Ala. Admin. Code r. 560-X-60-.11
Current through Register Vol. 43, No. 1, October 31, 2024
Section 560-X-60-.11 - Unallowable Expenses(1) General (a) All payments to providers for services rendered must be based on the reasonable cost of such services covered by the Alabama State Plan. It is the intent of the program that providers will be reimbursed the reasonable costs which must be incurred in providing quality patient care. Implicit in the intent that reasonable costs be paid are the expectations that the provider seeks to minimize costs and that costs do not exceed what a prudent and cost-conscious buyer pays for a given item of service or product. If costs are determined to exceed the level that prudent buyers incur in the absence of clear evidence that the higher costs were unavoidable, the excess costs are not allowable.(b) Costs related to patient care include necessary and proper costs involved in developing and maintaining the efficient operation of patient care facilities. Necessary and proper costs related to patient care are those which are usual and accepted expenses of similar providers.(2) Overhead costs which will not be allowed are listed below. This listing is not intended to be all inclusive. Other overhead costs which violate the prudent buyer concept or are not related to patient care will not be reimbursed by the Alabama Medicaid Agency.(a) Management Fees. Management firms, individuals and consultants which duplicate services already provided, or in a clinic in which a full-time administrator is employed. Excluded from this rule are those management contracts required incident to a bond issue for a valid business purpose.(c) Compensation to owners and other personnel not performing necessary functions(d) Salaries which are paid to personnel performing overlapping or duplicate functions(e) Legal Fees and Expenses 2. Relating to informal conferences and fair hearings3. Relating to issuance and sale of capital stock and other securities4. Relating to creation of corporations or partnerships5. Relating to business reorganization6. Services for benefits of stockholders7. Acquisition of clinics or other business enterprises8. Relating to sale of clinics and other enterprises9. In connection with criminal actions resulting in a finding of guilt or equivalent action or plea10. Other legal services not related to patient care(f) Outside Accounting and Audit Fees and Expenses3. Relating to informal conferences and fair hearings4. Relating to issuance and sale of capital stock and other securities5. Relating to creation of corporations or partnerships6. Relating to business reorganization7. Services for the benefits of stockholders8. Acquisition for clinics or other business enterprises9. Relating to sale of clinics and other enterprises10. In connection with participation in criminal actions resulting in guilt or equivalent action or plea11. Other accounting services not related to patient care(g) Taxes2. Property not related to patient care(h) Dues 4. Professional organization dues for individuals5. Non-patient care related organization(i) Insurance2. Personal property not used in patient care3. On real estate not used in providing patient care4. Group life and health insurance premiums which favor owners of a clinic or are for personnel not bona fide employees of the clinic(j) Special assessments from Health Care Association(k) Bad debts and associated collection expenses(l) Employees relocation expenses(m) Penalties2. Late payment charges. (None: If a clinic can fully document that a late payment, charge is directly due to late Medicaid payments, the amount of the late payment charge will be an allowable cost.)(n) Certain Real Estate Expenses 1. Appraisals obtained in connection with the sale or lease of a clinic (unless required by Medicaid)2. Costs associated with real estate not related to patient care(o) Interest Expense 1. Interest associated with real estate in excess of clinic needs or real estate not related to patient care.2. Interest expenses applicable to penalties3. Construction Interest (must be capitalized)4. Interest paid to a related party5. Interest on personal property not related to patient care6. Interest on loans not associated with patient care(p) Licenses 2. Professional personnel(q) Donations and Contributions(r) Accreditation Surveys(s) Telephone Services 1. Mobile telephones, beepers, telephone call relays, automated dialing services2. Long distance telephone calls of a personal nature(t) Any costs associated with corporate stock records maintenance(u) Any expenses associated with political activities or lobbying efforts are not allowable(3) Prior Period Costs and Accounts Payable (a) The Medicaid reimbursement rate is calculated to provide adequate funds to pay business expenses in a timely manner. Costs incurred in prior periods but not paid must be accrued and reported in that period during which the costs were incurred. Payment of prior period cost in the current year is not an allowable cost. Exceptions will be allowed, based on reasonableness, for small invoices which, in total, do not exceed $500.00 per fiscal period. These invoices must be as a result of no fault of the provider. Any pattern of abuse will cause the costs in question to be automatically disallowed by the Agency.(b) Short-term liabilities must be paid within ninety (90) days from the date of invoice; otherwise, the expense will not be allowed unless the provider can establish to the satisfaction of Medicaid that the payment was not made during the 90 days for a valid business reason.(c) Actual payment must be made by cash or negotiable instrument. For this purpose, an instrument to be negotiable must be in writing and signed, must contain an unconditional promise or order to pay a certain sum of money on demand or at a fixed and determinable future time, and must be payable to order of or to bearer. All voided instruments, whether voided in fact or by devise, are considered void from inception.(d) A provider who files for and is awarded protection under Chapter 11 of the Federal Bankruptcy Code may be given consideration in a current year cost report for actual payment of prior period allowable costs which have been disallowed in prior period cost reports due to failure to make actual payment of the cost claimed. In order for payment of these prior year allowable costs to be considered under a current year cost report, they must have been paid pursuant to a court approved plan for reorganization under Chapter 11 of the Federal Bankruptcy Code. The allowable costs will not include any interest or penalty incurred for failure to make payment in prior year. The Agency will not reimburse interest expense generated from loans incurred to pay any such allowable prior period costs. Any such (untrended) allowable cost shall be added to the encounter rate after the normal rate setting process. It will be subject to the 80th percentile ceiling, thus the providers cost must be below the ceiling rate for any possible reimbursement of these prior period costs to occur.(4) Bad Debts. Bad debts resulting from beneficiaries' failure to pay are to be treated as noncovered costs. Hence, such bad debts cannot be included in allowable costs.(5) Research Costs (a) Costs, incurred for research purposes, over and above usual patient care, are not includable as allowable costs.(b) There are numerous sources of financing for health-related research activities. Funds for this purpose are provided under many Federal programs and by other tax-supported agencies. Also, many foundations, voluntary health agencies and other private organizations, as well as individuals, sponsor or contribute to the support of medical and related research. Funds available from such sources are generally ample to meet basic medical and clinic research needs(6) Luxury Items or Services (a) Where clinic operating costs include amounts that flow from the provision of luxury items or services, such amounts are not allowable in computing reimbursable costs.(b) Luxury items or services are those that are substantially in excess of or more expensive than the usual items or services rendered within a clinic's operation to the majority of patients. Author:
Ala. Admin. Code r. 560-X-60-.11
Emergency rule effective October 1, 1993. New Rule: Filed December 7, 1993; effective January 12, 1994.Statutory Authority:Code of Ala. 1975, State Plan; Title XIX, Social Security Act, 42 C.F.R. Sections 405.2460 - .2472 and 447.371.