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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language


  

                         Laws of Minnesota 1983 

                        CHAPTER 199--S.F.No. 695
           An act relating to public welfare; requiring new 
          procedures for determining nursing home payment rates; 
          requiring a moratorium on certification or welfare 
          licensure of new beds with certain exceptions; 
          providing for an interagency board for quality 
          assurance; appropriating money; amending Minnesota 
          Statutes 1982, sections 144A.10, subdivisions 4, 6, 
          and by adding a subdivision; 256B.091, subdivisions 1, 
          2, 4, and 8; 256B.41; 256B.47; and 256B.48; proposing 
          new law coded in Minnesota Statutes 1982, chapters 
          144A and 256B; repealing Minnesota Statutes 1982, 
          sections 256B.42; 256B.43; 256B.44; 256B.45; and 
          256B.46; and 12 MCAR 2.049. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [144A.071] [MORATORIUM ON CERTIFICATION OF 
NURSING HOME BEDS.] 
    Subdivision 1.  [FINDINGS.] The legislature finds that 
medical assistance expenditures are increasing at a much faster 
rate than the state's ability to pay them; that reimbursement 
for nursing home care and ancillary services comprises over half 
of medical assistance costs, and, therefore, controlling 
expenditures for nursing home care is essential to prudent 
management of the state's budget; that construction of new 
nursing homes, the addition of more nursing home beds to the 
state's long-term care resources, and increased conversion of 
beds to skilled nursing facility bed status inhibits the ability 
to control expenditures; that Minnesota already leads the nation 
in nursing home expenditures per capita, has the fifth highest 
number of beds per capita elderly, and that private paying 
individuals and medical assistance recipients have equivalent 
access to nursing home care; and that in the absence of a 
moratorium the increased numbers of nursing homes and nursing 
home beds will consume resources that would otherwise be 
available to develop a comprehensive long-term care system that 
includes a continuum of care.  Unless action is taken, this 
expansion of bed capacity and changes of beds to a higher 
classification of care are likely to accelerate with the repeal 
of the certificate of need program effective March 15, 1984. The 
legislature also finds that Minnesota's dependence on 
institutional care for elderly persons is due in part to the 
dearth of alternative services in the home and community.  
     The legislature declares that a moratorium on medical 
assistance certification of new nursing home beds and on changes 
in certification to a higher level of care is necessary to 
control nursing home expenditure growth and enable the state to 
meet the needs of its elderly by providing high quality services 
in the most appropriate manner along a continuum of care.  
    Subd. 2.  [MORATORIUM.] Notwithstanding the provisions of 
the Certificate of Need Act, sections 145.832 to 145.845, or any 
other law to the contrary, the commissioner of health, in 
coordination with the commissioner of public welfare, shall deny 
each request by a nursing home or boarding care home, except an 
intermediate care facility for the mentally retarded, for 
addition of new certified beds or for a change or changes in the 
certification status of existing beds except as provided in 
subdivision 3.  The total number of certified beds in the state 
in the skilled level and in the intermediate levels of care 
shall remain at or decrease from the number of beds certified at 
each level of care on the effective date of this section, except 
as allowed under subdivision 3.  "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.  
    The commissioner of public welfare, in coordination with 
the commissioner of health, shall deny any request to issue a 
license under sections 245.781 to 245.812 and 252.28 to a 
nursing home or boarding care home, if that license would result 
in an increase in the medical assistance reimbursement amount.  
    Subd. 3.  [EXCEPTIONS.] The commissioner of health, in 
coordination with the commissioner of welfare, may approve the 
addition of a new certified bed or change in the certification 
status of an existing bed under the following conditions:  
    (a) To replace a bed decertified after the effective date 
of this section 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 health care financing administration 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.  In allowing replacement of a 
decertified bed, the commissioners shall ensure that the number 
of added or recertified beds does not exceed the total number of 
decertified beds in the state in that level of care.  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;  
    (b) To certify a new bed in a facility that commenced 
construction before the effective date of this section.  For the 
purposes of this section, "commenced construction" means that 
all of the following conditions were met:  the final working 
drawings and specifications were approved by the commissioner of 
health; the construction contracts were let; a timely 
construction schedule was developed, stipulating dates for 
beginning, achieving various stages, and completing 
construction; and all zoning and building permits were secured;  
    (c) To certify beds in a new nursing home that is needed in 
order to meet the special dietary needs of its residents, if: 
the nursing home proves to the commissioner's satisfaction that 
the needs of its residents cannot otherwise be met; elements of 
the special diet are not available through most food 
distributors; and proper preparation of the special diet 
requires incurring various operating expenses, including extra 
food preparation or serving items, not incurred to a similar 
extent by most nursing homes; or 
    (d) When the change in certification status results in a 
decrease in the reimbursement amount.  
    Subd. 4.  [MONITORING.] The commissioner of health, in 
coordination with the commissioner of public welfare, shall 
implement mechanisms to monitor and analyze the effect of the 
moratorium in the different geographic areas of the state.  The 
commissioner of health shall submit to the legislature, no later 
than January 15, 1984, and annually thereafter, an assessment of 
the impact of the moratorium by geographic area, with particular 
attention to service deficits or problems and a corrective 
action plan.  
    Subd. 5.  [REPORT.] The commissioner of energy, planning, 
and development, in consultation with the commissioners of 
health and public welfare, shall report to the senate health and 
human services committee and the house health and welfare 
committee by January 15, 1986 and biennially thereafter 
regarding:  
    projections on the number of elderly Minnesota residents 
including medical assistance recipients;  
    the number of residents most at risk for nursing home 
placement;  
    the needs for long-term care and alternative home and 
noninstitutional services;  
    availability of and access to alternative services by 
geographic region; and 
    the necessity or desirability of continuing, modifying, or 
repealing the moratorium in relation to the availability and 
development of the continuum of long-term care services.  
     Sec. 2.  Minnesota Statutes 1982, section 144A.10, 
subdivision 4, is amended to read:  
    Subd. 4.  [CORRECTION ORDERS.] Whenever a duly authorized 
representative of the commissioner of health finds upon 
inspection of a nursing home, that the facility or a controlling 
person or an employee of the facility is not in compliance with 
sections 144.651, 144A.01 to 144A.17, or 626.557 or the rules 
promulgated thereunder, a correction order shall be issued to 
the facility.  The correction order shall state the deficiency, 
cite the specific rule or statute violated, state the suggested 
method of correction, and specify the time allowed for 
correction.  The commissioner of health by rule shall establish 
a schedule of allowable time periods for correction of nursing 
home deficiencies.  If the commissioner finds that the nursing 
home had uncorrected violations and that two or more of the 
uncorrected violations create a risk to resident care, safety, 
or rights, the commissioner shall notify the commissioner of 
public welfare who shall review reimbursement to the nursing 
home to determine the extent to which the state has paid for 
substandard care.  
    Sec. 3.  Minnesota Statutes 1982, section 144A.10, 
subdivision 6, is amended to read: 
    Subd. 6.  [FINES.] A nursing home which is issued a notice 
of noncompliance with a correction order shall be assessed a 
civil fine in accordance with a schedule of fines promulgated by 
rule of established by the commissioner of health before 
December 1, 1983.  In establishing the schedule of fines, the 
commissioner shall consider the potential for harm presented to 
any resident as a result of noncompliance with each statute or 
rule.  The fine shall be assessed for each day the facility 
remains in noncompliance and until a notice of correction is 
received by the commissioner of health in accordance with 
subdivision 7.  No fine for a specific violation may exceed $250 
$500 per day of noncompliance. 
    Sec. 4.  Minnesota Statutes 1982, section 144A.10, is 
amended by adding a subdivision to read:  
    Subd. 6a.  [SCHEDULE OF FINES.] The commissioner of health 
shall propose for adoption the schedule of fines by publishing 
it in the State Register and allowing a period of 60 days from 
the publication date for interested persons to submit written 
comments on the schedule.  Within 60 days after the close of the 
comment period, and after considering any comments received, the 
commissioner shall adopt the schedule in final form.  
    The schedule of fines is exempt from the definition of 
"rule" in section 14.02, subdivision 4, and has the force and 
effect of law upon compliance with section 14.38, subdivision 
7.  The effective date of the schedule of fines is five days 
after publication, as provided in section 14.38, subdivision 8. 
The provisions of any rule establishing a schedule of fines for 
noncompliance with correction orders issued to nursing homes 
remain effective with respect to nursing homes until repealed, 
modified, or superseded by the schedule established in 
accordance with this subdivision.  
    Sec. 5.  [144A.31] [INTERAGENCY BOARD FOR QUALITY 
ASSURANCE.] 
    Subdivision 1.  [INTERAGENCY BOARD.] The commissioners of 
health and public welfare shall establish, by July 1, 1983, an 
interagency board of employees of their respective departments 
who are knowledgeable and employed in the areas of long-term 
care, geriatric care, long-term care facility inspection, or 
quality of care assurance.  The number of interagency board 
members shall not exceed seven; three members each to represent 
the commissioners of health and public welfare and one member to 
represent the commissioner of public safety in the enforcement 
of fire and safety standards in nursing homes.  The commissioner 
of public welfare or a designee shall chair and convene the 
board.  The board may utilize the expertise and time of other 
individuals employed by either department as needed.  The board 
may recommend that the commissioners contract for services as 
needed.  The board shall meet as often as necessary to 
accomplish its duties, but at least monthly.  The board shall 
establish procedures, including public hearings, for allowing 
regular opportunities for input from residents, nursing homes, 
and other interested persons.  
    Subd. 2.  [INSPECTIONS.] No later than January 1, 1984, the 
board shall develop and recommend implementation and enforcement 
of an effective system to ensure quality of care in each nursing 
home in the state.  Quality of care includes evaluating, using 
the resident's care plan, whether the resident's ability to 
function is optimized and should not be measured solely by the 
number or amount of services provided.  
    The board shall assist the commissioner of health in 
ensuring that inspections and reinspections of nursing homes are 
conducted with a frequency and in a manner calculated to most 
effectively and appropriately fulfill its quality assurance 
responsibilities and achieve the greatest benefit to nursing 
home residents.  The commissioner of health shall require a 
higher frequency and extent of inspections with respect to those 
nursing homes that present the most serious concerns with 
respect to resident health, treatment, comfort, safety, and 
well-being.  These concerns include but are not limited to: 
complaints about care, safety, or rights; situations where 
previous inspections or reinspections have resulted in 
correction orders related to care, safety, or rights; instances 
of frequent change in administration in excess of normal 
turnover rates; and situations where persons involved in 
ownership or administration of the nursing home have been 
convicted of engaging in criminal activity.  A nursing home that 
presents none of these concerns or any other concern or 
condition established by the board that poses a risk to resident 
care, safety, or rights shall be inspected once every two years 
for compliance with key requirements as determined by the board. 
    The board shall develop and recommend to the commissioners 
mechanisms beyond the inspection process to protect resident 
care, safety, and rights, including but not limited to 
coordination with the office of health facility complaints and 
the nursing home ombudsman program.  
    Subd. 3.  [METHODS FOR DETERMINING RESIDENT CARE NEEDS.] 
The board shall develop and recommend to the commissioners 
definitions for levels of care and methods for determining 
resident care needs for implementation on July 1, 1985 in order 
to adjust payments for resident care based on the mix of 
resident needs in a nursing home.  The methods for determining 
resident care needs shall include assessments of ability to 
perform activities of daily living and assessments of medical 
and therapeutic needs.  
    Subd. 4.  [ENFORCEMENT.] The board shall develop and 
recommend for implementation effective methods of enforcing 
quality of care standards.  When it deems necessary, and when 
all other methods of enforcement are not appropriate, the board 
shall recommend to the commissioner of health closure of all or 
part of a nursing home and revocation of the license.  The board 
shall develop, and the commissioner of public welfare shall 
implement, a resident relocation plan that instructs the county 
in which the nursing home is located of procedures to ensure 
that the needs of residents in nursing homes about to be closed 
are met.  The county shall ensure placement in swing beds in 
hospitals, placement in unoccupied beds in other nursing homes, 
utilization of home health care on a temporary basis, foster 
care placement, or other appropriate alternative care.  In 
preparing for relocation, the board shall ensure that residents 
and their families or guardians are involved in planning the 
relocation.  
    Subd. 5.  [REPORTS.] The board shall prepare a report and 
the commissioners of health and public welfare shall deliver 
this report to the legislature no later than January 15, 1984, 
on the board's proposals and progress on implementation of the 
methods required under subdivisions 2, 3, and 4.  The 
commissioners shall recommend changes in or additions to 
legislation necessary or desirable to fulfill their 
responsibilities.  The board shall prepare an annual report and 
the commissioners shall deliver this report annually to the 
legislature, beginning in January, 1985, on the implementation 
and enforcement of the provisions of this section. 
    Subd. 6.  [DATA.] The interagency board may have access to 
data from the commissioners of health, public welfare, and 
public safety for carrying out its duties under this section. 
The commissioner of health and the commissioner of public 
welfare may each have access to data on persons, including data 
on vendors of services, from the other to carry out the purposes 
of this section.  If the interagency board, the commissioner of 
health, or the commissioner of public welfare receives data on 
persons, including data on vendors of services, that is 
collected, maintained, used or disseminated in an investigation, 
authorized by statute and relating to enforcement of rules or 
law, the board or the commissioner shall not disclose that 
information except:  
    (a) pursuant to section 13.05;  
    (b) pursuant to statute or valid court order; or 
    (c) to a party named in a civil or criminal proceeding, 
administrative or judicial, for preparation of defense.  
    Data described in this subdivision is classified as public 
data upon its submission to a hearing examiner or court in an 
administrative or judicial proceeding.  
    Sec. 6.  Minnesota Statutes 1982, section 256B.091, 
subdivision 1, is amended to read: 
    Subdivision 1.  [PURPOSE.] It is the purpose of this 
section to prevent inappropriate nursing home or boarding care 
home placement by establishing a program of preadmission 
screening teams for all medical assistance recipients and any 
individual who would become eligible for medical assistance 
within 90 180 days of admission to a licensed nursing home or 
boarding care home participating in the program.  Further, it is 
the purpose of this section and the program to gain further 
information about how to contain costs associated with 
inappropriate nursing home or boarding care home admissions.  
The commissioners of public welfare and health shall seek to 
maximize use of available federal and state funds and establish 
the broadest program possible within the appropriation 
available.  The commissioner of public welfare shall promulgate 
temporary rules in order to implement this section by September 
1, 1980.  
    Sec. 7.  Minnesota Statutes 1982, section 256B.091, 
subdivision 2, is amended to read: 
    Subd. 2.  [SCREENING TEAMS; ESTABLISHMENT.] Each county 
agency designated by the commissioner of public welfare to 
participate in the program shall contract with the local board 
of health organized under section 145.911 to 145.922 or other 
public or nonprofit agency to establish a screening team to 
assess, prior to admission to a nursing home or a boarding care 
home licensed under section 144A.02 or sections 144.50 to 
144.56, that is certified for medical assistance as a skilled 
nursing facility, intermediate care facility level I, or 
intermediate care facility level II, the health and social needs 
of medical assistance recipients and individuals who would 
become eligible for medical assistance within 90 180 days of 
nursing home or boarding care home admission.  Each local 
screening team shall be composed of a public health nurse from 
the local public health nursing service and a social worker from 
the local community welfare agency.  Each screening team shall 
have a physician available for consultation and shall utilize 
individuals' attending physicians' physical assessment forms, if 
any, in assessing needs.  The individual's physician shall be 
included on the screening team if the physician chooses to 
participate.  If the individual is being discharged from an 
acute care facility, a discharge planner from that facility may 
be present, at the facility's request, during the screening 
team's assessment of the individual and may participate in 
discussions but not in making the screening team's 
recommendations under subdivision 3, clause (e).  If the 
assessment procedure or screening team recommendation results in 
a delay of the individual's discharge from the acute care 
facility, the facility shall not be denied medical assistance 
reimbursement or incur any other financial or regulatory penalty 
of the medical assistance program that would otherwise be caused 
by the individual's extended length of stay; 50 percent of the 
cost of this reimbursement or financial or regulatory penalty 
shall be paid by the state and 50 percent shall be paid by the 
county.  Other personnel as deemed appropriate by the county 
agency may be included on the team.  The county agency may 
contract with an acute care facility to have the facility's 
discharge planners perform the functions of a screening team 
with regard to individuals discharged from the facility and in 
those cases the discharge planners may participate in making 
recommendations under subdivision 3, clause (e).  No member of a 
screening team shall have a direct or indirect financial or 
self-serving interest in a nursing home or noninstitutional 
referral such that it would not be possible for the member to 
consider each case objectively. 
    Sec. 8.  Minnesota Statutes 1982, section 256B.091, 
subdivision 4, is amended to read: 
    Subd. 4.  [SCREENING OF PERSONS.] Prior to nursing home or 
boarding care home admission, screening teams shall assess the 
needs of all persons receiving medical assistance and of all 
persons who would be eligible for medical assistance within 90 
180 days of admission to a nursing home or boarding care home, 
except patients transferred from other nursing homes or patients 
who, having entered acute care facilities from nursing homes, 
are returning to nursing home care.  Any other interested person 
may be assessed by a screening team upon payment of a fee based 
upon a sliding fee scale. 
    Sec. 9.  Minnesota Statutes 1982, section 256B.091, 
subdivision 8, is amended to read: 
    Subd. 8.  [ALTERNATIVE CARE GRANTS.] The commissioner shall 
provide grants to counties participating in the program to pay 
costs of providing alternative care to individuals screened 
under subdivision 4.  Payment is available under this 
subdivision only for individuals (1) for whom the screening team 
would recommend nursing home admission if alternative care were 
not available; (2) who are receiving medical assistance or who 
would be eligible for medical assistance within 90 180 days of 
admission to a nursing home; and (3) who need services that are 
not available at that time in the county through other public 
assistance. 
    Grants may be used for payment of costs of providing 
services such as, but not limited to, foster care for elderly 
persons, day care whether or not offered through a nursing home, 
nutritional counseling, or medical social services, which 
services are provided by a licensed health care provider, a home 
health service eligible for reimbursement under Titles XVIII and 
XIX of the federal Social Security Act, or by persons employed 
by or contracted with by the county board or the local welfare 
agency.  The county agency shall ensure that a plan of care is 
established for each individual in accordance with subdivision 
3, clause (e)(2).  The plan shall include any services 
prescribed by the individual's attending physician as necessary 
and follow up services as necessary.  The county agency shall 
provide documentation to the commissioner verifying that the 
individual's alternative care is not available at that time 
through any other public assistance or service program and shall 
provide documentation in each individual's plan of care that the 
most cost effective alternatives available have been offered to 
the individual.  Grants to counties under this subdivision are 
subject to audit by the commissioner for fiscal and utilization 
control. 
     The commissioner shall establish a sliding fee schedule for 
requiring payment for the cost of providing services under this 
subdivision to persons who are eligible for the services but who 
are not yet eligible for medical assistance.  The sliding fee 
schedule is not subject to chapter 14 but the commissioner shall 
publish the schedule and any later changes in the State Register 
and allow a period of 20 working days from the publication date 
for interested persons to comment before adopting the sliding 
fee schedule in final forms.  
    The commissioner shall apply for a waiver for federal 
financial participation to expand the availability of services 
under this subdivision.  The commissioner shall provide grants 
to counties from the nonfederal share, unless the commissioner 
obtains a federal waiver for medical assistance payments, of 
medical assistance appropriations.  The state expenditures for 
this section shall not exceed $1,800,000 for the biennium ending 
June 30, 1983.  A county agency may use grant money to 
supplement but not supplant services available through other 
public assistance or service programs and shall not use grant 
money to establish new programs for which public money is 
available through sources other than grants provided under this 
subdivision.  A county agency shall not use grant money to 
provide care under this subdivision to an individual if the 
anticipated cost of providing this care would exceed the average 
payment, as determined by the commissioner, for the level of 
nursing home care that the recipient would receive if placed in 
a nursing home.  The nonfederal share may be used to pay up to 
90 percent of the start-up and service delivery costs of 
providing care under this subdivision.  Each county agency that 
receives a grant shall pay 10 percent of the costs. 
    The commissioner shall promulgate temporary rules in 
accordance with sections 14.29 to 14.36, to establish required 
documentation and reporting of care delivered. 
    Sec. 10.  Minnesota Statutes 1982, section 256B.41, is 
amended to read:  
    256B.41 [INTENT.] 
    Subdivision 1.  [AUTHORITY.] The state agency commissioner 
shall by rule establish a formula, by rule, procedures for 
establishing payment determining rates for care of residents of 
nursing homes which qualify as vendors of medical assistance, 
and for implementing the provisions of sections 256B.41, 
256B.47, 256B.48, and sections 11, 12, 15, and 16.  The 
procedures shall be based on methods and standards that the 
commissioner finds are adequate to provide for the costs that 
must be incurred for the care of residents in efficiently and 
economically operated nursing homes and shall specify the costs 
that are allowable for establishing payment rates through 
medical assistance. 
    Subd. 2.  [FEDERAL REQUIREMENTS.] It is the intent of the 
legislature to establish certain limitations on the state agency 
in setting standards for nursing home rate setting for the care 
of recipients of medical assistance pursuant to this chapter. It 
is not the intent of the legislature to repeal or change any 
existing or future rule promulgated by the state agency relating 
to the setting of rates for nursing homes unless the rule is 
clearly in conflict with sections 256B.41 to 256B.48.  If any 
provision of sections 256B.41 to, 256B.47, and 256B.48 and 
sections 11, 12, 15, and 16, 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. 
    Sec. 11.  [256B.421] [DEFINITIONS.] 
    Subdivision 1.  [SCOPE.] For the purposes of sections 
256B.41, 256B.47, 256B.48, and sections 11, 12, 15, and 16, the 
following terms and phrases shall have the meaning given to them.
     Subd. 2.  [ACTUAL ALLOWABLE HISTORICAL OPERATING COST PER 
DIEM.] "Actual allowable historical operating cost per diem" 
means the per diem payment for actual costs, including operating 
costs, allowed by the commissioner for the most recent reporting 
year. 
    Subd. 3.  [COMMISSIONER.] "Commissioner" means the 
commissioner of public welfare.  
    Subd. 4.  [FINAL RATE.] "Final rate" means the rate 
established after any adjustment by the commissioner, including 
but not limited to adjustments resulting from cost report 
reviews and field audits.  
    Subd. 5.  [GENERAL AND ADMINISTRATIVE COSTS.] "General and 
administrative costs" means all allowable costs for 
administering the facility, including but not limited to: 
salaries of administrators, assistant administrators, medical 
directors, accounting personnel, data processing personnel, and 
all clerical personnel; board of directors fees; business office 
functions and supplies; travel; telephone and telegraph; 
advertising; licenses and permits; membership dues and 
subscriptions; postage; insurance, except as included as a 
fringe benefit under subdivision 14; professional services such 
as legal, accounting and data processing services; central or 
home office costs; management fees; management consultants; 
employee training, for any top management personnel and for 
other than direct resident care related personnel; and business 
meetings and seminars.  These costs shall be included in general 
and administrative costs in total, without direct or indirect 
allocation to other cost categories.  
     In a nursing home of 60 or fewer beds, part of an 
administrator's salary may be allocated to other cost categories 
to the extent justified in records kept by the nursing home. 
Central or home office costs representing services of required 
consultants in areas including, but not limited to, dietary, 
pharmacy, social services, or activities may be allocated to the 
appropriate department, but only if those costs are directly 
identified by the nursing home.  
    Subd. 6.  [HISTORICAL OPERATING COSTS.] "Historical 
operating costs" means the allowable operating costs incurred by 
the facility during the reporting year immediately preceding the 
rate year for which the payment rate becomes effective, after 
the commissioner has reviewed those costs and determined them to 
be allowable costs under the medical assistance program, and 
after the commissioner has applied appropriate limitations such 
as the limit on administrative costs.  
    Subd. 7.  [NURSING HOME.] "Nursing home" means a facility 
licensed under chapter 144A or a boarding care facility licensed 
under sections 144.50 to 144.56.  
    Subd. 8.  [OPERATING COSTS.] "Operating costs" means the 
day-to-day costs of operating the facility in compliance with 
licensure and certification standards.  Operating cost 
categories are:  nursing, including nurses and nursing 
assistants training; dietary; laundry and linen; housekeeping; 
plant operation and maintenance; other care-related services; 
general and administration; payroll taxes; real estate taxes and 
actual special assessments paid; and fringe benefits, including 
clerical training.  
    Subd. 9.  [PAYMENT RATE.] "Payment rate" means the rate 
determined under section 12.  
    Subd. 10.  [PRIVATE PAYING RESIDENT.] "Private paying 
resident" means a nursing home 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.  
    Subd. 11.  [RATE YEAR.] "Rate year" means the fiscal year 
for which a payment rate determined under section 12 is 
effective, from July 1 to the next June 30.  
    Subd. 12.  [REPORTING YEAR.] "Reporting year" means the 
period from October 1 to September 30, immediately preceding the 
rate year, for which the nursing home submits reports required 
under section 256B.48, subdivision 2.  
    Subd. 13.  [ACTUAL RESIDENT DAY.] "Actual resident day" 
means a billable, countable day as defined by the commissioner.  
    Subd. 14.  [FRINGE BENEFITS.] "Fringe benefits" means 
workers' compensation insurance, group health or dental 
insurance, group life insurance, retirement benefits or plans, 
and uniform allowances.  
    Subd. 15.  [PAYROLL TAXES.] "Payroll taxes" means the 
employer's share of FICA taxes, governmentally required 
retirement contributions, and state and federal unemployment 
compensation taxes.  
    Sec. 12.  [256B.431] [RATE DETERMINATION.] 
    Subdivision 1.  [IN GENERAL.] The commissioner shall 
determine prospective payment rates for resident care costs.  In 
determining the rates, the commissioner shall group nursing 
homes according to different levels of care and geographic 
location until July 1, 1985, and after that date, mix of 
resident needs, and geographic location, as defined by the 
commissioner.  The commissioner shall consider the use of the 
standard metropolitan statistical areas when developing groups 
by geographic location.  Until groups are established according 
to mix of resident needs, the commissioner shall group all 
convalescent and nursing care units attached to hospitals into 
one group for purposes of determining reimbursement for 
operating costs.  On or before June 15, 1983, the commissioner 
shall mail notices to each nursing home of the rates to be 
effective from July 1 of that year to June 30 of the following 
year.  In subsequent years, the commissioner shall provide 
notice to each nursing home on or before May 1 of the rates 
effective for the following rate year.  If a statute enacted 
after May 1 affects the rates, the commissioner shall provide a 
revised notice to each nursing home as soon as possible.  
    The commissioner shall establish, by rule, limitations on 
compensation recognized in the historical base for top 
management personnel.  The commissioner shall also establish, by 
rule, limitations on allowable nursing hours for each level of 
care for the rate years beginning July 1, 1983 and July 1, 1984. 
    Subd. 2.  [OPERATING COSTS.] (a) The commissioner shall 
establish, by rule, procedures for determining per diem 
reimbursement for operating costs based on actual resident days. 
The commissioner shall disallow any portion of the general and 
administration cost category, exclusive of fringe benefits and 
payroll taxes, that exceeds 
     10 percent for nursing homes with more than 100 certified 
beds in total, 
     12 percent for nursing homes with fewer than 101 but more 
than 40 certified beds in total, 
    14 percent for nursing homes with 40 or fewer certified 
beds in total, and 
    15 percent for convalescent and nursing care units attached 
to hospitals for the rate year beginning July 1, 1983, 
of the expenditures in all operating cost categories except 
fringe benefits, payroll taxes, and general and administration.  
    (b) For the rate year beginning July 1, 1983, and ending 
June 30, 1984, the prospective operating cost payment rate for 
each nursing home shall be determined by the commissioner based 
on the allowed historical operating costs as reported in the 
most recent cost report received by December 31, 1982 and 
audited by March 1, 1983, and may be subsequently adjusted to 
reflect the costs allowed.  To determine the allowed historical 
operating cost, the commissioner shall update the historical per 
diem shown in those cost reports to June 30, 1983, using a nine 
percent annual rate of increase after applying the general and 
administrative cost limitation described in paragraph (a).  The 
commissioner shall calculate the 60th percentile of actual 
allowable historical operating cost per diems for each group of 
nursing homes established under subdivision 1.  
    (1) Within each group, each nursing home whose actual 
allowable historical operating cost per diem as determined under 
this paragraph (b) is above the 60th percentile shall receive 
the 60th percentile increased by six percent plus 80 percent of 
the difference between its actual allowable operating cost per 
diem and the 60th percentile.  
    (2) Within each group, each nursing home whose actual 
allowable historical operating cost per diem is at or below the 
60th percentile shall receive that actual allowable historical 
operating cost per diem increased by six percent.  
    For the rate year beginning July 1, 1984, and ending June 
30, 1985, the prospective operating cost payment rate for each 
nursing home shall be determined by the commissioner based on 
actual allowable historical operating costs incurred during the 
reporting year preceding the rate year.  The commissioner shall 
analyze and evaluate each nursing home's report of allowable 
operating costs incurred by the nursing home during the 
reporting year immediately preceding the rate year.  The actual 
allowable historical operating costs, after the commissioner's 
analysis and evaluation, shall be added together and divided by 
the number of actual resident days to compute the actual 
allowable historical operating cost per diem.  The commissioner 
shall calculate the 60th percentile of actual allowable 
historical operating cost per diems for each group of nursing 
homes established under subdivision 1.  
    (3) Within each group, each nursing home whose actual 
allowable historical operating cost per diem is above the 60th 
percentile of payment rates shall receive the 60th percentile 
increased at an annual rate of six percent plus 75 percent of 
the difference between its actual allowable historical operating 
cost per diem and the 60th percentile.  
    (4) Within each group, each nursing home whose actual 
allowable historical operating cost per diem is at or below the 
60th percentile shall receive that actual allowable historical 
operating cost per diem increased at an annual rate of six 
percent.  
    (c) For subsequent years, the commissioner shall:  
    (1) Contract with an econometric firm with recognized 
expertise in and access to national economic change indices that 
can be applied to the appropriate cost categories when 
determining the operating cost payment rate;  
    (2) Establish the 60th percentile of actual allowable 
historical operating cost per diems for each group of nursing 
homes established under subdivision 1 based on cost reports of 
allowable operating costs in the previous reporting year.  The 
commissioner shall analyze and evaluate each nursing home's 
report of allowable operating costs incurred by the nursing home 
during the reporting year immediately preceding the rate year 
for which the payment rate becomes effective.  The allowable 
historical operating costs, after the commissioner's analysis 
and evaluation, shall be added together and divided by the 
actual number of resident days in order to compute the actual 
allowable historical operating cost per diem; 
    (3) Establish a composite index for each group by 
determining the weighted average of all economic change 
indicators applied to the operating cost categories in that 
group.  
    (4) Within each group, each nursing home shall receive the 
60th percentile increased by the composite index calculated in 
paragraph (c)(3).  The historical base for determining the 
prospective payment rate shall not exceed the operating cost 
payment rates during that reporting year.  
    The commissioner shall include the reported actual real 
estate tax liability of each proprietary nursing home as an 
operating cost of that nursing home.  The commissioner shall 
include a reported actual special assessment for each nursing 
home as an operating cost of that nursing home.  Total real 
estate tax liability and actual special assessments paid for 
each nursing home (i) shall be divided by actual resident days 
in order to compute the operating cost payment rate for this 
operating cost category, but (ii) shall not be used to compute 
the 60th percentile.  
    (d) The commissioner shall allow the nursing home to keep, 
as an efficiency incentive, the difference between the nursing 
home's operating cost payment rate established for that rate 
year and the actual historical operating costs incurred for that 
rate year, if the latter amount is smaller.  If a nursing home's 
actual historic operating costs are greater than the prospective 
payment rate for that rate year, there shall be no retroactive 
cost settle-up.  If an annual cost report or field audit 
indicates that the 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 and the interagency 
board for quality assurance.  If a field audit reveals that 
unallowable expenditures have been included in the nursing 
home's historical operating costs, the commissioner shall 
disallow the expenditures and recover the entire overpayment. 
The commissioner shall establish, by rule, procedures for 
assessing an interest charge at the rate determined for unpaid 
taxes or penalties under section 270.75 on any outstanding 
balance resulting from an overpayment or underpayment.  
    (e) The commissioner may negotiate, with a nursing home 
that is eligible to receive medical assistance payments, a 
payment rate of up to 125 percent of the allowed payment rate to 
be paid for a period of up to three months for individuals who 
have been hospitalized for more than 100 days, who have 
extensive care needs based on nursing hours actually provided or 
mental or physical disability, or need for respite care for a 
specified and limited time period, and based on an assessment of 
the nursing home's resident mix as determined by the 
commissioner of health.  The payment rate negotiated and paid 
pursuant to this paragraph is specifically exempt from the 
definition of "rule" and the rule-making procedures required by 
chapter 14 and section 16.  
    (f) Until groups are established according to mix of 
resident care needs, nursing homes licensed on June 1, 1983 by 
the commissioner to provide residential services for the 
physically handicapped and nursing homes that have an average 
length of stay of less than 180 days shall not be included in 
the calculation of the 60th percentile of any group.  For rate 
year beginning July 1, 1983 and July 1, 1984, each of these 
nursing homes shall receive their actual allowed historical 
operating cost per diem increased by six percent.  The 
commissioner shall also apply to these nursing homes the 
percentage limitation on the general and administrative cost 
category as provided in subdivision 2, paragraph (a).  
    Subd. 3.  [PROPERTY-RELATED COSTS.] For rate years 
beginning July 1, 1983 and July 1, 1984, property-related costs 
shall be reimbursed to each nursing home at the level recognized 
in the most recent cost report received by December 31, 1982 and 
audited by March 1, 1983, and may be subsequently adjusted to 
reflect the costs recognized in the final rate for that cost 
report, adjusted for rate limitations in effect before the 
effective date of this section.  Property-related costs 
include:  depreciation, interest, earnings or investment 
allowance, lease, or rental payments.  No adjustments shall be 
made as a result of sales or reorganizations of provider 
entities.  
    Adjustments for the cost of repairs, replacements, 
renewals, betterments, or improvements to existing buildings, 
and building service equipment shall be allowed if:  
    (i) The cost incurred is reasonable, necessary, and 
ordinary;  
    (ii) The net cost is greater than $5,000.  "Net cost" means 
the actual cost, minus proceeds from insurance, salvage, or 
disposal;  
    (iii) The nursing home's property-related costs per diem is 
equal to or less than the average property-related costs per 
diem within its group; and 
    (iv) The adjustment is shown in depreciation schedules 
submitted to and approved by the commissioner.  
     Annual per diem shall be computed by dividing total 
property-related costs by 96 percent of the nursing home's 
licensed capacity days for nursing homes with more than 60 beds 
and 94 percent of the nursing home's licensed capacity days for 
nursing homes with 60 or fewer beds.  For a nursing home whose 
residents' average length of stay is 180 days or less, the 
commissioner may waive the 96 or 94 percent factor and divide 
the nursing home's property-related costs by the actual resident 
days to compute the nursing home's annual property-related per 
diem.  The commissioner shall promulgate temporary and permanent 
rules to recapture excess depreciation upon sale of a nursing 
home.  
    For rate years beginning on or after July 1, 1985, the 
commissioner, by permanent rule, shall reimburse nursing home 
providers that are vendors in the medical assistance program for 
the rental use of their property.  The "rent" is the amount of 
periodic payment which a renter might expect to pay for the 
right to the agreed use of the real estate and the depreciable 
equipment as it exists.  "Real estate" means land improvements, 
buildings, and attached fixtures used directly for resident 
care.  "Depreciable equipment" means the standard moveable 
resident care equipment and support service equipment generally 
used in long-term care facilities.  
    In developing the method for determining payment rates for 
the rental use of nursing homes, the commissioner shall consider 
factors designed to:  
    (i) simplify the administrative procedures for determining 
payment rates for property-related costs;  
    (ii) minimize discretionary or appealable decisions;  
    (iii) eliminate any incentives to sell nursing homes;  
     (iv) recognize legitimate costs of preserving and replacing 
property; 
     (v) recognize the existing costs of outstanding 
indebtedness allowable under the statutes and rules in effect on 
May 1, 1983;  
     (vi) address the current value of, if used directly for 
patient care, land improvements, buildings, attached fixtures, 
and equipment; 
     (vii) establish an investment per bed limitation; 
     (viii) reward efficient management of capital assets; 
    (ix) provide equitable treatment of facilities;  
    (x) consider a variable rate; and 
    (xi) phase in implementation of the rental reimbursement 
method.  
    No later than January 1, 1984, the commissioner shall 
report to the legislature on any further action necessary or 
desirable in order to implement the purposes and provisions of 
this subdivision.  
    Subd. 4.  [SPECIAL RATES.] A newly constructed nursing home 
or one with a capacity increase of 50 percent or more may, upon 
written application to the commissioner, receive an interim 
payment rate for reimbursement for property-related costs 
calculated pursuant to the statutes and rules in effect on May 
1, 1983 and for operating costs negotiated by the commissioner 
based upon the 60th percentile established for the appropriate 
group under subdivision 2, paragraph (b) to be effective from 
the first day a medical assistance recipient resides in the home 
or for the added beds.  For newly constructed nursing homes 
which are not included in the calculation of the 60th percentile 
for any group, subdivision 2(f), the commissioner shall 
establish by rule procedures for determining interim operating 
cost payment rates and interim property-related cost payment 
rates.  The interim payment rate shall not be in effect for more 
than 17 months.  The commissioner shall establish, by temporary 
and permanent rules, procedures for determining the interim rate 
and for making a retroactive cost settle-up after the first year 
of operation; the cost settled operating cost per diem shall not 
exceed 110 percent of the 60th percentile established for the 
appropriate group.  The commissioner shall establish by rule 
procedures for determining payment rates for nursing homes which 
provide care under a lesser care level than the level for which 
the nursing home is certified.  
    Subd. 5.  [ADJUSTMENTS.] When resolution of appeals or 
on-site field audits of the records of nursing homes within a 
group result in adjustments to the 60th percentile of the 
payment rates within the group in any reporting year, the 60th 
percentile established for the following rate year for that 
group shall be increased or decreased by the adjustment amount.  
    Sec. 13.  Minnesota Statutes 1982, section 256B.47, is 
amended to read:  
    256B.47 [RATE LIMITS NONALLOWABLE COSTS; NOTICE OF 
INCREASES TO PRIVATE PAYING RESIDENTS.] 
    Subdivision 1.  [NONALLOWABLE COSTS.] The state agency 
shall by rule establish separate overall limitations on the 
costs for items which directly relate to the provision of 
patient care to residents of nursing homes and those which do 
not directly relate to the provision of care.  The state agency 
may also by rule, establish limitations for specific cost 
categories which do not directly relate to the provision of 
patient care.  The state agency shall reimburse nursing homes 
for the costs of nursing care in excess of any state agency 
limits on hours of nursing care if the commissioner of health 
issues a correction order pursuant to section 144A.10, 
subdivision 4, directing the nursing home to provide the 
additional nursing care.  All costs determined otherwise 
allowable shall be subject to these limitations.  
    Subd. 2.  The following costs shall not be recognized as 
allowable to the extent that these costs cannot be demonstrated 
by the nursing home to the state agency to be directly related 
to the provision of patient care:  (1) political contributions; 
(2) salaries or expenses of a lobbyist, as defined in section 
10A.01, subdivision 11, for lobbying activities; (3) advertising 
designed to encourage potential residents to select a particular 
nursing home; (4) assessments levied by the health department 
commissioner of health for uncorrected violations; (5) legal and 
related fees expenses for unsuccessful challenges to decisions 
by state governmental agencies; (6) memberships in sports, 
health or similar social clubs or organizations; and (7) costs 
incurred for activities directly related to influencing 
employees with respect to unionization and (6) dues paid to a 
nursing home or hospital association.  The state agency shall 
promulgate rules establishing standards which shall distinguish 
between any patient-care related components and nonpatient-care 
related components of these costs, where applicable.  For 
purposes of these rules, the state agency shall exercise 
emergency powers and establish emergency rules pursuant to 
section 15.0412, subdivision 5, before September 1, 1977.  The 
state agency commissioner shall by rule exclude the costs of any 
other items which it determines are not directly related to the 
provision of patient resident care. 
    Subd. 3.  On or before January 1, 1977 the state agency 
shall by rule establish a procedure affording notice of the 
approved rate for medical assistance recipients to nursing homes 
within 120 days after the close of the fiscal year of the 
nursing home.  
    Subd. 4. 2.  [NOTICE TO RESIDENTS.] No increase in nursing 
home rates for private paying residents shall be effective 
unless the nursing home notifies the resident or person 
responsible for payment of the increase in writing 30 days 
before the increase takes effect.  
    A nursing home may adjust its rates without giving the 
notice required by this subdivision when the purpose of the rate 
adjustment is to:  (a) reflect a necessary change in the level 
of care provided to a resident; or (b) retroactively or 
prospectively equalize private pay rates with rates charged to 
medical assistance recipients as required by section 256B.48, 
subdivision 1, clause (a) and applicable federal law.  
    Subd. 5.  The commissioner shall promulgate rules no later 
than August 1, 1980, to amend the current rules governing 
nursing home reimbursement, in accordance with sections 14.01 to 
14.70, to allow providers to allocate their resources in order 
to provide as many nursing hours as necessary within the total 
cost limitations of the per diem already granted.  If the state 
fails to set rates as required by section 12, the time required 
for giving notice is decreased by the number of days by which 
the state was late in setting the rates. 
    Sec. 14.  Minnesota Statutes 1982, section 256B.48, is 
amended to read:  
    256B.48 [CONDITIONS FOR PARTICIPATION.] 
    Subdivision 1.  [PROHIBITED PRACTICES.] No A nursing home 
shall be is not eligible to receive medical assistance payments 
unless it agrees in writing that it will refrain refrains from: 
    (a) Charging nonmedical assistance residents rates for 
similar services which exceed by more than ten percent those 
rates which are approved by the state agency for medical 
assistance recipients.  For nursing homes charging nonmedical 
assistance residents rates less than ten percent more than those 
rates which are approved by the state agency for medical 
assistance recipients, the maximum differential in rates between 
nonmedical assistance residents and medical assistance 
recipients shall not exceed that differential which was in 
effect on April 13, 1976.  If a nursing home has exceeded this 
differential since April 13, 1976, it shall return the amount 
collected in excess of the allowable differential stated by this 
subdivision to the nonmedical assistance resident, or that 
person's representative, by July 1, 1977.  Effective July 1, 
1978, no nursing home shall be eligible for medical assistance 
if it charges nonmedical assistance recipients Charging private 
paying residents rates for similar services which exceed those 
which are approved by the state agency for medical assistance 
recipients; provided, however, that as determined by the 
prospective desk audit rate, except under the following 
circumstances:  the nursing home may (1) charge nonmedical 
assistance 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 patients residents are 
charged separately at the same rate for the same services in 
addition to the daily rate paid by the state agency 
commissioner.  A nursing home that charges a private paying 
resident a rate in violation of this clause 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 home that charges the resident rates 
in violation of this clause.  The damages awarded shall include 
three times the payments that result from the violation, 
together with costs and disbursements, including reasonable 
attorneys' fees or their equivalent.  A private paying resident 
or the resident's legal representative, the state, subdivision 
or agency, or a nursing home 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 a hearing 
examiner under sections 14.48 to 14.56 to conduct the hearing as 
soon as possible or according to agreement by the parties.  The 
hearing examiner shall issue a report within 15 calendar days 
following the close of the hearing.  The prohibition set forth 
in this clause 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; 
    (b) Requiring an applicant for admission to the home, or 
the guardian or conservator of the applicant, as a condition of 
admission, to pay an admission fee any fee or deposit in excess 
of $100, loan any money to the nursing home, or promise to leave 
all or part of the applicant's estate to the home; and 
    (c) Requiring any resident of the nursing home to utilize a 
vendor of health care services who is a licensed physician or 
pharmacist chosen by the nursing home;  
     (d) Requiring any applicant to the nursing home, or the 
applicant's guardian or conservator, as a condition of 
admission, to assure that the applicant is neither eligible for 
nor will seek public assistance for payment of nursing home care 
costs;  
    (e) 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 portion of 
his fee to the nursing home except as payment for renting or 
leasing space or equipment of the nursing home or purchasing 
support services, if those agreements are disclosed to the 
commissioner; and 
    (f) Refusing, for more than 24 hours, to accept a resident 
returning to his 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. 
    The prohibitions set forth in clause (b) shall not apply to 
a retirement home with more than 325 beds including at least 150 
licensed nursing home beds and which: 
    (1) is owned and operated by an organization tax-exempt 
under section 290.05, subdivision 1, clause (i); and 
    (2) at the time of admission places accounts for all of the 
applicant's assets which are required to be assigned to the home 
in a trust account from which so that only expenses for the cost 
of care of the applicant may be deducted charged against the 
account; and 
    (3) agrees in writing at the time of admission to the home 
to permit the applicant, or his guardian, or conservator, to 
examine the records relating to the individual's trust 
applicant's account upon request, and to receive an audited 
statement of the expenditures from charged against his 
individual account upon request; and 
    (4) agrees in writing at the time of admission to the home 
to permit the applicant to withdraw from the home at any time 
and to receive, upon withdrawal, all of the unexpended funds 
remaining in the balance of his individual trust account; and 
    (5) was in compliance with provisions (1) to (4) as of June 
30, 1976. 
    Subd. 2.  [REPORTING REQUIREMENTS.] Effective July 1, 1976, 
no nursing home shall be eligible to receive medical assistance 
payments unless it agrees in writing to:  
    (a) provide the state agency with its most recent (1) 
balance sheet and statement of revenues and expenses as audited 
by a certified public accountant licensed by this state or by a 
public accountant as defined in section 412.222; (2) statement 
of ownership for the nursing home; and (3) a separate audited 
balance sheet and statement of revenues and expenses for each 
nursing home if more than one nursing home or other business 
operation is owned by the same owner; a governmentally owned 
nursing home may comply with the auditing requirements of this 
clause by submitting an audit report prepared by the state 
auditor's office;  
    (b) Provide the state agency with copies of leases, 
purchase agreements and other related documents related to the 
lease or purchase of the nursing home; and 
    (c) Provide to the state agency upon request copies of 
leases, purchase agreements, or similar documents for the 
purchase or acquisition of equipment, goods and services which 
are claimed as allowable costs.  
    No later than December 31 of each year, a skilled nursing 
facility or intermediate care facility, including boarding care 
facilities, which receives medical assistance payments or other 
reimbursements from the state agency shall:  
    (a) Provide the state agency with a copy of its audited 
financial statements.  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, statements of changes in financial position 
(cash and working capital methods), notes to the financial 
statements, 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;  
    (b) Provide the state agency with a statement of ownership 
for the facility;  
    (c) Provide the state agency with separate, audited 
financial statements as specified in clause (a) for every other 
facility owned in whole or part by an individual or entity which 
has an ownership interest in the facility;  
    (d) Upon request, provide the state agency with separate, 
audited financial statements as specified in clause (a) 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;  
    (e) Provide the state agency with copies of leases, 
purchase agreements, and other documents related to the lease or 
purchase of the nursing facility;  
    (f) 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; and 
    (g) Permit access by the state agency to the certified 
public accountant's and licensed public accountant's audit 
workpapers which support the audited financial statements 
required in clauses (a), (c), and (d).  
    Documents or information provided to the state agency 
pursuant to this subdivision shall be public.  If the 
requirements of clauses (a) to (g) 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 year, and the reduction shall continue 
until the requirements are met.  
    Subd. 3.  [INCOMPLETE OR INACCURATE REPORTS.] The state 
agency commissioner may reject any annual cost report filed by a 
nursing home pursuant to this chapter if it the commissioner 
determines that the report or the information required in 
subdivision 2, clause (a) has been filed in a form that is 
incomplete or inaccurate.  In the event that a report is 
rejected pursuant to this subdivision, the state agency may make 
payments commissioner shall reduce the reimbursement rate to a 
nursing home at the to 80 percent of its most recently 
established rate determined for its prior fiscal year, or at an 
interim rate established by the state agency, until the 
information is completely and accurately filed. 
    Subd. 4.  [EXTENSIONS.] The commissioner may grant a 15-day 
extension of the reporting deadline to a nursing home for good 
cause.  To receive such an extension, a nursing home shall 
submit a written request by December 1.  The commissioner will 
notify the nursing home of the decision by December 15.  
    Subd. 5.  [FALSE REPORTS.] If a nursing home knowingly 
supplies inaccurate or false information in a required report 
that results in an overpayment, the commissioner shall:  
    (a) immediately adjust the nursing home's payment rate to 
recover the entire overpayment within the rate year; or 
    (b) terminate the commissioner's agreement with the nursing 
home; or 
    (c) prosecute under applicable state or federal law; or 
    (d) use any combination of the foregoing actions.  
    Sec. 15.  [256B.50] [APPEALS.] 
    A nursing home may appeal a decision arising from the 
application of standards or methods pursuant to sections 10 and 
256B.47 if the appeal, if successful, would result in a change 
to the nursing home's payment rate.  To appeal, the nursing home 
shall notify the commissioner of its intent to appeal within 30 
days and submit a written appeal request within 60 days of 
receiving notice of the payment rate determination or decision. 
The appeal request shall specify each disputed item, the reason 
for the dispute, an estimate of the dollar amount involved for 
each disputed item, the computation that the nursing home 
believes is correct, the authority in statute or rule upon which 
the nursing home relies for each disputed item, the name and 
address of the person or firm with whom contacts may be made 
regarding the appeal, and other information required by the 
commissioner.  The appeal shall be heard by a hearing examiner 
according to sections 14.48 to 14.56, or upon agreement by both 
parties according to a modified appeals procedure established by 
the commissioner and the hearing examiner.  In any proceeding 
under this section, the appealing party must demonstrate by a 
preponderance of the evidence that the commissioner's 
determination is incorrect.  Regardless of any rate appeal, the 
rate established shall be the rate paid and shall remain in 
effect until final resolution of the appeal or subsequent desk 
or field audit adjustment, notwithstanding any provision of law 
or rule to the contrary.  To challenge the validity of rules 
established by the commissioner pursuant to sections 256B.41, 
256B.47, 256B.48, and sections 11, 12, 15, and 16, a nursing 
home shall comply with section 14.44.  
    Sec. 16.  [256B.502] [TEMPORARY RULES.] 
    The commissioners of health and public welfare shall 
promulgate temporary and permanent rules necessary to implement 
sections 1 to 15 except as otherwise indicated in accordance 
with sections 14.01 to 14.38.  Temporary rules promulgated by 
August 15, 1983 to implement the rate determination provisions 
of section 12 are retroactive to and effective as of July 1, 
1983.  Notwithstanding the provisions of section 14.35, 
temporary rules promulgated to implement sections 1 to 15 shall 
be effective for up to 360 days after July 1, 1983, and may be 
continued in effect for two additional periods of 180 days each 
if the commissioner gives notice of continuation of each 
additional period by publishing notice in the State Register and 
mailing the same notice to all persons registered with the 
commissioner to receive notice of rulemaking proceedings in 
connection with sections 1 to 15.  The temporary rules 
promulgated in accordance with this section shall not be 
effective 720 days after their effective date without following 
the procedures in sections 14.13 to 14.20.  The commissioner 
shall report to the legislature by January 1, 1985, on likely 
groups and shall establish groups of nursing homes based on the 
mix of resident care needs, and on geographic area, by July 1, 
1985.  
    Sec. 17.  [LEGISLATIVE COMMISSION ON LONG-TERM HEALTH 
CARE.] 
    Subdivision 1.  A legislative study commission is created 
    (a) to monitor the inspection and regulation activities, 
including rule developments, of the departments of health and 
public welfare with the goal of improving quality of care;  
    (b) to study and report on alternative long-term care 
services, including respite care services, day care services, 
and hospice services; and 
    (c) to study and report on alternatives to medical 
assistance funding for providing long term health care services 
to the citizens of Minnesota. 
    The study commission shall consider the use of such 
alternatives as private insurance, private annuities, health 
maintenance organizations, preferred provider organizations, 
medicare, and such other alternatives as the commission may deem 
worthy of study.  
    Subd. 2.  The commission shall consist of six members of 
the house of representatives appointed by the speaker and six 
members of the senate appointed by the subcommittee on 
committees.  
    Subd. 3.  The commission shall report its findings and 
recommendations to the governor and the legislature not later 
than January 1, 1985.  
    Subd. 4.  The commission shall hold meetings and hearings 
at the times and places it designates to accomplish the purposes 
set forth in this section.  It shall select a chairperson and 
other officers from its membership as it deems necessary.  
    Subd. 5.  The commission shall make use of existing 
legislative facilities and staff of the house and senate 
research department and senate counsel, but it may also request 
the legislative coordinating commission to supply it with 
additional necessary staff, office space, and administrative 
services.  All additional personnel shall be hired and 
supervised by the directors of the house and senate research 
departments and senate counsel.  The commission shall have full 
authority to contract for expert services and opinions relevant 
to the purposes of this section.  The commission, by a 
two-thirds vote of its members, may request the issuance of 
subpoenas, including subpoenas duces tecum, requiring the 
appearance of persons, production of relevant records, and 
giving of relevant testimony.  
    Sec. 18.  [256B.433] [ANCILLARY SERVICES.] 
    The commissioner shall promulgate rules pursuant to the 
Administrative Procedures Act to set the amount and method of 
payment for ancillary materials and services provided to 
recipients residing in long-term care facilities.  Payment for 
materials and services may be made to either the nursing home in 
the operating cost per diem, to the vendor of ancillary services 
pursuant to 12 MCAR 2.047 or to a nursing home pursuant to 12 
MCAR 2.047.  Payment for the same or similar service to a 
recipient shall not be made to both the nursing home and the 
vendor.  The commissioner shall ensure that charges for 
ancillary materials and services are as would be incurred by a 
prudent buyer.  
    Sec. 19.  [REPEALER.] 
    Minnesota Statutes 1982, sections 256B.42; 256B.43; 256B.44;
256B.45; and 256B.46 are repealed effective July 1, 1983.  12 
MCAR, section 2.049 is superseded effective on the effective 
date of the first temporary rule promulgated to implement 
section 12, retroactive to July 1, 1983.  
    Sec. 20.  [APPROPRIATION.] 
    The approved complement of the department of health 
increased by one-half position for the interagency board. 
$1,043,520 for fiscal year 1984 and $603,680 for fiscal year 
1985 are appropriated from the general fund to the commissioner 
of public welfare for the state's costs of implementing sections 
1 to 19 for the biennium ending June 30, 1985.  $4,376,560 for 
fiscal year 1984 and $6,176,462 for fiscal year 1985 is 
appropriated from the general fund for the state's costs for 
preadmission screening and alternative care grants.  Remaining 
amounts necessary to fund these areas shall be obtained from 
federal and county sources and shall be appropriated for 
implementing sections 1 to 18.  The approved complement of the 
department of public welfare is increased by five and one-half 
full-time positions; the one-half full-time position is for the 
interagency board.  
    Sec. 21.  [EFFECTIVE DATE.] 
    Sections 1 to 20 are effective the day following enactment, 
for the moratorium and for establishing procedures for 
determining payment rates to become effective for the biennium 
beginning July 1, 1983, and thereafter.  The amendments to 
section 256B.48, subdivision 1, apply to causes of action 
arising from charges made on or after the effective date of 
section 14.  
    Approved May 22, 1983