Subsection 144-101-III-50-1100 - ALLOWABLE COSTS1110PrincipleFederal law requires that payment for long term care facility services provided under MaineCare shall be provided through the use of rates that are reasonable and adequate to meet the costs incurred by efficiently and economically operated facilities in order to provide care services in conformity with applicable State and Federal laws, regulations, and quality and safety standards. Costs incurred by efficiently and economically operated facilities include costs that are reasonable, necessary, and related to patient care, subject to principles relating to specific items of revenue and cost.
1111 Costs must be ordinary, reasonable, and necessary and related to resident care. They must be of the nature and magnitude that prudent and cost conscious management would pay for a specific item or service. A cost is considered reasonable if in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.1112 Costs must not be of the type conceived for the purpose of circumventing the regulations. Such costs will be disallowed under the principle that the substance of any transaction will prevail over form.1113 Costs that relate to inefficiency, unnecessary or luxurious care, or unnecessary or luxurious facilities, and to activities not common and accepted in the field of mental retardation services are not allowable.1114 Compensation to be allowable must be reasonable and for services that are necessary and related to resident care habilitation and active treatment and pertinent to the operation of the facility. The services must actually be performed and must be paid in full. The compensation must be reported to all appropriate State and Federal tax authorities to the extent required by law for income tax, social security, and unemployment insurance purposes.1115 Costs incurred to comply with changes in Federal or State laws and regulations for increased care, habilitation treatment, and improved facilities are to be considered reasonable and necessary costs.1116 Costs incurred for resident services that are rendered in common to MaineCare residents, as well as to non-MaineCare residents, will be allowed on a prorated basis unless there is a specific allocation defined elsewhere in these Principles. 1121 Reasonable Costs are those costs incurred by a provider that are ordinary and necessary in providing care, rehabilitation, and treatment to publicly aided residents and are within the requirements and limitations of these Principles. The reasonableness and necessity of any costs shall be determined by reference to or in comparison with the costs of providing comparable services described in the MaineCare Benefits Manual or absolute costs related to resident's unique circumstances and needs.1122 Allowable Costs are the operating costs after the adjustment required by the Principles have been applied to the provider's total operating costs as reported in the annual costs reports.1123 Necessary and Proper Costs are those costs which are appropriate and helpful in developing and maintaining the efficient and economical operation of resident care and habilitation facilities and activities. They are usually costs that are common and accepted occurrences in the field of mental retardation. C.M.R. 10, 144, ch. 101, ch. III, 144-101-III-50, subsec. 144-101-III-50-1100