SF 1317

as introduced - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to human services; changing procedures for 
  1.3             intermediate care facilities; establishing a study of 
  1.4             cost-effective services; changing provisions for 
  1.5             recovery of overpayments made to vendors; changing 
  1.6             provisions for nursing facilities; changing vendor 
  1.7             rates for day training and habilitation services; 
  1.8             medical assistance; amending Minnesota Statutes 1994, 
  1.9             sections 144.0723, subdivisions 1, 2, 3, 4, and 6; 
  1.10            252.292, subdivision 4; 252.46, subdivisions 1, 3, 6, 
  1.11            17, and by adding a subdivision; 256B.0641, 
  1.12            subdivision 1; 256B.431, subdivisions 2j, 15, 22, 24, 
  1.13            and by adding subdivisions; 256B.432, subdivisions 1, 
  1.14            2, 3, 5, and 6; 256B.501, subdivisions 1, 3, 3c, 3g, 
  1.15            8, and by adding subdivisions; repealing Minnesota 
  1.16            Statutes 1994, sections 144.0723, subdivision 5; 
  1.17            252.47; and 256B.501, subdivisions 3d, 3e, and 3f. 
  1.18  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.19     Section 1.  Minnesota Statutes 1994, section 144.0723, 
  1.20  subdivision 1, is amended to read: 
  1.21     Subdivision 1.  [CLIENT REIMBURSEMENT CLASSIFICATIONS.] The 
  1.22  commissioner of health shall establish reimbursement 
  1.23  classifications based upon the assessment of each client in 
  1.24  intermediate care facilities for the mentally retarded conducted 
  1.25  after December 31, 1988 1994, under section 256B.501, 
  1.26  subdivision 3g, or under rules established by the commissioner 
  1.27  of human services under section 256B.501, subdivision 3j.  
  1.28  The reimbursement classifications established by the 
  1.29  commissioner must conform to the section 256B.501, subdivision 
  1.30  3g, and subsequent rules established by the commissioner of 
  1.31  human services to set payment rates for intermediate care 
  2.1   facilities for the mentally retarded beginning on or after 
  2.2   October 1, 1990. 
  2.3      Sec. 2.  Minnesota Statutes 1994, section 144.0723, 
  2.4   subdivision 2, is amended to read: 
  2.5      Subd. 2.  [NOTICE OF CLIENT REIMBURSEMENT CLASSIFICATION.] 
  2.6   The commissioner of health shall notify each client and 
  2.7   intermediate care facility for the mentally retarded in which 
  2.8   the client resides of the reimbursement classification 
  2.9   classifications established under subdivision 1 for each client 
  2.10  residing in the facility.  The notice must inform the 
  2.11  client intermediate care facility for the mentally retarded of 
  2.12  the classification classifications that was are assigned, the 
  2.13  opportunity to review the documentation supporting the 
  2.14  classification, the opportunity to obtain clarification from the 
  2.15  commissioner, and the opportunity to request a reconsideration 
  2.16  of the classification any classifications assigned.  The notice 
  2.17  of classification must be sent by first-class mail.  The 
  2.18  individual client notices may be sent to the client's 
  2.19  intermediate care facility for the mentally retarded for 
  2.20  distribution to the client.  The facility must distribute the 
  2.21  notice to the client's case manager and to the client or to the 
  2.22  client's representative.  This notice must be distributed within 
  2.23  three working days after the facility receives the notices from 
  2.24  the department.  For the purposes of this section, 
  2.25  "representative" includes the client's legal representative as 
  2.26  defined in Minnesota Rules, part 9525.0015, subpart 18, the 
  2.27  person authorized to pay the client's facility expenses, or any 
  2.28  other individual designated by the client. 
  2.29     Sec. 3.  Minnesota Statutes 1994, section 144.0723, 
  2.30  subdivision 3, is amended to read: 
  2.31     Subd. 3.  [REQUEST FOR RECONSIDERATION.] The client, 
  2.32  client's representative, or the intermediate care facility for 
  2.33  the mentally retarded may request that the commissioner 
  2.34  reconsider the assigned classification.  The request for 
  2.35  reconsideration must be submitted in writing to the commissioner 
  2.36  within 30 days after the receipt of the notice of client 
  3.1   classification.  The request for reconsideration must include 
  3.2   the name of the client, the name and address of the facility in 
  3.3   which the client resides, the reasons for the reconsideration, 
  3.4   the requested classification changes, and documentation 
  3.5   supporting the requested classification.  The documentation 
  3.6   accompanying the reconsideration request is limited to 
  3.7   documentation establishing that the needs of the client and 
  3.8   services provided to the client at the time of the assessment 
  3.9   resulting in the disputed classification justify a change of 
  3.10  classification. 
  3.11     Sec. 4.  Minnesota Statutes 1994, section 144.0723, 
  3.12  subdivision 4, is amended to read: 
  3.13     Subd. 4.  [ACCESS TO INFORMATION.] Annually, at the 
  3.14  interdisciplinary team meeting, the intermediate care facility 
  3.15  for the mentally retarded shall inform the client or the 
  3.16  client's representative and case manager of the client's most 
  3.17  recent classification as determined by the department of 
  3.18  health.  Upon written request, the intermediate care facility 
  3.19  for the mentally retarded must give the client's case manager, 
  3.20  the client, or the client's representative a copy of the 
  3.21  assessment form and the other documentation that was given to 
  3.22  the department to support the assessment findings.  The facility 
  3.23  shall also provide access to and a copy of other information 
  3.24  from the client's record that has been requested by or on behalf 
  3.25  of the client to support a client's reconsideration request.  A 
  3.26  copy of any requested material must be provided within three 
  3.27  working days after the facility receives a written request for 
  3.28  the information.  If the facility fails to provide the material 
  3.29  within this time, it is subject to the issuance of a correction 
  3.30  order and penalty assessment.  Notwithstanding this section, any 
  3.31  order issued by the commissioner under this subdivision must 
  3.32  require that the facility immediately comply with the request 
  3.33  for information and that as of the date the order is issued, the 
  3.34  facility shall forfeit to the state a $100 fine the first day of 
  3.35  noncompliance, and an increase in the $100 fine by $50 
  3.36  increments for each day the noncompliance continues. 
  4.1      Sec. 5.  Minnesota Statutes 1994, section 144.0723, 
  4.2   subdivision 6, is amended to read: 
  4.3      Subd. 6.  [RECONSIDERATION.] The commissioner's 
  4.4   reconsideration must be made by individuals not involved in 
  4.5   reviewing the assessment that established the disputed 
  4.6   classification.  The reconsideration must be based upon the 
  4.7   initial assessment and upon the information provided to the 
  4.8   commissioner under subdivisions subdivision 3 and 5.  If 
  4.9   necessary for evaluating the reconsideration request, the 
  4.10  commissioner may conduct on-site reviews.  At the commissioner's 
  4.11  discretion, the commissioner may review the reimbursement 
  4.12  classifications assigned to all clients in the facility.  Within 
  4.13  15 working days after receiving the request for reconsideration, 
  4.14  the commissioner shall affirm or modify the original client 
  4.15  classification.  The original classification must be modified if 
  4.16  the commissioner determines that the assessment resulting in the 
  4.17  classification did not accurately reflect the status of the 
  4.18  client at the time of the assessment.  The client and the 
  4.19  intermediate care facility for the mentally retarded shall be 
  4.20  notified within five working days after the decision is made.  
  4.21  The commissioner's decision under this subdivision is the final 
  4.22  administrative decision of the agency. 
  4.23     Sec. 6.  Minnesota Statutes 1994, section 252.292, 
  4.24  subdivision 4, is amended to read: 
  4.25     Subd. 4.  [FACILITY RATES.] For purposes of this section, 
  4.26  the commissioner shall establish payment rates under section 
  4.27  256B.501 and Minnesota Rules, parts 9553.0010 to 9553.0080, 
  4.28  except that, in order to facilitate an orderly transition of 
  4.29  residents from community intermediate care facilities for 
  4.30  persons with mental retardation or related conditions to 
  4.31  services provided under the home and community-based services 
  4.32  program, the commissioner may, in a contract with the provider, 
  4.33  modify the effect of provisions in Minnesota Rules, parts 
  4.34  9553.0010 to 9553.0080, as stated in clauses (a) to (i): 
  4.35     (a) extend the interim and settle-up rate provisions to 
  4.36  include facilities covered by this section; 
  5.1      (b) extend the length of the interim period but not to 
  5.2   exceed 24 12 months.  The commissioner may grant a variance to 
  5.3   exceed the 24-month 12-month interim period, as necessary, for 
  5.4   facilities which are licensed and certified to serve more than 
  5.5   99 persons.  In no case shall the commissioner approve an 
  5.6   interim period which exceeds 36 24 months; 
  5.7      (c) waive the investment per bed limitations for the 
  5.8   interim period and the settle-up rate; 
  5.9      (d) limit the amount of reimbursable expenses related to 
  5.10  the acquisition of new capital assets; 
  5.11     (e) prohibit the acquisition of additional capital debt or 
  5.12  refinancing of existing capital debt unless prior approval is 
  5.13  obtained from the commissioner; 
  5.14     (f) establish an administrative operating cost limitation 
  5.15  for the interim period and the settle-up rate; 
  5.16     (g) require the retention of financial and statistical 
  5.17  records until the commissioner has audited the interim period 
  5.18  and the settle-up rate; 
  5.19     (h) require that the interim period be audited by a 
  5.20  certified or licensed public accounting firm; or 
  5.21     (i) change any other provision to which all parties to the 
  5.22  contract agree. 
  5.23     Sec. 7.  Minnesota Statutes 1994, section 252.46, 
  5.24  subdivision 1, is amended to read: 
  5.25     Subdivision 1.  [RATES.] Payment rates to vendors, except 
  5.26  regional centers, for county-funded day training and 
  5.27  habilitation services and transportation provided to persons 
  5.28  receiving day training and habilitation services established by 
  5.29  a county board are governed by subdivisions 2 to 19.  The 
  5.30  commissioner shall approve the following three payment rates for 
  5.31  services provided by a vendor: 
  5.32     (1) a full-day service rate for persons who receive at 
  5.33  least six service hours a day, including the time it takes to 
  5.34  transport the person to and from the service site; 
  5.35     (2) a partial-day service rate that must not exceed 75 
  5.36  percent of the full-day service rate for persons who receive 
  6.1   less than a full day of service; and 
  6.2      (3) a transportation rate for providing, or arranging and 
  6.3   paying for, transportation of a person to and from the person's 
  6.4   residence to the service site.; and 
  6.5      (4) an hourly job-coach, follow-along rate for services 
  6.6   provided by one employee en route to or from community locations 
  6.7   to supervise, support, and assist one person receiving the 
  6.8   vendor's services to learn job-related skills necessary to 
  6.9   obtain or retain employment when and where no other persons 
  6.10  receiving services are present and when all the following 
  6.11  criteria are met: 
  6.12     (a) the service is prior authorized by the county on the 
  6.13  medicaid management information system for no more than 414 
  6.14  hours in a 12-month period and the daily per person charge to 
  6.15  medical assistance does not exceed the vendor's approved full 
  6.16  day plus transportation rates; 
  6.17     (b) separate full day, partial day, and transportation 
  6.18  rates are not billed for the same person on the same day; 
  6.19     (c) the approved hourly rate does not exceed the sum of the 
  6.20  vendor's current average hourly direct service wage, including 
  6.21  fringe benefits and taxes, plus a component equal to the 
  6.22  vendor's average hourly nondirect service wage expenses; and 
  6.23     (d) the actual revenue received for provision of hourly 
  6.24  job-coach, follow-along services is subtracted from the vendor's 
  6.25  total expenses for the same time period and those adjusted 
  6.26  expenses are used for determining recommended full day and 
  6.27  transportation payment rates under subdivision 5 in accordance 
  6.28  with the limitations in subdivision 3. 
  6.29     Medical assistance rates for home and community-based 
  6.30  service provided under section 256B.501, subdivision 4, by 
  6.31  licensed vendors of day training and habilitation services must 
  6.32  not be greater than the rates for the same services established 
  6.33  by counties under sections 252.40 to 252.47.  For very dependent 
  6.34  persons with special needs the commissioner may approve an 
  6.35  exception to the approved payment rate under section 256B.501, 
  6.36  subdivision 4 or 8. 
  7.1      Sec. 8.  Minnesota Statutes 1994, section 252.46, 
  7.2   subdivision 3, is amended to read: 
  7.3      Subd. 3.  [RATE MAXIMUM.] Unless a variance is granted 
  7.4   under subdivision 6, the maximum payment rates for each vendor 
  7.5   for a calendar year must be equal to the payment rates approved 
  7.6   by the commissioner for that vendor in effect December 1 of the 
  7.7   previous calendar year.  The commissioner of finance shall 
  7.8   include as a budget change request in each biennial detailed 
  7.9   expenditure budget submitted to the legislature under section 
  7.10  16A.11 annual inflation adjustments in reimbursement rates for 
  7.11  each vendor, based upon the projected percentage change in the 
  7.12  urban consumer price index, all items, published by the United 
  7.13  States Department of Labor, for the upcoming calendar year over 
  7.14  the current calendar year.  The commissioner shall not provide 
  7.15  an annual inflation adjustment for the biennium ending June 30, 
  7.16  1993. 
  7.17     Sec. 9.  Minnesota Statutes 1994, section 252.46, 
  7.18  subdivision 6, is amended to read: 
  7.19     Subd. 6.  [VARIANCES.] (a) A variance from the minimum or 
  7.20  maximum payment rates in subdivisions 2 and 3 may be granted by 
  7.21  the commissioner when the vendor requests and the county board 
  7.22  submits to the commissioner a written variance request on forms 
  7.23  supplied by the commissioner with the recommended payment rates. 
  7.24     (a) A variance to the rate maximum may be utilized for 
  7.25  costs associated with compliance with state administrative 
  7.26  rules, compliance with court orders, capital costs required for 
  7.27  continued licensure, increased insurance costs, start-up and 
  7.28  conversion costs for supported employment, direct service staff 
  7.29  salaries and benefits, transportation, and other program related 
  7.30  costs when any of the criteria in clauses (1) to (3) and (2) is 
  7.31  also met: 
  7.32     (1) change is necessary to comply with licensing citations; 
  7.33  or 
  7.34     (2) a significant change is approved by the commissioner 
  7.35  under section 252.28 that is necessary to provide authorized 
  7.36  services to new clients with very severe self-injurious or 
  8.1   assaultive behavior, or medical conditions requiring delivery of 
  8.2   physician-prescribed medical interventions requiring one-to-one 
  8.3   staffing for at least 15 minutes each time they are performed, 
  8.4   or to new clients directly discharged to the vendor's program 
  8.5   from a regional treatment center; or 
  8.6      (3) a significant increase in the average level of staffing 
  8.7   is needed to provide authorized services approved by the 
  8.8   commissioner under section 252.28, that is necessitated by a 
  8.9   decrease in licensed capacity or loss of clientele when counties 
  8.10  choose alternative services under Laws 1992, chapter 513, 
  8.11  article 9, section 41. 
  8.12     A variance under this paragraph may be approved only if the 
  8.13  costs to the medical assistance program do not exceed the 
  8.14  medical assistance costs for all clients served by the 
  8.15  alternatives and all clients remaining in the existing services. 
  8.16     (b) A variance to the rate minimum may be granted when (1) 
  8.17  the county board contracts for increased services from a vendor 
  8.18  and for some or all individuals receiving services from the 
  8.19  vendor lower per unit fixed costs result or (2) when the actual 
  8.20  costs of delivering authorized service over a 12-month contract 
  8.21  period have decreased. 
  8.22     (c) The written variance request under this subdivision 
  8.23  must include documentation that all the following criteria have 
  8.24  been met: 
  8.25     (1) The commissioner and the county board have both 
  8.26  conducted a review and have identified a need for a change in 
  8.27  the payment rates and recommended an effective date for the 
  8.28  change in the rate. 
  8.29     (2) The vendor documents efforts to reallocate current 
  8.30  staff and any additional staffing needs cannot be met by using 
  8.31  temporary special needs rate exceptions under Minnesota Rules, 
  8.32  parts 9510.1020 to 9510.1140. 
  8.33     (3) The vendor documents that financial resources have been 
  8.34  reallocated before applying for a variance.  No variance may be 
  8.35  granted for equipment, supplies, or other capital expenditures 
  8.36  when depreciation expense for repair and replacement of such 
  9.1   items is part of the current rate. 
  9.2      (4) For variances related to loss of clientele, the vendor 
  9.3   documents the other program and administrative expenses, if any, 
  9.4   that have been reduced. 
  9.5      (5) The county board submits verification of the conditions 
  9.6   for which the variance is requested, a description of the nature 
  9.7   and cost of the proposed changes, and how the county will 
  9.8   monitor the use of money by the vendor to make necessary changes 
  9.9   in services.  
  9.10     (6) The county board's recommended payment rates do not 
  9.11  exceed 95 percent of the greater of 125 percent of the current 
  9.12  statewide median or 125 percent of the regional average payment 
  9.13  rates, whichever is higher, for each of the regional commission 
  9.14  districts under sections 462.381 to 462.396 in which the vendor 
  9.15  is located except for the following:  when a variance is 
  9.16  recommended to allow authorized service delivery to new clients 
  9.17  with severe self-injurious or assaultive behaviors or with 
  9.18  medical conditions requiring delivery of physician prescribed 
  9.19  medical interventions, or to persons being directly discharged 
  9.20  from a regional treatment center to the vendor's program, those 
  9.21  persons must be assigned a payment rate of 200 percent of the 
  9.22  current statewide average rates.  All other clients receiving 
  9.23  services from the vendor must be assigned a payment rate equal 
  9.24  to the vendor's current rate unless the vendor's current rate 
  9.25  exceeds 95 percent of 125 percent of the statewide median or 125 
  9.26  percent of the regional average payment rates, whichever is 
  9.27  higher.  When the vendor's rates exceed 95 percent of 125 
  9.28  percent of the statewide median or 125 percent of the regional 
  9.29  average rates, the maximum rates assigned to all other clients 
  9.30  must be equal to the greater of 95 percent of 125 percent of the 
  9.31  statewide median or 125 percent of the regional average rates.  
  9.32  The maximum payment rate that may be recommended for the vendor 
  9.33  under these conditions is determined by multiplying the number 
  9.34  of clients at each limit by the rate corresponding to that limit 
  9.35  and then dividing the sum by the total number of clients. 
  9.36     (7) The vendor has not received a variance under this 
 10.1   subdivision in the past 12 months.  
 10.2      (d) The commissioner shall have 60 calendar days from the 
 10.3   date of the receipt of the complete request to accept or reject 
 10.4   it, or the request shall be deemed to have been granted.  If the 
 10.5   commissioner rejects the request, the commissioner shall state 
 10.6   in writing the specific objections to the request and the 
 10.7   reasons for its rejection. 
 10.8      Sec. 10.  Minnesota Statutes 1994, section 252.46, 
 10.9   subdivision 17, is amended to read: 
 10.10     Subd. 17.  [HOURLY RATE STRUCTURE.] Counties participating 
 10.11  as host counties under the pilot study of hourly rates 
 10.12  established under Laws 1988, chapter 689, article 2, section 
 10.13  117, may recommend continuation of the hourly rates for 
 10.14  participating vendors.  The recommendation must be made annually 
 10.15  under subdivision 5 and according to the methods and standards 
 10.16  provided by the commissioner.  The commissioner shall approve 
 10.17  the hourly rates when service authorization, billing, and 
 10.18  payment for services is possible through the Medicaid management 
 10.19  information system and the other criteria in this subdivision 
 10.20  are met.  Counties and vendors operating under the pilot study 
 10.21  of hourly rates established under Laws 1988, chapter 689, 
 10.22  article 2, section 117, shall work with the commissioner to 
 10.23  translate the hourly rates and actual expenditures into rates 
 10.24  meeting the criteria in subdivisions 1 to 16 unless hourly rates 
 10.25  are approved under this subdivision. 
 10.26     Sec. 11.  Minnesota Statutes 1994, section 252.46, is 
 10.27  amended by adding a subdivision to read: 
 10.28     Subd. 19.  [STUDY OF VENDORS.] The commissioner shall study 
 10.29  the feasibility of grouping vendors of similar size, location, 
 10.30  direct service staffing needs or performance outcomes to 
 10.31  establish payment rate limits that define cost-effective 
 10.32  service.  Based on the conclusions of the feasibility study the 
 10.33  department shall consider developing a method to redistribute 
 10.34  dollars from less cost effective to more cost-effective services 
 10.35  based on vendor achievement of performance outcomes.  The 
 10.36  department shall report to the legislature by March 1, 1996, 
 11.1   with results of the study and recommendations for further 
 11.2   action.  The department shall consult with an advisory committee 
 11.3   representing counties, service consumers, vendors, and the 
 11.4   legislature. 
 11.5      Sec. 12.  Minnesota Statutes 1994, section 256B.0641, 
 11.6   subdivision 1, is amended to read: 
 11.7      Subdivision 1.  [RECOVERY PROCEDURES; SOURCES.] 
 11.8   Notwithstanding section 256B.72 or any law or rule to the 
 11.9   contrary, when the commissioner or the federal government 
 11.10  determines that an overpayment has been made by the state to any 
 11.11  medical assistance vendor, the commissioner shall recover the 
 11.12  overpayment as follows:  
 11.13     (1) if the federal share of the overpayment amount is due 
 11.14  and owing to the federal government under federal law and 
 11.15  regulations, the commissioner shall recover from the medical 
 11.16  assistance vendor the federal share of the determined 
 11.17  overpayment amount paid to that provider using the schedule of 
 11.18  payments required by the federal government; and 
 11.19     (2) if the overpayment to a medical assistance vendor is 
 11.20  due to a retroactive adjustment made because the medical 
 11.21  assistance vendor's temporary payment rate was higher than the 
 11.22  established desk audit payment rate or because of a department 
 11.23  error in calculating a payment rate, the commissioner shall 
 11.24  recover from the medical assistance vendor the total amount of 
 11.25  the overpayment within 120 days after the date on which written 
 11.26  notice of the adjustment is sent to the medical assistance 
 11.27  vendor or according to a schedule of payments approved by the 
 11.28  commissioner; and 
 11.29     (3) a medical assistance vendor is liable for the 
 11.30  overpayment amount owed by a long-term care provider if the 
 11.31  vendors or their owners are under common control or ownership.  
 11.32     Sec. 13.  Minnesota Statutes 1994, section 256B.431, 
 11.33  subdivision 2j, is amended to read: 
 11.34     Subd. 2j.  [HOSPITAL-ATTACHED NURSING FACILITY STATUS.] (a) 
 11.35  For the purpose of setting rates under Minnesota Rules, parts 
 11.36  9549.0010 to 9549.0080, for rate years beginning after June 30, 
 12.1   1989, a hospital-attached nursing facility means a nursing 
 12.2   facility which meets the requirements of clauses (1) to (3): 
 12.3      (1) The nursing facility is recognized by the federal 
 12.4   Medicare program to be a hospital-based nursing facility for 
 12.5   purposes of being subject to higher cost limits accorded 
 12.6   hospital-based nursing facilities under the Medicare program, 
 12.7   or, prior to June 30, 1983, was classified as a 
 12.8   hospital-attached nursing facility under Minnesota Rules, parts 
 12.9   9510.0010 to 9510.0480, provided that; 
 12.10     (2) the nursing facility's cost report filed under 
 12.11  Minnesota Rules, parts 9549.0010 to 9549.0080, shall use the 
 12.12  same cost allocation principles and methods used in the reports 
 12.13  filed for the Medicare program except as provided in clause (3); 
 12.14  and 
 12.15     (3) direct identification of costs to the nursing facility 
 12.16  cost center will be permitted only when the comparable hospital 
 12.17  costs have also been directly identified to a cost center which 
 12.18  is not allocated to the nursing facility. 
 12.19     (b) For rate years beginning after June 30, 1989, a nursing 
 12.20  facility and hospital, which have applied for hospital-based 
 12.21  nursing facility status under the federal Medicare program 
 12.22  during the reporting year or the nine-month period following the 
 12.23  nursing facility's reporting year, shall be considered a 
 12.24  hospital-attached nursing facility for purposes of setting 
 12.25  payment rates under Minnesota Rules, parts 9549.0010 to 
 12.26  9549.0080, for the rate year following the reporting year or the 
 12.27  nine-month period in which the facility made its Medicare 
 12.28  application.  The nursing facility must file its cost report or 
 12.29  an amended cost report for that reporting year before the 
 12.30  following rate year using Medicare principles and Medicare's 
 12.31  recommended cost allocation methods had the Medicare program's 
 12.32  hospital-based nursing facility status been granted to the 
 12.33  nursing facility.  For each subsequent rate year, the nursing 
 12.34  facility must meet the definition requirements in paragraph 
 12.35  (a).  If the nursing facility is denied hospital-based nursing 
 12.36  facility status under the Medicare program, the nursing 
 13.1   facility's payment rates for the rate years the nursing facility 
 13.2   was considered to be a hospital-attached nursing facility 
 13.3   pursuant to this paragraph shall be recalculated treating the 
 13.4   nursing facility as a non-hospital-attached nursing facility.  
 13.5      Sec. 14.  Minnesota Statutes 1994, section 256B.431, is 
 13.6   amended by adding a subdivision to read: 
 13.7      Subd. 2s.  [OPERATING COSTS AFTER JUNE 30, 1995.] For rate 
 13.8   years beginning on July 1, 1995, and July 1, 1996, the 
 13.9   commissioner shall limit the allowable operating cost per diems 
 13.10  for high cost nursing facilities.  Prior to indexing each 
 13.11  nursing facility's operating cost per diems for inflation, the 
 13.12  commissioner shall group nursing facilities into two groups, 
 13.13  freestanding or nonfreestanding, within each geographic group.  
 13.14  A nonfreestanding nursing facility is a nursing facility whose 
 13.15  other operating cost per diems are subject to hospital attached, 
 13.16  short length of stay, or rule 80 limits.  All other nursing 
 13.17  facilities shall be considered freestanding nursing facilities.  
 13.18  The commissioner shall then array all nursing facilities within 
 13.19  each grouping by their allowable case mix A operating cost per 
 13.20  diems.  For those nursing facilities in each grouping whose case 
 13.21  mix A operating cost per diem exceeds 1.0 standard deviation 
 13.22  above the median, the commissioner shall reduce their allowable 
 13.23  operating cost per diems by three percent.  For those nursing 
 13.24  facilities in each grouping whose case mix A operating cost per 
 13.25  diem exceeds .5 standard deviation above the median but is less 
 13.26  than or equal to 1.0 standard deviation above the median, the 
 13.27  commissioner shall reduce their allowable operating cost per 
 13.28  diems by two percent.  After applying these limits, the 
 13.29  commissioner shall index these operating costs per diems for all 
 13.30  nursing facilities by the inflation adjustments provided for in 
 13.31  subdivision 2l and add the nursing facility's efficiency 
 13.32  incentive as computed in subdivision 24, without regard to the 
 13.33  limitation in this subdivision. 
 13.34     Sec. 15.  Minnesota Statutes 1994, section 256B.431, is 
 13.35  amended by adding a subdivision to read: 
 13.36     Subd. 2t.  [OPERATING COSTS AFTER JUNE 30, 1997.] (a) In 
 14.1   general, the commissioner shall establish maximum standard rates 
 14.2   for the prospective reimbursement of nursing facility costs.  
 14.3   The maximum standard rates must take into account the level of 
 14.4   reimbursement which is adequate to cover the base-level costs of 
 14.5   economically operated nursing facilities.  In determining the 
 14.6   base-level costs, the commissioner shall consider geographic 
 14.7   location, types of nursing facilities (Rule 80, 
 14.8   short-length-of-stay, hospital attached, etc.), minimum nursing 
 14.9   standards, case mix assessment of residents, and other factors 
 14.10  as determined by the commissioner. 
 14.11     The commissioner shall also develop additional 
 14.12  incentive-based payments which if achieved for specified 
 14.13  outcomes will be added to the maximum standard rates.  The 
 14.14  specified outcomes must be measurable, and shall be based on 
 14.15  criteria to be developed by the commissioner during fiscal year 
 14.16  1996.  The commissioner may establish various levels of 
 14.17  achievement within an outcome.  Once the outcomes are 
 14.18  established, the commissioner shall assign various levels of 
 14.19  payment associated with achieving the outcome.  In establishing 
 14.20  the specified outcomes and the related criteria, the 
 14.21  commissioner shall consider the following state policy 
 14.22  objectives:  
 14.23     (1) a reduction in the number of case mix A admissions; 
 14.24     (2) a shortened length of stay; 
 14.25     (3) improved results of a uniform consumer satisfaction 
 14.26  survey; 
 14.27     (4) the achievement of no major licensure or certification 
 14.28  deficiencies; 
 14.29     (5) the delicensure and decertification of a portion of the 
 14.30  nursing facilities bed complement; or 
 14.31     (6) any other outcomes the commissioner finds desirable. 
 14.32     (b) In developing the maximum standard rates and the 
 14.33  incentive-based payments, desirable outcomes, and related 
 14.34  criteria, the commissioner, in collaboration with the 
 14.35  commissioner of health, shall form an advisory committee.  The 
 14.36  membership of the advisory committee shall consist of: 
 15.1      (1) three representatives from consumer advocacy groups; 
 15.2      (2) three representatives from the nursing facility trade 
 15.3   associations; 
 15.4      (3) the commissioner of finance; 
 15.5      (4) four representatives from the legislature, two each 
 15.6   from the house and senate; and 
 15.7      (5) others the commissioners find appropriate. 
 15.8      (c) Beginning July 1, 1996, the commissioner shall collect 
 15.9   the data from nursing facilities, the department of health, or 
 15.10  others as necessary to determine the extent to which a nursing 
 15.11  facility has met any of the outcomes and related criteria.  
 15.12  Payment rates under this subdivision shall be effective July 1, 
 15.13  1997. 
 15.14     (d) The commissioner shall report to the legislature on the 
 15.15  progress of the advisory committee by January 31, 1996, any 
 15.16  necessary changes to the reimbursement methodology proposed 
 15.17  under this subdivision.  By January 15, 1997, the commissioner 
 15.18  shall recommend to the legislature legislation which will 
 15.19  implement this reimbursement methodology for rate years 
 15.20  beginning on or after the proposed effective date of July 1, 
 15.21  1997. 
 15.22     Sec. 16.  Minnesota Statutes 1994, section 256B.431, 
 15.23  subdivision 15, is amended to read: 
 15.24     Subd. 15.  [CAPITAL REPAIR AND REPLACEMENT COST REPORTING 
 15.25  AND RATE CALCULATION.] For rate years beginning after June 30, 
 15.26  1993, a nursing facility's capital repair and replacement 
 15.27  payment rate shall be established annually as provided in 
 15.28  paragraphs (a) to (d) (e).  
 15.29     (a) Notwithstanding Minnesota Rules, part 9549.0060, 
 15.30  subpart 12, the costs of acquiring any of the following items 
 15.31  not included in the equity incentive computations under 
 15.32  subdivision 16 or reported as a capital asset addition under 
 15.33  subdivision 18, paragraph (b), including cash payment for equity 
 15.34  investment and principal and interest expense for debt 
 15.35  financing, shall must be reported in the capital repair and 
 15.36  replacement cost category when the cost of the item exceeds $500:
 16.1      (1) wall coverings; 
 16.2      (2) paint; 
 16.3      (3) floor coverings; 
 16.4      (4) window coverings; 
 16.5      (5) roof repair; and 
 16.6      (6) heating or cooling system repair or replacement; 
 16.7      (7) window repair or replacement;. 
 16.8      (8) initiatives designed to reduce energy usage by the 
 16.9   facility if accompanied by an energy audit prepared by a 
 16.10  professional engineer or architect registered in Minnesota, or 
 16.11  by an auditor certified under Minnesota Rules, part 7635.0130, 
 16.12  to do energy audits and the energy audit identifies the 
 16.13  initiative as a conservation measure; and 
 16.14     (9) repair or replacement of capital assets not included in 
 16.15  the equity incentive computations under subdivision 16.  
 16.16     (b) Notwithstanding Minnesota Rules, part 9549.0060, 
 16.17  subpart 12, the repair or replacement of a capital asset not 
 16.18  included in the equity incentive computations under subdivision 
 16.19  16 or reported as a capital asset addition under subdivision 18, 
 16.20  paragraph (b), must be reported under this subdivision when the 
 16.21  cost of the item exceeds $500, or in the plant operations and 
 16.22  maintenance cost category when the cost of the item is equal to 
 16.23  or less than $500. 
 16.24     (c) To compute the capital repair and replacement payment 
 16.25  rate, the allowable annual repair and replacement costs for the 
 16.26  reporting year must be divided by actual resident days for the 
 16.27  reporting year.  The annual allowable capital repair and 
 16.28  replacement costs shall not exceed $150 per licensed bed.  The 
 16.29  excess of the allowed capital repair and replacement costs over 
 16.30  the capital repair and replacement limit shall be a cost 
 16.31  carryover to succeeding cost reporting periods, except that sale 
 16.32  of a facility, under subdivision 14, shall terminate the 
 16.33  carryover of all costs except those incurred in the most recent 
 16.34  cost reporting year.  The termination of the carryover shall 
 16.35  have effect on the capital repair and replacement rate on the 
 16.36  same date as provided in subdivision 14, paragraph (f), for the 
 17.1   sale.  For rate years beginning after June 30, 1994, the capital 
 17.2   repair and replacement limit shall be subject to the index 
 17.3   provided in subdivision 3f, paragraph (a).  For purposes of this 
 17.4   subdivision, the number of licensed beds shall be the number 
 17.5   used to calculate the nursing facility's capacity days.  The 
 17.6   capital repair and replacement rate must be added to the nursing 
 17.7   facility's total payment rate. 
 17.8      (c) (d) Capital repair and replacement costs under this 
 17.9   subdivision shall not be counted as either care-related or other 
 17.10  operating costs, nor subject to care-related or other operating 
 17.11  limits. 
 17.12     (d) (e) If costs otherwise allowable under this subdivision 
 17.13  are incurred as the result of a project approved under the 
 17.14  moratorium exception process in section 144A.073, or in 
 17.15  connection with an addition to or replacement of buildings, 
 17.16  attached fixtures, or land improvements for which the total 
 17.17  historical cost of these assets exceeds the lesser of $150,000 
 17.18  or ten percent of the nursing facility's appraised value, these 
 17.19  costs must be claimed under subdivision 16 or 17, as appropriate.
 17.20     Sec. 17.  Minnesota Statutes 1994, section 256B.431, 
 17.21  subdivision 22, is amended to read: 
 17.22     Subd. 22.  [CHANGES TO NURSING FACILITY REIMBURSEMENT.] The 
 17.23  nursing facility reimbursement changes in paragraphs (a) to 
 17.24  (e) (d) apply to Minnesota Rules, parts 9549.0010 to 9549.0080, 
 17.25  and this section, and are effective for rate years beginning on 
 17.26  or after July 1, 1993, unless otherwise indicated. 
 17.27     (a) In addition to the approved pension or profit sharing 
 17.28  plans allowed by the reimbursement rule, the commissioner shall 
 17.29  allow those plans specified in Internal Revenue Code, sections 
 17.30  403(b) and 408(k). 
 17.31     (b) The commissioner shall allow as workers' compensation 
 17.32  insurance costs under section 256B.421, subdivision 14, the 
 17.33  costs of workers' compensation coverage obtained under the 
 17.34  following conditions: 
 17.35     (1) a plan approved by the commissioner of commerce as a 
 17.36  Minnesota group or individual self-insurance plan as provided in 
 18.1   section 79A.03; 
 18.2      (2) a plan in which: 
 18.3      (i) the nursing facility, directly or indirectly, purchases 
 18.4   workers' compensation coverage in compliance with section 
 18.5   176.181, subdivision 2, from an authorized insurance carrier; 
 18.6      (ii) a related organization to the nursing facility 
 18.7   reinsures the workers' compensation coverage purchased, directly 
 18.8   or indirectly, by the nursing facility; and 
 18.9      (iii) all of the conditions in clause (4) are met; 
 18.10     (3) a plan in which: 
 18.11     (i) the nursing facility, directly or indirectly, purchases 
 18.12  workers' compensation coverage in compliance with section 
 18.13  176.181, subdivision 2, from an authorized insurance carrier; 
 18.14     (ii) the insurance premium is calculated retrospectively, 
 18.15  including a maximum premium limit, and paid using the paid loss 
 18.16  retro method; and 
 18.17     (iii) all of the conditions in clause (4) are met; 
 18.18     (4) additional conditions are: 
 18.19     (i) the costs of the plan are allowable under the federal 
 18.20  Medicare program; 
 18.21     (ii) the reserves for the plan are maintained in an account 
 18.22  controlled and administered by a person which is not a related 
 18.23  organization to the nursing facility; 
 18.24     (iii) the reserves for the plan cannot be used, directly or 
 18.25  indirectly, as collateral for debts incurred or other 
 18.26  obligations of the nursing facility or related organizations to 
 18.27  the nursing facility; 
 18.28     (iv) if the plan provides workers' compensation coverage 
 18.29  for non-Minnesota nursing facilities, the plan's cost 
 18.30  methodology must be consistent among all nursing facilities 
 18.31  covered by the plan, and if reasonable, is allowed 
 18.32  notwithstanding any reimbursement laws regarding cost allocation 
 18.33  to the contrary; 
 18.34     (v) central, affiliated, corporate, or nursing facility 
 18.35  costs related to their administration of the plan are costs 
 18.36  which must remain in the nursing facility's administrative cost 
 19.1   category and must not be allocated to other cost categories; and 
 19.2      (vi) required security deposits, whether in the form of 
 19.3   cash, investments, securities, assets, letters of credit, or in 
 19.4   any other form are not allowable costs for purposes of 
 19.5   establishing the facilities payment rate. 
 19.6      (5) any costs allowed pursuant to clauses (1) to (3) are 
 19.7   subject to the following requirements: 
 19.8      (i) if the nursing facility is sold or otherwise ceases 
 19.9   operations, the plan's reserves must be subject to an 
 19.10  actuarially based settle-up after 36 months from the date of 
 19.11  sale or the date on which operations ceased.  The facility's 
 19.12  medical assistance portion of the total excess plan reserves 
 19.13  must be paid to the state within 30 days following the date on 
 19.14  which excess plan reserves are determined; 
 19.15     (ii) any distribution of excess plan reserves made to or 
 19.16  withdrawals made by the nursing facility or a related 
 19.17  organization are applicable credits and must be used to reduce 
 19.18  the nursing facility's workers' compensation insurance costs in 
 19.19  the reporting period in which a distribution or withdrawal is 
 19.20  received; 
 19.21     (iii) if reimbursement for the plan is sought under the 
 19.22  federal Medicare program, and is audited pursuant to the 
 19.23  Medicare program, the nursing facility must provide a copy of 
 19.24  Medicare's final audit report, including attachments and 
 19.25  exhibits, to the commissioner within 30 days of receipt by the 
 19.26  nursing facility or any related organization.  The commissioner 
 19.27  shall implement the audit findings associated with the plan upon 
 19.28  receipt of Medicare's final audit report.  The department's 
 19.29  authority to implement the audit findings is independent of its 
 19.30  authority to conduct a field audit. 
 19.31     (6) the commissioner shall have authority to adopt 
 19.32  emergency rules to implement this paragraph. 
 19.33     (c) In the determination of incremental increases in the 
 19.34  nursing facility's rental rate as required in subdivisions 14 to 
 19.35  21, except for a refinancing permitted under subdivision 19, the 
 19.36  commissioner must adjust the nursing facility's property-related 
 20.1   payment rate for both incremental increases and decreases in 
 20.2   recomputations of its rental rate; 
 20.3      (d) A nursing facility's administrative cost limitation 
 20.4   must be modified as follows: 
 20.5      (1) if the nursing facility's licensed beds exceed 195 
 20.6   licensed beds, the general and administrative cost category 
 20.7   limitation shall be 13 percent; 
 20.8      (2) if the nursing facility's licensed beds are more than 
 20.9   150 licensed beds, but less than 196 licensed beds, the general 
 20.10  and administrative cost category limitation shall be 14 percent; 
 20.11  or 
 20.12     (3) if the nursing facility's licensed beds is less than 
 20.13  151 licensed beds, the general and administrative cost category 
 20.14  limitation shall remain at 15 percent. 
 20.15     (e) The care related operating rate shall be increased by 
 20.16  eight cents to reimburse facilities for unfunded federal 
 20.17  mandates, including costs related to hepatitis B vaccinations. 
 20.18     Sec. 18.  Minnesota Statutes 1994, section 256B.431, 
 20.19  subdivision 24, is amended to read: 
 20.20     Subd. 24.  [MODIFIED EFFICIENCY INCENTIVE.] (a) 
 20.21  Notwithstanding section 256B.74, subdivision 3, for the rate 
 20.22  year beginning July 1, 1993, the maximum efficiency incentive is 
 20.23  $2.20, and for rate years beginning on or after July 1, 1994, 
 20.24  the commissioner shall determine a nursing facility's efficiency 
 20.25  incentive by first computing the amount by which the facility's 
 20.26  other operating cost limit exceeds its nonadjusted other 
 20.27  operating cost per diem for that rate year.  The commissioner 
 20.28  shall then use the following table to compute the nursing 
 20.29  facility's efficiency incentive.  Each increment or partial 
 20.30  increment the nursing facility's nonadjusted other operating per 
 20.31  diem is below its other operating cost limit shall be multiplied 
 20.32  by the corresponding percentage for that per diem increment.  
 20.33  The sum of each of those computations shall be the nursing 
 20.34  facility's efficiency incentive. 
 20.35        Other Operating Cost             Percentage Applied
 20.36        Per Diem Increment                to Each Per Diem
 21.1         Below Facility Limit                 Increment
 21.2        Less than $0.50                       70 percent
 21.3        $0.50 to less than $0.70              10 percent
 21.4        $0.70 to less than $0.90              15 percent
 21.5        $0.90 to less than $1.10              20 percent
 21.6        $1.10 to less than $1.30              25 percent
 21.7        $1.30 to less than $1.50              30 percent
 21.8        $1.50 to less than $1.70              35 percent
 21.9        $1.70 to less than $1.90              40 percent
 21.10       $1.90 to less than $2.10              45 percent
 21.11       $2.10 to less than $2.30              50 percent
 21.12       $2.30 to less than $2.50              55 percent
 21.13       $2.50 to less than $2.70              60 percent
 21.14       $2.70 to less than $2.90              65 percent
 21.15       $2.90 to less than $3.10              70 percent
 21.16       $3.10 to less than $3.30              75 percent
 21.17       $3.30 to less than $3.50              80 percent
 21.18       $3.50 to less than $3.70              85 percent
 21.19       $3.70 to less than $3.90              90 percent 
 21.20       $3.90 to less than $4.10              95 percent 
 21.21       $4.10 to less than $4.30             100 percent 
 21.22     The maximum efficiency incentive is $2.44 per resident day. 
 21.23     (b) For rate years beginning on or after July 1, 1995, the 
 21.24  commissioner shall determine a nursing facility's efficiency 
 21.25  incentive by first computing the allowable difference, which is 
 21.26  the lesser of $4.50 of the amount by which the facility's other 
 21.27  operating cost limit exceeds its nonadjusted other operating 
 21.28  cost per diem for that rate year.  The commissioner shall 
 21.29  compute the efficiency incentive by:  
 21.30     (1) subtracting the allowable difference from $4.50 and 
 21.31  dividing the result by $4.50; 
 21.32     (2) multiplying 0.20 by the ratio resulting from clause 
 21.33  (1), and then; 
 21.34     (3) adding 0.50 to the result from clause (2); 
 21.35     (4) multiplying the result from clause (3) times the 
 21.36  allowable difference. 
 22.1      The nursing facility's efficiency incentive payment shall 
 22.2   be the lesser of $2.25 or the product obtained in clause (4). 
 22.3      Sec. 19.  Minnesota Statutes 1994, section 256B.432, 
 22.4   subdivision 1, is amended to read: 
 22.5      Subdivision 1.  [DEFINITIONS.] For purposes of this 
 22.6   section, the following terms have the meanings given them. 
 22.7      (a) "Management agreement" means an agreement in which one 
 22.8   or more of the following criteria exist:  
 22.9      (1) the central, affiliated, or corporate office has or is 
 22.10  authorized to assume day-to-day operational control of the 
 22.11  long-term care nursing facility for any six-month period within 
 22.12  a 24-month period.  "Day-to-day operational control" means that 
 22.13  the central, affiliated, or corporate office has the authority 
 22.14  to require, mandate, direct, or compel the employees of the 
 22.15  long-term care nursing facility to perform or refrain from 
 22.16  performing certain acts, or to supplant or take the place of the 
 22.17  top management of the long-term care nursing facility.  
 22.18  "Day-to-day operational control" includes the authority to hire 
 22.19  or terminate employees or to provide an employee of the central, 
 22.20  affiliated, or corporate office to serve as administrator of the 
 22.21  long-term care nursing facility; 
 22.22     (2) the central, affiliated, or corporate office performs 
 22.23  or is authorized to perform two or more of the following:  the 
 22.24  execution of contracts; authorization of purchase orders; 
 22.25  signature authority for checks, notes, or other financial 
 22.26  instruments; requiring the long-term care nursing facility to 
 22.27  use the group or volume purchasing services of the central, 
 22.28  affiliated, or corporate office; or the authority to make annual 
 22.29  capital expenditures for the long-term care nursing facility 
 22.30  exceeding $50,000, or $500 per licensed bed, whichever is less, 
 22.31  without first securing the approval of the long-term care 
 22.32  nursing facility board of directors; 
 22.33     (3) the central, affiliated, or corporate office becomes or 
 22.34  is required to become the licensee under applicable state law; 
 22.35     (4) the agreement provides that the compensation for 
 22.36  services provided under the agreement is directly related to any 
 23.1   profits made by the long-term care nursing facility; or 
 23.2      (5) the long-term care nursing facility entering into the 
 23.3   agreement is governed by a governing body that meets fewer than 
 23.4   four times a year, that does not publish notice of its meetings, 
 23.5   or that does not keep formal records of its proceedings.  
 23.6      (b) "Consulting agreement" means any agreement the purpose 
 23.7   of which is for a central, affiliated, or corporate office to 
 23.8   advise, counsel, recommend, or suggest to the owner or operator 
 23.9   of the nonrelated long-term care nursing facility measures and 
 23.10  methods for improving the operations of the long-term care 
 23.11  nursing facility.  
 23.12     (c) "Long-term care Nursing facility" means a nursing 
 23.13  facility whose medical assistance rates are determined according 
 23.14  to section 256B.431 or an intermediate care facility for persons 
 23.15  with mental retardation and related conditions whose medical 
 23.16  assistance rates are determined according to section 256B.501. 
 23.17     Sec. 20.  Minnesota Statutes 1994, section 256B.432, 
 23.18  subdivision 2, is amended to read: 
 23.19     Subd. 2.  [EFFECTIVE DATE.] For rate years beginning on or 
 23.20  after July 1, 1990, the central, affiliated, or corporate office 
 23.21  cost allocations in subdivisions 3 to 6 must be used when 
 23.22  determining medical assistance rates under sections 256B.431 and 
 23.23  256B.501 256B.50.  
 23.24     Sec. 21.  Minnesota Statutes 1994, section 256B.432, 
 23.25  subdivision 3, is amended to read: 
 23.26     Subd. 3.  [ALLOCATION; DIRECT IDENTIFICATION OF COSTS OF 
 23.27  LONG-TERM CARE NURSING FACILITIES; MANAGEMENT AGREEMENT.] All 
 23.28  costs that can be directly identified with a specific long-term 
 23.29  care nursing facility that is a related organization to the 
 23.30  central, affiliated, or corporate office, or that is controlled 
 23.31  by the central, affiliated, or corporate office under a 
 23.32  management agreement, must be allocated to that long-term care 
 23.33  nursing facility. 
 23.34     Sec. 22.  Minnesota Statutes 1994, section 256B.432, 
 23.35  subdivision 5, is amended to read: 
 23.36     Subd. 5.  [ALLOCATION OF REMAINING COSTS; ALLOCATION 
 24.1   RATIO.] (a) After the costs that can be directly identified 
 24.2   according to subdivisions 3 and 4 have been allocated, the 
 24.3   remaining central, affiliated, or corporate office costs must be 
 24.4   allocated between the long-term care nursing facility operations 
 24.5   and the other activities or facilities unrelated to 
 24.6   the long-term care nursing facility operations based on the 
 24.7   ratio of total operating costs. 
 24.8      (b) For purposes of allocating these remaining central, 
 24.9   affiliated, or corporate office costs, the numerator for the 
 24.10  allocation ratio shall be determined as follows:  
 24.11     (1) for long-term care nursing facilities that are related 
 24.12  organizations or are controlled by a central, affiliated, or 
 24.13  corporate office under a management agreement, the numerator of 
 24.14  the allocation ratio shall be equal to the sum of the total 
 24.15  operating costs incurred by each related organization or 
 24.16  controlled long-term care nursing facility; 
 24.17     (2) for a central, affiliated, or corporate office 
 24.18  providing goods or services to related organizations that are 
 24.19  not long-term care nursing facilities, the numerator of the 
 24.20  allocation ratio shall be equal to the sum of the total 
 24.21  operating costs incurred by the non-long-term care nonnursing 
 24.22  facility related organizations; 
 24.23     (3) for a central, affiliated, or corporate office 
 24.24  providing goods or services to unrelated long-term care nursing 
 24.25  facilities under a consulting agreement, the numerator of the 
 24.26  allocation ratio shall be equal to the greater of directly 
 24.27  identified central, affiliated, or corporate costs or the 
 24.28  contracted amount; or 
 24.29     (4) for business activities that involve the providing of 
 24.30  goods or services to unrelated parties which are not long-term 
 24.31  care nursing facilities, the numerator of the allocation ratio 
 24.32  shall be equal to the greater of directly identified costs or 
 24.33  revenues generated by the activity or function.  
 24.34     (c) The denominator for the allocation ratio is the sum of 
 24.35  the numerators in paragraph (b), clauses (1) to (4). 
 24.36     Sec. 23.  Minnesota Statutes 1994, section 256B.432, 
 25.1   subdivision 6, is amended to read: 
 25.2      Subd. 6.  [COST ALLOCATION BETWEEN LONG-TERM CARE NURSING 
 25.3   FACILITIES.] (a) Those long-term care nursing operations that 
 25.4   have long-term care nursing facilities both in Minnesota and 
 25.5   comparable facilities outside of Minnesota must allocate 
 25.6   the long-term care nursing operation's central, affiliated, or 
 25.7   corporate office costs identified in subdivision 5 to Minnesota 
 25.8   based on the ratio of total resident days in Minnesota long-term 
 25.9   care nursing facilities to the total resident days in all 
 25.10  facilities.  
 25.11     (b) The Minnesota long-term care nursing operation's 
 25.12  central, affiliated, or corporate office costs identified in 
 25.13  paragraph (a) must be allocated to each Minnesota long-term care 
 25.14  nursing facility on the basis of resident days. 
 25.15     Sec. 24.  Minnesota Statutes 1994, section 256B.501, 
 25.16  subdivision 1, is amended to read: 
 25.17     Subdivision 1.  [DEFINITIONS.] For the purposes of this 
 25.18  section, the following terms have the meaning given them.  
 25.19     (a) "Commissioner" means the commissioner of human services.
 25.20     (b) "Facility" means a facility licensed as a mental 
 25.21  retardation residential facility under section 252.28, licensed 
 25.22  as a supervised living facility under chapter 144, and certified 
 25.23  as an intermediate care facility for persons with mental 
 25.24  retardation or related conditions.  The term does not include a 
 25.25  state regional treatment center. 
 25.26     (c) "Waivered service" means home or community-based 
 25.27  service authorized under United States Code, title 42, section 
 25.28  1396n(c), as amended through December 31, 1987, and defined in 
 25.29  the Minnesota state plan for the provision of medical assistance 
 25.30  services.  Waivered services include, at a minimum, case 
 25.31  management, family training and support, developmental training 
 25.32  homes, supervised living arrangements, semi-independent living 
 25.33  services, respite care, and training and habilitation services. 
 25.34     Sec. 25.  Minnesota Statutes 1994, section 256B.501, 
 25.35  subdivision 3, is amended to read: 
 25.36     Subd. 3.  [RATES FOR INTERMEDIATE CARE FACILITIES FOR 
 26.1   PERSONS WITH MENTAL RETARDATION OR RELATED CONDITIONS.] The 
 26.2   commissioner shall establish, by rule, procedures for 
 26.3   determining rates for care of residents of intermediate care 
 26.4   facilities for persons with mental retardation or related 
 26.5   conditions.  The procedures shall be based on methods and 
 26.6   standards that the commissioner finds are adequate to provide 
 26.7   for the costs that must be incurred for the care of residents in 
 26.8   efficiently and economically operated facilities.  In developing 
 26.9   the procedures, the commissioner shall include: 
 26.10     (a) cost containment measures that assure efficient and 
 26.11  prudent management of capital assets and operating cost 
 26.12  increases which do not exceed increases in other sections of the 
 26.13  economy; 
 26.14     (b) limits on the amounts of reimbursement for property, 
 26.15  general and administration, and new facilities; 
 26.16     (c) requirements to ensure that the accounting practices of 
 26.17  the facilities conform to generally accepted accounting 
 26.18  principles; 
 26.19     (d) incentives to reward accumulation of equity; 
 26.20     (e) a revaluation on sale between unrelated organizations 
 26.21  for a facility that, for at least three years before its use as 
 26.22  an intermediate care facility, has been used by the seller as a 
 26.23  single family home and been claimed by the seller as a 
 26.24  homestead, and was not revalued immediately prior to or upon 
 26.25  entering the medical assistance program, provided that the 
 26.26  facility revaluation not exceed the amount permitted by the 
 26.27  Social Security Act, section 1902(a)(13); and rule revisions 
 26.28  which: 
 26.29     (1) combine the program, maintenance, and administrative 
 26.30  operating cost categories, and professional liability and real 
 26.31  estate insurance expenses into one general operating cost 
 26.32  category; 
 26.33     (2) eliminate the maintenance and administrative operating 
 26.34  cost category limits and account for disallowances under the 
 26.35  rule existing on the effective date of this section in the 
 26.36  revised rule.  If this provision is later invalidated, the total 
 27.1   administrative cost disallowance shall be deducted from 
 27.2   economical facility payments in clause (3); 
 27.3      (3) establish an economical facility incentive that rewards 
 27.4   facilities that provide all appropriate services in a 
 27.5   cost-effective manner and penalizes reductions of either direct 
 27.6   service wages or standardized hours of care per resident; 
 27.7      (4) establish a best practices award system that is based 
 27.8   on outcome measures and that rewards quality, innovation, cost 
 27.9   effectiveness, and staff retention; 
 27.10     (5) establish compensation limits for employees on the 
 27.11  basis of full-time employment and the developmentally disabled 
 27.12  client base of a provider group or facility.  The commissioner 
 27.13  may consider the inclusion of hold harmless provisions; 
 27.14     (6) establish overall limits on a high cost facility's 
 27.15  general operating costs.  The commissioner shall consider 
 27.16  groupings of facilities that account for a significant variation 
 27.17  in cost.  The commissioner may differentiate in the application 
 27.18  of these limits between high and very high cost facilities.  The 
 27.19  limits, once established, shall be indexed for inflation and may 
 27.20  be rebased by the commissioner; 
 27.21     (7) utilize the client assessment information obtained from 
 27.22  the application of the provisions in subdivision 3g for the 
 27.23  revisions in clauses (3), (4), and (6); and 
 27.24     (8) develop cost allocation principles which are based on 
 27.25  facility expenses; and 
 27.26     (f) appeals procedures that satisfy the requirements of 
 27.27  section 256B.50 for appeals of decisions arising from the 
 27.28  application of standards or methods pursuant to Minnesota Rules, 
 27.29  parts 9510.0500 to 9510.0890, 9553.0010 to 9553.0080, and 12 
 27.30  MCAR 2.05301 to 2.05315 (temporary).  
 27.31     In establishing rules and procedures for setting rates for 
 27.32  care of residents in intermediate care facilities for persons 
 27.33  with mental retardation or related conditions, the commissioner 
 27.34  shall consider the recommendations contained in the February 11, 
 27.35  1983, Report of the Legislative Auditor on Community Residential 
 27.36  Programs for the Mentally Retarded and the recommendations 
 28.1   contained in the 1982 Report of the Department of Public Welfare 
 28.2   Rule 52 Task Force.  Rates paid to supervised living facilities 
 28.3   for rate years beginning during the fiscal biennium ending June 
 28.4   30, 1985, shall not exceed the final rate allowed the facility 
 28.5   for the previous rate year by more than five percent. 
 28.6      Sec. 26.  Minnesota Statutes 1994, section 256B.501, 
 28.7   subdivision 3c, is amended to read: 
 28.8      Subd. 3c.  [COMPOSITE FORECASTED INDEX.] For rate years 
 28.9   beginning on or after October 1, 1988, the commissioner shall 
 28.10  establish a statewide composite forecasted index to take into 
 28.11  account economic trends and conditions between the midpoint of 
 28.12  the facility's reporting year and the midpoint of the rate year 
 28.13  following the reporting year.  The statewide composite index 
 28.14  must incorporate the forecast by Data Resources, Inc. of 
 28.15  increases in the average hourly earnings of nursing and personal 
 28.16  care workers indexed in Standard Industrial Code 805 in 
 28.17  "Employment and Earnings," published by the Bureau of Labor 
 28.18  Statistics, United States Department of Labor.  This portion of 
 28.19  the index must be weighted annually by the proportion of total 
 28.20  allowable salaries and wages to the total allowable operating 
 28.21  costs in the program, maintenance, and administrative operating 
 28.22  cost categories for all facilities. 
 28.23     For adjustments to the other operating costs in the 
 28.24  program, maintenance, and administrative operating cost 
 28.25  categories, the statewide index must incorporate the Data 
 28.26  Resources, Inc. forecast for increases in the national CPI-U.  
 28.27  This portion of the index must be weighted annually by the 
 28.28  proportion of total allowable other operating costs to the total 
 28.29  allowable operating costs in the program, maintenance, and 
 28.30  administrative operating cost categories for all facilities.  
 28.31  The commissioner shall use the indices as forecasted by Data 
 28.32  Resources, Inc., in the fourth quarter of the reporting year. 
 28.33     For rate years beginning on or after October 1, 1990, the 
 28.34  commissioner shall index a facility's allowable operating costs 
 28.35  in the program, maintenance, and administrative operating cost 
 28.36  categories by using Data Resources, Inc., forecast for change in 
 29.1   the Consumer Price Index-All Items (U.S. city average) (CPI-U).  
 29.2   The commissioner shall use the indices as forecasted by Data 
 29.3   Resources, Inc., in the first quarter of the calendar year in 
 29.4   which the rate year begins.  For fiscal years beginning after 
 29.5   June 30, 1993, the commissioner shall not provide automatic 
 29.6   inflation adjustments for intermediate care facilities for 
 29.7   persons with mental retardation.  The commissioner of finance 
 29.8   shall include annual inflation adjustments in operating costs 
 29.9   for intermediate care facilities for persons with mental 
 29.10  retardation and related conditions as a budget change request in 
 29.11  each biennial detailed expenditure budget submitted to the 
 29.12  legislature under section 16A.11.  The commissioner shall use 
 29.13  the Consumer Price Index-All Items (United States city average) 
 29.14  (CPI-U) as forecasted by Data Resources, Inc., to take into 
 29.15  account economic trends and conditions for changes in facility 
 29.16  allowable historical general operating costs and limits.  The 
 29.17  forecasted index shall be established for allowable historical 
 29.18  general operating costs as follows: 
 29.19     (1) the CPI-U forecasted index for allowable historical 
 29.20  general operating costs shall be determined in the first quarter 
 29.21  of the calendar year in which the rate year begins, and shall be 
 29.22  based on the 21-month period from the midpoint of the facility's 
 29.23  reporting year to the midpoint of the rate year following the 
 29.24  reporting year; and 
 29.25     (2) for rate years beginning on or after October 1, 1995, 
 29.26  the CPI-U forecasted index for the overall operating cost limits 
 29.27  and for the individual compensation limit shall be determined in 
 29.28  the first quarter of the calendar year in which the rate year 
 29.29  begins, and shall be based on the 12-month period between the 
 29.30  midpoints of the two reporting years preceding the rate year. 
 29.31     Sec. 27.  Minnesota Statutes 1994, section 256B.501, 
 29.32  subdivision 3g, is amended to read: 
 29.33     Subd. 3g.  [ASSESSMENT OF RESIDENTS CLIENTS.] (a) To 
 29.34  establish the service characteristics of residents clients, 
 29.35  the quality assurance and review teams in the department of 
 29.36  health Minnesota department of health case mix review program 
 30.1   shall assess all residents clients annually.  beginning January 
 30.2   1, 1989, using a uniform assessment instrument developed by the 
 30.3   commissioner.  This instrument shall include assessment of the 
 30.4   services identified as needed and provided to each client to 
 30.5   address behavioral needs, integration into the community, 
 30.6   ability to perform activities of daily living, medical and 
 30.7   therapeutic needs, and other relevant factors determined by the 
 30.8   commissioner.  By January 30, 1994, the commissioner shall 
 30.9   report to the legislature on: 
 30.10     (1) the assessment process and scoring system utilized; 
 30.11     (2) possible utilization of assessment information by 
 30.12  facilities for management purposes; and 
 30.13     (3) possible application of the assessment for purposes of 
 30.14  adjusting the operating cost rates of facilities based on a 
 30.15  comparison of client services characteristics, resource needs, 
 30.16  and costs.  The facility's qualified mental retardation 
 30.17  professional (QMRP) with primary responsibility for the client's 
 30.18  individual program plan, in conjunction with the 
 30.19  interdisciplinary team, shall assess each client who is newly 
 30.20  admitted to a facility.  This assessment must occur within 30 
 30.21  days from the date of admission during the interdisciplinary 
 30.22  team meeting. 
 30.23     (b) All client assessments must be conducted as set forth 
 30.24  in the manual, Minnesota ICF/MR Client Assessment Manual, 
 30.25  February 1995, hereinafter referred to in this subdivision as 
 30.26  the manual.  Client assessments completed by the case mix review 
 30.27  program and the facility QMRP must be recorded on assessment 
 30.28  forms developed by the commissioner of health.  The facility 
 30.29  QMRP must complete the assessment form, submit it to the case 
 30.30  mix review program, and mail a copy to the client's case manager 
 30.31  within ten working days following the interdisciplinary team 
 30.32  meeting. 
 30.33     (c) The case mix review program shall score assessments 
 30.34  according to attachment E of the manual in the assessment 
 30.35  domains of personal interaction, independence, and integration, 
 30.36  challenging behaviors and preventive practice, activities of 
 31.1   daily living, and special treatments.  Scores must be based on 
 31.2   information from the assessment form.  A client's score from 
 31.3   each assessment domain shall be used to determine that client's 
 31.4   classification. 
 31.5      (d) The commissioner of health shall determine and assign 
 31.6   classifications for each client using the procedures specified 
 31.7   in attachment F of the manual.  The commissioner of health shall 
 31.8   assign the client classification within 15 working days after 
 31.9   receiving the completed assessment form submitted by the case 
 31.10  mix review program team or the facility QMRP.  The 
 31.11  classification for a newly admitted client is effective 
 31.12  retroactive to the date of the client's admission.  If a 
 31.13  facility QMRP submits an incomplete assessment form, the case 
 31.14  mix review program shall inform the facility QMRP of the need to 
 31.15  submit additional information necessary for assigning a 
 31.16  classification.  The facility QMRP must mail the additional 
 31.17  information to the case mix review program no later than five 
 31.18  working days after receiving the request for the information.  
 31.19  If a facility QMRP fails to submit a completed client assessment 
 31.20  for a client who is newly admitted to the facility, that 
 31.21  client's first assessment in the facility conducted by the case 
 31.22  mix review program shall be used to establish a client 
 31.23  classification retroactive to the date of the client's 
 31.24  admission.  Any change in classification due to annual 
 31.25  assessment by the case mix review program will be effective on 
 31.26  the first day of the month following completion of the case mix 
 31.27  review program's annual assessment of all the facility's 
 31.28  clients.  A client who has resided in the facility less than 30 
 31.29  days must be assessed by the case mix review program during the 
 31.30  annual assessment, but must not have a client classification 
 31.31  assigned based on the case mix review program's assessment 
 31.32  unless the facility QMRP fails to submit a completed client 
 31.33  assessment and the client goes on to reside in the facility for 
 31.34  more than 30 days. 
 31.35     (e) The facility QMRP may request a reclassification for a 
 31.36  client by completing a new client assessment if the facility 
 32.1   QMRP believes that the client's status has changed since the 
 32.2   case mix review program's annual assessment and that these 
 32.3   changes will result in a change in the client's classification.  
 32.4   Client assessments for purposes of reclassification will be 
 32.5   governed by the following: 
 32.6      (1) The facility QMRP that requests reclassification of a 
 32.7   client must provide the case mix review program with evidence to 
 32.8   determine a change in the client's classification.  Evidence 
 32.9   must include photocopies of documentation from the client's 
 32.10  record, as specified in the documentation requirements sections 
 32.11  of the manual. 
 32.12     (2) A reclassification assessment must occur between the 
 32.13  third and the ninth month following the case mix review 
 32.14  program's annual assessment of the client.  The facility QMRP 
 32.15  can request only one reclassification for each client annually. 
 32.16     (3) Any change in classification approved by the case mix 
 32.17  review program shall be effective on the first day of the month 
 32.18  following the date when the facility QMRP assessed the client 
 32.19  for the reclassification. 
 32.20     (4) The case mix review program shall determine 
 32.21  reclassification based on the documentation submitted by the 
 32.22  facility QMRP.  If there is not sufficient information submitted 
 32.23  to justify a change to a higher classification, the case mix 
 32.24  review program may request additional information necessary to 
 32.25  complete a reclassification. 
 32.26     (5) If the facility QMRP does not provide sufficient 
 32.27  documentation to support a change in classification, the 
 32.28  classification shall remain at the level assessed by the case 
 32.29  mix review program at the last inspection of care. 
 32.30     (f) The case mix review program shall conduct desk audits 
 32.31  or on-site audits of assessments performed by facility QMRPs.  
 32.32  Case mix review program staff shall conduct desk audits of any 
 32.33  assessment believed to be inaccurate.  The case mix review 
 32.34  program may request the facility to submit additional 
 32.35  information needed to conduct a desk audit.  The facility shall 
 32.36  mail the requested information within five working days after 
 33.1   receiving the request. 
 33.2      (g) The case mix review program may conduct on-site audits 
 33.3   of at least ten percent of the total assessments submitted by 
 33.4   facility QMRPs in the previous year and may also conduct special 
 33.5   audits if it determines that circumstances exist that could 
 33.6   change or affect the validity of assigned classifications.  The 
 33.7   facility shall grant the case mix review program staff access to 
 33.8   the client records during regular business hours for the purpose 
 33.9   of conducting an audit.  For assessments submitted for new 
 33.10  clients, the case mix review program shall consider 
 33.11  documentation in the client's record up to and including the 
 33.12  date the client was assessed by the facility QMRP.  For audits 
 33.13  of reclassification assessments, the case mix review program 
 33.14  shall consider documentation in the client's record from three 
 33.15  months preceding the assessment up to and including the date the 
 33.16  client was assessed by the facility QMRP.  If the audit reveals 
 33.17  that the facility's assessment does not accurately reflect the 
 33.18  client's status for the time period and the appropriate 
 33.19  supporting documentation cannot be produced by the facility, the 
 33.20  case mix review program shall change the classification so that 
 33.21  it is consistent with the results of the audit.  Any change in 
 33.22  client classification that results from an audit must be 
 33.23  retroactive to the effective date of the client assessment that 
 33.24  was audited.  Case mix review program staff shall not discuss 
 33.25  preliminary audit findings with the facility's staff.  Within 15 
 33.26  working days after completing the audit, the case mix review 
 33.27  program shall mail a notice of the results of the audit to the 
 33.28  facility. 
 33.29     (h) Requests for reconsideration of client classifications 
 33.30  shall be made under section 144.0723 and must be submitted 
 33.31  according to section IV of the manual.  A reconsideration must 
 33.32  be reviewed by case mix review program staff not involved in 
 33.33  completing the assessment that established the disputed 
 33.34  classification.  The reconsideration must be based upon the 
 33.35  information provided to the case mix review program.  Within 15 
 33.36  working days after receiving the request for reconsideration, 
 34.1   the case mix review program shall affirm or modify the original 
 34.2   classification.  The original classification must be modified if 
 34.3   the case mix review program determines that the assessment 
 34.4   resulting in the classification did not accurately reflect the 
 34.5   status of the client at the time of the assessment.  The 
 34.6   department of health's decision on reconsiderations is the final 
 34.7   administrative decision of the department.  The classification 
 34.8   assigned by the department of health must be the classification 
 34.9   that applies to the client while the request for reconsideration 
 34.10  is pending.  A change in a classification resulting from a 
 34.11  reconsideration must be retroactive to the effective date of the 
 34.12  client assessment for which a reconsideration was requested. 
 34.13     (i) The commissioner of human services shall assign weights 
 34.14  to each client's classification according to the following table:
 34.15            Classification           Classification Weight 
 34.16                1S                          1.00 
 34.17                1I                          1.04 
 34.18                2S                          1.36 
 34.19                2I                          1.52 
 34.20                3S                          1.58 
 34.21                3I                          1.68 
 34.22                4S                          1.87 
 34.23                4I                          2.02 
 34.24                5S                          2.09 
 34.25                5I                          2.26 
 34.26                6S                          2.26 
 34.27                6I                          2.52 
 34.28                7S                          2.10 
 34.29                7I                          2.37 
 34.30                8S                          2.26 
 34.31                8I                          2.52 
 34.32     Sec. 28.  Minnesota Statutes 1994, section 256B.501, is 
 34.33  amended by adding a subdivision to read: 
 34.34     Subd. 5b.  [ICF/MR OPERATING COST LIMITATION AFTER 
 34.35  SEPTEMBER 30, 1995.] (a) For rate years beginning on October 1, 
 34.36  1995, and October 1, 1996, the commissioner shall limit the 
 35.1   allowable operating cost per diems, as determined under this 
 35.2   subdivision and the reimbursement rules, for high cost 
 35.3   ICF's/MR.  Prior to indexing each facility's operating cost per 
 35.4   diems for inflation, the commissioner shall group the facilities 
 35.5   into eight groups.  The commissioner shall then array all 
 35.6   facilities within each grouping by their general operating cost 
 35.7   per service unit per diems. 
 35.8      (b) The commissioner shall annually review and adjust the 
 35.9   general operating costs incurred by the facility during the 
 35.10  reporting year preceding the rate year to determine the 
 35.11  facility's allowable historical general operating costs.  For 
 35.12  this purpose, the term general operating costs means the 
 35.13  facility's allowable operating costs included in the program, 
 35.14  maintenance, and administrative operating costs categories, as 
 35.15  well as the facility's related payroll taxes and fringe 
 35.16  benefits, real estate insurance, and professional liability 
 35.17  insurance.  A facility's total operating cost payment rate shall 
 35.18  be limited according to paragraphs (c) and (d) as follows: 
 35.19     (c) A facility's total operating cost payment rate shall be 
 35.20  equal to its allowable historical operating cost per diems for 
 35.21  program, maintenance, and administrative cost categories 
 35.22  multiplied by the forecasted inflation index in subdivision 3c, 
 35.23  clause (1), subject to the limitations in paragraph (d). 
 35.24     (d) For the rate years beginning on or after October 1, 
 35.25  1995, the commissioner shall establish maximum overall general 
 35.26  operating cost per service unit limits for facilities according 
 35.27  to clauses (1) to (8).  Each facility's allowable historical 
 35.28  general operating costs and client assessment information 
 35.29  obtained from client assessments completed under subdivision 3g 
 35.30  for the reporting year ending December 31, 1994 (the base year), 
 35.31  shall be used for establishing the overall limits.  If a 
 35.32  facility's proportion of temporary care resident days to total 
 35.33  resident days exceeds 80 percent, the commissioner must exempt 
 35.34  that facility from the overall general operating cost per 
 35.35  service unit limits in clauses (1) to (8).  For this purpose, 
 35.36  "temporary care" means care provided by a facility to a client 
 36.1   for less than 30 consecutive resident days. 
 36.2      (1) The commissioner shall determine each facility's 
 36.3   weighted service units for the reporting year by multiplying its 
 36.4   resident days in each client classification level as established 
 36.5   in subdivision 3g, paragraph (d), by the corresponding weights 
 36.6   for that classification level, as established in subdivision 3g, 
 36.7   paragraph (i), and summing the results.  For the reporting year 
 36.8   ending December 31, 1994, the commissioner shall use the service 
 36.9   unit score computed from the client classifications determined 
 36.10  by the Minnesota department of health's annual review, including 
 36.11  those of clients admitted during that year. 
 36.12     (2) The facility's service unit score is equal to its 
 36.13  weighted service units as computed in clause (1), divided by the 
 36.14  facility's total resident days excluding temporary care resident 
 36.15  days, for the reporting year. 
 36.16     (3) For each facility, the commissioner shall determine the 
 36.17  facility's cost per service unit by dividing its allowable 
 36.18  historical general operating costs for the reporting year by the 
 36.19  facility's service unit score in clause (2) multiplied by its 
 36.20  total resident days, or 85 percent of the facility's capacity 
 36.21  days times its service unit score in clause (2), if the 
 36.22  facility's occupancy is less than 85 percent of licensed 
 36.23  capacity.  If a facility reports temporary care resident days, 
 36.24  the temporary care resident days shall be multiplied by the 
 36.25  service unit score in clause (2), and the resulting weighted 
 36.26  resident days shall be added to the facility's weighted service 
 36.27  units in clause (1) prior to computing the facility's cost per 
 36.28  service unit under this clause. 
 36.29     (4) The commissioner shall group facilities based on class 
 36.30  A or class B licensure designation, number of licensed beds, and 
 36.31  geographic location.  For purposes of this grouping, facilities 
 36.32  with six beds or less shall be designated as small facilities 
 36.33  and facilities with more than six beds shall be designated as 
 36.34  large facilities.  If a facility has both class A and class B 
 36.35  licensed beds, the facility shall be considered a class A 
 36.36  facility for this purpose if the number of class A beds is more 
 37.1   than half its total number of ICF/MR beds; otherwise the 
 37.2   facility shall be considered a class B facility.  The 
 37.3   metropolitan geographic designation shall include Anoka, Carver, 
 37.4   Dakota, Hennepin, Ramsey, Scott, and Washington counties.  All 
 37.5   other Minnesota counties shall be designated as the 
 37.6   nonmetropolitan geographic group.  These characteristics result 
 37.7   in the following eight groupings: 
 37.8      (i) small class A metropolitan; 
 37.9      (ii) large class A metropolitan; 
 37.10     (iii) small class B metropolitan; 
 37.11     (iv) large class B metropolitan; 
 37.12     (v) small class A nonmetropolitan; 
 37.13     (vi) large class A nonmetropolitan; 
 37.14     (vii) small class B nonmetropolitan; and 
 37.15     (viii) large class B nonmetropolitan. 
 37.16     (5) The commissioner shall array facilities within each 
 37.17  grouping in clause (4) by each facility's cost per service unit 
 37.18  as determined in clause (3). 
 37.19     (6) The overall operating cost per service unit limit for 
 37.20  each group shall be established as follows: 
 37.21     (i) in each array established in clause (5), two general 
 37.22  operating cost limits shall be determined.  The first cost per 
 37.23  service unit limit shall be established at .5 and less than or 
 37.24  equal to 1.0 standard deviation above the median of that array.  
 37.25  The second cost per service unit limit shall be established at 
 37.26  1.0 standard deviation above the median of the array; and 
 37.27     (ii) the overall operating cost per service unit limits 
 37.28  shall be indexed for inflation annually beginning with the 
 37.29  reporting year ending December 31, 1995, using the forecasted 
 37.30  inflation index in subdivision 3c, clause (2). 
 37.31     (7) Annually, facilities shall be arrayed using the method 
 37.32  described in clauses (1) and (5).  Each facility with a cost per 
 37.33  service unit at or above its group's first cost per service unit 
 37.34  limit, but less than the second cost per service unit limit for 
 37.35  that group, shall be limited to 98 percent of its total 
 37.36  operating cost per diems then add the forecasted inflation index 
 38.1   in subdivision 3c, clause (1).  Each facility with a cost per 
 38.2   service unit at or above the second cost per service unit limit 
 38.3   will be limited to 97 percent of its total operating cost per 
 38.4   diems, then add the forecasted inflation index in subdivision 
 38.5   3c, clause (1). 
 38.6      (8) The commissioner may rebase these overall limits, using 
 38.7   the method described in this subdivision, but no more frequently 
 38.8   than once every three years. 
 38.9      (e) For rate years beginning on or after October 1, 1995, 
 38.10  the facility's efficiency incentive shall be determined as 
 38.11  provided in the reimbursement rule. 
 38.12     (f) The total operating cost payment rate shall be the sum 
 38.13  of paragraphs (c), (d), and (e). 
 38.14     Sec. 29.  Minnesota Statutes 1994, section 256B.501, is 
 38.15  amended by adding a subdivision to read: 
 38.16     Subd. 5c.  [OPERATING COSTS AFTER SEPTEMBER 30, 1997.] (a)  
 38.17  In general, the commissioner shall establish maximum standard 
 38.18  rates for the prospective reimbursement of facility costs.  The 
 38.19  maximum standard rates must take into account the level of 
 38.20  reimbursement which is adequate to cover the base-level costs of 
 38.21  economically operated facilities.  In determining the base-level 
 38.22  costs, the commissioner shall consider geographic location, 
 38.23  types of facilities (class A or class B), minimum staffing 
 38.24  standards, resident assessment under subdivision 3g, and other 
 38.25  factors as determined by the commissioner. 
 38.26     (b) The commissioner shall also develop additional 
 38.27  incentive-based payments which, if achieved for specified 
 38.28  outcomes, will be added to the maximum standard rates.  The 
 38.29  specified outcomes must be measurable and shall be based on 
 38.30  criteria to be developed by the commissioner during fiscal year 
 38.31  1996.  The commissioner may establish various levels of 
 38.32  achievement within an outcome.  Once the outcomes are 
 38.33  established, the commissioner shall assign various levels of 
 38.34  payment associated with achieving the outcome.  In establishing 
 38.35  the specified outcomes and the related criteria, the 
 38.36  commissioner shall consider the following state policy 
 39.1   objectives:  (1) resident transitioned into cost-effective 
 39.2   community alternatives; (2) the results of a uniform consumer 
 39.3   satisfaction survey; (3) the achievement of no major licensure 
 39.4   or certification deficiencies; or (4) any other outcomes the 
 39.5   commissioner finds desirable. 
 39.6      (c) In developing the maximum standard rates and the 
 39.7   incentive-based payments, desirable outcomes, and related 
 39.8   criteria, the commissioner, in collaboration with the 
 39.9   commissioner of health, shall form an advisory committee.  The 
 39.10  membership of the advisory committee shall include 
 39.11  representation from the consumers advocacy groups (3), the two 
 39.12  facility trade associations (3 each), counties (3), commissioner 
 39.13  of finance (1), the legislature (2 each from both the house and 
 39.14  senate), and others the commissioners finds appropriate.  By 
 39.15  February 1, 1997, the commissioner shall recommend to the 
 39.16  legislature changes to facility reimbursement laws and rules 
 39.17  which respond to the provisions of this subdivision. 
 39.18     (d) Beginning July 1, 1996, the commissioner shall collect 
 39.19  the data from the facilities, the department of health, or 
 39.20  others as necessary to determine the extent to which a facility 
 39.21  has met any of the outcomes and related criteria.  Payment rates 
 39.22  under this subdivision shall be effective October 1, 1997. 
 39.23     (e) The commissioner shall report to the legislature on the 
 39.24  progress of the advisory committee by January 31, 1996, any 
 39.25  necessary changes to the reimbursement methodology proposed 
 39.26  under this subdivision.  By January 15, 1997, the commissioner 
 39.27  shall recommend to the legislature legislation which will 
 39.28  implement this reimbursement methodology for rate years 
 39.29  beginning on or after the proposed effective date of October 1, 
 39.30  1997. 
 39.31     Sec. 30.  Minnesota Statutes 1994, section 256B.501, 
 39.32  subdivision 8, is amended to read: 
 39.33     Subd. 8.  [PAYMENT FOR PERSONS WITH SPECIAL NEEDS.] The 
 39.34  commissioner shall establish by December 31, 1983, procedures to 
 39.35  be followed by the counties to seek authorization from the 
 39.36  commissioner for medical assistance reimbursement for very 
 40.1   dependent persons with special needs in an amount in excess of 
 40.2   the rates allowed pursuant to subdivision subdivisions 2 and 8a, 
 40.3   including rates established under section 252.46 when they apply 
 40.4   to services provided to residents of intermediate care 
 40.5   facilities for persons with mental retardation or related 
 40.6   conditions, and procedures to be followed for rate limitation 
 40.7   exemptions for intermediate care facilities for persons with 
 40.8   mental retardation or related conditions.  No excess payment 
 40.9   approved by the commissioner after June 30, 1991, shall be 
 40.10  authorized unless: 
 40.11     (1) the need for specific level of service is documented in 
 40.12  the individual service plan of the person to be served; 
 40.13     (2) the level of service needed can be provided within the 
 40.14  rates established under section 252.46 and Minnesota Rules, 
 40.15  parts 9553.0010 to 9553.0080, without a rate exception within 12 
 40.16  months; 
 40.17     (3) staff hours beyond those available under the rates 
 40.18  established under section 252.46 and Minnesota Rules, parts 
 40.19  9553.0010 to 9553.0080, necessary to deliver services do not 
 40.20  exceed 1,440 hours within 12 months; 
 40.21     (4) there is a basis for the estimated cost of services; 
 40.22     (5) the provider requesting the exception documents that 
 40.23  current per diem rates are insufficient to support needed 
 40.24  services; 
 40.25     (6) estimated costs, when added to the costs of current 
 40.26  medical assistance-funded residential and day training and 
 40.27  habilitation services and calculated as a per diem, do not 
 40.28  exceed the per diem established for the regional treatment 
 40.29  centers for persons with mental retardation and related 
 40.30  conditions on July 1, 1990, indexed annually by the urban 
 40.31  consumer price index, all items, as forecasted by Data Resources 
 40.32  Inc., for the next fiscal year over the current fiscal year; 
 40.33     (7) any contingencies for an approval as outlined in 
 40.34  writing by the commissioner are met; and 
 40.35     (8) any commissioner orders for use of preferred providers 
 40.36  are met. 
 41.1      The commissioner shall evaluate the services provided 
 41.2   pursuant to this subdivision through program and fiscal audits.  
 41.3      The commissioner may terminate the rate exception at any 
 41.4   time under any of the conditions outlined in Minnesota Rules, 
 41.5   part 9510.1120, subpart 3, for county termination, or by reason 
 41.6   of information obtained through program and fiscal audits which 
 41.7   indicate the criteria outlined in this subdivision have not 
 41.8   been, or are no longer being, met. 
 41.9      The commissioner may approve no more than one rate 
 41.10  exception, up to 12 months duration, for an eligible client. 
 41.11     Sec. 31.  Minnesota Statutes 1994, section 256B.501, is 
 41.12  amended by adding a subdivision to read: 
 41.13     Subd. 8a.  [PAYMENT FOR PERSONS WITH SPECIAL NEEDS FOR 
 41.14  CRISIS INTERVENTION SERVICES.] State-operated, community-based 
 41.15  crisis services provided in accordance with section 252.50, 
 41.16  subdivision 7, to a resident of an intermediate care facility 
 41.17  for persons with mental retardation (ICF/MR) reimbursed under 
 41.18  this section shall be paid by medical assistance in accordance 
 41.19  with the paragraphs in this subdivision. 
 41.20     (a) "Crisis services" means the specialized services listed 
 41.21  in clauses (1) to (3) provided to prevent the recipient from 
 41.22  requiring placement in a more restrictive institutional setting 
 41.23  such as an inpatient hospital or regional treatment center and 
 41.24  to maintain the recipient in his or her present community 
 41.25  setting. 
 41.26     (1) The crisis services provider shall assess the 
 41.27  recipient's behavior and environment to identify factors 
 41.28  contributing to the crisis. 
 41.29     (2) The crisis services provider shall develop a 
 41.30  recipient-specific intervention plan in coordination with the 
 41.31  service planning team and provide recommendations for revisions 
 41.32  to the individual service plan if necessary to prevent or 
 41.33  minimize the likelihood of future crisis situations.  The 
 41.34  intervention plan shall include a transition plan to aid the 
 41.35  recipient in returning to the community-based ICF/MR if the 
 41.36  recipient is receiving residential crisis services.  
 42.1      (3) The crisis services provider shall consult with and 
 42.2   provide training and ongoing technical assistance to the 
 42.3   recipient's service providers to aid in the implementation of 
 42.4   the intervention plan and revisions to the individual service 
 42.5   plan. 
 42.6      (b) "Residential crisis services" means crisis services 
 42.7   that are provided to a recipient admitted to the crisis services 
 42.8   foster care setting because the ICF/MR receiving reimbursement 
 42.9   under this section is not able, as determined by the 
 42.10  commissioner, to provide the intervention and protection of the 
 42.11  recipient and others living with the recipient that is necessary 
 42.12  to prevent the recipient from requiring placement in a more 
 42.13  restrictive institutional setting. 
 42.14     (c) Crisis services providers must be licensed by the 
 42.15  commissioner under section 245A.03 to provide foster care, must 
 42.16  exclusively provide short-term crisis intervention, and must not 
 42.17  be located in a private residence. 
 42.18     (d) Payment rates are determined annually for each crisis 
 42.19  services provider based on cost of care for each provider as 
 42.20  defined in section 246.50.  Interim payment rates are calculated 
 42.21  on a per diem basis by dividing the projected cost of providing 
 42.22  care by the projected number of contact days for the fiscal 
 42.23  year, as estimated by the commissioner.  Final payment rates are 
 42.24  calculated by dividing the actual cost of providing care by the 
 42.25  actual number of contact days in the applicable fiscal year.  
 42.26     (e) Payment shall be made for each contact day.  "Contact 
 42.27  day" means any day in which the crisis services provider has 
 42.28  face-to-face contact with the recipient or any of the 
 42.29  recipient's medical assistance service providers for the purpose 
 42.30  of providing crisis services as defined in paragraph (c). 
 42.31     (f) Payment for residential crisis services is limited to 
 42.32  21 days, unless an additional period is authorized by the 
 42.33  commissioner.  The additional period may not exceed 21 days. 
 42.34     (g) Payment for crisis services shall be made only for 
 42.35  services provided while the ICF/MR receiving reimbursement under 
 42.36  this section: 
 43.1      (1) has a shared services agreement with the crisis 
 43.2   services provider in effect in accordance with section 246.57; 
 43.3      (2) has reassigned payment for the provision of the crisis 
 43.4   services under this subdivision to the commissioner in 
 43.5   accordance with Code of Federal Regulations, title 42, section 
 43.6   447.10(e); and 
 43.7      (3) has executed a cooperative agreement with the crisis 
 43.8   services provider to implement the intervention plan and 
 43.9   revisions to the individual service plan as necessary to prevent 
 43.10  or minimize the likelihood of future crisis situations, to 
 43.11  maintain the recipient in his or her present community setting, 
 43.12  and to prevent the recipient from requiring a more restrictive 
 43.13  institutional setting. 
 43.14     (h) Payment to the ICF/MR receiving reimbursement under 
 43.15  this section shall be made for each therapeutic leave day during 
 43.16  which the recipient is receiving residential crisis services, if 
 43.17  the ICF/MR is otherwise eligible to receive payment for a 
 43.18  therapeutic leave day under Minnesota Rules, part 9505.0415.  
 43.19  Payment under this paragraph shall be terminated if the 
 43.20  commissioner determines that the ICF/MR is not meeting the terms 
 43.21  of the cooperative agreement under paragraph (g) or that the 
 43.22  recipient will not return to the ICF/MR. 
 43.23     Sec. 32.  [ICF/MR RULE REVISION RECORD KEEPING.] 
 43.24     The commissioner shall consider various time record and 
 43.25  time distribution record keeping requirements when developing 
 43.26  rule revisions for cost allocation regarding intermediate care 
 43.27  facilities for persons with mental retardation or related 
 43.28  conditions.  The commissioner shall consider information from 
 43.29  the public, including providers, provider associations, 
 43.30  advocates, and counties when developing rule amendments in the 
 43.31  area of cost allocation. 
 43.32     From July 1, 1995, until June 30, 1996, all employees and 
 43.33  consultants of ICFs/MR, including any individual for whom any 
 43.34  portion of that individual's compensation is reported for 
 43.35  reimbursement under Minnesota Rules, parts 9553.0010 to 
 43.36  9553.0080, shall document their service to all sites according 
 44.1   to paragraphs (a) to (c).  For this purpose, and for paragraphs 
 44.2   (a) to (c), employee means an individual who is compensated by a 
 44.3   facility or provider group for necessary services on any hourly 
 44.4   or salaried basis.  Employees and consultants for whom no 
 44.5   portion of that individual's total compensation is reported for 
 44.6   reimbursement in Minnesota Rules, parts 9553.0010 to 9553.0080, 
 44.7   are exempt from the record keeping requirements set forth in 
 44.8   paragraphs (a) to (c). 
 44.9      (a) Time and attendance records are required for all 
 44.10  employees and consultants as set forth in Minnesota Statutes, 
 44.11  section 256B.432, subdivision 8. 
 44.12     (b) Employees and consultants shall keep time records on a 
 44.13  daily basis showing the actual time spent on various activities, 
 44.14  as required by Minnesota Rules, part 9553.0030, except that 
 44.15  employees with multiple duties must not use a sampling method. 
 44.16     (c) All employees and consultants who work for the benefit 
 44.17  of more than one site shall keep a record of where work is 
 44.18  performed.  This record must specify the time in which work 
 44.19  performed at a site solely benefits that site.  The amount of 
 44.20  time reported for work performed at a site for the sole benefit 
 44.21  of that site does not need to be adjusted for brief, infrequent 
 44.22  telephone interruptions, time spent away from the site when 
 44.23  accompanying clients from that site, and time away from the site 
 44.24  for shopping or errands if the shopping or errands benefit 
 44.25  solely that site. 
 44.26     For record keeping purposes, site means a Minnesota ICF/MR, 
 44.27  waivered services location, semi-independent living service 
 44.28  arrangement, day training and habilitation operation, or similar 
 44.29  out-of-state service operation for persons with developmental 
 44.30  disabilities.  Site also means any nondevelopmental disability 
 44.31  service location or any business operation owned or operated by 
 44.32  a provider group, either in or outside of Minnesota, whether or 
 44.33  not that operation provides a service to persons with 
 44.34  developmental disabilities. 
 44.35     Sec. 33.  [REPEALER.] 
 44.36     Subdivision 1.  Minnesota Statutes 1994, sections 144.0723, 
 45.1   subdivision 5; and 252.47, are repealed. 
 45.2      Subd. 2.  Minnesota Statutes 1994, section 256B.501, 
 45.3   subdivisions 3d and 3e, are repealed for rate years beginning 
 45.4   after September 30, 1996. 
 45.5      Subd. 3.  Minnesota Statutes 1994, section 256B.501, 
 45.6   subdivision 3f, is repealed effective July 1, 1995. 
 45.7      Sec. 34.  [EFFECTIVE DATES.] 
 45.8      Subdivision 1.  Sections 19 to 23 (256B.432, subdivisions 
 45.9   1, 2, 3, 5, and 6) are effective for ICF/MR rate years beginning 
 45.10  after September 30, 1996. 
 45.11     Subd. 2.  Sections 30 and 31 (256B.501, subdivisions 8 and 
 45.12  8a) are effective upon publication in the State Register by the 
 45.13  commissioner of human services that federal approval is received.