42 C.F.R. § 417.564 Apportionment and allocation of administrative and general costs.
Title 42 - Public Health
(a) Costs not directly associated with providing medical care. Enrollment, marketing, and other administrative and general costs that benefit the total enrollment of the HMO or CMP and are not directly associated with furnishing medical care must be apportioned on the basis of a ratio of Medicare enrollees to the total HMO or CMP enrollment. (b) Costs significantly related to providing medical services. (1) The following administrative and general costs, which bear a significant relationship to the services furnished, are not apportioned to Medicare directly; they must be allocated or distributed to the HMO or CMP components and then apportioned to Medicare in accordance with §§417.552 through 417.560: (i) Facility costs. (ii) Interest expense. (iii) Medical record costs. (iv) Centralized purchasing costs. (v) Accounting and data processing costs. (vi) Other administrative and general costs that are not included in paragraph (a) of this section. (2) The allocation or distribution process must be as follows: (i) If a separate entity or department of an HMO or CMP performs administrative functions the benefit of which can be quantitatively measured (such as centralized purchasing and data processing), the total allowable costs of this entity or department must be allocated or distributed to the components of the HMO or CMP in reasonable proportion to the benefits received by these components. (ii) If a separate entity or department of an HMO or CMP performs administrative functions the benefit of which cannot be quantitatively measured (such as facility costs), the total allowable costs of this entity or department must be allocated or distributed to the components of the HMO or CMP on the basis of a ratio of total incurred and distributed costs per component to the total incurred and distributed costs for all components. [60 FR 46231, Sept. 6, 1995]
Title 42: Public Health
PART 417—HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL PLANS, AND HEALTH CARE PREPAYMENT PLANS
Subpart O—Medicare Payment: Cost Basis
§ 417.564 Apportionment and allocation of administrative and general costs.
