Group
(iv) Group means. SNFs are grouped by urban or rural location by census region. Separate means of adjusted labor-related and nonlabor routine operating costs for each SNF group are established in accordance with the SNF's region and urban or rural location. For each group, the mean labor-related and mean nonlabor-related per diem routine operating costs are multiplied by 105 percent. (2) Computation of routine capital-related cost. (i) The SNF routine capital-related cost for both direct and indirect capital costs allocated to routine services, as reported on the Medicare cost report, is obtained for each SNF in the data base. (ii) For each SNF, the per diem capital-related cost is calculated by dividing the SNF's routine capital costs by its inpatient days. (iii) SNFs are grouped by urban and rural location by census region, and mean per diem routine capital-related cost is determined for each group. (iv) Each group mean per diem capital-related cost is multiplied by 105 percent. (3) Computation of return on owner's equity for services furnished before October 1, 1993. (i) Each proprietary SNF's Medicare return on equity is obtained from its cost report and the portion attributable to the routine service cost is determined as described in 413.157. (ii) For each proprietary SNF, per diem return on equity is calculated by dividing the routine cost related return on equity determined under paragraph (b)(3)(i) of this section by the SNF's total Medicare inpatient days. (iii) Separate group means are computed for per diem return on equity of proprietary SNFs, based on regional and urban or rural classification. (iv) Each group mean is multiplied by 105 percent.