1.1 	A bill for an act
1.2 	relating to health; modifying case mix reimbursement for federal conformity;
1.3 	amending Minnesota Statutes 2024, section 144.0724, subdivisions 2, 3a, 4, 7, 9.
1.4 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.5 	Section 1. Minnesota Statutes 2024, section 144.0724, subdivision 2, is amended to read:
1.6 		Subd. 2.Definitions. For purposes of this section, the following terms have the meanings 
1.7 	given.
1.8 	(a) "Assessment reference date" or "ARD" means the specific end point for look-back 
1.9 	periods in the MDS assessment process. This look-back period is also called the observation 
1.10 	or assessment period.
1.11 	(b) "Case mix index" means the weighting factors assigned to the case mix reimbursement 
1.12 	classifications determined by an assessment.
1.13 	(c) "Index maximization" means classifying a resident who could be assigned to more 
1.14 	than one category, to the category with the highest case mix index.
1.15 	(d) "Minimum Data Set" or "MDS" means a core set of screening, clinical assessment, 
1.16 	and functional status elements, that include common definitions and coding categories 
1.17 	specified by the Centers for Medicare and Medicaid Services and designated by the 
1.18 	Department of Health.
1.19 	(e) "Representative" means a person who is the resident's guardian or conservator, the 
1.20 	person authorized to pay the nursing home expenses of the resident, a representative of the 
1.21 	Office of Ombudsman for Long-Term Care whose assistance has been requested, or any 
1.22 	other individual designated by the resident.
2.1 	(f) "Activities of daily living" or "ADL" includes personal hygiene, dressing, bathing, 
2.2 	transferring, bed mobility, locomotion, eating, and toileting.
2.3 	(g) "Patient Driven Payment Model" or "PDPM" means a case mix classification system 
2.4 	for residents in nursing facilities based on the resident's condition, diagnosis, and the care 
2.5 	the resident is receiving based on data supplied in the facility's MDS for assessments with 
2.6 	an ARD on or after October 1, 2025.
2.7 	(g) (h) "Nursing facility level of care determination" means the assessment process that 
2.8 	results in a determination of a resident's or prospective resident's need for nursing facility 
2.9 	level of care as established in subdivision 11 for purposes of medical assistance payment 
2.10 	of long-term care services for:
2.11 	(1) nursing facility services under chapter 256R;
2.12 	(2) elderly waiver services under chapter 256S;
2.13 	(3) CADI and BI waiver services under section 256B.49; and
2.14 	(4) state payment of alternative care services under section 256B.0913.
2.15 	(i) "Resource utilization groups" or "RUG" means a system for grouping a nursing 
2.16 	facility's residents according to the resident's clinical and functional status identified in data 
2.17 	supplied by the facility's minimum data set with an ARD on or prior to September 30, 2025.

2.18 	Sec. 2. Minnesota Statutes 2024, section 144.0724, subdivision 3a, is amended to read:
2.19 		Subd. 3a.Resident case mix reimbursement classifications. (a) Resident case mix 
2.20 	reimbursement classifications shall be based on the Minimum Data Set, version 3.0 
2.21 	assessment instrument, or its successor version mandated by the Centers for Medicare and 
2.22 	Medicaid Services that nursing facilities are required to complete for all residents. Case 
2.23 	mix reimbursement classifications shall also be based on assessments required under 
2.24 	subdivision 4. Assessments must be completed according to the Long Term Care Facility 
2.25 	Resident Assessment Instrument User's Manual Version 3.0 or a successor manual issued 
2.26 	by the Centers for Medicare and Medicaid Services. On or before September 30, 2025, the 
2.27 	optional state assessment must be completed according to the OSA Manual Version 1.0 v.2.
2.28 	(b) Each resident must be classified based on the information from the Minimum Data 
2.29 	Set according to the general categories issued by the Minnesota Department of Health, 
2.30 	utilized for reimbursement purposes.

3.1 	Sec. 3. Minnesota Statutes 2024, section 144.0724, subdivision 4, is amended to read:
3.2 		Subd. 4.Resident assessment schedule. (a) A facility must conduct and electronically 
3.3 	submit to the federal database MDS assessments that conform with the assessment schedule 
3.4 	defined by the Long Term Care Facility Resident Assessment Instrument User's Manual, 
3.5 	version 3.0, or its successor issued by the Centers for Medicare and Medicaid Services. The 
3.6 	commissioner of health may substitute successor manuals or question and answer documents 
3.7 	published by the United States Department of Health and Human Services, Centers for 
3.8 	Medicare and Medicaid Services, to replace or supplement the current version of the manual 
3.9 	or document.
3.10 	(b) The assessments required under the Omnibus Budget Reconciliation Act of 1987 
3.11 	(OBRA) used to determine a case mix reimbursement classification include:
3.12 	(1) a new admission comprehensive assessment, which must have an assessment reference 
3.13 	date (ARD) within 14 calendar days after admission, excluding readmissions;
3.14 	(2) an annual comprehensive assessment, which must have an ARD within 92 days of 
3.15 	a previous quarterly review assessment or a previous comprehensive assessment, which 
3.16 	must occur at least once every 366 days;
3.17 	(3) a significant change in status comprehensive assessment, which must have an ARD 
3.18 	within 14 days after the facility determines, or should have determined, that there has been 
3.19 	a significant change in the resident's physical or mental condition, whether an improvement 
3.20 	or a decline, and regardless of the amount of time since the last comprehensive assessment 
3.21 	or quarterly review assessment. Effective October 1, 2025, a significant change in status 
3.22 	assessment is also required when isolation for an infectious disease has ended. If isolation 
3.23 	was not coded on the most recent OBRA assessment completed, then the significant change 
3.24 	in status assessment is not required. The ARD of this assessment must be set on day 15 after 
3.25 	isolation has ended;
3.26 	(4) a quarterly review assessment must have an ARD within 92 days of the ARD of the 
3.27 	previous quarterly review assessment or a previous comprehensive assessment;
3.28 	(5) any significant correction to a prior comprehensive assessment, if the assessment 
3.29 	being corrected is the current one being used for reimbursement classification;
3.30 	(6) any significant correction to a prior quarterly review assessment, if the assessment 
3.31 	being corrected is the current one being used for reimbursement classification; and
3.32 	(7) any modifications to the most recent assessments under clauses (1) to (6).
4.1 	(c) On or before September 30, 2025, the optional state assessment must accompany all 
4.2 	OBRA assessments. The optional state assessment is also required to determine 
4.3 	reimbursement when:
4.4 	(1) all speech, occupational, and physical therapies have ended. If the most recent optional 
4.5 	state assessment completed does not result in a rehabilitation case mix reimbursement 
4.6 	classification, then the optional state assessment is not required. The ARD of this assessment 
4.7 	must be set on day eight after all therapy services have ended; and
4.8 	(2) isolation for an infectious disease has ended. If isolation was not coded on the most 
4.9 	recent optional state assessment completed, then the optional state assessment is not required. 
4.10 	The ARD of this assessment must be set on day 15 after isolation has ended.
4.11 	(d) In addition to the assessments listed in paragraphs (b) and (c), the assessments used 
4.12 	to determine nursing facility level of care include the following:
4.13 	(1) preadmission screening completed under section 256.975, subdivisions 7a to 7c, by 
4.14 	the Senior LinkAge Line or other organization under contract with the Minnesota Board on 
4.15 	Aging; and
4.16 	(2) a nursing facility level of care determination as provided for under section 256B.0911, 
4.17 	subdivision 26, as part of a face-to-face long-term care consultation assessment completed 
4.18 	under section 256B.0911, by a county, tribe, or managed care organization under contract 
4.19 	with the Department of Human Services.

4.20 	Sec. 4. Minnesota Statutes 2024, section 144.0724, subdivision 7, is amended to read:
4.21 		Subd. 7.Notice of resident case mix reimbursement classification. (a) The 
4.22 	commissioner of health shall provide to a nursing facility a notice for each resident of the 
4.23 	classification established under subdivision 1. The notice must inform the resident of the 
4.24 	case mix reimbursement classification assigned, the opportunity to review the documentation 
4.25 	supporting the classification, the opportunity to obtain clarification from the commissioner, 
4.26 	the opportunity to request a reconsideration of the classification, and the address and 
4.27 	telephone number of the Office of Ombudsman for Long-Term Care. The commissioner 
4.28 	must transmit the notice of resident classification by electronic means to the nursing facility. 
4.29 	The nursing facility is responsible for the distribution of the notice to each resident or the 
4.30 	resident's representative. This notice must be distributed within three business days after 
4.31 	the facility's receipt.
4.32 	(b) If a facility submits a modified assessment resulting in a change in the case mix 
4.33 	reimbursement classification, the facility must provide a written notice to the resident or 
5.1 	the resident's representative regarding the item or items that were modified and the reason 
5.2 	for the modifications. The written notice must be provided within three business days after 
5.3 	distribution of the resident case mix reimbursement classification notice.

5.4 	Sec. 5. Minnesota Statutes 2024, section 144.0724, subdivision 9, is amended to read:
5.5 		Subd. 9.Audit authority. (a) The commissioner shall audit the accuracy of resident 
5.6 	assessments performed under section 256R.17 through any of the following: desk audits; 
5.7 	on-site review of residents and their records; and interviews with staff, residents, or residents' 
5.8 	families. The commissioner shall reclassify a resident if the commissioner determines that 
5.9 	the resident was incorrectly classified.
5.10 	(b) The commissioner is authorized to conduct on-site audits on an unannounced basis.
5.11 	(c) A facility must grant the commissioner access to examine the medical records relating 
5.12 	to the resident assessments selected for audit under this subdivision. The commissioner may 
5.13 	also observe and speak to facility staff and residents.
5.14 	(d) The commissioner shall consider documentation under the time frames for coding 
5.15 	items on the minimum data set as set out in the Long-Term Care Facility Resident Assessment 
5.16 	Instrument User's Manual or on or before September 30, 2025, the OSA Manual version 
5.17 	1.0 v.2 published by the Centers for Medicare and Medicaid Services.
5.18 	(e) The commissioner shall develop an audit selection procedure that includes the 
5.19 	following factors:
5.20 	(1) Each facility shall be audited annually. If a facility has two successive audits in which 
5.21 	the percentage of change is five percent or less and the facility has not been the subject of 
5.22 	a special audit in the past 36 months, the facility may be audited biannually. A stratified 
5.23 	sample of 15 percent, with a minimum of ten assessments, of the most current assessments 
5.24 	shall be selected for audit. If more than 20 percent of the case mix reimbursement 
5.25 	classifications are changed as a result of the audit, the audit shall be expanded to a second 
5.26 	15 percent sample, with a minimum of ten assessments. If the total change between the first 
5.27 	and second samples is 35 percent or greater, the commissioner may expand the audit to all 
5.28 	of the remaining assessments.
5.29 	(2) If a facility qualifies for an expanded audit, the commissioner may audit the facility 
5.30 	again within six months. If a facility has two expanded audits within a 24-month period, 
5.31 	that facility will be audited at least every six months for the next 18 months.
6.1 	(3) The commissioner may conduct special audits if the commissioner determines that 
6.2 	circumstances exist that could alter or affect the validity of case mix reimbursement 
6.3 	classifications of residents. These circumstances include, but are not limited to, the following:
6.4 	(i) frequent changes in the administration or management of the facility;
6.5 	(ii) an unusually high percentage of residents in a specific case mix reimbursement 
6.6 	classification;
6.7 	(iii) a high frequency in the number of reconsideration requests received from a facility;
6.8 	(iv) frequent adjustments of case mix reimbursement classifications as the result of 
6.9 	reconsiderations or audits;
6.10 	(v) a criminal indictment alleging provider fraud;
6.11 	(vi) other similar factors that relate to a facility's ability to conduct accurate assessments;
6.12 	(vii) an atypical pattern of scoring minimum data set items;
6.13 	(viii) nonsubmission of assessments;
6.14 	(ix) late submission of assessments; or
6.15 	(x) a previous history of audit changes of 35 percent or greater.
6.16 	(f) If the audit results in a case mix reimbursement classification change, the 
6.17 	commissioner must transmit the audit classification notice by electronic means to the nursing 
6.18 	facility within 15 business days of completing an audit. The nursing facility is responsible 
6.19 	for distribution of the notice to each resident or the resident's representative. This notice 
6.20 	must be distributed by the nursing facility within three business days after receipt. The 
6.21 	notice must inform the resident of the case mix reimbursement classification assigned, the 
6.22 	opportunity to review the documentation supporting the classification, the opportunity to 
6.23 	obtain clarification from the commissioner, the opportunity to request a reconsideration of 
6.24 	the classification, and the address and telephone number of the Office of Ombudsman for 
6.25 	Long-Term Care.