N.Y. Comp. Codes R. & Regs. tit. 14, § 578.14 – Allowable costs.

(a) To be considered as allowable in determining the rate of payment, costs must be properly chargeable to necessary resident care rendered in accordance with the requirements of Part 584 of this Title and any applicable codes, rules, regulations and laws pursuant to title XIX of the Social Security Act. The allowability of costs shall be determined in accordance with the following:
1. (1) specific and applicable sections of this Part;
2. (2) Medicare reimbursement principles;
3. (3) reasonableness and relationship to resident care as determined by the commissioner; and
4. (4) generally accepted accounting principles.
(b) Allowable operating costs shall include the costs of all services necessary to meet the requirements of Part 584 of this Title and the special needs of the resident population to be served by a residential treatment facility. Such costs shall include the costs of mental health services and physical health services, whether the services are provided directly by the residential treatment facility or pursuant to a written agreement with a provider of service. Such costs do not include educational costs pursuant to section 584.11(f) of this Title.
(c) Allowable costs shall include a monetary value assigned to services provided by religious orders and for services rendered by the provider of services of a residential treatment facility.
(d) Allowable costs shall include depreciation and interest pursuant to sections 578.16 and 578.18 of this Part. In accordance with section 578.16 of this Part, allowable costs may include interest and principal or debt service rather than interest and depreciation.
(e) Allowable costs shall include only that portion of the dues paid to any professional association which has been demonstrated, to the satisfaction of the commissioner, to be allowable to expenditures other than for public relations, advertising and political contributions.
(f) Allowable costs shall not include costs for services that have not been approved by the commissioner.
(g) Allowable costs shall not include expenses or portions of expenses reported by a residential treatment facility which are determined by the commissioner not to be reasonably related to the efficient provision of service because of either the nature or amount of the particular item.
(h) Allowable costs shall not include costs which principally afford entertainment or amusement to owners, operators or employees.
(i) Allowable costs shall not include any interest charged or penalty imposed by governmental agencies or courts, nor the costs of policies obtained solely to insure against the imposition of such a penalty.
(j) Allowable costs shall not include the direct or indirect costs of advertising, public relations and promotion except in those instances where the costs are specifically related to the operation of the residential treatment facility and not for the purpose of attracting residents.
(k) Allowable costs shall not include costs of contributions or other payments to political parties, candidates or organizations.
(l) Allowable costs shall not include any costs which the commissioner determines result solely from the transfer of ownership of a residential treatment facility.
(m) Allowable operating costs shall not include the following costs incurred by a residential treatment facility:
1. (1) inpatient care, other than such care provided in a residential treatment facility; and
2. (2) emergency services.
(n) Allowable operating costs shall not include the costs of prosthetic or orthotic appliances and devices, including hearing aids which are supplied by vendors who are eligible for payment for such appliances or devices in accordance with the established requirements of the Medical Assistance Program.
(o) Effective on or after January 1, 2011, and contingent upon Federal approval, allowable operating costs shall not include the costs of pharmaceuticals listed on the New York State Medicaid formulary, except for such costs incurred during the first 90 days after admission to the residential treatment facility or until Medicaid eligibility is established for the recipient, whichever comes first. Pharmaceuticals for which the cost is so excluded may be reimbursed, as appropriate, on a fee-for-service basis by the Medicaid program.