1.1                          A bill for an act 
  1.2             relating to human services; adding provisions to the 
  1.3             contractual alternative payment demonstration project 
  1.4             for nursing homes; amending Minnesota Statutes 1995 
  1.5             Supplement, section 256B.434, subdivisions 2, 4, and 9.
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1995 Supplement, section 
  1.8   256B.434, subdivision 2, is amended to read: 
  1.9      Subd. 2.  [REQUESTS FOR PROPOSALS.] (a) No later than 
  1.10  August 1, 1995, the commissioner shall publish in the State 
  1.11  Register a request for proposals to provide nursing facility 
  1.12  services according to this section.  The commissioner shall 
  1.13  issue two additional requests for proposals prior to July 1, 
  1.14  1997, based upon a timetable established by the commissioner.  
  1.15  The commissioner must respond to all proposals in a timely 
  1.16  manner. 
  1.17     (b) The commissioner may reject any proposal if, in the 
  1.18  judgment of the commissioner, a contract with a particular 
  1.19  facility is not in the best interests of the residents of the 
  1.20  facility or the state of Minnesota.  The commissioner shall 
  1.21  consider all nursing facilities with a current state nursing 
  1.22  home or boarding care home license as eligible to respond to the 
  1.23  request for proposals.  The request for proposal shall not 
  1.24  restrict the ability of the certified boarding care home to 
  1.25  respond to the request for proposal whether through licensing 
  2.1   definitions or requiring Medicare participation.  The 
  2.2   commissioner may accept up to the number of proposals that can 
  2.3   be adequately supported with available state resources, as 
  2.4   determined by the commissioner, except that the commissioner 
  2.5   shall not contract with more than 40 nursing facilities as part 
  2.6   of any request for proposals.  The commissioner may accept 
  2.7   proposals from a single nursing facility or from a group of 
  2.8   facilities through a managing entity.  The commissioner shall 
  2.9   seek to ensure that nursing facilities under contract are 
  2.10  located in all geographic areas of the state.  The commissioner 
  2.11  shall present recommendations to the legislature by February 1, 
  2.12  1996, on the number of nursing facility contracts that may be 
  2.13  entered into by the commissioner as a result of a request for 
  2.14  proposals. 
  2.15     (c) In issuing the request for proposals, the commissioner 
  2.16  may develop reasonable requirements which, in the judgment of 
  2.17  the commissioner, are necessary to protect residents or ensure 
  2.18  that the contractual alternative payment demonstration project 
  2.19  furthers the interest of the state of Minnesota.  The request 
  2.20  for proposals may include, but need not be limited to, the 
  2.21  following: 
  2.22     (1) a requirement that a nursing facility make reasonable 
  2.23  efforts to maximize Medicare payments on behalf of eligible 
  2.24  residents; 
  2.25     (2) requirements designed to prevent inappropriate or 
  2.26  illegal discrimination against residents enrolled in the medical 
  2.27  assistance program as compared to private paying residents; 
  2.28     (3) requirements designed to ensure that admissions to a 
  2.29  nursing facility are appropriate and that reasonable efforts are 
  2.30  made to place residents in home and community-based settings 
  2.31  when appropriate; 
  2.32     (4) a requirement to agree to participate in a project to 
  2.33  develop data collection systems and outcome-based standards for 
  2.34  managed care contracting for long-term care services.  Among 
  2.35  other requirements specified by the commissioner, each facility 
  2.36  entering into a contract may be required to pay an annual fee in 
  3.1   an amount determined by the commissioner not to exceed $50 per 
  3.2   bed.  Revenue generated from the fees is appropriated to the 
  3.3   commissioner and must be used to contract with a qualified 
  3.4   consultant or contractor to develop data collection systems and 
  3.5   outcome-based contracting standards; 
  3.6      (5) a requirement that contractors agree to maintain 
  3.7   Medicare cost reports and to submit them to the commissioner 
  3.8   upon request or at times specified by the commissioner; 
  3.9      (6) a requirement for demonstrated willingness and ability 
  3.10  to develop and maintain data collection and retrieval systems to 
  3.11  be used in measuring outcomes; and 
  3.12     (7) a requirement to provide all information and assurances 
  3.13  required by the terms and conditions of the federal waiver or 
  3.14  federal approval. 
  3.15     (d) In addition to the information and assurances contained 
  3.16  in the submitted proposals, the commissioner may consider the 
  3.17  following in determining whether to accept or deny a proposal: 
  3.18     (1) the facility's history of compliance with federal and 
  3.19  state laws and rules; 
  3.20     (2) whether the facility has a record of excessive 
  3.21  licensure fines or sanctions or fraudulent cost reports; 
  3.22     (3) financial history and solvency; and 
  3.23     (4) other factors identified by the commissioner that the 
  3.24  commissioner deems relevant to a determination that a contract 
  3.25  with a particular facility is not in the best interests of the 
  3.26  residents of the facility or the state of Minnesota. 
  3.27     (e) If the commissioner rejects the proposal of a nursing 
  3.28  facility, the commissioner shall provide written notice to the 
  3.29  facility of the reason for the rejection, including the factors 
  3.30  and evidence upon which the rejection was based. 
  3.31     Sec. 2.  Minnesota Statutes 1995 Supplement, section 
  3.32  256B.434, subdivision 4, is amended to read: 
  3.33     Subd. 4.  [ALTERNATE RATES FOR NURSING FACILITIES.] (a) For 
  3.34  nursing facilities which have their payment rates determined 
  3.35  under this section rather than section 256B.431, subdivision 25, 
  3.36  the commissioner shall establish a rate under this subdivision.  
  4.1   The nursing facility must enter into a written contract with the 
  4.2   commissioner. 
  4.3      (b) A nursing facility's case mix payment rate for the 
  4.4   first rate year of a facility's contract under this section is 
  4.5   the payment rate the facility would have received under section 
  4.6   256B.431, subdivision 25. 
  4.7      (c) A nursing facility's case mix payment rates for the 
  4.8   second and subsequent years of a facility's contract under this 
  4.9   section are the previous rate year's contract payment rates plus 
  4.10  an inflation adjustment.  The index for the inflation adjustment 
  4.11  must be based on the change in the Consumer Price Index-All 
  4.12  Items (United States City average) (CPI-U) forecasted by Data 
  4.13  Resources, Inc., as forecasted in the fourth quarter of the 
  4.14  calendar year preceding the rate year.  The inflation adjustment 
  4.15  must be based on the 12-month period from the midpoint of the 
  4.16  previous rate year to the midpoint of the rate year for which 
  4.17  the rate is being determined.  Contract rates will be adjusted 
  4.18  to reflect changes in property taxes resulting from construction 
  4.19  projects if the nursing facility received approval of an 
  4.20  exception to the moratorium through the process established in 
  4.21  section 144A.071. 
  4.22     (d) The commissioner may develop additional incentive-based 
  4.23  payments of up to five percent above the standard contract rate 
  4.24  for achieving outcomes specified in each contract.  The 
  4.25  incentive system may be implemented for contract rate years 
  4.26  beginning on or after July 1, 1996.  The specified outcomes must 
  4.27  be measurable and must be based on criteria to be developed by 
  4.28  the commissioner.  The commissioner may establish, for each 
  4.29  contract, various levels of achievement within an outcome.  
  4.30  After the outcomes have been specified the commissioner shall 
  4.31  assign various levels of payment associated with achieving the 
  4.32  outcome.  Any incentive-based payment cancels if there is a 
  4.33  termination of the contract.  In establishing the specified 
  4.34  outcomes and related criteria the commissioner shall consider 
  4.35  the following state policy objectives: 
  4.36     (1) improved cost effectiveness and quality of life as 
  5.1   measured by improved clinical outcomes; 
  5.2      (2) successful diversion or discharge to community 
  5.3   alternatives; 
  5.4      (3) decreased acute care costs; 
  5.5      (4) improved consumer satisfaction; 
  5.6      (5) the achievement of quality; or 
  5.7      (6) any additional outcomes the commissioner finds 
  5.8   desirable. 
  5.9      Sec. 3.  Minnesota Statutes 1995 Supplement, section 
  5.10  256B.434, subdivision 9, is amended to read: 
  5.11     Subd. 9.  [MANAGED CARE CONTRACTS FOR OTHER SERVICES.] (a) 
  5.12  Beginning July 1, 1995, the commissioner may contract with 
  5.13  nursing facilities that have entered into alternative payment 
  5.14  demonstration project contracts under this section to provide 
  5.15  medical assistance services other than nursing facility care to 
  5.16  residents of the facility under a prepaid, managed care payment 
  5.17  system.  For purposes of contracts entered into under this 
  5.18  subdivision, the commissioner may waive one or more of the 
  5.19  requirements for payment for ancillary services in section 
  5.20  256B.433.  Managed care contracts for other services may be 
  5.21  entered into at any time during the duration of a nursing 
  5.22  facility's alternative payment demonstration project contract, 
  5.23  and the terms of the managed care contracts need not coincide 
  5.24  with the terms of the alternative payment demonstration project 
  5.25  contract.  Nursing facilities that have entered into alternative 
  5.26  payment demonstration project contracts shall be considered 
  5.27  eligible demonstration providers as defined in section 256B.69, 
  5.28  subdivision 2, except that the nursing facility would not be 
  5.29  subject to the service delivery provisions of section 256B.69, 
  5.30  subdivision 6. 
  5.31     (b) Nursing facilities participating in this demonstration 
  5.32  project shall not be prohibited from changing the therapy vendor 
  5.33  used in the facility for therapy services from unrelated 
  5.34  contractual services to a related party provision of therapy 
  5.35  services.  Nursing facilities participating in this 
  5.36  demonstration project that chose a vendor of therapy services 
  6.1   related by ownership, control, affiliation or employment status 
  6.2   to the nursing facility shall not be subject to therapy offset 
  6.3   provisions of section 256B.433, subdivision 3. 
  6.4      Sec. 4.  [EFFECTIVE DATE.] 
  6.5      Section 3 is effective December 15, 1995, for any nursing 
  6.6   facility contract signed after December 15, 1995.