EXPENSES AND REVENUE ITEMS NOT ALLOWABLE IN
DETERMINING NET OPERATING COSTS
§ 1181.271. Excluded expenses and revenues.
In determining the net operating costs of a facility, the Department will not allow expenses or revenues relating to:
(1) Nonworking officers’ salaries.
(2) Fund raising expenses for capital and replacement items exceeding 5% of the amount raised, and, for operating expenses and cash flow, fund raising expenses exceeding 10% of the amount raised.
(3) Free care or discounted services.
(4) Parties and social activities not related to patient care.
(5) Organizational memberships not necessary to patient care.
(6) Personal telephone service.
(7) Personal radio and television service.
(8) The direct and indirect costs related to nonallowable cost centers including gift, barber, beauty, flower and coffee shops, homes for administrators or pastors, convent areas, and nurses’ quarters, except as provided in § 1181.252 (relating to volunteer and donated services of individuals).
(9) Vending machines.
(10) Charitable contributions.
(11) Employe and guest meals.
(12) Pennsylvania Capital Stock and Franchise Tax.
(13) Income tax.
(14) Ambulance costs.
(15) Promotional advertising, including a yellow page listing that is greater than a minimum insert.
(16) Late payment penalties.
(17) Taxes based upon receivables, revenues or net income.
(18) Officers’ and directors’ life insurance, including life insurance premiums necessary to obtain mortgages and other loans.
(19) Bad debts or contractual adjustments.
(20) Collection expenses associated with bad debts.
(21) Losses on the sale of fixed and movable assets.
(22) Remuneration of any kind for any purpose including travel expenses for members of the Board of Directors.
(23) Personal laundry services.
(24) Depreciation and interest on capital indebtedness for costs in excess of the per bed limitation.
(25) Expenses or revenues not necessary to patient care.
(26) Net operating or capital cost, including legal fees, accounting and administration costs, travel costs, and the costs of feasibility studies, attributable to the negotiation or settlement of the sale or purchase of a capital asset—by acquisition or merger—for which payment has previously been made under Title XVIII of the Social Security Act (42 U.S.C.A. § § 1395—1395xx) if the sale or purchase was made on or after July 18, 1984.
Authority The provisions of this § 1181.271 issued under sections 201 and 443.1 of the Public Welfare Code (62 P. S. § § 201 and 443.1).
Source The provisions of this § 1181.271 adopted August 5, 1989, effective July 1, 1989, 13 Pa.B. 2402; amended February 28, 1986, effective March 1, 1986, 16 Pa.B. 600. Immediately preceding text appears at serial pages (99433) to (99434).
Notes of Decisions The Department can not use a methodology for determining depreciation expenses that would result in the depreciation costs for nonallowable cost centers to be deducted twice. Meadows Nursing Center v. Department of Public Welfare, 561 A.2d 68 (Pa. Cmwlth. 1989).
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