Minnesota Session Laws - 1989, Regular Session

  

                         Laws of Minnesota 1989 

                         CHAPTER 12-S.F.No. 644 
           An act relating to medical assistance for needy 
          persons; proposing changes to the method for 
          calculating a nursing home's property-related payment 
          rate upon refinancing; amending Minnesota Statutes 
          1988, section 256B.431, subdivisions 3f and 3g. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1988, section 256B.431, 
subdivision 3f, is amended to read: 
    Subd. 3f.  [PROPERTY COSTS AFTER JULY 1, 1988.] (a) 
[INVESTMENT PER BED LIMIT.] For the rate year beginning July 1, 
1988, the replacement-cost-new per bed limit must be $32,571 per 
licensed bed in multiple bedrooms and $48,857 per licensed bed 
in a single bedroom.  Beginning January 1, 1989, the 
replacement-cost-new per bed limits must be adjusted annually as 
specified in Minnesota Rules, part 9549.0060, subpart 4, item A, 
subitem (1). 
    (b)  [RENTAL FACTOR.] For the rate year beginning July 1, 
1988, the commissioner shall increase the rental factor as 
established in Minnesota Rules, part 9549.0060, subpart 8, item 
A, by 6.2 percent rounded to the nearest 100th percent for the 
purpose of reimbursing nursing homes for soft costs and 
entrepreneurial profits not included in the cost valuation 
services used by the state's contracted appraisers.  For rate 
years beginning on or after July 1, 1989, the rental factor is 
the amount determined under this paragraph for the rate year 
beginning July 1, 1988. 
     (c)  [OCCUPANCY FACTOR.] For rate years beginning on or 
after July 1, 1988, in order to determine property-related 
payment rates under Minnesota Rules, part 9549.0060, for all 
nursing homes except those whose average length of stay in a 
skilled level of care within a nursing home is 180 days or less, 
the commissioner shall use 95 percent of capacity days.  For a 
nursing home whose average length of stay in a skilled level of 
care within a nursing home is 180 days or less, the commissioner 
shall use the greater of resident days or 80 percent of capacity 
days but in no event shall the divisor exceed 95 percent of 
capacity days. 
     (d)  [EQUIPMENT ALLOWANCE.] For rate years beginning on 
July 1, 1988, and July 1, 1989, the commissioner shall add ten 
cents per resident per day to each nursing home's 
property-related payment rate.  The ten-cent property-related 
payment rate increase is not cumulative from rate year to rate 
year.  For the rate year beginning July 1, 1990, the 
commissioner shall increase each nursing home's equipment 
allowance as established in Minnesota Rules, part 9549.0060, 
subpart 10, by ten cents per resident per day.  For rate years 
beginning on or after July 1, 1991, the adjusted equipment 
allowance must be adjusted annually for inflation as in 
Minnesota Rules, part 9549.0060, subpart 10, item E.  
    (e)  [REFINANCING.] If a nursing home is refinanced, the 
commissioner shall adjust the nursing home's property-related 
payment rate for the savings that result from refinancing.  The 
adjustment to the property-related payment rate must be as 
follows: 
    (1) The commissioner shall recalculate the nursing home's 
rental per diem by substituting the new allowable annual 
principle and interest payments for those of the refinanced debt.
    (2) The nursing home's property-related payment rate must 
be decreased by the difference between the nursing home's 
current rental per diem and the rental per diem determined under 
clause (1). 
    If a nursing home payment rate is adjusted according to 
this paragraph, the adjusted payment rate is effective the first 
of the month following the date of the refinancing for both 
medical assistance and private paying residents.  The nursing 
home's adjusted property-related payment rate is effective until 
June 30, 1990. 
    Sec. 2.  Minnesota Statutes 1988, section 256B.431, 
subdivision 3g, is amended to read: 
    Subd. 3g.  [PROPERTY COSTS AFTER JULY 1, 1990, FOR CERTAIN 
FACILITIES.] (a) For rate years beginning on or after July 1, 
1990, non-hospital-attached nursing homes that, on or after 
January 1, 1976, but prior to December 31, 1985, were newly 
licensed after new construction, or increased their licensed 
beds by a minimum of 35 percent through new construction, and 
whose building capital allowance is less than their allowable 
annual principal and interest on allowable debt prior to the 
application of the replacement-cost-new per bed limit and whose 
remaining weighted average debt amortization schedule as of 
January 1, 1988, exceeded 15 years, must receive a 
property-related payment rate equal to the greater of their 
rental per diem or their annual allowable principal and 
allowable interest without application of the 
replacement-cost-new per bed limit, divided by their capacity 
days as determined under Minnesota Rules, part 9549.0060, 
subpart 11, as modified by subdivision 3f, paragraph (c), for 
the preceding reporting year, plus their equipment allowance.  A 
nursing home that is eligible for a property-related payment 
rate under this subdivision and whose property-related payment 
rate in a subsequent rate year is its rental per diem must 
continue to have its property-related payment rates established 
for all future rate years based on the rental reimbursement 
method in Minnesota Rules, part 9549.0060.  
The commissioner may require the nursing home to apply for 
refinancing as a condition of receiving special rate treatment 
under this subdivision. 
    (b) If a nursing home is eligible for a property-related 
payment rate under this subdivision, and the nursing home's debt 
is refinanced after October 1, 1988, the provisions in 
paragraphs (1) to (7) also apply to the property-related payment 
rate for rate years beginning on or after July 1, 1990. 
    (1) A nursing home's refinancing must not include debts 
with balloon payments. 
    (2) If the issuance costs, including issuance costs on the 
debt refinanced, are financed as part of the refinancing, the 
historical cost of capital assets limit in Minnesota Rules, part 
9549.0060, subpart 5, item A, subitem (6), includes issuance 
costs that do not exceed seven percent of the debt refinanced, 
plus the related issuance costs.  For purposes of this 
paragraph, issuance costs means the fees charged by the 
underwriter, issuer, attorneys, bond raters, appraisers, and 
trustees, and includes the cost of printing, title insurance, 
registration tax, and a feasibility study for the refinancing of 
a nursing home's debt.  Issuance costs do not include bond 
premiums or discounts when bonds are sold at other than their 
par value, points, or a bond reserve fund.  To the extent 
otherwise allowed under this paragraph, the straight-line 
amortization of the refinancing issuance costs is not an 
allowable cost. 
     (3) The annual principal and interest expense payments and 
any required annual municipal fees on the nursing home's 
refinancing replace those of the refinanced debt and, together 
with annual principal and interest payments on other allowable 
debts, are allowable costs subject to the limitation on 
historical cost of capital assets plus issuance costs as limited 
in paragraph (2), if any. 
    (4) If the nursing home's refinancing includes zero coupon 
bonds, the commissioner shall establish a monthly debt service 
payment schedule based on an annuity that will produce an amount 
equal to the zero coupon bonds at maturity.  The term and 
interest rate is the term and interest rate of the zero coupon 
bonds.  Any refinancing to repay the zero coupon bonds is not an 
allowable cost. 
    (5) The annual amount of annuity payments is added to the 
nursing home's allowable annual principal and interest payment 
computed in paragraph (3). 
    (6) The property-related payment rate is equal to the 
amount in paragraph (5), divided by the nursing home's capacity 
days as determined under Minnesota Rules, part 9549.0060, 
subpart 11, as modified by subdivision 3f, paragraph (c), for 
the preceding reporting year plus an equipment allowance. 
     (7) Except as provided in this subdivision, the provisions 
of Minnesota Rules, part 9549.0060 apply. 
     Sec. 3.  [NOTIFICATION OF NURSING HOMES.] 
    Within five working days after final enactment of this act, 
the commissioner of human services shall notify all nursing 
homes that are potentially eligible for a property-rate 
adjustment under section 2 of the provisions of this act. 
    Sec. 4.  [EFFECTIVE DATE.] 
    Sections 1 to 3 are effective the day following final 
enactment. 
    Presented to the governor March 17, 1989 
    Signed by the governor March 17, 1989, 1:30 p.m.