Part 458 - Natural Classification of Expense

Effective Date: 
Tuesday, December 23, 1980
Doc Status: 
Complete
Statutory Authority: 
Public Health Law, Sections 2803(2), 2803-b, 2805-e, 2808

Section 458.1 - Introduction

458.1 Introduction. This Part contains the definitions (where necessary) of the natural classifications of expense which, as indicated in section 453.2(c) of this Article are a mandated reporting level for expenses. Also contained in this Part are two indexes: one for salaries and wages, by job title; the other, a supplies and materials classification index. The indexes present guidelines for classifying wages and salaries by specific job titles and for proper classification of supplies and services expense.
 

Doc Status: 
Complete

Section 458.2 - Salaries and wages

458.2 Salaries and wages. (a) General.

(1) If management is to have maximum control over labor costs, close control of the number of man-hours paid is essential. Man-hours are a more stable measure of labor utilization than dollars, because man-hours are not affected by inflation. Also, when man-hours are compared to units of service, they can provide management with information that is useful both for internal control and external comparisons.

(2) A record of man-hours paid that exactly parallels the record of salaries and wages paid by department must be maintained. This requires that the residential health care facility establish a record of paid man-hours by department for all personnel whose compensation is included on the payroll, including exempt personnel. These man-hours must include separate records of worked man-hours and nonworked man-hours. Worked man-hours should include regular hours worked, overtime hours worked, hours worked when on call or on standby, hours spent in in-service education, orientation, breaks, paid social functions (such as Christmas parties), and so forth. Nonworked man-hours should include paid vacations, holidays, sick pay, military leave, educational leave, (including continuing education) bereavement or funeral leave, jury duty, benefit hours paid for but not taken as leave, and so forth.

(3) Overtime hours are hours for which an overtime pay rate is used. The actual overtime hours are not treated differently from regular worked hours; it is the rate that changes. This is preferable to the common but undesirable practice of adding additional hours to the records when calculating the payroll so that the regular pay rate can be used instead of the overtime rate.

(4) On-call and/or standby pay is compensation to an employee for being available to work. During the period when the employee is on call or on standby, he might or might not actually perform work. The Fair Labor Standards Act differentiates between restricted and unrestricted on-call situations. All restricted on-call hours are compensable and contribute to the total hours used for determining overtime pay. Unrestricted on-call hours do not contribute to total hours, but unrestricted on-call compensation does contribute to the salary base used for calculating overtime premiums only. Thus all restricted on-call hours must be accounted for, but only those hours worked need be accounted for when employees are on unrestricted on-call duty.

(5) Salaries and wages are defined as all remuneration, payable in cash, for services performed by an employee for the residential health care facility, and the fair market value of services donated to the facility by persons performing in an employee relationship. Reimbursement of independent contractors, such as private duty nurses, should be excluded.

(b) Specific classifications of salaries and wages follow:

(1) Management and supervision. Employees included in this classification are primarily involved in the direction, supervision and coordination of residential health care facility activities. Salaries and wages for this classification would usually include, but are not limited to, the following job titles: president, chief executive officer; administrator; manager; department head; supervisor; director; and foreman. These employees may be exempt from Federal wage and hour laws. Lead positions of chief, head, and so forth must be classified as Management and Supervision if they provide direct supervision to five or more other employees, except for Registered Nurses and Licensed Practical Nurses which must be classified as detailed in paragraphs (b)(3) and (b)(4) of this section. Positions supervising fewer than five employees may be classified as Management and Supervision if the activities performed otherwise meet the Management and Supervision criteria.

(2) Technicians, specialists and non-physician medical practitioners. Employees included in this classification usually perform activities of a creative or complex nature. Also included are those employed to consult, diagnose and prescribe and provide treatment to patients under the direction of a physician. Salaries and wages for this classification would usually include, but are not limited to, the following job titles: coordinator; chef; programmer; technologist; technician; therapist; instructor; nurse practitioner; physician assistant; clinical specialist and accountant. These employees are often licensed or registered. Some of these positions are exempt from Federal wage and hour laws because they are administrative or professional in nature. Lead positions of chief, head, and so forth must be classified as Management and Supervision if they provide direct supervision to five or more other employees. Positions supervising fewer than five employees may be classified as Management and Supervision if the activities performed otherwise meet the Management and Supervision criteria. (3) Registered nurses. This classification includes all registered nurses employed to provide direct nursing care to patients except the following specific job titles: RN - Supervisor (supervising two or more units), Health Services Supervisor, Director of Nursing Services and Assistant Director of Nursing Services. These specific job titles are to be reported under the classification Management and Supervision in accordance with paragraph (b)(1) of this section.

(4) Licensed practical nurses. This classification includes all licensed practical nurses employed to provide direct nursing care to patients except the following specific job titles: RN - Supervisor (supervising two or more units), Health Services Supervisor, Director of Nursing Services and Assistant Director of Nursing Services. These specific job titles are to be reported under the classification Management and Supervision in accordance with paragraph (b)(1) of this section. Employees in this classification are subject to Federal wage and hour laws.

(5) Aides, orderlies and assistants. Included in this classification are nontechnical personnel employed to provide direct nursing care to patients. Salaries and wages for this classification would usually include, but are not limited to, the following job titles; aide; orderly; and nurse assistant. These employees are subject to Federal wage and hour laws.

(6) Clerical and other administrative employees. Included in this classification are nontechnical personnel employed in the performance of recordkeeping, communication and other administrative functions, who are subject to Federal wage and hour laws. Salaries and wages for this classification would usually include, but are not limited to the following job titles: accounting clerk; admitting clerk; messenger; keypunch operator; secretary; telephone operator; clerk-typist; cashier; and receptionist.

(7) Environment, hotel and food service employees. This classification includes personnel employed to provide basic services related to food and accommodations. They perform routine work of a nontechnical nature and are subject to Federal wage and hour laws. Salaries and wages for this classification would usually include, but are not limited to, the following job titles: maintenance man; housekeeping aide; cook's helper; flatwork finisher; guard; food service worker; wall washer; washperson; carpenter and plumber.

(8) Physicians salaries. Employees included in this classification are employed to consult, diagnose, and prescribe and provide treatment for patients. Physicians are also employed to provide education. These employees must possess Doctor of Medicine or Doctor of Osteopathy degrees and be licensed to practice medicine.

(9) Interns, residents and fellows. Employees included in this classification are employed to consult, diagnose, and prescribe and provide treatment for patients. Salaries and wages for this classification would usually include, but are not limited to, the following job titles: intern; resident and fellow.
 

Effective Date: 
Tuesday, January 1, 1991
Doc Status: 
Complete

Section 458.3 - Other than salaries and wages

458.3 Other than salaries and wages. (a) Employee benefits. The costs of employee benefits are charged directly to the appropriate functional reporting center. If such benefits are charged initially to an employee benefits account, they must be assigned to appropriate functional reporting centers at year-end prior to cost finding. Reference: section 452.4(a)(1)(ii). Specific classifications for employee benefits follow:

(1) Employee Uniform Allowance;

(2) FICA;

(3) State Unemployment and Federal Unemployment Insurance;

(4) Group Health Insurance;

(5) Pension and Retirement--Union;

(6) Workers' Compensation Insurance;

(7) Pension and Retirement--Nonunion;

(8) Disability;

(9) Other Employee Benefits;

(10) Union Health and Welfare; and

(11) Employee Meal Allowance.

(b) Fees. The fees and other amounts paid for professional services of people who are not on the facility's payroll are included in the following classifications:

(1) Administrative Fees--Long-Term Debt;

(2) Physicians' Fees. Included in this classification are all fees paid to nonsalaried physicians for patient care and supervisory activities, and other professional fees for service;

(3) Therapists and Other (Nonphysicians) ;

(4) Consulting and Management Services;

(5) Legal Services;

(6) Auditing Services;

(7) Registered Nurses;

(8) Licensed Practical Nurses;

(9) Private Duty Nurses' Fees; and

(10) Other Fees.

(c) Supplies and materials. The following classifications are used to report the costs of the various supplies used by a residential health care facility. The fair market value of donated supplies is included in these classifications if the commodity would otherwise be purchased by the facility. An offsetting amount would be included in the reporting level Other Operating Revenue, Donated Commodities, section 453.3(i)(2)(xxi) of this Article.

(1) Disposable Linen;

(2) Prescription Drugs. Include in this classification the cost of all drugs for which a prescription would be required if purchased at an outside pharmacy;

(3) Medicine Cabinet Drugs. Include in this classification the cost of all drugs that could be purchased without a prescription;

(4) Other Medical Care Materials and Supplies. Include in this classification the cost of all medical materials and supplies used in direct patient care;

(5) Dietary--Food. Include in this classification all food purchased by the facility;

(6) Dietary--Other. Include in this classification all dietary supplies other than food;

(7) Linen and Bedding;

(8) Cleaning Supplies;

(9) Office and Administrative Supplies;

(10) Employee Wearing Apparel;

(11) Instruments and Minor Medical Equipment;

(12) Minor Nonmedical Equipment; and

(13) Other Supplies and Materials. Include in this classification the cost of nonmedical supplies not included elsewhere. Include the cost of miscellaneous supplies used for the personal care of patients.

(d) Purchased and contracted services. These classifications are provided to report the costs of purchased or contracted services. For instance, if the laboratory function is contracted outside the residential health care facility, the expense would be classified Contracted Services, in the laboratory functional reporting center. If, however, a minor service such as exterior painting were purchased outside the residential health care facility, the expense would be classified Repairs and Maintenance--Purchased Services-Nonassignable. The difference between the purchased and contracted classification lies in the magnitude of the service provided by outsiders. Note that because the service rendered (exterior painting) benefited the entire facility and, therefore, is not directly assignable to a specific functional reporting center (other than the Plant Operation and Maintenance functional reporting center), the cost of the service is classified Repairs and Maintenance--Purchased Services--Nonassignable. In those instances where outside repairs and maintenance can be directly assigned to a specific functional reporting center, e.g., the repair of a piece of laundry equipment, the cost must be classified Repairs and Maintenance--Purchased Services--Directly Assignable.

(1) Repairs and Maintenance--Purchased Services--Nonassignable. Include in this classification purchased repair and maintenance services not directly assignable to a specific functional reporting center other than the Plant Operation and Maintenance functional reporting center;

(2) Repairs and Maintenance--Purchased Services--Directly Assignable. Include in this classification purchased repair and maintenance services that are directly assignable to a functional reporting center other than the Plant Operation and Maintenance functional reporting center;

(3) Medical--Purchased Services;

(4) Management Services; (5) Collection Services;

(6) Other Purchased Services; and

(7) Contracted Services.

(e) Depreciation, leases and rentals.

(1) Depreciation and Amortization;

(2) Rental or Lease--Land;

(3) Rental or Lease--Buildings;

(4) Rental or Lease--Fixed equipment; and

(5) Rental or Lease--Movable equipment.

(f) Other direct expenses.

(1) Electricity;

(2) Gas;

(3) Water and Sewer;

(4) Fuel Oil #2;

(5) Fuel Oil #4;

(6) Fuel Oil #6;

(7) Other Utilities. Include in this classification steam, coal and all other utilities;

(8) Insurance;

(9) Interest. Include in this classification all interest expense of the facility;

(10) Licenses and Taxes (other than Income Taxes);

(11) Telephone and Telegraph;

(12) Dues to Nursing Home Associations;

(13) Printing, Duplicating, Microfilming;

(14) Travel, Conferences, Workshops;

(15) Books, Periodicals, Etc.; and

(16) Other Direct Expenses.

(g) Assessments from municipalities, religious or educational foundations, or other associations. These accounts are used to report costs assessed by parent/subsidiary organizations, such as municipalities, religious or educational organizations.
 

Doc Status: 
Complete

Section 458.4 - Index for salaries by job title

458.4 Index for salaries by job title. This index presents guidelines for classifying specific job titles by the proper natural classification.

(The chart, Index for salaries by job title, is available from the Bureau of Management Analysis, New York State Department of Health).
 

Effective Date: 
Tuesday, January 1, 1991
Doc Status: 
Complete

Section 458.5 - Supplies and materials classification index

458.5 Supplies and materials classification index. This section presents guidelines for reporting supplies and services expenses by the proper functional reporting center and natural classification. Items whose use is common to more than one functional reporting center are not referenced to a single center but to the "appropriate" reporting center. Some items are too general in nature to be referenced to a specific natural classification. Therefore, the reference is to the "appropriate" natural classification.

(The chart, Supplies and materials classification index, is available from the Bureau of Management Analysis, New York State Department of Health).
 

Effective Date: 
Tuesday, January 1, 1991
Doc Status: 
Complete