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Capital IconMinnesota Legislature

SF 2539

as introduced - 89th Legislature (2015 - 2016) Posted on 05/18/2016 10:24am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to human services; recodifying nursing facility payment language;
making conforming changes; repealing obsolete provisions; amending
Minnesota Statutes 2014, sections 144A.071, subdivision 2; 256B.0625, by
adding a subdivision; 256B.19, subdivision 1e; 256B.431, subdivision 22;
256B.434, subdivision 10; 256B.48, subdivisions 2, 3a; 256B.50, subdivision 1a;
Minnesota Statutes 2015 Supplement, sections 144A.15, subdivision 6; 256I.05,
subdivision 2; proposing coding for new law as Minnesota Statutes, chapter
256R; repealing Minnesota Statutes 2014, sections 256B.0911, subdivision 7;
256B.25, subdivision 4; 256B.27, subdivision 2a; 256B.41, subdivisions 1, 2, 3;
256B.411, subdivisions 1, 2; 256B.421, subdivisions 2, 3, 4, 5, 6, 7, 8, 9, 10, 11,
12, 13, 14, 15; 256B.431, subdivisions 1, 2d, 2e, 2n, 2r, 2s, 2t, 3e, 32, 35, 42, 44;
256B.432, subdivisions 1, 2, 3, 4, 4a, 5, 6, 6a, 7, 8; 256B.433, subdivisions 1, 2,
3, 3a; 256B.434, subdivisions 2, 9, 11, 12, 14, 15, 16, 18, 19a, 20, 21; 256B.437,
subdivisions 1, 3, 4, 5, 6, 7, 9, 10; 256B.438, subdivisions 1, 2, 3, 4, 5, 6, 7, 8;
256B.441, subdivisions 2, 3, 4, 7, 8, 9, 10, 11, 15, 18, 20, 22, 23, 24, 25, 27,
28a, 29, 32, 33a, 34, 36, 37, 38, 39, 41, 42a, 43, 46b, 47, 49, 57, 59, 60, 61, 64;
256B.47, subdivisions 1, 2, 3, 4; 256B.48, subdivisions 1, 1a, 1b, 1c, 3, 4, 5, 6a,
7, 8; Minnesota Statutes 2015 Supplement, sections 256B.431, subdivisions 2b,
36; 256B.441, subdivisions 1, 5, 6, 11a, 13, 14, 17, 30, 31, 33, 35, 40, 44, 46c,
46d, 48, 50, 51, 51a, 51b, 53, 54, 55a, 56, 63, 65, 66, 67; 256B.495, subdivisions
1, 5; Minnesota Rules, parts 9549.0035, subparts 1, 3, 7, 8; 9549.0041, subpart 6;
9549.0055, subparts 1, 2, 3; 9549.0070, subparts 2, 3.

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

ARTICLE 1

NURSING FACILITY RECODIFICATION

GENERAL

Section 1.

new text begin [256R.01] GENERAL.
new text end

new text begin Subdivision 1. new text end

new text begin Payment rates. new text end

new text begin Payment rates paid to any nursing facility receiving
medical assistance payments must be those rates established pursuant to this chapter
and rules adopted under it.
new text end

new text begin Subd. 2. new text end

new text begin Authority of commissioner. new text end

new text begin The commissioner shall establish, by rule,
procedures for determining rates for care of residents of nursing facilities which qualify as
vendors of medical assistance, and for implementing the provisions of this chapter and
section 256B.50. The procedures shall specify the costs that are allowable for establishing
payment rates through medical assistance.
new text end

new text begin Subd. 3. new text end

new text begin Compliance with federal requirements. new text end

new text begin If any provision of this chapter
and section 256B.50 is determined by the United States government to be in conflict with
existing or future requirements of the United States government with respect to federal
participation in medical assistance, the federal requirements shall prevail.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin The grant of rulemaking authority to the commissioner
of human services in this section is a continuation of authority previously granted in
Minnesota Statutes, section 256B.41, subdivision 1.
new text end

Sec. 2.

new text begin [256R.02] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin For purposes of this chapter, the terms in this section
have the meanings given unless otherwise provided for in this chapter.
new text end

new text begin Subd. 2. new text end

new text begin Active beds. new text end

new text begin "Active beds" means licensed beds that are not currently
in layaway status.
new text end

new text begin Subd. 3. new text end

new text begin Activities costs. new text end

new text begin "Activities costs" means the costs for the salaries and
wages of the supervisor and other activities workers, associated fringe benefits and payroll
taxes, supplies, services, and consultants.
new text end

new text begin Subd. 4. new text end

new text begin Administrative costs. new text end

new text begin "Administrative costs" means the identifiable
costs for administering the overall activities of the nursing home. These costs include
salaries and wages of the administrator, assistant administrator, business office employees,
security guards, and associated fringe benefits and payroll taxes, fees, contracts, or
purchases related to business office functions, licenses, and permits except as provided
in the external fixed costs category, employee recognition, travel including meals and
lodging, all training except as specified in subdivision 17, voice and data communication
or transmission, office supplies, property and liability insurance and other forms of
insurance not designated to other areas, personnel recruitment, legal services, accounting
services, management or business consultants, data processing, information technology,
Web site, central or home office costs, business meetings and seminars, postage, fees for
professional organizations, subscriptions, security services, advertising, board of directors
fees, working capital interest expense, and bad debts and bad debt collection fees.
new text end

new text begin Subd. 5. new text end

new text begin Allowed costs. new text end

new text begin "Allowed costs" means the amounts reported by the facility
which are necessary for the operation of the facility and the care of residents and which
are reviewed by the Department of Human Services for accuracy; reasonableness, in
accordance with the requirements set forth in title XVIII of the federal Social Security
Act and the interpretations in the provider reimbursement manual; and compliance with
this chapter and generally accepted accounting principles. All references to costs in this
chapter shall be assumed to refer to allowed costs, unless otherwise specified.
new text end

new text begin Subd. 6. new text end

new text begin Applicable credit. new text end

new text begin "Applicable credit" means a receipt or expense
reduction as a result of a purchase discount, rebate, refund, allowance, public grant,
beauty shop income, guest meals income, adjustment for overcharges, insurance claims
settlement, recovered bad debts, or any other adjustment or income reducing the costs
claimed by a nursing facility.
new text end

new text begin Subd. 7. new text end

new text begin Assessment reference date. new text end

new text begin "Assessment reference date" has the meaning
given in section 144.0724, subdivision 2, paragraph (a).
new text end

new text begin Subd. 8. new text end

new text begin Capital assets. new text end

new text begin "Capital assets" means a nursing facility's buildings,
attached fixtures, land improvements, leasehold improvements, and all additions to or
replacements of those assets used directly for resident care.
new text end

new text begin Subd. 9. new text end

new text begin Case mix classification. new text end

new text begin "Case mix classification" refers to resident
reimbursement case mix classifications described in section 144.0724.
new text end

new text begin Subd. 10. new text end

new text begin Case mix index. new text end

new text begin "Case mix index" has the meaning given in section
144.0724, subdivision 2, paragraph (b).
new text end

new text begin Subd. 11. new text end

new text begin Centers for Medicare and Medicaid services. new text end

new text begin "Centers for Medicare
and Medicaid services" means the federal agency, in the United States Department of
Health and Human Services that administers Medicaid, also referred to as "CMS."
new text end

new text begin Subd. 12. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of human
services unless specified otherwise.
new text end

new text begin Subd. 13. new text end

new text begin Consulting agreement. new text end

new text begin "Consulting agreement" means any agreement
the purpose of which is for a central, affiliated, or corporate office to advise, counsel,
recommend, or suggest to the owner or operator of the nonrelated nursing facility
measures and methods for improving the operations of the nursing facility.
new text end

new text begin Subd. 14. new text end

new text begin Cost to limit ratio. new text end

new text begin "Cost to limit ratio" means a facility's total
care-related cost per day divided by its total care-related payment rate limit.
new text end

new text begin Subd. 15. new text end

new text begin Desk audit. new text end

new text begin "Desk audit" means the establishment of the payment
rate based on the commissioner's review and analysis of required reports, supporting
documentation, and work sheets submitted by the nursing facility.
new text end

new text begin Subd. 16. new text end

new text begin Dietary costs. new text end

new text begin "Dietary costs" means the costs for the salaries and wages
of the dietary supervisor, dietitians, chefs, cooks, dishwashers, and other employees
assigned to the kitchen and dining room, and associated fringe benefits and payroll taxes.
Dietary costs also includes the salaries or fees of dietary consultants, dietary supplies,
and food preparation and serving.
new text end

new text begin Subd. 17. new text end

new text begin Direct care costs. new text end

new text begin "Direct care costs" means costs for the wages of
nursing administration, direct care registered nurses, licensed practical nurses, certified
nursing assistants, trained medication aides, employees conducting training in resident
care topics and associated fringe benefits and payroll taxes; services from a supplemental
nursing services agency; supplies that are stocked at nursing stations or on the floor and
distributed or used individually, including, but not limited to: alcohol, applicators, cotton
balls, incontinence pads, disposable ice bags, dressings, bandages, water pitchers, tongue
depressors, disposable gloves, enemas, enema equipment, soap, medication cups, diapers,
plastic waste bags, sanitary products, thermometers, hypodermic needles and syringes,
clinical reagents or similar diagnostic agents, drugs that are not paid on a separate fee
schedule by the medical assistance program or any other payer, and technology related
to the provision of nursing care to residents, such as electronic charting systems; costs
of materials used for resident care training, and training courses outside of the facility
attended by direct care staff on resident care topics.
new text end

new text begin Subd. 18. new text end

new text begin Employer health insurance costs. new text end

new text begin "Employer health insurance costs"
means premium expenses for group coverage and reinsurance, actual expenses incurred
for self-insured plans, and employer contributions to employee health reimbursement and
health savings accounts. Premium and expense costs and contributions are allowable for
(1) all employees and (2) the spouse and dependents of employees who meet the definition
of full-time employees under the federal Affordable Care Act, Public Law 111-148.
new text end

new text begin Subd. 19. new text end

new text begin External fixed costs. new text end

new text begin "External fixed costs" means costs related to the
nursing home surcharge under section 256.9657, subdivision 1; licensure fees under
section 144.122; family advisory council fee under section 144A.33; scholarships under
section 256R.37; planned closure rate adjustments under section 256R.40; single-bed
room incentives under section 256R.41; property taxes, assessments, and payments in
lieu of taxes; employer health insurance costs; quality improvement incentive payment
rate adjustments under section 256R.39; performance-based incentive payments under
section 256R.38; special dietary needs under section 256R.51; and Public Employees
Retirement Association.
new text end

new text begin Subd. 20. new text end

new text begin Facility average case mix index. new text end

new text begin "Facility average case mix index"
or "CMI" means a numerical score that describes the relative resource use for all
residents within the case mix classifications under the resource utilization group (RUG)
classification system prescribed by the commissioner based on an assessment of each
resident. The facility average CMI shall be computed as the standardized days divided
by the sum of the facility's resident days. The case mix indices used shall be based on
the system prescribed in section 256R.17.
new text end

new text begin Subd. 21. new text end

new text begin Field audit. new text end

new text begin "Field audit" means the examination, verification, and review
of the financial records, statistical records, and related supporting documentation on the
nursing home and any related organization.
new text end

new text begin Subd. 22. new text end

new text begin Fringe benefit costs. new text end

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

new text begin Subd. 23. new text end

new text begin Generally accepted accounting principles. new text end

new text begin "Generally accepted
accounting principles" means the body of pronouncements adopted by the American
Institute of Certified Public Accountants regarding proper accounting procedures,
guidelines, and rules.
new text end

new text begin Subd. 24. new text end

new text begin Housekeeping costs. new text end

new text begin "Housekeeping costs" means the costs for the
salaries and wages of the housekeeping supervisor, housekeepers, and other cleaning
employees and associated fringe benefits and payroll taxes. It also includes the cost of
housekeeping supplies, including, but not limited to, cleaning and lavatory supplies and
contract services.
new text end

new text begin Subd. 25. new text end

new text begin Identifiable cost. new text end

new text begin "Identifiable cost" means a cost that can be directly
identified with a specific nursing facility or can be directly identified with an activity or
function.
new text end

new text begin Subd. 26. new text end

new text begin Laundry costs. new text end

new text begin "Laundry costs" means the costs for the salaries and
wages of the laundry supervisor and other laundry employees, associated fringe benefits,
and payroll taxes. It also includes the costs of linen and bedding, the laundering of
resident clothing, laundry supplies, and contract services.
new text end

new text begin Subd. 27. new text end

new text begin Leave day. new text end

new text begin "Leave day" means any calendar day during which the
recipient leaves the facility and is absent overnight, and all subsequent, consecutive
calendar days. An overnight absence from the facility of less than 23 hours does
not constitute a leave day. Nevertheless, if the recipient is absent from the facility
to participate in active programming of the facility under the personal direction and
observation of facility staff, the day shall not be considered a leave day regardless of the
number of hours of the recipient's absence. For purposes of this subdivision, "calendar
day" means the 24-hour period ending at midnight.
new text end

new text begin Subd. 28. new text end

new text begin Licensee. new text end

new text begin "Licensee" means the individual or organization listed on the
form issued by the Minnesota Department of Health under chapter 144A or sections
144.50 to 144.56.
new text end

new text begin Subd. 29. new text end

new text begin Maintenance and plant operations costs. new text end

new text begin "Maintenance and plant
operations costs" means the costs for the salaries and wages of the maintenance supervisor,
engineers, heating-plant employees, and other maintenance employees and associated
fringe benefits and payroll taxes. It also includes identifiable costs for maintenance and
operation of the building and grounds, including, but not limited to, fuel, electricity,
medical waste and garbage removal, water, sewer, supplies, tools, and repairs.
new text end

new text begin Subd. 30. new text end

new text begin Management agreement. new text end

new text begin "Management agreement" means an agreement
in which one or more of the following criteria exist:
new text end

new text begin (1) the central, affiliated, or corporate office has or is authorized to assume
day-to-day operational control of the nursing facility for any six-month period within a
24-month period. "Day-to-day operational control" means that the central, affiliated, or
corporate office has the authority to require, mandate, direct, or compel the employees
of the nursing facility to perform or refrain from performing certain acts, or to supplant
or take the place of the top management of the nursing facility. "Day-to-day operational
control" includes the authority to hire or terminate employees or to provide an employee
of the central, affiliated, or corporate office to serve as administrator of the nursing facility;
new text end

new text begin (2) the central, affiliated, or corporate office performs or is authorized to perform
two or more of the following: the execution of contracts; authorization of purchase
orders; signature authority for checks, notes, or other financial instruments; requiring the
nursing facility to use the group or volume purchasing services of the central, affiliated,
or corporate office; or the authority to make annual capital expenditures for the nursing
facility exceeding $50,000, or $500 per licensed bed, whichever is less, without first
securing the approval of the nursing facility board of directors;
new text end

new text begin (3) the central, affiliated, or corporate office becomes or is required to become the
licensee under applicable state law;
new text end

new text begin (4) the agreement provides that the compensation for services provided under the
agreement is directly related to any profits made by the nursing facility; or
new text end

new text begin (5) the nursing facility entering into the agreement is governed by a governing body
that meets fewer than four times per year, that does not publish notice of its meetings,
or that does not keep formal records of its proceedings.
new text end

new text begin Subd. 31. new text end

new text begin Medical assistance program. new text end

new text begin "Medical assistance program" means the
program which reimburses the cost of health care provided to eligible recipients pursuant
to chapters 256B and 256R, and United States Code, title 42, section 1396, et seq.
new text end

new text begin Subd. 32. new text end

new text begin Minimum data set. new text end

new text begin "Minimum data set" has the meaning given in section
144.0724, subdivision 2, paragraph (d).
new text end

new text begin Subd. 33. new text end

new text begin Nursing facility. new text end

new text begin "Nursing facility" means a facility with a medical
assistance provider agreement that is licensed as a nursing home under chapter 144A or
as a boarding care home under sections 144.50 to 144.56.
new text end

new text begin Subd. 34. new text end

new text begin Other care-related costs. new text end

new text begin "Other care-related costs" means the sum of
activities costs, other direct care costs, raw food costs, therapy costs, and social services
costs.
new text end

new text begin Subd. 35. new text end

new text begin Other direct care costs. new text end

new text begin "Other direct care costs" means the costs
for the salaries and wages and associated fringe benefits and payroll taxes of mental
health workers, religious personnel, and other direct care employees not specified in
the definition of direct care costs.
new text end

new text begin Subd. 36. new text end

new text begin Other operating costs. new text end

new text begin "Other operating costs" means the sum of
administrative costs, dietary costs, housekeeping costs, laundry costs, and maintenance
and plant operation costs.
new text end

new text begin Subd. 37. new text end

new text begin Payroll taxes. new text end

new text begin "Payroll taxes" means the costs for the employer's
share of the FICA and Medicare withholding tax, and state and federal unemployment
compensation taxes.
new text end

new text begin Subd. 38. new text end

new text begin Prior system operating cost payment rate. new text end

new text begin "Prior system operating
cost payment rate" means the operating cost payment rate in effect on December 31,
2015, under Minnesota Rules and Minnesota Statutes, inclusive of health insurance, plus
property insurance costs from external fixed costs, minus any rate increases allowed under
Minnesota Statutes 2015 Supplement, section 256B.441, subdivision 55a.
new text end

new text begin Subd. 39. new text end

new text begin Private paying resident. new text end

new text begin "Private paying resident" means a nursing
facility resident who is not a medical assistance recipient and whose payment rate is not
established by another third party, including the veterans administration or Medicare.
new text end

new text begin Subd. 40. new text end

new text begin Public accountant. new text end

new text begin "Public accountant" means a certified public
accountant or certified public accounting firm licensed in accordance with chapter 326A.
new text end

new text begin Subd. 41. new text end

new text begin Rate year. new text end

new text begin "Rate year" means the 12-month period beginning on January 1.
new text end

new text begin Subd. 42. new text end

new text begin Raw food costs. new text end

new text begin "Raw food costs" means the cost of food provided to
nursing facility residents. Also included are special dietary supplements used for tube
feeding or oral feeding, such as elemental high nitrogen diet.
new text end

new text begin Subd. 43. new text end

new text begin Related organization. new text end

new text begin (a) "Related organization" means a person that
furnishes goods or services to a nursing facility and that is a close relative of a nursing
facility, an affiliate of a nursing facility, a close relative of an affiliate of a nursing facility,
or an affiliate of a close relative of an affiliate of a nursing facility. As used in this
subdivision, paragraphs (b) to (e) apply.
new text end

new text begin (b) "Affiliate" means a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with another person.
new text end

new text begin (c) "Person" means an individual, a corporation, a partnership, an association, a trust,
an unincorporated organization, or a government or political subdivision.
new text end

new text begin (d) "Close relative of an affiliate of a nursing facility" means an individual whose
relationship by blood, marriage, or adoption to an individual who is an affiliate of a
nursing facility is no more remote than first cousin.
new text end

new text begin (e) "Control" including the terms "controlling," "controlled by," and "under common
control with" means the possession, direct or indirect, of the power to direct or cause the
direction of the management, operations, or policies of a person, whether through the
ownership of voting securities, by contract, or otherwise.
new text end

new text begin Subd. 44. new text end

new text begin Reporting period. new text end

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

new text begin Subd. 45. new text end

new text begin Resident day. new text end

new text begin "Resident day" means a day for which nursing services are
rendered and billable, or a day for which a bed is held and billed. The day of admission is
considered a resident day, regardless of the time of admission. The day of discharge is not
considered a resident day, regardless of the time of discharge.
new text end

new text begin Subd. 46. new text end

new text begin Resource utilization group. new text end

new text begin "Resource utilization groups" or "RUG" has
the meaning given in section 144.0724, subdivision 2, paragraph (f).
new text end

new text begin Subd. 47. new text end

new text begin Salaries and wages. new text end

new text begin "Salaries and wages" means amounts earned by and
paid to employees or on behalf of employees to compensate for necessary services provided.
Salaries and wages include accrued vested vacation and accrued vested sick leave pay.
new text end

new text begin Subd. 48. new text end

new text begin Social services costs. new text end

new text begin "Social services costs" means the costs for the
salaries and wages of the supervisor and other social work employees, associated fringe
benefits and payroll taxes, supplies, services, and consultants. This category includes the
cost of those employees who manage and process admission to the nursing facility.
new text end

new text begin Subd. 49. new text end

new text begin Stakeholders. new text end

new text begin "Stakeholders" means individuals and representatives of
organizations interested in long-term care, including nursing homes, consumers, and
labor unions.
new text end

new text begin Subd. 50. new text end

new text begin Standardized days. new text end

new text begin "Standardized days" means the sum of resident days
by case mix classification multiplied by the case mix index for each classification. When a
facility has resident days at a penalty classification, these days shall be reported as resident
days at the case mix classification established immediately after the penalty period, if
available, and otherwise, at the case mix classification in effect before the penalty began.
new text end

new text begin Subd. 51. new text end

new text begin Statistical and cost report. new text end

new text begin "Statistical and cost report" means the forms
supplied by the commissioner for annual reporting of nursing facility expenses and
statistics, including instructions and definitions of items in the report.
new text end

new text begin Subd. 52. new text end

new text begin Therapy costs. new text end

new text begin "Therapy costs" means any costs related to medical
assistance therapy services provided to residents that are not billed separately from the
daily operating rate.
new text end

new text begin Subd. 53. new text end

new text begin Working capital debt. new text end

new text begin "Working capital debt" means debt incurred
to finance nursing facility operating costs. Working capital debt does not include debt
incurred to acquire or refinance a capital asset.
new text end

new text begin Subd. 54. new text end

new text begin Working capital interest expense. new text end

new text begin "Working capital interest expense"
means the interest expense incurred on working capital debt during the reporting period.
new text end

CONDITIONS FOR PARTICIPATION

Sec. 3.

new text begin [256R.03] CONDITIONS FOR FUNDING.
new text end

new text begin Subdivision 1. new text end

new text begin Requirements for funding. new text end

new text begin (a) No medical assistance payments
shall be made to any nursing facility unless the nursing facility is certified to participate
in the medical assistance program under title XIX of the federal Social Security Act and
has in effect a provider agreement with the commissioner meeting the requirements of
state and federal statutes and rules.
new text end

new text begin (b) No medical assistance payments shall be made to any nursing facility unless
the nursing facility complies with all requirements of Minnesota Statutes including, but
not limited to, this chapter and chapter 256B and rules adopted under them that govern
participation in the program.
new text end

new text begin (c) Subject to exceptions in section 256B.25, subdivision 3, no nursing facility may
receive any state or local payment for providing care to a person eligible for medical
assistance, except under the medical assistance program.
new text end

new text begin Subd. 2. new text end

new text begin Payment during suspended admissions. new text end

new text begin A nursing home or boarding
care home that has received a notice to suspend admissions under section 144A.105 shall
be ineligible to receive payment for admissions that occur during the effective dates of the
suspension. Upon termination of the suspension by the commissioner of health, payments
may be made for eligible persons, beginning with the day after the suspension ends.
new text end

new text begin Subd. 3. new text end

new text begin Payments to facilities withdrawing from medical assistance. new text end

new text begin This
section applies whether the nursing facility participates fully in the medical assistance
program or is withdrawing from the medical assistance program. No medical assistance
payments may be made to any nursing facility which has withdrawn or is withdrawing
from the medical assistance program except as provided in subdivision 4, or federal law.
new text end

new text begin Subd. 4. new text end

new text begin Termination. new text end

new text begin If a nursing facility terminates its participation in the
medical assistance program, whether voluntarily or involuntarily, the commissioner may
authorize the nursing facility to receive continued medical assistance reimbursement
until medical assistance residents can be relocated to nursing facilities participating in
the medical assistance program.
new text end

Sec. 4.

new text begin [256R.04] PROHIBITED PRACTICES.
new text end

new text begin Subdivision 1. new text end

new text begin Financial exploitation. new text end

new text begin A nursing facility is not eligible to receive
medical assistance payments unless it refrains from all of the following:
new text end

new text begin (1) charging, soliciting, accepting, or receiving from an applicant for admission to
the facility, or from anyone acting on behalf of the applicant, as a condition of admission,
expediting the admission, or as a requirement for the individual's continued stay, any fee,
deposit, gift, money, donation, or other consideration not otherwise required as payment
under the Medicaid state plan;
new text end

new text begin (2) requiring an individual, or anyone acting on behalf of the individual, to loan
any money to the nursing facility;
new text end

new text begin (3) requiring an individual, or anyone acting on behalf of the individual, to promise
to leave all or part of the individual's estate to the facility; or
new text end

new text begin (4) requiring a third-party guarantee of payment to the facility as a condition of
admission, expedited admission, or continued stay in the facility.
new text end

new text begin Nothing in this subdivision prohibits discharge for nonpayment of services in accordance
with state and federal regulations.
new text end

new text begin Subd. 2. new text end

new text begin Restricting resident choice of vendors of medical services. new text end

new text begin (a) A nursing
facility is not eligible to receive medical assistance payments unless it refrains from
requiring any resident of the nursing facility to utilize a vendor of health care services
chosen by the nursing facility.
new text end

new text begin (b) A nursing facility may require a resident to use pharmacies that utilize unit
dose packing systems approved by the Minnesota Board of Pharmacy, and may require a
resident to use pharmacies that are able to meet the federal regulations for safe and timely
administration of medications such as systems with specific number of doses, prompt
delivery of medications, or access to medications on a 24-hour basis. Notwithstanding
the provisions of this subdivision, nursing facilities shall not restrict a resident's choice of
pharmacy because the pharmacy utilizes a specific system of unit dose drug packing.
new text end

new text begin Subd. 3. new text end

new text begin Differential treatment. new text end

new text begin A nursing facility is not eligible to receive medical
assistance payments unless it refrains from providing differential treatment on the basis
of status with regard to public assistance.
new text end

new text begin Subd. 4. new text end

new text begin Discrimination. new text end

new text begin A nursing facility is not eligible to receive medical
assistance payments unless it refrains from discriminating in admissions, services offered,
or room assignment on the basis of status with regard to public assistance or refusal to
purchase special services. Admissions discrimination shall include, but is not limited to:
new text end

new text begin (1) basing admissions decisions upon assurance by the applicant to the nursing
facility, or the applicant's guardian or conservator, that the applicant is neither eligible for
nor will seek public assistance for payment of nursing facility care costs; and
new text end

new text begin (2) engaging in preferential selection from waiting lists based on an applicant's
ability to pay privately or an applicant's refusal to pay for a special service.
new text end

new text begin The collection and use by a nursing facility of financial information of any applicant
pursuant to a preadmission screening program established by law shall not raise an
inference that the nursing facility is utilizing that information for any purpose prohibited
by this subdivision.
new text end

new text begin Subd. 5. new text end

new text begin Kickbacks. new text end

new text begin A nursing facility is not eligible to receive medical assistance
payments unless it refrains from requiring any vendor of medical care as defined by
section 256B.02, subdivision 7, who is reimbursed by medical assistance under a separate
fee schedule, to pay any amount based on utilization or service levels or any portion of
the vendor's fee to the nursing facility except as payment for renting or leasing space or
equipment or purchasing support services from the nursing facility as limited by section
256R.54. All agreements must be disclosed to the commissioner upon request of the
commissioner. Nursing facilities and vendors of ancillary services that are found to be in
violation of this subdivision shall each be subject to an action by the state of Minnesota or
any of its subdivisions or agencies for treble civil damages on the portion of the fee in
excess of that allowed by this subdivision and section 256R.54. Damages awarded must
include three times the excess payments together with costs and disbursements including
reasonable attorney fees or their equivalent.
new text end

new text begin Subd. 6. new text end

new text begin Refusing readmissions. new text end

new text begin A nursing facility is not eligible to receive medical
assistance payments unless it refrains from refusing, for more than 24 hours, to accept a
resident returning to the same bed or a bed certified for the same level of care, in accordance
with a physician's order authorizing transfer, after receiving inpatient hospital services.
new text end

new text begin Subd. 7. new text end

new text begin Violations and penalties. new text end

new text begin For a period not to exceed 180 days, the
commissioner may continue to make medical assistance payments to a nursing facility
or boarding care home which is in violation of this section if extreme hardship to the
residents would result. In these cases the commissioner shall issue an order requiring the
nursing facility to correct the violation. The nursing facility shall have 20 days from its
receipt of the order to correct the violation. If the violation is not corrected within the
20-day period the commissioner may reduce the payment rate to the nursing facility
by up to 20 percent. The amount of the payment rate reduction shall be related to the
severity of the violation and shall remain in effect until the violation is corrected. The
nursing facility or boarding care home may appeal the commissioner's action pursuant to
the provisions of chapter 14 pertaining to contested cases. An appeal shall be considered
timely if written notice of appeal is received by the commissioner within 20 days of
notice of the commissioner's proposed action.
new text end

new text begin Subd. 8. new text end

new text begin Temporary reimbursement to facilities in violation of this section.
new text end

new text begin In the event that the commissioner determines that, due to a violation of this section, a
nursing facility is not eligible for reimbursement for a resident who is eligible for medical
assistance, the commissioner may authorize the nursing facility to receive reimbursement
on a temporary basis until the resident can be relocated to a participating nursing facility.
new text end

Sec. 5.

new text begin [256R.05] REQUIRED PRACTICES.
new text end

new text begin Subdivision 1. new text end

new text begin Preadmission screening. new text end

new text begin (a) Medical assistance reimbursement
for nursing facilities shall be authorized for a medical assistance recipient only if
a preadmission screening has been conducted prior to admission or the county has
authorized an exemption. Medical assistance reimbursement for nursing facilities shall
not be provided for any recipient who the local screener has determined does not meet the
level of care criteria for nursing facility placement in section 144.0724, subdivision 11, or,
if indicated, has not had a level II OBRA evaluation as required under the federal Omnibus
Budget Reconciliation Act of 1987, unless an admission for a recipient with mental illness
is approved by the local mental health authority or an admission for a recipient with
developmental disability is approved by the state developmental disability authority.
new text end

new text begin (b) The nursing facility must not bill a person who is not a medical assistance
recipient for resident days that preceded the date of completion of screening activities
as required under section 256.975, subdivisions 7a to 7c. The nursing facility must
include unreimbursed resident days in the nursing facility resident day totals reported to
the commissioner.
new text end

new text begin Subd. 2. new text end

new text begin Referrals to Medicare providers. new text end

new text begin (a) Notwithstanding sections 256R.04
and 256R.06, subdivisions 2 and 4, nursing facility providers that do not participate in
or accept Medicare assignment must refer and document the referral of dual eligible
recipients for whom placement is requested and for whom the resident would be qualified
for a Medicare-covered stay to Medicare providers. The commissioner shall audit nursing
facilities that do not accept Medicare and determine if dual eligible individuals with
Medicare qualifying stays have been admitted. If such a determination is made, the
commissioner shall deny Medicaid payment for the first 20 days of that resident's stay.
new text end

new text begin (b) A nursing facility that violates this subdivision is subject to section 256R.04,
subdivisions 7 and 8.
new text end

Sec. 6.

new text begin [256R.06] PRIVATE PAY RESIDENTS; REQUIRED PRACTICES.
new text end

new text begin Subdivision 1. new text end

new text begin Medical assistance rates not to exceed private pay residents'
rates.
new text end

new text begin (a) The total payment rate must not exceed the rate paid by private paying residents
for similar services for the same period.
new text end

new text begin (b) The medical assistance rate limitation in paragraph (a) shall not apply to
retroactive adjustments to the total payment rate established under this chapter unless the
facility was in violation of paragraph (a) prior to the retroactive rate adjustment.
new text end

new text begin Subd. 2. new text end

new text begin Private pay rates not to exceed medical assistance residents' rates. new text end

new text begin (a)
A nursing facility is not eligible to receive medical assistance payments unless it refrains
from charging private paying residents rates for similar services which exceed those which
are approved by the state agency for medical assistance recipients as determined by the
prospective desk audit rate. The nursing facility may (1) charge private paying residents a
higher rate for a private room, and (2) charge for special services which are not included
in the daily rate if medical assistance residents are charged separately at the same rate for
the same services in addition to the daily rate paid by the commissioner.
new text end

new text begin (b) Services covered by the payment rate must be the same regardless of payment
source.
new text end

new text begin (c) Special services, if offered, must:
new text end

new text begin (1) be available to all residents in all areas of the nursing facility;
new text end

new text begin (2) be charged separately at the same rate; and
new text end

new text begin (3) not include services which must be provided by the nursing facility in order to
comply with licensure or certification standards and that if not provided would result in a
deficiency or violation by the nursing facility. Services beyond those required to comply
with licensure or certification standards must not be charged separately as a special service
if they were included in the payment rate for the previous reporting period.
new text end

new text begin (d) Residents must be free to select or decline special services.
new text end

new text begin Subd. 3. new text end

new text begin Violations and penalties. new text end

new text begin A nursing facility that violates subdivision 2, 6,
or 7 is subject to section 256R.04, subdivisions 7 and 8.
new text end

new text begin Subd. 4. new text end

new text begin Civil penalties and procedures. new text end

new text begin A nursing facility that charges a private
paying resident a rate in violation of subdivision 2 is subject to an action by the state of
Minnesota or any of its subdivisions or agencies for civil damages. A private paying
resident or the resident's legal representative has a cause of action for civil damages against
a nursing facility that charges the resident rates in violation of subdivision 2. The damages
awarded shall include three times the payments that result from the violation, together with
costs and disbursements, including reasonable attorney fees or their equivalent. A private
paying resident or the resident's legal representative, the state, subdivision or agency, or a
nursing facility may request a hearing to determine the allowed rate or rates at issue in
the cause of action. Within 15 calendar days after receiving a request for such a hearing,
the commissioner shall request assignment of an administrative law judge under sections
14.48 to 14.56 to conduct the hearing as soon as possible or according to agreement by
the parties. The administrative law judge shall issue a report within 15 calendar days
following the close of the hearing. The prohibition set forth in subdivision 2 shall not
apply to facilities licensed as boarding care facilities which are not certified as skilled or
intermediate care facilities level I or II for reimbursement through medical assistance.
new text end

new text begin Subd. 5. new text end

new text begin Notice to residents. new text end

new text begin (a) No increase in nursing facility rates for private
paying residents shall be effective unless the nursing facility notifies the resident or person
responsible for payment of the increase in writing 30 days before the increase takes effect.
new text end

new text begin A nursing facility may adjust its rates without giving the notice required by this
subdivision when the purpose of the rate adjustment is to reflect a change in the case
mix classification of the resident.
new text end

new text begin If the state fails to set rates as required by section 256R.09, subdivision 1, the time
required for giving notice is decreased by the number of days by which the state was
late in setting the rates.
new text end

new text begin (b) If the state does not set rates by the date required in section 256R.09, subdivision
1, nursing facilities shall meet the requirement for advance notice by informing the
resident or person responsible for payments, on or before the effective date of the increase,
that a rate increase will be effective on that date.
new text end

new text begin If the exact amount has not yet been determined, the nursing facility may raise the
rates by the amount anticipated to be allowed. Any amounts collected from private pay
residents in excess of the allowable rate must be repaid to private pay residents with
interest at the rate used by the commissioner of revenue for the late payment of taxes and
in effect on the date the rate increase is effective.
new text end

new text begin Subd. 6. new text end

new text begin Refund of excess charges. new text end

new text begin Any nursing facility which has charged a
resident a rate for a case mix classification upon admission which is in excess of the rate
for the case mix classification established by the commissioner of health and effective on
the date of admission, must refund the amount charged in excess of that rate. Refunds
must be credited to the next monthly billing or refunded within 15 days of receipt of
the case mix classification notice from the Department of Health. Failure to refund the
excess charge is a violation of this section.
new text end

new text begin Subd. 7. new text end

new text begin Notification to a spouse or health care agent. new text end

new text begin (a) When a private pay
resident who has not yet been screened by the preadmission screening team is admitted to
a nursing facility or boarding care facility, the nursing facility or boarding care facility
must notify the resident and the resident's spouse or health care agent of the following:
new text end

new text begin (1) their right to retain certain resources under sections 256B.0575, 256B.058,
256B.059, 256B.0595, and 256B.14, subdivision 2; and
new text end

new text begin (2) that the federal Medicare hospital insurance benefits program covers posthospital
extended care services in a qualified skilled nursing facility for up to 100 days and that
there are several limitations on this benefit. The resident and the resident's family or
health care agent must be informed about all mechanisms to appeal limitations imposed
under this federal benefit program.
new text end

new text begin (b) This notice may be included in the nursing facility's or boarding care facility's
admission agreement and must clearly explain what resources the resident and spouse may
retain if the resident applies for medical assistance. The Department of Human Services
must notify nursing facilities and boarding care facilities of changes in the determination
of medical assistance eligibility that relate to resources retained by a resident and the
resident's spouse.
new text end

new text begin (c) The preadmission screening team has primary responsibility for informing all
private pay applicants to a nursing facility or boarding care facility of the resources the
resident and spouse may retain.
new text end

DATA COLLECTION AND REPORTING

Sec. 7.

new text begin [256R.07] ADEQUATE DOCUMENTATION.
new text end

new text begin Subdivision 1. new text end

new text begin Criteria. new text end

new text begin A nursing facility shall keep adequate documentation. In
order to be adequate, documentation must:
new text end

new text begin (1) be maintained in orderly, well-organized files;
new text end

new text begin (2) not include documentation of more than one nursing facility in one set of files
unless transactions may be traced by the commissioner to the nursing facility's annual
cost report;
new text end

new text begin (3) include a paid invoice or copy of a paid invoice with date of purchase, vendor
name and address, purchaser name and delivery destination address, listing of items or
services purchased, cost of items purchased, account number to which the cost is posted,
and a breakdown of any allocation of costs between accounts or nursing facilities. If any
of the information is not available, the nursing facility shall document its good faith
attempt to obtain the information;
new text end

new text begin (4) include contracts, agreements, amortization schedules, mortgages, other debt
instruments, and all other documents necessary to explain the nursing facility's costs or
revenues; and
new text end

new text begin (5) be retained by the nursing facility to support the five most recent annual cost
reports. The commissioner may extend the period of retention if the field audit was
postponed because of inadequate record keeping or accounting practices as in section
256R.13, subdivisions 2 and 4, the records are necessary to resolve a pending appeal, or
the records are required for the enforcement of sections 256R.04; 256R.05, subdivision
2; 256R.06, subdivisions 2, 6, and 7; 256R.08, subdivisions 1 to 3; and 256R.09,
subdivisions 3 and 4.
new text end

new text begin Subd. 2. new text end

new text begin Documentation of compensation. new text end

new text begin Compensation for personal services,
regardless of whether treated as identifiable costs or costs that are not identifiable, must be
documented on payroll records. Payrolls must be supported by time and attendance or
equivalent records for individual employees. Salaries and wages of employees which are
allocated to more than one cost category must be supported by time distribution records.
The method used must produce a proportional distribution of actual time spent, or an
accurate estimate of time spent performing assigned duties. The nursing facility that
chooses to estimate time spent must use a statistically valid method. The compensation
must reflect an amount proportionate to a full-time basis if the services are rendered on
less than a full-time basis.
new text end

new text begin Subd. 3. new text end

new text begin Adequate documentation supporting nursing facility payrolls. new text end

new text begin Payroll
records supporting compensation costs claimed by nursing facilities must be supported by
affirmative time and attendance records prepared by each individual at intervals of not
more than one month. The requirements of this subdivision are met when documentation
is provided under either clause (1) or (2) as follows:
new text end

new text begin (1) the affirmative time and attendance record must identify the individual's name;
the days worked during each pay period; the number of hours worked each day; and the
number of hours taken each day by the individual for vacation, sick, and other leave. The
affirmative time and attendance record must include a signed verification by the individual
and the individual's supervisor, if any, that the entries reported on the record are correct; or
new text end

new text begin (2) if the affirmative time and attendance records identifying the individual's name,
the days worked each pay period, the number of hours worked each day, and the number
of hours taken each day by the individual for vacation, sick, and other leave are placed
on microfilm, equipment must be made available for viewing and printing them, or if the
records are stored as automated data, summary data must be available for viewing and
printing.
new text end

new text begin Subd. 4. new text end

new text begin Documentation of mileage. new text end

new text begin Except for vehicles used exclusively for
nursing facility business, the nursing facility or related organization must maintain a
motor vehicle log that shows nursing facility mileage for the reporting period. Mileage
paid for the use of a personal vehicle must be documented.
new text end

new text begin Subd. 5. new text end

new text begin Records for cost allocations. new text end

new text begin Complete and orderly records must be
maintained for cost allocations made to cost categories.
new text end

Sec. 8.

new text begin [256R.08] REPORTING OF FINANCIAL STATEMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Reporting of financial statements. new text end

new text begin (a) No later than February 1 of
each year, a nursing facility shall:
new text end

new text begin (1) provide the state agency with a copy of its audited financial statements or
its working trial balance;
new text end

new text begin (2) provide the state agency with a statement of ownership for the facility;
new text end

new text begin (3) provide the state agency with separate, audited financial statements or working
trial balances for every other facility owned in whole or in part by an individual or entity
that has an ownership interest in the facility;
new text end

new text begin (4) upon request, provide the state agency with separate, audited financial statements
or working trial balances for every organization with which the facility conducts business
and which is owned in whole or in part by an individual or entity which has an ownership
interest in the facility;
new text end

new text begin (5) provide the state agency with copies of leases, purchase agreements, and other
documents related to the lease or purchase of the nursing facility; and
new text end

new text begin (6) upon request, provide the state agency with copies of leases, purchase
agreements, and other documents related to the acquisition of equipment, goods, and
services which are claimed as allowable costs.
new text end

new text begin (b) Audited financial statements submitted under paragraph (a) must include a
balance sheet, income statement, statement of the rate or rates charged to private paying
residents, statement of retained earnings, statement of cash flows, notes to the financial
statements, audited applicable supplemental information, and the public accountant's
report. Public accountants must conduct audits in accordance with chapter 326A. The cost
of an audit shall not be an allowable cost unless the nursing facility submits its audited
financial statements in the manner otherwise specified in this subdivision. A nursing
facility must permit access by the state agency to the public accountant's audit work papers
that support the audited financial statements submitted under paragraph (a).
new text end

new text begin (c) Documents or information provided to the state agency pursuant to this
subdivision shall be public.
new text end

new text begin (d) If the requirements of paragraphs (a) and (b) are not met, the reimbursement
rate may be reduced to 80 percent of the rate in effect on the first day of the fourth
calendar month after the close of the reporting period and the reduction shall continue
until the requirements are met.
new text end

new text begin Subd. 2. new text end

new text begin Extensions. new text end

new text begin The commissioner may grant up to a 15-day extension of the
reporting deadline to a nursing facility for good cause. To receive such an extension, a
nursing facility shall submit a written request by January 1. The commissioner shall notify
the nursing facility of the decision by January 15. Between January 1 and February 1,
the nursing facility may request a reporting extension for good cause by telephone and
followed by a written request.
new text end

new text begin Subd. 3. new text end

new text begin False reports. new text end

new text begin If a nursing facility knowingly supplies inaccurate or false
information in a required report that results in an overpayment, the commissioner shall:
new text end

new text begin (1) immediately adjust the nursing facility's payment rate to recover the entire
overpayment within the rate year;
new text end

new text begin (2) terminate the commissioner's agreement with the nursing facility;
new text end

new text begin (3) prosecute under applicable state or federal law; or
new text end

new text begin (4) use any combination of the foregoing actions.
new text end

new text begin Subd. 4. new text end

new text begin Violations and penalties. new text end

new text begin A nursing facility that violates this section is
subject to section 256R.04, subdivisions 7 and 8.
new text end

Sec. 9.

new text begin [256R.09] REPORTING OF STATISTICAL AND COST REPORTS.
new text end

new text begin Subdivision 1. new text end

new text begin Reporting timeline. new text end

new text begin Each nursing facility shall file a statistical and
cost report for the prior reporting period by February 1 in a form and manner specified by
the commissioner. Notice of rates shall be distributed by November 15.
new text end

new text begin Subd. 2. new text end

new text begin Reporting of statistical and cost information. new text end

new text begin All nursing facilities shall
provide information annually to the commissioner on a form and in a manner determined
by the commissioner. The commissioner may separately require facilities to submit in a
manner specified by the commissioner documentation of statistical and cost information
included in the report to ensure accuracy in establishing payment rates and to perform
audit and appeal review functions under this chapter. The commissioner may also require
nursing facilities to provide statistical and cost information for a subset of the items in
the annual report on a semiannual basis. Nursing facilities shall report only costs directly
related to the operation of the nursing facility. The facility shall not include costs which
are separately reimbursed by residents, medical assistance, or other payors. Allocations of
costs from central, affiliated, or corporate office and related organization transactions shall
be reported according to sections 256R.07, subdivision 3, and 256R.12, subdivisions 1 to
7. The commissioner shall not grant facilities extensions to the filing deadline.
new text end

new text begin Subd. 3. new text end

new text begin Record retention. new text end

new text begin Facilities shall retain all records necessary to document
statistical and cost information on the report for a period of no less than seven years.
The commissioner may amend information in the report according to section 256R.13,
subdivision 2. For computerized accounting systems, the records must include copies of
electronically generated media and technology to enable access to the records.
new text end

new text begin Subd. 4. new text end

new text begin Incomplete or inaccurate reports; reports not submitted in a timely
manner.
new text end

new text begin The commissioner may reject a report filed by a nursing facility under this section
if the commissioner determines that the report has been filed in a form that is incomplete
or inaccurate and the information is insufficient to establish accurate payment rates. In the
event that a complete report is not submitted in a timely manner, the commissioner shall
reduce the reimbursement payments to a nursing facility to 85 percent of amounts due
until the information is filed. The release of withheld payments shall be retroactive for
no more than 90 days. A nursing facility that does not submit a report or whose report is
filed in a timely manner but determined to be incomplete shall be given written notice that
a payment reduction is to be implemented and allowed ten days to complete the report
prior to any payment reduction. The commissioner may delay the payment withhold under
exceptional circumstances to be determined at the sole discretion of the commissioner.
new text end

new text begin Subd. 5. new text end

new text begin Method of accounting. new text end

new text begin The accrual method of accounting in accordance
with generally accepted accounting principles is the only method acceptable for purposes
of satisfying the reporting requirements of this chapter. If a governmentally owned nursing
facility demonstrates that the accrual method of accounting is not applicable to its accounts
and that a cash or modified accrual method of accounting more accurately reports the
nursing facility's financial operations, the commissioner shall permit the governmentally
owned nursing facility to use a cash or modified accrual method of accounting.
new text end

new text begin Subd. 6. new text end

new text begin Amending statistical and cost information. new text end

new text begin (a) Nursing facilities may,
within 12 months of the due date of a statistical and cost report, file an amendment
when errors or omissions in the annual statistical and cost report are discovered and
an amendment would result in a rate increase of at least 0.15 percent of the statewide
weighted average operating payment rate and shall, at any time, file an amendment which
would result in a rate reduction of at least 0.15 percent of the statewide weighted average
operating payment rate.
new text end

new text begin (b) The commissioner must calculate the statewide average operating payment
rate as follows:
new text end

new text begin (1) for each nursing facility reimbursed under this chapter, multiply the number of
resident days in each case mix classification the facility has billed to the commissioner
under this chapter during the previous reporting year by the facility's corresponding case
mix adjusted total payment rates;
new text end

new text begin (2) sum the results of clause (1) for all facilities reimbursed under this chapter;
new text end

new text begin (3) calculate the total number of resident days billed by all nursing facilities
reimbursed under this chapter during the previous reporting year; and
new text end

new text begin (4) divide the result of clause (2) by the result of clause (3).
new text end

new text begin (c) The commissioner shall make retroactive adjustments to the total payment rate of
a nursing facility if an amendment is accepted. When a retroactive adjustment is made as a
result of an amended report, audit findings, or other determination of an incorrect payment
rate, the commissioner may settle the payment error through a negotiated agreement with
the facility and a gross adjustment of the payments to the facility. Retroactive adjustments
shall not be applied to private pay residents. An error or omission for purposes of this
subdivision does not include a nursing facility's determination that an election between
permissible alternatives was not advantageous and should be changed.
new text end

new text begin Subd. 7. new text end

new text begin Reporting of false statistical and cost information. new text end

new text begin If the commissioner
determines that a nursing facility knowingly supplied inaccurate or false information
or failed to file an amendment to a statistical and cost report that resulted in or would
result in an overpayment, the commissioner shall immediately adjust the nursing facility's
payment rate and recover the entire overpayment. The commissioner may also terminate
the commissioner's agreement with the nursing facility and prosecute under applicable
state or federal law.
new text end

Sec. 10.

new text begin [256R.10] ALLOWED COSTS.
new text end

new text begin Subdivision 1. new text end

new text begin General cost principles. new text end

new text begin Only costs determined to be allowable
shall be used to compute the total payment rate for nursing facilities participating in the
medical assistance program. To be considered an allowable cost for rate-setting purposes,
a cost must satisfy the following criteria:
new text end

new text begin (1) the cost is ordinary, necessary, and related to resident care;
new text end

new text begin (2) the cost is what a prudent and cost-conscious business person would pay for the
specific good or service in the open market in an arm's-length transaction;
new text end

new text begin (3) the cost is for goods or services actually provided in the nursing facility;
new text end

new text begin (4) the cost effects of transactions that have the effect of circumventing this chapter
are not allowable under the principle that the substance of the transaction shall prevail
over form; and
new text end

new text begin (5) costs that are incurred due to management inefficiency, unnecessary care or
facilities, agreements not to compete, or activities not commonly accepted in the nursing
facility care field are not allowable.
new text end

new text begin Subd. 2. new text end

new text begin Employees represented by a collective bargaining agent. new text end

new text begin (a) For
facilities where employees are represented by collective bargaining agents, costs related
to the salaries and wages, payroll taxes, and employer's share of fringe benefit costs,
except employer health insurance costs, for facility employees who are members of the
bargaining unit are allowed costs only if:
new text end

new text begin (1) these costs are incurred pursuant to a collective bargaining agreement. The
commissioner shall allow a collective bargaining agent until March 1 following the date on
which the cost report was required to be submitted to notify the commissioner if a collective
bargaining agreement, effective on the last day of the reporting period, was not in effect; or
new text end

new text begin (2) the collective bargaining agent notifies the commissioner by October 1 following
the date on which the cost report was required to be submitted that these costs are
incurred pursuant to an agreement or understanding between the facility and the collective
bargaining agent.
new text end

new text begin (b) In any year when a portion of a facility's reported costs are not allowed costs
under paragraph (a), when calculating the operating payment rate for the facility, the
commissioner shall use the facility's allowed costs from the facility's second most recent
cost report in place of the nonallowed costs. For the purpose of setting the other operating
payment rate under section 256R.24, subdivision 3, the commissioner shall reduce the
other operating payment rate by the difference between the nonallowed costs and the
allowed costs from the facility's second most recent cost report.
new text end

new text begin Subd. 3. new text end

new text begin Employer sponsored retirement plans. new text end

new text begin In addition to the approved
pension or profit-sharing plans allowed by Minnesota Rules, parts 9549.0010 to
9549.0080, the commissioner shall allow those plans specified in Internal Revenue Code,
sections 403(b) and 408(k).
new text end

new text begin Subd. 4. new text end

new text begin Workers' compensation insurance costs. new text end

new text begin The commissioner shall allow
as workers' compensation insurance costs under section 256R.02, subdivision 22, the costs
of workers' compensation coverage obtained under the following conditions:
new text end

new text begin (1) a plan approved by the commissioner of commerce as a Minnesota group or
individual self-insurance plan as provided in section 79A.03;
new text end

new text begin (2) a plan in which:
new text end

new text begin (i) the nursing facility, directly or indirectly, purchases workers' compensation
coverage in compliance with section 176.181, subdivision 2, from an authorized insurance
carrier;
new text end

new text begin (ii) a related organization to the nursing facility reinsures the workers' compensation
coverage purchased, directly or indirectly, by the nursing facility; and
new text end

new text begin (iii) all of the conditions in clause (4) are met;
new text end

new text begin (3) a plan in which:
new text end

new text begin (i) the nursing facility, directly or indirectly, purchases workers' compensation
coverage in compliance with section 176.181, subdivision 2, from an authorized insurance
carrier;
new text end

new text begin (ii) the insurance premium is calculated retrospectively, including a maximum
premium limit, and paid using the paid loss retro method; and
new text end

new text begin (iii) all of the conditions in clause (4) are met;
new text end

new text begin (4) additional conditions are:
new text end

new text begin (i) the costs of the plan are allowable under the federal Medicare program;
new text end

new text begin (ii) the reserves for the plan are maintained in an account controlled and administered
by a person which is not a related organization to the nursing facility;
new text end

new text begin (iii) the reserves for the plan cannot be used, directly or indirectly, as collateral
for debts incurred or other obligations of the nursing facility or related organizations to
the nursing facility;
new text end

new text begin (iv) if the plan provides workers' compensation coverage for non-Minnesota nursing
facilities, the plan's cost methodology must be consistent among all nursing facilities
covered by the plan, and if reasonable, is allowed notwithstanding any reimbursement
laws regarding cost allocation to the contrary;
new text end

new text begin (v) central, affiliated, corporate, or nursing facility costs related to their
administration of the plan are costs which must remain in the nursing facility's
administrative cost category and must not be allocated to other cost categories;
new text end

new text begin (vi) required security deposits, whether in the form of cash, investments, securities,
assets, letters of credit, or in any other form are not allowable costs for purposes of
establishing the facility's payment rate; and
new text end

new text begin (vii) a group of nursing facilities related by common ownership that self-insures
workers' compensation may allocate its directly identified costs of self-insuring its
Minnesota nursing facility workers among those nursing facilities in the group that are
reimbursed under this chapter. The method of cost allocation shall be based on the ratio
of each nursing facility's total allowable salaries and wages to that of the nursing facility
group's total allowable salaries and wages, then similarly allocated within each nursing
facility's operating cost categories. The costs associated with the administration of the
group's self-insurance plan must remain classified in the nursing facility's administrative
cost category. A written request of the nursing facility group's election to use this alternate
method of allocation of self-insurance costs must be received by the commissioner no
later than May 1, 1998, to take effect July 1, 1998, or such costs shall continue to be
allocated under the existing cost allocation methods. Once a nursing facility group elects
this method of cost allocation for its workers' compensation self-insurance costs, it shall
remain in effect until such time as the group no longer self-insures these costs;
new text end

new text begin (5) any costs allowed pursuant to clauses (1) to (3) are subject to the following
requirements:
new text end

new text begin (i) if the nursing facility is sold or otherwise ceases operations, the plan's reserves
must be subject to an actuarially based settle up after 36 months from the date of sale or
the date on which operations ceased. The facility's medical assistance portion of the
total excess plan reserves must be paid to the state within 30 days following the date on
which excess plan reserves are determined;
new text end

new text begin (ii) any distribution of excess plan reserves made to or withdrawals made by the
nursing facility or a related organization are applicable credits and must be used to reduce
the nursing facility's workers' compensation insurance costs in the reporting period in
which a distribution or withdrawal is received;
new text end

new text begin (iii) if reimbursement for the plan is sought under the federal Medicare program,
and is audited pursuant to the Medicare program, the nursing facility must provide a copy
of Medicare's final audit report, including attachments and exhibits, to the commissioner
within 30 days of receipt by the nursing facility or any related organization. The
commissioner shall implement the audit findings associated with the plan upon receipt of
Medicare's final audit report. The department's authority to implement the audit findings is
independent of its authority to conduct a field audit.
new text end

new text begin Subd. 5. new text end

new text begin Salaries and wages. new text end

new text begin Salaries and wages must be paid within 30 days of
the end of the reporting period in order to be allowable costs of the reporting period.
new text end

new text begin Subd. 6. new text end

new text begin Applicable credits. new text end

new text begin Applicable credits must be used to offset or reduce the
expenses of the nursing facility to the extent that the cost to which the credits apply was
claimed as a nursing facility cost. Interest income, dividend income, and other investment
income of the nursing facility or related organization are not applicable credits except to
the extent that the interest expense on working capital debt is incurred and claimed as a
reimbursable expense by the nursing facility or related organization.
new text end

Sec. 11.

new text begin [256R.11] NONALLOWED COSTS.
new text end

new text begin Subdivision 1. new text end

new text begin Generally. new text end

new text begin (a) The following costs shall not be recognized as
allowable:
new text end

new text begin (1) political contributions;
new text end

new text begin (2) salaries or expenses of a lobbyist, as defined in section 10A.01, subdivision
21, for lobbying activities;
new text end

new text begin (3) advertising designed to encourage potential residents to select a particular
nursing facility;
new text end

new text begin (4) assessments levied by the commissioner of health for uncorrected violations;
new text end

new text begin (5) legal and related expenses for unsuccessful challenges to decisions by
governmental agencies;
new text end

new text begin (6) memberships in sports, health or similar social clubs or organizations;
new text end

new text begin (7) costs incurred for activities directly related to influencing employees with respect
to unionization; and
new text end

new text begin (8) costs of providing services which are billed separately from the nursing facility's
payment rate or pursuant to Minnesota Rules, parts 9505.0170 to 9505.0475.
new text end

new text begin (b) The commissioner shall by rule exclude the costs of any other items not directly
related to the provision of resident care.
new text end

new text begin Subd. 2. new text end

new text begin Collective bargaining. new text end

new text begin Costs incurred for any activities which are directed
at or are intended to influence or dissuade employees in the exercise of their legal rights to
freely engage in the process of selecting an exclusive representative for the purpose of
collective bargaining with their employer shall not be allowable for purposes of setting
payment rates.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin The grant of rulemaking authority to the commissioner
of human services in this section is a continuation of authority previously granted in
Minnesota Statutes, section 256B.47, subdivision 1.
new text end

Sec. 12.

new text begin [256R.12] COST ALLOCATION.
new text end

new text begin Subdivision 1. new text end

new text begin Allocation; direct identification of costs; management agreement.
new text end

new text begin All costs that can be directly identified with a specific nursing facility that is a related
organization to the central, affiliated, or corporate office, or that is controlled by the
central, affiliated, or corporate office under a management agreement, must be allocated to
that nursing facility.
new text end

new text begin Subd. 2. new text end

new text begin Allocation; direct identification of costs to other activities. new text end

new text begin All costs that
can be directly identified with any other activity or function not described in subdivision 1
must be allocated to that activity or function.
new text end

new text begin Subd. 3. new text end

new text begin Cost allocation on a functional basis. new text end

new text begin (a) Costs that have not been
directly identified must be allocated to nursing facilities on a basis designed to equitably
allocate the costs to the nursing facilities or activities receiving the benefits of the costs.
This allocation must be made in a manner reasonably related to the services received by
the nursing facilities. Where practical and the amounts are material, these costs must be
allocated on a functional basis. The functions, or cost centers used to allocate central
office costs, and the unit bases used to allocate the costs, including those central office
costs allocated according to subdivision 4, must be used consistently from one central
office accounting period to another.
new text end

new text begin (b) If the central office wishes to change its allocation bases and believes the change
will result in more appropriate and more accurate allocations, the central office must make
a written request, with its justification, to the commissioner for approval of the change no
later than 120 days after the beginning of the central office accounting period to which
the change is to apply. The commissioner's approval of a central office request must be
furnished to the central office in writing. Where the commissioner approves the central
office request, the change must be applied to the accounting period for which the request
was made, and to all subsequent central office accounting periods unless the commissioner
approves a subsequent request for change by the central office. The effective date of the
change will be the beginning of the accounting period for which the request was made.
new text end

new text begin Subd. 4. new text end

new text begin Allocation of remaining costs; allocation ratio. new text end

new text begin (a) After the costs that can
be directly identified according to subdivisions 1 and 2 have been allocated, the remaining
central, affiliated, or corporate office costs must be allocated between the nursing facility
operations and the other activities or facilities unrelated to the nursing facility operations
based on the ratio of total operating costs. However, in the event that these remaining
costs are partially attributable to the start-up of home and community-based services
intended to fill a gap identified by the local agency, the facility may assign these remaining
costs to the appropriate cost category of the facility for a period not to exceed two years.
new text end

new text begin (b) For purposes of allocating these remaining central, affiliated, or corporate office
costs, the numerator for the allocation ratio is determined as follows:
new text end

new text begin (1) for nursing facilities that are related organizations or are controlled by a central,
affiliated, or corporate office under a management agreement, the numerator of the
allocation ratio is equal to the sum of the total operating costs incurred by each related
organization or controlled nursing facility;
new text end

new text begin (2) for a central, affiliated, or corporate office providing goods or services to related
organizations that are not nursing facilities, the numerator of the allocation ratio is equal to
the sum of the total operating costs incurred by the nonnursing facility related organizations;
new text end

new text begin (3) for a central, affiliated, or corporate office providing goods or services to
unrelated nursing facilities under a consulting agreement, the numerator of the allocation
ratio is equal to the greater of directly identified central, affiliated, or corporate costs or
the contracted amount; or
new text end

new text begin (4) for business activities that involve the providing of goods or services to unrelated
parties which are not nursing facilities, the numerator of the allocation ratio is equal to the
greater of directly identified costs or revenues generated by the activity or function.
new text end

new text begin (c) The denominator for the allocation ratio is the sum of the numerators in
paragraph (b), clauses (1) to (4).
new text end

new text begin Subd. 5. new text end

new text begin Cost allocation between nursing facilities. new text end

new text begin (a) Nursing operations that
have nursing facilities in Minnesota and comparable facilities outside of Minnesota must
allocate the nursing operation's central, affiliated, or corporate office costs identified
in subdivision 4 to Minnesota, based on the ratio of the sum of the nursing operation's
resident days in Minnesota nursing facilities to the sum of the nursing operation's resident
days in all its facilities.
new text end

new text begin (b) The Minnesota nursing operation's central, affiliated, or corporate office costs
identified in paragraph (a) must be allocated to each Minnesota nursing facility on the
basis of resident days.
new text end

new text begin Subd. 6. new text end

new text begin Related organization costs. new text end

new text begin (a) Costs applicable to services, capital
assets, and supplies directly or indirectly furnished to the nursing facility by any related
organization are includable in the allowable cost of the nursing facility at the purchase
price paid by the related organization for capital assets or supplies and at the cost incurred
by the related organization for the provision of services to the nursing facility if these
prices or costs do not exceed the price of comparable services, capital assets, or supplies
that could be purchased elsewhere. For this purpose, the related organization's costs must
not include an amount for markup or profit.
new text end

new text begin (b) If the related organization in the normal course of business sells services, capital
assets, or supplies to nonrelated organizations, the cost to the nursing facility is the
nonrelated organization's price provided that sales to nonrelated organizations constitute at
least 50 percent of total annual sales of similar services, capital assets, or supplies.
new text end

new text begin (c) The cost of ownership of a capital asset used by the nursing facility must be
included in the allowable cost of the nursing facility even though it is owned by a related
organization.
new text end

new text begin Subd. 7. new text end

new text begin Receiverships. new text end

new text begin This section does not apply to payment rates determined
under sections 245A.12, 245A.13, and 256R.52, except that any additional directly
identified costs associated with the Department of Human Services' or the Department
of Health's managing agent under a receivership agreement must be allocated to the
facility under receivership, and are nonallowable costs to the managing agent on the
facility's cost reports.
new text end

new text begin Subd. 8. new text end

new text begin Allocation of costs for therapy services; non-hospital-attached
facilities.
new text end

new text begin (a) To ensure the avoidance of double payments as required by section 256R.54,
the direct and indirect reporting period costs of providing residents of nursing facilities
that are not hospital attached with therapy services that are billed separately from the
nursing facility payment rate or according to Minnesota Rules, parts 9505.0170 to
9505.0475, must be determined and deducted from the appropriate cost categories of the
annual cost report according to paragraphs (b) to (g).
new text end

new text begin (b) The costs of wages and salaries for employees providing or participating in
providing and consultants providing services shall be allocated to the therapy service
based on direct identification.
new text end

new text begin (c) The costs of fringe benefits and payroll taxes relating to the costs in paragraph (b)
must be allocated to the therapy service based on direct identification or the ratio of total
costs in paragraph (b) to the sum of total allowable salaries and the costs in paragraph (b).
new text end

new text begin (d) The costs of housekeeping, plant operations and maintenance, real estate taxes,
special assessments, and insurance, other than the amounts classified as a fringe benefit,
must be allocated to the therapy service based on the ratio of service area square footage
to total facility square footage.
new text end

new text begin (e) The costs of bookkeeping and medical records must be allocated to the therapy
service either by the method in paragraph (f) or based on direct identification. Direct
identification may be used if adequate documentation is provided to, and accepted by,
the commissioner.
new text end

new text begin (f) The costs of administrators, bookkeeping, and medical records salaries, except
as provided in paragraph (e), must be allocated to the therapy service based on the ratio
of the total costs in paragraphs (b) to (e) to the sum of total allowable nursing facility
costs and the costs in paragraphs (b) to (e).
new text end

new text begin (g) The cost of property must be allocated to the therapy service and removed from
the nursing facility's property-related payment rate, based on the ratio of service area square
footage to total facility square footage multiplied by the property-related payment rate.
new text end

new text begin Subd. 9. new text end

new text begin Allocation of costs for therapy services; hospital-attached facilities.
new text end

new text begin To ensure the avoidance of double payments as required by section 256R.54, the direct
and indirect reporting period costs of providing therapy services to residents of a
hospital-attached nursing facility, when the services are billed separately from the nursing
facility's payment rate or according to Minnesota Rules, parts 9505.0170 to 9505.0475,
must be determined and deducted from the appropriate cost categories of the annual cost
report based on the Medicare step-down as prepared in accordance with instructions
provided by the commissioner.
new text end

new text begin Subd. 10. new text end

new text begin Allocation of self-insurance costs. new text end

new text begin For the rate year beginning on July 1,
1998, a group of nursing facilities related by common ownership that self-insures group
health, dental, or life insurance may allocate its directly identified costs of self-insuring its
Minnesota nursing facility workers among those nursing facilities in the group that are
reimbursed under this chapter. The method of cost allocation shall be based on the ratio
of each nursing facility's total allowable salaries and wages to that of the nursing facility
group's total allowable salaries and wages, then similarly allocated within each nursing
facility's operating cost categories. The costs associated with the administration of the
group's self-insurance plan must remain classified in the nursing facility's administrative
cost category. A written request of the nursing facility group's election to use this alternate
method of allocation of self-insurance costs must be received by the commissioner no later
than May 1, 1998, to take effect July 1, 1998, or those self-insurance costs shall continue to
be allocated under the existing cost allocation methods. Once a nursing facility group elects
this method of cost allocation for its group health, dental, or life insurance self-insurance
costs, it shall remain in effect until such time as the group no longer self-insures these costs.
new text end

Sec. 13.

new text begin [256R.13] AUDITING REQUIREMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Audit authority. new text end

new text begin (a) The commissioner shall provide for an audit
of the cost and statistical data of nursing facilities participating as vendors of medical
assistance. The commissioner shall select for audit at least 15 percent of the nursing
facilities' data reported at random or using factors including, but not limited to: data
reported to the public as criteria for rating nursing facilities; data used to set limits for
other medical assistance programs or vendors of services to nursing facilities; change
in ownership; frequent changes in administration in excess of normal turnover rates;
complaints to the commissioner of health about care, safety, or rights; where previous
inspections or reinspections under section 144A.10 have resulted in correction orders
related to care, safety, or rights; or where persons involved in ownership or administration
of the facility have been indicted for alleged criminal activity.
new text end

new text begin (b) The commissioner shall meet the 15 percent requirement by either conducting an
audit focused on an individual nursing facility, a group of facilities, or targeting specific
data categories in multiple nursing facilities. These audits may be conducted on site
at the nursing facility, at office space used by a nursing facility or a nursing facility's
parent organization, or at the commissioner's office. Data being audited may be collected
electronically, in person, or by any other means the commissioner finds acceptable.
new text end

new text begin Subd. 2. new text end

new text begin Desk and field audits of statistical and cost reports. new text end

new text begin (a) The
commissioner may subject reports and supporting documentation to desk and field audits
to determine compliance with this chapter. Retroactive adjustments shall be made as
a result of desk or field audit findings if the cumulative impact of the finding would
result in a rate adjustment of at least 0.15 percent of the statewide weighted average
operating payment rate as determined in section 256R.09, subdivision 6. If a field audit
reveals inadequacies in a nursing facility's record keeping or accounting practices, the
commissioner may require the nursing facility to engage competent professional assistance
to correct those inadequacies within 90 days so that the field audit may proceed.
new text end

new text begin (b) Field audits may cover the four most recent annual statistical and cost reports for
which desk audits have been completed and payment rates have been established. The
field audit must be an independent review of the nursing facility's statistical and cost
report. All transactions, invoices, or other documentation that support or relate to the
statistics and costs claimed on the annual statistical and cost reports are subject to review
by the field auditor. If the provider fails to provide the field auditor access to supporting
documentation related to the information reported on the statistical and cost report within
the time period specified by the commissioner, the commissioner shall calculate the total
payment rate by disallowing the cost of the items for which access to the supporting
documentation is not provided.
new text end

new text begin (c) Changes in the total payment rate which result from desk or field audit adjustments
to statistical and cost reports for reporting periods earlier than the four most recent annual
cost reports must be made to the four most recent annual statistical and cost reports, the
current statistical and cost report, and future statistical and cost reports to the extent that
those adjustments affect the total payment rate established by those reporting years.
new text end

new text begin Subd. 3. new text end

new text begin Audit adjustments. new text end

new text begin If the commissioner requests supporting
documentation during an audit for an item of cost reported by a nursing facility, and
the nursing facility's response does not adequately document the item of cost, the
commissioner may make reasoned assumptions considered appropriate in the absence of
the requested documentation to reasonably establish a payment rate rather than disallow the
entire item of cost. This subdivision shall not diminish the nursing facility's appeal rights.
new text end

new text begin Subd. 4. new text end

new text begin Extended record retention requirements. new text end

new text begin The commissioner shall extend
the period for retention of records under section 256R.09, subdivision 3, for purposes of
performing field audits as necessary to enforce sections 256R.04; 256R.05, subdivision
2; 256R.06, subdivisions 2, 6, and 7; 256R.08, subdivisions 1 to 3; and 256R.09,
subdivisions 3 and 4, with written notice to the facility postmarked no later than 90 days
prior to the expiration of the record retention requirement.
new text end

Sec. 14.

new text begin [256R.16] QUALITY OF CARE.
new text end

new text begin Subdivision 1. new text end

new text begin Calculation of a quality score. new text end

new text begin (a) The commissioner shall
determine a quality score for each nursing facility using quality measures established in
section 256B.439, according to methods determined by the commissioner in consultation
with stakeholders and experts, and using the most recently available data as provided in
the Minnesota Nursing Home Report Card. These methods shall be exempt from the
rulemaking requirements under chapter 14.
new text end

new text begin (b) For each quality measure, a score shall be determined with the number of points
assigned as determined by the commissioner using the methodology established according
to this subdivision. The determination of the quality measures to be used and the methods
of calculating scores may be revised annually by the commissioner.
new text end

new text begin (c) The quality score shall include up to 50 points related to the Minnesota quality
indicators score derived from the minimum data set, up to 40 points related to the resident
quality of life score derived from the consumer survey conducted under section 256B.439,
subdivision 3, and up to ten points related to the state inspection results score.
new text end

new text begin (d) The commissioner, in cooperation with the commissioner of health, may adjust
the formula in paragraph (c), or the methodology for computing the total quality score,
effective July 1 of any year, with five months advance public notice. In changing the
formula, the commissioner shall consider quality measure priorities registered by report
card users, advice of stakeholders, and available research.
new text end

new text begin Subd. 2. new text end

new text begin Monitoring quality of care. new text end

new text begin If an annual cost report or field audit indicates
that expenditures for direct resident care have been reduced in amounts large enough to
indicate a possible detrimental effect on the quality of care, the commissioner shall notify
the commissioner of health.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Subdivision 1, paragraph (d), is effective February 1, 2017.
new text end

Sec. 15.

new text begin [256R.17] CASE MIX.
new text end

new text begin Subdivision 1. new text end

new text begin Case mix classifications. new text end

new text begin The case mix classifications shall be
those established under section 144.0724.
new text end

new text begin Subd. 2. new text end

new text begin Case mix indices. new text end

new text begin (a) The commissioner shall assign a case mix index to
each case mix classification based on the Centers for Medicare and Medicaid Services
staff time measurement study.
new text end

new text begin (b) An index maximization approach shall be used to classify residents. "Index
maximization" has the meaning given in section 144.0724, subdivision 2, paragraph (c).
new text end

new text begin Subd. 3. new text end

new text begin Resident assessment schedule. new text end

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

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

new text begin Subd. 4. new text end

new text begin Notice of resident reimbursement case mix classification. new text end

new text begin Nursing
facilities shall provide notice to a resident of the resident's case mix classification
according to procedures established by the commissioner of health under section
144.0724, subdivision 7.
new text end

new text begin Subd. 5. new text end

new text begin Reconsideration of resident case mix classification. new text end

new text begin Any request for
reconsideration of a resident case mix classification must be made under section 144.0724,
subdivision 8.
new text end

RATE STRUCTURE/RATE CALCULATION

Sec. 16.

new text begin [256R.21] TOTAL PAYMENT RATE.
new text end

new text begin Subdivision 1. new text end

new text begin Total payment rates. new text end

new text begin For each facility, the commissioner shall
calculate a total payment rate using the statistical and cost report filed by each nursing
facility for the reporting period ending 15 months prior to the rate year.
new text end

new text begin The total payment rates are the total payment rates in effect on the first day of the
rate year, unless another date is specified.
new text end

new text begin Subd. 2. new text end

new text begin Determination of total care-related payment rates. new text end

new text begin A facility's total
care-related payment rate is the sum of:
new text end

new text begin (1) its direct care payment rate as determined in section 256R.23, subdivision 7; and
new text end

new text begin (2) its other care-related payment rate as determined in section 256R.23, subdivision
8.
new text end

new text begin A facility's total care-related payment rate is its total care-related payment rate
associated with a case mix index of 1.00.
new text end

new text begin Subd. 3. new text end

new text begin Determination of operating payment rates. new text end

new text begin A facility's operating
payment rate is the sum of:
new text end

new text begin (1) its total care-related payment rate as determined in subdivision 2; and
new text end

new text begin (2) its other operating payment rate as determined in section 256R.24.
new text end

new text begin A facility's operating payment rate is its operating payment rate associated with a
case mix index of 1.00.
new text end

new text begin Subd. 4. new text end

new text begin Determination of total payment rates. new text end

new text begin A facility's total payment rate
is the sum of:
new text end

new text begin (1) its operating payment rate as determined in subdivision 3;
new text end

new text begin (2) its external fixed costs payment rate as determined in section 256R.25; and
new text end

new text begin (3) its property payment rate as determined in section 256R.26.
new text end

new text begin A facility's total payment rate is its total payment rate associated with a case mix
index of 1.00.
new text end

Sec. 17.

new text begin [256R.22] CASE MIX ADJUSTED TOTAL PAYMENT RATE.
new text end

new text begin Subdivision 1. new text end

new text begin Case mix adjusted payment rates generally. new text end

new text begin For each facility,
the commissioner shall calculate case mix adjusted payment rates for each case mix
classification.
new text end

new text begin Subd. 2. new text end

new text begin Determination of case mix adjusted total care-related payment
rates.
new text end

new text begin A facility's case mix adjusted total care-related payment rate for each case mix
classification is the sum of:
new text end

new text begin (1) its direct care payment rate as determined in section 256R.23, subdivision 7,
multiplied by the case mix index; and
new text end

new text begin (2) its other care-related payment rate as determined in section 256R.23, subdivision
8.
new text end

new text begin Subd. 3. new text end

new text begin Determination of case mix adjusted operating payment rates. new text end

new text begin A
facility's case mix adjusted operating payment rate for each case mix classification is
the sum of:
new text end

new text begin (1) its case mix adjusted total care-related payment rate as determined in subdivision
2; and
new text end

new text begin (2) its other operating payment rate as determined in section 256R.24.
new text end

new text begin Subd. 4. new text end

new text begin Determination of case mix adjusted total payment rates. new text end

new text begin A facility's
case mix adjusted total payment rate for each case mix classification is the sum of:
new text end

new text begin (1) its case mix adjusted operating payment rate as determined in subdivision 3;
new text end

new text begin (2) its external fixed costs payment rate as determined in section 256R.25; and
new text end

new text begin (3) its property payment rate as determined in section 256R.26.
new text end

Sec. 18.

new text begin [256R.23] TOTAL CARE-RELATED PAYMENT RATES.
new text end

new text begin Subdivision 1. new text end

new text begin Determination of total care-related cost per day. new text end

new text begin Each facility's
total care-related cost per day is the sum of its direct care cost per standardized day and
its other care-related cost per resident day.
new text end

new text begin Subd. 2. new text end

new text begin Calculation of direct care cost per standardized day. new text end

new text begin Each facility's
direct care cost per standardized day is the facility's direct care costs divided by the sum of
the facility's standardized days. A facility's direct care cost per standardized day is the
facility's cost per day for direct care services associated with a case mix index of 1.00.
new text end

new text begin Subd. 3. new text end

new text begin Calculation of other care-related cost per resident day. new text end

new text begin Each facility's
other care-related cost per resident day is its other care-related costs, divided by the sum
of the facility's resident days.
new text end

new text begin Subd. 4. new text end

new text begin Determination of the median total care-related cost per day. new text end

new text begin The
commissioner must determine the median total care-related cost per day using the cost
reports from nursing facilities in Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and
Washington Counties.
new text end

new text begin Subd. 5. new text end

new text begin Determination of total care-related payment rate limits. new text end

new text begin The
commissioner must determine each facility's total care-related payment rate limit by:
new text end

new text begin (1) multiplying the facility's quality score, as determined under section 256R.16,
subdivision 1, by 0.5625;
new text end

new text begin (2) adding 89.375 to the amount determined in clause (1), and dividing the total by
100; and
new text end

new text begin (3) multiplying the amount determined in clause (2) by the median total care-related
cost per day.
new text end

new text begin Subd. 6. new text end

new text begin Payment rate limit reduction. new text end

new text begin No facility shall be subject in any rate year
to a care-related payment rate limit reduction greater than five percent of the median
determined in subdivision 4.
new text end

new text begin Subd. 7. new text end

new text begin Determination of direct care payment rates. new text end

new text begin A facility's direct care
payment rate equals the lesser of (1) the facility's direct care costs per standardized day, or
(2) the facility's direct care costs per standardized day divided by its cost to limit ratio.
new text end

new text begin Subd. 8. new text end

new text begin Determination of other care-related payment rates. new text end

new text begin A facility's other
care-related payment rate equals the lesser of (1) the facility's other care-related cost per
resident day, or (2) the facility's other care-related cost per resident day divided by its
cost to limit ratio.
new text end

new text begin Subd. 9. new text end

new text begin Determination of total care-related payment rates. new text end

new text begin A facility's total
care-related payment rate is the sum of its direct care payment rate as determined in
subdivision 7 and its other care-related payment rate as determined in subdivision 8.
new text end

Sec. 19.

new text begin [256R.24] OTHER OPERATING PAYMENT RATE.
new text end

new text begin Subdivision 1. new text end

new text begin Determination of other operating cost per day. new text end

new text begin Each facility's
other operating cost per day is its other operating costs divided by the sum of the facility's
resident days.
new text end

new text begin Subd. 2. new text end

new text begin Determination of the median other operating cost per day. new text end

new text begin The
commissioner must determine the median other operating cost per day using the cost
reports from nursing facilities in Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and
Washington Counties.
new text end

new text begin Subd. 3. new text end

new text begin Determination of the other operating payment rate. new text end

new text begin A facility's other
operating payment rate equals 105 percent of the median other operating cost per day.
new text end

Sec. 20.

new text begin [256R.25] EXTERNAL FIXED COSTS PAYMENT RATE.
new text end

new text begin (a) The payment rate for external fixed costs is the sum of the amounts in paragraphs
(b) to (m).
new text end

new text begin (b) For a facility licensed as a nursing home, the portion related to the provider
surcharge under section 256.9657 is equal to $8.86 per resident day. For a facility licensed
as both a nursing home and a boarding care home, the portion related to the provider
surcharge under section 256.9657 is equal to $8.86 per resident day multiplied by the
result of its number of nursing home beds divided by its total number of licensed beds.
new text end

new text begin (c) The portion related to the licensure fee under section 144.122, paragraph (d), is
the amount of the fee divided by the sum of the facility's resident days.
new text end

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

new text begin (e) The portion related to scholarships is determined under section 256R.37.
new text end

new text begin (f) The portion related to planned closure rate adjustments is as determined under
section 256R.40, subdivision 5, and Minnesota Statutes 2010, section 256B.436.
new text end

new text begin (g) The portion related to single-bed room incentives is as determined under section
256R.41.
new text end

new text begin (h) The portions related to real estate taxes, special assessments, and payments made
in lieu of real estate taxes directly identified or allocated to the nursing facility are the
actual amounts divided by the sum of the facility's resident days. Allowable costs under
this paragraph for payments made by a nonprofit nursing facility that are in lieu of real
estate taxes shall not exceed the amount which the nursing facility would have paid to
a city or township and county for fire, police, sanitation services, and road maintenance
costs had real estate taxes been levied on that property for those purposes.
new text end

new text begin (i) The portion related to employer health insurance costs is the allowable costs
divided by the sum of the facility's resident days.
new text end

new text begin (j) The portion related to the Public Employees Retirement Association is actual
costs divided by the sum of the facility's resident days.
new text end

new text begin (k) The portion related to quality improvement incentive payment rate adjustments
is the amount determined under section 256R.39.
new text end

new text begin (l) The portion related to performance-based incentive payments is the amount
determined under section 256R.38.
new text end

new text begin (m) The portion related to special dietary needs is the amount determined under
section 256R.51.
new text end

Sec. 21.

new text begin [256R.26] PROPERTY PAYMENT RATE.
new text end

new text begin The property payment rate for a nursing facility is the property rate established for
the facility under sections 256B.431 and 256B.434.
new text end

Sec. 22.

new text begin [256R.32] APPEALS.
new text end

new text begin Nursing facilities may appeal, as described under section 256B.50, the determination
of a payment rate established under this chapter.
new text end

ADJUSTMENTS AND ADD-ONS TO THE TOTAL PAYMENT RATE

Sec. 23.

new text begin [256R.36] HOLD HARMLESS.
new text end

new text begin No nursing facility's operating payment rate, plus its employer health insurance
costs portion of the external fixed costs payment rate, will be less than its prior system
operating cost payment rate.
new text end

Sec. 24.

new text begin [256R.37] SCHOLARSHIPS.
new text end

new text begin (a) For the 27-month period beginning October 1, 2015, through December 31,
2017, the commissioner shall allow a scholarship per diem of up to 25 cents for each
nursing facility with no scholarship per diem that is requesting a scholarship per diem to
be added to the external fixed payment rate to be used:
new text end

new text begin (1) for employee scholarships that satisfy the following requirements:
new text end

new text begin (i) scholarships are available to all employees who work an average of at least ten
hours per week at the facility except the administrator, and to reimburse student loan
expenses for newly hired and recently graduated registered nurses and licensed practical
nurses, and training expenses for nursing assistants as defined in section 144A.611,
subdivision 2, who are newly hired and have graduated within the last 12 months; and
new text end

new text begin (ii) the course of study is expected to lead to career advancement with the facility or
in long-term care, including medical care interpreter services and social work; and
new text end

new text begin (2) to provide job-related training in English as a second language.
new text end

new text begin (b) All facilities may annually request a rate adjustment under this section by
submitting information to the commissioner on a schedule and in a form supplied by the
commissioner. The commissioner shall allow a scholarship payment rate equal to the
reported and allowable costs divided by resident days.
new text end

new text begin (c) In calculating the per diem under paragraph (b), the commissioner shall allow
costs related to tuition, direct educational expenses, and reasonable costs as defined by the
commissioner for child care costs and transportation expenses related to direct educational
expenses.
new text end

new text begin (d) The rate increase under this section is an optional rate add-on that the facility
must request from the commissioner in a manner prescribed by the commissioner. The
rate increase must be used for scholarships as specified in this section.
new text end

new text begin (e) For instances in which a rate adjustment will be 15 cents or greater, nursing
facilities that close beds during a rate year may request to have their scholarship
adjustment under paragraph (b) recalculated by the commissioner for the remainder of the
rate year to reflect the reduction in resident days compared to the cost report year.
new text end

Sec. 25.

new text begin [256R.38] PERFORMANCE-BASED INCENTIVE PAYMENTS.
new text end

new text begin The commissioner shall develop additional incentive-based payments of up to
five percent above a facility's operating payment rate for achieving outcomes specified
in a contract. The commissioner may solicit proposals and select those which, on a
competitive basis, best meet the state's policy objectives. The commissioner shall limit
the amount of any incentive payment and the number of contract amendments under this
section to operate the incentive payments within funds appropriated for this purpose.
The commissioner shall approve proposals through a memorandum of understanding
which shall specify various levels of payment for various levels of performance. Incentive
payments to facilities under this section shall be in the form of time-limited rate
adjustments which shall be included in the external fixed payment rate under section
256R.25. In establishing the specified outcomes and related criteria, the commissioner
shall consider the following state policy objectives:
new text end

new text begin (1) successful diversion or discharge of residents to the residents' prior home or other
community-based alternatives;
new text end

new text begin (2) adoption of new technology to improve quality or efficiency;
new text end

new text begin (3) improved quality as measured in the Minnesota Nursing Home Report Card;
new text end

new text begin (4) reduced acute care costs; and
new text end

new text begin (5) any additional outcomes proposed by a nursing facility that the commissioner
finds desirable.
new text end

Sec. 26.

new text begin [256R.39] QUALITY IMPROVEMENT INCENTIVE PROGRAM.
new text end

new text begin The commissioner shall develop a quality improvement incentive program in
consultation with stakeholders. The annual funding pool available for quality improvement
incentive payments shall be equal to 0.8 percent of all operating payments, not including
any rate components resulting from equitable cost-sharing for publicly owned nursing
facility program participation under section 256R.48, critical access nursing facility
program participation under section 256R.47, or performance-based incentive payment
program participation under section 256R.38. For the period from October 1, 2015, to
December 31, 2016, rate adjustments provided under this section shall be effective for
15 months. Beginning January 1, 2017, annual rate adjustments provided under this
section shall be effective for one rate year.
new text end

Sec. 27.

new text begin [256R.40] NURSING FACILITY VOLUNTARY CLOSURE;
ALTERNATIVES.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) The definitions in this subdivision apply to this
section.
new text end

new text begin (b) "Closure" means the cessation of operations of a nursing facility and delicensure
and decertification of all beds within the facility.
new text end

new text begin (c) "Closure plan" means a plan to close a nursing facility and reallocate a portion of
the resulting savings to provide planned closure rate adjustments at other facilities.
new text end

new text begin (d) "Commencement of closure" means the date on which residents and designated
representatives are notified of a planned closure as provided in section 144A.161,
subdivision 5a, as part of an approved closure plan.
new text end

new text begin (e) "Completion of closure" means the date on which the final resident of the nursing
facility designated for closure in an approved closure plan is discharged from the facility.
new text end

new text begin (f) "Partial closure" means the delicensure and decertification of a portion of the
beds within the facility.
new text end

new text begin (g) "Planned closure rate adjustment" means an increase in a nursing facility's
operating rates resulting from a planned closure or a planned partial closure of another
facility.
new text end

new text begin Subd. 2. new text end

new text begin Applications for planned closure rate. new text end

new text begin (a) To be considered for approval
of a planned closure, an application must include:
new text end

new text begin (1) a description of the proposed closure plan, which must include identification of
the facility or facilities to receive a planned closure rate adjustment;
new text end

new text begin (2) the proposed timetable for any proposed closure, including the proposed dates
for announcement to residents, commencement of closure, and completion of closure;
new text end

new text begin (3) if available, the proposed relocation plan for current residents of any facility
designated for closure. If a relocation plan is not available, the application must include a
statement agreeing to develop a relocation plan designed to comply with section 144A.161;
new text end

new text begin (4) a description of the relationship between the nursing facility that is proposed for
closure and the nursing facility or facilities proposed to receive the planned closure rate
adjustment. If these facilities are not under common ownership, copies of any contracts,
purchase agreements, or other documents establishing a relationship or proposed
relationship must be provided; and
new text end

new text begin (5) documentation, in a format approved by the commissioner, that all the nursing
facilities receiving a planned closure rate adjustment under the plan have accepted joint
and several liability for recovery of overpayments under section 256B.0641, subdivision
2, for the facilities designated for closure under the plan.
new text end

new text begin (b) The application must also address the criteria listed in subdivision 3.
new text end

new text begin Subd. 3. new text end

new text begin Criteria for review of application. new text end

new text begin In reviewing and approving closure
proposals, the commissioner shall consider, but not be limited to, the following criteria:
new text end

new text begin (1) improved quality of care and quality of life for consumers;
new text end

new text begin (2) closure of a nursing facility that has a poor physical plant;
new text end

new text begin (3) the existence of excess nursing facility beds, measured in terms of beds per
thousand persons aged 85 or older. The excess must be measured in reference to:
new text end

new text begin (i) the county in which the facility is located. A facility in a county that is in the
lowest quartile of counties with reference to beds per thousand persons aged 85 or older is
not in an area of excess capacity;
new text end

new text begin (ii) the county and all contiguous counties;
new text end

new text begin (iii) the region in which the facility is located; or
new text end

new text begin (iv) the facility's service area. The facility shall indicate in its application the service
area it believes is appropriate for this measurement;
new text end

new text begin (4) low-occupancy rates, provided that the unoccupied beds are not the result of
a personnel shortage. In analyzing occupancy rates, the commissioner shall examine
waiting lists in the applicant facility and at facilities in the surrounding area, as determined
under clause (3);
new text end

new text begin (5) evidence of coordination between the community planning process and the
facility application. If the planning group does not support a level of nursing facility
closures that the commissioner considers to be reasonable, the commissioner may approve
a planned closure proposal without its support;
new text end

new text begin (6) proposed usage of funds available from a planned closure rate adjustment for
care-related purposes;
new text end

new text begin (7) innovative use planned for the closed facility's physical plant;
new text end

new text begin (8) evidence that the proposal serves the interests of the state; and
new text end

new text begin (9) evidence of other factors that affect the viability of the facility, including
excessive nursing pool costs.
new text end

new text begin Subd. 4. new text end

new text begin Review and approval of applications. new text end

new text begin (a) The commissioner, in
consultation with the commissioner of health, shall approve or deny an application within
30 days after receiving it. The commissioner may appoint an advisory review panel
composed of representatives of counties, consumers, and providers to review proposals
and provide comments and recommendations to the committee. The commissioners of
human services and health shall provide staff and technical assistance to the committee
for the review and analysis of proposals.
new text end

new text begin (b) Approval of a planned closure expires 18 months after approval by the
commissioner unless commencement of closure has begun.
new text end

new text begin (c) The commissioner may change any provision of the application to which the
applicant, the regional planning group, and the commissioner agree.
new text end

new text begin Subd. 5. new text end

new text begin Planned closure rate adjustment. new text end

new text begin (a) The commissioner shall calculate
the amount of the planned closure rate adjustment available under subdivision 6 according
to clauses (1) to (4):
new text end

new text begin (1) the amount available is the net reduction of nursing facility beds multiplied
by $2,080;
new text end

new text begin (2) the total number of beds in the nursing facility or facilities receiving the planned
closure rate adjustment must be identified;
new text end

new text begin (3) capacity days are determined by multiplying the number determined under
clause (2) by 365; and
new text end

new text begin (4) the planned closure rate adjustment is the amount available in clause (1), divided
by capacity days determined under clause (3).
new text end

new text begin (b) A planned closure rate adjustment under this section is effective on the first day
of the month following completion of closure of the facility designated for closure in the
application and becomes part of the nursing facility's external fixed payment rate.
new text end

new text begin (c) Upon the request of a closing facility, the commissioner must allow the facility a
closure rate adjustment as provided under section 144A.161, subdivision 10.
new text end

new text begin (d) A facility that has received a planned closure rate adjustment may reassign it
to another facility that is under the same ownership at any time within three years of its
effective date. The amount of the adjustment is computed according to paragraph (a).
new text end

new text begin (e) If the per bed dollar amount specified in paragraph (a), clause (1), is increased,
the commissioner shall recalculate planned closure rate adjustments for facilities that
delicense beds under this section on or after July 1, 2001, to reflect the increase in the per
bed dollar amount. The recalculated planned closure rate adjustment is effective from the
date the per bed dollar amount is increased.
new text end

new text begin Subd. 6. new text end

new text begin Assignment of closure rate to another facility. new text end

new text begin A facility or facilities
reimbursed under this chapter with a closure plan approved by the commissioner under
subdivision 4 may assign a planned closure rate adjustment to another facility or facilities
that are not closing or in the case of a partial closure, to the facility undertaking the partial
closure. A facility may also elect to have a planned closure rate adjustment shared equally
by the five nursing facilities with the lowest total operating payment rates in the state
development region designated under section 462.385, in which the facility that is closing
is located. The planned closure rate adjustment must be calculated under subdivision 5.
Facilities that delicense beds without a closure plan, or whose closure plan is not approved
by the commissioner, are not eligible to assign a planned closure rate adjustment under
subdivision 5, unless they: (1) are delicensing five or fewer beds, or less than six percent
of their total licensed bed capacity, whichever is greater; (2) are located in a county in
the top three quartiles of beds per 1,000 persons aged 65 or older; and (3) have not
delicensed beds in the prior three months. Facilities meeting these criteria are eligible to
assign the amount calculated under subdivision 5 to themselves. If a facility is delicensing
the greater of six or more beds, or six percent or more of its total licensed bed capacity,
and does not have an approved closure plan or is not eligible for the adjustment under
subdivision 5, the commissioner shall calculate the amount the facility would have been
eligible to assign under subdivision 5, and shall use this amount to provide equal rate
adjustments to the five nursing facilities with the lowest total operating payment rates in
the state development region designated under section 462.385, in which the facility
that delicensed beds is located.
new text end

new text begin Subd. 7. new text end

new text begin Other rate adjustments. new text end

new text begin Facilities receiving planned closure rate
adjustments remain eligible for any applicable rate adjustments provided under this chapter.
new text end

Sec. 28.

new text begin [256R.41] SINGLE-BED ROOM INCENTIVE.
new text end

new text begin (a) Beginning July 1, 2005, the operating payment rate for nursing facilities
reimbursed under this chapter shall be increased by 20 percent multiplied by the ratio of
the number of new single-bed rooms created divided by the number of active beds on
July 1, 2005, for each bed closure that results in the creation of a single-bed room after
July 1, 2005. The commissioner may implement rate adjustments for up to 3,000 new
single-bed rooms each year. For eligible bed closures for which the commissioner receives
a notice from a facility during a calendar quarter that a bed has been delicensed and a
new single-bed room has been established, the rate adjustment in this paragraph shall be
effective on the first day of the second month following that calendar quarter.
new text end

new text begin (b) A nursing facility is prohibited from discharging residents for purposes of
establishing single-bed rooms. A nursing facility must submit documentation to the
commissioner in a form prescribed by the commissioner, certifying the occupancy status
of beds closed to create single-bed rooms. In the event that the commissioner determines
that a facility has discharged a resident for purposes of establishing a single-bed room, the
commissioner shall not provide a rate adjustment under paragraph (a).
new text end

Sec. 29.

new text begin [256R.42] RATE ADJUSTMENT FOR THE FIRST 30 DAYS.
new text end

new text begin (a) During the first 30 calendar days after admission, the total payment rate for a case
mix classification must be increased by 20 percent. Beginning with the 31st calendar day
after admission, the total payment rate is the rate otherwise determined under this chapter.
new text end

new text begin (b) The enhanced rates under this section shall not be allowed if a resident has
resided during the previous 30 calendar days in:
new text end

new text begin (1) the same nursing facility;
new text end

new text begin (2) a nursing facility owned or operated by a related party; or
new text end

new text begin (3) a nursing facility or part of a facility that closed or was in the process of closing.
new text end

Sec. 30.

new text begin [256R.43] BED HOLDS.
new text end

new text begin The commissioner shall limit payment for leave days in a nursing facility to 30
percent of that nursing facility's total payment rate for the involved resident, and shall allow
this payment only when the occupancy of the nursing facility, inclusive of bed hold days,
is equal to or greater than 96 percent, notwithstanding Minnesota Rules, part 9505.0415.
new text end

Sec. 31.

new text begin [256R.44] RATE ADJUSTMENT FOR PRIVATE ROOMS FOR
MEDICAL NECESSITY.
new text end

new text begin The amount paid for a private room is 111.5 percent of the established total payment
rate for a resident if the resident is a medical assistance recipient and the private room is
considered a medical necessity for the resident or others who are affected by the resident's
condition, except as provided in Minnesota Rules, part 9549.0060, subpart 11, item C.
Conditions requiring a private room must be determined by the resident's attending
physician and submitted to the commissioner for approval or denial by the commissioner
on the basis of medical necessity.
new text end

Sec. 32.

new text begin [256R.45] RATE ADJUSTMENT FOR VENTILATOR-DEPENDENT
PERSONS.
new text end

new text begin The commissioner may negotiate with a nursing facility eligible to receive medical
assistance payments to provide services to a ventilator-dependent person identified by the
commissioner according to criteria developed by the commissioner, including:
new text end

new text begin (1) nursing facility care has been recommended for the person by a preadmission
screening team;
new text end

new text begin (2) the person has been hospitalized and no longer requires inpatient acute care
hospital services; and
new text end

new text begin (3) the commissioner has determined that necessary services for the person cannot
be provided under existing nursing facility rates.
new text end

new text begin The commissioner may negotiate an adjustment to the operating payment rate
for a nursing facility with a resident who is ventilator-dependent, for that resident.
The negotiated adjustment must reflect only the actual additional cost of meeting the
specialized care needs of a ventilator-dependent person identified by the commissioner
for whom necessary services cannot be provided under existing nursing facility rates and
which are not otherwise covered under Minnesota Rules, parts 9549.0010 to 9549.0080 or
9505.0170 to 9505.0475. The negotiated payment rate must not exceed 300 percent of
the case mix adjusted operating payment rate for the highest case mix classification. The
negotiated adjustment shall not affect the payment rate charged to private paying residents
under the provisions of section 256R.06, subdivision 2.
new text end

Sec. 33.

new text begin [256R.46] SPECIALIZED CARE FACILITIES.
new text end

new text begin (a) The total care-related payment rate limit for specialized care facilities shall be
increased by 50 percent.
new text end

new text begin (b) "Specialized care facilities" are defined as a facility having a program licensed
under chapter 245A and Minnesota Rules, chapter 9570, or a facility with 96 beds on
January 1, 2015, located in Robbinsdale that specializes in the treatment of Huntington's
Disease.
new text end

Sec. 34.

new text begin [256R.47] RATE ADJUSTMENT FOR CRITICAL ACCESS NURSING
FACILITIES.
new text end

new text begin (a) The commissioner, in consultation with the commissioner of health, may
designate certain nursing facilities as critical access nursing facilities. The designation shall
be granted on a competitive basis, within the limits of funds appropriated for this purpose.
new text end

new text begin (b) The commissioner shall request proposals from nursing facilities every two years.
Proposals must be submitted in the form and according to the timelines established by
the commissioner. In selecting applicants to designate, the commissioner, in consultation
with the commissioner of health, and with input from stakeholders, shall develop criteria
designed to preserve access to nursing facility services in isolated areas, rebalance
long-term care, and improve quality. To the extent practicable, the commissioner shall
ensure an even distribution of designations across the state.
new text end

new text begin (c) The commissioner shall allow the benefits in clauses (1) to (5) for nursing
facilities designated as critical access nursing facilities:
new text end

new text begin (1) partial rebasing, with the commissioner allowing a designated facility operating
payment rates being the sum of up to 60 percent of the operating payment rate determined
in accordance with section 256R.21, subdivision 3, and at least 40 percent, with the sum of
the two portions being equal to 100 percent, of the operating payment rate that would have
been allowed had the facility not been designated. The commissioner may adjust these
percentages by up to 20 percent and may approve a request for less than the amount allowed;
new text end

new text begin (2) enhanced payments for leave days. Notwithstanding section 256R.43, upon
designation as a critical access nursing facility, the commissioner shall limit payment for
leave days to 60 percent of that nursing facility's total payment rate for the involved
resident, and shall allow this payment only when the occupancy of the nursing facility,
inclusive of bed hold days, is equal to or greater than 90 percent;
new text end

new text begin (3) two designated critical access nursing facilities, with up to 100 beds in active
service, may jointly apply to the commissioner of health for a waiver of Minnesota
Rules, part 4658.0500, subpart 2, in order to jointly employ a director of nursing. The
commissioner of health shall consider each waiver request independently based on the
criteria under Minnesota Rules, part 4658.0040;
new text end

new text begin (4) the minimum threshold under section 256B.431, subdivision 15, paragraph (e),
shall be 40 percent of the amount that would otherwise apply; and
new text end

new text begin (5) the quality-based rate limits under section 256R.23, subdivisions 5 to 7, apply to
designated critical access nursing facilities.
new text end

new text begin (d) Designation of a critical access nursing facility is for a period of two years, after
which the benefits allowed under paragraph (c) shall be removed. Designated facilities
may apply for continued designation.
new text end

new text begin (e) This section is suspended and no state or federal funding shall be appropriated or
allocated for the purposes of this section from January 1, 2016, to December 31, 2017.
new text end

Sec. 35.

new text begin [256R.48] PUBLICLY OWNED FACILITIES.
new text end

new text begin (a) The commissioner shall allow nursing facilities whose physical plant is owned or
whose license is held by a city, county, or hospital district to apply for a higher payment
rate under this section if the local governmental entity agrees to pay a specified portion of
the nonfederal share of medical assistance costs. Nursing facilities that apply are eligible
to select an operating payment rate with a case mix index of 1.00, up to an amount
determined by the commissioner to be allowable under the Medicare upper payment limit
test. The case mix adjusted rates shall be computed under section 256R.22. The rate
increase allowed in this paragraph shall take effect only upon federal approval.
new text end

new text begin (b) Rates determined under this section shall take effect in accordance with the rate
year in section 256R.02, subdivision 41, based on the most recent available cost report.
new text end

new text begin (c) Eligible nursing facilities that wish to participate under this section shall make
an application to the commissioner by September 30 to be allowed participation on the
following January 1.
new text end

new text begin (d) For each participating nursing facility, the public entity that owns the physical
plant or is the license holder of the nursing facility shall pay to the state the entire
nonfederal share of medical assistance payments received as a result of the difference
between the nursing facility's payment rate under this section, and the rates that the
nursing facility would otherwise be paid without application of this section under section
256R.21 as determined by the commissioner.
new text end

new text begin (e) The commissioner may, at any time, reduce the payments under this section
based on the commissioner's determination that the payments shall cause nursing facility
rates to exceed the state's Medicare upper payment limit or any other federal limitation. If
the commissioner determines a reduction is necessary, the commissioner shall reduce all
payment rates for participating nursing facilities by a percentage applied to the amount of
increase they would otherwise receive under this section and shall notify participating
facilities of the reductions. If payments to a nursing facility are reduced, payments under
section 256B.19, subdivision 1e, shall be reduced accordingly.
new text end

Sec. 36.

new text begin [256R.49] RATE ADJUSTMENTS FOR COMPENSATION-RELATED
COSTS FOR MINIMUM WAGE CHANGES.
new text end

new text begin Subdivision 1. new text end

new text begin Rate adjustments for compensation-related costs. new text end

new text begin (a) Operating
payment rates of all nursing facilities that are reimbursed under this chapter shall be
increased effective for rate years beginning on and after October 1, 2014, to address
changes in compensation costs for nursing facility employees paid less than $14 per hour
in accordance with this section.
new text end

new text begin (b) Nursing facilities that receive approval of the applications in subdivision 2 must
receive rate adjustments according to subdivision 4. The rate adjustments must be used to
pay compensation costs for nursing facility employees paid less than $14 per hour.
new text end

new text begin Subd. 2. new text end

new text begin Application process. new text end

new text begin To receive a rate adjustment, nursing facilities
must submit applications to the commissioner in a form and manner determined by
the commissioner. The applications for the rate adjustments shall include specified
data, and spending plans that describe how the funds from the rate adjustments will be
allocated for compensation to employees paid less than $14 per hour. The applications
must be submitted within three months of the effective date of any operating payment rate
adjustment under this section. The commissioner may request any additional information
needed to determine the rate adjustment within three weeks of receiving a complete
application. The nursing facility must provide any additional information requested by
the commissioner within six months of the effective date of any operating payment rate
adjustment under this section. The commissioner may waive the deadlines in this section
under extraordinary circumstances.
new text end

new text begin Subd. 3. new text end

new text begin Additional application requirements for facilities with employees
represented by an exclusive bargaining representative.
new text end

new text begin For nursing facilities in which
employees are represented by an exclusive bargaining representative, the commissioner
shall approve the applications submitted under subdivision 2 only upon receipt of a letter
or letters of acceptance of the spending plans in regard to members of the bargaining unit,
signed by the exclusive bargaining agent and dated after May 31, 2014. Upon receipt of
the letter or letters of acceptance, the commissioner shall deem all requirements of this
section as having been met in regard to the members of the bargaining unit.
new text end

new text begin Subd. 4. new text end

new text begin Determination of the rate adjustments for compensation-related costs.
new text end

new text begin Based on the application in subdivision 2, the commissioner shall calculate the allowable
annualized compensation costs by adding the totals of clauses (1), (2), and (3). The result
must be divided by the standardized or resident days from the most recently available cost
report to determine per day amounts, which must be included in the operating portion of
the total payment rate and allocated to direct care or other operating as determined by
the commissioner:
new text end

new text begin (1) the sum of the difference between $9.50 and any hourly wage rate less than $9.50
for October 1, 2016; and between the indexed value of the minimum wage, as defined in
section 177.24, subdivision 1, paragraph (f), and any hourly wage less than that indexed
value for rate years beginning on and after October 1, 2017; multiplied by the number
of compensated hours at that wage rate;
new text end

new text begin (2) using wages and hours in effect during the first three months of calendar year
2014, beginning with the first pay period beginning on or after January 1, 2014; 22.2
percent of the sum of items (i) to (viii) for October 1, 2016;
new text end

new text begin (i) for all compensated hours from $8 to $8.49 per hour, the number of compensated
hours is multiplied by $0.13;
new text end

new text begin (ii) for all compensated hours from $8.50 to $8.99 per hour, the number of
compensated hours is multiplied by $0.25;
new text end

new text begin (iii) for all compensated hours from $9 to $9.49 per hour, the number of compensated
hours is multiplied by $0.38;
new text end

new text begin (iv) for all compensated hours from $9.50 to $10.49 per hour, the number of
compensated hours is multiplied by $0.50;
new text end

new text begin (v) for all compensated hours from $10.50 to $10.99 per hour, the number of
compensated hours is multiplied by $0.40;
new text end

new text begin (vi) for all compensated hours from $11 to $11.49 per hour, the number of
compensated hours is multiplied by $0.30;
new text end

new text begin (vii) for all compensated hours from $11.50 to $11.99 per hour, the number of
compensated hours is multiplied by $0.20; and
new text end

new text begin (viii) for all compensated hours from $12 to $13 per hour, the number of
compensated hours is multiplied by $0.10; and
new text end

new text begin (3) the sum of the employer's share of FICA taxes, Medicare taxes, state and federal
unemployment taxes, workers' compensation, pensions, and contributions to employee
retirement accounts attributable to the amounts in clauses (1) and (2).
new text end

Sec. 37.

new text begin [256R.50] BED RELOCATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Method for determining budget-neutral nursing facility rates for
relocated beds.
new text end

new text begin Nursing facility rates for bed relocations must be calculated by comparing
the estimated medical assistance costs prior to and after the proposed bed relocation
using the calculations in this section. All payment rates are based on a case mix index
of 1.0, with other case mix adjusted rates determined accordingly. Nursing facility beds
on layaway status that are being moved must be included in the calculation for both the
originating and receiving facility and treated as though they were in active status with the
occupancy characteristics of the active beds of the originating facility.
new text end

new text begin Subd. 2. new text end

new text begin Determination of costs in originating facility. new text end

new text begin Medical assistance costs
of the beds in the originating nursing facilities must be calculated as follows:
new text end

new text begin (1) multiply each originating facility's total payment rate for a case mix index of 1.0 by
the facility's percentage of medical assistance days on its most recent available cost report;
new text end

new text begin (2) take the products in clause (1) and multiply by each facility's average case mix
index for medical assistance residents on its most recent available cost report;
new text end

new text begin (3) take the products in clause (2) and multiply by the number of beds being
relocated, times 365; and
new text end

new text begin (4) calculate the sum of the amounts determined in clause (3).
new text end

new text begin Subd. 3. new text end

new text begin Determination of costs in receiving facility. new text end

new text begin Medical assistance costs in
the receiving facility, prior to the bed relocation, must be calculated as follows:
new text end

new text begin (1) multiply the facility's total payment rate for a case mix index of 1.0 by the
medical assistance days on the most recent cost report; and
new text end

new text begin (2) multiply the product in clause (1) by the facility average case mix index of
medical assistance residents on the most recent cost report.
new text end

new text begin Subd. 4. new text end

new text begin Determination of costs prior to relocation. new text end

new text begin The commissioner shall
determine the medical assistance costs prior to the bed relocation which must be the sum
of the amounts determined in subdivisions 2 and 3.
new text end

new text begin Subd. 5. new text end

new text begin Estimation of costs after bed relocation. new text end

new text begin The commissioner shall
estimate the medical assistance costs after the bed relocation as follows:
new text end

new text begin (1) estimate the medical assistance days in the receiving facility after the bed
relocation. The commissioner may use the current medical assistance portion, or if data
does not exist, may use the statewide average, or may use the provider's estimate of the
medical assistance utilization of the relocated beds;
new text end

new text begin (2) estimate the receiving facility's average case mix index of medical assistance
residents after the bed relocation. The commissioner may use current facility average case
mix index or, if data does not exist, may use the statewide average case mix index, or may
use the provider's estimate of the facility average case mix index; and
new text end

new text begin (3) multiply the amount determined in clause (1) by the amount determined in
clause (2) by the total payment rate for a case mix index of 1.0 that is the highest rate of
the facilities from which the relocated beds either originate or to which they are being
relocated so long as that rate is associated with ten percent or more of the total number of
beds to be in the receiving facility after the bed relocation.
new text end

new text begin Subd. 6. new text end

new text begin Determination of rate adjustment. new text end

new text begin (a) If the amount determined in
subdivision 5 is less than or equal to the amount determined in subdivision 4, the
commissioner shall allow a total payment rate equal to the amount used in subdivision
5, clause (3).
new text end

new text begin (b) If the amount determined in subdivision 5 is greater than the amount determined
in subdivision 4, the commissioner shall allow a rate with a case mix index of 1.0 that
when used in subdivision 5, clause (3), results in the amount determined in subdivision 5
being equal to the amount determined in subdivision 4.
new text end

new text begin (c) If the commissioner relies upon provider estimates in subdivision 5, clause (1) or
(2), then annually, for three years after the rates determined in this section take effect, the
commissioner shall determine the accuracy of the alternative factors of medical assistance
case load and the facility average case mix index used in this section and shall reduce the
total payment rate if the factors used result in medical assistance costs exceeding the
amount in subdivision 4. If the actual medical assistance costs exceed the estimates by
more than five percent, the commissioner shall also recover the difference between the
estimated costs in subdivision 5 and the actual costs according to section 256B.0641.
The commissioner may require submission of data from the receiving facility needed to
implement this paragraph.
new text end

new text begin (d) When beds approved for relocation are put into active service at the destination
facility, rates determined in this section must be adjusted by any adjustment amounts that
were implemented after the date of the letter of approval.
new text end

Sec. 38.

new text begin [256R.51] ADJUSTMENT FOR SPECIAL DIETARY NEEDS.
new text end

new text begin (a) The commissioner shall adjust the rates of a nursing facility that meets the
criteria for the special dietary needs of its residents and the requirements in section
31.651 or 31.658. The adjustment for raw food cost shall be the difference between the
nursing facility's most recently reported allowable raw food cost per resident day and 115
percent of the median allowable raw food cost per resident day. This amount shall be
removed from other care-related costs per resident day as determined in section 256R.23,
subdivision 3, and included in the external fixed costs payment rate under section 256R.25.
new text end

new text begin (b) In calculating a nursing facility's other care-related costs per day for the purposes
of comparing to an array, a median, or other statistical measure of nursing facility payment
rates used to determine future rate adjustments under this chapter, the commissioner shall
exclude adjustments for raw food costs under this section.
new text end

Sec. 39.

new text begin [256R.52] NURSING FACILITY RECEIVERSHIP FEES.
new text end

new text begin Subdivision 1. new text end

new text begin Payment of receivership fees. new text end

new text begin (a) When the commissioner of
health notifies the commissioner of human services that a nursing facility is subject to
the receivership provisions under section 144A.15 and provides a recommendation
in accordance with section 144A.154, the commissioner in consultation with the
commissioner of health may establish a receivership fee that is added to a nursing facility
payment. The commissioner shall reduce the requested amount by any amounts the
commissioner determines are included in the nursing facility's payment rate and that are
not specifically required to be paid for expenditures of the nursing facility.
new text end

new text begin A receivership fee shall be set according to paragraphs (b) and (c) and payment
shall be according to paragraphs (d) to (f).
new text end

new text begin (b) The receivership fee per day shall be determined and revised as necessary by
dividing the estimated amount of needed additional funding or actual additional costs of the
receivership by the estimated resident days for the projected duration of the receivership.
new text end

new text begin (c) The receivership fee per day shall be added to the nursing facility's payment rate.
new text end

new text begin (d) Notification of the payment rate increase must meet the requirements of section
256R.06, subdivisions 5.
new text end

new text begin (e) The payment rate in paragraph (c) for a nursing facility is effective the first
day of the receivership.
new text end

new text begin (f) The commissioner may elect to make a lump-sum payment of a portion of the
receivership fee to the receiver or managing agent. In this case, the commissioner and
the receiver or managing agent shall agree to a repayment plan. Regardless of whether
the commissioner makes a lump-sum payment under this paragraph, the provisions of
paragraphs (b) to (e) apply.
new text end

new text begin Subd. 2. new text end

new text begin Sale or transfer of a nursing facility in receivership after closure. new text end

new text begin (a)
Upon the subsequent sale or transfer of a nursing facility in receivership, the commissioner
shall seek to recover from the prior licensee any amounts paid through payment rate
adjustments under subdivision 1. The prior licensee shall repay this amount to the
commissioner within 60 days after the commissioner notifies the prior licensee of the
obligation to repay.
new text end

new text begin (b) The commissioner may recover amounts paid through the receivership fee by
means of withholding from the prior licensee payments related to any other medical
assistance provider of the prior licensee in Minnesota. The prior licensee must also repay
private-pay residents the amount the private-pay resident paid for the receivership fee.
new text end

new text begin (c) If a nursing facility with payment rates determined under subdivision 1 is later
sold while the nursing facility is in receivership, the payment rates in effect prior to the
receivership shall be the new owner's payment rates. The commissioner shall apply to
these rates any rate adjustment provided to other nursing facilities for which the facility is
qualified.
new text end

new text begin (d) The commissioner may adjust, reclassify, or disallow costs reported for a facility
that was in receivership for periods of a reporting period during which the receivership
was in effect and for the prior year.
new text end

Sec. 40.

new text begin [256R.53] FACILITY SPECIFIC EXEMPTIONS.
new text end

new text begin Subdivision 1. new text end

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

new text begin The operating payment rate for a
facility located in the city of Golden Valley at 3915 Golden Valley Road with 44 licensed
rehabilitation beds as of January 7, 2015, is the sum of its direct care costs per standardized
day, its other care-related costs per resident day, and its other operating costs per day.
new text end

new text begin Subd. 2. new text end

new text begin Nursing facility in Breckenridge. new text end

new text begin The operating payment rate of a
nonprofit nursing facility that exists on January 1, 2015, is located within the boundaries
of the city of Breckenridge, and is reimbursed under this chapter, is equal to the greater of:
new text end

new text begin (1) the operating payment rate determined under section 256R.21, subdivision 3; or
new text end

new text begin (2) the median case mix adjusted rates, including comparable rate components as
determined by the median case mix adjusted rates, including comparable rate components
as determined by the commissioner, for the equivalent case mix indices of the nonprofit
nursing facility or facilities located in an adjacent city in another state and in cities
contiguous to the adjacent city. The Minnesota facility's operating payment rate with
a case mix index of 1.0 is computed by dividing the adjacent city's nursing facility or
facilities' median operating payment rate with an index of 1.02 by 1.02.
new text end

PAYMENTS FOR SERVICES BILLED SEPARATELY

Sec. 41.

new text begin [256R.54] ANCILLARY SERVICES.
new text end

new text begin Subdivision 1. new text end

new text begin Setting payment; monitoring use of therapy services. new text end

new text begin (a) The
commissioner shall adopt rules under the Administrative Procedure Act to set the amount
and method of payment for ancillary materials and services provided to recipients residing
in nursing facilities. Payment for materials and services may be made to either the vendor
of ancillary services pursuant to Minnesota Rules, parts 9505.0170 to 9505.0475, or to a
nursing facility pursuant to Minnesota Rules, parts 9505.0170 to 9505.0475.
new text end

new text begin (b) Payment for the same or similar service to a recipient shall not be made to both
the nursing facility and the vendor. The commissioner shall ensure: (1) the avoidance of
double payments through audits and adjustments to the nursing facility's annual cost
report as required by section 256R.12, subdivisions 8 and 9; and (2) that charges and
arrangements for ancillary materials and services are cost-effective and as would be
incurred by a prudent and cost-conscious buyer.
new text end

new text begin (c) Therapy services provided to a recipient must be medically necessary and
appropriate to the medical condition of the recipient. If the vendor, nursing facility, or
ordering physician cannot provide adequate medical necessity justification, as determined
by the commissioner, the commissioner may recover or disallow the payment for the
services and may require prior authorization for therapy services as a condition of payment
or may impose administrative sanctions to limit the vendor, nursing facility, or ordering
physician's participation in the medical assistance program. If the provider number of a
nursing facility is used to bill services provided by a vendor of therapy services that is
not related to the nursing facility by ownership, control, affiliation, or employment status,
no withholding of payment shall be imposed against the nursing facility for services not
medically necessary except for funds due the unrelated vendor of therapy services as
provided in subdivision 5. For the purpose of this subdivision, no monetary recovery may
be imposed against the nursing facility for funds paid to the unrelated vendor of therapy
services as provided in subdivision 5, for services not medically necessary.
new text end

new text begin (d) For purposes of this section and section 256R.12, subdivisions 8 and 9, therapy
includes physical therapy, occupational therapy, speech therapy, audiology, and mental
health services that are covered services according to Minnesota Rules, parts 9505.0170
to 9505.0475.
new text end

new text begin (e) For purposes of this subdivision, "ancillary services" includes transportation
defined as a covered service in section 256B.0625, subdivision 17.
new text end

new text begin Subd. 2. new text end

new text begin Certification that treatment is appropriate. new text end

new text begin The physical therapist,
occupational therapist, speech therapist, mental health professional, or audiologist who
provides or supervises the provision of therapy services, other than an initial evaluation,
to a medical assistance recipient must certify in writing that the therapy's nature, scope,
duration, and intensity are appropriate to the medical condition of the recipient every
30 days. The therapist's statement of certification must be maintained in the recipient's
medical record together with the specific orders by the physician and the treatment plan. If
the recipient's medical record does not include these documents, the commissioner may
recover or disallow the payment for such services. If the therapist determines that the
therapy's nature, scope, duration, or intensity is not appropriate to the medical condition of
the recipient, the therapist must provide a statement to that effect in writing to the nursing
facility for inclusion in the recipient's medical record. The commissioner shall make
recommendations regarding the medical necessity of services provided.
new text end

new text begin Subd. 3. new text end

new text begin Separate billings for therapy services; nursing facility provider number.
new text end

new text begin Payment for therapy services provided to nursing facility residents that are billed separate
from nursing facility's payment rate or according to Minnesota Rules, parts 9505.0170 to
9505.0475, shall be subject to the requirements in this subdivision and subdivisions 4 to 8.
new text end

new text begin The practitioner invoice must include, in a format specified by the commissioner,
the provider number of the nursing facility where the medical assistance recipient resides
regardless of the service setting.
new text end

new text begin Subd. 4. new text end

new text begin Separate billings for therapy services; related vendors. new text end

new text begin Nursing
facilities that are related by ownership, control, affiliation, or employment status to the
vendor of therapy services shall report, in a format specified by the commissioner, the
revenues received during the reporting period for therapy services provided to residents
of the nursing facility. The commissioner shall offset the revenues received during the
reporting period for therapy services provided to residents of the nursing facility to the
total payment rate of the nursing facility by dividing the amount of offset by the sum of
the nursing facility's resident days. Except as specified in subdivisions 6 and 8, the amount
of offset shall be the revenue in excess of 108 percent of the cost removed from the cost
report resulting from the requirement of the commissioner to ensure the avoidance of
double payments as determined by section 256R.12, subdivisions 8 and 9.
new text end

new text begin Subd. 5. new text end

new text begin Separate billings for therapy services; unrelated vendors. new text end

new text begin Nursing
facilities shall limit charges in total to vendors of therapy services for renting space,
equipment, or obtaining other services during the rate year to 108 percent of the annualized
cost removed from the reporting period cost report resulting from the requirement of the
commissioner to ensure the avoidance of double payments as determined by section
256R.12, subdivisions 8 and 9. If the arrangement for therapy services is changed so that a
nursing facility is subject to this subdivision instead of subdivision 4, the cost that is used
to determine rent must be adjusted to exclude the annualized costs for therapy services
that are not provided in the rate year. The maximum charges to the vendors shall be
based on the commissioner's determination of annualized cost and may be subsequently
adjusted upon resolution of appeals.
new text end

new text begin Subd. 6. new text end

new text begin Separate billings for therapy services; cost to revenue ratio. new text end

new text begin The
commissioner shall require reporting of all revenues relating to the provision of therapy
services and shall establish a therapy cost, as determined by section 256R.12, subdivisions
8 and 9, to revenue ratio for the reporting period ending in 1986. For subsequent reporting
periods the ratio may increase five percentage points in total until a new base year is
established under subdivision 7. Increases in excess of five percentage points may be
allowed if adequate justification is provided to and accepted by the commissioner. Unless
an exception is allowed by the commissioner, the amount of offset in subdivision 4 is
the greater of the amount determined in subdivision 4 or the amount of offset that is
imputed based on one minus the lesser of (1) the actual reporting period ratio or (2) the
base reporting period ratio increased by five percentage points, multiplied by the revenues.
new text end

new text begin Subd. 7. new text end

new text begin Separate billings for therapy services; base year. new text end

new text begin The commissioner
may establish a new base reporting period for determining the cost to revenue ratio.
new text end

new text begin Subd. 8. new text end

new text begin Separate billings for therapy services; transition from unrelated to
related vendor.
new text end

new text begin If the arrangement for therapy services is changed so that a nursing
facility is subject to the provisions of subdivision 4 instead of subdivision 5, an average
cost to revenue ratio based on the ratios of nursing facilities that are subject to the
provisions of subdivision 4 shall be imputed for subdivision 6.
new text end

new text begin Subd. 9. new text end

new text begin Separate billings for therapy services; prohibited practices. new text end

new text begin This
section does not allow unrelated nursing facilities to reorganize related organization
therapy services and provide services among themselves to avoid offsetting revenues.
Nursing facilities that are found to be in violation of this provision are subject to the
penalty requirements of section 256R.04, subdivision 5.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin The grant of rulemaking authority to the commissioner
of human services in this section is a continuation of authority previously granted in
Minnesota Statutes, section 256B.433, subdivision 1.
new text end

Sec. 42. new text beginREVISOR'S INSTRUCTION.
new text end

new text begin The revisor of statutes shall make necessary cross-reference changes and remove
statutory cross-references in Minnesota Statutes and Minnesota Rules to conform with the
recodification and repealer in this act. The revisor may make technical and other necessary
changes to sentence structure to preserve the meaning of the text. The revisor may alter
the statutory coding in this act to incorporate statutory changes made by other law in the
2016 regular legislative session. If a provision repealed in this act is also amended in the
2016 regular legislative session by other law, the revisor shall merge the amendment into
the recodification, notwithstanding Minnesota Statutes, section 645.30.
new text end

Sec. 43. new text beginREPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2014, sections 256B.0911, subdivision 7; 256B.25,
subdivision 4; 256B.27, subdivision 2a; 256B.41, subdivisions 1, 2, and 3; 256B.411,
subdivisions 1 and 2; 256B.421, subdivisions 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, and
15; 256B.431, subdivisions 1, 2d, 2e, 2n, 2r, 2s, 2t, 3e, 32, 35, 42, and 44; 256B.432,
subdivisions 1, 2, 3, 4, 4a, 5, 6, 6a, 7, and 8; 256B.433, subdivisions 1, 2, 3, and 3a;
256B.434, subdivisions 2, 9, 11, 12, 14, 15, 16, 18, 19a, 20, and 21; 256B.437, subdivisions
1, 3, 4, 5, 6, 7, 9, and 10; 256B.438, subdivisions 1, 2, 3, 4, 5, 6, 7, and 8; 256B.441,
subdivisions 2, 3, 4, 7, 8, 9, 10, 11, 15, 18, 20, 22, 23, 24, 25, 27, 28a, 29, 32, 33a, 34, 36,
37, 38, 39, 41, 42a, 43, 46b, 47, 49, 57, 59, 60, 61, and 64; 256B.47, subdivisions 1, 2, 3,
and 4; and 256B.48, subdivisions 1, 1a, 1b, 1c, 3, 4, 5, 6a, 7, and 8,
new text end new text begin are repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2015 Supplement, sections 256B.431, subdivisions 2b and
36; 256B.441, subdivisions 1, 5, 6, 11a, 13, 14, 17, 30, 31, 33, 35, 40, 44, 46c, 46d,
48, 50, 51, 51a, 51b, 53, 54, 55a, 56, 63, 65, 66, and 67; and 256B.495, subdivisions 1
and 5,
new text end new text begin are repealed.
new text end

new text begin (c) new text end new text begin Minnesota Rules, parts 9549.0035, subparts 1, 3, 7, and 8; 9549.0041, subpart 6;
9549.0055, subparts 1, 2, and 3; and 9549.0070, subparts 2 and 3,
new text end new text begin are repealed.
new text end

ARTICLE 2

CONFORMING CHANGES

Section 1.

Minnesota Statutes 2014, section 144A.071, subdivision 2, is amended to
read:


Subd. 2.

Moratorium.

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.new text begin Certified beds in facilities which
do not allow medical assistance intake shall be deemed to be decertified for purposes
of this section only. [256B.48, subd. 1, third unlettered paragraph after paragraph (g),
with an old date removed]
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.

In addition, the commissioner of health must not approve any construction project
whose cost exceeds $1,000,000, unless:

(a) 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

(b) the project:

(1) has been approved through the process described in section 144A.073;

(2) meets an exception in subdivision 3 or 4a;

(3) is necessary to correct violations of state or federal law issued by the
commissioner of health;

(4) 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;

(5) as of May 1, 1992, the facility has submitted to the commissioner of health
written documentation evidencing that the facility meets the "commenced construction"
definition as specified in subdivision 1a, clause (d), or that substantial steps have been
taken prior to April 1, 1992, relating to the construction project. "Substantial steps"
require that the facility has made arrangements with outside parties relating to the
construction project and include the hiring of an architect or construction firm, submission
of preliminary plans to the Department of Health or documentation from a financial
institution that financing arrangements for the construction project have been made; or

(6) 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.

Prior to the final plan approval of any construction project, the commissioner of
health 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 commissioner and shall be considered as
one construction project. Once the construction project is completed and prior to the final
clearance by the commissioner, the total project construction costs for the construction
project shall be submitted to the commissioner. 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.

The dollar thresholds for construction projects are as follows: for construction
projects other than those authorized in clauses (1) to (6), the dollar threshold is $1,000,000.
For projects authorized after July 1, 1993, under clause (1), 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 clauses (2) to (4), 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).

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.

Sec. 2.

Minnesota Statutes 2015 Supplement, section 144A.15, subdivision 6, is
amended to read:


Subd. 6.

Postreceivership period; facility remaining open.

deleted text begin(a)deleted text end If a facility remains
open after the receivership is concluded, a new operator is only legally responsible under
state law for its actions after the receivership has concluded.

deleted text begin (b) The commissioner of human services may adjust, reclassify, or disallow costs
reported for a facility that was in receivership for periods of a reporting year during which
the receivership was in effect and for the prior year.
deleted text end

Sec. 3.

Minnesota Statutes 2014, section 256B.0625, is amended by adding a
subdivision to read:


new text begin Subd. 57a. new text end

new text begin Payment limitation for Medicare-covered skilled nursing facility
stays.
new text end

new text begin For services rendered on or after July 1, 2003, for facilities reimbursed under
this chapter or chapter 256R, the Medicaid program shall only pay a co-payment during
a Medicare-covered skilled nursing facility stay if the Medicare rate less the resident's
co-payment responsibility is less than the case mix adjusted total payment rate under
chapter 256R. The amount that shall be paid by the Medicaid program is equal to the
amount by which the case mix adjusted total payment rate exceeds the Medicare rate less
the co-payment responsibility. Health plans paying for nursing home services under
section 256B.69, subdivision 6a, may limit payments as allowed under this subdivision.
new text end

Sec. 4.

Minnesota Statutes 2014, section 256B.19, subdivision 1e, is amended to read:


Subd. 1e.

Additional local share of certain nursing facility costs.

deleted text beginBeginning
October 1, 2011,
deleted text end Participating local governmental entities that own the physical plant or are
the license holders of nursing facilities receiving rate adjustments under section deleted text begin256B.441,
subdivision 55a
deleted text endnew text begin 256R.48new text end, shall be responsible for paying the portion of nonfederal costs
calculated under section deleted text begin256B.441, subdivision 55a, paragraph (e)deleted text endnew text begin 256R.48, paragraph
(d)
new text end. Payments of the nonfederal share shall be submitted to the commissioner by the 15th
day of the month prior to payment to the nursing facility for that month's services. If any
participating governmental entity obligated to pay an amount under this subdivision does
not make timely payment of the monthly installment, the commissioner shall revoke
participation under this subdivision and end payments determined under section deleted text begin256B.441,
subdivision 55a
deleted text endnew text begin 256R.48new text end, to the participating nursing facility effective on the first day of
the month for which timely payment was not received. In the event of revocation, the
nursing facility may not bill, collect, or retain the amount allowed in section deleted text begin256B.441,
subdivision 55a
deleted text endnew text begin 256R.48new text end, from private-pay residents for days of service on or after the
first day of the month following the month in which the revocation occurred.

Sec. 5.

Minnesota Statutes 2014, section 256B.431, subdivision 22, is amended to read:


Subd. 22.

Changes to nursing facility reimbursement.

deleted text begin The nursing facility
reimbursement changes in paragraphs (a) to (d) apply to Minnesota Rules, parts 9549.0010
to 9549.0080, and this section, and are effective for rate years beginning on or after July 1,
1993, unless otherwise indicated.
deleted text end

deleted text begin (a) In addition to the approved pension or profit-sharing plans allowed by the
reimbursement rule, the commissioner shall allow those plans specified in Internal
Revenue Code, sections 403(b) and 408(k).
deleted text end

deleted text begin (b) The commissioner shall allow as workers' compensation insurance costs under
section 256B.421, subdivision 14, the costs of workers' compensation coverage obtained
under the following conditions:
deleted text end

deleted text begin (1) a plan approved by the commissioner of commerce as a Minnesota group or
individual self-insurance plan as provided in section 79A.03;
deleted text end

deleted text begin (2) a plan in which:
deleted text end

deleted text begin (i) the nursing facility, directly or indirectly, purchases workers' compensation
coverage in compliance with section 176.181, subdivision 2, from an authorized insurance
carrier;
deleted text end

deleted text begin (ii) a related organization to the nursing facility reinsures the workers' compensation
coverage purchased, directly or indirectly, by the nursing facility; and
deleted text end

deleted text begin (iii) all of the conditions in clause (4) are met;
deleted text end

deleted text begin (3) a plan in which:
deleted text end

deleted text begin (i) the nursing facility, directly or indirectly, purchases workers' compensation
coverage in compliance with section 176.181, subdivision 2, from an authorized insurance
carrier;
deleted text end

deleted text begin (ii) the insurance premium is calculated retrospectively, including a maximum
premium limit, and paid using the paid loss retro method; and
deleted text end

deleted text begin (iii) all of the conditions in clause (4) are met;
deleted text end

deleted text begin (4) additional conditions are:
deleted text end

deleted text begin (i) the costs of the plan are allowable under the federal Medicare program;
deleted text end

deleted text begin (ii) the reserves for the plan are maintained in an account controlled and administered
by a person which is not a related organization to the nursing facility;
deleted text end

deleted text begin (iii) the reserves for the plan cannot be used, directly or indirectly, as collateral
for debts incurred or other obligations of the nursing facility or related organizations to
the nursing facility;
deleted text end

deleted text begin (iv) if the plan provides workers' compensation coverage for non-Minnesota nursing
facilities, the plan's cost methodology must be consistent among all nursing facilities
covered by the plan, and if reasonable, is allowed notwithstanding any reimbursement
laws regarding cost allocation to the contrary;
deleted text end

deleted text begin (v) central, affiliated, corporate, or nursing facility costs related to their
administration of the plan are costs which must remain in the nursing facility's
administrative cost category and must not be allocated to other cost categories;
deleted text end

deleted text begin (vi) required security deposits, whether in the form of cash, investments, securities,
assets, letters of credit, or in any other form are not allowable costs for purposes of
establishing the facilities payment rate; and
deleted text end

deleted text begin (vii) for the rate year beginning on July 1, 1998, a group of nursing facilities related
by common ownership that self-insures workers' compensation may allocate its directly
identified costs of self-insuring its Minnesota nursing facility workers among those
nursing facilities in the group that are reimbursed under this section or section 256B.434.
The method of cost allocation shall be based on the ratio of each nursing facility's
total allowable salaries and wages to that of the nursing facility group's total allowable
salaries and wages, then similarly allocated within each nursing facility's operating cost
categories. The costs associated with the administration of the group's self-insurance plan
must remain classified in the nursing facility's administrative cost category. A written
request of the nursing facility group's election to use this alternate method of allocation of
self-insurance costs must be received by the commissioner no later than May 1, 1998, to
take effect July 1, 1998, or such costs shall continue to be allocated under the existing cost
allocation methods. Once a nursing facility group elects this method of cost allocation for
its workers' compensation self-insurance costs, it shall remain in effect until such time as
the group no longer self-insures these costs;
deleted text end

deleted text begin (5) any costs allowed pursuant to clauses (1) to (3) are subject to the following
requirements:
deleted text end

deleted text begin (i) if the nursing facility is sold or otherwise ceases operations, the plan's reserves
must be subject to an actuarially based settle up after 36 months from the date of sale or
the date on which operations ceased. The facility's medical assistance portion of the
total excess plan reserves must be paid to the state within 30 days following the date on
which excess plan reserves are determined;
deleted text end

deleted text begin (ii) any distribution of excess plan reserves made to or withdrawals made by the
nursing facility or a related organization are applicable credits and must be used to reduce
the nursing facility's workers' compensation insurance costs in the reporting period in
which a distribution or withdrawal is received;
deleted text end

deleted text begin (iii) if reimbursement for the plan is sought under the federal Medicare program,
and is audited pursuant to the Medicare program, the nursing facility must provide a copy
of Medicare's final audit report, including attachments and exhibits, to the commissioner
within 30 days of receipt by the nursing facility or any related organization. The
commissioner shall implement the audit findings associated with the plan upon receipt of
Medicare's final audit report. The department's authority to implement the audit findings is
independent of its authority to conduct a field audit.
deleted text end

deleted text begin (c)deleted text end In the determination of incremental increases in the nursing facility's rental rate
as required in subdivisions 14 to 21, except for a refinancing permitted under subdivision
19, the commissioner must adjust the nursing facility's property-related payment rate for
both incremental increases and decreases in recomputations of its rental ratedeleted text begin;deleted text endnew text begin.
new text end

deleted text begin (d) A nursing facility's administrative cost limitation must be modified as follows:
deleted text end

deleted text begin (1) if the nursing facility's licensed beds exceed 195 licensed beds, the general and
administrative cost category limitation shall be 13 percent;
deleted text end

deleted text begin (2) if the nursing facility's licensed beds are more than 150 licensed beds, but less
than 196 licensed beds, the general and administrative cost category limitation shall be
14 percent; or
deleted text end

deleted text begin (3) if the nursing facility's licensed beds is less than 151 licensed beds, the general
and administrative cost category limitation shall remain at 15 percent.
deleted text end

deleted text begin (e) For the rate year beginning on July 1, 1998, a group of nursing facilities related by
common ownership that self-insures group health, dental, or life insurance may allocate its
directly identified costs of self-insuring its Minnesota nursing facility workers among those
nursing facilities in the group that are reimbursed under this section or section 256B.434.
The method of cost allocation shall be based on the ratio of each nursing facility's total
allowable salaries and wages to that of the nursing facility group's total allowable salaries
and wages, then similarly allocated within each nursing facility's operating cost categories.
The costs associated with the administration of the group's self-insurance plan must remain
classified in the nursing facility's administrative cost category. A written request of the
nursing facility group's election to use this alternate method of allocation of self-insurance
costs must be received by the commissioner no later than May 1, 1998, to take effect July
1, 1998, or those self-insurance costs shall continue to be allocated under the existing cost
allocation methods. Once a nursing facility group elects this method of cost allocation for
its group health, dental, or life insurance self-insurance costs, it shall remain in effect until
such time as the group no longer self-insures these costs.
deleted text end

Sec. 6.

Minnesota Statutes 2014, section 256B.434, subdivision 10, is amended to read:


Subd. 10.

Exemptions.

deleted text begin (a) To the extent permitted by federal law, (1) a facility that
has entered into a contract under this section is not required to file a cost report, as defined
in Minnesota Rules, part 9549.0020, subpart 13, for any year after the base year that is the
basis for the calculation of the contract payment rate for the first rate year of the alternative
payment demonstration project contract; and (2) a facility under contract is not subject
to audits of historical costs or revenues, or paybacks or retroactive adjustments based on
these costs or revenues, except audits, paybacks, or adjustments relating to the cost report
that is the basis for calculation of the first rate year under the contract.
deleted text end

deleted text begin (b)deleted text end A facility that is under contract with the commissioner under this section is
not subject to the moratorium on licensure or certification of new nursing home beds in
section 144A.071, unless the project results in a net increase in bed capacity or involves
relocation of beds from one site to another. Contract payment rates must not be adjusted
to reflect any additional costs that a nursing facility incurs as a result of a construction
project undertaken under this deleted text beginparagraphdeleted text endnew text begin subdivisionnew text end. In addition, as a condition of
entering into a contract under this section, a nursing facility must agree that any future
medical assistance payments for nursing facility services will not reflect any additional
costs attributable to the sale of a nursing facility under this section and to construction
undertaken under this deleted text beginparagraphdeleted text endnew text begin subdivisionnew text end that otherwise would not be authorized
under the moratorium in section 144A.073. Nothing in this section prevents a nursing
facility participating in the alternative payment demonstration project under this section
from seeking approval of an exception to the moratorium through the process established
in section 144A.073, and if approved the facility's rates shall be adjusted to reflect the
cost of the project. Nothing in this section prevents a nursing facility participating in
the alternative payment demonstration project from seeking legislative approval of an
exception to the moratorium under section 144A.071, and, if enacted, the facility's rates
shall be adjusted to reflect the cost of the project.

deleted text begin (c) Notwithstanding paragraph (a), if by April 1, 1996, the health care financing
administration has not approved a required waiver, or the Centers for Medicare and
Medicaid Services otherwise requires cost reports to be filed prior to the waiver's approval,
the commissioner shall require a cost report for the rate year.
deleted text end

deleted text begin (d) A facility that is under contract with the commissioner under this section shall
be allowed to change therapy arrangements from an unrelated vendor to a related vendor
during the term of the contract. The commissioner may develop reasonable requirements
designed to prevent an increase in therapy utilization for residents enrolled in the medical
assistance program.
deleted text end

deleted text begin (e) Nursing facilities participating in the alternative payment system demonstration
project must either participate in the alternative payment system quality improvement
program established by the commissioner or submit information on their own quality
improvement process to the commissioner for approval. Nursing facilities that have had
their own quality improvement process approved by the commissioner must report results
for at least one key area of quality improvement annually to the commissioner.
deleted text end

Sec. 7.

Minnesota Statutes 2014, section 256B.48, subdivision 2, is amended to read:


Subd. 2.

Reporting requirements.

new text begin(a) new text endNo later than December 31 of each year, deleted text begina
skilled nursing facility or
deleted text endnew text begin annew text end intermediate care facility, including boarding care facilities,
which receives medical assistance payments or other reimbursements from the state
agency shall:

(1) provide the state agency with a copy of its audited financial statementsdeleted text begin. The
audited financial statements must include a balance sheet, income statement, statement
of the rate or rates charged to private paying residents, statement of retained earnings,
statement of cash flows, notes to the financial statements, audited applicable supplemental
information, and the certified public accountant's or licensed public accountant's opinion.
The examination by the certified public accountant or licensed public accountant shall
be conducted in accordance with generally accepted auditing standards as promulgated
and adopted by the American Institute of Certified Public Accountants. Beginning with
the reporting year which begins October 1, 1992, a nursing facility is no longer required
to have a certified audit of its financial statements. The cost of a certified audit shall not
be an allowable cost in that reporting year, nor in subsequent reporting years unless the
nursing facility submits its certified audited financial statements in the manner otherwise
specified in this subdivision. A nursing facility which does not submit a certified audit
must submit its working trial balance
deleted text end;

(2) provide the state agency with a statement of ownership for the facility;

(3) provide the state agency with separate, audited financial statements deleted text beginas specified
in clause (1)
deleted text end for every other facility owned in whole or part by an individual or entity
which has an ownership interest in the facility;

(4) upon request, provide the state agency with separate, audited financial statements
deleted text beginas specified in clause (1)deleted text end for every organization with which the facility conducts business
and which is owned in whole or in part by an individual or entity which has an ownership
interest in the facility;

(5) provide the state agency with copies of leases, purchase agreements, and other
documents related to the lease or purchase of the deleted text beginnursingdeleted text end facility;new text begin and
new text end

(6) upon request, provide the state agency with copies of leases, purchase
agreements, and other documents related to the acquisition of equipment, goods, and
services which are claimed as allowable costsdeleted text begin; anddeleted text endnew text begin.
new text end

deleted text begin (7) permit access by the state agency to the certified public accountant's and licensed
public accountant's audit work papers which support the audited financial statements
required in clauses (1), (3), and (4).
deleted text end

new text begin (b) Audited financial statements submitted under paragraph (a) must include
a balance sheet, income statement, statement of the rate or rates charged to private
paying residents, statement of retained earnings, statement of cash flows, notes to the
financial statements, audited applicable supplemental information, and the certified public
accountant's report. Certified public accountants must conduct audits in accordance with
chapter 326A. The cost of an audit shall not be an allowable cost unless the intermediate
care facility submits its audited financial statements in the manner otherwise specified in
this subdivision. An intermediate care facility must permit access by the state agency to
the certified public accountant's work papers that support the audited financial statements
submitted under paragraph (a).
new text end

new text begin (c) new text endDocuments or information provided to the state agency pursuant to this
subdivision shall be public.

new text begin (d) new text endIf the requirements of deleted text beginclauses (1) to (7)deleted text endnew text begin paragraphs (a) and (b)new text end are not met, the
reimbursement rate may be reduced to 80 percent of the rate in effect on the first day of
the fourth calendar month after the close of the reporting deleted text beginyear,deleted text endnew text begin periodnew text end and the reduction
shall continue until the requirements are met.

new text begin (e) new text enddeleted text beginBoth nursing facilities anddeleted text end Intermediate care facilities for the developmentally
disabled must maintain statistical and accounting records in sufficient detail to support
information contained in the facility's cost report for at least six years, including the year
following the submission of the cost report. For computerized accounting systems, the
records must include copies of electronically generated media such as magnetic discs
and tapes.

Sec. 8.

Minnesota Statutes 2014, section 256B.48, subdivision 3a, is amended to read:


Subd. 3a.

Audit adjustments.

If the commissioner requests supporting
documentation during an audit for an item of cost reported by deleted text begina long-term caredeleted text endnew text begin an
intermediate care
new text end facility, and the deleted text beginlong-term caredeleted text end facility's response does not adequately
document the item of cost, the commissioner may make reasoned assumptions considered
appropriate in the absence of the requested documentation to reasonably establish a
payment rate rather than disallow the entire item of cost. This provision shall not diminish
the deleted text beginlong-term caredeleted text end facility's appeal rights.

Sec. 9.

Minnesota Statutes 2014, section 256B.50, subdivision 1a, is amended to read:


Subd. 1a.

Definitions.

new text begin(a) new text endFor the purposes of this section, the following terms
have the meanings given.

deleted text begin (a)deleted text endnew text begin (b)new text end "Determination of a payment rate" means the process by which the
commissioner establishes the payment rate paid to a provider pursuant to this chapter,
including determinations made in desk audit, field audit, or pursuant to an amendment
filed by the provider.

deleted text begin (b)deleted text endnew text begin (c)new text end "Provider" means a nursing facility as defined in section deleted text begin256B.421, subdivision
7
deleted text endnew text begin 256R.02, subdivision 33new text end, or a facility as defined in section 256B.501, subdivision 1.

deleted text begin (c) "Reimbursement rules" means Minnesota Rules, parts 9510.0010 to 9510.0480,
9510.0500 to 9510.0890, and rules adopted by the commissioner pursuant to sections
256B.41 and 256B.501, subdivision 3.
deleted text end

new text begin (d) The definitions in section 256R.02 apply to this section.
new text end

Sec. 10.

Minnesota Statutes 2015 Supplement, section 256I.05, subdivision 2, is
amended to read:


Subd. 2.

Monthly rates; exemptions.

This subdivision applies to a residence
that on August 1, 1984, was licensed by the commissioner of health only as a boarding
care home, certified by the commissioner of health as an intermediate care facility, and
licensed by the commissioner of human services under Minnesota Rules, parts 9520.0500
to 9520.0690. Notwithstanding the provisions of subdivision 1c, the rate paid to a facility
reimbursed under this subdivision shall be determined under deleted text beginsection 256B.431, 256B.434,
or 256B.441
deleted text endnew text begin chapter 256Rnew text end, if the facility is accepted by the commissioner for participation
in the alternative payment demonstration project. The rate paid to this facility shall also
include adjustments to the group residential housing rate according to subdivision 1, and
any adjustments applicable to supplemental service rates statewide.