Social Security Act §1861

(i)until the expirationof four years after the furnishing of such services pursuant to suchcontract, the subcontractor shall make available, upon written requestby the Secretary, or upon request by the Comptroller General, or anyof their duly authorized representatives, the contract, and books,documents and records of such subcontractor that are necessary tocertify the nature and extent of such costs, and(ii)if the subcontractorcarries out any of the duties of the contract through a subcontract,with a value or cost of $10,000 or more over a twelve-month period,with a related organization, such subcontract shall contain a clauseto the effect that until the expiration of four years after the furnishingof such services pursuant to such subcontract, the related organizationshall make available, upon written request by the Secretary, or uponrequest by the Comptroller General, or any of their duly authorizedrepresentatives, the subcontract, and books, documents and recordsof such organization that are necessary to verify the nature and extentof such costs.The Secretary shall prescribe in regulation criteria and procedureswhich the Secretary shall use in obtaining access to books, documents,and records under clauses required in contracts and subcontracts underthis subparagraph.(J)Such regulationsmay not provide for any inpatient routine salary cost differentialas a reimbursable cost for hospitals and skilled nursing facilities.(K)(i)The Secretaryshall issue regulations that provide, to the extent feasible, forthe establishment of limitations on the amount of any costs or chargesthat shall be considered reasonable with respect to services providedon an outpatient basis by hospitals (other than bona fide emergencyservices as defined in clause (ii)) or clinics (other than rural healthclinics), which are reimbursed on a cost basis or on the basis ofcost related charges, and by physicians utilizing such outpatientfacilities. Such limitations shall be reasonably related to the chargesin the same area for similar services provided in physiciansoffices. Such regulations shall provide for exceptions to such limitationsin cases where similar services are not generally available in physiciansoffices in the area to individuals entitled to benefits under thistitle.(ii)For purposesof clause (i), the term bona fide emergency services means services provided in a hospital emergency room after the suddenonset of a medical condition manifesting itself by acute symptomsof sufficient severity (including severe pain) such that the absenceof immediate medical attention could reasonably be expected to resultin(I)placingthe patients health in serious jeopardy;(II)seriousimpairment to bodily functions; or(III)seriousdysfunction of any bodily organ or part.(L)(i)The Secretary,in determining the amount of the payments that may be made under thistitle with respect to services furnished by home health agencies,may not recognize as reasonable (in the efficient delivery of suchservices) costs for the provision of such services by an agency tothe extent these costs exceed (on the aggregate for the agency) forcost reporting periods beginning on or after(I)July 1,1985, and before July 1, 1986, 120 percent of the mean of the labor-relatedand nonlabor per visit costs for freestanding home health agencies,(II)July 1,1986, and before July 1, 1987, 115 percent of such mean,(III)July1, 1987, and before October 1, 1997, 112 percent of such mean,(IV)October1, 1997, and before October 1, 1998, 105 percent of the median ofthe labor-related and nonlabor per visit costs for freestanding homehealth agencies; or(V)October1, 1998, 106 percent of such median.(ii)Effective forcost reporting periods beginning on or after July 1, 1986, such limitationsshall be applied on an aggregate basis for the agency, rather thanon a discipline specific basis. The Secretary may provide for suchexemptions and exceptions to such limitation as he deems appropriate.[512](iii)Not laterthan July 1, 1991, and annually thereafter (but not for cost reportingperiods beginning on or after July 1, 1994, and before July 1, 1996,or on or after July 1, 1997, and before October 1, 1997), the Secretaryshall establish limits under this subparagraph for cost reportingperiods beginning on or after such date by utilizing the area wageindex applicable under section 1886(d)(3)(E) and determined usingthe survey of the most recent available wages and wage-related costsof hospitals located in the geographic area in which the home healthservice is furnished (determined without regard to whether such hospitalshave been reclassified to a new geographic area pursuant to section 1886(d)(8)(B),a decision of the Medicare Geographic Classification Review Boardunder section 1886(d)(10), or a decision of the Secretary).(iv)In establishinglimits under this subparagraph for cost reporting periods beginningafter September 30, 1997, the Secretary shall not take into accountany changes in the home health market basket, as determined by theSecretary, with respect to cost reporting periods which began on orafter July 1, 1994, and before July 1, 1996.(v)For servicesfurnished by home health agencies for cost reporting periods beginningon or after October 1, 1997, subject to clause (viii)(I), the Secretaryshall provide for an interim system of limits. Payment shall not exceedthe costs determined under the preceding provisions of this subparagraphor, if lower, the product of(I)an agency-specificper beneficiary annual limitation calculated based 75 percent on 98percent of the reasonable costs (including nonroutine medical supplies)for the agencys 12-month cost reporting period ending duringfiscal year 1994, and based 25 percent on 98 percent of the standardizedregional average of such costs for the agencys census division,as applied to such agency, for cost reporting periods ending duringfiscal year 1994, such costs updated by the home health market basketindex; and(II)the agencysunduplicated census count of patients (entitled to benefits underthis title) for the cost reporting period subject to the limitation.(vi)For servicesfurnished by home health agencies for cost reporting periods beginningon or after October 1, 1997, the following rules apply:(I)For newproviders and those providers without a 12-month cost reporting periodending in fiscal year 1994 subject to clauses (viii)(II) and (viii)(III),the per beneficiary limitation shall be equal to the median of theselimits (or the Secretarys best estimates thereof) applied toother home health agencies as determined by the Secretary. A homehealth agency that has altered its corporate structure or name shallnot be considered a new provider for this purpose.(II)For beneficiarieswho use services furnished by more than one home health agency, theper beneficiary limitations shall be prorated among the agencies.(vii)(I)Not laterthan January 1, 1998, the Secretary shall establish per visit limitsapplicable for fiscal year 1998, and not later than April 1, 1998,the Secretary shall establish per beneficiary limits under clause(v)(I) for fiscal year 1998.(II)Notlater than August 1 of each year (beginning in 1998) the Secretaryshall establish the limits applicable under this subparagraph forservices furnished during the fiscal year beginning October 1 of theyear.(viii)(I)In thecase of a provider with a 12-month cost reporting period ending infiscal year 1994, if the limit imposed under clause (v) (determinedwithout regard to this subclause) for a cost reporting period beginningduring or after fiscal year 1999 is less than the median describedin clause (vi)(I) (but determined as if any reference in clause (v)to 98 percent were a reference to 100 percent), the limit otherwise imposed under clause (v) for such providerand period shall be increased by 1/3 of such difference.(II)Subjectto subclause (IV), for new providers and those providers without a12-month cost reporting period ending in fiscal year 1994, but forwhich the first cost reporting period begins before fiscal year 1999,for cost reporting periods beginning during or after fiscal year 1999,the per beneficiary limitation described in clause (vi)(I) shall beequal to the median described in such clause (determined as if anyreference in clause (v) to 98 percent were a referenceto 100 percent).(III)Subjectto subclause (IV), in the case of a new provider for which the firstcost reporting period begins during or after fiscal year 1999, thelimitation applied under clause (vi)(I) (but only with respect tosuch provider) shall be equal to 75 percent of the median describedin clause (vi)(I).(IV)Inthe case of a new provider or a provider without a 12-month cost reportingperiod ending in fiscal year 1994, subclause (II) shall apply, insteadof subclause (III), to a home health agency which filed an applicationfor home health agency provider status under this title before September15, 1998, or which was approved as a branch of its parent agency beforesuch date and becomes a subunit of the parent agency or a separateagency on or after such date.(V)Eachof the amounts specified in subclauses (I) through (III) are suchamounts as adjusted under clause (iii) to reflect variations in wagesamong different areas.(ix)Notwithstandingthe per beneficiary limit under clause (viii), if the limit imposedunder clause (v) (determined without regard to this clause) for acost reporting period beginning during or after fiscal year 2000 isless than the median described in clause (vi)(I) (but determined asif any reference in clause (v) to 98 percent were areference to 100 percent), the limit otherwise imposedunder clause (v) for such provider and period shall be increased by2 percent.(x)Notwithstandingany other provision of this subparagraph, in updating any limit underthis subparagraph by a home health market basket index for cost reportingperiods beginning during each of fiscal years 2000, 2002, and 2003,the update otherwise provided shall be reduced by 1.1 percentage points.With respect to cost reporting periods beginning during fiscal year2001, the update to any limit under this subparagraph shall be thehome health market basket index.(M)Such regulationsshall provide that costs respecting care provided by a provider ofservices, pursuant to an assurance under title VI or XVI of the PublicHealth Service Act[513]that the provider will make available a reasonable volume of servicesto persons unable to pay therefor, shall not be allowable as reasonablecosts.(N)In determiningsuch reasonable costs, costs incurred for activities directly relatedto influencing employees respecting unionization may not be included.(O)(i)In establishingan appropriate allowance for depreciation and for interest on capitalindebtedness with respect to an asset of a provider of services whichhas undergone a change of ownership, such regulations shall provide,except as provided in clause (iii), that the valuation of the assetafter such change of ownership shall be the historical cost of theasset, as recognized under this title, less depreciation allowed,to the owner of record as of the date of enactment of the BalancedBudget Act of 1997[514](or, in the case of an assetnot in existence as of that date, the first owner of record of theasset after that date).(ii)Such regulationsshall not recognize, as reasonable in the provision of health careservices, costs (including legal fees, accounting and administrativecosts, travel costs, and the costs of feasibility studies) attributableto the negotiation or settlement of the sale or purchase of any capitalasset (by acquisition or merger) for which any payment has previouslybeen made under this title.(iii)In the caseof the transfer of a hospital from ownership by a State to ownershipby a nonprofit corporation without monetary consideration, the basisfor capital allowances to the new owner shall be the book value ofthe hospital to the State at the time of the transfer.(P)If such regulationsprovide for the payment for a return on equity capital (other thanwith respect to costs of inpatient hospital services), the rate ofreturn to be recognized, for determining the reasonable cost of servicesfurnished in a cost reporting period, shall be equal to the averageof the rates of interest, for each of the months any part of whichis included in the period, on obligations issued for purchase by theFederal Hospital Insurance Trust Fund.(Q)Except asotherwise explicitly authorized, the Secretary is not authorized tolimit the rate of increase on allowable costs of approved medicaleducational activities.(R)In determiningsuch reasonable cost, costs incurred by a provider of services representinga beneficiary in an unsuccessful appeal of a determination describedin section 1869(b) shall not be allowable as reasonable costs.(S)(i)Such regulationsshall not include provision for specific recognition of any returnon equity capital with respect to hospital outpatient departments.