thereto as provided by paragraph (j) of this section. Costs so allocated to direct medical and surgical services to hospital patients must be apportioned to health insurance program beneficiaries as provided by paragraph (g) of this section. (2) Reasonable costs of other than direct medical and surgical services rendered in a teaching hospital by medical school faculty (or organization related to the medical school). Such costs are determined in accordance with paragraph (c)(1) of this section except that: (i) Where the hospital makes payment to the medical school for other than direct medical and surgical services rendered to all patients, such payments are subject to the required costfinding and apportionment methods applicable to the cost of other hospital services (excepting direct medical and surgical services rendered to patients), or (ii) where the hospital makes payment to the medical school only for such services rendered to health insurance program patients, then the cost of services which are so reimbursed are not subject to cost-finding and apportionment as otherwise provided by this subpart and the reasonable cost reimbursed by the health insurance program must be determined on the basis of the health insurance ratio(s) used in the apportionment of all other provider costs (excepting physicians' direct medical and surgical services rendered to patients) applied to the allowable medical school costs incurred by the medical school for the services rendered to all patients of the hospital. (d) "Salary Equivalent" payments for physicians' direct medical and surgical services rendered to health insurance program patients in a teaching hospital by physicians on the voluntary staff of the hospital (or medical school or organization related thereto under arrangement with the hospital). (1) Payments will be made to a fund as defined in § 405.466 for direct medical and surgical services rendered on a regularly scheduled basis by physicians on the unpaid voluntary medical staff of the hospital (or medical school under arrangement with the hospital) to health insurance program patients. Such payments represent compensation for contributed medical staff time which, if not contributed, would have to be obtained through employed staff on a reimbursable basis. Payments for volunteer services are determined by applying to the regularly scheduled contributed time an hourly rate not to exceed the equivalent of the average direct salary (exclusive of fringe benefits) paid to all full-time, salaried physicians (other than interns and residents) on the hospital staff or, where the number of full-time salaried physicians is minimal in absolute terms or in relation to the number of physicians on the voluntary staff, to physicians at like institutions in the area. This "salary equivalent" is a single hourly rate covering all physicians regardless of specialty, and is applied to the actual regularly scheduled time contributed by the physicians in rendering direct medical and surgical services to health insurance program patients including supervision of interns and residents in such care. A physician who receives any compensation from the hospital or a medical school related to the hospital by common ownership or control (within the meaning of § 405.427), for direct medical and surgical services rendered to any patient in the hospital will not be considered an unpaid voluntary physician for purposes of this paragraph. Where, however, a physician receives compensation from the hospital or related medical school or organization related thereto for only services which are other than direct medical and surgical services, a salary equivalent payment for his regularly scheduled direct medical and surgical services to health insurance program patients of the hospital may be imputed. However, the sum of the imputed value for volunteer services and his actual compensation from the hospital and the related medical school (or organization related thereto) may not exceed the amount that would have been imputed if all of his hospital and medical school services (compensated and volunteer) had been (i) volunteer services, or (ii) at the rate of $30,000 per year, whichever is less. (2) The following examples illustrate how the allowable imputed value for volunteer services is determined. In each example, it has been assumed that the average salary equivalent hourly rate is equal to the hourly rate for the individual physician's compensated services. Example No. 1. Dr. Jones received $3,000 a year from Hospital X for services other than direct medical services to all patients, e.g., utilization review, administrative services, etc. Dr. Jones also voluntarily rendered direct medical services to health insurance program patients. The imputed value of the volunteer services amounted to $10,000 for the cost-reporting period. The full imputed value of Dr. Jones' volunteer direct medical services would be allowed since the total amount of the imputed value ($10,000) and the compensated services ($3,000) does not exceed $30,000. Example No. 2. Dr. Smith received $25,000 from Hospital X for services as a department head in a teaching hospital. Dr. Smith also voluntarily rendered direct medical services to health insurance program patients. The imputed value of the volunteer services amounted to $10,000. Only $5,000 of the imputed value of volunteer services would be allowed since the total amount of the imputed value ($10,000) and the compensated services ($25,000) exceeds the $30,000 maximum amount allowable for all his services. $5,000 Allowable amount of imputed value for the volunteer services rendered by Dr. Smith...... Example No. 3. Dr. Brown is not compensated by Hospital X for any services rendered in the hospital. Dr. Brown voluntarily rendered direct surgical services to health insurance program patients for a period of 6 months and the imputed value of these services amounted to $20,000. The allowable amount of the imputed value for volunteer services rendered by Dr. Brown would be limited to $15,000 ($30,000 × 12). (3) The amount of the imputed value for volunteer services applicable to health insurance program beneficiaries and payable to a fund will be determined in accordance with the Aggregate Per Diem Method described in paragraph (g) of this section. (4) Health insurance payments to a fund will be used by the fund solely for improvement of care of hospital patients or for educational or charitable purposes (which may include but are not limited to medical and other scientific research). No personal financial gain, either direct or indirect, from benefits of the fund may inure to any of the hospital staff physicians, medical school faculty, or physicians for whom the health insurance program imputes costs for purposes of payment into the fund. Expenses met from contributions made to the hospital from such a fund will not be included as a reimbursable cost when expended by the hospital, and depreciation expense will not be allowed with respect to equipment or facilities donated to the hospital by such a fund or purchased by the hospital from monies in such a fund. (e) Requirements for reimbursement for physicians' direct medical and surgical services (including supervision of interns and residents) in the care of individual patients rendered in α teaching hospital (1) Physicians on the hospital stuff. The requirements under which the costs of physicians' direct medical and surgical services (including supervision of interns and residents) in the care of individual patients rendered to health insurance program patients will be allowed are the same as those applicable to the cost of all other covered provider services except that the costs of these services are separately determined as provided by this section and are not subject to cost-finding as described in § 405.453. (2) Physicians on the medical school faculty. Reimbursement will be made to a hospital by the health insurance program for the costs of services of physicians on the medical school faculty, provided that in situations where the medical school is not related to the hospital (within the meaning of § 405.427), the hospital does not make payment to the medical school for services rendered to all patients and the following requirements are met: (In situations where the hospital makes payment to the medical school for services rendered to all patients, these requirements do not apply (see § 405.465(c)(1)(ii)). (i) There is a written agreement between the hospital and the medical school or organization related thereto, specifying the types and extent of services to be furnished by the medical school and specifying that the hospital must pay to the medical school an amount at least equal to the reasonable cost (as defined in paragraph (c) of this section) of providing such services to health insurance program patients, (ii) Such costs are paid to the medical school by the hospital no later than the date on which the cost report covering the period in which the services were rendered is due, and (iii) Payment for such services furnished under such an arrangement would be made by the health insurance program to the hospital had such services been furnished directly by the hospital. (3) Physicians on the voluntary staff of the hospital (or medical school under arrangement with the hospital). Payments will be made by the health insurance program on a “salary equivalent" basis (as defined in paragraph (d) of this section) to a fund where the conditions outlined in § 405.466 are met. (f) Requirements for reimbursement for medical school faculty services other than physicians' direct medical and surgical services rendered in a teaching hospital. Reimbursement will be made to a hospital by the health insurance program for the costs of medical school faculty services other than physicians' direct medical and surgical services rendered in a teaching hospital where the requirements described in paragraph (e) of this section are met. (g) Aggregate per diem methods of apportionment for physicians' direct medical and surgical services (including supervision of interns and residents) in the care of individual patients, rendered in a teaching hospital (1) Aggregate per diem method of apportionment for the costs of physicians' direct medical and surgical services (including supervision of interns and residents) in the care of individual patients. The cost of physicians' direct medical and surgical services rendered in a teaching hospital to health insurance program beneficia ries is determined on the basis of an average cost per diem as defined in paragraph (h)(1) of this section for physicians' direct medical and surgical services to all patients (see § 405.521) for each of the following categories of physicians: (i) Physicians on the hospital staff. (ii) Physicians on the medical school faculty. (2) Aggregate per diem method of apportionment for the imputed value of physicians' volunteer direct medical and surgical services. The imputed value of physicians' direct medical and surgical services rendered to health insurance program beneficiaries in a teaching hospital is determined on the basis of an average per diem, as defined in paragraph (h)(1) of this section, for physicians' direct medical and surgical services to all patients except that the average per diem will be derived from the imputed value of the physician volunteer direct medical and surgical services rendered to all patients. (h) Definitions—(1) Average cost per diem for physicians' direct medical and surgical services (including supervision of interns and residents) rendered in a teaching hospital. Average cost per diem for physicians' direct medical and surgical services rendered in a teaching hospital to patients in each category of physicians' services as described in paragraphs (g)(1) (i) and (ii) of this section means the amount computed by dividing total reasonable costs of such services in each category by the sum of: (i) Inpatient days (as defined in paragraph (h)(2) of this section) and, (ii) Outpatient visit days (as defined in paragraph (h)(3) of this section). (2) Inpatient days. Inpatient days will be determined by counting the day of admission as 3.5 days and each day subsequent to a patient's day of admission except the day of discharge, as 1 day. (3) Outpatient visit days. Outpatient visit days will be determined by counting only one visit day for each calendar day that a patient visits the outpatient department. (i) Application. (1) The following illustrates how apportionment based on the Aggregate Per Diem Method for Total outpatient part B visit days applicable Computation of cost applicable to program for physicians on the hospital staff: Average cost per diem for direct medical Cost of physicians' direct medical and surgi- Cost of physicians' direct medical and surgical services rendered to outpatient beneficiaries covered under part B: $20 per diem x 5,000.. Computation of cost applicable to program for physicians on the medical school faculty: Average cost per diem for direct medical and surgical services to patients by physicians on the medical school faculty: $1,650,000÷75,000 $22 per diem. Cost of physicians' direct medical and surgical services rendered to inpatient beneficiaries covered under part A: $22 per diem x 20,000.. Cost of physicians' direct medical and surgical services rendered to inpatient beneficiaries covered under part B: $22 per diem x 1,000 Cost of physicians' direct medical and surgical services rendered to outpatient beneficiaries covered under part B: $22 per diem x 5,000. 5,000 $1,500,000 Example: The physicians on the medical staff of Teaching Hospital Y donated a total of 5,000 hours in rendering direct medical and surgical services to patients of the hospital during a cost-reporting period and did not receive any compensation from either the hospital or the medical school. Also, the imputed value for any physician's volunteer services did not exceed the rate of $30,000 per year per physician. Statistical and financial data: Total salaries paid to the full-time salaried physicians by the hospital (excluding interns and residents).. Total physicians who were paid for an average of 40 hours per week or 2,080 (52 weeks × 40 hours per week) hours per year Average hourly rate equivalent: $800,000 ÷41,600 (2,080 × 20). Computation of total imputed value of physicians' volunteer services applicable to all patients: (Total donated hours average hourly rate equivalent): 5,000 x $19.23. $800,000 20 $19.23 $96,150 (2) The following illustrates how the imputed value of physicians' volunteer direct medical and surgical services rendered in a teaching hospital applicable to health insurance program patients will be determined. Computation of imputed value of physicians' volunteer direct medical and surgical services applicable to program beneficiaries: Average per diem for physicians' direct $25,600 $1,280 Imputed value of physicians' direct medical and surgical services rendered to outpatient beneficiaries covered under part B: $1.28 per diem × 5,000. $6,400 Total.. $33,280 (j) Allocation of compensation paid to physicians in a teaching hospital. In determining reasonable cost under this section, the compensation paid by a teaching hospital, or a medical school or related organization under arrangement with the hospital, to physicians in a teaching hospital must be allocated to the full range of services implicit in the physicians' compensation arrangements. (However, see paragraph (d) of this section for the computation of the "salary equivalent" payments for volunteer services rendered to patients.) Such allocation must be made and must be capable of substantiation on the basis of the proportion of each physician's time spent in rendering each type of service to such hospital and/or medical school. [40 FR 33440, Aug. 8, 1975. Redesignated at 42 FR 52826, Sept. 30, 1977] § 405.466 Payment to a fund. (a) General. Payment for certain voluntary services by physicians in teaching hospitals (as such services are described in § 405.521(d)(2) will be paid on a salary equivalent basis (as described in § 405.465(d)) subject to the conditions and limitations contained in this Part 405 and title XVIII of the Act, to a single fund (as defined in paragraph (b) of this section) designated by the organized medical staff of the hospital (or, where such services are furnished in such hospital by the faculty of a medical school, to such fund as may be designated by the faculty), if: (1) The hospital (or medical school furnishing the services under arrangement with the hospital) incurs no actual cost in furnishing the services; and (2) The hospital has an agreement with the Secretary under § 405.602; and (3) The intermediary, or the Health Care Financing Administration, as appropriate, has received written assurances that: (i) The payment will be used solely for the improvement of care of hospital patients or for educational or charitable purposes; and (ii) Neither the individuals who are furnished the services nor any other persons will be charged for the services (and if charged, provision will be made for the return of any monies incorrectly collected). (b) Definition of a fund. For purposes of paragraph (a) of this section, a fund is an organization which meets either of the following requirements: (1) Has and retains exemption, as a governmental entity or under section 501(c)(3) of the Internal Revenue Code (nonprofit educational, charita ble, and similar organizations), from Federal taxation; or (2) Is an organization of physicians who, under the terms of their employment by an entity which meets the requirements of paragraph (b)(1) of this section, are required to turn over to that entity all income which the physician organization derives from the physicians' services. (c) Status of a fund. A fund approved for payment under paragraph (a) of this section has all the rights and responsibilities of a provider under title XVIII of the Act except that it does not enter into an agreement with the Secretary under § 405.602. [40 FR 33443, Aug. 8, 1975. Redesignated at 42 FR 52826, Sept. 30, 1977] § 405.480 Determining reimbursement for services performed by hospital-based physicians. (a) General. The Health Insurance for the Aged Act establishes two separate health insurance programs for the elderly. One provides hospital insurance protection to nearly all the aged financed largely through social security taxes (see Subpart A of this part). The other provides supplementary medical insurance to aged people who enroll and agree to pay monthly premiums, that are matched with amounts from Federal general revenues (see Subpart B of this part). (b) Sources of benefit payments. Under the law, benefit payments for the services of physicians (except for services of residents and interns under professionally-approved training programs) furnished to individual patients are under the supplementary medical insurance program (see Subpart B of this part). However, some of the services which hospital-based physicians perform are clearly not furnished to an individual patient. To the extent that the cost of such services is borne by the hospital, reimbursement will be made to the hospital under the hospital insurance program or, in certain cases, as a hospital cost under the supplementary medical insurance pro gram. (c) Applicability of principles of reimbursement. The principles set forth in §§ 405.480-405.488 deal principally |