All Long Term Care Facilities will be reimbursed according to the principles and procedures specified in these regulations. Allowable costs are those costs necessary and reasonable for performance of covered services required by Medicaid recipients.

A facility's direct and indirect allowable costs related to covered services will be considered in the findings and allocation of costs to the Medical Assistance Program for its eligible recipients. Total allowable, reasonable costs after removal of direct Medicare ancillary cost of a facility shall be apportioned on a per resident day basis between third-party payers and other residents so that the share borne by Medicaid under Title XIX is based upon actual services and costs related to Medical Assistance recipients.

Costs included in the per diem rate will be those necessary to be incurred by efficiently and economically operated facilities to comply with all requirements of participation in the Medicaid program.