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

                             CHAPTER 16-H.F.No. 647 
                  An act relating to human services; providing an 
                  exception to the nursing home construction moratorium; 
                  modifying special provisions for moratorium 
                  exceptions; authorizing an appropriation carryforward; 
                  amending Minnesota Statutes 2002, sections 144A.071, 
                  by adding a subdivision; 256B.431, subdivision 17. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2002, section 144A.071, is 
        amended by adding a subdivision to read: 
           Subd. 4c.  [EXCEPTIONS FOR REPLACEMENT BEDS AFTER JUNE 30, 
        2003.] (a) The commissioner of health, in coordination with the 
        commissioner of human services, may approve the renovation, 
        replacement, upgrading, or relocation of a nursing home or 
        boarding care home, under the following conditions:  to license 
        and certify an 80-bed city-owned facility in Nicollet county to 
        be constructed on the site of a new city-owned hospital to 
        replace an existing 85-bed facility attached to a hospital that 
        is also being replaced.  The threshold allowed for this project 
        under section 144A.073 shall be the maximum amount available to 
        pay the additional medical assistance costs of the new facility. 
           (b) Projects approved under this subdivision shall be 
        treated in a manner equivalent to projects approved under 
        subdivision 4a. 
           Sec. 2.  Minnesota Statutes 2002, 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; (3) has 
        completed a construction project approved under section 
        144A.071, subdivision 4c; or (3) (4) 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 subdivisions 17 to 17f. 
           (b) Subd. 17a.  [ALLOWABLE INTEREST EXPENSE.] (a) 
        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) (b) Debt incurred for costs under paragraph (b) (a) is 
        not subject to Minnesota Rules, part 9549.0060, subpart 5, item 
        A, subitem (5) or (6). 
           (d) Subd. 17b.  [PROPERTY-RELATED PAYMENT RATE.] 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) Subd. 17c.  [REPLACEMENT-COSTS-NEW PER BED LIMIT.] 
        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) Subd. 17d.  [DETERMINATION OF RENTAL PER DIEM FOR TOTAL 
        REPLACEMENT PROJECTS.] (a) For purposes of this paragraph 
        subdivision, a total replacement means the complete replacement 
        of the nursing facility's physical plant through the 
        construction of a new physical plant, the transfer of the 
        nursing facility's license from one physical plant location to 
        another, or a new building addition to relocate beds from three- 
        and four-bed wards.  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 (c), shall 
        apply.  
           (b) 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 subdivision, 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). 
           (c) In the case of either type of total replacement as 
        authorized under section 144A.071 or 144A.073, the provisions of 
        this subdivision subdivisions 17 to 17f shall also apply.  
           (d) 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. 
           (g) Subd. 17e.  [REPLACEMENT-COSTS-NEW PER BED LIMIT 
        EFFECTIVE JULY 1, 2001.] Notwithstanding Minnesota Rules, part 
        9549.0060, subpart 11, item C, subitem (2), for a total 
        replacement, as defined in paragraph (f), authorized under 
        section 144A.071 or 144A.073 after July 1, 1999, or any building 
        project that is a relocation, renovation, upgrading, or 
        conversion completed on or after July 1, 2001, 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.  
           (h) Subd. 17f.  [PROVISIONS FOR SPECIFIC FACILITIES.] (a) 
        For a total replacement, as defined in paragraph (f) subdivision 
        17d, 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. 
           (i) (b) For a renovation authorized under section 144A.073 
        for a 65-bed nursing home in St. Louis county, the incremental 
        increase in rental rate for purposes of paragraph 
        (d) subdivision 17b shall be $8.16, and the total replacement 
        cost, allowable appraised value, allowable debt, and allowable 
        interest shall be increased according to the incremental 
        increase. 
           (j) (c) For a total replacement, as defined in paragraph 
        (f) subdivision 17d, authorized under section 144A.073 involving 
        a new building addition that relocates beds from three-bed wards 
        for an 80-bed nursing home in Redwood county, the 
        replacement-costs-new per bed limit shall be $74,280 per 
        licensed bed for multiple-bed rooms; $92,850 per licensed bed 
        for semiprivate rooms with a fixed partition separating the 
        beds; and $111,420 per licensed bed for single rooms.  These 
        amounts shall be adjusted annually, beginning January 1, 2001.  
        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. 3.  [CARRYFORWARD.] 
           Of the amount appropriated in Laws 2001, First Special 
        Session chapter 9, article 17, section 2, subdivision 9, 
        paragraph (g), for nursing home moratorium exceptions under 
        Minnesota Statutes, section 144A.073, $94,562 allocated for a 
        project in Nicollet county shall not cancel but shall be 
        available to the commissioner of human services until expended 
        for the additional medical assistance costs authorized in 
        section 1. 
           Presented to the governor April 16, 2003 
           Signed by the governor April 17, 2003, 10:36 a.m.