Washington Administrative Code › Title 388 - Social and Health Services, Department of › AGING AND ADULT SERVICES › Chapter 388-96 - Wage equity funding › Section 388-96-585 - Unallowable costs

Current through Register Vol. 24-14, July 15, 2024
(1)  Unallowable
				costs listed in subsection (2) of this section represent a partial summary of
				such costs, in addition to those unallowable under chapter 74.46 RCW and this
				chapter.
(2)  Unallowable costs
				include but are not limited to the following:
(a)
				 Costs of items or services not covered by the medical care
				program. Costs of such items or services are unallowable even if they are
				indirectly reimbursed by the department as the result of an authorized
				reduction in patient contribution.
(b)
				 Costs of services and items provided to recipients covered by the
				medical care program but not included in the medicaid per-resident day payment
				rate established under this chapter and chapter 74.46 RCW.
(c)  Costs associated with a capital
				expenditure if the department found it was not consistent with applicable
				standards, criteria, or plans. If the department was not given timely notice of
				a proposed capital expenditure, all associated costs will be unallowable up to
				the date they are determined to be reimbursable under applicable federal
				regulations.
(d)  Costs associated
				with a construction or acquisition project requiring certificate of need
				approval or exemption from the requirements for certificate of need for the
				replacement of existing nursing home beds, pursuant to chapter 70.38 RCW if
				such approval or exemption was not obtained.
(e)
				 Interest costs other than those provided by WAC
				388-96-556(4) on
				and after January 1, 1985.
(f) 
				Salaries or other compensation of owners, officers, directors, stockholders,
				partners, principals, participants, and others associated with the contractor
				or its home office, including all board of directors' fees for any purpose,
				except reasonable compensation paid for service related to patient
				care.
(g)  Costs in excess of
				limits or in violation of principles set forth in this chapter.
(h)  Costs resulting from transactions or the
				application of accounting methods that circumvent the principles of the payment
				system set forth in this chapter and chapter 74.46 RCW.
(i)  Costs applicable to services,
				facilities, and supplies furnished by a related organization in excess of the
				lower of the cost to the related organization or the price of comparable
				services, facilities, or supplies purchased elsewhere.
(j)  Bad debts of Title XIX recipients are
				unallowable unless all the following applies:
(i)
				 The debt is related to covered services.
(ii)  The debt arises from the recipient's
				required contribution toward the cost of care.
(iii)  The provider can establish reasonable
				collection efforts were made. Reasonable collection efforts consist of at least
				three documented attempts by the contractor to obtain payment demonstrating
				that the effort devoted to collecting the bad debts of Title XIX recipients is
				the same devoted by the contractor to collect the bad debts of non-Title XIX
				recipients.
(iv)  The debt was
				actually uncollectible when claimed as worthless.
(v)  Sound business judgment established
				there was no likelihood of recovery at any time in the future.
(k)  Charity and courtesy
				allowances.
(l)  Cash, assessments,
				or other contributions to charitable organizations, professional organizations,
				trade associations, or political parties, and costs incurred to improve
				community or public relations.
(m) 
				Vending machine expenses. This does not include membership dues.
(n)  Expenses for barber or beautician
				services not included in routine care.
(o)
				 Funeral and burial expenses.
(p)
				 Costs of gift shop operations and inventory.
(q)  Personal items such as cosmetics,
				smoking materials, newspapers and magazines, and clothing, except those used in
				patient activity programs.
(r) 
				Fund-raising expenses, except those directly related to the patient activity
				program.
(s)  Penalties and
				fines.
(t)  Expenses related to
				telephones, radios, and similar appliances in patients' private
				accommodations.
(u)  Federal,
				state, and other income taxes.
(v) 
				Costs of special care services except where authorized by the
				department;
(w)  Expenses of an
				employee benefit not in fact made available to all employees on an equal or
				fair basis. For example, key-man insurance and other insurance or retirement
				plans.
(x)  Expenses of
				profit-sharing plans.
(y)  Expenses
				related to the purchase or use of private or commercial airplanes that are in
				excess of what a prudent contractor would expend for the ordinary and economic
				provision of such a transportation need related to patient care.
(z)  Personal expenses and allowances of any
				nursing home employees or owners or relatives of any nursing home employees or
				owners.
(aa)  All expenses of
				maintaining professional licenses or membership in professional
				organizations.
(bb)  Costs related
				to agreements not to compete.
(cc) 
				Amortization of goodwill, lease acquisition, or any other intangible asset,
				whether related to resident care or not and whether recognized under generally
				accepted accounting principles or not.
(dd)
				 Legal and consultant fees in connection with a fair hearing
				against the department when the department's board of appeals upholds the
				department's actions in an administrative review decision. When the
				administrative review decision is pending, reported legal and consultant fees
				are unallowable. To be allowable, the contractor must report legal and
				consultant fees related to an administrative review decision issued in the
				contractor's favor in the cost report period in which the board of appeals
				issues its decision irrespective of when the legal and consultant fees related
				to the administrative review were incurred.
(ee)
				 Legal and consultant fees of a contractor or contractors in
				connection with a lawsuit against the department. Judicial review is a lawsuit
				against the department.
(ff)  Lease
				acquisition costs, goodwill, the cost of bed rights, or any other intangible
				assets.
(gg)  All rental or lease
				costs other than those provided for in WAC
				388-96-580.
(hh)  Post-survey charges incurred by the
				facility under RCW 18.51.-060.
(ii)
				 Compensation paid for any purchased nursing care services,
				including registered nurse, licensed practical nurse, and nurse assistant
				services, obtained through a service contract arrangement in excess of the
				amount of compensation paid for such hours of nursing care service had the
				purchased nursing care staff been paid at the average hourly wage for in-house
				nursing care staff of like classification at the same nursing facility,
				including related taxes and benefits, as reported in the most recent cost
				report period.
(jj)  Costs reported
				by the contractor for a prior period to the extent such costs, due to statutory
				exemption, will not be incurred by the contractor in the period to be covered
				by the rate.
(kk)  Costs of outside
				activities, for example, costs allocated to the use of a vehicle for personal
				purposes or related to the part of a facility leased out for office
				space.
(ll)  Travel expenses that
				are not necessary, ordinary, and related to resident care.
(mm)  Moving expenses of employees in the
				absence a of demonstrated, good-faith effort to recruit within the states of
				Idaho, Oregon, and Washington, and the province of British Columbia.
(nn)  Costs for temporary health care
				personnel from a nursing pool not registered with the secretary of the
				department of health.
(oo)  Payroll
				taxes associated with compensation in excess of allowable compensation of
				owners, relatives, and administrative personnel.
(pp)  Costs and fees associated with filing a
				petition for bankruptcy.
(qq)  All
				advertising or promotional costs, except reasonable costs of help wanted
				advertising.
(rr)  Interest charges
				assessed by any department or agency of this state for failure to make a timely
				refund of overpayments and interest expenses incurred for loans obtained to
				make the refunds.
(ss)  Tax
				expenses that a nursing facility has never incurred.
(tt)  Any portion of trade association dues
				attributable to legal and consultant fees and costs in connection with lawsuits
				against the department.
(uu) 
				Increased costs resulting from a series of transactions between the same
				parties and involving the same assets such as sale and lease back and
				successive sales or leases of a single facility or piece of
				equipment).
(vv)  Costs related to
				a nursing assistant certified training program.
(ww)  Effective July 1, 2012, payments made
				relating to the safety net assessment.
(xx)
				 Building renovations, building improvements, or leasehold
				improvements that require preapproval from the department of health and were
				not preapproved.