[Code of Federal Regulations]
[Title 42, Volume 2]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR413.149]

[Page 599]
 
                         TITLE 42--PUBLIC HEALTH
 
                             HUMAN SERVICES
 
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR END-STAGE RENAL DISEASE SERVICES; PROSPECTIVELY DETERMINED PAYMENT RATES FOR SKILLED NURSING 
FACILITIES--Table of Contents
 
                    Subpart G--Capital-Related Costs
 
Sec. 413.149  Depreciation: Allowance for depreciation on assets financed with Federal or public funds.

    (a) Principle. Depreciation is allowed on assets financed with Hill-
Burton or other Federal or public funds.
    (b) Application. Like other assets (including other donated 
depreciable assets), assets financed with Hill-Burton or other Federal 
or public funds become a part of the provider institution's plant and 
equipment to be used in furnishing services. It is the function of 
payment of depreciation to provide funds that make it possible to 
maintain the assets and preserve the capital employed in the production 
of services. Therefore, irrespective of the source of financing of an 
asset, if it is used in the providing of services for beneficiaries of 
the program, payment for depreciation of the asset is, in fact, a cost 
of the production of those services. Moreover, recognition of this cost 
is necessary to maintain productive capacity for the future. An 
incentive for funding of depreciation is provided in these principles by 
the provision that investment income on funded depreciation is not 
treated as a reduction of allowable interest expense under 
Sec. 413.153(a).