HF 1289

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to human services; modifying procedures for determining nursing
home per diem reimbursements; directing the commissioner to implement law;
amending Minnesota Statutes 2006, section 256B.431, subdivision 2b.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2006, section 256B.431, subdivision 2b, is amended to
read:

Subd. 2b.

Operating costs after July 1, 1985.

(a) For rate years beginning on or
after July 1, 1985, the commissioner shall establish procedures for determining per diem
reimbursement for operating costs.

(b) The commissioner shall contract with an econometric firm with recognized
expertise in and access to national economic change indices that can be applied to the
appropriate cost categories when determining the operating cost payment rate.

(c) The commissioner shall analyze and evaluate each nursing facility's cost report
of allowable operating costs incurred by the nursing facility during the reporting year
immediately preceding the rate year for which the payment rate becomes effective.

(d) The commissioner shall establish limits on actual allowable historical operating
cost per diems based on cost reports of allowable operating costs for the reporting year
that begins October 1, 1983, taking into consideration relevant factors including resident
needs, geographic location, and size of the nursing facility. In developing the geographic
groups for purposes of reimbursement under this section, the commissioner shall ensure
that nursing facilities in any county contiguous to the Minneapolis-St. Paul seven-county
metropolitan area new text begin and Benton, Sherburne, and Stearns Counties new text end are included in the same
geographic group. The limits established by the commissioner shall not be less, in the
aggregate, than the 60th percentile of total actual allowable historical operating cost
per diems for each group of nursing facilities established under subdivision 1 based
on cost reports of allowable operating costs in the previous reporting year. For rate
years beginning on or after July 1, 1989, facilities located in geographic group I as
described in Minnesota Rules, part 9549.0052, on January 1, 1989, may choose to have
the commissioner apply either the care related limits or the other operating cost limits
calculated for facilities located in geographic group II, or both, if either of the limits
calculated for the group II facilities is higher. The efficiency incentive for geographic
group I nursing facilities must be calculated based on geographic group I limits. The
phase-in must be established utilizing the chosen limits. For purposes of these exceptions
to the geographic grouping requirements, the definitions in Minnesota Rules, parts
9549.0050 to 9549.0059 (Emergency), and 9549.0010 to 9549.0080, apply. The limits
established under this paragraph remain in effect until the commissioner establishes
a new base period. Until the new base period is established, the commissioner shall
adjust the limits annually using the appropriate economic change indices established in
paragraph (e). In determining allowable historical operating cost per diems for purposes
of setting limits and nursing facility payment rates, the commissioner shall divide the
allowable historical operating costs by the actual number of resident days, except that
where a nursing facility is occupied at less than 90 percent of licensed capacity days, the
commissioner may establish procedures to adjust the computation of the per diem to
an imputed occupancy level at or below 90 percent. The commissioner shall establish
efficiency incentives as appropriate. The commissioner may establish efficiency incentives
for different operating cost categories. The commissioner shall consider establishing
efficiency incentives in care related cost categories. The commissioner may combine one
or more operating cost categories and may use different methods for calculating payment
rates for each operating cost category or combination of operating cost categories. For the
rate year beginning on July 1, 1985, the commissioner shall:

(1) allow nursing facilities that have an average length of stay of 180 days or less in
their skilled nursing level of care, 125 percent of the care related limit and 105 percent
of the other operating cost limit established by rule; and

(2) exempt nursing facilities licensed on July 1, 1983, by the commissioner to
provide residential services for the physically disabled under Minnesota Rules, parts
9570.2000 to 9570.3600, from the care related limits and allow 105 percent of the other
operating cost limit established by rule.

For the purpose of calculating the other operating cost efficiency incentive for
nursing facilities referred to in clause (1) or (2), the commissioner shall use the other
operating cost limit established by rule before application of the 105 percent.

(e) The commissioner shall establish a composite index or indices by determining
the appropriate economic change indicators to be applied to specific operating cost
categories or combination of operating cost categories.

(f) Each nursing facility shall receive an operating cost payment rate equal to the
sum of the nursing facility's operating cost payment rates for each operating cost category.
The operating cost payment rate for an operating cost category shall be the lesser of the
nursing facility's historical operating cost in the category increased by the appropriate
index established in paragraph (e) for the operating cost category plus an efficiency
incentive established pursuant to paragraph (d) or the limit for the operating cost category
increased by the same index. If a nursing facility's actual historic operating costs are
greater than the prospective payment rate for that rate year, there shall be no retroactive
cost settle-up. In establishing payment rates for one or more operating cost categories,
the commissioner may establish separate rates for different classes of residents based on
their relative care needs.

(g) The commissioner shall include the reported actual real estate tax liability or
payments in lieu of real estate tax of each nursing facility as an operating cost of that
nursing facility. Allowable costs under this subdivision for payments made by a nonprofit
nursing facility that are in lieu of real estate taxes shall not exceed the amount which the
nursing facility would have paid to a city or township and county for fire, police, sanitation
services, and road maintenance costs had real estate taxes been levied on that property
for those purposes. For rate years beginning on or after July 1, 1987, the reported actual
real estate tax liability or payments in lieu of real estate tax of nursing facilities shall be
adjusted to include an amount equal to one-half of the dollar change in real estate taxes
from the prior year. The commissioner shall include a reported actual special assessment,
and reported actual license fees required by the Minnesota Department of Health, for each
nursing facility as an operating cost of that nursing facility. For rate years beginning
on or after July 1, 1989, the commissioner shall include a nursing facility's reported
Public Employee Retirement Act contribution for the reporting year as apportioned to the
care-related operating cost categories and other operating cost categories multiplied by
the appropriate composite index or indices established pursuant to paragraph (e) as costs
under this paragraph. Total adjusted real estate tax liability, payments in lieu of real
estate tax, actual special assessments paid, the indexed Public Employee Retirement Act
contribution, and license fees paid as required by the Minnesota Department of Health,
for each nursing facility (1) shall be divided by actual resident days in order to compute
the operating cost payment rate for this operating cost category, (2) shall not be used to
compute the care-related operating cost limits or other operating cost limits established
by the commissioner, and (3) shall not be increased by the composite index or indices
established pursuant to paragraph (e), unless otherwise indicated in this paragraph.

(h) For rate years beginning on or after July 1, 1987, the commissioner shall adjust
the rates of a nursing facility that meets the criteria for the special dietary needs of its
residents and the requirements in section 31.651. The adjustment for raw food cost shall
be the difference between the nursing facility's allowable historical raw food cost per
diem and 115 percent of the median historical allowable raw food cost per diem of the
corresponding geographic group.

The rate adjustment shall be reduced by the applicable phase-in percentage as
provided under subdivision 2h.

Sec. 2. new text begin COMMISSIONER DIRECTIVE.
new text end

new text begin Pursuant to Minnesota Statutes, section 3.195, the commissioner of human services
is directed to provide a report to the legislature which outlines the steps taken to implement
Minnesota Statutes, section 256B.431, subdivision 2b.
new text end