§ 1181.1. Policy.

 (a)  This subchapter applies to psychiatric transitional facilities that are enrolled in the MA Program. To the extent that this subchapter is inconsistent with Subchapter B (relating to manual for allowance cost reimbursement for skilled nursing and intermediate care facilities), Subchapter B prevails for psychiatric transitional facilities.

 (b)  The MA Program provides payment for psychiatric transitional facility services provided to eligible recipients by enrolled providers. Payment for services is made subject to this subchapter, Subchapter B for psychiatric transitional facilities, and Chapter 1101 (relating to general provisions). The upper limit of payment of the MA Program is specified in §  1181.68 (relating to upper limits of payment).

 (c)  Any section of this subchapter may not be applied or interpreted out of context.

 (d)  Extensions of time will be as follows:

   (1)  The time limits established by this chapter for the filing of an application, cost report, waiver request or appeal cannot be extended except as provided in this section.

   (2)  Extensions of time in addition to the time otherwise prescribed for providers by this chapter with respect to the filing of an application, cost report, waiver request or appeal may be permitted only if required because of a breakdown in Department procedures justifying relief nunc pro tunc or because of an intervening natural disaster making timely compliance impossible or unsafe.

   (3)  This subsection supersedes 1 Pa. Code §  31.15 (relating to extensions of time).

 The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise:

   Certified registered nurse practitioner—A registered nurse licensed in this Commonwealth who is currently certified by the State Board of Medicine and the State Board of Nursing as a certified registered nurse practitioner as defined at 42 CFR 481.2(b).

   County nursing facility—A nursing facility controlled and totally funded by the County Institution District or by the county if no County Institution District exists. ‘‘Totally funded,’’ as used in this definition, means that the county funds costs which are not reimbursed by liable third parties, such as MA, Medicare or other health insurance programs. ‘‘Controlled,’’ as used in this definition, means that the county government directs the actions and policies of the facility. The term does not include intermediate care facilities for the mentally retarded controlled or totally funded by a County Institution District or county government.

   Distinct part—A designated part or unit of a health care facility licensed or approved by the appropriate State agency to provide a specific level of care, either skilled nursing, intermediate care or intermediate care for the mentally retarded.

   General nursing facility—A skilled nursing or intermediate care facility, including special rehabilitation and hospital-based facility, that is owned by an individual, partnership, association or corporation and may be operated on a profit or nonprofit basis. The term does not include intermediate care facilities for the mentally retarded, psychiatric transitional facilities, State-owned facilities or county nursing facilities.

   HIM-15—The Medicare Provider Reimbursement Manual, Health Insurance Manual-15.

   Heavy care/intermediate services—Health related care and services, provided to a patient in a dually certified skilled bed, which are not as inherently complex as skilled nursing services, which meet the criteria in Appendix F (relating to heavy care/intermediate services) and which are:

     (i)   Ordered by and provided under the direction of a physician.

     (ii)   Needed in the context of a planned program of health care management due to the degree of functional impairment.

     (iii)   Provided to a patient requiring 24-hour supervision on an inpatient basis.

   Hospital-based nursing facility—A distinct part skilled nursing or intermediate care unit that is:

     (i)   Located physically within or on the immediate grounds of a hospital.

     (ii)   Operated or controlled by the hospital.

     (iii)   Licensed or approved by the Department of Health and meets the requirements of 28 Pa. Code §  101.31 (relating to hospital requirements) and shares support services and administrative costs of the hospital.

   Interim per diem rate—The rate established by the Department for the purpose of making interim payments to the facility pending a year-end cost settlement. The interim per diem rate is based on the facility’s latest approved reported costs, and is limited by the upper limits of payment specified in §  1181.68 (relating to upper limits of payment).

   Intermediate care—A level of care provided by a facility that is licensed by the Department of Health to provide intermediate care. Intermediate care shall be ordered by, and provided under the direction of a physician. It is available on a continuous 24-hour basis to a person who does not require the degree of care and treatment provided in a hospital or skilled nursing facility. Because of a mental or physical disability, the person does, however, require nursing and related health and medical services in the context of a planned program of health care and management. The term does not include intermediate care for the mentally retarded.

   Intermediate care for the mentally retarded—A level of care provided by a State-operated or non-State-operated facility licensed as an ICF/MR facility by the Department. Care is specially designed to meet the needs of persons who are mentally retarded, or persons with related conditions, who require specialized health and rehabilitative services; that is, active treatment provided by an intermediate care facility for the mentally retarded.

   Nursing facility—A general descriptive term that includes general nursing facilities, hospital-based nursing facilities, county-operated nursing facilities, intermediate care facilities for the mentally retarded, psychiatric transitional facilities and special rehabilitation facilities.

   Physician assistant—An individual currently certified as a physician assistant by the State Board of Medicine or by the State Board of Osteopathic Medicine and who meets the qualifications for a physician assistant as defined at 42 CFR 481.2(d).

   Psychiatric transitional facility—A private or public facility which provides skilled nursing or intermediate care services primarily to individuals who have been discharged from institutions for mental diseases and who require nursing services for a limited period of time to prepare them to function independently in a community setting. The psychiatric transitional facility shall exclusively serve this population group and must give the Department control over intake decisions.

   Skilled nursing facility services—Skilled nursing and rehabilitation services which are provided in accordance with the Medicare requirements and which meet the criteria in Appendix E (relating to skilled nursing care) by a facility or distinct part of a facility that is licensed to provide skilled care and is certified to meet the requirements for participation as a provider in the MA Program.

   Special rehabilitation facility—A facility with skilled or intermediate care patients more than 80% of whom are so severely physically disabled that they require intensive services thereby necessitating facility staffing at the levels specified in §  1181.242(b) (relating to nursing staff allowance).

   The provisions of this §  1181.2 amended under sections 403(a) and (b) and 443.1(2) and (3) of the Public Welfare Code (62 P. S. § §  403(a) and (b) and 443.1(2) and (3)); amended under section 443.1(2) and (3) of the Public Welfare Code (62 P. S. §  443.1(2) and (3)).

   The provisions of this §  1181.2 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610; amended July 2, 1982, effective July 1, 1982, 12 Pa.B. 2070; amended January 7, 1983, effective January 8, 1983, 13 Pa.B. 148; amended May 3, 1985, effective retroactively to July 1, 1984, 15 Pa.B. 1629; amended September 5, 1986, effective July 1, 1985, 16 Pa.B. 3294; amended March 10, 1989, effective immediately and applies retroactively to February 23, 1988, 19 Pa.B. 999; amended March 10, 1989, effective immediately and applies retroactively to January 1, 1989, 19 Pa.B. 1005. Immediately preceding text appears at serial pages (117410) to (117412).

SCOPE OF BENEFITS

§ 1181.21. Scope of benefits for the categorically needy.

 Categorically needy recipients are eligible for medically necessary skilled nursing care, intermediate care, and intermediate care for the mentally retarded, subject to the conditions and limitations established in this chapter and Chapter 1101 (relating to general provisions).

 Medically needy recipients are eligible for medically necessary skilled nursing care, intermediate care and intermediate care for the mentally retarded, subject to the conditions and limitations established in this chapter and Chapter 1101 (relating to general provisions).

 State Blind Pension recipients are not eligible for nursing facility care under the MA Program. Blind and visually impaired individuals are, however, eligible for nursing facility services if they qualify as categorically or medically needy recipients.

 Qualified Medicare beneficiaries only are not eligible for nursing facility care under the MA Program. Qualified Medicare beneficiaries are eligible for nursing facility services if they qualify as categorically or medically needy recipients.

 General Assistance recipients, age 21 to 65, whose MA benefits are funded solely by State funds, are eligible for medically necessary basic health care benefits as defined in Chapter 1101 (relating to general provisions). See §  1101.31(e) (relating to scope).

   The provisions of this §  1181.25 adopted December 11, 1992, effective January 1, 1993, 22 Pa.B. 5995.

PROVIDER PARTICIPATION

§ 1181.41. Provider participation requirements.

 In addition to the participation requirements established in Chapter 1101 (relating to general provisions), nursing facilities shall meet the following requirements:

   (1)  Skilled nursing care and intermediate care facilities shall be licensed by the Department of Health.

   (2)  Intermediate care facilities for the mentally retarded shall be licensed by the Department.

   (3)  Nursing facilities shall abide by applicable Federal, State and local statutes and regulations, including, but not limited to, Title XIX of the Social Security Act (42 U.S.C.A. § §  1396—1396q), sections 443.1—443.6 of the Public Welfare Code (62 P. S. § §  443.1—443.6) and applicable licensing statutes. Nursing facilities shall conform with the requirements specified in Title XIX of the Social Security Act and the regulations promulgated thereunder which are necessary for the Department to receive Federal financial participation for nursing services rendered by the facilities.

   (4)  A facility with more than 60 licensed beds shall be enrolled and participating in the Medicare Program. This paragraph does not apply to a facility that has no beds certified to provide skilled care.

   The provisions of this §  1181.41 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610; amended March 10, 1989, effective immediately and applies retroactively to January 1, 1989, 19 Pa.B. 1005. Immediately preceding text appears at serial pages (133589) to (133590).

   Court rejected petitioner’s contention that Department of Public Welfare’s regulations regarding classification of nursing care as skilled or intermediate were inconsistent with Department of Health’s regulations. The Department of Public Welfare has been named as the single state agency to administer and supervise the medicard program and the Department of Health is merely in charge of licensing skilled and intermediate care facilities. Barnett v. Department of Public Welfare, 491 A.2d 320 (Pa. Cmwlth. 1985).

 (a)  As a result of the multiple changes to §  1181.41(4) (relating to provider participation requirements), a facility providing skilled care, enrolled in the MA Program with more than 60 licensed beds, shall also be enrolled in the Medicare program to the extent that it has sufficient beds to accommodate Medicare eligible residents. This does not preclude a facility with a bed complement of under 60 beds from enrolling in the Medicare program.

 (b)  A facility certified to participate in the Medicare program shall have sufficient beds to accommodate its Medicare eligible residents. Payment will be based on criteria found in §  1181.51(b) (relating to general payment policy).

 (c)  If a facility has a total bed complement of more than 60 licensed beds and is not enrolled in the Medicare Program, the Department of Health should be contacted to enroll the skilled beds. Medicare enrollment forms may be requested from and returned to: Department of Health, Division of Long Term Care, Room 526, Health and Welfare Building, Harrisburg, Pennsylvania 17108, (717) 787-1816.

 (d)  Failure to be enrolled and certified in the Medicare Program will result in denial of claims for a recipient with both Medicare and MA coverage.

 In addition to the participation requirements listed in § §  1181.41 and 1181.45 (relating to provider participation requirements; and ongoing responsibilities of providers), hospital-based nursing units shall meet the following requirements:

   (1)  The nursing unit shall be composed of former acute care hospital beds that have been converted to and certified for skilled nursing or intermediate care.

   (2)  The need for the beds shall have been approved by the local health planning agency.

   (3)  The distinct part unit may not exceed 50% of the facility’s total licensed or approved bed complement for acute hospital care. A facility will, however, be granted an exception to the 50% bed limit if it submits written documentation to the Office of MA, Bureau of Long Term Care Programs, substantiating that all of the following criteria have been met:

     (i)   Beds operated in excess of the 50% limit have been approved by the Department of Health, Division of Need Review.

     (ii)   The unit is located in an area underserved or lacking long term care beds under an approved local health plan.

     (iii)   More than 50% of the unit’s licensed long term care beds are occupied by MA patients.

 (a)  In addition to § §  1181.41 and 1181.45 (relating to provider participation requirements; and ongoing responsibilities of providers), intermediate care facilities for the mentally retarded shall enter into a written provider agreement with the Office of MA.

 (b)  State-operated intermediate care facilities for the mentally retarded shall submit budgets on Department forms to the Office of Mental Retardation.

 (c)  Non-State operated intermediate care facilities for the mentally retarded shall submit cost reports, or budgets if a waiver is granted in accordance with Subchapter C (Reserved), to the Office of Mental Retardation.

 (d)  The Office of Mental Retardation is responsible for approving projected operating costs and budgets for intermediate care facilities for the mentally retarded.

 In addition to the participation requirements in § §  1181.41 and 1181.45 (relating to provider participation requirements; and ongoing responsibilities of providers), psychiatric transitional facilities and other State-operated nursing facilities other than intermediate care facilities for the mentally retarded shall also submit budgets to the Office of Fiscal Management and the Office of MA, Bureau of Long Term Care Programs, for review and approval 60 days prior to July 1 of each year.

 (a)  In addition to the ongoing responsibilities established in Chapter 1101 (relating to general provisions), a nursing facility shall, as a condition of participation:

   (1)  Submit a Utilization Review Plan to the Office of MA for approval.

   (2)  Have in operation a system for managing patients’ funds that, at a minimum, fully complies with the Medicare long term care certification requirements established at 42 CFR 405.1121(k)(6) (relating to conditions of participation—governing body and management).

     (i)   The facility in which a qualified Medical Assistance recipient dies may, under the circumstances described in this subparagraph, make payment of funds, if any remain in the patient’s care account, for the decedent’s burial expenses. Payment may be made only to a qualified funeral director and may not exceed $1,000. The payment may be made whether or not a personal representative has been appointed.

     (ii)   Subparagraph (i) applies only in circumstances where there is no will, if this is ascertainable, and if no relative or friend of the deceased patient takes responsibility for the burial. Under 20 Pa.C.S. (relating to Probate, Estates and Fiduciaries Code) a facility making such a payment is released from responsibility to the same extent as if payment had been made to an appointed personal representative of the decedent and the facility is not required to oversee the manner in which the funeral director applies the payment.

   (3)  File an acceptable cost report with the Department within the time limit specified in §  1181.64 (relating to cost reporting) if the facility is continuing its participation in the MA Program or within the time limit specified in §  1181.73 (relating to final reporting) if the facility is sold, transferred by merger or consolidation, terminated or withdraws from participation in the MA Program. An acceptable cost report is one that meets the requirements of §  1181.66(a)(1)(i)—(iv) (relating to setting ceilings on allowable net operating costs).

   (4)  Except for non-State operated intermediate care facilities for the mentally retarded, if making initial application for participation, submit a projected MA 11 cost report to the Bureau of Long Term Care Programs for the purpose of establishing an interim per diem rate.

   (5)  Undergo at least an annual onsite inspection of care by the Department’s Inspection of Care Team and within 30 days of receipt of the team’s report, submit a written response, if required by the Department.

   (6)  Submit to the Bureau of Long Term Care Programs changes in ownership of persons having a direct or indirect interest of 5% or more in the nursing facility and, if a corporation, changes in the name or address of corporate officers.

   (7)  Have a written transfer agreement with one or more general hospitals to provide needed diagnostic and other medical services to patients of the nursing facility, and under which acutely ill patients may be transferred to ensure timely admission. Hospital based units are exempt from this requirement.

 (b)  If the facility changes ownership and the new owner wishes the facility to participate in MA, the facility shall submit a written request for participation to the Bureau of Long Term Care Programs. The agreement in effect at the time of the ownership change will be assigned to the new owner subject to applicable statutes and regulations and to the terms and conditions under which it was originally issued.

   The provisions of this §  1181.45 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610; amended May 3, 1985, effective retroactively to July 1, 1984, 15 Pa.B. 1629; amended March 10, 1989, effective immediately and applies retroactively to January 1, 1989, 19 Pa.B. 1005. Immediately preceding text appears at serial pages (117415) to (117417).

   Nursing care facilities must file a ‘‘cost report’’ with the Department within 90 days of the close of each fiscal year in order to be eligible for cost reimbursement. Harston Hall Nursing and Convalescent Home, Inc. v. Department of Public Welfare, 513 A.2d 1097, 1099 (Pa. Commw. 1986).

   This section cited in 55 Pa. Code §  1181.42 (relating to additional participation requirements for hospital-based nursing units); 55 Pa. Code §  1181.43 (relating to additional participation requirements for intermediate care facilities for the mentally retarded); and 55 Pa. Code §  1181.44 (relating to additional participation requirements for State-operated nursing facilities other than intermediate care facilities for the mentally retarded).

PAYMENT FOR NURSING FACILITY CARE

§ 1181.51. General payment policy.

 (a)  Payment for nursing facility care is subject to the following conditions and limitations:

   (1)  This chapter and Chapter 1101 (relating to general provisions).

   (2)  The applicable per diem ceilings established under §  1181.66 (relating to setting ceilings on allowable net operating costs) and announced by the submission of a notice for recommended publication in the Pennsylvania Bulletin and suggested codification in the Pennsylvania Code as an annex to §  1181.66 for the location of the facility, level of care, type of facility and date of service involved. Heavy care/intermediate services shall be paid at the higher of a facility’s applicable rates for skilled or intermediate care, as limited by the ceilings.

 (b)  Payment will not be made for long term care if full payment, at the medical assistance interim per diem rate, is available from another public agency, another insurance or health program, or the patient’s resources.

   The provisions of this §  1181.51 amended under sections 201 and 443.1(2) of the Public Welfare Code (62 P. S. § §  201 and 443.1(2)).

   The provisions of this §  1181.51 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610; amended May 3, 1985, effective retroactively to July 1, 1984, 15 Pa.B. 1629; amended September 6, 1985, effective September 7, 1985, except that the groups and ceilings shall be effective and apply at audit to costs of services rendered from July 1, 1984 through December 31, 1985, 15 Pa.B. 3181; amended March 10, 1989, effective immediately and applies retroactively to February 23, 1988, 19 Pa.B. 999. Immediately preceding text appears at serial pages (117417) to (117418).

 For payment to be made to a nursing facility for covered services the applicable conditions of § §  1181.51—1181.69 (relating to payment for nursing facility care) shall be met. Payment shall be subject to the sanctions in this chapter and as otherwise provided by law.

 (a)  Certification of need for care. For skilled, heavy care/intermediate, intermediate and intermediate care for the mentally retarded levels of care, a physician, or a nurse practitioner or clinical nurse specialist who is not an employe of the facility but is working in collaboration with a physician, shall certify in writing on the medical record that the applicant or recipient needs skilled, heavy care/intermediate, intermediate care or intermediate care for the mentally retarded as applicable. The certification shall be signed and dated by a physician, or a nurse practitioner or clinical nurse specialist who is not an employe of the facility but is working in collaboration with a physician, not more than 30 days prior to the admission of an applicant or recipient to a facility, or, if an individual applies for assistance while in a facility before the Department authorizes payment for nursing facility care or intermediate care for the mentally retarded.

 (b)  Medical evaluation. The medical evaluation shall consist of the following:

   (1)  Before admission to a facility for skilled nursing care or before authorization of payment, the attending physician shall make a medical evaluation of the applicant’s or recipient’s need for skilled nursing care.

   (2)  Before the latter of the admission of an applicant or recipient to a skilled nursing facility or the Department’s authorization of payment for skilled nursing care, an applicant or recipient shall be determined to be medically eligible for skilled nursing care in accordance with the criteria specified in Appendix E (relating to skilled nursing care). Skilled Nursing Care Assessment forms which are designed to enable the Department to determine whether the criteria specified in Appendix E are met by a recipient, will be supplied by the Department. The form shall be completed by a physician.

   (3)  Before admission to a facility for heavy care/intermediate, intermediate care or intermediate care for the mentally retarded, or before authorization for payment, an interdisciplinary team of health professionals shall make a comprehensive medical and social evaluation and, when appropriate, a psychological evaluation of each applicant’s or recipient’s need for heavy care/intermediate, intermediate care or intermediate care for the mentally retarded. In an intermediate care facility for the mentally retarded, the team shall also make a psychological evaluation of need for care.

   (4)  The following criteria shall be met before a person qualifies for an intermediate care facility for the mentally retarded level (ICF/MR) of care:

     (i)   The applicant or recipient has a diagnosis of mental retardation.

     (ii)   The applicant or recipient requires active treatment.

     (iii)   The applicant or recipient is recommended for an ICF/MR level of care based on medical evaluation as specified in Appendix Q (Reserved).

   (5)  The evaluations required in this subsection shall be recorded on the patient’s medical record and on forms issued by the Department and forwarded to the Department for review and assessment. The Department’s Review Team will evaluate the need for admission and authorize payment for the appropriate level of care.

   (6)  The Department will send a written notice of the authorization or denial of payment to the nursing facility and the patient.

   (7)  The notice will indicate the effective date of coverage and the amount of money the patient has available to contribute toward the interim per diem rate. Obtaining the patient’s share of the interim per diem rate is the responsibility of the nursing facility.

 (c)  Plan of care. Before admission to a skilled nursing facility, intermediate care facility or intermediate care facility for the mentally retarded, or before authorization for payment, the attending physician shall establish a written plan of care for each applicant or recipient. The plan of care shall indicate time-limited and measurable care objectives and goals to be accomplished and who is to give each element of care.

   The provisions of this §  1181.53 amended under sections 403(a) and (b), 443.1(2) and (3) and 443.6 of the act of June 13, 1967 (P. L. 31, No. 21) (62 P. S. § §  403(a) and (b), and 443.1(2) and (3) and 443.6).

   The provisions of this §  1181.53 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610; amended January 7, 1983, effective January 8, 1983, 13 Pa.B. 148; amended November 30, 1984, effective December 1, 1984, 14 Pa.B. 4370, and by approval of the court of a joint motion for modification of a consent agreement dated February 11, 1985 in Turner v. Beal, et al., C.A. No. 74-1680 (E.D. Pa. 1975); amended May 3, 1985, effective retroactively to July 1, 1984, 15 Pa.B. 1629; amended March 10, 1989, effective immediately and applies retroactively to February 23, 1988, 19 Pa.B. 999; amended June 29, 1990, effective June 30, 1990, 20 Pa.B. 3595. Immediately preceding text appears at serial pages (135888) to (135889).

 (a)  Recertification of continued need for care.

   (1)  A physician, a physician assistant under the supervision of a physician or a nurse practitioner or clinical nurse specialist who is not an employe of the facility but is working in collaboration with a physician shall enter into the recipient’s medical record a signed and dated statement that the recipient continues to need skilled, heavy care/intermediate or intermediate level of care, as applicable. For a certification for the skilled level of care to be considered valid, the physician, physician assistant, nurse practitioner or clinical nurse specialist shall certify that the criteria specified in Appendix E (relating to skilled nursing care) have been met. For a certification for the heavy care/intermediate level of care to be considered valid, the physician, physician assistant, nurse practitioner or clinical nurse specialist shall certify that the criteria in Appendix F (relating to heavy care/intermediate services) have been met.

   (2)  Recertification of the need for care of a recipient receiving care in an ICF/MR shall be made at least once every 365 days after the initial certification as specified in Appendix Q (Reserved).

   (3)  Recertification of the need for care of a recipient receiving skilled nursing facility services shall be made as follows:

     (i)   At least 30 days after the date of the initial certification.

     (ii)   At least 60 days after the date of the initial certification.

     (iii)   At least 90 days after the date of the initial certification and every 60 days thereafter.

   (4)  Recertification of the need for care of a recipient receiving heavy care/intermediate or intermediate care services shall be made as follows:

     (i)   At least 60 days after the date of the initial certification.

     (ii)   At least 180 days after the date of the initial certification.

     (iii)   At least 12 months after the date of the initial certification.

     (iv)   At least 18 months after the date of the initial certification.

     (v)   At least 24 months after the date of the initial certification and every 12 months thereafter.

 (b)  Continued stay reviews by the Utilization Review Committee.

   (1)  The Utilization Review Committee of a facility shall document in the medical record of the recipient the continued stay review date and need determination of the Committee.

   (2)  If the Utilization Review Committee recommends that a recipient’s continued stay at the skilled level of care is needed, the Committee shall complete the Skilled Nursing Care Assessment form substantiating that the recipient meets the minimum medical requirements for skilled level of care specified in §  1181.53(b)(2) (relating to payment conditions related to the recipient’s initial need for care). The Skilled Nursing Care Assessment form shall be completed each time the Utilization Review Committee recommends that the recipient’s continued stay be at the skilled level of care. The form shall be signed by the Utilization Review Committee chairperson and retained in the medical record of the recipient. If the Utilization Review Committee recommends that a recipient’s level of care be changed to or from the skilled level of care, the original of the Skilled Nursing Care Assessment form shall accompany the Committee’s notification (Utilization Review Request for Change Summary) to the Department. Copies of the forms shall be retained in the recipient’s medical record.

   (3)  If the Utilization Review Committee recommends that a recipient’s level of care be changed to intermediate care from skilled or heavy care/intermediate, the Committee shall notify the Department of the Committee’s recommendation on the Utilization Review Request for Change Summary form. A copy of the form shall be retained in the recipient’s medical record.

   (4)  If the Utilization Review Committee recommends that a recipient’s level of care be changed to heavy care/intermediate from skilled or intermediate, the Committee shall notify the Department of the Committee’s recommendation on the Utilization Review Request for Change Summary form. A copy of the form shall be retained in the recipient’s medical record. The Committee shall also submit documentation to the Department to substantiate that the recipient meets the minimum medical requirements for the heavy care/intermediate level of care specified in Appendix F (relating to heavy care/intermediate services).

   (5)  If the Utilization Review Committee recommends that a recipient not continue to receive the level of care for which payment is authorized, the Committee shall notify the Department of the Committee’s recommendation on the Utilization Review Request for Change Summary form. A copy of the form shall be retained in the recipient’s medical record.

 (c)  Adverse decisions by the Inspection of Care team. If the Department’s Inspection of Care team determines that a recipient no longer needs the level of care for which payment is authorized, the Inspection of Care team shall direct the Department to take action to authorize payment for alternate care.

 (d)  Recipient notice of adverse decisions. Upon notification of the recommended change in the level of care, the Department will notify the recipient and facility of its decision. If the recipient or the representative of the recipient appeals the decision within 10 calendar days from the date the notice is mailed, payment for the present level of care will continue pending the outcome of the hearing. If the recipient does not respond to the notice within 10 calendar days, the Department will deny payment in a case where care is no longer needed or authorize payment for the appropriate level of care no earlier than 10 calendar days from the date the notice was mailed to the recipient.

 (e)  Continued review of plan of care. The plan of care shall comply with the following:

   (1)  For recipients receiving skilled nursing care, the attending or staff physician and other personnel involved in the care of the recipient shall review each plan of care at least every 60 days and document the date of the review in the record of the patient.

   (2)  For recipients receiving intermediate, heavy care/intermediate or intermediate care for the mentally retarded, the interdisciplinary team shall review each plan of care at least every 90 days and document the date of the review in the record of the recipient.

 (f)  Attending physician decision on level of care.

   (1)  In response to changes in the recipient’s medical condition, the attending physician may order a change in the recipient’s level of care which is different from the level of care for which payment is authorized.

   (2)  If the attending physician recommends a change in the recipient’s level of care to or from the skilled level of care, the attending physician shall document the change in the recipient’s medical record and sign a completed Skilled Nursing Care Assessment form which substantiates that the recipient meets or does not meet the minimum medical criteria for skilled level of care specified in §  1181.53(b)(2). The attending physician shall sign and date the entry in the medical record. The original of the Skilled Nursing Care Assessment form shall accompany the Attending Physician Request for Change Summary form to the Department. Copies of the forms shall be retained in the recipient’s medical record. The facility shall make the change immediately and notify the Department of the change. The Department will issue a Confirming Notice to the recipient or the person acting on behalf of the recipient and to the nursing facility.

   (3)  If the attending physician recommends a change in the recipient’s level of care to the intermediate level of care, the attending physician shall document the change in the recipient’s medical record and notify the Department of the level of care change on the Attending Physician Request for Change Summary form. A copy of the form shall be retained in the recipient’s medical record.

   (4)  If the attending physician recommends a change in the recipient’s level of care to the heavy care/intermediate level of care, the attending physician shall document the change in the recipient’s medical record. The facility shall notify the Department of the level of care change on the Attending Physician Request for Change Summary form. A copy of the form shall be retained in the recipient’s medical record. The facility shall also submit documentation to the Department to substantiate that the recipient meets the minimum medical requirements for the heavy care/intermediate level of care in Appendix F.

   (5)  If the recipient’s level of care is changed as a result of a determination by the Department’s Inspection of Care team as described in subsection (c), the attending physician may order a change in the recipient’s level of care only if the recipient’s medical condition changes subsequent to the date of the Inspection of Care team’s determination and the change in the recipient’s medical condition warrants another level of care. The physician shall date and sign the documentation of the change in the medical condition and state the alternate care recommendation in the recipient’s record.

     (i)   If ordering the skilled level of care, the attending physician shall sign and date a completed Skilled Nursing Care Assessment form substantiating that the recipient meets the minimum medical requirements for skilled level of care specified in §  1181.53(b)(2). The original of the Skilled Nursing Care Assessment form substantiating the recipient’s medical eligibility shall accompany the Attending Physician Request for Change Summary form to the Department. Copies of the forms shall be retained in the recipient’s medical record.

     (ii)   If ordering the intermediate level of care, the attending physician shall complete an Attending Physician Request for Change Summary form, and the original copy shall be sent to the Department. A copy of the form shall be retained in the recipient’s medical record.

     (iii)   If ordering the heavy care/intermediate level of care, the attending physician shall complete an Attending Physician Request for Change Summary form. The original of the Attending Physician Request for Change Summary form and documentation to substantiate that the recipient meets the minimum medical requirements for the heavy care/intermediate level of care in Appendix F, shall be sent to the Department. A copy of the form shall be retained in the recipient’s medical record.

 (g)  Payment pending appeal. If the recipient or the person or the nursing facility acting on behalf of the recipient appeals an action of the Department to change the level of care for which payment is authorized within the time period specified on the advance notice issued by the Department, the Department will make payment to the facility for the level of care the recipient is presently receiving pending the outcome of the hearing under §  275.4(a)(3)(iii) (relating to procedures). If the Department is sustained in its action, the Department will recover from the facility payments in excess of the amount that would have been made if the action of the Department had not been appealed. The period for which the Department will recover excess payment runs from the effective date specified on the advance notice to the date that the appropriate change in the level of care for which payment is authorized is made.

   The provisions of this §  1181.54 amended under sections 403(a) and (b) and 443.1(2) and (3) of the Public Welfare Code (62 P. S. § §  403(a) and (b) and 443.1(2) and (3)).

   The provisions of this §  1181.54 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610; amended July 2, 1982, effective July 1, 1982, 12 Pa.B. 2070; amended January 7, 1983, effective January 8, 1983, 13 Pa.B. 148; amended May 3, 1985, effective retroactively to July 1, 1984, 15 Pa.B. 1629; amended March 10, 1989, effective immediately and applies retroactively to February 23, 1988, 19 Pa.B. 999; amended June 29, 1990, effective June 30, 1990, 20 Pa.B. 3595. Immediately preceding text appears at serial pages (135889) to (135894).

   This section is not arbitrary and capricious and furthers the Commonwealth’s interest in maintaining a solvent Medicaid Program. Centennial Spring Health Care Centers v. Department of Public Welfare, 541 A.2d 806 (Pa. Cmwlth. 1988).

   It is not unreasonable for the Department of Public Welfare to recoup overpayments made for services actually rendered following a provider or recipient appeal when the Department of Public Welfare’s reclassifications are sustained. Centennial Spring Health Care Centers v. Department of Public Welfare, 541 A.2d 806 (Pa. Cmwlth. 1988).

 The payment limits specified in this section apply to payment to nursing facilities for nursing facility care.

   The provisions of this §  1181.55 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610.

 The Department will make payment to a nursing facility for a reserved bed when the recipient is absent from the facility for a continuous 24-hour period because of hospitalization or therapeutic leave. Each reserved bed for therapeutic leave shall be recorded on the facility’s daily census record and invoice. If a bed is being reserved for a recipient who has been hospitalized and that bed is being temporarily occupied by another recipient, the occupied bed shall be recorded on the facility’s daily census record and the invoice. A reserved bed shall be available for the recipient upon the recipient’s return to the facility. The following limits on payment for reserved bed days apply:

   (1)  Hospitalization. A recipient receiving skilled nursing care, intermediate care or intermediate care for the mentally retarded—except a recipient in a State-operated intermediate care facility for the mentally retarded—is eligible for a maximum 15 consecutive reserved bed days per hospitalization. The Department will pay a facility at a rate of one-third of the facility’s current interim per diem rate on file with the Department for a hospital reserved bed day.

   (2)  Therapeutic leave. Payment for therapeutic leave days is limited as follows:

     (i)   A recipient receiving skilled nursing care is eligible for a maximum of 15 days per calendar year for therapeutic leave outside the facility if the leave is included in the individual’s plan of care and is ordered by the attending physician.

     (ii)   A recipient receiving intermediate care is eligible for a maximum of 30 days per calendar year of therapeutic leave outside the facility if the leave is included in the individual’s plan of care and is ordered by the attending physician.

     (iii)   A recipient receiving intermediate care for the mentally retarded is eligible for a maximum of 75 days per calendar year for therapeutic leave outside the facility.

     (iv)   A recipient receiving both skilled and intermediate level of care during the calendar year is eligible for a maximum of 30 days per calendar year for therapeutic leave.

   The provisions of this §  1181.56 amended under section 443.1(2) and (3) of the Public Welfare Code (62 P. S. §  443.1(2) and (3)).

   The provisions of this §  1181.56 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610; amended July 2, 1982, effective July 1, 1982, 12 Pa.B. 2070; corrected July 2, 1982, effective July 1, 1982, 12 Pa.B. 2290; amended March 10, 1989, effective immediately and applies retroactively to January 1, 1989, 19 Pa.B. 1005. Immediately preceding text appears at serial pages (133591) to (133592).

 (a)  Interpretation. The Department interprets §  1181.56 (relating to limitations on payments for reserved beds) to mean that for each continuous 24-hour period the patient is absent from the facility, the nursing home should bill the Department for a hospital or therapeutic leave day, under the limitations set forth in this chapter. Furthermore, when the cycle—continuous 24-hour period—is broken, the home will bill the Department for a facility day.

 (b)  Discussion. The Department has seen evidence that some nursing homes are not following the interpretation set forth in subsection (a) of how to bill for reserved days. The following examples should serve as guidelines to help nursing homes bill for reserved days properly.

   (1)  Example 1. A nursing home resident leaves the facility May 4, 1987 at 2:30 p.m. and returns to the facility May 5, 1987 at 10:30 a.m. May 4, 1987 should be billed as a facility day and May 5, 1987 should also be billed as a facility day because the patient was not absent from the facility for a continuous 24-hour period.

   (2)  Example 2. A nursing home resident leaves the facility on May 4, 1987 at 11 a.m. and returns to the facility May 5, 1987 at 1 p.m. May 4, 1987 should be billed as a reserve bed day and May 5, 1987 should be billed as a facility day. The patient was absent from the facility for a continuous 24-hour period from May 4, 1987 at 11 a.m. to May 5, 1987 at 11 a.m.

   (3)  Example 3. A nursing home resident leaves the facility on May 4, 1987 at 9 a.m. and returns to the facility May 11, 1987 at 12 noon. May 4, 1987 through May 10, 1987 should be billed as reserve bed days. May 11, 1987 should be billed as a facility day.

   (4)  Example 4. A nursing home resident leaves the facility May 1, 1987 at 10 a.m. and returns to the facility May 16, 1987 at 1 p.m. May 1, 1987 through May 15, 1987 should be billed as reserve bed days and May 16, 1987 should be billed as a facility day.

   The provisions of this §  1181.56a adopted February 5, 1988, effective February 12, 1988, 18 Pa.B. 596.

 (a)  Under the Omnibus Budget Reconciliation Act of 1987, if a nursing facility resident is transferred to a hospital, the resident shall be permitted to return to the nursing facility immediately upon the first availability of a bed in a semiprivate room in the facility if, at the time of readmission, the resident requires the services provided by the facility.

 (b)  If a nursing facility resident indicates in writing a desire to pay the nursing facility to keep the resident’s bed vacant in anticipation of the resident’s return to the facility after the 15-day bed hold, the nursing facility may charge the resident to hold the bed the resident occupied prior to transferring to the hospital.

 (c)  The nursing facility may not charge the resident more than the MA rate paid for the resident’s care prior to the resident’s transfer to the hospital.

 (d)  The nursing facility may not charge the resident to hold a bed other than the bed the resident occupied prior to the resident’s transfer to the hospital.

 (e)  Nursing facilities enrolled in the MA Program shall adhere to this chapter.

   The provisions of this §  1181.56b adopted May 1, 1992, effective upon publication and applies retroactively to May 1, 1992, 22 Pa.B. 2357.

 (a)  Effective with dates of service on and after January 1, 1992, an MA eligible nursing facility resident that is in a Medicare benefit period, fully paid days or coinsurance days, or both, is eligible for a maximum of 15 consecutive reserved bed days per hospitalization. The Department will reimburse a nursing facility at 1/3 of the facility’s current interim per diem rate on file with the Department, for a hospital reserved bed day when a resident is hospitalized during a Medicare benefit period.

 (b)  Nursing facilities should follow the billing instructions under the billing section of the Long Term Care Services Provider Handbook when invoicing the Department for hospital reserved bed days.

   The provisions of this §  1181.56c adopted May 1, 1992, effective upon publication and applies retroactively to January 1, 1992, 22 Pa.B. 2358.

 The Department’s interim per diem rate for nursing facility care does not include prescription drugs. Prescribed drugs for categorically needy are reimbursable directly to a licensed pharmacy according to regulations contained in Chapter 1121 (relating to pharmaceutical services).

   The provisions of this §  1181.57 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610.

 Payment may continue to be made to a facility that has temporarily transferred patients, as the result or threat of a strike or disaster situation, to the closest medical institution able to meet the patients’ needs, if the institution receiving the patients is licensed and certified to provide the required level of care. If the facility transferring the patients can demonstrate that there is no certified facility available for the safe and orderly transfer of the patients, the payments may be made so long as the institution receiving the patients is certifiable and licensed to provide the required level of care. If the facility to which the patients are transferred has a different interim per diem rate, the transferring facility will be reimbursed at the lower rate. The facility shall immediately notify the Department, Office of Medical Assistance Programs, in writing of an impending strike or a disaster situation and follow with a listing of MA patients and the facility to which they will be or were transferred.

   The provisions of this §  1181.58 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610; amended March 10, 1989, effective immediately and applies retroactively to January 1, 1989, 19 Pa.B. 1005. Immediately preceding text appears at serial pages (133593) and (117425).

 (a)  Payment may be made to a nursing facility for intermediate care provided in a bed which is dually certified for skilled and intermediate care, subject to the following conditions:

   (1)  The costs of services to the intermediate care (ICF) patients in dually certified beds, including services to heavy care/intermediate patients, shall be included in the determination of the skilled nursing facility (SNF) payment rate.

   (2)  The SNF payment rate shall be based on the costs of care of all patients served in dually-certified and SNF-only certified beds.

   (3)  Except as provided in subsection (b), payments for ICF patients in the dually-certified beds will be determined by the facility’s rate for ICF-only certified beds, or, where the facility has no ICF-only certified beds, by combining the facility’s SNF rate components for depreciation and interest on capital indebtedness with the lower of one of the following:

     (i)   The facility’s SNF net operating cost rate component.

     (ii)   The applicable ceiling on ICF net operating costs.

   (4)  The facility has contacted the Department, prior to invoicing for intermediate care in the bed, to designate the bed as an intermediate care bed for MA program payment purposes.

   (5)  Payment will not be made for services to an ICF patient in a bed which is not certified to provide intermediate care.

 (b)  Payment may be made to a nursing facility for heavy care/intermediate services when a recipient’s level of care changes to heavy care/intermediate if that recipient is in a dually certified skilled bed. The nursing facility shall be reimbursed for heavy care/intermediate services at the higher of the facility’s applicable rates for skilled or intermediate care, as limited by the ceilings.

   The provisions of this §  1181.59 amended under sections 201 and 443.1(2) of the Public Welfare Code (62 P. S. § §  201 and 443.1(2)).

   The provisions of this §  1181.59 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610; amended August 5, 1983, effective January 1, 1983, 13 Pa.B. 2402; amended September 6, 1985, effective September 7, 1985, except that the groups and ceilings shall be effective and apply to costs of services rendered from July 1, 1984 through December 31, 1984, 15 Pa.B. 3181; amended March 10, 1989, effective immediately and applies retroactively to February 23, 1988, 19 Pa.B. 999. Immediately preceding text appears at serial page (117425).

 (a)  An eligible recipient who is a Medicare beneficiary, is receiving care in a Medicare certified facility and is authorized by the Medicare Program to receive skilled nursing care benefits shall utilize these benefits before payment will be made by the MA Program. For each benefit period, the Medicare Program makes full payment for the first 20 days of skilled nursing care and pays all but a specified coinsurance amount for days 21 through 100. If the Medicare payment for days 21 through 100 is less than the facility’s MA interim per diem rate for skilled nursing care, the Department will participate in payment of the coinsurance charge to the extent that the total of the Medicare payment and the Department’s coinsurance payment does not exceed the MA skilled interim per diem rate for the facility. The Department will not pay more than the maximum coinsurance amount.

 (b)  The facility may not seek or accept payment from a source other than Medicare for any portion of the Medicare coinsurance amount that is not paid by the Department on behalf of an eligible recipient because of the limit of the facility’s MA skilled interim per diem rate.

 (c)  The Medicare payment will be recognized as payment in full for each day that a Medicare payment is made during the first 20 days of a benefit period.

 (d)  If a recipient either has purchased Medicare Part B coverage or the coverage has been purchased for the recipient, the facility shall use available Medicare Part B resources for Medicare Part B services.

 (e)  The amendments to this section as published in Annex A at 20 Pa.B. 6175 (December 15, 1990), and corrected at 21 Pa.B. 228 (January 19, 1991), required by the Medicare Catastrophic Coverage Act of 1988 (Pub. L. No. 100-360 (Repealed)) are in effect for the period from January 1, 1989 to December 31, 1989.

   The provisions of this §  1181.60 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610; deleted August 5, 1983, effective July 1, 1983, 13 Pa.B. 2402; amended August 19, 1983, effective July 1, 1983, 13 Pa.B. 2554; amended March 10, 1989, effective immediately and applies retroactively to January 1, 1989, 19 Pa.B. 1005; amended December 14, 1990, effective immediately and apply retroactively to January 1, 1989, 20 Pa.B. 6172; amended December 14, 1990, effective immediately and apply retroactively to January 1, 1990, 20 Pa.B. 6172; corrected December 21, 1990, effective immediately and apply retroactively to January 1, 1990, 20 Pa.B. 6269; corrected January 18, 1991, effective immediately and apply retroactively to January 1, 1990, 21 Pa.B. 228. Immediately preceding text appears at serial page (135899).

 The Department’s interim per diem rate of reimbursement for long term care provided eligible recipients in participating facilities includes allowable costs for routine services. Services include but are not limited to:

   (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 but not limited to administration of oxygen and related medications, handfeeding, incontinency care, tray service and enemas.

   (3)  Items furnished routinely and relatively uniformly to all patients, such as patient gowns, water pitchers, basins and bedpans.

   (4)  Items furnished, distributed or used individually 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)  Items used by individual patients but which are reusable and expected to be available, such as ice bags, bedrails, 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)  Laundry services other than for personal clothing, except for intermediate care facilities for the mentally retarded in which laundry services including the laundering of resident’s personal clothing are allowable.

   (8)  Other special medical services of a rehabilitative, restorative or maintenance nature, designed to restore or sustain the patient’s physical and social capacities.

   The provisions of this §  1181.61 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610; amended May 3, 1985, effective retroactively to July 1, 1984, 15 Pa.B. 1629. Immediately preceding text appears at serial pages (85073) to (85074).

 As a result of provisions contained in the Federal Omnibus Budget Reconciliation Act of 1987 (42 U.S.C.A. §  1396r(b)(5)) regarding nurse aide training and testing fees, the Department will reimburse nursing facilities the reasonable and appropriate costs for State-approved nurse aide training programs that meet Federal requirements and are completed by individuals employed or offered employment within 12 months of completing the Nurse Aide Training and Competency Evaluation Program (NATCEP) or a Competency Evaluation Program (CEP).

   The provisions of this §  1181.61a adopted April 1, 1995, effective April 6, 1995, 25 Pa.B. 1169.

 Payment will not be made to a nursing facility for:

   (1)  Services provided to a recipient who no longer requires the level of care for which payment is authorized by the County Assistance Office.

   (2)  Reserved bed days that exceed the limits set for the different levels of care in §  1181.56 (relating to limitations on payment for reserved beds).

   (3)  Services provided to a recipient occupying a bed which is not certified for the level of care for which payment is authorized by the County Assistance Office.

   (4)  Services covered but disallowed by Medicare.

   (5)  Services rendered by a provider that do not meet the conditions for payment established by this chapter and Chapter 1101 (relating to general provisions).

   The provisions of this §  1181.62 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610; amended March 10, 1989, effective immediately and applies retroactively to February 23, 1988, 19 Pa.B. 999; amended March 10, 1989, effective immediately and applies retroactively to January 1, 1989, 19 Pa.B. 1005. Immediately preceding text appears at serial page (117427).

 Payment for nursing facility care is made in accordance with the provisions of the Medicaid State Plan and this chapter.

   The provisions of this §  1181.63 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610.

 Each facility shall submit a cost report to the Department within 90 days following the close of each fiscal year as designated by the facility in accordance with §  1181.71 (relating to annual reporting). The report shall be prepared using the accrual basis of accounting and must cover a fiscal period of 12 consecutive months. Facilities beginning operations during a fiscal period will prepare a report from the date of approval for participation to the end of the facility’s fiscal year. The cost report shall identify costs of services, facilities and supplies furnished by organizations related to the provider by common ownership or control.

   The provisions of this §  1181.64 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610.

 (a)  A nursing facility shall use the direct allocation method of cost-finding. The costs of ancillary and administrative services shall be apportioned directly to the appropriate level of care based on appropriate statistical data.

 (b)  A facility’s direct or indirect allowable costs related to patient care will be considered in the finding and allocation of costs to the MA Program for its eligible recipients. Total allowable costs of a facility shall be apportioned between third-party payors and other patients so that the share borne by MA is based upon actual services and costs related to MA patients. For purposes of MA reimbursement, the return on net equity and net worth is not reimbursable.

 (c)  The Department will recognize depreciation and interest as an allowable cost for general and county nursing facilities subject to the following conditions:

   (1)  Depreciation and interest on new or additional beds is an allowable cost only if one of the following applies:

     (i)   The facility was issued either a Section 1122 approval or letter of nonreviewability under 28 Pa. Code Chapter 301 (relating to limitation on Federal participation for capital expenditures) or a Certificate of Need or letter of nonreviewability under 28 Pa. Code Chapter 401 (relating to Certificate of Need Program) for the project by the Department of Health no later than August 31, 1982.

     (ii)   The facility was issued a Certificate of Need or letter of nonreviewability under 28 Pa. Code Chapter 401 for the construction of a nursing facility, and there was no nursing facility, including county, private or hospital-based, located within the county.

   (2)  The Department will not recognize depreciation and interest as allowable costs if the facility does not substantially implement the project as defined at 28 Pa. Code §  401.5(m)(3) (relating to Certificate of Need) within the effective period of the original Section 1122 approval or the original Certificate of Need.

   (3)  Depreciation and interest on replacement beds is an allowable cost only if the facility was issued a Certificate of Need or a letter of nonreviewability by the Department of Health.

   (4)  Allowable depreciation and interest on capital indebtedness will be recognized on debt service incurred to finance a maximum cost per bed of $22,000. The $22,000 per bed limit does not include the cost of movable equipment. Allowable depreciation and interest will be calculated by the straight line method of accounting.

 (d)  Allowable operating costs for a general nursing facility including hospital-based and special rehabilitation facilities, shall be determined subject to the following:

   (1)  The Department’s Manual for Allowable Cost Reimbursement for Skilled Nursing and Intermediate Care Facilities.

   (2)  The HIM-15, except that if the Department’s Manual and the HIM-15 differ, the Department’s Manual applies.

   (3)  The MSA or non-MSA group ceilings if applicable.

 (e)  Allowable operating costs for a county nursing facility will be determined under the following:

   (1)  The Department’s Manual for Allowable Cost Reimbursement for Skilled Nursing and Intermediate Care Facilities is used for cost-finding.

   (2)  HIM-15 will used as a supplement to the Department’s Manual for Allowable Cost Reimbursement for Skilled Nursing and Intermediate Care Facilities with respect to allowable costs. HIM-15 may not be construed to recognize an allowable cost which otherwise is not included or is excluded in the Department’s Manual for Allowable Cost Reimbursement for Skilled Nursing and Intermediate Care Facilities.

   (3)  The facility’s net operating per diem is subject to the MSA or non-MSA group ceiling for county facilities.

   (4)  The Department will deduct from the State share of the allowable operating costs of county facilities the administrative expense the Department incurs in determining the allowable operating costs of a county facility.

 (f)  Allowable costs for an intermediate care facility for the mentally retarded shall be determined as follows:

   (1)  For State-operated intermediate care facilities for the mentally retarded, allowable costs are determined by HIM-15.

   (2)  For non-State-operated intermediate care facilities for the mentally retarded, allowable costs are determined by Subchapter C (Reserved).

 (g)  The allowable costs of a psychiatric transitional facility and other State-operated nursing facility other than an intermediate care facility for the mentally retarded will be determined in accordance with the HIM-15 and within the limits of their approved budgets.

 (h)  For a nursing facility, the Department’s reimbursement for depreciation, interest and other costs related to the negotiation or settlement of the sale or purchase of a capital asset that undergoes a transfer of ownership either on or after July 18, 1984, will be determined under paragraphs (1) and (2). Paragraph (1) does not apply to an asset that undergoes a transfer of ownership either on or after July 18, 1984 under an enforceable agreement that was entered into prior to July 18, 1984.

   (1)  The cost basis that will be used to establish the allowable depreciation and interest for an asset that undergoes a transfer of ownership on or after July 18, 1984 will be the lesser of the remaining allowable cost basis of the asset to the owner of record on or after July 18, 1984, or, in the case of an asset not in existence as of that date, the first owner of record of the asset after that date, or the allowable cost basis of the asset to the new owner.

   (2)  The Department will not recognize as allowable, a cost including legal fees, 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 a payment has previously been made under Title XVIII of the Social Security Act (42 U.S.C.A. § §  1395—1395xx).

   The provisions of this §  1181.65 amended under sections 201 and 443.1 of the Public Welfare Code (62 P. S. § §  201 and 443.1).

   The provisions of this §  1181.65 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610; amended July 2, 1982, effective July 1, 1982, 12 Pa.B. 2070; amended August 5, 1983, effective July 1, 1983, 13 Pa.B. 2402; corrected August 19, 1983, effective February 12, 1983, 13 Pa.B. 2553; amended February 17, 1984, effective July 1, 1983, 14 Pa.B. 546; corrected August 24, 1984, effective March 24, 1984, 14 Pa.B. 3091; amended May 3, 1985, effective retroactively to July 1984, 15 Pa.B. 1629; amended September 6, 1985, effective September 7, 1985, except that the groups and ceilings shall be effective and apply at audit to costs of services rendered from July 1, 1984 through December 31, 1985, 15 Pa.B. 3181; corrected January 24, 1986, effective September 7, 1985, 16 Pa.B. 249; amended February 28, 1986, effective March 1, 1986, 16 Pa.B. 600; amended March 10, 1989, effective immediately and applies retroactively to February 23, 1988, 19 Pa.B. 999; amended March 10, 1989, effective immediately and applies retroactively to January 1, 1989, 19 Pa.B. 1005. Immediately preceding text appears at serial pages (117428) to (117430).

   

Conflicting Authorities

   When a conflict as to allowable operating costs arose between the state and federal manual, the State manual controlled. Western Reserve Convalescent Home v. Department of Public Welfare, 660 A.2d 1312 (Pa. 1995).

   Federal manual establishing offset rules applies where State manual is silent. Northwood Nursing and Convalescent Home v. Department of Public Welfare, 567 A.2d 1385 (Pa. 1989).

 (a)  The Department will establish maximum group per diem rate ceilings for allowable net operating costs for each level of care for general and county operated nursing facilities. Effective April 1, 1988, these ceilings will be based on 115% of the median of year-end reported costs excluding depreciation and interest. Facilities will not be reimbursed for net operating costs above the maximum group per diem rate ceilings. Costs which are not reimbursed within the established ceilings for a fiscal year may not be carried forward or backward to other fiscal years. The ceilings for general and county operated nursing facilities will be established as follows:

   (1)  The Department will use only year-end cost reports that cover a period of at least 180 days, are acceptable and received at least 90 days prior to the implementation date of the new ceilings. An acceptable cost report is one in which the following requirements are met:

     (i)   Applicable items are fully completed in accordance with the instructions incorporated in the Department’s cost report, including the necessary original signatures on the required number of copies.

     (ii)   Computations carried out on the form are accurate and consistent with other related computations.

     (iii)   The treatment of costs conforms to the applicable requirements of this subchapter and Subchapters B and C (relating to manual for allowable cost reimbursement for skilled nursing and intermediate care facilities; and Reserved).

     (iv)   Required documentation is included.

   (2)  In establishing net operating ceilings, the data from the provider’s latest acceptable cost report will be brought forward to a common date by using multipliers developed by the Department based on the most current revised urban wage earners and clerical workers consumer price index (CPI-W, 1967 = 100, all items, all cities, United States average). This factor will adjust for inflation for the period from the end-date of each cost report to the common date.

   (3)  To account for the period from the common date to the end date for which these ceilings will be in effect, the Department will again utilize a combination of inflation factors. If actual inflation factors are available, CPI-W will be utilized. If actual CPI-W is not available, the Department will take into account projected economic indicators, such as CPI-W. During Fiscal Years 1992-1993, 1993-1994 and 1994-1995, the Department will utilize CPI-W plus an amount equal to the difference between CPI-W and the DRI McGraw-Hill Health Care Costs-Nursing Home Market Basket applied to the full year ceiling setting period applicable to the last day of the second quarter of the calendar year, as the inflation factor under this paragraph. The Department will also increase the ceilings so calculated by an additional factor equal to 2.5%.

   (4)  The inflation factors used, the common date and the number of cost reports by facility year utilized will be published in the notice in the Pennsylvania Bulletin which establishes each new ceiling.

   (5)  Metropolitan Statistical Area (MSA) group ceilings for allowable net operating costs for county nursing facilities and general nursing facilities, excluding hospital-based and special rehabilitation facilities, will be established at least annually by the Department. Effective April 1, 1988, these ceilings will be based on 115% of the median of year-end reported costs excluding depreciation and interest. The groups used by the Department will be based on the classification levels announced by the Federal Office of Management and Budget no later than 90 days before the implementation date of the new ceilings. The Department will establish a separate ceiling for general nursing facilities, excluding hospital-based and special rehabilitation facilities, in counties which are located in Level A statistical areas, for those in Level B statistical areas, for those in Level C statistical areas and for those in nonstatistical areas under the Federal system. The Department will establish a separate ceiling for county nursing facilities in counties located in either Level A or Level B statistical areas and one for county nursing facilities in counties located in either Level C statistical areas or in nonstatistical areas under the Federal system.

   (6)  The Department will announce, by notice submitted for recommended publication in the Pennsylvania Bulletin and suggested codification in the Pennsylvania Code as an appendix to this section, the classification levels and the applicable per diem ceilings for the location of the facility, level of care, type of facility and date of service involved. A fiscal note, as required by section 612 of The Administrative Code of 1929 (71 P. S. §  232), will accompany the notice.

 (b)  Statewide ceilings for allowable net operating costs will be established at least annually by the Department under the method in subsection (a)(1)—(4) and (6) for hospital-based nursing facilities. Effective April 1, 1988, these ceilings will be based on 115% of the median of year-end reported costs excluding depreciation and interest.

 (c)  Statewide ceilings for allowable net operating costs will be established at least annually by the Department under the method in subsection (a)(1)—(4) and (6) for special rehabilitation facilities. Effective April 1, 1988, these ceilings will be based on 115% of the median of year-end reported costs excluding depreciation and interest.

 (d)  State-operated intermediate care facilities for the mentally retarded are reimbursed actual allowable costs under Medicare principles, subject to MA regulations. NonState-operated intermediate care facilities for the mentally retarded are reimbursed actual, allowable, reasonable costs under Subchapter C and other applicable MA Regulations.

 (e)  Psychiatric transitional facilities are reimbursed actual allowable costs under Medicare principles and within the limits of their budgets.

   The provisions of this §  1181.66 amended under sections 201, 403 and 443.1(2) and (3) of the Public Welfare Code (62 P. S. § §  201, 403 and 443.1 (2) and (3)).

   The provisions of this §  1181.66 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610; amended July 2, 1982, effective July 1, 1982, 12 Pa.B. 2070; amended May 3, 1985, effective retroactively to July 1, 1984, 15 Pa.B. 1629; amended September 6, 1985, effective September 7, 1985, except that the groups and ceilings shall be effective and apply at audit to costs of services rendered from July 1, 1984 through December 31, 1985, 15 Pa.B. 3181; corrected January 24, 1986, effective September 7, 1985, 16 Pa.B. 249; amended September 5, 1986, effective July 1, 1985, 16 Pa.B. 3294; amended June 29, 1990, effective immediately and apply retroactively to April 1, 1988, 20 Pa.B. 3593; amended July 21, 1995, effective immediately and apply retroactively to July 1, 1992, and sunsetted on June 30, 1995, 25 Pa.B. 2893. Immediately preceding text appears at serial pages (196505) to (196507). (Editor’s Note: See 22 Pa.B. 3749 (July 18, 1992) for nursing home pooling provisions.)

   The General Assembly lacked the authority to specify the starting date on which a raised ceiling for nursing home cost reimbursements would commence. Wesbury United Methodist Community v. Department of Public Welfare, 597 A.2d 271 (Pa. Cmwlth. 1991).

   This section cited in 55 Pa. Code §  1181.45 (relating to ongoing responsibilities of providers); 55 Pa. Code §  1181.51 (relating to general payment policy); 55 Pa. Code §  1181.52 (relating to payment conditions); 55 Pa. Code §  1181.73 (relating to final reporting); 55 Pa. Code §  1181.74 (relating to auditing requirements related to cost reports); and 55 Pa. Code §  1181.217 (relating to establishing ceilings for allowable net operating costs).

APPENDIX A
CEILINGS ON NET OPERATING
COST REIMBURSEMENT FOR
GENERAL AND COUNTY NURSING
FACILITIES

 Editor’s Note: The following document was published in the Pennsylvania Bulletin as a Notice and is codified under 1 Pa. Code §  3.1(9) (relating to contents of Code) as a document which the Legislative Reference Bureau finds to be general and permanent in nature.

Annex A
GENERAL NURSING FACILITIES
(Excluding Hospital-Based and Special Rehabilitation Facilities)

	*Skilled Nursing Care Net Operating Ceilings Effective July 1, 1995 thru December 31, 1995	*Intermediate Care Net Operating Ceilings Effective July 1, 1995 thru December 31, 1995
1. LEVEL A
Philadelphia
Bucks	$133.39	$110.54
Chester	$133.39	$110.54
Delaware	$133.39	$110.54
Montgomery	$133.39	$110.54
Philadelphia	$133.39	$110.54
Pittsburgh
Allegheny	$133.39	$110.54
Beaver	$133.39	$110.54
Butler	$133.39	$110.54
Fayette	$133.39	$110.54
Washington	$133.39	$110.54
Westmoreland	$133.39	$110.54
2. LEVEL B
Allentown—Bethlehem—Easton
Carbon	$117.20	$ 98.00
Lehigh	$117.20	$ 98.00
Northampton	$117.20	$ 98.00
Erie
Erie	$117.20	$ 98.00
Harrisburg—Lebanon—Carlisle
Cumberland	$117.20	$ 98.00
Dauphin	$117.20	$ 98.00
Lebanon	$117.20	$ 98.00
Perry	$117.20	$ 98.00
Lancaster
Lancaster	$117.20	$ 98.00
Newburgh
Pike	$117.20	$ 98.00
Reading
Berks	$117.20	$ 98.00
Scranton—Wilkes-Barre—Hazleton
Columbia	$117.20	$ 98.00
Lackawanna	$117.20	$ 98.00
Luzerne	$117.20	$ 98.00
Wyoming	$117.20	$ 98.00
York
York	$117.20	$ 98.00
3. LEVEL C
Altoona
Blair	$115.67	$ 91.37
Johnstown
Cambria	$115.67	$ 91.37
Somerset	$115.67	$ 91.37
Sharon
Mercer	$115.67	$ 91.37
State College
Centre	$115.67	$ 91.37
Williamsport
Lycoming	$115.67	$ 91.37
4. Non-MSA
Adams	$105.51	$ 86.15
Armstrong	$105.51	$ 86.15
Bedford	$105.51	$ 86.15
Bradford	$105.51	$ 86.15
Cameron	$105.51	$ 86.15
Clarion	$105.51	$ 86.15
Clearfield	$105.51	$ 86.15
Clinton	$105.51	$ 86.15
Crawford	$105.51	$ 86.15
Elk	$105.51	$ 86.15
Forest	$105.51	$ 86.15
Franklin	$105.51	$ 86.15
Fulton	$105.51	$ 86.15
Greene	$105.51	$ 86.15
Huntingdon	$105.51	$ 86.15
Indiana	$105.51	$ 86.15
Jefferson	$105.51	$ 86.15
Juniata	$105.51	$ 86.15
Lawrence	$105.51	$ 86.15
McKean	$105.51	$ 86.15
Mifflin	$105.51	$ 86.15
Monroe	$105.51	$ 86.15
Montour	$105.51	$ 86.15
Northumberland	$105.51	$ 86.15
Potter	$105.51	$ 86.15
Schuylkill	$105.51	$ 86.15
Snyder	$105.51	$ 86.15
Sullivan	$105.51	$ 86.15
Susquehanna	$105.51	$ 86.15
Tioga	$105.51	$ 86.15
Union	$105.51	$ 86.15
Venango	$105.51	$ 86.15
Warren	$105.51	$ 86.15
Wayne	$105.51	$ 86.15
*Does not include depreciation and interest.

HOSPITAL-BASED NURSING FACILITIES
	*Skilled Nursing Care Net Operating Ceilings Effective July 1, 1995 thru December 31, 1995	*Intermediate Care Net Operating Ceilings Effective July 1, 1995 thru December 31, 1995
Statewide per  diem ceilings	$202.80	$135.08
*Does not include depreciation and interest.

 SPECIAL REHABILITATION FACILITIES

 *Does not include depreciation and interest.

 The Department establishes interim per diem rates on the basis of the following methods and in accordance with §  1181.68 (relating to upper limits of payment):

   (1)  For general and county nursing facilities, interim per diem rates within the ceilings on net operating costs will be established by the Department based on the latest adjusted reported net operating cost of the facility plus an allowance for depreciation and interest. For the period July 1, 1995, through December 31, 1995, the interim rate will be calculated in this manner, except that if the interim rate for a nursing facility (excluding depreciation and interest) is less than the ceiling on net operating costs to be applied during this period, the interim rate for the nursing facility will be increased by 2% to reflect inflation up to the upper limits on payment as stated in §  1181.68.

   (2)  For State-operated intermediate care facilities for the mentally retarded, interim per diem rates will be established by the Department based on the latest adjusted reported costs and approved budgets. For non-State intermediate care facilities for the mentally retarded, interim per diem rates will be established by the Department based on the latest adjusted cost report plus an inflationary factor, or a submitted budget if a waiver is granted in accordance with Subchapter C (Reserved).

   (3)  For psychiatric transitional facilities, interim per diem rates will be established by the Department based on latest adjusted reported costs and approved budgets.

   (4)  For facilities entering the program and for facilities in the programs with changes of ownership, except for intermediate care facilities for the mentally retarded, the facility’s projected MA-11 cost report will be used to set the interim rate for MA during the initial period of operation pending the filing of the first year-end cost report.

   The provisions of this §  1181.67 amended under sections 201, 403 and 443.1(2) and (3) of the Public Welfare Code (62 P. S. § §  201, 403 and 443.1(2) and (3)).

   The provisions of this §  1181.67 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610; amended May 3, 1985, effective retroactively as of July 1, 1984, 15 Pa.B. 1629; amended July 21, 1995, effective immediately and apply retroactively to July 1, 1992, and sunsetted on June 30, 1995, 25 Pa.B. 2893; amended August 23, 1996, effective immediately and apply to the time period from July 1, 1995, to December 31, 1995, 26 Pa.B. 4086. Immediately preceding text appears at serial pages (209183) and (201411). (Editor’s Note: See 22 Pa.B. 3749 (July 18, 1992) for nursing home pooling provisions.)

 (a)  Maximum rate of payment. Except as provided in this section, the Department’s maximum rate of payment to an enrolled facility will be the lower of the following:

   (1)  The facility’s lowest charge to private pay patients for the same level of care.

   (2)  The facility’s Medicare rate, which is either of the following:

     (i)   As compared to the facility’s Medical Assistance interim per diem rate, the facility’s Medicare interim per diem rate that is in effect on the date the facility’s request for an interim per diem rate is postmarked or, if hand delivered, the date the request is received by the Department as documented by the Department’s date stamp.

     (ii)   As compared to the facility’s Medical Assistance final rate, the Medicare interim per diem rate in effect on the day of the facility’s exit conference.

   (3)  The facility’s Medical Assistance final per diem rate.

 (b)  Established ceilings. The established ceilings on net operating costs as published by notice in the Pennsylvania Bulletin are the upper limit, as applicable, on the net operating costs of county and general nursing facilities.

 (c)  Waiver of application.

   (1)  A facility participating in Medicare may obtain a waiver of the application of subsection (a)(2) when the following apply:

     (i)   The facility demonstrates to the Department that the applicable Medicare interim per diem rates are lower than the facility’s Medical Assistance per diem rate.

     (ii)   The grant of the waiver will not cause the Department’s estimated aggregate payment for long-term care facility services for the fiscal year involved to exceed the amount that the Department could reasonably estimate would be paid for these services under Medicare principles of reimbursement.

   (2)  A waiver will not be granted from the application of subsection (a)(2) unless the request for the waiver is received by the Department prior to the expiration of the time limit established by §  1101.84 (relating to provider right of appeal) for filing an appeal of the interim rate or audit report with respect to which the waiver is sought. Additionally, no request for a waiver received after the issuance of an audit report shall stay the collection of any overpayments resulting from the determinations of the audit report pending the adjudication of the waiver request.

 (d)  Upper limits for State-operated facilities. The upper limits of payment for State-operated intermediate care facilities for the mentally retarded are the full allowable costs as specified in the HIM-15.

 (e)  Upper limits for non-State operated facilities. The upper limits of payment for non-State operated intermediate care facilities for the mentally retarded are the total projected operating cost or if a waiver is granted under Subchapter C (Reserved) an approved budget level as specified in Subchapter C.

   The provisions of this §  1181.68 amended under sections 201 and 443.1(2) of the Public Welfare Code (62 P. S. § §  201 and 443.1 (2)).

   The provisions of this §  1181.68 codified July 24, 1981, effective July 25, 1981, 11 Pa.B. 2610; amended July 2, 1