(a) Definitions.  The following words and terms, when used in this Section, have the following meaning, unless the context clearly indicates otherwise:

• (1) "Employee Benefits" means the benefits an employer provides to an employee which include:
• (A) FICA taxes,
• (B) Unemployment Compensation Tax,
• (C) Worker's Compensation Insurance,
• (D) Group health and dental insurance,
• (E) Retirement and pensions, and
• (F) Other employee benefits (any other benefit that is provided by a majority of the industry).
• (2) "Enhanced" means the upward adjusted rate as required by Title 63, Section 5022 of Oklahoma Statutes.
• (3) "Enhancement" means the upward adjusted rate as required by Title 63, Section 5022 of Oklahoma Statute.
• (4) "Regular employee" means an employee that is paid an hourly/salaried amount for services rendered, however, the facility is not excluded from paying employee benefits.
• (5) "Specified staff" means the employee positions listed in the Oklahoma Statutes under Section 5022, Title 63 that meet the requirements listed in 42 CFR Section 483.75(e)(1)-(8).

(b) Enhancement.  Effective May 1, 1997, the OHCA provides a wage and salary enhancement to nursing facilities serving adults and Intermediate Care Facilities for the Mentally Retarded as required by Title 63, Section 5022 of Oklahoma Statutes.  The purpose of the wage and salary enhancement is to provide an adjustment to the facility payment rate in order for facilities to reduce turnover and be able to attract and retain qualified personnel.  The maximum wage enhancement rates that may be reimbursed to the facilities per diem include:

• (1) Three dollars and fifteen cents ($3.15) per patient day for NFs,
• (2) Four dollars and twenty cents ($4.20) per patient day for standard private ICFs/MR, and
• (3) Five dollars and fifteen cents ($5.15) per patient day for specialized private ICFs/MR.

(c) Reporting requirements. Each NF and ICF/MR is required to submit a Nursing and Intermediate Care Facilities Quarterly Wage Enhancement Report (QER) which captures and calculates specified facility expenses.  The report must be completed quarterly and returned to OHCA no later than 45 days following the end of each quarter.  QERs must be filed for the State Fiscal Year (SFY) which runs from July 1 to June 30.  The Oklahoma Health Care Authority reserves the right to recoup all dollars that cannot be accounted for in the absence of a report.  The QER is designed to capture and calculate specified facility expenses for quarterly auditing by the OHCA.  The report is used to determine whether wage enhancement payments are being distributed among salaries/wages, employee benefits, or both for the employee positions listed in (1) through (8) of this subsection.  Furthermore, the OHCA reserves the right to recoup all dollars not spent on salaries, wages, employee benefits, or both for the employee positions.  The specified employee positions included on the QER are:

• (1) Licensed Practical Nurse (LPN),
• (2) Nurse Aide (NA),
• (3) Certified Medication Aide (CMA),
• (4) Social Service Director (SSD),
• (5) Other Social Service Staff (OSSS),
• (6) Activities Director (AD),
• (7) Other Activities Staff (OAS), and
• (8) Therapy Aide Assistant (TAA).

(d) Timely filing and extension of time.

• (1) Quarterly reports. Quarterly reports are required to be filed within 45 days following the end of each quarter.  This requirement is rigidly enforced unless approved extensions of time for the filing of the quarterly report is granted by OHCA.  Filing extensions not to exceed 15 calendar days may be granted for extraordinary cause only.  A failure to present any of the items listed in (A)-(D) of this paragraph will result in a denial of the request for an extension.  The extension request will be attached to the filing of the report after the request has been granted.  For an extension to be granted, the following must occur.
• (A) An extension request must be received at the Oklahoma Health Care Authority on or before the 30th day after the end of the quarter.
• (B) The extension must be addressed on a form supplied by the Health Care Authority.
• (C) The facility must demonstrate there is an extraordinary reason for the need to have an extension.  An extraordinary reason is defined in the plain meaning of the word.  Therefore, it does not include reasons such as the employee who normally makes these requests was absent, someone at the facility made a mistake and forgot to send the form, the facility failed to get documents to some third party to evaluate the expenditures.  An unusual and unforeseen event must be the reason for the extension request.
• (D) The facility must not have any extension request granted for a period of two years prior to the current request.
• (2) Failure to file a quarterly report.  If the facility fails to file the quarterly report within the required (or extended) time, the facility is treated as out of compliance and payments made for the quarter in which no report was filed will be subject to a 100% recoupment.  The overpayment is recouped in future payments to the facility immediately following the filing deadline for the reporting period.  The full overpayment is recovered within a three month period.  The Oklahoma Health Care Authority reserves the right to discontinue wage enhancement payments until an acceptable QER (quarterly enhancement report) is received.  In addition to the recoupment of payments, the matter of noncompliance is referred to the Legal Division of the OHCA to be considered in connection with the renewal of the facility's contract.
• (3) Ownership changes and fractional quarter report.  Where the ownership or operation of a facility changes hands during the quarter, or where a new operation is commenced, a fractional quarter report is required, covering each period of time the facility was in operation during the quarter.
• (A) Fractional quarter reports are linked to the legal requirement that all facility reports be properly filed in order that the overall cost of operation of the facility may be determined.
• (B) Upon notice of any change in ownership or management, the OHCA withholds payments from the facility until a fractional quarter report is received and evaluation of payment for the wage enhancement is conducted.  In this case the QER is due within 15 days of the ownership or management change.
• (4) Pay periods and employee benefits reflected in the QER.  Salaries and wages are determined by accruing the payroll to reflect the number of days reported for the month.  Unpaid salaries and wages are accrued through the quarter.  Any salaries and wages accrued in the previous quarter and paid in the current quarter are excluded.  Employee benefits are determined by accruing any benefits paid to coincide with the reporting month.  Unpaid employee benefits are accrued through the quarter.  Any employee benefits accrued in the previous quarter and paid in the current quarter are excluded.  To be included as an allowable wage enhancement expenditure, accrued salaries, wages and benefits must be paid within forty-five (45) days from the end of the reporting quarter.
• (5) Report accuracy.  Errors and/or omissions discovered by the provider after the initial filing/approved extension are not considered grounds for re-opening/revisions of previously filed reports.  Furthermore, errors and/or omission discovered by the provider after the initial filing/approved extension can not be carried forward and claimed for future quarterly reporting periods.
• (6) False statements or misrepresentations.  Penalties for false statements or misrepresentations made by or on behalf of the provider are provided at 42 U.S.C. Section 1320a-7b which states, in part, "(a) Whoever...(2) at any time knowingly and willfully makes or cause to be made any false statement of a material fact for use in determining rights to such benefit or payment... shall (i) in the case of such a statement, representation, concealment, failure, or conversion by any person in connection with furnishing (by that person) of items or services for which payment is or may be made under this title (42 U.S.C. '1320 et. seq.), be guilty of a felony and upon conviction thereof fined not more than $25,000 or imprisoned for not more than five years or both, or (ii) in the case of such a statement, representation, concealment, failure, or conversion by any other person, be guilty of a misdemeanor and upon conviction thereof fined not more than $10,000 or imprisoned for not more than one year, or both."
• (7) Audits, desk and site reviews.
• (A) Upon receipt of each quarterly report a desk review is performed.  During this process, the report is examined to insure it is complete.  If any required information is deemed to have been omitted, the report may be returned for completion.  Delays that are due to incomplete reports are counted toward the 45 day deadline outlined in (c) of this Section.  At that time the mathematical accuracy of all totals and extensions is verified.  Census information may be independently verified through other sources.  After completion of the desk review, each report is entered into the OHCA's computerized data base.  This facilitates the overall evaluation of the industry's costs.
• (B) Announced and/or unannounced site reviews are conducted at a time designated by the OHCA.  The purpose of site reviews is to verify the information reported on the QER(s) submitted by the facility to the OHCA.  Errors and/or omissions discovered by the OHCA upon the completion of a site review is immediately reflected in future payment(s) to the facility.  The OHCA makes deficiencies known to the facility within 30 calendar days.  A deficiency notice in no way prevents the OHCA from additionally finding any overpayment and adjusting future payments to reflect these findings.
• (8) Appeals process.
• (A) If the desk or site review indicates that a facility has been improperly paid, the OHCA will notify the facility that the OHCA will rectify the improper payment in future payments to the facility.  Improper payments consist of an overpayment to a facility.  The facility may appeal the determination to recoup an alleged overpayment and/or the size of the alleged overpayment, within 20 days of receipt of notice of the improper payment from the OHCA.  Such appeals will be Level I proceedings heard pursuant to OAC 317:2-1-2(c)(2). The issues on appeals will be limited to whether an improper payment occurred and the size of the alleged improper payment.  The methodology for determining base period computations will not be an issue considered by the administrative law judge.
• (B) Certain exceptional circumstances, such as material expenses due to the use of contract employees, overtime expenses paid to direct care staff, or changes within classes of staff may have an effect on the wage enhancement payment and expense results.  Facilities may demonstrate and present documentation of the affects of such circumstances before the administrative law judge.

(e) Methodology for the distribution of payments/adjustments.  The OHCA initiates a two-part process for the distribution and/or recoupment of the wage enhancement.

• (1) Distribution of wage enhancement revenue.  All wage enhancement rates are added to the current facility per diem rate.  Facilities receive the maximum wage enhancement rate applicable to each facility type.
• (2) Payment/recoupment of adjustment process.  Initially, all overpayments resulting from the Fourth Quarter of SFY-1997 and the First Quarter of SFY-1998 audits will be deducted from the first month's payment of the Third Quarter of SFY-1998 (January-1998).  The Fourth and First Quarter of SFY-1997 and SFY 1998 audit results will be averaged to determine the adjustment.  All overpayments as a result of the Second Quarter of SFY-1998 audit will be deducted from the first month's payment of the Fourth Quarter of SFY-1998 (April-1998).  Audit results will determine whether or not a facility is utilizing wage enhancement payments that are being added to the facility's per diem rate.  When audit results for a given quarter after the Second Quarter of SFY-1998 (October, November, and December 1997) reflect an adjustment, recoupments will be deducted from the facility.  Any adjustments calculated will not be recouped during the quarter in which the calculation is made, rather, they will be recouped during the following quarter.  The recoupments, as a result of an adjustment, will not exceed the wage enhancement revenue received for the quarter in which the audit is conducted.  Recoupments will be included in the facility's monthly payment and will not exceed the three month period of the quarter in which it is being recouped.

(f) Methodology for determining base year cost.  The information used to calculate Base Year Cost is taken from actual SFY-1995 cost reports submitted, to the OHCA, by the NFs and ICFs/MR that will be receiving a wage enhancement.  A Statewide Average Base Cost is calculated for facilities that did not submit a cost report for SFY-1995.  Newly constructed facilities that submit a partial year report are assigned the lower of the Statewide Average Base Cost or actual cost.  The process for calculating the Base Year Cost, the Statewide Average Base Cost, and the process for newly constructed facilities is determined as follows.

• (1) Methodology used for determining base year cost.  The methodology for determining the Base Year Cost is determined by the steps listed in (A) through (E) of this paragraph.
• (A) Regular employee salaries are determined by adding the salaries of LPNs, NAs, CMAs, SSDs, OSSS, ADs, OAS, and TAAs.
• (B) Percentage of benefits allowed are determined by dividing total facility benefits by total facility salaries and wages.
• (C) Total expenditures are determined by multiplying the sum of regular employee salaries by a factor of one plus the percentage of benefits allowed in (B) of this subparagraph.
• (D) Base Year PPD Costs are determined by dividing total expenditures, in (3) of this subparagraph by total facility patient days.  This information is used to determine statewide average base year cost.
• (E) Inflated Base Year Costs are determined by multiplying Base Year Cost, in (C) of this subparagraph by the appropriate inflation factors.  Base Year Expenditures were adjusted from the midpoint of the base year to the midpoint of the rate year using the moving rate of change forecast in the Data Resources, Inc., (DRI) "HCFA Nursing Home without Capital Market Basket" Index as published for the fourth quarter of calendar year 1995.  The OHCA uses this same index (DRI) for subsequent years as it becomes available and is appropriate.
• (2) Methodology used for determining Statewide Average Base Cost.  A Statewide Average Base Cost is calculated for all facilities that did not submit a cost report, to the OHCA, for SFY-1995.  The steps listed in (A) through (C) of this paragraph are applied to determine the Base Cost in the absence of actual SFY-1995 cost report information.
• (A) Statewide Average Base Year PPD Costs are determined by adding Base Year PPD Cost, calculated in (1)(D) of this subsection, for all facilities that submitted SFY-1995 cost reports, the sum of this calculation is then divided by the number of facilities that submitted cost reports.
• (B) Inflated Base Year PPD Costs are determined by multiplying Statewide Base Year PPD Cost by the appropriate inflation factors.  Statewide Base Year PPD Cost was adjusted from the midpoint of the base year to the midpoint of the rate year using the moving rate of change forecast in the Data Resources, Inc., (DRI) "HCFA Nursing Home without Capital Market Basket" Index as published for the fourth quarter of calendar year 1995.  The OHCA uses this same index (DRI) for subsequent years as it becomes available and is appropriate.
• (C) The facilities base cost is determined by multiplying the facilities' current quarter census by the inflated statewide average PPD costs calculated in (B) of this unit.

(g) Methodology for determining wage enhancement revenue and expenditure results. The methodology for determining the facilities' wage enhancement revenue and expenditures results are calculated in (1) through (3) of this paragraph.

• (1) Wage enhancement revenue.  Total wage enhancement revenue received by the facility for the current quarter is calculated by multiplying the facilities total paid Medicaid days for the current quarter by the facilities wage enhancement rate.  The Oklahoma Health Care Authority adjusts the computations and results when actual paid Medicaid data for the reporting quarter becomes available.
• (2) Wage enhancement expenditures.  Total wage enhancement expenditures are determined in a four step process as described in (A) through (D) of this paragraph.
• (A) Total current quarter allowable expenses are calculated.  Salaries and wages of specified staff are totaled and added to the applicable percent of customary employee benefits and 100% of the new employee benefits.
• (B) Base period expenditures are calculated.  An occupancy adjustment factor is applied to the quarterly average base period cost to account for changes in census.
• (C) Current quarter wage enhancement expenditures are calculated by subtracting allowable base period expenditures (see (B) of this subparagraph) from total current quarter allowable expenses (see (A) of this subparagraph).
• (D) Total wage enhancement expenditures are calculated by adding current quarter wage enhancement expenditures (see (C) of this subparagraph) to prior period wage enhancement expenditures carried forward.
• (3) Wage enhancement revenue and expenditure results.  Wage enhancement revenue and expenditure results are determined by comparing total wage enhancement revenue (see (1) of this paragraph) to total wage enhancement expenditures (see (2)(D) of this paragraph).  Revenue exceeding expenses is subject to recoupment.  Expenses exceeding revenue are carried forward to the next reporting period as a prior period wage enhancement expenditure carry over.