Ind. Admin. Code tit. 405, r. 1-12-15 – Allowable costs; capital return factor; use fee; depreciable life; property basis

Sec. 15. (a) The following is a schedule of allowable use fee lives by property category: The maximum property basis per bed at the time of acquisition, for all providers, except for providers of extensive support needs residences for adults, shall be in accordance with the following schedule: The schedule shall be updated semiannually effective on March 1 and September 1 by the office and rounded to the nearest one hundred dollars ($100) based on the change in the R.S. Means Construction Index.

	Property Basis	Use Fee Life
	Land	20 years
	Land improvements	20 years
	Buildings and building components	20 years
	Building improvements	20 years
	Movable equipment	7 years
	Vehicles	7 years

	Acquisition Date	Maximum Property Basis Per Bed
	7/1/76	$12,650
	4/1/77	$13,255
	10/1/77	$13,695
	4/1/78	$14,080
	10/1/78	$14,630
	4/1/79	$15,290
	10/1/79	$16,115
	4/1/80	$16,610
	10/1/80	$17,490
	4/1/81	$18,370
	10/1/81	$19,140
	4/1/82	$19,690
	9/1/82	$20,000
	3/1/83	$20,100
	9/1/83	$20,600
	3/1/84	$20,600
	9/1/84	$21,200
	3/1/85	$21,200
	9/1/85	$21,200
	3/1/86	$21,400
	9/1/86	$21,500
	3/1/87	$21,900
	9/1/87	$22,400
	3/1/88	$22,600
	9/1/88	$23,000
	3/1/89	$23,100
	9/1/89	$23,300
	3/1/90	$23,600
	9/1/90	$23,900
	3/1/91	$24,500
	9/1/91	$24,700
	3/1/92	$24,900
	9/1/92	$25,300
	3/1/93	$25,400
	9/1/93	$25,700

(b) The capital return factor portion of a rate, for all providers, except for providers of extensive support needs residences for adults, that becomes effective after the acquisition date of an asset shall be limited to the maximum capital return factor, which shall be calculated as follows:

(1) The use fee portion of the maximum capital return factor is calculated based on the following:
1. (A) The maximum property basis per bed at the time of acquisition of each bed, plus one-half (1/2) of the difference between that amount and the maximum property basis per bed at the rate effective date.
2. (B) The term is determined per bed at the time of acquisition of each bed and is twenty (20) years for beds acquired on or after April 1, 1983, and twelve (12) years for beds acquired before April 1, 1983.
3. (C) The allowable interest rate is the United States Treasury bond, ten (10) year amortization, constant maturity rate plus three percent (3%), rounded to the nearest one-half percent (0.5%) plus one and one-half percent (1.5%) at the earlier of the acquisition date of the beds or the commitment date of the attendant permanent financing.
(2) The equity portion of the maximum capital return factor is calculated based on the following:
1. (A) The allowable equity as established under section 14 of this rule.
2. (B) The rate of return on equity is the greater of the United States Treasury bond, ten (10) year amortization, constant maturity rate plus three percent (3%), rounded to the nearest one-half percent (0.5%) on the last day of the reporting period minus one percent (1%), or the weighted average of the United States Treasury bond, ten (10) year amortization, constant maturity rate plus three percent (3%), rounded to the nearest one-half percent (0.5%) plus one percent (1%) at the earlier of the acquisition date of the beds or the commitment date of the attendant permanent financing.

(c) For facilities with a change of provider status, the allowable capital return factor of the buyer/lessee shall be not greater than the capital return factor that the seller/lessor would have received on the date of the transaction, increased by one-half (1/2) of the percentage increase (as measured from the date of acquisition/lease commitment date by the seller/lessor to the date of the change in provider status) in the Consumer Price Index for All Urban Consumers (CPI-U) (United States city average). Any additional allowed capital expenditures incurred by the buyer/lessee shall be treated in the same manner as if the seller/lessor had incurred the additional capital expenditures.

(d) The following costs, which are attributable to the negotiation or settlement of the sale or purchase of any capital asset (by acquisition or merger) for which any payment has been previously made under Medicaid shall not be recognized as an allowable cost:

(1) Legal fees.
(2) Accounting and administrative costs.
(3) Travel costs.
(4) The costs of feasibility studies.

(Office of the Secretary of Family and Social Services; 405 IAC 1-12-15; filed Jun 1, 1994, 5:00 p.m.: 17 IR 2324; filed Sep 1, 2000, 2:10 p.m.: 24 IR 17; readopted filed Jun 27, 2001, 9:40 a.m.: 24 IR 3822; filed Oct 10, 2002, 10:52 a.m.: 26 IR 726; filed Aug 7, 2007, 10:27 a.m.: 20070905-IR-405060157FRA; readopted filed Sep 19, 2007, 12:16 p.m.: 20071010-IR-405070311RFA; readopted filed Oct 28, 2013, 3:18 p.m.: 20131127-IR-405130241RFA; filed Aug 1, 2016, 3:44 p.m.: 20160831-IR- 405150418FRA; readopted filed Jul 28, 2022, 2:21 p.m.: 20220824-IR-405220205RFA; readopted filed May 30, 2023, 11:54 a.m.: 20230628-IR-405230292RFA)