Title: Section 442.24 - Direct assignment of costs
SPECIALIZED REPORTING AREAS
442.24 Direct assignment of costs. (1610) (a) The direct assigning of costs is the process of identifying and assigning costs directly to the functional cost center generating those costs. Only those costs which meet the definitions and guidelines established within this section and in section 444.7 of this Article will be directly assigned.
(b) Buildings and fixtures. (1611) The cost of all depreciation or rent/lease of buildings and fixtures is to be charged to the Depreciation and Amortization Cost Center (account 8810) and to the Leases and Rental Cost Center (account 8815), respectively, and not reported as a direct expense of specific cost centers.
(c) Salary- and payroll-related employee benefits. (1612) (1) The salaries and wages cost must be assigned directly to the functional cost center to which the employee is assigned (see Natural Classification Accounts, section 444.23(b) of this Article). For example, for reporting purposes the salary cost of direct nursing services, including float nurses, must be directly assigned to the patient care cost centers receiving the service. This assignment may be based on each employee's actual nursing services, hours performed within each patient care cost center multiplied by that employee's hourly salary rate while performing the direct nursing service, or based on an analysis of salary and wage expense including time and cost studies.
(2) Payroll-related employee benefits must be reported in the cost center where the applicable employee's compensation is reported. This assignment can be performed on an actual basis or upon the following basis:
(i) FICA - actual expense by cost center;
(ii) pension and retirement and health insurance (non-union) - gross salaries of participating individuals by cost center;
(iii) union health and welfare - gross salaries of participating union members by cost center;
(iv) all other payroll-related benefits - gross salaries by cost center.
(3) Non-payroll-related employee benefits are to be reported in account 8830 (Employee Benefits--Non-Payroll-Related).
(d) Medical supplies and durable medical equipment. (1613) (1) The invoice/inventory cost of all medical and surgical supplies for which a separate charge is made, except home program dialysis supplies, must be reported as a cost of the Medical Supplies--Sold cost center (account 7110). The related revenue must be reflected in the Medical Supplies--Sold revenue center (account 4110). Home program dialysis supplies must be reported as a cost of the appropriate home program dialysis center.
(2) Medical and surgical supplies and materials issued by Central Services and Supplies for which a separate charge is not made must be reported at invoice/inventory cost as a cost of the cost center using the supplies and materials.
(3) Effective for cost reporting periods beginning January 1, 1982, the invoice/inventory cost of all durable medical equipment sold must be reported as a cost of the Durable Medical Equipment--Sold cost center (account 7130). The related revenue must be reported in the Durable Medical Equipment--Sold revenue center (account 4130).
(4) Effective for cost reporting periods beginning January 1, 1982, the depreciation expense associated with durable medical equipment leased or rented must be reported in the Durable Medical Equipment--Leased/Rented cost center (account 7140). The related revenue must be reported in the Durable Medical Equipment--Leased/Rented revenue center (account 4140).
(5) The overhead associated with the issuance of medical supplies and durable medical equipment must be reported in the Central Services and Supplies cost center (account 8460). The cost of reusable patient chargeable supplies must remain in the Central Services and Supplies cost center.
(e) Drugs. (1614) Pharmaceutical supplies and materials (including IV solutions, admixtures, blood derivatives, etc.) issued by the Pharmacy cost center for which a separate Pharmacy charge is made must be reported for as a cost of the Drugs Sold cost center (account 7150). The related revenue must be reflected in the Drugs Sold revenue center (account 4150).
Pharmaceutical supplies and materials (including IV solutions, admixtures, blood derivatives, etc.) issued by the Pharmacy for which a separate charge is not made must be reported at invoice/inventory cost as a cost of the cost center using the supplies and materials.
The overhead associated with the issuing of pharmaceutical supplies and materials (including IV solutions, admixtures, blood derivatives, etc.) must be reported in the Pharmacy cost center (account 8470). The cost of reusable patient chargeable items must remain in the Pharmacy cost center.
(f) Data processing. (1615) (1) All the direct costs incurred in operating an electronic data processing center, in purchasing data processing services, and/or in obtaining such services from related organizations, must be reported in the using cost centers. Direct cost which cannot be directly identified with specific functional cost centers must be assigned to the functional cost centers using such services based on each hospital's own determination of a fair and equitable assignment or allocation concept which gives appropriate recognition to the types of data processing costs incurred in their data processing center, under contract, and/or from related organizations. (2) Effective for cost reporting periods commencing January 1, 1981 or thereafter, this cost assignment or allocation concept must be agreed to by the medical fiscal intermediary prior to the end of the reporting period. Once a basis has been approved, it will remain in effect until the provider initiates a subsequent request to change it.
(3) No prior approval is required for cost reporting periods ending December 31, 1980 or before.
(g) Central patient transportation. (1616) (1) Because patient transportation costs are relatively minor in most hospitals, direct assignment of this expense is not required. Such expense may be reported where incurred. However, since no patient transportation cost center is provided, those hospitals which maintain a central patient transportation department must report such expenses in the appropriate ancillary services cost centers. Patient visits or some other valid basis may be used for reclassifying such expenses.
(2) The expenses incurred in transporting patients to the Daily Hospital Services areas at the time of admission are to be assigned to the Inpatient Admitting cost center (account 8524). The expenses incurred in transporting patients who have been discharged are to be assigned to the Daily Hospital Services functional cost center from which the patient was discharged.
VOLUME C (Title 10)