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Medicare and HMO billings for noncontract patients in the SNF,
and ancillary services associated with the SNF. He stated that
it is reasonable to subtract medical expenses not associated with
the residents from both the numerator and denominator of the
formula. Additionally, the ancillary fees that are paid on a
fee-for-service basis and expected reimbursements from Medicare
and HMO insurance should also be subtracted from both the
numerator and denominator because these expenses are not expected
to be covered by entrance fees or monthly service fees.
Similar to the ad hoc committee, Mr. Powell believed that
the expenses for medical care would include expenses allocated to
the ALU, SCU,30 and SNF, plus a portion of the interest expense
allocable to these facilities. The same debt finance costs, SNF
room and board revenues, and ancillary services and Medicare and
HMO billings subtracted from the total costs would also be
subtracted from the medical expense. In addition, ancillary
services, Medicare, and HMO billings for residents should be
subtracted; however, Mr. Powell stated that he could not obtain
an accurate amount due to a difference between the accrual and
cash bases for those revenues.
30The SCU was completed in June 1997 and began operation at
that time. Mr. Powell did not allocate any medical expenses to
the SCU for 1997.
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