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SF 626

3rd Engrossment - 87th Legislature (2011 - 2012) Posted on 03/06/2012 02:20pm

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 3rd Engrossment

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A bill for an act
relating to health; amending nursing facility provisions; making changes to
nursing facility bed layaway status; providing exceptions for an increase of beds
in certain hardship areas; modifying the nursing facility moratorium exception
process; modifying medical assistance reimbursement rates; making conforming
changes; amending Minnesota Statutes 2010, sections 12A.10, by adding a
subdivision; 144A.071, subdivisions 3, 4a, by adding a subdivision; 144A.073,
subdivision 3c, by adding a subdivision; 256B.431, subdivision 26, by adding
a subdivision; 256B.437, subdivision 4; 256B.441, by adding a subdivision;
repealing Minnesota Statutes 2010, section 144A.073, subdivisions 4, 5.

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

ARTICLE 1

NURSING FACILITIES

Section 1.

Minnesota Statutes 2010, section 12A.10, is amended by adding a
subdivision to read:


new text begin Subd. 4. new text end

new text begin Nursing home bed layaway. new text end

new text begin In consultation with the commissioner of
human services, the commissioner of health may waive timelines specified in section
144A.071, subdivision 4b, at any time when a partial or complete evacuation occurs in
response to a natural disaster, or another event that threatens the health and safety of
residents of a nursing home. Property payment rates must not be adjusted for a nursing
home placing beds in or removing them from layaway under this subdivision.
new text end

Sec. 2.

Minnesota Statutes 2010, section 144A.071, subdivision 3, is amended to read:


Subd. 3.

Exceptions authorizing increase in bedsnew text begin; hardship areasnew text end.

new text begin(a) new text endThe
commissioner of health, in coordination with the commissioner of human services, may
approve the addition of deleted text beginadeleted text end new deleted text begincertified bed or the addition of a newdeleted text end licensed new text beginand Medicare
and Medicaid certified
new text endnursing home deleted text beginbeddeleted text endnew text begin bedsnew text end, deleted text beginunderdeleted text endnew text begin usingnew text end the deleted text beginfollowing conditions:deleted text endnew text begin
criteria and process set forth in this subdivision.
new text end

deleted text begin (a) to license or certify a new bed in place of one decertified after July 1, 1993, as
long as the number of certified plus newly certified or recertified beds does not exceed the
number of beds licensed or certified on July 1, 1993, or to address an extreme hardship
situation, in a particular county that, together with all contiguous Minnesota counties, has
fewer nursing home beds per 1,000 elderly than the number that is ten percent higher than
the national average of nursing home beds per 1,000 elderly individuals. For the purposes
of this section, the national average of nursing home beds shall be the most recent figure
that can be supplied by the federal Centers for Medicare and Medicaid Services and the
number of elderly in the county or the nation shall be determined by the most recent
federal census or the most recent estimate of the state demographer as of July 1, of each
year of persons age 65 and older, whichever is the most recent at the time of the request for
replacement. An extreme hardship situation can only be found after the county documents
the existence of unmet medical needs that cannot be addressed by any other alternatives;
deleted text end

new text begin (b) The commissioner, in cooperation with the commissioner of human services,
shall consider the following criteria when determining that an area of the state is a
hardship area with regard to access to nursing facility services:
new text end

new text begin (1) a low number of beds per thousand in a specified area using as a standard the
beds per thousand people age 65 and older, in five year age groups, using data from the
most recent census and population projections, weighted by each groups' most recent
nursing home utilization, of the county at the 20th percentile, as determined by the
commissioner of human services;
new text end

new text begin (2) a high level of out-migration for nursing facility services associated with a
described area from the county or counties of residence to other Minnesota counties, as
determined by the commissioner of human services, using as a standard an amount greater
than the out-migration of the county ranked at the 50th percentile;
new text end

new text begin (3) an adequate level of availability of noninstitutional long-term care services
measured as public spending for home and community-based long-term care services per
individual age 65 and older, in five year age groups, using data from the most recent
census and population projections, weighted by each groups' most recent nursing home
utilization, as determined by the commissioner of human services using as a standard an
amount greater than the 50th percentile of counties;
new text end

new text begin (4) there must be a declaration of hardship resulting from insufficient access to
nursing home beds by local county agencies and area agencies on aging; and
new text end

new text begin (5) other factors that may demonstrate the need to add new nursing facility beds.
new text end

new text begin (c) On August 15 of odd-numbered years, the commissioner, in cooperation with
the commissioner of human services, may publish in the State Register a request for
information in which interested parties, using the data provided under section 144A.351,
along with any other relevant data, demonstrate that a specified area is a hardship area
with regard to access to nursing facility services. For a response to be considered, the
commissioner must receive it by November 15. The commissioner shall make responses
to the request for information available to the public and shall allow 30 days for comment.
The commissioner shall review responses and comments and determine if any areas of
the state are to be declared hardship areas.
new text end

new text begin (d) For each designated hardship area determined in paragraph (c), the commissioner
shall publish a request for proposals in accordance with section 144A.073 and Minnesota
Rules, parts 4655.1070 to 4655.1098. The request for proposals must be published in the
State Register by March 15 following receipt of responses to the request for information.
The request for proposals must specify the number of new beds which may be added
in the designated hardship area, which must not exceed the number which, if added to
the existing number of beds in the area, including beds in layaway status, would have
prevented it from being determined to be a hardship area under paragraph (b), clause
(1). Beginning July 1, 2011, the number of new beds approved must not exceed 200
beds statewide per biennium. After June 30, 2019, the number of new beds that may be
approved in a biennium must not exceed 300 statewide. For a proposal to be considered,
the commissioner must receive it within six months of the publication of the request for
proposals. The commissioner shall review responses to the request for proposals and
shall approve or disapprove each proposal by the following July 15, in accordance with
section 144A.073 and Minnesota Rules, parts 4655.1070 to 4655.1098. The commissioner
shall base approvals or disapprovals on a comparison and ranking of proposals using
only the criteria in subdivision 4a. Approval of a proposal expires after 18 months
unless the facility has added the new beds using existing space, subject to approval
by the commissioner, or has commenced construction as defined in section 144A.071,
subdivision 1a, paragraph (d). Operating payment rates shall be determined according
to Minnesota Rules, part 9549.0057, using the limits under section 256B.441. External
fixed payment rates must be determined according to section 256B.441, subdivision 53.
Property payment rates for facilities with beds added under this subdivision must be
determined in the same manner as rate determinations resulting from projects approved
and completed under section 144A.073.
new text end

deleted text begin (b) to deleted text end new text begin (e) The commissioner may:
new text end

new text begin (1)new text end certify or license new beds in a new facility that is to be operated by the
commissioner of veterans affairs or when the costs of constructing and operating the new
beds are to be reimbursed by the commissioner of veterans affairs or the United States
Veterans Administration;new text begin and
new text end

deleted text begin (c) todeleted text endnew text begin (2)new text end license or certify beds in a facility that has been involuntarily delicensed or
decertified for participation in the medical assistance program, provided that an application
for relicensure or recertification is submitted to the commissionernew text begin by an organization that
is not a related organization as defined in section 256B.441, subdivision 34, to the prior
licensee
new text end within 120 days after delicensure or decertificationdeleted text begin;deleted text endnew text begin.
new text end

deleted text begin (d) to certify two existing beds in a facility with 66 licensed beds on January 1, 1994,
that had an average occupancy rate of 98 percent or higher in both calendar years 1992 and
1993, and which began construction of four attached assisted living units in April 1993; or
deleted text end

deleted text begin (e) to certify four existing beds in a facility in Winona with 139 beds, of which 129
beds are certified.
deleted text end

Sec. 3.

Minnesota Statutes 2010, section 144A.071, is amended by adding a
subdivision to read:


new text begin Subd. 4d. new text end

new text begin Consolidation of nursing facilities. new text end

new text begin (a) The commissioner of health,
in consultation with the commissioner of human services, may approve a request for
consolidation of nursing facilities which includes the closure of one or more facilities
and the upgrading of the physical plant of the remaining nursing facility or facilities,
the costs of which exceed the threshold project limit under subdivision 2, clause (a).
The commissioners shall consider the criteria in this section, section 144A.073, and
section 256B.437, in approving or rejecting a consolidation proposal. In the event the
commissioners approve the request, the commissioner of human services shall calculate a
property rate adjustment according to clauses (1) to (3):
new text end

new text begin (1) the closure of beds shall not be eligible for a planned closure rate adjustment
under section 256B.437, subdivision 6;
new text end

new text begin (2) the construction project permitted in this clause shall not be eligible for a
threshold project rate adjustment under section 256B.434, subdivision 4f, or a moratorium
exception adjustment under section 144A.073; and
new text end

new text begin (3) the property payment rate for a remaining facility or facilities shall be increased
by an amount equal to 65 percent of the projected net cost savings to the state calculated in
paragraph (b), divided by the state's medical assistance percentage of medical assistance
dollars, and then divided by estimated medical assistance resident days, as determined in
paragraph (c), of the remaining nursing facility or facilities in the request in this paragraph.
new text end

new text begin (b) For purposes of calculating the net cost savings to the state, the commissioner
shall consider clauses (1) to (7):
new text end

new text begin (1) the annual savings from estimated medical assistance payments from the net
number of beds closed taking into consideration only beds that are in active service on the
date of the request and that have been in active service for at least three years;
new text end

new text begin (2) the estimated annual cost of increased case load of individuals receiving services
under the elderly waiver;
new text end

new text begin (3) the estimated annual cost of elderly waiver recipients receiving support under
group residential housing;
new text end

new text begin (4) the estimated annual cost of increased case load of individuals receiving services
under the alternative care program;
new text end

new text begin (5) the annual loss of license surcharge payments on closed beds;
new text end

new text begin (6) the savings from not paying planned closure rate adjustments that the facilities
would otherwise be eligible for under section 256B.437; and
new text end

new text begin (7) the savings from not paying property payment rate adjustments from submission
of renovation costs that would otherwise be eligible as threshold projects under section
256B.434, subdivision 4f.
new text end

new text begin (c) For purposes of the calculation in paragraph (a), clause (3), the estimated medical
assistance resident days of the remaining facility or facilities shall be computed assuming
95 percent occupancy multiplied by the historical percentage of medical assistance
resident days of the remaining facility or facilities, as reported on the facility's or facilities'
most recent nursing facility statistical and cost report filed before the plan of closure
is submitted, multiplied by 365.
new text end

new text begin (d) For purposes of net cost of savings to the state in paragraph (b), the average
occupancy percentages will be those reported on the facility's or facilities' most recent
nursing facility statistical and cost report filed before the plan of closure is submitted, and
the average payment rates shall be calculated based on the approved payment rates in
effect at the time the consolidation request is submitted.
new text end

new text begin (e) To qualify for the property payment rate adjustment under this provision, the
closing facilities shall:
new text end

new text begin (1) submit an application for closure according to section 256B.437, subdivision
3; and
new text end

new text begin (2) follow the resident relocation provisions of section 144A.161.
new text end

new text begin (f) The county or counties in which a facility or facilities are closed under this
subdivision shall not be eligible for designation as a hardship area under section 144A.071,
subdivision 3, for five years from the date of the approval of the proposed consolidation.
The applicant shall notify the county of this limitation and the county shall acknowledge
this in a letter of support.
new text end

Sec. 4.

Minnesota Statutes 2010, section 144A.073, subdivision 3c, is amended to read:


Subd. 3c.

Cost neutral relocation projects.

(a) Notwithstanding subdivision 3, the
commissioner may at any time accept proposals, or amendments to proposals previously
approved under this section, for relocations that are cost neutral with respect to state costs
as defined in section 144A.071, subdivision 5a. The commissioner, in consultation with
the commissioner of human services, shall evaluate proposals according to subdivision
deleted text begin 4deleted text endnew text begin 4anew text end, clauses (1), deleted text begin(2), (3), and (9)deleted text endnew text begin (4), (5), (6), and (8),new text end and other criteria established in
ruledeleted text begin.deleted text end new text beginor law. The commissioner of human services shall determine the allowable payment
rates of the facility receiving the beds in accordance with section 256B.441, subdivision
60.
new text endThe commissioner shall approve or disapprove a project within 90 days. deleted text beginProposals
and amendments approved under this subdivision are not subject to the six-mile limit
in subdivision 5, paragraph (e).
deleted text end

(b) For the purposes of paragraph (a), cost neutrality shall be measured over the first
three 12-month periods of operation after completion of the project.

Sec. 5.

Minnesota Statutes 2010, section 144A.073, is amended by adding a
subdivision to read:


new text begin Subd. 4a. new text end

new text begin Criteria for review. new text end

new text begin In reviewing the application materials and submitted
costs by an applicant to the moratorium process, the review panel shall consider the
following criteria in recommending proposals:
new text end

new text begin (1) the extent to which the proposed nursing home project is integrated with other
health and long-term care services for older adults;
new text end

new text begin (2) the extent to which the project provides for the complete replacement of an
outdated physical plant;
new text end

new text begin (3) the extent to which the project results in a reduction of nursing facility beds in an
area that has a relatively high number of beds per thousand occupied by persons age 85
and over;
new text end

new text begin (4) the extent to which the project produces improvements in health; safety,
including life safety code corrections; quality of life; and privacy of residents;
new text end

new text begin (5) the extent to which, under the current facility ownership and management, the
provider has shown the ability to provide good quality of care based on health-related
findings on certification surveys, quality indicator scores, and quality-of-life scores,
including those from the Minnesota nursing home report card;
new text end

new text begin (6) the extent to which the project integrates the latest technology and design
features in a way that improves the resident experience and improves the working
environment for employees;
new text end

new text begin (7) the extent to which the sustainability of the nursing facility can be demonstrated
based on the need for services in the area and the proposed financing of the project; and
new text end

new text begin (8) the extent to which the project provides or maintains access to nursing facility
services needed in the community.
new text end

Sec. 6.

Minnesota Statutes 2010, section 256B.431, is amended by adding a
subdivision to read:


new text begin Subd. 44. new text end

new text begin Property rate increase for a facility in Bloomington effective
November 1, 2010.
new text end

new text begin Notwithstanding any other law to the contrary, money available for
moratorium projects under section 144A.073, subdivision 11, shall be used, effective
November 1, 2010, to fund an approved moratorium exception project for a nursing
facility in Bloomington licensed for 137 beds as of November 1, 2010, up to a total
property rate adjustment of $19.33.
new text end

Sec. 7.

Minnesota Statutes 2010, section 256B.441, is amended by adding a
subdivision to read:


new text begin Subd. 60. new text end

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

new text begin (a) 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 subdivision. All payment rates are based on a 1.0
case mix level, with other case mix 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 (b) 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 RUGS weight 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
score 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 (c) 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 RUGS weight 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 average case mix weight of medical
assistance residents on the most recent cost report.
new text end

new text begin (d) The commissioner shall determine the medical assistance costs prior to the bed
relocation which must be the sum of the amounts determined in paragraphs (b) and (c).
new text end

new text begin (e) 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 average case mix weight of medical assistance residents in the
receiving facility after the bed relocation. The commissioner may use current average
case mix weight or, if data does not exist, may use the statewide average, or may use the
provider's estimate of the average case mix weight; 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 RUGS weight 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 (f) If the amount determined in paragraph (e) is less than or equal to the amount
determined in paragraph (d), the commissioner shall allow a total payment rate equal to
the amount used in paragraph (e), clause (3).
new text end

new text begin (g) If the amount determined in paragraph (e) is greater than the amount determined
in paragraph (d), the commissioner shall allow a rate with a RUGS weight of 1.0 that
when used in paragraph (e), clause (3), results in the amount determined in paragraph (e)
being equal to the amount determined in paragraph (d).
new text end

new text begin (h) If the commissioner relies upon provider estimates in paragraph (e), clause (1)
or (2), then annually, for three years after the rates determined in this subdivision take
effect, the commissioner shall determine the accuracy of the alternative factors of medical
assistance case load and RUGS weight used in this subdivision and shall reduce the total
payment rate for a RUGS weight of 1.0 if the factors used result in medical assistance
costs exceeding the amount in paragraph (d). 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 paragraph (e) 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 (i) When beds approved for relocation are put into active service at the destination
facility, rates determined in this subdivision must be adjusted by any adjustment amounts
that were implemented after the date of the letter of approval.
new text end

Sec. 8. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2010, section 144A.073, subdivisions 4 and 5, new text end new text begin are repealed.
new text end

Sec. 9. new text beginEFFECTIVE DATE.
new text end

new text begin This article is effective the day following final enactment.
new text end

ARTICLE 2

CONFORMING CHANGES

Section 1.

Minnesota Statutes 2010, section 144A.071, subdivision 4a, is amended to
read:


Subd. 4a.

Exceptions for replacement beds.

It is in the best interest of the state
to ensure that nursing homes and boarding care homes continue to meet the physical
plant licensing and certification requirements by permitting certain construction projects.
Facilities should be maintained in condition to satisfy the physical and emotional needs
of residents while allowing the state to maintain control over nursing home expenditure
growth.

The commissioner of health in coordination with the commissioner of human
services, may approve the renovation, replacement, upgrading, or relocation of a nursing
home or boarding care home, under the following conditions:

(a) to license or certify beds in a new facility constructed to replace a facility or to
make repairs in an existing facility that was destroyed or damaged after June 30, 1987, by
fire, lightning, or other hazard provided:

(i) destruction was not caused by the intentional act of or at the direction of a
controlling person of the facility;

(ii) at the time the facility was destroyed or damaged the controlling persons of the
facility maintained insurance coverage for the type of hazard that occurred in an amount
that a reasonable person would conclude was adequate;

(iii) the net proceeds from an insurance settlement for the damages caused by the
hazard are applied to the cost of the new facility or repairs;

deleted text begin (iv) the new facility is constructed on the same site as the destroyed facility or on
another site subject to the restrictions in section 144A.073, subdivision 5;
deleted text end

deleted text begin (v)deleted text endnew text begin (iv)new text end the number of licensed and certified beds in the new facility does not exceed
the number of licensed and certified beds in the destroyed facility; and

deleted text begin (vi)deleted text endnew text begin (v)new text end the commissioner determines that the replacement beds are needed to
prevent an inadequate supply of beds.

Project construction costs incurred for repairs authorized under this clause shall not be
considered in the dollar threshold amount defined in subdivision 2;

(b) to license or certify beds that are moved from one location to another within a
nursing home facility, provided the total costs of remodeling performed in conjunction
with the relocation of beds does not exceed $1,000,000;

(c) to license or certify beds in a project recommended for approval under section
144A.073;

(d) to license or certify beds that are moved from an existing state nursing home to
a different state facility, provided there is no net increase in the number of state nursing
home beds;

(e) to certify and license as nursing home beds boarding care beds in a certified
boarding care facility if the beds meet the standards for nursing home licensure, or in a
facility that was granted an exception to the moratorium under section 144A.073, and if
the cost of any remodeling of the facility does not exceed $1,000,000. If boarding care
beds are licensed as nursing home beds, the number of boarding care beds in the facility
must not increase beyond the number remaining at the time of the upgrade in licensure.
The provisions contained in section 144A.073 regarding the upgrading of the facilities
do not apply to facilities that satisfy these requirements;

(f) to license and certify up to 40 beds transferred from an existing facility owned and
operated by the Amherst H. Wilder Foundation in the city of St. Paul to a new unit at the
same location as the existing facility that will serve persons with Alzheimer's disease and
other related disorders. The transfer of beds may occur gradually or in stages, provided
the total number of beds transferred does not exceed 40. At the time of licensure and
certification of a bed or beds in the new unit, the commissioner of health shall delicense
and decertify the same number of beds in the existing facility. As a condition of receiving
a license or certification under this clause, the facility must make a written commitment
to the commissioner of human services that it will not seek to receive an increase in its
property-related payment rate as a result of the transfers allowed under this paragraph;

(g) to license and certify nursing home beds to replace currently licensed and certified
boarding care beds which may be located either in a remodeled or renovated boarding care
or nursing home facility or in a remodeled, renovated, newly constructed, or replacement
nursing home facility within the identifiable complex of health care facilities in which the
currently licensed boarding care beds are presently located, provided that the number of
boarding care beds in the facility or complex are decreased by the number to be licensed
as nursing home beds and further provided that, if the total costs of new construction,
replacement, remodeling, or renovation exceed ten percent of the appraised value of
the facility or $200,000, whichever is less, the facility makes a written commitment to
the commissioner of human services that it will not seek to receive an increase in its
property-related payment rate by reason of the new construction, replacement, remodeling,
or renovation. The provisions contained in section 144A.073 regarding the upgrading of
facilities do not apply to facilities that satisfy these requirements;

(h) to license as a nursing home and certify as a nursing facility a facility that is
licensed as a boarding care facility but not certified under the medical assistance program,
but only if the commissioner of human services certifies to the commissioner of health that
licensing the facility as a nursing home and certifying the facility as a nursing facility will
result in a net annual savings to the state general fund of $200,000 or more;

(i) to certify, after September 30, 1992, and prior to July 1, 1993, existing nursing
home beds in a facility that was licensed and in operation prior to January 1, 1992;

(j) to license and certify new nursing home beds to replace beds in a facility acquired
by the Minneapolis Community Development Agency as part of redevelopment activities
in a city of the first class, provided the new facility is located within three miles of the site
of the old facility. Operating and property costs for the new facility must be determined
and allowed under section 256B.431 or 256B.434;

(k) to license and certify up to 20 new nursing home beds in a community-operated
hospital and attached convalescent and nursing care facility with 40 beds on April 21,
1991, that suspended operation of the hospital in April 1986. The commissioner of human
services shall provide the facility with the same per diem property-related payment rate
for each additional licensed and certified bed as it will receive for its existing 40 beds;

(l) to license or certify beds in renovation, replacement, or upgrading projects as
defined in section 144A.073, subdivision 1, so long as the cumulative total costs of the
facility's remodeling projects do not exceed $1,000,000;

(m) to license and certify beds that are moved from one location to another for the
purposes of converting up to five four-bed wards to single or double occupancy rooms
in a nursing home that, as of January 1, 1993, was county-owned and had a licensed
capacity of 115 beds;

(n) to allow a facility that on April 16, 1993, was a 106-bed licensed and certified
nursing facility located in Minneapolis to layaway all of its licensed and certified nursing
home beds. These beds may be relicensed and recertified in a newly constructed teaching
nursing home facility affiliated with a teaching hospital upon approval by the legislature.
The proposal must be developed in consultation with the interagency committee on
long-term care planning. The beds on layaway status shall have the same status as
voluntarily delicensed and decertified beds, except that beds on layaway status remain
subject to the surcharge in section 256.9657. This layaway provision expires July 1, 1998;

(o) to allow a project which will be completed in conjunction with an approved
moratorium exception project for a nursing home in southern Cass County and which is
directly related to that portion of the facility that must be repaired, renovated, or replaced,
to correct an emergency plumbing problem for which a state correction order has been
issued and which must be corrected by August 31, 1993;

(p) to allow a facility that on April 16, 1993, was a 368-bed licensed and certified
nursing facility located in Minneapolis to layaway, upon 30 days prior written notice to
the commissioner, up to 30 of the facility's licensed and certified beds by converting
three-bed wards to single or double occupancy. Beds on layaway status shall have the
same status as voluntarily delicensed and decertified beds except that beds on layaway
status remain subject to the surcharge in section 256.9657, remain subject to the license
application and renewal fees under section 144A.07 and shall be subject to a $100 per bed
reactivation fee. In addition, at any time within three years of the effective date of the
layaway, the beds on layaway status may be:

(1) relicensed and recertified upon relocation and reactivation of some or all of
the beds to an existing licensed and certified facility or facilities located in Pine River,
Brainerd, or International Falls; provided that the total project construction costs related to
the relocation of beds from layaway status for any facility receiving relocated beds may
not exceed the dollar threshold provided in subdivision 2 unless the construction project
has been approved through the moratorium exception process under section 144A.073;

(2) relicensed and recertified, upon reactivation of some or all of the beds within the
facility which placed the beds in layaway status, if the commissioner has determined a
need for the reactivation of the beds on layaway status.

The property-related payment rate of a facility placing beds on layaway status
must be adjusted by the incremental change in its rental per diem after recalculating the
rental per diem as provided in section 256B.431, subdivision 3a, paragraph (c). The
property-related payment rate for a facility relicensing and recertifying beds from layaway
status must be adjusted by the incremental change in its rental per diem after recalculating
its rental per diem using the number of beds after the relicensing to establish the facility's
capacity day divisor, which shall be effective the first day of the month following the
month in which the relicensing and recertification became effective. Any beds remaining
on layaway status more than three years after the date the layaway status became effective
must be removed from layaway status and immediately delicensed and decertified;

(q) to license and certify beds in a renovation and remodeling project to convert 12
four-bed wards into 24 two-bed rooms, expand space, and add improvements in a nursing
home that, as of January 1, 1994, met the following conditions: the nursing home was
located in Ramsey County; had a licensed capacity of 154 beds; and had been ranked
among the top 15 applicants by the 1993 moratorium exceptions advisory review panel.
The total project construction cost estimate for this project must not exceed the cost
estimate submitted in connection with the 1993 moratorium exception process;

(r) to license and certify up to 117 beds that are relocated from a licensed and
certified 138-bed nursing facility located in St. Paul to a hospital with 130 licensed
hospital beds located in South St. Paul, provided that the nursing facility and hospital are
owned by the same or a related organization and that prior to the date the relocation is
completed the hospital ceases operation of its inpatient hospital services at that hospital.
After relocation, the nursing facility's status under section 256B.431, subdivision 2j, shall
be the same as it was prior to relocation. The nursing facility's property-related payment
rate resulting from the project authorized in this paragraph shall become effective no
earlier than April 1, 1996. For purposes of calculating the incremental change in the
facility's rental per diem resulting from this project, the allowable appraised value of
the nursing facility portion of the existing health care facility physical plant prior to the
renovation and relocation may not exceed $2,490,000;

(s) to license and certify two beds in a facility to replace beds that were voluntarily
delicensed and decertified on June 28, 1991;

(t) to allow 16 licensed and certified beds located on July 1, 1994, in a 142-bed
nursing home and 21-bed boarding care home facility in Minneapolis, notwithstanding
the licensure and certification after July 1, 1995, of the Minneapolis facility as a 147-bed
nursing home facility after completion of a construction project approved in 1993 under
section 144A.073, to be laid away upon 30 days' prior written notice to the commissioner.
Beds on layaway status shall have the same status as voluntarily delicensed or decertified
beds except that they shall remain subject to the surcharge in section 256.9657. The
16 beds on layaway status may be relicensed as nursing home beds and recertified at
any time within five years of the effective date of the layaway upon relocation of some
or all of the beds to a licensed and certified facility located in Watertown, provided that
the total project construction costs related to the relocation of beds from layaway status
for the Watertown facility may not exceed the dollar threshold provided in subdivision
2 unless the construction project has been approved through the moratorium exception
process under section 144A.073.

The property-related payment rate of the facility placing beds on layaway status
must be adjusted by the incremental change in its rental per diem after recalculating the
rental per diem as provided in section 256B.431, subdivision 3a, paragraph (c). The
property-related payment rate for the facility relicensing and recertifying beds from
layaway status must be adjusted by the incremental change in its rental per diem after
recalculating its rental per diem using the number of beds after the relicensing to establish
the facility's capacity day divisor, which shall be effective the first day of the month
following the month in which the relicensing and recertification became effective. Any
beds remaining on layaway status more than five years after the date the layaway status
became effective must be removed from layaway status and immediately delicensed
and decertified;

(u) to license and certify beds that are moved within an existing area of a facility or
to a newly constructed addition which is built for the purpose of eliminating three- and
four-bed rooms and adding space for dining, lounge areas, bathing rooms, and ancillary
service areas in a nursing home that, as of January 1, 1995, was located in Fridley and had
a licensed capacity of 129 beds;

(v) to relocate 36 beds in Crow Wing County and four beds from Hennepin County
to a 160-bed facility in Crow Wing County, provided all the affected beds are under
common ownership;

(w) to license and certify a total replacement project of up to 49 beds located in
Norman County that are relocated from a nursing home destroyed by flood and whose
residents were relocated to other nursing homes. The operating cost payment rates for
the new nursing facility shall be determined based on the interim and settle-up payment
provisions of Minnesota Rules, part 9549.0057, and the reimbursement provisions of
section 256B.431, except that subdivision 26, paragraphs (a) and (b), shall not apply until
the second rate year after the settle-up cost report is filed. Property-related reimbursement
rates shall be determined under section 256B.431, taking into account any federal or state
flood-related loans or grants provided to the facility;

(x) to license and certify a total replacement project of up to 129 beds located
in Polk County that are relocated from a nursing home destroyed by flood and whose
residents were relocated to other nursing homes. The operating cost payment rates for
the new nursing facility shall be determined based on the interim and settle-up payment
provisions of Minnesota Rules, part 9549.0057, and the reimbursement provisions of
section 256B.431, except that subdivision 26, paragraphs (a) and (b), shall not apply until
the second rate year after the settle-up cost report is filed. Property-related reimbursement
rates shall be determined under section 256B.431, taking into account any federal or state
flood-related loans or grants provided to the facility;

(y) to license and certify beds in a renovation and remodeling project to convert 13
three-bed wards into 13 two-bed rooms and 13 single-bed rooms, expand space, and
add improvements in a nursing home that, as of January 1, 1994, met the following
conditions: the nursing home was located in Ramsey County, was not owned by a hospital
corporation, had a licensed capacity of 64 beds, and had been ranked among the top 15
applicants by the 1993 moratorium exceptions advisory review panel. The total project
construction cost estimate for this project must not exceed the cost estimate submitted in
connection with the 1993 moratorium exception process;

(z) to license and certify up to 150 nursing home beds to replace an existing 285
bed nursing facility located in St. Paul. The replacement project shall include both the
renovation of existing buildings and the construction of new facilities at the existing
site. The reduction in the licensed capacity of the existing facility shall occur during the
construction project as beds are taken out of service due to the construction process. Prior
to the start of the construction process, the facility shall provide written information to the
commissioner of health describing the process for bed reduction, plans for the relocation
of residents, and the estimated construction schedule. The relocation of residents shall be
in accordance with the provisions of law and rule;

(aa) to allow the commissioner of human services to license an additional 36 beds
to provide residential services for the physically disabled under Minnesota Rules, parts
9570.2000 to 9570.3400, in a 198-bed nursing home located in Red Wing, provided that
the total number of licensed and certified beds at the facility does not increase;

(bb) to license and certify a new facility in St. Louis County with 44 beds
constructed to replace an existing facility in St. Louis County with 31 beds, which has
resident rooms on two separate floors and an antiquated elevator that creates safety
concerns for residents and prevents nonambulatory residents from residing on the second
floor. The project shall include the elimination of three- and four-bed rooms;

(cc) to license and certify four beds in a 16-bed certified boarding care home in
Minneapolis to replace beds that were voluntarily delicensed and decertified on or
before March 31, 1992. The licensure and certification is conditional upon the facility
periodically assessing and adjusting its resident mix and other factors which may
contribute to a potential institution for mental disease declaration. The commissioner of
human services shall retain the authority to audit the facility at any time and shall require
the facility to comply with any requirements necessary to prevent an institution for mental
disease declaration, including delicensure and decertification of beds, if necessary;

(dd) to license and certify 72 beds in an existing facility in Mille Lacs County with
80 beds as part of a renovation project. The renovation must include construction of
an addition to accommodate ten residents with beginning and midstage dementia in a
self-contained living unit; creation of three resident households where dining, activities,
and support spaces are located near resident living quarters; designation of four beds
for rehabilitation in a self-contained area; designation of 30 private rooms; and other
improvements;

(ee) to license and certify beds in a facility that has undergone replacement or
remodeling as part of a planned closure under section 256B.437;

(ff) to license and certify a total replacement project of up to 124 beds located
in Wilkin County that are in need of relocation from a nursing home significantly
damaged by flood. The operating cost payment rates for the new nursing facility shall
be determined based on the interim and settle-up payment provisions of Minnesota
Rules, part 9549.0057, and the reimbursement provisions of section 256B.431, except
that section 256B.431, subdivision 26, paragraphs (a) and (b), shall not apply until the
second rate year after the settle-up cost report is filed. Property-related reimbursement
rates shall be determined under section 256B.431, taking into account any federal or state
flood-related loans or grants provided to the facility;

(gg) to allow the commissioner of human services to license an additional nine beds
to provide residential services for the physically disabled under Minnesota Rules, parts
9570.2000 to 9570.3400, in a 240-bed nursing home located in Duluth, provided that the
total number of licensed and certified beds at the facility does not increase;

(hh) to license and certify up to 120 new nursing facility beds to replace beds in a
facility in Anoka County, which was licensed for 98 beds as of July 1, 2000, provided the
new facility is located within four miles of the existing facility and is in Anoka County.
Operating and property rates shall be determined and allowed under section 256B.431 and
Minnesota Rules, parts 9549.0010 to 9549.0080, or section 256B.434 or 256B.435. The
provisions of section 256B.431, subdivision 26, paragraphs (a) and (b), do not apply until
the second rate year following settle-up; or

(ii) to transfer up to 98 beds of a 129-licensed bed facility located in Anoka County
that, as of March 25, 2001, is in the active process of closing, to a 122-licensed bed
nonprofit nursing facility located in the city of Columbia Heights or its affiliate. The
transfer is effective when the receiving facility notifies the commissioner in writing of the
number of beds accepted. The commissioner shall place all transferred beds on layaway
status held in the name of the receiving facility. The layaway adjustment provisions of
section 256B.431, subdivision 30, do not apply to this layaway. The receiving facility
may only remove the beds from layaway for recertification and relicensure at the receiving
facility's current site, or at a newly constructed facility located in Anoka County. The
receiving facility must receive statutory authorization before removing these beds from
layaway status, or may remove these beds from layaway status if removal from layaway
status is part of a moratorium exception project approved by the commissioner under
section 144A.073.

Sec. 2.

Minnesota Statutes 2010, section 256B.431, subdivision 26, is amended to read:


Subd. 26.

Changes to nursing facility reimbursement beginning July 1, 1997.

The nursing facility reimbursement changes in paragraphs (a) to (e) shall apply in the
sequence specified in Minnesota Rules, parts 9549.0010 to 9549.0080, and this section,
beginning July 1, 1997.

(a) For rate years beginning on or after July 1, 1997, the commissioner shall limit a
nursing facility's allowable operating per diem for each case mix category for each rate
year. The commissioner shall group nursing facilities into two groups, freestanding and
nonfreestanding, within each geographic group, using their operating cost per diem for
the case mix A classification. A nonfreestanding nursing facility is a nursing facility
whose other operating cost per diem is subject to the hospital attached, short length of
stay, or the rule 80 limits. All other nursing facilities shall be considered freestanding
nursing facilities. The commissioner shall then array all nursing facilities in each grouping
by their allowable case mix A operating cost per diem. In calculating a nursing facility's
operating cost per diem for this purpose, the commissioner shall exclude the raw food
cost per diem related to providing special diets that are based on religious beliefs, as
determined in subdivision 2b, paragraph (h). For those nursing facilities in each grouping
whose case mix A operating cost per diem:

(1) is at or below the median of the array, the commissioner shall limit the nursing
facility's allowable operating cost per diem for each case mix category to the lesser of
the prior reporting year's allowable operating cost per diem as specified in Laws 1996,
chapter 451, article 3, section 11, paragraph (h), plus the inflation factor as established
in paragraph (d), clause (2), increased by two percentage points, or the current reporting
year's corresponding allowable operating cost per diem; or

(2) is above the median of the array, the commissioner shall limit the nursing
facility's allowable operating cost per diem for each case mix category to the lesser of
the prior reporting year's allowable operating cost per diem as specified in Laws 1996,
chapter 451, article 3, section 11, paragraph (h), plus the inflation factor as established
in paragraph (d), clause (2), increased by one percentage point, or the current reporting
year's corresponding allowable operating cost per diem.

For purposes of paragraph (a), if a nursing facility reports on its cost report a
reduction in cost due to a refund or credit for a rate year beginning on or after July 1, 1998,
the commissioner shall increase that facility's spend-up limit for the rate year following
the current rate year by the amount of the cost reduction divided by its resident days for
the reporting year preceding the rate year in which the adjustment is to be made.

(b) For rate years beginning on or after July 1, 1997, the commissioner shall limit the
allowable operating cost per diem for high cost nursing facilities. After application of the
limits in paragraph (a) to each nursing facility's operating cost per diem, the commissioner
shall group nursing facilities into two groups, freestanding or nonfreestanding, within each
geographic group. A nonfreestanding nursing facility is a nursing facility whose other
operating cost per diem are subject to hospital attached, short length of stay, or rule 80
limits. All other nursing facilities shall be considered freestanding nursing facilities. The
commissioner shall then array all nursing facilities within each grouping by their allowable
case mix A operating cost per diem. In calculating a nursing facility's operating cost per
diem for this purpose, the commissioner shall exclude the raw food cost per diem related to
providing special diets that are based on religious beliefs, as determined in subdivision 2b,
paragraph (h). For those nursing facilities in each grouping whose case mix A operating
cost per diem exceeds 1.0 standard deviation above the median, the commissioner shall
reduce their allowable operating cost per diem by three percent. For those nursing
facilities in each grouping whose case mix A operating cost per diem exceeds 0.5 standard
deviation above the median but is less than or equal to 1.0 standard deviation above the
median, the commissioner shall reduce their allowable operating cost per diem by two
percent. However, in no case shall a nursing facility's operating cost per diem be reduced
below its grouping's limit established at 0.5 standard deviations above the median.

(c) For rate years beginning on or after July 1, 1997, the commissioner shall
determine a nursing facility's efficiency incentive by first computing the allowable
difference, which is the lesser of $4.50 or the amount by which the facility's other
operating cost limit exceeds its nonadjusted other operating cost per diem for that rate
year. The commissioner shall compute the efficiency incentive by:

(1) subtracting the allowable difference from $4.50 and dividing the result by $4.50;

(2) multiplying 0.20 by the ratio resulting from clause (1), and then;

(3) adding 0.50 to the result from clause (2); and

(4) multiplying the result from clause (3) times the allowable difference.

The nursing facility's efficiency incentive payment shall be the lesser of $2.25 or the
product obtained in clause (4).

(d) For rate years beginning on or after July 1, 1997, the forecasted price index for
a nursing facility's allowable operating cost per diem shall be determined under clauses
(1) and (2) using the change in the Consumer Price Index-All Items (United States city
average) (CPI-U) as forecasted by Data Resources, Inc. The commissioner shall use the
indices as forecasted in the fourth quarter of the calendar year preceding the rate year,
subject to subdivision 2l, paragraph (c).

(1) The CPI-U forecasted index for allowable operating cost per diem shall be based
on the 21-month period from the midpoint of the nursing facility's reporting year to the
midpoint of the rate year following the reporting year.

(2) For rate years beginning on or after July 1, 1997, the forecasted index for
operating cost limits referred to in subdivision 21, paragraph (b), shall be based on
the CPI-U for the 12-month period between the midpoints of the two reporting years
preceding the rate year.

(e) After applying these provisions for the respective rate years, the commissioner
shall index these allowable operating cost per diem by the inflation factor provided for in
paragraph (d), clause (1), and add the nursing facility's efficiency incentive as computed in
paragraph (c).

(f) For the rate years beginning on July 1, 1997, July 1, 1998, and July 1, 1999, a
nursing facility licensed for 40 beds effective May 1, 1992, with a subsequent increase of
20 Medicare/Medicaid certified beds, effective January 26, 1993, in accordance with an
increase in licensure is exempt from paragraphs (a) and (b).

deleted text begin (g) For a nursing facility whose construction project was authorized according to
section 144A.073, subdivision 5, paragraph (g), the operating cost payment rates for
the new location shall be determined based on Minnesota Rules, part 9549.0057. The
relocation allowed under section 144A.073, subdivision 5, paragraph (g), and the rate
determination allowed under this paragraph must meet the cost neutrality requirements
of section 144A.073, subdivision 3c. Paragraphs (a) and (b) shall not apply until the
second rate year after the settle-up cost report is filed. Notwithstanding subdivision 2b,
paragraph (g), real estate taxes and special assessments payable by the new location, a
501(c)(3) nonprofit corporation, shall be included in the payment rates determined under
this subdivision for all subsequent rate years.
deleted text end

deleted text begin (h)deleted text endnew text begin (g)new text end For the rate year beginning July 1, 1997, the commissioner shall compute
the payment rate for a nursing facility licensed for 94 beds on September 30, 1996,
that applied in October 1993 for approval of a total replacement under the moratorium
exception process in section 144A.073, and completed the approved replacement in June
1995, with other operating cost spend-up limit under paragraph (a), increased by $3.98,
and after computing the facility's payment rate according to this section, the commissioner
shall make a one-year positive rate adjustment of $3.19 for operating costs related to the
newly constructed total replacement, without application of paragraphs (a) and (b). The
facility's per diem, before the $3.19 adjustment, shall be used as the prior reporting year's
allowable operating cost per diem for payment rate calculation for the rate year beginning
July 1, 1998. A facility described in this paragraph is exempt from paragraph (b) for the
rate years beginning July 1, 1997, and July 1, 1998.

deleted text begin (i)deleted text endnew text begin (h)new text end For the purpose of applying the limit stated in paragraph (a), a nursing facility
in Kandiyohi County licensed for 86 beds that was granted hospital-attached status on
December 1, 1994, shall have the prior year's allowable care-related per diem increased
by $3.207 and the prior year's other operating cost per diem increased by $4.777 before
adding the inflation in paragraph (d), clause (2), for the rate year beginning on July 1, 1997.

deleted text begin (j)deleted text endnew text begin (i)new text end For the purpose of applying the limit stated in paragraph (a), a 117 bed nursing
facility located in Pine County shall have the prior year's allowable other operating cost
per diem increased by $1.50 before adding the inflation in paragraph (d), clause (2), for
the rate year beginning on July 1, 1997.

deleted text begin (k)deleted text endnew text begin (j)new text end For the purpose of applying the limit under paragraph (a), a nursing facility in
Hibbing licensed for 192 beds shall have the prior year's allowable other operating cost
per diem increased by $2.67 before adding the inflation in paragraph (d), clause (2),
for the rate year beginning July 1, 1997.

Sec. 3.

Minnesota Statutes 2010, section 256B.437, subdivision 4, is amended to read:


Subd. 4.

Criteria for review of application.

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

(1) improved quality of care and quality of life for consumers;

(2) closure of a nursing facility that has a poor physical plantdeleted text begin, which may be
evidenced by the conditions referred to in section 144A.073, subdivision 4, clauses (4)
and (5)
deleted text end;

(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:

(i) the county in which the facility is located;

(ii) the county and all contiguous counties;

(iii) the region in which the facility is located; or

(iv) the facility's service area;

the facility shall indicate in its application the service area it believes is appropriate for this
measurement. 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;

(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);

(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;

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

(7) innovative use planned for the closed facility's physical plant;

(8) evidence that the proposal serves the interests of the state; and

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

Sec. 4. new text beginEFFECTIVE DATE.
new text end

new text begin This article is effective the day following final enactment.
new text end