New York Codes, Rules and Regulations › Title 10 - DEPARTMENT OF HEALTH › Chapter II - Administrative Rules and Regulations › Subchapter L - Hospitals and Related Facilities › Part 86 - Reporting and Rate Certifications for Facilities › Subpart 86-2 - Residential Health Care Facilities › Section 86-2.19 - Depreciation for voluntary and public residential health care facilities

Current through Register Vol. 46, No. 28, July 10, 2024
(a) Reported
					 depreciation based on approved historical cost of buildings, fixed equipment
					 and capital improvements thereto is recognized as a proper element of cost for
					 voluntary and public residential health care facilities. Useful lives shall be
					 the higher of the reported useful life or those useful lives from the most
					 recent edition of Estimated Useful Lives of Depreciable Hospital Assets,
					 American Hospital Association.
(b)
					 In the computation of rates effective for voluntary residential health care
					 facilities, depreciation shall be included on a straight line method on plant
					 and nonmovable equipment. Depreciation shall be funded unless the Commissioner
					 of Health shall have determined, upon application by the residential health
					 care facility, and after inviting written comments from interested parties,
					 that the requested waiver of the requirements for funding is a matter of public
					 interest and necessity. In instances where funding is required, such fund may
					 be used only for capital expenditures with approval as required or for the
					 amortization of capital indebtedness. Funding for plant and fixed equipment
					 shall mean that the transfer of monies to the funded accounts shall occur by
					 the end of the fiscal period in which the depreciation is recorded.
					 Board-designated funds and the accrual of liabilities to the funded
					 depreciation accounts (due to/from accounts) shall not be recognized as funding
					 of depreciation. Deposits to the funded depreciation accounts must remain in
					 such accounts to be considered as valid funding transactions unless expended
					 for the purpose for which it was funded.
(c) In the computation of rates for public
					 residential health care facilities, depreciation is to be included on a
					 straight line method on plant and nonmovable equipment.
(d) Residential health care facilities
					 financed by mortgage loans pursuant to the Nursing Home Companies Law or the
					 Hospital Mortgage Loan Construction Law (defined as facilities for purposes of
					 this subdivision only) shall conform to the requirements of this Subpart.
(1) In lieu of depreciation and interest, on
					 the loan-financed portion of the facilities the State Commissioner of Health
					 shall allow debt service on the mortgage loan as set forth in the mortgage
					 repayment schedule computed by the Medical Care Facilities Finance Agency,
					 together with such required fixed charges, sinking funds and reserves as may be
					 determined by the commissioner as necessary to assure repayment of the mortgage
					 indebtedness. Such mortgage repayment schedule may allow for the accelerated
					 repayment of the soft costs, including, but not limited to, mortgage and bond
					 insurance costs, start-up operating costs, underwriter discounts, government
					 agency fees and investment contract fees, included in the approved total
					 project cost.
(2) Effective January
					 1, 1995 for facilities in an initial period of operation, facilities which have
					 approved discrete units serving specialty populations as defined in paragraphs
					 (5), (6), (7) and (8) of section
					 86-2.15(b) 
					 of this Subpart, which serve AIDS residents, long term ventilator dependent
					 residents, residents requiring behavioral interventions in specialized programs
					 or traumatic brain injured residents who receive long term inpatient
					 rehabilitation, respectively, shall be reimbursed for certain capital
					 expenditures requiring a cash outlay as follows:
(i) Debt service amortization and interest,
					 property insurance and SONYMA annual fees shall be divided by an estimate of
					 patient days in the calculation of the capital component of the specialty
					 population unit rate that is promulgated for the initial period of operation.
(a) An estimate of patient days shall be
					 determined by the department based on a reasonable projection of utilization
					 during the initial period of operation. The reasonable projection of
					 utilization shall be based on factors that shall include, but not be limited
					 to, prior initial utilization of similarly situated facilities.
(b) Initial period of operation is defined as
					 the period commencing on the initial effective date on which the facility is
					 certified by the department to begin operation of the discrete unit(s)
					 identified in paragraph (2) of this subdivision, and ending on the last day of
					 the 12th month of continuous operation or the beginning date of the initial
					 cost report filed in accordance with section
					 86-2.2(e) 
					 of this Subpart, whichever is shorter.
(ii) The capital component of the facility's
					 rate for the initial period of operation shall be subject to audit for
					 utilization based on actual patient days in the initial period of operation.
					 Such capital component of the rate shall be retrospectively or prospectively
					 adjusted based on such audit.