HF 1353

1st Engrossment - 90th Legislature (2017 - 2018) Posted on 02/22/2018 05:18pm

A bill for an act
relating to human services; correcting obsolete nursing facility cross-references;
amending Minnesota Statutes 2016, sections 144.0722, subdivision 1; 144.0724,
subdivisions 1, 2, 9; 144A.071, subdivisions 3, 4a, 4c, 4d; 144A.073, subdivision
3c; 144A.10, subdivision 4; 144A.15, subdivision 2; 144A.154; 144A.161,
subdivision 10; 144A.1888; 144A.611, subdivision 1; 144A.74; 256.9657,
subdivision 1; 256B.0915, subdivision 3e; 256B.35, subdivision 4; 256B.431,
subdivision 30; 256B.50, subdivision 1.

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

Section 1.

Minnesota Statutes 2016, section 144.0722, subdivision 1, is amended to read:

Subdivision 1.

Resident reimbursement classifications.

The commissioner of health
shall establish resident reimbursement classifications based upon the assessments of residents
of nursing homes and boarding care homes conducted under section 144.0721, or under
rules established by the commissioner of human services under deleted text begin sections 256B.41 to 256B.48 deleted text end new text begin
chapter 256R new text end . The reimbursement classifications established by the commissioner must
conform to the rules established by the commissioner of human services.

Sec. 2.

Minnesota Statutes 2016, section 144.0724, subdivision 1, is amended to read:

Subdivision 1.

Resident reimbursement case mix classifications.

The commissioner
of health shall establish resident reimbursement classifications based upon the assessments
of residents of nursing homes and boarding care homes conducted under this section and
according to section deleted text begin 256B.438 deleted text end new text begin 256R.17 new text end .

Sec. 3.

Minnesota Statutes 2016, section 144.0724, subdivision 2, is amended to read:

Subd. 2.

Definitions.

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

(a) "Assessment reference date" or "ARD" means the specific end point for look-back
periods in the MDS assessment process. This look-back period is also called the observation
or assessment period.

(b) "Case mix index" means the weighting factors assigned to the RUG-IV classifications.

(c) "Index maximization" means classifying a resident who could be assigned to more
than one category, to the category with the highest case mix index.

(d) "Minimum data set" or "MDS" means a core set of screening, clinical assessment,
and functional status elements, that include common definitions and coding categories
specified by the Centers for Medicare and Medicaid Services and designated by the
Minnesota Department of Health.

(e) "Representative" means a person who is the resident's guardian or conservator, the
person authorized to pay the nursing home expenses of the resident, a representative of the
Office of Ombudsman for Long-Term Care whose assistance has been requested, or any
other individual designated by the resident.

(f) "Resource utilization groups" or "RUG" means the system for grouping a nursing
facility's residents according to their clinical and functional status identified in data supplied
by the facility's minimum data set.

(g) "Activities of daily living" means grooming, dressing, bathing, transferring, mobility,
positioning, eating, and toileting.

(h) "Nursing facility level of care determination" means the assessment process that
results in a determination of a resident's or prospective resident's need for nursing facility
level of care as established in subdivision 11 for purposes of medical assistance payment
of long-term care services for:

(1) nursing facility services under section 256B.434 or deleted text begin 256B.441 deleted text end new text begin chapter 256R new text end ;

(2) elderly waiver services under section 256B.0915;

(3) CADI and BI waiver services under section 256B.49; and

(4) state payment of alternative care services under section 256B.0913.

Sec. 4.

Minnesota Statutes 2016, section 144.0724, subdivision 9, is amended to read:

Subd. 9.

Audit authority.

(a) The commissioner shall audit the accuracy of resident
assessments performed under section deleted text begin 256B.438 deleted text end new text begin 256R.17 new text end through any of the following: desk
audits; on-site review of residents and their records; and interviews with staff, residents, or
residents' families. The commissioner shall reclassify a resident if the commissioner
determines that the resident was incorrectly classified.

(b) The commissioner is authorized to conduct on-site audits on an unannounced basis.

(c) A facility must grant the commissioner access to examine the medical records relating
to the resident assessments selected for audit under this subdivision. The commissioner may
also observe and speak to facility staff and residents.

(d) The commissioner shall consider documentation under the time frames for coding
items on the minimum data set as set out in the Long-Term Care Facility Resident Assessment
Instrument User's Manual published by the Centers for Medicare and Medicaid Services.

(e) The commissioner shall develop an audit selection procedure that includes the
following factors:

(1) Each facility shall be audited annually. If a facility has two successive audits in which
the percentage of change is five percent or less and the facility has not been the subject of
a special audit in the past 36 months, the facility may be audited biannually. A stratified
sample of 15 percent, with a minimum of ten assessments, of the most current assessments
shall be selected for audit. If more than 20 percent of the RUG-IV classifications are changed
as a result of the audit, the audit shall be expanded to a second 15 percent sample, with a
minimum of ten assessments. If the total change between the first and second samples is
35 percent or greater, the commissioner may expand the audit to all of the remaining
assessments.

(2) If a facility qualifies for an expanded audit, the commissioner may audit the facility
again within six months. If a facility has two expanded audits within a 24-month period,
that facility will be audited at least every six months for the next 18 months.

(3) The commissioner may conduct special audits if the commissioner determines that
circumstances exist that could alter or affect the validity of case mix classifications of
residents. These circumstances include, but are not limited to, the following:

(i) frequent changes in the administration or management of the facility;

(ii) an unusually high percentage of residents in a specific case mix classification;

(iii) a high frequency in the number of reconsideration requests received from a facility;

(iv) frequent adjustments of case mix classifications as the result of reconsiderations or
audits;

(v) a criminal indictment alleging provider fraud;

(vi) other similar factors that relate to a facility's ability to conduct accurate assessments;

(vii) an atypical pattern of scoring minimum data set items;

(viii) nonsubmission of assessments;

(ix) late submission of assessments; or

(x) a previous history of audit changes of 35 percent or greater.

(f) Within 15 working days of completing the audit process, the commissioner shall
make available electronically the results of the audit to the facility. If the results of the audit
reflect a change in the resident's case mix classification, a case mix classification notice
will be made available electronically to the facility, using the procedure in subdivision 7,
paragraph (a). The notice must contain the resident's classification and a statement informing
the resident, the resident's authorized representative, and the facility of their right to review
the commissioner's documents supporting the classification and to request a reconsideration
of the classification. This notice must also include the address and telephone number of the
Office of Ombudsman for Long-Term Care.

Sec. 5.

Minnesota Statutes 2016, section 144A.071, subdivision 3, is amended to read:

Subd. 3.

Exceptions authorizing increase in beds; hardship areas.

(a) The
commissioner of health, in coordination with the commissioner of human services, may
approve the addition of new licensed and Medicare and Medicaid certified nursing home
beds, using the criteria and process set forth in this subdivision.

(b) The commissioner, in cooperation with the commissioner of human services, shall
consider the following criteria when determining that an area of the state is a hardship area
with regard to access to nursing facility services:

(1) a low number of beds per thousand in a specified area using as a standard the beds
per thousand people age 65 and older, in five year age groups, using data from the most
recent census and population projections, weighted by each group's most recent nursing
home utilization, of the county at the 20th percentile, as determined by the commissioner
of human services;

(2) a high level of out-migration for nursing facility services associated with a described
area from the county or counties of residence to other Minnesota counties, as determined
by the commissioner of human services, using as a standard an amount greater than the
out-migration of the county ranked at the 50th percentile;

(3) an adequate level of availability of noninstitutional long-term care services measured
as public spending for home and community-based long-term care services per individual
age 65 and older, in five year age groups, using data from the most recent census and
population projections, weighted by each group's most recent nursing home utilization, as
determined by the commissioner of human services using as a standard an amount greater
than the 50th percentile of counties;

(4) there must be a declaration of hardship resulting from insufficient access to nursing
home beds by local county agencies and area agencies on aging; and

(5) other factors that may demonstrate the need to add new nursing facility beds.

(c) On August 15 of odd-numbered years, the commissioner, in cooperation with the
commissioner of human services, may publish in the State Register a request for information
in which interested parties, using the data provided under section 144A.351, along with any
other relevant data, demonstrate that a specified area is a hardship area with regard to access
to nursing facility services. For a response to be considered, the commissioner must receive
it by November 15. The commissioner shall make responses to the request for information
available to the public and shall allow 30 days for comment. The commissioner shall review
responses and comments and determine if any areas of the state are to be declared hardship
areas.

(d) For each designated hardship area determined in paragraph (c), the commissioner
shall publish a request for proposals in accordance with section 144A.073 and Minnesota
Rules, parts 4655.1070 to 4655.1098. The request for proposals must be published in the
State Register by March 15 following receipt of responses to the request for information.
The request for proposals must specify the number of new beds which may be added in the
designated hardship area, which must not exceed the number which, if added to the existing
number of beds in the area, including beds in layaway status, would have prevented it from
being determined to be a hardship area under paragraph (b), clause (1). Beginning July 1,
2011, the number of new beds approved must not exceed 200 beds statewide per biennium.
After June 30, 2019, the number of new beds that may be approved in a biennium must not
exceed 300 statewide. For a proposal to be considered, the commissioner must receive it
within six months of the publication of the request for proposals. The commissioner shall
review responses to the request for proposals and shall approve or disapprove each proposal
by the following July 15, in accordance with section 144A.073 and Minnesota Rules, parts
4655.1070 to 4655.1098. The commissioner shall base approvals or disapprovals on a
comparison and ranking of proposals using only the criteria in subdivision 4a. Approval of
a proposal expires after 18 months unless the facility has added the new beds using existing
space, subject to approval by the commissioner, or has commenced construction as defined
in section 144A.071, subdivision 1a, paragraph (d). If, after the approved beds have been
added, fewer than 50 percent of the beds in a facility are newly licensed, the operating
payment rates previously in effect shall remain. If, after the approved beds have been added,
50 percent or more of the beds in a facility are newly licensed, operating payment rates shall
be determined according to Minnesota Rules, part 9549.0057, using the limits under deleted text begin section
256B.441 deleted text end new text begin sections 256R.23, subdivision 5, and 256R.24, subdivision 3 new text end . External fixed new text begin costs new text end
payment rates must be determined according to section deleted text begin 256B.441, subdivision 53 deleted text end new text begin 256R.25 new text end .
Property payment rates for facilities with beds added under this subdivision must be
determined in the same manner as rate determinations resulting from projects approved and
completed under section 144A.073.

(e) The commissioner may:

(1) certify or license new beds in a new facility that is to be operated by the commissioner
of veterans affairs or when the costs of constructing and operating the new beds are to be
reimbursed by the commissioner of veterans affairs or the United States Veterans
Administration; and

(2) license or certify beds in a facility that has been involuntarily delicensed or decertified
for participation in the medical assistance program, provided that an application for
relicensure or recertification is submitted to the commissioner by an organization that is
not a related organization as defined in section deleted text begin 256B.441, subdivision 34 deleted text end new text begin 256R.02,
subdivision 43 new text end , to the prior licensee within 120 days after delicensure or decertification.

Sec. 6.

Minnesota Statutes 2016, 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 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

(v) 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;

(c) to license or certify beds in a project recommended for approval under section
144A.073;

(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 new text begin or chapter 256R new text end ;

(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 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 deleted text begin section 256B.431 deleted text end new text begin
chapter 256R new text end . Property-related reimbursement rates shall be determined under section
deleted text begin 256B.431 deleted text end new text begin 256R.26 new text end , taking into account any federal or state flood-related loans or grants
provided to the facility;

(x) to license and certify to the licensee of a nursing home in Polk County that was
destroyed by flood in 1997 replacement projects with a total of up to 129 beds, with at least
25 beds to be located in Polk County and up to 104 beds distributed among up to three other
counties. These beds may only be distributed to counties with fewer than the median number
of age intensity adjusted beds per thousand, as most recently published by the commissioner
of human services. If the licensee chooses to distribute beds outside of Polk County under
this paragraph, prior to distributing the beds, the commissioner of health must approve the
location in which the licensee plans to distribute the beds. The commissioner of health shall
consult with the commissioner of human services prior to approving the location of the
proposed beds. The licensee may combine these beds with beds relocated from other nursing
facilities as provided in section 144A.073, subdivision 3c. The operating payment rates for
the new nursing facilities shall be determined based on the interim and settle-up payment
provisions of deleted text begin section 256B.431, 256B.434, or 256B.441 or deleted text end Minnesota Rules, parts 9549.0010
to 9549.0080. Property-related reimbursement rates shall be determined under section
deleted text begin 256B.431, 256B.434, or 256B.441 deleted text end new text begin 256R.26 new text end . If the replacement beds permitted under this
paragraph are combined with beds from other nursing facilities, the rates shall be calculated
as the weighted average of rates determined as provided in this paragraph and section
deleted text begin 256B.441, subdivision 60 deleted text end new text begin 256R.50 new text end ;

(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 disabled 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 deleted text begin 256B.437 deleted text end new text begin 256R.40 new text end ;

(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 deleted text begin section 256B.431 deleted text end new text begin chapter 256R new text end . Property-related reimbursement
rates shall be determined under section deleted text begin 256B.431 deleted text end new text begin 256R.26 new text end , 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 disabled 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 deleted text begin section 256B.431 deleted text end new text begin chapter 256R new text end
and Minnesota Rules, parts 9549.0010 to 9549.0080 deleted text begin , or section 256B.434 or 256B.441 deleted text end ; 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, or may
remove these beds from layaway status if removal from layaway status is part of a
moratorium exception project approved by the commissioner under section 144A.073.

Sec. 7.

Minnesota Statutes 2016, section 144A.071, subdivision 4c, is amended to read:

Subd. 4c.

Exceptions for replacement beds after June 30, 2003.

(a) 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:

(1) to license and certify an 80-bed city-owned facility in Nicollet County to be
constructed on the site of a new city-owned hospital to replace an existing 85-bed facility
attached to a hospital that is also being replaced. The threshold allowed for this project
under section 144A.073 shall be the maximum amount available to pay the additional
medical assistance costs of the new facility;

(2) to license and certify 29 beds to be added to an existing 69-bed facility in St. Louis
County, provided that the 29 beds must be transferred from active or layaway status at an
existing facility in St. Louis County that had 235 beds on April 1, 2003.

The licensed capacity at the 235-bed facility must be reduced to 206 beds, but the payment
rate at that facility shall not be adjusted as a result of this transfer. The operating payment
rate of the facility adding beds after completion of this project shall be the same as it was
on the day prior to the day the beds are licensed and certified. This project shall not proceed
unless it is approved and financed under the provisions of section 144A.073;

(3) to license and certify a new 60-bed facility in Austin, provided that: (i) 45 of the new
beds are transferred from a 45-bed facility in Austin under common ownership that is closed
and 15 of the new beds are transferred from a 182-bed facility in Albert Lea under common
ownership; (ii) the commissioner of human services is authorized by the 2004 legislature
to negotiate budget-neutral planned nursing facility closures; and (iii) money is available
from planned closures of facilities under common ownership to make implementation of
this clause budget-neutral to the state. The bed capacity of the Albert Lea facility shall be
reduced to 167 beds following the transfer. Of the 60 beds at the new facility, 20 beds shall
be used for a special care unit for persons with Alzheimer's disease or related dementias;

(4) to license and certify up to 80 beds transferred from an existing state-owned nursing
facility in Cass County to a new facility located on the grounds of the Ah-Gwah-Ching
campus. The operating cost payment rates for the new facility shall be determined based
on the interim and settle-up payment provisions of Minnesota Rules, part 9549.0057, and
the reimbursement provisions of deleted text begin section 256B.431 deleted text end new text begin chapter 256R new text end . The property payment
rate for the first three years of operation shall be $35 per day. For subsequent years, the
property payment rate of $35 per day shall be adjusted for inflation as provided in section
256B.434, subdivision 4, paragraph (c), as long as the facility has a contract under section
256B.434;

(5) to initiate a pilot program to license and certify up to 80 beds transferred from an
existing county-owned nursing facility in Steele County relocated to the site of a new acute
care facility as part of the county's Communities for a Lifetime comprehensive plan to create
innovative responses to the aging of its population. Upon relocation to the new site, the
nursing facility shall delicense 28 beds. The payment rate for external fixed costs for the
new facility shall be increased by an amount as calculated according to items (i) to (v):

(i) compute the estimated decrease in medical assistance residents served by the nursing
facility by multiplying the decrease in licensed beds by the historical percentage of medical
assistance resident days;

(ii) compute the annual savings to the medical assistance program from the delicensure
of 28 beds by multiplying the anticipated decrease in medical assistance residents, determined
in item (i), by the existing facility's weighted average payment rate multiplied by 365;

(iii) compute the anticipated annual costs for community-based services by multiplying
the anticipated decrease in medical assistance residents served by the nursing facility,
determined in item (i), by the average monthly elderly waiver service costs for individuals
in Steele County multiplied by 12;

(iv) subtract the amount in item (iii) from the amount in item (ii);

(v) divide the amount in item (iv) by an amount equal to the relocated nursing facility's
occupancy factor under section 256B.431, subdivision 3f, paragraph (c), multiplied by the
historical percentage of medical assistance resident days; and

(6) to consolidate and relocate nursing facility beds to a new site in Goodhue County
and to integrate these services with other community-based programs and services under a
communities for a lifetime pilot program and comprehensive plan to create innovative
responses to the aging of its population. Two nursing facilities, one for 84 beds and one for
65 beds, in the city of Red Wing licensed on July 1, 2015, shall be consolidated into a newly
renovated 64-bed nursing facility resulting in the delicensure of 85 beds. Notwithstanding
the carryforward of the approval authority in section 144A.073, subdivision 11, the funding
approved in April 2009 by the commissioner of health for a project in Goodhue County
shall not carry forward. The closure of the 85 beds shall not be eligible for a planned closure
rate adjustment under section deleted text begin 256B.437 deleted text end new text begin 256R.40 new text end . The construction project permitted in this
clause shall not be eligible for a threshold project rate adjustment under section 256B.434,
subdivision 4f. The payment rate for external fixed costs for the new facility shall be
increased by an amount as calculated according to items (i) to (vi):

(i) compute the estimated decrease in medical assistance residents served by both nursing
facilities by multiplying the difference between the occupied beds of the two nursing facilities
for the reporting year ending September 30, 2009, and the projected occupancy of the facility
at 95 percent occupancy by the historical percentage of medical assistance resident days;

(ii) compute the annual savings to the medical assistance program from the delicensure
by multiplying the anticipated decrease in the medical assistance residents, determined in
item (i), by the hospital-owned nursing facility weighted average payment rate multiplied
by 365;

(iii) compute the anticipated annual costs for community-based services by multiplying
the anticipated decrease in medical assistance residents served by the facilities, determined
in item (i), by the average monthly elderly waiver service costs for individuals in Goodhue
County multiplied by 12;

(iv) subtract the amount in item (iii) from the amount in item (ii);

(v) multiply the amount in item (iv) by 57.2 percent; and

(vi) divide the difference of the amount in item (iv) and the amount in item (v) by an
amount equal to the relocated nursing facility's occupancy factor under section 256B.431,
subdivision 3f, paragraph (c), multiplied by the historical percentage of medical assistance
resident days.

(b) Projects approved under this subdivision shall be treated in a manner equivalent to
projects approved under subdivision 4a.

Sec. 8.

Minnesota Statutes 2016, section 144A.071, subdivision 4d, is amended to read:

Subd. 4d.

Consolidation of nursing facilities.

(a) The commissioner of health, in
consultation with the commissioner of human services, may approve a request for
consolidation of nursing facilities which includes the closure of one or more facilities and
the upgrading of the physical plant of the remaining nursing facility or facilities, the costs
of which exceed the threshold project limit under subdivision 2, clause (a). The
commissioners shall consider the criteria in this section, section 144A.073, and section
deleted text begin 256B.437 deleted text end new text begin 256R.40 new text end , in approving or rejecting a consolidation proposal. In the event the
commissioners approve the request, the commissioner of human services shall calculate an
external fixed costs rate adjustment according to clauses (1) to (3):

(1) the closure of beds shall not be eligible for a planned closure rate adjustment under
section deleted text begin 256B.437, subdivision 6 deleted text end new text begin 256R.40, subdivision 5 new text end ;

(2) the construction project permitted in this clause shall not be eligible for a threshold
project rate adjustment under section 256B.434, subdivision 4f, or a moratorium exception
adjustment under section 144A.073; and

(3) the payment rate for external fixed costs for a remaining facility or facilities shall
be increased by an amount equal to 65 percent of the projected net cost savings to the state
calculated in paragraph (b), divided by the state's medical assistance percentage of medical
assistance dollars, and then divided by estimated medical assistance resident days, as
determined in paragraph (c), of the remaining nursing facility or facilities in the request in
this paragraph. The rate adjustment is effective on the later of the first day of the month
following completion of the construction upgrades in the consolidation plan or the first day
of the month following the complete closure of a facility designated for closure in the
consolidation plan. If more than one facility is receiving upgrades in the consolidation plan,
each facility's date of construction completion must be evaluated separately.

(b) For purposes of calculating the net cost savings to the state, the commissioner shall
consider clauses (1) to (7):

(1) the annual savings from estimated medical assistance payments from the net number
of beds closed taking into consideration only beds that are in active service on the date of
the request and that have been in active service for at least three years;

(2) the estimated annual cost of increased case load of individuals receiving services
under the elderly waiver;

(3) the estimated annual cost of elderly waiver recipients receiving support under group
residential housing;

(4) the estimated annual cost of increased case load of individuals receiving services
under the alternative care program;

(5) the annual loss of license surcharge payments on closed beds;

(6) the savings from not paying planned closure rate adjustments that the facilities would
otherwise be eligible for under section deleted text begin 256B.437 deleted text end new text begin 256R.40 new text end ; and

(7) the savings from not paying external fixed costs payment rate adjustments from
submission of renovation costs that would otherwise be eligible as threshold projects under
section 256B.434, subdivision 4f.

(c) For purposes of the calculation in paragraph (a), clause (3), the estimated medical
assistance resident days of the remaining facility or facilities shall be computed assuming
95 percent occupancy multiplied by the historical percentage of medical assistance resident
days of the remaining facility or facilities, as reported on the facility's or facilities' most
recent nursing facility statistical and cost report filed before the plan of closure is submitted,
multiplied by 365.

(d) For purposes of net cost of savings to the state in paragraph (b), the average occupancy
percentages will be those reported on the facility's or facilities' most recent nursing facility
statistical and cost report filed before the plan of closure is submitted, and the average
payment rates shall be calculated based on the approved payment rates in effect at the time
the consolidation request is submitted.

(e) To qualify for the external fixed costs payment rate adjustment under this subdivision,
the closing facilities shall:

(1) submit an application for closure according to section deleted text begin 256B.437, subdivision 3 deleted text end new text begin
256R.40, subdivision 2 new text end ; and

(2) follow the resident relocation provisions of section 144A.161.

(f) The county or counties in which a facility or facilities are closed under this subdivision
shall not be eligible for designation as a hardship area under subdivision 3 for five years
from the date of the approval of the proposed consolidation. The applicant shall notify the
county of this limitation and the county shall acknowledge this in a letter of support.

Sec. 9.

Minnesota Statutes 2016, section 144A.073, subdivision 3c, is amended to read:

Subd. 3c.

Cost neutral relocation projects.

(a) Notwithstanding subdivision 3, the
commissioner may at any time accept proposals, or amendments to proposals previously
approved under this section, for relocations that are cost neutral with respect to state costs
as defined in section 144A.071, subdivision 5a. The commissioner, in consultation with the
commissioner of human services, shall evaluate proposals according to subdivision 4a,
clauses (1), (4), (5), (6), and (8), and other criteria established in rule or law. The
commissioner of human services shall determine the allowable payment rates of the facility
receiving the beds in accordance with section deleted text begin 256B.441, subdivision 60 deleted text end new text begin 256R.50 new text end . The
commissioner shall approve or disapprove a project within 90 days.

(b) For the purposes of paragraph (a), cost neutrality shall be measured over the first
three 12-month periods of operation after completion of the project.

Sec. 10.

Minnesota Statutes 2016, section 144A.10, subdivision 4, is amended to read:

Subd. 4.

Correction orders.

Whenever a duly authorized representative of the
commissioner of health finds upon inspection of a nursing home, that the facility or a
controlling person or an employee of the facility is not in compliance with sections 144.411
to 144.417, 144.651, 144.6503, 144A.01 to 144A.155, or 626.557 or the rules promulgated
thereunder, a correction order shall be issued to the facility. The correction order shall state
the deficiency, cite the specific rule or statute violated, state the suggested method of
correction, and specify the time allowed for correction. If the commissioner finds that the
nursing home had uncorrected or repeated violations which create a risk to resident care,
safety, or rights, the commissioner shall notify the commissioner of human services deleted text begin who
shall require the facility to use any efficiency incentive payments received under section
256B.431, subdivision 2b, paragraph (d), to correct the violations and shall require the
facility to forfeit incentive payments for failure to correct the violations as provided in
section 256B.431, subdivision 2n. The forfeiture shall not apply to correction orders issued
for physical plant deficiencies deleted text end .

Sec. 11.

Minnesota Statutes 2016, section 144A.15, subdivision 2, is amended to read:

Subd. 2.

Appointment of receiver, rental.

If, after hearing, the court finds that
receivership is necessary as a means of protecting the health, safety, or welfare of a resident
of the facility, the court shall appoint the commissioner of health as a receiver to take charge
of the facility. The commissioner may enter into an agreement for a managing agent to work
on the commissioner's behalf in operating the facility during the receivership. The court
shall determine a fair monthly rental for the facility, taking into account all relevant factors
including the condition of the facility. This rental fee shall be paid by the receiver to the
appropriate controlling person for each month that the receivership remains in effect but
shall be reduced by the amount that the costs of the receivership provided under section
deleted text begin 256B.495 deleted text end new text begin 256R.52 new text end are in excess of the facility rate. The controlling person may agree to
waive the fair monthly rent by affidavit to the court. Notwithstanding any other law to the
contrary, no payment made to a controlling person by any state agency during a period of
receivership shall include any allowance for profit or be based on any formula which includes
an allowance for profit.

Notwithstanding state contracting requirements in chapter 16C, the commissioner shall
establish and maintain a list of qualified licensed nursing home administrators, or other
qualified persons or organizations with experience in delivering skilled health care services
and the operation of long-term care facilities for those interested in being a managing agent
on the commissioner's behalf during a state receivership of a facility. This list will be a
resource for choosing a managing agent and the commissioner may update the list at any
time. A managing agent cannot be someone who: (1) is the owner, licensee, or administrator
of the facility; (2) has a financial interest in the facility at the time of the receivership or is
a related party to the owner, licensee, or administrator; or (3) has owned or operated any
nursing facility or boarding care home that has been ordered into receivership.

Sec. 12.

Minnesota Statutes 2016, section 144A.154, is amended to read:

144A.154 RATE RECOMMENDATION.

The commissioner may recommend to the commissioner of human services a review of
the rates for a nursing home or boarding care home that participates in the medical assistance
program that is in voluntary or involuntary receivership, and that has needs or deficiencies
documented by the Department of Health. If the commissioner of health determines that a
review of the rate under section deleted text begin 256B.495 deleted text end new text begin 256R.52 new text end is needed, the commissioner shall provide
the commissioner of human services with:

(1) a copy of the order or determination that cites the deficiency or need; and

(2) the commissioner's recommendation for additional staff and additional annual hours
by type of employee and additional consultants, services, supplies, equipment, or repairs
necessary to satisfy the need or deficiency.

Sec. 13.

Minnesota Statutes 2016, section 144A.161, subdivision 10, is amended to read:

Subd. 10.

Facility closure rate adjustment.

Upon the request of a closing facility, the
commissioner of human services must allow the facility a closure rate adjustment equal to
a 50 percent payment rate increase to reimburse relocation costs or other costs related to
facility closure. This rate increase is effective on the date the facility's occupancy decreases
to 90 percent of capacity days after the written notice of closure is distributed under
subdivision 5 and shall remain in effect for a period of up to 60 days. The commissioner
shall delay the implementation of rate adjustments under section deleted text begin 256B.437, subdivisions
3, paragraph (b), and 6, paragraph (a) deleted text end new text begin 256R.40, subdivisions 5 and 6 new text end , to offset the cost of
this rate adjustment.

Sec. 14.

Minnesota Statutes 2016, section 144A.1888, is amended to read:

144A.1888 REUSE OF FACILITIES.

Notwithstanding any local ordinance related to development, planning, or zoning to the
contrary, the conversion or reuse of a nursing home that closes or that curtails, reduces, or
changes operations shall be considered a conforming use permitted under local law, provided
that the facility is converted to another long-term care service approved by a regional
planning group under section deleted text begin 256B.437 deleted text end new text begin 256R.40 new text end that serves a smaller number of persons
than the number of persons served before the closure or curtailment, reduction, or change
in operations.

Sec. 15.

Minnesota Statutes 2016, section 144A.611, subdivision 1, is amended to read:

Subdivision 1.

Nursing homes and certified boarding care homes.

The actual costs
of tuition and textbooks and reasonable expenses for the competency evaluation or the
nursing assistant training program and competency evaluation approved under section
144A.61, which are paid to nursing assistants or adult training programs pursuant to
subdivisions 2 and 4, are a reimbursable expense for nursing homes and certified boarding
care homes under section deleted text begin 256B.431, subdivision 36 deleted text end new text begin 256R.37 new text end .

Sec. 16.

Minnesota Statutes 2016, section 144A.74, is amended to read:

144A.74 MAXIMUM CHARGES.

A supplemental nursing services agency must not bill or receive payments from a nursing
home licensed under this chapter at a rate higher than 150 percent of the sum of the weighted
average wage rate, plus a factor determined by the commissioner to incorporate payroll
taxes as defined in deleted text begin Minnesota Rules, part 9549.0020, subpart 33 deleted text end new text begin section 256R.02, subdivision
37 new text end , for the applicable employee classification for the geographic group to which the nursing
home is assigned under Minnesota Rules, part 9549.0052. The weighted average wage rates
must be determined by the commissioner of human services and reported to the commissioner
of health on an annual basis. Wages are defined as hourly rate of pay and shift differential,
including weekend shift differential and overtime. Facilities shall provide information
necessary to determine weighted average wage rates to the commissioner of human services
in a format requested by the commissioner. The maximum rate must include all charges for
administrative fees, contract fees, or other special charges in addition to the hourly rates for
the temporary nursing pool personnel supplied to a nursing home.

Sec. 17.

Minnesota Statutes 2016, section 256.9657, subdivision 1, is amended to read:

Subdivision 1.

Nursing home license surcharge.

(a) Effective July 1, 1993, each
non-state-operated nursing home licensed under chapter 144A shall pay to the commissioner
an annual surcharge according to the schedule in subdivision 4. The surcharge shall be
calculated as $620 per licensed bed. If the number of licensed beds is reduced, the surcharge
shall be based on the number of remaining licensed beds the second month following the
receipt of timely notice by the commissioner of human services that beds have been
delicensed. The nursing home must notify the commissioner of health in writing when beds
are delicensed. The commissioner of health must notify the commissioner of human services
within ten working days after receiving written notification. If the notification is received
by the commissioner of human services by the 15th of the month, the invoice for the second
following month must be reduced to recognize the delicensing of beds. Beds on layaway
status continue to be subject to the surcharge. The commissioner of human services must
acknowledge a medical care surcharge appeal within 30 days of receipt of the written appeal
from the provider.

(b) Effective July 1, 1994, the surcharge in paragraph (a) shall be increased to $625.

(c) Effective August 15, 2002, the surcharge under paragraph (b) shall be increased to
$990.

(d) Effective July 15, 2003, the surcharge under paragraph (c) shall be increased to
$2,815.

(e) The commissioner may reduce, and may subsequently restore, the surcharge under
paragraph (d) based on the commissioner's determination of a permissible surcharge.

deleted text begin (f) Between April 1, 2002, and August 15, 2004, a facility governed by this subdivision
may elect to assume full participation in the medical assistance program by agreeing to
comply with all of the requirements of the medical assistance program, including the rate
equalization law in section 256B.48, subdivision 1, paragraph (a), and all other requirements
established in law or rule, and to begin intake of new medical assistance recipients. Rates
will be determined under Minnesota Rules, parts 9549.0010 to 9549.0080. Rate calculations
will be subject to limits as prescribed in rule and law. Other than the adjustments in sections
256B.431, subdivisions 30 and 32; 256B.437, subdivision 3, paragraph (b), Minnesota
Rules, part 9549.0057, and any other applicable legislation enacted prior to the finalization
of rates, facilities assuming full participation in medical assistance under this paragraph are
not eligible for any rate adjustments until the July 1 following their settle-up period.
deleted text end

Sec. 18.

Minnesota Statutes 2016, section 256B.0915, subdivision 3e, is amended to read:

Subd. 3e.

Customized living service rate.

(a) Payment for customized living services
shall be a monthly rate authorized by the lead agency within the parameters established by
the commissioner. The payment agreement must delineate the amount of each component
service included in the recipient's customized living service plan. The lead agency, with
input from the provider of customized living services, shall ensure that there is a documented
need within the parameters established by the commissioner for all component customized
living services authorized.

(b) The payment rate must be based on the amount of component services to be provided
utilizing component rates established by the commissioner. Counties and tribes shall use
tools issued by the commissioner to develop and document customized living service plans
and rates.

(c) Component service rates must not exceed payment rates for comparable elderly
waiver or medical assistance services and must reflect economies of scale. Customized
living services must not include rent or raw food costs.

(d) With the exception of individuals described in subdivision 3a, paragraph (b), the
individualized monthly authorized payment for the customized living service plan shall not
exceed 50 percent of the greater of either the statewide or any of the geographic groups'
weighted average monthly nursing facility rate of the case mix resident class to which the
elderly waiver eligible client would be assigned under Minnesota Rules, parts 9549.0051
to 9549.0059, less the maintenance needs allowance as described in subdivision 1d, paragraph
(a). Effective on July 1 of the state fiscal year in which the resident assessment system as
described in section deleted text begin 256B.438 deleted text end new text begin 256R.17 new text end for nursing home rate determination is implemented
and July 1 of each subsequent state fiscal year, the individualized monthly authorized
payment for the services described in this clause shall not exceed the limit which was in
effect on June 30 of the previous state fiscal year updated annually based on legislatively
adopted changes to all service rate maximums for home and community-based service
providers.

(e) Effective July 1, 2011, the individualized monthly payment for the customized living
service plan for individuals described in subdivision 3a, paragraph (b), must be the monthly
authorized payment limit for customized living for individuals classified as case mix A,
reduced by 25 percent. This rate limit must be applied to all new participants enrolled in
the program on or after July 1, 2011, who meet the criteria described in subdivision 3a,
paragraph (b). This monthly limit also applies to all other participants who meet the criteria
described in subdivision 3a, paragraph (b), at reassessment.

(f) Customized living services are delivered by a provider licensed by the Department
of Health as a class A or class F home care provider and provided in a building that is
registered as a housing with services establishment under chapter 144D. Licensed home
care providers are subject to section 256B.0651, subdivision 14.

(g) A provider may not bill or otherwise charge an elderly waiver participant or their
family for additional units of any allowable component service beyond those available under
the service rate limits described in paragraph (d), nor for additional units of any allowable
component service beyond those approved in the service plan by the lead agency.

(h) Effective July 1, 2016, and each July 1 thereafter, individualized service rate limits
for customized living services under this subdivision shall be increased by the difference
between any legislatively adopted home and community-based provider rate increases
effective on July 1 or since the previous July 1 and the average statewide percentage increase
in nursing facility operating payment rates under deleted text begin sections 256B.431, 256B.434, and 256B.441 deleted text end new text begin
chapter 256R new text end , effective the previous January 1. This paragraph shall only apply if the average
statewide percentage increase in nursing facility operating payment rates is greater than any
legislatively adopted home and community-based provider rate increases effective on July
1, or occurring since the previous July 1.

Sec. 19.

Minnesota Statutes 2016, section 256B.35, subdivision 4, is amended to read:

Subd. 4.

Field audits required.

The commissioner of human services shall conduct
field audits at the same time as cost report audits required under section deleted text begin 256B.27, subdivision
2a deleted text end new text begin 256R.13, subdivision 1 new text end , and at any other time but at least once every four years, without
notice, to determine whether this section was complied with and that the funds provided
residents for their personal needs were actually expended for that purpose.

Sec. 20.

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 following the month 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 new text begin or chapter 256R new text end , a nursing facility reimbursed under
that section new text begin or chapter new text end 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 new text begin or chapter 256R new text end 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 following the month 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 new text begin or chapter 256R new text end , a nursing facility reimbursed under
that section new text begin or chapter new text end , 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 following the month in which the delicensure of the beds becomes effective.

(e) For nursing facilities reimbursed under this section deleted text begin or deleted text end new text begin , new text end section 256B.434, new text begin or chapter
256R, new text end 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 deleted text begin or deleted text end new text begin , new text end section 256B.434, new text begin or chapter
256R, new text end 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, subdivision 2 deleted text end new text begin 256R.06, subdivision 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. 21.

Minnesota Statutes 2016, section 256B.50, subdivision 1, is amended to read:

Subdivision 1.

Scope.

A provider may appeal from a determination of a payment rate
established pursuant to this chapter or allowed costs under deleted text begin section 256B.441 deleted text end new text begin chapter 256R new text end
if the appeal, if successful, would result in a change to the provider's payment rate or to the
calculation of maximum charges to therapy vendors as provided by section deleted text begin 256B.433,
subdivision 3 deleted text end new text begin 256R.54 new text end . Appeals must be filed in accordance with procedures in this section.
This section does not apply to a request from a resident or long-term care facility for
reconsideration of the classification of a resident under section 144.0722.

Sec. 22. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 21 are effective the day following final enactment.
new text end