Subsection 144-101-III-67-27 - ESTABLISHMENT OF PEER GROUP27.1Establishment of Peer Group. All Nursing care facilities will be included in one (1) of three (3) peer groups. Hospital based nursing facilities (excluding governmental institutions) will comprise one (1) peer group, non-hospital based facilities with sixty (60) or fewer beds will compose a second peer group, and non-hospital based facilities with more than sixty (60) beds will compose the third peer group. Please refer to Principle 1.4 for a description of a hospital-affiliated nursing facility. For determining the Medicare upper limit, it should be noted that the establishment of these three (3) peer groups in developing a payment model is not an accepted model in determining the upper limits as established by Federal Statute. The Federal Statute recognizes free standing nursing facilities in determining the upper limit. The upper limit for hospital-based facilities is based on one-half the routine costs of freestanding facilities and one-half the costs of hospital based facilities. Therefore, the appropriate Medicare upper limit test will be applied to all nursing facilities. C.M.R. 10, 144, ch. 101, ch. III, 144-101-III-67, subsec. 144-101-III-67-27