PDFWAC 388-96-535

Management agreements, management fees, and central office services.

(1) The contractor shall disclose to the department the nature and purpose of all management agreements, including an organizational chart showing the relationship among the contractor, management company and all related organizations. The department may request additional information or clarification.
(2) A copy of the agreement must be received by the department at least sixty days before it is to become effective. A copy of any amendment to a management agreement must be received by the department at least thirty days in advance of the date it is to become effective. Failure to meet these deadlines will result in the unallowability of cost incurred more than sixty days prior to submitting a management agreement and more than thirty days prior to submitting an amendment.
(3) Management fees will be allowed only when:
(a) A written management agreement both creates a principal/agent relationship between the contractor and the manager, and sets forth the items, services, and activities to be provided by the manager; and
(b) Documentation demonstrates that the service contracted for were actually delivered; and
(c) The scope of services performed under a management agreement are not so extensive that the manager or managing entity is substituted for the contractor in fact, substantially relieving the contractor/licensee of responsibility for operating the facility.
(4) Acceptance of a management agreement shall not be construed as a determination that all management fees or costs are allowable in whole or in part. Management fees or costs not disclosed or approved in conformity with chapter 74.46 RCW and this section are unallowable. When necessary for the health and safety of medical care recipients, in writing, the department may waive the sixty-day or thirty-day advance notice requirement of subsection (2) of this section.
(5)(a) Management fees are allowable only for necessary, nonduplicative services that are of the nature and magnitude that prudent and cost-conscious management would pay; and
(b) Management fees paid to or for the benefit of a related organization will be allowable to the extent they not exceed the lower of the:
(i) Actual cost to the related organization of providing necessary services related to patient care under the agreement; or
(ii) The cost of comparable services purchased elsewhere. Where costs to the related organization represent joint facility costs, the measurement of such costs shall comply with WAC 388-96-534.
(6) Allowable fees for all general management services of any kind referenced in this section, including corporate or business entity management and management fees not allocated to specific services, are subject to any applicable cost center limit established in chapter 74.46 RCW and this chapter.
(7) Central office costs, owner's compensation, and other fees or compensation, including joint facility costs for general administrative and management services, and management expense not allocated to specific services shall be subject to any cost center limit established by chapter 74.46 RCW and chapter 388-96 WAC.
(8) Necessary travel and housing expenses of nonresident staff working at a contractor's nursing facility shall be considered allowable costs if the visit does not exceed three weeks.
(9) Bonuses paid to employees at a contractor's nursing facility or management company shall be considered compensation.
[Statutory Authority: Chapter 74.46 RCW, 2010 1st sp.s. c 34, and 2010 1st sp.s. c 37 § 958. WSR 11-05-068, § 388-96-535, filed 2/14/11, effective 2/26/11. Statutory Authority: RCW 74.46.800. WSR 98-20-023, § 388-96-535, filed 9/25/98, effective 10/1/98. Statutory Authority: RCW 74.46.800 and 74.09.120. WSR 93-19-074 (Order 3634), § 388-96-535, filed 9/14/93, effective 10/15/93. Statutory Authority: 1987 c 476. WSR 88-01-126 (Order 2573), § 388-96-535, filed 12/23/87. Statutory Authority: RCW 74.46.800. WSR 86-10-055 (Order 2372), § 388-96-535, filed 5/7/86, effective 7/1/86. Statutory Authority: RCW 74.09.120. WSR 83-19-047 (Order 2025), § 388-96-535, filed 9/16/83; WSR 81-22-081 (Order 1712), § 388-96-535, filed 11/4/81. Statutory Authority: RCW 74.09.120 and 74.46.800. WSR 81-06-024 (Order 1613), § 388-96-535, filed 2/25/81. Statutory Authority: RCW 74.09.120. WSR 80-09-083 (Order 1527), § 388-96-535, filed 7/22/80; WSR 79-03-020 (Order 1371), § 388-96-535, filed 2/21/79; Order 1262, § 388-96-535, filed 12/30/77.]