Accounting for Patient Care Costs

Directive Statement

This Directive establishes the proper methods of accounting for patient care costs. Uniform Guidance 2 CFR 200 establishes principles for determining costs applicable to grants, contracts, and other agreements with educational institutions. According to Uniform Guidance 2 CFR 200 sections 200.402, “The total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits.”

The tests of allowability of costs under these principles in section 200.403 are:

1. Be necessary and reasonable for the performance of the Federal award
2. Be allocable thereto under these principles:

• Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity
• Be accorded consistent treatment. “A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.”

This means there must be consistency in accounting campus-wide; all costs for similar circumstances must be charged the same.

Reason for Directive

To provide information about identifying and allocating Patient Care Cost as defined in Uniform Guidance 2 CFR 200 and the Cost Accounting Standard (CAS) 48 CFR 9905.502 to which the University of Florida must adhere.

Cost Accounting Standard (CAS) 9905.501 requires consistency in estimating, accumulating, and reporting costs. The purposes of this standard are to make the cost accounting practices in estimating costs for its proposals consistent with those practices used in accumulating and reporting costs during contract performance, and to provide a basis for comparing such costs. (See University of Florida Policy on Charging Costs Directly to Sponsored Projects)

Cost Accounting Standard (CAS) 48 CFR 9905.502-40 requires consistency in allocating costs incurred for the same purpose. “All costs incurred for the same purpose, in like circumstances, are either direct costs only or indirect costs only with respect to final cost objectives. No final cost objective shall have allocated to it as an indirect cost any cost, if other costs incurred for the same purpose, in like circumstances, have been included as a direct cost of that or any other final cost objective. Further, no final cost objective shall have allocated to it as a direct cost any cost, if other costs incurred for the same purpose, in like circumstances, have been included in any indirect cost pool to be allocated to that or any other final cost objective. See Charging Costs Directly or Indirectly to Sponsored Projects for more information.

Who must comply?

1. Principal Investigators (PIs)/Departments are responsible for correctly recording any patient care costs that are directly charged to a sponsored project
2. Due care must be taken to ensure these costs are allowable
3. Responsibility for following these guidelines lies primarily with Contracts and Grants
4. The University of Florida administration is responsible for guidance and training and for ensuring compliance through periodic internal and external audits

Guideline Issues

Uniform Guidance 2 CFR 200 (200.68) identifies costs that are to be excluded from modified total direct cost for the purpose of charging indirect costs.

Per 2 CFR 200 “Excluded costs include equipment, capital expenditures, charges for patient care and tuition remission, rental costs, scholarship and fellowships, participant support costs and the portion of each sub-award and subcontract in excess of $25,000.

1. The costs associated with patient care and other major functions must be clearly and separately defined
2. Space, material and labor used jointly for patient care and other activities must be allocated equitably between those cost objectives
3. For institutions which receive cost reimbursement from Federal research sponsors and Medicare/Medicaid, the allocation of costs between patient care and research, used as the basis for reimbursement, must be consistent (e.g., physician effort reported to Medicare must be consistent with effort reported to the National Institute of Health)

Last Reviewed

Last reviewed on 03/20/2024

Resources

2 CFR 200 Quick Reference Guide

Uniform Guidance 2 CFR 200

48 CFR 9905 – Cost Accounting Standards (CAS) for Education Institutions

Training

RSH260: Cost Principles

RSH206: Cost Principles Advanced Topics

Contacts

Contracts & Grants: (352) 392-1235

Cost Analysis: (352) 392-5778