Article 9 - Residential Health Care Facility Uniform Reporting

Effective Date: 
Tuesday, December 23, 1980
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Part 450 - Applicability

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

Section 450.1 - Applicability and relationship to reimbursement

Section 450.1 Applicability and relationship to reimbursement. (a) This Article is applicable to all residential health care facilities except those that are hospital-based, unless said residential health care facility was organized under article 28-A of the Public Health Law, in which case this Article applies regardless of whether or not such facility is hospital-based.

(b) This Article has been designed so that a uniform report for financial disclosure could be developed. This Article has not been designed to conform to or reflect reimbursement regulations, since they have and will continue to change. It is anticipated that an omnibus annual Medicaid cost report will reflect both the uniform reporting concepts and reimbursement regulations.
 

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Part 451 - Definitions

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

Section 451.0 - General

Section 451.0 General. For the purposes of this Article, the following terms shall have the following meanings:

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Section 451.1 - Accelerated depreciation

451.1 Accelerated depreciation. Method of depreciation which generates a greater amount of expense in the earlier life of an asset, and less expense in the later years, than the straight-line method. The purposes for adopting such a method would be:

(a) operation of plant or equipment at more than normal speed, use or capacity; (b) a useful or economic life materially less than physical life;

(c) an excessive cost being written off during what is estimated to be the high-price period; and

(d) tax advantages arising from the use of declining-balance and sum-of-the-years methods.
 

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Section 451.2 - Accommodation fee

451.2 Accommodation fee. An advance payment or transfer of a specified amount of funds or property by, or on behalf of, an aged person to a facility as full or partial payment for the promise to provide accommodations for the remainder of the person's life.
 

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Section 451.3 - Accounting

451.3 Accounting. The art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof.

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Section 451.4 - Account control

451.4 Account control. The administrative procedures employed in maintaining the accuracy and propriety of transactions and the bookkeeping record thereof.
 

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Section 451.5 - Accounting manual

451.5 Accounting manual. A handbook of accounting policies, standards, and practices governing the accounts of a business enterprise or other entity; it includes the classification of accounts.
 

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Section 451.6 - Accounting period

451.6 Accounting period. The period of time for which an operating statement is customarily prepared (normally 12 months).
 

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Section 451.7 - Accounting policy

451.7 Accounting policy. The general principles and procedures under which the accounts of an organization are maintained and reported; any one such principle or procedure.
 

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Section 451.8 - Accrual basis

451.8 Accrual basis. The recognition of revenue when earned and expenses when incurred, together with acquired assets or related liabilities, without regard to the date of receipt or payment of cash.
 

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Section 451.9 - Accumulated income (or earnings or profit)

451.9 Accumulated income (or earnings or profit). Net income retained and not paid out in dividends or dissipated by subsequent losses; earned surplus or retained earnings.
 

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Section 451.10 - Activity

451.10 Activity. (a) The work, or one of several lines of work, carried on within any organization or organizational subdivision.

(b) The whole of the work carried on by any organization or individual.
 

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Section 451.11 - Actual cost

451.11 Actual cost. (a) Acquisition costs, net of discounts and allowances, but including transportation and storage (often averaged for internal transfer or inventory purposes).

(b) Payroll costs or other production costs.
 

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Section 451.12 - Actual time method

451.12 Actual time method. Depreciation expense based on the number of months the assets is owned in both the year of acquisition and the last year of an asset's life, as opposed to using a half year's depreciation in the year of acquisition and zero in the last year.
 

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Section 451.13 - Actuarial basis

451.13 Actuarial basis. A basis compatible with principles followed by actuaries; said of computations involving compound interest, retirement and mortality estimates, and the like.
 

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Section 451.14 - Additional (paid-in) capital

451.14 Additional (paid-in) capital. (a) Contributions of corporate stockholders credited to accounts other than capital stock.

(b) Sources:

(1) an excess over par or stated value received from the sale or exchange of capital stock;

(2) an excess of par or stated value of capital stock reacquired over the amount paid therefor; or

(3) an excess from recapitalization, often displayed on the balance sheet as a separate item or in combination with par or stated value and designated paid-in capital.

(c) known also as paid-in surplus.
 

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Section 451.15 - Adjusting (journal) entry

451.15 Adjusting (journal) entry. (a) The record made of an accounting transaction giving effect to the correction of an error, an accrual, a write-off, a provision for bad debts or depreciation, or the like.

(b) Auditing. Any change in the accounts required by an auditor, expressed in the form of a simple or compound journal entry.
 

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Section 451.16 - Administrative accounting

451.16 Administrative accounting. That portion of the accounting process generally associated with management: for example, the functions of the controller, internal auditing, and decisions as to prorations, valuations, reserves, charge-offs and reporting.
 

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Section 451.17 - Administrative expense

451.17 Administrative expense. A classification of expense incurred in the general directing of an enterprise as a whole, as contrasted with expense of a more specific function, such as nursing services or dietary, but not including income deductions. Items included under this heading vary with the nature of the business, but usually include salaries of top officers and other general office expense.
 

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Section 451.18 - Advance

451.18 Advance. (a) Payment of cash or the transfer of goods for which an accounting must be rendered by the recipient at some later date.

(b) A payment of a contract before its completion.

(c) The payment of wages, salaries or commissions before they have been earned.
 

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Section 451.19 - Age

451.19 Age. The number of years or other time periods an asset or asset group has remained in service at a given date.
 

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Section 451.20 - AICPA

451.20 AICPA. American Institute of Certified Public Accountants.
 

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Section 451.21 - Allocate

451.21 Allocate. (a) To charge an item or group of items of revenue or cost to one or more objects, activities, processes, operations or products, in accordance with cost responsibilities, benefits received, or other readily identifiable measure of application or consumption.

(b) To distribute the total cost of a lump-sum purchase over the items purchased or departments affected.

(c) To spread a cost systematically over two or more time periods.
 

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Section 451.22 - Allowance

451.22 Allowance. The difference between gross revenue from services rendered and amounts received (or to be received) from patients or third-party payors. Allowances are to be distinguished from uncollectible accounts resulting from credit losses.
 

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Section 451.23 - Allowable costs

451.23 Allowable costs. Documented costs which are necessary for the day-to-day operation of a provider, are directly or indirectly related to patient care, and are not expressly declared nonallowable by Federal or State regulations.
 

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Section 451.24 - Amortization

451.24 Amortization. The systematic distribution of the cost or other basis of a tangible or intangible asset over the estimated useful life of the asset.
 

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Section 451.25 - Apportionment

451.25 Apportionment. The distribution of a cost over several periods of time in proportion to anticipated benefits.
 

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Section 451.26 - Appreciation

451.26 Appreciation. Increase in value of property; the excess of the present value of property over book value.
 

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Section 451.27 - Article 2-A facility

451.27 Article 2-A facility. A residential health care facility organized under article 28-A of the Public Health Law.
 

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Section 451.28 - Assets

451.28 Assets. Economic resources of an enterprise which are recognized and measured in conformity with generally accepted accounting principles.
 

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Section 451.29 - Audit

451.29 Audit. (a) The examination of contracts, orders and other original documents for the purpose of substantiating individual transactions before their settlement.

(b) Any systematic investigation or appraisal of procedures or operations for the purpose of determining conformity with prescribed criteria; the work performed by an internal auditor.

(c) Auditing. An exploratory, critical review, by a public accountant, of the underlying internal controls and accounting records of a business enterprise or other economic unit, precedent to the expression by him of an opinion of the propriety ("fairness") of its financial statements.
 

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Section 451.30 - Available beds

451.30 Available beds. Health facility beds which are maintained and staffed for the provision of patient care.
 

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Section 451.31 - Average daily inpatient census

451.31 Average daily inpatient census. Average number of inpatients (based on the daily inpatient census) present each day for a given period of time.
 

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Section 451.32 - Average length of stay

451.32 Average length of stay. The average number of days of service rendered to each inpatient discharged during a given period.
 

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Section 451.33 - Average life

451.33 Average life. The estimated useful-life expectancy of a group of assets subject to depreciation.
 

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Section 451.34 - Bad debts

451.34 Bad debts. Amounts considered to be uncollectible from accounts and notes receivable which were created or acquired in providing services to patients.
 

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Section 451.35 - Balance

451.35 Balance. (a) The difference between the total debits and the total credits of an account or the total of an account containing only debits or credits.

(b) The equality of the total debit balances and the total credit balances of the accounts in a ledger.

(c) Agreement of the total of the account balances in a subsidiary ledger with its general ledger control.
 

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Section 451.36 - Balance sheet

451.36 Balance sheet. A statement of financial position of any economic unit, or component thereof, reporting as at a given moment of time its assets (at cost, depreciated cost, or other indicated value), its liabilities, and its ownership equities recorded under an accounting system.
 

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Section 451.37 - Bed turnover rate

451.37 Bed turnover rate. The number of times a health facility bed, on the average, changes occupants during a given period of time.
 

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Section 451.38 - Benefit

451.38 Benefit. The service or satisfaction yielded by an expenditure.
 

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Section 451.39 - Betterment

451.39 Betterment. An expenditure having the effect of extending the useful life of an existing fixed asset, increasing its normal rate of output, lowering its operating cost, increasing rather than merely maintaining efficiency, or otherwise adding to the worth of benefits it can yield.
 

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Section 451.40 - Board-designated funds

451.40 Board-designated funds. Unrestricted funds set aside by the governing board for specific purposes or projects.
 

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Section 451.41 - Bond

451.41 Bond. (a) A certificate of indebtedness, in writing and often under seal.

(b) An obligation in writing, binding one or more parties as surety for another.
 

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Section 451.42 - Book inventory

451.42 Book inventory. (a) An inventory which is not the result of actual stocktaking but of adding the units and the cost of incoming goods to previous inventory figures and deducting the units and cost of outgoing goods.

(b) The balances of materials or products on hand in quantities, dollars, or both, appealing in perpetual-inventory accounts.
 

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Section 451.43 - Book of original entry

451.43 Book of original entry. A record book, recognized by law or custom, in which transactions are successively recorded, and which is the source of posting to ledgers; a journal. Books of original entry include general and special journals, such as cashbooks and registers of sales and purchases.
 

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Section 451.44 - Book value (or cost)

451.44 Book value (or cost). (a) The net amount at which an asset or asset group appears on the books of account, as distinguished from its market value or some intrinsic value.

(b) The face amount of a liability less any unamortized discount and expense.

(c) As applied to capital stock:

(1) the book value of the net assets;

(2) in a corporation, the book value of net assets divided by the number of outstanding shares of capital stock.
 

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Section 451.45 - Calendar year

451.45 Calendar year. A 12-month period beginning January 1st and ending December 31st of the same year.
 

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Section 451.46 - Capital expenditures

451.46 Capital expenditures. An expenditure intended to benefit future periods. in contrast to a revenue expenditure, which benefits a current period; an addition to a capital asset. The term is generally restricted to expenditures that add fixed-asset units or that have the effect of increasing the capacity, efficiency, life span or economy of operation of an existing fixed asset.
 

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Section 451.47 - Capitalization

451.47 Capitalization. The process of setting up expenditures as assets and amortizing or depreciating these assets over time.
 

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Section 451.48 - Cash basis

451.48 Cash basis. Recording cash as received, regardless of when it is earned, and recording expenses when they are paid, regardless of when they are incurred.
 

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Section 451.49 - Certificate of deposit

451.49 Certificate of deposit. (a) A formal instrument, frequently negotiable or transferable, issued by a bank as evidence of indebtedness and arising from a deposit of cash subject to withdrawal under the specific terms of the instrument:

(1) demand certificates, payable upon presentation, seldom bearing interest;

(2) time certificates, payable at a fixed or determinable future date, usually bearing interest at a specified rate.

(b) A formal certificate, usually printed or engraved, ordinarily negotiable or transferable, and issued by a depository or agent against the deposit of bonds or stock of a corporation under the terms of a reorganization plan or other agreement.
 

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Section 451.50 - Chain Organization

451.50 Chain Organization. A health care or other organization consisting of a group of two or more facilities which are owned, leased or, through any other device, controlled by one business entity.
 

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Section 451.51 - Change of ownership

451.51 Change of ownership. A change in the entity which has ultimate legal responsibility for the operation of a provider and thus for decisions and for liabilities arising in the course of its operation.
 

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Section 451.52 - Charity allowances

451.52 Charity allowances. Reductions in charges made by the provider of services because of the indigence or medical indigence of the patient.
 

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Section 451.53 - Chart of accounts

451.53 Chart of accounts. A systematically arranged list of accounts applicable to a specific concern, giving account names and numbers. A chart of accounts, accompanied by descriptions of their use and of the general operation of the books of account, becomes a classification or manual of accounts.
 

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Section 451.54 - Classification of accounts

451.54 Classification of accounts. A list of accounts, systematically grouped (chart of accounts), suitable for a particular organization, with descriptions setting forth the meaning, function and content of each account and the relation of one to another.
 

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Section 451.55 - Clearing account

451.55 Clearing account. (a) A primary account containing costs that are to be transferred or allocated to other accounts.

(b) An intermediate account to which is transferred a group of costs or revenues, or a group of accounts containing costs or revenues, and from which a distribution of the total is made to other accounts.
 

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Section 451.56 - Common ownership

451.56 Common ownership. An individual or individuals with a controlling interest in both the residential health care facility and an organization that does business with the facility.
 

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Section 451.57 - Consistency

451.57 Consistency. Continued uniformity, during a period or from one period to another, in methods of accounting and use of generally accepted accounting principles (mainly in valuation bases and methods of accrual, as reflected in the financial statements of a business enterprise or other accounting or economic unit).
 

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Section 451.58 - Consultant

451.58 Consultant. A firm or person (normally not an employee), with demonstrated expertise in a given field, who provides technical advice in that field in order to improve the necessary day-to-day operation of a facility.
 

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Section 451.59 - Contractor

451.59 Contractor. An entity which contracts with the department to deliver care to medical-recipient patients.
 

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Section 451.60 - Contractual adjustment

451.60 Contractual adjustment. The difference between billings at established charges and amounts received or due from third-party payors under contract agreements--similar to a trade discount.
 

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Section 451.61 - Contributed capital

451.61 Contributed capital. (a) The payments in cash or property made to a corporation by its stockholders:

(1) in exchange for capital stock;

(2) in response to an assessment on the capital stock; or

(3) as a gift.

(b) Paid-In capital.
 

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Section 451.62 - Contributed services

451.62 Contributed services. See donated services.
 

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Section 451.63 - Control

451.63 Control. The process by which the activities of an organization are conformed to a desired plan of action and the plan is conformed to the organization's activities.
 

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Section 451.64 - Control (or controlling) account

451.64 Control (or controlling) account. An account containing primarily totals of one or more types of transactions, the detail of which appears in a subsidiary ledger or its equivalent. Its balance equals the sum of the balances of the detail accounts.
 

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Section 451.65 - Cost

451.65 Cost. An expenditure or outlay of cash, other property, capital stock or services, or the incurring of a liability therefor, identified with goods or services acquired or with any loss incurred, and measured by the amount of cash paid or payable or the market value of other property, capital stock or services given in exchange or, in other situations, any commonly accepted basis of valuation. Implicit in the concept of cost is the accrual basis of accounting.
 

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Section 451.66 - Cost allocation

451.66 Cost allocation. The apportionment or allocation of the costs of nonrevenue-producing cost centers to each other, and to revenue-producing centers on the basis of the statistical data that measure the amount of service rendered by each center to other centers. The purpose of cost allocation is to determine the total of full costs of operating each revenue-producing center of a health facility.
 

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Section 451.67 - Cost centers

451.67 Cost centers. Categories into which related costs are grouped for purposes of cost reimbursement reporting and rate determination.
 

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Section 451.68 - Cost-finding

451.68 Cost-finding. The process of recasting the data derived from the accounts kept by a provider to ascertain the cost of the various types of services rendered.
 

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Section 451.69 - Courtesy allowances

451.69 Courtesy allowances. A reduction in charges in the form of all allowances to physicians, clergy and others for services received from the provider.
 

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Section 451.70 - Current assets

451.70 Current assets. Unrestricted cash, or other assets held for conversion within a relatively short period into cash or other readily convertible asset, or currently useful goods or services. Usually the period is one year or less; however, in some enterprises the period may be extended to the length of the operating cycle, which may be more than a year. The five customary subdivisions of current assets are cash, temporary investments, receivables, inventory, and prepaid expenses.
 

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Section 451.71 - Current liability

451.71 Current liability. A short-term debt, regardless of its source, including any liability accrued and deferred and unearned revenue that is to be paid out of current assets or is to be transferred to income within a relatively short period, usually one year or less, or a period greater than a year but within the business cycle of an enterprise. The currently maturing portion of long-term debt is thus classified.
 

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Section 451.72 - Daily inpatient census

451.72 Daily inpatient census. The number of inpatients present at the census-taking time each day, plus any inpatients who were both admitted and discharged after the census-taking time the previous day. Generally, the inpatient census is taken each midnight. However, a facility may designate and consistently use any other specified hour for census taking.
 

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Section 451.73 - Date of acquisition

451.73 Date of acquisition. The effective purchase date of an asset. Usually, this is the date title is acquired or the burdens of ownership are assumed and the asset is in possession.
 

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Section 451.74 - Deductible

451.74 Deductible. Under the Medicare program, that portion of covered hospital and medical charges which an insured person must pay before his policy benefits begin. Proposed as a mechanism to discourage over-utilization or to avoid processing small claims.
 

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Section 451.75 - Deferral (or deferment)

451.75 Deferral (or deferment). The accounting treatment accorded the receipt or accrual of revenue before it is earned, or the incurrence of an expenditure before the benefits therefrom are received.
 

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Section 451.76 - Deferred charges

451.76 Deferred charges. The portion of an expenditure which has been made which will not be charged against revenue within 12 months following the date of the statement of operations.
 

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Section 451.77 - Definition

451.77 Definition. A statement that sets forth and delimits the meaning of a word, phrase, or other symbolic expression, as used in a given discourse or context.
 

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Section 451.78 - Depreciation

451.78 Depreciation. The systematic distribution of the cost or other basis of depreciable asset over its estimated useful life.
 

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Section 451.79 - Department

451.79 Department. A division within an organizational structure.
 

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Section 451.80 - Development period

451.80 Development period. The period from the inception of an article 28-A residential health care facility to the day preceding the permanent financial occupancy date.
 

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Section 451.81 - Direct cost

451.81 Direct cost. The cost of any good or service that contributes to and is readily ascribable to product or service output.
 

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Section 451.82 - Direct expense

451.82 Direct expense. See direct cost.
 

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Section 451.83 - Discount earned

451.83 Discount earned. A reduction in the purchase price of a good or service because of early payment.
 

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Section 451.84 - Distribution

451.84 Distribution. (a) Any payment to stockholders or owners of cash, property or shares, including any of the various forms of dividend; in noncorporate enterprise, a withdrawal.

(b) A spread of revenue or expenditure or of capital additions to various accounts; an allocation.

(c) Disposal of a product by sale.
 

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Section 451.85 - Donated services

451.85 Donated services. The estimated fair monetary value, based on a facility's compensation policies, of services related to patient care or in administrative positions essential to provisions of patient care performed by individuals who receive no monetary compensation or partial compensation for their services, but in which there is an employer-employee relationship between the individual and the facility. The term is usually applied to services rendered by members of religious orders, societies or similar groups to institutions operated by or affiliated with such groups.
 

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Section 451.86 - Donated supplies

451.86 Donated supplies. The estimated fair monetary value of contributed supplies.
 

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Section 451.87 - Earned

451.87 Earned. Realized or accrued as revenue through sales of goods, services performed, or the lapse of time.
 

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Section 451.88 - Employee benefit

451.88 Employee benefit. A pension provision, retirement allowance, insurance coverage, paid vacation, sick leave or holiday time off, or other cost representing a present or future return to an employee, which is neither deducted on a payroll nor paid or by the employee.
 

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Section 451.89 - Encumbrance (governmental accounting)

451.89 Encumbrance (governmental accounting). (a) An anticipated expenditure, evidenced by a contract or purchase order, or determined by administrative action.

(b) Commitment.

(c) Any lien or other liability attaching to real property.
 

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Section 451.90 - Endowment fund

451.90 Endowment fund. Funds, usually of a nonprofit institution, in which a donor has stipulated, as a condition of gift, that the principal of the fund is to be maintained inviolate and in perpetuity and that only income from investments of the fund may be expended.
 

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Section 451.91 - Enterprise

451.91 Enterprise. Any business undertaking; a business enterprise; without qualification the terms refers to an entire organization rather than a subdivision thereof.
 

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Section 451.92 - Equity

451.92 Equity. (a) Any right or claim to assets.

(b) An interest in property or in a business, subject to claims of creditors.

(c) The difference between assets and liabilities.

(d) Net worth.
 

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Section 451.93 - Equity ownership

451.93 Equity ownership. (a) The interest of an owner in property or in a business or other organization, subject, in case of liquidation, to prior claim of creditors.

(b) The interest (paid-in capital and retained earnings) of a stockholder or of stockholders collectively in a corporation; proprietorship.
 

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Section 451.94 - Examination

451.94 Examination. Audit.
 

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Section 451.95 - Exception

451.95 Exception. A qualification by an auditor in his report, indicating a limitation as to the scope of his audit or disagreement with or doubt concerning an item of a financial statement on which he is reporting.
 

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Section 451.96 - Exhibit

451.96 Exhibit. A financial or other statement of a formal character prepared for the information of others, as in an auditor's report.
 

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Section 451.97 - Expected life

451.97 Expected life. Length of life or years of service of an asset or asset group at a particular moment of time.
 

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Section 451.98 - Expenditure

451.98 Expenditure. (a) The incurring of a liability, the payment of cash or the transfer of property for the purpose of acquiring an asset or service or settling a loss.

(b) The amount of cash or property paid or to be paid for a service rendered, or an asset purchased.

(c) Any cost, the benefits of which may extend beyond the current accounting period.
 

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Section 451.99 - Expense

451.99 Expense. Expired cost; any item or class of cost of (or loss from) carrying on an activity; a present or past experience defraying a present operating cost or representing an irrecoverable cost or loss.
 

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Section 451.100 - Expense center

451.100 Expense center. Any location within an organization at which the coincidence of organization and function has been recognized; an activity.
 

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Section 451.101 - Expired cost

451.101 Expired cost. An expenditure from which no further benefit is anticipated; an expense; a cost absorbed over the period during which benefits were enjoyed or a loss incurred.
 

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Section 451.102 - External audit

451.102 External audit. An audit by a person not an employee; an independent audit.
 

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Section 451.103 - Extraordinary depreciation

451.103 Extraordinary depreciation. Depreciation caused by unusual wear and tear, unexpected disintegration, obsolescence or inadequacy beyond that attributable to ordinary loss of physical or service life.
 

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Section 451.104 - Facility

451.104 Facility. A residential health care facility; may be a distinct part of a hospital.
 

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Section 451.105 - Fair market value

451.105 Fair market value. The price for which an asset would be purchased in an arm's-length transaction as a result of good-faith bargaining between a sophisticated buyer and seller, neither being under any compulsion to buy or sell.
 

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Section 451.106 - Fidelity bond

451.106 Fidelity bond. Insurance against losses arising from dishonest acts of employees involving money, merchandise or other property.
 

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Section 451.107 - Fiduciary

451.107 Fiduciary. Any person responsible for the custody or administration, or both, of property belonging to another; as, a trustee.
 

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Section 451.108 - Financial accounting

451.108 Financial accounting. The accounting for revenues, expenses, assets and liabilities that is commonly carried on in the general offices of a business.
 

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Section 451.109 - Financial Accounting Standards Board (FASB)

451.109 Financial Accounting Standards Board (FASB). A quasi-independent organization established in 1873 by the AICPA-sponsored Financial Accounting Foundation for the purpose of developing principles for financial reporting by business enterprises.
 

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Section 451.110 - Financial statement

451.110 Financial statement. A balance sheet, income statement, funds statement, or any supporting statement or other presentation of financial data derived from accounting records.
 

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Section 451.111 - Fiscal year

451.111 Fiscal year. The facility's uniform period between one annual reporting of financial accounts and the next reporting.
 

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Section 451.112 - Fixed asset

451.112 Fixed asset. (a) A tangible asset held for the services it yields in the production of goods and services; any item of plant.

(b) A balance sheet classification denoting capital assets other than intangibles and investments in affiliated companies or other long-term investments. included in the usual fixed-asset categories are land (from which the flow of services is seemingly permanent), buildings, building equipment, fixtures, machinery, tools (large and small), furniture, office devices, patterns, drawings, dies, and often containers; generally excluded are goodwill, patents and other intangibles. The characteristic fixed asset has a limited life (land is the one important exception), and, in organizations where expenses are accounted for, its cost, less estimated salvage at the end of its useful line, is distributed over the periods it benefits by means of provisions of depreciation.
 

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Section 451.113 - Fixed capital

451.113 Fixed capital. The investment in capital assets.
 

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Section 451.114 - Fixed cost (or expense)

451.114 Fixed cost (or expense). An operating expense, or operating expense as a class, that does not vary with business volume. Examples: interest on bonds; rent; property tax; depreciation (sometimes in part); minimal amounts of general overhead. Fixed costs are not fixed in the sense that they do not fluctuate or vary; they vary, but from causes independent of volume.
 

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Section 451.115 - Fringe benefit

451.115 Fringe benefit. See employee benefit.
 

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Section 451.116 - Functional

451.116 Functional (a) The general end or purpose sought to be accomplished by an organizational unit. Examples: administrative services; skilled nursing; physical therapy; research; plant operation and maintenance; dietary.

(b) A group of related activities serving a common end.
 

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Section 451.117 - Functional

451.117 Functional. Adapted to and capable of performance; a function or service performed by one organizational unit for another.
 

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Section 451.118 - Functional accounting

451.118 Functional accounting. Accounting by functions and activities; activity accounting.
 

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Section 451.119 - Fund

451.119 Fund. A self-contained accounting entity set up to account for a specific activity or project.
 

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Section 451.120 - Fund account

451.120 Fund account. Any account reflecting transactions of a fund.
 

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Section 451.121 - Fund accounting

451.121 Fund accounting. Maintenance of separate and/or group accounts for health facility resources according to spending objectives set by donors, other outside sources or the governing body.
 

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Section 451.122 - Fund asset

451.122 Fund asset. An asset belonging to a particular fund or a group of funds.
 

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Section 451.123 - Fund balance

451.123 Fund balance. The excess of assets over liabilities (net equity). An excess of liabilities over assets is known as a deficit in fund balance.
 

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Section 451.124 - Fund balance sheet

451.124 Fund balance sheet. A balance sheet divided into self-balancing sections, each of which shows the assets and liabilities of a single fund or group of related funds.
 

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Section 451.125 - Funded debt

451.125 Funded debt. Debt evidenced by outstanding bonds or long-term notes.
 

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Section 451.126 - Funded reserve

451.126 Funded reserve. A pension reserve, a reserve for bonuses or for the retirement of preferred stock, or other prospective future liability against which certain assets have been accumulated and set aside or earmarked.
 

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Section 451.127 - Fund group

451.127 Fund group. A group of funds of similar character which are brought together for administrative and reporting purposes. Examples: current funds; loan funds; endowment funds; plant funds; agency funds.
 

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Section 451.128 - Fund liability

451.128 Fund liability. A liability of a fund which is to be met out of its existing resources.
 

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Section 451.129 - Funds held in trust by others

451.129 Funds held in trust by others. Funds held and administered, at the direction of the donor, by an outside trustee for the benefit of an institution or institutions.
 

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Section 451.130 - Generally accepted accounting principles

451.130 Generally accepted accounting principles. Accounting principles currently approved by the American institute of Certified Public Accountants,
 

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Section 451.131 - Generally accepted auditing standards

451.131 Generally accepted auditing standards. Auditing standards currently approved by the American institute of Certified Public Accountants.
 

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Section 451.132 - General journal

451.132 General journal. The journal in which are recorded transactions not provided for in specialized journals.
 

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Section 451.133 - General ledger

451.133 General ledger. A ledger containing accounts in which all the transactions of a business enterprise or other accounting unit are classified, either in detail or in summary form.
 

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Section 451.134 - Generally accepted

451.134 Generally accepted. Given authoritative recognition; said of accounting principles or audit standards, and the pronouncements concerning them, particularly, in recent years, those of the American Institute of Certified Public Accountants and the Financial Accounting Standards Board.
 

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Section 451.135 - Gross

451.135 Gross. Undiminished by related deductions, except corrections; applied to sales, revenues, income, expense and the like.
 

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Section 451.136 - Group I equipment

451.136 Group I equipment. Equipment permanently attached to the structure (fixed equipment).
 

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Section 451.137 - Group II equipment

451.137 Group II equipment. Equipment and furnishings not permanently attached to the structure (movable equipment).
 

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Section 451.138 - Group III equipment

451.138 Group III equipment. Equipment and supplies with a relatively short, useful life (minor equipment).
 

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Section 451.139 - HFMA

451.139 HFMA. Hospital Financial Management Association.
 

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Section 451.140 - Historical cost

451.140 Historical cost. The total actual cost incurred in acquiring and preparing a fixed asset for use. This cost includes items, if any, which would be capitalized under generally accepted accounting principles in addition to purchase price; e.g., installation costs.
 

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Section 451.141 - Home office

451.141 Home office. The office of the controlling organization. This office generally incurs costs and provides services to or on behalf of the individual health facility.
 

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Section 451.142 - Hospital

451.142 Hospital. An establishment with an organized medical staff; with permanent facilities that include inpatient beds; and with medical services, including continuous nursing services, that provide diagnosis and treatment for patients.
 

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Section 451.143 - Imprest cash

451.143 Imprest cash. Imprest fund.
 

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Section 451.144 - Imprest fund

451.144 Imprest fund. (a) A fixed cash fund or petty cash fund in the form of currency, a bank checking account, or both, maintained for expenditures that must be made in cash, and from time to time restored to its original amount by a transfer from general cash of a sum equal to the aggregate of disbursements.

(b) A form of working fund.
 

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Section 451.145 - Imprest system

451.145 Imprest system. The system under which imprest cash in disbursed and from time to time restored to its original amount through reimbursements equal to sums expended. Implicit in the concept is the review by a higher authority of the propriety of the expended amounts before reimbursement is approved.
 

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Section 451.146 - Improvement

451.146 Improvement. (a) Betterment.

(b) The clearing, draining, grading, or other addition to the worth of a tract of land; any cost of developing real estate, whether paid for directly or through special assessment taxes.
 

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Section 451.147 - Imputed value of services rendered

451.147 Imputed value of services rendered. The dollar value of specified services, computed according to formulas established by the department.
 

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Section 451.148 - Income realization

451.148 Income realization. The recognition of income, the usual test being the passage of title to or delivery of goods, or the performance of services.
 

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Section 451.149 - Income statement

451.149 Income statement. A summary of the revenues and expenses of an accounting unit, or group of such units, for a specified period.
 

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Section 451.150 - Increment

451.150 Increment. (a) An increase in value from one point of time to another, without reference to cost or book value.

(b) Unearned increment has reference to an increase in the value of land from causes to which the owner has made no contribution, as from growth of population.
 

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Section 451.151 - Indirect cost

451.151 Indirect cost. A functional cost not attributed to the production of a specified good or service but to an activity associated with production generally.
 

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Section 451.152 - Indirect liability

451.152 Indirect liability. (a) An obligation not yet incurred but for which responsibility may have to be assumed in the future; as, the possible liability from the premature settlement of a long-term contract.

(b) A debt of another, as the result of which an obligation to pay may develop.

(c) A contingent liability.
 

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Section 451.153 - Initial occupancy period

451.153 Initial occupancy period. The period Commencing with the first month prior to the admittance of the first patient and ending with the day preceding the permanent financial occupancy date. The initial occupancy period is part of the development period.
 

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Section 451.154 - Initial occupancy expense

451.154 Initial occupancy expense. All expenses incurred and all income earned related to patient care accounted for on the accrual basis during the initial occupancy period, except for:

(a) interest expense and interest income;

(b) any additional New York State Housing Finance Agency financing expense;

(c) accounting fees of outside independent accountants; and

(d) legal fees.
 

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Section 451.155 - Inpatient

451.155 Inpatient. A person who is provided with room, board and continuous nursing service in a health facility.
 

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Section 451.156 - Inpatient admission

451.156 Inpatient admission. The formal acceptance by a health facility of a patient who is to be provided with room, board and continuous nursing service in an area of the health facility where patients generally stay at least overnight.
 

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Section 451.157 - Inpatient bed count

451.57 Inpatient bed count. The number of available health facility inpatient beds, both occupied and vacant, on any given day.
 

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Section 451.158 - Inpatient bed count day

451.158 Inpatient bed count day. A unit of measure denoting the presence of one inpatient bed (either occupied or vacant) set up and staffed for use in one 24-hour period.
 

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Section 451.159 - Inpatient bed count days (total)

451.159 Inpatient bed count days (total). The sum of inpatient bed count days for each of the days in the period under consideration.
 

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Section 451.160 - Inpatient bed occupancy ratio

451.160 Inpatient bed occupancy ratio. The proportion of inpatient beds occupied, defined as the ratio of inpatient service days to inpatient bed count days in the period under consideration.
 

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Section 451.161 - Inpatient census

451.161 Inpatient census. See daily inpatient census.
 

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Section 451.162 - Inpatient discharge

451.162 Inpatient discharge. The termination of period of inpatient care through the formal release of an inpatient by a health care facility.
 

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Section 451.163 - Intangible assets

451.163 Intangible assets. Nonphysical assets (e.g., goodwill, an agreement not to compete), almost always noncurrent.
 

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Section 451.164 - Interfund transfer

451.164 Interfund transfer. The transfer of money or other asset, or of a liability, from one fund to another.
 

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Section 451.165 - Interest

451.165 Interest. The cost incurred for the use of borrowed funds.
 

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Section 451.166 - Interest on capital indebtedness

451.166 Interest on capital indebtedness. The cost incurred for funds borrowed for capital purposes. Examples: acquisition of facilities, equipment and capital improvements. Generally, loans for capital purposes are long-term loans.
 

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Section 451.167 - Internal control

451.167 Internal control. (a) The general methodology by which management is carried on within an organization; also, any of the numerous devices for supervising and directing an operation or operations generally. Internal control, a management function, is a basic factor operating in one form or another in the administration of every organization, business or otherwise. Although sometimes identified with the administrative organism itself, it is often characterized as the nervous system that activates overall operating policies and keeps them within practicable performance ranges. The principal elements contributing to internal control are usually these:

(1) recognition that within every organizational unit there are one or more functional or action components known as activities, cost or responsibility centers, or management units with appropriate segregation of functional responsibilities;

(2) delegated operating authority in each organizational unit permitting freedom of action within defined limits;

(3) the linking of expenditures--their incurrence and disposition--with specified individual authority;

(4) end-product planning:

(i) by means of a budget fitted to the organizational structure and to its functional components, thus maintaining dual forward operating disciplines; and

(ii) the adoption of standards of comparison and other performance measurements such as standard costs, quality controls and timing goals;

(5) an accounting process and system of record procedures adequate to provide organizational and functional administrators with reasonable accounting control over assets, liabilities, revenues and expenses and also provide administrators with prompt, complete and accurate information on operating performance, and comparisons with predetermined performance standards;

(6) periodic reports, consonant with accounting and related records, by activity heads to supervisory management; reports serving as feedbacks of informative pictures of operations, and as displays of favorable and unfavorable factors that have influenced performance;

(7) internal check, built into operating procedures, and providing maximum protection against fraud and error;

(8) frequent professional appraisals, through internal audit, of management and its policies and operations generally, as a protective and constructive management service, its emphasis varying with the quality of operating policies and their administration.

(b) The construction of the above controls in such a manner as to stimulate and take full advantage of those natural attributes of individual employees. i.e., personnel of a quality commensurate with responsibilities.
 

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Section 451.168 - Inventory

451.168 Inventory. The dollar value (computed in accordance with generally accepted accounting principles) of merchandise, materials and supplies on hand at the close of a facility's accounting period.
 

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Section 451.169 - Inventory control

451.169 Inventory control. The control of merchandise, materials, goods in process, finished goods, and supplies on hand by accounting and physical methods. An accounting control is effected by means of a stock or stores ledger, mechanical storage records, or a ledger account in which the quantities or amounts (or both) of goods received during an accounting period are added to corresponding balances at the beginning of the period and amounts of goods sold or otherwise disposed of are deducted at a calculated cost based on individual identification or any of various methods of averaging. Physical controls consist of various plans of buying, storing. handling, issuing, supervising and stocktaking. Stockledger control is made more effective by physical control in the nature of a continuous check of the goods on hand.
 

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Section 451.170 - Inventory valuation

451.170 Inventory valuation. The determination of the costs or the portion of cost assignable to on-hand raw materials, merchandise held for resale, and supplies based on any generally accepted method consistently applied.
 

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Section 451.171 - Invested capital

451.171 Invested capital. (a) The amount of capital contributed to a business by its owners; capital.

(b) The amount so contributed, plus retained earnings (or less accumulated losses) and appropriated surplus.
 

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Section 451.172 - Ledger control

451.172 Ledger control. The control of a subsidiary record or ledger by the use of a control account. Ledger control is limited to a proof that all items were recorded in the subsidiary record or that they were accurately made, as required, to the debit and credit sides of that record. It does not furnish proof that every item was recorded in its proper account in the subsidiary record.
 

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Section 451.173 - Length of stay (for one patient)

451.173 Length of stay (for one patient). The number of calendar days from admission to discharge, counting the day of admission but not the day of discharge.
 

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Section 451.175 - Leasehold improvements

451.175 Leasehold improvements. Those improvements made by the owners of a facility to leased land, buildings or equipment.
 

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Section 451.176 - Liability

451.176 Liability. (a) An amount owing by one person (a debtor) to another (a creditor), payable in money, or in goods or services; the consequence of an asset or service received or a loss incurred or accrued; particularly, any debt:

(1) due or past due (current liability);

(2) due at a specified time in the future (e.g., funded debt, accrued liability); or

(3) due only to failure to perform a future act (deferred income, contingent liability).

(b) The title of the credit half of a balance sheet, often including net worth as well as obligations to outsiders; when thus used, the inference is that the organization reflected in the balance sheet has a status independent of both its creditors and its owners--to whom it must account in the amounts shown.
 

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Section 451.177 - Licensed bed capacity

451.177 Licensed bed capacity. The maximum number of beds which a provider may keep occupied under the terms of its license.
 

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Section 451.178 - Limited-life asset

451.178 Limited-life asset. Any capital asset, as a building, machine or patent, the usefulness of which to its owner is restricted by its physical life or by the period during which it contributes to operations.
 

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Section 451.179 - Liquid asset

451.179 Liquid asset. Cash in banks and on hand, and other cash assets not set aside for specific purposes other than the payment of a current liability, or a readily marketable investment. The term is somewhat less restrictive than cash asset and much more restrictive than quick asset.
 

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Section 451.180 - Living trust funds

451.180 Living trust funds. Funds acquired by an institution subject to agreement whereby resources are made available to the institution on condition that the institution pay periodically to a designated person, or persons, the income earned on the resources acquired for the lifetime of the designated person, or persons, or for a specified period.
 

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Section 451.181 - Maintenance

431.181 Maintenance. The keeping of property at a standard of operating condition; also, the expense involved. Example: recurring operations of cleaning, oiling, repairing and adjusting. Maintenance cost includes outlays for:

(a) labor and supplies;

(b) the replacement of any parts that constitute less than a retirement unit; and

(c) major overhauls, the item of which may involve elements of the first two classes.
 

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Section 451.182 - Management

451.182 Management. (a) Executive authority; the combined fields of policy and administration.

(b) As applied to individuals:

(1) the head of an organization; or

(2) collectively, the head and his immediate staff and any or all persons possessing supervisory persons' delegated authority; or

(3) broadly, the persons within an organization who originate transactions.
 

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Section 451.183 - Materiality

451.183 Materiality. (a) The relative importance, when measured against a standard of comparison, of any item included in or omitted from books of account or financial statements, or of any procedure or change in procedure that conceivably might affect such statements.

(b) The characteristic attaching to a statement, fact or item whereby its disclosure or the method of giving it expression would be likely to influence the judgment of a reasonable person.
 

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Section 451.184 - Matrix inversion

451.184 Matrix inversion. A process of allocating a department's costs to all other departments by solving simultaneous equations.
 

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Section 451.185 - Medical recipient

451.185 Medical recipient. A recipient of medical assistance under title XIX of the Social Security Act or of State-funded medical care services.
 

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Section 451.186 - Medical services

451.186 Medical services. The services pertaining to medical care that are performed at the direction of a physician on behalf of patients by physicians, dentists, nurses and other professional and technical personnel.
 

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Section 451.187 - Medicare

451.187 Medicare. A third-party reimbursement program administered by the Social Security Administration that underwrites the medical costs of persons 65 and over and some qualified persons under 65. "Part A" covers hospital services and "Part B" covers physicians' services.
 

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Section 451.188 - Multi-facility provider

451.188 Multi-facility provider. A provide delivering two or more types of health care; e.g., a hospital and residential health care facility, or a retirement home and residential health care facility.
 

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Section 451.189 - Net worth

451.189 Net worth. The aggregate appearing on the accounting records of the equities representing proprietary interests; the excess of the going concern's value of assets over liabilities to outsiders; of a corporation, the total of paid-in capital, retained earnings and appropriated surplus; of a sole proprietorship, the proprietor's account; of a partnership, the sum of the partners' accounts.
 

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Section 451.190 - Nominal account

451.190 Nominal account. Any of the accounts the balances of which are transferred to retained earnings at the close of each fiscal year; so-called because such accounts reflect completed transactions or expired costs.
 

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Section 451.191 - Nonallowable cost

451.191 Nonallowable cost. A cost which does not meet every test of an allowable cost as defined in this Part.
 

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Section 451.192 - Nonoperating revenue

451.192 Nonoperating revenue. The revenues of an enterprise derived from sources other than its regular activities; other revenue.
 

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Section 451.193 - Nonprofit corporation

451.193 Nonprofit corporation. An incorporated charity, or any corporation operated under a policy by which no stockholder or trustee shares in the profits or losses, if any, of the enterprise.
 

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Section 451.194 - Nonrestricted funds

451.194 Nonrestricted funds. Unrestricted funds. Funds which are not restricted to a specific use by the donor. Examples of unrestricted funds include operating and board-designated funds.
 

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Section 451.195 - Nonrevenue-producing cost centers

451.195 Nonrevenue-producing cost centers. These are overhead units, such as dietary and plant operations and maintenance, that provide necessary support services to revenue-producing centers.
 

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Section 451.196 - Object classification

451.196 Object classification. A method of classifying expenditures according to their natural classification, such as salaries and wages, employee benefits, supplies, purchased services, etc.
 

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Section 451.197 - Obsolescence

451.197 Obsolescence. The loss in usefulness of an asset, occasioned by the approach to the state of economic uselessness through progress of the arts; economic inutility arising from external causes; disappearing usefulness resulting from invention, change of style, legislation, or other causes having no physical relation to the object affected. It is distinguished from exhaustion, wear and tear, and deterioration, in that these terms refer to a functional loss arising out of a change in physical condition.
 

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Section 451.198 - Occasion of service

451.198 Occasion of service. A specific identifiable instance of an act of service involved in the medical care of health facility patients.
 

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Section 451.199 - Occupancy expense

451.199 Occupancy expense. Expense relating to the use of property. Examples: rent, heat, light, depreciation, upkeep, and general care of premises occupied.
 

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Section 451.200 - Operating budget

451.200 Operating budget. A budget covering recurrent revenue and expense.
 

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Section 451.201 - Operating cost (or expense)

451.201 Operating cost (or expense). An expense incurred in conducting the ordinary major activities of an enterprise, usually excluding nonoperating expense or income deductions.
 

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Section 451.202 - Operating income (or profit)

451.202 Operating income (or profit). The excess of revenues of a business enterprise over the expenses pertaining thereto, excluding income and expense derived from sources other than its regular activities.
 

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Section 451.203 - Operational period

451.203 Operational period. The period commencing with the permanent financial occupancy date.
 

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Section 451.204 - Organizational unit

451.204 Organizational unit. Any administrative subdivision of an enterprise, especially one charged with carrying on one or more functions or activities.
 

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Section 451.205 - Original cost

451.205 Original cost. Outlay for an asset by its owner, not including any adjustments of cost arising from post-acquisition alterations, improvement or depreciation.
 

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Section 451.206 - Outpatient

451.206 Outpatient. A person who receives health care services in a health facility without being admitted as a bed patient.
 

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Section 451.207 - Outstanding

451.207 Outstanding. (a) Uncollected or unpaid; said of an account or note receivable or payable, or of a check sent to the payee but not yet cleared against the drawee bank.

(b) in the hands of others; said of the units of funded debt of a corporation or of the certificates representing issued shares of capital stock in the hands of the public; treasury stock is defined in terms of shares issued but not outstanding.
 

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Section 451.208 - Overhead

451.208 Overhead. (a) Any cost of doing business other than a direct cost of an output of product or service.

(b) A general name for costs of materials and services not directly adding to or readily identifiable with the product or services constituting the main object of an operation.
 

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Section 451.209 - Owner

451.209 Owner. The entity which is legally responsible for the operation of a provider, and thus for decisions and for liabilities arising in the course of its operation.
 

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Section 451.210 - Paid-in capital

451.210 Paid-in capital. The total amount of cash, property and services contributed to a corporation by its stockholders and constituting a major balance sheet item. It may be reflected in a single account or divided between capital stock and additional paid-in capital accounts.
 

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Section 451.211 - Part A and Part B services

451.211 Part A and Part B services. Medicare benefits are payable from two funds. Part A services, which, in general, are those rendered by institutions, are reimbursed from funds derived from payroll tax. Part B services, generally medical and surgical physicians' services, and outpatient treatment and diagnosis, are reimbursed from the fund created by voluntary premium payments and general Federal revenues.
 

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Section 451.212 - Patient day

451.212 Patient day. A calendar day of patient care. In computing calendar days of care, the day of admission is always counted. The day of discharge is counted only when the patient was admitted on the same day. A patient is admitted for purposes of this definition when he or she is physically present, is assigned a bed, and a patient medical record is opened.
 

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Section 451.213 - Payroll distribution

451.213 Payroll distribution. (a) An analysis of the total amount of salaries and wages paid or accrued for a period, showing the component amounts to be charged to the various departments, operations, activities or products affected.

(b) The entry by which the amount of salaries and wages paid or accrued for a period is charged in the required detail to the accounts or records.
 

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Section 451.214 - Permanent financial occupancy date

451.214 Permanent financial occupancy date. The date declared by the Commissioner of Health or his designee after a facility has been occupied for a period of time. This date is a financial concept date; it is not the date a facility admits its first patient.
 

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Section 451.215 - Per patient day costs (PPD)

451.215 Per patient day costs (PPD). Total allowable costs divided by total patient days for the period covered.
 

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Section 451.216 - Petty cash fund

451.216 Petty cash fund. See imprest fund.
 

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Section 451.217 - Plant

451.217 Plant. Physical properties used for institutional purposes; i.e., land, building, improvements, equipment and so forth. The term does not include real estate or properties of restricted or unrestricted funds not used for health facility operations.
 

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Section 451.218 - Plant replacement and expansion funds

451.218 Plant replacement and expansion funds. Funds restricted by donor or granted for renewal, expansion or replacement of plant.
 

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Section 451.219 - Pooled investments

451.219 Pooled investments. Assets of two or more funds consolidated for investment purposes.
 

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Section 451.220 - Pre-operating expenses

451.220 Pre-operating expenses. The one-time expenses of a new provider incurred prior to the admission of any patients.
 

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Section 451.221 - Prepaid expense

451.221 Prepaid expense. The portion of an expenditure which has been made which will be charged against revenue within 12 months following the date of the statement of operations.
 

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Section 451.222 - Principal

451.222 Principal. A sum on which interest accrues; capital, as distinguished from income.
 

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Section 451.223 - Proprietary accounts

451.223 Proprietary accounts. (a) The accounts, including nominal accounts, containing the equities of owners.

(b) Governmental accounting. The accounts reflecting the assets and liabilities, and displaying the results of operations in terms of revenue, expense, surplus or deficit.
 

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Section 451.224 - Prorate

451.224 Prorate. To assign or redistribute a portion of a cost, such as a joint cost, to a department, operation, activity or product according to some formula or other agreed-to, often arbitrary, procedure.
 

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Section 451.225 - Prudent buyer concept

451.225 Prudent buyer concept. The price paid for items by a prudent buyer in the open market under competitive conditions.
 

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Section 451.226 - Purchased services

451.226 Purchased services. Services directly or indirectly related to patient care which a provider contracts for with an outside individual or firm.
 

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Section 451.227 - Quick asset

451.227 Quick asset. A current asset normally convertible into cash within a relatively short period, such as a month. Examples: cash, call loan, marketable security, customer's account, a commodity immediately salable at quoted prices on the open market.
 

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Section 451.228 - Reasonable cost

451.228 Reasonable cost. Those costs which are determined by the Department of Health as reasonable in comparison to like expenses incurred by other similar facilities.
 

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Section 451.229 - Related organization

451.229 Related organization. An entity which, to a significant extent, is under common ownership and/or control with, or has control of or is controlled by, the provider. An entity is deemed to control another entity if it has a significant ownership interest in the other, or if it has the power, whether or not exercised, to influence directly or indirectly the activities or policies of the other.
 

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Section 451.230 - Repair

451.230 Repair. (a) The restoration of a capital asset to its full productive capacity, or a contribution thereto, after damage, accident or prolonged use, without increase in its previously estimated service life or productive capacity.

(b) The charge to operations representing the cost of such restoration.
 

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Section 451.231 - Replacement

451.231 Replacement. The substitution of one fixed asset for another, particularly of a new asset for an old, or of a new part for an old part. On the books of account, the recognition of the cost of the new asset requires the elimination of the cost of the asset it replaces.
 

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Section 451.232 - Replacement cost

451.232 Replacement cost. (a) The cost of an acquired asset or asset part, capitalizable if the cost of its retired counterpart is removed from the asset account.

(b) The cost at current prices, in a particular locality or market area, of replacing an item of property or a group of assets.
 

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Section 451.233 - Residential health care facility

451.233 Residential health care facility. All facilities or organizations covered by the term nursing home as defined in article 28 of the Public Health Law, including hospital-based residential health care facilities, provided that such facility possesses a valid operating certificate issued by the State Commissioner of Health and, where required, has been established by the Public Health Council.
 

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Section 451.234 - Responsibility accounting

451.234 Responsibility accounting. The classification, management, maintenance, review, appraisal of accounts serving the purpose of providing information on the quality, quantity and standards of performance attained by persons to whom authority has been assigned.
 

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Section 451.235 - Restricted funds

451.235 Restricted funds. Funds designated by the donors, governmental units and endowments for special nonoperating purposes.
 

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Section 451.236 - Retained earnings (or income)

451.236 Retained earnings (or income). Accumulated net income, less distributions to stockholders and transfers to paid-in capital accounts.
 

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Section 451.237 - Retirement of indebtedness funds

451.237 Retirement of indebtedness funds. Funds required by external sources to be used to meet debt-service charges and the retirement of indebtedness on plant assets. The term sinking funds is sometimes used to describe these funds.
 

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Section 451.238 - Return on capital investment

451.238 Return on capital investment. A rate of return on owner's net equity.

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Section 451.239 - Revenue

451.239 Revenue. (a) Sales of products, merchandise and services, and earnings from interest, dividends, rent and wages; transactions resulting in increases in assets.

(b) Governmental accounting. The gross receipts and receivables of a governmental unit derived from taxes, customs and other sources, but excluding appropriations and allotments.
 

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Section 451.240 - Revenue-producing cost centers

451.240 Revenue-producing cost centers. Health facility departments providing direct services to patients (such as nursing, physical therapy and laboratory) and thereby generating revenue.
 

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Section 451.241 - Revolving fund

451.241 Revolving fund. A fund from which moneys are continuously expended, replenished, and again expended. Examples: imprest cash; working funds; assets available for loans, the repayments of which are available for other loans.
 

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Section 451.242 - Round off

451.242 Round off. To simplify the presentation of a quantity by omitting its terminal digits, with the express purpose of displaying only significant figures.
 

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Section 451.243 - Schedule

451.243 Schedule. A supporting, explanatory or supplementary analysis accompanying a balance sheet, income statement or other statement prepared from the books of account.
 

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Section 451.244 - Service cost

451.244 Service cost. (a) The cost of any service.

(b) The amortizable cost of a limited-life asset; i.e., the asset cost, less estimated recovery, if any, from resale or scrap. Service cost is the amount to be depreciated over the useful life of a fixed asset.
 

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Section 451.245 - Share of pooled investments

451.245 Share of pooled investments. The proportion of pooled investments, including accumulated gains or losses, owned by a particular fund, usually expressed by a number (units) indicating the fractional ownership of total shares in the pool or by a percentage expressing the portion of the total pool owned by the particular fund.
 

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Section 451.246 - Sinking fund

451.246 Sinking fund. Retirement of indebtedness funds.
 

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Section 451.247 - Special purpose fund

451.247 Special purpose fund. Specific purpose funds.
 

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Section 451.248 - Specific purpose funds

451.248 Specific purpose funds. Funds restricted for a specific purpose or project. Board-designated funds do not constitute specific purpose funds.
 

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Section 451.249 - Stepdown method

451.249 Stepdown method. The allocation of the accumulated costs of the nonrevenue-producing centers to those other nonrevenue-producing centers which utilize their services, as well as to the revenue-producing centers to which they render service. Once the costs of a nonrevenue-producing center have been allocated, that center is considered closed.
 

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Section 451.250 - Straight-line method

451.250 Straight-line method. The assignment of equal segments of the service cost of any item to the benefits to be yielded by the item; a procedure followed in depreciation computations and in the spread of prepaid expenses and bond discount. In practice, a period charge for depreciation is usually substituted for a more exact measurement of benefits yielded because of:

(a) its relative simplicity;

(b) the presence of only minor differences between the two methods;

(c) the impossibility of estimating with any degree of realism the total prospective output of services, as in the case of many types of machinery; or

(d) the absence of any ready determinable unit of service, as in the case of buildings. See amortization; apportionment; deferred charge.
 

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Section 451.251 - Tangible assets

451.251 Tangible assets. Physical assets (e.g., building, equipment inventory).
 

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Section 451.252 - Temporary funds

451.252 Temporary funds. See specific purpose funds.
 

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Section 451.253 - Term endowment funds

451.253 Term endowment funds. Donated funds which, by the terms of the agreement, become available either for any legitimate purpose designated by the board or for a specific purpose designated by the donor upon the happening of an event or upon the passage of a stated period of time.
 

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Section 451.254 - Trial balance

451.254 Trial balance. A list or abstract of the balances or of total debits and total credits of the accounts in a ledger, the purpose being to determine the quality of posted debits and credits and to establish a basic summary for financial statements. The term is also applied to a list of account balances (and their total) abstracted from a customer's ledger or other subsidiary ledger for the purpose of testing their totals with the related control account.
 

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Section 451.255 - Trade discount

451.255 Trade discount. The discount allowed to a class of customers on a list price before consideration of credit terms; as a rule, invoice prices are recorded in the books of account net after deduction of trade and quantity discounts.
 

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Section 451.256 - Total inpatient service days

451.256 Total inpatient service days. The sum of all inpatient service days for each of the days in the period under consideration.
 

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Section 451.257 - Total length of stay (for all inpatients)

451.257 Total length of stay (for all inpatients). The sum-of-the-days' stay of any group of inpatients discharged during a specified period of time.
 

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Section 451.258 - Unit of service

451.258 Unit of service. A unit of measure, often commonly accepted, for determining average cost, time or efficiency, thus making possible:

(a) comparisons of one operation with another, or with the same operation in a preceding period; and

(b) estimates of future operations.
 

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Section 451.259 - Unrestricted funds

451.259 Unrestricted funds. Funds which bear no external restrictions as to use or purpose, i.e., funds which can be used for any legitimate purpose designated by the governing board as distinguished from funds restricted externally for specific operating purposes, for plant replacement and expansion, and for endowment.
 

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Section 451.260 - Useful life

451.260 Useful life. Normal operating life in terms of utility to the owner: said of a fixed asset or a fixed-asset group; the period may be more or less than physical life or any commonly recognized economic life; service life.
 

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Section 451.261 - Valuation account (or reserve)

451.261 Valuation account (or reserve). An account which relates to and partly or wholly offsets one or more other accounts; as, accumulated depreciation or allowance for bad debts; unamortized debt discount.
 

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Section 451.262 - Weighted average

451.262 Weighted average. A simple average of items reduced to a common basis. For example, purchases of certain raw material are made during a given month as follows:

Units Price each Total cost

150 $1.50 $225.00

175 1.40 245.00

50 1.32 66.00

65 1.30 84.50

___ _____ _______

440 $5.52 $620.50

The simple average of prices paid is $5.52 / 4, or $1.38; but the weighted average would be the total cost divided by the number of units purchased: $620.50 / 440, or $1.41.
 

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Part 452 - Basic Concepts, Reporting Principles And Specialized Reporting Areas

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

Section 452.1 - Purpose

Section 452.1 Purpose. The purpose of this Article is to establish a foundation for uniform reporting by residential health care facilities. In making their reports, such facilities will be bound by the basic principles and concepts set forth in this Article. Any reporting principles not specifically discussed herein should be report according to generally accepted accounting principles as interpreted in the opinions of the American Institute of Certified Public Accountants (AICPA) and in the statements by the Financial Accounting Standards Board.
 

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Section 452.2 - Basic concepts

452.2 Basic concepts. (a) Accounting entity. A fundamental accounting concept is that of the accounting entity or unit. For the purposes of this Article, a residential health care facility is presumed to be an accounting entity, the boundaries of which may not be the same as those of the legal entity. The residential health care facility is the primary unit for which the accounting records are maintained.

(b) Going concern. An accounting entity is viewed as continuing in operation in the absence of evidence to the contrary. The results of operation of an accounting entity are recognized and measured based on this concept.

(c) Reporting period. The economic activities of an accounting entity are measured and accounted for in incremental time periods that are shorter than the life of the entity. The basic reporting period for this Article is one year, commencing on January 1st and ending on December 31st of each year.

(d) Substance over form. Financial accounting is concerned with the economic substance of transactions rather than the legal form of such transactions. Generally, economic substance agrees with legal form. However, in those instances where substance and form differ, the financial treatment for such transactions should be accounted for based on their economic substance to provide more meaningful information of the economic activities of the accounting entity.

(e) Consistency. Consistency refers to continued uniformity, during a period and from one period to another, in methods of accounting, mainly in valuation bases and methods of accrual, as reflected in the financial statements of an accounting entity. However, consistency does not require continued adherence to a method or procedure that is incorrect or no longer useful, nor does it preclude a justifiable and desirable change in accounting and reporting methods or procedures.

(f) Materiality. Materiality is an elusive concept, with the dividing line between material and immaterial amounts subject to various interpretations. It is clear, however, that an amount is material if its exclusion from the financial statements would cause misleading or incorrect conclusions to be drawn by users of the statements.

(g) Functional vs. responsibility accounting. (1) Normally, financial data is accumulated for operating departments that are identified with specific managerial responsibility. This information provides management with tools necessary to evaluate the performance of various departments. Recording and reporting financial data in this manner is known as responsibility accounting.

(2) Functional accounting is the process of recording and reporting revenues and expenses on the basis of activities performed without regard to organizational framework. Thus, costs related to a specific activity, normally charged to the organizational unit (department) responsible for that activity, would instead be charged to the cost center whose function is to perform the activity.

(3) Since facilities vary in basic organizational structure and the way responsibilities are organized within departments, this Article mandates reporting on a functional basis in accordance with defined activities of each department to achieve a level of compatibility.

(h) Objective evidence. (1) Information produced by the accounting process should be based, to the extent possible, on objectively determined facts. A record of an addition to inventory, for example, should be supported by properly executed business documents such as the purchase order, the receiving report, the supplier's invoice, and the check issued in payment of the invoice. Such documents serve as objective evidence of the transaction, and permit reliable determination of the cost of the asset, the amount of the liability, and the appropriateness of the resulting cash disbursement. Retention of these documents for a suitable period makes it possible to verify data in the accounting records.

(2) The requirement of objective evidence, however, cannot always be met by financial data in accounting reports. Although various computations and analyses can provide some evidence, it is often necessary to make estimates. Determination of depreciation and anticipated bad debts, for example, are based to a large extent on past experience and expected future conditions. In those instances requiring estimates, the judgment of the accountant and of management must be exercised.
 

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Section 452.3 - Reporting principles

452.3 Reporting principles. (a) Accrual reporting. In order to provide complete, accurate and uniform financial data, all residential health care facilities, including governmental institutions, must report such data on the accrual basis. If differences between the results of accruing an item and reporting that item on a cash basis are immaterial, accrual reporting of that item would be waived. Within these guidelines, therefore, employee vacation, sick time, holidays and personal time must be accrued when there is reasonable assurance that a liability does exist and will be liquidated.

(b) Matching of revenue and expenses. (1) Subject to the limitations of subdivision (a) of this section, revenue must be reported in the period earned, i.e., when the services are rendered and a legal claim arises for the services. Deductions from revenue, including contractual adjustments, are to be given accounting recognition in the same period that the related revenues were recorded.

(2) Revenue derived from services must be matched with the cost of providing those services.

(3) Revenue and expenses should be matched for each cost center within the residential health care facility. Therefore, the cost of functions and activities within each cost center are to be included in accounts designated for that cost center. Revenue relative to such functions and activities must be included in the matching revenue accounts.

(4) For those institutions that record charges on an all-inclusive rate basis (a flat charge regardless of services performed), a center-by-center matching of cost and revenue at the cost center level would be impossible. Therefore, for these institutions, the matching of cost and revenue should be accomplished at the program level. This, however, does not preclude such institutions from recording their costs in the proper cost center. In addition, revenue from patients should be reported at gross (the full established rate charged to a private patient) with a contractual allowance to reflect the difference between the full rate and the amount received from third-party payors. If the institution is on an all-inclusive rate basis (a flat charge for all services), then the gross rate would be the all-inclusive flat charge. If, however, the institution utilized a fee-for-service basis (a separate charge for each service provided), the gross charge for each service and patient must be reflected.

(c) Fund accounting. Many residential health care facilities receive funds from donors which are restricted as to use. These funds must be accounted for separately as restricted funds. This does not preclude the pooling of assets for investment purposes. Restricted funds generally fall into three categories: endowment funds, plant replacement and expansion funds, and specific purpose funds. However, certain facilities may also have agency funds to account for funds held for patients. The accounts within each restricted fund are self-balancing, as each fund requires separate fiduciary accountability. The following paragraphs outline the conditions and events which require separate accountability and the required accounting treatment for transactions within the established funds.

(1) Unrestricted Fund. (i) The Unrestricted Fund is used to account for funds derived from the day-to-day activities of the residential health care facility and unrestricted contributions. Funds which originate from unrestricted gifts or previously accumulated income may be designated by the governing board for special uses. If the governing board designates funds in this manner, it should be recognized that the board also has the authority to rescind its action. For this reason, such funds should be accounted for in the Unrestricted Fund as "board-designated funds". A separate structure of accounts in the Unrestricted Fund has been provided for these assets.

(ii) The term restricted should not be used in connection with board or other internal appropriations or designations of funds.

(2) Endowment funds. (i) Funds classified as endowment include:

(a) pure endowments (principal is to remain intact in perpetuity); and

(b) term endowments (principal is available for use upon the passage of time or the occurrence of an event).

(ii) When term endowments become available to the governing board for unrestricted purposes, they should be reported as nonoperating revenue; if these funds are restricted, they should be transferred to the appropriate restricted fund.

(iii) Income earned on endowment fund investments should be accounted for in accordance with donors' instructions if restricted, or as nonoperating revenue in the Unrestricted Fund if not restricted.

(iv) Under section 513 of the New York State Not-for-Profit Corporation Law, realized gains from the sale of endowment fund assets may be available for the general use of the residential health care facility, provided that the amount of fair value of the principal of such assets as of the end of the fiscal year in which the gains are recorded is not less than the amount of fair value of such assets at the time they were originally received by the home. Realized gains that were treated as additions to principal before the effective date of this section of law, September 1, 1970, may be available to the residential health care facility under the aforementioned conditions in an amount not to exceed 20 percent of such gains in one year. (3) Plant Replacement and Expansion Funds. (i) Resources restricted by donors and other third-parties for the acquisition or construction of plant assets or the reduction of related debt must be accounted for in the Plant Replacement and Expansion Fund.

(ii) When expenditures for plant assets are made by the Unrestricted Fund for the Plant Replacement and Expansion Fund, a transfer must be made from the Plant Replacement and Expansion Fund to match such expenditures if such funds are available.

(iii) Due to/due from accounts are to be used only as an interim measure, and must be reduced within a reasonable period of time by a transfer of physical assets (generally cash or investments) between the respective funds.

(iv) If expenditures for plant assets are made in the Plant Replacement and Expansion Fund, the plant assets must be transferred to the Unrestricted Fund, with the accompanying credit made to the Operating Fund Balance--Transfers from restricted funds for capital outlays. In the Plant Replacement and Expansion Fund, fund balance would be debited, and a cash account credited. No entry would be made to the interfund payable or receivable accounts.

(v) Income earned and any net realized gains on investments should be reflected as an addition to the fund balance if so specified by the donor. If available for general operating purposes, they should be included in nonoperating revenue in the Unrestricted Fund.

(4) Specific Purpose Fund. (i) Funds received which are restricted for a specific purpose should be accounted for in a separate restricted fund (Specific Purpose Fund). These resources must be recorded as other operating revenue in the period in which expenditures are made for the purpose specified by the donor.

(ii) Income earned and any net realized gains on investments should be recorded as an addition to fund balance if required to conform to the donor's instructions or as nonoperating revenue of the Unrestricted Fund if such revenue is available for general purposes.

(d) Investments in marketable securities. Investments in marketable securities are to be valued at cost if purchased or, if acquired by donation, at the fair market value at the date of the gift. If there is evidence of a permanent decline in value, an appropriate reduction in carrying value must be made.

(e) Pooled investments. (1) Investments of various funds may be pooled unless prohibited by law or the terms of a donation or grant. Gains/losses and investment income on pooled investments should be distributed to participating funds on a basis utilizing market value.

(2) The distribution of the income for the first year would be based on each participating fund's percentage of the pool, based on its contribution at market value at the initiation of the pool. For subsequent periods, the distribution percentage for the income and gains on pooled investments for each of the participating funds would be based on the market value of the investment pool as of the date of the last addition. Each time an addition is made to the investment pool, a new distribution basis must be calculated. This is also true for any reductions to the pool. All gains/losses and investment income from the beginning of the accounting period up to the date of the addition must be determined and distributed on the basis prior to the addition. Any gains/losses and investment income subsequent to an addition would be distributed on the new basis until another addition or reduction is made.

(f) Inventories. (1) Inventories reflect the cost of unused residential health care facility supplies and should be carried at cost or market, whichever is lower. Any generally accepted cost method (e.g., FIFO, LIFO, average, etc.) may be used as long as it is consistent with that of the preceding reporting period. Cost of inventories based on the last invoice price is not an acceptable method for determining such cost.

(2) Perpetual inventory record systems are recommended. Physical valuation must be made at least once a year and the accounting records and perpetual records, if applicable, adjusted to such valuations. Physical valuations on a cycle basis are acceptable if perpetual inventory record systems are used by the residential health care facility.

(3) Inventory usage records of some sort should be maintained for all inventories that are distributed and used by more than one department or cost center in the residential health care facility. It is recommended that a formal requisition system be used for this purpose.

(4) Where inventory had not been recorded in the past, the cumulative effect of establishing such amounts will be reflected in accordance with generally accepted accounting principles.

(5) While the taking of a physical inventory is mandated, the independent public accountant shall determine whether or not they should observe the physical evaluation of inventory for the purpose of expressing an opinion on the financial statements. (g) Accounting for property, plant and equipment. (1) Classification of fixed asset expenditures. Property, plant and equipment and related liabilities must be recorded in the Unrestricted Fund, since segregation in a separate fund would imply the existence of restrictions on the use of the asset. Costs of construction in progress and related liabilities should be recorded in or transferred to the Unrestricted Fund as incurred except for assets and liabilities related to the proceeds of debt. For those areas, refer to paragraph (n)(3) of this section.

(2) Basis of valuation. Property, plant and equipment must be recorded on the basis of cost. Cost shall be defined as historical cost or fair market value at the date of gift for donated property, less any applicable salvage value.

(3) Accounting control. To maintain accounting control over capital assets of the residential health care facility, a plant asset ledger should be maintained as part of the general accounting records. Some items of equipment should be treated as individual units within the plant ledger when their individuality and unit cost justify such treatment. Other items of equipment, if they are similar and are used in a single cost center, may be grouped together and treated as a single unit within the ledger. The plant ledger should be segregated by cost center so that the cost of equipment and the related depreciation for each center is available. Those providers who are not able to identify historical costs and depreciation by department for major movable acquisitions prior to January 1, 1978, may use square feet net to allocate depreciation by department. All additions to major movable equipment as of January 1, 1978 and thereafter must be identified by cost center.

(4) Capitalization policy. Each residential health care facility must set a standard policy with respect to the capitalization of its depreciable assets. This policy, excluding minor equipment, must meet the following specifications:

(i) The minimum capitalization policy must follow the guidelines and amounts required in the Medicare regulations.

(ii) Normal repair and maintenance and modernization to maintain depreciable assets should not be capitalized if the life of the asset is not materially extended.

(iii) Significant alterations and renovations should be capitalized and depreciated over the expected useful lives, which should not exceed the lives of the assets to which they are fixed.

(5) Minor equipment. Minor equipment includes such items as wastebaskets, bed pans, syringes, catheters, silverware, mops, buckets, etc. The general characteristics of this equipment are: (i) in general, no fixed location, and subject to use by various departments within a residential health care facility; (ii) comparatively small in size and unit cost; (iii) subject to inventory control; (iv) fairly large quantity in use; and (v) generally, a useful life of approximately three years or less. The cost of minor equipment is to be reported in accordance with Medicare regulations.

(6) Interest expense during period of construction. Frequently, residential health care facilities borrow funds to construct new facilities or to modernize and expand existing facilities. Interest costs incurred during the period of construction must be capitalized as a part of the cost of the construction. The period of construction is considered to extend to the date the constructed asset is put into use. When proceeds from a construction loan are invested and income is derived from such investments during the construction period, the amount of interest expense to be capitalized must be reduced by the amount of such income.

(7) Depreciation policies. (i) Depreciation on plant assets used in the residential health care facility's operations should be recorded as an operating expense in the Unrestricted Fund. The straight-line method of depreciation must be used for uniform reporting.

(ii) The estimated lives used in computing depreciation should be taken from the recommendations made in the Estimated Useful Lives of Depreciable Hospital Assets, published by the American Hospital Association ( copyright 1973), or other acceptable sources. However, with the rapidly changing technology in residential health care facilities, these recommendations may not be all-inclusive; in which case, the exper tise of the manufacturer or other reliable source may be considered subject to approval by the New York State Department of Health.

(iii) Each residential health care facility must establish, and consistently follow, a policy relative to the amount of depreciation to be taken in the year of acquisition on normal annual additions. Examples of acceptable policies are: (a) recording first-year depreciation based upon the number of actual months the asset was in use during the first year;

(b) recording one half of the annual depreciation expense in the years of acquisition and disposal, regardless of the date of acquisition;

(c) recording no depreciation in the year of acquisition and a full year's depreciation in the year of disposal; or

(d) recording a full year's depreciation expense if the asset was acquired in the first half of the year. If the asset was acquired in the last half of the year, no depreciation expense would be recognized in the year of acquisition.

The above alternatives are acceptable for normal annual additions to plant assets. However, when major construction projects are completed and capitalized, first-year depreciation must be computed based upon the actual number of months the asset was in use, if the application of any other method results in a material mismatching of revenue and expense in the initial year.

(8) Disposal of plant assets. Plant assets may be retired voluntarily, or disposed of by sale, trade or abandonment, or involuntarily lost as a result of casualty such as fire or storm. At the date of the retirement or disposal, the cost of the asset and its related accumulated depreciation must be removed from the accounts. Any resulting gain or loss on the retirement or disposal is to be reported as nonoperating revenue/expense.

(h) Investment tax credit. (1) As contained in APB Opinion No. 2, issued by the American Institute of Certified Public Accountants, the investment tax credit may be accounted for in one of the following manners:

(i) the allowable investment credit may be taken as a reduction of Federal income taxes in the year in which the credit arises (flow-through method); or

(ii) the allowable investment credit may be reflected in net income over the productive life of the asset and not in the year in which it is placed in service (deferral method).

(2) Once a residential health care facility has applied one of these methods, that method must be used consistently thereafter.

(i) Leases. Often a facility will obtain the use of land, buildings, or equipment by entering into an agreement to lease them from an outside party. In some cases, a lease is merely obtaining the use of an asset for a specified period; however, under certain conditions a lease is considered to be, in substance, a purchase of property. For determination of the acceptable accounting treatment for leases, reference should be made to Accounting for Leases--Statement of Financial Accounting Standards No. 13.

(j) Timing differences. Timing differences result when accounting policies and practices used in an organization's accounting differ from those used for reporting operations to governmental units collecting taxes or to outside agencies making payments based upon the reported operations. These differences must be recorded on the residential health care facility's records when they arise. The references relative to their acceptable accounting treatment are as follows:

(1) income tax allocation--accounting principles--Board Opinions Nos. 11, 23 and 24;

(2) third-party cost reimbursement--timing differences--Hospital Audit Guide.

(k) Accounting for pledges. All pledges, less a provision for amounts estimated to be uncollectible, should be included in the residential health care facility's records. If unrestricted, they should be recorded as nonoperating revenue. If restricted, they should be recorded as an addition to the appropriate restricted fund balance.

(l) Self-insurance. Self-insurance by a residential health care facility for potential losses due to malpractice claims, asserted or otherwise, places all or part of the risk of such losses on the residential health care facility rather than insuring against all or part of such losses with an independent insurer. Accruing for self-insured losses is governed by the Financial Accounting Standards Board's Statement No. 5, Accounting for Contingencies.

(1) Paragraph 8 of that statement indicates that "an estimated loss from a loss contingency can only be accrued as a charge to income if both of the following conditions are met:

(i) "Information available prior to issuance of the financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements. It is implicit in this condition that it must be probable that one or more future events will occur confirming the fact of the loss.

(ii) "The amount of loss can be reasonably estimated."

(2) Paragraphs 29 and 30 of that statement state:

(i) "An enterprise may choose not to purchase insurance against risk of loss that may result from injury to others, damage to the property of others, or interruption of its business operations. Exposure to risks of those types constitutes an existing condition involving uncertainty about the amount and timing of any losses that may occur, in which case a contingency exists... (ii) "Mere exposure to risks of those types, however, does not mean that an asset has been impaired or a liability has been incurred. The condition for accrual in paragraph 8(a) is not met with respect to loss that may result from injury to others, damage to the property of others, or business interruption that may occur after the date of an enterprise's financial statements. Losses of those types do not relate to the current or a prior period but rather to the future period in which they occur. Thus, for example, an enterprise with a fleet of vehicles should not accrue for injury to others or damage to the property of others that may be caused by those vehicles in the future, even if the amount of those losses may be reasonably estimable. On the other hand, the conditions in paragraph 8 would be met with respect to uninsured losses resulting from injury to others or damage to the property of others that took place prior to the date of the financial statements, even though the enterprise may not become aware of those matters until after that date, if the experience of the enterprise or other information enables it to make a reasonable estimate of the loss that was incurred prior to the date of its financial statements."

(3) For the purposes of this Article, a reasonable estimate of current and prior unasserted self-insurance claims can only be made by an independent professional qualified to make such valuations. If an estimate is obtained, such amount should be recorded on the books of the residential health care facility.

(m) Other related organizations. Auxiliaries, guilds, fund-raising groups and other related organizations frequently assist residential health care facilities. If such organizations are independent and are characterized by their own charter, bylaws, tax-exempt status and governing board, or a sufficient combination of these characteristics, to demonstrate their independent existence from the residential health care facility, the financial reporting of these organizations should be separate from reports of the residential health care facility. If such organizations are under the control of (or common control with) residential health care facilities and handle residential health care facility resources, their financial reports should be combined with those of the residential health care facility.

(n) Debt financing for plant replacement and expansion purposes. Debt financing for plant replacement and expansion programs may take many forms. Under the terms of most debt financing agreements, the debtor is required to perform or is prohibited from performing certain acts. In many instances, such financing gives rise to special accounting treatment because of discounts and premiums on bond issues, financing charges, formal restrictions on debt proceeds, sinking and other required funds.

(1) Discounts and premiums on bond issues. Discounts and premiums arising from the issue of bonds must be amortized over the life of the related issue(s). For reporting purposes, bond discounts must be reported as a reduction of the related debt (Bonds Payable--New of Unamortized Discount). Bond premium must be reported as Other Deferred Credits.

(2) Financing charges. All costs of obtaining debt financing other than discounts (e.g., legal fees, underwriting fees, special accounting costs) should be recorded as deferred costs and amortized over the life of the related debt.

(3) Accounting for debt proceeds. (i) Debt agreements which finance plant replacement and expansion programs may or may not require formal segregation of debt proceeds prior to their use. Proceeds which are not required to be formally segregated prior to their uses should be reported as other noncurrent assets in the unrestricted funds. However, proceeds which require formal segregation have been recorded in several ways, specifically:

(a) as a separate restricted fund which includes all of the attendant liabilities and any required equity contribution, as in the case of financing through New York State Housing Finance Agency; or

(b) as part of the restricted plant replacement and expansion funds, which include all of the attendant liabilities; or

(c) the liabilities are reflected in the unrestricted fund and only the proceeds are reflected in a restricted fund. The proceeds, however, are not considered as an addition to the restricted fund balance but rather as a liability to the unrestricted fund. This liability is reduced as the proceeds are used for their intended purposes.
 

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Section 452.4 - Specialized reporting areas

452.4 Specialized reporting areas. (a) Interdepartmental services. The following represent areas for which costs must be directly assigned to the functional reporting center operating such costs. The term interdepartmental services, for the purposes of this Article, is defined as the direct cost of utility provided by one residential health care facility department to another. The objective of accounting for interdepartmental services is to establish a proper distribution of direct costs prior to any cost allocation process.

(1) For the purposes of this Article, the following are costs which should be so treated:

(i) Plant maintenance. (a) All direct costs incurred in the routine maintenance, repair and service of buildings and equipment are included in the Plant Operation and Maintenance reporting center.

(b) However, the cost of noncapitalizable nonroutine maintenance and repairs directly assignable to a single reporting center (such as a major repair of an X-ray machine) must be transferred to the reporting center receiving the service. These costs include all direct expenses incurred by the Plant Operation and Maintenance cost center in performing such services.

(c) When such nonroutine maintenance and repairs are performed by nonfacility personnel, the cost related to these purchased services must be either transferred from Plant Operation and Maintenance or charged directly to the reporting center receiving the service. In the event that such costs are charged directly to the recipient reporting center, such costs must be segregated under the new natural classification provided, i.e., Repairs and Maintenance-- Purchased Services Directly Assignable.

(d) It is recommended that identification of direct costs be accomplished by developing a work order system. Written work orders identifying the requesting reporting center should be prepared upon receipt of the request for services. Upon completion of the service, the direct cost of labor and materials would be entered on the work order. Completed work orders should be sent to general accounting on a regular basis so that interdepartmental costs can be recorded.

(ii) Employee benefits. Employee benefits must be reported in the functional reporting centers which include the applicable employee's compensation. This can be accomplished by accumulating all fringe benefit costs in one account and assigning the expenses to the appropriate reporting center at year-end as a preliminary adjustment prior to cost finding. This assignment can be performed on an actual basis or upon the following basis:

(a) FICA and tuition refunds--actual expense by department.

(b) Pension and health insurance. (1) Union--gross salaries of participating individuals by department.

(2) Nonunion--gross salaries of participating individuals by department.

(c) All other benefits--the remaining benefits may be allocated to the various departments based upon gross salaries of the departments.

(iii) Major movable depreciation. Major movable depreciation must be reported in the reporting center established entitled, "Depreciation--Major Movable Equipment". Such depreciation must be assigned to the department (as a cost allocation basis later explained) where the equipment is located and utilized. However, those providers who are not able to allocate historical costs and depreciation for major movable equipment acquired prior to January 1, 1978 may use square feet, net, to allocate depreciation by department. All additions to major movable equipment as of January 1, 1978 and thereafter will be functionalized.

(b) Residential health care facility research and education costs. All direct costs incurred in conducting residential health care facility research and formal educational activities (as opposed to inservice education) must be reported in the appropriate unrestricted or restricted fund reporting center.

(c) Grant accountability. When separate accounting is required by law, grant, contract, or donation restricted for research and educational activities, such grants should be reported separately. Transfers from restricted funds to match the expenditures for these activities must also be segregated. Thus, accountability is maintained for all restricted research and educational activities. Grants that represent deficit financing should be reported as a reduction of the appropriate contractual allowances when used rather than, in the case of other grants, as other operating revenue.

(d) Grant overhead allocation. (1) No allocation of overhead should be made prior to cost finding unless such allocation is required by grant agreement. When a grant contract calls for the payment of direct costs plus an overhead factor, the overhead factor should be used in billing only. (2) If indirect overhead must, by grant contract, be recorded in the unrestricted fund cost centers used for the recording of the direct costs of the grant activity, the natural expense classification (other direct expenses) must be used. Such overhead allocations should be accumulated separately in the unrestricted fund. For reporting to the New York State Department of Health, this amount must be offset against grant activity costs, so such remaining costs are direct costs only.

(e) Overhead allocation between facilities. An allocation of overhead should be made prior to cost finding for facilities which share services or receive services from a service corporation. Statistical bases utilized for such allocation must be approved by the New York State Department of Health.

(f) Affiliated school contracts. Education costs incurred relative to affiliated school contracts, including salaries, wages and stipends paid to students on approved programs and fees paid to physicians involved primarily in approved education programs, must be reflected in the appropriate education reporting center in the Unrestricted Fund.

(g) In service education--nursing. (1) Nursing inservice education activities are defined as educational activities conducted within the residential health care facility for residential health care facility nursing personnel. The cost of time spent by nursing personnel as students in such classes and activities must remain in the reporting center in which their normal salary and wage costs are charged (i.e., the reporting center in which they work). However, the cost (defined as salary, wages and payroll-related fringe benefits) of time spent in such classes and activities by those instructing and administering the programs must be included in the Nursing Administration reporting center.

(2) If instructors do not work full-time in the inservice education program, the cost (as defined above) of the portion of time they spend working in the inservice education program must be included in the "Nursing Administration" reporting center. This may be accomplished by direct distribution of these costs (by natural classification of expense category) each payroll period, or by reclassification (based upon time spent) at year end.

(3) The costs of nursing inservice education supplies (such as cassettes, books, medical supplies, etc.) and outside lecturers must also be reflected in the Nursing Administration reporting center.

(h) Inservice education--other. All costs relative to nonnursing inservice education activities should be included in the reporting center to which they apply (e.g., Physical Therapy, Radiology, etc.), as such inservice education activities will rarely apply to more than one functional activity.

(i) Physician remuneration. Due to the numerous types of financial and work arrangements between residential health care facilities and physicians, comparability of costs between residential health care facilities may be significantly impaired. This section deals with the methods to be used in reporting costs and revenues related to the services of physicians.

(1) Financial arrangements. Although the variations in financial arrangements between residential health care facilities and physicians are endless, there are five general types of such arrangements:

(i) Attending physician. Under this arrangement, the physician bills both Medicare, part B, and patients in his name for professional services provided. The residential health care facility reflects no operating revenue or expense relative to the professional component.

(ii) House physician. The residential health care facility bills Medicare, part B, in its name and receives payment, or bills in the physician's name and receives payment from the physician. The physician is paid a salary by the residential health care facility which is included in the facility's expense. Amounts received by the residential health care facility from Medicare may be operating revenue to the facility or may be a liability to Medicaid or the patient, depending upon the extent of the reimbursement ceiling in effect.

(iii) Normal arrangement. The residential health care facility bills patients for the physician's contractual professional services, including this amount as facility revenue. All department expenses are paid by the residential health care facility. The residential health care facility remits a fee to the physician which is included in facility expense.

(iv) Rental department. The physician bills the patients for certain of the part A and part B component (as defined by Medicare) and incurs all substantial direct expenses. The physician remits a fee to recover certain residential heath care facility expenses. This fee is recorded an nonoperating revenue in the appropriate department. (v) Independent/separate department. The department functions are provided by an independent physician or group of physicians. Neither revenues nor expenses are incurred by the residential health care facility. The residential health care facility refers patients and/or specimens to the physician or group, which is usually located on separate premises. No costs are incurred and no revenue is received under this arrangement.

(2) Work arrangement. (i) The services provided by residential health care facility-based physicians may be categorized into five general types:

(a) professional component--providing direct patient care;

(b) education--teaching and supervising student activity in educational programs;

(c) research--working in research projects;

(d) administration--administering overall activities; and

(e) department supervision--supervising activities of the department.

(ii) When physicians are involved in more than one of the above functional activities, their remuneration, if any, should be recorded in the reporting center for which services they are paid. Prior to cost finding, their remunerations are to be reclassified to the appropriate reporting center on the residential health care facility's records.

(j) Periodic Interim Payments (PIP). Periodic interim payments are made biweekly to a residential health care facility on the PIP program and are based on the facility's estimate of applicable Medicare reimbursement for the current cost report period. When such payments are received, a cash account in the Unrestricted Fund is debited and a PIP clearing account is credited for the amount of the payment. When applicable, Medicare charges are billed to the intermediary, the PIP clearing account is debited and patient accounts receivable is credited. At year end, adjustments must be made to eliminate any remaining balance in the PIP clearing account and to reflect the amount receivable from, or due to, the Medicare intermediary.

(k) Patient trust funds. Patient trust funds consist of amounts deposited on behalf of the patient which are to be used for the personal care and expenditure of that patient. In most cases, these funds consist of social security funds which are received by the patient or by the residential health care facility on behalf of the patient. In most instances, the facility must give the patient an allowance each month out of these funds. Since patient trust funds are administered by a facility, these funds should be accounted for as agency funds by governmental and voluntary facilities. For proprietary facilities, these funds should be accounted for as noncurrent assets and noncurrent liabilities.
 

Doc Status: 
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Part 453 - Mandatory Reporting Levels

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

Section 453.1 - General

Section 453.1 General. (a) The listing of mandatory reporting levels that follows is a system of aggregating accounting information for the purposes of uniform reporting mandated in this Article. Definitions for the mandatory reporting levels are contained within the listing for all items other than the functional reporting centers which are specifically addressed in Part 455 of this Article. The names of all such functional reporting centers are included in the listing and are designated with an asterisk(*).

(b) The listing of mandatory reporting levels is not required to be formally adopted as a residential health care facility's chart of accounts. However, such levels are mandated nonetheless, and the crosswalk between a facility's chart of accounts and the mandated levels must be considered a permanent part of the facility's records and must contain sufficient audit trails to demonstrate the reliability of the information.
 

Doc Status: 
Complete

Section 453.2 - Mandatory sublevels

453.2 Mandatory sublevels. In addition to the basic listing, the following additional sublevels of detail are mandated in certain areas. The circumstances under which such additional sublevels are required are outlined in subdivision (f) of this section.

(a) Financial Classification.

(1) Self-Pay.

(2) Medicare Part A.

(3) Medicare Part B.

(4) Medicaid.

(5) Other.

(b) Patient Service Category.

(1) Residential Health Care Facility.

(2) Domiciliary Care Facility.

(3) Adult Day Health Care.

(4) Outpatient Clinic.

(5) Home Health Services.

(6) Homemaker.

(7) Meals on Wheels.

(8) Intermediate Care Facility--Mental Retardation.

(9) Independent Living.

(10) Specialty Pediatric.

(11) Head Injury.

(12) Acquired Immune Deficiency Syndrome.

(13) Respite Care.

(14) Long Term Ventilator Dependent.

(c) Natural Classification of Expenses.

(1) Salaries and Wages.

(i) Management and Supervision.

(ii) Technicians, Specialists, and Non-Physician Medical Practitioners.

(iii) Registered Nurses.

(iv) Licensed Practical Nurses.

(v) Aides, Orderlies and Assistants.

(vi) Clerical and Other Administrative Employees.

(vii) Environment, Hotel and Food Service Employees.

(viii) Physicians.

(ix) Interns, Residents and Fellows.

(2) Employee Benefits.

(i) Employee Uniform Allowance.

(ii) FICA.

(iii) State Unemployment and Federal Unemployment Insurance.

(iv) Group Health Insurance.

(v) Pension and Retirement--Union.

(vi) Workers' Compensation Insurance.

(vii) Pension and Retirement--Nonunion.

(viii) Disability.

(ix) Other Employee Benefits.

(x) Union Health and Welfare.

(xi) Employee Meal Allowance.

(3) Fees.

(i) Administrative Fees--Long-Term Debt.

(ii) Physicians Fees.

(iii) Therapists and Other (Non-Physicians).

(iv) Consulting and Management Services.

(v) Legal Services.

(vi) Auditing Services.

(vii) Registered Nurses.

(viii) Licensed Practical Nurses.

(ix) Private Duty Nurses Fees.

(x) Other Fees.

(4) Supplies and Materials.

(i) Disposable Linen.

(ii) Prescription Drugs.

(iii) Medicine Cabinet Drugs.

(iv) Other Medical Care Materials and Supplies.

(v) Dietary--Food.

(vi) Dietary--Other.

(vii) Linen and Bedding.

(viii) Cleaning Supplies.

(ix) Office and Administrative Supplies.

(x) Employee Wearing Apparel.

(xi) Instruments and Minor Medical Equipment.

(xii) Minor Nonmedical Equipment.

(xiii) Other Supplies and Materials.

(5) Purchased and Contracted Services.

(i) Repairs and Maintenance--Purchased Services--Nonassignable.

(ii) Medical--Purchased Services.

(iii) Repairs & Maintenance--Purchased Services--Directly Assignable.

(iv) Management Services.

(v) Collection Services.

(vi) Other Purchased Services.

(vii) Contracted Services.

(6) Depreciation, Rentals and Leases.

(i) Depreciation and Amortization.

(ii) Rental or Lease--Land.

(iii) Rental or Lease--Buildings.

(iv) Rental or Lease--Fixed Equipment.

(v) Rental or Lease--Movable Equipment.

(7) Other Direct Expenses.

(i) Electricity.

(ii) Gas.

(iii) Water and Sewer.

(iv) Fuel Oil #2.

(v) Fuel Oil #4.

(vi) Fuel Oil #6.

(vii) Other Utilities.

(viii) Insurance.

(ix) Interest.

(x) Licenses and Taxes (Other than Income Taxes).

(xi) Telephone and Telegraph.

(xii) Dues to Nursing Home Association.

(xiii) Printing, Duplicating, Microfilming.

(xiv) Travel, Conferences, Workshops.

(xv) Books, Periodicals, etc.

(xvi) Other Direct Expenses.

(8) Assessments.

(i) Assessments from Municipalities or Religious, Educational, Foundations or Other Associations.

(d) Charges by type.

(1) Routine, representing room and board charges.

(2) Ancillary, by type.

(i) Laboratory.

(ii) Electrocardiology.

(iii) Electroencephalogy.

(iv) Radiology.

(v) Inhalation Therapy.

(vi) Podiatry.

(vii) Dental.

(viii) Psychiatric.

(ix) Physical Therapy.

(x) Occupational Therapy.

(xi) Speech and Hearing Therapy.

(xii) Pharmacy.

(xiii) Central Service Supply.

(xiv) Medical Staff Services.

(xv) Other.

(e) Fund Classification.

(1) Unrestricted Operating Fund.

(2) Unrestricted Board-Designated Fund.

(3) Plant Replacement and Expansion Fund.

(4) Specific Purpose Fund.

(5) Endowment Fund.

(6) Other.

(f) Application of preceding sublevels of detail.

(1) For Patient Service Revenues, the following sublevels are mandated:

(i) Where a facility records patient charges on a fee-for-service basis, such charges must be reported by type (subdivision (d) of this section) in accordance with the functional reporting center descriptions in Part 455 of this Article. (ii) Where a facility records patient charges on an all-inclusive or flat-rate basis, such charges would all be reported as Routine Patient Service Revenue.

(iii) Regardless of a facility's charge structure, charges must also be reported by Patient Service Category, subdivision (b) of this section.

(2) For Deductions From Revenue, the following sublevels are mandated:

(i) Financial Classification, subdivision (a) of this section.

(ii) Patient Service Category, subdivision (b) of this section.

(3) For Expenses, the sublevel of natural classification of expense, subdivision (c) of this section, is mandated. Such Natural Classification of Expenses is described in detail in Part 458 of this Article.

(4) For Assets, Liability and Fund Balances/Equity Accounts, the sublevel of Fund Classification, subdivision (e) of this section, is mandated.
 

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

Section 453.3 - Listing and definitions

453.3 Listing and definitions. (a) Current assets.

(1) Cash.

(2) Savings accounts.

(3) Certificates of Deposit. These assets, paragraphs (1)-(3), represent the amount of cash on deposit in banks that is immediately available for use in financing various fund activities, amounts of cash that are on hand for minor disbursements, and amounts of cash that are held in savings accounts and certificates of deposits.

(4) Investments. Current securities, including U.S. government securities, other current investments, share of pooled investments, cash and investments held in escrow, evidenced by certificates of ownership or indebtedness, should be included in these reporting levels.

(5) Accounts and Notes Receivable. These assets should reflect the amounts due from residential health care facility patients and their third-party sponsors.

(6) Allowance for Uncollectible Receivables and Third-Party Contractuals. These are valuation type (or contra-asset) reporting levels. Credit balances represent the estimated amount of uncollectible receivables from patients and third-party payors.

(7) Receivables from Third-Party Payors. These assets reflect the estimated amount due from third-party reimbursement programs based on cost reports which will be submitted or have already been submitted and/or audited. Other levels should be maintained for each year's settlement if more than one year's settlement is included in an estimated amount, and by program if separately reimbursed.

(8) Pledges and Other Receivables (Pledges).

(9) Due from Parent/Subsidiary/Affiliate. These assets, paragraphs (8) and (9), reflect pledges, grants and legacies due the facility as well as miscellaneous receivables due from staff, employees, affiliates, and interest receivable. An allowance for the estimated amount of uncollectible pledges should also be reported.

(10) Due from Other Funds. These assets reflect the amounts due between funds. These balances should not be construed as receivables because they do not represent external claims. Instead, these balances should be viewed as representing assets of the general funds that are currently accounted for as restricted funds.

(11) Inventory. These assets reflect the cost of unused supplies. Perpetual inventory records should be maintained and adjusted periodically to show actual amounts of supplies on hand. These adjustments should be applied to the inventory and distributed to the requisitioning cost centers. The extent of inventory control and detailed record-keeping will depend on the size and organizational complexity of the residential health care facility.

(12) Prepaid Expenses. These prepaid asset and other asset levels represent costs incurred that are properly chargeable to a future accounting period. Other current assets not included elsewhere can be included here.

(b) Assets whose use is limited.

(1) Depreciation funds.

(2) Operating escrow funds.

(3) Mortgage repayment escrow. These assets, paragraphs (1) - (3) are provided to account for board-designated assets, or assets whose use is restricted as to withdrawal or use.

(c) Property, Plant and Equipment--Historical Cost.

(1) Land. The balance of this asset reflects the cost of land used in residential health care facility operations. Included here are the costs of offsite sewer and water lines, public utility charges for servicing the land, government assessments for street paving and sewers, curbs and sidewalks whose replacement is not the responsibility of the facility, and other land expenditures of a nondepreciable nature. Unlike buildings and equipment, land does not deteriorate with use or with the passage of time; therefore, no depreciation is accumulated.

(2) Land Improvements. All depreciable land expenditures for residential health care facility operations are charged to this asset. This includes the costs of onsite sewer and water lines; paving of roadways, parking lots, curbs and sidewalks (if replacement is the responsibility of the facility); and the cost of shrubbery, fences, and walls.

(3) Buildings. The original costs of all buildings and any subsequent additions used in residential health care facility operations are included here. Included are architectural, consulting and legal fees related to the acquisition or construction of buildings, and interest paid on construction loans during the period of construction.

(4) Leasehold Improvements. All expenditures for the depreciable improvement of leased land and buildings used in residential health care facility operations are to be included here.

(5) Fixed Equipment. Expenditures for fixed equipment are included in this amount. The equipment should fulfill the following requirements:

(i) It should be affixed to the building and not be subject to transfer or removal. (ii) It should be a depreciable asset with a life less than or equal to that of the building to which it is affixed.

(iii) It should be used in residential health care facility operations. Fixed equipment includes such items as boiler, generators, incinerators, elevators, engines, pumps, air conditioning systems and refrigeration machinery.

(6) Major Movable Equipment. Depreciable equipment included in this amount fulfills the following requirements:

(i) It should be movable, as distinguished from fixed equipment.

(ii) It should have sufficient individuality and size to make control by means of identification tags feasible.

(iii) It should usually have a minimum life of three years or more.

(iv) It should be used in residential health care facility operations. Major movable equipment includes such items as automobiles and trucks, desks, beds, chairs, accounting machines, oxygen tents and X-ray apparatus.

(7) Minor Equipment. Equipment included here generally fulfills the following requirements:

(i) Its location is usually not fixed and it is subject to requisition or use by various departments of the residential health care facility.

(ii) It should be of relatively small size.

(iii) It should be subject to storeroom control.

(iv) There should be a fairly large number of pieces in use.

(v) It should usually have a useful life of three years or less.

(vi) It should be used in residential health care facility operations. Minor equipment includes such items as wastebaskets, bedpans, syringes, catheters, basins, glassware, silverware, pots and pans, mattresses and surgical instruments. Each facility should develop capitalization parameters, in accordance with Medicare regulations and in consultation with its independent public accountants.

(8) Construction in Progress. This must include the construction costs of uncompleted facilities that will be used for residential health care facility operations. Upon completion of the construction program, these amounts would be transferred and the appropriate asset debited. In the case of projects that are financed through debt agreements that require formal segregation of project assets and/or separate accountability, the construction in progress should be accounted for in the Plant Replacement and Expansion Fund. Upon completion of the construction program, these amounts should be transferred to appropriate operating fund assets.

(d) Accumulated Depreciation--Historical Cost.

(1) Land Improvements.

(2) Buildings.

(3) Leasehold Improvements.

(4) Fixed Equipment.

(5) Major Movable Equipment.

(6) Minor Equipment. These amounts reflect the depreciation accumulated on the listed assets used in residential health care facility operations.

(e) Deferred Charges and Other Assets.

(1) Cash.

(2) Time deposits and equivalents.

(3) Patient fund held in trust (proprietary facilities only).

(4) Other assets.

(5) Investments.

(6) Investment in nonoperating property, plant and equipment.

(7) Accumulated depreciation--investments in nonoperating plant and equipment. Included in these levels, paragraphs (1)-(7), are the costs (or fair market value at date of donation) of property, plant and equipment not used in residential health care facility operations, and the accumulated depreciation on these assets. Other assets not included elsewhere are also included here.

(8) Other intangible assets. This level is required to record intangible assets such as goodwill and organization costs.

(9) Due from plant replacement and expansion funds (noncurrent). This level reflects the receivables of the operating fund from the plant replacement and expansion funds relative to special restricted funds required by debt agreement. These amounts would increase as the operating fund transfers assets to these restricted funds. These transfers are considered to give rise to receivables/payables between the funds, rather than reductions or increases to their fund balances, since the source of the assets are provided either from operations or from a portion of the proceeds from the debt financing. These operating funds receivables and the corresponding Plant Replacement and Expansion Fund liabilities will be reduced as the assets are used in these restricted funds to reduce debt, replace assets or pay specified operating expenses.

(f) Current Liabilities.

(1) Notes and Loans Payable.

(2) Current Portion of Long-Term Debt. These required levels, paragraphs (1) and (2) reflect liabilities of the residential health care facility to vendors, banks, and other creditors, evidenced by promissory notes due and payable within one year.

(3) Accounts Payable. This required level reflects the amounts due to trade and other creditors for supplies and services purchased. (4) Accrued Compensation and Related Liabilities. This required level reflects the actual or estimated liabilities of the residential health care facility for salaries and wages payable and liability amounts related to payroll.

(5) Other Accrued Expenses. This required level represents current liabilities that have accumulated at the end of the month or accounting period for those expenses.

(6) Advances from Third-Party Payors. Included here are liabilities to third-party payors for current financing and other types of advances due and payable within one year. Liabilities to third-party payors arising from reimbursement settlements are not to be included. Such liabilities must be included in Payable to Third-Party and Private Payors, paragraph (7) of this subdivision.

(7) Payable to Third-Party and Private Payors. These amounts reflect reimbursement settlements due to third-party and private payors.

(8) Due to Other Funds. Liabilities to other funds are to be recorded here. These liabilities should not be construed as payables because no external obligation exists.

(9) Income Taxes Payable. The amount of income taxes currently payable should be included here.

(10) Other Current Liabilities.

(11) Deferred Revenue--Patient Deposits.

(12) Deferred Revenue--Other.

(13) Due to Parent/Subsidiary/Affiliate.

(i) Deferred revenue is defined as revenue received or accrued that is applicable to services to be rendered within the next fiscal or calendar accounting period. Deferred revenue applicable to accounting periods extending beyond the next accounting period should be included under Deferred Credits and Other Liabilities, subdivision (f) of this section. Any deferred revenue items, previously classified as noncurrent liabilities, that have become current should be included here.

(ii) Also included are unrestricted fund current liabilities which have not been provided for elsewhere.

(iii) In addition, certain construction project liabilities would be included here, in the Plant Replacement and Expansion Fund, for those projects that are financed through debt agreements that require final accountability of project activities. These liabilities should be reduced as paid or transferred to the operating fund when the project is completed and the assets are transferred to the appropriate operating fund assets.

(g) Deferred Credits and Other Liabilities.

(1) Deferred Income Taxes.

(2) Deferred Third-Party Revenue. These required levels, paragraphs (1) and (2), reflect the effects of any timing differences between book and tax or third-party reimbursement accounting.

(3) Due to Operating Fund--Long-Term. This level reflects the liabilities of the plant replacement and expansion funds to the operating fund relative to special restricted funds required by debt agreements. These amounts would increase as the operating fund transfers assets into these funds. The source of such funds could either be provided from operations or a portion of the proceeds from the debt financing. The liabilities in the Plant Replacement and Expansion Fund and the corresponding receivables in the operating fund would be reduced as the assets are used to reduce debt, replace assets or pay specified operating expenses.

(4) Other Liabilities.*

(5) Patient Funds Held in Trust* (proprietary facilities only).

_________________________________________________________________________

*FOOTNOTE: See section 453.1(a) of this Part.

_________________________________________________________________________

(h) Long-Term Debt.

(1) Long-Term Debt. Included here are amounts which reflect those liabilities that have maturity dates extending more than one year beyond the current year-end.

(2) Long-term debt liabilities would also be included in the plant replacement and expansion funds for those projects that are financed through debt agreements that require separate accountability of project activities.

(3) These liabilities should be transferred to the operating fund when the project is completed and the assets are transferred to the appropriate operating fund assets.

(i) Fund Balances (Not-for-Profit Residential Health Care Facilities).

(1) (i) Fund Balances--Each Major Fund Group.

(ii) Restricted Project Fund Balance.

(iii) Depreciation Fund Balance.

(iv) Retirement of Indebtedness Fund Balance.

(v) Operating Escrow Fund Balance.

(vi) Donor-Restricted Fund Balance.

(vii) Transfers from Restricted Funds for Capital Outlays.

(viii) Value of Donated Property, Plant and Equipment.

(ix) Transfers to Operating Fund for Operating Purposes.

(x) Transfers of Amounts Equivalent to Depreciation.

(2) (i) General fund balances represent the difference between total general fund assets and total general fund liabilities; that is, the net assets of the general fund. (ii) The Transfers from Restricted Funds for Capital Outlays reporting level should be credited for the cost of capital i tems purchased with money from the restricted funds. The fair market value at the date of donation of donated property, plant and equipment should be credited to value of donated property, plant and equipment. At the end of the year these amounts should be closed out to the fund balance.

(iii) The credit balances of the restricted fund balances represent the net amount of each restricted fund's assets that is available for its designated purpose. These fund balances must be credited for all income earned on restricted fund assets and for gains from the disposal of such assets, and must be debited for all losses from disposal of such assets.

(iv) If, however, such items are treated as operating fund income (considering legal requirements and donor intent), the restricted fund balance should be charged for such income and due to operating funds should be credited.

(j) Equity.

(1) Investor-Owned Corporation. The level of detail required to report equity amounts reflects the difference between the total assets and the total liabilities of the investor-owned corporation.

(i) Stockholders' Equity.

(ii) Preferred Stock.

(iii) Common Stock.

(iv) Retained Earnings.

(v) Treasury Stock.

(vi) Additional Paid-In Capital.

(2) Investor-Owned Partnership. These amounts represent the net assets of the partnership.

(i) Capital.

(ii) Partner's Draw.

(3) Sole Proprietorship or Governmentally Operated Facilities.

(i) Capital.

(ii) Retained Earnings.

(iii) Contributions from Other Funds. This reporting level is to be used to record the value of assets contributed to an enterprise fund for its unrestricted use and without any liability attached to them. It corresponds, in a general sense, to capital invested by stockholders of a private corporation. The most common source is from the general revenues of a governmental unit, usually through the general fund, to provide initial resources for acquisition of the enterprise.

(k) Revenue. The following represent mandated reporting levels of revenue. To reiterate, where a reporting level coincides with a functional reporting center, such level is listed only, designated with an asterisk(*) and not defined. All functional reporting centers are described in detail in Part 455 of this Article.

(1) Nursing and Professional Services.

(i) Residential Health Care Facility.

(ii) Domiciliary Care Facility.*

(iii) Adult Day Health Care.*

(iv) Home Health Care.*

(v) Homemaker.*

(vi) Outpatient Clinics.*

(vii) Meals on Wheels.*

(viii) Intermediate Care Facility--Mental Retardation.*

(ix) Independent Living.*

(x) Speciality Pediatric.*

(xi) Head Injury.*

(xii) Acquired Immune Deficiency Syndrome.*

(xiii) Respite Care.

(xiv) Long Term Ventilatory Dependent.*

(xv) Central Medical Supplies and Equipment.*

(xvi) Laboratory Services.*

(xvii) Electrocardiology.*

(xviii) Electroencephalogy.*

(xix) Radiology.*

(xx) Inhalation Therapy.*

(xxi) Pharmacy.*

(xxii) Podiatry.*

(xxiii) Dental.*

(xxiv) Psychiatric.*

(xxv) Physical Therapy.*

(xxvi) Occupational Therapy.*

(xxvii) Speech and Hearing Therapy.*

(xxviii) Medical Staff Service.*

(2) Other Operating Revenues.

(i) Transfers from Restricted Funds for Research. This required level of detail reflects the amount of money transferred from restricted funds to the unrestricted fund to match expenses incurred by the unrestricted fund in the current period for restricted fund research activities only. Amounts should be segregated for each specific restricted fund activity or group of activities for which separate accounting is required by law, grant or donation agreement.

(ii) Transfers from Restricted Funds for Education. Included here is the amount of money transferred from restricted funds to the unrestricted fund to match expenses incurred by the unrestricted fund in the current period for restricted fund education activities only. Amounts should be segregated for each specific restricted fund activity or group of activities for which separate accounting is required by law, grant or donation agreement.

(iii) Transfers from Restricted Funds for Specific Operating Purposes. This level reflects the amount of money transferred from restricted funds to the unrestricted fund to match expenses incurred by the unrestricted fund in the current period for restricted fund activities other than research and education.

(iv) Supplies Sold to Other than Patients. This level reflects the income earned by the institution in the sale of medical supplies sold to other than patients. (v) Private Duty Nurses' Fees. This level is used to report revenues earned on services of private duty nurses.

(vi) Barber and Beauty Shops.*

(vii) Cafeteria.*

(viii) Gift Shop.*

(ix) Public Restaurant.*

(x) Laundry and/or Linen Services. This level should include revenues earned by providing laundry services to employees and students. See also subparagraph (j)(2)(xxiii) of this section.

(xi) Telephone and Telegraph Services. Money received from patients, employees and others in payment for residential health care facility telephone and telegraph services should be reported here.

(xii) Parking. Money received from visitors, employees and others in payment for parking privileges should be reported here.

(xiii) Television and Radio Rentals. This level should be used to report the revenue from television and radio rentals.

(xiv) Medical Record and Abstract Fees. This level should be used to report medical record transcript and abstract fees.

(xv) Sale of Scrap and Waste. This level should be used to report the revenue from sale of miscellaneous scrap and waste.

(xvi) Vending Machine Commissions (net). Commissions earned by the residential health care facility from coin-operated vending machines and telephones should be reported here.

(xvii) Housing.*

(xviii) Physicians' Offices and Other Rentals.*

(xix) Cash Discounts on Purchases. The amounts of cash discounts taken by the residential health care facility on purchases should be reported here. Trade discounts, however, should be treated as reductions in the costs of items purchased.

(xx) Rebates and Refunds from Vendors. This level should be used to report the revenue from rebates and refunds of expenses.

(xxi) Donated Commodities. This level should be used to report the fair market value of donated commodities.

(xxii) Interest, Finance and Penalty Charges on Accounts Receivable. This level should be used to report interest, finance and penalty charges billed (net of an estimate for uncollectibles).

(xxiii) Services to Other Organizations. This level should include revenues earned from the provision of services to other organizations or individuals.

(3) Nonoperating Revenue.

(i) General Contributions.

(ii) Donated Services.

(iii) Gain (Loss) on Sale of Property.

(iv) Income and Gains from Unrestricted Fund Investments.

(v) Unrestricted Income from Endowment Funds.

(vi) Unrestricted Income from Other Restricted Funds.

(vii) Term Endowment Funds Becoming Unrestricted.

(viii) Transfers from Restricted Funds for Nonoperating Purposes.

(ix) Contributions from Other Funds (governmentally operated facilities only). This reporting level reflects periodic transfers, from the general fund or special revenue fund to an enterprise fund, that serve as a subsidy for the operation of the enterprise. This level is not to be confused with the reporting level Deficit Financing Grants, paragraph (k)(5) of this section, which relates to contractual arrangements.

(x) Extraordinary Gain (Loss).

(l) Deductions from Revenue.

(1) Bad Debts. (i) This level should contain periodic estimates of the amounts of accounts and notes receivable that are likely to be credit losses. The estimated amounts of bad debts can be based on an experience percentage applied to the balances of accounts receivable or the amount of charges made to patients' accounts during the period, or it can be based on a detailed aging and analysis of patients' accounts.

(ii) Because residential health care facilities experience bad debt patterns that vary with classes or types of patients, the computation of the estimate or provision should take these differences into consideration.

(2) Contractual Adjustments. (i) These levels of detail must be used to report the differential (if any) between the amount (based on the residential health care facility's full established rates) of contractual charges to patients for services rendered during the period covered by the contract, and the amounts received and due from third-party agencies in payment of such charges, including adjustments estimated at year end.

(ii) Should the facility receive more than its established rates from a contractor, the differential will reduce these amounts.

(iii) In any instance in which the difference between the amount of a patient's bill and the payment received by the residential health care facility from a third-party agency is recoverable from the patient, the differential is retained in Accounts and Notes Receivable until it is paid or deemed to be a bad debt and is written off.

(iv) Specific required sublevels of reporting detail were outlined in section 453.2 of this Part. (3) Charity Services. (i) This level of detail should be used to report the difference between the amount (based on the residential health care facility's full established rates) of bills for services to charity patients and the amount (if any) to be received from patients in payment for such services. This difference should be credited directly to Accounts and Notes Receivable, rather than to an allowance, because charity discounts are readily determinable.

(ii) In order to properly distinguish between patients whose uncollectible bills should be considered charity write-offs and patients whose uncollectible bills should be considered bad debts, all patients should be classified at the time of admission or as soon after as possible as charity (full or partial) or paying patients. There may be some instances in which charges to a patient are considerably greater than was anticipated because of complications unforeseen at the time of admission, and the patient then is unable to pay the full amount. In such cases the patient should be reclassified as a charity patient, and the charges attributable to the unforeseen complications should be considered charity service. Uncollectible charges to patients classified as paying patients should be treated as credit losses--that is, bad debts--except for contractual adjustments, policy discounts and administrative adjustments.

(4) Other Deductions. Adjustments in charges for services rendered, in the form of courtesy allowances and employee discounts from the residential health care facility's full established rates, should be reported here and credited to Accounts and Notes Receivable.

(5) Deficit Financing Grants. This level is used to report voluntary and governmental grants received for the purpose of funding deficits at the residential health care facilities in accordance with contracted arrangements. Reference: subparagraph (j)(3)(ix) of this section.

(m) Expenses. The following represents mandatory reporting levels of expense. To reiterate, in addition to the following, the sublevel of natural classification of expense is also mandated.

(1) All Functional Reporting Centers, described in Part 455 of this Article, subject to the significance of criteria outlined therein.

(2) Nonoperating Expenses.

(i) Federal, State and Local Income Tax--Current.

(ii) Federal, State and Local Income Tax--Deferred.

(n) The following represent mandatory reporting levels for statistical information:

(1) Standard Units of Measure, as detailed and defined under each Functional Reporting Center in Part 455 of this Article.

(2) Cost Allocation Basis, as detailed and defined for each Functional Reporting Center in section 456.3 of this Article.
 

Effective Date: 
Tuesday, January 1, 1991
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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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Part 455 - Functional Reporting Centers

Effective Date: 
Tuesday, January 1, 1991
Doc Status: 
Complete
Statutory Authority: 
Public Health Law, Sections 2803(2), 2803-b, 2805-e 2808

Section 455.0 - Introduction

Section 455.0 Introduction. The following sections contain the mandatory reporting levels of functional reporting centers, standard units of measure, appropriate definitions for each center and the source for collection of data.
 

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Section 455.1 - Depreciation, leases and rentals

455.1 Depreciation, Leases and Rentals. This functional reporting center must contain all depreciation and amortization expenses on buildings, fixed equipment and leasehold improvements recorded at their historical cost. In addition, the center must also contain all lease and rented expenses for land, buildings, fixed equipment and leasehold improvements.

(a) Standard unit of measure: gross square feet. Gross square feet shall be determined using the outer dimensions of the facility. Measurement should be taken by floor, to account for structural irregularities that may exist on various floors. When changes have been made during the year as a result of new construction or expansion or curtailment of service, statistical data should be maintained to allow for the development of "weighted" areas for the fractional part of the year.

(b) Data source. Gross square feet shall be determined from the blueprints of the residential health care facility, or actual measurement if blueprints are not available.
 

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Section 455.2 - Depreciation on major movable equipment

455.2 Depreciation on major movable equipment. This functional reporting center must contain all depreciation on major movable equipment of the residential health care facility. Note the special rules shown in section 452.4(a)(1)(iii) of this Article for assignment of major movable depreciation to departments.

(a) Standard unit of measure. None.

(b) Data source. Not applicable.
 

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Section 455.3 - Interest on capital debt

455.3 Interest on capital debt. This functional reporting center must contain all interest on capital, mortgage rates and other loans for the acquisition of equipment.

(a) Standard unit of measure: total operating expenses. The total operating expenses of the facility, less depreciation and lease costs for land, buildings and fixed equipment, and interest on capital debt.

(b) Data source. The costs shall be determined from the general accounting records.
 

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Section 455.4 - Fiscal services

455.4 Fiscal services. This functional reporting center must contain all expenses related to managing the residential health care facility's fiscal affairs, including general ledger accounting, budgeting, accounts payable, plant asset records, payroll, inventory accounting and data processing. Additional activities include but are not restricted to the following: entering abstracted data on insurance forms; accounting for sales to other institutions; patient accounting, including the processing of patient charges, preparing claims for patient-related billings, receiving and processing payments from or on behalf of patients for services rendered, extending credit, collecting outstanding accounts, and recording and accounting for patient trust funds.

(a) Standard unit of measure: total operating expenses. The total operating expenses of the residential health care facility, less depreciation and lease costs for land, buildings and fixed equipment, and interest on capital debt.

(b) Data source. The costs shall be determined from the general accounting records.
 

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Section 455.5 - Administrative services

455.5 Administrative services. This functional reporting center must contain all the expenses associated with the overall management of the facility, including the office of the administrative director, management fees, public relations, auxiliaries or volunteer groups, messenger services, purchasing, governing board, information and paging activities, maintaining all insurance policies (except employee benefit insurance), licenses and taxes, and working capital interest. Additional activities include but are not limited to the following: provision of staff support to the board; charting the flow of patients through residential health care facility services; projecting daily census for budgets; pickup and delivery of mail within the residential health care facility; printing and duplication of forms and reports; operation of the communications system within the facility, including the telephone switchboard and related telephone services; receipt and processing of requisitions; monitoring perpetual supply items; obtaining quotes from selected vendors and monitoring receipt of supplies; receiving, storing and delivering materials, equipment and supplies to various departments; recruitment, employee selection, salary and wage administration; fringe benefit program administration; procurement of temporary help; scheduling and recordkeeping relative to employee visits and pre-employment and post-illness employee physicals.

(a) Standard unit of measure: total operating expenses. The total operating expenses of the facility less depreciation and lease costs for land, buildings and fixed equipment, and interest on capital debt.

(b) Data source. The costs shall be determined for the general accounting records.
 

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Section 455.6 - Plant operation and maintenance

455.6 Plant operation and maintenance. This functional reporting center must contain all the expenses associated with the maintenance, repair and service of buildings, fixed and movable equipment, and operating and utility systems, including minor renovation of buildings (including services of the building trades, i.e., carpentry, plumbing, electricity, painting, masonry, plastering and mechanical repairs); maintenance and repair of the following systems: domestic water supply, sewage treatment facility, domestic hot water storage and distribution; bulk oxygen distribution from entry into the buildings; biomedical equipment inspection, testing, maintenance and repair; electrical distribution; operation and maintenance of the boiler plant to include steam distribution piping up to and including PRV stations and the condensate return system from the receiving tanks to the boiler plant; emergency power system; air conditioning systems to include air handling equipment; incinerators and waste removal equipment; elevators and dumbwaiters. This center should include all similar services performed under contract. Additional activities include but are not limited to the following: technical assistance on equipment purchases and installations; coordinating construction; establishing priorities for repairs and utility systems and projects; service and maintenance of water and sewage treatment facilities; and maintenance of utilities such as heat, light, water, air conditioning and air treatment.

(a) Standard unit of measure: net square feet. The number of net square feet shall be determined using the center of the exterior walls of the facility, by floor. Measurement should be taken by floor to account for structural irregularities that may exist on various floors. When changes have been made during the year as a result of new construction, expansion, or curtailment of service, statistical data should be maintained to allow for the development of weighted areas for the fractional part of the year.

(b) Data source. Net square feet shall be determined from the blueprints of the residential health care facility, or actual measurement if blueprints are not available.
 

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Section 455.7 - Grounds

455.7 Grounds. This functional reporting center must contain all the expenses associated with the maintenance of grounds of the facility, including landscaped and paved areas, streets on the property, sidewalks, fenced areas and fencing, external recreation areas and parking facilities (e.g., lawn care, repairs and snow removal).

(a) Standard unit of measure: square feet serviced. Measurement should be of the outer dimensions of the residential health care facility property and should only include grounds which are maintained. Wooded grounds which are not maintained would not be included. When changes occur during the year as a result of purchase, sale or receipt of donated property, data should be maintained to allow for the development of weighted areas for the fractional part of the year.

(b) Data source. Square feet of grounds shall be determined from the deeds held by the residential health care facility or actual measurement. Square feet serviced should then be determined by the grounds department.
 

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Section 455.8 - Security

455.8 Security. This functional reporting center must contain all the expenses associated with maintaining the safety and well-being of residential health care facility patients, personnel and visitors, and protecting the facility by patrolling and guarding designated areas.

(a) Standard unit of measure. None.

(b) Data source. Not applicable.
 

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Section 455.9 - Laundry and linen services

455.9 Laundry and linen services. This functional reporting center must contain all the expenses associated with picking up, sorting, issuing, distributing, mending, washing, and processing in-service linens, including uniforms and special linens. Also included in this reporting center are linen purchases, purchased laundry services and the cost of disposable linen.

(a) Standard unit of measure: dry and clean pounds processed. The total weight of linen processed for the residential health care facility's use (including patients' personal linen and linen applicable to employee housing). If the facility is presently weighing soiled linen, a conversion to dry and clean pounds must be made by dividing the soiled weight by 110 percent. If the facility is accumulating pieces of linen as a statistic, a conversion by weight of piece must be made. In those instances where disposable linen substitutes are utilized, an equivalent weight statistic in terms of actual linen must be included.

(b) Data source. The weight should be determined from an actual measurement maintained by the laundry and linen department.
 

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Section 455.10 - Housekeeping service

455.10 Housekeeping service. This functional reporting center must contain all the expenses associated with care and cleaning of the interior physical plant, including care of floors (washing, waxing and stripping), walls, ceilings, partitions, windows (inside and outside), furniture stripping, disinfecting beds, fixtures (excluding equipment), and furnishings, and emptying of room trash containers. Routine housekeeping services performed by dietary personnel in dietary (kitchen) should be reported in the Patient Food Service functional center. This includes the costs of purchasing similar services from outside organizations. Additional activities include but are not limited to the following: providing pest and rodent control; gathering bacteriological surface samplings and carrying out pertinent infection control procedures; providing technical assistance in selection of furniture and furnishings; moving and relocating furniture; and arranging for refinishing, repairing and upholstering or replacement of furniture.

(a) Standard unit of measure: square feet serviced. The number of square feet in the residential health care facility should be determined either by a physical measurement of the facility or by a measurement from blueprints. Floor area measurements should be taken from the center of walls to the center of adjoining corridors if a hallway services more than one department. Exclude stairwells, elevators and other shafts. General and unused areas are also to be excluded. When changes in assigned areas have been made during the year as a result of new construction, departmental relocation, expansion, or curtailment of service, statistical data should be maintained to allow for the development of weighted areas for the fractional part of the year.

(b) Data source. Square feet shall be determined from the blueprints of the residential health care facility, or actual measurement if blueprints are not available. Square feet serviced should then be determined by reference to housekeeping assignments as maintained by the director of housekeeping.
 

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Section 455.11 - Patient food service

455.11 Patient food service. (a) This functional reporting center must contain all the expenses associated with the procurement, storage, processing and delivery of food and nourishments to the floors and dining facilities in compliance with public health regulations and physicians' orders. This would include the material costs relative to tube feeding of a high protein diet. Additional activities include but are not limited to the following: teaching patients and their families about nutrition and modified diet requirements; determining patient food preferences in terms of type of food and method of preparation; preparing selective menus for various specific diet requirements; preparing or recommending a diet manual, approved by the medical staff, for use by physicians and nurses; and delivering and collecting food trays to the floors and dining facilities for meals and nourishments.

(b) Where this center and the Cafeteria functional reporting center share kitchen facilities with corresponding common salaries of cooks, food costs, minor equipment costs, administrative costs, etc., such common costs must be entirely distributed (preferably on a monthly basis) to the Patient Food Service and Cafeteria functional reporting centers, based on the ratio of number of meals served in each area. Note that such distribution must be performed and is not subject to the reclassification criteria detailed in section 454.2(b) of this Article. The patient meal count should be made by counting one meal for each tray sent to a patient at mealtime. Nourishments should be excluded. For a meal count, tube feedings will be counted as three meals for each day so fed. An equivalent meal count should be made in the cafeteria by use of the following procedures: count a free meal served as a full meal. A full meal consists of meat, potato, vegetable, salad, beverage and dessert. When there is a selection of entrees, desserts, etc., at different prices, use an average in calculating the selling price of a full meal. An equivalent meal in a pay cafeteria is determined by dividing total sales by the average selling price of a full meal served at noon.

(c) Standard unit of measure: dietary meals served. Number of meals served shall include only regularly scheduled meals and exclude snacks and fruit juices served between regularly scheduled meals. For a meal count, tube feedings will be counted as three meals for each day as fed.

(d) Data source. The number of meals served shall be determined from an actual count maintained by the dietary and nursing departments.
 

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Section 455.12 - Cafeteria

455.12 Cafeteria. This functional reporting center must contain all the expenses associated with procurement, storage, processing and delivery of food and nourishment to personnel and visitors in compliance with public health regulations, including vending machine operation. Additional activities include but are not limited to the following: preparation of food, food service, maintenance of vending machines, and operation of the cafeteria to serve employees and visitors. Note that when distributing shared (common) kitchen costs between this center and the Patient Food Service functional center, the reclassification criteria do not apply. See the special rules which are detailed in section 455.11(b) of this Part.

(a) Standard unit of measure: equivalent cafeteria meals served. An equivalent meal count is determined by total cafeteria dollar sales divided by the average sales price of a full meal served at noon. The average sales price of a full meal should include meat, potato, vegetable, salad, beverage and dessert. Count a free meal to an employee (or other nonpatient) as a full meal.

(b) Data source. The average sales price of a full meal shall be determined by an estimate based upon cafeteria prices and appropriately weighted for price changes during the year. Dollar sales in the cafeteria are maintained in general accounting. Free meals are to be determined by an actual count maintained by cafeteria personnel.
 

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Section 455.13 - Nursing administration

455.13 Nursing administration. This functional reporting center must contain all the expenses associated with the overall administration and supervision of all nursing services, including all nursing in-service training, scheduling and transferring of nurses between services and units, nursing staff supervision, evaluation and discipline. It includes the work of the director, assistants and/or associates, secretaries, clerks, and all nursing personnel who are responsible for conducting in-service education of nursing personnel, and the following specific job titles: RN Supervisor (supervising two or more units and/or areas), Health Services Supervisor, Director of Nursing Services, and Assistant Director of Nursing Services. Note that nursing in-service education is subject to special rules rather than the reclassification criteria (section 452.4(g)). Additional activities include but are not limited to the following: recommendation of appointments to the nursing staff; definition and execution of the philosophy, objectives, policies and standards for nursing care of patients; participation in community education health programs; participation in patient care review committees; inspection of patient areas to verify that patient needs are met; and coordination of all nursing activities and functions with other residential health care facility functions.

(a) Standard unit of measure: average number of nursing department employees. The sum of the average number of nursing service personnel working in the various departments throughout the residential health care facility under the direction of nursing administration.

(b) Data source. The average shall be determined by adding the number of nursing service personnel who worked for at least four pay periods during the year and dividing the total by the number of pay periods used. Payroll records should be used to obtain this information.
 

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Section 455.14 - Activities program

455.14 Activities program. This functional reporting center must contain all the expenses associated with providing recreational and leisure-time facilities, activities and services to patients both at the facility and on special group activities including trips for recreational purposes, excluding transportation costs. This department is supervised by personnel trained for administration of an activities program. Additional activities encompassed by this functional reporting center include but are not limited to the following: coordinating and scheduling activity programs; arranging for special group activities and trips; arranging for transportation to activities; supervising activity programs; participating in discharge coordination as required by code.

(a) Standard unit of measure: total number of participants in program. Count one participant for each person participating in each activity.

(b) Data source. The total number of participants in the program shall be determined from the activities logs.
 

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Section 455.15 - Nonphysician education

455.15 Nonphysician education. This functional reporting center must contain all the direct expenses associated with State-approved schools for educating professional people other than physicians. Additional activities include but are not limited to the following: student assistance; selecting qualified students; providing education in theory and practice conforming to approved standards; maintaining an education library and student personnel records; counseling students regarding their professional, personal and educational problems; selecting faculty personnel; assigning and supervising students in on-the-job training; and administering aptitude tests and other tests for counseling and selection purposes.

(a) Standard unit of measure: number of students. Number of students enrolled in the program(s). This number should be appropriately weighted for students who do not attend for the entire school year, and for those who do not undertake a full education workload as defined by the program.

(b) Data source. The number of students shall be determined from the education department's records.
 

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Section 455.16 - Medical education

455.16 Medical education. This functional reporting center must contain all expenses associated with organized medical education programs approved by the American Medical Association that provide medical clinical education to interns and residents. Additional activities include but are not limited to the following: providing services of interns and residents; selecting qualified students; providing education in theory and practice conforming to approved standards; maintaining student personnel records; counseling students regarding professional, personal and educational problems.

(a) Standard unit of measure: number of students. Number of students in the program(s). This number should be appropriately weighted for students who are not in the program for the entire year, and for those who do not undertake a full workload as defined by the program.

(b) Data source. The number of students shall be determined from the education department's records.
 

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Section 455.17 - Medical director's office

455.17 Medical director's office. This functional reporting center must contain all the expenses, both professional and clerical, associated with the medical director's office and providing overall medical administration at the facility. Additional activities include but are not limited to the following: providing administrative guidance to physicians at the facility; monitoring the quality of physician care; conducting medical staff meetings; providing clerical assistance to physicians. Note that the time spent by the medical director on direct patient care, as well as in this function, must be specifically assigned to the appropriate reporting center and is not subject to the reclassification criteria. Reference: section 452.4(i) and section 454.2(b) of this Article.

(a) Standard unit of measure. None.

(b) Data source. Not applicable.
 

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Section 455.18 - Housing

455.18 Housing. This functional reporting center must contain all the expenses associated with the provision of living quarters to residential health care facility employees.

(a) Standard unit of measure: average number of persons housed. Average number of employees housed in residential health care facility residences. This number should be appropriately weighted for employees housed for periods less than the full year.

(b) Data source. This average should be calculated from records maintained in the housing office.
 

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Section 455.19 - Medical records

455.19 Medical records. This functional reporting center must contain all the expenses associated with maintaining a record system for the use, transcription, retrieval, storage and disposal of patient medical records and production of indexes, abstracts and statistics for residential health care facility management and medical staff use. Additional activities include but are not limited to: operating microfilm equipment (or equivalent).

(a) Standard unit of measure. None.

(b) Data source. Not applicable.
 

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Section 455.20 - Utilization review

455.20 Utilization review. This functional reporting center must contain all the expenses associated with providing utilization review. Reference: section 416.9 of this Subchapter. Additional activities include but are not limited to the following: conducting ongoing evaluation of the quality of care provided. This includes periodic review of utilization of bed facilities and of the diagnostic, nursing and therapeutic resources of the residential health care facility with respect to availability of these resources to all patients according to their medical needs, and recognition of the medical practitioner's responsibility for the costs of health care. This review should cover necessity of admission (including concurrent review of admission), length of stay, level of care, quality of care, utilization of ancillary services, professional services furnished, and availability and alternative use of facilities and services. The review committee should include two or more physicians with participation of other professional personnel, or a group outside the facility which is similarly composed and which is established by the local medical society and some or all of the residential health care facilities in the locality, or a group established and organized in a manner approved by the Department of Health that is capable of performing such function.

(a) Standard unit of measure: number of cases reviewed. The total number of patient cases reviewed by the Utilization Review Committee. If a case is reviewed more than once, it should be counted as a case reviewed, each time reviewed.

(b) Data source. The number shall be determined from an actual count maintained in the Utilization Review Committee.
 

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Section 455.21 - Social services

455.21 Social Services. (a) This functional reporting center must contain all the expenses associated with obtaining, analyzing and interpreting social and economic information to assist in diagnosis, treatment and rehabilitation of patients, including counseling of staff and patients in case units and group units, participating in the development of community social and health education programs, coordinating the admission and transfer of patients, coordinating discharges, and providing religious counseling and services. Additional activities include but are not limited to the following: filling out admission forms; scheduling admission times; accompanying patients to rooms or service areas after admission and arrangement of admission details; interviewing patients and relatives in order to obtain social history relevant to medical problems and planning; interpreting problems of social situations as they relate to the medical condition and/or hospitalization of the patient; arranging for post-discharge care of chronically ill patients; and collecting and revising information on community health and welfare resources.

(b) Standard unit of measure. None.
 

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Section 455.22 - Transportation

455.22 Transportation. This functional reporting center must contain all the expenses associated with the transporting of patients and supplies to and from the facility on behalf of patient-related activities. Additional activities include but are not limited to the following: transporting patients to and from scheduled outside activities; transporting patients to and from department and other stores; transporting supplies to be used in patient-related activities.

(a) Standard unit of measure: number of trips. The total number of trips made for the purpose of transporting patients and supplies to and from the facility.

(b) Data source. The number of trips shall be determined from departmental logs.
 

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Section 455.23 - Laboratory services

455.23 Laboratory Services. This functional reporting center must contain all the expenses associated with performance of diagnostic and routine laboratory tests on tissues and cultures necessary for the diagnosis and treatment of residential health care facility patients. This functional reporting center should also include maintenance of a blood bank within the residential health care facility. Additional activities include but are not limited to the following: transportation of specimens from nursing floors; care of laboratory equipment; preparation of samples for testing; drawing or otherwise procuring, processing, storing and issuing whole blood and blood derivatives.

(a) Standard unit of measure: CAP workload measurement units. A Workload Recording Method for Clinical Laboratories, published by the College of American Pathologists (use the latest edition). In recording workload measurement units, workload units related to quality control studies, calibration standards and specimen collection, and repeats for which a patient is not charged, are not to be counted. Workload units for unlisted procedures should be reasonably estimated based upon work units for other comparable procedures, or estimated by qualified personnel. Workload measurement units shall be maintained and reported for laboratory services obtained from outside laboratories.

(b) Data source. The number of workload measurement units shall be an actual count maintained by the laboratory. Copies of the Workload Recording Method can be obtained by writing to:

College of American Pathologists

7400 North Skokie Boulevard

Skokie, IL 60076
 

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Section 455.24 - Electrocardiology

455.24 Electrocardiology. This functional reporting center must contain all the expenses associated with the operation of specialized equipment to record electromotive variations in actions of the heart muscle on an electrocardiograph for diagnosis of heart ailments. Additional activities include but are not limited to the following: wheeling portable equipment to patients' bedsides; explaining test procedures to patients; operating electrocardiograph equipment; inspecting, testing and maintaining special equipment; and attaching and removing electrodes to and from patients.

(a) Standard unit of measure: CAP workload measurement units. Reference: section 455.23(a) of this Part.

(b) Data source. The number of workload measurement units shall be an actual count maintained by the laboratory.
 

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Section 455.25 - Electroencephalogy

455.25 Electroencephalogy. This functional reporting center must contain all the expenses associated with the operation of specialized equipment to record electromotive variations in brain waves on an electroencephalograph for diagnosis. Additional activities include but are not limited to the following: wheeling portable equipment to patients' bedside; explaining test procedures to patient; operating electroencephalograph equipment; inspecting, testing and maintaining special equipment.

(a) Standard unit of measure: CAP workload measurement units. Reference: section 455.23(a) of this Part.

(b) Data source. The number of workload measurement units shall be an actual count maintained by the laboratory.
 

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Section 455.26 - Radiology

455.26 Radiology. This functional reporting center must contain all the expenses associated with the provision of diagnostic radiology services under the direction of a radiologist as required for the examination and care of patients. Additional activities include but are not limited to the following: taking and processing fluorographs and radiographs; examining and interpreting results; consulting with patients and attending physicians; disposing of radioactive waste; and storing and retrieving film and radioactive materials.

(a) Standard unit of measure: relative value units. Radiology Relative Values as determined by the California Medical Association, 1974 California Relative Value Studies, pages 142-155, California Medical Association, 44 Gough Street, San Francisco, CA 94103. Copies of this publication are available from the Office of Health Systems Management, Department of Health, Empire State Plaza, Corning Tower, Albany, NY 12237, and a copy is available for inspection and copying at the offices of the records access officer of the Department of Health, Empire State Plaza, Corning Tower, Albany, NY 12237. Relative value units for unlisted and "BR" (By Report) procedures should be reasonably estimated on the basis of other comparable procedures or estimated by qualified personnel. Count "Total Unit Value," not "PC Unit Value."

(b) Data source. The number of relative value units shall be the actual count maintained by the radiology department. Copies of the California Relative Value Scales can be obtained from the Office of Health Systems Management by requesting a copy of Health Facilities Memorandum No. 78-72, dated August 7, 1978.
 

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Section 455.27 - Inhalation therapy

455.27 Inhalation therapy. This functional reporting center must contain all the expenses associated with the administration of oxygen and certain potent drugs through inhalation or positive pressure and other forms of rehabilitative therapy as prescribed by physicians. This function is performed by specially trained personnel who initiate, monitor and evaluate patient performance, cooperation and ability during testing procedures. Additional activities include but are not limited to the following: assisting physician in performance of emergency care; maintaining open airways, breathing and blood circulation; maintaining aseptic conditions; transporting equipment to patients' bedsides; observing and instructing patients during therapy; visiting all assigned patients to ensure that physicians' orders are being carried out; inspecting and testing equipment; enforcing safety rules; and calculating test results.

(a) Standard unit of measure: number of treatments. Count each procedure as one treatment. Administering of oxygen should be reported as one procedure, regardless of service time, except in those instances where oxygen is continuously administered. In such instances, one treatment would be counted for each 24-hour period.

(b) Data source. The number of treatments shall be obtained from an actual count maintained by the inhalation therapy department.
 

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Section 455.28 - Podiatry

455.28 Podiatry. This functional reporting center must contain all the expenses associated with the provision of specialized diagnostic and therapeutic procedures in treatment of a patient by a podiatrist and/or podiatry staff. Additional activities include but are not limited to the following: examination of patients; consulting with patients and attending physicians.

(a) Standard unit of measure: number of visits. A visit is defined as medical attention provided by the podiatry department regardless of whether the patient visits the podiatry department or is visited in his room by the podiatrist and/or podiatry staff.

(b) Data source. The number of visits shall be an actual count maintained by the podiatry department.
 

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Section 455.29 - Dental

455.29 Dental. This functional reporting center must contain all the expenses associated with the provision of preventive and emergency dental care under the supervision of a dentist or other licensed dental personnel. Additional activities include but are not limited to the following: examination and treatment of patients; consulting with patients and attending physician.

(a) Standard unit of measure: number of visits. A visit is defined as dental attention provided by the dentist and/or dental staff, regardless of whether the patient visits the dental department or the patient is visited by the dentist and/or dental staff.

(b) Data source. The number of visits shall be an actual count maintained by the dental office.
 

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Section 455.30 - Psychiatric

455.30 Psychiatric. This functional reporting center must contain all the expenses associated with providing specialized diagnostic and therapeutic procedures by a licensed psychiatrist or psychologist. Additional activities include but are not limited to the following: consultation with patients, patient relatives and attending physician; establishing goal-directed relationship with patient; participating in group and milieu therapy.

(a) Standard unit of measure: number of visits. A visit is defined as psychiatric care provided by the psychiatrist and/or psychiatric staff, regardless of whether the patient visits the psychiatric office or is visited by the psychiatrist and/or psychiatric staff.

(b) Data Source. The number of visits shall be an actual count maintained by the psychiatric office.
 

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Section 455.31 - Physical therapy

455.31 Physical therapy. This functional reporting center must contain all the expenses associated with employing therapeutic exercises and massage and utilizing effective properties of heat, light, cold water and electricity for diagnosis and rehabilitation of patients with neuromuscular, orthopedic and other impairments. Such services are provided in a coordinated and integrated program under the direction and prescription of a physician or a registered physical therapist. Additional activities include but are not limited to the following: the provision of clinical and consultative services; the direction of patients in the use, function and care of braces, artificial limbs and other devices; prescribing therapeutic exercises; counseling patients and their relatives; organizing and conducting medically prescribed physical therapy programs; applying diagnostic muscle tests; administering whirlpool and compact baths; changing linen on physical therapy department beds and treatment tables; assisting patients in changing clothes and other personal needs and participating in discharge coordination as required by the code.

(a) Standard unit of measure: number of treatments. (1) A treatment should be synonymous with a visit. The treatment would consist of one or more modalities and/or procedures rendered during one patient visit. If a patient received two such visits in one day, that would constitute two treatments. The main difference between a skilled (or rehabilitative) treatment and a maintenance visit lies in the purpose and method of provision. A skilled treatment is rendered with the expectation of improving the patient's condition and is given by the licensed therapist or under the therapist's direct supervision. A maintenance procedure is designed to help keep the patient at his/her present level of function and is most often performed by ancillary personnel and does not require direct supervision. Maintenance procedures, for the most part, do not require the therapist's skills and do not utilize the more refined modalities or procedures.

(2) For purposes of reporting under this Article, a count of the total number of treatments, both skilled and maintenance, will be required. However, facilities must also maintain statistics which segregate skilled treatments from maintenance procedures as they will be required for reporting to the Department of Health for other purposes, i.e., management assessment, PMR/IPR's and surveys.

(b) Data source. The number of treatments shall be an actual count maintained by the physical therapy department.
 

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Section 455.32 - Occupational therapy

455.32 Occupational therapy. This functional reporting center must contain all the expenses associated with teaching manual skills and independence in personal care to stimulate mental and emotional activity on the part of patients. This would include the utilization of modalities and tests of occupational therapy and rehabilitative nursing in a coordinated and integrated program of services under the direction of a physician. This would consist of instructing patients in prescribed academic subjects to prevent mental deconditioning, improving patients' mental and physical conditions and aiding in the attainment of knowledge and skills that will further patients' progress toward vocational objectives. Additional activities include but are not limited to the following: evaluation by conducting diagnostic tests; consultations; prescriptions and carrying out prescriptions; assisting patients with personal needs; counseling patients' relatives and employees on both individual case and group bases; administering accreditation and other academic tests; instructing patients in technical aspects of work participation and in discharge coordination as required by the code.

(a) Standard unit of measure: number of treatments. Count each procedure as one treatment. In group sessions, the number of treatments would be equal to the number of patients in the group.

(b) Data source. The number of treatments shall be an actual count maintained by the occupational therapy department.
 

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Section 455.33 - Speech and hearing therapy

455.33 Speech and hearing therapy. This functional reporting center must contain all expenses associated with the utilization of modalities and tests of speech and hearing therapy and rehabilitation nursing in a coordinated and integrated program of services under the direction and prescription of a physician. Additional activities include but are not limited to the following: evaluation by conducting diagnostic tests; consultations, prescriptions, and carrying out prescriptions; assisting patients with personal needs; and participation in discharge coordination as required by code.

(a) Standard unit of measure: number of treatments. Count the number of treatments for each modality or procedure provided to a patient. When a combination of modalities and procedures is provided, the count shall include the individual modality(ies) and procedure(s).

(b) Data source. The number of treatments shall be obtained by an actual count maintained by the speech and hearing therapy department.
 

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Section 455.34 - Pharmacy

455.34 Pharmacy. This functional reporting center must contain all the expenses associated with the procurement, preservation, storage, compounding, manufacturing, packaging, controlling, assaying and dispensing of medications (including intravenous solutions) for in-and out-patients carried out under the jurisdiction of a licensed pharmacist. This functional reporting center should include the cost of drugs charged to patients and the cost of non-billable floor stock distributed to the various departments. Additional activities include but are not limited to the following: developing and maintaining formularies established by the medical staff; consulting and advising medical staff and nursing staff on drug therapy overdoses; adding drugs to I.V. solutions; analyzing incompatibility of drug combinations; and stocking of floor drugs and dispensing machines.

(a) Standard unit of measure. None.

(b) Data source. Not applicable.
 

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Section 455.35 - Central services supply

455.35 Central services supply. This functional reporting center must contain all the expenses associated with the preparation and issuance of medical and surgical supplies and equipment to patients and other functional reporting centers, and the cost of medical/surgical supplies and equipment charged to patients and the cost of non-billable medical supplies distributed to the various floors as stock. Additional activities include but are not limited to the following: requisitioning and issuing appropriate supply items required for patient care; preparing sterile irrigating solutions; collecting, assembling, cleaning, sterilizing and redistributing reusable items; and cleaning, assembling, maintaining and issuing of portable apparatus.

(a) Standard unit of measure. None.

(b) Data source. Not applicable.
 

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Section 455.36 - Medical staff service

455.36 Medical staff service. This functional reporting center must contain all the expenses associated with services to patients provided by physicians who are not assigned to specific professional service departments. All remuneration for physicians' services should be reported under this functional classification for payment to chiefs of service, house officers, and all other physicians not assigned to a specific professional service department. Note that the assignment of physicians' costs are not subject to the reclassification criteria and must be directly assigned in accordance with section 452.4(i) of this Article.

(a) Standard unit of measure. None.

(b) Data source. Not applicable.
 

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Section 455.37 - Skilled nursing facility

455.37 Skilled nursing facility. This functional reporting center must contain all the expenses associated with providing skilled nursing care to patients on the basis of physicians' orders and approved nursing care plans, when patients require convalescent rehabilitative and/or restorative services at a level less intensive than that of the usual medical acute care. Additional activities include but are not limited to the following: monitoring vital life signs; operating specialized equipment; preparing equipment and assisting physicians during patient examinations and treatments; changing dressings and cleansing wounds and incisions; observing and recording emotional stability of patients; assisting in bathing patients and helping them in and out of bed; observing patients for reaction to drugs; administering specified medication; serving food to patients in their rooms, and feeding patients regardless of location; assisting patients with daily hygiene; answering patient calls; stripping and making beds; and keeping patients' rooms in order.

(a) Standard unit of measure: number of patient days. Report patient days of care for all patients admitted to this unit. Include the day of admission, but not the day of discharge or death. If both admission and discharge or death occur on the same day, the day is considered a day of admission and counts as one patient day.

(b) Data source. The number of patient days shall be taken from daily census counts.
 

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Section 455.38 Reserved

Section 455.39 - Adult care facility

455.39 Adult care facility. This functional reporting center must contain all the expenses associated with the provision of supportive, restorative and preventive health care for ambulatory patients who are capable of caring for themselves under supervision.

(a) Standard unit of measure: number of patient days. Report patient days of care for all patients admitted to this unit. Include the day of admission, but not the day of discharge or death. If both admission and discharge or death occur on the same day, the day is considered a day of admission and counts as one patient day.

(b) Data source. The number of patient days shall be taken from daily census counts.
 

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Section 455.40 - Intermediate care facility--mental retardation

455.40 Intermediate care facility--mental retardation. This functional reporting center must contain all the expenses associated with the provision of safe, hygienic, sheltered living for mentally retarded patients not capable of fully independent living. Regular and frequent medical nursing services are provided.

(a) Standard unit of measure: number of patient days. Report patient days of care for all patients admitted to this unit. Include the day of admission, but not the day of discharge or death. If both admission and discharge or death occur on the same day, the day is considered a day of admission and counts as one patient day.

(b) Data source. The number of patient days shall be taken from daily census counts.
 

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Section 455.41 - Independent living

455.41 Independent living. This functional reporting center must contain all the expenses associated with the provision of a safe and sheltered place of living for those capable of fully independent living. Quarters are usually provided in the form of apartment complexes. Note that any housekeeping, dietary or other services provided should be reported in their respective functional cost center.

(a) Standard unit of measure: number of occupant days. Report occupant days for all occupants assigned to this unit. Include the initial day of occupancy but not the day of vacancy.

(b) Data source. The number of occupant days shall be taken from daily census counts.
 

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Section 455.42 - Specialty pediatric

455.42 Specialty pediatric. This functional reporting center must contain all the expenses associated with the provision of extensive nursing, medical, psychological and counseling support services to children with diverse and complex medical, emotional and social problems in a program recognized and approved by the department to provide specialty pediatric services.

(a) Standard unit of measure: number of patient days. Report patient days of care for all patients admitted to this unit. Include the day of admission, but not the day of discharge or death. If both admission and discharge or death occur on the same day, the day is considered a day of admission and counts as one day.

(b) Data source. The number of patient days shall be taken from daily census counts.
 

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Section 455.43 - Head injury

455.43 Head injury. This functional reporting center must contain all the expense associated with a planned combination of services provided in a residential health care facility unit as a provider of specialized services for head injured patients.

(a) Standard unit of measure: number of patient days. Report patient days of care for all patients admitted to this unit. Include the day of admission, but not the day of discharge or death. If both admission and discharge or death occur on the same day, the day is considered a day of admission and counts as one patient day.

(b) Data source. The number of patient days shall be taken from daily census counts.
 

Effective Date: 
Tuesday, January 1, 1991
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Section 455.44 - Acquired Immune Deficiency Syndrome

455.44 Acquired Immune Deficiency Syndrome. This functional reporting center must contain all the expenses associated with the care of individuals with AIDS, AIDS related complex, and those diagnosed with other human immunodeficiency virus related illnesses in a discrete AIDS unit within a residential health care facility or in a free standing designated AIDS center. Costs associated with AIDS patients in designated or undesignated AIDS beds in an existing non-AIDS unit will remain a part of that unit's costs.

(a) Standard unit of measure: number of patient days of care for all patients admitted to this unit. Include the day of admission, but not the day of discharge or death. If both admission and discharge or death occur on the same say, the day is considered a day of admission and counts as one patient day.

(b) Data source. The number of patient days shall be taken from daily census counts.
 

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Tuesday, January 1, 1991
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Section 455.45 - Long term ventilator dependent

455.45 Long term ventilator dependent. This functional reporting center must contain all the expenses associated with the provision of nursing services to long term ventilator dependent patients in a discrete unit established and approved to provide care to such patients.

(a) Standard unit of measure: number of patient days of care for all patients admitted to this unit. Include the day of admission but not the day of discharge or death. If both admission and discharge or death occur on the same day, the day is considered a day of admission and counts as one patient day.

(b) Data source. The number of patient days shall be taken from daily census counts.
 

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Section 455.46 - Outpatient clinics

455.46 Outpatient clinics. This functional reporting center must contain all the expenses associated with an organized service providing diagnostic, preventive, curative, rehabilitative and educational services on a scheduled basis to ambulatory patients. Additional activities include but are not limited to the following: participating in activities designed to promote health education; assisting in administration of physical examinations and diagnosis and treatment of ambulatory patients; referring patients who require prolonged or specialized care to appropriate services; assigning patients to physicians in accordance with clinic rules; and making patients' appointments through required professional service functions.

(a) Standard unit of measure: number of visits. Enter all visits to medical clinics. Each visit is counted as one.

(b) Data source. The number of visits shall be the actual count maintained by the clinics.
 

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Section 455.47 - Adult day health care

455.47 Adult day health care. This functional reporting center must contain all the expenses associated with the provision of organized treatment on a scheduled basis for ambulatory patients. This unit is used to provide medical supervision and evaluation to patients who require a minimal amount of nursing supervision.

(a) Standard unit of measure: number of visits. Enter all visits to the day care center. Each visit is counted as one.

(b) Data source. The number of visits shall be the actual count maintained by day care.
 

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Tuesday, January 1, 1991
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Section 455.48 - Home health care

455.48 Home health care. This functional reporting center must contain all the expenses associated with the provision of nursing care and professional and nonprofessional services to patients at their place of residence. Activities include but are not limited to the following functions which can be performed to patients outside the residential health care facility: nursing care; intravenous therapy; inhalation therapy; electrocardiology; physical therapy; occupational and recreational therapy; speech and hearing therapy; social services; dietary services; and housekeeping services.

(a) Standard unit of measure: number of home health patient visits. The number of home health patient visits shall be the number of home health patients visited at their place of residence by representatives of the home health program.

(b) Data source. The number of home health patient visits shall be the actual count obtained from home health services.
 

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Section 455.49 - Homemaker

455.49 Homemaker. This functional reporting center must contain all the expenses associated with the provisions of domestic services to patients at their place of residence. Additional activities include but are not limited to the following functions which can be performed under this program at the patient's residence: housekeeping, dietary, maintenance, laundry and linen, and patient education.

(a) Standard unit of measure: number of homemaker visits. The number of homemaker visits shall be the number of homemaker patients visited at their place of residence by representatives of the homemaker program.

(b) Data source. The number of homemaker visits shall be the actual count obtained from homemaker services.
 

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Section 455.50 - Meals on wheels

455.50 Meals on wheels. This functional reporting center must contain all the expenses associated with the provision of dietary services to patients at their place of residence.

(a) Standard unit of measure: number of meals. The number of meals provided by the residential health care facility to participants in the meals on wheels program.

(b) Data source. The number of meals shall be determined from an actual count maintained by the dietary department at the facility.
 

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Section 455.51 - Research

455.51 Research. This functional reporting center must contain all the expenses associated with the overall administrative management of all research projects carried on by the facility. This would include all expenses associated with all research activities that are specifically funded by internal or external sources.

(a) Standard unit of measure. None.

(b) Data source. Not applicable.
 

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Section 455.52 - Physicians' offices and other rentals

455.52 Physicians' offices and other rentals. This functional reporting center must contain all the expenses associated with the provision of rental space to physicians and other professional persons, and with other rental activities engaged in by the residential health care facility, such as the rental of movable equipment.

(a) Standard unit of measure. None.

(b) Data source. Not applicable.
 

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Section 455.53 - Gift shop

455.53 Gift shop. This functional reporting center must contain all the expenses associated with the operation of a gift shop maintained on the premises of the residential health care facility. This would include the provision of space for the maintenance of a gift shop, as well as direct salaries and incurred expenses in gift shop operations.

(a) Standard unit of measure. None.

(b) Data source. Not applicable.
 

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Section 455.54 - Public restaurant

455.54 Public restaurant. This functional reporting center must contain all the expenses associated with the operation of a restaurant open to the general public on the premises of the residential health care facility.

(a) Standard unit of measure. None.

(b) Data source. Not applicable.
 

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Section 455.55 - Fundraising

455.55 Fundraising. This functional reporting center must include all the expenses associated with fundraising efforts by the residential health care facility.

(a) Standard unit of measure. None.

(b) Data source. Not applicable.
 

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Section 455.56 - Barber and beauty shop

455.56 Barber and beauty shop. This functional reporting center must contain all the expenses associated with providing barber and beautician services to the patients at the residential health care facility.

(a) Standard unit of measure. None.

(b) Data source. Not applicable.
 

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Section 455.57 - Sold services

455.57 Sold services. This functional reporting center must contain all the expenses related to the sale of services to individuals or enterprises outside of and unrelated to the ordinary functions of the residential health care facility. Activities would include but are not limited to the following: housekeeping services; laundry and linen services; data processing; management services; education services; janitorial services; purchasing; laboratory, etc.

(a) Standard unit of measure. None.

(b) Data source. Not applicable.
 

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Part 456 - Cost-Finding Practices And Procedures

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

Section 456.1 - Introduction

Section 456.1 Introduction. (a) Cost finding is the apportionment or allocation of the costs of the nonrevenue-producing centers to each other and to the revenue-producing centers and final program centers on the basis of statistical data reflective of the amount of service rendered by each center to the other centers.

(b) In general, each nonrevenue, ancillary revenue or program revenue center has a total expense of operation which can be described in an algebraic equation comprised of its own direct expense plus some fraction of the total expense of the operation of each of the other centers.

(c) Also, each center has a relationship to each of the other centers that can be described by a statistical allocation basis which is reflective of the relative amount of service rendered.

(d) Cost finding is a mathematical process used to solve the problem of allocating expenses to each center and subtotal expense in each ancillary or program center after the allocation of nonrevenue centers has been accomplished.

(e) While there are a number of methods that can be and have been used (direct allocation, single step down, multiple step down, matrix inversion, etc.), the matrix inversion process which solves equations simultaneously is the most accurate. This process recognizes all the services provided by one reporting center to all other centers. The complete recognition of services is not possible to the same degree in the other cost-finding processes. Although it is anticipated that the matrix inversion process will be used, the uniform system of statistical allocation is applicable to any process.

(f) This Part discusses the segregation of costs, the source for the compilation of data and other information pertinent to the cost allocation process.

(g) When the single step-down method of cost allocation is employed, the cost centers involved in the step down shall be arrayed in the following sequence:

Depreciation, Leases and Rentals

Depreciation on Major Movable Equipment

Interest on Capital Debt

Fiscal Services

Administrative Services

Plant Operation and Maintenance

Grounds

Security

Laundry and Linen

Housekeeping

Patient Food Service

Cafeteria

Nursing Administration

Activities Program

Non-Physician Education

Medical Education

Medical Director's Office

Medical Records

Utilization Review

Social Service

Transportation

Laboratory Service

Electrocardiology

Electroencephalogy

Radiology

Inhalation Therapy

Podiatry

Dental

Psychiatric

Physical Therapy

Occupational Therapy

Speech and Hearing Therapy

Pharmacy

Central Service Supply

Medical Staff Service

Ancillary--Other--A

Ancillary--Other--B

Ancillary--Other--C
 

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Section 456.2 - Statistics and sampling

456.2 Statistics and sampling. (a) A standard statistical allocation has been set forth for each functional reporting center. This prescribed minimum statistic must be reported based on residential health care facility records for functional reporting centers which have their own direct costs as well as centers which may receive only indirect costs as a result of cost finding.

(b) Alternative statistics may be developed and utilized for cost allocation of a functional center if such alternative basis had been used in the past and approved through audit by the third-party reimbursement agency auditor.

(c) However, a residential health care facility utilizing an alternative statistical basis must also report the minimal acceptable statistics set forth in this Part. A residential health care facility wishing to change its statistical allocation basis at any time in the future must collect the data and submit same to the New York State Department of Health, or other body if established, for approval as an exception to the approved cost allocation basis before it can be used. See procedure for same in Part 457 of this Article. Once an alternative statistic is used, it must remain in use until approval is given to alter the approved statistical basis.

(d) It is understood that in some instances a residential health care facility may not be able to accumulate the statistics for a full year. Under these circumstances, the residential health care facility may use a sample for accumulation of the data. A discussion of the sampling technique is presented in section 456.4 of this Part. The minimum mandated statistical basis for cost allocation is presented in section 456.3. A more precise definition for the compilation of the data is provided in section 456.5.
 

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Section 456.3 - Mandated statistical bases for cost allocation

456.3 Mandated statistical bases for cost allocation. The following represent the minimum mandated statistical bases for cost allocation.
(a) Nonrevenue support services.

Functional reporting center Allocation basis

(1) Depreciation, Leases and Depreciation by building,
Rentals by Department

(2) Depreciation on Major Movable For assets acquired prior to
Equipment 1/1/78, depreciation may be
allocated to departments
based on square feet, net.
For major movable equipment
acquisitions subsequent to
1/1/78, depreciation on such
assets must be assigned based
on the physical location of
the equipment.

(3) Interest on Capital Debt Square feet of building for
incurred which debt incurred and
actual depreciation ofmajor
movable equipment.

(4) Fiscal Services Accumulated costs

(5) Administrative Services Accumulated costs

(6) Plant Operation and Maintenance Square feet, net

(7) Grounds Square feet, net

(8) Security Square feet, net

(9) Laundry and Linen Dry and Clean pounds
distributed, includes
the equivalent weight of
disposable linens
distributed

(10) Housekeeping Assigned time

(11) Patient Food Service Dietary meals served

(12) Cafeteria Average number of employees

(13) Nursing Administration* Total hours of direct nursing
service

(14) Activities Program Number of participants, by
program

(15) Non-Physician Education Assigned time of students

(16) Medical Education Assigned time--interns and
residents

(17) Medical Director's Office* Time spent

(18) Housing Number of rooms occupied by
department assigned

(19) Medical Records* Hours of service

(20) Utilization Review Number of cases reviewed, by
program area

(21) Social Services* Hours of service

(22) Transportation* Number of users, by program

(b) Ancillary service revenue centers.

Functional Reporting Center Allocation Basis

(1) Laboratory Services CAP workload measurement units

(2) Electrocardiology CAP workload measurement units

(3) Electroencephalogy CAP workload measurement units

(4) Radiology Relative value units

(5) Inhalation Therapy Number of treatments

(6) Podiatry Number of visits

(7) Dental Number of visits

(8) Psychiatric Number of visits

(9) Physical Therapy Number of treatments

(10) Occupational Therapy Number of treatments

(11) Speech and Hearing Therapy Number of treatments

(12) Medical Staff Services* Hours of service by physician

(13) Pharmacy** Costed requisitions

(14) Central Service Supply** Costed requisitions
(c) Exceptions.
*(1) For facilities with a single program service classification the cost allocation bases indicated in subdivisions (a) and (b) of this section by an asterisk (*) are waived.
**(2) In Pharmacy and Central Services Supply cost centers, indicated by (**) in subdivision (b) of this section, for facilities with a single program service classification, the cost allocation bases are waived. However, requisitions for these cost centers for the sample periods must be retained as an audit trail showing that such supplies were not utilized in areas other than the program area. Also, for Pharmacy costs in multicare facilities, see section 456.5(p) of this Part for alternate pricing out of requisitions allowable.

 

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Section 456.4 - Sampling technique

456.4 Sampling technique. (a) The following allocation bases may be sampled for the functional reporting centers indicated, rather than having actual cost allocation statistics accumulated for a full year:

(1) dry and clean pounds distributed (Laundry and Linen);

(2) hours of service (Medical Records) (Medical Staff Services) (Social Services);

(3) time spent (Medical Director's Office);

(4) total hours of nursing service (Nursing Administration);

(5) costed requisitions (Pharmacy) (Central Service Supply);

(6) assigned time (Housekeeping); and

(7) the allocation basis for any cost center not having direct costs, but which receives indirect costs as a result of the cost-finding process.

(b) The sampling plan used by the residential health care facility need not conform to the strict mathematical concepts inherent to statistical sampling. The recommended approach to be used to sample statistics used as an allocation basis is as follows:

(1) A minimum of eight calendar weeks will be selected each year for the accumulation of data.

(2) These eight weeks will be representative of the full year. In order to achieve this, the facility will select a two-week block (14 consecutive days) within each fiscal quarter for the collection of data.

(3) The same two-week block need not be used for all statistics.

(4) During the testing period, actual counting, weighing, etc. will be done for all shifts involved in the particular area.

(c) Periods of unusual circumstances should be avoided as test weeks. The principle of representative samples is the ultimate goal.

(d) It should be noted that sampling techniques may only be utilized for those statistical bases indicated above and only with respect to cost allocation. Statistics utilized for the standard unit of measure may not be sampled.
 

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Section 456.5 - Compilation of statistical data

456.5 Compilation of statistical data. The cost allocation process utilizes statistics in distributing costs among the various residential health care facilities services. In order to facilitate the development of appropriate statistical data, set forth below is a definition and source of the required statistic for each nonrevenue-producing department. The statistical bases for cost allocation for ancillary services are the same as the standard units of measure except that such statistics must be segregated by program level of patients served.

Statistic Definition or method of computation Source

(a) Square The number of net square feet in each Blueprints of the feet, net department should be determined either residential health by a physical measurement of the facility care facility or or by a measurement from blueprints. actual measurement Floor area measurements should be taken if blueprints are from the center of walls to the center of not available. adjoining corridors if a hallway services more than one department. Exclude stairwells, elevators and other shafts. General and unused areas are also to be excluded. Hallways, waiting rooms, storage areas, etc., serving only one department should be included in that department. When changes in assigned areas have been made during the year as a result of new construction, departmental relocation, expansion or curtailment of service, statistical data should be maintained to allow for the development of weighted areas for the fractional part of the year. Where the same area serves more than one function, this area must be apportioned between functions. Where costs applicable to a particular building are identifiable, e.g., depreciation, the costs should be distributed by the square feet in that building alone, and to the corresponding department.

(b) Square The number of gross square feet in each Blueprints of the feet, gross department should be determined by a residential health physical measurement of the residential care facility or health care facility or by a measurement actual measurement from blueprints. Measurement should be if blueprints are taken from the exterior wall or railing to not available. the center of adjoining interior corridors if a hallway services more than one department. Exclude stairwells, elevators and other shafts. General and unused areas are also to be excluded. Hallways, waiting rooms, storage areas, etc., serving only one department should be included in that department. When changes in assigned areas have been made during the year as a result of new construction, departmental relocation, expansion or curtailment of service, statistical data should be maintained to allow for the development of weighted areas for the fractional part of the year. Where the same area serves more than one function, this area must be apportioned between or among the appropriate functions. Where costs applicable to a particular building are identifiable, e.g., depreciation, the costs should be distributed by the square feet of that building alone, and to the corresponding department.

(c) Major Depreciation on major movable equipment General accounting movable allocated to departments, based on the records and equipment department where the equipment is physically blueprints of the depreciation located and utilized. For acquisitions prior residential health by to 1/1/78, allocation may be based on square care facility or department feet, net. actual measurement.

(d) Square The interest expense related to the building General accounting feet of and fixed equipment must be allocated to records and building for departments in the building based upon gross blueprints of the which debt square feet. The interest expense related to residential health incurred and the major movable equipment will be care facility or actual allocated based upon actual department actual measurement. depreciation depreciation of major movable equipment. of major movable equipment

(e) Depre- The depreciation expense for each building General accounting ciation by distributed through gross square feet to records and building, by departments in that building. blueprints of the department. residential health care facility or actual measurement.

(f) Accumu- The direct costs of each reporting center Stepdown report lated costs and indirect costs previously allocated. (For) other than inversion process. matrix

(g) Hours of Accumulated hours of service to departments Departmental service or by program. records.

(h) Dietary Number of meals served shall include only Actual count meals served regularly scheduled meals and exclude maintained by snacks and fruit juices served between dietary regularly scheduled meals. Also includes department. tube feeding at the rate of three meals for each day so fed.

(i) Average The average number of employees in each Payroll records. number of department. This average should be computed employees computed by using at least one pay period per quarter. (j) Total Hours of nurses providing direct patient Payroll records. hours of care for which administration is provided. direct nursing service

(k) Assigned Hours of students enrolled in programs Education records. time of by assigned department. students

(l) Assigned Number of full-time equivalent interns and Education records. time--interns residents in approved teaching programs, and residents by assigned departments.

(m) Time Number of minutes/hours utilized by a Departmental log. spent department.

(n) Dry and Statistic shall include the weight of linen Actual count clean pounds distributed for the residential health care maintained inthe distributed facility's use (including linen of laundry and linen personnel quarters and employee housing). department. Also shall include equivalent weight of disposable linens distributed.

(o) Number of Where housing is provided, a count of the Personnel records rooms number of rooms occupied by physicians and and general occupied by employees, totaled by the departments they accounting records. department are assigned to, regardless of whether or assigned not the facility receives income.

(p) Costed The aggregate cost of goods supplied to General requisitions departments. For the Pharmacy cost center, accounting the prices shown in the Red Book or Blue records. Book reference manuals may be utilized rather than actual invoice price. Such reference manuals are published annually (the Red Book one half of the year; the Blue Book the other half).

(q) Number Number of patient cases reviewed by Department of cases Utilization Review personnel, by program records. reviewed, by area. program area

(r) Number of Number of patients using transportation, Department log. users, by by program area. program area

(s) Assigned The hours (or other unit of time) assigned Department log. time to service each department. Exclude common or unused areas. Time assigned to shared areas is to be allocated to the reporting centers sharing those areas on an equitable basis.
 

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Part 457 - Interpretations

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

Section 457.1 - Interpretations

Section 457.1 Interpretations. This Part contains the procedures for requesting interpretations and special waivers relating to this Article.

(a) Residential health care facilities may have significant questions relative to the meaning and interpretation of various aspects of this Article. Correspondence requesting interpretations should include suggestions on how the issue in question should be handled and considered by any advisory group to the Department of Health. Correspondence requesting interpretations and/or waivers with supporting documentation should be sent to:

New York State Office of Health Systems Management Division of Health Care Financing Empire State Plaza Albany, N.Y. 12237

(b) Major instances or items for which approval or interpretation may be sought include:

(1) interpretation of statements, as applied to a specific residential health care facility;

(2) approval to change allocation statistics;

(3) approval to establish new functional centers; and

(4) approval to waive specific procedures based on unique situations of the facility.
 

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Part 458 - Natural Classification of Expense

Effective Date: 
Tuesday, December 23, 1980
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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.
 

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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.
 

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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.
 

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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).
 

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Tuesday, January 1, 1991
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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).
 

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