Social Security Act §1861

(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.(ii)(I)Such regulationsshall provide that, in determining the amount of the payments thatmay be made under this title with respect to all the capital-relatedcosts of outpatient hospital services, the Secretary shall reducethe amounts of such payments otherwise established under this titleby 15 percent for payments attributable to portions of cost reportingperiods occurring during fiscal year 1990, by 15 percent for paymentsattributable to portions of cost reporting periods occurring duringfiscal year 1991, and by 10 percent for payments attributable to portionsof cost reporting periods occurring during fiscal years 1992 through1999 and until the first date that the prospective payment systemunder section 1833(t)is implemented.(II)The Secretaryshall reduce the reasonable cost of outpatient hospital services (otherthan the capital-related costs of such services) otherwise determinedpursuant to section 1833(a)(2)(B)(i)(I) by 5.8 percentfor payments attributable to portions of cost reporting periods occurringduring fiscal years 1991 through 1999 and until the first date thatthe prospective payment system under section 1833(t) is implemented during fiscalyear 2000 before January 1, 2000.(III)Subclauses(I) and (II) shall not apply to payments with respect to the costsof hospital outpatient services provided by any hospital that is asole community hospital (as defined in section 1886(d)(5)(D)(iii)) or a criticalaccess hospital (as defined in section 1861(mm)(1)).(IV)In applyingsubclauses (I) and (II) to services for which payment is made on thebasis of a blend amount under section 1833(i)(3)(A)(ii) or 1833(n)(1)(A)(ii), the costsreflected in the amounts described in sections 1833(i)(3)(B)(i)(I) and 1833(n)(1)(B)(i)(I), respectively,shall be reduced in accordance with such subclause.(T)In determiningsuch reasonable costs for hospitals, no reduction in copayments undersection 1833(t)(8)(B) shall be treated as a bad debt and the amount of bad debts otherwisetreated as allowable costs which are attributable to the deductiblesand coinsurance amounts under this title shall be reduced(i)for cost reportingperiods beginning during fiscal year 1998, by 25 percent of such amountotherwise allowable,(ii)for cost reportingperiods beginning during fiscal year 1999, by 40 percent of such amountotherwise allowable,(iii)for costreporting periods beginning during fiscal year 2000, by 45 percentof such amount otherwise allowable[515](iv)for cost reportingperiods beginning during fiscal years 2001 through 2012[516], by 30 percentof such amount otherwise allowable, and[517](v)[518]for cost reporting periods beginning duringfiscal year 2013 or a subsequent fiscal year, by 35 percent of suchamount otherwise allowable.(U)In determiningthe reasonable cost of ambulance services (as described in subsection(s)(7)) provided during fiscal year 1998, during fiscal year 1999,and during so much of fiscal year 2000 as precedes January 1, 2000,the Secretary shall not recognize the costs per trip in excess ofcosts recognized as reasonable for ambulance services provided ona per trip basis during the previous fiscal year (after applicationof this subparagraph), increased by the percentage increase in theconsumer price index for all urban consumers (U.S. city average) asestimated by the Secretary for the 12-month period ending with themidpoint of the fiscal year involved reduced by 1.0 percentage point.For ambulance services provided after June 30, 1998, the Secretarymay provide that claims for such services must include a code (orcodes) under a uniform coding system specified by the Secretary thatidentifies the services furnished.(V)In determiningsuch reasonable costs for skilled nursing facilities and (beginningwith respect to cost reporting periods beginning during fiscal year2013) for covered skilled nursing services described in section 1888(e)(2)(A) furnishedby hospital providers of extended care services (as described in section 1883)[519], the amount ofbad debts otherwise treated as allowed costs which are attributableto the coinsurance amounts under this title for individuals who areentitled to benefits under part A and(i)[520]are not described insection 1935(c)(6)(A)(ii) shall be reduced by(I)for costreporting periods beginning on or after October 1, 2005, but beforefiscal year 2013, 30 percent of such amount otherwise allowable; and(II)for costreporting periods beginning during fiscal year 2013 or a subsequentfiscal year, by 35 percent of such amount otherwise allowable.(ii)are describedin such section(I)for costreporting periods beginning on or after October 1, 2005, but beforefiscal year 2013, shall not be reduced;(II)for costreporting periods beginning during fiscal year 2013, shall be reducedby 12 percent of such amount otherwise allowable;(III)forcost reporting periods beginning during fiscal year 2014, shall bereduced by 24 percent of such amount otherwise allowable; and(IV)for costreporting periods beginning during a subsequent fiscal year, shallbe reduced by 35 percent of such amount otherwise allowable.[521](W)[522](i)In determiningsuch reasonable costs for providers described in clause (ii), theamount of bad debts otherwise treated as allowable costs which areattributable to deductibles and coinsurance amounts under this titleshall be reduced(I)for costreporting periods beginning during fiscal year 2013, by 12 percentof such amount otherwise allowable;(II)for costreporting periods beginning during fiscal year 2014, by 24 percentof such amount otherwise allowable; and(III)forcost reporting periods beginning during a subsequent fiscal year,by 35 percent of such amount otherwise allowable.(ii)A providerdescribed in this clause is a provider of services not described insubparagraph (T) or (V), a supplier, or any other type of entity thatreceives payment for bad debts under the authority under subparagraph(A).(2)(A)If the bedand board furnished as part of inpatient hospital services (includinginpatient tuberculosis hospital services and inpatient psychiatrichospital services) or post-hospital extended care services is in accommodationsmore expensive than semi-private accommodations, the amount takeninto account for purposes of payment under this title with respectto such services may not exceed the amount that would be taken intoaccount with respect to such services if furnished in such semi-privateaccommodations unless the more expensive accommodations were requiredfor medical reasons.(B)Where a providerof services which has an agreement in effect under this title furnishesto an individual items or services which are in excess of or moreexpensive than the items or services with respect to which paymentmay be made under part A or part B, as the case may be, the Secretaryshall take into account for purposes of payment to such provider ofservices only the items or services with respect to which such paymentmay be made.[523](3)If the bed andboard furnished as part of inpatient hospital services (includinginpatient tuberculosis hospital services and inpatient psychiatrichospital services) or post-hospital extended care services is in accommodationsother than, but not more expensive than, semi-private accommodationsand the use of such other accommodations rather than semi-privateaccommodations was neither at the request of the patient nor for areason which the Secretary determines is consistent with the purposesof this title, the amount of the payment with respect to such bedand board under part A shall be the amount otherwise payable underthis title for such bed and board furnished in semi-private accommodationsminus the difference between the charge customarily made by the hospitalor skilled nursing facility for bed and board in semi-private accommodationsand the charge customarily made by it for bed and board in the accommodationsfurnished.(4)If a providerof services furnishes items or services to an individual which arein excess of or more expensive than the items or services determinedto be necessary in the efficient delivery of needed health servicesand charges are imposed for such more expensive items or servicesunder the authority granted in section 1866(a)(2)(B)(ii), the amountof payment with respect to such items or services otherwise due suchprovider in any fiscal period shall be reduced to the extent thatsuch payment plus such charges exceed the cost actually incurred forsuch items or services in the fiscal period in which such chargesare imposed.(5)(A)Where physicaltherapy services, occupational therapy services, speech therapy services,or other therapy services or services of other health-related personnel(other than physicians) are furnished under an arrangement with aprovider of services or other organization, specified in the firstsentence of subsection (p) (including through the operation of subsection(g)) the amount included in any payment to such provider or otherorganization under this title as the reasonable cost of such services(as furnished under such arrangements) shall not exceed an amountequal to the salary which would reasonably have been paid for suchservices (together with any additional costs that would have beenincurred by the provider or other organization) to the person performingthem if they had been performed in an employment relationship withsuch provider or other organization (rather than under such arrangement)plus the cost of such other expenses (including a reasonable allowancefor traveltime and other reasonable types of expense related to anydifferences in acceptable methods of organization for the provisionof such therapy) incurred by such person, as the Secretary may inregulations determine to be appropriate.(B)Notwithstandingthe provisions of subparagraph (A), if a provider of services or otherorganization specified in the first sentence of section 1861(p) requires theservices of a therapist on a limited part-time basis, or only to performintermittent services, the Secretary may make payment on the basisof a reasonable rate per unit of service, even though such rate isgreater per unit of time than salary related amounts, where he findsthat such greater payment is, in the aggregate, less than the amountthat would have been paid if such organization had employed a therapiston a full-or part-time salary basis.(6)For purposes ofthis subsection, the term semi-private accommodations means two-bed, three-bed, or four-bed accommodations.(7)(A)For limitationon Federal participation for capital expenditures which are out ofconformity with a comprehensive plan of a State or areawide planningagency, see section 1122.(B)For furtherlimitations on reasonable cost and determination of payment amountsfor operating costs of inpatient hospital services and waivers forcertain States, see section 1886.(C)For provisionsrestricting payment for provider-based physicians servicesand for payments under certain percentage arrangements, see section 1887.(D)For furtherlimitations on reasonable cost and determination of payment amountsfor routine service costs of skilled nursing facilities, see subsections(a) through (c) of section 1888.(8)Items unrelatedto patient careReasonable costs do not include costs for thefollowing(i)entertainment,including tickets to sporting and other entertainment events;(ii)gifts or donations;(iii)personal useof motor vehicles;(iv)costs for finesand penalties resulting from violations of Federal, State, or locallaws; and(v)education expensesfor spouses or other dependents of providers of services, their employeesor contractors.Arrangements for Certain Services(w)(1)The term arrangements is limited to arrangements under which receiptof payment by the hospital, critical access hospital, skilled nursingfacility, home health agency, or hospice program (whether in its ownright or as agent), with respect to services for which an individualis entitled to have payment made under this title, discharges theliability of such individual or any other person to pay for the services.