Code of Massachusetts Regulations › 101 CMR - EXECUTIVE OFFICE FOR HEALTH AND HUMAN SERVICES › Title 101 CMR 204.00 - Rates of Payment to Resident Care Facilities › Section 204.04 - Variable Cost Allowance

Current through Register 1525, July 5, 2024
(1)
Scope
. EOHHS will include in each provider's rate a
			 variable cost allowance to compensate for variable costs.
(2)
Base Year Variable Cost
Per Diem
. EOHHS will calculate the base year
			 variable cost
per diem
for each provider by dividing the total
			 allowable base year variable costs by the greater of base year resident days or
			 90% of the mean licensed bed capacity in the base year times the days in the
			 base year. For providers that are organized as sole proprietors, EOHHS will
			 include an imputed amount of $104,205 for the personal services of an
			 owner.
(3)
Cost
			 Adjustment Factor
. EOHHS will apply a cost adjustment factor of
			 13.18% to 2021 base year costs. If there has been a change of ownership in the
			 base year, and the rates are based on the new owner's reported base year costs,
			 EOHHS will modify the cost adjustment factor to reflect the number of months
			 from the midpoint of the new owner's reporting period to the midpoint of the
			 prospective rate period.
(4)
Variable Cost Allowance
. The variable cost allowance
			 equals the lower of base year variable cost
per diem
or
			 $154.85, which is further adjusted by the cost adjustment factor.
(5)
Special
			 Provisions
.
(a)
Accrued Expenses
. EOHHS will not allow accrued
			 expenses that remain unpaid for more than 120 days after the close of the
			 reporting year, excluding vacation and sick time accruals. If the provider
			 submits evidence of satisfactory payment to the Center, EOHHS may reverse the
			 adjustment and include that cost, if otherwise allowable, in the applicable
			 rates.
(b)
Accounting
			 and Auditing Expenses
. Reasonable and necessary accounting and
			 auditing expenses in matters directly related to providing adequate care to
			 publicly aided residents are included, provided that the books and records of
			 the provider are maintained in accordance with generally accepted accounting
			 principles.
(c)
Staff
			 Training Expenses
. The net cost, which is the cost of required
			 staff training activities less any reimbursement from grants, tuition, specific
			 donations, employee contributions, or other sources is included, only if the
			 training is
1. conducted within the
			 Commonwealth of Massachusetts;
2.
			 directly related to improving resident care to publicly aided residents;
			 and
3. conducted by a recognized
			 school, other authorized organization, or a qualified professional as required
			 in 105 CMR 150.000:
Standards for Long-term Care
			 Facilities
.
(d)
Advertising Expenses
. The reasonable and necessary
			 expense of newspaper or other public media advertisements for the purpose of
			 hiring necessary employees.
(e)
Generally Available Employee Benefits
. The extent of
			 the facility's contribution to the cost of generally available fringe benefits
			 are included so long as they are nondiscriminatory.
(f)
Membership Dues
.
			 Reasonable and necessary membership dues are included if the organization's
			 function and purpose are directly related to the development and operation of
			 the facility and providing adequate resident care.
(g)
Services of Volunteer
			 Workers
. Services performed under an agreement between the
			 organization and the provider for the performance of the services without
			 direct payment. The value of services normally provided on a voluntary basis,
			 such as distribution of magazines and newspapers to residents, does not
			 constitute a reasonable variable cost. The net value of services for unpaid
			 persons in positions customarily held by paid employees, performing such
			 services on a regular basis as unpaid members of religious or other
			 organizations, is allowable as a variable cost if
1. the amount allowed does not exceed that
			 which would be paid others for similar work;
2. the amount paid by the provider to the
			 organization is identifiable in the records of the provider as a legal
			 obligation; and
3. the services are
			 performed on a regular, scheduled basis and are necessary for the provision of
			 adequate resident care to publicly aided residents and for the efficient
			 operation of the provider.
(h)
Non-legend
			 Drugs
. The reasonable and necessary costs of providing the
			 non-legend drugs, including non-legend drugs ordered by a doctor. Non-legend
			 drugs must not be billed directly to any governmental unit or charged against
			 the personal care funds of any resident.
(i)
Pension Plans
.
			 Reasonable and necessary expenses incurred by a provider relating to a pension
			 plan are included as a generally available employee benefit. Reimbursable
			 pension plans must provide for either a fixed determinable amount to be
			 contributed by the employer on a regular basis or for a fixed determinable
			 benefit to be received by the employee at retirement. Reimbursement of pension
			 costs is subject to the following specific provisions.
1.
Required by State
			 Statute
. Providers required by enabling statute to make payments
			 to municipal or county pension funds will be reimbursed for the compensation
			 paid by the plan, provided that the provider submits detail of the allocations
			 provided to the Public Employees Retirement Administration Commission, and for
			 funded pension plans, a schedule of the individuals associated with the
			 resident care facility, to the Center.
2.
Not Required by State
			 Statute
. Providers not required by state statute to make payments
			 to a municipal pension fund will be reimbursed for expenses incurred to the
			 extent that
a. the claimed expenses represent
			 an amount based on fair, reasonable, and necessary compensation for services
			 performed by employees;
b. the
			 claimed expenses are costs incurred on current year payroll and do not include
			 payments for prior year payroll;
c.
			 the plan does not provide for contributions by the employer based on the
			 contingency of profit or is at the discretion of the employer;
d. the pension plan must have met the current
			 requirements of and, if applicable, received the approval of the Internal
			 Revenue Service. All applicable Internal Revenue Service forms documenting
			 Internal Revenue Service approval must be filed with the Center along with
			 copies of the plan;
e. the
			 employer's contribution to a pension plan will be included, along with other
			 increments in the calculation of limits to the reimbursement of individual
			 employee compensation as referred to in
			 101 CMR 204.00;
			 and
f. any forfeiture by an
			 employee must be applied against the cost to reduce the premiums paid by the
			 employer. A forfeiture is considered to have occurred when any employee who
			 participated in the pension plan terminates employment prior to becoming
			 vested. This reduction in the claim for reimbursement must be made
			 notwithstanding the terms or lack of terms in the pension
			 plan.