2003 Minnesota Statutes

     256B.432 Long-term care facilities; central, affiliated, 
  or corporate office costs. 

    Subdivision 1.    Definitions.  For purposes of this 
 section, the following terms have the meanings given them. 

    (a) "Management agreement" means an agreement in which one 
 or more of the following criteria exist:  

    (1) the central, affiliated, or corporate office has or is 
 authorized to assume day-to-day operational control of the 
 nursing facility for any six-month period within a 24-month 
 period.  "Day-to-day operational control" means that the 
 central, affiliated, or corporate office has the authority to 
 require, mandate, direct, or compel the employees of the nursing 
 facility to perform or refrain from performing certain acts, or 
 to supplant or take the place of the top management of the 
 nursing facility.  "Day-to-day operational control" includes the 
 authority to hire or terminate employees or to provide an 
 employee of the central, affiliated, or corporate office to 
 serve as administrator of the nursing facility; 

    (2) the central, affiliated, or corporate office performs 
 or is authorized to perform two or more of the following:  the 
 execution of contracts; authorization of purchase orders; 
 signature authority for checks, notes, or other financial 
 instruments; requiring the nursing facility to use the group or 
 volume purchasing services of the central, affiliated, or 
 corporate office; or the authority to make annual capital 
 expenditures for the nursing facility exceeding $50,000, or $500 
 per licensed bed, whichever is less, without first securing the 
 approval of the nursing facility board of directors; 

    (3) the central, affiliated, or corporate office becomes or 
 is required to become the licensee under applicable state law; 

    (4) the agreement provides that the compensation for 
 services provided under the agreement is directly related to any 
 profits made by the nursing facility; or 

    (5) the nursing facility entering into the agreement is 
 governed by a governing body that meets fewer than four times a 
 year, that does not publish notice of its meetings, or that does 
 not keep formal records of its proceedings.  

    (b) "Consulting agreement" means any agreement the purpose 
 of which is for a central, affiliated, or corporate office to 
 advise, counsel, recommend, or suggest to the owner or operator 
 of the nonrelated nursing facility measures and methods for 
 improving the operations of the nursing facility.  

    (c) "Nursing facility" means a nursing facility whose 
 medical assistance rates are determined according to section 
 256B.431. 

    Subd. 2.    Effective date.  For rate years beginning on 
 or after July 1, 1990, the central, affiliated, or corporate 
 office cost allocations in subdivisions 3 to 6 must be used when 
 determining medical assistance rates under section 256B.431.  

    Subd. 3.    Allocation; direct identification of costs of 
 nursing facilities; management agreement.  All costs that can 
 be directly identified with a specific nursing facility that is 
 a related organization to the central, affiliated, or corporate 
 office, or that is controlled by the central, affiliated, or 
 corporate office under a management agreement, must be allocated 
 to that nursing facility. 

    Subd. 4.    Allocation; direct identification of costs to 
 other activities.  All costs that can be directly identified 
 with any other activity or function not described in subdivision 
 3 must be allocated to that activity or function. 

    Subd. 5.    Allocation of remaining costs; allocation 
 ratio.  (a) After the costs that can be directly identified 
 according to subdivisions 3 and 4 have been allocated, the 
 remaining central, affiliated, or corporate office costs must be 
 allocated between the nursing facility operations and the other 
 activities or facilities unrelated to the nursing facility 
 operations based on the ratio of total operating costs. 

    (b) For purposes of allocating these remaining central, 
 affiliated, or corporate office costs, the numerator for the 
 allocation ratio shall be determined as follows:  

    (1) for nursing facilities that are related organizations 
 or are controlled by a central, affiliated, or corporate office 
 under a management agreement, the numerator of the allocation 
 ratio shall be equal to the sum of the total operating costs 
 incurred by each related organization or controlled nursing 
 facility; 

    (2) for a central, affiliated, or corporate office 
 providing goods or services to related organizations that are 
 not nursing facilities, the numerator of the allocation ratio 
 shall be equal to the sum of the total operating costs incurred 
 by the nonnursing facility related organizations; 

    (3) for a central, affiliated, or corporate office 
 providing goods or services to unrelated nursing facilities 
 under a consulting agreement, the numerator of the allocation 
 ratio shall be equal to the greater of directly identified 
 central, affiliated, or corporate costs or the contracted 
 amount; or 

    (4) for business activities that involve the providing of 
 goods or services to unrelated parties which are not nursing 
 facilities, the numerator of the allocation ratio shall be equal 
 to the greater of directly identified costs or revenues 
 generated by the activity or function.  

    (c) The denominator for the allocation ratio is the sum of 
 the numerators in paragraph (b), clauses (1) to (4). 

    Subd. 6.    Cost allocation between nursing facilities.  
 (a) Those nursing operations that have nursing facilities both 
 in Minnesota and comparable facilities outside of Minnesota must 
 allocate the nursing operation's central, affiliated, or 
 corporate office costs identified in subdivision 5 to Minnesota 
 based on the ratio of total resident days in Minnesota nursing 
 facilities to the total resident days in all facilities.  

    (b) The Minnesota nursing operation's central, affiliated, 
 or corporate office costs identified in paragraph (a) must be 
 allocated to each Minnesota nursing facility on the basis of 
 resident days. 

    Subd. 7.    Receiverships.  This section does not apply 
 to payment rates determined under sections 245A.12, 245A.13, and 
 256B.495, except that any additional directly identified costs 
 associated with the Department of Human Services' or the 
 department of health's managing agent under a receivership 
 agreement must be allocated to the facility under receivership, 
 and are nonallowable costs to the managing agent on the 
 facility's cost reports. 

    Subd. 8.    Adequate documentation supporting long-term 
 care facility payrolls.  Beginning July 1, 1998, payroll 
 records supporting compensation costs claimed by long-term care 
 facilities must be supported by affirmative time and attendance 
 records prepared by each individual at intervals of not more 
 than one month.  The requirements of this subdivision are met 
 when documentation is provided under either clause (1) or (2) as 
 follows: 

    (1) the affirmative time and attendance record must 
 identify the individual's name; the days worked during each pay 
 period; the number of hours worked each day; and the number of 
 hours taken each day by the individual for vacation, sick, and 
 other leave.  The affirmative time and attendance record must 
 include a signed verification by the individual and the 
 individual's supervisor, if any, that the entries reported on 
 the record are correct; or 

    (2) if the affirmative time and attendance records 
 identifying the individual's name, the days worked each pay 
 period, the number of hours worked each day, and the number of 
 hours taken each day by the individual for vacation, sick, and 
 other leave are placed on microfilm, equipment must be made 
 available for viewing and printing them, or if the records are 
 stored as automated data, summary data must be available for 
 viewing and printing. 

    HIST: 1990 c 568 art 3 s 73; 1992 c 513 art 7 s 104,136; 
 1Sp1993 c 1 art 5 s 100,101; 1995 c 207 art 7 s 27-31; 1996 c 
 451 art 5 s 27; 1998 c 274 s 1