Common use of Determining Cost Clause in Contracts

Determining Cost. The MCO determines the cost of room and board in the facility in which the member resides. The MCO shall use one method for all its members. It shall select one of the three following methods: a. Actual Cost Methodology This method requires calculation of actual room and board costs for each community residential facility with which the MCO contracts. Facility- specific costs are split between care and supervision on the one hand and room and board on the other. Total costs attributable to room and board are divided by the number of residents licensed or certified for the living arrangement to get a room and board rate. i. Costs attributable to Room and Board: a) Rent, mortgage payments, title insurance, mortgage insurance b) Property and casualty insurance c) Building and grounds maintenance costs d) Residents’ food e) Household supplies and equipment necessary for the room and board of the individual f) Furnishings used by the individual (does not include office furnishings) g) Utilities h) Resident’s telephone, cable television i) Property taxes j) Specific individual special dietary needs ii. Costs attributable to Care and Supervision. The following are allowable elements in residential provider rates for which FFP can be claimed: a) Staff Costs: • Salaries. In certain circumstances, a staff person’s wages and benefits may need to be apportioned between room and board costs and care and supervision. • FICA • Staff health insurance • Worker’s compensation • Unemployment compensation • Staff travel • Staff liability insurance • Staff development and education b) Resident travel (includes depreciation on vehicle) c) Administrative overhead-contractor’s costs to do business, including: • Office supplies and furnishings • Percentage of administrative staff salaries • Office telephone • Recruitment • Audit fees • Operating fees/permits/licenses • Percentage of office space costs • Data processing fees • Legal fees • Agency liability insurance An MCO that uses this method is responsible for assuring that each residential care provider with which it contracts uses this method for identifying the portion of the facility rate attributable to room and board, for maintaining documentation or auditing providers to verify the accuracy of these calculations and for updating this information annually. b. SSI-E Methodology SSI-E Payment Standard - SSI-E or the SSI Exceptional Expense Supplement represents the highest combined federal and state SSI payment amount in Wisconsin. Eligibility for the supplement is based on qualifying for SSI and either residing in community residential care or needing at least 40 hours a month of supportive services in one's personal home. The flat rate equals the SSI-E payment amount minus a personal needs allowance the MCO may set at either $80 or $100 a month (must be the same for all members in community residential care in the MCO's service area). This flat rate method is used regardless of whether the member receives SSI or her/his income comes from other sources. Since the SSI-E amount changes annually, the MCO must update this room and board flat rate annually. c. HUD Fair Market Rent (FMR) Methodology HUD Fair Market Rate (FMR) Method - This method uses HUD FMR rental amounts as a proxy for housing costs. HUD FMR rents are set at the 40% percentile of surveyed rental costs reflecting modest but reasonable housing, include utilities, vary by county and apartment size, and are updated yearly. MCO's using this method use the prior year's efficiency rent for owner-occupied Adult Family Homes; the one bedroom rent for corporate-operated Adult Family Homes and Community Based Residential Facilities; and the two bedroom rent for Residential Care Apartment Complexes. The board portion is set at a flat amount equal to the maximum Supplemental Nutrition Assistance Program (SNAP, called FoodShare in Wisconsin), allocation for one person plus a small amount for ancillary costs not included in the FMR or FoodShare figures. Figures are updated yearly.

Determining Cost. The MCO determines the cost of room and board in the facility in which the member resides. The MCO shall use one method for all its members. It shall select one of the three following methods: a. Actual Cost Methodology This method requires calculation of actual room and board costs for each community residential facility with which the MCO contracts. Facility- specific costs are split between care and supervision on the one hand and room and board on the other. Total costs attributable to room and board are divided by the number of residents licensed or certified for the living arrangement to get a room and board rate. i. Costs attributable to Room and Board: a) Rent, mortgage payments, title insurance, mortgage insurance b) Property and casualty insurance c) Building and grounds maintenance costs d) Residents’ food e) Household supplies and equipment necessary for the room and board of the individual f) Furnishings used by the individual (does not include office furnishings) g) Utilities h) Resident’s telephone, cable television i) Property taxes j) Specific individual special dietary needs ii. Costs attributable to Care and Supervision. The following are allowable elements in residential provider rates for which FFP can be claimed: a) Staff Costs: •  Salaries. In certain circumstances, a staff person’s wages and benefits may need to be apportioned between room and board costs and care and supervision. •  FICA •  Staff health insurance •  Worker’s compensation •  Unemployment compensation •  Staff travel •  Staff liability insurance •  Staff development and education b) Resident travel (includes depreciation on vehicle) c) Administrative overhead-contractor’s costs to do business, including: •  Office supplies and furnishings •  Percentage of administrative staff salaries •  Office telephone •  Recruitment •  Audit fees •  Operating fees/permits/licenses •  Percentage of office space costs •  Data processing fees •  Legal fees •  Agency liability insurance An MCO that uses this method is responsible for assuring that each residential care provider with which it contracts uses this method for identifying the portion of the facility rate attributable to room and board, for maintaining documentation or auditing providers to verify the accuracy of these calculations and for updating this information annually. b. SSI-E Methodology SSI-E Payment Standard - SSI-E or the SSI Exceptional Expense Supplement represents the highest combined federal and state SSI payment amount in Wisconsin. Eligibility for the supplement is based on qualifying for SSI and either residing in community residential care or needing at least 40 hours a month of supportive services in one's personal home. The flat rate equals the SSI-E payment amount minus a personal needs allowance the MCO may set at either $80 or $100 a month (must be the same for all members in community residential care in the MCO's service area). This flat rate method is used regardless of whether the member receives SSI or her/his income comes from other sources. Since the SSI-E amount changes annually, the MCO must update this room and board flat rate annually. c. HUD Fair Market Rent (FMR) Methodology HUD Fair Market Rate (FMR) Method - This method uses HUD FMR rental amounts as a proxy for housing costs. HUD FMR rents are set at the 40% percentile of surveyed rental costs reflecting modest but reasonable housing, include utilities, vary by county and apartment size, and are updated yearly. MCO's using this method use the prior year's efficiency rent for owner-occupied Adult Family Homes; the one bedroom rent for corporate-operated Adult Family Homes and Community Based Residential Facilities; and the two bedroom rent for Residential Care Apartment Complexes. The board portion is set at a flat amount equal to the maximum Supplemental Nutrition Assistance Program (SNAP, called FoodShare in Wisconsin), allocation for one person plus a small amount for ancillary costs not included in the FMR or FoodShare figures. Figures are updated yearly.