N.Y. Comp. Codes R. & Regs. tit. 10, § 86-4.19 – Rates for facilities without adequate cost experience.

(a) A facility shall be deemed to be without adequate cost experience when fiscal and statistical data necessary for setting a rate are unavailable through no fault of the operator or his or her agents, and due to circumstances beyond his or her control, or in the instance of a newly licensed facility or in the instance of a new service for which certificate of need (CON) approval has been received as required by law. The rates certified for a facility without adequate cost experience shall be determined on the basis of:
1. (1) the rates established for comparable services or facilities in the geographic area;
2. (2) reasonable and complete cost projections based on estimated costs and statistics contained in a proposed annual budget for the new service or newly licensed facility, reviewed for adequacy and reasonableness of the proposed operation, including but not limited to utilization, as compared to standards established in section 86-4.10 of this Subpart, staffing, and salaries;
3. (3) actual allowable expenditures and statistics for prior or subsequent cost reporting periods; and/or
4. (4) existing ceilings.
(b) Rates for new services or facilities established pursuant to this section shall be retroactively adjusted using actual costs and statistics for the first full fiscal period of operation of the new facility or service.
(c) Notwithstanding the above, rates of payment for licensed free-standing ambulatory surgery centers shall be determined pursuant to section 86-4.40 of this Subpart.
(d) All rates of reimbursement certified pursuant to this section, exclusive of those for licensed free-standing ambulatory surgery centers, shall be subject to audit. After audit, the facility rate shah be revised based upon actual allowable costs incurred during the rate period, consistent with the provisions of this Subpart.