Subchapter E. ALLOWABLE PROGRAM COSTS AND POLICIES
Sec.
1187.51. Scope.
1187.52. Allowable cost policies.
1187.53. Allocating cost centers.
1187.54. Changes in bed complement during a cost reporting period.
1187.55. Selected resident care and other resident related cost policies.
1187.55a. Clarification of the term ‘‘written’’—statement of policy.
1187.56. Selected administrative cost policies.
1187.57. Selected capital cost policies.
1187.58. Costs of related parties.
1187.59. Nonallowable costs.
1187.60. Prudent buyer concept.
1187.61. Movable property cost policies.§ 1187.51. Scope.
(a) This subchapter sets forth principles for determining the allowable costs of nursing facilities.
(b) The Medicare Provider Reimbursement Manual (CMS Pub. 15-1) and the Federal regulations in 42 CFR Part 489 (relating to provider and supplier agreements) appropriate to the reimbursement for nursing facility services under the Medicare Program are a supplement to this chapter. If a cost is included in this subchapter as allowable, the CMS Pub. 15-1 and applicable Federal regulations may be used as a source for more detailed information on that cost. The CMS Pub. 15-1 and applicable Federal regulations will not be used for a cost that is nonallowable either by a statement to that effect in this chapter or because the cost is not addressed in this chapter or in the MA-11. The CMS Pub. 15-1 or applicable Federal regulations will not be used to alter the treatment of a cost provided for in this subchapter or the MA-11.
(c) The Department’s payment rate for nursing facility services to eligible residents in participating nursing facilities includes allowable costs for routine services. Routine services may include the following:
(1) Regular room, dietary and nursing services, social services and other services required to meet certification standards, medical and surgical supplies and the use of equipment and facilities.
(2) General nursing services, including administration of oxygen and related medications, hand feeding, incontinency care, tray service and enemas.
(3) Items furnished routinely and uniformly to residents, such as resident gowns, water pitchers, basins and bedpans.
(4) Items furnished, distributed to residents or used individually by residents in small quantities such as alcohol, applicators, cotton balls, bandaids, antacids, aspirin (and other nonlegend drugs ordinarily kept on hand), suppositories and tongue depressors.
(5) Reusable items furnished to residents, such as ice bags, bed rails, canes, crutches, walkers, wheelchairs, traction equipment and other durable medical equipment.
(6) Special dietary supplements used for tube feeding or oral feeding, such as elemental high nitrogen diet, even if written as a prescription item by a physician.
(7) Basic laundry services.
(8) Nonemergency transportation.
(9) Beauty and barber services.
(10) Other special medical services of a rehabilitative, restorative or maintenance nature, designed to restore or maintain the resident’s physical and social capacities.
(d) Nursing facilities will receive payment for allowable costs in four general cost centers:
(1) Resident care costs.
(2) Other resident related costs.
(3) Administrative costs.
(4) Capital costs.
(e) Within the limits of this subchapter, allowable costs for purposes of cost reporting include those costs necessary to provide nursing facility services. These may include costs related to the following:
(1) Resident care costs.
(i) Nursing.
(ii) Director of nursing.
(iii) Related clerical staff.
(iv) Practitioners.
(v) Medical director.
(vi) Utilization and medical review.
(vii) Social services.
(viii) Resident activities.
(ix) Volunteer services.
(x) Over-the-counter drugs.
(xi) Medical supplies.
(xii) Physical, occupational and speech therapy.
(xiii) Oxygen.
(xiv) Beauty and barber.
(xv) Supplies and minor movable property acquired during cost report periods beginning on or after January 1, 2001, used in a nursing facility in the course of providing a service or engaging in an activity identified in this paragraph.
(2) Other resident related costs.
(i) Dietary, including food, food preparation, food service, and kitchen and dining supplies.
(ii) Laundry and linens.
(iii) Housekeeping.
(iv) Plant operation and maintenance, including the repair, maintenance and service of movable property.
(v) Supplies and minor movable property acquired during cost report periods beginning on or after January 1, 2001, used in a nursing facility in the course of providing a service or engaging in an activity identified in this paragraph.
(3) Administrative costs.
(i) Administrator.
(ii) Office personnel.
(iii) Management fees.
(iv) Home office costs.
(v) Professional services.
(vi) Determination of eligibility.
(vii) Advertising.
(viii) Travel/entertainment.
(ix) Telephone.
(x) Insurance.
(xi) Interest other than that disallowed under § 1187.59(a)(24) (relating to nonallowable costs).
(xii) Legal fees.
(xiii) Amortization—administrative costs.
(xiv) Supplies and minor movable property acquired during cost report periods beginning on or after January 1, 2001, used in a nursing facility in connection with an activity identified in this paragraph.
(4) Capital costs.
(i) Assigned cost of fixed property.
(ii) Acquisition cost of major movable property.
(iii) Real estate tax cost.
Authority The provisions of this § 1187.51 amended under sections 201(2), 206(2), 403(b) and 443.1(5) of the Public Welfare Code (62 P.S. § § 201(2), 206(2), 403(b) and 443.1(5)).
Source The provisions of this § 1187.51 amended February 8, 2002, effective July 1, 2001, 32 Pa.B. 734; amended June 23, 2006, effective July 1, 2006, 36 Pa.B. 3207; amended November 26, 2010, effective November 27, 2010, 40 Pa.B. 6782. Immediately preceding text appears at serial pages (351453) to (351454) and (320623).
Cross References This section cited in 55 Pa. Code § 1187.57 (relating to selected capital cost policies).
§ 1187.52. Allowable cost policies.
(a) The Department will incorporate a nursing facility’s direct and indirect allowable costs related to the care of residents into the NIS database. The Department will consider these costs in the setting of prices.
(b) Costs that are not recognized as allowable costs in a fiscal year may not be carried forward or backward to other fiscal years for inclusion in reporting allowable costs. For the cost to be allowable, short-term liabilities shall be liquidated within 1 year after the end of the cost reporting period in which the liability is incurred.
Cross References This section cited in 55 Pa. Code § 1187.61 (relating to movable property cost policies).
§ 1187.53. Allocating cost centers.
(a) The nursing facility shall allocate costs between nursing facility and residential in accordance with the allocation bases established by the Department as contained in this chapter and the MA-11. If the nursing facility has its own more accurate method of allocation, it may be used only if the nursing facility receives written approval from the Department prior to the first day of the applicable cost report year.
(b) The absence of documentation to support allocation or the use of other methods which do not properly reflect use of the Department’s required allocation bases or approved changes in bases shall result in disallowances being imposed for each affected line item.
§ 1187.54. Changes in bed complement during a cost reporting period.
(a) When the nursing facility’s bed complement changes during a cost reporting period, the allocation bases are subject to verification at audit.
(b) The nursing facility shall keep adequate documentation of the costs related to bed complement changes during a cost reporting period. The nursing facility shall submit a supplemental Schedule C (computation and allocation of allowable cost), which identifies costs being allocated by the required statistical methods for each period of change.
§ 1187.55. Selected resident care and other resident related cost policies.
Policies for selected resident care and other resident related costs are as follows:
(1) Drug services.
(i) The costs of nonlegend drugs, such as laxatives, aspirin and antacids that are provided directly by a nursing facility from its own supply are allowable costs if the drugs are medically necessary and administered according to a physician’s written order or prescription.
(ii) Costs of legend drugs are not allowable costs.
(iii) Costs related to a pharmacy consultant shall be reported as general administrative costs on the cost report.
(2) Practitioner and therapy services.
(i) Costs for practitioner and therapy services which are provided on a contract or salary basis by the nursing facility are allowable costs.
(ii) The direct and indirect costs associated with noncompensable cost centers, such as a pharmacy or space rented or used by an independent practitioner, are not allowable costs.
(3) Volunteer and donated services of individuals.
(i) The actual costs that a nursing facility incurs when the nursing facility regularly uses the services of volunteer or religious organizations in positions that are normally held by full-time employes who provide resident care or assist with the operation of the nursing facility are allowable costs. The following conditions and limitations apply:
(A) The costs shall be limited to the fair market value of customary compensation of full-time personnel who perform similar services.
(B) The costs shall be based on regular working hours, excluding overtime.
(C) The actual costs for these services shall be supported by substantiating documentation.
(D) The costs will be reimbursed as part of the net operating costs.
(ii) The Department will recognize costs as allowable for nonpaid workers only if the following conditions are met:
(A) The nonpaid workers shall be members of an organization of nonpaid workers.
(B) Membership of a nonpaid worker in the organization shall be substantiated by adequate documentation in the files of the organization of nonpaid workers.
(C) A legally enforceable agreement between the nursing facility and the organization of nonpaid workers shall exist and establish the nursing facility’s obligation to remunerate the organization for services rendered. If the nursing facility’s legal obligation to pay the organization of nonpaid workers is nullified by an offsetting legal obligation by the organization of nonpaid workers to pay or make a contribution to the nursing facility of all or part of the salary liability, the amount paid or contributed by the organization of nonpaid workers is not an allowable cost.
(iii) A payment made by the organization of nonpaid workers to the nursing facility for the nonpaid workers’ maintenance, perquisites or fringe benefits shall be used as an offset to the total of the cost actually incurred by the nursing facility.
(iv) Staff services relating to the use of volunteer workers are allowable costs.
(4) Pastoral services.
(i) Salary costs for pastoral services rendered directly to residents by professional staff employed by, or under contract with, the nursing facility are allowable costs.
(ii) Costs for a chaplaincy training program and pastoral housing are not allowable costs.
Cross References This section cited in 55 Pa. Code § 1187.55a (relating to clarification of the term ‘‘written’’—statement of policy); and 55 Pa. Code § 1187.59 (relating to nonallowable costs).
§ 1187.55a. Clarification of the term ‘‘written’’—statement of policy.
(a) The term ‘‘written’’ in § 1187.55(1)(i) (relating to selected resident care and other resident related cost policies) includes orders and prescriptions that are handwritten or transmitted by electronic means.
(b) Written orders and prescriptions transmitted by electronic means must be electronically encrypted or transmitted by other technological means designed to protect and prevent access, alteration, manipulation or use by any unauthorized person.
Source The provisions of this § 1187.55a adopted July 16, 2010, effective July 17, 2010, 40 Pa.B. 3963.
§ 1187.56. Selected administrative cost policies.
Policies for selected administrative costs are as follows:
(1) Administrative allowance.
(i) The allowable administrative costs incurred by a nursing facility to provide services are subject to the following limitation: the allowable administrative costs will be determined so that all other allowable costs, excluding capital costs, equal no less than 88% of the allowable net operating costs.
(ii) Home office cost allocations and management fees are subject to the following conditions and limitations:
(A) Home office cost allocations and management fees between related parties shall be reported without markup by the nursing facility.
(B) Costs which are not allowable, such as those related to nonworking officers or officers’ life insurance, may not be included in home office allocations or management fees.
(C) Documentation relating to home office and management costs shall be provided to the Department’s auditors upon request.
(D) Home office allocations, including administratively allowable depreciation and interest costs shall be reported on the administrative line in the MA-11.
(iii) A nursing facility providing nursing, residential and other services shall allocate the total administrative cost to nursing, residential and other services on the basis of a percentage of these costs to the total net operating costs.
(2) Other interest allowance.
(i) Other interest is an allowable administrative cost if it is necessary and proper. To be considered allowable, necessary and proper, the interest expense shall be incurred and paid within 90 days of the close of the cost reporting period on a loan made to satisfy a financial need of the nursing facility and for a purpose related to resident care. Interest incurred to pay interest is nonallowable.
(ii) Other interest may not exceed that amount which a prudent borrower would pay as described in the Medicare Provider Reimbursement Manual (CMS Pub. 15-1).
(iii) Other interest is allowable if paid on loans from the nursing facility’s donor-restricted funds, the funded depreciation account or the nursing facility’s qualified pension fund.
(iv) Moneys borrowed for the purchase or redemption of capital stock will be considered a loan for investment purposes. The interest paid on these borrowed funds is a nonallowable cost. The use of funds by the nursing facility for the redemption of capital stock will be considered as an investment of available funds.
(3) Investment income.
(i) Investment income is used to reduce allowable other interest unless the investment income is from one of the following:
(A) Gifts or grants of which the corpus and interest are restricted by the donor.
(B) Funded depreciation maintained in accordance with Federal regulations.
(C) The nursing facility’s qualified pension fund, if the interest earned remains in the fund.
(D) Issuer specified designated capital bond funds or debt service reserve funds.
(ii) Investment income on funds found to be used for purposes other than their designated purpose or commingled with other funds will be used to reduce allowable administrative interest expense.
(4) General administration expenses.
(i) Salaries of the nursing facility’s administrator, comptroller, purchasing agent, personnel director, pharmacy consultant and other persons performing general supervision or management duties are allowable as general administrative costs.
(ii) The salary or compensation costs of owners, operators or persons other than nursing facility employees shall be included as allowable costs only to the extent of their documented time and involvement in the required management of a nursing facility. These costs mean actual payment made during the cost reporting period on a current basis of salary or benefits for services rendered to the nursing facility.
(iii) If a person performs work customarily performed by different or several types of employees, the cost of the salary and other compensation allowable for the person shall be determined by the prorated customary salary and other compensation paid to employees for performing the same types of work. This cost is allowable only if adequate documentation verifying the cost is supplied by the nursing facility.
(iv) The allowable cost for a person performing necessary duties may not exceed the customary compensation and fringe benefits that an employee would normally receive while performing that work.
(5) Contracted management services.
(i) In lieu of home office allocations or management fees, a nursing facility may contract with a nonrelated management service. The cost of this contract shall be shown as an administrative cost and may not be allocated among other cost centers.
(ii) Management services contracted with a related party shall be treated as home office allocations.
Source The provisions of this § 1187.56 amended February 8, 2002, effective July 1, 2001, 32 Pa.B. 734. Immediately preceding text appears at serial pages (201543) to (201546).
Cross References This section cited in 55 Pa. Code § 1187.59 (relating to nonallowable costs); and 55 Pa. Code
§ 1187.57. Selected capital cost policies.
The Department will establish a prospective facility-specific capital rate annually for each nursing facility. That rate will consist of three components: the fixed property component, the movable property component and the real estate tax component.
(1) Fixed property component. The Department will base the nursing facility’s fixed property component on an assigned cost of $26,000 per allowable bed.
(2) Movable property component. The Department will determine the movable property component of each nursing facility’s capital rate as follows:
(i) The Department will base the nursing facility’s movable property component on the nursing facility’s audited cost of major movable property, as set forth in that MA-11.
(ii) Each nursing facility shall report the acquisition cost of all major movable property on the major movable property line of its MA-11 and shall report the cost of minor movable property and the cost of supplies as net operating costs in accordance with § 1187.51 (relating to scope) and instructions for the MA-11.
(3) Real estate tax cost component. A nursing facility’s real estate tax component will be based solely upon the audited cost of that nursing facility’s 12-month real estate tax cost, as set forth on the most recent audited MA-11 cost report available in the NIS database.
Source The provisions of this § 1187.57 amended February 8, 2002, effective July 1, 2001, 32 Pa.B. 734; amended November 26, 2010, effective November 27, 2010, 40 Pa.B. 6782. Immediately preceding text appears at serial pages (320628) to (320630).
§ 1187.58. Costs of related parties.
Costs applicable to services, movable property and supplies, furnished to the nursing facility by organizations related to the nursing facility by common ownership or control shall be included as an allowable cost of the nursing facility at the cost to the related organization. This cost may not exceed the price of comparable services, movable property or supplies that could be purchased elsewhere.
Source The provisions of this § 1187.58 amended February 8, 2002, effective July 1, 2001, 32 Pa.B. 734. Immediately preceding text appears at serial page (201547).
Cross References This section cited in 55 Pa. Code § 1187.61 (relating to movable property cost policies).
§ 1187.59. Nonallowable costs.
(a) Nonallowable costs related to expenses and revenues. The Department will not recognize as allowable costs the expenses or revenues of a nursing facility related to:
(1) Nonworking officers’ or owners’ salaries.
(2) Fundraising expenses for capital and replacement items exceeding 5% of the amount raised and, for operating expenses and cash flow, fundraising expenses exceeding 10% of the amount raised.
(3) Free care or discounted services.
(4) Parties and social activities not related to resident care.
(5) Organizational memberships not necessary to resident care.
(6) Personal telephone service.
(7) Personal television service.
(8) The direct and indirect costs related to nonallowable cost centers, including gift, flower and coffee shops, homes for administrators or pastors, convent areas and nurses’ quarters, except as provided in § 1187.55(3) (relating to selected resident care and other resident related cost policies).
(9) Vending machines.
(10) Charitable contributions.
(11) Employee and guest meals.
(12) Pennsylvania Capital Stock and Franchise Tax.
(13) Income tax.
(14) Ambulance costs.
(15) Promotional advertising, including a yellow page listing larger than a minimum insert.
(16) Late payment penalties.
(17) Taxes based upon 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) Dry cleaning, mending or other specialty laundry services.
(24) Depreciation on fixed or movable property, capital interest, amortization—capital costs and rental expense for fixed property.
(25) Expenses or revenues not necessary to resident care.
(26) Costs, including legal fees, accounting and administrative 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—1395yy) if the sale or purchase was made on or after July 18, 1984.
(27) Letter of credit costs.
(28) Legal expenses related to an appeal or action challenging a payment determination under this chapter until a final adjudication is issued sustaining the nursing facility’s appeal. If the nursing facility prevails on some but not all issues raised in the appeal or action, a percentage of the reasonable legal expenses is allowable based upon the proportion of additional reimbursement received to the total additional reimbursement sought on appeal.
(29) Nonstandard or nonuniform fringe benefits.
(30) Return on net equity and net worth.
(b) Nonallowable costs related to revenue producing items. In determining the operating costs of a nursing facility, the Department will not allow costs related to:
(1) The sale of laundry and linen service.
(2) The sale of drugs to nonresidents.
(3) The sale of medical and surgical supplies to nonresidents.
(4) The sale of clinical records and abstracts.
(5) The rental of quarters to employees and others.
(6) The rental of space within the nursing facility.
(7) The payments received from clinical specialists.
(8) Discounts on purchases which include trade, quantity and time.
(9) Rebates and refunds of expenses.
(c) Income that reduces allowable costs.
(1) Except as provided in § 1187.56(3)(i) (relating to selected administrative cost policies), any form of investment income shall be used to reduce the allowable administrative interest expense.
(2) Grants, gifts and income designated by the donor for specific operating expenses are used to reduce the allowable costs relating to the specific operating expense.
(3) Recovery of insured loss shall be used to reduce the allowable costs relating to the insured loss.
(4) Applicable revenue producing items, other than room and board, shall be used to reduce the related allowable costs.
(5) Payments received under an exceptional DME grant reduce the allowable cost of the major movable property and related services and items in the cost centers where the costs were originally reported in the MA-11.
(d) Nonallowable direct nursing facility payments. Costs for prescription drugs, physician services, dental services, dentures, podiatry services, eyeglasses, appliances, X-rays, laboratory services and other materials or services covered by payments, other than MA or Medicare Part A, made directly to nursing facilities, including Medicare Part B, Champus, Blue Cross, Blue Shield or other insurers or third parties, are not allowable in determining net operating costs.
Source The provisions of this § 1187.59 amended February 8, 2002, effective retroactively November 1, 1999, 32 Pa.B. 734. Immediately preceding text appears at serial pages (201547) to (201549).
Cross References This section cited in 55 Pa. Code § 1187.51 (relating to scope).
§ 1187.60. Prudent buyer concept.
The purchase or rental by a nursing facility of services, movable property and supplies, including pharmaceuticals, may not exceed the cost that a prudent buyer would pay in the open market to obtain these items, as described in the Medicare Provider Reimbursement Manual (CMS Pub. 15-1).
Source The provisions of this § 1187.60 amended February 8, 2002, effective July 1, 2001, 32 Pa.B. 734. Immediately preceding text appears at serial page (201549).
Cross References This section cited in 55 Pa. Code § 1187.61 (relating to movable property cost policies).
§ 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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