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CODE OF STATE REGULATIONS 1ROBIN CARNAHAN (10/31/05)Secretary of State

Rules of

Department of Social ServicesDivision 35�Children�s Division

Chapter 80�Payment of Residential Facilities

Title Page

13 CSR 35-80.010 Residential Foster Care Maintenance Methodology......................................3

13 CSR 35-80.020 Residential Care Agency Cost Reporting System.........................................4

Title 13�DEPARTMENT OFSOCIAL SERVICES

Division 35�Children�s DivisionChapter 80�Payment of Residential

Facilities

13 CSR 35-80.010 Residential Foster CareMaintenance Methodology

PURPOSE: This rule establishes a methodol-ogy for determination of the costs associatedwith the provision of foster care maintenancebased on the statutory criteria contained in42 U.S.C. 672/675(4)(A) and related ratesfor residential care agencies.

(1) Objectives. This rule establishes amethodology for determination of the costsassociated with the provision of foster caremaintenance based on the statutory criteriacontained in 42 U.S.C. 672/675(4)(A) andrelated rates for residential care agencies.

(2) General Principles. (A) Four (4) child-specific foster care

maintenance rates shall be determined inaccordance with section (3) Residential Fos-ter Care Maintenance Rate Methodology.

(B) Residential child caring agencies willbe required to complete a cost report detail-ing their most recent fiscal year�s operatingcosts. Providers must also submit auditedfinancial statements with their report for ver-ification purposes.

(C) Foster care maintenance costs shall beobtained from residential care providers usingthe standard cost report completed in accor-dance with applicable instructions.

1. In order to be considered �FosterCare Maintenance,� agency costs shall firstmeet the general definition as ascribed with-in federal regulation, accompanying clarifica-tion or audit finding and be allowable asdefined within OMB Circular A-122, OMBCircular A-87, and the Child Welfare PolicyManual.

2. Reported agency costs shall be rea-sonable in nature as defined with OMB Cir-cular A-122 and OMB Circular A-87.

3. Cost must be appropriately allocatedto all benefiting programs or services offeredby an agency.

4. The calculation of the foster caremaintenance rate must consider any applica-ble credits or payments received either direct-ly from federal or state funding sources orindirectly via contracted services or reim-bursement.

(D) Statewide foster care maintenancecosts shall be rebased every three (3) years.

(E) The Department of Social Services(DSS) will submit budget items for the Gen-

eral Assembly�s consideration to revise ratesin accordance with the results of the rate set-ting methodology. Rates will be adjusted inaccordance with the Truly Agreed and Final-ly Passed appropriation by the GeneralAssembly subject to veto by the Governor.

(3) Residential Foster Care Maintenance RateMethodology. The foster care maintenancerate will contain two (2) separate compo-nents. A statewide average room and boardcomponent and a child-specific daily supervi-sion component.

(A) Room and Board Component. 1. Because the general cost of providing

room and board will not vary based on achild�s identified level of care or other pro-grammatic considerations, a core, statewide,board rate will be calculated based on theaverage cost of all agencies providing suchservices.

2. The room and board component willbe calculated by dividing the total net appli-cable room and board related costs for allagencies by the statewide total days of resi-dential child caring services provided.

(B) Daily Supervision Component.1. The daily supervision component will

vary based upon required staffing ratios asdefined within the Missouri Code of StateRegulations �Rules of Department of SocialServices, Division 40�Division of FamilyServices, Chapter 71�Licensing Rules forResidential Care Agencies.� This documentestablishes basic expectations for staff/childratios within residential care agencies asidentified within Exhibit 1, Residential ChildCare Agency Staff/Child Ratios.

Exhibit 1

2. Agencies will report days by type ofservice provided. To determine the child-spe-cific daily supervision portion of the rate,agencies will be classified into one of fourcategories based upon the average level ofsupervision required by children in their care.This classification will allow for adequatedifferentiation of cost incurred in the provi-

sion of daily supervision across each catego-ry and permit calculation of the related ratecomponent. After categorization of agenciesinto each of the defined categories, the dailysupervision rate will be calculated by divid-ing the total net applicable supervision costsfor all agencies within a category by the totaldays of child caring services provided bythose agencies.

A. Days of service provided under thebasic core requirements regardless of payorsource. Examples of services under this cat-egory reimbursed by DSS include the follow-ing categories:

(I) Emergency shelter;(II) REHAB�RT emergency crisis

intervention;(III) Maternity care; and(IV) Maternity care with infant.

B. Days of service provided under theinfant/toddler/preschool requirements re-gardless of payor source. Examples of ser-vices under this category reimbursed by DSSinclude the following contract categories:

(I) Infant care; and(II) Toddler care.

C. Days of service provided underresidential treatment requirements regardlessof payor source. Examples of services underthis category reimbursed by DSS include thefollowing contract categories:

(I) Moderate need (Level II);(II) REHAB�RT moderate need

(Level II);(III) Severe need (Level III); (IV) REHAB�RT severe need

(Level III); and(V) Family focused residential ser-

vices.D. Days of services provided under

intensive residential care requirementsregardless of payor source. Examples of ser-vices under this category reimbursed by DSSinclude the following contract categories:

(I) Intensive need (Level IV); and(II) REHAB�RT intensive need

(Level IV).

(4) Inflation/Trend Factor Adjustments.(A) For the purpose of establishing base

year costs, the room and board componentwill be adjusted based on the change in theUSDA Expenditures on Children by Families.For State Fiscal Year 2005, the adjustmentwill be three and thirty hundredths percent(3.30%). The child-specific daily supervisioncomponent will be adjusted based on thechange in the Midwest Region ConsumerPrice Index for all Urban consumers (CPI-U). For State Fiscal Year 2005, the adjust-ment will be two and ninety-two hundredthspercent (2.92%). The annual change in the


Chapter 80�Payment of Residential Facilities 13 CSR 35-80

Category Age Child Awake

Child Asleep

Basic Core Requirements

Birth�6 6�8 8�21 7�21 7�21

1:4 1:6 1:10

1:6 (staff awake) 1:12 (staff asleep) 1:20 (staff awake)

Infant/Toddler/Preschool

Birth�6 1:4 1:6 (staff awake)

Residential Treatment

(DFS Levels II & III)

6 7 8�21

1:4 1:6 1:8

1:6 (staff awake) 1:6 (staff awake) 1:16 (staff awake)

Intensive Residential

Care (DFS Level IV)

6 7�21

1:4 1:6

1:6 (staff awake) 1:6 (staff awake)

4 CODE OF STATE REGULATIONS (10/31/05) ROBIN CARNAHANSecretary of State

13 CSR 35-80�DEPARTMENT OF SOCIAL SERVICES Division 35�Children�s Division

USDA index two and twenty hundreths per-cent (2.20%) and CPI-U one and ninety-fourhundreths percent (1.94%) was determinedfor the most recent calendar year and multi-plied by a factor of 1.5 for the purpose ofconverting calendar year 2003 cost data tothe State Fiscal Year 2005 rate period.

(B) For the purpose of interim in-flation/trend factor adjustments until rates arerebased, the department will submit budgetitems for the General Assembly�s considera-tion to revise rates in accordance with theresults of the rate setting methodology. Thechange in the USDA Expenditures on Chil-dren by Families will be used for the roomand board component and the MidwestRegion Consumer Price Index for all Urbanconsumers (CPI-U) will be used for the dailysupervision component. Rates will be adjust-ed in accordance with the Truly Agreed andFinally Passed appropriation by the GeneralAssembly subject to veto by the Governor.

AUTHORITY: section 207.020, RSMo 2000.*Emergency rule filed Jan. 16, 2004, effectiveJan. 26, 2004, expired July 23, 2004. Origi-nal rule filed Jan. 16, 2004, effective Aug.30, 2004. Emergency amendment filed Sept.22, 2004, effective Oct. 2, 2004, expiredMarch 30, 2005. Amended: Filed Sept. 22,2004, effective March 30, 2005.

*Original authority: 207.020, RSMo 1945, amended 1961,1965, 1977, 1981, 1982, 1986, 1993.

13 CSR 35-80.020 Residential Care AgencyCost Reporting System

PURPOSE: This rule establishes a uniformcost reporting system to be used in reportingactual cost incurred in the operation of resi-dential care agencies. The uniform costreporting system provides the data necessaryfor the determination of the costs and ratesassociated with the provision of foster caremaintenance.

(1) Objectives. This rule establishes a uni-form cost reporting system to be used inreporting actual cost incurred in the operationof residential care agencies. The ResidentialCare Agency Cost Report included is one partof the two (2)-part process set forth by theState of Missouri Department of Social Ser-vices in fulfilling the requirements for identi-fying foster care maintenance related expen-ditures within residential care agencies. Theother part of the process involves participa-tion in either a time study or random momentsample to determine the portion of time directcare staff spend performing foster care main-tenance related activities.

(2) General Cost Reporting Principles. Resi-dential Care Agency Cost Report line specif-ic reporting instructions are included as anappendix to this rule included herein. Thecost report must include all costs incurred bythe residential care agency. Costs included inthe report can be grouped/categorized in sev-eral different ways and are subject to certainguidelines or requirements:

(A) Costs directly attributable to a functionor activity may be charged in their entirety tothat function or activity. Example: A staffperson working in a single function or activ-ity may have one hundred percent (100%) oftheir time charged to that function or activity.

(B) Costs not attributable to a single func-tion or activity must be distributed based onan appropriate allocation methodology.Example: A staff person who spends a por-tion of their time working for several differ-ent functions or activities should have theirrelated cost allocated across each program bysome substantially documented methodology.

(C) Some staff will have their associatedcost allocated through the application ofactivity-based time study or random momentsample (RMS) results: All agency staffresponsible for the provision of direct dailysupervision of children on a regular basis willbe included in the activity based allocationtime study process. Those staff that shouldNOT participate in the time study include:

1. Agency administration. It should benoted that, in some agencies, an agencyadministrator might perform a significantamount of direct care of residents. In theseinstances, the individual should participate inthe time study process.

2. Staff involved in the provision of asingle function such as the provision of coun-seling or therapy; medical service; foodpreparation; cleaning; or facility mainte-nance.

(D) Costs are either considered allowableor unallowable, based on federal definitionsand guidelines, for inclusion in the calcula-tion of the residential foster care maintenancerate.

(E) Costs must be net of applicable creditswhen determining the portion attributable tothe residential foster care maintenance rate.Any credits to reported costs will be appliedas a function of the rate calculation process.Examples of applicable credits may include,but are not limited to:

1. IV-E training payments;2. USDA reimbursements;3. Payments from school districts or the

Department of Elementary and SecondaryEducation for the provision of educationalservices;

4. Reimbursements from the Depart-ment of Social Services (DSS), the Depart-ment of Mental Health (DMH) or other thirdparty payors that offset reported costs suchas, including but not limited to:

A. Reimbursements for the develop-ment of the initial treatment plan, quarterlyupdates to the initial treatment plan and othertreatment planning services reimbursed byothers;

B. Reimbursements for day treatment;and

C. Reimbursements for counseling orother therapeutic services.

5. Reimbursements for medical andbehavioral health services covered by thestate�s Medicaid State Plan (either directly orindirectly through MC+Plans) including, butnot limited to:

A. Physician�s services;B. Pharmacy-related services;C. Psychology and counseling ser-

vices; andD. Targeted case management.

6. Other reimbursement from Medicaidor the MC+plans for the provision of othermedically necessary services.

7. Reimbursements for medical andbehavioral health services covered by otherthird party payors.

(3) Explanation of Common Terms. To facil-itate the completion of the cost report cost-related terms used throughout the instructionsare defined, and a brief explanation of theirapplication is given.

(A) Reported Costs. For a cost to beincluded on the cost report it must meet thefollowing general criteria:

1. Be reasonable for the performance ofthe activities of the agency;

2. Be accorded consistent treatment; and3. Be adequately documented.

(B) Reasonable. A cost is reasonable if, inits nature or amount, it does not exceed thatwhich would be incurred by a prudent personunder the circumstances prevailing at the timethe decision was made to incur the costs.Reasonable costs are further defined in OMBCircular OMB A-87.

(C) Allowable. Allowable costs are thosecosts that are generally considered eligiblefor federal reimbursement based on the costprinciples established in federal transmittalssuch as OMB Circular A-87 or A-122.Appendix A gives a list of items that are gen-erally considered to be allowable. This is notan all-inclusive list and other costs not listedmay be allowable. Although a cost may beconsidered ineligible for inclusion in the fos-ter care maintenance rate based upon federal

rules, regulations, or guidelines. (See �Eligi-ble Cost�)

(D) Unallowable. A cost is unallowable forreimbursement under, or claim to, any feder-al program based on established cost princi-ples. Appendix A includes a list of itemsconsidered to be unallowable. All costsshould be included on the cost report. Coststhat are not allowable based on the federalguidelines should be placed in the �Unallow-able� column on the cost report.

(E) Administrative Cost. Refers to thosecosts related to general operation and man-agement of an agency or to those costsincurred in the support of multiple agencyfunctions or programs. Examples of admin-istrative costs include, but are not limited to:

1. Executive direction and supervision;2. Bookkeeping and fiscal management;3. Secretarial and clerical support; 4. Physical plant management;5. Staff training (unless clearly related

to a primary activity area); and6. Related occupancy costs.

(F) Allocation Methodology. Documenta-tion and/or description of the pro-cedures/methods used to distribute costs toprograms and to the direct service categorieson the cost report. In general, costs shouldbe allocated across the cost report�s directservice categories/activities if there is a cleardelineation and documentation for the alloca-tion. Documentation must be maintainedrecording the methodology and detailing thespecific calculation used to distribute costs.The use of estimates not based on a statisti-cally sound methodology is unacceptable.

(G) Applicable Credits. The term applica-ble credits refers to those receipts, or reduc-tion of expenditures which operate to offsetor reduce expense items that are allocable toawards as direct or indirect costs. Typicalexamples of such transactions are: purchasediscounts, rebates or allowances, recoveriesor indemnities on losses, insurance refunds,and adjustments of overpayments or erro-neous charges. To the extent that such creditsaccruing or received by the organizationrelate to allowable cost, they shall be credit-ed to the federal government either as a costreduction or cash refund, as appropriate. Insome instances, the amounts received fromthe federal government to finance organiza-tional activities or service operations shouldbe treated as applicable credits. Specifically,the concept of netting such credit itemsagainst related expenditures should beapplied by the organization in determiningthe rates or amounts to be charged to federalawards for services rendered whenever thefacilities or other resources used in providingsuch services have been financed directly, in

whole or in part, by federal funds. For rulescovering program income (i.e., gross incomeearned from federally-supported activities)see Sec. 24 of Office of Management andBudget (OMB) Circular A-110, �UniformAdministrative Requirements for Grants andAgreements with Institutions of Higher Edu-cation, Hospitals, and Other Non-ProfitOrganizations.�

(H) Random Moment Sample (RMS)/TimeStudy. A time study or RMS is a statisticallybased process to gather information fromdirect service child care staff members onhow they spend their time. The informationcollected will be used for distributing the costof direct staff among various activities. Theresults of this study are used to determine theportion of the direct service providers costrelated to foster care maintenance.

(I) Eligible Cost. For the purpose of deter-mining the residential foster care mainte-nance rate, only those costs incurred in theprovision of the following items/activitieswill be considered. The federal Departmentof Health and Human Services, Administra-tion for Children and Families has publishedguidance in this regard in the Child WelfarePolicy Manual Section 8.3.B.1. In general,this includes the cost of, and the cost of pro-viding, the following:

1. Food;2. Clothing;3. Shelter;4. Daily supervision;5. School supplies;6. Personal incidentals;7. Liability insurance with respect to the

child care;8. Reasonable travel for the child for

visitation as defined within the Child WelfarePolicy Manual; and

9. Related administrative costs.

(4) Entities Covered by the Cost Report. TheMissouri Residential Care Agency CostReport is to be used in reporting actual costsincurred in the operation of residential carelicensed under the Department of Social Ser-vices, Division 40�Division of Family Ser-vices, Chapter 71�Licensing Rules for Resi-dential Care Agencies. Each cost reportestablishes the portion of that agency�s costattributable to the provision of foster caremaintenance. Information from all reportingagencies will be used, in aggregate, to estab-lish foster care maintenance rates for each ofthe following four (4) categories based uponMissouri licensing rules for residential careagencies:

(A) Basic Core Requirements;(B) Infant/Toddler/Preschool;(C) Residential Treatment (DFS Levels II

and III); and

(D) Intensive Residential Care (DFS LevelIV).

(5) Reporting Period and Filing Require-ments.

(A) The cost report must reflect actualaudited costs incurred in the provision of res-idential child care and related services by anagency for the most recent fiscal year. Costreports must be submitted in accordance withthe applicable instructions and in the costreport format prescribed in Appendix A,included herein. Failure to provide costreports may result in the residential care facil-ities exclusion from contracts with the Chil-dren�s Division.

(B) An annual cost report for fiscal yearsending after December 31, 2003 must be sub-mitted within ninety (90) days of the close ofthe fiscal year. The division may grant anextension for submission of the annual costreport and/or audited financial statement.Cost reports which have not been submittedfor fiscal years ending in calendar year 2004must be submitted by August 15, 2005 on thecurrent report format contained in AppendixA. A wavier from filing a fiscal year 2004cost report will be provided for providers thatwill submit a fiscal year 2005 cost report byAugust 15, 2005.

(C) Audited financial statements must besubmitted with cost reports. An auditor�sopinion does not have to be provided on thecost report. A preliminary fiscal year 2005cost report may be submitted by August 15,2005 without an audited financial statement.A final report and audited financial statementmust be submitted in accordance with sub-section (5)(B).

(D) Providers must also participate in thestatewide time study of direct care staffdescribed in section (1).

(6) Record Retention. Records used in sup-port of costs reported on the cost report mustbe retained for a minimum of three (3) yearsfrom the end of the rate year for which thereport is applicable. Records include, but arenot limited to, financial, programmatic, sta-tistical, recipient records, and supportingdocumentation. If any litigation, administra-tive review, claim, negotiation, audit, orother action involving the records has beenstarted before the expiration of the three (3)-year period, the records shall be retaineduntil completion of the action and resolutionof all issues which arise from it, or until theend of the regular three (3)-year period,whichever is later. As part of the residentialfoster care maintenance rate calculation pro-cess, the state and/or its contracted represen-tative may conduct reviews of the financial





and programmatic information used as thebasis for completion of an agency�s costreport. After completion of any such review,a written report will be completed addressingwhether reported costs are adequately sup-ported, allocated appropriately, and reason-able in nature. Documentation created whilecompleting the cost report should be main-tained recording the compilation of costsincluded in the report, and any methodolo-gies or calculations used in the allocation ofcosts.



Appendix A

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