§ 1181.264. Rental of property and plant.
(a) Rental expense shall be an allowable net operating cost for the leasing of facilities from related or nonrelated parties. The amount of rental expense allowed during a fiscal year may not exceed the equivalent annual depreciation, computed on the historical cost basis, with depreciation being calculated over the facility’s useful life. Historical cost will be established on the basis of either the original construction cost or original purchase price as shown on the lessor’s books and records. A maximum of 25% of the equivalent annual depreciation will be allowed if the lessor pays the related costs of ownership. This additional allowance is established upon the documented amount of actual incurred related costs.
(b) Allowable costs for lease purchase agreements and installment sales agreements in which title does not transfer to the lessee will be accounted for in accordance with subsection (a) except as provided otherwise in this subchapter.
(c) For those lease purchase agreements and installment sales agreements in which title transfers to the lessee, Medical Assistance reimbursement for the period of time prior to the date of transfer will be based upon subsection (a). Subsequent to the transfer date, providers shall follow § 1181.259 (relating to depreciation allowance).
Source The provisions of this § 1181.264 adopted August 5, 1983, effective July 1, 1983, 13 Pa.B. 2402.
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