Pennsylvania Code › Title 55 - HUMAN SERVICES › Part III - MEDICAL ASSISTANCE MANUAL › Chapter 1181 - NURSING FACILITY CARE › Subchapter B - MANUAL FOR ALLOWABLE COST REIMBURSEMENT FOR SKILLED NURSING AND INTERMEDIATE CARE FACILITIES › GENERAL PROVISIONS › Section 1181.202 - Definitions

Current through Register Vol. 54, No. 28, July 13, 2024
The following words and terms, when used in this
						subchapter, have the following meanings, unless the context clearly indicates
						otherwise:
Accrual basis
-An accounting method by
						which revenue is recorded in the period when it is earned, regardless of when
						it is collected, and expenses are recorded in the period when they are
						incurred, regardless of when they are paid.
Actual time method
-An accounting method
						used for determining depreciation which counts the number of months an asset is
						owned in both the year of acquisition and the year of disposal.
Allowable cost
-Costs which are necessary
						and reasonable to the proper care of Medical Assistance patients and which are
						identified in this subchapter.
Annual adjustment notice
-The notice from
						the Department comptroller of underpayment or overpayment stating the
						difference between the total of the interim payments to a facility and the
						total certified costs for the facility's audit year.
Average per diem cost
-The facility's
						total allowable costs for a level of care divided by the total actual patient
						days for the same level of care for a reporting period.
Bad debts
-Amounts considered to be
						uncollectable from accounts and notes receivable that were created or acquired
						in providing services.
Cash basis
-An accounting method by which
						cash is recorded when it is received, regardless of when it is earned and
						expenses are recorded when they are paid, regardless of when they are
						incurred.
Certified cost
-The amount of
						reimbursement due after the application of group ceilings and other adjustments
						due a facility for an audit period as certified to the Department comptroller
						by the Department auditors or their agents.
Common ownership
-A business arrangement
						wherein an individual, partnership, association or corporation has equity and,
						thereby, an association or affiliation in both the nursing facility and an
						organization which does business with the facility.
Facility
-A county or general nursing
						facility that is enrolled in the Medical Assistance Program.
Fair market value
-The value at which an
						asset could be sold in the open market in a transaction between unrelated
						parties.
Final per diem rate
-The rate established
						by the Department after completion of an audit of the facility's year-end cost
						report, comprised of the facility's allowable net operating per diem rate and
						an efficiency incentive, if appropriate, which are subject to the limitation of
						the applicable group ceiling, plus rates for allowable depreciation and
						interest.
Group ceiling
-The maximum per diem cost,
						excluding depreciation and interest on capital indebtedness, that may be
						reimbursed by the Medical Assistance Program for a facility in a specified
						group.
Half-year method
-An accounting method
						used for determining depreciation which counts 1/2 year's depreciation in the
						year in which an asset is acquired, plus 1/2 year's depreciation in the year in
						which the asset is disposed of, regardless of when the asset was acquired or
						disposed of during the year.
Interest
-The direct actual cost incurred
						for the use of borrowed funds.
Interest on capital indebtedness
-The
						direct cost incurred for funds borrowed for capital purposes. Examples are
						acquisition of facilities, equipment and capital improvements. Generally, loans
						for capital purposes are long term loans.
Interest on current indebtedness
-The
						direct cost incurred for funds borrowed for current operating expenses or
						working capital.
Interim payment
-Reimbursement for MA
						patients by the Department to the facility based on the interim per diem
						rate.
Investment income
-Actual or imputed
						income available to or accrued by a facility from funds which the facility
						invest or lends or which are held by others for the benefit of the
						facility.
Leasehold improvement
-The improvements
						made by the owners of a facility to the leased land, buildings or equipment,
						with amortization taken over the useful life of the asset.
Medicare Part B service
-A service for
						which reimbursement may be made to a facility under this subchapter and
						Medicare Part.
Medicare Part B type service
-A service
						for which reimbursement may be made to a facility under this subchapter and
						would be made under Medicare Part B if the service were rendered to a Medicare
						Part B eligible beneficiary.
Net operating cost
-The total allowable
						cost less depreciation and interest on capital indebtedness.
Patient day
-Care of one patient during a
						day of service. In maintaining statistics, the day of admission is counted as a
						day of patient care but the day of discharge is not counted as a day of patient
						care.
Per diem rate
-A comprehensive rate of
						payment for the costs of covered services for a patient day.
Private pay patient
-An individual for
						whom payment for services is made with his own resources, private insurance or
						funds from liable third parties but not by the MA Program.
Private pay rate
-The lowest rate for a
						semiprivate room charged by a facility to a private pay patient for a day of
						care, consisting of either a comprehensive charge or the sum of a flat rate of
						routine services plus the result of the total annual allowable cost for
						ancillary services for private pay patients which would be recognized as
						allowable by the MA Program for MA patients divided by the total annual private
						pay patient days.
Prudent buyer concept
-An accounting term
						used to refer to the price paid for items by a prudent buyer in the open market
						under competitive conditions.
Related party
-An individual or
						organization that is associated or affiliated with, or has control of or is
						controlled by, the provider. "Control," as used in this definition, means the
						power to influence or direct the actions or policies of
						another.