§ 124.503 Compliance level.

(a) Annual compliance level. Subject to the provisions of this subpart, a facility is in compliance with its assurance to provide a reasonable volume of services to persons unable to pay if it provides for the fiscal year uncompensated services at a level not less than the lesser of—

(1) Three percent of its operating costs for the most recent fiscal year for which an audited financial statement is available;

(2) Ten percent of all Federal assistance provided to or on behalf of the facility, adjusted by a percentage equal to the percentage change in the CPI between the year in which the facility received assistance or 1979, whichever is later, and the most recent year for which a published index is available.

(b) Deficits. If in any fiscal year a facility fails to meet its annual compliance level, it shall provide uncompensated services in an amount sufficient to make up that deficit in subsequent years, and its period of obligation shall be extended until the deficit is made up.

(1) Types of deficits. For purposes of determining the timing and amount of any deficit make-up, there are two types of deficits:

(i) Justifiable deficits. A justifiable deficit is one in which the facility did not meet its annual compliance level due to either financial inability (as determined under § 124.511(c)) or, although otherwise in compliance with this subpart, a lack of eligible applicants for uncompensated services during the fiscal year.

(ii) Noncompliance deficits. A noncompliance deficit is one in which the facility failed to meet its annual compliance level due to noncompliance with this subpart.