Engrossments
Introduction		Posted on 05/26/2005

A bill for an act
relating to the operation of state government; making
changes to health and human services programs;
changing licensing and state-operated services
provisions; changing provisions in state health care
programs, changing MinnesotaCare to a forecasted
program and changing eligibility requirements and
payments, allowing transfer of excess health care
access funds to the general fund, allowing the
commissioner to withhold for delinquent nursing home
provider surcharges, allowing reduction of excess
assets for MA and changing other MA provisions,
reducing payments to managed care plans, establishing
medical necessity standards for state health care
programs, allowing the state to recover payment for
long-term care from trusts and life estates or joint
tenancy interests, and establishing a health services
policy committee and medication therapy management;
establishing a value-based nursing facility
reimbursement system and changing other provisions for
nursing facilities; changing continuing care for the
elderly and disabled provisions and establishing the
Minnesota partnership for long-term care programs,
increasing rate reimbursement for ICF/MR facilities,
health care services, and provider rate increases,
requiring a study for dental access, establishing an
interagency work group on disability services;
changing provisions for mental health services,
allowing payment for mental health telemedicine,
providing treatment foster care services and
transitional youth intensive rehabilitative mental
health services; modifying health policy, establishing
a Health Information Technology and Infrastructure
Advisory Committee, establishing a rural pharmacy
planning and transition grant program, requiring a
report from physicians and facilities performing
abortions, classifying data in abortion notification
reports, providing education on shaking infants and
children, establishing a voluntary trauma system,
trauma registry, and trauma advisory council,
establishing a cancer drug repository program,
prohibiting family grant funds to subsidize abortion
services, promoting positive abortion alternatives,
establishing the unborn child pain prevention act,
providing education on postpartum depression,
adjusting certain fees, providing civil and criminal
penalties; making forecast adjustments; appropriating
money; and providing for alternative funding; amending
Minnesota Statutes 2004, sections 13.3806, by adding a
subdivision; 16A.724; 103I.101, subdivision 6;
103I.208, subdivisions 1, 2; 103I.235, subdivision 1;
103I.601, subdivision 2; 144.122; 144.147,
subdivisions 1, 2; 144.148, subdivision 1; 144.1483;
144.1501, subdivisions 1, 2, 3, 4; 144.226,
subdivisions 1, 4, by adding subdivisions; 144.3831,
subdivision 1; 144.551, subdivision 1; 144.562,
subdivision 2; 144.9504, subdivision 2; 144.98,
subdivision 3; 144A.071, subdivision 4a; 144A.073, by
adding a subdivision; 144E.101, by adding a
subdivision; 145.56, subdivisions 2, 5; 145.924;
145.9268; 146A.11, subdivision 1; 147A.08; 150A.22;
157.011, by adding a subdivision; 157.15, by adding a
subdivision; 157.16, subdivisions 2, 3, by adding
subdivisions; 157.20, subdivisions 2, 2a; 214.01,
subdivision 2; 214.06, subdivision 1, by adding a
subdivision; 245.4661, subdivisions 2, 6; 245.4885,
subdivisions 1, 2, by adding a subdivision; 245A.10,
subdivision 5; 245C.10, subdivisions 2, 3; 245C.32,
subdivision 2; 246.0136, subdivision 1; 252.27,
subdivision 2a; 253.20; 253B.02, subdivision 7;
256.01, subdivision 2, by adding subdivisions;
256.019, subdivision 1; 256.045, subdivisions 3, 3a;
256.046, subdivision 1; 256.9657, by adding a
subdivision; 256.969, subdivisions 3a, 26; 256B.02,
subdivision 12; 256B.04, by adding a subdivision;
256B.056, subdivisions 5, 5a, 5b, 7, by adding
subdivisions; 256B.057, subdivision 9; 256B.0575;
256B.0595, subdivision 2; 256B.06, subdivision 4;
256B.0621, subdivisions 2, 3, 4, 5, 6, 7, by adding a
subdivision; 256B.0625, subdivisions 2, 3a, 13, 13a,
13c, 13e, 13f, 17, by adding subdivisions; 256B.0644;
256B.075, subdivision 2; 256B.0913, subdivisions 2, 4;
256B.0916, by adding a subdivision; 256B.0943,
subdivision 3; 256B.095; 256B.0951, subdivision 1;
256B.0952, subdivision 5; 256B.0953, subdivision 1;
256B.15, subdivision 1; 256B.19, subdivision 1;
256B.195, subdivision 3; 256B.32, subdivision 1;
256B.431, subdivisions 28, 29, 35, by adding
subdivisions; 256B.432, subdivisions 1, 2, 5, by
adding subdivisions; 256B.434, subdivisions 3, 4, 4a,
4b, 4c, 4d, by adding subdivisions; 256B.438,
subdivision 3; 256B.47, subdivision 2; 256B.49,
subdivision 16; 256B.5012, by adding a subdivision;
256B.69, subdivisions 4, 23, by adding a subdivision;
256B.75; 256B.765; 256D.03, subdivisions 3, 4, by
adding subdivisions; 256D.045; 256L.01, subdivisions
1a, 4, 5; 256L.03, subdivisions 1, 3, 5, by adding a
subdivision; 256L.04, subdivisions 1, 2, 8, by adding
subdivisions; 256L.05, subdivisions 2, 3, 3a, 5;
256L.06, subdivision 3; 256L.07, subdivisions 1, 3, by
adding a subdivision; 256L.09, subdivision 2; 256L.11,
subdivision 6; 256L.12, subdivision 6, by adding a
subdivision; 256L.15, subdivisions 2, 3; 326.42,
subdivision 2; 471.61, by adding a subdivision;
514.981, subdivision 6; Laws 2003, First Special
Session chapter 14, article 12, section 93; proposing
coding for new law in Minnesota Statutes, chapters
62J; 144; 145; 245A; 256B; 501B; repealing Minnesota
Statutes 2004, sections 13.383, subdivision 3; 13.411,
subdivision 3; 144.1486; 144.1502; 145.925; 146A.01,
subdivisions 2, 5; 146A.02; 146A.03; 146A.04; 146A.05;
146A.06; 146A.07; 146A.08; 146A.09; 146A.10; 157.215;
256.955; 256B.075, subdivision 5; 256L.035; 256L.04,
subdivisions 7, 11; 256L.09, subdivisions 1, 4, 5, 6,
7; 295.581; Minnesota Rules, parts 4700.1900;
4700.2000; 4700.2100; 4700.2200; 4700.2210; 4700.2300;
4700.2400; 4700.2410; 4700.2420; 4700.2500.

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

ARTICLE 1

LICENSING

Section 1.

Minnesota Statutes 2004, section 245A.10,
subdivision 5, is amended to read:

Subd. 5.

Annual license or certification fee for programs
without a licensed capacity.

(a) Except as provided
in deleted text begin paragraph deleted text end new text begin paragraphs new text end (b) new text begin and (c)new text end , a program without a stated
licensed capacity shall pay a license or certification fee of
$400.

(b) A mental health center or mental health clinic
requesting certification for purposes of insurance and
subscriber contract reimbursement under Minnesota Rules, parts
9520.0750 to 9520.0870, shall pay a certification fee of $1,000
per year. If the mental health center or mental health clinic
provides services at a primary location with satellite
facilities, the satellite facilities shall be certified with the
primary location without an additional charge.

new text begin (c) A program licensed to provide residential-based
habilitation services under the home and community-based waiver
for persons with developmental disabilities shall pay an annual
license fee that includes a base rate of $250 plus $38 times the
number of clients served on the first day of August of the
current license year. State-operated programs are exempt from
the license fee under this paragraph.
new text end

Sec. 2.

Minnesota Statutes 2004, section 245C.10,
subdivision 2, is amended to read:

Subd. 2.

Supplemental nursing services agencies.

The
commissioner shall recover the cost of the background studies
initiated by supplemental nursing services agencies registered
under section 144A.71, subdivision 1, through a fee of no more
than deleted text begin $8 deleted text end new text begin $20 new text end per study charged to the agency. The fees collected
under this subdivision are appropriated to the commissioner for
the purpose of conducting background studies.

Sec. 3.

Minnesota Statutes 2004, section 245C.10,
subdivision 3, is amended to read:

Subd. 3.

Personal care provider organizations.

The
commissioner shall recover the cost of background studies
initiated by a personal care provider organization under section
256B.0627 through a fee of no more than deleted text begin $12 deleted text end new text begin $20 new text end per study
charged to the organization responsible for submitting the
background study form. The fees collected under this
subdivision are appropriated to the commissioner for the purpose
of conducting background studies.

Sec. 4.

Minnesota Statutes 2004, section 245C.32,
subdivision 2, is amended to read:

Subd. 2.

Use.

(a) The commissioner may also use these
systems and records to obtain and provide criminal history data
from the Bureau of Criminal Apprehension, criminal history data
held by the commissioner, and data about substantiated
maltreatment under section 626.556 or 626.557, for other
purposes, provided that:

(1) the background study is specifically authorized in
statute; or

(2) the request is made with the informed consent of the
subject of the study as provided in section 13.05, subdivision 4.

(b) An individual making a request under paragraph (a),
clause (2), must agree in writing not to disclose the data to
any other individual without the consent of the subject of the
data.

(c) The commissioner may recover the cost of obtaining and
providing background study data by charging the individual or
entity requesting the study a fee of no more than deleted text begin $12 deleted text end new text begin $20 new text end per
study. The fees collected under this paragraph are appropriated
to the commissioner for the purpose of conducting background
studies.

ARTICLE 2

STATE-OPERATED SERVICES

Section 1.

Minnesota Statutes 2004, section 245.4661,
subdivision 2, is amended to read:

Subd. 2.

Program design and implementation.

(a) The
pilot projects shall be established to design, plan, and improve
the mental health service delivery system for adults with
serious and persistent mental illness that would:

(1) provide an expanded array of services from which
clients can choose services appropriate to their needs;

(2) be based on purchasing strategies that improve access
and coordinate services without cost shifting;

(3) incorporate existing state facilities and resources
into the community mental health infrastructure through creative
partnerships with local vendors; and

(4) utilize existing categorical funding streams and
reimbursement sources in combined and creative ways, except
appropriations to regional treatment centers and all funds that
are attributable to the operation of state-operated services are
excluded unless appropriated specifically by the legislature for
a purpose consistent with this section new text begin or section 246.0136,
subdivision 1new text end .

(b) All projects funded by January 1, 1997, must complete
the planning phase and be operational by June 30, 1997; all
projects funded by January 1, 1998, must be operational by June
30, 1998.

Sec. 2.

Minnesota Statutes 2004, section 245.4661,
subdivision 6, is amended to read:

Subd. 6.

Duties of commissioner.

(a) For purposes of the
pilot projects, the commissioner shall facilitate integration of
funds or other resources as needed and requested by each
project. These resources may include:

(1) residential services funds administered under Minnesota
Rules, parts 9535.2000 to 9535.3000, in an amount to be
determined by mutual agreement between the project's managing
entity and the commissioner of human services after an
examination of the county's historical utilization of facilities
located both within and outside of the county and licensed under
Minnesota Rules, parts 9520.0500 to 9520.0690;

(2) community support services funds administered under
Minnesota Rules, parts 9535.1700 to 9535.1760;

(3) other mental health special project funds;

(4) medical assistance, general assistance medical care,
MinnesotaCare and group residential housing if requested by the
project's managing entity, and if the commissioner determines
this would be consistent with the state's overall health care
reform efforts; and

(5) regional treatment center deleted text begin nonfiscal deleted text end resources deleted text begin to the
extent agreed to by the project's managing entity and the
regional treatment center deleted text end new text begin consistent with section 246.0136,
subdivision 1new text end .

(b) The commissioner shall consider the following criteria
in awarding start-up and implementation grants for the pilot
projects:

(1) the ability of the proposed projects to accomplish the
objectives described in subdivision 2;

(2) the size of the target population to be served; and

(3) geographical distribution.

(c) The commissioner shall review overall status of the
projects initiatives at least every two years and recommend any
legislative changes needed by January 15 of each odd-numbered
year.

(d) The commissioner may waive administrative rule
requirements which are incompatible with the implementation of
the pilot project.

(e) The commissioner may exempt the participating counties
from fiscal sanctions for noncompliance with requirements in
laws and rules which are incompatible with the implementation of
the pilot project.

(f) The commissioner may award grants to an entity
designated by a county board or group of county boards to pay
for start-up and implementation costs of the pilot project.

Sec. 3.

Minnesota Statutes 2004, section 246.0136,
subdivision 1, is amended to read:

Subdivision 1.

Planning for enterprise activities.

The
commissioner of human services is directed to study and make
recommendations to the legislature on establishing enterprise
activities within state-operated services. Before implementing
an enterprise activity, the commissioner must obtain statutory
authorization for its implementation, except that the
commissioner has authority to implement enterprise activities
for new text begin adult mental health,new text end adolescent servicesnew text begin ,new text end and to establish a
public group practice without statutory authorization.
Enterprise activities are defined as the range of services,
which are delivered by state employees, needed by people with
disabilities and are fully funded by public or private
third-party health insurance or other revenue sources available
to clients that provide reimbursement for the services
provided. Enterprise activities within state-operated services
shall specialize in caring for vulnerable people for whom no
other providers are available or for whom state-operated
services may be the provider selected by the payer. In
subsequent biennia after an enterprise activity is established
within a state-operated service, the base state appropriation
for that state-operated service shall be reduced proportionate
to the size of the enterprise activity.

Sec. 4.

Minnesota Statutes 2004, section 253.20, is
amended to read:

253.20 MINNESOTA SECURITY HOSPITAL.

The commissioner of human services shall erect, equip, and
maintain in St. Peter deleted text begin a deleted text end new text begin and other geographic locations under the
control of the commissioner of human services new text end suitable
deleted text begin building deleted text end new text begin buildings new text end to be known as the Minnesota Security
Hospital, for the purpose of providing a secure treatment
facility as defined in section 253B.02, subdivision 18a, for
persons who may be committed there by courts, or otherwise, or
transferred there by the commissioner of human services, and for
persons who are found to be mentally ill while confined in any
correctional facility, or who may be found to be mentally ill
and dangerous, and the commissioner shall supervise and manage
the same as in the case of other state hospitals.

ARTICLE 3

HEALTH CARE

Section 1.

Minnesota Statutes 2004, section 16A.724, is
amended to read:

16A.724 HEALTH CARE ACCESS FUND.

new text begin Subdivision 1. new text end

new text begin Creation of fund. new text end

new text begin (a) new text end A health care
access fund is created in the state treasury. The fund is a
direct appropriated special revenue fund. The commissioner
shall deposit to the credit of the fund money made available to
the fund. Notwithstanding section 11A.20, after June 30, 1997,
all investment income and all investment losses attributable to
the investment of the health care access fund not currently
needed shall be credited to the health care access fund.

new text begin (b) Effective July 1, 2006, the commissioner of finance
shall deposit revenues collected from section 256.9657,
subdivisions 2 and 3, into the health care access fund.
new text end

new text begin Subd. 2.new text end

new text begin Transfers.new text end

new text begin To the extent available resources in
the health care access fund exceed expenditures in that fund,
starting in fiscal year 2005, the commissioner of finance shall
transfer the excess funds from the health care access fund to
the general fund on June 30 of each year.
new text end

new text begin (a) In fiscal year 2005, transfers may not exceed
$192,442,000. For fiscal year 2008 and thereafter, the transfer
may not exceed $50,000,000.
new text end

new text begin (b) For fiscal years 2005 to 2007, MinnesotaCare shall be a
forecasted program and, if necessary, the commissioner shall
reduce transfers to meet expenditures and shall transfer
sufficient funds from the general fund to the health care access
fund to meet annual expenditures.
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 256.01,
subdivision 2, is amended to read:

Subd. 2.

Specific powers.

Subject to the provisions of
section 241.021, subdivision 2, the commissioner of human
services shall carry out the specific duties in paragraphs (a)
through deleted text begin (aa) deleted text end new text begin (cc)new text end :

(a) Administer and supervise all forms of public assistance
provided for by state law and other welfare activities or
services as are vested in the commissioner. Administration and
supervision of human services activities or services includes,
but is not limited to, assuring timely and accurate distribution
of benefits, completeness of service, and quality program
management. In addition to administering and supervising human
services activities vested by law in the department, the
commissioner shall have the authority to:

(1) require county agency participation in training and
technical assistance programs to promote compliance with
statutes, rules, federal laws, regulations, and policies
governing human services;

(2) monitor, on an ongoing basis, the performance of county
agencies in the operation and administration of human services,
enforce compliance with statutes, rules, federal laws,
regulations, and policies governing welfare services and promote
excellence of administration and program operation;

(3) develop a quality control program or other monitoring
program to review county performance and accuracy of benefit
determinations;

(4) require county agencies to make an adjustment to the
public assistance benefits issued to any individual consistent
with federal law and regulation and state law and rule and to
issue or recover benefits as appropriate;

(5) delay or deny payment of all or part of the state and
federal share of benefits and administrative reimbursement
according to the procedures set forth in section 256.017;

(6) make contracts with and grants to public and private
agencies and organizations, both profit and nonprofit, and
individuals, using appropriated funds; and

(7) enter into contractual agreements with federally
recognized Indian tribes with a reservation in Minnesota to the
extent necessary for the tribe to operate a federally approved
family assistance program or any other program under the
supervision of the commissioner. The commissioner shall consult
with the affected county or counties in the contractual
agreement negotiations, if the county or counties wish to be
included, in order to avoid the duplication of county and tribal
assistance program services. The commissioner may establish
necessary accounts for the purposes of receiving and disbursing
funds as necessary for the operation of the programs.

(b) Inform county agencies, on a timely basis, of changes
in statute, rule, federal law, regulation, and policy necessary
to county agency administration of the programs.

(c) Administer and supervise all child welfare activities;
promote the enforcement of laws protecting handicapped,
dependent, neglected and delinquent children, and children born
to mothers who were not married to the children's fathers at the
times of the conception nor at the births of the children;
license and supervise child-caring and child-placing agencies
and institutions; supervise the care of children in boarding and
foster homes or in private institutions; and generally perform
all functions relating to the field of child welfare now vested
in the State Board of Control.

(d) Administer and supervise all noninstitutional service
to handicapped persons, including those who are visually
impaired, hearing impaired, or physically impaired or otherwise
handicapped. The commissioner may provide and contract for the
care and treatment of qualified indigent children in facilities
other than those located and available at state hospitals when
it is not feasible to provide the service in state hospitals.

(e) Assist and actively cooperate with other departments,
agencies and institutions, local, state, and federal, by
performing services in conformity with the purposes of Laws
1939, chapter 431.

(f) Act as the agent of and cooperate with the federal
government in matters of mutual concern relative to and in
conformity with the provisions of Laws 1939, chapter 431,
including the administration of any federal funds granted to the
state to aid in the performance of any functions of the
commissioner as specified in Laws 1939, chapter 431, and
including the promulgation of rules making uniformly available
medical care benefits to all recipients of public assistance, at
such times as the federal government increases its participation
in assistance expenditures for medical care to recipients of
public assistance, the cost thereof to be borne in the same
proportion as are grants of aid to said recipients.

(g) Establish and maintain any administrative units
reasonably necessary for the performance of administrative
functions common to all divisions of the department.

(h) Act as designated guardian of both the estate and the
person of all the wards of the state of Minnesota, whether by
operation of law or by an order of court, without any further
act or proceeding whatever, except as to persons committed as
mentally retarded. For children under the guardianship of the
commissioner whose interests would be best served by adoptive
placement, the commissioner may contract with a licensed
child-placing agency or a Minnesota tribal social services
agency to provide adoption services. A contract with a licensed
child-placing agency must be designed to supplement existing
county efforts and may not replace existing county programs,
unless the replacement is agreed to by the county board and the
appropriate exclusive bargaining representative or the
commissioner has evidence that child placements of the county
continue to be substantially below that of other counties.
Funds encumbered and obligated under an agreement for a specific
child shall remain available until the terms of the agreement
are fulfilled or the agreement is terminated.

(i) Act as coordinating referral and informational center
on requests for service for newly arrived immigrants coming to
Minnesota.

(j) The specific enumeration of powers and duties as
hereinabove set forth shall in no way be construed to be a
limitation upon the general transfer of powers herein contained.

(k) Establish county, regional, or statewide schedules of
maximum fees and charges which may be paid by county agencies
for medical, dental, surgical, hospital, nursing and nursing
home care and medicine and medical supplies under all programs
of medical care provided by the state and for congregate living
care under the income maintenance programs.

(l) Have the authority to conduct and administer
experimental projects to test methods and procedures of
administering assistance and services to recipients or potential
recipients of public welfare. To carry out such experimental
projects, it is further provided that the commissioner of human
services is authorized to waive the enforcement of existing
specific statutory program requirements, rules, and standards in
one or more counties. The order establishing the waiver shall
provide alternative methods and procedures of administration,
shall not be in conflict with the basic purposes, coverage, or
benefits provided by law, and in no event shall the duration of
a project exceed four years. It is further provided that no
order establishing an experimental project as authorized by the
provisions of this section shall become effective until the
following conditions have been met:

(1) the secretary of health and human services of the
United States has agreed, for the same project, to waive state
plan requirements relative to statewide uniformity; and

(2) a comprehensive plan, including estimated project
costs, shall be approved by the Legislative Advisory Commission
and filed with the commissioner of administration.

(m) According to federal requirements, establish procedures
to be followed by local welfare boards in creating citizen
advisory committees, including procedures for selection of
committee members.

(n) Allocate federal fiscal disallowances or sanctions
which are based on quality control error rates for the aid to
families with dependent children program formerly codified in
sections 256.72 to 256.87, medical assistance, or food stamp
program in the following manner:

(1) one-half of the total amount of the disallowance shall
be borne by the county boards responsible for administering the
programs. For the medical assistance and the AFDC program
formerly codified in sections 256.72 to 256.87, disallowances
shall be shared by each county board in the same proportion as
that county's expenditures for the sanctioned program are to the
total of all counties' expenditures for the AFDC program
formerly codified in sections 256.72 to 256.87, and medical
assistance programs. For the food stamp program, sanctions
shall be shared by each county board, with 50 percent of the
sanction being distributed to each county in the same proportion
as that county's administrative costs for food stamps are to the
total of all food stamp administrative costs for all counties,
and 50 percent of the sanctions being distributed to each county
in the same proportion as that county's value of food stamp
benefits issued are to the total of all benefits issued for all
counties. Each county shall pay its share of the disallowance
to the state of Minnesota. When a county fails to pay the
amount due hereunder, the commissioner may deduct the amount
from reimbursement otherwise due the county, or the attorney
general, upon the request of the commissioner, may institute
civil action to recover the amount due; and

(2) notwithstanding the provisions of clause (1), if the
disallowance results from knowing noncompliance by one or more
counties with a specific program instruction, and that knowing
noncompliance is a matter of official county board record, the
commissioner may require payment or recover from the county or
counties, in the manner prescribed in clause (1), an amount
equal to the portion of the total disallowance which resulted
from the noncompliance, and may distribute the balance of the
disallowance according to clause (1).

(o) Develop and implement special projects that maximize
reimbursements and result in the recovery of money to the
state. For the purpose of recovering state money, the
commissioner may enter into contracts with third parties. Any
recoveries that result from projects or contracts entered into
under this paragraph shall be deposited in the state treasury
and credited to a special account until the balance in the
account reaches $1,000,000. When the balance in the account
exceeds $1,000,000, the excess shall be transferred and credited
to the general fund. All money in the account is appropriated
to the commissioner for the purposes of this paragraph.

(p) Have the authority to make direct payments to
facilities providing shelter to women and their children
according to section 256D.05, subdivision 3. Upon the written
request of a shelter facility that has been denied payments
under section 256D.05, subdivision 3, the commissioner shall
review all relevant evidence and make a determination within 30
days of the request for review regarding issuance of direct
payments to the shelter facility. Failure to act within 30 days
shall be considered a determination not to issue direct payments.

(q) Have the authority to establish and enforce the
following county reporting requirements:

(1) the commissioner shall establish fiscal and statistical
reporting requirements necessary to account for the expenditure
of funds allocated to counties for human services programs.
When establishing financial and statistical reporting
requirements, the commissioner shall evaluate all reports, in
consultation with the counties, to determine if the reports can
be simplified or the number of reports can be reduced;

(2) the county board shall submit monthly or quarterly
reports to the department as required by the commissioner.
Monthly reports are due no later than 15 working days after the
end of the month. Quarterly reports are due no later than 30
calendar days after the end of the quarter, unless the
commissioner determines that the deadline must be shortened to
20 calendar days to avoid jeopardizing compliance with federal
deadlines or risking a loss of federal funding. Only reports
that are complete, legible, and in the required format shall be
accepted by the commissioner;

(3) if the required reports are not received by the
deadlines established in clause (2), the commissioner may delay
payments and withhold funds from the county board until the next
reporting period. When the report is needed to account for the
use of federal funds and the late report results in a reduction
in federal funding, the commissioner shall withhold from the
county boards with late reports an amount equal to the reduction
in federal funding until full federal funding is received;

(4) a county board that submits reports that are late,
illegible, incomplete, or not in the required format for two out
of three consecutive reporting periods is considered
noncompliant. When a county board is found to be noncompliant,
the commissioner shall notify the county board of the reason the
county board is considered noncompliant and request that the
county board develop a corrective action plan stating how the
county board plans to correct the problem. The corrective
action plan must be submitted to the commissioner within 45 days
after the date the county board received notice of
noncompliance;

(5) the final deadline for fiscal reports or amendments to
fiscal reports is one year after the date the report was
originally due. If the commissioner does not receive a report
by the final deadline, the county board forfeits the funding
associated with the report for that reporting period and the
county board must repay any funds associated with the report
received for that reporting period;

(6) the commissioner may not delay payments, withhold
funds, or require repayment under clause (3) or (5) if the
county demonstrates that the commissioner failed to provide
appropriate forms, guidelines, and technical assistance to
enable the county to comply with the requirements. If the
county board disagrees with an action taken by the commissioner
under clause (3) or (5), the county board may appeal the action
according to sections 14.57 to 14.69; and

(7) counties subject to withholding of funds under clause
(3) or forfeiture or repayment of funds under clause (5) shall
not reduce or withhold benefits or services to clients to cover
costs incurred due to actions taken by the commissioner under
clause (3) or (5).

(r) Allocate federal fiscal disallowances or sanctions for
audit exceptions when federal fiscal disallowances or sanctions
are based on a statewide random sample for the foster care
program under title IV-E of the Social Security Act, United
States Code, title 42, in direct proportion to each county's
title IV-E foster care maintenance claim for that period.

(s) Be responsible for ensuring the detection, prevention,
investigation, and resolution of fraudulent activities or
behavior by applicants, recipients, and other participants in
the human services programs administered by the department.

(t) Require county agencies to identify overpayments,
establish claims, and utilize all available and cost-beneficial
methodologies to collect and recover these overpayments in the
human services programs administered by the department.

(u) Have the authority to administer a drug rebate program
for drugs purchased pursuant to the prescription drug program
established under section 256.955 after the beneficiary's
satisfaction of any deductible established in the program. The
commissioner shall require a rebate agreement from all
manufacturers of covered drugs as defined in section 256B.0625,
subdivision 13. Rebate agreements for prescription drugs
delivered on or after July 1, 2002, must include rebates for
individuals covered under the prescription drug program who are
under 65 years of age. For each drug, the amount of the rebate
shall be equal to the rebate as defined for purposes of the
federal rebate program in United States Code, title 42, section
1396r-8. The manufacturers must provide full payment within 30
days of receipt of the state invoice for the rebate within the
terms and conditions used for the federal rebate program
established pursuant to section 1927 of title XIX of the Social
Security Act. The manufacturers must provide the commissioner
with any information necessary to verify the rebate determined
per drug. The rebate program shall utilize the terms and
conditions used for the federal rebate program established
pursuant to section 1927 of title XIX of the Social Security Act.

(v) Have the authority to administer the federal drug
rebate program for drugs purchased under the medical assistance
program as allowed by section 1927 of title XIX of the Social
Security Act and according to the terms and conditions of
section 1927. Rebates shall be collected for all drugs that
have been dispensed or administered in an outpatient setting and
that are from manufacturers who have signed a rebate agreement
with the United States Department of Health and Human Services.

(w) Have the authority to administer a supplemental drug
rebate program for drugs purchased under the medical assistance
program. The commissioner may enter into supplemental rebate
contracts with pharmaceutical manufacturers and may require
prior authorization for drugs that are from manufacturers that
have not signed a supplemental rebate contract. Prior
authorization of drugs shall be subject to the provisions of
section 256B.0625, subdivision 13.

(x) Operate the department's communication systems account
established in Laws 1993, First Special Session chapter 1,
article 1, section 2, subdivision 2, to manage shared
communication costs necessary for the operation of the programs
the commissioner supervises. A communications account may also
be established for each regional treatment center which operates
communications systems. Each account must be used to manage
shared communication costs necessary for the operations of the
programs the commissioner supervises. The commissioner may
distribute the costs of operating and maintaining communication
systems to participants in a manner that reflects actual usage.
Costs may include acquisition, licensing, insurance,
maintenance, repair, staff time and other costs as determined by
the commissioner. Nonprofit organizations and state, county,
and local government agencies involved in the operation of
programs the commissioner supervises may participate in the use
of the department's communications technology and share in the
cost of operation. The commissioner may accept on behalf of the
state any gift, bequest, devise or personal property of any
kind, or money tendered to the state for any lawful purpose
pertaining to the communication activities of the department.
Any money received for this purpose must be deposited in the
department's communication systems accounts. Money collected by
the commissioner for the use of communication systems must be
deposited in the state communication systems account and is
appropriated to the commissioner for purposes of this section.

(y) Receive any federal matching money that is made
available through the medical assistance program for the
consumer satisfaction survey. Any federal money received for
the survey is appropriated to the commissioner for this
purpose. The commissioner may expend the federal money received
for the consumer satisfaction survey in either year of the
biennium.

(z) Designate community information and referral call
centers and incorporate cost reimbursement claims from the
designated community information and referral call centers into
the federal cost reimbursement claiming processes of the
department according to federal law, rule, and regulations.
Existing information and referral centers provided by Greater
Twin Cities United Way or existing call centers for which
Greater Twin Cities United Way has legal authority to represent,
shall be included in these designations upon review by the
commissioner and assurance that these services are accredited
and in compliance with national standards. Any reimbursement is
appropriated to the commissioner and all designated information
and referral centers shall receive payments according to normal
department schedules established by the commissioner upon final
approval of allocation methodologies from the United States
Department of Health and Human Services Division of Cost
Allocation or other appropriate authorities.

(aa) Develop recommended standards for foster care homes
that address the components of specialized therapeutic services
to be provided by foster care homes with those services.

new text begin (bb) Have the authority to administer a drug rebate program
for drugs purchased for persons eligible for general assistance
medical care under section 256D.03, subdivision 3. The
commissioner shall require a rebate agreement from all
manufacturers of covered drugs as defined in section 256B.0625,
subdivisions 13 and 13d. For each drug, the amount of the
rebate shall be equal to the rebate as defined for purposes of
the federal rebate program in United States Code, title 42,
section 1396r-8. The manufacturers must provide payment within
the terms and conditions used for the federal rebate program
established under section 1927 of title XIX of the Social
Security Act. The manufacturers must provide the commissioner
with any information necessary to verify the rebate determined
per drug. The rebate program shall utilize the terms and
conditions used for the federal rebate program established under
section 1927 of title XIX of the Social Security Act.
new text end

new text begin Effective January 1, 2006, drug coverage under general
assistance medical care shall be limited to those prescription
drugs that:
new text end

new text begin (1) are covered under the medical assistance program as
described in section 256B.0625, subdivisions 13 and 13d; and
new text end

new text begin (2) are provided by manufacturers that have fully executed
general assistance medical care rebate agreements with the
commissioner and comply with such agreements. Prescription drug
coverage under general assistance medical care shall conform to
coverage under the medical assistance program according to
section 256B.0625, subdivisions 13 to 13g.
new text end

new text begin The rebate revenues collected under the drug rebate program
are dedicated to funding the pharmaceutical assistance program
established under paragraph (cc).
new text end

new text begin (cc) Have the authority to administer a pharmaceutical
assistance program. The pharmaceutical assistance program may
include:
new text end

new text begin (1) a drug discount card;
new text end

new text begin (2) assistance to the program administered by the Minnesota
Board on Aging under section 256.975, subdivision 9; and
new text end

new text begin (3) other efforts designed to assist citizens of the state
who are not eligible for prescription drug coverage to obtain
free or discounted prescription drugs.
new text end

new text begin The commissioner shall have authority to administer a drug
rebate program for any discount card program established under
this paragraph. The rebates collected under this paragraph
shall be used to provide a discount on the prescription drugs
dispensed to enrollees of the discount card program.
new text end

Sec. 3.

Minnesota Statutes 2004, section 256.01, is
amended by adding a subdivision to read:

new text begin Subd. 2a. new text end

new text begin Authorization for test sites for health care
programs. new text end

new text begin In coordination with the development and
implementation of HealthMatch, an automated eligibility system
for medical assistance, general assistance medical care, and
MinnesotaCare, the commissioner, in cooperation with county
agencies, is authorized to test and compare a variety of
administrative models to demonstrate and evaluate outcomes of
integrating health care program business processes and points of
access. The models will be evaluated for ease of enrollment for
health care program applicants and recipients and administrative
efficiencies. Test sites will combine the administration of all
three programs and will include both local county and
centralized statewide customer assistance. The duration of each
approved test site shall be no more than one year. Based on the
evaluation, the commissioner shall recommend the most efficient
and effective administrative model for statewide implementation.
new text end

Sec. 4.

Minnesota Statutes 2004, section 256.019,
subdivision 1, is amended to read:

Subdivision 1.

Retention rates.

When an assistance
recovery amount is collected and posted by a county agency under
the provisions governing public assistance programs including
general assistance medical care, general assistance, and
Minnesota supplemental aid, the county may keep one-half of the
recovery made by the county agency using any method other than
recoupment. For medical assistance, if the recovery is made by
a county agency using any method other than recoupment, the
county may keep one-half of the nonfederal share of the recovery.
new text begin For MinnesotaCare, if the recovery is collected and posted by
the county agency, the county may keep one-half of the
nonfederal share of the recovery.
new text end

This does not apply to recoveries from medical providers or
to recoveries begun by the Department of Human Services'
Surveillance and Utilization Review Division, State Hospital
Collections Unit, and the Benefit Recoveries Division or, by the
attorney general's office, or child support collections. In the
food stamp or food support program, the nonfederal share of
recoveries in the federal tax offset program only will be
divided equally between the state agency and the involved county
agency.

Sec. 5.

Minnesota Statutes 2004, section 256.045,
subdivision 3, is amended to read:

Subd. 3.

State agency hearings.

(a) State agency
hearings are available for the following: (1) any person
applying for, receiving or having received public assistance,
medical care, or a program of social services granted by the
state agency or a county agency or the federal Food Stamp Act
whose application for assistance is denied, not acted upon with
reasonable promptness, or whose assistance is suspended,
reduced, terminated, or claimed to have been incorrectly paid;
(2) any patient or relative aggrieved by an order of the
commissioner under section 252.27; (3) a party aggrieved by a
ruling of a prepaid health plan; (4) except as provided under
chapter 245C, any individual or facility determined by a lead
agency to have maltreated a vulnerable adult under section
626.557 after they have exercised their right to administrative
reconsideration under section 626.557; (5) any person whose
claim for foster care payment according to a placement of the
child resulting from a child protection assessment under section
626.556 is denied or not acted upon with reasonable promptness,
regardless of funding source; (6) any person to whom a right of
appeal according to this section is given by other provision of
law; (7) an applicant aggrieved by an adverse decision to an
application for a hardship waiver under section 256B.15; (8) new text begin an
applicant aggrieved by an adverse decision to an application or
redetermination for a Medicare Part D prescription drug subsidy
under section 256B.04, subdivision 4a; (9) new text end except as provided
under chapter 245A, an individual or facility determined to have
maltreated a minor under section 626.556, after the individual
or facility has exercised the right to administrative
reconsideration under section 626.556; or deleted text begin (9) deleted text end new text begin (10) new text end except as
provided under chapter 245C, an individual disqualified under
sections 245C.14 and 245C.15, on the basis of serious or
recurring maltreatment; a preponderance of the evidence that the
individual has committed an act or acts that meet the definition
of any of the crimes listed in section 245C.15, subdivisions 1
to 4; or for failing to make reports required under section
626.556, subdivision 3, or 626.557, subdivision 3. Hearings
regarding a maltreatment determination under clause (4)
or deleted text begin (8) deleted text end new text begin (9) new text end and a disqualification under this clause in which the
basis for a disqualification is serious or recurring
maltreatment, which has not been set aside under sections
245C.22 and 245C.23, shall be consolidated into a single fair
hearing. In such cases, the scope of review by the human
services referee shall include both the maltreatment
determination and the disqualification. The failure to exercise
the right to an administrative reconsideration shall not be a
bar to a hearing under this section if federal law provides an
individual the right to a hearing to dispute a finding of
maltreatment. Individuals and organizations specified in this
section may contest the specified action, decision, or final
disposition before the state agency by submitting a written
request for a hearing to the state agency within 30 days after
receiving written notice of the action, decision, or final
disposition, or within 90 days of such written notice if the
applicant, recipient, patient, or relative shows good cause why
the request was not submitted within the 30-day time limit.

The hearing for an individual or facility under clause (4),
deleted text begin (8) deleted text end new text begin (9)new text end , or deleted text begin (9) deleted text end new text begin (10) new text end is the only administrative appeal to the
final agency determination specifically, including a challenge
to the accuracy and completeness of data under section 13.04.
Hearings requested under clause (4) apply only to incidents of
maltreatment that occur on or after October 1, 1995. Hearings
requested by nursing assistants in nursing homes alleged to have
maltreated a resident prior to October 1, 1995, shall be held as
a contested case proceeding under the provisions of chapter 14.
Hearings requested under clause deleted text begin (8) deleted text end new text begin (9) new text end apply only to incidents
of maltreatment that occur on or after July 1, 1997. A hearing
for an individual or facility under clause deleted text begin (8) deleted text end new text begin (9) new text end is only
available when there is no juvenile court or adult criminal
action pending. If such action is filed in either court while
an administrative review is pending, the administrative review
must be suspended until the judicial actions are completed. If
the juvenile court action or criminal charge is dismissed or the
criminal action overturned, the matter may be considered in an
administrative hearing.

For purposes of this section, bargaining unit grievance
procedures are not an administrative appeal.

The scope of hearings involving claims to foster care
payments under clause (5) shall be limited to the issue of
whether the county is legally responsible for a child's
placement under court order or voluntary placement agreement
and, if so, the correct amount of foster care payment to be made
on the child's behalf and shall not include review of the
propriety of the county's child protection determination or
child placement decision.

(b) A vendor of medical care as defined in section 256B.02,
subdivision 7, or a vendor under contract with a county agency
to provide social services is not a party and may not request a
hearing under this section, except if assisting a recipient as
provided in subdivision 4.

(c) An applicant or recipient is not entitled to receive
social services beyond the services included in the amended
community social services plan.

(d) The commissioner may summarily affirm the county or
state agency's proposed action without a hearing when the sole
issue is an automatic change due to a change in state or federal
law.

Sec. 6.

Minnesota Statutes 2004, section 256.045,
subdivision 3a, is amended to read:

Subd. 3a.

Prepaid health plan appeals.

(a) All prepaid
health plans under contract to the commissioner under chapter
256B or 256D must provide for a complaint system according to
section 62D.11. When a prepaid health plan denies, reduces, or
terminates a health service or denies a request to authorize a
previously authorized health service, the prepaid health plan
must notify the recipient of the right to file a complaint or an
appeal. The notice must include the name and telephone number
of the ombudsman and notice of the recipient's right to request
a hearing under paragraph (b). deleted text begin When a complaint is filed, the
prepaid health plan must notify the ombudsman within three
working days.deleted text end Recipients may request the assistance of the
ombudsman in the complaint system process. The prepaid health
plan must issue a written resolution of the complaint to the
recipient within 30 days after the complaint is filed with the
prepaid health plan. A recipient is not required to exhaust the
complaint system procedures in order to request a hearing under
paragraph (b).

(b) Recipients enrolled in a prepaid health plan under
chapter 256B or 256D may contest a prepaid health plan's denial,
reduction, or termination of health services, a prepaid health
plan's denial of a request to authorize a previously authorized
health service, or the prepaid health plan's written resolution
of a complaint by submitting a written request for a hearing
according to subdivision 3. A state human services referee
shall conduct a hearing on the matter and shall recommend an
order to the commissioner of human services. The commissioner
need not grant a hearing if the sole issue raised by a recipient
is the commissioner's authority to require mandatory enrollment
in a prepaid health plan in a county where prepaid health plans
are under contract with the commissioner. The state human
services referee may order a second medical opinion from the
prepaid health plan or may order a second medical opinion from a
nonprepaid health plan provider at the expense of the prepaid
health plan. Recipients may request the assistance of the
ombudsman in the appeal process.

(c) In the written request for a hearing to appeal from a
prepaid health plan's denial, reduction, or termination of a
health service, a prepaid health plan's denial of a request to
authorize a previously authorized service, or the prepaid health
plan's written resolution to a complaint, a recipient may
request an expedited hearing. If an expedited appeal is
warranted, the state human services referee shall hear the
appeal and render a decision within a time commensurate with the
level of urgency involved, based on the individual circumstances
of the case.

Sec. 7.

Minnesota Statutes 2004, section 256.046,
subdivision 1, is amended to read:

Subdivision 1.

Hearing authority.

A local agency must
initiate an administrative fraud disqualification hearing for
individuals, including child care providers caring for children
receiving child care assistance, accused of wrongfully obtaining
assistance or intentional program violations, in lieu of a
criminal action when it has not been pursued, in the aid to
families with dependent children program formerly codified in
sections 256.72 to 256.87, MFIP, the diversionary work program,
child care assistance programs, general assistance, family
general assistance program formerly codified in section 256D.05,
subdivision 1, clause (15), Minnesota supplemental aid, food
stamp programs, general assistance medical care, MinnesotaCare
for adults without children, and upon federal approval, all
categories of medical assistance and remaining categories of
MinnesotaCare except for children through age 18. new text begin The
Department of Human Services, in lieu of a local agency, may
initiate an administrative fraud disqualification hearing when
the state agency is directly responsible for administration of
the health care program for which benefits were wrongfully
obtained.new text end The hearing is subject to the requirements of section
256.045 and the requirements in Code of Federal Regulations,
title 7, section 273.16, for the food stamp program and title
45, section 235.112, as of September 30, 1995, for the cash
grant, medical care programs, and child care assistance under
chapter 119B.

Sec. 8.

Minnesota Statutes 2004, section 256.9657, is
amended by adding a subdivision to read:

new text begin Subd. 7a. new text end

new text begin Withholding. new text end

new text begin If any provider obligated to pay
an annual surcharge under this section is more than two months
delinquent in the timely payment of a monthly surcharge
installment payment, the provisions in paragraphs (a) to (f)
apply.
new text end

new text begin (a) The department may withhold some or all of the amount
of the delinquent surcharge, together with any interest and
penalties due and owing on those amounts, from any money the
department owes to the provider. The department may, at its
discretion, also withhold future surcharge installment payments
from any money the department owes the provider as those
installments become due and owing. The department may continue
this withholding until the department determines there in no
longer any need to do so.
new text end

new text begin (b) The department shall give prior notice of the
department's intention to withhold by mailing a written notice
to the provider at the address to which remittance advices are
mailed or faxing a copy of the notice to the provider at least
ten business days before the date of the first payment period
for which the withholding begins. The notice may be sent by
ordinary or certified mail, or facsimile, and shall be deemed
received as of the date of mailing or receipt of the facsimile.
The notice shall:
new text end

new text begin (i) state the amount of the delinquent surcharge;
new text end

new text begin (ii) state the amount of the withholding per payment
period;
new text end

new text begin (iii) state the date on which the withholding is to begin;
new text end

new text begin (iv) state whether the department intends to withhold
future installments of the provider's surcharge payments;
new text end

new text begin (v) inform the provider of their rights to informally
object to the proposed withholding and to appeal the withholding
as provided for in this subdivision;
new text end

new text begin (vi) state that the provider may prevent the withholding
during the pendancy of their appeal by posting a bond; and
new text end

new text begin (vii) state other contents as the department deems
appropriate.
new text end

new text begin (c) The provider may informally object to the withholding
in writing anytime before the withholding begins. An informal
objection shall not stay or delay the commencement of the
withholding. The department may postpone the commencement of
the withholding as deemed appropriate and shall not be required
to give another notice at the end of the postponement and before
commencing the withholding. The provider shall have the right
to appeal any withholding from remittances by filing an appeal
with Ramsey County District Court and serving notice of the
appeal on the department within 30 days of the date of the
written notice of the withholding. Notice shall be given and
the appeal shall be heard no later than 45 days after the appeal
is filed. In a hearing of the appeal, the department's action
shall be sustained if the department proves the amount of the
delinquent surcharges or overpayment the provider owes, plus any
accrued interest and penalties, has not been repaid. The
department may continue withholding for delinquent and current
surcharge installment payments during the pendancy of an appeal
unless the provider posts a bond from a surety company licensed
to do business in Minnesota in favor of the department in an
amount equal to two times the provider's total annual surcharge
payment for the fiscal year in which the appeal is filed with
the department.
new text end

new text begin (d) The department shall refund any amounts due to the
provider under any final administrative or judicial order or
decree which fully and finally resolves the appeal together with
interest on those amounts at the rate of three percent per annum
simple interest computed from the date of each withholding, as
soon as practical after entry of the order or decree.
new text end

new text begin (e) The commissioner, or the commissioner's designee, may
enter into written settlement agreements with a provider to
resolve disputes and other matters involving unpaid surcharge
installment payments or future surcharge installment payments.
new text end

new text begin (f) Notwithstanding any law to the contrary, all unpaid
surcharges, plus any accrued interest and penalties, shall be
overpayments for purposes of section 256B.0641.
new text end

Sec. 9.

Minnesota Statutes 2004, section 256.969,
subdivision 3a, is amended to read:

Subd. 3a.

Payments.

(a) Acute care hospital billings
under the medical assistance program must not be submitted until
the recipient is discharged. However, the commissioner shall
establish monthly interim payments for inpatient hospitals that
have individual patient lengths of stay over 30 days regardless
of diagnostic category. Except as provided in section 256.9693,
medical assistance reimbursement for treatment of mental illness
shall be reimbursed based on diagnostic classifications.
Individual hospital payments established under this section and
sections 256.9685, 256.9686, and 256.9695, in addition to third
party and recipient liability, for discharges occurring during
the rate year shall not exceed, in aggregate, the charges for
the medical assistance covered inpatient services paid for the
same period of time to the hospital. This payment limitation
shall be calculated separately for medical assistance and
general assistance medical care services. The limitation on
general assistance medical care shall be effective for
admissions occurring on or after July 1, 1991. Services that
have rates established under subdivision 11 or 12, must be
limited separately from other services. After consulting with
the affected hospitals, the commissioner may consider related
hospitals one entity and may merge the payment rates while
maintaining separate provider numbers. The operating and
property base rates per admission or per day shall be derived
from the best Medicare and claims data available when rates are
established. The commissioner shall determine the best Medicare
and claims data, taking into consideration variables of recency
of the data, audit disposition, settlement status, and the
ability to set rates in a timely manner. The commissioner shall
notify hospitals of payment rates by December 1 of the year
preceding the rate year. The rate setting data must reflect the
admissions data used to establish relative values. Base year
changes from 1981 to the base year established for the rate year
beginning January 1, 1991, and for subsequent rate years, shall
not be limited to the limits ending June 30, 1987, on the
maximum rate of increase under subdivision 1. The commissioner
may adjust base year cost, relative value, and case mix index
data to exclude the costs of services that have been
discontinued by the October 1 of the year preceding the rate
year or that are paid separately from inpatient services.
Inpatient stays that encompass portions of two or more rate
years shall have payments established based on payment rates in
effect at the time of admission unless the date of admission
preceded the rate year in effect by six months or more. In this
case, operating payment rates for services rendered during the
rate year in effect and established based on the date of
admission shall be adjusted to the rate year in effect by the
hospital cost index.

(b) For fee-for-service admissions occurring on or after
July 1, 2002, the total payment, before third-party liability
and spenddown, made to hospitals for inpatient services is
reduced by .5 percent from the current statutory rates.

(c) In addition to the reduction in paragraph (b), the
total payment for fee-for-service admissions occurring on or
after July 1, 2003, made to hospitals for inpatient services
before third-party liability and spenddown, is reduced five
percent from the current statutory rates. Mental health
services within diagnosis related groups 424 to 432, and
facilities defined under subdivision 16 are excluded from this
paragraph.

new text begin (d) In addition to the reduction in paragraphs (b) and (c)
and section 256D.03, subdivision 4, paragraph (k), the total
payment for fee-for-service admissions occurring on or after
July 1, 2005, made to hospitals for inpatient services before
third-party liability and spenddown, is reduced five percent
from the current statutory rates. Mental health services within
diagnosis related groups 424 to 432 and facilities defined under
subdivision 16 are excluded from this paragraph.
new text end

Sec. 10.

Minnesota Statutes 2004, section 256.969,
subdivision 26, is amended to read:

Subd. 26.

Greater minnesota payment adjustment after june
30, 2001.

(a) For admissions occurring after June 30, 2001, the
commissioner shall pay fee-for-service inpatient admissions for
the diagnosis-related groups specified in paragraph (b) at
hospitals located outside of the seven-county metropolitan area
at the higher of:

(1) the hospital's current payment rate for the diagnostic
category to which the diagnosis-related group belongs, exclusive
of disproportionate population adjustments received under
subdivision 9 and hospital payment adjustments received under
subdivision 23; or

(2) 90 percent of the average payment rate for that
diagnostic category for hospitals located within the
seven-county metropolitan area, exclusive of disproportionate
population adjustments received under subdivision 9 and hospital
payment adjustments received under subdivisions 20 and 23. deleted text begin The
commissioner may adjust this percentage each year so that the
estimated payment increases under this paragraph are equal to
the funding provided under section 256B.195 for this purpose.
deleted text end

(b) The payment increases provided in paragraph (a) apply
to the following diagnosis-related groups, as they fall within
the diagnostic categories:

(1) 370 cesarean section with complicating diagnosis;

(2) 371 cesarean section without complicating diagnosis;

(3) 372 vaginal delivery with complicating diagnosis;

(4) 373 vaginal delivery without complicating diagnosis;

(5) 386 extreme immaturity and respiratory distress
syndrome, neonate;

(6) 388 full-term neonates with other problems;

(7) 390 prematurity without major problems;

(8) 391 normal newborn;

(9) 385 neonate, died or transferred to another acute care
facility;

(10) 425 acute adjustment reaction and psychosocial
dysfunction;

(11) 430 psychoses;

(12) 431 childhood mental disorders; and

(13) 164-167 appendectomy.

Sec. 11.

Minnesota Statutes 2004, section 256B.02,
subdivision 12, is amended to read:

Subd. 12.

Thirdnew text begin -new text end party payer.

"Thirdnew text begin -new text end party payer" means a
person, entity, or agency or government program that has a
probable obligation to pay all or part of the costs of a medical
assistance recipient's health services. new text begin Third-party payer
includes an entity under contract with the recipient to cover
all or part of the recipient's medical costs.
new text end

Sec. 12.

Minnesota Statutes 2004, section 256B.04, is
amended by adding a subdivision to read:

new text begin Subd. 4a. new text end

new text begin Medicare prescription drug subsidy. new text end

new text begin The
commissioner shall perform all duties necessary to administer
eligibility determinations for the Medicare Part D prescription
drug subsidy and facilitate the enrollment of eligible medical
assistance recipients into Medicare prescription drug plans as
required by the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (MMA), Public Law 108-173, and Code of
Federal Regulations, title 42, sections 423.30 through 423.56
and 423.771 through 423.800.
new text end

Sec. 13.

Minnesota Statutes 2004, section 256B.056, is
amended by adding a subdivision to read:

new text begin Subd. 3d. new text end

new text begin Reduction of excess assets. new text end

new text begin Assets in excess
of the limits set forth in subdivisions 3 to 3c may be reduced
to allowable limits as follows:
new text end

new text begin (a) Assets may be reduced in any of the three calendar
months before the month of application in which the applicant
seeks coverage by:
new text end

new text begin (1) designating burial funds up to $1500 for each
applicant, spouse, and MA-eligible dependent child; and
new text end

new text begin (2) paying health service bills incurred in the retroactive
period for which the applicant seeks eligibility, starting with
the oldest bill. After assets are reduced to allowable limits,
eligibility begins with the next dollar of MA-covered health
services incurred in the retroactive period. Applicants
reducing assets under this subdivision who also have excess
income shall first spend excess assets to pay health service
bills and may meet the income spenddown on remaining bills.
new text end

new text begin (b) Assets may be reduced beginning the month of
application by:
new text end

new text begin (1) paying bills for health services that would otherwise
be paid by medical assistance; and
new text end

new text begin (2) using any means other than a transfer of assets for
less than fair market value as defined in section 256B.0595,
subdivision 1, paragraph (b).
new text end

Sec. 14.

Minnesota Statutes 2004, section 256B.056,
subdivision 5, is amended to read:

Subd. 5.

Excess income.

A person who has excess income
is eligible for medical assistance if the person has expenses
for medical care that are more than the amount of the person's
excess income, computed by deducting incurred medical expenses
from the excess income to reduce the excess to the income
standard specified in subdivision 5c. The person shall elect to
have the medical expenses deducted at the beginning of a
one-month budget period or at the beginning of a six-month
budget period. The commissioner shall allow persons eligible
for assistance on a one-month spenddown basis under this
subdivision to elect to pay the monthly spenddown amount in
advance of the month of eligibility to the state agency in order
to maintain eligibility on a continuous basis. If the recipient
does not pay the spenddown amount on or before the deleted text begin 20th deleted text end new text begin last
business day new text end of the month, the recipient is ineligible for this
option for the following month. The local agency shall code the
Medicaid Management Information System (MMIS) to indicate that
the recipient has elected this option. The state agency shall
convey recipient eligibility information relative to the
collection of the spenddown to providers through the Electronic
Verification System (EVS). A recipient electing advance payment
must pay the state agency the monthly spenddown amount on or
before new text begin noon on new text end the deleted text begin 20th deleted text end new text begin last business day new text end of the month in order
to be eligible for this option in the following month.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective March 1, 2006,
or upon HealthMatch implementation, whichever is later.
new text end

Sec. 15.

Minnesota Statutes 2004, section 256B.056,
subdivision 5a, is amended to read:

Subd. 5a.

Individuals on fixed or excluded income.

Recipients of medical assistance who receive only fixed unearned
or excluded income, when that income is excluded from
consideration as income or unvarying in amount and timing of
receipt throughout the year, shall report and verify their
income deleted text begin annually deleted text end new text begin every 12 months. The 12-month period begins
with the month of applicationnew text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective March 1, 2006,
or upon HealthMatch implementation, whichever is later.
new text end

Sec. 16.

Minnesota Statutes 2004, section 256B.056,
subdivision 5b, is amended to read:

Subd. 5b.

Individuals with low income.

Recipients of
medical assistance not residing in a long-term care facility who
have slightly fluctuating income which is below the medical
assistance income limit shall report and verify their income deleted text begin on
a semiannual basis deleted text end new text begin every six months. The six-month period
begins the month of applicationnew text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective March 1, 2006,
or upon HealthMatch implementation, whichever is later.
new text end

Sec. 17.

Minnesota Statutes 2004, section 256B.056,
subdivision 7, is amended to read:

Subd. 7.

Period of eligibility.

Eligibility is available
for the month of application and for three months prior to
application if the person was eligible in those prior
months. new text begin Eligibility for months prior to application is
determined independently from eligibility for the month of
application and future months.new text end A redetermination of eligibility
must occur every 12 months. new text begin The 12-month period begins with the
month of application.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective March 1, 2006,
or upon HealthMatch implementation, whichever is later.
new text end

Sec. 18.

Minnesota Statutes 2004, section 256B.056, is
amended by adding a subdivision to read:

new text begin Subd. 9. new text end

new text begin Notice. new text end

new text begin The state agency must be given notice
of monetary claims against a person, entity, or corporation that
may be liable to pay all or part of the cost of medical care
when the state agency has paid or becomes liable for the cost of
that care. Notice must be given according to paragraphs (a) to
(d).
new text end

new text begin (a) An applicant for medical assistance shall notify the
state or local agency of any possible claims when the applicant
submits the application. A recipient of medical assistance
shall notify the state or local agency of any possible claims
when those claims arise.
new text end

new text begin (b) A person providing medical care services to a recipient
of medical assistance shall notify the state agency when the
person has reason to believe that a third party may be liable
for payment of the cost of medical care.
new text end

new text begin (c) A party to a claim that may be assigned to the state
agency under this section shall notify the state agency of its
potential assignment claim in writing at each of the following
stages of a claim:
new text end

new text begin (1) when a claim is filed;
new text end

new text begin (2) when an action is commenced; and
new text end

new text begin (3) when a claim is concluded by payment, award, judgment,
settlement, or otherwise.
new text end

new text begin (d) Every party involved in any stage of a claim under this
subdivision is required to provide notice to the state agency at
that stage of the claim. However, when one of the parties to
the claim provides notice at that stage, every other party to
the claim is deemed to have provided the required notice for
that stage of the claim. If the required notice under this
paragraph is not provided to the state agency, all parties to
the claim are deemed to have failed to provide the required
notice. A party to the claim includes the injured person or the
person's legal representative, the plaintiff, the defendants, or
persons alleged to be responsible for compensating the injured
person or plaintiff, and any other party to the cause of action
or claim, regardless of whether the party knows the state agency
has a potential or actual assignment claim.
new text end

Sec. 19.

Minnesota Statutes 2004, section 256B.056, is
amended by adding a subdivision to read:

new text begin Subd. 10.new text end

new text begin Eligibility verification.new text end

new text begin (a) The commissioner
shall require women who are applying for the continuation of
medical assistance coverage following the end of the 60-day
postpartum period to complete a renewal form and verify assets.
new text end

new text begin (b) The commissioner shall determine the eligibility of
private-sector health care coverage for infants less than one
year of age eligible under section 256B.055, subdivision 10, or
256B.057, subdivision 1, paragraph (d), and shall pay for
private-sector coverage if this is determined to be
cost-effective.
new text end

new text begin (c) The commissioner shall modify the application for
Minnesota health care programs to require more detailed
information related to verification of assets and income, and
shall verify assets and income for all applicants, and for all
recipients upon renewal.
new text end

new text begin (d) The commissioner shall require recipients to report and
verify new employment income within ten days of the change, and
shall disenroll recipients who fail to provide verification.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2005.
Prior to the implementation of HealthMatch, the commissioner
shall implement this section to the fullest extent possible,
including the use of manual processing. Upon implementation of
HealthMatch, the commissioner shall implement this section in a
manner consistent with the procedures and requirements of
HealthMatch.
new text end

Sec. 20.

Minnesota Statutes 2004, section 256B.0575, is
amended to read:

256B.0575 AVAILABILITY OF INCOME FOR INSTITUTIONALIZED
PERSONS.

When an institutionalized person is determined eligible for
medical assistance, the income that exceeds the deductions in
paragraphs (a) and (b) must be applied to the cost of
institutional care.

(a) The following amounts must be deducted from the
institutionalized person's income in the following order:

(1) the personal needs allowance under section 256B.35 or,
for a veteran who does not have a spouse or child, or a
surviving spouse of a veteran having no child, the amount of an
improved pension received from the veteran's administration not
exceeding $90 per month;

(2) the personal allowance for disabled individuals under
section 256B.36;

(3) if the institutionalized person has a legally appointed
guardian or conservator, five percent of the recipient's gross
monthly income up to $100 as reimbursement for guardianship or
conservatorship services;

(4) a monthly income allowance determined under section
256B.058, subdivision 2, but only to the extent income of the
institutionalized spouse is made available to the community
spouse;

(5) a monthly allowance for children under age 18 which,
together with the net income of the children, would provide
income equal to the medical assistance standard for families and
children according to section 256B.056, subdivision 4, for a
family size that includes only the minor children. This
deduction applies only if the children do not live with the
community spouse and only to the extent that the deduction is
not included in the personal needs allowance under section
256B.35, subdivision 1, as child support garnished under a court
order;

(6) a monthly family allowance for other family members,
equal to one-third of the difference between 122 percent of the
federal poverty guidelines and the monthly income for that
family member;

(7) reparations payments made by the Federal Republic of
Germany and reparations payments made by the Netherlands for
victims of Nazi persecution between 1940 and 1945;

(8) all other exclusions from income for institutionalized
persons as mandated by federal law; and

(9) amounts for reasonable expenses incurred for necessary
medical or remedial care for the institutionalized person that
are not medical assistance covered expenses and that are not
subject to payment by a third party.

new text begin Reasonable expenses are limited to expenses that have not
been previously used as a deduction from income and are incurred
during the enrollee's current period of eligibility, including
retroactive months associated with the current period of
eligibility, for medical assistance payment of long-term care
services.
new text end

For purposes of clause (6), "other family member" means a
person who resides with the community spouse and who is a minor
or dependent child, dependent parent, or dependent sibling of
either spouse. "Dependent" means a person who could be claimed
as a dependent for federal income tax purposes under the
Internal Revenue Code.

(b) Income shall be allocated to an institutionalized
person for a period of up to three calendar months, in an amount
equal to the medical assistance standard for a family size of
one if:

(1) a physician certifies that the person is expected to
reside in the long-term care facility for three calendar months
or less;

(2) if the person has expenses of maintaining a residence
in the community; and

(3) if one of the following circumstances apply:

(i) the person was not living together with a spouse or a
family member as defined in paragraph (a) when the person
entered a long-term care facility; or

(ii) the person and the person's spouse become
institutionalized on the same date, in which case the allocation
shall be applied to the income of one of the spouses.

For purposes of this paragraph, a person is determined to be
residing in a licensed nursing home, regional treatment center,
or medical institution if the person is expected to remain for a
period of one full calendar month or more.

Sec. 21.

Minnesota Statutes 2004, section 256B.0595,
subdivision 2, is amended to read:

Subd. 2.

Period of ineligibility.

(a) For any
uncompensated transfer occurring on or before August 10, 1993,
the number of months of ineligibility for long-term care
services shall be the lesser of 30 months, or the uncompensated
transfer amount divided by the average medical assistance rate
for nursing facility services in the state in effect on the date
of application. The amount used to calculate the average
medical assistance payment rate shall be adjusted each July 1 to
reflect payment rates for the previous calendar year. The
period of ineligibility begins with the month in which the
assets were transferred. If the transfer was not reported to
the local agency at the time of application, and the applicant
received long-term care services during what would have been the
period of ineligibility if the transfer had been reported, a
cause of action exists against the transferee for the cost of
long-term care services provided during the period of
ineligibility, or for the uncompensated amount of the transfer,
whichever is less. The action may be brought by the state or
the local agency responsible for providing medical assistance
under chapter 256G. The uncompensated transfer amount is the
fair market value of the asset at the time it was given away,
sold, or disposed of, less the amount of compensation received.

(b) For uncompensated transfers made after August 10, 1993,
the number of months of ineligibility for long-term care
services shall be the total uncompensated value of the resources
transferred divided by the average medical assistance rate for
nursing facility services in the state in effect on the date of
application. The amount used to calculate the average medical
assistance payment rate shall be adjusted each July 1 to reflect
payment rates for the previous calendar year. The period of
ineligibility begins with the first day of the month after the
month in which the assets were transferred except that if one or
more uncompensated transfers are made during a period of
ineligibility, the total assets transferred during the
ineligibility period shall be combined and a penalty period
calculated to begin on the first day of the month after the
month in which the first uncompensated transfer was made. If
the new text begin transfer was reported to the local agency after the date
that advance notice of a period of ineligibility that affects
the next month could be provided to the recipient and the
recipient received medical assistance services or the new text end transfer
was not reported to the local agency, and the applicant new text begin or
recipient new text end received medical assistance services during what would
have been the period of ineligibility if the transfer had been
reported, a cause of action exists against the transferee for
the cost of medical assistance services provided during the
period of ineligibility, or for the uncompensated amount of the
transfer, whichever is less. The action may be brought by the
state or the local agency responsible for providing medical
assistance under chapter 256G. The uncompensated transfer
amount is the fair market value of the asset at the time it was
given away, sold, or disposed of, less the amount of
compensation received. Effective for transfers made on or after
March 1, 1996, involving persons who apply for medical
assistance on or after April 13, 1996, no cause of action exists
for a transfer unless:

(1) the transferee knew or should have known that the
transfer was being made by a person who was a resident of a
long-term care facility or was receiving that level of care in
the community at the time of the transfer;

(2) the transferee knew or should have known that the
transfer was being made to assist the person to qualify for or
retain medical assistance eligibility; or

(3) the transferee actively solicited the transfer with
intent to assist the person to qualify for or retain eligibility
for medical assistance.

(c) If a calculation of a penalty period results in a
partial month, payments for long-term care services shall be
reduced in an amount equal to the fraction, except that in
calculating the value of uncompensated transfers, if the total
value of all uncompensated transfers made in a month not
included in an existing penalty period does not exceed $200,
then such transfers shall be disregarded for each month prior to
the month of application for or during receipt of medical
assistance.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for transfers
occurring on or after July 1, 2005.
new text end

Sec. 22.

Minnesota Statutes 2004, section 256B.06,
subdivision 4, is amended to read:

Subd. 4.

Citizenship requirements.

(a) Eligibility for
medical assistance is limited to citizens of the United States,
qualified noncitizens as defined in this subdivision, and other
persons residing lawfully in the United States.

(b) "Qualified noncitizen" means a person who meets one of
the following immigration criteria:

(1) admitted for lawful permanent residence according to
United States Code, title 8;

(2) admitted to the United States as a refugee according to
United States Code, title 8, section 1157;

(3) granted asylum according to United States Code, title
8, section 1158;

(4) granted withholding of deportation according to United
States Code, title 8, section 1253(h);

(5) paroled for a period of at least one year according to
United States Code, title 8, section 1182(d)(5);

(6) granted conditional entrant status according to United
States Code, title 8, section 1153(a)(7);

(7) determined to be a battered noncitizen by the United
States Attorney General according to the Illegal Immigration
Reform and Immigrant Responsibility Act of 1996, title V of the
Omnibus Consolidated Appropriations Bill, Public Law 104-200;

(8) is a child of a noncitizen determined to be a battered
noncitizen by the United States Attorney General according to
the Illegal Immigration Reform and Immigrant Responsibility Act
of 1996, title V, of the Omnibus Consolidated Appropriations
Bill, Public Law 104-200; or

(9) determined to be a Cuban or Haitian entrant as defined
in section 501(e) of Public Law 96-422, the Refugee Education
Assistance Act of 1980.

(c) All qualified noncitizens who were residing in the
United States before August 22, 1996, who otherwise meet the
eligibility requirements of this chapter, are eligible for
medical assistance with federal financial participation.

(d) All qualified noncitizens who entered the United States
on or after August 22, 1996, and who otherwise meet the
eligibility requirements of this chapter, are eligible for
medical assistance with federal financial participation through
November 30, 1996.

Beginning December 1, 1996, qualified noncitizens who
entered the United States on or after August 22, 1996, and who
otherwise meet the eligibility requirements of this chapter are
eligible for medical assistance with federal participation for
five years if they meet one of the following criteria:

(i) refugees admitted to the United States according to
United States Code, title 8, section 1157;

(ii) persons granted asylum according to United States
Code, title 8, section 1158;

(iii) persons granted withholding of deportation according
to United States Code, title 8, section 1253(h);

(iv) veterans of the United States armed forces with an
honorable discharge for a reason other than noncitizen status,
their spouses and unmarried minor dependent children; or

(v) persons on active duty in the United States armed
forces, other than for training, their spouses and unmarried
minor dependent children.

Beginning December 1, 1996, qualified noncitizens who do
not meet one of the criteria in items (i) to (v) are eligible
for medical assistance without federal financial participation
as described in paragraph (j).

(e) Noncitizens who are not qualified noncitizens as
defined in paragraph (b), who are lawfully residing in the
United States and who otherwise meet the eligibility
requirements of this chapter, are eligible for medical
assistance under clauses (1) to (3). These individuals must
cooperate with the Immigration and Naturalization Service to
pursue any applicable immigration status, including citizenship,
that would qualify them for medical assistance with federal
financial participation.

(1) Persons who were medical assistance recipients on
August 22, 1996, are eligible for medical assistance with
federal financial participation through December 31, 1996.

(2) Beginning January 1, 1997, persons described in clause
(1) are eligible for medical assistance without federal
financial participation as described in paragraph (j).

(3) Beginning December 1, 1996, persons residing in the
United States prior to August 22, 1996, who were not receiving
medical assistance and persons who arrived on or after August
22, 1996, are eligible for medical assistance without federal
financial participation as described in paragraph (j).

(f) Nonimmigrants who otherwise meet the eligibility
requirements of this chapter are eligible for the benefits as
provided in paragraphs (g) to (i). For purposes of this
subdivision, a "nonimmigrant" is a person in one of the classes
listed in United States Code, title 8, section 1101(a)(15).

(g) Payment shall also be made for care and services that
are furnished to noncitizens, regardless of immigration status,
who otherwise meet the eligibility requirements of this chapter,
if such care and services are necessary for the treatment of an
emergency medical condition, except for organ transplants and
related care and services and routine prenatal care.

(h) For purposes of this subdivision, the term "emergency
medical condition" means a medical condition that meets the
requirements of United States Code, title 42, section 1396b(v).

(i) Pregnant noncitizens who are undocumented deleted text begin or deleted text end new text begin ,
new text end nonimmigrants, new text begin or eligible for medical assistance as described
in paragraph (j), and who are not covered by a group health plan
or health insurance coverage according to Code of Federal
Regulations, title 42, section 457.310, and new text end who otherwise meet
the eligibility requirements of this chapter, are eligible for
medical assistance deleted text begin payment without federal financial
participation for care and services deleted text end through the period of
pregnancy, deleted text begin and deleted text end new text begin including labor and delivery, to the extent
federal funds are available under Title XXI of the Social
Security Act, and the state children's health insurance program,
followed by new text end 60 days postpartumdeleted text begin , except for labor and
delivery deleted text end new text begin without federal financial participationnew text end .

(j) Qualified noncitizens as described in paragraph (d),
and all other noncitizens lawfully residing in the United States
as described in paragraph (e), who are ineligible for medical
assistance with federal financial participation and who
otherwise meet the eligibility requirements of chapter 256B and
of this paragraph, are eligible for medical assistance without
federal financial participation. Qualified noncitizens as
described in paragraph (d) are only eligible for medical
assistance without federal financial participation for five
years from their date of entry into the United States.

(k) Beginning October 1, 2003, persons who are receiving
care and rehabilitation services from a nonprofit center
established to serve victims of torture and are otherwise
ineligible for medical assistance under this chapter are
eligible for medical assistance without federal financial
participation. These individuals are eligible only for the
period during which they are receiving services from the
center. Individuals eligible under this paragraph shall not be
required to participate in prepaid medical assistance.

Sec. 23.

Minnesota Statutes 2004, section 256B.0625, is
amended by adding a subdivision to read:

new text begin Subd. 1a. new text end

new text begin Services provided in a hospital emergency
room. new text end

new text begin Medical assistance does not cover visits to a hospital
emergency room that are not for emergency and emergency
poststabilization care or urgent care, and does not pay for any
services provided in a hospital emergency room that are not for
emergency and emergency poststabilization care or urgent care.
new text end

Sec. 24.

Minnesota Statutes 2004, section 256B.0625,
subdivision 3a, is amended to read:

Subd. 3a.

deleted text begin gender deleted text end new text begin sex new text end reassignment surgery.

deleted text begin Gender deleted text end new text begin Sex
new text end reassignment surgery deleted text begin and other gender reassignment medical
procedures including drug therapy for gender reassignment are deleted text end new text begin is
new text end not covered deleted text begin unless the individual began receiving gender
reassignment services prior to July 1, 1998deleted text end .

Sec. 25.

Minnesota Statutes 2004, section 256B.0625, is
amended by adding a subdivision to read:

new text begin Subd. 3c.new text end

new text begin Circumcision for newborns.new text end

new text begin Newborn
circumcision is not covered, unless the procedure is medically
necessary or required because of a well-established religious
practice.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2005,
and applies to services provided on or after that date.
new text end

Sec. 26.

Minnesota Statutes 2004, section 256B.0625, is
amended by adding a subdivision to read:

new text begin Subd. 3d. new text end

new text begin Health services policy committee. new text end

new text begin The
commissioner, after receiving recommendations from professional
physician associations, professional associations representing
licensed nonphysician health care professionals, and consumer
groups, shall establish an 11-member Health Services Policy
Committee which will consist of ten voting members and one
nonvoting member. The Health Services Policy Committee will
advise the commissioner regarding health services issues
pertaining to the administration of health care benefits covered
under the medical assistance, general assistance medical care,
and MinnesotaCare programs. The Health Services Policy
Committee shall meet at least quarterly. The Health Services
Policy Committee shall annually elect a physician chair from
among its members, who will work directly with the
commissioner's medical director, to establish the agenda for
each meeting.
new text end

Sec. 27.

Minnesota Statutes 2004, section 256B.0625, is
amended by adding a subdivision to read:

new text begin Subd. 3e. new text end

new text begin Health services policy committee members. new text end

new text begin The
Health Services Policy Committee shall be comprised of:
new text end

new text begin (1) six voting members who are licensed physicians actively
engaged in the practice of medicine in Minnesota, one of whom
must be actively engaged in the treatment of persons with mental
illness and three of whom must represent health plans currently
under contract to serve medical assistance recipients;
new text end

new text begin (2) three voting members who are nonphysician health care
professionals licensed in their profession and actively engaged
in the practice of their profession in Minnesota;
new text end

new text begin (3) the commissioner's medical director who will serve as a
nonvoting member; and
new text end

new text begin (4) one consumer who shall serve as a voting member.
new text end

new text begin Members of the Health Services Policy Committee shall not
be employed by the Department of Human Services, except for the
medical director.
new text end

Sec. 28.

Minnesota Statutes 2004, section 256B.0625, is
amended by adding a subdivision to read:

new text begin Subd. 3f. new text end

new text begin Health services policy committee terms and
compensation. new text end

new text begin Committee members shall serve staggered
three-year terms, with one-third of the voting members' terms
expiring annually. Members may be reappointed by the
commissioner. The commissioner may require more frequent Health
Services Policy Committee meetings as needed. An honorarium of
$200 per meeting and reimbursement for mileage and parking shall
be paid to each committee member in attendance except the
medical director. The Health Services Policy Committee does not
expire as provided in section 15.059, subdivision 6.
new text end

Sec. 29.

Minnesota Statutes 2004, section 256B.0625,
subdivision 13, is amended to read:

Subd. 13.

Drugs.

(a) Medical assistance covers drugs,
except for fertility drugs when specifically used to enhance
fertility, if prescribed by a licensed practitioner and
dispensed by a licensed pharmacist, by a physician enrolled in
the medical assistance program as a dispensing physician, or by
a physician or a nurse practitioner employed by or under
contract with a community health board as defined in section
145A.02, subdivision 5, for the purposes of communicable disease
control.

(b) The dispensed quantity of a prescription drug must not
exceed a 34-day supply, unless authorized by the commissioner.

(c) Medical assistance covers the following
over-the-counter drugs when prescribed by a licensed
practitioner or by a licensed pharmacist who meets standards
established by the commissioner, in consultation with the board
of pharmacy: antacids, acetaminophen, family planning products,
aspirin, insulin, products for the treatment of lice, vitamins
for adults with documented vitamin deficiencies, vitamins for
children under the age of seven and pregnant or nursing women,
and any other over-the-counter drug identified by the
commissioner, in consultation with the formulary committee, as
necessary, appropriate, and cost-effective for the treatment of
certain specified chronic diseases, conditions, or disorders,
and this determination shall not be subject to the requirements
of chapter 14. A pharmacist may prescribe over-the-counter
medications as provided under this paragraph for purposes of
receiving reimbursement under Medicaid. When prescribing
over-the-counter drugs under this paragraph, licensed
pharmacists must consult with the recipient to determine
necessity, provide drug counseling, review drug therapy for
potential adverse interactions, and make referrals as needed to
other health care professionals.

new text begin (d) Effective January 1, 2006, medical assistance shall not
cover drugs that are coverable under Medicare Part D as defined
in the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003, Public Law 108-173, section
1860D-2(e), for individuals eligible for drug coverage as
defined in the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003, Public Law 108-173, section
1860D-1(a)(3)(A). For such individuals, medical assistance may
cover drugs from the drug classes listed in United States Code,
title 42, section 1396r-8(d)(2), subject to the provisions of
this subdivision and subdivisions 13a to 13g, except that drugs
listed in United States Code, title 42, section
1396r-8(d)(2)(E), shall not be covered.
new text end

Sec. 30.

Minnesota Statutes 2004, section 256B.0625,
subdivision 13a, is amended to read:

Subd. 13a.

Drug utilization review board.

new text begin The
commissioner, after receiving recommendations from professional
medical associations, professional pharmacy associations, and
consumer groups shall designate new text end a nine-member Drug Utilization
Review Board deleted text begin is establisheddeleted text end . The board deleted text begin is deleted text end new text begin shall be new text end comprised of
at least three but no more than four licensed physicians
actively engaged in the practice of medicine in Minnesota; at
least three licensed pharmacists actively engaged in the
practice of pharmacy in Minnesota; and one consumer
representative; the remainder to be made up of health care
professionals who are licensed in their field and have
recognized knowledge in the clinically appropriate prescribing,
dispensing, and monitoring of covered outpatient drugs. The
board shall be staffed by an employee of the department who
shall serve as an ex officio nonvoting member of the board. new text begin The
department's medical director shall also serve as an ex officio,
nonvoting member of the board.new text end The members of the board shall
be appointed by the commissioner and shall serve three-year
terms. deleted text begin The members shall be selected from lists submitted by
professional associations.deleted text end The commissioner shall appoint the
initial members of the board for terms expiring as follows:
three members for terms expiring June 30, 1996; three members
for terms expiring June 30, 1997; and three members for terms
expiring June 30, 1998. Members may be reappointed deleted text begin once deleted text end new text begin by the
commissionernew text end . The board shall annually elect a chair from among
the members.

The commissioner shall, with the advice of the board:

(1) implement a medical assistance retrospective and
prospective drug utilization review program as required by
United States Code, title 42, section 1396r-8(g)(3);

(2) develop and implement the predetermined criteria and
practice parameters for appropriate prescribing to be used in
retrospective and prospective drug utilization review;

(3) develop, select, implement, and assess interventions
for physicians, pharmacists, and patients that are educational
and not punitive in nature;

(4) establish a grievance and appeals process for
physicians and pharmacists under this section;

(5) publish and disseminate educational information to
physicians and pharmacists regarding the board and the review
program;

(6) adopt and implement procedures designed to ensure the
confidentiality of any information collected, stored, retrieved,
assessed, or analyzed by the board, staff to the board, or
contractors to the review program that identifies individual
physicians, pharmacists, or recipients;

(7) establish and implement an ongoing process to (i)
receive public comment regarding drug utilization review
criteria and standards, and (ii) consider the comments along
with other scientific and clinical information in order to
revise criteria and standards on a timely basis; and

(8) adopt any rules necessary to carry out this section.

The board may establish advisory committees. The
commissioner may contract with appropriate organizations to
assist the board in carrying out the board's duties. The
commissioner may enter into contracts for services to develop
and implement a retrospective and prospective review program.

The board shall report to the commissioner annually on the
date the Drug Utilization Review Annual Report is due to the
Centers for Medicare and Medicaid Services. This report is to
cover the preceding federal fiscal year. The commissioner shall
make the report available to the public upon request. The
report must include information on the activities of the board
and the program; the effectiveness of implemented interventions;
administrative costs; and any fiscal impact resulting from the
program. An honorarium of $100 per meeting and reimbursement
for mileage shall be paid to each board member in attendance.

Sec. 31.

Minnesota Statutes 2004, section 256B.0625,
subdivision 13c, is amended to read:

Subd. 13c.

Formulary committee.

The commissioner, after
receiving recommendations from professional medical associations
and professional pharmacy associations, and consumer groups
shall designate a Formulary Committee to carry out duties as
described in subdivisions 13 to 13g. The Formulary Committee
shall be comprised of four licensed physicians actively engaged
in the practice of medicine in Minnesota one of whom must be
actively engaged in the treatment of persons with mental
illness; at least three licensed pharmacists actively engaged in
the practice of pharmacy in Minnesota; and one consumer
representative; the remainder to be made up of health care
professionals who are licensed in their field and have
recognized knowledge in the clinically appropriate prescribing,
dispensing, and monitoring of covered outpatient drugs. Members
of the Formulary Committee shall not be employed by the
Department of Human Servicesnew text begin , but the committee shall be staffed
by an employee of the department who shall serve as an ex
officio, nonvoting member of the board. The department's
medical director shall also serve as an ex officio, nonvoting
member for the committeenew text end . Committee members shall serve
three-year terms and may be reappointed by the commissioner.
The Formulary Committee shall meet at least quarterly. The
commissioner may require more frequent Formulary Committee
meetings as needed. An honorarium of $100 per meeting and
reimbursement for mileage shall be paid to each committee member
in attendance.

Sec. 32.

Minnesota Statutes 2004, section 256B.0625,
subdivision 13e, is amended to read:

Subd. 13e.

Payment rates.

(a) The basis for determining
the amount of payment shall be the lower of the actual
acquisition costs of the drugs plus a fixed dispensing fee; the
maximum allowable cost set by the federal government or by the
commissioner plus the fixed dispensing fee; or the usual and
customary price charged to the public. The amount of payment
basis must be reduced to reflect all discount amounts applied to
the charge by any provider/insurer agreement or contract for
submitted charges to medical assistance programs. The net
submitted charge may not be greater than the patient liability
for the service. The pharmacy dispensing fee shall be $3.65,
except that the dispensing fee for intravenous solutions which
must be compounded by the pharmacist shall be $8 per bag, $14
per bag for cancer chemotherapy products, and $30 per bag for
total parenteral nutritional products dispensed in one liter
quantities, or $44 per bag for total parenteral nutritional
products dispensed in quantities greater than one liter. Actual
acquisition cost includes quantity and other special discounts
except time and cash discounts. The actual acquisition cost of
a drug shall be estimated by the commissioner, at average
wholesale price minus deleted text begin 11.5 deleted text end new text begin 12 new text end percentdeleted text begin , except that where a drug
has had its wholesale price reduced as a result of the actions
of the National Association of Medicaid Fraud Control Units, the
estimated actual acquisition cost shall be the reduced average
wholesale price, without the 11.5 percent deductiondeleted text end . The
maximum allowable cost of a multisource drug may be set by the
commissioner and it shall be comparable to, but no higher than,
the maximum amount paid by other third-party payors in this
state who have maximum allowable cost programs. Establishment
of the amount of payment for drugs shall not be subject to the
requirements of the Administrative Procedure Act.

(b) An additional dispensing fee of $.30 may be added to
the dispensing fee paid to pharmacists for legend drug
prescriptions dispensed to residents of long-term care
facilities when a unit dose blister card system, approved by the
department, is used. Under this type of dispensing system, the
pharmacist must dispense a 30-day supply of drug. The National
Drug Code (NDC) from the drug container used to fill the blister
card must be identified on the claim to the department. The
unit dose blister card containing the drug must meet the
packaging standards set forth in Minnesota Rules, part
6800.2700, that govern the return of unused drugs to the
pharmacy for reuse. The pharmacy provider will be required to
credit the department for the actual acquisition cost of all
unused drugs that are eligible for reuse. Over-the-counter
medications must be dispensed in the manufacturer's unopened
package. The commissioner may permit the drug clozapine to be
dispensed in a quantity that is less than a 30-day supply.

(c) Whenever a generically equivalent product is available,
payment shall be on the basis of the actual acquisition cost of
the generic drug, or on the maximum allowable cost established
by the commissioner.

(d) The basis for determining the amount of payment for
drugs administered in an outpatient setting shall be the lower
of the usual and customary cost submitted by the providerdeleted text begin , the
average wholesale price minus five percent, or the maximum
allowable cost set by the federal government under United States
Code, title 42, chapter 7, section 1396r-8(e), and Code of
Federal Regulations, title 42, section 447.332, or by the
commissioner under paragraphs (a) to (c) deleted text end new text begin or the amount
established for Medicare by the United States Department of
Health and Human Services pursuant to the Social Security Act,
title XVIII, section 1847anew text end .

new text begin (e) The commissioner may negotiate lower reimbursement
rates for specialty pharmacy products than the rates specified
in paragraph (a). The commissioner may require individuals
enrolled in the health care programs administered by the
department to obtain specialty pharmacy products from providers
with whom the commissioner has negotiated lower reimbursement
rates. Specialty pharmacy products are defined as those used by
a small number of recipients or recipients with complex and
chronic diseases that require expensive and challenging drug
regimens. Examples of such conditions include, but are not
limited to: multiple sclerosis, HIV/AIDS, transplantation,
hepatitis C, growth hormone deficiency, Crohn's Disease,
rheumatoid arthritis, and certain forms of cancer. Specialty
pharmaceutical products commonly include injectable and infusion
therapies, biotechnology drugs, high-cost therapies, and
therapies that require complex care. The commissioner shall
consult with the formulary committee to develop a list of
specialty pharmacy products subject to this paragraph.
new text end

new text begin (f) The commissioner may require individuals enrolled in
the health care programs administered by the department to
obtain drugs used to treat hemophilia from a comprehensive
hemophilia diagnostic treatment center as defined in United
States Code, title 42, section 256b(a)(4)(G); provided that the
hemophilia treatment center is enrolled as a covered entity in
the drug pricing program, commonly known as the 340B program,
that is established under that section.
new text end

Sec. 33.

Minnesota Statutes 2004, section 256B.0625,
subdivision 13f, is amended to read:

Subd. 13f.

Prior authorization.

(a) The Formulary
Committee shall review and recommend drugs which require prior
authorization. The Formulary Committee shall establish general
criteria to be used for the prior authorization of brand-name
drugs for which generically equivalent drugs are available, but
the committee is not required to review each brand-name drug for
which a generically equivalent drug is available.

(b) Prior authorization may be required by the commissioner
before certain formulary drugs are eligible for payment. The
Formulary Committee may recommend drugs for prior authorization
directly to the commissioner. The commissioner may also request
that the Formulary Committee review a drug for prior
authorization. Before the commissioner may require prior
authorization for a drug:

(1) the commissioner must provide information to the
Formulary Committee on the impact that placing the drug on prior
authorization may have on the quality of patient care and on
program costs, information regarding whether the drug is subject
to clinical abuse or misuse, and relevant data from the state
Medicaid program if such data is available;

(2) the Formulary Committee must review the drug, taking
into account medical and clinical data and the information
provided by the commissioner; and

(3) the Formulary Committee must hold a public forum and
receive public comment for an additional 15 days.

The commissioner must provide a 15-day notice period before
implementing the prior authorization.

(c) Prior authorization shall not be required or utilized
for any atypical antipsychotic drug prescribed for the treatment
of mental illness if:

(1) there is no generically equivalent drug available; and

(2) the drug was initially prescribed for the recipient
prior to July 1, 2003; or

(3) the drug is part of the recipient's current course of
treatment.

This paragraph applies to any multistate preferred drug list or
supplemental drug rebate program established or administered by
the commissioner. new text begin Prior authorization shall automatically be
granted for 60 days for brand name drugs prescribed for
treatment of mental illness within 60 days of when a generically
equivalent drug becomes available.
new text end

(d) Prior authorization shall not be required or utilized
for any antihemophilic factor drug prescribed for the treatment
of hemophilia and blood disorders where there is no generically
equivalent drug available if the prior authorization is used in
conjunction with any supplemental drug rebate program or
multistate preferred drug list established or administered by
the commissioner. deleted text begin This paragraph expires July 1, 2005.
deleted text end

(e) The commissioner may require prior authorization for
brand name drugs whenever a generically equivalent product is
available, even if the prescriber specifically indicates
"dispense as written-brand necessary" on the prescription as
required by section 151.21, subdivision 2.

new text begin (f) Notwithstanding the provisions of this subdivision, the
commissioner may automatically require prior authorization, for
a period not to exceed 180 days, for any drug that is approved
by the United States Food and Drug Administration on or after
July 1, 2005. The 180-day period shall begin no later than the
first day that a drug is available for shipment to pharmacies
within the state. The Formulary Committee shall recommend to
the commissioner general criteria to be used for the prior
authorization of such drugs, but the committee is not required
to review each individual drug. In order to continue prior
authorizations for a drug after the 180-day period has expired,
the commissioner must follow the provisions of this subdivision.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin The amendment to paragraph (d) is
effective June 30, 2005.
new text end

Sec. 34.

Minnesota Statutes 2004, section 256B.0625, is
amended by adding a subdivision to read:

new text begin Subd. 13h. new text end

new text begin Medication therapy management care. new text end

new text begin (a)
Medical assistance and general assistance medical care cover
medication therapy management services for a recipient taking
four or more prescriptions to treat or prevent two or more
chronic medical conditions, or a recipient with a drug therapy
problem that is identified or prior authorized by the
commissioner that has resulted or is likely to result in
significant nondrug program costs. The commissioner may cover
medical therapy management services under MinnesotaCare if the
commissioner determines this is cost-effective. For purposes of
this subdivision, "medication therapy management" means the
provision of the following pharmaceutical care services by a
licensed pharmacist to optimize the therapeutic outcomes of the
patient's medications:
new text end

new text begin (1) performing or obtaining necessary assessments of the
patient's health status;
new text end

new text begin (2) formulating a medication treatment plan;
new text end

new text begin (3) monitoring and evaluating the patient's response to
therapy, including safety and effectiveness;
new text end

new text begin (4) performing a comprehensive medication review to
identify, resolve, and prevent medication-related problems,
including adverse drug events;
new text end

new text begin (5) documenting the care delivered and communicating
essential information to the patient's other primary care
providers;
new text end

new text begin (6) providing verbal education and training designed to
enhance patient understanding and appropriate use of the
patient's medications;
new text end

new text begin (7) providing information, support services, and resources
designed to enhance patient adherence with the patient's
therapeutic regimens; and
new text end

new text begin (8) coordinating and integrating medication therapy
management services within the broader health care management
services being provided to the patient.
new text end

new text begin Nothing in this subdivision shall be construed to expand or
modify the scope of practice of the pharmacist as defined in
section 151.01, subdivision 27.
new text end

new text begin (b) To be eligible for reimbursement for services under
this subdivision, a pharmacist must meet the following
requirements:
new text end

new text begin (1) have a valid license issued under chapter 151;
new text end

new text begin (2) have graduated from an accredited college of pharmacy
on or after May 1996, or completed a structured and
comprehensive education program approved by the Board of
Pharmacy and the American Council of Pharmaceutical Education
for the provision and documentation of pharmaceutical care
management services that has both clinical and didactic
elements;
new text end

new text begin (3) be practicing in an ambulatory care setting as part of
a multidisciplinary team or have developed a structured patient
care process that is offered in a private or semiprivate patient
care area that is separate from the commercial business that
also occurs in the setting; and
new text end

new text begin (4) make use of an electronic patient record system that
meets state standards.
new text end

new text begin (c) For purposes of reimbursement for medication therapy
management services, the commissioner may enroll individual
pharmacists as medical assistance and general assistance medical
care providers. The commissioner may also establish contact
requirements between the pharmacist and recipient, including
limiting the number of reimbursable consultations per recipient.
new text end

new text begin (d) The commissioner, after receiving recommendations from
professional medical associations, professional pharmacy
associations, and consumer groups, shall convene an 11-member
Medication Therapy Management Advisory Committee to advise the
commissioner on the implementation and administration of
medication therapy management services. The committee shall be
comprised of: two licensed physicians; two licensed
pharmacists; two consumer representatives; two health plan
company representatives; and three members with expertise in the
area of medication therapy management, who may be licensed
physicians or licensed pharmacists. The committee is governed
by section 15.059, except that committee members do not receive
compensation or reimbursement for expenses. The advisory
committee expires on June 30, 2007.
new text end

new text begin (e) The commissioner shall evaluate the effect of
medication therapy management on quality of care, patient
outcomes, and program costs, and shall include a description of
any savings generated in the medical assistance and general
assistance medical care programs that can be attributable to
this coverage. The evaluation shall be submitted to the
legislature by December 15, 2007. The commissioner may contract
with a vendor or an academic institution that has expertise in
evaluating health care outcomes for the purpose of completing
the evaluation.
new text end

Sec. 35.

Minnesota Statutes 2004, section 256B.0625,
subdivision 17, is amended to read:

Subd. 17.

Transportation costs.

(a) Medical assistance
covers transportation costs incurred solely for obtaining
emergency medical care or transportation costs incurred by
eligible persons in obtaining emergency or nonemergency medical
care when paid directly to an ambulance company, common carrier,
or other recognized providers of transportation services.

(b) Medical assistance covers special transportation, as
defined in Minnesota Rules, part 9505.0315, subpart 1, item F,
if the recipient has a physical or mental impairment that would
prohibit the recipient from safely accessing and using a bus,
taxi, other commercial transportation, or private automobile.

The commissioner may use an order by the recipient's attending
physician to certify that the recipient requires special
transportation services. Special transportation includes
driver-assisted service to eligible individuals.
Driver-assisted service includes passenger pickup at and return
to the individual's residence or place of business, assistance
with admittance of the individual to the medical facility, and
assistance in passenger securement or in securing of wheelchairs
or stretchers in the vehicle. Special transportation providers
must obtain written documentation from the health care service
provider who is serving the recipient being transported,
identifying the time that the recipient arrived. Special
transportation providers may not bill for separate base rates
for the continuation of a trip beyond the original destination.
Special transportation providers must take recipients to the
nearest appropriate health care provider, using the most direct
route available. The maximum medical assistance reimbursement
rates for special transportation services are:

(1) $18 for the base rate and $1.40 per mile for services
to eligible persons who need a wheelchair-accessible van;

(2) $12 for the base rate and $1.35 per mile for services
to eligible persons who do not need a wheelchair-accessible van;
and

(3) deleted text begin $36 deleted text end new text begin $60 new text end for the base rate and deleted text begin $1.40 deleted text end new text begin $2.40 new text end per mile, and
an attendant rate of $9 per trip, for services to eligible
persons who need a stretcher-accessible vehicle.

Sec. 36.

new text begin [256B.0632] MEDICALLY NECESSARY ITEMS AND
SERVICES.
new text end

new text begin Subdivision 1. new text end

new text begin General requirement for
coverage. new text end

new text begin Enrollees under the medical assistance program are
eligible to receive, and medical assistance shall provide
payment for, only those medical items and services that are:
new text end

new text begin (1) within the scope of defined benefits for which the
enrollee is eligible under the medical assistance program; and
new text end

new text begin (2) determined by the medical assistance program to be
medically necessary.
new text end

new text begin Subd. 2. new text end

new text begin Medical necessity. new text end

new text begin (a) To be determined to be
medically necessary, a medical item or service must be
recommended by a physician who is treating the enrollee or other
licensed health care provider practicing within the scope of
their practice and must satisfy each of the criteria in this
section.
new text end

new text begin (b) It must be required in order to diagnose or treat an
enrollee's medical condition. The convenience of an enrollee,
the enrollee's family, or a provider, shall not be a factor or
justification in determining that a medical item or service is
medically necessary.
new text end

new text begin (c) It must be safe and effective. To qualify as safe and
effective, the type and level of medical item or service must be
consistent with the symptoms or diagnosis and treatment of the
particular medical condition, and the reasonably anticipated
medical benefits of the item or service must outweigh the
reasonably anticipated medical risks based on the enrollee's
condition and scientifically supported evidence.
new text end

new text begin (d) It must be the least costly alternative course of
diagnosis or treatment that is adequate for the medical
condition of the enrollee. When applied to medical items or
services delivered in an inpatient setting, it further means
that the medical item or service cannot be safely provided for
the same or lesser cost to the person in an outpatient setting.
Where there are less costly alternative courses of diagnosis or
treatment, including less costly alternative settings, that are
adequate for the medical condition of the enrollee, more costly
alternative courses of diagnosis or treatment are not medically
necessary. An alternative course of diagnosis or treatment may
include observation, lifestyle or behavioral changes, or where
appropriate, no treatment at all.
new text end

new text begin Subd. 3. new text end

new text begin Determination of commissioner. new text end

new text begin It is the
responsibility of the commissioner ultimately to determine what
medical items and services are medically necessary for the
medical assistance program. The fact that a provider has
prescribed, recommended, or approved a medical item or service
does not, in itself, make such item or service medically
necessary.
new text end

new text begin Subd. 4. new text end

new text begin Applicability. new text end

new text begin The medical necessity standard
in this section shall govern the delivery of all services and
items to all enrollees or classes of beneficiaries in the
medical assistance program. The commissioner is authorized to
make limited special provisions for particular items or
services, such as long-term care, or such as may be required for
compliance with federal law.
new text end

new text begin Subd. 5. new text end

new text begin Medical protocols. new text end

new text begin Medical protocols developed
using evidence-based medicine that are authorized by the
commissioner shall satisfy the standard of medical necessity.
Such protocols shall be appropriately published to all medical
assistance providers and managed care organizations.
new text end

new text begin Subd. 6. new text end

new text begin Rulemaking. new text end

new text begin The commissioner is authorized to
adopt any rules necessary to implement this section.
new text end

new text begin Subd. 7. new text end

new text begin Application. new text end

new text begin This section does not apply if the
medical necessity standard, or medical protocols authorized
under subdivision 5, authorize or recommend denial of treatment,
food, or fluids necessary to sustain life on the basis of the
patient's age or expected length of life, or the patient's
present or predicted disability, degree of medical dependency,
or quality of life.
new text end

Sec. 37.

new text begin [256B.0633] LIMITING COVERAGE OF HEALTH CARE
SERVICES FOR PUBLIC PROGRAMS.
new text end

new text begin Subdivision 1. new text end

new text begin Prior authorization of services. new text end

new text begin (a)
Effective July 1, 2005, prior authorization is required for the
services described in subdivision 2 for reimbursement under
chapters 256B, 256D, and 256L. Effective July 1, 2005, prepaid
health plans shall use prior authorization for the services
described in subdivision 2 unless the prepaid health plan is
otherwise using evidence-based practices to address these
services.
new text end

new text begin (b) Prior authorization shall be conducted under the
direction of the medical director of the Department of Human
Services in conjunction with the Health Services Policy
Committee. To the extent available, the medical director shall
use publicly available evidence-based guidelines developed by an
independent, nonprofit organization or by the professional
association of the specialty that typically provides the service
or by a multistate Medicaid evidence-based practice center. If
the commissioner does not have a medical director and medical
policy in place, the commissioner shall contract prior
authorization to a Minnesota-licensed utilization review
organization or an organization federally certified as a peer
review organization-like entity eligible to operate in Minnesota.
new text end

new text begin Subd. 2. new text end

new text begin Services requiring prior authorization. new text end

new text begin The
following services require prior authorization:
new text end

new text begin (1) elective outpatient high technology imaging to include
positive emission tomography (PET) scans, magnetic resonance
imaging (MRI), computed tomography (CT), and nuclear cardiology;
new text end

new text begin (2) spinal fusion, unless in an emergency situation related
to trauma;
new text end

new text begin (3) bariatric surgery;
new text end

new text begin (4) orthodontia;
new text end

new text begin (5) cesarean section or insertion of tympanostomy tubes
except in an emergency situation; and
new text end

new text begin (6) hysterectomy.
new text end

Sec. 38.

Minnesota Statutes 2004, section 256B.0644, is
amended to read:

256B.0644 PARTICIPATION REQUIRED FOR REIMBURSEMENT UNDER
OTHER STATE HEALTH CARE PROGRAMS.

A vendor of medical care, as defined in section 256B.02,
subdivision 7, and a health maintenance organization, as defined
in chapter 62D, must participate as a provider or contractor in
the medical assistance program, general assistance medical care
program, and MinnesotaCare as a condition of participating as a
provider in health insurance plans and programs or contractor
for state employees established under section 43A.18, the public
employees insurance program under section 43A.316, for health
insurance plans offered to local statutory or home rule charter
city, county, and school district employees, the workers'
compensation system under section 176.135, and insurance plans
provided through the Minnesota Comprehensive Health Association
under sections 62E.01 to 62E.19. new text begin This section does not apply to
any person providing dental services.new text end The limitations on
insurance plans offered to local government employees shall not
be applicable in geographic areas where provider participation
is limited by managed care contracts with the Department of
Human Services. For providers other than health maintenance
organizations, participation in the medical assistance program
means that deleted text begin (1) deleted text end the provider accepts new medical assistance,
general assistance medical care, and MinnesotaCare patients deleted text begin or
(2) for providers other than dental service providersdeleted text end , new text begin and new text end at
least 20 percent of the provider's patients are covered by
medical assistance, general assistance medical care, and
MinnesotaCare as their primary source of coveragedeleted text begin , or (3) for
dental service providers, at least ten percent of the provider's
patients are covered by medical assistance, general assistance
medical care, and MinnesotaCare as their primary source of
coveragedeleted text end . Patients seen on a volunteer basis by the provider at
a location other than the provider's usual place of practice may
be considered in meeting this participation requirement. The
commissioner shall establish participation requirements for
health maintenance organizations. The commissioner shall
provide lists of participating medical assistance providers on a
quarterly basis to the commissioner of employee relations, the
commissioner of labor and industry, and the commissioner of
commerce. Each of the commissioners shall develop and implement
procedures to exclude as participating providers in the program
or programs under their jurisdiction those providers who do not
participate in the medical assistance program. The commissioner
of employee relations shall implement this section through
contracts with participating health deleted text begin and dental deleted text end carriers.

Sec. 39.

Minnesota Statutes 2004, section 256B.075,
subdivision 2, is amended to read:

Subd. 2.

Fee-for-service.

(a) The commissioner shall
develop and implement a disease management program for medical
assistance and general assistance medical care recipients who
are not enrolled in the prepaid medical assistance or prepaid
general assistance medical care programs and who are receiving
services on a fee-for-service basis. The commissioner may
contract with an outside organization to provide these services.

(b) The commissioner shall seek any federal approval
necessary to implement this section and to obtain federal
matching funds.

new text begin (c) The commissioner shall develop and implement a pilot
intensive care management program for medical assistance
children with complex and chronic medical issues who are not
able to participate in the metro-based U Special Kids program
due to geographic distance.
new text end

Sec. 40.

Minnesota Statutes 2004, section 256B.15,
subdivision 1, is amended to read:

Subdivision 1.

Policy, applicability, purpose, and
construction; definition.

(a) It is the policy of this state
that individuals or couples, either or both of whom participate
in the medical assistance program, use their own assets to pay
their share of the total cost of their care during or after
their enrollment in the program according to applicable federal
law and the laws of this state. The following provisions apply:

(1) subdivisions 1c to 1k shall not apply to claims arising
under this section which are presented under section 525.313;

(2) the provisions of subdivisions 1c to 1k expanding the
interests included in an estate for purposes of recovery under
this section give effect to the provisions of United States
Code, title 42, section 1396p, governing recoveries, but do not
give rise to any express or implied liens in favor of any other
parties not named in these provisions;

(3) the continuation of a recipient's life estate or joint
tenancy interest in real property after the recipient's death
for the purpose of recovering medical assistance under this
section modifies common law principles holding that these
interests terminate on the death of the holder;

(4) all laws, rules, and regulations governing or involved
with a recovery of medical assistance shall be liberally
construed to accomplish their intended purposes;

(5) a deceased recipient's life estate and joint tenancy
interests continued under this section shall be owned by the
remaindermen or surviving joint tenants as their interests may
appear on the date of the recipient's death. They shall not be
merged into the remainder interest or the interests of the
surviving joint tenants by reason of ownership. They shall be
subject to the provisions of this section. Any conveyance,
transfer, sale, assignment, or encumbrance by a remainderman, a
surviving joint tenant, or their heirs, successors, and assigns
shall be deemed to include all of their interest in the deceased
recipient's life estate or joint tenancy interest continued
under this section; and

(6) the provisions of subdivisions 1c to 1k continuing a
recipient's joint tenancy interests in real property after the
recipient's death do not apply to a homestead owned of record,
on the date the recipient dies, by the recipient and the
recipient's spouse as joint tenants with a right of
survivorship. Homestead means the real property occupied by the
surviving joint tenant spouse as their sole residence on the
date the recipient dies and classified and taxed to the
recipient and surviving joint tenant spouse as homestead
property for property tax purposes in the calendar year in which
the recipient dies. For purposes of this exemption, real
property the recipient and their surviving joint tenant spouse
purchase solely with the proceeds from the sale of their prior
homestead, own of record as joint tenants, and qualify as
homestead property under section 273.124 in the calendar year in
which the recipient dies and prior to the recipient's death
shall be deemed to be real property classified and taxed to the
recipient and their surviving joint tenant spouse as homestead
property in the calendar year in which the recipient dies. The
surviving spouse, or any person with personal knowledge of the
facts, may provide an affidavit describing the homestead
property affected by this clause and stating facts showing
compliance with this clause. The affidavit shall be prima facie
evidence of the facts it states.

(b) For purposes of this section, "medical assistance"
includes the medical assistance program under this chapter and
the general assistance medical care program under chapter 256D
and alternative care for nonmedical assistance recipients under
section 256B.0913.

new text begin (c) All provisions in this subdivision, and subdivisions
1d, 1f, 1g, 1h, 1i, and 1j, related to the continuation of a
recipient's life estate or joint tenancy interests in real
property after the recipient's death for the purpose of
recovering medical assistance, are effective only for life
estates and joint tenancy interests established on or after
August 1, 2003.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively
from August 1, 2003.
new text end

Sec. 41.

Minnesota Statutes 2004, section 256B.195,
subdivision 3, is amended to read:

Subd. 3.

Payments to certain safety net providers.

(a)
Effective July 15, 2001, the commissioner shall make the
following payments to the hospitals indicated after noon on the
15th of each month:

(1) to Hennepin County Medical Center, any federal matching
funds available to match the payments received by the medical
center under subdivision 2, to increase payments for medical
assistance admissions and to recognize higher medical assistance
costs in institutions that provide high levels of charity care;
and

(2) to Regions Hospital, any federal matching funds
available to match the payments received by the hospital under
subdivision 2, to increase payments for medical assistance
admissions and to recognize higher medical assistance costs in
institutions that provide high levels of charity care.

(b) Effective July 15, 2001, the following percentages of
the transfers under subdivision 2 shall be retained by the
commissioner for deposit each month into the general fund:

(1) 18 percent, plus any federal matching funds, shall be
allocated for the following purposes:

(i) during the fiscal year beginning July 1, 2001, of the
amount available under this clause, 39.7 percent shall be
allocated to make increased hospital payments under section
256.969, subdivision 26; 34.2 percent shall be allocated to fund
the amounts due from small rural hospitals, as defined in
section 144.148, for overpayments under section 256.969,
subdivision 5a, resulting from a determination that medical
assistance and general assistance payments exceeded the charge
limit during the period from 1994 to 1997; and 26.1 percent
shall be allocated to the commissioner of health for rural
hospital capital improvement grants under section 144.148; and

(ii) during fiscal years beginning on or after July 1,
2002, of the amount available under this clause, 55 percent
shall be allocated to make increased hospital payments under
section 256.969, subdivision 26, and 45 percent shall be
allocated to the commissioner of health for rural hospital
capital improvement grants under section 144.148; and

(2) 11 percent shall be allocated to the commissioner of
health to fund community clinic grants under section 145.9268.

(c) This subdivision shall apply to fee-for-service
payments only and shall not increase capitation payments or
payments made based on average rates. new text begin The allocation in
paragraph (b), clause (1), item (ii), to increase hospital
payments under section 256.969, subdivision 26, shall not limit
payments under that section.
new text end

(d) Medical assistance rate or payment changes, including
those required to obtain federal financial participation under
section 62J.692, subdivision 8, shall precede the determination
of intergovernmental transfer amounts determined in this
subdivision. Participation in the intergovernmental transfer
program shall not result in the offset of any health care
provider's receipt of medical assistance payment increases other
than limits resulting from hospital-specific charge limits and
limits on disproportionate share hospital payments.

(e) Effective July 1, 2003, if the amount available for
allocation under paragraph (b) is greater than the amounts
available during March 2003, after any increase in
intergovernmental transfers and payments that result from
section 256.969, subdivision 3a, paragraph (c), are paid to the
general fund, any additional amounts available under this
subdivision after reimbursement of the transfers under
subdivision 2 shall be allocated to increase medical assistance
payments, subject to hospital-specific charge limits and limits
on disproportionate share hospital payments, as follows:

(1) if the payments under subdivision 5 are approved, the
amount shall be paid to the largest ten percent of hospitals as
measured by 2001 payments for medical assistance, general
assistance medical care, and MinnesotaCare in the nonstate
government hospital category. Payments shall be allocated
according to each hospital's proportionate share of the 2001
payments; or

(2) if the payments under subdivision 5 are not approved,
the amount shall be paid to the largest ten percent of hospitals
as measured by 2001 payments for medical assistance, general
assistance medical care, and MinnesotaCare in the nonstate
government category and to the largest ten percent of hospitals
as measured by payments for medical assistance, general
assistance medical care, and MinnesotaCare in the nongovernment
hospital category. Payments shall be allocated according to
each hospital's proportionate share of the 2001 payments in
their respective category of nonstate government and
nongovernment. The commissioner shall determine which hospitals
are in the nonstate government and nongovernment hospital
categories.

Sec. 42.

Minnesota Statutes 2004, section 256B.32,
subdivision 1, is amended to read:

Subdivision 1.

Facility fee payment.

(a) The
commissioner shall establish a facility fee payment mechanism
that will pay a facility fee to all enrolled outpatient
hospitals for each emergency room or outpatient clinic visit
provided on or after July 1, 1989. This payment mechanism may
not result in an overall increase in outpatient payment rates.
This section does not apply to federally mandated maximum
payment limits, department-approved program packages, or
services billed using a nonoutpatient hospital provider number.

(b) For fee-for-service services provided on or after July
1, 2002, the total payment, before third-party liability and
spenddown, made to hospitals for outpatient hospital facility
services is reduced by .5 percent from the current statutory
rates.

(c) In addition to the reduction in paragraph (b), the
total payment for fee-for-service services provided on or after
July 1, 2003, made to hospitals for outpatient hospital facility
services before third-party liability and spenddown, is reduced
five percent from the current statutory rates. Facilities
defined under section 256.969, subdivision 16, are excluded from
this paragraph.

new text begin (d) In addition to the reduction in paragraphs (b) and (c)
and section 256D.03, subdivision 4, paragraph (k), the total
payment for fee-for-service services provided on or after July
1, 2005, made to hospitals for outpatient hospital facility
services before third-party liability and spenddown, is reduced
five percent from the current statutory rates. Facilities
defined under section 256.969, subdivision 16, are excluded from
this paragraph.
new text end

Sec. 43.

Minnesota Statutes 2004, section 256B.69,
subdivision 4, is amended to read:

Subd. 4.

Limitation of choice.

(a) The commissioner
shall develop criteria to determine when limitation of choice
may be implemented in the experimental counties. The criteria
shall ensure that all eligible individuals in the county have
continuing access to the full range of medical assistance
services as specified in subdivision 6.

(b) The commissioner shall exempt the following persons
from participation in the project, in addition to those who do
not meet the criteria for limitation of choice:

(1) persons eligible for medical assistance according to
section 256B.055, subdivision 1;

(2) persons eligible for medical assistance due to
blindness or disability as determined by the Social Security
Administration or the state medical review team, unless:

(i) they are 65 years of age or older; or

(ii) they reside in Itasca County or they reside in a
county in which the commissioner conducts a pilot project under
a waiver granted pursuant to section 1115 of the Social Security
Act;

(3) recipients who currently have private coverage through
a health maintenance organization;

(4) recipients who are eligible for medical assistance by
spending down excess income for medical expenses other than the
nursing facility per diem expense;

(5) recipients who receive benefits under the Refugee
Assistance Program, established under United States Code, title
8, section 1522(e);

(6) children who are both determined to be severely
emotionally disturbed and receiving case management services
according to section 256B.0625, subdivision 20;

(7) adults who are both determined to be seriously and
persistently mentally ill and received case management services
according to section 256B.0625, subdivision 20;

(8) persons eligible for medical assistance according to
section 256B.057, subdivision 10; and

(9) persons with access to cost-effective
employer-sponsored private health insurance or persons enrolled
in deleted text begin an deleted text end new text begin a non-Medicare new text end individual health plan determined to be
cost-effective according to section 256B.0625, subdivision 15.

Children under age 21 who are in foster placement may enroll in
the project on an elective basis. Individuals excluded under
clauses (1), (6), and (7) may choose to enroll on an elective
basis. The commissioner may enroll recipients in the prepaid
medical assistance program for seniors who are (1) age 65 and
over, and (2) eligible for medical assistance by spending down
excess income.

(c) The commissioner may allow persons with a one-month
spenddown who are otherwise eligible to enroll to voluntarily
enroll or remain enrolled, if they elect to prepay their monthly
spenddown to the state.

(d) The commissioner may require those individuals to
enroll in the prepaid medical assistance program who otherwise
would have been excluded under paragraph (b), clauses (1), (3),
and (8), and under Minnesota Rules, part 9500.1452, subpart 2,
items H, K, and L.

(e) Before limitation of choice is implemented, eligible
individuals shall be notified and after notification, shall be
allowed to choose only among demonstration providers. The
commissioner may assign an individual with private coverage
through a health maintenance organization, to the same health
maintenance organization for medical assistance coverage, if the
health maintenance organization is under contract for medical
assistance in the individual's county of residence. After
initially choosing a provider, the recipient is allowed to
change that choice only at specified times as allowed by the
commissioner. If a demonstration provider ends participation in
the project for any reason, a recipient enrolled with that
provider must select a new provider but may change providers
without cause once more within the first 60 days after
enrollment with the second provider.

(f) An infant born to a woman who is eligible for and
receiving medical assistance and who is enrolled in the prepaid
medical assistance program shall be retroactively enrolled to
the month of birth in the same managed care plan as the mother
once the child is enrolled in medical assistance unless the
child is determined to be excluded from enrollment in a prepaid
plan under this section.

Sec. 44.

Minnesota Statutes 2004, section 256B.69, is
amended by adding a subdivision to read:

new text begin Subd. 5i. new text end

new text begin Payment reduction. new text end

new text begin In addition to the
reduction in subdivisions 5g and 5h and section 256D.03,
subdivision 4, paragraph (m), the total payment made to managed
care plans is reduced 2.01 percent under the medical assistance
program and 2.20 percent under the general assistance medical
care program for services provided on or after January 1, 2006.
This provision excludes payments for nursing home services, home
and community-based waivers, and payments to demonstration
projects for persons with disabilities.
new text end

Sec. 45.

Minnesota Statutes 2004, section 256B.75, is
amended to read:

256B.75 HOSPITAL OUTPATIENT REIMBURSEMENT.

(a) For outpatient hospital facility fee payments for
services rendered on or after October 1, 1992, the commissioner
of human services shall pay the lower of (1) submitted charge,
or (2) 32 percent above the rate in effect on June 30, 1992,
except for those services for which there is a federal maximum
allowable payment. Effective for services rendered on or after
January 1, 2000, payment rates for nonsurgical outpatient
hospital facility fees and emergency room facility fees shall be
increased by eight percent over the rates in effect on December
31, 1999, except for those services for which there is a federal
maximum allowable payment. Services for which there is a
federal maximum allowable payment shall be paid at the lower of
(1) submitted charge, or (2) the federal maximum allowable
payment. Total aggregate payment for outpatient hospital
facility fee services shall not exceed the Medicare upper
limit. If it is determined that a provision of this section
conflicts with existing or future requirements of the United
States government with respect to federal financial
participation in medical assistance, the federal requirements
prevail. The commissioner may, in the aggregate, prospectively
reduce payment rates to avoid reduced federal financial
participation resulting from rates that are in excess of the
Medicare upper limitations.

(b) Notwithstanding paragraph (a), payment for outpatient,
emergency, and ambulatory surgery hospital facility fee services
for critical access hospitals designated under section 144.1483,
clause (11), shall be paid on a cost-based payment system that
is based on the cost-finding methods and allowable costs of the
Medicare program.

(c) Effective for services provided on or after July 1,
2003, rates that are based on the Medicare outpatient
prospective payment system shall be replaced by a budget neutral
prospective payment system that is derived using medical
assistance data. The commissioner shall provide a proposal to
the 2003 legislature to define and implement this provision.

(d) For fee-for-service services provided on or after July
1, 2002, the total payment, before third-party liability and
spenddown, made to hospitals for outpatient hospital facility
services is reduced by .5 percent from the current statutory
rate.

(e) In addition to the reduction in paragraph (d), the
total payment for fee-for-service services provided on or after
July 1, 2003, made to hospitals for outpatient hospital facility
services before third-party liability and spenddown, is reduced
five percent from the current statutory rates. Facilities
defined under section 256.969, subdivision 16, are excluded from
this paragraph.

new text begin (f) In addition to the reduction in paragraphs (d) and (e)
and section 256D.03, subdivision 4, paragraph (k), the total
payment for fee-for-service services provided on or after July
1, 2005, made to hospitals for outpatient hospital facility
services before third-party liability and spenddown, is reduced
five percent from the current statutory rates. Facilities
defined under section 256.969, subdivision 16, are excluded from
this paragraph.
new text end

Sec. 46.

Minnesota Statutes 2004, section 256D.03,
subdivision 3, is amended to read:

Subd. 3.

General assistance medical care; eligibility.

(a) General assistance medical care may be paid for any person
who is not eligible for medical assistance under chapter 256B,
including eligibility for medical assistance based on a
spenddown of excess income according to section 256B.056,
subdivision 5, or MinnesotaCare as defined in paragraph (b),
except as provided in paragraph (c), and:

(1) who is receiving assistance under section 256D.05,
except for families with children who are eligible under
Minnesota family investment program (MFIP), deleted text begin or deleted text end who is having a
payment made on the person's behalf under sections 256I.01 to
256I.06new text begin , or who resides in group residential housing as defined
in chapter 256I and can meet a spenddown using the cost of
remedial services received through group residential housingnew text end ; or

(2) new text begin (i) new text end who is a resident of Minnesotadeleted text begin ;deleted text end and

deleted text begin (i) who has gross countable income not in excess of 75
percent of the federal poverty guidelines for the family size,
using a six-month budget period and deleted text end whose equity in assets is
not in excess of $1,000 per assistance unit. Exempt assets, the
reduction of excess assets, and the waiver of excess assets must
conform to the medical assistance program in section 256B.056,
subdivision 3, with the following exception: the maximum amount
of undistributed funds in a trust that could be distributed to
or on behalf of the beneficiary by the trustee, assuming the
full exercise of the trustee's discretion under the terms of the
trust, must be applied toward the asset maximum; deleted text begin or deleted text end new text begin and
new text end

(ii) who has gross countable income deleted text begin above 75 percent deleted text end new text begin not in
excess new text end of new text begin 75 percent of new text end the federal poverty guidelines deleted text begin but not
in excess of 175 percent of the federal poverty guidelines deleted text end for
the family size, using a six-month budget period, new text begin or new text end whose
deleted text begin equity in assets is not in excess of the limits in section
256B.056, subdivision 3c, and who applies during an inpatient
hospitalization deleted text end new text begin excess income is spent down to 50 percent of the
federal poverty guidelines using a six-month budget periodnew text end .

(b) General assistance medical care may not be paid for
applicants or recipients who meet all eligibility requirements
of MinnesotaCare as defined in sections 256L.01 to 256L.16, and
are adults with dependent children under 21 whose gross family
income is equal to or less than deleted text begin 275 deleted text end new text begin 175 new text end percent of the federal
poverty guidelines.

(c) deleted text begin For applications received on or after October 1, 2003,
deleted text end Eligibility may begin no earlier than the date of application.
For individuals eligible under paragraph (a), clause (2), deleted text begin item
(i),deleted text end a redetermination of eligibility must occur every 12
months. deleted text begin Individuals are eligible under paragraph (a), clause
(2), item (ii), only during inpatient hospitalization but may
reapply if there is a subsequent period of inpatient
hospitalization.deleted text end Beginning January 1, 2000, Minnesota health
care program applications completed by recipients and applicants
who are persons described in paragraph (b), may be returned to
the county agency to be forwarded to the Department of Human
Services or sent directly to the Department of Human Services
for enrollment in MinnesotaCare. If all other eligibility
requirements of this subdivision are met, eligibility for
general assistance medical care shall be available in any month
during which a MinnesotaCare eligibility determination and
enrollment are pending. Upon notification of eligibility for
MinnesotaCare, notice of termination for eligibility for general
assistance medical care shall be sent to an applicant or
recipient. If all other eligibility requirements of this
subdivision are met, eligibility for general assistance medical
care shall be available until enrollment in MinnesotaCare
subject to the provisions of paragraph (e).

(d) The date of an initial Minnesota health care program
application necessary to begin a determination of eligibility
shall be the date the applicant has provided a name, address,
and Social Security number, signed and dated, to the county
agency or the Department of Human Services. If the applicant is
unable to provide a name, address, Social Security number, and
signature when health care is delivered due to a medical
condition or disability, a health care provider may act on an
applicant's behalf to establish the date of an initial Minnesota
health care program application by providing the county agency
or Department of Human Services with provider identification and
a temporary unique identifier for the applicant. The applicant
must complete the remainder of the application and provide
necessary verification before eligibility can be determined.
The county agency must assist the applicant in obtaining
verification if necessary.

(e) County agencies are authorized to use all automated
databases containing information regarding recipients' or
applicants' income in order to determine eligibility for general
assistance medical care or MinnesotaCare. Such use shall be
considered sufficient in order to determine eligibility and
premium payments by the county agency.

(f) General assistance medical care is not available for a
person in a correctional facility unless the person is detained
by law for less than one year in a county correctional or
detention facility as a person accused or convicted of a crime,
or admitted as an inpatient to a hospital on a criminal hold
order, and the person is a recipient of general assistance
medical care at the time the person is detained by law or
admitted on a criminal hold order and as long as the person
continues to meet other eligibility requirements of this
subdivision.

(g) General assistance medical care is not available for
applicants or recipients who do not cooperate with the county
agency to meet the requirements of medical assistance.

(h) In determining the amount of assets of an individual
eligible under paragraph (a), clause (2), deleted text begin item (i),deleted text end there shall
be included any asset or interest in an asset, including an
asset excluded under paragraph (a), that was given away, sold,
or disposed of for less than fair market value within the 60
months preceding application for general assistance medical care
or during the period of eligibility. Any transfer described in
this paragraph shall be presumed to have been for the purpose of
establishing eligibility for general assistance medical care,
unless the individual furnishes convincing evidence to establish
that the transaction was exclusively for another purpose. For
purposes of this paragraph, the value of the asset or interest
shall be the fair market value at the time it was given away,
sold, or disposed of, less the amount of compensation received.
For any uncompensated transfer, the number of months of
ineligibility, including partial months, shall be calculated by
dividing the uncompensated transfer amount by the average
monthly per person payment made by the medical assistance
program to skilled nursing facilities for the previous calendar
year. The individual shall remain ineligible until this fixed
period has expired. The period of ineligibility may exceed 30
months, and a reapplication for benefits after 30 months from
the date of the transfer shall not result in eligibility unless
and until the period of ineligibility has expired. The period
of ineligibility begins in the month the transfer was reported
to the county agency, or if the transfer was not reported, the
month in which the county agency discovered the transfer,
whichever comes first. For applicants, the period of
ineligibility begins on the date of the first approved
application.

(i) When determining eligibility for any state benefits
under this subdivision, the income and resources of all
noncitizens shall be deemed to include their sponsor's income
and resources as defined in the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996, title IV, Public Law
104-193, sections 421 and 422, and subsequently set out in
federal rules.

(j) Undocumented noncitizens and nonimmigrants are
ineligible for general assistance medical care. For purposes of
this subdivision, a nonimmigrant is an individual in one or more
of the classes listed in United States Code, title 8, section
1101(a)(15), and an undocumented noncitizen is an individual who
resides in the United States without the approval or
acquiescence of the Immigration and Naturalization Service.

(k) Notwithstanding any other provision of law, a
noncitizen who is ineligible for medical assistance due to the
deeming of a sponsor's income and resources, is ineligible for
general assistance medical care.

(l) Effective July 1, 2003, general assistance medical care
emergency services end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective October 1, 2005.
new text end

Sec. 47.

Minnesota Statutes 2004, section 256D.03,
subdivision 4, is amended to read:

Subd. 4.

General assistance medical care; services.

(a) deleted text begin (i) deleted text end For a person who is eligible under subdivision 3,
paragraph (a), deleted text begin clause (2), item (i),deleted text end general assistance medical
care covers, except as provided in paragraph (c):

(1) inpatient hospital services;

(2) outpatient hospital services;

(3) services provided by Medicare certified rehabilitation
agencies;

(4) prescription drugs and other products recommended
through the process established in section 256B.0625,
subdivision 13;

(5) equipment necessary to administer insulin and
diagnostic supplies and equipment for diabetics to monitor blood
sugar level;

(6) eyeglasses and eye examinations provided by a physician
or optometrist;

(7) hearing aids;

(8) prosthetic devices;

(9) laboratory and X-ray services;

(10) physician's services;

(11) medical transportation except special transportation;

(12) chiropractic services as covered under the medical
assistance program;

(13) podiatric services;

(14) dental services and dentures, subject to the
limitations specified in section 256B.0625, subdivision 9;

(15) outpatient services provided by a mental health center
or clinic that is under contract with the county board and is
established under section 245.62;

(16) day treatment services for mental illness provided
under contract with the county board;

(17) prescribed medications for persons who have been
diagnosed as mentally ill as necessary to prevent more
restrictive institutionalization;

(18) psychological services, medical supplies and
equipment, and Medicare premiums, coinsurance and deductible
payments;

(19) medical equipment not specifically listed in this
paragraph when the use of the equipment will prevent the need
for costlier services that are reimbursable under this
subdivision;

(20) services performed by a certified pediatric nurse
practitioner, a certified family nurse practitioner, a certified
adult nurse practitioner, a certified obstetric/gynecological
nurse practitioner, a certified neonatal nurse practitioner, or
a certified geriatric nurse practitioner in independent
practice, if (1) the service is otherwise covered under this
chapter as a physician service, (2) the service provided on an
inpatient basis is not included as part of the cost for
inpatient services included in the operating payment rate, and
(3) the service is within the scope of practice of the nurse
practitioner's license as a registered nurse, as defined in
section 148.171;

(21) services of a certified public health nurse or a
registered nurse practicing in a public health nursing clinic
that is a department of, or that operates under the direct
authority of, a unit of government, if the service is within the
scope of practice of the public health nurse's license as a
registered nurse, as defined in section 148.171; and

(22) telemedicine consultations, to the extent they are
covered under section 256B.0625, subdivision 3b.

deleted text begin (ii) Effective October 1, 2003, for a person who is
eligible under subdivision 3, paragraph (a), clause (2), item
(ii), general assistance medical care coverage is limited to
inpatient hospital services, including physician services
provided during the inpatient hospital stay. A $1,000
deductible is required for each inpatient hospitalization.
deleted text end

(b) deleted text begin Gender deleted text end new text begin Sex new text end reassignment surgery deleted text begin and related services
are deleted text end new text begin is new text end not covered deleted text begin services deleted text end under this subdivision deleted text begin unless the
individual began receiving gender reassignment services prior to
July 1, 1995deleted text end .

(c) In order to contain costs, the commissioner of human
services shall select vendors of medical care who can provide
the most economical care consistent with high medical standards
and shall where possible contract with organizations on a
prepaid capitation basis to provide these services. The
commissioner shall consider proposals by counties and vendors
for prepaid health plans, competitive bidding programs, block
grants, or other vendor payment mechanisms designed to provide
services in an economical manner or to control utilization, with
safeguards to ensure that necessary services are provided.
Before implementing prepaid programs in counties with a county
operated or affiliated public teaching hospital or a hospital or
clinic operated by the University of Minnesota, the commissioner
shall consider the risks the prepaid program creates for the
hospital and allow the county or hospital the opportunity to
participate in the program in a manner that reflects the risk of
adverse selection and the nature of the patients served by the
hospital, provided the terms of participation in the program are
competitive with the terms of other participants considering the
nature of the population served. Payment for services provided
pursuant to this subdivision shall be as provided to medical
assistance vendors of these services under sections 256B.02,
subdivision 8, and 256B.0625. For payments made during fiscal
year 1990 and later years, the commissioner shall consult with
an independent actuary in establishing prepayment rates, but
shall retain final control over the rate methodology.

(d) Recipients eligible under subdivision 3, paragraph (a),
deleted text begin clause (2), item (i),deleted text end shall pay the following co-payments for
services provided on or after October 1, 2003:

(1) $3 per nonpreventive visit. For purposes of this
subdivision, a visit means an episode of service which is
required because of a recipient's symptoms, diagnosis, or
established illness, and which is delivered in an ambulatory
setting by a physician or physician ancillary, chiropractor,
podiatrist, nurse midwife, advanced practice nurse, audiologist,
optician, or optometrist;

(2) $25 for eyeglasses;

(3) $25 for nonemergency visits to a hospital-based
emergency room;

(4) $3 per brand-name drug prescription and $1 per generic
drug prescription, subject to a $20 per month maximum for
prescription drug co-payments. No co-payments shall apply to
antipsychotic drugs when used for the treatment of mental
illness; and

(5) 50 percent coinsurance on restorative dental services.

(e) Co-payments shall be limited to one per day per
provider for nonpreventive visits, eyeglasses, and nonemergency
visits to a hospital-based emergency room. Recipients of
general assistance medical care are responsible for all
co-payments in this subdivision. The general assistance medical
care reimbursement to the provider shall be reduced by the
amount of the co-payment, except that reimbursement for
prescription drugs shall not be reduced once a recipient has
reached the $20 per month maximum for prescription drug
co-payments. The provider collects the co-payment from the
recipient. Providers may not deny services to recipients who
are unable to pay the co-payment, except as provided in
paragraph (f).

(f) If it is the routine business practice of a provider to
refuse service to an individual with uncollected debt, the
provider may include uncollected co-payments under this
section. A provider must give advance notice to a recipient
with uncollected debt before services can be denied.

(g) Any county may, from its own resources, provide medical
payments for which state payments are not made.

(h) Chemical dependency services that are reimbursed under
chapter 254B must not be reimbursed under general assistance
medical care.

(i) The maximum payment for new vendors enrolled in the
general assistance medical care program after the base year
shall be determined from the average usual and customary charge
of the same vendor type enrolled in the base year.

(j) The conditions of payment for services under this
subdivision are the same as the conditions specified in rules
adopted under chapter 256B governing the medical assistance
program, unless otherwise provided by statute or rule.

(k) Inpatient and outpatient payments shall be reduced by
five percent, effective July 1, 2003. This reduction is in
addition to the five percent reduction effective July 1, 2003,
and incorporated by reference in paragraph (i).

(l) Payments for all other health services except
inpatient, outpatient, and pharmacy services shall be reduced by
five percent, effective July 1, 2003.

(m) Payments to managed care plans shall be reduced by five
percent for services provided on or after October 1, 2003.

(n) A hospital receiving a reduced payment as a result of
this section may apply the unpaid balance toward satisfaction of
the hospital's bad debts.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2005,
except the amendment to paragraph (a), item (ii), is effective
October 1, 2005.
new text end

Sec. 48.

Minnesota Statutes 2004, section 256D.03, is
amended by adding a subdivision to read:

new text begin Subd. 4a. new text end

new text begin General assistance medical care; medical
necessity. new text end

new text begin In order to be covered under general assistance
medical care, a medical item or service must meet the medical
necessity standards in section 256B.0632.
new text end

Sec. 49.

Minnesota Statutes 2004, section 256D.03, is
amended by adding a subdivision to read:

new text begin Subd. 10. new text end

new text begin Payments after october 1, 2005. new text end

new text begin General
assistance medical care payments made on or after October 1,
2005, shall be made from the health care access fund.
new text end

Sec. 50.

Minnesota Statutes 2004, section 256D.045, is
amended to read:

256D.045 SOCIAL SECURITY NUMBER REQUIRED.

To be eligible for general assistance under sections
256D.01 to 256D.21, an individual must provide the individual's
Social Security number to the county agency or submit proof that
an application has been made. new text begin An individual who refuses to
provide a Social Security number because of a well-established
religious objection as described in Code of Federal Regulations,
title 42, section 435.910, may be eligible for general
assistance medical care under section 256D.03.new text end The provisions
of this section do not apply to the determination of eligibility
for emergency general assistance under section 256D.06,
subdivision 2. This provision applies to eligible children
under the age of 18 effective July 1, 1997.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective March 1, 2006,
or upon HealthMatch implementation, whichever is later.
new text end

Sec. 51.

Minnesota Statutes 2004, section 256L.01,
subdivision 1a, is amended to read:

Subd. 1a.

Child.

new text begin (a) new text end "Child" means an individual under
21 years of age new text begin who is not enrolled in a program of study at a
postsecondary education institutionnew text end , including the unborn child
of a pregnant woman, an emancipated minor, and an emancipated
minor's spouse.

new text begin (b) For an individual enrolled in a program of study at a
postsecondary education institution, child means an individual
under 19 years of age, including an emancipated minor, and an
emancipated minor's spouse, except that an individual with
access to health coverage through the postsecondary education
institution or the individual's parent does not qualify as a
child under this paragraph.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2005,
or upon federal approval, whichever is later. Prior to the
implementation of HealthMatch, the commissioner shall implement
this section to the fullest extent possible, including the use
of manual processing. Upon implementation of HealthMatch, the
commissioner shall implement this section in a manner consistent
with the procedures and requirements of HealthMatch.
new text end

Sec. 52.

Minnesota Statutes 2004, section 256L.01,
subdivision 4, is amended to read:

Subd. 4.

Gross individual or gross family income.

(a)
"Gross individual or gross family income" for nonfarm
self-employed means income calculated new text begin for the six-month period
of eligibility new text end using as the baseline the adjusted gross income
reported on the applicant's federal income tax form for the
previous year and deleted text begin adding back in reported depreciation,
carryover loss, and net operating loss amounts that apply to the
business in which the family is currently engaged deleted text end new text begin using the
medical assistance families with children methodology for
determining allowable and nonallowable self-employment expenses
and countable incomenew text end .

(b) "Gross individual or gross family income" for farm
self-employed means income calculated new text begin for the six-month period
of eligibility new text end using as the baseline the adjusted gross income
reported on the applicant's federal income tax form for the
previous year and adding back in reported depreciation amounts
that apply to the business in which the family is currently
engaged.

(c) deleted text begin Applicants shall report the most recent financial
situation of the family if it has changed from the period of
time covered by the federal income tax form. The report may be
in the form of percentage increase or decrease deleted text end new text begin "Gross individual
or gross family income" means the total income for all family
members, calculated for the six-month period of eligibilitynew text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective March 1, 2006,
or upon HealthMatch implementation, whichever is later.
new text end

Sec. 53.

Minnesota Statutes 2004, section 256L.01,
subdivision 5, is amended to read:

Subd. 5.

Income.

new text begin (a) new text end "Income" has the meaning given for
earned and unearned income for families and children in the
medical assistance program, according to the state's aid to
families with dependent children plan in effect as of July 16,
1996. The definition does not include medical assistance income
methodologies and deeming requirements. The earned income of
full-time and part-time students under age 19 is not counted as
income. Public assistance payments and supplemental security
income are not excluded income.

new text begin (b) For purposes of this subdivision, and unless otherwise
specified in this section, the commissioner shall use reasonable
methods to calculate gross earned and unearned income including,
but not limited to, projecting income based on income received
within the past 30 days, the last 90 days, or the last 12 months.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2005.
new text end

Sec. 54.

Minnesota Statutes 2004, section 256L.03,
subdivision 1, is amended to read:

Subdivision 1.

Covered health services.

deleted text begin For individuals
under section 256L.04, subdivision 7, with income no greater
than 75 percent of the federal poverty guidelines or deleted text end For
families with children under section 256L.04, subdivision 1, all
subdivisions of this section apply. "Covered health services"
means the health services reimbursed under chapter 256B, with
the exception of inpatient hospital services, special education
services, private duty nursing services, adult dental care
services other than services covered under section 256B.0625,
subdivision 9, paragraph (b), orthodontic services, nonemergency
medical transportation services, personal care assistant and
case management services, nursing home or intermediate care
facilities services, inpatient mental health services, and
chemical dependency services. Outpatient mental health services
covered under the MinnesotaCare program are limited to
diagnostic assessments, psychological testing, explanation of
findings, medication management by a physician, day treatment,
partial hospitalization, and individual, family, and group
psychotherapy.

No public funds shall be used for coverage of abortion
under MinnesotaCare except where the life of the female would be
endangered or substantial and irreversible impairment of a major
bodily function would result if the fetus were carried to term;
or where the pregnancy is the result of rape or incest.

Covered health services shall be expanded as provided in
this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective October 1, 2005.
new text end

Sec. 55.

Minnesota Statutes 2004, section 256L.03,
subdivision 3, is amended to read:

Subd. 3.

Inpatient hospital services.

(a) Covered health
services shall include inpatient hospital services, including
inpatient hospital mental health services and inpatient hospital
and residential chemical dependency treatment, subject to those
limitations necessary to coordinate the provision of these
services with eligibility under the medical assistance
spenddown. deleted text begin Prior to July 1, 1997, the inpatient hospital
benefit for adult enrollees is subject to an annual benefit
limit of $10,000. The inpatient hospital benefit for adult
enrollees who qualify under section 256L.04, subdivision 7, or
who qualify under section 256L.04, subdivisions 1 and 2, with
family gross income that exceeds 175 percent of the federal
poverty guidelines and who are not pregnant, is subject to an
annual limit of $10,000.
deleted text end

(b) Admissions for inpatient hospital services paid for
under section 256L.11, subdivision 3, must be certified as
medically necessary in accordance with Minnesota Rules, parts
9505.0500 to 9505.0540, except as provided in clauses (1) and
(2):

(1) all admissions must be certified, except those
authorized under rules established under section 254A.03,
subdivision 3, or approved under Medicare; and

(2) payment under section 256L.11, subdivision 3, shall be
reduced by five percent for admissions for which certification
is requested more than 30 days after the day of admission. The
hospital may not seek payment from the enrollee for the amount
of the payment reduction under this clause.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective October 1, 2005.
new text end

Sec. 56.

Minnesota Statutes 2004, section 256L.03,
subdivision 5, is amended to read:

Subd. 5.

Co-payments and coinsurance.

(a) Except as
provided in paragraphs (b) and (c), the MinnesotaCare benefit
plan shall include the following co-payments and coinsurance
requirements for all enrollees:

(1) ten percent of the paid charges for inpatient hospital
services for adult enrollees, subject to an annual inpatient
out-of-pocket maximum of $1,000 per individual and $3,000 per
family;

(2) $3 per prescription for adult enrollees;

(3) $25 for eyeglasses for adult enrollees; deleted text begin and
deleted text end

(4) new text begin $3 per nonpreventive visit. For purposes of this
subdivision, a visit means an episode of service which is
required because of an enrollee's symptoms, diagnosis, or
established illness, and which is delivered in an ambulatory
setting by a physician or physician ancillary, chiropractor,
podiatrist, advanced practice nurse, audiologist, optician, or
optometrist;
new text end

new text begin (5) $6 for nonemergency visits to a hospital-based
emergency room; and
new text end

new text begin (6) new text end 50 percent of the fee-for-service rate for adult dental
care services other than preventive care services for persons
eligible under section 256L.04, subdivisions 1 to 7, with income
equal to or less than 175 percent of the federal poverty
guidelines.

(b) Paragraph (a), clause (1), does not apply to parents
and relative caretakers of children under the age of 21 in
households with family income equal to or less than 175 percent
of the federal poverty guidelines. deleted text begin Paragraph (a), clause (1),
does not apply to parents and relative caretakers of children
under the age of 21 in households with family income greater
than 175 percent of the federal poverty guidelines for inpatient
hospital admissions occurring on or after January 1, 2001.
deleted text end

(c) Paragraph (a), clauses (1) to deleted text begin (4) deleted text end new text begin (6)new text end , do not apply to
pregnant women and children under the age of 21.

(d) Adult enrollees with family gross income that exceeds
175 percent of the federal poverty guidelines and who are not
pregnant shall be financially responsible for the coinsurance
amount, if applicable, and amounts which exceed the $10,000
inpatient hospital benefit limit.

(e) When a MinnesotaCare enrollee becomes a member of a
prepaid health plan, or changes from one prepaid health plan to
another during a calendar year, any charges submitted towards
the $10,000 annual inpatient benefit limit, and any
out-of-pocket expenses incurred by the enrollee for inpatient
services, that were submitted or incurred prior to enrollment,
or prior to the change in health plans, shall be disregarded.

new text begin (f) Paragraph (a), clauses (4) and (5), are limited to one
co-payment per day per provider.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1,
2006, except the amendment to paragraph (b) is effective October
1, 2005.
new text end

Sec. 57.

Minnesota Statutes 2004, section 256L.03, is
amended by adding a subdivision to read:

new text begin Subd. 7. new text end

new text begin Medical necessity. new text end

new text begin In order to be covered under
MinnesotaCare, a medical item or service must meet the medical
necessity standards in section 256B.0632.
new text end

Sec. 58.

Minnesota Statutes 2004, section 256L.04,
subdivision 1, is amended to read:

Subdivision 1.

Families with children.

(a) new text begin Through
September 30, 2005,new text end families with children with family income
equal to or less than 275 percent of the federal poverty
guidelines for the applicable family size shall be eligible for
MinnesotaCare according to this section. new text begin Beginning October 1,
2005, children and pregnant women with family income equal to or
less than 275 percent of the federal poverty guidelines for the
applicable family size shall be eligible for MinnesotaCare
according to this section. Beginning October 1, 2005, parents,
grandparents, foster parents, relative caretakers, and legal
guardians ages 21 and over are not eligible for MinnesotaCare if
their gross income exceeds 175 percent of the federal poverty
guidelines for the applicable family size.new text end All other provisions
of sections 256L.01 to 256L.18, including the insurance-related
barriers to enrollment under section 256L.07, shall apply unless
otherwise specified.

(b) Parents who enroll in the MinnesotaCare program must
also enroll their children, if the children are eligible.
Children may be enrolled separately without enrollment by
parents. However, if one parent in the household enrolls, both
parents must enroll, unless other insurance is available. If
one child from a family is enrolled, all children must be
enrolled, unless other insurance is available. If one spouse in
a household enrolls, the other spouse in the household must also
enroll, unless other insurance is available. Families cannot
choose to enroll only certain uninsured members.

(c) deleted text begin Beginning October 1, 2003, the dependent sibling
definition no longer applies to the MinnesotaCare program.
These persons are no longer counted in the parental household
and may apply as a separate household.
deleted text end

deleted text begin (d) deleted text end Beginning July 1, 2003, or upon federal approval,
whichever is later, parents are not eligible for MinnesotaCare
if their gross income exceeds $50,000.

Sec. 59.

Minnesota Statutes 2004, section 256L.04, is
amended by adding a subdivision to read:

new text begin Subd. 1a.new text end

new text begin Social security number required.new text end

new text begin (a)
Individuals and families applying for MinnesotaCare coverage
must provide a Social Security number.
new text end

new text begin (b) The commissioner shall not deny eligibility to an
otherwise eligible applicant who has applied for a Social
Security number and is awaiting issuance of that Social Security
number.
new text end

new text begin (c) Newborns enrolled under section 256L.05, subdivision 3,
are exempt from the requirements of this subdivision.
new text end

new text begin (d) Individuals who refuse to provide a Social Security
number because of well-established religious objections are
exempt from the requirements of this subdivision. The term
"well-established religious objections" has the meaning given in
Code of Federal Regulations, title 42, section 435.910.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective March 1, 2006,
or upon HealthMatch implementation, whichever is later.
new text end

Sec. 60.

Minnesota Statutes 2004, section 256L.04,
subdivision 2, is amended to read:

Subd. 2.

Cooperation in establishing third-party
liability, paternity, and other medical support.

(a) To be
eligible for MinnesotaCare, individuals and families must
cooperate with the state agency to identify potentially liable
third-party payers and assist the state in obtaining third-party
payments. "Cooperation" includes, but is not limited
to, new text begin complying with the notice requirements in section 256B.056,
subdivision 9,new text end identifying any third party who may be liable for
care and services provided under MinnesotaCare to the enrollee,
providing relevant information to assist the state in pursuing a
potentially liable third party, and completing forms necessary
to recover third-party payments.

(b) A parent, guardian, relative caretaker, or child
enrolled in the MinnesotaCare program must cooperate with the
Department of Human Services and the local agency in
establishing the paternity of an enrolled child and in obtaining
medical care support and payments for the child and any other
person for whom the person can legally assign rights, in
accordance with applicable laws and rules governing the medical
assistance program. A child shall not be ineligible for or
disenrolled from the MinnesotaCare program solely because the
child's parent, relative caretaker, or guardian fails to
cooperate in establishing paternity or obtaining medical support.

Sec. 61.

Minnesota Statutes 2004, section 256L.04, is
amended by adding a subdivision to read:

new text begin Subd. 2a.new text end

new text begin Applications for other benefits.new text end

new text begin To be
eligible for MinnesotaCare, individuals and families must take
all necessary steps to obtain other benefits as described in
Code of Federal Regulations, title 42, section 435.608.
Applicants and enrollees must apply for other benefits within 30
days of notification.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective March 1, 2006,
or upon HealthMatch implementation, whichever is later.
new text end

Sec. 62.

Minnesota Statutes 2004, section 256L.04,
subdivision 8, is amended to read:

Subd. 8.

Applicants potentially eligible for medical
assistance.

deleted text begin (a) Individuals who receive supplemental security
income or retirement, survivors, or disability benefits due to a
disability, or other disability-based pension, who qualify under
subdivision 7, but who are potentially eligible for medical
assistance without a spenddown shall be allowed to enroll in
MinnesotaCare for a period of 60 days, so long as the applicant
meets all other conditions of eligibility. The commissioner
shall identify and refer the applications of such individuals to
their county social service agency. The county and the
commissioner shall cooperate to ensure that the individuals
obtain medical assistance coverage for any months for which they
are eligible.
deleted text end

deleted text begin (b) The enrollee must cooperate with the county social
service agency in determining medical assistance eligibility
within the 60-day enrollment period. Enrollees who do not
cooperate with medical assistance within the 60-day enrollment
period shall be disenrolled from the plan within one calendar
month. Persons disenrolled for nonapplication for medical
assistance may not reenroll until they have obtained a medical
assistance eligibility determination. Persons disenrolled for
noncooperation with medical assistance may not reenroll until
they have cooperated with the county agency and have obtained a
medical assistance eligibility determination.
deleted text end

deleted text begin (c) deleted text end Beginning January 1, 2000, counties that choose to
become MinnesotaCare enrollment sites shall consider
MinnesotaCare applications to also be applications for medical
assistance. Applicants who are potentially eligible for medical
assistancedeleted text begin , except for those described in paragraph (a),deleted text end may
choose to enroll in either MinnesotaCare or medical assistance.

deleted text begin (d) The commissioner shall redetermine provider payments
made under MinnesotaCare to the appropriate medical assistance
payments for those enrollees who subsequently become eligible
for medical assistance.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective October 1, 2005.
new text end

Sec. 63.

Minnesota Statutes 2004, section 256L.05,
subdivision 2, is amended to read:

Subd. 2.

Commissioner's duties.

new text begin (a) new text end The commissioner or
county agency shall use electronic verification as the primary
method of income verification. If there is a discrepancy
between reported income and electronically verified income, an
individual may be required to submit additional verification.
In addition, the commissioner shall perform random audits to
verify reported income and eligibility. The commissioner may
execute data sharing arrangements with the Department of Revenue
and any other governmental agency in order to perform income
verification related to eligibility and premium payment under
the MinnesotaCare program.

new text begin (b) In determining eligibility for MinnesotaCare, the
commissioner shall require applicants and enrollees seeking
renewal of eligibility to verify both earned and unearned
income. The commissioner shall also require applicants and
enrollees to submit to their employers, if employed, a form to
verify whether the applicant or enrollee, and any dependents,
are eligible for employer subsidized coverage.
new text end

new text begin EFFECTIVE DATE. new text end

Sec. 64.

Minnesota Statutes 2004, section 256L.05,
subdivision 3, is amended to read:

Subd. 3.

Effective date of coverage.

(a) The effective
date of coverage is the first day of the month following the
month in which eligibility is approved and the first premium
payment has been received. As provided in section 256B.057,
coverage for newborns is automatic from the date of birth and
must be coordinated with other health coverage. The effective
date of coverage for eligible newly adoptive children added to a
family receiving covered health services is the deleted text begin date of entry
into the family deleted text end new text begin month of placement or the month placement is
reported, whichever is laternew text end . The effective date of coverage
for other new deleted text begin recipients deleted text end new text begin members new text end added to the family deleted text begin receiving
covered health services deleted text end is the first day of the month following
the month in which deleted text begin eligibility is approved or at renewal,
whichever the family receiving covered health services
prefers deleted text end new text begin the change is reportednew text end . All eligibility criteria must
be met by the family at the time the new family member is
added. The income of the new family member is included with the
family's gross income and the adjusted premium begins in the
month the new family member is added.

(b) The initial premium must be received by the last
working day of the month for coverage to begin the first day of
the following month.

(c) Benefits are not available until the day following
discharge if an enrollee is hospitalized on the first day of
coverage.

(d) Notwithstanding any other law to the contrary, benefits
under sections 256L.01 to 256L.18 are secondary to a plan of
insurance or benefit program under which an eligible person may
have coverage and the commissioner shall use cost avoidance
techniques to ensure coordination of any other health coverage
for eligible persons. The commissioner shall identify eligible
persons who may have coverage or benefits under other plans of
insurance or who become eligible for medical assistance.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective March 1, 2006,
or upon HealthMatch implementation, whichever is later.
new text end

Sec. 65.

Minnesota Statutes 2004, section 256L.05,
subdivision 3a, is amended to read:

Subd. 3a.

Renewal of eligibility.

(a) Beginning January
1, 1999, an enrollee's eligibility must be renewed every 12
months. The 12-month period begins in the month after the month
the application is approved.

(b) Beginning October 1, 2004, an enrollee's eligibility
must be renewed every six months. The first six-month period of
eligibility begins deleted text begin in the month after deleted text end the month the application
is deleted text begin approved deleted text end new text begin received by the commissionernew text end . new text begin The effective date of
coverage within the first six-month period of eligibility is as
provided in section 256L.05, subdivision 3.new text end Each new period of
eligibility must take into account any changes in circumstances
that impact eligibility and premium amount. An enrollee must
provide all the information needed to redetermine eligibility by
the first day of the month that ends the eligibility period.
The premium for the new period of eligibility must be received
as provided in section 256L.06 in order for eligibility to
continue.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective March 1, 2006,
or upon HealthMatch implementation, whichever is later.
new text end

Sec. 66.

Minnesota Statutes 2004, section 256L.05,
subdivision 5, is amended to read:

Subd. 5.

Availability of private insurance.

The
commissioner, in consultation with the commissioners of health
and commerce, shall provide information regarding the
availability of private health insurance coverage and the
possibility of disenrollment under section 256L.07, subdivision
1, deleted text begin paragraphs (b) and (c), to all: (1) deleted text end new text begin to new text end families enrolled in
the MinnesotaCare program whose gross family income is equal to
or more than 225 percent of the federal poverty guidelinesdeleted text begin ; and
(2) single adults and households without children enrolled in
the MinnesotaCare program whose gross family income is equal to
or more than 165 percent of the federal poverty guidelinesdeleted text end .
This information must be provided upon initial enrollment and
annually thereafter. The commissioner shall also include
information regarding the availability of private health
insurance coverage in the notice of ineligibility provided to
persons subject to disenrollment under section 256L.07,
subdivision 1deleted text begin , paragraphs (b) and (c)deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective October 1, 2005.
new text end

Sec. 67.

Minnesota Statutes 2004, section 256L.06,
subdivision 3, is amended to read:

Subd. 3.

Commissioner's duties and payment.

(a) Premiums
are dedicated to the commissioner for MinnesotaCare.

(b) The commissioner shall develop and implement procedures
to: (1) require enrollees to report changes in income; (2)
adjust sliding scale premium payments, based upon deleted text begin changes deleted text end new text begin both
increases and decreases new text end in enrollee incomenew text begin , at the time the
change in income is reportednew text end ; and (3) disenroll enrollees from
MinnesotaCare for failure to pay required premiums. Failure to
pay includes payment with a dishonored check, a returned
automatic bank withdrawal, or a refused credit card or debit
card payment. The commissioner may demand a guaranteed form of
payment, including a cashier's check or a money order, as the
only means to replace a dishonored, returned, or refused payment.

(c) Premiums are calculated on a calendar month basis and
may be paid on a monthly, quarterly, or semiannual basis, with
the first payment due upon notice from the commissioner of the
premium amount required. The commissioner shall inform
applicants and enrollees of these premium payment options.
Premium payment is required before enrollment is complete and to
maintain eligibility in MinnesotaCare. Premium payments
received before noon are credited the same day. Premium
payments received after noon are credited on the next working
day.

(d) Nonpayment of the premium will result in disenrollment
from the plan effective for the calendar month for which the
premium was due. Persons disenrolled for nonpayment or who
voluntarily terminate coverage from the program may not reenroll
until four calendar months have elapsed. Persons disenrolled
for nonpayment who pay all past due premiums as well as current
premiums due, including premiums due for the period of
disenrollment, within 20 days of disenrollment, shall be
reenrolled retroactively to the first day of disenrollment.
Persons disenrolled for nonpayment or who voluntarily terminate
coverage from the program may not reenroll for four calendar
months unless the person demonstrates good cause for
nonpayment. Good cause does not exist if a person chooses to
pay other family expenses instead of the premium. The
commissioner shall define good cause in rule.

new text begin EFFECTIVE DATE. new text end

Sec. 68.

Minnesota Statutes 2004, section 256L.07,
subdivision 1, is amended to read:

Subdivision 1.

General requirements.

(a) Children
enrolled in the original children's health plan as of September
30, 1992, children who enrolled in the MinnesotaCare program
after September 30, 1992, pursuant to Laws 1992, chapter 549,
article 4, section 17, and children who have family gross
incomes that are equal to or less than 150 percent of the
federal poverty guidelines are eligible without meeting the
requirements of subdivision 2 and the four-month requirement in
subdivision 3, as long as they maintain continuous coverage in
the MinnesotaCare program or medical assistance. Children who
apply for MinnesotaCare on or after the implementation date of
the employer-subsidized health coverage program as described in
Laws 1998, chapter 407, article 5, section 45, who have family
gross incomes that are equal to or less than 150 percent of the
federal poverty guidelines, must meet the requirements of
subdivision 2 to be eligible for MinnesotaCare.

(b) new text begin Through September 30, 2005,new text end families enrolled in
MinnesotaCare under section 256L.04, subdivision 1, whose income
increases above 275 percent of the federal poverty guidelines,
are no longer eligible for the program and shall be disenrolled
by the commissioner. deleted text begin Individuals deleted text end new text begin Beginning October 1, 2005,
children new text end enrolled in MinnesotaCare under section 256L.04,
subdivision deleted text begin 7 deleted text end new text begin 1new text end , whose income increases above deleted text begin 175 deleted text end new text begin 275 new text end percent of
the federal poverty guidelinesnew text begin ,new text end are no longer eligible for the
program and shall be disenrolled by the commissioner. new text begin Pregnant
women enrolled in MinnesotaCare whose income increases above 275
percent of the federal poverty guidelines remain eligible
through the end of the 60-day postpartum period. Beginning
October 1, 2005, parents, grandparents, foster parents, relative
caretakers, and legal guardians ages 21 and over are no longer
eligible for MinnesotaCare if their gross income exceeds 175
percent of the federal poverty guidelines for the applicable
family size.new text end For persons disenrolled under this subdivision,
MinnesotaCare coverage terminates the last day of the calendar
month following the month in which the commissioner determines
that the income of a family or individual exceeds program income
limits.

(c) deleted text begin (1) Notwithstanding paragraph (b), families enrolled in
MinnesotaCare under section 256L.04, subdivision 1, may remain
enrolled in MinnesotaCare if ten percent of their annual income
is less than the annual premium for a policy with a $500
deductible available through the Minnesota Comprehensive Health
Association. Families who are no longer eligible for
MinnesotaCare under this subdivision shall be given an 18-month
notice period from the date that ineligibility is determined
before disenrollment. This clause expires February 1, 2004.
deleted text end

deleted text begin (2) deleted text end Effective February 1, 2004, notwithstanding paragraph
(b), children may remain enrolled in MinnesotaCare if ten
percent of their deleted text begin annual deleted text end new text begin gross individual or gross new text end family income
new text begin as defined in section 256L.01, subdivision 4,new text end is less than the
deleted text begin annual deleted text end premium for a new text begin six-month new text end policy with a $500 deductible
available through the Minnesota Comprehensive Health
Association. Children who are no longer eligible for
MinnesotaCare under this clause shall be given a deleted text begin 12-month
deleted text end new text begin six-month new text end notice period from the date that ineligibility is
determined before disenrollment. The premium for children
remaining eligible under this clause shall be the maximum
premium determined under section 256L.15, subdivision 2,
paragraph (b).

(d) Effective July 1, 2003, notwithstanding paragraphs (b)
and (c), parents are no longer eligible for MinnesotaCare if
gross household income exceeds deleted text begin $50,000 deleted text end new text begin $25,000 for the six-month
period of eligibilitynew text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective March 1, 2006,
or upon HealthMatch implementation, whichever is later.
new text end

Sec. 69.

Minnesota Statutes 2004, section 256L.07,
subdivision 3, is amended to read:

Subd. 3.

Other health coverage.

(a) Families and
individuals enrolled in the MinnesotaCare program must have no
health coverage while enrolled or for at least four months prior
to application and renewal. Children enrolled in the original
children's health plan and children in families with income
equal to or less than 150 percent of the federal poverty
guidelines, who have other health insurance, are eligible if the
coverage:

(1) lacks two or more of the following:

(i) basic hospital insurance;

(ii) medical-surgical insurance;

(iii) prescription drug coverage;

(iv) dental coverage; or

(v) vision coverage;

(2) requires a deductible of $100 or more per person per
year; or

(3) lacks coverage because the child has exceeded the
maximum coverage for a particular diagnosis or the policy
excludes a particular diagnosis.

The commissioner may change this eligibility criterion for
sliding scale premiums in order to remain within the limits of
available appropriations. The requirement of no health coverage
does not apply to newborns.

(b) Medical assistance, general assistance medical care,
and the Civilian Health and Medical Program of the Uniformed
Service, CHAMPUS, or other coverage provided under United States
Code, title 10, subtitle A, part II, chapter 55, are not
considered insurance or health coverage for purposes of the
four-month requirement described in this subdivision.

(c) For purposes of this subdivision, new text begin an applicant or
enrollee who is entitled to new text end Medicare Part A or new text begin enrolled in
Medicare Part new text end B coverage under title XVIII of the Social
Security Act, United States Code, title 42, sections 1395c
to deleted text begin 1395w-4 deleted text end new text begin 1395w-152new text end , is considered new text begin to have new text end health coverage. An
applicant or enrollee new text begin who is entitled to premium free Medicare
Part A new text end may not refuse new text begin to apply for or enroll in new text end Medicare
coverage to establish eligibility for MinnesotaCare.

(d) Applicants who were recipients of medical assistance or
general assistance medical care within one month of application
must meet the provisions of this subdivision and subdivision 2.

(e) deleted text begin Effective October 1, 2003, applicants who were
recipients of medical assistance and had deleted text end Cost-effective health
insurance deleted text begin which deleted text end new text begin that new text end was paid for by medical assistance deleted text begin are
exempt from deleted text end new text begin is not considered health coverage for purposes of
new text end the four-month requirement under this sectionnew text begin , except if the
insurance continued after medical assistance no longer
considered it cost-effective or after medical assistance closednew text end .

Sec. 70.

Minnesota Statutes 2004, section 256L.07, is
amended by adding a subdivision to read:

new text begin Subd. 5.new text end

new text begin Voluntary disenrollment for members of
military.new text end

new text begin Notwithstanding section 256L.05, subdivision 3b,
MinnesotaCare enrollees who are members of the military and
their families, who choose to voluntarily disenroll from the
program when one or more family members are called to active
duty, may reenroll during or following that member's tour of
active duty. Those individuals and families shall be considered
to have good cause for voluntary termination under section
256L.06, subdivision 3, paragraph (d). Income and asset
increases reported at the time of reenrollment shall be
disregarded. All provisions of sections 256L.01 to 256L.18,
shall apply to individuals and families enrolled under this
subdivision upon six-month renewal.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2005.
new text end

Sec. 71.

Minnesota Statutes 2004, section 256L.09,
subdivision 2, is amended to read:

Subd. 2.

Residency requirement.

deleted text begin (a) To be eligible for
health coverage under the MinnesotaCare program, adults without
children must be permanent residents of Minnesota.
deleted text end

deleted text begin (b) deleted text end To be eligible for health coverage under the
MinnesotaCare program, pregnant women, families, and children
must meet the residency requirements as provided by Code of
Federal Regulations, title 42, section 435.403deleted text begin , except that the
provisions of section 256B.056, subdivision 1, shall apply upon
receipt of federal approvaldeleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective October 1, 2005.
new text end

Sec. 72.

Minnesota Statutes 2004, section 256L.11,
subdivision 6, is amended to read:

Subd. 6.

Enrollees 18 or older.

deleted text begin Payment by the
MinnesotaCare program for inpatient hospital services provided
to MinnesotaCare enrollees eligible under section 256L.04,
subdivision 7, or who qualify under section 256L.04,
subdivisions 1 and 2, with family gross income that exceeds 175
percent of the federal poverty guidelines and who are not
pregnant, who are 18 years old or older on the date of admission
to the inpatient hospital must be in accordance with paragraphs
(a) and (b).deleted text end Payment for adults who are not pregnant and are
eligible under section 256L.04, subdivisions 1 and 2, and whose
incomes are equal to or less than 175 percent of the federal
poverty guidelines, shall be as provided for under deleted text begin paragraph (c)
deleted text end new text begin this subdivisionnew text end .

deleted text begin (a) If the medical assistance rate minus any co-payment
required under section 256L.03, subdivision 4, is less than or
equal to the amount remaining in the enrollee's benefit limit
under section 256L.03, subdivision 3, payment must be the
medical assistance rate minus any co-payment required under
section 256L.03, subdivision 4. The hospital must not seek
payment from the enrollee in addition to the co-payment. The
MinnesotaCare payment plus the co-payment must be treated as
payment in full.
deleted text end

deleted text begin (b) If the medical assistance rate minus any co-payment
required under section 256L.03, subdivision 4, is greater than
the amount remaining in the enrollee's benefit limit under
section 256L.03, subdivision 3, payment must be the lesser of:
deleted text end

deleted text begin (1) the amount remaining in the enrollee's benefit limit;
or
deleted text end

deleted text begin (2) charges submitted for the inpatient hospital services
less any co-payment established under section 256L.03,
subdivision 4.
deleted text end

deleted text begin The hospital may seek payment from the enrollee for the
amount by which usual and customary charges exceed the payment
under this paragraph. If payment is reduced under section
256L.03, subdivision 3, paragraph (b), the hospital may not seek
payment from the enrollee for the amount of the reduction.
deleted text end

deleted text begin (c) deleted text end For admissions occurring during the period of July 1,
1997, through June 30, 1998, for adults who are not pregnant and
are eligible under section 256L.04, subdivisions 1 and 2, and
whose incomes are equal to or less than 175 percent of the
federal poverty guidelines, the commissioner shall pay hospitals
directly, up to the medical assistance payment rate, for
inpatient hospital benefits in excess of the $10,000 annual
inpatient benefit limit.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective October 1, 2005.
new text end

Sec. 73.

Minnesota Statutes 2004, section 256L.12,
subdivision 6, is amended to read:

Subd. 6.

Co-payments and benefit limits.

Enrollees are
responsible for all co-payments in deleted text begin sections deleted text end new text begin section new text end 256L.03,
subdivision 5, deleted text begin and 256L.035,deleted text end and shall pay co-payments to the
managed care plan or to its participating providers. The
enrollee is also responsible for payment of inpatient hospital
charges which exceed the MinnesotaCare benefit limit.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective October 1, 2005.
new text end

Sec. 74.

Minnesota Statutes 2004, section 256L.12, is
amended by adding a subdivision to read:

new text begin Subd. 9b. new text end

new text begin Rate setting; ratable reduction. new text end

new text begin In addition
to the reduction in subdivision 9a, the total payment made to
managed care plans under the MinnesotaCare program is reduced
1.83 percent for services provided on or after January 1, 2006.
new text end

Sec. 75.

Minnesota Statutes 2004, section 256L.15,
subdivision 2, is amended to read:

Subd. 2.

Sliding fee scale to determine percentage of
new text begin monthly new text end gross individual or family income.

(a) The commissioner
shall establish a sliding fee scale to determine the percentage
of new text begin monthly new text end gross individual or family income that households at
different income levels must pay to obtain coverage through the
MinnesotaCare program. The sliding fee scale must be based on
the enrollee's new text begin monthly new text end gross individual or family income. The
sliding fee scale must contain separate tables based on
enrollment of one, two, or three or more persons. The sliding
fee scale begins with a premium of 1.5 percent of new text begin monthly new text end gross
individual or family income for individuals or families with
incomes below the limits for the medical assistance program for
families and children in effect on January 1, 1999, and proceeds
through the following evenly spaced steps: 1.8, 2.3, 3.1, 3.8,
4.8, 5.9, 7.4, and 8.8 percent. These percentages are matched
to evenly spaced income steps ranging from the medical
assistance income limit for families and children in effect on
January 1, 1999, to 275 percent of the federal poverty
guidelines for the applicable family size, up to a family size
of five. The sliding fee scale for a family of five must be
used for families of more than five. Effective October 1, 2003,
the commissioner shall increase each percentage by 0.5
percentage points for enrollees with income greater than 100
percent but not exceeding 200 percent of the federal poverty
guidelines and shall increase each percentage by 1.0 percentage
points for families and children with incomes greater than 200
percent of the federal poverty guidelines. The sliding fee
scale and percentages are not subject to the provisions of
chapter 14. If a family or individual reports increased income
after enrollment, premiums shall deleted text begin not deleted text end be adjusted deleted text begin until
eligibility renewal deleted text end new text begin at the time the change in income is reportednew text end .

(b)(1) Enrolled families whose gross annual income
increases above 275 percent of the federal poverty guideline
shall pay the maximum premium. This clause expires effective
February 1, 2004.

(2) Effective February 1, 2004, children in families whose
gross income is above 275 percent of the federal poverty
guidelines shall pay the maximum premium.

(3) The maximum premium is defined as a base charge for
one, two, or three or more enrollees so that if all
MinnesotaCare cases paid the maximum premium, the total revenue
would equal the total cost of MinnesotaCare medical coverage and
administration. In this calculation, administrative costs shall
be assumed to equal ten percent of the total. The costs of
medical coverage for pregnant women and children under age two
and the enrollees in these groups shall be excluded from the
total. The maximum premium for two enrollees shall be twice the
maximum premium for one, and the maximum premium for three or
more enrollees shall be three times the maximum premium for one.

new text begin (c) After calculating the percentage of premium each
enrollee shall pay under paragraph (a), ten percent shall be
added to the premium effective July 1, 2005.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin The amendment to paragraph (a) changing
gross family or individual income to monthly gross family or
individual income is effective March 1, 2006, or upon
implementation of HealthMatch, whichever is later. The
amendment to paragraph (a) related to premium adjustments and
changes of income is effective July 1, 2005. Prior to the
implementation of HealthMatch, the commissioner shall implement
this section to the fullest extent possible, including the use
of manual processing. Upon implementation of HealthMatch, the
commissioner shall implement this section in a manner consistent
with the procedures and requirements of HealthMatch.
new text end

Sec. 76.

Minnesota Statutes 2004, section 256L.15,
subdivision 3, is amended to read:

Subd. 3.

Exceptions to sliding scale.

deleted text begin An annual premium
of $48 is required for all deleted text end Children in families with income at
or deleted text begin less than deleted text end new text begin below new text end 150 percent of new text begin the new text end federal poverty guidelines
new text begin pay a monthly premium of $5new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective March 1, 2006,
or upon implementation of HealthMatch, whichever is later,
except that the increase in the monthly premium shall be
effective July 1, 2005.
new text end

Sec. 77.

new text begin [501B.895] PUBLIC HEALTH CARE PROGRAMS AND
CERTAIN TRUSTS.
new text end

new text begin (a) It is the public policy of this state that individuals
use all available resources to pay for the cost of long-term
care services, as defined in section 256B.0595, before turning
to Minnesota health care program funds, and that trust
instruments should not be permitted to shield available
resources of an individual or an individual's spouse from such
use. Any irrevocable inter-vivos trust or any legal instrument,
device, or arrangement similar to an irrevocable inter-vivos
trust created on or after July 1, 2005, containing assets or
income of an individual or an individual's spouse, including
those created by a person, court, or administrative body with
legal authority to act in place of, at the direction of, upon
the request of, or on behalf of the individual or individual's
spouse, becomes revocable by operation of law for the sole
purpose of a state or local human services agency determination
on an application by the individual or the individual's spouse
for payment of long-term care services through a Minnesota
public health care program pursuant to chapter 256B. For
purposes of this section, any inter-vivos trust and any legal
instrument, device, or arrangement similar to an inter-vivos
trust:
new text end

new text begin (1) shall be deemed to be located in and subject to the
laws of this state; and
new text end

new text begin (2) is created as of the date it is fully executed by or on
behalf of all of the settlors or others.
new text end

new text begin (b) For purposes of this section, a legal instrument,
device, or arrangement similar to an irrevocable inter-vivos
trust means any instrument, device, or arrangement which
involves a grantor who transfers or whose property is
transferred by another including, but not limited to, any court,
administrative body, or anyone else with authority to act on
their behalf or at their direction, to an individual or entity
with fiduciary, contractual, or legal obligations to the grantor
or others to be held, managed, or administered by the individual
or entity for the benefit of the grantor or others. These legal
instruments, devices, or other arrangements are irrevocable
inter-vivos trusts for purposes of this section.
new text end

new text begin (c) In the event of a conflict between this section and the
provisions of an irrevocable trust created on or after July 1,
2005, this section shall control.
new text end

new text begin (d) This section does not apply to trusts that qualify as
supplemental needs trusts under section 501B.89 or to trusts
meeting the criteria of United States Code, title 42, section
1396p (d)(4)(a) and (c) for purposes of eligibility for medical
assistance.
new text end

new text begin (e) This section applies to all trusts first created on or
after July 1, 2005, and to all interests in real or personal
property regardless of the date on which the interest was
created, reserved, or acquired.
new text end

Sec. 78.

Minnesota Statutes 2004, section 514.981,
subdivision 6, is amended to read:

Subd. 6.

Time limits; claim limits; liens on life estates
and joint tenancies.

(a) A medical assistance lien is a lien on
the real property it describes for a period of ten years from
the date it attaches according to section 514.981, subdivision
2, paragraph (a), except as otherwise provided for in sections
514.980 to 514.985. The agency may renew a medical assistance
lien for an additional ten years from the date it would
otherwise expire by recording or filing a certificate of renewal
before the lien expires. The certificate shall be recorded or
filed in the office of the county recorder or registrar of
titles for the county in which the lien is recorded or filed.
The certificate must refer to the recording or filing data for
the medical assistance lien it renews. The certificate need not
be attested, certified, or acknowledged as a condition for
recording or filing. The registrar of titles or the recorder
shall file, record, index, and return the certificate of renewal
in the same manner as provided for medical assistance liens in
section 514.982, subdivision 2.

(b) A medical assistance lien is not enforceable against
the real property of an estate to the extent there is a
determination by a court of competent jurisdiction, or by an
officer of the court designated for that purpose, that there are
insufficient assets in the estate to satisfy the agency's
medical assistance lien in whole or in part because of the
homestead exemption under section 256B.15, subdivision 4, the
rights of the surviving spouse or minor children under section
524.2-403, paragraphs (a) and (b), or claims with a priority
under section 524.3-805, paragraph (a), clauses (1) to (4). For
purposes of this section, the rights of the decedent's adult
children to exempt property under section 524.2-403, paragraph
(b), shall not be considered costs of administration under
section 524.3-805, paragraph (a), clause (1).

(c) Notwithstanding any law or rule to the contrary, the
provisions in clauses (1) to (7) apply if a life estate subject
to a medical assistance lien ends according to its terms, or if
a medical assistance recipient who owns a life estate or any
interest in real property as a joint tenant that is subject to a
medical assistance lien dies.

(1) The medical assistance recipient's life estate or joint
tenancy interest in the real property shall not end upon the
recipient's death but shall merge into the remainder interest or
other interest in real property the medical assistance recipient
owned in joint tenancy with others. The medical assistance lien
shall attach to and run with the remainder or other interest in
the real property to the extent of the medical assistance
recipient's interest in the property at the time of the
recipient's death as determined under this section.

(2) If the medical assistance recipient's interest was a
life estate in real property, the lien shall be a lien against
the portion of the remainder equal to the percentage factor for
the life estate of a person the medical assistance recipient's
age on the date the life estate ended according to its terms or
the date of the medical assistance recipient's death as listed
in the Life Estate Mortality Table in the health care program's
manual.

(3) If the medical assistance recipient owned the interest
in real property in joint tenancy with others, the lien shall be
a lien against the portion of that interest equal to the
fractional interest the medical assistance recipient would have
owned in the jointly owned interest had the medical assistance
recipient and the other owners held title to that interest as
tenants in common on the date the medical assistance recipient
died.

(4) The medical assistance lien shall remain a lien against
the remainder or other jointly owned interest for the length of
time and be renewable as provided in paragraph (a).

(5) Subdivision 5, paragraph (a), clause (4), paragraph
(b), clauses (1) and (2); and subdivision 6, paragraph (b), do
not apply to medical assistance liens which attach to interests
in real property as provided under this subdivision.

(6) The continuation of a medical assistance recipient's
life estate or joint tenancy interest in real property after the
medical assistance recipient's death for the purpose of
recovering medical assistance provided for in sections 514.980
to 514.985 modifies common law principles holding that these
interests terminate on the death of the holder.

(7) Notwithstanding any law or rule to the contrary, no
release, satisfaction, discharge, or affidavit under section
256B.15 shall extinguish or terminate the life estate or joint
tenancy interest of a medical assistance recipient subject to a
lien under sections 514.980 to 514.985 on the date the recipient
dies.

(8) The provisions of clauses (1) to (7) do not apply to a
homestead owned of record, on the date the recipient dies, by
the recipient and the recipient's spouse as joint tenants with a
right of survivorship. Homestead means the real property
occupied by the surviving joint tenant spouse as their sole
residence on the date the recipient dies and classified and
taxed to the recipient and surviving joint tenant spouse as
homestead property for property tax purposes in the calendar
year in which the recipient dies. For purposes of this
exemption, real property the recipient and their surviving joint
tenant spouse purchase solely with the proceeds from the sale of
their prior homestead, own of record as joint tenants, and
qualify as homestead property under section 273.124 in the
calendar year in which the recipient dies and prior to the
recipient's death shall be deemed to be real property classified
and taxed to the recipient and their surviving joint tenant
spouse as homestead property in the calendar year in which the
recipient dies. The surviving spouse, or any person with
personal knowledge of the facts, may provide an affidavit
describing the homestead property affected by this clause and
stating facts showing compliance with this clause. The
affidavit shall be prima facie evidence of the facts it states.
new text begin All provisions in this paragraph related to the continuation of
a recipient's life estate or joint tenancy interests in real
property after the recipient's death, for the purpose of
recovering medical assistance, are effective only for life
estates and joint tenancy interests established on or after
August 1, 2003.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively
from August 1, 2003.
new text end

Sec. 79.

Laws 2003, First Special Session chapter 14,
article 12, section 93, is amended to read:

Sec. 93deleted text begin REVIEW OF SPECIAL TRANSPORTATION ELIGIBILITY
CRITERIA AND POTENTIAL COST SAVINGS deleted text end new text begin USE OF A BROKER TO MANAGE
SPECIAL TRANSPORTATION SERVICES.
new text end

deleted text begin The commissioner of human services, in consultation with
the commissioner of transportation and special transportation
service providers, shall review eligibility criteria for medical
assistance special transportation services and shall evaluate
whether the level of special transportation services provided
should be based on the degree of impairment of the client, as
well as the medical diagnosis. The commissioner shall also
evaluate methods for reducing the cost of special transportation
services, including, but not limited to:
deleted text end

deleted text begin (1) requiring providers to maintain a daily log book
confirming delivery of clients to medical facilities;
deleted text end

deleted text begin (2) requiring providers to implement commercially available
computer mapping programs to calculate mileage for purposes of
reimbursement;
deleted text end

deleted text begin (3) restricting special transportation service from being
provided solely for trips to pharmacies;
deleted text end

deleted text begin (4) modifying eligibility for special transportation;
deleted text end

deleted text begin (5) expanding alternatives to the use of special
transportation services;
deleted text end

deleted text begin (6) improving the process of certifying persons as eligible
for special transportation services; and
deleted text end

deleted text begin (7) examining the feasibility and benefits of licensing
special transportation providers.
deleted text end

deleted text begin The commissioner shall present recommendations for changes
in the eligibility criteria and potential cost-savings for
special transportation services to the chairs and ranking
minority members of the house and senate committees having
jurisdiction over health and human services spending by January
15, 2004.deleted text end The commissioner is prohibited from using a broker or
coordinator to manage special transportation services new text begin for
fee-for-service enrollees residing in a nursing home licensed
under Minnesota Statutes, chapter 144A, until July 1, 2006, and
for all other fee-for-service enrollees new text end until July 1, 2005,
except for the purposes of checking for recipient eligibility,
authorizing recipients for appropriate level of transportation,
and monitoring provider compliance with Minnesota Statutes,
section 256B.0625, subdivision 17. This prohibition does not
apply to the purchase or management of common carrier
transportation.

Sec. 80. new text begin ADVISORY COMMITTEE ON NONEMERGENCY
TRANSPORTATION SERVICES.
new text end

new text begin The commissioner of human services shall establish a
seven-member advisory committee on medical assistance
nonemergency transportation services. The committee shall
consist of: a representative of the commissioner of human
services, who shall serve as chair; two special transportation
service providers, appointed by the trade associations
representing special transportation service providers; one
representative of nursing facilities; one representative of the
disability community; and one house and one senate member,
appointed respectively by the chairs of the house and senate
committees with jurisdiction over medical assistance funding.
The advisory committee shall monitor and evaluate the provision
of medical assistance nonemergency medical transportation
services, and present recommendations for any necessary changes
to the commissioner.
new text end

Sec. 81. new text begin PLANNING PROCESS FOR MANAGED CARE.
new text end

new text begin The commissioner of human services shall develop a planning
process for the purposes of implementing at least one additional
managed care arrangement to provide medical assistance services,
excluding continuing care services, to recipients enrolled in
the medical assistance fee-for-service program, effective
January 1, 2007. This planning process shall include an
advisory committee composed of current fee-for-service
consumers, consumer advocates, and providers, as well as
representatives of health plans and other provider organizations
qualified to provide basic health care services to persons with
disabilities. The department shall seek any additional federal
authority necessary to provide basic health care services
through contracted managed care arrangements.
new text end

Sec. 82. new text begin FEDERAL APPROVAL RELATED TO MEDICAL ASSISTANCE
INCOME LIMIT FOR PREGNANT WOMEN AND SPECIAL WORK EXPENSE
DEDUCTION.
new text end

new text begin The commissioner of human services, by July 1, 2005, shall
apply for any federal waivers and approvals necessary to retain
the medical assistance income limit for pregnant women at 200
percent of the federal poverty guidelines, and to not apply the
special work expense deductions for infants and pregnant women,
while continuing to receive federal funding under the state
children's health insurance program (SCHIP). The commissioner
shall update the chairs and ranking minority members of the
house and senate committees with jurisdiction over the medical
assistance program of the status of the request for federal
waivers and approvals.
new text end

Sec. 83. new text begin FEDERAL APPROVAL.
new text end

new text begin (a) The commissioner of human services shall seek federal
waivers and approvals necessary to allow the commissioner to
charge medical assistance recipients sliding scale premiums,
based on the sliding scale used for the MinnesotaCare program
under Minnesota Statutes, section 256L.15.
new text end

new text begin (b) The commissioner of human services shall seek federal
waivers and approvals necessary to modify the definition of
household and family income under MinnesotaCare, to include the
earned and unearned income of all persons residing in the
household or family, including unrelated persons.
new text end

Sec. 84. new text begin HEALTH CARE FINANCING REPORT.
new text end

new text begin The commissioner of human services shall develop
recommendations on simplifying publicly funded health care
program financing. The commissioner shall report the
recommendations to the chairs of the house and senate committees
with jurisdiction over health care financing during the 2007
legislative session.
new text end

Sec. 85. new text begin GENERAL PROVISIONS GOVERNING CHANGE IN EFFECTIVE
DATE FOR LIFE ESTATE AND JOINT TENANCY INTEREST PROVISIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment of life estate or joint
tenancy interest. new text end

new text begin For purposes of the amendments to Minnesota
Statutes, sections 256B.15, subdivision 1, and 514.981,
subdivision 6, a life estate or joint tenancy interest is
established upon the earlier of:
new text end

new text begin (1) the date the instrument creating the interest is
recorded or filed in the office of the county recorder or
registrar of titles where the real estate interest it describes
is located;
new text end

new text begin (2) the date of delivery by the grantor to the grantee of
the signed instrument as stated in an affidavit made by a person
with knowledge of the facts;
new text end

new text begin (3) the date on which the judicial order creating the
interest was issued by the court; or
new text end

new text begin (4) the date upon which the interest devolves under
Minnesota Statutes, section 524.3-101.
new text end

new text begin Subd. 2. new text end

new text begin Medical assistance. new text end

new text begin For purposes of the
amendments to Minnesota Statutes, sections 256B.15, subdivision
1, and 514.981, subdivision 6, the term medical assistance means
medical assistance as defined in Minnesota Statutes 2004,
section 256B.15, subdivision 1.
new text end

new text begin Subd. 3.new text end

new text begin Lien notices.new text end

new text begin Medical assistance liens and
liens under notices of potential claims that are of record
against life estate or joint tenancy interests established prior
to August 1, 2003, shall end and become unenforceable upon the
death of the person named in the lien, or a notice of potential
claim shall be disregarded by examiners of title after the death
of the life tenant or joint tenant, and shall not be carried
forward to a subsequent certificate of title. This subdivision
shall not apply to life estates that continue to exist after the
death of the person named in the lien or notice of potential
claim under the terms of the instrument creating or reserving
the life estate until the life estate ends as provided for in
the instrument.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively
from August 1, 2003.
new text end

Sec. 86. new text begin COMMISSIONER'S DUTIES RELATED TO CHANGE IN
EFFECTIVE DATE FOR LIFE ESTATE AND JOINT TENANCY INTEREST
PROVISIONS.
new text end

new text begin (a) The commissioner of human services or a county agency
that has recovered medical assistance or alternative care
payments for recipients after they die from their life estates
or jointly owned interests in real property that were
established prior to August 1, 2003, and that were continued in
existence or merged into another interest in real property after
their death due solely to the provisions of section 256B.15 or
514.981, subdivision 6, paragraph (c), as those provisions
existed prior to the amendments in this act, shall refund those
recoveries, without interest. The refunds shall be paid to the
surviving record owners of the real property in which the
recipient had a life estate or a jointly owned interest on the
date of the recipient's death in proportion to their record
interests on that date. The commissioner and a county agency
are not required to refund any other recoveries attributable to
any other interests or assets of the deceased recipient.
new text end

new text begin (b) If the commissioner of human services or a county
agency determines a person entitled to any refund under this act
is dead, they may pay the refund due that person to their estate
if it is still open. If the person's estate is closed or if a
court has entered a decree of distribution for that person under
section 525.312 that is a final decree, the commissioner or the
county agency may, in their absolute discretion, pay the
person's refund to their heirs or devisees as finally determined
in any completed probate or under any final decree of
distribution. In all other cases including, but not limited to,
those in which the commissioner or a county agency determines
they cannot identify or locate a person entitled to a refund
under this section, they may, at their discretion, declare such
person's refund to be abandoned property and pay and deliver it
to the commissioner of commerce. The commissioner of commerce
shall administer and dispose of the refunds according to
sections 345.31 to 345.60. Neither the commissioner of human
services, the Department of Human Services, a county agency, or
the employees of the department or agency, shall be liable to
anyone with respect to the refund after paying or delivering the
refund as provided for in this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively
from August 1, 2003.
new text end

Sec. 87. new text begin IMMUNITY.
new text end

new text begin The commissioner of human services, county agencies, and
elected officials and their employees are immune from all
liability for any action taken implementing Laws 2003, First
Special Session chapter 14, article 12, sections 40 to 52 and
90, as those laws existed at the time the action was taken, and
sections 1 to 4 of this act.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively
from August 1, 2003.
new text end

Sec. 88. new text begin REPEALER.
new text end

new text begin (a) Minnesota Statutes 2004, sections 256L.035; 256L.04,
subdivision 7; and 256L.09, subdivisions 1, 4, 5, 6, and 7, are
repealed effective October 1, 2005.
new text end

new text begin (b) Minnesota Statutes 2004, section 256.955, is repealed
effective January 1, 2006.
new text end

new text begin (c) Minnesota Statutes 2004, sections 256B.075, subdivision
5, and 295.581, are repealed the day following final enactment.
new text end

new text begin (d) Minnesota Statutes 2004, section 256L.04, subdivision
11, MinnesotaCare outreach grants, is repealed effective July 1,
2005.
new text end

ARTICLE 4

NURSING FACILITY REIMBURSEMENT SYSTEM
AND OTHER PROVISIONS

Section 1.

Minnesota Statutes 2004, section 144A.071,
subdivision 4a, is amended to read:

Subd. 4a.

Exceptions for replacement beds.

It is in the
best interest of the state to ensure that nursing homes and
boarding care homes continue to meet the physical plant
licensing and certification requirements by permitting certain
construction projects. Facilities should be maintained in
condition to satisfy the physical and emotional needs of
residents while allowing the state to maintain control over
nursing home expenditure growth.

The commissioner of health in coordination with the
commissioner of human services, may approve the renovation,
replacement, upgrading, or relocation of a nursing home or
boarding care home, under the following conditions:

(a) to license or certify beds in a new facility
constructed to replace a facility or to make repairs in an
existing facility that was destroyed or damaged after June 30,
1987, by fire, lightning, or other hazard provided:

(i) destruction was not caused by the intentional act of or
at the direction of a controlling person of the facility;

(ii) at the time the facility was destroyed or damaged the
controlling persons of the facility maintained insurance
coverage for the type of hazard that occurred in an amount that
a reasonable person would conclude was adequate;

(iii) the net proceeds from an insurance settlement for the
damages caused by the hazard are applied to the cost of the new
facility or repairs;

(iv) the new facility is constructed on the same site as
the destroyed facility or on another site subject to the
restrictions in section 144A.073, subdivision 5;

(v) the number of licensed and certified beds in the new
facility does not exceed the number of licensed and certified
beds in the destroyed facility; and

(vi) the commissioner determines that the replacement beds
are needed to prevent an inadequate supply of beds.

Project construction costs incurred for repairs authorized under
this clause shall not be considered in the dollar threshold
amount defined in subdivision 2;

(b) to license or certify beds that are moved from one
location to another within a nursing home facility, provided the
total costs of remodeling performed in conjunction with the
relocation of beds does not exceed $1,000,000;

(d) to license or certify beds that are moved from an
existing state nursing home to a different state facility,
provided there is no net increase in the number of state nursing
home beds;

(e) to certify and license as nursing home beds boarding
care beds in a certified boarding care facility if the beds meet
the standards for nursing home licensure, or in a facility that
was granted an exception to the moratorium under section
144A.073, and if the cost of any remodeling of the facility does
not exceed $1,000,000. If boarding care beds are licensed as
nursing home beds, the number of boarding care beds in the
facility must not increase beyond the number remaining at the
time of the upgrade in licensure. The provisions contained in
section 144A.073 regarding the upgrading of the facilities do
not apply to facilities that satisfy these requirements;

(f) to license and certify up to 40 beds transferred from
an existing facility owned and operated by the Amherst H. Wilder
Foundation in the city of St. Paul to a new unit at the same
location as the existing facility that will serve persons with
Alzheimer's disease and other related disorders. The transfer
of beds may occur gradually or in stages, provided the total
number of beds transferred does not exceed 40. At the time of
licensure and certification of a bed or beds in the new unit,
the commissioner of health shall delicense and decertify the
same number of beds in the existing facility. As a condition of
receiving a license or certification under this clause, the
facility must make a written commitment to the commissioner of
human services that it will not seek to receive an increase in
its property-related payment rate as a result of the transfers
allowed under this paragraph;

(g) to license and certify nursing home beds to replace
currently licensed and certified boarding care beds which may be
located either in a remodeled or renovated boarding care or
nursing home facility or in a remodeled, renovated, newly
constructed, or replacement nursing home facility within the
identifiable complex of health care facilities in which the
currently licensed boarding care beds are presently located,
provided that the number of boarding care beds in the facility
or complex are decreased by the number to be licensed as nursing
home beds and further provided that, if the total costs of new
construction, replacement, remodeling, or renovation exceed ten
percent of the appraised value of the facility or $200,000,
whichever is less, the facility makes a written commitment to
the commissioner of human services that it will not seek to
receive an increase in its property-related payment rate by
reason of the new construction, replacement, remodeling, or
renovation. The provisions contained in section 144A.073
regarding the upgrading of facilities do not apply to facilities
that satisfy these requirements;

(h) to license as a nursing home and certify as a nursing
facility a facility that is licensed as a boarding care facility
but not certified under the medical assistance program, but only
if the commissioner of human services certifies to the
commissioner of health that licensing the facility as a nursing
home and certifying the facility as a nursing facility will
result in a net annual savings to the state general fund of
$200,000 or more;

(i) to certify, after September 30, 1992, and prior to July
1, 1993, existing nursing home beds in a facility that was
licensed and in operation prior to January 1, 1992;

(j) to license and certify new nursing home beds to replace
beds in a facility acquired by the Minneapolis Community
Development Agency as part of redevelopment activities in a city
of the first class, provided the new facility is located within
three miles of the site of the old facility. Operating and
property costs for the new facility must be determined and
allowed under section 256B.431 or 256B.434;

(k) to license and certify up to 20 new nursing home beds
in a community-operated hospital and attached convalescent and
nursing care facility with 40 beds on April 21, 1991, that
suspended operation of the hospital in April 1986. The
commissioner of human services shall provide the facility with
the same per diem property-related payment rate for each
additional licensed and certified bed as it will receive for its
existing 40 beds;

(l) to license or certify beds in renovation, replacement,
or upgrading projects as defined in section 144A.073,
subdivision 1, so long as the cumulative total costs of the
facility's remodeling projects do not exceed $1,000,000;

(m) to license and certify beds that are moved from one
location to another for the purposes of converting up to five
four-bed wards to single or double occupancy rooms in a nursing
home that, as of January 1, 1993, was county-owned and had a
licensed capacity of 115 beds;

(n) to allow a facility that on April 16, 1993, was a
106-bed licensed and certified nursing facility located in
Minneapolis to layaway all of its licensed and certified nursing
home beds. These beds may be relicensed and recertified in a
newly constructed teaching nursing home facility affiliated with
a teaching hospital upon approval by the legislature. The
proposal must be developed in consultation with the interagency
committee on long-term care planning. The beds on layaway
status shall have the same status as voluntarily delicensed and
decertified beds, except that beds on layaway status remain
subject to the surcharge in section 256.9657. This layaway
provision expires July 1, 1998;

(o) to allow a project which will be completed in
conjunction with an approved moratorium exception project for a
nursing home in southern Cass County and which is directly
related to that portion of the facility that must be repaired,
renovated, or replaced, to correct an emergency plumbing problem
for which a state correction order has been issued and which
must be corrected by August 31, 1993;

(p) to allow a facility that on April 16, 1993, was a
368-bed licensed and certified nursing facility located in
Minneapolis to layaway, upon 30 days prior written notice to the
commissioner, up to 30 of the facility's licensed and certified
beds by converting three-bed wards to single or double
occupancy. Beds on layaway status shall have the same status as
voluntarily delicensed and decertified beds except that beds on
layaway status remain subject to the surcharge in section
256.9657, remain subject to the license application and renewal
fees under section 144A.07 and shall be subject to a $100 per
bed reactivation fee. In addition, at any time within three
years of the effective date of the layaway, the beds on layaway
status may be:

(1) relicensed and recertified upon relocation and
reactivation of some or all of the beds to an existing licensed
and certified facility or facilities located in Pine River,
Brainerd, or International Falls; provided that the total
project construction costs related to the relocation of beds
from layaway status for any facility receiving relocated beds
may not exceed the dollar threshold provided in subdivision 2
unless the construction project has been approved through the
moratorium exception process under section 144A.073;

(2) relicensed and recertified, upon reactivation of some
or all of the beds within the facility which placed the beds in
layaway status, if the commissioner has determined a need for
the reactivation of the beds on layaway status.

The property-related payment rate of a facility placing
beds on layaway status must be adjusted by the incremental
change in its rental per diem after recalculating the rental per
diem as provided in section 256B.431, subdivision 3a, paragraph
(c). The property-related payment rate for a facility
relicensing and recertifying beds from layaway status must be
adjusted by the incremental change in its rental per diem after
recalculating its rental per diem using the number of beds after
the relicensing to establish the facility's capacity day
divisor, which shall be effective the first day of the month
following the month in which the relicensing and recertification
became effective. Any beds remaining on layaway status more
than three years after the date the layaway status became
effective must be removed from layaway status and immediately
delicensed and decertified;

(q) to license and certify beds in a renovation and
remodeling project to convert 12 four-bed wards into 24 two-bed
rooms, expand space, and add improvements in a nursing home
that, as of January 1, 1994, met the following conditions: the
nursing home was located in Ramsey County; had a licensed
capacity of 154 beds; and had been ranked among the top 15
applicants by the 1993 moratorium exceptions advisory review
panel. The total project construction cost estimate for this
project must not exceed the cost estimate submitted in
connection with the 1993 moratorium exception process;

(r) to license and certify up to 117 beds that are
relocated from a licensed and certified 138-bed nursing facility
located in St. Paul to a hospital with 130 licensed hospital
beds located in South St. Paul, provided that the nursing
facility and hospital are owned by the same or a related
organization and that prior to the date the relocation is
completed the hospital ceases operation of its inpatient
hospital services at that hospital. After relocation, the
nursing facility's status under section 256B.431, subdivision
2j, shall be the same as it was prior to relocation. The
nursing facility's property-related payment rate resulting from
the project authorized in this paragraph shall become effective
no earlier than April 1, 1996. For purposes of calculating the
incremental change in the facility's rental per diem resulting
from this project, the allowable appraised value of the nursing
facility portion of the existing health care facility physical
plant prior to the renovation and relocation may not exceed
$2,490,000;

(s) to license and certify two beds in a facility to
replace beds that were voluntarily delicensed and decertified on
June 28, 1991;

(t) to allow 16 licensed and certified beds located on July
1, 1994, in a 142-bed nursing home and 21-bed boarding care home
facility in Minneapolis, notwithstanding the licensure and
certification after July 1, 1995, of the Minneapolis facility as
a 147-bed nursing home facility after completion of a
construction project approved in 1993 under section 144A.073, to
be laid away upon 30 days' prior written notice to the
commissioner. Beds on layaway status shall have the same status
as voluntarily delicensed or decertified beds except that they
shall remain subject to the surcharge in section 256.9657. The
16 beds on layaway status may be relicensed as nursing home beds
and recertified at any time within five years of the effective
date of the layaway upon relocation of some or all of the beds
to a licensed and certified facility located in Watertown,
provided that the total project construction costs related to
the relocation of beds from layaway status for the Watertown
facility may not exceed the dollar threshold provided in
subdivision 2 unless the construction project has been approved
through the moratorium exception process under section 144A.073.

The property-related payment rate of the facility placing
beds on layaway status must be adjusted by the incremental
change in its rental per diem after recalculating the rental per
diem as provided in section 256B.431, subdivision 3a, paragraph
(c). The property-related payment rate for the facility
relicensing and recertifying beds from layaway status must be
adjusted by the incremental change in its rental per diem after
recalculating its rental per diem using the number of beds after
the relicensing to establish the facility's capacity day
divisor, which shall be effective the first day of the month
following the month in which the relicensing and recertification
became effective. Any beds remaining on layaway status more
than five years after the date the layaway status became
effective must be removed from layaway status and immediately
delicensed and decertified;

(u) to license and certify beds that are moved within an
existing area of a facility or to a newly constructed addition
which is built for the purpose of eliminating three- and
four-bed rooms and adding space for dining, lounge areas,
bathing rooms, and ancillary service areas in a nursing home
that, as of January 1, 1995, was located in Fridley and had a
licensed capacity of 129 beds;

(v) to relocate 36 beds in Crow Wing County and four beds
from Hennepin County to a 160-bed facility in Crow Wing County,
provided all the affected beds are under common ownership;

(w) to license and certify a total replacement project of
up to 49 beds located in Norman County that are relocated from a
nursing home destroyed by flood and whose residents were
relocated to other nursing homes. The operating cost payment
rates for the new nursing facility shall be determined based on
the interim and settle-up payment provisions of Minnesota Rules,
part 9549.0057, and the reimbursement provisions of section
256B.431, except that subdivision 26, paragraphs (a) and (b),
shall not apply until the second rate year after the settle-up
cost report is filed. Property-related reimbursement rates
shall be determined under section 256B.431, taking into account
any federal or state flood-related loans or grants provided to
the facility;

(x) to license and certify a total replacement project of
up to 129 beds located in Polk County that are relocated from a
nursing home destroyed by flood and whose residents were
relocated to other nursing homes. The operating cost payment
rates for the new nursing facility shall be determined based on
the interim and settle-up payment provisions of Minnesota Rules,
part 9549.0057, and the reimbursement provisions of section
256B.431, except that subdivision 26, paragraphs (a) and (b),
shall not apply until the second rate year after the settle-up
cost report is filed. Property-related reimbursement rates
shall be determined under section 256B.431, taking into account
any federal or state flood-related loans or grants provided to
the facility;

(y) to license and certify beds in a renovation and
remodeling project to convert 13 three-bed wards into 13 two-bed
rooms and 13 single-bed rooms, expand space, and add
improvements in a nursing home that, as of January 1, 1994, met
the following conditions: the nursing home was located in
Ramsey County, was not owned by a hospital corporation, had a
licensed capacity of 64 beds, and had been ranked among the top
15 applicants by the 1993 moratorium exceptions advisory review
panel. The total project construction cost estimate for this
project must not exceed the cost estimate submitted in
connection with the 1993 moratorium exception process;

(z) to license and certify up to 150 nursing home beds to
replace an existing 285 bed nursing facility located in St.
Paul. The replacement project shall include both the renovation
of existing buildings and the construction of new facilities at
the existing site. The reduction in the licensed capacity of
the existing facility shall occur during the construction
project as beds are taken out of service due to the construction
process. Prior to the start of the construction process, the
facility shall provide written information to the commissioner
of health describing the process for bed reduction, plans for
the relocation of residents, and the estimated construction
schedule. The relocation of residents shall be in accordance
with the provisions of law and rule;

(aa) to allow the commissioner of human services to license
an additional 36 beds to provide residential services for the
physically handicapped under Minnesota Rules, parts 9570.2000 to
9570.3400, in a 198-bed nursing home located in Red Wing,
provided that the total number of licensed and certified beds at
the facility does not increase;

(bb) to license and certify a new facility in St. Louis
county with 44 beds constructed to replace an existing facility
in St. Louis County with 31 beds, which has resident rooms on
two separate floors and an antiquated elevator that creates
safety concerns for residents and prevents nonambulatory
residents from residing on the second floor. The project shall
include the elimination of three- and four-bed rooms;

(cc) to license and certify four beds in a 16-bed certified
boarding care home in Minneapolis to replace beds that were
voluntarily delicensed and decertified on or before March 31,
1992. The licensure and certification is conditional upon the
facility periodically assessing and adjusting its resident mix
and other factors which may contribute to a potential
institution for mental disease declaration. The commissioner of
human services shall retain the authority to audit the facility
at any time and shall require the facility to comply with any
requirements necessary to prevent an institution for mental
disease declaration, including delicensure and decertification
of beds, if necessary;

(dd) to license and certify 72 beds in an existing facility
in Mille Lacs County with 80 beds as part of a renovation
project. The renovation must include construction of an
addition to accommodate ten residents with beginning and
midstage dementia in a self-contained living unit; creation of
three resident households where dining, activities, and support
spaces are located near resident living quarters; designation of
four beds for rehabilitation in a self-contained area;
designation of 30 private rooms; and other improvements;

(ee) to license and certify beds in a facility that has
undergone replacement or remodeling as part of a planned closure
under section 256B.437;

(ff) to license and certify a total replacement project of
up to 124 beds located in Wilkin County that are in need of
relocation from a nursing home significantly damaged by flood.
The operating cost payment rates for the new nursing facility
shall be determined based on the interim and settle-up payment
provisions of Minnesota Rules, part 9549.0057, and the
reimbursement provisions of section 256B.431, except that
section 256B.431, subdivision 26, paragraphs (a) and (b), shall
not apply until the second rate year after the settle-up cost
report is filed. Property-related reimbursement rates shall be
determined under section 256B.431, taking into account any
federal or state flood-related loans or grants provided to the
facility;

(gg) to allow the commissioner of human services to license
an additional nine beds to provide residential services for the
physically handicapped under Minnesota Rules, parts 9570.2000 to
9570.3400, in a 240-bed nursing home located in Duluth, provided
that the total number of licensed and certified beds at the
facility does not increase;

(hh) to license and certify up to 120 new nursing facility
beds to replace beds in a facility in Anoka County, which was
licensed for 98 beds as of July 1, 2000, provided the new
facility is located within four miles of the existing facility
and is in Anoka County. Operating and property rates shall be
determined and allowed under section 256B.431 and Minnesota
Rules, parts 9549.0010 to 9549.0080, or section 256B.434 or
256B.435. The provisions of section 256B.431, subdivision 26,
paragraphs (a) and (b), do not apply until the second rate year
following settle-up; or

(ii) to transfer up to 98 beds of a 129-licensed bed
facility located in Anoka County that, as of March 25, 2001, is
in the active process of closing, to a 122-licensed bed
nonprofit nursing facility located in the city of Columbia
Heights or its affiliate. The transfer is effective when the
receiving facility notifies the commissioner in writing of the
number of beds accepted. The commissioner shall place all
transferred beds on layaway status held in the name of the
receiving facility. The layaway adjustment provisions of
section 256B.431, subdivision 30, do not apply to this layaway.
The receiving facility may only remove the beds from layaway for
recertification and relicensure at the receiving facility's
current site, or at a newly constructed facility located in
Anoka County. The receiving facility must receive statutory
authorization before removing these beds from layaway status.

new text begin (jj)(1) A facility in Columbia Heights with 122 beds on
January 1, 2005, may remove from layaway status up to 35 of 98
beds placed in layaway status in paragraph (ii), and relicense
and recertify these beds in stages in a newly constructed
nursing facility in Ramsey located on a long-term care campus
that provides a continuum of housing and health care options and
services, ranging from independent living to skilled nursing
services. The beds may be relicensed and recertified in two
stages.
new text end

new text begin (2) A facility in Anoka with 57 beds on January 1, 2005,
may remove from layaway status an additional 33 of the 98 beds
placed in layaway status in paragraph (ii) and relicense and
recertify these beds in a newly constructed nursing facility
located in Anoka County, north of State Highway 242 and at a
site not closer than five miles from any other licensed and
certified nursing facility, along with up to 57 beds that may be
relocated from the facility in Anoka.
new text end

new text begin (3) Notwithstanding the five-year duration after which beds
may no longer remain in layaway and still be placed in active
service, as specified in subdivision 4b, the beds must be
relicensed and recertified prior to June 30, 2009.
new text end

new text begin (4) For the facility in clause (1), the total payment rates
shall be equal to those of the 122-bed facility in Columbia
Heights. For the facility in clause (2), the total payment
rates shall be equal to those of the 57-bed facility in Anoka.
new text end

new text begin (5) The facilities in clauses (1) and (2) may annually
certify to the commissioner of human services, on a form and in
a manner specified by the commissioner, beginning no later than
one year after they are licensed and certified, that they are
discharging eight or more individuals per year for each newly
licensed bed. If, in the certification, the facility reports
that they are discharging fewer than eight individuals per year
for each newly licensed bed, the commissioner shall reduce the
facility's payment rates under medical assistance by three
percent for each one discharge per year for each newly licensed
bed, or portion thereof, less than eight, times the portion of
the facility's licensed and certified beds that are newly
licensed and certified. If the facility fails to provide this
annual certification, the commissioner shall assume two
discharges per year for each newly licensed bed and reduce the
facility's payment rates under medical assistance by three
percent for each one discharge per year for each newly licensed
bed, less than eight.
new text end

Sec. 2.

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

new text begin Subd. 10a. new text end

new text begin Extension of approval for a facility in otter
tail county. new text end

new text begin Notwithstanding subdivisions 3 and 10, the
commissioner of health shall extend project approval for an
additional 24 months for an exception to the nursing home
licensure and certification moratorium proposed by a nursing
facility in Otter Tail County and originally approved by the
commissioner on December 20, 2002.
new text end

Sec. 3.

Minnesota Statutes 2004, section 256B.431,
subdivision 28, is amended to read:

Subd. 28.

Nursing facility rate increases beginning july
1, 1999, and july 1, 2000.

(a) For the rate years beginning
July 1, 1999, and July 1, 2000, the commissioner shall make
available to each nursing facility reimbursed under this section
or section 256B.434 an adjustment to the total operating payment
rate. For nursing facilities reimbursed under this section or
section 256B.434, the July 1, 2000, operating payment rate
increases provided in this subdivision shall be applied to each
facility's June 30, 2000, operating payment rate. For each
facility, total operating costs shall be separated into costs
that are compensation related and all other costs.
Compensation-related costs include salaries, payroll taxes, and
fringe benefits for all employees except management fees, the
administrator, and central office staff.

(b) For the rate year beginning July 1, 1999, the
commissioner shall make available a rate increase for
compensation-related costs of 4.843 percent and a rate increase
for all other operating costs of 3.446 percent.

(1) a rate increase for compensation-related costs of 3.632
percent;

(2) an additional rate increase for each case mix payment
rate which must be used to increase the per-hour pay rate of all
employees except management fees, the administrator, and central
office staff by an equal dollar amount and to pay associated
costs for FICA, the Medicare tax, workers' compensation
premiums, and federal and state unemployment insurance, to be
calculated according to clauses (i) to (iii):

(i) the commissioner shall calculate the arithmetic mean of
the 11 June 30, 2000, operating rates for each facility;

(ii) the commissioner shall construct an array of nursing
facilities from highest to lowest, according to the arithmetic
mean calculated in clause (i). A numerical rank shall be
assigned to each facility in the array. The facility with the
highest mean shall be assigned a numerical rank of one. The
facility with the lowest mean shall be assigned a numerical rank
equal to the total number of nursing facilities in the array.
All other facilities shall be assigned a numerical rank in
accordance with their position in the array;

(iii) the amount of the additional rate increase shall be
$1 plus an amount equal to $3.13 multiplied by the ratio of the
facility's numeric rank divided by the number of facilities in
the array; and

(3) a rate increase for all other operating costs of 2.585
percent.

Money received by a facility as a result of the additional
rate increase provided under clause (2) shall be used only for
wage increases implemented on or after July 1, 2000, and shall
not be used for wage increases implemented prior to that date.

(d) The payment rate adjustment for each nursing facility
must be determined under clause (1) or (2):

(1) for each nursing facility that reports salaries for
registered nurses, licensed practical nurses, aides, orderlies,
and attendants separately, the commissioner shall determine the
payment rate adjustment using the categories specified in
paragraph (a) multiplied by the rate increases specified in
paragraph (b) or (c), and then dividing the resulting amount by
the nursing facility's actual resident days. In determining the
amount of a payment rate adjustment for a nursing facility
reimbursed under section 256B.434, the commissioner shall
determine the proportions of the facility's rates that are
compensation-related costs and all other operating costs based
on the facility's most recent cost report; and

(2) for each nursing facility that does not report salaries
for registered nurses, licensed practical nurses, aides,
orderlies, and attendants separately, the payment rate
adjustment shall be computed using the facility's total
operating costs, separated into the categories specified in
paragraph (a) in proportion to the weighted average of all
facilities determined under clause (1), multiplied by the rate
increases specified in paragraph (b) or (c), and then dividing
the resulting amount by the nursing facility's actual resident
days.

(e) A nursing facility may apply for the
compensation-related payment rate adjustment calculated under
this subdivision. The application must be made to the
commissioner and contain a plan by which the nursing facility
will distribute the compensation-related portion of the payment
rate adjustment to employees of the nursing facility. For
nursing facilities in which the employees are represented by an
exclusive bargaining representative, an agreement negotiated and
agreed to by the employer and the exclusive bargaining
representative constitutes the plan. For the second rate year,
a negotiated agreement constitutes the plan only if the
agreement is finalized after the date of enactment of all rate
increases for the second rate year. The commissioner shall
review the plan to ensure that the payment rate adjustment per
diem is used as provided in paragraphs (a) to (c). To be
eligible, a facility must submit its plan for the compensation
distribution by December 31 each year. A facility may amend its
plan for the second rate year by submitting a revised plan by
December 31, 2000. If a facility's plan for compensation
distribution is effective for its employees after July 1 of the
year that the funds are available, the payment rate adjustment
per diem shall be effective the same date as its plan.

(f) A copy of the approved distribution plan must be made
available to all employees. This must be done by giving each
employee a copy or by posting it in an area of the nursing
facility to which all employees have access. If an employee
does not receive the compensation adjustment described in their
facility's approved plan and is unable to resolve the problem
with the facility's management or through the employee's union
representative, the employee may contact the commissioner at an
address or phone number provided by the commissioner and
included in the approved plan.

(g) If the reimbursement system under section 256B.435 is
not implemented until July 1, 2001, the salary adjustment per
diem authorized in subdivision 2i, paragraph (c), shall continue
until June 30, 2001.

(h) For the rate year beginning July 1, 1999, the following
nursing facilities shall be allowed a rate increase equal to 67
percent of the rate increase that would be allowed if
subdivision 26, paragraph (a), was not applied:

(1) a nursing facility in Carver County licensed for 33
nursing home beds and four boarding care beds;

(2) a nursing facility in Faribault County licensed for 159
nursing home beds on September 30, 1998; and

(3) a nursing facility in Houston County licensed for 68
nursing home beds on September 30, 1998.

(i) For the rate year beginning July 1, 1999, the following
nursing facilities shall be allowed a rate increase equal to 67
percent of the rate increase that would be allowed if
subdivision 26, paragraphs (a) and (b), were not applied:

(1) a nursing facility in Chisago County licensed for 135
nursing home beds on September 30, 1998; and

(2) a nursing facility in Murray County licensed for 62
nursing home beds on September 30, 1998.

(j) For the rate year beginning July 1, 1999, a nursing
facility in Hennepin County licensed for 134 beds on September
30, 1998, shall:

(1) have the prior year's allowable care-related per diem
increased by $3.93 and the prior year's other operating cost per
diem increased by $1.69 before adding the inflation in
subdivision 26, paragraph (d), clause (2); and

(2) be allowed a rate increase equal to 67 percent of the
rate increase that would be allowed if subdivision 26,
paragraphs (a) and (b), were not applied.

The increases provided in paragraphs (h), (i), and (j)
shall be included in the facility's total payment rates for the
purposes of determining future rates under this section deleted text begin or any
other sectiondeleted text end .

(k) For the rate years beginning on or after July 1, 2000,
a nursing home facility in Goodhue County that was licensed for
104 beds on February 1, 2000, shall have its employee pension
benefit costs reported on its Rule 50 cost report treated as
PERA contributions for the purpose of computing its payment
rates.

Sec. 4.

Minnesota Statutes 2004, section 256B.431,
subdivision 29, is amended to read:

Subd. 29.

Facility rate increases effective july 1,
2000.

Following the determination under subdivision 28 of the
payment rate for the rate year beginning July 1, 2000, for a
facility in Roseau County licensed for 49 beds, the facility's
operating cost per diem shall be increased by the following
amounts:

(1) case mix class A, $1.97;

(2) case mix class B, $2.11;

(3) case mix class C, $2.26;

(4) case mix class D, $2.39;

(5) case mix class E, $2.54;

(6) case mix class F, $2.55;

(7) case mix class G, $2.66;

(8) case mix class H, $2.90;

(9) case mix class I, $2.97;

(10) case mix class J, $3.10; and

(11) case mix class K, $3.36.

These increases shall be included in the facility's total
payment rates for the purpose of determining future rates under
this section deleted text begin or any other sectiondeleted text end .

Sec. 5.

Minnesota Statutes 2004, section 256B.431,
subdivision 35, is amended to read:

Subd. 35.

Exclusion of raw food cost adjustment.

For
rate years beginning on or after July 1, 2001, in calculating a
nursing facility's operating cost per diem for the purposes of
constructing an array, determining a median, or otherwise
performing a statistical measure of nursing facility payment
rates to be used to determine future rate increases under this
section, section 256B.434, or any other section, the
commissioner shall exclude adjustments for raw food costs under
subdivision 2b, paragraph (h), that are related to providing
special diets based on religious beliefs. new text begin For rates determined
under section 256B.441, the amount determined under subdivision
2b, paragraph (h), shall not be included in the support services
per diem cost determined in section 256B.441, subdivision 45,
and shall be added to the external fixed cost costs payment rate
determined in section 256B.441, subdivision 52, paragraph (i).
new text end

Sec. 6.

Minnesota Statutes 2004, section 256B.431, is
amended by adding a subdivision to read:

new text begin Subd. 41. new text end

new text begin Nursing facility rate increases beginning
october 1, 2005, and october 1, 2006. new text end

new text begin (a) For the rate year
beginning October 1, 2005, the commissioner shall provide
nursing facilities reimbursed under this section or section
256B.434 and for rates determined under section 256B.441 with an
adjustment to the total operating payment rate of 2.2 percent.
For the rate year beginning October 1, 2006, the commissioner
shall provide nursing facilities reimbursed under this section
or section 256B.434, and for rates determined under section
256B.431, with an adjustment to the total operating payment rate
of one percent. At least two-thirds of each year's adjustment
must be used for increased costs of employee salaries and
benefits and associated costs for FICA, the Medicare tax,
workers' compensation premiums, and federal and state
unemployment insurance. Each facility receiving an adjustment
shall report to the commissioner, in the form and manner
specified by the commissioner, on how the additional funding was
used.
new text end

new text begin (b) Costs for salary and employee benefits increases
incurred by nursing facilities since July 1, 2003, can be
counted towards the amount required to be spent on salaries and
benefits under paragraph (a). These costs should be reported in
the form and manner specified by the commissioner along with the
information required under paragraph (a).
new text end

Sec. 7.

Minnesota Statutes 2004, section 256B.431, is
amended by adding a subdivision to read:

new text begin Subd. 42. new text end

new text begin Rate increase for facilities in stearns,
sherburne, and benton counties. new text end

new text begin Effective October 1, 2005,
before determining any other rate adjustment effective on that
date, operating payment rates of nursing facilities in Stearns
County, Sherburne County, and Benton County, reimbursed under
this section or section 256B.434, shall be increased to be
equal, for a RUGs rate with a weight of 1.00, to the 30th
percentile of the geographic group III rate for the same RUGs
weight. The percentage of the operating payment rate for each
facility to be case-mix adjusted shall be equal to the
percentage that is case-mix adjusted in that facility's
September 30, 2005, operating payment rate. This subdivision
shall apply only if it results in a rate increase. Increases
provided by this subdivision shall be added to the rate
determined under any new reimbursement system established under
section 256B.440.
new text end

Sec. 8.

Minnesota Statutes 2004, section 256B.432,
subdivision 1, is amended to read:

Subdivision 1.

Definitions.

For purposes of this
section, the following terms have the meanings given them.

(a) "Management agreement" means an agreement in which one
or more of the following criteria exist:

(1) the central, affiliated, or corporate office has or is
authorized to assume day-to-day operational control of the
nursing facility for any six-month period within a 24-month
period. "Day-to-day operational control" means that the
central, affiliated, or corporate office has the authority to
require, mandate, direct, or compel the employees of the nursing
facility to perform or refrain from performing certain acts, or
to supplant or take the place of the top management of the
nursing facility. "Day-to-day operational control" includes the
authority to hire or terminate employees or to provide an
employee of the central, affiliated, or corporate office to
serve as administrator of the nursing facility;

(2) the central, affiliated, or corporate office performs
or is authorized to perform two or more of the following: the
execution of contracts; authorization of purchase orders;
signature authority for checks, notes, or other financial
instruments; requiring the nursing facility to use the group or
volume purchasing services of the central, affiliated, or
corporate office; or the authority to make annual capital
expenditures for the nursing facility exceeding $50,000, or $500
per licensed bed, whichever is less, without first securing the
approval of the nursing facility board of directors;

(3) the central, affiliated, or corporate office becomes or
is required to become the licensee under applicable state law;

(4) the agreement provides that the compensation for
services provided under the agreement is directly related to any
profits made by the nursing facility; or

(5) the nursing facility entering into the agreement is
governed by a governing body that meets fewer than four times a
year, that does not publish notice of its meetings, or that does
not keep formal records of its proceedings.

(b) "Consulting agreement" means any agreement the purpose
of which is for a central, affiliated, or corporate office to
advise, counsel, recommend, or suggest to the owner or operator
of the nonrelated nursing facility measures and methods for
improving the operations of the nursing facility.

(c) "Nursing facility" means a deleted text begin nursing deleted text end facility deleted text begin whose
medical assistance rates are determined according to section
256B.431 deleted text end new text begin with a medical assistance provider agreement that is
licensed as a nursing home under chapter 144A or as a boarding
care home under sections 144.50 to 144.56new text end .

Sec. 9.

Minnesota Statutes 2004, section 256B.432,
subdivision 2, is amended to read:

Subd. 2.

Effective date.

For rate years beginning on or
after July 1, 1990, the central, affiliated, or corporate office
cost allocations in subdivisions 3 to 6 must be used when
determining medical assistance rates under section 256B.431new text begin ,
256B.434, or 256B.441new text end .

Sec. 10.

Minnesota Statutes 2004, section 256B.432, is
amended by adding a subdivision to read:

new text begin Subd. 4a. new text end

new text begin Allocation; costs allocable on a functional
basis. new text end

new text begin (a) Costs that have not been directly identified must be
allocated to nursing facilities on a basis designed to equitably
allocate the costs to the nursing facilities or activities
receiving the benefits of the costs. This allocation must be
made in a manner reasonably related to the services received by
the nursing facilities. Where practical and the amounts are
material, these costs must be allocated on a functional basis.
The functions, or cost centers used to allocate central office
costs, and the unit bases used to allocate the costs, including
those central office costs allocated according to subdivision 5,
must be used consistently from one central office accounting
period to another.
new text end

new text begin (b) If the central office wishes to change its allocation
bases and believes the change will result in more appropriate
and more accurate allocations, the central office must make a
written request, with its justification, to the commissioner for
approval of the change no later than 120 days after the
beginning of the central office accounting period to which the
change is to apply. The commissioner's approval of a central
office request will be furnished to the central office in
writing. Where the commissioner approves the central office
request, the change must be applied to the accounting period for
which the request was made, and to all subsequent central office
accounting periods unless the commissioner approves a subsequent
request for change by the central office. The effective date of
the change will be the beginning of the accounting period for
which the request was made.
new text end

Sec. 11.

Minnesota Statutes 2004, section 256B.432,
subdivision 5, is amended to read:

Subd. 5.

Allocation of remaining costs; allocation
ratio.

(a) After the costs that can be directly identified
according to subdivisions 3 and 4 have been allocated, the
remaining central, affiliated, or corporate office costs must be
allocated between the nursing facility operations and the other
activities or facilities unrelated to the nursing facility
operations based on the ratio of total operating
costs. new text begin However, in the event that these remaining costs are
partially attributable to the start-up of home and
community-based services intended to fill a gap identified by
the local agency, the facility may assign these remaining costs
to the appropriate cost category of the facility for a period
not to exceed two years.
new text end

(b) For purposes of allocating these remaining central,
affiliated, or corporate office costs, the numerator for the
allocation ratio shall be determined as follows:

(1) for nursing facilities that are related organizations
or are controlled by a central, affiliated, or corporate office
under a management agreement, the numerator of the allocation
ratio shall be equal to the sum of the total operating costs
incurred by each related organization or controlled nursing
facility;

(2) for a central, affiliated, or corporate office
providing goods or services to related organizations that are
not nursing facilities, the numerator of the allocation ratio
shall be equal to the sum of the total operating costs incurred
by the nonnursing facility related organizations;

(3) for a central, affiliated, or corporate office
providing goods or services to unrelated nursing facilities
under a consulting agreement, the numerator of the allocation
ratio shall be equal to the greater of directly identified
central, affiliated, or corporate costs or the contracted
amount; or

(4) for business activities that involve the providing of
goods or services to unrelated parties which are not nursing
facilities, the numerator of the allocation ratio shall be equal
to the greater of directly identified costs or revenues
generated by the activity or function.

Sec. 12.

Minnesota Statutes 2004, section 256B.432, is
amended by adding a subdivision to read:

new text begin Subd. 6a. new text end

new text begin Related organization costs. new text end

new text begin (a) Costs
applicable to services, capital assets, and supplies directly or
indirectly furnished to the nursing facility by any related
organization are includable in the allowable cost of the nursing
facility at the purchase price paid by the related organization
for capital assets or supplies and at the cost incurred by the
related organization for the provision of services to the
nursing facility if these prices or costs do not exceed the
price of comparable services, capital assets, or supplies that
could be purchased elsewhere. For this purpose, the related
organization's costs must not include an amount for markup or
profit.
new text end

new text begin (b) If the related organization in the normal course of
business sells services, capital assets, or supplies to
nonrelated organizations, the cost to the nursing facility shall
be the nonrelated organization's price provided that sales to
nonrelated organizations constitute at least 50 percent of total
annual sales of similar services, capital assets, or supplies.
new text end

Sec. 13.

Minnesota Statutes 2004, section 256B.434,
subdivision 3, is amended to read:

Subd. 3.

Duration and termination of contracts.

(a)
Subject to available resources, the commissioner may begin to
execute contracts with nursing facilities November 1, 1995.

(b) All contracts entered into under this section are for a
term deleted text begin of one year deleted text end new text begin not to exceed four yearsnew text end . Either party may
terminate a contract at any time without cause by providing 90
calendar days advance written notice to the other party. The
decision to terminate a contract is not appealable.
Notwithstanding section 16C.05, subdivision 2, paragraph (a),
clause (5), the contract shall be renegotiated for
additional deleted text begin one-year deleted text end new text begin four-year new text end terms, unless either party
provides written notice of termination. The provisions of the
contract shall be renegotiated deleted text begin annually deleted text end new text begin at a minimum of every
four years new text end by the parties prior to the expiration date of the
contract. The parties may voluntarily renegotiate the terms of
the contract at any time by mutual agreement.

(c) If a nursing facility fails to comply with the terms of
a contract, the commissioner shall provide reasonable notice
regarding the breach of contract and a reasonable opportunity
for the facility to come into compliance. If the facility fails
to come into compliance or to remain in compliance, the
commissioner may terminate the contract. If a contract is
terminated, the contract payment remains in effect for the
remainder of the rate year in which the contract was terminated,
but in all other respects the provisions of this section do not
apply to that facility effective the date the contract is
terminated. The contract shall contain a provision governing
the transition back to the cost-based reimbursement system
established under section 256B.431 and Minnesota Rules, parts
9549.0010 to 9549.0080. A contract entered into under this
section may be amended by mutual agreement of the parties.

Sec. 14.

Minnesota Statutes 2004, section 256B.434,
subdivision 4, is amended to read:

Subd. 4.

Alternate rates for nursing facilities.

(a) For
nursing facilities which have their payment rates determined
under this section rather than section 256B.431, the
commissioner shall establish a rate under this subdivision. The
nursing facility must enter into a written contract with the
commissioner.

(b) A nursing facility's case mix payment rate for the
first rate year of a facility's contract under this section is
the payment rate the facility would have received under section
256B.431.

(c) A nursing facility's case mix payment rates for the
second and subsequent years of a facility's contract under this
section are the previous rate year's contract payment rates plus
an inflation adjustment and, for facilities reimbursed under
this section or section 256B.431, an adjustment to include the
cost of any increase in Health Department licensing fees for the
facility taking effect on or after July 1, 2001. The index for
the inflation adjustment must be based on the change in the
Consumer Price Index-All Items (United States City average)
(CPI-U) forecasted by the commissioner of finance's national
economic consultant, as forecasted in the fourth quarter of the
calendar year preceding the rate year. The inflation adjustment
must be based on the 12-month period from the midpoint of the
previous rate year to the midpoint of the rate year for which
the rate is being determined. For the rate years beginning on
July 1, 1999, July 1, 2000, July 1, 2001, July 1, 2002, July 1,
2003, deleted text begin and deleted text end July 1, 2004new text begin , July 1, 2005, July 1, 2006, July 1,
2007, July 1, 2008, and July 1, 2009new text end , this paragraph shall apply
only to the property-related payment rate, except that
adjustments to include the cost of any increase in Health
Department licensing fees taking effect on or after July 1,
2001, shall be provided. new text begin Beginning in 2005, adjustment to the
property payment rate under this section and section 256B.431
shall be effective on October 1.new text end In determining the amount of
the property-related payment rate adjustment under this
paragraph, the commissioner shall determine the proportion of
the facility's rates that are property-related based on the
facility's most recent cost report. new text begin Facilities reimbursed under
this section shall be allowed to receive a property rate
adjustment for building projects under section 144A.071,
subdivision 2.
new text end

(d) The commissioner shall develop additional
incentive-based payments of up to five percent above the
standard contract rate for achieving outcomes specified in each
contract. The specified facility-specific outcomes must be
measurable and approved by the commissioner. The commissioner
may establish, for each contract, various levels of achievement
within an outcome. After the outcomes have been specified the
commissioner shall assign various levels of payment associated
with achieving the outcome. Any incentive-based payment cancels
if there is a termination of the contract. In establishing the
specified outcomes and related criteria the commissioner shall
consider the following state policy objectives:

(1) improved cost effectiveness and quality of life as
measured by improved clinical outcomes;

(2) successful diversion or discharge to community
alternatives;

(3) decreased acute care costs;

(4) improved consumer satisfaction;

(5) the achievement of quality; or

(6) any additional outcomes proposed by a nursing facility
that the commissioner finds desirable.

Sec. 15.

Minnesota Statutes 2004, section 256B.434,
subdivision 4a, is amended to read:

Subd. 4a.

Facility rate increases.

For the rate year
beginning July 1, 1999, the nursing facilities described in
clauses (1) to (5) shall receive the rate increases indicated.
The increases provided under this subdivision shall be included
in the facility's total payment rates for the purpose of
determining future rates under this section deleted text begin or any other sectiondeleted text end :

(1) a nursing facility in Becker County licensed for 102
nursing home beds on September 30, 1998, shall receive an
increase of $1.30 in its case mix class A payment rate; an
increase of $1.33 in its case mix class B payment rate; an
increase of $1.36 in its case mix class C payment rate; an
increase of $1.39 in its case mix class D payment rate; an
increase of $1.42 in its case mix class E payment rate; an
increase of $1.42 in its case mix class F payment rate; an
increase of $1.45 in its case mix class G payment rate; an
increase of $1.49 in its case mix class H payment rate; an
increase of $1.51 in its case mix class I payment rate; an
increase of $1.54 in its case mix class J payment rate; and an
increase of $1.59 in its case mix class K payment rate;

(2) a nursing facility in Chisago County licensed for 101
nursing home beds on September 30, 1998, shall receive an
increase of $3.67 in each case mix payment rate;

(3) a nursing facility in Canby, licensed for 75 beds shall
have its property-related per diem rate increased by $1.21.
This increase shall be recognized in the facility's contract
payment rate under this section;

(4) a nursing facility in Golden Valley with all its beds
licensed to provide residential rehabilitative services to young
adults under Minnesota Rules, parts 9570.2000 to 9570.3400,
shall have the payment rate computed according to this section
increased by $14.83; and

(5) a county-owned 130-bed nursing facility in Park Rapids
shall have its per diem contract payment rate increased by $1.02
for costs related to compliance with comparable worth
requirements.

Sec. 16.

Minnesota Statutes 2004, section 256B.434,
subdivision 4b, is amended to read:

Subd. 4b.

Facility rate increases effective july 1,
2000.

For the rate year beginning July 1, 2000, the nursing
facilities described in clauses (1) to (6) shall receive the
rate increases indicated. The increases under this subdivision
shall be added following the determination under section
256B.431, subdivision 28, of the payment rate for the rate year
beginning July 1, 2000, and shall be included in the facility's
total payment rates for the purposes of determining future rates
under this section deleted text begin or any other sectiondeleted text end :

(1) a nursing facility in Hennepin County licensed for 290
beds shall receive an operating cost per diem increase of 5.9
percent, provided that the facility delicenses, decertifies, or
places on layaway status, if that status is otherwise permitted
by law, 70 beds;

(2) a nursing facility in Goodhue County licensed for 84
beds shall receive an increase of $1.54 in each case mix payment
rate;

(3) a nursing facility located in Rochester and licensed
for 103 beds on January 1, 2000, shall receive an increase in
its case mix resident class A payment of $3.78, and an increase
in the payment rate for all other case mix classes of that
amount multiplied by the class weight for that case mix class
established in Minnesota Rules, part 9549.0058, subpart 3;

(4) a nursing facility in Wright County licensed for 154
beds shall receive an increase of $2.03 in each case mix payment
rate to be used for employee wage and benefit enhancements;

(5) a facility in Todd County licensed for 78 beds, shall
have its operating cost per diem increased by the following
amounts:

(i) case mix class A, $1.16;

(ii) case mix class B, $1.50;

(iii) case mix class C, $1.89;

(iv) case mix class D, $2.26;

(v) case mix class E, $2.63;

(vi) case mix class F, $2.65;

(vii) case mix class G, $2.96;

(viii) case mix class H, $3.55;

(ix) case mix class I, $3.76;

(x) case mix class J, $4.08; and

(xi) case mix class K, $4.76; and

(6) a nursing facility in Pine City that decertified 22
beds in calendar year 1999 shall have its property-related per
diem payment rate increased by $1.59.

Sec. 17.

Minnesota Statutes 2004, section 256B.434,
subdivision 4c, is amended to read:

Subd. 4c.

Facility rate increases effective january 1,
2002.

For the rate period beginning January 1, 2002, and for
the rate year beginning July 1, 2002, a nursing facility in
Morrison County licensed for 83 beds as of March 1, 2001, shall
receive an increase of $2.54 in each case mix payment rate to
offset property tax payments due as a result of the facility's
conversion from nonprofit to for-profit status. The increase
under this subdivision shall be added following the
determination under this chapter of the payment rate for the
rate year beginning July 1, 2001, and shall be included in the
facility's total payment rates for the purposes of determining
future rates under this section deleted text begin or any other sectiondeleted text end .

Sec. 18.

Minnesota Statutes 2004, section 256B.434,
subdivision 4d, is amended to read:

Subd. 4d.

Facility rate increases effective july 1,
2001.

For the rate year beginning July 1, 2001, a nursing
facility in Hennepin County licensed for 302 beds shall receive
an increase of 29 cents in each case mix payment rate to correct
an error in the cost-reporting system that occurred prior to the
date that the facility entered the alternative payment
demonstration project. The increase under this subdivision
shall be added following the determination under this chapter of
the payment rate for the rate year beginning July 1, 2001, and
shall be included in the facility's total payment rates for the
purposes of determining future rates under this section deleted text begin or any
other sectiondeleted text end .

Sec. 19.

Minnesota Statutes 2004, section 256B.434, is
amended by adding a subdivision to read:

new text begin Subd. 18. new text end

new text begin Phase-out of alternative payment system
contracts. new text end

new text begin Nursing facilities that have entered into a contract
with the commissioner under the provisions of this section will
cease their contractual agreement with the commissioner
effective October 1, 2009. Nursing facilities with a contract
in effect on September 30, 2006, shall be paid the contract
payment rate for the remainder of the phase-in period according
to the provisions of section 256B.441, subdivision 53.
new text end

Sec. 20.

Minnesota Statutes 2004, section 256B.434, is
amended by adding a subdivision to read:

new text begin Subd. 19. new text end

new text begin Phase-out of rule 50 property rates. new text end

new text begin Effective
October 1, 2006, payment rates for property shall no longer be
determined under section 256B.431. A facility that does not
have a contract with the commissioner under this section shall
be construed as being reimbursed under neither section 256B.431
nor this section.
new text end

Sec. 21.

Minnesota Statutes 2004, section 256B.438,
subdivision 3, is amended to read:

Subd. 3.

Case mix indices.

(a) The commissioner of human
services shall assign a case mix index to each resident class
based on the Centers for Medicare and Medicaid Services staff
time measurement study and adjusted for Minnesota-specific wage
indices. The case mix indices assigned to each resident class
shall be published in the Minnesota State Register at least 120
days prior to the implementation of the 34 group, RUG-III
resident classification system.

(b) An index maximization approach shall be used to
classify residents.

(c) After implementation of the revised case mix system,
the commissioner of human services may annually rebase case mix
indices and base rates using more current data on average wage
rates and staff time measurement studies. This rebasing shall
be calculated under subdivision 7, paragraph (b). The
commissioner shall publish in the Minnesota State Register
adjusted case mix indices at least 45 days prior to the
effective date of the adjusted case mix indices. new text begin In the event
that new case mix indices are implemented together with a new
payment system, rebasing of rates under subdivision 7, paragraph
(b), shall not apply.
new text end

Sec. 22.

new text begin [256B.441] NURSING FACILITY REIMBURSEMENT SYSTEM
EFFECTIVE OCTOBER 1, 2005.
new text end

new text begin Subdivision 1. new text end

new text begin In general. new text end

new text begin (a) The commissioner shall
establish a value-based nursing facility reimbursement system
which will provide facility-specific, prospective rates for
nursing facilities participating in the medical assistance
program. The rates shall be determined using an annual
statistical and cost report filed by each nursing facility. The
total payment rate shall be composed of four rate components:
direct care services, support services, external fixed, and
property-related rate components. The payment rate shall be
derived from statistical measures of actual costs incurred in
facility operation of nursing facilities. From this cost basis,
the components of the total payment rate shall be adjusted for
quality of services provided, recognition of staffing levels,
geographic variation in labor costs, and resident acuity.
new text end

new text begin (b) Rates shall be rebased annually. Each cost reporting
year shall begin on October 1 and end on the following September
30. Beginning in 2006, a statistical and cost report shall be
filed by each nursing facility by January 15. Notice of rates
shall be distributed by August 15 and the rates shall go into
effect on October 1 for one year.
new text end

new text begin (c) The commissioner shall begin to phase in the new
reimbursement system beginning October 1, 2006. Full phase-in
shall be completed by October 1, 2010.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin For purposes of this section, the
terms in subdivisions 3 to 42 have the meanings given unless
otherwise provided for in this section.
new text end

new text begin Subd. 3. new text end

new text begin Active beds. new text end

new text begin "Active beds" means licensed beds
that are not currently in layaway status.
new text end

new text begin Subd. 4. new text end

new text begin Activities costs. new text end

new text begin "Activities costs" means the
costs for the salaries and wages of the supervisor and other
activities workers, associated fringe benefits and payroll
taxes, supplies, services, and consultants.
new text end

new text begin Subd. 5. new text end

new text begin Administrative costs. new text end

new text begin "Administrative costs"
means the direct costs for administering the overall activities
of the nursing home. These costs include salaries and wages of
the administrator, assistant administrator, business office
employees, security guards, and associated fringe benefits and
payroll taxes, fees, contracts, or purchases related to business
office functions, licenses, and permits except as provided in
the external fixed costs category, employee recognition, travel
including meals and lodging, training, voice and data
communication or transmission, office supplies, liability
insurance and other forms of insurance not designated to other
areas, personnel recruitment, legal services, accounting
services, management or business consultants, data processing,
central or home office costs, business meetings and seminars,
postage, fees for professional organizations, subscriptions,
security services, advertising, board of director's fees,
working capital interest expense, and bad debts and bad debt
collection fees.
new text end

new text begin Subd. 6. new text end

new text begin Allowed costs. new text end

new text begin "Allowed costs" means the
amounts reported by the facility which are necessary for the
operation of the facility and the care of residents and which
are reviewed by the department for accuracy, reasonableness, and
compliance with this section and generally accepted accounting
principles.
new text end

new text begin Subd. 7. new text end

new text begin Center for medicare and medicaid
services. new text end

new text begin "Center for Medicare and Medicaid services" means the
federal agency, in the United States Department of Health and
Human Services that administers Medicaid, also referred to as
"CMS."
new text end

new text begin Subd. 8. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the
commissioner of human services unless specified otherwise.
new text end

new text begin Subd. 9. new text end

new text begin Desk audit. new text end

new text begin "Desk audit" means the
establishment of the payment rate based on the commissioner's
review and analysis of required reports, supporting
documentation, and work sheets submitted by the nursing facility.
new text end

new text begin Subd. 10. new text end

new text begin Dietary costs. new text end

new text begin "Dietary costs" means the costs
for the salaries and wages of the dietary supervisor,
dietitians, chefs, cooks, dishwashers, and other employees
assigned to the kitchen and dining room, and associated fringe
benefits and payroll taxes. Dietary costs also includes the
salaries or fees of dietary consultants, direct costs of raw
food (both normal and special diet food), dietary supplies, and
food preparation and serving. Also included are special dietary
supplements used for tube feeding or oral feeding, such as
elemental high nitrogen diet, even if written as a prescription
item by a physician.
new text end

new text begin Subd. 11. new text end

new text begin Direct care costs category. new text end

new text begin "Direct care costs
category" means costs for nursing services, activities, and
social services.
new text end

new text begin Subd. 12. new text end

new text begin Economic development regions. new text end

new text begin "Economic
development regions" are as defined in section 462.385,
subdivision 1.
new text end

new text begin Subd. 13. new text end

new text begin External fixed costs category. new text end

new text begin "External fixed
costs category" means costs related to the nursing home
surcharge under section 256.9657, subdivision 1; licensure fees
under section 144.122; long-term care consultation fees under
section 256B.0911, subdivision 6; family advisory council fee
under section 144A.35; scholarships under section 256B.431,
subdivision 36; planned closure rate adjustments under section
256B.437; property taxes and property insurance; and PERA.
new text end

new text begin Subd. 14.new text end [FACILITY AVERAGE CASE MIX INDEX
(CMI).] new text begin "Facility average case mix index" or "CMI" means a
numerical value score that describes the relative resource use
for all residents within the groups under the resource
utilization group (RUG-III) classification system prescribed by
the commissioner based on an assessment of each resident. The
facility average CMI shall be computed as the standardized days
divided by total days for all residents in the facility.
new text end

new text begin Subd. 15. new text end

new text begin Field audit. new text end

new text begin "Field audit" means the
examination, verification, and review of the financial records,
statistical records, and related supporting documentation on the
nursing home and any related organization.
new text end

new text begin Subd. 16. new text end

new text begin Final rate. new text end

new text begin "Final rate" means the rate
established after any adjustment by the commissioner, including,
but not limited to, adjustments resulting from audits.
new text end

new text begin Subd. 17. new text end

new text begin Fringe benefit costs. new text end

new text begin "Fringe benefit costs"
means the costs for group life, health, dental, workers'
compensation, and other employee insurances and pension,
profit-sharing, and retirement plans for which the employer pays
all or a portion of the costs and that are available to at least
all employees who work at least 20 hours per week.
new text end

new text begin Subd. 18. new text end

new text begin Generally accepted accounting principles.
new text end

new text begin "Generally Accepted Accounting Principles" means the body of
pronouncements adopted by the American Institute of Certified
Public Accountants regarding proper accounting procedures,
guidelines, and rules.
new text end

new text begin Subd. 19. new text end

new text begin Hospital-attached nursing facility status. new text end

new text begin (a)
For the purpose of setting rates under this section, for rate
years beginning after September 30, 2006, "hospital-attached
nursing facility" means a nursing facility which meets the
requirements of clauses (1) and (2); or (3); or (4), or had
hospital-attached status prior to January 1, 1995, and has been
recognized as having hospital-attached status by CMS
continuously since that date:
new text end

new text begin (1) the nursing facility is recognized by the federal
Medicare program to be a hospital-based nursing facility;
new text end

new text begin (2) the hospital and nursing facility are physically
attached or connected by a corridor;
new text end

new text begin (3) a nursing facility and hospital, which have applied for
hospital-based nursing facility status under the federal
Medicare program during the reporting year, shall be considered
a hospital-attached nursing facility for purposes of setting
payment rates under this section. The nursing facility must
file its cost report for that reporting year using Medicare
principles and Medicare's recommended cost allocation methods
had the Medicare program's hospital-based nursing facility
status been granted to the nursing facility. For each
subsequent rate year, the nursing facility must meet the
definition requirements in clauses (1) and (2). If the nursing
facility is denied hospital-based nursing facility status under
the Medicare program, the nursing facility's payment rates for
the rate years the nursing facility was considered to be a
hospital-attached nursing facility according to this paragraph
shall be recalculated treating the nursing facility as a
non-hospital-attached nursing facility;
new text end

new text begin (4) if a nonprofit or community-operated hospital and
attached nursing facility suspend operation of the hospital, the
remaining nursing facility must be allowed to continue its
status as hospital-attached for rate calculations in the three
rate years subsequent to the one in which the hospital ceased
operations.
new text end

new text begin (b) The nursing facility's cost report filed as
hospital-attached facility shall use the same cost allocation
principles and methods used in the reports filed for the
Medicare program. Direct identification of costs to the nursing
facility cost center will be permitted only when the comparable
hospital costs have also been directly identified to a cost
center which is not allocated to the nursing facility.
new text end

new text begin Subd. 20. new text end

new text begin Housekeeping costs. new text end

new text begin "Housekeeping costs" means
the costs for the salaries and wages of the housekeeping
supervisor, housekeepers, and other cleaning employees and
associated fringe benefits and payroll taxes. It also includes
the cost of housekeeping supplies, including cleaning and
lavatory supplies and contract services.
new text end

new text begin Subd. 21. new text end

new text begin Labor-related portion. new text end

new text begin The "labor-related
portion" of direct care costs and of support service costs shall
be that portion of costs that is attributable to wages for all
compensated hours, payroll taxes, and fringe benefits.
new text end

new text begin Subd. 22. new text end

new text begin Laundry costs. new text end

new text begin "Laundry costs" means the costs
for the salaries and wages of the laundry supervisor and other
laundry employees, associated fringe benefits, and payroll
taxes. It also includes the costs of linen and bedding, the
laundering of resident clothing, laundry supplies, and contract
services.
new text end

new text begin Subd. 23. new text end

new text begin Licensee. new text end

new text begin "Licensee" means the individual or
organization listed on the form issued by the Minnesota
Department of Health under chapter 144A or sections 144.50 to
144.56.
new text end

new text begin Subd. 24. new text end

new text begin Maintenance and plant operations
costs. new text end

new text begin "Maintenance and plant operations costs" means the costs
for the salaries and wages of the maintenance supervisor,
engineers, heating-plant employees, and other maintenance
employees and associated fringe benefits and payroll taxes. It
also includes direct costs for maintenance and operation of the
building and grounds, including fuel, electricity, medical waste
and garbage removal, water, sewer, supplies, tools, and repairs.
new text end

new text begin Subd. 25. new text end

new text begin Normalized direct care costs per
day. new text end

new text begin "Normalized direct care costs per day" means direct care
costs divided by standardized days. It is the costs per day for
direct care services associated with a RUG's index of 1.00.
new text end

new text begin Subd. 26. new text end

new text begin Nursing costs. new text end

new text begin "Nursing costs" means the costs
for the wages of nursing administration, staff education, and
direct care registered nurses, licensed practical nurses,
certified nursing assistants, and trained medication aides;
mental health workers and other direct care employees, and
associated fringe benefits and payroll taxes; services from a
supplemental nursing services agency and supplies that are
stocked at nursing stations or on the floor and distributed or
used individually, including: alcohol, applicators, cotton
balls, incontinence pads, disposable ice bags, dressings,
bandages, water pitchers, tongue depressors, disposable gloves,
enemas, enema equipment, soap, medication cups, diapers, plastic
waste bags, sanitary products, thermometers, hypodermic needles
and syringes, and clinical reagents or similar diagnostic
agents, and drugs which are not paid on a separate fee schedule
by the medical assistance program or any other payer.
new text end

new text begin Subd. 27. new text end

new text begin Nursing facility. new text end

new text begin "Nursing facility" means a
facility with a medical assistance provider agreement that is
licensed as a nursing home under chapter 144A or as a boarding
care home under sections 144.50 to 144.56.
new text end

new text begin Subd. 28. new text end

new text begin Operating costs. new text end

new text begin "Operating costs" means costs
associated with the direct care costs category and the support
services costs category.
new text end

new text begin Subd. 29. new text end

new text begin Payroll taxes. new text end

new text begin "Payroll taxes" means the costs
for the employer's share of the FICA and Medicare withholding
tax, and state and federal unemployment compensation taxes.
new text end

new text begin Subd. 30. new text end

new text begin Peer groups. new text end

new text begin Facilities shall be classified
into three groups, called "peer groups," which shall consist of:
new text end

new text begin (1) C&NC/Short Stay/R80 - facilities that have three or
more admissions per bed per year, are hospital-attached, or are
licensed under Minnesota Rules, parts 9570.2000 to 9570.3600;
new text end

new text begin (2) boarding care homes - facilities that have more than 50
percent of their beds licensed as boarding care homes; and
new text end

new text begin (3) standard - all other facilities.
new text end

new text begin Subd. 31. new text end

new text begin Prior rate-setting method. new text end

new text begin "Prior rate-setting
method" means the rate determination process in effect prior to
October 1, 2006, under Minnesota Rules and Minnesota Statutes.
new text end

new text begin Subd. 32. new text end

new text begin Private paying resident. new text end

new text begin "Private paying
resident" means a nursing facility resident who is not a medical
assistance recipient and whose payment rate is not established
by another third party, including the veterans administration or
Medicare.
new text end

new text begin Subd. 33. new text end

new text begin Rate year. new text end

new text begin "Rate year" means the 12-month
period beginning on October 1 following the second most recent
reporting year.
new text end

new text begin Subd. 34. new text end

new text begin Related organization. new text end

new text begin "Related organization"
means a person that furnishes goods or services to a nursing
facility and that is a close relative of a nursing facility, an
affiliate of a nursing facility, a close relative of an
affiliate of a nursing facility, or an affiliate of a close
relative of an affiliate of a nursing facility. As used in this
subdivision, paragraphs (a) to (d) apply:
new text end

new text begin (a) "Affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls or is controlled
by, or is under common control with another person.
new text end

new text begin (b) "Person" means an individual, a corporation, a
partnership, an association, a trust, an unincorporated
organization, or a government or political subdivision.
new text end

new text begin (c) "Close relative of an affiliate of a nursing facility"
means an individual whose relationship by blood, marriage, or
adoption to an individual who is an affiliate of a nursing
facility is no more remote than first cousin.
new text end

new text begin (d) "Control" including the terms "controlling,"
"controlled by," and "under common control with" means the
possession, direct or indirect, of the power to direct or cause
the direction of the management, operations, or policies of a
person, whether through the ownership of voting securities, by
contract, or otherwise, or to influence in any manner other than
through an arms length, legal transaction.
new text end

new text begin Subd. 35. new text end

new text begin Reporting period. new text end

new text begin "Reporting period" means the
one-year period beginning on October 1 and ending on the
following September 30 during which incurred costs are
accumulated and then reported on the statistical and cost report.
new text end

new text begin Subd. 36. new text end

new text begin Resident day or actual resident day. new text end

new text begin "Resident
day" or "actual resident day" means a day for which nursing
services are rendered and billable, or a day for which a bed is
held and billed. The day of admission is considered a resident
day, regardless of the time of admission. The day of discharge
is not considered a resident day, regardless of the time of
discharge.
new text end

new text begin Subd. 37. new text end

new text begin Salaries and wages. new text end

new text begin "Salaries and wages" means
amounts earned by and paid to employees or on behalf of
employees to compensate for necessary services provided.
Salaries and wages include accrued vested vacation and accrued
vested sick leave pay. Salaries and wages must be paid within
30 days of the end of the reporting period in order to be
allowable costs of the reporting period.
new text end

new text begin Subd. 38. new text end

new text begin Social services costs. new text end

new text begin "Social services costs"
means the costs for the salaries and wages of the supervisor and
other social work employees, associated fringe benefits and
payroll taxes, supplies, services, and consultants.
new text end

new text begin Subd. 39. new text end

new text begin Stakeholders. new text end

new text begin "Stakeholders" means individuals
and representatives of organizations interested in long-term
care, including nursing homes, consumers, and labor unions.
new text end

new text begin Subd. 40. new text end

new text begin Standardized days. new text end

new text begin "Standardized days" means
the sum of resident days by case mix category multiplied by the
RUG index for each category.
new text end

new text begin Subd. 41. new text end

new text begin Statistical and cost report. new text end

new text begin "Statistical and
cost report" means the forms supplied by the commissioner for
annual reporting of nursing facility expenses and statistics,
including instructions and definitions of items in the report.
new text end

new text begin Subd. 42. new text end

new text begin Support services costs category. new text end

new text begin "Support
services costs category" means the costs for dietary,
housekeeping, laundry, maintenance, and administration.
new text end

new text begin Subd. 43. new text end

new text begin Reporting of statistical and cost
information. new text end

new text begin (a) Beginning in 2006, all nursing facilities
shall provide information annually to the commissioner on a form
and in a manner determined by the commissioner. The
commissioner may also require nursing facilities to provide
statistical and cost information for a subset of the items in
the annual report on a semiannual basis. Nursing facilities
shall report only costs directly related to the operation of the
nursing facility. The facility shall not include costs which
are separately reimbursed by residents, medical assistance, or
other payors. Allocations of costs from central, affiliated, or
corporate office and related organization transactions shall be
reported according to section 256B.432. The commissioner may
grant to facilities one extension of up to 15 days for the
filing of this report if the extension is requested by December
15 and the commissioner determines that the extension will not
prevent the commissioner from establishing rates in a timely
manner required by law. The commissioner may separately require
facilities to submit in a manner specified by the commissioner
documentation of statistical and cost information included in
the report to ensure accuracy in establishing payment rates and
to perform audit and appeal review functions under this section.
Facilities shall retain all records necessary to document
statistical and cost information on the report for a period of
no less than seven years. The commissioner may amend
information in the report according to subdivision 54. The
commissioner may reject a report filed by a nursing facility
under this section if the commissioner determines that the
report has been filed in a form that is incomplete or inaccurate
and the information is insufficient to establish accurate
payment rates. In the event that a complete report is not
submitted in a timely manner, the commissioner shall reduce the
reimbursement payments to a nursing facility to 85 percent of
amounts due until the information is filed. The release of
withheld payments shall be retroactive for no more than 90
days. A nursing facility that does not submit a report or whose
report is filed in a timely manner but determined to be
incomplete shall be given written notice that a payment
reduction is to be implemented and allowed ten days to complete
the report prior to any payment reduction. The commissioner may
delay the payment withhold under exceptional circumstances to be
determined at the sole discretion of the commissioner.
new text end

new text begin (b) Nursing facilities may, within 12 months of the due
date of a statistical and cost report, file an amendment when
errors or omissions in the annual statistical and cost report
are discovered and an amendment would result in a rate increase
of at least 0.15 percent of the statewide weighted average
operating payment rate and shall, at any time, file an amendment
which would result in a rate reduction of at least 0.15 percent
of the statewide weighted average operating payment rate. The
commissioner shall make retroactive adjustments to the total
payment rate of a nursing facility if an amendment is accepted.
Where a retroactive adjustment is to be made as a result of an
amended report, audit findings, or other determination of an
incorrect payment rate, the commissioner may settle the payment
error through a negotiated agreement with the facility and a
gross adjustment of the payments to the facility. Retroactive
adjustments shall not be applied to private pay residents. An
error or omission for purposes of this item does not include a
nursing facility's determination that an election between
permissible alternatives was not advantageous and should be
changed.
new text end

new text begin (c) If the commissioner determines that a nursing facility
knowingly supplied inaccurate or false information or failed to
file an amendment to a statistical and cost report that resulted
in or would result in an overpayment, the commissioner shall
immediately adjust the nursing facility's payment rate and
recover the entire overpayment. The commissioner may also
terminate the commissioner's agreement with the nursing facility
and prosecute under applicable state or federal law.
new text end

new text begin Subd. 44. new text end

new text begin Calculation of direct care per diem costs. new text end

new text begin The
commissioner shall calculate, for each nursing facility, the
normalized per diem cost for direct care services by dividing
the total allowable reported costs for direct care services by
the number of standardized days for the same reporting period.
new text end

new text begin Subd. 45. new text end

new text begin Calculation of support services per diem
costs. new text end

new text begin The commissioner shall calculate, for each nursing
facility, the per diem cost for support services by dividing the
total allowable reported costs for support services by the
number of resident days for the same reporting period.
new text end

new text begin Subd. 46. new text end

new text begin Calculation of a quality score. new text end

new text begin (a) The
commissioner shall determine a quality score for each nursing
facility using quality measures established in section 256B.439,
according to methods determined by the commissioner in
consultation with stakeholders and experts. These methods shall
be exempt from the rulemaking requirements under chapter 14.
new text end

new text begin (b) For each quality measure, a score shall be determined
with a maximum number of points available and number of points
assigned as determined by the commissioner using the methodology
established according to this subdivision. The scores
determined for all quality measures shall be totaled. The
determination of the quality measures to be used and the methods
of calculating scores may be revised annually by the
commissioner.
new text end

new text begin (c) For the initial rate year under the new payment system,
the quality measures shall include:
new text end

new text begin (1) staff turnover;
new text end

new text begin (2) staff retention;
new text end

new text begin (3) use of pool staff;
new text end

new text begin (4) quality indicators from the minimum data set; and
new text end

new text begin (5) survey deficiencies.
new text end

new text begin (d) For rate years beginning after October 1, 2006, when
making revisions to the quality measures or method for
calculating scores, the commissioner shall publish the
methodology in the State Register at least 15 months prior to
the start of the rate year for which the revised methodology is
to be used for rate-setting purposes. The quality score used to
determine payment rates shall be established for a rate year
using data submitted in the statistical and cost report from the
associated reporting year, and using data from other sources
related to a period beginning no more than six months prior to
the associated reporting year.
new text end

new text begin Subd. 47. new text end

new text begin Calculation of payment rate for direct care
services. new text end

new text begin The commissioner shall provide recommendations to the
legislature by February 15, 2006, on specific methodology for
the establishment of the payment rate for direct care services
under the new system. The recommendations must not increase
expenditures for the new payment system beyond the limits of the
appropriation. The commissioner shall include recommendations
on options for recognizing changes in direct care staff hours
that may require a supplemental appropriation in the future.
new text end

new text begin Subd. 48. new text end

new text begin Calculation of payment rate for support
services. new text end

new text begin The payment rate for support services shall be a
fixed amount adjusted for the facility's peer group and
geography.
new text end

new text begin (a) For each facility, determine the geographic normalized
support services costs per standardized day according to clauses
(1) to (7):
new text end

new text begin (1) for the costs determined in subdivision 45, for each
facility, determine the portion, as a percent, that is
labor-related;
new text end

new text begin (2) array the values in clause (1) by peer group and select
the median for each peer group;
new text end

new text begin (3) for each facility, multiply the costs determined in
subdivision 45 by the value determined in clause (2) for its
peer group;
new text end

new text begin (4) divide the value determined in clause (3) by the
geographic adjuster determined in subdivision 50;
new text end

new text begin (5) for each facility, multiply the costs determined in
subdivision 45 by the value of one minus the value determined in
clause (2) for its peer group;
new text end

new text begin (6) add the value determined in clause (4) to the value
determined in clause (5);
new text end

new text begin (7) array the values determined in clause (6) for each peer
group, and select the 40th percentile; and
new text end

new text begin (8) the commissioner is authorized to apply multipliers to
the values determined in clause (7) to assure that expenditures
are within the limits of the appropriation and that funds are
not shifted between peer groups. These values shall be the
unadjusted support services payment rate for the three peer
groups.
new text end

new text begin (b) The support services price for each facility shall be
the value determined in paragraph (a), clause (8), adjusted by
the geographic adjuster of the facility according to clauses (1)
to (4):
new text end

new text begin (1) the value determined in paragraph (a), clause (8),
shall be multiplied by the value determined in paragraph (a),
clause (2), for the facility's peer group;
new text end

new text begin (2) multiply the value determined in clause (1) by the
geographic adjuster determined in subdivision 50;
new text end

new text begin (3) for each facility, multiply the value determined in
paragraph (a), clause (8), by the value of one minus the value
determined in paragraph (a), clause (2), for the facility's peer
group;
new text end

new text begin (4) add the value determined in clause (2) to the value
determined in clause (3). This value shall be the support
services payment rate for each facility; and
new text end

new text begin (c) For rate years beginning on or after October 1, 2007,
the value determined in paragraph (b), clause (4), shall not be
less than the value used for the rate year beginning October 1,
2006.
new text end

new text begin Subd. 49. new text end

new text begin Calculation of quality add-on. new text end

new text begin The payment
rate for the quality add-on shall be a variable amount based on
each facility's quality score.
new text end

new text begin (a) For the rate year beginning October 1, 2006, the
maximum quality add-on percent shall be three percent and this
add-on shall not be subject to the phase-in under subdivision
53. When new quality measures are incorporated into the quality
score methodology and when existing quality measures are updated
or improved, the commissioner may increase the maximum quality
add-on percent.
new text end

new text begin (b) For each facility, determine the sum of the values
determined in subdivisions 47 and 48.
new text end

new text begin (c) For each facility determine a ratio of the quality
score of the facility determined in subdivision 46, less 40 and
then divided by 60. If this value is less than zero, use the
value zero.
new text end

new text begin (d) For each facility, the quality add-on shall be the
value determined in paragraph (b) times the value determined in
paragraph (c) times the maximum quality add-on percent.
new text end

new text begin Subd. 50. new text end

new text begin Geographic adjustments of labor-related costs.
new text end

new text begin The commissioner shall determine adjusters for the labor-related
share of the operating rate which shall be the ratio calculated
in paragraphs (a) to (c), using data reported under subdivision
43. In paragraphs (a) and (b), use direct care costs and direct
care compensated hours and use only facilities that have
reported both.
new text end

new text begin (a) Calculate the sum of compensation for all facilities in
each economic development region divided by the facilities total
compensated hours.
new text end

new text begin (b) Calculate the sum of compensation for all facilities in
the state divided by total reported compensated hours of all
facilities in the state.
new text end

new text begin (c) For each economic development region, divide the value
in paragraph (a) by the value in paragraph (b). These ratios
shall be the geographic adjusters for the economic development
regions.
new text end

new text begin Subd. 51. new text end

new text begin Adjuster for operating payment rates. new text end

new text begin (a) The
commissioner shall provide information to the appropriate
committee chairs of the legislature by January 15 of each year
specifying adjusters that may be multiplied by the uninflated
payment rates, or by any other factor the commissioner deems
appropriate, for direct care and support service costs
determined in subdivisions 47 and 48. The information shall
include:
new text end

new text begin (1) the projected change in the CPI-U, between the midpoint
of the reporting year and the midpoint of the rate year, as
determined by the national economic consultant used by the
commissioner of finance, for the next rate year; and
new text end

new text begin (2) the costs or savings to the state of adjusting payment
rates according to clause (1).
new text end

new text begin (b) The commissioner may also describe other factors or
methods that may be considered in adjusting rates.
new text end

new text begin Subd. 52. new text end

new text begin Calculation of payment rate for external fixed
costs. new text end

new text begin The commissioner shall calculate a payment rate for
external fixed costs.
new text end

new text begin (a) For facilities licensed as nursing homes, the portion
related to section 256.9657 shall be equal to $8.86. For
facilities licensed as both nursing homes and boarding care
homes, the portion related to section 256.9657 shall be equal to
$8.86 multiplied by the ratio of their number of nursing home
beds divided by their total number of active licensed and
certified nursing home and boarding care beds.
new text end

new text begin (b) The portion related to the licensure fee under section
144.122, paragraph (d), shall be the amount of the fee divided
by actual resident days.
new text end

new text begin (c) The portion related to scholarships shall be determined
under section 256B.431, subdivision 36.
new text end

new text begin (d) The portion related to long-term care consultation
shall be determined according to section 256B.0911, subdivision
6.
new text end

new text begin (e) The portion related to development and education of
resident and family advisory councils under section 144A.33
shall be $5 divided by 365.
new text end

new text begin (f) The portion related to planned closure rate adjustments
shall be as determined under section 256B.437.
new text end

new text begin (g) The portions related to property insurance, real estate
taxes, special assessments, and payments made in lieu of real
estate taxes directly identified or allocated to the nursing
facility shall be the actual amounts divided by actual resident
days.
new text end

new text begin (h) The portion related to PERA shall be actual costs
divided by actual resident days.
new text end

new text begin (i) The payment rate for external fixed costs shall be the
sum of the amounts in paragraphs (a) to (h).
new text end

new text begin Subd. 53. new text end

new text begin Phase-in. new text end

new text begin The commissioner shall implement the
operating payment rate-setting methods in this section according
to paragraphs (a) to (j).
new text end

new text begin (a) Total payment rates effective on June 30, 2006, shall
remain in effect through September 30, 2006.
new text end

new text begin (b) By August 15 of 2006, 2007, and 2008, the commissioner
shall notify nursing facilities of the operating payment rates
they will receive under both this section and under the prior
rate-setting method, of the blended operating payment rates that
will apply based on paragraphs (c) to (i), and the actual
operating payment rate that will result from application of
paragraph (j). For purposes of determining payment rates under
the prior rate-setting method, the RUG's indices determined
under section 256B.438, subdivision 3, paragraph (a), shall be
used. For purposes of determining payment rates under the new
rate-setting method, the RUG's indices determined under section
256B.438, subdivision 3, paragraph (c), shall be used.
new text end

new text begin (c) For facilities reimbursed under section 256B.434 on
September 30, 2006, for purposes of determining payment rates
under the prior rate-setting method, and under this section for
rate years beginning after June 30, 2006, the rate adjustment
under section 256B.434, subdivision 4, paragraph (c), shall
apply only to the property-related payment rate. For facilities
reimbursed under section 256B.431 on September 30, 2006, for
rate years beginning on and after October 1, 2006, property
rates shall continue to be determined under Minnesota Rules,
parts 9549.0010 to 9549.0080.
new text end

new text begin (d) For the rate year beginning October 1, 2006, for the
operating rate components under the prior rate-setting method,
the commissioner shall use the amounts in effect on June 30,
2006. For the rate years beginning on October 1, 2007, and
October 1, 2008, the commissioner shall use the amounts in
effect on the prior September 30.
new text end

new text begin (e) For RUG's classifications with an effective date prior
to October 1, 2007, the commissioner of health shall apply index
maximization using the indices determined under section
256B.438, subdivision 3, paragraph (a). For RUG's
classifications with an effective date on or after October 1,
2007, the commissioner of health shall apply index maximization
using the indices determined under section 256B.438, subdivision
3, paragraph (c).
new text end

new text begin (f) The blended total payment rate that will apply on
October 1, 2006, shall consist of ten percent of the amount
determined under this section and 90 percent of the amount
determined under the prior rate-setting method.
new text end

new text begin (g) The blended total payment rate that will apply on
October 1, 2007, shall consist of 40 percent of the amount
determined under this section and 60 percent of the amount
determined under the prior rate-setting method.
new text end

new text begin (h) The blended total payment rate that will apply on
October 1, 2008, shall consist of 70 percent of the amount
determined under this section and 30 percent of the amount
determined under the prior rate-setting method.
new text end

new text begin (i) The blended total payment rate that will apply on
October 1, 2009, shall be the amount determined under this
section.
new text end

new text begin (j) For rate years beginning October 1 of 2006, 2007, and
2008, for facilities for which the rate determined under this
subdivision as adjusted according to section 256B.431,
subdivision 41, is less than the rate that was in effect on
September 30, 2006, the actual operating payment rate shall be
the rate that was in effect on September 30, 2006. For the rate
year beginning October 1, 2009, for facilities for which the
rate determined under this section is less than the rate
determined under the prior rate-setting method, the actual
operating payment rate shall be the rate determined under this
section but shall be no more than $10 less than the rate that
was in effect on September 30, 2006. For rate years beginning
on or after October 1, 2010, for facilities for which the rate
determined under this section is less than the rate that was in
effect on September 30, 2010, the actual operating payment rate
shall be the rate determined under this section.
new text end

new text begin Subd. 54. new text end

new text begin Audit authority. new text end

new text begin (a) The commissioner may
subject reports and supporting documentation to desk and field
audits to determine compliance with this section. Retroactive
adjustments shall be made as a result of desk or field audit
findings if the cumulative impact of the finding would result in
a rate adjustment of at least 0.15 percent of the statewide
weighted average operating payment rate. If a field audit
reveals inadequacies in a nursing facility's record keeping or
accounting practices, the commissioner may require the nursing
facility to engage competent professional assistance to correct
those inadequacies within 90 days so that the field audit may
proceed.
new text end

new text begin (b) Field audits may cover the four most recent annual
statistical and cost reports for which desk audits have been
completed and payment rates have been established. The field
audit must be an independent review of the nursing facility's
statistical and cost report. All transactions, invoices, or
other documentation that support or relate to the statistics and
costs claimed on the annual statistical and cost reports are
subject to review by the field auditor. If the provider fails
to provide the field auditor access to supporting documentation
related to the information reported on the statistical and cost
report within the time period specified by the commissioner, the
commissioner shall calculate the total payment rate by
disallowing the cost of the items for which access to the
supporting documentation is not provided.
new text end

new text begin (c) Changes in the total payment rate which result from
desk or field audit adjustments to statistical and cost reports
for reporting years earlier than the four most recent annual
cost reports must be made to the four most recent annual
statistical and cost reports, the current statistical and cost
report, and future statistical and cost reports to the extent
that those adjustments affect the total payment rate established
by those reporting years.
new text end

new text begin (d) The commissioner shall extend the period for retention
of records under subdivision 43 for purposes of performing field
audits as necessary to enforce section 256B.48 with written
notice to the facility postmarked no later than 90 days prior to
the expiration of the record retention requirement.
new text end

new text begin Subd. 55. new text end

new text begin Remedies for disputes. new text end

new text begin The commissioner shall
provide remedies for disputes under this section.
new text end

new text begin (a) A provider may appeal a determination of a payment rate
established under this section if the appeal, if successful,
would result in a change to the provider's payment rate of at
least 0.15 percent of the statewide weighted average operating
payment rate. Appeals must be filed according to procedures in
this subdivision.
new text end

new text begin (b) To appeal, the provider shall file with the
commissioner a written notice of appeal and the appeal must be
postmarked or received by the commissioner within 60 days of the
date the determination of the payment rate was mailed or
personally received by a provider, whichever is earlier.
new text end

new text begin (c) The notice of appeal must specify:
new text end

new text begin (1) each disputed item;
new text end

new text begin (2) the reason for the dispute;
new text end

new text begin (3) the computation that the provider believes is correct;
new text end

new text begin (4) the impact upon the facility's payment rate if the
appeal is successful;
new text end

new text begin (5) the authority in statute or rule upon which the
provider relies for each disputed item;
new text end

new text begin (6) the name and address of the person or firm with whom
contacts may be made regarding the appeal; and
new text end

new text begin (7) additional information the provider wishes to offer
with the appeal to support the provider's position. The
commissioner may request additional information to clarify the
provider's position.
new text end

new text begin (d) The commissioner shall review appeals and issue a
written appeal determination on each appealed item within 180
days of the due date of the appeal. Upon mutual agreement, the
commissioner and the provider may extend the time for issuing a
determination for a specified period. The appeal determination
takes effect 30 days following the date of issuance specified in
the determination.
new text end

new text begin (e) For an appeal item on which the provider disagrees with
the appeal determination, the provider may request
reconsideration. A request for reconsideration must be
postmarked or received by the commissioner within 30 days of the
date of issuance of the determination. A request for
reconsideration delays the date on which the determination takes
effect. The appeal determination and any changes resulting from
reconsideration shall be implemented 30 days following the
issuance of the reconsideration response.
new text end

new text begin (f) For an appeal item on which the provider disagrees with
the appeal determination and the reconsideration response, if
any, the provider may file with the commissioner a written
demand for a contested case hearing to determine the proper
resolution of specified appeal items. The demand must be
postmarked or received by the commissioner within 30 days of the
date of issuance specified in the determination or within 30
days of the issuance of the reconsideration response, if
reconsideration was requested. A demand for a contested case
hearing for an appeal item nullifies the written appeal
determination issued by the commissioner for that appeal item.
The commissioner shall refer any demand for a contested case
hearing to the Office of the Attorney General.
new text end

new text begin (g) A contested case hearing shall be heard by an
administrative law judge according to sections 14.48 to 14.56.
In any proceeding under this section, the appealing party must
demonstrate by a preponderance of the evidence that the
determination of a payment rate is incorrect.
new text end

new text begin (h) Regardless of any rate appeal, the rate established
must be the rate paid and must remain in effect until final
resolution of the appeal or a subsequent rate determination.
new text end

new text begin (i) A provider shall not use this process to challenge the
method of determining a quality score under subdivision 46; or
the commissioner's determination under subdivision 56 to
negotiate rates. This process does not apply to a request from
a resident or nursing facility for reconsideration of the
classification of a resident under section 144.0722 or 144.0724.
new text end

new text begin Subd. 56. new text end

new text begin Interim rates. new text end

new text begin (a) The commissioner shall
determine interim payment rates for nursing facilities that have
no cost history. The facilities shall provide statistical and
cost information, according to subdivision 43, on a prospective
basis. The commissioner shall establish an interim rate using
the quality score of the nursing facility at the 60th
percentile, direct care costs according to a budget negotiated
with the provider and the methods provided in subdivision 47.
The interim rate shall apply until a rate can be established
under this section. Upon providing final information under
subdivision 43 for the interim rate period, the commissioner
shall determine that an overpayment has occurred if the interim
payment rate for direct care costs exceeded the final rate for
direct care costs by an amount greater than four percent, and
shall recover any overpayment.
new text end

new text begin In the event of an overpayment, the commissioner may allow
up to six months for complete repayment if the provider
demonstrates that immediate repayment of the overpayment would
result in an undue hardship to the operation of the facility.
new text end

new text begin (b) The commissioner may negotiate an interim rate with a
nursing facility, according to the process in paragraph (a),
when that facility has been purchased by an unrelated party
within the last six months. In determining if negotiations
shall be initiated, the commissioner shall consider:
new text end

new text begin (1) the potential inadequacy of current rates as evidenced
by the position in the arrays of operating costs of the rates of
the requesting facility;
new text end

new text begin (2) preventing closure of facilities in under-bedded areas
of the state, as measured by the number of beds per 1,000
elderly in the county or in contiguous counties in which the
facility is located;
new text end

new text begin (3) the ability of the purchaser to provide high quality
services as evidenced by high quality scores of any other
facility under the control of the purchaser operating in
Minnesota;
new text end

new text begin (4) the ability of the purchasing entity to operate
efficiently as evidenced by the difference between the operating
costs and target prices of the other facility or facilities
under the control of the purchaser operating in Minnesota;
new text end

new text begin (5) previous success of the purchaser with negotiated
interim rates;
new text end

new text begin (6) the financial soundness of the purchaser;
new text end

new text begin (7) avoiding negotiating interim rates with purchasers who
have sold facilities that then requested interim rate
negotiation; and
new text end

new text begin (8) avoiding too much consolidation of the nursing facility
industry within any small number of providers.
new text end

Sec. 23.

Minnesota Statutes 2004, section 256B.47,
subdivision 2, is amended to read:

Subd. 2.

Notice to residents.

(a) No increase in nursing
facility rates for private paying residents shall be effective
unless the nursing facility notifies the resident or person
responsible for payment of the increase in writing 30 days
before the increase takes effect.

A nursing facility may adjust its rates without giving the
notice required by this subdivision when the purpose of the rate
adjustment is to reflect a change in the case-mix classification
of the resident. If the state fails to set rates as required by
section deleted text begin 256B.431 deleted text end new text begin 256B.441new text end , deleted text begin subdivision 1,deleted text end the time required for
giving notice is decreased by the number of days by which the
state was late in setting the rates.

(b) If the state does not set rates by the date required in
section deleted text begin 256B.431 deleted text end new text begin 256B.441new text end , deleted text begin subdivision 1,deleted text end nursing facilities
shall meet the requirement for advance notice by informing the
resident or person responsible for payments, on or before the
effective date of the increase, that a rate increase will be
effective on that date. If the exact amount has not yet been
determined, the nursing facility may raise the rates by the
amount anticipated to be allowed. Any amounts collected from
private pay residents in excess of the allowable rate must be
repaid to private pay residents with interest at the rate used
by the commissioner of revenue for the late payment of taxes and
in effect on the date the rate increase is effective.

Sec. 24. new text begin MORATORIUM PROJECT DEADLINE EXTENSION IN AITKIN
COUNTY.
new text end

new text begin Notwithstanding Minnesota Statutes, section 144A.073,
subdivisions 3 and 10, the commissioner of health shall extend
the project approval until December 31, 2006, for a nursing home
moratorium exception project that was approved under Minnesota
Statutes, section 144A.073, in 2002 to remodel a 48-bed facility
in Aitkin County.
new text end

Sec. 25. new text begin MORATORIUM PROJECT DEADLINE EXTENSION IN
RENVILLE COUNTY.
new text end

Sec. 26. new text begin RECOMMENDATIONS ON CRITERIA AND RATE
NEGOTIATIONS FOR NURSING FACILITIES.
new text end

new text begin The commissioner of human services shall provide
recommendations to the legislature by December 15, 2006,
defining criteria and rate negotiations for nursing facilities
that provide specialized care or that have extenuating
circumstances requiring a negotiated rate. The commissioner
shall also provide recommendations to the legislature on changes
to the current nursing facility property system by December 15,
2006.
new text end

ARTICLE 5

CONTINUING CARE FOR THE ELDERLY AND DISABLED

Section 1.

Minnesota Statutes 2004, section 252.27,
subdivision 2a, is amended to read:

Subd. 2a.

Contribution amount.

(a) The natural or
adoptive parents of a minor child, including a child determined
eligible for medical assistance without consideration of
parental income, must contribute to the cost of services used by
making monthly payments on a sliding scale based on income,
unless the child is married or has been married, parental rights
have been terminated, or the child's adoption is subsidized
according to section 259.67 or through title IV-E of the Social
Security Act.

(b) For households with adjusted gross income equal to or
greater than 100 percent of federal poverty guidelines, the
parental contribution shall be computed by applying the
following schedule of rates to the adjusted gross income of the
natural or adoptive parents:

(1) if the adjusted gross income is equal to or greater
than 100 percent of federal poverty guidelines and less than 175
percent of federal poverty guidelines, the parental contribution
is $4 per month;

(2) if the adjusted gross income is equal to or greater
than 175 percent of federal poverty guidelines and less than or
equal to deleted text begin 375 deleted text end new text begin 545 new text end percent of federal poverty guidelines, the
parental contribution shall be determined using a sliding fee
scale established by the commissioner of human services which
begins at one percent of adjusted gross income at 175 percent of
federal poverty guidelines and increases to 7.5 percent of
adjusted gross income for those with adjusted gross income up to
deleted text begin 375 deleted text end new text begin 545 new text end percent of federal poverty guidelines;

(3) if the adjusted gross income is greater than deleted text begin 375 deleted text end new text begin 545
new text end percent of federal poverty guidelines and less than 675 percent
of federal poverty guidelines, the parental contribution shall
be 7.5 percent of adjusted gross income;

(4) if the adjusted gross income is equal to or greater
than 675 percent of federal poverty guidelines and less than 975
percent of federal poverty guidelines, the parental contribution
shall be new text begin determined using a sliding fee scale established by the
commissioner of human services which begins at 7.5 percent of
adjusted gross income at 675 percent of federal poverty
guidelines and increases to new text end ten percent of adjusted gross income
new text begin for those with adjusted gross income up to 975 percent of
federal poverty guidelinesnew text end ; and

(5) if the adjusted gross income is equal to or greater
than 975 percent of federal poverty guidelines, the parental
contribution shall be 12.5 percent of adjusted gross income.

If the child lives with the parent, the annual adjusted
gross income is reduced by $2,400 prior to calculating the
parental contribution. If the child resides in an institution
specified in section 256B.35, the parent is responsible for the
personal needs allowance specified under that section in
addition to the parental contribution determined under this
section. The parental contribution is reduced by any amount
required to be paid directly to the child pursuant to a court
order, but only if actually paid.

(c) The household size to be used in determining the amount
of contribution under paragraph (b) includes natural and
adoptive parents and their dependents, including the child
receiving services. Adjustments in the contribution amount due
to annual changes in the federal poverty guidelines shall be
implemented on the first day of July following publication of
the changes.

(d) For purposes of paragraph (b), "income" means the
adjusted gross income of the natural or adoptive parents
determined according to the previous year's federal tax form,
except, effective retroactive to July 1, 2003, taxable capital
gains to the extent the funds have been used to purchase a home
shall not be counted as income.

(e) The contribution shall be explained in writing to the
parents at the time eligibility for services is being
determined. The contribution shall be made on a monthly basis
effective with the first month in which the child receives
services. Annually upon redetermination or at termination of
eligibility, if the contribution exceeded the cost of services
provided, the local agency or the state shall reimburse that
excess amount to the parents, either by direct reimbursement if
the parent is no longer required to pay a contribution, or by a
reduction in or waiver of parental fees until the excess amount
is exhausted.

(f) The monthly contribution amount must be reviewed at
least every 12 months; when there is a change in household size;
and when there is a loss of or gain in income from one month to
another in excess of ten percent. The local agency shall mail a
written notice 30 days in advance of the effective date of a
change in the contribution amount. A decrease in the
contribution amount is effective in the month that the parent
verifies a reduction in income or change in household size.

(g) Parents of a minor child who do not live with each
other shall each pay the contribution required under paragraph
(a). An amount equal to the annual court-ordered child support
payment actually paid on behalf of the child receiving services
shall be deducted from the adjusted gross income of the parent
making the payment prior to calculating the parental
contribution under paragraph (b).

(h) The contribution under paragraph (b) shall be increased
by an additional five percent if the local agency determines
that insurance coverage is available but not obtained for the
child. For purposes of this section, "available" means the
insurance is a benefit of employment for a family member at an
annual cost of no more than five percent of the family's annual
income. For purposes of this section, "insurance" means health
and accident insurance coverage, enrollment in a nonprofit
health service plan, health maintenance organization,
self-insured plan, or preferred provider organization.

Parents who have more than one child receiving services
shall not be required to pay more than the amount for the child
with the highest expenditures. There shall be no resource
contribution from the parents. The parent shall not be required
to pay a contribution in excess of the cost of the services
provided to the child, not counting payments made to school
districts for education-related services. Notice of an increase
in fee payment must be given at least 30 days before the
increased fee is due.

(i) The contribution under paragraph (b) shall be reduced
by $300 per fiscal year if, in the 12 months prior to July 1:

(1) the parent applied for insurance for the child;

(2) the insurer denied insurance;

(3) the parents submitted a complaint or appeal, in writing
to the insurer, submitted a complaint or appeal, in writing, to
the commissioner of health or the commissioner of commerce, or
litigated the complaint or appeal; and

(4) as a result of the dispute, the insurer reversed its
decision and granted insurance.

For purposes of this section, "insurance" has the meaning
given in paragraph (h).

A parent who has requested a reduction in the contribution
amount under this paragraph shall submit proof in the form and
manner prescribed by the commissioner or county agency,
including, but not limited to, the insurer's denial of
insurance, the written letter or complaint of the parents, court
documents, and the written response of the insurer approving
insurance. The determinations of the commissioner or county
agency under this paragraph are not rules subject to chapter 14.

Sec. 2.

new text begin [256B.0185] REQUIRED REPORT.
new text end

new text begin Subdivision 1. new text end

new text begin Pending application. new text end

new text begin By December 15 of
both 2005 and 2006, the commissioner must deliver to the
legislature a report that identifies:
new text end

new text begin (1) each county in which an application for medical
assistance from a person identified as residing in a long-term
care facility is or was pending, at any time between January 1
and December 1 of the calendar year to which the report relates,
for more than 60 days in the case of a person who is disabled,
or for more than 45 days in the case of a person who is age 65
or older; and
new text end

new text begin (2) for each of the identified counties: the number of
applications described in clause (1), the average number of days
the applications were pending, the distribution of days for
applications that were pending, and what percentage of the
applications, respectively, the county approved and denied.
new text end

new text begin Subd. 2. new text end

new text begin Time to process application. new text end

new text begin The report must
include specific recommendations for how counties, as a group,
could shorten the time it takes to act on the applications
described in subdivision 1, clause (1).
new text end

Sec. 3.

Minnesota Statutes 2004, section 256B.057,
subdivision 9, is amended to read:

Subd. 9.

Employed persons with disabilities.

(a) Medical
assistance may be paid for a person who is employed and who:

(1) meets the definition of disabled under the supplemental
security income program;

(2) is at least 16 but less than 65 years of age;

(3) meets the asset limits in paragraph (b); and

(4) effective November 1, 2003, pays a premium and other
obligations under paragraph (d).

Any spousal income or assets shall be disregarded for purposes
of eligibility and premium determinations.

After the month of enrollment, a person enrolled in medical
assistance under this subdivision who:

(1) is temporarily unable to work and without receipt of
earned income due to a medical condition, as verified by a
physician, may retain eligibility for up to four calendar
months; or

(2) effective January 1, 2004, loses employment for reasons
not attributable to the enrollee, may retain eligibility for up
to four consecutive months after the month of job loss. To
receive a four-month extension, enrollees must verify the
medical condition or provide notification of job loss. All
other eligibility requirements must be met and the enrollee must
pay all calculated premium costs for continued eligibility.

(b) For purposes of determining eligibility under this
subdivision, a person's assets must not exceed $20,000,
excluding:

(1) all assets excluded under section 256B.056;

(2) retirement accounts, including individual accounts,
401(k) plans, 403(b) plans, Keogh plans, and pension plans; and

(3) medical expense accounts set up through the person's
employer.

(c)(1) Effective January 1, 2004, for purposes of
eligibility, there will be a $65 earned income disregard. To be
eligible, a person applying for medical assistance under this
subdivision must have earned income above the disregard level.

(2) Effective January 1, 2004, to be considered earned
income, Medicare, Social Security, and applicable state and
federal income taxes must be withheld. To be eligible, a person
must document earned income tax withholding.

(d)(1) A person whose earned and unearned income is equal
to or greater than 100 percent of federal poverty guidelines for
the applicable family size must pay a premium to be eligible for
medical assistance under this subdivision. The premium shall be
based on the person's gross earned and unearned income and the
applicable family size using a sliding fee scale established by
the commissioner, which begins at one percent of income at 100
percent of the federal poverty guidelines and increases to 7.5
percent of income for those with incomes at or above 300 percent
of the federal poverty guidelines. Annual adjustments in the
premium schedule based upon changes in the federal poverty
guidelines shall be effective for premiums due in July of each
year.

(2) Effective January 1, 2004, all enrollees must pay a
premium to be eligible for medical assistance under this
subdivision. An enrollee shall pay the greater of a $35 premium
or the premium calculated in clause (1).

(3) Effective November 1, 2003, all enrollees who receive
unearned income must pay one-half of one percent of unearned
income in addition to the premium amount.

(4) Effective deleted text begin November 1, 2003 deleted text end new text begin July 1, 2005new text end , for
enrollees deleted text begin whose income does not exceed 200 percent of the
federal poverty guidelines and deleted text end who are also enrolled in
Medicare, the commissioner must reimburse the enrollee for
Medicare Part B premiums under section 256B.0625, subdivision
15, paragraph (a).

new text begin (5) Increases in benefits under title II of the Social
Security Act shall not be counted as income for purposes of this
subdivision until July 1 of each year.
new text end

(e) A person's eligibility and premium shall be determined
by the local county agency. Premiums must be paid to the
commissioner. All premiums are dedicated to the commissioner.

(f) Any required premium shall be determined at application
and redetermined at the enrollee's six-month income review or
when a change in income or household size is reported.
Enrollees must report any change in income or household size
within ten days of when the change occurs. A decreased premium
resulting from a reported change in income or household size
shall be effective the first day of the next available billing
month after the change is reported. Except for changes
occurring from annual cost-of-living increases, a change
resulting in an increased premium shall not affect the premium
amount until the next six-month review.

(g) Premium payment is due upon notification from the
commissioner of the premium amount required. Premiums may be
paid in installments at the discretion of the commissioner.

(h) Nonpayment of the premium shall result in denial or
termination of medical assistance unless the person demonstrates
good cause for nonpayment. Good cause exists if the
requirements specified in Minnesota Rules, part 9506.0040,
subpart 7, items B to D, are met. Except when an installment
agreement is accepted by the commissioner, all persons
disenrolled for nonpayment of a premium must pay any past due
premiums as well as current premiums due prior to being
reenrolled. Nonpayment shall include payment with a returned,
refused, or dishonored instrument. The commissioner may require
a guaranteed form of payment as the only means to replace a
returned, refused, or dishonored instrument.

Sec. 4.

new text begin [256B.0571] LONG-TERM CARE PARTNERSHIP.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this
section, the following terms have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Home care service. new text end

new text begin "Home care service" means
care described in section 144A.43.
new text end

new text begin Subd. 3. new text end

new text begin Long-term care insurance. new text end

new text begin "Long-term care
insurance" means a policy described in section 62S.01.
new text end

new text begin Subd. 4. new text end

new text begin Medical assistance. new text end

new text begin "Medical assistance" means
the program of medical assistance established under section
256B.01.
new text end

new text begin Subd. 5. new text end

new text begin Nursing home. new text end

new text begin "Nursing home" means a nursing
home as described in section 144A.01.
new text end

new text begin Subd. 6. new text end

new text begin Partnership policy. new text end

new text begin "Partnership policy" means
a long-term care insurance policy that meets the requirements
under subdivision 10.
new text end

new text begin Subd. 7. new text end

new text begin Partnership program. new text end

new text begin "Partnership program"
means the Minnesota partnership for long-term care program
established under this section.
new text end

new text begin Subd. 8. new text end

new text begin Program established. new text end

new text begin (a) The commissioner, in
cooperation with the commissioner of commerce, shall establish
the Minnesota partnership for long-term care program to provide
for the financing of long-term care through a combination of
private insurance and medical assistance.
new text end

new text begin (b) An individual who meets the requirements in this
paragraph is eligible to participate in the partnership
program. The individual must:
new text end

new text begin (1) be a Minnesota resident;
new text end

new text begin (2) purchase a partnership policy that is delivered, issued
for delivery, or renewed on or after the effective date of this
section, and maintain the partnership policy in effect
throughout the period of participation in the partnership
program; and
new text end

new text begin (3) exhaust the minimum benefits under the partnership
policy as described in this section. Benefits received under a
long-term care insurance policy before the effective date of
this section do not count toward the exhaustion of benefits
required in this subdivision.
new text end

new text begin Subd. 9. new text end

new text begin Medical assistance eligibility. new text end

new text begin (a) Upon
application of an individual who meets the requirements
described in subdivision 8, the commissioner shall determine the
individual's eligibility for medical assistance according to
paragraphs (b) and (c).
new text end

new text begin (b) After disregarding financial assets exempted under
medical assistance eligibility requirements, the commissioner
shall disregard an additional amount of financial assets equal
to the dollar amount of coverage utilized under the partnership
policy.
new text end

new text begin (c) The commissioner shall consider the individual's income
according to medical assistance eligibility requirements.
new text end

new text begin Subd. 10. new text end

new text begin Approved policies. new text end

new text begin (a) A partnership policy
must meet all of the requirements in paragraphs (b) to (h).
new text end

new text begin (b) Minimum coverage shall be for a period of not less than
three years and for a dollar amount equal to 36 months of
nursing home care at the minimum daily benefit rate determined
and adjusted under paragraph (c). The policy shall provide for
home health care benefits to be substituted for nursing home
care benefits on the basis of two home health care days for one
nursing home care day.
new text end

new text begin (c) Minimum daily benefits shall be $150 for nursing home
care or $75 for home care, with inflation protection provided in
the policy as described in section 62S.23, subdivision 1, clause
(1). These minimum daily benefit amounts shall also be adjusted
by the commissioner on October 1 of each year by a percentage
equal to the inflation protection feature described in section
62S.23, subdivision 1, clause (1), for purposes of setting
minimum requirements that a policy must meet in future years in
order to initially qualify as an approved policy under this
subdivision. Adjusted minimum daily benefit amounts shall be
rounded to the nearest whole dollar.
new text end

new text begin (d) A third party designated by the insured shall be
entitled to receive notice if the policy is about to lapse for
nonpayment of premium, and an additional 30-day grace period for
payment of premium shall be granted following notification to
that person.
new text end

new text begin (e) The policy must cover all of the following services:
new text end

new text begin (1) nursing home stay;
new text end

new text begin (2) home care service;
new text end

new text begin (3) care management; and
new text end

new text begin (4) up to 14 days of nursing care in a hospital while the
individual is waiting for long-term care placement.
new text end

new text begin (f) Payment for service under paragraph (e), clause (4),
must not exceed the daily benefit amount for nursing home care.
new text end

new text begin (g) A partnership policy must offer, as an option for an
adjusted premium, an elimination period of not more than 180
days.
new text end

new text begin (h) An issuer of a partnership policy must comply with any
federal law authorizing partnership policies in Minnesota,
including any federal regulations, as amended, adopted under
that law. This paragraph does not require compliance with any
provision of this federal law until the date upon which the law
requires compliance with the provision. The commissioner has
authority to enforce this paragraph.
new text end

new text begin Subd. 11. new text end

new text begin Limitations on estate recovery. new text end

new text begin For an
individual determined eligible for medical assistance under
subdivision 9, the state shall not seek recovery under the
provisions of section 256B.15 against the estate of the
individual or individual's spouse for medical assistance
benefits received by that individual.
new text end

new text begin Subd. 12. new text end

new text begin Effective date. new text end

new text begin (a) If any provision of this
section is prohibited by federal law, no provision shall become
effective until federal law is changed to permit its full
implementation. The commissioner of human services shall notify
the revisor of statutes when federal law is enacted or other
federal approval is received and publish a notice in the State
Register. The commissioner must include the notice in the first
State Register published after the effective date of the federal
changes.
new text end

new text begin (b) If federal law is changed to permit a waiver of any
provisions prohibited by federal law, the commissioner of human
services shall apply to the federal government for a waiver of
those prohibitions or other federal authority, and that
provision shall become effective upon receipt of a federal
waiver or other federal approval, notification to the revisor of
statutes, and publication of a notice in the State Register to
that effect.
new text end

Sec. 5.

Minnesota Statutes 2004, section 256B.0621,
subdivision 2, is amended to read:

Subd. 2.

Targeted case management; definitions.

For
purposes of subdivisions 3 to 10, the following terms have the
meanings given them:

(1) "home care service recipients" means those individuals
receiving the following services under section 256B.0627:
skilled nursing visits, home health aide visits, private duty
nursing, personal care assistants, or therapies provided through
a home health agency;

(2) "home care targeted case management" means the
provision of targeted case management services for the purpose
of assisting home care service recipients to gain access to
needed services and supports so that they may remain in the
community;

(3) "institutions" means hospitals, consistent with Code of
Federal Regulations, title 42, section 440.10; regional
treatment center inpatient services, consistent with section
245.474; nursing facilities; and intermediate care facilities
for persons with mental retardation;

(4) "relocation targeted case management" deleted text begin means deleted text end new text begin includes
new text end the provision of new text begin both county new text end targeted case management new text begin and public
or private vendor service coordination new text end services for the purpose
of assisting recipients to gain access to needed services and
supports if they choose to move from an institution to the
community. Relocation targeted case management may be provided
during the last 180 consecutive days of an eligible recipient's
institutional stay; and

(5) "targeted case management" means case management
services provided to help recipients gain access to needed
medical, social, educational, and other services and supports.

Sec. 6.

Minnesota Statutes 2004, section 256B.0621,
subdivision 3, is amended to read:

Subd. 3.

Eligibility.

The following persons are eligible
for relocation targeted case management or home deleted text begin care-targeted
deleted text end new text begin care targeted new text end case management:

(1) medical assistance eligible persons residing in
institutions who choose to move into the community are eligible
for relocation targeted case management services; and

(2) medical assistance eligible persons receiving home care
services, who are not eligible for any other medical assistance
reimbursable case management service, are eligible for home
deleted text begin care-targeted deleted text end new text begin care targeted new text end case management services beginning
deleted text begin January 1, 2003 deleted text end new text begin July 1, 2005new text end .

Sec. 7.

Minnesota Statutes 2004, section 256B.0621,
subdivision 4, is amended to read:

Subd. 4.

Relocation targeted new text begin county new text end case management
provider qualifications.

(a) A relocation targeted new text begin county new text end case
management provider is an enrolled medical assistance provider
who is determined by the commissioner to have all of the
following characteristics:

(1) the legal authority to provide public welfare under
sections 393.01, subdivision 7; and 393.07; or a federally
recognized Indian tribe;

(2) the demonstrated capacity and experience to provide the
components of case management to coordinate and link community
resources needed by the eligible population;

(3) the administrative capacity and experience to serve the
target population for whom it will provide services and ensure
quality of services under state and federal requirements;

(4) the legal authority to provide complete investigative
and protective services under section 626.556, subdivision 10;
and child welfare and foster care services under section 393.07,
subdivisions 1 and 2; or a federally recognized Indian tribe;

(5) a financial management system that provides accurate
documentation of services and costs under state and federal
requirements; and

(6) the capacity to document and maintain individual case
records under state and federal requirements.

(b) A provider of targeted case management under section
256B.0625, subdivision 20, may be deemed a certified provider of
relocation targeted case management.

(c) A relocation targeted new text begin county new text end case management provider
may subcontract with another provider to deliver relocation
targeted case management services. Subcontracted providers must
demonstrate the ability to provide the services outlined in
subdivision 6, and have a procedure in place that notifies the
recipient and the recipient's legal representative of any
conflict of interest if the contracted targeted case management
provider also provides, or will provide, the recipient's
services and supports. new text begin Counties must require that new text end contracted
providers must provide information on all conflicts of interest
and obtain the recipient's informed consent or provide the
recipient with alternatives.

Sec. 8.

Minnesota Statutes 2004, section 256B.0621,
subdivision 5, is amended to read:

Subd. 5.

Home care targeted case management new text begin and
relocation service coordination new text end provider qualifications.

deleted text begin The
following qualifications and certification standards must be met
by deleted text end Providers of home care targeted case management new text begin and
relocation service coordination must meet the qualifications
under subdivision 4 for county vendors or the qualifications and
certification standards under paragraphs (a) and (b) for private
vendorsnew text end .

(a) The commissioner must certify each provider of home
care targeted case management new text begin and relocation service
coordination new text end before enrollment. The certification process shall
examine the provider's ability to meet the requirements in this
subdivision and other state and federal requirements of this
service.

(b) deleted text begin A deleted text end new text begin Both new text end home care targeted case management deleted text begin provider is
an deleted text end new text begin providers and relocation service coordination providers are
new text end enrolled medical assistance deleted text begin provider deleted text end new text begin providers new text end who deleted text begin has deleted text end new text begin have new text end a
minimum of a bachelor's degree or a license in a health or human
services field, new text begin or comparable training and two years of
experience in human services,new text end and deleted text begin is deleted text end new text begin have been new text end determined by the
commissioner to have all of the following characteristics:

(1) the demonstrated capacity and experience to provide the
components of case management to coordinate and link community
resources needed by the eligible population;

(2) the administrative capacity and experience to serve the
target population for whom it will provide services and ensure
quality of services under state and federal requirements;

(3) a financial management system that provides accurate
documentation of services and costs under state and federal
requirements;

(4) the capacity to document and maintain individual case
records under state and federal requirements; deleted text begin and
deleted text end

(5) the capacity to coordinate with county administrative
functionsnew text begin ;
new text end

new text begin (6) have no financial interest in the provision of
out-of-home residential services to persons for whom home care
targeted case management or relocation service coordination is
provided; and
new text end

new text begin (7) if a provider has a financial interest in services
other than out-of-home residential services provided to persons
for whom home care targeted case management or relocation
service coordination is also provided, the county must determine
each year that:
new text end

new text begin (i) any possible conflict of interest is explained annually
at a face-to-face meeting and in writing and the person provides
written informed consent consistent with section 256B.77,
subdivision 2, paragraph (p); and
new text end

new text begin (ii) information on a range of other feasible service
provider options has been providednew text end .

Sec. 9.

Minnesota Statutes 2004, section 256B.0621,
subdivision 6, is amended to read:

Subd. 6.

Eligible services.

new text begin (a) new text end Services eligible for
medical assistance reimbursement as targeted case management
include:

(1) assessment of the recipient's need for targeted case
management services new text begin and for persons choosing to relocate, the
county must provide service coordination provider options at the
first contact and upon requestnew text end ;

(2) development, completion, and regular review of a
written individual service plan, which is based upon the
assessment of the recipient's needs and choices, and which will
ensure access to medical, social, educational, and other related
services and supports;

(3) routine contact or communication with the recipient,
recipient's family, primary caregiver, legal representative,
substitute care provider, service providers, or other relevant
persons identified as necessary to the development or
implementation of the goals of the individual service plan;

(4) coordinating referrals for, and the provision of, case
management services for the recipient with appropriate service
providers, consistent with section 1902(a)(23) of the Social
Security Act;

(5) coordinating and monitoring the overall service
delivery new text begin and engaging in advocacy as needed new text end to ensure quality of
services, appropriateness, and continued need;

(6) completing and maintaining necessary documentation that
supports and verifies the activities in this subdivision;

(7) deleted text begin traveling deleted text end new text begin assisting individuals in order to access
needed services, including travel new text end to conduct a visit with the
recipient or other relevant person necessary to develop or
implement the goals of the individual service plan; and

(8) coordinating with the institution discharge planner in
the 180-day period before the recipient's discharge.

new text begin (b) Relocation targeted county case management includes
services under paragraph (a), clauses (1), (2), and (4).
Relocation service coordination includes services under
paragraph (a), clauses (3) and (5) to (8). Home care targeted
case management includes services under paragraph (a), clauses
(1) to (8).
new text end

Sec. 10.

Minnesota Statutes 2004, section 256B.0621,
subdivision 7, is amended to read:

Subd. 7.

Time lines.

The following time lines must be
met for assigning a case manager:

(a) For relocation targeted case management, an eligible
recipient must be assigned a new text begin county new text end case manager who visits the
person within 20 working days of requesting a case manager from
their county of financial responsibility as determined under
chapter 256G.

(1) If a county agency, its contractor, or federally
recognized tribe does not provide case management services as
required, the recipient may obtain deleted text begin targeted relocation case
management services deleted text end new text begin relocation service coordination new text end from deleted text begin an
alternative deleted text end new text begin a new text end provider deleted text begin of targeted case management services
enrolled by the commissioner deleted text end new text begin qualified under subdivision 5new text end .

(2) The commissioner may waive the provider requirements in
subdivision 4, paragraph (a), clauses (1) and (4), to ensure
recipient access to the assistance necessary to move from an
institution to the community. The recipient or the recipient's
legal guardian shall provide written notice to the county or
tribe of the decision to obtain services from an alternative
provider.

(3) Providers of relocation targeted case management
enrolled under this subdivision shall:

(i) meet the provider requirements under subdivision 4 that
are not waived by the commissioner;

(ii) be qualified to provide the services specified in
subdivision 6;

(iii) coordinate efforts with local social service agencies
and tribes; and

(iv) comply with the conflict of interest provisions
established under subdivision 4, paragraph (c).

(4) Local social service agencies and federally recognized
tribes shall cooperate with providers certified by the
commissioner under this subdivision to facilitate the
recipient's successful relocation from an institution to the
community.

(b) For home care targeted case management, an eligible
recipient must be assigned a case manager within 20 working days
of requesting a case manager from a home care targeted case
management provider, as defined in subdivision 5.

Sec. 11.

Minnesota Statutes 2004, section 256B.0621, is
amended by adding a subdivision to read:

new text begin Subd. 11. new text end

new text begin Data use agreement and notice of relocation
targeted case management availability. new text end

new text begin The commissioner shall
execute a data use agreement with the Centers for Medicare and
Medicaid Services to obtain the long-term care minimum data set
data to assist residents of nursing facilities who have
indicated a desire to live in the community. The commissioner
shall in turn enter into agreements with the Centers for
Independent Living to provide information about assistance for
persons who want to move to the community.
new text end

Sec. 12.

Minnesota Statutes 2004, section 256B.0625,
subdivision 2, is amended to read:

Subd. 2.

Skilled and intermediate nursing care.

Medical
assistance covers skilled nursing home services and services of
intermediate care facilities, including training and
habilitation services, as defined in section 252.41, subdivision
3, for persons with mental retardation or related conditions who
are residing in intermediate care facilities for persons with
mental retardation or related conditions. Medical assistance
must not be used to pay the costs of nursing care provided to a
patient in a swing bed as defined in section 144.562, unless (a)
the facility in which the swing bed is located is eligible as a
sole community provider, as defined in Code of Federal
Regulations, title 42, section 412.92, or the facility is a
public hospital owned by a governmental entity with 15 or fewer
licensed acute care beds; (b) the Centers for Medicare and
Medicaid Services approves the necessary state plan amendments;
(c) the patient was screened as provided by law; (d) the patient
no longer requires acute care services; and (e) no nursing home
beds are available within 25 miles of the facility. new text begin The
commissioner shall exempt a facility from compliance with the
sole community provider requirement in clause (a) if, as of
January 1, 2004, the facility had an agreement with the
commissioner to provide medical assistance swing bed services.
new text end Medical assistance also covers up to ten days of nursing care
provided to a patient in a swing bed if: (1) the patient's
physician certifies that the patient has a terminal illness or
condition that is likely to result in death within 30 days and
that moving the patient would not be in the best interests of
the patient and patient's family; (2) no open nursing home beds
are available within 25 miles of the facility; and (3) no open
beds are available in any Medicare hospice program within 50
miles of the facility. The daily medical assistance payment for
nursing care for the patient in the swing bed is the statewide
average medical assistance skilled nursing care per diem as
computed annually by the commissioner on July 1 of each year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment and applies to medical assistance
payments for swing bed services provided on or after March 5,
2005.
new text end

Sec. 13.

Minnesota Statutes 2004, section 256B.0913,
subdivision 2, is amended to read:

Subd. 2.

Eligibility for services.

Alternative care
services are available to Minnesotans age 65 or older who would
be eligible for medical assistance within deleted text begin 180 deleted text end new text begin 120 new text end days of
admission to a nursing facility and subject to subdivisions 4 to
13.

Sec. 14.

Minnesota Statutes 2004, section 256B.0913,
subdivision 4, is amended to read:

Subd. 4.

Eligibility for funding for services for
nonmedical assistance recipients.

(a) Funding for services
under the alternative care program is available to persons who
meet the following criteria:

(1) the person has been determined by a community
assessment under section 256B.0911 to be a person who would
require the level of care provided in a nursing facility, but
for the provision of services under the alternative care
program;

(2) the person is age 65 or older;

(3) the person would be eligible for medical assistance
within deleted text begin 180 deleted text end new text begin 120 new text end days of admission to a nursing facility;

(4) the person is not ineligible for the medical assistance
program due to an asset transfer penalty;

(5) the person needs services that are not funded through
other state or federal funding;

(6) the monthly cost of the alternative care services
funded by the program for this person does not exceed 75 percent
of the monthly limit described under section 256B.0915,
subdivision 3a. This monthly limit does not prohibit the
alternative care client from payment for additional services,
but in no case may the cost of additional services purchased
under this section exceed the difference between the client's
monthly service limit defined under section 256B.0915,
subdivision 3, and the alternative care program monthly service
limit defined in this paragraph. If medical supplies and
equipment or environmental modifications are or will be
purchased for an alternative care services recipient, the costs
may be prorated on a monthly basis for up to 12 consecutive
months beginning with the month of purchase. If the monthly
cost of a recipient's other alternative care services exceeds
the monthly limit established in this paragraph, the annual cost
of the alternative care services shall be determined. In this
event, the annual cost of alternative care services shall not
exceed 12 times the monthly limit described in this paragraph;
and

(7) the person is making timely payments of the assessed
monthly fee.

A person is ineligible if payment of the fee is over 60 days
past due, unless the person agrees to:

(i) the appointment of a representative payee;

(ii) automatic payment from a financial account;

(iii) the establishment of greater family involvement in
the financial management of payments; or

(iv) another method acceptable to the county to ensure
prompt fee payments.

The county shall extend the client's eligibility as
necessary while making arrangements to facilitate payment of
past-due amounts and future premium payments. Following
disenrollment due to nonpayment of a monthly fee, eligibility
shall not be reinstated for a period of 30 days.

(b) Alternative care funding under this subdivision is not
available for a person who is a medical assistance recipient or
who would be eligible for medical assistance without a spenddown
or waiver obligation. A person whose initial application for
medical assistance and the elderly waiver program is being
processed may be served under the alternative care program for a
period up to 60 days. If the individual is found to be eligible
for medical assistance, medical assistance must be billed for
services payable under the federally approved elderly waiver
plan and delivered from the date the individual was found
eligible for the federally approved elderly waiver plan.
Notwithstanding this provision, alternative care funds may not
be used to pay for any service the cost of which: (i) is
payable by medical assistance; (ii) is used by a recipient to
meet a waiver obligation; or (iii) is used to pay a medical
assistance income spenddown for a person who is eligible to
participate in the federally approved elderly waiver program
under the special income standard provision.

(c) Alternative care funding is not available for a person
who resides in a licensed nursing home, certified boarding care
home, hospital, or intermediate care facility, except for case
management services which are provided in support of the
discharge planning process for a nursing home resident or
certified boarding care home resident to assist with a
relocation process to a community-based setting.

(d) Alternative care funding is not available for a person
whose income is greater than the maintenance needs allowance
under section 256B.0915, subdivision 1d, but equal to or less
than 120 percent of the federal poverty guideline effective July
1 in the year for which alternative care eligibility is
determined, who would be eligible for the elderly waiver with a
waiver obligation.

Sec. 15.

Minnesota Statutes 2004, section 256B.0916, is
amended by adding a subdivision to read:

new text begin Subd. 10.new text end

new text begin Transitional supports allowance.new text end

new text begin A
transitional supports allowance shall be available to all
persons under a home and community-based waiver who are moving
from a licensed setting to a community setting. "Transitional
supports allowance" means a onetime payment of up to $3,000, to
cover the costs, not covered by other sources, associated with
moving from a licensed setting to a community setting. Covered
costs include:
new text end

new text begin (1) lease or rent deposits;
new text end

new text begin (2) security deposits;
new text end

new text begin (3) utilities set-up costs, including telephone;
new text end

new text begin (4) essential furnishings and supplies; and
new text end

new text begin (5) personal supports and transports needed to locate and
transition to community settings.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon federal
approval and to the extent approved as a federal waiver
amendment.
new text end

Sec. 16.

Minnesota Statutes 2004, section 256B.095, is
amended to read:

256B.095 QUALITY ASSURANCE SYSTEM ESTABLISHED.

(a) Effective July 1, 1998, a quality assurance system for
persons with developmental disabilities, which includes an
alternative quality assurance licensing system for programs, is
established in Dodge, Fillmore, Freeborn, Goodhue, Houston,
Mower, Olmsted, Rice, Steele, Wabasha, and Winona Counties for
the purpose of improving the quality of services provided to
persons with developmental disabilities. A county, at its
option, may choose to have all programs for persons with
developmental disabilities located within the county licensed
under chapter 245A using standards determined under the
alternative quality assurance licensing system or may continue
regulation of these programs under the licensing system operated
by the commissioner. The project expires on June 30, deleted text begin 2007 deleted text end new text begin 2009new text end .

(b) Effective July 1, 2003, a county not listed in
paragraph (a) may apply to participate in the quality assurance
system established under paragraph (a). The commission
established under section 256B.0951 may, at its option, allow
additional counties to participate in the system.

(c) Effective July 1, 2003, any county or group of counties
not listed in paragraph (a) may establish a quality assurance
system under this section. A new system established under this
section shall have the same rights and duties as the system
established under paragraph (a). A new system shall be governed
by a commission under section 256B.0951. The commissioner shall
appoint the initial commission members based on recommendations
from advocates, families, service providers, and counties in the
geographic area included in the new system. Counties that
choose to participate in a new system shall have the duties
assigned under section 256B.0952. The new system shall
establish a quality assurance process under section 256B.0953.
The provisions of section 256B.0954 shall apply to a new system
established under this paragraph. The commissioner shall
delegate authority to a new system established under this
paragraph according to section 256B.0955.

Sec. 17.

Minnesota Statutes 2004, section 256B.0951,
subdivision 1, is amended to read:

Subdivision 1.

Membership.

The Quality Assurance
Commission is established. The commission consists of at least
14 but not more than 21 members as follows: at least three but
not more than five members representing advocacy organizations;
at least three but not more than five members representing
consumers, families, and their legal representatives; at least
three but not more than five members representing service
providers; at least three but not more than five members
representing counties; and the commissioner of human services or
the commissioner's designee. The first commission shall
establish membership guidelines for the transition and
recruitment of membership for the commission's ongoing
existence. Members of the commission who do not receive a
salary or wages from an employer for time spent on commission
duties may receive a per diem payment when performing commission
duties and functions. All members may be reimbursed for
expenses related to commission activities. Notwithstanding the
provisions of section 15.059, subdivision 5, the commission
expires on June 30, deleted text begin 2007 deleted text end new text begin 2009new text end .

Sec. 18.

Minnesota Statutes 2004, section 256B.0952,
subdivision 5, is amended to read:

Subd. 5.

Quality assurance teams.

Quality assurance
teams shall be comprised of county staff; providers; consumers,
families, and their legal representatives; members of advocacy
organizations; and other involved community members. Team
members must satisfactorily complete the training program
approved by the commission and must demonstrate
performance-based competency. Team members are not considered
to be county employees for purposes of workers' compensation,
unemployment insurance, or state retirement laws solely on the
basis of participation on a quality assurance team. The county
may pay a per diem to team members deleted text begin who do not receive a salary
or wages from an employer deleted text end for time spent on alternative quality
assurance process matters. All team members may be reimbursed
for expenses related to their participation in the alternative
process.

Sec. 19.

Minnesota Statutes 2004, section 256B.0953,
subdivision 1, is amended to read:

Subdivision 1.

Process components.

(a) The quality
assurance licensing process consists of an evaluation by a
quality assurance team of the facility, program, or service
according to outcome-based measurements. The process must
include an evaluation of a random sample of program consumers.
The sample must be representative of each service provided. The
sample size must be at least five percent of consumers but not
less than deleted text begin three deleted text end new text begin two new text end consumers.

(b) All consumers must be given the opportunity to be
included in the quality assurance process in addition to those
chosen for the random sample.

Sec. 20.

Minnesota Statutes 2004, section 256B.19,
subdivision 1, is amended to read:

Subdivision 1.

Division of cost.

The state and county
share of medical assistance costs not paid by federal funds
shall be as follows:

(1) beginning January 1, 1992, 50 percent state funds and
50 percent county funds for the cost of placement of severely
emotionally disturbed children in regional treatment centers;

(2) beginning January 1, 2003, 80 percent state funds and
20 percent county funds for the costs of nursing facility
placements of persons with disabilities under the age of 65 that
have exceeded 90 days. This clause shall be subject to chapter
256G and shall not apply to placements in facilities not
certified to participate in medical assistance;

(3) beginning July 1, 2004, deleted text begin 80 deleted text end new text begin 95 new text end percent state funds and
deleted text begin 20 deleted text end new text begin five new text end percent county funds for the costs of placements that
have exceeded 90 days in intermediate care facilities for
persons with mental retardation or a related condition that have
seven or more beds. This provision includes pass-through
payments made under section 256B.5015; and

(4) beginning July 1, 2004, when state funds are used to
pay for a nursing facility placement due to the facility's
status as an institution for mental diseases (IMD), the county
shall pay 20 percent of the nonfederal share of costs that have
exceeded 90 days. This clause is subject to chapter 256G.

For counties that participate in a Medicaid demonstration
project under sections 256B.69 and 256B.71, the division of the
nonfederal share of medical assistance expenses for payments
made to prepaid health plans or for payments made to health
maintenance organizations in the form of prepaid capitation
payments, this division of medical assistance expenses shall be
95 percent by the state and five percent by the county of
financial responsibility.

In counties where prepaid health plans are under contract
to the commissioner to provide services to medical assistance
recipients, the cost of court ordered treatment ordered without
consulting the prepaid health plan that does not include
diagnostic evaluation, recommendation, and referral for
treatment by the prepaid health plan is the responsibility of
the county of financial responsibility.

new text begin EFFECTIVE DATE. new text end

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

Sec. 21.

Minnesota Statutes 2004, section 256B.49,
subdivision 16, is amended to read:

Subd. 16.

Services and supports.

(a) Services and
supports included in the home and community-based waivers for
persons with disabilities shall meet the requirements set out in
United States Code, title 42, section 1396n. The services and
supports, which are offered as alternatives to institutional
care, shall promote consumer choice, community inclusion,
self-sufficiency, and self-determination.

(b) Beginning January 1, 2003, the commissioner shall
simplify and improve access to home and community-based waivered
services, to the extent possible, through the establishment of a
common service menu that is available to eligible recipients
regardless of age, disability type, or waiver program.

(c) Consumer directed community support services shall be
offered as an option to all persons eligible for services under
subdivision 11, by January 1, 2002.

(d) Services and supports shall be arranged and provided
consistent with individualized written plans of care for
eligible waiver recipients.

(e) new text begin A transitional supports allowance shall be available to
all persons under a home and community-based waiver who are
moving from a licensed setting to a community setting.
"Transitional supports allowance" means a onetime payment of up
to $3,000, to cover the costs, not covered by other sources,
associated with moving from a licensed setting to a community
setting. Covered costs include:
new text end

new text begin (1) lease or rent deposits;
new text end

new text begin (2) security deposits;
new text end

new text begin (3) utilities set-up costs, including telephone;
new text end

new text begin (4) essential furnishings and supplies; and
new text end

new text begin (5) personal supports and transports needed to locate and
transition to community settings.
new text end

new text begin (f) new text end The state of Minnesota and county agencies that
administer home and community-based waivered services for
persons with disabilities, shall not be liable for damages,
injuries, or liabilities sustained through the purchase of
supports by the individual, the individual's family, legal
representative, or the authorized representative with funds
received through the consumer-directed community support service
under this section. Liabilities include but are not limited
to: workers' compensation liability, the Federal Insurance
Contributions Act (FICA), or the Federal Unemployment Tax Act
(FUTA).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective upon federal
approval and to the extent approved as a federal waiver
amendment.
new text end

Sec. 22.

Minnesota Statutes 2004, section 256B.5012, is
amended by adding a subdivision to read:

new text begin Subd. 6. new text end

new text begin Icf/mr rate increases beginning october 1, 2005,
and october 1, 2006. new text end

new text begin For the rate years beginning October 1,
2005, and October 1, 2006, the commissioner shall provide
facilities reimbursed under this section an adjustment to the
total operating payment rate of two percent. At least
two-thirds of each year's adjustment must be used for increased
costs of employee salaries and benefits and associated costs for
FICA, the Medicare tax, workers' compensation premiums, and
federal and state unemployment insurance. Each facility
receiving an adjustment shall report to the commissioner, in the
form and manner specified by the commissioner, on how the
additional funding was used.
new text end

Sec. 23.

Minnesota Statutes 2004, section 256B.69,
subdivision 23, is amended to read:

Subd. 23.

Alternative integrated long-term care services;
elderly and disabled persons.

(a) The commissioner may
implement demonstration projects to create alternative
integrated delivery systems for acute and long-term care
services to elderly persons and persons with disabilities as
defined in section 256B.77, subdivision 7a, that provide
increased coordination, improve access to quality services, and
mitigate future cost increases. The commissioner may seek
federal authority to combine Medicare and Medicaid capitation
payments for the purpose of such demonstrations. Medicare funds
and services shall be administered according to the terms and
conditions of the federal waiver and demonstration provisions.
For the purpose of administering medical assistance funds,
demonstrations under this subdivision are subject to
subdivisions 1 to 22. The provisions of Minnesota Rules, parts
9500.1450 to 9500.1464, apply to these demonstrations, with the
exceptions of parts 9500.1452, subpart 2, item B; and 9500.1457,
subpart 1, items B and C, which do not apply to persons
enrolling in demonstrations under this section. An initial open
enrollment period may be provided. Persons who disenroll from
demonstrations under this subdivision remain subject to
Minnesota Rules, parts 9500.1450 to 9500.1464. When a person is
enrolled in a health plan under these demonstrations and the
health plan's participation is subsequently terminated for any
reason, the person shall be provided an opportunity to select a
new health plan and shall have the right to change health plans
within the first 60 days of enrollment in the second health
plan. Persons required to participate in health plans under
this section who fail to make a choice of health plan shall not
be randomly assigned to health plans under these demonstrations.
Notwithstanding section 256L.12, subdivision 5, and Minnesota
Rules, part 9505.5220, subpart 1, item A, if adopted, for the
purpose of demonstrations under this subdivision, the
commissioner may contract with managed care organizations,
including counties, to serve only elderly persons eligible for
medical assistance, elderly and disabled persons, or disabled
persons only. For persons with primary diagnoses of mental
retardation or a related condition, serious and persistent
mental illness, or serious emotional disturbance, the
commissioner must ensure that the county authority has approved
the demonstration and contracting design. Enrollment in these
projects for persons with disabilities shall be voluntary. The
commissioner shall not implement any demonstration project under
this subdivision for persons with primary diagnoses of mental
retardation or a related condition, serious and persistent
mental illness, or serious emotional disturbance, without
approval of the county board of the county in which the
demonstration is being implemented.

(b) Notwithstanding chapter 245B, sections 252.40 to
252.46, 256B.092, 256B.501 to 256B.5015, and Minnesota Rules,
parts 9525.0004 to 9525.0036, 9525.1200 to 9525.1330, 9525.1580,
and 9525.1800 to 9525.1930, the commissioner may implement under
this section projects for persons with developmental
disabilities. The commissioner may capitate payments for ICF/MR
services, waivered services for mental retardation or related
conditions, including case management services, day training and
habilitation and alternative active treatment services, and
other services as approved by the state and by the federal
government. Case management and active treatment must be
individualized and developed in accordance with a
person-centered plan. Costs under these projects may not exceed
costs that would have been incurred under fee-for-service.
Beginning July 1, 2003, and until two years after the pilot
project implementation date, subcontractor participation in the
long-term care developmental disability pilot is limited to a
nonprofit long-term care system providing ICF/MR services, home
and community-based waiver services, and in-home services to no
more than 120 consumers with developmental disabilities in
Carver, Hennepin, and Scott Counties. The commissioner shall
report to the legislature prior to expansion of the
developmental disability pilot project. This paragraph expires
two years after the implementation date of the pilot project.

(c) Before implementation of a demonstration project for
disabled persons, the commissioner must provide information to
appropriate committees of the house of representatives and
senate and must involve representatives of affected disability
groups in the design of the demonstration projects.

(d) A nursing facility reimbursed under the alternative
reimbursement methodology in section 256B.434 may, in
collaboration with a hospital, clinic, or other health care
entity provide services under paragraph (a). The commissioner
shall amend the state plan and seek any federal waivers
necessary to implement this paragraph.

new text begin (e) The commissioner, in consultation with the
commissioners of commerce and health, may approve and implement
programs for all-inclusive care for the elderly (PACE) according
to federal laws and regulations governing that program and state
laws or rules applicable to participating providers. The
process for approval of these programs shall begin only after
the commissioner receives grant money in an amount sufficient to
cover the state share of the administrative and actuarial costs
to implement the programs during state fiscal years 2006 through
2009. Grants for this purpose shall be deposited in an account
in the special revenue fund and are appropriated to the
commissioner to be used solely for the purpose of PACE
administrative and actuarial costs. A PACE provider is not
required to be licensed or certified as a health plan company as
defined in section 62Q.01, subdivision 4. Persons age 55 and
older who have been screened by the county and found to be
eligible for services under the elderly waiver or community
alternatives for disabled individuals or who are already
eligible for Medicaid but meet level of care criteria for
receipt of waiver services may choose to enroll in the PACE
program. Medicare and Medicaid services will be provided
according to this subdivision and federal Medicare and Medicaid
requirements governing PACE providers and programs. PACE
enrollees will receive Medicaid home and community-based
services through the PACE provider as an alternative to services
for which they would otherwise be eligible through home and
community-based waiver programs and Medicaid State Plan
Services. The commissioner shall establish Medicaid rates for
PACE providers that do not exceed costs that would have been
incurred under fee-for-service or other relevant managed care
programs operated by the state.
new text end

new text begin (f) The commissioner shall seek federal approval to expand
the Minnesota disability health options (MnDHO) program
established under this subdivision in stages, first to regional
population centers outside the seven-county metro area and then
to all areas of the state.
new text end

new text begin (g) Notwithstanding section 256B.0261, health plans
providing services under this section are responsible for home
care targeted case management and relocation targeted case
management. Services must be provided according to the terms of
the waivers and contracts approved by the federal government.
new text end

Sec. 24.

new text begin [256B.762] REIMBURSEMENT FOR HEALTH CARE
SERVICES.
new text end

new text begin Effective for services provided on or after October 1,
2005, payment rates for the following services shall be
increased by five percent over the rates in effect on September
30, 2005, when these services are provided as home health
services under section 256B.0625, subdivision 6a:
new text end

new text begin (1) skilled nursing visit;
new text end

new text begin (2) physical therapy visit;
new text end

new text begin (3) occupational therapy visit;
new text end

new text begin (4) speech therapy visit; and
new text end

new text begin (5) home health aide visit.
new text end

Sec. 25.

Minnesota Statutes 2004, section 256B.765, is
amended to read:

256B.765 PROVIDER RATE INCREASES.

new text begin Subdivision 1. new text end

new text begin Annual inflation adjustments. new text end

(a)
Effective July 1, 2001, within the limits of appropriations
specifically for this purpose, the commissioner shall provide an
annual inflation adjustment for the providers listed
in deleted text begin paragraph (c) deleted text end new text begin subdivision 2new text end . The index for the inflation
adjustment must be based on the change in the Employment Cost
Index for Private Industry Workers - Total Compensation
forecasted by Data Resources, Inc., as forecasted in the fourth
quarter of the calendar year preceding the fiscal year. The
commissioner shall increase reimbursement or allocation rates by
the percentage of this adjustment, and county boards shall
adjust provider contracts as needed.

(b) The commissioner of finance shall include an annual
inflationary adjustment in reimbursement rates for the providers
listed in deleted text begin paragraph (c) deleted text end new text begin subdivision 2 new text end using the inflation factor
specified in paragraph (a) as a budget change request in each
biennial detailed expenditure budget submitted to the
legislature under section 16A.11.

deleted text begin (c) deleted text end new text begin Subd. 2.new text end [ELIGIBLE PROVIDERS.] The annual adjustment
under new text begin subdivision 1,new text end paragraph (a)new text begin ,new text end shall be provided for home
and community-based waiver services for persons with mental
retardation or related conditions under section 256B.501; home
and community-based waiver services for the elderly under
section 256B.0915; waivered services under community
alternatives for disabled individuals under section 256B.49;
community alternative care waivered services under section
256B.49; traumatic brain injury waivered services under section
256B.49; nursing services and home health services under section
256B.0625, subdivision 6a; personal care services and nursing
supervision of personal care services under section 256B.0625,
subdivision 19a; private duty nursing services under section
256B.0625, subdivision 7; day training and habilitation services
for adults with mental retardation or related conditions under
sections 252.40 to 252.46; physical therapy services under
sections 256B.0625, subdivision 8, and 256D.03, subdivision 4;
occupational therapy services under sections 256B.0625,
subdivision 8a, and 256D.03, subdivision 4; speech-language
therapy services under section 256D.03, subdivision 4, and
Minnesota Rules, part 9505.0390; respiratory therapy services
under section 256D.03, subdivision 4, and Minnesota Rules, part
9505.0295; alternative care services under section 256B.0913;
adult residential program grants under Minnesota Rules, parts
9535.2000 to 9535.3000; adult and family community support
grants under Minnesota Rules, parts 9535.1700 to 9535.1760;
semi-independent living services under section 252.275 including
SILS funding under county social services grants formerly funded
under chapter 256I; and community support services for deaf and
hard-of-hearing adults with mental illness who use or wish to
use sign language as their primary means of communication.

new text begin Subd. 3. new text end

new text begin Rate increase for rate periods beginning october
1, 2005. new text end

new text begin For the rate periods beginning October 1, 2005, and
October 1, 2006, the commissioner shall increase reimbursement
rates for the providers listed in subdivision 2 by two percent.
At least two-thirds of each year's adjustment must be used for
increased costs of employee salaries and benefits and associated
costs for FICA, the Medicare tax, workers' compensation
premiums, and federal and state unemployment insurance. Each
provider receiving an adjustment shall report to the
commissioner, in the form and manner specified by the
commissioner, on how the additional funding was used.
new text end

Sec. 26. new text begin ICF/MR PLAN.
new text end

new text begin The commissioner of human services shall consult with
ICF/MR providers, advocates, counties, and consumer families to
develop recommendations and legislation concerning the future
services provided to people now served in ICFs/MR. The
recommendations shall be reported to the house and senate
committees with jurisdiction over health and human services
policy and finance issues by January 15, 2006. In preparing the
recommendations, the commissioner shall consider:
new text end

new text begin (1) consumer choice of services;
new text end

new text begin (2) consumers' service needs, including, but not limited
to, active treatment;
new text end

new text begin (3) the total cost of providing services in ICFs/MR and
alternative delivery systems for individuals currently residing
in ICFs/MR;
new text end

new text begin (4) whether it is the policy of the state to maintain an
ICF/MR system and, if so, the recommendations shall:
new text end

new text begin (i) define the purpose, types of services, and intended
recipients of ICF/MR services;
new text end

new text begin (ii) define the capacity needed to maintain ICF/MR services
for designated populations; and
new text end

new text begin (iii) assure that mechanisms are provided to adequately
fund the transition to the defined services, maintain the
designated capacity, and are adjustable to meet increased
service demands; and
new text end

new text begin (5) if alternative services are recommended to support the
people now receiving services in an ICF/MR, the recommendations
shall provide for transition planning and ensure adequate state
and federal financial resources are available to meet the needs
of ICF/MR recipients.
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. 27. new text begin DIRECTION TO THE COMMISSIONER; LICENSING AND
ALTERNATIVE QUALITY ASSURANCE STUDY.
new text end

new text begin The commissioner of human services shall arrange for a
study, including recommendations for statewide development and
implementation of regional or local quality assurance models for
disability services. The study shall include a review of
current projects or models; make findings regarding the best
components, role, and function of such models within a statewide
quality assurance system; and shall estimate the cost and
sources of funding for regional and local quality assurance
models on a statewide basis. The study shall be done in
consultation with counties, consumers of service, providers, and
representatives of the Quality Assurance Commission under
Minnesota Statutes, section 256B.0951, subdivision 1.
new text end

new text begin The study shall be submitted to the chairs of the
legislative committees with jurisdiction over health and human
services with recommendations on implementation of a statewide
system of quality assurance and licensing by July 1, 2006. The
commissioner shall submit proposed legislation for
implementation of a statewide system of quality assurance to the
chairs of the legislative committees with jurisdiction over
health and human services by December 15, 2006.
new text end

Sec. 28. new text begin CONSUMER-DIRECTED COMMUNITY SUPPORTS EXCEPTION.
new text end

new text begin (a) Effective upon federal approval, for persons using the
home and community-based waiver for persons with developmental
disabilities consumer-directed community supports option whose
budgets were reduced by the October 2004 state set budget
methodology, the commissioner must allow exceptions to exceed
the state set budget formula amount up to the daily average cost
during calendar year 2004 or for persons who graduated from
school during 2004, the average daily cost during July through
December 2004, less one-half case management and home
modifications over $5,000, when the person's county of financial
responsibility determines that: (1) necessary alternative
services will cost the same or more than the person's current
budget, and (2) administrative expenses or provider rates will
result in fewer hours of needed staffing for the person than
under the consumer-directed community supports option. Any
exceptions the county grants must be within the county's
allowable aggregate amount for the home and community-based
waiver for persons with developmental disabilities.
new text end

new text begin (b) This section expires on the date the Department of
Human Services implements a new consumer-directed community
supports budget methodology that is based on reliable and
accurate information about the services and supports intensity
needs of persons using the option which adequately accounts for
the increased costs of adults who graduate from school and need
services funded by the waiver during the day.
new text end

Sec. 29. new text begin COSTS ASSOCIATED WITH PHYSICAL ACTIVITIES.
new text end

new text begin Effective upon federal approval, the expenses allowed for
adults under the consumer-directed community supports option
shall include the costs at the lowest rate available considering
daily, monthly, semi-annual, annual, or membership rates,
including transportation, associated with physical exercise or
other physical activities to maintain or improve the person's
health and functioning.
new text end

Sec. 30. new text begin WAIVER AMENDMENT.
new text end

new text begin The commissioner of human services shall submit an
amendment to the Centers for Medicare and Medicaid Services
consistent with sections 28 and 29 by August 1, 2005.
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. 31. new text begin INDEPENDENT EVALUATION AND REVIEW OF UNALLOWABLE
ITEMS.
new text end

new text begin The commissioner of human services shall include in the
independent evaluation of the consumer-directed community
supports option provided through the home and community-based
services waivers for persons with disabilities under 65 years of
age: (1) provisions for ongoing, regular stakeholder
representatives participation through June 30, 2007; (2)
recommendations to the legislative committees with jurisdiction
over human services policy and finance issues by January 15,
2006, on whether changes to the unallowable items should be made
to meet the health, safety, or welfare needs of participants in
the consumer-directed community supports option within the
allowed budget amounts; and (3) a review of the statewide
caseload changes for the disability waiver programs for persons
under 65 years of age, which occurred after the state set budget
methodology implementation on October 1, 2004, and
recommendations on the fiscal impact of the budget methodology
on use of the consumer-directed community supports option.
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. 32. new text begin FEDERAL APPROVAL.
new text end

new text begin By August 1, 2005, the commissioner of human services shall
request any federal approval and plan amendments necessary to
implement (1) the transitional supports allowance under
Minnesota Statutes, sections 256B.0916, subdivision 10, and
256B.49, subdivision 16; and (2) the choice of case management
service coordination provisions under Minnesota Statutes,
section 256B.0621, subdivisions 4, 5, 6, and 7.
new text end

Sec. 33. new text begin DENTAL ACCESS FOR PERSONS WITH DISABILITIES.
new text end

new text begin The commissioner of human services shall study access to
dental services for persons with disabilities and shall present
recommendations for improving access to dental services to the
legislature by January 15, 2006. The study must examine
physical and geographic access, the willingness of dentists to
serve persons with disabilities enrolled in state health care
programs, reimbursement rates for dental service providers, and
other factors identified by the commissioner as potential
barriers to accessing dental services. The commissioner shall
direct the Dental Access Advisory Committee, established under
Minnesota Statutes, section 256B.55, to assist in this study.
new text end

Sec. 34. new text begin DISABILITY SERVICES INTERAGENCY WORK GROUP.
new text end

new text begin Subdivision 1. new text end

new text begin Membership. new text end

new text begin The Department of Human
Services, the Minnesota Housing Finance Agency, and the
Minnesota State Council on Disability shall convene an
interagency work group which includes interested stakeholders
including other state agencies, counties, public housing
authorities, the Metropolitan Council, disability service
providers, and representatives from disability advocacy
organizations to identify barriers, strengthen coordination,
recommend policy and funding changes, and pursue federal
financing that will assist Minnesotans with disabilities who are
attempting to relocate from or avoid placement in institutional
settings.
new text end

new text begin Subd. 2. new text end

new text begin Work group activities. new text end

new text begin The work group shall
make recommendations to the state agencies and the legislature
related to:
new text end

new text begin (1) coordinating the availability of housing,
transportation, and support services needed to discharge persons
with disabilities from institutions;
new text end

new text begin (2) improving information and assistance needed to make an
informed choice about relocating from an institutional placement
to community-based services;
new text end

new text begin (3) identifying gaps in human services, transportation, or
housing access which are barriers to moving to community
services;
new text end

new text begin (4) identifying strategies which would result in earlier
identification of persons most at risk of institutional
placement in order to promote diversion to community service or
reduce length of stay in an institutional facility;
new text end

new text begin (5) identifying funding mechanisms and financial strategies
to assure a financially sustainable community support system
that diverts and relocates individuals from institutional
placement; and
new text end

new text begin (6) identifying state changes needed to address any federal
changes affecting policies, benefits, or funding used to support
persons with disabilities to avoid institutional placement.
new text end

new text begin Subd. 3. new text end

new text begin Recommendations. new text end

new text begin Recommendations of the work
group will be submitted to each participating state agency and
to the chairs of the health and human services policy and
finance committees of the senate and house of representatives by
October 15, 2006. This section expires October 15, 2006.
new text end

Sec. 35. new text begin REPORT TO LEGISLATURE.
new text end

new text begin The commissioner shall report to the legislature on the
redesign of case management services. In preparing the report,
the commissioner shall consult with representatives for
consumers, consumer advocates, counties, and service providers.
The report shall include draft legislation for case management
changes that will:
new text end

new text begin (1) streamline administration;
new text end

new text begin (2) improve consumer access to case management services;
new text end

new text begin (3) address the use of a comprehensive universal assessment
protocol for persons seeking community supports;
new text end

new text begin (4) establish case management performance measures;
new text end

new text begin (5) provide for consumer choice of the case management
service vendor; and
new text end

new text begin (6) provide a method of payment for case management
services that is cost-effective and best supports the draft
legislation in clauses (1) to (5).
new text end

ARTICLE 6

MISCELLANEOUS