Title 7 . Health and Social Services

Chapter 43 . Hearings

Section 1060. Determination of administrative and general cost rate

7 AAC 43.1060. Determination of administrative and general cost rate

(a) A home and community-based services provider seeking an administrative and general cost rate for services reimbursed under 7 AAC 43.1058(f) must comply with the applicable requirements of this section. If a provider does not comply with those requirements, the department will calculate a reimbursable unit rate based solely on the allowable direct service costs for the service provided.

(b) The department will approve an administrative and general cost rate for a home and community-based services provider at the time of initial certification under 7 AAC 43.1090 and annually thereafter, at the beginning of the waiver year in which the rate is payable. When first applying for provider certification and no later than 30 days before the start of each following waiver year, a provider seeking an administrative and general cost rate shall submit to the department the following information on a form or in a format approved by the department:

(1) a proposed operating budget for the provider's next fiscal year that sets out all anticipated funding sources and amounts, including recipient contributions to room and board if applicable, and that breaks anticipated costs into the categories of allowable direct service costs, non-allowable direct service costs, allowable administrative and general costs, and non-allowable administrative and general costs;

(2) a calculation of the administrative and general cost rate for the provider that is determined by dividing the provider's total allowable administrative and general costs by the sum of the provider's total allowable and non-allowable direct service costs and the provider's total non-allowable administrative and general costs; however, a provider's administrative and general cost rate may not exceed 18 percent of the sum of the provider's total allowable and non-allowable direct service costs and the provider's total non-allowable administrative and general costs, unless the provider provides only residential supported living services under 7 AAC 43.1044; if a provider provides only residential supported living services under 7 AAC 43.1044, that provider's administrative and general cost rate may not exceed 25 percent of the sum of the provider's total allowable and nonallowable direct service costs and the provider's total non-allowable administrative and general costs.

(c) Upon review of the information provided under (b) of this section and any additional information provided under this subsection, the department may ask for clarification, request additional information, or approve the provider's administrative and general cost rate. The department will provide written notification to the provider of the final approved rate.

(d) In this section,

(1) "allowable direct service costs" include

(A) personal service costs, including salaries, annualized hourly wages, contract labor payments, and stipends paid for direct care staff and associated benefit costs such as payroll taxes and insurance; whatever form these costs take, they must be commensurate with compensation paid for similar staff positions performing similar duties for the provider;

(B) travel costs for recipients and providers including transportation, per diem, and meal allowances; these costs may not be charged at rates that exceed those allowed under the general government bargaining unit employees' agreement with the state in effect for July 1, 2000 - June 30, 2003; for purposes of this subparagraph, the travel cost rates set out in article 30, sections 30.01 - 30.04 and 30.07 - 30.08 of the general government bargaining unit employees' agreement with the state for July 1, 2000 - June 30, 2003 are adopted by reference;

(C) the costs of items or services purchased for recipients that are necessary to carry out their approved plans of care; and

(D) room and board costs for

(i) respite care services provided under 7 AAC 43.1049 in a nursing facility, acute care hospital, intermediate care facility for the mentally retarded or persons with related conditions (ICF/MR) assisted living home licensed under AS 47.33, or foster home licensed under AS 47.35; or

(ii) meals that are provided as part of a unit of adult day services provided under 7 AAC 43.1043, as part of a unit of day habilitation services provided under 7 AAC 43.1045, or in a unit of meals service provided under 7 AAC 43.1053;

(2) "non-allowable direct service costs" include

(A) items or services purchased for recipients that are not necessary to carry out their approved plans of care; and

(B) room and board costs other than those described in (1)(D) of this subsection;

(3) "allowable administrative and general costs" include

(A) board of directors' expenses, including travel and training costs directly associated with board functions on behalf of the provider, but excluding lobbying activities;

(B) administrative support costs, including the costs of

(i) personal services and associated benefits, training, and travel of the provider's executive director and its secretarial, clerical, accounting, and other administrative staff;

(ii) office equipment, including leased equipment, supplies, postage, related professional subscriptions, and associated procurement costs;

(iii) facility operations, including rent, interest on capital loans, utilities, equipment, security systems, and routine maintenance; and

(iv) professional dues for professional staff;

(C) contractual costs for consulting, legal, and financial accounting and auditing services;

(D) public relations and community education expenses related to advertisements, brochures, newsletters, marketing, surveys, and staff and community development activities; and

(E) insurance expenses, including professional liability, automobile and facility coverage, and bonding; and

(4) "non-allowable administrative and general costs" include

(A) lobbying expenses;

(B) fund raising expenses;

(C) contingency funds;

(D) fines, penalties, and bad debts;

(E) contributions or donations;

(F) entertainment expenses, including meals, banquets, gratuities, and decorations;

(G) organization dues that are based on a percentage of grant award amounts; and

(H) other costs not allowed under requirements or special conditions related to other state grant awards to the provider.

(e) Notwithstanding the requirements of this section, a home and community-based services provider may choose to obtain an indirect cost rate agreed upon by the federal government and the home and community-based services provider.

History: Eff. 12/19/93, Register 128; am 5/15/2004, Register 170

Authority: AS 47.05.010

AS 47.07.030