N.Y. Comp. Codes R. & Regs. tit. 10, § 86-5.21 – Capital cost reimbursement for propietary LTHHCPs.

(a) Reimbursement for capital costs shall be allowable in determining rates for proprietary LTHHCPs. These costs shall be included as such costs are allocated from a related organization to the extent that:
1. (1) those costs are reasonably related to the efficient production of long-term home health care services; and
2. (2) the bases of allocation of such costs are consistent with regulations applicable to the cost reporting of the related organization.
(b) Any capital expenditures associated with non-arms length leases shall be approved and certified to, if required, pursuant to article 36 of the Public Health Law. In the computation of rates for non-arms length leases, the capital cost shall be included in allowable costs only to the extent that it does not exceed the amount which the LTHHCP would have included in allowable costs if it had legal title to the asset (the cost of ownership), such as straight-line depreciation, insurance, and interest. Accelerated depreciation on these assets may not be included in allowable costs under any circumstances.