HF 500

1st Engrossment - 90th Legislature (2017 - 2018) Posted on 03/02/2017 04:20pm

A bill for an act
relating to human services; making policy and technical changes to the nursing
facility payment system; requiring a report; amending Minnesota Statutes 2016,
sections 144.0724, subdivision 6; 256B.431, subdivision 30, by adding a
subdivision; 256B.434, subdivision 4; 256R.02, subdivisions 4, 17, 18, 19, 22, 42,
52, by adding subdivisions; 256R.07, subdivision 1, by adding a subdivision;
256R.10, by adding a subdivision; 256R.13, subdivision 4; 256R.37; 256R.40,
subdivisions 1, 5; 256R.41; 256R.47; 256R.49; proposing coding for new law in
Minnesota Statutes, chapter 256R.

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

Section 1.

Minnesota Statutes 2016, section 144.0724, subdivision 6, is amended to read:

Subd. 6.

Penalties for late or nonsubmission.

(a) A facility that fails to complete or
submit an assessment according to subdivisions 4 and 5 for a RUG-IV classification within
seven days of the time requirements listed in the Long-Term Care Facility Resident
Assessment Instrument User's Manual is subject to a reduced rate for that resident. The
reduced rate shall be the lowest rate for that facility. The reduced rate is effective on the
day of admission for new admission assessments, on the ARD for significant change in
status assessments, or on the day that the assessment was due for all other assessments and
continues in effect until the first day of the month following the date of submission and
acceptance of the resident's assessment.

(b) If loss of revenue due to penalties incurred by a facility for any period of 92 days
are equal to or greater than deleted text begin 1.0 deleted text end new text begin 0.1 new text end percent of the total operating costs on the facility's most
recent annual statistical and cost report, a facility may apply to the commissioner of human
services for a reduction in the total penalty amount. The commissioner of human services,
in consultation with the commissioner of health, may, at the sole discretion of the
commissioner of human services, limit the penalty for residents covered by medical assistance
to deleted text begin 15 deleted text end new text begin ten new text end days.

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 2016, section 256B.431, subdivision 30, is amended to read:

Subd. 30.

Bed layaway and delicensure.

(a) For rate years beginning on or after July
1, 2000, a nursing facility reimbursed under this section which has placed beds on layaway
shall, for purposes of application of the downsizing incentive in subdivision 3a, paragraph
(c), and calculation of the rental per diem, have those beds given the same effect as if the
beds had been delicensed so long as the beds remain on layaway. At the time of a layaway,
a facility may change its single bed election for use in calculating capacity days under
Minnesota Rules, part 9549.0060, subpart 11. The property payment rate increase shall be
effective the first day of the month new text begin of January or July, whichever occurs first new text end following the
deleted text begin month deleted text end new text begin date new text end in which the layaway of the beds becomes effective under section 144A.071,
subdivision 4b.

(b) For rate years beginning on or after July 1, 2000, notwithstanding any provision to
the contrary under section 256B.434, a nursing facility reimbursed under that section which
has placed beds on layaway shall, for so long as the beds remain on layaway, be allowed
to:

(1) aggregate the applicable investment per bed limits based on the number of beds
licensed immediately prior to entering the alternative payment system;

(2) retain or change the facility's single bed election for use in calculating capacity days
under Minnesota Rules, part 9549.0060, subpart 11; and

(3) establish capacity days based on the number of beds immediately prior to the layaway
and the number of beds after the layaway.

The commissioner shall increase the facility's property payment rate by the incremental
increase in the rental per diem resulting from the recalculation of the facility's rental per
diem applying only the changes resulting from the layaway of beds and clauses (1), (2), and
(3). If a facility reimbursed under section 256B.434 completes a moratorium exception
project after its base year, the base year property rate shall be the moratorium project property
rate. The base year rate shall be inflated by the factors in section 256B.434, subdivision 4,
paragraph (c). The property payment rate increase shall be effective the first day of the
month new text begin of January or July, whichever occurs first new text end following the deleted text begin month deleted text end new text begin date new text end in which the
layaway of the beds becomes effective.

(c) If a nursing facility removes a bed from layaway status in accordance with section
144A.071, subdivision 4b, the commissioner shall establish capacity days based on the
number of licensed and certified beds in the facility not on layaway and shall reduce the
nursing facility's property payment rate in accordance with paragraph (b).

(d) For the rate years beginning on or after July 1, 2000, notwithstanding any provision
to the contrary under section 256B.434, a nursing facility reimbursed under that section,
which has delicensed beds after July 1, 2000, by giving notice of the delicensure to the
commissioner of health according to the notice requirements in section 144A.071, subdivision
4b, shall be allowed to:

(1) aggregate the applicable investment per bed limits based on the number of beds
licensed immediately prior to entering the alternative payment system;

(2) retain or change the facility's single bed election for use in calculating capacity days
under Minnesota Rules, part 9549.0060, subpart 11; and

(3) establish capacity days based on the number of beds immediately prior to the
delicensure and the number of beds after the delicensure.

The commissioner shall increase the facility's property payment rate by the incremental
increase in the rental per diem resulting from the recalculation of the facility's rental per
diem applying only the changes resulting from the delicensure of beds and clauses (1), (2),
and (3). If a facility reimbursed under section 256B.434 completes a moratorium exception
project after its base year, the base year property rate shall be the moratorium project property
rate. The base year rate shall be inflated by the factors in section 256B.434, subdivision 4,
paragraph (c). The property payment rate increase shall be effective the first day of the
month new text begin of January or July, whichever occurs first new text end following the deleted text begin month deleted text end new text begin date new text end in which the
delicensure of the beds becomes effective.

(e) For nursing facilities reimbursed under this section or section 256B.434, any beds
placed on layaway shall not be included in calculating facility occupancy as it pertains to
leave days defined in Minnesota Rules, part 9505.0415.

(f) For nursing facilities reimbursed under this section or section 256B.434, the rental
rate calculated after placing beds on layaway may not be less than the rental rate prior to
placing beds on layaway.

(g) A nursing facility receiving a rate adjustment as a result of this section shall comply
with section deleted text begin 256B.47 deleted text end new text begin 256R.06 new text end , subdivision deleted text begin 2 deleted text end new text begin 5 new text end .

(h) A facility that does not utilize the space made available as a result of bed layaway
or delicensure under this subdivision to reduce the number of beds per room or provide
more common space for nursing facility uses or perform other activities related to the
operation of the nursing facility shall have its property rate increase calculated under this
subdivision reduced by the ratio of the square footage made available that is not used for
these purposes to the total square footage made available as a result of bed layaway or
delicensure.

Sec. 3.

Minnesota Statutes 2016, section 256B.431, is amended by adding a subdivision
to read:

new text begin Subd. 46. new text end

new text begin Single-bed election. new text end

new text begin A nursing facility may change its single-bed election for
use in calculating capacity days under Minnesota Rules, part 9549.0060, subpart 11, for
rates established on January 1 if the commissioner receives written notification from the
nursing facility by August 15 of the preceding year.
new text end

Sec. 4.

Minnesota Statutes 2016, section 256B.434, subdivision 4, is amended to read:

Subd. 4.

Alternate rates for nursing facilities.

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 management and budget'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 deleted text begin July 1, 1999, July
1, 2000, July 1, 2001, July 1, 2002, July 1, 2003, July 1, 2004, July 1, 2005, July 1, 2006,
July 1, 2007, July 1, 2008, October 1, 2009, and October 1, 2010 deleted text end new text begin and after January 1, 2018 new text end ,
this paragraph shall apply only to the property-related payment rate. deleted text begin For the rate years
beginning on October 1, 2011, October 1, 2012, October 1, 2013, October 1, 2014, October
1, 2015, January 1, 2016, and January 1, 2017, the rate adjustment under this paragraph
shall be suspended. deleted text end Beginning in 2005, adjustment to the property payment rate under this
section and section 256B.431 shall be effective on October 1. deleted text begin 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.
deleted text end

Sec. 5.

Minnesota Statutes 2016, section 256R.02, subdivision 4, is amended to read:

Subd. 4.

Administrative costs.

"Administrative costs" means the identifiable 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, all training except
as specified in subdivision 17, voice and data communication or transmission, office supplies,
property and liability insurance and other forms of insurance not deleted text begin designated to other areas deleted text end new text begin
including insurance that is an employee benefit new text end , personnel recruitment, legal services,
accounting services, management or business consultants, data processing, information
technology, Web site, central or home office costs, business meetings and seminars, postage,
fees for professional organizations, subscriptions, security services, advertising, board of
directors fees, working capital interest expense, and bad debts and bad debt collection fees.

Sec. 6.

Minnesota Statutes 2016, section 256R.02, subdivision 17, is amended to read:

Subd. 17.

Direct care costs.

"Direct care costs" means costs for the wages of nursing
administration, direct care registered nurses, licensed practical nurses, certified nursing
assistants, trained medication aides, employees conducting training in resident care topics
and associated fringe benefits and payroll taxes; services from a supplemental nursing
services agency; supplies that are stocked at nursing stations or on the floor and distributed
or used individually, including, but not limited to: 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,
clinical reagents or similar diagnostic agents, drugs that are not paid on a separate fee
schedule by the medical assistance program or any other payer, and technology related to
the provision of nursing care to residents, such as electronic charting systems; costs of
materials used for resident care training, and training courses outside of the facility attended
by direct care staff on resident care topics new text begin ; and costs for nurse consultants, pharmacy
consultants, and medical directors. Salaries and payroll taxes for nurse consultants who
work out of a central office must be allocated proportionately by total resident days or by
direct identification to the nursing facilities served by those consultants new text end .

Sec. 7.

Minnesota Statutes 2016, section 256R.02, subdivision 18, is amended to read:

Subd. 18.

Employer health insurance costs.

"Employer health insurance costs" means
premium expenses for group coverage deleted text begin and reinsurance deleted text end , actual expenses incurred for
self-insured plans new text begin including reinsurance and administrative costs new text end , and employer contributions
to employee health reimbursement and health savings accounts. Premium and expense costs
and contributions are allowable for (1) all employees and (2) the spouse and dependents of
new text begin those new text end employees who deleted text begin meet the definition of full-time employees under the federal Affordable
Care Act, Public Law 111-148 deleted text end new text begin are employed on average at least 30 hours of service per
week, or 130 hours of service per month new text end .

Sec. 8.

Minnesota Statutes 2016, section 256R.02, subdivision 19, is amended to read:

Subd. 19.

External fixed costs.

"External fixed costs" means costs related to the nursing
home surcharge under section 256.9657, subdivision 1; licensure fees under section 144.122;
family advisory council fee under section 144A.33; scholarships under section 256R.37;
planned closure rate adjustments under section 256R.40; consolidation rate adjustments
under section 144A.071, subdivisions 4c, paragraph (a), clauses (5) and (6), and 4d;
single-bed room incentives under section 256R.41; property taxes, assessments, and payments
in lieu of taxes; employer health insurance costs; quality improvement incentive payment
rate adjustments under section 256R.39; performance-based incentive payments under
section 256R.38; special dietary needs under section 256R.51; new text begin rate adjustments for
compensation-related costs for minimum wage changes under section 256R.49 provided
on or after January 1, 2018; new text end and Public Employees Retirement Association new text begin employer costs new text end .

Sec. 9.

Minnesota Statutes 2016, section 256R.02, subdivision 22, is amended to read:

Subd. 22.

Fringe benefit costs.

"Fringe benefit costs" means the costs for group life,
dental, workers' compensation, deleted text begin and other employee insurances and deleted text end new text begin short- and long-term
disability, long-term care insurance, accident insurance, supplemental insurance, legal
assistance insurance, profit sharing, health insurance costs not covered under subdivision
18, including costs associated with part-time employee family members or retirees, and new text end
pension new text begin and retirement plan contributions new text end , except for the Public Employees Retirement
Association deleted text begin and employer health insurance costs; profit sharing; and retirement plans for
which the employer pays all or a portion of the deleted text end costs.

Sec. 10.

Minnesota Statutes 2016, section 256R.02, subdivision 42, is amended to read:

Subd. 42.

Raw food costs.

"Raw food costs" means the cost of food provided to nursing
facility residents new text begin and the allocation of dietary credits new text end . Also included are special dietary
supplements used for tube feeding or oral feeding, such as elemental high nitrogen diet.

Sec. 11.

Minnesota Statutes 2016, section 256R.02, is amended by adding a subdivision
to read:

new text begin Subd. 42a. new text end

new text begin Real estate taxes. new text end

new text begin "Real estate taxes" means the real estate tax liability shown
on the annual property tax statement of the nursing facility for the reporting period. The
term does not include personnel costs or fees for late payment.
new text end

Sec. 12.

Minnesota Statutes 2016, section 256R.02, is amended by adding a subdivision
to read:

new text begin Subd. 48a. new text end

new text begin Special assessments. new text end

new text begin "Special assessments" means the actual special
assessments and related interest paid during the reporting period. The term does not include
personnel costs or fees for late payment.
new text end

Sec. 13.

Minnesota Statutes 2016, section 256R.02, subdivision 52, is amended to read:

Subd. 52.

Therapy costs.

"Therapy costs" means any costs related to deleted text begin medical assistance deleted text end
therapy services provided to residents that are not deleted text begin billed deleted text end separately new text begin billable new text end from the daily
operating rate.

Sec. 14.

Minnesota Statutes 2016, section 256R.07, subdivision 1, is amended to read:

Subdivision 1.

Criteria.

A nursing facility shall keep adequate documentation. In order
to be adequate, documentation must:

(1) be maintained in orderly, well-organized files;

(2) not include documentation of more than one nursing facility in one set of files unless
transactions may be traced by the commissioner to the nursing facility's annual cost report;

(3) include a paid invoice or copy of a paid invoice with date of purchase, vendor name
and address, purchaser name and delivery destination address, listing of items or services
purchased, cost of items purchased, account number to which the cost is posted, and a
breakdown of any allocation of costs between accounts or nursing facilities. If any of the
information is not available, the nursing facility shall document its good faith attempt to
obtain the information;

(4) include contracts, agreements, amortization schedules, mortgages, other debt
instruments, and all other documents necessary to explain the nursing facility's costs or
revenues; and

(5) be retained by the nursing facility to support the five most recent annual cost reports.
The commissioner may extend the period of retention if the field audit was postponed
because of inadequate record keeping or accounting practices as in section 256R.13,
subdivisions 2 and 4, the records are necessary to resolve a pending appeal, or the records
are required for the enforcement of sections 256R.04; 256R.05, subdivision 2; 256R.06,
subdivisions 2 deleted text begin , deleted text end new text begin and new text end 6 deleted text begin , and 7 deleted text end ; 256R.08, subdivisions 1 to 3; and 256R.09, subdivisions 3 and
4.

Sec. 15.

Minnesota Statutes 2016, section 256R.07, is amended by adding a subdivision
to read:

new text begin Subd. 6. new text end

new text begin Electronic signature. new text end

new text begin For documentation requiring a signature under this
chapter or section 256B.431 or 256B.434, use of an electronic signature as defined under
section 325L.02, paragraph (h), is allowed.
new text end

Sec. 16.

Minnesota Statutes 2016, section 256R.10, is amended by adding a subdivision
to read:

new text begin Subd. 7. new text end

new text begin Bad debts. new text end

new text begin Bad debts of Medicaid and private pay recipients are allowable
only when:
new text end

new text begin (1) the debt is related to covered services;
new text end

new text begin (2) the debt arises from the recipient's required contribution toward the cost of care, not
including Medicare coinsurance for Medicaid recipients as defined in section 256B.0625,
subdivision 57a;
new text end

new text begin (3) the provider can establish reasonable collection efforts were made. Reasonable
collection efforts consist of at least three documented attempts by the contractor to obtain
payment demonstrating that the effort devoted to collecting the bad debts of a Medicaid
recipient is the same as the effort devoted to collecting the bad debts of a private pay
recipient;
new text end

new text begin (4) the debt was actually uncollectible when claimed as worthless; and
new text end

new text begin (5) sound business judgment established there was no likelihood of recovery at any time
in the future.
new text end

Sec. 17.

Minnesota Statutes 2016, section 256R.13, subdivision 4, is amended to read:

Subd. 4.

Extended record retention requirements.

The commissioner shall extend the
period for retention of records under section 256R.09, subdivision 3, for purposes of
performing field audits as necessary to enforce sections 256R.04; 256R.05, subdivision 2;
256R.06, subdivisions 2 deleted text begin , deleted text end new text begin and new text end 6 deleted text begin , and 7 deleted text end ; 256R.08, subdivisions 1 to 3; and 256R.09,
subdivisions 3 and 4, with written notice to the facility postmarked no later than 90 days
prior to the expiration of the record retention requirement.

Sec. 18.

new text begin [256R.18] BIENNIAL REPORT.
new text end

new text begin The commissioner shall provide to the legislative committees with jurisdiction over
nursing facility payment rates a biennial report including:
new text end

new text begin (1) the impact of using cost report data to set rates without updating the cost report data
by the change in the Consumer Price Index for all urban consumers from the mid-point of
the cost report to the mid-point of the rate year;
new text end

new text begin (2) the impact of the quality adjusted care limits;
new text end

new text begin (3) the ability of nursing facilities to retain employees, including whether rate increases
are passed through to employees;
new text end

new text begin (4) the efficacy of the critical access nursing facility program under section 256R.47;
and
new text end

new text begin (5) the impact of payment rate limit reduction under section 256R.23, subdivision 6.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019.
new text end

Sec. 19.

Minnesota Statutes 2016, section 256R.37, is amended to read:

256R.37 SCHOLARSHIPS.

(a) For the 27-month period beginning October 1, 2015, through December 31, 2017,
the commissioner shall allow a scholarship per diem of up to 25 cents for each nursing
facility with no scholarship per diem that is requesting a scholarship per diem to be added
to the external fixed payment rate to be used:

(1) for employee scholarships that satisfy the following requirements:

(i) scholarships are available to all employees who work an average of at least ten hours
per week at the facility except the administrator, and to reimburse student loan expenses
for deleted text begin newly hired and recently graduated deleted text end registered nurses and licensed practical nurses, and
training expenses for nursing assistants as specified in section 144A.611, subdivisions 2
and 4 deleted text begin , who are newly hired and have graduated within the last 12 months deleted text end ; and

(ii) the course of study is expected to lead to career advancement with the facility or in
long-term care, including medical care interpreter services and social work; and

(2) to provide job-related training in English as a second language.

(b) All facilities may annually request a rate adjustment under this section by submitting
information to the commissioner on a schedule and in a form supplied by the commissioner.
The commissioner shall allow a scholarship payment rate equal to the reported and allowable
costs divided by resident days.

(c) In calculating the per diem under paragraph (b), the commissioner shall allow costs
related to tuition, direct educational expenses, and reasonable costs as defined by the
commissioner for child care costs and transportation expenses related to direct educational
expenses.

(d) The rate increase under this section is an optional rate add-on that the facility must
request from the commissioner in a manner prescribed by the commissioner. The rate
increase must be used for scholarships as specified in this section.

(e) For instances in which a rate adjustment will be 15 cents or greater, nursing facilities
that close beds during a rate year may request to have their scholarship adjustment under
paragraph (b) recalculated by the commissioner for the remainder of the rate year to reflect
the reduction in resident days compared to the cost report year.

Sec. 20.

Minnesota Statutes 2016, section 256R.40, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) The definitions in this subdivision apply to this section.

(b) "Closure" means the cessation of operations of a nursing facility and delicensure and
decertification of all beds within the facility.

(c) "Closure plan" means a plan to close a nursing facility and reallocate a portion of
the resulting savings to provide planned closure rate adjustments at other facilities.

(d) "Commencement of closure" means the date on which residents and designated
representatives are notified of a planned closure as provided in section 144A.161, subdivision
5a, as part of an approved closure plan.

(e) "Completion of closure" means the date on which the final resident of the nursing
facility designated for closure in an approved closure plan is discharged from the facility new text begin
or the date that beds from a partial closure are delicensed and decertified new text end .

(f) "Partial closure" means the delicensure and decertification of a portion of the beds
within the facility.

(g) "Planned closure rate adjustment" means an increase in a nursing facility's operating
rates resulting from a planned closure or a planned partial closure of another facility.

Sec. 21.

Minnesota Statutes 2016, section 256R.40, subdivision 5, is amended to read:

Subd. 5.

Planned closure rate adjustment.

(a) The commissioner shall calculate the
amount of the planned closure rate adjustment available under subdivision 6 according to
clauses (1) to (4):

(1) the amount available is the net reduction of nursing facility beds multiplied by $2,080;

(2) the total number of beds in the nursing facility or facilities receiving the planned
closure rate adjustment must be identified;

(3) capacity days are determined by multiplying the number determined under clause
(2) by 365; and

(4) the planned closure rate adjustment is the amount available in clause (1), divided by
capacity days determined under clause (3).

(b) A planned closure rate adjustment under this section is effective on the first day of
the month new text begin of January or July, whichever occurs first new text end following completion of closure of the
facility designated for closure in the application and becomes part of the nursing facility's
external fixed payment rate.

(c) Upon the request of a closing facility, the commissioner must allow the facility a
closure rate adjustment as provided under section 144A.161, subdivision 10.

(d) A facility that has received a planned closure rate adjustment may reassign it to
another facility that is under the same ownership at any time within three years of its effective
date. The amount of the adjustment is computed according to paragraph (a).

(e) If the per bed dollar amount specified in paragraph (a), clause (1), is increased, the
commissioner shall recalculate planned closure rate adjustments for facilities that delicense
beds under this section on or after July 1, 2001, to reflect the increase in the per bed dollar
amount. The recalculated planned closure rate adjustment is effective from the date the per
bed dollar amount is increased.

new text begin (f) For a nursing facility that is ceasing operations through delicensure and decertification
of all beds within the facility, the planned closure rate adjustment under this section is
effective on the first day of the month following completion of closure of the facility
designated for closure in the application and becomes part of any assigned nursing facility's
external fixed payment rate.
new text end

Sec. 22.

Minnesota Statutes 2016, section 256R.41, is amended to read:

256R.41 SINGLE-BED ROOM INCENTIVE.

(a) Beginning July 1, 2005, the operating payment rate for nursing facilities reimbursed
under this chapter shall be increased by 20 percent multiplied by the ratio of the number of
new single-bed rooms created divided by the number of active beds on July 1, 2005, for
each bed closure that results in the creation of a single-bed room after July 1, 2005. The
commissioner may implement rate adjustments for up to 3,000 new single-bed rooms each
year. For eligible bed closures for which the commissioner receives a notice from a facility
deleted text begin during a calendar quarter deleted text end that a bed has been delicensed and a new single-bed room has
been established, the rate adjustment in this paragraph shall be effective on new text begin either new text end the first
day of the deleted text begin second deleted text end month new text begin of January or July, whichever occurs first new text end following deleted text begin that calendar
quarter deleted text end new text begin the date of the bed delicensure new text end .

(b) A nursing facility is prohibited from discharging residents for purposes of establishing
single-bed rooms. A nursing facility must submit documentation to the commissioner in a
form prescribed by the commissioner, certifying the occupancy status of beds closed to
create single-bed rooms. In the event that the commissioner determines that a facility has
discharged a resident for purposes of establishing a single-bed room, the commissioner shall
not provide a rate adjustment under paragraph (a).

Sec. 23.

Minnesota Statutes 2016, section 256R.47, is amended to read:

256R.47 RATE ADJUSTMENT FOR CRITICAL ACCESS NURSING
FACILITIES.

(a) The commissioner, in consultation with the commissioner of health, may designate
certain nursing facilities as critical access nursing facilities. The designation shall be granted
on a competitive basis, within the limits of funds appropriated for this purpose.

(b) The commissioner shall request proposals from nursing facilities every two years.
Proposals must be submitted in the form and according to the timelines established by the
commissioner. In selecting applicants to designate, the commissioner, in consultation with
the commissioner of health, and with input from stakeholders, shall develop criteria designed
to preserve access to nursing facility services in isolated areas, rebalance long-term care,
and improve quality. To the extent practicable, the commissioner shall ensure an even
distribution of designations across the state.

(c) The commissioner shall allow the benefits in clauses (1) to (5) for nursing facilities
designated as critical access nursing facilities:

(1) partial rebasing, with the commissioner allowing a designated facility operating
payment rates being the sum of up to 60 percent of the operating payment rate determined
in accordance with section 256R.21, subdivision 3, and at least 40 percent, with the sum of
the two portions being equal to 100 percent, of the operating payment rate that would have
been allowed had the facility not been designated. The commissioner may adjust these
percentages by up to 20 percent and may approve a request for less than the amount allowed;

(2) enhanced payments for leave days. Notwithstanding section 256R.43, upon
designation as a critical access nursing facility, the commissioner shall limit payment for
leave days to 60 percent of that nursing facility's total payment rate for the involved resident,
and shall allow this payment only when the occupancy of the nursing facility, inclusive of
bed hold days, is equal to or greater than 90 percent;

(3) two designated critical access nursing facilities, with up to 100 beds in active service,
may jointly apply to the commissioner of health for a waiver of Minnesota Rules, part
4658.0500, subpart 2, in order to jointly employ a director of nursing. The commissioner
of health shall consider each waiver request independently based on the criteria under
Minnesota Rules, part 4658.0040;

(4) the minimum threshold under section 256B.431, subdivision 15, paragraph (e), shall
be 40 percent of the amount that would otherwise apply; and

(5) the quality-based rate limits under section 256R.23, subdivisions 5 to 7, apply to
designated critical access nursing facilities.

(d) Designation of a critical access nursing facility is for a period of two years, after
which the benefits allowed under paragraph (c) shall be removed. Designated facilities may
apply for continued designation.

(e) This section is suspended and no state or federal funding shall be appropriated or
allocated for the purposes of this section from January 1, 2016, to December 31, deleted text begin 2017 deleted text end new text begin 2019 new text end .

Sec. 24.

Minnesota Statutes 2016, section 256R.49, is amended to read:

256R.49 RATE ADJUSTMENTS FOR COMPENSATION-RELATED COSTS
FOR MINIMUM WAGE CHANGES.

Subdivision 1.

Rate adjustments for compensation-related costs.

(a) Operating payment
rates of all nursing facilities that are reimbursed under this chapter shall be increased effective
for rate years beginning on and after October 1, 2014, to address changes in compensation
costs for nursing facility employees deleted text begin paid less than $14 per hour deleted text end in accordance with this
section. new text begin Rate increases provided under this section before October 1, 2016, expire effective
January 1, 2018. Rate increases provided on or after October 1, 2016, expire two years after
the effective date of the rate increases.
new text end

(b) Nursing facilities that receive approval of the applications in subdivision 2 must
receive rate adjustments according to subdivision 4. deleted text begin The rate adjustments must be used to
pay compensation costs for nursing facility employees paid less than $14 per hour.
deleted text end

Subd. 2.

Application process.

To receive a rate adjustment, nursing facilities must
submit applications to the commissioner in a form and manner determined by the
commissioner. The applications for the rate adjustments shall include specified data, and
spending plans that describe how the funds from the rate adjustments will be allocated for
compensation to employees deleted text begin paid less than $14 per hour deleted text end . The applications must be submitted
within three months of the effective date of any operating payment rate adjustment under
this section. The commissioner may request any additional information needed to determine
the rate adjustment within three weeks of receiving a complete application. The nursing
facility must provide any additional information requested by the commissioner within six
months of the effective date of any operating payment rate adjustment under this section.
The commissioner may waive the deadlines in this section under extraordinary circumstances.

Subd. 3.

Additional application requirements for facilities with employees
represented by an exclusive bargaining representative.

For nursing facilities in which
employees are represented by an exclusive bargaining representative, the commissioner
shall approve the applications submitted under subdivision 2 only upon receipt of a letter
or letters of acceptance of the spending plans in regard to members of the bargaining unit,
signed by the exclusive bargaining agent and dated after May 31, 2014. Upon receipt of the
letter or letters of acceptance, the commissioner shall deem all requirements of this section
as having been met in regard to the members of the bargaining unit.

Subd. 4.

Determination of the rate adjustments for compensation-related costs.

Based on the application in subdivision 2, the commissioner shall calculate the allowable
annualized compensation costs by adding the totals of clauses (1) deleted text begin , deleted text end new text begin and new text end (2) deleted text begin , and (3) deleted text end . The
result must be divided by the standardized or resident days from the most recently available
cost report to determine per day amounts, which must be included in the operating portion
of the total payment rate and allocated to direct care or other operating as determined by
the commissioner:

(1) the sum of the difference between $9.50 and any hourly wage rate less than $9.50
for October 1, 2016; and between the indexed value of the minimum wage, as defined in
section 177.24, subdivision 1, paragraph (f), new text begin or any other minimum wage implemented in
statute or by any local ordinance, new text end and any hourly wage less than that indexed value for rate
years beginning on and after deleted text begin October 1, 2017 deleted text end new text begin January 1, 2018 new text end ; multiplied by the number
of compensated hours at that wage rate; new text begin and
new text end

deleted text begin (2) using wages and hours in effect during the first three months of calendar year 2014,
beginning with the first pay period beginning on or after January 1, 2014; 22.2 percent of
the sum of items (i) to (viii) for October 1, 2016;
deleted text end

deleted text begin (i) for all compensated hours from $8 to $8.49 per hour, the number of compensated
hours is multiplied by $0.13;
deleted text end

deleted text begin (ii) for all compensated hours from $8.50 to $8.99 per hour, the number of compensated
hours is multiplied by $0.25;
deleted text end

deleted text begin (iii) for all compensated hours from $9 to $9.49 per hour, the number of compensated
hours is multiplied by $0.38;
deleted text end

deleted text begin (iv) for all compensated hours from $9.50 to $10.49 per hour, the number of compensated
hours is multiplied by $0.50;
deleted text end

deleted text begin (v) for all compensated hours from $10.50 to $10.99 per hour, the number of compensated
hours is multiplied by $0.40;
deleted text end

deleted text begin (vi) for all compensated hours from $11 to $11.49 per hour, the number of compensated
hours is multiplied by $0.30;
deleted text end

deleted text begin (vii) for all compensated hours from $11.50 to $11.99 per hour, the number of
compensated hours is multiplied by $0.20; and
deleted text end

deleted text begin (viii) for all compensated hours from $12 to $13 per hour, the number of compensated
hours is multiplied by $0.10; and
deleted text end

deleted text begin (3) deleted text end new text begin (2) new text end the sum of the employer's share of FICA taxes, Medicare taxes, state and federal
unemployment taxes, workers' compensation, pensions, and contributions to employee
retirement accounts attributable to the amounts in deleted text begin clauses deleted text end new text begin clause new text end (1) deleted text begin and (2) deleted text end .