Title: Section 453.3 - Listing and definitions
453.3 Listing and definitions. (a) Current assets.
(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.
(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.
(2) Time deposits and equivalents.
(3) Patient fund held in trust (proprietary facilities only).
(4) Other assets.
(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.
(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.
(ii) Partner's Draw.
(3) Sole Proprietorship or Governmentally Operated Facilities.
(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.*
(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.*
(xx) Inhalation Therapy.*
(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.*
(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.
(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.
VOLUME D (Title 10)