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Minnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 194-S.F.No. 1604 
                  An act relating to human services; requiring the 
                  commissioner of human services to provide rate notices 
                  within certain timelines under certain conditions; 
                  requiring a planned nursing facility closure to be 
                  budget neutral; requiring a recommendation to 
                  establish a new nursing facility reimbursement; 
                  amending Minnesota Statutes 2002, sections 256B.431, 
                  subdivision 10; 256B.437, subdivision 3; proposing 
                  coding for new law in Minnesota Statutes, chapter 256B.
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2002, 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.  The commissioner shall provide a rate 
        notice reflecting the allowable costs within 60 days after 
        receiving all the necessary information to compute the rate 
        adjustment.  No sooner than the effective date of the rate 
        adjustment for the building project, a nursing facility may 
        adjust its rates by the amount anticipated to be allowed.  Any 
        amounts collected from private pay residents in excess of the 
        allowable rate must be repaid to private pay residents with 
        interest at the rate used by the commissioner of revenue for the 
        late payment of taxes and in effect on the date the rate 
        increase is effective.  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" have the meanings 
        given them in Minnesota Statutes, section 144A.071, subdivision 
        1a. 
           Sec. 2.  Minnesota Statutes 2002, section 256B.437, 
        subdivision 3, is amended to read: 
           Subd. 3.  [APPLICATIONS FOR PLANNED CLOSURE OF NURSING 
        FACILITIES.] (a) By August 15, 2001, the commissioner of human 
        services shall implement and announce a program for closure or 
        partial closure of nursing facilities.  Names and identifying 
        information provided in response to the announcement shall 
        remain private unless approved, according to the timelines 
        established in the plan.  The announcement must specify: 
           (1) the criteria in subdivision 4 that will be used by the 
        commissioner to approve or reject applications; 
           (2) the information that must accompany an application; and 
           (3) that applications may combine planned closure rate 
        adjustments with moratorium exception funding, in which case a 
        single application may serve both purposes. 
        Between August 1, 2001, and June 30, 2003, the commissioner may 
        approve planned closures of up to 5,140 nursing facility beds, 
        less the number of beds delicensed in facilities during the same 
        time period without approved closure plans or that have notified 
        the commissioner of health of their intent to close without an 
        approved closure plan.  Beginning July 1, 2004, the commissioner 
        may negotiate a planned closure for nursing facilities providing 
        the proposal has no cost to the state. 
           (b) A facility or facilities reimbursed under section 
        256B.431 or 256B.434 with a closure plan approved by the 
        commissioner under subdivision 5 may assign a planned closure 
        rate adjustment to another facility or facilities that are not 
        closing or in the case of a partial closure, to the facility 
        undertaking the partial closure.  A facility may also elect to 
        have a planned closure rate adjustment shared equally by the 
        five nursing facilities with the lowest total operating payment 
        rates in the state development region designated under section 
        462.385, in which the facility that is closing is located.  The 
        planned closure rate adjustment must be calculated under 
        subdivision 6.  Facilities that delicense beds without a closure 
        plan, or whose closure plan is not approved by the commissioner, 
        are not eligible to assign a planned closure rate adjustment 
        under subdivision 6, unless they are delicensing five or fewer 
        beds, or less than six percent of their total licensed bed 
        capacity, whichever is greater, are located in a county in the 
        top three quartiles of beds per 1,000 persons aged 65 or older, 
        and have not delicensed beds in the prior three months.  
        Facilities meeting these criteria are eligible to assign the 
        amount calculated under subdivision 6 to themselves.  If a 
        facility is delicensing the greater of six or more beds, or six 
        percent or more of its total licensed bed capacity, and does not 
        have an approved closure plan or is not eligible for the 
        adjustment under subdivision 6, the commissioner shall calculate 
        the amount the facility would have been eligible to assign under 
        subdivision 6, and shall use this amount to provide equal rate 
        adjustments to the five nursing facilities with the lowest total 
        operating payment rates in the state development region 
        designated under section 462.385, in which the facility that 
        delicensed beds is located. 
           (c) To be considered for approval, an application must 
        include: 
           (1) a description of the proposed closure plan, which must 
        include identification of the facility or facilities to receive 
        a planned closure rate adjustment; 
           (2) the proposed timetable for any proposed closure, 
        including the proposed dates for announcement to residents, 
        commencement of closure, and completion of closure; 
           (3) if available, the proposed relocation plan for current 
        residents of any facility designated for closure.  If a 
        relocation plan is not available, the application must include a 
        statement agreeing to develop a relocation plan designed to 
        comply with section 144A.161; 
           (4) a description of the relationship between the nursing 
        facility that is proposed for closure and the nursing facility 
        or facilities proposed to receive the planned closure rate 
        adjustment.  If these facilities are not under common ownership, 
        copies of any contracts, purchase agreements, or other documents 
        establishing a relationship or proposed relationship must be 
        provided; 
           (5) documentation, in a format approved by the 
        commissioner, that all the nursing facilities receiving a 
        planned closure rate adjustment under the plan have accepted 
        joint and several liability for recovery of overpayments under 
        section 256B.0641, subdivision 2, for the facilities designated 
        for closure under the plan; and 
           (6) an explanation of how the application coordinates with 
        planning efforts under subdivision 2.  If the planning group 
        does not support a level of nursing facility closures that the 
        commissioner considers to be reasonable, the commissioner may 
        approve a planned closure proposal without its support. 
           (d) The application must address the criteria listed in 
        subdivision 4. 
           Sec. 3.  [256B.440] [RECOMMENDATION TO ESTABLISH NEW 
        NURSING FACILITY REIMBURSEMENT SYSTEM.] 
           Subdivision 1.  [IN GENERAL.] The commissioner shall 
        present to the legislature, by January 15, 2005, a 
        recommendation to establish a new nursing facility reimbursement 
        system that provides facility-specific, prospective payment 
        rates for nursing facilities participating in the medical 
        assistance program.  The rates shall be determined using a 
        statistical and cost report filed by each nursing facility.  The 
        total payment rate shall be composed of four rate components: 
        direct-care services, support services, external fixed, and 
        property-related costs.  The payment rate shall be derived from 
        statistical measures of actual costs incurred in the operation 
        of nursing facilities.  From this cost basis, the components of 
        the total payment rate shall be adjusted for quality of services 
        provided, actual costs of operation of each facility, geographic 
        variation in labor costs, rental value, and resident acuity. 
           Subd. 2.  [RECOMMENDATION FOR ESTABLISHMENT BEGINNING 
        OCTOBER 1, 2006.] The recommendation in subdivision 1 shall 
        provide for the establishment of all or part of a nursing 
        facility's rates under the new nursing facility reimbursement 
        system beginning on October 1, 2006.  Rates shall be rebased 
        annually.  Effective January 1, 2005, each cost reporting year 
        shall begin on January 1 and end on the following December 31.  
        A cost report shall be filed by each nursing facility by March 
        31.  Notice of rates shall be distributed by August 1 and the 
        rates shall go into effect on October 1 for one year. 
           Subd. 3.  [REPORTING OF BASELINE STATISTICAL AND COST 
        INFORMATION.] (a) Nursing facilities shall file a baseline 
        statistical and cost report on or before August 31, 2004, for 
        the reporting period ending either September 30, 2003, or 
        December 31, 2003.  After July 1, 2004, the report required 
        under Minnesota Rules, part 9549.0041, subpart 1, shall no 
        longer be required.  For the period between January 1, 2004, and 
        December 31, 2004, the commissioner may collect statistical and 
        cost information from facilities in no greater detail than items 
        collected from facilities under section 256B.431 or section 
        256B.434, whichever is applicable, for the year ending September 
        30, 2003. 
           (b) All nursing facilities shall provide information to the 
        commissioner in the form and manner specified by the 
        commissioner.  The commissioner shall consult with stakeholders 
        in developing the baseline statistical and cost report that will 
        be used to collect all data necessary to develop and model the 
        new nursing facility reimbursement system. 
           (c) Nursing facilities shall report as costs of the nursing 
        facility only costs directly related to the operation of the 
        nursing facility.  The facility shall not include costs that are 
        separately reimbursed by residents, medical assistance, or other 
        payors.  The commissioner may grant to facilities one extension 
        of up to ten days for the filing of this report, if the 
        extension is requested by August 1.  The commissioner may 
        require facilities to submit separately, in the form and manner 
        specified by the commissioner, documentation of statistical and 
        cost information included in the report, in order to ensure 
        accuracy in modeling payment rates and to perform audit and 
        appeal review functions under this section.  Facilities shall 
        retain all records necessary to document statistical and cost 
        information provided in the report for a period of no less than 
        seven years. 
           (d) The commissioner may reject a report filed by a nursing 
        facility under this section if the commissioner determines that 
        the report has been filed in a form that is incomplete or 
        inaccurate and the information is insufficient to model accurate 
        payment rates.  If a report is rejected or is not submitted in a 
        timely manner, the commissioner shall reduce payments to a 
        nursing facility to 85 percent of amounts due until the 
        information is completely and accurately filed.  The 
        reinstatement of withheld payments shall be retroactive for no 
        more than 90 days.  A nursing facility whose report is rejected 
        shall be given notice of the rejection, the reasons for the 
        rejection, and an opportunity to correct the report prior to any 
        payment reduction.  A nursing facility that does not submit a 
        report shall be given a prior written notice of the payment 
        reduction. 
           (e) The commissioner shall use the baseline statistical and 
        cost report data to model and simulate the new nursing facility 
        reimbursement system.  Modeling shall be done using both budget 
        neutrality and additional funding assumptions. 
           (f) The data set in which statistical and cost reports are 
        compiled shall, upon request, be released by the commissioner, 
        once it has been used for statistical analyses for purposes of 
        modeling rate setting. 
           (g) The commissioner shall determine, in consultation with 
        stakeholders and experts, methods that shall be used to 
        integrate quality measures into the new nursing facility 
        reimbursement system.  For the modeling and simulations of the 
        baseline data, the quality measures shall include, at a minimum: 
           (1) direct care hours per standardized resident day; 
           (2) staff turnover; 
           (3) staff retention; 
           (4) use of pool staff; 
           (5) proportion of beds in single bed rooms; 
           (6) quality indicators from the minimum data set; and 
           (7) survey deficiencies. 
        If data analysis of the modeling and simulations indicates that 
        revisions, deletions, or additional indicators are needed, those 
        modifications shall be made prior to the initial rate year.  The 
        quality measures used to determine a component of the payment 
        rates shall be established for a rate year using data submitted 
        in the statistical and cost report from the associated reporting 
        year, and using data from other sources related to the reporting 
        year. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Presented to the governor May 10, 2004 
           Signed by the governor May 13, 2004, 12:01 p.m.