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Minnesota Legislature

Office of the Revisor of Statutes

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

 

                         Laws of Minnesota 1985 

                          CHAPTER 3-S.F.No. 4 
           An act relating to human services; creating a 
          procedure for reconsideration of a resident's case mix 
          classification; establishing approval procedures and 
          requirements for hospital swing beds; restricting 
          licensure of new nursing home beds; expanding the 
          preadmission screening program; revising statutes 
          relating to nursing home reimbursement; requiring 
          nursing homes participating in the medical assistance 
          program to be medicare certified; creating an appeal 
          process for nursing home appraisals; authorizing the 
          legislative commission on long-term health care to 
          study cost containment strategies and collect data; 
          authorizing bingo in nursing homes and senior citizen 
          housing projects; requiring review by the 
          commissioners of human services and health of 
          proposals for revenue bond financing of health 
          facility projects; appropriating money; amending 
          Minnesota Statutes 1984, sections 144.50, subdivision 
          2; 144A.01, subdivisions 5, 7, and by adding a 
          subdivision; 144A.04, subdivisions 4 and 6; 144A.071, 
          subdivisions 1, 2, and 3; 144A.08, subdivision 3; 
          144A.10, subdivision 4, and by adding subdivisions; 
          144A.11, subdivisions 2 and 3a; 256B.02, subdivision 8;
          256B.091, subdivisions 1, 2, 4, 5, and 8; 256B.421, 
          subdivision 5; 256B.431, subdivisions 2b, 3, and 4, 
          and by adding subdivisions; 256B.48, by adding a 
          subdivision; 256B.50; 256B.504, subdivision 1; 
          349.214, by adding a subdivision; and 474.01, 
          subdivisions 7a and 9; proposing coding for new law in 
          Minnesota Statutes, chapter 144. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [144.0722] [RESIDENT REIMBURSEMENT 
CLASSIFICATIONS; PROCEDURES FOR RECONSIDERATION.] 
    Subdivision 1.  [RESIDENT REIMBURSEMENT 
CLASSIFICATIONS.] The commissioner of health shall establish 
resident reimbursement classifications based upon the 
assessments of residents of nursing homes and boarding care 
homes conducted under sections 144.072 and 144.0721, or under 
rules established by the commissioner of human services under 
sections 256B.41 to 256B.48.  The reimbursement classifications 
established by the commissioner must conform to the rules 
established by the commissioner of human services. 
    Subd. 2.  [NOTICE OF RESIDENT REIMBURSEMENT 
CLASSIFICATION.] The commissioner of health shall notify each 
resident, and the nursing home or boarding care home in which 
the resident resides, of the reimbursement classification 
established under subdivision 1.  The notice must inform the 
resident of the classification that was assigned, the 
opportunity to review the documentation supporting the 
classification, the opportunity to obtain clarification from the 
commissioner, and the opportunity to request a reconsideration 
of the classification.  The notice of resident classification 
must be sent by first-class mail.  The individual resident 
notices may be sent to the resident's nursing home or boarding 
care home for distribution to the resident. 
    Subd. 3.  [REQUEST FOR RECONSIDERATION.] The resident or 
the nursing home or boarding care home may request that the 
commissioner reconsider the assigned reimbursement 
classification.  The request for reconsideration must be 
submitted in writing to the commissioner within ten working days 
of the receipt of the notice of resident classification.  The 
request for reconsideration must include the name of the 
resident, the name and address of the facility in which the 
resident resides, the reasons for the reconsideration, the 
requested classification changes, and documentation supporting 
the requested classification.  The documentation accompanying 
the reconsideration request is limited to documentation 
establishing that the needs of the resident at the time of the 
assessment resulting in the disputed classification justify a 
change of classification. 
    Subd. 4.  [RECONSIDERATION.] The commissioner's 
reconsideration must be made by individuals not involved in 
reviewing the assessment that established the disputed 
classification.  The reconsideration must be based upon the 
initial assessment and upon the information provided to the 
commissioner under subdivision 3.  If necessary for evaluating 
the reconsideration request, the commissioner may conduct 
on-site reviews.  In its discretion, the commissioner may review 
the reimbursement classifications assigned to all residents in 
the facility.  Within 15 working days of receiving the request 
for reconsideration, the commissioner shall affirm or modify the 
original resident classification.  The original classification 
must be modified if the commissioner determines that the 
assessment resulting in the classification did not accurately 
reflect the needs of the resident at the time of the 
assessment.  The resident and the nursing home or boarding care 
home shall be notified within five working days after the 
decision is made.  The commissioner's decision under this 
subdivision is the final administrative decision of the agency. 
    Sec. 2.  Minnesota Statutes 1984, section 144.50, 
subdivision 2, is amended to read: 
    Subd. 2.  Hospital, sanatorium or other institution for the 
hospitalization or care of human beings, within the meaning of 
sections 144.50 to 144.56 shall mean any institution, place, 
building, or agency, in which any accommodation is maintained, 
furnished, or offered for:  the hospitalization of the sick or 
injured; the provision of care in a swing bed authorized under 
section 3; elective outpatient surgery for preexamined, 
prediagnosed low risk patients; emergency medical services 
offered 24 hours a day, seven days a week, in an ambulatory or 
outpatient setting in a facility not a part of a licensed 
hospital; or the institutional care of human beings.  Nothing in 
sections 144.50 to 144.56 shall apply to a clinic, a physician's 
office or to hotels or other similar places that furnish only 
board and room, or either, to their guests. 
    Sec. 3.  [144.562] [SWING BED APPROVAL; ISSUANCE OF LICENSE 
CONDITIONS; VIOLATIONS.] 
    Subdivision 1.  [DEFINITION.] For the purposes of this 
section, "swing bed" means a hospital bed licensed under 
sections 144.50 to 144.56 that has been granted a license 
condition under this section and which has been certified to 
participate in the federal medicare program under United States 
Code, title 42, section 1395 (tt).  
    Subd. 2.  [ELIGIBILITY FOR LICENSE CONDITION.] A hospital 
is not eligible to receive a license condition for swing beds 
unless (1) it either has a licensed bed capacity of less than 50 
beds defined in the federal medicare regulations, Code of 
Federal Regulations, title 42, section 405.1041, or it has a 
licensed bed capacity of 50 beds or more and has swing beds that 
were approved for medicare reimbursement before May 1, 1985; (2) 
it is located in a rural area as defined in the federal medicare 
regulations, Code of Federal Regulations, title 42, section 
405.1041; and (3) it agrees to utilize no more than four 
hospital beds as swing beds at any one time, except that the 
commissioner may approve the utilization of up to three 
additional beds at the request of a hospital if no medicare 
certified skilled nursing facility beds are available within 25 
miles of that hospital. 
    Subd. 3.  [APPROVAL OF LICENSE CONDITION.] The commissioner 
of health shall approve a license condition for swing beds if 
the hospital meets all of the criteria of this subdivision: 
    (a) The hospital must meet the eligibility criteria in 
subdivision 2. 
    (b) The hospital must be in compliance with the medicare 
conditions of participation for swing beds under Code of Federal 
Regulations, title 42, section 405.1041. 
    (c) The hospital must agree, in writing, to limit the 
length of stay of a patient receiving services in a swing bed to 
not more than 40 days, or the duration of medicare eligibility, 
unless the commissioner of health approves a greater length of 
stay in an emergency situation.  To determine whether an 
emergency situation exists, the commissioner shall require the 
hospital to provide documentation that continued services in the 
swing bed are required by the patient; that no skilled nursing 
facility beds are available within 25 miles from the patient's 
home, or in some more remote facility of the resident's choice, 
that can provide the appropriate level of services required by 
the patient; and that other alternative services are not 
available to meet the needs of the patient.  If the commissioner 
approves a greater length of stay, the hospital shall develop a 
plan providing for the discharge of the patient upon the 
availability of a nursing home bed or other services that meet 
the needs of the patient.  Permission to extend a patient's 
length of stay must be requested by the hospital at least 10 
days prior to the end of the maximum length of stay. 
    (d) The hospital must agree, in writing, to limit admission 
to a swing bed only to patients who have been hospitalized and 
not yet discharged from the facility. 
    (e) The hospital must agree, in writing, to report to the 
commissioner of health by December 1, 1985, and annually 
thereafter, in a manner required by the commissioner (1) the 
number of patients readmitted to a swing bed within 60 days of a 
patient's discharge from the facility, (2) the hospital's 
charges for care in a swing bed during the reporting period with 
a description of the care provided for the rate charged, and (3) 
the number of beds used by the hospital for transitional care 
and similar sub-acute inpatient care.  
    (f) The hospital must agree, in writing, to report 
statistical data on the utilization of the swing beds on forms 
supplied by the commissioner.  The data must include the number 
of swing beds, the number of admissions to and discharges from 
swing beds, medicare reimbursed patient days, total patient 
days, and other information required by the commissioner to 
assess the utilization of swing beds.  
    Subd. 4.  [ISSUANCE OF LICENSE CONDITION; RENEWALS.] The 
commissioner of health shall issue a license condition to a 
hospital that complies with subdivisions 2 and 3.  The license 
condition must be granted when the license is first issued, when 
it is renewed, or during the hospital's licensure year.  The 
condition is valid for the hospital's licensure year.  The 
license condition can be renewed at the time of the hospital's 
license renewal if the hospital complies with subdivisions 2 and 
3. 
    Subd. 5.  [INSPECTIONS.] Notwithstanding section 144.55, 
subdivision 4, the commissioner of health may conduct 
inspections of a hospital granted a condition under this section 
to assess compliance with this section. 
    Subd. 6.  [VIOLATIONS.] Notwithstanding section 144.55, 
subdivision 4, if the hospital fails to comply with subdivision 
2 or 3, the commissioner of health shall issue a correction 
order and penalty assessment under section 144.653 or may 
suspend, revoke, or refuse to renew the license condition under 
section 144.55, subdivision 6.  The penalty assessment for a 
violation of subdivision 2 or 3 is $500. 
    Subd. 7.  [EFFECTIVE DATE.] Hospitals participating in the 
medicare swing bed program on the effective date of this section 
shall comply with this section by January 1, 1986, or at the 
time of the renewal of the medicare swing bed approval, 
whichever is earlier. 
    Sec. 4.  [144.563] [NURSING SERVICES PROVIDED IN A HOSPITAL;
PROHIBITED PRACTICES.] 
     A hospital that has been granted a license condition under 
section 3 must not provide to patients not reimbursed by 
medicare or medical assistance the types of services that would 
be usually and customarily provided and reimbursed under medical 
assistance or medicare as services of a skilled nursing facility 
or intermediate care facility for more than 42 days and only for 
patients who have been hospitalized and no longer require an 
acute level of care.  Permission to extend a patient's length of 
stay may be granted by the commissioner if requested by the 
physician at least ten days prior to the end of the maximum 
length of stay.  
    Sec. 5.  Minnesota Statutes 1984, section 144A.01, 
subdivision 5, is amended to read: 
    Subd. 5.  "Nursing home" means a facility or that part of a 
facility which provides nursing care to five or more persons.  
"Nursing home" does not include a facility or that part of a 
facility which is a hospital, a hospital with approved swing 
beds as defined in section 3, clinic, doctor's office, 
diagnostic or treatment center, or a residential facility 
licensed pursuant to sections 245.781 to 245.821 or 252.28. 
    Sec. 6.  Minnesota Statutes 1984, section 144A.01, 
subdivision 7, is amended to read: 
    Subd. 7.  "Uncorrected violation" means (a) a violation of 
a statute or rule or any other deficiency for which a notice of 
noncompliance has been issued and fine assessed and allowed to 
be recovered pursuant to section 144A.10, subdivision 6, or (b) 
the issuance of two or more correction orders, within a 12-month 
period, for a violation of the same provision of a statute or 
rule 8.  
    Sec. 7.  Minnesota Statutes 1984, section 144A.01, is 
amended by adding a subdivision to read: 
    Subd. 10.  "Repeated violation" means the issuance of two 
or more correction orders, within a 12-month period, for a 
violation of the same provision of a statute or rule. 
    Sec. 8.  Minnesota Statutes 1984, section 144A.04, 
subdivision 4, is amended to read: 
    Subd. 4.  The controlling persons of a nursing home may not 
include any person who was a controlling person of another 
nursing home during any period of time in the previous two year 
period:  
    (a) during which time of control that other nursing home 
incurred the following number of uncorrected or repeated 
violations: 
    (1) two or more uncorrected violations or one or more 
repeated violations which created an imminent risk to direct 
resident care or safety; or 
    (2) five four or more uncorrected violations or two or more 
repeated violations of any nature for which the fines are in the 
two four highest daily fine categories prescribed in rule; or 
    (b) who was convicted of a felony or gross misdemeanor 
punishable by a term of imprisonment of more than 90 days that 
relates to operation of the nursing home or directly affects 
resident safety or care, during that period. 
    The provisions of this subdivision shall not apply to any 
controlling person who had no legal authority to affect or 
change decisions related to the operation of the nursing home 
which incurred the uncorrected violations. 
    Sec. 9.  Minnesota Statutes 1984, section 144A.04, 
subdivision 6, is amended to read: 
    Subd. 6.  A nursing home may not employ as a managerial 
employee or as its licensed administrator any person who was a 
managerial employee or the licensed administrator of another 
facility during any period of time in the previous two year 
period:  
    (a) During which time of employment that other nursing home 
incurred the following number of uncorrected violations which 
were in the jurisdiction and control of the managerial employee 
or the administrator: 
    (1) two or more uncorrected violations or one or more 
repeated violations which created an imminent risk to direct 
resident care or safety; or 
    (2) five four or more uncorrected violations or two or more 
repeated violations of any nature for which the fines are in the 
two four highest daily fine categories prescribed in rule; or 
    (b) who was convicted of a felony or gross misdemeanor 
punishable by a term of imprisonment of more than 90 days that 
relates to operation of the nursing home or directly affects 
resident safety or care, during that period. 
    Sec. 10.  Minnesota Statutes 1984, section 144A.071, 
subdivision 1, is amended to read:  
    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, and 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 is 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 also finds that further increases in the number of 
licensed nursing home beds, especially in nursing homes not 
certified for participation in the medical assistance program, 
is contrary to public policy, because:  (1) nursing home 
residents with limited resources may exhaust their resources 
more rapidly in these facilities, creating the need for a 
transfer to a certified nursing home, with the concomitant risk 
of transfer trauma; (2) a continuing increase in the number of 
nursing home beds will foster continuing reliance on 
institutional care to meet the long-term care needs of residents 
of the state; (3) a further expansion of nursing home beds will 
diminish incentives to develop more appropriate and 
cost-effective alternative services and divert community 
resources that would otherwise be available to fund alternative 
services; (4) through corporate reorganization resulting in the 
separation of certified and licensed beds, a nursing home may 
evade the provisions of section 256B.48, subdivision 1, clause 
(a); and (5) it is in the best interests of the state to ensure 
that the long-term care system is designed to protect the 
private resources of individuals as well as to use state 
resources most effectively and efficiently. 
    The legislature declares that a moratorium on the licensure 
and 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.  
    Sec. 11.  Minnesota Statutes 1984, section 144A.071, 
subdivision 2, is amended to read:  
    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 human services, 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 May 23, 1983, 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 human services, 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.  
The commissioner of health shall deny each request for licensure 
of nursing home beds except as provided in subdivision 3. 
    Sec. 12.  Minnesota Statutes 1984, section 144A.071, 
subdivision 3, is amended to read:  
    Subd. 3.  [EXCEPTIONS.] The commissioner of health, in 
coordination with the commissioner of human services, may 
approve the addition of a new certified bed or change in the 
certification status of an existing bed the addition of a new 
licensed nursing home bed, under the following conditions:  
    (a) To replace a bed decertified after May 23, 1983 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 May 23, 1983.  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 To license a new nursing 
home bed in a facility that meets one of the exceptions 
contained in clauses (a) to (c); 
    (e) To license nursing home beds in a facility that has 
submitted either a completed licensure application or a written 
request for licensure to the commissioner before March 1, 1985, 
and has either commenced any required construction as defined in 
clause (b) before May 1, 1985, or has, before May 1, 1985, 
received from the commissioner approval of plans for phased-in 
construction and written authorization to begin construction on 
a phased-in basis.  For the purpose of this clause, 
"construction" means any erection, building, alteration, 
reconstruction, modernization, or improvement necessary to 
comply with the nursing home licensure rules; or 
    (f) To certify or license new beds in a new facility that 
is to be operated by the commissioner of veterans' affairs or 
when the costs of constructing and operating the new beds are to 
be reimbursed by the commissioner of veterans' affairs or the 
United States veterans administration. 
    Sec. 13.  Minnesota Statutes 1984, section 144A.08, 
subdivision 3, is amended to read: 
    Subd. 3.  [PENALTY.] Any controlling person who 
establishes, conducts, manages or operates a nursing home which 
incurs the following number of uncorrected or repeated 
violations, in any two year period: 
    (a) two or more uncorrected violations or one or more 
repeated violations which created an imminent risk of harm to a 
nursing home direct resident care or safety; or 
    (b) Five four or more uncorrected violations or two or more 
repeated violations of any nature for which the fines are in the 
four highest daily fine categories prescribed in rule, is guilty 
of a misdemeanor. 
    The provisions of this subdivision shall not apply to any 
controlling person who had no legal authority to affect or 
change decisions as to the operation of the nursing home which 
incurred the uncorrected or repeated violations. 
    Sec. 14.  Minnesota Statutes 1984, 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.  If the commissioner finds that the nursing home had 
uncorrected or repeated violations and that two or more of the 
uncorrected violations which create a risk to resident care, 
safety, or rights, the commissioner shall notify the 
commissioner of human services who shall (1) review 
reimbursement to the nursing home to determine the extent to 
which the state has paid for substandard care and, (2) furnish 
his or her findings and disposition to the commissioner of 
health within 30 days of notification.  
    Sec. 15.  Minnesota Statutes 1984, section 144A.10, is 
amended by adding a subdivision to read: 
    Subd. 4a.  [SUSPENSION OF ADMISSIONS.] If the commissioner 
issues a penalty assessment or if the nursing home has a 
repeated violation of that portion of Minnesota Rules, part 
4655.5600, subdivision 2, establishing minimum nursing personnel 
requirements, the nursing home shall be prohibited from 
admitting new residents until correction is verified by a duly 
authorized representative of the commissioner.  A nursing home 
shall notify the commissioner of health in writing when the 
violation is corrected.  The facility shall be reinspected 
within three working days after the receipt of the notification. 
    Sec. 16.  Minnesota Statutes 1984, section 144A.10, is 
amended by adding a subdivision to read: 
    Subd. 10.  [REPORTING TO A MEDICAL EXAMINER OR 
CORONER.] Whenever a duly authorized representative of the 
commissioner of health has reasonable cause to believe that a 
resident has died as a direct or indirect result of abuse or 
neglect, the representative shall report that information to the 
appropriate medical examiner or coroner and police department or 
county sheriff.  The medical examiner or coroner shall complete 
an investigation as soon as feasible and report the findings to 
the police department or county sheriff, and to the commissioner 
of health. 
    Sec. 17.  Minnesota Statutes 1984, section 144A.11, 
subdivision 2, is amended to read: 
    Subd. 2.  [MANDATORY PROCEEDINGS.] The commissioner of 
health shall initiate proceedings within 60 days of notification 
to suspend or revoke a nursing home license or shall refuse to 
renew a license if within the preceding two years the nursing 
home has incurred the following number of uncorrected or 
repeated violations: 
    (1) two or more uncorrected violations or one or more 
repeated violations which created an imminent risk to direct 
resident care or safety, violated the patients' bill of rights 
section 144.651, or violated the vulnerable adults reporting 
act, section 626.557; or 
    (2) five four or more uncorrected violations or two or more 
repeated violations of any nature for which the fines are in the 
two four highest daily fine categories prescribed in rule. 
    Sec. 18.  Minnesota Statutes 1984, section 144A.11, 
subdivision 3a, is amended to read: 
    Subd. 3a.  [MANDATORY REVOCATION.] Notwithstanding the 
provisions of subdivision 3, the commissioner shall revoke a 
nursing home license if a controlling person is convicted of a 
felony or gross misdemeanor punishable by a term of imprisonment 
of more than 90 days that relates to operation of the nursing 
home or directly affects resident safety or care.  The 
commissioner shall notify the nursing home 30 days in advance of 
the date of revocation. 
    Sec. 19.  Minnesota Statutes 1984, section 256B.02, 
subdivision 8, is amended to read: 
    Subd. 8.  [MEDICAL ASSISTANCE; MEDICAL CARE.] "Medical 
assistance"  or "medical care" means payment of part or all of 
the cost of the following care and services for eligible 
individuals whose income and resources are insufficient to meet 
all of this cost: 
    (1) Inpatient hospital services.  A second medical opinion 
is required prior to reimbursement for elective surgeries.  The 
commissioner shall publish in the State Register a proposed list 
of elective surgeries that require a second medical opinion 
prior to reimbursement.  The list is not subject to the 
requirements of sections 14.01 to 14.70.  The commissioner's 
decision whether a second medical opinion is required, made in 
accordance with rules governing that decision, is not subject to 
administrative appeal;  
    (2) Skilled nursing home services and services of 
intermediate care facilities, including training and 
habilitation services, as defined in section 256B.50, 
subdivision 1, for mentally retarded individuals residing in 
intermediate care facilities for the mentally retarded.  Medical 
assistance must not be used to pay the costs of nursing care 
provided to a patient in a swing bed as defined in section 3; 
    (3) Physicians' services; 
    (4) Outpatient hospital or nonprofit community health 
clinic services or physician-directed clinic services.  The 
physician-directed clinic staff shall include at least two 
physicians, one of whom is on the premises whenever the clinic 
is open, and all services shall be provided under the direct 
supervision of the physician who is on the premises.  Hospital 
outpatient departments are subject to the same limitations and 
reimbursements as other enrolled vendors for all services, 
except initial triage, emergency services, and services not 
provided or immediately available in clinics, physicians' 
offices, or by other enrolled providers.  "Emergency services" 
means those medical services required for the immediate 
diagnosis and treatment of medical conditions that, if not 
immediately diagnosed and treated, could lead to serious 
physical or mental disability or death or are necessary to 
alleviate severe pain.  Neither the hospital, its employees, nor 
any physician or dentist, shall be liable in any action arising 
out of a determination not to render emergency services or care 
if reasonable care is exercised in determining the condition of 
the person, or in determining the appropriateness of the 
facilities, or the qualifications and availability of personnel 
to render these services consistent with this section;  
     (5) Community mental health center services, as defined in 
rules adopted by the commissioner pursuant to section 256B.04, 
subdivision 2, and provided by a community mental health center 
as defined in section 245.62, subdivision 2;  
     (6) Home health care services; 
     (7) Private duty nursing services; 
     (8) Physical therapy and related services; 
     (9) Dental services, excluding cast metal restorations; 
     (10) Laboratory and xray services; 
         (11) The following if prescribed by a licensed 
practitioner:  drugs, eyeglasses, dentures, and prosthetic 
devices.  The commissioner shall designate a formulary committee 
which shall advise the commissioner on the names of drugs for 
which payment shall be made, recommend a system for reimbursing 
providers on a set fee or charge basis rather than the present 
system, and develop methods encouraging use of generic drugs 
when they are less expensive and equally effective as trademark 
drugs.  The commissioner shall appoint the formulary committee 
members no later than 30 days following July 1, 1981.  The 
formulary committee shall consist of nine members, four of whom 
shall be physicians who are not employed by the department of 
human services, and a majority of whose practice is for persons 
paying privately or through health insurance, three of whom 
shall be pharmacists who are not employed by the department of 
human services, and a majority of whose practice is for persons 
paying privately or through health insurance, a consumer 
representative, and a nursing home representative.  Committee 
members shall serve two year terms and shall serve without 
compensation.  The commissioner may establish a drug formulary.  
Its establishment and publication shall not be subject to the 
requirements of the Administrative Procedure Act, but the 
formulary committee shall review and comment on the formulary 
contents.  Prior authorization may be required by the 
commissioner, with the consent of the drug formulary committee, 
before certain formulary drugs are eligible for payment.  The 
formulary shall not include:  drugs or products for which there 
is no federal funding; over the counter drugs, except for 
antacids, acetaminophen, family planning products, aspirin, 
insulin, prenatal vitamins, and vitamins for children under the 
age of seven; or any other over the counter drug identified by 
the commissioner, in consultation with the appropriate 
professional consultants under contract with or employed by the 
state agency, as necessary, appropriate and cost effective for 
the treatment of certain specified chronic diseases, conditions 
or disorders, and this determination shall not be subject to the 
requirements of chapter 14, the Administrative Procedure Act; 
nutritional products, except for those products needed for 
treatment of phenylketonuria, hyperlysinemia, maple syrup urine 
disease, a combined allergy to human milk, cow milk, and soy 
formula, or any other childhood or adult diseases, conditions, 
or disorders identified by the commissioner as requiring a 
similarly necessary nutritional product; anorectics; and drugs 
for which medical value has not been established.  Separate 
payment shall not be made for nutritional products for residents 
of long-term care facilities; payment for dietary requirements 
is a component of the per diem rate paid to these facilities.  
Payment to drug vendors shall not be modified before the 
formulary is established except that the commissioner shall not 
permit payment for any drugs which may not by law be included in 
the formulary, and his determination shall not be subject to 
chapter 14, the Administrative Procedure Act.  The commissioner 
shall publish conditions for prohibiting payment for specific 
drugs after considering the formulary committee's 
recommendations.  
     The basis for determining the amount of payment shall be 
the actual acquisition costs of the drugs plus a fixed 
dispensing fee established by the commissioner.  Actual 
acquisition cost includes quantity and other special discounts 
except time and cash discounts.  Establishment of this fee shall 
not be subject to the requirements of the Administrative 
Procedure Act.  Whenever a generically equivalent product is 
available, payment shall be on the basis of the actual 
acquisition cost of the generic drug, unless the prescriber 
specifically indicates "dispense as written" on the prescription 
as required by section 151.21, subdivision 2.  
      Notwithstanding the above provisions, implementation of any 
change in the fixed dispensing fee which has not been subject to 
the Administrative Procedure Act shall be limited to not more 
than 180 days, unless, during that time, the commissioner shall 
have initiated rulemaking through the Administrative Procedure 
Act;  
    (12) Diagnostic, screening, and preventive services; 
    (13) Health care pre-payment plan premiums and insurance 
premiums if paid directly to a vendor and supplementary medical 
insurance benefits under Title XVIII of the Social Security Act; 
    (14) Abortion services, but only if one of the following 
conditions is met: 
    (a) The abortion is a medical necessity.  "Medical 
necessity" means (1) the signed written statement of two 
physicians indicating the abortion is medically necessary to 
prevent the death of the mother, and (2) the patient has given 
her consent to the abortion in writing unless the patient is 
physically or legally incapable of providing informed consent to 
the procedure, in which case consent will be given as otherwise 
provided by law; 
    (b) The pregnancy is the result of criminal sexual conduct 
as defined in section 609.342, clauses (c), (d), (e)(i), and 
(f), and the incident is reported within 48 hours after the 
incident occurs to a valid law enforcement agency for 
investigation, unless the victim is physically unable to report 
the criminal sexual conduct, in which case the report shall be 
made within 48 hours after the victim becomes physically able to 
report the criminal sexual conduct; or 
    (c) The pregnancy is the result of incest, but only if the 
incident and relative are reported to a valid law enforcement 
agency for investigation prior to the abortion; 
    (15) Transportation costs incurred solely for obtaining 
emergency medical care or transportation costs incurred by 
nonambulatory persons in obtaining emergency or nonemergency 
medical care when paid directly to an ambulance company, common 
carrier, or other recognized providers of transportation 
services.  For the purpose of this clause, a person who is 
incapable of transport by taxicab or bus shall be considered to 
be nonambulatory; 
    (16) To the extent authorized by rule of the state agency, 
costs of bus or taxicab transportation incurred by any 
ambulatory eligible person for obtaining nonemergency medical 
care; 
    (17) Personal care attendant services provided by an 
individual, not a relative, who is qualified to provide the 
services, where the services are prescribed by a physician in 
accordance with a plan of treatment and are supervised by a 
registered nurse.  Payments to personal care attendants shall be 
adjusted annually to reflect changes in the cost of living or of 
providing services by the average annual adjustment granted to 
vendors such as nursing homes and home health agencies; and 
    (18) Any other medical or remedial care licensed and 
recognized under state law unless otherwise prohibited by law. 
    Sec. 20.  Minnesota Statutes 1984, 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 180 days of applicants seeking admission to a licensed 
nursing home or boarding care home participating in the medical 
assistance 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 human services and 
health shall seek to maximize use of available federal and state 
funds and establish the broadest program possible within the 
appropriation available. 
    Sec. 21.  Minnesota Statutes 1984, section 256B.091, 
subdivision 2, is amended to read: 
    Subd. 2.  [SCREENING TEAMS; ESTABLISHMENT.] Each county 
agency designated by the commissioner of human services 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, the health and social needs of all applicants 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 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 a person who has been screened must be 
reassessed for purposes of assigning a case mix classification 
because admission to a nursing home occurs later than the time 
allowed by rule following the initial screening and assessment, 
the reassessment may be completed by the public health nurse 
member of the screening team.  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. 22.  Minnesota Statutes 1984, 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 180 
days of admission to a nursing home or boarding care home 
applicants, except (1) patients transferred from other nursing 
homes or; (2) patients who, having entered acute care facilities 
from nursing homes, are returning to nursing home care; (3) 
persons entering a facility described in section 256B.431, 
subdivision 4, paragraph (b); or (4) persons entering a facility 
conducted by and for the adherents of a recognized church or 
religious denomination for the purpose of providing care and 
services for those who depend upon spiritual means, through 
prayer alone, for healing.  Any other interested person may The 
cost for screening persons who are receiving medical assistance 
or who would be eligible for medical assistance within 180 days 
of nursing home or boarding care home admission, must be paid by 
state, federal, and county money.  Other persons shall be 
assessed by a screening team upon payment of a fee based upon a 
sliding fee scale approved by the commissioner. 
    Sec. 23.  Minnesota Statutes 1984, section 256B.091, 
subdivision 5, is amended to read: 
    Subd. 5.  [APPEALS.] Appeals from the screening team's 
determination recommendation shall be made pursuant to the 
procedures set forth in section 256.045, subdivisions 2 and 3.  
An appeal shall be automatic if the individual's physician does 
not agree with the recommendation of the screening team.  
    Sec. 24.  Minnesota Statutes 1984, 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 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; and (4) who are age 65 or older. 
    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.  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 ten percent of the costs. 
    The commissioner shall promulgate emergency rules in 
accordance with sections 14.29 to 14.36, to establish required 
documentation and reporting of care delivered. 
    Sec. 25.  Minnesota Statutes 1984, section 256B.431, 
subdivision 2b, is amended to read: 
    Subd. 2b.  [OPERATING COSTS, AFTER JULY 1, 1985.] (a) For 
rate years beginning on or after July 1, 1985, the commissioner 
shall establish procedures for determining per diem 
reimbursement for operating costs.  
    (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.
    (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.  
    (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.  In developing the geographic groups for purposes 
of reimbursement under this section, the commissioner shall 
ensure that nursing homes in any county contiguous to the 
Minneapolis-St. Paul seven-county metropolitan area are included 
in the same geographic group.  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.  For the 
rate year beginning on July 1, 1985, the commissioner shall: 
    (1) allow nursing homes that have an average length of stay 
of 180 days or less in their skilled nursing level of care, 125 
percent of the care related limit and 105 percent of the other 
operating cost limit established by rule; and 
    (2) exempt nursing homes licensed on July 1, 1983, by the 
commissioner to provide residential services for the physically 
handicapped under Minnesota Rules, parts 9570.2000 to 9570.3600, 
from the care related limits and allow 105 percent of the other 
operating cost limit established by rule. 
    For the purpose of calculating the other operating cost 
efficiency incentive for nursing homes referred to in clauses 
(1) or (2), the commissioner shall use the other operating cost 
limit established by rule before application of the 105 percent. 
    (e) The commissioner shall establish a composite index or 
indices by determining the appropriate economic change 
indicators to be applied to specific operating cost categories 
or combination of operating cost categories.  
    (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 (1) shall be divided by actual resident days 
in order to compute the operating cost payment rate for this 
operating cost category, (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).
    Sec. 26.  Minnesota Statutes 1984, 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, 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; 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. 27.  Minnesota Statutes 1984, section 256B.431, is 
amended by adding a subdivision to read: 
    Subd. 2g.  [REQUIRED CONSULTANTS.] Costs considered general 
and administrative costs under section 256B.421 must 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.  Central, affiliated, or corporate office 
costs representing services of consultants not required by law 
in the areas of nursing, quality assurance, medical records, 
dietary, other care related services, and plant operations may 
be allocated to the appropriate operating cost category of a 
nursing home according to paragraphs (a) to (e). 
    (a) Only the salaries, fringe benefits, and payroll taxes 
associated with the individual performing the service may be 
allocated.  No other costs may be allocated. 
    (b) The allocation must be based on direct identification 
and only to the extent justified in time distribution records 
that show the actual time spent by the consultant performing the 
services in the nursing home. 
    (c) The cost in paragraph (a) for each consultant must not 
be allocated to more than one operating cost category in the 
nursing home.  If more than one nursing home is served by a 
consultant, all nursing homes shall allocate the consultant's 
cost to the same operating category. 
    (d) Top management personnel must not be considered 
consultants. 
    (e) The consultant's full-time responsibilities shall be to 
provide the services identified in this item. 
    Sec. 28.  Minnesota Statutes 1984, section 256B.431, is 
amended by adding a subdivision to read: 
    Subd. 2h.  [PHASE-IN.] The commissioner shall allow each 
nursing home whose actual allowable historical operating cost 
per diem for the reporting year ending September 30, 1984, and 
the following two reporting years is five percent or more above 
the limits established by the commissioner, to be reimbursed for 
part of the excess costs each year for up to three rate years 
according to the formula in this subdivision.  The commissioner 
shall reimburse the nursing home: 
    (1) for the rate year beginning July 1, 1985, 70 percent of 
the difference between the actual allowable historical operating 
cost per diem and 105 percent of the limit established by the 
commissioner; 
    (2) for the rate year beginning July 1, 1986, 50 percent of 
the difference between the actual allowable historical operating 
cost per diem and 105 percent of the limit established by the 
commissioner; and 
    (3) for the rate year beginning July 1, 1987, 30 percent of 
the difference between the actual allowable historical operating 
cost per diem and 105 percent of the limit established by the 
commissioner. 
    Any efficiency incentive amount earned by the nursing home 
must be subtracted from any of the reimbursement phase-in 
amounts computed under this section. 
    Sec. 29.  Minnesota Statutes 1984, section 256B.431, 
subdivision 3, is amended to read: 
    Subd. 3.  [PROPERTY-RELATED COSTS, 1983-1985.] (a) 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.  
    (b) Adjustments for the cost of repairs, replacements, 
renewals, betterments, or improvements to existing buildings, 
and building service equipment shall be allowed if:  
    (1) The cost incurred is reasonable, necessary, and 
ordinary;  
    (2) The net cost is greater than $5,000.  "Net cost" means 
the actual cost, minus proceeds from insurance, salvage, or 
disposal;  
    (3) 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 
    (4) The adjustment is shown in depreciation schedules 
submitted to and approved by the commissioner.  
    (c) 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 emergency and permanent 
rules to recapture excess depreciation upon sale of a nursing 
home.  
    (d) Subd. 3a.  [PROPERTY-RELATED COSTS AFTER JULY 1, 1985.] 
(a) 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 and depreciable equipment.  
"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.  
    (e) (b) In developing the method for determining payment 
rates for the rental use of nursing homes, the commissioner 
shall consider factors designed to:  
    (1) simplify the administrative procedures for determining 
payment rates for property-related costs;  
    (2) minimize discretionary or appealable decisions;  
    (3) eliminate any incentives to sell nursing homes;  
    (4) recognize legitimate costs of preserving and replacing 
property; 
    (5) recognize the existing costs of outstanding 
indebtedness allowable under the statutes and rules in effect on 
May 1, 1983;  
    (6) address the current value of, if used directly for 
patient care, land improvements, buildings, attached fixtures, 
and equipment; 
    (7) establish an investment per bed limitation; 
    (8) reward efficient management of capital assets; 
    (9) provide equitable treatment of facilities;  
    (10) consider a variable rate; and 
    (11) phase in implementation of the rental reimbursement 
method.  
    (f) (c) 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.  
    Sec. 31.  Minnesota Statutes 1984, section 256B.431, 
subdivision 4, is amended to read: 
    Subd. 4.  [SPECIAL RATES.] (a) For the rate years beginning 
July 1, 1983, and July 1, 1984, 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 emergency 
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 the rate years beginning on or after July 1, 1985, 
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, operating costs, and real estate 
taxes and special assessments calculated under rules promulgated 
by the commissioner. 
     (c) 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 human services 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.  
    For the rate year beginning July 1, 1985, each nursing home 
total payment rate must be effective two calendar months from 
the first day of the month after the commissioner issues the 
rate notice to the nursing home.  From July 1, 1985, until the 
total payment rate becomes effective, the commissioner shall 
make payments to each nursing home at a temporary rate that is 
the prior rate year's operating cost payment rate increased by 
2.6 percent plus the prior rate year's property-related payment 
rate and the prior rate year's real estate taxes and special 
assessments payment rate.  The commissioner shall retroactively 
adjust the property-related payment rate and the real estate 
taxes and special assessments payment rate to July 1, 1985, but 
must not retroactively adjust the operating cost payment rate. 
    Sec. 31.  Minnesota Statutes 1984, section 256B.48, is 
amended by adding a subdivision to read: 
    Subd. 6.  [MEDICARE CERTIFICATION.] All nursing homes 
certified as skilled nursing facilities under the medical 
assistance program shall participate in medicare part A and part 
B unless, after submitting an application, medicare 
certification is denied by the federal health care financing 
administration.  Medicare review shall be conducted at the time 
of the annual medical assistance review.  Charges for 
medicare-covered services provided to residents who are 
simultaneously eligible for medical assistance and medicare must 
be billed to medicare part A or part B before billing medical 
assistance.  Medical assistance may be billed only for charges 
not reimbursed by medicare.  
    Until September 30, 1987, the commissioner of health may 
grant exceptions from this requirement when a nursing home 
submits a written request for exception and it is determined 
that there is sufficient participation in the medicare program 
to meet the needs of medicare beneficiaries in that region of 
the state.  For the purposes of this section, the relevant 
region is the county in which the nursing home is located 
together with contiguous Minnesota counties.  There is 
sufficient participation in the medicare program in a particular 
region when the proportion of skilled resident days paid by the 
medicare program is at least equal to the national average based 
on the most recent figure that can be supplied by the federal 
health care financing administration.  A nursing home that is 
granted an exception under this subdivision must give 
appropriate notice to all applicants for admission that medicare 
coverage is not available in the nursing home and publish this 
fact in all literature and advertisement related to the nursing 
home. 
    Sec. 32.  Minnesota Statutes 1984, section 256B.50, is 
amended to read: 
    256B.50 [APPEALS.] 
    Subdivision 1.  [SCOPE.] 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, or appraised value.  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.  This 
section does not apply to a request from a resident or nursing 
home for reconsideration of the classification of a resident 
under section 1.  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. 
     Except as provided in subdivision 2, the appeal shall be 
heard by an administrative law judge 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 administrative law judge.  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. 
    Subd. 2.  [APPRAISED VALUE; APPEALS BOARD.] (a) Appeals 
concerning the appraised value of a nursing home's real estate 
must be heard by a three-person appeal board appointed by the 
commissioner.  The real estate as defined in section 256B.431, 
subdivision 3, must be appraised using the depreciated 
replacement cost method. 
    (b) Members of the appeals board shall be appointed by the 
commissioner from the list of appraisers approved for state 
contracts by the commissioner of administration.  In making the 
selection, the commissioner of human services shall ensure that 
each member is experienced in the use of the depreciated 
replacement cost method and is free of any personal, political, 
or economic conflict of interest that may impair the member's 
ability to function in a fair and objective manner. 
    (c) The appeals board shall appoint one of its members to 
act as chief representative and shall examine witnesses when it 
is necessary to make a complete record.  Facts to be considered 
by the board are limited to those in existence at the time of 
the appraisal being appealed.  The board shall issue a written 
report regarding each appeal to the commissioner within 30 days 
following the close of the record.  The report must contain 
findings of fact, conclusions, and a recommended disposition 
based on a majority decision of the board.  A copy of the report 
must be served upon all parties. 
    (d) The commissioner shall issue an order adopting, 
rejecting, or modifying the appeal board's recommendation within 
30 days of receipt of the report.  A copy of the decision must 
be served upon all parties. 
    (e) Within 30 days of receipt of the commissioner's order, 
the appealing party may appeal to the Minnesota court of 
appeals.  The court's decision is limited to a determination of 
the appraised value of the real estate and must not include 
costs assessed against either party. 
    Sec. 33.  Minnesota Statutes 1984, section 256B.504, 
subdivision 1, is amended to read: 
    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 
human services with the goal goals of improving quality of care 
and controlling health care costs;  
    (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;  
    (d) to monitor the delivery of health care in Minnesota, 
and to study and report on strategies to contain health care 
costs; and 
    (e) to study the adequacy of the present system of quality 
assurance and to recommend changes if the current system is not 
adequate to ensure a cost-effective, quality care system.  The 
commission shall review the department of health's quality 
assurance program in order to assure that each individual 
resident's ability to function is optimized, based upon valid 
and reliable indicators that focus on individual client outcomes 
and are not measured solely by the number or amount of services 
provided. 
    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.  
    Sec. 34.  Minnesota Statutes 1984, section 349.214, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [BINGO; CERTAIN ORGANIZATIONS.] Bingo may be 
conducted within a nursing home or a senior citizen housing 
project or by a senior citizen organization without compliance 
with sections 349.11 to 349.213 if the prizes for a single bingo 
game do not exceed $10, total prizes awarded at a single bingo 
occasion do not exceed $200, no more than two bingo occasions 
are held by the organization or at the facility each week, only 
members of the organization or residents of the nursing home or 
housing project are allowed to play in a bingo game, no 
compensation is paid for any persons who conduct the bingo, a 
manager is appointed to supervise the bingo, and the manager 
registers with the board.  The gross receipts from bingo 
conducted under the limitations of this subdivision are exempt 
from taxation under chapter 297A.  
    Sec. 35.  Minnesota Statutes 1984, section 474.01, 
subdivision 7a, is amended to read:  
    Subd. 7a.  No municipality or redevelopment agency shall 
undertake any project authorized by sections 474.01 to 474.13, 
except a project referred to in section 474.02, subdivision 1f, 
unless its governing body finds that the project furthers the 
purposes stated in this section, nor until the commissioner of 
energy and economic development has approved the project, on the 
basis of preliminary information which the commissioner may 
require, as tending to further the purposes and policies of 
sections 474.01 to 474.13.  The commissioner may not approve any 
projects relating to health care facilities except as permitted 
under subdivision 9.  Approval shall not be deemed to be an 
approval by the commissioner of energy and economic development 
or the state of the feasibility of the project or the terms of 
the revenue agreement to be executed or the bonds to be issued 
therefor, and the commissioner shall state this in communicating 
approval. 
    Sec. 36.  Minnesota Statutes 1984, section 474.01, 
subdivision 9, is amended to read: 
    Subd. 9.  [HEALTH CARE FACILITIES.] The welfare of the 
state further requires the provision of necessary health care 
facilities, to the end that adequate health care services be 
made available to residents of the state at reasonable 
cost.  However, some projects relating to nursing homes may be 
inconsistent with established state policies and detrimental to 
the welfare of the state.  The commissioner of energy and 
economic development shall forward to the commissioner of human 
services and the commissioner of health for review, all 
applications for projects relating to nursing homes licensed by 
the commissioner of health under chapter 144A.  This review 
process does not apply to projects approved by the housing 
finance agency involving residences for the elderly, the costs 
of which will not be reimbursed under the medical assistance 
program.  The commissioner of human services and the 
commissioner of health must return the applications to the 
commissioner of energy and economic development with a 
recommendation within 30 days of receipt.  The commissioner of 
energy and economic development may not approve an application 
unless the project has been determined by both the commissioner 
of human services and the commissioner of health to be 
consistent with policies of the state as reflected in a statute 
or rule.  The following projects may not be approved: 
    (1) projects that will result in an increase in the number 
of nursing home or boarding care beds in the state, unless the 
increase was approved before May 1, 1985, under section 
144A.071, subdivision 3; 
    (2) projects involving refinancing, unless the refinancing 
will result in a reduction in debt service charges that will be 
reflected in charges to patients and third-party payors; and 
    (3) projects that are inconsistent with the established 
policies of the state as reflected in a statute or rule. 
    Sec. 37.  [TRANSITIONAL CARE STUDY.] 
    By February 1, 1986, the commissioner of health shall 
submit a report to the legislature regarding the provision of 
transitional care or other sub-acute inpatient services provided 
in hospitals.  The report must contain recommendations for 
legislative action that address the following:  the nature and 
extent of these services; how these services are reimbursed; the 
impact of these services on the long-term care system; and the 
costs, quality, and appropriateness of providing these services 
in a hospital.  
    Sec. 38.  [APPROPRIATIONS.] 
    $50,000 is appropriated from the general fund to the 
commissioner of human services for purposes of section 37.  
Federal money received during the biennium for purposes of 
section 37 is appropriated to the commissioner of human services 
for contracting with the commmissioner of health to study 
transitional care services provided in hospitals. 
    Sec. 39.  [EFFECTIVE DATES.] 
    Sections 1 to 5, 10 to 12, 24, and 28 to 33 are effective 
the day following final enactment.  Sections 19 to 23, 25 to 27, 
31, and 35 to 37 are effective July 1, 1985. 
    Approved June 24, 1985