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 86-2.20 - Interest expense for all residential health care facilities

Current through Register Vol. 46, No. 28, July 10, 2024
(a) Necessary
					 interest on both current and capital indebtedness is an allowable cost for all
					 residential health care facilities.
(b) To be considered as an allowable cost,
					 debt generating interest shall be incurred to satisfy a financial need, and
					 interest expense shall be at a rate not in excess of what a prudent borrower
					 would have had to pay in the money market at the time the loan was made. Also,
					 the interest shall be paid to a lender not related through control, ownership,
					 affiliation or personal relationship to the borrower, except in instances where
					 the prior approval of the Commissioner of Health has been obtained. Financial
					 need for capital indebtedness relating to a specific project shall exist when
					 all available restricted funds designated for capital acquisition of that type
					 have been considered for equity purposes.
(c)
(1)
					 Interest expense shall be reduced by investment income with the exception of
					 income from funded depreciation, qualified pension funds, trusteed malpractice
					 insurance funds, or in instances where income from gifts or grants is
					 restricted by donors. Interest on funds borrowed from a donor-restricted fund
					 or funded depreciation is an allowable expense. Investment incomeshall be
					 defined as the aggregate net amount realized from dividends, interest, rental
					 income, interest earned on temporary investment of withholding taxes, as well
					 as all gains and losses. If the aggregate net amount realized is a loss, the
					 loss is not allowable.
(2) For rate
					 years beginning prior to January 1, 1994, investment income reported for the
					 fiscal year ending December 31, 1983, (or for a subsequent fiscal year if that
					 subsequent year's report is being used by the department to establish the basic
					 rate pursuant to section
					 86-2.10 
					 of this Subpart) shall reduce the interest expense allowed for reimbursement as
					 follows:
(i) for all residential health care
					 facilities, investment income shall first reduce the interest expense allowed
					 each year for operational cost reimbursement; and
(ii) the amount of any remaining investment
					 income, after application of subparagraph (i) of this paragraph, shall reduce
					 the interest expense reimbursed each year as capital cost for residential
					 health care facilities; and
(iii)
					 the amount of any remaining investment income after application of subparagraph
					 (ii) of this paragraph, shall not be considered in the computation of the
					 rate.
(3) For rate years
					 beginning on or after January 1, 1994, for all residential health care
					 facilities, investment income reported for the same year used to compute
					 capital cost reimbursement for a facility's rate shall reduce the interest
					 expense allowed for reimbursement.