[Code of Federal Regulations]

[Title 42, Volume 1]

[Revised as of October 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 42CFR53.111]



[Page 225-230]

 

                         TITLE 42--PUBLIC HEALTH

 

    CHAPTER I--PUBLIC HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN 

                                SERVICES

 

PART 53_GRANTS, LOANS AND LOAN GUARANTEES FOR CONSTRUCTION AND 

MODERNIZATION OF HOSPITALS AND MEDICAL FACILITIES--Table of Contents

 

    Subpart L_Services for Persons Unable To Pay; Community Service; 

                           Nondiscrimination.

 

Sec.  53.111  Services for persons unable to pay.





    (a) Applicability. The provisions of this section apply to every 

applicant which heretofore has given or hereafter will give an assurance 

that it will make available a reasonable volume of services to persons 

unable to pay therefor but shall not apply to an applicant (1) for more 

than 20 years after the completion of construction of any facility with 

respect to which funds have been paid under section 606 of the Act or 

(2) beyond the period during which any amount of a direct loan made 

under sections 610 or 623 of the Act, or any amount of a loan with 

respect to which a loan guarantee and interest subsidy has been provided 

under sections 623 and 624 of the Act remains unpaid.

    (b) Definitions. As used in this section:

    (1) The term facility includes hospitals, facilities for long-term 

care, outpatient facilities, rehabilitation facilities, and public 

health centers;

    (2) The term applicant means an applicant for, or recipient of, a 

grant, a loan guarantee or a loan under the Act;

    (3) Fiscal year means the fiscal year of the applicant;

    (4) The term operating costs means the actual operating costs of the 

applicant for a fiscal year as determined in accordance with cost 

determination principles and requirements under title XVIII of the 

Social Security Act (42 U.S.C. 1395): Provided, That such ``operating 

costs'' shall be determined for the applicant's entire facility and for 

all patients regardless of the source of payment for such care: And 

provided further, That in determining such operating costs there shall 

be deducted the amount of all actual or estimated reimbursements, as 

applicable, for services received or to be received pursuant to title 

XVIII and XIX of the Social Security Act (42 U.S.C. 1395 and 1936);

    (5) The term reasonable cost means the cost of providing services to 

a specific patient determined in accordance with the cost determination 

principles and requirements under title XVIII of the Social Security Act 

(42 U.S.C. 1395) and subpart D of the regulations thereunder (20 CFR 

part 405, \1\ part 401 et seq.);

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    \1\ Redesignated as 42 CFR part 405 at 42 FR 52826, Sept. 30, 1977.

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    (6) The term uncompensated services means services which are made 

available to persons unable to pay therefor without charge or at a 

charge which is less than the reasonable cost of such services. The 

level of such services is measured by the difference between the amount 

charged such persons for such services and the reasonable cost thereof;

    (7) Reasonable volume of services to persons unable to pay therefor 

means a level of uncompensated services which meets a need for such 

services in the area served by an applicant and which is within the 

financial ability of such applicant to provide.

    (c) Assurance. (1) Before an application under this part is 

recommended by



[[Page 226]]



a State agency to the Secretary for approval, the State agency shall 

obtain an assurance from the applicant that there will be made available 

in the facility or portion thereof to be constructed or modernized a 

reasonable volume of services to persons unable to pay therefor. The 

requirement of an assurance from an applicant shall be waived if the 

applicant demonstrates to the satisfaction of the State agency, subject 

to subsequent approval by the Secretary, that such a requirement is not 

feasible from a financial viewpoint.

    (2) Prior to recommending that such requirement be waived, the State 

agency shall publish in a newspaper of general circulation in the area 

served by the applicant a notice of the request for such waiver and 

invite public comment thereon, allowing not less than 30 days therefor. 

All comments received shall be available for public inspection, and 

shall be considered by the State agency in arriving at its 

recommendation. Notice of the determination on the request for waiver 

shall be given to all interested persons and to the public before the 

approval of the Secretary is sought.

    (d) Presumptive compliance guideline. An applicant which, for a 

fiscal year, (1) budgets for the support of, and makes available on 

request, uncompensated services at a level not less than the lesser of 3 

percent of operating costs or 10 percent of all Federal assistance 

provided to or on behalf of the applicant under the Act, or (2) 

certifies that it will not exclude any person from admission on the 

ground that such person is unable to pay for needed services and that it 

will make available to each person so admitted services provided by the 

facility without charge or at a charge below reasonable cost which does 

not exceed any such person's ability to pay therefor as determined in 

accordance with criteria established pursuant to paragraph (g), shall be 

deemed in presumptive compliance with its assurance. In the case of a 

loan guarantee with interest subsidy or a direct loan guarantee be sold 

by the Secretary with an interest subsidy, the amount of Federal 

assistance shall include the total amount of the interest subsidy which 

the Secretary is, or will be, obligated to pay over the full life of the 

loan, as well as any other payments which the Secretary makes on behalf 

of the applicant in connection with the loan guarantee or the direct 

loan which has been sold.

    (e) Compliance reports. (1) Each applicant shall, not later than 120 

days after the end of a fiscal year, unless a longer period is approved 

by the State agency for good cause shown, file with the State agency a 

copy of its annual statement for such year as required by section 646 of 

the Act and Sec.  53.128(q), which shall set forth its operating costs.

    (2) With respect to each fiscal year for which a level of 

uncompensated services has been established in accordance with this 

section, the annual statement shall also set forth the amount of 

uncompensated services provided in such year.

    (i) The provision of a level of uncompensated services in such year 

which equals or exceeds the level established pursuant to paragraph (h) 

of this section for such year shall constitute compliance with the 

assurance.

    (ii) If the level of services provided was less than the level of 

uncompensated services established pursuant to paragraph (h) of this 

section, the applicant shall submit with such statement: A justification 

therefor, showing that the provision of such lower level of 

uncompensated services was reasonable under the circumstances; and a 

description of the steps it proposes to take to assure the availability 

and utilization of the level of uncompensated services to be established 

for the current fiscal year, which shall include an affirmative action 

plan, utilizing press releases or other appropriate means as the 

facility may desire to bring to the attention of the public the 

availability of such uncompensated services and the conditions of 

eligibility therefor.

    (3) Each applicant shall file with its annual statement a copy of 

that portion of its adopted budget for the current fiscal year relating 

to the support of uncompensated services in such year. Such budget for 

uncompensated services shall be based on the operating costs of the 

applicant for the preceding



[[Page 227]]



fiscal year and shall give due cognizance to probable increases in 

operating costs. Except in the case of a certification pursuant to 

paragraph (d)(2) of this section, if the budget statement does not 

conform to the presumptive compliance guideline, the applicant shall 

submit with its statement.

    (i) A justification therefor, showing that such lower level of 

uncompensated services is reasonable under the circumstances, and

    (ii) A plan to increase such uncompensated services to meet the 

presumptive compliance guideline or such other level of uncompensated 

services as may have been established or as it requests the State agency 

to establish in accordance with paragraph (h) of this section.

    (4) The applicant shall also submit such additional reports related 

to compliance with its assurance as the State agency may reasonably 

require.

    (5) Pending the establishment of a level of uncompensated services 

for any fiscal year pursuant to paragraph (h) of this section, the 

applicant shall, in such fiscal year, provide a level of services which 

is the higher of

    (i) The level established for the preceding fiscal year (or if no 

such level has been established for such prior year, the level of 

services provided in such year) or

    (ii) The level proposed in its adopted budget for the current fiscal 

year.

    (f) Qualifying services. (1) In determining the amount of 

uncompensated services provided by an applicant, there shall be included 

only those services provided to an individual with respect to whom the 

applicant has made a written determination prior to the provision of 

such services that such individual is unable to pay therefor under the 

criteria established pursuant to 42 CFR 53.111(g), except that:

    (i) Such determination may be made after the provision of such 

services in the case of services provided on an emergency basis: 

Provided, That when billing is made for such service, such billing must 

be accompanied by substantially the information required in the posted 

notice under paragraph (i) of this section; and

    (ii) Such determination may be made after the provision of such 

services in the case of a change in circumstances as a result of the 

illness or injury occasioning such services (e.g., the patient's 

financial condition has changed due to a loss of wages resulting from 

the illness) or in case of insurance coverage or other resources being 

less than anticipated or the costs of services being greater than 

anticipated. Further, in all cases where such determination was not made 

prior to the provision of services, such services may not be included as 

uncompensated services if any collection effort has been made other than 

the rendering of bills permissible in the above exceptions: Provided, 

That such a determination may be made at any time if the determination 

was hindered or delayed by reason of erroneous or incomplete information 

furnished by or in behalf of the patient.

    (2) There shall be excluded from the computation of uncompensated 

services:

    (i) Any amount which the applicant has received, or is entitled to 

receive, from a third party insurer or under a governmental program; and

    (ii) The reasonable cost of any services for which payment in whole 

or in part would be available under a governmental program (e.g., 

Medicare and Medicaid) in which the applicant, although eligible to do 

so, does not participate, but only to the extent of such otherwise 

available payment.

    (g) Persons unable to pay for services. (1) The State agency shall 

set forth in its State plan, subject to approval by the Secretary, 

criteria for identifying persons unable to pay for services, which shall 

include persons who are otherwise self-supporting but unable to pay the 

full charge for needed services. Such criteria shall be based on the 

following or similar factors:

    (i) The health and medical care insurance coverage, personal or 

family income, the size of the patient's family, and other financial 

obligations and resources of the patient or the family in relation to 

the reasonable cost of the services;

    (ii) Generally recognized standards of need such as:



[[Page 228]]



    (a) The State standard for the medically needy as determined for the 

purposes of the Aid for Families with Dependent Children program;

    (b) The current Social Security Administration poverty income level;

    (c) The current Office of Economic Opportunity Income Poverty 

Guidelines applicable in the area; or

    (iii) Any other equivalent measures which are found by the Secretary 

to provide a reasonable basis for determining an individual's ability to 

pay for medical and hospital services.

    (2) A copy of such criteria shall be provided by the applicant, upon 

request, to any patient or former patient of the applicant and to any 

person seeking services from the applicant.

    (3) The State agency shall provide a copy of such criteria to any 

person requesting it.

    (h) Level of uncompensated services. (1) The State agency shall set 

forth in its State plan procedures for the determination for each 

applicant of the level of uncompensated services which constitutes a 

reasonable volume of services to persons unable to pay therefor provided 

that in no event shall the level of uncompensated services established 

under this section exceed the presumptive compliance guideline.

    (2) The State agency shall for the purpose of making such 

determination, review, and evaluate the annual statement, the budget and 

the related documents submitted by each applicant pursuant to paragraph 

(e) of this section, by applying the following criteria:

    (i) The financial status of the applicant, taking account of income 

from all sources, and its financial ability to provide uncompensated 

services;

    (ii) The nature and quantity of services provided by the applicant;

    (iii) The need within the area served by the applicant for the 

provision, without charge or at charge which is less than reasonable 

cost, for services of the nature provided or to be provided by the 

applicant; and

    (iv) The extent and nature of joint or cooperative programs with 

other facilities for the provision of uncompensated services, and the 

extent and nature of outreach services directed to the needs of 

underserved areas.

    (3) In accordance with its findings made after such review and 

evaluation, the State agency shall, within 60 days after receipt of the 

annual statement and related documents required by paragraph (e) of this 

section, for each fiscal year of an applicant which begins following the 

expiration of 90 days after the effective date of this regulation:

    (i) Establish a level of uncompensated services for each applicant 

which may be equal to or less than the presumptive compliance guideline: 

Provided, That if the State agency determines, in accordance with 

paragraph (h)(2) of this section, that (a) there is a need in the area 

served by an applicant for a level of uncompensated services greater 

than the level proposed in the applicant's budget statement, and (b) the 

applicant is financially able to provide such greater level of 

uncompensated services, the State agency shall establish such greater 

level as the level applicable to the applicant; and

    (ii) Accept or modify a plan submitted pursuant to paragraph (e) of 

this section.

    (4) The State agency shall notify the applicant in writing of the 

level of uncompensated services which it has established for the 

applicant for the fiscal year. At the time of notifying the applicant, 

the State agency shall also publish as a public notice in a newspaper of 

general circulation within the community served by the applicant the 

rate that has been established and a statement that the documents upon 

which the agency based its determination are available for public 

inspection at a location and time prescribed. In the case of the 

establishment by the State agency of a rate which is less than the 

presumptive compliance guideline, such notice shall also include a 

statement that persons wishing to object to the rate established may do 

so by writing to the State agency within 20 days after publication of 

the notice: Provided, That the applicant may object to any level 

established which is greater than the level proposed in the applicant's 

budget statement.

    (5) In accordance with the provisions of paragraph (h)(4) of this 

section, the



[[Page 229]]



applicant or any person or persons residing or located within the area 

served by the applicant, or any organization on behalf of such person or 

persons, may submit to the State agency within 20 days of the 

publication and sending of the notice objections to the rate established 

by the State agency for the applicant. Such objections may be supported 

in writing by factual information and argument. The State agency shall 

give public notice of receipt of the objections and shall make the 

objections and their supporting documents available for public 

inspection and comment. It may, if it believes that determination of the 

objections will be assisted by oral evidence or by oral argument, set a 

public hearing on the objections and shall give notice of such hearing 

to all interested parties and to the public. The State agency shall 

within 60 days of the expiration of the period within which objections 

may be filed, rule upon the objections in writing, stating its reason 

for sustaining or overruling them, in whole or in part, and establishing 

finally the rate of uncompensated services either the same as, above, or 

below the rate previously established, as may best accord with all of 

the evidence on file with or heard by the State agency. Notice of the 

final determination shall be mailed to all parties who filed objections 

or who participated in the proceedings leading to the redetermination.

    (6) Within 20 days of receipt of written notice of the final 

determination of a State agency after ruling on objections to the rate 

established by the State agency, the applicant or any other interested 

person or organization may submit to the Secretary a written request for 

review of the State agency determination. Such review shall be made upon 

the record of the State agency determination which shall be sustained if 

supported by substantial evidence and is not otherwise arbitrary or 

capricious. If the Secretary or his designee determines that the rate 

established by the State agency is unsupported by the evidence in the 

record or is otherwise arbitrary or capricious, the Secretary or his 

designee shall, upon the basis of the record or upon other evidence or 

information which is before him or which he may obtain, establish a 

level of uncompensated services which he determines, in accordance with 

the criteria set out in paragraph (h)(2) of this section, is 

appropriate.

    (7) The level of uncompensated services established for an applicant 

under this section for any fiscal year shall constitute a reasonable 

volume of services to persons unable to pay therefor with respect to 

such applicant for such fiscal year.

    (i) Posted notice. The applicant shall post notice (which shall be 

multilingual where the applicant serves a multilingual community), in 

substantially the following form, in appropriate areas within the 

facility (admissions, office, emergency department and business office) 

for the purpose of informing patients or potential patients that 

criteria for eligibility and applications are available upon request:



                    Notice of Hill-Burton Obligation



    This hospital (or other facility) is required by law to give a 

reasonable amount of service at no cost or less than full cost to people 

who cannot pay. If you think that you are eligible for these services, 

please contact our business office (give office location) and ask for 

assistance. If you are not satisfied with the results, you may contact 

(the State Hill-Burton agency with address).

    Provided, That an applicant which has selected a presumptive 

compliance guideline under paragraph (d)(1) of this section may, at its 

option, either (1) add to such notice language stating that the 

facility's obligation is limited to a specified dollar volume of 

uncompensated services and that if the facility has, during a specified 

period (e.g., year, quarter, month), already provided a volume of 

uncompensated services sufficient to satisfy such obligation, any person 

inquiring about such services will be given a written statement to that 

effect which shall also state when additional uncompensated services 

will be available; or (2) post an additional notice stating that the 

facility's obligation has been satisfied for the current period and 

stating when additional uncompensated services will be available.



    (j) Evaluation and enforcement. The State plan shall provide for 

evaluation and enforcement of the assurance in accordance with the 

following requirements:

    (1) The State agency shall,



[[Page 230]]



    (i) At least annually, perform evaluations of the amount of the 

various services provided in each facility with respect to which Federal 

assistance has been provided under the Act, to determine whether such 

assurance is being complied with; and

    (ii) Establish procedures for the investigation of complaints that 

such assurance is not being complied with.

    (2) Evaluation pursuant to paragraph (j)(1) of this section shall be 

based on the annual budget of each facility for uncompensated services 

and on financial statements of such facilities filed pursuant to section 

646 of the Act and Sec.  53.128(q), and on such other information, 

including reports of investigations and hearing decisions, as the State 

agency deems relevant and material.

    (3) The State plan shall provide for adequate methods of enforcement 

of the assurance, including effective sanctions to be applied against 

any facility which fails to comply with such assurance. Such sanctions 

may include, but need not be limited to, license revocation, termination 

of State assistance, and court action.

    (k) Reports. (1) The State agency shall, not less often than 

annually, report in writing to the Secretary its evaluation of each 

facility's compliance with the assurance, the disposition of each 

complaint received by the State agency, proposed remedial action with 

respect to each facility found by the State agency to be not in 

compliance with the assurance, and the status of such remedial action.

    (2) In addition, the State agency shall promptly report to the 

Regional Attorney and Regional Health Director of the Department of 

Health and Human Services the institution of any legal action against a 

facility or the State agency involving compliance with the assurance.



[37 FR 14721, July 22, 1972, as amended at 38 FR 16354, June 22, 1973; 

40 FR 46203, Oct. 6, 1975]