rules of department of social services - sos.mo.gov · 13 csr 70-10.017 nursing facility invasive...

CODE OF STATE REGULATIONS 1JOHN R. ASHCROFT (2/28/19)Secretary of State

Rules of

Department of Social ServicesDivision 70—MO HealthNet DivisionChapter 10—Nursing Home Program

Title Page

13 CSR 70-10.005 Reasonable Cost-Related Reimbursement Plan for Long-Term Care ..................3

13 CSR 70-10.010 Prospective Reimbursement Plan for Long-Term Care .................................11

13 CSR 70-10.015 Prospective Reimbursement Plan for Nursing Facility Services ......................36

13 CSR 70-10.016 Global Per Diem Adjustments to Nursing Facility and HIV Nursing Facility Reimbursement Rates..............................................................58

13 CSR 70-10.017 Nursing Facility Invasive Ventilator Program ............................................60

13 CSR 70-10.030 Prospective Reimbursement Plan for Nonstate-Operated Facilities for ICF/IID Services .............................................................................61

13 CSR 70-10.040 Medicaid Eligibility and Preadmission Screening for Mentally Ill and Mentally Retarded Individuals .............................................................72

13 CSR 70-10.050 Pediatric Nursing Care Plan (Rescinded August 30, 2018)............................73

13 CSR 70-10.060 Retrospective Reimbursement Plan for State-Operated Facilities for ICF/MR Services ............................................................................73

13 CSR 70-10.070 Limitations on Allowable Nursing Facility Costs to Reserve a Bed for Absences Due to Hospital Admission ....................................................78

13 CSR 70-10.080 Prospective Reimbursement Plan for HIV Nursing Facility Services ................79

13 CSR 70-10.100 Limitation on Allowable Capital Cost Overruns for New Institutional Health Services in Title XIX Reimbursement Rate Setting ...........................93

13 CSR 70-10.110 Nursing Facility Reimbursement Allowance..............................................93

13 CSR 70-10.120 Reimbursement for Nurse Assistant Training ............................................97

13 CSR 70-10.150 Enhancement Pools (Rescinded June 30, 2018)..........................................98

13 CSR 70-10.160 Public/Private Long-Term Care Services and Supports Partnership Supplemental Payment to Nursing Facilities.............................................99

Title 13—DEPARTMENT OFSOCIAL SERVICES

Division 70—MO HealthNet DivisionChapter 10—Nursing Home Program

13 CSR 70-10.005 Reasonable Cost-Relat-ed Reimbursement Plan for Long-TermCare

PURPOSE: This rule establishes a paymentplan for nursing home care required by theCode of Federal Regulations (42 CFR447.273–447.316). The plan describes costprinciples to be followed by Title XIX nursinghome providers in making financial reportsand presents the necessary procedures forsetting rates, making adjustments and audit-ing of the cost reports.

Editor’s Note: The secretary of state hasdetermined that the publication of this rule inits entirety would be unduly cumbersome orexpensive. The entire text of the material ref-erenced has been filed with the secretary ofstate. This material may be found at theOffice of the Secretary of State or at the head-quarters of the agency and is available to anyinterested person at a cost established bystate law. The forms mentioned in this rulefollow 13 CSR 70-10.010.

(1) Objectives.(A) Uniform Plan. The provisions embod-

ied in this rule define a system of reasonablecost-related reimbursement for long-termcare (LTC) facilities participating in the Mis-souri Title XIX Medical Assistance Programthat treats all providers of nursing care andservices on a uniform basis.

(B) Adequacy of Reimbursement. Consis-tent with efficiency, economy and quality ofcare, the plan is to accomplish the purpose ofadequate and reasonable reimbursement forservices rendered to persons eligible for med-ical assistance under the Missouri Title XIXprogram.

(C) Improvement of Expenditure Forecast-ing. Capability of Title XIX management toforecast expenditures for LTC will beimproved.

(2) Scope.(A) Participating Providers. Reasonable

cost-related reimbursement for LTC and ser-vices is applicable to those facilities with avalid participation agreement in effect on orafter July 1, 1976, with the Missouri Depart-ment of Social Services. Areas of a facilitycertified to participate in the Title

XIX program by the Department of SocialServices or other certifying authorityapproved by the Department of Social Ser-vices and the Department of Health, Educa-tion and Welfare (HEW) are covered withinthis rule. The provisions of this rule shallbecome effective January 1, 1980; however,year-end cost reports for fiscal years begin-ning prior to January 1, 1980, shall be pre-pared in accordance with the prior planexcept in those areas where additional cov-ered services have been added by this plan.These additional services shall be handled ina separate line item in the cost report. Theprovisions contained in this rule shall nothave any retroactive effect on the cost reportsor determination of any retrospective pay-ment for fiscal years beginning prior to May11, 1975.

(B) Allowable Costs. Each provider’s totalallowable costs (TACs) will be determined bythe Department of Social Services from costreports submitted on a fiscal-year basis. Thefiscal year, which will be each provider’s fis-cal year, should coincide with the tax yearused by the provider in submitting federalincome tax reports.

(C) Eligible Recipients. This plan appliesonly to allowable costs incurred by eligiblefacilities for eligible recipients certified tomedically require long-term, skilled, inter-mediate care or care for the mentally retard-ed, or a combination of these.

(3) Changes to Plan. Changes to the plan maybe made by the Department of Social Ser-vices. Representatives of participating facili-ties will have an opportunity to make recom-mendations. All these changes will be subjectto approval by the secretary of HEW and inaccordance with sections 536.021 and536.025, RSMo.

(4) Reporting Requirements.(A) Annual Cost Report.

1. Each provider shall establish a twelve(12)-month period which is to be designatedas the provider’s fiscal year (see subsection(2)(B) of this rule). An annual cost report forthe fiscal year shall be submitted by theprovider to the department on forms to befurnished for that purpose. The completedforms shall be submitted by each providerwithin ninety (90) days following the close ofits fiscal year.

2. Unless adequate documentation in thefollowing areas has been filed previously withthe department, authenticated copies of thefollowing documents must be submitted withthe cost report: authenticated copies of allleases related to the activities of the facility,all management contracts, all contracts with

consultants, federal and state income taxreturns for the fiscal year and documentationof expenditures, by line item, made under allrestricted and unrestricted grants. Forrestricted grants, a statement verifying therestriction as specified by the donor.

3. Adequate documentation for all lineitems on the uniform cost reports must bemaintained by the facility and must be sub-mitted to the department upon request.

4. Following the ninety (90)-day period,interim payments will be withheld from thefacility until the cost report is submitted.Upon receipt of a cost report prepared inaccordance with these rules, the interim pay-ments that were withheld will be released.

5. If requested in writing, a reasonableextension of the filing date may be granted forgood cause shown.

6. The termination by a provider of par-ticipation in the program or a change of own-ership requires that the provider submit a costreport for the period ending with the date oftermination or change. The cost report is duewithin forty-five (45) days of the date of ter-mination or change. If requested in writing, areasonable extension of the filing date may begranted for good cause shown.

(B) Certification of Cost Reports. 1. The accuracy and validity of any cost

report, whether annual or interim, must becertified. Certification must be made by one(1) of the following persons (who must beauthorized by the governing body of the facil-ity to make the certification and will furnishproof of this authorization): for an incorpo-rated body, an officer of the corporation; fora partnership, a partner; for a sole proprietor-ship or a sole owner, the owner; or for a pub-lic facility, the chief administrative officer ofthe facility. The cost report must also be nota-rized by a licensed notary public.

2. Certification statement.

Form of Certification

Misrepresentation or falsification of anyinformation contained in this cost report maybe punishable by fine, imprisonment, orboth, under state or federal law.

Certification by officer or administrator ofprovider(s):

I hereby certify that I have read the abovestatement and that I have examined theaccompanying Cost Report and supportingschedules prepared by __________________________________________________

(Provider name(s) and number(s))for the cost report period beginning ______,19___ and ending ________, and that to thebest of my knowledge and belief, it is true,correct, and complete statement prepared

CODE OF STATE REGULATIONS 3ROBIN CARNAHAN (2/29/08)Secretary of State

Chapter 10—Nursing Home Program 13 CSR 70-10

from the books and records of the provider(s)in accordance with applicable instructions,except as noted.____________________________________(Signature) (Title) (Date)

(C) Interim Reports.1. From the beginning of its fiscal year,

a provider, at its election, may submit cumu-lative quarterly cost reports. Insurance pre-miums, property taxes, professional fees andsimilar items shall be prorated in this reportin order to avoid any distortion of allowablecosts.

2. An interim cost report may be sub-mitted for consideration whenever a partici-pating LTC facility changes the level-of-careit has been certified to provide.

3. Whenever additional beds are added,licensed and certified to an existing facility,the facility may file an interim cost report.

(D) Adequacy of Records.1. The records and accounting proce-

dures of a provider must be adequate to sub-stantiate purposes of review and audit as maybe necessary in accordance with this plan.

2. At all reasonable times, the providershall make available to the department and itsduly authorized agent, including federalagents from HEW, records as are necessaryto permit review and audit of the provider’scost reports. Failure to do so may lead to thepenalty stated in paragraph (4)(A)4. of thisrule.

3. All records associated with the prepa-ration and documentation of the data associ-ated with the cost report must be retained forseven (7) years from the cost report filingdate.

(5) Principles of Reasonable Cost-RelatedReimbursement, Allowable Costs.

(A) General Provisions.1. Nursing facilities participating in the

Missouri Medicaid program which provideskilled or intermediate care, or intermediatecare facility/mentally retarded (ICF/MR)care, or a combination of these, shall bereimbursed based upon the allowable costs ofthe individual nursing facility. These costsmust be related to ordinary and necessarycare for the level-of-care actually provided.

2. In addition to reimbursement ofallowable costs, a proprietary provider shallbe paid a reasonable return on owner’s netequity (see section (14)).

3. Allowable costs means those costs ofthe provider which are allowable for alloca-tion to the Medicaid program based upon theprinciples established in this rule.

4. The allowability of costs notaddressed specifically in this rule will be

determined by the director, Department ofSocial Services, in a manner as to assure uni-form application to all providers. This deter-mination may be based upon criteria such asthe Medicare Provider Reimbursement Manu-al (HIM-15).

5. Provider means a nursing home, orother facility as may be designated by theDepartment of Social Services, duly licensedand certified to participate in the Title XIXprogram by appropriate state agencies to fur-nish nursing and other care to individualswho by reason of illness, physical infirmitiesor advanced age are unable to care for them-selves.

6. Payments to providers shall be basedupon an individual accounting of the allow-able costs of operation of each provider. TheDepartment of Social Services shall haveauthority to require uniform accounting andreporting procedures as it deems necessary.As a minimum, standardized definitions,accounting, statistical and reporting proce-dures as well as expense classifications are tobe in accordance with widely accepted under-standing and use in health care institutions.

7. A participating nursing home is aprovider which has entered into an agreementwith the Department of Social Services toaccept payments based upon the principles ofreimbursement described in this rule and notcharge the eligible recipient or any other per-son for covered items and services except inpersonal items.

8. A reasonable cost in each related costarea will be determined by the director of theDepartment of Social Services pursuant tosection 208.152, RSMo. At his/her option,the director may follow guidelines set forth inthe Medicare and Medicaid Provider Manual(HIM-15, Section 904), “Criteria for Deter-mining Reasonable Compensation General,”as applicable to the operation of the programby Missouri.

(B) Compensation of Owners.1. Regardless of whether the provider is

a corporation, partnership, proprietorship orotherwise, a reasonable allowance of com-pensation of services of owners shall be anallowable cost, provided the services areactually performed in a necessary function.

2. Compensation shall mean the totalbenefit received by the owner for the servicess/he renders to the facility including: directpayments for managerial, administrative, pro-fessional and other services; amount paid bythe provider for the personal benefit of theowner; the cost of assets and services whichthe owner receives from the provider;deferred compensation; and additionalamounts determined to be the reasonablevalue of the services rendered by sole propri-

etors or partners and not paid by any methodenumerated in this section.

3. Reasonableness of compensation maybe determined by reference to or in compari-son with compensation paid for comparableservices and responsibilities in comparableinstitutions, or it may be determined by otherappropriate means such as the Medicare andMedicaid Provider Reimbursement Manual(HIM-15).

4. Necessary services refers to those ser-vices that are pertinent to the operation andsound conduct of the facility; had theprovider not rendered these services, thenemployment of another person(s) to performthe service would be necessary.

(C) Covered Services and Supplies.1. Skilled nursing facility (SNF) and

ICF services and supplies covered by thisplan are those found in 42 CFR 442.100—442.516 which include, among other ser-vices, the regular room, dietary and nursingservices or any other services that arerequired for standards of participation or cer-tification; also included are minor medicaland surgical supplies and the use of equip-ment and facilities. Services set out in sub-paragraphs (5)(C)1.G. and H. of this ruleshall be covered services effective January 1,1980. These items include, but are not limit-ed to, the following:

A. All general nursing servicesincluding, but not limited to, administrationof oxygen and related medications, hand-feeding, incontinency care, tray services andenemas;

B. Items which are furnished routine-ly and relatively uniformly to all recipients,for example, gowns, water pitchers, basinsand bed pans;

C. Items stocked at nursing stationsor on the floor in gross supply and distributedor utilized individually in small quantitiessuch as alcohol, applicators, cotton balls, andbandaids, antacids, aspirins (and other non-legend drugs ordinarily kept on hand), sup-positories and tongue depressors;

D. Items which are utilized by indi-vidual recipients, but which are reusable andexpected to be available such as ice bags, bedrails, canes, crutches, walkers, wheelchairs,traction equipment and other durable, nonde-preciable medical equipment;

E. Additional items as specified in theappendix to this plan when provided to thepatient;

F. Special dietary supplements usedfor tube feeding or oral feeding such as ele-mental high nitrogen diet including dietarysupplements written as a prescription item bya physician;

4 CODE OF STATE REGULATIONS (2/29/08) ROBIN CARNAHAN

Secretary of State

13 CSR 70-10—DEPARTMENT OF SOCIAL SERVICES Division 70—MO HealthNet Division

G. All laundry services including per-sonal laundry; and

H. All general personal care serviceswhich are furnished routinely and relativelyuniformly to all recipients for their personalcleanliness and appearance shall be coveredservices, for example, necessary clipping andcleaning of fingernails and toenails, basichair care, shampoos and shaves to the extentnecessary for reasonable personal hygiene.The provider shall not bill the patient orhis/her responsible party for this type of per-sonal service.

(I) All consultive services asrequired by state or federal law or regulationor for proper operation by the provider. Con-tracts for the purchase of these services mustaccompany the provider cost report, as spec-ified in paragraph (4)(A)2. of this rule. Fail-ure to do so will result in the penalties spec-ified in paragraph (4)(A)4. of this rule.

(II) All services and supplies notincluded in allowable costs shall be treated asservices and supplies not covered by theMedicaid program.

(III) The provider may collect fromrecipients, their relatives or from the recipi-ent’s personal needs fund only charges forpersonal items, noncovered services and sup-plies and prescription drugs not on the formu-lary.

(D) Depreciation.1. An appropriate allowance for depreci-

ation on buildings, furnishings and equipmentwhich are part of the operation and soundconduct of the provider’s business, includingitems that are used in a normal standby oremergency capacity, is an allowable cost.

2. The depreciation must be identifiableand recorded in the provider’s accountingrecords, based on the program basis of theasset and prorated over the estimated usefullife of the asset using the straight line methodof depreciation from the date initially put intoservice.

3. The program basis of assets shall belower of the book value of the provider, fairmarket value at the time of acquisition or therecognized Internal Revenue Service (IRS)tax basis. Donated assets will be allowedbasis to the extent of recognition of incomeresulting from the donation of the asset.Should a dispute arise between a nursinghome facility and the Department of SocialServices as to the fair market value at thetime of acquisition of a depreciable asset andan appraisal by a third party is required, theappraisal cost will be shared proportionatelyby the Medicaid program and the nursinghome facility in ratio to Medicaid recipients.

4. Allowable methods of depreciationshall be limited to the straight line method.

The depreciation method used for an assetunder the Medicaid program need not corre-spond to the method used by a provider fornon-Medicaid purposes; however, useful lifeshall be the same as the provider claims forIRS purposes. Component part depreciationis optional and allowable under this plan.

5. Historical cost is the cost incurred bythe provider in acquiring the asset and to pre-pare it for use except as provided for in thisrule. Usually, historical cost includes coststhat would be capitalized under generallyaccepted accounting principles. For example,in addition to the purchase price, historicalcost would include architectural fees, consult-ing fees and related legal fees. Where aprovider has elected for federal income taxpurposes to expense certain items, such asinterest and taxes during construction, thehistorical cost basis for Medicaid deprecia-tion purposes may include the amount ofthese expensed items. However, where aprovider did not capitalize these costs and haswritten off these costs in the year they wereincurred, the provider cannot retroactivelycapitalize any part of these costs under theprogram. For Title XIX purposes and thisplan, any asset costing less than three hun-dred dollars ($300) or having a useful life ofone (1) year or less may be expensed and notcapitalized at the option of the provider.

6. When an asset is acquired by tradingin an existing asset, the cost basis of the newasset shall be the sum of the undepreciatedcost basis of the traded asset plus the cashpaid and subsection (10)(A) shall not apply.

7. For the purpose of determiningallowance for depreciation under the Medi-caid program, the cost basis of a facility pur-chased as an ongoing operation after July 1,1976, shall be the price paid by the purchaseror the appraised value, whichever is lower. Ifthe purchaser cannot demonstrate that thesale was a bona fide sale, the cost basis of theseller shall be determined on the basis of thevalue reported to IRS for the year immediate-ly preceding the sale.

8. Subject to the principles enumeratedin this subsection, the cost basis usable fordepreciation of the facility to the purchasershall be the lower of the purchaser’s bookvalue for the facility, the recognized IRS taxbasis or the depreciable cost as determined inparagraph (5)(D)7.

9. Capital expenditures for building con-struction or for renovation costs which are inexcess of one hundred thousand dollars($100,000) and which cause an increase in aprovider’s bed capacity shall not be allowedin the program or depreciation base if thesecapital expenditures are disallowed by theprovisions of federal Social Security Act,

Section 1122(B), Social Security Amend-ments of 1972, Sections 221(B) and (D) orfor failure to comply with any other federalact that promulgates a limitation on reim-bursement for capital expenditures under fed-eral or state legislation.

(E) Interest and Finance Costs.1. Necessary and proper interest on both

current and capital indebtedness shall be anallowable cost.

2. Interest is the cost incurred for theuse of borrowed funds. Interest on currentindebtedness is the cost incurred for fundsborrowed for a relatively short-term. This isusually for purposes as working capital fornormal operating expense. Interest on capitalindebtedness is the cost incurred for fundsborrowed for capital purposes such as acqui-sition of facilities and equipment and capitalimprovements. Generally, loans for capitalpurposes are long-term loans.

3. Interest may be included in financecharges imposed by some lending institutionsor it may be a prepaid cost or discount intransactions with those lenders who collectthe full interest charges when funds are bor-rowed.

4. To be an allowable cost under theMedicaid program, interest (includingfinance charges, prepaid costs and discount)must be supported by evidence of an agree-ment that funds were borrowed and that pay-ment of interest and repayment of the fundsare required, identifiable in the provider’saccounting records, relating to the reportingperiod in which the costs are claimed, andnecessary and proper for the operation, main-tenance or acquisition of the provider’s facil-ities.

5. Necessary, as used in these rules,means that the interest be incurred on a loanmade to satisfy a financial need of theprovider and for a purpose reasonably relatedto recipient care. Loans which result inexcess of funds or investments would not beconsidered necessary.

6. Proper, as used in these rules, meansthat the interest be incurred at a rate not inexcess of what a prudent borrower wouldhave had to pay in the money market existingat the time the loan was made.

7. Interest on loans to providers by pro-prietors and general partners shall not be anallowable cost because these loans shall betreated as invested capital and included in thecomputation of an allowable return onowner’s net equity. Interest on loans toproviders by limited partners or minoritystockholders shall be an allowable cost at arate not in excess of a reasonable rate. If aprovider operated by members of a religious



order borrows from the order, interest paid tothe order shall be an allowable cost.

8. Income from a provider’s qualifiedretirement fund shall be excluded in consider-ation of the per-diem rate.

9. A provider shall amortize financecharges, prepaid interest or discount over theperiod of the loan ratably or by means of theconstant rate of interest method on the unpaidbalance where the time period is in excess oftwelve (12) months.

10. Usual and customary costs incurredto obtain loans shall be treated as interestexpense and shall be allowable costs over theloan period ratably or by means of the con-stant interest applied method.

11. Usual and customary costs include,but are not limited to, lender’s financecharges or fees, title and recording fees,appraisal fees, legal fees, escrow fees andclosing costs.

12. Loan costs shall be allowable costsonly to the extent that they meet the criteriaestablished in this rule for the allowance ofinterest expense in general.

13. Interest expense resultant from cap-ital expenditures for building construction orfor renovation costs which are in excess ofone hundred thousand dollars ($100,000) andwhich cause an increase in a bed capacity bythe provider shall not be an allowable cost ifthose capital expenditures are disallowed bythe secretary of Health and Human Services(HHS) for failure to comply with the provi-sions of federal Social Security Act, Section1122(B), Social Security Amendments of1972, Sections 221(B) and (D), or for failureto comply with any other federal or staterequirement that promulgates a limitation onreimbursement for capital expenditures.

(F) Rental Costs.1. Rental costs of land, buildings, fur-

nishings and equipment are allowable costsprovided that the rented items are reasonable,necessary and not in essence a purchase ofthose assets.

2. Necessary rental items are thosewhich are pertinent to the operation andsound conduct of the provider, includingitems that are used in a normal standby oremergency capacity.

3. Reasonable rental amounts are thelesser of those which are actually paid orthose that would be paid to an unrelated partyfor use of the same property.

4. Determination of reasonableness inindividual cases may be established by affi-davits of competent, impartial experts whoare familiar with the current rentals in thecommunity.

5. The test of reasonableness shall takeinto account the agreement between the

owner and the tenant regarding the paymentof related property costs.

6. In the case of rental costs paid to indi-viduals or organizations related to theprovider by common ownership or control (orto the lessors or an ongoing facility), therental amounts shall not exceed the lesser ofactual or reasonable costs to constitute allow-able costs (see paragraph (5)(F)3.).

7. Related to the provider, commonownership and control have the same meaningas defined in paragraphs (5)(N)2. and 3.

8. Lessor of an ongoing facility meansany owner of rented property who had usedthe property to participate in the Medicaidprogram on or after January 1, 1976.

9. In the case of rental costs paid to thelessor of an ongoing facility, the rentalamounts must not be in excess of reasonablerental costs (see paragraph (5)(F)3.).

(G) Taxes.1. Taxes levied on or incurred by a

provider shall be allowable costs with theexception of the following items:

A. Federal, state or local income andexcess profit taxes including any penaltiespaid them;

B. Taxes, in connection with financ-ing, refinancing or refunding operations suchas taxes on the issuance of bonds, propertytransfer, issuance or transfer of stocks. Gen-erally, these costs are either amortized overthe life of the securities or depreciated overthe life of the asset. They are not, however,recognized as a tax expense;

C. Taxes from which exemptions areavailable to the provider;

D. Special assessments on land whichrepresent capital improvements such as sew-ers, water and pavements. These costs shallbe capitalized and depreciated over the periodduring which the assessment is scheduled tobe paid in annual installments;

E. Taxes on property which is not apart of the operation and sound conduct of theprovider nor used in a normal standby oremergency capacity;

F. Taxes, such as sales taxes, whichare levied against the recipient and collectedand remitted by the provider; and

G. Self-employment Federal Insur -ance Contribution Act (FICA) taxes applica-ble to individual proprietors, partners, mem-bers of a joint venture, to the extent thesetaxes exceed the amount which would havebeen paid by the provider on the allowablecompensation of these persons had theprovider organization been an incorporatedrather than unincorporated entity.

(H) Issuance of Revenue Bonds and TaxLevies by District and County Facilities.Those nursing home districts and county

facilities whose funding is through theissuance of revenue bonds, in accordancewith sections 198.312 and 205.371—205.375, RSMo will be granted as an allow-able cost that interest which is paid per therevenue bonds; depreciation on the plant andequipment of these facilities shall also be anallowable cost. Any tax levies which are col-lected by nursing home districts or countyhomes that are supported in whole or in partby these levies will not be recognized as arevenue offset, except to the extent that thefunds are used for the actual operation of thefacility.

(I) Value of Services of Employees.1. The value of services performed by

employees in the facility shall be included inallowable costs to the extent actually compen-sated, either to the employee directly or tothe supplying organization.

2. Services rendered gratis by volun-teers, such as those affiliated with the Amer-ican Red Cross, hospital guilds, auxiliaries,private individuals and similar organizations,shall not be included in allowable costs, asthese services traditionally have been ren-dered on a purely volunteer basis withoutexpectation of any form of reimbursement bythe organization through which the service isrendered or by the person rendering the ser-vice.

3. Services by priests, ministers, rabbisand similar type professionals shall be anallowable cost provided that the services arenot of a religious nature. An example of anallowable cost under this section would be anecessary administrative function performedby a clergyman. The state will not recognizebuilding costs on space set aside primarily forprofessionals providing any religious func-tion. Costs for wardrobe and similar itemslikewise are considered nonallowable.

(J) Fringe Benefits.1. Life insurance.

A. Types of insurance which are notconsidered an allowable cost—premiumsrelated to insurance on the lives of officersand key employees are not allowable costsunder the following circumstances:

(I) Where, upon the death of aninsured officer or key employee, the insur-ance proceeds are payable directly to theprovider. In this case, the provider is a directbeneficiary. Insurance of this type is referredto as key-man insurance; and

(II) Where, insurance on the livesof officers is voluntarily taken out as part ofa mortgage loan agreement entered into forbuilding construction and, upon the death ofan insured officer, the proceeds are payabledirectly to the lending institution as a credit


Secretary of State


against the loan balance. In this case, theprovider is an indirect beneficiary. Insuranceof this type is referred to as credit-life insur-ance.

B. Types of insurance which are con-sidered an allowable cost where—

(I) Credit life insurance is requiredas part of a mortgage loan agreement. Anexample would be insurance on loans grantedunder certain federal programs; and

(II) The relative(s) or estate of theemployee is the beneficiary. This type ofinsurance is considered to be compensation tothe employee as a fringe benefit and is anallowable cost to the extent that the amount ofcoverage is reasonable.

2. Retirement plans.A. Contributions to retirement plans

for the benefit of employees, including owneremployees of the provider, shall be allowablecosts provided these plans meet the qualifica-tions established in Section 401 of the Inter-nal Revenue Code of 1954, as amended in therequirements for Title XVIII. These require-ments state that—“A trust created or orga-nized in the United States and forming partsof a stock bonus, pension or profit-sharingplan of an employer for the exclusive benefitsof his/her employees or their beneficiariesshall constitute a qualified trust under thissection if the contributions or the benefitsprovided under the plan do not discriminatein favor of employees who are—1) officers; 2)shareholders; or 3) highly compensated.”Interest income from funded pension orretirement plans shall be excluded from con-sideration in determining the allowable costs.

B. Amounts funded to pension andretirement plans, together with associatedincome, shall be recaptured if not actuallypaid when due or as anticipated and offset toexpenses on the cost report form.

3. Deferred compensation plans.A. Contributions for the benefit of

employees, including owner employees underdeferred compensation plans, shall be allow-able costs when and to the extent that thesecosts are actually incurred and met by theprovider. Deferred compensation plans mustbe funded. Provider payments under unfund-ed deferred compensation plans will be con-sidered as an allowable cost only when paidto the participating employee and only to theextent considered reasonable.

B. Amount paid by tax-exempt orga-nizations to purchase tax-sheltered annuitiesfor employees shall be treated as deferredcompensation actually incurred and met bythe provider.

C. Amounts funded to deferred com-pensation plans together with associated

income shall be recaptured if not actuallypaid when due or as anticipated and offset toexpenses on the cost report form.

(K) Education and Training Expenses.1. The cost of on-the-job training which

directly benefits the quality of health care ofadministration of the facility shall be allow-able. Off-the-job training involving extendedperiods exceeding five (5) continuous days isallowable only when specifically authorizedin advance by the department.

2. Costs of education and training shallinclude incidental travel costs but will notinclude leaves of absence or sabbaticals.

(L) Organizational Costs.1. Organizational costs may be included

in allowable costs on an amortized basis. 2. Organizational costs include, but are

not limited to, the following: legal feesincurred in establishing the corporation orother organizations, necessary accountingfees, expenses of temporary directors andorganizational meetings of directors and stockholders; and fees paid to states for incorpora-tion.

3. Organizational costs shall be amor-tized ratably over a period of sixty (60)months beginning with the date of organiza-tion. When the provider enters the programmore than sixty (60) months after the date oforganization, no organizational costs shall berecognized.

4. Where a provider did not capitalizeorganizational costs and has written off thesecosts in the year they were incurred, theprovider cannot retroactively capitalize anypart of these costs under the program.

5. Where a provider is organized withina five (5)-year period prior to his/her entryinto the program and properly has capitalizedorganizational costs using a sixty (60)-monthamortization period, no change in the rate ofamortization is required. In this instance, theunamortized portion of organizational costs isallowable under the program and shall beamortized over the remaining part of the sixty(60)-month period.

(M) Advertising Costs. Advertising costswhich are reasonable, appropriate and helpfulin developing, maintaining and furnishing theprovider services shall be allowable costs.These costs must be common and acceptedoccurrences in the field of the activity of theprovider.

(N) Costs of Related Organizations.1. Purchase from related organiza -

tion(s). Costs applicable to services, facilitiesand supplies furnished to a provider by orga-nization(s) related to the provider by commonownership or control shall not exceed thelower of the cost to the related organizationor the prices of comparable services, facili-

ties or supplies purchased elsewhere. Theprovider shall be required to identify therelated organization(s) and costs to the relat-ed organization(s) in the uniform costreport(s). For the purpose of this section,common ownership and control will be deter-mined by paragraphs (5)(N)2. and 3. of thisrule.

2. Related to the provider means the fol-lowing:

A. With respect to a partnership, eachpartner;

B. With respect to a limited partner-ship, the general partner and each limitedpartner with an interest of five percent (5%)or more in the limited partnership;

C. With respect to a corporation, eachperson who owns, holds or has the power tovote five percent (5%) or more of any class ofsecurities issued by the corporation and eachofficer and director; and

D. With respect to a natural person,any parent, child, sibling or spouse of thatperson.

3. For the purposes of this section only,owner of a facility refers to any person whoowns an interest of five percent (5%) or morein the following:

A. The land on which any facility islocated;

B. The structure(s) in which any facil-ity is located;

C. Any mortgage, contract for deedor other obligation secured in whole or partby the land or structure in or on which anyfacility is located; or

D. Any lease or sublease of the landor structure in or on which a facility is locat-ed. Owner does not include a bank, savingsbank, trust company, building and loan asso-ciation, savings and loan association, creditunion, industrial loan and thrift company,investment banking firm or insurance compa-ny unless the entity directly or through a sub-sidiary operates a facility.

(O) Utilization Review. Incurred cost forthe performance of required utilization reviewfor SNF, ICF, ICF/MR or SNF/ICF combi-nation is an allowable cost. These expendi-tures must be for the purpose of providingutilization review on behalf of Title XIXrecipients. Utilization review costs incurredfor Title XVIII and XIX must be apportionedon the basis of recipient days recorded foreach program during the reporting period.

(6) Upper Limits.(A) In no event may the total reimburse-

ment of a provider exceed the lesser of—1. The current customary charges by the

facility to the general public for the same ser-vices rendered to the Medicaid recipients



except in the case of public facilities render-ing services at a nominal charge; thesecharges will be determined by the standardset forth in the Medicare Provider Reimburse-ment Manual (HIM-15), Part I, Section2600;

2. The Title XVIII rates applicable; and 3. One hundred twenty-five percent

(125%) of the weighted mean rate paid foreach level-of-care group as follows: SNF,ICF, ICF/MR and SNF/ICF combination.

(B) The determination of weighted meanper-diem rates by level-of-care shall be deter-mined and updated quarterly using reim-bursement rates in effect the first day of thatquarter.

(C) Providers shall be considered as simi-lar facilities when classed by the followinglevels of care: ICF/MR or SNF, ICF,SNF/ICF combination.

(D) All costs in excess of the ceilingimposed shall not be carried forward.

(7) Minimum Utilization.(A) In the event that the occupancy utiliza-

tion of a provider in a cost-reporting periodfalls below ninety percent (90%) of its certi-fied bed capacity, appropriate adjustmentsshall be made to the allowable costs of theprovider. Fixed costs will be calculated as ifthe provider experienced ninety percent(90%) utilization. The fixed costs are laun-dry, housekeeping, administrative and gener-al costs. Variable costs will be calculated atactual utilization. The variable costs are nurs-ing, dietary and ancillary costs.

(B) In the event a provider’s total reim-bursement is reduced below allowable costsdue to the limitation in subsection (7)(A), theunreimbursed allowable cost shall be subjectto subsection (7)(C) and, if no waiver isgranted, the retroactive adjustment shall bethe lower of the actual cost or cost establishedunder the provisions of subsection (7)(A).

(C) Subsections (7)(A) and (B) shall bewaived for newly constructed facilities, newadditions, or both, until an occupancy level ofninety percent (90%) is reached, but thatwaiver shall not exceed twelve (12) monthsfrom the date of licensure. A second waivermay be granted for an additional twelve (12)-month period. Subsections (7)(A) and (B)also will be waived for any facility which isclosed completely for six (6) months or moreand whose residents are removed, if andwhen this facility reopens.

(8) Nonreimbursable Costs.(A) Bad debts, charity and courtesy

allowances are deductions from revenue andare not to be included in allowable costs.

(B) Those services that are specifically list-ed as provided in section 208.152, RSMo areattributable to Medicare and Medicaid andshould be billed to those agencies.

(C) Any costs incurred that are related tofund drives are not reimbursable.

(D) Costs incurred for research purposesshall not be included as allowable costs.

(E) The cost of services provided undercontract or subcontract under the Title XXprogram is specifically excluded as allowablecosts.

(9) Other Revenues.(A) Other revenues including, but not lim-

ited to those listed as follows, will be deduct-ed from the total allowable cost, if includedin gross revenue: income from telephone ser-vice; sale of employee and guest meals; saleof medical abstracts; sale of scrap and wastefood or materials; rental income; cash, trade,quantity time and other discounts, purchaserebates and refunds; recovery on insuredloss; parking lot revenues; hospital roomreservation charges; vendor machine com-mission; sales from drugs to other than recip-ients; sales from medical and surgical sup-plies to other than recipients; and roomreservation charges in excess of two (2) daysper quarter.

(B) Interest income received from a fundeddepreciation account will not be deductedfrom allowable operating costs provided theinterest is applied to the replacement of theasset being depreciated. Interest income otherthan from funded depreciation in excess ofinterest expense will not be used to offsetother allowable costs.

(C) Cost centers or operations specified bythe provider as subsection (10)(D) shall nothave their associated cost or revenues includ-ed in the covered costs or revenues of thefacility.

(D) Restricted and Unrestricted Funds.1. Restricted funds, as used in this rule,

mean those funds, cash or otherwise, andincluding grants, gifts, taxes and incomefrom endowments, which must be used onlyfor a specific purpose designated by thedonor. Those restricted funds which are nottransferred funds and are designated by thedonor for paying operating costs will be offsetfrom the total allowable expenses. If anadministrative body has the authority to re-restrict restricted funds designated by the donorfor paying operating costs, these funds willnot be offset from total allowable expenses.

2. Unrestricted funds, as used in thisrule, mean those funds, cash or otherwise,and including grants, gifts, taxes and incomefrom endowments, that are given to aprovider without restriction by the donor as

to their use. These funds can be used in anymanner desired by the provider. However,those unrestricted funds which are not trans-ferred funds and are used for paying operat-ing costs will be offset from total allowableexpenses.

3. Transferred funds, as used in thisrule, are those funds appropriated through alegislative or governmental administrativebody’s action, state or local, to a state orlocal governmental provider. The transfer canbe state-to-state, state-to-local or local-to-local providers. These funds are not consid-ered a grant or gift for reimbursement pur-poses, so have no effect on the provider’sallowable cost under this plan.

(10) Gains and Losses on Sales of FixedAssets.

(A) Gains and losses on the sale or otherdisposition of buildings, furniture and equip-ment of a provider shall be taken into accountin the determination of allowable costs onlyto the extent that the following provisions areapplicable.

(B) There shall be a recapture of any sub-section (10)(A) gain or loss according to thefollowing ratio:

1. The numerator shall be the number ofyears during the asset life after July 1, 1976,that the provider has been reimbursed for allallowable costs by the Department of SocialServices for Title XIX services. For the pur-poses stated here, the year in which the assetwas purchased shall be included but the yearin which the asset disposition is made willnot be considered;

2. The denominator shall be the numberof years the asset was owned and used in theoperation of Title XIX facility; and

3. The ratio shall not exceed one hun-dred percent (100%).

(C) There shall be no recapture of any sub-section (10)(A) gain or loss, in accordancewith subsection (10)(B), unless subsection(10)(A) gain or loss, exceeds one thousanddollars ($1000).

(D) The provider may designate specificassets or operations with the submission ofeach cost report that are not to be consideredas relating to the nursing facility operation.The gains or losses from the sales of theseassets or operations shall not be subject tosubsections (10)(A)—(C).

(E) The provisions of subsections(10)(A)—(C) shall not apply to the disposi-tions of whole nursing facilities or similarchanges of ownership.

(11) Apportionment of Costs to MedicaidRecipients.


Secretary of State


(A) A provider’s allowable costs shall beapportioned between Medicaid programrecipients and other patients so that the shareborne by the Medicaid program is based uponactual services received by program recipi-ents.

(B) To accomplish this apportionment, theratio of recipient’s charges to total patientcharges for the service of each ancillarydepartment may be applied to the cost of thisdepartment. To this shall be added the cost ofroutine services for program recipients deter-mined on the basis of a separate average costper diem for general routine care areas or, atthe option of the provider, on the basis of theoverall routine care area.

(C) So that its charges may be allowablefor use in apportioning costs under the pro-gram, each provider should have an estab-lished charge structure which is applied uni-formly to each patient as services arefurnished to the patient and which is reason-ably and consistently related to the cost ofproviding these services.

(D) Average cost per diem for general rou-tine services means the amount computed bydividing the total allowable patient costs forroutine services by the total number of patientdays of care rendered by the provider in thecost-reporting period.

(E) A patient day of care is that period ofservice rendered a patient between the censustaking hours on two (2) successive days, theday of discharge being counted only when thepatient was admitted that same day. A censuslog shall be maintained in the facility for doc-umentation purposes.

(F) Nursing facilities that provide skilledor intermediate nursing care, or both, toMedicaid recipients may establish distinctpart cost centers in their facility provided thatadequate accounting and statistical datarequired to separately determine the nursingcare cost of each distinct part is maintained.Each distinct part may share common ser-vices and facilities as management services,dietary, housekeeping, building maintenanceand laundry.

(G) Reimbursement is to be limited to thelower of the level-of-care required by therecipient or the level-of-care provided in thedistinct part to which the recipient is assignedif admitted in accordance with 42 CFR456.600–456.614.

(H) In no case may a provider’s allowablecosts allocated to the Medicaid programinclude the cost of furnishing services to per-sons not covered under the Medicaid pro-gram.

(12) Accounting Basis.

(A) The cost report submitted must bebased on the accrual basis of accounting.

(B) Governmental institutions that operateon a cash or modified cash basis of account-ing may continue to use those methods pro-vided appropriate treatment of capital expen-ditures is made.

(13) Audits. (A) Cost reports submitted shall be based

upon the provider’s financial and statisticalrecords which must be capable of verificationby audit.

(B) If the provider has included the cost ofa certified audit of the facility as a coveredexpense to this plan, a copy of that auditreport and accompanying management lettershall be submitted without deletions.

(C) The annual cost report for the fiscalyear of the provider shall be subject to auditby the Department of Social Services or theircontracted agents. An audit guide will be pre-pared specifying the audit standards to beemployed by the department.

(D) The department will conduct a deskreview of all cost reports within four (4)months after submission by the provider andshall provide for on-site audits of facilitieswherever cost variances or exceptions arenoted by their personnel.

(E) No less than one-third (1/3) of the par-ticipating LTC facilities are to be audited eachyear over a three (3)-year period starting withthe close of the cost reporting years beginningon or after January 1, 1977. These audits willbe scheduled in a manner as to ensure that, atthe close of this three (3)-year period, eachparticipating LTC facility will have beenaudited.

(F) The department shall retain the annualcost report and any working paper relating toaudits of the cost reports for a period of notless than seven (7) full years from the date ofsubmission of the report or completion of theaudit.

(G) In accordance with the provisions of 42CFR 447.295, a report of each on-site auditshall be submitted to the director of theDepartment of Social Services.

(H) In accordance with the provisions of42 CFR 447.293, on-site audits will be per-formed each year after the initial three (3)-year period in at least fifteen percent (15%)of the participating facilities. At least fivepercent (5%) of the participating facilitiesshall be selected on a random basis and theremainder on the basis of exceptional pro-files.

(I) Those providers having an annual TitleXIX bed-day ratio on total bed days or certi-fied beds of greater than sixty percent (60%),an annual Title XIX payment of two hundred

thousand dollars ($200,000) or more, orboth, shall be required for at least the firsttwo (2) fiscal years of participation in theplan to have an annual audit of their financialrecords by an independent certified publicaccountant. The auditor may issue a qualifiedaudit report stating that confirmations ofaccounts receivable and accounts payable arenot required by the plan. The Department ofSocial Services will accept a qualified opin-ion from a certified public accounting firm.A copy of the audit report must be submittedto the department to support the annual costreport of the nursing home facility.

(14) Return on Equity.(A) A return on a provider’s net equity

shall be paid as a part of the interim per-diemrate in addition to allowable costs.

(B) The amount of return on a provider’snet equity shall initially be twelve percent(12%) for the state’s fiscal year period 1976–1977; a new rate of return shall be estab-lished by the Department of Social Serviceseach year thereafter prior to October 1 of thatyear. This rate shall be published yearly and,upon publication, shall be incorporated intothis plan.

(C) For the purposes of this paragraph,owner’s net equity is defined according to theMedicare Provider Reimbursement Manual(HIM-15), Section 1202.

(D) The return on owner’s net equity shallbe payable only to proprietary providers.

(E) A provider’s return on owner’s netequity shall be apportioned to the Medicaidprogram on the basis of the provider’s Medi-caid program days of care to total recipientdays of care during the cost reporting period.For the purpose of this calculation, totalrecipient days of care shall be the greater ofninety percent (90%) of the provider’s certi-fied bed capacity or actual occupancy rateduring the cost year.

(15) Allowance for Known Cost Changes. Aprovider, at its election, may include with anyregularly filed cost report, as an integral partof the report, a statement of known costchanges which reasonably can be anticipatedto change the allowable costs of the subse-quent cost-reporting period and which fallwithin guidelines as established by thedepartment. Based upon this information, theprovider may obtain an increase in its interimrate to cover the increases, provided adequatedocumentation is submitted with the reportregarding the nature and amount of costincreases and their anticipated effect uponallowable costs in the subsequent reportingperiod.



(16) Inflationary Adjustments. Inflationaryadjustments will be considered in calculatingthe interim per-diem rate. They will be basedupon the past fiscal year and will be adjustedaccording to an index such as the CompositeConsumer Price Index (CPI). Rental, inter-est, depreciation expenses and property taxeswill be excluded from the adjustments.

(17) Interim Rate.(A) Each participating provider shall be

assigned an interim per-diem rate for reim-bursement under the Medicaid programwhich will be based principally upon the costreport of the facility for the preceding report-ing period. Interim rates shall be establishedbased upon the date in the cost report, adjust-ed as described in this rule and subject to fur-ther adjustment later by reason of auditchanges to the cost report.

(B) A provider’s interim rate for a givenperiod shall take into account its past allow-able costs and return on owner’s net equity,all as most recently determined, togetherwith an allowance for known cost increases.

(C) Upon initial entry into the Medicaidprogram after July 1, 1976, a provider nothaving had a full year of prior operation maysubmit budgetary projections of allowablecosts to the department for the purpose ofestablishing an initial Medicaid interim rate.These budgetary projections shall be takeninto consideration and included in the initialinterim per-diem rate to the extent they donot exceed one hundred twenty-five percent(125%) of the weighted mean rate as deter-mined by section (6). A new facility mustoperate at the initial rate for at least six (6)months.

(D) The budgetary projections shall bebased upon a minimum occupancy utilizationof ninety percent (90%) pursuant to the prin-ciples established in section (7).

(E) In the case of a change of ownership ofan ongoing facility already participating inthe Medicaid program, the rates in effect atthe time of the change in ownership shall con-tinue until new interim cost reports are sub-mitted by the new owner in accordance withparagraph (4)(C)1. or 2.

(F) Approved interim rates shall becomeeffective on or before the first day of the thirdmonth following the filing of any cost reportas described in this rule.

(G) A written notification indicating theSNF, ICF, ICF/MR and SNF/ICF combina-tion per-diem rates respectively will be trans-mitted to the facility upon approval by thedirector, Department of Social Services orhis/her designee.

(H) In the event either party determinesthat a significant error or omission has been

made in the determination of the per-diemrate, this will be reported within thirty (30)days. Upon proper analysis of the problem,the Department of Social Services will beauthorized to make adjustments consistentwith the principles set forth in this rule andshall notify the provider in writing of its deci-sion. In the event the decision is not accept-able, the provider has the right to appealwithin sixty (60) days as provided under thisplan, section (20).

(18) Retroactive Adjustments. Initial retroac-tive adjustments for each year payable to theprovider and made in accordance with thisplan shall be paid as soon as practicable with-in one hundred eighty (180) days after receiptof the provider’s fiscal year cost report.

(19) Amounts Due the Department of SocialServices for a Provider

(A) When there is an amount due theDepartment of Social Services from aprovider, the single state agency shall notifythe provider or the provider’s representativeof the amount of the overpayment. When aprovider receives notice of an overpaymentand the amount due is in excess of one thou-sand dollars ($1000), the provider, withintwenty (20) days of the notice, shall submit aplan for repayment to the single state agencywhich shall not exceed six (6) months induration and request that the plan be adoptedand adhered to by the single state agency incollecting the overpayment. If an alternativerepayment plan is received timely from aprovider, the single state agency shall consid-er the proposal, together with all the facts andcircumstances of the case, and reject, acceptor offer to accept a modified version of theprovider’s plan for repayment. The singlestate agency shall notify the provider of itsdecision within fifteen (15) days after theproposal is received. If no alternative plan forrepayment is agreed upon within forty-five(45) days after the provider received notice ofthe overpayment, the withholding of pay-ments to the provider shall commence as ifno alternative plan for repayment had beensubmitted. Overpayments of one thousanddollars ($1000) or less shall be repaid withinforty-five (45) days.

(B) If a plan for repayment of amounts duethe Department of Social Services from aprovider is breached, discontinued or other-wise violated by a provider, the single stateagency, immediately upon the next paymentto the provider, shall begin to withhold pay-ments or portions of payments until the entireamount due has been collected.

(C) If a provider fails or refuses to complywith the provisions of this rule, the single

state agency, at its discretion, may withholdfunds from amounts due the provider inamounts as to guarantee full recovery of anoverpayment over a period of time as the sin-gle state agency deems warranted under thecircumstances.

(D) Repayment or an agreement to repayamounts due the Department of Social Ser-vices by a provider shall not prevent theimposition of any sanction by the single stateagency upon the provider.

(E) The Department of Social Servicesshall account to HHS for the amounts onForm HCFA-64 (see 10 CSR 70-10.010)owed by providers no later than the secondquarter following the quarter in which theoverpayment was determined in accordancewith principles of the plan.

(20) Appeals. Unresolved provider disputesinvolving an amount in excess of five hundreddollars ($500) may be appealed to the Admin-istrative Hearing Commission under the pro-visions of sections 161.274 and 208.156,RSMo and the corresponding rules estab-lished by the commission.

APPENDIXRoutine Covered Medical Supplies

and Services

ABD PadsA & D OintmentAdhesive TapeAir MattressesAir P.R. MattressesAirway OralAlcoholAlcohol PlastersAlcohol SpongesAntacid SuspensionsAntipruitic OilApplicators, Cotton-TippedApplicators, Swab-EezAquamatic K Pads (water-heated pad)Arm SlingsAsepto SyringesBaby PowderBandagesBandages Elastic or CohesiveBandaidsBasinsBed Frame Equipment (for certain

immobilized bed patients)Bed RailsBedpan, FractureBedpan, RegularBedside, TissuesBenzoinBibsBottle, SpecimenCanes


Secretary of State


Cannula—NasalCascara (1 oz.)Catheter, IndwellingCatheter PlugsCatheter TrayCatheters (any size)Colostomy BagsComposite PadsCotton BallsCrutchesCustomized Crutches, Canes and

WheelchairsDecubitus Ulcer PadsDeodorantsDisposable UnderpadsDonutsDouche BagsDrain TubingDrainage BagsDrainage SetsDrainage TubesDressing TrayDressings (all)Drugs, NonlegendDrugs, Stock (excluding Insulin)Enema CanEnema—FleetsEnema—RetentionEnema SoapEnema SuppliesEnema UnitEnemasEquipment and Supplies for Diabetic Urine

TestingEye PadsFeeding TubesFemale UrinalFlotation Mattress or Biowave MattressFlotation Pads, Turning Frames, or BothFolding Foot CradleGastric Feeding UnitGauze SpongesGloves, Unsterile and SterileGowns, HospitalGreen SoapHand-FeedingHeat CradleHeating PadsHeel ProtectorHot Pack MachineIce BagsIncontinency CareIncontinency Pads and PantsInfusion Arm BoardsInhalation Therapy Supplies

Aerosol Inhalators, Self-ContainedAerosol (other types)Nasal Catheter Insertion and TubeNebulizer and Replacement KitSteam Vaporizer

Intermittent Positive Pressure BreathingMachines (IPPB)

Invalid RingIrrigation BulbsIrrigation TraysI.V. TraysJelly—LubricatingKaolin and Pectin SolutionLinens, ExtraLotion, Soap and OilMale UrinalMassages (by nurses)Medical Social ServicesMedicine CupsMedicine DropperMerthiolate AerosolMilk of MagnesiaMineral OilMouthwashesNasal CannulaNasal CatheterNasal Gastric TubesNasal Tub FeedingNeedles (hypodermic, scalp, vein)Needles (various sizes)Nonallergic TapeNursing Services (all) regardless of level,

including the administration of oxygenand restorative nursing care

Nursing Supplies and Dressings (other thanitems of personal comfort or cosmetics)Ointment (nonprescription, skin)Overhead Trapeze EquipmentOxygenOxygen Equipment (such as IPPB machines

and oxygen tents)PadsPeroxidePharmaceuticals, NonprescriptionPitcherPlastic BibPumps (aspiration and suction)RestraintsRoom and BoardSand BagsScalpelSheepskinSpecial DietsSpecimen CupsSpongesSterile PadsStomach TubesSuction CatheterSuction MachinesSuction TubeSuppositories—NonlegendSurgical Dressings (including sterilesponges)Surgical PadsSurgical TapeSuture TraysSyringes, DisposableTape (for laboratory tests)Tape (nonallergic or butterfly)

Testing Sets and Refills (S & A)Tongue DepressorsTracheostomy SpongesTray ServiceTubing—I.V. Trays, Blood Infusion Set,

I.V. TubingUnderpadsUrinary Drainage TubeUrinary Tube and BottleUrological SolutionsWalkersWater PitchersWheelchairs

AUTHORITY: section 207.020, RSMo Supp.1993. * This rule was previously filed as 13CSR 40-81.080. Original rule filed Jan. 16,1978, effective May 11, 1978. Emergencyrescission filed Dec. 7, 1979, effective Dec.31, 1979, expired March 12, 1980. Emergen-cy rule filed Dec. 7, 1979, effective Jan. 1,1980, expired March 12, 1980. Rescindedand readopted: Filed Dec. 7, 1979, effectiveMay 11, 1980. Emergency amendment filedJuly 23, 1981, effective Aug. 1, 1981, expiredNov. 11, 1981. Amended: Filed July 23, 1981,effective Nov. 12, 1981. Emergency amend-ment filed Oct. 13, 1981, effective Oct. 23,1981, expired Jan. 13, 1982. Amended: FiledOct. 13, 1981, effective Jan. 14, 1982.

*Original authority 1945, amended 1961, 1965, 1977,1981, 1982, 1986, 1993.

13 CSR 70-10.010 Prospective Reimburse-ment Plan for Long-Term Care

PURPOSE: This rule establishes a paymentplan for long-term care required by the Codeof Federal Regulations. The plan describesprinciples to be followed by Title XIX long-term care providers in making financialreports and presents the necessary proce-dures for setting rates, making adjustmentsand auditing the cost reports.

Editor’s Note: The secretary of state hasdetermined that the publication of this rule inits entirety would be unduly cumbersome orexpensive. The entire text of the material ref-erenced has been filed with the secretary ofstate. This material may be found at theOffice of the Secretary of State or at the head-quarters of the agency and is available to anyinterested person at a cost established bystate law.

(1) Authority. This rule is established pur-suant to the authorization granted to theDepartment of Social Services, Division ofMedical Services to promulgate rules.



(2) Purpose. This rule establishes a method-ology for determination of prospective per-diem rates for long-term care (LTC) facilities.

(3) General Principles.(A) Provisions of this reimbursement plan

shall apply only to facilities certified for par-ticipation in the Missouri Medical Assistance(Medicaid) program.

(B) The per-diem rates determined by thisrule shall apply only to services provided onand after July 1, 1990.

(C) The effective date of this rule shall beJuly 1, 1990.

(D) The Medicaid program shall providereimbursement for LTC services based solelyon the individual Medicaid-eligible recipi-ent’s covered days of care (within benefit lim-itations) multiplied by the facility’s Medicaidper-diem rate. No payments may be collectedor retained in addition to the Medicaid per-diem rate for covered services. Where third-party payment is involved, Medicaid will bethe payor of last resort with the exception ofstate programs such as Vocational Rehabilita-tion and the Missouri Crippled Children’sServices.

(E) The Medicaid per-diem rate shall bethe lower of—

1. The Medicare (Title XVIII) per-diemrate, if applicable;

2. The per-diem rate as determined inaccordance with section (11); or

3. The LTC ceiling (LTCC). The LTCCin effect on July 1, 1990, shall be a per-diemrate of fifty-four dollars and ninety-five cents($54.95). The LTCC will be increased by theamounts prescribed in paragraph (12)(A)1.effective for the dates of services and purpos-es specified in paragraph (12)(A)1.

(F) Medicaid reimbursements shall not bepaid for services provided to Medicaid-eligi-ble recipients during any time period inwhich the facility failed to have a Medicaidparticipation agreement in effect. A per-diemreimbursement rate may not be establishedfor a facility if a Medicaid participationagreement is not in effect.

(G) Upon execution of a Medicaid partici-pation agreement, a qualified facility not pre-viously certified for participation in the Med-icaid program shall be assigned a providernumber by the Division of Medical Services.Facilities previously certified shall retain thesame provider number regardless of anychange in ownership.

(H) Regardless of changes in ownership forany facility certified for participation in theMedicaid program, the division will issueallowable reimbursements to the facility iden-tified in the current Medicaid participationagreement and will recover from that entity

liabilities, sanctions and penalties pertainingto the Medicaid program.

(I) A facility with certified and noncerti-fied beds shall allocate allowable costs relatedto the provisions of LTC services in an equi-table manner. The methods for allocationmust be supported by adequate accounting,statistical data, or both, necessary to evaluatethe allocation method and its application.

(J) Any facility which is terminated fromparticipation in the Medicare program alsoshall be terminated from participation in thestate’s Medicaid program on the same date asthe Medicare determination.

(K) No restrictions nor limitations shall beplaced on a recipient’s right to selectproviders of his/her own choice.

(L) The average Medicaid rate paid shallnot exceed the average private pay rate for thesame period covered by the facility’s Medi-caid cost report. Any amount in excess willbe subject to repayment, recoupment, orboth.

(4) Definitions.(A) Allowable cost. Those costs which are

allowable for allocation to the Medicaid pro-gram based upon the principles established inthis rule. The allowability of costs notaddressed specifically in this rule shall bedetermined by the Division of Medical Ser-vices. This determination may be based uponcriteria such as the Medicare Provider Reim-bursement Manual (HIM-15) and section (7)of this rule.

(B) Average private pay rate. The usual andcustomary charge for non-Medicaid patientsdetermined by dividing total non-Medicaiddays of care into revenue net of contractualallowances from the same service that isincluded in the Medicaid per-diem rate,excluding negotiated payment methodologieswith state or federal agencies such as the Vet-erans Administration and the MissouriDepartment of Mental Health.

(C) The Building Cost Calculator (former-ly known as the Dodge Construction Index).The cost per square foot as published in Cal-culator and Valuation Guide for a convales-cent/nursing home of good quality, masonrywall construction as of mid-year 1970 andadjusted by the general purpose Local Build-ing Cost Multiplier as of the following date:1) the date the original Certificate of Need(CON) or waiver was issued, 2) if a six (6)-month extension was granted, the date thefirst extension was granted, or 3) if the facil-ity was constructed prior to October 1, 1980,the date will be October 1, 1980. The LocalBuilding Cost Multipliers used to adjust costsshall be those established for Columbia,Kansas City and St. Louis. The multiplier to

be used in determining a facility’s rate shallbe the one established for the city geographi-cally closest to the facility as determined bythe straight line distance (not road miles)between the two (2) points, as determinedfrom the latest Missouri official highway mapfurnished by the Missouri Highways andTransportation Department. Calculator andValuation Guide is a publication of Calcula-tor, Inc., 12251 Harbor Drive, Woodbridge,VA 22192.

(D) Change of ownership. A change inownership, control, operation or leaseholdinterest by any form for any facility certifiedfor participation in the Medicaid program atany time.

(E) Cost report. The Financial and Statis-tical Report for Nursing Facilities, requiredattachments as specified in subsection(10)(A) of this rule and all worksheets sup-plied by the division for this purpose. Thecost report shall detail the cost of renderingboth covered and noncovered services for thefiscal reporting period in accordance with theprocedures prescribed by the division and onforms provided or prescribed, or both, by thedivision.

(F) Department. The department, unlessotherwise specified, refers to the MissouriDepartment of Social Services.

(G) Desk review. The Division of MedicalServices’ review of a provider’s cost reportwithout on-site audit.

(H) Director. The director, unless other-wise specified, refers to the director, Mis-souri Department of Social Services.

(I) Division. Unless otherwise designated,division refers to the Division of MedicalServices, the division of the Department ofSocial Services charged with administrationof Missouri’s Medical Assistance (Medicaid)program.

(J) Division of Aging. The division of theDepartment of Social Services responsiblefor survey, certification and licensure of LTCfacilities.

(K) Entity. Any natural person, all corpo-rations, business, partnership or somethingthat exists as a discrete unit.

(L) Facility fiscal year. A facility’s twelve(12)-month fiscal reporting period coveringthe same twelve (12)-month period as its fed-eral tax year.

(M) Generally accepted accounting princi-ples (GAAP). Accounting conventions, rulesand procedures necessary to describe acceptedaccounting practice at a particular time pro-mulgated by the authoritative body establish-ing those principles.


Secretary of State


(N) Intermediate care facility (ICF). Priorto October 1, 1990, a facility certified to pro-vide intermediate care under the Title XIXprogram.

(O) LTC facility. Prior to October 1, 1990,a facility certified to provide skilled nursingservices under the Title XIX program (skillednursing facility (SNF)), or a facility certifiedto provide intermediate care under the TitleXIX program (ICF), or a facility certified toprovide skilled nursing and intermediate careunder the Title XIX program (SNF/ICF). Onand after October 1, 1990, a nursing facility(NF).

(P) New facility. A newly-built LTC facili-ty for which an approved CON or applicablewaiver was obtained and which was newlycompleted and operational on or after July 1,1990.

(Q) Nursing facility (NF). Effective Octo-ber 1, 1990, SNFs, SNF/ICFs and ICFs par-ticipating in the Medicaid program all will besubject to state and federal laws or regula-tions for participation as an NF.

(R) Occupancy. A facility’s total actualpatient days divided by the total bed days forthe same period.

(S) Patient day. The period of service ren-dered to a patient between the census-takinghour on two (2) consecutive days. Censusshall be taken in all facilities at midnight eachday and a census log maintained in each facil-ity for documentation purposes. Patient dayincludes the allowable temporary leave-of-absence days per subsection (5)(D). The dayof discharge is not a patient day for reim-bursement unless it is also the day of admis-sion.

(T) Provider or facility. An LTC facilitywith a valid Medicaid participation agree-ment in effect on or after July 1, 1990, withthe Department of Social Services for thepurpose of providing LTC services to TitleXIX-eligible recipients.

(U) Related parties. Parties are relatedwhen any one (1) of the following circum-stances apply:

1. An entity in which, through its activ-ities, one (1) entity’s transactions are for thebenefit of the other and the benefits exceedthose which are usual and customary in thosedealings;

2. An entity has an ownership or con-trolling interest in another entity and the enti-ty, or one (1) or more relatives of the entity,has an ownership or controlling interest in theother entity. For the purposes of this para-graph, ownership or controlling interest doesnot include a bank, savings bank, trust com-pany, building and loan association, savingsand loan association, credit union, industrialloan and thrift company, investment banking

firm or insurance company unless the entity,directly or through a subsidiary, operates afacility; or

3. As used in this rule, the followingterms mean:

A. Indirect ownership/interest, anownership/interest in an entity that has anownership/interest in another entity. Thisterm includes an ownership/interest in anyentity that has an indirect ownership/interestin an entity;

B. Ownership/interest, the possessionof equity in the capital, in the stock or in theprofits of an entity;

C. Ownership or controlling interest,when an entity—

(I) Has an ownership/interesttotalling five percent (5%) or more in an enti-ty;

(II) Has an indirect ownership/interest equal to five percent (5%) or more inan entity. The amount of indirectownership/interest is determined by multiply-ing the percentages of ownership in each enti-ty;

(III) Has a combination of directand indirect ownership/interest equal to fivepercent (5%) or more in an entity;

(IV) Owns an interest of five per-cent (5%) or more in any mortgage, deed oftrust, note or other obligation secured by anentity if that interest equals at least five per-cent (5%) of the value of the property orassets of the entity. The percentage of owner-ship resulting from these obligations is deter-mined by multiplying the percentage of inter-est owned in the obligation by the percentageof the entity’s assets used to secure the obli-gation;

(V) Is an officer or director of anentity; or

(VI) Is a partner in an entity that isorganized as a partnership; and

D. Relative, person related by blood,adoption or marriage to the fourth degree ofconsanguinity.

(V) Restricted funds. Funds, cash or other-wise, including grants, gifts, taxes andincome from endowments which must beused only for a specific purpose designatedby the donor.

(W) Skilled nursing facility (SNF). Priorto October 1, 1990, a facility certified to pro-vide skilled nursing services under the TitleXIX program.

(X) SNF/ICF combination. Prior to Octo-ber 1, 1990, a facility certified to provideskilled nursing and intermediate care underthe Title XIX program.

(Y) Square footage. The square footage ofa facility will be determined from the recordsof the county assessor of the county wherethe facility is located. For facilities that are

exempt from property tax assessment, thesquare footage of the facility shall be deter-mined from a certified statement from alicensed architect verifying the square footageof the facility in accordance with the Ameri-can Institute of Architects Document D101.

(Z) Unrestricted funds. Funds, cash or oth-erwise, including grants, gifts, taxes andincome from endowments which are given toa provider without restriction by the donor asto their use.

(5) Covered Supplies, Items and Services. Allsupplies, items and services covered in theper-diem rate must be provided to the resi-dent as necessary. Supplies and serviceswhich would otherwise be covered in a per-diem rate but which also are billable to theTitle XVIII Medicare program must be billedto that program for facilities participating inthe Title XVIII Medicare program. Coveredsupplies, items and services include, but arenot limited to, the following:

(A) Services, items and supplies requiredby federal or state law or regulation whichmust be provided by LTC facilities participat-ing in the Title XIX program;

(B) Semiprivate room and board;(C) Private room and board when it is nec-

essary to isolate a recipient due to a medicalor social condition, examples of which maybe contagious infection, loud irrationalspeech, and the like;

(D) Temporary leave of absence days forMedicaid recipients, not to exceed twelve(12) days for the first six (6) calendar monthsand not to exceed twelve (12) days for thesecond six (6) calendar months. Temporaryleave of absence days specifically must beprovided for in the recipient’s plan of careand physician prescribed. Periods of timeduring which a recipient is away from thefacility because s/he is visiting a friend or rel-ative are considered temporary leaves ofabsence;

(E) Provision of nursing services;(F) Provision of personal hygiene and rou-

tine care services furnished routinely and rel-atively uniformly to all residents;

(G) All laundry services, including person-al laundry;

(H) All dietary services, including specialdietary supplements used for tube feeding ororal feeding. Dietary supplements prescribedby a physician are also covered items;

(I) All consultative services required byfederal or state law or regulation;

(J) All therapy services required by federalor state law or regulation;

(K) All routine care items, including dis-posables and including, but not limited to,



those items specified in Appendix A to thisrule;

(L) All nursing care services and supplies,including disposables and including, but notlimited to, those items specified in AppendixA to this rule;

(M) Any and all nonlegend antacids, non-legend laxatives, nonlegend stool softenersand nonlegend vitamins. Providers may notelect which nonlegend drugs in any of thefour (4) categories to supply; any and allmust be provided to residents as needed andare included in a facility’s per-diem rate; and

(N) Hospital leave days as defined in 13CSR 70-10.070.

(6) Noncovered Supplies, Items and Services.All supplies, items and services which are noteither covered in a facility’s per-diem rate,billable to another program in the MissouriMedical Assistance (Medicaid) program orbillable to Medicare or other third-party pay-ors. Noncovered supplies, items and servicesinclude, but are not limited to, the following:

(A) Private room and board unless it isnecessary to isolate a recipient due to a med-ical or social condition, examples of whichmay be contagious infection and loud irra-tional speech. Unless a private room is nec-essary due to a medical or social condition, aprivate room is a noncovered service andtherefore a Medicaid recipient or responsibleparty may pay the difference between a facil-ity’s semiprivate charge and its charge for aprivate room. Medicaid recipients may not beplaced in private rooms and charged anyadditional amount above the facility’s Medi-caid per diem unless the recipient or respon-sible party, in writing, specifically requests aprivate room prior to placement in one andacknowledges that an additional amount notpayable by Medicaid will be charged for it;

(B) Supplies, items and services for whichpayment is made under Missouri MedicalAssistance (Medicaid) program directly to aprovider(s) other than providers of the LTCservices; and

(C) Supplies, items and services providednonroutinely to residents for personal com-fort or convenience.

(7) Allowable cost areas are—(A) Compensation of owners.

1. Compensation of services of ownersshall be an allowable cost area, provided theservices are actually performed, are neces-sary and are reasonable.

2. Compensation shall mean the totalbenefit, within the limitations set forth in thisrule, received by the owner for the servicess/he renders to the facility, including direct

payments for managerial, administrative, pro-fessional and other services, amounts paid forthe personal benefit of the owner, the cost ofassets and services which the owner receivesfrom the provider, and additional amountsdetermined to be the reasonable value of theservices rendered by sole proprietors or part-ners and not paid by any method previouslydescribed in this rule. Compensation must bepaid (whether in cash, negotiable instrumentor in kind) within seventy-five (75) days afterthe close of the period in accordance with theguidelines published in the MedicareProvider Reimbursement Manual (PRM),Part 1, Section 906.4.

3. Reasonableness of compensation shallbe limited as prescribed in subsection (8)(Q).

4. Necessary services refers to thoseservices that are pertinent to the operationand sound conduct of the facility; had theowner not rendered these services, thenemployment of another entity to perform theservice would be necessary;

(B) Covered services and supplies asdefined in section (5) of this rule.

(C) Depreciation.1. An appropriate allowance for depreci-

ation on buildings, furnishings and equipmentwhich are part of the operation and soundconduct of the provider’s business is anallowable cost item. Finder’s fees are not anallowable cost item.

2. The depreciation must be identifiableand recorded in the provider’s accountingrecords, based on the basis of the asset andprorated over the estimated useful life of theasset using the straight-line method of depre-ciation from the date initially put into service.

3. The basis of assets at the time placedin service shall be the lower of—

A. The book value of the provider;B. Fair market value at the time of

acquisition;C. The recognized Internal Revenue

Service (IRS) tax basis; andD. In the case of change in ownership

after July 18, 1984, the cost basis of acquiredassets of the owner of record as of July 18,1984, as of the effective date of the change inownership or, in the case of a facility whichentered the program after July 18, 1984, theowner at the time of the initial entry into theMedicaid program.

4. The basis of donated assets will beallowed to the extent of recognition of incomeresulting from the donation of the asset.Should a dispute arise between a provider andthe division as to the fair market value at thetime of acquisition of a depreciable asset andan appraisal by a third party is required, theappraisal cost will be shared proportionatelyby the Medicaid program and the facility in

ratio to Medicaid recipient reimbursablepatient days to total patient days.

5. Allowable methods of depreciationshall be limited to the straight-line method.The depreciation method used for an assetunder the Medicaid program need not corre-spond to the method used by a provider fornon-Medicaid purposes; however, useful lifeshall be in accordance with the AmericanHospital Association’s Guidelines. Com -ponent part depreciation is optional andallowable under this rule.

6. Historical cost is the cost incurred bythe provider in acquiring the asset andpreparing it for use except as provided in thisrule. Usually, historical cost includes coststhat would be capitalized under GAAP. Forexample, in addition to the purchase price,historical cost would include architecturalfees and related legal fees. When a providerhas elected, for federal income tax purposes,to expense certain items, such as interest andtaxes during construction, the historical costbasis for Medicaid depreciation purposes mayinclude the amount of these expensed items.However, when a provider did not capitalizethese costs and has written off the costs in theyear they were incurred, the provider cannotretroactively capitalize any part of these costsunder the program. For purposes of this rule,any asset costing less than one thousand dol-lars ($1000), or having a useful life of one (1)year or less, may be expensed and not capi-talized at the option of the provider.

7. When an asset is acquired by tradingin an existing asset, the cost basis of the newasset shall be the sum of undepreciated costbasis of the traded asset plus the cash paid.

8. For the purpose of determiningallowance for depreciation, the cost basis ofthe asset shall be as described in paragraph(7)(C)3.

9. Capital expenditures for building con-struction or for renovation costs which are inexcess of one hundred fifty thousand dollars($150,000) and which cause an increase in aprovider’s bed capacity shall not be allowedin the depreciation base if the capital expen-ditures fail to comply with any federal orstate law or regulation, such as CON.

10. Amortization of leasehold rights andrelated interest and finance costs shall not beallowable costs under this rule;

(D) Interest and finance costs.1. Necessary and proper interest on both

current and capital indebtedness shall be anallowable cost item excluding finder’s fees.

2. Interest is the cost incurred for theuse of borrowed funds. Interest on currentindebtedness is the cost incurred for fundsborrowed for a relatively short term. This isusually for purposes such as working capital


Secretary of State


for normal operating expenses. Interest oncapital indebtedness is the cost incurred forfunds borrowed for capital purposes such asacquisition of facilities and capital improve-ments, and this indebtedness must be amor-tized over the life of the loan.

3. Interest may be included in financecharges imposed by some lending institu-tions, or it may be a prepaid cost or discountin transactions with those lenders who collectthe full interest charges when funds are bor-rowed.

4. Interest (including finance charges,prepaid costs and discounts) must be support-ed by evidence of a written agreement thatfunds were borrowed and that payment ofinterest and repayment of the funds arerequired. The interest costs must be identifi-able in the provider’s accounting records,must be related to the reporting period inwhich the costs are claimed and must be nec-essary and proper for the operation, mainte-nance or acquisition of the provider’s facility.

5. Necessary means that the interest beincurred for a loan made to satisfy a financialneed of the provider and for a purpose relatedto recipient care. Loans which result inexcess funds or investments are not consid-ered necessary.

6. Proper means that the interest beincurred at a rate not in excess of what a pru-dent borrower would have had to pay in themarket at the time the loan was made.

7. Interest on loans to for-profitproviders by proprietors, partners and anystockholders shall not be an allowable costitem because the loans shall be treated asinvested capital and included in the computa-tion of an allowable return on owner’s netequity.

8. If loans for capital indebtednessexceed the asset cost basis as defined in sub-section (7)(C), the interest associated withthe portion of the loan(s) which exceeds theasset cost basis as defined in subsection(7)(C) shall not be allowable.

9. Income from a provider’s qualifiedretirement fund shall be excluded in consider-ation of the per-diem rate.

10. A provider shall amortize financecharges, prepaid interest and discounts overthe period of the loan ratably or by means ofthe constant rate of interest method on theunpaid balance.

11. Usual and customary costs exclud-ing finder’s fees incurred to obtain loans shallbe treated as interest expense and shall beallowable costs over the period of the loanratably or by means of the constant rate ofinterest method.

12. Usual and customary costs shall belimited to the lender’s title and recording

fees, appraisal fees, legal fees, escrow feesand closing costs.

13. Interest expense resultant from cap-ital expenditures for building construction orfor renovation costs which are in excess ofone hundred fifty thousand dollars($150,000) and which cause an increase in aprovider’s bed capacity shall not be an allow-able cost item if the capital expenditures failto comply with any federal or state law orregulation, such as CON;

(E) Rental and leases.1. Rental and leases of land, buildings,

furnishings and equipment are allowable costareas; provided, that the rented items are nec-essary and not, in essence, a purchase ofthose assets. Finder’s fees are not an allow-able cost item.

2. Necessary rental and lease items arethose which are pertinent to the economicaloperation of the provider.

3. In the case of related parties, rentaland lease amounts cannot exceed the lesser ofthose which are actually paid or the costs tothe related party.

4. Determination of reasonable and ade-quate reimbursement for rental and amounts,except in the case of related parties which issubject to other provisions of this rule, mayrequire affidavits of competent, impartialexperts who are familiar with the currentrentals and leases.

5. The test of necessary costs shall takeinto account the agreement between theowner and the tenant regarding the paymentof related property costs.

6. Leases subject to CON approval musthave that approval before a rate is deter-mined.

7. If rent or lease costs increase solelyas a result of change in ownership after July18, 1984, the resulting increase whichexceeds the allowable capital cost of theowner of record as of July 18, 1984, or, in thecase of a facility which entered the programafter July 18, 1984, the owner at the time ofthe initial entry into the Medicaid program,shall be a nonallowable cost;

(F) Real estate and personal property taxeslevied on or incurred by a facility.

(G) Issuance of revenue bond and taxlevies by district and county facilities. Forthose nursing home districts and county facil-ities whose funding is through the issuance ofrevenue bonds, that interest which is paid perthe revenue bond will be granted as an allow-able cost item. Depreciation on the plant andequipment of these facilities also shall be anallowable cost item. Any tax levies which arecollected by nursing home districts or countyhomes that are supported in whole or in partby these levies will not be recognized as a

revenue offset except to the extent that thefunds are used for the actual operation of thefacility.

(H) Value of services of employees.1. Except as provided for in this rule,

the value of services performed by employeesin the facility shall be included as an allow-able cost area to the extent actually compen-sated, either to the employee or to the supply-ing organization.

2. Services rendered by volunteers suchas those affiliated with the American RedCross, hospital guilds, auxiliaries, privateindividuals and similar organizations shallnot be an allowable cost, as the services havetraditionally been rendered on a purely volun-teer basis without expectation of any form ofreimbursement by the organization throughwhich the service is rendered or by the per-son rendering the service.

3. Services by priests, ministers, rabbisand similar type professionals shall be anallowable cost; provided, that the services arenot of a religious nature. Building costs onspace set aside primarily for professionalsproviding any religious function shall not beallowable. Costs for wardrobe and similaritems likewise are considered nonallowable;

(I) Fringe benefits.1. Retirement plans.

A. Contributions to qualified retire-ment plans for the benefit of employees,excluding stockholders, partners and propri-etors of the provider shall be an allowablecost. Interest income from funded pension orqualified retirement plans shall be excludedfrom revenue offsets.

B. Amounts funded to pension andqualified retirement plans, together withassociated income, shall be recaptured, if notactually paid when due, as an offset toexpenses on the cost report.


employees, excluding stockholders, partnersand proprietors, under deferred compensa-tion plans shall be allowable costs when, andto the extent that, these costs are actually paidby the provider. Deferred compensation plansmust be funded. Provider payments underunfunded deferred compensation plans willbe considered an allowable cost only whenpaid to the participating employee and only tothe extent considered reasonable.

B. Amounts paid by tax-exempt orga-nizations to purchase tax-sheltered annuitiesfor employees shall be treated as deferredcompensation actually paid by the provider.

C. Amounts funded to deferred com-pensation plans together with associatedincome shall be recaptured, if not actually



paid when due, as an offset to expenses onthe cost report.

3. Types of insurance which are consid-ered an allowable cost area.

A. Where credit life insurance isrequired as part of a mortgage loan agree-ment. An example would be insurance onloans granted under certain federal programs.

B. Where the relative(s) or estate ofthe employee, excluding stockholders, part-ners and proprietors, is the beneficiary. Thistype of insurance is considered to be a fringebenefit and is an allowable cost area to theextent that the amount of coverage is reason-able;

(J) Education and training expenses.1. Except for costs associated with nurse

aide training, and competency evaluation pro-grams after October 1, 1990, the cost of on-the-job training which directly benefits thequality of health care or administration at thefacility shall be allowable. Off-the-job train-ing involving extended periods exceeding five(5) continuous days is an allowable cost onlywhen specifically authorized in advance inwriting by the division.

2. Costs of education and training shallinclude incidental travel costs but will notinclude leaves of absence or sabbaticals;

(K) Organizational costs.1. Organizational costs may be included

as an allowable cost, if properly amortized. 2. Organizational cost items include the

following: legal fees incurred in establishingthe corporation or other organizations, neces-sary accounting fees, expenses of temporarydirectors and organizational meetings ofdirectors and stockholders, and fees paid tostates for incorporation.


4. When a provider did not capitalizeorganizational costs and has written off thosecosts in the year they were incurred, theprovider cannot retroactively capitalize anypart of these costs under the program.

5. Where a provider is organized withina five (5)-year period prior to entry into theprogram and has properly capitalized organi-zational costs using a sixty (60)-month amor-tization period, no change in the rate ofamortization is required. In this instance theunamortized portion of organizational costs isan allowable cost area under the program andshall be amortized over the remaining part ofthe sixty (60)-month period.

6. For change in ownership after July18, 1984, allowable amortization will be lim-ited to the prior owner’s allowable unamor-tized portion of organizational cost;

(L) Advertising costs. Advertising costswhich are reasonable and appropriate. Thecosts must be a common and accepted occur-rence for providing LTC services.

(M) Cost of supplies and services involv-ing related parties. Costs of goods and ser-vices furnished by related parties shall notexceed the lower of the cost to the supplier orthe prices of comparable goods or servicesobtained elsewhere. In the uniform costreport, a provider shall identify related partysuppliers and the type, the quantity and coststo the related party for goods and servicesobtained from each supplier.

(N) Utilization review. Costs incurred forthe performance of required utilizationreview.

(O) Minimum utilization. In the event theoccupancy rate of a facility is below ninetypercent (90%), the following cost centers willbe adjusted as though the provider experi-enced ninety percent (90%) occupancy: laun-dry, housekeeping, plant operation and gener-al and administrative. In no case may costsdisallowed under this provision be carriedforward to succeeding periods. Cost centersare expenses grouped in accordance with theheadings as identified in the cost report.

(P) Return on equity.1. A return on a provider’s net equity

shall be an allowable cost area. 2. The amount of return on a provider’s

net equity shall not exceed twelve percent(12%) per year.

3. An owner’s net equity is comprised ofinvestment capital and working capital.Investment capital includes the investment inbuilding, property and equipment (cost ofland, mortgage payments toward principaland equipment purchase less the accumula-tive depreciation). Working capital representsthe amount of capital which is required toinsure proper operation of the facility.

4. The return on owner’s net equity shallbe payable only to proprietary providers.

5. A provider’s return on owner’s netequity shall be apportioned to the Medicaidprogram on the basis of the provider’s Medi-caid program reimbursable recipient residentdays of care to total resident days of care dur-ing the cost-reporting period. For the purposeof this calculation, total resident days of careshall be the greater of ninety percent (90%)of the provider’s certified bed capacity oractual occupancy during the cost report year;

(Q) Capital.

1. Capital reimbursement will be deter-mined as follows:

A. For facilities entering the programafter July 1, 1990, allowable capital is asdescribed in paragraph (7)(Q)2. except themovable equipment rate described in item(7)(Q)2.A.(I)(a)IV. shall be sixty-five cents(65¢) per bed day which equates to two hun-dred twenty dollars ($220) per bed;

B. For facilities which entered theprogram after March 18, 1983, and whichwere not in operation for two (2) years priorto entering the program, allowable capital isas described in paragraph (7)(Q)2.;

C. For facilities which were in opera-tion for two (2) years prior to entering theprogram and which entered the programbetween March 18, 1983 and prior to July 1,1990, allowable capital shall be depreciation;rent or leases, or both; interest and financecosts; organizational costs; and return onequity as described in the provisions of thisrule; and

D. For facilities which entered theprogram prior to March 18, 1983, allowablecapital shall be depreciation; rent or leases,or both; interest and finance costs; organiza-tional costs; and return on equity asdescribed in the provisions of this rule.

2. In lieu of depreciation; rent or leases,or both; interest and finance costs; organiza-tional costs; and return on equity asdescribed in the provisions of this rule, allow-able capital for facilities described in sub-paragraphs (7)(Q)1.A. and B. shall be thesum of the building and equipment rate, landrate and working capital rate determined inaccordance with the following procedures:

A. The building and equipment ratewill be computed in the following way:

(I) Determine the lower of—(a) Dodge allowable for building

and equipment, which is computed as—I. Reasonable construction or acquisi-

tion cost computed by applying the BuildingCost Calculator as defined in this rule for thefacility geographically closest to St. Louis,Kansas City or Columbia, multiplied by onehundred eight percent (108%) as anallowance for fees authorized as architecturalor legal not included in the Building CostCalculator, multiplied by the square footageof the facility not to exceed three hundredtwenty-five (325) square feet per bed;

II. Multiply by a return rate of twelvepercent (12%);

III. Divide by ninety-three percent(93%) of the facility’s total available bedsmultiplied by three hundred sixty-five (365)days; and

IV. Add fifty-three cents (53¢) perbed day to cover the movable equipment,


Secretary of State


which equates to one hundred eighty dollars($180) per bed divided by the product ofninety-three percent (93%) multiplied bythree hundred sixty-five (365) days; or

(b) Actual acquisition cost,which is computed as—

I. Actual acquisition cost, which isthe original cost to construct or acquire thebuilding, including fixed and movable equip-ment, and excluding land costs not to exceedthe limitations on reimbursement as set forthin 13 CSR 70-10.100, if applicable;

II. Multiply by a return rate oftwelve percent (12%);

III. Divide by ninety-three percent(93%) of the facility’s total available bedsmultiplied by three hundred sixty-five (365)days;

B. The land rate.(I) The maximum allowable land

area is defined as five (5) acres for a facilitywith one hundred (100) or fewer beds andone (1) additional acre for each additionalone hundred (100) beds or fraction of bedsfor a facility with one hundred one (101) ormore beds.

(II) Calculation.(a) For facilities with land areas

at or below the maximum allowable landarea, multiply the acquisition cost of the landnot to exceed the limitations on reimburse-ment as set forth in 13 CSR 70-10.100, ifapplicable, by the return rate of twelve per-cent (12%), divide by ninety-three percent(93%) of the facility’s total available bedsmultiplied by three hundred sixty-five (365)days.

(b) For facilities with land areasgreater than the maximum allowable landarea, divide the acquisition cost of the landnot to exceed the limitations on reimburse-ment as set forth in 13 CSR 70-10.100, ifapplicable, by the total acres, multiply by themaximum allowable land area, multiply bythe return rate of twelve percent (12%),divide by ninety-three percent (93%) of thefacility’s total available beds, multiplied bythree hundred sixty-five (365) days;

C. The working capital rate will betwenty cents (20¢) per day. This amount wasdetermined to be the average daily balancedue to a facility for services provided to thestate with a return rate of twelve percent(12%), divided by ninety-three percent(93%); and

D. If a provider does not provide theactual acquisition cost to determine the build-ing and equipment rate and the land rate, thebuilding and equipment rate will be comput-ed using subpart (7)(Q)2.A.(I)(b), and theland rate will be zero cents (0¢); and

(R) Central office, pooled costs, manage-ment company costs. The allowability of theindividual cost items contained within centraloffice, pooled costs or management companycosts will be determined in accordance withall other provisions of this rule. The total ofcentral office, pooled costs and managementcompany costs, or a combination of these, arelimited to seven percent (7%) of revenues.

(8) Nonallowable Costs. Cost not reasonablyrelated to LTC facility services shall not beincluded in a provider’s costs. Contractualallowances, courtesy discounts, charityallowances and similar adjustments orallowances are offsets to revenue and notincluded in allowable costs. Nonallowablecost areas include, but are not limited to, thefollowing:

(A) Amortization on intangible assets,such as goodwill, leasehold rights, covenants,purchased CON, but excluding organizationalcosts;

(B) Attorney fees related to litigationinvolving state, local or federal governmentalentities and attorneys’ fees which are notrelated to the provision of LTC services, suchas litigation related to disputes between oramong owners, operators or administrators;

(C) Bad debts;(D) Capital cost increases due solely to

changes in ownership; (E) Central office or pooled costs not

attributable to the efficient and economicaloperation of the facility;

(F) Charitable contributions;(G) Compensation paid to a relative or an

owner through a related party to the extent itexceeds the limitations established under sub-section (7)(A) of this rule;

(H) Costs such as legal fees, accountingand administration costs, travel costs and thecosts of feasibility studies which areattributable to the negotiation or settlement ofthe sale or purchase of any capital asset byacquisition or merger for which any paymenthas been previously made under the program;

(I) Directors’ fees included on the costreport in excess of two hundred dollars($200) per month per individual;

(J) Federal, state or local income andexcess profit taxes, including any interest andpenalties paid on them;

(K) Late charges and penalties;(L) Finder’s fees;(M) Fund-raising expenses;(N) Interest expense on intangible assets;(O) Life insurance premiums for officers

and owners and related parties except theamount relating to a bona fide nondiscrimina-tory employee benefits plan;

(P) Noncovered supplies, services anditems as defined in section (6);

(Q) Owner’s compensation in excess of theapplicable range of the most recent survey ofadministrative salaries paid to individualsother than owners for proprietary and non-proprietary providers as published in theupdated Medicare PRM Part 1, Section 905.2and based upon the total number of workinghours.

1. The applicable range will be deter-mined as follows:

A. Number of licensed beds owned ormanaged; and

B. Owners/administrators will beadjusted on the basis of the high range; own-ers included in home office costs or manage-ment company costs will be adjusted on thehigh range provided the owner works a mini-mum of forty (40) hours a week in the homeoffice, management company or owned nurs-ing homes. All others will be calculated onthe median range.

2. The salary identified in subparagraph(8)(Q)1.B. will be apportioned on the basis ofhours worked in the facility(ies), home officeor management company as applicable tototal hours reported for all business interests.A forty (40)-hour minimum will be applied iftotal hours for all business interests are lessthan forty (40) hours;

(R) Prescription drugs;(S) Religious items or supplies or services

of a primarily religious nature performed bypriests, rabbis, ministers or other similartypes of professionals. Costs associated withportions of the physical plant used primarilyfor religious functions are also nonallowable;

(T) Research costs;(U) Resident personal purchases;(V) Salaries, wages or fees paid to non-

working officers, employees or consultants; (W) Stockholder relations or stock proxy

expenses;(X) Taxes or assessments for which exemp-

tions are available; (Y) Value of services (imputed or actual)

rendered by nonpaid workers or volunteers;and

(Z) All costs associated with nurse aidetraining and competency evaluation programsafter October 1, 1990.

(9) Revenue Offsets.(A) Other revenues must be identified sep-

arately in the cost report if included in grossrevenues. These revenues include, but are notlimited to, the following:

1. Income from telephone services;2. Sale of employee and guest meals;3. Sale of medical abstracts;



4. Sale of scrap and waste food or mate-rials;

5. Rental income;6. Cash, trade, quantity, time and other

discounts;7. Purchase rebates and refunds;8. Recovery on insured loss;9. Parking lot revenues;10. Vending machine commissions or

profits;11. Sales from drugs to individuals

other than Medicaid recipients;12. Interest income to the extent of

interest expense;13. Noninterest income from invest-

ments;14. Room reservation charges other than

covered therapeutic home leave days; 15. Barber and beauty shop revenue;16. Private room differential;17. Medicare Part B revenues;18. Personal services;19. Activity income; and20. Revenue recorded for donated ser-

vices and commodities. (B) Interest income received from a funded

depreciation account will not be deductedfrom allowable operating costs if that interestis applied to the asset being depreciated.

(C) Restricted funds designated by thedonor prior to the donation for payment ofoperating costs will be offset from the associ-ated cost.

(D) Restricted funds designated by thedonor for future capital expenditures will notbe offset from allowable expenses at any time.

(E) Unrestricted funds not designated bythe provider for future capital expenditureswill be offset from allowable cost.

(F) As applicable, restricted and unrestrict-ed funds will be offset in each cost center,excluding capital costs, in an amount equal tocost center’s proportionate share of allowableexpense.

(G) Any tax levies which are collected bynursing home districts or county homes thatare supported in whole or in part by theselevies will not be recognized as a revenue off-set except to the extent that the funds are usedfor the actual operation of the facility.

(10) Provider Reporting and RecordkeepingRequirements.

(A) Annual Cost Report.1. Each provider shall adopt the same

twelve (12)-month fiscal period for complet-ing its cost report as is used for federalincome tax reporting.

2. Each provider is required to completeand submit to the Division of Medical Ser-vices an Annual Cost Report, Financial andStatistical Report for Nursing Facilities,

including all worksheets, attachments, sched-ules and requests for additional informationfrom the division. The cost report shall besubmitted on forms provided by the divisionfor that purpose.

3. All cost reports shall be completed inaccordance with the requirements of this ruleand the cost report instructions. Financialreporting shall adhere to GAAP except asotherwise specifically indicated in this rule.

4. The cost report submitted must bebased on the accrual basis of accounting.Governmental institutions operating on a cashor modified cash basis of accounting maycontinue to report on that basis, providedappropriate treatment under GAAP of capitalexpenditures is made.

5. Cost reports shall be submitted by thefirst day of the fourth month following theclose of the fiscal period.

6. If requested in writing, one (1) thirty(30)-day extension of the filing date may begranted.

7. If a cost report is more than ten (10)days past due, payment will be withheld fromthe facility until the cost report is submitted.Upon receipt of a cost report prepared inaccordance with this rule, the payments thatwere withheld will be released to theprovider. For cost reports which are morethan ninety (90) days past due, the depart-ment may terminate the provider’s Medicaidparticipation and retain all payments whichhave been withheld pursuant to this provi-sion.

8. Authenticated copies of agreementsand other significant documents related to theprovider’s operation and provision of care toMedicaid recipients must be attached to thecost report at the time of filing unless currentand accurate copies have already been filedwith the division. Material which must besubmitted includes, but is not limited to, thefollowing:

A. Audit, review or compilation state-ment prepared by an independent accountant,including disclosure statements and manage-ment letter or SEC Form 10-K;

B. Contracts or agreements involvingthe purchase of facilities or equipment duringthe last seven (7) years if requested by thedivision, the department or its agents;

C. Contracts or agreements with own-ers or related parties;

D. Contracts with consultants;E. Documentation of expenditures, by

line item, made under all restricted and unre-stricted grants;

F. Federal and state income taxreturns for the fiscal year, within fifteen (15)days of filing the returns;

G. Leases, rental agreements, orboth, related to the activities of the provider;

H. Management contracts;I. Medicare cost report, if applicable;J. Statement verifying the restrictions

as specified by the donor, prior to donation,for all restricted grants; and

K. Working trial balance actuallyused to prepare cost report with line numbertracing notations or similar identifications.

9. Cost reports must be fully, clearlyand accurately completed and all requiredattachments must be submitted before a costreport is considered complete. If any addi-tional information, documentation or clarifi-cation requested by the division or its autho-rized agent is not provided within fourteen(14) days of the provider’s receipt of therequest, payments may be withheld from thefacility until the information is submitted.

10. Under no circumstances will thedivision accept amended cost reports for ratedetermination or rate adjustment after thedate of the division’s notification of the finaldetermination of the rate.

(B) Certification of Cost Reports.1. The accuracy and validity of the cost

report must be certified by the provider. Cer-tification must be made by a person autho-rized by one (1) of the following: for anincorporated entity, an officer of the corpora-tion; for a partnership, a partner; for a soleproprietorship or sole owner, the owner orlicensed operator; or for a public facility, thechief administrative officer of the facility.Proof of authorization shall be furnishedupon request.

2. Cost reports must be notarized by alicensed notary public.

3. The following statement must besigned on each cost report to certify its accu-racy and validity:

Certification Statement: Misrepresenta tionor falsification of any information containedin this cost report may be punishable by fine,imprisonment, or both, under state or federallaw.

I hereby certify that I have read the abovestatement and that I have examined theaccompanying cost report and supportingschedules prepared by

____________________________________(Provider name(s) and number(s))

for the cost report period beginning______________, 19_____ and ending_______________, 19______ , and that tothe best of my knowledge and belief, it is atrue, correct and complete statement pre-pared from the books and records of the


Secretary of State


provider in accordance with applicableinstructions, except as noted.

_______________ _____________ _______(Signature) (Title) (Date)

(C) Adequate Records and Documentation.1. A provider must keep records in

accordance with GAAP and maintain suffi-cient internal control and documentation tosatisfy audit requirements and other require-ments of this rule, including reasonablerequests by the division or its authorizedagent for additional information.

2. Each of a provider’s funded accountsmust be maintained separately with allaccount activity clearly identified.

3. Adequate documentation for all lineitems on the cost report shall be maintainedby a provider. Upon request, all original doc-umentation and records must be made avail-able for review by the division or its autho-rized agent at the same site at which theservices were provided. Copies of documen-tation and records shall be submitted to thedivision or its authorized agent upon request.

4. Each facility shall retain all financialinformation, data and records relating to theoperation and reimbursement of the facilityfor a period of not less than seven (7) years.

(D) Audits.1. Any cost report submitted may be

subject to field audit by the division or itsauthorized agent.

2. A provider shall have available at thefield audit location one (1) or more knowl-edgeable persons authorized by the providerand capable of explaining the provider’saccounting and control system and cost reportpreparation, including all attachments andallocations.

3. If a provider maintains any records ordocumentation at a location which is not thesame as the site where services were provid-ed, the provider shall transfer the records tothe same facility at which the Medicaid ser-vices were provided, or the provider mustreimburse the division or its authorized agentfor reasonable travel costs necessary to per-form any part of the field audit in any off-sitelocation, if the location is acceptable to thedivision.

4. Those providers initially entering theprogram shall be required to have an annualaudit of the financial records used to prepareannual cost reports covering, at a minimumthe first two (2) full twelve (12)-month fiscalyears of their participation in the Medicaidprogram. For example: A provider beginsbusiness in March, they choose a fiscal yearof October 1 to September 30, their first costreport will cover March through September.

That cost report may be audited at the optionof the provider. The October 1 to September30 cost report (the first full fiscal year costreport) shall be audited and the next October1 to September 30 cost report shall be audit-ed. The audits shall be done by an indepen-dent certified public accountant. The auditormay issue a qualified audit report stating thatconfirmation of accounts receivable andaccounts payable are not required by the plan.

(E) Change in Provider Status.1. Upon termination of participation in

the Medicaid program or change of owner-ship, the provider is required to submit a costreport for the period ending with the date oftermination or change, regardless of its taxperiod. The fully completed cost report withall required attachments and documentationis due within forty-five (45) days after thedate of termination or change.

2. The next payment due the providerafter the division has received the notificationof the termination or change may be held bythe division until the cost report is filed.Upon receipt of a cost report prepared inaccordance with this rule, the payments thatwere withheld will be released.

(F) Joint Use of Resources.1. If a provider has business enterprises

in addition to the LTC facility, the revenues,expenses, statistical and financial records ofeach separate enterprise shall be clearly iden-tifiable.

2. When the facility is owned, con-trolled or managed by an entity(ies) thatowns, controls or manages one (1) or moreother facilities, records of central office andother costs incurred outside the facility shallbe maintained so as to separately identify rev-enues and expenses of, and allocations to,individual facilities. Allocation of centraloffice or pooled costs to individual facilitiesshall be consistent from year-to-year. If adesk review or field audit established thatrecords are not maintained so as to clearlyidentify information required by this rule,those commingled costs shall not be recog-nized as allowable cost in determining thefacility’s Medicaid per-diem rate. Allowabili-ty of these costs shall be determined in accor-dance with the provisions of this rule.

(11) Rate Determination. Subject to limita-tions prescribed elsewhere in these rules, afacility’s per-diem rate shall be determinedby the division as described in this section.

(A) A facility with a valid Medicaid partic-ipation agreement in effect on June 30, 1990,and with a cost report on file with the divi-sion as of December 31, 1989, with a periodending in calendar year 1988 shall be

granted a prospective per-diem rate effectivefor service dates on and after July 1, 1990.This rate will be the greater of the amountdetermined in the following paragraphs:

1. The allowable cost per patient day asdetermined by the division from the desk-reviewed or field-audited cost report, or both,with a period ending in calendar year 1988will be multiplied by one hundred eleven andone-tenth percent (111.1%). One dollar andsix cents ($1.06) will be added to this adjust-ed cost per patient day amount to allow forthe April 1, 1990 change in the minimumwage and the total will be subject to and lim-ited by the ceiling amount of fifty-four dollarsand ninety-five cents ($54.95). The divisionwill use a cost report which has an endingdate in calendar year 1988 which is on filewith the division as of December 31, 1989,and no amended information will be acceptedafter that date. If a facility has more than one(1) cost report with periods ending in calen-dar year 1988, the report covering a fulltwelve (12)-month period ending in calendaryear 1988 will be used. If none of the reportscovers twelve (12) months, the report withthe latest period ending in calendar year 1988will be used; or

2. The per-diem rate in effect for ser-vices rendered on June 30, 1990.

(B) A facility with a valid Medicaid partic-ipation agreement in effect on June 30, 1990,which does not have a cost report with a peri-od ending in calendar year 1988 shall begranted an interim per-diem rate effective forservice dates on and after July 1, 1990, equalto the per-diem rate in effect for services ren-dered on June 30, 1990. A prospective per-diem rate shall be determined on the basis ofthe allowable cost per patient day as deter-mined by the division from the desk-reviewed, field-audited, or both, facility fis-cal year cost report which covers either thefirst twelve (12) months of operation underrules applicable at the time the facilityentered the Medicaid program or the secondtwelve (12)-month fiscal year following theinitial date of Medicaid certification. Thefacility must elect the option in writing and itmust be received by the Division of MedicalServices no later than October 1, 1990. Afacility failing to notify the Division of Med-ical Services of its intent shall have itsprospective per-diem rate established on thebasis of the second twelve (12)-month facilityfiscal year following the initial date of Medi-caid certification. This prospective per-diemrate shall be retroactively effective for ser-vices beginning on the first day of the facili-ty’s option year but not earlier than July



1, 1990, and shall replace the interim per-diem rate on and after that date. Rate adjust-ment per paragraph (12)(A)1. which mayhave been granted for service dates on andafter the effective date of the prospective per-diem rate will be applied when effective.

(C) Except as provided in subsection(11)(D), a facility entering the Medicaid pro-gram after June 30, 1990, shall receive aninterim per-diem rate equal to ninety-fivepercent (95%) of the LTCC in effect on theinitial date of Medicaid certification to beeffective for services rendered on and afterthe initial date of Medicaid certification. Aprospective per-diem rate will be determinedon the basis of the division’s determination ofthe allowable cost per patient day as deter-mined by the division from the desk-reviewed, field-audited, or both, facility fis-cal year cost report which covers the secondtwelve (12)-month fiscal year following thefacility’s initial date of Medicaid certificationfor new facilities, and the first twelve (12)-month fiscal year cost report for facilitiesentering the Medicaid program after June 30,1990, which are not new facilities. Thisprospective per-diem rate shall be effectiveretroactively for services beginning on thefirst day of the new facility’s second twelve(12)-month fiscal year and the first day of thefacility’s first twelve (12)-month fiscal yearfor facilities entering the Medicaid programafter June 30, 1990, which are not new facil-ities and shall replace the interim per-diemrate on and after that date. Rate adjustmentper paragraph (12)(A)1. which may havebeen granted for service dates on and afterthe effective date of the prospective per-diemrate will be applied when effective.

(D) A facility with a valid Medicaid partic-ipation agreement in effect on or after July 1,1990, which either voluntarily or involuntar-ily terminates its participation in the Medi-caid program and which reenters the Medi-caid program shall have its prospectiveper-diem rate established as the rate in effecton the day prior to the date of terminationfrom participation in the program plus rateadjustments which may have been grantedwith effective dates subsequent to the termi-nation date but prior to reentry into the pro-gram as described in paragraph (12)(A)1.This prospective per-diem rate shall be effec-tive for service dates on and after the effec-tive date of the reentry following a voluntaryor involuntary termination.

(12) Adjustments to the Per-Diem Rate. Sub-ject to the limitations prescribed elsewhere inthese rules, a facility’s per-diem rate may beadjusted as described in this section.

(A) Adjustments determined by the divi-sion without the advice of the rate advisorycommittee.

1. Global per-diem rate adjustments.Global per-diem rate adjustments shall beadded to the LTCC. All facilities with validMedicaid participation agreements in effecton the effective date of the adjustments shallbe eligible for the global per-diem rateadjustments. A facility with either an interimrate or a prospective per-diem rate may qual-ify for the global per-diem rate adjustmentsas follows:

A. Laundry. All facilities with eitheran interim per-diem rate or a prospective per-diem rate in effect on July 1, 1990, per sub-sections (11)(A) and (B) shall be granted anincrease to their per-diem rate effective July1, 1990, of fifty cents (50¢) per patient dayrelated to personal laundry;

B. Negotiated trend factor. All facili-ties with either an interim per-diem rate or aprospective per-diem rate in effect on July 1,1990, per subsections (11)(A) and (B) shallbe granted an increase to their per-diem rateeffective July 1, 1990, of forty-seven cents(47¢) per patient day for the negotiated trendfactor. This amount is one percent (1%) ofthe average per-diem rate paid to all facilitieson April 30, 1990;

C. Minimum wage adjustment. Allfacilities with either an interim per-diem rateor a prospective per-diem rate in effect onApril 1, 1991, per subsections (11)(A) (C)shall be granted an increase to their per diemof one dollar and six cents ($1.06) effectiveApril 1, 1991, to allow for the April 1, 1991change in minimum wage. This amount is twoand one-tenth percent (2.1%) of the weightedaverage per-diem rate paid to all facilities onFebruary 28, 1991;

D. FY-92 trend factor and Workers’Compensation. All facilities with either aninterim rate or a prospective per-diem rate ineffect on July 1, 1992, shall be granted anincrease to their per-diem rate effective July1, 1992, of three dollars and ninety-six cents($3.96) per patient day related to the contin-uation of the FY-92 trend factor and theWorkers’ Compensation adjustment. Thisadjustment is equal to seven and one-half per-cent (7.5%) of the weighted average per-diemrate of fifty-two dollars and eighty-two cents($52.82) for January 1992;

E. FY-93 negotiated trend factor. Allfacilities with either an interim rate orprospective per-diem rate in effect on July 1,1992, shall be granted an increase to theirper-diem rates effective July 1, 1992, of sev-enty-four cents (74¢) per patient day for thenegotiated trend factor. This adjustment isequal to one and four-tenths percent (1.4%)

of the weighted average per-diem rate of fifty-two dollars and eighty-two cents ($52.82) forJanuary 1992; and

F. Workers’ Compensation. All facili-ties with either an interim per-diem rate or aprospective per-diem rate in effect on Jan-uary 1, 1994, shall be granted an increase totheir per-diem rate effective January 1, 1994,of thirty-eight cents (38¢) per patient dayrelated to Workers’ Compensation.

2. Special per-diem rate adjustments.Special per-diem rate adjustments shall notbe added to the LTCC. Only those facilitiesqualifying for special per-diem rate adjust-ments are eligible for the special per-diemrate adjustments as follows:

A. Nursing home reform.(I) ICFs. A facility certified for

participation as an ICF as of June 30, 1990,or a facility certified after January 1, 1990,as an SNF which did not apply for a change-in-level-of-care adjustment as of June 30,1990, may be granted the consultant adjust-ment described in subpart (12)(A)2.A.(I)(a)effective for service dates on and after July 1,1990. A facility qualifying for the consultantadjustment must apply between July 1, 1990,and December 31, 1990, in order to be con-sidered for or receive the registered nurse(RN) or the licensed practical nurse (LPN)adjustment, or both, described in subparts(12)(A)2.A.(I)(b) and (c), which will beeffective beginning on the application datebut no earlier than July 1, 1990, subject toapplicable waivers. A facility must demon-strate by September 1, 1992, that they havehired the RNs and LPNs for which they havereceived an adjustment by submitting a con-secutive two (2)-week staffing patternbetween the effective date of the adjustmentand May 1, 1992; and, to the extent that afacility does not demonstrate by that staffingpattern that it hired the RNs, LPNs, or both,for which it received an adjustment undersubparts (12)(A)2.A.(I)(b) and (c), that facil-ity’s rate will be reduced by the undemon-strated portion of the adjustment, bothretroactive to the effective date of the adjust-ment and prospectively, and the overpaymentwill be recouped. These are one (1)-timeadjustments.

(a) Consultant adjustment. Onedollar ($1) will be added to the per-diem ratein effect on July 1, 1990, for qualifying facil-ities to allow for consultant requirements.This amount was derived from the 1988 SNFconsultant costs converted to a weightedmean cost per patient day and then increasedby twenty percent (20%).

(b) RN adjustment. An RN isrequired for eight (8) consecutive hours,seven (7) days a week. The RN requirement


Secretary of State


will be compared to a facility’s RN staffingas documented on the 1988 staffing reports(DOA 184) on file as of December 31, 1989,with the Division of Aging. If a facility doesnot have 1988 staffing reports, the latestreport on file as of June 30, 1990, will beused. The difference between the daily RNrequirement and the average daily RNstaffing per the DOA 184s will be determinedand multiplied by a per-hour rate of sixteendollars and eighty-one cents ($16.81) toarrive at total daily cost. The per-hour ratewas derived from 1988 RN rates for ICFs,including fringe benefits at fifteen percent(15%) and then increased by twenty percent(20%). If the total daily cost is positive, itwill be divided by average daily licensedoccupied beds or ninety percent (90%) oflicensed beds, whichever is greater to obtainthe RN adjustment to the per-diem rate ineffect on July 1, 1990. Occupancy data willbe obtained from the fourth quarter 1989occupancy statistics of the Division of Agingor the most recent data if fourth quarter 1989occupancy statistics are not available for thefacility.

(c) LPN adjustments. For a facil-ity with average daily occupancy of sixty (60)or fewer residents, eight (8) hours of LPNcoverage is required for each of two (2) eight(8)-hour shifts seven (7) days a week, exceptin cases when the RN requirement is waived.If the RN requirement is waived and the facil-ity has average daily occupancy of sixty (60)or fewer residents, eight (8) hours of LPNcoverage is required for each of three (3)eight (8)-hour shifts seven (7) days a week.For a facility with occupancy in excess ofsixty (60) residents, eight (8) hours of LPNcoverage is required for each of three (3)eight (8)-hour shifts seven (7) days a week.The LPN requirement will be compared tothe facility’s LPN staffing as documented onthe 1988 staffing reports (DOA 184) on fileas of December 31, 1989, with the Divisionof Aging. If a facility does not have 1988staffing reports, the latest report on file as ofJune 30, 1990, will be used. The differencebetween the daily LPN requirement and theaverage daily LPN staffing per the DOA 184swill be determined and multiplied by a per-hour rate of ten dollars and eighty-three cents($10.83) to arrive at total daily cost. The per-hour rate was derived from 1988 LPN ratesfor ICFs, including fringe benefits at fifteenpercent (15%) and then increased by twentypercent (20%). If the total daily cost is posi-tive, it will be divided by average dailylicensed occupied beds or ninety percent(90%) of licensed beds, whichever is greaterto obtain the LPN adjustment to the per-diemrate in effect on July 1, 1990. Occupancy

data will be obtained from this fourth quarter1989 occupancy statistics of the Division ofAging or the most recent data if fourth quar-ter 1989 occupancy statistics are not availablefor the facility; and

B. High volume provider. A facilitymust qualify each July 1 for the high volumeadjustment. For a facility which has a highvolume adjustment on June 30, 1994, anddoes not qualify July 1, 1994, that facility’sprospective rate will be reduced by theamount of the high volume adjustmentincluded in the facility’s prospective per-diemrate in effect June 30, 1994. The adjustmentwill be effective for services renderedbetween July 1, 1994 through June 30, 1995.Effective with the state’s Fiscal Year 1996,the division may reconstruct and redefine thequalifying criteria and payment methodologyfor the high volume adjustment.

(I) A facility must meet all four (4)of the following qualifications:

(a) A full twelve (12)-month costreport ending in calendar year 1992. For anonprofit facility that changed ownership oroperator, or both, and filed a partial year costreport, the latest period cost report will beconsidered as a full twelve (12)-month costreport;

(b) One hundred six and two-tenths percent (106.2%) of the allowable costper patient day as determined by the divisionfrom the cost report identified in subpart(12)(A)2.B.(I)(a) exceeds the LTCC in effectJune 30, 1994, as identified in paragraph(3)(E)3.;

(c) Total occupied beds as deter-mined from the cost report identified in sub-part (12)(A)2.B.(I)(a) exceeds eighty-fivepercent (85%) of licensed beds or facilitiesthat had a high volume adjustment on June30, 1994, and had total occupied beds asdetermined from the cost report identified insubpart (12)(A)2.B.(I)(a) exceeding eighty-three percent (83%) of licensed beds. If thefacility did not include all licensed beds onthe cost report, this qualifier will be deter-mined from the Division of Aging quarterlyreport of licensed occupancy for the 1992quarter which ends on an ending date closestto the ending date of the cost report; and

(d) Medicaid-occupied beds asdetermined from the cost report identified insubpart (12)(A)2.B.(I)(a) exceeds eighty per-cent (80%) of the total licensed occupiedbeds identified in subpart (12)(A)2.B.(I)(c) orprovide at minimum sixty-five thousand(65,000) Missouri Medicaid patient days asdetermined from the cost report identified insubpart (12)(A)2.B.(I)(a).

(II) The adjustment will be equal toten percent (10%) of the LTCC which was in

effect June 30, 1994. This amount was sixdollars and twenty-one cents ($6.21).

(III) If a facility qualifies for thehigh volume adjustment, their LTCC adjust-ment will be six dollars and twenty-one cents($6.21) above the LTCC in effect for servicesrendered between July 1, 1994 through June30, 1995;

C. 1967 Life Safety Code (LSC). Cur-rently certified LTC facilities that must com-ply with a recent interpretation of paragraph10-133 of the 1967 LSC which requires cor-ridor walls to extend to the roof deck orachieve equivalency under the Fire SafetyEvaluation System (FSES) will be reimbursedthe reasonable and necessary cost to meetthose standards required for compliancethrough their Medicaid per-diem rate. Thereimbursement shall not be effective until theDivision of Aging has confirmed that the cor-rective action to comply with the 1967 LSCor FSES is operational. Fire sprinkler sys-tems shall be reimbursed over a depreciationlife of twenty-five (25) years and other alter-native corrective action will be reimbursedover a depreciable life of fifteen (15) years.The nursing home’s rate plus this adjustmentwill be limited to the Medicaid LTCC persubpart (12)(A)2.B.(I)(a). The division willuse a cost report with the latest period endingin calendar year 1992 which is on file withthe division as of July 1, 1993. This adjust-ment will be computed as follows based onthe cost documented and submitted to theDivision of Medical Services:

(I) Depreciation. The asset valuefor the actual cost incurred for the approvedcorrective action to continue in compliancedivided by the depreciable useful life;

(II) Interest. The interest costincurred to finance this project shall be doc-umented by a statement from the lendinginstitution detailing the total interest cost ofthe loan period. The total interest cost will bedivided by the loan period; and

(III) The total of the result ofdepreciation and interest will be divided bytwelve (12) and then multiplied by the num-ber of months covered by the 1991 costreport. This amount will be divided by thegreater of actual patient days from the 1991cost report or ninety percent (90%) of theavailable bed days from the 1991 cost report;

D. Effective March 1, 1993, anynursing facility licensed under Chapter 198,RSMo and operated by a district or countywhich receives local tax revenues and certi-fies these revenues to the Department ofSocial Services shall receive an adjustment totheir per-diem rate. The adjustment shall notexceed ninety percent (90%) of the Medicaidportion of the local tax revenues in aggregate



divided by the total projected Medicaid pay-ments for FY-93 for those qualifying facili-ties. The adjustment will be limited by theclass ceiling. Any unused certified local taxrevenues will not carry forward into the nextstate fiscal year’s calculation.

(I) The Medicaid portion is deter-mined by multiplying the total local tax rev-enues certified to the Department of SocialServices for each facility by each facility’sMedicaid occupancy rate as reported on their1990 cost report.

(II) The projected Medicaid pay-ments for FY-93 are computed by multiplyingthe per-diem rate on record with Division ofMedical Services for September 1992 timesthe projected FY-93 Medicaid days for eachqualifying facility allocated based on itsFebruary 1992 Medicaid census annualized;and

E. Effective July 1, 1993, and eachJuly 1 after that, any nursing facility licensedunder Chapter 198, RSMo and operated by adistrict or county which receives local taxrevenues and certifies these revenues to theDepartment of Social Services shall receivean adjustment to its per-diem rate. Theadjustment shall not exceed ninety percent(90%) of the Medicaid portion of the localtax revenue in aggregate divided by the totalprojected Medicaid payments for those quali-fying facilities. The adjustment will be limit-ed by the class ceiling. Any unused certifiedlocal tax revenue will not carry forward intothe next state fiscal year’s calculation.

(I) The Medicaid portion is deter-mined by multiplying the total local tax rev-enues certified to the Department of SocialServices for each facility by each facility’sMedicaid occupancy rate as reported on itsmost recent desk-reviewed cost report.

(II) The projected Medicaid pay-ments are computed by multiplying the per-diem rate on record with DMS on June 1each year times the June 1 of each year pro-jected Medicaid days for the following statefiscal year for each qualifying facility allocat-ed based on its reported Medicaid days on themost current cost report on file with DMS.

3. Prospective payment adjustment(PPA). A FY-92 PPA will be provided priorto the end of the state fiscal year for nursinghomes with a current provider agreement onfile with the DMS as of October 1, 1991,except those facilities that are owned or oper-ated, or both, by the federal government.

A. For nursing homes which qualify,the PPA shall be the lesser of—

(I) The nursing home’s facility peergroup factor (FPGF) times the projectedpatient days (PPD) covered by the adjustmentyear times the prospective payment adjust-

ment factor (PPAF) times the LTCC on Octo-ber 1, 1991, (FPGF × PPD × PPAF ×LTCC). For example: A nursing home havingtwo thousand seven (2007) paid days for theperiod May 1991 to July 1991 out of a totalpaid days for this same period of two millionone hundred seventy-five thousand two hun-dred fifty-seven (2,175,257) represents anFPGF of nine-hundredths percent (.09%). Sousing the FPGF of .09% × 9,750,000 ×32.5% × $56.98=$167,578; or

(II) The nursing home’s FPGFtimes one hundred forty-five percent (145%)of the amount credited to the nursing facilityrevenue collection center (NFRCC) of theState Title XIX Fund (STF) for the periodOctober 1, 1991 through December 31,1991.

B. FPGF is determined by using eachnursing home’s paid days for the servicedates in May 1991 through July 1991 as ofAugust 20, 1991, divided by the sum of thepaid days for the same service dates for allnursing homes qualifying as of the determina-tion date of September 12, 1991.

C. LTCC is fifty-six dollars and nine-ty-eight cents ($56.98) on October 1, 1991.

D. PPAF is equal to thirty-two andfive-tenths percent (32.5%) for Fiscal Year1992 which includes an adjustment for eco-nomic trends, Workers’ Compensation andheavy care/access incentive.

E. PPD is the projection of nine mil-lion seven hundred fifty thousand(9,750,000) patient days made on October 1,1991, for the adjustment year.

4. Other conditions for per-diem rateadjustments. The division may adjust a facil-ity’s per-diem rate both retrospectively andprospectively under the following conditions:

A. Fraud, misrepresentation, errors,audit adjustment. When information con-tained in a facility’s cost report is found to befraudulent, misrepresented or inaccurate, thefacility’s reimbursement rate may be reduced,both retroactively and prospectively, if thefraudulent, misrepresented or inaccurateinformation as originally reported resulted inestablishment of a higher reimbursement ratethan the facility would have received in theabsence of that information. No decision bythe Medicaid agency to impose a rate adjust-ment in the case of fraudulent, misrepresent-ed or inaccurate information in any way shallaffect the Medicaid agency’s ability toimpose any sanctions authorized by statute orregulation. The fact that fraudulent, misrep-resented or inaccurate information reporteddid not result in establishment of a higherreimbursement rate than the facility wouldhave received in the absence of this informa-tion also does not affect the Medicaid

agency’s ability to impose any sanctionsauthorized by statute or regulation;

B. Decisions of the AdministrativeHearing Commission or settlement agree-ments approved by the Administrative Hear-ing Commission;

C. Court order; andD. Disallowance of federal financial

participation.(B) Adjustments Determined by the Divi-

sion With the Advice of the Rate AdvisoryCommittee.

1. Advisory committee. The director,Department of Social Services, shall appointan advisory committee to review and makerecommendations pursuant to requests forrate reconsideration which are in accordancewith the provisions of paragraph (12)(B)2.The director may accept, reject or modify theadvisory committee’s recommendations.

A. Membership. The advisory com-mittee shall be composed of four (4) mem-bers representative of the nursing homeindustry in Missouri, three (3) members fromthe Department of Social Services and two(2) members who may include, but are notlimited to, a consumer representative, anaccountant or economist or a representativeof the legal profession. Members shall beappointed for terms of twelve (12) months.The director shall select a chairman from themembership who shall serve at the director’sdiscretion.

B. Procedures.(I) The committee may hold meet-

ings when five (5) or more members are pre-sent and may make recommendations to thedepartment in instances where a simplemajority of those present and voting concurs.

(II) The committee shall meet noless than one (1) time each quarter and mem-bers shall be reimbursed for expenses.

(III) The Division of Medical Ser-vices will summarize each case and makerecommendations. The advisory committeemay request additional documentation. Fail-ure to submit requested documentation shallbe abandonment of the request.

(IV) The committee, at its discre-tion, may issue its recommendation based onwritten documentation or may request furtherjustification from the provider sending therequest.

(V) The advisory committee shallhave ninety (90) days from the receipt of eachcomplete request, or the receipt of any addi-tional documentation, to submit its recom-mendations in writing to the director. If thecommittee is unable to make a recommenda-tion within the specified time limit, the direc-tor or his/her designee, if the committee


Secretary of State


establishes good cause, may grant a reason-able extension.

(VI) Final determination on rateadjustment. The director or his/herdesignee’s final decision on each requestshall be issued in writing to the providerwithin fifteen (15) working days from receiptof the committee’s recommendation.

(VII) If the director or his/herdesignee’s final determination allows a rateadjustment, it shall become effective on thefirst day of the month in which the requestwas made providing that it was made prior tothe tenth of the month. If the request is notfiled by the tenth of the month, adjustmentsshall be effective the first day of the followingmonth.

2. Requests for rate adjustments. Aparticipating facility which has a prospectiveper-diem rate may request adjustment to itsprospective per-diem rate only under the con-ditions described in subparagraph(12)(B)2.A., B. or C. The request must besubmitted in writing to the division withinone year of the occurrence of the extraordi-nary circumstance. The request must clearlyand specifically identify under which of theconditions the rate adjustment is sought. Thetotal dollar amount of the requested rateadjustment must be supported by complete,accurate and documented records satisfactoryto the division. If the division makes a written request for additional information andthe facility does not comply within ninety(90) days of the request for additional infor-mation, the division shall consider therequest withdrawn. Requests for rate adjust-ments that have been withdrawn by the facil-ity or are considered withdrawn because offailure to supply requested information maybe resubmitted once for the requested adjust-ment. In the case of a rate adjustment requestthat has been withdrawn and then resubmit-ted, the effective date shall be the first day ofthe month in which the resubmitted requestwas made providing that it was made prior tothe tenth day of the month. If the resubmittedrequest is not filed by the tenth of the month,adjustments shall be effective the first day ofthe following month. Conditions for rateadjustment are—

A. Extraordinary circumstances.(I) When the provider can show

that it incurred higher costs due to circum-stances beyond its control; the circumstanceswere not experienced by the nursing homeindustry in general; and the costs have a sub-stantial effect.

(II) Extraordinary circumstancesinclude:

(a) Natural disasters; such asfire, earthquakes and flood; 1) that are not

covered by insurance; and 2) that occur in afederally-declared disaster area; and

(b) Vandalism, civil disorder orboth.

(III) The per-diem rate increasewill be calculated as follows:

(a) To determine what portion ofthe incurred costs will be paid by the Divi-sion of Medical Services, the division willuse the quarterly occupancy survey from theDivision of Aging for the time period preced-ing when the extraordinary circumstanceoccurred;

(b) For one (1)-time costs (costswhich will not be incurred in future fiscalyears): The costs directly associated with theextraordinary circumstance will be divided bythe paid days for the month the rate adjust-ment becomes effective per part(12)(B)1.B.(VII). This calculation will equalthe amount to be added to the per-diem ratefor only one (1) month, which will be themonth the rate adjustment becomes effective.For this one month only, the LTCC will bewaived; and

(c) For on-going or capitalizedcosts (costs that will be incurred in future fis-cal years): Ongoing annual costs (that is,depreciation, interest, etc.) will be divided bythe greater of: annualized (calculated for atwelve (12)-month period) total patient daysfrom the latest cost report on file or ninetypercent (90%) of annualized total bed days.This calculation will equal the amount to beadded to the per-diem rate, not to exceed theLTCC in effect on the date of the increase.This rate adjustment will be added to the per-diem rate;

B. Professional service hours. A rateadjustment may be granted if a facility hasexperienced an increase in total RN and LPNhours. This increase divided by patient daysfrom the latter period must be at least twentypercent (20%) of the average total RN andLPN hours per patient day for the appropriateperiod. For adjustments requested in stateFY-92, this average will be derived from totalRN and LPN hours as identified from costreports for facilities licensed as SNFs withending dates after July 1, 1990, and prior toJanuary 1, 1991. For each succeeding statefiscal year, this average will be derived fromtotal RN and LPN hours as identified fromcost reports with ending dates in the secondcalendar year prior to the ending date of thestate fiscal year. For example, adjustmentsrequested in state FY-93, the data from costreports with ending dates in calendar year1991 will be used. This adjustment is avail-able no more frequently than every two (2)years, with the first adjustment availableunder this plan to be based upon the twelve

(12)-month facility fiscal year required costreport with a period ending after the effectivedate of this rule. This cost report will becompared to the required cost report for thesucceeding twelve (12)-month facility fiscalyear. For example, a facility with a twelve(12)-month cost report ending September 30,1990, shall compare total RN and LPN hourscorresponding to RN and LPN salariesreported on lines forty-nine (49) and fifty(50) of the cost report plus contracted RNand LPN hours corresponding to the con-tracted costs identified on the cost report, tosimilar data from the cost report for thetwelve (12)-month period ending September30, 1991. The next available adjustmentwould be for the twelve (12)-month facilityfiscal year required cost report with a periodending September 30, 1993, as compared tothe required cost report for the twelve (12)-month period ending September 30, 1991.The adjustment amount will be determinedby obtaining the difference in costs perpatient day reported for RN and LPN ser-vices (salaries, fringe benefits and RN andLPN contract costs) between the two (2)applicable cost reporting periods using thegreater of ninety percent (90%) of bed daysor actual reported occupancy. The facilitymust submit copies of the actual payrollrecords which support the cost report data aswell as billings showing RN and LPN con-tract hours which support the cost report.These records must show job title (RN,LPN), actual hours worked, the per-hour rateand the total amount paid for each employee.Any salaried RN or LPN employee will beassumed to be working a forty (40)-hourweek for all weeks worked; and

C. Additional beds. The division mayrecommend a rate adjustment for a participat-ing facility which has a prospective per-diemrate in effect, and which increases its bedcapacity after July 1, 1990, in accordancewith an approved CON or applicable waiver.The recommended rate adjustment will becalculated as the difference between theweighted average allowable capital costs perday as defined in part (12)(B)2.C.(I) and theallowable capital cost per day as determinedin subsection (7)(Q).

(I) The weighted average allowablecapital cost per day is calculated as the sumof subparts (12)(B)2.C.(I)(a) and (b) dividedby the total number of certified beds.

(a) The allowable capital cost perday as determined in subsection (7)(Q) multi-plied by the number of existing certified beds.

(b) The allowable capital cost perday for new beds as described in paragraph(7)(Q)2. multiplied by the number of newcertified beds, except the movable equipment



rate described in subparagraph (7)(Q)2.B.shall be sixty-five cents (65¢) per bed daywhich equates to two hundred twenty dollars($220) per bed.

(13) Exceptions.(A) For those Medicaid-eligible recipient

patients who have concurrent Medicare PartA SNF benefits available, Missouri MedicalAssistance Program reimbursement for cov-ered days of stay in a qualified facility will bebased on this coinsurance as may be imposedunder Title XVIII.

(B) The Title XIX reimbursement rate forout-of-state providers shall be set by one (1)of the following methods:

1. For providers which provided ser-vices of fewer than one thousand (1000)patient days for Missouri Title XIX recipi-ents, the reimbursement rate shall be the ratepaid for comparable services and level-of-care by the state in which the provider islocated; and

2. For providers which provided ser-vices of one thousand (1000) or more patientdays for Missouri Title XIX recipients, thereimbursement rate shall be the lower of—

A. The rate paid for comparable ser-vices and level-of-care by the state in whichthe provider is located; or

B. The rate as calculated in section(11).

(14) Sanctions and Overpayments.(A) In addition to the sanctions and penal-

ties set forth in this rule, the division alsomay impose sanctions against a provider inaccordance with 13 CSR 70-3.030 Sanctionsfor False or Fraudulent Claims for Title XIXServices or any other sanction authorized bystate or federal law or regulation.

(B) Overpayments due the Medicaid pro-gram from a provider shall be recovered bythe division in accordance with 13 CSR 70-3.030 Sanctions for False or FraudulentClaims for Title XIX Services.

(15) Appeals. In accordance with sections208.156 and 621.055, RSMo, providers mayseek a hearing before the AdministrativeHearing Commission of final decisions of thedirector, Department of Social Services orthe Division of Medical Services.

(16) Payment in Full. Participation in the pro-gram shall be limited to providers who acceptas payment in full, for covered services ren-dered to Medicaid recipients, the amountpaid in accordance with these rules and appli-cable copayments.

(17) Provider Participation. Payments madein accordance with the standards and methods

described in this rule are designed to enlistparticipation of a sufficient number ofproviders in the program so that eligible per-sons can receive the medical care and ser-vices included in the state plan at least to theextent these services are available to the gen-eral public.

(18) Transition. Cost reports used for ratedetermination shall be adjusted by the divi-sion in accordance with the applicable costprinciples provided in this rule.

APPENDIX ACovered Supplies & Services

Personal Care—Baby PowderBedside TissuesBids (all types)DeodorantsDisposable Underpads (all types)Gowns, HospitalHair Care, Basic (including washing,

cuts, sets, brushes, combs, nonlegendshampoo)

Lotion, Soap and OilNail Clipping and Cleaning RoutineOral Hygiene (including denture care,cups, cleaner, mouthwashes, toothbrushesand

paste)Shaves, Shaving Cream and Blades

Equipment—Arm SlingsBasinsBathing EquipmentBed Frame Equipment (including trapeze

bars and bedrails)Bed Pans (all types)Beds, Manual, ElectricCanes (all types)Crutches (all types)Foot Cradles (all types)GlucometersHeat CradlesHeating PadsHot Pack MachinesHypothermia BlanketMattresses (all types)Patient Lifts (all types)Respiratory Equipment (compressors, vapor-

izers, Humidifers, Intermittent PositivePressure Breathing Machines (IPPB), neb-ulizers, suction equipment and related sup-plies and the like)

RestraintsSand BagsSpecimen Container (cup or bottle)Urinals (male and female)Walkers (all types)Water PitchersWheelchairs (standard, geriatric and

rollabout)

Nursing Care/Patient Care Supplies—Catheter (indwelling and nonlegend supplies)Decubitus Ulcer Care (pads, dressings, airmattresses, aquamatic K-pads (water-heatedpads), alternating pressure pads, flotationpads, or turning frames, or any combinationof these, heel protectors, donuts and sheepskins)Diabetic Blood and Urine Testing SuppliesDouche BagsDrainage Sets, Bags, Tubes and the like Dressing Trays (dressings of all types)Enema SuppliesGloves (nonsterile and sterile)Ice BagsIncontinency Care (including pads, diapers

and pants)Irrigation Trays and Nonlegend SuppliesMedicine CupsMedicine DroppersNeedles (including, but not limited to,

hypodermic, scalp, vein)Nursing Services (regardless of level, admin-

istration of oxygen, restorative nursingcare, nursing supplies, assistance with eat-ing and massages provided by facility per-sonnel)

Nursing Supplies: Lubricating Jelly,, Beta -dine,Benzoin, Peroxide, A & D Ointment,Tapes, Alcohol, Alcohol Sponges, Ap -plicators, Dressings and Bandages (of alltypes),Cottonballs, Merthiolate Aerosol andTongue Depressors

Ostomy Supplies (adhesive, appliance, belts,face plates, flanges, gaskets, irrigationsets, night drains, protective dressings,skin barriers, tail closures and bags)

Suture Care (including trays and removal kits) Syringes, all sizes and types (including

Ascepto)Tape (for laboratory tests)Urinary Drainage Tube and Bottle

Therapeutic Agents and Supplies—Antacids, NonlegendDrugs, Stock (excluding Insulin)Enteral Feedings (including by tube, and all

related supplies)I.V. Therapy Supplies (arm boards, needles,

tubing and other related supplies)Laxatives, NonlegendOxygen (portable or stationary), Oxygen

Delivery Systems, Concentratorsand Supplies

Special DietsStool Softeners, NonlegendVitamins, Nonlegend

Other Services and Supplies as OtherwiseDetermined


Secretary of State


AUTHORITY: sections 208.153, 208.159 and208.201, RSMo 1994.* This rule was previ-ously filed as 13 CSR 40-81.081. Emergencyrule filed Sept. 18, 1981, effective Oct. 1,1981, expired Jan. 13, 1982. Original rulefiled Sept. 18, 1981, effective Jan. 14, 1982.Emergency amendment filed Sept. 28, 1981,effective Oct. 7, 1981, expired Jan. 13, 1982.Amended: Filed Oct. 13, 1981, effective Jan.14, 1982. Emergency amendment filed June21, 1982, effective July 1, 1982, expired Oct.10, 1982. Amended: Filed June 21, 1982,effective Oct. 11, 1982. Emergency amend-ment filed Oct. 8, 1982, effective Oct. 18,1982, expired Jan. 12, 1983. Amended: FiledOct. 8, 1982, effective Jan. 13, 1983.Amended: Filed March 14, 1985, effectiveJuly 11, 1985. Emergency amendment filedJune 20, 1985, effective July 1, 1985, expiredSept. 30, 1985. Amended: Filed June 20,1985, effective Oct. 1, 1985. Amended: FiledAug. 2, 1985, effective Nov. 1, 1985. Amend-ed: Filed Dec. 16, 1985, effective April 25,1986. Amended: Filed April 16, 1986, effec-tive July 1, 1986. Amended: Filed June 17,1986, effective Sept. 1, 1986. Emergencyamendment filed June 30, 1986, effective July10, 1986, expired Nov. 7, 1986. Amended:Filed July 3, 1986, effective Oct. 11, 1986.Amended: Filed July 3, 1986, effective Nov.1, 1986. Amended: Filed Aug. 1, 1986, effec-tive Nov. 13, 1986. Amended: Filed Dec. 16,1986, effective April 26, 1987. Emergencyamendment filed June 19, 1987, effective July1, 1987, expired Oct. 29, 1987. Emergencyamendment filed Aug. 18, 1987, effectiveAug. 28, 1987, expired Dec. 25, 1987.Amended: Filed Aug. 18, 1987, effective Dec.12, 1987. Amended: Filed Aug. 18, 1987,effective Oct. 25, 1987. Emergency amend-ment filed July 28, 1988, effective Aug. 6,1988, expired Dec. 3, 1988. Emergencyamendment filed Oct. 4, 1988, effective Oct.14, 1988, expired Dec. 4, 1988. Amended:Filed Dec. 5, 1988, effective Feb. 24, 1989.Emergency amendment filed Dec. 16, 1988,effective Jan. 1, 1989, expired May 1, 1989.Amended: Filed Dec. 16, 1988, effectiveMarch 11, 1989. Amended: Filed March 3,1989, effective May 15, 1989. Amended:Filed Aug. 16, 1989, effective Nov. 11, 1989.Amended: Filed March 5, 1990, effectiveJune 11, 1990. Emergency rescission and rulefiled June 1, 1990, effective July 1, 1990,expired Oct. 28, 1990. Rescinded and read-opted: Filed June 1, 1990, effective Sept. 28,1990. Emergency amendment filed March 4,1991, effective April 1, 1991, expired July 29,1991. Amended: Filed March 4, 1991, effec-tive July 8, 1991. Amended: Filed March 18,1991, effective July 8, 1991. Amended: FiledMay 2, 1991, effective Sept. 30, 1991.

Emergency amendment filed June 20, 1991,effective July 1, 1991, expired Oct. 28, 1991.Amended: Filed June 26, 1991, effective Dec.9, 1991. Amended: Filed Sept. 4, 1991, effec-tive Jan. 13, 1992. Emergency amendmentfiled Oct. 9, 1991, effective Oct. 29, 1991,expired Feb. 25, 1992. Emergency amend-ment filed Nov. 15, 1991, effective Dec. 3,1991, expired April 1, 1992. Amended: FiledNov. 15, 1991, effective April 9, 1992. Emer-gency amendment filed March 13, 1992,effective April 2, 1992, expired July 30,1992. Amended: Filed Feb. 3, 1992, effectiveJune 25, 1992. Amended: Filed March 30,1992, effective Sept. 6, 1992. Amended:Filed May 5, 1992, effective Jan. 15, 1993.Amended: Filed May 15, 1992, effective Jan.15, 1993. Emergency amendment filed June16, 1992, effective July 1, 1992, expired Oct.28, 1992. Emergency amendment filed June16, 1992, effective July 1, 1992, expired Oct.28, 1992. Emergency amendment filed June26, 1992, effective July 5, 1992, expired Oct.28, 1992. Emergency amendment filed July23, 1992, effective Aug. 2, 1992, expiredNov. 29, 1992. Emergency amendment filedJuly 23, 1992, effective Aug. 2, 1992, expiredNov. 29, 1992. Emergency amendment filedSept. 25, 1992, effective Oct. 29, 1992,expired Feb. 25, 1993. Emergency amend-ment filed Sept. 25, 1992, effective Nov. 1,1992, expired Feb. 27, 1993. Emergencyamendment filed Nov. 16, 1992, effectiveNov. 30, 1992, expired March 29, 1993.Emergency amendment filed Nov. 16, 1992,effective Nov. 30, 1992, expired March 29,1993. Amended: Filed June 16, 1992, effec-tive Feb. 26, 1993. Amended: Filed Sept. 25,1992, effective May 6, 1993. Amended: FiledOct. 15, 1992, effective May 6, 1993. Emer-gency amendment filed Feb. 18, 1993, effec-tive March 1, 1993, expired June 28, 1993.Amended: Filed Feb. 5, 1993, effective July8, 1993. Emergency amendment filed Feb.16, 1993, effective Feb. 26, 1993, expiredJune 25, 1993. Emergency amendment filedFeb. 16, 1993, effective Feb. 28, 1993,expired June 27, 1993. Amended: Filed Feb.18, 1993, effective Sept. 9, 1993. Emergencyamendment filed June 15, 1993, effective July1, 1993, expired Oct. 28, 1993. Emergencyamendment filed May 20, 1993, effectiveJune 1, 1993, expired Sept. 28, 1993. Emer-gency amendment filed June 15, 1993, effec-tive June 30, 1993, expired Oct. 27, 1993.Emergency amendment filed Aug. 17, 1993,effective Sept. 1, 1993, expired Dec. 29,1993. Amended: Filed June 3, 1993, effectiveDec. 9, 1993. Amended: Filed June 15,1993, effective Dec. 9, 1993. Emergencyamendment filed Aug. 17, 1993, effectiveSept. 1, 1993, expired Dec. 29, 1993. Emer-

gency amendment filed Oct. 15, 1993, effec-tive Oct. 29, 1993, expired Feb. 25, 1994.Amended: Filed Aug. 17, 1993, effectiveMarch 10, 1994. Amended: Filed Nov. 2,1993, effective June 6, 1994. Emergencyamendment filed Dec. 17, 1993, effectiveJan. 1, 1994, expired April 30, 1994. Emer-gency amendment filed Dec. 17, 1993, effec-tive Jan. 1, 1994, expired April 28, 1994.Amended: Filed Dec. 2, 1993, effective July30, 1994. Emergency amendment filed April19, 1994, effective May 1, 1994, expiredAug. 28, 1994. Amended: Filed Feb. 16,1994, effective Aug. 28, 1994. Emergencyamendment filed June 15, 1994, effective July1, 1994, expired Oct. 28, 1994. Emergencyamendment filed Sept. 20, 1994, effectiveOct. 1, 1994, expired Jan. 28, 1995. Emer-gency amendment filed Oct. 7, 1994, effectiveOct. 29, 1994, expired Feb. 25, 1995.Amended: Filed June 15, 1994, effective Jan.29, 1995. Emergency amendment filed Sept.20, 1994, effective Oct. 1, 1994, expired Jan.28, 1995. Emergency amendment filed Oct.7, 1994, effective Oct. 29, 1994, expired Feb.25, 1995. Amended: Filed Sept. 20, 1994,effective May 28, 1995.

*Original authority: 208.153, RSMo 1967, amended1973, 1989, 1990, 1991; 208.159, RSMo 1979; and208.201, RSMo 1987.




Secretary of State


CODE OF STATE REGULATIONS 35JASON KANDER (3/31/16)Secretary of State


13 CSR 70-10.015 Prospective Reim -bursement Plan for Nursing Facility Ser-vices

PURPOSE: This rule establishes a paymentplan for long-term care required by the Codeof Federal Regulations. The plan describesprinciples to be followed by Title XIX long-term care providers in making financialreports and presents the necessary proce-dures for setting rates, making adjustments,and auditing the cost reports.

(1) Authority. This regulation is establishedpursuant to the authorization granted to theDepartment of Social Services (department),MO HealthNet Division (division), to pro-mulgate rules and regulations.

(2) Purpose. This regulation establishes amethodology for determination of reimburse-ment rates for nursing facilities. Subject tolimitations prescribed elsewhere in this regu-lation, a facility’s reimbursement rate shall bedetermined by the division as described inthis regulation. Any reimbursement ratedetermined by the division shall be a finaldecision and will be implemented as set forthin the division’s decision letter. The deci-sions of the division may be subject to reviewupon properly filing a complaint with theAdministrative Hearing Commission (AHC).A nursing facility seeking review by the AHCmust obtain a stay from the AHC to stop thedivision from implementing its final decisionif the AHC determines the facility meets thecriteria for a stay and so orders. If the facilityappeals the division’s decision, it is theresponsibility of the nursing facility to notifyany interested parties, including but not lim-ited to, hospice providers, that the rate beingreceived is not a final rate and is subject tochange. Federal financial participation isavailable on expenditures for services provid-ed within the scope of the federal MedicaidProgram and made under a court order inaccordance with 42 CFR 431.250.

(3) General Principles.(A) Provisions of this reimbursement regu-

lation shall apply only to facilities certifiedfor participation in the Missouri MedicalAssistance (Medicaid) Program.

(B) The reimbursement rates determinedby this regulation shall apply only to servicesprovided on or after January 1, 1995.

(C) The effective date of this regulationshall be January 1, 1995.

(D) The Medicaid Program shall providereimbursement for nursing facility servicesbased solely on the individual Medicaid-eligi-ble recipient’s covered days of care, withinbenefit limitations as determined in subsec-tions (5)(D) and (M) multiplied by the facili-

ty’s Medicaid reimbursement rate. No pay-ments may be collected or retained in addi-tion to the Medicaid reimbursement rate forcovered services, unless otherwise providedfor in this plan. Where third-party payment isinvolved, Medicaid will be the payor of lastresort with the exception of state programssuch as vocational rehabilitation and the Mis-souri Crippled Children’s Services.

(E) The Medicaid reimbursement rate shallbe the lower of—

1. The Medicare (Title XVIII) rate, ifapplicable; or

2. The reimbursement rate as deter-mined in accordance with this regulation.

(F) Medicaid reimbursements shall not bepaid for services provided to Medicaid-eligi-ble recipients during any time period inwhich the facility failed to have a Medicaidparticipation agreement in effect. A reim-bursement rate may not be established for afacility if a Medicaid participation agreementis not in effect.

(G) When a nursing facility is found not incompliance with federal requirements forparticipation in the Medicaid Program, sec-tions 1919(b), (c), and (d) of the Social Secu-rity Act (42 U.S.C. 1396r), it may be termi-nated from the Medicaid Program or it mayhave imposed upon it an alternative remedy,pursuant to section 1919(h) of the SocialSecurity Act (42 U.S.C. 1396r). In accor-dance with section 1919(h)(3)(D) of theSocial Security Act, the alternative remedy,denial of payment for new admission, is con-tingent upon agreement to repay paymentsreceived if the corrective action is not takenin accordance with the approved plan andtimetable. It is also required that the nursingfacility establish a directed plan of correctionin conjunction with and acceptable to theDepartment of Health and Senior Services.

(H) Upon execution of a Medicaid partici-pation agreement, a qualified facility not pre-viously certified for participation in the Med-icaid Program shall be assigned a providernumber by the division. Facilities previouslycertified shall retain the same provider num-ber regardless of any change in ownership.

(I) Regardless of changes in control orownership for any facility certified for partic-ipation in the Medicaid Program, the divisionshall issue payments to the facility identifiedin the current Medicaid participation agree-ment. Regardless of changes in control orownership for any facility certified for partic-ipation in Medicaid, the division shall recov-er from that entity liabilities, sanctions, andpenalties pertaining to the Medicaid Pro-gram, regardless of when the services wererendered.

(J) Changes in ownership, management,control, operation, leasehold interest by

whatever form for any facility previously cer-tified for participation in the Medicaid Pro-gram at any time that results in increased cap-ital costs for the successor owner,management, or leaseholder shall not be rec-ognized for purposes of reimbursement andetc.

(K) A facility with certified and noncerti-fied beds shall allocate allowable costs relatedto the provision of nursing facility services onthe cost report, in accordance with the costreport instructions. The methods for alloca-tion must be supported by adequate account-ing and/or statistical data necessary to evalu-ate the allocation method and its application.

(L) Any facility which is involuntarily ter-minated from participation in the MedicareProgram shall also be terminated from partic-ipation in the Medicaid Program on the samedate as the Medicare termination.

(M) No restrictions nor limitations shall,unless precluded by federal or state regula-tion, be placed on a recipient’s right to selectproviders of his/her own choice.

(N) A nursing facility’s Medicaid reim-bursement rate shall not be limited by itsaverage private pay rate.

(O) The reimbursement rates authorized bythis regulation may be reevaluated at least onan annual basis in light of the provider’s costexperience to determine any adjustmentsneeded to assure coverage of cost increasesthat must be incurred by efficiently and eco-nomically operated providers.

(P) Covered supplies, such as food, laun-dry supplies, housekeeping supplies, linens,medical supplies, but not limited to, must beaccounted for through inventory accounts.Purchases shall be recorded as inventory andshall be expensed in the fiscal year the itemsare used. Inventory shall be counted at leastannually to coincide with the facility’s fiscalyear or the end of the cost report period, ifdifferent. Expensing of items shall be record-ed by adding purchases to the beginning peri-od inventory and subtracting the end of theperiod inventory. This inventory control shallbegin the first fiscal year ending after theeffective date of this plan.

(Q) Medicaid reimbursement will not bepaid for a Medicaid-eligible resident whileplaced in a noncertified bed in a nursingfacility.

(R) All illustrations and examples providedthroughout this regulation are for illustrationpurposes only and are not meant to be actualcalculations.

(S) Each state fiscal year the departmentshall submit to the Office of Administrationfor consideration a budget item based on theHCFA Market Basket Index for NursingHomes representing a statistical measure ofthe change in costs of goods and services pur-chased by nursing facilities during the course

36 CODE OF STATE REGULATIONS (3/31/16) JASON KANDER

Secretary of State


of one (1) year. The submission of the budgetitem by the department has no correlation todetermining the costs that are incurred by anefficiently and economically operated facility.Any trend factor granted shall be applied tothe patient care, ancillary and administrationcost components, and the pass-throughexpenses included in the capital cost compo-nent per diem. For facilities with allowablecosts from their 1992 desk audited and/orfield audited cost report as determined in thisregulation that are below the facilities’ Jan-uary 1, 1994 reimbursement rate, any grantedtrend factor shall be limited to the product ofthe new plan rate divided by the January 1,1994, (old plan rate) times the facility’s trendfactor. For example:

New Plan Rate (1-1-95) $49.19January 1, 1994 Rate $54.32Proposed Trend Factor $ 1.88Adjusted Trend Factor $ 1.70

($49.19/$54.32) * $1.8890.55% * $1.88 = $1.70

The rate after the trend factor would be$56.02 ($54.32 + $1.70).

(T) Rebasing.1. The division based on its discretion

shall pick at least one (1) cost report yearfrom cost reports with fiscal years ending in2001 or later to compare the allowable costsfrom the selected desk audited and/or fieldaudited cost report year to the reimbursementrate in effect at the time of the comparison.The rebased rates shall be determined inaccordance with section (20).

2. The asset value will be adjusted annu-ally based on the R. S. Means ConstructionIndex. The asset value as adjusted will beused only for determining reimbursement insection (11) for the year(s) selected above forrebasing and as determined in paragraphs(13)(B)6. and (13)(B)7.

(U) Effective for dates of service begin-ning April 1, 2010, reimbursement of Medi-care/Medicaid crossover claims (crossoverclaims) for Medicare Part A and MedicareAdvantage/Part C inpatient skilled nursingfacility benefits shall be as follows:

1. Crossover claims for Medicare Part Ainpatient skilled nursing facility benefits inwhich Medicare was the primary payer andthe MO HealthNet Division is the payer oflast resort for the coinsurance must meet thefollowing criteria to be eligible for MOHealthNet reimbursement:

A. The crossover claim must be relat-ed to Medicare Part A inpatient skilled nurs-ing facility benefits that were provided to MOHealthNet participants also having Medicarecoverage; and

B. The crossover claim must containapproved coinsurance days. The amount indi-cated by Medicare to be the coinsurance dueon the Medicare allowed amount is thecrossover amount eligible for MO HealthNetreimbursement. The coinsurance amount isbased on the days for which Medicare is notthe sole payer. These days are referred to ascoinsurance days and are days twenty-one(21) through one hundred (100) of eachMedicare benefit period; and

C. The Other Payer paid amount fieldon the claim must contain the actual amountpaid by Medicare. The MO HealthNetprovider is responsible for accurate and validreporting of crossover claims submitted toMO HealthNet for payment. Providers sub-mitting crossover claims for Medicare Part Ainpatient skilled nursing facility benefits tothe MO HealthNet program must be able toprovide documentation that supports theinformation on the claim upon request. Thedocumentation must match the information onthe Medicare Part A plan’s remittance advice.Any amounts paid by MO HealthNet that aredetermined to be based on inaccurate datawill be subject to recoupment; and

D. The nursing facility’s Medicaidreimbursement rate multiplied by theapproved coinsurance days exceeds theamount paid by Medicare for the sameapproved coinsurance days;

2. Crossover claims for MedicareAdvantage/Part C (Medicare Advantage)inpatient skilled nursing facility benefits inwhich a Medicare Advantage plan was theprimary payer and the MO HealthNet Divi-sion is the payer of last resort for the copay(coinsurance) must meet the following crite-ria to be eligible for MO HealthNet reim-bursement:

A. The crossover claim must be relat-ed to Medicare Advantage inpatient skillednursing facility benefits that were provided toMO HealthNet participants who also areeither a Qualified Medicare Beneficiary(QMB Only) or Qualified Medicare Benefi-ciary Plus (QMB Plus); and

B. The crossover claim must be sub-mitted as a Medicare UB-04 Part C Institu-tional Crossover claim through the division’sonline Internet billing system; and

C. The crossover claim must containapproved coinsurance days. The amount indi-cated by the Medicare Advantage plan to bethe coinsurance due on the Medicare Advan-tage plan allowed amount is the crossoveramount eligible for MO HealthNet reim-bursement. The coinsurance amount is basedon the days for which the Medicare Advan-tage plan is not the sole payer. These days arereferred to as coinsurance days and are estab-lished by each Medicare Advantage plan; and

D. The Other Payer paid amount fieldon the claim must contain the actual amountpaid by the Medicare Advantage plan. TheMO HealthNet provider is responsible foraccurate and valid reporting of crossoverclaims submitted to MO HealthNet for pay-ment. Providers submitting crossover claimsfor Medicare Advantage inpatient skillednursing facility benefits to the MO HealthNetprogram must be able to provide documenta-tion that supports the information on theclaim upon request. The documentation mustmatch the information on the MedicareAdvantage plan’s remittance advice. Anyamounts paid by MO HealthNet that aredetermined to be based on inaccurate datawill be subject to recoupment; and

E. The nursing facility’s Medicaidreimbursement rate multiplied by theapproved coinsurance days exceeds theamount paid by the Medicare Advantage planfor the same approved coinsurance days;

3. MO HealthNet reimbursement will bethe lower of—

A. The difference between the nurs-ing facility’s Medicaid reimbursement ratemultiplied by the approved coinsurance daysand the amount paid by either Medicare orthe Medicare Advantage plan for those samecoinsurance days; or

B. The coinsurance amount; and 4. Nursing facility providers may not

submit a MO HealthNet fee-for-service nurs-ing facility claim for the same dates of ser-vice on the crossover claim for Medicare PartA and Medicare Advantage inpatient skillednursing facility benefits. If it is determinedthat a MO HealthNet fee-for-service nursingfacility claim is submitted and payment ismade, it will be subject to recoupment.

(4) Definitions.(A) Additional beds. Newly constructed

beds never certified for Medicaid or neverpreviously licensed by the Department ofHealth and Senior Services.

(B) Administration. This cost componentincludes the following lines from the costreport:

1. Version MSIR-1 (7-93): lines 105,113–120, 122–140, 142–144, 147–150, 152–158 and amortization of organizational costsreported on line 106; and

2. Version MSIR-1 (3-95): lines 111–150.

(C) Age of beds. The age is determined bysubtracting the initial licensing year from1994 for prospective rates effective January1, 1995 set during the initial 1992 rate baseyear calculations or the rate setting year forprospective rates effective after January 1,1995.

(D) Allowable cost. Those costs which areallowable for allocation to the Medicaid



Program based upon the principles estab-lished in this regulation. The allowability ofcosts shall be determined by the Division ofMedical Services and shall be based upon cri-teria and principles included in this regula-tion, the Medicare Provider ReimbursementManual (HIM-15) and GAAP. Criteria andprinciples will be applied using this regula-tion as the first source, the Medicare ProviderReimbursement Manual (HIM-15) as the sec-ond source and GAAP as the third source.

(E) Ancillary. This cost componentincludes the following lines from the costreport:

1. Version MSIR-1 (7-93): lines 62–75,87–95, 97–103, 145–146; and

2. Version MSIR-1 (3-95): lines 71–101.(F) Asset value. The asset value is the per

bed cost of construction used in calculating afacility’s capital cost component per diem uti-lizing the fair rental value system (FRV) asset forth in subsection (11)(D). The assetvalue is determined using the RS MeansBuilding Construction Cost publication andthe median, total cost of construction per bedfor nursing homes from the “S.F., C.F., and% of Total Costs” table, adjusted by the totalweighted average index for Missouri citiesfrom the “City Cost Indexes” table. The ini-tial asset value used in setting rates effectiveJanuary 1, 1995 relating to the initial 1992base year is the value for 1994 and is thirty-two thousand three hundred thirty dollars($32,330). The initial asset value is adjustedannually using the estimated Historical CostIndexes from the RS Means publication foreach year and is used to set the prospectiverate for new facilities. The asset value ineffect at the end of the rate setting periodshall be used.

(G) Average private pay rate. The usualand customary charge for private patientdetermined by dividing total private patientdays of care into private patient revenue net ofcontractual allowances for the same servicethat is included in the Medicaid reimburse-ment rate. This excludes negotiated paymentmethodologies with state or federal agenciessuch as the Veteran’s Administration or theMissouri Department of Mental Health. Baddebts, charity care, and other miscellaneousdiscounts are excluded in the computation ofthe average private pay rate.

(H) Bad debt. The difference between theamount expected to be received and theamount actually received. This amount maybe written off as uncollectible after all collec-tion efforts are exhausted. Collection effortsmust be documented and an aged accountsreceivable schedule should be kept. Writtenprocedures should be maintained detailinghow, when, and by whom a receivable may bewritten off as a bad debt.

(I) Capital. This cost component will becalculated using a fair rental value system(FRV). The fair rental value is reimbursed inlieu of the costs reported on the followinglines of the cost report:

1. Version MSIR-1 (7-93): lines 106–112, except for amortization of organizationalcosts; and

2. Version MSIR-1 (3-95): lines 102–109.

(J) Capital asset. A facility’s building,building equipment, major moveable equip-ment, minor equipment, land, land improve-ments, and leasehold improvements asdefined in HIM-15. Motor vehicles areexcluded from this definition.

(K) Capital asset debt. The debt related tothe capital assets as determined from the deskaudited and/or field audited cost report.

(L) Ceiling. The ceiling is the maximumper diem rate for which a facility may bereimbursed for the patient care, ancillary andadministration cost components, and is deter-mined by applying a percentage to the medianper diem for the patient care, ancillary andadministration cost components. The percent-age is one hundred twenty percent (120%) forpatient care, one hundred twenty percent(120%) for ancillary, and one hundred tenpercent (110%) for administration.

(M) Certified bed. Any nursing facility orhospital based bed that is certified by theDepartment of Health and Senior Services toparticipate in the Medicaid Program.

(N) Change of ownership. A change inownership, control, operator, or leaseholdinterest, for any facility certified for partici-pation in the Medicaid Program.

(O) Charity care. Offset to gross billedcharges to reduce charges for free servicesprovided to specific types of residents, (i.e.charity care provided to meet Hill BurtonFund obligations or care provided by a reli-gious organization for members, etc.).

(P) Contractual allowance. A contra rev-enue account to reduce gross charges to theamount expected to be received. Contractualallowances represent the difference betweenthe private pay rate and a contracted ratewhich the facility contracted with an outsideparty for full payment of services rendered(i.e. Medicaid, Medicare, managed careorganizations, etc.). No efforts are made tocollect the difference.

(Q) Cost components. The groupings ofallowable costs used to calculate a facility’sper-diem rate. They are patient care, ancil-lary, capital, and administration. In addition,a working capital allowance is provided.

(R) Cost report. The Financial and Statis-tical Report for Nursing Facilities, requiredattachments as specified in paragraph(10)(A)7. of this regulation, and all work-sheets supplied by the division for this

purpose. The cost report shall detail the costof rendering both covered and noncoveredservices for the fiscal reporting period inaccordance with this regulation and the costreport instructions and shall be prepared onforms or diskettes provided by and/or asapproved by the division.

1. Cost Report version MSIR-1 (7-93)shall be used for completing cost reports withfiscal years ending prior to January 1, 1995and shall be denoted as CR (7-93) throughoutthe remainder of this regulation.

2. Cost Report version MSIR-1 (3-95)shall be used for completing cost reports withfiscal years ending on or after January 1,1995 and shall be denoted as CR (3-95)throughout the remainder of this regulation.

(S) Data bank. The data from the rate baseyear cost reports excluding the followingfacilities: hospital based, state operated,pediatric HIV, terminated or interim rate. If afacility has more than one (1) cost report withperiods ending in the rate base year, the costreport covering a full twelve- (12-) monthperiod ending in the rate base year will beused. If none of the cost reports cover a fulltwelve (12) months, the cost report with thelatest period ending in the rate base year willbe used.

1. The initial rate base year shall be1992 and the data bank shall include costreports with an ending date in calendar year1992. The 1992 initial base year data shall beused to set rates effective for dates of servicebeginning January 1, 1995 through June 30,2004. The 1992 initial base year data isadjusted for the HCFA Market Basket Indexfor 1993 of 3.9%, 1994 of 3.4%, and nine(9) months of 1995 of 3.3%, for a totaladjustment of 10.6%.

2. The rate base year used for rebasingshall be 2001 and the data bank shall includecost reports with an ending date in calendaryear 2001. The 2001 rebase year data shall beused to set rates effective for dates of servicebeginning July 1, 2004 through such timerates are rebased again or calculated on someother cost report as set forth in regulation.The 2001 rebase year data is adjusted for theCMS Market Basket Index for SFY 2002 of3.2%, SFY 2003 of 3.4%, SFY 2004 of2.3%, and SFY 2005 of 2.3%, for a totaladjustment of 11.2%.

(T) Department. The department, unlessotherwise specified, refers to the MissouriDepartment of Social Services.

(U) Department of Health and Senior Ser-vices. The department of the state of Mis-souri responsible for the survey, certification,and licensure of nursing facilities as pre-scribed in Chapter 198, RSMo. Previously,the agency responsible for these duties wasthe Division of Aging within the Departmentof Social Services.


Secretary of State


(V) Desk audit. The Division of MedicalServices’ or its authorized agent’s audit of aprovider’s cost report without a field audit.

(W) Director. The director, unless other-wise specified, refers to the director, Mis-souri Department of Social Services.

(X) Division. Unless otherwise specified,division refers to the MO HealthNet Division,the division of the Department of Social Ser-vices charged with administration of Mis-souri’s MO HealthNet Program.

(Y) Entity. Any natural person, corpora-tion, business, partnership, or any other fidu-ciary unit.

(Z) Facility asset value. Total asset valueless adjustment for age of beds.

(AA) Facility fiscal year. A facility’stwelve- (12-) month fiscal reporting periodcovering the same twelve- (12-) month periodas its federal tax year.

(BB) Facility size. The number of licensednursing facility beds as determined from thedesk audited and/or field audited cost reportwhich has been verified with Department ofHealth and Senior Services records.

(CC) Fair rental value system. Themethodology used to calculate the reimburse-ment of capital.

(DD) Field audit. An on-site audit of thenursing facility’s records performed by thedepartment or its authorized agent.

(EE) Generally accepted accounting prin-ciples (GAAP). Accounting conventions,practices, methods, rules, and proceduresnecessary to describe accepted accountingpractice at a particular time as established bythe authoritative body establishing such prin-ciples.

(FF) HCFA Market Basket Index. Anindex showing nursing home market basketindexes. The index is published quarterly byDRI/McGraw Hill. The table used in thisregulation is titled “DRI Health Care Cost—National Forecasts, HCFA Nursing HomeWithout Capital Market Basket.” HCFAbecame known as the Center for Medicareand Medicaid Services (CMS) and the tablename changed accordingly. The publicationand publisher have also changed names butthe publication still provides essentially thesame information. The publication is knownas the Health-Care Cost Review and it is pub-lished by Global Insight. The same or com-parable index and table shall continue to beused, regardless of any changes in the nameof the publication, publisher, or table.

(GG) Hospital based. Any nursing facilitybed licensed and certified by the Departmentof Health and Senior Services, Section forHealth Facilities Regulation, which is physi-cally connected to or located in a hospital.

(HH) Interim rate. The interim rate is thesum of one hundred percent (100%) of thepatient care cost component ceiling, ninety

percent (90%) of the ancillary and adminis-tration cost component ceilings, ninety-fivepercent (95%) of the median per diem for thecapital cost component, and the working cap-ital allowance using the interim rate costcomponent. The median per diem for capitalwill be determined from the capital compo-nent per diems of providers with prospectiverates in effect on January 1, 1995 for the ini-tial rate base year; July 1, 2004 for the 2001rebased year; and March 15, 2005 for therevised rebase calculations effective for datesof service beginning April 1, 2005 and forthe per diem rate calculation effective fordates of service beginning July 1, 2005 for-ward.

(II) Licensed bed. Any skilled nursingfacility or intermediate care facility bed meet-ing the licensing requirement of the MissouriDepartment of Health and Senior Services.

(JJ) Miscellaneous discounts/other revenuedeductions. A contra revenue account to re-duce gross charges to the amount expected tobe received. These deductions represent othermiscellaneous discounts not specificallydefined as a bad debt. Written policies mustbe maintained detailing the circumstancesunder which the discounts are available andmust be uniformly applied.

(KK) Median. The middle value in a distri-bution, above and below which lie an equalnumber of values. The distribution for pur-poses of this regulation includes the perdiems calculated for each facility based on orderived from the data in the data bank. Theper diem for each facility is the allowable costper day which is calculated by dividing thefacility’s allowable costs by the patient days.For the administration cost component, eachfacility’s per diem included in the data bankand used to determine the median shallinclude the adjustment for minimum utiliza-tion set forth in subsection (7)(O) by dividingthe facility’s allowable costs by the greater ofthe facility’s actual patient days or the calcu-lated minimum utilization days.

(LL) Nursing facility (NF). EffectiveOctober 1, 1990, skilled nursing facilities,skilled nursing facilities/intermediate carefacilities and intermediate care facilities asdefined in Chapter 198, RSMo participatingin the Medicaid Program will all be subject tothe minimum federal requirements found insection 1919 of the Social Security Act.

(MM) Occupancy rate. A facility’s totalactual patient days divided by the total beddays for the same period as determined fromthe desk audited and/or field audited costreport. For a distinct part facility that com-pletes a worksheet one of cost report, versionMSIR (7-93) or (3-95), determine the occu-pancy rate from the total actual patient daysfrom the certified portion of the facilitydivided by the total bed days from the certi-

fied portion for the same period, as deter-mined from the desk audited and/or fieldaudited cost report.

(NN) Patient care. This cost componentincludes the following lines from the costreport:

1. Version MSIR-1 (7-93): lines 45–60,77–85; and

2. Version MSIR-1 (3-95): lines 46–70.(OO) Patient day. The period of service

rendered to a patient between the census-tak-ing hour on two (2) consecutive days. Censusshall be taken in all facilities at midnight eachday and a census log maintained in each facil-ity for documentation purposes. “Patientday” includes the allowable temporary leave-of-absence days per subsection (5)(D) andhospital leave days per subsection (5)(M).The day of discharge is not a patient day forreimbursement unless it is also the day ofadmission.

(PP) Per diem. The daily rate calculatedusing this regulation’s cost components andused in the determination of a facility’sprospective and/or interim rate.

(QQ) Provider or facility. A nursing facili-ty with a valid Medicaid participation agree-ment with the Department of Social Servicesfor the purpose of providing nursing facilityservices to Title XIX-eligible recipients.

(RR) Prospective rate. The rate determinedfrom the rate setting cost report.

(SS) Rate setting period. The period inwhich a facility’s prospective rate is deter-mined. The cost report that contains the datacovering this period will be used to determinethe facility’s prospective rate and is known asthe rate setting cost report.The rate settingperiod for a facility is determined from appli-cable regulations on or after July 1, 1990.

(TT) Reimbursement rate. A prospectiveor interim rate.

(UU) Related parties. Parties are relatedwhen any one (1) of the following circum-stances apply:

1. An entity where, through its activi-ties, one (1) entity’s transactions are for thebenefit of the other and such benefits exceedthose which are usual and customary in suchdealings;

2. An entity has an ownership or con-trolling interest in another entity; and theentity, or one (1) or more relatives of the enti-ty, has an ownership or controlling interest inthe other entity. For the purposes of this para-graph, ownership, or controlling interest doesnot include a bank, savings bank, trust com-pany, building and loan association, savingsand loan association, credit union, industrialloan and thrift company, investment bankingfirm, or insurance company unless the entitydirectly, or through a subsidiary, operates afacility; and



3. As used in this regulation, the follow-ing terms mean:

A. Indirect ownership/interest meansan ownership interest in an entity that has anownership interest in another entity. Thisterm includes an ownership interest in anyentity that has an indirect ownership interestin an entity;

B. Ownership interest means the pos-session of equity in the capital, in the stock,or in the profits of an entity. Ownership orcontrolling interest is when an entity—

(I) Has an ownership interesttotalling five percent (5%) or more in an enti-ty;

(II) Has an indirect ownershipinterest equal to five percent (5%) or more inan entity. The amount of indirect ownershipinterest is determined by multiplying the per-centages of ownership in each entity;

(III) Has a combination of directand indirect ownership interest equal to fivepercent (5%) or more in an entity;

(IV) Owns an interest of five per-cent (5%) or more in any mortgage, deed oftrust, note, or other obligation secured by anentity if that interest equals at least five per-cent (5%) of the value of the property orassets of the entity. The percentage of owner-ship resulting from these obligations is deter-mined by multiplying the percentage of inter-est owned in the obligation by the percentageof the entity’s assets used to secure the obli-gation;


(VI) Is a partner in an entity that isorganized as a partnership; and

C. Relative means person related byblood, adoption, or marriage to the fourthdegree of consanguinity.

(VV) Replacement beds. Newly construct-ed beds never certified for Medicaid or previ-ously licensed by the Department of Healthand Senior Services and put in service inplace of existing Medicaid beds. The numberof replacement beds being certified for Med-icaid shall not exceed the number of bedsbeing replaced.

(WW) Renovations/major improvements.Capital cost incurred for improving a facilityexcluding replacement beds and additionalbeds.

(XX) Restricted funds. Funds, cash, cashequivalent, or marketable securities, includ-ing grants, gifts, taxes, and income fromendowments which must only be used for aspecific purpose designated by the donor.

(YY) Total facility size. Facility size plusincreases minus decreases of licensed nursingfacility beds plus calculated bed equivalentsfor renovations/major improvements.

(ZZ) Unrestricted funds. Funds, cash, cashequivalents, or marketable securities, includ-

ing grants, gifts, taxes, and income fromendowments, that are given to a providerwithout restriction by the donor as to theiruse.

(5) Covered Supplies, Items, and Services.All supplies, items, and services covered inthe reimbursement rate must be provided tothe resident as necessary. Supplies and ser-vices which would otherwise be covered in areimbursement rate but which are also bill-able to the Title XVIII Medicare Programmust be billed to that program for facilitiesparticipating in the Title XVIII MedicareProgram. Covered supplies, items, and ser-vices include, but are not limited to, the fol-lowing:

(A) Services, items, and covered suppliesrequired by federal or state law or regulationwhich must be provided by nursing facilitiesparticipating in the Title XIX program;

(B) Semiprivate room and board;(C) Private room and board when it is nec-

essary to isolate a recipient due to a medicalor social condition examples of which may becontagious infection, loud irrational speech,etc.;

(D) Temporary leave of absence days forMedicaid recipients, not to exceed twelve(12) days for the first six (6) calendar monthsand not to exceed twelve (12) days for thesecond six (6) calendar months. Temporaryleave of absence days must be specificallyprovided for in the recipient’s plan of careand prescribed by a physician. Periods oftime during which a recipient is away fromthe facility visiting a friend or relative areconsidered temporary leaves of absence;

(E) Provision of personal hygiene and rou-tine care services furnished routinely anduniformly to all residents;

(F) All laundry services, including person-al laundry;

(G) All dietary services, including specialdietary supplements used for tube feeding ororal feeding. Dietary supplements prescribedby a physician are also covered items;

(H) All consultative services required byfederal or state law or regulations;

(I) All therapy services required by federalor state law or regulations;

(J) All routine care items including, butnot limited to, those items specified inAppendix A to this regulation;

(K) All nursing services and suppliesincluding, but not limited to, those itemsspecified in Appendix A to this regulation;

(L) All nonlegend antacids, nonlegend lax-atives, nonlegend stool softeners, and nonle-gend vitamins. Providers may not elect whichnonlegend drugs in any of the four (4) cate-gories to supply; any and all must be providedto residents as needed and are included in afacility’s reimbursement rate; and

(M) Hospital leave days as defined in 13CSR 70-10.070.

(6) Noncovered Supplies, Items, and Services.All supplies, items, and services which areeither not covered in a facility’s reimburse-ment rate or are billable to another programin Medicaid, Medicare or other third-partypayor. Noncovered supplies, items, andservices include, but are not limited to, thefollowing:

(A) Private room and board unless it isnecessary to isolate a recipient due to a med-ical or social condition, examples of whichmay be contagious infection, loud irrationalspeech, etc. Unless a private room is neces-sary due to such a medical or social condi-tion, a private room is a noncovered serviceand a Medicaid recipient or responsible partymay therefore pay the difference between afacility’s semiprivate charge and its chargefor a private room. Medicaid recipients maynot be placed in private rooms and chargedany additional amount above the facility’sMedicaid reimbursement rate unless therecipient or responsible party specificallyrequests in writing a private room prior toplacement in a private room and acknowl-edges that an additional amount not payableby Medicaid will be charged for a privateroom;

(B) Supplies, items, and services for whichpayment is made under other Medicaid pro-grams directly to a provider(s) other thanproviders of the nursing facility services; and

(C) Supplies, items, and services providednonroutinely to residents for personal com-fort or convenience.

(7) Allowable Cost Areas.(A) Compensation of Owners.

1. Compensation of services of ownersshall be an allowable cost area. Reason able -ness of compensation shall be limited as pre-scribed in subsection (8)(P).

2. Compensation shall mean the totalbenefit, within the limitations set forth in thisregulation, received by the owner for the ser-vices rendered to the facility. This includesdirect payments for managerial, administra-tive, professional and other services, amountspaid for the personal benefit of the owner, thecost of assets and services which the ownerreceives from the provider, and additionalamounts determined to be the reasonablevalue of the services rendered by sole propri-etors or partners and not paid by any methodpreviously described in this regulation. Com-pensation must be paid (whether in cash,negotiable instrument, or in kind) within sev-enty-five (75) days after the close of the peri-od in accordance with the guidelines pub-lished in the Medicare ProviderReimburse-ment Manual, Part 1, Section906.4.


Secretary of State


(B) Covered services and supplies asdefined in section (5) of this regulation.

(C) Capital Assets.1. Capital assets shall include historical

costs that would be capitalized under GAAP.For example, historical costs would include,but not be limited to, architectural fees, relat-ed legal fees, interest, and taxes during con-struction.

2. For purposes of this regulation, anyasset or improvement costing greater thanone thousand dollars ($1,000) and having auseful life greater than one (1) year in accor-dance with American Hospital Associationdepreciable guidelines, shall be capitalized.

3. In addition to the American HospitalAssociation depreciable guidelines, mattress-es shall be considered a capitalized asset andshall have a three- (3-) year useful life.

(D) Vehicle Costs. Costs related to allow-able vehicles shall be accounted for as setforth below. Allowable vehicles are vehicleswhich are a necessary part of the operation ofa nursing facility. One (1) vehicle per sixty(60) licensed beds is allowable. For example,one (1) vehicle is allowed for a facility withzero to sixty (0–60) licensed beds, two (2)vehicles are allowed for a facility with sixty-one to one hundred twenty (61–120) licensedbeds, and so forth. Costs related to vehiclesthat are disallowed shall also be disallowedand adjustments made accordingly.

1. Depreciation.A. An appropriate allowance for

depreciation on allowable vehicles is reportedon line 139 of the cost report, version MSIR-1 (7-93) and on line 133 of CR (3-95).

B. The depreciation must be identifi-able and recorded in the provider’s account-ing records, based on the basis of the vehicleand prorated over the estimated useful life ofthe vehicle in accordance with AmericanHospital Association depreciable guidelinesusing the straight line method of depreciationfrom the date initially put into service.

C. The basis of vehicle cost at thetime placed in service shall be the lower of—

(I) The book value of the provider;(II) Fair market value at the time of

acquisition; or(III) The recognized Internal Rev-

enue Service (IRS) tax basis. D. The basis of a donated vehicle will

be allowed to the extent of recognition ofincome resulting from the donation of thevehicle. Should a dispute arise between aprovider and the division as to the fair marketvalue at the time of acquisition of a deprecia-ble vehicle, an appraisal by a third party isrequired. The appraisal cost will be the soleresponsibility of the nursing facility.

E. Historical cost will include thecost incurred to prepare the vehicle for use bythe nursing facility.

F. When a vehicle is acquired by trad-ing in an existing vehicle, the cost basis of thenew vehicle shall be the sum of undepreciatedcost basis of the traded vehicle plus the cashpaid.

2. Interest. Interest cost on vehicle debtrelated to allowable vehicles shall be reportedon line 139 of CR (7-93) and line 134 of CR(3-95).

3. Insurance. Insurance cost related toallowable vehicles shall be reported on line140 of CR (7-93) and line 135 of CR (3-95).

4. Rental and leases. Lease cost relatedto allowable vehicles shall be reported on line139 of CR (7-93) and on line 135 of CR (3-95).

5. Personal property taxes. Personalproperty taxes related to allowable vehiclesshall be reported on line 112 of CR (7-93)and on line 109 of CR (3–95).

6. Other miscellaneous maintenance andrepairs. Other miscellaneous maintenanceand repairs related to allowable vehicles shallbe reported on line 139 of CR (7-93) and online 135 of CR (3-95).

(E) Insurance.1. Property insurance. Insurance cost on

property of the nursing facility used to pro-vide nursing facility services. Property insur-ance should be reported on line 109 of thecost report version MSIR-1 (7-93) and line107 of CR (3-95).

2. Other insurance. Liability, umbrella,and other general insurance for the nursingfacility should be reported on line 140 of thecost report version MSIR-1 (7–93) and line136 of CR (3–95).

3. Workers’ compensation insurance.Insurance cost for workers’ compensationshould be reported on the applicable workers’compensation lines on the cost report corre-sponding to the employee salary groupings.

(F) Interest and Borrowing Costs on Capi-tal Asset Debt. Allowable interest and bor-rowing costs, as set forth below, are reim-bursed as part of the capital cost componentper diem detailed in subsection (11)(D).

1. Interest will be reimbursed for neces-sary loans for outstanding capital asset debtfrom the rate setting cost report at the primerate plus two (2) percentage points, as setforth in paragraph (11)(D)3.

2. Loans (including finance charges,prepaid costs, and discounts) must be sup-ported by evidence of a written agreementthat funds were borrowed and repayment ofthe funds are required. The loan costs mustbe identifiable in the provider’s accountingrecords, must be related to the reporting peri-od in which the costs are claimed, and mustbe necessary for the acquisition and/or reno-vation of the provider’s facility.

3. Necessary means that the loan beincurred to satisfy a financial need of the

provider and for a purpose related to recipientcare. Loans which result in excess funds orinvestments are not considered necessary.

4. A provider shall capitalize borrowingcosts and amortize them over the life of theloan on a straight-line basis. Borrowing costsinclude loan costs (that is, lender’s title andrecording fees, appraisal fees, legal fees,escrow fees, and other closing costs), financecharges, prepaid interest, and discounts.Finder’s fees are not allowed.

5. If loans for capital asset debt exceedthe facility asset value, the interest and bor-rowing costs associated with the portion ofthe loan or loans which exceeds the facilityasset value shall not be allowable.

6. An illustration of how allowable inter-est and allowable borrowing costs is calculat-ed is detailed in paragraphs (11)(D)3. and 4.

(G) Rental and Leases.1. Capitalized leases, as defined by

GAAP, are to be reported on the books of thefacility as if the facility owns the property(i.e., the building, equipment, and relatedexpenses are recorded on the books of thefacility) in accordance with subsections(7)(C), (E), (F) and (H). A facility operatingits building under a capital lease shall have itscapital cost component calculated using thefair rental value system.

2. Operating leases, as defined byGAAP, shall be reported on line 103 of CR(3-95). A facility operating its building underan operating lease shall have its capital costcomponent calculated using the fair rentalvalue system. A facility may record the prop-erty insurance, real estate taxes and personalproperty taxes directly on the applicable cap-ital lines of the cost report (i.e., lines 107,108, and 109 of CR (3-95), respectively), andinclude the costs of such in calculating thepass-through expenses portion of the capitalrate if it meets the following criteria:

A. If the cost of the property insur-ance, real estate taxes, and personal propertytaxes are a distinct component of a facility’soperating lease for the building and the leasepayment is directly affected or changed by theamount of these items; and

B. The cost of the property insurance,real estate taxes, and personal property taxesincluded in the lease must be documented andsupported by the property insurance premiumnotice and tax assessment notices relating tothe nursing facility.

(H) Real Estate and Personal PropertyTaxes. Taxes levied on or incurred by a facil-ity used to provide nursing facility services.

(I) Value of Services of Employees.1. Except as provided for in this regula-

tion, the value of services performed byemployees in the facility shall be included asan allowable cost area to the extent actually



compensated, either to the employee or to thesupplying organization.

2. Services rendered by volunteers suchas those affiliated with the American RedCross, hospital guilds, auxiliaries, privateindividuals, and similar organizations shallnot be an allowable cost, as the services havetraditionally been rendered on a purely volun-teer basis without expectation of any form ofreimbursement by the organization throughwhich the service is rendered or by the per-son rendering the service.

3. Services by priests, ministers, rabbis,and similar type professionals shall be anallowable cost, provided that the services arenot of a religious nature and are compensat-ed. Costs of wardrobe and similar items shallnot be allowable.

(J) Employee Benefits.1. Retirement plans.

A. Contributions to IRS qualifiedretirement plans shall be an allowable cost.


2. Deferred compensation plans.A. Contributions shall be allowable

costs when, and to the extent that, these costsare actually paid by the provider. Providerpayments for unfunded deferred compensa-tion plans will be considered an allowablecost only when paid to the participatingemployee.

B. Amounts paid by organizations topurchase tax-sheltered annuities for employ-ees shall be treated as deferred compensationactually paid by the provider.

C. Amounts funded to deferred com-pensation plans together with associatedincome shall be recaptured, if not actuallypaid when due, as an offset to expenses onthe cost report.

3. Types of insurance which are consid-ered an allowable cost:

A. Credit life insurance (term insur-ance), if required as part of a mortgage loanagreement. An example, would be insuranceon loans granted under certain federal pro-grams;

B. Where the relative(s) or estate ofthe employee, excluding stockholders, part-ners and proprietors, is the beneficiary. Thistype of insurance is considered to be anemployee benefit and is an allowable cost.This cost should be reported on the applica-ble payroll lines on the cost report for theemployees salary groupings; and

C. Health, disability, dental, etc.,insurances for employees/owners shall beallowable costs.

(K) Education and Training Expenses.

1. The cost of on-the-job training whichdirectly benefits the quality of health care oradministration at the facility shall be allow-able, except for costs associated with nurseaide training and competency evaluation pro-gram.

2. Costs of education and training shallinclude travel costs, but will not includeleaves of absence or sabbaticals.

(L) Organizational Costs.1. Organizational cost items include the

following: legal fees incurred in establishingthe corporation or other organizations; neces-sary accounting fees; expenses of temporarydirectors and organizational meetings ofdirectors and stockholders; and fees paid tostates for incorporation.


3. Where a provider is organized withina five- (5-) year period prior to its entry intothe program and has properly capitalized orga-nizational costs using a sixty- (60-) monthamortization period, no change in the rate ofamortization is required. In this instance theunamortized portion of organizational costs isan allowable cost under the program and shallbe amortized over the remaining part of thesixty- (60-) month period.

4. For change in ownership after July18, 1984, allowable amortization will be lim-ited to the prior owner’s allowable unamor-tized portion of organizational cost.

(M) Advertising Costs. Advertising costswhich are reasonable and appropriate areallowable. The costs must be a common andaccepted occurrence for providing nursingfacility services.

(N) Cost of Supplies and Services Involv-ing Related Parties. Costs of goods and ser-vices furnished by related parties shall notexceed the lower of the cost to the supplier orthe prices of comparable goods or servicesobtained elsewhere. In the cost report aprovider shall identify related party suppliersand the type, the quantity, and costs to therelated party for goods and services obtainedfrom each such supplier.

(O) Minimum Utilization. In the event theoccupancy rate of a facility is below eighty-five percent (85%), the administration andcapital cost components will be adjusted asthough the provider experienced eighty-fivepercent (85%) occupancy. The adjustmentfor minimum utilization is reflected in thecalculation of the per diem for the adminis-tration and capital cost components. If theprovider’s occupancy is less than eighty-fivepercent (85%), the total allowable costs are

divided by the minimum utilization daysrather than the facility’s actual patient days.Minimum utilization days are calculated bymultiplying the facility’s bed days by the min-imum utilization percent. Bed days are cal-culated by multiplying the number of bedslicensed during the cost report period timesthe days in the cost report period. If the facil-ity is removing the noncertified area revenuesand expenses by completing a worksheet 1,bed days are calculated by multiplying thenumber of beds certified during the costreport period times the days in the cost reportperiod. In no case may costs disallowedunder this provision be carried forward tosucceeding periods.

(P) Central Office/Home Office or Man-agement Company Costs. The allowability ofthe individual cost items contained withincentral office/home office or managementcompany costs will be determined in accor-dance with all other provisions of this regula-tion. The total of central office/home officeand/or management company costs, asreported on lines 129 and 130 of the costreport, version MSIR (7-93) and lines 121and 122 of CR (3-95), are limited to sevenpercent (7%) of gross revenues less contrac-tual allowances.

(Q) Start-Up Costs. Expenses incurredprior to opening, as defined in HIM-15 asstart-up costs, shall be amortized on astraight-line method over sixty (60) months.The amortization shall be reported on thesame line on the cost report as the originalstart-up costs are reported. For example, RNsalary prior to opening would be amortizedover sixty (60) months and would be reportedon line 49, RN of CR (7-93) and line 51 ofCR (3-95).

(R) Reusable Items. Costs incurred foritems, such as linen and bedding, but not lim-ited to, shall be classified as inventory whenpurchased and expensed as the item is used.

(S) Nursing Facility ReimbursementAllowance (NFRA). Effective October 1,1996, the fee assessed to nursing facilities inthe state of Missouri for the privilege ofdoing business in the state will be an allow-able cost.

(8) Non-allowable Costs. Costs not reason-ably related to nursing facility services shallnot be included in a provider’s costs. Non-allowable costs include, but are not limitedto, the following:

(A) Amortization on intangible assets,such as goodwill, leasehold rights, covenants,and purchased certificates of need;

(B) Bad debts, contractual allowances,courtesy discounts, charity allowances, andsimilar adjustments or allowances are offsetsto revenues and, therefore, not included inallowable costs;


Secretary of State


(C) Capital cost increases due solely tochanges in ownership;

(D) Charitable contributions;(E) Compensation paid to a relative or an

owner through a related party to the extent itexceeds the limitations established under sub-section (7)(A) of this regulation;

(F) Costs such as legal fees, accountingand administrative costs, travel costs, and thecosts of feasibility studies, which areattributable to the negotiation or settlement ofthe sale or purchase of any capital asset byacquisition or merger for which any paymenthas been previously made under the program;

(G) Directors’ fees included on the costreport in excess of two hundred dollars($200) per month, per individual;

(H) Federal, state, or local income andexcess profit taxes, including any interest andpenalties paid thereon;

(I) Late charges and penalties;(J) Finder’s fees;(K) Fund-raising expenses;(L) Interest expense on loans for intangible

assets;(M) Legal fees related to litigation involv-

ing the department and attorney’s fees whichare not related to the provision of nursingfacility services, such as litigation related todisputes between or among owners, opera-tors, or administrators;

(N) Life insurance premiums for officersand owners and related parties except theamount relating to a bona fide nondiscrimina-tory employee benefits plan;

(O) Noncovered supplies, services, anditems as defined in section (6);

(P) Owner’s compensation in excess of theapplicable range of the most recent survey ofadministrative salaries paid to individualsother than owners for proprietary and non-proprietary providers as published in theupdated Medicare Provider ReimbursementManual Part 1, Section 905.2 and based uponthe total number of working hours.



B. Owners/administrators will beadjusted on the basis of the high range. Own-ers included in home office costs or manage-ment company costs will be adjusted on thehigh range. All others will be calculated onthe median range.

2. The salary identified above will beapportioned on the basis of hours worked inthe facility(ies), home office, or managementcompany as applicable to total hours in thefacility(ies), home office, or managementcompany;

(Q) Prescription drugs;(R) Religious items or supplies or services

of a primarily religious nature performed by

priests, rabbis, ministers, or other similartypes of professionals;

(S) Research costs;(T) Resident personal purchases provided

nonroutinely to residents for personal com-fort or convenience;

(U) Salaries, wages, or fees paid to non-working officers, employees, or consultants;

(V) Cost of stockholder meetings or stockproxy expenses;

(W) Taxes or assessments for whichexemptions are available;

(X) Value of services (imputed or actual)rendered by nonpaid workers or volunteers;

(Y) All costs associated with nurse aidetraining and competency evaluation program;and

(Z) Losses from disposal of assets.


arately in the cost report. These revenues areoffset against expenses. Such revenuesinclude, but are not limited to, the following:

1. Income from telephone services;2. Sale of employee and guest meals;3. Sale of medical abstracts;4. Sale of scrap and waste food or

materials;5. Cash, trade, quantity, time, and

other discounts;6. Purchase rebates and refunds;7. Recovery on insured loss;8. Parking lot revenues;9. Vending machine commissions or

profits;10. Sales from supplies to individuals

other than nursing facility recipients; 11. Room reservation charges other than

covered therapeutic home leave days and hos-pital leave days;

12. Barber and beauty shop revenue;13. Private room differential;14. Medicare Part B revenues;

A. Revenues received from Part Bcharges through Medicare intermediaries willbe offset;

B. Seventy-five percent (75%) of therevenues received from Part B chargesthrough Medicare carriers will be offset;

15. Personal services;16. Activity income; and17. Revenue recorded for donated ser-

vices and commodities. (B) Restricted funds designated by the

donor prior to the donation for payment ofoperating costs will be offset from the associ-ated cost.

(C) Restricted funds designated by thedonor for capital expenditures will not be off-set from allowable expenses.

(D) Unrestricted funds not designated bythe provider for future capital expenditureswill be offset from allowable cost.

(E) As applicable, restricted, and unre-stricted funds will be offset in each cost com-ponent, excluding capital, in an amount equalto the cost component’s proportionate shareof allowable expense.

(F) Any tax levies which are collected bynursing home districts or county homes thatare supported in whole or in part by theselevies, will not be offset.

(G) Gains on disposal of assets will not beoffset from allowable expenses.

(10) Provider Reporting and Record KeepingRequirements.

(A) Annual Cost Report. The cost report(version MSIR-1 (3-95)) and cost reportinstructions (revised 3/95) are incorporatedby reference and made a part of this rule aspublished by the Department of Social Ser-vices, MO HealthNet Division, 615 Hower-ton Court, Jefferson City, MO 65109, August1, 2008. This rule does not incorporate anysubsequent amendments or additions.

1. Each provider shall adopt the sametwelve- (12-) month fiscal period for com-pleting its cost report as is used for federalincome tax reporting.

2. Each provider is required to completeand submit to the division an annual costreport, including all worksheets, attachments,schedules, and requests for additional infor-mation from the division. The cost reportshall be submitted on forms provided by thedivision for that purpose. Any substitute orcomputer generated cost report must haveprior approval by the division.

3. All cost reports shall be completed inaccordance with the requirements of this reg-ulation and the cost report instructions.Financial reporting shall adhere to GAAP,except as otherwise specifically indicated inthis regulation.

4. The cost report submitted must bebased on the accrual basis of accounting.Governmental institutions operating on a cashor modified cash basis of accounting maycontinue to report on that basis, providedappropriate treatment for capital expendituresis made under GAAP.

5. Cost reports shall be submitted by thefirst day of the sixth month following theclose of the fiscal period.

6. If a cost report is more than ten (10)days past due, payment shall be withheld fromthe facility until the cost report is submitted.Upon receipt of a cost report prepared inaccordance with this regulation, the paymentsthat were withheld will be released to theprovider. For cost reports which are morethan ninety (90) days past due, the departmentmay terminate the provider’s MO HealthNetparticipation agreement and if terminated



retain all payments which have been withheldpursuant to this provision.

7. Copies of signed agreements andother significant documents related to theprovider’s operation and provision of care toMO HealthNet participants must be attached(unless otherwise noted) to the cost report atthe time of filing unless current and accuratecopies have already been filed with the divi-sion. Material which must be submitted oravailable upon request includes, but is notlimited to, the following:

A. Audit prepared by an independentaccountant, including disclosure statementsand management letter or SEC Form 10-K;

B. Contracts or agreements involvingthe purchase of facilities or equipment duringthe last seven (7) years if requested by thedivision, the department, or its agents;




F. Federal and state income taxreturns for the fiscal year, if requested by thedivision, the department, or its agents;

G. Leases and/or rental agreementsrelated to the activities of the provider ifrequested by the division, the department, orits agents;

H. Management contracts;I. Medicare cost report, if applicable;J. Review and compilation statement;K. Statement verifying the restrictions

as specified by the donor, prior to donation,for all restricted grants;

L. Working trial balance actually usedto prepare the cost report with line numbertracing notations or similar identifications;and

M. Schedule of capital assets withcorresponding debt.

8. Cost reports must be fully, clearly,and accurately completed. All requiredattachments must be submitted before a costreport is considered complete. If any addi-tional information, documentation, or clarifi-cation requested by the division or its autho-rized agent is not provided within fourteen(14) days of the date of receipt of the divi-sion’s request, payments may be withheldfrom the facility until the information is sub-mitted.

9. Under no circumstances will the divi-sion accept amended cost reports for ratedetermination or rate adjustment after thedate of the division’s notification of the finaldetermination of the rate.

10. Exceptions. A cost report may notbe required for the following if a providerrequests a waiver in writing. Upon review ofthe provider’s request, the division shall pro-

vide a written response, indicating its deci-sion as to whether a waiver shall be granted.

A. Hospital based providers whichprovide less than one thousand (1,000)patient days of nursing facility services forMissouri Title XIX recipients, relative totheir fiscal year.

B. Change in provider status.(I) Providers which provide less

than one thousand (1,000) patient days ofnursing facility services for Missouri TitleXIX recipients, relative to their fiscal year,and have less than a twelve- (12-) month costreport due to a termination, change of owner-ship, or being newly MO HealthNet certi-fied.

(II) Beginning in SFY-04, the divi-sion may waive the cost report filing require-ment for the cost report resulting from achange of control, ownership, or terminationof participation in the MO HealthNet pro-gram if the old/terminating provider canshow financial hardship in providing the costreport. The old/terminating provider mustsubmit a written request to the division, indi-cating and providing documentation for thefinancial hardship caused by filing the costreport.

(III) Beginning in SFY-07, the divi-sion may waive the cost report filing require-ment for the cost report resulting from achange of control or ownership of participa-tion in the MO HealthNet program if the oldand new providers can provide assurancessatisfactory to the division that the newproviders will submit a cost report in the cal-endar year in which the change occurred andthat the cost report will cover at least a three-(3-) month period. A written request jointlysubmitted by the old and new providers, indi-cating the new provider’s fiscal year end andthe dates that the cost report will cover, mayprovide adequate assurances.

11. Cost report requirements and with-holding of funds for a change in provider sta-tus. A provider shall provide written notifica-tion to the assistant deputy director of theInstitutional Reimbursement Unit of the divi-sion prior to a change of control, ownership,or termination of participation in the MOHealthNet program. If a provider does notqualify for an exception for filing a costreport as detailed above in subparagraph(10)(A)10.C., the division may withholdpayments due to the provider pending receiptof the required cost report. The cost reportmust be prepared in accordance with thisregulation with all required attachments anddocumentation and is due the first day of thesixth month after the date of change of con-trol, ownership, or termination. Upon receiptof the fully completed cost report, any pay-ments withheld will be released, less any

amounts owed to the division such as unpaidNFRA, overpayments, etc.

A. If the division receives notificationprior to the change of control, ownership, ortermination of participation in the MOHealthNet program, the division will with-hold a minimum of thirty thousand dollars($30,000) of the remaining payments fromthe old/terminating provider until the costreport is filed. Upon receipt of the cost reportprepared in accordance with this regulation,any payments withheld will be released to theold/terminating provider, less any amountsowed to the division such as unpaid NFRA,overpayments, etc.

B. If the division does not receivenotification prior to a change of control orownership, the division will withhold thirtythousand dollars ($30,000) of the next avail-able MO HealthNet payment from theprovider identified in the current MO Health-Net participation agreement until the requiredcost report is filed. If the MO HealthNet pay-ment is less than thirty thousand dollars($30,000), the entire payment will be with-held. Upon receipt of the cost report preparedin accordance with this regulation, any pay-ments withheld will be released to theprovider identified in the current MO Health-Net participation agreement, less anyamounts owed to the division such as unpaidNFRA, overpayments, etc.

C. The division may, at its discretion,delay the withholding of funds specified insubparagraphs (10)(A)11.A. and B. until thecost report is due based on assurances satis-factory to the division that the cost report willbe timely filed. A request jointly submittedby the old and new provider may provide ade-quate assurances. The new provider mustaccept responsibility for ensuring timely fil-ing of the cost report and authorize the divi-sion to immediately withhold thirty thousanddollars ($30,000) if the cost report is nottimely filed.


report must be certified by the provider. Cer-tification must be made by a person autho-rized by one (1) of the following: for anincorporated entity, an officer of the corpora-tion; for a partnership, a partner; for a soleproprietorship or sole owner, the owner orlicensed operator; or for a public facility, thechief administrative officer of the facility.Proof of such authorization shall be furnishedupon request.

2. Cost reports must be notarized by acommissioned notary public.

3. The following statement must besigned on each cost report to certify its accu-racy and validity: Certification Statement:Misrepresentation or falsification of anyinformation contained in this cost report may


Secretary of State


be punishable by fine and/or imprisonmentunder state or federal law.

I hereby certify that I have read the abovestatement and that I have examined theaccompanying cost report and supportingschedules prepared by (provider name andnumber) for the cost report period beginning(date/year) and ending (date/year), and thatto the best of my knowledge and belief, it isa true, correct, and complete statement pre-pared from the books and records of theprovider in accordance with applicableinstructions, except as noted.

(Signature)

(Title) (Date)


accordance with GAAP and maintain suffi-cient internal control and documentation tosatisfy audit requirements and other require-ments of this regulation, including reasonablerequests by the division or its authorizedagent for additional information.

2. Each of a provider’s funded accountsmust be separately maintained with allaccount activity clearly identified.

3. Adequate documentation for all lineitems on the cost report shall be maintainedby a provider. Upon request, all original doc-umentation and records must be made avail-able for review by the division or its autho-rized agent at the same site at which theservices were provided or at the centraloffice/home office if located in the state ofMissouri. Copies of documentation andrecords shall be submitted to the division orits authorized agent upon request.

4. Each facility shall retain all financialinformation, data, and records relating to theoperation and reimbursement of the facilityfor a period of not less than seven (7) years.



2. A provider shall have available at thefield audit location one (1) or more knowl-edgeable persons authorized by the providerand capable of explaining the provider’saccounting and control system and cost reportpreparation, including all attachments andallocations.

3. If a provider maintains any records ordocumentation at a location which is not thesame as the site where services were provid-ed, other than central offices/home officesnot located in the state of Missouri, theprovider shall transfer the records to the samefacility at which the Medicaid services were

provided, or the provider must reimburse thedivision or its authorized agent for reasonabletravel costs necessary to perform any part ofthe field audit in any off-site location, if thelocation is acceptable to the division.

4. Those providers initially entering theprogram shall be required to have an annualindependent audit of the financial records,used to prepare annual cost reports covering,at a minimum, the first two (2) full twelve-(12-) month fiscal years of their participationin the Medicaid Program, in accordance withGAAP and generally accepted auditing stan-dards. The audit shall include, but may not belimited to, the Balance Sheet, Income State-ment, Statement of Retained Earnings, andStatement of Cash Flow. For example, aprovider begins participation in the Medicaidprogram in March and chooses a fiscal yearof October 1 to September 30. The first costreport will cover March through September.That cost report may be audited at the optionof the provider. The October 1 to September30 cost report, the first full twelve- (12-)month fiscal year cost report, shall be audit-ed. The next October 1 to September 30 costreport, the second full twelve- (12-) monthcost report, shall be audited. The audits shallbe done by an independent certified publicaccountant.

(E) Joint Use of Resources.1. If a provider has business enterprises

in addition to the nursing facility, the rev-enues, expenses, statistical, and financialrecords of each separate enterprise shall beclearly identifiable.

2. When the facility is owned, con-trolled or managed by an entity(ies) that own,control, or manage one (1) or more otherfacilities, records of central office and othercosts incurred outside the facility shall bemaintained so as to separately identify rev-enues and expenses of, and allocations to,individual facilities. Direct allocation of cost,such as RN consultant, which can be directlyidentifiable in the central office/home officecost and directly allocated to a facility byactual amounts or actual time spent. Thesedirect costs shall be reported on the appropri-ate lines of the cost report. Allocation of cen-tral office/home office or management com-pany costs to individual facilities should beconsistent from year-to-year. If a desk auditor field audit establishes that records are notmaintained so as to clearly identify informa-tion required by this regulation, those com-mingled costs shall not be recognized asallowable costs in determining the facility’sMedicaid reimbursement rate. Allowability ofthese costs shall be determined in accordancewith the provisions of this regulation.

(11) Cost Components and Per DiemCalculation. The division will use the rate

setting cost report to determine the nursingfacility’s per diem rate for each cost compo-nent, as set forth in this section, and itsprospective rate, as continued and set forth inthe remaining sections of the regulation.

(A) Patient Care. Each nursing facility’spatient care per diem shall be the lower ofthe—

1. Allowable cost per patient day forpatient care as determined by the divisionfrom the rate setting cost report, includingapplicable trends; or

2. Per diem ceiling of one hundredtwenty percent (120%) of the patient caremedian determined by the division from thedata bank.

(B) Ancillary. Each nursing facility’s ancil-lary per diem will be the lower of the—

1. Allowable cost per patient day forancillary as determined by the division fromthe rate setting cost report, including applica-ble trends; or

2. Per diem ceiling of one hundredtwenty percent (120%) of the ancillary medi-an determined by the division from the databank.

(C) Administration. Each nursing facility’sadministration per diem shall be the lower ofthe—

1. Allowable cost per patient day foradministration as determined by the divisionfrom the rate setting cost report, includingapplicable trends, and adjusted for minimumutilization, if applicable, as described in sub-section (7)(O); or

2. Per diem ceiling of one hundred tenpercent (110%) of the administration mediandetermined by the division from the databank. The administration median shall bebased on the administration per diems thathave been adjusted for minimum utilization,if applicable, as described in subsection(7)(O).

(D) Capital. Each nursing facility’s capitalper diem shall be determined using the fairrental value system (FRV), which consists offive (5) elements—rental value, return, com-puted interest, borrowing costs, and pass-through expenses. The calculation for eachelement, as well as the overall capital perdiem, is detailed below in paragraphs(11)(D)1.–6.

1. Rental value.A. Determine the total asset value.

(I) Determine facility size from therate setting cost report.

(II) Determine the number ofincreased licensed beds after the end of thefacility’s 1992 desk audited and/or fieldaudited cost report but prior to July 1, 1994(this is only applicable for the 1992 initial



rate base year for rates effective January 1,1995).

(III) Determine the bed equivalencyfor renovations/major improvements from thedate facility was originally licensed throughJune 30, 1994 for the 1992 initial rate baseyear for rates effective January 1, 1995 orthrough the end of the rate setting period forprospective rates effective after January 1,1995, by taking the cost of therenovations/major improvements divided bythe asset value per bed for the year of the ren-ovation/major improvement rounded to thenearest whole bed. The cost of the renova-tion/major improvement must be at least theasset value per bed for the year of the renova-tion/major improvement for each bed equiva-lency. For example, a renovations/major improvements done in 1994 with a costof two hundred twenty thousand dollars($220,000) is equal to six (6) beds.($220,000/$32,330 equals 6.80 beds roundeddown to 6 beds).

(IV) Determine the number ofdecreased licensed beds after the end of thefacility’s 1992 cost report but prior to July 1,1994 (this is only applicable for the 1992 ini-tial rate base year for rates effective January1, 1995).

(V) The Total Facility Size is thesum of (I), (II), and (III) less (IV).

(VI) The Total Asset Value is thetotal facility size times the asset value.

B. Determine the reduction for age.The age of the beds is determined by sub-tracting the year the beds were originallylicensed from the year relative to the end ofthe rate setting period. The reduction for ageis determined by multiplying the age of thebeds by one percent (1%) up to a maximumof forty percent (40%). For multiple licensingdates, the result of the weighted average agecalculation will be limited to forty percent(40%).

(I) The age of the beds for multiplelicensing dates is calculated on a weightedaverage method rounded to the nearest wholeyear. For example, using 1994 as the ratebase year for a facility with original licensurein 1977 of sixty (60) beds and an additionallicensure of sixty (60) beds in 1982 and ten(10) beds in 1990, the reduction is calculatedas follows:

Licensure Age ×Year Age Beds Beds

1977 17 60 10201982 12 60 7201990 4 10 40Total 130 1780

Weighted Average Age—1780/130 beds =13.69 years rounded to 14 years. This resultsin a reduction for age of the beds of 14%.

(II) The age of the beds for replace-ment beds is calculated on a weighted averagemethod rounded to the nearest whole yearwith the oldest beds always being replacedfirst. For example, a facility with one hun-dred twenty (120) beds licensed in 1978 withreplacement of sixty (60) beds in 1988, thereduction is calculated as follows:


1978 16 60 9601988 6 60 360Total 120 1320

Weighted Average Age—1320/120 = 11.00years. This results in a reduction for age ofthe beds of 11%.

(III) The age of the beds for reduc-tions in licensed beds is calculated on aweighted average method rounded to thenearest whole year with the oldest bedsalways being delicensed first. For example, afacility with original licensure in 1977 ofsixty (60) beds, additional licensure of sixty(60) beds in 1982 and ten (10) beds in 1990and a reduction of ten (10) beds in 1985, thereduction percentage is calculated as follows:


1977 17 60 10201982 12 60 7201990 4 10 401985* 17 (10) (170)Total 120 1610

* reduction of 1977 beds

Weighted Average Age—1610/120 beds =13.41 years rounded to thirteen (13) years.This results in a reduction for age of the bedsof 13%.

(IV) The age of the bed equivalentsfor renovations/major improvements is calcu-lated on a weighted average method roundedto the nearest whole year. For example, a onehundred twenty (120) bed facility licensed in1978 undertakes two (2) renovations:$200,000 in 1983 and $100,000 in 1993. Theasset value per bed is $25,250 for 1983 and$32,039 for 1993. The bed equivalency isseven (7) beds for 1983 and three (3) beds for1993, the reduction percentage is calculatedas follows:

Licensure/Construction Age ×Year Age Beds Beds

1978 16 120 19201983 11 7 771993 1 3 3Total 130 2000

Weighted Average Method—2000/130 =15.38 years rounded to 15 years. This resultsin a reduction for age of beds of 15%.

C. Determine the facility asset value.The facility asset value is the total asset valueset forth in subparagraph (11)(D)1.A. less thereduction for age set forth in subparagraph(11)(D)1.B.

D. Determine the rental value. Multi-ply the facility asset value by two and one-half percent (2.5%) to determine the rentalvalue. The two and one-half percent (2.5%)is based on a forty- (40-) year life.

E. The following is an illustration ofhow subparagraphs (11)(D)1.A., B., C. andD. determine the rental value:

(I) Assumptions:

1992 Rate Setting Cost ReportLicensed beds 170Bed equivalents 4Total facility size 174 bedsWeighted average age of the beds 23 yearsAsset value $32,330

(II) The total asset value is theproduct of the total facility size times theasset value;Total facility size 174Asset value × $32,330Total asset value $5,625,420

(III) Facility asset value is totalasset value less the reduction for age of thebeds; andTotal asset value $5,625,420× Age of beds × 23%-Reduction for age (23%) $1,293,847Facility asset value $4,331,573

(IV) Rental value is the facilityasset value multiplied by 2.5%.Facility asset value $4,331,573

× 2.5%Rental value $108,289

2. Return.A. Reduce the facility asset value by

the necessary outstanding capital asset debtfrom the rate setting cost report, but not lessthan zero (0), times the rate of return. Therate of return is the yield for the thirty- (30-)year Treasury Bond as reported by the Feder-al Reserve Board plus two percent (2%), asfollows:

(I) For the initial 1992 rate base


Secretary of State


year for rates effective for dates of servicefrom January 1, 1995 through June 30, 2004,the rate of return shall be set using the yieldfor the thirty- (30-) year Treasury Bondreported by the Federal Reserve Board andpublished in the Wall Street Journal for theweek ending September 2, 1994, plus twopercent (2%). The yield for the week endingSeptember 2, 1994 is 7.48% plus 2% equalsa total rate of return of 9.48%.

(II) For rates effective for dates ofservices beginning July 1, 2004, the rate ofreturn is detailed in sections (20) and (21).

B. The debt associated with increasesin licensed beds or renovations/majorimprovements after the end of the facility’s1992 desk audited and/or field audited costreport and prior to July 1, 1994, will beadded to the capital asset debt from the 1992desk audited and/or field audited cost report(this is only applicable for the 1992 initialrate base year for rates effective January 1,1995). The facility shall provide adequatedocumentation to support the additional debtas required in paragraph (7)(F)2. If adequatedocumentation is not provided to support theadditional asset debt, it will be assumed toequal the facility asset value.

C. The following is an illustration ofhow subparagraph (11)(D)2.A. is calculated:

Facility asset value $4,331,573Capital asset debt $2,371,094 $1,960,479Rate of return × 9.48%Return $ 185,853

3. Computed interest.A. Computed interest will be calculat-

ed by multiplying the lessor of the necessaryoutstanding capital asset debt from the ratesetting cost report or the facility asset valueas determined in subparagraph (11)(D)1.C.by the interest rate. The interest rate is theprime rate plus two percent (2%), as follows:

(I) For the initial 1992 rate baseyear for rates effective for dates of servicefrom January 1, 1995 through June 30, 2004,the interest rate shall be set using the ChaseManhattan prime rate in effect on the firstbusiness day of September as published in theWall Street Journal, plus two percent (2%).The prime rate effective September 1, 1994is 7.75% plus 2% equals a total interest rateof 9.75%. For replacement beds, additionalbeds, and new facilities placed in serviceafter August 31, 1995, the prime rate will beupdated annually on the first business day ofeach September based on the Chase Manhat-tan prime rate plus two (2) percentage points;

(II) For rates effective for dates ofservices beginning July 1, 2004, the interest

rate is detailed in sections (20) and (21).B. The following is an illustration of

how computed interest is calculated:

Example A: Example B: Facility Asset Facility Asset Value < Debt Value > DebtAssumptions:Facility assetvalue $2,000,000 $4,331,573

Outstandingcapital assetdebt $2,500,000 $2,371,094

Term of debt 25 years 25 yearsPrime rate—September 2,1994 7.75% 7.75%

Computed interest calculation:Facility asset value(Ex. A) $2,000,000

Outstanding capital asset debt (Ex. B) $2,371,094

Interest rate(prime rate+ 2%) × 9.75% × 9.75%

Computed interest $ 195,000 $ 231,182

4. Borrowing costs.A. A provider shall capitalize allow-

able borrowing costs and amortize them overthe life of the loan on a straight-line basis.

B. If loans for capital asset debtexceed the facility asset value, the borrowingcosts associated with the portion of the loanor loans which exceeds the facility asset valueshall not be allowable.

C. The following is an illustration ofhow allowable borrowing costs are calculat-ed, using the data from the interest calcula-tion example detailed above in (11)(D)3.B.:

Assumptions:Loan costs = $120,000Discount costs = $125,000Total borrowing costs = $245,000

Example A Example BFacility assetvalue $2,000,000 $4,331,573

Outstanding capital asset debt / 2,500,000 / 2,371,094

Percent ofborrowingcosts allowed 80% 100%

Borrowing costs ×$245,000 ×$245,000Allowable portion tobe amortized $196,000 $245,000

Term of debt / 25 years / 25 yearsAllowable borrowingcosts $7,840 $9,800

5. Pass-through expenses.A. Add the following pass-through

expenses, including applicable trends:(I) Property insurance – line 109 of

CR (7-93) and line 107 of CR (3-95);(II) Real estate taxes – line 111 of

CR (7-93) and line 108 of CR (3-95); (III) Personal property taxes – line

112 of CR (7-93) and line 109 of CR (3-95); 6. Capital component per diem calcula-

tion. A per diem is calculated for each ele-ment detailed above in paragraph (11)(D)1.–5. which are then added together todetermine the total capital cost componentper diem.

A. Rental value, return and computedinterest per diems. A per diem is calculatedby dividing the rental value, the return andthe computed interest by the computedpatient days, rounded to the nearest cent.Computed patient days are equal to the totalfacility size (i.e., number of licensed bedsplus equivalencies) determined in part(11)(D)1.A.(V) times three hundred sixty-five (365) adjusted by the greater of the min-imum utilization as determined in subsection(7)(O) or the facility’s occupancy from therate setting cost report. The following is anillustration of how this subparagraph(11)(D)6.A. is calculated:

Allowable Computed Per Cost Patient Days* DiemRental value $108,289 56,079 $1.93Return $185,853 56,079 $3.31Computed interest(from Ex. B) $231,182 56,079 $4.12

* Computed patient days:Total facility size 174× 365 days × 365Subtotal 63,510

Greater of minimum utilization or facility occupancy × 88.30% **

Computed patient days 56,079

** Assumption: facility occupancy from therate setting cost report = 88.30%

B. Borrowing costs/pass-throughexpenses per diems. A per diem is calculatedby dividing the borrowing costs and the pass-through expenses by the greater of the mini-mum utilization days as determined in sub-section (7)(O) or the facility’s patient daysfrom the rate setting cost report, rounded tothe nearest cent. The following is an illustra-tion of how subparagraph (11)(D)6.B. is cal-culated:



Allowable Patient Per Cost Days* DiemBorrowingcosts (fromEx.B) $9,800 54,940 $0.18

Pass-throughexpenses $48,142 54,940 $0.88

*Patient days—the greater of:a. minimum utilization days = 170 × 366

× 85% = 52,887(Note: 1992 is a leap year; therefore, 366days are used); or

b. facility patient days = 54,940 (Assump-tion—this is the number of actual patient daysreported on rate setting cost report)

C. The capital cost component perdiem is the sum of the per diems determinedin subparagraphs (11)(D)6.A. and(11)(D)6.B.

Rental value $ 1.93Return $ 3.31Computed interest $ 4.12Borrowing costs $ 0.18Pass-through expenses $ 0.88Total capital cost component

per diem $10.42

(E) Working Capital Allowance. Eachnursing facility’s working capital per diemshall be equal to one and one-tenth (1.1)months of the sum of each facility’s per diemfor patient care, ancillary, and administrationtimes the interest rate set forth in (11)(D)3.,rounded to the nearest cent. The following isan illustration of how this subsection (11)(E)is calculated:

Patient care $38.00Ancillary $ 6.00Administration $11.00Total per diem $55.00Divided by 12 months 12 $ 4.58Times 1.1 months 1.1 $ 5.04Times Interest Rate(Prime + 2%) 9.75%Working capital allowance per day $ 0.49

(F) The following is an illustration of howsubsections (11)(A)–(E) determine the totalper diem rate for the cost components:

Allowable Cost Ceiling Per DiemPatient Care $38.00 $40.00 $38.00Ancillary $ 8.00 $ 6.00 $ 6.00Administration $12.00 $11.00 $11.00Capital (FRV) $10.42Working capital allowance $ 0.49

Total per diem $65.91

(12) Reimbursement Rate Determination. Afacility’s reimbursement rate shall be deter-mined by the division as described in thisregulation. Any facility with an interim rateon December 31, 1994, shall be granted aninterim rate effective for services on and afterJanuary 1, 1995, as prescribed in subsection(4)(HH), if applicable. A prospective ratedetermined from this regulation shall beretroactively effective for services beginningon the first day of the facility’s secondtwelve- (12-) month fiscal year but not earlierthan January 1, 1995, and shall replace theinterim on and after January 1, 1995.

(A) A facility with a valid Medicaid partic-ipation agreement in effect on December 31,1994, and with a 1992 cost report on file withthe division as of December 31, 1993, with arate setting period ending in calendar year1992 or prior shall be granted a prospectiverate effective for service dates on and afterJanuary 1, 1995. For services before January1, 1995, a prospective rate shall be deter-mined on the basis of the allowable cost perpatient day as determined by the divisionfrom the desk audited and/or field auditedfacility fiscal year cost report under regula-tions applicable on July 1, 1990. Theprospective rate shall be the greater of the fol-lowing:

1. The per diem rate as determined insection (11); or

2. The prospective rate in effect for ser-vices rendered on January 1, 1994.

(B) A facility with a valid Medicaid partic-ipation agreement in effect on December 31,1994, which has a cost report with a rate set-ting period ending in calendar year 1993 shallhave their prospective rate for services afterDecember 31, 1994, based on the 1993 ratesetting cost report. For services before Jan-uary 1, 1995, a prospective rate shall bedetermined on the basis of the allowable costper patient day as determined by the divisionfrom the desk audited and/or field auditedfacility fiscal year cost report under regula-tions applicable on July 1, 1990. For serviceson or after January 1, 1995, a prospectiverate will be the greater of the following:

1. The per diem rate as calculated inaccordance with section (11), except the 1993desk audited and/or field audited cost reportwill be used. The HCFA Market Basket Indexfor 1993, 1994, and nine (9) months of 1995of 10.6% will be replaced with the 1994 and1995 HCFA Market Basket Index of 3.4%and 3.3% respectively for a total of 6.7%; or


(C) A facility with a valid Medicaid partic-ipation agreement in effect on December 31,1994, which has a cost report with a rate set-ting period ending in calendar year 1994 shallhave their prospective rate for services after

December 31, 1994, based on the 1994 ratesetting cost report. For services before Jan-uary 1, 1995, a prospective rate shall bedetermined on the basis of the allowable costper patient day as determined by the divisionfrom the desk audited and/or field auditedfacility fiscal year cost report under regula-tions applicable on July 1, 1990. For serviceson or after January 1, 1995, a prospectiverate will be the greater of the following:

1. The per diem rate as calculated inaccordance with section (11), except the 1994desk audited and/or field audited cost reportwill be used. The HCFA Market Basket Indexfor 1993, 1994, and nine (9) months of 1995of 10.6% will be replaced with the 1995HCFA Market Basket Index of 3.3%; or


(D) A facility with a valid Medicaid partic-ipation agreement in effect on December 31,1994, which has a cost report with a rate set-ting period ending after December 31, 1994,but before December 1, 1995, shall havetheir prospective rate for services afterDecember 31, 1994, based on the rate settingcost report ending after December 31, 1994but before December 1, 1995. For servicesbefore January 1, 1995, a prospective rateshall be determined on the basis of the allow-able cost per patient day as determined by thedivision from the desk audited and/or fieldaudited facility fiscal year cost report underregulations applicable on July 1, 1990. Forservices on or after January 1, 1995, aprospective rate will be the greater of the fol-lowing:

1. The per diem rate as calculated inaccordance with section (11), except the fis-cal year ending after December 31, 1994 butprior to December 1, 1995, desk auditedand/or field audited cost report will be used.The HCFA Market Basket Index for 1993,1994, and nine (9) months of 1995 will notbe applied; or

2. The prospective rate in effect for ser-vices rendered on December 31, 1994.

(E) A facility with a valid Medicaid partic-ipation agreement in effect on December 31,1994, which has a cost report with a rate set-ting period ending after November 30, 1995,shall have their prospective rate based on arate setting cost report ending after Novem-ber 30, 1995. A prospective rate will beeffective for services on or after the first dayof the rate setting period as determined insection (11), except the desk audited and/orfield audited cost report ending after Novem-ber 30, 1995, will be used. The 1993, 1994,and nine (9) months of 1995 HCFA MarketBasket Index will not be applied.

(F) A facility entering the MO HealthNetprogram after December 31, 1994, shall


Secretary of State


receive an interim rate as defined in subsec-tion (4)(HH) to be effective on the initial dateof MO HealthNet certification. A prospectiverate shall be determined in accordance withthis regulation from the desk audited and/orfield audited facility fiscal year cost reportwhich covers the second full twelve- (12-)month fiscal year following the facility’s ini-tial date of MO HealthNet certification. TheHCFA Market Basket Index for 1993, 1994,and nine (9) months of 1995 will not beapplied. This prospective rate shall beretroactively effective and shall replace theinterim rate for services beginning on thefirst day of the facility’s second full twelve-(12-) month fiscal year.

(G) A facility with a valid Medicaid partic-ipation agreement in effect after December31, 1994, which either voluntarily or invol-untarily terminates its participation in theMedicaid Program and which reenters theMedicaid Program, shall have its prospectiverate established as the rate in effect on theday prior to the date of termination from par-ticipation in the program plus rate adjust-ments which may have been granted witheffective dates subsequent to the terminationdate but prior to reentry into the program asdescribed in subsection (13)(A). Thisprospective rate shall be effective for servicedates on and after the effective date of thereentry following a voluntary or involuntarytermination.

(13) Adjustments to the ReimbursementRates. Subject to the limitations prescribedelsewhere in this regulation, a facility’s reim-bursement rate may be adjusted as describedin this section, 13 CSR 70-10.016, and 13CSR 70-10.017.

(A) Global Per Diem Rate Adjustments. Afacility with either an interim rate or aprospective rate may qualify for the globalper diem rate adjustments as set forth in 13CSR 70-10.016. Global per diem rate adjust-ments shall be added to the specified costcomponent ceiling.

(B) Special Per Diem Rate Adjustments.Special per diem rate adjustments may beadded to a qualifying facility’s rate withoutregard to the cost component ceiling if specif-ically provided as described below.

1. Patient care incentive. Each facilitywith a prospective rate on or after January 1,1995, shall receive a per diem adjustmentequal to ten percent (10%) of the facility’sallowable patient care per diem subject to amaximum of one hundred thirty percent(130%) of the patient care median whenadded to the patient care per diem as deter-mined in subsection (11)(A). This adjustmentwill not be subject to the cost componentceiling of one hundred twenty percent(120%) for the patient care median.

2. Ancillary incentive. Each facility

with a prospective rate on or after January 1,1995, and which meets one (1) of the follow-ing criteria shall receive a per diem adjust-ment:

A. If the facility’s allowable ancillaryper diem as determined in subsection (11)(B)is below ninety percent (90%) of the ancillarymedian, the adjustment is equal to one-half(1/2) of the difference between one hundredtwenty percent (120%) and ninety percent(90%) of the ancillary median. The followingis an illustration of how the ancillary perdiem adjustment is calculated:

120% of median $6.6290% of median $4.97Difference $1.651/2 the difference 2Per diem adjustment $ .83

B. If the facility’s allowable ancillaryper diem as determined in subsection (11)(B)is between ninety percent (90%) and onehundred twenty percent (120%) of the medi-an, the adjustment is equal to one-half (1/2)of the difference between one hundred twentypercent (120%) of the median and the facili-ty’s allowable ancillary per diem. The follow-ing is an illustration of how the ancillary perdiem adjustment is calculated:

90% of median $4.97120% of median $6.62Ancillary per diem $5.21Difference $1.411/2 the difference 2Per diem adjustment $ .71

3. Multiple component incentive. Eachfacility with a prospective rate on or afterJanuary 1, 1995, and which meets the follow-ing criteria shall receive a per diem adjust-ment:

A. If the sum of the facility’s patientcare per diem and ancillary per diem, asdetermined in subsections (11)(A) and (B), isgreater than or equal to sixty percent (60%)but less than or equal to eighty percent(80%), rounded to four (4) decimal places(.5985 or .8015 would not receive the adjust-ment), of the facility’s total per diem, theadjustment is as follows:

Percent of Total Per DiemRate Incentive

< 60% $0.00> or = 60% but < 65% $1.15> or = 65% but < 70% $1.30> or = 70% but < 75% $1.45> or = 75% but < or 80% = $1.60

B. A facility shall receive an additionalincentive if it receives the adjustment in sub-paragraph (13)(B)3.A. and the following cal-culation is greater than seventy-five percent

(75%), rounded to four (4) decimal places(.7485 would not receive the adjustment):Medicaid days divided by the licensed nurs-ing facility patient days from the facility’sdesk audited and/or field audited 1992 costreport. The adjustment is as follows:

Calculated Percentage Incentive

< 75% $0.00> or = 75% but < 80% $0.15> or = 80% but < 85% $0.30> or = 85% but < 90% $0.45> or = 90% but < 95% $0.60> or = 95% $0.75

4. 1967 Life Safety Code (LSC). Cur-rently certified nursing facilities that mustcomply with a recent interpretation of para-graph 10-133 of the 1967 LSC which requirescorridor walls to extend to the roof deck orachieve equivalency under the Fire SafetyEvaluation System (FSES) will be reimbursedthe reasonable and necessary cost to meetthose standards required for compliancethrough their reimbursement rate. The reim-bursement shall not be effective until theDepartment of Health and Senior Services hasconfirmed that the corrective action to complywith the 1967 LSC or FSES is operational andhas reviewed the cost for compliance. Firesprinkler systems shall be reimbursed over adepreciation life of twenty-five (25) years, andother alternative corrective action will bereimbursed over a depreciable life of fifteen(15) years. The division will use a desk audit-ed and/or field audited cost report with the lat-est period ending in calendar year 1992 whichis on file with the division as of December 31,1993. This adjustment will be computed basedon the documented cost submitted to the divi-sion as follows:

A. Depreciation. The cost incurredfor the approved corrective action to continuein compliance divided by the depreciable use-ful life;

B. Interest. The interest cost incurredto finance this project shall be documented bya statement from the lending institutiondetailing the total interest cost of the loanperiod. The total interest cost will be dividedby the loan period on a straight-line basis;and

C. The total of subparagraphs(13)(B)4.A. and B. will be divided by twelve(12) and then multiplied by the number ofmonths covered by the 1992 cost report. Thisamount will be divided by the greater of actu-al patient days from the 1992 cost report oreighty-five percent (85%) of the licensed beddays from the 1992 cost report.

5. Any facility that had a 1967 LSCadjustment included in their December 31,1994 reimbursement rate shall have thatadjustment added to their January 1, 1995



reimbursement rate. 6. Replacement beds. A facility with a

prospective rate in effect on or after January1, 1995, may request a rate adjustment forreplacement beds that resulted in the samenumber of beds being delicensed with theDepartment of Health and Senior Services.The facility shall provide documentation fromthe Department of Health and Senior Ser-vices that verifies the number of beds usedfor replacement have been delicensed fromthat facility. The rate adjustment will be cal-culated as the difference between the capitalcomponent per diem (fair rental value (FRV))prior to the replacement beds being placed inservice and the capital component per diem(FRV) including the replacement beds placedin service as calculated in subsection (11)(D)including the replacement beds placed in ser-vice. The capital component is calculated forthe replacement beds using the asset valueper licensed bed as determined using the R.S. Means Construction Index for nursingfacility beds adjusted for the Missouri index-es for the date the replacement beds areplaced in service.

7. Additional beds. A facility with aprospective rate in effect on or after January1, 1995, may request a rate adjustment foradditional beds. The facility must obtain anapproved certificate of need or applicablewaiver for the additional beds. The rateadjustment will be calculated as the differ-ence between the capital component per diem(FRV) prior to the additional beds beingplaced in service and the capital componentper diem (FRV) including the additional bedsas calculated in subsection (11)(D) includingthe additional beds placed in service. Thecapital component is calculated for the addi-tional beds using the asset value per licensedbed as determined using the R. S. MeansConstruction Index for nursing facility bedsadjusted for the Missouri indexes for the datethe additional beds are placed in service.

8. Extraordinary circumstances. A par-ticipating facility which has a prospective ratemay request an adjustment to its prospectiverate due to extraordinary circumstances. Thisrequest must be submitted in writing to thedivision within one (1) year of the occurrenceof the extraordinary circumstance. Therequest must clearly and specifically identifythe conditions for which the rate adjustmentis sought. The dollar amount of the requestedrate adjustment must be supported by com-plete, accurate, and documented records sat-isfactory to the division. If the divisionmakes a written request for additional infor-mation and the facility does not comply with-in ninety (90) days of the request for addition-al information, the division shall consider therequest withdrawn. Requests for rate adjust-ments that have been withdrawn by the facil-ity or are considered withdrawn because of

failure to supply requested information may beresubmitted once for the requested rate adjust-ment. In the case of a rate adjustment requestthat has been withdrawn and then resubmitted,the effective date shall be the first day of themonth in which the resubmitted request wasmade providing that it was made prior to thetenth day of the month. If the resubmittedrequest is not filed by the tenth of the month,rate adjustments shall be effective the first dayof the following month. Conditions for anextraordinary circumstance are as follows:

A. When the provider can show that itincurred higher costs due to circumstancesbeyond its control, the circumstances werenot experienced by the nursing home industryin general, and the costs have a substantialcost effect;

B. Extraordinary circumstances,beyond the reasonable control of the nursingfacility and is not a product or result of thenegligence or malfeasance of the nursing facil-ity, include:

(I) Unavoidable acts of nature arehurricane, flooding, earthquake, tornado,lightening, natural wildfire, or other naturaldisaster for which no one can be held respon-sible that are not covered by insurance and thatoccur in a federally declared disaster area; or

(II) Vandalism and/or civil disorderthat are not covered by insurance; and

C. The rate increase shall be calculat-ed as follows:

(I) The one- (1-) time costs (coststhat will not be incurred in future fiscalyears)—

(a) To determine what portion ofthe incurred costs will be paid, the divisionwill use the patient occupancy days from lat-est available quarterly occupancy survey fromthe Department of Health and Senior Ser-vices for the time period preceding when theextraordinary circumstances occurred; and

(b) The costs directly associatedwith the extraordinary circumstances will bemultiplied by the above percent. This amountwill be divided by the paid days for the monththe rate adjustment becomes effective perparagraph (13)(B)8. This calculation willequal the amount to be added to the prospec-tive rate for only one (1) month, which willbe the month the rate adjustment becomeseffective. For this one (1) month only, theceiling will be waived;

(II) For ongoing costs (costs thatwill be incurred in future fiscal years): Ongo-ing annual costs will be divided by the greaterof: annualized (calculated for a twelve- (12-)month period) total patient days from the lat-est cost report on file or eighty-five percent(85%) of annualized total bed days. This cal-culation will equal the amount to be added tothe respective cost center, not to exceed thecost component ceiling. The rate adjustment,subject to ceiling limits, will be added to theprospective rate; and

(III) For capitalized costs, a capitalcomponent per diem (FRV) will be calculatedas determined in subsection (11)(D). The rateadjustment will be calculated as the differencebetween the capital component per diem (FRV)prior to the extraordinary circumstances andthe capital component per diem (FRV) includ-ing the extraordinary circumstances.

9. Quality Assurance Incentive. A. Each nursing facility with an inter-

im or prospective rate on or after July 1,2000, shall receive a per diem adjustment ofthree dollars and twenty cents ($3.20). TheQuality Assurance Incentive adjustment willbe added to the facility’s current rate.

B. The Quality Assurance Incentiveper diem increase shall be used to increasethe expenditures to a nursing facility’s directpatient care costs. Direct patient care costsinclude all expenses in the patient care costcomponent (i.e., lines 46 through 69 ofSchedule B in the Title XIX Cost Report).Any increases in wages and benefits alreadycodified in a collective bargaining agreementin effect as of July 1, 2000, will not be count-ed towards the expenditure requirements ofthe Quality Assurance Incentive as statedabove. Nursing facilities with collective bar-gaining agreements shall provide such agree-ments to the division.

10. High volume adjustment. Effectivefor dates of service July 1, 2000, a high vol-ume adjustment shall be granted to qualifyingproviders. A provider must qualify each July1, the beginning of each state fiscal year(SFY), for the high volume adjustment andthe adjustment will be effective for servicesrendered during the SFY, July 1 through June30. For a provider who has a high volumeadjustment on June 30, but does not qualifyfor the high volume adjustment on July 1 ofthe subsequent SFY, that provider’s prospec-tive rate will be reduced by the amount of thehigh volume adjustment included in the facil-ity’s prospective rate in effect June 30.

A. Each facility with a prospective rateon or after July 1, 2000, and which meets allof the following criteria shall receive a perdiem adjustment:

(I) Have on file at the division a fulltwelve- (12-) month cost report ending in thethird calender year prior to the state fiscalyear in which the adjustment is being deter-mined (i.e., for SFY 2001, the third prioryear would be 1998, for SFY 2002, the thirdprior year would be 1999, etc.);

(II) The Medicaid patient days asdetermined from the cost report identified inpart (13)(B)10.A.(I) exceeds eighty-five per-cent (85%) of the total patient days for allnursing facility licensed beds;

(III) The allowable cost per patientday as determined by the division from theapplicable cost report for the patient care,ancillary, and administration cost compo-nents, as set forth in paragraphs (11)(A)1.,


Secretary of State


(11)(B)1., and (11)(C)1., exceeds the perdiem ceiling for each cost component ineffect at the end of the cost report period; and

(IV) State owned or operated facil-ities shall not be eligible for this adjustment.

B. The adjustment will be equal to tenpercent (10%) of the sum of the per diemceilings for the patient care, ancillary, andadministration cost components in effect onJuly 1 of each year. Effective July 1, 2002,the adjustment shall not accumulate fromyear-to-year.

C. The division may reconstruct andredefine the qualifying criteria and paymentmethodology for the high volume adjustment.

D. Second tier high volume adjust-ment. Effective for dates of service July 1,2002, a second tier high volume adjustmentshall be granted to qualifying providers.

(I) If a nursing facility qualifies forthe first tier high volume adjustment, as setforth above in subparagraph (13)(B)10.A., itmay qualify for the second tier adjustment ifit meets the following criteria:

(a) The Medicaid patient days asdetermined from the cost report identified inpart (13)(B)10.A.(I) exceeds ninety-threepercent (93%) of the total patient days for allnursing facility licensed beds;

(b) The allowable cost perpatient day as determined by the divisionfrom the applicable cost report for the patientcare cost component, as set forth in para-graph (11)(A)1., exceeds one hundred twentypercent (120%) of the per diem ceiling forthe patient care cost component in effect atthe end of the cost report period; and

(c) The allowable cost per patientday as determined by the division from theapplicable cost report for the administrationcost component, as set forth in paragraph(11)(C)1., is less than one hundred fifty per-cent (150%) of the per diem ceiling for theadministration cost component in effect at theend of the cost report period.

(II) The second tier high volumeadjustment will be calculated as a percentage,to be determined by the Department of SocialServices, of the sum of the per diem ceilingsfor the patient care, ancillary, and administra-tion cost components in effect on July 1 ofeach year.

(a) The adjustment for State Fis-cal Year 2003 shall be eighteen dollars andfifty-six cents ($18.56) per Medicaid day.

(b) The adjustment for SFY2004 shall be nineteen dollars and seventy-one cents ($19.71) per Medicaid day.

(III) The adjustment shall be dis-tributed based on a quarterly amount, inaddition to per diem payments, based onMedicaid days determined from the paid dayreport from Missouri’s fiscal agent for paycycles during the immediately preceding statefiscal year.

(IV) The state share of the second

tier high volume adjustment shall come fromcertified public funds. If the aggregate certi-fied public funds are less than the state matchrequired, the total aggregate second tier highvolume adjustment will be adjusted down-ward accordingly.

(V) A nursing facility must qualifyfor the adjustment each year to receive theadditional quarterly payments.

E. High volume adjustment for nurs-ing facilities without a full twelve- (12-)month cost report. Effective for dates of ser-vice on or after January 17, 2003, the fulltwelve- (12-) month cost report requirementset forth in (13)(B)10.A.(I) shall include nurs-ing facilities that have on file at the divisiontwo (2) partial year cost reports that whencombined cover a full twelve- (12-) monthperiod.

F. Medicaid hospice days to be includ-ed in determination of Medicaid occupancy.Effective for dates of service on or after Jan-uary 17, 2003, the Medicaid patient days usedto determine the Medicaid occupancy require-ment set forth in part (13)(B)10.A.(II) shall becalculated by adding the days paid for by theMedicaid nursing facility program plus thedays paid for by the Medicaid hospice pro-gram from the cost report identified in part(13)(B)10.A.(I).

G. State Fiscal Year (SFY) 2004Ninety Percent (90%) Medicaid High VolumeGrant.

(I) Effective for SFY 2004, addi-tional one (1) time funding shall be providedto nursing facilities that qualify for the firsttier high volume adjustment, as set forthabove in subparagraph (13)(B)10.A., andwhose Medicaid patient days as determinedfrom the cost report identified in part(13)(B)10.A.(I) exceeds ninety percent(90%) of the total patient days for all nursingfacility licensed beds.

(II) The SFY 2004 High VolumeGrant will be calculated as a per diem adjust-ment based upon the funding appropriated bythe general assembly and the Medicaid daysincurred by the qualifying providers duringSFY 2003. The adjustment for State FiscalYear 2004 shall be two dollars and thirty-sixcents ($2.36) per Medicaid day.

(III) The adjustment shall be dis-tributed based on a quarterly amount, inaddition to per diem payments, based onMedicaid days determined from the paid daysreport from Missouri’s fiscal agent for paycycles during State Fiscal Year 2003.

H. High volume adjustment for nurs-ing facilities placed in receivership.

(I) For facilities placed in receiver-ship under Missouri law after December 31,2001, the division shall make a determinationas to whether the operator of the facility whenthe receivership ended (i.e., successor opera-tor) is a related party to the facility placed inreceivership. If the successor operator is

determined to be an unrelated party and thefacility was receiving the high volume adjust-ment prior to the receivership, the facilityshall continue to receive the high volumeadjustment during the receivership and untilthe adjustment is based on the first full yearcost report prepared by the successor operator.

(II) Any adjustments contingentupon the facility qualifying for the high vol-ume adjustment shall not be granted if thefacility did not qualify for the high volumeadjustment except as provided in part(13)(B)10.G.(I) above.

(III) This provision only appliesuntil the first full year cost report is available,after which the facility must qualify for thehigh volume adjustment each year as speci-fied in subparagraphs (13)(B)10.A., B., andC. in order to receive it.

11. Minimum Rate Adjustment. A min-imum rate adjustment shall be granted toqualifying providers, as follows:

A. Effective for dates of servicebeginning July 1, 2001, the minimum Medi-caid reimbursement rate for nursing facilityservices shall be eighty-five dollars ($85).

12. Invasive Ventilator Care Adjust-ment. Effective for dates of service beginningJanuary 1, 2013, a per diem adjustment shallbe granted for ventilator services provided byqualifying providers to qualifying MOHealthNet participants as set forth in 13 CSR70-10.017.

(C) Conditions for prospective rate adjust-ments. The division may adjust a facility’sprospective rate both retrospectively andprospectively under the following conditions:

1. Fraud, misrepresentation, errors.When information contained in a facility’scost report is found to be fraudulent, misrep-resented, or inaccurate, the facility’s prospec-tive rate may be both retroactively andprospectively reduced if the fraudulent, mis-represented, or inaccurate information asoriginally reported resulted in establishmentof a higher, prospective rate than the facilitywould have received in the absence of suchinformation. No decision by the division toimpose a rate adjustment in the case of fraud-ulent, misrepresented, or inaccurate informa-tion shall in any way affect the division’s abil-ity to impose any sanctions authorized bystatute or regulation. The fact that fraudulent,misrepresented, or inaccurate informationreported did not result in establishment of ahigher prospective rate than the facility wouldhave received in the absence of this informa-tion also does not affect the division’s abilityto impose any sanctions authorized by statuteor regulation;

2. Decisions of the Administrative Hear-ing Commission, or settlement agreementsapproved by the Administrative HearingCommission;

3. Court order; and



4. Disallowance of federal financial par-ticipation.

(14) Exceptions.(A) For those Medicaid-eligible recipients

who have concurrent Medicare Part A skillednursing facility benefits available, Medicaidreimbursement for covered days of stay in aqualified facility will be based on this coin-surance as may be imposed under TitleXVIII.

(B) The Title XIX reimbursement rate forout-of-state providers shall be set as follows:

1. For out-of-state providers which pro-vided services for Missouri Title XIX recipi-ents, the reimbursement rate shall be the ratepaid for comparable services and level of careby the state in which the provider is located.The reimbursement rate will remain in effectuntil—

A. Rate increases—The divisionreceives written notification of an increase inthe provider’s rate as issued by the state MOHealthNet agency in which the provider islocated. The provider must also include acopy of the rate letter issued by their statedetailing the rate and effective date. If theprovider notifies the division within thirty(30) days of receipt of notification from theirstate of the per diem rate increase, the effec-tive date of the rate increase for purposes ofreimbursement from Missouri shall be thesame date as indicated in the issuing state’srate letter. If the division does not receivewritten notification from the provider withinthirty (30) days of the date the providerreceived notification from their state of therate increase, the effective date of the rateincrease for purposes of reimbursement fromMissouri shall be the first day of the monthfollowing the date the division receives noti-fication; or

B. Rate decreases—The divisionreceives written notification of a decrease inthe provider’s rate as issued by the state Med-icaid agency in which the provider is locatedincluding a copy of the rate letter issued bytheir state detailing the rate and effectivedate. The effective date of the rate decreasefor purposes of reimbursement from Missourishall be the same date as indicated in the issu-ing state’s rate letter.

(C) The Title XIX reimbursement rate forhospital based providers, which provide ser-vices of less than one thousand (1,000)patient days for Missouri Title XIX recipi-ents, relative to their fiscal year, are exemptfrom filing a cost report as prescribed in sec-tion (10).

1. For hospital based nursing facilitiesthat have less than one thousand (1,000)Medicaid patient days, the rate base costreport will not be required. The prospectiverate will be the sum of the ceilings for patient

care, ancillary and administration, workingcapital allowance, and the median per diemfor capital. In addition, the patient careincentive of ten percent (10%) of the patientcare median will be granted.

2. For hospital based nursing facilitieswith a provider agreement in effect onDecember 31, 1994, a prospective rate shallbe set by one (1) of the following:

A. The hospital based nursing facilityrequests, in writing, that their prospectiverate be determined from their rate setting costreport as set forth in this regulation; or

B. The sum of the ceilings for patientcare, ancillary, administration and workingcapital allowance, and the median per diemfor capital from the permanent capital perdiem in effect January 1, 1995 for the initialrate base year; July 1, 2004 for the 2001rebased year; and March 15, 2005 for therevised rebase calculations effective for datesof service beginning April 1, 2005 and forthe per diem rate calculation effective fordates of service beginning July 1, 2005 for-ward. In addition, the patient care incentiveof ten percent (10%) of the patient care medi-an will be granted.


ties set forth in this regulation, the divisionmay also impose sanctions against a providerin accordance with 13 CSR 70-3.030 Sanc-tions for False or Fraudulent Claims for TitleXIX Services, or any other sanction autho-rized by state or federal law or regulations.

(B) Overpayments due the Medicaid pro-gram from a provider shall be recovered bythe division in accordance with 13 CSR 70-3.030 Sanctions for False or FraudulentClaims for Title XIX Services.

(16) Appeals. In accordance with sections208.156, RSMo and 622.055, RSMo provid-ers may seek hearing before the Administra-tive Hearing Commission of final decisionsof the director or the division.

(17) Payment in Full. Participation in the pro-gram shall be limited to providers who acceptas payment in full, for covered services ren-dered to Medicaid recipients, the amountpaid in accordance with these regulations andother applicable payments.

(18) Provider Participation. Payments madein accordance with the standards and methodsdescribed in this regulation are designed toenlist participation of a sufficient number ofproviders in the program so that eligible per-sons can receive the medical care and ser-vices included in the regulation at least to theextent these services are available to the gen-eral public.

(19) Transition. Cost reports used for ratedetermination shall be adjusted by thedivision in accordance with the applicablecost principles provided in this regulation.

(20) Rebasing of Nursing Facility Rates.(A) Effective July 1, 2004, nursing facility

rates shall be rebased on an annual basis.The rebased rates shall be phased in as setforth below in subsection (20)(B). Eachnursing facility shall have its prospective raterecalculated using the same principles andmethodology as detailed throughout sections(1)–(19) of this regulation, unless otherwisenoted in this section (20). The followingitems have been updated to reflect the rebase:

1. Nursing facility rates shall be rebasedon an annual basis using the cost report yearthat is three (3) years prior to the effectivedate of the rate change. For example, for SFY2005, the effective date of the rate change isfor dates of service beginning July 1, 2004and the cost report year used to recalculaterates shall be 2001; for SFY 2006, the effec-tive date of the rate change is for dates of ser-vice beginning July 1, 2005 and the costreport year used to recalculate rates shall be2002; etc.

A. A new databank shall be devel-oped from the cost reports for each rebaseyear in accordance with paragraph (20)(A)1.and subsection (4)(S).

B. The costs in the databank shall betrended using the indices from the mostrecent publication of the Health-Care CostReview available to the division using the“CMS Nursing Home without Capital Mar-ket Basket” table. The costs shall be trendedusing the second quarter indices for eachyear. The costs shall be trended for the yearsfollowing the cost report year, up to andincluding the state fiscal year correspondingto the effective date of the rates. For SFY2005, the trends are from the First Quarter2004 publication of the Health-Care CostReview and include the following:

(I) 2002:2 = 3.2%(II) 2003:2 = 3.4%(III) 2004:2 = 2.3%(IV) 2005:2 = 2.3%(V) The total trend applied to the

2001 cost report data is 11.2%.C. The medians and ceilings shall be

recalculated each year, based upon the trend-ed costs included in the new databank that isdeveloped each year.

D. The costs, beds, days, renova-tions/major improvements, loans, etc. fromeach facility’s cost report included in thedatabank shall be used to recalculate eachfacility’s rate. The costs reflected in eachfacility’s cost report shall be trended asdetailed above in (20)(A)1.B.;


Secretary of State


2. The asset value used to determine thecapital cost component, as set forth in sub-section (11)(D), shall be updated each yearbased upon the RS Means Building Construc-tion Cost Data for the year coinciding withthe effective date of the rates. The assetvalue is determined by using the median, totalcost of construction per bed for nursinghomes from the “S.F., C.F., and % of TotalCosts” table and adjusting it by the totalweighted average index for Missouri citiesfrom the “City Cost Indexes” table. For SFY2005, the asset value shall be forty-one thou-sand seven hundred twenty-eight dollars($41,728);

3. The age of the beds shall be calculat-ed from the year coinciding with the effectivedate of the rates;

4. The interest rate used in determiningthe capital cost component and working cap-ital allowance, as set forth in subsections(7)(F), (11)(D), and (11)(E), shall be updatedto reflect the prime rate as reported by theFederal Reserve and published in the WallStreet Journal on the first business day ofJune for the year coinciding with the effectivedate of the rates plus two percent (2%). ForSFY 2005, the interest rate shall be the primerate of four percent (4%), as published June1, 2004, plus two percent (2%) for a total ofsix percent (6%);

5. The rate of return used in determiningthe capital cost component, as set forth insubsection (11)(D), shall be updated toreflect the interest (i.e., coupon) rate for themost recent issue of thirty- (30-) year Trea-sury Bonds in effect on the first business dayof June for the year coinciding with the effec-tive date of the rates plus two percent (2%).For SFY 2005, the rate of return shall be thethirty- (30-) year Treasury Bond rate of5.375%, effective June 1, 2004, plus twopercent (2%) for a total of 7.375%;

6. The administration cost componentper diem calculation shall not be adjusted forminimum utilization;

7. The capital cost component per diemcalculation shall be adjusted for minimumutilization using the Department of Healthand Senior Services’ (DHSS) IntermediateCare Facility/Skilled Nursing Facility Certifi-cate of Need Quarterly Survey (CON Quar-terly Survey) for the most recent quarteravailable to the division relative to the effec-tive date of the rates. The occupancy datafrom the CON Quarterly Survey shall beadjusted by the division using total licensedbeds rather than available beds as is used byDHSS. For SFY 2005, the minimum utiliza-tion percent for the capital component is theadjusted industry average from the October–December 2003 CON Quarterly Survey andshall be seventy-three percent (73%);

8. The high volume adjustment for SFY2005 shall continue to be based on the 2001cost report rather than the cost report endingin the third calendar year prior to the statefiscal year as set forth in (13)(B)10.A.(I).The remaining criteria and calculations setforth in (13)(B)10. shall continue to be appli-cable. Therefore, facilities receiving the highvolume adjustment for SFY 2004 shall con-tinue to receive the same high volume adjust-ment for the first year of the rebase (i.e., July1, 2004–June 30, 2005); and

9. Since rates are being recalculatedeach year, rate adjustment requests forreplacement beds, additional beds, and/orextraordinary circumstances as set forth inparagraphs (13)(B)6., (13)(B)7., and(13)(B)8. are no longer allowed.

(B) The rebased rates shall be phased in, asset forth below:

1. A preliminary rebased rate shall becalculated using the same principles andmethodology as detailed throughout sections(1)–(19) of this regulation and the updateditems detailed above in paragraphs(20)(A)1.–9.

2. The total increase resulting from therebase each year shall be calculated as fol-lows:

A. Each facility’s current rate as ofJune 30 of each year shall be compared to thepreliminary rebased rate effective July 1 ofthe following SFY. For example, for SFY2005, the facility’s rate as of June 30, 2004shall be compared to the preliminary rebasedrate effective July 1, 2004; for SFY 2006, thefacility’s rate as of June 30, 2005 shall becompared to the preliminary rebased rateeffective July 1, 2005; etc.

(I) The high volume adjustment, ifapplicable, and the NFRA shall not beincluded in the current rate or the preliminaryrebased rate for comparison purposes indetermining the total increase.

(II) The high volume adjustment, ifapplicable, and the current NFRA shall beadded to the rate determined below in sub-paragraph (20)(B)2.B.

B. If the preliminary rebased rate isgreater than the current rate, the differencebetween the two (2) shall represent the totalincrease that will be phased in by grantingone-third (1/3) of the total increase each year.For SFY 2005, one-third (1/3) of the totalincrease shall be added to the facility’s cur-rent rate as of June 30, 2004, less the reduc-tion in the nursing facility operations adjust-ment of fifty-four cents (54¢) effective July1, 2004 as set forth in 13 CSR 70-10.016.The high volume adjustment, if applicable,and the current NFRA shall be added to thattotal and shall be the facility’s prospectiverate for SFY 2005.

C. If the preliminary rebased rate isless than the current rate, the facility shallcontinue to receive its current rate with anyapplicable adjustments for high volume andNFRA for the SFY.

(C) Interim rates and rates for hospital-based facilities that do not submit cost reportsdue to having less than one thousand (1,000)patient days for Medicaid residents shall alsobe recalculated and increases given each July1 as set forth above.

(D) Effective for dates of service begin-ning April 1, 2005, the rebased rates for SFY2005 shall be calculated as follows:

1. The audited 2001 cost report datashall continue to be used to develop the data-bank and to determine each nursing facility’srebased rate. The audited 2001 cost reportdata; the licensed beds data; and the bedequivalencies data used to determine eachnursing facility’s final rate paid for dates ofservices effective July 1, 2004 shall bedeemed final. This finalized data will be usedas the base to calculate the rates effectiveApril 1, 2005. The following items havebeen revised for the April 1, 2005 rate calcu-lation:

A. A new databank shall be developedusing the audited 2001 cost report data setforth above in paragraph (20)(D)1. for nurs-ing facilities enrolled in the Medicaid pro-gram as of March 15, 2005 in accordancewith subsection (4)(S); and

B. The administration and capital costcomponents shall be adjusted for minimumutilization at eighty-five percent (85%) occu-pancy, rather than as set forth in paragraph(20)(A)6.–7.

(E) Prospective Rate Determination forNewly Medicaid Certified Nursing Facilities.As set forth in subsection (12)(F), a nursingfacility never previously certified for partici-pation in the Medicaid program shall receivean interim rate upon entering the Medicaidprogram and have its prospective rate set onits second full twelve- (12-) month cost reportfollowing the facility’s initial date of certifica-tion. The prospective rate shall be calculatedin accordance with the provisions of the reg-ulation in effect from the beginning of thefacility’s rate setting period through the datethe prospective rate is determined, as detailedbelow. If industry-wide rate changes wereimplemented during this period the provisionof the regulation relating to the effective dateof the rate change shall be the governing reg-ulation for those dates of service. For exam-ple, for a rate setting period of January 1,2004 through December 31, 2004, the facili-ty’s initial prospective rate effective January1, 2004 shall be set in accordance with theregulations in effect at that time and ratechanges that occurred after January 1, 2004shall be calculated in accordance with the



regulation applicable to each rate changethroughout the period, as follows: the facili-ty’s initial prospective rate effective January1, 2004 shall be set in accordance with theregulations in effect at that time (sections(1)–(19)); nursing facility rates were rebasedeffective July 1, 2004 per section (20); therebase provisions were modified effectiveApril 1, 2005 under subsection (20)(D); theper diem rate calculation effective for datesof service beginning July 1, 2005 are detailedin section (21); a quality improvement adjust-ment of three dollars and seventeen cents($3.17) per day was granted effective July 1,2006 in 13 CSR 70-10.016; etc.

1. A nursing facility that did not have aprospective rate established when rates wererebased on July 1, 2004, shall have itsprospective rate for dates of service begin-ning on or after July 1, 2004 through June30, 2005 established on the rate setting costreport in accordance with section (20), con-sistent with the rest of the nursing facilityindustry.

2. As set forth in paragraphs (20)(B)1.and 2., a preliminary rate shall be calculatedand compared to the facility’s rate as of June30, 2004, less the reduction in the nursingfacility operations adjustment of fifty-fourcents (54¢) effective July 1, 2004 as set forthin 13 CSR 70-10.016, to determine the totalincrease. The NFRA shall not be included inthe preliminary rate or the June 30, 2004 ratefor comparison purposes in determining thetotal increase.

A. If the facility will have a prospec-tive rate established on June 30, 2004 oncethe prospective rate setting process is com-plete, the prospective rate shall be the rate forcomparison purposes in determining the totalincrease.

B. If the facility will not have aprospective rate established on June 30, 2004once the prospective rate setting process iscomplete, the division will calculate a June30, 2004 computed rate which will be used asthe rate for comparison purposes in determin-ing the total increase as follows:

(I) The rate setting cost report asdetermined in subsection (12)(F) shall beused.

(II) The allowable costs from therate setting cost report will be negativelytrended back to June 30, 2004 using theindices from the most recent publication ofthe Health-Care Cost Review available to thedivision using the “CMS Nursing Homewithout Capital Market Basket” table. Theallowable costs shall be negatively trendedusing the second quarter indices for eachyear, beginning with the index for the yearrelative to the end of the rate setting periodback to and including the index for 2005.For example, a rate setting cost report for the

period July 1, 2006 through June 30, 2007,shall have a 2007 rate setting year. The allow-able costs shall be negatively trended by the2007 second quarter index, the 2006 secondquarter index, and the 2005 second quarterindex. The resulting allowable costs shall beused to determine the June 30, 2004 comput-ed rate.

(III) The computed rate shall becalculated in accordance with sections (1)–(19) of this regulation, prior to the rebase,using the regulations applicable to calculatinga June 30, 2004 rate including the cost com-ponent ceilings, interest, rate of return, etc.in effect on June 30, 2004.

3. If the preliminary rate is greater thanthe June 30, 2004 rate, the facility shallreceive one-third (1/3) of the total increase ofthe preliminary rate over the June 30, 2004rate, less the reduction in the nursing facilityoperations adjustment of fifty-four cents(54¢) effective July 1, 2004 as set forth in 13CSR 70-10.016. The one-third (1/3) increaseshall be added to the June 30, 2004 rate, lessthe reduction in the nursing facility opera-tions adjustment of fifty-four cents (54¢)effective July 1, 2004 as set forth in 13 CSR70-10.016. The NFRA in effect shall beadded to that total to determine the prospec-tive rate.

4. If the preliminary rate is less than theJune 30, 2004 rate, the facility’s June 30,2004 rate plus the NFRA in effect shallbecome the prospective rate.

(21) Per Diem Rate Calculation Effective forDates of Service Beginning July 1, 2005.Effective for dates of service beginning July1, 2005, the rebase provisions set forth insection (20) shall not apply. Effective fordates of service beginning July 1, 2005, theper diem rates shall be calculated using thesame principles and methodology as detailedthroughout sections (1)–(19) of this regula-tion, except that the data indicated in this sec-tion (21) shall be used.

(A) The audited 2001 cost report data shallbe used to develop the databank and to deter-mine each nursing facility’s per diem rate.The audited 2001 cost report data; thelicensed beds data; and the bed equivalenciesdata used to determine each nursing facility’sfinal rate paid for dates of services effectiveJuly 1, 2004 shall be deemed final. Thisfinalized data will be used as the base to cal-culate the rates effective July 1, 2005.

1. A new databank shall be developedusing the audited 2001 cost report data setforth above in subsection (21)(A) for nursingfacilities enrolled in the Medicaid program asof March 15, 2005 in accordance with sub-section (4)(S).

2. The costs in the databank shall betrended using the second quarter indices fromthe First Quarter 2004 publication of the

Health-Care Cost Review using the “CMSNursing Home without Capital Market Bas-ket” table. The costs shall be trended for theyears following the cost report year, up to andincluding SFY 2005. The trends applied tothe 2001 cost report data include the follow-ing:

A. 2002:2 = 3.2%B. 2003:2 = 3.4%C. 2004:2 = 2.3%D. 2005:2 = 2.3%E. The total trend applied to the

2001 cost report data is 11.2%.3. The medians and ceilings shall be

recalculated, based upon the trended costsincluded in the new databank.

4. The costs, beds, days, renova-tions/major improvements, loans, etc. fromeach facility’s cost report included in thedatabank shall be used to calculate each nurs-ing facility’s rate. The costs reflected in eachfacility’s cost report shall be trended asdetailed above in paragraph (21)(A)2.

(B) The asset value used to determine thecapital cost component, as set forth in sub-section (11)(D), shall be based upon the 2004publication of the RS Means Building Con-struction Cost Data. The asset value is deter-mined by using the median, total cost of con-struction per bed for nursing homes from the“S.F., C.F., and % of Total Costs” table andadjusting it by the total weighted averageindex for Missouri cities from the “City CostIndexes” table. The asset value shall beforty-one thousand seven hundred twenty-seven dollars and fifty cents ($41,727.50).

(C) The age of the beds shall be calculatedfrom 2004.

(D) The interest rate used in determiningthe capital cost component and working cap-ital allowance, as set forth in subsections(7)(F), (11)(D), and (11)(E), shall be theprime rate as reported by the Federal Reserveand published in the Wall Street Journal onthe first business day of June 2004 plus twopercent (2%). The interest rate shall be theprime rate of four percent (4%), as publishedJune 1, 2004, plus two percent (2%) for atotal of six percent (6%).

(E) The rate of return used in determiningthe capital cost component, as set forth insubsection (11)(D), shall be the interest (i.e.,coupon) rate for the most recent issue of thir-ty- (30-) year Treasury Bonds in effect on thefirst business day of June 2004 plus two per-cent (2%). The rate of return shall be thethirty- (30-) year Treasury Bond rate of5.375%, effective June 1, 2004, plus twopercent (2%) for a total of 7.375%.

(F) The administration and capital costcomponents shall be adjusted for minimumutilization at eighty-five percent (85%) occu-pancy.

(G) The high volume adjustment shall con-tinue to be that determined for SFY 2004.The 2001 cost report shall continue to be


Secretary of State


used rather than the cost report ending in thethird calendar year prior to the state fiscalyear as set forth in part (13)(B)10.A.(I), andthe remaining criteria and calculations setforth in paragraph (13)(B)10. shall continueto be that used in the SFY 2004 calculation.Therefore, facilities receiving the high vol-ume adjustment for SFY 2004 shall continueto receive that same high volume adjustmentwhich will be included in its rate effective fordates of service beginning July 1, 2005.

(H) Rate adjustment requests for replace-ment beds, additional beds, and/or extraordi-nary circumstances as set forth in paragraphs(13)(B)6., (13)(B)7., and (13)(B)8. are nolonger allowed.

1. Beginning State Fiscal Year 2016, anadjustment to the capital rate may be allowedfor extraordinary circumstances as set forthin paragraph (13)(B)8. except the require-ment that the occurrence is not covered byinsurance does not have to be met. If a nurs-ing facility is destroyed by an unavoidable actof nature beyond the control of the facility orvandalism and/or civil disorder the rebuiltnursing facility may apply for an adjustmentto the capital component of the per diem rate,as calculated in part (13)(B)8.C.(III). Therate adjustment will be effective the date therebuilt nursing facility is placed in service.

(I) Facility size and occupancy rate adjust-ment. If a facility qualifies for the facility sizeand occupancy rate adjustment, its facilitysize and occupancy rate shall be adjusted andused in the calculation of its per diem rate.

1. Qualifying criteria. A nursing facilitymay qualify for a facility size and occupancyadjustment if it meets all of the following cri-teria:

A. The facility has been operatingonly fifty percent (50%) of its licensed bedcapacity; and

B. Every resident has been residing ina private room; and

C. The facility has been operating assuch (as detailed in subparagraphs A. and B.above) from the beginning of their 2001 costreport period through the date the rate iseffective as reported on the quarterly surveyform, “Missouri Department of Health andSenior Services, Division of Senior Servicesand Regulation, ICF/SNF Certificate of NeedQuarterly Survey” (form MO 886-9001(6-95)) (quarterly survey); and

D. The facility’s intent for operatingas such is to qualify for a Certificate of Need(CON) in accordance with section197.318.9, RSMo 2000.

2. Calculation of adjusted facility size,adjusted occupancy rate, and adjusted perdiem rate.

A. Adjusted facility size. The facilitysize as defined in subsection (4)(BB) andused in the determination of a facility’s capi-tal cost component under the fair rental valuesystem set forth in subsection (11)(D) shall be

adjusted to reflect fifty percent (50%) of thelicensed bed capacity.

B. Adjusted occupancy rate. Theoccupancy rate as defined in subsection(4)(MM) shall be adjusted to reflect fifty per-cent (50%) of the licensed bed capacity byadjusting the bed days used to determine theoccupancy rate. The bed days shall be calcu-lated using fifty percent (50%) of the licensedbed capacity and the adjusted occupancy rateshall be calculated by dividing the facility’stotal actual patient days by the adjusted beddays.

C. The adjusted facility size and theadjusted occupancy rate shall be used todetermine the facility’s per diem rate inaccordance with the remaining provisions ofthis regulation.

3. The facility must notify the divisionin writing that it qualifies for this adjustmentand provide the proper documentation,including the following:

A. A copy of the quarterly surveysfrom the beginning of the 2001 cost reportperiod through the date the rate is effective;and

B. A copy of an approved CONobtained under section 197.318.9, RSMo2000, or a written statement indicating thefacility’s intention of obtaining a CON undersection 197.318.9, RSMo 2000, including aspecific time line detailing when they plan toapply for the CON and when they plan tobegin construction relative to the CON;

C. The division shall accept suchwritten notification from facilities that qualifyfor this adjustment as of July 1, 2005 for upto thirty (30) days after the effective date ofthis amendment.

4. This adjustment shall only apply tonursing facilities with a prospective rate onJuly 1, 2005 and shall only be granted for theJuly 1, 2005 rate calculation.

5. Loss of facility size and occupancyrate adjustment and recalculation of per diemrate. If a facility’s per diem rate has been setusing an adjusted facility size and an adjustedoccupancy rate and at least one (1) of the con-ditions set forth below in subparagraphs(21)(I)5.A.(I)–(IV) is met, the facility will nolonger receive the adjustment to the facilitysize and occupancy rate in determining its perdiem rate and its per diem rate shall be recal-culated.

A. The conditions for losing the facil-ity size and occupancy rate adjustmentinclude the following:

(I) The facility ceases to operate atfifty percent (50%) of its licensed bed capac-ity; or

(II) The facility ceases to operatewith every resident residing in a privateroom; or

(III) The facility does not apply fora CON under section 197.318.9, RSMo 2000

within five (5) years of receiving the adjust-ment; or

(IV) The facility does not begin theconstruction relative to the CON obtainedunder section 197.318.9, RSMo 2000 withinfive (5) years of receiving the adjustment.

B. If the facility size and occupancyrate adjustment is lost, the facility’s per diemrate shall be recalculated using the unadjustedfacility size as set forth in subsection (4)(BB)and the unadjusted bed days and unadjustedoccupancy rate as set forth in subsection(4)(MM).

C. The facility must notify the divi-sion within thirty (30) days if it no longerqualifies for the facility size and occupancyrate adjustment as a result of meeting one (1)of the conditions listed above in subparagraph(21)(I)5.A.

(I) If the facility notifies the divi-sion of such within thirty (30) days, the effec-tive date of the rate recalculation shall be thedate that one (1) of the conditions set forthabove in subparagraph (21)(I)5.A. is met. Ifmore than one (1) of the conditions apply, theeffective date shall be the earliest date. Thefacility shall repay the division any overpay-ment resulting from the loss of the facilitysize and occupancy rate adjustment.

(II) If the facility does not notifythe division within thirty (30) days, the effec-tive date of the rate recalculation shall be thedate the facility size and occupancy rateadjustment was originally granted. The facil-ity shall repay the division any overpaymentresulting from the loss of the facility size andoccupancy rate adjustment.

(J) The rates effective for dates of servicebeginning July 1, 2005 shall be determined,as set forth below:

1. A preliminary rate for July 1, 2005shall be calculated using the same principlesand methodology as detailed throughout sec-tions (1)–(19) of this regulation and theupdated items detailed above in subsections(21)(A)–(I).

2. The total increase resulting from theJuly 1, 2005 preliminary rate calculationshall be calculated as follows:

A. Each facility’s rate as of June 30,2004, less the reduction in the nursing facilityoperations adjustment of fifty-four cents(54¢) effective July 1, 2004 as set forth in 13CSR 70-10.016, shall be compared to theJuly 1, 2005 preliminary rate calculation.

(I) The high volume adjustment, ifapplicable, and the NFRA shall not beincluded in the June 30, 2004 rate or the July1, 2005 preliminary rate for comparison pur-poses in determining the total increase.

(II) The high volume adjustment, ifapplicable, and the current NFRA shall beadded to the rate determined below in sub-paragraphs (21)(J)2.B. and (21)(J)2.C.;



B. If the July 1, 2005 preliminary rateis greater than the June 30, 2004 rate includ-ing the reduction in the nursing facility oper-ations adjustment of fifty-four cents (54¢)effective July 1, 2004 as set forth in 13 CSR70-10.016, the difference between the two (2)shall represent the total increase. Effectivefor dates of service beginning July 1, 2005,one-third (1/3) of the total increase shall beadded to the facility’s rate as of June 30, 2004including the reduction in the nursing facilityoperations adjustment of fifty-four cents(54¢) effective July 1, 2004 as set forth in 13CSR 70-10.016. The high volume adjust-ment, if applicable, and the current NFRAshall be added to that total and shall be thefacility’s prospective rate for dates of servicebeginning July 1, 2005;

C. If the July 1, 2005 preliminary rateis less than the June 30, 2004 rate includingthe reduction in the nursing facility opera-tions adjustment of fifty-four cents (54¢)effective July 1, 2004 as set forth in 13 CSR70-10.016, the facility’s prospective rate shallbe the facility’s rate as of June 30, 2004including the reduction in the nursing facilityoperations adjustment of fifty-four cents(54¢) effective July 1, 2004 as set forth in 13CSR 70-10.016 plus the high volume adjust-ment, if applicable, and the current NFRA.

(K) Interim rates and rates for hospital-based facilities that do not submit cost reportsdue to having less than one thousand (1,000)patient days for Medicaid residents shall alsobe recalculated and increases given as setforth above.

(L) Prospective Rate Determination forNursing Facilities Newly Medicaid Certifiedafter June 30, 2004. As set forth in subsec-tion (12)(F), a nursing facility never previ-ously certified for participation in the Medi-caid program shall receive an interim rateupon entering the Medicaid program andhave its prospective rate set on its second fulltwelve- (12-) month cost report following thefacility’s initial date of certification. Theprospective rate shall be calculated in accor-dance with the provisions of the regulation ineffect from the beginning of the facility’s ratesetting period through the date the prospec-tive rate is determined, as detailed below. Ifindustry-wide rate changes were implementedduring this period the provision of the regula-tion relating to the effective date of the ratechange shall be the governing regulation forthose dates of service. For example, for arate setting period of January 1, 2006 throughDecember 30, 2006, the facility’s initialprospective rate effective January 1, 2006shall be set in accordance with the regula-tions in effect at that time and rate changesthat occurred after January 1, 2006 shall becalculated in accordance with the regulationapplicable to each rate change throughout the

period, as follows: the facility’s initialprospective rate effective January 1, 2006shall be set in accordance with the regula-tions in effect at that time, section (21) (i.e.,the per diem rate calculation effective fordates of service beginning July 1, 2005 aredetailed in section (21)); a quality improve-ment adjustment of three dollars and seven-teen cents ($3.17) per day was granted effec-tive July 1, 2006 in paragraph (13)(A)10.;etc.

1. A nursing facility never previouslycertified for participation in the Medicaidprogram that originally enters the Medicaidprogram after June 30, 2004 shall have itsprospective rate for dates of service begin-ning on or after July 1, 2005 calculated inaccordance with the provisions of section(21), consistent with the rest of the nursingfacility industry. The following items shall beupdated annually and shall be used in deter-mining the prospective rate, as follows:

A. Asset value. The asset value usedto determine the capital cost component, asset forth in subsection (11)(D), shall beadjusted annually based upon the R. S.Means Building Construction Cost Data pub-lished each year using the “Historical CostIndexes” table. The asset value for the yearrelative to the end of the rate setting periodshall be used;

B. Age of beds. The age of the bedsshall be calculated by subtracting the year thebeds were originally licensed from the yearrelative to the end of the rate setting period;

C. Interest rate. The interest rateused in determining the capital cost compo-nent and working capital allowance, as setforth in subsections (7)(F), (11)(D), and(11)(E), shall be updated annually using theprime rate reported by the Federal Reserveand published in the Wall Street Journal onthe first business day of June of each yearplus two percent (2%). The interest rate ineffect at the end of the rate setting periodshall be used.

2. A preliminary rate at the beginning ofthe rate setting period shall be calculatedusing the same principles and methodologyas detailed throughout sections (1)–(19) ofthis regulation and the updated items detailedin section (21).

3. The preliminary rate at the beginningof the rate setting period shall be compared toa June 30, 2004 computed rate as detailedbelow to determine the total increase. TheNFRA shall not be included in the prelimi-nary rate or the June 30, 2004 computed ratefor comparison purposes in determining thetotal increase.

A. The June 30, 2004 computed ratefor comparison purposes shall be calculatedas follows:

(I) The rate setting cost report asdetermined in subsection (12)(F) shall beused;

(II) The allowable costs from therate setting cost report will be negativelytrended back to June 30, 2004 using theindices from the most recent publication ofthe Health-Care Cost Review available to thedivision using the “CMS Nursing Homewithout Capital Market Basket” table. Theallowable costs shall be negatively trendedusing the second quarter indices for eachyear, beginning with the index for the yearrelative to the end of the rate setting periodback to and including the index for 2005.For example, a rate setting cost report for theperiod July 1, 2006 through June 30, 2007,shall have a 2007 rate setting year. The allow-able costs shall be negatively trended by the2007 second quarter index, the 2006 secondquarter index, and the 2005 second quarterindex. The resulting allowable costs shall beused to determine the June 30, 2004 comput-ed rate;

(III) The computed rate shall becalculated in accordance with sections (1)-(19) of this regulation, prior to the rebase,using the regulations applicable to calculatinga June 30, 2004 rate including the cost com-ponent ceilings, interest, rate of return, etc.in effect on June 30, 2004.

B. If the preliminary rate at the begin-ning of the rate setting period is greater thanthe June 30, 2004 computed rate, the facilityshall receive one-third of the total increase ofthe preliminary rate over the June 30, 2004computed rate. The one-third increase shallbe added to the facility’s June 30, 2004 com-puted rate. The NFRA in effect shall beadded to the total and shall be the facility’sprospective rate effective at the beginning ofthe rate setting period.

C. If the preliminary rate at the begin-ning of the rate setting period is less than theJune 30, 2004 computed rate, the facility’sJune 30, 2004 computed rate plus the NFRAin effect shall become the prospective rateeffective the beginning of the rate settingperiod.

(M) Prospective Rate Determination forPreviously Medicaid Certified Nursing Facil-ities Reentering the Medicaid Program. Asset forth in subsection (12)(G), a nursingfacility that was previously certified for par-ticipation in the Medicaid Program and eithervoluntarily or involuntarily terminated fromthe Medicaid Program which then reentersthe Medicaid Program shall have its prospec-tive rate established as the rate in effect onthe day prior to the date of termination fromparticipation in the program plus rate adjust-ments which may have been granted subse-quent to the termination date but prior toreentry into the program. The prospectiverate for nursing facilities that reentered the


Secretary of State


Medicaid Program after nursing facility rateswere rebased July 1, 2004 shall be calculatedas follows:

1. If there is a 2001 cost report for thenursing facility, regardless of the owner/oper-ator who completed the 2001 cost report, theprospective rate shall be based on the 2001cost report in accordance with section (21); or

2. If there is not a 2001 cost report forthe nursing facility, the prospective rate ineffect when the facility terminated from theprogram shall be adjusted to reflect the ratechanges granted through June 30, 2004 andshall be the June 30, 2004 rate to be com-pared to the preliminary rebased interim rateto determine the total increase, the one-thirdincrease and the rebased prospective rate, inaccordance with section (21), consistent withthe rest of the nursing facility industry.

(N) Nursing facilities who qualify to havetheir prospective rate set in accordance withthe provisions of subsection (20)(E) shallcontinue to receive the rate determined fromsubsection (20)(E) for dates of service begin-ning July 1, 2005.

APPENDIX A

COVERED SUPPLIES AND SERVICES PERSONAL CARE

Baby powderBedside tissuesBibs, all typesDeodorantsDisposable underpads of all typesGowns, hospitalHair care, basic including washing, cuts,

sets, brushes, combs, nonlegend shampooLotion, soap, and oilOral hygiene including denture care, cups,

cleaner, mouthwashes, toothbrushes, andpaste

Shaves, shaving cream, and bladesNail clipping and cleaning routine

EQUIPMENTArm slingsBasinsBathing equipmentBed frame equipment including trapeze bars

and bedrailsBed pans, all typesBeds, manual, electricCanes, all typesCrutches, all typesFoot cradles, all typesGlucometersHeat cradlesHeating padsHot pack machinesHypothermia blanketMattresses, all typesPatient lifts, all typesRespiratory equipment: compressors, vapor-

izers, humidifiers, IPPB machines, nebu-lizers, suction equipment, and related supplies, etc.

RestraintsSand bagsSpecimen container, cup or bottleUrinals, male and femaleWalkers, all typesWater pitchersWheelchairs, standard, geriatric, and roll -

about

NURSING CARE/PATIENT CARESUPPLIES

Catheter, indwelling and nonlegend suppliesDecubitus ulcer care: pads, dressings, air

mattresses, aquamatic K pads (water heat-ed pads), alternating pressure pads, flota-tion pads, and/or turning frames, heel pro-tectors, donuts and sheepskins

Diabetic blood and urine testing suppliesDouche bagsDrainage sets, bags, tubes, etc.Dressing trays and dressings of all typesEnema suppliesGloves, nonsterile and sterileIce bagsIncontinency care including pads, diapers,

and pantsIrrigation trays and nonlegend suppliesMedicine droppersMedicine cupsNeedles including, but not limited to, hypo-

dermic, scalp, veinNursing services: regardless of level, admin-

istration of oxygen, restorative nursingcare, nursing supplies, assistance with eat-ing and massages provided by facility per-sonnel

Nursing supplies: lubricating jelly, betadine,benzoin, peroxide, A and D Ointment,tapes, alcohol, alcohol sponges, applica-tors, dressings and bandages of all types,cottonballs, and aerosol merthiolate,tongue depressors

Ostomy supplies: adhesive, appliance, belts,face plates, flanges, gaskets, irrigationsets, night drains, protective dressings,skin barriers, tail closures, and bags

Suture care including trays and removal kitsSyringes, all sizes and types including

asceptoTape for laboratory testsUrinary drainage tube and bottle

THERAPEUTIC AGENTS ANDSUPPLIES

Supplies related to internal feedingsI.V. therapy supplies: arm boards, needles,

tubing, and other related suppliesOxygen (portable or stationary), oxygen

delivery systems, concentrators, and sup-plies

Special diets

AUTHORITY: section 208.159, RSMo 2000,and sections 208.153 and 208.201, RSMoSupp. 2013.* Emergency rule filed Dec. 21,

1994, effective Jan. 1, 1995, expired April 30,1995. Emergency rule filed April 21, 1995,effective May 1, 1995, expired Aug. 28, 1995.Original rule filed Dec. 15, 1994, effectiveJuly 30, 1995. Emergency amendment filedSept. 1, 1995, effective Oct. 1, 1995, expiredMarch 28, 1996. Amended: Filed Sept. 1,1995, effective March 30, 1996. Amended:Filed Dec. 22, 1995, effective Aug. 30, 1996.Amended: Filed Feb. 1, 1996, effective Sept.30, 1996. Emergency amendment filed Sept.20, 1996, effective Oct. 1, 1996, expiredMarch 29, 1997. Emergency amendment filedOct. 22, 1996, effective Nov. 1, 1996, expiredApril 29, 1997. Emergency amendment filedAug. 12, 1997, effective Sept. 1, 1997, expiredFeb. 27, 1998. Amended: Filed Aug. 12,1997, effective Feb. 28, 1998. Emergencyamendment filed Sept. 19, 1997, effective Oct.1, 1997, expired March 29, 1998. Amended:Filed Sept. 25, 1997, effective March 30,1998. Amended: Filed March 2, 1998, effec-tive Oct. 30, 1998. Amended: Filed July 15,1998, effective Feb. 28, 1999. Emergencyamendment filed Sept. 21, 1998, effective Oct.1, 1998, expired March 29, 1999. Amended:Filed Sept. 21, 1998, effective May 30, 1999.Emergency amendment filed Sept. 20, 1999,effective Oct. 1, 1999, expired March 29,2000. Amended: Filed Aug. 30, 1999, effectiveMarch 30, 2000. Emergency amendment filedJuly 18, 2000, effective July 28, 2000, expiredJan. 24, 2001. Amended: Filed June 29, 2000,effective Feb. 28, 2001. Amended: Filed Oct.6, 2000, effective April 30, 2001. Amended:Filed Aug. 2, 2001, effective Feb. 28, 2002.Amended: Filed July 30, 2002, effective Jan.30, 2003. Emergency amendment filed Jan. 3,2003, effective Jan. 17, 2003, expired July 15,2003. Amended: Filed Jan. 3, 2003, effectiveJune 30, 2003. Emergency amendment filedSept. 22, 2003, effective Oct. 1, 2003, termi-nated Oct. 29, 2003. Amended: Filed Sept. 22,2003, effective May 30, 2004. Amended: FiledMarch 12, 2004, effective Sept. 30, 2004.Emergency amendment filed June 18, 2004,effective July 1, 2004, expired Dec. 15, 2004.Amended: Filed Aug. 16, 2004, effective Feb.28, 2005. Emergency amendment filed March21, 2005, effective April 1, 2005, expired Sept.27, 2005. Emergency amendment filed June20, 2005, effective July 1, 2005, expired Dec.27, 2005. Amended: Filed March 29, 2005,effective Sept. 30, 2005. Emergency amend-ment filed June 15, 2006, effective July 1,2006, expired Dec. 28, 2006. Amended: FiledMay 15, 2006, effective Nov. 30, 2006. Emer-gency amendment filed Sept. 17, 2007, effec-tive Oct. 1, 2007, expired March 28, 2008.Amended: Filed March 30, 2007, effective Nov.30, 2007. Amended: Filed July 1, 2008, effec-tive Jan. 30, 2009. Emergency amendmentfiled March 11, 2010, effective April 1, 2010,expired Sept. 27, 2010. Amended: FiledMarch 11, 2010, effective Sept. 30, 2010.Amended: Filed July 1, 2013, effective Jan.



30, 2014. Amended: Filed Oct. 15, 2015,effective April 30, 2016.

*Original authority: 208.153, RSMo 1967, amended1967, 1973, 1989, 1990, 1991, 2007, 2012; 208.159,RSMo 1979; and 208.201, RSMo 1987, amended 2007.

13 CSR 70-10.016 Global Per Diem Adjust-ments to Nursing Facility and HIV NursingFacility Reimbursement Rates

PURPOSE: This rule sets forth the global perdiem adjustments to be applied to nursingfacility reimbursement rates, established in 13CSR 70-10.015, and HIV nursing facilityreimbursement rates, established in 13 CSR70-10.080. The global per diem adjustmentswere previously included in 13 CSR 70-10.015and 13 CSR 70-10.080.


(2) Purpose. This regulation sets forth theglobal per diem adjustments to be applied tonursing facility reimbursement rates, estab-lished in 13 CSR 70-10.015, and HumanImmunodeficiency Virus (HIV) nursing facil-ity reimbursement rates, established in 13CSR 70-10.080. All principles and defini-tions set forth in 13 CSR 70-10.015 are appli-cable to nursing facilities, and all principlesand definitions set forth in 13 CSR 70-10.080are applicable to HIV nursing facilities. Theterms “facility” or “facilities” as used in thisregulation shall apply to both nursing facili-ties and HIV nursing facilities.

(3) Adjustments to the Reimbursement Rates.Subject to the limitations prescribed in 13CSR 70-10.015, a nursing facility’s reim-bursement rate may be adjusted as describedin this section. Subject to the limitations pre-scribed in 13 CSR 70-10.080, an HIV nurs-ing facility’s reimbursement rate may beadjusted as described in this section.

(A) Global Per Diem Rate Adjustments. Afacility with either an interim rate or aprospective rate may qualify for the globalper diem rate adjustments. Global per diemrate adjustments shall be added to the speci-fied cost component ceiling.

1. FY-96 negotiated trend factor—A. Facilities with either an interim rate

or prospective rate in effect on October 1,1995, shall be granted an increase to their perdiem effective October 1, 1995, of four andsix-tenths percent (4.6%) of the cost deter-mined in paragraphs (11)(A)1., (11)(B)1.,(11)(C)1., and the property insurance andproperty taxes detailed in subsection (11)(D)of 13 CSR 70-10.015; or

B. Facilities that were granted aprospective rate based on paragraph (12)(A)2.

of 13 CSR 70-10.015 that is in effect on Octo-ber 1, 1995, shall have their increase deter-mined by subsection (3)(S) of 13 CSR 70-10.015.


or prospective rate in effect on October 1,1996, shall be granted an increase to their perdiem effective October 1, 1996, of three andseven-tenths percent (3.7%) of the cost deter-mined in paragraphs (11)(A)1., (11)(B)1.,(11)(C)1., and the property insurance andproperty taxes detailed in subsection (11)(D)of 13 CSR 70-10.015; or

B. Facilities that were granted aprospective rate based on paragraph (12)(A)2.of 13 CSR 70-10.015 that is in effect on Octo-ber 1, 1995, shall have their increase deter-mined by subsection (3)(S) of 13 CSR 70-10.015.

3. Nursing Facility ReimbursementAllowance (NFRA). Effective October 1,1996, all facilities with either an interim rateor a prospective rate shall have its per diemadjusted to include the current NFRA as anallowable cost in its reimbursement rate cal-culation.

4. Minimum wage adjustment. All facil-ities with either an interim rate or a prospec-tive rate in effect on November 1, 1996, shallbe granted an increase to their per diemeffective November 1, 1996, of two dollarsand forty-five cents ($2.45) to allow for thechange in minimum wage. Utilizing FiscalYear 1995 cost report data, the total industryhours reported for each payroll category wasmultiplied by the fifty-cent (50¢) increase,divided by the patient days for the facilitiesreporting hours for that payroll category, andfactored up by eight and sixty-seven hun-dredths percent (8.67%) to account for therelated increase to payroll taxes. This calcu-lation excludes the director of nursing, theadministrator, and assistant administrator.

5. Minimum wage adjustment. All facil-ities with either an interim rate or a prospec-tive rate in effect on September 1, 1997, shallbe granted an increase to their per diemeffective September 1, 1997, of one dollarand ninety-eight cents ($1.98) to allow for thechange in minimum wage. Utilizing FiscalYear 1995 cost report data, the total industryhours reported for each payroll category wasmultiplied by the forty-cent (40¢) increase,divided by the patient days for the facilitiesreporting hours for that payroll category, andfactored up by eight and sixty-seven hun-dredths percent (8.67%) to account for therelated increase to payroll taxes. This calcu-lation excludes the director of nursing, theadministrator, and assistant administrator.

6. FY-98 negotiated trend factor—A. Facilities with either an interim

rate or prospective rate in effect on October1, 1997, shall be granted an increase to theirper diem effective October 1, 1997, of three

and four-tenths percent (3.4%) of the costdetermined in paragraphs (11)(A)1.,(11)(B)1., (11)(C)1., and the property insur-ance and property taxes detailed in subsection(11)(D) of 13 CSR 70-10.015 for nursingfacilities and 13 CSR 70-10.080 for HIVnursing facilities; or

B. Facilities that were granted aprospective rate based on paragraph(12)(A)2. of 13 CSR 70-10.015 that is ineffect on October 1, 1995, shall have theirincrease determined by subsection (3)(S) of13 CSR 70-10.015.


or prospective rate in effect on October 1,1998, shall be granted an increase to their perdiem effective October 1, 1998, of two andone-tenth percent (2.1%) of the cost deter-mined in paragraphs (11)(A)1., (11)(B)1.,(11)(C)1., the property insurance and propertytaxes detailed in subsection (11)(D) of 13 CSR70-10.015 for nursing facilities and 13 CSR70-10.080 for HIV nursing facilities, and theminimum wage adjustments detailed in para-graphs (3)(A)4. and (3)(A)5. of this regula-tion; or

B. Facilities that were granted aprospective rate based on paragraph(12)(A)2. of 13 CSR 70-10.015 that is ineffect on October 1, 1998, shall have theirincrease determined by subsection (3)(S) of13 CSR 70-10.015.

8. FY-2000 negotiated trend factor—A. Facilities with either an interim

rate or prospective rate in effect on July 1,1999, shall be granted an increase to their perdiem effective July 1, 1999, of one and nine-ty-four hundredths percent (1.94%) of thecost determined in subsections (11)(A),(11)(B), (11)(C), the property insurance andproperty taxes detailed in subsection (11)(D)of 13 CSR 70-10.015 for nursing facilitiesand 13 CSR 70-10.080 for HIV nursing facil-ities, and the minimum wage adjustmentsdetailed in paragraphs (3)(A)4. and (3)(A)5.of this regulation; or

B. Facilities that were granted aprospective rate based on paragraph (12)(A)2.of 13 CSR 70-10.015 that is in effect on July1, 1999, shall have their increase determinedby subsection (3)(S) of 13 CSR 70-10.015.

9. FY-2004 nursing facility operationsadjustment—

A. Facilities with either an interimrate or prospective rate in effect on July 1,2003, shall be granted an increase to their perdiem effective for dates of service beginningJuly 1, 2003, through June 30, 2004, of fourdollars and thirty-two cents ($4.32) for thecost of nursing facility operations. Effectivefor dates of service beginning July 1, 2004,the per diem adjustment shall be reduced tothree dollars and seventy-eight cents ($3.78);and

B. The operations adjustment shall be

58 CODE OF STATE REGULATIONS (12/31/17) JOHN R. ASHCROFT

Secretary of State


added to the facility’s current rate as ofJune 30, 2003, and is effective for paymentdates after August 1, 2003.

10. FY-2007 quality improvementadjustment—

A. Facilities with either an interimrate or prospective rate in effect on July 1,2006, shall be granted an increase to their perdiem effective for dates of service beginningJuly 1, 2006, of three dollars and seventeencents ($3.17) to improve the quality of life fornursing facility residents; and

B. The quality improvement adjust-ment shall be added to the facility’s currentrate as of June 30, 2006, and is effective fordates of service beginning July 1, 2006, andafter.

11. FY-2007 trend adjustment— A. Facilities with either an interim

rate or a prospective rate in effect on Febru-ary 1, 2007, shall be granted an increase totheir per diem rate effective for dates of ser-vice beginning February 1, 2007, of threedollars and zero cents ($3.00) to allow for atrend adjustment to ensure quality nursingfacility services; and

B. The trend adjustment shall be addedto the facility’s reimbursement rate as of Jan-uary 31, 2007, and is effective for dates ofservice beginning February 1, 2007, for pay-ment dates after March 1, 2007.

12. FY-2008 trend adjustment— A. Facilities with either an interim rate

or a prospective rate in effect on July 1, 2007,shall be granted an increase to their per diemrate effective for dates of service beginningJuly 1, 2007, of six dollars and zero cents($6.00) to allow for a trend adjustment toensure quality nursing facility services; and

B. The trend adjustment shall beadded to the facility’s current rate as of June30, 2007, and is effective for dates of servicebeginning July 1, 2007.

13. FY-2009 trend adjustment—A. Facilities with either an interim rate

or a prospective rate in effect on July 1, 2008,shall be granted an increase to their per diemrate effective for dates of service beginningJuly 1, 2008, of six dollars and zero cents($6.00) to allow for a trend adjustment toensure quality nursing facility services; and

B. The trend adjustment shall beadded to the facility’s current rate as of June30, 2008, and is effective for dates of servicebeginning July 1, 2008.


or a prospective rate in effect on July 1, 2009,shall be granted an increase to their per diemrate effective for dates of service beginningJuly 1, 2009, of five dollars and fifty cents($5.50) to allow for a trend adjustment toensure quality nursing facility services; and

B. The trend adjustment shall beadded to the facility’s current rate as of June30, 2009, and is effective for dates of service

beginning July 1, 2009.15. FY-2012 trend adjustment—

A. Facilities with either an interim rateor a prospective rate in effect on October 1,2011, shall be granted an increase to their perdiem rate effective for dates of service begin-ning October 1, 2011, of six dollars and zerocents ($6.00) to allow for a trend adjustmentto ensure quality nursing facility services;

B. The trend adjustment shall be addedto the facility’s current rate as of September30, 2011, and is effective for dates of servicebeginning October 1, 2011; and

C. This increase is contingent upon thefederal assessment rate limit increasing to sixpercent (6%) and is subject to approval by theCenters for Medicare and Medicaid Services.


or a prospective rate in effect on July 1, 2012,shall be granted an increase to their per diemrate effective for dates of services beginningJuly 1, 2012, of six dollars and zero cents($6.00) to allow for a trend adjustment toensure quality nursing facility services;

B. The trend adjustment shall beadded to the facility’s current rate as of June30, 2012, and is effective for dates of servicebeginning July 1, 2012; and

C. This increase is contingent uponapproval by the Centers for Medicare andMedicaid Services.


or a prospective rate in effect on July 1, 2013,shall be granted an increase to their per diemrate effective for dates of services beginningJuly 1, 2013, of three percent (3.0%) of theircurrent rate, less certain fixed cost items. Thefixed cost items are the per diem amountsincluded in the facility’s current rate from thefollowing: subsection (2)(O) of 13 CSR 70-10.110, paragraphs (11)(D)1., (11)(D)2.,(11)(D)3., (11)(D)4., (13)(B)3., and(13)(B)10. of 13 CSR 70-10.015;


C. This increase is contingent uponapproval by the Centers for Medicare andMedicaid Services.

18. FY-2015 trend adjustment—A. Facilities with either an interim

rate or a prospective rate in effect on July 1,2014, shall be granted an increase to their perdiem rate effective for dates of servicesbeginning July 1, 2014, of one dollar andtwenty-five cents ($1.25) to allow for a trendadjustment to ensure quality nursing facilityservices;


C. This increase is contingent upon

approval by the Centers for Medicare andMedicaid Services.

19. January 1, 2016 – June 30, 2016trend adjustment—

A. Facilities with either an interim rateor a prospective rate in effect on January 1,2016, shall be granted an increase to their perdiem rate effective for dates of services begin-ning January 1, 2016, of two dollars and ninecents ($2.09) to allow for a trend adjustmentto ensure quality nursing facility services;

B. The trend adjustment will not beadded to the facility’s rate after June 30,2016; and

C. This increase is contingent uponapproval by the Centers for Medicare andMedicaid Services and sufficient fundingavailable through the Tax Amnesty Fund.

20. Continuation of FY-2016 trendadjustment and FY-2017 trend adjustment—

A. Facilities with either an interimrate or a prospective rate in effect on July 1,2016, shall continue to be granted an increaseto their per diem rate effective for dates ofservice beginning July 1, 2016, of two dollarsand nine cents ($2.09);

B. Facilities with either an interim rateor a prospective rate in effect on July 1, 2016,shall be granted an increase to their per diemrate effective for dates of services beginningJuly 1, 2016, of two dollars and eighty-threecents ($2.83) to allow for a trend adjustmentto ensure quality nursing facility services;

C. The trend adjustment of two dol-lars and eighty-three cents ($2.83) shall beadded to the facility’s rate as of June 30,2016, which includes the two dollars and ninecents ($2.09) increase, and is effective fordates of service beginning July 1, 2016; and

D. These increases are contingentupon approval by the Centers for Medicareand Medicaid Services.

21. FY-2018 per diem adjustment—A. Facilities with either an interim

rate or a prospective rate in effect on August1, 2017, shall be subject to a decrease in theirper diem rate effective for dates of servicesAugust 1, 2017 through June 30, 2018, offive dollars and thirty-seven cents ($5.37);

B. The per diem adjustment of fivedollars and thirty-seven cents ($5.37) shall bededucted from the facility’s current rate as ofJuly 31, 2017, and is effective for dates ofservice beginning August 1, 2017;

C. Effective for dates of service begin-ning July 1, 2018, the per diem decrease shallbe reduced to four dollars and eighty-threecents ($4.83). A per diem adjustment of fifty-four cents ($0.54) shall be added to the facili-ties current rate as of June 30, 2018, whichincludes the five dollars and thirty-seven cents($5.37) decrease, and is effective for dates ofservice beginning July 1, 2018; and

D. This decrease is contingent uponapproval by the Centers for Medicare andMedicaid Services.



AUTHORITY: sections 208.153, 208.159,and 208.201, RSMo 2016.* Original rule filedJuly 1, 2008, effective Jan. 30, 2009. Emer-gency rule filed Oct. 3, 2008, effective Oct.13, 2008, expired April 10, 2009. Emergencyamendment filed Nov. 9, 2009, effective Nov.19, 2009, expired Jan. 30, 2010. Amended:Filed July 1, 2009, effective Jan. 30, 2010.Emergency amendment filed Sept. 20, 2011,effective Oct. 1, 2011, expired March 28,2012. Amended: Filed July 1, 2011, effectiveDec. 30, 2011. Amended: Filed June 20, 2012,effective Jan. 30, 2013. Amended: Filed Oct.30, 2013, effective May 30, 2014. Amended:Filed July 15, 2014, effective Jan. 30, 2015.Amended: Filed Nov. 16, 2015, effective May30, 2016. Amended: Filed May 16, 2016,effective Nov. 30, 2016. Emergency amend-ment filed July 21, 2017, effective Aug. 1,2017, expired Feb. 22, 2018. Amended: FiledJuly 21, 2017, effective Jan. 30, 2018.


13 CSR 70-10.017 Nursing Facility InvasiveVentilator Program

PURPOSE: This rule sets forth the require-ments for participation in the MO HealthNetInvasive Ventilator Program and the per diemadd-on amounts to be applied to nursingfacility reimbursement rates, established in13 CSR 70-10.015 and 13 CSR 70-10.016.The services provided under the Invasive Ven-tilator Program are in addition to the nursingfacility services already provided by the facil-ity and as such are subject to all policies,rules, regulations, and provider agreementsapplicable to providing nursing facility ser-vices to MO HealthNet participants.

(1) The Invasive Ventilator Program is limit-ed to—

(A) Nursing facilities licensed by theDepartment of Health and Senior Services(DHSS) and certified for participation in theMO HealthNet program and enrolled in theMO HealthNet Invasive Ventilator Program;and

(B) Services provided to adult MO Health-Net participants who are dependent on aninvasive ventilator as a means of life support.An invasive ventilator generates breath deliv-ered to the participant through an artificialairway positioned in the participant’s trachea.

(2) Reimbursement for Invasive VentilatorCare. Providers approved for participation inthe Invasive Ventilator Program will receivepayment in the form of a per diem add-on totheir reimbursement rate established in accor-dance with 13 CSR 70-10.015. The per diemadd-on amount will be one hundred fifty dol-lars ($150.00) will be paid for MO HealthNet

participants who are dependent on a ventila-tor full time as a means of life support.

(3) Provider Requirements for Participationin the Invasive Ventilator Program.

(A) Nursing facilities seeking to participatein the Invasive Ventilator Program must sub-mit the following information to MissouriMedicaid Audit and Compliance (MMAC),Provider Enrollment Unit:

1. A completed Invasive Ventilator Pro-gram Provider application; and

2. Any other information or documenta-tion requested by MMAC to assist in deter-mining enrollment status.

(B) MMAC may enter into agreementswith facilities for the participation in the MOHealthNet Invasive Ventilator Programthrough the provider enrollment process onlyif the provider agrees to the following terms:

1. The provider must maintain and pro-vide documentation demonstrating—

A. Medicaid (Title XIX) Certification;B. The provider has the capacity and

capability to provide invasive ventilator med-ical care as documented by DHSS, MOHealthNet Division (MHD), and MMACrecords;

C. Adherence to regulatory require-ments established by DHSS, MHD, andMMAC;

D. The medical condition of the par-ticipant to verify they meet the criteria forparticipation in this program; and

E. The provider has the followingwritten agreements:

(I) A written agreement with anenrolled MO HealthNet Durable MedicalEquipment (DME) provider which mustinclude a service contract for invasive venti-lator equipment. DME providers will billMO HealthNet for the necessary ventilator;

(II) A written agreement with alocal emergency transportation provider;

(III) A written agreement with alocal hospital capable of providing the neces-sary care for invasive ventilator-dependentparticipants, when appropriate;

(IV) Presence of written emergencyprocedures including but not limited to thefollowing:

(a) Procedures to care for andtransport invasive ventilator-dependent par-ticipants in the event of an emergency evacu-ation;

(b) Procedures to care for inva-sive ventilator-dependent participants in theevent of power failure; and

(c) Procedures to care for inva-sive ventilator-dependent participants in theevent of equipment failure;

2. Individuals qualifying for participa-tion in the Invasive Ventilator Program mustbe placed in contiguous rooms; and

3. In addition to the covered items andservices included in the reimbursement rate

set forth in 13 CSR 70-10.015—A. The nursing facility must purchase

one (1) Ambu bag per invasive ventilatordependent participant and place it in a desig-nated location readily accessible at the bed-side to ensure access in the event of an emer-gency;

B. The provider must ensure the nec-essary equipment to accommodate the needsof the invasive ventilator-dependent partici-pants is provided by the DME provider. Theequipment and supplies covered under the MOHealthNet DME program will be payabledirectly to the DME provider;

C. Proper invasive ventilator and tra-cheostomy supplies and equipment are pro-vided to the participant;

D. Each invasive ventilator is equippedwith an alarm on both the pressure valve andthe volume valve; and

E. Each invasive ventilator is equippedwith internal batteries to provide a short termback-up system in case of a total loss ofpower, and the battery must be checked asrecommended by the manufacturer.

(C) Termination of Participation in Inva-sive Ventilator Program.

1. Providers desiring to discontinue pro-viding invasive ventilator services shall notifyMMAC Provider Enrollment Unit in writing,at least sixty (60) days prior to the date of ter-mination. Payment for invasive ventilatorparticipants already residing in facilities whowish to discontinue providing invasive venti-lator services will remain at the previousinvasive ventilator rate as long as the partici-pant meets the invasive ventilator criteria andas long as all related criteria are met by theprovider or the participant is discharged.

(4) Participant Eligibility for Participation inInvasive Ventilator Program.

(A) Pre-certification must be obtainedthrough MO HealthNet in order to receive pay-ment under the Invasive Ventilator Program.The pre-certification must be initiated by anauthorized medical assistance provider whohas evaluated the medical needs of the individ-ual. Authorized providers include physicians,advanced practice nurses, respiratory thera-pists, hospitals, and nursing facilities.

1. The pre-certification application willbe available by contacting the Clinical Ser-vices Unit/Invasive Ventilator Program.

2. The pre-certification period will beapproved for the duration of the physician’sprescription for invasive ventilation. If theinvasive ventilator is used for weaning purpos-es, a pre-certification must be completed everyninety (90) days to ensure individuals still meetthe requirements for participation in this pro-gram. An approved pre-certification requestdoes not guarantee payment. The providermust verify participant eligibility on the date ofservice using the Interactive Voice Response(IVR) System at (573) 635-8908 or by logging


Secretary of State


onto the MO HealthNet Internet Web portal atwww.emomed.com.

(B) Accessibility to Records. The providermust make accessible to MHD, MMAC,and/or DHSS all provider, participant, andother records necessary to determine that theneeds of the participant are being met and todetermine the appropriateness of invasiveventilator services.

(C) In the event that it is determinedthrough the pre-certification process that theparticipant is no longer in need of or receivinginvasive ventilator services, MHD shall dis-continue the add-on per diem authorized bythis regulation for the participant and reducethe rate of payment to the provider to theprovider’s standard MO HealthNet per diemrate established under 13 CSR 70-10.015.

(5) Cost Reporting Requirements.(A) Providers will be required to separate-

ly identify the invasive ventilator-dependentpatient days regardless of payer source thatrelate to dates of service within the costreporting time period by completing a supple-mental schedule as provided by MHD.

(B) Due to the complex record-keepingrequirements needed to identify the specificcost of this program, MHD will remove thecost as a revenue offset determined as fol-lows. The days from each category identifiedabove will be multiplied by the related Inva-sive Ventilator add-on amount and offsetagainst the expenses. This will ensure theadditional cost of caring for these participantswill be removed from the allowable cost indetermining the prospective reimbursementrate. The offset will be allocated among thecost components as follows: Patient Care—sixty percent (60%), Ancillary—thirty per-cent (30%), and Administrative—five percent(5%). The remaining five percent (5%) willnot be offset because the capital costs are eas-ily identified and will be removed as non-allowable.

AUTHORITY: section 208.159, RSMo 2000,and sections 208.153 and 208.201, RSMoSupp. 2012.* Original rule filed April 1,2013, effective Oct. 30, 2013.


13 CSR 70-10.030 Prospective Reimburse-ment Plan for Nonstate-Operated Facilitiesfor ICF/IID Services

PURPOSE: This rule establishes a paymentplan for nonstate-operated intermediate carefacility for individuals with intellectual dis-abilities services. The plan describes princi-ples to be followed by Title XIX intermediatecare facility for individuals with intellectualdisabilities providers in making financial

reports and presents the necessary proce-dures for setting rates, making adjustments,and auditing the cost reports.

(1) Objectives. This rule establishes a pay-ment plan for nonstate-operated intermediatecare facility for individuals with intellectualdisabilities (ICF/IID) services.

(2) General Principles.(A) The MO HealthNet program shall reim-

burse qualified providers of ICF/IID servicesbased solely on the individual MO HealthNetparticipant’s days of care (within benefit limi-tations) multiplied by the facility’s Title XIXper diem rate less any payments made by par-ticipants.

(B) Effective November 1, 1986, the TitleXIX per diem rate for all ICF/IID facilitiesparticipating on or after October 31, 1986,shall be the lower of—

1. The average private pay charge;2. The Medicare per diem rate, if appli-

cable;3. The rate paid to a facility on October

31, 1986, as adjusted by updating its base yearto its 1985 fiscal year. Facilities which do nothave a full twelve- (12-) month 1985 fiscalyear shall not have their base years updated totheir 1985 fiscal years. Changes in ownership,management, control, operation, leaseholdinterests by whatever form for any facilitypreviously certified for participation in theMO HealthNet program at any time thatresults in increased capital costs for the suc-cessor owner, management, or leaseholdershall not be recognized for purposes of reim-bursement; and

4. However, any provider who does nothave a rate on October 31, 1986, and whosefacility meets the definition in subsection(3)(J) of this rule, will be exempt from para-graph (2)(B)3., and the rate shall be deter-mined in accordance with applicable provi-sions of this rule.

(C) This plan has an effective date ofNovember 1, 1986, at which time prospectiveper diem rates shall be calculated for theremainder of the state’s FY-87 and future fis-cal years. Per diem rates established byupdating facilities’ base years to FY-85 maybe subject to retroactive and prospectiveadjustment based on audit of the facilities’new base year period.

(D) The Title XIX per diem rates as deter-mined by this plan shall apply only to ser-vices furnished on or after November 1,1986.

(3) Definitions.(A) Allowable cost areas. Those cost areas

which are allowable for allocation to the MOHealthNet program based upon the principlesestablished in this rule. The allowability ofcost areas, not specifically addressed in thisrule, will be based upon criteria of the Medi-

care Provider Reimbursement Manual (HIM-15) and section (7) of this rule.

(B) Average private pay charge. The aver-age private pay charge is the usual and cus-tomary charge for non-MO HealthNetpatients determined by dividing total non-MOHealthNet days of care into total revenue col-lected for the same service that is included inthe MO HealthNet per diem rate, excludingnegotiated payment methodologies with theVeterans Administration and the MissouriDepartment of Mental Health.

(C) Committee. The advisory committeedefined in subsection (6)(A) of this rule.

(D) Cost report. The cost report shalldetail the cost of rendering covered servicesfor the fiscal reporting period. Providersmust file the cost report on forms provided byand in accordance with the procedures of thedepartment.

(E) Department. The department, unlessotherwise specified, refers to the MissouriDepartment of Social Services.

(F) Director. The director, unless other-wise specified, refers to the director, Mis-souri Department of Social Services.

(G) Effective date.1. The plan effective date shall be

November 1, 1986.2. The effective date for rate adjust-

ments granted in accordance with section (6)of this rule shall be for dates of service begin-ning the first day of the month following thedirector’s, or his/her designee’s, final deter-mination on the rate.

(H) ICF/IID. Nonstate-operated facilitiescertified to provide intermediate care forindividuals with intellectual disabilities underthe Title XIX program.

(I) Medicare rate. This is the allowablecost of care permitted by Medicare standardsand principles of reimbursement.

(J) New construction. Newly built facilitiesor parts, for which an approved Certificate ofNeed (CON) or applicable waivers wereobtained and which were newly completedand operational on or after November 1,1986.

(K) New owners. Original owners of newconstruction.

(L) Providers. A provider under theProspective Reimbursement Plan is a non-state-operated ICF/IID facility with a validparticipation agreement, in effect on or afterOctober 31, 1986, with the Missouri Depart-ment of Social Services for the purpose ofproviding long-term care (LTC) services toTitle XIX-eligible participants. Facilities cer-tified to provide intermediate care services toindividuals with intellectual disabilities underthe Title XIX program may be offered a MOHealthNet participation agreement on or afterJanuary 1, 1990, only if 1) the facility has nomore than fifteen (15) beds for individualswith intellectual disabilities, and 2) there isno other licensed residential living facility for



individuals with intellectual disabilities with-in a radius of one-half (1/2) mile of the facil-ity seeking participation in the MO Health-Net program.

(M) Reasonable and adequate reimburse-ment. Reimbursement levels which meet theneeds of an efficiently and economicallyoperated facility and which in no case exceednormal market costs.

(N) Related parties. Parties are relatedwhen—

1. An individual or group, regardless ofthe business structure of either, where,through their activities, one (1) individual’sor group’s transactions are for the benefit ofthe other and the benefits exceed those whichare usual and customary in the dealings;

2. One (1) or more persons has an own-ership or controlling interest in a party, andthe person(s) or one (1) or more relatives ofthe person(s) has an ownership or controllinginterest in the other party. For the purposes ofthis paragraph, ownership or controlling inter-est does not include a bank, savings bank,trust company, building and loan association,savings and loan association, credit union,industrial loan and thrift company, investmentbanking firm, or insurance company unlessthe entity, directly or through a subsidiary,operates a facility; or

3. As used in section (3), the followingterms mean:


B. Ownership interest means the pos-session of equity in the capital, in the stock,or in the profits of an entity;

C. Ownership or controlling interestis when a person or corporation(s)—

(I) Has an ownership interesttotalling five percent (5%) or more in an enti-ty;



(IV) Owns an interest of five percent(5%) or more in any mortgage, deed of trust,note, or other obligation secured by an entity,if that interest equals at least five percent(5%) of the value of the property or assets ofthe entity. The percentage of ownershipresulting from the obligations is determinedby multiplying the percentage of interestowned in the obligation by the percentage ofthe entity’s assets used to secure the obliga-tion;

(V) Is an officer or director of an

entity; or(VI) Is a partner in an entity that is

organized as a partnership; D. Relative means persons related by

blood or marriage to the fourth degree ofconsanguinity; and

E. Entity means any person, corpora-tion, partnership, or association.

(O) Rural. Those counties which are notdefined as urban.

(P) Urban. The urban counties are stan-dard metropolitan statistical areas includingAndrew, Boone, Buchanan, Cass, Christian,Clay, Franklin, Greene, Jackson, Jasper, Jef-ferson, Newton, Platte, Ray, St. Charles, St.Louis, and St. Louis City.

(4) Prospective Reimbursement Rate Compu-tation.

(A) Except in accordance with other provi-sions of this rule, the provisions of this sec-tion shall apply to all providers of ICF/IIDservices certified to participate in Missouri’sMO HealthNet program.

1. ICF/IID facilities.A. Except in accordance with other

provisions of this rule, the MO HealthNetprogram shall reimburse providers of theseLTC services based on the individual MOHealthNet-participant days of care multipliedby the Title XIX prospective per diem rateless any payments collected from partici-pants. The Title XIX prospective per diemreimbursement rate for the remainder of stateFiscal Year 1987 shall be the facility’s perdiem reimbursement payment rate in effecton October 31, 1986, as adjusted by updatingthe facility’s allowable base year to its 1985fiscal year. Each facility’s per diem costs asreported on its Fiscal Year 1985 Title XIXcost report will be determined in accordancewith the principles set forth in this rule. If afacility has not filed a 1985 fiscal year costreport, the most current cost report on filewith the department will be used to set its perdiem rate. Facilities with less than a fulltwelve- (12-) month 1985 fiscal year will nothave their base year rates updated.

B. For state FY-88 and dates of ser-vice beginning July 1, 1987, the negotiatedtrend factor shall be equal to two percent(2%) to be applied in the following manner:Two percent (2%) of the average per diemrate paid to both state- and nonstate-operatedICF/IID facilities on June 1, 1987, shall beadded to each facility’s rate.

C. For state FY-89 and dates of ser-vice beginning January 1, 1989, the negotiat-ed trend factor shall be equal to one percent(1%) to be applied in the following manner:One percent (1%) of the average per diemrate paid to both state- and nonstate-operatedICF/IID facilities on June 1, 1988, shall beadded to each facility’s rate.

D. For state FY-91 and dates of ser-vice beginning July 1, 1990, the negotiatedtrend factor shall be equal to one percent

(1%) to be applied in the following manner:One percent (1%) of the average per diemrate paid to both state- and nonstate-operatedICF/IID facilities on June 1, 1990, shall beadded to each facility’s rate.

E. FY-96 negotiated trend factor. Allnonstate-operated ICF/IID facilities shall begranted an increase to their per diem rateseffective for dates of service beginning Jan-uary 1, 1996, of six dollars and seven cents($6.07) per patient day for the negotiatedtrend factor. This adjustment is equal to fourand six-tenths percent (4.6%) of the weightedaverage per diem rates paid to nonstate-oper-ated ICF/IID facilities on June 1, 1995, ofone hundred and thirty-one dollars and nine-ty-three cents ($131.93).

F. State FY-99 trend factor. All non-state-operated ICF/IID facilities shall begranted an increase to their per diem rateseffective for dates of service beginning July1, 1998, of four dollars and forty-seven cents($4.47) per patient day for the trend factor.This adjustment is equal to three percent(3%) of the weighted average per diem ratepaid to nonstate-operated ICF/IID facilitieson June 30, 1998, of one hundred forty-eightdollars and ninety-nine cents ($148.99).

G. State FY-2000 trend factor. Allnonstate-operated ICF/IID facilities shall begranted an increase to their per diem rateseffective for dates of service beginning July1, 1999, of four dollars and sixty-three cents($4.63) per patient day for the trend factor.This adjustment is equal to three percent(3%) of the weighted average per diem ratepaid to nonstate-operated ICF/IID facilitieson April 30, 1999, of one hundred fifty-fourdollars and forty-three cents ($154.43). Thisincrease shall only be used for increases forthe salaries and fringe benefits for direct carestaff and their immediate supervisors.

H. State FY-2001 trend factor. Allnonstate-operated ICF/IID facilities shall begranted an increase to their per diem rateseffective for dates of service beginning July1, 2000, of four dollars and eighty-one cents($4.81) per patient day for the trend factor.This adjustment is equal to three percent(3%) of the weighted average per diem ratepaid to nonstate-operated ICF/IID facilitieson April 30, 2000, of one hundred sixty dol-lars and twenty-three cents ($160.23). Thisincrease shall only be used for increases forsalaries and fringe benefits for direct carestaff and their immediate supervisors.

I. State FY-2007 trend factor. Allnonstate-operated ICF/IID facilities shall begranted an increase of seven percent (7%) totheir per diem rates effective for dates of ser-vice billed for state fiscal year 2007 andthereafter. This adjustment is equal to sevenpercent (7%) of the per diem rate paid tononstate-operated ICF/IID facilities on June30, 2006.

J. State FY-2008 trend factor. Effec-tive for dates of service beginning July 1,


Secretary of State


2007, all nonstate-operated ICF/IID facilitiesshall be granted an increase to their per diemrates of two percent (2%) for the trend factor.This adjustment is equal to two percent (2%)of the per diem rate paid to nonstate-operatedICF/IID facilities on June 30, 2007.

K. State FY-2009 trend factor. Effec-tive for dates of service beginning July 1,2008, all nonstate-operated ICF/IID facilitiesshall be granted an increase to their per diemrates of three percent (3%) for the trend fac-tor. This adjustment is equal to three percent(3%) of the per diem rate paid to nonstate-operated ICF/IID facilities on June 30, 2008.

L. State FY-2009 catch up increase.Effective for dates of service beginning July1, 2008, all nonstate-operated ICF/IID facil-ities shall be granted an increase to their perdiem rates of thirteen and ninety-five hun-dredths percent (13.95%). This adjustment isequal to thirteen and ninety-five hundredthspercent (13.95%) of the per diem rate paid tononstate-operated ICF/IID facilities on June30, 2008. This increase is intended to providecompensation to providers for the yearswhere no trend factor was given. The catchup increase was based on the CMS PPSSkilled Nursing Facility Input Price Index(four- (4-) quarter moving average).

M. State FY-2012 trend factor. Effec-tive for dates of service beginning October 1,2011, all nonstate-operated ICF/IID facilitiesshall be granted an increase to their per diemrates of one and four tenths percent (1.4%)for the trend factor. This adjustment is equalto one and four tenths percent (1.4%) of theper diem rate paid to nonstate-operatedICF/IID facilities on September 30, 2011.

N. State FY-2014 trend factor. Effec-tive for dates of service beginning January 1,2014, all nonstate-operated ICF/IID facilitiesshall be granted an increase to their per diemrates of three percent (3%) for the trend factor.This adjustment is equal to three percent (3%)of the per diem rate paid to nonstate-operatedICF/IID facilities on December 31, 2013.

O. State FY-2016 trend factor. Effec-tive for dates of service beginning February1, 2016, all nonstate-operated ICF/IID facil-ities shall be granted an increase to their perdiem rates of one percent (1%) for the trendfactor. This adjustment is equal to one per-cent (1%) of the per diem rate paid to non-state-operated ICF/IID facilities on January31, 2016.

P. State FY-2017 trend factor. Effec-tive for dates of service beginning September1, 2016, all nonstate-operated ICF/IID facil-ities shall be granted an increase to their perdiem rates of two percent (2%) for the trendfactor. This adjustment is equal to two per-cent (2%) of the per diem rate paid to non-state-operated ICF/IID facilities on August31, 2016.

Q. State FY-2018 per diem adjust-ment. Effective for dates of service beginningSeptember 1, 2017, all nonstate-operated

ICF/IID facilities shall be subject to adecrease to their per diem rates of two andeighty-two hundredths percent (2.82%). Thisadjustment is equal to two and eighty-two hun-dredths percent (2.82%) of the per diem ratepaid to nonstate-operated ICF/IID facilities onAugust 31, 2017.

2. Adjustments to rates. The prospec-tively determined reimbursement rate may beadjusted only under the following conditions:

A. When information contained in afacility’s cost report is found to be fraudulent,misrepresented, or inaccurate, the facility’sreimbursement rate may be reduced, bothretroactively and prospectively, if the fraudu-lent, misrepresented, or inaccurate informationas originally reported resulted in establishmentof a higher reimbursement rate than the facilitywould have received in the absence of thisinformation. No decision by the MO Health-Net agency to impose a rate adjustment in thecase of fraudulent, misrepresented, or inaccu-rate information in any way shall affect the MOHealthNet agency’s ability to impose any sanc-tions authorized by statute or rule. The factthat fraudulent, misrepresented, or inaccurateinformation reported did not result in estab-lishment of a higher reimbursement rate thanthe facility would have received in the absenceof the information also does not affect the MOHealthNet agency’s ability to impose any sanc-tions authorized by statute or rules;

B. In accordance with subsection(6)(B) of this rule, a newly constructed facil-ity’s initial reimbursement rate may bereduced if the facility’s actual allowable perdiem cost for its first twelve (12) months ofoperation is less than its initial rate;

C. When a facility’s MO HealthNetreimbursement rate is higher than either itsprivate pay rate or its Medicare rate, the MOHealthNet rate will be reduced in accordancewith subsection (2)(B) of this rule;

D. When the provider can show that itincurred higher cost due to circumstancesbeyond its control, and the circumstances arenot experienced by the nursing home orICF/IID industry in general, the request musthave a substantial cost effect. These circum-stances include, but are not limited to:

(I) Acts of nature, such as fire,earthquakes, and flood, that are not coveredby insurance;

(II) Vandalism, civil disorder, orboth; or

(III) Replacement of capital depre-ciable items not built into existing rates thatare the result of circumstances not related tonormal wear and tear or upgrading of existingsystem;

E. When an adjustment to a facility’srate is made in accordance with the provi-sions of section (6) of this rule; or

F. When an adjustment is based on anAdministrative Hearing Commission or courtdecision.

(B) In the case of newly constructed non-

state-operated ICF/IID facilities entering theMO HealthNet program after October 31,1986, and for which no rate has previouslybeen set, the director or his/her designee mayset an initial rate for the facility as in his/herdiscretion s/he deems appropriate. The initialrate shall be subject to review by the advisorycommittee under the provisions of section (6)of this rule.

(5) Covered Services and Supplies.(A) ICF/IID services and supplies covered

by the per diem reimbursement rate underthis plan, and which must be provided, asrequired by federal or state law or rule andinclude, among other services, the regularroom, dietary and nursing services, or anyother services that are required for standardsof participation or certification. Also includ-ed are minor medical and surgical suppliesand the use of equipment and facilities. Theseitems include, but are not limited to, the fol-lowing:

1. All general nursing services includ-ing, but not limited to, administration of oxy-gen and related medications, hand-feeding,incontinency care, tray service, and enemas;

2. Items which are furnished routinelyand relatively uniformly to all participants,for example, gowns, water pitchers, soap,basins, and bed pans;

3. Items such as alcohol, applicators,cotton balls, bandaids, and tongue depres-sors;

4. All nonlegend antacids, nonlegendlaxatives, nonlegend stool softeners, and non-legend vitamins. Any nonlegend drug in one(1) of these four (4) categories must be pro-vided to residents as needed and no additionalcharge may be made to any party for any ofthese drugs. Facilities may not elect whichnonlegend drugs in any of the four (4) cate-gories to supply; all must be provided asneeded within the existing per diem rate;

5. Items which are utilized by individualparticipants but which are reusable andexpected to be available, such as ice bags, bedrails, canes, crutches, walkers, wheelchairs,traction equipment, and other durable, non-depreciable medical equipment;

6. Additional items as specified in theappendix to this plan when required by thepatient;

7. Special dietary supplements used fortube feeding or oral feeding, such as elemen-tal high nitrogen diet, including dietary sup-plements written as a prescription item by aphysician;

8. All laundry services except personallaundry which is a noncovered service;

9. All general personal care serviceswhich are furnished routinely and relativelyuniformly to all participants for their personalcleanliness and appearance shall be coveredservices, for example, necessary clipping andcleaning of fingernails and toenails, basichair care, shampoos, and shaves to the extent



necessary for reasonable personal hygiene.The provider shall not bill the patient orhis/her responsible party for this type of per-sonal service;

10. All consultative services as requiredby state or federal law or regulation or forproper operation by the provider. Contractsfor the purchase of these services mustaccompany the provider cost report. Failureto do so will result in the penalties specifiedin section (9) of this rule;

11. Semiprivate room and board and pri-vate room and board when necessary to iso-late a participant due to a medical or socialcondition, such as contagious infection, irra-tional loud speech, and the like. Unless a pri-vate room is necessary due to a medical orsocial condition, a private room is a noncov-ered service, and a MO HealthNet participantor responsible party may therefore pay thedifference between a facility’s semiprivatecharge and its charge for a private room. MOHealthNet participants may not be placed inprivate rooms and charged any additionalamount above the facility’s MO HealthNetper diem unless the participant or responsibleparty in writing specifically requests a privateroom prior to placement in a private roomand acknowledges that an additional amountnot payable by MO HealthNet will be chargedfor a private room;

12. Twelve (12) days per any period ofsix (6) consecutive months during which aparticipant is on a temporary leave of absencefrom the facility. Temporary leave of absencedays must be specifically provided for in theparticipant’s plan of care. Periods of timeduring which a participant is away from thefacility because s/he is visiting a friend or rel-ative are considered temporary leaves ofabsence; and

13. Days when participants are awayfrom the facility overnight on facility-spon-sored group trips under the continuing super-vision and care of facility personnel.

(6) Rate Determination. All nonstate-operat-ed ICF/IID providers of LTC services underthe MO HealthNet program who desire tohave their rates changed or established mustapply to the MO HealthNet Division. Thedepartment may request the participation ofthe Department of Mental Health in the anal-ysis for rate determination. The procedureand conditions for rate reconsideration are asfollows:

(A) Advisory Committee. The director,Department of Social Services, shall appointan advisory committee to review and makerecommendations pursuant to providerrequests for rate determination. The directormay accept, reject, or modify the advisorycommittee’s recommendations.

1. Membership. The advisory committeeshall be composed of four (4) members repre-sentative of the nursing home industry in Mis-souri, three (3) members from the Department

of Social Services, and two (2) memberswhich may include, but are not limited to, aconsumer representative, an accountant oreconomist, or a representative of the legal pro-fession. Members shall be appointed for termsof twelve (12) months. The director shallselect a chairman from the membership whoshall serve at the director’s discretion.

2. Procedures.A. The committee may hold meetings

when five (5) or more members are presentand may make recommendations to thedepartment in instances where a simplemajority of those present and voting concur.

B. The committee shall meet no lessthan one (1) time each quarter, and membersshall be reimbursed for expenses.

C. The MO HealthNet Division willsummarize each case and, if requested by theadvisory committee, make recommendations.The advisory committee may request addi-tional documentation as well as require thefacility to submit to a comprehensive opera-tional review to determine if there exists anefficient and economical delivery of patientservices. The review will be made at the dis-cretion of the committee and may be per-formed by it or its designee. The findingsfrom a review may be used to determine theper diem rate for the facility. Failure to sub-mit requested documentation shall begrounds for denial of the request.

D. The committee, at its discretion,may issue its recommendation based on writ-ten documentation or may request furtherjustification from the provider sending therequest.

E. The advisory committee shall haveninety (90) days from the receipt of eachcomplete request, provided the request is onbehalf of a facility which has executed a validTitle XIX participation agreement, or thereceipt of any additional documentation tosubmit its recommendations in writing to thedirector. If the committee is unable to make arecommendation within the specified timelimit, the director or his/her designee, if thecommittee establishes good cause, may granta reasonable extension.

F. Final determination on rate adjust-ment. The director’s, or his/her designee’s,final decision on each request shall be issuedin writing to the provider within fifteen (15)working days from receipt of the committee’srecommendation.

G. The director’s, or his/herdesignee’s, final determination on the adviso-ry committee’s recommendation shallbecome effective on the first day of the monthin which the request was made, providing thatit was made prior to the tenth of the month.If the request is not filed by the tenth of themonth, adjustments shall be effective the firstday of the following month;

(B) In the case of new construction wherea valid Title XIX participation agreement hasbeen executed, a request for a rate must be

submitted in writing to the MO HealthNetDivision and must specifically and clearlyidentify the issue and the total amountinvolved. The total dollar amount must besupported by complete, accurate, and docu-mented records satisfactory to the single stateagency. Until an initial per diem rate is estab-lished, the MO HealthNet Division shallgrant a tentative per diem rate for that period.In no case may a facility receive a per diemreimbursement rate greater than the classceiling in effect on March 1, 1990, adjustedby the negotiated trend factor.

1. In the case of newly built facility orpart of the facility which is less than two (2)years of age and enters the Title XIX Pro-gram on or after November 1, 1986, a reim-bursement rate shall be assigned based on theprojected estimated operating costs. Adviceof the advisory committee will be obtainedfor all initial rate determination requests fornew construction. Owners of new construc-tion which have an approved CON are certi-fied for participation and which have a validTitle XIX participation agreement shall sub-mit a budget in accordance with the princi-ples of section (7) of this rule and other doc-umentation as the committee may request.

2. The establishment of the permanentrate for all new construction facility providersshall be based on the second full facility fis-cal year cost report prepared in accordancewith the principles of section (7) of this rule.This cost report shall be submitted withinninety (90) days of the close of their secondfull facility fiscal year. This cost report shallbe based on actual operating costs. Norequest for an extension of this ninety- (90-)day filing requirement will be considered.Any new construction facility provider whichfails to timely submit the cost report may besubject to sanction under this rule and 13CSR 70-3.030.

3. Prior to establishment of a permanentrate for new construction facility providers,the cost reports may be subject to an on-siteaudit by the Department of Social Services todetermine the facility’s actual allowablecosts. Allowability of costs will be deter-mined as described in subsection (3)(A) ofthis rule.

4. The cost report, audited or unaudited,will be reviewed by the MO HealthNet Divi-sion, and each facility’s actual allowable perdiem cost will be determined. The cost reportshall not be submitted to the advisory com-mittee for review. If a facility’s actual allow-able per diem cost is less than its initial perdiem reimbursement rate, the facility’s ratewill be reduced to its actual allowable perdiem cost. This reduction will be effective onthe first day of the second full facility fiscalyear.

5. If a facility’s actual allowable perdiem cost is higher than its initial per diemreimbursement rate, the facility’s rate will notbe adjusted; a facility shall not receive a rate


Secretary of State


increase based on review or audit of the costreport and actual operating costs;

(C) In the case of existing facilities not pre-viously certified to participate in the TitleXIX program, a request for a per diem reim-bursement rate must be submitted in writingto the MO HealthNet Division and mustspecifically and clearly identify the issue andthe total amount involved. The total dollaramount must be supported by complete,accurate, and documented records satisfacto-ry to the single state agency. Until the time asa per diem rate is established, the MOHealthNet Division shall grant a tentative perdiem rate for that period. In no case may afacility receive a per diem reimbursementrate greater than the class ceiling in effect onMarch 1, 1990, adjusted by the negotiatedtrend factor.

1. In the case of a facility described insubsection (6)(C) of this rule and entering theTitle XIX program on or after March 1,1990, a reimbursement rate shall be assignedbased on the projected estimated operatingcosts. Advice of the advisory committee willbe obtained for all initial rate determinationrequests for first full facility’s fiscal year.

2. The establishment of the permanentrate for all existing facility providers shall bebased on the second full facility fiscal yearcost report prepared in accordance with theprinciples of section (7) of this rule. This costreport shall be submitted within ninety (90)days of the close of their second full facilityfiscal year. This cost report shall be based onactual operating costs. No request for anextension of this ninety- (90-) day filingrequirement will be considered. Any newconstruction facility provider which fails totimely submit the cost report may be subjectto sanction under this rule and 13 CSR 70-3.030.

3. Prior to establishment of a permanentrate for existing facility providers, the costreports may be subject to an on-site audit bythe Department of Social Services to deter-mine the facility’s actual allowable costs.Allowability of costs will be determined asdescribed in subsection (3)(A) of this rule.

4. The cost report, audited or unaudited,will be reviewed by the MO HealthNet Divi-sion, and each facility’s actual allowable perdiem cost will be determined. The cost reportshall not be submitted to the advisory com-mittee for review. If a facility’s actual allow-able per diem cost is less than its initial perdiem reimbursement rate, the facility’s ratewill be reduced to its actual allowable perdiem cost. This reduction will be effective onthe second day of the first full facility fiscalyear.

5. If a facility’s actual allowable perdiem cost is higher than its initial per diemreimbursement rate, the facility’s rate will notbe adjusted; a facility shall not receive a rateincrease based on review or audit of the cost

report and actual operating costs;(D) Rate Reconsideration.

1. The committee may review the fol-lowing conditions for rate reconsideration:

A. Those costs directly related to achange in a facility’s case mix; and

B. Requests for rate reconsiderationwhich the director, in his/her discretion, mayrefer to the committee due to extraordinarycircumstances contained in the request and asdefined in subparagraph (4)(A)2.D. of thisrule.

2. The request for an adjustment mustbe submitted in writing to the MO HealthNetDivision and must specifically and clearlyidentify the issue and the total dollar amountinvolved. The total dollar amount must besupported by complete, accurate, and docu-mented records satisfactory to the single stateagency. The facility must demonstrate that theadjustment is necessary, proper, and consis-tent with efficient and economical delivery ofcovered patient care services.

3. However, for state fiscal years afterFiscal Year 1987, in no case may a facilityreceive a per diem reimbursement rate higherthan the class ceiling for that facility in effecton June 30 of the preceding fiscal year adjust-ed by the negotiated trend factor.

4. The following will not be subject toreview:

A. The negotiated trend factor;B. The use of prospective reimburse-

ment rate; andC. The cost base for the June 30 per

diem rate except as specified in this rule; (E) Rate Adjustments. The department may

alter a facility’s per diem rate based on—1. Court decisions;2. Administrative Hearing Commission

decisions; 3. Determination through desk audits,

field audits, and other means, which estab-lishes misrepresentations in or the inclusionof unallowable costs in the cost report used toestablish the per diem rate. In these cases, theadjustment shall be applied retroactively; or

4. Adjustments determined by thedepartment without the advice of the rateadvisory committee.

A. Prospective payment adjustment(PPA). A FY-92 PPA will be provided priorto the end of the state fiscal year for nonstate-operated ICF/IID facilities with a currentprovider agreement on file with the MOHealthNet Division as of October 1, 1991.

(I) For providers which qualify, thePPA shall be the lesser of—

(a) The provider’s facility peergroup factor (FPGF) times the projectedpatient days (PPD) covered by the adjustmentyear times the prospective payment adjust-ment factor (PPAF) times the nonstate-oper-ated intermediate care facility for individualswith intellectual disabilities ceiling (ICFI-IDC) on October 1, 1991 (FPGF × PPD ×

PPAF × ICFIIDC). For example: A providerhaving nine hundred twenty (920) paid daysfor the period May 1991 to July 1991 out ofa total paid days for this same period of twen-ty-eight thousand five hundred sixty-one(28,561) represents an FPGF of three andtwenty-two hundredths percent (3.22%). Sousing the FPGF of 3.22% × 114,244 ×24.5% × $156.01 = $140,659; or

(b) The provider FPGF timesone hundred forty-five percent (145%) of theamount credited to the intermediate care rev-enue collection center (ICRCC) of the StateTitle XIX Fund (STF) for the period October1, 1991 through December 31, 1991.

(II) FPGF—is determined by usingeach ICF/IID facility’s paid days for the ser-vice dates in May 1991 through July 1991 asof September 20, 1991, divided by the sum ofthe paid days for the same service dates forall provider’s qualifying as of the determina-tion date of October 16, 1991.

(III) ICFIIDC—is one hundredfifty-six dollars and one cent ($156.01) onOctober 1, 1991.

(IV) PPAF—is equal to twenty-fourand five-tenths percent (24.5%) for fiscalyear 1992 which includes an adjustment foreconomic trends.

(V) PPD—is the projection of onehundred fourteen thousand two hundredforty-four (114,244) patient days made onOctober 1, 1991, for the adjustment year;

5. FY-92 trend factor and Workers’Compensation. All facilities with either aninterim rate or a prospective per diem rate ineffect on September 1, 1992, shall be grantedan increase to their per diem rate effectiveSeptember 1, 1992, of eight dollars andeighty-six cents ($8.86) per patient day relat-ed to the continuation of the FY-92 trend fac-tor and the Workers’ Compensation adjust-ment. This adjustment is equal to seven andone-half percent (7.5%) of the March 1992weighted average per diem rate of one hun-dred eighteen dollars and fourteen cents($118.14) for all nonstate-operated ICF/IIDfacilities; or

6. FY-93 negotiated trend factor. Allfacilities with either an interim rate orprospective per diem rate in effect onSeptember 1, 1992, shall be granted anincrease to their per diem rate effectiveSeptember 1, 1992, of one dollar and sixty-six cents ($1.66) per patient day for the nego-tiated trend factor. This adjustment is equal toone and four-tenths percent (1.4%) of theMarch 1992 weighted average per diem rateof one hundred eighteen dollars and fourteencents ($118.14) for all nonstate-operatedICF/IID facilities; and

(F) Rate determination shall be based on adetermination of reasonable and adequatereimbursement levels for allowable cost itemsdescribed in this rule which are related to ordi-nary and necessary care for the level-of-care



provided for an efficiently and economicallyoperated facility. All providers shall submitdocumentation of expenses for allowable costareas. The department shall have authority torequire those uniform accounting and report-ing procedures and forms as it deems neces-sary. A reasonable and adequate reimburse-ment in each allowable cost area will bedetermined by the advisory committee withthe consent of the director.


1. Allowance of compensation of ser-vices of owners shall be an allowable costarea, provided the services are actually per-formed and are necessary services.

2. Compensation shall mean the totalbenefit, within the limitations set forth in thisrule, by the owner of the services s/he ren-ders to the facility including direct paymentsfor managerial, administrative, professional,and other services, amounts paid by theprovider for the personal benefit of theowner, the cost of assets and services whichthe owner receives from the provider, andadditional amounts determined to be the rea-sonable value of the services rendered by soleproprietors or partners and not paid by anymethod previously described.

3. Reasonableness of compensation maybe determined by reference to or in compari-son with compensation paid for comparableinstitutions or it may be determined by otherappropriate means such as the Medicare andMedicaid Provider Reimbursement Manual(HIM-15) or by other means.

4. Necessary services refers to thoseservices that are pertinent to the operationand sound conduct of the facility, had theprovider not rendered these services, thenemployment of another person(s) to performthe service would be necessary.

(B) Covered services and supplies asdefined in section (5) of this rule.

(C) Depreciation.1. An appropriate allowance for depreci-

ation on buildings, furnishings, and equip-ment which are part of the operation andsound conduct of the provider’s business is anallowable cost item. Finder’s fees are not anallowable cost item.

2. The depreciation must be identifiableand recorded in the provider’s accountingrecords, based on the basis of the asset andprorated over the estimated useful life of theasset using the straight-line method of depre-ciation from the date initially put into service.

3. The basis of assets at the time placedin service shall be the lower of—


acquisition;C. The recognized Internal Revenue

Service (IRS) tax basis; and D. In the case of the change in own-

ership, the cost basis of acquired assets of theowner of record on or after July 18, 1984, asof the effective date of the change of owner-ship; or in the case of a facility which enteredthe program after July 18, 1984, the owner atthe time of the initial entry into the MOHealthNet program.

4. The basis of donated assets will beallowed to the extent of recognition of incomeresulting from the donation of the asset.Should a dispute arise between a provider andthe Department of Social Services as to thefair market value at the time of acquisition ofa depreciable asset and an appraisal by a thirdparty is required, the appraisal cost will beshared proportionately by the MO HealthNetprogram and the facility in ratio toMO HealthNet participant reimbursablepatient days to total patient days.

5. Allowable methods of depreciationshall be limited to the straight-line method.The depreciation method used for an assetunder the MO HealthNet program need notcorrespond to the method used by a providerfor non-MO HealthNet purposes; however,useful life shall be in accordance with theAmerican Hospital Association’s Guidelines.Component part depreciation is optional andallowable under this plan.

6. Historical cost is the cost incurred bythe provider in acquiring the asset andpreparing it for use except as provided in thisrule. Usually, historical cost includes coststhat would be capitalized under generallyaccepted accounting principles. For example,in addition to the purchase price, historicalcost would include architectural fees andrelated legal fees. Where a provider has elect-ed, for federal income tax purposes, toexpense certain items such as interest andtaxes during construction, the historical costbasis for MO HealthNet depreciation purpos-es may include the amount of these expenseditems. However, where a provider did notcapitalize these costs and has written off thecosts in the year they were incurred, theprovider cannot retroactively capitalize anypart of these costs under the program. ForTitle XIX purposes and this rule, any assetcosting less than five hundred dollars ($500)or having a useful life of one (1) year or less,may be expensed and not capitalized at theoption of the provider, or in the case of afacility which entered the program after July18, 1984, the owner at the time of the initialentry into the MO HealthNet program.


8. For the purpose of determiningallowance for depreciation, the cost basis ofthe asset shall be as prescribed in paragraph(7)(C)3.

9. Capital expenditures for building con-struction or for renovation costs which are in

excess of one hundred fifty thousand dollars($150,000) and which cause an increase in aprovider’s bed capacity shall not be allowedin the program or depreciation base if thesecapital expenditures fail to comply with anyother federal or state law or regulation, suchas Certificate of Need (CON).

10. Amortization of leasehold rights andrelated interest and finance costs shall not beallowable costs under this plan.

(D) Interest and Finance Costs.1. Necessary and proper interest on both


2. Interest is the cost incurred for theuse of borrowed funds. Interest on currentindebtedness is the cost incurred for fundsborrowed for a relatively short term. This isusually for those purposes as working capitalfor normal operating expenses. Interest oncapital indebtedness is the cost incurred forfunds borrowed for capital purposes, such asacquisition of facilities and capital improve-ments, and this indebtedness must be amor-tized over the life of the loan.


4. To be an allowable cost item, interest(including finance charges, prepaid costs, anddiscounts) must be supported by evidence ofan agreement that funds were borrowed andthat payment of interest and repayment of thefunds are required, identifiable in theprovider’s accounting records, relating to thereporting period in which the costs areclaims, and necessary and proper for theoperation, maintenance, or acquisition of theprovider’s facilities.

5. Necessary means that the interest beincurred for a loan made to satisfy a financialneed of the provider and for a purpose relatedto participant care. Loans which result inexcess funds or investments are not consid-ered necessary.

6. Proper means that the interest beincurred at a rate not in excess of what a pru-dent borrower would have had to pay in themoney market existing at the time the loanwas made, and provided further the depart-ment shall not reimburse for interest andfinance charges any amount in excess of theprime rate current at the time the loan wasobtained.

7. Interest on loans to providers by pro-prietors, partners, and any stockholders shallnot be an allowable cost item because theloans shall be treated as invested capital andincluded in the computation of an allowablereturn on owner’s net equity. If a facilityoperated by a religious order borrows fromthe order, interest paid to the order shall bean allowable cost.


Secretary of State


8. If loans for capital indebtednessexceed the asset cost basis as defined in sub-section (7)(C) of this rule, the interest associ-ated with the portion of the loan(s) whichexceed the asset cost basis as defined in sub-section (7)(C) of this rule shall not be allow-able.

9. Income from a provider’s qualifiedretirement fund shall be excluded in consider-ation of the per diem rate.

10. A provider shall amortize financecharges, prepaid interest, and discount overthe period of the loan ratably or by means ofthe constant rate of interest method on theunpaid balance.

11. Usual and customary costs, exclud-ing finder’s fees, incurred to obtain loansshall be treated as interest expense and shallbe allowable costs over the loan period rat-ably or by means of the constant interestapplied method.

12. Usual and customary costs shall belimited to the lender’s title and recordingfees, appraisal fees, legal fees, escrow fees,and closing costs.

13. Interest expense resultant from cap-ital expenditures for building construction orfor renovation costs which are in excess ofone hundred fifty thousand dollars($150,000) and which cause an increase in abed capacity by the provider shall not be anallowable cost item if the capital expenditurefails to comply with other federal or state lawor rules such as CON.

(E) Rental and Leases.1. Rental and leases of land, buildings,

furnishings, and equipment are allowable costareas provided that the rented items are nec-essary and not in essence a purchase of thoseassets. Finder’s fees are not an allowable costitem.



4. Determination of reasonable and ade-quate reimbursement for rental and amounts,except in the case of related parties which issubject to other provisions of this rule, mayrequire affidavits of competent, impartialexperts who are familiar with the currentrentals and leases.



7. If rent or lease costs increase solelyas a result of change in ownership, the result-ing increase which exceeds the allowable cap-ital cost of the owner of record as of July 18,

1984, or in the case of a facility whichentered the program after July 18, 1984, theowner at the time of the initial entry into theMO HealthNet program, shall be a nonallow-able cost.

(F) Taxes. Taxes levied on or incurred byproviders shall be allowable cost areas withthe exceptions of the following items:

1. Federal, state, or local income andexcess profit taxes including any interest andpenalties paid;

2. Taxes in connection with financing,refinancing, or refunding operations, such astaxes on the issuance of bond, property trans-fer, issuance of transfer of stocks;

3. Taxes for which exemptions are avail-able to the provider;

4. Special assessments on land whichrepresent capital improvements. These costsshall be capitalized and depreciated over theperiod during which the assessment is sched-uled to be paid;

5. Taxes on property which are not apart of the operation of the provider;

6. Taxes which are levied against a resi-dent and collected and remitted by theprovider; and

7. Self-employment Federal InsuranceContributions Act (FICA) taxes applicable toindividual proprietors, partners, or membersof a joint venture to the extent the taxesexceed the amount which would have beenpaid by the provider on the allowable com-pensation of the persons had the providerorganization been an incorporated rather thanunincorporated entity.

(G) Issuance of Revenue Bond and TaxLevies by District and County Facilities.Those nursing home districts and countyfacilities whose funding is through theissuance of revenue bonds, that interest whichis paid per the revenue bond will be an allow-able cost item. Depreciation on the plant andequipment of these facilities also shall be anallowable cost item. Any tax levies which arecollected by nursing home districts or countyhomes that are supported in whole or in partby these levies will not be recognized as arevenue offset except to the extent that thefunds are used for the actual operation of thefacility.

(H) Value of Services of Employees.1. Except as provided for in this rule,


2. Services rendered by volunteers, suchas those affiliated with the American RedCross, hospital guilds, auxiliaries, privateindividuals, and similar organizations, shallnot be included as an allowable cost area, asthe services have traditionally been renderedon a purely volunteer basis without expecta-tion of any form of reimbursement by the

organization through which the service isrendered or by the person rendering the ser-vice.

3. Services by priests, ministers, rabbis,and similar type professionals shall be anallowable cost area; provided, that the ser-vices are not of a religious nature. An exam-ple of an allowable cost area under this sec-tion would be a necessary administrativefunction performed by a clergyman. The statewill not recognize building costs on space setaside primarily for professionals providingany religious function. Costs for wardrobeand similar items likewise are considerednonallowable.

(I) Fringe Benefits.1. Life insurance.

A. Types of insurance which are notconsidered an allowable cost area; premiumsrelated to insurance on the lives of officersand key employees are not allowable costareas under the following circumstances:

(I) Where, upon the death of aninsured officer or key employee, the insur-ance proceeds are payable directly to theprovider. In this case, the provider is a directbeneficiary. Insurance of this type is referredto as key-man insurance; and

(II) Where insurance on the lives ofofficers is voluntarily taken out as part of amortgage loan agreement entered into forbuilding construction and, upon the death ofan insured officer, the proceeds are payabledirectly to the lending institution as a creditagainst the loan balance. In this case, theprovider is an indirect beneficiary.

B. Types of insurance which are con-sidered an allowable cost area—

(I) Where credit life insurance isrequired as part of a mortgage loan agree-ment. An example would be insurance onloans granted under certain federal programs;and

(II) Where the relative(s) or estateof the employee, excluding stockholders,partners and proprietors, is the beneficiary.This type of insurance is considered to be afringe benefit and is an allowable cost area tothe extent that the amount of coverage is rea-sonable.

2. Retirement plans.A. Contributions to qualified retire-

ment plans for the benefit of employeesexcluding stockholders, partners, and propri-etors of the provider shall be allowable costareas. Interest income from funded pensionsor retirement plans shall be excluded fromconsideration in determining the allowablecost area.

B. Amounts funded to pension andretirement plans, together with associatedincome, shall be recaptured if not actuallypaid when due, as an offset to expenses onthe cost report form.




employees, excluding stockholders, partners,and proprietors, under deferred compensa-tion plans shall be all allowable cost areaswhen, and to the extent that, the costs areactually paid by the provider. Deferred com-pensation plans must be funded. Providerpayments under unfunded deferred compen-sation plans will be considered as an allow-able cost area only when paid to the partici-pating employee and only to the extentconsidered reasonable.

B. Amount paid by tax-exempt orga-nizations to purchase tax-sheltered annuitiesfor employees shall be treated as deferredcompensation actually paid by the provider.

C. Amounts funded to deferred com-pensation plans together with associatedincome shall be recaptured if not actuallypaid when due, as an offset to expenses onthe cost report form.

(J) Education and Training Expenses.1. The cost of on-the-job training which

directly benefits the quality of health care oradministration at the facility shall be allow-able. Off-the-job training involving extendedperiods exceeding five (5) continuous days isan allowable cost item only when specificallyauthorized in advance by the department.

2. Cost of education and training shallinclude incidental travel costs but will notinclude leaves of absence or sabbaticals.

(K) Organizational Cost Items.1. Organizational cost items may be

included as an allowable cost area on anamortized basis.

2. Organizational cost items include thefollowing: legal fees incurred in establishingthe corporation or other organizations, neces-sary accounting fees, expenses of temporarydirectors, and organizational meetings ofdirectors and stockholders, and fees paid tostates of incorporation.


4. Where a provider did not capitalizeorganizational costs and has written off thosecosts in the year they were incurred, theprovider cannot retroactively capitalize anypart of these costs under the program.

5. Where a provider is organized withina five- (5-) year period prior to entering theprogram and has properly capitalized organi-zational costs using a sixty- (60-) monthamortization period, no change in the rate ofamortization is required. In this instance theunamortized portion of organizational costs isan allowable cost area under the program andshall be amortized over the remaining part ofthe sixty- (60-) month period.

6. For change in ownership after July18, 1984, allowable amortization will be lim-

ited to the prior owner’s allowable unamor-tized portion of organizational cost.

(L) Advertising Costs. Advertising costswhich are reasonable, appropriate, and help-ful in developing, maintaining, and furnish-ing services shall be an allowable cost area.The costs must be common and acceptedoccurrence in the field of the activity of theprovider.

(M) Cost of Suppliers Involving RelatedParties. Costs applicable to facilities, goods,and services furnished to a provider by a sup-plier related to the provider shall not exceedthe lower of the cost to the supplier or theprices of comparable facilities, goods, or ser-vices obtained elsewhere. A provider shallidentify suppliers related to it in the uniformcost report and the type-quantity and costs offacilities, goods, and services obtained fromeach supplier.

(N) Utilization Review. Incurred cost forthe performance of required utilization reviewfor ICF/IID is an allowable cost area. Theexpenditures must be for the purpose of pro-viding utilization review on behalf of a TitleXIX participant. Utilization review costsincurred for Title XVIII and Title XIX mustbe apportioned on the basis of reimbursableparticipant days recorded for each programduring the reporting period.

(O) Minimum Utilization. In the event theoccupancy of a provider is below ninety per-cent (90%), the following cost centers will becalculated as if the provider experiencedninety percent (90%) occupancy: laundry,housekeeping, general, administrative, andplant operation costs. In no case may costsdisallowed under this provision be carriedforward to succeeding periods.

(P) Nonreimbursable Costs.1. Bad debts, charity, and courtesy

allowances are deductions from revenue andare not to be included as allowable costs.

2. Those services that are specificallyprovided by Medicare and MO HealthNetmust be billed to those agencies.

3. Any costs incurred that are related tofund drives are not reimbursable.

4. Costs incurred for research purposesshall not be included as allowable costs.

5. The cost of services provided underthe Title XX program, by contract or subcon-tract, is specifically excluded as an allowableitem.

6. Attorney fees related to litigationinvolving state, local, or federal governmen-tal entities and attorneys’ fees which are notrelated to the provision of LTC services, suchas litigation related to disputes between oramong owners, operators, or administrators.

7. Costs, such as legal fees, accountingand administration costs, travel costs, and thecosts of feasibility studies, which areattributable to the negotiation or settlement ofthe sale or purchase of any capital asset byacquisition of merger for which any payment

has been previously made under the program. (Q) Other Revenues. Other revenues,

including those listed that follow and exclud-ing amounts collected under paragraph(5)(A)8. will be deducted from the total allow-able cost and must be shown separately in thecost report by use of a separate schedule ifincluded in the gross revenue: income fromtelephone services; sale of employee andguest meals; sale of medical abstracts; sale ofscrap and waste food or materials; rentalincome; cash, trade, quantity time, and otherdiscounts; purchase rebates and refunds;recovery on insured loss; parking lot rev-enues; vending machine commissions orprofit; sales from drugs to other than partici-pants; income from investments of whatevertype; and room reservation charges for tem-porary leave of absence days which are notcovered services under section (5) of thisrule. Failure to separately account for any ofthe revenues specifically set out previously inthis rule in a readily ascertainable mannershall result in termination from the program.

1. Interest income received from a fund-ed depreciation account will not be deductedfrom allowable operating costs provided thatinterest is applied to the replacement of theasset being depreciated.

2. Cost centers or operations specifiedby the provider in paragraph (7)(R)3. of thisrule shall not have their associated cost orrevenues included in the covered costs or rev-enues of the facility.

3. Restricted and unrestricted funds.A. Restricted funds as used in this

rule mean those funds, cash or otherwise,including grants, gifts, taxes, and incomefrom endowments, which must be used onlyfor a specific purpose designated by thedonor. Those restricted funds which are nottransferred funds and are designated by thedonor for paying operating costs will be offsetfrom the total allowable expenses. If anadministrative body has the authority to rere-strict restricted funds designated by the donorfor paying operating costs, the funds will notbe offset from total allowable expenses.

B. Unrestricted funds as used in thisrule mean those funds, cash or otherwise,including grants, gifts, taxes, and incomefrom endowments, that are given to aprovider without restriction by the donor asto their use. These funds can be used in anymanner desired by the provider. However,those unrestricted funds which are not trans-ferred funds and are used for paying operat-ing costs will be offset from total allowableexpenses.

C. Transferred funds as used in thisrule are those funds appropriated through alegislative or governmental administrativebody’s action, state or local, to a state or localgovernment provider. The transfer can bestate-to-state, state-to-local, or local-to-localprovider. These funds are not considered a


Secretary of State


grant or gift for reimbursement purposes, sohaving no effect on the provider’s allowablecost under this plan.

(R) Apportionment of Costs to MOHealthNet Participant Residents.

1. Provider’s allowable cost areas shallbe apportioned between MO HealthNet pro-gram participant residents and other patientsso that the share borne by the MO HealthNetprogram is based upon actual servicesreceived by program participants.

2. To accomplish this apportionment,the ratio of participant residents’ charges tototal patient charges for the service of eachancillary department may be applied to thecost of this department. To this shall be addedthe cost of routine services for MO Health-Net program participant residents determinedon the basis of a separate average cost perdiem for general routine care areas or at theoption of the provider on the basis of overallroutine care area.

3. So that its charges may be allowablefor use in apportioning costs under the pro-gram, each provider shall have an establishedcharge structure which is applied uniformlyto each patient as services are furnished tothe patient and which is reasonable and con-sistently related to the cost of providing theseservices.

4. Average cost per diem for generalroutine services means the amount computedby dividing the total allowable patient costsfor routine services by the total number ofpatient days of care rendered by the providerin the cost-reporting period.

5. A patient day of care is that period ofservice rendered a patient between the cen-sus-taking hours on two (2) consecutive days,including the twelve (12) temporary leave ofabsence days per any period of six (6) consec-utive months as specifically covered undersection (5) of this rule, the day of dischargebeing counted only when the patient wasadmitted the same day. A census log shall bemaintained in the facility for documentationpurposes. Census shall be taken daily at mid-night. A day of care includes those overnightperiods when a participant is away from thefacility on a facility-sponsored group trip andremains under the supervision and care offacility personnel.

6. ICF/IID facilities that provide inter-mediate care services to MO HealthNet par-ticipants may establish distinct part cost cen-ters in their facility provided that adequateaccounting and statistical data required toseparately determine the nursing care cost ofeach distinct part is maintained. Each distinctpart may share the common services andfacilities, such as management services,dietary, housekeeping, building maintenance,and laundry.

7. In no case may a provider’s allowablecosts allocated to the MO HealthNet programinclude the cost of furnishing services to per-

sons not covered under the MO HealthNetprogram.

(S) Return on Equity.1. A return on a provider’s net equity

shall be an allowable cost area. 2. The amount of return on a provider’s

net equity shall not exceed twelve percent(12%).

3. An owner’s net equity is comprised ofinvestment capital and working capital.Investment capital includes the investment inbuilding, property, and equipment (cost ofland, mortgage payments toward principle,and equipment purchase less the accumula-tive depreciation). Working capital representsthe amount of capital which is required toinsure proper operation of the facility.

4. The return on owner’s net equity shallbe payable only to proprietary providers.

5. A provider’s return on owner’s netequity shall be apportioned to theMO HealthNet program on the basis of theprovider’s MO HealthNet program reim-bursable participant resident days of care tototal resident days of care during the cost-reporting period. For the purpose of this cal-culation, total resident days of care shall bethe greater of ninety percent (90%) of theprovider’s certified bed capacity or actualoccupancy during the cost year.


1. Each provider shall establish a twelve-(12-) month fiscal period which is to be desig-nated as the provider’s fiscal year. An annualcost report for the fiscal year shall be submit-ted by the provider to the department on formsto be furnished for that purpose. The complet-ed cost report shall be submitted by eachprovider the first day of the sixth month fol-lowing the close of the fiscal period.

2. Unless adequate and current docu-mentation in the following areas has beenfiled previously with the department, authen-ticated copies of the following documentsmust be submitted with the cost reports:authenticated copies of all leases related tothe activities of the facility; all managementcontracts, all contracts with consultants; fed-eral and state income tax returns for the fiscalyear; and documentation of expenditures, byline item, made under all restricted and unre-stricted grants. For restricted grants, a state-ment verifying the restriction as specified bythe donor.


4. If a cost report is more than ten (10)days past due, payment shall be withheldfrom the facility until the cost report is sub-mitted. Upon receipt of a cost report pre-pared in accordance with this regulation, thepayments that were withheld will be released

to the provider. For cost reports which aremore than ninety (90) days past due, thedepartment may terminate the provider’s MOHealthNet participation agreement and if ter-minated, retain all payments which have beenwithheld pursuant to this provision.

5. If a provider notifies, in writing, thedirector of the Institutional ReimbursementUnit of the division prior to the change ofcontrol, ownership, or termination of partici-pation in the MO HealthNet program, thedivision will withhold all remaining paymentsfrom the selling provider until the cost reportis filed. The fully completed cost report withall required attachments and documentationis due the first day of the sixth month afterthe date of change of control, ownership, ortermination. Upon receipt of a cost reportprepared in accordance with this regulation,any payment that was withheld will bereleased to the selling provider.

(B) Certification of Cost Reports.1. The accuracy and validity of any cost

report must be certified. Certification mustbe made by one (1) of the following persons(who must be authorized by the governingbody of the facility to make the certificationand will furnish proof of the authorization):an incorporated entity, an officer of the cor-poration; for a partnership, a partner; for asole proprietorship or sole owner, the owner;or for a public facility, the chief administra-tive officer of the facility. The cost reportmust also be notarized by a licensed notarypublic.

2. Certification statement.Form of Certification

Misrepresentation or falsifications of anyinformation contained in this report may bepunishable by fine, imprisonment, or both,under state or federal law.

Certification by officer or administrator ofprovider:

I hereby certify that I have read the abovestatement and that I have examined theaccompanying cost report and supportingschedules prepared by ______________________________________________________

(Provider’s name(s) and number(s))for the cost report period beginning,_________________, 20 ______ and ending_________________, 20_____, and that tothe best of my knowledge and belief, it is atrue, correct, and complete statement pre-pared from the books and records of theprovider in accordance with applicableinstructions, except as noted.______________ __________ __________

(Signature) (Title) (Date) (C) Adequacy of Records.

1. The provider must make available tothe department or its duly authorized agent,including federal agents from Health andHuman Services (HHS), at all reasonabletimes, the records as are necessary to permit



review and audit of provider’s cost reports.Failure to do so may lead to sanctions statedin section (8) of this rule or other sanctionsavailable in section (9) of this rule.


(D) Accounting Basis.1. The cost report submitted must be

based on the accrual basis of accounting. 2. Governmental institutions that operate

on a cash or modified cash basis of account-ing may continue to use those methods, pro-vided appropriate treatment of capital expen-ditures is made.

(E) Audits.1. Cost reports shall be based upon the

provider’s financial and statistical recordswhich must be capable of verification byaudit.

2. If the provider has included the costof a certified audit of the facility as an allow-able cost item to the plan, a copy of that auditreport and accompanying letter shall be sub-mitted without deletions.

3. The annual cost report for the fiscalyear of the provider may be subject to auditby the Department of Social Services or itscontracted agents. Twelve- (12-) month costreports for new construction facilitiesrequired to be submitted under section (4) ofthis rule may be audited by the department orits contracted agents prior to establishment ofa permanent rate.

4. The department will conduct a deskreview of all cost reports after submission bythe provider and shall provide for on-siteaudits of facilities wherever cost variances orexceptions are noted by their personnel.

5. The department shall retain the annu-al cost report and any working papers relatingto the audits of those cost reports for a periodof not less than seven (7) full years from thedate of submission of the report or comple-tion of the audit.

6. Those providers having an annual TitleXIX bed-day ratio on total bed days or certi-fied beds of greater than sixty percent (60%)or an annual Title XIX payment of two hun-dred thousand dollars ($200,000) or more, orboth, shall be required, for at least the firsttwo (2) fiscal years of participation in theplan, to have an annual audit of their financialrecords by an independent certified publicaccountant. The auditor may issue a qualifiedaudit report stating that confirmations ofaccounts receivable and accounts payable arenot required by the plan. For the purposes ofthe paragraph, the Department of Social Ser-vices will only accept an unqualified opinionfrom a certified public accounting firm. Acopy of the audit report must be submitted tothe department to support the annual costreport of the facility.

(9) Sanctions and Overpayments.(A) Sanctions may be imposed against a

provider in accordance with 13 CSR 70-3.030 and other federal or state statutes andregulations.

(B) In the case of overpayments toproviders based on, but not limited to, fieldor audit findings or determinations based ona comprehensive operational review of thefacility, the provider shall repay the overpay-ment in accordance with the provisions as setforth in 13 CSR 70-3.030.

(10) Exceptions.(A) For those MO HealthNet-eligible par-

ticipant-patients who have concurrent Medi-care Part A skilled nursing facilities benefitsavailable, MO HealthNet reimbursement forcovered days of stay in a qualified facility willbe based on the coinsurance as may beimposed under the Medicare Program.

(B) The Title XIX reimbursement rate forout-of-state providers shall be set by one (1)of the following methods:

1. For providers which provided ser-vices of fewer than one thousand (1,000)patient days for Missouri Title XIX partici-pants, the reimbursement rate shall be therate paid for comparable services and level-of-care by the state in which the provider islocated; and

2. For providers which provide servicesof one thousand (1,000) or more patient daysfor Missouri Title XIX participants, the reim-bursement rate shall be the lower of—

A. The rate paid for comparable ser-vices and level-of-care by the state in whichthe provider is located; or

B. The rate calculated in sections (4)and (6) of this rule.

(11) Payment Assurance.(A) The state will pay each provider, which

furnished the services in accordance with therequirements of the state plan, the amountdetermined for services furnished by theprovider according to the standards and meth-ods set forth in these rules.

(B) Where third-party payment is involved,MO HealthNet will be the payor of last resortwith the exception of state programs such asVocational Rehabilitation and the MissouriCrippled Children’s Service. Procedures forremitting third-party payments are providedin the MO HealthNet program provider man-uals.

(12) Provider Participation. Payments madein accordance with the standards and methodsdescribed in this rule are designed to enlistparticipation of a sufficient number ofproviders in the program so that eligible per-sons can receive medical care and servicesincluded in the state plan at least to the extentthese services are available to the generalpublic.

(13) Payment in Full. Participation in the pro-gram shall be limited to providers who acceptas payment in full for covered services ren-dered to MO HealthNet participants, theamount paid in accordance with these rulesand applicable copayments.

(14) Plan Evaluation. Documentation will bemaintained to effectively monitor and evalu-ate experience during administration of thisrule.

APPENDIX ARoutine Covered

Medical Supplies and ServicesABD PadsA & D OintmentAdhesive TapeAerosol Inhalators, Self-ContainedAerosol, Other TypesAir MattressesAir P.R. MattressesAirway OralAlcoholAlcohol PlastersAlcohol SpongesAntacids, NonlegendApplicators, Cotton-TippedApplicators, Swab-EezAquamatic K Pads (water-heated pad)Arm SlingsAsepto SyringesBaby PowderBandagesBandages (elastic or cohesive)BandaidsBasinsBed Frame Equipment (for certain

immobilized bed patients)Bed RailsBedpan, FractureBedpan, RegularBedside TissuesBenzoinBibsBottle, SpecimenCanesCannula NasalCatheter IndwellingCatheter PlugsCatheter TraysCatheter (any size)Colostomy BagsComposite PadsCotton BallsCrutchesCustomized Crutches, Canes, and

WheelchairsDecubitus Ulcer PadsDeodorantsDisposable UnderpadsDonutsDouche BagsDrain TubingDrainage BagsDrainage Sets


Secretary of State


Drainage TubesDressing TrayDressings (all)Drugs, Stock (excluding Insulin)Enema CanEnema SoapEnema SuppliesEnema UnitEnemasEquipment and Supplies for Diabetic

Urine TestingEye PadsFeeding TubesFemale UrinalFlotation Mattress or Biowave

MattressFlotation Pads, Turning

Frames, or bothFolding Foot CradleGastric Feeding UnitGauze SpongesGloves, Unsterile and SterileGowns, HospitalGreen SoapHand-FeedingHeat CradleHeating PadsHeel ProtectorHot Pack MachineIce BagsIncontinency CareIncontinency Pads and PantsInfusion Arm BoardsInhalation Therapy SuppliesIntermittent Positive Pressure

Breathing Machine (IPPB)Invalid RingIrrigation BulbsIrrigation TraysI.V. TraysJelly, LubricatingLaxatives, NonlegendLines, ExtraLotion, Soap, and OilMale UrinalMassages (by nurses)Medical Social ServicesMedicine CupsMedicine DropperMerthiolate AerosolMouthwashesNasal CannulaNasal CatheterNasal Catheter, Insertion and TubeNasal Gastric TubesNasal Tube FeedingNebulizer and Replacement KitNeedles (hypodermic, scalp, vein)Needles (various sizes)Nonallergic TapeNursing Services (all) regardless of

level including the administration ofoxygen and restorative nursing care

Nursing Supplies and Dressing (otherthan items of personal comfort orcosmetic)

Overhead Trapeze EquipmentOxygen Equipment (such as IPPB

machines and oxygen tents)Oxygen MaskPadsPeroxidePitcherPlastic BibPump (aspiration and suction)RestraintsRoom and Board (semiprivate or

private if necessitated by a medical or social condition)

Sand BagsScalpelSheepskinSpecial DietsSpecimen CupsSpongesSteam VaporizerSterile PadsStomach TubesStool Softeners, NonlegendSuction CatheterSuction MachinesSuction TubeSurgical Dressings (including sterile

sponges)Surgical PadsSurgical TapeSuture Removal KitSuture TraysSyringes (all sizes)Syringes, DisposableTape (for laboratory test)Tape (nonallergic or butterfly)Testing Sets and Refills (S & A)Tongue DepressorsTracheostomy SpongesTray ServiceTubing I.V. Trays, Blood Infusion

Set, I.V. TubingUnderpadsUrinary Drainage TubeUrinary Tube and BottleUrological SolutionsVitamins, NonlegendWalkersWater PitchersWheelchairs

AUTHORITY: sections 208.153, 208.159,and 208.201, RSMo 2016.* This rule was pre-viously filed as 13 CSR 40-81.083. Originalrule filed Aug. 13, 1982, effective Nov. 11,1982. Rescinded: Filed July 12, 1984, effec-tive Oct. 11, 1984. Readopted: Filed July 3,1986, effective Nov. 1, 1986. Amended: FiledDec. 16, 1986, effective April 26, 1987.Emergency amendment filed June 19, 1987,effective July 1, 1987, expired Oct. 29, 1987.Amended: Filed Aug. 18, 1987, effective Oct.25, 1987. Emergency amendment filed Feb.5, 1988, effective Feb. 15, 1988, expired June13, 1988. Amended: Filed Feb. 5, 1988,effective June 11, 1988. Emergency amend-

ment filed Dec. 16, 1988, effective Jan. 1,1989, expired May 1, 1989. Amended: FiledDec. 5, 1988, effective Feb. 24, 1989.Amended: Filed Dec. 16, 1988, effectiveMarch 11, 1989. Amended: Filed Aug. 16,1989, effective Nov. 11, 1989. Amended:Filed Dec. 1, 1989, effective Feb. 25, 1990.Rescinded and readopted: Filed March 5,1990, effective June 11, 1990. Amended:Filed May 30, 1990, effective Sept. 28, 1990.Emergency amendment filed Nov. 15, 1991,effective Dec. 3, 1991, expired April 1, 1992.Emergency amendment filed March 13, 1992,effective April 2, 1992, expired July 30,1992. Amended: Filed Nov. 15, 1991, effec-tive April 9, 1992. Emergency amendmentfiled July 17, 1992, effective Sept. 1, 1992,expired Dec. 29, 1992. Emergency amend-ment filed Dec. 8, 1992, effective Dec. 31,1992, expired April 28, 1993. Amended:Filed July 17, 1992, effective April 8, 1993.Amended: Filed Dec. 14, 1992, effective June7, 1993. Amended: Filed Nov. 21, 1994,effective June 30, 1995. Emergency amend-ment filed Dec. 15, 1995, effective Jan. 1,1996, expired June 28, 1996. Amended: FiledOct. 10, 1995, effective May 30, 1996.Amended: Filed Oct. 16, 1995, effective May30, 1996. Emergency amendment filed Feb.23, 1999, effective March 5, 1999, expiredAug. 31, 1999. Amended: Filed May 27,1999, effective Nov. 30, 1999. Emergencyamendment filed Sept. 20, 1999, effectiveOct. 1, 1999, expired March 29, 2000.Amended: Filed Feb. 14, 2001, effective Aug.30, 2001. Emergency amendment filed Jan.24, 2007, effective Feb. 3, 2007, expired Aug.1, 2007. Amended: Filed Jan. 16, 2007,effective July 30, 2007. Emergency amend-ment filed June 20, 2007, effective July 1,2007, expired Dec. 27, 2007. Amended: FiledJune 20, 2007, effective Jan. 30, 2008. Emer-gency amendment filed June 18, 2008, effec-tive July 1, 2008, expired Dec. 28, 2008.Amended: Filed July 1, 2008, effective Jan.30, 2009. Emergency amendment filed Sept.20, 2011, effective Oct. 1, 2011, expiredMarch 29, 2012. Amended: Filed Sept. 20,2011, effective March 30, 2012. Amended:Filed Dec. 13, 2013, effective June 30, 2014.Emergency amendment filed Aug. 15, 2016,effective Sept. 1, 2016, expired Feb. 27, 2017.Amended: Filed Aug. 15, 2016, effectiveMarch 30, 2017. Emergency amendment filedAug. 22, 2017, effective Sept. 1, 2017,expired Feb. 27, 2018. Amended: Filed Aug.22, 2017, effective Feb. 28, 2018.




13 CSR 70-10.040 Medicaid Eligibility andPreadmission Screening for Mentally Illand Mentally Retarded Individuals

PURPOSE: This rule outlines the preadmis-sion screening requirements related to eligi-bility for Title XIX.

PUBLISHER’S NOTE: The publication of thefull text of the material that the adoptingagency has incorporated by reference in thisrule would be unduly cumbersome or expen-sive. Therefore, the full text of that materialwill be made available to any interested per-son at both the Office of the Secretary of Stateand the office of the adopting agency, pur-suant to section 536.031.4, RSMo. Suchmaterial will be provided at the cost estab-lished by state law.

(1) An individual who is admitted to a Med-icaid certified bed on or after January 1,1989, and has not been screened for mentalillness and mental retardation prior to admis-sion to a Medicaid-certified nursing facility(NF) bed or who does not have a valid specialadmission exemption will not be eligible forTitle XIX payments to be made on his/herbehalf for NF services.

(A) This rule incorporates by reference 42Code of Federal Regulations (CFR)483.20(m)(1) and (2).

(B) For purposes of this rule an individualis considered to have mental illness if theindividual has a serious mental illness asdefined in 42 CFR 483.102(b)(1) which ishereby incorporated by reference.

(C) For purposes of this rule an individualis considered to be mentally retarded if theindividual is mentally retarded as defined in42 CFR 483.102(b)(3), which is herebyincorporated by reference, or is a person witha related condition as described in 42 CFR435.1009, which is hereby incorporated byreference.

(2) The requirement for preadmission screen-ing applies whether the individual is a Medi-care beneficiary, Medicaid recipient or pri-vate pay.

(3) Preadmission screening and residentreviews (PASARR) will include an assess-ment of the individual’s:

(A) Physical condition;(B) Mental condition; and(C) Need for specialized services for men-

tal illness or mental retardation.

(4) For purposes of this rule, the term “spe-cialized services” is defined for individualswith—

(A) Mental illness as the implementation ofan individualized plan of care developed underand supervised by a physician, provided by aphysician and other qualified mental healthprofessionals, that prescribes specific thera-

pies and activities for the treatment of per-sons who are experiencing an acute episodeof serious mental illness which necessitatessupervision by trained mental health person-nel; and

(B) Mental retardation or other relatedcondition(s) as a continuous program for eachclient, which includes aggressive, consistentimplementation of a program of specializedand generic training, treatment, health ser-vices and services that are directed towardsthe acquisition of the behaviors necessary forthe client to function with as much self-deter-mination and independence as possible; andthe prevention or deceleration of regressionor loss of current optimal function status.Specialized services do not include servicesto maintain generally independent clientswho are able to function with little supervi-sion or in the absence of a continuous treat-ment program.

(5) Medical information needed to do theassessments will be furnished by the attend-ing physician. Other information needed tomake the assessments, such as social historyand behavior, may be furnished by the indi-vidual, guardian, family members, socialworkers or other persons.

(6) The preadmission screening and residentreview process will be divided into two (2)parts: Level I and Level II.

(A) The purpose of a Level I screening is toidentify a nursing facility applicant or residentwho is known or suspected to be mentally ill,mentally retarded or developmentally dis-abled.

(B) The purpose of a Level II screening isto confirm that the individual is mentallyimpaired and to determine whether the indi-vidual needs specialized services and deter-mine if a nursing facility is an appropriatesetting. If a determination is made that place-ment in an NF is inappropriate, no Title XIXvendor payments will be made or continue tobe made in the case of a resident already inthe NF.

(7) Any individual identified to be or suspect-ed to be mentally ill, mentally retarded ordevelopmentally disabled by the Level Iscreening may require a Level II screening.A Level II screening must be performed priorto admittance into a certified bed located inan NF, unless a valid special admission cate-gory applies.

(A) The Level II screening shall be per-formed by the Department of Mental Healthor its designee. If a review indicates that spe-cialized services are required at a level of carethat can only be furnished in an intermediatecare facility for the mentally retarded(ICF/MR), within the Home and Community-Based Waiver for the Developmentally Dis-abled or an acute care mental hospital, thatindividual is inappropriate for admission or

continued stay in an NF. This will be trueeven if the individual meets the eighteen (18)-point count under 13 CSR 15-9.030 neededfor authorization of Medicaid nursing facilitypayments.

1. If an individual described in subsec-tion (7)(A) has medical needs which can onlybe met in an NF, as confirmed by and recom-mended by a Level II screening and commu-nicated to the nursing facility by the Divisionof Aging, that individual may be admitted orcontinue to remain in an NF. If the medicalcondition improves and nursing needs couldbe met in other settings, the individual shallbe discharged.

2. Notice of a decision resulting from aLevel II screening shall be sent by the Divi-sion of Aging to the referring entity who sub-mitted the Level I screening forms and theproposed placement facility, if different.

(B) Any individual suspected of beingmentally ill, mentally retarded or develop-mentally disabled by the Level II process andwho has been admitted to an NF shall be sub-ject to a Level II preadmission screening/res-ident review. Any individual determinedthrough the Level II process to be mentallyill, mentally retarded or developmentally dis-abled and to require specialized services shallbe discharged if a Level II screening deter-mines nursing care needs can be met in othersettings regardless of the point count under13 CSR 15-9.030.

(C) Special admission categories are as fol-lows:

1. A person who qualifies for a specialadmission category shall have mental healthscreen performed as detailed per the follow-ing:

A. Terminal illness. The person iscertified by a physician to be terminally ill.As defined by the Social Security Act an indi-vidual is considered to be terminally ill ifthere is a medical prognosis that the individ-ual’s life expectancy is six (6) months or less;and

B. Severely ill. The person iscomatose, ventilator dependent, functions atbrain stem level or has a diagnosis of chronicobstructive pulmonary disease, severeParkinson’s disease, Huntington’s disease,Amyotrophic Lateral Sclerosis or congestiveheart failure which results in a level of phys-ical impairment so severe the individualcould not be expected to benefit from special-ized services; and

2. The following special admission cate-gories may require a mental health evaluationfollowing admission:

A. Direct transfer from a hospital—Ifa physician attests that the individual is likelyto need thirty (30) days or less of nursingfacility care for the condition for which theindividual was hospitalized, no Level IIscreening is necessary and the individual isexempt from the PASARR process. Nursing


Secretary of State


facility payment will be made for no morethan thirty (30) days. If it becomes apparentthat the individual will need longer than thir-ty (30) days, the facility must immediatelynotify the Division of Aging. If a continuedstay is approved, a Level II screening may beperformed;

B. Emergency provisional admis-sion—This category is for a situation inwhich an individual needs placement to pro-tect the individual from serious physical harmto self or others. The nursing facility mustcontact the Division of Aging ElderlyAbuse/Neglect hotline to make a formalrequest. This special admission categoryrequires prior authorization by the Divisionof Aging as an emergency. No more thanseven (7) days will be allowed for an emer-gency admission. The Division of FamilyServices will manage those dates based oninformation from the Division of Aging. Ifthe resident needs to stay in the facilitylonger than seven (7) days, the facility mustimmediately notify the Division of Aging todetermine continued stay. A Level II screen-ing may be performed after the initial seven(7)-day period; and

C. Respite care—An individual maybe admitted and remain in a facility for thirty(30) consecutive days or less with a forty-two(42)-day maximum in twelve (12) months inorder to provide respite for the individual’scaregiver. A Level II screening is notrequired. The Division of Family Serviceswill control the nursing facility authorizedpayment dates by means of a form they sendto the state office. No payment will be madeto the nursing facility beyond the thirty (30)days. If a situation arises in which the stay islonger than thirty (30) days, the nursing facil-ity must contact the Division of Aging. If acontinued stay is authorized, a Level IIscreening may be performed.

(8) The Department of Social Services andthe Department of Mental Health will havejoint responsibility for the preadmissionscreening process.

AUTHORITY: sections 208.153, and208.201, RSMo 1994.* Emergency rule filedDec. 30, 1988, effective Jan. 10, 1989,expired April 29, 1989. Original rule filedFeb. 15, 1989, effective April 27, 1989.Amended: Filed June 6, 1989, effective Aug.24, 1989. Amended: Filed July 23, 1991,effective Dec. 9, 1991. Amended: Filed May27, 1999, effective Jan. 30, 2000.

*Original authority: 208.153, RSMo 1967, amended1967, 1973, 1989, 1990, 1991 and 208.201, RSMo 1987.

13 CSR 70-10.050 Pediatric Nursing CarePlan(Rescinded August 30, 2018)

AUTHORITY: sections 208.153, 208.159 and208.201, RSMo 2000. Original rule filedSept. 26, 1989, effective Feb. 11, 1990.Emergency amendment filed Oct. 5, 1992,effective Nov. 1, 1992, expired Feb. 28, 1993.Emergency amendment filed Feb. 16, 1993,effective Feb. 28, 1993, expired June 27,1993. Amended: Filed Oct. 5, 1992, effectiveMay 6, 1993. Amended: Filed Oct. 16, 1995,effective May 30, 1996. Emergency amend-ment filed Oct. 15, 1996, effective Oct. 25,1996, expired April 22, 1997. Emergencyamendment filed Oct. 22, 1996, effectiveNov. 1, 1996, expired April 29, 1997. Emer-gency amendment filed Aug. 12, 1997, effec-tive Sept. 1, 1997, expired Feb. 27, 1998.Amended: Filed Aug. 12, 1997, effective Feb.28, 1998. Amended: Filed May 27, 1999,effective Nov. 30, 1999. Emergency amend-ment filed, Sept. 20, 1999, effective Oct. 1,1999, expired March 29, 2000. Emergencyamendment filed July 18, 2000, effective July28, 2000, expired Jan. 24, 2001. Amended:Filed June 30, 2000, effective Feb. 28, 2001.Amended: Filed Nov. 15, 2001, effective May30, 2002. Rescinded: Filed Jan. 16, 2018,effective Aug. 30, 2018.

13 CSR 70-10.060 Retrospective Reim-bursement Plan for State-Operated Facili-ties for ICF/MR Services

PURPOSE: This rule establishes a paymentplan for state-operated providers of servicesrequired by the Code of Federal Regulations.The plan describes principles to be followedby Title XIX intermediate care facility/men-tally retarded providers in making financialreports and presents the necessary proce-dures for setting rates, making adjustmentsand auditing the cost reports.

PUBLISHER’S NOTE: The secretary of statehas determined that the publication of theentire text of the material which is incorpo-rated by reference as a portion of this rulewould be unduly cumbersome or expensive.Therefore, the material which is so incorpo-rated is on file with the agency who filed thisrule, and with the Office of the Secretary ofState. Any interested person may view thismaterial at either agency’s headquarters orthe same will be made available at the Officeof the Secretary of State at a cost not toexceed actual cost of copy reproduction. Theentire text of the rule is printed here. Thisnote refers only to the incorporated by refer-ence material. The forms mentioned in thisrule follow 13 CSR 70-10.010.

(1) Objectives. The retrospective rate plandescribed in this rule shall apply to state-operated intermediate care facility/mentally

retarded (ICF/MR) facilities for dates of ser-vice on and after March 1, 1990, and theobjective of this plan is to provide reimburse-ment of allowable cost.

(2) General Principles. The Missouri MedicalAssistance program shall reimburse qualifiedproviders of ICF/MR services based solelyon the individual MO HealthNet participant’sdays of care (within benefit limitations) mul-tiplied by the facility’s Title XIX per diemrate less any payments made by participantsas described in sections (4) and (5).

(3) Definitions.(A) Allowable cost areas. Those cost areas

which are allowable for allocation to the MOHealthNet program based upon the principlesestablished in this plan. The allowability ofcost areas not specifically addressed in thisplan will be based upon criteria of the Medi-care Provider Reimbursement Manual (HIM-15) and section (7) of this rule.

(B) Cost report. The cost report shall detailthe cost of rendering covered services for thefiscal reporting period. Providers must filethe cost report on forms provided by and inaccordance with the procedures of the depart-ment.

(C) Department. The department, unlessotherwise specified, refers to the MissouriDepartment of Social Services.

(D) Director. The director, unless other-wise specified, refers to the director, Mis-souri Department of Social Services.

(E) Division. The division, unless other-wise specified, refers to the MO HealthNetDivision.

(F) Effective date. The plan effective dateshall be for services furnished on and afterMarch 1, 1990.

(G) ICF/MR. State-operated facilities cer-tified to provide intermediate care for thementally retarded under the Title XIX pro-gram.

(H) Medicare rate. This is the allowablecost of care permitted by Medicare standardsand principles of reimbursement (42 CFRpart 405).

(I) New construction. Newly built facilitiesor parts for which an approved Certificate ofNeed (CON) or applicable waivers wereobtained and which were newly completedand operational on or after March 1, 1990.

(J) Patient days. Patient day of care is thatperiod of service rendered a patient betweenthe census-taking hours on two (2) consecu-tive days, including the twelve (12) temporaryleave of absence days per any period of six (6)consecutive months as specifically coveredunder section (6) of this rule, the day of dis-charge being counted only when the patientwas admitted the same day. A census log shall



be maintained in the facility for documenta-tion purposes. Census shall be taken daily atmidnight. A day of care includes thoseovernight periods when a participant is awayfrom the facility on a facility-sponsoredgroup trip and remains under the supervisionand care of facility personnel.

(K) Providers. A provider under the Retro-spective Reimbursement Plan is a state-oper-ated ICF/MR facility with a valid participa-tion agreement in effect on or after February28, 1990, with the Missouri Department ofSocial Services for the purpose of providinglong-term care (LTC) services to Title XIX-eligible participants.

(L) Reasonable and adequate reimburse-ment. Reimbursement levels which meet theneeds of an efficiently and economicallyoperated facility.

(4) Interim Rate.(A) For service dates beginning March 1,

1990 through and including June 30, 1991,each provider shall be assigned an interim perdiem rate for reimbursement under the Mis-souri Medicaid program. The interim per diemrate will be based on the provider’s fiscal yearFY-89 desk-reviewed allowable costs inflatedforward on the basis of the historical rate ofchange. This rate of change shall be thirty-five percent (35%) of the following amount:the percentage increase between the FY-87weighted mean allowable cost per patient dayfor all state-operated facilities (WMACP-PDSOF) and the FY-89 WMACPPDSOFannualized by dividing by two (2).

ExampleFY-87 WMACPPDSOF $128.06FY-89 WMACPPDSOF $161.47Percent of Change

($161.47 - $128.06) ÷ $128.06 = 26.09%Annualized Percent of Change

(26.09% ÷ 2) = 13.04%35% of Annualized Percent of Change

(13.04% × 35%) = 4.57%Facility FY-89 Allowable Cost

$24,220,500Facility FY-89 Patient Days 150,000Inflated Cost

($24,220,500 × 104.57%) = $25,327,376Interim Rate

($25,327,376 ÷ 150,000) = $168.85(B) For service dates beginning July 1,

1991 and annually after that, each providershall be assigned an interim per-diem ratebased on the provider’s second prior yeardesk-reviewed allowable costs inflated for-ward on the basis of the historical rate ofchange. This rate of change shall be fifty per-cent (50%) of the following amount: the per-centage increase between the fourth prioryear WMACPPDSOF and the second prioryear WMACPPDSOF annualized by dividingby two (2). For example with the July 1, 1991

interim rate, the fourth prior year is the facil-ity fiscal year ending June 30, 1988, and thesecond prior year is the facility fiscal yearending June 30, 1990.

ExampleFY-88 WMACPPDSOF $160FY-90 WMACPPDSOF $180Percent of Change

($180 - $160) ÷ $160 =12.50%Annualized Percent of Change

($12.50 ÷ 2) = 6.25%50% of Annualized Percent of Change

(6.25% × 50%) = 3.13%Facility FY-90 Allowable Cost

$27,000,000Facility FY-90 Patient Days 150,000Inflated Cost

($27,000,000 × 103.13%) = $27,845,100Interim Rate

($27,845,100 ÷ 150,000) = $185.63

(C) In the case of newly constructed state-operated ICF/MR facilities or existing facili-ties not previously certified to participate inthe Title XIX Program entering the MOHealthNet Program after February 28, 1990,the facilities shall have an interim rate basedon one hundred twenty-five percent (125%)of the weighted mean rate of all providers forthe month prior to entering the MO Health-Net program until the time a second prioryear cost report is available, at which time theprovisions of subsection (4)(B) will apply.

ExampleWeighted Mean Rate of All Providers

(7/01/91) $160Interim Rate Effective (8/01/91)

($160 × 125%) = $200

(D) When information contained in a facil-ity’s cost report is found to be fraudulent,misrepresented or inaccurate, the facility’sinterim rate at the discretion of the divisionmay be both retroactively and prospectivelyadjusted if the fraudulent, misrepresented orinaccurate information as originally reportedresulted in establishment of a different inter-im rate than the facility would have receivedin the absence of that information.

(5) Retroactive Adjustments.(A) The division shall desk review the MO

HealthNet cost reports for each facility andshall determine the facility’s allowable costper patient day. This shall be the final perdiem rate for the service dates covered by thecost report. A payment adjustment will bemade equal to the difference between thefinal per diem rate and the interim per diemrate multiplied by the MO HealthNet dayscorresponding to the service dates covered bythe interim per diem rate. For the periodMarch 1, 1990 through June 30, 1990, the

full facility Fiscal Year 1990 Medicaid costreport will be used to establish the final perdiem rate for payment adjustment purposes.

(B) When information contained in a facil-ity’s cost report is found to be fraudulent,misrepresented or inaccurate, the facility’sfinal rate at the discretion of the division maybe both retroactively and prospectivelyadjusted if the fraudulent, misrepresented orinaccurate information as originally reportedresulted in establishment of a different finalrate than the facility would have received inthe absence of that information.

(6) Covered Services and Supplies. ICF/MRservices and supplies covered by the per diemreimbursement rate under this rule, andwhich must be provided, are found in 42CFR 442.100–442.516 and include, amongother services, the regular room, dietary andnursing services or any other services that arerequired for standards of participation or cer-tification, also included are minor medicaland surgical supplies and the use of equip-ment and facilities. These items include, butare not limited to, the following:

(A) All general nursing services including,but not limited to, administration of oxygenand related medications, hand-feeding,incontinency care, tray service and enemas;

(B) Items which are furnished routinelyand relatively uniformly to all participants,for example, gowns, water pitchers, soap,basins and bed pans;

(C) Items such as alcohol, applicators, cot-ton balls, bandaids and tongue depressors;

(D) All nonlegend antacids, nonlegend lax-atives, nonlegend stool softeners and nonle-gend vitamins. All nonlegend drugs in one (1)of these four (4) categories must be providedto residents as needed and no additionalcharge may be made to any party for any ofthese drugs. Facilities may not elect whichnonlegend drugs in any of the four (4) cate-gories to supply; all must be provided asneeded within the existing per-diem rate;

(E) Items which are utilized by individualparticipants but which are reusable andexpected to be available such as ice bags, bedrails, canes, crutches, walkers, wheelchairs,traction equipment and other durable, nonde-preciable medical equipment;

(F) Additional items as specified in theappendix to this plan when required by thepatient;

(G) Special dietary supplements used fortube feeding or oral feeding such as elementalhigh nitrogen diet, including dietary supple-ments written as a prescription item by aphysician;

(H) All laundry services including person-al laundry;

(I) All general personal care serviceswhich are furnished routinely and relatively


Secretary of State


uniformly to all participants for their personalcleanliness and appearance shall be coveredservices; for example, necessary clipping andcleaning of fingernails and toenails, basichair care, shampoos and shaves to the extentnecessary for reasonable personal hygiene.The provider shall not bill the patient orhis/her responsible party for this type of per-sonal service;

(J) All consultative services as required bystate or federal law or rule or for properoperation by the provider. Contracts for thepurchase of these services must accompanythe provider cost report. Failure to do so willresult in the penalties specified in section (9)of this rule;

(K) Semiprivate room and board and pri-vate room and board when necessary to iso-late a participant due to a medical or socialcondition, such as contagious infection, irra-tional loud speech and the like. Unless a pri-vate room is necessary due to a medical orsocial condition, a private room is a noncov-ered service and a MO HealthNet participantor responsible party may pay the differencebetween a facility’s semiprivate charge and itscharge for a private room. MO HealthNetparticipants may not be placed in privaterooms and charged any additional amountabove the facility’s MO HealthNet per diemunless the participant or responsible partyspecifically requests in writing a private roomprior to placement in a private room andacknowledges that an additional amount notpayable by MO HealthNet will be charged fora private room;

(L) Twelve (12) days per any period of six(6) consecutive months during which a par-ticipant is on a temporary leave of absencefrom the facility. These temporary leave ofabsence days specifically must be providedfor in the participant’s plan of care. Periodsof time during which a participant is awayfrom the facility because s/he is visiting afriend or relative are considered temporaryleaves of absence; and

(M) Days when participants are away fromthe facility overnight on facility-sponsoredgroup trips under the continuing supervisionand care of facility personnel.

(7) Allowable Cost Areas.(A) Covered Services and Supplies as

Defined in Section (6) of This Plan. (B) Depreciation.

1. An appropriate allowance for depreci-ation on buildings, furnishings and equipmentwhich are part of the operation and soundconduct of the provider’s business is anallowable cost item. Finder’s fees are not anallowable cost item.

2. The depreciation must be identifiableand recorded in the provider’s accountingrecords, based on the basis of the asset andprorated over the estimated useful life of the

asset using the straight-line method of depre-ciation from the date initially put into service.

3. The basis of assets shall be the lowerof the book value of the provider, fair marketvalue at the time of acquisition or the recog-nized Internal Revenue Service (IRS) taxbasis. Donated assets will be allowed basis tothe extent of recognition of income resultingfrom the donation of the asset. Should a dis-pute arise between a provider and the Depart-ment of Social Services as to the fair marketvalue at the time of acquisition of a deprecia-ble asset and an appraisal by a third party isrequired, the appraisal cost will be sharedproportionately by the MO HealthNet pro-gram and the facility in ratio to MO Health-Net participant reimbursable patient days tototal patient days.

4. Allowable methods of depreciationshall be limited to the straight-line method.The depreciation method used for an assetunder the MO HealthNet program need notcorrespond to the method used by a providerfor non-MO HealthNet purposes; however,useful life shall be in accordance with theAmerican Hospital Association’s Guidelines.Component part depreciation is optional andallowable under this rule.

5. Historical cost is the cost incurred bythe provider in acquiring the asset andpreparing it for use except as provided in thisrule. Usually, historical cost includes coststhat would be capitalized under generallyaccepted accounting principles. For example,in addition to the purchase price, historicalcost would include architectural fees andrelated legal fees. Where a provider has elect-ed to expense certain items such as interestand taxes during construction, the historicalcost basis for MO HealthNet depreciationpurposes may include the amount of theseexpensed items. However, where a providerdid not capitalize these costs and has writtenoff the costs in the year they were incurred,the provider cannot retroactively capitalizeany part of these costs under the program.For Title XIX purposes and this rule, anyasset costing less than five hundred dollars($500) or having a useful life of one (1) yearor less may be expensed and not capitalizedat the option of the provider.


7. Capital expenditures for building con-struction or for renovation costs which are inexcess of one hundred fifty thousand dollars($150,000) and which cause an increase in aprovider’s bed capacity shall not be allowedin the program or depreciation base if thecapital expenditures have not receivedapproved CON or waiver.

8. Amortization of leasehold rights and

related interest and finance costs shall not beallowable costs under this plan.

(C) Interest and Finance Costs.1. Necessary and proper interest on both


2. Interest is the cost incurred for theuse of borrowed funds. Interest on currentindebtedness is the cost incurred for fundsborrowed for a relatively short-term. This isusually for purposes as working capital fornormal operating expenses. Interest on capi-tal indebtedness is the cost incurred for fundsborrowed for capital purposes such as acqui-sition of facilities and capital improvementsand this indebtedness must be amortized overthe life of the loan.


4. To be an allowable cost item, interest(including finance charges, prepaid costs anddiscounts) must be supported by evidence ofan agreement that funds were borrowed andthat payment of interest and repayment of thefunds are required, identifiable in theprovider’s accounting records, relating to thereporting period in which the costs are claimsand necessary and proper for the operation,maintenance or acquisition of the provider’sfacilities.

5. Necessary means that the interest beincurred for a loan made to satisfy a financialneed of the provider and for a purpose relatedto participant care. Loans which result inexcess funds or investments are not consid-ered necessary.

6. Proper means that the interest beincurred at a rate not in excess of what a pru-dent borrower would have had to pay in themoney market existing at the time the loanwas made and provided further the depart-ment shall not reimburse for interest andfinance charges any amount in excess of theprime rate current at the time the loan wasobtained.

7. Income from a provider’s qualifiedretirement fund shall be excluded in consider-ation of the per diem rate.

8. A provider shall amortize financecharges, prepaid interest and discount overthe period of the loan ratably or by means ofthe constant rate of interest method on theunpaid balance.

9. Usual and customary costs excludingfinder’s fees incurred to obtain loans shall betreated as interest expense and shall be allow-able costs over the loan period ratably or bymeans of the constant interest appliedmethod.

10. Usual and customary costs shall be



limited to the lender’s title and recordingfees, appraisal fees, legal fees, escrow feesand closing costs.

11. Interest expense resulting from cap-ital expenditures for building construction orfor renovation costs which are in excess ofone hundred fifty thousand dollars($150,000) and which cause an increase in abed capacity by the provider shall not be anallowable cost item if the expenditure fails tocomply with other federal or state require-ments that promulgate a limitation on reim-bursement for capital expenditures, such asCON.

(D) Rental and Leases.1. Rental and leases of land, buildings,

furnishings and equipment are allowable costareas; provided, that the rented items are nec-essary and not in essence a purchase of thoseassets. Finder’s fees are not an allowable costitem.



4. Determination of reasonable and ade-quate reimbursement for rental and leaseamounts, except in the case of related partieswhich is subject to other provisions of thisplan, may require affidavits of competent,impartial experts who are familiar with thecurrent rentals and leases.



(E) Taxes. Taxes levied on or incurred byproviders shall be allowable cost areas withthe exceptions of the following items:

1. Federal, state or local income andexcess profit taxes including any interest andpenalties paid;

2. Taxes in connection with financing,refinancing or refunding operations such astaxes on the issuance of bond, property trans-fer, issuance or transfer of stocks;

3. Taxes for which exemptions are avail-able to the provider;

4. Special assessments on land whichrepresent capital improvements. These costsshall be capitalized and depreciated over theperiod during which the assessment is sched-uled to be paid;

5. Taxes on property which is not a partof the operation of the provider; and

6. Taxes which are levied against a resi-dent and collected and remitted by theprovider.

(F) Value of Services of Employees.1. Except as provided for in this rule,


2. Services rendered by volunteers, suchas those affiliated with the American RedCross, hospital guilds, auxiliaries, privateindividuals and similar organizations, shallnot be included as an allowable cost area, asthe services traditionally have been renderedon a purely volunteer basis without expecta-tion of any form of reimbursement by theorganization through which the service isrendered or by the person rendering the ser-vice.

3. Services by priests, ministers, rabbisand similar type professionals shall be anallowable cost area, provided that the servicesare not of a religious nature. An example ofan allowable cost area under this sectionwould be a necessary administrative functionperformed by a clergyman. The state will notrecognize building costs on space set asideprimarily for professionals providing any reli-gious function. Costs for wardrobe and simi-lar items likewise are considered nonallow-able.

(G) Fringe Benefits.1. Life insurance.2. Retirement plans. Contributions to

qualified retirement plans, as determined bythe United States IRS, for the benefit ofemployees of the provider shall be allowablecost area.

(H) Education and Training Expenses.1. The cost of training which directly

benefits the quality of health care or adminis-tration at the facility shall be allowable.

2. Cost of education and training shallinclude travel costs incidental to training butwill not include leaves of absence or sabbati-cals.

(I) Advertising Costs. Advertising costswhich are reasonable, appropriate and helpfulin developing, maintaining and furnishingservices shall be an allowable cost area. Thecosts must be common and accepted occur-rence in the field of the activity of theprovider.

(J) Central Office and State Central Ser-vice Costs. Costs which are appropriatelydistributed to the provider as direct costs,properly allocated to the provider, or allocat-ed in accordance with approved cost alloca-tion plans when plans are required, shall beallowable.

(K) Utilization Review. Incurred cost forthe performance of required utilization reviewfor ICF/MR is an allowable cost area. Theexpenditures must be for the purpose of pro-viding utilization review on behalf of Title

XIX participants. Utilization review costsincurred for Title XVIII and XIX must beapportioned on the basis of reimbursable par-ticipant days recorded for each program dur-ing the reporting period.

(L) Minimum Utilization. In the event theoccupancy utilization of a provider is belowninety percent (90%) of its certified bedcapacity, appropriate adjustments shall bemade to the allowable cost areas of theprovider. Fixed costs will be calculated as ifthe provider experienced ninety percent(90%) utilization. The fixed costs are laun-dry, housekeeping, general and administra-tive and plant operation costs. Variable costswill be calculated at actual utilization. Thevariable costs are nursing, dietary and ancil-lary costs. In no case may costs disallowedunder this provision be carried forward tosucceeding periods.

(M) Nonreimbursable Costs.1. Bad debts, charity and courtesy

allowances are deductions from revenue andare not to be included as allowable costs.

2. Those services that are specificallyprovided by Medicare and MO HealthNetmust be billed to those agencies.

3. Any costs incurred that are related tofund drives are not reimbursable.

4. Costs incurred for research purposesshall not be included as allowable costs.

5. The cost of services provided underthe Title XX program, by contract or subcon-tract, is specifically excluded as an allowableitem.

(N) Other Revenues. Other revenues,including those listed that follow, will bededucted from the total allowable cost, andmust be shown separately in the cost reportby use of a separate schedule if included inthe gross revenue: income from telephoneservices; sale of employee and guest meals;sale of medical abstracts; sale of scrap andwaste food or materials; rental income; cash,trade, quantity time and other discounts; pur-chase rebates and refunds; parking lot rev-enues; vending machine commission or prof-it; sales from drugs to other than participants;Medicare Part B revenues; and room reserva-tion charges for temporary leave of absencedays which are not covered services undersection (6) of this rule. Failure to separatelyaccount for any of the revenues specificallyset out previously in this rule in a readilyascertainable manner shall result in termina-tion from the program.

(O) Apportionment of Costs to MOHealthNet Participant Residents. Provider’sallowable cost areas shall be apportionedbetween the certified ICF/MR portion andthe noncertified portion so that the shareborne by the MO HealthNet program is basedupon actual services received by programparticipants.


Secretary of State



1. Each provider shall establish a twelve(12)-month period which is to be designatedas the provider’s fiscal year. An annual costreport for the fiscal year shall be submittedby the provider to the department on forms tobe furnished for that purpose. The completedforms shall be submitted by each providerwithin ninety (90) days following the close ofits fiscal year.

2. Unless adequate and current docu-mentation in the following areas have previ-ously been filed with the department, authen-ticated copies of the following documentsmust be submitted with the cost reports:authenticated copies of all leases related tothe activities of the facility, all managementcontracts and all contracts with consultants.


4. Following the ninety (90)-day period,payments will be withheld from the facilityuntil the cost report is submitted. Uponreceipt of a cost report prepared in accordancewith these rules, the payments that were with-held will be released.

5. If requested in writing, a thirty (30)-day extension of the filing date may be grant-ed for good cause shown.

6. The termination of or by a provider ofparticipation in the program requires that theprovider submit a cost report for the periodending with the date of termination. The costreport is due within forty-five (45) days of thedate of termination. Cost reports under thisparagraph shall conform to the principles ofsection (7). The final payment due providersshall be withheld until their cost report isfiled.

7. Cost reports shall be based upon theprovider’s financial and statistical recordswhich must be capable of verification byaudit.

8. The annual cost report for the fiscalyear of the provider may be subject to auditby the Department of Social Services or itscontracted agents.

9. The department shall retain the annu-al cost report and any working papers relatingto the audits of the cost reports for a periodof not less than seven (7) full years from thedate of submission of the report or comple-tion of the audit.

(B) Certification of Cost Reports.1. The accuracy and validity of any cost

report must be certified. Certification mustbe made by one (1) of the following persons(who must be authorized by the governingbody of the facility to make the certificationand will furnish proof of authorization): anincorporated entity, an officer of the corpora-

tion; for a partnership, a partner; for a soleproprietorship or sole owner, the owner; orfor a public facility, the chief administrativeofficer of the facility. The cost report alsomust be notarized by a licensed notary public.

2. Certification statement.Form of Certification

Misrepresentation or falsification of anyinformation contained in this report may bepunishable by fine, imprisonment, or both,under state or federal law.

Certification by officer or administrator ofprovider:

I hereby certify that I have read the abovestatement and that I have examined theaccompanying Cost Report and supportingschedules prepared by ______________________________________________________

(Provider name(s) and number(s))for the cost report period beginning____________________, 19____ and ending____________________, 19____ and that tothe best of my knowledge and belief, it is atrue, correct and complete statement pre-pared from the books and records of theprovider in accordance with applicableinstructions, except as noted.______________ ___________ _________

(Signature) (Title) (Date) (C) Adequacy of Records.

1. The provider must make available tothe department or its duly authorized agent,including federal agents from the Departmentof Health and Human Services (HHS), at allreasonable times, records as are necessary topermit review and audit of provider’s costreports. Failure to do so may lead to sanc-tions stated in paragraph (8)(A)4. of this ruleor other sanctions available in section (9).


(D) Accounting Basis.1. The cost report submitted must be

based on the accrual basis of accounting. 2. Governmental institutions that operate

on a cash or modified cash basis of account-ing may continue to use those methods, pro-vided appropriate treatment of capital expen-ditures is made.

(9) Sanctions and Overpayments.(A) Sanctions may be imposed against a

provider in accordance with 13 CSR 70-3.030 and other federal or state statutes andregulations.

(B) In the case of overpayments, theprovider shall repay the overpayment inaccordance with the provisions as set forth in13 CSR 70-3.030.

(10) Payment Assurance.(A) The state will pay each provider, which

furnished the services in accordance with therequirements of the state plan, the amountdetermined for services furnished by theprovider according to the standards and meth-ods set forth in these rules.

(B) Where third-party payment is involved,MO HealthNet will be the payor of last resortwith the exception of state programs such asVocational Rehabilitation and the MissouriCrippled Children’s Service. Procedures forremitting third-party payments are providedin the Missouri Medical Assistance (MOHealthNet) Program provider manuals.

(11) Provider Participation. Payments madein accordance with the standards and methodsdescribed in this rule are designed to enlistparticipation of a sufficient number ofproviders in the program so that eligible per-sons can receive medical care and servicesincluded in the state plan at least to the extentthese services are available to the generalpublic.

(12) Payment in Full. Participation in the pro-gram shall be limited to providers who acceptas payment in full for covered services ren-dered to MO HealthNet participants, theamount paid in accordance with these rulesand applicable copayments.

(13) Plan Evaluation. Documentation will bemaintained to effectively monitor and evalu-ate experience during administration of thisplan.

(14) Transition. Cost reports used for thedetermination of the rates and the historicalrate of change shall be adjusted by the divi-sion in accordance with the cost principlesprovided in this plan.

APPENDIX ARoutine Covered Medical Supplies

and ServicesABD PadsA & D OintmentAdhesive TapeAerosol Inhalators, Self-ContainedAerosol, Other TypesAir MattressesAir P.R. MattressesAirway—OralAlcoholAlcohol PlastersAlcohol SpongesAntacids, NonlegendApplicators, Cotton-TippedApplicators, Swab-EezAquamatic K Pads (water-heated pad)Arm SlingsAsepto Syringes



Baby PowderBandagesBandages (elastic or cohesive)BandaidsBasinsBed Frame Equipment (for certain

immobilized bed patients)Bed RailsBedpan, FractureBedpan, RegularBedside TissuesBenzoinBibsBottle, SpecimenCanesCannula—NasalCatheter IndwellingCatheter PlugsCatheter TraysCatheter (any size)Colostomy BagsComposite PadsCotton BallsCrutchesCustomized Crutches, Canes and

WheelchairsDecubitus Ulcer PadsDeodorantsDisposable UnderpadsDonutsDouche BagsDrain TubingDrainage BagsDrainage SetsDrainage TubesDressing TrayDressings (all)Drugs, Stock (excluding Insulin)Enema CanEnema SoapEnema SuppliesEnema UnitEnemasEquipment and Supplies for Diabetic Urine

TestingEye PadsFeeding TubesFemale UrinalFlotation Mattress or Biowave MattressFlotation Pads, Turning Frames, or bothFolding Foot CradleGastric Feeding UnitGauze SpongesGloves, Unsterile and SterileGowns, HospitalGreen SoapHand-FeedingHeat CradleHeating PadsHeel ProtectorHot Pack MachineIce BagsIncontinency Care

Incontinency Pads and PantsInfusion Arm BoardsInhalation Therapy SuppliesIntermittent Positive Pressure Breathing

Machine (IPPB)Invalid RingIrrigation BulbsIrrigation TraysI.V. TraysJelly—LubricatingLaxatives, NonlegendLines, ExtraLotion, Soap and OilMale UrinalMassages (by nurses)Medical Social ServicesMedicine CupsMedicine DropperMerthiolate AerosolMouthwashesNasal CannulaNasal CatheterNasal Catheter, Insertion and TubeNasal Gastric TubesNasal Tube FeedingNebulizer and Replacement KitNeedles (hypodermic, scalp, vein)Needles (various sizes)Nonallergic TapeNursing Services (all) regardless of level,

including the administration of oxygenand restorative nursing care

Nursing Supplies and Dressing (otherthan items of personal comfort or cosmetic)

Overhead Trapeze EquipmentOxygen Equipment (such as IPPB machines

and oxygen tents)Oxygen MaskPadsPeroxidePitcherPlastic BibPump (aspiration and suction)RestraintsRoom and Board (semiprivate or

private if necessitated by a medical orsocial condition)

Sand BagsScalpelSheepskinSpecial DietsSpecimen CupsSpongesSteam VaporizerSterile PadsStomach TubesStool Softeners, NonlegendSuction CatheterSuction MachinesSuction TubeSurgical Dressings (including sterile sponges)Surgical PadsSurgical TapeSuture Removal Kit

Suture TraysSyringes (all sizes)Syringes, DisposableTape (for laboratory tests)Tape (nonallergic or butterfly)Testing Sets and Refills (S & A)Tongue DepressorsTracheostomy SpongesTray ServiceTubing I.V. Trays, Blood Infusion Set, I.V.

TubingUnderpadsUrinary Drainage TubeUrinary Tube and BottleUrological SolutionsVitamins, NonlegendWalkersWater PitchersWheelchairs

AUTHORITY: sections 208.159, RSMo 2000and 208.153 and 208.201, RSMo Supp.2007.* Original rule filed March 5, 1990,effective June 11, 1990. Amended: Filed Dec.14, 1992, effective June 7, 1993. Amended:Filed Aug. 15, 2007, effective March 30,2008.

*Original authority: 208.153, RSMo 1967, amended1967, 1973, 1989, 1990, 1991, 2007; 208.159, RSMo1979; and 208.201, RSMo 1987, amended 2007.

13 CSR 70-10.070 Limitations on Allow-able Nursing Facility Costs to Reserve aBed for Absences Due to Hospital Admis-sion

PURPOSE: This rule outlines the coverage ofnursing facility costs to reserve a bed in anursing facility during an absence from thefacility due to a hospital admission of threedays or less and the limitations related to thatcoverage.

(1) Payment to a nursing facility (NF) forhospital leave days is authorized for days inwhich a Medicaid recipient is absent from theNF due to admission to a hospital for serviceswhich cannot be performed on an outpatientbasis, subject to the following:

(A) The nursing facility in which the Med-icaid resident resides is licensed under Chap-ter 198, RSMo;

(B) The NF is in compliance with all fed-eral and state certification standards;

(C) The occupancy rate of the NF is at orabove ninety-seven point zero percent(97.0%), rounded to four (4) decimal places,of Medicaid certified licensed beds, for thequarter prior to the first day of services pro-vided based on the census for that quarterprovided from the Division of Aging to theDivision of Medical Services;

(D) The Medicaid recipient is admitted to


Secretary of State


a hospital for a medical condition, which can-not be treated on an outpatient basis, with atotal stay of three (3) days or less; and

(E) The hospital provides a discharge planfor the recipient which includes returning tothe facility requesting the hospital leave days.

(2) The payment for hospital leave days shallonly be provided for qualified hospital staysof three (3) days or less. A qualified hospitalstay is one in which the medical conditioncannot be treated on an outpatient basis.

(3) The hospital leave days billed by the nurs-ing facility shall be held in suspense until thenursing home bill, hospital bill and quarterlycensus has been received by the Division ofMedical Services so appropriate payment canbe determined.

(4) Payment for authorized hospital leave daysshall be at the per-diem rate for the respectiveprovider.

(5) For each day that Medicaid reimburses anursing facility, pursuant to this subsection,the Medicaid recipient shall be ineligible forreimbursement to nursing facilities for twootherwise available temporary leave ofabsence days as described in 13 CSR 70-10.010(5)(D). The total hospital leave daysand temporary leave of absence days shall notexceed the limits for the periods defined in 13CSR 70-10.010(5)(D).

AUTHORITY: sections 208.153, RSMo Supp.1991, 208.159, RSMo 1986 and 208.201,RSMo Supp. 1987.* Emergency rule filedDec. 17, 1993, effective Dec. 27, 1993,expired April 25, 1994. Emergency rule filedApril 15, 1994, effective May 1, 1994,expired Aug. 28, 1994. Original rule filedNov. 2, 1993, effective June 6, 1994.

*Original authority: 208.153, RSMo 1967, amended1973, 1989, 1990, 1991; 208.159, RSMo 1979; and208.201, RSMo 1987.

13 CSR 70-10.080 Prospective Reimburse-ment Plan for HIV Nursing Facility Ser-vices

PURPOSE: This rule establishes a paymentplan for HIV nursing facility services. Theplan describes principles to be followed byTitle XIX HIV nursing facility providers inmaking financial reports and presents the nec-essary procedures for setting rates, makingadjustments, and auditing the cost reports.

PUBLISHER’S NOTE: The secretary of statehas determined that the publication of theentire text of the material which is incorpo-rated by reference as a portion of this rule

would be unduly cumbersome or expensive.This material as incorporated by reference inthis rule shall be maintained by the agency atits headquarters and shall be made availableto the public for inspection and copying at nomore than the actual cost of reproduction.This note applies only to the reference mate-rial. The entire text of the rule is printedhere.


(2) Purpose. This regulation establishes amethodology for determination of reimburse-ment rates for human immunodeficiencyvirus (HIV) nursing facilities, operated exclu-sively for persons with HIV that causesacquired immunodeficiency syndrome(AIDS). Subject to limitations prescribedelsewhere in this regulation, a facility’s reim-bursement rate shall be determined by thedivision as described in this regulation. Anyreimbursement rate determined by the divi-sion shall be a final decision and will beimplemented as set forth in the division’sdecision letter. The decisions of the divisionmay be subject to review upon properly filinga complaint with the Administrative HearingCommission (AHC). A nursing facility seek-ing review by the AHC must obtain a stayfrom the AHC to stop the division fromimplementing its final decision if the AHCdetermines the facility meets the criteria for astay and so orders. If the facility appeals thedivision’s decision, it is the responsibility ofthe nursing facility to notify any interestedparties, including but not limited to hospiceproviders, that the rate being received is nota final rate and is subject to change. Federalfinancial participation is available on expen-ditures for services provided within the scopeof the Federal Medicaid Program and madeunder a court order in accordance with 42CFR 431.250.

(3) General Principles.(A) Provisions of this reimbursement regu-

lation shall apply only to HIV nursing facili-ties certified for participation in the MissouriMedical Assistance (Medicaid) Program.

(B) The reimbursement rates determinedby this regulation shall apply only to servicesfor HIV residents provided on or afterDecember 1, 1995.

(C) The effective date of this regulationshall be December 1, 1995.

(D) The Medicaid Program shall providereimbursement for HIV nursing facility ser-vices based solely on the individual Medi-caid-eligible recipient’s covered days of care,

within benefit limitations as determined insubsections (5)(D) and (5)(M) multiplied bythe facility’s Medicaid reimbursement rate.No payments may be collected or retained inaddition to the Medicaid reimbursement ratefor covered services, unless otherwise provid-ed for in this plan. Where third-party pay-ment is involved, Medicaid will be the payorof last resort with the exception of state pro-grams such as Vocational Rehabilitation andthe Missouri Crippled Children’s Services.

(E) The Medicaid reimbursement rate shallbe the lower of:

1. The Medicare (Title XVIII) rate, ifapplicable; or

2. The reimbursement rate as deter-mined in accordance with sections (11), (12),and (13) of this rule.

(F) Medicaid reimbursements shall not bepaid for services provided to Medicaid-eligi-ble recipients during any time period inwhich the facility failed to have a Medicaid participation agreement in effect. A reim-bursement rate may not be established for afacility if a Medicaid participation agreementis not in effect.

(G) When an HIV nursing facility is foundnot in compliance with federal requirementsfor participation in the Medicaid Program,sections 1919(b), (c), and (d) of the SocialSecurity Act (42 U.S.C. 1396r), it may beterminated from the Medicaid Program or itmay have imposed upon it an alternative rem-edy, pursuant to section 1919(h) of the SocialSecurity Act (42 U.S.C. 1396r). In accor-dance with section 1919(h)(3)(D) of theSocial Security Act, the alternative remedy,denial of payment for new admission, is con-tingent upon agreement to repay paymentsreceived if the corrective action is not takenin accordance with the approved plan andtimetable. It is also required that the HIVnursing facility establish a directed plan ofcorrection in conjunction with and acceptableto the Division of Aging.

(H) Upon execution of a Medicaid partic-ipation agreement, a qualified facility notpreviously certified for participation in theMedicaid Program shall be assigned aprovider number by the division. Facilitiespreviously certified shall retain the sameprovider number and interim or prospectiverate regardless of any change in ownership.

(I) Regardless of changes in control orownership for any facility certified for partic-ipation in the Medicaid Program, the divisionshall issue payments to the facility identifiedin the current Medicaid participation agree-ment. Regardless of changes in control orownership for any facility certified for partic-ipation in Medicaid, the division shall recov-er from the entity identified in the currentMedicaid participation agreement, liabilities,



sanctions, and penalties pertaining to theMedicaid Program, regardless of when theservices were rendered.

(J) Changes in ownership, management,control, operation, leasehold interest bywhatever form for any facility previously cer-tified for participation in the Medicaid Pro-gram at any time that results in increased cap-ital costs for the successor owner,management, or leaseholder shall not be rec-ognized for purposes of reimbursement.

(K) A facility with certified and noncerti-fied beds shall allocate allowable costs relatedto the provision of HIV nursing facility ser-vices on the cost report, in accordance withthe cost report instructions. The methods forallocation must be supported by adequateaccounting and/or statistical data necessary toevaluate the allocation method and its appli-cation.

(L) Any facility which is involuntarily ter-minated from participation in the MedicareProgram shall also be terminated from partic-ipation in the Medicaid Program on the samedate as the Medicare termination.

(M) No restrictions nor limitations shall,unless precluded by federal or state regula-tion, be placed on a recipient’s right to selectproviders of his/her own choice.

(N) Rebasing. Effective July 1, 2004, HIVnursing facility rates shall be rebased on anannual basis, as set forth in section (20).

(O) The reimbursement rates authorized bythis regulation may be reevaluated at least onan annual basis in light of the provider’s costexperience to determine any adjustmentsneeded to assure coverage of cost increasesthat must be incurred by efficiently and eco-nomically operated providers.

(P) Covered supplies, such as, but not lim-ited to, food, laundry supplies, housekeepingsupplies, linens, medical supplies, must beaccounted for through inventory accounts.Purchases shall be recorded as inventory andshall be expensed in the fiscal year the itemsare used. Inventory shall be counted at leastannually to coincide with the facility’s fiscalyear or the end of the cost report period, ifdifferent. Expensing of items shall be record-ed by adding purchases to the beginning peri-od inventory and subtracting the end of theperiod inventory. This inventory control shallbegin the first fiscal year ending after theeffective date of this plan.

(Q) Medicaid reimbursement will not bepaid for a Medicaid-eligible resident whileplaced in a noncertified bed in an HIV nurs-ing facility.

(R) All illustrations and examples providedthroughout this regulation are for illustrationpurposes only and are not meant to be actualcalculations.

(S) Each state fiscal year the departmentshall submit to the Office of Administration

for consideration a budget item based on theHCFA Market Basket Index for NursingHomes representing a statistical measure ofthe change in costs of goods and services pur-chased by HIV nursing facilities during thecourse of one (1) year. The submission of thebudget item by the department has no corre-lation to determining the costs that areincurred by an efficiently and economicallyoperated facility. Any trend factor grantedshall be applied to the patient care, ancillary,and administration cost components.

(T) Effective for dates of service beginningApril 1, 2010, reimbursement ofMedicare/Medicaid crossover claims(crossover claims) for Medicare Part A andMedicare Advantage/Part C inpatient skillednursing facility benefits in an HIV nursingfacility shall be as follows:

1. Crossover claims for Medicare Part Ainpatient skilled nursing facility benefits inwhich Medicare was the primary payer andthe MO HealthNet Division is the payer oflast resort for the coinsurance must meet thefollowing criteria to be eligible for MOHealthNet reimbursement:

A. The crossover claim must be relat-ed to Medicare Part A inpatient skilled nurs-ing facility benefits that were provided to MOHealthNet participants also having Medicarecoverage; and

B. The crossover claim must containapproved coinsurance days. The amount indi-cated by Medicare to be the coinsurance dueon the Medicare allowed amount is thecrossover amount eligible for MO HealthNetreimbursement. The coinsurance amount isbased on the days for which Medicare is notthe sole payer. These days are referred to ascoinsurance days and are days twenty-one(21) through one hundred (100) of eachMedicare benefit period; and

C. The Other Payer paid amount fieldon the claim must contain the actual amountpaid by Medicare. The MO HealthNetprovider is responsible for accurate and validreporting of crossover claims submitted toMO HealthNet for payment. Providers sub-mitting crossover claims for Medicare Part Ainpatient skilled nursing facility benefits tothe MO HealthNet program must be able toprovide documentation that supports theinformation on the claim upon request. Thedocumentation must match the informationon the Medicare Part A plan’s remittanceadvice. Any amounts paid by MO HealthNetthat are determined to be based on inaccuratedata will be subject to recoupment; and

D. The nursing facility’s Medicaidreimbursement rate multiplied by theapproved coinsurance days exceeds theamount paid by Medicare for the sameapproved coinsurance days;

2. Crossover claims for Medicare

Advantage/Part C (Medicare Advantage)inpatient skilled nursing facility benefits inwhich a Medicare Advantage plan was theprimary payer and the MO HealthNet Divi-sion is the payer of last resort for the copay(coinsurance) must meet the following crite-ria to be eligible for MO HealthNet reim-bursement:

A. The crossover claim must be relat-ed to Medicare Advantage inpatient skillednursing facility benefits that were provided toMO HealthNet participants who also areeither a Qualified Medicare Beneficiary(QMB Only) or Qualified Medicare Benefi-ciary Plus (QMB Plus); and

B. The crossover claim must be sub-mitted as a Medicare UB-04 Part C Institu-tional Crossover claim through the division’sonline Internet billing system; and

C. The crossover claim must containapproved coinsurance days. The amount indi-cated by the Medicare Advantage plan to bethe coinsurance due on the Medicare Advan-tage plan allowed amount is the crossoveramount eligible for MO HealthNet reim-bursement. The coinsurance amount is basedon the days for which the Medicare Advan-tage plan is not the sole payer. These days arereferred to as coinsurance days and are estab-lished by each Medicare Advantage plan; and

D. The Other Payer paid amount fieldon the claim must contain the actual amountpaid by the Medicare Advantage plan. TheMO HealthNet provider is responsible foraccurate and valid reporting of crossoverclaims submitted to MO HealthNet for pay-ment. Providers submitting crossover claimsfor Medicare Advantage inpatient skillednursing facility benefits to the MO HealthNetprogram must be able to provide documenta-tion that supports the information on theclaim upon request. The documentation mustmatch the information on the MedicareAdvantage plan’s remittance advice. Anyamounts paid by MO HealthNet that aredetermined to be based on inaccurate datawill be subject to recoupment; and

E. The nursing facility’s Medicaidreimbursement rate multiplied by theapproved coinsurance days exceeds theamount paid by the Medicare Advantage planfor the same approved coinsurance days;

3. MO HealthNet reimbursement will bethe lower of—

A. The difference between the nurs-ing facility’s Medicaid reimbursement ratemultiplied by the approved coinsurance daysand the amount paid by either Medicare orthe Medicare Advantage plan for those samecoinsurance days; or

B. The coinsurance amount; and 4. HIV nursing facility providers may

not submit a MO HealthNet fee-for-servicenursing facility claim for the same dates of


Secretary of State


service on the crossover claim for MedicarePart A and Medicare Advantage inpatientskilled nursing facility benefits. If it is deter-mined that a MO HealthNet fee-for-servicenursing facility claim is submitted and pay-ment is made, it will be subject to recoup-ment.

(4) Definitions.(A) Additional beds. Newly constructed

beds never certified for Medicaid or neverpreviously licensed by the Division of Aging.

(B) Administration. This cost componentincludes the following lines from the costreport version MSIR-1 (3-95): lines 111–131,133–149, 151–158.

(C) Age of beds. The age is determined bysubtracting the initial licensing year from1995 or the current year, if later.

(D) Allowable cost. Those costs which areallowable for allocation to the Medicaid Pro-gram based upon the principles established inthis regulation. The allowability of costs shallbe determined by the Division of MedicalServices and shall be based upon criteria andprinciples included in this regulation, theMedicare Provider Reimbursement Manual(HIM-15) and Generally Accepted Account-ing Principles (GAAP). Criteria and princi-ples will be applied using this regulation asthe first source, the Medicare Provider Reim-bursement Manual (HIM-15) as the secondsource and GAAP as the third source.

(E) Ancillary. This cost componentincludes the following lines from the costreport version MSIR-1 (3-95): lines 71–89,91–100.

(F) Asset value. The asset value is thirty-two thousand seven hundred twenty-threedollars ($32,723) and is used in calculatingthe fair rental value system.

(G) Average private pay rate. The usualand customary charge for private patientdetermined by dividing total private patientdays of care into private patient revenue net ofcontractual allowances and bad debt expensefor the same service that is included in theMedicaid reimbursement rate. This excludesnegotiated payment methodologies with stateor federal agencies such as the veteran’sadministration or the Missouri Department ofMental Health.

(H) Capital. This cost component will becalculated using a fair rental value system.The fair rental value is reimbursed in lieu ofthe costs reported on lines 102–109 of thecost report version MSIR-1 (3-95) except foramortization of organizational costs.

(I) Capital asset. A facility’s building,building equipment, major moveable equip-ment, minor equipment, land, land improve-ments, and leasehold improvements asdefined in HIM-15. Motor vehicles areexcluded from this definition.

(J) Capital asset debt. The debt related tothe capital assets as determined from the deskaudited and/or field audited cost report.

(K) Ceiling. The ceiling is determined byapplying a percentage to the median per diemfor the patient care, ancillary and administra-tion cost components. The percentage is onehundred twenty percent (120%) for patientcare, one hundred twenty percent (120%) forancillary and one hundred ten percent (110%)for administration.

(L) Certified bed. Any HIV nursing facili-ty bed that is certified by the Division ofAging to participate in the Medicaid Pro-gram.

(M) Change of ownership. A change inownership, control, operator or leaseholdinterest, for any facility certified for partici-pation in the Medicaid Program.

(N) Cost components. The groupings ofallowable costs used to calculate a facility’sper diem rate. They are patient care, ancil-lary, capital, and administration. In addition,a working capital allowance is provided.

(O) Cost report. The Financial and Statis-tical Report for Nursing Facilities, requiredattachments as specified in paragraph(10)(A)8. of this regulation and all work-sheets supplied by the division for this pur-pose. The cost report shall detail the cost ofrendering both covered and noncovered ser-vices for the fiscal reporting period in accor-dance with this regulation, cost reportinstruction and on forms or diskettes provid-ed by or as approved by the division or both.

(P) Data bank. The data from the deskaudited and/or field audited rate setting costreport for HIV nursing facilities.

(Q) Department. The department, unlessotherwise specified, refers to the MissouriDepartment of Social Services.

(R) Desk audit. The Division of MedicalServices’ or its authorized agent’s audit of aprovider’s cost report without a field audit.

(S) Director. The director, unless other-wise specified, refers to the director, Mis-souri Department of Social Services.

(T) Division of Aging. The division of theDepartment of Social Services responsiblefor survey, certification, and licensure as pre-scribed in Chapter 198, RSMo.

(U) Division. Unless otherwise specified,division refers to the MO HealthNet Divi-sion, the division of the Department of SocialServices charged with administration of Mis-souri’s MO HealthNet Program.

(V) Entity. Any natural person, corpora-tion, business, partnership or any other fidu-ciary unit.

(W) Facility asset value. Total asset valueless adjustment for age of beds.

(X) Facility fiscal year. A facility’s twelve(12)-month fiscal reporting period covering

the same twelve (12)-month period as its fed-eral tax year.

(Y) Facility size. The number of licensedHIV nursing facility beds as determined fromthe desk audited and/or field audited costreport.

(Z) Fair rental value system (FRVS). Themethodology used to calculate the reimburse-ment of capital.

(AA) Field audit. An on-site audit of theHIV nursing facility’s records performed bythe department or its authorized agent.

(BB) Generally Accepted Accounting Prin-ciples (GAAP). Accounting conventions,practices, methods, rules, and proceduresnecessary to describe accepted accountingpractice at a particular time as established bythe authoritative body establishing such prin-ciples.

(CC) HCFA Market Basket Index. Anindex showing nursing home market basketindexes. The index is published quarterly byDRI/McGraw Hill. The table used in thisregulation is titled “DRI Health Care Cost—National Forecasts, HFCA Nursing HomeWithout Capital Market Basket.”

(DD) HIV nursing facility. Any facilitylicensed under Chapter 198, RSMo grantedan exemption from Certificate of Need undersection 197.316, RSMo and certified by theDivision of Aging.

(EE) HIV nursing facility resident. A per-son that resides in a HIV nursing facility thathas the HIV that causes AIDS.

(FF) Interim rate. The interim rate shall bebased upon the budgeted cost report (versionMSIR-1 (3-95)) that has been submitted tothe division. The interim rate shall be thesum of one hundred percent (100%) of thebudgeted patient care costs, ninety percent(90%) of the budgeted ancillary costs andadministration costs, ninety-five percent(95%) of the capital cost, and the workingcapital allowance using the interim rate costcomponents.

(GG) Licensed bed. Any skilled nursingfacility or intermediate care facility bed meet-ing the licensing requirement of the Divisionof Aging.

(HH) Median. The middle value in a dis-tribution, above and below which lie an equalnumber of values. This distribution is basedon the databank.

(II) Nursing facility (NF). Effective Octo-ber 1, 1990, skilled nursing facilities, fillednursing facilities/intermediate care facilities,and intermediate care facilities as defined inChapter 198, RSMo, participating in theMedicaid Program will all be subject to theminimum federal requirements found in sec-tion 1919 of the Social Security Act.

(JJ) Occupancy rate. A facility’s total actu-al patient days divided by the total bed days



for the same period as determined from thedesk audited and/or field audited cost report.For a distinct part facility that completes aworksheet one (1) of cost report, versionMSIR-1 (3-95), determine the occupancy ratefrom the total actual patient days from thecertified portion of the facility divided by thetotal bed days from the certified portion forthe same period, as determined from the deskaudited and/or field audited cost report.

(KK) Patient care. This cost componentincludes the following lines from the costreport version MSIR-1 (3-95): lines 46–69.

(LL) Patient day. The period of servicerendered to a patient between the census-tak-ing hour on two (2) consecutive days. Censusshall be taken in all facilities at midnight eachday and a census log maintained in each facil-ity for documentation purposes. “Patientday” includes the allowable temporary leave-of-absence days per subsection (5)(D) andhospital leave days per subsection (5)(M).The day of discharge is not a patient day forreimbursement unless it is also the day ofadmission.

(MM) Per diem. The daily rate calculatedusing this regulation’s cost components andused in the determination of a facility’sprospective and/or interim rate.

(NN) Provider or facility. An HIV nursingfacility with a valid Medicaid participationagreement with the Department of Social Ser-vices for the purpose of providing HIV nurs-ing facility services to Title XIX-eligiblerecipients.

(OO) Prospective rate. The rate deter-mined from the rate setting cost report.

(PP) Rate setting cost report. The deskaudited and/or field audited cost report relat-ing to a facility’s rate setting period.

(QQ) Rate setting period. The period forwhich a facility’s prospective rate is deter-mined. The rate setting period shall apply tothe annual rebasing of rates as set forth in(3)(N) as well as to facilities who have aninterim rate and whose initial prospective rateis being set. For interim rate facilities, therate setting period is the second full twelve(12)-month cost report following the facility’sinitial date of Medicaid certification.

(RR) Reimbursement rate. A prospectiveor interim rate.

(SS) Related parties. Parties are relatedwhen any one (1) of the following circum-stances apply:

1. An entity where, through its activi-ties, one (1) entity’s transactions are for thebenefit of the other and such benefits exceedthose which are usual and customary in suchdealings.

2. An entity has an ownership or con-trolling interest in another entity; and theentity, or one (1) or more relatives of the enti-

ty, has an ownership or controlling interest inthe other entity. For the purposes of this para-graph, ownership or controlling interest doesnot include a bank, savings bank, trust com-pany, building and loan association, savingsand loan association, credit union, industrialloan and thrift company, investment bankingfirm or insurance company unless the entitydirectly, or through a subsidiary, operates afacility.

3. As used in this regulation, the follow-ing terms mean:


B. Ownership interest means the pos-session of equity in the capital, in the stock,or in the profits of an entity. Ownership orcontrolling interest is when an entity:

(I) Has an ownership interesttotaling five percent (5%) or more in an enti-ty;



(IV) Owns an interest of five per-cent (5%) or more in any mortgage, deed oftrust, note, or other obligation secured by anentity if that interest equals at least five per-cent (5%) of the value of the property or assetsof the entity. The percentage of ownershipresulting from these obligations is determinedby multiplying the percentage of interestowned in the obligation by the percentage ofthe entity’s assets used to secure the obliga-tion;


(VI) Is a partner in an entity that isorganized as a partnership.

C. Relative means person related byblood, adoption, or marriage to the fourthdegree of consanguinity.

(TT) Replacement beds. Newly construct-ed beds never certified for Medicaid or previ-ously licensed by the Division of Aging or theDepartment of Health and put in service inplace of existing Medicaid beds. The numberof replacement beds being certified for Med-icaid shall not exceed the number of bedsbeing replaced.

(UU) Renovations/major improvements.Capital cost incurred for improving a facilityexcluding replacement beds and additionalbeds.

(VV) Restricted funds. Funds, cash, cashequivalents, or marketable securities, includ-ing grants, gifts, taxes, and income fromendowments which must only be used for aspecific purpose designated by the donor.

(WW) Total facility size. Facility size plusincreases minus decreases of licensed HIVnursing facility beds plus calculated bedequivalents for renovations/major improve-ments.

(XX) Unrestricted funds. Funds, cash,cash equivalents, or marketable securities,including grants, gifts, taxes, and incomefrom endowments, that are given to aprovider without restriction by the donor asto their use.

(YY) Incorporation by Reference. Thisrule adopts and incorporates by reference theprovisions of the—

1. Financial and Statistical Report forNursing Facilities (version MSIR-1 (3-95))and the cost report instructions (revised 3/95)published by the Missouri Department ofSocial Services, MO HealthNet Division,615 Howerton Court, Jefferson City, MO65109, August 1, 2008. This rule does notincorporate any subsequent amendments oradditions;

2. MO HealthNet Nursing Home Manu-al, which is published by the Department ofSocial Services, MO HealthNet Division,615 Howerton Court, Jefferson City, MO65109, at its website www.dss.mo.gov/mhd,August 1, 2008. This rule does not incorpo-rate any subsequent amendments or addi-tions.

(5) Covered Supplies, Items, and Services. Allsupplies, items, and services covered in thereimbursement rate must be provided to theresident as necessary. Supplies and serviceswhich would otherwise be covered in a reim-bursement rate but which are also billable tothe Title XVIII Medicare Program must bebilled to that program for facilities participat-ing in the Title XVIII Medicare Program.Covered supplies, items, and servicesinclude, but are not limited to, the following:

(A) Services, items, and covered suppliesrequired by federal or state law or regulationwhich must be provided by nursing facilitiesparticipating in the Title XIX Program;

(B) Semi-private room and board;(C) Private room and board when it is nec-

essary to isolate a recipient due to a medicalor social condition, examples of which maybe contagious infection, loud irrationalspeech, etc.;

(D) Temporary leave of absence days forMedicaid recipients, not to exceed twelve(12) days for the first six (6) calendar monthsand not to exceed twelve (12) days for thesecond six (6) calendar months. Temporary


Secretary of State


leave of absence days must be specificallyprovided for in the recipient’s plan of careand prescribed by a physician. Periods oftime during which a recipient is away fromthe facility visiting a friend or relative areconsidered temporary leaves of absence;

(E) Provision of personal hygiene and rou-tine care services furnished routinely anduniformly to all residents;

(F) All laundry services, including person-al laundry;

(G) All dietary services, including specialdietary supplements used for tube feeding ororal feeding. Dietary supplements prescribedby a physician are also covered items;

(H) All consultative services required byfederal or state law or regulations;

(I) All therapy services required by federalor state law or regulations;

(J) All routine care items including, butnot limited to, those items specified inAppendix A to this regulation;

(K) All nursing services and suppliesincluding, but not limited to, those itemsspecified in Appendix A to this regulation;

(L) All nonlegend antacids, nonlegend lax-atives, nonlegend stool softeners and nonle-gend vitamins. Providers may not elect whichnonlegend drugs in any of the four (4) cate-gories to supply; any and all must be provid-ed to residents as needed and are included ina facility’s reimbursement rate; and

(M) Hospital leave days as defined in 13CSR 70-10.070.

(6) Noncovered Supplies, Items, and Ser-vices. All supplies, items, and services whichare either not covered in a facility’s reim-bursement rate or are billable to another pro-gram in Medicaid, Medicare, or other thirdparty payor. Noncovered supplies, items, andservices include, but are not limited to, thefollowing:

(A) Private room and board unless it isnecessary to isolate a recipient due to a med-ical or social condition, examples of whichmay be contagious infection, loud irrationalspeech, etc. Unless a private room is neces-sary due to such a medical or social condi-tion, a private room is a noncovered serviceand a Medicaid recipient or responsible partymay therefore pay the difference between afacility’s semi-private charge and its chargefor a private room. Medicaid recipients maynot be placed in private rooms and chargedany additional amount above the facility’sMedicaid reimbursement rate unless therecipient or responsible party specificallyrequests in writing a private room prior toplacement in a private room and acknowl-edges that an additional amount not payableby Medicaid will be charged for a privateroom;

(B) Supplies, items, and services for whichpayment is made under other Medicaid Pro-grams directly to a provider or providersother than providers of the HIV nursing facil-ity services; and

(C) Supplies, items, and services providednonroutinely to residents for personal com-fort or convenience.


1. Compensation of services of ownersshall be an allowable cost area. Reasonable-ness of compensation shall be limited as pre-scribed in subsection (8)(Q).

2. Compensation shall mean the totalbenefit, within the limitations set forth in thisregulation, received by the owner for the ser-vices rendered to the facility. This includesdirect payments for managerial, administra-tive, professional, and other services,amounts paid for the personal benefit of theowner, the cost of assets and services whichthe owner receives from the provider, andadditional amounts determined to be the rea-sonable value of the services rendered by soleproprietors or partners and not paid by anymethod previously described in this regula-tion. Compensation must be paid (whether incash, negotiable instrument, or in kind) with-in seventy-five (75) days after the close of theperiod in accordance with the guidelines pub-lished in the Medicare Provider Reim -bursement Manual, Part 1, section 906.4.

(B) Covered services and supplies asdefined in section (5) of this regulation.

(C) Capital Assets.1. Capital Assets shall include historical

costs that would be capitalized under GAAP.For example, historical costs would include,but are not limited to, architectural fees,related legal fees, interest and taxes duringconstruction.

2. For purposes of this regulation, anyasset or improvement having a useful lifegreater than one (1) year in accordance withAmerican Hospital Association depreciableguidelines, shall be capitalized.

3. In addition to the American HospitalAssociation depreciable guidelines, mattress-es shall be considered a capitalized asset andshall have a three (3)-year useful life.

(D) Depreciation—Vehicle.1. An appropriate allowance for depreci-

ation on vehicles which are a necessary partof the operation of a HIV nursing facility isan allowable cost. One (1) vehicle per sixty(60) licensed beds is allowable. For example,one vehicle is allowed for a facility with zeroto sixty (0–60) licensed beds, two (2) vehiclesare allowed for a facility with sixty-one toone hundred twenty (61–120) licensed beds,etc. Depreciation is treated as an administra-

tion cost and is reported on line 133 of thecost report, version MSIR-1 (3-95).

2. The depreciation must be identifiableand recorded in the provider’s accountingrecords, based on the basis of the vehicle andprorated over the estimated useful life of thevehicle in accordance with American Hospi-tal Association depreciable guidelines usingthe straight line method of depreciation fromthe date initially put into service.

3. The basis of vehicle cost at the timeplaced in service shall be the lower of:


acquisition; orC. The recognized Internal Revenue

Service (IRS) tax basis.4. The basis of a donated vehicle will be

allowed to the extent of recognition of incomeresulting from the donation of the vehicle.Should a dispute arise between a provider andthe division as to the fair market value at thetime of acquisition of a depreciable vehicle,an appraisal by a third party is required. Theappraisal cost will be the sole responsibilityof the HIV nursing facility.

5. Historical cost will include the costincurred to prepare the vehicle for use by theHIV nursing facility.

6. When a vehicle is acquired by tradingin an existing vehicle, the cost basis of thenew vehicle shall be the sum of undepreciatedcost basis of the traded vehicle plus the cashpaid.

(E) Insurance.1. Property insurance. Insurance cost on

property of the HIV nursing facility used toprovide HIV nursing facility services. Prop-erty insurance should be reported on line 107of the cost report version MSIR-1 (3-95).

2. Other insurance. Liability, umbrella,vehicle, and other general insurance for theHIV nursing facility should be reported on line136 of the cost report version MSIR-1 (3-95).

3. Workers’ Compensation insuranceshould be reported on the applicable payrolllines on the cost report for the employeesalary groupings.

(F) Interest and Finance Costs.1. Interest will be reimbursed for neces-

sary loans for capital asset debt at the ChaseManhattan prime rate on July 3, 1995, plustwo percentage (2%) points. For replacementbeds, additional beds, and new facilitiesplaced in service after June 30, 1996, theprime rate will be updated annually on thefirst business day of each July based on theChase Manhattan prime rate plus two per-centage (2%) points.

2. Loans (including finance charges,prepaid costs, and discounts) must be sup-ported by evidence of a written agreementthat funds were borrowed and repayment ofthe funds are required. The loan costs must



be identifiable in the provider’s accountingrecords, must be related to the reporting peri-od in which the costs are claimed, and mustbe necessary for the operation, maintenance,or acquisition of the provider’s facility.

3. Necessary means that the loan beincurred to satisfy a financial need of theprovider and for a purpose related to recipientcare. Loans which result in excess funds orinvestments are not considered necessary.

4. A provider shall capitalize loan costs(for example lender’s title and recording fees,appraisal fees, legal fees, escrow fees, andother closing costs), finance charges, prepaidinterest, and discounts. The loan costs shallbe amortized over the life of the loan on astraight line basis.

5. If loans for capital asset debt exceedthe facility asset value, the interest associatedwith the portion of the loan or loans whichexceeds the facility asset value shall not beallowable.

6. The following is an illustration of howallowable interest is calculated:

Outstanding Capital Asset Debt $2,500,000Term of Debt 25 yearsInterest Rate (Chase Manhattan prime + 2%) 10 percent Facility Asset Value $2,000,000Discount $125,000Loan Costs $120,000

Allowable interest calculation—use the lesserof the facility asset value or the outstandingcapital asset debt.

Other Allowable Borrowing Costs:Discount—$2,000,000/$2,500,000 × $125,000 = $100,000Loan Cost—$2,000,000/$2,500,000 × $120,000 = $ 96,000Allowable Interest—$2,000,000 × 10% = $200,000Discount—$100,000/25 years = $ 4,000Loan Cost—$96,000/25 years = $ 3,840Allowable Interest and Other Borrowing Costs $207,840

7. Interest cost on vehicle debt forallowable vehicles per paragraph (7)(D)1. istreated as an administration cost and reportedon line 134 of the cost report version MSIR-1 (3-95).

(G) Rental and Leases.1. Capitalized leases, as defined by

GAAP, will be reimbursed in accordancewith subsections (7)(C) and (7)(E).

2. Lease cost related to allowable vehi-cles per paragraph (7)(D)1. shall be treatedas an administrative cost and be reported online 135 of the cost report version MSIR-1 (3-

95).3. Operating leases, as defined by

GAAP, will be part of the fair rental valuesystem.

(H) Real Estate and Personal PropertyTaxes. Taxes levied on or incurred by a facil-ity used to provide HIV nursing facility ser-vices.

(I) Value of Services of Employees.1. Except as provided for in this regula-

tion, the value of services performed byemployees in the facility shall be included asan allowable cost area to the extent actuallycompensated, either to the employee or to thesupplying organization.

2. Services rendered by volunteers suchas those affiliated with the American RedCross, hospital guilds, auxiliaries, privateindividuals, and similar organizations shallnot be an allowable cost, as the services havetraditionally been rendered on a purely volun-teer basis without expectation of any form ofreimbursement by the organization throughwhich the service is rendered or by the per-son rendering the service.

3. Services by priests, ministers, rabbis,and similar type professionals shall be anallowable cost, provided that the services arenot of a religious nature and are compensat-ed. Costs of wardrobe and similar items shallnot be allowable.

(J) Employee Benefits.1. Retirement plans.

A. Contributions to IRS qualifiedretirement plans shall be an allowable cost.


2. Deferred compensation plans.A. Contributions shall be allowable

costs when, and to the extent that, these costsare actually paid by the provider. Providerpayments for unfunded deferred compensa-tion plans will be considered an allowablecost only when paid to the participatingemployee.

B. Amounts paid by organizations topurchase tax-sheltered annuities for employ-ees shall be treated as deferred compensationactually paid by the provider.

C. Amounts funded to deferred com-pensation plans together with associatedincome shall be recaptured, if not actuallypaid when due, as an offset to expenses onthe cost report.

3. Types of insurance which are consid-ered an allowable cost:

A. Credit life insurance (term insur-ance), if required as part of a mortgage loanagreement. An example, would be insuranceon loans granted under certain federal pro-grams.

B. Where the relative(s) or estate ofthe employee, excluding stockholders, part-ners and proprietors, is the beneficiary. Thistype of insurance is considered to be anemployee benefit and is an allowable cost.This cost should be reported on the applica-ble payroll lines on the cost report for theemployees salary groupings.

C. Health, disability, dental, etc.,insurances for employees/owners shall beallowable costs.

(K) Education and Training Expenses.1. The cost of on-the-job training which

directly benefits the quality of health care oradministration at the facility shall be allow-able, except for costs associated with NurseAide Training and Competency EvaluationProgram.

2. Costs of education and training shallinclude travel costs but will not include leavesof absence or sabbaticals.

(L) Organizational Costs.1. Organizational cost items include the

following: legal fees incurred in establishingthe corporation or other organizations; neces-sary accounting fees; expenses of temporarydirectors and organizational meetings ofdirectors and stockholders; and fees paid tostates for incorporation.


3. Where a provider is organized withina five (5)-year period prior to its entry intothe program and has properly capitalizedorganizational costs using a sixty (60)-monthamortization period, no change in the rate ofamortization is required. In this instance theunamortized portion of organizational costs isan allowable cost under the program and shallbe amortized over the remaining part of thesixty (60)-month period.

4. For change in ownership after July18, 1984, allowable amortization will be lim-ited to the prior owner’s allowable unamor-tized portion of organizational cost.

(M) Advertising Costs. Advertising costswhich are reasonable and appropriate areallowable. The costs must be a common andaccepted occurrence for providing HIV nurs-ing facility services.

(N) Cost of Supplies and Services Involv-ing Related Parties. Costs of goods and ser-vices furnished by related parties shall notexceed the lower of the cost to the supplier orthe prices of comparable goods or servicesobtained elsewhere. In the cost report aprovider shall identify related party suppliersand the type, the quantity, and costs to therelated party for goods and services obtained


Secretary of State


from each such supplier.(O) Minimum Utilization. In the event the

occupancy rate of a facility is below eighty-five percent (85%), the administration andcapital cost components will be adjusted asthough the provider experienced eighty-fivepercent (85%) occupancy. In no case maycosts disallowed under this provision be car-ried forward to succeeding periods.

(P) Central Office/Home Office or Man-agement Company Costs. The allowability ofthe individual cost items contained withincentral office/home office or managementcompany costs will be determined in accor-dance with all other provisions of this regula-tion. The total of central office/home officeand/or management company costs, asreported on lines 121 and 122 of the costreport, version MSIR-1 (3-95), are limited toseven percent (7%) of gross revenues lesscontractual allowances.

(Q) Start-Up Costs. Expenses incurredprior to opening, as defined in HIM-15 asstart-up costs, shall be amortized on a straightline method over sixty (60) months. Theamortization shall be reported on the sameline on the cost report as the original start-upcosts are reported. For example, RN salaryprior to opening would be amortized oversixty (60) months and would be reported online 51 of the cost report, version MSIR-1 (3-95), RN.

(R) Reusable Items. Costs incurred foritems, such as linen and bedding, but not lim-ited to, shall be classified as inventory whenpurchased and expensed as the item is used.

(S) Nursing Facility Reimbursement Al-lowance (NFRA). Effective October 1, 1996,the fee assessed to nursing facilities in thestate of Missouri for the privilege of doingbusiness in the state will be an allowable cost.

(8) Nonallowable Costs. Costs not reasonablyrelated to HIV nursing facility services shallnot be included in a provider’s costs. Nonal-lowable costs include, but are not limited to,the following:

(A) Amortization on intangible assets,such as goodwill, leasehold rights, covenants,and purchased certificates of need;

(B) Bad debts, contractual allowances,courtesy discounts, charity allowances, andsimilar adjustments or allowances are offsetsto revenues and, therefore, not included inallowable costs;

(C) Capital cost increases due solely tochanges in ownership;

(D) Charitable contributions;(E) Compensation paid to a relative or an

owner through a related party to the extent itexceeds the limitations established under sub-section (7)(A) of this regulation;

(F) Costs such as legal fees, accountingand administrative costs, travel costs, and the

costs of feasibility studies, which areattributable to the negotiation or settlement ofthe sale or purchase of any capital asset byacquisition or merger for which any paymenthas been previously made under the program;

(G) Directors’ fees included on the costreport in excess of two hundred dollars($200) per month, per individual;

(H) Federal, state, or local income andexcess profit taxes, including any interest andpenalties paid thereon;

(I) Late charges and penalties;(J) Finder’s fees;(K) Fund-raising expenses;(L) Interest expense on loans for intangi-

ble assets;(M) Legal fees related to litigation involv-

ing the department and attorneys fees which are not related to the provision of HIV nurs-ing facility services, such as litigation relatedto disputes between or among owners, opera-tors, or administrators;

(N) Life insurance premiums for officersand owners and related parties except theamount relating to a bona fide nondiscrimina-tory employee benefits plan;

(O) Noncovered supplies, services, anditems as defined in section (6);

(P) Owner’s compensation in excess of theapplicable range of the most recent survey ofadministrative salaries paid to individualsother than owners for proprietary and non-proprietary providers as published in theupdated Medicare Provider ReimbursementManual Part 1, section 905.2 and based uponthe total number of working hours.



B. Owner/administrators will beadjusted on the basis of the high range. Own-ers included in home office costs or manage-ment company costs will be adjusted on thehigh range. All others will be calculated onthe median range.

2. The salary identified above will beapportioned on the basis of hours worked inthe facility(ies), home office, or managementcompany as applicable to total hours in thefacility(ies), home office, or managementcompany;

(Q) Prescription drugs;(R) Religious items or supplies or services

of a primarily religious nature performed bypriests, rabbis, ministers, or other similartypes of professionals;

(S) Research costs;(T) Resident personal purchases provided

nonroutinely to residents for personal com-fort or convenience;

(U) Salaries, wages, or fees paid to non-working officers, employees or consultants;

(V) Cost of stockholder meetings or stockproxy expenses;

(W) Taxes or assessments for whichexemptions are available;

(X) Value of services (imputed or actual)rendered by nonpaid workers or volunteers;

(Y) All costs associated with Nurse AideTraining and Competency Evaluation Pro-gram; and

(Z) Losses from disposal of assets.


arately in the cost report. These revenues areoffset against expenses. Such revenuesinclude, but are not limited to, the following:

1. Income from telephone services;2. Sale of employee and guest meals;3. Sale of medical abstracts;4. Sale of scrap and waste food or

materials;5. Cash, trade, quantity, time, and

other discounts;6. Purchase rebates and refunds;7. Recovery on insured loss;8. Parking lot revenues;9. Vending machine commissions or

profits;10. Sales from supplies to individuals

other than HIV nursing facility recipients;11. Room reservation charges other than

covered therapeutic home leave days and hos-pital leave days;

12. Barber and beauty shop revenue;13. Private room differential;14. Medicare Part B revenues.

A. Revenues received from Part Bcharges through Medicare intermediaries willbe offset.

B. Seventy-five percent (75%) of therevenues received from Part B chargesthrough Medicare carriers will be offset;

15. Personal services;16. Activity income; and17. Revenue recorded for donated ser-

vices and commodities.(B) Restricted funds designated by the

donor prior to the donation for payment ofoperating costs will be offset from the associ-ated cost.

(C) Restricted funds designated by thedonor for capital expenditures will not be off-set from allowable expenses.

(D) Unrestricted funds not designated bythe provider for future capital expenditureswill be offset from allowable cost.

(E) As applicable, restricted and unrestrict-ed funds will be offset in each cost compo-nent, excluding capital, in an amount equal tothe cost component’s proportionate share of



allowable expense.(F) Any tax levies which are collected by

nursing home districts or county homes thatare supported in whole or in part by theselevies, will not be offset.

(G) Gains on disposal of assets will not beoffset from allowable expenses.

(10) Provider Reporting and Record KeepingRequirements.

(A) Annual Cost Report. The cost report(version MSIR-1 (3-95)) and cost reportinstructions (revised 3/95) are incorporatedby reference and made a part of this rule aspublished by the Department of Social Ser-vices, MO HealthNet Division, 615 Hower-ton Court, Jefferson City, MO 65109, August1, 2008. This rule does not incorporate anysubsequent amendments or additions.

1. Each provider shall adopt the sametwelve (12)-month fiscal period for complet-ing its cost report as is used for federalincome tax reporting.

2. Each provider is required to completeand submit to the division an annual costreport, including all worksheets, attachments,schedules, and requests for additional infor-mation from the division. The cost reportshall be submitted on forms provided by thedivision for that purpose. Any substitute orcomputer generated cost report must haveprior approval by the division.

3. All cost reports shall be completed inaccordance with the requirements of this reg-ulation and the cost report instructions.Financial reporting shall adhere to GAAP,except as otherwise specifically indicated inthis regulation.

4. The cost report submitted must bebased on the accrual basis of accounting.Governmental institutions operating on a cashor modified cash basis of accounting maycontinue to report on that basis, providedappropriate treatment for capital expendituresis made under GAAP.

5. Cost reports shall be submitted by thefirst day of the fourth month following theclose of the fiscal period, unless an extensionhas been granted.

6. If requested in writing and post-marked prior to the first day of the fourthmonth following the close of the fiscal peri-od, one (1) thirty (30)-day extension of thefiling date may be granted.

7. If a cost report is more than ten (10)days past due, payment shall be withheldfrom the facility until the cost report is sub-mitted. Upon receipt of a cost report pre-pared in accordance with this regulation, thepayments that were withheld will be releasedto the provider. For cost reports which aremore than ninety (90) days past due, thedepartment may terminate the provider’sMedicaid participation agreement and, if ter-

minated, retain all payments which have beenwithheld pursuant to this provision.

8. Copies of signed agreements andother significant documents related to theprovider’s operation and provision of care toMedicaid recipients must be attached (unlessotherwise noted) to the cost report at the timeof filing unless current and accurate copieshave already been filed with the division.Material which must be submitted or avail-able upon request includes, but is not limitedto, the following:

A. Audit prepared by an independentaccountant, including disclosure statementsand management letter or SEC Form 10-K;

B. Contracts or agreements involvingthe purchase of facilities or equipment duringthe last seven (7) years if requested by thedivision, the department, or its agents;




F. Federal and state income taxreturns for the fiscal year, if requested by thedivision, the department, or its agents;

G. Leases and/or rental agreementsrelated to the activities of the provider ifrequested by the division, the department, orits agents;

H. Management contracts;I. Medicare cost report, if applicable;J. Review and compilation statement;K. Statement verifying the restrictions

as specified by the donor, prior to donation,for all restricted grants;

L. Working trial balance actually usedto prepare the cost report with line numbertracing notations or similar identifications;and

M. Schedule of capital assets withcorresponding debt.

9. Cost reports must be fully, clearly,and accurately completed. All requiredattachments must be submitted before a costreport is considered complete. If any addi-tional information, documentation, or clarifi-cation requested by the division or its autho-rized agent is not provided within fourteen(14) days of the date of receipt of the divi-sion’s request, payments may be withheldfrom the facility until the information is sub-mitted.

10. Under no circumstances will thedivision accept amended cost reports for ratedetermination or rate adjustment after thedate of the division’s notification of the finaldetermination of the rate.


report must be certified by the provider. Cer-tification must be made by a person autho-

rized by one (1) of the following: for anincorporated entity, an officer of the corpora-tion; for a partnership, a partner; for a soleproprietorship or sole owner, the owner orlicensed operator; or for a public facility, thechief administrative officer of the facility.Proof of such authorization shall be furnishedupon request.

2. Cost reports must be notarized by acommissioned notary public.

3. The following statement must besigned on each cost report to certify its accu-racy and validity:

Certification Statement: Misrepresentation orfalsification of any information contained inthis cost report may be punishable by fineand/or imprisonment under state or federallaw.

I hereby certify that I have read the abovestatement and that I have examined theaccompanying cost report and supportingschedules prepared by (provider name andnumber) for the cost report period beginning(date/year) and ending (date/year), and thatto the best of my knowledge and belief, it isa true, correct, and complete statement pre-pared from the books and records of theprovider in accordance with applicableinstructions, except as noted.

_____________ ___________ ___________(Signature) (Title) (Date)


accordance with GAAP and maintain suffi-cient internal control and documentation tosatisfy audit requirements and other require-ments of this regulation, including reasonablerequests by the division or its authorizedagent for additional information.

2. Each of a provider’s funded accountsmust be separately maintained with allaccount activity clearly identified.

3. Adequate documentation for all lineitems on the cost report shall be maintainedby a provider. Upon request, all original doc-umentation and records must be made avail-able for review by the division or its autho-rized agent at the same site at which theservices were provided or at the centraloffice/home office if located in the state ofMissouri. Copies of documentation andrecords shall be submitted to the division orits authorized agent upon request.

4. Each facility shall retain all financialinformation, data, and records relating to theoperation and reimbursement of the facilityfor a period of not less than seven (7) years.



2. A provider shall have available at the


Secretary of State


field audit location one (1) or more knowl-edgeable persons authorized by the providerand capable of explaining the provider’saccounting and control system and cost reportpreparation, including all attachments andallocations.

3. If a provider maintains any records ordocumentation at a location which is not thesame as the site where services were provid-ed, other than central offices/home officesnot located in the state of Missouri, theprovider shall transfer the records to the samefacility at which the Medicaid services wereprovided, or the provider must reimburse thedivision or its authorized agent for reasonabletravel costs necessary to perform any part ofthe field audit in any off-site location, if thelocation is acceptable to the division.

4. Those providers initially entering theprogram shall be required to have an annualindependent audit of the financial records,used to prepare annual cost reports coveringat a minimum the first two (2) full twelve(12)-month fiscal years of their participationin the Medicaid Program, in accordance withGAAP and generally accepted auditing stan-dards. The audit shall include, but may not belimited to, the Balance Sheet, Income State-ment, Statement of Retained Earnings, andStatement of Cash Flow. For example, aprovider begins participation in the MedicaidProgram in March and chooses a fiscal yearof October 1 to September 30. The first costreport will cover March through September.That cost report may be audited at the optionof the provider. The October 1 to September30 cost report, the first full twelve (12)-month fiscal year cost report, shall be audit-ed. The next October 1 to September 30 costreport, the second full twelve (12)-month costreport, shall be audited. The audits shall bedone by an independent certified publicaccountant.

(E) Change in Provider Status.1. If a provider notifies, in writing, the

director of the Institutional ReimbursementUnit of the division prior to the change ofcontrol, ownership, or termination of partici-pation in the Medicaid Program, the divisionwill withhold all remaining payments fromthe selling provider until the cost report isfiled. The fully completed cost report with allrequired attachments and documentation isdue the first day of the fourth month after the date of change of control, ownership, or ter-mination. Upon receipt of a cost report pre-pared in accordance with this regulation, anypayment that was withheld will be released tothe selling provider.

2. If the director of the InstitutionalReimbursement Unit does not receive, inwriting, notification of a change of control orownership and a cost report ending with thedate of the change of control or ownership,upon learning of a change of control or own-

ership, thirty thousand dollars ($30,000) ofthe next available full month Medicaid pay-ment, after learning of the change of controlor ownership, will be withheld from theprovider identified in the current Medicaidparticipation agreement until a cost report isfiled. If the Medicaid payment is less thanthirty thousand dollars ($30,000), the entirepayment will be withheld. Once the costreport, prepared in accordance with this reg-ulation, is received the payment will bereleased to the provider identified in the cur-rent Medicaid participation agreement.

(F) Joint Use of Resources.1. If a provider has business enterprises

in addition to the HIV nursing facility, therevenues, expenses, statistical, and financialrecords of each separate enterprise shall beclearly identifiable.

2. When the facility is owned, con-trolled, or managed by an entity or entitiesthat own, control, or manage one (1) or moreother facilities, records of central office andother costs incurred outside the facility shallbe maintained so as to separately identify rev-enues and expenses of, and allocations to,individual facilities. Direct allocation of cost,such as RN consultant, which can be directlyidentifiable in the central office/home officecost and directly allocated to a facility byactual amounts or actual time spent. Thesedirect costs shall be reported on the appropri-ate lines of the cost report. Allocation of cen-tral office/home office or management com-pany costs to individual facilities should beconsistent from year-to-year. If a desk auditor field audit establishes that records are notmaintained so as to clearly identify informa-tion required by this regulation, those com-mingled costs shall not be recognized asallowable costs in determining the facility’sMedicaid reimbursement rate. Allowability ofthese costs shall be determined in accordancewith the provisions of this regulation.

(11) Cost Components and Per-Diem Calcu-lation. The division will use the HIV nursingfacility rate setting cost report.

(A) Patient Care. Each HIV nursing facili-ty’s patient care per diem shall be the lowerof—

1. Allowable cost per patient day forpatient care as determined by the divisionfrom the rate setting cost report; or

2. The per diem ceiling of one hundredtwenty percent (120%) of the patient caremedian determined by the division from thedata bank.

(B) Ancillary. Each HIV nursing facility’sancillary per diem will be the lower of—

1. Allowable cost per patient day forancillary as determined by the division fromthe rate setting cost report; or

2. The per diem ceiling of one hundredtwenty percent (120%) of the ancillarymedian determined by the division from thedata bank.

(C) Administration. Each HIV nursingfacility’s administration per diem shall be thelower of—

1. Allowable cost per patient day foradministration as determined by the divisionfrom the rate setting cost report and adjustedfor minimum utilization, if applicable, asdescribed in subsection (7)(O); or

2. The per diem ceiling of one hundredten percent (110%) of the administrationmedian determined by the division from thedata bank.

(D) Capital. Each HIV nursing facility’scapital per diem shall be determined usingthe fair rental value system as follows:

1. Rental value.A. Determine the total asset value.

(I) Determine facility size from therate setting cost report.

(II) Determine the number ofincreased licensed beds after the rate settingcost report.

(III) Determine the bed equivalen-cy for renovations/major improvements afterNovember 30, 1995, by taking the cost of therenovations/major improvements divided bythe asset value per bed for the year of the ren-ovation/major improvement rounded to thenearest whole bed. The cost must be at leastthe asset value per bed for the year of the ren-ovation/major improvement. For example, arenovations/major improvements cost of twohundred thousand dollars ($200,000) is equalto six (6) beds. ($200,000/$32,723 equals6.11 beds rounded to 6 beds).

(IV) Determine the number ofdecreased licensed beds after the rate settingcost report.

(V) Sum of (I), (II), (III) less (IV)times the asset value is the Total Asset Value.

B. Determine the reduction for age bymultiplying the age of the beds by one percent(1%) up to forty percent (40%). For multiplelicensing dates, the result of the weightedaverage age calculation will be limited toforty percent (40%).

(I) The age of the beds for multiplelicensing dates is calculated on a weightedaverage method rounded to the nearest wholeyear. For example, a facility with originallicensure in 1977 of sixty (60) beds and anadditional licensure of sixty (60) beds in 1982and ten (10) beds in 1993, the reduction iscalculated as follows:

Licensure Year Age Beds Age × Beds1977 17 60 10201982 12 60 7201993 1 10 10Total 130 1750

Weighted Average Age—1750/130 beds =13.5 years rounded to 14 years. This resultsin a reduction for age of the beds of fourteenpercent (14%).



(II) The age of the beds for replace-ment beds is calculated on a weighted averagemethod rounded to the nearest whole yearwith the oldest beds always being replacedfirst. For example, a facility with one hun-dred twenty (120) beds licensed in 1978 withreplacement of sixty (60) beds in 1988, thereduction is calculated as follows

Licensure Year Age Beds Age × Beds1978 16 60 9601988 6 60 360Total 120 1320

Weighted Average Age—1320/120 = 11years. This results in a reduction for age ofthe beds of eleven percent (11%).

(III) The age of the beds for reduc-tions in licensed beds is calculated on aweighted average method rounded to thenearest whole year with the oldest bedsalways being delicensed first. For example, afacility with original licensure in 1977 ofsixty (60) beds, additional licensure of sixty(60) beds in 1982 and ten (10) beds in 1993and a reduction of ten (10) beds in 1985, thereduction percentage is calculated as follows:

Licensure Year Age Beds Age × Beds1977 17 60 10201982 12 60 7201993 1 10 101985* 17 (10) (170)Total 120 1580

*reduction of 1977 beds

Weighted Average Age—1580/120 beds =13.2 years rounded to 13 years. This resultsin a reduction for age of the beds of thirteenpercent (13%).

(IV) The age of the beds equiva-lents for renovations/major improvements iscalculated on a weighted average methodrounded to the nearest whole year. For exam-ple, a one hundred twenty (120)-bed facilitylicensed in 1978 undertakes two (2) renova-tions: two hundred thousand dollars($200,000) in 1983 and one hundred thousanddollars ($100,000) in 1993. The asset valueper bed is thirty-two thousand seven hundredtwenty-three dollars ($32,723). The bedequivalency is six (6) beds for 1983 and three(3) beds for 1993, the reduction percentage iscalculated as follows:

Licensure/Construction Year Age Beds Age × Beds1978 16 120 19201983 11 6 661993 1 3 3Total 129 1989

Weighted Average Method—1989/129 =15.42 years rounded to 15 years. This resultsin a reduction for age of beds of fifteen per-

cent (15%).C. The facility asset value is subpara-

graph (11)(D)1.A. less subparagraph(11)(D)1.B.

D. Multiply the facility asset value bytwo and one-half percent (2.5%) to determinethe rental value. The two and one-half percent(2.5%) is based on a forty (40)-year life.

E. The following is an illustration ofhow subparagraphs (11)(D)1.A.,(11)(D)1.B., and (11)(D)1.C., (11)(D)1.D.determines the rental value:

(I) Total Facility Size 174 bedsWeighted Average

Age of the Beds 23 yearsCapital Asset Debt $2,371,094Asset Value $ 32,723

(II) The Total Asset Value is theproduct of the Total Facility Size times theAsset Value;Total Facility Size 174Asset Value × $32,723Total Asset Value $5,693,802

(III) Facility Asset Value is TotalAsset Value less the Reduction for Age of theBeds; andReduction for Age (23%) $1,309,574Facility Asset Value $4,384,228

(IV) Rental Value is the FacilityAsset Value multiplied by 2.5%.Rental Value × 2.5% $ 109,606

2. Rate of return.A. Reduce the Facility Asset Value by

the Capital Asset Debt, but not less than zero(0), times the percentage of return. The per-centage of return is the yield for the thirty(30)-year Treasury Bond as reported by theFederal Reserve Board and published in theWall Street Journal for the week ending June30, 1995, plus two (2) percentage points. Therate is 6.58% for the week ending June 30,1995, plus 2% for a total of 8.58%.

B. The debt associated with increasesin licensed beds or renovations/major im-provements after the end of the facility’s ratesetting cost report and will be added to thecapital asset debt from the rate setting costreport. The facility shall provide adequatedocumentation to support the additional debtas required in paragraph (7)(E)2. If adequatedocumentation is not provided to support theadditional asset debt, it will be assumed toequal the facility asset value.

C. The following is an illustration ofhow subparagraph (11)(D)2.A. is calculated:Facility Asset Value $4,331,573Capital Asset Debt $2,371,094

$1,960,479Percentage of Return × 9.48%Rate of Return $ 185,853

3. Computed interest and pass throughexpenses.

A. Add property insurance (line 107)and property taxes (lines 108 and 109). Alsoadd interest subject to limits identified in sub-

section (7)(F). These lines are found in thecost report, version MSIR-1 (3-95).

B. The following is an illustration ofhow subparagraph (11)(D)3.A. is calculated:Computed Interest $207,840Insurance $ 7,594Property Taxes $ 40,548Pass Through Expenses $ 48,142

4. Capital Component Per Diem Calcu-lation.

A. A per diem is calculated by divid-ing the sum of rental value, rate of return,and computed interest by the number of bedsdetermined in subparagraph (11)(D)1.A.times three hundred sixty-five (365) adjustedby the greater of the minimum utilization asdetermined in subsection (7)(O) or the facili-ty’s occupancy from the rate setting costreport. The following is an illustration of howsubparagraph (11)(D)4.A. is calculated:Rental Value $108,289Rate of Return $185,853Computed Interest $207,840Total $501,982Divided by Annualized

Patient Days 56,077Capital Per Diem $ 8.95

B. A per diem is calculated by divid-ing the pass through expenses by the greaterof the minimum utilization as determined insubsection (7)(O) or the facility’s patient daysfrom the rate setting cost report. The follow-ing is an illustration of how subparagraph(11)(D)4.B. is calculated:Pass Through Expenses $48,142Patient Days 55,146Pass Through Per Diem $ .87

C. The capital component per diem isthe sum of subparagraph (11)(D)4.A. and(11)(D)4.B.Capital Per Diem $ 8.95Pass-Through Per Diem $ .87Total Capital Component

Per Diem $ 9.82(E) Working Capital Allowance. Each HIV

nursing facility’s working capital per diemshall be equal to one and one-tenth (1.1)months of each facility’s per diem for patientcare, ancillary, and administration times theChase Manhattan prime rate on July 3, 1995,plus two (2) percentage points. The followingis an illustration of how subsection (11)(E) iscalculated:Patient Care $30.00Ancillary $ 7.00Administration $20.00Total Per Diem $57.00divided by 12 months 12

$ 4.75Times 1.1 months 1.1

$ 5.23Times Prime + 2% (Chase Manhattan plus 2%) 11%

Working Capital Allowanceper day $ .58


Secretary of State


(F) The following is an illustration of howsubsections (11)(A), (11)(B), (11)(C),(11)(D), and (11)(E) determine the per diemrate: Allowable Cost Ceiling Per Diem

Patient Care $38.00 $40.00 $38.00Ancillary $ 8.00 $ 6.00 $ 6.00Administration $12.00 $11.00 $11.00Capital (FRV) $ 9.82Working Capital Allowance $ .58Total Per Diem $65.40

(12) Reimbursement Rate Determination. AnHIV nursing facility’s reimbursement rateshall be determined by the division asdescribed in sections (11), (12), (13), and(14), subject to limitations prescribed else-where in this regulation.

(A) A facility entering the Medicaid Pro-gram after November 30, 1995, shall receivean interim rate as defined in subsection(4)(FF) to be effective on the initial date ofMedicaid certification. A prospective rateshall be determined in accordance with section(11) from the desk audited and/or field auditedfacility fiscal year cost report which covers thesecond full twelve (12)-month fiscal year fol-lowing the facility’s initial date of Medicaidcertification. This prospective rate shall beretroactively effective and shall replace theinterim rate for services beginning on the firstday of the facility’s second full twelve (12)-month fiscal year.

(B) A facility with a valid Medicaid partic-ipation agreement in effect after November30, 1995, which either voluntarily or invol-untarily terminates its participation in theMedicaid Program and which re-enters theMedicaid Program, shall have its prospectiverate established as the rate in effect on theday prior to the date of termination from par-ticipation in the program plus rate adjust-ments which may have been granted witheffective dates subsequent to the terminationdate but prior to re-entry into the program asdescribed in subsection (13)(A). Thisprospective rate shall be effective for servicedates on and after the effective date of the re-entry following a voluntary or involuntarytermination.

(13) Adjustments to the ReimbursementRates. Subject to the limitations prescribedelsewhere in this regulation, a facility’s reim-bursement rate may be adjusted as describedin this section and 13 CSR 70-10.016.

(A) Global Per Diem Rate Adjustments. Afacility with either an interim rate or aprospective rate may qualify for the globalper diem rate adjustments as set forth in 13CSR 70-10.016. Global per diem rate adjust-ments shall be added to the specified costcomponent ceiling.

(B) Special Per Diem Rate Adjustments.

Special per diem rate adjustments may beadded to a qualifying facility’s rate withoutregard to the cost component ceiling if specif-ically provided as described below.

1. Replacement beds. A facility with aprospective rate in effect on or after Novem-ber 30, 1995, may request a rate adjustmentfor replacement beds that resulted in the samenumber of beds being delicensed with theDivision of Aging. The facility shall providedocumentation from the Division of Agingthat verifies the number of beds used forreplacement have been delicensed from thatfacility. The rate adjustment will be calculat-ed as the difference between the capital com-ponent per diem (fair rental value, FRV)prior to the replacement beds being placed inservice and the capital component per diemFRV including the replacement beds placedin service as calculated in subsection (11)(D)including the replacement beds placed in ser-vice. The capital component is calculated forthe replacement beds using the asset valueper licensed bed as determined using the R.S. Means Construction Index for nursingfacility beds adjusted for the Missouri index-es for the date the replacement beds areplaced in service.

2. Additional beds. A facility with aprospective rate in effect on or after Novem-ber 30, 1995, may request a rate adjustmentfor additional beds. The facility must obtainan approved certificate of need or applicablewaiver for the additional beds. The rateadjustment will be calculated as the differ-ence between the capital component per diemFRV prior to the additional beds being placedin service and the capital component perdiem FRV including the additional beds ascalculated in subsection (11)(D) including theadditional beds placed in service. The capitalcomponent is calculated for the additionalbeds using the asset value per licensed bed asdetermined using the R. S. Means Construc-tion Index for nursing facility beds adjustedfor the Missouri indexes for the date the addi-tional beds are placed in service.

3. Extraordinary circumstances. A par-ticipating facility which has a prospective ratemay request an adjustment to its prospectiverate due to extraordinary circumstances. Thisrequest must be submitted in writing to thedivision within one (1) year of the occurrenceof the extraordinary circumstance. Therequest must clearly and specifically identifythe conditions for which the rate adjustmentis sought. The dollar amount of the requestedrate adjustment must be supported by com-plete, accurate, and documented records sat-isfactory to the division. If the divisionmakes a written request for additional infor-mation and the facility does not comply with-in ninety (90) days of the request for addition-al information, the division shall consider the

request withdrawn. Requests for rate adjust-ments that have been withdrawn by the facil-ity or are considered withdrawn because offailure to supply requested information maybe resubmitted once for the requested rateadjustment. In the case of a rate adjustmentrequest that has been withdrawn and thenresubmitted, the effective date shall be thefirst day of the month in which the resubmit-ted request was made providing that it wasmade prior to the tenth day of the month. Ifthe resubmitted request is not filed by thetenth of the month, rate adjustments shall beeffective the first day of the following month.Conditions for an extraordinary circumstanceare as follows:

A. When the provider can show that itincurred higher costs due to circumstancesbeyond its control, the circumstances werenot experienced by the nursing home industryin general and the costs have a substantialcost effect;

B. Extraordinary circumstancesinclude:

(I) Natural disasters such as fires,earthquakes, and floods that are not coveredby insurance and that occur in a federallydeclared disaster area; and

(II) Vandalism and/or civil disorderthat are not covered by insurance; and

C. The rate increase shall be calculat-ed as follows:

(I) The one (1) time costs (coststhat will not be incurred in future fiscalyears):

(a) To determine what portion ofthe incurred costs will be paid, the divisionwill use the patient occupancy days from lat-est available quarterly occupancy survey fromthe Division of Aging for the time period pre-ceding when the extraordinary circumstancesoccurred; and

(b) The costs directly associatedwith the extraordinary circumstances will bemultiplied by the above percent. This amountwill be divided by the paid days for the monththe rate adjustment becomes effective perparagraph (13)(B)8. This calculation willequal the amount to be added to the prospec-tive rate for only one (1) month, which willbe the month the rate adjustment becomeseffective. For this one (1) month only, theceiling will be waived.

(II) For ongoing costs (costs thatwill be incurred in future fiscal years): Ongo-ing annual costs will be divided by the greaterof: annualized (calculated for a twelve(12)-month period) total patient days from thelatest cost report on file or eighty-five percent(85%) of annualized total bed days. This cal-culation will equal the amount to be added tothe respective cost center, not to exceed thecost component ceiling. The rate adjustment,subject to ceiling limits will be added to the



prospective rate.(III) For capitalized costs, a capital

component per diem FRV will be calculatedas determined in subsection (11)(D). The rateadjustment will be calculated as the differ-ence between the capital component per diemFRV prior to the extraordinary circumstancesand the capital component per diem FRVincluding the extraordinary circumstances.

4. Quality Assurance Incentive. A. Each HIV nursing facility with an

interim or prospective rate on or after July 1,2000, shall receive a per diem adjustment of$3.20. The Quality Assurance Incentiveadjustment will be added to the facility’s cur-rent rate.

B. The Quality Assurance Incentiveper diem increase shall be used to increase theexpenditures to a nursing facility’s directpatient care costs. Direct patient care costsinclude all expenses in the patient care costcomponent (i.e., lines 46 through 69 of Sched-ule B in the Title XIX Cost Report). Anyincreases in wages and benefits already codi-fied in a collective bargaining agreement ineffect as of July 1, 2000, will not be countedtowards the expenditure requirements of theQuality Assurance Incentive as stated above.Nursing facilities with collective bargainingagreements shall provide such agreements tothe division.

(C) Conditions for Prospective RateAdjustments. The division may adjust a facil-ity’s prospective rate both retrospectively andprospectively under the following conditions:

1. Fraud, misrepresentation, errors.When information contained in a facility’scost report is found to be fraudulent, misrep-resented, or inaccurate, the facility’s prospec-tive rate may be both retroactively andprospectively reduced if the fraudulent, mis-represented, or inaccurate information asoriginally reported resulted in establishmentof a higher, prospective rate than the facilitywould have received in the absence of suchinformation. No decision by the division toimpose a rate adjustment in the case of fraud-ulent, misrepresented, or inaccurate informa-tion shall in any way affect the division’s abil-ity to impose any sanctions authorized bystatute or regulation. The fact that fraudulent,misrepresented, or inaccurate informationreported did not result in establishment of ahigher prospective rate than the facility wouldhave received in the absence of this informa-tion also does not affect the division’s abilityto impose any sanctions authorized by statuteor regulation;

2. Decisions of the Administrative Hear-ing Commission, or settlement agreementsapproved by the Administrative HearingCommission;

3. Court Order; and

4. Disallowance of federal financial par-ticipation.

(14) Exceptions.(A) For those Medicaid-eligible recipients

who have concurrent Medicare Part A skillednursing facility benefits available, Medicaidreimbursement for covered days of stay in aqualified facility will be based on this coin-surance as may be imposed under TitleXVIII.


ties set forth in this regulation, the divisionmay also impose sanctions against a providerin accordance with state regulation 13 CSR70-3.030, Sanctions for False or FraudulentClaims for Title XIX Services, or any othersanction authorized by state or federal law orregulations.

(B) Overpayments due the Medicaid Pro-gram from a provider shall be recovered bythe division in accordance with state regula-tion 13 CSR 70-3.030, Sanctions for False orFraudulent Claims for Title XIX Services.

(16) Appeals. In accordance with sections208.156 and 622.055, RSMo, providers mayseek hearing before the Administrative Hear-ing Commission of final decisions of thedirector or the division.

(17) Payment in Full. Participation in the pro-gram shall be limited to providers who acceptas payment in full, for covered servicesrendered to Medicaid recipients, the amountpaid in accordance with these regulations andother applicable payments.

(18) Provider Participation. Payments madein accordance with the standards and methodsdescribed in this regulation are designed toenlist participation of a sufficient number ofproviders in the program so that eligible per-sons can receive the medical care and ser-vices included in the regulation at least to theextent these services are available to the gen-eral public.

(19) Transition. Cost reports used for ratedetermination shall be adjusted by the divi-sion in accordance with the applicable costprinciples provided in this regulation.

(20) Rebasing of HIV Nursing Facility Rates.(A) Effective July 1, 2004, HIV nursing

facility rates shall be rebased on an annualbasis. The rebased rates shall be phased in asset forth below in subsection (20)(B). EachHIV nursing facility shall have its prospectiverate recalculated using the same principles

and methodology as detailed throughout sec-tions (1)–(19) of this regulation, unless other-wise noted in this section (20). The follow-ing items have been updated to reflect therebase:

1. HIV nursing facility rates shall berebased on an annual basis using the costreport year that is three (3) years prior to theeffective date of the rate change. For exam-ple, for SFY 2005, the effective date of therate change is for dates of service beginningJuly 1, 2004 and the cost report year used torecalculate rates shall be 2001; for SFY2006, the effective date of the rate change isfor dates of service beginning July 1, 2005and the cost report year used to recalculaterates shall be 2002; etc.

A. A new databank shall be devel-oped from the cost reports for each rebaseyear in accordance with paragraph (20)(A)1.and subsection (4)(P).

B. The costs in the databank shall betrended using the indices from the mostrecent publication of the Health-Care CostReview available to the division using the“CMS Nursing Home without Capital Mar-ket Basket” table. The costs shall be trendedusing the second quarter indices for eachyear. The costs shall be trended for the yearsfollowing the cost report year, up to andincluding the state fiscal year correspondingto the effective date of the rates. For SFY2005, the trends are from the First Quarter2004 publication of the Health-Care CostReview and include the following:

(I) 2002:2 = 3.2%(II) 2003:2 = 3.4%(III) 2004:2 = 2.3%(IV) 2005:2 = 2.3%(V) The total trend applied to the

2001 cost report data is 11.2%.C. The medians and ceilings shall be

recalculated each year, based upon the trend-ed costs included in the new databank that isdeveloped each year.

D. The costs, beds, days, renova-tions/major improvements, loans, etc. fromeach facility’s cost report included in thedatabank shall be used to recalculate eachfacility’s rate. The costs reflected in eachfacility’s cost report shall be trended asdetailed above in (20)(A)1.B.

2. The asset value used to determine thecapital cost component, as set forth in sub-section (11)(D), shall be updated each yearbased upon the RS Means Building Construc-tion Cost Data for the year coinciding withthe effective date of the rates. The assetvalue is determined by using the median, totalcost of construction per bed for nursinghomes from the “S.F., C.F., and % of TotalCosts” table and adjusting it by the totalweighted average index for Missouri cities


Secretary of State


from the “City Cost Indexes” table. For SFY2005, the asset value shall be forty-one thou-sand seven hundred twenty-eight dollars($41,728).

3. The age of the beds shall be calculat-ed from the year coinciding with the effectivedate of the rates.

4. The interest rate used in determiningthe capital cost component and working cap-ital allowance, as set forth in subsections(7)(F), (11)(D), and (11)(E), shall be updatedto reflect the prime rate as reported by theFederal Reserve and published in the WallStreet Journal on the first business day ofJune for the year coinciding with the effectivedate of the rates plus two percent (2%). ForSFY 2005, the interest rate shall be the primerate of four percent (4%), as published June1, 2004, plus two percent (2%) for a total ofsix percent (6%).

5. The rate of return used in determiningthe capital cost component, as set forth insubsection (11)(D), shall be updated toreflect the interest (i.e., coupon) rate for themost recent issue of thirty (30)-year TreasuryBonds in effect on the first business day ofJune for the year coinciding with the effectivedate of the rates plus two percent (2%). ForSFY 2005, the rate of return shall be the thir-ty (30)-year Treasury Bond rate of 5.375%,effective June 1, 2004, plus two percent (2%)for a total of 7.375%.

6. The administration cost componentper diem calculation shall not be adjusted forminimum utilization.

7. The capital cost component per diemcalculation shall be adjusted for minimumutilization using the Department of Healthand Senior Services’ (DHSS) IntermediateCare Facility/Skilled Nursing FacilityCertificate of Need Quarterly Survey (CONQuarterly Survey) for the most recent quarteravailable to the division relative to the effec-tive date of the rates. The occupancy datafrom the CON Quarterly Survey shall beadjusted by the division using total licensedbeds rather than available beds as is used byDHSS. For SFY 2005, the minimum utiliza-tion percent for the capital component is theadjusted industry average from the October–December 2003 CON Quarterly Survey andshall be seventy-three percent (73%).

8. Since rates are being recalculatedeach year, rate adjustment requests forreplacement beds, additional beds, and/orextraordinary circumstances as set forth inparagraphs (13)(B)1., (13)(B)2., and(13)(B)3. are no longer allowed.

(B) The rebased rates shall be phased in, asset forth below:

1. A preliminary rebased rate shall becalculated using the same principles and

methodology as detailed throughout sections(1)–(19) of this regulation and the updateditems detailed above in paragraphs(20)(A)1.–8.

2. The total increase resulting from therebase each year shall be calculated as fol-lows:

A. Each facility’s current rate as ofJune 30 of each year shall be compared to thepreliminary rebased rate effective July 1 ofthe following SFY. For example, for SFY2005, the facility’s rate as of June 30, 2004shall be compared to the preliminary rebasedrate effective July 1, 2004; for SFY 2006, thefacility’s rate as of June 30, 2005 shall becompared to the preliminary rebased rateeffective July 1, 2005; etc.

(I) The NFRA shall not be includedin the current rate or the preliminary rebasedrate for comparison purposes in determiningthe total increase.

(II) The current NFRA shall beadded to the rate determined below in sub-paragraph (20)(B)2.B.

B. If the preliminary rebased rate isgreater than the current rate, the differencebetween the two (2) shall represent the totalincrease that will be phased in by grantingone-third (1/3) of the total increase each year.For SFY 2005, one-third (1/3) of the totalincrease shall be added to the facility’s cur-rent rate as of June 30, 2004, less the reduc-tion in the nursing facility operations adjust-ment of fifty-four cents (54¢) effective July1, 2004 as set forth in (13)(A)5. The currentNFRA shall be added to that total and shallbe the facility’s prospective rate for SFY2005.

C. If the preliminary rebased rate isless than the current rate, the facility shallcontinue to receive its current rate includingthe current NFRA for the SFY.

(C) Effective for dates of service beginningApril 1, 2005, the rebased rates for SFY2005 shall be calculated as follows:

1. The audited 2001 cost report datashall continue to be used to develop the data-bank and to determine each nursing facility’srebased rate. The audited 2001 cost reportdata; the licensed beds data; and the bedequivalencies data used to determine eachnursing facility’s final rate paid for dates ofservices effective July 1, 2004 shall bedeemed final. This finalized data will be usedas the base to calculate the rates effectiveApril 1, 2005. The following items have beenrevised for the April 1, 2005 rate calculation:

A. A new databank shall be developedusing the audited 2001 cost report data setforth above in paragraph (20)(C)1. for nurs-ing facilities enrolled in the Medicaid pro-gram as of March 15, 2005 in accordance

with subsection (4)(S). B. The administration and capital cost

components shall be adjusted for minimumutilization at eighty-five percent (85%) occu-pancy, rather than as set forth in paragraphs(20)(A)6.–7.

(21) Per Diem Rate Calculation Effective forDates of Service Beginning July 1, 2005.Effective for dates of service beginning July1, 2005, the rebase provisions set forth insection (20) shall not apply. Effective fordates of service beginning July 1, 2005, theper diem rates shall be calculated using thesame principles and methodology as detailedthroughout sections (1)–(19) of this regula-tion, except that the data indicated in this sec-tion (21) shall be used.

(A) The audited 2001 cost report data shallbe used to develop the databank and to deter-mine each nursing facility’s per diem rate.The audited 2001 cost report data; thelicensed beds data; and the bed equivalenciesdata used to determine each nursing facility’sfinal rate paid for dates of services effectiveJuly 1, 2004 shall be deemed final. Thisfinalized data will be used as the base to cal-culate the rates effective July 1, 2005.

1. A new databank shall be developedusing the audited 2001 cost report data setforth above in subsection (21)(A) for nursingfacilities enrolled in the Medicaid program asof March 15, 2005 in accordance with sub-section (4)(S).

2. The costs in the databank shall betrended using the second quarter indices fromthe First Quarter 2004 publication of theHealth-Care Cost Review using the “CMSNursing Home without Capital Market Bas-ket” table. The costs shall be trended for theyears following the cost report year, up to andincluding SFY 2005. The trends applied tothe 2001 cost report data include the follow-ing:

A. 2002:2 = 3.2%B. 2003:2 = 3.4%C. 2004:2 = 2.3%D. 2005:2 = 2.3%E. The total trend applied to the

2001 cost report data is 11.2%.3. The medians and ceilings shall be

recalculated, based upon the trended costsincluded in the new databank.

4. The costs, beds, days, renova-tions/major improvements, loans, etc. fromeach facility’s cost report included in thedatabank shall be used to calculate each nurs-ing facility’s rate. The costs reflected in eachfacility’s cost report shall be trended asdetailed above in paragraph (21)(A)2.

(B) The asset value used to determine thecapital cost component, as set forth in sub-section (11)(D), shall be based upon the 2004



publication of the RS Means Building Con-struction Cost Data. The asset value is deter-mined by using the median, total cost of con-struction per bed for nursing homes from the“S.F., C.F., and % of Total Costs” table andadjusting it by the total weighted averageindex for Missouri cities from the “City CostIndexes” table. The asset value shall beforty-one thousand seven hundred twenty-seven dollars and fifty cents ($41,727.50).

(C) The age of the beds shall be calculatedfrom 2004.

(D) The interest rate used in determiningthe capital cost component and working cap-ital allowance, as set forth in subsections(7)(F), (11)(D), and (11)(E), shall be theprime rate as reported by the Federal Reserveand published in the Wall Street Journal onthe first business day of June 2004 plus twopercent (2%). The interest rate shall be theprime rate of four percent (4%), as publishedJune 1, 2004, plus two percent (2%) for atotal of six percent (6%).

(E) The rate of return used in determiningthe capital cost component, as set forth insubsection (11)(D), shall be the interest (i.e.,coupon) rate for the most recent issue of thir-ty (30)-year Treasury Bonds in effect on thefirst business day of June 2004 plus two per-cent (2%). The rate of return shall be thethirty (30)-year Treasury Bond rate of5.375%, effective June 1, 2004, plus twopercent (2%) for a total of 7.375%.

(F) The administration and capital costcomponents shall be adjusted for minimumutilization at eighty-five percent (85%) occu-pancy.

(G) Rate adjustment requests for replace-ment beds, additional beds, and/or extraordi-nary circumstances as set forth in paragraphs(13)(B)1., (13)(B)2., and (13)(B)3. are nolonger allowed.

(H) The rates effective for dates of servicebeginning July 1, 2005 shall be determined asset forth below:

1. A preliminary rate for July 1, 2005shall be calculated using the same principlesand methodology as detailed throughout sec-tions (1)–(19) of this regulation and theupdated items detailed above in subsections(21)(A)–(G).

2. The total increase resulting from theJuly 1, 2005 preliminary rate calculationshall be calculated as follows:

A. Each facility’s rate as of June 30,2004, less the reduction in the nursing facilityoperations adjustment of fifty-four cents(54¢) effective July 1, 2004 as set forth inparagraph (13)(A)5., shall be compared tothe July 1, 2005 preliminary rate calculation.

(I) The high volume adjustment, ifapplicable, and the NFRA shall not beincluded in the June 30, 2004 rate or the July

1, 2005 preliminary rate for comparison pur-poses in determining the total increase.

(II) The high volume adjustment, ifapplicable, and the current NFRA shall beadded to the rate determined below in sub-paragraphs (21)(H)2.B. and (21)(H)2.C.

B. If the July 1, 2005 preliminary rateis greater than the June 30, 2004 rate includ-ing the reduction in the nursing facility oper-ations adjustment of fifty-four cents (54¢)effective July 1, 2004 as set forth in para-graph (13)(A)5., the difference between thetwo (2) shall represent the total increase.Effective for dates of service beginning July1, 2005, one-third (1/3) of the total increaseshall be added to the facility’s rate as of June30, 2004 including the reduction in the nurs-ing facility operations adjustment of fifty-fourcents (54¢) effective July 1, 2004 as set forthin paragraph (13)(A)5. The high volumeadjustment, if applicable, and the currentNFRA shall be added to that total and shallbe the facility’s prospective rate for dates ofservice beginning July 1, 2005.

C. If the July 1, 2005 preliminary rateis less than the June 30, 2004 rate includingthe reduction in the nursing facility opera-tions adjustment of fifty-four cents (54¢)effective July 1, 2004 as set forth in para-graph (13)(A)5., the facility’s prospectiverate shall be the facility’s rate as of June 30,2004 including the reduction in the nursingfacility operations adjustment of fifty-fourcents (54¢) effective July 1, 2004 as set forthin paragraph (13)(A)5. plus the high volumeadjustment, if applicable, and the currentNFRA.

APPENDIX A

COVERED SUPPLIES AND SERVICESPERSONAL CARE

Baby powderBedside tissuesBibs, all typesDeodorantsDisposable underpads of all typesGowns, hospitalHair care, basic including washing, cuts,sets, brushes, combs, nonlegend shampoo

Lotion, soap, and oilOral hygiene including denture care, cups,cleaner, mouthwashes, toothbrushes, andtoothpaste

Shaves, shaving cream, and bladesNail clipping and cleaning-routine

EQUIPMENT

Arm slingsBasinsBathing equipmentBed frame equipment including trapeze barsand bedrails

Bed pans, all typesBeds, manual, electricCanes, all typesCrutches, all typesFoot cradles, all typesGlucometersHeat cradlesHeating padsHot pack machinesHypothermia blanketMattresses, all typesPatient lifts, all typesRespiratory equipment: compressors, vapor-izers, humidifiers, IPPB machines, nebuliz-ers, suction equipment, and related sup-plies, etc.

RestraintsSand bagsSpecimen container, cup or bottleUrinals, male and femaleWalkers, all typesWater pitchersWheelchairs, standard, geriatric, and roll -about

NURSING CARE/PATIENT CARESUPPLIES

Catheter, indwelling and nonlegend suppliesDecubitus ulcer care: pads, dressings, airmattresses, aquamatic K pads (water heatedpads), alternating pressure pads, flotationpads, and/or turning frames, heel protec-tors, donuts and sheepskins

Diabetic blood and urine testing suppliesDouche bagsDrainage sets, bags, tubes, etc.Dressing trays and dressings of all typesEnema suppliesGloves, nonsterile and sterileIce bagsIncontinency care including pads, diapers,and pants

Irrigation trays and nonlegend suppliesMedicine droppersMedicine cupsNeedles including, but not limited to, hypo-dermic, scalp, vein

Nursing services: regardless of level, admin-istration of oxygen, restorative nursing care,nursing supplies, assistance with eating andmassages provided by facility personnel

Nursing supplies: lubricating jelly, betadine,benzoin, peroxide, A and D ointment,tapes, alcohol, alcohol sponges, applicators,dressings and bandages of all types, cotton-balls, and aerosol merthiolate, tonguedepressors

Ostomy supplies: adhesive, appliance, belts,face plates, flanges, gaskets, irrigation sets,night drains, protective dressings, skin bar-riers, tail closures, and bags

Suture care including trays and removal kitsSyringes, all sizes and types including ascepto Tape for laboratory tests


Secretary of State


Urinary drainage tube and bottle

THERAPEUTIC AGENTS AND SUPPLIES

Supplies related to internal feedingsI.V. therapy supplies: arm boards, needles,tubing, and other related supplies

Oxygen (portable or stationary), oxygendelivery systems, concentrators, and sup-plies

Special diets

AUTHORITY: sections 208.153 and 208.201,RSMo Supp. 2009.* Original rule filed Aug.1, 1995, effective March 30, 1996. Emergen-cy amendment filed Oct. 15, 1996, effectiveOct. 25, 1996, expired April 22, 1997. Emer-gency amendment filed Aug. 12, 1997, effec-tive Sept. 1, 1997, expired Feb. 27, 1998.Amended: Filed Aug. 12, 1997, effective Feb.28, 1998. Emergency amendment filed Sept.19, 1997, effective Oct. 1, 1997, expiredMarch 29, 1998. Amended: Filed Sept. 25,1997, effective March 30, 1998. Emergencyamendment filed Sept. 21, 1998, effectiveOct. 1, 1998, expired March 29, 1999.Amended: Filed Sept. 21, 1998, effective May30, 1999. Emergency amendment filed Sept.20, 1999, effective Oct. 1, 1999, expiredMarch 29, 2000. Amended: Filed Aug. 30,1999, effective March 30, 2000. Emergencyamendment filed July 18, 2000, effective July28, 2000, expired Jan. 24, 2001. Amended:Filed June 30, 2000, effective Feb. 28, 2001.Emergency amendment filed Sept. 22, 2003,effective Oct. 1, 2003, terminated Oct. 29,2003. Amended: Filed Sept. 22, 2003, effec-tive May 30, 2004. Emergency amendmentfiled June 18, 2004, effective July 1, 2004,expired Dec. 15, 2004. Amended: Filed Aug.16, 2004, effective Feb. 28, 2005. Emergencyamendment filed March 21, 2005, effectiveApril 1, 2005, expired Sept. 27, 2005. Emer-gency amendment filed June 20, 2005,expired Dec. 27, 2005. Amended: FiledMarch 29, 2005, effective Sept. 30, 2005.Emergency amendment filed June 15, 2006,effective July 1, 2006, expired Dec. 28, 2006.Amended: Filed May 15, 2006, effective Nov.30, 2006. Emergency amendment filed Sept.17, 2007, effective Oct. 1, 2007, expiredMarch 28, 2008. Amended: Filed March 30,2007, effective Nov. 30, 2007. Amended:Filed July 1, 2008, effective Jan. 30, 2009.Amended: Filed March 11, 2010, effectiveSept. 30, 2010.

*Original authority: 208.153, RSMo 1967, amended 1967,1973, 1989, 1990, 1991, 2007 and 208.201, RSMo 1987,amended 2007.

13 CSR 70-10.100 Limitation on AllowableCapital Cost Overruns for New Institu-tional Health Services in Title XIX Reim-bursement Rate Setting

PURPOSE: This rule establishes a limitationon the allowance of capital cost overruns inthe construction of new institutional healthservices for Title XIX reimbursement rate set-ting purposes.

(1) For implementation purposes of this rule,the following definitions shall apply:

(A) Cost overrun is that part of projectcosts for new institutional health services inexcess of ten percent (10%) of the initial pro-ject estimate;

(B) Initial project estimate—1. Is the dollar amount for which the

Missouri Health Facilities Review Committeeissued a Certificate of Need (CON); or

2. For those facilities deemed to havereceived a CON, is the dollar amount speci-fied on the binding construction or purchasecontract which was executed prior to October1, 1980;

(C) New institutional health services arethose as specified in section 197.305(9),RSMo; and

(D) Project costs are those costs subject toreview under CON and include the generalconstruction costs, site work, land acquisitioncosts, architectural and engineering fees, con-tingency costs, interest during construction,financing costs and equipment acquisitioncosts.

(2) Project costs for new institutional healthservices in excess of ten percent (10%) of theinitial project estimates shall not be consideredin establishing a Title XIX per-diem rate forthe first thirty-six (36) months that a facilityreceives payment for services provided undersection 208.152, RSMo for any facility thatapplies for approval or consent for a costoverrun on or after November 11, 1982. Thislimitation is effective whether or not approvalis granted under section 197.315.7, RSMo. Ifapproval or consent is given, a facility’s costoverrun will be considered in establishing aTitle XIX per-diem rate after the thirty-six(36)-month period in accordance with theprovisions of the Title XIX reimbursementplan applicable to the provider type and sub-ject to the limitations.

(3) If a facility applies for approval or consentfor a cost overrun prior to November 11,1982, and subsequently receives the requisiteapproval or consent, the dollar amount of thecost overrun will be considered in establish-ing a Title XIX per-diem rate in accordancewith the provisions of the Title XIX reim-

bursement plan applicable to the providertype and subject to the limitations of the plan,notwithstanding the provisions of section197.357, RSMo.

AUTHORITY: sections 207.020, RSMo Supp.1993, 208.159, RSMo 1986 and 208.153,RSMo Supp. 1991.* This rule was previouslyfiled as 13 CSR 40-81.082. Emergency rulefiled Aug. 5, 1982, effective Aug. 15, 1982,expired Nov. 10, 1982. Original rule filedAug. 5, 1982, effective Nov. 11, 1982.

*Original authority: 207.020, RSMo 1945, amended 1961,1965, 1977, 1981, 1982, 1986, 1993; 208.153, RSMo1967, amended 1967, 1973, 1989, 1990, 1991; and208.159, RSMo 1979.

13 CSR 70-10.110 Nursing Facility Reim-bursement Allowance

PURPOSE: This regulation is necessary tooutline the provisions allowed in House Bill1362.

PUBLISHER’S NOTE: The secretary of statehas determined that the publication of theentire text of the material which is incorpo-rated by reference as a portion of this rulewould be unduly cumbersome or expensive.This material as incorporated by reference inthis rule shall be maintained by the agency atits headquarters and shall be made availableto the public for inspection and copying at nomore than the actual cost of reproduction.This note applies only to the reference mate-rial. The entire text of the rule is printedhere.

(1) Nursing Facility ReimbursementAllowance (NFRA). NFRA shall be assessedas described in this section.

(A) Definitions.1. Nursing facility. An institution or a

distinct part of an institution which—A. Is primarily engaged in providing

to residents—(I) Skilled nursing care and related

services for residents who require medical ornursing care; or

(II) Rehabilitation services for therehabilitation of injured, disabled, or sickpersons; or

(III) On a regular basis, health-careand services to individuals who, because oftheir mental or physical condition, requirecare and services (above the level of roomand board) which can be made available tothem only through institutional facilities andis not primarily for the care and treatment ofmental diseases; and

B. Has in effect a transfer agreement



with one (1) or more hospitals as required byfederal law; and

C. Meets the requirements for a nurs-ing facility described in section 1919(b)–(d)of the Social Security Act; or

D. Is licensed in accordance withChapter 198, RSMo, as a skilled nursingfacility.

2. Fiscal period. A facility’s twelve-(12-) month fiscal reporting period coveringthe same twelve- (12-) month period as itsfederal tax year.

3. Department. Department of SocialServices.

4. Director. Director of the Departmentof Social Services.

5. Division. MO HealthNet Division,Department of Social Services.

6. Department of Health and Senior Ser-vices (DHSS). The Missouri state agencyresponsible for licensing and inspecting alllong-term care facilities operating in Mis-souri and certifying annually those facilitiesparticipating in the Medicare or Medicaidprogram.

7. Engaging in the business of providingnursing facility services. Accepting paymentfor nursing facility services rendered.

8. Quarterly survey. The survey filledout each quarter by a nursing facility provid-ing data on its licensed and certified beds andthe related resident occupancy days (ROD)that is submitted to the DHSS. The surveyform, “Missouri Department of Health andSenior Services, Division of Senior Servicesand Regulation, ICF/SNF Certificate of NeedQuarterly Survey” (form MO 886-9001 (6-95)), incorporated by reference in this rule, ispublished by the Department of Health andSenior Services, Division of Senior Servicesand Regulation, PO Box 570, Jefferson City,MO 65102. This rule does not incorporateany subsequent amendments or additions.

9. Applicable quarterly survey. Thequarterly survey used by the division fromwhich the patient occupancy days are taken todetermine the NFRA assessment for a givenperiod as set forth in section (2).

10. Patient occupancy days. The numberof days that residents occupied the licensedbeds in a nursing facility as shown on the quar-terly survey, line D. “Number of occupiedRODs (days patients in beds or beds held).”

11. Annualized level of patient occupan-cy days. The annual level of patient occupan-cy days used to determine the annual NFRAassessment.

A. For existing nursing facilitieswhose NFRA assessment is set in accordancewith paragraph (1)(B)1. of this regulation,the annualized level of patient occupancy daysis calculated by taking the number of patient

occupancy days shown on line D. of the quar-terly survey multiplied by four (4).

B. For nursing facilities whose NFRAassessment is not set by the general rule setforth in paragraph (1)(B)1. (i.e., it is an excep-tion set under subparagraph (1)(B)1.A., is anew facility set under paragraph (1)(B)2.,qualifies for a NFRA Adjustment in accor-dance with section (3), etc.), the annualizedlevel of patient occupancy days may be calcu-lated differently and is set forth in those sec-tions.

12. Licensed beds. Any skilled nursingfacility or intermediate care facility bed meet-ing the licensing requirement of the MissouriDepartment of Health and Senior Services.

13. Licensed bed days. The total numberof patient days available for use during agiven period for all licensed beds. For pur-poses of this regulation, licensed bed days arecalculated for an annual period and is thenumber of licensed beds times three hundredsixty-five (365) days.

14. Change of ownership. A change inthe ownership, control, operator, or leaseholdinterest.

(B) Each nursing facility, except any nurs-ing facility operated by the Department ofMental Health, engaging in the business ofproviding nursing facility services in Mis-souri shall pay a Nursing Facility Reim-bursement Allowance (NFRA).

1. The NFRA owed for existing nursingfacilities shall be calculated by multiplying theNFRA rate by the annualized level of patientoccupancy days from the applicable quarterlysurvey. The NFRA shall be divided by andcollected over the number of months for whicheach NFRA rate is effective. The NFRArates, effective dates, and applicable quarter-ly surveys are set forth in section (2).

A. Exceptions.(I) If an existing nursing facility’s

applicable quarterly survey, as set forth insection (2), does not represent a full quarter’sworth of days due to a termination, temporaryclosure, change of ownership, etc., annual-ized level of patient occupancy days used todetermine the NFRA shall be the greater of:

(a) The annualized level ofpatient occupancy days from the quarterlysurvey immediately prior to the applicablequarterly survey, if it represents a full quar-ter’s worth of days; or

(b) Fifty percent (50%) oflicensed bed days (i.e., number of licensedbeds times three hundred sixty-five (365)days times fifty percent (50%)).

(II) If an existing nursing facilitydid not have patient occupancy informationincluded on the applicable quarterly surveydue to a termination, temporary closure,

change of ownership, etc., the annualizedlevel of patient occupancy days used to deter-mine the NFRA shall be the greater of:

(a) The annualized level ofpatient occupany days from the quarterly sur-vey immediately prior to the applicable quar-terly survey, if it represents a full quarter’sworth of days; or

(b) Fifty percent (50%) oflicensed bed days.

(III) If a nursing facility has ICFlicensed beds and SNF licensed beds andnone of the beds are Medicaid certified, onlythe SNF beds are subject to NFRA. Theannualized level of patient occupancy daysused to determine the NFRA shall be deter-mined by multiplying the occupancy percent-age from the applicable quarterly survey bythe licensed bed days for the SNF licensedbeds (i.e., number of SNF licensed bedstimes three hundred sixty-five (365) days).

(IV) If two (2) existing nursingfacilities merge, with one (1) nursing facilityterminating and transferring its beds to theremaining facility, the NFRA for the two (2)previously independent nursing facilities shallbe added together and assessed to the remain-ing facility.

2. The initial NFRA owed by a newlylicensed nursing facility that just opened as aresult of receiving a Certificate of Need(CON) for a new nursing facility shall be cal-culated by multiplying the NFRA rate by theannualized level of patient occupancy daysbased on fifty percent (50%) of licensed beddays. The NFRA shall be prorated for thenumber of months remaining in the NFRAperiod. If a nursing facility’s licensure date isafter the first day of a month, the NFRA willbe collected beginning with the first day ofthe month following the actual licensure date.

3. If a nursing facility ceases to providenursing facility services, the nursing facilityis not required to pay the NFRA during themonths in which it does not have residents,even though it may retain a license due totemporary closure for renovations, replace-ment, etc. If a nursing facility provided nurs-ing facility services for any portion of amonth, it shall pay the NFRA for the entiremonth (i.e., the NFRA shall not be proratedfor the month in which it ceases to providenursing facility services). If the facilityreopens, it shall resume paying the NFRA. Itshall owe the same NFRA as it did prior toclosing, if the NFRA has not changed persection (2) below. If the NFRA has changed,the facility shall be assessed in accordancewith paragraph (1)(B)1. above.

(C) Each nursing facility shall submit tothe department a statement that accuratelyreflects—


Secretary of State


1. If the nursing facility is owned andoperated by the state of Missouri; and

2. If the nursing facility accepts paymentfor services rendered.

(D) The department shall prepare a confir-mation schedule of the information from eachnursing facility’s 1994 second quarterly sur-vey from the Division of Aging and provideeach nursing facility with this schedule.

1. This schedule shall include: A. Provider name; B. Provider number; and C. Total patient occupancy days.

2. Each nursing facility required to paythe Nursing Facility ReimbursementAllowance shall review the information in theschedule referenced in paragraph (1)(D)1. ofthis regulation and provide the departmentwith correct information. If the informationsupplied by the department is incorrect, thefacility within thirty (30) calendar days ofreceiving the confirmation schedule mustnotify the division and explain the correc-tions. If the division does not receive correct-ed information within thirty (30) calendardays, it will be assumed to be correct, unlessthe nursing facility files a protest in accor-dance with subsection (1)(F) of this regula-tion.

(E) Payment of the NFRA.1. Offset. Each nursing facility may

request that their Nursing Facility Reimburse-ment Allowance be offset against any Mis-souri Medicaid payment due to that nursingfacility. A statement authorizing the offsetmust be on file with the division before anyoffset may be made relative to the nursingfacility reimbursement allowance by the nurs-ing facility. Assessments shall be allocatedand deducted over the applicable serviceperiod. Any balance due after the offset shallbe remitted by the nursing facility to thedepartment. The remittance shall be madepayable to the Director of the Department ofRevenue and deposited in the state treasury tothe credit of the Nursing Facility Reimburse-ment Allowance Fund. If the remittance isnot received before the next Medicaid pay-ment cycle, the division shall offset the bal-ance due from that check.

2. Check. If no offset has been autho-rized by the nursing facility, the division willbegin collecting the nursing facility reim-bursement allowance on the first day of eachmonth. The NFRA shall be remitted by thenursing facility to the department. The remit-tance shall be made payable to the director ofthe Department of Revenue and deposited inthe state treasury to the credit of the NursingFacility Reimbursement Allowance Fund.

3. Failure to pay the NFRA. If a nursingfacility fails to pay its NFRA within thirty

(30) days of notice, the NFRA shall be delin-quent. For any delinquent NFRA, the depart-ment may proceed to enforce the state’s lienof the property of the nursing facility, maycancel or refuse to issue, extend, or reinstatethe Medicaid provider agreement or may seekdenial, suspension, or revocation of licensegranted under Chapter 198, RSMo. The newowner, as a result of a change in ownership,shall have his/her NFRA paid by the samemethod the previous owner elected.

(F) Each nursing facility, upon receivingwritten notice of the final determination of itsNursing Facility Reimbursement Allowancemay file a protest with the director of thedepartment setting forth the grounds onwhich the protest is based, within thirty (30)days from the date of receipt of written noticefrom the department. The director of thedepartment shall reconsider the determina-tion and, if the nursing facility so requested,the director or the director’s designee shallgrant the nursing facility a hearing to be heldwithin forty-five (45) days after the protest isfiled, unless extended by agreement betweenthe nursing facility and the director. Thedirector shall issue a final decision withinforty-five (45) days of the completion of thehearing. After a final decision by the director,a nursing facility’s appeal of the director’sfinal decision shall be to the AdministrativeHearing Commission in accordance with sec-tions 208.156, RSMo and 621.055, RSMo.

(2) NFRA Rates. The NFRA rates deter-mined by the division, as set forth in subsec-tion (1)(B) above, are as follows:

(A) The NFRA will be two dollars and sev-enty-six cents ($2.76) per patient occupancyday for the period January 1, 1995 throughSeptember 30, 1995, and collected over nine(9) months (February 1995 through October1995). The applicable quarterly survey forthis period shall be the Division of Aging’sJune 1994 quarterly survey;

(B) The NFRA will be three dollars andfifty-five cents ($3.55) per patient occupancyday for the period October 1, 1995 throughSeptember 30, 1996, and collected overtwelve (12) months (November 1995 throughOctober 1996). The applicable quarterly sur-vey for this period shall be the Division ofAging’s June 1995 quarterly survey;

(C) The NFRA will be five dollars andthirty cents ($5.30) per patient occupancy dayfor the period October 1, 1996 throughSeptember 30, 1997, and collected overtwelve (12) months (November 1996 throughOctober 1997). The applicable quarterly sur-vey for this period shall be the Division ofAging’s June 1996 quarterly survey;

(D) The NFRA will be five dollars and

eighty-eight cents ($5.88) per patient occu-pancy day for the period October 1, 1997through September 30, 1998, and collectedover twelve (12) months (November 1997through October 1998). The applicable quar-terly survey for this period shall be the Divi-sion of Aging’s June 1997 quarterly survey;

(E) The NFRA will be five dollars andeighty-eight cents ($5.88) per patient occu-pancy day for the period October 1, 1998through September 30, 1999, and collectedover twelve (12) months (November 1998through October 1999). The applicable quar-terly survey for this period shall be the Divi-sion of Aging’s June 1998 quarterly survey;

(F) The NFRA will be seven dollars andfour cents ($7.04) per patient occupancy day,effective October 1, 1999. The applicablequarterly survey for this period shall be theDivision of Aging’s June 1999 quarterly sur-vey;

(G) The NFRA will be seven dollars andfifty cents ($7.50) per patient occupancy day,effective July 1, 2000. The applicable quar-terly survey for this period shall be the Divi-sion of Aging’s December 1999 quarterlysurvey;

(H) The NFRA will be seven dollars andthirty cents ($7.30) per patient occupancyday, effective July 1, 2001. The applicablequarterly survey for this period shall be theDivision of Aging’s December 2000 quarter-ly survey;

(I) The NFRA will be eight dollars andforty-two cents ($8.42) per patient occupancyday, effective July 1, 2003. The applicablequarterly survey for this period shall be theDepartment of Health and Senior Services’December 2002 quarterly survey;

(J) Effective January 1, 2005, the applica-ble quarterly survey shall be the June 2004quarterly survey. The NFRA will continue tobe eight dollars and forty-two cents ($8.42)per patient occupancy day;

(K) Effective July 1, 2005, the applicablequarterly survey shall be updated at thebeginning of each state fiscal year using theprevious December’s quarterly survey;

(L) Effective July 1, 2009, the NFRA willbe nine dollars and seven cents ($9.07) perpatient occupancy day. The applicable quar-terly survey shall be as defined in subsection(2)(K);

(M) Effective January 1, 2010, the NFRAwill be nine dollars and twenty-seven cents($9.27) per patient occupancy day. The appli-cable quarterly survey shall be as defined insubsection (2)(K);

(N) Effective October 1, 2011, the NFRAwill be eleven dollars and seventy cents($11.70) per patient occupancy day. Theapplicable quarterly survey shall be as



defined in subsection (2)(K); (O) Effective July 1, 2012, the NFRA will

be twelve dollars and eleven cents ($12.11)per patient occupancy day. The applicablequarterly survey shall be as defined in sub-section (2)(K); and

(P) Effective July 1, 2015, the NFRA willbe thirteen dollars and forty cents ($13.40)per patient occupancy day. The applicablequarterly survey shall be as defined in sub-section (2)(K).

(3) NFRA Adjustment Request. A facilitybeing assessed the NFRA may request that itscurrent NFRA assessment be adjusted, as setforth below.

(A) Qualifying Criteria. In order for afacility to receive an adjustment to its currentNFRA assessment, it must meet all of the fol-lowing criteria:

1. The facility must decrease its licensedbed capacity by at least fifteen percent(15%).

2. The facility must draft a written state-ment documenting that the decrease inlicensed bed capacity is intended to be per-manent.

A. If the facility increases its licensedcapacity back to the original capacity withinone (1) year of the decrease, the NFRAadjustment shall be voided and the facilityshall resume paying the original NFRAbeginning with the first of the month in whichthe facility made the request to DHSS toincrease licensed capacity.

3. The annualized level of patient occu-pancy days currently being assessed is notpossible to attain because it is greater thanone hundred percent (100%) of its newlicensed capacity. For example, assume afacility had one hundred thirty (130) licensedbeds and was being assessed on an average ofone hundred (100) beds:

A. If a facility decreased its license bytwenty (20) beds, being left with a total ofone hundred ten (110) licensed beds, thefacility could still obtain the occupancy atwhich it was assessed (i.e., one hundred(100) beds being assessed is less than the onehundred ten (110) licensed bed capacity).Therefore, it would not meet the criteria for aNFRA adjustment.

B. If a facility decreased its license byforty (40) beds, being left with a total of nine-ty (90) licensed beds, the facility could notobtain the occupancy at which it was assessed(i.e., one hundred (100) beds being assessedis greater than the ninety (90) licensed bedcapacity). Therefore, it would meet the crite-ria for a NFRA adjustment.

4. The facility must submit a writtenrequest to the division that includes an expla-

nation as to why it believes it qualifies for anadjustment to its NFRA and documentationsupporting its request. The following docu-mentation is required:

A. A copy of the facility’s requestsubmitted to the DHSS and/or the CON pro-gram that its licensed bed capacity bedecreased.

B. A copy of the license issued as aresult of the request for the decrease and alllicenses issued from that point forward to thecurrent license.

C. If the facility’s request submittedto the DHSS and/or the CON program todecrease its licensed bed capacity did notinclude a statement that the facility intendedfor the decrease to be permanent, such astatement must be submitted with the NFRAAdjustment Request.

D. The division may obtain this doc-umentation and any other documentation itdeems relevant to satisfy itself that the facili-ty’s licensed bed capacity has been decreasedand the facility intends for the decrease to bepermanent from the facility, the DHSS, theCON program, or any other source it deemsappropriate.

E. If the division makes a writtenrequest for additional information and thefacility does not comply within ninety (90)days of the request, the division shall consid-er the NFRA Adjustment Request withdrawn.

(B) Calculation of Adjustment. A nursingfacility meeting the criteria for a NFRAAdjustment shall have its NFRA recalculatedand it shall replace the current NFRA. Therevised, adjusted NFRA shall be calculatedas follows:

1. The facility’s new, decreased licensedbed capacity shall be multiplied by three hun-dred sixty-five (365) days to determine theannualized level of patient occupancy days.

2. The new annualized level of patientoccupancy days shall be multiplied by thecurrent NFRA rate set forth in section (2) todetermine the revised annual assessment.

3. The revised annual assessment shallbe divided by twelve (12) months to deter-mine the revised monthly assessment that thefacility will owe beginning with the effectivedate of the adjustment.

(C) Effective Date of NFRA Adjustment.The effective date of the NFRA Adjustmentshall be the first day of the month followingthe date the request is received; it will not beretroactive back to the effective date of theoriginal NFRA.

AUTHORITY: sections 198.401, 198.403,198.406, 198.409, 198.412, 198.416,198.418, 198.424, 198.427, 198.431,198.433, 198.436, and 208.159, RSMo 2000,

sections 208.153 and 208.201, RSMo Supp.2013, section 198.421, RSMo Supp. 2014, andsection 198.439, RSMo Supp. 2015.* Emer-gency rule filed Dec. 21, 1994, effective Jan.1, 1995, expired April 30, 1995. Emergencyrule filed April 21, 1995, effective May 1,1995, expired Aug. 28, 1995. Original rulefiled Dec. 15, 1994, effective July 30, 1995.Emergency amendment filed Sept. 5, 1995,effective Oct. 1, 1995, expired March 28,1996. Amended: Filed May 30, 1995, effectiveDec. 30, 1995. Amended: Filed Sept. 5, 1995,effective March 30, 1996. Emergency amend-ment filed Sept. 20, 1996, effective Oct. 1,1996, expired March 29, 1997. Emergencyamendment filed Sept. 19, 1997, effective Oct.1, 1997, expired March 29, 1998. Amended:Filed Sept. 25, 1997, effective March 30,1998. Emergency amendment filed Sept. 21,1998, effective Oct. 1, 1998, expired March29, 1999. Amended: Filed Sept. 21, 1998,effective May 30, 1999. Emergency amendmentfiled Sept. 20, 1999, effective Oct. 1, 1999expired March 29, 2000. Amended: Filed Aug.30, 1999, effective March 30, 2000. Amended:Filed Feb. 29, 2000, effective Oct. 30, 2000.Emergency amendment filed Aug. 29, 2001,effective Sept. 8, 2001, expired March 6, 2002.Amended: Filed Aug. 29, 2001, effectiveMarch 30, 2002. Emergency amendment filedSept. 22, 2003, effective Oct. 1, 2003, termi-nated Oct. 29, 2003. Amended: Filed Sept. 22,2003, effective May 30, 2004. Emergencyamendment filed Dec. 17, 2004, effective Jan.1, 2005, expired June 29, 2005. Amended:Filed Dec. 17, 2004, effective July 30, 2005.Emergency amendment filed Nov. 9, 2009,effective Nov. 19, 2009, expired Dec. 31, 2009.Amended: Filed July 1, 2009, effective Jan.30, 2010. Emergency amendment filed Dec. 1,2009, effective Jan. 1, 2010, expired June 29,2010. Amended: Filed Dec. 1, 2009, effectiveJune 30, 2010. Emergency amendment filedSept. 20, 2011, effective Oct. 1, 2011, expiredMarch 28, 2012. Amended: Filed July 1, 2011,effective Dec. 30, 2011. Emergency amend-ment filed June 20, 2012, effective July 1,2012, expired Dec. 28, 2012. Amended:Filed July 2, 2012, effective Jan. 30, 2013.Emergency amendment filed June 19, 2015,effective July 1, 2015, expired Dec. 28, 2015.Amended: Filed July 1, 2015, effective Jan.30, 2016.

*Original authority: 198.401, RSMo 1994; 198.403,RSMo 1994; 198.406, RSMo 1994; 198.409, RSMo 1994;198.412, RSMo 1994; 198.416, RSMo 1994; 198.418,RSMo 1994; 198.421, RSMo 1994, 2014; 198.424, RSMo1994; 198.427, RSMo 1994; 198.431, RSMo 1994;198.433, RSMo 1994; 198.436, RSMo 1994, amended1995; 198.439, RSMo 1994, amended 1996, 1999, 2002,2005, 2006, 2007, 2011, 2015; 208.153, RSMo 1967,amended 1967, 1973, 1989, 1990, 1991, 2007, 2012;208.159, RSMo 1979; and 208.201, RSMo 1987, amended2007.


Secretary of State


13 CSR 70-10.120 Reimbursement forNurse Assistant Training

PURPOSE: This rule establishes a methodol-ogy for payment of nurse assistant training asrequired by the Omnibus Budget Reconcilia-tion Act 87.

(1) Definitions. (A) “Nurse assistant training agency” is an

agency which is approved by the Departmentof Health and Senior Services under 19 CSR30-84.010(7).

(B) “Basic course” is the seventy-five (75)hours of classroom training, the one hundred(100) hours of on-the-job supervised training,and the final examination of the approvednurse assistant training course.

(C) “Challenge the final examination”means taking the final examination of thebasic course without taking the entire basiccourse.

(D) “Cost report” is the Financial and Sta-tistical Report for Nursing Facilities, requiredattachments, and all worksheets supplied bythe division for this purpose per 13 CSR 70-10.015. The cost report details the cost ofrendering both covered and noncovered ser-vices for the fiscal reporting period in accor-dance with the procedures prescribed by thedivision, and on forms provided by and/orapproved by the division.

(E) “Department of Health and Senior Ser-vices” is the department responsible for thesurvey, certification, and licensure as pre-scribed in Chapter 198, RSMo.

(F) “Desk audit” is the MO HealthNetDivision or its authorized agent’s audit of aprovider’s cost report without a field audit.

(G) “Division,” unless otherwise speci-fied, refers to the Department of Social Ser-vices, MO HealthNet Division that is chargedwith administration of Missouri’s MedicalAssistance (Medicaid) Program.

(H) “Facility fiscal year” is a facility’stwelve- (12-) month fiscal reporting periodcovering the same twelve- (12-) month periodas its federal tax year.

(I) “Field audit” is an on-site audit of thenursing facility’s records performed by thedepartment or its authorized agent.

(J) “Nursing facility (NF)” is, effectiveOctober 1, 1990, skilled nursing facilities,skilled nursing facilities/intermediate carefacilities, and intermediate care facilities asdefined in Chapter 198, RSMo participatingin the Medicaid Program will all be subject tothe minimum federal requirements found insection 1919 of the Social Security Act.

(K) “Occupancy rate” is a facility’s totalactual patient days divided by the total beddays for the same period as determined fromthe desk audited and/or field audited costreport.

(L) “Patient day” is the period of servicerendered to a patient between the census-tak-ing hour on two (2) consecutive days. Censusshall be taken in all facilities at midnight eachday and a census log maintained in each facil-ity for documentation purposes. Patient dayincludes the allowable temporary leave-of-absence days per 13 CSR 70-10.015(5)(D)and hospital leave days per 13 CSR 70-10.070. The day of discharge is not a patientday for reimbursement purposes unless it isalso the day of admission.

(M) “Provider or facility” is a nursingfacility with a valid Medicaid participationagreement with the Department of Social Ser-vices for the purpose of providing nursingfacility services to Title XIX-eligible recipi-ents.

(2) General Principles. (A) Provisions of this reimbursement plan

shall apply only to nursing facilities withvalid provider agreements certified by theDepartment of Social Services, MissouriMedicaid Audit and Compliance (MMAC)for participation in the Missouri MedicalAssistance (Medicaid) Program.

(B) The reimbursement determined by thisregulation shall apply only to costs incurredfor nurse assistant training and competencyevaluations for nurse assistants beginning thetraining after February 26, 1993.

(C) Program Approval—The Departmentof Health and Senior Services will approve ordisapprove nurse assistant training programsin the state of Missouri. If the Department ofHealth and Senior Services withdrawsapproval of a formerly approved nurse assis-tant training program, the facility may contin-ue to teach (and bill MO HealthNet for) thosenurse assistants who had already begun thetraining program. However, that facility maynot begin training (or bill the division) forany additional nurse assistants until it againreceives approval from the Department ofHealth and Senior Services. Nursing facilitiesreceiving a “level A” violation or extended orpartially extended survey will be ineligiblefor reimbursement for a period of two (2)years after the date of exit interview by theDepartment of Health and Senior Services.

(D) Training Agencies—Any nurse assis-tant training agency must be approved by theDepartment of Health and Senior Servicesper 19 CSR 30-84.010(7). This training agen-cy must provide seventy-five (75) classroomhours of instruction and one hundred (100)hours on-the-job training. The seventy-five(75) classroom hours of instruction mayinclude lecture, discussion, video/film usage,demonstration, and return demonstration byan approved registered nurse (RN) instructorwho remains with and is always available tostudents to answer questions and to conduct

the class. The one hundred (100) hours on-the-job training shall be done by an approvedRN or licensed practical nurse (LPN) whomeets 19 CSR 30-84.010 clinical supervisorqualifications and who directly observes theirskills when checking their competencies. Theone hundred (100) hours on-the-job trainingshall be devoted to the student; and the clini-cal supervisor or instructor must not haveother job duties at the same time, such as butnot limited to, charge nurse duties, medica-tion pass duties and/or treatment duties. Thefacility will not be reimbursed in the per-diem rate for the salary/fringes of the RNand/or LPN for time spent teaching the nurseassistant training program.

(E) Medicaid Cost Reports—Costs fornurse assistant training and competency eval-uations are to be reported in the non-allow-able column on the Medicaid cost report andare not to be covered in the per-diem rate.These costs include: any charge for trainingby an outside training agency, the cost of thecompetency evaluation, teacher salaries andfringes, necessary textbooks, and otherrequired course materials. However, costs forsalaries of nurse assistants in training orreplacement nurse assistants for those intraining or testing are to be reported in theallowable column on the Medicaid cost reportand are to be covered in the per-diem rate.

(F) Billing—Nursing facilities with validprovider agreements may bill the MO Health-Net Division for costs incurred for nurseassistant training and competency evaluationsfor nurse assistants beginning the trainingafter February 26, 1993. Facilities may onlybill for nurse assistants trained by anapproved training agency and tested by anapproved state examiner. This state examinermust be approved per 19 CSR 30-84.010(9)and must have a signed agreement with theDepartment of Health and Senior Services.Facilities may bill once a month on anapproved nurse assistant training billingform.

(G) Medicaid Utilization—Reimbursementwill be allocated based on the ratio of Medi-caid days to total patient days as reported onthe latest Medicaid cost report filed by thefacility with a year ending in the most recentyear that all nursing facility Medicaid costreports have been desk audited. If the facilitydid not have a Medicaid cost report ending inthe most recent year that all nursing facilityMedicaid cost reports have been desk audit-ed, then the average ratio of Medicaid days tototal patient days for all cost reports with end-ing dates in the most recent year that all nurs-ing facility Medicaid cost reports have beendesk audited will be used in calculating reim-bursement.

(H) Prohibition of Charges—No nurseassistant who is employed by, or who has an



offer of employment from, a nursing facilityon the date on which the assistant begins atraining and testing program may be chargedfor any portion of the program.

(3) Reimbursement for Nurse AssistantsEmployed at the Time of Training. If a nurseassistant is employed at a nursing facility andthen passes an approved nurse assistant train-ing and competency evaluation program, thedivision will reimburse a facility if all the fol-lowing criteria are met:

(A) The nurse assistant is on the MissouriDepartment of Health and Senior Servicesnurse assistant register;

(B) The individual is employed by thebilling nursing facility at the time of passingthe competency evaluation (final exam);

(C) The following reimbursement amountswill be prorated based on Medicaid utiliza-tion:

1. Three hundred sixty-five dollars($365) for a nurse assistant completing theentire basic course (all lesson plans, seventy-five (75) hours classroom training, and onehundred (100) hours on-the-job training) andpassing the final exam;

2. A percentage of the three hundredsixty-five dollars ($365) for nurse assistantswho only complete a portion of the lessonplans and pass the final exam will be paid.The percentage will be based on how manylesson plans were completed. For example:

If no on-the-job training was provided,and if only lesson plans 1, 2, 4, 5, 6,8, 9, 10, 11, 12, 41, 42, and 43 werecompleted, the percentage of the $365allowable would be:

$ 34.50 classroom training ((18.36/hr × 75 hrs)/10) = $138

$138 × 18.75 hours/75 hrs = $34.50 $ 0.00 on-the-job training (0 of 100

hours) $ 30.00 textbook and supplies $ 50.00 testing fee $ 25.00 certification fee $139.50 allowable to be prorated on Medi-

caid utilization

3. Seventy-five dollars ($75) for nurseassistants who do not complete any lessonplans through a challenge and pass the finalexam;

(D) The facility which employs the nurseassistant must submit the bill for reimburse-ment to the division on the approved billingform; and

(E) The facility must bill for nurse assis-tant training and/or competency exam withinone (1) year after the nurse assistant passedthe final exam. Nurse assistant training that

was completed prior to one (1) year beforethe effective date of this regulation and beganafter February 26, 1993, will be allowed.

(4) Reimbursement for Nurse Assistants NotYet Employed at the Time of Training. If anurse assistant is not employed at a nursingfacility and that individual pays for the nurseassistant training and competency evaluationprogram, the division will reimburse a facili-ty if all the following criteria are met:

(A) The nurse assistant is on the MissouriDepartment of Health and Senior Servicesnurse assistant register;

(B) The individual is employed by thebilling nursing facility not later than twelve(12) months after passing the final exam;

(C) The individual incurred costs for thetraining and testing, and the billing nursingfacility submits to the division documentaryevidence of those costs. The division will notreimburse costs if the nurse assistant receivedfunding for the training through a grant orother funding source that is not required to berepaid by the nurse assistant;

(D) The billing nursing facility must sub-mit documentation that it has paid the nurseassistant for the cost it is submitting to thedivision;

(E) The facility which employs the nurseassistant must submit the bill for reimburse-ment to the division on the approved billingform;

(F) The division will prorate costs basedon Medicaid utilization as follows:

1. Three hundred sixty-five dollars($365) for a nurse assistant completing theentire basic course (all lesson plans, seventy-five (75) hours classroom training, and onehundred (100) hours on-the-job training) andpassing the final exam;

2. A percentage of the three hundredsixty-five dollars ($365) for nurse assistantswho only complete a portion of the lessonplans and pass the final exam. The percentagewill be based on how many lesson plans werecompleted. See paragraph (3)(C)2. of thisregulation; and

3. Seventy-five dollars ($75) for nurseassistants who do not complete any lessonplans through a challenge process and passthe final exam; and

(G) The MO HealthNet Division will sub-tract one-twelfth (1/12) of allowable reim-bursement for each month that the nurseassistant is not employed after passing thefinal exam.

AUTHORITY: sections 208.153, 208.159,208.201, and 660.017, RSMo 2016, and sec-tion 208.152, RSMo Supp. 2018.* Originalrule filed May 30, 1995, effective Dec. 30,

1995. Amended: Filed Feb. 15, 1996, effec-tive Sept. 30, 1996. Amended: Filed Aug. 8,2018, effective March 30, 2019.

*Original authority: 208.152, RSMo 1967, amended1969, 1971, 1972, 1973, 1975, 1977, 1978, 1978, 1981,1986, 1988, 1990, 1992, 1993, 2004, 2005, 2007, 2011,2013, 2014, 2015, 2016, 2018; 208.153, RSMo 1967,amended 1967, 1973, 1989, 1990, 1991, 2007; 208.159,RSMo 1979; 208.201, RSMo 1981, amended 2007;660.017, RSMo 1993, amended 1995.

13 CSR 70-10.150 Enhancement Pools(Rescinded June 30, 2018)

AUTHORITY: sections 208.153, 208.159 and208.201, RSMo 2000. Emergency rule filedNov. 3, 2000, effective Nov. 13, 2000, expiredMay 11, 2001. Original rule filed Nov. 13,2000, effective May 30, 2001. Emergencyamendment filed July 9, 2001, effective July19, 2001, expired Feb. 28, 2002. Amended:Filed July 9, 2001, effective Dec. 30, 2001.Emergency amendment filed Oct. 29, 2002,effective Nov. 8, 2002, expired May 6, 2003.Amended: Filed Oct. 29, 2002, effective April30, 2002. Rescinded: Filed Nov. 3, 2017,effective June 30, 2018.

Rule Action Notice: 13 CSR 70-10.150(1)(B)Rule Suspension. The Missouri Constitutionauthorizes the governor to control the rate atwhich appropriations are expended or reduceexpenditures below the appropriated amountwhen actual revenues are less than estimated.The State Fiscal Year (SFY) 2002 revenueprojection is expected to be $750 million lessthan the original consensus revenue forecast,which was established in December, 2000.This original forecast was the basis uponwhich the SFY 2002 budget was establishedby the General Assembly and the governor. The current revenue projection is $230 mil-lion less than the revised consensus revenueforecast, which was established in December,2001. Attempts to access the Rainy Day Fundwere not supported by a super majority in theHouse, even though accessing the fund wasproposed by the governor and supported bythe Senate. Subsequently, the Department ofSocial Services was notified by the governorthat monies appropriated in SFY 2002 fornursing facility efficiency grants in theapproximate amount of $20 million would notbe available for expenditure. These monieswere contained in House Bill 11, Section11.445. At this time, the Department of SocialServices must suspend the rule authorizingthe payment of these monies, effective imme-diately.


Secretary of State


Action Taken: Rule 13 CSR 70-10.150(1)(B)is suspended. Authority: Missouri Constitu-tion Article IV, Section 27, and sections536.022 and 208.201, RSMo 2000. Rule sus-pension filed May 22, 2002.

Attention: Pursuant to the TemporaryRestraining Order of Circuit Judge Thomas J.Brown, of the 19th Judicial Circuit, DivisionI, entered on the 21st day of June 2002, this“Notice of Rule Suspension” is hereby tem-porarily enjoined from taking effect, until fur-ther action by said Court. Cole County Cir-cuit Court, Case No. 02CV324451. (see July1, 2002, Missouri Register (27 MoReg 1126–1128).

13 CSR 70-10.160 Public/Private Long-Term Care Services and Supports Partner-ship Supplemental Payment to NursingFacilities

PURPOSE: This rule implements a supple-mental payment program for qualifying pri-vate and public nursing facilities.

(1) Effective for dates of service on or afterApril 1, 2012, through June 30, 2013, sup-plemental payments will be made as set forthin subsections (1)(A)–(1)(D) in each follow-ing calendar quarter from the Long-TermSupport Upper Payment Limit (UPL) Fund toqualifying private and public nursing facili-ties for services rendered during the quarteron or after April 1, 2012 through June 30,2013. Maximum payments to all qualifyingprivate and public nursing facilities shall notexceed the upper payment limit defined in 42CFR 447.272 in each state fiscal year.

(A) Qualifying Criteria. The nursing facil-ities named in Section (13)(E)7. of the Med-icaid State Plan are eligible for the Partner-ship Supplemental Payment and shall bereferred to as qualifying nursing facilities. Inaddition, to qualify for the supplemental pay-ment, a private or public nursing facility mustbe enrolled in MO HealthNet at the time thesupplemental payment is calculated andmade.

1. A private nursing facility is defined asbeing owned and operated by a private entity.

2. A public nursing facility is defined asbeing owned or operated by a public entity.

(B) Reimbursement Methodology. Qualify-ing private and public nursing facilities areeligible to receive supplemental payments fornursing facility services. Supplemental pay-ments will be made in each calendar quarterafter April 1, 2012.

1. Calculating qualifying nursing facili-ties quarterly Partnership Supplemental Per

Diems—The quarterly per diem amount foreach qualifying nursing facility shall be cal-culated as follows:

A. Dividing the available annualfunding listed in Section (13)(E)6. of theMedicaid State Plan by the number of quar-ters in the fiscal period to obtain the quarterlyfunding amount;

B. Allotment between qualifying pub-licly owned and qualifying privately ownednursing facilities will be calculated as fol-lows:

(I) The allotment for qualifyingpublicly owned nursing facilities will be thefunding in subparagraph (1)(B)1.A. of thisrule multiplied by eighty percent (80%); and

(II) The allotment for qualifying pri-vately owned nursing facilities will be thefunding calculated in subparagraph (1)(B)1.A.of this rule multiplied by twenty percent(20%);

C. The public nursing facility perdiem is calculated by dividing the amountcalculated in part (1)(B)1.B.(I) of this rule bythe number of Medicaid paid days from theprevious full state fiscal year divided by thefour (4) quarters in the year for all qualifyingpublic nursing facilities enrolled in the Med-icaid program at the time the supplementalpayments are made; and

D. The private nursing facility perdiem is calculated by dividing the amountcalculated in part (1)(B)1.B.(II) of this ruleby the number of Medicaid paid days fromthe previous full state fiscal year divided bythe four (4) quarters in the year for all quali-fying private nursing facilities enrolled in theMedicaid program at the time the supplemen-tal payments are made.

2. Calculating qualifying nursing facili-ties’ quarterly Partnership Supplemental Pay-ments—The quarterly payment amount foreach qualifying nursing facility enrolled inthe Medicaid program shall be calculated asfollows:

A. Each Medicaid enrolled qualifyingnursing facility’s Medicaid paid days from theprevious full state fiscal year divided by thefour (4) quarters in the year shall be multipliedby the Partnership Supplemental Payment perdiem calculated in subparagraph (1)(B)1.C. ofthis rule for qualifying public nursing facilitiesand subparagraph (1)(B)1.D. of this rule forqualifying private nursing facilities to obtaineach qualifying nursing facility’s quarterlyamount.

3. The time period used in calculatingparagraphs (1)(B)1. and 2. of this rule will bethe most recent state fiscal year for whichdata is available for the full fiscal year.

(C) Payment Limitations.1. Public Nursing Facilities—Annual

payment distributions for all qualifying indi-vidual public nursing facilities enrolled in theMedicaid program shall be limited to thequalifying individual public nursing facility’sannual amount of unreimbursed Medicaidcosts.

2. Private Nursing Facilities—Annualpayment distributions for all qualifying pri-vate nursing facilities enrolled in the Medi-caid program shall be limited to the differ-ence between the qualifying nursing facility’sMedicare equivalent payments as determinedin the Medicare upper payment limit calcula-tion and Medicaid payments the qualifyingnursing facility receives for covered servicesprovided to Medicaid recipients.

3. Any amount over the payment limita-tion for a qualifying individual nursing facil-ity will be distributed to qualifying nursingfacilities enrolled in the Medicaid programthat have not reached their payment limita-tions as follows:

A. If any qualifying public nursingfacility reaches its limitation described inparagraph (1)(C)1. above—

(I) The amount exceeding the limi-tation will be divided by the Medicaid days forthe qualifying public nursing facilities enrolledin the Medicaid program within the pool thathave not exceeded their limitations to obtainan additional Partnership Supplemental Pay-ment Per Diem;

(II) This additional per diem willbe paid to each qualifying public nursingfacility enrolled in the Medicaid program thathas not exceeded its limitation by multiplyingthe facility’s Medicaid days by the per diemcalculated in part (1)(C)3.A.(I) of this rule;

(III) The calculation in parts(1)(C)3.A.(I) and (II) of this rule will berepeated until the entire amount allocated toqualifying public nursing facilities enrolled inthe Medicaid program has been expended orall of the qualifying public facilities enrolledin the Medicaid program have reached theirlimits as specified in paragraph (1)(C)1. ofthis rule; and

(IV) If any funding amount fromthe public allocation remains, it will be usedto make Partnership Supplemental Paymentsto qualifying private nursing facilitiesenrolled in the Medicaid program.

B. If any qualifying private nursingfacility reaches its limitation described inparagraph (1)(C)2. above—

(I) The amount exceeding the limi-tation will be divided by the Medicaid daysfor the qualifying private nursing facilitiesenrolled in the Medicaid program within thepool that have not exceeded their limitationsto obtain an additional Partnership Supple-mental Payment Per Diem;




Secretary of State


(II) This additional per diem willbe paid to each qualifying private nursingfacility enrolled in the Medicaid program thathas not exceeded its limitation by multiplyingthe facility’s Medicaid days by the per diemcalculated in part (1)(C)3.B.(I) of this rule;

(III) The calculation in parts(1)(C)3.B.(I) and (II) of this rule will berepeated until the entire amount allocated toqualifying private nursing facilities has beenexpended or all of the qualifying private facil-ities have reached their limits as specified inparagraph (1)(C)2. of this rule; and

(IV) Any remaining funding fromthe private allocation will be used to makePartnership Supplemental Payments to publicnursing facilities.

C. Any remaining quarterly fundingfrom either pool that cannot be paid due topayment limitations will be used in the recon-ciliation process described in subsection(1)(D) of this rule.

4. The time period used in calculatingsubsection (1)(C) of this rule will be the mostrecent state fiscal year for which data is avail-able for the full fiscal year.

(D) Partnership Supplemental PaymentReconciliation—Prior to making paymentseach quarter, the department will calculate areconciliation factor by—

1. Determining an amended aggregatepayment amount by adjusting the availablefunding amount by any residual amount fromsubparagraph (1)(C)3.C. of this rule;

2. Dividing the amount established inparagraph (1)(D)1. of this rule by the originalavailable funding amount to establish the rec-onciliation factor; and

3. The reconciliation factor from para-graph (1)(D)2. of this rule will be applied tothe payments identified in subsection (1)(B)of this rule that are made during that fiscalyear unless the department is unable to makethe adjustment during the fiscal year due tothe timing of the payments. In that case, thepayments for the subsequent fiscal year willbe adjusted by the difference between theamounts from paragraph (1)(D)1. of this ruleand the available annual funding amount list-ed in Section (13)(E)6. of the Medicaid StatePlan.

(2) Effective for dates of service beginningJuly 1, 2013, Nursing Facility UPL Paymentsshall be made as set forth below in subsec-tions (2)(A)–(2)(C). Maximum aggregatepayments to all qualifying nursing facilitiesshall not exceed the upper payment limitdefined in 42 CFR 447.272 in each state fis-cal year.

(A) An annual UPL Payment shall be madeat the end of each state fiscal year (SFY) to

qualifying nursing facilities.(B) Qualifying Criteria. Public nursing

facilities that have executed an agreementwith the department are eligible for a UPLPayment and shall be referred to as qualifyingnursing facilities. In addition, to qualify forthe UPL Payment, each nursing facility mustbe enrolled in the Medicaid program at thetime the UPL payments are calculated andmade.

(C) Reimbursement Methodology. Theannual UPL Payment will be made to quali-fying nursing facilities based on each facili-ty’s unreimbursed costs determined from thefacility’s second prior year Medicaid costreport, subject to the Medicare Upper Pay-ment Limit.

AUTHORITY: section 208.201, RSMo Supp.2014.* Original rule filed Feb. 15, 2012,effective Aug. 30, 2012. Amended: Filed July1, 2013, effective Jan. 30, 2014. Amended:Filed Aug. 15, 2014, effective Feb. 28, 2015.

*Original authority: 208.201, RSMo 1987, amended 2007.

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