411-070-0359 Allowable Costs (1) ALLOWABLE COSTS. Allowable costs are the necessary costs incurred for the customary and normal operation of a facility, to the extent that they are reasonable and related to resident services. (a) Accounting, Auditing, and Data Processing -- The costs of recording, summarizing, and reporting the results of operations are allowable. (b) Advertising -- Help wanted advertising and the expense related to the alphabetical listing in the yellow pages of a phone directory are allowable. (c) Allowable Workers Compensation Dividends (Refunds) or Billings of the nursing facility are those dated in the fiscal reporting period. (d) Auto and Travel Expense -- Expense of maintenance and operation of a vehicle and travel expense related to resident services are reimbursable. The allowance for mileage reimbursement must not exceed the amount determined reasonable by the Internal Revenue Service for the period reported. Allowable out-of-state travel is restricted to Washington, Idaho, and Northern California, no farther south than San Francisco. One out of state/contiguous area trip per year for two employees shall be allowed, as long as it relates to resident services. (e) Bad Debts -- Bad debts related to Title XIX recipients are allowable. (f) Bank and Finance Charges -- Charges for routine maintenance of accounts are allowable. (g) Communications -- Charges for routine telephone service, including pagers, and cable television fees, are allowable. (h) Compensation of Owners -- Owner's compensation in accordance with OAR 411-070-0330 is allowable. (i) Consultant Fees -- Consultant fees are allowable provided they meet the criteria as outlined in OAR 411-070-0320. (j) COVID-19 -- Costs of COVID-19 related expenses not reimbursed by the State of Oregon or the federal government are allowable. The Emergency Health Care Center (EHCC) revenue is non-allowable. (k) Criminal Records Checks -- Costs of criminal records checks of facility employees if mandated by federal or state law are allowable. (l) Depreciation and Amortization -- Depreciation schedules on buildings and equipment must be maintained. Depreciation expense is not allowable for land. Lease-hold improvements may be amortized. Depreciation and amortization must be calculated on a straight-line basis and prorated over the estimated useful life of the asset. Effective July 1, 2003, these costs must be reported in accordance with OAR 411-070-0365, OAR 411-070-0375, and OAR 411-070-0385. (m) Education and Training -- Registration, tuition, and book expense associated with education and training of personnel is allowed provided it is related to resident services. The costs associated with training and certifying nurse aides are not allowable for inclusion in the annual NFFS. These costs are reimbursed separately by SPD per OAR 411-070-0470. (n) Employee Benefits -- Employee benefits that are made available to all employees, are for the primary use of the employees, are generally considered by the industry as reasonable and important benefits to provide for employees, are not taxable as wages, and are allowable to the extent of employer participation. (o) Food -- Food products and supplements used in food preparation are allowable. (p) Home Office Costs -- Home office costs are allowable in accordance with OAR 411-070-0345. (q) Insurance -- Premiums for insurance on assets or for liability purposes, including vehicles, are allowable to the extent that they are related to resident services. Self-insurance costs are allowable only when expense is actually incurred. (r) Interest -- Interest on debt related to the provision of resident services is an allowable expense, except on or after July 1, 1984, interest expense related to that portion of the acquisition price of a long-term facility that exceeds the depreciable basis (OAR 411-070-0375) will not be reimbursable. (s) Legal Fees -- Legal fees directly related to resident services are allowable. Legal fees related to non-allowable costs are not allowable. Legal fees claimed as related to resident services must be explained and listed on Schedule A. Fees related to legal and administrative actions to resolve a disagreement with the state shall be allowable if the action is resolved in the provider's favor, and the judge or hearings officer does not order the state to pay the provider's legal fees. (t) Licenses, Dues, and Subscriptions -- Fees for facility licenses, dues in professional associations, and costs of subscriptions for newspapers, magazines, and periodicals provided for resident and staff professional use are allowable. (u) Linen and Bedding -- Linen and bedding costs for the facility are allowable. (v) Management Fees -- Management fees are allowable provided they meet the criteria for OAR 411-070-0350. (w) Postage and Freight -- Postage expense is considered an office supply cost. Freight must be posted to the same account as the item purchased. (x) Property Costs -- Costs related to purchase or lease of a facility are to be reported in Accounts 452 through 459 and 461. (y) Purchased Services -- Services that are received under contract arrangements are reimbursable to the extent that they are related to resident services and the sound conduct and operation of the facility. (z) Rent or Lease Payments -- Payments for the lease or rental of land, buildings, and equipment are to be reported. Payments for lease agreements entered into with a related party are limited to the lower of actual costs or the lease payments. (aa) Repairs and Maintenance -- Costs of maintenance and minor repairs are allowable when related to the provision of resident services. (bb) Salaries (Except Owners and Related Parties) -- Salaries and wages of all employees engaged in resident service activities or overall operation and maintenance of the facility, including support activities of home offices and regional offices, are allowable. (cc) Supplies -- Cost of supplies used in resident services or providing services related to resident services are allowable. (dd) Taxes -- Property taxes on assets used in rendering resident services are allowable. Long term facility taxes paid on resident days are allowable, effective July 1, 2003. (ee) Utilities -- Costs for facility heating, lighting, water-sewer, and garbage provisions are allowable. (ff) Utilization Review -- Costs incurred for utilization review are Medicare related and are not allowable for Medicaid reimbursement. (2) EXCEPTIONS. Exceptions to the items listed in section (1) of this rule must be approved in writing to be allowable. Exceptions shall not be granted for the following items: (a) Amortization of non-competitive agreement; (b) Goodwill; (c) Federal and other governmental income taxes; (d) Penalties and fines; (e) Costs of services and items otherwise reimbursable through DMAP, other third party payors (see section (3) of this rule), or the resident's personal funds; (f) The cost related to the functioning of Corporate Boards of Directors; (g) Advertising for purposes of soliciting potential residents, except for listings in the yellow pages (see section (1)(b) of this rule); (h) The cost of salaries and supplies devoted to religious activities; or (i) Gifts and contributions. (3) THIRD PARTY PAYORS. The purpose of this section is to assure that facilities are not paid twice, once through the Medicaid bundled rate and again through a third party payor, for providing a service. This section includes both allowed and non-allowed costs. (a) Facilities must bill third party payors for nursing facility services whenever payment from a third party payor is or may be available. Examples of such payors are Medicare, Veterans Administration, insurance companies, or a private resident when the items are not included in the basic rate. (b) Failure to bill or collect from third party payors whenever appropriate may not cause these expenses to be considered allowable. (c) The cost of services incurred for therapy services performed by non-employee therapists are reimbursable through a third party payor or DMAP and are non-allowable on the NFFS. (d) The cost of supplies and equipment medically necessary in the performance of therapy services that are reimbursable through a third party payor or DMAP, are non-allowable on the NFFS. Statutory/Other Authority: ORS 410.070 & 414.065 Statutes/Other Implemented: ORS 410.070 & 414.065 History: APD 46-2020, amend filed 11/18/2020, effective 12/01/2020 APD 28-2020, temporary amend filed 06/26/2020, effective 07/01/2020 through 12/27/2020 SPD 15-2009, f. 11-30-09, cert. ef. 12-1-09 SPD 2-2008, f. 2-29-08, cert. ef. 3-1-08 SPD 15-2007(Temp), f. & cert. ef. 9-10-07 thru 3-8-08 SPD 9-2006, f. 1-26-06, cert. ef. 2-1-06 SPD 36-2004, f. 12-23-04, cert. ef. 12-28-04 Reverted to SSD 1-1997, f. 6-30-97, cert. ef. 7-1-97 SPD 11-2004(Temp), f. & cert. ef. 5-28-04 thru 11-24-04 SSD 1-1997, f. 6-30-97, cert. ef. 7-1-97 SSD 8-1994, f. & cert. ef. 12-1-94 SSD 6-1993, f. 6-30-93, cert. ef. 7-1-93 SSD 13-1992, f. 12-31-92, cert. ef. 1-1-93 SSD 4-1992, f. & cert. ef. 6-24-92 SSD 18-1991, f. 9-27-91, cert. ef. 10-1-91 SSD 14-1991(Temp), f. 6-28-91, cert. ef. 7-1-91 SSD 8-1991, f. & cert. ef. 4-1-91 SSD 10-1989, f. 6-30-89, cert. ef. 7-1-89 SSD 11-1986, f. 8-29-86, ef. 9-1-86 SSD 10-1986, f. & ef. 7-1-86 SSD 5-1985, f. & ef. 5-1-85