§ 1181.254. Medicare Part B type services.
(a) Facilities shall have the option of using one of two methods of dealing with Medicare Part B services provided by nursing facility owners or operators to MA recipients:
(1) Option 1. The nursing facility may exclude from its cost report any operating and capital costs incurred in, and any income derived from, the provision of Medicare Part B services. The nursing facility shall attach, to the cost report the facility submits to the Department, a copy of the cost report the facility submits to Medicare for the Part B services and a copy of the Medicare final audit, including audit adjustments. If final audits are not available, the Department will exclude any operating or capital cost associated with providing the Medicare Part B service.
(2) Option 2. The nursing facility may elect, through advance written notification to the Department, to include in its cost report the operating and capital costs incurred in, and the income derived from, the provision of Medicare Part B services. If the nursing facility elects this option, the facility’s fiscal year must coincide with that of the Department; and the facility may not change its methodology for Medicare Part B services for the duration of the fiscal year. The Department, at the final settlement, will take the following steps in determining its reimbursement to the facility:
(i) The Department will identify the percentage of the total operating costs represented by the Medicare Part B services and reduce the ceiling on net operating costs for the facility by that percentage.
(ii) The Department will identify and deduct from the total capital costs of the facility the percentage of depreciation and interest costs associated with the provision of Medicare Part B services.
(iii) The Department will apply any revenue received by the facility from Medicare for providing the Part B service as an adjustment to the cost of providing these services before the Department adjusts for the ceiling on net operating costs for the facility.
(3) If the facility did not provide advance written notification to the Department of the facility’s election of Option 2 and the facility’s cost report contains costs associated with the provision of Medicare Part B services, the Department will credit against the total reimbursement due any revenue the facility received from Medicare for the Part B services rendered to the facility’s Medical Assistance recipients.
(b) The cost of providing Medicare Part B type services to non-Medicare Part B eligible recipients which are otherwise allowable costs under this part should be reported as provided elsewhere in this subchapter.
Source The provisions of this § 1181.254 adopted August 5, 1983, effective July 1, 1983, 13 Pa.B. 2402.
Notes of Decisions Hearing Officer’s finding that Department of Public Welfare did not intend to use the exclusion method for Medicare Part B costs and revenue related to services provided by salaried physicians at the time the net operating costs ceiling was imposed, was supported by substantial evidence, and where only interpretation applied to regulations thus far referred to offset method, petitioner could not claim that current interpretation of exclusion method contradicted prior practice. Fair Acres Geriatric Center v. Department of Public Welfare, 528 A.2d 1008 (Pa. Cmwlth. 1987).
This section provides two options for handling Medicare Part B Services which a facility itself provides, the exclusion method and the offset method. Fair Acres Geriatric Center v. Department of Public Welfare, 528 A.2d 1008 (Pa. Commw. 1987).
Cross References This section cited in 55 Pa. Code § 1181.254a (relating to Medicare Part B adjustments—statement of policy).
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