Part 454 - Functional Reporting

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

Section 454.1 - Introduction and concepts

Section 454.1 Introduction and concepts. (a) This Part discusses the overall concepts, principles, and other factors involved in the preparation and submission of financial and statistical information for the uniform financial reporting program for residential health care facilities in New York State. Uniform reporting is defined as the identification and reporting of all financial and related statistical data in a uniform manner consistent with the definitions set forth in this Article. All residential health care facilities in New York State will be required to adopt the policies, methodologies and practices presented in this section in preparing and submitting their uniform reports to the State.

(b) The revenue and expense portion of uniform reporting includes:

(1) alignment and classification of revenue and expense on a functional (activity) basis, rather than by organizational unit;

(2) application of a uniform standard unit of measure to the functional reporting center for an expression of revenue or expense per unit of activity; and

(3) cost finding, involving the systematic allocation of expenses on a statistical basis between centers which serve or are directly related to the activity performed in another center.

(c) This Part presents overall concepts, definitions of the functional revenue and expense reporting centers and standard units of measurement for the identified centers.

(d) The cost-finding methods, including segregation of costs and statistical bases for allocation, are discussed in Part 456 of this Article.

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Section 454.2 - Concepts for functional reporting

454.2 Concepts for functional reporting. (a) In order to comply with the reporting requirements of the New York State Department of Health, residential health care facilities must adhere to the following basic concepts.

(1) Residential health care facilities must follow the uniform accounting policies and practices as specified in Part 452 of this Article. Items such as methods of capitalization and depreciation of assets and direct charging of maintenance repairs, and payroll-related benefits to using centers are examples of important policies which must be adhered to for the annual uniform financial report.

(2) The principles and concepts utilized in the preparation of the annual uniform financial report will be based upon a portrayal of the activities on a functional basis regardless of third-party reimbursement practices.

(3) Another concept affecting the preparation of the annual uniform financial report is the requirement that costs will be measured at a level where uniformity can be obtained and a standard statistical measurement applied. For purposes of reporting, it was determined that standard units of measure would not be applied to certain nonrevenue or general support services; however, their total cost would be identifiable. The application of standard units of measure for some support services and ancillary revenue centers and all program centers would occur at the direct cost level. Standard units of measure may also be applied to support services, ancillary revenue and program service centers after cost allocation.

(4) Uniform financial reporting for revenue and expense categories is divided into three categories, as follows:

(i) nonrevenue support services centers--includes those reporting centers which do not normally produce patient service revenue and which tend to support the activities and services provided by the patient care services or special education, research or auxiliary programs. Reporting centers representing functions not necessarily associated with services would also be included in this category, such as insurance, etc;

(ii) ancillary service centers--includes those reporting centers which provide diagnostic and treatment services for inpatient and outpatient care; and

(iii) program and auxiliary service centers--includes those patient care, education, research and auxiliary programs for which the residential health care facility is ultimately organized to provide. All effort within the facility is ultimately related to these final program centers.

(b) Conversion from responsibility to functional reporting. (1) A fundamental aspect of the uniform financial reporting program is the portrayal of revenue and expenses on a functional basis rather than following the organizational pattern of the specific residential health care facility.

(2) The need for uniform functional reporting practices occurs from the fact that facilities will identify costs and revenue according to responsibility centers; that is, the reporting of costs according to the operating units such as departments. Because of the significant variation of the size and scope of residential health care facilities, there may be variation in the assignment of costs within each chart of accounts. Therefore, for uniform functional reporting of revenue and expenses, there may be a need for reclassifications to convert costs from the responsibility reporting format to a functional reporting format. Functional reporting may be defined as the reporting of costs according to the type of activities.

(3) Certain facilities will be required to reclassify certain revenue and expenses to meet the specifications for uniform reporting. Without this conversion from responsibility to functional reporting, residential health care facilities would not be reporting costs in a uniform manner, thus defeating the purposes of the uniform financial reporting requirements within the State.

(4) To achieve uniform functional reporting, all facilities will be required to reclassify revenue, expenses and statistics according to the definition of the functional centers discussed in Part 455 of this Article.

(i) Reclassifications, as discussed in this Part are of two types:

(a) To obtain the required level of reporting. This type of reclassification may be necessary to reach the required level of reporting because the facility has combined several departments. For instance, smaller facilities may be combining the costs of housekeeping and maintenance in one reporting center. In such cases, it is necessary to reclassify the total direct costs into the reporting centers relating to these two types of services.

(b) To correct accumulation of costs. This type of reclassification would be necessary when the expense associated with a particular function is recorded in a reporting center different from the functional description specified in this section. For instance, a reclassification would be required if the Patient Food Services Department recorded the costs associated with hand-feeding of patients, because these costs should have been recorded in the nursing reporting center relating to that patient program. (ii) These reclassifications may be computed on any one of the following bases:

(a) analysis of direct expense, including time and cost studies;

(b) ratio of total charges to charges of a specific cost center; or

(c) ratio of total units of service to units of service reclassified in a specific reporting center.

(iii) (a) Reclassifications must be made for significant amounts of misplaced costs. Significant is defined, for the purposes of this section, as an amount in excess of:

(1) one full-time equivalent employee within the functional center transferred to or from for salary costs; or

(2) 10 percent of the direct costs or $1,000, whichever is greater of the functional center transferred to or from, for other than salary costs.

(b) For the purposes of this Part, an estimate may be utilized to determine the limitation for salary costs. This estimate should be based on an approximation of one employee's total paid working hours during the year; e.g., 2,000 hours representing one full-time employee.

(c) Pursuant to the above criteria, the determination of the necessity for reclassification of salary costs may be made based on time studies. A time study must be made of employees who are performing activities related to more than one function. Time studies would be performed for such employees for a two-week period per quarter, for all four quarters in a year. The time study would result in a percentage of employees' hours worked, by function, to total hours worked. These percentages would, for each quarter, be applied to total hours paid for the same employees to arrive at hours paid by function. The results would be totaled for all four quarters and then compared to the estimate of one full-time equivalent of 2,000 hours to determine whether or not a reclassification is required.

(d) When reclassifying full-time equivalent employees between cost centers, non-work hours, i.e., vacation, sick pay, etc., will also be reclassified.

(e) The tests of significance indicated above do not apply to the areas described in section 453.4 of this Article. These allocations must be classified as described in that section. Also, in determining the segregation of costs between the Cafeteria and Patient Food Service Reporting Centers, where joint kitchen facilities are used, the criteria described in those functional reporting centers is to be utilized.

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Section 454.3 - Standard units of measure

454.3 Standard units of measure. (a) The purpose of the standard unit of measure is to provide a uniform statistic for measuring costs. The unit of measure for revenue-producing centers has been developed to reflect man effort, where possible, and the volume of services rendered to patients.

(b) With regard to the standard unit of measure, the following terms are defined as follows:

(1) A clinic outpatient is one who is admitted to the clinical service of the residential health care facility for diagnosis or treatment on an ambulatory basis in a formally organized unit of a medical specialty or subspecialty clinic or service.

(2) A day-care outpatient is one who is participating in a psychiatric or medical day or night care program and is not included in the daily inpatient census.

(3) A home health outpatient is one who receives medical services at his residence from representatives of an organized home health program of the residential health care facility.

(4) Meals on wheels is a program whereby a patient receives dietary services at his residence from representatives of the residential health care facility.

(5) A homemaker outpatient is one who receives domestic services at his residence from representatives of the residential health care facility. Examples of services are housekeeping, maintenance, laundry, etc.

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Section 454.4 - Listing of functional reporting centers and standard units of measure

454.4 Listing of functional reporting centers and standard units of measure.

(a) The listing which follows shows each functional center and related standard unit of measure that are mandated levels of reporting for this Article. The standard units of measure are required to be reported for all functional reporting centers in which direct costs are reported. The specific definitions of each reporting center and related standard unit of measure, and the data source for its collection, are indicated in Part 455 of this Article.

(1) Non-Revenue Support Services.

Functional Reporting Centers Standard Unit of Measure

(i) Depreciation, Leases and Rentals Square feet, gross

(ii) Depreciation on Major Movable Equipment None

(iii) Interest on Capital Debt Total operating expenses

(iv) Fiscal Services Total operating expenses

(v) Administrative Services Total operating expenses

(vi) Plant Operations and Maintenance Square feet, net

(vii) Grounds Square feet serviced

(viii) Security None

(ix) Laundry and Linen Dry and clean pounds processed

(x) Housekeeping Square feet serviced

(xi) Patient Food Services Dietary meals served

(xii) Cafeteria Equivalent cafeteria meals served

(xiii) Nursing Administration Average number of nursing department employees

(xiv) Activities Program Total number of participants program

(xv) Non-Physician Education Number of students

(xvi) Medical Education Number of students

(xvii) Medical Director's Office None

(xviii) Housing Average number of persons housed

(xix) Medical Records None

(xx) Utilization Review Number of cases reviewed

(xxi) Social Services None

(xxii) Transportation Number of trips

(2) Ancillary Service Revenue Centers.

Functional Reporting Center Standard Unit of Measure

(i) Laboratory Services CAP workload measurement unit

(ii) Electrocardiology CAP workload measurement unit

(iii) Electroencephalogy CAP workload measurement unit

(iv) Radiology Relative value units

(v) Inhalation Therapy Number of treatments

(vi) Podiatry Number of visits

(vii) Dental Number of visits

(viii) Psychiatric Number of visits

(ix) Physical Therapy Number of treatments

(x) Occupational Therapy Number of treatments

(xi) Speech and Hearing Therapy Number of treatments

(xii) Pharmacy None

(xiii) Central Service Supply None

(xiv) Medical Staff Services None

(3) Program Service Revenue Centers.

(i) Inpatient.

(a) Residential Health Care Facility Patient days

(b) Adult Care Facility Patient days

(c) Intermediate Care Facility--

Mental Retardation Patient days

(d) Independent Living Patient days

(e) Specialty Pediatric Patient days

(f) Head Injury Patient days

(g) Acquired Immune Deficiency

Syndrome Patient days

(h) Long Term Ventilator Dependent Patient days

(ii) Ambulatory and Other Care.

(a) Outpatient Clinics Visits

(b) Adult Day Health Care Visits

(c) Home Health Number of home health visits

(d) Homemaker Number of homemaker visits

(e) Meals on Wheels Number of meals

(iii) Research and Auxiliary Services.

(a) Research None

(b) Physicians' Offices and Other Rentals None

(c) Gift Shop None

(d) Public Restaurant None

(e) Fund Raising None

(f) Barber and Beauty Shop None

(g) Sold Services None

Effective Date: 
Tuesday, January 1, 1991
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