AGING AND DISABILITY SERVICES ADMINISTRATION

2005 NH "Dear Administrator" Letters

August 12, 2005

ADSA: NH #2005-023
Re: 2006 Joint Cost Allocation Disclosure

Dear Nursing Facility Administrator:

By September 30 of each year, Revised Code of Washington Section 74.46.270 requires all central servicing organizations to submit a Joint Cost Allocation Disclosure (JCAD). Central servicing organizations include related organiza­tions which provide services to more than one nursing facility, or one nursing facility and any other entity. Examples of organizations that must submit a disclosure if joint costs are incurred are:

1. chain operations;
2. organizations operating more than one type of facility at a location (for example, a nursing facility and a hospital or a nursing facility and a boarding home);
3. organizations operating more than one type of business (for example, a nursing facility and an apartment complex); and
4. facilities providing services to another facility (for example, a facility providing laundry services to another facility).

Changes to the 2006 Joint Cost Allocation Disclosure:

Section 1 - We added a new Type 5 (Other) category to the previous four types of organizations. There are now five number references to describe the organizational set up of the servicing organization. Please refer to the attached list of Joint Facility Organization Types.

Section 4 – A third column “Specific Cost Report Accounts Included” was added to the table. The purpose for this change is to make it easier to identify different cost report expense accounts that will be allocated into each service category. Please refer to Section 4 of the joint cost allocation disclosure form for further explanation of this change.

As in previous years, one disclosure form for each servicing organization is required. For example, if a central office provides services to five facilities, the central office is the servicing organization and should submit one disclosure. All servicing organizations allocating joint facility costs in 2006 must complete the form in its entirety and sign the certification on page 4. All signatures must be original signatures in ink.

The disclosure must identify the nature and purpose of all costs which represent an allocation of joint facility costs, describe the allocation methodology utilized and list the entities to which the costs are to be allocated. An organization chart for the servicing organization is required to be submitted. The organization chart must define all staff positions and define services provided. Please disclose all management positions with the names of the current staff holding such positions. Also changes from the prior year’s organization chart must be disclosed in Section 2.

To have joint facility costs for calendar year 2006 considered in the determination of allowable costs under Washington Administrative Code (WAC) 388-96-585 and other related sections of WAC 388-96, the allocation disclosure is required to be postmarked by September 30, 2005 per WAC 388-96-534 (3). The department will review the methodology and notify the contractor of approval or denial by December 31, 2005 for all timely received JCADs in accordance with WAC 388-96-534 (4).

PLEASE NOTE: In accordance with WAC 388-96-534 (5), an amendment or revision to a JCAD must be submitted at least thirty days prior to the effective date of the amendment or revision. Also, contractors who will begin to incur joint costs at some time other than the beginning of the calendar year must submit a new JCAD ninety days prior to the time the costs will be incurred per WAC 388-96-534 (6).

For guidelines on the disclosure of joint facility cost allocation, please review RCW 74.46.270; WACs 388-96-534, 388-96-535, and 388-96-542; and the State of Washington Nursing Home Accounting and Reporting Manual pages III-23 through III-26, and pages V-3 through V-4.

If your JCAD for calendar year 2005 was not approved, please complete the 2005 form and return the form to the address below. The department will review your 2005 JCAD and then compare its findings to your 2006 JCAD. JCADs for 2005 that were conditionally approved last year will be automatically disap­proved if the department has not received the requested information.

Enclosed are:

1. A 2006 disclosure form
2. Copies of relevant sections of state law (RCW) and regulations (WAC) and excerpt pages of the Nursing Home Accounting and Reporting Manual (Not available electronically)
3. Joint facility organization types
4. Criteria for Approval of Provider Statements

Disclosures for calendar year 2006 must be postmarked by September 30, 2005 and submitted to:

Department of Social and Health Services
Aging and Disability Services Administration
Nursing Home Rates Section
Post Office Box 45600
Olympia, Washington 98504-5600

If you have any questions, please call the analyst responsible for your facility. If you do not know your assigned analyst, please call Linda Herrera at (360) 725-2498.

Sincerely,

Tom Kearns, Chief
Office of Rates Management

Enclosures