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PubMed1987

Fair rental systems: paying nursing homes for capital costs.

Fair rental systems pay an imputed rent for the housing a nursing home provides for its residents. The rent is paid in place of reimbursement for capital costs covered by the system--depreciation, interest, lease payments, and return on equity capital. It is an approach that is intended to overcome the inflationary incentives of cost-based reimbursement. Several state Medicaid programs have adopted fair rental systems using different approaches. And although it is too early to tell which approach is best, one point seems clear--a fair rental system can be a distinct improvement over cost-based reimbursement, depending on design and administration.

Capital Financing↗
PubMed1989

Mooring in safe harbors. Proposed rules set out what's legal, what's not under Medicare fraud and abuse laws.

The 1977 Fraud and Abuse Amendments, which prohibit business relationships that increase Medicare utilization, have created uncertainty among healthcare providers as to which commercial arrangements are legal and which are not. In response to this uncertainty, Congress enacted the Medicare and Medicaid Patient and Program Protection Act of 1987, which required the Department of Health and Human Services to develop regulations that would specify allowable practices. The regulations proposed Jan. 23, 1989, specify "safe harbors" from criminal and civil penalties in the following areas: sales of physician practices, rental agreements, investments by providers, and personal services and management contracts. In addition, the Fraud and Abuse Amendments exempted referrals arising out of a bona fide employment relationship, properly disclosed discounts, and group purchasing arrangements. The proposed regulations attempt to clarify these exemptions. Unfortunately, the proposals do little to calm a healthcare industry that is jumpy about which transactions are permitted and which are not. This is partly because the Internal Revenue Service, Health and Human Services, and the Department of Justice often issue conflicting pronouncements regarding prohibited business transactions by tax-exempt providers.

Contract Services↗
PubMed1989

Act now to maximize Medicare payments for capital.

Anticipating a change in the way Medicare pays for capital costs, healthcare organizations should evaluate their capital expenditure plans. To maximize payments under the current system, they should create an equipment acquisition plan that brings the greatest capital costs during the equipment's early life. They then should determine a cost allocation method that assigns the greatest allowable capital costs to Medicare.

Capital Expenditures↗