[Code of Federal Regulations]
[Title 42, Volume 2]
[Revised as of October 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR413.94]

[Page 613]
 
                         TITLE 42--PUBLIC HEALTH
 
                    CHAPTER IV--CENTERS FOR MEDICARE
                          & MEDICAID SERVICES,
                        DEPARTMENT OF HEALTH AND
                             HUMAN SERVICES
 
 PART 413_PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR 
 
                 Subpart F_Specific Categories of Costs
 
Sec. 413.94  Value of services of nonpaid workers.

    (a) Principle. The value of services in positions customarily held 
by full-time employees performed on a regular, scheduled basis by 
individuals as nonpaid members of organizations under arrangements 
between such organizations and a provider for the performance of such 
services without direct remuneration from the provider to such 
individuals is allowable as an operating expense for the determination 
of allowable cost subject to the limitation contained in paragraph (b) 
of this section. The amounts allowed are not to exceed those paid others 
for similar work. Such amounts must be identifiable in the records of 
the institutions as a legal obligation for operating expenses.
    (b) Limitations: Services of nonpaid workers. The services must be 
performed on a regular, scheduled basis in positions customarily held by 
full-time employees and necessary to enable the provider to carry out 
the functions of normal patient care and operation of the institution. 
The value of services of a type for which providers generally do not 
remunerate individuals performing such services is not allowable as a 
reimbursable cost under the Medicare program. For example, donated 
services of individuals in distributing books and magazines to patients, 
or in serving in a provider canteen or cafeteria or in a provider gift 
shop, would not be reimbursable.
    (c) Application. The following illustrates how a provider would 
determine an amount to be allowed under this principle: The prevailing 
salary for a lay nurse working in Hospital A is $5,000 for the year. The 
lay nurse receives no maintenance or special perquisites. A sister 
working as a nurse engaged in the same activities in the same hospital 
receives maintenance and special perquisites which cost the hospital 
$2,000 and are included in the hospital's allowable operating costs. The 
hospital would then include in its records an additional $3,000 to bring 
the value of the services rendered to $5,000. The amount of $3,000 would 
be allowable if the provider assumes obligation for the expense under a 
written agreement with the sisterhood or other religious order covering 
payment by the provider for the services.