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nursing personnel are working under the supervision of a licensed patient care provider;

(3) physician cost: physician compensation costs and charges associated with providing care to patients are not allowable for purposes of calculating a prospective payment rate;

(4) medical service cost: medical services, including those services described in 7 AAC 145.650(c)(5), that a long-term care unit or facility is not licensed to provide, are not an allowable long-term care unit or facility ancillary cost;

(5) management fees: a facility must file with its year-end report, as described in 7 AAC 150.130, any management agreement, or change to a management agreement with a firm that, or an individual other than an employee who, will manage the facility during the period the prospective rate is effective; management fees paid to a firm or to an individual who is not an employee of the facility or of the facility’s home office are allowable costs only if the

(A) fees are paid in accordance with the terms of a written management agreement that creates a principal/agent relationship between the facility and the manager, and sets out the items, services, and activities to be provided by the manager;

(B) facility documents the actual delivery of management services;

(C) services do not duplicate management services otherwise provided to the facility; and

(D) management fees are reasonably attributable to the management of the local facility;

(6) costs are authorized by a certificate of need: costs authorized by a certificate of need are allowable as follows:

(A) interest, depreciation, and other capital costs will not be recognized on the entire basis of assets purchased after January 18, 1990, if a certificate of need was required and the facility did not secure one; recognition of interest, depreciation, and other capital costs for which a certificate of need was required will be no greater than the amounts described and approved in the certificate of need application and other information the applicant provided as a basis for approval of the certificate of need;

(B) prospective payment rates for facilities that are calculated and paid on a per diem rate basis will be no greater than the per diem rates proposed in the certificate of need application and other information the applicant provided as a basis for approval of the certificate of need for the first year during which the following listed items are available for use and for the two years immediately following that first year: