OAR 410-147-0540: Related Party Transactions

(1) A “related party” is an individual or organization that is associated or affiliated with, or has control of, or is controlled by the federally qualified health center (FQHC) or rural health clinic (RHC) furnishing the services, facilities, or supplies: (a) “Common ownership” exists if an individual or individuals possess significant ownership or equity in the provider and the institution or organization serving the provider; (b) “Control” exists if an individual or an organization has the power, directly or indirectly, significantly to influence or direct the actions or policies of an organization or institution. (2) Division of Medical Assistance Programs (Division) allows costs applicable to services, facilities, and supplies furnished to the FQHC or RHC by a related party at the lower of cost, excluding profits and markups to the related party, or charge to the clinic. Such costs are allowable in accordance with 42 CFR 413.17, to the extent that they: (a) Relate to Title XIX and Title XXI client care; (b) Are reasonable, ordinary, and necessary; and (c) Are not in excess of those costs incurred by a prudent cost-conscious buyer. (3) The intent is to treat the costs incurred by the related party as if they were incurred by the FQHC/RHC itself. (4) Clinics must disclose a related party who is separately enrolled as a provider with Division and furnish the provider’s National Provider Identifier (NPI) and associated taxonomy code(s). (5) Documentation of costs to related parties shall be made available at the time of an audit or as requested by Division. If documentation is not available, such payments to or for the benefit of the related organization will be non-allowable costs. (6) Division will allow rental expense paid to related individuals or organizations for facilities or equipment to the extent the rental does not exceed the related organization's cost of owning (e.g., depreciation, interest on a mortgage) or leasing the assets, computed in accordance with the provisions of the FQHC and RHC Administrative Rules. (7) If all of these conditions are not met, none of the costs of the related party transaction can be reported as reimbursable costs on the FQHC or RHC’s cost statement report.