§ 1187.61. Movable property cost policies.
(a) Actual acquisition cost during cost report period. Except as otherwise specified in this section and subject to § § 1187.58 and 1187.60 (relating to costs of related parties; and prudent buyer concept), a nursing facility’s allowable movable property shall be limited to the nursing facility’s actual acquisition cost of movable property placed in service during the cost report period.
(b) Determination of acquisition cost. Except in situations where an item of movable property is obtained from a related party, the acquisition cost of that item shall be determined as follows:
(1) Acquisition cost is determined on a per-unit basis.
(2) When an item is purchased, the acquisition cost of that item is equal to the total actual purchase price of the item, regardless of whether the total price is paid in full at the time of purchase or over a period of time, plus the following: any required sales tax, shipping charges and installation charges.
(3) When an item of movable property is leased or rented, the acquisition cost is limited to the lower of: the actual annual lease or rental payments made by the nursing facility; or the imputed purchase price of the item, pro-rated on a straight-line basis over the useful life of the item, as identified in the most recent Uniform Chart of Accounts and Definitions for Hospitals published by the American Hospital Association at the time the item is leased or rented. For purposes of this section, the imputed purchase price of a leased or rented item is the lesser of:
(i) The suggested list price from the manufacturer of the item.
(ii) The actual discounted price of the item available at the time of lease or rental.
(iii) The purchase price for the item set forth in the lease or rental agreement.
(iv) If the lessor is a related party, the related party’s acquisition cost as determined in accordance with paragraph (2).
(4) When an item is acquired as the result of a gift or donation, the acquisition cost of that item is deemed to be the appraised depreciated replacement cost of the item provided that, on a date prior to the submission of the MA-11 for the period in which the item is acquired, the nursing facility obtains an appraisal of the item’s depreciated replacement cost from a licensed appraiser and submits a copy of the written report of the appraisal to the Department with its MA-11. If the nursing facility fails to obtain an appraisal of the item’s depreciated replacement cost from a licensed appraiser within the time period set forth in this section or if the nursing facility fails to submit a copy of the written report of the appraisal to the Department with its MA-11, the acquisition cost of the donated item or gift is deemed to be $0.
(5) When an item is acquired by a trade-in, the acquisition cost of the item shall be the sum of the remaining book value of the item traded-in plus any acquisition cost of the newly acquired item, computed in accordance with paragraphs 2, 3 and 4. The remaining book value of the item shall be determined based upon the useful life of the item, using the Uniform Chart of Accounts and Definitions for Hospitals published by the American Hospital Association, and depreciation computed on a straight-line basis.
(6) When an item is loaned to the nursing facility without charge, the acquisition cost of that item is deemed to be $0.
(7) When an item is covered by a standard express warranty, the cost of that warranty is included in the acquisition cost of the item. The cost of any extended warranty is not included in the acquisition cost of the item.
(8) When an item is acquired from a related party, the acquisition cost of the item shall be determined under § 1187.58.
(c) Offsets to reported cost of movable property.
(1) If a nursing facility conveys or otherwise transfers movable property acquired during a cost report period beginning on or after January 1, 2001, to any other person as the result of a sale, trade-in, gift, assignment or other transaction, an offset will be made against the nursing facility’s allowable movable property costs in the year in which the conveyance or transfer occurs. The amount of the offset will be the greater of the amount paid or credited to the nursing facility for the item by the person to whom the item is conveyed or transferred or the remaining book value of the item on the date the item is conveyed or transferred, as determined based upon the useful life of the item, using the Uniform Chart of Accounts and Definitions for Hospitals published by the American Hospital Association, and depreciation computed on a straight-line basis.
(2) If a nursing facility removes from service an item acquired during a cost report period beginning on or after January 1, 2001, before the expiration of the useful life of the item, determined using the Uniform Chart of Accounts and Definitions for Hospitals published by the American Hospital Association, an offset will be made against the nursing facility’s allowable movable property costs in the year in which the item is removed from service. The amount of the offset will be the remaining book value of the item, as determined based upon the Uniform Chart of Accounts and Definitions for Hospitals published by the American Hospital Association, and depreciation computed on a straight-line basis.
(3) If, for movable property acquired during a cost report period beginning on or after January 1, 2001, a nursing facility receives a refund, money or credit under a lease or rental agreement; or money or credit as a result of a trade-in; or money, including insurance proceeds or damages, as the result of recovery of a loss related to that movable property, the amount received by the nursing facility will be offset against the nursing facility’s allowable movable property costs in the year in which the refund money or credit is received.
(4) If a nursing facility fails to liquidate all or part of the acquisition cost of an item reported on the MA-11 during a cost report period beginning on or after January 1, 2001 in accordance with § 1187.52(b) (relating to allowable cost policies) the unliquidated amount will be offset against the nursing facility’s allowable movable property cost in a subsequent fiscal period.
(5) If a nursing facility receives a rebate on an item acquired during a cost report period beginning on or after January 1, 2001, the rebate amount received by the nursing facility will be offset against the nursing facility’s allowable movable property costs in the year in which the refund money or credit is received.
(d) Losses incurred on the sale, transfer or disposal of movable property are not allowable costs.
(e) The acquisition cost of movable property that is rented or leased is an allowable cost only if the following requirements are met:
(1) The agreement to rent or lease the movable property shall be in writing, identify each item of movable property that is being rented or leased, identify any other services or supplies that are being provided under the agreement, identify the term of the agreement, the payment intervals, and the amount of the periodic payments and total payments due under the agreement.
(2) The agreement to rent or lease the movable property shall set forth a suggested purchase price for each item of movable property rented or leased.
Source The provisions of this § 1187.61 adopted February 8, 2002, effective July 1, 2001, 32 Pa.B. 734.
Cross References This section cited in 55 Pa. Code § 1187.97 (relating to rates for new nursing facilities, nursing facilities with a change of ownership, reorganized nursing facilities, and former prospective payment nursing facilities); and 55 Pa. Code § 1187.154 (relating to exceptional DME grants—general conditions and limitations).
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