(1) The administration and operations rate component includes reimbursement for the necessary and ordinary costs of:

(a) Overall administration and management of the facility;

(b) Operations and maintenance of the physical plant;

(c) Resident transportation;

(d) Dietary service (other than the cost of food and beverages);

(e) Laundry service;

(f) Medical and habilitative supplies;

(g) Taxes; and

(h) Insurance.

(2) An ICF/ID facility's administration and operations rate component is the lesser of:

(a) It's most recent reported cost per resident day adjusted for inflation; or

(b) The calculated rate that is at or above eighty-five percent of state and private facilities' most recent reported cost per resident day adjusted for inflation. This ranking must be based on cost reports used to determine rates for facilities with an occupancy level of at least eighty-five percent during the cost report period.