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not being challenged. Accordingly, the noncontract patient fees
related to the SNF, ALU, and SCU should all be excluded from
total costs and medical expenses.
In his report, Mr. Powell states that it is reasonable to
subtract SNF ancillary service, Medicare, and HMO billings from
total costs and medical expenses. Respondent argues that the
entrance fees and monthly service fees are expected to cover the
costs of care for residents of a CCRC, and therefore it is
reasonable to subtract expenses not expected to be covered by the
fees. Respondent contends that ancillary services that are paid
on a fee-for-service basis, and expected reimbursements from
Medicare and HMO insurance are expenses not covered by the
entrance fees and monthly service fees.
At trial, Mr. Dalton testified that if medical care was
covered by insurance, then the fees were charged directly to the
insurance company and charged to an expense account. If payment
was received from Medicare or an HMO insurance company, the
payments were credited to a revenue account.
We agree with respondent on this issue. Our understanding
of the facts of this case is that the monthly service fees are
paid to cover costs related to AFVW residents. The ad hoc
committee allocated SNF, ALU, and SCU expenses to medical care;
however, these facilities are also used by noncontract patients.
The noncontract patients are charged fees for use of the
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