Unless the context clearly requires otherwise, the following terms and definitions are used consistently throughout the chapter:

"Accrual method of accounting" is a method of accounting where:

(1) Revenues are reported when they are earned, regardless of when they are collected; and

(2) Expenses are reported when they are incurred, regardless of when they are paid.

"Active treatment," as used in this chapter, is defined in 42 C.F.R. 483.440(a) and includes implementation of an individual program plan for each resident as outlined in 42 C.F.R. 483.440 (c) through (f).

"Administration and management" means activities used to maintain, control, and evaluate an organization's use of resources while pursuing its goals, objectives and policies.

"Admission" means entering a state-certified facility and being authorized to receive services from it.

"Allowable costs" are documented costs that:

(1) Are necessary, ordinary, and related to providing ICF/ID services to ICF/ID residents; and

(2) Not expressly declared "nonallowable" by applicable statutes or regulations.

"Appraisal" is a process performed by a professional person either designated by the American Institute of Real Estate Appraisers as a member, appraisal institute (MAI), or by the Society of Real Estate Appraisers as a senior real estate analyst (SREA) or a senior real property appraiser (SRPA). The appraisal process is used to establish the fair market value of an asset or to reconstruct the historical cost of an asset that was acquired in a past period. The appraisal process includes recording and analyzing property facts, rights, investments and values based on a personal inspection and a property inventory.

"Arm's-length transaction" is a transaction resulting from good faith bargaining between a buyer and seller who hold adverse positions in the market place. Arm's-length transactions are presumed to be objective transactions. A sale or exchange of ICF/ID or nursing home facilities among two or more parties where all parties continue to own one or more of the facilities involved in the transaction is not considered an arm's-length transactions. The sale of an ICF/ID facility that is subsequently leased back to the seller within five years of the date of sale is not considered an arm's-length transaction for purposes of chapter 388-835 WAC.

"Assets" are economic resources of the provider, recognized, and measured in conformity with generally accepted accounting principles. Assets also include deferred charges that are recognized and measured according to generally accepted accounting principles. (The value of assets acquired in a change of ownership transaction entered into after September 30, 1984, cannot exceed the acquisition cost of the owner of record as of July 18, 1984.)

"Bad debts" or "uncollectable accounts" are amounts considered uncollectable from accounts and notes receivable. Generally accepted accounting principles must be followed when accounting for bad debts.

"Beds," unless otherwise specified, means the number of set-up beds in an ICF/ID facility. The number of set-up beds cannot exceed the number of licensed beds for the facility.

"Beneficial owner": For a definition, see WAC 388-835-0015.

"Assisted living facility" means any home or other institution licensed according to the requirements of chapter 18.20 RCW.

"Capitalization" means recording expenditures as assets.

"Capitalized lease" is a lease that is recorded, according to generally accepted accounting principles, as an asset with an associated liability.

"Cash method of accounting" is a method of accounting where revenues are recorded only when cash is received and expenses are not recorded until cash is paid.

"Change of ownership," see WAC 388-835-0020.

"Charity allowances" are reductions in a provider's charges because of the indigence or medical indigence of a resident.

"Consent" means the process of obtaining a person's permission before initiating procedures or actions against that person.

"Contract" means a contract between the department and a provider for the delivery of ICF/ID services to eligible medicaid recipients.

"Courtesy allowances" are reductions in charges to physicians, clergy, and others for services received from a provider. Employee fringe benefits are not considered courtesy allowances.

"Custody" means the immediate physical confinement, sheltering and supervision of a person in order to provide them with care and protect their welfare.

"DDA" means the developmental disabilities administration of the department.

"Department" means the department of social and health services (DSHS) and its employees.

"Depreciation" is the systematic distribution of the cost (or depreciable base) of a tangible asset over its estimated useful life.

"Discharge" means the process that takes place when:

(1) A resident leaves a residential facility; and

(2) The facility relinquishes any responsibility it acquired when the resident was admitted.

"Donated asset" is an asset given to a provider without any payment in cash, property, or services. An asset is not considered donated if the provider makes a nominal payment when acquiring it. An asset purchased using donated funds is not a donated asset.

"Entity" means an individual, partnership, corporation, public institution established by law, or any other association of individuals, capable of entering into enforceable contracts.

"Equity capital" is the total tangible and other assets that are necessary, ordinary, and related to resident care listed on a provider's most recent cost report minus the total related long-term debt from the same cost report plus working capital as defined in this section.

"Exemption" means a department approved written request asking for an exception to a rule in this chapter.

"Facility" means a residential setting certified, according to federal regulations, as an ICF/ID by the department. A state facility is a state-owned and operated residential living center. A private facility is a residential setting licensed as a nursing home under chapter 18.51 RCW or a boarding home licensed under chapter 18.20 RCW.

"Fair market value" is the purchase price of an asset resulting from an arm's-length transaction between a well-informed buyer and seller, neither being under any compulsion to buy or sell.

"Financial statements" are statements prepared and presented according to generally accepted accounting principles and practice and the requirements of this chapter. Financial statements and their related notes include, but are not limited to, balance sheet, statement of operations, and statement of change in financial position.

"Fiscal year" is the operating or business year of a provider. Providers report on the basis of a twelve-month fiscal year, but this chapter allows reports covering abbreviated fiscal periods.

"Funded capacity," for a state facility, is the number of beds on file with the office of financial management.

"Generally accepted accounting principles" are the accounting principles currently approved by the financial accounting standard board (FASB).

"Generally accepted auditing standards" are the auditing standards currently approved by the American Institute of Certified Public Accountants (AICPA).

"Goodwill" is the excess of the purchase price of a business over the fair market value of all identifiable, tangible, and intangible assets acquired.

"Goodwill" also means the excess of the price paid for an asset over fair market value.

"Habilitative services" means those services required by an individual habilitation plan.

"Harmful" is when an individual is at immediate risk of serious bodily harm.

"Historical cost" is the actual cost incurred in acquiring and preparing an asset for use, including feasibility studies, architects' fees, and engineering studies.

"Imprest fund" is a fund:

(1) Regularly replenished for the amounts expended from it; and

(2) The cash in the fund and the receipts for expenditures should always equal a predetermined amount.

(3) An example of an imprest fund is a petty cash fund.

"ICF/ID" means a facility certified by Title XIX as an intermediate care facility for providing services to persons with mental retardation or related conditions.

"Interest" is the cost incurred for the use of borrowed funds, generally paid at fixed intervals by the borrower.

"Joint facility costs" are any expenses incurred that benefit more than one facility or a facility and any other entity.

"Lease agreement" is a contract for a specified period of time between two parties regarding the possession and use of real or personal property and/or assets in exchange for specified periodic payments.

"Medicaid program" means either the state medical assistance program provided under RCW 74.09.500 or authorized state medical services.

"Medical assistance recipient" is an individual that the department declares eligible for medical assistance services provided in chapter 74.09 RCW.

"Modified accrual method of accounting" is a method of accounting that records revenues only when cash is received and records expenses when they are incurred, regardless of when they are paid.

"Net book value" is the historical cost of an asset less its accumulated depreciation.

"Nonallowable costs" are costs that are not documented, necessary, ordinary and related to providing services to residents.

"Nonrestricted funds" are donated funds not restricted to a specific use by the donor. General operating funds are an example of nonrestricted funds.

"Nursing facility" means a home, place, or institution, licensed or certified according to chapter 18.51 RCW.

"Operating lease" is a lease, according to generally accepted accounting principles, that requires rental or lease payments to be charged to current expenses when they are incurred.

"Ordinary costs" are costs that, by their nature and magnitude, a prudent and cost conscious management would pay.

"Owner" means a sole proprietor, general or limited partner, or beneficial interest holder of at least five percent of a corporation's outstanding stock.

"Ownership interest" means all beneficial interests owned by a person (calculated in the aggregate) regardless of the form such beneficial ownership takes. Also, see WAC 388-835-0015.

"Per diem costs" or "per resident day costs" are total allowable costs for a fiscal period divided by total resident days for that same period.

"Prospective daily payment rate" is the daily amount the department assigns to each provider for providing services to ICF/ID residents. The rate is used to compute the department's maximum participation in the provider's cost.

"Provider" means an entity contracting with the department to deliver ICF/ID services to eligible medicaid recipients.

"Qualified intellectual disability professional (QIDP)" means QIDP as defined under 42 C.F.R. 483.430(a).

"Qualified therapist," see WAC 388-835-0030.

"Regression analysis" is a statistical technique used to analyze the relationship between a dependent or criterion variable and a set of independent or predictor variables.

"Regional services" are the services of a local office of the developmental disabilities administration.

"Related organization" is an entity that either controls another entity or is controlled by another entity or provider. Control results from common ownership or the ability to exercise significant influence on the other entity's activities. Control occurs when an entity or provider has:

(1) At least a five percent ownership interest in the other entity; or

(2) The ability to influence the activities of the other.

"Relative" means spouse; natural parent, child, or sibling; adopted child or adoptive parent; stepparent, stepchild, stepbrother, stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law; grandparent or grandchild; uncle, aunt, nephew, niece, or cousin.

"Resident" or "person" means a person the administration determines is, under RCW 71A.16.040 eligible for administration-funded services.

"Resident day" means a calendar day of resident care. When computing calendar days of resident care, the day of admission is always counted. The day of discharge is counted only when discharge and admission occur on the same day. For the purpose of this definition, a person is considered admitted when they are assigned a bed and a resident record is opened for them.

"Resident care and training staff" are staff whose primary responsibility is the care and development of the residents, including:

(1) Resident activity program;

(2) Domiciliary services; and

(3) Habilitative services under the supervision of a QIDP.

"Restricted fund" is a fund where the donor restricts the use of the fund principal or income to a specific purpose. Restricted funds generally fall into one of three categories:

(1) Funds restricted to specific operating purposes; or

(2) Funds restricted to additions of property, plant, and equipment; or

(3) Endowment funds.

"RHC" - Residential habilitation center. A facility owned and operated by the state and is certified as an ICF/ID or a nursing facility.

"Secretary" means the secretary of DSHS.

"Start-up costs" are the one-time costs incurred from the time preparations begin on a newly constructed or purchased building until the first resident is admitted. Such "preopening" costs include, but are not limited to, administrative and nursing salaries, utility costs, taxes, insurance, repairs and maintenance, and training costs. Start-up costs do not include expenditures for capital assets.

"Superintendent" means the superintendent of a residential habilitation center (RHC) or the superintendent's designee.

"Title XIX" means the 1965 amendments to the Social Security Act, P.L. 89-07, as amended.

"Uniform chart of accounts" means a list of department established account titles and related code numbers that providers must use when reporting costs.

"Vendor number" or "provider number" is a number assigned by the department to each provider who delivers ICF/ID services to ICF/ID medicaid recipients.

"Working capital" is the difference between the total current assets that are necessary, ordinary, and related to resident care, as reported in a provider's most recent cost report, and the total current liabilities necessary, ordinary, and related to resident care reported in the same cost report.