HF 2596

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to human services; providing rate adjustments for long-term care
providers; modifying the tax treatment of income of foreign operating
corporations; amending Minnesota Statutes 2004, section 290.17, subdivision
4; Minnesota Statutes 2005 Supplement, sections 256B.431, subdivision 41;
256B.5012, subdivision 6; Laws 2005, First Special Session chapter 4, article
7, section 55.

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

Section 1.

Minnesota Statutes 2005 Supplement, section 256B.431, subdivision 41,
is amended to read:

Subd. 41.

Rate increases for October 1, 2005, and October 1, 2006.

(a) For the
rate period beginning October 1, 2005, the commissioner shall make available to each
nursing facility reimbursed under this section or section 256B.434 an adjustment equal to
2.2553 percent of the total operating payment rate, and for the rate year beginning October
1, 2006, the commissioner shall make available to each nursing facility reimbursed under
this section or section 256B.434 an adjustment equal to percent of the total
operating payment rate.

(b) 75 percent of the money resulting from the rate adjustment under paragraph (a)
must be used to increase wages and benefits and pay associated costs for all employees,
except management fees, the administrator, and central office staff. Except as provided
in paragraph (c), 75 percent of the money received by a facility as a result of the rate
adjustment provided in paragraph (a) must be used only for wage, benefit, and staff
increases implemented on or after the effective date of the rate increase each year, and
must not be used for increases implemented prior to that date.

(c) With respect only to the October 1, 2005, rate increase, a nursing facility that
incurred costs for salary and employee benefit increases first provided after July 1, 2003,
may count those costs towards the amount required to be spent on salaries and benefits
under paragraph (b). These costs must be reported to the commissioner in the form and
manner specified by the commissioner.

(d) Nursing facilities may apply for the portion of the rate adjustment under
paragraph (a) for employee wages and benefits and associated costs. The application
must be made to the commissioner and contain a plan by which the nursing facility
will distribute the funds according to paragraph (b). For nursing facilities in which the
employees are represented by an exclusive bargaining representative, an agreement
negotiated and agreed to by the employer and the exclusive bargaining representative
constitutes the plan. A negotiated agreement may constitute the plan only if the agreement
is finalized after the date of enactment of all increases for the rate year and signed by both
parties prior to submission to the commissioner. The commissioner shall review the
plan to ensure that the rate adjustments are used as provided in paragraph (b). To be
eligible, a facility must submit its distribution plan by March 31, 2006, and March 31,
2007, respectively. The commissioner may approve distribution plans on or before June
30, 2006, and June 30, 2007, respectively. If a facility's distribution plan is effective after
the first day of the applicable rate period that the funds are available, the rate adjustments
are effective the same date as the facility's plan.

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

Sec. 2.

Minnesota Statutes 2005 Supplement, section 256B.5012, subdivision 6,
is amended to read:

Subd. 6.

ICF/MR rate increases October 1, 2005, and October 1, 2006.

(a) For
the rate deleted text begin periods deleted text end new text begin period new text end beginning October 1, 2005, deleted text begin and October 1, 2006, deleted text end the commissioner
shall make available to each facility reimbursed under this section an adjustment to the
total operating payment rate of 2.2553 percent. new text begin For the rate period beginning October 1,
2006, the commissioner shall make available to each facility reimbursed under this section
an adjustment to the total operating payment rate of 7.2553 percent.
new text end

(b) 75 percent of the money resulting from the rate adjustment under paragraph (a)
must be used to increase wages and benefits and pay associated costs for all employees,
except for administrative and central office employees. 75 percent of the money received
by a facility as a result of the rate adjustment provided in paragraph (a) must be used only
for wage, benefit, and staff increases implemented on or after the effective date of the rate
increase each year, and must not be used for increases implemented prior to that date.

(c) For each facility, the commissioner shall make available an adjustment using the
percentage specified in paragraph (a) multiplied by the total payment rate, excluding the
property-related payment rate, in effect on the preceding day. The total payment rate shall
include the adjustment provided in section 256B.501, subdivision 12.

(d) A facility whose payment rates are governed by closure agreements, receivership
agreements, or Minnesota Rules, part 9553.0075, is not eligible for an adjustment
otherwise granted under this subdivision.

(e) A facility may apply for the portion of the payment rate adjustment provided
under paragraph (a) for employee wages and benefits and associated costs. The application
must be made to the commissioner and contain a plan by which the facility will distribute
the funds according to paragraph (b). For facilities in which the employees are represented
by an exclusive bargaining representative, an agreement negotiated and agreed to by the
employer and the exclusive bargaining representative constitutes the plan. A negotiated
agreement may constitute the plan only if the agreement is finalized after the date of
enactment of all rate increases for the rate year. The commissioner shall review the plan to
ensure that the payment rate adjustment per diem is used as provided in this subdivision.
To be eligible, a facility must submit its plan by March 31, 2006, and December 31,
2006, respectively. If a facility's plan is effective for its employees after the first day of
the applicable rate period that the funds are available, the payment rate adjustment per
diem is effective the same date as its plan.

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

Sec. 3.

Minnesota Statutes 2004, section 290.17, subdivision 4, is amended to read:

Subd. 4.

Unitary business principle.

(a) If a trade or business conducted wholly
within this state or partly within and partly without this state is part of a unitary business,
the entire income of the unitary business is subject to apportionment pursuant to section
290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary
business is considered to be derived from any particular source and none may be allocated
to a particular place except as provided by the applicable apportionment formula. The
provisions of this subdivision do not apply to business income subject to subdivision 5,
income of an insurance company, or income of an investment company determined under
section 290.36.

(b) The term "unitary business" means business activities or operations which
result in a flow of value between them. The term may be applied within a single legal
entity or between multiple entities and without regard to whether each entity is a sole
proprietorship, a corporation, a partnership or a trust.

(c) Unity is presumed whenever there is unity of ownership, operation, and use,
evidenced by centralized management or executive force, centralized purchasing,
advertising, accounting, or other controlled interaction, but the absence of these
centralized activities will not necessarily evidence a nonunitary business. Unity is also
presumed when business activities or operations are of mutual benefit, dependent upon or
contributory to one another, either individually or as a group.

(d) Where a business operation conducted in Minnesota is owned by a business
entity that carries on business activity outside the state different in kind from that
conducted within this state, and the other business is conducted entirely outside the state, it
is presumed that the two business operations are unitary in nature, interrelated, connected,
and interdependent unless it can be shown to the contrary.

(e) Unity of ownership is not deemed to exist when a corporation is involved unless
that corporation is a member of a group of two or more business entities and more than 50
percent of the voting stock of each member of the group is directly or indirectly owned
by a common owner or by common owners, either corporate or noncorporate, or by one
or more of the member corporations of the group. For this purpose, the term "voting
stock" shall include membership interests of mutual insurance holding companies formed
under section 60A.077.

(f) The net income and apportionment factors under section 290.191 or 290.20 of
foreign corporations and other foreign entities which are part of a unitary business shall
not be included in the net income or the apportionment factors of the unitary business.
A foreign corporation or other foreign entity which is required to file a return under this
chapter shall file on a separate return basis. The net income and apportionment factors
under section 290.191 or 290.20 of foreign operating corporations shall not be included in
the net income or the apportionment factors of the unitary business except as provided in
paragraph (g).

(g) new text begin ......... percent of new text end the adjusted net income of a foreign operating corporation shall
be deemed to be paid as a dividend on the last day of its taxable year to each shareholder
thereof, in proportion to each shareholder's ownership, with which such corporation is
engaged in a unitary business. Such deemed dividend shall be treated as a dividend under
section 290.21, subdivision 4.

Dividends actually paid by a foreign operating corporation to a corporate shareholder
which is a member of the same unitary business as the foreign operating corporation shall
be eliminated from the net income of the unitary business in preparing a combined report
for the unitary business. The adjusted net income of a foreign operating corporation
shall be its net income adjusted as follows:

(1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
Rico, or a United States possession or political subdivision of any of the foregoing shall
be a deduction; and

(2) the subtraction from federal taxable income for payments received from foreign
corporations or foreign operating corporations under section 290.01, subdivision 19d,
clause (10), shall not be allowed.

If a foreign operating corporation incurs a net loss, neither income nor deduction
from that corporation shall be included in determining the net income of the unitary
business.

(h) For purposes of determining the net income of a unitary business and the factors
to be used in the apportionment of net income pursuant to section 290.191 or 290.20, there
must be included only the income and apportionment factors of domestic corporations or
other domestic entities other than foreign operating corporations that are determined to
be part of the unitary business pursuant to this subdivision, notwithstanding that foreign
corporations or other foreign entities might be included in the unitary business.

(i) Deductions for expenses, interest, or taxes otherwise allowable under this chapter
that are connected with or allocable against dividends, deemed dividends described
in paragraph (g), or royalties, fees, or other like income described in section 290.01,
subdivision 19d, clause (10), shall not be disallowed.

(j) Each corporation or other entity, except a sole proprietorship, that is part of a
unitary business must file combined reports as the commissioner determines. On the
reports, all intercompany transactions between entities included pursuant to paragraph
(h) must be eliminated and the entire net income of the unitary business determined in
accordance with this subdivision is apportioned among the entities by using each entity's
Minnesota factors for apportionment purposes in the numerators of the apportionment
formula and the total factors for apportionment purposes of all entities included pursuant
to paragraph (h) in the denominators of the apportionment formula.

(k) If a corporation has been divested from a unitary business and is included in a
combined report for a fractional part of the common accounting period of the combined
report:

(1) its income includable in the combined report is its income incurred for that part
of the year determined by proration or separate accounting; and

(2) its sales, property, and payroll included in the apportionment formula must
be prorated or accounted for separately.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for tax years beginning on or after
December 31, 2005.
new text end

Sec. 4.

Laws 2005, First Special Session chapter 4, article 7, section 55, is amended to
read:

Sec. 55. [COMMUNITY SERVICES PROVIDER RATE INCREASES.]

(a) The commissioner of human services shall increase reimbursement rates or rate
limits, as applicable, by 2.2553 percent for the rate period beginning October 1, 2005, and
new text begin by 7.2553 percent for new text end the rate period beginning October 1, 2006, effective for services
rendered on or after those dates.

(b) The deleted text begin 2.2553 percent deleted text end annual rate deleted text begin increase deleted text end new text begin increases new text end described in this section must
be provided to:

(1) home and community-based waivered services for persons with mental
retardation or related conditions under Minnesota Statutes, section 256B.501;

(2) home and community-based waivered services for the elderly under Minnesota
Statutes, section 256B.0915;

(3) waivered services under community alternatives for disabled individuals under
Minnesota Statutes, section 256B.49;

(4) community alternative care waivered services under Minnesota Statutes, section
256B.49;

(5) traumatic brain injury waivered services under Minnesota Statutes, section
256B.49;

(6) nursing services and home health services under Minnesota Statutes, section
256B.0625, subdivision 6a;

(7) personal care services and nursing supervision of personal care services under
Minnesota Statutes, section 256B.0625, subdivision 19a;

(8) private duty nursing services under Minnesota Statutes, section 256B.0625,
subdivision 7;

(9) day training and habilitation services for adults with mental retardation or related
conditions under Minnesota Statutes, sections 252.40 to 252.46;

(10) alternative care services under Minnesota Statutes, section 256B.0913;

(11) adult residential program grants under Minnesota Rules, parts 9535.2000 to
9535.3000;

(12) adult and family community support grants under Minnesota Rules, parts
9535.1700 to 9535.1760;

(13) the group residential housing supplementary service rate under Minnesota
Statutes, section 256I.05, subdivision 1a;

(14) adult mental health integrated fund grants under Minnesota Statutes, section
245.4661;

(15) semi-independent living services under Minnesota Statutes, section 252.275,
including SILS funding under county social services grants formerly funded under
Minnesota Statutes, chapter 256I;

(16) community support services for deaf and hard-of-hearing adults with mental
illness who use or wish to use sign language as their primary means of communication;

(17) living skills training programs for persons with intractable epilepsy who need
assistance in the transition to independent living;

(18) physical therapy services under sections 256B.0625, subdivision 8, and
256D.03, subdivision 4;

(19) occupational therapy services under sections 256B.0625, subdivision 8a, and
256D.03, subdivision 4;

(20) speech-language therapy services under section 256D.03, subdivision 4, and
Minnesota Rules, part 9505.0390; and

(21) respiratory therapy services under section 256D.03, subdivision 4, and
Minnesota Rules, part 9505.0295.

(c) Providers that receive a rate increase under this section shall use 75 percent of
the additional revenue to increase wages and benefits and pay associated costs for all
employees, except for management fees, the administrator, and central office staffs.

(d) For public employees, the increase for wages and benefits for certain staff is
available and pay rates shall be increased only to the extent that they comply with laws
governing public employees collective bargaining. Money received by a provider for pay
increases under this section may be used only for increases implemented on or after the
first day of the rate period in which the increase is available and must not be used for
increases implemented prior to that date.

(e) A copy of the provider's plan for complying with paragraph (c) must be made
available to all employees by giving each employee a copy or by posting a copy in an area
of the provider's operation to which all employees have access. If an employee does not
receive the adjustment, if any, described in the plan and is unable to resolve the problem
with the provider, the employee may contact the employee's union representative. If the
employee is not covered by a collective bargaining agreement, the employee may contact
the commissioner at a telephone number provided by the commissioner and included in
the provider's plan.