The Oregon Administrative Rules contain OARs filed through November 15, 2015

 

QUESTIONS ABOUT THE CONTENT OR MEANING OF THIS AGENCY'S RULES?
CLICK HERE TO ACCESS RULES COORDINATOR CONTACT INFORMATION

 

OREGON HEALTH AUTHORITY,

ADDICTIONS AND MENTAL HEALTH DIVISION: MENTAL HEALTH SERVICES

 

DIVISION 13
ACCOUNTING AND BUSINESS PRACTICES

 

Audit Guidelines

309-013-0020 [Renumbered to 309-013-0120, 309-013-0130, 309-013-0140, 309-013-0150, 309-013-0160, 309-013-0170, 309-013-0180, 309-013-0190, 309-013-0200, 309-013-0210, 309-013-0220]

Trust Accounts and Patient Funds

309-013-0030
Management of Trust Accounts
and Patient Funds in State Institutions
(1) Purpose. This rule establishes
standards and procedures to be observed by Superintendents and their employees in
the management of trust accounts and patient funds in state institutions, as well
as make applications on behalf of patients for Social Security or Veterans Administration
benefits or be appointed representative payee for a patient’s Social Security
or Veterans Administration benefit payments.
(2) Statutory Authority and
Procedure. This rule is authorized by ORS 430.040 and carries out the provisions
of ORS 179.510 to 179.530.
(3) Definitions. As used in
this rule:
(a) “Agency trust account”
means an account established in the name of a patient by the Superintendent of a
state institution under ORS 179.510 to retain funds deposited with the Superintendent
by or for the named patient;
(b) “Division” means
the Addictions and Mental Health Division of the Oregon Health Authority;
(c) “Patient’s Designee”
means a person designated by the patient in a state institution in writing to receive
duplicate copies of documents sent to the patient relating to the patient’s
funds;
(d) “Representative or
Indirect Payee Trust Account” means a trust account established in the name
of a patient by the Superintendent of a state institution or other staff representative
or indirect payee to retain the patient’s Social Security or Veterans benefits
paid to the representative payee;
(e) “State Institution”
means Dammasch State Hospital in Wilsonville, Oregon State Hospital in Salem, Fairview
Training Center in Salem, and Eastern Oregon Hospital and Training Center in Pendleton;
(f) “Superintendent”
means the executive head of the state institution as listed in subsection (3)(e)
of this rule;
(g) “Treatment Team”
means the group whose membership consists of professional and direct care staff.
(4) Admission to State Institution.
Upon admission or readmission to a state institution, the patient, a guardian or
conservator, and the patient’s designee, if any, shall be provided with written
notices containing the following information:
(a) The patient’s obligation
under state law to reimburse the state for the actual cost of the patient’s
care and maintenance, according to the patient’s ability to pay, whichever
is less;
(b) The patient’s option
to place money in either an agency trust account or other suitable depository outside
the state institution. The agency trust account withdrawal and deposit procedures
and the Superintendent’s powers with respect to such accounts shall be explained
therein;
(c) In the event the patient
requests the state institution to forward funds outside the state institution to
other than a bank or secure financial institution and, in the clinical judgment
of the Superintendent, the patient is not able to understand the implications of
the patient’s request, the Superintendent shall provide notice that the patient’s
funds have been placed in an agency trust account; and a proceeding to have a conservator
appointed will be commenced within ten days from the date of the notice;
(d) Copies of all relevant state
laws and rules regarding handling of patient funds and institutional reimbursement
shall be made available to the patient, a guardian or conservator, and the patient’s
designee on request;
(e) The patient, a guardian,
or a conservator may designate another responsible person to be representative or
indirect payee for benefits and/or to receive duplicate copies of all further documents
detailing procedures, agency trust account transactions, applications by the Superintendent
for patient benefits, or documents otherwise related to the institutional reimbursement
process as it affects the patient. A form for designating one other person to receive
such documents shall be provided upon request.
(5) Agency Trust Account Transactions.
A monthly statement indicating the deposits and withdrawals during the prior month
of the agency trust account shall be delivered to the patient, a guardian or conservator,
and the patient’s designee, if any.
(6) Representative or Indirect
Payee Trust Account Transactions. A monthly statement indicating the deposits and
withdrawals during the prior month of the representative or indirect payee trust
account shall be delivered to the patient, a guardian or conservator, and the patient’s
designee, if any.
(7) Determination of Patient’s
Capability to Manage Funds:
(a)(A) If an investigation indicates
the patient is incapable of managing his or her funds, the relevant Social Security
Administration or Veterans Administration form and recommendation shall be forwarded
to the Superintendent’s office. Upon receiving the form, the Superintendent
or the Superintendent’s designee shall cause notice of the proposed application
to be sent as indicated in section (8) of this rule;
(B) Inquiries may be made of
attending doctors and other reliable persons who deal with the patient frequently.
(b) When, after investigation,
in the opinion of the Superintendent, a patient is or has become incompetent and/or
incapable of making an informed consent or incapable of managing funds, and there
is no person legally responsible for the patient (such as a guardian or conservator),
the Superintendent may:
(A) Apply to have a representative
or indirect payee appointed under section (8) of this rule; and/or
(B) Commence proceedings to
establish a guardianship or conservatorship.
(8) Application for Benefits
or Notification of Incapacity to Manage Funds:
(a) When, after investigation
pursuant to section (7) of this rule, the Superintendent determines that such a
step would be in the best interests of the patient, the Superintendent or the Superintendent’s
designee may apply for Social Security or Veterans benefits on behalf of a patient.
Before each application, the patient, a guardian or conservator, and the patient’s
designee, if any, shall be mailed notice of the proposed application. Notice shall
include the following:
(A) A statement of the intention
to apply for such benefits;
(B) A copy of the proposed application,
indicating the reason for the application and the evidence relied upon in determining
that an application is warranted;
(C) If the applicant seeks to
be selected as representative or indirect payee, a statement that this will mean
that the representative of the federal agency concerned will determine whether it
is in the best interests of the patient that a payee be appointed;
(D) A statement that the patient,
a guardian or conservator, or the patient’s designee, if any, may submit to
the Superintendent a written statement including written evidence why the application should not be made. This statement and evidence must be submitted
not more than 12 days from the date of the notice; and
(E) A statement that any such written statement
submitted on behalf of the patient and received within the time specified shall
be considered by the Superintendent or other official in the decision to submit
the proposed application.
(b) After such notice has been
given, and either:
(A) Twelve days have elapsed
without response from the patient, a guardian or conservator, or the patient’s
designee, if any; or
(B) The statement or written
evidence submitted pursuant to paragraph (8)(a)(D) of this rule has been received,
the Superintendent or the Superintendent’s designee shall consider all the
evidence submitted and decide whether an application would be in the patient’s
best interest. If it is decided that the application should be made, the patient,
a guardian or conservator, and the patient’s designee, if any, shall receive
copies of the application and any supporting materials thereof.
(c) The response of the Social
Security Administration or Veterans Administration to the application shall likewise
be forwarded, along with information concerning the rights of patients and other
interested persons regarding Social Security or Veterans Administration benefits,
to the patient, a guardian or conservator, and the patient’s designee, if
any.
(9) Deposit of Social Security
Administration and Veterans Administration Checks:
(a) Checks for which the patient
is the payee must be deposited directly into the patient’s agency trust account
if the patient has elected to have such an account. In the event the patient has
elected a suitable depository outside the state institution, arrangements for forwarding
the patient’s funds to that depository are the responsibility of the patient,
a guardian or conservator, or the patient’s designee, if any. Notification
of receipt of the check and the deposit thereof in the agency trust account shall
be made in the next monthly statement to the patient, a guardian or conservator,
and the patient’s designee, if any. When such Social Security or Veterans
funds are deposited in the agency trust account, the funds shall be clearly designated
as Social Security Administration or Veterans Administration benefit money;
(b) Social Security or Veterans
funds in the agency trust account may be taken to pay the patient’s bill for
care and maintenance at the state institution only when the patient (if not judicially
or factually incompetent) or the patient’s guardian or conservator has executed
a written consent for that particular transaction. “Blanket” or continuing
consents will not be honored insofar as they affect Social Security or Veterans
benefits;
(c) Checks payable to the Superintendent
or the Superintendent’s designee as indirect or representative payee may be
deposited directly into the patient’s representative or indirect payee trust
account. Notification of receipt of the check and the deposit thereof in the representative
or indirect payee trust account shall be made in the next quarterly statement to
the patient, a guardian or conservator, and the patient’s designee, if any.
(10) Discharge from State Institution.
At or before discharge from a state institution, each patient, a guardian or conservator,
and the patient’s designee, if any, shall be provided with a statement containing
the following information:
(a) The patient’s continuing
obligation under state law to reimburse the state for the actual cost of the patient’s
care and maintenance, according to the patient’s ability to pay;
(b) The patient may contest
payments made to the State of Oregon for charges for institutional care and maintenance
during the period of recent hospitalization;
(c) Copies of the relevant state
laws and administrative rules regarding the patient’s post-discharge right
to contest payments made to the State of Oregon for charges for institutional care
and maintenance will be made available to the patient or other interested party
on request;
(d) Copies of monthly statements
of transactions concerning the activity in the patient’s agency trust account
and quarterly statement of representative or indirect payee trust account may be
made available to the patient, legal representative, or other designated person
not otherwise prohibited from seeing them upon request.
(11) Incapacity to Perform:
(a) The patient’s treatment
team at the state institution may certify in writing that a patient’s mental
illness or mental retardation has rendered the patient incapable of even minimal
understanding of any of the notices provided for in this rule. Notwithstanding any
other provision of this rule, should such certification occur, the Division or state
institution is not required to provide the patient with the various forms of notice
otherwise required by this rule;
(b) Certification that a patient’s
mental illness or mental retardation renders the patient incapable of understanding
the notice provided by this rule shall be reviewed and redetermined annually by
the Superintendent as part of the patient’s annual plan of care.
Stat. Auth.: ORS 179.040 &
413.042

Stats. Implemented: ORS 179.510
– 179.530

Hist.: MHD 42(Temp), f. &
ef. 9-9-76; MHD 9-1980(Temp), f. & ef. 4-18-80; MHD 16-1980, f. & ef. 6-24-80
Agency Payroll System for
Patient andResident Workers in State Institutions
309-013-0035
Purpose and Statutory
Authority
(1) Purpose. The Pay for Patient
and Resident Workers Program was established to support the goals or the patient’s
or resident’s treatment/training plan. These rules establish standards and
procedures for administering the agency payroll system for patient and resident
workers in state institutions.
(2) Statutory Authority. These
rules are authorized by ORS 413.042, and carry out the provisions of ORS 179.440,
426.385 and 427.031.
Stat. Auth.: ORS 179.040 &
413.042

Stats. Implemented: ORS 426.385,
427.031 & 179.440

Hist.: MHD 2-1981, f. &
ef. 6-25-81; MHD 2-1985, f. & ef. 2-7-85
309-013-0040
Definitions
As used in these rules:
(1) “Appointment Notice”
means the form used at the institution to enter a patient or resident worker into
the agency payroll system.
(2) “Division” means
the Addictions and Mental Health Division of the Oregon Health Authority.
(3) “Patient Worker”
means a person in a state institution for the mentally or emotionally disturbed
who performs work for pay that is of therapeutic benefit to the patient.
(4) “Resident Worker”
means a person in a state institution for the mentally retarded and other developmentally
disabled who performs work for pay that is of training benefit to the resident.
(5) “State Institution”
means Dammasch State Hospital in Wilsonville, Oregon State Hospital in Salem, Fairview
Training Center in Salem, and Eastern Oregon Psychiatric Center and Eastern Oregon
Training Center in Pendleton.
Stat. Auth.: ORS 179.040 &
413.042

Stats. Implemented: ORS 426.385,
427.031 & 179.440

Hist.: MHD 2-1981, f. &
ef. 6-25-81; MHD 2-1985, f. & ef. 2-7-85
309-013-0045
Wage Standards
(1) State institutions will
use the first step of the state wage scale, which corresponds with the existing
state classification of the job to be performed, to calculate payments for work
performed by patient and resident workers.
(2) Patients and residents whose
productivity is lower than the productivity normally required to perform the job
will be paid a percentage of the first step amount. The percentage will be commensurate
with the level of productivity as calculated by the institution, and consistent
with the Personnel Division Compensation Plan.
(3)
Patients and residents who are paid an amount equal to less than the first step
of the state wage scale for the existing classification will be allowed, upon request,
to review their record with regard to the calculation of their productivity level.
(4) Wages will be paid based either on
the time spent doing the job or on the rate established for completing a specific
task multiplied by the number of tasks completed.
Stat. Auth.: ORS 179.040 &
413.042

Stats. Implemented: ORS 426.385,
427.031 & 179.440

Hist.: MHD 2-1981, f. &
ef. 6-25-81; MHD 2-1985, f. & ef. 2-7-85
309-013-0055
Hiring Procedure
(1) Prior to employment, all
patient and resident workers must be informed verbally, and in writing, of their
rights with respect to their working relationship with the state institution. Those
rights are as follows:
(a) To receive reasonable compensation
for all work performed, other than personal housekeeping chores;
(b) To receive overtime compensation
for work performed in excess of an eight hours per day or 40 hours per week;
(c) To refuse any work except
personal housekeeping chores and, that which is essential for their treatment or
training;
(d) To review their productivity
rating if less than 100 percent.
(2) The institution must complete
an appointment notice for each patient and resident worker.
(3) Each patient worker and
resident worker must complete a Form W-4.
(4) Each patient and resident
worker without a Social Security number must apply for and receive one prior to
employment.
(5) Each patient and resident
worker who receives Social Security benefits (SSI or SSD), or is eligible for Title
XIX, must be informed that an earnings record will be sent to those offices for
possible payment adjustment.
(6) Each patient and resident
worker under 18 years of age must have a work permit prior to employment.
(7) If applicable, the patient
or resident worker must sign, in the presence of a witness, the Notice to Patient/Resident
Worker form, (MHD-ADM-0169), prior to beginning work. No billing for cost of care
based on agency earnings will predate the delivery of this notice.
Stat. Auth.: ORS 179.040 &
413.042

Stats. Implemented: ORS 426.385,
427.031 & 179.440

Hist.: MHD 2-1981, f. &
ef. 6-25-81; MHD 2-1985, f. & ef. 2-7-85
309-013-0060
Payroll Procedure
(1) Each state institution will
use a gross payroll system for processing the agency payroll for patient and resident
workers. Biennial budgets for agency payroll will be based on expected gross payroll
expenses.
(2) The work supervisor will
keep a record of each patient or resident worker’s work times and/or specific
tasks completed.
(3) Each institution shall adopt
written procedures, approved by the Division Administrator, to prepare, distribute,
and account for agency payroll payments.
(4) Payroll records will be
maintained in accordance with the appropriate record retention requirements of the
Secretary of State’s Archives Division.
Stat. Auth.: ORS 179.040 &
413.042

Stats. Implemented: ORS 426.385,
427.031 & 179.440

Hist.: MHD 2-1981, f. &
ef. 6-25-81; MHD 2-1985, f. & ef. 2-7-85
Fraud and Embezzlement
309-013-0075
Purpose and Statutory
Authority
(1) Purpose. These rules prescribe
procedures for handling cases of fraud and embezzlement involving Division employees
working in the central office or state institutions, persons working under personal
service contracts with the Division, and service providers and subcontractors of
service providers contracting with the Division.
(2) Statutory Authority. These
rules are authorized by ORS 179.040 and 413.042, and carry out the provisions of
430.021(2).
Stat. Auth.: ORS 179.040 &
413.042

Stats. Implemented: ORS 430.021

Hist.: MHD 18-1982, f. &
ef. 8-6-82
309-013-0080
Definitions
As used in these rules:
(1) “Central Office”
means all organizational elements of the Addictions and Mental Health Division which
are not a part of a state institution.
(2) “Division” means
the Addictions and Mental Health Division of the Oregon Health Authority.
(3) “Embezzlement”
means any action to willfully take or convert to one’s own use, money or property
of another, which the wrongdoer acquired lawfully through some office or employment
or position of trust.
(4) “Fraud” means
any action by an individual to knowingly, willfully and with deceitful intend take
or use for their own personal gain money or property which does not belong to them.
(5) “Service Provider”
means a public or private community agency or organization that provides a particular
mental health service (such as preschool services for the developmentally disabled,
a detoxification center, or a day treatment program) approved by the Division. An
agency organization may provide more than one service element, and more than one
agency or organization in a county may provide the same service element.
(6) “State Institution”
means Dammasch State Hospital in Wilsonville, Oregon State Hospital in Salem, Fairview
Training Center in Salem, and Eastern Oregon Hospital and Training Center in Pendleton.
Stat. Auth.: ORS 179.040 &
413.042

Stats. Implemented: ORS 430.021

Hist.: MHD 18-1982, f. &
ef. 8-6-82
309-013-0085
Reporting of Suspected
Fraud and Embezzlement
(1) Upon discovery, all cases
of suspected fraud and embezzlement related to the central office shall be referred,
along with all related information, to the Administrator. The Administrator shall
review the case, call upon appropriate sources to investigate, and notify appropriate
authorities.
(2) In case of suspected fraud
or embezzlement involving a state institution, the superintendent of the institution
shall review the case, call upon appropriate sources to investigate, and notify
appropriate authorities. All cases under review shall be reported to the Administrator.
(3) Each service provider contracting
with the Division shall report in writing the details of all cases of suspected
fraud and embezzlement involving its employees and/or the employees of its subcontractors
to the Division’s Administrator not later than one working day after the date
the alleged activity comes to their attention. The report shall describe the incident
and action being taken to resolve the problem.
Stat. Auth.: ORS 179.040 &
413.042

Stats. Implemented: ORS 430.021

Hist.: MHD 18-1982, f. &
ef. 8-6-82
309-013-0090
Investigation of Suspected
Fraud and Embezzlement
(1) In cases of suspected fraud
and embezzlement involving funds and resources of the Division:
(a) The Administrator shall
begin the investigation immediately and may, in the course of investigation, call
upon the services of appropriate law enforcement agencies, the Attorney General,
the Division Audit Unit, and/or other who may be of assistance in developing the
case;
(b) A service provider which
has contracted with the Division is responsible for developing cases of suspected
fraud and embezzlement involving its
employees and/or the employees of its subcontractors, and is responsible for referral
to the proper authorities. However, the Division may assume control of any case
not handled to the Division’s satisfaction.
(2) In cases of suspected fraud and embezzlement
which do not involve funds and resources of the Division:
(a) The aggrieved parties shall
seek their own resolution, and the Division will not become involved in development
of the case or prosecution, except it may intervene in cases involving resources
of clients of service providers;
(b) The Division shall review
the case to determine whether the lack of internal controls which allowed fraud
or embezzlement to occur might also endanger Division resources. If that possibility
exists, the service provider shall be required to adopt and follow procedures which
the Division decides are needed to minimize chances for recurrence of the fraud
or embezzlement. Failure of the service provider to adopt and follow such procedures
shall constitute grounds for refusing to contract with the service provider in the
future, and for terminating the existing contract.
Stat. Auth.: ORS 179.040 &
413.042

Stats. Implemented: ORS 430.021

Hist.: MHD 18-1982, f. &
ef. 8-6-82
309-013-0095
Consequences of Failure
to Adopt Procedures
Failure of a service provider
to adopt and follow procedures which the Division decides are needed to minimize
chances for fraud and embezzlement of Division resources shall constitute grounds
for terminating any contract between the Division and that service provider. If
the service provider is a subcontractor of a service provider contracting with the
Division, then such failure on the part of the subcontractor shall constitute grounds
for stipulation by the Division that no Division managed funds be used for payment
to that subcontractor.
Stat. Auth.: ORS 179.040 &
413.042

Stats. Implemented: ORS 430.021

Hist.: MHD 18-1982, f. &
ef. 8-6-82
309-013-0100
Disclosure Requirement
Disclosure must be made to the
Division before a contract is entered into, or at the time it becomes known, of
the name of any person who has ownership or control interest of five percent or
more, or is an officer, director, agent, or managing employee, and has been convicted
of a criminal offense related to the involvement of such person in any such program,
including theft of patient funds. Failure to make this disclosure shall constitute
grounds for terminating that contract.
Stat. Auth.: ORS 179.040 &
413.042

Stats. Implemented: ORS 430.021

Hist.: MHD 18-1982, f. &
ef. 8-6-82
309-013-0105
Disciplinary Action
Fraud or embezzlement of Division
resources and/or patient or resident funds committed by Division employees shall
constitute grounds for disciplinary action. The type and extent of disciplinary
action will be determined in accordance with the Division’s collective bargaining
agreements and “Personnel Relations Law, Personnel Rules and Personnel Policies.”
Notwithstanding any portion of these rules, existing agreements with unions representing
the employee(s) involved, governing complaint investigation, shall be observed.
Stat. Auth.: ORS 179.040 &
413.042

Stats. Implemented: ORS 430.021

Hist.: MHD 18-1982, f. &
ef. 8-6-82
Audit Guidelines
309-013-0120
Purpose and Statutory
Authority
(1) Purpose. These rules establish
a Division procedure for audits of community mental health programs, mental health
organizations and their subcontractors and vendors and any service provider agreeing
to offer services through direct contract with the Division. These rules also establish
basic record keeping standards for programs subject to audit under these rules,
establish procedures for appealing audit findings, and set out a process to implement
the findings of the final audit report.
(2) Statutory Authority. These
rules are authorized by ORS 179.040, 413.042 & 430.640 and are promulgated to
enable the Division to carry out its responsibilities under ORS 414.018 to 414.024
and 430.610 through 430.695.
Stat. Auth.: ORS 179.040 &
413.042 & 430.640

Stats. Implemented: ORS 414.018
& 430.610–430.695

Hist.: MHD 9-1978, f. &
ef. 12-11-78; MHD 15-1998, f. 8-12-98, cert. ef. 9-1-98, Renumbered from 309-013-0020
309-013-0130
Definitions
(1) “Audit” means
the examination of documents, records, reports, systems of internal control, accounting
and financial procedures, and other evidence for one or more of the following purposes:
(a) To ascertain whether the
financial statements present fairly the financial position and the results of financial
operations of the fund types and/or account groups in accordance with Generally
Accepted Accounting Principles and federal and state rules and regulations;
(b) To determine compliance
with applicable laws, rules, regulations and contract provisions;
(c) To review the efficiency
and economy with which operations are carried out; and
(d) To review effectiveness
in achieving program results.
(2) “Capital Construction”
is an expenditure related to construction or remodeling of physical facilities with
a projected cost of $250,000 or more.
(3) “Capital Improvement”
is an expenditure related to construction or remodeling of physical facilities with
a projected cost of more than $5,000 but less than $250,000.
(4) “Capital Outlay”
are purchases of equipment and tangible personal property of a non-expendable nature
which have a useful life of more than one year. The minimum dollar threshold for
determining if a purchase is capital outlay can not exceed the amount set for state
purchases of capital outlay. The current threshold for the State of Oregon is $5,000,
however, a lessor amount may be used.
(5) “Community Mental
Health Program (CMHP)” means the organization of all services for individuals
with mental or emotional disturbances, developmental disabilities or chemical dependency,
operated by, or contractually affiliated with, a local mental health authority,
operated in a specific geographic area of the state under an intergovernmental agreement
or direct contract with the Division.
(6) “Direct Contractor”
means a person or organization which operates under a direct contract with the Division
to provide services to persons with mental or emotional conditions and/or developmental
disabilities.
(7) “Internal Auditor”
means auditors within the Audit Unit of the Division.
(8) “Internal Control
Structure” means the plan of organization including all of the methods and
measures adopted within a business to safeguard its assets, check the accuracy and
reliability of its accounting data, and promote operational efficiency and adherence
to management’s policies.
(9) “Local Mental Health
Authority (LMHA)” means the county court or board of county commissioners
of one or more counties who choose to operate a CMHP; or, if the county declines
to operate or contract for all or part of a CMHP, the board of directors of a public
or private corporation which contracts with the Division to operate a CMHP for that
county.
(10) “Addictions and Mental
Health Division (Division)” means the Oregon Health Authority (Authority)
Agency responsible for the administration of the State mental health and developmental
disability services to persons who qualify for certain programs under federal and
state laws, rules and regulations.
(11)
“Mental Health Organization (MHO)” means a Prepaid Health Plan under
contract with the Division to provide covered services under the Oregon Health Plan
Medicaid Demonstration Project. MHOs can be Fully Capitated Health Plans (FCHPs),
CMHPs or private MHOs or combinations thereof.
(12) “Non-allowable Expenditures”
means expenditures made by a contractor or subcontractor of the Division which are
not consistent with relevant federal and state laws, rules, regulations and contract
provisions. To be allowable, expenditures must be necessary and reasonable for the
proper and efficient performance of the contracted services. If only state funds
are involved, expenditures will be evaluated based on state laws and rules, the
contract provisions, and whether they are necessary and reasonable for the proper
and efficient performance of the contracted services. When federal funds are involved,
determination of allowable expenditures includes, but is not limited to, those rules
and regulations itemized and referred to in applicable Office of Management and
Budget circulars.
(13) “Office of Medical
Assistance Programs (OMAP)” means the office of the Oregon Health Authority
responsible for coordinating the Medical Assistance Program within the State of
Oregon.
(14) “Reasonable Cost”
means a cost that in nature or amount does not exceed that which would be incurred
by a prudent person under the circumstance prevailing at the time the decision was
made to incur the cost. Consideration shall be given to whether the cost is of a
type generally recognized as ordinary and necessary for the operation of the organization;
what restraints or requirements exist such as those imposed by factors of generally
accepted sound business practices, federal and state laws and regulations, and terms
and conditions of the contract; whether the individuals concerned acted with prudence
in the circumstances, considering their responsibilities to the organization, their
employer, their clients, the public and the governments; and whether significant
deviations from the organization’s established practices unjustifiably increase
costs.
(15) “Service Element”
means a distinct service or combination of services as defined in Part III of the
Intergovernmental Agreement for persons with mental or emotional conditions and
or developmental disabilities provided in the community setting by a contract with
the Division or through a subcontract with a local mental health authority.
(16) “Service Provider”
means a public or private community agency or organization contracted by the Division
that provides recognized mental health or developmental disability service(s) and
is approved by the Division or other appropriate agency to provide these service(s).
For the purpose of this rule, “provider” or “program” is
synonymous with “service provider.”
Stat. Auth.: ORS 179.040 &
413.042 & 430.640

Stats. Implemented: ORS 414.018
& 430.610–430.695

Hist.: MHD 9-1978, f. &
ef. 12-11-78; MHD 15-1998, f. 8-12-98, cert. ef. 9-1-98, Renumbered from 309-013-0020
309-013-0140
Scope and Application
of the Rule
Under these rules, the Division
may audit any service provider that provides any part of the community mental health
program including the community mental health program itself, Mental Health Organizations
providing services under the Oregon Health Plan including subcontractors and vendors
providing mental health services, or any direct contractor. The scope of the audit
shall include only Division funds or related matching funds. However, Division may
include other funds in its tests to the extent necessary to audit Division funds
or matching funds. These rules shall be read and applied consistently with OAR 309-014-0000
(Community Mental Health Contractors) or the Division of Medical Assistance Programs
general rules (OAR 410-120-0000 through 410-120-1980) when these are applicable.
Stat. Auth.: ORS 413.042 &
430.640

Stats. Implemented: ORS 430.610–430.695

Hist.: MHD 9-1978, f. &
ef. 12-11-78; MHD 15-1998, f. 8-12-98, cert. ef. 9-1-98, Renumbered from 309-013-0020
309-013-0150
Revenue
(1) A service provider shall
maintain a revenue account for each income source which results from the operation
of the service or is used to support the service. For example, separate revenue
accounts shall be established for each service element for which the provider receives
payment from Division or the Division of Medical Assistance Programs, direct federal
payments, donations, fees, interest earned, rentals collected from subleases and
parking lots, sales of capital equipment, training grants or any other source of
income.
(2) Only cash revenue may be
used to match state funds unless the Division gives prior authorization in writing
to use contributed services or property to match state funds.
Stat. Auth.: ORS 179.040 &
413.042 & 430.640

Stats. Implemented: ORS 414.018
& 430.610–430.695

Hist.: MHD 9-1978, f. &
ef. 12-11-78; MHD 15-1998, f. 8-12-98, cert. ef. 9-1-98, Renumbered from 309-013-0020
309-013-0160
Expenses
(1) A service provider subject
to audit under these rules shall keep its accounting records consistent with Generally
Accepted Accounting Principles. Accounting records shall be retained for three years
from the date of the expiration of the Division’s agreement or from the finalization
of an audit, whichever comes later. Allocation methods for expenses shall be documented.
Relevant calculations representing allocations shall be shown. The allocation method
shall reasonably distribute expenses which are shared by service providers or service
elements. Charges assessed against a service provider by a related organization
shall be justified by the related organization as to the method and reason for relevant
cost allocation. The expense invoice shall list the location where services and
supplies purchases are delivered for any item in excess of $1,000.
(2) Record requirements for
Personal Services:
(a) Reports reflecting the distribution
of labor of each employee must be maintained for all staff members, professional
and nonprofessional, whose compensation is charged in whole or in part to Division
funds. To support the allocation of indirect costs, such reports must also be maintained
for other employees whose work involves two or more functions or activities if a
distribution of their compensation between such functions or activities is needed
in the determination of the organization’s indirect cost rate(s). Reports
maintained to satisfy these requirements must meet the following standards:
(A) The reports must reflect
an after-the-fact determination of the actual activity of each employee. Budget
estimates (i.e., estimates determined before the services are performed) do not
qualify as support for charges to Division funds;
(B) Each report must account
for the total activity for which employees are compensated and which is required
in fulfillment of their obligations to the organization;
(C) The reports must be signed
by the individual employee, or by a responsible supervisory official having first-hand
knowledge of the activities performed by the employee, to attest that the distribution
of activity represents a reasonable distribution of the actual work performed by
the employee during the periods covered by the reports;
(D) The reports must be prepared
at least monthly and must coincide with one or more pay periods;
(E) Periodic time studies, in
lieu of ongoing time reports, may be used to allocate salary and wage costs. However,
the time studies used must meet the following criteria:
(i) A minimally acceptable time
study must encompass at least one full week per month of the cost reporting period;
(ii) Each week selected must
be a full work week (e.g., Monday to Friday, Monday to Saturday or Sunday to Saturday);
(iii) The weeks selected must
be equally distributed among the months in the cost reporting period, e.g., for
a 12 month period three of the 12 weeks in the study must be the first week beginning in the month, three weeks the second week beginning in
the month, three weeks the third and three weeks the fourth;
(iv) No two consecutive months may use
the same week for the study, (e.g., if the second week beginning in April is the
study week for April, the weeks selected for March and May may not be the second
week beginning in those months);
(v) The time study must be contemporaneous
with the costs to be allocated. Thus, a time study conducted in the current cost
reporting year may not be used to allocate the costs of prior or subsequent cost
reporting years;
(vi) The time study must apply
to a specific provider. Thus, chain organizations may not use a time study from
one provider to allocate the costs of another provider or a time study of a sample
group of providers to allocate the costs of all providers within the chain.
(b) Any person being compensated
for services to a service provider who is not an employee of the organization shall
have a written contract with the service provider. The contract shall set forth
the specific services being purchased, the contract time period, the rate at which
compensation will be paid and an hourly rate where applicable.
(3) Record Requirements for
Capital Expenditures:
(a) Depreciation for capital
outlay, capital improvements, and capital construction shall be documented in a
depreciation schedule. The depreciation schedule at a minimum shall include a description
of the asset, date of acquisition, cost basis, depreciation method, estimated useful
life, annual depreciation expense and accumulated depreciation.
(b) Any capital expenditures
purchased by a service provider using Division funds shall be listed on an inventory
system showing location of item and reference to purchase invoice and payment receipt
location. The inventory shall be checked annually and verification of the inventory
list signed by the inventory control person. All capital items purchased with Division
funds must be used in an Division approved program.
(4) Reasonable Procedures will
be established to ensure the security of cash, blank checks, purchase orders, check
protector machines, and signature stamps.
(5) A service provider must
expend funds consistent with an intergovernmental agreement or direct contract,
these rules, the required program or licensing rule, and federal and state requirements.
For service elements contracted with a predetermined rate, Division funds not used
in delivering the service of the required quantity and quality shall be classified
as carryover. Carryover of Division administered funds shall be spent for Division
services. These funds shall be kept in restricted accounts in the financial records.
Funds spent on unallowed costs shall be considered noncompliance and shall be returned
to Division.
(6) All travel expenses shall
be supported by a system of authorized trip reports, receipts, and/or other documentation.
Authorization is indicated by approval of the travel expenditure by the Director
(or person with delegated authority) of the service provider.
Stat. Auth.: ORS 179.040 &
413.042 & 430.640

Stats. Implemented: ORS 414.018
& 430.610–430.695

Hist.: MHD 9-1978, f. &
ef. 12-11-78; MHD 15-1998, f. 8-12-98, cert. ef. 9-1-98, Renumbered from 309-013-0020
309-013-0170
Audit Process and Reports
(1) Any person, organization,
or agency, including the Division, may request an audit of a community mental health
program or any service provider offering a service thereunder or any direct contractor
by submitting an audit request in writing to the Division Internal Audit Unit Coordinator.
The request shall clearly identify the service provider to be audited, setting forth
its name, location, program director, the period for which the audit is requested
and the reason for the request.
(2) The Internal Audit Unit
Coordinator shall review the request and arrange for scheduling if an audit is considered
appropriate. The Internal Audit Unit Coordinator shall notify appropriate Assistant
Administrators of the audit schedule.
(3) The Assistant Administrator
of the Division for the Office of Finance has the discretion to notify the appropriate
community mental health program director of the scheduled audit in advance. The
Division retains the right to perform an audit without prior notice to the subject
service provider.
(4) Upon completion of the audit,
the Internal Audit Unit Coordinator shall prepare a report setting forth the findings,
recommendations, and auditee responses where applicable. Audit work papers shall
be available showing the details of the audit findings.
Stat. Auth.: ORS 179.040 &
413.042 & 430.640

Stats. Implemented: ORS 414.018
& 430.610–430.695

Hist.: MHD 9-1978, f. &
ef. 12-11-78; MHD 15-1998, f. 8-12-98, cert. ef. 9-1-98, Renumbered from 309-013-0020
309-013-0180
Disposition of Audit
Findings
(1) To the extent an audit documents
non-allowable expenditures in non-capitated programs, the Division shall recover
such funds.
(2) To the extent an audit report
evidences non-compliance with applicable program and/or licensing rules, the audit
findings may be referred to the Administrator of the Division to assess civil penalties,
where applicable, or for other corrective action deemed necessary by the program
office.
(3) Notwithstanding any other
provisions of these rules, to the extent an audit report reveals non-compliance
with Generally Accepted Accounting Principles or these rules, the Division may require
corrective action to bring the deficiencies into compliance with state and federal
rules and regulations. Non-compliance which results in substantial misrepresentation
of financial activities may result in termination of the license and/or contract
upon consultation with Division program offices and/or the local mental health authority.
Stat. Auth.: ORS 179.040 &
413.042 & 430.640

Stats. Implemented: ORS 414.018
& 430.610–430.695

Hist.: MHD 9-1978, f. &
ef. 12-11-78; MHD 15-1998, f. 8-12-98, cert. ef. 9-1-98, Renumbered from 309-013-0020
309-013-0190
Provider Appeals
(1) A provider may appeal certain
decisions affecting the provider by making a written request to the Division Assistant
Administrator for the Office of Finance. The request must state whether the provider
wants an administrative review, and/or a contested case hearing, as outlined in
the OMAP General Rules OAR 410-120-1560, Provider Appeals, through 410-120-1840,
Provider Hearings-Role of Hearings Officer. If the subject service provider decides
to appeal the audit, it shall set forth in writing the reasons for its appeal within
30 days of receipt of the report.
(2) When the Division seeks
to recover funds under these rules, the Division shall negotiate the terms and conditions
of repayment with the audited service provider, after consultation with the community
mental health program director or the MHO director (if applicable).
Stat. Auth.: ORS 179.040 &
413.042 & 430.640

Stats. Implemented: ORS 414.018
& 430.610–430.695

Hist.: MHD 9-1978, f. &
ef. 12-11-78; MHD 15-1998, f. 8-12-98, cert. ef. 9-1-98, Renumbered from 309-013-0020
309-013-0200
Basic Accounting Records
A service provider subject to
audit under these rules shall maintain a chart of accounts that defines all items
included in determining the cost for each service element. The chart of accounts
shall list all revenues and expense accounts. The organization shall have bank deposit
records and documentation to verify the source of revenue. Revenue and expense accounts,
with related asset, liability, and equity accounts, shall account for all expenditures
related to delivery of the service. All basic accounting records shall be retained
for at least three years following the expiration of the contract or from the finalization
of an audit including any appeal, whichever is later.
Stat. Auth.: ORS 179.040 &
413.042 & 430.640
Stats. Implemented:
ORS 414.018 & 430.610–430.695
Hist.: MHD 9-1978, f. & ef. 12-11-78;
MHD 15-1998, f. 8-12-98, cert. ef. 9-1-98, Renumbered from 309-013-0020
309-013-0210
Internal Controls
Establishing and maintaining
an internal control structure is the responsibility of the service provider. Effective
internal controls are considered essential to achieving the proper conduct of business
with full accountability for the resources made available. Internal controls shall
be implemented and maintained to provide reasonable assurance that:
(1) The provider identifies,
assembles, classifies, records, analyzes, and reports its transactions in conformity
with Generally Accepted Accounting Principles or appropriate regulatory requirements
for preparing financial statements and other required financial reports;
(2) Losses or misappropriations
of assets due to errors or irregularities in processing transactions and handling
the related assets are prevented or detected;
(3) Noncompliance with applicable
federal and state laws and rules and regulations and terms of the contract is prevented
or detected;
(4) State and federal funds
are reasonably, prudently and economically spent; and
(5) All costs are appropriately
allocated among programs, departments, and other benefiting units.
Stat. Auth.: ORS 179.040 &
413.042 & 430.640

Stats. Implemented: ORS 414.018
& 430.610–430.695

Hist.: MHD 9-1978, f. &
ef. 12-11-78; MHD 15-1998, f. 8-12-98, cert. ef. 9-1-98, Renumbered from 309-013-0020
309-013-0220
Independent Audit Reports
The Division may, in its discretion,
accept an independent audit, in lieu of a Division audit, if it determines the workpapers
and procedures of the independent auditor meet Government Auditing Standards (where
applicable), Generally Accepted Auditing Standards and other audit standards which
may be adopted by the Division.
Stat. Auth.: ORS 179.040 &
413.042 & 430.640

Stats. Implemented: ORS 414.018
& 430.610–430.695

Hist.: MHD 9-1978, f. &
ef. 12-11-78; MHD 15-1998, f. 8-12-98, cert. ef. 9-1-98, Renumbered from 309-013-0020

The official copy of an Oregon Administrative Rule is
contained in the Administrative Order filed at the Archives Division,
800 Summer St. NE, Salem, Oregon 97310. Any discrepancies with the
published version are satisfied in favor of the Administrative Order.
The Oregon Administrative Rules and the Oregon Bulletin are
copyrighted by the Oregon Secretary of State. Terms
and Conditions of Use