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

  

                         Laws of Minnesota 1984 

                        CHAPTER 641-H.F.No. 2098 
           An act relating to public welfare; requiring financial 
          statements by providers of continuing care facilities; 
          allowing residents to form associations; revising 
          procedures for determining operating cost payment 
          rates for nursing homes; providing for a study; 
          limiting control of waivered services; regulating 
          continuing care facilities; appropriating money; 
          amending Minnesota Statutes 1982, sections 62D.12, 
          subdivision 1; 62D.17, subdivision 4; 144.072; 256B.25;
          256D.06, by adding a subdivision; Minnesota Statutes 
          1983 Supplement, sections 45.16, subdivision 2; 
          62D.03, subdivision 4; 144A.31, subdivision 4; 
          256B.421, subdivisions 2, 5, and 8; 256B.431, 
          subdivisions 1, 2, 4, 5, and by adding a subdivision; 
          256.48, subdivision 1; and 256B.50; proposing new law 
          coded in Minnesota Statutes, chapters 62D; 80D; 144; 
          and 256B. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1983 Supplement, section 
45.16, subdivision 2, is amended to read: 
    Subd. 2.  [DUTIES.] The attorney general shall:  
    (a) enforce the provisions of law relating to consumer 
fraud and unlawful practices in connection therewith as set 
forth in sections 325F.68 and 325F.69; 
    (b) enforce the provisions of law set forth in sections 2 
to 4;  
    (c) make recommendations to the governor and the 
legislature for statutory needs that exist in adequately 
protecting the consumer. 
    Sec. 2.  Minnesota Statutes 1983 Supplement, section 
62D.03, subdivision 4, if amended by H.F. No. 1561 at the 1984 
regular session, is amended to read:  
    Subd. 4.  Each application for a certificate of authority 
shall be verified by an officer or authorized representative of 
the applicant, and shall be in a form prescribed by the 
commissioner of health.  Each application shall include the 
following: 
    (a) a copy of the basic organizational document, if any, of 
the applicant and of each major participating entity; such as 
the articles of incorporation, or other applicable documents, 
and all amendments thereto; 
    (b) a copy of the bylaws, rules and regulations, or similar 
document, if any, and all amendments thereto which regulate the 
conduct of the affairs of the applicant and of each major 
participating entity; 
    (c) a list of the names, addresses, and official positions 
of the following: 
    (1) all members of the board of directors, or governing 
body of the local government unit, and the principal officers 
and controlling shareholders of the applicant organization; and 
    (2) all members of the board of directors, or governing 
body of the local government unit, and the principal officers of 
the major participating entity and controlling shareholders of 
each shareholder beneficially owning more than ten percent of 
any voting stock of the major participating entity;  
    The commissioner may by rule identify persons included in 
the terms term "principal officers" and "controlling 
shareholders"; 
    (d) a full disclosure of the extent and nature of any 
contract or financial arrangements between the following:  
    (1) the health maintenance organization and the persons 
listed in clause (c)(1);  
    (2) the health maintenance organization and the persons 
listed in clause (c)(2);  
    (3) each major participating entity and the persons listed 
in clause (c)(1) concerning any financial relationship with the 
health maintenance organization; and 
    (4) each major participating entity and the persons listed 
in clause (c)(2) concerning any financial relationship with the 
health maintenance organization;  
    (e) the name and address of each participating entity and 
the agreed upon duration of each contract or agreement;  
    (f) a copy of the form of each contract binding the 
participating entities and the health maintenance organization.  
Contractual provisions shall be consistent with the purposes of 
sections 62D.01 to 62D.29, in regard to the services to be 
performed under the contract, the manner in which payment for 
services is determined, the nature and extent of 
responsibilities to be retained by the health maintenance 
organization, the nature and extent of risk sharing permissible, 
and contractual termination provisions.;  
    (g) a copy of each contract binding major participating 
entities and the health maintenance organization.  Contract 
information filed with the commissioner shall be confidential 
and subject to the provisions of section 13.37, subdivision 1, 
clause (b), upon the request of the health maintenance 
organization.  
    Upon initial filing and thereafter on or before the 
anniversary of the implementation of each contract, the health 
maintenance organization shall file a separate document 
detailing the projected annual expenses to the major 
participating entity in performing the contract and the 
projected annual revenues received by the entity from the health 
maintenance organization for such performance.  The commissioner 
shall disapprove any contract with a major participating entity 
if the contract will result in an unreasonable expense under 
section 62D.19.  The commissioner shall notify a major 
participating entity approve or disapprove a contract within 30 
days if a contract may be disapproved of filing.  
    Within 120 days of the anniversary of the implementation of 
each contract, the health maintenance organization shall file a 
document detailing the actual expenses incurred and reported by 
the major participating entity in performing the contract in the 
proceeding year and the actual revenues received from the health 
maintenance organization by the entity in payment for the 
performance.  The contract shall be submitted for a 
reasonableness determination under section 62D.19.  
    Contracts implemented prior to the effective date of this 
subdivision shall be filed within 90 days of such effective date.
These contracts are subject to the provisions of section 62D.19 
but are not subject to the prospective review prescribed by this 
clause unless or until the terms of the contract are modified.  
Commencing with the next anniversary of the implementation of 
each of these contracts immediately following filing, the health 
maintenance organization shall, as otherwise required by this 
subdivision, file annual projected and actual expenses and 
revenues which will be subject to review in the manner 
prescribed by this subdivision.  
    (h) a statement generally describing the health maintenance 
organization, its health maintenance contracts and separate 
health service contracts, facilities, and personnel, including a 
statement describing the manner in which the applicant proposes 
to provide enrollees with comprehensive health maintenance 
services and separate health services; 
    (i) a copy of the form of each evidence of coverage to be 
issued to the enrollees; 
    (j) a copy of the form of each individual or group health 
maintenance contract and each separate health service contract 
which is to be issued to enrollees or their representatives; 
    (k) financial statements showing the applicant's assets, 
liabilities, and sources of financial support.  If the 
applicant's financial affairs are audited by independent 
certified public accountants, a copy of the applicant's most 
recent certified financial statement may be deemed to satisfy 
this requirement; 
    (l) a description of the proposed method of marketng the 
plan, a schedule of proposed charges, and a financial plan which 
includes a three year projection of the expenses and income and 
other sources of future capital; 
    (m) a statement reasonably describing the geographic area 
or areas to be served and the type or types of enrollees to be 
served; 
    (n) a description of the complaint procedures to be 
utilized as required under section 62D.11; 
    (o) a description of the procedures and programs to be 
implemented to meet the requirements of section 62D.04, 
subdivision 1, clauses (b) and (c) and to monitor the quality of 
health care provided to enrollees; 
    (p) a description of the mechanism by which enrollees will 
be afforded an opportunity to participate in matters of policy 
and operation under section 62D.06; 
    (q) a copy of any agreement between the health maintenance 
organization and an insurer or nonprofit health service 
corporation regarding reinsurance, stop-loss coverage or any 
other type of coverage for potential costs of health services, 
as authorized in section 62D.04, subdivision 1, clause (f), and 
section 62D.13; and 
    (r) other information as the commissioner of health may 
reasonably require to be provided. 
    Sec. 3.  [62D.102] [MINIMUM BENEFITS.] 
    In addition to minimum requirements established in other 
sections, all group health maintenance contracts providing 
benefits for mental or nervous disorder treatments in a hospital 
shall also provide coverage for at least ten hours of treatment 
over a 12-month period with a copayment not to exceed the 
greater of $10 or 20 percent of the applicable usual and 
customary charge for mental or nervous disorder consultation, 
diagnosis and treatment services delivered while the enrollee is 
not a bed patient in a hospital.  
    Sec. 4.  [62D.103] [SECOND OPINION RELATED TO CHEMICAL 
DEPENDENCY AND MENTAL HEALTH.] 
    A health maintenance organization shall promptly evaluate 
the treatment needs of any enrollee who is seeking treatment for 
a problem related to chemical dependency or mental health 
conditions.  In the event that the health maintenance 
organization or a participating provider determines that no type 
of structured treatment is necessary, the enrollee shall be 
immediately entitled to a second opinion paid for by the health 
maintenance organization, by a health care professional 
qualified in diagnosis and treatment of the problem and not 
affiliated with the health maintenance organization.  The health 
maintenance organization or participating provider shall 
consider the second opinion but is not obligated to accept the 
conclusion of the second opinion.  The health maintenance 
organization or participating provider shall document its 
consideration of the second opinion.  
    Sec. 5.  Minnesota Statutes 1982, section 62D.12, 
subdivision 1, if amended by H.F. No. 1561 at the 1984 regular 
session, is amended to read:  
    Subdivision 1.  No health maintenance organization or 
representative thereof may cause or knowingly permit the use of 
advertising or solicitation which is untrue or misleading, or 
any form of evidence of coverage which is deceptive.  Any 
written advertising is misleading if it fails to disclose that 
there are limitations on the services of some health care 
professionals.  This general disclosure is not required on 
billboards.  Each health maintenance organization shall be 
subject to sections 72A.17 to 72A.321, relating to the 
regulation of trade practices, except (a) to the extent that the 
nature of a health maintenance organization renders such 
sections clearly inappropriate and (b) that enforcement shall be 
by the commissioner of health and not by the commissioner of 
insurance.  Every health maintenance organization shall be 
subject to sections 325F.69 and 8.31. 
    Sec. 6.  Minnesota Statutes 1982, section 62D.17, 
subdivision 4, is amended to read:  
    Subd. 4.  (a) The commissioner of health may issue an order 
directing a health maintenance organization or a representative 
of a health maintenance organization to cease and desist from 
engaging in any act or practice in violation of the provisions 
of sections 62D.01 to 62D.29. 
    (b) Within 20 days after service of the order to cease and 
desist, the respondent may request a hearing on the question of 
whether acts or practices in violation of sections 62D.01 to 
62D.29 have occurred.  Such hearings shall be subject to 
judicial review as provided by chapter 14. 
    If the acts or practices involve violation of the reporting 
requirements of section 62D.08, or if the commissioner of 
commerce has ordered the rehabilitation, liquidation, or 
conservation of the health maintenance organization in 
accordance with section 62D.18, the health maintenance 
organization may request an expedited hearing on the matter. The 
hearing shall be held within 15 days of the request.  Within ten 
days thereafter, a hearing examiner shall issue a recommendation 
on the matter.  The commissioner shall make a final 
determination on the matter within ten days of receipt of the 
hearing examiner's recommendation.  
    When a request for a stay accompanies the hearing request, 
the matter shall be referred to the office of administrative 
hearings within three working days of receipt of the request. 
Within ten days thereafter, a hearing examiner shall issue a 
recommendation to grant or deny the stay.  The commissioner 
shall grant or deny the stay within five days of receipt of the 
hearing examiner's recommendation.  
     To the extent the acts or practices alleged do not involve 
violations of section 62D.08, if a timely request for a hearing 
is made, the cease and desist order shall be stayed for a period 
of 90 days from the date the hearing is requested or until a 
final determination is made on the order, whichever is earlier. 
During this stay, the respondent may show cause why the order 
should not become effective upon the expiration of the stay. 
Arguments on this issue shall be made through briefs filed with 
the hearing examiner no later than ten days prior to the 
expiration of the stay.  
    Sec. 7.  [80D.19] [ANNUAL FINANCIAL STATEMENT REQUIRED.] 
    A provider shall prepare and distribute an annual financial 
statement to the residents of a facility.  The statement shall 
be prepared in accordance with generally accepted accounting 
principles and shall be distributed within four months of the 
end of the provider's fiscal year.  The statement must reflect 
all of the income and expense attributable to the facility for 
the fiscal year covered.  The statement must account for all 
receipts and disbursements from whatever source derived, to 
whatever source paid, arising from the operation of the facility.
    All entrance and maintenance fees, actual interest received 
and paid, and loan proceeds received, and interest and principal 
paid thereon, must be accounted for whether or not included in 
separate accounts because of trust, escrow, or other 
requirements.  Items of income and expense to be allocated 
between a facility and another accounting entity must be 
allocated in accordance with generally accepted accounting 
principles.  The allocation must be noted in the statement.  The 
statement must be in sufficient detail to be meaningful but must 
be easily readable by, and understandable to, a person of 
average intelligence and education.  The statement must include 
comparable data for the fewer of:  each of the last five years; 
or for each year since the first receipts or disbursements, 
arising out of the facility project.  If comparable data does 
not exist and cannot be created for a past year, the variation 
must be noted and explained in the statement.  
    Sec. 8.  [80D.20] [RESIDENTS' REVIEW OF BUDGET; MONTHLY 
STATEMENTS.] 
    Subdivision 1.  [FORMATION OF ASSOCIATION.] The residents 
of a facility may form a residents' association to deal with 
common interests related to their residency.  The association 
may be organized in any way so long as each resident is given an 
equal opportunity to participate and an equal vote in the 
association's decisions including those delegating authority to 
the association's officers, board, and committees, if any.  
    Subd. 2.  [ANNUAL BUDGET REVIEW.] Upon notification to it 
of the existence of a residents' association, the provider must 
present its annual budget to the association for comment before 
its adoption.  The budget must be in sufficient detail to be 
meaningful, but must be readable by, and understandable to, a 
person of average intelligence and education.  The budget must 
reflect the projected collection and disbursement of receipts of 
any kind, for any purpose by the provider, or any person related 
in business to the provider, attributable to residents of the 
facility, including interest income, and trust assets, during 
the budget year.  
    Subd. 3.  [REVIEW OF MONTHLY EXPENDITURE STATEMENTS.] 
Throughout the budget year, the provider must give the 
association timely monthly statements of current income and 
expense showing year-to-date relationship to the annual budget, 
and explanations for a deviation from the budget.  The 
association or its representative may comment on, or raise 
questions about, the monthly statements, to the provider.  
    Subd. 4.  The penalty provisions of section 80D.16 shall 
apply to provider actions in sections 2 and 3.  
    Sec. 9.  [TIME OF EFFECT.] 
    The first reporting fiscal year a provider must comply with 
section 7 is the first of its fiscal years that ends after the 
effective date of sections 7 to 9.  Comparable data from up to 
five years earlier than the reporting fiscal year is required to 
comply with section 7 according to its terms.  
    Sec. 10.  Minnesota Statutes 1982, section 144.072, is 
amended to read: 
    144.072 [IMPLEMENTATION OF SOCIAL SECURITY AMENDMENTS OF 
1972.] 
    Subdivision 1.  [RULES.] The state commissioner of health 
shall implement by rule, pursuant to the administrative 
procedures act, those provisions of the social security 
amendments of 1972 (P. L. 92-603) required of state health 
agencies, including rules which: 
    (a) establish a plan, consistent with regulations 
prescribed by the secretary of health, education, and welfare, 
for the review by appropriate professional health personnel, of 
the appropriateness and quality of care and services furnished 
to recipients of medical assistance; and 
    (b) provide for the determination as to whether 
institutions and agencies meet the requirements for 
participation in the medical assistance program, and the 
certification that those requirements, including utilization 
review, are being met. 
    Subd. 2.  [EXISTING PROCEDURES.] The policies and 
procedures, including survey forms, reporting forms, and other 
documents developed by the commissioner of health for the 
purpose of conducting the inspections of care required under 
Code of Federal Regulations, title 42, sections 456.600 to 
456.614, in effect on March 1, 1984, have the force and effect 
of law and shall remain in effect and govern inspections of care 
until June 30, 1986, unless otherwise superseded by rules 
adopted by the commissioner of health.  
    Sec. 11.  [144.0721] [ASSESSMENTS OF CARE AND SERVICES TO 
NURSING HOME RESIDENTS.] 
    Subdivision 1.  The commissioner of health shall assess the 
appropriateness and quality of care and services furnished to 
private paying residents in nursing homes and boarding care 
homes that are certified for participation in the medical 
assistance program under United States Code, title 42, sections 
1396-1396p.  These assessments shall be conducted in accordance 
with section 144.072, with the exception of provisions requiring 
recommendations for changes in the level of care provided to the 
private paying residents.  
    Subd. 2.  [ACCESS TO DATA.] With the exception of summary 
data, data on individuals that is collected, maintained, used, 
or disseminated by the commissioner of health under subdivision 
1 is private data on individuals and shall not be disclosed to 
others except:  
    (1) under section 13.05;  
    (2) under a valid court order;  
    (3) to the nursing home or boarding care home in which the 
individual resided at the time the assessment was completed; or 
    (4) to the commissioner of public welfare.  
    Sec. 12.  Minnesota Statutes 1983 Supplement, section 
144A.31, subdivision 4, is amended to read: 
    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 or certified boarding care 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 or certified boarding care home is located of procedures to 
ensure that the needs of residents in nursing homes or certified 
boarding care homes about to be closed are met.  The duties of a 
county under the relocation plan also apply when residents are 
to be discharged from a nursing home or certified boarding care 
home as a result of a change in certification, closure, or loss 
or termination of the facility's medical assistance provider 
agreement.  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.  
    Sec. 13.  Minnesota Statutes 1982, section 256B.25, is 
amended to read: 
    256B.25 [PAYMENTS TO LICENSED CERTIFIED FACILITIES.] 
    Subdivision 1.  Payments may not be made hereunder for care 
in any private or public institution, including but not limited 
to hospitals and nursing homes, unless licensed by an 
appropriate licensing authority of this state, any other state, 
or a Canadian province and if applicable, certified by an 
appropriate authority under United States Code, title 42, 
sections 1396-1396p. 
    Subd. 2.  The payment of state or county funds to nursing 
homes, boarding care homes, and supervised living facilities, 
except payments to state operated institutions, for the care of 
persons who are eligible for medical assistance, shall be made 
only through the medical assistance program, except as provided 
in subdivision 3.  
    Subd. 3.  The limitation in subdivision 2 shall not apply 
to:  
    (a) payment of Minnesota supplemental assistance funds to 
recipients who reside in facilities which are involved in 
litigation contesting their designation as an institution for 
treatment of mental disease;  
    (b) payment or grants to a boarding care home or supervised 
living facility licensed by the department of public welfare 
under 12 MCAR 2.036, 12 MCAR 2.035, 12 MCAR 2.005, or 12 MCAR 
2.008, or payment to recipients who reside in these facilities;  
    (c) payments or grants to a boarding care home or 
supervised living facility which are ineligible for 
certification under United States Code, title 42, sections 
1396-1396p;  
    (d) payments or grants otherwise specifically authorized by 
statute or rule.  
    Sec. 14.  Minnesota Statutes 1983 Supplement, section 
256B.421, subdivision 2, is amended to read: 
    Subd. 2.  [ACTUAL ALLOWABLE HISTORICAL OPERATING COST PER 
DIEM.] "Actual allowable historical operating cost per diem" 
means the per diem payment for actual operating costs, including 
operating costs, allowed by the commissioner for the most recent 
reporting year. 
    Sec. 15.  Minnesota Statutes 1983 Supplement, section 
256B.421, subdivision 5, is amended to read: 
    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, except as necessary for training 
programs for nursing personnel and dieticians required to 
maintain licensure, certification, or professional standards 
requirements; 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.  
    Sec. 16.  Minnesota Statutes 1983 Supplement, section 
256B.421, subdivision 8, is amended to read: 
    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; 
medical directors; licenses and permits; general and 
administration; payroll taxes; real estate taxes and actual 
special assessments paid; and fringe benefits, including 
clerical training; and travel necessary for training programs 
for nursing personnel and dieticians required to maintain 
licensure, certification, or professional standards requirements.
    Sec. 17.  Minnesota Statutes 1983 Supplement, section 
256B.431, subdivision 1, is amended to read: 
    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.  For rates established on or after July 1, 1985, 
the commissioner shall develop procedures for determining 
operating cost payment rates that take into account the mix of 
resident needs, geographic location, and other factors as 
determined by the commissioner.  The commissioner shall consider 
whether the fact that a facility is attached to a hospital or 
has an average length of stay of 180 days or less should be 
taken into account in determining rates.  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 
establishes procedures for determining operating cost payment 
rates, 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.  For rate years beginning July 1, 1985, 
the commissioner shall not provide, by rule, limitations on top 
management personnel.  Compensation for top management personnel 
shall continue to be categorized as a general and administrative 
cost and is subject to any limits imposed on that cost 
category.  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.  For 
the rate year beginning July 1, 1984, nursing homes in which the 
nursing hours exceeded 2.9 hours per day for skilled nursing 
care or 2.3 hours per day for intermediate care for the 
reporting year ending on September 30, 1983, shall be limited to 
a maximum of 3.2 hours per day for skilled nursing care and 2.6 
hours per day for intermediate care.  
    Sec. 18.  Minnesota Statutes 1983 Supplement, section 
256B.431, subdivision 2, is amended to read: 
    Subd. 2.  [OPERATING COSTS, 1984-1985.] (a) For the rate 
year beginning July 1, 1984, 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 (1) for nursing homes with more than 100 
certified beds in total, the greater of ten percent or the 25th 
percentile of general and administrative cost per diems of 
nursing homes grouped by level of care;  
    12 percent (2) for nursing homes with fewer than 101 but 
more than 40 certified beds in total, the greater of 12 percent 
or the 25th percentile of general and administrative cost per 
diems of nursing homes grouped by level of care;  
    14 percent (3) for nursing homes with 40 or fewer certified 
beds in total, the greater of 14 percent or the 25th percentile 
of general and administrative cost per diems of nursing homes 
grouped by level of care; and 
    (4) 15 percent for convalescent and nursing care units 
attached to hospitals for the rate year beginning July 1, 1983 
1984, of the expenditures in all operating cost categories 
except fringe benefits, payroll taxes, and general and 
administration.  
    (b) Subd. 2a.  [OPERATING COSTS, 1983-1984.] 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) subdivision 2.  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) (a) Within each group, each nursing home whose actual 
allowable historical operating cost per diem as determined under 
this paragraph (b) subdivision 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) (b) 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 diems.  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) (c) 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) (d) 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) Subd. 2b.  [OPERATING COSTS, AFTER JULY 1, 1985.] (a) 
For subsequent years rate years beginning on or after July 1, 
1985, the commissioner shall establish procedures for 
determining per diem reimbursement for operating costs.  
    (1) (b) The commissioner shall 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.  (c) 
The commissioner shall analyze and evaluate each nursing home's 
cost 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;  
    (d) The commissioner shall establish limits on actual 
allowable historical operating cost per diems based on cost 
reports of allowable operating costs for the reporting year that 
begins October 1, 1983, taking into consideration relevant 
factors including resident needs, geographic location, age, size 
of the nursing home, and the costs that must be incurred for the 
care of residents in an efficiently and economically operated 
nursing home.  The limits established by the commissioner shall 
not be less, in the aggregate, than the 60th percentile of total 
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 limits established under this paragraph 
remain in effect until the commissioner establishes a new base 
period.  Until the new base period is established, the 
commissioner shall adjust the limits annually using the 
appropriate economic change indices established in paragraph (e).
In determining allowable historical operating cost per diems for 
purposes of setting limits and nursing home payment rates, the 
commissioner shall divide the allowable historical operating 
costs by the actual number of resident days, except that where a 
nursing home is occupied at less than 90 percent of licensed 
capacity days, the commissioner may establish procedures to 
adjust the computation of the per diem to an imputed occupancy 
level at or below 90 percent.  The commissioner shall establish 
efficiency incentives as appropriate.  The commissioner may 
establish efficiency incentives for different operating cost 
categories.  The commissioner shall consider establishing 
efficiency incentives in care related cost categories.  The 
commissioner may combine one or more operating cost categories 
and may use different methods for calculating payment rates for 
each operating cost category or combination of operating cost 
categories.  
    (3) (e) The commissioner shall establish a composite index 
for each group or indices by determining the weighted average of 
all appropriate economic change indicators to be applied to the 
specific operating cost categories in that group; or combination 
of operating cost categories.  
    (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.  
    (f) Each nursing home shall receive an operating cost 
payment rate equal to the sum of the nursing home's operating 
cost payment rates for each operating cost category.  The 
operating cost payment rate for an operating cost category shall 
be the lesser of the nursing home's historical operating cost in 
the category increased by the appropriate index established in 
paragraph (e) for the operating cost category plus an efficiency 
incentive established pursuant to paragraph (d) or the limit for 
the operating cost category increased by the same index.  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.  In establishing payment rates 
for one or more operating cost categories, the commissioner may 
establish separate rates for different classes of residents 
based on their relative care needs.  
    (g) 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) (1) 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 (2) shall not be used to compute the 
60th percentile or other operating cost limits established by 
the commissioner, and (3) shall not be increased by the 
composite index or indices established pursuant to paragraph (e).
    Subd. 2c.  [OPERATING COSTS AFTER JULY 1, 1986.] For rate 
years beginning on or after July 1, 1986, the commissioner may 
allow a one time adjustment to historical operating costs of a 
nursing home that has been found by the commissioner of health 
to be significantly below care related minimum standards 
appropriate to the mix of resident needs in that nursing home 
when it is determined by the commissioners of health and public 
welfare that the nursing home is unable to meet minimum 
standards through reallocation of nursing home costs and 
efficiency incentives or allowances.  In developing procedures 
to allow adjustments, the commissioner shall specify the terms 
and conditions governing any additional payments made to a 
nursing home as a result of the adjustment.  The commissioner 
shall establish procedures to recover amounts paid under this 
subdivision, in whole or in part, and to adjust current and 
future rates, for nursing homes that fail to use the adjustment 
to satisfy care related minimum standards.  
    (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.  
     Subd. 2d. 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) Subd. 2e.  [NEGOTIATED RATES.] Until procedures for 
determining operating cost payment rates according to mix of 
resident needs are established, 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, or who have extensive care needs based on nursing 
hours actually provided or mental or physical disability, or who 
need for respite care for a specified and limited time period, 
and.  In addition, the commissioner shall take into 
consideration facilities which historically provided nursing 
hours at or near the maximum limits which were subsequently 
reduced as a consequence of payment rate reductions.  The 
payment rate shall be based on an assessment of the nursing 
home's resident mix as determined by the commissioner of 
health.  When circumstances dictate, the commissioner has 
authority to renegotiate payment rates for an additional period 
of time.  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 256B.502. 
    (f) Subd. 2f.  [EXCLUSION.] Until groups are established 
according to mix of resident care needs procedures for 
determining operating cost payment rates according to mix of 
resident needs are established, 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).  
    Sec. 19.  Minnesota Statutes 1983 Supplement, section 
256B.431, subdivision 4, is amended to read: 
    Subd. 4.  [SPECIAL RATES.] (a) 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.  Until procedures determining operating cost 
payment rates according to mix of resident needs are 
established, 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.  
    (b) For rate years beginning on or after July 1, 1983, the 
commissioner may exclude from a provision of 12 MCAR S 2.050 any 
facility that is licensed by the commissioner of health only as 
a boarding care home, is certified by the commissioner of health 
as an intermediate care facility, is licensed by the 
commissioner of public welfare under 12 MCAR S 2.036, and has 
less than five percent of its licensed boarding care capacity 
reimbursed by the medical assistance program.  Until a permanent 
rule to establish the payment rates for facilities meeting these 
criteria is promulgated, the commissioner shall establish the 
medical assistance payment rate as follows:  
    (1) The desk audited payment rate in effect on June 30, 
1983, remains in effect until the end of the facility's fiscal 
year.  The commissioner shall not allow any amendments to the 
cost report on which this desk audited payment rate is based.  
    (2) For each fiscal year beginning between July 1, 1983, 
and June 30, 1985, the facility's payment rate shall be 
established by increasing the desk audited operating cost 
payment rate determined in clause (1) at an annual rate of five 
percent.  
    (3) For fiscal years beginning on or after July 1, 1985, 
the facility's payment rate shall be established by increasing 
the facility's payment rate in the facility's prior fiscal year 
by the increase indicated by the consumer price index for 
Minneapolis and St. Paul.  
    (4) For the purpose of establishing payment rates under 
this paragraph, the facility's rate and reporting years coincide 
with the facility's fiscal year.  
    A facility that meets the criteria of this paragraph shall 
submit annual cost reports on forms prescribed by the 
commissioner.  
    Sec. 20.  Minnesota Statutes 1983 Supplement, section 
256B.431, subdivision 5, is amended to read: 
    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 the reporting year ending 
on September 30, 1983, the 60th percentile established for the 
following rate year for that group shall be increased or 
decreased by the adjustment amount.  
    Sec. 21.  Minnesota Statutes 1983 Supplement, section 
256B.50, is amended to read: 
    256B.50 [APPEALS.] 
    A nursing home may appeal a decision arising from the 
application of standards or methods pursuant to sections 256B.41 
and 256B.47 if the appeal, if successful, would result in a 
change to the nursing home's payment rate.  The appeal 
procedures also apply to appeals of payment rates calculated 
under 12 MCAR S 2.049 filed with the commissioner on or after 
May 1, 1984.  To appeal, the nursing home shall notify the 
commissioner in writing 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.421, 256B.431, 256B.47, 256B.48, 256B.50, and 256B.502, a 
nursing home shall comply with section 14.44. 
    Sec. 22.  Minnesota Statutes 1983 Supplement, section 
256B.431, is amended by adding a subdivision to read: 
    Subd. 6.  The commissioners of health and public welfare 
shall adopt temporary rules necessary for the implementation and 
enforcement of the reimbursement system established in sections 
10 to 20.  The commissioner of health may adopt temporary rules 
relating to the licensure requirements of boarding care homes 
and nursing homes promulgated under sections 144.56 and 144A.08 
if appropriate due to the changes in the reimbursement system. 
Until June 30, 1986, any temporary rules adopted by the 
commissioner of health or the commissioner of public welfare 
under this section shall be adopted in accordance with the 
provisions contained in sections 14.29 to 14.36 in effect on 
March 1, 1984.  Temporary rules adopted under this subdivision 
have the force and effect of law and remain in effect until June 
30, 1986, unless otherwise superseded by rule.  The procedures 
for the adoption of the temporary rules authorized by this 
subdivision shall prevail over any other act that amends chapter 
14 regardless of the date of final enactment of those 
amendments.  The rules shall be developed in consultation with 
the interagency board for quality assurance, provider groups and 
consumers and the board shall conduct public hearings as 
appropriate.  The commissioners of health and public welfare 
shall consider all comments received and shall not implement the 
temporary rules until a report on the proposed rules has been 
presented to the senate health and human services committee and 
the house of representatives health and welfare committee.  The 
rules are effective five days after publication in the State 
Register.  
    Sec. 23.  Minnesota Statutes, 1983 Supplement, section 
256B.48, subdivision 1, is amended to read: 
    Subdivision 1.  [PROHIBITED PRACTICES.] A nursing home is 
not eligible to receive medical assistance payments unless it 
refrains from: 
    (a) Charging private paying residents rates for similar 
services which exceed those which are approved by the state 
agency for medical assistance recipients as determined by the 
prospective desk audit rate, except under the following 
circumstances:  the nursing home may (1) charge private paying 
residents a higher rate for a private room, and (2) charge for 
special services which are not included in the daily rate if 
medical assistance residents are charged separately at the same 
rate for the same services in addition to the daily rate paid by 
the commissioner.  Services covered by the payment rate must be 
the same regardless of payment source.  Special services, if 
offered, must be offered to all residents and charged separately 
at the same rate.  Residents are free to select or decline 
special services.  Special services must not include services 
which must be provided by the nursing home in order to comply 
with licensure or certification standards and that if not 
provided would result in a deficiency or violation by the 
nursing home.  Services beyond those required to comply with 
licensure or certification standards must not be charged 
separately as a special service if they were included in the 
payment rate for the previous reporting year.  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 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;  
     (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 Providing differential treatment on the basis of status 
with regard to public assistance;  
    (e) Discriminating in admissions, services offered, or room 
assignment on the basis of status with regard to public 
assistance.  Admissions discrimination shall include, but is not 
limited to:  
    (1) basing admissions decisions upon assurance by the 
applicant to the nursing home, or the applicant's guardian or 
conservator, that the applicant is neither eligible for nor will 
seek public assistance for payment of nursing home care costs;  
    (2) engaging in preferential selection from waiting lists 
based on an applicant's ability to pay privately. 
     The collection and use by a nursing home of financial 
information of any applicant pursuant to the pre-admission 
screening program established by section 256B.091 shall not 
raise an inference that the nursing home is utilizing that 
information for any purpose prohibited by this paragraph;  
    (e) (f) 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) (g) 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) accounts for all of the applicant's assets which are 
required to be assigned to the home so that only expenses for 
the cost of care of the applicant may be 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 applicant's account upon 
request, and to receive an audited statement of the expenditures 
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, the balance of his individual 
account. 
    For a period not to exceed 180 days, the commissioner may 
continue to make medical assistance payments to a nursing home 
or boarding care home which is in violation of this section if 
extreme hardship to the residents would result.  In these cases 
the commissioner shall issue an order requiring the nursing home 
to correct the violation.  The nursing home shall have 20 days 
from its receipt of the order to correct the violation.  If the 
violation is not corrected within the 20 day period the 
commissioner may reduce the payment rate to the nursing home by 
up to 20 percent.  The amount of the payment rate reduction 
shall be related to the severity of the violation, and shall 
remain in effect until the violation is corrected.  The nursing 
home or boarding care home may appeal the commissioner's action 
pursuant to the provisions of chapter 14 pertaining to contested 
cases.  An appeal shall be considered timely if written notice 
of appeal is received by the commissioner within 20 days of 
notice of the commissioner's proposed action.  
    In the event that the commissioner determines that a 
nursing home is not eligible for reimbursement for a resident 
who is eligible for medical assistance, the commissioner may 
authorize the nursing home to receive reimbursement on a 
temporary basis until the resident can be relocated to a 
participating nursing home. 
     Certified beds in facilities which do not allow medical 
assistance intake on July 1, 1984, or after shall be deemed to 
be decertified for purposes of section 144A.071 only.  
    Sec. 24.  [256B.491] [WAIVERED SERVICES.] 
    Subdivision 1.  [STUDY.] The commissioner of public welfare 
shall prepare a study on the characteristics of providers who 
have the potential for offering home and community-based 
services under federal waivers authorized by United States Code, 
title 42, sections 1396 to 1396p.  The study shall include, but 
not be limited to:  
    (a) An analysis of the characteristics of providers 
presently involved in offering services to the elderly, 
chronically ill children, disabled persons under age 65, and 
mentally retarded persons;  
    (b) The potential for conversion to waivered services of 
facilities which currently provide services to the disability 
groups enumerated in clause (a);  
    (c) Proposals for system redesign to include (1) profiles 
of the types of providers best able, within reasonable fiscal 
constraints, to serve the needs of clients and to fulfill public 
policy goals in provision of waivered services, (2) methods for 
limiting concentration of facilities providing services under 
waiver, (3) methods for ensuring that services are provided by 
the widest array of provider groups.  
    The commissioner shall present the study to the legislature 
no later than March 15, 1985.  
    Subd. 2.  [CONTROL LIMITED.] Until July 1, 1985, no one 
person shall control the delivery of waivered services to more 
than 50 persons receiving waivered services as authorized by 
section 256B.501.  For the purposes of this section the 
following terms have the meanings given them:  
    (1) A "person" is an individual, a corporation, a 
partnership, an association, a trust, an unincorporated 
organization, a subsidiary of an organization, and an 
affiliate.  A "person" does not include any governmental 
authority, agency or body.  
    (2) An "affiliate" is a person that directly, or indirectly 
through one or more intermediaries, controls, or is controlled 
by, or is under common control with another person.  
    (3) "Control" including the terms "controlling," 
"controlled by," and "under the common control with" is the 
possession, direct or indirect, or the power to direct or cause 
the direction of the management, operations or policies of a 
person, whether through the ownership of voting securities, by 
contract, through consultation or otherwise.  
    Sec. 25.  Minnesota Statutes 1982, section 256D.06, is 
amended by adding a subdivision to read: 
    Subd. 6.  General assistance funds may be paid to cover the 
room and board needs of persons who are eligible for general 
assistance and who are placed by the county in a licensed 
facility for the purpose of receiving physical, mental health, 
or rehabilitative care.  
    Sec. 26. [OPERATING COST ADJUSTMENT ALLOWANCE.] 
    For the rate year beginning July 1, 1984, and ending June 
30, 1985, and for the purpose of salary increases for 
direct-care personnel, the commissioner shall add 24 cents per 
resident per day to the operating cost payment rate of each 
nursing home whose allowable historical operating cost per diem 
is below the 60th percentile of allowable historical operating 
costs per diems for its respective group and shall add 6 cents 
per resident per day to the operating cost payment rate of each 
nursing home whose allowable historical operating cost per diem 
is at or above the 60th percentile of allowable historical 
operating costs per diems for its respective group.  The groups 
shall be the groups established under section 256B.431, 
subdivision 1, based on cost reports of allowable historical 
operating costs incurred in the previous reporting year.  This 
increase shall not be used for general and administrative costs 
or property-related costs.  Any change in the ranking of nursing 
homes as a result of amendments, field audits, or appeal 
settlements shall not affect the calculation in this clause.  
    Sec. 27.  [ACQUISITION LIMITATION STUDY.] 
    The interagency board for quality assurance in consultation 
with the state planning agency, the department of public 
welfare, and the department of health shall study the issues 
related to concentration of ownership in the nursing home 
industry and in residential care services for the mentally 
retarded, including the effect on medical assistance rates paid 
for resident care.  The board shall report to the legislative 
commission on long-term health care by January 15, 1985.  
    Sec. 28.  [APPROPRIATION.] 
    Subdivision 1.  The sum of $698,000 is appropriated from 
the general fund to the commissioner of health for purposes of 
sections 10, 11, and 21 and is available until June 30, 1985. 
The approved complement of the department of health is increased 
by 22 positions for the purposes of sections 10, 11, and 21. 
Five of these positions are temporary to continue only until 
June 30, 1985.  
    Subd. 2.  There is appropriated to the commissioner of the 
department of public welfare, $1,170,000 for the purposes of 
sections 8 to 27.  
    Subd. 3.  There is appropriated to the legislative 
commission on long-term health care $15,000 for the purposes of 
nursing home reimbursement rule developments and the state 
hospital planning study.  
    Subd. 4.  The appropriations in subdivisions 1, 2, and 3, 
are from the general fund for the biennium ending June 30, 1985. 
    Sec. 29.  [EFFECTIVE DATE.] 
    Sections 1 to 27 are effective the day following final 
enactment. 
    Approved May 2, 1984