A hospital-based skilled nursing facility (SNF) was properly declared to be a separate entity from a hospital and was therefore required to begin its cost reporting period on the first day it began rendering services covered by Medicare, which made the reimbursement subject to the prospective payment system (PPS) reimbursement methodology, not the cost-based method. The SNF was classified as a "new provider," because the SNF (1) was certified by CMS as a provider five years after the hospital was certified, (2) was issued its own unique provider number different from that of the hospital, (3) had entered into a separate agreement with CMS to participate in Medicare, and (4) had met certain requirements of 42 C.F.R. § 483.1 pertaining to the provision of services, quality of care and relationships with other providers distinct from those for hospitals.
Shortly before the end of the hospital's cost reporting period, Medicare certified one floor of the hospital as an SNF. The hospital claimed reimbursement for the SNF on a reasonable-cost basis, because the hopsital's cost reporting period began before the effective date of the implementation of prospective payment systems (PPS) for SNFs. The fiscal intermediary initially accepted the cost report, then reversed its decision, disallowing $355,465 in costs and applying a PPS methodology of reimbursement. The SNF was certified to enter the Medicare program in early April 1999 and rendered its first patient care shortly thereafter on April 10, 1999. Although several Medicare manual provisions required the provider and its SNF to file one cost report, such filing did not make the SNF a "subprovider." Rather, under PRM-I § 102.1 a provider is considered a "new provider," at the inception of or during its initial business year.
Source: Community Care v. Leavitt, 5th Cir., July 29, 2008.
For more information on this and related topics, consult the CCH® Medicare and Medicaid Guide.
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