SF 2411

1st Engrossment - 93rd Legislature (2023 - 2024) Posted on 10/25/2023 09:42am

A bill for an act
relating to health; changing nursing home moratorium process; amending Minnesota
Statutes 2022, sections 144A.071, subdivision 2; 144A.073, subdivision 3b;
256B.434, subdivision 4f.

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

Section 1.

Minnesota Statutes 2022, section 144A.071, subdivision 2, is amended to read:

Subd. 2.

Moratorium.

new text begin (a) new text end The commissioner of health, in coordination with the
commissioner of human services, shall deny each request for new licensed or certified
nursing home or certified boarding care beds except as provided in subdivision 3 or 4a, or
section 144A.073. "Certified bed" means a nursing home bed or a boarding care bed certified
by the commissioner of health for the purposes of the medical assistance program, under
United States Code, title 42, sections 1396 et seq. Certified beds in facilities which do not
allow medical assistance intake shall be deemed to be decertified for purposes of this section
only.

new text begin (b) new text end The commissioner of human services, in coordination with the commissioner of
health, shall deny any request to issue a license under section 252.28 and chapter 245A to
a nursing home or boarding care home, if that license would result in an increase in the
medical assistance reimbursement amount.

new text begin (c) new text end In addition, the commissioner of health must not approve any construction project
whose cost exceeds $1,000,000, unless:

deleted text begin (a) deleted text end new text begin (1) new text end any construction costs exceeding $1,000,000 are not added to the facility's
appraised value and are not included in the facility's payment rate for reimbursement under
the medical assistance program; or

deleted text begin (b) deleted text end new text begin (2) new text end the project:

deleted text begin (1) deleted text end new text begin (i) new text end has been approved through the process described in section 144A.073 new text begin and if
approved under section 144A.073, subdivision 3, after March 1, 2020, is subject to the fair
rental value property rate as described in section 256R.26 new text end ;

deleted text begin (2) deleted text end new text begin (ii) new text end meets an exception in subdivision 3 or 4a;

deleted text begin (3) deleted text end new text begin (iii) new text end is necessary to correct violations of state or federal law issued by the
commissioner of health;

deleted text begin (4) deleted text end new text begin (iv) new text end is necessary to repair or replace a portion of the facility that was damaged by
fire, lightning, ground shifts, or other such hazards, including environmental hazards,
provided that the provisions of subdivision 4a, clause (a), are met; or

deleted text begin (5) deleted text end new text begin (v) new text end is being proposed by a licensed nursing facility that is not certified to participate
in the medical assistance program and will not result in new licensed or certified beds.

new text begin (d) new text end Prior to the final plan approval of any construction project, the commissioners of
health and human services shall be provided with an itemized cost estimate for the project
construction costs. If a construction project is anticipated to be completed in phases, the
total estimated cost of all phases of the project shall be submitted to the commissioners and
shall be considered as one construction project. Once the construction project is completed
and prior to the final clearance by the commissioners, the total project construction costs
for the construction project shall be submitted to the commissioners. If the final project
construction cost exceeds the dollar threshold in this subdivision, the commissioner of
human services shall not recognize any of the project construction costs or the related
financing costs in excess of this threshold in establishing the facility's property-related
payment rate.

new text begin (e) new text end The dollar thresholds for construction projects are as follows: for construction projects
other than those authorized in deleted text begin clauses (1) to (6) deleted text end new text begin paragraph (c), clause (2), items (i) to (v) new text end ,
the dollar threshold is $1,000,000. For projects authorized after July 1, 1993, under deleted text begin clause
(1) deleted text end new text begin paragraph (c), clause (2), item (i) new text end , the dollar threshold is the cost estimate submitted
with a proposal for an exception under section 144A.073, plus inflation as calculated
according to section 256B.431, subdivision 3f, paragraph (a). For projects authorized under
deleted text begin clauses (2) to (4) deleted text end new text begin paragraph (c), clause (2), items (ii) to (iv) new text end , the dollar threshold is the
itemized estimate project construction costs submitted to the commissioner of health at the
time of final plan approval, plus inflation as calculated according to section 256B.431,
subdivision 3f, paragraph (a).

new text begin (f) new text end The commissioner of health shall adopt rules to implement this section or to amend
the emergency rules for granting exceptions to the moratorium on nursing homes under
section 144A.073.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from March 1, 2020.
new text end

Sec. 2.

Minnesota Statutes 2022, section 144A.073, subdivision 3b, is amended to read:

Subd. 3b.

Amendments to approved projects.

(a) Nursing facilities that have received
approval deleted text begin on or after July 1, 1993, deleted text end for exceptions to the moratorium on nursing homes through
the process described in this section may request amendments to the designs of the projects
by writing the commissioner within 15 months of receiving approval. new text begin An approved project
may not be amended to reduce the scope of an approved project. new text end Applicants shall submit
supporting materials that demonstrate how the amended projects meet the criteria described
in paragraph (b).

(b) The commissioner shall approve requests for amendments for projects approved deleted text begin on
or after July 1, 1993, deleted text end according to the following criteria:

(1) the amended project designs must provide solutions to all of the problems addressed
by the original application that are at least as effective as the original solutions;

(2) the amended project designs may not reduce the space in each resident's living area
or in the total amount of common space devoted to resident and family uses by more than
five percent;

(3) the costs deleted text begin recognized for reimbursement deleted text end of amended project designs shall be deleted text begin the
threshold amount of the original proposal as identified according to section 144A.071,
subdivision 2 deleted text end new text begin the cost estimate associated with the project as originally approved new text end , except
under conditions described in clause (4); and

(4) total costs deleted text begin up to ten percent greater than the cost identified in clause (3) may be
recognized for reimbursement if deleted text end new text begin of the amendment are no greater than ten percent of the
cost estimate associated with the project as initially approved if new text end the proposer can document
that one of the following circumstances is true:

(i) changes are needed due to a natural disaster;

(ii) conditions that affect the safety or durability of the project that could not have
reasonably been known prior to approval are discovered;

(iii) state or federal law require changes in project design; or

(iv) documentable circumstances occur that are beyond the control of the owner and
require changes in the design.

(c) Approval of a request for an amendment does not alter the expiration of approval of
the project according to subdivision 3.

new text begin (d) Reimbursement for amendments to approved projects is independent of the actual
construction costs and based on the allowable appraised value of the completed project.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from March 1, 2020.
new text end

Sec. 3.

Minnesota Statutes 2022, section 256B.434, subdivision 4f, is amended to read:

Subd. 4f.

Construction project rate adjustments effective October 1, 2006.

(a)
Effective October 1, 2006, facilities reimbursed under this section may receive a property
rate adjustment for construction projects exceeding the threshold in section 256B.431,
subdivision 16, and below the threshold in section 144A.071, subdivision 2, deleted text begin clause (a) deleted text end new text begin
paragraph (c), clause (1) new text end . For these projects, capital assets purchased shall be counted as
construction project costs for a rate adjustment request made by a facility if they are: (1)
purchased within 24 months of the completion of the construction project; (2) purchased
after the completion date of any prior construction project; and (3) are not purchased prior
to July 14, 2005. Except as otherwise provided in this subdivision, the definitions, rate
calculation methods, and principles in sections 144A.071 and 256B.431 and Minnesota
Rules, parts 9549.0010 to 9549.0080, shall be used to calculate rate adjustments for allowable
construction projects under this subdivision and section 144A.073. Facilities completing
construction projects between October 1, 2005, and October 1, 2006, are eligible to have a
property rate adjustment effective October 1, 2006. Facilities completing projects after
October 1, 2006, are eligible for a property rate adjustment effective on the first day of the
month following the completion date. Facilities completing projects after January 1, 2018,
are eligible for a property rate adjustment effective on the first day of the month of January
or July, whichever occurs immediately following the completion date.

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

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

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

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

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

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

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

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

(iv) If a facility's current request for a rate adjustment results from the completion of a
construction project that was previously approved under section 144A.073, the assets to be
added to the rate calculation cannot exceed the lesser of the amount determined under
sections 144A.071, subdivision 2, and 144A.073, subdivision 3b, or the actual allowable
costs of the construction project. A current request that is not the result of a project under
section 144A.073 cannot exceed the limit stated in section 144A.071, subdivision 2,
paragraph deleted text begin (a) deleted text end new text begin (c), clause (1) new text end . Assets disposed of as a result of a construction project and
applicable credits must be deducted from the cost of the construction project.

(f) For construction projects approved under section 144A.073, allowable debt may
never exceed the lesser of the cost of the assets purchased, the threshold limit in section
144A.071, subdivision 2, or the replacement-cost-new limit less previously existing capital
debt.

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

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

For a total replacement project as defined in section 256B.431, subdivision 17d, the
value of previously existing capital debt shall be zero.

(h) In addition to the interest expense allowed from the application of paragraph (f), the
amounts allowed under section 256B.431, subdivision 17a, paragraph (a), clauses (2) and
(3), will be added to interest expense.

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

(j) For projects that are not a total replacement of a nursing facility, the amount in
paragraph (i) is adjusted for nonreimbursable areas and then added to the current property
payment rate of the facility.

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

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

(m) Capital assets purchased after the completion date of a construction project shall be
counted as construction project costs for any future rate adjustment request made by a facility
under section 144A.071, subdivision 2, deleted text begin clause (a) deleted text end new text begin paragraph (c), clause (1) new text end , if they are
purchased within 24 months of the completion of the future construction project.

(n) In subsequent rate years, the property payment rate for a facility that results from
the application of this subdivision shall be the amount inflated in subdivision 4.

(o) Construction projects are eligible for an equity incentive under section 256B.431,
subdivision 16. When computing the equity incentive for a construction project under this
subdivision, only the allowable costs and allowable debt related to the construction project
shall be used. The equity incentive shall not be a part of the property payment rate and not
inflated under subdivision 4. Effective October 1, 2006, all equity incentives for nursing
facilities reimbursed under this section shall be allowed for a duration determined under
section 256B.431, subdivision 16, paragraph (c).