C.M.R. 10, 144, ch. 101, ch. III, 144-101-III-50, subsec. 144-101-III-50-3000
| Electronic Components | 20 year life |
| Plumbing and Heating Components | 25 year life |
| Central Air Conditioning Unit | 15 year life |
| Elevator | 20 year life |
| Escalator | 20 year life |
| Central Vacuum Cleaning System | 15 year life |
| Generator | 20 year life |
For the Energy Efficient Improvements listed below which are made to existing facilities on or after September 1, 1981, reimbursement will be allowed based on the length of the loan received with the limitations listed below:
CAPITAL EXPENDITURE
Up to $5,000.00 Minimum depreciable Period 3 years
From $5,001.00 to $10,000.00 Minimum depreciable period 5 years
$10,001.00 and over Minimum depreciable period 7 years
The above limitations are minimum and if a loan is obtained for a period time in excess of these minimum the depreciable period then becomes the length of the loan provided that, in no case shall the depreciable period exceed the useful life as spelled out in the Chart of Accounts published by the American Hospital Association.
The reimbursement for the Energy Efficient Improvements that are 100% financed will consist of reimbursement of the principal and interest payments, based on the length of the loan or the above listed minimum. If no loans are obtained, then the depreciable lives will be based on the above minimum. If only partially financed, then the interest and the principal payments will be reimbursed with the additional amounts reimbursed on a depreciable basis limited to the minimum lives as spelled out above.
If the total expenditure exceeds $25,000.00, then prior approval for such an expenditure must be received in writing from the Department. A request for prior approval will be evaluated by the Department on the basis of whether such a large expenditure would decrease the actual energy costs to such an extent as to render this expenditure reasonable. The age and condition of the facility requesting approval will also be considered in determining whether or not such an expenditure would be approvable.
The reasonable energy efficient improvements are listed below:
In the event of a sale of the facility the principal payments as listed above will be recaptured in lieu of depreciation.
Wood Frame, Wood Exterior 30 years
Wood Frame, Masonry Exterior 35 years
Steel Frame or Reinforced Concrete Masonry Exterior 40 years
If a mortgage obtained on the property exceeds the minimum life as listed above, then the terms of the mortgage will be used as the minimum useful life.
The recapture will be made in cash from the seller. During the first eight (8) years of operation, all depreciation allowed on buildings and fixed equipment by the Department will be recaptured from the seller in cash at the time of the sale. From the ninth (9th) to the fifteenth (15th) year, all but three percent (3%) per year will be recaptured, and from the sixteenth (16th) to the twenty-fifth (25th) year, all but eight percent (8%) per year will be recaptured not to exceed one hundred percent (100%.) Accumulated depreciation is recapturable to the extent of the gain on the sale.
Also, accumulated depreciation of the seller under the program shall be considered as incurred by the purchaser for purposes of computing gains and applying the depreciation recapture rules (Section 3016) to subsequent sales by the buyer. There will be no recapture of depreciation from the seller on a sale between stipulated related parties since no step-up in the basis of depreciable assets is permitted to the buyer.
If Section 3021.62 is satisfied, Section 3021.1 and Section 3021.3 will also be satisfied.
If the seller acquires any interest defined by Section 3021.62 (B), then pursuant to the agreement the basis will revert to what the seller's basis would be if the seller had continued to own the facility, the amounts paid by the Title XIX program for depreciation, interest and return of owner's equity from the increase in basis will be immediately recaptured, and an interest rate of nine percent (9%) per annum on recaptured monies will be paid to the Department for seller's use of the Title XIX monies. A credit against this, of the original amount of depreciation recapture from the seller, will be allowed with any remaining amount of the original depreciation recapture becoming the property of the Department.
If a provider wishes to have costs associated with leases included in reimbursement:
The lessor will furnish the Department a copy of the bank computer printout sheet on the lessor's mortgage showing the monthly principle and interest payments.
The allowable cost between two (2) unrelated organizations is the lesser of:
If the cost as defined in Section 3024.32 are less than the costs as defined in Section 3024.31, then the difference can be deferred to a subsequent fiscal period. If in a later fiscal period, costs as defined in Section 3024.32 exceed costs as defined in Section 3024.31, the deferred costs may begin to be amortized. Amortization will increase allowable costs up to the level of the actual lease payments for any given year. These deferred costs are not assets of the provider for purposes of calculating allowable costs of interest, and except as specified, do not represent assets that a provider or creditor of a provider may claim is a monetary obligation from the Title XIX program.
This does not apply to leases for office space or day program space in facilities that are separate from an ICF-MR; for such leases, the provider must demonstrate that the costs do not exceed prevailing market rates.
Prior approval in writing must be issued by the Department in advance of the date of any salary paid to an administrator in training. A request for prior approval must be received by the Department at least two (2) weeks prior to the desired effective date of the approval.
Failure to become an administrator within one (1) year following completion of the examination to become a licensed administrator will result in the Department of Health and Human Services recovering one hundred percent (100%) of the amount allowed for the administrator in training. If the administrator in training discontinues the training program for any reason or fails to take the required examination to become a licensed administrator, the Department will recover one hundred percent (100%) of the amount allowed to the ICF-MR nursing facility.
Start-up costs incurred during the period of developing a provider's ability to furnish patient care services must be capitalized as deferred charges and amortized over a number of benefiting periods.
Start-up costs include, for example; administrative and nursing salaries, heat, gas, electricity, taxes, insurance, mortgage and other interest; employee training costs; repairs, maintenance, housekeeping, and any other allowable costs incident to the start-up period. However, any costs that are properly identifiable as organization costs, or which may be capitalized as construction costs, must be appropriately classified as such and excluded from start-up costs.
Start-up costs are incurred from the time preparation begins on a newly constructed or purchased building, wing, floor, unit, or expansion thereof to the time the first member is admitted for treatment, or where the start-up costs apply only to nonrevenue-producing patient care functions or nonallowable functions, to the time the areas are used for their intended purposes. If a provider intends to prepare all portions of its entire facility at the same time, start-up costs for all portions of the facility should be accumulated in a single deferred charge account and should be amortized when the first patient is admitted for treatment. However, if a provider intends to prepare portions of its facility on a piecemeal basis (i.e., preparation of a floor or wing of a provider's facility is delayed), start-up costs would be capitalized and amortized separately for the portion(s) of the provider's facility prepared during different time periods. Moreover, if a provider expands its facility by constructing or purchasing additional buildings or wings, start-up costs should be capitalized and amortized separately for these areas.
Start-up costs that are incurred immediately before a provider enters the program and that are determined to be immaterial by the Department need not be capitalized, but rather, may be charged to operations in the first cost reporting period. In the case where a provider incurs start-up costs while in the program and these costs are determined to be immaterial by the Department, these costs need not be capitalized, but may be charged to operations in the periods incurred. For program reimbursement purposes, costs of the provider's facility and building equipment should be depreciated over the lives of these assests starting with the month the first member is admitted for treatment, subject to the provider's method of determining depreciation in the year of acquisition or construction. Where portions of the provider's facility are prepared for patient care services after the initial start-up period, these asset costs applicable to each portion should be depreciated over the remaining lives of the applicable assets. If the portion of the facility is a patient care area, depreciation should start with the month the first patient is admitted for treatment. If the portion of the facility is a nonrevenue-producing patient care area or nonallowable area, depreciation should begin when the area is opened for its intended purpose. Costs of major movable equipment, however, should be depreciated over the useful life of each item starting with the month the item is placed into operation.
C.M.R. 10, 144, ch. 101, ch. III, 144-101-III-50, subsec. 144-101-III-50-3000