HF 316

1st Engrossment - 89th Legislature (2015 - 2016) Posted on 03/23/2015 03:50pm

A bill for an act
relating to human services; modifying the nursing facility reimbursement
system; amending Minnesota Statutes 2014, sections 256B.0915, subdivision 3a;
256B.441, subdivisions 1, 5, 13, 14, 17, 30, 31, 35, 48, 50, 51, 51a, 53, 54, 56,
by adding subdivisions; repealing Minnesota Statutes 2014, section 256B.441,
subdivisions 14a, 19, 50a, 52, 55, 58, 62.

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

Section 1.

Minnesota Statutes 2014, section 256B.0915, subdivision 3a, is amended to
read:

Subd. 3a.

Elderly waiver cost limits.

(a) The monthly limit for the cost of
waivered services to an individual elderly waiver client except for individuals described
in paragraphs (b) and (d) shall be the weighted average monthly nursing facility rate of
the case mix resident class to which the elderly waiver client would be assigned under
Minnesota Rules, parts 9549.0050 to 9549.0059, less the recipient's maintenance needs
allowance as described in subdivision 1d, paragraph (a), until the first day of the state fiscal
year in which the resident assessment system as described in section 256B.438 for nursing
home rate determination is implemented. Effective on the first day of the state fiscal year
in which the resident assessment system as described in section 256B.438 for nursing
home rate determination is implemented and the first day of each subsequent state fiscal
year, the monthly limit for the cost of waivered services to an individual elderly waiver
client shall be the rate of the case mix resident class to which the waiver client would be
assigned under Minnesota Rules, parts 9549.0050 to 9549.0059, in effect on the last
day of the previous state fiscal year, adjusted by new text begin the greater of new text end any legislatively adopted
home and community-based services percentage rate adjustment new text begin or the average statewide
percentage increase in nursing facility operating payment rates under section 256B.441 new text end .

(b) The monthly limit for the cost of waivered services new text begin under paragraph (a) new text end to an
individual elderly waiver client assigned to a case mix classification A deleted text begin under paragraph
(a) deleted text end with:

(1) no dependencies in activities of daily living; or

(2) up to two dependencies in bathing, dressing, grooming, walking, and eating
when the dependency score in eating is three or greater as determined by an assessment
performed under section 256B.0911 shall be $1,750 per month effective on July 1, 2011,
for all new participants enrolled in the program on or after July 1, 2011. This monthly
limit shall be applied to all other participants who meet this criteria at reassessment. This
monthly limit shall be increased annually as described in paragraph (a).

(c) If extended medical supplies and equipment or environmental modifications are
or will be purchased for an elderly waiver client, the costs may be prorated for up to
12 consecutive months beginning with the month of purchase. If the monthly cost of a
recipient's waivered services exceeds the monthly limit established in paragraph (a) or
(b), the annual cost of all waivered services shall be determined. In this event, the annual
cost of all waivered services shall not exceed 12 times the monthly limit of waivered
services as described in paragraph (a) or (b).

(d) Effective July 1, 2013, the monthly cost limit of waiver services, including
any necessary home care services described in section 256B.0651, subdivision 2, for
individuals who meet the criteria as ventilator-dependent given in section 256B.0651,
subdivision 1, paragraph (g), shall be the average of the monthly medical assistance
amount established for home care services as described in section 256B.0652, subdivision
7, and the annual average contracted amount established by the commissioner for nursing
facility services for ventilator-dependent individuals. This monthly limit shall be increased
annually as described in paragraph (a).

Sec. 2.

Minnesota Statutes 2014, section 256B.441, subdivision 1, is amended to read:

Subdivision 1.

deleted text begin Rebasing deleted text end new text begin Calculation new text end of nursing facility operating payment
rates.

(a) The commissioner shall deleted text begin rebase nursing facility operating payment rates to align
payments to facilities with the cost of providing care. The rebased deleted text end new text begin calculate new text end operating
payment rates deleted text begin shall be calculated deleted text end using the statistical and cost report filed by each nursing
facility for the report period ending one year prior to the rate year.

(b) The deleted text begin new deleted text end operating payment rates based on this section shall take effect deleted text begin beginning deleted text end
with the rate year beginning October 1, deleted text begin 2008, and shall be phased in over eight rate years
through October 1, 2015. For each year of the phase-in, the operating payment rates deleted text end deleted text begin shall
be calculated using the statistical and cost report filed by each nursing facility for the
report period ending one year prior to the rate year deleted text end new text begin 2015 new text end .

(c) deleted text begin Operating payment rates shall be rebased on October 1, 2016, and every two
years after that date.
deleted text end

deleted text begin (d) deleted text end Each cost reporting year shall begin on October 1 and end on the following
September 30. deleted text begin Beginning in 2014, deleted text end A statistical and cost report shall be filed by each
nursing facility by February 1. Notice of rates shall be distributed by August 15 and the
rates shall go into effect on October 1 for one year.

deleted text begin (e) deleted text end new text begin (d) new text end Effective October 1, deleted text begin 2014 deleted text end new text begin 2016 new text end , property rates shall be deleted text begin rebased in accordance
with section 256B.431 and Minnesota Rules, chapter 9549. The commissioner shall
determine what the property payment rate for a nursing facility would be had the facility
not had its property rate determined under section 256B.434. The commissioner shall
allow nursing facilities to provide information affecting this rate determination that would
have been filed annually under Minnesota Rules, chapter 9549, and nursing facilities shall
report information necessary to determine allowable debt. The commissioner shall use
this information to determine the property payment rate deleted text end new text begin recalculated based on a new
property rate system to be developed by the commissioner in consultation with nursing
facility providers and other stakeholders. The new property system shall be designed
to provide payment rates that allow providers to efficiently meet consumer needs and
preferences throughout the state new text end .

Sec. 3.

Minnesota Statutes 2014, section 256B.441, subdivision 5, is amended to read:

Subd. 5.

Administrative costs.

"Administrative costs" means the direct costs for
administering the overall activities of the nursing home. These costs include salaries and
wages of the administrator, assistant administrator, business office employees, security
guards, and associated fringe benefits and payroll taxes, fees, contracts, or purchases
related to business office functions, licenses, and permits except as provided in the
external fixed costs category, employee recognition, travel including meals and lodging,
all training except as specified in subdivision 11, voice and data communication or
transmission, office supplies, new text begin property and new text end liability insurance and other forms of insurance
not designated to other areas, personnel recruitment, legal services, accounting services,
management or business consultants, data processing, information technology, Web
site, central or home office costs, business meetings and seminars, postage, fees for
professional organizations, subscriptions, security services, advertising, board of director's
fees, working capital interest expense, and bad debts and bad debt collection fees.

Sec. 4.

Minnesota Statutes 2014, section 256B.441, is amended by adding a
subdivision to read:

new text begin Subd. 11a. new text end

new text begin Employer health insurance costs. new text end

new text begin "Employer health insurance costs"
means premium expenses for group coverage and reinsurance, actual expenses incurred
for self-insured plans, and employer contributions to employee health reimbursement and
savings accounts. Premium and expense costs and contributions shall only be allowable if
they are for employees who meet the definition of full time employees under the federal
Affordable Care Act, Public Law 111-148.
new text end

Sec. 5.

Minnesota Statutes 2014, section 256B.441, subdivision 13, is amended to read:

Subd. 13.

External fixed costs.

"External fixed costs" means costs related to the
nursing home surcharge under section 256.9657, subdivision 1; licensure fees under
section 144.122; deleted text begin until September 30, 2013, long-term care consultation fees under
section 256B.0911, subdivision 6; deleted text end family advisory council fee under section 144A.33;
scholarships under section 256B.431, subdivision 36; planned closure rate adjustments
under section 256B.437; deleted text begin or deleted text end single bed room incentives under section 256B.431,
subdivision 42; property taxes deleted text begin and property insurance deleted text end new text begin , assessments, and payments in lieu
of taxes; employer health insurance costs new text end ; and PERA.

Sec. 6.

Minnesota Statutes 2014, section 256B.441, subdivision 14, is amended to read:

Subd. 14.

Facility average case mix index.

"Facility average case mix index"
or "CMI" means a numerical deleted text begin value deleted text end score that describes the relative resource use for
all residents within the groups under the resource utilization group ( deleted text begin RUG-III deleted text end new text begin RUG new text end )
classification system prescribed by the commissioner based on an assessment of each
resident. The facility average CMI shall be computed as the standardized days divided by
total days for all residents in the facility. The RUG's weights used deleted text begin in this section shall be
as follows for each RUG's class: SE3 1.605; SE2 1.247; SE1 1.081; RAD 1.509; RAC
1.259; RAB 1.109; RAA 0.957; SSC 1.453; SSB 1.224; SSA 1.047; CC2 1.292; CC1
1.200; CB2 1.086; CB1 1.017; CA2 0.908; CA1 0.834; IB2 0.877; IB1 0.817; IA2 0.720;
IA1 0.676; BB2 0.956; BB1 0.885; BA2 0.716; BA1 0.673; PE2 1.199; PE1 1.104; PD2
1.023; PD1 0.948; PC2 0.926; PC1 0.860; PB2 0.786; PB1 0.734; PA2 0.691; PA1 0.651;
BC1 0.651; and DDF 1.000 deleted text end new text begin shall be based on the system prescribed in section 256B.438 new text end .

Sec. 7.

Minnesota Statutes 2014, section 256B.441, subdivision 17, is amended to read:

Subd. 17.

Fringe benefit costs.

"Fringe benefit costs" means the costs for group
life, deleted text begin health, deleted text end dental, workers' compensation, and other employee insurances and pension,
new text begin except for the Public Employee Retirement Association; new text end profit sharing deleted text begin , deleted text end new text begin ; new text end and retirement
plans for which the employer pays all or a portion of the costs.

Sec. 8.

Minnesota Statutes 2014, section 256B.441, subdivision 30, is amended to read:

Subd. 30.

Peer groups.

new text begin (a) new text end Facilities shall be classified into deleted text begin three deleted text end new text begin two new text end groups by
county. The groups shall consist of:

(1) group one: facilities in Anoka, Benton, new text begin Blue Earth, new text end Carlton, Carver, Chisago,
new text begin Clay, Cook, Crow Wing, new text end Dakota, Dodge, Goodhue, Hennepin, Isanti, new text begin Kanabec, Lake,
Le Sueur, McLeod, Meeker, new text end Mille Lacs, Morrison, new text begin Nicollet, new text end Olmsted, new text begin Pine, new text end Ramsey,
Rice, Scott, Sherburne, new text begin Sibley, new text end St. Louis, Stearns, Steele, Wabasha, new text begin Waseca, new text end Washington,
Winona, or Wright County; new text begin and
new text end

(2) deleted text begin group two: facilities in Aitkin, Beltrami, Blue Earth, Brown, Cass, Clay,
Cook, Crow Wing, Faribault, Fillmore, Freeborn, Houston, Hubbard, Itasca, Kanabec,
Koochiching, Lake, Lake of the Woods, Le Sueur, Martin, McLeod, Meeker, Mower,
Nicollet, Norman, Pine, Roseau, Sibley, Todd, Wadena, Waseca, Watonwan, or Wilkin
County; and
deleted text end

deleted text begin (3) deleted text end group deleted text begin three deleted text end new text begin two new text end : facilities in all other counties.

new text begin (b) The commissioner shall regularly review the appropriations of the peer groups
established in paragraph (a). The review shall use the most recent cost report data and look
at relative wages for nursing department positions across counties. The commissioner shall
provide a report to the chairs and ranking minority members of the legislative committees
with jurisdiction over nursing facility payment rates on the review of the wage data every
two years beginning on January 15, 2017. The report may include recommendations to
change the assignment of counties between the two groups based on the review of the data.
new text end

Sec. 9.

Minnesota Statutes 2014, section 256B.441, subdivision 31, is amended to read:

Subd. 31.

Prior system operating cost payment rate.

"Prior system operating cost
payment rate" means the operating cost payment rate in effect on September 30, deleted text begin 2008 deleted text end new text begin
2015 new text end , under Minnesota Rules and Minnesota Statutes, not including planned closure
rate adjustments under section 256B.437 or single bed room incentives under section
256B.431, subdivision 42.

Sec. 10.

Minnesota Statutes 2014, section 256B.441, subdivision 35, is amended to read:

Subd. 35.

Reporting period.

"Reporting period" means the one-year period
beginning on October 1 and ending on the following September 30 during which incurred
costs are accumulated and then reported on the statistical and cost report. new text begin If a facility is
reporting for an interim or settle-up period, the reporting period beginning date may be a
date other than October 1. An interim or settle-up report must cover at least five months,
but no more than 17 months, and must always end on September 30.
new text end

Sec. 11.

Minnesota Statutes 2014, section 256B.441, subdivision 48, is amended to read:

Subd. 48.

Calculation of deleted text begin operating deleted text end new text begin care-related new text end per diems.

The direct care per
diem for each facility shall be the facility's direct care costs divided by its standardized
days. The other care-related per diem shall be the sum of the facility's activities costs,
other direct care costs, raw food costs, therapy costs, and social services costs, divided by
the facility's resident days. deleted text begin The other operating per diem shall be the sum of the facility's
administrative costs, dietary costs, housekeeping costs, laundry costs, and maintenance
and plant operations costs divided by the facility's resident days.
deleted text end

Sec. 12.

Minnesota Statutes 2014, section 256B.441, subdivision 50, is amended to read:

Subd. 50.

Determination of total care-related limit.

(a) The deleted text begin limit on the deleted text end new text begin median new text end
total care-related per diem shall be determined for each peer group deleted text begin and facility type group
combination. A facility's total care-related per diems shall be limited to 120 percent of the
median for the facility's peer and facility type group. The facility-specific direct care costs
used in making this comparison and in the calculation of the median shall be based on a
RUG's weight of 1.00. A facility that is above that limit shall have its total care-related per
diem reduced to the limit. If a reduction of the total care-related per diem is necessary
because of this limit, the reduction shall be made proportionally to both the direct care per
diem and the other care-related per diem deleted text end .

(b) deleted text begin Beginning with rates determined for October 1, 2016, The deleted text end new text begin A facility's new text end total
care-related limit shall be a variable amount based on each facility's quality score, as
determined under subdivision 44, in accordance with clauses (1) to deleted text begin (4) deleted text end new text begin (3) new text end :

deleted text begin (1) for each facility, the commissioner shall determine the quality score, subtract 40,
divide by 40, and convert to a percentage;
deleted text end

deleted text begin (2) if the value determined in clause (1) is less than zero deleted text end new text begin (1) for each facility with a
quality score of ten or less new text end , the total care-related limit shall be deleted text begin 105 deleted text end new text begin 95 new text end percent of the
median for the facility's peer deleted text begin and facility type deleted text end group;

deleted text begin (3) if the value determined in clause (1) is greater than 100 percent deleted text end new text begin (2) for each
facility with a quality score of 90 or more new text end , the total care-related limit shall be deleted text begin 125 deleted text end new text begin 140 new text end
percent of the median for the facility's peer deleted text begin and facility type deleted text end group; and

deleted text begin (4) if the value determined in clause (1) is greater than zero and less than 100
percent, the total care-related limit shall be 105 percent of the median for the facility's peer
and facility type group plus one-fifth of the percentage determined in clause (1) deleted text end new text begin (3) for
each facility with a quality score of more than ten and less than 90, the total care-related
limit shall be computed by:
new text end

new text begin (i) computing the difference between the facility's quality score and ten;
new text end

new text begin (ii) dividing the amount in item (i) by 80;
new text end

new text begin (iii) multiplying the amount in item (ii) by 0.45;
new text end

new text begin (iv) adding the amount in item (iii) to 0.95; and
new text end

new text begin (v) multiplying the amount in item (iv) by the median for the facility's peer group new text end .

new text begin (c) A RUG's weight of 1.00 shall be used in the calculation of each peer group's
median total care-related per diem, and in comparisons of facility-specific direct care
costs to the peer group median.
new text end

new text begin (d) A facility that is above its total care-related limit as determined according to
paragraph (b) shall have its total care-related per diem reduced to its limit. If a reduction
of the total care-related per diem is necessary due to this limit, the reduction shall be made
proportionally to both the direct care per diem and the other care-related per diem.
new text end

Sec. 13.

Minnesota Statutes 2014, section 256B.441, subdivision 51, is amended to read:

Subd. 51.

Determination of other operating deleted text begin limit deleted text end new text begin price new text end .

deleted text begin The limit on the deleted text end new text begin A price
for new text end other operating deleted text begin per diem deleted text end new text begin costs new text end shall be determined for each peer group. deleted text begin A facility's
other operating per diem shall be limited to deleted text end new text begin The price shall be calculated as new text end 105 percent
of the median new text begin other operating per diem new text end for deleted text begin its deleted text end new text begin a facility's new text end peer group. deleted text begin A facility that is
above that limit shall have its other operating per diem reduced to the limit deleted text end new text begin The other
operating per diem shall be the sum of each facility's administrative costs, dietary costs,
housekeeping costs, laundry costs, and maintenance and plant operations costs divided
by each facility's resident days new text end .

Sec. 14.

Minnesota Statutes 2014, section 256B.441, subdivision 51a, is amended to
read:

Subd. 51a.

Exception deleted text begin allowing contracting deleted text end for specialized care new text begin facilities new text end .

(a)
For rate years beginning on or after October 1, deleted text begin 2016, the commissioner may negotiate
increases to the care-related limit for nursing facilities that provide specialized care, at a
cost to the general fund not to exceed $600,000 per year. The commissioner shall publish
a request for proposals annually, and may negotiate increases to the limits that shall apply
for either one or two years before the increase shall be subject to a new proposal and
negotiation. The deleted text end new text begin 2015, the new text end care-related limit deleted text begin may deleted text end new text begin for specialized care facilities shall
new text end be increased by deleted text begin up to deleted text end 50 percent.

(b) deleted text begin In selecting facilities with which to negotiate, the commissioner shall consider: deleted text end new text begin
Specialized care facilities are defined as having a program license issued under chapter
245A and Minnesota Rules, chapter 9570, or a facility with 96 beds on January 1, 2015,
located in Robbinsdale that specializes in the treatment of Huntington's Disease.
new text end

deleted text begin (1) the diagnoses or other circumstances of residents in the specialized program that
require care that costs substantially more than the RUG's rates associated with those
residents;
deleted text end

deleted text begin (2) the nature of the specialized program or programs offered to meet the needs
of these individuals; and
deleted text end

deleted text begin (3) outcomes achieved by the specialized program.
deleted text end

Sec. 15.

Minnesota Statutes 2014, section 256B.441, subdivision 53, is amended to read:

Subd. 53.

Calculation of payment rate for external fixed costs.

The commissioner
shall calculate a payment rate for external fixed costs.

(a) For a facility licensed as a nursing home, the portion related to section 256.9657
shall be equal to $8.86. For a facility licensed as both a nursing home and a boarding care
home, the portion related to section 256.9657 shall be equal to $8.86 multiplied by the
result of its number of nursing home beds divided by its total number of licensed beds.

(b) The portion related to the licensure fee under section 144.122, paragraph (d),
shall be the amount of the fee divided by actual resident days.

(c) new text begin The portion related to development and education of resident and family advisory
councils under section 144A.33 shall be $5 divided by 365.
new text end

new text begin (d) new text end The portion related to scholarships shall be determined under section 256B.431,
subdivision 36.

deleted text begin (d) Until September 30, 2013, the portion related to long-term care consultation shall
be determined according to section 256B.0911, subdivision 6 deleted text end .

deleted text begin (e) The portion related to development and education of resident and family advisory
councils under section 144A.33 shall be $5 divided by 365.
deleted text end

deleted text begin (f) deleted text end new text begin (e) new text end The portion related to planned closure rate adjustments shall be as determined
under section 256B.437, subdivision 6, and Minnesota Statutes 2010, section 256B.436.
deleted text begin Planned closure rate adjustments that take effect before October 1, 2014, shall no longer
be included in the payment rate for external fixed costs beginning October 1, 2016.
Planned closure rate adjustments that take effect on or after October 1, 2014, shall no
longer be included in the payment rate for external fixed costs beginning on October 1 of
the first year not less than two years after their effective date.
deleted text end

new text begin (f) The single bed room incentives shall be as determined under section 256B.431,
subdivision 42.
new text end

(g) The portions related to deleted text begin property insurance, deleted text end real estate taxes, special assessments,
and payments made in lieu of real estate taxes directly identified or allocated to the nursing
facility shall be the actual amounts divided by actual resident days.

(h) new text begin The portion related to employer health insurance costs shall be the allowable
costs divided by resident days.
new text end

new text begin (i) new text end The portion related to the Public Employees Retirement Association shall be
actual costs divided by resident days.

deleted text begin (i) The single bed room incentives shall be as determined under section 256B.431,
subdivision 42. Single bed room incentives that take effect before October 1, 2014, shall
no longer be included in the payment rate for external fixed costs beginning October 1,
2016. Single bed room incentives that take effect on or after October 1, 2014, shall no
longer be included in the payment rate for external fixed costs beginning on October 1 of
the first year not less than two years after their effective date.
deleted text end

(j) The payment rate for external fixed costs shall be the sum of the amounts in
paragraphs (a) to (i).

Sec. 16.

Minnesota Statutes 2014, section 256B.441, subdivision 54, is amended to read:

Subd. 54.

Determination of total payment rates.

deleted text begin In rate years when rates are
rebased, deleted text end new text begin The total care-related per diem, other operating price, and external fixed per diem
for each facility shall be converted to payment rates by multiplying each by the forecast
increase in the CPI-U index from the midpoint of the reporting year to the midpoint of
the rate year. new text end The total payment rate for a RUG's weight of 1.00 shall be the sum of
the total care-related payment rate, other operating payment rate, deleted text begin efficiency incentive, deleted text end
external fixed cost rate, and the property rate determined under section 256B.434. To
determine a total payment rate for each RUG's level, the total care-related payment rate
shall be divided into the direct care payment rate and the other care-related payment rate,
and the direct care payment rate multiplied by the RUG's weight for each RUG's level deleted text begin
using the weights in subdivision 14 deleted text end .

Sec. 17.

Minnesota Statutes 2014, section 256B.441, subdivision 56, is amended to read:

Subd. 56.

Hold harmless.

For the rate deleted text begin years deleted text end new text begin year new text end beginning October 1, deleted text begin 2008, to
October 1, 2016 deleted text end new text begin 2015 new text end , no nursing facility shall receive an operating cost payment rate less
than its new text begin prior system new text end operating cost payment rate deleted text begin under section 256B.434. For rate years
beginning between October 1, 2009, and October 1, 2015, no nursing facility shall receive
an operating payment rate less than its operating payment rate in effect on September 30,
2009 deleted text end new text begin as defined in subdivision 31 new text end . The comparison of operating payment rates under this
section shall be made for a RUG's rate with a weight of 1.00.

Sec. 18.

Minnesota Statutes 2014, section 256B.441, is amended by adding a
subdivision to read:

new text begin Subd. 65. new text end

new text begin Nursing facility in Golden Valley. new text end

new text begin Effective with the rate year beginning
October 1, 2015, and all subsequent rate years, the operating payment rate for a facility
located in the city of Golden Valley at 3915 Golden Valley Road with 44 licensed
rehabilitation beds as of January 7, 2015, must be calculated without the application of
subdivisions 50 and 51.
new text end

Sec. 19. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2014, section 256B.441, subdivisions 14a, 19, 50a, 52, 55,
58, and 62, new text end new text begin are repealed.
new text end