HF 3481

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

A bill for an act
relating to human services; making changes to continuing care provisions and
elderly and disabled services; amending Minnesota Statutes 2004, sections
144.0724, subdivisions 3, 4; 256B.434, by adding a subdivision; 256B.438,
subdivision 4; Minnesota Statutes 2005 Supplement, sections 144A.071,
subdivision 1a; 256B.434, subdivision 4.

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

Section 1.

Minnesota Statutes 2004, section 144.0724, subdivision 3, is amended to
read:

Subd. 3.

Resident reimbursement classifications.

(a) Resident reimbursement
classifications shall be based on the minimum data set, version 2.0 assessment instrument,
or its successor version mandated by the Centers for Medicare and Medicaid Services
that nursing facilities are required to complete for all residents. The commissioner of
health shall establish resident classes according to the 34 group, resource utilization
groups, version III or RUG-III model. Resident classes must be established based on the
individual items on the minimum data set and must be completed according to the facility
manual for case mix classification issued by the Minnesota Department of Health. The
facility manual for case mix classification shall be drafted by the Minnesota Department
of Health and presented to the chairs of health and human services legislative committees
by December 31, 2001.

(b) Each resident must be classified based on the information from the minimum
data set according to general domains in clauses (1) to (7):

(1) extensive services where a resident requires intravenous feeding or medications,
suctioning, or tracheostomy care, or is on a ventilator or respirator;

(2) rehabilitation where a resident requires physical, occupational, or speech therapy;

(3) special care where a resident has cerebral palsy; quadriplegia; multiple sclerosis;
pressure ulcers; ulcers; fever with vomiting, weight loss, pneumonia, or dehydration;
surgical wounds with treatment; or tube feeding and aphasia; or is receiving radiation
therapy;

(4) clinically complex status where a resident has tube feeding, burns, coma,
septicemia, pneumonia, internal bleeding, chemotherapy, dialysis, oxygen, transfusions,
foot infections or lesions with treatment, deleted text begin heiplegia/hemiparesis deleted text end new text begin hemiplegia/hemiparesis new text end ,
physician visits or order changes, or diabetes with injections and order changes;

(5) impaired cognition where a resident has poor cognitive performance;

(6) behavior problems where a resident exhibits wandering or socially inappropriate
or disruptive behavior, has hallucinations or delusions, is physically or verbally abusive
toward others, or resists care, unless the resident's other condition would place the resident
in other categories; and

(7) reduced physical functioning where a resident has no special clinical conditions.

(c) The commissioner of health shall establish resident classification according to a
34 group model based on the information on the minimum data set and within the general
domains listed in paragraph (b), clauses (1) to (7). Detailed descriptions of each resource
utilization group shall be defined in the facility manual for case mix classification issued
by the Minnesota Department of Health. The 34 groups are described as follows:

(1) SE3: requires four or five extensive services;

(2) SE2: requires two or three extensive services;

(3) SE1: requires one extensive service;

(4) RAD: requires rehabilitation services and is dependent in activity of daily living
(ADL) at a count of 17 or 18;

(5) RAC: requires rehabilitation services and ADL count is 14 to 16;

(6) RAB: requires rehabilitation services and ADL count is ten to 13;

(7) RAA: requires rehabilitation services and ADL count is four to nine;

(8) SSC: requires special care and ADL count is 17 or 18;

(9) SSB: requires special care and ADL count is 15 or 16;

(10) SSA: requires special care and ADL count is seven to 14;

(11) CC2: clinically complex with depression and ADL count is 17 or 18;

(12) CC1: clinically complex with no depression and ADL count is 17 or 18;

(13) CB2: clinically complex with depression and ADL count is 12 to 16;

(14) CB1: clinically complex with no depression and ADL count is 12 to 16;

(15) CA2: clinically complex with depression and ADL count is four to 11;

(16) CA1: clinically complex with no depression and ADL count is four to 11;

(17) IB2: impaired cognition with nursing rehabilitation and ADL count is six to ten;

(18) IB1: impaired cognition with no nursing rehabilitation and ADL count is six
to ten;

(19) IA2: impaired cognition with nursing rehabilitation and ADL count is four or
five;

(20) IA1: impaired cognition with no nursing rehabilitation and ADL count is four
or five;

(21) BB2: behavior problems with nursing rehabilitation and ADL count is six to ten;

(22) BB1: behavior problems with no nursing rehabilitation and ADL count is
six to ten;

(23) BA2: behavior problems with nursing rehabilitation and ADL count is four to
five;

(24) BA1: behavior problems with no nursing rehabilitation and ADL count is
four to five;

(25) PE2: reduced physical functioning with nursing rehabilitation and ADL count
is 16 to 18;

(26) PE1: reduced physical functioning with no nursing rehabilitation and ADL
count is 16 to 18;

(27) PD2: reduced physical functioning with nursing rehabilitation and ADL count
is 11 to 15;

(28) PD1: reduced physical functioning with no nursing rehabilitation and ADL
count is 11 to 15;

(29) PC2: reduced physical functioning with nursing rehabilitation and ADL count
is nine or ten;

(30) PC1: reduced physical functioning with no nursing rehabilitation and ADL
count is nine or ten;

(31) PB2: reduced physical functioning with nursing rehabilitation and ADL count
is six to eight;

(32) PB1: reduced physical functioning with no nursing rehabilitation and ADL
count is six to eight;

(33) PA2: reduced physical functioning with nursing rehabilitation and ADL count
is four or five; and

(34) PA1: reduced physical functioning with no nursing rehabilitation and ADL
count is four or five.

Sec. 2.

Minnesota Statutes 2004, section 144.0724, subdivision 4, is amended to read:

Subd. 4.

Resident assessment schedule.

(a) A facility must conduct and
electronically submit to the commissioner of health case mix assessments that conform
with the assessment schedule defined by Code of Federal Regulations, title 42, section
483.20, and published by the United States Department of Health and Human Services,
Centers for Medicare and Medicaid Services, in the Long Term Care Assessment
Instrument User's Manual, version 2.0, October 1995, and subsequent clarifications made
in the Long-Term Care Assessment Instrument Questions and Answers, version 2.0,
August 1996. The commissioner of health may substitute successor manuals or question
and answer documents published by the United States Department of Health and Human
Services, Centers for Medicare and Medicaid Services, to replace or supplement the
current version of the manual or document.

(b) The assessments used to determine a case mix classification for reimbursement
include the following:

(1) a new admission assessment must be completed by day 14 following admission;

(2) an annual assessment must be completed within 366 days of the last
comprehensive assessment;

(3) a significant change assessment must be completed within 14 days of the
identification of a significant change; and

(4) deleted text begin the second deleted text end quarterly deleted text begin assessment following either a new deleted text end deleted text begin admission assessment,
an annual assessment, or a significant change assessment deleted text end new text begin assessments beginning October
1, 2006 new text end . Each quarterly assessment must be completed within 92 days of the previous
assessment.

Sec. 3.

Minnesota Statutes 2005 Supplement, section 144A.071, subdivision 1a,
is amended to read:

Subd. 1a.

Definitions.

For purposes of sections 144A.071 to 144A.073, the
following terms have the meanings given them:

(a) "Attached fixtures" has the meaning given in Minnesota Rules, part 9549.0020,
subpart 6.

(b) "Buildings" has the meaning given in Minnesota Rules, part 9549.0020, subpart
7.

(c) "Capital assets" has the meaning given in section 256B.421, subdivision 16.

(d) "Commenced construction" means that all of the following conditions were met:
the final working drawings and specifications were approved by the commissioner of
health; the construction contracts were let; a timely construction schedule was developed,
stipulating dates for beginning, achieving various stages, and completing construction;
and all zoning and building permits were applied for.

(e) "Completion date" means the date on which deleted text begin a certificate of occupancy deleted text end new text begin clearance
for the construction project new text end is issued deleted text begin for a construction project deleted text end , or if a deleted text begin certificate of
occupancy deleted text end new text begin clearance for the construction project new text end is not required, the date on which the
construction project deleted text begin is deleted text end new text begin assets are new text end available for facility use.

(f) "Construction" means any erection, building, alteration, reconstruction,
modernization, or improvement necessary to comply with the nursing home licensure
rules.

(g) "Construction project" means:

(1) a capital asset addition to, or replacement of a nursing home or certified boarding
care home that results in new space or the remodeling of or renovations to existing
facility space; and

(2) the remodeling or renovation of existing facility space the use of which is
modified as a result of the project described in clause (1). This existing space and the
project described in clause (1) must be used for the functions as designated on the
construction plans on completion of the project described in clause (1) for a period of
not less than 24 months.

(h) "Depreciation guidelines" means the most recent publication of "The Estimated
Useful Lives of Depreciable Hospital Assets," issued by the American Hospital
Association, 840 North Lake Shore Drive, Chicago, Illinois, 60611.

(i) "New licensed" or "new certified beds" means:

(1) newly constructed beds in a facility or the construction of a new facility that
would increase the total number of licensed nursing home beds or certified boarding
care or nursing home beds in the state; or

(2) newly licensed nursing home beds or newly certified boarding care or nursing
home beds that result from remodeling of the facility that involves relocation of beds but
does not result in an increase in the total number of beds, except when the project involves
the upgrade of boarding care beds to nursing home beds, as defined in section 144A.073,
subdivision 1. "Remodeling" includes any of the type of conversion, renovation,
replacement, or upgrading projects as defined in section 144A.073, subdivision 1.

(j) "Project construction costs" means the cost of the following items that have
a completion date within 12 months before or after the completion date of the project
described in item (g), clause (1):

(1) facility capital asset additions;

(2) replacements;

(3) renovations;

(4) remodeling projects;

(5) construction site preparation costs;

(6) related soft costs; and

(7) the cost of new technology implemented as part of the construction project
and depreciable equipment directly identified to the project, if the construction costs for
clauses (1) to (6) exceed the threshold for additions and replacements stated in section
256B.431, subdivision 16. Technology and depreciable equipment shall be included in the
project construction costs unless a written election is made by the facility, to not include
it in the facility's appraised value for purposes of Minnesota Rules, part 9549.0020,
subpart 5. Debt incurred for purchase of technology and depreciable equipment shall be
included as allowable debt for purposes of Minnesota Rules, part 9549.0060, subpart 5,
items A and C, unless the written election is to not include it. Any new technology and
depreciable equipment included in the project construction costs that the facility elects
not to include in its appraised value and allowable debt shall be treated as provided in
section 256B.431, subdivision 17, paragraph (b). Written election under this paragraph
must be included in the facility's request for the rate change related to the project, and
this election may not be changed.

(k) "Technology" means information systems or devices that make documentation,
charting, and staff time more efficient or encourage and allow for care through alternative
settings including, but not limited to, touch screens, monitors, hand-helds, swipe cards,
motion detectors, pagers, telemedicine, medication dispensers, and equipment to monitor
vital signs and self-injections, and to observe skin and other conditions.

Sec. 4.

Minnesota Statutes 2005 Supplement, section 256B.434, subdivision 4, is
amended to read:

Subd. 4.

Alternate rates for nursing facilities.

(a) For nursing facilities which
have their payment rates determined under this section rather than section 256B.431, the
commissioner shall establish a rate under this subdivision. The nursing facility must enter
into a written contract with the commissioner.

(b) A nursing facility's case mix payment rate for the first rate year of a facility's
contract under this section is the payment rate the facility would have received under
section 256B.431.

(c) A nursing facility's case mix payment rates for the second and subsequent years
of a facility's contract under this section are the previous rate year's contract payment
rates plus an inflation adjustment and, for facilities reimbursed under this section or
section 256B.431, an adjustment to include the cost of any increase in Health Department
licensing fees for the facility taking effect on or after July 1, 2001. The index for the
inflation adjustment must be based on the change in the Consumer Price Index-All Items
(United States City average) (CPI-U) forecasted by the commissioner of finance's national
economic consultant, as forecasted in the fourth quarter of the calendar year preceding
the rate year. The inflation adjustment must be based on the 12-month period from the
midpoint of the previous rate year to the midpoint of the rate year for which the rate is
being determined. For the rate years beginning on July 1, 1999, July 1, 2000, July 1, 2001,
July 1, 2002, July 1, 2003, July 1, 2004, July 1, 2005, July 1, 2006, July 1, 2007, and July
1, 2008, this paragraph shall apply only to the property-related payment rate, except
that adjustments to include the cost of any increase in Health Department licensing fees
taking effect on or after July 1, 2001, shall be provided. Beginning in 2005, adjustment to
the property payment rate under this section and section 256B.431 shall be effective on
October 1. In determining the amount of the property-related payment rate adjustment
under this paragraph, the commissioner shall determine the proportion of the facility's
rates that are property-related based on the facility's most recent cost report. deleted text begin Beginning
October 1, 2006, facilities reimbursed under this section shall be allowed to receive a
property rate adjustment for building projects under section 144A.071, subdivision 2.
deleted text end

Sec. 5.

Minnesota Statutes 2004, section 256B.434, is amended by adding a
subdivision to read:

new text begin Subd. 4f. new text end

new text begin Construction project rate adjustments effective October 1, 2006. new text end

new text begin (a)
Effective October 1, 2006, facilities reimbursed under this section may receive a property
rate adjustment for construction projects under section 144A.071, subdivision 2, clause
(a). Except as otherwise provided in this subdivision, the rate calculation methods and
principles in section 256B.431 and Minnesota Rules, parts 9549.0010 to 9549.0080,
shall be used to calculate rate adjustments for allowable construction projects under this
subdivision and section 144A.073. Facilities completing construction projects between
October 1, 2005, and September 1, 2006, are eligible to have a property rate adjustment
effective October 1, 2006. Facilities completing projects after September 1, 2006, are
eligible for a property rate adjustment effective on the first of the month following the
completion date.
new text end

new text begin Notwithstanding subdivision 18, as of July 14, 2005, facilities with rates set under
section 256B.431 and Minnesota Rules, parts 9549.0010 to 9549.0080, that commenced
a construction project on or after October 1, 2004, and do not have a contract under
subdivision 3 by September 30, 2006, are eligible to request a rate adjustment under
section 256B.431, subdivision 10, through September 30, 2006. If the request results
in the commissioner determining a rate adjustment is allowable, the rate adjustment is
effective on the first of the month following project completion. These facilities shall
be allowed to accumulate construction project costs for the period October 1, 2004, to
September 30, 2006.
new text end

new text begin Facilities shall be allowed construction project rate adjustments no sooner than 12
months after completing a previous construction project. Facilities must request the rate
adjustment according to section 256B.431, subdivision 10.
new text end

new text begin Capacity days shall be computed according to Minnesota Rules, part 9549.0060,
subpart 11. For rate calculations under this section, the number of licensed beds in the
nursing facility shall be the number existing after the construction project is completed
and the number of days in the nursing facility's reporting period shall be 365.
new text end

new text begin (b) The value of assets to be recognized for a total replacement project as defined
in section 256B.431, subdivision 17d, shall be computed as described in clause (1). The
value of assets to be recognized for all other projects shall be computed as described
in clause (2):
new text end

new text begin (1) Replacement-cost-new limits under section 256B.431, subdivision 17e, and the
number of beds allowed under subdivision 3a, paragraph (c), shall be used to compute the
maximum amount of assets allowable in a facility's property rate calculation. If a facility's
current request for a rate adjustment results from the completion of a construction
project that was previously approved under section 144A.073, the assets to be used in
the rate calculation cannot exceed the lesser of the amount determined under sections
144A.071, subdivision 2, and 144A.073, subdivision 3b, or the actual allowable costs of
the construction project. A current request that is not the result of a project under section
144A.073 cannot exceed the limit under section 144A.071, subdivision 2, paragraph (a).
Applicable credits must be deducted from the cost of the construction project.
new text end

new text begin (2) (i) Replacement-cost-new limits under section 256B.431, subdivision 17e, and
the number of beds allowed under section 256B.431, subdivision 3a, paragraph (c), shall
be used to compute the maximum amount of assets allowable in a facility's property
rate calculation.
new text end

new text begin (ii) The value of a facility's assets to be compared to the amount in item (i) begins
with the total appraised value from the last rate notice a facility received when its rates
were set under section 256B.431 and Minnesota Rules, parts 9549.0010 to 9549.0080.
This value shall be indexed by the factor in section 256B.431, subdivision 3f, paragraph
(a), for each rate year the facility received an inflation factor on its property-related rate
when its rates were set under this section. The value of assets listed as previous capital
additions, capital additions, and special projects on the facility's base year rate notice
and the value of assets related to a construction project for which the facility received a
rate adjustment when its rates were determined under this section shall be added to the
indexed appraised value.
new text end

new text begin (iii) The maximum amount of assets to be recognized in computing a facility's rate
adjustment after a project is completed is the lesser of the aggregate replacement-cost-new
limit computed in (i) minus the assets recognized in (ii) or the actual allowable costs of
the construction project.
new text end

new text begin (iv) If a facility's current request for a rate adjustment results from the completion of
a construction project that was previously approved under section 144A.073, the assets to
be added to the rate calculation cannot exceed the lesser of the amount determined under
sections 144A.071, subdivision 2, and 144A.073, subdivision 3b, or the actual allowable
costs of the construction project. A current request that is not the result of a project under
section 144A.073 cannot exceed the limit stated in section 144A.071, subdivision 2,
paragraph (a). Assets disposed of as a result of a construction project and applicable
credits must be deducted from the cost of the construction project.
new text end

new text begin (c) For construction projects approved under section 144A.073, allowable debt
shall be the lesser of:
new text end

new text begin (1) the lesser of the limit stated in section 144A.071, subdivision 2, for such
construction projects or the capital assets purchased; or
new text end

new text begin (2) the lesser of the debt taken out to finance the project or the replacement-cost-new
limit in paragraph (b), clause (1), less previously existing capital debt.
new text end

new text begin (d) For construction projects that were not approved under section 144A.073,
allowable debt is limited to the lesser of the threshold in section 144A.071, subdivision 2,
for such construction projects or the amount in paragraph (b), clause (1), less previously
existing capital debt. Amounts of debt taken out that exceed the costs of a construction
project shall not be allowed regardless of the use of the funds.
new text end

new text begin For all construction projects being recognized, interest expense and average debt
shall be computed based on the first 12 months following project completion. "Previously
existing capital debt" means capital debt recognized on the last rate determined under
section 256B.431 and Minnesota Rules, parts 9549.0010 to 9549.0080, and the amount of
debt recognized for a construction project for which the facility received a rate adjustment
when its rates were determined under this section.
new text end

new text begin For a total replacement project as defined in section 256B.431, subdivision 17d, the
value of previously existing capital debt is not deducted in paragraph (c), clause (2).
new text end

new text begin (e) In addition to the interest expense allowed from the application of paragraph (c),
the amounts allowed under section 256B.431, subdivision 17a, paragraph (a), clauses (2)
and (3), will be added to interest expense.
new text end

new text begin (f) The equity portion of the construction project shall be computed as the allowable
assets in paragraph (b), less the average debt in paragraph (c). The equity portion must
be multiplied by 5.66 percent and the allowable interest expense in paragraph (c) must
be added. This sum must be divided by 95 percent of capacity days to compute the
construction project rate adjustment.
new text end

new text begin (g) For projects that are not a total replacement of a nursing facility, the amount
in paragraph (f) is adjusted for nonreimbursable areas and then added to the current
property-related per diem of the facility.
new text end

new text begin (h) For projects that are a total replacement of a nursing facility, the amount
in paragraph (f) becomes the new property-related per diem after being adjusted for
nonreimbursable areas. Any amounts existing in a facility's rate before the effective date
of the construction project for equity incentives under section 256B.431, subdivision 16;
capital repairs and replacements under section 256B.431, subdivision 15; or refinancing
incentives under section 256B.431, subdivision 19, shall be removed from the facility's
rates.
new text end

new text begin (i) No additional equipment allowance is allowed under Minnesota Rules, part
9549.0060, subpart 10, as the result of construction projects under this section. Allowable
equipment shall be included in the construction project costs.
new text end

new text begin (j) Capital assets purchased after the completion date of a construction project shall
be counted as construction project costs for any future rate adjustment request made by a
facility under section 144A.071, subdivision 2, clause (a), if they are purchased within 24
months of the completion of the future construction project.
new text end

new text begin (k) In subsequent rate years, the property-related rate for a facility that results from
the application of this subdivision shall be the amount inflated in subdivision 4.
new text end

new text begin (l) Construction projects are eligible for an equity incentive under section 256B.431,
subdivision 16. When computing the equity incentive for a construction project under
this subdivision, only the allowable costs and allowable debt related to the construction
project shall be used. The equity incentive shall not be a part of the property-related per
diem and not inflated under subdivision 4.
new text end

new text begin The definitions in sections 144A.071 and 256B.431 and Minnesota Rules, parts
9549.0010 to 9549.0080, apply to the terms used in this subdivision.
new text end

Sec. 6.

Minnesota Statutes 2004, section 256B.438, subdivision 4, is amended to read:

Subd. 4.

Resident assessment schedule.

(a) Nursing facilities shall conduct and
submit case mix assessments according to the schedule established by the commissioner
of health under section 144.0724, subdivisions 4 and 5.

(b) The resident reimbursement classifications established under section 144.0724,
subdivision 3, shall be effective the day of admission for new admission assessments. The
effective date for significant change assessments shall be the assessment reference date.
The effective date for annual and deleted text begin second deleted text end quarterly assessments shall be the first day of the
month following assessment reference date.

new text begin (c) Effective October 1, 2006, the commissioner shall rebase payment rates to
account for the change in resident assessment schedule in section 144.0724, subdivision
4, paragraph (b), clause (4), in a facility specific budget neutral manner, according to
subdivision 7, paragraph (b).
new text end