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B. Medicare Guidelines
The Federal Health Care Financing Administration (HCFA)
reimburses certified home health care agencies, such as
petitioner, for the reasonable costs of providing home health
care services to Medicare beneficiaries. About 98-99 percent of
petitioner’s revenues are Medicare reimbursements.
Petitioner must comply with accounting guidelines contained
in the Medicare Provider Reimbursement Manual (HCFA Publication
15-1) (the manual) and must submit to annual compliance audits of
its books and records by one of Medicare’s fiscal intermediaries.
The manual contains guidelines concerning providers’
capitalization and expensing policies. Those guidelines state:
108. GUIDELINES FOR CAPITALIZATION OF HISTORICAL COSTS
AND IMPROVEMENT COSTS OF DEPRECIABLE ASSETS
108.1 Acquisitions.–If a depreciable asset has at the
time of its acquisition an estimated useful life of at
least 2 years and a historical cost of at least $500,
its costs must be capitalized, and written off ratably
over the estimated useful life of the asset, using one
of the approved methods of depreciation. If a
depreciable asset has a historical cost of less than
$500, or if the asset has a useful life of less than 2
years, its cost is allowable in the year it is acquired
* * *.
The provider may, if it desires, establish a:
capitalization policy with lower minimum criteria, but
under no circumstances may the above minimum limits be
exceeded. For example, a provider may elect to
capitalize all assets with an estimated useful life of
at least 18 months and a historical cost of at least
$400. However, it may not elect to only capitalize
assets with a useful life of at least 3 years and a
historical cost of more than $600.
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Last modified: May 25, 2011