A. Compensation in the form of salaries, benefits, or any form of perquisite provided to owners, partners, officers, directors, stockholders, employees, or others who do not provide services necessary to facility operations or recipient care;

B. Personal expenses not related to the provision of long-term recipient care in a facility;

C. Costs for a private duty nurse or sitter;

D. Forms of compensation that are not clearly enumerated as to dollar amount or which represent profit distributions;

E. Management fees paid to a related organization that exceed the actual cost of materials, supplies, or services;

F. Costs of advertising to the general public which are intended to attract residents to the facility (for example: advertising in the yellow pages of the telephone directory exceeding the advertisement that is free with a business line).

The cost of advertising related to classified advertisements for labor and supplies are allowable costs and should be included in the Administrative and Operating Expenses section;

G. Business expenses not related to the care of recipient or necessary for the operation of a long-term care facility. This includes all costs of business investment activities, stockholder and public relations activities, and farm and ranch operations;

H. Political contributions and lobbying expenses including any portion of professional or other association dues or fees which is used for these purposes;

I. Depreciation and amortization of unallowable costs. This includes amounts in excess of those resulting from the straight-line method, capitalized lease expenses in excess of actual lease payments, and amortization of goodwill or any excess above the actual value of physical assets at the time of purchase;

J. Amounts donated to charitable or other organizations;

K. Dues to all types of organizations and associations not related to facility resident care;

L. Entertainment expenses not related to resident care;

M. Cost of radios and television sets used in the residents' rooms, or cost of providing cable TV to residents' rooms;

N. Expense incurred for services provided in a facility but not related to long-term recipient care. This includes meals provided to others than recipients or facility employees as a part of an employment contract, nonmedical rentals, barber and beauty shop operations, canteens and gift shops, and vending machines;

O. Retainers, and honorariums;

P. Fines and penalties for violations of regulations, statutes, and ordinances of all types;

Q. Fund raising and promotional expenses;

R. Interest expenses on loans pertaining to unallowable items. Otherwise allowable interest expense on short-term indebtedness must be reduced or offset by interest income as specified in Section 3-4 of this Chapter;

S. Insurance premiums pertaining to items of unallowable cost;

T. Cost of life insurance on officers and key employees of the facility where the company is the direct or indirect beneficiary. The cost of premiums for term policies on the lives of key officers or employees will be allowable provided that securing such policies was a condition precedent to the provider's obtaining financing to improve resident facilities and when such condition is a customary business practice of the lender. However, these premiums will be considered allowable only to the extent that coverage equals the unpaid principal balance;

U. Costs associated with portions of a facility that are not licensed as a NF or ICF/IID. Costs must be allocated between licensed and unlicensed portions of a facility based upon objective measures;

V. Planning and evaluation expenses for the expansion of an existing facility or for new business opportunities. Expense will be capitalized and amortized on the records of the appropriate facility if actual construction occurs;

W. Costs of motor vehicles, except as allowed in 3-2.K;

X. Values assigned to the services of unpaid workers and volunteers;

Y. Costs of purchases from a related party which exceed the lesser of the original cost to the related party or fair market value;

Z. Out-of-state travel expenses, except as allowed in Section 3-2 M;

AA. Legal and other costs associated with litigation between the provider and the state or federal agencies administering the Medicaid program;

BB. Penalties and insufficient funds charges by banks;

CC. Undocumented cost;

DD. Federal, state, and local income taxes;

EE. Prescription drugs;

FF. Accounts receivable written off as uncollectable, including bad debts incurred from private pay residents, Medicare, or Medicaid recipients;

GG. Personal telephone service;

HH. Costs of owning, leasing or operating boats;

II. Costs of chaplaincy training programs;

JJ. Cosmetics;

KK. Barber and beautician services provided by personnel not employed within the facility;

LL. Dry cleaning services for residents.

MM. Salaries, wages, and benefits paid for undocumented or duplicated duties, services, and management activities.

NN. Interest related to the acquisition and retirement of treasury stock is not an allowable cost. Treasury stock is not an asset and should be carried on the balance sheet as a reduction of equity capital. All costs relating to the retirement of stock shall not be considered allowable. Transactions in stock or equity which benefit stockholders, partners, and ownership interest will not be recognized.

OO. Interest expense, finance charges, and service charges on loans, mortgages, and bond issues, where the proceeds of such loans, mortgages, and bond issues are used to acquire stock ownership of additional facilities are not allowable costs.

PP. Interest on proceeds from loans not necessary for facility operations or used for investments are not allowable costs.