Office of the Revisor of Statutes
Minnesota Session Laws - 2000, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 449-H.F.No. 3020
An act relating to human services; modifying
provisions in long-term care; amending Minnesota
Statutes 1998, sections 256B.411, subdivision 2; and
256B.431, subdivisions 1, 3a, 10, 16, 18, 21, 22, and
25; Minnesota Statutes 1999 Supplement, sections
256B.0913, subdivision 5; 256B.431, subdivisions 17
and 26; and 256B.434, subdivisions 3 and 4; repealing
Minnesota Statutes 1998, sections 256B.03, subdivision
2; 256B.431, subdivisions 2, 2a, 2f, 2h, 2m, 2p, 2q,
3, 3b, 3d, 3h, 3j, 4, 5, 7, 8, 9, 9a, 12, and 24;
256B.48, subdivision 9; 256B.50, subdivision 3; and
256B.74, subdivision 3.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1999 Supplement, section
256B.0913, subdivision 5, is amended to read:
Subd. 5. [SERVICES COVERED UNDER ALTERNATIVE CARE.] (a)
Alternative care funding may be used for payment of costs of:
(1) adult foster care;
(2) adult day care;
(3) home health aide;
(4) homemaker services;
(5) personal care;
(6) case management;
(7) respite care;
(8) assisted living;
(9) residential care services;
(10) care-related supplies and equipment;
(11) meals delivered to the home;
(12) transportation;
(13) skilled nursing;
(14) chore services;
(15) companion services;
(16) nutrition services;
(17) training for direct informal caregivers;
(18) telemedicine devices to monitor recipients in their
own homes as an alternative to hospital care, nursing home care,
or home visits; and
(19) other services including direct cash payments to
clients, approved by the county agency, subject to the
provisions of paragraph (m). Total annual payments for other
services for all clients within a county may not exceed either
ten percent of that county's annual alternative care program
base allocation or $5,000, whichever is greater. In no case
shall this amount exceed the county's total annual alternative
care program base allocation.
(b) The county agency must ensure that the funds are used
only to supplement and not supplant services available through
other public assistance or services programs.
(c) Unless specified in statute, the service standards for
alternative care services shall be the same as the service
standards defined in the elderly waiver. Except for the county
agencies' approval of direct cash payments to clients, persons
or agencies must be employed by or under a contract with the
county agency or the public health nursing agency of the local
board of health in order to receive funding under the
alternative care program.
(d) The adult foster care rate shall be considered a
difficulty of care payment and shall not include room and
board. The adult foster care daily rate shall be negotiated
between the county agency and the foster care provider. The
rate established under this section shall not exceed 75 percent
of the state average monthly nursing home payment for the case
mix classification to which the individual receiving foster care
is assigned, and it must allow for other alternative care
services to be authorized by the case manager.
(e) Personal care services may be provided by a personal
care provider organization. A county agency may contract with a
relative of the client to provide personal care services, but
must ensure nursing supervision. Covered personal care services
defined in section 256B.0627, subdivision 4, must meet
applicable standards in Minnesota Rules, part 9505.0335.
(f) A county may use alternative care funds to purchase
medical supplies and equipment without prior approval from the
commissioner when: (1) there is no other funding source; (2)
the supplies and equipment are specified in the individual's
care plan as medically necessary to enable the individual to
remain in the community according to the criteria in Minnesota
Rules, part 9505.0210, item A; and (3) the supplies and
equipment represent an effective and appropriate use of
alternative care funds. A county may use alternative care funds
to purchase supplies and equipment from a non-Medicaid certified
vendor if the cost for the items is less than that of a Medicaid
vendor. A county is not required to contract with a provider of
supplies and equipment if the monthly cost of the supplies and
equipment is less than $250.
(g) For purposes of this section, residential care services
are services which are provided to individuals living in
residential care homes. Residential care homes are currently
licensed as board and lodging establishments and are registered
with the department of health as providing special services.
Residential care services are defined as "supportive services"
and "health-related services." "Supportive services" means the
provision of up to 24-hour supervision and oversight.
Supportive services includes: (1) transportation, when provided
by the residential care center only; (2) socialization, when
socialization is part of the plan of care, has specific goals
and outcomes established, and is not diversional or recreational
in nature; (3) assisting clients in setting up meetings and
appointments; (4) assisting clients in setting up medical and
social services; (5) providing assistance with personal laundry,
such as carrying the client's laundry to the laundry room.
Assistance with personal laundry does not include any laundry,
such as bed linen, that is included in the room and board rate.
Health-related services are limited to minimal assistance with
dressing, grooming, and bathing and providing reminders to
residents to take medications that are self-administered or
providing storage for medications, if requested. Individuals
receiving residential care services cannot receive both personal
care services and residential care homemaking services.
(h) For the purposes of this section, "assisted living"
refers to supportive services provided by a single vendor to
clients who reside in the same apartment building of three or
more units which are not subject to registration under chapter
144D. Assisted living services are defined as up to 24-hour
supervision, and oversight, supportive services as defined in
clause (1), individualized home care aide tasks as defined in
clause (2), and individualized home management tasks as defined
in clause (3) provided to residents of a residential center
living in their units or apartments with a full kitchen and
bathroom. A full kitchen includes a stove, oven, refrigerator,
food preparation counter space, and a kitchen utensil storage
compartment. Assisted living services must be provided by the
management of the residential center or by providers under
contract with the management or with the county.
(1) Supportive services include:
(i) socialization, when socialization is part of the plan
of care, has specific goals and outcomes established, and is not
diversional or recreational in nature;
(ii) assisting clients in setting up meetings and
appointments; and
(iii) providing transportation, when provided by the
residential center only.
Individuals receiving assisted living services will not
receive both assisted living services and homemaking or personal
care services. Individualized means services are chosen and
designed specifically for each resident's needs, rather than
provided or offered to all residents regardless of their
illnesses, disabilities, or physical conditions.
(2) Home care aide tasks means:
(i) preparing modified diets, such as diabetic or low
sodium diets;
(ii) reminding residents to take regularly scheduled
medications or to perform exercises;
(iii) household chores in the presence of technically
sophisticated medical equipment or episodes of acute illness or
infectious disease;
(iv) household chores when the resident's care requires the
prevention of exposure to infectious disease or containment of
infectious disease; and
(v) assisting with dressing, oral hygiene, hair care,
grooming, and bathing, if the resident is ambulatory, and if the
resident has no serious acute illness or infectious disease.
Oral hygiene means care of teeth, gums, and oral prosthetic
devices.
(3) Home management tasks means:
(i) housekeeping;
(ii) laundry;
(iii) preparation of regular snacks and meals; and
(iv) shopping.
Assisted living services as defined in this section shall
not be authorized in boarding and lodging establishments
licensed according to sections 157.011 and 157.15 to 157.22.
(i) For establishments registered under chapter 144D,
assisted living services under this section means the services
described and licensed under section 144A.4605.
(j) For the purposes of this section, reimbursement for
assisted living services and residential care services shall be
a monthly rate negotiated and authorized by the county agency
based on an individualized service plan for each resident. The
rate shall not exceed the nonfederal share of the greater of
either the statewide or any of the geographic groups' weighted
average monthly medical assistance nursing facility payment rate
of the case mix resident class to which the 180-day eligible
client would be assigned under Minnesota Rules, parts 9549.0050
to 9549.0059, unless the services are provided by a home care
provider licensed by the department of health and are provided
in a building that is registered as a housing with services
establishment under chapter 144D and that provides 24-hour
supervision.
(k) For purposes of this section, companion services are
defined as nonmedical care, supervision and oversight, provided
to a functionally impaired adult. Companions may assist the
individual with such tasks as meal preparation, laundry and
shopping, but do not perform these activities as discrete
services. The provision of companion services does not entail
hands-on medical care. Providers may also perform light
housekeeping tasks which are incidental to the care and
supervision of the recipient. This service must be approved by
the case manager as part of the care plan. Companion services
must be provided by individuals or organizations who are under
contract with the local agency to provide the service. Any
person related to the waiver recipient by blood, marriage or
adoption cannot be reimbursed under this service. Persons
providing companion services will be monitored by the case
manager.
(l) For purposes of this section, training for direct
informal caregivers is defined as a classroom or home course of
instruction which may include: transfer and lifting skills,
nutrition, personal and physical cares, home safety in a home
environment, stress reduction and management, behavioral
management, long-term care decision making, care coordination
and family dynamics. The training is provided to an informal
unpaid caregiver of a 180-day eligible client which enables the
caregiver to deliver care in a home setting with high levels of
quality. The training must be approved by the case manager as
part of the individual care plan. Individuals, agencies, and
educational facilities which provide caregiver training and
education will be monitored by the case manager.
(m) A county agency may make payment from their alternative
care program allocation for other services provided to an
alternative care program recipient if those services prevent,
shorten, or delay institutionalization. These services may
include direct cash payments to the recipient for the purpose of
purchasing the recipient's services. The following provisions
apply to payments under this paragraph:
(1) a cash payment to a client under this provision cannot
exceed 80 percent of the monthly payment limit for that client
as specified in subdivision 4, paragraph (a), clause (7);
(2) a county may not approve any cash payment for a client
who has been assessed as having a dependency in orientation,
unless the client has an authorized representative under section
256.476, subdivision 2, paragraph (g), or for a client who is
concurrently receiving adult foster care, residential care, or
assisted living services;
(3) any service approved under this section must be a
service which meets the purpose and goals of the program as
listed in subdivision 1;
(4) cash payments must also meet the criteria of and are
governed by the procedures and liability protection established
in section 256.476, subdivision 4, paragraph
paragraphs (b) through (h), and recipients of cash grants must
meet the requirements in section 256.476, subdivision 10; and
(5) the county shall report client outcomes, services, and
costs under this paragraph in a manner prescribed by the
commissioner.
Upon implementation of direct cash payments to clients under
this section, any person determined eligible for the alternative
care program who chooses a cash payment approved by the county
agency shall receive the cash payment under this section and not
under section 256.476 unless the person was receiving a consumer
support grant under section 256.476 before implementation of
direct cash payments under this section.
Sec. 2. Minnesota Statutes 1998, section 256B.411,
subdivision 2, is amended to read:
Subd. 2. [REQUIREMENTS.] No medical assistance payments
shall be made to any nursing facility unless the nursing
facility is certified to participate in the medical assistance
program under title XIX of the federal Social Security Act and
has in effect a provider agreement with the commissioner meeting
the requirements of state and federal statutes and rules. No
medical assistance payments shall be made to any nursing
facility unless the nursing facility complies with all
requirements of Minnesota Statutes including, but not limited
to, this chapter and rules adopted under it that govern
participation in the program. This section applies whether the
nursing facility participates fully in the medical assistance
program or is withdrawing from the medical assistance program.
No future payments may be made to any nursing facility which has
withdrawn or is withdrawing from the medical assistance program
except as provided in section 256B.48, subdivision 1a; provided,
however, that, or federal law. Payments may also be made under
a court order entered on or before June 7, 1985, unless the
court order is reversed on appeal.
Sec. 3. Minnesota Statutes 1998, 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
facilities according to different levels of care and geographic
location until July 1, 1985. 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 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 facility 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 facility 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 facility as soon as
possible except that if legislation is pending on May 1 that may
affect rates for nursing facilities, the commissioner shall set
the rates after the legislation is enacted and provide notice to
each facility 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 facilities 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. 4. Minnesota Statutes 1998, section 256B.431,
subdivision 3a, is amended to read:
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
facility providers that are vendors in the medical assistance
program for the rental use of real estate and depreciable
equipment. "Real estate" means land improvements, buildings,
and attached fixtures used directly for resident care.
"Depreciable equipment" means the standard movable resident care
equipment and support service equipment generally used in
long-term care facilities.
(b) In developing the method for determining payment rates
for the rental use of nursing facilities, 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 facilities;
(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.
(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.
(d) (c) For rate years beginning on or after July 1, 1987,
a nursing facility which has reduced licensed bed capacity after
January 1, 1986, shall be allowed to:
(1) aggregate the applicable investment per bed limits
based on the number of beds licensed prior to the reduction; and
(2) establish capacity days for each rate year following
the licensure reduction based on the number of beds licensed on
the previous April 1 if the commissioner is notified of the
change by April 4. The notification must include a copy of the
delicensure request that has been submitted to the commissioner
of health.
(e) Until the rental reimbursement method is fully phased
in, a nursing facility whose final property-related payment rate
is the rental rate shall continue to have its property-related
payment rates established based on the rental reimbursement
method.
(f) (d) For rate years beginning on or after July 1, 1989,
the interest expense that results from a refinancing of a
nursing facility's demand call loan, when the loan that must be
refinanced was incurred before May 22, 1983, is an allowable
interest expense if:
(1) the demand call loan or any part of it was in the form
of a loan that was callable at the demand of the lender;
(2) the demand call loan or any part of it was called by
the lender through no fault of the nursing facility;
(3) the demand call loan or any part of it was made by a
government agency operating under a statutory or regulatory loan
program;
(4) the refinanced debt does not exceed the sum of the
allowable remaining balance of the demand call loan at the time
of payment on the demand call loan and refinancing costs;
(5) the term of the refinanced debt does not exceed the
remaining term of the demand call loan, had the debt not been
subject to an on-call payment demand; and
(6) the refinanced debt is not a debt between related
organizations as defined in Minnesota Rules, part 9549.0020,
subpart 38.
Sec. 5. Minnesota Statutes 1998, section 256B.431,
subdivision 10, is amended to read:
Subd. 10. [PROPERTY RATE ADJUSTMENTS AND CONSTRUCTION
PROJECTS.] A nursing facility's request for a property-related
payment rate adjustment and the related supporting documentation
of project construction cost information must be submitted to
the commissioner within 60 days after the construction project's
completion date to be considered eligible for a property-related
payment rate adjustment. Construction projects with completion
dates within one year of the completion date associated with the
property rate adjustment request and phased projects with
project completion dates within three years of the last phase of
the phased project must be aggregated for purposes of the
minimum thresholds in subdivisions 16 and 17, and the maximum
threshold in section 144A.071, subdivision 2. "Construction
project," and "project construction costs," and "phased project"
have the meanings given them in Minnesota Rules, part 4655.1110
(Emergency) Statutes, section 144A.071, subdivision 1a.
Sec. 6. Minnesota Statutes 1998, section 256B.431,
subdivision 16, is amended to read:
Subd. 16. [MAJOR ADDITIONS AND REPLACEMENTS; EQUITY
INCENTIVE.] For rate years beginning after June 30, 1993, if a
nursing facility acquires capital assets in connection with a
project approved under the moratorium exception process in
section 144A.073 or in connection with an addition to or
replacement of buildings, attached fixtures, or land
improvements for which the total historical cost of those
capital asset additions exceeds the lesser of $150,000 or ten
percent of the most recent appraised value, the nursing facility
shall be eligible for an equity incentive payment rate as in
paragraphs (a) to (d). This computation is separate from the
determination of the nursing facility's rental rate. An equity
incentive payment rate as computed under this subdivision is
limited to one in a 12-month period.
(a) An eligible nursing facility shall receive an equity
incentive payment rate equal to the allowable historical cost of
the capital asset acquired, minus the allowable debt directly
identified to that capital asset, multiplied by the equity
incentive factor as described in paragraphs (b) and (c), and
divided by the nursing facility's occupancy factor under
subdivision 3f, paragraph (c). This amount shall be added to
the nursing facility's total payment rate and shall be effective
the same day as the incremental increase in paragraph (d) or
subdivision 17. The allowable historical cost of the capital
assets and the allowable debt shall be determined as provided in
Minnesota Rules, parts 9549.0010 to 9549.0080, and this section.
(b) The equity incentive factor shall be determined under
clauses (1) to (4):
(1) divide the initial allowable debt in paragraph (a) by
the initial historical cost of the capital asset additions
referred to in paragraph (a), then cube the quotient,
(2) subtract the amount calculated in clause (1) from the
number one,
(3) determine the difference between the rental factor and
the lesser of two percentage points above the posted yield for
standard conventional fixed rate mortgages of the Federal Home
Loan Mortgage Corporation as published in the Wall Street
Journal and in effect on the first day of the month the debt or
cost is incurred, or 16 percent,
(4) multiply the amount calculated in clause (2) by the
amount calculated in clause (3).
(c) The equity incentive payment rate shall be limited to
the term of the allowable debt in paragraph (a), not greater
than 20 years nor less than ten years. If no debt is incurred
in acquiring the capital asset, the equity incentive payment
rate shall be paid for ten years. The sale of a nursing
facility under subdivision 14 shall terminate application of the
equity incentive payment rate effective on the date provided in
subdivision 4 14, paragraph (f), for the sale.
(d) A nursing facility with an addition to or a renovation
of its buildings, attached fixtures, or land improvements
meeting the criteria in this subdivision and not receiving the
property-related payment rate adjustment in subdivision 17,
shall receive the incremental increase in the nursing facility's
rental rate as determined under Minnesota Rules, parts 9549.0010
to 9549.0080, and this section. The incremental increase shall
be added to the nursing facility's property-related payment rate.
The effective date of this incremental increase shall be the
first day of the month following the month in which the addition
or replacement is completed.
Sec. 7. Minnesota Statutes 1999 Supplement, section
256B.431, subdivision 17, is amended to read:
Subd. 17. [SPECIAL PROVISIONS FOR MORATORIUM EXCEPTIONS.]
(a) Notwithstanding Minnesota Rules, part 9549.0060, subpart 3,
for rate periods beginning on October 1, 1992, and for rate
years beginning after June 30, 1993, a nursing facility that (1)
has completed a construction project approved under section
144A.071, subdivision 4a, clause (m); (2) has completed a
construction project approved under section 144A.071,
subdivision 4a, and effective after June 30, 1995; or (3) has
completed a renovation, replacement, or upgrading project
approved under the moratorium exception process in section
144A.073 shall be reimbursed for costs directly identified to
that project as provided in subdivision 16 and this subdivision.
(b) Notwithstanding Minnesota Rules, part 9549.0060,
subparts 5, item A, subitems (1) and (3), and 7, item D,
allowable interest expense on debt shall include:
(1) interest expense on debt related to the cost of
purchasing or replacing depreciable equipment, excluding
vehicles, not to exceed six percent of the total historical cost
of the project; and
(2) interest expense on debt related to financing or
refinancing costs, including costs related to points, loan
origination fees, financing charges, legal fees, and title
searches; and issuance costs including bond discounts, bond
counsel, underwriter's counsel, corporate counsel, printing, and
financial forecasts. Allowable debt related to items in this
clause shall not exceed seven percent of the total historical
cost of the project. To the extent these costs are financed,
the straight-line amortization of the costs in this clause is
not an allowable cost; and
(3) interest on debt incurred for the establishment of a
debt reserve fund, net of the interest earned on the debt
reserve fund.
(c) Debt incurred for costs under paragraph (b) is not
subject to Minnesota Rules, part 9549.0060, subpart 5, item A,
subitem (5) or (6).
(d) The incremental increase in a nursing facility's rental
rate, determined under Minnesota Rules, parts 9549.0010 to
9549.0080, and this section, resulting from the acquisition of
allowable capital assets, and allowable debt and interest
expense under this subdivision shall be added to its
property-related payment rate and shall be effective on the
first day of the month following the month in which the
moratorium project was completed.
(e) Notwithstanding subdivision 3f, paragraph (a), for rate
periods beginning on October 1, 1992, and for rate years
beginning after June 30, 1993, the replacement-costs-new per bed
limit to be used in Minnesota Rules, part 9549.0060, subpart 4,
item B, for a nursing facility that has completed a renovation,
replacement, or upgrading project that has been approved under
the moratorium exception process in section 144A.073, or that
has completed an addition to or replacement of buildings,
attached fixtures, or land improvements for which the total
historical cost exceeds the lesser of $150,000 or ten percent of
the most recent appraised value, must be $47,500 per licensed
bed in multiple-bed rooms and $71,250 per licensed bed in a
single-bed room. These amounts must be adjusted annually as
specified in subdivision 3f, paragraph (a), beginning January 1,
1993.
(f) A nursing facility that completes a project identified
in this subdivision and, as of April 17, 1992, has not been
mailed a rate notice with a special appraisal for a completed
project, or completes a project after April 17, 1992, but before
September 1, 1992, may elect either to request a special
reappraisal with the corresponding adjustment to the
property-related payment rate under the laws in effect on June
30, 1992, or to submit their capital asset and debt information
after that date and obtain the property-related payment rate
adjustment under this section, but not both.
(g) (f) For purposes of this paragraph, a total replacement
means the complete replacement of the nursing facility's
physical plant through the construction of a new physical plant
or the transfer of the nursing facility's license from one
physical plant location to another. For total replacement
projects completed on or after July 1, 1992, the commissioner
shall compute the incremental change in the nursing facility's
rental per diem, for rate years beginning on or after July 1,
1995, by replacing its appraised value, including the historical
capital asset costs, and the capital debt and interest costs
with the new nursing facility's allowable capital asset costs
and the related allowable capital debt and interest costs. If
the new nursing facility has decreased its licensed capacity,
the aggregate investment per bed limit in subdivision 3a,
paragraph (d) (c), shall apply. If the new nursing facility has
retained a portion of the original physical plant for nursing
facility usage, then a portion of the appraised value prior to
the replacement must be retained and included in the calculation
of the incremental change in the nursing facility's rental per
diem. For purposes of this part, the original nursing facility
means the nursing facility prior to the total replacement
project. The portion of the appraised value to be retained
shall be calculated according to clauses (1) to (3):
(1) The numerator of the allocation ratio shall be the
square footage of the area in the original physical plant which
is being retained for nursing facility usage.
(2) The denominator of the allocation ratio shall be the
total square footage of the original nursing facility physical
plant.
(3) Each component of the nursing facility's allowable
appraised value prior to the total replacement project shall be
multiplied by the allocation ratio developed by dividing clause
(1) by clause (2).
In the case of either type of total replacement as
authorized under section 144A.071 or 144A.073, the provisions of
this subdivision shall also apply. For purposes of the
moratorium exception authorized under section 144A.071,
subdivision 4a, paragraph (s), if the total replacement involves
the renovation and use of an existing health care facility
physical plant, the new allowable capital asset costs and
related debt and interest costs shall include first the
allowable capital asset costs and related debt and interest
costs of the renovation, to which shall be added the allowable
capital asset costs of the existing physical plant prior to the
renovation, and if reported by the facility, the related
allowable capital debt and interest costs.
(h) (g) Notwithstanding Minnesota Rules, part 9549.0060,
subpart 11, item C, subitem (2), for a total replacement, as
defined in paragraph (g) (f), authorized under section 144A.071
or 144A.073 after July 1, 1999, the replacement-costs-new per
bed limit shall be $74,280 per licensed bed in multiple-bed
rooms, $92,850 per licensed bed in semiprivate rooms with a
fixed partition separating the resident beds, and $111,420 per
licensed bed in single rooms. Minnesota Rules, part 9549.0060,
subpart 11, item C, subitem (2), does not apply. These amounts
must be adjusted annually as specified in subdivision 3f,
paragraph (a), beginning January 1, 2000.
(i) (h) For a total replacement, as defined in paragraph
(g) (f), authorized under section 144A.073 for a 96-bed nursing
home in Carlton county, the replacement-costs-new per bed limit
shall be $74,280 per licensed bed in multiple-bed rooms, $92,850
per licensed bed in semiprivate rooms with a fixed partition
separating the resident's beds, and $111,420 per licensed bed in
a single room. Minnesota Rules, part 9549.0060, subpart 11,
item C, subitem (2), does not apply. The resulting maximum
allowable replacement-costs-new multiplied by 1.25 shall
constitute the project's dollar threshold for purposes of
application of the limit set forth in section 144A.071,
subdivision 2. The commissioner of health may waive the
requirements of section 144A.073, subdivision 3b, paragraph (b),
clause (2), on the condition that the other requirements of that
paragraph are met.
Sec. 8. Minnesota Statutes 1998, section 256B.431,
subdivision 18, is amended to read:
Subd. 18. [APPRAISALS; UPDATING APPRAISALS, ADDITIONS, AND
REPLACEMENTS.] (a) Notwithstanding Minnesota Rules, part
9549.0060, subparts 1 to 3, the appraised value, routine
updating of the appraised value, and special reappraisals are
subject to this subdivision.
(1) For rate years beginning after June 30, 1993, the
commissioner shall permit a nursing facility to appeal its
appraisal. Any reappraisals conducted in connection with that
appeal must utilize the comparative-unit method as described in
the Marshall Valuation Service published by Marshall-Swift in
establishing the nursing facility's depreciated replacement cost.
Nursing facilities electing to appeal their appraised value
shall file written notice of appeal with the commissioner of
human services before December 30, 1992. The cost of the
reappraisal, if any, shall be considered an allowable cost under
Minnesota Rules, parts 9549.0040, subpart 9, and 9549.0061.
(2) The redetermination of a nursing facility's appraised
value under this paragraph shall have no impact on the rental
payment rate determined under subdivision 13 but shall only be
used for calculating the nursing facility's rental rate under
Minnesota Rules, parts 9549.0010 to 9549.0080, and this section
for rate years beginning after June 30, 1993.
(3) For all rate years after June 30, 1993, the
commissioner shall no longer conduct any appraisals under
Minnesota Rules, part 9549.0060, for the purpose of determining
property-related payment rates.
(b) Notwithstanding Minnesota Rules, part 9549.0060,
subpart 2, for rate years beginning after June 30, 1993, the
commissioner shall routinely update the appraised value of each
nursing facility by adding the cost of capital asset
acquisitions to its allowable appraised value.
The commissioner shall also annually index each nursing
facility's allowable appraised value by the inflation index
referenced in subdivision 3f, paragraph (a), for the purpose of
computing the nursing facility's annual rental rate. In
annually adjusting the nursing facility's appraised value, the
commissioner must not include the historical cost of capital
assets acquired during the reporting year in the nursing
facility's appraised value.
In addition, the nursing facility's appraised value must be
reduced by the historical cost of capital asset disposals or
applicable credits such as public grants and insurance
proceeds. Capital asset additions and disposals must be
reported on the nursing facility's annual cost report in the
reporting year of acquisition or disposal. The incremental
increase in the nursing facility's rental rate resulting from
this annual adjustment as determined under Minnesota Rules,
parts 9549.0010 to 9549.0080, and this section shall be added to
the nursing facility's property-related payment rate for the
rate year following the reporting year.
Sec. 9. Minnesota Statutes 1998, section 256B.431,
subdivision 21, is amended to read:
Subd. 21. [INDEXING THRESHOLDS.] Beginning January 1,
1993, and each January 1 thereafter, the commissioner shall
annually update the dollar thresholds in subdivisions 15,
paragraph (d) (e), 16, and 17, and in section 144A.071,
subdivisions 2 and 4a, clauses (b) and (e), by the inflation
index referenced in subdivision 3f, paragraph (a).
Sec. 10. Minnesota Statutes 1998, section 256B.431,
subdivision 22, is amended to read:
Subd. 22. [CHANGES TO NURSING FACILITY REIMBURSEMENT.] The
nursing facility reimbursement changes in paragraphs (a)
to (e) (d) apply to Minnesota Rules, parts 9549.0010 to
9549.0080, and this section, and are effective for rate years
beginning on or after July 1, 1993, unless otherwise indicated.
(a) In addition to the approved pension or profit sharing
plans allowed by the reimbursement rule, the commissioner shall
allow those plans specified in Internal Revenue Code, sections
403(b) and 408(k).
(b) The commissioner shall allow as workers' compensation
insurance costs under section 256B.421, subdivision 14, the
costs of workers' compensation coverage obtained under the
following conditions:
(1) a plan approved by the commissioner of commerce as a
Minnesota group or individual self-insurance plan as provided in
section 79A.03;
(2) a plan in which:
(i) the nursing facility, directly or indirectly, purchases
workers' compensation coverage in compliance with section
176.181, subdivision 2, from an authorized insurance carrier;
(ii) a related organization to the nursing facility
reinsures the workers' compensation coverage purchased, directly
or indirectly, by the nursing facility; and
(iii) all of the conditions in clause (4) are met;
(3) a plan in which:
(i) the nursing facility, directly or indirectly, purchases
workers' compensation coverage in compliance with section
176.181, subdivision 2, from an authorized insurance carrier;
(ii) the insurance premium is calculated retrospectively,
including a maximum premium limit, and paid using the paid loss
retro method; and
(iii) all of the conditions in clause (4) are met;
(4) additional conditions are:
(i) the costs of the plan are allowable under the federal
Medicare program;
(ii) the reserves for the plan are maintained in an account
controlled and administered by a person which is not a related
organization to the nursing facility;
(iii) the reserves for the plan cannot be used, directly or
indirectly, as collateral for debts incurred or other
obligations of the nursing facility or related organizations to
the nursing facility;
(iv) if the plan provides workers' compensation coverage
for non-Minnesota nursing facilities, the plan's cost
methodology must be consistent among all nursing facilities
covered by the plan, and if reasonable, is allowed
notwithstanding any reimbursement laws regarding cost allocation
to the contrary;
(v) central, affiliated, corporate, or nursing facility
costs related to their administration of the plan are costs
which must remain in the nursing facility's administrative cost
category and must not be allocated to other cost categories;
(vi) required security deposits, whether in the form of
cash, investments, securities, assets, letters of credit, or in
any other form are not allowable costs for purposes of
establishing the facilities payment rate; and
(vii) for the rate year beginning on July 1, 1998, a group
of nursing facilities related by common ownership that
self-insures workers' compensation may allocate its directly
identified costs of self-insuring its Minnesota nursing facility
workers among those nursing facilities in the group that are
reimbursed under this section or section 256B.434. The method
of cost allocation shall be based on the ratio of each nursing
facility's total allowable salaries and wages to that of the
nursing facility group's total allowable salaries and wages,
then similarly allocated within each nursing facility's
operating cost categories. The costs associated with the
administration of the group's self-insurance plan must remain
classified in the nursing facility's administrative cost
category. A written request of the nursing facility group's
election to use this alternate method of allocation of
self-insurance costs must be received by the commissioner no
later than May 1, 1998, to take effect July 1, 1998, or such
costs shall continue to be allocated under the existing cost
allocation methods. Once a nursing facility group elects this
method of cost allocation for its workers' compensation
self-insurance costs, it shall remain in effect until such time
as the group no longer self-insures these costs;
(5) any costs allowed pursuant to clauses (1) to (3) are
subject to the following requirements:
(i) if the nursing facility is sold or otherwise ceases
operations, the plan's reserves must be subject to an
actuarially based settle-up after 36 months from the date of
sale or the date on which operations ceased. The facility's
medical assistance portion of the total excess plan reserves
must be paid to the state within 30 days following the date on
which excess plan reserves are determined;
(ii) any distribution of excess plan reserves made to or
withdrawals made by the nursing facility or a related
organization are applicable credits and must be used to reduce
the nursing facility's workers' compensation insurance costs in
the reporting period in which a distribution or withdrawal is
received;
(iii) if reimbursement for the plan is sought under the
federal Medicare program, and is audited pursuant to the
Medicare program, the nursing facility must provide a copy of
Medicare's final audit report, including attachments and
exhibits, to the commissioner within 30 days of receipt by the
nursing facility or any related organization. The commissioner
shall implement the audit findings associated with the plan upon
receipt of Medicare's final audit report. The department's
authority to implement the audit findings is independent of its
authority to conduct a field audit.
(c) In the determination of incremental increases in the
nursing facility's rental rate as required in subdivisions 14 to
21, except for a refinancing permitted under subdivision 19, the
commissioner must adjust the nursing facility's property-related
payment rate for both incremental increases and decreases in
recomputations of its rental rate;
(d) A nursing facility's administrative cost limitation
must be modified as follows:
(1) if the nursing facility's licensed beds exceed 195
licensed beds, the general and administrative cost category
limitation shall be 13 percent;
(2) if the nursing facility's licensed beds are more than
150 licensed beds, but less than 196 licensed beds, the general
and administrative cost category limitation shall be 14 percent;
or
(3) if the nursing facility's licensed beds is less than
151 licensed beds, the general and administrative cost category
limitation shall remain at 15 percent.
(e) The care related operating rate shall be increased by
eight cents to reimburse facilities for unfunded federal
mandates, including costs related to hepatitis B vaccinations.
(f) For the rate year beginning on July 1, 1998, a group of
nursing facilities related by common ownership that self-insures
group health, dental, or life insurance may allocate its
directly identified costs of self-insuring its Minnesota nursing
facility workers among those nursing facilities in the group
that are reimbursed under this section or section 256B.434. The
method of cost allocation shall be based on the ratio of each
nursing facility's total allowable salaries and wages to that of
the nursing facility group's total allowable salaries and wages,
then similarly allocated within each nursing facility's
operating cost categories. The costs associated with the
administration of the group's self-insurance plan must remain
classified in the nursing facility's administrative cost
category. A written request of the nursing facility group's
election to use this alternate method of allocation of
self-insurance costs must be received by the commissioner no
later than May 1, 1998, to take effect July 1, 1998, or those
self-insurance costs shall continue to be allocated under the
existing cost allocation methods. Once a nursing facility group
elects this method of cost allocation for its group health,
dental, or life insurance self-insurance costs, it shall remain
in effect until such time as the group no longer self-insures
these costs.
Sec. 11. Minnesota Statutes 1998, section 256B.431,
subdivision 25, is amended to read:
Subd. 25. [CHANGES TO NURSING FACILITY REIMBURSEMENT
BEGINNING JULY 1, 1995.] The nursing facility reimbursement
changes in paragraphs (a) to (g) shall apply in the sequence
specified to Minnesota Rules, parts 9549.0010 to 9549.0080, and
this section, beginning July 1, 1995.
(a) The eight-cent adjustment to care-related rates in
subdivision 22, paragraph (e), shall no longer apply.
(b) For rate years beginning on or after July 1, 1995, the
commissioner shall limit a nursing facility's allowable
operating per diem for each case mix category for each rate year
as in clauses (1) to (3).
(1) For the rate year beginning July 1, 1995, the
commissioner shall group nursing facilities into two groups,
freestanding and nonfreestanding, within each geographic group,
using their operating cost per diem for the case mix A
classification. A nonfreestanding nursing facility is a nursing
facility whose other operating cost per diem is subject to the
hospital attached, short length of stay, or the rule 80 limits.
All other nursing facilities shall be considered freestanding
nursing facilities. The commissioner shall then array all
nursing facilities in each grouping by their allowable case mix
A operating cost per diem. In calculating a nursing facility's
operating cost per diem for this purpose, the commissioner shall
exclude the raw food cost per diem related to providing special
diets that are based on religious beliefs, as determined in
subdivision 2b, paragraph (h). For those nursing facilities in
each grouping whose case mix A operating cost per diem:
(i) is at or below the median minus 1.0 standard deviation
of the array, the commissioner shall limit the nursing
facility's allowable operating cost per diem for each case mix
category to the lesser of the prior reporting year's allowable
operating cost per diems plus the inflation factor as
established in paragraph (f), clause (2), increased by six
percentage points, or the current reporting year's corresponding
allowable operating cost per diem;
(ii) is between minus .5 standard deviation and minus 1.0
standard deviation below the median of the array, the
commissioner shall limit the nursing facility's allowable
operating cost per diem for each case mix category to the lesser
of the prior reporting year's allowable operating cost per diems
plus the inflation factor as established in paragraph (f),
clause (2), increased by four percentage points, or the current
reporting year's corresponding allowable operating cost per
diem; or
(iii) is equal to or above minus .5 standard deviation
below the median of the array, the commissioner shall limit the
nursing facility's allowable operating cost per diem for each
case mix category to the lesser of the prior reporting year's
allowable operating cost per diems plus the inflation factor as
established in paragraph (f), clause (2), increased by three
percentage points, or the current reporting year's corresponding
allowable operating cost per diem.
(2) For the rate year beginning on July 1, 1996, the
commissioner shall limit the nursing facility's allowable
operating cost per diem for each case mix category to the lesser
of the prior reporting year's allowable operating cost per diems
plus the inflation factor as established in paragraph (f),
clause (2), increased by one percentage point or the current
reporting year's corresponding allowable operating cost per
diems; and
(3) For rate years beginning on or after July 1, 1997, the
commissioner shall limit the nursing facility's allowable
operating cost per diem for each case mix category to the lesser
of the reporting year prior to the current reporting year's
allowable operating cost per diems plus the inflation factor as
established in paragraph (f), clause (2), or the current
reporting year's corresponding allowable operating cost per
diems.
(c) For rate years beginning on July 1, 1995, the
commissioner shall limit the allowable operating cost per diems
for high cost nursing facilities. After application of the
limits in paragraph (b) to each nursing facility's operating
cost per diems, the commissioner shall group nursing facilities
into two groups, freestanding or nonfreestanding, within each
geographic group. A nonfreestanding nursing facility is a
nursing facility whose other operating cost per diems are
subject to hospital attached, short length of stay, or rule 80
limits. All other nursing facilities shall be considered
freestanding nursing facilities. The commissioner shall then
array all nursing facilities within each grouping by their
allowable case mix A operating cost per diems. In calculating a
nursing facility's operating cost per diem for this purpose, the
commissioner shall exclude the raw food cost per diem related to
providing special diets that are based on religious beliefs, as
determined in subdivision 2b, paragraph (h). For those nursing
facilities in each grouping whose case mix A operating cost per
diem exceeds 1.0 standard deviation above the median, the
commissioner shall reduce their allowable operating cost per
diems by two percent. For those nursing facilities in each
grouping whose case mix A operating cost per diem exceeds 0.5
standard deviation above the median but is less than or equal to
1.0 standard deviation above the median, the commissioner shall
reduce their allowable operating cost per diems by one percent.
(d) For rate years beginning on or after July 1, 1996, the
commissioner shall limit the allowable operating cost per diems
for high cost nursing facilities. After application of the
limits in paragraph (b) to each nursing facility's operating
cost per diems, the commissioner shall group nursing facilities
into two groups, freestanding or nonfreestanding, within each
geographic group. A nonfreestanding nursing facility is a
nursing facility whose other operating cost per diems are
subject to hospital attached, short length of stay, or rule 80
limits. All other nursing facilities shall be considered
freestanding nursing facilities. The commissioner shall then
array all nursing facilities within each grouping by their
allowable case mix A operating cost per diems. In calculating a
nursing facility's operating cost per diem for this purpose, the
commissioner shall exclude the raw food cost per diem related to
providing special diets that are based on religious beliefs, as
determined in subdivision 2b, paragraph (h). In those nursing
facilities in each grouping whose case mix A operating cost per
diem exceeds 1.0 standard deviation above the median, the
commissioner shall reduce their allowable operating cost per
diems by three percent. For those nursing facilities in each
grouping whose case mix A operating cost per diem exceeds 0.5
standard deviation above the median but is less than or equal to
1.0 standard deviation above the median, the commissioner shall
reduce their allowable operating cost per diems by two percent.
(e) For rate years beginning on or after July 1, 1995, the
commissioner shall determine a nursing facility's efficiency
incentive by first computing the allowable difference, which is
the lesser of $4.50 or the amount by which the facility's other
operating cost limit exceeds its nonadjusted other operating
cost per diem for that rate year. The commissioner shall
compute the efficiency incentive by:
(1) subtracting the allowable difference from $4.50 and
dividing the result by $4.50;
(2) multiplying 0.20 by the ratio resulting from clause
(1), and then;
(3) adding 0.50 to the result from clause (2); and
(4) multiplying the result from clause (3) times the
allowable difference.
The nursing facility's efficiency incentive payment shall
be the lesser of $2.25 or the product obtained in clause (4).
(f) For rate years beginning on or after July 1, 1995, the
forecasted price index for a nursing facility's allowable
operating cost per diems shall be determined under clauses (1)
to (3) using the change in the Consumer Price Index-All Items
(United States city average) (CPI-U) or the change in the
Nursing Home Market Basket, both as forecasted by Data Resources
Inc., whichever is applicable. The commissioner shall use the
indices as forecasted in the fourth quarter of the calendar year
preceding the rate year, subject to subdivision 2l, paragraph
(c). If, as a result of federal legislative or administrative
action, the methodology used to calculate the Consumer Price
Index-All Items (United States city average) (CPI-U) changes,
the commissioner shall develop a conversion factor or other
methodology to convert the CPI-U index factor that results from
the new methodology to an index factor that approximates, as
closely as possible, the index factor that would have resulted
from application of the original CPI-U methodology prior to any
changes in methodology. The commissioner shall use the
conversion factor or other methodology to calculate an adjusted
inflation index. The adjusted inflation index must be used to
calculate payment rates under this section instead of the CPI-U
index specified in paragraph (d). If the commissioner is
required to develop an adjusted inflation index, the
commissioner shall report to the legislature as part of the next
budget submission the fiscal impact of applying this index.
(1) The CPI-U forecasted index for allowable operating cost
per diems shall be based on the 21-month period from the
midpoint of the nursing facility's reporting year to the
midpoint of the rate year following the reporting year.
(2) The Nursing Home Market Basket forecasted index for
allowable operating costs and per diem limits shall be based on
the 12-month period between the midpoints of the two reporting
years preceding the rate year.
(3) For rate years beginning on or after July 1, 1996, the
forecasted index for operating cost limits referred to in
subdivision 21, paragraph (b), shall be based on the CPI-U for
the 12-month period between the midpoints of the two reporting
years preceding the rate year.
(g) After applying these provisions for the respective rate
years, the commissioner shall index these allowable operating
costs per diems by the inflation factor provided for in
paragraph (f), clause (1), and add the nursing facility's
efficiency incentive as computed in paragraph (e).
(h)(1) A nursing facility licensed for 302 beds on
September 30, 1993, that was approved under the moratorium
exception process in section 144A.073 for a partial replacement,
and completed the replacement project in December 1994, is
exempt from Minnesota Statutes 1998, section 256B.431,
subdivision 25, paragraphs (b) to (d) for rate years beginning
on or after July 1, 1995.
(2) For the rate year beginning July 1, 1997, after
computing this nursing facility's payment rate according to
section 256B.434, the commissioner shall make a one-year rate
adjustment of $8.62 to the facility's contract payment rate for
the rate effect of operating cost changes associated with the
facility's 1994 downsizing project.
(3) For rate years beginning on or after July 1, 1997, the
commissioner shall add 35 cents to the facility's base property
related payment rate for the rate effect of reducing its
licensed capacity to 290 beds from 302 beds and shall add 83
cents to the facility's real estate tax and special assessment
payment rate for payments in lieu of real estate taxes. The
adjustments in this clause shall remain in effect for the
duration of the facility's contract under section 256B.434.
(i) Notwithstanding Laws 1996, chapter 451, article 3,
section 11, paragraph (h), for the rate years beginning on July
1, 1996, July 1, 1997, and July 1, 1998, a nursing facility
licensed for 40 beds effective May 1, 1992, with a subsequent
increase of 20 Medicare/Medicaid certified beds, effective
January 26, 1993, in accordance with an increase in licensure is
exempt from paragraphs (b) to (d).
Sec. 12. Minnesota Statutes 1999 Supplement, section
256B.431, subdivision 26, is amended to read:
Subd. 26. [CHANGES TO NURSING FACILITY REIMBURSEMENT
BEGINNING JULY 1, 1997.] The nursing facility reimbursement
changes in paragraphs (a) to (f) (e) shall apply in the sequence
specified in Minnesota Rules, parts 9549.0010 to 9549.0080, and
this section, beginning July 1, 1997.
(a) For rate years beginning on or after July 1, 1997, the
commissioner shall limit a nursing facility's allowable
operating per diem for each case mix category for each rate year.
The commissioner shall group nursing facilities into two groups,
freestanding and nonfreestanding, within each geographic group,
using their operating cost per diem for the case mix A
classification. A nonfreestanding nursing facility is a nursing
facility whose other operating cost per diem is subject to the
hospital attached, short length of stay, or the rule 80 limits.
All other nursing facilities shall be considered freestanding
nursing facilities. The commissioner shall then array all
nursing facilities in each grouping by their allowable case mix
A operating cost per diem. In calculating a nursing facility's
operating cost per diem for this purpose, the commissioner shall
exclude the raw food cost per diem related to providing special
diets that are based on religious beliefs, as determined in
subdivision 2b, paragraph (h). For those nursing facilities in
each grouping whose case mix A operating cost per diem:
(1) is at or below the median of the array, the
commissioner shall limit the nursing facility's allowable
operating cost per diem for each case mix category to the lesser
of the prior reporting year's allowable operating cost per diem
as specified in Laws 1996, chapter 451, article 3, section 11,
paragraph (h), plus the inflation factor as established in
paragraph (d), clause (2), increased by two percentage points,
or the current reporting year's corresponding allowable
operating cost per diem; or
(2) is above the median of the array, the commissioner
shall limit the nursing facility's allowable operating cost per
diem for each case mix category to the lesser of the prior
reporting year's allowable operating cost per diem as specified
in Laws 1996, chapter 451, article 3, section 11, paragraph (h),
plus the inflation factor as established in paragraph (d),
clause (2), increased by one percentage point, or the current
reporting year's corresponding allowable operating cost per diem.
For purposes of paragraph (a), if a nursing facility
reports on its cost report a reduction in cost due to a refund
or credit for a rate year beginning on or after July 1, 1998,
the commissioner shall increase that facility's spend-up limit
for the rate year following the current rate year by the amount
of the cost reduction divided by its resident days for the
reporting year preceding the rate year in which the adjustment
is to be made.
(b) For rate years beginning on or after July 1, 1997, the
commissioner shall limit the allowable operating cost per diem
for high cost nursing facilities. After application of the
limits in paragraph (a) to each nursing facility's operating
cost per diem, the commissioner shall group nursing facilities
into two groups, freestanding or nonfreestanding, within each
geographic group. A nonfreestanding nursing facility is a
nursing facility whose other operating cost per diem are subject
to hospital attached, short length of stay, or rule 80 limits.
All other nursing facilities shall be considered freestanding
nursing facilities. The commissioner shall then array all
nursing facilities within each grouping by their allowable case
mix A operating cost per diem. In calculating a nursing
facility's operating cost per diem for this purpose, the
commissioner shall exclude the raw food cost per diem related to
providing special diets that are based on religious beliefs, as
determined in subdivision 2b, paragraph (h). For those nursing
facilities in each grouping whose case mix A operating cost per
diem exceeds 1.0 standard deviation above the median, the
commissioner shall reduce their allowable operating cost per
diem by three percent. For those nursing facilities in each
grouping whose case mix A operating cost per diem exceeds 0.5
standard deviation above the median but is less than or equal to
1.0 standard deviation above the median, the commissioner shall
reduce their allowable operating cost per diem by two percent.
However, in no case shall a nursing facility's operating cost
per diem be reduced below its grouping's limit established at
0.5 standard deviations above the median.
(c) For rate years beginning on or after July 1, 1997, the
commissioner shall determine a nursing facility's efficiency
incentive by first computing the allowable difference, which is
the lesser of $4.50 or the amount by which the facility's other
operating cost limit exceeds its nonadjusted other operating
cost per diem for that rate year. The commissioner shall
compute the efficiency incentive by:
(1) subtracting the allowable difference from $4.50 and
dividing the result by $4.50;
(2) multiplying 0.20 by the ratio resulting from clause
(1), and then;
(3) adding 0.50 to the result from clause (2); and
(4) multiplying the result from clause (3) times the
allowable difference.
The nursing facility's efficiency incentive payment shall
be the lesser of $2.25 or the product obtained in clause (4).
(d) For rate years beginning on or after July 1, 1997, the
forecasted price index for a nursing facility's allowable
operating cost per diem shall be determined under clauses (1)
and (2) using the change in the Consumer Price Index-All Items
(United States city average) (CPI-U) as forecasted by Data
Resources, Inc. The commissioner shall use the indices as
forecasted in the fourth quarter of the calendar year preceding
the rate year, subject to subdivision 2l, paragraph (c).
(1) The CPI-U forecasted index for allowable operating cost
per diem shall be based on the 21-month period from the midpoint
of the nursing facility's reporting year to the midpoint of the
rate year following the reporting year.
(2) For rate years beginning on or after July 1, 1997, the
forecasted index for operating cost limits referred to in
subdivision 21, paragraph (b), shall be based on the CPI-U for
the 12-month period between the midpoints of the two reporting
years preceding the rate year.
(e) After applying these provisions for the respective rate
years, the commissioner shall index these allowable operating
cost per diem by the inflation factor provided for in paragraph
(d), clause (1), and add the nursing facility's efficiency
incentive as computed in paragraph (c).
(f) For rate years beginning on or after July 1, 1997, the
total operating cost payment rates for a nursing facility shall
be the greater of the total operating cost payment rates
determined under this section or the total operating cost
payment rates in effect on June 30, 1997, subject to rate
adjustments due to field audit or rate appeal resolution. This
provision shall not apply to subsequent field audit adjustments
of the nursing facility's operating cost rates for rate years
beginning on or after July 1, 1997.
(g) (f) For the rate years beginning on July 1, 1997, July
1, 1998, and July 1, 1999, a nursing facility licensed for 40
beds effective May 1, 1992, with a subsequent increase of 20
Medicare/Medicaid certified beds, effective January 26, 1993, in
accordance with an increase in licensure is exempt from
paragraphs (a) and (b).
(h) (g) For a nursing facility whose construction project
was authorized according to section 144A.073, subdivision 5,
paragraph (g), the operating cost payment rates for the new
location shall be determined based on Minnesota Rules, part
9549.0057. The relocation allowed under section 144A.073,
subdivision 5, paragraph (g), and the rate determination allowed
under this paragraph must meet the cost neutrality requirements
of section 144A.073, subdivision 3c. Paragraphs (a) and (b)
shall not apply until the second rate year after the settle-up
cost report is filed. Notwithstanding subdivision 2b, paragraph
(g), real estate taxes and special assessments payable by the
new location, a 501(c)(3) nonprofit corporation, shall be
included in the payment rates determined under this subdivision
for all subsequent rate years.
(i) (h) For the rate year beginning July 1, 1997, the
commissioner shall compute the payment rate for a nursing
facility licensed for 94 beds on September 30, 1996, that
applied in October 1993 for approval of a total replacement
under the moratorium exception process in section 144A.073, and
completed the approved replacement in June 1995, with other
operating cost spend-up limit under paragraph (a), increased by
$3.98, and after computing the facility's payment rate according
to this section, the commissioner shall make a one-year positive
rate adjustment of $3.19 for operating costs related to the
newly constructed total replacement, without application of
paragraphs (a) and (b). The facility's per diem, before the
$3.19 adjustment, shall be used as the prior reporting year's
allowable operating cost per diem for payment rate calculation
for the rate year beginning July 1, 1998. A facility described
in this paragraph is exempt from paragraph (b) for the rate
years beginning July 1, 1997, and July 1, 1998.
(j) (i) For the purpose of applying the limit stated in
paragraph (a), a nursing facility in Kandiyohi county licensed
for 86 beds that was granted hospital-attached status on
December 1, 1994, shall have the prior year's allowable
care-related per diem increased by $3.207 and the prior year's
other operating cost per diem increased by $4.777 before adding
the inflation in paragraph (d), clause (2), for the rate year
beginning on July 1, 1997.
(k) (j) For the purpose of applying the limit stated in
paragraph (a), a 117 bed nursing facility located in Pine county
shall have the prior year's allowable other operating cost per
diem increased by $1.50 before adding the inflation in paragraph
(d), clause (2), for the rate year beginning on July 1, 1997.
(l) (k) For the purpose of applying the limit under
paragraph (a), a nursing facility in Hibbing licensed for 192
beds shall have the prior year's allowable other operating cost
per diem increased by $2.67 before adding the inflation in
paragraph (d), clause (2), for the rate year beginning July 1,
1997.
Sec. 13. Minnesota Statutes 1999 Supplement, section
256B.434, subdivision 3, is amended to read:
Subd. 3. [DURATION AND TERMINATION OF CONTRACTS.] (a)
Subject to available resources, the commissioner may begin to
execute contracts with nursing facilities November 1, 1995.
(b) All contracts entered into under this section are for a
term of one year. Either party may terminate a contract at any
time without cause by providing 90 calendar days advance written
notice to the other party. The decision to terminate a contract
is not appealable. Notwithstanding section 16C.05, subdivision
2, paragraph (a), clause (5), the contract shall be renegotiated
for additional one-year terms, unless either party provides
written notice of termination. The provisions of the contract
shall be renegotiated annually by the parties prior to the
expiration date of the contract. The parties may voluntarily
renegotiate the terms of the contract at any time by mutual
agreement.
(c) If a nursing facility fails to comply with the terms of
a contract, the commissioner shall provide reasonable notice
regarding the breach of contract and a reasonable opportunity
for the facility to come into compliance. If the facility fails
to come into compliance or to remain in compliance, the
commissioner may terminate the contract. If a contract is
terminated, the contract payment remains in effect for the
remainder of the rate year in which the contract was terminated,
but in all other respects the provisions of this section do not
apply to that facility effective the date the contract is
terminated. The contract shall contain a provision governing
the transition back to the cost-based reimbursement system
established under section 256B.431, subdivision 25, and
Minnesota Rules, parts 9549.0010 to 9549.0080. A contract
entered into under this section may be amended by mutual
agreement of the parties.
Sec. 14. Minnesota Statutes 1999 Supplement, section
256B.434, subdivision 4, is amended to read:
Subd. 4. [ALTERNATE RATES FOR NURSING FACILITIES.] (a) For
nursing facilities which have their payment rates determined
under this section rather than section 256B.431, subdivision 25,
the commissioner shall establish a rate under this subdivision.
The nursing facility must enter into a written contract with the
commissioner.
(b) A nursing facility's case mix payment rate for the
first rate year of a facility's contract under this section is
the payment rate the facility would have received under section
256B.431, subdivision 25.
(c) A nursing facility's case mix payment rates for the
second and subsequent years of a facility's contract under this
section are the previous rate year's contract payment rates plus
an inflation adjustment. The index for the inflation adjustment
must be based on the change in the Consumer Price Index-All
Items (United States City average) (CPI-U) forecasted by Data
Resources, Inc., as forecasted in the fourth quarter of the
calendar year preceding the rate year. The inflation adjustment
must be based on the 12-month period from the midpoint of the
previous rate year to the midpoint of the rate year for which
the rate is being determined. For the rate years beginning on
July 1, 1999, and July 1, 2000, this paragraph shall apply only
to the property-related payment rate. In determining the amount
of the property-related payment rate adjustment under this
paragraph, the commissioner shall determine the proportion of
the facility's rates that are property-related based on the
facility's most recent cost report.
(d) The commissioner shall develop additional
incentive-based payments of up to five percent above the
standard contract rate for achieving outcomes specified in each
contract. The specified facility-specific outcomes must be
measurable and approved by the commissioner. The commissioner
may establish, for each contract, various levels of achievement
within an outcome. After the outcomes have been specified the
commissioner shall assign various levels of payment associated
with achieving the outcome. Any incentive-based payment cancels
if there is a termination of the contract. In establishing the
specified outcomes and related criteria the commissioner shall
consider the following state policy objectives:
(1) improved cost effectiveness and quality of life as
measured by improved clinical outcomes;
(2) successful diversion or discharge to community
alternatives;
(3) decreased acute care costs;
(4) improved consumer satisfaction;
(5) the achievement of quality; or
(6) any additional outcomes proposed by a nursing facility
that the commissioner finds desirable.
Sec. 15. [REPEALER.]
Minnesota Statutes 1998, sections 256B.03, subdivision 2;
256B.431, subdivisions 2, 2a, 2f, 2h, 2m, 2p, 2q, 3, 3b, 3d, 3h,
3j, 4, 5, 7, 8, 9, 9a, 12, and 24; 256B.48, subdivision 9;
256B.50, subdivision 3; and 256B.74, subdivision 3, are repealed
effective July 1, 2000.
Sec. 16. [REVISOR INSTRUCTIONS.]
In the next and subsequent editions of Minnesota Statutes
and Minnesota Rules, the revisor of statutes shall make any
necessary statutory cross-reference changes required as a result
of the provisions in this bill.
Sec. 17. [EFFECTIVE DATE.]
The amendment in section 1 to Minnesota Statutes, section
256B.0913, subdivision 5, paragraph (g), is effective July 1,
2000, or upon federal approval of amendments to Minnesota's home
and community-based waiver for elderly persons at risk of
nursing home level of care, health care financing administration
control number 0025.91.R3, whichever occurs later. The
remainder of section 1, and sections 2 to 15 are effective July
1, 2000.
Presented to the governor April 27, 2000
Signed by the governor May 1, 2000, 2:45 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes