HF 1967

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to health; providing for a nursing facility
closure and alternative service development process;
requiring the commissioner of finance to issue
appropriation bonds; establishing a critical access
nursing facility designation; updating provisions
governing the competitive moratorium exception
process; appropriating money; amending Minnesota
Statutes 2004, section 144A.073, subdivisions 2, 3, 4,
5, by adding a subdivision; proposing coding for new
in Minnesota Statutes, chapters 16A, 144A; repealing
Minnesota Statutes 2004, section 144A.071, subdivision
8.

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

Section 1.

new text begin [16A.663] NURSING FACILITY CLOSURE AND
ALTERNATIVE SERVICE DEVELOPMENT PROCESS; APPROPRIATION BONDS.
new text end

new text begin Subdivision 1. new text end

new text begin Goal. new text end

new text begin The commissioner of finance, in
cooperation with the commissioner of health, shall issue
appropriation bonds to establish a nursing facility closure and
alternative service development process, that will further state
goals of ensuring consumer access to a continuum of older adult
services, creating an adequate supply of affordable home-based
alternatives to care for people currently using nursing homes,
and providing adequate funding for smaller, state of the art
nursing homes.
new text end

new text begin Subd. 2. new text end

new text begin Authorization. new text end

new text begin The commissioner is authorized
to sell and issue, between July 1, 2005, and June 30, 2007, in
one or more series or issues, state appropriation bonds to fund
the nursing facility closure and alternative service development
process under section 144A.074. The proceeds of the bonds are
appropriated for the purposes of section 144A.074. The
commissioner shall issue appropriation bonds at the direction of
the commissioner of health. The principal amount of the bonds
must not exceed $90,000,000. The bonds may be sold at any price
and at public or private sale as determined by the
commissioner. The bonds must be sold and issued upon such terms
and in such manner as the commissioner determines to be in the
best interests of the state. The bonds shall have a term of no
more than 30 years.
new text end

new text begin Subd. 3. new text end

new text begin Security; bonds not public debt. new text end

new text begin The bonds and
the interest thereon must be payable solely from and secured by
appropriations made each biennium to the debt service fund
established for this purpose in this section and investment
income thereon and any bond reserve established for the bonds.
The bonds are not public debt and the full faith, credit, and
taxing powers of the state are not pledged for their payment.
The bonds and the interest thereon must not be paid, directly or
indirectly, in whole or in part, from a tax of statewide
application on any class of property, income, transaction, or
privilege.
new text end

new text begin Subd. 4. new text end

new text begin Debt service fund. new text end

new text begin There is established in the
state treasury a separate and special debt service fund. Money
transferred or appropriated to the fund and investment income
thereon on hand or required to be transferred to the fund must
be used and are irrevocably appropriated for payment of the
principal of and interest on the bonds authorized in this
section when due.
new text end

new text begin Subd. 5. new text end

new text begin Covenants; agreements. new text end

new text begin The commissioner may,
for and on behalf of the state, enter into such covenants and
agreements not inconsistent with section 144A.074 as may be
necessary or desirable to facilitate the sale and issuance of
the bonds on terms favorable to the state, including, but not
limited to, covenants and agreements relating to the payment of
and security for the bonds, tax-exemption, and disclosure of
information required by federal and state securities laws.
Sections 16A.672 and 16A.675 are applicable to the bonds. The
commissioner may pay to the United States of America any rebate
in the amounts and at the times required by the United States
Internal Revenue Code and treasury regulations promulgated
thereunder in order to maintain the federal tax exemption of
bonds issued under this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2004, section 144A.073,
subdivision 2, is amended to read:

Subd. 2.

Request for proposals.

At the authorization by
the legislature of additional medical assistance expenditures
for exceptions to the moratorium on nursing homes, the
commissioner shall publish in the State Register a request for
proposals for nursing deleted text begin home deleted text end new text begin facility new text end projects to be licensed or
certified under section 144A.071, subdivision 4a, clause (c).
The public notice of this funding and the request for proposals
must specify how the approval criteria will be prioritized by
the commissioner. The notice must describe the information that
must accompany a request and state that proposals must be
submitted to the commissioner within 90 days of the date of
publication. The notice must include the amount of the
legislative appropriation available for the additional costs to
the medical assistance program of projects approved under this
section. If no money is appropriated for a year, the
commissioner shall publish a notice to that effect, and no
proposals shall be requested. If money is appropriated, the
commissioner shall initiate the application and review process
described in this section at least twice each biennium and up to
four times each biennium deleted text begin , according to dates established by
rule deleted text end . Authorized funds shall be allocated proportionally to the
number of processes. Funds not encumbered by an earlier process
within a biennium shall carry forward to subsequent iterations
of the process. Authorization for expenditures does not carry
forward into the following biennium. To be considered for
approval, a proposal must include the following information:

(1) whether the request is for renovation, replacement,
upgrading, conversion, or relocation;

(2) a description of the problem the project is designed to
address;

(3) a description of the proposed project;

(4) an analysis of projected costs of the nursing facility
proposal, which are not required to exceed the cost threshold
referred to in section 144A.071, subdivision 1, to be considered
under this section, including initial construction and
remodeling costs; site preparation costs; technology costs;
financing costs, including the current estimated long-term
financing costs of the proposal, which consists of estimates of
the amount and sources of money, reserves if required under the
proposed funding mechanism, annual payments schedule, interest
rates, length of term, closing costs and fees, insurance costs,
and any completed marketing study or underwriting review; and
estimated operating costs during the first two years after
completion of the project;

(5) for proposals involving replacement of all or part of a
facility, the proposed location of the replacement facility and
an estimate of the cost of addressing the problem through
renovation;

(6) for proposals involving renovation, an estimate of the
cost of addressing the problem through replacement;

(7) the proposed timetable for commencing construction and
completing the project; new text begin and
new text end

(8) a statement of any licensure or certification issues,
such as certification survey deficiencies deleted text begin ;
deleted text end

deleted text begin (9) the proposed relocation plan for current residents if
beds are to be closed so that the Department of Human Services
can estimate the total costs of a proposal; and
deleted text end

deleted text begin (10) other information required by permanent rule of the
commissioner of health in accordance with subdivisions 4 and 8 deleted text end .

Sec. 3.

Minnesota Statutes 2004, section 144A.073,
subdivision 3, is amended to read:

Subd. 3.

Review and approval of proposals.

Within the
limits of money specifically appropriated to the medical
assistance program for this purpose, the commissioner of health
may grant exceptions to the nursing home licensure or
certification moratorium for proposals that satisfy the
requirements of this section. The commissioner of health shall
approve or disapprove a project. new text begin The commissioner of human
services, at the recommendation of the commissioner of health,
may adjust facility payment rates above current limits, if
private lending financial institutions require a higher debt
service coverage ratio. new text end The commissioner of health shall base
approvals or disapprovals on a comparison and ranking of
proposals using only the criteria in subdivision 4 and deleted text begin in rules
adopted by the commissioner deleted text end new text begin recommendations made by the
Interagency Review Panel established under subdivision 3d new text end . The
cost to the medical assistance program of the proposals approved
must be within the limits of the appropriations specifically
made for this purpose. Approval of a proposal expires 18 months
after approval by the commissioner of health unless the facility
has commenced construction as defined in section 144A.071,
subdivision 1a, paragraph (d).

Sec. 4.

Minnesota Statutes 2004, section 144A.073, is
amended by adding a subdivision to read:

new text begin Subd. 3d. new text end

new text begin Interagency review panel. new text end

new text begin The commissioners of
finance, human services, and housing finance, or their
designees, and the director of the Minnesota Board on Aging
shall serve in an advisory capacity to the commissioner in the
selection and ranking of projects funded through the moratorium
exception process under this section and the nursing facility
closure and alternative service development process under
section 144A.074.
new text end

Sec. 5.

Minnesota Statutes 2004, section 144A.073,
subdivision 4, is amended to read:

Subd. 4.

Criteria for review.

The following criteria
shall be used in a consistent manner to compare, evaluate, and
rank all proposals submitted. Except for the criteria specified
in clause (3), the application of criteria listed under this
subdivision shall not reflect any distinction based on the
geographic location of the proposed project:

(1) the extent to which the proposal furthers state
long-term care goals, including the goal of enhancing the
availability and use of alternative care services and the goal
of reducing the number of long-term care resident rooms with
more than two beds;

(2) the proposal's long-term effects on state costs
including the cost estimate of the project according to section
144A.071, subdivision 5a;

(3) the extent to which the proposal promotes equitable
access to long-term care services in nursing homes through
redistribution of the nursing home bed supply, as measured by
the number of beds relative to the population 85 or older,
projected deleted text begin to the year 2000 deleted text end by the state demographer, and
according to items (i) to (iv):

(i) reduce beds in counties where the supply is high,
relative to the statewide mean, and increase beds in counties
where the supply is low, relative to the statewide mean;

(ii) adjust the bed supply so as to create the greatest
benefits in improving the distribution of beds;

(iii) adjust the existing bed supply in counties so that
the bed supply in a county moves toward the statewide mean; and

(iv) adjust the existing bed supply so that the
distribution of beds as projected for the year 2020 would be
consistent with projected need deleted text begin , based on the methodology
outlined in the Interagency Long-Term Care Committee's nursing
home bed distribution study deleted text end ;

(4) the extent to which the project improves conditions
that affect the health or safety of residents, such as narrow
corridors, narrow door frames, unenclosed fire exits, and wood
frame construction, and similar provisions contained in fire and
life safety codes and licensure and certification rules;

(5) the extent to which the project improves conditions
that affect the comfort or quality of life of residents in a
facility or the ability of the facility to provide efficient
care, such as a relatively high number of residents in a room;
inadequate lighting or ventilation; poor access to bathing or
toilet facilities; a lack of available ancillary space for
dining rooms, day rooms, or rooms used for other activities;
problems relating to heating, cooling, or energy efficiency;
inefficient location of nursing stations; narrow corridors; or
other provisions contained in the licensure and certification
rules;

(6) the extent to which the applicant demonstrates the
delivery of quality care, as defined in state and federal
statutes and rules, to residents as evidenced by the two most
recent state agency certification surveys and the applicants'
response to those surveys;

(7) the extent to which the project removes the need for
waivers or variances previously granted by either the licensing
agency, certifying agency, fire marshal, or local government
entity;

(8) the extent to which the project increases the number of
private or single bed rooms; and

(9) deleted text begin other factors that may be developed in permanent rule
by the commissioner of health that evaluate and assess how the
proposed project will further promote or protect the health,
safety, comfort, treatment, or well-being of the facility's
residents deleted text end new text begin the extent to which the project ensures access to
nursing facility or community-based services for specialized
populations new text end .

Sec. 6.

Minnesota Statutes 2004, section 144A.073,
subdivision 5, is amended to read:

Subd. 5.

Replacement restrictions.

(a) Proposals
submitted or approved under this section involving replacement
must provide for replacement of the facility on the existing
site except as allowed in this subdivision.

(b) Facilities located in a metropolitan statistical area
other than the Minneapolis-St. Paul seven-county metropolitan
area may relocate to a site within the same census tract or a
contiguous census tract.

(c) Facilities located in the Minneapolis-St. Paul
seven-county metropolitan area may relocate to a site within the
same or contiguous health planning area as adopted in March 1982
by the Metropolitan Council.

(d) Facilities located outside a metropolitan statistical
area may relocate to a site within the same city or township, or
within a contiguous township.

(e) A facility relocated to a different site under
paragraph (b), (c), or (d) must not be relocated to a site more
than six miles from the existing site new text begin , unless the relocation is
necessary to meet criteria under subdivision 4 and if the
relocation of beds is not opposed by existing nursing facility
providers in the community to which the facility will be
relocated new text end .

(f) The relocation of part of an existing first facility to
a second location, under paragraphs (d) and (e), may include the
relocation to the second location of up to four beds from part
of an existing third facility located in a township contiguous
to the location of the first facility. The six-mile limit in
paragraph (e) does not apply to this relocation from the third
facility.

(g) For proposals approved on January 13, 1994, under this
section involving the replacement of 102 licensed and certified
beds, the relocation of the existing first facility to the new
location under paragraphs (d) and (e) may include the relocation
of up to 75 beds of the existing facility. The six-mile limit
in paragraph (e) does not apply to this relocation.

Sec. 7.

new text begin [144A.074] NURSING FACILITY CLOSURE AND
ALTERNATIVE SERVICE DEVELOPMENT PROCESS.
new text end

new text begin Subdivision 1. new text end

new text begin Application process. new text end

new text begin (a) The commissioner
of health shall request applications from nursing facilities
that are interested in closing beds or facilities or developing
alternative community-based services. The commissioner shall
request applications for at least two rounds of review between
July 1, 2005, and June 30, 2007. Nursing facilities applying
for a payment must provide the commissioner, in the form and
manner specified by the commissioner, with:
new text end

new text begin (1) information on how any payment received will be used;
new text end

new text begin (2) measurable outcomes, including, but not limited to, the
number of beds closed and the number of persons expected to
receive alternative services; and
new text end

new text begin (3) any other information required by the commissioner to
review applications.
new text end

new text begin (b) The commissioner shall give priority in the application
process to nursing facilities that are proposing to completely
close. The commissioner may approve applications for partial
closure if the commissioner believes that the savings from any
partial closure will justify the expenditure of bond proceeds
for that closure. In reviewing applications, the commissioner
shall also consider:
new text end

new text begin (1) facility financial condition and occupancy;
new text end

new text begin (2) the ratio of nursing home beds to the number of people
age 85 and over in the economic development region where the
facility is located; and
new text end

new text begin (3) the availability of alternatives to nursing homes in
the economic development region in which the facility is located
and willingness of the facility operator to develop and operate
alternative services for people diverted from nursing facility
care.
new text end

new text begin (c) After reviewing applications, the commissioner shall
forward recommendations for funding to the commissioner of human
services. The commissioner of human services may then authorize
payments to nursing facilities that agree to close beds.
Payments must not exceed $25,000 per closed bed for any facility
and must not exceed an average of $15,000 per closed bed for any
round of applications.
new text end

new text begin Subd. 2. new text end

new text begin Coordination. new text end

new text begin The commissioner of health shall
coordinate the application and review process with the
competitive moratorium exception process under section 144A.073.
new text end

new text begin Subd. 3. new text end

new text begin Use of payments to nursing facilities. new text end

new text begin (a)
Nursing facilities receiving payments from the commissioner of
health shall use the payments only for the following purposes:
new text end

new text begin (1) to pay off debt on the facility incurred prior to July
1, 2005;
new text end

new text begin (2) to cover costs associated with closing the facility;
and
new text end

new text begin (3) to cover the cost of developing and operating
alternative services for the elderly.
new text end

new text begin (b) The commissioner may audit nursing facilities' owners
within two years after the owner has received a payment and
shall recover any amounts that were not used as indicated in the
original application.
new text end

new text begin Subd. 4. new text end

new text begin Measurement of outcomes; report to legislature.
new text end

new text begin The commissioner of health, in cooperation with the commissioner
of finance, shall verify expenditures, state savings, bed
closures, the availability of alternative services, and progress
toward measurable outcomes proposed by applicants and shall
report this information to the legislature on December 1, 2006,
and December 1, 2007.
new text end

new text begin Subd. 5. new text end

new text begin Tracking and use of medical assistance savings.
new text end

new text begin The commissioner of finance shall track medical assistance
savings from bed closures that occur both as part of and outside
of the process described in this section and shall use the
savings to fund requests for proposals described in subdivision
1 and to fund initiatives as provided under section 9. The
commissioner of finance shall deposit all savings in a nursing
facility closure account established in the general fund.
new text end

Sec. 8.

new text begin [144A.076] CRITICAL ACCESS NURSING FACILITIES.
new text end

new text begin The commissioner of health, in consultation with the
Interagency Review Panel under section 144A.073, subdivision 3d,
shall designate as a critical access nursing facility any
facility whose continued operation is necessary to provide
adequate access to nursing facility services in the area of the
state served by the facility. The commissioner of health, in
cooperation with the commissioner of human services, shall
establish a special temporary rate add-on for each critical
access nursing facility, based upon an analysis of the financial
condition of the facility. The commissioner of human services
shall increase the medical assistance reimbursement rate of the
critical access nursing facility by the amount of this rate
add-on, following determination of the facility's rate under
chapter 256B. Rate increases provided under this section shall
remain part of the base rate of the chosen critical access
nursing facilities until the commissioner of health changes the
amount of the special rate add-on or eliminates the critical
access status of the facility. The commissioner of health, in
cooperation with the commissioner of human services, shall
review the financial condition of a critical access nursing
facility annually and may increase, reduce, or eliminate the
special rate based upon the review after providing at least 30
days' notice to the affected facility.
new text end

Sec. 9. new text begin APPROPRIATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Moratorium exception process. new text end

new text begin $....... is
appropriated from the general fund to the commissioner of human
services for the fiscal year beginning July 1, 2006, to fund
moratorium exceptions approved by the commissioner of health
under Minnesota Statutes, section 144A.073. Effective with this
round of applications for this process, the Interagency Review
Panel under Minnesota Statutes, section 144A.073, subdivision
3d, shall review applications and make recommendations to the
commissioner of health. The Interagency Review Panel shall
publish the request for proposals for moratorium exceptions.
Nursing facility owners may apply for both a moratorium
exception and a payment under the nursing facility closure and
alternative service development process established under
Minnesota Statutes, section 144A.074, in one application.
new text end

new text begin Subd. 2. new text end

new text begin Community services grants. new text end

new text begin $....... is
appropriated from the general fund to the commissioner of human
services for the fiscal year beginning July 1, 2006, to fund
community services grants under Minnesota Statutes, section
256B.0917, subdivision 13.
new text end

new text begin Subd. 3. new text end

new text begin Critical access nursing facilities. new text end

new text begin $....... is
appropriated from the general fund to the commissioner of human
services for the fiscal year beginning July 1, 2006, to fund
special rate add-ons for critical access nursing facilities.
new text end

new text begin Subd. 4. new text end

new text begin Bond repayment. new text end

new text begin $....... is appropriated from
the general fund for the fiscal year beginning July 1, 2005, and
$....... is appropriated from the general fund for the fiscal
year beginning July 1, 2006, to the commissioner of finance to
make payments to holders of the bonds used under Minnesota
Statutes, section 16A.663.
new text end

Sec. 10. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2004, section 144A.071, subdivision 8,
is repealed.
new text end