42 U.S.C. § 1396l — Hospital providers of nursing facility services

(a) Despite any other provision of this subchapter, an approved State plan may pay for nursing-facility services furnished by a hospital if the hospital has an agreement under section 1395tt of this title and, for those services, meets subsections (b) through (d) of section 1396r of this title. (b) (1) Unless paragraph (3) applies, the payment to such a hospital for nursing-facility services under subsection (a) must equal the average amount paid per patient day during the previous calendar year under the State plan for routine services provided by nursing facilities located in the State where the hospital is located. The reasonable cost of ancillary services must be determined in the same way as the reasonable cost of ancillary services for inpatient hospital services. (2) For any period when the hospital has an agreement under section 1395tt, the hospital must subtract from its total routine costs the total reimbursement due for routine services to all categories of long-term-care patients, including patients covered by subchapter XVIII, this subchapter, and private pay patients. This subtraction is made before calculating reimbursement for routine hospital services under the State plan. (3) The State may pay all such hospitals for nursing-facility services under subsection (a) at a rate the State establishes in accordance with section 1396a(a)(13)(A) of this title. This section does not define “routine services” or “ancillary services.”