as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to human services; changing nursing home 1.3 reimbursement formulas; amending Minnesota Statutes 1.4 1996, section 256B.431, subdivision 25. 1.5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.6 Section 1. Minnesota Statutes 1996, section 256B.431, 1.7 subdivision 25, is amended to read: 1.8 Subd. 25. [CHANGES TO NURSING FACILITY REIMBURSEMENT 1.9 BEGINNING JULY 1,19951997.]The nursing facility reimbursement1.10changes in paragraphs (a) to (h) shall apply in the sequence1.11specified to Minnesota Rules, parts 9549.0010 to 9549.0080, and1.12this section, beginning July 1, 1995.1.13(a) The eight-cent adjustment to care-related rates in1.14subdivision 22, paragraph (e), shall no longer apply.1.15(b) For rate years beginning on or after July 1, 1995, the1.16commissioner shall limit a nursing facility's allowable1.17operating per diem for each case mix category for each rate year1.18as in clauses (1) to (3).1.19(1) For the rate year beginning July 1, 1995, the1.20commissioner shall group nursing facilities into two groups,1.21freestanding and nonfreestanding, within each geographic group,1.22using their operating cost per diem for the case mix A1.23classification. A nonfreestanding nursing facility is a nursing1.24facility whose other operating cost per diem is subject to the1.25hospital attached, short length of stay, or the rule 80 limits.2.1All other nursing facilities shall be considered freestanding2.2nursing facilities. The commissioner shall then array all2.3nursing facilities in each grouping by their allowable case mix2.4A operating cost per diem. In calculating a nursing facility's2.5operating cost per diem for this purpose, the commissioner shall2.6exclude the raw food cost per diem related to providing special2.7diets that are based on religious beliefs, as determined in2.8subdivision 2b, paragraph (h). For those nursing facilities in2.9each grouping whose case mix A operating cost per diem:2.10(i) is at or below the median minus 1.0 standard deviation2.11of the array, the commissioner shall limit the nursing2.12facility's allowable operating cost per diem for each case mix2.13category to the lesser of the prior reporting year's allowable2.14operating cost per diems plus the inflation factor as2.15established in paragraph (f), clause (2), increased by six2.16percentage points, or the current reporting year's corresponding2.17allowable operating cost per diem;2.18(ii) is between minus .5 standard deviation and minus 1.02.19standard deviation below the median of the array, the2.20commissioner shall limit the nursing facility's allowable2.21operating cost per diem for each case mix category to the lesser2.22of the prior reporting year's allowable operating cost per diems2.23plus the inflation factor as established in paragraph (f),2.24clause (2), increased by four percentage points, or the current2.25reporting year's corresponding allowable operating cost per2.26diem; or2.27(iii) is equal to or above minus .5 standard deviation2.28below the median of the array, the commissioner shall limit the2.29nursing facility's allowable operating cost per diem for each2.30case mix category to the lesser of the prior reporting year's2.31allowable operating cost per diems plus the inflation factor as2.32established in paragraph (f), clause (2), increased by three2.33percentage points, or the current reporting year's corresponding2.34allowable operating cost per diem.2.35(2) For the rate year beginning on July 1, 1996, the2.36commissioner shall limit the nursing facility's allowable3.1operating cost per diem for each case mix category to the lesser3.2of the prior reporting year's allowable operating cost per diems3.3plus the inflation factor as established in paragraph (f),3.4clause (2), increased by one percentage point or the current3.5reporting year's corresponding allowable operating cost per3.6diems; and3.7(3) For rate years beginning on or after July 1, 1997, the3.8commissioner shall limit the nursing facility's allowable3.9operating cost per diem for each case mix category to the lesser3.10of the reporting year prior to the current reporting year's3.11allowable operating cost per diems plus the inflation factor as3.12established in paragraph (f), clause (2), or the current3.13reporting year's corresponding allowable operating cost per3.14diems.3.15(c) For rate years beginning on July 1, 1995, the3.16commissioner shall limit the allowable operating cost per diems3.17for high cost nursing facilities. After application of the3.18limits in paragraph (b) to each nursing facility's operating3.19cost per diems, the commissioner shall group nursing facilities3.20into two groups, freestanding or nonfreestanding, within each3.21geographic group. A nonfreestanding nursing facility is a3.22nursing facility whose other operating cost per diems are3.23subject to hospital attached, short length of stay, or rule 803.24limits. All other nursing facilities shall be considered3.25freestanding nursing facilities. The commissioner shall then3.26array all nursing facilities within each grouping by their3.27allowable case mix A operating cost per diems. In calculating a3.28nursing facility's operating cost per diem for this purpose, the3.29commissioner shall exclude the raw food cost per diem related to3.30providing special diets that are based on religious beliefs, as3.31determined in subdivision 2b, paragraph (h). For those nursing3.32facilities in each grouping whose case mix A operating cost per3.33diem exceeds 1.0 standard deviation above the median, the3.34commissioner shall reduce their allowable operating cost per3.35diems by two percent. For those nursing facilities in each3.36grouping whose case mix A operating cost per diem exceeds 0.54.1standard deviation above the median but is less than or equal to4.21.0 standard deviation above the median, the commissioner shall4.3reduce their allowable operating cost per diems by one percent.4.4(d) For rate years beginning on or after July 1, 1996, the4.5commissioner shall limit the allowable operating cost per diems4.6for high cost nursing facilities. After application of the4.7limits in paragraph (b) to each nursing facility's operating4.8cost per diems, the commissioner shall group nursing facilities4.9into two groups, freestanding or nonfreestanding, within each4.10geographic group. A nonfreestanding nursing facility is a4.11nursing facility whose other operating cost per diems are4.12subject to hospital attached, short length of stay, or rule 804.13limits. All other nursing facilities shall be considered4.14freestanding nursing facilities. The commissioner shall then4.15array all nursing facilities within each grouping by their4.16allowable case mix A operating cost per diems. In calculating a4.17nursing facility's operating cost per diem for this purpose, the4.18commissioner shall exclude the raw food cost per diem related to4.19providing special diets that are based on religious beliefs, as4.20determined in subdivision 2b, paragraph (h). In those nursing4.21facilities in each grouping whose case mix A operating cost per4.22diem exceeds 1.0 standard deviation above the median, the4.23commissioner shall reduce their allowable operating cost per4.24diems by three percent. For those nursing facilities in each4.25grouping whose case mix A operating cost per diem exceeds 0.54.26standard deviation above the median but is less than or equal to4.271.0 standard deviation above the median, the commissioner shall4.28reduce their allowable operating cost per diems by two percent.4.29(e) For rate years beginning on or after July 1, 1995, the4.30commissioner shall determine a nursing facility's efficiency4.31incentive by first computing the allowable difference, which is4.32the lesser of $4.50 or the amount by which the facility's other4.33operating cost limit exceeds its nonadjusted other operating4.34cost per diem for that rate year. The commissioner shall4.35compute the efficiency incentive by:4.36(1) subtracting the allowable difference from $4.50 and5.1dividing the result by $4.50;5.2(2) multiplying 0.20 by the ratio resulting from clause5.3(1), and then;5.4(3) adding 0.50 to the result from clause (2); and5.5(4) multiplying the result from clause (3) times the5.6allowable difference.5.7The nursing facility's efficiency incentive payment shall5.8be the lesser of $2.25 or the product obtained in clause (4).5.9(f) For rate years beginning on or after July 1, 1995, the5.10forecasted price index for a nursing facility's allowable5.11operating cost per diems shall be determined under clauses (1)5.12to (3) using the change in the Consumer Price Index-All Items5.13(United States city average) (CPI-U) or the change in the5.14Nursing Home Market Basket, both as forecasted by Data Resources5.15Inc., whichever is applicable. The commissioner shall use the5.16indices as forecasted in the fourth quarter of the calendar year5.17preceding the rate year, subject to subdivision 2l, paragraph5.18(c). If, as a result of federal legislative or administrative5.19action, the methodology used to calculate the Consumer Price5.20Index-All Items (United States city average) (CPI-U) changes,5.21the commissioner shall develop a conversion factor or other5.22methodology to convert the CPI-U index factor that results from5.23the new methodology to an index factor that approximates, as5.24closely as possible, the index factor that would have resulted5.25from application of the original CPI-U methodology prior to any5.26changes in methodology. The commissioner shall use the5.27conversion factor or other methodology to calculate an adjusted5.28inflation index. The adjusted inflation index must be used to5.29calculate payment rates under this section instead of the CPI-U5.30index specified in paragraph (d). If the commissioner is5.31required to develop an adjusted inflation index, the5.32commissioner shall report to the legislature as part of the next5.33budget submission the fiscal impact of applying this index.5.34(1) The CPI-U forecasted index for allowable operating cost5.35per diems shall be based on the 21-month period from the5.36midpoint of the nursing facility's reporting year to the6.1midpoint of the rate year following the reporting year.6.2(2) The Nursing Home Market Basket forecasted index for6.3allowable operating costs and per diem limits shall be based on6.4the 12-month period between the midpoints of the two reporting6.5years preceding the rate year.6.6(3) For rate years beginning on or after July 1, 1996, the6.7forecasted index for operating cost limits referred to in6.8subdivision 21, paragraph (b), shall be based on the CPI-U for6.9the 12-month period between the midpoints of the two reporting6.10years preceding the rate year.6.11(g) After applying these provisions for the respective rate6.12years, the commissioner shall index these allowable operating6.13costs per diems by the inflation factor provided for in6.14paragraph (f), clause (1), and add the nursing facility's6.15efficiency incentive as computed in paragraph (e).6.16(h) A nursing facility licensed for 302 beds on September6.1730, 1993, that was approved under the moratorium exception6.18process in section 144A.073 for a partial replacement, and6.19completed the replacement project in December 1994, is exempt6.20from paragraphs (b) to (d) for rate years beginning on or after6.21July 1, 1995.6.22(i) Notwithstanding Laws 1996, chapter 451, article 3,6.23section 11, paragraph (h), for the rate years beginning on July6.241, 1996, July 1, 1997, and July 1, 1998, a nursing facility6.25licensed for 40 beds effective May 1, 1992, with a subsequent6.26increase of 20 Medicare/Medicaid certified beds, effective6.27January 26, 1993, in accordance with an increase in licensure is6.28exempt from paragraphs (b) to (d).6.29 (a) Notwithstanding any contrary provisions of this 6.30 subdivision, the provisions of this section shall apply for rate 6.31 years beginning on or after July 1, 1997. 6.32 (b) The commissioner of human services shall group nursing 6.33 facilities into two groups, freestanding and nonfreestanding, 6.34 within each geographic group, using their operating cost per 6.35 diem for the case mix A classification. A nonfreestanding 6.36 nursing facility is a nursing facility whose other operating 7.1 cost per diem is subject to the hospital attached, short length 7.2 stay, or the rule 80 limits. All other nursing facilities shall 7.3 be considered freestanding nursing facilities. The commissioner 7.4 shall then array all nursing facilities in each grouping by 7.5 their allowable case mix A operating cost per diem. In 7.6 calculating a nursing facility's operating cost per diem for 7.7 this purpose, the commissioner shall exclude the raw food cost 7.8 per diem related to providing special diets that are based on 7.9 religious beliefs, as calculated in subdivision 2b, paragraph 7.10 (h). For those nursing facilities in each grouping whose case 7.11 mix A operating cost per diem is: 7.12 (1) at or above the median plus 1.0 standard deviation of 7.13 the array, the commissioner shall limit the nursing facility's 7.14 allowable operating cost per diem for each case mix category to 7.15 the lesser of the prior reporting year's allowable operating 7.16 cost per diems plus the inflation factor as established in 7.17 paragraph (d), or the current reporting year's corresponding 7.18 allowable operating cost per diem; 7.19 (2) between .5 standard deviation and 1.0 standard 7.20 deviation above the median of the array, the commissioner shall 7.21 limit the nursing facility's allowable operating cost per diem 7.22 for each case mix category to the lesser of the prior reporting 7.23 year's allowable operating costs per diems plus the inflation 7.24 factor as established in paragraph (d), increased by one 7.25 percentage point, or the current reporting year's corresponding 7.26 allowable operating cost per diem; or 7.27 (3) equal to or below .5 standard deviation above the 7.28 median of the array, the commissioner shall limit the nursing 7.29 facility's allowable operating cost per diem for each case mix 7.30 category to the lesser of the prior reporting year's allowable 7.31 operating cost per diems plus the inflation factor as 7.32 established in paragraph (d), increased by two percentage 7.33 points, or the current reporting year's corresponding allowable 7.34 operating cost per diem. 7.35 However, if this spendup limit would reduce a facility's 7.36 case mix A per diem from greater than to less than .5 standard 8.1 deviation above the group median, the commissioner must 8.2 recalculate the limit by replacing the inflation factor with the 8.3 ratio between .5 standard deviation above the group median and 8.4 the prior reporting year's allowable case mix A per diem. 8.5 For rate years beginning on or after July 1, 1997, the 8.6 commissioner will calculate the operating cost spendup limits 8.7 using the medians and standard deviations from the 1996 rate 8.8 year, adjusted each year for inflation by the change in the 8.9 nursing home market basket as forecasted by Data Resources Inc., 8.10 for the 12-month period between the midpoints of the two 8.11 reporting years preceding the rate year, increased by two 8.12 percentage points. 8.13 (c) For rate years beginning on or after July 1, 1997, the 8.14 provisions of paragraph (d) shall not apply. 8.15 (d) For rate years beginning on or after July 1, 1997, the 8.16 forecasted index for operating cost limits referred to in 8.17 subdivision 2l, paragraph (b), shall be based on the change in 8.18 the nursing home market basket as forecasted by Data Resources 8.19 Inc., for the 12-month period between the midpoints of the two 8.20 reporting years preceding the rate year. 8.21 (e) For rate years beginning on or after July 1, 1997, the 8.22 operating cost limits established in subdivisions 2, 2b, 2i, 3c, 8.23 and 22, paragraph (d), and any previously effective 8.24 corresponding limits in law or rule shall not apply, except that 8.25 these cost limits shall still be calculated for purposes of 8.26 determining efficiency incentive per diems. 8.27 (f) For rate years beginning on or after July 1, 1997, the 8.28 commissioner shall exempt all rule 80 facilities from any limits 8.29 described in paragraph (b), clause (2), that affect care-related 8.30 operating per diems. 8.31 (g) For rate years beginning on or after July 1, 1997, the 8.32 operating cost per diem referred to in paragraph (b), clause 8.33 (2), is the sum of the care-related and other operating cost per 8.34 diems for a given case mix class. Any reductions to the 8.35 combined operating per diem shall be divided proportionately 8.36 between the care-related and other operating per diems. 9.1 (h) The commissioner of human services shall develop, no 9.2 later than January 1, 1999, in consultation with affected 9.3 providers, a replacement for the current set of cost-based 9.4 reimbursement formulas for rule 80 nursing facilities not 9.5 participating in the contractual alternative payment project. 9.6 The commissioner must consider replacing current rate formulas 9.7 with an all-inclusive flat payment rate covering basic and 9.8 ancillary services with possible add-ons for special services. 9.9 For rate years beginning on or after July 1, 1997, until a 9.10 new set of reimbursement formulas becomes effective, the 9.11 commissioner shall use the rate formulas in effect on July 1, 9.12 1994, adjusted for inflation, to calculate reimbursement rates 9.13 for nursing facilities licensed by the commissioner to provide 9.14 residential services for the physically handicapped under 9.15 Minnesota Rules, parts 9570.2000 to 9570.3400, not participating 9.16 in the contractual alternative payment project.