost of meals provided
to owners must be included in compensation stated in Section E. Adequate meal
records must be maintained.
E.
Ownership of Facility; Compensation of Owners, Administrators, and
Relatives of Owners and Administrators; Related Party Transactions, Including
Home Office Costs; Charge Rates; and Patient
Transportation
9. Controlling interest is defined as a
person or entity that:
(a) has an ownership
interest totaling five percent (5%) or more in a disclosing entity,
(b) has an indirect ownership interest equal
to five percent (5%) or more in a disclosing entity,
(c) has a combination of direct and indirect
ownership interest obligation secured by the disclosing entity if that interest
equals at least five percent (5%) of the value of the property or assets of the
disclosing entity,
(d) is an
officer or director of a disclosing entity that is organized as a corporation,
or
(e) is a partner in a disclosing
entity that is organized as a partnership.
Indirect ownership interest is defined as any ownership
interest in an entity that has an ownership interest in the disclosing entity.
This includes an ownership interest in any entity that has an indirect
ownership interest in the disclosing entity.
The amount of indirect ownership interest is determined by
multiplying the percentages of ownership in each entity. EXAMPLE: A owns ten
percent (10%) of the stock of Corporation B which owns eighty percent (80%) of
the stock of the disclosing entity. A's interest is an eight percent (8%)
indirect ownership interest in the disclosing entity and must be
disclosed.
The amount of ownership, mortgage, deed of trust, note, or
other obligation is determined by multiplying the percentage owned in the
obligation by the percentage of the disclosing entity's assets used to secure
the obligation. EXAMPLE: A owns ten percent (10%) of a note secured by sixty
percent (60%) of the provider's assets. A's interest in the provider's assets
is six percent (6%) and must be disclosed.
10. Disclosing entities are defined as
hospitals, skilled nursing facilities, clinical laboratories, renal disease
facilities, health maintenance organizations, and rural health clinics (as
established by P. L. 95210) under Title XVIII (Medicare), entities (other than
practitioners or groups of practitioners) that furnish or arrange for the
furnishing of services under the Title XIX or Title V (Children's Special
Service) programs; fiscal intermediaries, fiscal agents, and carriers
participating in Medicare or Medicaid; and providers of health related services
under the Title XX program.
11.
Information relating to ownership shall be maintained at the facility and
available for audit and upon request at any time.
12. The amounts of business transacted with
entities that are not related entities need not be disclosed in the cost
report. However, in the event of a request, the disclosure of the amounts and
the ownership of the business entity with whom the provider transacted business
of more than $25,000 or five percent or more of the total operating expenses of
the provider, whichever is less, may be required within 30 days of the
request.
13. For reimbursement
purposes, a reasonable allowance or compensation for services of an owner or
persons related to an owner is an allowable cost, provided the services are
performed in a necessary function. The requirement that the function be
necessary means that had the owner not rendered the services, the institution
would have had to employ another person to perform them. The services must be
related to patient care and pertinent to the operation and sound management of
the institution.
Total compensation to such persons must be listed in Section
E, Items 1 and 2. Where such amounts include items other than salaries, a
schedule must be attached that identifies the amounts and the method of
assigning values to these benefits. All such costs included in Section F must
be reported in Section E.
The Comptroller's Office will review these amounts and
compare them with allowable compensation ranges and make necessary adjustments.
The Comptroller will consider the duties, responsibilities, and managerial
authority of the person as well as the services performed for other
institutions and his engagements in other occupations. Only one fulltime
position, or its equivalent will be allowed for each person. The duties
performed, time spent, and compensation received by such a person must be
substantiated by appropriate records. Allowable ranges can be found in Chapter
1200-13-6-.11.
14. Complete
Section E, Item 2 only for individuals who are not owners of the facility. If
the individual is related to any owner by blood or marriage, this relationship
must be indicated in Column 3. See PRM, Part 1, Section 902.5.
15. All loan transactions with related
parties as defined in footnotes 9 and 10 shall be fully disclosed in Section E
and the corresponding interest expense shall be disallowed in Section
G.
16. The hospital parent or a
hospital-based nursing home shall not be considered as a home office if the
hospital is a regular provider in the Medicaid hospital program and files the
appropriate Medicare-Medicaid hospital cost report in a timely manner. Costs
allocated to the nursing home on the hospital's Medicare-Medicaid cost report
are includable in Section F of this cost report. These amounts do not have to
be audited by the Certified Public Accountant or licensed Public Accountant if
significant portions of the corresponding expenses before allocation are
apportioned to the hospital and prior approval is received from the
Comptroller's Office. The report by the Certified Public Accountant must
disclose the amounts allocated to the hospital and nursing facility, the bases
used, and the corresponding figures which were not included in the
audit.
17. Home Office costs
directly related to those services performed for individual providers which
relate to patient care, plus an appropriate share of indirect costs (overhead,
rent, administrative salaries, etc.) may be allowable to the extent they are
reasonable. Home Office costs or related organization costs that are not
otherwise allowable costs when incurred directly by the provider cannot be
allowable costs when allocated to providers. Nursing facility cost reports will
not be processed until the home office costs are submitted.
F.
Operating
Expenses
18. Itemized schedules must be attached to
support advertising, public relations, "other," and "purchased services"
accounts. Amounts not supported will be disallowed.
Enter in the appropriate classification the number of
personnel employed full-time as of the end of the fiscal period covered by this
statement. Report the fulltime equivalent (FTE) of all personnel working in the
particular classification. For example, if five people are employed full-time
as LPNs, one person is employed as an LPN one day per week (eight hours per
day), and another person works as an LPN two days per week (eight hours per
day), the total LPNs to be reported should be 5.6 full-time equivalent
employees. The number of personnel in each particular classification under
Section F, Column (4), "FTEs", must coincide with the salaries reported in each
particular classification of Section F, Column (2), "Amount of Expense".
Payroll records are to be available for verification by the Comptroller's
Office.
19. All facilities
should properly identify and include in Section F. "Operating Expense," the
cost of providing to all patients the medical supplies, equipment, and services
specified by the Department of Health as covered services. These are items and
services (per the Department of Health contract with all facilities) for which
the facility may not receive extra payments from Medicaid patients, their
relatives or others.
20. Include
the cost of covered supplies only. Do not include drugs or pharmacy items that
are not covered by the NF-1 program. Drugs and pharmacy should be included in
item F.9.
21. Psychiatric and
Psychological Services can be provided only to ICF/MR patients in an ICF/MR
licensed facility.
22. The purpose
of Section G, "Adjustments for Calculating Allowable Routine Operating Expense"
is to determine the cost of room and board, nursing care, medical and nursing
supplies, and other services as specified and defined by the Department of
Health as NF-1 covered services. Consequently, the cost of any items or
services not a part of the cost of providing NF-1 covered services included in
Section F, "Operating Expense" are to be deducted from operating expenses in
Section G. Accounting and other records of participating facilities are subject
to audit and verification by the Comptroller's Office for proper determination
of cost of covered services. In addition to the items specifically identified
in Section G, the following are also expenses not considered a part of the cost
of providing routine service, and should be deducted. This list is not to be
considered all inclusive. Generally, where an item is not specifically
addressed, Medicare reimbursement principles apply.
a. Interest paid:
(1) On borrowed funds used for a
non-allowable expenditure.
(2) On
borrowed funds which create excess working capital.
(3) On borrowed funds used for investing in
other than provider's health care operations.
(4) To partners (owners), stockholders, or
related organizations or relatives.
(5) On borrowed funds used to fund
depreciation.
b. Any
imputed value of produce, supplies or space donated to the provider.
c. Purchase discounts, cash discounts, trade
discounts, quantity discounts or allowances.
d. Purchase refunds or rebates.
e. Costs which are not necessary or related
to patient care.
f. Costs of
non-competing covenant agreements.
g. Insurance premiums paid on the lives of
owners, officers, and key personnel, if the provider is the direct or indirect
beneficiary. If another party is beneficiary, the premiums are to be considered
as compensation to the respective owner, officer, or key employee and should be
disclosed separately.
h. Cost of
personal comfort items and other non-covered items, as may be specified and
defined by the Department of Health.
i. Cost of luxury items such as TV,
telephone, and radio in patient rooms. (This does not include those items
placed in lounges or recreation rooms to be used by all patients).
j. Any fines, penalties, or interest paid on
any tax payments or interest charges on overdue payables.
k. Federal, State, or local income taxes, or
excess profit taxes.
l. Any taxes
for which exemptions are available but not taken.
m. Sales taxes collected by the provider and
remitted to the state.
n. Real
estate taxes and other expenses on property purchased and held for investment
or expansion, and not used in rendering patient service.
o. Self employment taxes applicable to
owners, partners, members of joint ventures, etc.
p. Casualty and other losses such as
liability, theft, larceny, embezzlement, that are insurable but uninsured.
(When insured, the insurance premiums and cost of deductibles for these losses
are allowable). Medicare principles must apply.
q. Advertising costs incurred:
(1) To raise funds for the
provider.
(2) Which are designed to
encourage physicians to utilize the provider's facilities in their capacity as
an independent practitioner.
(3) In
connection with the issuance of the provider's own stock or sale of stock held
by the provider in another corporation.
(4) Which seek to increase patient population
or utilization of the provider's facilities by the general public.
r. Membership dues, initiation
fees, subscription costs or special assessments paid to Social, Fraternal, or
other organizations whose activities are unrelated to the profession or
business of their members.
s. Cost
of private duty nurses and attendants.
t. Travel expenses which are personal in
nature, not proper or related to patient care, and auto expenses applicable to
non-business uses of the vehicles. Detailed justification for out of state
travel must be retained for audit verification.
u. Any other costs which are identified and
specified as non-allowable by the Medicaid Program manuals, or federal or state
rules or regulations.
23. The cost of excludable expenses should be
deducted. In the relatively few instances where such costs cannot be adequately
determined, deduct the revenue received therefrom. If the amount shown is
revenue enter "R" as the base.
24.
Cost of facilities furnished to owners, administrators, and other non-patients
must be determined on a reasonable basis. Where the nursing home has no plan
for determining reasonable charges for these facilities, the patient charge
schedule may be used by the Comptroller of the Treasury in arriving at the
amount of exclusion.
25. In Section
G. Item 2bb any costs or expenses included in Section F, "Operating Expense,"
for the items or services for which Medicaid NF-1 patients may be charged extra
by the facility in addition to the established reimbursable cost rate of the
facility are to be deducted from operating expense.
26. Facilities with no ancillary or extra
charge areas should omit Sections H and I.
H.
Allocation of Cost to Routine, Ancillary and Extra Charge
Areas
(Facilities with no ancillary or extra charge areas can omit
this section).
27. The statistical bases below shall be used
to apportion indirect costs to ancillary and extra charge areas unless prior
approval is obtained in writing from the Comptroller of the Treasury.
| Cost Item |
Basis |
| 1. Administration and General |
Direct Costs (Section F) |
| 2. Employee Benefits |
Salaries |
| 3. Dietary |
Meals
Served |
| 4. Housekeeping |
Square Feet or Actual Time Spent |
| 5. Laundry |
Pounds |
| 6. Plant Operation and
Maintenance |
Square Feet |
| 7. Medical and Nursing |
Actual Cost |
| 8. Recreational Activities |
Time Spent |
| 9. Social Services |
Time Spent |
| 10. Property Expenses |
Square Feet |
| 11. Building Depreciation |
Square Feet |
| 12. Equipment and Other
Depreciation |
Dollar Value |
| 13. Any other cost which should
be |
Any reasonable basis |
| allocated to Ancillary or |
approved by the State |
| Extra-Charge areas |
Comptroller's Office |
The first line under each cost item to be allocated should
show the allocation statistics used to apportion the total cost. The second
line should show the costs after allocation. The allocation formula is:
Area Statistic X Total Cost = Area
Cost Total Statistic
J.
Patient Log Summary of Charges
28. Routine charges must be based on the
facility's established daily charge rate before contractual allowances.
Ancillary charges (Section J) do not apply to Medicaid NF1
recipients.
29. If a facility is
rendering only one level of care, the percentages of costs of the NF-1 program
will be determined as a percentage of Medicaid NF-1 patient days to total
patient days (Section K, Item a). If a facility is rendering more than one
level of care, the percentage of costs to the NF-1 program will be determined
as a percentage of Medicaid NF-1 covered charges to total covered charges
(Section K, Item b).
L.
Depreciation and Amortization Schedule
30. The Depreciation and
Amortization Schedule (Section L) must be completed. Fixed Asset cost must
agree with the Fixed Asset cost by classification shown in Section C. Do not
include land, as land is not considered a depreciable asset. The sum of the
current period total amortization expense reported in Section L and the current
year unamortized expense reported in Section C.1.c. (Items (5) and (6)) should
equal the unamortized expense reported in Section C.1.c. (Items (5) and (6)) of
the prior period cost report.
N. Statement of
Equity Capital
31.
Equity Capital means the net worth of a provider, excluding those assets not
related to patient care. Specifically, Equity Capital, includes:
(a) a provider's investment in plant,
property, and equipment (net of depreciation and associated long-term debt)
related to patient care plus funds deposited by a provider who leases plant,
property, and equipment related to patient care and is required by terms of the
lease to deposit such funds (net of noncurrent debt related to such investment
or deposited funds) and
(b) net
working capital maintained for necessary and proper operation of patient care
activities.
Providers of chain organizations may assign an appropriate
share of the equity capital of the home office to each facility. This
assignment must be shown in the home office cost report. Debt representing
loans from partners, stockholders, or related organizations and for which the
interest is not an allowable cost shall be considered as equity capital and
shall not be subtracted in the determination of (a) or (b) above.
Investments, excess fixed assets, excess inventory, goodwill,
loans to officers, owners, related organizations, or employees, uncollectible
accounts and notes receivable, cash in excess of reasonable needs, and other
assets, current or noncurrent, that are not reasonably related to patient care
must be excluded from equity capital. Further, any capital expenditure that has
not been approved by the Tennessee Health Facilities Commission or its
successor agency in accordance with state law must be excluded from equity
capital.
If the current year's beginning equity capital does not agree
with the prior year's ending equity capital shown on the prior year's cost
report, Section N, Statement of Equity Capital, a reconciliation must be
attached.
All entries on line 1c, 1d, or 1e must be dated. Any changes
in equity capital reported on lines 1c, 1d, and 1e must be supported by a
schedule showing the date and amount of each change that has occurred during
the period. EXAMPLE - If the beginning balance of a loan to an owner is $10,000
and the ending balance is $12,000 and the net change of $2,000 occurred at
different dates in different amounts (e.g., on February 15, the owner repaid
$1,000; on April 20, the owner repaid $1,000; on June 10, the owner borrowed
$3,000; on September 5, the owner repaid $2,000; and on October 20, the owner
borrowed $3,000) each increase and/or decrease during the period must be dated
with the appropriate amounts reported separately. A return on equity amount
cannot be calculated unless the changes are dated and the amounts are reported
accurately.
32.
Reserved
