Section 75-04-05-13 - Nonallowable costsNonallowable costs include:
1. Advertising designed to encourage potential clients to select a particular provider agency.2. Amortization of noncompetitive agreements.4. Barber and beautician services.6. Fees paid to a member of a board of directors for meetings attended to the extent that the fees exceed the compensation paid per day to a member of the legislative council pursuant to North Dakota Century Code section 54-35-10.7. Concession and vending machine costs.8. Contributions or charitable donations.9. Corporate costs, such as organization costs, reorganization costs, and other costs not related to client services.10. Costs for which payment is available from another primary third-party payor or for which the department determines that payment may lawfully be demanded from any source.11. Costs of functions performed by clients in a residential setting which are typical of functions of any individual living in the individual's own home, such as keeping the home sanitary, performing ordinary chores, lawnmowing, laundry, cooking, and dishwashing. These activities shall be an integral element of an individual program plan consistent with the client's level of function.12. Costs of donations or memberships in sports, health, fraternal, or social clubs or organizations, such as Elks, YMCA, or country clubs.13. Costs, including legal fees, accounting and administrative costs, travel costs, and the costs of feasibility studies, attributed to the negotiation or settlement of the sale or purchase of any capital assets, whether by sale or merger, when the cost of the asset has been previously reported and included in the rate paid to the vendor. 14. Costs incurred by the provider agency's subcontractors, or by the lessor of property which the provider agency leases, and which becomes an element in the subcontractor's or lessor's charge to the provider agency, if such costs would not have been allowable under this section had they been incurred by a provider agency directly furnishing the subcontracted services, or owning the leased property.15. Depreciation on assets acquired with federal or state grants. 16. Education costs incurred for the provision of services to clients who are, could be, or could have been, included in a student census. Education costs do not include costs incurred for a client, defined as a "student with disabilities" by North Dakota Century Code chapter 15.1-32, who is enrolled in a school district pursuant to an interdepartmental plan of transition.17. Employee benefits not offered to all full-time employees.18. Entertainment costs, including activities.19. Equipment costs for any equipment, whether owned or leased, not exclusively used by the facility except to the extent that the facility demonstrates to the satisfaction of the department that any particular use of the equipment was related to client services. 20. Expense or liabilities established through or under threat of litigation against the state of North Dakota or any of its agencies; provided, that reasonable insurance expense may not be limited by this subsection.21. Community contributions, employer sponsorship of sports teams, and dues to civic and business organizations, such as Lions, chamber of commerce, Kiwanis, in excess of one thousand five hundred dollars per statement of costs period.22. Fundraising costs, including salaries, advertising, promotional, or publicity costs incurred for such a purpose.23. Funeral and cemetery costs.25. Home office costs when unallowable if incurred by facilities in a chain organization.26. Travel not directly related to industry conferences, state or federally sponsored activities, or client services.27. Interest cost related to money borrowed for funding depreciation.28. Items or services, such as telephone, television, and radio, located in a client's room and furnished primarily for the convenience of the clients.29. Top management personnel insurance.30. Laboratory salaries and supplies.31. The cost of education unless: a. The education was provided by an accredited academic or technical educational facility;b. The costs were for materials, books, or tuition;c. The employee was enrolled in a course of study intended to prepare the employee for a position at the facility and is in a position; andd. The facility claims the cost of the education at a rate that does not exceed one dollar and twenty-five cents per hour of work performed by the employee in the position for which the employee received education at the provider agency's cost provided the amount claimed per employee may not exceed two thousand five hundred dollars per year or an aggregate of ten thousand dollars per employee and in any event may not exceed the cost to the facility of the employee's education.32. Meals and food service in day service programs.33. Membership fees or dues for professional organizations exceeding six thousand dollars in any statement of costs year.34. Materials and monetary reinforces for clients.35. Miscellaneous costs not related to client services.36.a. Except as provided in subdivisions b, c, and d, payments to a member of the governing board of the provider agency, a member of the governing board of a related organization, or a family member of a member of those governing boards, including a spouse and an individual in the following relationship to a member or to a spouse of a member: parent, stepparent, child, stepchild, grandparent, step-grandparent, grandchild, step-grandchild, brother, sister, half-brother, half-sister, stepbrother, and stepsister. b. Payments made to a member of the governing board of the provider agency to reimburse that member for allowable costs incurred by that member in the conduct of the provider agency's business may be allowed.c. Payments for a service or product unavailable from another source at a lower cost may be allowed.d. Wages allowed are limited to those wages paid to a family member of a member of the board and the amount must be consistent with wages paid to anyone else who would hold the same or similar position and the position is such that if the family member were not to hold the position agency, the provider would hire someone else to do the job.37. Penalties, fines, and related interest and bank charges other than regular service charges.40. Physician and dentist salaries.41.a. For facility-based day habilitation programs, production costs, such as client salaries and benefits, supplies, and materials representing unfinished or finished goods or products that are assembled, altered, or modified. b. For non-facility-based day habilitation programs, production costs, such as client salaries and benefits, supplies, and materials representing unfinished or finished goods or products that are assembled, altered, or modified, square footage, and equipment.c. For employment supports, in addition to subdivisions a and b, costs of employing clients, including preproduction and postproduction costs for supplies, materials, property, and equipment, and property costs other than an office, office supplies, and equipment for the supervisor, job coach, and support staff.d. Total production-related legal fees in excess of five thousand dollars in any fiscal period.42. Religious salaries, space, and supplies.43. Room and board costs in residential services other than an intermediate care facility for individuals with intellectual disabilities.44. Salary costs of employees determined by the department to be inadequately trained to assume assigned responsibilities, but when an election has been made to not participate in appropriate training approved by the department.45. Salary costs of employees who fail to meet the functional competency standards established or approved by the department.46. Travel of clients visiting relatives or acquaintances in or out of state.47. Mileage reimbursement in excess of the standard mileage rate established by the state of North Dakota and meal reimbursement in excess of rates established by the general services administration for the destination city.48. Undocumented expenditures.49. Value of donated goods or services.50. Vehicle and aircraft costs not directly related to provider agency business or client services.51. X-ray salaries and supplies.52. Alcohol and tobacco products.53. Political contributions.54. Salaries or costs of a lobbyist.N.D. Admin Code 75-04-05-13
Effective July 1, 1984; amended effective June 1, 1985; January 1, 1989; August 1, 1992; June 1, 1995; July 1, 1995; April 1, 1996; August 1, 1997; July 1, 2001; May 1, 2006; July 1, 2012.Amended by Administrative Rules Supplement 2017-363, January 2017, effective 1/1/2017.Amended by Administrative Rules Supplement 368, April 2018, effective 4/1/2018.General Authority: NDCC 25-01.2-18, 50-06-16
Law Implemented: NDCC 25-18-03, 50-24.1-01