1.1                          A bill for an act 
  1.2             relating to human services; changing provisions for 
  1.3             the contractual alternative payment demonstration 
  1.4             project for nursing homes; amending Minnesota Statutes 
  1.5             1996, section 256B.434, subdivisions 2, 4, 9, and 10. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1996, section 256B.434, 
  1.8   subdivision 2, is amended to read: 
  1.9      Subd. 2.  [REQUESTS FOR PROPOSALS.] (a) No later than 
  1.10  August 1, 1995, At least twice annually the commissioner shall 
  1.11  publish in the State Register a request for proposals to provide 
  1.12  nursing facility services according to this section.  The 
  1.13  commissioner shall issue two additional requests for proposals 
  1.14  prior to July 1, 1997, based upon a timetable established by the 
  1.15  commissioner.  The commissioner must respond to all proposals in 
  1.16  a timely 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 may accept 
  1.21  up to the number of proposals that can be adequately supported 
  1.22  with available state resources, as determined by the 
  1.23  commissioner, except that the commissioner shall not contract 
  1.24  with more than 40 nursing facilities as part of any request for 
  1.25  proposals.  The commissioner may accept proposals from a single 
  2.1   nursing facility or from a group of facilities through a 
  2.2   managing entity.  The commissioner shall seek to ensure that 
  2.3   nursing facilities under contract are located in all geographic 
  2.4   areas of the state.  The commissioner shall present 
  2.5   recommendations to the legislature by February 1, 1996, on the 
  2.6   number of nursing facility contracts that may be entered into by 
  2.7   the commissioner as a result of a request for proposals. 
  2.8      (c) In issuing the request for proposals, the commissioner 
  2.9   may develop reasonable requirements which, in the judgment of 
  2.10  the commissioner, are necessary to protect residents or ensure 
  2.11  that the contractual alternative payment demonstration project 
  2.12  furthers the interest of the state of Minnesota.  The request 
  2.13  for proposals may include, but need not be limited to, the 
  2.14  following: 
  2.15     (1) a requirement that a nursing facility make reasonable 
  2.16  efforts to maximize Medicare payments on behalf of eligible 
  2.17  residents; 
  2.18     (2) requirements designed to prevent inappropriate or 
  2.19  illegal discrimination against residents enrolled in the medical 
  2.20  assistance program as compared to private paying residents; 
  2.21     (3) requirements designed to ensure that admissions to a 
  2.22  nursing facility are appropriate and that reasonable efforts are 
  2.23  made to place residents in home and community-based settings 
  2.24  when appropriate; 
  2.25     (4) a requirement to agree to participate in a project to 
  2.26  develop data collection systems and outcome-based standards for 
  2.27  managed care contracting for long-term care services.  Among 
  2.28  other requirements specified by the commissioner, each facility 
  2.29  entering into a contract may be required to pay an annual fee in 
  2.30  an amount determined by the commissioner not to exceed $50 per 
  2.31  bed.  Revenue generated from the fees is appropriated to the 
  2.32  commissioner and must be used to contract with a qualified 
  2.33  consultant or contractor to develop data collection systems and 
  2.34  outcome-based contracting standards; 
  2.35     (5) a requirement that contractors agree to maintain 
  2.36  Medicare cost reports and to submit them to the commissioner 
  3.1   upon request or at times specified by the commissioner; 
  3.2      (6) a requirement for demonstrated willingness and ability 
  3.3   to develop and maintain data collection and retrieval systems to 
  3.4   be used in measuring outcomes; and 
  3.5      (7) a requirement to provide all information and assurances 
  3.6   required by the terms and conditions of the federal waiver or 
  3.7   federal approval. 
  3.8      (d) In addition to the information and assurances contained 
  3.9   in the submitted proposals, the commissioner may consider the 
  3.10  following in determining whether to accept or deny a proposal: 
  3.11     (1) the facility's history of compliance with federal and 
  3.12  state laws and rules;, except that a facility deemed to be in 
  3.13  substantial compliance with federal and state laws and rules is 
  3.14  eligible to respond to a request for proposal.  A facility's 
  3.15  compliance history shall not be a determining factor in 
  3.16  situations where the facility has been sold and the new owners 
  3.17  have submitted a proposal; 
  3.18     (2) whether the facility has a record of excessive 
  3.19  licensure fines or sanctions or fraudulent cost reports; 
  3.20     (3) financial history and solvency; and 
  3.21     (4) other factors identified by the commissioner that the 
  3.22  commissioner deems relevant to a determination that a contract 
  3.23  with a particular facility is not in the best interests of the 
  3.24  residents of the facility or the state of Minnesota. 
  3.25     (e) If the commissioner rejects the proposal of a nursing 
  3.26  facility, the commissioner shall provide written notice to the 
  3.27  facility of the reason for the rejection, including the factors 
  3.28  and evidence upon which the rejection was based. 
  3.29     Sec. 2.  Minnesota Statutes 1996, section 256B.434, 
  3.30  subdivision 4, is amended to read: 
  3.31     Subd. 4.  [ALTERNATE RATES FOR NURSING FACILITIES.] (a) For 
  3.32  nursing facilities which have their payment rates determined 
  3.33  under this section rather than section 256B.431, subdivision 25, 
  3.34  the commissioner shall establish a rate under this subdivision.  
  3.35  The nursing facility must enter into a written contract with the 
  3.36  commissioner. 
  4.1      (b) A nursing facility's case mix payment rate for the 
  4.2   first rate year of a facility's contract under this section is 
  4.3   the payment rate the facility would have received under section 
  4.4   256B.431, subdivision 25. 
  4.5      (c) A nursing facility's case mix payment rates for the 
  4.6   second and subsequent years of a facility's contract under this 
  4.7   section are the previous rate year's contract payment rates plus 
  4.8   an inflation adjustment.  The index for the inflation adjustment 
  4.9   must be based on the change in the Consumer Price Index-All 
  4.10  Items (United States City average) (CPI-U) forecasted by Data 
  4.11  Resources, Inc., as forecasted in the fourth quarter of the 
  4.12  calendar year preceding the rate year.  The inflation adjustment 
  4.13  must be based on the 12-month period from the midpoint of the 
  4.14  previous rate year to the midpoint of the rate year for which 
  4.15  the rate is being determined. 
  4.16     (d) The commissioner may shall develop additional 
  4.17  incentive-based payments of up to five percent above the 
  4.18  standard contract rate for achieving outcomes specified in each 
  4.19  contract.  The incentive system may be implemented for contract 
  4.20  rate years beginning on or after July 1, 1996.  The specified 
  4.21  facility-specific outcomes must be measurable and must be based 
  4.22  on criteria to be developed and approved by the commissioner.  
  4.23  The commissioner may establish, for each contract, various 
  4.24  levels of achievement within an outcome.  After the outcomes 
  4.25  have been specified the commissioner shall assign various levels 
  4.26  of payment associated with achieving the outcome.  Any 
  4.27  incentive-based payment cancels if there is a termination of the 
  4.28  contract.  In establishing the specified outcomes and related 
  4.29  criteria the commissioner shall consider the following state 
  4.30  policy objectives: 
  4.31     (1) improved cost effectiveness and quality of life as 
  4.32  measured by improved clinical outcomes; 
  4.33     (2) successful diversion or discharge to community 
  4.34  alternatives; 
  4.35     (3) decreased acute care costs; 
  4.36     (4) improved consumer satisfaction; 
  5.1      (5) the achievement of quality; or 
  5.2      (6) any additional outcomes proposed by a nursing facility 
  5.3   that the commissioner finds desirable. 
  5.4      Sec. 3.  Minnesota Statutes 1996, section 256B.434, 
  5.5   subdivision 9, is amended to read: 
  5.6      Subd. 9.  [MANAGED CARE CONTRACTS FOR OTHER SERVICES.] 
  5.7   Beginning July 1, 1995, the commissioner may contract with 
  5.8   nursing facilities that have entered into alternative payment 
  5.9   demonstration project contracts under this section to provide 
  5.10  medical assistance services other than nursing facility care to 
  5.11  residents of the facility under a prepaid, managed care payment 
  5.12  system.  For purposes of contracts entered into under this 
  5.13  subdivision, the commissioner may waive one or more of the 
  5.14  requirements for payment for ancillary services in section 
  5.15  256B.433.  Managed care contracts for other services may be 
  5.16  entered into at any time during the duration of a nursing 
  5.17  facility's alternative payment demonstration project contract, 
  5.18  and the terms of the managed care contracts need not coincide 
  5.19  with the terms of the alternative payment demonstration project 
  5.20  contract. 
  5.21     Sec. 4.  Minnesota Statutes 1996, section 256B.434, 
  5.22  subdivision 10, is amended to read: 
  5.23     Subd. 10.  [EXEMPTIONS.] (a) To the extent permitted by 
  5.24  federal law, (1) a facility that has entered into a contract 
  5.25  under this section is not required to file a cost report, as 
  5.26  defined in Minnesota Rules, part 9549.0020, subpart 13, for any 
  5.27  year after the base year that is the basis for the calculation 
  5.28  of the contract payment rate for the first rate year of the 
  5.29  alternative payment demonstration project contract; and (2) a 
  5.30  facility under contract is not subject to audits of historical 
  5.31  costs or revenues, or paybacks or retroactive adjustments based 
  5.32  on these costs or revenues, except audits, paybacks, or 
  5.33  adjustments relating to the cost report that is the basis for 
  5.34  calculation of the first rate year under the contract. 
  5.35     (b) A facility that is under contract with the commissioner 
  5.36  under this section is not subject to the moratorium on licensure 
  6.1   or certification of new nursing home beds in section 144A.071, 
  6.2   unless the project results in a net increase in bed capacity or 
  6.3   involves relocation of beds from one site to another.  Contract 
  6.4   payment rates must not be adjusted to reflect any additional 
  6.5   costs that a nursing facility incurs as a result of a 
  6.6   construction project undertaken under this paragraph.  In 
  6.7   addition, as a condition of entering into a contract under this 
  6.8   section, a nursing facility must agree that any future medical 
  6.9   assistance payments for nursing facility services will not 
  6.10  reflect any additional costs attributable to the sale of a 
  6.11  nursing facility under this section and to construction 
  6.12  undertaken under this paragraph that otherwise would not be 
  6.13  authorized under the moratorium in section 144A.073.  Nothing in 
  6.14  this section prevents a nursing facility participating in the 
  6.15  alternative payment demonstration project under this section 
  6.16  from seeking approval of an exception to the moratorium through 
  6.17  the process established in section 144A.073, and if approved the 
  6.18  facility's rates shall be adjusted to reflect the cost of the 
  6.19  project. 
  6.20     (c) Notwithstanding section 256B.48, subdivision 6, 
  6.21  paragraphs (c), (d), and (e), and pursuant to any terms and 
  6.22  conditions contained in the facility's contract, a nursing 
  6.23  facility that is under contract with the commissioner under this 
  6.24  section is in compliance with section 256B.48, subdivision 6, 
  6.25  paragraph (b), if the facility is Medicare certified. 
  6.26     (d) Notwithstanding paragraph (a), if by April 1, 1996, the 
  6.27  health care financing administration has not approved a required 
  6.28  waiver, or the health care financing administration otherwise 
  6.29  requires cost reports to be filed prior to the waiver's 
  6.30  approval, the commissioner shall require a cost report for the 
  6.31  rate year. 
  6.32     (e) A facility that is under contract with the commissioner 
  6.33  under this section is not subject to ancillary services billing 
  6.34  restrictions contained in section 256B.433, subdivision 3.  A 
  6.35  facility under contract shall be allowed to provide therapy 
  6.36  services to their residents and to bill the medical assistance 
  7.1   program separately for this service.