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                            CHAPTER 207-S.F.No. 1110 
                  An act relating to human services; including 
                  provisions for human services administration; life 
                  skills and self-sufficiency; childrens' programs; 
                  economic self-sufficiency; medical assistance and 
                  general assistance medicare; long-term care; community 
                  mental health and regional treatment centers; health 
                  department; child support enforcement; department of 
                  human services flexibility reforms; appropriating 
                  money; amending Minnesota Statutes 1994, sections 
                  14.03, subdivision 3; 16B.08, subdivision 5; 62A.045; 
                  62A.046; 62A.048; 62A.27; 62N.381, subdivisions 2, 3, 
                  and 4; 144.0721, by adding subdivisions; 144.0723, 
                  subdivisions 1, 2, 3, 4, and 6; 144.122; 144.226, 
                  subdivision 1; 144.56, by adding a subdivision; 
                  144.562, subdivision 2; 144.702, subdivision 2; 
                  144.801, subdivisions 3 and 5; 144.802; 144.803; 
                  144.804; 144.806; 144.807; 144.808; 144.809; 144.8091; 
                  144.8093; 144.8095; 144A.071, subdivisions 2, 3, 4a, 
                  and by adding a subdivision; 144A.073, subdivisions 1, 
                  2, 3, 4, 5, 8, and by adding a subdivision; 144A.31, 
                  subdivision 2a; 144A.33, subdivision 3; 144A.43, 
                  subdivision 3; 144A.47; 144B.01, subdivision 5; 
                  144C.01, subdivision 2; 144C.05, subdivision 1; 
                  144C.07; 144C.08; 144C.09, subdivision 2; 144C.10; 
                  145A.15; 147.01, subdivision 6; 148.921, subdivision 
                  2; 157.03; 171.07, by adding a subdivision; 198.003, 
                  subdivisions 3 and 4; 245.041; 245.4871, subdivisions 
                  12, 33a, and by adding a subdivision; 245.4873, 
                  subdivisions 2 and 6; 245.4874; 245.4875, subdivision 
                  2, and by adding a subdivision; 245.4878; 245.4882, 
                  subdivision 5; 245.4885, subdivision 2; 245.4886, by 
                  adding a subdivision; 245.492, subdivisions 2, 6, 9, 
                  and 23; 245.493, subdivision 2; 245.4932, subdivisions 
                  1, 2, 3, and 4; 245.494, subdivisions 1, 2, and 3; 
                  245.495; 245.496, subdivision 3, and by adding a 
                  subdivision; 245.825; 245A.02, by adding a 
                  subdivision; 245A.03, subdivision 2a; 245A.04, 
                  subdivisions 3, 3b, 7, and 9; 245A.06, subdivisions 2, 
                  4, and by adding a subdivision; 245A.07, subdivision 
                  3; 245A.09, by adding subdivisions; 245A.14, 
                  subdivisions 6 and 7; 246.18, subdivision 4, and by 
                  adding a subdivision; 246.23, subdivision 2; 246.56, 
                  by adding a subdivision; 252.27, subdivisions 1, 1a, 
                  2a, and by adding subdivisions; 252.275, subdivisions 
                  3, 4, and 8; 252.292, subdivision 4; 252.46, 
                  subdivisions 1, 3, 6, 17, and by adding subdivisions; 
                  253B.091; 254A.17, subdivision 3; 254B.02, subdivision 
                  1; 254B.05, subdivisions 1 and 4; 256.014, subdivision 
                  1; 256.015, subdivisions 1, 2, and 7; 256.025, 
                  subdivisions 1, 2, and 3; 256.026; 256.034, 
                  subdivision 1; 256.045, subdivisions 3, 4, 4a, and 5; 
                  256.12, subdivision 14; 256.73, subdivisions 2 and 3a; 
                  256.736, subdivisions 3 and 13; 256.74, subdivision 1, 
                  and by adding a subdivision; 256.76, subdivision 1; 
                  256.8711; 256.9353, subdivision 8; 256.9365; 256.9657, 
                  subdivisions 3 and 4; 256.9685, subdivision 1b, and by 
                  adding subdivisions; 256.969, subdivisions 1, 2b, 9, 
                  10, 16, and by adding subdivisions; 256.975, by adding 
                  a subdivision; 256.98, subdivisions 1 and 8; 256.983, 
                  subdivision 4; 256B.042, subdivision 2; 256B.055, 
                  subdivision 12; 256B.056, subdivision 4, and by adding 
                  a subdivision; 256B.0575; 256B.059, subdivisions 1, 3, 
                  and 5; 256B.0595, subdivisions 1, 2, 3, and 4; 
                  256B.06, subdivision 4; 256B.0625, subdivisions 5, 8, 
                  8a, 13, 13a, 17, 18, 19a, 37, and by adding 
                  subdivisions; 256B.0627, subdivisions 1, 2, 4, and 5; 
                  256B.0628, subdivision 2, and by adding a subdivision; 
                  256B.0641, subdivision 1; 256B.0911, subdivisions 2, 
                  2a, 3, 4, and 7; 256B.0913, subdivisions 4, 5, 8, 12, 
                  14, and by adding subdivisions; 256B.0915, 
                  subdivisions 2, 3, 5, and by adding subdivisions; 
                  256B.092, subdivision 4, and by adding a subdivision; 
                  256B.093, subdivisions 1, 2, 3, and by adding a 
                  subdivision; 256B.15, subdivisions 1a, 2, and by 
                  adding a subdivision; 256B.19, subdivisions 1b, 1c, 
                  and 1d; 256B.27, subdivision 2a; 256B.431, 
                  subdivisions 2b, 2j, 15, 17, 23, and by adding a 
                  subdivision; 256B.432, subdivisions 1, 2, 3, 5, and 6; 
                  256B.49, subdivision 1, and by adding subdivisions; 
                  256B.501, subdivisions 1, 3, 3c, 3g, 8, and by adding 
                  subdivisions; 256B.69, subdivisions 4, 5, 6, 9, and by 
                  adding subdivisions; 256D.02, subdivision 5; 256D.03, 
                  subdivisions 3, 3b, and 4; 256D.05, subdivision 7; 
                  256D.36, subdivision 1; 256D.385; 256D.405, 
                  subdivision 3; 256D.425, subdivision 1, and by adding 
                  a subdivision; 256D.435, subdivisions 1, 3, 4, 5, 6, 
                  and by adding a subdivision; 256D.44, subdivisions 1, 
                  2, 3, 4, 5, and 6; 256D.45, subdivision 1; 256D.46, 
                  subdivisions 1 and 2; 256D.48, subdivision 1; 256E.08, 
                  subdivision 6; 256E.115; 256F.01; 256F.02; 256F.03, 
                  subdivision 5, and by adding a subdivision; 256F.04, 
                  subdivisions 1 and 2; 256F.05, subdivisions 2, 3, 4, 
                  5, 7, 8, and by adding a subdivision; 256F.06, 
                  subdivisions 1, 2, and 4; 256F.09; 256H.01, 
                  subdivisions 9 and 12; 256H.02; 256H.03, subdivisions 
                  1, 2a, 4, 6, and by adding a subdivision; 256H.05, 
                  subdivision 6; 256H.08; 256H.11, subdivision 1; 
                  256H.12, subdivisions 1, 3, and by adding a 
                  subdivision; 256H.15, subdivision 1; 256H.18; 256H.20, 
                  subdivision 3a; 256I.03, subdivision 5, and by adding 
                  a subdivision; 256I.04, subdivisions 2b and 3; 
                  256I.05, subdivisions 1, 1a, and 5; 256I.06, 
                  subdivisions 2 and 6; 257.3571, subdivision 1; 
                  257.3572; 257.3577, subdivision 1; 257.55, subdivision 
                  1; 257.57, subdivision 2; 257.62, subdivisions 1, 5, 
                  and 6; 257.64, subdivision 3; 257.69, subdivisions 1 
                  and 2; 393.07, subdivisions 5 and 10; 393.12; 447.32, 
                  subdivision 5; 501B.89, subdivision 1, and by adding a 
                  subdivision; 518.171, subdivisions 1, 3, 4, 5, 7, and 
                  8; 518.611, subdivisions 2 and 4; 518.613, subdivision 
                  7; 518.615, subdivision 3; 524.6-207; 550.37, 
                  subdivision 14; and Laws 1993, First Special Session 
                  chapter 1, article 7, section 51, subdivision 5; and 
                  article 8, section 30, subdivision 2; proposing coding 
                  for new law in Minnesota Statutes, chapters 144; 145; 
                  157; 214; 245; 245A; 256; and 256B; proposing coding 
                  for new law as Minnesota Statutes, chapters 144D; and 
                  144E; repealing Minnesota Statutes 1994, sections 
                  38.161; 38.162; 62C.141; 62C.143; 62D.106; 62E.04, 
                  subdivisions 9 and 10; 144.8097; 144A.31, subdivisions 
                  2b, 4, 5, 6, and 7; 157.01; 157.02; 157.031; 157.04; 
                  157.045; 157.05; 157.08; 157.12; 157.13; 157.14; 
                  245.492, subdivision 20; 245.825, subdivision 2; 
                  245.98, subdivision 3; 252.275, subdivisions 4a and 
                  10; 256.851; 256D.35, subdivisions 14 and 19; 256D.36, 
                  subdivision 1a; 256D.37; 256D.425, subdivision 3; 
                  256D.435, subdivisions 2, 7, 8, 9, and 10; 256D.44, 
                  subdivision 7; 256E.06, subdivisions 12 and 13; 
                  256F.05, subdivisions 2a and 4a; 256F.06, subdivision 
                  3; 256F.09, subdivision 4; and 256H.03, subdivisions 2 
                  and 5. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1
                                 APPROPRIATIONS 
        Section 1.  [HEALTH AND HUMAN SERVICES APPROPRIATIONS.] 
           The sums shown in the columns marked "APPROPRIATIONS" are 
        appropriated from the general fund, or any other fund named, to 
        the agencies and for the purposes specified in the following 
        sections of this article, to be available for the fiscal years 
        indicated for each purpose.  The figures "1996" and "1997" where 
        used in this article, mean that the appropriation or 
        appropriations listed under them are available for the fiscal 
        year ending June 30, 1996, or June 30, 1997, respectively.  
        Where a dollar amount appears in parentheses, it means a 
        reduction of an appropriation.  
                                SUMMARY BY FUND
        APPROPRIATIONS                                      BIENNIAL
                                  1996          1997           TOTAL
        General          $2,402,943,000 $2,598,629,000 $5,001,572,000
        Local Government
        Trust Fund           50,499,000        -0-         50,499,000 
        State Government
        Special Revenue      24,853,000     24,830,000     49,683,000
        Metropolitan Landfill 
        Contingency Action Fund 193,000        193,000        386,000
        Trunk Highway         1,513,000      1,513,000      3,026,000
        Special Revenue           8,000          8,000         16,000
        TOTAL             2,480,009,000  2,625,173,000  5,105,182,000
                                                   APPROPRIATIONS 
                                               Available for the Year 
                                                   Ending June 30 
                                                  1996         1997 
        Sec. 2.  COMMISSIONER OF 
        HUMAN SERVICES 
        Subdivision 1.  Total 
        Appropriation                      2,395,537,000  2,540,250,000
                      Summary by Fund
        General           2,345,038,000 2,540,250,000
        Local Government
        Trust Fund           50,499,000         -0-  
        Subd. 2.  Finance and Management
        General
            20,126,000     21,396,000
        [RECEIPTS FOR SYSTEMS PROJECTS.] 
        Appropriations and federal receipts for 
        information system projects for MAXIS, 
        electronic benefit system, social 
        services information system, child 
        support enforcement, and Minnesota 
        medicaid information system (MMIS II) 
        must be deposited in the state system 
        account authorized in Minnesota 
        Statutes, section 256.014.  Money 
        appropriated for computer projects 
        approved by the information policy 
        office, funded by the legislature, and 
        approved by the commissioner of finance 
        may be transferred from one project to 
        another and from development to 
        operations as the commissioner of human 
        services considers necessary.  Any 
        unexpended balance in the appropriation 
        for these projects does not cancel but 
        is available for ongoing development 
        and operations. 
        [COMMUNICATION COSTS.] The commissioner 
        shall continue to operate the 
        department of human services 
        communication systems account 
        established in Laws 1993, First Special 
        Session chapter 1, article 1, section 
        2, subdivision 2, to manage shared 
        communication costs necessary for the 
        operation of the programs the 
        commissioner supervises.  The 
        commissioner may distribute the costs 
        of operating and maintaining 
        communication systems to participants 
        in a manner that reflects actual system 
        usage.  Costs may include acquisition, 
        licensing, insurance, maintenance, 
        repair, staff time, and other direct 
        costs as determined by the 
        commissioner.  The commissioner may 
        accept on behalf of the state any gift, 
        bequest, devise, or personal property 
        of any kind or money tendered to the 
        state for any lawful purpose pertaining 
        to the communication activities of the 
        department.  Any money so received must 
        be deposited in the department of human 
        services communication systems 
        account.  Money collected by the 
        commissioner for the use of 
        communication systems must be deposited 
        in the state communication systems 
        account and is appropriated to the 
        commissioner for purposes of this 
        section. 
        [ISSUANCE OPERATIONS CENTER.] Payments 
        to the commissioner from other 
        governmental units and private 
        enterprises for (1) services performed 
        by the issuance operations center or (2)
        reports generated by the payment and 
        eligibility systems must be deposited 
        in the state systems account authorized 
        in Minnesota Statutes, section 
        256.014.  These payments are 
        appropriated to the commissioner for 
        the operation of the issuance center or 
        system, in accordance with Minnesota 
        Statutes, section 256.014. 
        [SOCIAL SERVICES INFORMATION PROJECT.] 
        If the commissioner proceeds with the 
        development and implementation of the 
        social services information system 
        (SSIS), the commissioner shall report 
        annually by February 1 on the status of 
        the project to the chairs of the house 
        health and human services committee and 
        of the senate health care and family 
        services committees.  This report must 
        include an explanation of the linkages 
        between the SSIS and the MAXIS and MMIS 
        computer systems.  The SSIS project 
        must not result in an increase in the 
        permanent staff of the department of 
        human services. 
        [PRINTING COSTS.] In order to reduce 
        printing costs, the commissioner shall 
        solicit bids for printing from inmate 
        work programs operated by the 
        department of corrections. 
        Subd. 3.  Life Skills 
        Self-Sufficiency 
           114,755,000    120,918,000
                      Summary by Fund
        General              64,256,000   120,918,000
        Local Government
        Trust                50,499,000           -0- 
        The amounts that may be spent from this 
        appropriation for each purpose are as 
        follows: 
        (a) Semi-Independent Living 
        Services (SILS) Grants              
             4,766,000      4,819,000
        (b) Chemical Dependency
        Consolidated Treatment
            41,230,000     45,080,000
        (c) Deaf and Hard of Hearing 
        Services Grants
               501,000        501,000
        (d) Community Social Services Grants
            51,476,000     52,902,000
                      Summary by Fund
        General                 977,000    52,902,000
        Local Government
        Trust                50,499,000           -0-
        [CSSA APPROPRIATION.] The increased 
        appropriation available in fiscal year 
        1996 and thereafter must be used to 
        increase each county's aid 
        proportionately over the aid received 
        in calendar year 1994. 
        (e) Consumer Support 
               125,000      1,832,000
        (f) Developmental Disabilities
        Family Support Grants
             1,599,000      1,074,000
        (g) Aging Ombudsman          
               166,000        166,000
        (h) Aging Grants
             4,103,000      4,103,000
        (i) American Indian Chemical 
        Dependency Grants and Chemical 
        Dependency Special Grants
             2,265,000      2,265,000
        (j) Chemical Dependency
        Consolidated Treatment - Nonentitled
             2,100,000      2,100,000
        (k) Administration and Other Grants
             6,424,000      6,076,000 
        [CROSS-CULTURAL TRAINING.] Of this 
        appropriation, $50,000 each year is for 
        cross-cultural training for deaf and 
        hard of hearing children and their 
        families and is available only upon the 
        receipt of $25,000 each year in 
        nonstate matching funds. 
        [INDIAN ELDERS.] The Minnesota board on 
        aging shall provide staff out of the 
        available appropriation to support the 
        Indian elders coordinator position. 
        [USE OF MENTAL HEALTH COLLABORATIVE 
        FUNDS.] Once a children's mental health 
        collaborative has been formed, the 
        commissioner may provide and a 
        collaborative may receive funding for 
        two years for planning and 
        implementation purposes.  This does not 
        preclude existing collaboratives from 
        getting additional start-up funds. 
        [CHEMICAL DEPENDENCY RATE FREEZE.] 
        Beginning January 1, 1996, rates for 
        chemical dependency treatment services 
        provided according to Minnesota 
        Statutes, chapter 254B, shall be the 
        same as those rates negotiated 
        according to Minnesota Statutes, 
        section 254B.03, subdivision 1, 
        paragraph (b), and effective January 1, 
        1995.  Rates for vendors under 
        Minnesota Statutes, chapter 254B, who 
        are enrolled after January 1, 1995, 
        shall not be higher than the statewide 
        average rate for vendors licensed at 
        the same level of care.  Counties and 
        providers shall not negotiate an 
        increase in rates between January 1, 
        1995, and December 31, 1997. 
        [SILS TRANSFER.] (a) For the purpose of 
        transferring certain persons from the 
        semi-independent living services (SILS) 
        program to the home and community-based 
        waivered services program for persons 
        with mental retardation or related 
        conditions, the amount of funds 
        transferred between the SILS account or 
        the state community social services 
        account and the state medical 
        assistance account shall be based on 
        each county's participation in 
        transferring persons to the waivered 
        services program.  No person for whom 
        these funds are transferred shall be 
        required to obtain a new living 
        arrangement, notwithstanding Minnesota 
        Statutes, section 252.28, subdivision 
        3, paragraph (4), and Minnesota Rules, 
        parts 9525.1800, subpart 25a, and 
        9525.1869, subpart 6.  When supported 
        living services are provided to persons 
        for whom these funds are transferred, 
        the commissioner may substitute the 
        licensing standards of Minnesota Rules, 
        parts 9525.0500 to 9525.0660, for parts 
        9525.2000 to 9525.2140, if the services 
        remain nonresidential as defined in 
        Minnesota Statutes, section 245A.02, 
        subdivision 10.  For the purposes of 
        Minnesota Statutes, chapter 256G, when 
        a service is provided under these 
        substituted licensing standards, the 
        status of residence of the recipient of 
        that service shall continue to be 
        considered excluded time.  
        (b) Contingent upon continuing federal 
        approval of expanding eligibility for 
        home and community-based services for 
        persons with mental retardation or 
        related conditions, the commissioner 
        shall reduce the state SILS payments to 
        each county by the total medical 
        assistance expenditures for 
        nonresidential services attributable to 
        former SILS recipients transferred by 
        the county to the home and 
        community-based services program for 
        persons with mental retardation or 
        related conditions.  Of the reduced 
        SILS payments determined above, the 
        commissioner shall transfer to the 
        state medical assistance account an 
        amount equal to the nonfederal share of 
        the nonresidential services under the 
        home and community-based services for 
        persons with mental retardation or 
        related conditions.  Of the remaining 
        reduced SILS payments, 80 percent shall 
        be returned to the SILS grant program 
        to provide additional SILS services and 
        20 percent shall be transferred to the 
        general fund. 
        [NEW ICF/MR.] For the fiscal year 
        ending June 30, 1996, a newly 
        constructed or newly established 
        intermediate care facility for persons 
        with mental retardation that is 
        developed and financed during that 
        period shall not be subject to the 
        equity requirements in Minnesota 
        Statutes, section 256B.501, subdivision 
        11, paragraph (d), or to Minnesota 
        Rules, part 9553.0060, subpart 3, item 
        F, provided that the provider's 
        interest rate does not exceed the 
        interest rate available through state 
        agency tax exempt financing. 
        [ICF/MR RECEIVERSHIP.] For the fiscal 
        year ending June 30, 1996, if a 
        facility which is in receivership under 
        Minnesota Statutes, section 245A.12 or 
        245A.13, is sold to an unrelated 
        organization:  (a) the facility shall 
        be considered a newly established 
        facility for rate setting purposes, 
        notwithstanding any provisions to the 
        contrary in Minnesota Statutes, section 
        256B.501, subdivision 11; and (b) the 
        facility's historical basis for the 
        physical plant, land, and land 
        improvements for each facility must not 
        exceed the prior owner's aggregate 
        historical basis for these same assets 
        for each facility.  The allocation of 
        the purchase price between land, land 
        improvements, and physical plant shall 
        be based on the real estate appraisal 
        using the depreciated replacement cost 
        method. 
        [GRH TO CSSA TRANSFER.] For the fiscal 
        year ending June 30, 1995, the 
        commissioner may transfer funds from 
        the group residential housing (GRH) 
        account to county community social 
        services act (CSSA) grants to provide 
        continuous funding for persons no 
        longer eligible for GRH payments for 
        the following reasons:  they reside in 
        a setting with only a semi-independent 
        living services license; or they reside 
        in family foster care settings and have 
        become ineligible for GRH difficulty of 
        care payments due to receipt of mental 
        retardation/related conditions waivered 
        services.  The amount to be transferred 
        must not exceed the amount of GRH 
        payments for actual residents in the 
        affected GRH settings during the fiscal 
        year 1995.  The amount transferred is 
        to be added to the affected county's 
        CSSA base.  This paragraph is effective 
        the day following final enactment. 
        [COUNTY MAINTENANCE-MEALS-AGING.] The 
        supplemental funding for nutrition 
        programs serving counties where 
        congregate and home-delivered meals 
        were locally financed prior to 
        participation in the nutrition program 
        of the Older Americans Act shall be 
        awarded at no less than the same levels 
        as in fiscal year 1995. 
        Subd. 4.  Children's Program          19,860,000     21,453,000
        The amounts that may be spent from this 
        appropriation for each purpose are as 
        follows: 
        (a) Children's Trust Fund Grants
               247,000        247,000
        (b) Families With Children
        Services Grants and Administration
             1,718,000      1,710,000
        (c) Family Service Collaborative Grants
             1,000,000      1,500,000
        (d) Family Preservation, Family Support,
        and Child Protection Grants
             8,573,000      8,573,000
        (e) Subsidized Adoption Grants
             5,587,000      6,688,000
        (f) Other Families with Children
        Services Grants
             2,735,000      2,735,000
        [FAMILY SERVICES COLLABORATIVE.] Plans 
        for the expenditure of funds for family 
        services collaboratives must be 
        approved by the children's cabinet 
        according to criteria in Minnesota 
        Statutes, section 121.8355.  Money 
        appropriated for these purposes may be 
        expended in either year of the 
        biennium.  Money appropriated for 
        family services collaboratives is also 
        available for start-up funds under 
        Minnesota Statutes, section 245.492, 
        subdivision 19, for children's mental 
        health collaboratives. 
        [HOME CHOICE PROGRAM.] Of this 
        appropriation, $75,000 each year must 
        be used as a grant to the metropolitan 
        council to support the housing and 
        related counseling component of the 
        home choice program. 
        [FOSTER CARE.] Foster care, as defined 
        in Minnesota Statutes, section 260.015, 
        subdivision 7, is not a community 
        social service as defined in Minnesota 
        Statutes, section 256E.03, subdivision 
        2, paragraph (a).  This paragraph is 
        effective the day following final 
        enactment. 
        [NEW CHANCE.] Of this appropriation, 
        $100,000 each year is for a grant to 
        the New Chance demonstration project 
        that provides comprehensive services to 
        young AFDC recipients who became 
        pregnant as teenagers and dropped out 
        of high school.  The commissioner shall 
        provide an annual report on the 
        progress of the demonstration project, 
        including specific data on participant 
        outcomes in comparison to a control 
        group that received no services.  The 
        commissioner shall also include 
        recommendations on whether strategies 
        or methods that have proven successful 
        in the demonstration project should be 
        incorporated into the STRIDE employment 
        program for AFDC recipients. 
        [HIPPY CARRY FORWARD.] $50,000 in 
        unexpended money appropriated in fiscal 
        year 1995 for the Home Instruction 
        Program for Preschool Youngsters 
        (HIPPY) in Laws 1994, chapter 636, 
        article 1, section 11, does not cancel 
        but is available for the same purposes 
        for fiscal year 1996. 
        [COMMUNITY COLLABORATIVE MATCHING 
        GRANT.] Of the funds appropriated for 
        family services collaboratives, $75,000 
        in fiscal year 1996 shall be used for 
        the commissioner of human services to 
        provide a matching grant for community 
        collaborative projects for children and 
        youth developed by a regional 
        organization established under 
        Minnesota Statutes, section 116N.08, to 
        receive rural development challenge 
        grants.  The regional organization must 
        include a broad cross-section of public 
        and private sector community 
        representatives to develop programs, 
        services or facilities to address 
        specific community needs of children 
        and youth.  The regional organization 
        must also provide a two-to-one match of 
        nonstate dollars for this grant. 
        [INDIAN CHILD WELFARE GRANTS.] $100,000 
        is appropriated from the general fund 
        to the commissioner of human services 
        for the purposes of providing 
        compliance grants to an Indian child 
        welfare defense corporation, pursuant 
        to Minnesota Statutes, section 
        257.3571, subdivision 2a, to be 
        available until June 30, 1997. 
        Subd. 5.  Economic Self-Sufficiency
        General
           317,950,000    321,696,000 
        The amounts that may be spent from this 
        appropriation for each purpose are as 
        follows: 
        (a) STRIDE Grants           
             8,939,000      8,211,000
        (b) AFDC Grants              
           143,568,000    146,772,000
        (c) General Assistance Grants
            45,707,000     45,009,000
        (d) Work Readiness Grants   
             1,573,000         -0-
        (e) Minnesota Supplemental Aid
            22,493,000     25,757,000
        (f) Minnesota Family Investment
        Plan (MFIP) Grants
            21,307,000     15,150,000
        (g) Child-Care Fund Entitlement Grants
            17,208,000     19,780,000
        (h) Child Support Enforcement Grants
             9,785,000      9,785,000
        (i) Child Care Fund - Nonentitled
            15,526,000     19,751,000
        (j) Administration and Other Grants
            31,844,000     31,481,000
        [FOOD STAMP EMPLOYMENT AND TRAINING.] 
        Federal food stamp employment and 
        training funds are appropriated to the 
        commissioner to reimburse counties for 
        food stamp employment and training 
        expenditures. 
        [STATE TAKEOVER ACCELERATION.] 
        Notwithstanding Minnesota Statutes, 
        section 256.025, $800,000 of the funds 
        appropriated for fiscal year 1996 under 
        Minnesota Statutes, section 256.026, 
        shall be used to reimburse the county 
        share of project STRIDE case management 
        and work readiness employment and 
        training services for the first six 
        months of calendar year 1995. 
        [CASH BENEFITS IN ADVANCE.] The 
        commissioner, with the advance approval 
        of the commissioner of finance, is 
        authorized to issue cash assistance 
        benefits up to two days before the 
        first day of each month, including two 
        days before the start of each state 
        fiscal year.  Of the money appropriated 
        for the aid to families with dependent 
        children program for fiscal year 1996, 
        $12,000,000 is available in fiscal year 
        1995.  If that amount is insufficient 
        for the costs incurred, an additional 
        amount of the fiscal year 1996 
        appropriation as needed may be 
        transferred with the advance approval 
        of the commissioner of finance.  This 
        paragraph is effective the day 
        following final enactment. 
        [MFIP TRANSFER.] Unexpended money 
        appropriated for the Minnesota family 
        investment plan in fiscal year 1996 
        does not cancel but is available for 
        those purposes in fiscal year 1997. 
        [PATERNITY ESTABLISHMENT.] Federal 
        matching funds from the hospital 
        acknowledgment reimbursement program 
        may be retained by the commissioner to 
        establish paternity in child support 
        cases.  These federal matching funds 
        are appropriated to the commissioner 
        and must be used for education and 
        public information concerning paternity 
        establishment and the prevention of 
        nonmarital births. 
        [CHILD SUPPORT INCENTIVES.] The 
        commissioner may transfer money 
        appropriated for child support 
        enforcement county performance 
        incentives for fiscal years 1996 and 
        1997 between county performance 
        incentive accounts.  Unexpended money 
        in fiscal year 1996 does not cancel but 
        is available for county performance 
        incentives in fiscal year 1997. 
        [MINNESOTA PARENTS' FAIR SHARE.] 
        Unexpended money appropriated for 
        Minnesota parents' fair share in fiscal 
        year 1996 does not cancel but is 
        available to the commissioner for this 
        program in fiscal year 1997. 
        [GA/AFDC TO SSI CONVERSION.] The 
        commissioner may contract with a 
        private entity to convert general 
        assistance and AFDC recipients to the 
        federal Supplemental Security Income 
        program.  The contract shall pay only 
        for cases successfully converted, at a 
        rate to be negotiated by the 
        commissioner. 
        [GA STANDARD.] The commissioner shall 
        set the monthly standard of assistance 
        for general assistance units consisting 
        of an adult recipient who is childless 
        and unmarried or living apart from his 
        or her parents or a legal guardian at 
        $203. 
        [AFDC SUPPLEMENTARY GRANTS.] Of the 
        appropriation for aid to families with 
        dependent children, the commissioner 
        shall provide supplementary grants not 
        to exceed $200,000 a year for aid to 
        families with dependent children.  The 
        commissioner shall include the 
        following costs in determining the 
        amount of the supplementary grants:  
        major home repairs, repair of major 
        home appliances, utility recaps, 
        supplementary dietary needs not covered 
        by medical assistance, and replacements 
        of furnishings and essential major 
        appliances. 
        [WORK READINESS ELIMINATION.] 
        Notwithstanding Minnesota Statutes, 
        section 256.025, $1,573,000 of the 
        funds appropriated for fiscal year 1996 
        under Minnesota Statutes, section 
        256.026, must be used to reimburse the 
        county share of work readiness grants 
        for the first six months of calendar 
        year 1995. 
        [FEDERAL WELFARE REFORM.] 
        Notwithstanding the provisions of 
        Minnesota Statutes, section 256.011 or 
        any other law to the contrary, the 
        commissioner of human services may not 
        implement changes in human services 
        block grants and entitlement programs 
        mandated by the 104th Congress, without 
        authorization by the Minnesota 
        Legislature. 
        Subd. 6.  Health Care 
        General
          1,668,242,000  1,794,408,000 
        The amounts that may be spent from this 
        appropriation for each purpose are as 
        follows: 
        (a) Group Residential Housing Grants
            48,284,000     54,776,000
        (b) MA Long-Term Care Facilities
           540,531,000    556,857,000
        (c) MA Long-Term Care Waivers
        and Home Care
           202,821,000    217,781,000
        (d) MA Managed Care and 
        Fee-for-Service
           581,671,000    659,554,000
        (e) General Assistance Medical Care
           224,007,000    230,400,000
        (f) Alternative Care         
            37,251,000     41,053,000
        (g) Medicaid Management 
        Information System
            10,657,000     10,657,000
        (h) Administration and Other Grants
            23,020,000     23,330,000
        [PREADMISSION SCREENING TRANSFER.] 
        Effective the day following final 
        enactment, up to $40,000 of the 
        appropriation for preadmission 
        screening and alternative care for 
        fiscal year 1995 may be transferred to 
        the health care administration account 
        to pay the state's share of county 
        claims for conducting nursing home 
        assessments for persons with mental 
        illness or mental retardation as 
        required by Public Law Number 100-203. 
        [ICF/MR AND NURSING FACILITY 
        INFLATION.] The commissioner of human 
        services shall grant inflation 
        adjustments for nursing facilities with 
        rate years beginning during the 
        biennium according to Minnesota 
        Statutes, section 256B.431, and shall 
        grant inflation adjustments for 
        intermediate care facilities for 
        persons with mental retardation or 
        related conditions with rate years 
        beginning during the biennium according 
        to Minnesota Statutes, section 256B.501.
        [ICF/MR RATE EXEMPTIONS.] For the rate 
        year beginning October 1, 1995, the 
        commissioner shall exempt ICF/MR 
        facilities from reductions to the 
        payment rates under Minnesota Statutes, 
        section 256B.501, subdivision 5b, if 
        the facility:  (1) has had a settle-up 
        payment rate established in the 
        reporting year preceding the rate year 
        for a one-time rate adjustment; (2) is 
        a newly established facility; (3) is an 
        A to B licensure conversion project 
        under the reimbursement rule; (4) has a 
        payment rate subject to a community 
        conversion project under Minnesota 
        Statutes, section 252.292; or (5) has a 
        payment rate established under 
        Minnesota Statutes, section 245A.12 or 
        245A.13.  The commissioner shall 
        consider these exceptions in the 
        promulgation of permanent rules for 
        payment rates to be effective on or 
        after October 1, 1996. 
        [MINNESOTACARE PHARMACY.] 
        Notwithstanding the amendments in this 
        act to Minnesota Statutes, section 
        256B.0625, subdivision 13, the pharmacy 
        dispensing fee in the MinnesotaCare 
        program shall be $4.10. 
        [ALTERNATIVE CARE TRANSFER.] Any money 
        allocated to the alternative care 
        program that is not spent for the 
        purposes indicated does not cancel but 
        shall be transferred to the medical 
        assistance account. 
        [RATABLE REDUCTION.] For services 
        rendered on or after July 1, 1995, the 
        commissioner shall ratably reduce 
        general assistance medical care 
        payments for all services except 
        pharmacy services by 4.0 percent. 
        [INFLATIONARY FORECAST ERRORS.] The 
        commissioner shall adjust the medical 
        assistance hospital cost index under 
        Minnesota Statutes, section 256.969, 
        subdivision 1, for admissions occurring 
        on or after July 1, 1995, to recover 
        payments under both medical assistance 
        and general assistance medical care 
        made to hospitals in prior years in 
        which projected inflation exceeded 
        actual inflation.  The adjustment shall 
        be determined by the commissioner and 
        established at a level sufficient to 
        recover the difference between 
        projected inflation and actual 
        inflation for rate years 1990 to 1992 
        by June 30, 1997. 
        [PREADMISSION SCREENING RATE.] The 
        preadmission screening payment to all 
        counties shall continue at the payment 
        amount in effect for fiscal year 1995. 
        [PAS/AC APPROPRIATION.] The 
        commissioner may expend the money 
        appropriated for preadmission screening 
        and the alternative care program for 
        these purposes in either year of the 
        biennium. 
        [SAIL TRANSFER.] Appropriations for 
        administrative costs associated with 
        the senior's agenda for independent 
        living (SAIL) program may be 
        transferred to SAIL grants as the 
        commissioner determines necessary to 
        facilitate the delivery of the program. 
        [STUDY OF OUTPATIENT RATES.] The 
        commissioner shall conduct a review of 
        payment rates and methodologies for 
        medical services that are provided on 
        an outpatient basis.  The commissioner 
        may convene a review panel that is 
        comprised of agency staff and staff 
        from hospitals and physician clinics to 
        assist in the review.  The commissioner 
        shall submit a report on the results of 
        the review, along with any 
        recommendations for changes to the 
        payment system for outpatient services, 
        to the governor and the legislature by 
        January 15, 1996. 
        [ADDITIONAL WAIVERED SERVICES.] (a) The 
        commissioner shall seek the necessary 
        amendments to home and community-based 
        waiver programs to provide services to 
        persons who, due to the inability to 
        direct their own care, are no longer 
        eligible for personal care assistant 
        services but are eligible for the 
        community alternatives for disabled 
        individuals (CADI), community 
        alternative care (CAC), mental 
        retardation or related conditions 
        (MR/RC), traumatic brain injury (TBI), 
        or elderly waivers.  These recipients 
        who transfer from personal care 
        services to home and community-based 
        waiver programs shall not be denied 
        personal care services until waivered 
        services are available.  
        (b) Notwithstanding Minnesota Rules, 
        parts 9525.1800 to 9525.1930 and 
        Minnesota Statutes, section 256B.092, 
        subdivision 4, resources for home and 
        community-based services for persons 
        with mental retardation or related 
        conditions, made available for the 
        purpose of providing alternative 
        services for persons affected by the 
        PCA restructuring, shall be allocated 
        based on criteria that considers the 
        assessed needs and home care 
        authorization levels of persons 
        affected by the restructuring and 
        provides preference to these persons 
        during the allocation process. 
        [CHILDREN INELIGIBLE FOR TEFRA.] When a 
        child is determined ineligible for 
        TEFRA or a child or adult for PCA 
        services, the commissioner shall 
        provide the adult or the child's parent 
        or guardian with information on how to 
        apply for alternative services from the 
        county, the local mental health 
        collaborative, the public health 
        agency, the departments of health and 
        human services, and the Minnesota 
        comprehensive health association. 
        [ALLOCATION OF WAIVERED SLOTS.] In 
        allocating waiver slots to counties 
        under Minnesota Statutes, sections 
        256B.092 and 256B.501, the commissioner 
        shall ensure that at least as many 
        individuals are served from county 
        waiting lists as the net census 
        reduction from regional treatment 
        centers.  Any unexpended appropriations 
        from the regional treatment center 
        supplements for state enhanced waiver 
        slots shall be transferred into the 
        regional treatment center salary 
        account. 
        [CONSUMER SATISFACTION SURVEY.] Any 
        federal matching money received through 
        the medical assistance program for the 
        consumer satisfaction survey is 
        appropriated to the commissioner for 
        this purpose.  The commissioner may 
        expend the federal money received for 
        the consumer satisfaction survey in 
        either year of the biennium. 
        [NURSING HOME GEOGRAPHIC GROUPS.] The 
        commissioner shall report to the chairs 
        of the senate health care and family 
        services finance division and the house 
        health and human services finance 
        division by January 15, 1996, with 
        recommendations for changes in the 
        current geographic grouping of nursing 
        homes.  The recommendations shall take 
        into account changes in the federal 
        definition of standard metropolitan 
        statistical areas and inequities that 
        result from the current groupings. 
        [LONG-TERM CARE OPTIONS PROJECT.] 
        Federal funds received by the 
        commissioner of human services for the 
        long-term care options project may be 
        transferred among object of expenditure 
        classifications as the commissioner 
        determines necessary for the 
        implementation of the project. 
        [MORATORIUM EXCEPTIONS.] Of this 
        appropriation, $200,000 each year is 
        for the medical assistance costs of 
        moratorium exceptions approved by the 
        commissioner of health under Minnesota 
        Statutes, section 144A.073. 
        [SURCHARGE COMPLIANCE.] In the event 
        that federal financial participation in 
        the Minnesota medical assistance 
        program is reduced as a result of a 
        determination that Minnesota is out of 
        compliance with Public Law Number 
        102-234 or its implementing regulations 
        or with any other federal law designed 
        to restrict provider tax programs or 
        intergovernmental transfers, the 
        commissioner shall appeal the 
        determination to the fullest extent 
        permitted by law and may ratably reduce 
        all medical assistance and general 
        assistance medical care payments to 
        providers other than the state of 
        Minnesota in order to eliminate any 
        shortfall resulting from the reduced 
        federal funding.  Any amount later 
        recovered through the appeals process 
        shall be used to reimburse providers 
        for any ratable reductions taken. 
        [MANAGED CARE.] The nonfederal share of 
        the Prepaid Medical Assistance Program 
        funds, which have been appropriated to 
        fund county managed care advocacy and 
        enrollment operating costs, shall be 
        disbursed as grants using either a 
        reimbursement or block grant mechanism. 
        [PMAP CARRYOVER.] Unexpended money 
        appropriated for fiscal year 1996 for 
        the nonfederal share of the prepaid 
        medical assistance program to fund 
        county managed care advocacy and 
        enrollment operating costs does not 
        cancel but is available in fiscal year 
        1997. 
        [PREPAID RATE DISCOUNTS.] 
        Notwithstanding section 12 of this 
        article, rates for rate years through 
        December 31, 1998, for the prepaid 
        medical assistance and prepaid general 
        assistance medical care programs shall, 
        in the aggregate for each program in 
        expansion counties after July 1, 1995, 
        include an effective ten percent 
        discount for individuals under 65, and 
        an effective five percent discount for 
        persons age 65 and older, compared with 
        expected fee-for-service costs for the 
        same population. 
        [COMPULSIVE GAMBLING.] (a) Of the 1995 
        appropriation for the compulsive 
        gambling program under Laws 1994, 
        chapter 633, article 8, section 8, 
        subdivision 1, up to $175,000 does not 
        cancel but shall remain available for 
        the development and implementation of 
        outcome evaluation, treatment 
        effectiveness research in the biennium 
        ending June 30, 1997. 
        (b) Only contributions to the 
        compulsive gambling program may be 
        carried forward between fiscal years or 
        from biennium to biennium. 
        (c) Paragraphs (a) and (b) are 
        effective the day following final 
        enactment. 
        Subd. 7.  Community Mental Health
        and State-Operated Services
        General 
           254,604,000    260,379,000
        The amounts that may be spent from this 
        appropriation for each purpose are as 
        follows: 
        (a) Mental Health Grants - Children
             7,097,000     12,536,000
        [MENTAL HEALTH COLLABORATIVE.] Mental 
        health grants available for children 
        formerly served under the TEFRA program 
        shall be distributed and administered 
        by a children's mental health 
        collaborative where a collaborative 
        exists. 
        (b) Mental Health Grants - Adults
            38,222,000     40,918,000
        (c) Residential Treatment
        Center Facilities
           194,921,000    192,265,000
        (d) Developmental Disability
        and Mentally Ill (DD and MI)
        State-Operated Community Services (SOCS)
            13,001,000     13,297,000
        (e) Administration and Other Grants
             1,363,000      1,363,000 
        [MENTAL HEALTH GRANTS.] (a) Mental 
        health grants appropriated for the 
        biennium as part of the TEFRA and PCA 
        restructuring proposal shall be 
        distributed to children's mental health 
        collaboratives, or where there is no 
        collaborative, to counties.  Grants 
        shall be prorated by county based on 
        the estimated dollar value of services 
        for children and adults with a mental 
        health diagnosis that will be lost due 
        to the changes in Minnesota Statutes, 
        sections 256B.055, subdivision 12, and 
        256B.0627. 
        (b) The commissioner shall form a work 
        group to recommend a process for 
        awarding grants that will maximize 
        services purchased and minimize 
        administrative overhead.  The task 
        force shall include representatives of 
        the state advisory council on mental 
        health and the children's subcommittee, 
        parents, consumers, advocacy groups, 
        providers, and local social service and 
        public health staff.  The work group 
        shall consider whether the process for 
        awarding consumer support grants under 
        Minnesota Statutes, section 256.476, 
        can be utilized for awarding these 
        mental health grants.  In addition, the 
        work group shall recommend ways to 
        minimize harm to children and families 
        and to reduce barriers to accessing 
        alternative services. 
        (c) For the first year of the biennium, 
        funds must be distributed by January 1, 
        1996, and for the second year, by July 
        1, 1996.  None of this appropriation 
        shall be used for county 
        administration, but must be used to 
        fund direct services to persons found 
        ineligible for TEFRA or PCA services. 
        [MENTAL HEALTH CASE MANAGEMENT.] 
        Notwithstanding section 12 of this 
        article, this paragraph does not 
        expire. The reimbursement rate for 
        mental health case management services 
        provided by counties under Minnesota 
        Statutes, sections 245.4881 and 
        256B.0625, for children with severe 
        emotional disturbance is $45. 
        [CALCULATION OF FTE's.] When 
        calculating regional treatment center 
        full-time equivalent employees, the 
        commissioner of finance shall make a 
        separate calculation for physicians and 
        their salaries. 
        [RELOCATIONS FROM FARIBAULT.] Of this 
        appropriation, $162,000 in fiscal year 
        1996 and $37,000 in fiscal year 1997 
        are for grants to counties for 
        discharge planning related to persons 
        with mental retardation or related 
        conditions being relocated from the 
        Faribault regional center to community 
        services. 
        [TRANSFERS TO MOOSE LAKE.] 
        Notwithstanding Minnesota Statutes, 
        sections 253B.18, subdivisions 4 and 6, 
        and 253B.185, subdivision 2, with the 
        establishment of the Minnesota sexual 
        psychopathic personality treatment 
        center, the commissioner is authorized 
        to transfer any person committed as a 
        psychopathic personality, sexual 
        psychopathic personality, or sexually 
        dangerous person, between the Minnesota 
        security hospital and the facility at 
        Moose Lake. 
        [RTC CHEMICAL DEPENDENCY PROGRAMS.] 
        When the operations of the regional 
        treatment center chemical dependency 
        fund created in Minnesota Statutes, 
        section 246.18, subdivision 2, are 
        impeded by projected cash deficiencies 
        resulting from delays in the receipt of 
        grants, dedicated income, or other 
        similar receivables, and when the 
        deficiencies would be corrected within 
        the budget period involved, the 
        commissioner of finance may transfer 
        general fund cash reserves into this 
        account as necessary to meet cash 
        demands.  The cash flow transfers must 
        be returned to the general fund in the 
        fiscal year that the transfer was 
        made.  Any interest earned on general 
        fund cash flow transfers accrues to the 
        general fund and not the regional 
        treatment center chemical dependency 
        fund. 
        [RTC RESTRUCTURING.] For purposes of 
        restructuring the regional treatment 
        centers and state nursing homes, any 
        regional treatment center or state 
        nursing home employee whose position is 
        to be eliminated shall be afforded the 
        options provided in applicable 
        collective bargaining agreements.  All 
        salary and mitigation allocations from 
        fiscal year 1996 shall be carried 
        forward into fiscal year 1997.  
        Provided there is no conflict with any 
        collective bargaining agreement, any 
        regional treatment center or state 
        nursing home position reduction must 
        only be accomplished through 
        mitigation, attrition, transfer, and 
        other measures as provided in state or 
        applicable collective bargaining 
        agreements and in Minnesota Statutes, 
        section 252.50, subdivision 11, and not 
        through layoff. 
        [RTC POPULATION.] If the resident 
        population at the regional treatment 
        centers is projected to be higher than 
        the estimates upon which the medical 
        assistance forecast and budget 
        recommendations for the 1996-97 
        biennium were based, the amount of the 
        medical assistance appropriation that 
        is attributable to the cost of services 
        that would have been provided as an 
        alternative to regional treatment 
        center services, including resources 
        for community placements and waivered 
        services for persons with mental 
        retardation and related conditions, is 
        transferred to the residential 
        facilities appropriation. 
        [INFRASTRUCTURE REINVESTMENT.] $750,000 
        is available from the public facilities 
        authority under Minnesota Statutes 
        446A.071 for grant funds to a local 
        unit of government for the development 
        of infrastructure and planning for 
        redevelopment in response to the 
        memorandum of understanding for the 
        regional treatment centers.  Eligible 
        costs include sewer, water, and 
        easements and engineering costs 
        associated with the project proposal. 
        [CAMP.] Of this appropriation, $30,000 
        is from the mental health special 
        projects account for adults and 
        children with mental illness from 
        across the state, for a camping program 
        which utilizes the Boundary Waters 
        Canoe Area and is cooperatively 
        sponsored by client advocacy, mental 
        health treatment, and outdoor 
        recreation agencies. 
        [IMD DOWNSIZING FLEXIBILITY.] If a 
        county presents a budget-neutral plan 
        for a net reduction in the number of 
        institution for mental disease (IMD) 
        beds funded under group residential 
        housing, the commissioner may transfer 
        the net savings from group residential 
        housing and general assistance medical 
        care to medical assistance and mental 
        health grants to provide appropriate 
        services in non-IMD settings. 
        [REPAIRS AND BETTERMENTS.] The 
        commissioner may transfer unencumbered 
        appropriation balances between fiscal 
        years for the state residential 
        facilities repairs and betterments 
        account and special equipment. 
        [PROJECT LABOR.] Wages for project 
        labor may be paid by the commissioner 
        of human services out of repairs and 
        betterments money if the individual is 
        to be engaged in a construction project 
        or a repair project of short term and 
        nonrecurring nature.  Compensation for 
        project labor shall be based on the 
        prevailing wage rates, as defined in 
        Minnesota Statutes, section 177.42, 
        subdivision 6.  Project laborers are 
        excluded from the provisions of 
        Minnesota Statutes, sections 43A.22 to 
        43A.30, and shall not be eligible for 
        state-paid insurance and benefits. 
        [PLAN FOR ADOLESCENT TREATMENT 
        EXPANSION.] The commissioner shall 
        report to the legislature by January 
        15, 1996, with a cost-neutral plan to 
        add up to 20 beds to each of the two 
        existing adolescent treatment 
        facilities at the regional treatment 
        centers in order to reduce or eliminate 
        out-of-state placement of adolescents 
        who have serious emotional disturbance 
        and exhibit violent behavior, if they 
        cannot be treated in their own 
        communities.  Cost neutrality shall be 
        determined by comparing the costs of 
        program expansion with the projected 
        costs of out-of-state placements. 
        Sec. 3.  COMMISSIONER OF HEALTH 
        Subdivision 1.  Total 
        Appropriation                         55,639,000     55,886,000
                      Summary by Fund
        General              37,978,000    37,950,000
        Metropolitan Landfill
        Contingency Action Fund 193,000       193,000
        State Government
        Special Revenue      15,947,000    16,222,000
        Trunk Highway         1,513,000     1,513,000
        Special Revenue           8,000         8,000
        [LANDFILL CONTINGENCY.] The 
        appropriation from the metropolitan 
        landfill contingency action fund is for 
        monitoring well water supplies and 
        conducting health assessments in the 
        metropolitan area. 
        [TRUNK HIGHWAY FUND.] The appropriation 
        from the trunk highway fund is for 
        emergency medical services activities. 
        Subd. 2.  Health
        Systems Development                   27,928,000     27,784,000
                      Summary by Fund
        General              27,499,000    27,354,000
        State Government
        Special Revenue         429,000       430,000
        [WIC TRANSFERS.] General fund 
        appropriations for the women, infants, 
        and children food supplement program 
        (WIC) are available for either year of 
        the biennium.  Transfers of 
        appropriations between fiscal years 
        must be for the purpose of maximizing 
        federal funds or minimizing 
        fluctuations in the number of 
        participants.  
        [NURSING HOME RESIDENTS EDUCATION.] Any 
        efforts undertaken by the Minnesota 
        departments of health or human services 
        to conduct periodic education programs 
        for nursing home residents shall build 
        on and be coordinated with the resident 
        and family advisory council education 
        program established in Minnesota 
        Statutes, section 144A.33. 
        [HOSPITAL CONVERSION.] Of the 
        appropriation from the general fund, 
        the commissioner of health shall 
        provide $25,000 to a 28-bed hospital 
        located in Chisago county, to enable 
        that facility to plan for closure and 
        conversion, in partnership with other 
        entities, in order to offer outpatient 
        and emergency services at the site. 
        [CARRYOVER.] General fund 
        appropriations for treatment services 
        in the services for children with 
        special health care needs program are 
        available for either year of the 
        biennium. 
        Subd. 3.  Health Quality
        Assurance                              6,934,000      7,065,000
                      Summary by Fund
        General               1,135,000     1,135,000
        Trunk Highway         1,431,000     1,431,000
        State Government 
        Special Revenue       4,368,000     4,499,000
        [NONCERTIFIED NURSING HOME.] Of the 
        appropriation from the state government 
        special revenue fund, up to $250,000 is 
        available if the commissioner 
        determines the need to place a 
        noncertified nursing home into 
        receivership under Minnesota Statutes, 
        section 144A.14 or 144A.15.  Any money 
        expended from this account for this 
        purpose shall only be used to cover the 
        necessary costs for the receivership 
        and for the operation of the facility 
        during the time period necessary to 
        relocate residents from the facility.  
        The commissioner shall suspend 
        admissions to the nursing home 
        effective as of the date of the 
        commencement of the receivership. 
        Notwithstanding the provisions of 
        Minnesota Statutes, section 144A.16, 
        and Minnesota Rules, parts 4655.6810 to 
        4655.6830, the commissioner shall 
        relocate residents within 45 days from 
        the commencement of the receivership if 
        the receivership costs are covered by 
        this section.  Once relocation of the 
        residents is completed, the nursing 
        home license shall expire.  
        Notwithstanding the provisions of 
        Minnesota Statutes, section 144A.071, 
        subdivision 3, paragraph (c), the 
        commissioner may issue a new license to 
        operate the facility as a nursing home 
        within 120 days from the commencement 
        of the receivership provided that the 
        licensed and certified capacity does 
        not exceed the capacity of the former 
        facility and all money expended from 
        the state government special revenue 
        account is repaid to the commissioner 
        prior to the issuance of the license.  
        Any unrecovered costs to the fund shall 
        be included as costs to the activity 
        under Minnesota Statutes, section 
        16A.1285.  The commissioner shall 
        report any use of this authority to the 
        commissioner of finance and the chair 
        of the senate health care and family 
        services finance division and the chair 
        of the house human services finance 
        division. 
        Subd. 4.  Health Protection           16,765,000     16,861,000
                      Summary by Fund
        General               6,899,000     6,895,000
        State Government
        Special Revenue       9,687,000     9,787,000
        Metropolitan Landfill
        Contingency Action
        Fund                    171,000       171,000
        Special Revenue           8,000         8,000
        [LEAD ABATEMENT.] $200,000 is 
        appropriated from the general fund to 
        the commissioner of health for the 
        biennium ending June 30, 1997, for the 
        purpose of administering lead abatement 
        activities.  Of this amount, $25,000 
        shall be used for the purposes of 
        lead-safe housing, and $25,000 shall be 
        used for the purposes of lead cleanup 
        equipment. 
        Subd. 5.  Management and
        Support Services                       4,012,000      4,176,000
                      Summary by Fund
        General               2,445,000     2,566,000
        Metropolitan Landfill
        Contingency Action Fund  22,000        22,000
        Trunk Highway            82,000        82,000
        State Government
        Special Revenue       1,463,000     1,506,000
        Sec. 4.  VETERANS NURSING
        HOMES BOARD                           17,937,000     18,614,000
        [SPECIAL REVENUE ACCOUNT.] The general 
        fund appropriations made to the 
        veterans homes board shall be 
        transferred to a veterans homes special 
        revenue account in the special revenue 
        fund in the same manner as other 
        receipts are deposited in accordance 
        with Minnesota Statutes, section 
        198.34, and are appropriated to the 
        veterans homes board of directors for 
        the operation of board facilities and 
        programs. 
        [SETTING THE COST OF CARE.] The 
        veterans homes board may set the cost 
        of care at the Silver Bay and Luverne 
        facilities based on the cost of average 
        skilled nursing care provided to 
        residents of the Minneapolis veterans 
        home for fiscal year 1996. 
        [ROOMS WITH MORE THAN FOUR BEDS.] (a) 
        Until June 30, 1996, the commissioner 
        of health shall not apply the 
        provisions of Minnesota Statutes, 
        section 144.55, subdivision 6, 
        paragraph (b), to the Minnesota 
        veterans home at Hastings. 
        (b) The veterans homes board may not 
        admit residents into the domiciliary 
        beds at the Minnesota veterans home at 
        Hastings before October 1, 1995. 
        [LICENSED CAPACITY.] The department of 
        health shall not reduce the licensed 
        bed capacity for the Minneapolis 
        veterans home pending completion of the 
        project authorized by Laws 1990, 
        chapter 610, article 1, section 9, 
        subdivision 3, unless the federal grant 
        for the project is not awarded. 
        [ALLOWANCE FOR FOOD.] The allowance for 
        food may be adjusted annually to 
        reflect changes in the producer price 
        index, as prepared by the United States 
        Bureau of Labor Statistics, with the 
        approval of the commissioner of 
        finance.  Adjustments for fiscal year 
        1996 and fiscal year 1997 must be based 
        on the June 1994 and June 1995 producer 
        price index respectively, but the 
        adjustment must be prorated if it would 
        require money in excess of the 
        appropriation. 
        [FERGUS FALLS.] If a federal grant for 
        the construction of the Fergus Falls 
        veterans home is received before the 
        start of the 1996 legislative session, 
        the veterans homes board of directors 
        may use up to $150,000 of this 
        appropriation to fund positions and 
        support services to coordinate and 
        oversee the construction of the home 
        and to begin planning for the opening 
        of the facility. 
        Sec. 5.  HEALTH-RELATED BOARDS 
        Subdivision 1.  Total     
        Appropriation                          8,906,000      8,608,000 
        [STATE GOVERNMENT SPECIAL REVENUE 
        FUND.] The appropriations in this 
        section are from the state government 
        special revenue fund. 
        [NO SPENDING IN EXCESS OF REVENUES.] 
        The commissioner of finance shall not 
        permit the allotment, encumbrance, or 
        expenditure of money appropriated in 
        this section in excess of the 
        anticipated biennial revenues or 
        accumulated surplus revenues from fees 
        collected by the boards.  Neither this 
        provision nor Minnesota Statutes, 
        section 214.06, applies to transfers 
        from the general contingent account, if 
        the amount transferred does not exceed 
        the amount of surplus revenue 
        accumulated by the transferee during 
        the previous five years. 
        Subd. 2.  Board of Chiropractic 
        Examiners                                309,000        313,000
        Subd. 3.  Board of Dentistry             698,000        708,000
        Subd. 4.  Board of Dietetic
        and Nutrition Practice                    63,000         64,000
        Subd. 5.  Board of Marriage and 
        Family Therapy                            95,000         96,000
        Subd. 6.  Board of Medical  
        Practice                               3,204,000      3,188,000
        Subd. 7.  Board of Nursing             2,258,000      2,009,000
        [DISCIPLINE AND LICENSING SYSTEMS 
        PROJECT.] Of this appropriation, 
        $548,000 the first year and $295,000 
        the second year is to implement the 
        discipline and licensing systems 
        project as recommended by the 
        information policy office.  In 
        accordance with Minnesota Statutes, 
        section 214.06, subdivision 1, the 
        board may raise fees to fund this 
        activity. 
        Subd. 8.  Board of Nursing 
        Home Administrators                      182,000        186,000
        Subd. 9.  Board of Optometry              78,000         79,000
        Subd. 10.  Board of Pharmacy             900,000        894,000
        Subd. 11.  Board of Podiatry              31,000         32,000
        Subd. 12.  Board of Psychology           393,000        396,000
        Subd. 13.  Board of Social Work          553,000        492,000
        Subd. 14.  Board of Veterinary 
        Medicine                                 142,000        151,000
        Sec. 6.  COUNCIL ON DISABILITY           725,000        581,000
        [COUNCIL ON DISABILITY.] Of this 
        appropriation $150,000 is from the 
        general fund to the council on 
        disability for fiscal year 1996, for 
        the purposes of a matching grant to the 
        Fergus Falls Center for the Arts, Inc. 
        to complete renovations of a local 
        theater necessary to bring it into 
        compliance with the federal Americans 
        with Disabilities Act.  This 
        appropriation must be matched by 
        $50,000 of nonstate local funds. 
        Sec. 7.  OMBUDSMAN FOR MENTAL 
        HEALTH AND MENTAL RETARDATION          1,132,000      1,097,000
        Sec. 8.  OMBUDSMAN
        FOR FAMILIES                             133,000        137,000
        Sec. 9.  TRANSFERS. 
        Subdivision 1.  Entitlement programs
        (a) Transfers in fiscal year 1995 
        Effective the day following final 
        enactment, the commissioner of human 
        services may transfer unencumbered 
        appropriation balances for fiscal year 
        1995 among the aid to families with 
        dependent children, aid to families 
        with dependent children child care, 
        Minnesota family investment plan, 
        general assistance, general assistance 
        medical care, medical assistance, 
        Minnesota supplemental aid, group 
        residential housing and work readiness 
        programs, and the entitlement portion 
        of the chemical dependency consolidated 
        treatment fund, with the approval of 
        the commissioner of finance after 
        notification of the chair of the senate 
        health care and family services finance 
        division and the chair of the house of 
        representatives health and human 
        services finance division. 
        (b) Transfers of unencumbered 
        entitled grant and aid appropriations 
        The commissioner of human services, 
        with the approval of the commissioner 
        of finance, and after notification of 
        the chair of the senate health care and 
        family services finance division and 
        the chair of the house of 
        representatives health and human 
        services finance division, may transfer 
        unencumbered appropriation balances for 
        the biennium ending June 30, 1997, 
        within fiscal years among the aid to 
        families with dependent children, aid 
        to families with dependent children 
        child care, Minnesota family investment 
        plan, general assistance, general 
        assistance medical care, medical 
        assistance, Minnesota supplemental aid, 
        group residential housing, and work 
        readiness programs, and the entitlement 
        portion of the chemical dependency 
        consolidated treatment fund, and 
        between fiscal years of the biennium. 
        Subd. 2.  Approval required 
        Positions, salary money, and nonsalary 
        administrative money may be transferred 
        within the departments of human 
        services and health and within the 
        programs operated by the veterans 
        nursing homes board as the 
        commissioners and the board consider 
        necessary, with the advance approval of 
        the commissioner of finance.  The 
        commissioners and the board shall 
        inform the chairs of the health and 
        human services finance division of the 
        house of representatives and the health 
        and family services finance division of 
        the senate quarterly about transfers 
        made under this provision. 
        Subd. 3.  Transfer 
        Funding appropriated by the legislature 
        may not be transferred to a different 
        department than that specified by the 
        legislature without legislative 
        authority. 
        Sec. 10.  PROVISIONS 
        (a) Money appropriated to the 
        commissioner of human services for the 
        purchase of provisions within the item 
        "current expense" must be used solely 
        for that purpose.  Money provided and 
        not used for the purchase of provisions 
        must be canceled into the fund from 
        which appropriated, except that money 
        provided and not used for the purchase 
        of provisions because of population 
        decreases may be transferred and used 
        for the purchase of drugs and medical 
        and hospital supplies and equipment 
        with written approval of the governor 
        after consultation with the legislative 
        advisory commission. 
        (b) For fiscal year 1996 the allowance 
        for food may be adjusted to the 
        equivalent of the 75th percentile of 
        the comparable raw food costs for 
        community nursing homes as reported to 
        the commissioner of human services.  
        For fiscal year 1997 an adjustment may 
        be made to reflect the annual change in 
        the United States Bureau of Labor 
        Statistics producer price index as of 
        June 1996 with the approval of the 
        commissioner of finance.  The 
        adjustments for either year must be 
        prorated if they would require money in 
        excess of this appropriation. 
        Sec. 11.  CARRYOVER LIMITATION 
        None of the appropriations in this act 
        which are allowed to be carried forward 
        from fiscal year 1996 to fiscal year 
        1997 shall become part of the base 
        level funding for the 1997-1999 
        biennial budget, unless specifically 
        directed by the legislature. 
        Sec. 12.  SUNSET OF UNCODIFIED LANGUAGE 
        All uncodified language contained in 
        this article expires on June 30, 1997, 
        unless a different expiration is 
        explicit. 
                                   ARTICLE 2
                         HUMAN SERVICES ADMINISTRATION 
           Section 1.  Minnesota Statutes 1994, section 14.03, 
        subdivision 3, is amended to read: 
           Subd. 3.  [RULEMAKING PROCEDURES.] The definition of a rule 
        in section 14.02, subdivision 4, does not include: 
           (1) rules concerning only the internal management of the 
        agency or other agencies that do not directly affect the rights 
        of or procedures available to the public; 
           (2) rules of the commissioner of corrections relating to 
        the placement and supervision of inmates serving a supervised 
        release term, the internal management of institutions under the 
        commissioner's control, and rules adopted under section 609.105 
        governing the inmates of those institutions; 
           (3) rules relating to weight limitations on the use of 
        highways when the substance of the rules is indicated to the 
        public by means of signs; 
           (4) opinions of the attorney general; 
           (5) the systems architecture plan and long-range plan of 
        the state education management information system provided by 
        section 121.931; 
           (6) the data element dictionary and the annual data 
        acquisition calendar of the department of education to the 
        extent provided by section 121.932; 
           (7) the occupational safety and health standards provided 
        in section 182.655; 
           (8) revenue notices and tax information bulletins of the 
        commissioner of revenue; or 
           (9) uniform conveyancing forms adopted by the commissioner 
        of commerce under section 507.09; or 
           (10) the interpretive guidelines developed by the 
        commissioner of human services to the extent provided in chapter 
        245A. 
           Sec. 2.  Minnesota Statutes 1994, section 16B.08, 
        subdivision 5, is amended to read: 
           Subd. 5.  [FEDERAL GENERAL SERVICES ADMINISTRATION AGENCY 
        PRICE SCHEDULES.] Notwithstanding anything in this chapter to 
        the contrary, the commissioner may, instead of soliciting bids, 
        contract for purchases with suppliers who have published 
        schedules of prices effective for sales to the General Services 
        Administration any federal agency of the United States.  These 
        contracts may be entered into, regardless of the amount of the 
        purchase price, if the commissioner considers them advantageous 
        and if the purchase price of all the commodities purchased under 
        the contract do not exceed the price specified by the schedule.  
           Sec. 3.  Minnesota Statutes 1994, section 171.07, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [AGREEMENTS WITH OTHER AGENCIES.] The 
        commissioner of public safety is authorized to enter into 
        agreements with other agencies to issue cards to clients of 
        those agencies for use in their programs.  The cards may be 
        issued to persons who do not qualify for a Minnesota driver's 
        license or do not provide evidence of name and identity as 
        required by rule for a Minnesota identification card.  Persons 
        issued cards under this subdivision will meet the identification 
        verification requirements of the contracting agency. 
           The interagency agreement may include provisions for the 
        payment of the county fee provided in section 171.06, 
        subdivision 4, and the actual cost to manufacture the card. 
           Cards issued under this subdivision are not Minnesota 
        identification cards for the purposes defined in sections 
        48.512, 201.061, 201.161, 332.50, and 340A.503. 
           Sec. 4.  Minnesota Statutes 1994, section 245A.02, is 
        amended by adding a subdivision to read: 
           Subd. 7b.  [INTERPRETIVE GUIDELINES.] "Interpretive 
        guidelines" means a policy statement that has been published 
        pursuant to section 245A.09, subdivision 12, and which provides 
        interpretation, details, or supplementary information concerning 
        the application of laws or rules.  Interpretive guidelines are 
        published for the information and guidance of consumers, 
        providers of service, county agencies, the department of human 
        services, and others concerned. 
           Sec. 5.  Minnesota Statutes 1994, section 245A.03, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [LICENSING OF FOSTER CARE BY AN INDIVIDUAL WHO 
        IS RELATED TO A CHILD; LICENSE REQUIRED.] Notwithstanding 
        subdivision 2, clause (1), the commissioner must license or 
        approve an individual who is related to a child in order to 
        provide foster care for that a child, an individual who is 
        related to the child, other than a parent, or legal guardian, 
        must be licensed by the commissioner except as provided by 
        section 245A.035.  The commissioner may issue the license or 
        approval retroactive to the date the child was placed in the 
        applicant's home, so long as no more than 90 days have elapsed 
        since the placement.  If more than 90 days have elapsed since 
        the placement, the commissioner may issue the license or 
        approval retroactive 90 days.  The granting of a license or 
        approval to an individual who is related to a child shall be 
        according to standards set forth by foster care rule.  The 
        commissioner shall consider the importance of maintaining the 
        child's relationship to family as an additional significant 
        factor in determining whether to set aside a licensing 
        disqualifier under section 245A.04, subdivision 3b, or to grant 
        a variance of licensing requirements under section 245A.04, 
        subdivision 9, in licensing or approving an individual related 
        to a child. 
           Sec. 6.  [245A.035] [RELATIVE FOSTER CARE; EMERGENCY 
        LICENSE.] 
           Subdivision 1.  [GRANT OF EMERGENCY LICENSE.] 
        Notwithstanding section 245A.03, subdivision 2a, a county agency 
        may place a child for foster care with a relative who is not 
        licensed to provide foster care, provided the requirements of 
        subdivision 2 are met.  As used in this section, the term 
        "relative" has the meaning given it under section 260.181, 
        subdivision 3. 
           Subd. 2.  [COOPERATION WITH EMERGENCY LICENSING PROCESS.] 
        (a) A county agency that places a child with a relative who is 
        not licensed to provide foster care must begin the process of 
        securing an emergency license for the relative as soon as 
        possible and must conduct the initial inspection required by 
        subdivision 3, clause (1), whenever possible, prior to placing 
        the child in the relative's home, but no later than three 
        working days after placing the child in the home.  A child 
        placed in the home of a relative who is not licensed to provide 
        foster care must be removed from that home if the relative fails 
        to cooperate with the county agency in securing an emergency 
        foster care license.  The commissioner may only issue an 
        emergency foster care license to a relative with whom the county 
        agency wishes to place or has placed a child for foster care. 
           (b) If a child is to be placed in the home of a relative 
        not licensed to provide foster care, either the placing agency 
        or the county agency in the county in which the relative lives 
        shall conduct the emergency licensing process as required in 
        this section. 
           Subd. 3.  [REQUIREMENTS FOR EMERGENCY LICENSE.] Before an 
        emergency license may be issued, the following requirements must 
        be met: 
           (1) the county agency must conduct an initial inspection of 
        the premises where the foster care is to be provided to ensure 
        the health and safety of any child placed in the home.  The 
        county agency shall conduct the inspection using a form 
        developed by the commissioner; 
           (2) at the time of the inspection or placement, whichever 
        is earlier, the relative being considered for an emergency 
        license shall receive an application form for a child foster 
        care license; and 
           (3) whenever possible, prior to placing the child in the 
        relative's home, the relative being considered for an emergency 
        license shall provide the information required by section 
        245A.04, subdivision 3, paragraph (b). 
           Subd. 4.  [APPLICANT STUDY.] When the county agency has 
        received the information required by section 245A.04, 
        subdivision 3, paragraph (b), the county agency shall begin an 
        applicant study according to the procedures in section 245A.04, 
        subdivision 3.  The commissioner may issue an emergency license 
        upon recommendation of the county agency once the initial 
        inspection has been successfully completed and the information 
        necessary to begin the applicant background study has been 
        provided.  If the county agency does not recommend that the 
        emergency license be granted, the agency shall notify the 
        relative in writing that the agency is recommending denial to 
        the commissioner; shall remove any child who has been placed in 
        the home prior to licensure; and shall inform the relative in 
        writing of the procedure to request review pursuant to 
        subdivision 6.  An emergency license shall be effective until a 
        child foster care license is granted or denied, but shall in no 
        case remain in effect more than 90 days from the date of 
        placement. 
           Subd. 5.  [CHILD FOSTER CARE LICENSE APPLICATION.] The 
        emergency license holder shall complete the child foster care 
        license application and necessary paperwork within ten days of 
        the placement.  The county agency shall assist the emergency 
        license holder to complete the application.  The granting of a 
        child foster care license to a relative shall be under the 
        procedures in this chapter and according to the standards set 
        forth by foster care rule.  In licensing a relative, the 
        commissioner shall consider the importance of maintaining the 
        child's relationship with relatives as an additional significant 
        factor in determining whether to set aside a licensing 
        disqualifier under section 245A.04, subdivision 3b, or to grant 
        a variance of licensing requirements under section 245A.04, 
        subdivision 9. 
           Subd. 6.  [DENIAL OF EMERGENCY LICENSE.] If the 
        commissioner denies an application for an emergency foster care 
        license under this section, that denial must be in writing and 
        must include reasons for the denial.  Denial of an emergency 
        license is not subject to appeal under chapter 14.  The relative 
        may request a review of the denial by submitting to the 
        commissioner a written statement of the reasons an emergency 
        license should be granted.  The commissioner shall evaluate the 
        request for review and determine whether to grant the emergency 
        license.  The commissioner's review shall be based on a review 
        of the records submitted by the county agency and the relative.  
        Within 15 working days of the receipt of the request for review, 
        the commissioner shall notify the relative requesting review in 
        written form whether the emergency license will be granted.  The 
        commissioner's review shall be based on a review of the records 
        submitted by the county agency and the relative.  A child shall 
        not be placed or remain placed in the relative's home while the 
        request for review is pending.  Denial of an emergency license 
        shall not preclude an individual from reapplying for an 
        emergency license or from applying for a child foster care 
        license.  The decision of the commissioner is the final 
        administrative agency action.  
           Sec. 7.  Minnesota Statutes 1994, section 245A.04, 
        subdivision 3, is amended to read: 
           Subd. 3.  [STUDY OF THE APPLICANT.] (a) Before the 
        commissioner issues a license, the commissioner shall conduct a 
        study of the individuals specified in clauses (1) to (4) 
        according to rules of the commissioner.  The applicant, license 
        holder, the bureau of criminal apprehension, and county 
        agencies, after written notice to the individual who is the 
        subject of the study, shall help with the study by giving the 
        commissioner criminal conviction data and reports about abuse or 
        neglect of adults in licensed programs substantiated under 
        section 626.557 and the maltreatment of minors in licensed 
        programs substantiated under section 626.556.  The individuals 
        to be studied shall include: 
           (1) the applicant; 
           (2) persons over the age of 13 living in the household 
        where the licensed program will be provided; 
           (3) current employees or contractors of the applicant who 
        will have direct contact with persons served by the program; and 
           (4) volunteers who have direct contact with persons served 
        by the program to provide program services, if the contact is 
        not directly supervised by the individuals listed in clause (1) 
        or (3). 
           The juvenile courts shall also help with the study by 
        giving the commissioner existing juvenile court records on 
        individuals described in clause (2) relating to delinquency 
        proceedings held within either the five years immediately 
        preceding the application or the five years immediately 
        preceding the individual's 18th birthday, whichever time period 
        is longer.  The commissioner shall destroy juvenile records 
        obtained pursuant to this subdivision when the subject of the 
        records reaches age 23.  
           For purposes of this section and Minnesota Rules, part 
        9543.3070, a finding that a delinquency petition is proven in 
        juvenile court shall be considered a conviction in state 
        district court. 
           For purposes of this subdivision, "direct contact" means 
        providing face-to-face care, training, supervision, counseling, 
        consultation, or medication assistance to persons served by a 
        program.  For purposes of this subdivision, "directly supervised"
        means an individual listed in clause (1) or (3) is within sight 
        or hearing of a volunteer to the extent that the individual 
        listed in clause (1) or (3) is capable at all times of 
        intervening to protect the health and safety of the persons 
        served by the program who have direct contact with the volunteer.
           A study of an individual in clauses (1) to (4) shall be 
        conducted at least upon application for initial license and 
        reapplication for a license.  No applicant, license holder, or 
        individual who is the subject of the study shall pay any fees 
        required to conduct the study.  
           (b) The individual who is the subject of the study must 
        provide the applicant or license holder with sufficient 
        information to ensure an accurate study including the 
        individual's first, middle, and last name; home address, city, 
        county, and state of residence; zip code; sex; date of birth; 
        and driver's license number.  The applicant or license holder 
        shall provide this information about an individual in paragraph 
        (a), clauses (1) to (4), on forms prescribed by the 
        commissioner.  The commissioner may request additional 
        information of the individual, which shall be optional for the 
        individual to provide, such as the individual's social security 
        number or race. 
           (c) Except for child foster care, adult foster care, and 
        family day care homes, a study must include information from the 
        county agency's record of substantiated abuse or neglect of 
        adults in licensed programs, and the maltreatment of minors in 
        licensed programs, information from juvenile courts as required 
        in paragraph (a) for persons listed in paragraph (a), clause 
        (2), and information from the bureau of criminal apprehension.  
        For child foster care, adult foster care, and family day care 
        homes, the study must include information from the county 
        agency's record of substantiated abuse or neglect of adults, and 
        the maltreatment of minors, information from juvenile courts as 
        required in paragraph (a) for persons listed in paragraph (a), 
        clause (2), and information from the bureau of criminal 
        apprehension.  The commissioner may also review arrest and 
        investigative information from the bureau of criminal 
        apprehension, a county attorney, county sheriff, county agency, 
        local chief of police, other states, the courts, or a national 
        criminal record repository if the commissioner has reasonable 
        cause to believe the information is pertinent to the 
        disqualification of an individual listed in paragraph (a), 
        clauses (1) to (4).  The commissioner is not required to conduct 
        more than one review of a subject's records from the national 
        criminal record repository if a review of the subject's criminal 
        history with the national criminal record repository has already 
        been completed by the commissioner and there has been no break 
        in the subject's affiliation with the license holder who 
        initiated the background studies. 
           (d) An applicant's or license holder's failure or refusal 
        to cooperate with the commissioner is reasonable cause to deny 
        an application or immediately suspend, suspend, or revoke a 
        license.  Failure or refusal of an individual to cooperate with 
        the study is just cause for denying or terminating employment of 
        the individual if the individual's failure or refusal to 
        cooperate could cause the applicant's application to be denied 
        or the license holder's license to be immediately suspended, 
        suspended, or revoked. 
           (e) The commissioner shall not consider an application to 
        be complete until all of the information required to be provided 
        under this subdivision has been received.  
           (f) No person in paragraph (a), clause (1), (2), (3), or 
        (4) who is disqualified as a result of this section may be 
        retained by the agency in a position involving direct contact 
        with persons served by the program. 
           (g) Termination of persons in paragraph (a), clause (1), 
        (2), (3), or (4) made in good faith reliance on a notice of 
        disqualification provided by the commissioner shall not subject 
        the applicant or license holder to civil liability. 
           (h) The commissioner may establish records to fulfill the 
        requirements of this section. 
           (i) The commissioner may not disqualify an individual 
        subject to a study under this section because that person has, 
        or has had, a mental illness as defined in section 245.462, 
        subdivision 20. 
           (j) An individual who is subject to an applicant background 
        study under this section and whose disqualification in 
        connection with a license would be subject to the limitations on 
        reconsideration set forth in subdivision 3b, paragraph (c), 
        shall be disqualified for conviction of the crimes specified in 
        the manner specified in subdivision 3b, paragraph (c).  The 
        commissioner of human services shall amend Minnesota Rules, part 
        9543.3070, to conform to this section. 
           Sec. 8.  Minnesota Statutes 1994, section 245A.04, 
        subdivision 3b, is amended to read: 
           Subd. 3b.  [RECONSIDERATION OF DISQUALIFICATION.] (a) 
        Within 30 days after receiving notice of disqualification under 
        subdivision 3a, the individual who is the subject of the study 
        may request reconsideration of the notice of disqualification.  
        The individual must submit the request for reconsideration to 
        the commissioner in writing.  The individual must present 
        information to show that: 
           (1) the information the commissioner relied upon is 
        incorrect; or 
           (2) the subject of the study does not pose a risk of harm 
        to any person served by the applicant or license holder. 
           (b) The commissioner may set aside the disqualification if 
        the commissioner finds that the information the commissioner 
        relied upon is incorrect or the individual does not pose a risk 
        of harm to any person served by the applicant or license 
        holder.  The commissioner shall review the consequences of the 
        event or events that could lead to disqualification, whether 
        there is more than one disqualifying event, the vulnerability of 
        the victim at the time of the event, the time elapsed without a 
        repeat of the same or similar event, and documentation of 
        successful completion by the individual studied of training or 
        rehabilitation pertinent to the event.  In reviewing a 
        disqualification, the commissioner shall give preeminent weight 
        to the safety of each person to be served by the license holder 
        or applicant over the interests of the license holder or 
        applicant.  
           (c) Unless the information the commissioner relied on in 
        disqualifying an individual is incorrect, the commissioner may 
        not set aside the disqualification of an individual in 
        connection with a license to provide family day care for 
        children, foster care for children in the provider's own home, 
        or foster care or day care services for adults in the provider's 
        own home if: 
           (1) less than ten years have passed since the discharge of 
        the sentence imposed for the offense; and the individual has 
        been convicted of a violation of any offense listed in section 
        609.20 (manslaughter in the first degree), 609.205 (manslaughter 
        in the second degree), 609.21 (criminal vehicular homicide), 
        609.215 (aiding suicide or aiding attempted suicide), 609.221 to 
        609.2231 (felony violations of assault in the first, second, 
        third, or fourth degree), 609.713 (terroristic threats), 609.235 
        (use of drugs to injure or to facilitate crime), 609.24 (simple 
        robbery), 609.245 (aggravated robbery), 609.25 (kidnapping), 
        609.255 (false imprisonment), 609.561 or 609.562 (arson in the 
        first or second degree), 609.71 (riot), 609.582 (burglary in the 
        first or second degree), 609.66 (reckless use of a gun or 
        dangerous weapon or intentionally pointing a gun at or towards a 
        human being), 609.665 (setting a spring gun), 609.67 (unlawfully 
        owning, possessing, or operating a machine gun), 609.749 
        (stalking), 152.021 or 152.022 (controlled substance crime in 
        the first or second degree), 152.023, subdivision 1, clause (3) 
        or (4), or subdivision 2, clause (4) (controlled substance crime 
        in the third degree), 152.024, subdivision 1, clause (2), (3), 
        or (4) (controlled substance crime in the fourth degree), 
        609.228 (great bodily harm caused by distribution of drugs), 
        609.23 (mistreatment of persons confined), 609.231 (mistreatment 
        of residents or patients), 609.265 (abduction), 609.2664 to 
        609.2665 (manslaughter of an unborn child in the first or second 
        degree), 609.267 to 609.2672 (assault of an unborn child in the 
        first, second, or third degree), 609.268 (injury or death of an 
        unborn child in the commission of a crime), 617.293 
        (disseminating or displaying harmful material to minors), 
        609.378 (neglect or endangerment of a child), 609.377 (a gross 
        misdemeanor offense of malicious punishment of a child); or an 
        attempt or conspiracy to commit any of these offenses, as each 
        of these offenses is defined in Minnesota Statutes; or an 
        offense in any other state, the elements of which are 
        substantially similar to the elements of any of the foregoing 
        offenses; 
           (2) regardless of how much time has passed since the 
        discharge of the sentence imposed for the offense, the 
        individual was convicted of a violation of any offense listed in 
        sections 609.185 to 609.195 (murder in the first, second, or 
        third degree), 609.2661 to 609.2663 (murder of an unborn child 
        in the first, second, or third degree), 609.377 (a felony 
        offense of malicious punishment of a child), 609.322 
        (soliciting, inducement, or promotion of prostitution), 609.323 
        (receiving profit derived from prostitution), 609.342 to 609.345 
        (criminal sexual conduct in the first, second, third, or fourth 
        degree), 609.352 (solicitation of children to engage in sexual 
        conduct), 617.246 (use of minors in a sexual performance), 
        617.247 (possession of pictorial representations of a minor), 
        609.365 (incest), or an attempt or conspiracy to commit any of 
        these offenses as defined in Minnesota Statutes, or an offense 
        in any other state, the elements of which are substantially 
        similar to any of the foregoing offenses; 
           (3) within the seven years preceding the study, the 
        individual committed an act that constitutes maltreatment of a 
        child under section 626.556, subdivision 10e, and that resulted 
        in substantial bodily harm as defined in section 609.02, 
        subdivision 7a, or substantial mental or emotional harm as 
        supported by competent psychological or psychiatric evidence; or 
           (4) within the seven years preceding the study, the 
        individual was determined under section 626.557 to be the 
        perpetrator of a substantiated incident of abuse of a vulnerable 
        adult that resulted in substantial bodily harm as defined in 
        section 609.02, subdivision 7a, or substantial mental or 
        emotional harm as supported by competent psychological or 
        psychiatric evidence. 
           In the case of any ground for disqualification under 
        clauses (1) to (4), if the act was committed by an individual 
        other than the applicant or license holder residing in the 
        applicant's or license holder's home, the applicant or license 
        holder may seek reconsideration when the individual who 
        committed the act no longer resides in the home.  
           The disqualification periods provided under clauses (1), 
        (3), and (4) are the minimum applicable disqualification 
        periods.  The commissioner may determine that an individual 
        should continue to be disqualified from licensure because the 
        license holder or applicant poses a risk of harm to a person 
        served by that individual after the minimum disqualification 
        period has passed. 
           (d) The commissioner shall respond in writing to all 
        reconsideration requests within 15 working days after receiving 
        the request for reconsideration.  If the disqualification is set 
        aside, the commissioner shall notify the applicant or license 
        holder in writing of the decision. 
           (e) Except as provided in subdivision 3c, the 
        commissioner's decision to disqualify an individual, including 
        the decision to grant or deny a reconsideration of 
        disqualification under this subdivision, or to set aside or 
        uphold the results of the study under subdivision 3, is the 
        final administrative agency action and shall not be subject to 
        further review in a contested case under chapter 14 involving a 
        negative licensing action taken in response to the 
        disqualification. 
           Sec. 9.  Minnesota Statutes 1994, section 245A.04, 
        subdivision 7, is amended to read: 
           Subd. 7.  [ISSUANCE OF A LICENSE; PROVISIONAL LICENSE.] (a) 
        If the commissioner determines that the program complies with 
        all applicable rules and laws, the commissioner shall issue a 
        license.  At minimum, the license shall state:  
           (1) the name of the license holder; 
           (2) the address of the program; 
           (3) the effective date and expiration date of the license; 
           (4) the type of license; 
           (5) the maximum number and ages of persons that may receive 
        services from the program; and 
           (6) any special conditions of licensure. 
           (b) The commissioner may issue a provisional license for a 
        period not to exceed one year if:  
           (1) the commissioner is unable to conduct the evaluation or 
        observation required by subdivision 4, paragraph (a), clauses (3)
        and (4), because the program is not yet operational; 
           (2) certain records and documents are not available because 
        persons are not yet receiving services from the program; and 
           (3) the applicant complies with applicable laws and rules 
        in all other respects.  
        A provisional license must not be issued except at the time that 
        a license is first issued to an applicant. 
           (c) A decision by the commissioner to issue a license does 
        not guarantee that any person or persons will be placed or cared 
        for in the licensed program.  A license shall not be 
        transferable to another individual, corporation, partnership, 
        voluntary association, other organization, or controlling 
        individual, or to another location.  Unless otherwise specified 
        by statute, all licenses expire at 12:01 a.m. on the day after 
        the expiration date stated on the license.  A license holder 
        must apply for and be granted a new license to operate the 
        program or the program must not be operated after the expiration 
        date.  
           Sec. 10.  Minnesota Statutes 1994, section 245A.04, 
        subdivision 9, is amended to read: 
           Subd. 9.  [VARIANCES.] The commissioner may grant variances 
        to rules that do not affect the health or safety of persons in a 
        licensed program if the following conditions are met:  
           (1) the variance must be requested by an applicant or 
        license holder on a form and in a manner prescribed by the 
        commissioner; 
           (2) the request for a variance must include the reasons 
        that the applicant or license holder cannot comply with a 
        requirement as stated in the rule and the alternative equivalent 
        measures that the applicant or license holder will follow to 
        comply with the intent of the rule; and 
           (3) the request must state the period of time for which the 
        variance is requested.  
           The commissioner may grant a permanent variance when 
        conditions under which the variance is requested do not affect 
        the health or safety of persons being served by the licensed 
        program, nor compromise the qualifications of staff to provide 
        services.  The permanent variance shall expire as soon as the 
        conditions that warranted the variance are modified in any way.  
        Any applicant or license holder must inform the commissioner of 
        any changes or modifications that have occurred in the 
        conditions that warranted the permanent variance.  Failure to 
        advise the commissioner shall result in revocation of the 
        permanent variance and may be cause for other sanctions under 
        sections 245A.06 and 245A.07. 
           The commissioner's decision to grant or deny a variance 
        request is final and not subject to appeal under the provisions 
        of chapter 14. 
           Sec. 11.  Minnesota Statutes 1994, section 245A.06, 
        subdivision 2, is amended to read: 
           Subd. 2.  [RECONSIDERATION OF CORRECTION ORDERS.] If the 
        applicant or license holder believes that the contents of the 
        commissioner's correction order are in error, the applicant or 
        license holder may ask the department of human services to 
        reconsider the parts of the correction order that are alleged to 
        be in error.  The request for reconsideration must be in 
        writing, delivered by certified mail and received by the 
        commissioner within 20 calendar days after receipt of the 
        correction order by the applicant or license holder, and: 
           (1) specify the parts of the correction order that are 
        alleged to be in error; 
           (2) explain why they are in error; and 
           (3) include documentation to support the allegation of 
        error. 
           A request for reconsideration does not stay any provisions 
        or requirements of the correction order.  The commissioner's 
        disposition of a request for reconsideration is final and not 
        subject to appeal under chapter 14. 
           Sec. 12.  Minnesota Statutes 1994, section 245A.06, 
        subdivision 4, is amended to read: 
           Subd. 4.  [NOTICE OF FINE; APPEAL.] A license holder who is 
        ordered to pay a fine must be notified of the order by certified 
        mail.  The notice must be mailed to the address shown on the 
        application or the last known address of the license holder.  
        The notice must state the reasons the fine was ordered and must 
        inform the license holder of the responsibility for payment of 
        fines in subdivision 7 and the right to a contested case hearing 
        under chapter 14.  The license holder may appeal the order to 
        forfeit a fine by notifying the commissioner by certified mail 
        within 15 calendar days after receiving the order.  A timely 
        appeal shall stay forfeiture of the fine until the commissioner 
        issues a final order under section 245A.08, subdivision 5. 
           Sec. 13.  Minnesota Statutes 1994, section 245A.06, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [RESPONSIBILITY FOR PAYMENT OF FINES.] When a 
        fine has been assessed, the license holder may not avoid payment 
        by closing, selling, or otherwise transferring the licensed 
        program to a third party.  In such an event, the license holder 
        will be personally liable for payment.  In the case of a 
        corporation, each controlling individual is personally and 
        jointly liable for payment. 
           Sec. 14.  Minnesota Statutes 1994, section 245A.07, 
        subdivision 3, is amended to read: 
           Subd. 3.  [SUSPENSION, REVOCATION, PROBATION.] The 
        commissioner may suspend, revoke, or make probationary a license 
        if a license holder fails to comply fully with applicable laws 
        or rules or knowingly gives false or misleading information to 
        the commissioner in connection with an application for a license 
        or during an investigation.  A license holder who has had a 
        license suspended, revoked, or made probationary must be given 
        notice of the action by certified mail.  The notice must be 
        mailed to the address shown on the application or the last known 
        address of the license holder.  The notice must state the 
        reasons the license was suspended, revoked, or made probationary.
           (a) If the license was suspended or revoked, the notice 
        must inform the license holder of the right to a contested case 
        hearing under chapter 14.  The license holder may appeal an 
        order suspending or revoking a license.  The appeal of an order 
        suspending or revoking a license must be made in writing by 
        certified mail and must be received by the commissioner within 
        ten calendar days after the license holder receives notice that 
        the license has been suspended or revoked.  
           (b) If the license was made probationary, the notice must 
        inform the license holder of the right to request a 
        reconsideration by the commissioner.  The request for 
        reconsideration must be made in writing by certified mail and 
        must be received by the commissioner within ten calendar days 
        after the license holder receives notice that the license has 
        been made probationary.  The license holder may submit with the 
        request for reconsideration written argument or evidence in 
        support of the request for reconsideration.  The commissioner's 
        disposition of a request for reconsideration is final and is not 
        subject to appeal under chapter 14.  
           Sec. 15.  Minnesota Statutes 1994, section 245A.09, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [INTERPRETIVE GUIDELINES; AUTHORITY.] The 
        commissioner of human services may develop and publish 
        interpretive guidelines. 
           Sec. 16.  Minnesota Statutes 1994, section 245A.09, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [EFFECT OF INTERPRETIVE GUIDELINES.] Interpretive 
        guidelines do not have the force and effect of law and have no 
        precedential effect, but may be relied on by consumers, 
        providers of service, county agencies, the department of human 
        services, and others concerned until revoked or modified.  A 
        guideline may be expressly revoked or modified by the 
        commissioner, by the issuance of another interpretive guideline, 
        but may not be revoked or modified retroactively to the 
        detriment of consumers, providers of service, county agencies, 
        the department of human services, or others concerned.  A change 
        in the law or an interpretation of the law occurring after the 
        interpretive guidelines are issued, whether in the form of a 
        statute, court decision, administrative ruling, or subsequent 
        interpretive guideline, results in the revocation or 
        modification of the previously adopted guidelines to the extent 
        that the change affects the guidelines. 
           Sec. 17.  Minnesota Statutes 1994, section 245A.09, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [RULEMAKING PROCESS; COMMISSIONER EXEMPTED.] 
        When developing, making, adopting, and issuing interpretive 
        guidelines under the authority granted under subdivision 8, the 
        commissioner is exempt from the rulemaking provisions of chapter 
        14. 
           Sec. 18.  Minnesota Statutes 1994, section 245A.09, is 
        amended by adding a subdivision to read: 
           Subd. 11.  [ISSUANCE; DISCRETION OF THE COMMISSIONER.] The 
        issuance of interpretive guidelines is at the discretion of the 
        commissioner of human services. 
           Sec. 19.  Minnesota Statutes 1994, section 245A.09, is 
        amended by adding a subdivision to read: 
           Subd. 12.  [PUBLICATION OF GUIDELINES.] The commissioner 
        shall publish notice of interpretive guidelines availability in 
        the State Register.  The commissioner may publish or make 
        available the interpretive guidelines in any manner determined 
        by the commissioner, provided they are accessible to the general 
        public.  The commissioner may charge a reasonable fee for copies 
        of the guidelines requested by interested parties when they are 
        provided by the commissioner. 
           Sec. 20.  Minnesota Statutes 1994, section 245A.14, 
        subdivision 6, is amended to read: 
           Subd. 6.  [DROP-IN CHILD CARE PROGRAMS.] (a) Except as 
        expressly set forth in this subdivision, drop-in child care 
        programs must be licensed as a drop-in program under the rules 
        governing child care programs operated in a center.  
           (b) Drop-in child care programs are exempt from the 
        following Minnesota Rules: 
           (1) part 9503.0040; 
           (2) part 9503.0045, subpart 1, items F and G; 
           (3) part 9503.0050, subpart 6, except for children less 
        than 2-1/2 years old; 
           (4) one-half the requirements of part 9503.0060, subpart 4, 
        item A, subitems (2), (5), and (8), subpart 5, item A, subitems 
        (2), (3), and (7), and subpart 6, item A, subitems (3) and (6); 
           (5) part 9503.0070; and 
           (6) part 9503.0090, subpart 2.  
           (c) A drop-in child care program must be operated under the 
        supervision of a person qualified as a director and a teacher.  
           (d) A drop-in child care program must have at least two 
        persons on staff whenever the program is operating, except that 
        the commissioner may permit variances from this requirement 
        under specified circumstances for parent cooperative programs, 
        as long as all other staff-to-child ratios are met.  
           (e) Whenever the total number of children present to be 
        cared for at a center is more than 20, children that are younger 
        than age 2-1/2 must be in a separate group.  This group may 
        contain children up to 60 months old.  This group must be cared 
        for in an area that is physically separated from older children. 
           (f) A drop-in child care program must maintain a minimum 
        staff ratio for children age 2-1/2 or greater of one staff 
        person for each ten children.  
           (g) If the program has additional staff who are on call as 
        a mandatory condition of their employment, the minimum 
        child-to-staff ratio may be exceeded only for children age 2-1/2 
        or greater, by a maximum of four children, for no more than 20 
        minutes while additional staff are in transit.  
           (h) The minimum staff-to-child ratio for infants up to 16 
        months of age is one staff person for every four infants.  The 
        minimum staff-to-child ratio for children age 17 months to 30 
        months is one staff for every seven children.  
           (i) In drop-in care programs that serve both infants and 
        older children, children up to age 2-1/2 may be supervised by 
        assistant teachers, as long as other staff are present in 
        appropriate ratios.  
           (j) The minimum staff distribution pattern for a drop-in 
        child care program serving children age 2-1/2 or greater is:  
        the first staff member must be a teacher; the second, third, and 
        fourth staff members must have at least the qualifications of a 
        child care aide; the fifth staff member must have at least the 
        qualifications of an assistant teacher; the sixth, seventh, and 
        eighth staff members must have at least the qualifications of a 
        child care aide; and the ninth staff person must have at least 
        the qualifications of an assistant teacher.  
           (k) A drop-in child care program may care for siblings 16 
        months or older together in any group.  For purposes of this 
        subdivision, sibling is defined as sister or brother, 
        half-sister or half-brother, or stepsister or stepbrother. 
           (l) The commissioner may grant a variance to any of the 
        requirements in paragraphs (a) to (k), as long as the health and 
        safety of the persons served by the program are not affected.  
        The request for a variance shall comply with the provisions in 
        section 245A.04, subdivision 9. 
           Sec. 21.  Minnesota Statutes 1994, section 256.014, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ESTABLISHMENT OF SYSTEMS.] The 
        commissioner of human services shall establish and enhance 
        computer systems necessary for the efficient operation of the 
        programs the commissioner supervises, including: 
           (1) management and administration of the food stamp and 
        income maintenance programs, including the electronic 
        distribution of benefits; 
           (2) management and administration of the child support 
        enforcement program; and 
           (3) administration of medical assistance and general 
        assistance medical care. 
           The commissioner shall distribute the nonfederal share of 
        the costs of operating and maintaining the systems to the 
        commissioner and to the counties participating in the system in 
        a manner that reflects actual system usage, except that the 
        nonfederal share of the costs of the MAXIS computer system and 
        child support enforcement systems shall be borne entirely by the 
        commissioner.  Development costs must not be assessed against 
        county agencies. 
           Sec. 22.  Minnesota Statutes 1994, section 256.025, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
        section, the following terms have the meanings given them.  
           (b) "Base amount" means the calendar year 1990 county share 
        of county agency expenditures for all of the programs specified 
        in subdivision 2, except for the programs in subdivision 2, 
        clauses (4), (7), and (13).  The 1990 base amount for 
        subdivision 2, clause (4), shall be reduced by one-seventh for 
        each county, and the 1990 base amount for subdivision 2, clause 
        (7), shall be reduced by seven-tenths for each county, and those 
        amounts in total shall be the 1990 base amount for group 
        residential housing in subdivision 2, clause (13).  
           (c) "County agency expenditure" means the total expenditure 
        or cost incurred by the county of financial responsibility for 
        the benefits and services for each of the programs specified in 
        subdivision 2, excluding county optional costs which are not 
        reimbursable with state funds.  The term includes the federal, 
        state, and county share of costs for programs in which there is 
        federal financial participation.  For programs in which there is 
        no federal financial participation, the term includes the state 
        and county share of costs.  The term excludes county 
        administrative costs, unless otherwise specified.  
           (d) "Nonfederal share" means the sum of state and county 
        shares of costs of the programs specified in subdivision 2. 
           (e) The "county share of county agency expenditures growth 
        amount" is the amount by which the county share of county agency 
        expenditures in calendar years 1991 to 2000 2002 has increased 
        over the base amount. 
           Sec. 23.  Minnesota Statutes 1994, section 256.025, 
        subdivision 2, is amended to read: 
           Subd. 2.  [COVERED PROGRAMS AND SERVICES.] The procedures 
        in this section govern payment of county agency expenditures for 
        benefits and services distributed under the following programs: 
           (1) aid to families with dependent children under sections 
        256.82, subdivision 1, and 256.935, subdivision 1; 
           (2) medical assistance under sections 256B.041, subdivision 
        5, and 256B.19, subdivision 1; 
           (3) general assistance medical care under section 256D.03, 
        subdivision 6; 
           (4) general assistance under section 256D.03, subdivision 
        2; 
           (5) work readiness under section 256D.03, subdivision 2, 
        for assistance costs incurred prior to July 1, 1995; 
           (6) emergency assistance under section 256.871, subdivision 
        6; 
           (7) Minnesota supplemental aid under section 256D.36, 
        subdivision 1; 
           (8) preadmission screening and alternative care grants; 
           (9) work readiness services under section 256D.051 for 
        employment and training services costs incurred prior to July 1, 
        1995; 
           (10) case management services under section 256.736, 
        subdivision 13, for case management service costs incurred prior 
        to July 1, 1995; 
           (11) general assistance claims processing, medical 
        transportation and related costs; 
           (12) medical assistance, medical transportation and related 
        costs; and 
           (13) group residential housing under section 256I.05, 
        subdivision 8, transferred from programs in clauses (4) and (7). 
           Sec. 24.  Minnesota Statutes 1994, section 256.025, 
        subdivision 3, is amended to read: 
           Subd. 3.  [PAYMENT METHODS.] (a) Beginning July 1, 1991, 
        the state will reimburse counties for the county share of county 
        agency expenditures for benefits and services distributed under 
        subdivision 2.  Reimbursement may take the form of offsets to 
        billings of a county, if the county agrees to the offset process.
           (b) Payments under subdivision 4 are only for client 
        benefits and services distributed under subdivision 2 and do not 
        include reimbursement for county administrative expenses. 
           (c) The state and the county agencies shall pay for 
        assistance programs as follows: 
           (1) Where the state issues payments for the programs, the 
        county shall monthly or quarterly pay to the state, as required 
        by the department of human services, the portion of program 
        costs not met by federal and state funds.  The payment shall be 
        an estimate that is based on actual expenditures from the prior 
        period and that is sufficient to compensate for the county share 
        of disbursements as well as state and federal shares of 
        recoveries; 
           (2) Where the county agencies issue payments for the 
        programs, the state shall monthly or quarterly pay to counties 
        all federal funds available for those programs together with an 
        amount of state funds equal to the state share of expenditures; 
        and 
           (3) Payments made under this paragraph are subject to 
        section 256.017.  Adjustment of any overestimate or 
        underestimate in payments shall be made by the state agency in 
        any succeeding month. 
           Sec. 25.  Minnesota Statutes 1994, section 256.026, is 
        amended to read: 
           256.026 [ANNUAL APPROPRIATION.] 
           (a) There shall be appropriated from the general fund to 
        the commissioner of human services in fiscal year 1994 1996 the 
        amount of $136,154,768 and in fiscal year 1997 and each fiscal 
        year thereafter the amount of $142,339,359, which is the sum of 
        the amount of human services aid determined for all counties in 
        Minnesota for calendar year 1992 under Minnesota Statutes 1992, 
        section 273.1398, subdivision 5a, before any adjustments for 
        calendar year 1991 $133,781,768.  
           (b) In addition to the amount in paragraph (a), there shall 
        also be annually appropriated from the general fund to the 
        commissioner of human services in fiscal years 1996, 1997, 1998, 
        1999, 2000, and 2001 the amount of $5,930,807 $5,574,241. 
           (c) The amounts appropriated under paragraphs (a) and (b) 
        shall be used with other appropriations to make payments 
        required under section 256.025 for fiscal year 1994 1996 and 
        thereafter. 
           Sec. 26.  Minnesota Statutes 1994, section 256.034, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CONSOLIDATION OF TYPES OF ASSISTANCE.] 
        Under the Minnesota family investment plan, assistance 
        previously provided to families through the AFDC, food stamp, 
        and general assistance programs must be combined into a single 
        cash assistance program.  As authorized by Congress, families 
        receiving assistance through the Minnesota family investment 
        plan are automatically eligible for and entitled to medical 
        assistance under chapter 256B.  Federal, state, and local funds 
        that would otherwise be allocated for assistance to families 
        under the AFDC, food stamp, and general assistance programs must 
        be transferred to the Minnesota family investment plan.  The 
        provisions of the Minnesota family investment plan prevail over 
        any provisions of sections 245.771, 256.72 to 256.87, 256D.01 to 
        256D.21, or 393.07, subdivisions 10 and 10a, and any rules 
        implementing those sections with which they are irreconcilable.  
        The food stamp, general assistance, and work readiness programs 
        for single persons and couples who are not responsible for the 
        care of children are not replaced by the Minnesota family 
        investment plan.  Unless stated otherwise in statutes or rules 
        governing the Minnesota family investment plan, participants in 
        the Minnesota family investment plan shall be considered to be 
        recipients of aid under aid to families with dependent children, 
        family general assistance, and food stamps for the purposes of 
        statutes and rules affecting such recipients or allocations of 
        funding based on the assistance status of the recipients, and to 
        specifically be subject to the provisions of section 256.98.  
           Sec. 27.  Minnesota Statutes 1994, section 256.045, 
        subdivision 3, is amended to read: 
           Subd. 3.  [STATE AGENCY HEARINGS.] (a) Any person applying 
        for, receiving or having received public assistance or a program 
        of social services granted by the state agency or a county 
        agency under sections 252.32, 256.031 to 256.036, and 256.72 to 
        256.879, chapters 256B, 256D, 256E, 261, or the federal Food 
        Stamp Act whose application for assistance is denied, not acted 
        upon with reasonable promptness, or whose assistance is 
        suspended, reduced, terminated, or claimed to have been 
        incorrectly paid, or any patient or relative aggrieved by an 
        order of the commissioner under section 252.27, or a party 
        aggrieved by a ruling of a prepaid health plan, may contest that 
        action or decision before the state agency by submitting a 
        written request for a hearing to the state agency within 30 days 
        after receiving written notice of the action or decision, or 
        within 90 days of such written notice if the applicant, 
        recipient, patient, or relative shows good cause why the request 
        was not submitted within the 30-day time limit. 
           (b) Except for a prepaid health plan, a vendor of medical 
        care as defined in section 256B.02, subdivision 7, or a vendor 
        under contract with a county agency to provide social services 
        under section 256E.08, subdivision 4, is not a party and may not 
        request a hearing under this section, except if assisting a 
        recipient as provided in subdivision 4. 
           (c) An applicant or recipient is not entitled to receive 
        social services beyond the services included in the amended 
        community social services plan developed under section 256E.081, 
        subdivision 3, if the county agency has met the requirements in 
        section 256E.081. 
           Sec. 28.  Minnesota Statutes 1994, section 256.045, 
        subdivision 4, is amended to read: 
           Subd. 4.  [CONDUCT OF HEARINGS.] All hearings held pursuant 
        to subdivision 3, 3a, or 4a shall be conducted according to the 
        provisions of the federal Social Security Act and the 
        regulations implemented in accordance with that act to enable 
        this state to qualify for federal grants-in-aid, and according 
        to the rules and written policies of the commissioner of human 
        services.  County agencies shall install equipment necessary to 
        conduct telephone hearings.  A state human services referee may 
        schedule a telephone conference hearing when the distance or 
        time required to travel to the county agency offices will cause 
        a delay in the issuance of an order, or to promote efficiency, 
        or at the mutual request of the parties.  Hearings may be 
        conducted by telephone conferences unless the applicant, 
        recipient, or former recipient objects.  The hearing shall not 
        be held earlier than five days after filing of the required 
        notice with the county or state agency.  The state human 
        services referee shall notify all interested persons of the 
        time, date, and location of the hearing at least five days 
        before the date of the hearing.  Interested persons may be 
        represented by legal counsel or other representative of their 
        choice, including a provider of therapy services, at the hearing 
        and may appear personally, testify and offer evidence, and 
        examine and cross-examine witnesses.  The applicant, recipient, 
        or former recipient shall have the opportunity to examine the 
        contents of the case file and all documents and records to be 
        used by the county or state agency at the hearing at a 
        reasonable time before the date of the hearing and during the 
        hearing.  Upon request, the county agency shall provide 
        reimbursement for transportation, child care, photocopying, 
        medical assessment, witness fee, and other necessary and 
        reasonable costs incurred by the applicant, recipient, or former 
        recipient in connection with the appeal.  All evidence, except 
        that privileged by law, commonly accepted by reasonable people 
        in the conduct of their affairs as having probative value with 
        respect to the issues shall be submitted at the hearing and such 
        hearing shall not be "a contested case" within the meaning of 
        section 14.02, subdivision 3.  The agency must present its 
        evidence prior to or at the hearing, and may not submit evidence 
        after the hearing except by agreement of the parties at the 
        hearing, provided the recipient has the opportunity to respond. 
           Sec. 29.  Minnesota Statutes 1994, section 256.045, 
        subdivision 5, is amended to read: 
           Subd. 5.  [ORDERS OF THE COMMISSIONER OF HUMAN SERVICES.] A 
        state human services referee shall conduct a hearing on the 
        appeal and shall recommend an order to the commissioner of human 
        services.  The recommended order must be based on all relevant 
        evidence and must not be limited to a review of the propriety of 
        the state or county agency's action.  A referee may take 
        official notice of adjudicative facts.  The commissioner of 
        human services may accept the recommended order of a state human 
        services referee and issue the order to the county agency and 
        the applicant, recipient, former recipient, or prepaid health 
        plan.  The commissioner on refusing to accept the recommended 
        order of the state human services referee, shall notify the 
        county agency and the applicant, recipient, former recipient, or 
        prepaid health plan of that fact and shall state reasons 
        therefor and shall allow each party ten days' time to submit 
        additional written argument on the matter.  After the expiration 
        of the ten-day period, the commissioner shall issue an order on 
        the matter to the county agency and the applicant, recipient, 
        former recipient, or prepaid health plan. 
           A party aggrieved by an order of the commissioner may 
        appeal under subdivision 7, or request reconsideration by the 
        commissioner within 30 days after the date the commissioner 
        issues the order.  The commissioner may reconsider an order upon 
        request of any party or on the commissioner's own motion.  A 
        request for reconsideration does not stay implementation of the 
        commissioner's order.  Upon reconsideration, the commissioner 
        may issue an amended order or an order affirming the original 
        order. 
           Any order of the commissioner issued under this subdivision 
        shall be conclusive upon the parties unless appeal is taken in 
        the manner provided by subdivision 7.  Any order of the 
        commissioner is binding on the parties and must be implemented 
        by the state agency or a county agency until the order is 
        reversed by the district court, or unless the commissioner or a 
        district court orders monthly assistance or aid or services paid 
        or provided under subdivision 10. 
           Except for a prepaid health plan, a vendor of medical care 
        as defined in section 256B.02, subdivision 7, or a vendor under 
        contract with a county agency to provide social services under 
        section 256E.08, subdivision 4, is not a party and may not 
        request a hearing or seek judicial review of an order issued 
        under this section, unless assisting a recipient as provided in 
        subdivision 4. 
           Sec. 30.  Minnesota Statutes 1994, section 256.98, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [WRONGFULLY OBTAINING ASSISTANCE.] A person 
        who obtains, or attempts to obtain, or aids or abets any person 
        to obtain by means of a willfully false statement or 
        representation, by intentional concealment of a material fact, 
        or by impersonation or other fraudulent device, assistance to 
        which the person is not entitled or assistance greater than that 
        to which the person is entitled, or who knowingly aids or abets 
        in buying or in any way disposing of the property of a recipient 
        or applicant of assistance without the consent of the county 
        agency with intent to defeat the purposes of sections 
        256.12, 256.031 to 256.0361, 256.72 to 256.871, and chapter 
        256B, or all of these sections is guilty of theft and shall be 
        sentenced pursuant to section 609.52, subdivision 3, clauses 
        (2), (3)(a) and (c), (4), and (5). 
           Sec. 31.  Minnesota Statutes 1994, section 256.98, 
        subdivision 8, is amended to read: 
           Subd. 8.  [DISQUALIFICATION FROM PROGRAM.] Any person found 
        to be guilty of wrongfully obtaining assistance by a federal or 
        state court or by an administrative hearing determination, or 
        waiver thereof, through a disqualification consent agreement, or 
        as part of any approved diversion plan under section 401.065 in 
        either the aid to families with dependent children program or, 
        the food stamp program, the Minnesota family investment plan, 
        the general assistance or family general assistance program, the 
        Minnesota supplemental aid program, or the work readiness 
        program shall be disqualified from that program.  The needs of 
        that individual shall not be taken into consideration in 
        determining the grant level for that assistance unit:  
           (1) for six months after the first offense; 
           (2) for 12 months after the second offense; and 
           (3) permanently after the third or subsequent offense.  
           Any The period for which sanctions are imposed is 
        effective, of program disqualification shall begin on the date 
        stipulated on the advance notice of disqualification without 
        possibility of postponement for administrative stay, or 
        administrative hearing and shall continue through completion 
        unless and until the findings upon which the sanctions were 
        imposed are reversed by a court of competent jurisdiction.  The 
        period for which sanctions are imposed is not subject to 
        review.  The sanctions provided under this subdivision are in 
        addition to, and not in substitution for, any other sanctions 
        that may be provided for by law for the offense involved.  A 
        disqualification established through hearing or waiver shall 
        result in the disqualification period beginning immediately 
        unless the person has become otherwise ineligible for 
        assistance.  If the person is ineligible for assistance, the 
        disqualification period begins when the person again meets the 
        eligibility criteria of the program from which they were 
        disqualified. 
           Sec. 32.  Minnesota Statutes 1994, section 256.983, 
        subdivision 4, is amended to read: 
           Subd. 4.  [FUNDING.] (a) Every involved county agency shall 
        either have in place or obtain an approved contract which meets 
        all federal requirements necessary to obtain enhanced federal 
        funding for its welfare fraud control and fraud prevention 
        investigation programs.  County agency reimbursement shall be 
        made through the settlement provisions applicable to the aid to 
        families with dependent children and food stamp programs. 
           (b) After allowing an opportunity to establish compliance, 
        the commissioner will deny administrative reimbursement if for 
        any three-month period during any grant year, a county agency 
        fails to comply with fraud investigation guidelines, or fails to 
        meet the cost-effectiveness standards developed by the 
        commissioner.  This result is contingent on the commissioner 
        providing written notice, including an offer of technical 
        assistance, within 30 days of the end of the third or subsequent 
        month of noncompliance.  The county agency shall be required to 
        submit a corrective action plan to the commissioner within 30 
        days of receipt of a notice of noncompliance.  Failure to submit 
        a corrective action plan or, continued deviation from standards 
        of more than ten percent after submission of a corrective action 
        plan, will result in denial of funding for each subsequent month 
        during the grant year or billing the county agency for fraud 
        prevention investigation (FPI) service provided by the 
        commissioner.  The denial of funding shall apply to the general 
        settlement received by the county agency on a quarterly basis 
        and shall not reduce the grant amount applicable to the FPI 
        project.  
           Sec. 33.  [256.9861] [FRAUD CONTROL; PROGRAM INTEGRITY 
        REINVESTMENT PROJECT.] 
           Subdivision 1.  [PROGRAM ESTABLISHED.] Within the limits of 
        available state and federal appropriations, and to the extent 
        required or authorized by applicable federal regulations, the 
        commissioner of human services shall make funding available to 
        county agencies for the establishment of program integrity 
        reinvestment initiatives.  The project shall initially be 
        limited to those county agencies participating in federally 
        funded optional fraud control programs as of January 1, 1995.  
           Subd. 2.  [COUNTY PROPOSALS.] Each included county shall 
        develop and submit annual funding, staffing, and operating grant 
        proposals to the commissioner no later than April 30 of each 
        year.  For the first operating year only, the proposal shall be 
        submitted no later than October 30.  Each proposal shall provide 
        information on:  (a) the staffing and funding of the fraud 
        investigation and prosecution operations; (b) job descriptions 
        for agency fraud control staff; (c) contracts covering outside 
        investigative agencies; (d) operational methods to integrate the 
        use of fraud prevention investigation techniques; and (e) 
        administrative disqualification hearings and diversions into the 
        existing county fraud control and prosecution procedures.  
           Subd. 3.  [DEPARTMENT RESPONSIBILITIES.] The commissioner 
        shall provide written instructions outlining the contents of the 
        proposals to be submitted under this section.  Instructions 
        shall be made available 30 days prior to the date by which 
        proposals under subdivision 2 must be submitted.  The 
        commissioner shall establish training programs which shall be 
        attended by fraud control staff of all involved counties.  The 
        commissioner shall also develop the necessary operational 
        guidelines, forms, and reporting mechanisms which shall be used 
        by the involved counties.  
           Subd. 4.  [STANDARDS.] The commissioner shall establish 
        standards governing the performance levels of involved county 
        investigative units based on grant agreements negotiated with 
        the involved county agencies.  The standards shall take into 
        consideration and may include investigative caseloads, grant 
        savings levels, the comparison of fraud prevention and 
        prosecution directed investigations, utilization levels of 
        administrative disqualification hearings, the timely reporting 
        and implementation of disqualifications, and the timeliness of 
        reports received from prosecutors.  
           Subd. 5.  [FUNDING.] (a) Grant funds are intended to help 
        offset the reduction in federal financial participation to 50 
        percent and may be apportioned to the participating counties 
        whenever feasible, and within the commissioner's discretion, to 
        achieve this goal.  State funding shall be made available 
        contingent on counties submitting a plan that is approved by the 
        department of human services.  Failure or delay in obtaining 
        that approval shall not, however, eliminate the obligation to 
        maintain fraud control efforts at the January 1, 1995, level.  
        Additional counties may be added to the project to the extent 
        that funds are subsequently made available.  Every involved 
        county must meet all federal requirements necessary to obtain 
        federal funding for its welfare fraud control and prevention 
        programs.  County agency reimbursement shall be made through the 
        settlement provisions applicable to the AFDC and food stamp 
        programs.  
           (b) Should a county agency fail to comply with the 
        standards set, or fail to meet cost-effectiveness standards 
        developed by the commissioner for three months during any grant 
        year, the commissioner shall deny reimbursement or 
        administrative costs, after allowing an opportunity to establish 
        compliance.  
           (c) Any denial of reimbursement under clause (b) is 
        contingent on the commissioner providing written notice, 
        including an offer of technical assistance, within 30 days of 
        the end of the third or subsequent months of noncompliance.  The 
        county agency shall be required to submit a corrective action 
        plan to the commissioner within 30 days of receipt of a notice 
        of noncompliance.  Failure to submit a corrective action plan or 
        continued deviation from standards of more than ten percent 
        after submission of corrective action plan, will result in 
        denial of funding for each such month during the grant year, or 
        billing the county agency for program integrity reinvestment 
        project services provided by the commissioner.  The denial of 
        funding shall apply to the general settlement received by the 
        county agency on a quarterly basis and shall not reduce the 
        grant amount applicable to the program integrity reinvestment 
        project. 
           Sec. 34.  [256.9862] [ASSISTANCE TRANSACTION CARD FEE.] 
           Subdivision 1.  [REPLACEMENT CARD.] The commissioner of 
        human services may charge a cardholder, defined as a person in 
        whose name the transaction card was issued, a $2 fee to replace 
        an assistance transaction card.  The fees shall be appropriated 
        to the commissioner and used for electronic benefit purposes. 
           Subd. 2.  [TRANSACTION FEE.] The commissioner may charge 
        transaction fees in accordance with this subdivision up to a 
        maximum of $10 in transaction fees per cardholder per month.  In 
        a given month, the first four cash withdrawals made by an 
        individual cardholder are free.  For subsequent cash 
        withdrawals, $1 may be charged.  No transaction fee can be 
        charged if the card is used to purchase goods or services on a 
        point of sale basis.  A transaction fee subsequently set by the 
        federal government may supersede a fee established under this 
        subdivision.  The fees shall be appropriated to the commissioner 
        and used for electronic benefit purposes. 
           Sec. 35.  Minnesota Statutes 1994, section 524.6-207, is 
        amended to read: 
           524.6-207 [RIGHTS OF CREDITORS.] 
           No multiple-party account will be effective against an 
        estate of a deceased party to transfer to a survivor sums needed 
        to pay debts, taxes, and expenses of administration, including 
        statutory allowances to the surviving spouse, minor children and 
        dependent children or against a county agency with a claim 
        authorized by section 256B.15, if other assets of the estate are 
        insufficient, to the extent the deceased party is the source of 
        the funds or beneficial owner.  A surviving party or P.O.D. 
        payee who receives payment from a multiple-party account after 
        the death of a deceased party shall be liable to account to the 
        deceased party's personal representative or a county agency with 
        a claim authorized by section 256B.15 for amounts the decedent 
        owned beneficially immediately before death to the extent 
        necessary to discharge any such claims and charges remaining 
        unpaid after the application of the assets of the decedent's 
        estate.  No proceeding to assert this liability shall be 
        commenced unless by the personal representative unless the 
        personal representative has received a written demand by a 
        surviving spouse, a creditor or one acting for a minor dependent 
        child of the decedent, and no proceeding shall be commenced 
        later than two years following the death of the decedent.  Sums 
        recovered by the personal representative shall be administered 
        as part of the decedent's estate.  This section shall not affect 
        the right of a financial institution to make payment on 
        multiple-party accounts according to the terms thereof, or make 
        it liable to the estate of a deceased party unless, before 
        payment, the institution has been served with process in a 
        proceeding by the personal representative or a county agency 
        with a claim authorized by section 256B.15. 
           Sec. 36.  Minnesota Statutes 1994, section 550.37, 
        subdivision 14, is amended to read: 
           Subd. 14.  [PUBLIC ASSISTANCE.] All relief based on need, 
        and the earnings or salary of a person who is a recipient of 
        relief based on need, shall be exempt from all claims of 
        creditors including any contractual setoff or security interest 
        asserted by a financial institution.  For the purposes of this 
        chapter, relief based on need includes AFDC, general assistance 
        medical care, supplemental security income, medical assistance, 
        Minnesota supplemental assistance, and general assistance.  The 
        salary or earnings of any debtor who is or has been a an 
        eligible recipient of relief based on need, or an inmate of a 
        correctional institution shall, upon the debtor's return to 
        private employment or farming after having been a an eligible 
        recipient of relief based on need, or an inmate of a 
        correctional institution, be exempt from attachment, 
        garnishment, or levy of execution for a period of six months 
        after the debtor's return to employment or farming and after all 
        public assistance for which eligibility existed has been 
        terminated.  The exemption provisions contained in this 
        subdivision also apply for 60 days after deposit in any 
        financial institution, whether in a single or joint account.  In 
        tracing the funds, the first-in first-out method of accounting 
        shall be used.  The burden of establishing that funds are exempt 
        rests upon the debtor.  Agencies distributing relief and the 
        correctional institutions shall, at the request of creditors, 
        inform them whether or not any debtor has been a an eligible 
        recipient of relief based on need, or an inmate of a 
        correctional institution, within the preceding six months. 
           Sec. 37.  [MCLEOD COUNTY; COUNTY OFFICES OUTSIDE COUNTY 
        SEAT.] 
           Notwithstanding Minnesota Statutes, section 382.04 to the 
        contrary, the McLeod county auditor, treasurer, social service 
        director, and recorder may temporarily office at a location in 
        Glencoe township.  The authority provided in this section 
        expires six years after final enactment. 
           Sec. 38.  [WAIVER REQUEST; GRANDPARENT EXCLUSION FROM 
        LICENSURE.] 
           The commissioner of human services shall seek a federal 
        waiver to allow the exclusion of grandparents from the foster 
        care licensing requirements.  If the waiver is granted, 
        notwithstanding Minnesota Statutes, section 245A.03, the 
        commissioner may exclude grandparents from foster care 
        licensure.  The commissioner shall recommend to the legislature 
        in the legislative session following the approval of the waiver, 
        related, necessary changes in the law. 
           Sec. 39.  [REPEALER.] 
           Minnesota Statutes 1994, section 256E.06, subdivisions 12 
        and 13, are repealed. 
           Sec. 40.  [EFFECTIVE DATES.] 
           Subdivision 1.  Sections 5 (245A.03, subdivision 2a), 6 
        (245A.035, subdivisions 1 to 6), 7 to 10 (245A.04, subdivisions 
        3, 3b, 7, and 9), 11 to 13 (245A.06, subdivisions 2, 4, and 7), 
        14 (245A.07, subdivision 3), and 20 (245A.14, subdivision 6), 
        are effective the day following final enactment. 
           Subd. 2.  Under Minnesota Statutes, section 645.023, 
        subdivision 1, clause (a), section 32, takes effect, without 
        local approval, the day following final enactment. 
                                   ARTICLE 3 
                         LIFE SKILLS; SELF-SUFFICIENCY 
           Section 1.  Minnesota Statutes 1994, section 246.23, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CHEMICAL DEPENDENCY TREATMENT.] The commissioner 
        shall maintain a regionally based, state-administered system of 
        chemical dependency programs.  Counties may refer individuals 
        who are eligible for services under chapter 254B to the chemical 
        dependency units in the regional treatment centers.  A 15 
        percent county share of the per diem cost of treatment is 
        required for individuals served within the treatment capacity 
        funded by direct legislative appropriation.  By July 1, 1991, 
        the commissioner shall establish criteria for admission to the 
        chemical dependency units that will maximize federal and private 
        funding sources, fully utilize the regional treatment center 
        capacity, and make state-funded treatment capacity available to 
        counties on an equitable basis.  The admission criteria may be 
        adopted without rulemaking.  Existing rules governing placements 
        under chapters 254A and 254B do not apply to admissions to the 
        capacity funded by direct appropriation.  Private and 
        third-party collections and payments are appropriated to the 
        commissioner for the operation of the chemical dependency 
        units.  In addition to the chemical dependency treatment 
        capacity funded by direct legislative appropriation, the 
        regional treatment centers may provide treatment to additional 
        individuals whose treatment is paid for out of the chemical 
        dependency consolidated treatment fund under chapter 254B, in 
        which case placement rules adopted under chapter 254B apply,; to 
        those individuals who are ineligible but committed for treatment 
        under chapter 253B as provided in section 254B.05, subdivision 
        4; or to individuals covered through other nonstate payment 
        sources.  
           Sec. 2.  Minnesota Statutes 1994, section 252.275, 
        subdivision 3, is amended to read: 
           Subd. 3.  [REIMBURSEMENT.] Counties shall be reimbursed for 
        all expenditures made pursuant to subdivision 1 at a rate of 70 
        percent, up to the allocation determined pursuant to 
        subdivisions 4, 4a, and 4b.  However, the commissioner shall not 
        reimburse costs of services for any person if the costs exceed 
        the state share of the average medical assistance costs for 
        services provided by intermediate care facilities for a person 
        with mental retardation or a related condition for the same 
        fiscal year, and shall not reimburse costs of a one-time living 
        allowance for any person if the costs exceed $1,500 in a state 
        fiscal year.  For the biennium ending June 30, 1993, the 
        commissioner shall not reimburse costs in excess of the 85th 
        percentile of hourly service costs based upon the cost 
        information supplied to the legislature in the proposed budget 
        for the biennium.  The commissioner may make payments to each 
        county in quarterly installments.  The commissioner may certify 
        an advance of up to 25 percent of the allocation.  Subsequent 
        payments shall be made on a reimbursement basis for reported 
        expenditures and may be adjusted for anticipated spending 
        patterns.  
           Sec. 3.  Minnesota Statutes 1994, section 252.275, 
        subdivision 4, is amended to read: 
           Subd. 4.  [FORMULA.] Effective January 1, 1992, The 
        commissioner shall allocate funds on a calendar year basis.  For 
        calendar year 1992, funds shall be allocated based on each 
        county's portion of the statewide reimbursement received under 
        this section for state fiscal year 1991.  For subsequent 
        calendar years, funds shall be Beginning with the calendar year 
        in the 1996 grant period, funds shall be allocated first in 
        amounts equal to each county's guaranteed floor according to 
        subdivision 4b, with any remaining available funds allocated 
        based on each county's portion of the statewide expenditures 
        eligible for reimbursement under this section during the 12 
        months ending on June 30 of the preceding calendar year. 
           If the legislature appropriates funds for special purposes, 
        the commissioner may allocate the funds based on proposals 
        submitted by the counties to the commissioner in a format 
        prescribed by the commissioner.  Nothing in this section 
        prevents a county from using other funds to pay for additional 
        costs of semi-independent living services. 
           Sec. 4.  Minnesota Statutes 1994, section 252.275, 
        subdivision 8, is amended to read: 
           Subd. 8.  [USE OF FEDERAL FUNDS AND TRANSFER OF FUNDS TO 
        MEDICAL ASSISTANCE.] (a) The commissioner shall make every 
        reasonable effort to maximize the use of federal funds for 
        semi-independent living services. 
           (b) The commissioner shall reduce the payments to be made 
        under this section to each county from January 1, 1994 to June 
        30, 1996, by the amount of the state share of medical assistance 
        reimbursement for services other than residential services 
        provided under the home and community-based waiver program under 
        section 256B.092 from January 1, 1994 to June 30, 1996, for 
        clients for whom the county is financially responsible and who 
        have been transferred by the county from the semi-independent 
        living services program to the home and community-based waiver 
        program.  Unless otherwise specified, all reduced amounts shall 
        be transferred to the medical assistance state account. 
           (c) For fiscal year 1997, the base appropriation available 
        under this section shall be reduced by the amount of the state 
        share of medical assistance reimbursement for services other 
        than residential services provided under the home and 
        community-based waiver program authorized in section 256B.092 
        from January 1, 1995 to December 31, 1995, for persons who have 
        been transferred from the semi-independent living services 
        program to the home and community-based waiver program.  The 
        base appropriation for the medical assistance state account 
        shall be increased by the same amount. 
           (d) For purposes of calculating the guaranteed floor under 
        subdivision 4b and to establish the calendar year 1996 
        allocations, each county's original allocation for calendar year 
        1995 shall be reduced by the amount transferred to the state 
        medical assistance account under paragraph (b) during the six 
        months ending on June 30, 1995.  For purposes of calculating the 
        guaranteed floor under subdivision 4b and to establish the 
        calendar year 1997 allocations, each county's original 
        allocation for calendar year 1996 shall be reduced by the amount 
        transferred to the state medical assistance account under 
        paragraph (b) during the six months ending on June 30, 1996 
        December 31, 1995. 
           Sec. 5.  Minnesota Statutes 1994, section 252.292, 
        subdivision 4, is amended to read: 
           Subd. 4.  [FACILITY RATES.] For purposes of this section, 
        the commissioner shall establish payment rates under section 
        256B.501 and Minnesota Rules, parts 9553.0010 to 9553.0080, 
        except that, in order to facilitate an orderly transition of 
        residents from community intermediate care facilities for 
        persons with mental retardation or related conditions to 
        services provided under the home and community-based services 
        program, the commissioner may, in a contract with the provider, 
        modify the effect of provisions in Minnesota Rules, parts 
        9553.0010 to 9553.0080, as stated in clauses (a) to (i): 
           (a) extend the interim and settle-up rate provisions to 
        include facilities covered by this section; 
           (b) extend the length of the interim period but not to 
        exceed 24 12 months.  The commissioner may grant a variance to 
        exceed the 24-month 12-month interim period, as necessary, for 
        facilities which are licensed and certified to serve more than 
        99 persons.  In no case shall the commissioner approve an 
        interim period which exceeds 36 24 months; 
           (c) waive the investment per bed limitations for the 
        interim period and the settle-up rate; 
           (d) limit the amount of reimbursable expenses related to 
        the acquisition of new capital assets; 
           (e) prohibit the acquisition of additional capital debt or 
        refinancing of existing capital debt unless prior approval is 
        obtained from the commissioner; 
           (f) establish an administrative operating cost limitation 
        for the interim period and the settle-up rate; 
           (g) require the retention of financial and statistical 
        records until the commissioner has audited the interim period 
        and the settle-up rate; 
           (h) require that the interim period be audited by a 
        certified or licensed public accounting firm; or 
           (i) change any other provision to which all parties to the 
        contract agree. 
           Sec. 6.  Minnesota Statutes 1994, section 252.46, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [RATES.] (a) Payment rates to vendors, 
        except regional centers, for county-funded day training and 
        habilitation services and transportation provided to persons 
        receiving day training and habilitation services established by 
        a county board are governed by subdivisions 2 to 19.  The 
        commissioner shall approve the following three payment rates for 
        services provided by a vendor: 
           (1) a full-day service rate for persons who receive at 
        least six service hours a day, including the time it takes to 
        transport the person to and from the service site; 
           (2) a partial-day service rate that must not exceed 75 
        percent of the full-day service rate for persons who receive 
        less than a full day of service; and 
           (3) a transportation rate for providing, or arranging and 
        paying for, transportation of a person to and from the person's 
        residence to the service site.  
           (b) The commissioner may also approve an hourly job-coach, 
        follow-along rate for services provided by one employee at or en 
        route to or from community locations to supervise, support, and 
        assist one person receiving the vendor's services to learn 
        job-related skills necessary to obtain or retain employment when 
        and where no other persons receiving services are present and 
        when all the following criteria are met: 
           (1) the vendor requests and the county recommends the 
        optional rate; 
           (2) the service is prior authorized by the county on the 
        medicaid management information system for no more than 414 
        hours in a 12-month period and the daily per person charge to 
        medical assistance does not exceed the vendor's approved full 
        day plus transportation rates; 
           (3) separate full day, partial day, and transportation 
        rates are not billed for the same person on the same day; 
           (4) the approved hourly rate does not exceed the sum of the 
        vendor's current average hourly direct service wage, including 
        fringe benefits and taxes, plus a component equal to the 
        vendor's average hourly nondirect service wage expenses; and 
           (5) the actual revenue received for provision of hourly 
        job-coach, follow-along services is subtracted from the vendor's 
        total expenses for the same time period and those adjusted 
        expenses are used for determining recommended full day and 
        transportation payment rates under subdivision 5 in accordance 
        with the limitations in subdivision 3. 
           (c) Medical assistance rates for home and community-based 
        service provided under section 256B.501, subdivision 4, by 
        licensed vendors of day training and habilitation services must 
        not be greater than the rates for the same services established 
        by counties under sections 252.40 to 252.47.  For very dependent 
        persons with special needs the commissioner may approve an 
        exception to the approved payment rate under section 256B.501, 
        subdivision 4 or 8. 
           Sec. 7.  Minnesota Statutes 1994, section 252.46, 
        subdivision 3, is amended to read: 
           Subd. 3.  [RATE MAXIMUM.] Unless a variance is granted 
        under subdivision 6, the maximum payment rates for each vendor 
        for a calendar year must be equal to the payment rates approved 
        by the commissioner for that vendor in effect December 1 of the 
        previous calendar year.  The commissioner of finance shall 
        include as a budget change request in each biennial detailed 
        expenditure budget submitted to the legislature under section 
        16A.11 annual inflation adjustments in reimbursement rates for 
        each vendor, based upon the projected percentage change in the 
        urban consumer price index, all items, published by the United 
        States Department of Labor, for the upcoming calendar year over 
        the current calendar year.  The commissioner shall not provide 
        an annual inflation adjustment for the biennium ending June 30, 
        1993. 
           Sec. 8.  Minnesota Statutes 1994, section 252.46, 
        subdivision 6, is amended to read: 
           Subd. 6.  [VARIANCES.] (a) A variance from the minimum or 
        maximum payment rates in subdivisions 2 and 3 may be granted by 
        the commissioner when the vendor requests and the county board 
        submits to the commissioner a written variance request on forms 
        supplied by the commissioner with the recommended payment rates. 
        A variance to the rate maximum may be utilized for costs 
        associated with compliance with state administrative rules, 
        compliance with court orders, capital costs required for 
        continued licensure, increased insurance costs, start-up and 
        conversion costs for supported employment, direct service staff 
        salaries and benefits, transportation, and other program related 
        costs when any of the criteria in clauses (1) to (3) (4) is also 
        met: 
           (1) change is necessary to comply with licensing citations; 
           (2) a licensed vendor currently serving fewer than 70 
        persons with payment rates of 80 percent or less of the 
        statewide average rates and with clients meeting the behavioral 
        or medical criteria under clause (3) approved by the 
        commissioner as a significant program change under section 
        252.28; 
           (3) a significant change is approved by the commissioner 
        under section 252.28 that is necessary to provide authorized 
        services to a new client or clients with very severe 
        self-injurious or assaultive behavior, or medical conditions 
        requiring delivery of physician-prescribed medical interventions 
        requiring one-to-one staffing for at least 15 minutes each time 
        they are performed, or to a new client or clients directly 
        discharged to the vendor's program from a regional treatment 
        center; or 
           (3) a significant increase in the average level of (4) 
        there is a need to maintain required staffing is needed levels 
        in order to provide authorized services approved by the 
        commissioner under section 252.28, that is necessitated by 
        a significant and permanent decrease in licensed capacity 
        or loss of clientele when counties choose alternative services 
        under Laws 1992, chapter 513, article 9, section 41. 
           The county shall review the adequacy of services provided 
        by vendors whose payment rates are 80 percent or more of the 
        statewide average rates and 50 percent or more of the vendor's 
        clients meet the behavioral or medical criteria in clause (3). 
           A variance under this paragraph may be approved only if the 
        costs to the medical assistance program do not exceed the 
        medical assistance costs for all clients served by the 
        alternatives and all clients remaining in the existing services. 
           (b) A variance to the rate minimum may be granted when (1) 
        the county board contracts for increased services from a vendor 
        and for some or all individuals receiving services from the 
        vendor lower per unit fixed costs result or (2) when the actual 
        costs of delivering authorized service over a 12-month contract 
        period have decreased. 
           (c) The written variance request under this subdivision 
        must include documentation that all the following criteria have 
        been met: 
           (1) The commissioner and the county board have both 
        conducted a review and have identified a need for a change in 
        the payment rates and recommended an effective date for the 
        change in the rate. 
           (2) The vendor documents efforts to reallocate current 
        staff and any additional staffing needs cannot be met by using 
        temporary special needs rate exceptions under Minnesota Rules, 
        parts 9510.1020 to 9510.1140. 
           (3) The vendor documents that financial resources have been 
        reallocated before applying for a variance.  No variance may be 
        granted for equipment, supplies, or other capital expenditures 
        when depreciation expense for repair and replacement of such 
        items is part of the current rate. 
           (4) For variances related to loss of clientele, the vendor 
        documents the other program and administrative expenses, if any, 
        that have been reduced. 
           (5) The county board submits verification of the conditions 
        for which the variance is requested, a description of the nature 
        and cost of the proposed changes, and how the county will 
        monitor the use of money by the vendor to make necessary changes 
        in services.  
           (6) The county board's recommended payment rates do not 
        exceed 95 percent of the greater of 125 percent of the current 
        statewide median or 125 percent of the regional average payment 
        rates, whichever is higher, for each of the regional commission 
        districts under sections 462.381 to 462.396 in which the vendor 
        is located except for the following:  when a variance is 
        recommended to allow authorized service delivery to new clients 
        with severe self-injurious or assaultive behaviors or with 
        medical conditions requiring delivery of physician prescribed 
        medical interventions, or to persons being directly discharged 
        from a regional treatment center to the vendor's program, those 
        persons must be assigned a payment rate of 200 percent of the 
        current statewide average rates.  All other clients receiving 
        services from the vendor must be assigned a payment rate equal 
        to the vendor's current rate unless the vendor's current rate 
        exceeds 95 percent of 125 percent of the statewide median or 125 
        percent of the regional average payment rates, whichever is 
        higher.  When the vendor's rates exceed 95 percent of 125 
        percent of the statewide median or 125 percent of the regional 
        average rates, the maximum rates assigned to all other clients 
        must be equal to the greater of 95 percent of 125 percent of the 
        statewide median or 125 percent of the regional average rates.  
        The maximum payment rate that may be recommended for the vendor 
        under these conditions is determined by multiplying the number 
        of clients at each limit by the rate corresponding to that limit 
        and then dividing the sum by the total number of clients. 
           (7) The vendor has not received a variance under this 
        subdivision in the past 12 months.  
           (d) The commissioner shall have 60 calendar days from the 
        date of the receipt of the complete request to accept or reject 
        it, or the request shall be deemed to have been granted.  If the 
        commissioner rejects the request, the commissioner shall state 
        in writing the specific objections to the request and the 
        reasons for its rejection. 
           Sec. 9.  Minnesota Statutes 1994, section 252.46, 
        subdivision 17, is amended to read: 
           Subd. 17.  [HOURLY RATE STRUCTURE.] Counties participating 
        as host counties under the pilot study of hourly rates 
        established under Laws 1988, chapter 689, article 2, section 
        117, may recommend continuation of the hourly rates for 
        participating vendors.  The recommendation must be made annually 
        under subdivision 5 and according to the methods and standards 
        provided by the commissioner.  The commissioner shall approve 
        the hourly rates when service authorization, billing, and 
        payment for services is possible through the Medicaid management 
        information system and the other criteria in this subdivision 
        are met.  Counties and vendors operating under the pilot study 
        of hourly rates established under Laws 1988, chapter 689, 
        article 2, section 117, shall work with the commissioner to 
        translate the hourly rates and actual expenditures into rates 
        meeting the criteria in subdivisions 1 to 16 unless hourly rates 
        are approved under this subdivision.  If the rates meeting the 
        criteria in subdivisions 1 to 16 are lower than the county's or 
        vendor's current rate, the county or vendor must continue to 
        receive the current rate. 
           Sec. 10.  Minnesota Statutes 1994, section 252.46, is 
        amended by adding a subdivision to read: 
           Subd. 19.  [VENDOR APPEALS.] With the concurrence of the 
        county board, a vendor may appeal the commissioner's rejection 
        of a variance request which has been submitted by the county 
        under subdivision 6 and may appeal the commissioner's denial 
        under subdivision 9 of a rate which has been recommended by the 
        county.  To appeal, the vendor and county board must file a 
        written notice of appeal with the commissioner.  The notice of 
        appeal must be filed or received by the commissioner within 45 
        days of the postmark date on the commissioner's notification to 
        the vendor and county agency that a variance request or county 
        recommended rate has been denied.  The notice of appeal must 
        specify the reasons for the appeal, the dollar amount in 
        dispute, and the basis in statute or rule for challenging the 
        commissioner's decision. 
           Within 45 days of receipt of the notice of appeal, the 
        commissioner must convene a reconciliation conference to attempt 
        to resolve the rate dispute.  If the dispute is not resolved to 
        the satisfaction of the parties, the parties may initiate a 
        contested case proceeding under sections 14.57 to 14.69.  In a 
        contested case hearing held under this section, the appealing 
        party must demonstrate by a preponderance of the evidence that 
        the commissioner incorrectly applied the governing law or 
        regulations, or that the commissioner improperly exercised the 
        commissioner's discretion, in refusing to grant a variance or in 
        refusing to adopt a county recommended rate. 
           Until the appeal is fully resolved, payments must continue 
        at the existing rate pending the appeal.  Retroactive payments 
        consistent with the final decision shall be made after the 
        appeal is fully resolved. 
           Sec. 11.  Minnesota Statutes 1994, section 252.46, is 
        amended by adding a subdivision to read: 
           Subd. 20.  [STUDY OF DAY TRAINING AND HABILITATION 
        VENDORS.] The commissioner shall study the feasibility of 
        grouping vendors of similar size, location, direct service 
        staffing needs or performance outcomes to establish payment rate 
        limits that define cost-effective service.  Based on the 
        conclusions of the feasibility study the department shall 
        consider developing a method to redistribute dollars from less 
        cost effective to more cost-effective services based on vendor 
        achievement of performance outcomes.  The department shall 
        report to the legislature by January 15, 1996, with results of 
        the study and recommendations for further action.  The 
        department shall consult with an advisory committee representing 
        counties, service consumers, vendors, and the legislature. 
           Sec. 12.  Minnesota Statutes 1994, section 254A.17, 
        subdivision 3, is amended to read: 
           Subd. 3.  [STATEWIDE DETOXIFICATION TRANSPORTATION 
        PROGRAM.] The commissioner shall provide grants to counties, 
        Indian reservations, other nonprofit agencies, or local 
        detoxification programs for provision of transportation of 
        intoxicated individuals to detoxification programs, to open 
        shelters, and to secure shelters as defined in section 254A.085 
        and shelters serving intoxicated persons.  In state fiscal years 
        1994 and, 1995, and 1996, funds shall be allocated to counties 
        in proportion to each county's allocation in fiscal year 1993.  
        In subsequent fiscal years, funds shall be allocated among 
        counties annually in proportion to each county's average number 
        of detoxification admissions for the prior two years, except 
        that no county shall receive less than $400.  Unless a county 
        has approved a grant of funds under this section, the 
        commissioner shall make quarterly payments of detoxification 
        funds to a county only after receiving an invoice describing the 
        number of persons transported and the cost of transportation 
        services for the previous quarter.  A county must make a good 
        faith effort to provide the transportation service through the 
        most cost-effective community-based agencies or organizations 
        eligible to provide the service.  The program administrator and 
        all staff of the program must report to the office of the 
        ombudsman for mental health and mental retardation within 24 
        hours of its occurrence, any serious injury, as defined in 
        section 245.91, subdivision 6, or the death of a person admitted 
        to the shelter.  The ombudsman shall acknowledge in writing the 
        receipt of all reports made to the ombudsman's office under this 
        section.  Acknowledgment must be mailed to the facility and to 
        the county social service agency within five working days of the 
        day the report was made.  In addition, the program administrator 
        and staff of the program must comply with all of the 
        requirements of section 626.557, the vulnerable adults act. 
           Sec. 13.  Minnesota Statutes 1994, section 254B.02, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CHEMICAL DEPENDENCY TREATMENT ALLOCATION.] 
        The chemical dependency funds appropriated for allocation shall 
        be placed in a special revenue account.  For the fiscal year 
        beginning July 1, 1987, funds shall be transferred to operate 
        the vendor payment, invoice processing, and collections system 
        for one year.  The commissioner shall annually transfer funds 
        from the chemical dependency fund to pay for operation of the 
        drug and alcohol abuse normative evaluation system and to pay 
        for all costs incurred by adding two positions for licensing of 
        chemical dependency treatment and rehabilitation programs 
        located in hospitals for which funds are not otherwise 
        appropriated.  The commissioner shall annually divide the money 
        available in the chemical dependency fund that is not held in 
        reserve by counties from a previous allocation.  Twelve percent 
        of the remaining money must be reserved for treatment of 
        American Indians by eligible vendors under section 254B.05.  The 
        remainder of the money must be allocated among the counties 
        according to the following formula, using state demographer data 
        and other data sources determined by the commissioner: 
           (a) The county non-Indian and over age 14 per capita-months 
        of eligibility for aid to families with dependent children, 
        general assistance, and medical assistance is divided by the 
        total state non-Indian and over age 14 per capita-months of 
        eligibility to determine the caseload factor for each county. 
           (b) The average median married couple income for the 
        previous three years for the state is divided by the average 
        median married couple income for the previous three years for 
        each county to determine the income factor.  
           (c) The non-Indian and over age 14 population of the county 
        is multiplied by the sum of the income factor and the caseload 
        factor to determine the adjusted population.  
           (a) For purposes of this formula, American Indians and 
        children under age 14 are subtracted from the population of each 
        county to determine the restricted population. 
           (b) The amount of chemical dependency fund expenditures for 
        entitled persons for services not covered by prepaid plans 
        governed by section 256B.69 in the previous year is divided by 
        the amount of chemical dependency fund expenditures for entitled 
        persons for all services to determine the proportion of exempt 
        service expenditures for each county. 
           (c) The prepaid plan months of eligibility is multiplied by 
        the proportion of exempt service expenditures to determine the 
        adjusted prepaid plan months of eligibility for each county. 
           (d) The adjusted prepaid plan months of eligibility is 
        added to the number of restricted population fee for service 
        months of eligibility for aid to families with dependent 
        children, general assistance, and medical assistance and divided 
        by the county restricted population to determine county per 
        capita months of covered service eligibility. 
           (e) The number of adjusted prepaid plan months of 
        eligibility for the state is added to the number of fee for 
        service months of eligibility for aid to families with dependent 
        children, general assistance, and medical assistance for the 
        state restricted population and divided by the state restricted 
        population to determine state per capita months of covered 
        service eligibility. 
           (f) The county per capita months of covered service 
        eligibility is divided by the state per capita months of covered 
        service eligibility to determine the county welfare caseload 
        factor. 
           (g) The median married couple income for the most recent 
        three-year period available for the state is divided by the 
        median married couple income for the same period for each county 
        to determine the income factor for each county. 
           (h) The county restricted population is multiplied by the 
        sum of the county welfare caseload factor and the county income 
        factor to determine the adjusted population. 
           (d) (i) $15,000 shall be allocated to each county.  
           (e) (j) The remaining funds shall be allocated proportional 
        to the county adjusted population. 
           Sec. 14.  Minnesota Statutes 1994, section 254B.05, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [LICENSURE REQUIRED.] Programs licensed by 
        the commissioner are eligible vendors.  Hospitals may apply for 
        and receive licenses to be eligible vendors, notwithstanding the 
        provisions of section 245A.03.  American Indian programs located 
        on federally recognized tribal lands that provide chemical 
        dependency primary treatment, extended care, transitional 
        residence, or outpatient treatment services, and are licensed by 
        tribal government are eligible vendors.  Detoxification programs 
        are not eligible vendors.  Programs that are not licensed as a 
        chemical dependency residential or nonresidential treatment 
        program by the commissioner or by tribal government are not 
        eligible vendors.  To be eligible for payment under the 
        Consolidated Chemical Dependency Treatment Fund, a vendor must 
        participate in the Drug and Alcohol Abuse Normative Evaluation 
        System and the treatment accountability plan. 
           Sec. 15.  [256.476] [CONSUMER SUPPORT PROGRAM.] 
           Subdivision 1.  [PURPOSE AND GOALS.] The commissioner of 
        human services shall establish a consumer support grant program 
        to assist individuals with functional limitations and their 
        families in purchasing and securing supports which the 
        individuals need to live as independently and productively in 
        the community as possible.  The commissioner and local agencies 
        shall jointly develop an implementation plan which must include 
        a way to resolve the issues related to county liability.  The 
        program shall: 
           (1) make support grants available to individuals or 
        families as an effective alternative to existing programs and 
        services, such as the developmental disability family support 
        program, the alternative care program, personal care attendant 
        services, home health aide services, and nursing facility 
        services; 
           (2) provide consumers more control, flexibility, and 
        responsibility over the needed supports; 
           (3) promote local program management and decision-making; 
        and 
           (4) encourage the use of informal and typical community 
        supports. 
           Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
        following terms have the meanings given them: 
           (a) "County board" means the county board of commissioners 
        for the county of financial responsibility as defined in section 
        256G.02, subdivision 4, or its designated representative.  When 
        a human services board has been established under sections 
        402.01 to 402.10, it shall be considered the county board for 
        the purposes of this section. 
           (b) "Family" means the person's birth parents, adoptive 
        parents or stepparents, siblings or stepsiblings, children or 
        stepchildren, grandparents, grandchildren, niece, nephew, aunt, 
        uncle, or spouse.  For the purposes of this section, a family 
        member is at least 18 years of age. 
           (c) "Functional limitations" means the long-term inability 
        to perform an activity or task in one or more areas of major 
        life activity, including self-care, understanding and use of 
        language, learning, mobility, self-direction, and capacity for 
        independent living.  For the purpose of this section, the 
        inability to perform an activity or task results from a mental, 
        emotional, psychological, sensory, or physical disability, 
        condition, or illness. 
           (d) "Informed choice" means a voluntary decision made by 
        the person or the person's legal representative, after becoming 
        familiarized with the alternatives to: 
           (1) select a preferred alternative from a number of 
        feasible alternatives; 
           (2) select an alternative which may be developed in the 
        future; and 
           (3) refuse any or all alternatives. 
           (e) "Local agency" means the local agency authorized by the 
        county board to carry out the provisions of this section. 
           (f) "Person" or "persons" means a person or persons meeting 
        the eligibility criteria in subdivision 3. 
           (g) "Responsible individual" means an individual designated 
        by the person or their legal representative to act on their 
        behalf.  This individual may be a family member, guardian, 
        representative payee, or other individual designated by the 
        person or their legal representative, if any, to assist in 
        purchasing and arranging for supports.  For the purposes of this 
        section, a responsible individual is at least 18 years of age. 
           (h) "Screening" means the screening of a person's service 
        needs under sections 256B.0911 and 256B.092. 
           (i) "Supports" means services, care, aids, home 
        modifications, or assistance purchased by the person or the 
        person's family.  Examples of supports include respite care, 
        assistance with daily living, and adaptive aids.  For the 
        purpose of this section, notwithstanding the provisions of 
        section 144A.43, supports purchased under the consumer support 
        program are not considered home care services. 
           Subd. 3.  [ELIGIBILITY TO APPLY FOR GRANTS.] (a) A person 
        is eligible to apply for a consumer support grant if the person 
        meets all of the following criteria: 
           (1) the person is eligible for medical assistance as 
        determined under sections 256B.055 and 256B.056 or the person is 
        eligible for alternative care services as determined under 
        section 256B.0913; 
           (2) the person is able to direct and purchase their own 
        care and supports, or the person has a family member, legal 
        representative, or other responsible individual who can purchase 
        and arrange supports on the person's behalf; 
           (3) the person has functional limitations, requires ongoing 
        supports to live in the community, and is at risk of or would 
        continue institutionalization without such supports; and 
           (4) the person will live in a home.  For the purpose of 
        this section, "home" means the person's own home or home of a 
        person's family member.  These homes are natural home settings 
        and are not licensed by the department of health or human 
        services. 
           (b) Persons may not concurrently receive a consumer support 
        grant if they are: 
           (1) receiving home and community-based services under 
        United States Code, title 42, section 1396h(c); personal care 
        attendant and home health aide services under section 256B.0625; 
        a developmental disability family support grant; or alternative 
        care services under section 256B.0913; or 
           (2) residing in an institutional or congregate care setting.
           (c) A person or person's family receiving a consumer 
        support grant shall not be charged a fee or premium by a local 
        agency for participating in the program.  A person or person's 
        family is not eligible for a consumer support grant if their 
        income is at a level where they are required to pay a parental 
        fee under sections 252.27, 256B.055, subdivision 12, and 256B.14 
        and rules adopted under those sections for medical assistance 
        services to a disabled child living with at least one parent. 
           Subd. 4.  [SUPPORT GRANTS; CRITERIA AND LIMITATIONS.] (a) A 
        county board may choose to participate in the consumer support 
        grant program.  If a county board chooses to participate in the 
        program, the local agency shall establish written procedures and 
        criteria to determine the amount and use of support grants.  
        These procedures must include, at least, the availability of 
        respite care, assistance with daily living, and adaptive aids.  
        The local agency may establish monthly or annual maximum amounts 
        for grants and procedures where exceptional resources may be 
        required to meet the health and safety needs of the person on a 
        time-limited basis. 
           (b) Support grants to a person or a person's family may be 
        provided through a monthly subsidy or lump sum payment basis and 
        be in the form of cash, voucher, or direct county payment to 
        vendor.  Support grant amounts must be determined by the local 
        agency.  Each service and item purchased with a support grant 
        must meet all of the following criteria:  
           (1) it must be over and above the normal cost of caring for 
        the person if the person did not have functional limitations; 
           (2) it must be directly attributable to the person's 
        functional limitations; 
           (3) it must enable a person or the person's family to delay 
        or prevent out-of-home placement of the person; and 
           (4) it must be consistent with the needs identified in the 
        service plan, when applicable. 
           (c) Items and services purchased with support grants must 
        be those for which there are no other public or private funds 
        available to the person or the person's family.  Fees assessed 
        to the person or the person's family for health and human 
        services are not reimbursable through the grant. 
           (d) In approving or denying applications, the local agency 
        shall consider the following factors:  
           (1) the extent and areas of the person's functional 
        limitations; 
           (2) the degree of need in the home environment for 
        additional support; and 
           (3) the potential effectiveness of the grant to maintain 
        and support the person in the family environment or the person's 
        own home. 
           (e) At the time of application to the program or screening 
        for other services, the person or the person's family shall be 
        provided sufficient information to ensure an informed choice of 
        alternatives by the person, the person's legal representative, 
        if any, or the person's family.  The application shall be made 
        to the local agency and shall specify the needs of the person 
        and family, the form and amount of grant requested, the items 
        and services to be reimbursed, and evidence of eligibility for 
        medical assistance or alternative care program. 
           (f) Upon approval of an application by the local agency and 
        agreement on a support plan for the person or person's family, 
        the local agency shall make grants to the person or the person's 
        family.  The grant shall be in an amount for the direct costs of 
        the services or supports outlined in the service agreement.  
           (g) Reimbursable costs shall not include costs for 
        resources already available, such as special education classes, 
        day training and habilitation, case management, other services 
        to which the person is entitled, medical costs covered by 
        insurance or other health programs, or other resources usually 
        available at no cost to the person or the person's family. 
           Subd. 5.  [REIMBURSEMENT, ALLOCATIONS, AND REPORTING.] (a) 
        For the purpose of transferring persons to the consumer support 
        grant program from specific programs or services, such as the 
        developmental disability family support program and alternative 
        care program, personal care attendant, home health aide, or 
        nursing facility services, the amount of funds transferred by 
        the commissioner between the developmental disability family 
        support program account, the alternative care account, the 
        medical assistance account, or the consumer support grant 
        account shall be based on each county's participation in 
        transferring persons to the consumer support grant program from 
        those programs and services. 
           (b) At the beginning of each fiscal year, county 
        allocations for consumer support grants shall be based on: 
           (1) the number of persons to whom the county board expects 
        to provide consumer supports grants; 
           (2) their eligibility for current program and services; 
           (3) the amount of nonfederal dollars expended on those 
        individuals for those programs and services; and 
           (4) projected dates when persons will start receiving 
        grants.  County allocations shall be adjusted periodically by 
        the commissioner based on the actual transfer of persons or 
        service openings, and the nonfederal dollars associated with 
        those persons or service openings, to the consumer support grant 
        program. 
           (c) The commissioner shall use up to five percent of each 
        county's allocation, as adjusted, for payments to that county 
        for administrative expenses, to be paid as a proportionate 
        addition to reported direct service expenditures. 
           (d) The commissioner may recover, suspend, or withhold 
        payments if the county board, local agency, or grantee does not 
        comply with the requirements of this section. 
           Subd. 6.  [RIGHT TO APPEAL.] Notice, appeal, and hearing 
        procedures shall be conducted in accordance with section 
        256.045.  The denial, suspension, or termination of services 
        under this program may be appealed by a recipient or applicant 
        under section 256.045, subdivision 3.  It is an absolute defense 
        to an appeal under this section, if the county board proves that 
        it followed the established written procedures and criteria and 
        determined that the grant could not be provided within the 
        county board's allocation of money for consumer support grants. 
           Subd. 7.  [FEDERAL FUNDS.] The commissioner and the 
        counties shall make reasonable efforts to maximize the use of 
        federal funds including funds available through grants and 
        federal waivers.  If federal funds are made available to the 
        consumer support grant program, the money shall be allocated to 
        the responsible county agency's consumer support grant fund. 
           Subd. 8.  [COMMISSIONER RESPONSIBILITIES.] The commissioner 
        shall: 
           (1) transfer and allocate funds pursuant to this section; 
           (2) determine allocations based on projected and actual 
        local agency use; 
           (3) monitor and oversee overall program spending; 
           (4) evaluate the effectiveness of the program; 
           (5) provide training and technical assistance for local 
        agencies and consumers to help identify potential applicants to 
        the program; and 
           (6) develop guidelines for local agency program 
        administration and consumer information. 
           Subd. 9.  [COUNTY BOARD RESPONSIBILITIES.] County boards 
        receiving funds under this section shall: 
           (1) determine the needs of persons and families for 
        services and supports; 
           (2) determine the eligibility for persons proposed for 
        program participation; 
           (3) approve items and services to be reimbursed and inform 
        families of their determination; 
           (4) issue support grants directly to or on behalf of 
        persons; 
           (5) submit quarterly financial reports and an annual 
        program report to the commissioner; 
           (6) coordinate services and supports with other programs 
        offered or made available to persons or their families; and 
           (7) provide assistance to persons or their families in 
        securing or maintaining supports, as needed. 
           Subd. 10.  [CONSUMER RESPONSIBILITIES.] Persons receiving 
        grants under this section shall: 
           (1) spend the grant money in a manner consistent with their 
        agreement with the local agency; 
           (2) notify the local agency of any necessary changes in the 
        grant or the items on which it is spent; 
           (3) notify the local agency of any decision made by the 
        person, the person's legal representative, or the person's 
        family that would change their eligibility for consumer support 
        grants; 
           (4) arrange and pay for supports; and 
           (5) inform the local agency of areas where they have 
        experienced difficulty securing or maintaining supports. 
           Sec. 16.  [256.973] [HOUSING FOR PERSONS WHO ARE ELDERLY, 
        PERSONS WITH PHYSICAL OR DEVELOPMENTAL DISABILITIES, AND 
        SINGLE-PARENT FAMILIES.] 
           Subdivision 1.  [HOME SHARING.] The home-sharing grant 
        program authorized by section 462A.05, subdivision 24, is 
        transferred from the Minnesota housing finance agency to the 
        department of human services.  The housing finance agency shall 
        administer the current grants that terminate on August 30, 
        1995.  The department of human services shall administer grants 
        funded after August 30, 1995.  The department of human services 
        may engage in housing programs, as defined by the agency, to 
        provide grants to housing sponsors who will provide a 
        home-sharing program for low- and moderate-income elderly, 
        persons with physical or developmental disabilities, or 
        single-parent families in urban and rural areas. 
           Subd. 2.  [MATCHING OWNERS AND TENANTS.] Housing sponsors 
        of home sharing programs, as defined by the agency, shall match 
        existing homeowners with prospective tenants who will contribute 
        either rent or services to the homeowner, where either the 
        homeowner or the prospective tenant is elderly, a person with 
        physical or developmental disabilities, or the head of a 
        single-parent family.  Home-sharing projects will coordinate 
        efforts with appropriate public and private agencies and 
        organizations in their area. 
           Subd. 3.  [INFORMATION FOR PARTICIPANTS.] Housing sponsors 
        who receive funding through these programs shall provide 
        homeowners and tenants participating in a home-sharing program 
        with information regarding their rights and obligations as they 
        relate to federal and state tax law including, but not limited 
        to, taxable rental income, homestead credit under chapter 273, 
        and the property tax refund act under chapter 290A. 
           Subd. 4.  [TECHNICAL ASSISTANCE.] The department of human 
        services may provide technical assistance to sponsors of 
        home-sharing programs or may contract or delegate the provision 
        of technical assistance. 
           Subd. 5.  [USING OUTSIDE AGENCIES.] The department of human 
        services may delegate, use, or employ any federal, state, 
        regional, or local public or private agency or organization, 
        including organizations of physically handicapped persons, upon 
        terms it deems necessary or desirable, to assist in the exercise 
        of any of the powers granted in this section. 
           Sec. 17.  Minnesota Statutes 1994, section 256.975, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [INDIAN ELDERS POSITION.] The Minnesota board on 
        aging shall create an Indian elders coordinator position, and 
        shall hire staff as appropriations permit for the purposes of 
        coordinating efforts with the National Indian Council on Aging 
        and developing a comprehensive statewide service system for 
        Indian elders.  An Indian elder is defined for purposes of this 
        subdivision as an Indian enrolled in a band or tribe who is 55 
        years or older.  The statewide service system must include the 
        following components: 
           (1) an assessment of the program eligibility, examining the 
        need to change the age-based eligibility criteria to need-based 
        eligibility criteria; 
           (2) a planning system that would grant or make 
        recommendations for granting federal and state funding for 
        services; 
           (3) a plan for service focal points, senior centers, or 
        community centers for socialization and service accessibility 
        for Indian elders; 
           (4) a plan to develop and implement education and public 
        awareness campaigns including awareness programs, sensitivity 
        cultural training, and public education on Indian elder needs; 
           (5) a plan for information and referral services including 
        trained advocates and an Indian elder newsletter; 
           (6) a plan for a coordinated health care system including 
        health promotion/prevention, in-home service, long-term care 
        service, and health care services; 
           (7) a plan for ongoing research involving Indian elders 
        including needs assessment and needs analysis; 
           (8) information and referral services for legal advice or 
        legal counsel; and 
           (9) a plan to coordinate services with existing 
        organizations including the council of Indian affairs, the 
        Minnesota Indian council of elders, the Minnesota board on 
        aging, and tribal governments. 
           Sec. 18.  Minnesota Statutes 1994, section 256B.0628, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [ASSESSMENT AND PRIOR AUTHORIZATION PROCESS FOR 
        RECIPIENTS OF BOTH HOME CARE AND HOME AND COMMUNITY-BASED 
        WAIVERED SERVICES FOR PERSONS WITH MENTAL RETARDATION OR RELATED 
        CONDITIONS.] Effective January 1, 1996, for purposes of 
        providing informed choice, coordinating of local planning 
        decisions, and streamlining administrative requirements, the 
        assessment and prior authorization process for persons receiving 
        both home care and home and community-based waivered services 
        for persons with mental retardation or related conditions shall 
        meet the requirements of this section and section 256B.0627 with 
        the following exceptions: 
           (a) Upon request for home care services and subsequent 
        assessment by the public health nurse under section 256B.0627, 
        the public health nurse shall participate in the screening 
        process, as appropriate, and, if home care services are 
        determined to be necessary, participate in the development of a 
        service plan coordinating the need for home care and home and 
        community-based waivered services with the assigned county case 
        manager, the recipient of services, and the recipient's legal 
        representative, if any. 
           (b) The public health nurse shall give prior authorization 
        for home care services to the extent that home care services are:
           (1) medically necessary; 
           (2) chosen by the recipient and their legal representative, 
        if any, from the array of home care and home and community-based 
        waivered services available; 
           (3) coordinated with other services to be received by the 
        recipient as described in the service plan; and 
           (4) provided within the county's reimbursement limits for 
        home care and home and community-based waivered services for 
        persons with mental retardation or related conditions. 
           (c) If the public health agency is or may be the provider 
        of home care services to the recipient, the public health agency 
        shall provide the commissioner of human services with a written 
        plan that specifies how the assessment and prior authorization 
        process will be held separate and distinct from the provision of 
        services. 
           Sec. 19.  Minnesota Statutes 1994, section 256B.092, is 
        amended by adding a subdivision to read: 
           Subd. 4c.  [LIVING ARRANGEMENTS BASED ON A 24-HOUR PLAN OF 
        CARE.] (a) Notwithstanding the requirements for licensure under 
        Minnesota Rules, part 9525.1860, subpart 6, item D, and upon 
        federal approval of an amendment to the home and community-based 
        services waiver for persons with mental retardation or related 
        conditions, a person receiving home and community-based services 
        may choose to live in their own home without requiring that the 
        living arrangement be licensed under Minnesota Rules, parts 
        9555.5050 to 9555.6265, provided the following conditions are 
        met: 
           (1) the person receiving home and community-based services 
        has chosen to live in their own home; 
           (2) home and community-based services are provided by a 
        qualified vendor who meets the provider standards as approved in 
        the Minnesota home and community-based services waiver plan for 
        persons with mental retardation or related conditions; 
           (3) the person, or their legal representative, individually 
        or with others has purchased or rents the home and the person's 
        service provider has no financial interest in the home; and 
           (4) the service planning team, as defined in Minnesota 
        Rules, part 9525.0004, subpart 24, has determined that the 
        planned services, the 24-hour plan of care, and the housing 
        arrangement are appropriate to address the health, safety, and 
        welfare of the person. 
           (b) The county agency may require safety inspections of the 
        selected housing as part of their determination of the adequacy 
        of the living arrangement. 
           Sec. 20.  [AUTHORIZATION FOR DOWNSIZING.] 
           Subdivision 1.  [DUTIES OF THE COMMISSIONER.] (a) The 
        commissioner of human services in consultation with Brown county 
        and advocates of persons with mental retardation, shall carry 
        out a voluntary downsizing of MBW on Center, an intermediate 
        care facility for persons with mental retardation, to assure 
        that appropriate services are provided in the least restrictive 
        setting as provided under Minnesota Statutes, section 252.291, 
        subdivision 3. 
           (b) The commissioner shall present a proposal to address 
        issues relating to: 
           (1) redistribution of costs; 
           (2) specific plans for the development and provision of 
        alternative services for residents moved from the intermediate 
        care facility for persons with mental retardation or related 
        conditions; 
           (3) timelines and expected beginning dates for resident 
        relocation and facility downsizing; and 
           (4) projected expenditures for services provided to persons 
        with mental retardation or related conditions. 
           (c) The commissioner shall ensure that residents discharged 
        from the facility are appropriately placed according to need in 
        compliance with Minnesota Rules, parts 9525.0025 to 9525.0165. 
           (d) The commissioner shall ensure that the proposal 
        complies with need determination procedures in Minnesota 
        Statutes, sections 252.28 and 252.291; case management 
        responsibilities in Minnesota Statutes, section 256B.092; rate 
        requirements in Minnesota Statutes, section 256B.501; the 
        requirements under United States Code, title 42, section 1396, 
        and the rules and regulations adopted under these laws. 
           (e) The resulting downsizing must result in living units of 
        no larger than four persons, having single bedrooms and a common 
        living room, dining room/kitchen, and bathroom. 
           (f) The commissioner shall contract with Brown county where 
        the facility is located and the facility.  The contract will 
        address and be consistent with the requirements of the proposal. 
           (g) Operating costs of the facility after downsizing may 
        not exceed the total allowable operating costs of the original 
        facility.  For purposes of rate setting for the facility after 
        downsizing, fixed costs may be redistributed but must be based 
        on the actual costs reflected in existing rates. 
           Subd. 2.  [IMPLEMENTATION OF THE PROPOSAL.] For the 
        purposes of the proposal, the commissioner shall: 
           (1) fund the downsizing of the ICF/MR; and 
           (2) notify Brown county and the facility of the selections 
        made and approved by the commissioner.  The decision of the 
        commissioner is final and may not be appealed. 
           Sec. 21.  [FACILITY CERTIFICATION.] 
           Notwithstanding Minnesota Statutes, section 252.291, 
        subdivisions 1 and 2, the commissioner of health shall inspect 
        to certify a large community-based facility currently licensed 
        under Minnesota Rules, parts 9525.0215 to 9525.0355, for more 
        than 16 beds and located in Northfield.  The facility may be 
        certified for up to 44 beds.  The commissioner of health must 
        inspect to certify the facility as soon as possible after the 
        effective date of this section.  The commissioner of human 
        services shall work with the facility and affected counties to 
        relocate any current residents of the facility who do not meet 
        the admission criteria for an ICF/MR.  To fund the ICF/MR 
        services and relocations of current residents authorized, the 
        commissioner of human services may transfer on a quarterly basis 
        to the medical assistance account from each affected county's 
        community social service allocation, an amount equal to the 
        state share of medical assistance reimbursement for the 
        residential and day habilitation services funded by medical 
        assistance and provided to clients for whom the county is 
        financially responsible.  For nonresidents of Minnesota seeking 
        admission to the facility, Rice county shall be notified in 
        order to assure that appropriate funding is guaranteed from 
        their state or country of residence. 
           Sec. 22.  [CRISIS INTERVENTION PROJECTS.] 
           (a) The commissioner of human services may authorize up to 
        five projects to provide crisis intervention through 
        community-based services in the private or public sector to 
        persons with developmental disabilities.  The projects must be 
        geographically distributed in rural and urban areas.  The 
        parameters of these projects may be consistent with the special 
        needs crisis services outlined under Minnesota Statutes, section 
        256B.501, subdivision 8a. 
           (b) The commissioner shall request proposals from 
        individual counties or groups of counties and establish criteria 
        for approval of proposals.  Criteria shall include: 
           (1) avoidance of duplication of service by agreements with 
        hospitals and other public or private vendors as appropriate; 
           (2) reduction of inpatient psychiatric hospital expenses 
        using a cost-effective alternative service; 
           (3) maintenance of clients in their current homes; 
           (4) promotion of service to clients under a capitation 
        agreement with providers; 
           (5) coordination with other target populations and other 
        counties; 
           (6) provision of a full complement of on-site and off-site 
        behavioral support and crisis response services including: 
        training and technical assistance to prevent out of home 
        placements; crisis response, including in-home and short-term 
        placements; and assessment of service outcomes; 
           (7) evaluation of service program efficacy and cost 
        effectiveness. 
           (c) The commissioner shall review proposals in accordance 
        with Minnesota Statutes, section 252.28, and shall report to the 
        legislature on the cost effectiveness of the projects by January 
        15, 1997. 
           Sec. 23.  [REPEALER.] 
           Minnesota Statutes 1994, section 252.275, subdivisions 4a 
        and 10, are repealed. 
           Sec. 24.  [EFFECTIVE DATES.] 
           Section 15 (256.476) is effective July 1, 1996. 
                                   ARTICLE 4 
                              CHILDREN'S PROGRAMS 
           Section 1.  Minnesota Statutes 1994, section 245A.14, 
        subdivision 7, is amended to read: 
           Subd. 7.  [CULTURAL DYNAMICS AND DISABILITIES TRAINING FOR 
        CHILD CARE PROVIDERS.] (a) The ongoing training required of 
        licensed child care centers center staff and group family and 
        group family child care providers and staff shall include 
        training in the cultural dynamics of early childhood development 
        and child care as an option. 
           (b) The cultural dynamics and disabilities training must 
        include, but not be limited to, the following:  awareness of the 
        value and dignity of different cultures and how different 
        cultures complement each other; awareness of the emotional, 
        physical, and mental needs of children and families of different 
        cultures; knowledge of current and traditional roles of women 
        and men in different cultures, communities, and family 
        environments; and awareness of the diversity of child rearing 
        practices and parenting traditions. and skills development of 
        child care providers shall be designed to achieve outcomes for 
        providers of child care that include, but are not limited to: 
           (1) an understanding and support of the importance of 
        culture and differences in ability in children's identity 
        development; 
           (2) understanding the importance of awareness of cultural 
        differences and similarities in working with children and their 
        families; 
           (3) understanding and support of the needs of families and 
        children with differences in ability; 
           (4) developing skills to help children develop unbiased 
        attitudes about cultural differences and differences in ability; 
           (5) developing skills in culturally appropriate caregiving; 
        and 
           (6) developing skills in appropriate caregiving for 
        children of different abilities.  
           Curriculum for cultural dynamics and disability training 
        shall be approved by the commissioner. 
           (c) The commissioner shall amend current rules relating to 
        the initial training of the licensed child care center staff and 
        licensed providers included in paragraph (a) of family and group 
        family child care and staff to require cultural dynamics 
        training upon determining that sufficient curriculum is 
        developed statewide.  Timelines established in the rule 
        amendments for complying with the cultural dynamics training 
        requirements shall be based on the commissioner's determination 
        that curriculum materials and trainers are available statewide. 
           Sec. 2.  Minnesota Statutes 1994, section 256.8711, is 
        amended to read: 
           256.8711 [EMERGENCY ASSISTANCE; INTENSIVE FAMILY 
        PRESERVATION SERVICES.] 
           Subdivision 1.  [SCOPE OF SERVICES.] (a) For a family 
        experiencing an emergency as defined in subdivision 2, and for 
        whom the county authorizes services under subdivision 3, 
        intensive family preservation services authorized under this 
        section include both intensive family preservation services and 
        emergency assistance placement services. 
           (b) For purposes of this section, intensive family 
        preservation services are: 
           (1) crisis family-based services; 
           (2) counseling family-based services; and 
           (3) mental health family-based services. 
           Intensive family preservation services also include 
        family-based life management skills when it is provided in 
        conjunction with any of the three family-based services or five 
        emergency assistance placement services in this subdivision.  
        The intensive family preservation services in clauses (1), (2), 
        and (3) and life management skills have the meanings given in 
        section 256F.03, subdivision 5, paragraphs (a), (b), (c), and 
        (e). 
           (c) For purposes of this section, emergency assistance 
        placement services include: 
           (1) emergency shelter services; 
           (2) foster care services; 
           (3) group home services; 
           (4) child residential treatment services; and 
           (5) correctional facility services. 
           Subd. 2.  [DEFINITION OF EMERGENCY.] For the purposes of 
        this section, an emergency is a situation in which the dependent 
        children are at risk for out-of-home placement due to abuse, 
        neglect, or delinquency; or when the children are returning home 
        from placements but need services to prevent another 
        placement; or when the parents are unable to provide care; or 
        when the dependent children have been removed from the home by a 
        peace officer, by order of the juvenile court, or pursuant to a 
        voluntary placement agreement, to a publicly funded out-of-home 
        placement. 
           Subd. 3.  [COUNTY AUTHORIZATION.] The county agency shall 
        assess current and prospective client families with a dependent 
        under 21 years of age to determine if there is an emergency, as 
        defined in subdivision 2, and to determine if there is a need 
        for intensive family preservation services.  Upon such 
        determinations, during the period October 1, 1993 to September 
        30, 1995, counties shall authorize intensive family preservation 
        services for up to 90 days 12 months for eligible families under 
        this section and under section 256.871, subdivisions 1 and 
        3.  Effective October 1, 1995, Once authorized, intensive family 
        services shall be used singly or in any combination or duration 
        up to 12 months appropriate to the needs of the child, as 
        determined by the county agency. 
           Subd. 3a.  [LIMITATIONS ON FEDERAL FUNDING.] County 
        agencies shall determine eligibility under Title IV-E of the 
        Social Security Act for every child being considered for 
        emergency assistance placement services.  The commissioner and 
        county agencies shall make every effort to use federal funding 
        under Title IV-E of the Social Security Act instead of federal 
        funding under this section, whenever possible.  The counties' 
        obligations to continue the base level of expenditures and to 
        expand family preservation services as defined in section 
        256F.03, subdivision 5, are eliminated, with the termination of 
        if the federal revenue earned under this section is terminated.  
        If the federal revenue earned under this section is terminated 
        or inadequate, the state has no obligation to pay for these 
        services.  In the event that federal limitations or ceilings are 
        imposed on federal emergency assistance funding, the 
        commissioner shall use the funds according to these priorities: 
           (1) emergency assistance benefits under section 256.871; 
           (2) emergency assistance benefits under the reserve 
        established in subdivision 5; 
           (3) intensive family preservation services under this 
        section; and 
           (4) emergency assistance placement services under this 
        section. 
           Subd. 4.  [COST TO FAMILIES.] Family preservation services 
        provided under this section or sections 256F.01 to 256F.07 shall 
        be provided at no cost to the client and without regard to the 
        client's available income or assets.  Emergency assistance 
        placement services provided under this section shall not be 
        dependent on the client's available income or assets.  However, 
        county agencies shall seek costs of care as required under 
        section 260.251 for emergency assistance placement services. 
           Subd. 5.  [EMERGENCY ASSISTANCE RESERVE.] The commissioner 
        shall establish an emergency assistance reserve for families who 
        receive intensive family preservation services under this 
        section.  A family is eligible to receive assistance once from 
        the emergency assistance reserve if it received intensive family 
        preservation services under this section within the past 12 
        months, but has not received emergency assistance under section 
        256.871 during that period.  The emergency assistance reserve 
        shall cover the cost of the federal share of the assistance that 
        would have been available under section 256.871, except for the 
        provision of intensive family preservation services provided 
        under this section.  The emergency assistance reserve shall be 
        authorized and paid in the same manner as emergency assistance 
        is provided under section 256.871.  Funds set aside for the 
        emergency assistance reserve that are not needed as determined 
        by the commissioner shall be distributed by the terms of 
        subdivision 6, paragraph (a); or 6b, paragraph (a), depending on 
        how the funds were earned. 
           Subd. 6.  [DISTRIBUTION OF NEW FEDERAL REVENUE EARNED FOR 
        INTENSIVE FAMILY PRESERVATION SERVICES.] (a) All federal funds 
        not set aside under paragraph (b), and at least 50 percent of 
        all federal funds earned for intensive family preservation 
        services under this section and earned through assessment 
        activity under subdivision 3, shall be paid to each county based 
        on its earnings and assessment activity, respectively, and shall 
        be used by each county to expand family preservation core 
        services as defined in section 256F.03, subdivision 5 10, and 
        may be used to expand crisis nursery services.  If a county 
        joins a local children's mental health collaborative as 
        authorized by the 1993 legislature, then the federal 
        reimbursement received under this paragraph by the county for 
        providing intensive family preservation services to children 
        served by the local collaborative shall be transferred by the 
        county to the integrated fund.  The federal reimbursement 
        transferred to the integrated fund by the county must be used 
        for intensive family preservation services as defined in section 
        256F.03, subdivision 5, to the target population.  
           (b) The commissioner shall set aside a portion, not to 
        exceed 50 percent, of the federal funds earned for intensive 
        family preservation services under this section and earned 
        through assessment activity described under subdivision 3.  The 
        set aside funds shall be used to develop and expand intensive 
        family preservation services statewide as provided in 
        subdivisions 6a and 7 and establish an emergency assistance 
        reserve as provided in subdivision 5.  
           Subd. 6a.  [DEVELOPMENT GRANTS.] Except for the portion 
        needed for the emergency assistance reserve provided in 
        subdivision 5, the commissioner may shall distribute the funds 
        set aside under subdivision 6, paragraph (b), 
        through development grants to a county or counties to establish 
        and maintain approved intensive family preservation core 
        services as defined in section 256F.03, subdivision 10, 
        statewide.  Funds available for crisis family-based services 
        through section 256F.05, subdivision 8, shall be considered in 
        establishing intensive family preservation services statewide.  
        The commissioner may phase in intensive family preservation 
        services in a county or group of counties as new federal funds 
        become available.  The commissioner's priority is to establish a 
        minimum level of intensive family preservation core services 
        statewide.  Each county's development grant shall be paid and 
        used as provided in sections 256F.01 to 256F.06. 
           Subd. 6b.  [DISTRIBUTION OF NEW FEDERAL REVENUE EARNED FOR 
        EMERGENCY ASSISTANCE PLACEMENT SERVICES.] (a) All federal funds 
        earned for emergency assistance placement services not set aside 
        under paragraph (b), shall be paid to each county based on its 
        earnings.  These payments shall constitute the placement 
        earnings grant of the family preservation fund under sections 
        256F.01 to 256F.06. 
           (b) The commissioner may set aside a portion, not to exceed 
        15 percent, of the federal funds earned for emergency assistance 
        placement services under this section.  The set aside funds 
        shall be used for the emergency assistance reserve as provided 
        in subdivision 5. 
           Subd. 7.  [EXPANSION OF SERVICES AND BASE LEVEL OF 
        EXPENDITURES.] (a) Counties must continue the base level of 
        expenditures for family preservation core services as defined in 
        section 256F.03, subdivision 5 10, from any state, county, or 
        federal funding source, which, in the absence of federal funds 
        earned for intensive family preservation services under this 
        section and earned through assessment activity described under 
        subdivision 3, would have been available for these services.  
        The commissioner shall review the county expenditures annually, 
        using reports required under sections 245.482, 256.01, 
        subdivision 2, paragraph (17), and 256E.08, subdivision 8, to 
        ensure that the base level of expenditures for family 
        preservation core services as defined in section 256F.03, 
        subdivision 5 10, is continued from sources other than the 
        federal funds earned under this section and earned through 
        assessment activity described under subdivision 3. 
           (b) The commissioner may shall, at the request of a county, 
        reduce, suspend, or eliminate either or both of a county's 
        obligations to continue the base level of expenditures and to 
        expand family preservation core services as defined in section 
        256F.03, subdivision 5 10, if the commissioner determines that 
        one or more of the following conditions apply to that county: 
           (1) imposition of levy limits or other levy restrictions 
        that significantly reduce available social service funds; 
           (2) reduction in the net tax capacity of the taxable 
        property within a county that significantly reduces available 
        social service funds; 
           (3) reduction in the number of children under age 19 in the 
        county by 25 percent when compared with the number in the base 
        year using the most recent data provided by the state 
        demographer's office; or 
           (4) termination or reduction of the federal revenue earned 
        under this section; or 
           (5) other changes in state law that significantly impact 
        the receipt or distribution of state and federal funding. 
           (c) The commissioner may suspend for one year either or 
        both of a county's obligations to continue the base level of 
        expenditures and to expand family preservation core services as 
        defined in section 256F.03, subdivision 5 10, if the 
        commissioner determines that in the previous year one or more of 
        the following conditions applied to that county: 
           (1) the unduplicated number of families who received family 
        preservation services under section 256F.03, subdivision 5, 
        paragraphs (a), (b), (c), and (e), equals or exceeds the 
        unduplicated number of children who entered placement under 
        sections 257.071 and 393.07, subdivisions 1 and 2, during the 
        year; 
           (2) the total number of children in placement under 
        sections 257.071 and 393.07, subdivisions 1 and 2, has been 
        reduced by 50 percent from the total number in the base year; or 
           (3) the average number of children in placement under 
        sections 257.071 and 393.07, subdivisions 1 and 2, on the last 
        day of each month is equal to or less than one child per 1,000 
        children in the county. 
           (d) For the purposes of this section, the base year is 
        calendar year 1992.  For the purposes of this section, the base 
        level of expenditures is the level of county expenditures in the 
        base year for eligible family preservation services under 
        section 256F.03, subdivision 5, paragraphs (a), (b), (c), and 
        (e). 
           Subd. 8.  [COUNTY RESPONSIBILITIES.] (a) Notwithstanding 
        section 256.871, subdivision 6, for intensive 
        family preservation services provided under this section, the 
        county agency shall submit quarterly fiscal reports as required 
        under section 256.01, subdivision 2, clause (17), and provide 
        the nonfederal share. 
           (b) County expenditures eligible for federal reimbursement 
        under this section must not be made from federal funds or funds 
        used to match other federal funds. 
           (c) The commissioner may suspend, reduce, or terminate the 
        federal reimbursement to a county that does not meet the 
        reporting or other requirements of this section. 
           Subd. 9.  [PAYMENTS.] Notwithstanding section 256.025, 
        subdivision 2, payments to counties for social service 
        expenditures for intensive family preservation services under 
        this section shall be made only from the federal earnings under 
        this section and earned through assessment activity described 
        under subdivision 3.  Counties may use up to ten percent of 
        federal earnings received under subdivision 6, paragraph (a), to 
        cover costs of income maintenance activities related to the 
        operation of this section and sections 256B.094 and 256F.10. 
           Subd. 10.  [COMMISSIONER RESPONSIBILITIES.] The 
        commissioner in consultation with counties shall analyze state 
        funding options to cover costs of counties' base level 
        expenditures and any expansion of the nonfederal share of 
        intensive family preservation services resulting from 
        implementation of this section.  The commissioner shall also 
        study problems of implementation, barriers to maximizing federal 
        revenue, and the impact on out-of-home placements of 
        implementation of this section.  The commissioner shall report 
        to the legislature on the results of this analysis and study, 
        together with recommendations, by February 15, 1995.  
           Sec. 3.  Minnesota Statutes 1994, section 256D.02, 
        subdivision 5, is amended to read: 
           Subd. 5.  "Family" means the applicant or recipient and the 
        following persons who reside with the applicant or recipient:  
           (1) the applicant's spouse; 
           (2) any minor child of whom the applicant is a parent, 
        stepparent, or legal custodian, and that child's minor siblings, 
        including half-siblings and stepsiblings; 
           (3) the other parent of the applicant's minor child or 
        children together with that parent's minor children, and, if 
        that parent is a minor, his or her parents, stepparents, legal 
        guardians, and minor siblings; and 
           (4) if the applicant or recipient is a minor, the minor's 
        parents, stepparents, or legal guardians, and any other minor 
        children for whom those parents, stepparents, or legal guardians 
        are financially responsible.  
           For the period July 1, 1993 to June 30, 1995, A minor child 
        who is temporarily absent from the applicant's or recipient's 
        home due to placement in foster care paid for from state or 
        local funds, but who is expected to return within six months of 
        the month of departure, is considered to be residing with the 
        applicant or recipient. 
           A "family" must contain at least one minor child and at 
        least one of that child's natural or adoptive parents, 
        stepparents, or legal custodians. 
           Sec. 4.  Minnesota Statutes 1994, section 256E.115, is 
        amended to read: 
           256E.115 [SAFE HOUSES AND TRANSITIONAL HOUSING FOR HOMELESS 
        YOUTH.] 
           Subdivision 1.  [COMMISSIONER DUTIES.] The commissioner 
        shall have authority to make grants for pilot programs when the 
        legislature authorizes money to encourage innovation in the 
        development of safe house programs to respond to the needs of 
        homeless youth issue a request for proposals from organizations 
        that are knowledgeable about the needs of homeless youth for the 
        purpose of providing safe houses and transitional housing for 
        homeless youth.  The commissioner shall appoint a review 
        committee of up to eight members to evaluate the proposals.  The 
        review panel must include representation from communities of 
        color, youth, and other community providers and agency 
        representatives who understand the needs and problems of 
        homeless youth.  The commissioner shall also assist in 
        coordinating funding from federal and state grant programs and 
        funding available from a variety of sources for efforts to 
        promote a continuum of services for youth through a consolidated 
        grant application.  The commissioner shall analyze the needs of 
        homeless youth and gaps in services throughout the state and 
        determine how to best serve those needs within the available 
        funding. 
           Subd. 2.  [SAFE HOUSES AND TRANSITIONAL HOUSING.] A safe 
        house provides emergency housing for homeless youth ranging in 
        age from 13 to 22 with the goal of reuniting the family, if 
        appropriate, whenever possible.  Transitional housing provides 
        housing for homeless youth ages 16 to 22 who are transitioning 
        into independent living. 
           In developing both types of housing, the commissioner and 
        the review committee shall try to create a family atmosphere in 
        a neighborhood or community and, if possible, provide separate 
        but cooperative homes for males and females.  It may be 
        necessary, due to licensing restrictions, to provide separate 
        housing for different age groups.  The following services, or 
        adequate access to referrals for the following services, must be 
        made available to the homeless youth: 
           (1) counseling services for the youth, and their families, 
        if appropriate, on site, to help with problems that resulted in 
        the homelessness; 
           (2) job services to help youth find employment in addition 
        to creating jobs on site, including food service, maintenance, 
        child care, and tutoring; 
           (3) health services that are confidential and provide 
        preventive care services, crisis referrals, and other necessary 
        health care services; 
           (4) living skills training to help youth learn how to care 
        for themselves; and 
           (5) education services that help youth enroll in academic 
        programs, if they are currently not in a program.  Enrollment in 
        an academic program is required for residency in transitional 
        housing. 
           Sec. 5.  Minnesota Statutes 1994, section 256F.01, is 
        amended to read: 
           256F.01 [PUBLIC POLICY.] 
           The public policy of this state is to assure that all 
        children, regardless of minority racial or ethnic heritage, live 
        in families that offer a safe, permanent relationship with 
        nurturing parents or caretakers.  To help assure children the 
        opportunity to establish lifetime relationships, public social 
        services must strive to provide culturally competent services 
        and be directed toward: 
           (1) preventing the unnecessary separation of children from 
        their families by identifying family problems, assisting 
        families in resolving their problems, and preventing breakup of 
        the family if it is desirable and possible; 
           (2) restoring to their families children who have been 
        removed, by continuing to provide services to the reunited child 
        and the families; 
           (3) placing children in suitable adoptive homes, in cases 
        where restoration to the biological family is not possible or 
        appropriate; and 
           (4) assuring adequate care of children away from their 
        homes, in cases where the child cannot be returned home or 
        cannot be placed for adoption. 
           Sec. 6.  Minnesota Statutes 1994, section 256F.02, is 
        amended to read: 
           256F.02 [CITATION.] 
           Sections 256F.01 to 256F.07 and 256F.10 may be cited as the 
        "Minnesota family preservation act." 
           Sec. 7.  Minnesota Statutes 1994, section 256F.03, 
        subdivision 5, is amended to read: 
           Subd. 5.  [FAMILY-BASED SERVICES.] "Family-based services" 
        means one or more of the services described in paragraphs (a) to 
        (f) provided to families primarily in their own home for a 
        limited time.  Family-based services eligible for funding under 
        the family preservation act are the services described in 
        paragraphs (a) to (f). 
           (a) [CRISIS SERVICES.] "Crisis services" means professional 
        services provided within 24 hours of referral to alleviate a 
        family crisis and to offer an alternative to placing a child 
        outside the family home.  The services are intensive and time 
        limited.  The service may offer transition to other appropriate 
        community-based services. 
           (b) [COUNSELING SERVICES.] "Counseling services" means 
        professional family counseling provided to alleviate individual 
        and family dysfunction; provide an alternative to placing a 
        child outside the family home; or permit a child to return 
        home.  The duration, frequency, and intensity of the service is 
        determined in the individual or family service plan. 
           (c) [LIFE MANAGEMENT SKILLS SERVICES.] "Life management 
        skills services" means paraprofessional services that teach 
        family members skills in such areas as parenting, budgeting, 
        home management, and communication.  The goal is to strengthen 
        family skills as an alternative to placing a child outside the 
        family home or to permit a child to return home.  A social 
        worker shall coordinate these services within the family case 
        plan. 
           (d) [CASE COORDINATION SERVICES.] "Case coordination 
        services" means professional services provided to an individual, 
        family, or caretaker as an alternative to placing a child 
        outside the family home, to permit a child to return home, or to 
        stabilize the long-term or permanent placement of a child.  
        Coordinated services are provided directly, are arranged, or are 
        monitored to meet the needs of a child and family.  The 
        duration, frequency, and intensity of services is determined in 
        the individual or family service plan. 
           (e) [MENTAL HEALTH SERVICES.] "Mental health services" 
        means the professional services defined in section 245.4871, 
        subdivision 31. 
           (f) [EARLY INTERVENTION SERVICES.] "Early intervention 
        services" means family-based intervention services designed to 
        help at-risk families avoid crisis situations. 
           Sec. 8.  Minnesota Statutes 1994, section 256F.03, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [FAMILY PRESERVATION CORE SERVICES.] "Family 
        preservation core services" means adequate capacity of crisis 
        services as defined in subdivision 5, paragraph (a), plus either 
        or both counseling services as defined in subdivision 5, 
        paragraph (b), and mental health services as defined in 
        subdivision 5, paragraph (e), plus life management skills 
        services as defined in subdivision 5, paragraph (c). 
           Sec. 9.  Minnesota Statutes 1994, section 256F.04, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GRANT PROGRAM FAMILY PRESERVATION FUND.] 
        The commissioner shall establish a statewide family preservation 
        grant program fund to assist counties in providing placement 
        prevention and family reunification services.  This fund shall 
        include a basic grant for family preservation services, a 
        placement earnings grant under section 256.8711, subdivision 6b, 
        paragraph (a), and a development grant under section 256.8711, 
        subdivision 6a, to assist counties in developing and expanding 
        their family preservation core services as defined in section 
        256F.03, subdivision 10.  Beginning with calendar year 1998, 
        after each annual or quarterly calculation, these three 
        component grants shall be added together and treated as a single 
        family preservation grant. 
           Sec. 10.  Minnesota Statutes 1994, section 256F.04, 
        subdivision 2, is amended to read: 
           Subd. 2.  [FORMS AND INSTRUCTIONS.] The commissioner shall 
        provide necessary forms and instructions to the counties for 
        their community social services plan, as required in section 
        256E.09, that incorporate the permanency plan format and 
        information necessary to apply for a family preservation fund 
        grant, and to exercise county options under section 256F.05, 
        subdivision 7, paragraph (a), or subdivision 8, paragraph (c).  
           Sec. 11.  Minnesota Statutes 1994, section 256F.05, is 
        amended by adding a subdivision to read: 
           Subd. 1a.  [DEVELOPMENT OF FAMILY PRESERVATION CORE 
        SERVICES.] The commissioner shall annually determine whether a 
        county's family preservation core services, as defined in 
        section 256F.03, subdivision 10, are developed for that calendar 
        year.  In making this determination for any given calendar year, 
        the commissioner shall consider factors for each county such as 
        which family preservation core services are included in its 
        community services plan under section 256E.09, the ratio of 
        expenditures on family preservation core services to 
        expenditures on out-of-home placements, the availability of 
        crisis services as defined in section 256F.03, subdivision 5, 
        paragraph (a), and recent trends in out-of-home placements both 
        within that county and statewide. 
           Sec. 12.  Minnesota Statutes 1994, section 256F.05, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MONEY AVAILABLE FOR THE BASIC GRANT.] Money 
        appropriated for family preservation grants to counties under 
        sections 256F.04 to 256F.07, together with an amount as 
        determined by the commissioner of title IV-B funds distributed 
        to Minnesota according to the Social Security Act, United States 
        Code, title 42, section 621, must be distributed to counties on 
        a calendar year basis according to the formula in subdivision 3. 
           Sec. 13.  Minnesota Statutes 1994, section 256F.05, 
        subdivision 3, is amended to read: 
           Subd. 3.  [BASIC GRANT FORMULA.] (a) The amount of money 
        allocated to counties under subdivision 2 must be based on the 
        following two factors shall first be allocated in amounts equal 
        to each county's guaranteed floor according to paragraph (b), 
        and second, any remaining available funds allocated as follows: 
           (1) 90 percent of the funds shall be allocated based on the 
        population of the county under age 19 years as compared to the 
        state as a whole as determined by the most recent data from the 
        state demographer's office; and 
           (2) ten percent of the funds shall be allocated based on 
        the county's percentage share of the number of minority children 
        in substitute care receiving children's case management services 
        as defined by the commissioner based on the most recent data as 
        determined by the most recent department of human services 
        annual report on children in foster care commissioner. 
           The amount of money allocated according to formula factor 
        (1) must not be less than 90 percent of the total allocated 
        under subdivision 2. 
           (b) Each county's basic grant guaranteed floor shall be 
        calculated as follows: 
           (1) 90 percent of the county's allocation received in the 
        preceding calendar year.  For calendar year 1996 only, the 
        allocation received in the preceding calendar year shall be 
        determined by the commissioner based on the funding previously 
        distributed as separate grants under sections 256F.04 to 
        256F.07; and 
           (2) when the amounts of funds available for allocation is 
        less than the amount available in the previous year, each 
        county's previous year allocation shall be reduced in proportion 
        to the reduction in the statewide funding, for the purpose of 
        establishing the guaranteed floor. 
           (c) The commissioner shall regularly review the use of 
        family preservation fund allocations by county.  The 
        commissioner may reallocate unexpended or unencumbered money at 
        any time among those counties that have expended or are 
        projected to expend their full allocation. 
           Sec. 14.  Minnesota Statutes 1994, section 256F.05, 
        subdivision 4, is amended to read: 
           Subd. 4.  [PAYMENTS.] The commissioner shall make grant 
        payments to each county whose biennial community social services 
        plan includes a permanency plan has been approved under section 
        256F.04, subdivision 2.  The payment must be made basic grant 
        under subdivisions 2 and 3 and the development grant under 
        section 256.8711, subdivision 6a, shall be paid to counties in 
        four installments per year.  The commissioner may certify the 
        payments for the first three months of a calendar year.  
        Subsequent payments must be made on May 15, August 15, and 
        November 15, of each calendar year.  When an amount of title 
        IV-B funds as determined by the commissioner is made available, 
        it shall be reimbursed to counties on November 15. shall be 
        based on reported expenditures and may be adjusted for 
        anticipated spending patterns.  The placement earnings grant 
        under section 256.8711, subdivision 6b, paragraph (a), shall be 
        based on earnings and coordinated with the other payments.  In 
        calendar years 1996 and 1997, the placement earnings grant and 
        the development grant shall be distributed separately from the 
        basic grant, except as provided in subdivision 7, paragraph 
        (a).  Beginning with calendar year 1998, after each annual or 
        quarterly calculation, these three component grants shall be 
        added together into a single family preservation fund grant and 
        treated as a single grant. 
           Sec. 15.  Minnesota Statutes 1994, section 256F.05, 
        subdivision 5, is amended to read: 
           Subd. 5.  [INAPPROPRIATE EXPENDITURES.] Family preservation 
        fund basic, placement earnings, and development grant money must 
        not be used for: 
           (1) child day care necessary solely because of the 
        employment or training to prepare for employment, of a parent or 
        other relative with whom the child is living; 
           (2) residential facility payments; 
           (3) adoption assistance payments; 
           (4) public assistance payments for aid to families with 
        dependent children, supplemental aid, medical assistance, 
        general assistance, general assistance medical care, or 
        community health services authorized by sections 145A.09 to 
        145A.13; or 
           (5) administrative costs for local social services agency 
        public assistance staff.  
           Sec. 16.  Minnesota Statutes 1994, section 256F.05, 
        subdivision 7, is amended to read: 
           Subd. 7.  [TRANSFER OF FUNDS USES OF PLACEMENT EARNINGS AND 
        DEVELOPMENT GRANTS.] Notwithstanding subdivision 1, the 
        commissioner may transfer money from the appropriation for 
        family preservation grants to counties into the subsidized 
        adoption account when a deficit in the subsidized adoption 
        program occurs.  The amount of the transfer must not exceed five 
        percent of the appropriation for family preservation grants to 
        counties. (a) For calendar years 1996 and 1997, each county must 
        use its placement earnings and development grants to develop and 
        expand its family preservation core services as defined in 
        section 256F.03, subdivision 10.  If a county demonstrates that 
        its family preservation core services are developed as provided 
        in subdivision 1a, then at the county's written request, the 
        commissioner shall add its placement earnings and development 
        grant to its basic grant, to be used as a single family 
        preservation fund grant. 
           (b) Beginning with calendar year 1998, each county which 
        has demonstrated that year that its family preservation core 
        services are developed as provided in subdivision 1a, shall have 
        its placement earnings and development grant added to its basic 
        grant, to be used as a single family preservation fund grant.  
        The development grant for any county which has not so 
        demonstrated shall be redistributed to all counties which have, 
        in proportion to their calculated development grants. 
           Sec. 17.  Minnesota Statutes 1994, section 256F.05, 
        subdivision 8, is amended to read: 
           Subd. 8.  [USES OF FAMILY PRESERVATION FUND GRANTS FOR 
        FAMILY-BASED CRISIS SERVICES.] Within the limits of 
        appropriations made for this purpose, the commissioner may award 
        grants for the families first program, including section 
        256F.08, to be distributed on a calendar year basis to counties 
        to provide programs for family-based crisis services defined in 
        section 256F.03, subdivision 5.  The commissioner shall ask 
        counties to present proposals for the funding and shall award 
        grants for the funding on a competitive basis.  Beginning 
        January 1, 1993, the state share of the costs of the programs 
        shall be 75 percent and the county share, 25 percent.  For both 
        basic grants and single family preservation fund grants: 
           (a) A county which has not demonstrated that year that its 
        family preservation core services are developed as provided in 
        subdivision 1a, must use its family preservation fund grant 
        exclusively for family preservation services defined in section 
        256F.03, subdivision 5, paragraphs (a), (b), (c), and (e). 
           (b) A county which has demonstrated that year that its 
        family preservation core services are developed becomes eligible 
        either to continue using its family preservation fund grant as 
        provided in paragraph (a), or to exercise the expanded service 
        option under paragraph (c). 
           (c) The expanded service option permits an eligible county 
        to use its family preservation fund grant for child welfare 
        preventative services as defined in section 256F.10, subdivision 
        7, paragraph (d).  To exercise this option, an eligible county 
        must notify the commissioner in writing of its intention to do 
        so no later than 30 days into the quarter during which it 
        intends to begin or in its county plan, as provided in section 
        256F.04, subdivision 2.  Effective with the first day of that 
        quarter, the county must maintain its base level of expenditures 
        for child welfare preventative services and use the family 
        preservation fund to expand them.  The base level of 
        expenditures for a county shall be that established under 
        section 256F.10, subdivision 7.  For counties which have no such 
        base established, a comparable base shall be established with 
        the base year being the calendar year ending at least two 
        calendar quarters before the first calendar quarter in which the 
        county exercises its expanded service option.  The commissioner 
        shall, at the request of the counties, reduce, suspend, or 
        eliminate either or both of a county's obligations to continue 
        the base level of expenditures and to expand child welfare 
        preventative services based on conditions described in section 
        256F.10, subdivision 7, paragraph (b) or (c).  
           (d) Each county's placement earnings and development grant 
        shall be determined under section 256.8711, but after each 
        annual or quarterly calculation, if added to that county's basic 
        grant, the three component grants shall be treated as a single 
        family preservation fund grant. 
           Sec. 18.  Minnesota Statutes 1994, section 256F.06, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [RESPONSIBILITIES.] A county board may, 
        alone or in combination with other county boards, apply for a 
        family preservation fund grant as provided in section 256F.04, 
        subdivision 2.  Upon approval of the family preservation grant, 
        the county board may contract for or directly provide 
        family-based and other eligible services. 
           Sec. 19.  Minnesota Statutes 1994, section 256F.06, 
        subdivision 2, is amended to read: 
           Subd. 2.  [USES OF GRANTS DEVELOPING FAMILY PRESERVATION 
        CORE SERVICES.] The grant must be used exclusively for 
        family-based services.  A county board shall endeavor to develop 
        and expand its family preservation core services.  When a county 
        can demonstrate that its family preservation core services are 
        developed as provided in section 256F.05, subdivision 1a, a 
        county board becomes eligible to exercise the expanded service 
        option under section 256F.05, subdivision 8, paragraph (c).  For 
        calendar years 1996 and 1997, the county board also becomes 
        eligible to request that its basic, placement earnings, and 
        development grants be added into a single grant under section 
        256F.05, subdivision 7, paragraph (a). 
           Sec. 20.  Minnesota Statutes 1994, section 256F.06, 
        subdivision 4, is amended to read: 
           Subd. 4.  [REPORTING.] The commissioner shall specify 
        requirements for reports, including quarterly fiscal reports, 
        according to section 256.01, subdivision 2, paragraph (17).  The 
        reports must include: 
           (1) a detailed statement of expenses attributable to the 
        grant during the preceding quarter; and 
           (2) a statement of the expenditure of money for 
        family-based services by the county during the preceding 
        quarter, including the number of clients served and the 
        expenditures, by client, for each service provided.  
           Sec. 21.  Minnesota Statutes 1994, section 256F.09, is 
        amended to read: 
           256F.09 [GRANTS FOR CHILDREN'S SAFETY FAMILY VISITATION 
        CENTERS.] 
           Subdivision 1.  [PURPOSE.] The commissioner shall issue a 
        request for proposals from existing local nonprofit, 
        nongovernmental, or governmental organizations, to use existing 
        local facilities as pilot children's safety family visitation 
        centers which may also be used for visitation exchanges.  The 
        commissioner shall award grants in amounts up to $50,000 for the 
        purpose of creating children's safety or maintaining family 
        visitation centers in an effort to reduce children's 
        vulnerability to violence and trauma related to family 
        visitation, where there has been a history of domestic violence 
        or abuse within the family.  At least one of the pilot projects 
        shall be located in the seven-county metropolitan area and at 
        least one of the projects shall be located outside the 
        seven-county metropolitan area, and The commissioner shall award 
        the grants to provide the greatest possible number of safety 
        family visitation centers and to locate them to provide for the 
        broadest possible geographic distribution of the centers 
        throughout the state.  
           Each children's safety family visitation center must use 
        existing local facilities to provide a healthy interactive 
        environment for parents who are separated or divorced and for 
        parents with children in foster homes to visit with their 
        children.  The centers must be available for use by district 
        courts who may order visitation to occur at a safety family 
        visitation center.  The centers may also be used as drop-off 
        sites, so that parents who are under court order to have no 
        contact with each other can exchange children for visitation at 
        a neutral site.  Each center must provide sufficient security to 
        ensure a safe visitation environment for children and their 
        parents.  A grantee must demonstrate the ability to provide a 25 
        percent local match, which may include in-kind contributions. 
           Subd. 1a.  [COUNTY INVOLVEMENT.] Each county or group of 
        counties is encouraged to provide supervised visitation services 
        in an effort to fill the gap in the court system that orders 
        supervised visitation, but does not provide a center to 
        accomplish the supervised visitation as ordered.  Each county or 
        group of counties is encouraged to either financially contribute 
        to an existing family visitation center in the area, or 
        establish a new center if there is not one in the area, possibly 
        through county social services.  In creating a new center, the 
        county may collaborate with other counties, other family 
        visitation centers, family services collaboratives, court 
        services, and any other entity or organization.  The goal is to 
        provide family visitation centers statewide.  The county shall 
        apply for funding that may be available through the federal 
        government, specifically for family preservation or family 
        reunification purposes, or any other source of funding that will 
        aid in developing and maintaining this vital service. 
           Subd. 2.  [PRIORITIES FUNDING.] The commissioner may award 
        grants to create or maintain family visitation centers. 
           In awarding grants to maintain a family visitation center, 
        the commissioner may award a grant to a center that can 
        demonstrate a 35 percent local match, provided the center is 
        diligently exploring and pursuing all available funding options 
        in an effort to become self-sustaining, and those efforts are 
        reported to the commissioner. 
           In awarding grants under the program to create a family 
        visitation center, the commissioner shall give priority to: 
           (1) areas of the state where no children's safety other 
        family visitation center or similar facility exists; 
           (2) applicants who demonstrate that private funding for the 
        center is available and will continue; and 
           (3) facilities that are adapted for use to care for 
        children, such as day care centers, religious institutions, 
        community centers, schools, technical colleges, parenting 
        resource centers, and child care referral services. 
           Subd. 3.  [ADDITIONAL SERVICES.] Each family visitation 
        center may provide parenting and child development classes, and 
        offer support groups to participating custodial parents and hold 
        regular classes designed to assist children who have experienced 
        domestic violence and abuse. 
           Subd. 4.  [REPORT.] The commissioner shall evaluate the 
        operation of the pilot children's safety family visitation 
        centers and report to the legislature by February 1, 1994, with 
        recommendations. 
           Subd. 5.  [ADMINISTRATION.] In administering the grants 
        authorized by this section, the commissioner shall ensure that 
        the term "family visitation center" is used in all future 
        applications, publicity releases, requests for proposals, and 
        other materials of like nature.  Materials published prior to 
        the enactment of this legislation which use different terms may 
        be distributed by the commissioner until supplies are gone. 
           Sec. 22.  Minnesota Statutes 1994, section 256H.01, 
        subdivision 9, is amended to read: 
           Subd. 9.  [FAMILY.] "Family" means parents, stepparents, 
        guardians and their spouses, or other eligible relative 
        caretakers and their spouses, and their blood related dependent 
        children and adoptive siblings under the age of 18 years living 
        in the same home including children temporarily absent from the 
        household in settings such as schools, foster care, and 
        residential treatment facilities.  When a minor parent or 
        parents and his, her, or their child or children are living with 
        other relatives, and the minor parent or parents apply for a 
        child care subsidy, "family" means only the minor parent or 
        parents and the child or children.  An adult may be considered a 
        dependent member of the family unit if 50 percent of the adult's 
        support is being provided by the parents, stepparents, guardians 
        and their spouses, or eligible relative caretakers and their 
        spouses, residing in the same household.  An adult age 18 who is 
        a full-time high school student and can reasonably be expected 
        to graduate before age 19 may be considered a dependent member 
        of the family unit. 
           Sec. 23.  Minnesota Statutes 1994, section 256H.01, 
        subdivision 12, is amended to read: 
           Subd. 12.  [PROVIDER.] "Provider" means a child care 
        license holder who operates a family day care home, a group 
        family day care home, a day care center, a nursery school, a day 
        nursery, an extended day school age child care program; a person 
        exempt from licensure who meets child care standards established 
        legal nonlicensed extended day school age child care program 
        which operates under the auspices of a local school board that 
        has adopted school age child care standards which meet or exceed 
        standards recommended by the state board department of 
        education; or a legal nonlicensed caregiver who is at least 18 
        years of age, and who is not a member of the AFDC assistance 
        unit.  
           Sec. 24.  Minnesota Statutes 1994, section 256H.02, is 
        amended to read: 
           256H.02 [DUTIES OF COMMISSIONER.] 
           The commissioner shall develop standards for county and 
        human services boards to provide child care services to enable 
        eligible families to participate in employment, training, or 
        education programs.  Within the limits of available 
        appropriations, the commissioner shall distribute money to 
        counties to reduce the costs of child care for eligible 
        families.  The commissioner shall adopt rules to govern the 
        program in accordance with this section.  The rules must 
        establish a sliding schedule of fees for parents receiving child 
        care services.  In the rules adopted under this section, county 
        and human services boards shall be authorized to establish 
        policies for payment of child care spaces for absent children, 
        when the payment is required by the child's regular provider.  
        The rules shall not set a maximum number of days for which 
        absence payments can be made, but instead shall direct the 
        county agency to set limits and pay for absences according to 
        the prevailing market practice in the county.  County policies 
        for payment of absences shall be subject to the approval of the 
        commissioner.  The commissioner shall maximize the use of 
        federal money under the AFDC employment special needs program in 
        section 256.736, subdivision 8, and other programs that provide 
        federal reimbursement for child care services for recipients of 
        aid to families with dependent children who are in education, 
        training, job search, or other activities allowed under those 
        programs.  Money appropriated under this section must be 
        coordinated with the AFDC employment special needs program and 
        other programs that provide federal reimbursement for child care 
        services to accomplish this purpose.  Federal reimbursement 
        obtained must be allocated to the county that spent money for 
        child care that is federally reimbursable under programs that 
        provide federal reimbursement for child care services.  The 
        counties shall use the federal money to expand child care 
        services.  The commissioner may adopt rules under chapter 14 to 
        implement and coordinate federal program requirements. 
           Sec. 25.  Minnesota Statutes 1994, section 256H.03, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ALLOCATION PERIOD; NOTICE OF ALLOCATION.] 
        When the commissioner notifies county and human service boards 
        of the forms and instructions they are to follow in the 
        development of their biennial community social services plans 
        required under section 256E.08, the commissioner shall also 
        notify county and human services boards of their estimated child 
        care fund program allocation for the two years covered by the 
        plan.  By June October 1 of each year, the commissioner shall 
        notify all counties of their final child care fund program 
        allocation. 
           Sec. 26.  Minnesota Statutes 1994, section 256H.03, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [ELIGIBLE RECIPIENTS.] Families that meet the 
        eligibility requirements under sections 256H.10, except AFDC 
        recipients, MFIP recipients, and transition year families, and 
        256H.11 are eligible for child care assistance under the basic 
        sliding fee program.  From July 1, 1990, to June 30, 1991, a 
        county may not accept new applications for the basic sliding fee 
        program unless the county can demonstrate that its state money 
        expenditures for the basic sliding fee program for this period 
        will not exceed 95 percent of the county's allocation of state 
        money for the fiscal year ending June 30, 1990.  As basic 
        sliding fee program money becomes available to serve new 
        families, eligible families whose benefits were terminated 
        during the fiscal year ending June 30, 1990, for reasons other 
        than loss of eligibility shall be reinstated.  Families enrolled 
        in the basic sliding fee program as of July 1, 1990, shall be 
        continued until they are no longer eligible.  Counties shall 
        make vendor payments to the child care provider or pay the 
        parent directly for eligible child care expenses on a 
        reimbursement basis.  Child care assistance provided through the 
        child care fund is considered assistance to the parent. 
           Sec. 27.  Minnesota Statutes 1994, section 256H.03, 
        subdivision 4, is amended to read: 
           Subd. 4.  [ALLOCATION FORMULA.] Beginning July 1, 1992 
        January 1, 1996, the basic sliding fee state and federal funds 
        shall be allocated on a calendar year basis.  Funds shall be 
        allocated first in amounts equal to each county's guaranteed 
        floor according to subdivision 6, with any remaining available 
        funds allocated according to the following formula:  
           (a) One-half One-third of the funds shall be allocated in 
        proportion to each county's total expenditures for the basic 
        sliding fee child care program reported during the 12-month 
        period ending on December 31 of the preceding state fiscal 
        year most recent calendar year completed at the time of the 
        notice of allocation.  
           (b) One-fourth One-third of the funds shall be allocated 
        based on the number of children under age 13 in each county who 
        are enrolled in general assistance medical care, medical 
        assistance, and the children's health plan on July 1, of each 
        year MinnesotaCare on December 31 of the most recent calendar 
        year completed at the time of the notice of allocation. 
           (c) One-fourth One-third of the funds shall be allocated 
        based on the number of children under age 13 who reside in each 
        county, from the most recent estimates of the state demographer. 
           Sec. 28.  Minnesota Statutes 1994, section 256H.03, is 
        amended by adding a subdivision to read: 
           Subd. 4a.  [SIX-MONTH ALLOCATION.] For the period from July 
        1, 1995, to December 31, 1995, every county shall receive an 
        allocation at least equal and proportionate to one-half of its 
        original allocation in state fiscal year 1995.  This six-month 
        allocation shall be combined with the calendar year 1996 
        allocation and be administered as one 18-month allocation. 
           Sec. 29.  Minnesota Statutes 1994, section 256H.03, 
        subdivision 6, is amended to read: 
           Subd. 6.  [GUARANTEED FLOOR.] (a) Each county's guaranteed 
        floor shall equal the lesser of:  
           (1) the county's original allocation in the preceding state 
        fiscal year; or 
           (2) 110 percent of the county's basic sliding fee child 
        care program state and federal earnings for the 12-month period 
        ending on December 31 of the preceding state fiscal year.  For 
        purposes of this clause, "state and federal earnings" means the 
        reported direct child care expenditures adjusted for the 
        administrative allowance and 15 percent required county 
        match. Beginning January 1, 1996, each county's guaranteed floor 
        shall equal 90 percent of the allocation received in the 
        preceding calendar year.  For the calendar year 1996 allocation, 
        the preceding calendar year shall be considered to be double the 
        six-month allocation as provided for in subdivision 4a.  
           (b) When the amount of funds available for allocation is 
        less than the amount available in the previous year, each 
        county's previous year allocation shall be reduced in proportion 
        to the reduction in the statewide funding, for the purpose of 
        establishing the guaranteed floor.  
           Sec. 30.  Minnesota Statutes 1994, section 256H.05, 
        subdivision 6, is amended to read: 
           Subd. 6.  [NON-STRIDE AFDC CHILD CARE PROGRAM ACCESS CHILD 
        CARE PROGRAM.] (a) Starting one month after April 30, 1992, the 
        department of human services commissioner shall reimburse 
        eligible expenditures for 2,000 family slots for AFDC caretakers 
        not eligible for services under section 256.736, who are engaged 
        in an authorized educational or job search program.  Each county 
        will receive a number of family slots based on the county's 
        proportion of the AFDC caseload.  A county must receive at least 
        two family slots.  Eligibility and reimbursement are limited to 
        the number of family slots allocated to each county.  County 
        agencies shall authorize an educational plan for each student 
        and may prioritize families eligible for this program in their 
        child care fund plan upon approval of the commissioner of human 
        services.  (b) Persons eligible for but unable to participate in 
        the JOBS (STRIDE) program because of a waiting list may be 
        accepted as a new participant, or continue to participate in the 
        ACCESS child care program if a slot is available as long as all 
        other eligibility factors are met.  Child care assistance must 
        continue under the ACCESS child care program until the 
        participant loses eligibility or is enrolled in project STRIDE. 
           (c)(1) Effective July 1, 1995, the commissioner shall 
        reclaim 90 percent of the vacant slots in each county and 
        distribute those slots to counties with waiting lists of persons 
        eligible for the ACCESS child care program.  The slots must be 
        distributed to eligible families based on the July 1, 1995, 
        waiting list placement date, first come, first served basis. 
           (2) ACCESS child care slots remaining after the waiting 
        list under clause (1) has been eliminated must be distributed to 
        eligible families on a first come, first served basis, based on 
        the client's date of request. 
           (3) The county must notify the commissioner when an ACCESS 
        slot in the county becomes available.  Notification by the 
        county must be within five calendar days of the effective date 
        of the termination of the ACCESS child care services.  The 
        resulting vacant slot must be returned to the department of 
        human services.  The slot must then be redistributed under 
        clause (2). 
           (4) The commissioner shall consult with the task force on 
        child care and make recommendations to the 1996 legislature for 
        future distribution of the ACCESS slots under this paragraph. 
           Sec. 31.  Minnesota Statutes 1994, section 256H.08, is 
        amended to read: 
           256H.08 [USE OF MONEY.] 
           Money for persons listed in sections 256H.03, subdivision 
        2a, and 256H.05, subdivision 1b, shall be used to reduce the 
        costs of child care for students, including the costs of child 
        care for students while employed if enrolled in an eligible 
        education program at the same time and making satisfactory 
        progress towards completion of the program.  Counties may not 
        limit the duration of child care subsidies for a person in an 
        employment or educational program, except when the person is 
        found to be ineligible under the child care fund eligibility 
        standards.  Any limitation must be based on a person's 
        employability plan in the case of an AFDC recipient, and county 
        policies included in the child care allocation plan.  Time 
        limitations for child care assistance, as specified in Minnesota 
        Rules, parts 9565.5000 to 9565.5200, do not apply to basic or 
        remedial educational programs needed to prepare for 
        post-secondary education or employment.  These programs 
        include:  high school, general equivalency diploma, and English 
        as a second language.  Programs exempt from this time limit must 
        not run concurrently with a post-secondary program.  High school 
        students who are participating in a post-secondary options 
        program and who receive a high school diploma issued by the 
        school district are exempt from the time limitations while 
        pursuing a high school diploma.  Financially eligible students 
        who have received child care assistance for one academic year 
        shall be provided child care assistance in the following 
        academic year if funds allocated under sections 256H.03 and 
        256H.05 are available.  If an AFDC recipient who is receiving 
        AFDC child care assistance under this chapter moves to another 
        county, continues to participate in educational or training 
        programs authorized in their employability development plans, 
        and continues to be eligible for AFDC child care assistance 
        under this chapter, the AFDC caretaker must receive continued 
        child care assistance from the county responsible for their 
        current employability development plan, without interruption. 
           Sec. 32.  Minnesota Statutes 1994, section 256H.11, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ASSISTANCE FOR PERSONS SEEKING AND 
        RETAINING EMPLOYMENT.] Persons who are seeking employment and 
        who are eligible for assistance under this section are eligible 
        to receive the equivalent of up to one month of child care up to 
        240 hours of child care assistance per calendar year.  Employed 
        persons who work at least an average of ten hours a week and 
        receive at least a minimum wage for all hours worked are 
        eligible for continued child care assistance.  
           Sec. 33.  Minnesota Statutes 1994, section 256H.12, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [COUNTY CONTRIBUTIONS REQUIRED.] Beginning 
        July 1, 1995, in addition to payments from parents basic sliding 
        fee child care program participants, counties shall contribute 
        from county tax or other sources a minimum of 15 percent of the 
        cost of the basic sliding fee program at the local match 
        percentage calculated according to subdivision 1a.  The 
        commissioner shall recover funds from the county as necessary to 
        bring county expenditures into compliance with this subdivision. 
           Sec. 34.  Minnesota Statutes 1994, section 256H.12, is 
        amended by adding a subdivision to read: 
           Subd. 1a.  [LOCAL MATCH PERCENTAGE.] The local match 
        percentage shall equal the lesser of either (i) 15 percent of 
        the cost of the basic sliding fee program or (ii) the statewide 
        required local match in state fiscal year 1995, divided by the 
        sum of the current year's basic sliding fee allocation plus the 
        statewide required local match in state fiscal year 1995.  The 
        resulting local match percentage shall be adjusted to reflect a 
        statewide local match of five percent on any state and federal 
        funding for the basic sliding fee program above the initial 
        state fiscal year 1995 statewide allocation.  For purposes of 
        this computation, the statewide required local match in state 
        fiscal year 1995 shall be equal to the initial state fiscal year 
        1995 basic sliding fee allocation, divided by 85 percent, and 
        then multiplied by 15 percent.  The calendar year 1996 local 
        match percentage shall be in effect for the six-month allocation 
        period defined in section 256H.03. 
           Sec. 35.  Minnesota Statutes 1994, section 256H.12, 
        subdivision 3, as amended by Laws 1995, chapter 139, section 1, 
        is amended to read: 
           Subd. 3.  [MAINTENANCE OF FUNDING EFFORT.] To receive money 
        through this program, each county shall certify, in its annual 
        plan to the commissioner, that the county has not reduced 
        allocations from other federal and state sources, which, in the 
        absence of the child care fund, would have been available for 
        child care assistance.  However, the county must continue 
        contributions, as necessary, to maintain on the basic sliding 
        fee program for, families who are receiving assistance on July 
        1, 1995, until the family loses eligibility for the program or 
        until a family voluntarily withdraws from the program.  This 
        subdivision does not affect the local match required for this 
        program under other sections of the law. 
           Sec. 36.  Minnesota Statutes 1994, section 256H.15, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [SUBSIDY RESTRICTIONS.] (a) Until June 30, 
        1991, the maximum child care rate is determined under this 
        paragraph.  The county board may limit the subsidy allowed by 
        setting a maximum on the provider child care rate that the 
        county shall subsidize.  The maximum rate set by any county 
        shall not be lower than 110 percent or higher than 125 percent 
        of the median rate in that county for like care arrangements for 
        all types of care, including special needs and handicapped care, 
        as determined by the commissioner.  If the county sets a maximum 
        rate, it must pay the provider's rate for each child receiving a 
        subsidy, up to the maximum rate set by the county.  If a county 
        does not set a maximum provider rate, it shall pay the 
        provider's rate for every child in care.  The maximum state 
        payment is 125 percent of the median provider rate.  If the 
        county has not set a maximum provider rate and the provider rate 
        is greater than 125 percent of the median provider rate in the 
        county, the county shall pay the amount in excess of 125 percent 
        of the median provider rate from county funding sources.  The 
        county shall pay the provider's full charges for every child in 
        care up to the maximum established.  The commissioner shall 
        determine the maximum rate for each type of care, including 
        special needs and handicapped care.  
           (b) Effective July 1, 1991, the maximum rate paid for child 
        care assistance under the child care fund is the maximum rate 
        eligible for federal reimbursement except that a provider 
        receiving reimbursement under paragraph (a) as of January 1, 
        1991, shall be paid at a rate no less than the rate of 
        reimbursement received under that paragraph.  A rate which 
        includes a provider bonus paid under subdivision 2 or a special 
        needs rate paid under subdivision 3 may be in excess of the 
        maximum rate allowed under this subdivision.  The department of 
        human services shall monitor the effect of this paragraph on 
        provider rates.  The county shall pay the provider's full 
        charges for every child in care up to the maximum established.  
        The commissioner shall determine the maximum rate for each type 
        of care, including special needs and handicapped care.  
           (c) When the provider charge is greater than the maximum 
        provider rate allowed, the parent is responsible for payment of 
        the difference in the rates in addition to any family copayment 
        fee. 
           Sec. 37.  Minnesota Statutes 1994, section 256H.18, is 
        amended to read: 
           256H.18 [ADMINISTRATIVE EXPENSES.] 
           The commissioner shall use up to seven percent one-eleventh 
        of the state and federal funds appropriated available for the 
        basic sliding fee program for payments to counties for 
        administrative expenses.  The commissioner shall use up to ten 
        percent of federal funds for payments to counties for 
        administrative expenses. 
           Sec. 38.  Minnesota Statutes 1994, section 256H.20, 
        subdivision 3a, is amended to read: 
           Subd. 3a.  [GRANT REQUIREMENTS AND PRIORITY.] Priority for 
        awarding resource and referral grants shall be given in the 
        following order: 
           (1) start up resource and referral programs in areas of the 
        state where they do not exist; and 
           (2) improve resource and referral programs. 
           Resource and referral programs shall meet the following 
        requirements:  
           (a) Each program shall identify all existing child care 
        services through information provided by all relevant public and 
        private agencies in the areas of service, and shall develop a 
        resource file of the services which shall be maintained and 
        updated at least quarterly.  These services must include family 
        day care homes; public and private day care programs; full-time 
        and part-time programs; infant, preschool, and extended care 
        programs; and programs for school age children. 
           The resource file must include:  the type of program, hours 
        of program service, ages of children served, fees, location of 
        the program, eligibility requirements for enrollment, special 
        needs services, and transportation available to the program.  
        The file may also include program information and special 
        program features. 
           (b) Each resource and referral program shall establish a 
        referral process which responds to parental need for information 
        and which fully recognizes confidentiality rights of parents.  
        The referral process must afford parents maximum access to all 
        referral information.  This access must include telephone 
        referral available for no less than 20 hours per week. 
           Each child care resource and referral agency shall 
        publicize its services through popular media sources, agencies, 
        employers, and other appropriate methods. 
           (c) Each resource and referral program shall maintain 
        ongoing documentation of requests for service.  All child care 
        resource and referral agencies must maintain documentation of 
        the number of calls and contacts to the child care information 
        and referral agency or component.  A resource and referral 
        program shall collect and maintain the following information: 
           (1) ages of children served; 
           (2) time category of child care request for each child; 
           (3) special time category, such as nights, weekends, and 
        swing shift; and 
           (4) reason that the child care is needed. 
           (d) Each resource and referral program shall make available 
        the following information as an educational aid to parents: 
           (1) information on aspects of evaluating the quality and 
        suitability of child care services, including licensing 
        regulation, financial assistance available, child abuse 
        reporting procedures, appropriate child development information; 
           (2) information on available parent, early childhood, and 
        family education programs in the community. 
           (e) On or after one year of operation a resource and 
        referral program shall provide technical assistance to employers 
        and existing and potential providers of all types of child care 
        services.  This assistance shall include: 
           (1) information on all aspects of initiating new child care 
        services including licensing, zoning, program and budget 
        development, and assistance in finding information from other 
        sources; 
           (2) information and resources which help existing child 
        care providers to maximize their ability to serve the children 
        and parents of their community; 
           (3) dissemination of information on current public issues 
        affecting the local and state delivery of child care services; 
           (4) facilitation of communication between existing child 
        care providers and child-related services in the community 
        served; 
           (5) recruitment of licensed providers; and 
           (6) options, and the benefits available to employers 
        utilizing the various options, to expand child care services to 
        employees. 
           Services prescribed by this section must be designed to 
        maximize parental choice in the selection of child care and to 
        facilitate the maintenance and development of child care 
        services and resources. 
           (f) Child care resource and referral information must be 
        provided to all persons requesting services and to all types of 
        child care providers and employers. 
           (g) Each resource and referral program shall coordinate 
        early childhood training for child care providers in that 
        program's service delivery area.  The resource and referral 
        program shall convene an early childhood care and education 
        training advisory committee to assist in the following 
        activities: 
           (1) assess the early childhood care and education training 
        needs of child care center staff and family and group family 
        child care providers; 
           (2) coordinate existing early childhood care and education 
        training; 
           (3) develop new early childhood care and education training 
        opportunities; and 
           (4) publicize all early childhood training classes and 
        workshops to child care center staff and family and group family 
        child care providers in the service delivery area. 
           (h) Public or private entities may apply to the 
        commissioner for funding.  A local match of up to 25 percent is 
        required. 
           Sec. 39.  Minnesota Statutes 1994, section 257.3571, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PRIMARY SUPPORT GRANTS.] The commissioner 
        shall establish direct grants to Indian tribes and, Indian 
        organizations, and tribal social service agency programs located 
        off-reservation that serve Indian children and their families to 
        provide primary support for Indian child welfare programs to 
        implement the Indian family preservation act.  
           Sec. 40.  Minnesota Statutes 1994, section 257.3572, is 
        amended to read: 
           257.3572 [GRANT APPLICATIONS.] 
           A tribe or, Indian organization, or tribal social service 
        agency program located off-reservation may apply for primary 
        support grants under section 257.3571, subdivision 1.  A local 
        social service agency, tribe, Indian organization, or other 
        social service organization may apply for special focus grants 
        under section 257.3571, subdivision 2.  Civil legal service 
        organizations eligible for grants under section 257.3571, 
        subdivision 2a, may apply for grants under that section.  
        Application may be made alone or in combination with other 
        tribes or Indian organizations. 
           Sec. 41.  Minnesota Statutes 1994, section 257.3577, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PRIMARY SUPPORT GRANTS.] (a) The amount 
        available for grants established under section 257.3571, 
        subdivision 1, to tribes and, Indian organization grants 
        organizations, and tribal social service agency programs located 
        off-reservation is four-fifths of the total annual appropriation 
        for Indian child welfare grants.  
           (b) The commissioner shall award tribes at least 70 percent 
        of the amount set in paragraph (a) for primary support grants.  
        Each tribe shall be awarded a base amount of five percent of the 
        total amount set in this paragraph.  In addition, each tribe 
        shall be allocated a proportion of the balance of the amount set 
        in this paragraph, less the total base amounts for all 
        reservations.  This proportion must equal the ratio of the 
        tribe's on-reservation population to the state's total 
        on-reservation population.  Population data must be based on the 
        most recent federal census data according to the state 
        demographer's office. 
           (c) The commissioner shall award Indian organizations and 
        tribal social service agency programs located off-reservation 
        that serve Indian children and families up to 30 percent of the 
        amount set in paragraph (a) for primary support grants.  A 
        maximum of four multiservice Indian organizations and tribal 
        social service agency programs located off-reservation may be 
        awarded grants under this paragraph.  "Multiservice Indian 
        organizations" means Indian organizations recognized by the 
        Indian community as providing a broad continuum of social, 
        educational, or cultural services, including Indian child 
        welfare services designed to meet the unique needs of the Indian 
        communities in Minneapolis, St. Paul, and Duluth.  Grants may be 
        awarded to programs that submit acceptable proposals, comply 
        with the goals and the application process of the program, and 
        have budgets that reflect appropriate and efficient use of funds.
        To maintain continuity of service in Indian communities, primary 
        support grants awarded under this paragraph which meet the grant 
        criteria and have demonstrated satisfactory performance as 
        established by the commissioner may be awarded on a 
        noncompetitive basis.  The commissioner may revoke or deny 
        funding for Indian organizations or tribal social service 
        agencies failing to meet the grant criteria established by the 
        commissioner, and the commissioner may request new proposals 
        from Indian organizations or tribal social service agencies to 
        the extent that funding is available. 
           Sec. 42.  [KINSHIP CAREGIVER INFORMATION.] 
           The commissioner of human services shall develop an 
        informational brochure which describes the laws and services 
        that may be applicable to and available to grandparents and 
        other kinship caregivers to assist them in caring for the minor 
        kinship children who are in their care.  The brochure must also 
        indicate how a kinship caregiver can receive further 
        information.  The brochure must be distributed to county social 
        service agencies, area agencies on aging, the ombudsperson for 
        families, and other known community organizations that may have 
        contact with kinship caregivers.  For purposes of this section, 
        "kinship caregiver" means any of the following persons related 
        to the child by marriage, blood, or adoption:  grandparent, 
        great grandparent, brother, sister, stepparent, stepsister, 
        stepbrother, niece, nephew, uncle, great uncle, aunt, or great 
        aunt. 
           Sec. 43.  [DIFFICULTY OF CARE STUDY.] 
           The commissioner of human services shall study and report 
        to the house health and human services finance division, and to 
        the senate health care and family services finance division, on 
        the advisability of continuing to reimburse for foster care 
        services on the basis of difficulty of care factors.  The report 
        shall be submitted no later than January 1, 1996, and shall 
        include specific recommendations as to whether the difficulty of 
        care reimbursement system should be retained, modified, or 
        abandoned.  In preparing this report, the commissioner shall 
        consult with public and private foster care agencies and with 
        foster care providers, and shall consider the differential 
        impact, if any, on the child from receiving foster care 
        reimbursement through the difficulty of care reimbursement 
        system versus through an alternative reimbursement mechanism.  
        The report must also identify the legal and institutional 
        barriers, if any, to changing from a difficulty of care 
        reimbursement system to another type of reimbursement system. 
           Sec. 44.  [REPEALER.] 
           Minnesota Statutes 1994, sections 256F.05, subdivisions 2a 
        and 4a; 256F.06, subdivision 3; 256F.09, subdivision 4; and 
        256H.03, subdivisions 2 and 5, are repealed. 
           Sec. 45.  [EFFECTIVE DATE.] 
           Section 2 (256.8711, subdivisions 1 to 10) is effective 
        October 1, 1995. 
           Sections 5 (256F.01), 6 (256F.02), 7 and 8 (256F.03, 
        subdivisions 5 and 10), 9 and 10 (256F.04, subdivisions 1 and 
        2), 11 to 17 (256F.05, subdivisions 1a, 2, 3, 4, 5, 7, and 8), 
        and 18 and 19 (256F.06, subdivisions 1 and 2) are effective 
        January 1, 1996. 
                                   ARTICLE 5 
                           ECONOMIC SELF-SUFFICIENCY 
           Section 1.  Minnesota Statutes 1994, section 256.12, 
        subdivision 14, is amended to read: 
           Subd. 14.  [DEPENDENT CHILD.] (a) "Dependent child," as 
        used in sections 256.72 to 256.87, means a child under the age 
        of 18 years, or a child under the age of 19 years who is 
        regularly attending as a full-time student, and is expected to 
        complete before reaching age 19, a high school or a secondary 
        level course of vocational or technical training designed to fit 
        students for gainful employment, who is found to be deprived of 
        parental support or care by reason of the death, continued 
        absence from the home, physical or mental incapacity of a 
        parent, or who is a child of an unemployed parent as that term 
        is defined by the commissioner of human services, such 
        definition to be consistent with and not to exceed minimum 
        standards established by the Congress of the United States and 
        the Secretary of Health and Human Services.  When defining 
        "unemployed parent," the commissioner shall count up to four 
        calendar quarters of full-time attendance in any of the 
        following toward the requirement that a principal earner have 
        six or more quarters of work in any 13 calendar quarter period 
        ending within one year before application for aid to families 
        with dependent children: 
           (1) an elementary or secondary school; 
           (2) a federally approved vocational or technical training 
        course designed to prepare the parent for gainful employment; or 
           (3) full-time participation in an education or training 
        program established under the job training partnership act.  
           (b) Dependent child also means a child: 
           (1) whose relatives are liable under the law for the 
        child's support and are not able to provide adequate care and 
        support of the child; and 
           (2) who is living with father, mother, grandfather, 
        grandmother, brother, sister, stepfather, stepmother, 
        stepbrother, stepsister, uncle, aunt, first cousin, nephew, or 
        niece a parent or a person in one of the groups listed under 
        Code of Federal Regulations, title 45, section 
        233.90(c)(1)(v)(A) in a place of residence maintained by one or 
        more of these relatives as a home. 
           (c) Dependent child also means a child who has been removed 
        from the home of a relative after a judicial determination that 
        continuance in the home would be contrary to the welfare and 
        best interests of the child and whose care and placement in a 
        foster home, a different relative's home, or a private licensed 
        child care institution is, in accordance with the rules of the 
        commissioner, the responsibility of the state or county agency 
        under sections 256.72 to 256.87.  This child is eligible for 
        benefits only through the foster care and adoption assistance 
        program contained in Title IV-E of the Social Security Act, 
        United States Code, title 42, sections 670 to 676, and is not 
        entitled to benefits under sections 256.72 to 256.87. 
           Sec. 2.  Minnesota Statutes 1994, section 256.73, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ALLOWANCE BARRED BY OWNERSHIP OF PROPERTY.] 
        Ownership by an assistance unit of property as follows is a bar 
        to any allowance under sections 256.72 to 256.87: 
           (1) The value of real property other than the homestead, 
        which when combined with other assets exceeds the limits of 
        paragraph (2), unless the assistance unit is making a good faith 
        effort to sell the nonexcludable real property.  The time period 
        for disposal must not exceed nine consecutive months.  The 
        assistance unit must sign an agreement to dispose of the 
        property and to repay assistance received during the nine months 
        that would not have been paid had the property been sold at the 
        beginning of such period, but not to exceed the amount of the 
        net sale proceeds.  The family has five working days from the 
        date it realizes cash from the sale of the property to repay the 
        overpayment.  If the property is not sold within the required 
        time or the assistance unit becomes ineligible for any reason 
        during the nine-month period, the amount payable under the 
        agreement will not be determined and recovery will not begin 
        until the property is in fact sold. give the local agency a lien 
        to secure repayment of benefits received by the assistance unit 
        during the nine-month period covered by the agreement.  The 
        provisions of section 514.981, subdivision 2, clauses (a)(1), 
        (a)(3), (a)(4), (a)(5), and (e); subdivisions 4 and 5, clauses 
        (a)(2), (b)(3) (b)(4), and (d); and subdivision 6; section 
        514.982, subdivision 1, clauses (1), (2), and (4); and 
        subdivision 2; and sections 514.983 and 514.984, regarding 
        medical assistance liens, shall apply to AFDC liens under this 
        section, except that the filing fees paid by the county agency 
        under this section shall be deducted from recoveries made under 
        this lien provision.  For purposes of this paragraph, all 
        references in sections 514.981 to 514.984, to medical assistance 
        liens and to medical assistance benefits shall be construed to 
        be references to AFDC liens and to AFDC benefits, respectively.  
        If the property is intentionally sold at less than fair market 
        value or if a good faith effort to sell the property is not 
        being made, the overpayment amount shall be computed using the 
        fair market value determined at the beginning of the nine-month 
        period.  For the purposes of this section, "homestead" means the 
        home that is owned by, and is the usual residence of, the child, 
        relative, or other member of the assistance unit together with 
        the surrounding property which is not separated from the home by 
        intervening property owned by others.  "Usual residence" 
        includes the home from which the child, relative, or other 
        members of the assistance unit is temporarily absent due to an 
        employability development plan approved by the local human 
        service agency, which includes education, training, or job 
        search within the state but outside of the immediate geographic 
        area.  Public rights-of-way, such as roads which run through the 
        surrounding property and separate it from the home, will not 
        affect the exemption of the property; or 
           (2) Personal property of an equity value in excess of 
        $1,000 for the entire assistance unit, exclusive of personal 
        property used as the home, one motor vehicle of an equity value 
        not exceeding $1,500 or the entire equity value of a motor 
        vehicle determined to be necessary for the operation of a 
        self-employment business, one burial plot for each member of the 
        assistance unit, one prepaid burial contract with an equity 
        value of no more than $1,000 for each member of the assistance 
        unit, clothing and necessary household furniture and equipment 
        and other basic maintenance items essential for daily living, in 
        accordance with rules promulgated by and standards established 
        by the commissioner of human services. 
           Sec. 3.  Minnesota Statutes 1994, section 256.73, 
        subdivision 3a, is amended to read: 
           Subd. 3a.  [PERSONS INELIGIBLE.] No assistance shall be 
        given under sections 256.72 to 256.87:  
           (1) on behalf of any person who is receiving supplemental 
        security income under title XVI of the Social Security Act 
        unless permitted by federal regulations; 
           (2) for any month in which the assistance unit's gross 
        income, without application of deductions or disregards, exceeds 
        185 percent of the standard of need for a family of the same 
        size and composition; except that the earnings of a dependent 
        child who is a full-time student may be disregarded for six 
        months per calendar year and the earnings of a dependent child 
        that are derived from the jobs training and partnership act 
        (JTPA) may be disregarded for six months per calendar year.  
        These two earnings disregards cannot be combined to allow more 
        than a total of six months per calendar year when the earned 
        income of a full-time student is derived from participation in a 
        program under the JTPA.  If a stepparent's income is taken into 
        account in determining need, the disregards specified in section 
        256.74, subdivision 1a, shall be applied to determine income 
        available to the assistance unit before calculating the unit's 
        gross income for purposes of this paragraph;.  If a stepparent's 
        needs are included in the assistance unit as specified in 
        section 256.74, subdivision 1, the disregards specified in 
        section 256.74, subdivision 1, shall be applied. 
           (3) to any assistance unit for any month in which any 
        caretaker relative with whom the child is living is, on the last 
        day of that month, participating in a strike; 
           (4) on behalf of any other individual in the assistance 
        unit, nor shall the individual's needs be taken into account for 
        any month in which, on the last day of the month, the individual 
        is participating in a strike; 
           (5) on behalf of any individual who is the principal earner 
        in an assistance unit whose eligibility is based on the 
        unemployment of a parent when the principal earner, without good 
        cause, fails or refuses to accept employment, or to register 
        with a public employment office, unless the principal earner is 
        exempt from these work requirements. 
           Sec. 4.  Minnesota Statutes 1994, section 256.736, 
        subdivision 3, is amended to read: 
           Subd. 3.  [REGISTRATION.] (a) To the extent permissible 
        under federal law, every caretaker or child is required to 
        register for employment and training services, as a condition of 
        receiving AFDC, unless the caretaker or child is: 
           (1) a child who is under age 16, a child age 16 or 17 who 
        is attending elementary or secondary school or a secondary level 
        vocational or technical school full time; 
           (2) ill, incapacitated, or age 60 or older; 
           (3) a person for whom participation in an employment and 
        training service would require a round trip commuting time by 
        available transportation of more than two hours; 
           (4) a person whose presence in the home is required because 
        of illness or incapacity of another member of the household; 
           (5) a caretaker or other caretaker relative of a child 
        under the age of three who personally provides full-time care 
        for the child.  In AFDC-UP cases, only one parent or other 
        relative may qualify for this exemption; 
           (6) a caretaker or other caretaker relative personally 
        providing care for a child under six years of age, except that 
        when child care is arranged for or provided, the caretaker or 
        caretaker relative may be required to register and participate 
        in employment and training services up to a maximum of 20 hours 
        per week.  In AFDC-UP cases, only one parent or other relative 
        may qualify for this exemption; 
           (7) a pregnant woman, if it has been medically verified 
        that the child is expected to be born within the next six 
        months; or 
           (8) employed at least 30 hours per week; or 
           (9) an individual added to an assistance unit as an 
        essential person under section 256.74, subdivision 1, who does 
        not meet the definition of a "caretaker" as defined in 
        subdivision 1a, paragraph (c). 
           (b) To the extent permissible by federal law, applicants 
        for benefits under the AFDC program are registered for 
        employment and training services by signing the application 
        form.  Applicants must be informed that they are registering for 
        employment and training services by signing the form.  Persons 
        receiving benefits on or after July 1, 1987, shall register for 
        employment and training services to the extent permissible by 
        federal law.  The caretaker has a right to a fair hearing under 
        section 256.045 with respect to the appropriateness of the 
        registration. 
           Sec. 5.  Minnesota Statutes 1994, section 256.736, 
        subdivision 13, is amended to read: 
           Subd. 13.  [STATE SHARE.] The state must pay 75 percent of 
        the nonfederal share of costs incurred by counties under 
        subdivision 11. 
           Beginning July 1, 1991, the state will reimburse counties, 
        up to the limit of state appropriations, according to the 
        payment schedule in section 256.025, for the county share of 
        county agency expenditures made under subdivision 11 from 
        January 1, 1991, on to June 30, 1995.  Payment to counties under 
        this subdivision is subject to the provisions of section 256.017.
           Beginning July 1, 1995, the state must pay 100 percent of 
        the nonfederal share incurred by counties under subdivision 11, 
        up to the limit of state appropriations.  If the state 
        appropriation is not sufficient to fund the cost of case 
        management services for all caretakers identified in subdivision 
        2a, the commissioner must define a statewide subgroup of 
        caretakers which includes all caretakers in subdivision 2a, 
        clause (1), and as many caretakers as possible from subdivision 
        2a, clauses (2) and (3). 
           Sec. 6.  Minnesota Statutes 1994, section 256.74, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AMOUNT.] The amount of assistance which 
        shall be granted to or on behalf of any dependent child 
        and mother parent or other needy eligible relative caring for 
        the dependent child shall be determined by the county agency in 
        accordance with rules promulgated by the commissioner and shall 
        be sufficient, when added to all other income and support 
        available to the child, to provide the child with a reasonable 
        subsistence compatible with decency and health.  To the extent 
        permissible under federal law, an eligible relative caretaker or 
        parent shall have the option to include in the assistance unit 
        the needs, income, and resources of the following essential 
        persons who are not otherwise eligible for AFDC because they do 
        not qualify as a caretaker or as a dependent child: 
           (1) a parent or relative caretaker's spouse and 
        stepchildren; or 
           (2) blood or legally adopted relatives who are under the 
        age of 18 or under the age of 19 years who are regularly 
        attending as a full-time student, and are expected to complete 
        before or during the month of their 19th birthday, a high school 
        or secondary level course of vocational or technical training 
        designed to prepare students for gainful employment.  The amount 
        shall be based on the method of budgeting required in Public Law 
        Number 97-35, section 2315, United States Code, title 42, 
        section 602, as amended and federal regulations at Code of 
        Federal Regulations, title 45, section 233.  Nonrecurring lump 
        sum income received by an AFDC family must be budgeted in the 
        normal retrospective cycle.  When the family's income, after 
        application of the applicable disregards, exceeds the need 
        standard for the family because of receipt of earned or unearned 
        lump sum income, the family will be ineligible for the full 
        number of months derived by dividing the sum of the lump sum 
        income and other income by the monthly need standard for a 
        family of that size.  Any income remaining from this calculation 
        is income in the first month following the period of 
        ineligibility.  The first month of ineligibility is the payment 
        month that corresponds with the budget month in which the lump 
        sum income was received.  For purposes of applying the lump sum 
        provision, family includes those persons defined in the Code of 
        Federal Regulations, title 45, section 233.20(a)(3)(ii)(F).  A 
        period of ineligibility must be shortened when the standard of 
        need increases and the amount the family would have received 
        also changes, an amount is documented as stolen, an amount is 
        unavailable because a member of the family left the household 
        with that amount and has not returned, an amount is paid by the 
        family during the period of ineligibility to cover a cost that 
        would otherwise qualify for emergency assistance, or the family 
        incurs and pays for medical expenses which would have been 
        covered by medical assistance if eligibility existed.  In making 
        its determination the county agency shall disregard the 
        following from family income:  
           (1) all the earned income of each dependent child applying 
        for AFDC if the child is a full-time student and all of the 
        earned income of each dependent child receiving AFDC who is a 
        full-time student or is a part-time student who is not a 
        full-time employee.  A student is one who is attending a school, 
        college, or university, or a course of vocational or technical 
        training designed to fit students for gainful employment and 
        includes a participant in the Job Corps program under the Job 
        Training Partnership Act (JTPA).  The county agency shall also 
        disregard all income of each dependent child applying for or 
        receiving AFDC when the income is derived from a program carried 
        out under JTPA, except that disregard of earned income may not 
        exceed six months per calendar year; 
           (2) all educational grants and loans assistance, except the 
        county agency shall count graduate student teaching 
        assistantships, fellowships, and other similar paid work as 
        earned income and, after allowing deductions for any unmet and 
        necessary educational expenses, shall count scholarships or 
        grants awarded to graduate students that do not require teaching 
        or research as unearned income; 
           (3) the first $90 of each individual's earned income.  For 
        self-employed persons, the expenses directly related to 
        producing goods and services and without which the goods and 
        services could not be produced shall be disregarded pursuant to 
        rules promulgated by the commissioner; 
           (4) thirty dollars plus one-third of each individual's 
        earned income for individuals found otherwise eligible to 
        receive aid or who have received aid in one of the four months 
        before the month of application.  With respect to any month, the 
        county welfare agency shall not disregard under this clause any 
        earned income of any person who has:  (a) reduced earned income 
        without good cause within 30 days preceding any month in which 
        an assistance payment is made; (b) refused without good cause to 
        accept an offer of suitable employment; (c) left employment or 
        reduced earnings without good cause and applied for assistance 
        so as to be able later to return to employment with the 
        advantage of the income disregard; or (d) failed without good 
        cause to make a timely report of earned income in accordance 
        with rules promulgated by the commissioner of human services.  
        Persons who are already employed and who apply for assistance 
        shall have their needs computed with full account taken of their 
        earned and other income.  If earned and other income of the 
        family is less than need, as determined on the basis of public 
        assistance standards, the county agency shall determine the 
        amount of the grant by applying the disregard of income 
        provisions.  The county agency shall not disregard earned income 
        for persons in a family if the total monthly earned and other 
        income exceeds their needs, unless for any one of the four 
        preceding months their needs were met in whole or in part by a 
        grant payment.  The disregard of $30 and one-third of earned 
        income in this clause shall be applied to the individual's 
        income for a period not to exceed four consecutive months.  Any 
        month in which the individual loses this disregard because of 
        the provisions of subclauses (a) to (d) shall be considered as 
        one of the four months.  An additional $30 work incentive must 
        be available for an eight-month period beginning in the month 
        following the last month of the combined $30 and one-third work 
        incentive.  This period must be in effect whether or not the 
        person has earned income or is eligible for AFDC.  To again 
        qualify for the earned income disregards under this clause, the 
        individual must not be a recipient of aid for a period of 12 
        consecutive months.  When an assistance unit becomes ineligible 
        for aid due to the fact that these disregards are no longer 
        applied to income, the assistance unit shall be eligible for 
        medical assistance benefits for a 12-month period beginning with 
        the first month of AFDC ineligibility; 
           (5) an amount equal to the actual expenditures for the care 
        of each dependent child or incapacitated individual living in 
        the same home and receiving aid, not to exceed:  (a) $175 for 
        each individual age two and older, and $200 for each individual 
        under the age of two.  The dependent care disregard must be 
        applied after all other disregards under this subdivision have 
        been applied; 
           (6) the first $50 per assistance unit of the monthly 
        support obligation collected by the support and recovery (IV-D) 
        unit.  The first $50 of periodic support payments collected by 
        the public authority responsible for child support enforcement 
        from a person with a legal obligation to pay support for a 
        member of the assistance unit must be paid to the assistance 
        unit within 15 days after the end of the month in which the 
        collection of the periodic support payments occurred and must be 
        disregarded when determining the amount of assistance.  A review 
        of a payment decision under this clause must be requested within 
        30 days after receiving the notice of collection of assigned 
        support or within 90 days after receiving the notice if good 
        cause can be shown for not making the request within the 30-day 
        limit; 
           (7) that portion of an insurance settlement earmarked and 
        used to pay medical expenses, funeral and burial costs, or to 
        repair or replace insured property; and 
           (8) all earned income tax credit payments received by the 
        family as a refund of federal income taxes or made as advance 
        payments by an employer.  
           All payments made pursuant to a court order for the support 
        of children not living in the assistance unit's household shall 
        be disregarded from the income of the person with the legal 
        obligation to pay support, provided that, if there has been a 
        change in the financial circumstances of the person with the 
        legal obligation to pay support since the support order was 
        entered, the person with the legal obligation to pay support has 
        petitioned for a modification of the support order. 
           Sec. 7.  Minnesota Statutes 1994, section 256D.05, 
        subdivision 7, is amended to read: 
           Subd. 7.  [INELIGIBILITY FOR GENERAL ASSISTANCE.] No person 
        disqualified from any federally aided assistance program shall 
        be eligible for general assistance during the a period covered 
        by the disqualification sanction of disqualification because of 
        sanctions, from any federally aided assistance program; or if 
        the person could be considered an essential person under section 
        256.74, subdivision 1.  
           Sec. 8.  Minnesota Statutes 1994, section 256D.36, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [STATE PARTICIPATION.] (a)  [ELIGIBILITY.] 
        Commencing January 1, 1974, the commissioner shall certify to 
        each county agency the names of all county residents who were 
        eligible for and did receive aid during December, 1973, pursuant 
        to a categorical aid program of old age assistance, aid to the 
        blind, or aid to the disabled.  The amount of supplemental aid 
        for each individual eligible under this section shall be 
        calculated according to the formula in title II, section 212(a) 
        (3) of Public Law Number 93-66, as amended. 
           (b)  [DIVISION COSTS.] From and after January 1, 1980, 
        until January 1, 1981, the state shall pay 70 percent and the 
        county shall pay 30 percent of the supplemental aid calculated 
        for each county resident certified under this section who is an 
        applicant for or recipient of supplemental security income.  
        After December 31, 1980, The state share of aid paid shall be 85 
        percent and the county share shall be 15 percent.  Benefits 
        shall be issued to recipients by the state or county and funded 
        according to section 256.025, subdivision 3, subject to 
        provisions of section 256.017. 
           Beginning July 1, 1991, the state will reimburse counties 
        according to the payment schedule in section 256.025 for the 
        county share of county agency expenditures for financial 
        benefits to individuals under this subdivision from January 1, 
        1991, on.  Payment to counties under this subdivision is subject 
        to the provisions of section 256.017. 
           Sec. 9.  Minnesota Statutes 1994, section 256D.385, is 
        amended to read: 
           256D.385 [RESIDENCE.] 
           To be eligible for Minnesota supplemental aid, a person 
        must be a resident of Minnesota and (1) a citizen of the United 
        States, or (2) an alien lawfully admitted to the United States 
        for permanent residence, or (3) otherwise permanently residing 
        in the United States under color of law as defined by an alien 
        eligible to receive benefits from the supplemental security 
        income program.  
           Sec. 10.  Minnesota Statutes 1994, section 256D.405, 
        subdivision 3, is amended to read: 
           Subd. 3.  [REPORTS.] Recipients must report changes in 
        circumstances that affect eligibility or assistance payment 
        amounts within ten days of the change.  Recipients with earned 
        income, and recipients who do not receive SSI because of excess 
        income must complete a monthly report form if they have earned 
        income, if they have income allocated deemed to them from a 
        financially responsible relative with whom the recipient 
        resides, must complete a monthly household report form or if 
        they have income deemed to them by a sponsor.  If the report 
        form is not received before the end of the month in which it is 
        due, the county agency must terminate assistance.  The 
        termination shall be effective on the first day of the month 
        following the month in which the report was due.  If a complete 
        report is received within the month the assistance was 
        terminated, the assistance unit is considered to have continued 
        its application for assistance, effective the first day of the 
        month the assistance was terminated. 
           Sec. 11.  Minnesota Statutes 1994, section 256D.425, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PERSONS ENTITLED TO RECEIVE AID.] A person 
        who is aged, blind, or 18 years of age or older and disabled, 
        whose income is less than the standards of assistance in section 
        256D.44 and whose resources are less than the limits in 
        subdivision 2 is eligible for and entitled to Minnesota 
        supplemental aid.  A person found eligible by the Social 
        Security Administration for supplemental security income under 
        Title XVI on the basis of age, blindness, or disability meets 
        these requirements.  A person who would be eligible for the 
        supplemental security income program except for income that 
        exceeds the limit of that program but that A person receiving 
        supplemental security benefits under Title XVI on the basis of 
        age, blindness, or disability (or would be eligible for such 
        benefits except for excess income) is eligible for a payment 
        under the Minnesota supplemental aid program, if the person's 
        net income is less than the standards in section 256D.44.  
        Persons who are not receiving supplemental security income 
        benefits under Title XVI of the Social Security Act or 
        disability insurance benefits under Title II of the Social 
        Security Act due to exhausting time limited benefits are not 
        eligible to receive benefits under the MSA program.  Persons who 
        are not receiving social security or other maintenance benefits 
        for failure to meet or comply with the social security or other 
        maintenance program requirements are not eligible to receive 
        benefits under the MSA program.  Persons who are found 
        ineligible for supplemental security income because of excess 
        income, but whose income is within the limits of the Minnesota 
        supplemental aid program, must have blindness or disability 
        determined by the state medical review team.  
           Sec. 12.  Minnesota Statutes 1994, section 256D.435, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [EXCLUSIONS INCOME.] The following is 
        excluded from income in determining eligibility for Minnesota 
        supplemental aid:  
           (1) the value of food stamps; 
           (2) home-produced food used by the household; 
           (3) Indian claim payments made by the United States 
        Congress to compensate members of Indian tribes for the taking 
        of tribal lands by the federal government; 
           (4) cash payments to displaced persons who face relocation 
        as a result of the Housing Act of 1965, the Housing and Urban 
        Development Act of 1965, or the Uniform Relocation Assistance 
        and Real Property Acquisition Policies Act of 1970; 
           (5) one-third of child support payments received by an 
        eligible child from an absent parent; 
           (6) displaced homemaker payments; 
           (7) reimbursement received for maintenance costs of 
        providing foster care to adults or children; 
           (8) benefits received under Title IV and Title VII of the 
        Older Americans Act of 1965; 
           (9) Minnesota renter or homeowner property tax refunds; 
           (10) infrequent, irregular income that does not total more 
        than $20 per person in a month; 
           (11) reimbursement payments received from the VISTA 
        program; 
           (12) in-kind income; 
           (13) payments received for providing volunteer services 
        under Title I, Title II, and Title III of the Domestic Volunteer 
        Service Act of 1973; 
           (14) loans that have to be repaid; 
           (15) federal low-income heating assistance program 
        payments; 
           (16) any other type of funds excluded as income by state 
        law; 
           (17) student financial aid, as allowed for the supplemental 
        security income program; and 
           (18) other income excluded by the supplemental security 
        income program.  For persons receiving supplemental security 
        income benefits, the countable income used to determine 
        eligibility and benefits for Minnesota supplemental aid is the 
        gross amount of the Federal Benefit Rate (FBR) after allowing 
        for the general income disregard in subdivision 5.  For persons 
        who have been denied a supplemental security income benefit due 
        to excess income, and have had their blindness or disability 
        determined through the state medical review team, the countable 
        income is the gross amount of earned and unearned income, minus 
        the exclusions and disregards listed in subdivisions 4a, 5, and 
        6. 
           Sec. 13.  Minnesota Statutes 1994, section 256D.435, 
        subdivision 3, is amended to read: 
           Subd. 3.  [APPLICATION FOR FEDERALLY FUNDED BENEFITS.] 
        Persons for whom the applicant or recipient has financial 
        responsibility and who have unmet needs Persons who live with 
        the applicant or recipient, who have unmet needs and for whom 
        the applicant or recipient has financial responsibility, must 
        apply for and, if eligible, accept AFDC and other federally 
        funded benefits.  If the persons are determined potentially 
        eligible for AFDC by the county agency, the applicant or 
        recipient may not allocate earned or unearned income to those 
        persons while an AFDC application is pending, or after the 
        persons are determined eligible for AFDC.  If the persons are 
        determined potentially eligible for other federal benefits, the 
        applicant or recipient may only allocate income to those persons 
        until they are determined eligible for those other benefits 
        unless the amount of those benefits is less than the amount in 
        subdivision 4.  
           Sec. 14.  Minnesota Statutes 1994, section 256D.435, 
        subdivision 4, is amended to read: 
           Subd. 4.  [ALLOCATION AND DEEMING OF INCOME.] The rate of 
        allocation to relatives for whom the applicant or recipient is 
        financially responsible is one-half the individual supplemental 
        security income standard of assistance, except as restricted in 
        subdivision 3.  
           If the applicant or recipient shares a residence with 
        another person who has financial responsibility for the 
        applicant or recipient, the income of that person is considered 
        available to the applicant or recipient after allowing:  (1) the 
        deductions in subdivisions 7 and 8; and (2) a deduction for the 
        needs of the financially responsible relative and others in the 
        household for whom that relative is financially responsible.  
        The rate allowed to meet the needs of each of these people is 
        one-half the individual supplemental security income 
        standard.  The county agency shall apply the supplemental 
        security income rules regarding financial responsibility when 
        determining the amount of income to allocate or deem. 
           Sec. 15.  Minnesota Statutes 1994, section 256D.435, is 
        amended by adding a subdivision to read: 
           Subd. 4a.  [EXCLUSIONS.] The income exclusions used to 
        determine eligibility for Minnesota supplemental aid are those 
        used to determine benefits for supplemental security income. 
           Sec. 16.  Minnesota Statutes 1994, section 256D.435, 
        subdivision 5, is amended to read: 
           Subd. 5.  [GENERAL INCOME DISREGARD.] The county agency 
        shall disregard the first $20 of the assistance unit's unearned 
        or earned income from the assistance unit's gross earned income. 
           Sec. 17.  Minnesota Statutes 1994, section 256D.435, 
        subdivision 6, is amended to read: 
           Subd. 6.  [EARNED INCOME DISREGARDS.] From the assistance 
        unit's gross earned income, the county agency shall disregard 
        $65 plus one-half of the remaining income.  The earned income 
        disregards used to determine eligibility for Minnesota 
        supplemental aid are those used to determine benefits for 
        supplemental security income.  
           Sec. 18.  Minnesota Statutes 1994, section 256D.44, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [USE OF STANDARDS; INCREASES.] The state 
        standards of assistance for shelter, basic needs, and plus 
        special need items that establish the total amount of 
        maintenance need for an applicant for or recipient of Minnesota 
        supplemental aid, are used to determine the assistance unit's 
        eligibility for Minnesota supplemental aid.  The state standards 
        of assistance for basic needs must increase by an amount equal 
        to the dollar value, rounded up to the nearest dollar, of any 
        cost of living increases in the supplemental security income 
        program. 
           Sec. 19.  Minnesota Statutes 1994, section 256D.44, 
        subdivision 2, is amended to read: 
           Subd. 2.  [STANDARD OF ASSISTANCE FOR SHELTER PERSONS 
        ELIGIBLE FOR MEDICAL ASSISTANCE WAIVERS OR AT RISK OF PLACEMENT 
        IN A GROUP RESIDENTIAL HOUSING FACILITY.] The state standard of 
        assistance for shelter provides for the recipient's shelter 
        costs.  The monthly state standard of assistance for shelter 
        must be determined according to paragraphs (a) to (f). 
           (a) If an applicant or recipient does not reside with 
        another person or persons, the state standard of assistance is 
        the actual cost for shelter items or $124, whichever is less.  
           (b) If an applicant married couple or recipient married 
        couple, who live together, does not reside with others, the 
        state standard of assistance is the actual cost for shelter 
        items or $186, whichever is less.  
           (c) If an applicant or recipient resides with another 
        person or persons, the state standard of assistance is the 
        actual cost for shelter items or $93, whichever is less. 
           (d) If an applicant married couple or recipient married 
        couple, who live together, resides with others, the state 
        standard of assistance is the actual cost for shelter items or 
        $124, whichever is less. 
           (e) Actual shelter costs for applicants or recipients, who 
        reside with others, are determined by dividing the total monthly 
        shelter costs by the number of persons who share the residence. 
           (f) Married couples, living together and receiving MSA on 
        January 1, 1994, and whose eligibility has not been terminated 
        for a full calendar month, are exempt from the standards in 
        paragraphs (b) and (d).  The state standard of assistance for a 
        person who is eligible for a medical assistance home and 
        community-based services waiver or a person who has been 
        determined by the local agency to meet the plan requirements for 
        placement in a group residential housing facility under section 
        256I.04, subdivision 1a, is the standard established in 
        subdivision 3, paragraph (a) or (b). 
           Sec. 20.  Minnesota Statutes 1994, section 256D.44, 
        subdivision 3, is amended to read: 
           Subd. 3.  [STANDARD OF ASSISTANCE FOR BASIC NEEDS.] The 
        state standard of assistance for basic needs provides for the 
        applicant's or recipient's maintenance needs, other than actual 
        shelter costs.  Except as provided in subdivision 4, the monthly 
        state standard of assistance for basic needs is as follows:  
           (a) If an applicant or recipient does not reside with 
        another person or persons, the state standard of assistance is 
        $371 $519.  
           (b) If an applicant married couple or recipient married 
        couple who live together, does not reside with others, the state 
        standard of assistance is $557 $778. 
           (c) If an applicant or recipient resides with another 
        person or persons, the state standard of assistance is $286 $395.
           (d) If an applicant married couple or recipient married 
        couple who live together, resides with others, the state 
        standard of assistance is $371 $519. 
           (e) Married couples, living together who do not reside with 
        others and were receiving MSA on prior to January 1, 1994, and 
        whose eligibility has not been terminated a full calendar month, 
        are exempt from the standards in paragraphs (b) and (d) the 
        state standard of assistance is $793. 
           (f) Married couples living together who reside with others 
        and were receiving MSA prior to January 1, 1994, and whose 
        eligibility has not been terminated a full calendar month, the 
        state standard of assistance is $682. 
           (g) For an individual who is a resident of a nursing home, 
        a regional treatment center or a group residential housing 
        facility, the state standard of assistance is the personal needs 
        allowance for medical assistance recipients under section 
        256B.35. 
           Sec. 21.  Minnesota Statutes 1994, section 256D.44, 
        subdivision 4, is amended to read: 
           Subd. 4.  [TEMPORARY ABSENCE DUE TO ILLNESS.] For the 
        purposes of this subdivision, "home" means a residence owned or 
        rented by a recipient or the recipient's spouse.  Home does not 
        include a negotiated rate group residential housing facility.  
        Assistance payments for recipients who are temporarily absent 
        from their home due to hospitalization for illness must continue 
        at the same level of payment during their absence if the 
        following criteria are met:  
           (1) a physician certifies that the absence is not expected 
        to continue for more than three months; 
           (2) a physician certifies that the recipient will be able 
        to return to independent living; and 
           (3) the recipient has expenses associated with maintaining 
        a residence in the community.  
           Sec. 22.  Minnesota Statutes 1994, section 256D.44, 
        subdivision 5, is amended to read: 
           Subd. 5.  [SPECIAL NEEDS.] Notwithstanding In addition to 
        the state standards of assistance established in subdivisions 1 
        to 4, payments are allowed for the following special needs of 
        recipients of Minnesota supplemental aid who are not residents 
        of a nursing home, a regional treatment center, or a group 
        residential housing facility:  
           (a) The county agency shall pay a monthly allowance for 
        medically prescribed diets payable under the AFDC program if the 
        cost of those additional dietary needs cannot be met through 
        some other maintenance benefit.  
           (b) Payment for nonrecurring special needs must be allowed 
        for necessary home repairs or necessary repairs or replacement 
        of household furniture and appliances using the payment standard 
        of the AFDC program for these expenses, as long as other funding 
        sources are not available.  
           (c) A fee for guardian or conservator service is allowed at 
        a reasonable rate negotiated by the county or approved by the 
        court.  This rate shall not exceed five percent of the 
        assistance unit's gross monthly income up to a maximum of $100 
        per month.  If the guardian or conservator is a member of the 
        county agency staff, no fee is allowed. 
           (d) The county agency shall continue to pay a monthly 
        allowance of $68 for restaurant meals for a person who was 
        receiving a restaurant meal allowance on June 1, 1990, and who 
        eats two or more meals in a restaurant daily.  The allowance 
        must continue until the person has not received Minnesota 
        supplemental aid for one full calendar month or until the 
        person's living arrangement changes and the person no longer 
        meets the criteria for the restaurant meal allowance, whichever 
        occurs first. 
           (e) A fee of ten percent of the recipients gross income or 
        $25, whichever is less, is allowed for representative payee 
        services provided by an agency that meets the requirements under 
        SSI regulations to charge a fee for representative payee 
        services.  This special need is available to all recipients of 
        Minnesota supplemental aid regardless of their living 
        arrangement. 
           Sec. 23.  Minnesota Statutes 1994, section 256D.44, 
        subdivision 6, is amended to read: 
           Subd. 6.  [COUNTY AGENCY STANDARDS OF ASSISTANCE.] The 
        county agency may establish standards of assistance for shelter, 
        basic needs, special needs, and clothing and personal needs, and 
        negotiated rates that exceed the corresponding state standards 
        of assistance.  State aid is not available for costs above state 
        standards.  
           Sec. 24.  Minnesota Statutes 1994, section 256D.45, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PROSPECTIVE BUDGETING.] A calendar month 
        is The payment period and budgeting cycle for Minnesota 
        supplemental aid.  The monthly payment to a recipient must be 
        determined prospectively are those of the supplemental security 
        income program. 
           Sec. 25.  Minnesota Statutes 1994, section 256D.46, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ELIGIBILITY.] Emergency Minnesota 
        supplemental aid must be granted if the recipient is without 
        adequate resources to resolve an emergency that, if unresolved, 
        will threaten the health or safety of the recipient.  For the 
        purposes of this section, the term "recipient" includes persons 
        for whom a group residential housing benefit is being paid under 
        sections 256I.01 to 256I.06. 
           Sec. 26.  Minnesota Statutes 1994, section 256D.46, 
        subdivision 2, is amended to read: 
           Subd. 2.  [INCOME AND RESOURCE TEST.] All income and 
        resources available to the recipient during the month in which 
        the need for emergency Minnesota supplemental aid arises must be 
        considered in determining the recipient's ability to meet the 
        emergency need.  Property that can be liquidated in time to 
        resolve the emergency and income (excluding Minnesota 
        supplemental aid issued for current month's need) that is 
        normally disregarded or excluded under the Minnesota 
        supplemental aid program must be considered available to meet 
        the emergency need.  
           Sec. 27.  Minnesota Statutes 1994, section 256D.48, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [NEED FOR PROTECTIVE PAYEE.] The county 
        agency shall determine whether a recipient needs a protective 
        payee when a physical or mental condition renders the recipient 
        unable to manage funds and when payments to the recipient would 
        be contrary to the recipient's welfare.  Protective payments 
        must be issued when there is evidence of:  (1) repeated 
        inability to plan the use of income to meet necessary 
        expenditures; (2) repeated observation that the recipient is not 
        properly fed or clothed; (3) repeated failure to meet 
        obligations for rent, utilities, food, and other essentials; (4) 
        evictions or a repeated incurrence of debts; or (5) lost or 
        stolen checks; or (6) use of emergency Minnesota supplemental 
        aid more than twice in a calendar year.  The determination of 
        representative payment by the Social Security Administration for 
        the recipient is sufficient reason for protective payment of 
        Minnesota supplemental aid payments.  
           Sec. 28.  Minnesota Statutes 1994, section 256I.03, 
        subdivision 5, is amended to read: 
           Subd. 5.  [MSA EQUIVALENT RATE.] "MSA equivalent rate" 
        means an amount equal to the total of:  
           (1) the combined maximum shelter and basic needs standards 
        for MSA recipients living alone specified in section 256D.44, 
        subdivisions 2, paragraph (a); and 3, paragraph (a); plus 
           (2) for persons who are not eligible to receive food stamps 
        due to living arrangement, the maximum allotment authorized by 
        the federal Food Stamp Program for a single individual which is 
        in effect on the first day of July each year; less 
           (3) the personal needs allowance authorized for medical 
        assistance recipients under section 256B.35.  
           The MSA equivalent rate is to be adjusted on the first day 
        of July each year to reflect changes in any of the component 
        rates under clauses (1) to (3). 
           Sec. 29.  Minnesota Statutes 1994, section 256I.03, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [COUNTABLE INCOME.] "Countable income" means all 
        income received by an applicant or recipient less any applicable 
        exclusions or disregards.  For a recipient of any cash benefit 
        from the SSI program, countable income means the SSI benefit 
        limit in effect at the time the person is in a GRH setting less 
        $20, less the medical assistance personal needs allowance.  If 
        the SSI limit has been reduced for a person due to events 
        occurring prior to the persons entering the GRH setting, 
        countable income means actual income less any applicable 
        exclusions and disregards. 
           Sec. 30.  Minnesota Statutes 1994, section 256I.04, 
        subdivision 2b, is amended to read: 
           Subd. 2b.  [GROUP RESIDENTIAL HOUSING AGREEMENTS.] 
        Agreements between county agencies and providers of group 
        residential housing must be in writing and must specify the name 
        and address under which the establishment subject to the 
        agreement does business and under which the establishment, or 
        service provider, if different from the group residential 
        housing establishment, is licensed by the department of health 
        or the department of human services; the specific license or 
        registration from the department of health or the department of 
        human services held by the provider and the number of beds 
        subject to that license; the address of the location or 
        locations at which group residential housing is provided under 
        this agreement; the per diem and monthly rates that are to be 
        paid from group residential housing funds for each eligible 
        resident at each location; the number of beds at each location 
        which are subject to the group residential housing agreement; 
        whether the license holder is a not-for-profit corporation under 
        section 501(c)(3) of the Internal Revenue Code; and a statement 
        that the agreement is subject to the provisions of sections 
        256I.01 to 256I.06 and subject to any changes to those sections. 
           Sec. 31.  Minnesota Statutes 1994, section 256I.04, 
        subdivision 3, is amended to read: 
           Subd. 3.  [MORATORIUM ON THE DEVELOPMENT OF GROUP 
        RESIDENTIAL HOUSING BEDS.] (a) County agencies shall not enter 
        into agreements for new group residential housing beds with 
        total rates in excess of the MSA equivalent rate except:  (1) 
        for group residential housing establishments meeting the 
        requirements of subdivision 2a, clause (2) with department 
        approval; (2) for group residential housing establishments 
        licensed under Minnesota Rules, parts 9525.0215 to 9525.0355, 
        provided the facility is needed to meet the census reduction 
        targets for persons with mental retardation or related 
        conditions at regional treatment centers; (3) to ensure 
        compliance with the federal Omnibus Budget Reconciliation Act 
        alternative disposition plan requirements for inappropriately 
        placed persons with mental retardation or related conditions or 
        mental illness; or (4) up to 80 beds in a single, specialized 
        facility located in Hennepin county that will provide housing 
        for chronic inebriates who are repetitive users of 
        detoxification centers and are refused placement in emergency 
        shelters because of their state of intoxication.  Planning for 
        the specialized facility must have been initiated before July 1, 
        1991, in anticipation of receiving a grant from the housing 
        finance agency under section 462A.05, subdivision 20a, paragraph 
        (b).; or (5) notwithstanding the provisions of subdivision 2a, 
        for up to 180 supportive housing units in Anoka, Dakota, 
        Hennepin, or Ramsey county for homeless adults with a mental 
        illness, a history of substance abuse, or human immunodeficiency 
        virus or acquired immunodeficiency syndrome.  For purposes of 
        this section, "homeless adult" means a person who is living on 
        the street or in a shelter or is evicted from a dwelling unit or 
        discharged from a regional treatment center, community hospital, 
        or residential treatment program and has no appropriate housing 
        available and lacks the resources and support necessary to 
        access appropriate housing.  At least 70 percent of the 
        supportive housing units must serve homeless adults with mental 
        illness, substance abuse problems, or human immunodeficiency 
        virus or acquired immunodeficiency syndrome who are about to be 
        discharged from a regional treatment center, or a 
        state-contracted psychiatric bed in a community hospital, or a 
        residential mental health or chemical dependency treatment 
        program.  If a person meets the requirements of subdivision 1, 
        paragraph (a), the group residential housing rate for that 
        person is limited to the supplementary rate under section 
        256I.05, subdivision 1a, and is determined by subtracting the 
        amount of the person's countable income that exceeds the MSA 
        equivalent rate from the group residential housing supplementary 
        rate.  Service funding under section 256I.05, subdivision 1a, 
        must end June 30, 1997.  Effective July 1, 1997, services to 
        persons in these settings must be provided through a managed 
        care entity.  This provision is subject to the availability of 
        matching federal funds. 
           (b) A county agency may enter into a group residential 
        housing agreement for beds with rates in excess of the MSA 
        equivalent rate in addition to those currently covered under a 
        group residential housing agreement if the additional beds are 
        only a replacement of beds with rates in excess of the MSA 
        equivalent rate which have been made available due to closure of 
        a setting, a change of licensure or certification which removes 
        the beds from group residential housing payment, or as a result 
        of the downsizing of a group residential housing setting.  The 
        transfer of available beds from one county to another can only 
        occur by the agreement of both counties. 
           (c) Group residential housing beds which become available 
        as a result of downsizing settings which have a license issued 
        under Minnesota Rules, parts 9520.0500 to 9520.0690, must be 
        permanently removed from the group residential housing census 
        and not replaced. 
           Sec. 32.  Minnesota Statutes 1994, section 256I.05, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [MAXIMUM RATES.] (a) Monthly room and board 
        rates negotiated by a county agency for a recipient living in 
        group residential housing must not exceed the MSA equivalent 
        rate specified under section 256I.03, subdivision 5, with the 
        exception that a county agency may negotiate a room and board 
        rate that exceeds the MSA equivalent rate by up to $426.37 for 
        recipients of waiver services under title XIX of the Social 
        Security Act.  This exception is subject to the following 
        conditions: 
           (1) that the Secretary of Health and Human Services has not 
        approved a state request to include room and board costs which 
        exceed the MSA equivalent rate in an individual's set of waiver 
        services under title XIX of the Social Security Act; or 
           (2) that the Secretary of Health and Human Services has 
        approved the inclusion of room and board costs which exceed the 
        MSA equivalent rate, but in an amount that is insufficient to 
        cover costs which are included in a group residential housing 
        agreement in effect on June 30, 1994,; and 
           (3) the amount of the rate that is above the MSA equivalent 
        rate has been approved by the commissioner.  The county agency 
        may at any time negotiate a lower room and board rate than the 
        rate that would otherwise be paid under this subdivision. 
           (b) The maximum monthly rate for an establishment that 
        enters into an initial group residential housing agreement with 
        a county agency on or after June 1, 1989, may not exceed 90 
        percent of the maximum rate established under this subdivision.  
        This is effective until June 30, 1994. 
           Sec. 33.  Minnesota Statutes 1994, section 256I.05, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [SUPPLEMENTARY RATES.] In addition to the room 
        and board rate specified in subdivision 1, the county agency may 
        negotiate a payment not to exceed $426.37 for other services 
        necessary to provide room and board provided by the group 
        residence if the residence is licensed by or registered by the 
        department of health, or licensed by the department of human 
        services to provide services in addition to room and board, and 
        if the recipient provider of services is not also concurrently 
        receiving funding for services for a recipient under a home and 
        community-based waiver under title XIX of the Social Security 
        Act or residing in a setting which receives funding under 
        Minnesota Rules, parts 9535.2000 to 9535.3000.  If funding is 
        available for other necessary services through a home and 
        community-based waiver, then the GRH rate is limited to the rate 
        set in subdivision 1.  The registration and licensure 
        requirement does not apply to establishments which are exempt 
        from state licensure because they are located on Indian 
        reservations and for which the tribe has prescribed health and 
        safety requirements.  Service payments under this section may be 
        prohibited under rules to prevent the supplanting of federal 
        funds with state funds.  The commissioner shall pursue the 
        feasibility of obtaining the approval of the Secretary of Health 
        and Human Services to provide home and community-based waiver 
        services under title XIX of the Social Security Act for 
        residents who are not eligible for an existing home and 
        community-based waiver due to a primary diagnosis of mental 
        illness or chemical dependency and shall apply for a waiver if 
        it is determined to be cost-effective. 
           Sec. 34.  Minnesota Statutes 1994, section 256I.05, 
        subdivision 5, is amended to read: 
           Subd. 5.  [ADULT FOSTER CARE RATES.] The commissioner shall 
        annually establish statewide maintenance and difficulty of 
        care rates limits for adults in foster care.  The commissioner 
        shall adopt rules to implement statewide rates.  In adopting 
        rules, the commissioner shall consider existing maintenance and 
        difficulty of care rates so that, to the extent possible, an 
        adult for whom a maintenance or difficulty of care rate is 
        established will not be adversely affected.  
           Sec. 35.  Minnesota Statutes 1994, section 256I.06, 
        subdivision 2, is amended to read: 
           Subd. 2.  [TIME OF PAYMENT.] A county agency may make 
        payments to a group residence in advance for an individual whose 
        stay in the group residence is expected to last beyond the 
        calendar month for which the payment is made and who does not 
        expect to receive countable earned income during the month for 
        which the payment is made.  Group residential housing payments 
        made by a county agency on behalf of an individual who is not 
        expected to remain in the group residence beyond the month for 
        which payment is made must be made subsequent to the 
        individual's departure from the group residence.  Group 
        residential housing payments made by a county agency on behalf 
        of an individual with countable earned income must be made 
        subsequent to receipt of a monthly household report form. 
           Sec. 36.  Minnesota Statutes 1994, section 256I.06, 
        subdivision 6, is amended to read: 
           Subd. 6.  [REPORTS.] Recipients must report changes in 
        circumstances that affect eligibility or group residential 
        housing payment amounts within ten days of the change.  
        Recipients with countable earned income must complete a monthly 
        household report form.  If the report form is not received 
        before the end of the month in which it is due, the county 
        agency must terminate eligibility for group residential housing 
        payments.  The termination shall be effective on the first day 
        of the month following the month in which the report was due.  
        If a complete report is received within the month eligibility 
        was terminated, the individual is considered to have continued 
        an application for group residential housing payment effective 
        the first day of the month the eligibility was terminated. 
           Sec. 37.  Minnesota Statutes 1994, section 393.07, 
        subdivision 10, is amended to read: 
           Subd. 10.  [FEDERAL FOOD STAMP PROGRAM.] (a) The local 
        social services agency shall establish and administer the food 
        stamp program pursuant to rules of the commissioner of human 
        services, the supervision of the commissioner as specified in 
        section 256.01, and all federal laws and regulations.  The 
        commissioner of human services shall monitor food stamp program 
        delivery on an ongoing basis to ensure that each county complies 
        with federal laws and regulations.  Program requirements to be 
        monitored include, but are not limited to, number of 
        applications, number of approvals, number of cases pending, 
        length of time required to process each application and deliver 
        benefits, number of applicants eligible for expedited issuance, 
        length of time required to process and deliver expedited 
        issuance, number of terminations and reasons for terminations, 
        client profiles by age, household composition and income level 
        and sources, and the use of phone certification and home 
        visits.  The commissioner shall determine the county-by-county 
        and statewide participation rate.  
           (b) On July 1 of each year, the commissioner of human 
        services shall determine a statewide and county-by-county food 
        stamp program participation rate.  The commissioner may 
        designate a different agency to administer the food stamp 
        program in a county if the agency administering the program 
        fails to increase the food stamp program participation rate 
        among families or eligible individuals, or comply with all 
        federal laws and regulations governing the food stamp program.  
        The commissioner shall review agency performance annually to 
        determine compliance with this paragraph. 
           (c) A person who commits any of the following acts has 
        violated section 256.98 or 609.821, or both, and is subject to 
        both the criminal and civil penalties provided under those 
        sections: 
           (1) obtains or attempts to obtain, or aids or abets any 
        person to obtain by means of a willfully false statement or 
        representation, or intentional concealment of a material fact, 
        food stamps to which the person is not entitled or in an amount 
        greater than that to which that person is entitled; or 
           (2) presents or causes to be presented, coupons for payment 
        or redemption knowing them to have been received, transferred or 
        used in a manner contrary to existing state or federal law; 
           (3) willfully uses, possesses, or transfers food stamp 
        coupons or authorization to purchase cards in any manner 
        contrary to existing state or federal law, rules, or 
        regulations; or 
           (4) buys or sells food stamp coupons, authorization to 
        purchase cards or other assistance transaction devices for cash 
        or consideration other than eligible food. 
           (d) A peace officer or welfare fraud investigator may 
        confiscate food stamps, authorization to purchase cards, or 
        other assistance transaction devices found in the possession of 
        any person who is neither a recipient of the food stamp program 
        nor otherwise authorized to possess and use such materials.  
        Confiscated property shall be disposed of as the commissioner 
        may direct and consistent with state and federal food stamp 
        law.  The confiscated property must be retained for a period of 
        not less than 30 days to allow any affected person to appeal the 
        confiscation under section 256.045. 
           (e) Food stamp overpayment claims which are due in whole or 
        in part to client error shall be established by the county 
        agency for a period of six years from the date of any resultant 
        overpayment.  
           (f) With regard to the federal tax revenue offset program 
        only, recovery incentives authorized by the federal food and 
        consumer service shall be retained at the rate of 50 percent by 
        the state agency and 50 percent by the certifying county agency. 
           Sec. 38.  [RAMSEY COUNTY ELECTRONIC BENEFIT SERVICE.] 
           Notwithstanding the requirements for state contracts 
        contained in Minnesota Statutes, chapter 16B, or Laws 1993, 
        First Special Session chapter 1, article 1, section 2, 
        subdivision 5, or any other law to the contrary, the 
        commissioner, under terms and conditions approved by the 
        attorney general, may accept assignment from Ramsey county of 
        any existing contract, license agreement, or similar 
        transactional document related to the Ramsey county electronic 
        benefit system.  The term of any contract, agreement, or other 
        document assigned to the state, including the agreement arising 
        from the Ramsey county electronic benefit services pilot 
        project, may not extend beyond June 30, 1997, and the 
        commissioner must publish a request for proposals for succeeding 
        electronic benefits services, including services required for 
        statewide expansion in the State Register before January 1, 1996.
           Sec. 39.  Laws 1993, First Special Session chapter 1, 
        article 8, section 30, subdivision 2, is amended to read: 
           Subd. 2.  Sections 1 to 3, 8, 9, 13 to 17, 22, 23, and 26 
        to 29 are effective July 1, 1994, contingent upon federal 
        recognition that group residential housing payments qualify as 
        optional state supplement payments to the supplemental security 
        income program under title XVI of the Social Security Act and 
        confer categorical eligibility for medical assistance under the 
        state plan for medical assistance.  The amendments and repeals 
        by Laws 1993, First Special Session chapter 1, article 8, 
        sections 1 to 3, 8, 9, 13 to 17, 22, 23, 26, and 29, are 
        effective July 1, 1994. 
           Sec. 40.  [REPEALER.] 
           Minnesota Statutes 1994, sections 256.851; 256D.35, 
        subdivisions 14 and 19; 256D.36, subdivision 1a; 256D.37; 
        256D.425, subdivision 3; 256D.435, subdivisions 2, 7, 8, 9, and 
        10; and 256D.44, subdivision 7, are repealed. 
           Sec. 41.  [EFFECTIVE DATES.] 
           Section 31 (256I.04, subdivision 3) is effective July 1, 
        1996. 
                                   ARTICLE 6 
                                  MA AND GAMC
           Section 1.  Minnesota Statutes 1994, section 144.0721, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [LEVEL OF CARE CRITERIA; MODIFICATIONS.] The 
        commissioner shall seek appropriate federal waivers to implement 
        this subdivision.  Notwithstanding any laws or rules to the 
        contrary, effective July 1, 1996, Minnesota's level of care 
        criteria for admission of any person to a nursing facility 
        licensed under chapter 144A, or a boarding care home licensed 
        under sections 144.50 to 144.56, are modified as follows: 
           (1) the resident reimbursement classifications and 
        terminology established by rule under sections 256B.41 to 
        256B.48 are the basis for applying the level of care criteria 
        changes; 
           (2) an applicant to a certified nursing facility or 
        certified boarding care home who is dependent in one or two case 
        mix activities of daily living, is classified as a case mix A, 
        and is independent in orientation and self-preservation, is 
        reclassified as a high function class A person and is not 
        eligible for admission to Minnesota certified nursing facilities 
        or certified boarding care homes; 
           (3) applicants in clause (2) who are eligible for 
        assistance as determined under sections 256B.055 and 256B.056 or 
        meet eligibility criteria for section 256B.0913 are eligible for 
        a service allowance under section 256B.0913, subdivision 15, and 
        are not eligible for services under sections 256B.0913, 
        subdivisions 1 to 14, and 256B.0915.  Applicants in clause (2) 
        shall have the option of receiving personal care assistant and 
        home health aide services under section 256B.0625, if otherwise 
        eligible, or of receiving the service allowance option, but not 
        both.  Applicants in clause (2) shall have the option of 
        residing in community settings under sections 256I.01 to 
        256I.06, if otherwise eligible, or receiving the services 
        allowance option under section 256B.0913, subdivision 15, but 
        not both; 
           (4) residents of a certified nursing facility or certified 
        boarding care home who were admitted before July 1, 1996, or 
        individuals receiving services under section 256B.0913, 
        subdivisions 1 to 14, or 256B.0915, before July 1, 1996, are not 
        subject to the new level of care criteria unless the resident is 
        discharged home or to another service setting other than a 
        certified nursing facility or certified boarding care home and 
        applies for admission to a certified nursing facility or 
        certified boarding care home after June 30, 1996; 
           (5) the local screening teams under section 256B.0911 shall 
        make preliminary determinations concerning the existence of 
        extraordinary circumstances and may authorize an admission for a 
        short-term stay at a certified nursing facility or certified 
        boarding care home in accordance with a treatment and discharge 
        plan for up to 30 days per year; and 
           (6) an individual deemed ineligible for admission to 
        Minnesota certified nursing facilities is entitled to an appeal 
        under section 256.045. 
           If the commissioner determines upon appeal that an 
        applicant in clause (2) presents extraordinary circumstances 
        including but not limited to the absence or inaccessibility of 
        suitable alternatives, contravening family circumstances, and 
        protective service issues, the applicant may be eligible for 
        admission to Minnesota certified nursing facilities or certified 
        boarding care homes. 
           Sec. 2.  Minnesota Statutes 1994, section 144.0721, is 
        amended by adding a subdivision to read: 
           Subd. 3a.  [EXCEPTION.] Subdivision 3 does not apply to a 
        facility whose rates are subject to section 256I.05, subdivision 
        2. 
           Sec. 3.  Minnesota Statutes 1994, section 144.702, 
        subdivision 2, is amended to read: 
           Subd. 2.  [APPROVAL OF ORGANIZATION'S REPORTING 
        PROCEDURES.] The commissioner of health may approve voluntary 
        reporting procedures consistent with written operating 
        requirements for the voluntary, nonprofit reporting organization 
        which shall be established annually by the commissioner.  These 
        written operating requirements shall specify reports, analyses, 
        and other deliverables to be produced by the voluntary, 
        nonprofit reporting organization, and the dates on which those 
        deliverables must be submitted to the commissioner.  These 
        written operating requirements shall specify deliverable dates 
        sufficient to enable the commissioner of health to process and 
        report health care cost information system data to the 
        commissioner of human services by August 15 of each year.  The 
        commissioner of health shall, by rule, prescribe standards for 
        submission of data by hospitals and outpatient surgical centers 
        to the voluntary, nonprofit reporting organization or to the 
        commissioner.  These standards shall provide for: 
           (a) The filing of appropriate financial information with 
        the reporting organization; 
           (b) Adequate analysis and verification of that financial 
        information; and 
           (c) Timely publication of the costs, revenues, and rates of 
        individual hospitals and outpatient surgical centers prior to 
        the effective date of any proposed rate increase.  The 
        commissioner of health shall annually review the procedures 
        approved pursuant to this subdivision. 
           Sec. 4.  Minnesota Statutes 1994, section 252.27, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [COUNTY OF FINANCIAL RESPONSIBILITY.] 
        Whenever any child who has mental retardation or a related 
        condition, or a physical disability or emotional disturbance is 
        in 24-hour care outside the home including respite care, in a 
        facility licensed by the commissioner of human services, the 
        cost of services shall be paid by the county of financial 
        responsibility determined pursuant to chapter 256G.  If the 
        child's parents or guardians do not reside in this state, the 
        cost shall be paid by the responsible governmental agency in the 
        state from which the child came, by the parents or guardians of 
        the child if they are financially able, or, if no other payment 
        source is available, by the commissioner of human services. 
           Sec. 5.  Minnesota Statutes 1994, section 252.27, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [DEFINITIONS.] A person has a "related 
        condition" if that person has is a condition that is found to be 
        closely related to mental retardation, including, but not 
        limited to, cerebral palsy, epilepsy, autism, and Prader-Willi 
        syndrome and that meets all of the following criteria:  (a) is 
        severe, and chronic disability that meets all of the following 
        conditions:  (a) is attributable to cerebral palsy, epilepsy, 
        autism, Prader-Willi syndrome, or any other condition, other 
        than mental illness as defined under section 245.462, 
        subdivision 20, or an emotional disturbance, as defined under 
        section 245.4871, subdivision 15, found to be closely related to 
        mental retardation because the condition; (b) results in 
        impairment of general intellectual functioning or adaptive 
        behavior similar to that of persons with mental retardation and; 
        (c) requires treatment or services similar to those required for 
        persons with mental retardation; (b) (d) is manifested before 
        the person reaches 22 years of age; (c) (e) is likely to 
        continue indefinitely; and (d) (f) results in substantial 
        functional limitations in three or more of the following areas 
        of major life activity:  (1) self-care, (2) understanding and 
        use of language, (3) learning, (4) mobility, (5) self-direction, 
        (6) capacity for independent living; and (g) is not attributable 
        to mental illness as defined in section 245.462, subdivision 20, 
        or an emotional disturbance as defined in section 245.4871, 
        subdivision 15.  For purposes of clause (g), notwithstanding 
        section 245.462, subdivision 20, or 245.4871, subdivision 15, 
        "mental illness" does not include autism or other pervasive 
        developmental disorders. 
           Sec. 6.  Minnesota Statutes 1994, section 252.27, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [CONTRIBUTION AMOUNT.] (a) The natural or 
        adoptive parents of a minor child, including a child determined 
        eligible for medical assistance without consideration of 
        parental income, must contribute monthly to the cost of 
        services, unless the child is married or has been married, 
        parental rights have been terminated, or the child's adoption is 
        subsidized according to section 259.67 or through title IV-E of 
        the Social Security Act. 
           (b) The parental contribution shall be the greater of a 
        minimum monthly fee of $25 for households with adjusted gross 
        income of $30,000 and over, or an amount to be computed by 
        applying to the adjusted gross income of the natural or adoptive 
        parents that exceeds 200 150 percent of the federal poverty 
        guidelines for the applicable household size, the following 
        schedule of rates: 
           (1) on the amount of adjusted gross income over 200 150 
        percent of poverty, but not over $50,000, ten percent; 
           (2) on the amount of adjusted gross income over 200 150 
        percent of poverty and over $50,000 but not over $60,000, 12 
        percent; 
           (3) on the amount of adjusted gross income over 200 150 
        percent of poverty, and over $60,000 but not over $75,000, 14 
        percent; and 
           (4) on all adjusted gross income amounts over 200 150 
        percent of poverty, and over $75,000, 15 percent. 
           If the child lives with the parent, the parental 
        contribution is reduced by $200, except that the parent must pay 
        the minimum monthly $25 fee under this paragraph.  If the child 
        resides in an institution specified in section 256B.35, the 
        parent is responsible for the personal needs allowance specified 
        under that section in addition to the parental contribution 
        determined under this section.  The parental contribution is 
        reduced by any amount required to be paid directly to the child 
        pursuant to a court order, but only if actually paid. 
           (c) The household size to be used in determining the amount 
        of contribution under paragraph (b) includes natural and 
        adoptive parents and their dependents under age 21, including 
        the child receiving services.  Adjustments in the contribution 
        amount due to annual changes in the federal poverty guidelines 
        shall be implemented on the first day of July following 
        publication of the changes. 
           (d) For purposes of paragraph (b), "income" means the 
        adjusted gross income of the natural or adoptive parents 
        determined according to the previous year's federal tax form. 
           (e) The contribution shall be explained in writing to the 
        parents at the time eligibility for services is being 
        determined.  The contribution shall be made on a monthly basis 
        effective with the first month in which the child receives 
        services.  Annually upon redetermination or at termination of 
        eligibility, if the contribution exceeded the cost of services 
        provided, the local agency or the state shall reimburse that 
        excess amount to the parents, either by direct reimbursement if 
        the parent is no longer required to pay a contribution, or by a 
        reduction in or waiver of parental fees until the excess amount 
        is exhausted. 
           (f) The monthly contribution amount must be reviewed at 
        least every 12 months; when there is a change in household size; 
        and when there is a loss of or gain in income from one month to 
        another in excess of ten percent.  The local agency shall mail a 
        written notice 30 days in advance of the effective date of a 
        change in the contribution amount.  A decrease in the 
        contribution amount is effective in the month that the parent 
        verifies a reduction in income or change in household size. 
           (g) Parents of a minor child who do not live with each 
        other shall each pay the contribution required under paragraph 
        (a), except that a court-ordered child support payment actually 
        paid on behalf of the child receiving services shall be deducted 
        from the contribution of the parent making the payment. 
           (h) The contribution under paragraph (b) shall be increased 
        by an additional five percent if the local agency determines 
        that insurance coverage is available but not obtained for the 
        child.  For purposes of this section, "available" means the 
        insurance is a benefit of employment for a family member at an 
        annual cost of no more than five percent of the family's annual 
        income.  For purposes of this section, insurance means health 
        and accident insurance coverage, enrollment in a nonprofit 
        health service plan, health maintenance organization, 
        self-insured plan, or preferred provider organization. 
           Parents who have more than one child receiving services 
        shall not be required to pay more than the amount for the child 
        with the highest expenditures.  There shall be no resource 
        contribution from the parents.  The parent shall not be required 
        to pay a contribution in excess of the cost of the services 
        provided to the child, not counting payments made to school 
        districts for education-related services.  Notice of an increase 
        in fee payment must be given at least 30 days before the 
        increased fee is due.  
           Sec. 7.  Minnesota Statutes 1994, section 252.27, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [DETERMINATION; REDETERMINATION; NOTICE.] A 
        determination order and notice of parental fee shall be mailed 
        to the parent at least annually, or more frequently as provided 
        in Minnesota Rules, parts 9550.6220 to 9550.6229.  The 
        determination order and notice shall contain the following 
        information:  (1) the amount the parent is required to 
        contribute; (2) notice of the right to a redetermination and 
        appeal; and (3) the telephone number of the division at the 
        department of human services that is responsible for 
        redeterminations.  
           Sec. 8.  Minnesota Statutes 1994, section 252.27, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [APPEALS.] A parent may appeal the determination 
        or redetermination of an obligation to make a contribution under 
        this section, according to section 256.045.  The parent must 
        make a request for a hearing in writing within 30 days of the 
        date the determination or redetermination order is mailed, or 
        within 90 days of such written notice if the parent shows good 
        cause why the request was not submitted within the 30-day time 
        limit.  The commissioner must provide the parent with a written 
        notice that acknowledges receipt of the request and notifies the 
        parent of the date of the hearing.  While the appeal is pending, 
        the parent has the rights regarding making payment that are 
        provided in Minnesota Rules, part 9550.6235.  If the 
        commissioner's determination or redetermination is affirmed, the 
        parent shall, within 90 calendar days after the date an order is 
        issued under section 256.045, subdivision 5, pay the total 
        amount due from the effective date of the notice of 
        determination or redetermination that was appealed by the 
        parent.  If the commissioner's order under this subdivision 
        results in a decrease in the parental fee amount, any payments 
        made by the parent that result in an overpayment shall be 
        credited to the parent as provided in Minnesota Rules, part 
        9550.6235, subpart 3. 
           Sec. 9.  Minnesota Statutes 1994, section 256.015, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [STATE AGENCY HAS LIEN.] When the state 
        agency provides, pays for, or becomes liable for medical care or 
        furnishes subsistence or other payments to a person, the agency 
        has a lien for the cost of the care and payments on all causes 
        of action that accrue to the person to whom the care or payments 
        were furnished, or to the person's legal representatives, as a 
        result of the occurrence that necessitated the medical care, 
        subsistence, or other payments.  For purposes of this section, 
        "state agency" includes authorized agents of the state agency. 
           Sec. 10.  Minnesota Statutes 1994, section 256.015, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PERFECTION; ENFORCEMENT.] The state agency may 
        perfect and enforce its lien under sections 514.69, 514.70, and 
        514.71, and must file the verified lien statement with the 
        appropriate court administrator in the county of financial 
        responsibility.  The verified lien statement must contain the 
        following:  the name and address of the person to whom medical 
        care, subsistence, or other payment was furnished; the date of 
        injury; the name and address of vendors furnishing medical care; 
        the dates of the service or payment; the amount claimed to be 
        due for the care or payment; and to the best of the state 
        agency's knowledge, the names and addresses of all persons, 
        firms, or corporations claimed to be liable for damages arising 
        from the injuries.  
           This section does not affect the priority of any attorney's 
        lien.  The state agency is not subject to any limitations period 
        referred to in section 514.69 or 514.71 and has one year from 
        the date notice is first received by it under subdivision 4, 
        paragraph (c), even if the notice is untimely, or one year from 
        the date medical bills are first paid by the state agency, 
        whichever is later, to file its verified lien statement.  The 
        state agency may commence an action to enforce the lien within 
        one year of (1) the date the notice required by subdivision 4, 
        paragraph (c), is received, or (2) the date the person's cause 
        of action is concluded by judgment, award, settlement, or 
        otherwise, whichever is later. 
           Sec. 11.  Minnesota Statutes 1994, section 256.015, 
        subdivision 7, is amended to read: 
           Subd. 7.  [COOPERATION REQUIRED.] Upon the request of the 
        department of human services, any state agency or third party 
        payer shall cooperate with the department in furnishing 
        information to help establish a third party liability.  Upon the 
        request of the department of human services or county child 
        support or human service agencies, any employer or third party 
        payer shall cooperate in furnishing information about group 
        health insurance plans or medical benefit plans available to its 
        employees.  The department of human services and county agencies 
        shall limit its use of information gained from agencies and, 
        third party payers, and employers to purposes directly connected 
        with the administration of its public assistance and child 
        support programs.  The provision of information by agencies and, 
        third party payers, and employers to the department under this 
        subdivision is not a violation of any right of confidentiality 
        or data privacy. 
           Sec. 12.  Minnesota Statutes 1994, section 256.9353, 
        subdivision 8, is amended to read: 
           Subd. 8.  [LIEN.] When the state agency provides, pays for, 
        or becomes liable for covered health services, the agency shall 
        have a lien for the cost of the covered health services upon any 
        and all causes of action accruing to the enrollee, or to the 
        enrollee's legal representatives, as a result of the occurrence 
        that necessitated the payment for the covered health services.  
        All liens under this section shall be subject to the provisions 
        of section 256.015.  For purposes of this subdivision, "state 
        agency" includes authorized agents of the state agency. 
           Sec. 13.  Minnesota Statutes 1994, section 256.9365, is 
        amended to read: 
           256.9365 [PURCHASE OF CONTINUATION COVERAGE FOR AIDS 
        PATIENTS.] 
           Subdivision 1.  [PROGRAM ESTABLISHED.] The commissioner of 
        human services shall establish a program to pay private health 
        plan premiums for persons who have contracted human 
        immunodeficiency virus (HIV) to enable them to continue coverage 
        under a group or individual health plan.  If a person is 
        determined to be eligible under subdivision 2, the commissioner 
        shall:  (1) pay the eligible person's group plan premium for the 
        period of continuation coverage provided in the Consolidated 
        Omnibus Budget Reconciliation Act of 1985; or (2) pay the 
        eligible person's individual plan premium for 24 months pay the 
        portion of the group plan premium for which the individual is 
        responsible, if the individual is responsible for at least 50 
        percent of the cost of the premium, or pay the individual plan 
        premium.  The commissioner shall not pay for that portion of a 
        premium that is attributable to other family members or 
        dependents.  
           Subd. 2.  [ELIGIBILITY REQUIREMENTS.] To be eligible for 
        the program, an applicant must satisfy the following 
        requirements: 
           (1) the applicant must provide a physician's statement 
        verifying that the applicant is infected with HIV and is, or 
        within three months is likely to become, too ill to work in the 
        applicant's current employment because of HIV-related disease; 
           (2) the applicant's monthly gross family income must not 
        exceed 300 percent of the federal poverty guidelines, after 
        deducting medical expenses and insurance premiums; 
           (3) the applicant must not own assets with a combined value 
        of more than $25,000; and 
           (4) if applying for payment of group plan premiums, the 
        applicant must be covered by an employer's or former employer's 
        group insurance plan and be eligible to purchase continuation 
        coverage; and 
           (5) if applying for payment of individual plan premiums, 
        the applicant must be covered by an individual health plan whose 
        coverage and premium costs satisfy additional requirements 
        established by the commissioner in rule. 
           Subd. 3.  [RULES COST-EFFECTIVE COVERAGE.] The commissioner 
        shall establish rules as necessary to implement the program.  
        Special Requirements for the payment of individual plan premiums 
        under subdivision 2, clause (5), must be designed to ensure that 
        the state cost of paying an individual plan premium over a 
        two-year period does not exceed the estimated state cost that 
        would otherwise be incurred in the medical assistance or general 
        assistance medical care program.  The commissioner shall 
        purchase the most cost-effective coverage available for eligible 
        individuals.  
           Sec. 14.  Minnesota Statutes 1994, section 256.9657, 
        subdivision 3, is amended to read: 
           Subd. 3.  [HEALTH MAINTENANCE ORGANIZATION; INTEGRATED 
        SERVICE NETWORK SURCHARGE.] (a) Effective October 1, 1992, each 
        health maintenance organization with a certificate of authority 
        issued by the commissioner of health under chapter 62D and each 
        integrated service network and community integrated service 
        network licensed by the commissioner under chapter 62N shall pay 
        to the commissioner of human services a surcharge equal to 
        six-tenths of one percent of the total premium revenues of the 
        health maintenance organization, integrated service network, or 
        community integrated service network as reported to the 
        commissioner of health according to the schedule in subdivision 
        4.  
           (b) For purposes of this subdivision, total premium revenue 
        means: 
           (1) premium revenue recognized on a prepaid basis from 
        individuals and groups for provision of a specified range of 
        health services over a defined period of time which is normally 
        one month, excluding premiums paid to a health maintenance 
        organization, integrated service network, or community 
        integrated service network from the Federal Employees Health 
        Benefit Program; 
           (2) premiums from Medicare wrap-around subscribers for 
        health benefits which supplement Medicare coverage; 
           (3) Medicare revenue, as a result of an arrangement between 
        a health maintenance organization, an integrated service 
        network, or a community integrated service network and the 
        health care financing administration of the federal Department 
        of Health and Human Services, for services to a Medicare 
        beneficiary; and 
           (4) medical assistance revenue, as a result of an 
        arrangement between a health maintenance organization, 
        integrated service network, or community integrated service 
        network and a Medicaid state agency, for services to a medical 
        assistance beneficiary. 
           If advance payments are made under clause (1) or (2) to the 
        health maintenance organization, integrated service network, or 
        community integrated service network for more than one reporting 
        period, the portion of the payment that has not yet been earned 
        must be treated as a liability. 
           (c) When a health maintenance organization or an integrated 
        service network or community integrated service network merges 
        or consolidates with or is acquired by another health 
        maintenance organization, integrated service network, or 
        community integrated service network, the surviving corporation 
        or the new corporation shall be responsible for the annual 
        surcharge originally imposed on each of the entities or 
        corporations subject to the merger, consolidation, or 
        acquisition, regardless of whether one of the entities or 
        corporations does not retain a certificate of authority under 
        chapter 62D or a license under chapter 62N. 
           (d) Effective July 1 of each year, the surviving 
        corporation's or the new corporation's surcharge shall be based 
        on the revenues earned in the second previous calendar year by 
        all of the entities or corporations subject to the merger, 
        consolidation, or acquisition regardless of whether one of the 
        entities or corporations does not retain a certificate of 
        authority under chapter 62D or a license under chapter 62N until 
        the total premium revenues of the surviving corporation include 
        the total premium revenues of all the merged entities as 
        reported to the commissioner of health. 
           (e) When a health maintenance organization, integrated 
        service network, or community integrated service network, which 
        is subject to liability for the surcharge under this chapter, 
        transfers, assigns, sells, leases, or disposes of all or 
        substantially all of its property or assets, liability for the 
        surcharge imposed by this chapter is imposed on the transferee, 
        assignee, or buyer of the health maintenance organization, 
        integrated service network, or community integrated service 
        network. 
           (f) In the event a health maintenance organization, 
        integrated service network, or community integrated service 
        network converts its licensure to a different type of entity 
        subject to liability for the surcharge under this chapter, but 
        survives in the same or substantially similar form, the 
        surviving entity remains liable for the surcharge regardless of 
        whether one of the entities or corporations does not retain a 
        certificate of authority under chapter 62D or a license under 
        chapter 62N. 
           (g) The surcharge assessed to a health maintenance 
        organization, integrated service network, or community 
        integrated service network ends when the entity ceases providing 
        services for premiums and the cessation is not connected with a 
        merger, consolidation, acquisition, or conversion. 
           Sec. 15.  Minnesota Statutes 1994, section 256.9657, 
        subdivision 4, is amended to read: 
           Subd. 4.  [PAYMENTS INTO THE ACCOUNT.] (a) Payments to the 
        commissioner under subdivisions 1 to 3 must be paid in monthly 
        installments due on the 15th of the month beginning October 15, 
        1992.  The monthly payment must be equal to the annual surcharge 
        divided by 12.  Payments to the commissioner under subdivisions 
        2 and 3 for fiscal year 1993 must be based on calendar year 1990 
        revenues.  Effective July 1 of each year, beginning in 1993, 
        payments under subdivisions 2 and 3 must be based on revenues 
        earned in the second previous calendar year. 
           (b) Effective October 1, 1995, and each October 1 
        thereafter, the payments in subdivisions 2 and 3 must be based 
        on revenues earned in the previous calendar year. 
           (c) If the commissioner of health does not provide by 
        August 15 of any year data needed to update the base year for 
        the hospital and health maintenance organization surcharges, the 
        commissioner of human services may estimate base year revenue 
        and use that estimate for the purposes of this section until 
        actual data is provided by the commissioner of health. 
           Sec. 16.  Minnesota Statutes 1994, section 256.9685, 
        subdivision 1b, is amended to read: 
           Subd. 1b.  [APPEAL OF RECONSIDERATION.] Notwithstanding 
        section 256B.72, the commissioner may recover inpatient hospital 
        payments for services that have been determined to be medically 
        unnecessary after the reconsideration and determinations.  A 
        physician or hospital may appeal the result of the 
        reconsideration process by submitting a written request for 
        review to the commissioner within 30 days after receiving notice 
        of the action.  The commissioner shall review the medical record 
        and information submitted during the reconsideration process and 
        the medical review agent's basis for the determination that the 
        services were not medically necessary for inpatient hospital 
        services.  The commissioner shall issue an order upholding or 
        reversing the decision of the reconsideration process based on 
        the review.  A hospital or physician who is aggrieved by an 
        order of the commissioner may appeal the order to the district 
        court of the county in which the physician or hospital is 
        located by serving a written copy of the notice of appeal upon 
        the commissioner within 30 days after the date the commissioner 
        issued the order. 
           Sec. 17.  Minnesota Statutes 1994, section 256.9685, is 
        amended by adding a subdivision to read: 
           Subd. 1c.  [JUDICIAL REVIEW.] A hospital or physician 
        aggrieved by an order of the commissioner under subdivision 1b 
        may appeal the order to the district court of the county in 
        which the physician or hospital is located by: 
           (1) serving a written copy of a notice of appeal upon the 
        commissioner within 30 days after the date the commissioner 
        issued the order; and 
           (2) filing the original notice of appeal and proof of 
        service with the court administrator of the district court.  The 
        appeal shall be treated as a dispositive motion under the 
        Minnesota General Rules of Practice, rule 115.  The district 
        court scope of review shall be as set forth in section 14.69. 
           Sec. 18.  Minnesota Statutes 1994, section 256.9685, is 
        amended by adding a subdivision to read: 
           Subd. 1d.  [TRANSMITTAL OF RECORD.] Within 30 days after 
        being served with the notice of appeal, the commissioner shall 
        transmit to the district court the original or certified copy of 
        the entire record considered by the commissioner in making the 
        final agency decision.  The district court shall not consider 
        evidence that was not included in the record before the 
        commissioner. 
           Sec. 19.  Minnesota Statutes 1994, section 256.969, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [HOSPITAL COST INDEX.] (a) The hospital 
        cost index shall be obtained from an independent source and 
        shall represent a weighted average of historical, as limited to 
        statutory maximums, and projected cost change estimates 
        determined for expense categories to include wages and salaries, 
        employee benefits, medical and professional fees, raw food, 
        utilities, insurance including malpractice insurance, and other 
        applicable expenses as determined by the commissioner.  The 
        index shall reflect Minnesota cost category weights.  Individual 
        indices shall be specific to Minnesota if the commissioner 
        determines that sufficient accuracy of the hospital cost index 
        is achieved. the change in the Consumer Price Index-All Items 
        (United States city average) (CPI-U) forecasted by Data 
        Resources, Inc.  The commissioner shall use the indices as 
        forecasted in the third quarter of the calendar year prior to 
        the rate year.  The hospital cost index may be used to adjust 
        the base year operating payment rate through the rate year on an 
        annually compounded basis.  Notwithstanding section 256.9695, 
        subdivision 3, paragraph (c), the hospital cost index shall not 
        be effective under the general assistance medical care program 
        and shall be limited to five percent under the medical 
        assistance program for admissions occurring during the biennium 
        ending June 30, 1995. 
           (b) For fiscal years beginning on or after July 1, 1993, 
        the commissioner of human services shall not provide automatic 
        annual inflation adjustments for hospital payment rates under 
        medical assistance, nor under general assistance medical care, 
        except that the inflation adjustments under paragraph (a) for 
        medical assistance, excluding general assistance medical care, 
        shall apply for the biennium ending June 30, 1997.  The 
        commissioner of finance shall include as a budget change request 
        in each biennial detailed expenditure budget submitted to the 
        legislature under section 16A.11 annual adjustments in hospital 
        payment rates under medical assistance and general assistance 
        medical care, based upon the hospital cost index. 
           Sec. 20.  Minnesota Statutes 1994, section 256.969, 
        subdivision 2b, is amended to read: 
           Subd. 2b.  [OPERATING PAYMENT RATES.] In determining 
        operating payment rates for admissions occurring on or after the 
        rate year beginning January 1, 1991, and every two years after, 
        or more frequently as determined by the commissioner, the 
        commissioner shall obtain operating data from an updated base 
        year and establish operating payment rates per admission for 
        each hospital based on the cost-finding methods and allowable 
        costs of the Medicare program in effect during the base year.  
        Rates under the general assistance medical care program shall 
        not be rebased to more current data on January 1, 1997.  The 
        base year operating payment rate per admission is standardized 
        by the case mix index and adjusted by the hospital cost index, 
        relative values, and disproportionate population adjustment.  
        The cost and charge data used to establish operating rates shall 
        only reflect inpatient services covered by medical assistance 
        and shall not include property cost information and costs 
        recognized in outlier payments. 
           Sec. 21.  Minnesota Statutes 1994, section 256.969, is 
        amended by adding a subdivision to read: 
           Subd. 8a.  [UNUSUAL SHORT LENGTH OF STAY.] Except as 
        provided in subdivision 13, for admissions occurring on or after 
        July 1, 1995, payment shall be determined as follows and shall 
        be included in the base year for rate setting purposes. 
           (1) For an admission that is categorized to a neonatal 
        diagnostic related group in which the length of stay is less 
        than 50 percent of the average length of stay for the category 
        in the base year and the patient at admission is equal to or 
        greater than the age of one, payments shall be established 
        according to the methods of subdivision 14. 
           (2) For an admission that is categorized to a diagnostic 
        category that includes neonatal respiratory distress syndrome, 
        the hospital must have a level II or level III nursery and the 
        patient must receive treatment in that unit or payment will be 
        made without regard to the syndrome condition. 
           Sec. 22.  Minnesota Statutes 1994, section 256.969, 
        subdivision 9, is amended to read: 
           Subd. 9.  [DISPROPORTIONATE NUMBERS OF LOW-INCOME PATIENTS 
        SERVED.] (a) For admissions occurring on or after October 1, 
        1992, through December 31, 1992, the medical assistance 
        disproportionate population adjustment shall comply with federal 
        law and shall be paid to a hospital, excluding regional 
        treatment centers and facilities of the federal Indian Health 
        Service, with a medical assistance inpatient utilization rate in 
        excess of the arithmetic mean.  The adjustment must be 
        determined as follows: 
           (1) for a hospital with a medical assistance inpatient 
        utilization rate above the arithmetic mean for all hospitals 
        excluding regional treatment centers and facilities of the 
        federal Indian Health Service but less than or equal to one 
        standard deviation above the mean, the adjustment must be 
        determined by multiplying the total of the operating and 
        property payment rates by the difference between the hospital's 
        actual medical assistance inpatient utilization rate and the 
        arithmetic mean for all hospitals excluding regional treatment 
        centers and facilities of the federal Indian Health Service; and 
           (2) for a hospital with a medical assistance inpatient 
        utilization rate above one standard deviation above the mean, 
        the adjustment must be determined by multiplying the adjustment 
        that would be determined under clause (1) for that hospital by 
        1.1.  If federal matching funds are not available for all 
        adjustments under this subdivision, the commissioner shall 
        reduce payments on a pro rata basis so that all adjustments 
        qualify for federal match.  The commissioner may establish a 
        separate disproportionate population operating payment rate 
        adjustment under the general assistance medical care program.  
        For purposes of this subdivision medical assistance does not 
        include general assistance medical care.  The commissioner shall 
        report annually on the number of hospitals likely to receive the 
        adjustment authorized by this paragraph.  The commissioner shall 
        specifically report on the adjustments received by public 
        hospitals and public hospital corporations located in cities of 
        the first class. 
           (b) For admissions occurring on or after July 1, 1993, the 
        medical assistance disproportionate population adjustment shall 
        comply with federal law and shall be paid to a hospital, 
        excluding regional treatment centers and facilities of the 
        federal Indian Health Service, with a medical assistance 
        inpatient utilization rate in excess of the arithmetic mean.  
        The adjustment must be determined as follows: 
           (1) for a hospital with a medical assistance inpatient 
        utilization rate above the arithmetic mean for all hospitals 
        excluding regional treatment centers and facilities of the 
        federal Indian Health Service but less than or equal to one 
        standard deviation above the mean, the adjustment must be 
        determined by multiplying the total of the operating and 
        property payment rates by the difference between the hospital's 
        actual medical assistance inpatient utilization rate and the 
        arithmetic mean for all hospitals excluding regional treatment 
        centers and facilities of the federal Indian Health Service; 
           (2) for a hospital with a medical assistance inpatient 
        utilization rate above one standard deviation above the mean, 
        the adjustment must be determined by multiplying the adjustment 
        that would be determined under clause (1) for that hospital by 
        1.1.  The commissioner may establish a separate disproportionate 
        population operating payment rate adjustment under the general 
        assistance medical care program.  For purposes of this 
        subdivision, medical assistance does not include general 
        assistance medical care.  The commissioner shall report annually 
        on the number of hospitals likely to receive the adjustment 
        authorized by this paragraph.  The commissioner shall 
        specifically report on the adjustments received by public 
        hospitals and public hospital corporations located in cities of 
        the first class; and 
           (3) for a hospital that (i) had medical assistance 
        fee-for-service payment volume during calendar year 1991 in 
        excess of 13 percent of total medical assistance fee-for-service 
        payment volume; or (ii), a medical assistance disproportionate 
        population adjustment shall be paid in addition to any other 
        disproportionate payment due under this subdivision as follows:  
        $1,515,000 due on the 15th of each month after noon, beginning 
        July 15, 1995.  For a hospital that had medical assistance 
        fee-for-service payment volume during calendar year 1991 in 
        excess of eight percent of total medical assistance 
        fee-for-service payment volume and is affiliated with the 
        University of Minnesota, a medical assistance disproportionate 
        population adjustment shall be paid in addition to any other 
        disproportionate payment due under this subdivision as follows:  
        $1,010,000 $505,000 due on the 15th of each month after noon, 
        beginning July 15, 1993 1995. 
           (c) The commissioner shall adjust rates paid to a health 
        maintenance organization under contract with the commissioner to 
        reflect rate increases provided in paragraph (b), clauses (1) 
        and (2), on a nondiscounted hospital-specific basis but shall 
        not adjust those rates to reflect payments provided in clause 
        (3). 
           (d) If federal matching funds are not available for all 
        adjustments under paragraph (b), the commissioner shall reduce 
        payments under paragraph (b), clauses (1) and (2), on a pro rata 
        basis so that all adjustments under paragraph (b) qualify for 
        federal match. 
           (e) For purposes of this subdivision, medical assistance 
        does not include general assistance medical care.  
           Sec. 23.  Minnesota Statutes 1994, section 256.969, 
        subdivision 10, is amended to read: 
           Subd. 10.  [SEPARATE BILLING BY CERTIFIED REGISTERED NURSE 
        ANESTHETISTS.] Hospitals may exclude certified registered nurse 
        anesthetist costs from the operating payment rate as allowed by 
        section 256B.0625, subdivision 11.  To be eligible, a hospital 
        must notify the commissioner in writing by October 1 of the year 
        preceding the rate year of the request to exclude certified 
        registered nurse anesthetist costs.  The hospital must agree 
        that all hospital claims for the cost and charges of certified 
        registered nurse anesthetist services will not be included as 
        part of the rates for inpatient services provided during the 
        rate year.  In this case, the operating payment rate shall be 
        adjusted to exclude the cost of certified registered nurse 
        anesthetist services.  Payments made through separate claims for 
        certified registered nurse anesthetist services shall not be 
        paid directly through the hospital provider number or indirectly 
        by the certified registered nurse anesthetist to the hospital or 
        related organizations. 
           For admissions occurring on or after July 1, 1991, and 
        until the expiration date of section 256.9695, subdivision 3, 
        services of certified registered nurse anesthetists provided on 
        an inpatient basis may be paid as allowed by section 256B.0625, 
        subdivision 11, when the hospital's base year did not include 
        the cost of these services.  To be eligible, a hospital must 
        notify the commissioner in writing by July 1, 1991, of the 
        request and must comply with all other requirements of this 
        subdivision. 
           Sec. 24.  Minnesota Statutes 1994, section 256.969, 
        subdivision 16, is amended to read: 
           Subd. 16.  [INDIAN HEALTH SERVICE FACILITIES.] Indian 
        health service facilities are exempt from the rate establishment 
        methods required by this section and shall be reimbursed at 
        charges as limited to the amount allowed under federal law.  
        This exemption is not effective for payments under general 
        assistance medical care. 
           Sec. 25.  Minnesota Statutes 1994, section 256.969, is 
        amended by adding a subdivision to read: 
           Subd. 25.  [LONG-TERM HOSPITAL RATES.] For admissions 
        occurring on or after April 1, 1995, a long-term hospital as 
        designated by Medicare that does not have admissions in the base 
        year shall have inpatient rates established at the average of 
        other hospitals with the same designation.  For subsequent 
        rate-setting periods in which base years are updated, the 
        hospital's base year shall be the first Medicare cost report 
        filed with the long-term hospital designation and shall remain 
        in effect until it falls within the same period as other 
        hospitals. 
           Sec. 26.  Minnesota Statutes 1994, section 256B.042, 
        subdivision 2, is amended to read: 
           Subd. 2.  [LIEN ENFORCEMENT.] The state agency may perfect 
        and enforce its lien by following the procedures set forth in 
        sections 514.69, 514.70 and 514.71, and its verified lien 
        statement shall be filed with the appropriate court 
        administrator in the county of financial responsibility.  The 
        verified lien statement shall contain the following:  the name 
        and address of the person to whom medical care was furnished, 
        the date of injury, the name and address of the vendor or 
        vendors furnishing medical care, the dates of the service, the 
        amount claimed to be due for the care, and, to the best of the 
        state agency's knowledge, the names and addresses of all 
        persons, firms, or corporations claimed to be liable for damages 
        arising from the injuries.  This section shall not affect the 
        priority of any attorney's lien.  The state agency is not 
        subject to any limitations period referred to in section 514.69 
        or 514.71 and has one year from the date notice is first 
        received by it under subdivision 4, paragraph (c), even if the 
        notice is untimely, or one year from the date medical bills are 
        first paid by the state agency, whichever is later, to file its 
        verified lien statement.  The state agency may commence an 
        action to enforce the lien within one year of (1) the date the 
        notice required by subdivision 4, paragraph (c), is received or 
        (2) the date the recipient's cause of action is concluded by 
        judgment, award, settlement, or otherwise, whichever is 
        later.  For purposes of this section, "state agency" includes 
        authorized agents of the state agency. 
           Sec. 27.  Minnesota Statutes 1994, section 256B.055, 
        subdivision 12, is amended to read: 
           Subd. 12.  [DISABLED CHILDREN.] (a) A person is eligible 
        for medical assistance if the person is under age 19 and 
        qualifies as a disabled individual under United States Code, 
        title 42, section 1382c(a), and would be eligible for medical 
        assistance under the state plan if residing in a medical 
        institution, and who the child requires a level of care provided 
        in a hospital, skilled nursing facility, intermediate care 
        facility, or intermediate care facility for persons with mental 
        retardation or related conditions, for whom home care is 
        appropriate, provided that the cost to medical assistance for 
        home care services under this section is not more than the 
        amount that medical assistance would pay for appropriate 
        institutional care if the child resides in an institution.  
        Eligibility under this section must be determined annually. 
           (b) For purposes of this subdivision, "hospital" means an 
        acute care institution as defined in section 144.696, 
        subdivision 3, 144.55, subdivision 3, or Minnesota Rules, part 
        4640.3600, and licensed pursuant to sections 144.50 to 144.58, 
        which is appropriate if a person is technology dependent or has 
        a chronic health condition which requires frequent intervention 
        by a health care professional to avoid death.  For purposes of 
        this subdivision, a child requires a level of care provided in a 
        hospital if the child is determined by the commissioner to need 
        an extensive array of health services, including mental health 
        services, for an undetermined period of time, whose health 
        condition requires frequent monitoring and treatment by a health 
        care professional or by a person supervised by a health care 
        professional, who would reside in a hospital or require frequent 
        hospitalization if these services were not provided, and the 
        daily care needs are more complex than a nursing facility level 
        of care.  
           A child with serious emotional disturbance requires a level 
        of care provided in a hospital if the commissioner determines 
        that the individual requires 24-hour supervision because the 
        person exhibits recurrent or frequent suicidal or homicidal 
        ideation or behavior, recurrent or frequent psychosomatic 
        disorders or somatopsychic disorders that may become life 
        threatening, recurrent or frequent severe socially unacceptable 
        behavior associated with psychiatric disorder, ongoing and 
        chronic psychosis or severe, ongoing and chronic developmental 
        problems requiring continuous skilled observation, or severe 
        disabling symptoms for which office-centered outpatient 
        treatment is not adequate, and which overall severely impact the 
        individual's ability to function. 
           (c) For purposes of this subdivision, "skilled nursing 
        facility" and "intermediate care facility" means a facility 
        which provides nursing care as defined in section 144A.01, 
        subdivision 5, licensed pursuant to sections 144A.02 to 144A.10, 
        which is appropriate if a person is in active restorative 
        treatment; is in need of special treatments provided or 
        supervised by a licensed nurse; or has unpredictable episodes of 
        active disease processes requiring immediate judgment by a 
        licensed nurse.  For purposes of this subdivision, a child 
        requires the level of care provided in a nursing facility if the 
        child is determined by the commissioner to meet the requirements 
        of the preadmission screening assessment document under section 
        256B.0911 and the home care independent rating document under 
        section 256B.0627, subdivision 5, paragraph (f), item (iii), 
        adjusted to address age-appropriate standards for children age 
        18 and under, pursuant to section 256B.0627, subdivision 5, 
        paragraph (d), clause (2). 
           (d) For purposes of this subdivision, "intermediate care 
        facility for the mentally retarded persons with mental 
        retardation or related conditions" or "ICF/MR" means a program 
        licensed to provide services to persons with mental retardation 
        under section 252.28, and chapter 245A, and a physical plant 
        licensed as a supervised living facility under chapter 144, 
        which together are certified by the Minnesota department of 
        health as meeting the standards in Code of Federal Regulations, 
        title 42, part 483, for an intermediate care facility which 
        provides services for persons with mental retardation or persons 
        with related conditions who require 24-hour supervision and 
        active treatment for medical, behavioral, or habilitation 
        needs.  For purposes of this subdivision, a child requires a 
        level of care provided in an ICF/MR if the commissioner finds 
        that the child has mental retardation or a related condition in 
        accordance with section 256B.092, is in need of a 24-hour plan 
        of care and active treatment similar to persons with mental 
        retardation, and there is a reasonable indication that the child 
        will need ICF/MR services. 
           (e) For purposes of this subdivision, a person "requires a 
        level of care provided in a hospital, skilled nursing facility, 
        intermediate care facility, or intermediate care facility for 
        persons with mental retardation or related conditions" if the 
        person requires 24-hour supervision because the person exhibits 
        suicidal or homicidal ideation or behavior, psychosomatic 
        disorders or somatopsychic disorders that may become life 
        threatening, severe socially unacceptable behavior associated 
        with psychiatric disorder, psychosis or severe developmental 
        problems requiring continuous skilled observation, or disabling 
        symptoms that do not respond to office-centered outpatient 
        treatment. The determination of the level of care needed by the 
        child shall be made by the commissioner based on information 
        supplied to the commissioner by the case manager if the child 
        has one, the parent or guardian, the child's physician or 
        physicians or, if available, the screening information obtained 
        under section 256B.092, and other professionals as requested by 
        the commissioner.  The commissioner shall establish a screening 
        team to conduct the level of care determinations according to 
        this subdivision. 
           (f) If a child meets the conditions in paragraph (b), (c), 
        or (d), the commissioner must assess the case to determine 
        whether: 
           (1) the child qualifies as a disabled individual under 
        United States Code, title 42, section 1382c(a) and would be 
        eligible for medical assistance if residing in a medical 
        institution; and 
           (2) the cost of medical assistance services for the child, 
        if eligible under this subdivision, would not be more than the 
        cost to medical assistance if the child resides in a medical 
        institution to be determined as follows: 
           (i) for a child who requires a level of care provided in an 
        ICF/MR, the cost of care for the child in an institution shall 
        be determined using the average payment rate established for the 
        regional treatment centers that are certified as ICFs/MR; 
           (ii) for a child who requires a level of care provided in 
        an inpatient hospital setting according to paragraph (b), 
        cost-effectiveness shall be determined according to Minnesota 
        Rules, part 9505.3520, items F and G; and 
           (iii) for a child who requires a level of care provided in 
        a nursing facility according to paragraph (c), 
        cost-effectiveness shall be determined according to Minnesota 
        Rules, part 9505.3040, except that the nursing facility average 
        rate shall be adjusted to reflect rates which would be paid for 
        children under age 16.  The commissioner may authorize an amount 
        up to the amount medical assistance would pay for a child 
        referred to the commissioner by the preadmission screening team 
        under section 256B.0911. 
           (g) Children eligible for medical assistance services under 
        section 256B.055, subdivision 12, as of June 30, 1995, must be 
        screened according to the criteria in this subdivision prior to 
        January 1, 1996.  Children found to be ineligible may not be 
        removed from the program until January 1, 1996.  
           Sec. 28.  Minnesota Statutes 1994, section 256B.056, is 
        amended by adding a subdivision to read: 
           Subd. 3b.  [TREATMENT OF TRUSTS.] (a) A "medical assistance 
        qualifying trust" is a revocable or irrevocable trust, or 
        similar legal device, established on or before August 10, 1993, 
        by a person or the person's spouse under the terms of which the 
        person receives or could receive payments from the trust 
        principal or income and the trustee has discretion in making 
        payments to the person from the trust principal or income.  
        Notwithstanding that definition, a medical assistance qualifying 
        trust does not include:  (1) a trust set up by will; (2) a trust 
        set up before April 7, 1986, solely to benefit a person with 
        mental retardation living in an intermediate care facility for 
        persons with mental retardation; or (3) a trust set up by a 
        person with payments made by the Social Security Administration 
        pursuant to the United States Supreme Court decision in Sullivan 
        v. Zebley, 110 S. Ct. 885 (1990).  The maximum amount of 
        payments that a trustee of a medical assistance qualifying trust 
        may make to a person under the terms of the trust is considered 
        to be available assets to the person, without regard to whether 
        the trustee actually makes the maximum payments to the person 
        and without regard to the purpose for which the medical 
        assistance qualifying trust was established. 
           (b) Trusts established after August 10, 1993, are treated 
        according to section 13611(b) of the Omnibus Budget 
        Reconciliation Act of 1993 (OBRA), Public Law Number 103-66. 
           Sec. 29.  Minnesota Statutes 1994, section 256B.056, 
        subdivision 4, is amended to read: 
           Subd. 4.  [INCOME.] To be eligible for medical assistance, 
        a person must not have, or anticipate receiving, semiannual 
        income in excess of 120 percent of the income standards by 
        family size used in the aid to families with dependent children 
        program, except that families and children may have an income up 
        to 133-1/3 percent of the AFDC income standard.  In computing 
        income to determine eligibility of persons who are not residents 
        of long-term care facilities, the commissioner shall disregard 
        increases in income as required by Public Law Numbers 94-566, 
        section 503; 99-272; and 99-509.  Veterans aid and attendance 
        benefits are considered income to the recipient. 
           Sec. 30.  Minnesota Statutes 1994, section 256B.0575, is 
        amended to read: 
           256B.0575 [AVAILABILITY OF INCOME FOR INSTITUTIONALIZED 
        PERSONS.] 
           When an institutionalized person is determined eligible for 
        medical assistance, the income that exceeds the deductions in 
        paragraphs (a) and (b) must be applied to the cost of 
        institutional care.  
           (a) The following amounts must be deducted from the 
        institutionalized person's income in the following order: 
           (1) the personal needs allowance under section 256B.35 or, 
        for a veteran who does not have a spouse or child, or a 
        surviving spouse of a veteran having no child, the amount of an 
        improved pension received from the veteran's administration not 
        exceeding $90 per month; 
           (2) the personal allowance for disabled individuals under 
        section 256B.36; 
           (3) if the institutionalized person has a legally appointed 
        guardian or conservator, five percent of the recipient's gross 
        monthly income up to $100 as reimbursement for guardianship or 
        conservatorship services; 
           (4) a monthly income allowance determined under section 
        256B.058, subdivision 2, but only to the extent income of the 
        institutionalized spouse is made available to the community 
        spouse; 
           (5) a monthly allowance for children under age 18 which, 
        together with the net income of the children, would provide 
        income equal to the medical assistance standard for families and 
        children according to section 256B.056, subdivision 4, for a 
        family size that includes only the minor children.  This 
        deduction applies only if the children do not live with the 
        community spouse and only if the children resided with the 
        institutionalized person immediately prior to admission; 
           (6) a monthly family allowance for other family members, 
        equal to one-third of the difference between 122 percent of the 
        federal poverty guidelines and the monthly income for that 
        family member; 
           (7) reparations payments made by the Federal Republic of 
        Germany and reparations payments made by the Netherlands for 
        victims of Nazi persecution between 1940 and 1945; and 
           (8) amounts for reasonable expenses incurred for necessary 
        medical or remedial care for the institutionalized spouse that 
        are not medical assistance covered expenses and that are not 
        subject to payment by a third party.  
           For purposes of clause (6), "other family member" means a 
        person who resides with the community spouse and who is a minor 
        or dependent child, dependent parent, or dependent sibling of 
        either spouse.  "Dependent" means a person who could be claimed 
        as a dependent for federal income tax purposes under the 
        Internal Revenue Code. 
           (b) Income shall be allocated to an institutionalized 
        person for a period of up to three calendar months, in an amount 
        equal to the medical assistance standard for a family size of 
        one if:  
           (1) a physician certifies that the person is expected to 
        reside in the long-term care facility for three calendar months 
        or less; 
           (2) if the person has expenses of maintaining a residence 
        in the community; and 
           (3) if one of the following circumstances apply:  
           (i) the person was not living together with a spouse or a 
        family member as defined in paragraph (a) when the person 
        entered a long-term care facility; or 
           (ii) the person and the person's spouse become 
        institutionalized on the same date, in which case the allocation 
        shall be applied to the income of one of the spouses.  
        For purposes of this paragraph, a person is determined to be 
        residing in a licensed nursing home, regional treatment center, 
        or medical institution if the person is expected to remain for a 
        period of one full calendar month or more. 
           Sec. 31.  Minnesota Statutes 1994, section 256B.059, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
        section, the terms defined in this subdivision have the meanings 
        given them. 
           (b) "Community spouse" means the spouse of an 
        institutionalized person spouse. 
           (c) "Spousal share" means one-half of the total value of 
        all assets, to the extent that either the institutionalized 
        spouse or the community spouse had an ownership interest at the 
        time of institutionalization. 
           (d) "Assets otherwise available to the community spouse" 
        means assets individually or jointly owned by the community 
        spouse, other than assets excluded by subdivision 5, paragraph 
        (c). 
           (e) "Community spouse asset allowance" is the value of 
        assets that can be transferred under subdivision 3. 
           (f) "Institutionalized spouse" means a person who is: 
           (1) in a hospital, nursing facility, or intermediate care 
        facility for persons with mental retardation, or receiving home 
        and community-based services under section 256B.0915 or 256B.49, 
        and is expected to remain in the facility or institution or 
        receive the home and community-based services for at least 30 
        consecutive days; and 
           (2) married to a person who is not in a hospital, nursing 
        facility, or intermediate care facility for persons with mental 
        retardation, and is not receiving home and community-based 
        services under section 256B.0915 or 256B.49. 
           Sec. 32.  Minnesota Statutes 1994, section 256B.059, 
        subdivision 3, is amended to read: 
           Subd. 3.  [COMMUNITY SPOUSE ASSET ALLOWANCE.] An 
        institutionalized spouse may transfer assets to the community 
        spouse solely for the benefit of the community spouse.  Except 
        for increased amounts allowable under subdivision 4, the maximum 
        amount of assets allowed to be transferred is the amount which, 
        when added to the assets otherwise available to the community 
        spouse, is as follows:  
           (1) prior to July 1, 1994, the greater of: 
           (i) $14,148; 
           (ii) the lesser of the spousal share or $70,740; or 
           (iii) the amount required by court order to be paid to the 
        community spouse; and 
           (2) for persons who begin whose date of initial 
        determination of eligibility for medical assistance following 
        their first continuous period of institutionalization occurs on 
        or after July 1, 1994, the greater of: 
           (i) $20,000; 
           (ii) the lesser of the spousal share or $70,740; or 
           (iii) the amount required by court order to be paid to the 
        community spouse. 
           If the assets available to the community spouse are already 
        at the limit permissible under this section, or the higher limit 
        attributable to increases under subdivision 4, no assets may be 
        transferred from the institutionalized spouse to the community 
        spouse.  The transfer must be made as soon as practicable after 
        the date the institutionalized spouse is determined eligible for 
        medical assistance, or within the amount of time needed for any 
        court order required for the transfer.  On January 1, 1994, and 
        every January 1 thereafter, the limits in this subdivision shall 
        be adjusted by the same percentage change in the consumer price 
        index for all urban consumers (all items; United States city 
        average) between the two previous Septembers.  These adjustments 
        shall also be applied to the limits in subdivision 5. 
           Sec. 33.  Minnesota Statutes 1994, section 256B.059, 
        subdivision 5, is amended to read: 
           Subd. 5.  [ASSET AVAILABILITY.] (a) At the time of 
        application initial determination of eligibility for medical 
        assistance benefits following the first continuous period of 
        institutionalization, assets considered available to the 
        institutionalized spouse shall be the total value of all assets 
        in which either spouse has an ownership interest, reduced by the 
        following: 
           (1) prior to July 1, 1994, the greater of:  
           (i) $14,148; 
           (ii) the lesser of the spousal share or $70,740; or 
           (iii) the amount required by court order to be paid to the 
        community spouse; 
           (2) for persons who begin whose date of initial 
        determination of eligibility for medical assistance following 
        their first continuous period of institutionalization occurs on 
        or after July 1, 1994, the greater of:  
           (i) $20,000; 
           (ii) the lesser of the spousal share or $70,740; or 
           (iii) the amount required by court order to be paid to the 
        community spouse.  If the community spouse asset allowance has 
        been increased under subdivision 4, then the assets considered 
        available to the institutionalized spouse under this subdivision 
        shall be further reduced by the value of additional amounts 
        allowed under subdivision 4. 
           (b) An institutionalized spouse may be found eligible for 
        medical assistance even though assets in excess of the allowable 
        amount are found to be available under paragraph (a) if the 
        assets are owned jointly or individually by the community 
        spouse, and the institutionalized spouse cannot use those assets 
        to pay for the cost of care without the consent of the community 
        spouse, and if:  (i) the institutionalized spouse assigns to the 
        commissioner the right to support from the community spouse 
        under section 256B.14, subdivision 3; (ii) the institutionalized 
        spouse lacks the ability to execute an assignment due to a 
        physical or mental impairment; or (iii) the denial of 
        eligibility would cause an imminent threat to the 
        institutionalized spouse's health and well-being. 
           (c) After the month in which the institutionalized spouse 
        is determined eligible for medical assistance, during the 
        continuous period of institutionalization, no assets of the 
        community spouse are considered available to the 
        institutionalized spouse, unless the institutionalized spouse 
        has been found eligible under clause paragraph (b). 
           (d) Assets determined to be available to the 
        institutionalized spouse under this section must be used for the 
        health care or personal needs of the institutionalized spouse. 
           (e) For purposes of this section, assets do not include 
        assets excluded under section 256B.056, without regard to the 
        limitations on total value in that section the supplemental 
        security income program. 
           Sec. 34.  Minnesota Statutes 1994, section 256B.0595, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PROHIBITED TRANSFERS.] (a) For transfers 
        of assets made on or before August 10, 1993, if a person or the 
        person's spouse has given away, sold, or disposed of, for less 
        than fair market value, any asset or interest therein, except 
        assets other than the homestead that are excluded under section 
        256B.056, subdivision 3 the supplemental security program, 
        within 30 months before or any time after the date of 
        institutionalization if the person has been determined eligible 
        for medical assistance, or within 30 months before or any time 
        after the date of the first approved application for medical 
        assistance if the person has not yet been determined eligible 
        for medical assistance, the person is ineligible for long-term 
        care services for the period of time determined under 
        subdivision 2.  
           (b) Effective for transfers made on or after July 1, 1993, 
        or upon federal approval, whichever is later August 10, 1993, a 
        person, a person's spouse, or a person's authorized 
        representative any person, court, or administrative body with 
        legal authority to act in place of, on behalf of, at the 
        direction of, or upon the request of the person or person's 
        spouse, may not give away, sell, or dispose of, for less than 
        fair market value, any asset or interest therein, except assets 
        other than the homestead that are excluded under the 
        supplemental security income program, for the purpose of 
        establishing or maintaining medical assistance eligibility.  For 
        purposes of determining eligibility for medical assistance 
        long-term care services, any transfer of an asset such assets 
        within 60 36 months preceding application before or any time 
        after an institutionalized person applies for medical assistance 
        or during the period of medical assistance eligibility, 
        including assets excluded under section 256B.056, subdivision 3, 
        or 36 months before or any time after a medical assistance 
        recipient becomes institutionalized, for less than fair market 
        value may be considered.  Any such transfer for less than fair 
        market value made within 60 months preceding application for 
        medical assistance or during the period of medical assistance 
        eligibility is presumed to have been made for the purpose of 
        establishing or maintaining medical assistance eligibility and 
        the person is ineligible for medical assistance long-term care 
        services for the period of time determined under subdivision 2, 
        unless the person furnishes convincing evidence to establish 
        that the transaction was exclusively for another purpose, or 
        unless the transfer is permitted under subdivisions subdivision 
        3 or 4.  Notwithstanding the provisions of this paragraph, in 
        the case of payments from a trust or portions of a trust that 
        are considered transfers of assets under federal law, any 
        transfers made within 60 months before or any time after an 
        institutionalized person applies for medical assistance and 
        within 60 months before or any time after a medical assistance 
        recipient becomes institutionalized, may be considered. 
           (c) This section applies to transfers, for less than fair 
        market value, of income or assets, including assets that are 
        considered income in the month received, such as inheritances, 
        court settlements, and retroactive benefit payments or income to 
        which the person or the person's spouse is entitled but does not 
        receive due to action by the person, the person's spouse, or any 
        person, court, or administrative body with legal authority to 
        act in place of, on behalf of, at the direction of, or upon the 
        request of the person or the person's spouse.  
           (d) This section applies to payments for care or personal 
        services provided by a relative, unless the compensation was 
        stipulated in a notarized, written agreement which was in 
        existence when the service was performed, the care or services 
        directly benefited the person, and the payments made represented 
        reasonable compensation for the care or services provided.  A 
        notarized written agreement is not required if payment for the 
        services was made within 60 days after the service was provided. 
           (e) This section applies to the portion of any asset or 
        interest that a person or, a person's spouse transfers, or any 
        person, court, or administrative body with legal authority to 
        act in place of, on behalf of, at the direction of, or upon the 
        request of the person or the person's spouse, to an 
        irrevocable any trust, annuity, or other instrument, that 
        exceeds the value of the benefit likely to be returned to the 
        person or spouse while alive, based on estimated life expectancy 
        using the life expectancy tables employed by the supplemental 
        security income program to determine the value of an agreement 
        for services for life.  The commissioner may adopt rules 
        reducing life expectancies based on the need for long-term care. 
           (f) For purposes of this section, long-term care services 
        include services in a nursing facility, services that are 
        eligible for payment according to section 256B.0625, subdivision 
        2, because they are provided in a swing bed, intermediate care 
        facility for persons with mental retardation, and home and 
        community-based services provided pursuant to section 256B.491 
        sections 256B.0915, 256B.092, and 256B.49.  For purposes of this 
        subdivision and subdivisions 2, 3, and 4, "institutionalized 
        person" includes a person who is an inpatient in a nursing 
        facility, or in a swing bed, or intermediate care facility for 
        persons with mental retardation or who is receiving home and 
        community-based services under section 256B.491 sections 
        256B.0915, 256B.092, and 256B.49. 
           (g) Effective for transfers made on or after July 1, 1995, 
        or upon federal approval, whichever is later, a person, a 
        person's spouse, or any person, court, or administrative body 
        with legal authority to act in place of, on behalf of, at the 
        direction of, or upon the request of the person or person's 
        spouse, may not give away, sell, or dispose of, for less than 
        fair market value, any asset or interest therein, for the 
        purpose of establishing or maintaining medical assistance 
        eligibility.  For purposes of determining eligibility for 
        long-term care services, any transfer of such assets within 60 
        months before, or any time after, an institutionalized person 
        applies for medical assistance, or 60 months before, or any time 
        after, a medical assistance recipient becomes institutionalized, 
        for less than fair market value may be considered.  Any such 
        transfer is presumed to have been made for the purpose of 
        establishing or maintaining medical assistance eligibility and 
        the person is ineligible for long-term care services for the 
        period of time determined under subdivision 2, unless the person 
        furnishes convincing evidence to establish that the transaction 
        was exclusively for another purpose, or unless the transfer is 
        permitted under subdivision 3 or 4. 
           Sec. 35.  Minnesota Statutes 1994, section 256B.0595, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PERIOD OF INELIGIBILITY.] (a) For any 
        uncompensated transfer occurring on or before August 10, 1993, 
        the number of months of ineligibility for long-term care 
        services shall be the lesser of 30 months, or the uncompensated 
        transfer amount divided by the average medical assistance rate 
        for nursing facility services in the state in effect on the date 
        of application.  The amount used to calculate the average 
        medical assistance payment rate shall be adjusted each July 1 to 
        reflect payment rates for the previous calendar year.  The 
        period of ineligibility begins with the month in which the 
        assets were transferred.  If the transfer was not reported to 
        the local agency at the time of application, and the applicant 
        received long-term care services during what would have been the 
        period of ineligibility if the transfer had been reported, a 
        cause of action exists against the transferee for the cost of 
        long-term care services provided during the period of 
        ineligibility, or for the uncompensated amount of the transfer, 
        whichever is less.  The action may be brought by the state or 
        the local agency responsible for providing medical assistance 
        under chapter 256G.  The uncompensated transfer amount is the 
        fair market value of the asset at the time it was given away, 
        sold, or disposed of, less the amount of compensation received.  
           (b) For uncompensated transfers made on or after July 1, 
        August 10, 1993, or upon federal approval, whichever is later, 
        the number of months of ineligibility, including partial months, 
        for medical assistance long-term care services shall be the 
        total uncompensated value of the resources transferred divided 
        by the average medical assistance rate for nursing facility 
        services in the state in effect on the date of application.  If 
        a calculation of a penalty period results in a partial month, 
        payments for medical assistance services will be reduced in an 
        amount equal to the fraction, except that in calculating the 
        value of uncompensated transfers, uncompensated transfers not to 
        exceed $1,000 in total value per month shall be disregarded for 
        each month prior to the month of application for medical 
        assistance.  The amount used to calculate the average medical 
        assistance payment rate shall be adjusted each July 1 to reflect 
        payment rates for the previous calendar year.  The period of 
        ineligibility begins with the month in which the assets were 
        transferred except that if one or more uncompensated transfers 
        are made during a period of ineligibility, the total assets 
        transferred during the ineligibility period shall be combined 
        and a penalty period calculated to begin in the month the first 
        uncompensated transfer was made.  The penalty in this paragraph 
        shall not apply to uncompensated transfers of assets not to 
        exceed a total of $1,000 per month during a medical assistance 
        eligibility certification period.  If the transfer was not 
        reported to the local agency at the time of application, and the 
        applicant received medical assistance services during what would 
        have been the period of ineligibility if the transfer had been 
        reported, a cause of action exists against the transferee for 
        the cost of medical assistance services provided during the 
        period of ineligibility, or for the uncompensated amount of the 
        transfer, whichever is less.  The action may be brought by the 
        state or the local agency responsible for providing medical 
        assistance under chapter 256G.  The uncompensated transfer 
        amount is the fair market value of the asset at the time it was 
        given away, sold, or disposed of, less the amount of 
        compensation received.  
           (c) If the total value of all uncompensated transfers made 
        in a month exceeds $1,000, the disregards allowed under 
        paragraph (b) do not apply.  If a calculation of a penalty 
        period results in a partial month, payments for long-term care 
        services shall be reduced in an amount equal to the fraction, 
        except that in calculating the value of uncompensated transfers, 
        if the total value of all uncompensated transfers made in a 
        month does not exceed $1,000, then such transfers shall be 
        disregarded for each month prior to the month of application for 
        or during receipt of medical assistance. 
           Sec. 36.  Minnesota Statutes 1994, section 256B.0595, 
        subdivision 3, is amended to read: 
           Subd. 3.  [HOMESTEAD EXCEPTION TO TRANSFER PROHIBITION.] 
        (a) An institutionalized person is not ineligible for long-term 
        care services due to a transfer of assets for less than fair 
        market value if the asset transferred was a homestead and: 
           (1) title to the homestead was transferred to the 
        individual's 
           (i) spouse; 
           (ii) child who is under age 21; 
           (iii) blind or permanently and totally disabled child as 
        defined in the supplemental security income program; 
           (iv) sibling who has equity interest in the home and who 
        was residing in the home for a period of at least one year 
        immediately before the date of the individual's admission to the 
        facility; or 
           (v) son or daughter who was residing in the individual's 
        home for a period of at least two years immediately before the 
        date of the individual's admission to the facility, and who 
        provided care to the individual that permitted the individual to 
        reside at home rather than in an institution or facility; 
           (2) a satisfactory showing is made that the individual 
        intended to dispose of the homestead at fair market value or for 
        other valuable consideration; or 
           (3) the local agency grants a waiver of the excess 
        resources created by the uncompensated transfer because denial 
        of eligibility would cause undue hardship for the individual, 
        based on imminent threat to the individual's health and 
        well-being.  
           (b) When a waiver is granted under paragraph (a), clause 
        (3), a cause of action exists against the person to whom the 
        homestead was transferred for that portion of long-term care 
        services granted within: 
           (1) 30 months of the a transfer made on or before August 
        10, 1993; 
           (2) 60 months if the homestead was transferred after August 
        10, 1993, to a trust or portion of a trust that is considered a 
        transfer of assets under federal law; or 
           (3) 36 months if transferred in any other manner after 
        August 10, 1993, 
        or the amount of the uncompensated transfer, whichever is less, 
        together with the costs incurred due to the action.  The action 
        may be brought by the state or the local agency responsible for 
        providing medical assistance under chapter 256G.  
           (c) Effective for transfers made on or after July 1, 1993, 
        or upon federal approval, whichever is later, an 
        institutionalized person is not ineligible for medical 
        assistance services due to a transfer of assets for less than 
        fair market value if the asset transferred was a homestead and: 
           (1) title to the homestead was transferred to the 
        individual's 
           (i) spouse; 
           (ii) child who is under age 21; 
           (iii) blind or permanently and totally disabled child as 
        defined in the supplemental security income program; 
           (iv) sibling who has equity interest in the home and who 
        was residing in the home for a period of at least one year 
        immediately before the date of the individual's admission to the 
        facility; or 
           (v) son or daughter who was residing in the individual's 
        home for a period of at least two years immediately before the 
        date of the individual's admission to the facility, and who 
        provided care to the individual that permitted the individual to 
        reside at home rather than in an institution or facility; 
           (2) a satisfactory showing is made that the individual 
        intended to dispose of the homestead at fair market value or for 
        other valuable consideration; or 
           (3) the local agency grants a waiver of the excess 
        resources created by the uncompensated transfer because denial 
        of eligibility would cause undue hardship for the individual, 
        based on imminent threat to the individual's health and 
        well-being.  
           (d) When a waiver is granted under paragraph (c), clause 
        (3), a cause of action exists against the person to whom the 
        homestead was transferred for that portion of medical assistance 
        services granted during the period of ineligibility under 
        subdivision 2, or the amount of the uncompensated transfer, 
        whichever is less, together with the costs incurred due to the 
        action.  The action may be brought by the state or the local 
        agency responsible for providing medical assistance under 
        chapter 256G.  
           Sec. 37.  Minnesota Statutes 1994, section 256B.0595, 
        subdivision 4, is amended to read: 
           Subd. 4.  [OTHER EXCEPTIONS TO TRANSFER PROHIBITION.] (a) 
        An institutionalized person who has made, or whose spouse has 
        made a transfer prohibited by subdivision 1, is not ineligible 
        for long-term care services if one of the following conditions 
        applies: 
           (1) the assets were transferred to the community 
        individual's spouse, as defined in section 256B.059 or to 
        another for the sole benefit of the spouse; or 
           (2) the institutionalized spouse, prior to being 
        institutionalized, transferred assets to a spouse, provided that 
        the spouse to whom the assets were transferred does not then 
        transfer those assets to another person for less than fair 
        market value.  (At the time when one spouse is 
        institutionalized, assets must be allocated between the spouses 
        as provided under section 256B.059); or 
           (3) the assets were transferred to the individual's child 
        who is blind or permanently and totally disabled as determined 
        in the supplemental security income program; or 
           (4) a satisfactory showing is made that the individual 
        intended to dispose of the assets either at fair market value or 
        for other valuable consideration; or 
           (5) the local agency determines that denial of eligibility 
        for long-term care services would work an undue hardship and 
        grants a waiver of excess assets.  When a waiver is granted, a 
        cause of action exists against the person to whom the assets 
        were transferred for that portion of long-term care services 
        granted within: 
           (i) 30 months of the a transfer made on or before August 
        10, 1993; 
           (ii) 60 months of a transfer if the assets were transferred 
        after August 30, 1993, to a trust or portion of a trust that is 
        considered a transfer of assets under federal law; or 
           (iii) 36 months of a transfer if transferred in any other 
        manner after August 10, 1993, 
        or the amount of the uncompensated transfer, whichever is less, 
        together with the costs incurred due to the action.  The action 
        may be brought by the state or the local agency responsible for 
        providing medical assistance under this chapter.; or 
           (6) for transfers occurring after August 10, 1993, the 
        assets were transferred by the person or person's spouse:  (i) 
        into a trust established solely for the benefit of a son or 
        daughter of any age who is blind or disabled as defined by the 
        Supplemental Security Income program; or (ii) into a trust 
        established solely for the benefit of an individual who is under 
        65 years of age who is disabled as defined by the Supplemental 
        Security Income program. 
           (b) Effective for transfers made on or after July 1, 1993, 
        or upon federal approval, whichever is later, an 
        institutionalized person who has made, or whose spouse has made 
        a transfer prohibited by subdivision 1, is not ineligible for 
        medical assistance services if one of the following conditions 
        applies: 
           (1) the assets were transferred to the community spouse, as 
        defined in section 256B.059; or 
           (2) the institutionalized spouse, prior to being 
        institutionalized, transferred assets to a spouse, provided that 
        the spouse to whom the assets were transferred does not then 
        transfer those assets to another person for less than fair 
        market value.  (At the time when one spouse is 
        institutionalized, assets must be allocated between the spouses 
        as provided under section 256B.059); or 
           (3) the assets were transferred to the individual's child 
        who is blind or permanently and totally disabled as determined 
        in the supplemental security income program; or 
           (4) a satisfactory showing is made that the individual 
        intended to dispose of the assets either at fair market value or 
        for other valuable consideration; or 
           (5) the local agency determines that denial of eligibility 
        for medical assistance services would work an undue hardship and 
        grants a waiver of excess assets.  When a waiver is granted, a 
        cause of action exists against the person to whom the assets 
        were transferred for that portion of medical assistance services 
        granted during the period of ineligibility determined under 
        subdivision 2 or the amount of the uncompensated transfer, 
        whichever is less, together with the costs incurred due to the 
        action.  The action may be brought by the state or the local 
        agency responsible for providing medical assistance under this 
        chapter. 
           Sec. 38.  Minnesota Statutes 1994, section 256B.06, 
        subdivision 4, is amended to read: 
           Subd. 4.  [CITIZENSHIP REQUIREMENTS.] Eligibility for 
        medical assistance is limited to citizens of the United States 
        and aliens lawfully admitted for permanent residence or 
        otherwise permanently residing in the United States under the 
        color of law.  Aliens who are seeking legalization under the 
        Immigration Reform and Control Act of 1986, Public Law Number 
        99-603, who are under age 18, over age 65, blind, disabled, or 
        Cuban or Haitian, and who meet the eligibility requirements of 
        medical assistance under subdivision 1 and sections 256B.055 to 
        256B.062 are eligible to receive medical assistance.  Pregnant 
        women who are aliens seeking legalization under the Immigration 
        Reform and Control Act of 1986, Public Law Number 99-603, and 
        who meet the eligibility requirements of medical assistance 
        under subdivision 1 are eligible for payment of care and 
        services through the period of pregnancy and six weeks 
        postpartum.  Payment shall also be made for care and services 
        that are furnished to an alien, regardless of immigration 
        status, who otherwise meets the eligibility requirements of this 
        section if such care and services are necessary for the 
        treatment of an emergency medical condition, except for organ 
        transplants and related care and services.  For purposes of this 
        subdivision, the term "emergency medical condition" means a 
        medical condition, including labor and delivery, that if not 
        immediately treated could cause a person physical or mental 
        disability, continuation of severe pain, or death. 
           Sec. 39.  Minnesota Statutes 1994, section 256B.0625, 
        subdivision 5, is amended to read: 
           Subd. 5.  [COMMUNITY MENTAL HEALTH CENTER SERVICES.] 
        Medical assistance covers community mental health center 
        services, as defined in rules adopted by the commissioner 
        pursuant to section 256B.04, subdivision 2, and provided by a 
        community mental health center as defined in section 245.62, 
        subdivision 2 that meets the requirements in paragraphs (a) to 
        (j). 
           (a) The provider is licensed under Minnesota Rules, parts 
        9520.0750 to 9520.0870.  
           (b) The provider provides mental health services under the 
        clinical supervision of a mental health professional who is 
        licensed for independent practice at the doctoral level or by a 
        board-certified psychiatrist or a psychiatrist who is eligible 
        for board certification.  Clinical supervision has the meaning 
        given in Minnesota Rules, part 9505.0323, subpart 1, item F.  
           (c) The provider must be a private nonprofit corporation or 
        a governmental agency and have a community board of directors as 
        specified by section 245.66.  
           (d) The provider must have a sliding fee scale that meets 
        the requirements in Minnesota Rules, part 9550.0060, and agree 
        to serve within the limits of its capacity all individuals 
        residing in its service delivery area.  
           (e) At a minimum, the provider must provide the following 
        outpatient mental health services:  diagnostic assessment; 
        explanation of findings; family, group, and individual 
        psychotherapy, including crisis intervention psychotherapy 
        services, multiple family group psychotherapy, psychological 
        testing, and medication management.  In addition, the provider 
        must provide or be capable of providing upon request of the 
        local mental health authority day treatment services and 
        professional home-based mental health services.  The provider 
        must have the capacity to provide such services to specialized 
        populations such as the elderly, families with children, persons 
        who are seriously and persistently mentally ill, and children 
        who are seriously emotionally disturbed.  
           (f) The provider must be capable of providing the services 
        specified in paragraph (e) to individuals who are diagnosed with 
        both mental illness or emotional disturbance, and chemical 
        dependency, and to individuals dually diagnosed with a mental 
        illness or emotional disturbance and mental retardation or a 
        related condition.  
           (g) The provider must provide 24-hour emergency care 
        services or demonstrate the capacity to assist recipients in 
        need of such services to access such services on a 24-hour basis.
           (h) The provider must have a contract with the local mental 
        health authority to provide one or more of the services 
        specified in paragraph (e).  
           (i) The provider must agree, upon request of the local 
        mental health authority, to enter into a contract with the 
        county to provide mental health services not reimbursable under 
        the medical assistance program.  
           (j) The provider may not be enrolled with the medical 
        assistance program as both a hospital and a community mental 
        health center.  The community mental health center's 
        administrative, organizational, and financial structure must be 
        separate and distinct from that of the hospital. 
           Sec. 40.  Minnesota Statutes 1994, section 256B.0625, 
        subdivision 8, is amended to read: 
           Subd. 8.  [PHYSICAL THERAPY.] Medical assistance covers 
        physical therapy and related services.  Services provided by a 
        physical therapy assistant shall be reimbursed at the same rate 
        as services performed by a physical therapist when the services 
        of the physical therapy assistant are provided under the 
        direction of a physical therapist who is on the premises.  
        Services provided by a physical therapy assistant that are 
        provided under the direction of a physical therapist who is not 
        on the premises shall be reimbursed at 65 percent of the 
        physical therapist rate. 
           Sec. 41.  Minnesota Statutes 1994, section 256B.0625, 
        subdivision 8a, is amended to read: 
           Subd. 8a.  [OCCUPATIONAL THERAPY.] Medical assistance 
        covers occupational therapy and related services.  Services 
        provided by an occupational therapy assistant shall be 
        reimbursed at the same rate as services performed by an 
        occupational therapist when the services of the occupational 
        therapy assistant are provided under the direction of the 
        occupational therapist who is on the premises.  Services 
        provided by an occupational therapy assistant that are provided 
        under the direction of an occupational therapist who is not on 
        the premises shall be reimbursed at 65 percent of the 
        occupational therapist rate. 
           Sec. 42.  Minnesota Statutes 1994, section 256B.0625, 
        subdivision 13, is amended to read: 
           Subd. 13.  [DRUGS.] (a) Medical assistance covers drugs if 
        prescribed by a licensed practitioner and dispensed by a 
        licensed pharmacist, or by a physician enrolled in the medical 
        assistance program as a dispensing physician, or by a physician 
        or a nurse practitioner employed by or under contract with a 
        community health board as defined in section 145A.02, 
        subdivision 5, for the purposes of communicable disease 
        control.  The commissioner, after receiving recommendations from 
        professional medical associations and professional pharmacist 
        associations, shall designate a formulary committee to advise 
        the commissioner on the names of drugs for which payment is 
        made, recommend a system for reimbursing providers on a set fee 
        or charge basis rather than the present system, and develop 
        methods encouraging use of generic drugs when they are less 
        expensive and equally effective as trademark drugs.  The 
        formulary committee shall consist of nine members, four of whom 
        shall be physicians who are not employed by the department of 
        human services, and a majority of whose practice is for persons 
        paying privately or through health insurance, three of whom 
        shall be pharmacists who are not employed by the department of 
        human services, and a majority of whose practice is for persons 
        paying privately or through health insurance, a consumer 
        representative, and a nursing home representative.  Committee 
        members shall serve three-year terms and shall serve without 
        compensation.  Members may be reappointed once.  
           (b) The commissioner shall establish a drug formulary.  Its 
        establishment and publication shall not be subject to the 
        requirements of the administrative procedure act, but the 
        formulary committee shall review and comment on the formulary 
        contents.  The formulary committee shall review and recommend 
        drugs which require prior authorization.  The formulary 
        committee may recommend drugs for prior authorization directly 
        to the commissioner, as long as opportunity for public input is 
        provided.  Prior authorization may be requested by the 
        commissioner based on medical and clinical criteria before 
        certain drugs are eligible for payment.  Before a drug may be 
        considered for prior authorization at the request of the 
        commissioner:  
           (1) the drug formulary committee must develop criteria to 
        be used for identifying drugs; the development of these criteria 
        is not subject to the requirements of chapter 14, but the 
        formulary committee shall provide opportunity for public input 
        in developing criteria; 
           (2) the drug formulary committee must hold a public forum 
        and receive public comment for an additional 15 days; and 
           (3) the commissioner must provide information to the 
        formulary committee on the impact that placing the drug on prior 
        authorization will have on the quality of patient care and 
        information regarding whether the drug is subject to clinical 
        abuse or misuse.  Prior authorization may be required by the 
        commissioner before certain formulary drugs are eligible for 
        payment.  The formulary shall not include:  
           (i) drugs or products for which there is no federal 
        funding; 
           (ii) over-the-counter drugs, except for antacids, 
        acetaminophen, family planning products, aspirin, insulin, 
        products for the treatment of lice, vitamins for adults with 
        documented vitamin deficiencies, and vitamins for children under 
        the age of seven and pregnant or nursing women; 
           (iii) any other over-the-counter drug identified by the 
        commissioner, in consultation with the drug formulary committee, 
        as necessary, appropriate, and cost-effective for the treatment 
        of certain specified chronic diseases, conditions or disorders, 
        and this determination shall not be subject to the requirements 
        of chapter 14; 
           (iv) anorectics; and 
           (v) drugs for which medical value has not been established. 
           The commissioner shall publish conditions for prohibiting 
        payment for specific drugs after considering the formulary 
        committee's recommendations.  
           (c) The basis for determining the amount of payment shall 
        be the lower of the actual acquisition costs of the drugs plus a 
        fixed dispensing fee established by the commissioner,; the 
        maximum allowable cost set by the federal government or by the 
        commissioner plus the fixed dispensing fee; or the usual and 
        customary price charged to the public.  The pharmacy dispensing 
        fee shall be $3.85.  Actual acquisition cost includes quantity 
        and other special discounts except time and cash discounts.  The 
        actual acquisition cost of a drug shall be estimated by the 
        commissioner, at average wholesale price minus 7.6 nine percent 
        effective January 1, 1994.  The maximum allowable cost of a 
        multisource drug may be set by the commissioner and it shall be 
        comparable to, but no higher than, the maximum amount paid by 
        other third-party payors in this state who have maximum 
        allowable cost programs.  Establishment of the amount of payment 
        for drugs shall not be subject to the requirements of the 
        administrative procedure act.  An additional dispensing fee of 
        $.30 may be added to the dispensing fee paid to pharmacists for 
        legend drug prescriptions dispensed to residents of long-term 
        care facilities when a unit dose blister card system, approved 
        by the department, is used.  Under this type of dispensing 
        system, the pharmacist must dispense a 30-day supply of drug.  
        The National Drug Code (NDC) from the drug container used to 
        fill the blister card must be identified on the claim to the 
        department.  The unit dose blister card containing the drug must 
        meet the packaging standards set forth in Minnesota Rules, part 
        6800.2700, that govern the return of unused drugs to the 
        pharmacy for reuse.  The pharmacy provider will be required to 
        credit the department for the actual acquisition cost of all 
        unused drugs that are eligible for reuse.  Over-the-counter 
        medications must be dispensed in the manufacturer's unopened 
        package.  The commissioner may permit the drug clozapine to be 
        dispensed in a quantity that is less than a 30-day supply.  
        Whenever a generically equivalent product is available, payment 
        shall be on the basis of the actual acquisition cost of the 
        generic drug, unless the prescriber specifically indicates 
        "dispense as written - brand necessary" on the prescription as 
        required by section 151.21, subdivision 2.  Implementation of 
        any change in the fixed dispensing fee that has not been subject 
        to the administrative procedure act is limited to not more than 
        180 days, unless, during that time, the commissioner initiates 
        rulemaking through the administrative procedure act. 
           (d) Until the date the on-line, real-time Medicaid 
        Management Information System (MMIS) upgrade is successfully 
        implemented, as determined by the commissioner of 
        administration, a pharmacy provider may require individuals who 
        seek to become eligible for medical assistance under a one-month 
        spenddown, as provided in section 256B.056, subdivision 5, to 
        pay for services to the extent of the spenddown amount at the 
        time the services are provided.  A pharmacy provider choosing 
        this option shall file a medical assistance claim for the 
        pharmacy services provided.  If medical assistance reimbursement 
        is received for this claim, the pharmacy provider shall return 
        to the individual the total amount paid by the individual for 
        the pharmacy services reimbursed by the medical assistance 
        program.  If the claim is not eligible for medical assistance 
        reimbursement because of the provider's failure to comply with 
        the provisions of the medical assistance program, the pharmacy 
        provider shall refund to the individual the total amount paid by 
        the individual.  Pharmacy providers may choose this option only 
        if they apply similar credit restrictions to private pay or 
        privately insured individuals.  A pharmacy provider choosing 
        this option must inform individuals who seek to become eligible 
        for medical assistance under a one-month spenddown of (1) their 
        right to appeal the denial of services on the grounds that they 
        have satisfied the spenddown requirement, and (2) their 
        potential eligibility for the MinnesotaCare program or the 
        children's health plan. 
           Sec. 43.  Minnesota Statutes 1994, section 256B.0625, 
        subdivision 13a, is amended to read: 
           Subd. 13a.  [DRUG UTILIZATION REVIEW BOARD.] A 
        12-member nine-member drug utilization review board is 
        established.  The board is comprised of six at least three but 
        no more than four licensed physicians actively engaged in the 
        practice of medicine in Minnesota; five at least three licensed 
        pharmacists actively engaged in the practice of pharmacy in 
        Minnesota; and one consumer representative; the remainder to be 
        made up of health care professionals who are licensed in their 
        field and have recognized knowledge in the clinically 
        appropriate prescribing, dispensing, and monitoring of covered 
        outpatient drugs.  The board shall be staffed by an employee of 
        the department who shall serve as an ex officio nonvoting member 
        of the board.  The members of the board shall be appointed by 
        the commissioner and shall serve three-year terms.  
        The physician members shall be selected from lists submitted by 
        professional medical associations.  The pharmacist members shall 
        be selected from lists submitted by professional pharmacist 
        associations.  The commissioner shall appoint the initial 
        members of the board for terms expiring as follows:  four three 
        members for terms expiring June 30, 1995 1996; four three 
        members for terms expiring June 30, 1994 1997; and four three 
        members for terms expiring June 30, 1993 1998.  Members may be 
        reappointed once.  The board shall annually elect a chair from 
        among the members. 
           The commissioner shall, with the advice of the board: 
           (1) implement a medical assistance retrospective and 
        prospective drug utilization review program as required by 
        United States Code, title 42, section 1396r-8(g)(3); 
           (2) develop and implement the predetermined criteria and 
        practice parameters for appropriate prescribing to be used in 
        retrospective and prospective drug utilization review; 
           (3) develop, select, implement, and assess interventions 
        for physicians, pharmacists, and patients that are educational 
        and not punitive in nature; 
           (4) establish a grievance and appeals process for 
        physicians and pharmacists under this section; 
           (5) publish and disseminate educational information to 
        physicians and pharmacists regarding the board and the review 
        program; 
           (6) adopt and implement procedures designed to ensure the 
        confidentiality of any information collected, stored, retrieved, 
        assessed, or analyzed by the board, staff to the board, or 
        contractors to the review program that identifies individual 
        physicians, pharmacists, or recipients; 
           (7) establish and implement an ongoing process to (i) 
        receive public comment regarding drug utilization review 
        criteria and standards, and (ii) consider the comments along 
        with other scientific and clinical information in order to 
        revise criteria and standards on a timely basis; and 
           (8) adopt any rules necessary to carry out this section. 
           The board may establish advisory committees.  The 
        commissioner may contract with appropriate organizations to 
        assist the board in carrying out the board's duties.  The 
        commissioner may enter into contracts for services to develop 
        and implement a retrospective and prospective review program. 
           The board shall report to the commissioner annually on 
        December 1 the date the Drug Utilization Review Annual Report is 
        due to the Health Care Financing Administration.  This report is 
        to cover the preceding federal fiscal year.  The commissioner 
        shall make the report available to the public upon request.  The 
        report must include information on the activities of the board 
        and the program; the effectiveness of implemented interventions; 
        administrative costs; and any fiscal impact resulting from the 
        program.  An honorarium of $50 per meeting shall be paid to each 
        board member in attendance.  
           Sec. 44.  Minnesota Statutes 1994, section 256B.0625, is 
        amended by adding a subdivision to read: 
           Subd. 13b.  [PHARMACY COPAYMENT REQUIREMENTS.] A copayment 
        of $1 per prescription shall be required under the medical 
        assistance and general assistance medical care programs 
        according to paragraphs (a) to (d): 
           (a) A copayment shall not be required of children, pregnant 
        women through the postpartum period, recipients whose only 
        available income is a personal needs allowance in the amount 
        established under section 256B.35 or 256B.36, recipients 
        residing in a setting which receives funding under sections 
        256I.01 to 256I.06, or institutionalized recipients or, under 
        medical assistance only, from any other persons required to be 
        exempted under federal law; 
           (b) A copayment shall not be required for family planning 
        services or supplies, psychotropic drugs or emergency services; 
           (c) A provider may not deny a prescription to a recipient 
        because the recipient is unable to pay the copayment; 
           (d) A lower copayment shall be collected, under medical 
        assistance only, up to the maximum permitted by federal law, for 
        prescriptions on which federal law prohibits a $1 copayment; 
           (e) The amount of the copayment under this subdivision 
        shall be subtracted from the payment under subdivision 13; and 
           (f) This subdivision does not apply to services under the 
        MinnesotaCare program. 
           Sec. 45.  Minnesota Statutes 1994, section 256B.0625, 
        subdivision 17, is amended to read: 
           Subd. 17.  [TRANSPORTATION COSTS.] (a) Medical assistance 
        covers transportation costs incurred solely for obtaining 
        emergency medical care or transportation costs incurred by 
        nonambulatory persons in obtaining emergency or nonemergency 
        medical care when paid directly to an ambulance company, common 
        carrier, or other recognized providers of transportation 
        services.  For the purpose of this subdivision, a person who is 
        incapable of transport by taxicab or bus shall be considered to 
        be nonambulatory. 
           (b) Medical assistance covers special transportation, as 
        defined in Minnesota Rules, part 9505.0315, subpart 1, item F, 
        if the provider receives and maintains a current physician's 
        order by the recipient's attending physician certifying that the 
        recipient is so mentally or physically impaired as to be unable 
        to safely access and use a bus, taxi, other commercial 
        transportation, or private automobile.  The commissioner shall 
        establish maximum medical assistance reimbursement rates for 
        special transportation services for persons who need a 
        wheelchair lift van or stretcher-equipped vehicle and for those 
        who do not need a wheelchair lift van or stretcher-equipped 
        vehicle.  The average of these two rates must not exceed $14 for 
        the base rate and $1.10 per mile.  Special transportation 
        provided to nonambulatory persons who do not need a wheelchair 
        lift van or stretcher-equipped vehicle, may be reimbursed at a 
        lower rate than special transportation provided to persons who 
        need a wheelchair lift van or stretcher-equipped vehicle. 
           Sec. 46.  Minnesota Statutes 1994, section 256B.0625, 
        subdivision 18, is amended to read: 
           Subd. 18.  [BUS OR TAXICAB TRANSPORTATION.] To the extent 
        authorized by rule of the state agency, medical assistance 
        covers costs of bus or taxicab the most appropriate and 
        cost-effective form of transportation incurred by any ambulatory 
        eligible person for obtaining nonemergency medical care. 
           Sec. 47.  Minnesota Statutes 1994, section 256B.0625, is 
        amended by adding a subdivision to read: 
           Subd. 18a.  [PAYMENT FOR MEALS AND LODGING.] (a) Medical 
        assistance reimbursement for meals for persons traveling to 
        receive medical care may not exceed $5.50 for breakfast, $6.50 
        for lunch, or $8 for dinner. 
           (b) Medical assistance reimbursement for lodging for 
        persons traveling to receive medical care may not exceed $50 per 
        day unless prior authorized by the local agency. 
           (c) Medical assistance direct mileage reimbursement to the 
        eligible person or the eligible person's driver may not exceed 
        20 cents per mile. 
           Sec. 48.  Minnesota Statutes 1994, section 256B.0625, 
        subdivision 19a, is amended to read: 
           Subd. 19a.  [PERSONAL CARE SERVICES.] Medical assistance 
        covers personal care services in a recipient's home.  To qualify 
        for personal care services recipients who can direct their own 
        care, or persons who cannot direct their own care when 
        authorized by the responsible party, may use must be able to 
        identify their needs, direct and evaluate task accomplishment, 
        and assure their health and safety.  Approved hours may be used 
        outside the home when normal life activities take them outside 
        the home and when, without the provision of personal care, their 
        health and safety would be jeopardized.  Total hours for 
        services, whether actually performed inside or outside the 
        recipient's home, cannot exceed that which is otherwise allowed 
        for personal care services in an in-home setting according to 
        section 256B.0627.  Medical assistance does not cover personal 
        care services for residents of a hospital, nursing facility, 
        intermediate care facility, health care facility licensed by the 
        commissioner of health, or unless a resident who is otherwise 
        eligible is on leave from the facility and the facility either 
        pays for the personal care services or forgoes the facility per 
        diem for the leave days that personal care services are used 
        except as authorized in section 256B.64 for ventilator-dependent 
        recipients in hospitals.  Total hours of service and payment 
        allowed for services outside the home cannot exceed that which 
        is otherwise allowed for personal care services in an in-home 
        setting according to section 256B.0627.  All personal care 
        services must be provided according to section 256B.0627.  
        Personal care services may not be reimbursed if the personal 
        care assistant is the spouse or legal guardian of the recipient 
        or the parent of a recipient under age 18, the responsible party 
        or the foster care provider of a recipient who cannot direct the 
        recipient's own care or the recipient's legal guardian unless, 
        in the case of a foster provider, a county or state case manager 
        visits the recipient as needed, but no less than every six 
        months, to monitor the health and safety of the recipient and to 
        ensure the goals of the care plan are met.  Parents of adult 
        recipients, adult children of the recipient or adult siblings of 
        the recipient may be reimbursed for personal care services if 
        they are not the recipient's legal guardian and are granted a 
        waiver under section 256B.0627.  
           Sec. 49.  Minnesota Statutes 1994, section 256B.0625, is 
        amended by adding a subdivision to read: 
           Subd. 38.  [PAYMENTS FOR MENTAL HEALTH SERVICES.] Payments 
        for mental health services covered under the medical assistance 
        program that are provided by masters-prepared mental health 
        professionals shall be 80 percent of the rate paid to 
        doctoral-prepared professionals.  Payments for mental health 
        services covered under the medical assistance program that are 
        provided by masters-prepared mental health professionals 
        employed by community mental health centers shall be 100 percent 
        of the rate paid to doctoral-prepared professionals. 
           Sec. 50.  Minnesota Statutes 1994, section 256B.0625, is 
        amended by adding a subdivision to read: 
           Subd. 39.  [CHILDHOOD IMMUNIZATIONS.] Providers who 
        administer pediatric vaccines within the scope of their 
        licensure, and who are enrolled as a medical assistance 
        provider, must enroll in the pediatric vaccine administration 
        program established by section 13631 of the Omnibus Budget 
        Reconciliation Act of 1993.  Medical assistance shall pay an 
        $8.50 fee per dose for administration of the vaccine to children 
        eligible for medical assistance.  Medical assistance does not 
        pay for vaccines that are available at no cost from the 
        pediatric vaccine administration program. 
           Sec. 51.  Minnesota Statutes 1994, section 256B.0625, is 
        amended by adding a subdivision to read: 
           Subd. 40.  [TUBERCULOSIS RELATED SERVICES.] (a) For persons 
        infected with tuberculosis, medical assistance covers case 
        management services and direct observation of the intake of 
        drugs prescribed to treat tuberculosis. 
           (b) "Case management services" means services furnished to 
        assist persons infected with tuberculosis in gaining access to 
        needed medical services.  Case management services include at a 
        minimum: 
           (1) assessing a person's need for medical services to treat 
        tuberculosis; 
           (2) developing a care plan that addresses the needs 
        identified in clause (1); 
           (3) assisting the person in accessing medical services 
        identified in the care plan; and 
           (4) monitoring the person's compliance with the care plan 
        to ensure completion of tuberculosis therapy.  Medical 
        assistance covers case management services under this 
        subdivision only if the services are provided by a certified 
        public health nurse who is employed by a community health board 
        as defined in section 145A.02, subdivision 5. 
           (c) To be covered by medical assistance, direct observation 
        of the intake of drugs prescribed to treat tuberculosis must be 
        provided by a community outreach worker, licensed practical 
        nurse, registered nurse who is trained and supervised by a 
        public health nurse employed by a community health board as 
        defined in section 145A.02, subdivision 5, or a public health 
        nurse employed by a community health board. 
           Sec. 52.  Minnesota Statutes 1994, section 256B.0627, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITION.] (a) "Home care services" 
        means a health service, determined by the commissioner as 
        medically necessary, that is ordered by a physician and 
        documented in a care plan that is reviewed by the physician at 
        least once every 60 days for the provision of home health 
        services, or private duty nursing, or at least once every 365 
        days for personal care.  Home care services are provided to the 
        recipient at the recipient's residence that is a place other 
        than a hospital or long-term care facility or as specified in 
        section 256B.0625.  
           (b) "Medically necessary" has the meaning given in 
        Minnesota Rules, parts 9505.0170 to 9505.0475.  
           (c) "Assessment" means a review and evaluation of a 
        recipient's need for home care services conducted in person. 
        Assessments for private duty nursing shall be conducted by a 
        private duty nurse.  Assessments for home health agency services 
        shall be conducted by a home health agency nurse.  Assessments 
        for personal care services shall be conducted by the county 
        public health nurse or a certified public health nurse under 
        contract with the county.  Assessments must be completed on 
        forms provided by the commissioner within 30 days of a request 
        for home care services by a recipient or responsible party. 
           (c) "Care plan" (d) "Service plan" means a written 
        description of the services needed which is based on the 
        assessment developed by the supervisory nurse who conducts the 
        assessment together with the recipient or responsible party and 
        includes a detailed.  The service plan shall include a 
        description of the covered home care services, who is providing 
        the services, frequency and duration of services, and expected 
        outcomes and goals.  The provider must give the recipient or 
        responsible party recipient and the provider chosen by the 
        recipient or responsible party must be given a copy of the 
        completed care service plan within 30 calendar days of beginning 
        home care services. of the request for home care services by the 
        recipient or responsible party. 
           (e) "Care plan" means a written description of personal 
        care assistant services developed by the agency nurse with the 
        recipient or responsible party to be used by the personal care 
        assistant with a copy provided to the recipient or responsible 
        party. 
           (d) "Responsible party" means an individual residing with a 
        recipient of personal care services who is capable of providing 
        the supportive care necessary to assist the recipient to live in 
        the community, is at least 18 years old, and is not a personal 
        care assistant.  Responsible parties who are parents of minors 
        or guardians of minors or incapacitated persons may delegate the 
        responsibility to another adult during a temporary absence of at 
        least 24 hours but not more than six months.  The person 
        delegated as a responsible party must be able to meet the 
        definition of responsible party, except that the delegated 
        responsible party is required to reside with the recipient only 
        while serving as the responsible party.  Foster care license 
        holders may be designated the responsible party for residents of 
        the foster care home if case management is provided as required 
        in section 256B.0625, subdivision 19a.  For persons who, as of 
        April 1, 1992, are sharing personal care services in order to 
        obtain the availability of 24-hour coverage, an employee of the 
        personal care provider organization may be designated as the 
        responsible party if case management is provided as required in 
        section 256B.0625, subdivision 19a.  (f) "Personal care 
        assistant" means a person who:  (1) is at least 18 years old; 
        (2) is able to read, write, and speak English, or communicate 
        with sign language, as well as communicate with the recipient; 
        (3) effective July 1, 1996, has completed one of the training 
        requirements as specified in Minnesota Rules, part 9505.0335, 
        subpart 3, items A to D; (4) has the ability to, and provides 
        covered personal care services according to the recipient's care 
        plan; (5) is not a consumer of personal care services; and (6) 
        is subject to criminal background checks.  An individual who has 
        ever been convicted of a crime specified in Minnesota Rules, 
        part 4668.0020, subpart 14, or a comparable crime in another 
        jurisdiction is disqualified from being a personal care 
        assistant. 
           (g) "Personal care provider organization" means an 
        organization enrolled to provide personal care services under 
        the medical assistance program that complies with the 
        following:  (1) owners who have a five percent interest or more 
        are subject to a criminal history check as provided in section 
        245A.04 at the time of application.  An organization will be 
        barred from enrollment if an owner or managerial official of the 
        organization has ever been convicted of a crime specified in 
        Minnesota Rules, part 4668.0020, subpart 14, or a comparable 
        crime in another jurisdiction; (2) the organization must 
        maintain a surety bond and liability insurance throughout the 
        duration of enrollment and provides proof thereof.  The insurer 
        must notify the department of human services of the cancellation 
        or lapse of policy; and (3) the organization must maintain 
        documentation of services as specified in Minnesota Rules, part 
        9505.2175, subpart 7, as well as evidence of compliance with 
        personal care assistant training requirements. 
           Sec. 53.  Minnesota Statutes 1994, section 256B.0627, 
        subdivision 2, is amended to read: 
           Subd. 2.  [SERVICES COVERED.] Home care services covered 
        under this section include:  
           (1) nursing services under section 256B.0625, subdivision 
        6a; 
           (2) private duty nursing services under section 256B.0625, 
        subdivision 7; 
           (3) home health aide services under section 256B.0625, 
        subdivision 6a; 
           (4) personal care services under section 256B.0625, 
        subdivision 19a; and 
           (5) nursing supervision of personal care services under 
        section 256B.0625, subdivision 19a; and 
           (6) assessments by county public health nurses for services 
        under section 256B.0625, subdivision 19a.  
           Sec. 54.  Minnesota Statutes 1994, section 256B.0627, 
        subdivision 4, is amended to read: 
           Subd. 4.  [PERSONAL CARE SERVICES.] (a) The personal care 
        services that are eligible for payment are the following:  
           (1) bowel and bladder care; 
           (2) skin care to maintain the health of the skin; 
           (3) delegated therapy tasks specific to maintaining a 
        recipient's optimal level of functioning, including repetitive 
        maintenance range of motion and muscle strengthening 
        exercises specific to maintaining a recipient's optimal level of 
        function; 
           (4) respiratory assistance; 
           (5) transfers and ambulation; 
           (6) bathing, grooming, and hairwashing necessary for 
        personal hygiene; 
           (7) turning and positioning; 
           (8) assistance with furnishing medication that is normally 
        self-administered; 
           (9) application and maintenance of prosthetics and 
        orthotics; 
           (10) cleaning medical equipment; 
           (11) dressing or undressing; 
           (12) assistance with food, nutrition, and diet 
        activities eating and meal preparation and necessary grocery 
        shopping; 
           (13) accompanying a recipient to obtain medical diagnosis 
        or treatment; and 
           (14) assisting, monitoring, or prompting the recipient to 
        complete the services in clauses (1) to (13); 
           (15) redirection, monitoring, and observation that are 
        medically necessary and an integral part of completing the 
        personal cares described in clauses (1) to (14); 
           (16) redirection and intervention for behavior, including 
        observation and monitoring; 
           (17) interventions for seizure disorders including 
        monitoring and observation if the recipient has had a seizure 
        that requires intervention within the past three months; and 
           (18) incidental household services that are an integral 
        part of a personal care service described in clauses (1) 
        to (17) (13). 
           For purposes of this subdivision, monitoring and 
        observation means watching for outward visible signs that are 
        likely to occur and for which there is a covered personal care 
        service or an appropriate personal care intervention. 
           (b) The personal care services that are not eligible for 
        payment are the following:  
           (1) personal care services that are not in the care plan 
        developed by the supervising registered nurse in consultation 
        with the personal care assistants and the recipient or the 
        responsible party directing the care of the recipient ordered by 
        the physician; 
           (2) assessments by personal care provider organizations or 
        by independently enrolled registered nurses; 
           (3) services that are not supervised by the registered 
        nurse in the service plan; 
           (3) (4) services provided by the recipient's spouse, legal 
        guardian for an adult or child recipient, or parent of a minor 
        child recipient under age 18; 
           (4) services provided by a foster care provider of a 
        recipient who cannot direct their own care, unless monitored by 
        a county or state case manager under section 256B.0625, 
        subdivision 19a; 
           (5) services provided by the residential or program license 
        holder in a residence for more than four persons; 
           (6) services that are the responsibility of a residential 
        or program license holder under the terms of a service agreement 
        and administrative rules; 
           (7) sterile procedures; 
           (8) injections of fluids into veins, muscles, or skin; 
           (9) services provided by parents of adult recipients, adult 
        children, or adult siblings of the recipient, unless these 
        relatives meet one of the following hardship criteria and the 
        commissioner waives this requirement: 
           (i) the relative resigns from a part-time or full-time job 
        to provide personal care for the recipient; 
           (ii) the relative goes from a full-time to a part-time job 
        with less compensation to provide personal care for the 
        recipient; 
           (iii) the relative takes a leave of absence without pay to 
        provide personal care for the recipient; 
           (iv) the relative incurs substantial expenses by providing 
        personal care for the recipient; or 
           (v) because of labor conditions, the relative is needed in 
        order to provide an adequate number of qualified personal care 
        assistants to meet the medical needs of the recipient; 
           (10) homemaker services that are not an integral part of a 
        personal care services; and 
           (11)  home maintenance, or chore services; 
           (12) services not specified under paragraph (a); and 
           (13) services not authorized by the commissioner or the 
        commissioner's designee. 
           Sec. 55.  Minnesota Statutes 1994, section 256B.0627, 
        subdivision 5, is amended to read: 
           Subd. 5.  [LIMITATION ON PAYMENTS.] Medical assistance 
        payments for home care services shall be limited according to 
        this subdivision.  
           (a) [EXEMPTION FROM PAYMENT LIMITATIONS.] The level, or the 
        number of hours or visits of a specific service, of home care 
        services to a recipient that began before and is continued 
        without increase on or after December 1987, shall be exempt from 
        the payment limitations of this section, as long as the services 
        are medically necessary.  
           (b) [LIMITS ON SERVICES WITHOUT PRIOR AUTHORIZATION.] A 
        recipient may receive the following amounts of home care 
        services during a calendar year: 
           (1) a total of 40 home health aide visits or skilled nurse 
        visits under section 256B.0625, subdivision 6a; and 
           (2) up to two assessments by a supervising registered nurse 
        assessments and reassessments done to determine a recipient's 
        need for personal care services, develop a care plan, and obtain 
        prior authorization.  Additional visits may be authorized by the 
        commissioner if there are circumstances that necessitate a 
        change in provider. 
           (c) (b) [PRIOR AUTHORIZATION; EXCEPTIONS.] All home care 
        services above the limits in paragraph (b) (a) must receive the 
        commissioner's prior authorization, except when: 
           (1) the home care services were required to treat an 
        emergency medical condition that if not immediately treated 
        could cause a recipient serious physical or mental disability, 
        continuation of severe pain, or death.  The provider must 
        request retroactive authorization no later than five working 
        days after giving the initial service.  The provider must be 
        able to substantiate the emergency by documentation such as 
        reports, notes, and admission or discharge histories; 
           (2) the home care services were provided on or after the 
        date on which the recipient's eligibility began, but before the 
        date on which the recipient was notified that the case was 
        opened.  Authorization will be considered if the request is 
        submitted by the provider within 20 working days of the date the 
        recipient was notified that the case was opened; 
           (3) a third-party payor for home care services has denied 
        or adjusted a payment.  Authorization requests must be submitted 
        by the provider within 20 working days of the notice of denial 
        or adjustment.  A copy of the notice must be included with the 
        request; or 
           (4) the commissioner has determined that a county or state 
        human services agency has made an error. 
           (d) (c) [RETROACTIVE AUTHORIZATION.] A request for 
        retroactive authorization under paragraph (c) will be evaluated 
        according to the same criteria applied to prior authorization 
        requests.  Implementation of this provision shall begin no later 
        than October 1, 1991, except that recipients who are currently 
        receiving medically necessary services above the limits 
        established under this subdivision may have a reasonable amount 
        of time to arrange for waivered services under section 256B.49 
        or to establish an alternative living arrangement.  All current 
        recipients shall be phased down to the limits established under 
        paragraph (b) on or before April 1, 1992. 
           (e) (d) [ASSESSMENT AND CARE SERVICE PLAN.] The home care 
        provider Assessments under section 256B.0627, subdivision 1, 
        paragraph (c), shall conduct be conducted initially, and at 
        least annually thereafter, a face-to-face assessment of the 
        recipient and complete a care plan in person with the recipient 
        and result in a completed service plan using forms specified by 
        the commissioner.  For the recipient to receive, or continue to 
        receive, home care services, the provider must submit evidence 
        necessary for the commissioner to determine the medical 
        necessity of the home care services.  The provider shall submit 
        to the commissioner the assessment, the care plan, Within 30 
        days of recipient or responsible party request for home care 
        services, the assessment, the service plan, and other 
        information necessary to determine medical necessity such as 
        diagnostic or testing information, social or medical histories, 
        and hospital or facility discharge summaries shall be submitted 
        to the commissioner.  For personal care services: 
           (1) The amount and type of service authorized based upon 
        the assessment and service plan will follow the recipient if the 
        recipient chooses to change providers.  
           (2) If the recipient's medical need changes, the 
        recipient's provider may assess the need for a change in service 
        authorization and request the change from the county public 
        health nurse.  Within 30 days of the request, the public health 
        nurse will determine whether to request the change in services 
        based upon the provider assessment, or conduct a home visit to 
        assess the need and determine whether the change is appropriate. 
           (3) To continue to receive home personal care services when 
        the recipient displays no significant change, the supervising 
        nurse county public health nurse has the option to review with 
        the commissioner, or the commissioner's designee, the care 
        service plan on record and receive authorization for up to an 
        additional 12 months. 
           (f) (e) [PRIOR AUTHORIZATION.] The commissioner, or the 
        commissioner's designee, shall review the assessment, the care 
        service plan, and any additional information that is submitted.  
        The commissioner shall, within 30 days after receiving a 
        complete request, assessment, and care service plan, authorize 
        home care services as follows:  
           (1)  [HOME HEALTH SERVICES.] All home health services 
        provided by a nurse or a home health aide that exceed the limits 
        established in paragraph (b) (a) must be prior authorized by the 
        commissioner or the commissioner's designee.  Prior 
        authorization must be based on medical necessity and 
        cost-effectiveness when compared with other care options.  When 
        home health services are used in combination with personal care 
        and private duty nursing, the cost of all home care services 
        shall be considered for cost-effectiveness.  The commissioner 
        shall limit nurse and home health aide visits to no more than 
        one visit each per day. 
           (2)  [PERSONAL CARE SERVICES.] (i) All personal care 
        services and registered nurse supervision must be prior 
        authorized by the commissioner or the commissioner's designee 
        except for the limits on supervision assessments established in 
        paragraph (b) (a).  The amount of personal care services 
        authorized must be based on the recipient's home care rating.  A 
        child may not be found to be dependent in an activity of daily 
        living if because of the child's age an adult would either 
        perform the activity for the child or assist the child with the 
        activity and the amount of assistance needed is similar to the 
        assistance appropriate for a typical child of the same age.  
        Based on medical necessity, the commissioner may authorize: 
           (A) up to two 1.75 times the average number of direct care 
        hours provided in nursing facilities for the recipient's 
        comparable case mix level; or 
           (B) up to three 2.625 times the average number of direct 
        care hours provided in nursing facilities for recipients who 
        have complex medical needs or are dependent in at least seven 
        activities of daily living and need physical assistance with 
        eating or have a neurological diagnosis but in no case shall the 
        dollar amount authorized exceed the statewide weighted average 
        nursing facility payment rate for fiscal year 1995; or 
           (C) up to 60 percent of the average reimbursement rate, as 
        of July 1, 1991, plus any inflation adjustment provided, for 
        care provided in a regional treatment center for recipients who 
        have Level I behavior; or 
           (D) up to the amount the commissioner would pay, as of July 
        1, 1991, plus any inflation adjustment provided for home care 
        services, for care provided in a regional treatment center for 
        recipients referred to the commissioner by a regional treatment 
        center preadmission evaluation team.  For purposes of this 
        clause, home care services means all services provided in the 
        home or community that would be included in the payment to a 
        regional treatment center; or 
           (E) (D) up to the amount medical assistance would reimburse 
        for facility care for recipients referred to the commissioner by 
        a preadmission screening team established under section 
        256B.0911 or 256B.092; and 
           (F) (E) a reasonable amount of time for the necessary 
        provision of nursing supervision of personal care services.  
           (ii) The number of direct care hours shall be determined 
        according to the annual cost report submitted to the department 
        by nursing facilities.  The average number of direct care hours, 
        as established by May 1, 1992 for the report year 1993, as 
        established by July 11, 1994, shall be calculated and 
        incorporated into the home care limits on July 1, 1992 1996.  
        These limits shall be calculated to the nearest quarter hour. 
           (iii) The home care rating shall be determined by the 
        commissioner or the commissioner's designee based on information 
        submitted to the commissioner by the personal care provider 
        county public health nurse on forms specified by the 
        commissioner.  The home care rating shall be a combination of 
        current assessment tools developed under sections 256B.0911 and 
        256B.501 with an addition for seizure activity that will assess 
        the frequency and severity of seizure activity and with 
        adjustments, additions, and clarifications that are necessary to 
        reflect the needs and conditions of children and nonelderly 
        adults recipients who need home care.  The commissioner shall 
        establish these forms and protocols under this section and shall 
        use the advisory group established in section 256B.04, 
        subdivision 16, for consultation in establishing the forms and 
        protocols by October 1, 1991 and shall use an advisory group, 
        including representatives of recipients, providers, and 
        counties, for consultation in establishing and revising the 
        forms and protocols. 
           (iv) A recipient shall qualify as having complex medical 
        needs if the care required is difficult to perform and because 
        of recipient's medical condition requires more time than 
        community-based standards allow or requires more skill than 
        would ordinarily be required and the recipient needs or has one 
        or more of the following: 
           (A) daily tube feedings; 
           (B) daily parenteral therapy; 
           (C) wound or decubiti care; 
           (D) postural drainage, percussion, nebulizer treatments, 
        suctioning, tracheotomy care, oxygen, mechanical ventilation; 
           (E) catheterization; 
           (F) ostomy care; 
           (G) quadriplegia; or 
           (H) other comparable medical conditions or treatments the 
        commissioner determines would otherwise require institutional 
        care. 
           (v) A recipient shall qualify as having Level I behavior if 
        there is reasonable supporting evidence that the recipient 
        exhibits, or that without supervision, observation, or 
        redirection would exhibit, one or more of the following 
        behaviors that cause, or have the potential to cause: 
           (A) injury to his or her own body; 
           (B) physical injury to other people; or 
           (C) destruction of property. 
           (vi) Time authorized for personal care relating to Level I 
        behavior in subclause (v), items (A) to (C), shall be based on 
        the predictability, frequency, and amount of intervention 
        required. 
           (vii) A recipient shall qualify as having Level II behavior 
        if the recipient exhibits on a daily basis one or more of the 
        following behaviors that interfere with the completion of 
        personal care services under subdivision 4, paragraph (a): 
           (A) unusual or repetitive habits; 
           (B) withdrawn behavior; or 
           (C) offensive behavior. 
           (viii) A recipient with a home care rating of Level II 
        behavior in subclause (vii), items (A) to (C), shall be rated as 
        comparable to a recipient with complex medical needs under 
        subclause (iv).  If a recipient has both complex medical needs 
        and Level II behavior, the home care rating shall be the next 
        complex category up to the maximum rating under subclause (i), 
        item (B). 
           (3)  [PRIVATE DUTY NURSING SERVICES.] All private duty 
        nursing services shall be prior authorized by the commissioner 
        or the commissioner's designee.  Prior authorization for private 
        duty nursing services shall be based on medical necessity and 
        cost-effectiveness when compared with alternative care options.  
        The commissioner may authorize medically necessary private duty 
        nursing services in quarter-hour units when: 
           (i) the recipient requires more individual and continuous 
        care than can be provided during a nurse visit; or 
           (ii) the cares are outside of the scope of services that 
        can be provided by a home health aide or personal care assistant.
           The commissioner may authorize: 
           (A) up to two times the average amount of direct care hours 
        provided in nursing facilities statewide for case mix 
        classification "K" as established by the annual cost report 
        submitted to the department by nursing facilities in May 1992; 
           (B) private duty nursing in combination with other home 
        care services up to the total cost allowed under clause (2); 
           (C) up to 16 hours per day if the recipient requires more 
        nursing than the maximum number of direct care hours as 
        established in item (A) and the recipient meets the hospital 
        admission criteria established under Minnesota Rules, parts 
        9505.0500 to 9505.0540.  
           The commissioner may authorize up to 16 hours per day of 
        medically necessary private duty nursing services or up to 24 
        hours per day of medically necessary private duty nursing 
        services until such time as the commissioner is able to make a 
        determination of eligibility for recipients who are 
        cooperatively applying for home care services under the 
        community alternative care program developed under section 
        256B.49, or until it is determined by the appropriate regulatory 
        agency that a health benefit plan is or is not required to pay 
        for appropriate medically necessary health care services.  
        Recipients or their representatives must cooperatively assist 
        the commissioner in obtaining this determination.  Recipients 
        who are eligible for the community alternative care program may 
        not receive more hours of nursing under this section than would 
        otherwise be authorized under section 256B.49. 
           (4)  [VENTILATOR-DEPENDENT RECIPIENTS.] If the recipient is 
        ventilator-dependent, the monthly medical assistance 
        authorization for home care services shall not exceed what the 
        commissioner would pay for care at the highest cost hospital 
        designated as a long-term hospital under the Medicare program.  
        For purposes of this clause, home care services means all 
        services provided in the home that would be included in the 
        payment for care at the long-term hospital.  
        "Ventilator-dependent" means an individual who receives 
        mechanical ventilation for life support at least six hours per 
        day and is expected to be or has been dependent for at least 30 
        consecutive days.  
           (g) (f) [PRIOR AUTHORIZATION; TIME LIMITS.] The 
        commissioner or the commissioner's designee shall determine the 
        time period for which a prior authorization shall be effective. 
        If the recipient continues to require home care services beyond 
        the duration of the prior authorization, the home care provider 
        must request a new prior authorization through the process 
        described above.  Under no circumstances, other than the 
        exceptions in subdivision 5, paragraph (c) (b), shall a prior 
        authorization be valid prior to the date the commissioner 
        receives the request or for more than 12 months.  A recipient 
        who appeals a reduction in previously authorized home care 
        services may continue previously authorized services, other than 
        temporary services under paragraph (i) (h), pending an appeal 
        under section 256.045.  The commissioner must provide a detailed 
        explanation of why the authorized services are reduced in amount 
        from those requested by the home care provider.  
           (h) (g) [APPROVAL OF HOME CARE SERVICES.] The commissioner 
        or the commissioner's designee shall determine the medical 
        necessity of home care services, the level of caregiver 
        according to subdivision 2, and the institutional comparison 
        according to this subdivision, the cost-effectiveness of 
        services, and the amount, scope, and duration of home care 
        services reimbursable by medical assistance, based on the 
        assessment, the care plan, the recipient's age, the cost of 
        services, the recipient's medical condition, and diagnosis or 
        disability.  The commissioner may publish additional criteria 
        for determining medical necessity according to section 256B.04. 
           (i) (h) [PRIOR AUTHORIZATION REQUESTS; TEMPORARY SERVICES.] 
        Providers The agency nurse, the independently enrolled private 
        duty nurse, or county public health nurse may request a 
        temporary authorization for home care services by telephone.  
        The commissioner may approve a temporary level of home care 
        services based on the assessment and service or care plan 
        information provided by an appropriately licensed nurse.  
        Authorization for a temporary level of home care 
        services including nurse supervision is limited to the time 
        specified by the commissioner, but shall not exceed 45 days, 
        unless extended because the county public health nurse has not 
        completed the required assessment and service plan, or the 
        commissioner's determination has not been made.  The level of 
        services authorized under this provision shall have no bearing 
        on a future prior authorization. 
           (j) (i) [PRIOR AUTHORIZATION REQUIRED IN FOSTER CARE 
        SETTING.] Home care services provided in an adult or child 
        foster care setting must receive prior authorization by the 
        department according to the limits established in 
        paragraph (b) (a). 
           The commissioner may not authorize: 
           (1) home care services that are the responsibility of the 
        foster care provider under the terms of the foster care 
        placement agreement and administrative rules; 
           (2) personal care services when the foster care license 
        holder is also the personal care provider or personal care 
        assistant unless the recipient can direct the recipient's own 
        care, or case management is provided as required in section 
        256B.0625, subdivision 19a; 
           (3) personal care services when the responsible party is an 
        employee of, or under contract with, or has any direct or 
        indirect financial relationship with the personal care provider 
        or personal care assistant, unless case management is provided 
        as required in section 256B.0625, subdivision 19a; 
           (4) home care services when the number of foster care 
        residents is greater than four unless the county responsible for 
        the recipient's foster placement made the placement prior to 
        April 1, 1992, requests that home care services be provided, and 
        case management is provided as required in section 256B.0625, 
        subdivision 19a; or 
           (5) (3) home care services when combined with foster care 
        payments, other than room and board payments plus the cost of 
        home and community-based waivered services unless the costs of 
        home care services and waivered services are combined and 
        managed under the waiver program, that exceed the total amount 
        that public funds would pay for the recipient's care in a 
        medical institution. 
           Sec. 56.  Minnesota Statutes 1994, section 256B.0628, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DUTIES.] (a) The commissioner may contract with 
        or employ qualified registered nurses and necessary support 
        staff, or contract with qualified agencies, to provide home care 
        prior authorization and review services for medical assistance 
        recipients who are receiving home care services. 
           (b) Reimbursement for the prior authorization function 
        shall be made through the medical assistance administrative 
        authority.  The state shall pay the nonfederal share.  The 
        functions will be to: 
           (1) assess the recipient's individual need for services 
        required to be cared for safely in the community; 
           (2) ensure that a care service plan that meets the 
        recipient's needs is developed by the appropriate agency or 
        individual; 
           (3) ensure cost-effectiveness of medical assistance home 
        care services; 
           (4) recommend the approval or denial of the use of medical 
        assistance funds to pay for home care services when home care 
        services exceed thresholds established by the commissioner under 
        Minnesota Rules, parts 9505.0170 to 9505.0475; 
           (5) reassess the recipient's need for and level of home 
        care services at a frequency determined by the commissioner; and 
           (6) conduct on-site assessments when determined necessary 
        by the commissioner and recommend changes to care plans that 
        will provide more efficient and appropriate home care. 
           (c) In addition, the commissioner or the commissioner's 
        designee may: 
           (1) review care service plans and reimbursement data for 
        utilization of services that exceed community-based standards 
        for home care, inappropriate home care services, medical 
        necessity, home care services that do not meet quality of care 
        standards, or unauthorized services and make appropriate 
        referrals within the department or to other appropriate entities 
        based on the findings; 
           (2) assist the recipient in obtaining services necessary to 
        allow the recipient to remain safely in or return to the 
        community; 
           (3) coordinate home care services with other medical 
        assistance services under section 256B.0625; 
           (4) assist the recipient with problems related to the 
        provision of home care services; and 
           (5) assure the quality of home care services. 
           (d) For the purposes of this section, "home care services"  
        means medical assistance services defined under section 
        256B.0625, subdivisions 6a, 7, and 19a. 
           Sec. 57.  Minnesota Statutes 1994, section 256B.0911, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PERSONS REQUIRED TO BE SCREENED; EXEMPTIONS.] 
        All applicants to Medicaid certified nursing facilities must be 
        screened prior to admission, regardless of income, assets, or 
        funding sources, except the following: 
           (1) patients who, having entered acute care facilities from 
        certified nursing facilities, are returning to a certified 
        nursing facility; 
           (2) residents transferred from other certified nursing 
        facilities located within the state of Minnesota; 
           (3) individuals who have a contractual right to have their 
        nursing facility care paid for indefinitely by the veteran's 
        administration; or 
           (4) individuals who are enrolled in the Ebenezer/Group 
        Health social health maintenance organization project, or 
        enrolled in a demonstration project under section 256B.69, 
        subdivision 18, at the time of application to a nursing home; or 
           (5) individuals previously screened and currently being 
        served under the alternative care program or under a home and 
        community-based services waiver authorized under section 1915(c) 
        of the Social Security Act. 
           Regardless of the exemptions in clauses (2) to (4), persons 
        who have a diagnosis or possible diagnosis of mental illness, 
        mental retardation, or a related condition must be screened 
        before admission unless the admission prior to screening is 
        authorized by the local mental health authority or the local 
        developmental disabilities case manager, or unless authorized by 
        the county agency according to Public Law Number 101-508. 
           Before admission to a Medicaid certified nursing home or 
        boarding care home, all persons must be screened and approved 
        for admission through an assessment process.  The nursing 
        facility is authorized to conduct case mix assessments which are 
        not conducted by the county public health nurse under Minnesota 
        Rules, part 9549.0059.  The designated county agency is 
        responsible for distributing the quality assurance and review 
        form for all new applicants to nursing homes. 
           Other persons who are not applicants to nursing facilities 
        must be screened if a request is made for a screening. 
           Sec. 58.  Minnesota Statutes 1994, section 256B.0911, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [SCREENING REQUIREMENTS.] Persons may be 
        screened by telephone or in a face-to-face consultation.  The 
        screener will identify each individual's needs according to the 
        following categories:  (1) needs no face-to-face screening; (2) 
        needs an immediate face-to-face screening interview; or (3) 
        needs a face-to-face screening interview after admission to a 
        certified nursing facility or after a return home.  The screener 
        shall confer with the screening team to ensure that the health 
        and social needs of the individual are assessed.  Persons who 
        are not admitted to a Medicaid certified nursing facility must 
        be screened within ten working days after the date of referral.  
        Persons admitted on a nonemergency basis to a Medicaid certified 
        nursing facility must be screened prior to the certified nursing 
        facility admission.  Persons admitted to the Medicaid certified 
        nursing facility from the community on an emergency basis or 
        from an acute care facility on a nonworking day must be screened 
        the first working day after admission and the reason for the 
        emergency admission must be certified by the attending physician 
        in the person's medical record. 
           Sec. 59.  Minnesota Statutes 1994, section 256B.0911, 
        subdivision 3, is amended to read: 
           Subd. 3.  [PERSONS RESPONSIBLE FOR CONDUCTING THE 
        PREADMISSION SCREENING.] (a) A local screening team shall be 
        established by the county board of commissioners.  Each local 
        screening team shall consist of screeners who are a social 
        worker and a public health nurse from their respective county 
        agencies.  If a county does not have a public health nurse 
        available, it may request approval from the commissioner to 
        assign a county registered nurse with at least one year 
        experience in home care to participate on the team.  The 
        screening team members must confer regarding the most 
        appropriate care for each individual screened.  Two or more 
        counties may collaborate to establish a joint local screening 
        team or teams. 
           (b) In assessing a person's needs, screeners shall have a 
        physician available for consultation and shall consider the 
        assessment of the individual's attending physician, if any.  The 
        individual's physician shall be included if the physician 
        chooses to participate.  Other personnel may be included on the 
        team as deemed appropriate by the county agencies. 
           Sec. 60.  Minnesota Statutes 1994, section 256B.0911, 
        subdivision 4, is amended to read: 
           Subd. 4.  [RESPONSIBILITIES OF THE COUNTY AND THE SCREENING 
        TEAM.] (a) The county shall: 
           (1) provide information and education to the general public 
        regarding availability of the preadmission screening program; 
           (2) accept referrals from individuals, families, human 
        service and health professionals, and hospital and nursing 
        facility personnel; 
           (3) assess the health, psychological, and social needs of 
        referred individuals and identify services needed to maintain 
        these persons in the least restrictive environments; 
           (4) determine if the individual screened needs nursing 
        facility level of care; 
           (5) assess specialized service needs based upon an 
        evaluation by: 
           (i) a qualified independent mental health professional for 
        persons with a primary or secondary diagnosis of a serious 
        mental illness; and 
           (ii) a qualified mental retardation professional for 
        persons with a primary or secondary diagnosis of mental 
        retardation or related conditions.  For purposes of this clause, 
        a qualified mental retardation professional must meet the 
        standards for a qualified mental retardation professional in 
        Code of Federal Regulations, title 42, section 483.430; 
           (6) make recommendations for individuals screened regarding 
        cost-effective community services which are available to the 
        individual; 
           (7) make recommendations for individuals screened regarding 
        nursing home placement when there are no cost-effective 
        community services available; 
           (8) develop an individual's community care plan and provide 
        follow-up services as needed; and 
           (9) prepare and submit reports that may be required by the 
        commissioner of human services. 
           (b) The screener shall document that the most 
        cost-effective alternatives available were offered to the 
        individual or the individual's legal representative.  For 
        purposes of this section, "cost-effective alternatives" means 
        community services and living arrangements that cost the same or 
        less than nursing facility care. 
           (c) Screeners shall adhere to the level of care criteria 
        for admission to a certified nursing facility established under 
        section 144.0721.  
           (d) For persons who are eligible for medical assistance or 
        who would be eligible within 180 days of admission to a nursing 
        facility and who are admitted to a nursing facility, the nursing 
        facility must include a screener or the case manager in the 
        discharge planning process for those individuals who the team 
        has determined have discharge potential.  The screener or the 
        case manager must ensure a smooth transition and follow-up for 
        the individual's return to the community. 
           Screeners shall cooperate with other public and private 
        agencies in the community, in order to offer a variety of 
        cost-effective services to the disabled and elderly.  The 
        screeners shall encourage the use of volunteers from families, 
        religious organizations, social clubs, and similar civic and 
        service organizations to provide services. 
           Sec. 61.  Minnesota Statutes 1994, section 256B.0911, 
        subdivision 7, is amended to read: 
           Subd. 7.  [REIMBURSEMENT FOR CERTIFIED NURSING FACILITIES.] 
        (a) Medical assistance reimbursement for nursing facilities 
        shall be authorized for a medical assistance recipient only if a 
        preadmission screening has been conducted prior to admission or 
        the local county agency has authorized an exemption.  Medical 
        assistance reimbursement for nursing facilities shall not be 
        provided for any recipient who the local screener has determined 
        does not meet the level of care criteria for nursing facility 
        placement or, if indicated, has not had a level II PASARR 
        evaluation completed unless an admission for a recipient with 
        mental illness is approved by the local mental health authority 
        or an admission for a recipient with mental retardation or 
        related condition is approved by the state mental retardation 
        authority.  The county preadmission screening team may deny 
        certified nursing facility admission using the level of care 
        criteria established under section 144.0721 and deny medical 
        assistance reimbursement for certified nursing facility care.  
        Persons receiving care in a certified nursing facility or 
        certified boarding care home who are reassessed and no longer 
        meet the level of care criteria for a certified nursing facility 
        or certified boarding care home may no longer remain a resident 
        in the certified nursing facility or certified boarding care 
        home and must be relocated to the community if the persons were 
        admitted on or after July 1, 1996.  Persons receiving services 
        under section 256B.0913, subdivisions 1 to 14, or 256B.0915 who 
        are reassessed and found to not meet the level of care criteria 
        for admission to a certified nursing facility or certified 
        boarding care home may no longer receive these services after 
        July 1, 1996.  The commissioner shall make a request to the 
        health care financing administration for a waiver allowing 
        screening team approval of Medicaid payments for certified 
        nursing facility care.  An individual has a choice and makes the 
        final decision between nursing facility placement and community 
        placement after the screening team's recommendation, except as 
        provided in paragraphs (b) and (c).  
           (b) The local county mental health authority or the state 
        mental retardation authority under Public Law Numbers 100-203 
        and 101-508 may prohibit admission to a nursing facility, if the 
        individual does not meet the nursing facility level of care 
        criteria or needs specialized services as defined in Public Law 
        Numbers 100-203 and 101-508.  For purposes of this section, 
        "specialized services" for a person with mental retardation or a 
        related condition means "active treatment" as that term is 
        defined in Code of Federal Regulations, title 42, section 
        483.440(a)(1). 
           (c) Upon the receipt by the commissioner of approval by the 
        Secretary of Health and Human Services of the waiver requested 
        under paragraph (a), the local screener shall deny medical 
        assistance reimbursement for nursing facility care for an 
        individual whose long-term care needs can be met in a 
        community-based setting and whose cost of community-based home 
        care services is less than 75 percent of the average payment for 
        nursing facility care for that individual's case mix 
        classification, and who is either: 
           (i) a current medical assistance recipient being screened 
        for admission to a nursing facility; or 
           (ii) an individual who would be eligible for medical 
        assistance within 180 days of entering a nursing facility and 
        who meets a nursing facility level of care. 
           (d) Appeals from the screening team's recommendation or the 
        county agency's final decision shall be made according to 
        section 256.045, subdivision 3. 
           Sec. 62.  [256B.0912] [ALTERNATIVE CARE AND WAIVERED 
        SERVICE PROGRAMS.] 
           Subdivision 1.  [RESTRUCTURING PLAN.] By January 1, 1996, 
        the commissioner shall present a plan to the legislature to 
        restructure administration of the alternative care, elderly 
        waiver, and disabled waiver programs.  The plan must demonstrate 
        cost neutrality and provide counties with the flexibility, 
        authority, and accountability to administer home and 
        community-based service programs within predetermined fixed 
        budgets.  To support this local program administration, the 
        commissioner shall explore options with the health care 
        financing administration to assure flexibility to expand core 
        services within the elderly and disabled waivers as long as cost 
        neutrality is maintained. 
           Subd. 2.  [WAIVER PROGRAM MODIFICATIONS.] The commissioner 
        of human services shall make the following modifications in 
        medical assistance waiver programs, effective for services 
        rendered after June 30, 1995, or, if necessary, after federal 
        approval is granted: 
           (a) The community alternatives for disabled individuals 
        waiver shall: 
           (1) if medical supplies and equipment or adaptations are or 
        will be purchased for a waiver services recipient, allow the 
        prorating of costs on a monthly basis throughout the year in 
        which they are purchased.  If the monthly cost of a recipient's 
        other waivered services exceeds the monthly limit established in 
        this paragraph, the annual cost of the waivered services shall 
        be determined.  In this event, the annual cost of waivered 
        services shall not exceed 12 times the monthly limit calculated 
        in this paragraph; 
           (2) require client reassessments once every 12 months; 
           (3) permit the purchase of supplies and equipment costing 
        $150 or less without prior approval of the commissioner of human 
        services.  A county is not required to contract with a provider 
        of supplies and equipment if the monthly cost of supplies and 
        equipment is less than $250; and 
           (4) allow the implementation of care plans without the 
        approval of the county of financial responsibility when the 
        client receives services from another county. 
           (b) The traumatic brain injury waiver shall: 
           (1) require client reassessments once every 12 months; 
           (2) permit the purchase of supplies and equipment costing 
        $250 or less without having a contract with the supplier; and 
           (3) allow the implementation of care plans without the 
        approval of the county of financial responsibility when the 
        client receives services from another county. 
           Sec. 63.  Minnesota Statutes 1994, section 256B.0913, 
        subdivision 4, is amended to read: 
           Subd. 4.  [ELIGIBILITY FOR FUNDING FOR SERVICES FOR 
        NONMEDICAL ASSISTANCE RECIPIENTS.] (a) Funding for services 
        under the alternative care program is available to persons who 
        meet the following criteria: 
           (1) the person has been screened by the county screening 
        team or, if previously screened and served under the alternative 
        care program, assessed by the local county social worker or 
        public health nurse; 
           (2) the person is age 65 or older; 
           (3) the person would be financially eligible for medical 
        assistance within 180 days of admission to a nursing facility; 
           (4) the person meets the asset transfer requirements of the 
        medical assistance program; 
           (5) the screening team would recommend nursing facility 
        admission or continued stay for the person if alternative care 
        services were not available; 
           (6) the person needs services that are not available at 
        that time in the county through other county, state, or federal 
        funding sources; and 
           (7) the monthly cost of the alternative care services 
        funded by the program for this person does not exceed 75 percent 
        of the statewide average monthly medical assistance payment for 
        nursing facility care at the individual's case mix 
        classification to which the individual would be assigned under 
        Minnesota Rules, parts 9549.0050 to 9549.0059.  If medical 
        supplies and equipment or adaptations are or will be purchased 
        for an alternative care services recipient, the costs may be 
        prorated on a monthly basis throughout the year in which they 
        are purchased.  If the monthly cost of a recipient's other 
        alternative care services exceeds the monthly limit established 
        in this paragraph, the annual cost of the alternative care 
        services shall be determined.  In this event, the annual cost of 
        alternative care services shall not exceed 12 times the monthly 
        limit calculated in this paragraph. 
           (b) Individuals who meet the criteria in paragraph (a) and 
        who have been approved for alternative care funding are called 
        180-day eligible clients. 
           (c) The statewide average payment for nursing facility care 
        is the statewide average monthly nursing facility rate in effect 
        on July 1 of the fiscal year in which the cost is incurred, less 
        the statewide average monthly income of nursing facility 
        residents who are age 65 or older and who are medical assistance 
        recipients in the month of March of the previous fiscal year.  
        This monthly limit does not prohibit the 180-day eligible client 
        from paying for additional services needed or desired.  
           (d) In determining the total costs of alternative care 
        services for one month, the costs of all services funded by the 
        alternative care program, including supplies and equipment, must 
        be included. 
           (e) Alternative care funding under this subdivision is not 
        available for a person who is a medical assistance recipient or 
        who would be eligible for medical assistance without a spenddown 
        if the person applied, unless authorized by the commissioner.  A 
        person whose application for medical assistance is being 
        processed may be served under the alternative care program for a 
        period up to 60 days.  If the individual is found to be eligible 
        for medical assistance, the county must bill medical assistance 
        from the date the individual was found eligible for the medical 
        assistance services provided that are reimbursable under the 
        elderly waiver program.  
           (f) Alternative care funding is not available for a person 
        who resides in a licensed nursing home or boarding care home, 
        except for case management services which are being provided in 
        support of the discharge planning process.  
           Sec. 64.  Minnesota Statutes 1994, 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; and 
           (17) training for direct informal caregivers. 
           (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.  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) Costs for supplies and equipment that exceed $150 per 
        item per month must have prior approval from the commissioner.  
        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 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.  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.  
           A person's eligibility to reside in the building must not 
        be contingent on the person's acceptance or use of the assisted 
        living services.  Assisted living services as defined in this 
        section shall not be authorized in boarding and lodging 
        establishments licensed according to sections 157.01 to 157.031. 
           (i) For the purposes of this section, reimbursement for 
        assisted living services and residential care services shall 
        be made by the lead agency to the vendor as a monthly rate 
        negotiated with and authorized by the county agency.  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, except.  For alternative care assisted living 
        projects established under Laws 1988, chapter 689, article 2, 
        section 256, whose monthly rates may not exceed 65 percent of 
        either the greater of either 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.  The rate may not cover 
        rent and direct food costs. 
           (i) (j) 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 nonprofit 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. 
           (j) (k) 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. 
           Sec. 65.  Minnesota Statutes 1994, section 256B.0913, 
        subdivision 8, is amended to read: 
           Subd. 8.  [REQUIREMENTS FOR INDIVIDUAL CARE PLAN.] (a) The 
        case manager shall implement the plan of care for each 180-day 
        eligible client and ensure that a client's service needs and 
        eligibility are reassessed at least every six 12 months.  The 
        plan shall include any services prescribed by the individual's 
        attending physician as necessary to allow the individual to 
        remain in a community setting.  In developing the individual's 
        care plan, the case manager should include the use of volunteers 
        from families and neighbors, religious organizations, social 
        clubs, and civic and service organizations to support the formal 
        home care services.  The county shall be held harmless for 
        damages or injuries sustained through the use of volunteers 
        under this subdivision including workers' compensation 
        liability.  The lead agency shall provide documentation to the 
        commissioner verifying that the individual's alternative care is 
        not available at that time through any other public assistance 
        or service program.  The lead agency shall provide documentation 
        in each individual's plan of care and to the commissioner that 
        the most cost-effective alternatives available have been offered 
        to the individual and that the individual was free to choose 
        among available qualified providers, both public and private. 
        The case manager must give the individual a ten-day written 
        notice of any decrease in or termination of alternative care 
        services. 
           (b) If the county administering alternative care services 
        is different than the county of financial responsibility, the 
        care plan may be implemented without the approval of the county 
        of financial responsibility. 
           Sec. 66.  Minnesota Statutes 1994, section 256B.0913, 
        subdivision 12, is amended to read: 
           Subd. 12.  [CLIENT PREMIUMS.] (a) A premium is required for 
        all 180-day eligible clients to help pay for the cost of 
        participating in the program.  The amount of the premium for the 
        alternative care client shall be determined as follows: 
           (1) when the alternative care client's income less 
        recurring and predictable medical expenses is greater than the 
        medical assistance income standard but less than 150 percent of 
        the federal poverty guideline, and total assets are less than 
        $6,000, the fee is zero; 
           (2) when the alternative care client's income less 
        recurring and predictable medical expenses is greater than 150 
        percent of the federal poverty guideline, and total assets are 
        less than $6,000, the fee is 25 percent of the cost of 
        alternative care services or the difference between 150 percent 
        of the federal poverty guideline and the client's income less 
        recurring and predictable medical expenses, whichever is less; 
        and 
           (3) when the alternative care client's total assets are 
        greater than $6,000, the fee is 25 percent of the cost of 
        alternative care services.  
           For married persons, total assets are defined as the total 
        marital assets less the estimated community spouse asset 
        allowance, under section 256B.059, if applicable.  For married 
        persons, total income is defined as the client's income less the 
        monthly spousal allotment, under section 256B.058. 
           All alternative care services except case management shall 
        be included in the estimated costs for the purpose of 
        determining 25 percent of the costs. 
           The monthly premium shall be calculated and be payable in 
        the based on the cost of the first full month in which the of 
        alternative care services begin and shall continue unaltered for 
        six months until the semiannual reassessment unless the actual 
        cost of services falls below the fee until the next reassessment 
        is completed or at the end of 12 months, whichever comes first.  
        Premiums are due and payable each month alternative care 
        services are received unless the actual cost of the services is 
        less than the premium. 
           (b) The fee shall be waived by the commissioner when: 
           (1) a person who is residing in a nursing facility is 
        receiving case management only; 
           (2) a person is applying for medical assistance; 
           (3) a married couple is requesting an asset assessment 
        under the spousal impoverishment provisions; 
           (4) a person is a medical assistance recipient, but has 
        been approved for alternative care-funded assisted living 
        services; 
           (5) a person is found eligible for alternative care, but is 
        not yet receiving alternative care services; or 
           (6) a person is an adult foster care resident for whom 
        alternative care funds are being used to meet a portion of the 
        person's medical assistance spenddown, as authorized in 
        subdivision 4; and 
           (7) a person's fee under paragraph (a) is less than $25. 
           (c) The county agency must collect the premium from the 
        client and forward the amounts collected to the commissioner in 
        the manner and at the times prescribed by the commissioner.  
        Money collected must be deposited in the general fund and is 
        appropriated to the commissioner for the alternative care 
        program.  The client must supply the county with the client's 
        social security number at the time of application.  If a client 
        fails or refuses to pay the premium due, the county shall supply 
        the commissioner with the client's social security number and 
        other information the commissioner requires to collect the 
        premium from the client.  The commissioner shall collect unpaid 
        premiums using the revenue recapture act in chapter 270A and 
        other methods available to the commissioner.  The commissioner 
        may require counties to inform clients of the collection 
        procedures that may be used by the state if a premium is not 
        paid.  
           (d) The commissioner shall begin to adopt emergency or 
        permanent rules governing client premiums within 30 days after 
        July 1, 1991, including criteria for determining when services 
        to a client must be terminated due to failure to pay a premium.  
           Sec. 67.  Minnesota Statutes 1994, section 256B.0913, 
        subdivision 14, is amended to read: 
           Subd. 14.  [REIMBURSEMENT AND RATE ADJUSTMENTS.] (a) 
        Reimbursement for expenditures for the alternative care services 
        as approved by the client's case manager shall be through the 
        invoice processing procedures of the department's Medicaid 
        Management Information System (MMIS), only with the approval of 
        the client's case manager.  To receive reimbursement, the county 
        or vendor must submit invoices within 120 days 12 months 
        following the month date of service.  The county agency and its 
        vendors under contract shall not be reimbursed for services 
        which exceed the county allocation. 
           (b) If a county collects less than 50 percent of the client 
        premiums due under subdivision 12, the commissioner may withhold 
        up to three percent of the county's final alternative care 
        program allocation determined under subdivisions 10 and 11. 
           (c) Beginning July 1, 1991, the state will reimburse 
        counties, up to the limits of state appropriations, according to 
        the payment schedule in section 256.025 for the county share of 
        costs incurred under this subdivision on or after January 1, 
        1991, for individuals who would be eligible for medical 
        assistance within 180 days of admission to a nursing home. 
           (d) For fiscal years beginning on or after July 1, 1993, 
        the commissioner of human services shall not provide automatic 
        annual inflation adjustments for alternative care services.  The 
        commissioner of finance shall include as a budget change request 
        in each biennial detailed expenditure budget submitted to the 
        legislature under section 16A.11 annual adjustments in 
        reimbursement rates for alternative care services based on the 
        forecasted percentage change in the Home Health Agency Market 
        Basket of Operating Costs, for the fiscal year beginning July 1, 
        compared to the previous fiscal year, unless otherwise adjusted 
        by statute.  The Home Health Agency Market Basket of Operating 
        Costs is published by Data Resources, Inc.  The forecast to be 
        used is the one published for the calendar quarter beginning 
        January 1, six months prior to the beginning of the fiscal year 
        for which rates are set. 
           (e) The county shall negotiate individual rates with 
        vendors and may be reimbursed for actual costs up to the greater 
        of the county's current approved rate or 60 percent of the 
        maximum rate in fiscal year 1994 and 65 percent of the maximum 
        rate in fiscal year 1995 for each alternative care service.  
        Notwithstanding any other rule or statutory provision to the 
        contrary, the commissioner shall not be authorized to increase 
        rates by an annual inflation factor, unless so authorized by the 
        legislature. 
           (f) On July 1, 1993, the commissioner shall increase the 
        maximum rate for home delivered meals to $4.50 per meal. 
           Sec. 68.  Minnesota Statutes 1994, section 256B.0913, is 
        amended by adding a subdivision to read: 
           Subd. 15.  [SERVICE ALLOWANCE FUND AVAILABILITY.] (a) 
        Effective July 1, 1996, the commissioner may use alternative 
        care funds for services to high function class A persons as 
        defined in section 144.0721, subdivision 3, clause (2).  The 
        county alternative care grant allocation will be supplemented 
        with a special allocation amount based on the projected number 
        of eligible high function class A's and computed on the basis of 
        $240 per month per projected eligible person.  Individual 
        monthly expenditures under the service allowance option are 
        permitted to be either greater or less than the amount of $240 
        per month based on individual need.  County allocations shall be 
        adjusted periodically based on the actual provision of services 
        to high function class A persons. 
           (b) Counties shall have the option of providing services, 
        cash service allowances, vouchers, or a combination of these 
        options to high function class A persons defined in section 
        144.0721, subdivision 3, clause (2).  High function class A 
        persons may choose services from among the categories of 
        services listed under section 256B.0913, subdivision 5, except 
        for case management services. 
           (c) If the allocation to a county is not sufficient to 
        serve all persons who qualify for alternative care services, the 
        county is not required to provide any alternative care services 
        to a high function class A person but shall establish a waiting 
        list to provide services as funding becomes available. 
           Sec. 69.  Minnesota Statutes 1994, section 256B.0913, is 
        amended by adding a subdivision to read: 
           Subd. 15a.  [REIMBURSEMENT RATE; ANOKA COUNTY.] 
        Notwithstanding subdivision 14, paragraph (e), or any other law 
        to the contrary, for services rendered on or after January 1, 
        1996, Anoka county may pay vendors, and the commissioner shall 
        reimburse the county, for actual costs up to the rate in effect 
        on December 31, 1995, plus half the difference between that rate 
        and the maximum allowed state rate for home health aide and 
        homemaker services. 
           Sec. 70.  Minnesota Statutes 1994, section 256B.0915, 
        subdivision 2, is amended to read: 
           Subd. 2.  [SPOUSAL IMPOVERISHMENT POLICIES.] The 
        commissioner shall seek to amend the federal waiver and the 
        medical assistance state plan to allow spousal impoverishment 
        criteria as authorized in Code of Federal Regulations, title 42, 
        section 435.726(1924) under United States Code, title 42, 
        section 1396r-5, and as implemented in sections 256B.0575, 
        256B.058, and 256B.059 to be applied to persons who are screened 
        and determined to need a nursing facility level of care, except 
        that the amendment shall seek to add to the personal needs 
        allowance permitted in section 256B.0575, an amount equivalent 
        to the group residential housing rate as set by section 256I.03, 
        subdivision 5. 
           Sec. 71.  Minnesota Statutes 1994, section 256B.0915, 
        subdivision 3, is amended to read: 
           Subd. 3.  [LIMITS OF CASES, RATES, REIMBURSEMENT, AND 
        FORECASTING.] (a) The number of medical assistance waiver 
        recipients that a county may serve must be allocated according 
        to the number of medical assistance waiver cases open on July 1 
        of each fiscal year.  Additional recipients may be served with 
        the approval of the commissioner. 
           (b) The monthly limit for the cost of waivered services to 
        an individual waiver client shall be the statewide average 
        payment rate of the case mix resident class to which the waiver 
        client would be assigned under the medical assistance case mix 
        reimbursement system.  If medical supplies and equipment or 
        adaptations are or will be purchased for an elderly waiver 
        services recipient, the costs may be prorated on a monthly basis 
        throughout the year in which they are purchased.  If the monthly 
        cost of a recipient's other waivered services exceeds the 
        monthly limit established in this paragraph, the annual cost of 
        the waivered services shall be determined.  In this event, the 
        annual cost of waivered services shall not exceed 12 times the 
        monthly limit calculated in this paragraph.  The statewide 
        average payment rate is calculated by determining the statewide 
        average monthly nursing home rate, effective July 1 of the 
        fiscal year in which the cost is incurred, less the statewide 
        average monthly income of nursing home residents who are age 65 
        or older, and who are medical assistance recipients in the month 
        of March of the previous state fiscal year.  The annual cost 
        divided by 12 of elderly or disabled waivered services for a 
        person who is a nursing facility resident at the time of 
        requesting a determination of eligibility for elderly or 
        disabled waivered services shall not exceed the monthly payment 
        for the resident class assigned under Minnesota Rules, parts 
        9549.0050 to 9549.0059, for that resident in the nursing 
        facility where the resident currently resides.  The following 
        costs must be included in determining the total monthly costs 
        for the waiver client: 
           (1) cost of all waivered services, including extended 
        medical supplies and equipment; and 
           (2) cost of skilled nursing, home health aide, and personal 
        care services reimbursable by medical assistance.  
           (c) Medical assistance funding for skilled nursing 
        services, home health aide, and personal care services for 
        waiver recipients must be approved by the case manager and 
        included in the individual care plan. 
           (d) Expenditures for extended medical supplies and 
        equipment that cost over $150 per month for both the elderly 
        waiver and the disabled waiver must have the commissioner's 
        prior approval.  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. 
           (e) For the fiscal year beginning on July 1, 1993, and for 
        subsequent fiscal years, the commissioner of human services 
        shall not provide automatic annual inflation adjustments for 
        home and community-based waivered services.  The commissioner of 
        finance shall include as a budget change request in each 
        biennial detailed expenditure budget submitted to the 
        legislature under section 16A.11, annual adjustments in 
        reimbursement rates for home and community-based waivered 
        services, based on the forecasted percentage change in the Home 
        Health Agency Market Basket of Operating Costs, for the fiscal 
        year beginning July 1, compared to the previous fiscal year, 
        unless otherwise adjusted by statute.  The Home Health Agency 
        Market Basket of Operating Costs is published by Data Resources, 
        Inc.  The forecast to be used is the one published for the 
        calendar quarter beginning January 1, six months prior to the 
        beginning of the fiscal year for which rates are set.  The adult 
        foster care rate shall be considered a difficulty of care 
        payment and shall not include room and board. 
           (f) The adult foster care daily rate for the elderly and 
        disabled waivers shall be negotiated between the county agency 
        and the foster care provider.  The rate established under this 
        section shall not exceed the state average monthly nursing home 
        payment for the case mix classification to which the individual 
        receiving foster care is assigned, and it; the rate must allow 
        for other waiver and medical assistance home care services to be 
        authorized by the case manager. 
           (g) The assisted living and residential care service rates 
        for elderly and disabled community alternatives for disabled 
        individuals (CADI) waivers shall be made to the vendor as a 
        monthly rate negotiated with the county agency.  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 elderly or disabled client 
        would be assigned under Minnesota Rules, parts 9549.0050 to 
        9549.0059, except.  For alternative care assisted living 
        projects established under Laws 1988, chapter 689, article 2, 
        section 256, whose monthly rates may not exceed 65 percent of 
        the greater of either the statewide or any of the geographic 
        groups' weighted average monthly medical assistance nursing 
        facility payment rate for the case mix resident class to which 
        the elderly or disabled client would be assigned under Minnesota 
        Rules, parts 9549.0050 to 9549.0059.  The rate may not cover 
        direct rent or food costs. 
           (h) The county shall negotiate individual rates with 
        vendors and may be reimbursed for actual costs up to the greater 
        of the county's current approved rate or 60 percent of the 
        maximum rate in fiscal year 1994 and 65 percent of the maximum 
        rate in fiscal year 1995 for each service within each program. 
           (i) On July 1, 1993, the commissioner shall increase the 
        maximum rate for home-delivered meals to $4.50 per meal. 
           (j) Reimbursement for the medical assistance recipients 
        under the approved waiver shall be made from the medical 
        assistance account through the invoice processing procedures of 
        the department's Medicaid Management Information System (MMIS), 
        only with the approval of the client's case manager.  The budget 
        for the state share of the Medicaid expenditures shall be 
        forecasted with the medical assistance budget, and shall be 
        consistent with the approved waiver.  
           (k) Beginning July 1, 1991, the state shall reimburse 
        counties according to the payment schedule in section 256.025 
        for the county share of costs incurred under this subdivision on 
        or after January 1, 1991, for individuals who are receiving 
        medical assistance. 
           Sec. 72.  Minnesota Statutes 1994, section 256B.0915, is 
        amended by adding a subdivision to read: 
           Subd. 3a.  [REIMBURSEMENT RATE; ANOKA COUNTY.] 
        Notwithstanding subdivision 3, paragraph (h), or any other law 
        to the contrary, for services rendered on or after January 1, 
        1996, Anoka county may pay vendors, and the commissioner shall 
        reimburse the county, for actual costs up to the rate in effect 
        on December 31, 1995, plus half the difference between that rate 
        and the maximum allowed state rate for home health aide and 
        homemaker services. 
           Sec. 73.  Minnesota Statutes 1994, section 256B.0915, 
        subdivision 5, is amended to read: 
           Subd. 5.  [REASSESSMENTS FOR WAIVER CLIENTS.] A 
        reassessment of a client served under the elderly or disabled 
        waiver must be conducted at least every six 12 months and at 
        other times when the case manager determines that there has been 
        significant change in the client's functioning.  This may 
        include instances where the client is discharged from the 
        hospital.  
           Sec. 74.  Minnesota Statutes 1994, section 256B.0915, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [IMPLEMENTATION OF CARE PLAN.] If the county 
        administering waivered services is different than the county of 
        financial responsibility, the care plan may be implemented 
        without the approval of the county of financial responsibility. 
           Sec. 75.  Minnesota Statutes 1994, section 256B.093, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [STATE TRAUMATIC BRAIN INJURY PROGRAM.] The 
        commissioner of human services shall: 
           (1) establish and maintain a statewide traumatic brain 
        injury program; 
           (2) designate a full-time position to supervise and 
        coordinate services and policies for persons with traumatic 
        brain injuries; 
           (3) contract with qualified agencies or employ staff to 
        provide statewide administrative case management and 
        consultation; 
           (4) establish maintain an advisory committee to provide 
        recommendations in a report reports to the commissioner 
        regarding program and service needs of persons with traumatic 
        brain injuries.  The advisory committee shall consist of no less 
        than ten members and no more than 30 members.  The commissioner 
        shall appoint all advisory committee members to one- or two-year 
        terms and appoint one member as chair; and 
           (5) investigate the need for the development of rules or 
        statutes for:  
           (i) the traumatic brain injury home and community-based 
        services waiver; and 
           (ii) traumatic brain injury services not covered by any 
        other statute or rule (6) investigate present and potential 
        models of service coordination which can be delivered at the 
        local level.  
           Sec. 76.  Minnesota Statutes 1994, section 256B.093, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ELIGIBILITY.] Persons eligible for traumatic 
        brain injury administrative case management and consultation 
        must be eligible medical assistance recipients who have 
        traumatic or certain acquired brain injury and: 
           (1) are at risk of institutionalization; or 
           (2) exceed limits established by the commissioner in 
        section 256B.0627, subdivision 5, paragraph (b). 
           Sec. 77.  Minnesota Statutes 1994, section 256B.093, 
        subdivision 3, is amended to read: 
           Subd. 3.  [TRAUMATIC BRAIN INJURY PROGRAM DUTIES.] The 
        department shall fund administrative case management under this 
        subdivision using medical assistance administrative funds.  The 
        traumatic brain injury program duties include: 
           (1) assessing the person's individual needs for services 
        required to prevent institutionalization; 
           (2) ensuring that a care plan that addresses the person's 
        needs is developed, implemented, and monitored on an ongoing 
        basis by the appropriate agency or individual; 
           (3) assisting the person in obtaining services necessary to 
        allow the person to remain in the community; 
           (4) coordinating home care services with other medical 
        assistance services under section 256B.0625; 
           (5) ensuring appropriate, accessible, and cost-effective 
        medical assistance services; 
           (6) recommending to the commissioner the approval or denial 
        of the use of medical assistance funds to pay for home care 
        services when home care services exceed thresholds established 
        by the commissioner under section 256B.0627; 
           (7) assisting the person with problems related to the 
        provision of home care services; 
           (8) ensuring the quality of home care services; 
           (9) reassessing the person's need for and level of home 
        care services at a frequency determined by the commissioner; 
           (10) (1) recommending to the commissioner the approval or 
        denial of medical assistance funds to pay for out-of-state 
        placements for traumatic brain injury services and in-state 
        traumatic brain injury services provided by designated Medicare 
        long-term care hospitals; 
           (11) (2) coordinating the traumatic brain injury home and 
        community-based waiver; and 
           (12) (3) approving traumatic brain injury waiver 
        eligibility or care plans or both; 
           (4) providing ongoing technical assistance and consultation 
        to county and facility case managers to facilitate care plan 
        development for appropriate, accessible, and cost-effective 
        medical assistance services; 
           (5) providing technical assistance to promote statewide 
        development of appropriate, accessible, and cost-effective 
        medical assistance services and related policy; 
           (6) providing training and outreach to facilitate access to 
        appropriate home and community-based services to prevent 
        institutionalization; 
           (7) facilitating appropriate admissions, continued stay 
        review, discharges, and utilization review for neurobehavioral 
        hospitals and other specialized institutions; 
           (8) providing technical assistance on the use of prior 
        authorization of home care services and coordination of these 
        services with other medical assistance services; 
           (9) developing a system for identification of nursing 
        facility and hospital residents with traumatic brain injury to 
        assist in long-term planning for medical assistance services.  
        Factors will include, but are not limited to, number of 
        individuals served, length of stay, services received, and 
        barriers to community placement; and 
           (10) providing information, referral, and case consultation 
        to access medical assistance services for recipients without a 
        county or facility case manager.  Direct access to this 
        assistance may be limited due to the structure of the program. 
           Sec. 78.  Minnesota Statutes 1994, section 256B.093, is 
        amended by adding a subdivision to read: 
           Subd. 3a.  [TRAUMATIC BRAIN INJURY CASE MANAGEMENT 
        SERVICES.] The annual appropriation established under section 
        171.29, subdivision 2, paragraph (b), clause (5), shall be used 
        for traumatic brain injury program services that include, but 
        are not limited to: 
           (1) collaborating with counties, providers, and other 
        public and private organizations to expand and strengthen local 
        capacity for delivering needed services and supports, including 
        efforts to increase access to supportive residential housing 
        options; 
           (2) participating in planning and accessing services not 
        otherwise covered in subdivision 3 to allow individuals to 
        attain and maintain community-based services; 
           (3) providing information, referral, and case consultation 
        to access health and human services for persons with traumatic 
        brain injury not eligible for medical assistance, though direct 
        access to this assistance may be limited due to the structure of 
        the program; and 
           (4) collaborating on injury prevention efforts. 
           Sec. 79.  Minnesota Statutes 1994, section 256B.15, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [ESTATES SUBJECT TO CLAIMS.] If a person 
        receives any medical assistance hereunder, on the person's 
        death, if single, or on the death of the survivor of a married 
        couple, either or both of whom received medical assistance, the 
        total amount paid for medical assistance rendered for the person 
        and spouse shall be filed as a claim against the estate of the 
        person or the estate of the surviving spouse in the court having 
        jurisdiction to probate the estate.  
           A claim shall be filed if medical assistance was rendered 
        for either or both persons under one of the following 
        circumstances: 
           (a) the person was over 65 55 years of age, and received 
        services under this chapter, excluding alternative care; 
           (b) the person resided in a medical institution for six 
        months or longer, received services under this chapter excluding 
        alternative care, and, at the time of institutionalization or 
        application for medical assistance, whichever is later, the 
        person could not have reasonably been expected to be discharged 
        and returned home, as certified in writing by the person's 
        treating physician.  For purposes of this section only, a 
        "medical institution" means a skilled nursing facility, 
        intermediate care facility, intermediate care facility for 
        persons with mental retardation, nursing facility, or inpatient 
        hospital; or 
           (c) the person received general assistance medical care 
        services under chapter 256D.  
           The claim shall be considered an expense of the last 
        illness of the decedent for the purpose of section 524.3-805.  
        Any statute of limitations that purports to limit any county 
        agency or the state agency, or both, to recover for medical 
        assistance granted hereunder shall not apply to any claim made 
        hereunder for reimbursement for any medical assistance granted 
        hereunder.  Notice of the claim shall be given to all heirs and 
        devisees of the decedent whose identity can be ascertained with 
        reasonable diligence.  The notice must include procedures and 
        instructions for making an application for a hardship waiver 
        under subdivision 5; time frames for submitting an application 
        and determination; and information regarding appeal rights and 
        procedures.  Counties are entitled to one-half of the nonfederal 
        share of medical assistance collections from estates that are 
        directly attributable to county effort.  
           Sec. 80.  Minnesota Statutes 1994, section 256B.15, 
        subdivision 2, is amended to read: 
           Subd. 2.  [LIMITATIONS ON CLAIMS.] The claim shall include 
        only the total amount of medical assistance rendered after 
        age 65 55 or during a period of institutionalization described 
        in subdivision 1a, clause (b), and the total amount of general 
        assistance medical care rendered, and shall not include 
        interest.  Claims that have been allowed but not paid shall bear 
        interest according to section 524.3-806, paragraph (d).  A claim 
        against the estate of a surviving spouse who did not receive 
        medical assistance, for medical assistance rendered for the 
        predeceased spouse, is limited to the value of the assets of the 
        estate that were marital property or jointly owned property at 
        any time during the marriage. 
           Sec. 81.  Minnesota Statutes 1994, section 256B.15, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [UNDUE HARDSHIP.] Any person entitled to notice 
        in subdivision 1a has a right to apply for waiver of the claim 
        based upon undue hardship.  Any claim pursuant to this section 
        may be fully or partially waived because of undue hardship.  
        Undue hardship does not include action taken by the decedent 
        which divested or diverted assets in order to avoid estate 
        recovery.  Any waiver of a claim must benefit the person 
        claiming undue hardship. 
           Sec. 82.  Minnesota Statutes 1994, section 256B.19, 
        subdivision 1b, is amended to read: 
           Subd. 1b.  [PORTION OF NONFEDERAL SHARE TO BE PAID BY 
        GOVERNMENT HOSPITALS.] (a) In addition to the percentage 
        contribution paid by a county under subdivision 1, the 
        governmental units designated in this subdivision shall be 
        responsible for an additional portion of the nonfederal share of 
        medical assistance costs attributable to them.  For purposes of 
        this subdivision, "designated governmental unit" means Hennepin 
        county and the University of Minnesota.  For purposes of this 
        subdivision, "public hospital" means the Hennepin County Medical 
        Center and the University of Minnesota hospital. 
           (b) From July 1, 1993 through June 30, 1994, Hennepin 
        county shall on a monthly basis transfer an amount equal to 1.8 
        percent of the public hospital's net patient revenues, excluding 
        net Medicare revenue to the state Medicaid agency. 
           (c) Effective July 1, 1994, each of the governmental units 
        designated in paragraph (a) shall on a monthly basis transfer an 
        amount equal to 1.8 percent of the public hospital's net patient 
        revenues, excluding net Medicare revenue, to the state Medicaid 
        agency.  The base year for determining this transfer amount 
        shall be established according to section 256.9657, subdivision 
        4. 
           (d) These sums shall be part of the designated governmental 
        unit's portion of the nonfederal share of medical assistance 
        costs, but shall not be subject to payback provisions of section 
        256.025. 
           Sec. 83.  Minnesota Statutes 1994, section 256B.19, 
        subdivision 1c, is amended to read: 
           Subd. 1c.  [ADDITIONAL PORTION OF NONFEDERAL SHARE.] In 
        addition to any payment required under subdivision 1b, Hennepin 
        county and the University of Minnesota shall be responsible for 
        a monthly transfer payment of $1,000,000 $1,500,000, due before 
        noon on the 15th of each month and the University of Minnesota 
        shall be responsible for a monthly transfer payment of $500,000 
        due before noon on the 15th of each month, beginning July 15, 
        1993 1995.  These sums shall be part of the designated 
        governmental unit's portion of the nonfederal share of medical 
        assistance costs, but shall not be subject to payback provisions 
        of section 256.025. 
           Sec. 84.  Minnesota Statutes 1994, section 256B.19, 
        subdivision 1d, is amended to read: 
           Subd. 1d.  [PORTION OF NONFEDERAL SHARE TO BE PAID BY 
        CERTAIN COUNTIES.] In addition to the percentage contribution 
        paid by a county under subdivision 1, the governmental units 
        designated in this subdivision shall be responsible for an 
        additional portion of the nonfederal share of medical assistance 
        cost.  For purposes of this subdivision, "designated 
        governmental unit" means the counties of Becker, Beltrami, 
        Clearwater, Cook, Dodge, Hubbard, Itasca, Lake, Mahnomen, 
        Pennington, Pipestone, Ramsey, St. Louis, Steele, Todd, 
        Traverse, and Wadena. 
           Beginning in 1994, each of the governmental units 
        designated in this subdivision shall transfer before noon on May 
        31 to the state Medicaid agency an amount equal to the number of 
        licensed beds in any nursing home owned and operated by the 
        county, with the county named as licensee, multiplied by $5,723. 
        If two or more counties own and operate a nursing home, the 
        payment shall be prorated.  These sums shall be part of the 
        designated governmental unit's portion of the nonfederal share 
        of medical assistance costs, but shall not be subject to payback 
        provisions of section 256.025. 
           Sec. 85.  Minnesota Statutes 1994, section 256B.431, 
        subdivision 2b, is amended to read: 
           Subd. 2b.  [OPERATING COSTS, AFTER JULY 1, 1985.] (a) For 
        rate years beginning on or after July 1, 1985, the commissioner 
        shall establish procedures for determining per diem 
        reimbursement for operating costs.  
           (b) The commissioner shall contract with an econometric 
        firm with recognized expertise in and access to national 
        economic change indices that can be applied to the appropriate 
        cost categories when determining the operating cost payment rate.
           (c) The commissioner shall analyze and evaluate each 
        nursing facility's cost report of allowable operating costs 
        incurred by the nursing facility during the reporting year 
        immediately preceding the rate year for which the payment rate 
        becomes effective.  
           (d) The commissioner shall establish limits on actual 
        allowable historical operating cost per diems based on cost 
        reports of allowable operating costs for the reporting year that 
        begins October 1, 1983, taking into consideration relevant 
        factors including resident needs, geographic location, size of 
        the nursing facility, and the costs that must be incurred for 
        the care of residents in an efficiently and economically 
        operated nursing facility.  In developing the geographic groups 
        for purposes of reimbursement under this section, the 
        commissioner shall ensure that nursing facilities in any county 
        contiguous to the Minneapolis-St. Paul seven-county metropolitan 
        area are included in the same geographic group.  The limits 
        established by the commissioner shall not be less, in the 
        aggregate, than the 60th percentile of total actual allowable 
        historical operating cost per diems for each group of nursing 
        facilities established under subdivision 1 based on cost reports 
        of allowable operating costs in the previous reporting year.  
        For rate years beginning on or after July 1, 1989, facilities 
        located in geographic group I as described in Minnesota Rules, 
        part 9549.0052, on January 1, 1989, may choose to have the 
        commissioner apply either the care related limits or the other 
        operating cost limits calculated for facilities located in 
        geographic group II, or both, if either of the limits calculated 
        for the group II facilities is higher.  The efficiency incentive 
        for geographic group I nursing facilities must be calculated 
        based on geographic group I limits.  The phase-in must be 
        established utilizing the chosen limits.  For purposes of these 
        exceptions to the geographic grouping requirements, the 
        definitions in Minnesota Rules, parts 9549.0050 to 9549.0059 
        (Emergency), and 9549.0010 to 9549.0080, apply.  The limits 
        established under this paragraph remain in effect until the 
        commissioner establishes a new base period.  Until the new base 
        period is established, the commissioner shall adjust the limits 
        annually using the appropriate economic change indices 
        established in paragraph (e).  In determining allowable 
        historical operating cost per diems for purposes of setting 
        limits and nursing facility payment rates, the commissioner 
        shall divide the allowable historical operating costs by the 
        actual number of resident days, except that where a nursing 
        facility is occupied at less than 90 percent of licensed 
        capacity days, the commissioner may establish procedures to 
        adjust the computation of the per diem to an imputed occupancy 
        level at or below 90 percent.  The commissioner shall establish 
        efficiency incentives as appropriate.  The commissioner may 
        establish efficiency incentives for different operating cost 
        categories.  The commissioner shall consider establishing 
        efficiency incentives in care related cost categories.  The 
        commissioner may combine one or more operating cost categories 
        and may use different methods for calculating payment rates for 
        each operating cost category or combination of operating cost 
        categories.  For the rate year beginning on July 1, 1985, the 
        commissioner shall: 
           (1) allow nursing facilities that have an average length of 
        stay of 180 days or less in their skilled nursing level of care, 
        125 percent of the care related limit and 105 percent of the 
        other operating cost limit established by rule; and 
           (2) exempt nursing facilities licensed on July 1, 1983, by 
        the commissioner to provide residential services for the 
        physically handicapped under Minnesota Rules, parts 9570.2000 to 
        9570.3600, from the care related limits and allow 105 percent of 
        the other operating cost limit established by rule. 
           For the purpose of calculating the other operating cost 
        efficiency incentive for nursing facilities referred to in 
        clause (1)  or (2), the commissioner shall use the other 
        operating cost limit established by rule before application of 
        the 105 percent. 
           (e) The commissioner shall establish a composite index or 
        indices by determining the appropriate economic change 
        indicators to be applied to specific operating cost categories 
        or combination of operating cost categories.  
           (f) Each nursing facility shall receive an operating cost 
        payment rate equal to the sum of the nursing facility's 
        operating cost payment rates for each operating cost category.  
        The operating cost payment rate for an operating cost category 
        shall be the lesser of the nursing facility's historical 
        operating cost in the category increased by the appropriate 
        index established in paragraph (e) for the operating cost 
        category plus an efficiency incentive established pursuant to 
        paragraph (d) or the limit for the operating cost category 
        increased by the same index.  If a nursing facility's actual 
        historic operating costs are greater than the prospective 
        payment rate for that rate year, there shall be no retroactive 
        cost settle-up.  In establishing payment rates for one or more 
        operating cost categories, the commissioner may establish 
        separate rates for different classes of residents based on their 
        relative care needs.  
           (g) The commissioner shall include the reported actual real 
        estate tax liability or payments in lieu of real estate tax of 
        each nursing facility as an operating cost of that nursing 
        facility.  Allowable costs under this subdivision for payments 
        made by a nonprofit nursing facility that are in lieu of real 
        estate taxes shall not exceed the amount which the nursing 
        facility would have paid to a city or township and county for 
        fire, police, sanitation services, and road maintenance costs 
        had real estate taxes been levied on that property for those 
        purposes.  For rate years beginning on or after July 1, 1987, 
        the reported actual real estate tax liability or payments in 
        lieu of real estate tax of nursing facilities shall be adjusted 
        to include an amount equal to one-half of the dollar change in 
        real estate taxes from the prior year.  The commissioner shall 
        include a reported actual special assessment, and reported 
        actual license fees required by the Minnesota department of 
        health, for each nursing facility as an operating cost of that 
        nursing facility.  For rate years beginning on or after July 1, 
        1989, the commissioner shall include a nursing facility's 
        reported public employee retirement act contribution for the 
        reporting year as apportioned to the care-related operating cost 
        categories and other operating cost categories multiplied by the 
        appropriate composite index or indices established pursuant to 
        paragraph (e) as costs under this paragraph.  Total adjusted 
        real estate tax liability, payments in lieu of real estate tax, 
        actual special assessments paid, the indexed public employee 
        retirement act contribution, and license fees paid as required 
        by the Minnesota department of health, for each nursing facility 
        (1) shall be divided by actual resident days in order to compute 
        the operating cost payment rate for this operating cost 
        category, (2) shall not be used to compute the care-related 
        operating cost limits or other operating cost limits established 
        by the commissioner, and (3) shall not be increased by the 
        composite index or indices established pursuant to paragraph 
        (e), unless otherwise indicated in this paragraph. 
           (h) For rate years beginning on or after July 1, 1987, the 
        commissioner shall adjust the rates of a nursing facility that 
        meets the criteria for the special dietary needs of its 
        residents and the requirements in section 31.651.  The 
        adjustment for raw food cost shall be the difference between the 
        nursing facility's allowable historical raw food cost per diem 
        and 115 percent of the median historical allowable raw food cost 
        per diem of the corresponding geographic group. 
           The rate adjustment shall be reduced by the applicable 
        phase-in percentage as provided under subdivision 2h. 
           (i) For the cost report year ending September 30, 1996, and 
        for all subsequent reporting years, certified nursing facilities 
        must identify, differentiate, and record resident day statistics 
        for residents in case mix classification A who, on or after July 
        1, 1996, meet the modified level of care criteria in section 
        144.0721.  The resident day statistics shall be separated into 
        case mix classification A-1 for any resident day meeting the 
        high-function class A level of care criteria and case mix 
        classification A-2 for other case mix class A resident days. 
           Sec. 86.  Minnesota Statutes 1994, section 256B.431, 
        subdivision 23, is amended to read: 
           Subd. 23.  [COUNTY NURSING HOME PAYMENT ADJUSTMENTS.] (a) 
        Beginning in 1994, the commissioner shall pay a nursing home 
        payment adjustment on May 31 after noon to a county in which is 
        located a nursing home that, as of January 1 of the previous 
        year, was county-owned and operated, with the county named as 
        licensee by the commissioner of health, and had over 40 beds and 
        medical assistance occupancy in excess of 50 percent during the 
        reporting year ending September 30, 1991.  The adjustment shall 
        be an amount equal to $16 per calendar day multiplied by the 
        number of beds licensed in the facility as of September 30, 1991.
           (b) Payments under paragraph (a) are excluded from medical 
        assistance per diem rate calculations.  These payments are 
        required notwithstanding any rule prohibiting medical assistance 
        payments from exceeding payments from private pay residents.  A 
        facility receiving a payment under paragraph (a) may not 
        increase charges to private pay residents by an amount 
        equivalent to the per diem amount payments under paragraph (a) 
        would equal if converted to a per diem. 
           Sec. 87.  Minnesota Statutes 1994, section 256B.49, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [STUDY; WAIVER APPLICATION.] The 
        commissioner shall authorize a study to assess the need for home 
        and community-based waivers for chronically ill children who 
        have been and will continue to be hospitalized without a waiver, 
        and for disabled individuals under the age of 65 who are likely 
        to reside in an acute care or nursing home facility in the 
        absence of a waiver.  If a need for these waivers can be 
        demonstrated, the commissioner shall apply for federal waivers 
        necessary to secure, to the extent allowed by law, federal 
        participation under United States Code, title 42, sections 
        1396-1396p, as amended through December 31, 1982, for the 
        provision of home and community-based services to chronically 
        ill children who, in the absence of such a waiver, would remain 
        in an acute care setting, and to disabled individuals under the 
        age of 65 who, in the absence of a waiver, would reside in an 
        acute care or nursing home setting.  If the need is 
        demonstrated, the commissioner shall request a waiver under 
        United States Code, title 42, sections 1396-1396p, to allow 
        medicaid eligibility for blind or disabled children with 
        ineligible parents where income deemed from the parents would 
        cause the applicant to be ineligible for supplemental security 
        income if the family shared a household and to furnish necessary 
        services in the home or community to disabled individuals under 
        the age of 65 who would be eligible for medicaid if 
        institutionalized in an acute care or nursing home setting. 
        These waivers are requested to furnish necessary services in the 
        home and community setting to children or disabled adults under 
        age 65 who are medicaid eligible when institutionalized in an 
        acute care or nursing home setting.  The commissioner shall 
        assure that the cost of home and community-based care will not 
        be more than the cost of care if the eligible child or disabled 
        adult under age 65 were to remain institutionalized.  The 
        commissioner shall seek to amend the federal waivers obtained 
        under this section to apply criteria to protect against spousal 
        impoverishment as authorized under United States Code, title 42, 
        section 1396r-5, and as implemented in sections 256B.0575, 
        256B.058, and 256B.059, except that the amendment shall seek to 
        add to the personal needs allowance permitted in section 
        256B.0575, an amount equivalent to the group residential housing 
        rate as set by section 256I.03, subdivision 5. 
           Sec. 88.  Minnesota Statutes 1994, section 256B.49, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [ADMISSION CERTIFICATION.] In determining an 
        individual's eligibility for the community alternative care 
        waiver program, and an individual's eligibility for medical 
        assistance under section 256B.055, subdivision 12, paragraph 
        (b), the commissioner may review or contract for review of the 
        individual's medical condition to determine level of care using 
        criteria in Minnesota Rules, parts 9505.0520 to 9505.0540.  
           For purposes of this subdivision, a person requires 
        long-term care in an inpatient hospital setting if the person 
        has an ongoing condition that is expected to last one year or 
        longer, and would require continuous or frequent 
        hospitalizations during that period, but for the provision of 
        home care services under this section. 
           Sec. 89.  Minnesota Statutes 1994, section 256B.49, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [PERSONS WITH DEVELOPMENTAL DISABILITIES OR 
        RELATED CONDITIONS.] Individuals who apply for services under 
        the community alternatives for disabled individuals (CADI) 
        waiver program who have developmental disabilities or related 
        conditions must be screened for the appropriate institutional 
        level of care in accordance with section 256B.092. 
           Sec. 90.  Minnesota Statutes 1994, section 256B.69, is 
        amended by adding a subdivision to read: 
           Subd. 3a.  [COUNTY AUTHORITY.] The commissioner, when 
        implementing the general assistance medical care or medical 
        assistance prepayment program within a county, must include the 
        county board in the process of development, approval, and 
        issuance of the request for proposals to provide services to 
        eligible individuals within the proposed county.  County boards 
        must be given reasonable opportunity to make recommendations 
        regarding the development, issuance, review of responses, and 
        changes needed in the request for proposals.  The commissioner 
        must provide county boards the opportunity to review each 
        proposal based on the identification of community needs under 
        chapters 145A and 256E and county advocacy activities.  If a 
        county board finds that a proposal does not address certain 
        community needs, the county board and commissioner shall 
        continue efforts for improving the proposal and network prior to 
        the approval of the contract.  The county board shall make 
        recommendations regarding the approval of local networks and 
        their operations to ensure adequate availability and access to 
        covered services.  The provider or health plan must respond 
        directly to county advocates and the state prepaid medical 
        assistance ombudsperson regarding service delivery and must be 
        accountable to the state regarding contracts with medical 
        assistance and general assistance medical care funds.  The 
        county board may recommend a maximum number of participating 
        health plans after considering the size of the enrolling 
        population; ensuring adequate access and capacity; considering 
        the client and county administrative complexity; and considering 
        the need to promote the viability of locally developed health 
        plans.  Prior to the development of the request for proposal, 
        there shall be established a mutually agreed upon timetable.  
        This process shall in no way delay the department's ability to 
        secure and finalize contracts for the medical assistance 
        prepayment program. 
           Sec. 91.  Minnesota Statutes 1994, section 256B.69, 
        subdivision 4, is amended to read: 
           Subd. 4.  [LIMITATION OF CHOICE.] The commissioner shall 
        develop criteria to determine when limitation of choice may be 
        implemented in the experimental counties.  The criteria shall 
        ensure that all eligible individuals in the county have 
        continuing access to the full range of medical assistance 
        services as specified in subdivision 6.  The commissioner shall 
        exempt the following persons from participation in the project, 
        in addition to those who do not meet the criteria for limitation 
        of choice:  (1) persons eligible for medical assistance 
        according to section 256B.055, subdivision 1, and children under 
        age 21 who are in foster placement; (2) persons eligible for 
        medical assistance due to blindness or disability as determined 
        by the social security administration or the state medical 
        review team, unless:  (i) they are 65 years of age or older, or 
        (ii) they are eligible for medical assistance according to 
        section 256B.055, subdivision 12; (3) recipients who currently 
        have private coverage through a health maintenance organization; 
        and (4) recipients who are eligible for medical assistance by 
        spending down excess income for medical expenses other than the 
        nursing facility per diem expense; and (5) recipients who 
        receive benefits under the Refugee Assistance Program, 
        established under United States Code, title 8, section 1522(e).  
        Children under age 21 who are in foster placement may enroll in 
        the project on an elective basis.  The commissioner may allow 
        persons with a one-month spenddown who are otherwise eligible to 
        enroll to voluntarily enroll or remain enrolled, if they elect 
        to prepay their monthly spenddown to the state.  Before 
        limitation of choice is implemented, eligible individuals shall 
        be notified and after notification, shall be allowed to choose 
        only among demonstration providers.  After initially choosing a 
        provider, the recipient is allowed to change that choice only at 
        specified times as allowed by the commissioner.  If a 
        demonstration provider ends participation in the project for any 
        reason, a recipient enrolled with that provider must select a 
        new provider but may change providers without cause once more 
        within the first 60 days after enrollment with the second 
        provider. 
           Sec. 92.  Minnesota Statutes 1994, section 256B.69, is 
        amended by adding a subdivision to read: 
           Subd. 4a.  [REQUIREMENTS OF REQUEST FOR PROPOSAL.] In 
        implementing the limitation of choice for persons eligible for 
        medical assistance according to section 256B.055, subdivision 
        12, hereinafter referred to as TEFRA recipients, the 
        commissioner shall comply with the request for proposal process 
        applicable to the prepaid medical assistance program.  
        Notwithstanding any provision to the contrary, the commissioner 
        shall include the following in the request for proposal issued 
        to health plans for purposes of covering TEFRA recipients: 
           (1) evidence that eligibility criteria for personal care 
        assistant services have been developed and implemented with 
        respect to TEFRA recipients; 
           (2) a complete and detailed description of the benefits the 
        health plan is responsible for providing to the TEFRA 
        recipients; 
           (3) identification of the circumstances under which and the 
        point at which the health plan covering the TEFRA recipient 
        pursuant to this section is responsible for the costs of and 
        delivery of benefits to the TEFRA recipient.  The purpose of 
        this information is to facilitate coordination of benefits with 
        private health plans, including self-insured employers who are 
        covering the TEFRA recipients.  The point at which and 
        circumstances under which the health plan is responsible must be 
        identified and developed so as to be applied consistently to all 
        TEFRA recipients; 
           (4) statistical information including the following: 
           (i) how many TEFRA recipients will be enrolled; 
           (ii) historical cost and utilization information, by type 
        of service and diagnosis or condition, and any other data or 
        statistics used in developing the proposed rate of payment to 
        the health plan; 
           (iii) average cost per TEFRA recipient to the state; and 
           (iv) outlier information, including diagnosis categories, 
        cost, and the number of TEFRA recipients; and 
           (5) actuarially valid rates of payment proposed to be paid 
        to the health plans. 
           Sec. 93.  Minnesota Statutes 1994, section 256B.69, 
        subdivision 5, is amended to read: 
           Subd. 5.  [PROSPECTIVE PER CAPITA PAYMENT.] The 
        commissioner shall establish the method and amount of payments 
        for services.  The commissioner shall annually contract with 
        demonstration providers to provide services consistent with 
        these established methods and amounts for payment.  
        Notwithstanding section 62D.02, subdivision 1, payments for 
        services rendered as part of the project may be made to 
        providers that are not licensed health maintenance organizations 
        on a risk-based, prepaid capitation basis.  
           If allowed by the commissioner, a demonstration provider 
        may contract with an insurer, health care provider, nonprofit 
        health service plan corporation, or the commissioner, to provide 
        insurance or similar protection against the cost of care 
        provided by the demonstration provider or to provide coverage 
        against the risks incurred by demonstration providers under this 
        section.  The recipients enrolled with a demonstration provider 
        are a permissible group under group insurance laws and chapter 
        62C, the Nonprofit Health Service Plan Corporations Act.  Under 
        this type of contract, the insurer or corporation may make 
        benefit payments to a demonstration provider for services 
        rendered or to be rendered to a recipient.  Any insurer or 
        nonprofit health service plan corporation licensed to do 
        business in this state is authorized to provide this insurance 
        or similar protection.  
           Payments to providers participating in the project are 
        exempt from the requirements of sections 256.966 and 256B.03, 
        subdivision 2.  The commissioner shall complete development of 
        capitation rates for payments before delivery of services under 
        this section is begun.  For payments made during calendar year 
        1990 and later years, the commissioner shall contract with an 
        independent actuary to establish prepayment rates. 
           By January 15, 1996, the commissioner shall report to the 
        legislature on the methodology used to allocate to participating 
        counties available administrative reimbursement for advocacy and 
        enrollment costs.  The report shall reflect the commissioner's 
        judgment as to the adequacy of the funds made available and of 
        the methodology for equitable distribution of the funds.  The 
        commissioner must involve participating counties in the 
        development of the report. 
           Sec. 94.  Minnesota Statutes 1994, section 256B.69, is 
        amended by adding a subdivision to read: 
           Subd. 5a.  [MANAGED CARE CONTRACTS.] Managed care contracts 
        under this section, section 256.9363, and section 256D.03, shall 
        be entered into or renewed on a calendar year basis beginning 
        January 1, 1996.  Managed care contracts which were in effect on 
        June 30, 1995, and set to renew on July 1, 1995, shall be 
        renewed for the period July 1, 1995 through December 31, 1995 at 
        the same terms that were in effect on June 30, 1995. 
           Sec. 95.  Minnesota Statutes 1994, section 256B.69, is 
        amended by adding a subdivision to read: 
           Subd. 5b.  [PROSPECTIVE REIMBURSEMENT RATES.] For prepaid 
        medical assistance and general assistance medical care program 
        contract rates effective January 1, 1996, through December 31, 
        1996, capitation rates for nonmetropolitan counties shall on a 
        weighted average be no less than 85 percent of the capitation 
        rates for metropolitan counties, excluding Hennepin county. 
           Sec. 96.  Minnesota Statutes 1994, section 256B.69, 
        subdivision 6, is amended to read: 
           Subd. 6.  [SERVICE DELIVERY.] (a) Each demonstration 
        provider shall be responsible for the health care coordination 
        for eligible individuals.  Demonstration providers:  
           (1) shall authorize and arrange for the provision of all 
        needed health services including but not limited to the full 
        range of services listed in sections 256B.02, subdivision 8, and 
        256B.0625 and for children eligible for medical assistance under 
        section 256B.055, subdivision 12, home care services and 
        personal care assistant services in order to ensure appropriate 
        health care is delivered to enrollees; 
           (2) shall accept the prospective, per capita payment from 
        the commissioner in return for the provision of comprehensive 
        and coordinated health care services for eligible individuals 
        enrolled in the program; 
           (3) may contract with other health care and social service 
        practitioners to provide services to enrollees; and 
           (4) shall institute recipient grievance procedures 
        according to the method established by the project, utilizing 
        applicable requirements of chapter 62D.  Disputes not resolved 
        through this process shall be appealable to the commissioner as 
        provided in subdivision 11.  
           (b) Demonstration providers must comply with the standards 
        for claims settlement under section 72A.201, subdivisions 4, 5, 
        7, and 8, when contracting with other health care and social 
        service practitioners to provide services to enrollees.  A 
        demonstration provider must pay a clean claim, as defined in 
        Code of Federal Regulations, title 42, section 447.45(b), within 
        30 business days of the date of acceptance of the claim.  
           Sec. 97.  Minnesota Statutes 1994, section 256B.69, 
        subdivision 9, is amended to read: 
           Subd. 9.  [REPORTING.] Each demonstration provider shall 
        submit information as required by the commissioner, including 
        data required for assessing client satisfaction, quality of 
        care, cost, and utilization of services for purposes of project 
        evaluation.  The commissioner shall also develop methods of data 
        collection from county advocacy activities in order to provide 
        aggregate enrollee information on encounters and outcomes to 
        determine access and quality assurance.  Required information 
        shall be specified before the commissioner contracts with a 
        demonstration provider. 
           Sec. 98.  Minnesota Statutes 1994, section 256B.69, is 
        amended by adding a subdivision to read: 
           Subd. 18.  [SERVICES PENDING APPEAL.] If the recipient 
        appeals in writing to the state agency on or before the tenth 
        day after the decision of the prepaid health plan to reduce, 
        suspend, or terminate services which the recipient had been 
        receiving, and the treating physician or another plan physician 
        orders the services to be continued at the previous level, the 
        prepaid health plan must continue to provide services at a level 
        equal to the level ordered by the plan's physician until the 
        state agency renders its decision. 
           Sec. 99.  Minnesota Statutes 1994, section 256B.69, is 
        amended by adding a subdivision to read: 
           Subd. 19.  [LIMITATION ON REIMBURSEMENT TO PROVIDERS NOT 
        AFFILIATED WITH A PREPAID HEALTH PLAN.] A prepaid health plan 
        may limit any reimbursement it may be required to pay to 
        providers not employed by or under contract with the prepaid 
        health plan to the medical assistance rates for medical 
        assistance enrollees, and the general assistance medical care 
        rates for general assistance medical care enrollees, paid by the 
        commissioner of human services to providers for services to 
        recipients not enrolled in a prepaid health plan. 
           Sec. 100.  Minnesota Statutes 1994, section 256B.69, is 
        amended by adding a subdivision to read: 
           Subd. 20.  [OMBUDSPERSON.] The commissioner shall designate 
        an ombudsperson to advocate for persons required to enroll in 
        prepaid health plans under this section.  The ombudsperson shall 
        advocate for recipients enrolled in prepaid health plans through 
        complaint and appeal procedures and ensure that necessary 
        medical services are provided either by the prepaid health plan 
        directly or by referral to appropriate social services.  At the 
        time of enrollment in a prepaid health plan, the local agency 
        shall inform recipients about the ombudsperson program and their 
        right to a resolution of a complaint by the prepaid health plan 
        if they experience a problem with the plan or its providers. 
           Sec. 101.  Minnesota Statutes 1994, section 256B.69, is 
        amended by adding a subdivision to read: 
           Subd. 21.  [PREPAYMENT COORDINATOR.] The local agency shall 
        designate a prepayment coordinator to assist the state agency in 
        implementing this section and section 256D.03, subdivision 4.  
        Assistance must include educating recipients about available 
        health care options, enrolling recipients under subdivision 5, 
        providing necessary eligibility and enrollment information to 
        health plans and the state agency, and coordinating complaints 
        and appeals with the ombudsman established in subdivision 18. 
           Sec. 102.  Minnesota Statutes 1994, section 256B.69, is 
        amended by adding a subdivision to read: 
           Subd. 22.  [IMPACT ON PUBLIC OR TEACHING HOSPITALS AND 
        COMMUNITY CLINICS.] (a) Before implementing prepaid programs in 
        counties with a county operated or affiliated public teaching 
        hospital or a hospital or clinic operated by the University of 
        Minnesota, the commissioner shall consider the risks the prepaid 
        program creates for the hospital and allow the county or 
        hospital the opportunity to participate in the program, provided 
        the terms of participation in the program are competitive with 
        the terms of other participants. 
           (b) Prepaid health plans serving counties with a nonprofit 
        community clinic or community health services agency must 
        contract with the clinic or agency to provide services to 
        clients who choose to receive services from the clinic or 
        agency, if the clinic or agency agrees to payment rates that are 
        competitive with rates paid to other health plan providers for 
        the same or similar services. 
           Sec. 103.  [256B.691] [RISK-BASED TRANSPORTATION PAYMENTS.] 
           Any contract with a prepaid health plan under the medical 
        assistance, general assistance medical care, or MinnesotaCare 
        program that requires the health plan to cover transportation 
        services for obtaining medical care for eligible individuals who 
        are ambulatory must provide for payment for those services on a 
        risk basis. 
           Sec. 104.  Minnesota Statutes 1994, section 256D.03, 
        subdivision 3, is amended to read: 
           Subd. 3.  [GENERAL ASSISTANCE MEDICAL CARE; ELIGIBILITY.] 
        (a) General assistance medical care may be paid for any person 
        who is not eligible for medical assistance under chapter 256B, 
        including eligibility for medical assistance based on a 
        spenddown of excess income according to section 256B.056, 
        subdivision 5, and: 
           (1) who is receiving assistance under section 256D.05 or 
        256D.051, or who is having a payment made on the person's behalf 
        under sections 256I.01 to 256I.06; or 
           (2)(i) who is a resident of Minnesota; and whose equity in 
        assets is not in excess of $1,000 per assistance unit.  No asset 
        test shall be applied to children and their parents living in 
        the same household.  Exempt assets, the reduction of excess 
        assets, and the waiver of excess assets must conform to the 
        medical assistance program in chapter 256B, with the following 
        exception:  the maximum amount of undistributed funds in a trust 
        that could be distributed to or on behalf of the beneficiary by 
        the trustee, assuming the full exercise of the trustee's 
        discretion under the terms of the trust, must be applied toward 
        the asset maximum; and 
           (ii) who has countable income not in excess of the 
        assistance standards established in section 256B.056, 
        subdivision 4, or whose excess income is spent down pursuant to 
        section 256B.056, subdivision 5, using a six-month budget 
        period, except that a one-month budget period must be used for 
        recipients residing in a long-term care facility.  The method 
        for calculating earned income disregards and deductions for a 
        person who resides with a dependent child under age 21 shall be 
        as specified in section 256.74, subdivision 1.  However, if a 
        disregard of $30 and one-third of the remainder described in 
        section 256.74, subdivision 1, clause (4), has been applied to 
        the wage earner's income, the disregard shall not be applied 
        again until the wage earner's income has not been considered in 
        an eligibility determination for general assistance, general 
        assistance medical care, medical assistance, or aid to families 
        with dependent children for 12 consecutive months.  The earned 
        income and work expense deductions for a person who does not 
        reside with a dependent child under age 21 shall be the same as 
        the method used to determine eligibility for a person under 
        section 256D.06, subdivision 1, except the disregard of the 
        first $50 of earned income is not allowed; or 
           (3) who would be eligible for medical assistance except 
        that the person resides in a facility that is determined by the 
        commissioner or the federal health care financing administration 
        to be an institution for mental diseases. 
           (b) Eligibility is available for the month of application, 
        and for three months prior to application if the person was 
        eligible in those prior months.  A redetermination of 
        eligibility must occur every 12 months. 
           (c) General assistance medical care is not available for a 
        person in a correctional facility unless the person is detained 
        by law for less than one year in a county correctional or 
        detention facility as a person accused or convicted of a crime, 
        or admitted as an inpatient to a hospital on a criminal hold 
        order, and the person is a recipient of general assistance 
        medical care at the time the person is detained by law or 
        admitted on a criminal hold order and as long as the person 
        continues to meet other eligibility requirements of this 
        subdivision.  
           (d) General assistance medical care is not available for 
        applicants or recipients who do not cooperate with the county 
        agency to meet the requirements of medical assistance. 
           (e) In determining the amount of assets of an individual, 
        there shall be included any asset or interest in an asset, 
        including an asset excluded under paragraph (a), that was given 
        away, sold, or disposed of for less than fair market value 
        within the 30 60 months preceding application for general 
        assistance medical care or during the period of eligibility.  
        Any transfer described in this paragraph shall be presumed to 
        have been for the purpose of establishing eligibility for 
        general assistance medical care, unless the individual furnishes 
        convincing evidence to establish that the transaction was 
        exclusively for another purpose.  For purposes of this 
        paragraph, the value of the asset or interest shall be the fair 
        market value at the time it was given away, sold, or disposed 
        of, less the amount of compensation received.  For any 
        uncompensated transfer, the number of months of ineligibility, 
        including partial months, shall be calculated by dividing the 
        uncompensated transfer amount by the average monthly per person 
        payment made by the medical assistance program to skilled 
        nursing facilities for the previous calendar year.  The 
        individual shall remain ineligible until this fixed period has 
        expired.  The period of ineligibility may exceed 30 months, and 
        a reapplication for benefits after 30 months from the date of 
        the transfer shall not result in eligibility unless and until 
        the period of ineligibility has expired.  The period of 
        ineligibility begins in the month the transfer was reported to 
        the county agency, or if the transfer was not reported, the 
        month in which the county agency discovered the transfer, 
        whichever comes first.  For applicants, the period of 
        ineligibility begins on the date of the first approved 
        application. 
           (f)(1) Beginning October 1, 1993, an undocumented alien or 
        a nonimmigrant is ineligible for general assistance medical care 
        other than emergency services.  For purposes of this 
        subdivision, a nonimmigrant is an individual in one or more of 
        the classes listed in United States Code, title 8, section 
        1101(a)(15), and an undocumented alien is an individual who 
        resides in the United States without the approval or 
        acquiescence of the Immigration and Naturalization Service. 
           (2) This subdivision does not apply to a child under age 
        18, to a Cuban or Haitian entrant as defined in Public Law 
        Number 96-422, section 501(e)(1) or (2)(a), or to an alien who 
        is aged, blind, or disabled as defined in United States Code, 
        title 42, section 1382c(a)(1). 
           (3) For purposes of paragraph (f), "emergency services" has 
        the meaning given in Code of Federal Regulations, title 42, 
        section 440.255(b)(1), except that it also means services 
        rendered because of suspected or actual pesticide poisoning. 
           Sec. 105.  Minnesota Statutes 1994, section 256D.03, 
        subdivision 3b, is amended to read: 
           Subd. 3b.  [COOPERATION.] General assistance or general 
        assistance medical care applicants and recipients must cooperate 
        with the state and local agency to identify potentially liable 
        third-party payors and assist the state in obtaining third-party 
        payments.  Cooperation includes identifying any third party who 
        may be liable for care and services provided under this chapter 
        to the applicant, recipient, or any other family member for whom 
        application is made and providing relevant information to assist 
        the state in pursuing a potentially liable third party.  General 
        assistance medical care applicants and recipients must cooperate 
        by providing information about any group health plan in which 
        they may be eligible to enroll.  They must cooperate with the 
        state and local agency in determining if the plan is 
        cost-effective.  If the plan is determined cost-effective and 
        the premium will be paid by the state or local agency or is 
        available at no cost to the person, they must enroll or remain 
        enrolled in the group health plan.  Cost-effective insurance 
        premiums approved for payment by the state agency and paid by 
        the local agency are eligible for reimbursement according to 
        subdivision 6.  
           Sec. 106.  Minnesota Statutes 1994, section 256D.03, 
        subdivision 4, is amended to read: 
           Subd. 4.  [GENERAL ASSISTANCE MEDICAL CARE; SERVICES.] (a) 
        For a person who is eligible under subdivision 3, paragraph (a), 
        clause (3), general assistance medical care covers: 
           (1) inpatient hospital services; 
           (2) outpatient hospital services; 
           (3) services provided by Medicare certified rehabilitation 
        agencies; 
           (4) prescription drugs and other products recommended 
        through the process established in section 256B.0625, 
        subdivision 13; 
           (5) equipment necessary to administer insulin and 
        diagnostic supplies and equipment for diabetics to monitor blood 
        sugar level; 
           (6) eyeglasses and eye examinations provided by a physician 
        or optometrist; 
           (7) hearing aids; 
           (8) prosthetic devices; 
           (9) laboratory and X-ray services; 
           (10) physician's services; 
           (11) medical transportation; 
           (12) chiropractic services as covered under the medical 
        assistance program; 
           (13) podiatric services; 
           (14) dental services; 
           (15) outpatient services provided by a mental health center 
        or clinic that is under contract with the county board and is 
        established under section 245.62; 
           (16) day treatment services for mental illness provided 
        under contract with the county board; 
           (17) prescribed medications for persons who have been 
        diagnosed as mentally ill as necessary to prevent more 
        restrictive institutionalization; 
           (18) case management services for a person with serious and 
        persistent mental illness who would be eligible for medical 
        assistance except that the person resides in an institution for 
        mental diseases; 
           (19) psychological services, medical supplies and 
        equipment, and Medicare premiums, coinsurance and deductible 
        payments; 
           (20) medical equipment not specifically listed in this 
        paragraph when the use of the equipment will prevent the need 
        for costlier services that are reimbursable under this 
        subdivision; and 
           (21) services performed by a certified pediatric nurse 
        practitioner, a certified family nurse practitioner, a certified 
        adult nurse practitioner, a certified obstetric/gynecological 
        nurse practitioner, or a certified geriatric nurse practitioner 
        in independent practice, if the services are otherwise covered 
        under this chapter as a physician service, and if the service is 
        within the scope of practice of the nurse practitioner's license 
        as a registered nurse, as defined in section 148.171; and 
           (22) services of a certified public health nurse or a 
        registered nurse practicing in a public health nursing clinic 
        that is a department of, or that operates under the direct 
        authority of, a unit of government, if the service is within the 
        scope of practice of the public health nurse's license as a 
        registered nurse, as defined in section 148.171.  
           (b) For a recipient who is eligible under subdivision 3, 
        paragraph (a), clause (1) or (2), general assistance medical 
        care covers the services listed in paragraph (a) with the 
        exception of special transportation services. 
           (c) In order to contain costs, the commissioner of human 
        services shall select vendors of medical care who can provide 
        the most economical care consistent with high medical standards 
        and shall where possible contract with organizations on a 
        prepaid capitation basis to provide these services.  The 
        commissioner shall consider proposals by counties and vendors 
        for prepaid health plans, competitive bidding programs, block 
        grants, or other vendor payment mechanisms designed to provide 
        services in an economical manner or to control utilization, with 
        safeguards to ensure that necessary services are provided.  
        Before implementing prepaid programs in counties with a county 
        operated or affiliated public teaching hospital or a hospital or 
        clinic operated by the University of Minnesota, the commissioner 
        shall consider the risks the prepaid program creates for the 
        hospital and allow the county or hospital the opportunity to 
        participate in the program in a manner that reflects the risk of 
        adverse selection and the nature of the patients served by the 
        hospital, provided the terms of participation in the program are 
        competitive with the terms of other participants considering the 
        nature of the population served.  Payment for services provided 
        pursuant to this subdivision shall be as provided to medical 
        assistance vendors of these services under sections 256B.02, 
        subdivision 8, and 256B.0625, and for contracts beginning on or 
        after July 1, 1995, shall be discounted ten percent from 
        comparable fee for service payments.  For payments made during 
        fiscal year 1990 and later years, the commissioner shall consult 
        with an independent actuary in establishing prepayment rates, 
        but shall retain final control over the rate methodology.  
        Notwithstanding the provisions of subdivision 3, an individual 
        who becomes ineligible for general assistance medical care 
        because of failure to submit income reports or recertification 
        forms in a timely manner, shall remain enrolled in the prepaid 
        health plan and shall remain eligible for general assistance 
        medical care coverage through the last day of the month in which 
        the enrollee became ineligible for general assistance medical 
        care. 
           (d) The commissioner of human services may reduce payments 
        provided under sections 256D.01 to 256D.21 and 261.23 in order 
        to remain within the amount appropriated for general assistance 
        medical care, within the following restrictions. 
           For the period July 1, 1985 to December 31, 1985, 
        reductions below the cost per service unit allowable under 
        section 256.966, are permitted only as follows:  payments for 
        inpatient and outpatient hospital care provided in response to a 
        primary diagnosis of chemical dependency or mental illness may 
        be reduced no more than 30 percent; payments for all other 
        inpatient hospital care may be reduced no more than 20 percent.  
        Reductions below the payments allowable under general assistance 
        medical care for the remaining general assistance medical care 
        services allowable under this subdivision may be reduced no more 
        than ten percent. 
           For the period January 1, 1986 to December 31, 1986, 
        reductions below the cost per service unit allowable under 
        section 256.966 are permitted only as follows:  payments for 
        inpatient and outpatient hospital care provided in response to a 
        primary diagnosis of chemical dependency or mental illness may 
        be reduced no more than 20 percent; payments for all other 
        inpatient hospital care may be reduced no more than 15 percent.  
        Reductions below the payments allowable under general assistance 
        medical care for the remaining general assistance medical care 
        services allowable under this subdivision may be reduced no more 
        than five percent. 
           For the period January 1, 1987 to June 30, 1987, reductions 
        below the cost per service unit allowable under section 256.966 
        are permitted only as follows:  payments for inpatient and 
        outpatient hospital care provided in response to a primary 
        diagnosis of chemical dependency or mental illness may be 
        reduced no more than 15 percent; payments for all other 
        inpatient hospital care may be reduced no more than ten 
        percent.  Reductions below the payments allowable under medical 
        assistance for the remaining general assistance medical care 
        services allowable under this subdivision may be reduced no more 
        than five percent.  
           For the period July 1, 1987 to June 30, 1988, reductions 
        below the cost per service unit allowable under section 256.966 
        are permitted only as follows:  payments for inpatient and 
        outpatient hospital care provided in response to a primary 
        diagnosis of chemical dependency or mental illness may be 
        reduced no more than 15 percent; payments for all other 
        inpatient hospital care may be reduced no more than five percent.
        Reductions below the payments allowable under medical assistance 
        for the remaining general assistance medical care services 
        allowable under this subdivision may be reduced no more than 
        five percent. 
           For the period July 1, 1988 to June 30, 1989, reductions 
        below the cost per service unit allowable under section 256.966 
        are permitted only as follows:  payments for inpatient and 
        outpatient hospital care provided in response to a primary 
        diagnosis of chemical dependency or mental illness may be 
        reduced no more than 15 percent; payments for all other 
        inpatient hospital care may not be reduced.  Reductions below 
        the payments allowable under medical assistance for the 
        remaining general assistance medical care services allowable 
        under this subdivision may be reduced no more than five percent. 
           There shall be no copayment required of any recipient of 
        benefits for any services provided under this subdivision.  A 
        hospital receiving a reduced payment as a result of this section 
        may apply the unpaid balance toward satisfaction of the 
        hospital's bad debts. 
           (e) Any county may, from its own resources, provide medical 
        payments for which state payments are not made. 
           (f) Chemical dependency services that are reimbursed under 
        chapter 254B must not be reimbursed under general assistance 
        medical care. 
           (g) The maximum payment for new vendors enrolled in the 
        general assistance medical care program after the base year 
        shall be determined from the average usual and customary charge 
        of the same vendor type enrolled in the base year. 
           (h) The conditions of payment for services under this 
        subdivision are the same as the conditions specified in rules 
        adopted under chapter 256B governing the medical assistance 
        program, unless otherwise provided by statute or rule. 
           Sec. 107.  Minnesota Statutes 1994, section 256D.425, is 
        amended by adding a subdivision to read: 
           Subd. 4.  [COOPERATION.] To be eligible for the Minnesota 
        supplemental aid program, applicants and recipients must 
        cooperate with the state and local agency to identify 
        potentially liable third-party payors and assist the state in 
        obtaining third-party payments.  Cooperation includes 
        identifying any third party who may be liable for benefits 
        provided under this chapter to the applicant, recipient, or any 
        other family member for whom application is made, and providing 
        relevant information to assist the state in pursuing a 
        potentially liable third party. 
           Sec. 108.  Minnesota Statutes 1994, section 501B.89, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TRUSTS CONTAINING LIMITATIONS LINKED TO 
        ELIGIBILITY FOR PUBLIC ASSISTANCE.] (a) Except as allowed by 
        subdivision 2 or 3, a provision in a trust that provides for the 
        suspension, termination, limitation, or diversion of the 
        principal, income, or beneficial interest of a beneficiary if 
        the beneficiary applies for, is determined eligible for, or 
        receives public assistance or benefits under a public health 
        care program is unenforceable as against the public policy of 
        this state, without regard to the irrevocability of the trust or 
        the purpose for which the trust was created. 
           (b) This subdivision applies to trust provisions created 
        after July 1, 1992.  For purposes of this section, a trust 
        provision is created on the date of execution of the first 
        instrument that contains the provision, even though the trust 
        provision is later amended or reformed or the trust is not 
        funded until a later date.  
           Sec. 109.  Minnesota Statutes 1994, section 501B.89, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [SUPPLEMENTAL NEEDS TRUSTS UNDER FEDERAL LAW.] A 
        trust created on or after August 11, 1993, which qualifies as a 
        supplemental needs trust for a person with a disability under 
        United States Code, title 42, section 1396p(c)(2)(B)(iv) or 
        1396p(d), as amended by section 13611(b) of the Omnibus Budget 
        Reconciliation Act of 1993, Public Law Number 103-66, commonly 
        known as OBRA 1993, is enforceable, and the courts of this state 
        may authorize creation and funding of a trust which so qualifies.
           Sec. 110.  [TEFRA FEE STUDY.] 
           The commissioner of human services shall study and report 
        to the legislature by January 15, 1996, recommendations to 
        modify the fee structure for the parents of children eligible 
        for medical assistance under Minnesota Statutes, section 
        256B.055, subdivision 12.  The report shall include a comparison 
        of the fee schedule for these parents with fee schedules in the 
        social services, MinnesotaCare, and sliding fee child care 
        programs.  The commissioner shall appoint an advisory committee 
        to assist with the study which must include parents, advocates, 
        and other interested persons. 
           Sec. 111.  [IMPLEMENTATION PLAN FOR HOME CARE SERVICES.] 
           The commissioner of human services, in conjunction with the 
        commissioner of education, shall require the provision of the 
        following types of home care services equivalent to personal 
        care assistant services through waivered programs and managed 
        care programs beginning July 1, 1996:  
           (1) school-based after school services; and 
           (2) vacation and summer-only services. 
        The commissioners shall define program participants, structure, 
        and activities and shall recommend to the 1996 legislature any 
        changes in licensing requirements or other law changes necessary 
        to implement the program.  The commissioner of human services 
        shall require participants in waivered programs and managed care 
        programs to receive services through these options unless the 
        requirement would create an undue hardship for recipients.  
           Sec. 112.  [WAIVER.] 
           The commissioner of human services shall seek a federal 
        waiver to implement the 60-month period for transfers of assets 
        under section 256B.0595, subdivision 1, paragraph (g).  
           Sec. 113.  [ADVISORY TASK FORCE TO STANDARDIZE SUPPORTING 
        DOCUMENTATION FOR PRIOR AUTHORIZATION.] 
           Subdivision 1.  [COMPOSITION OF TASK FORCE.] A six-member 
        advisory task force on prior authorization for physical therapy, 
        occupational therapy, speech therapy, or related services 
        supporting documentation shall be established.  The task force 
        shall be comprised of one licensed physiatrist, one licensed 
        physical therapist, one licensed occupational therapist, one 
        licensed speech therapist, one licensed rehabilitation nurse, 
        and one consumer representative.  All licensed task force 
        members must be actively engaged in the practice of their 
        profession in Minnesota.  The members of the task force shall be 
        appointed by the commissioner of human services.  No more than 
        three members may be of one gender.  All licensed professional 
        members shall be selected from lists submitted to the 
        commissioner by the appropriate professional associations.  Task 
        force members who are licensed professionals shall not be 
        compensated for their service.  The consumer representative 
        member must be compensated for time spent on task force 
        activities as specified in Minnesota Statutes, section 15.059, 
        subdivision 3.  The task force shall expire on December 31, 1996.
           Subd. 2.  [DUTIES OF COMMISSIONER AND TASK FORCE.] The task 
        force shall study the lists of items, specified in the issue of 
        the medical assistance and general assistance medical care 
        provider manual which is in effect as of the effective date of 
        this act, that are required to be submitted by each category of 
        provider along with the provider's request for prior 
        authorization.  The task force shall recommend to the 
        commissioner any amendments or refinements needed to clarify the 
        lists.  The commissioner shall use the recommendations of the 
        task force to develop standardized documentation which a 
        provider must submit with a prior authorization request.  If the 
        commissioner intends to depart from the recommendations of the 
        task force, the commissioner shall inform the task force of the 
        intended departure, provide a written explanation of the reasons 
        for the departure, and give the task force an opportunity to 
        comment on the intended departure.  
           Sec. 114.  [MEDICAL ASSISTANCE ASSET TRANSFER AND 
        ELIGIBILITY REQUIREMENTS.] 
           The commissioner of human services shall investigate and 
        pursue all viable options for tightening the medical assistance 
        asset transfer and eligibility requirements to restore and 
        preserve the function of the medical assistance program as a 
        safety net program for low-income Minnesotans who cannot afford 
        to meet their medical needs with their own resources.  Among 
        other actions, the commissioner shall aggressively pursue 
        waivers of federal requirements to strengthen restrictions on 
        transfers of assets for the purposes of gaining eligibility for 
        medical assistance. 
           Sec. 115.  [CONTINUATION OF PILOT PROJECTS.] 
           The alternative care pilot projects authorized in Laws 
        1993, First Special Session chapter 1, article 5, section 133, 
        shall not expire on June 30, 1995, but shall continue until June 
        30, 1997, except that the three percent rate increases 
        authorized in Laws 1993, First Special Session chapter 1, 
        article 1, section 2, subdivision 4, shall be incorporated in 
        average monthly cost effective July 1, 1995.  The commissioner 
        shall allow additional counties at their option to implement the 
        alternative care program within the parameters established in 
        Laws 1993, First Special Session chapter 1, article 5, section 
        133.  If more than five counties exercise this option, the 
        commissioner may require counties to make this change on a 
        phased schedule if necessary in order to implement this 
        provision within the limit of available resources.  For newly 
        participating counties, the previous fiscal year shall be the 
        base year. 
           Sec. 116.  [RATE CONSOLIDATION PLAN.] 
           The commissioner of human services, in cooperation with 
        counties, shall prepare an implementation plan to consolidate 
        payment rates for alternative care services, elderly waiver 
        services, community alternatives for disabled individuals 
        services, traumatic brain injury services, and comparable 
        medical assistance services provided after June 30, 1996, that 
        establishes a statewide rate cap for each individual service 
        that is equal to the highest rate cap in any program for that 
        service.  The plan must be submitted to the legislature by 
        October 1, 1995. 
           Sec. 117.  [REIMBURSEMENT INCREASE.] 
           Notwithstanding statutory provisions to the contrary, the 
        commissioner of human services shall increase reimbursement 
        rates for the following by 1.5 percent on April 1, 1996: 
           (1) personal care services under Minnesota Statutes, 
        section 256B.0625, subdivision 19a; 
           (2) home and community-based services waiver for persons 
        with mental retardation and related conditions under Minnesota 
        Statutes, section 256B.501; 
           (3) adult residential program grants, under Minnesota 
        Rules, parts 9535.2000 to 9535.3000; 
           (4) adult and family community support grants, under 
        Minnesota Rules, parts 9535.1700 to 9535.1760; 
           (5) day training and habilitation services for adults with 
        mental retardation and related conditions under Minnesota 
        Statutes, sections 252.40 to 252.47; and 
           (6) semi-independent living services under Minnesota 
        Statutes, section 252.275. 
           Sec. 118.  [MANAGED CARE RATE SETTING METHODOLOGY.] 
           Subdivision 1.  [DEVELOPMENT.] The commissioner of human 
        services, in conjunction with the rate setting task force 
        established in subdivision 2, shall develop a prospective rate 
        setting methodology for implementation on January 1, 1998.  The 
        methodology must incorporate the public program risk adjustment 
        mechanism and, at a minimum, take into account the following 
        factors: 
           (1) costs of ensuring appropriate access to health care 
        services in all counties; 
           (2) costs of medical education, disproportionate share 
        payments, provisions for federally qualified health care 
        centers, rural health clinics, and other adjustors historically 
        provided for in the fee-for-service payments to specific 
        providers; 
           (3) health status; 
           (4) statistically valid regional utilization patterns as 
        well as population characteristics; 
           (5) the benefit set to be provided through the prepaid 
        medical assistance program; and 
           (6) utilization demands resulting from program changes and 
        newly created access to care. 
           Subd. 2.  [RATE SETTING TASK FORCE.] The commissioner shall 
        establish a task force consisting of representatives of health 
        plans, public program providers, disproportionate share and 
        teaching hospitals, independent actuaries, counties, and 
        consumers, to develop recommendations for a prospective rate 
        setting methodology with a risk adjustment mechanism to be 
        implemented by January 1, 1998.  The task force shall include at 
        least one representative of each regional coordinating board 
        established under section 62J.09.  Fifty percent of the 
        provider, county, and consumer members shall be from non-metro 
        counties.  The commissioner and task force shall jointly deliver 
        a progress report to the legislature by January 15, 1996, and a 
        final methodology proposal to the legislature by December 15, 
        1996. 
           Sec. 119.  [JOINT PURCHASER DEMONSTRATION PROJECTS.] 
           Subdivision 1.  [DEMONSTRATION PROJECTS.] A county or 
        counties may apply or the commissioner may solicit a 
        demonstration project or projects for a state-county partnership 
        as joint purchasers for services provided to eligible 
        individuals under medical assistance, general assistance medical 
        care, state health and social service grants, and county funds 
        for these or other participants.  Individual county staff who 
        are employed by a publicly owned health plan that intends to 
        respond to the request for proposal are prohibited from 
        reviewing, critiquing, or approving any proposals submitted in 
        accordance with this section.  As part of this project, the 
        commissioner, in cooperation with the county boards, must 
        explore options for various purchasing models including 
        contracting directly with providers or provider networks.  The 
        commissioner retains total responsibility for the medical 
        assistance and general assistance medical care contracts. 
           Subd. 2.  [OBJECTIVES.] The objective of the demonstration 
        project is to promote the development of local provider 
        networks; further define the county role and authorities in 
        providing publicly reimbursed health services, including 
        services reimbursed by the county; to provide better 
        coordination of services; and to identify costs and methods to 
        reduce cost-shifting. 
           Subd. 3.  [PARTICIPATING COUNTIES.] Carlton, Cook, 
        Koochiching, Lake, and Saint Louis counties shall be allowed to 
        participate in joint purchasing demonstration projects at the 
        option of their county boards.  Any county may also participate 
        in a joint purchasing demonstration project, which may include 
        county employees, at the option of the county board.  
           Sec. 120.  [DEMONSTRATION PROJECT TO TEST ALTERNATIVES TO 
        DELIVERY OF SERVICES TO HIGH-RISK MEDICAL ASSISTANCE 
        RECIPIENTS.] 
           Subdivision 1.  [AUTHORIZATION FOR DEMONSTRATION PROJECTS.] 
        Counties may propose demonstration projects to test alternatives 
        to the delivery of health services to high risk populations.  
        The commissioner of human services shall review and may approve 
        demonstration project proposals and shall seek federal waivers 
        as applicable for approved demonstration projects. 
           Subd. 2.  [PROGRAM DESIGN AND IMPLEMENTATION.] (a) The 
        demonstration projects shall be established jointly by the 
        commissioners and participating county boards to design and plan 
        an improved health services delivery system for high-risk 
        medical assistance recipients who also receive services under 
        other publicly funded health, human services, or corrections 
        programs.  In counties where prepaid medical assistance programs 
        have been implemented, health plan companies participating in 
        the prepaid program shall be included in the program design.  In 
        the proposal, the county must delineate exactly which 
        populations would be served and what enrollment procedures would 
        be used.  The projects must address one or more of the following:
           (1) provide an array of health and social services that are 
        better coordinated for persons and families now served by 
        multiple, uncoordinated programs; 
           (2) be based on purchasing strategies that improve access 
        and coordinate services without cost shifting; 
           (3) coordinate between provider networks or health plan 
        companies and the community health and human services 
        infrastructure through creative partnerships with local vendors; 
        and 
           (4) utilize existing categorical funding streams and 
        reimbursement sources in coordinated and creative ways. 
           (b) All projects must complete their planning phase and be 
        operational by June 30, 1997. 
           Subd. 3.  [PROGRAM EVALUATION.] Evaluation of each project 
        will be based on outcome evaluation criteria negotiated with 
        each project prior to implementation. 
           Subd. 4.  [NOTICE OF PROJECT DISCONTINUATION.] Each project 
        may be discontinued for any reason by the county board or the 
        commissioner of human services, after 90 days' written notice to 
        the other party. 
           Subd. 5.  [PLANNING FOR DEMONSTRATION PROJECTS.] Each local 
        plan for a demonstration project must be developed under the 
        direction of the county board, or multiple county boards acting 
        jointly, as the local health and human services authority.  The 
        planning process for each demonstration shall include, but not 
        be limited to, advocates, providers, and the departments of 
        health and human services.  
           Subd. 6.  [DUTIES OF COMMISSIONER.] (a) For purposes of the 
        demonstration projects, the commissioner of human services shall 
        facilitate coordination of funds or other resources as needed 
        and requested by each project.  These resources may include: 
        medical assistance, general assistance medical care, 
        MinnesotaCare, and other categorical state and federal funds if 
        requested by the county boards, and if the commissioner 
        determines this would be consistent with the state's overall 
        health care reform efforts. 
           (b) The commissioner shall consider the following criteria 
        in awarding start-up and implementation grants for the 
        demonstration projects: 
           (1) the ability of the proposed projects to accomplish the 
        objectives described in subdivision 2; 
           (2) the size of the target population to be served; and 
           (3) geographical distribution. 
           (c) The commissioner shall review overall status of the 
        projects at least every two years and recommend any legislative 
        changes needed by January 15 of each odd-numbered year. 
           (d) The county board may seek a waiver of administrative 
        procedural rules under Minnesota Statutes, section 465.797. 
           (e) The commissioner may exempt the participating counties 
        from state fiscal sanctions for noncompliance with requirements 
        in laws and rules which are incompatible with the implementation 
        of the demonstration project. 
           (f) The commissioner may award grants to a county board or 
        group of county boards to pay for start-up, implementation, and 
        evaluation costs of the demonstration project. 
           Subd. 7.  [DUTIES OF COUNTY BOARD.] The county board, or 
        other entity which is approved to administer a demonstration 
        project, shall: 
           (1) administer the project in a manner which is consistent 
        with the objectives described in subdivision 2 and the planning 
        process described in subdivision 5; 
           (2) ensure that no one is denied services for which they 
        would otherwise be eligible; and 
           (3) provide the commissioner of human services with timely 
        and pertinent information through the following methods: 
           (i) submission of community health services act, maternal 
        and child health act, and community social services act plans 
        and plan amendments; 
           (ii) submission of health and social services expenditure 
        and grant reconciliation reports, based on a coding format to be 
        determined by mutual agreement between the project's managing 
        entity and the commissioner; and 
           (iii) submission of data and participation in an evaluation 
        of the demonstration projects, to be designed cooperatively by 
        the commissioner and the projects. 
           Sec. 121.  [TASK FORCE FOR HOME CARE SERVICES.] 
           The commissioner shall appoint a home care services task 
        force to recommend changes to medical assistance home care 
        services as alternatives to the home care changes to take effect 
        July 1, 1996, Minnesota Statutes, sections 256B.0625, 
        subdivisions 6a, 7, and 19a; 256B.0627; and 256B.0628, which 
        will reduce projected growth for the 1996-1997 biennium to no 
        more than five percent over 1995 projected expenditures as 
        described in the November 1994 medical assistance forecast, 
        department of human services.  The recommendations shall include:
        proposals for independent delivery models for personal care 
        assistant services; county assessment, service plan, and care 
        plan development; coordination, including coordination with 
        mental health services; streamlining of assessment and reporting 
        processes to achieve administrative cost efficiencies; and 
        alternative ways to serve segments of this population with 
        needed services.  The task force shall be comprised of home care 
        services recipients, providers, advocates, staff from counties, 
        the departments of human services, health, finance, the attorney 
        general's office, in addition to the chairs of the health and 
        human services finance committees of both houses of the 
        legislature or their representatives.  The recommendations shall 
        be completed by December 1, 1995, except that the 
        recommendations relating to county assessment and streamlining 
        of assessment and reporting processes shall be completed by 
        October 1, 1995, and presented to the next session, including a 
        special session, of the Minnesota legislature.  
           By January 15, 1996, the commissioner of human services, 
        jointly with counties, shall develop a plan for presentation to 
        the legislature at their next session, including any special 
        session, to allow counties to assume the prior authorization for 
        home care services at the option of the county.  The plan must 
        provide participating counties with the funding, flexibility, 
        authority, and accountability to administer both the assessment 
        and prior authorization functions for medical assistance 
        reimbursement for services under section 256B.0627, subdivision 
        2. 
           The plan shall also make a recommendation for adequate 
        reimbursement of county administrative responsibilities of 
        assessment, case management and appeals activities.  In 
        developing the plan and recommendations, the commissioner of 
        human services shall involve the counties, consumers, and 
        providers and include the development of standards, criteria and 
        outcomes to foster local authority and flexibility, while 
        defining quality expectations, budgetary incentives and 
        sanctions, and promoting consistency. 
           Sec. 122.  [INSURANCE STUDY.] 
           The Minnesota health care commission shall report to the 
        legislature by January 15, 1996, recommendations to improve 
        coverage through private health plans, the Minnesota 
        comprehensive health association, and other public or private 
        programs for children and adults with disabilities. 
           Sec. 123.  [TEFRA MANAGED CARE ADVISORY COMMITTEE AND 
        PROGRESS REPORT.] 
           Subdivision 1.  [ADVISORY COMMITTEE.] The commissioner 
        shall appoint an advisory committee to assist with the 
        development of managed care for children eligible for medical 
        assistance under Minnesota Statutes, section 256B.055, 
        subdivision 12.  The advisory committee shall include 
        representatives of parents, advocates, health plan companies, 
        health care providers serving the children, counties, and other 
        other interested persons. 
           Subd. 2.  [PROGRESS REPORT.] The commission shall report to 
        the legislature by December 15, 1995, regarding progress toward 
        implementing managed care.  The report shall make 
        recommendations regarding the following:  any law changes needed 
        for effective implementation; how to coordinate with other 
        insurance coverage the families may have; how managed care plans 
        would operate as to varying coverage; what services would be 
        available, including any gaps under managed care plans; and 
        whether going to managed care results in cost savings to the 
        state.  The report shall also provide information by county and 
        major diagnoses of children found eligible and ineligible for 
        TEFRA, the services and amounts paid by the medical assistance 
        program, name of health insurance plan, family income, and total 
        number of TEFRA eligible children in each county. 
           Sec. 124.  [REPEALER.] 
           Minnesota Statutes 1994, sections 252.27, subdivision 2c; 
        and 256.969, subdivision 24, are repealed. 
           Minnesota Rules, part 9500.1452, subpart 2, item B, is 
        repealed. 
           Sec. 125.  [EFFECTIVE DATE.] 
           Subdivision 1.  Sections 79 and 80, the amendments to 
        section 256B.15, subdivisions 1a and 2, relating only to the age 
        of a medical assistance recipient for purposes of estate claims, 
        are effective for persons who are between the ages of 55 and 64 
        on or after July 1, 1995, for the total amount of medical 
        assistance rendered on or after July 1, 1995. 
           Subd. 2.  Sections 34 to 37, section 256B.0595, 
        subdivisions 1, 2, 3, and 4, are effective retroactive to August 
        11, 1993, except that portion amending subdivision 2, paragraph 
        (c), is effective retroactive to transfers of income or assets 
        made on or after September 1994. 
           Subd. 3.  Sections 28, 108, and 109, sections 256B.056, 
        subdivision 3b, and 501B.89, subdivisions 1 and 3, are effective 
        retroactive to August 11, 1993. 
           Subd. 4.  Sections 14, 49, 84, and 86, sections 256.9657, 
        subdivision 3, 256B.0625, subdivision 38, 256B.19, subdivision 
        1d, and 256B.431, subdivision 23, are effective the day 
        following final enactment. 
           Subd. 5.  Section 30, the amendment to section 256B.0575, 
        paragraph (a), clause (5), is effective retroactive to January 
        1, 1994. 
           Subd. 6.  Section 91, the amendment to section 256B.69, 
        subdivision 4, requiring children eligible for medical 
        assistance under section 256B.055, subdivision 12, to 
        participate in managed care, is effective July 1, 1996. 
           Subd. 7.  Section 96, the amendment to section 256B.69, 
        subdivision 6, expanding services under managed care to include 
        home care services and personal care assistant services for 
        certain recipients, is effective July 1, 1996. 
           Subd. 8.  Section 48, section 256B.0625, subdivision 19a, 
        is effective July 1, 1996. 
           Subd. 9.  Section 52, section 256B.0627, subdivision 1, 
        paragraph (c), is effective January 1, 1996; paragraph (d) is 
        effective January 1, 1996, except the deletions relating to 
        responsible party are effective July 1, 1996; and the stricken 
        paragraph (d), the deletion of the definition of responsible 
        party, is effective July 1, 1996. 
           Subd. 10.  Section 53, section 256B.0627, subdivision 2, 
        clause (6), is effective January 1, 1996. 
           Subd. 11.  Section 54, section 256B.0627, subdivision 4, 
        paragraph (a), is effective July 1, 1996; and paragraph (b), 
        clauses (2) and (3), are effective January 1, 1996; and the 
        stricken language in clause (1) and the stricken language in the 
        stricken clause (4), are effective July 1, 1996. 
           Subd. 12.  Section 55, section 256B.0627, subdivision 5, 
        paragraph (a), clause (2), is effective January 1, 1996; 
        paragraph (d) is effective January 1, 1996; paragraph (e), 
        clause (2)(i), the new language relating to the registered nurse 
        supervision is effective January 1, 1996; paragraph (e), clause 
        (2)(i)A, B, C, D, and E, are effective July 1, 1996; paragraph 
        (e), clause (2)(ii), is effective July 1, 1996; paragraph (e), 
        clause (2)(iii), the new language relating to county public 
        health nurse, is effective January 1, 1996, and the stricken 
        language relating to the seizure activity provision, is 
        effective July 1, 1996; paragraph (e), clause (2), the language 
        striking items (v) to (viii), is effective July 1, 1996; 
        paragraph (h), is effective January 1, 1996; and paragraph (i), 
        clause (2), the stricken language relating to the foster care 
        license holder, and the language in the stricken clause (3) 
        relating to the responsible party, is effective July 1, 1996. 
                                   ARTICLE 7 
                                 LONG-TERM CARE 
           Section 1.  Minnesota Statutes 1994, section 144.0723, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CLIENT REIMBURSEMENT CLASSIFICATIONS.] The 
        commissioner of health shall establish reimbursement 
        classifications based upon the assessment of each client in 
        intermediate care facilities for the mentally retarded conducted 
        after December 31, 1988 1992, under section 256B.501, 
        subdivision 3g, or under rules established by the commissioner 
        of human services under section 256B.501, subdivision 3j.  
        The reimbursement classifications established by the 
        commissioner must conform to the section 256B.501, subdivision 
        3g, and subsequent rules established by the commissioner of 
        human services to set payment rates for intermediate care 
        facilities for the mentally retarded beginning on or after 
        October 1, 1990. 
           Sec. 2.  Minnesota Statutes 1994, section 144.0723, 
        subdivision 2, is amended to read: 
           Subd. 2.  [NOTICE OF CLIENT REIMBURSEMENT CLASSIFICATION.] 
        The commissioner of health shall notify each client and 
        intermediate care facility for the mentally retarded in which 
        the client resides of the reimbursement classification 
        classifications established under subdivision 1 for each client 
        residing in the facility.  The notice must inform the 
        client intermediate care facility for the mentally retarded of 
        the classification classifications that was are assigned, the 
        opportunity to review the documentation supporting the 
        classification, the opportunity to obtain clarification from the 
        commissioner, and the opportunity to request a reconsideration 
        of the classification any classifications assigned.  The notice 
        of classification must be sent by first-class mail.  The 
        individual client notices may be sent to the client's 
        intermediate care facility for the mentally retarded for 
        distribution to the client.  The facility must distribute the 
        notice to the client's case manager and to the client or to the 
        client's representative.  This notice must be distributed within 
        three working days after the facility receives the notices from 
        the department.  For the purposes of this section, 
        "representative" includes the client's legal representative as 
        defined in Minnesota Rules, part 9525.0015, subpart 18, the 
        person authorized to pay the client's facility expenses, or any 
        other individual designated by the client. 
           Sec. 3.  Minnesota Statutes 1994, section 144.0723, 
        subdivision 3, is amended to read: 
           Subd. 3.  [REQUEST FOR RECONSIDERATION.] The client, 
        client's representative, or the intermediate care facility for 
        the mentally retarded may request that the commissioner 
        reconsider the assigned classification.  The request for 
        reconsideration must be submitted in writing to the commissioner 
        within 30 days after the receipt of the notice of client 
        classification.  The request for reconsideration must include 
        the name of the client, the name and address of the facility in 
        which the client resides, the reasons for the reconsideration, 
        the requested classification changes, and documentation 
        supporting the requested classification.  The documentation 
        accompanying the reconsideration request is limited to 
        documentation establishing that the needs of the client and 
        services provided to the client at the time of the assessment 
        resulting in the disputed classification justify a change of 
        classification. 
           Sec. 4.  Minnesota Statutes 1994, section 144.0723, 
        subdivision 4, is amended to read: 
           Subd. 4.  [ACCESS TO INFORMATION.] Annually, at the 
        interdisciplinary team meeting, the intermediate care facility 
        for the mentally retarded shall inform the client or the 
        client's representative and case manager of the client's most 
        recent classification as determined by the department of 
        health.  Upon written request, the intermediate care facility 
        for the mentally retarded must give the client's case manager, 
        the client, or the client's representative a copy of the 
        assessment form and the other documentation that was given to 
        the department to support the assessment findings.  The facility 
        shall also provide access to and a copy of other information 
        from the client's record that has been requested by or on behalf 
        of the client to support a client's reconsideration request.  A 
        copy of any requested material must be provided within three 
        working days after the facility receives a written request for 
        the information.  If the facility fails to provide the material 
        within this time, it is subject to the issuance of a correction 
        order and penalty assessment.  Notwithstanding this section, any 
        order issued by the commissioner under this subdivision must 
        require that the facility immediately comply with the request 
        for information and that as of the date the order is issued, the 
        facility shall forfeit to the state a $100 fine the first day of 
        noncompliance, and an increase in the $100 fine by $50 
        increments for each day the noncompliance continues. 
           Sec. 5.  Minnesota Statutes 1994, section 144.0723, 
        subdivision 6, is amended to read: 
           Subd. 6.  [RECONSIDERATION.] The commissioner's 
        reconsideration must be made by individuals not involved in 
        reviewing the assessment that established the disputed 
        classification.  The reconsideration must be based upon the 
        initial assessment and upon the information provided to the 
        commissioner under subdivisions subdivision 3 and 5.  If 
        necessary for evaluating the reconsideration request, the 
        commissioner may conduct on-site reviews.  At the commissioner's 
        discretion, the commissioner may review the reimbursement 
        classifications assigned to all clients in the facility.  Within 
        15 working days after receiving the request for reconsideration, 
        the commissioner shall affirm or modify the original client 
        classification.  The original classification must be modified if 
        the commissioner determines that the assessment resulting in the 
        classification did not accurately reflect the status of the 
        client at the time of the assessment.  The client and the 
        intermediate care facility for the mentally retarded shall be 
        notified within five working days after the decision is made.  
        The commissioner's decision under this subdivision is the final 
        administrative decision of the agency. 
           Sec. 6.  Minnesota Statutes 1994, section 144.56, is 
        amended by adding a subdivision to read: 
           Subd. 2b.  [BOARDING CARE HOMES.] The commissioner shall 
        not adopt or enforce any rule that limits a certified boarding 
        care home from providing nursing services in accordance with the 
        home's medicaid certification. 
           Sec. 7.  Minnesota Statutes 1994, section 144.562, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ELIGIBILITY FOR LICENSE CONDITION.] A hospital 
        is not eligible to receive a license condition for swing beds 
        unless (1) it either has a licensed bed capacity of less than 50 
        beds defined in the federal Medicare regulations, Code of 
        Federal Regulations, title 42, section 482.66, or it has a 
        licensed bed capacity of 50 beds or more and has swing beds that 
        were approved for Medicare reimbursement before May 1, 1985, or 
        it has a licensed bed capacity of less than 65 beds and, as of 
        the effective date, the available nursing homes within 50 miles 
        have had, in the aggregate, an average occupancy rates rate of 
        96 percent or higher in the past most recent two years as 
        documented on the statistical reports to the department of 
        health; and (2) it is located in a rural area as defined in the 
        federal Medicare regulations, Code of Federal Regulations, title 
        42, section 482.66; and (3) it agrees to utilize no more than 
        four hospital beds as swing beds at any one time, except that 
        the commissioner may approve the utilization of up to three 
        additional beds at the request of a hospital if.  Eligible 
        hospitals are allowed a total of 1,460 days of swing bed use per 
        year, provided that no more than ten hospital beds are used as 
        swing beds at any one time.  The commissioner of health must 
        approve swing bed use beyond 1,460 days as long as there are no 
        Medicare certified skilled nursing facility beds are available 
        within 25 miles of that hospital. 
           Sec. 8.  [144.6505] [SUBACUTE CARE WAIVERS.] 
           Subdivision 1.  [SUBACUTE CARE; WAIVER FROM STATE AND 
        FEDERAL RULES AND REGULATIONS.] The commissioners of health and 
        human services shall work with providers to examine state and 
        federal rules and regulations governing the provision of care in 
        nursing facilities and apply for federal waivers and pursue 
        state law changes to any impediments to the provision of 
        subacute care in skilled nursing facilities. 
           Subd. 2.  [DEFINITION OF SUBACUTE CARE.] (a) For the 
        purpose of this section, "subacute care" means comprehensive 
        inpatient care, as further defined in this subdivision, designed 
        for persons who: 
           (1) have or have had an acute illness or accident, or an 
        acute exacerbation of a chronic illness, and who require a 
        moderate level of service intensity; 
           (2) do not require, or no longer require, technologically 
        intensive diagnosis or management; 
           (3) have concurrent medical, nursing, and discharge and/or 
        nondischarge oriented rehabilitation objectives that are 
        expected to be achieved within a specified time; and 
           (4) require interdisciplinary management.  
           (b) Subacute care includes goal-oriented treatment rendered 
        immediately after, as an appropriate alternative to, acute 
        hospitalization with the goal of transitioning patients towards 
        increased independence or lower acuity level in a cost-effective 
        environment, to treat one or more specific active complex 
        medical conditions or to administer one or more technically 
        complex treatments, in the context of a patient's underlying 
        long-term conditions and overall situation. 
           (c) Subacute care does not generally depend heavily on high 
        technology monitoring or complex diagnostic procedures.  
           (d) Subacute care requires the coordinated services of an 
        interdisciplinary team including physicians, nurses, and other 
        relevant professional disciplines, who are trained and 
        knowledgeable to assess and manage these specific conditions and 
        perform the necessary procedures.  
           (e) Subacute care is provided as part of a specifically 
        defined program. 
           (f) Subacute care includes more intensive care than 
        traditional nursing facility care and less intensive care than 
        acute care and may be provided at a variety of sites, including 
        hospitals and skilled nursing facilities. 
           (g) Subacute care requires recurrent patient assessment on 
        a daily to weekly basis and review of the clinical course and 
        treatment plan for a limited time period ranging from several 
        days to several months, until the condition is stabilized or a 
        predetermined treatment course is completed. 
           Sec. 9.  Minnesota Statutes 1994, section 144A.071, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MORATORIUM.] The commissioner of health, in 
        coordination with the commissioner of human services, shall deny 
        each request for new licensed or certified nursing home or 
        certified boarding care beds except as provided in subdivision 3 
        or 4a, or section 144A.073.  "Certified bed" means a nursing 
        home bed or a boarding care bed certified by the commissioner of 
        health for the purposes of the medical assistance program, under 
        United States Code, title 42, sections 1396 et seq.  
           The commissioner of human services, in coordination with 
        the commissioner of health, shall deny any request to issue a 
        license under section 252.28 and chapter 245A to a nursing home 
        or boarding care home, if that license would result in an 
        increase in the medical assistance reimbursement amount.  
           In addition, the commissioner of health must not approve 
        any construction project whose cost exceeds $500,000, or 25 
        percent of the facility's appraised value, whichever is less, 
        unless: 
           (a) any construction costs exceeding the lesser of $500,000 
        or 25 percent of the facility's appraised value are not added to 
        the facility's appraised value and are not included in the 
        facility's payment rate for reimbursement under the medical 
        assistance program; or 
           (b) the project: 
           (1) has been approved through the process described in 
        section 144A.073; 
           (2) meets an exception in subdivision 3 or 4a; 
           (3) is necessary to correct violations of state or federal 
        law issued by the commissioner of health; 
           (4) is necessary to repair or replace a portion of the 
        facility that was destroyed damaged by fire, lightning, 
        groundshifts, or other such hazards, including environmental 
        hazards, provided that the provisions of subdivision 4a, clause 
        (a), are met; 
           (5) as of May 1, 1992, the facility has submitted to the 
        commissioner of health written documentation evidencing that the 
        facility meets the "commenced construction" definition as 
        specified in subdivision 1a, clause (d), or that substantial 
        steps have been taken prior to April 1, 1992, relating to the 
        construction project.  "Substantial steps" require that the 
        facility has made arrangements with outside parties relating to 
        the construction project and include the hiring of an architect 
        or construction firm, submission of preliminary plans to the 
        department of health or documentation from a financial 
        institution that financing arrangements for the construction 
        project have been made; or 
           (6) is being proposed by a licensed nursing facility that 
        is not certified to participate in the medical assistance 
        program and will not result in new licensed or certified beds. 
           Prior to the final plan approval of any construction 
        project, the commissioner of health shall be provided with an 
        itemized cost estimate for the project construction costs.  If a 
        construction project is anticipated to be completed in phases, 
        the total estimated cost of all phases of the project shall be 
        submitted to the commissioner and shall be considered as one 
        construction project.  Once the construction project is 
        completed and prior to the final clearance by the commissioner, 
        the total project construction costs for the construction 
        project shall be submitted to the commissioner.  If the final 
        project construction cost exceeds the dollar threshold in this 
        subdivision, the commissioner of human services shall not 
        recognize any of the project construction costs or the related 
        financing costs in excess of this threshold in establishing the 
        facility's property-related payment rate. 
           The dollar thresholds for construction projects are as 
        follows:  for construction projects other than those authorized 
        in clauses (1) to (6), the dollar threshold is $500,000 or 25 
        percent of appraised value, whichever is less.  For projects 
        authorized after July 1, 1993, under clause (1), the dollar 
        threshold is the cost estimate submitted with a proposal for an 
        exception under section 144A.073, plus inflation as calculated 
        according to section 256B.431, subdivision 3f, paragraph (a).  
        For projects authorized under clauses (2) to (4), the dollar 
        threshold is the itemized estimate project construction costs 
        submitted to the commissioner of health at the time of final 
        plan approval, plus inflation as calculated according to section 
        256B.431, subdivision 3f, paragraph (a). 
           The commissioner of health shall adopt emergency or 
        permanent rules to implement this section or to amend the 
        emergency rules for granting exceptions to the moratorium on 
        nursing homes under section 144A.073.  The authority to adopt 
        emergency rules continues to December 30, 1992. 
           Sec. 10.  Minnesota Statutes 1994, section 144A.071, 
        subdivision 3, is amended to read: 
           Subd. 3.  [EXCEPTIONS AUTHORIZING AN INCREASE IN BEDS.] The 
        commissioner of health, in coordination with the commissioner of 
        human services, may approve the addition of a new certified bed 
        or the addition of a new licensed nursing home bed, under the 
        following conditions:  
           (a) to license or certify a new bed in place of one 
        decertified after July 1, 1993, as long as the number of 
        certified plus newly certified or recertified beds does not 
        exceed the number of beds licensed or certified on July 1, 1993, 
        or to address an extreme hardship situation, in a particular 
        county that, together with all contiguous Minnesota counties, 
        has fewer nursing home beds per 1,000 elderly than the number 
        that is ten percent higher than the national average of nursing 
        home beds per 1,000 elderly individuals.  For the purposes of 
        this section, the national average of nursing home beds shall be 
        the most recent figure that can be supplied by the federal 
        health care financing administration and the number of elderly 
        in the county or the nation shall be determined by the most 
        recent federal census or the most recent estimate of the state 
        demographer as of July 1, of each year of persons age 65 and 
        older, whichever is the most recent at the time of the request 
        for replacement.  An extreme hardship situation can only be 
        found after the county documents the existence of unmet medical 
        needs that cannot be addressed by any other alternatives; 
           (b) to certify or license new beds in a new facility that 
        is to be operated by the commissioner of veterans affairs or 
        when the costs of constructing and operating the new beds are to 
        be reimbursed by the commissioner of veterans affairs or the 
        United States Veterans Administration; or 
           (c) to license or certify beds in a facility that has been 
        involuntarily delicensed or decertified for participation in the 
        medical assistance program, provided that an application for 
        relicensure or recertification is submitted to the commissioner 
        within 120 days after delicensure or decertification; or 
           (d) to certify two existing beds in a facility with 66 
        licensed beds on January 1, 1994, that had an average occupancy 
        rate of 98 percent or higher in both calendar years 1992 and 
        1993, and which began construction of four attached assisted 
        living units in April 1993. 
           Sec. 11.  Minnesota Statutes 1994, section 144A.071, 
        subdivision 4a, is amended to read: 
           Subd. 4a.  [EXCEPTIONS FOR REPLACEMENT BEDS.] It is in the 
        best interest of the state to ensure that nursing homes and 
        boarding care homes continue to meet the physical plant 
        licensing and certification requirements by permitting certain 
        construction projects.  Facilities should be maintained in 
        condition to satisfy the physical and emotional needs of 
        residents while allowing the state to maintain control over 
        nursing home expenditure growth. 
           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: 
           (a) to license or certify beds in a new facility 
        constructed to replace a facility or to make repairs in an 
        existing facility that was destroyed or damaged after June 30, 
        1987, by fire, lightning, or other hazard provided:  
           (i) destruction was not caused by the intentional act of or 
        at the direction of a controlling person of the facility; 
           (ii) at the time the facility was destroyed or damaged the 
        controlling persons of the facility maintained insurance 
        coverage for the type of hazard that occurred in an amount that 
        a reasonable person would conclude was adequate; 
           (iii) the net proceeds from an insurance settlement for the 
        damages caused by the hazard are applied to the cost of the new 
        facility or repairs; 
           (iv) the new facility is constructed on the same site as 
        the destroyed facility or on another site subject to the 
        restrictions in section 144A.073, subdivision 5; 
           (v) the number of licensed and certified beds in the new 
        facility does not exceed the number of licensed and certified 
        beds in the destroyed facility; and 
           (vi) the commissioner determines that the replacement beds 
        are needed to prevent an inadequate supply of beds. 
        Project construction costs incurred for repairs authorized under 
        this clause shall not be considered in the dollar threshold 
        amount defined in subdivision 2; 
           (b) to license or certify beds that are moved from one 
        location to another within a nursing home facility, provided the 
        total costs of remodeling performed in conjunction with the 
        relocation of beds does not exceed 25 percent of the appraised 
        value of the facility or $500,000, whichever is less; 
           (c) to license or certify beds in a project recommended for 
        approval under section 144A.073; 
           (d) to license or certify beds that are moved from an 
        existing state nursing home to a different state facility, 
        provided there is no net increase in the number of state nursing 
        home beds; 
           (e) to certify and license as nursing home beds boarding 
        care beds in a certified boarding care facility if the beds meet 
        the standards for nursing home licensure, or in a facility that 
        was granted an exception to the moratorium under section 
        144A.073, and if the cost of any remodeling of the facility does 
        not exceed 25 percent of the appraised value of the facility or 
        $500,000, whichever is less.  If boarding care beds are licensed 
        as nursing home beds, the number of boarding care beds in the 
        facility must not increase beyond the number remaining at the 
        time of the upgrade in licensure.  The provisions contained in 
        section 144A.073 regarding the upgrading of the facilities do 
        not apply to facilities that satisfy these requirements; 
           (f) to license and certify up to 40 beds transferred from 
        an existing facility owned and operated by the Amherst H. Wilder 
        Foundation in the city of St. Paul to a new unit at the same 
        location as the existing facility that will serve persons with 
        Alzheimer's disease and other related disorders.  The transfer 
        of beds may occur gradually or in stages, provided the total 
        number of beds transferred does not exceed 40.  At the time of 
        licensure and certification of a bed or beds in the new unit, 
        the commissioner of health shall delicense and decertify the 
        same number of beds in the existing facility.  As a condition of 
        receiving a license or certification under this clause, the 
        facility must make a written commitment to the commissioner of 
        human services that it will not seek to receive an increase in 
        its property-related payment rate as a result of the transfers 
        allowed under this paragraph; 
           (g) to license and certify nursing home beds to replace 
        currently licensed and certified boarding care beds which may be 
        located either in a remodeled or renovated boarding care or 
        nursing home facility or in a remodeled, renovated, newly 
        constructed, or replacement nursing home facility within the 
        identifiable complex of health care facilities in which the 
        currently licensed boarding care beds are presently located, 
        provided that the number of boarding care beds in the facility 
        or complex are decreased by the number to be licensed as nursing 
        home beds and further provided that, if the total costs of new 
        construction, replacement, remodeling, or renovation exceed ten 
        percent of the appraised value of the facility or $200,000, 
        whichever is less, the facility makes a written commitment to 
        the commissioner of human services that it will not seek to 
        receive an increase in its property-related payment rate by 
        reason of the new construction, replacement, remodeling, or 
        renovation.  The provisions contained in section 144A.073 
        regarding the upgrading of facilities do not apply to facilities 
        that satisfy these requirements; 
           (h) to license as a nursing home and certify as a nursing 
        facility a facility that is licensed as a boarding care facility 
        but not certified under the medical assistance program, but only 
        if the commissioner of human services certifies to the 
        commissioner of health that licensing the facility as a nursing 
        home and certifying the facility as a nursing facility will 
        result in a net annual savings to the state general fund of 
        $200,000 or more; 
           (i) to certify, after September 30, 1992, and prior to July 
        1, 1993, existing nursing home beds in a facility that was 
        licensed and in operation prior to January 1, 1992; 
           (j) to license and certify new nursing home beds to replace 
        beds in a facility condemned as part of an economic 
        redevelopment plan in a city of the first class, provided the 
        new facility is located within one mile of the site of the old 
        facility.  Operating and property costs for the new facility 
        must be determined and allowed under existing reimbursement 
        rules; 
           (k) to license and certify up to 20 new nursing home beds 
        in a community-operated hospital and attached convalescent and 
        nursing care facility with 40 beds on April 21, 1991, that 
        suspended operation of the hospital in April 1986.  The 
        commissioner of human services shall provide the facility with 
        the same per diem property-related payment rate for each 
        additional licensed and certified bed as it will receive for its 
        existing 40 beds; 
           (l) to license or certify beds in renovation, replacement, 
        or upgrading projects as defined in section 144A.073, 
        subdivision 1, so long as the cumulative total costs of the 
        facility's remodeling projects do not exceed 25 percent of the 
        appraised value of the facility or $500,000, whichever is less; 
           (m) to license and certify beds that are moved from one 
        location to another for the purposes of converting up to five 
        four-bed wards to single or double occupancy rooms in a nursing 
        home that, as of January 1, 1993, was county-owned and had a 
        licensed capacity of 115 beds; 
           (n) to allow a facility that on April 16, 1993, was a 
        106-bed licensed and certified nursing facility located in 
        Minneapolis to layaway all of its licensed and certified nursing 
        home beds.  These beds may be relicensed and recertified in a 
        newly-constructed teaching nursing home facility affiliated with 
        a teaching hospital upon approval by the legislature.  The 
        proposal must be developed in consultation with the interagency 
        committee on long-term care planning.  The beds on layaway 
        status shall have the same status as voluntarily delicensed and 
        decertified beds, except that beds on layaway status remain 
        subject to the surcharge in section 256.9657.  This layaway 
        provision expires July 1, 1995 1997; 
           (o) to allow a project which will be completed in 
        conjunction with an approved moratorium exception project for a 
        nursing home in southern Cass county and which is directly 
        related to that portion of the facility that must be repaired, 
        renovated, or replaced, to correct an emergency plumbing problem 
        for which a state correction order has been issued and which 
        must be corrected by August 31, 1993; 
           (p) to allow a facility that on April 16, 1993, was a 
        368-bed licensed and certified nursing facility located in 
        Minneapolis to layaway, upon 30 days prior written notice to the 
        commissioner, up to 30 of the facility's licensed and certified 
        beds by converting three-bed wards to single or double 
        occupancy.  Beds on layaway status shall have the same status as 
        voluntarily delicensed and decertified beds except that beds on 
        layaway status remain subject to the surcharge in section 
        256.9657, remain subject to the license application and renewal 
        fees under section 144A.07 and shall be subject to a $100 per 
        bed reactivation fee.  In addition, at any time within three 
        years of the effective date of the layaway, the beds on layaway 
        status may be: 
           (1) relicensed and recertified upon relocation and 
        reactivation of some or all of the beds to an existing licensed 
        and certified facility or facilities located in Pine River, 
        Brainerd, or International Falls; provided that the total 
        project construction costs related to the relocation of beds 
        from layaway status for any facility receiving relocated beds 
        may not exceed the dollar threshold provided in subdivision 2 
        unless the construction project has been approved through the 
        moratorium exception process under section 144A.073; 
           (2) relicensed and recertified, upon reactivation of some 
        or all of the beds within the facility which placed the beds in 
        layaway status, if the commissioner has determined a need for 
        the reactivation of the beds on layaway status. 
           The property-related payment rate of a facility placing 
        beds on layaway status must be adjusted by the incremental 
        change in its rental per diem after recalculating the rental per 
        diem as provided in section 256B.431, subdivision 3a, paragraph 
        (d).  The property-related payment rate for a facility 
        relicensing and recertifying beds from layaway status must be 
        adjusted by the incremental change in its rental per diem after 
        recalculating its rental per diem using the number of beds after 
        the relicensing to establish the facility's capacity day 
        divisor, which shall be effective the first day of the month 
        following the month in which the relicensing and recertification 
        became effective.  Any beds remaining on layaway status more 
        than three years after the date the layaway status became 
        effective must be removed from layaway status and immediately 
        delicensed and decertified; 
           (q) to license and certify beds in a renovation and 
        remodeling project to convert 13 three-bed wards into 13 two-bed 
        rooms and 13 single-bed rooms, expand space, and add 
        improvements in a nursing home that, as of January 1, 1994, met 
        the following conditions:  the nursing home was located in 
        Ramsey county; was not owned by a hospital corporation; had a 
        licensed capacity of 64 beds; and had been ranked among the top 
        15 applicants by the 1993 moratorium exceptions advisory review 
        panel.  The total project construction cost estimate for this 
        project must not exceed the cost estimate submitted in 
        connection with the 1993 moratorium exception process; or 
           (r) to license and certify beds in a renovation and 
        remodeling project to convert 12 four-bed wards into 24 two-bed 
        rooms, expand space, and add improvements in a nursing home 
        that, as of January 1, 1994, met the following conditions:  the 
        nursing home was located in Ramsey county; had a licensed 
        capacity of 154 beds; and had been ranked among the top 15 
        applicants by the 1993 moratorium exceptions advisory review 
        panel.  The total project construction cost estimate for this 
        project must not exceed the cost estimate submitted in 
        connection with the 1993 moratorium exception process.; 
           (s) to license and certify up to 117 beds that are 
        relocated from a licensed and certified 138-bed nursing facility 
        located in St. Paul to a hospital with 130 licensed hospital 
        beds located in South St. Paul, provided that the nursing 
        facility and hospital are owned by the same or a related 
        organization and that prior to the date the relocation is 
        completed the hospital ceases operation of its inpatient 
        hospital services at that hospital.  After relocation, the 
        nursing facility's status under section 256B.431, subdivision 2, 
        shall be the same as it was prior to relocation.  The nursing 
        facility's property-related payment rate resulting from the 
        project authorized in this paragraph shall become effective no 
        earlier than April 1, 1996.  For purposes of calculating the 
        incremental change in the facility's rental per diem resulting 
        from this project, the allowable appraised value of the nursing 
        facility portion of the existing health care facility physical 
        plant prior to the renovation and relocation may not exceed 
        $2,490,000; 
           (t) to license and certify two beds in a facility to 
        replace beds that were voluntarily delicensed and decertified on 
        June 28, 1991; 
           (u) to allow 16 licensed and certified beds located on July 
        1, 1994, in a 142-bed nursing home and 21-bed boarding care home 
        facility in Minneapolis, notwithstanding the licensure and 
        certification after July 1, 1995, of the Minneapolis facility as 
        a 147-bed nursing home facility after completion of a 
        construction project approved in 1993 under section 144A.073, to 
        be laid away upon 30 days' prior written notice to the 
        commissioner.  Beds on layaway status shall have the same status 
        as voluntarily delicensed or decertified beds except that they 
        shall remain subject to the surcharge in section 256.9657.  The 
        16 beds on layaway status may be relicensed as nursing home beds 
        and recertified at any time within five years of the effective 
        date of the layaway upon relocation of some or all of the beds 
        to a licensed and certified facility located in Watertown, 
        provided that the total project construction costs related to 
        the relocation of beds from layaway status for the Watertown 
        facility may not exceed the dollar threshold provided in 
        subdivision 2 unless the construction project has been approved 
        through the moratorium exception process under section 144A.073. 
           The property-related payment rate of the facility placing 
        beds on layaway status must be adjusted by the incremental 
        change in its rental per diem after recalculating the rental per 
        diem as provided in section 256B.431, subdivision 3a, paragraph 
        (d).  The property-related payment rate for the facility 
        relicensing and recertifying beds from layaway status must be 
        adjusted by the incremental change in its rental per diem after 
        recalculating its rental per diem using the number of beds after 
        the relicensing to establish the facility's capacity day 
        divisor, which shall be effective the first day of the month 
        following the month in which the relicensing and recertification 
        became effective.  Any beds remaining on layaway status more 
        than five years after the date the layaway status became 
        effective must be removed from layaway status and immediately 
        delicensed and decertified; or 
           (v) to license and certify beds that are moved within an 
        existing area of a facility or to a newly-constructed addition 
        which is built for the purpose of eliminating three- and 
        four-bed rooms and adding space for dining, lounge areas, 
        bathing rooms, and ancillary service areas in a nursing home 
        that, as of January 1, 1995, was located in Fridley and had a 
        licensed capacity of 129 beds. 
           Sec. 12.  Minnesota Statutes 1994, section 144A.071, is 
        amended by adding a subdivision to read: 
           Subd. 5a.  [COST ESTIMATE OF A MORATORIUM EXCEPTION 
        PROJECT.] (a) For the purposes of this section and section 
        144A.073, the cost estimate of a moratorium exception project 
        shall include the effects of the proposed project on the costs 
        of the state subsidy for community-based services, nursing 
        services, and housing in institutional and noninstitutional 
        settings.  The commissioner of health, in cooperation with the 
        commissioner of human services, shall define the method for 
        estimating these costs in the permanent rule implementing 
        section 144A.073.  The commissioner of human services shall 
        prepare an estimate of the total state annual long-term costs of 
        each moratorium exception proposal. 
           (b) The interest rate to be used for estimating the cost of 
        each moratorium exception project proposal shall be the lesser 
        of either the prime rate plus two percentage points, or the 
        posted yield for standard conventional fixed rate mortgages of 
        the Federal Home Loan Mortgage Corporation plus two percentage 
        points as published in the Wall Street Journal and in effect 56 
        days prior to the application deadline.  If the applicant's 
        proposal uses this interest rate, the commissioner of human 
        services, in determining the facility's actual property-related 
        payment rate to be established upon completion of the project 
        must use the actual interest rate obtained by the facility for 
        the project's permanent financing up to the maximum permitted 
        under subdivision 6. 
           The applicant may choose an alternate interest rate for 
        estimating the project's cost.  If the applicant makes this 
        election, the commissioner of human services, in determining the 
        facility's actual property-related payment rate to be 
        established upon completion of the project, must use the lesser 
        of the actual interest rate obtained for the project's permanent 
        financing or the interest rate which was used to estimate the 
        proposal's project cost.  For succeeding rate years, the 
        applicant is at risk for financing costs in excess of the 
        interest rate selected. 
           Sec. 13.  Minnesota Statutes 1994, section 144A.073, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] For purposes of this 
        section, the following terms have the meanings given them: 
           (a) "Conversion" means the relocation of a nursing home bed 
        from a nursing home to an attached hospital. 
           (b) "Relocation" means the movement of licensed nursing 
        home beds or certified boarding care beds as permitted under 
        subdivision 4, clause (3), and subdivision 5. 
           (c) "Renovation" means extensive remodeling of, or 
        construction of an addition to, a facility on an existing site 
        with a total cost exceeding ten percent of the appraised value 
        of the facility or $200,000, whichever is less. 
           (c) (d) "Replacement" means the demolition or, delicensure, 
        reconstruction, or construction of an addition to all or part of 
        an existing facility. 
           (d) (e) "Upgrading" means a change in the level of 
        licensure of a bed from a boarding care bed to a nursing home 
        bed in a certified boarding care facility. 
           Sec. 14.  Minnesota Statutes 1994, section 144A.073, 
        subdivision 2, is amended to read: 
           Subd. 2.  [REQUEST FOR PROPOSALS.] At the intervals 
        specified in rules authorization by the legislature of 
        additional medical assistance expenditures for exceptions to the 
        moratorium on nursing homes, the interagency committee shall 
        publish in the State Register a request for proposals for 
        nursing home projects to be licensed or certified under section 
        144A.071, subdivision 4a, clause (c).  The public notice of this 
        funding and the request for proposals must specify how the 
        approval criteria will be prioritized by the advisory review 
        panel, the interagency long-term care planning committee, and 
        the commissioner.  The notice must describe the information that 
        must accompany a request and state that proposals must be 
        submitted to the interagency committee within 90 days of the 
        date of publication.  The notice must include the amount of the 
        legislative appropriation available for the additional costs to 
        the medical assistance program of projects approved under this 
        section.  If no money is appropriated for a year, the notice for 
        that year must state that proposals will not be requested 
        because no appropriations were made the interagency committee 
        shall publish a notice to that effect, and no proposals shall be 
        requested.  If money is appropriated, the interagency committee 
        shall initiate the application and review process described in 
        this section at least twice each biennium and up to four times 
        each biennium, according to dates established by rule.  
        Authorized funds shall be allocated proportionally to the number 
        of processes.  Funds not encumbered by an earlier process within 
        a biennium shall carry forward to subsequent iterations of the 
        process.  Authorization for expenditures does not carry forward 
        into the following biennium.  To be considered for approval, a 
        proposal must include the following information: 
           (1) whether the request is for renovation, replacement, 
        upgrading, or conversion, or relocation; 
           (2) a description of the problem the project is designed to 
        address; 
           (3) a description of the proposed project; 
           (4) an analysis of projected costs of the nursing facility 
        proposal, including initial construction and remodeling costs,; 
        site preparation costs,; financing costs, including the current 
        estimated long-term financing costs of the proposal, which 
        consists of estimates of the amount and sources of money, 
        reserves if required under the proposed funding mechanism, 
        annual payments schedule, interest rates, length of term, 
        closing costs and fees, insurance costs, and any completed 
        marketing study or underwriting review; and estimated operating 
        costs during the first two years after completion of the 
        project; 
           (5) for proposals involving replacement of all or part of a 
        facility, the proposed location of the replacement facility and 
        an estimate of the cost of addressing the problem through 
        renovation; 
           (6) for proposals involving renovation, an estimate of the 
        cost of addressing the problem through replacement; 
           (7) the proposed timetable for commencing construction and 
        completing the project; and 
           (8) a statement of any licensure or certification issues, 
        such as certification survey deficiencies; 
           (9) the proposed relocation plan for current residents if 
        beds are to be closed so that the department of human services 
        can estimate the total costs of a proposal; and 
           (10) other information required by permanent rule of the 
        commissioner of health in accordance with subdivisions 4 and 8. 
           Sec. 15.  Minnesota Statutes 1994, section 144A.073, 
        subdivision 3, is amended to read: 
           Subd. 3.  [REVIEW AND APPROVAL OF PROPOSALS.] Within the 
        limits of money specifically appropriated to the medical 
        assistance program for this purpose, the interagency long-term 
        care planning committee may recommend that the commissioner of 
        health grant exceptions to the nursing home licensure or 
        certification moratorium for proposals that satisfy the 
        requirements of this section.  The interagency committee shall 
        appoint an advisory review panel composed of representatives of 
        consumers and providers to review proposals and provide comments 
        and recommendations to the committee.  The commissioners of 
        human services and health shall provide staff and technical 
        assistance to the committee for the review and analysis of 
        proposals.  The interagency committee shall hold a public 
        hearing before submitting recommendations to the commissioner of 
        health on project requests.  The committee shall submit 
        recommendations within 150 days of the date of the publication 
        of the notice, based on a comparison and ranking of proposals 
        using the criteria in subdivision 4.  The commissioner of health 
        shall approve or disapprove a project within 30 days after 
        receiving the committee's recommendations.  The advisory review 
        panel, the committee, and the commissioner of health shall base 
        their recommendations, approvals, or disapprovals on a 
        comparison and ranking of proposals using only the criteria in 
        subdivision 4 and in emergency and permanent rules adopted by 
        the commissioner.  The cost to the medical assistance program of 
        the proposals approved must be within the limits of the 
        appropriations specifically made for this purpose.  Approval of 
        a proposal expires 18 months after approval by the commissioner 
        of health unless the facility has commenced construction as 
        defined in section 144A.071, subdivision 1a, paragraph (d).  The 
        committee's report to the legislature, as required under section 
        144A.31, must include the projects approved, the criteria used 
        to recommend proposals for approval, and the estimated costs of 
        the projects, including the costs of initial construction and 
        remodeling, and the estimated operating costs during the first 
        two years after the project is completed. 
           Sec. 16.  Minnesota Statutes 1994, section 144A.073, is 
        amended by adding a subdivision to read: 
           Subd. 3c.  [COST NEUTRAL RELOCATION PROJECTS.] (a) 
        Notwithstanding subdivision 3, the interagency committee may at 
        any time accept proposals, or amendments to proposals previously 
        approved under this section, for relocations that are cost 
        neutral with respect to state costs as defined in section 
        144A.071, subdivision 5a.  The committee shall review these 
        applications and make recommendations to the commissioner within 
        90 days.  The committee must evaluate proposals according to 
        subdivision 4, clauses (1), (2), and (3), and other criteria 
        established in rule.  The commissioner shall approve or 
        disapprove a project within 30 days of receiving the committee's 
        recommendation.  Proposals and amendments approved under this 
        subdivision are not subject to the six-mile limit in subdivision 
        5, paragraph (e). 
           (b) For the purposes of paragraph (a), cost neutrality 
        shall be measured over the first three 12-month periods of 
        operation after completion of the project. 
           Sec. 17.  Minnesota Statutes 1994, section 144A.073, 
        subdivision 4, is amended to read: 
           Subd. 4.  [CRITERIA FOR REVIEW.] (a) The following criteria 
        must shall be used in a consistent manner to compare and, 
        evaluate, and rank all proposals submitted.  Except for the 
        criteria specified in clause (3), the application of criteria 
        listed under this subdivision shall not reflect any distinction 
        based on the geographic location of the proposed project: 
           (1) the extent to which the average occupancy rate of the 
        facility supports the need for the proposed project; 
           (2) the extent to which the average occupancy rate of all 
        facilities in the county in which the applicant is located, 
        together with all contiguous Minnesota counties, supports the 
        need for the proposed project; 
           (3) the extent to which the proposal furthers state 
        long-term care goals, including the goals stated in section 
        144A.31, and including the goal of enhancing the availability 
        and use of alternative care services and the goal of reducing 
        the number of long-term care resident rooms with more than two 
        beds; 
           (4) the cost-effectiveness of the proposal, including (2) 
        the proposal's long-term effects on the state costs of the 
        medical assistance program, as determined by the commissioner of 
        human services; and including the cost estimate of the project 
        according to section 144A.071, subdivision 5a; 
           (5) other factors developed in rule by the commissioner of 
        health that evaluate and assess how the proposed project will 
        further promote or protect the health, safety, comfort, 
        treatment, or well-being of the facility's residents. 
           (b) In addition to the criteria in paragraph (a), the 
        following criteria must be used to evaluate, compare, and rank 
        proposals involving renovation or replacement: 
           (3) the extent to which the proposal promotes equitable 
        access to long-term care services in nursing homes through 
        redistribution of the nursing home bed supply, as measured by 
        the number of beds relative to the population 85 or older, 
        projected to the year 2000 by the state demographer, and 
        according to items (i) to (iv): 
           (i) reduce beds in counties where the supply is high, 
        relative to the statewide mean, and increase beds in counties 
        where the supply is low, relative to the statewide mean; 
           (ii) adjust the bed supply so as to create the greatest 
        benefits in improving the distribution of beds; 
           (iii) adjust the existing bed supply in counties so that 
        the bed supply in a county moves toward the statewide mean; and 
           (iv) adjust the existing bed supply so that the 
        distribution of beds as projected for the year 2020 would be 
        consistent with projected need, based on the methodology 
        outlined in the interagency long-term care committee's 1993 
        nursing home bed distribution study; 
           (1) (4) the extent to which the project improves conditions 
        that affect the health or safety of residents, such as narrow 
        corridors, narrow door frames, unenclosed fire exits, and wood 
        frame construction, and similar provisions contained in fire and 
        life safety codes and licensure and certification rules; 
           (2) (5) the extent to which the project improves conditions 
        that affect the comfort or quality of life of residents in a 
        facility or the ability of the facility to provide efficient 
        care, such as a relatively high number of residents in a room; 
        inadequate lighting or ventilation; poor access to bathing or 
        toilet facilities; a lack of available ancillary space for 
        dining rooms, day rooms, or rooms used for other activities; 
        problems relating to heating, cooling, or energy efficiency; 
        inefficient location of nursing stations; narrow corridors; or 
        other provisions contained in the licensure and certification 
        rules; 
           (6) the extent to which the applicant demonstrates the 
        delivery of quality care, as defined in state and federal 
        statutes and rules, to residents as evidenced by the two most 
        recent state agency certification surveys and the applicants' 
        response to those surveys; 
           (7) the extent to which the project removes the need for 
        waivers or variances previously granted by either the licensing 
        agency, certifying agency, fire marshal, or local government 
        entity; and 
           (8) other factors that may be developed in permanent rule 
        by the commissioner of health that evaluate and assess how the 
        proposed project will further promote or protect the health, 
        safety, comfort, treatment, or well-being of the facility's 
        residents. 
           Sec. 18.  Minnesota Statutes 1994, section 144A.073, 
        subdivision 5, is amended to read: 
           Subd. 5.  [REPLACEMENT RESTRICTIONS.] (a) Proposals 
        submitted or approved under this section involving replacement 
        must provide for replacement of the facility on the existing 
        site except as allowed in this subdivision.  
           (b) Facilities located in a metropolitan statistical area 
        other than the Minneapolis-St. Paul seven-county metropolitan 
        area may relocate to a site within the same census tract or a 
        contiguous census tract.  
           (c) Facilities located in the Minneapolis-St. Paul 
        seven-county metropolitan area may relocate to a site within the 
        same or contiguous health planning area as adopted in March 1982 
        by the metropolitan council.  
           (d) Facilities located outside a metropolitan statistical 
        area may relocate to a site within the same city or township, or 
        within a contiguous township.  
           (e) A facility relocated to a different site under 
        paragraph (b), (c), or (d) must not be relocated to a site more 
        than six miles from the existing site. 
           (f) The relocation of part of an existing first facility to 
        a second location, under paragraphs (d) and (e), may include the 
        relocation to the second location of up to four beds from part 
        of an existing third facility located in a township contiguous 
        to the location of the first facility.  The six-mile limit in 
        paragraph (e) does not apply to this relocation from the third 
        facility. 
           (g) For proposals approved on January 13, 1994, under this 
        section involving the replacement of 102 licensed and certified 
        beds, the relocation of the existing first facility to the 
        second and third locations under paragraphs (d) and (e) may 
        include the relocation of up to 50 percent of the beds of the 
        existing first facility to each of the locations.  The six-mile 
        limit in paragraph (e) does not apply to this relocation to the 
        third location.  Notwithstanding subdivision 3, construction of 
        this project may be commenced any time prior to January 1, 1996. 
           Sec. 19.  Minnesota Statutes 1994, section 144A.073, 
        subdivision 8, is amended to read: 
           Subd. 8.  [RULEMAKING.] The commissioner of health shall 
        adopt emergency or permanent rules to implement this 
        section.  The permanent rules must be in accordance with and 
        implement only the criteria listed in this section.  The 
        authority to adopt emergency permanent rules continues until 
        December 30, 1988 July 1, 1996.  
           Sec. 20.  Minnesota Statutes 1994, section 198.003, 
        subdivision 3, is amended to read: 
           Subd. 3.  [USE OF FACILITIES CAMPUS.] The board may allow 
        veterans organizations or public or private social service, 
        educational, or rehabilitation agencies or organizations and 
        their clients to use surplus facilities space on a home's 
        campus, staff, and other resources of the board and may require 
        the participating agencies or organizations to pay for that use. 
           Sec. 21.  Minnesota Statutes 1994, section 198.003, 
        subdivision 4, is amended to read: 
           Subd. 4.  [VETERANS HOMES RESOURCES ACCOUNT.] Money 
        received by the board under subdivision 3 must be deposited in 
        the state treasury and credited to a veterans homes resources 
        account in the special revenue fund.  Money in the account is 
        appropriated to the board to operate, maintain, and repair 
        facilities make repairs at the campus used under subdivision 3, 
        and to pay including payment of associated legal fees and 
        expenses. 
           Sec. 22.  Minnesota Statutes 1994, section 256B.0641, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [RECOVERY PROCEDURES; SOURCES.] 
        Notwithstanding section 256B.72 or any law or rule to the 
        contrary, when the commissioner or the federal government 
        determines that an overpayment has been made by the state to any 
        medical assistance vendor, the commissioner shall recover the 
        overpayment as follows:  
           (1) if the federal share of the overpayment amount is due 
        and owing to the federal government under federal law and 
        regulations, the commissioner shall recover from the medical 
        assistance vendor the federal share of the determined 
        overpayment amount paid to that provider using the schedule of 
        payments required by the federal government; and 
           (2) if the overpayment to a medical assistance vendor is 
        due to a retroactive adjustment made because the medical 
        assistance vendor's temporary payment rate was higher than the 
        established desk audit payment rate or because of a department 
        error in calculating a payment rate, the commissioner shall 
        recover from the medical assistance vendor the total amount of 
        the overpayment within 120 days after the date on which written 
        notice of the adjustment is sent to the medical assistance 
        vendor or according to a schedule of payments approved by the 
        commissioner; and 
           (3) a medical assistance vendor is liable for the 
        overpayment amount owed by a long-term care provider if the 
        vendors or their owners are under common control or ownership.  
           Sec. 23.  Minnesota Statutes 1994, section 256B.431, 
        subdivision 2j, is amended to read: 
           Subd. 2j.  [HOSPITAL-ATTACHED NURSING FACILITY STATUS.] (a) 
        For the purpose of setting rates under Minnesota Rules, parts 
        9549.0010 to 9549.0080, for rate years beginning after June 30, 
        1989, a hospital-attached nursing facility means a nursing 
        facility which meets the requirements of clauses (1) to (3): 
           (1) the nursing facility is recognized by the federal 
        Medicare program to be a hospital-based nursing facility for 
        purposes of being subject to higher cost limits accorded 
        hospital-based nursing facilities under the Medicare program, 
        or, prior to June 30, 1983, was classified as a 
        hospital-attached nursing facility under Minnesota Rules, parts 
        9510.0010 to 9510.0480, provided that; 
           (2) the nursing facility's cost report filed under 
        Minnesota Rules, parts 9549.0010 to 9549.0080, shall use the 
        same cost allocation principles and methods used in the reports 
        filed for the Medicare program except as provided in clause (3); 
        and 
           (3) direct identification of costs to the nursing facility 
        cost center will be permitted only when the comparable hospital 
        costs have also been directly identified to a cost center which 
        is not allocated to the nursing facility.  
           (b) For rate years beginning after June 30, 1989, a nursing 
        facility and hospital, which have applied for hospital-based 
        nursing facility status under the federal Medicare program 
        during the reporting year or the nine-month period following the 
        nursing facility's reporting year, shall be considered a 
        hospital-attached nursing facility for purposes of setting 
        payment rates under Minnesota Rules, parts 9549.0010 to 
        9549.0080, for the rate year following the reporting year or the 
        nine-month period in which the facility made its Medicare 
        application.  The nursing facility must file its cost report or 
        an amended cost report for that reporting year before the 
        following rate year using Medicare principles and Medicare's 
        recommended cost allocation methods had the Medicare program's 
        hospital-based nursing facility status been granted to the 
        nursing facility.  For each subsequent rate year, the nursing 
        facility must meet the definition requirements in paragraph 
        (a).  If the nursing facility is denied hospital-based nursing 
        facility status under the Medicare program, the nursing 
        facility's payment rates for the rate years the nursing facility 
        was considered to be a hospital-attached nursing facility 
        pursuant to this paragraph shall be recalculated treating the 
        nursing facility as a non-hospital-attached nursing facility. 
           (c) For rate years beginning on or after July 1, 1995, a 
        nursing facility shall be considered a hospital attached nursing 
        facility for purposes of setting payment rates under Minnesota 
        Rules, parts 9549.0010 to 9549.0080 and this section if it meets 
        the requirements of paragraphs (a) and (b), and 
           (1) the hospital and nursing facility are physically 
        attached or connected by a tunnel or skyway; or 
           (2) the nursing facility was recognized by the Medicare 
        program as hospital attached as of January 1, 1995, and this 
        status has been maintained continuously. 
           Sec. 24.  Minnesota Statutes 1994, section 256B.431, 
        subdivision 15, is amended to read: 
           Subd. 15.  [CAPITAL REPAIR AND REPLACEMENT COST REPORTING 
        AND RATE CALCULATION.] For rate years beginning after June 30, 
        1993, a nursing facility's capital repair and replacement 
        payment rate shall be established annually as provided in 
        paragraphs (a) to (d) (e).  
           (a) Notwithstanding Minnesota Rules, part 9549.0060, 
        subpart 12, the costs of acquiring any of the following items 
        not included in the equity incentive computations under 
        subdivision 16 or reported as a capital asset addition under 
        subdivision 18, paragraph (b), including cash payment for equity 
        investment and principal and interest expense for debt 
        financing, shall must be reported in the capital repair and 
        replacement cost category when the cost of the item exceeds $500:
           (1) wall coverings; 
           (2) paint; 
           (3) floor coverings; 
           (4) window coverings; 
           (5) roof repair; and 
           (6) heating or cooling system repair or replacement; 
           (7) window repair or replacement;. 
           (8) initiatives designed to reduce energy usage by the 
        facility if accompanied by an energy audit prepared by a 
        professional engineer or architect registered in Minnesota, or 
        by an auditor certified under Minnesota Rules, part 7635.0130, 
        to do energy audits and the energy audit identifies the 
        initiative as a conservation measure; and 
           (9) repair or replacement of capital assets not included in 
        the equity incentive computations under subdivision 16.  
           (b) Notwithstanding Minnesota Rules, part 9549.0060, 
        subpart 12, the repair or replacement of a capital asset not 
        included in the equity incentive computations under subdivision 
        16 or reported as a capital asset addition under subdivision 18, 
        paragraph (b), must be reported under this subdivision when the 
        cost of the item exceeds $500, or in the plant operations and 
        maintenance cost category when the cost of the item is equal to 
        or less than $500. 
           (c) To compute the capital repair and replacement payment 
        rate, the allowable annual repair and replacement costs for the 
        reporting year must be divided by actual resident days for the 
        reporting year.  The annual allowable capital repair and 
        replacement costs shall not exceed $150 per licensed bed.  The 
        excess of the allowed capital repair and replacement costs over 
        the capital repair and replacement limit shall be a cost 
        carryover to succeeding cost reporting periods, except that sale 
        of a facility, under subdivision 14, shall terminate the 
        carryover of all costs except those incurred in the most recent 
        cost reporting year.  The termination of the carryover shall 
        have effect on the capital repair and replacement rate on the 
        same date as provided in subdivision 14, paragraph (f), for the 
        sale.  For rate years beginning after June 30, 1994, the capital 
        repair and replacement limit shall be subject to the index 
        provided in subdivision 3f, paragraph (a).  For purposes of this 
        subdivision, the number of licensed beds shall be the number 
        used to calculate the nursing facility's capacity days.  The 
        capital repair and replacement rate must be added to the nursing 
        facility's total payment rate. 
           (c) (d) Capital repair and replacement costs under this 
        subdivision shall not be counted as either care-related or other 
        operating costs, nor subject to care-related or other operating 
        limits. 
           (d) (e) If costs otherwise allowable under this subdivision 
        are incurred as the result of 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 these assets exceeds the lesser of $150,000 
        or ten percent of the nursing facility's appraised value, these 
        costs must be claimed under subdivision 16 or 17, as appropriate.
           Sec. 25.  Minnesota Statutes 1994, 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) 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), 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. 
           Sec. 26.  Minnesota Statutes 1994, section 256B.431, is 
        amended by adding a subdivision 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 clause (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). 
           Sec. 27.  Minnesota Statutes 1994, section 256B.432, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] For purposes of this 
        section, the following terms have the meanings given them. 
           (a) "Management agreement" means an agreement in which one 
        or more of the following criteria exist:  
           (1) the central, affiliated, or corporate office has or is 
        authorized to assume day-to-day operational control of the 
        long-term care nursing facility for any six-month period within 
        a 24-month period.  "Day-to-day operational control" means that 
        the central, affiliated, or corporate office has the authority 
        to require, mandate, direct, or compel the employees of the 
        long-term care nursing facility to perform or refrain from 
        performing certain acts, or to supplant or take the place of the 
        top management of the long-term care nursing facility.  
        "Day-to-day operational control" includes the authority to hire 
        or terminate employees or to provide an employee of the central, 
        affiliated, or corporate office to serve as administrator of the 
        long-term care nursing facility; 
           (2) the central, affiliated, or corporate office performs 
        or is authorized to perform two or more of the following:  the 
        execution of contracts; authorization of purchase orders; 
        signature authority for checks, notes, or other financial 
        instruments; requiring the long-term care nursing facility to 
        use the group or volume purchasing services of the central, 
        affiliated, or corporate office; or the authority to make annual 
        capital expenditures for the long-term care nursing facility 
        exceeding $50,000, or $500 per licensed bed, whichever is less, 
        without first securing the approval of the long-term care 
        nursing facility board of directors; 
           (3) the central, affiliated, or corporate office becomes or 
        is required to become the licensee under applicable state law; 
           (4) the agreement provides that the compensation for 
        services provided under the agreement is directly related to any 
        profits made by the long-term care nursing facility; or 
           (5) the long-term care nursing facility entering into the 
        agreement is governed by a governing body that meets fewer than 
        four times a year, that does not publish notice of its meetings, 
        or that does not keep formal records of its proceedings.  
           (b) "Consulting agreement" means any agreement the purpose 
        of which is for a central, affiliated, or corporate office to 
        advise, counsel, recommend, or suggest to the owner or operator 
        of the nonrelated long-term care nursing facility measures and 
        methods for improving the operations of the long-term care 
        nursing facility.  
           (c) "Long-term care Nursing facility" means a nursing 
        facility whose medical assistance rates are determined according 
        to section 256B.431 or an intermediate care facility for persons 
        with mental retardation and related conditions whose medical 
        assistance rates are determined according to section 256B.501. 
           Sec. 28.  Minnesota Statutes 1994, section 256B.432, 
        subdivision 2, is amended to read: 
           Subd. 2.  [EFFECTIVE DATE.] For rate years beginning on or 
        after July 1, 1990, the central, affiliated, or corporate office 
        cost allocations in subdivisions 3 to 6 must be used when 
        determining medical assistance rates under sections 256B.431 and 
        256B.501 256B.50.  
           Sec. 29.  Minnesota Statutes 1994, section 256B.432, 
        subdivision 3, is amended to read: 
           Subd. 3.  [ALLOCATION; DIRECT IDENTIFICATION OF COSTS OF 
        LONG-TERM CARE NURSING FACILITIES; MANAGEMENT AGREEMENT.] All 
        costs that can be directly identified with a specific long-term 
        care nursing facility that is a related organization to the 
        central, affiliated, or corporate office, or that is controlled 
        by the central, affiliated, or corporate office under a 
        management agreement, must be allocated to that long-term care 
        nursing facility. 
           Sec. 30.  Minnesota Statutes 1994, section 256B.432, 
        subdivision 5, is amended to read: 
           Subd. 5.  [ALLOCATION OF REMAINING COSTS; ALLOCATION 
        RATIO.] (a) After the costs that can be directly identified 
        according to subdivisions 3 and 4 have been allocated, the 
        remaining central, affiliated, or corporate office costs must be 
        allocated between the long-term care nursing facility operations 
        and the other activities or facilities unrelated to 
        the long-term care nursing facility operations based on the 
        ratio of total operating costs. 
           (b) For purposes of allocating these remaining central, 
        affiliated, or corporate office costs, the numerator for the 
        allocation ratio shall be determined as follows:  
           (1) for long-term care nursing facilities that are related 
        organizations or are controlled by a central, affiliated, or 
        corporate office under a management agreement, the numerator of 
        the allocation ratio shall be equal to the sum of the total 
        operating costs incurred by each related organization or 
        controlled long-term care nursing facility; 
           (2) for a central, affiliated, or corporate office 
        providing goods or services to related organizations that are 
        not long-term care nursing facilities, the numerator of the 
        allocation ratio shall be equal to the sum of the total 
        operating costs incurred by the non-long-term care nonnursing 
        facility related organizations; 
           (3) for a central, affiliated, or corporate office 
        providing goods or services to unrelated long-term care nursing 
        facilities under a consulting agreement, the numerator of the 
        allocation ratio shall be equal to the greater of directly 
        identified central, affiliated, or corporate costs or the 
        contracted amount; or 
           (4) for business activities that involve the providing of 
        goods or services to unrelated parties which are not long-term 
        care nursing facilities, the numerator of the allocation ratio 
        shall be equal to the greater of directly identified costs or 
        revenues generated by the activity or function.  
           (c) The denominator for the allocation ratio is the sum of 
        the numerators in paragraph (b), clauses (1) to (4). 
           Sec. 31.  Minnesota Statutes 1994, section 256B.432, 
        subdivision 6, is amended to read: 
           Subd. 6.  [COST ALLOCATION BETWEEN LONG-TERM CARE NURSING 
        FACILITIES.] (a) Those long-term care nursing operations that 
        have long-term care nursing facilities both in Minnesota and 
        comparable facilities outside of Minnesota must allocate 
        the long-term care nursing operation's central, affiliated, or 
        corporate office costs identified in subdivision 5 to Minnesota 
        based on the ratio of total resident days in Minnesota long-term 
        care nursing facilities to the total resident days in all 
        facilities.  
           (b) The Minnesota long-term care nursing operation's 
        central, affiliated, or corporate office costs identified in 
        paragraph (a) must be allocated to each Minnesota long-term care 
        nursing facility on the basis of resident days. 
           Sec. 32.  [256B.434] [CONTRACTUAL ALTERNATIVE PAYMENT 
        DEMONSTRATION PROJECT FOR NURSING HOMES.] 
           Subdivision 1.  [ALTERNATIVE PAYMENT DEMONSTRATION PROJECT 
        ESTABLISHED.] The commissioner of human services shall establish 
        a contractual alternative payment demonstration project for 
        paying for nursing facility services under the medical 
        assistance program.  A nursing facility may apply to be paid 
        under the contractual alternative payment demonstration project 
        instead of the cost-based payment system established under 
        section 256B.431.  A nursing facility electing to use the 
        alternative payment demonstration project must enter into a 
        contract with the commissioner.  Payment rates and procedures 
        for facilities electing to use the alternative payment 
        demonstration project are determined and governed by this 
        section and by the terms of the contract.  The commissioner may 
        negotiate different contract terms for different nursing 
        facilities. 
           Subd. 2.  [REQUESTS FOR PROPOSALS.] (a) No later than 
        August 1, 1995, the commissioner shall publish in the State 
        Register a request for proposals to provide nursing facility 
        services according to this section.  The commissioner shall 
        issue two additional requests for proposals prior to July 1, 
        1997, based upon a timetable established by the commissioner.  
        The commissioner must respond to all proposals in a timely 
        manner. 
           (b) The commissioner may reject any proposal if, in the 
        judgment of the commissioner, a contract with a particular 
        facility is not in the best interests of the residents of the 
        facility or the state of Minnesota.  The commissioner may accept 
        up to the number of proposals that can be adequately supported 
        with available state resources, as determined by the 
        commissioner, except that the commissioner shall not contract 
        with more than 40 nursing facilities as part of any request for 
        proposals.  The commissioner may accept proposals from a single 
        nursing facility or from a group of facilities through a 
        managing entity.  The commissioner shall seek to ensure that 
        nursing facilities under contract are located in all geographic 
        areas of the state.  The commissioner shall present 
        recommendations to the legislature by February 1, 1996, on the 
        number of nursing facility contracts that may be entered into by 
        the commissioner as a result of a request for proposals. 
           (c) In issuing the request for proposals, the commissioner 
        may develop reasonable requirements which, in the judgment of 
        the commissioner, are necessary to protect residents or ensure 
        that the contractual alternative payment demonstration project 
        furthers the interest of the state of Minnesota.  The request 
        for proposals may include, but need not be limited to, the 
        following: 
           (1) a requirement that a nursing facility make reasonable 
        efforts to maximize Medicare payments on behalf of eligible 
        residents; 
           (2) requirements designed to prevent inappropriate or 
        illegal discrimination against residents enrolled in the medical 
        assistance program as compared to private paying residents; 
           (3) requirements designed to ensure that admissions to a 
        nursing facility are appropriate and that reasonable efforts are 
        made to place residents in home and community-based settings 
        when appropriate; 
           (4) a requirement to agree to participate in a project to 
        develop data collection systems and outcome-based standards for 
        managed care contracting for long-term care services.  Among 
        other requirements specified by the commissioner, each facility 
        entering into a contract may be required to pay an annual fee in 
        an amount determined by the commissioner not to exceed $50 per 
        bed.  Revenue generated from the fees is appropriated to the 
        commissioner and must be used to contract with a qualified 
        consultant or contractor to develop data collection systems and 
        outcome-based contracting standards; 
           (5) a requirement that contractors agree to maintain 
        Medicare cost reports and to submit them to the commissioner 
        upon request or at times specified by the commissioner; 
           (6) a requirement for demonstrated willingness and ability 
        to develop and maintain data collection and retrieval systems to 
        be used in measuring outcomes; and 
           (7) a requirement to provide all information and assurances 
        required by the terms and conditions of the federal waiver or 
        federal approval. 
           (d) In addition to the information and assurances contained 
        in the submitted proposals, the commissioner may consider the 
        following in determining whether to accept or deny a proposal: 
           (1) the facility's history of compliance with federal and 
        state laws and rules; 
           (2) whether the facility has a record of excessive 
        licensure fines or sanctions or fraudulent cost reports; 
           (3) financial history and solvency; and 
           (4) other factors identified by the commissioner that the 
        commissioner deems relevant to a determination that a contract 
        with a particular facility is not in the best interests of the 
        residents of the facility or the state of Minnesota. 
           (e) If the commissioner rejects the proposal of a nursing 
        facility, the commissioner shall provide written notice to the 
        facility of the reason for the rejection, including the factors 
        and evidence upon which the rejection was based. 
           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 four years.  Either party may terminate a contract 
        effective July 1 of any year by providing written notice to the 
        other party no later than April 1 of that year.  If neither 
        party provides written notice of termination by April 1, the 
        contract is automatically renewed for the next rate year.  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. 
           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. 
           (d) The commissioner may develop additional incentive-based 
        payments of up to five percent above the standard contract rate 
        for achieving outcomes specified in each contract.  The 
        incentive system may be implemented for contract rate years 
        beginning on or after July 1, 1996.  The specified outcomes must 
        be measurable and must be based on criteria to be developed 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 the commissioner finds 
        desirable. 
           Subd. 5.  [PRIVATE PAY RATES.] (a) Notwithstanding section 
        256B.48, subdivision 1, paragraph (a), the commissioner shall 
        determine the maximum private pay case mix payment rates for 
        nursing facilities that have entered into an alternative payment 
        demonstration contract under this section as specified in this 
        subdivision.  Nothing in this section shall limit the exceptions 
        for private pay rates authorized under section 256B.48, 
        subdivision 1, paragraph (a). 
           (b) The maximum private pay rate for short-stay private 
        paying residents who are discharged from the facility less than 
        101 days after admission is an amount equal to the greater of 
        the Medicare payment rate for that facility or the resident's 
        medical assistance case mix payment rate.  For the first year of 
        an alternative payment demonstration project contract the 
        commissioner shall establish a maximum private paying rate for 
        short-stay residents that is based on a nursing facility's 
        estimated Medicare payment rate.  When actual Medicare final 
        rates are determined, the nursing facility shall retroactively 
        adjust a private paying resident's rates and provide a refund or 
        credit if the amount actually paid by the resident exceeds the 
        amount that would have been paid using Medicare rates. 
           (c) When a private paying resident is admitted, a nursing 
        facility shall determine, based on the resident's care plan, 
        whether the resident is likely to be discharged less than 101 
        days after admission.  If the resident is likely to be 
        discharged less than 101 days after admission, the nursing 
        facility may charge a short-stay private pay rate up to the 
        maximum specified in paragraph (b).  If the resident remains in 
        the facility for longer than 100 days, the facility shall 
        retroactively reduce the resident's payments to the maximum 
        long-term rate specified in subdivision 4 effective from the 
        date of admission and shall reimburse the resident for the 
        overpayment.  At the resident's option, the facility may 
        reimburse residents for overpayments by providing a refund or a 
        credit to be applied to future payments, or a combination of 
        both, subject to the facility's right to offset for past-due 
        payments.  If the facility determines, based on the care plan, 
        that the resident is likely to remain in the facility for longer 
        than 100 days, the facility shall not charge a private pay rate 
        greater than the maximum rate specified in subdivision 4. 
           (d) The provisions of paragraphs (b) and (c) do not apply 
        to short-stay residents admitted prior to the effective date of 
        a demonstration project contract. 
           Subd. 6.  [CONTRACT PAYMENT RATES; APPEALS.] If an appeal 
        is pending concerning the cost-based payment rates that are the 
        basis for the calculation of the payment rate under the 
        alternative payment demonstration project, the commissioner and 
        the nursing facility may agree on an interim contract rate to be 
        used until the appeal is resolved.  When the appeal is resolved, 
        the contract rate must be adjusted retroactively in accordance 
        with the appeal decision.  
           Subd. 7.  [CASE MIX ASSESSMENTS.] The commissioner may 
        allow a contract facility to develop and implement a case mix 
        assessment using the federal minimum data set resident 
        assessment. 
           Subd. 8.  [OPTIONAL HIGHER PAYMENTS FOR FIRST 100 
        DAYS.] The commissioner may include in the contract with a 
        nursing facility under this section a higher rate for the first 
        100 days after admission than for subsequent days.  The rate for 
        the subsequent days must be reduced so that the estimated total 
        cost to the medical assistance program will not exceed the 
        estimated cost without the differential payment rates. 
           Subd. 9.  [MANAGED CARE CONTRACTS FOR OTHER 
        SERVICES.] Beginning July 1, 1995, the commissioner may contract 
        with nursing facilities that have entered into alternative 
        payment demonstration project contracts under this section to 
        provide medical assistance services other than nursing facility 
        care to residents of the facility under a prepaid, managed care 
        payment system.  For purposes of contracts entered into under 
        this subdivision, the commissioner may waive one or more of the 
        requirements for payment for ancillary services in section 
        256B.433.  Managed care contracts for other services may be 
        entered into at any time during the duration of a nursing 
        facility's alternative payment demonstration project contract, 
        and the terms of the managed care contracts need not coincide 
        with the terms of the alternative payment demonstration project 
        contract. 
           Subd. 10.  [EXEMPTIONS.] (a) To the extent permitted by 
        federal law, (1) a facility that has entered into a contract 
        under this section is not required to file a cost report, as 
        defined in Minnesota Rules, part 9549.0020, subpart 13, for any 
        year after the base year that is the basis for the calculation 
        of the contract payment rate for the first rate year of the 
        alternative payment demonstration project contract; and (2) a 
        facility under contract is not subject to audits of historical 
        costs or revenues, or paybacks or retroactive adjustments based 
        on these costs or revenues, except audits, paybacks, or 
        adjustments relating to the cost report that is the basis for 
        calculation of the first rate year under the contract. 
           (b) A facility that is under contract with the commissioner 
        under this section is not subject to the moratorium on licensure 
        or certification of new nursing home beds in section 144A.071, 
        unless the project results in a net increase in bed capacity or 
        involves relocation of beds from one site to another.  Contract 
        payment rates must not be adjusted to reflect any additional 
        costs that a nursing facility incurs as a result of a 
        construction project undertaken under this paragraph.  In 
        addition, as a condition of entering into a contract under this 
        section, a nursing facility must agree that any future medical 
        assistance payments for nursing facility services will not 
        reflect any additional costs attributable to the sale of a 
        nursing facility under this section and to construction 
        undertaken under this paragraph that otherwise would not be 
        authorized under the moratorium in sections 144A.071 and 
        144A.073.  Nothing in this section prevents a nursing facility 
        participating in the alternative payment demonstration project 
        under this section from seeking approval of an exception to the 
        moratorium through the process established in section 144A.071, 
        and if approved the facility's rates shall be adjusted to 
        reflect the cost of the project. 
           (c) Notwithstanding section 256B.48, subdivision 6, 
        paragraphs (c), (d), and (e), and pursuant to any terms and 
        conditions contained in the facility's contract, a nursing 
        facility that is under contract with the commissioner under this 
        section is in compliance with section 256B.48, subdivision 6, 
        paragraph (b), if the facility is Medicare certified. 
           (d) Notwithstanding paragraph (a), if by April 1, 1996, the 
        health care financing administration has not approved a required 
        waiver, or the health care financing administration otherwise 
        requires cost reports to be filed prior to the waiver's 
        approval, the commissioner shall require a cost report for the 
        rate year. 
           Subd. 11.  [CONSUMER PROTECTION.] As a condition of 
        entering into a contract under this section, a nursing facility 
        must agree to establish resident grievance procedures that are 
        similar to those required under section 256.045, subdivision 3.  
        The commissioner may also require nursing facilities to 
        establish expedited grievance procedures to resolve complaints 
        made by short-stay residents.  The facility must notify its 
        resident council of its intent to enter into a contract and must 
        consult with the council regarding any changes in operation 
        expected as a result of the contract. 
           Subd. 12.  [CONTRACTS ARE VOLUNTARY.] Participation of 
        nursing facilities in the alternative payment demonstration 
        project is voluntary.  The terms and procedures governing the 
        alternative payment demonstration project are determined under 
        this section and through negotiations between the commissioner 
        and nursing facilities that have submitted a letter of intent to 
        participate in the alternative demonstration project.  For 
        purposes of developing requests for proposals and contract 
        requirements, and negotiating the terms, conditions, and 
        requirements of contracts the commissioner is exempt from the 
        rulemaking requirements in chapter 14. 
           Subd. 13.  [PAYMENT SYSTEM REFORM ADVISORY COMMITTEE.] (a) 
        The commissioner, in consultation with an advisory committee, 
        shall study options for reforming the regulatory and 
        reimbursement system for nursing facilities to reduce the level 
        of regulation, reporting, and procedural requirements, and to 
        provide greater flexibility and incentives to stimulate 
        competition and innovation.  The advisory committee shall 
        include, at a minimum, representatives from the long-term care 
        provider community, the department of health, and consumers of 
        long-term care services.  The advisory committee sunsets on June 
        30, 1997.  Among other things, the commissioner shall consider 
        the feasibility and desirability of changing from a 
        certification requirement to an accreditation requirement for 
        participation in the medical assistance program, options to 
        encourage early discharge of short-term residents through the 
        provision of intensive therapy, and further modifications needed 
        in rate equalization.  The commissioner shall also include 
        detailed recommendations for a permanent managed care payment 
        system to replace the contractual alternative payment 
        demonstration project authorized under this section.  The 
        commissioner shall submit a report with findings and 
        recommendations to the legislature by January 15, 1997. 
           (b) If a permanent managed care payment system has not been 
        enacted into law by July 1, 1997, the commissioner shall develop 
        and implement a transition plan to enable nursing facilities 
        under contract with the commissioner under this section to 
        revert to the cost-based payment system at the expiration of the 
        alternative payment demonstration project.  The commissioner 
        shall include in the alternative payment demonstration project 
        contracts entered into under this section a provision to permit 
        an amendment to the contract to be made after July 1, 1997, 
        governing the transition back to the cost-based payment system.  
        The transition plan and contract amendments are not subject to 
        rulemaking requirements. 
           Subd. 14.  [FEDERAL REQUIREMENTS.] The commissioner shall 
        implement the contractual alternative payment demonstration 
        project subject to any required federal waivers or approval and 
        in a manner that is consistent with federal requirements.  If a 
        provision of this section is inconsistent with a federal 
        requirement the federal requirement supersedes the inconsistent 
        provision.  The commissioner shall seek federal approval and 
        request waivers as necessary to implement this section. 
           Subd. 15.  [EXTERNAL REVIEW PANEL.] The commissioner may 
        establish an external review panel consisting of persons 
        appointed by the commissioner for their expertise on issues 
        relating to nursing facility services, quality, payment systems, 
        and other matters, to advise the commissioner on the development 
        and implementation of the contractual alternative payment 
        demonstration project and to assist the commissioner in 
        assessing the quality of care provided and evaluating a 
        facility's compliance with performance standards specified in a 
        contract.  The external review panel must include, among other 
        members, representatives of nursing facilities. 
           Subd. 16.  [ALTERNATIVE CONTRACTS.] The commissioner may 
        also contract with nursing facilities in other ways through 
        requests for proposals, including contracts on a risk or nonrisk 
        basis, with nursing facilities or consortia of nursing 
        facilities, to provide comprehensive long-term care coverage on 
        a premium or capitated basis. 
           Subd. 17.  [REPORT.] The commissioner shall report to the 
        legislature by January 15, 1997, regarding the impact of the 
        alternative payment demonstration project.  In assessing the 
        impact, the commissioner may examine elements of the project 
        including consumer satisfaction, quality of care, adequacy of 
        services, timeliness in the delivery of services, and other 
        elements determined appropriate by the commissioner.  In 
        developing this report, the commissioner may involve appropriate 
        consumer advocate groups as needed to assist in monitoring and 
        evaluating changes in a nursing facility's behavior, including 
        the monitoring and evaluation of issues involving resident 
        protection.  The report must include recommendations for 
        reimbursement of nursing homes after June 30, 1997, based on 
        experience with the demonstration project. 
           Sec. 33.  Minnesota Statutes 1994, section 256B.501, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] For the purposes of this 
        section, the following terms have the meaning given them.  
           (a) "Commissioner" means the commissioner of human services.
           (b) "Facility" means a facility licensed as a mental 
        retardation residential facility under section 252.28, licensed 
        as a supervised living facility under chapter 144, and certified 
        as an intermediate care facility for persons with mental 
        retardation or related conditions.  The term does not include a 
        state regional treatment center. 
           (c) "Waivered service" means home or community-based 
        service authorized under United States Code, title 42, section 
        1396n(c), as amended through December 31, 1987, and defined in 
        the Minnesota state plan for the provision of medical assistance 
        services.  Waivered services include, at a minimum, case 
        management, family training and support, developmental training 
        homes, supervised living arrangements, semi-independent living 
        services, respite care, and training and habilitation services. 
           Sec. 34.  Minnesota Statutes 1994, section 256B.501, 
        subdivision 3, is amended to read: 
           Subd. 3.  [RATES FOR INTERMEDIATE CARE FACILITIES FOR 
        PERSONS WITH MENTAL RETARDATION OR RELATED CONDITIONS.] The 
        commissioner shall establish, by rule, procedures for 
        determining rates for care of residents of intermediate care 
        facilities for persons with mental retardation or related 
        conditions.  The procedures shall be based on methods and 
        standards that the commissioner finds are adequate to provide 
        for the costs that must be incurred for the care of residents in 
        efficiently and economically operated facilities.  In developing 
        the procedures, the commissioner shall include: 
           (a) cost containment measures that assure efficient and 
        prudent management of capital assets and operating cost 
        increases which do not exceed increases in other sections of the 
        economy; 
           (b) limits on the amounts of reimbursement for property, 
        general and administration, and new facilities; 
           (c) requirements to ensure that the accounting practices of 
        the facilities conform to generally accepted accounting 
        principles; 
           (d) incentives to reward accumulation of equity; 
           (e) a revaluation on sale between unrelated organizations 
        for a facility that, for at least three years before its use as 
        an intermediate care facility, has been used by the seller as a 
        single family home and been claimed by the seller as a 
        homestead, and was not revalued immediately prior to or upon 
        entering the medical assistance program, provided that the 
        facility revaluation not exceed the amount permitted by the 
        Social Security Act, section 1902(a)(13); and rule revisions 
        which: 
           (1) combine the program, maintenance, and administrative 
        operating cost categories, and professional liability and real 
        estate insurance expenses into one general operating cost 
        category; 
           (2) eliminate the maintenance and administrative operating 
        cost category limits and account for disallowances under the 
        rule existing on the effective date of this section in the 
        revised rule.  If this provision is later invalidated, the total 
        administrative cost disallowance shall be deducted from 
        economical facility payments in clause (3); 
           (3) establish an economical facility incentive that rewards 
        facilities that provide all appropriate services in a 
        cost-effective manner and penalizes reductions of either direct 
        service wages or standardized hours of care per resident; 
           (4) establish a best practices award system that is based 
        on outcome measures and that rewards quality, innovation, cost 
        effectiveness, and staff retention; 
           (5) establish compensation limits for employees on the 
        basis of full-time employment and the developmentally disabled 
        client base of a provider group or facility.  The commissioner 
        may consider the inclusion of hold harmless provisions; 
           (6) establish overall limits on a high cost facility's 
        general operating costs.  The commissioner shall consider 
        groupings of facilities that account for a significant variation 
        in cost.  The commissioner may differentiate in the application 
        of these limits between high and very high cost facilities.  The 
        limits, once established, shall be indexed for inflation and may 
        be rebased by the commissioner; 
           (7) utilize the client assessment information obtained from 
        the application of the provisions in subdivision 3g for the 
        revisions in clauses (3), (4), and (6); and 
           (8) develop cost allocation principles which are based on 
        facility expenses; and 
           (f) appeals procedures that satisfy the requirements of 
        section 256B.50 for appeals of decisions arising from the 
        application of standards or methods pursuant to Minnesota Rules, 
        parts 9510.0500 to 9510.0890, 9553.0010 to 9553.0080, and 12 
        MCAR 2.05301 to 2.05315 (temporary).  
           In establishing rules and procedures for setting rates for 
        care of residents in intermediate care facilities for persons 
        with mental retardation or related conditions, the commissioner 
        shall consider the recommendations contained in the February 11, 
        1983, Report of the Legislative Auditor on Community Residential 
        Programs for the Mentally Retarded and the recommendations 
        contained in the 1982 Report of the Department of Public Welfare 
        Rule 52 Task Force.  Rates paid to supervised living facilities 
        for rate years beginning during the fiscal biennium ending June 
        30, 1985, shall not exceed the final rate allowed the facility 
        for the previous rate year by more than five percent. 
           Sec. 35.  Minnesota Statutes 1994, section 256B.501, 
        subdivision 3c, is amended to read: 
           Subd. 3c.  [COMPOSITE FORECASTED INDEX.] For rate years 
        beginning on or after October 1, 1988, the commissioner shall 
        establish a statewide composite forecasted index to take into 
        account economic trends and conditions between the midpoint of 
        the facility's reporting year and the midpoint of the rate year 
        following the reporting year.  The statewide composite index 
        must incorporate the forecast by Data Resources, Inc. of 
        increases in the average hourly earnings of nursing and personal 
        care workers indexed in Standard Industrial Code 805 in 
        "Employment and Earnings," published by the Bureau of Labor 
        Statistics, United States Department of Labor.  This portion of 
        the index must be weighted annually by the proportion of total 
        allowable salaries and wages to the total allowable operating 
        costs in the program, maintenance, and administrative operating 
        cost categories for all facilities. 
           For adjustments to the other operating costs in the 
        program, maintenance, and administrative operating cost 
        categories, the statewide index must incorporate the Data 
        Resources, Inc. forecast for increases in the national CPI-U.  
        This portion of the index must be weighted annually by the 
        proportion of total allowable other operating costs to the total 
        allowable operating costs in the program, maintenance, and 
        administrative operating cost categories for all facilities.  
        The commissioner shall use the indices as forecasted by Data 
        Resources, Inc., in the fourth quarter of the reporting year. 
           For rate years beginning on or after October 1, 1990, the 
        commissioner shall index a facility's allowable operating costs 
        in the program, maintenance, and administrative operating cost 
        categories by using Data Resources, Inc., forecast for change in 
        the Consumer Price Index-All Items (U.S. city average) (CPI-U).  
        The commissioner shall use the indices as forecasted by Data 
        Resources, Inc., in the first quarter of the calendar year in 
        which the rate year begins.  For fiscal years beginning after 
        June 30, 1993, the commissioner shall not provide automatic 
        inflation adjustments for intermediate care facilities for 
        persons with mental retardation.  The commissioner of finance 
        shall include annual inflation adjustments in operating costs 
        for intermediate care facilities for persons with mental 
        retardation and related conditions as a budget change request in 
        each biennial detailed expenditure budget submitted to the 
        legislature under section 16A.11.  The commissioner shall use 
        the Consumer Price Index-All Items (United States city average) 
        (CPI-U) as forecasted by Data Resources, Inc., to take into 
        account economic trends and conditions for changes in facility 
        allowable historical general operating costs and limits.  The 
        forecasted index shall be established for allowable historical 
        general operating costs as follows: 
           (1) the CPI-U forecasted index for allowable historical 
        general operating costs shall be determined in the first quarter 
        of the calendar year in which the rate year begins, and shall be 
        based on the 21-month period from the midpoint of the facility's 
        reporting year to the midpoint of the rate year following the 
        reporting year; and 
           (2) for rate years beginning on or after October 1, 1995, 
        the CPI-U forecasted index for the overall operating cost limits 
        and for the individual compensation limit shall be determined in 
        the first quarter of the calendar year in which the rate year 
        begins, and shall be based on the 12-month period between the 
        midpoints of the two reporting years preceding the rate year. 
           Sec. 36.  Minnesota Statutes 1994, section 256B.501, 
        subdivision 3g, is amended to read: 
           Subd. 3g.  [ASSESSMENT OF RESIDENTS CLIENTS.] (a) To 
        establish the service characteristics of residents clients, 
        the quality assurance and review teams in the department of 
        health Minnesota department of health case mix review program 
        shall assess all residents clients annually.  beginning January 
        1, 1989, using a uniform assessment instrument developed by the 
        commissioner.  This instrument shall include assessment of the 
        services identified as needed and provided to each client to 
        address behavioral needs, integration into the community, 
        ability to perform activities of daily living, medical and 
        therapeutic needs, and other relevant factors determined by the 
        commissioner.  By January 30, 1994, the commissioner shall 
        report to the legislature on: 
           (1) the assessment process and scoring system utilized; 
           (2) possible utilization of assessment information by 
        facilities for management purposes; and 
           (3) possible application of the assessment for purposes of 
        adjusting the operating cost rates of facilities based on a 
        comparison of client services characteristics, resource needs, 
        and costs.  The facility's qualified mental retardation 
        professional (QMRP) with primary responsibility for the client's 
        individual program plan, in conjunction with the 
        interdisciplinary team, shall assess each client who is newly 
        admitted to a facility.  This assessment must occur within 30 
        days from the date of admission during the interdisciplinary 
        team meeting. 
           (b) All client assessments must be conducted as set forth 
        in the manual, Minnesota ICF/MR Client Assessment Manual, 
        February 1995, hereinafter referred to in this subdivision as 
        the manual.  Client assessments completed by the case mix review 
        program and the facility QMRP must be recorded on assessment 
        forms developed by the commissioner of health.  The facility 
        QMRP must complete the assessment form, submit it to the case 
        mix review program, and mail a copy to the client's case manager 
        within ten working days following the interdisciplinary team 
        meeting. 
           (c) The case mix review program shall score assessments 
        according to attachment E of the manual in the assessment 
        domains of personal interaction, independence, and integration, 
        challenging behaviors and preventive practice, activities of 
        daily living, and special treatments.  Scores must be based on 
        information from the assessment form.  A client's score from 
        each assessment domain shall be used to determine that client's 
        classification. 
           (d) The commissioner of health shall determine and assign 
        classifications for each client using the procedures specified 
        in attachment F of the manual.  The commissioner of health shall 
        assign the client classification within 15 working days after 
        receiving the completed assessment form submitted by the case 
        mix review program team or the facility QMRP.  The 
        classification for a newly admitted client is effective 
        retroactive to the date of the client's admission.  If a 
        facility QMRP submits an incomplete assessment form, the case 
        mix review program shall inform the facility QMRP of the need to 
        submit additional information necessary for assigning a 
        classification.  The facility QMRP must mail the additional 
        information to the case mix review program no later than five 
        working days after receiving the request for the information.  
        If a facility QMRP fails to submit a completed client assessment 
        for a client who is newly admitted to the facility, that 
        client's first assessment in the facility conducted by the case 
        mix review program shall be used to establish a client 
        classification retroactive to the date of the client's 
        admission.  Any change in classification due to annual 
        assessment by the case mix review program will be effective on 
        the first day of the month following completion of the case mix 
        review program's annual assessment of all the facility's 
        clients.  A client who has resided in the facility less than 30 
        days must be assessed by the case mix review program during the 
        annual assessment, but must not have a client classification 
        assigned based on the case mix review program's assessment 
        unless the facility QMRP fails to submit a completed client 
        assessment and the client goes on to reside in the facility for 
        more than 30 days. 
           (e) The facility QMRP may request a reclassification for a 
        client by completing a new client assessment if the facility 
        QMRP believes that the client's status has changed since the 
        case mix review program's annual assessment and that these 
        changes will result in a change in the client's classification.  
        Client assessments for purposes of reclassification will be 
        governed by the following: 
           (1) The facility QMRP that requests reclassification of a 
        client must provide the case mix review program with evidence to 
        determine a change in the client's classification.  Evidence 
        must include photocopies of documentation from the client's 
        record, as specified in the documentation requirements sections 
        of the manual. 
           (2) A reclassification assessment must occur between the 
        third and the ninth month following the case mix review 
        program's annual assessment of the client.  The facility QMRP 
        can request only one reclassification for each client annually. 
           (3) Any change in classification approved by the case mix 
        review program shall be effective on the first day of the month 
        following the date when the facility QMRP assessed the client 
        for the reclassification. 
           (4) The case mix review program shall determine 
        reclassification based on the documentation submitted by the 
        facility QMRP.  If there is not sufficient information submitted 
        to justify a change to a higher classification, the case mix 
        review program may request additional information necessary to 
        complete a reclassification. 
           (5) If the facility QMRP does not provide sufficient 
        documentation to support a change in classification, the 
        classification shall remain at the level assessed by the case 
        mix review program at the last inspection of care. 
           (f) The case mix review program shall conduct desk audits 
        or on-site audits of assessments performed by facility QMRPs.  
        Case mix review program staff shall conduct desk audits of any 
        assessment believed to be inaccurate.  The case mix review 
        program may request the facility to submit additional 
        information needed to conduct a desk audit.  The facility shall 
        mail the requested information within five working days after 
        receiving the request. 
           (g) The case mix review program may conduct on-site audits 
        of at least ten percent of the total assessments submitted by 
        facility QMRPs in the previous year and may also conduct special 
        audits if it determines that circumstances exist that could 
        change or affect the validity of assigned classifications.  The 
        facility shall grant the case mix review program staff access to 
        the client records during regular business hours for the purpose 
        of conducting an audit.  For assessments submitted for new 
        clients, the case mix review program shall consider 
        documentation in the client's record up to and including the 
        date the client was assessed by the facility QMRP.  For audits 
        of reclassification assessments, the case mix review program 
        shall consider documentation in the client's record from three 
        months preceding the assessment up to and including the date the 
        client was assessed by the facility QMRP.  If the audit reveals 
        that the facility's assessment does not accurately reflect the 
        client's status for the time period and the appropriate 
        supporting documentation cannot be produced by the facility, the 
        case mix review program shall change the classification so that 
        it is consistent with the results of the audit.  Any change in 
        client classification that results from an audit must be 
        retroactive to the effective date of the client assessment that 
        was audited.  Case mix review program staff shall not discuss 
        preliminary audit findings with the facility's staff.  Within 15 
        working days after completing the audit, the case mix review 
        program shall mail a notice of the results of the audit to the 
        facility. 
           (h) Requests for reconsideration of client classifications 
        shall be made under section 144.0723 and must be submitted 
        according to section IV of the manual.  A reconsideration must 
        be reviewed by case mix review program staff not involved in 
        completing the assessment that established the disputed 
        classification.  The reconsideration must be based upon the 
        information provided to the case mix review program.  Within 15 
        working days after receiving the request for reconsideration, 
        the case mix review program shall affirm or modify the original 
        classification.  The original classification must be modified if 
        the case mix review program determines that the assessment 
        resulting in the classification did not accurately reflect the 
        status of the client at the time of the assessment.  The 
        department of health's decision on reconsiderations is the final 
        administrative decision of the department.  The classification 
        assigned by the department of health must be the classification 
        that applies to the client while the request for reconsideration 
        is pending.  A change in a classification resulting from a 
        reconsideration must be retroactive to the effective date of the 
        client assessment for which a reconsideration was requested. 
           (i) The commissioner of human services shall assign weights 
        to each client's classification according to the following table:
                  Classification           Classification Weight 
                      1S                          1.00 
                      1I                          1.04 
                      2S                          1.36 
                      2I                          1.52 
                      3S                          1.58 
                      3I                          1.68 
                      4S                          1.87 
                      4I                          2.02 
                      5S                          2.09 
                      5I                          2.26 
                      6S                          2.26 
                      6I                          2.52 
                      7S                          2.10 
                      7I                          2.37 
                      8S                          2.26 
                      8I                          2.52 
           Sec. 37.  Minnesota Statutes 1994, section 256B.501, is 
        amended by adding a subdivision to read: 
           Subd. 5b.  [ICF/MR OPERATING COST LIMITATION AFTER 
        SEPTEMBER 30, 1995.] (a) For rate years beginning on October 1, 
        1995, and October 1, 1996, the commissioner shall limit the 
        allowable operating cost per diems, as determined under this 
        subdivision and the reimbursement rules, for high cost 
        ICF's/MR.  Prior to indexing each facility's operating cost per 
        diems for inflation, the commissioner shall group the facilities 
        into eight groups.  The commissioner shall then array all 
        facilities within each grouping by their general operating cost 
        per service unit per diems. 
           (b) The commissioner shall annually review and adjust the 
        general operating costs incurred by the facility during the 
        reporting year preceding the rate year to determine the 
        facility's allowable historical general operating costs.  For 
        this purpose, the term general operating costs means the 
        facility's allowable operating costs included in the program, 
        maintenance, and administrative operating costs categories, as 
        well as the facility's related payroll taxes and fringe 
        benefits, real estate insurance, and professional liability 
        insurance.  A facility's total operating cost payment rate shall 
        be limited according to paragraphs (c) and (d) as follows: 
           (c) A facility's total operating cost payment rate shall be 
        equal to its allowable historical operating cost per diems for 
        program, maintenance, and administrative cost categories 
        multiplied by the forecasted inflation index in subdivision 3c, 
        clause (1), subject to the limitations in paragraph (d). 
           (d) For the rate years beginning on or after October 1, 
        1995, the commissioner shall establish maximum overall general 
        operating cost per service unit limits for facilities according 
        to clauses (1) to (8).  Each facility's allowable historical 
        general operating costs and client assessment information 
        obtained from client assessments completed under subdivision 3g 
        for the reporting year ending December 31, 1994 (the base year), 
        shall be used for establishing the overall limits.  If a 
        facility's proportion of temporary care resident days to total 
        resident days exceeds 80 percent, the commissioner must exempt 
        that facility from the overall general operating cost per 
        service unit limits in clauses (1) to (8).  For this purpose, 
        "temporary care" means care provided by a facility to a client 
        for less than 30 consecutive resident days. 
           (1) The commissioner shall determine each facility's 
        weighted service units for the reporting year by multiplying its 
        resident days in each client classification level as established 
        in subdivision 3g, paragraph (d), by the corresponding weights 
        for that classification level, as established in subdivision 3g, 
        paragraph (i), and summing the results.  For the reporting year 
        ending December 31, 1994, the commissioner shall use the service 
        unit score computed from the client classifications determined 
        by the Minnesota department of health's annual review, including 
        those of clients admitted during that year. 
           (2) The facility's service unit score is equal to its 
        weighted service units as computed in clause (1), divided by the 
        facility's total resident days excluding temporary care resident 
        days, for the reporting year. 
           (3) For each facility, the commissioner shall determine the 
        facility's cost per service unit by dividing its allowable 
        historical general operating costs for the reporting year by the 
        facility's service unit score in clause (2) multiplied by its 
        total resident days, or 85 percent of the facility's capacity 
        days times its service unit score in clause (2), if the 
        facility's occupancy is less than 85 percent of licensed 
        capacity.  If a facility reports temporary care resident days, 
        the temporary care resident days shall be multiplied by the 
        service unit score in clause (2), and the resulting weighted 
        resident days shall be added to the facility's weighted service 
        units in clause (1) prior to computing the facility's cost per 
        service unit under this clause. 
           (4) The commissioner shall group facilities based on class 
        A or class B licensure designation, number of licensed beds, and 
        geographic location.  For purposes of this grouping, facilities 
        with six beds or less shall be designated as small facilities 
        and facilities with more than six beds shall be designated as 
        large facilities.  If a facility has both class A and class B 
        licensed beds, the facility shall be considered a class A 
        facility for this purpose if the number of class A beds is more 
        than half its total number of ICF/MR beds; otherwise the 
        facility shall be considered a class B facility.  The 
        metropolitan geographic designation shall include Anoka, Carver, 
        Dakota, Hennepin, Ramsey, Scott, and Washington counties.  All 
        other Minnesota counties shall be designated as the 
        nonmetropolitan geographic group.  These characteristics result 
        in the following eight groupings: 
           (i) small class A metropolitan; 
           (ii) large class A metropolitan; 
           (iii) small class B metropolitan; 
           (iv) large class B metropolitan; 
           (v) small class A nonmetropolitan; 
           (vi) large class A nonmetropolitan; 
           (vii) small class B nonmetropolitan; and 
           (viii) large class B nonmetropolitan. 
           (5) The commissioner shall array facilities within each 
        grouping in clause (4) by each facility's cost per service unit 
        as determined in clause (3). 
           (6) In each array established under clause (5), facilities 
        with a cost per service unit at or above the median shall be 
        limited to the lesser of:  (i) the current reporting year's cost 
        per service unit; or (ii) the prior reporting year's allowable 
        historical general operating cost per service unit plus the 
        inflation factor as established in subdivision 3c, clause (2), 
        increased by three percentage points. 
           (7) The overall operating cost per service unit limit for 
        each group shall be established as follows: 
           (i) each array established under clause (5) shall be 
        arrayed again after the application of clause (6); 
           (ii) in each array established in clause (5), two general 
        operating cost limits shall be determined.  The first cost per 
        service unit limit shall be established at 0.5 and less than or 
        equal to 1.0 standard deviation above the median of that array.  
        The second cost per service unit limit shall be established at 
        1.0 standard deviation above the median of the array; and 
           (iii) the overall operating cost per service unit limits 
        shall be indexed for inflation annually beginning with the 
        reporting year ending December 31, 1995, using the forecasted 
        inflation index in subdivision 3c, clause (2). 
           (8) Annually, facilities shall be arrayed using the method 
        described in clauses (5) and (7).  Each facility with a cost per 
        service unit at or above its group's first cost per service unit 
        limit, but less than the second cost per service unit limit for 
        that group, shall be limited to 98 percent of its total 
        operating cost per diems then add the forecasted inflation index 
        in subdivision 3c, clause (1).  Each facility with a cost per 
        service unit at or above the second cost per service unit limit 
        will be limited to 97 percent of its total operating cost per 
        diems, then add the forecasted inflation index in subdivision 
        3c, clause (1). 
           (9) The commissioner may rebase these overall limits, using 
        the method described in this subdivision, but no more frequently 
        than once every three years. 
           (e) For rate years beginning on or after October 1, 1995, 
        the facility's efficiency incentive shall be determined as 
        provided in the reimbursement rule. 
           (f) The total operating cost payment rate shall be the sum 
        of paragraphs (c) and (e). 
           Sec. 38.  Minnesota Statutes 1994, section 256B.501, is 
        amended by adding a subdivision to read: 
           Subd. 5c.  [OPERATING COSTS AFTER SEPTEMBER 30, 1997.] (a)  
        In general, the commissioner shall establish maximum standard 
        rates for the prospective reimbursement of facility costs.  The 
        maximum standard rates must take into account the level of 
        reimbursement which is adequate to cover the base-level costs of 
        economically operated facilities.  In determining the base-level 
        costs, the commissioner shall consider geographic location, 
        types of facilities (class A or class B), minimum staffing 
        standards, resident assessment under subdivision 3g, and other 
        factors as determined by the commissioner. 
           (b) The commissioner shall also develop additional 
        incentive-based payments which, if achieved for specified 
        outcomes, will be added to the maximum standard rates.  The 
        specified outcomes must be measurable and shall be based on 
        criteria to be developed by the commissioner during fiscal year 
        1996.  The commissioner may establish various levels of 
        achievement within an outcome.  Once the outcomes are 
        established, the commissioner shall assign various levels of 
        payment associated with achieving the outcome.  In establishing 
        the specified outcomes and the related criteria, the 
        commissioner shall consider the following state policy 
        objectives:  (1) resident transitioned into cost-effective 
        community alternatives; (2) the results of a uniform consumer 
        satisfaction survey; (3) the achievement of no major licensure 
        or certification deficiencies; or (4) any other outcomes the 
        commissioner finds desirable. 
           (c) In developing the maximum standard rates and the 
        incentive-based payments, desirable outcomes, and related 
        criteria, the commissioner, in collaboration with the 
        commissioner of health, shall form an advisory committee.  The 
        membership of the advisory committee shall include 
        representation from the consumers advocacy groups (3), the two 
        facility trade associations (3 each), counties (3), commissioner 
        of finance (1), the legislature (2 each from both the house and 
        senate), and others the commissioners find appropriate. 
           (d) Beginning July 1, 1996, the commissioner shall collect 
        the data from the facilities, the department of health, or 
        others as necessary to determine the extent to which a facility 
        has met any of the outcomes and related criteria.  Payment rates 
        under this subdivision shall be effective October 1, 1997. 
           (e) The commissioner shall report to the legislature on the 
        progress of the advisory committee by January 31, 1996, any 
        necessary changes to the reimbursement methodology proposed 
        under this subdivision.  By January 15, 1997, the commissioner 
        shall recommend to the legislature legislation which will 
        implement this reimbursement methodology for rate years 
        beginning on or after the proposed effective date of October 1, 
        1997. 
           Sec. 39.  Minnesota Statutes 1994, section 256B.501, 
        subdivision 8, is amended to read: 
           Subd. 8.  [PAYMENT FOR PERSONS WITH SPECIAL NEEDS.] The 
        commissioner shall establish by December 31, 1983, procedures to 
        be followed by the counties to seek authorization from the 
        commissioner for medical assistance reimbursement for very 
        dependent persons with special needs in an amount in excess of 
        the rates allowed pursuant to subdivision 2, including rates 
        established under section 252.46 when they apply to services 
        provided to residents of intermediate care facilities for 
        persons with mental retardation or related conditions, and 
        procedures to be followed for rate limitation exemptions for 
        intermediate care facilities for persons with mental retardation 
        or related conditions.  Rate payments under subdivision 8a are 
        eligible for a rate exception under this subdivision.  No excess 
        payment approved by the commissioner after June 30, 1991, shall 
        be authorized unless: 
           (1) the need for specific level of service is documented in 
        the individual service plan of the person to be served; 
           (2) the level of service needed can be provided within the 
        rates established under section 252.46 and Minnesota Rules, 
        parts 9553.0010 to 9553.0080, without a rate exception within 12 
        months; 
           (3) staff hours beyond those available under the rates 
        established under section 252.46 and Minnesota Rules, parts 
        9553.0010 to 9553.0080, necessary to deliver services do not 
        exceed 1,440 hours within 12 months; 
           (4) there is a basis for the estimated cost of services; 
           (5) the provider requesting the exception documents that 
        current per diem rates are insufficient to support needed 
        services; 
           (6) estimated costs, when added to the costs of current 
        medical assistance-funded residential and day training and 
        habilitation services and calculated as a per diem, do not 
        exceed the per diem established for the regional treatment 
        centers for persons with mental retardation and related 
        conditions on July 1, 1990, indexed annually by the urban 
        consumer price index, all items, as forecasted by Data Resources 
        Inc., for the next fiscal year over the current fiscal year; 
           (7) any contingencies for an approval as outlined in 
        writing by the commissioner are met; and 
           (8) any commissioner orders for use of preferred providers 
        are met. 
           The commissioner shall evaluate the services provided 
        pursuant to this subdivision through program and fiscal audits.  
           The commissioner may terminate the rate exception at any 
        time under any of the conditions outlined in Minnesota Rules, 
        part 9510.1120, subpart 3, for county termination, or by reason 
        of information obtained through program and fiscal audits which 
        indicate the criteria outlined in this subdivision have not 
        been, or are no longer being, met. 
           The commissioner may approve no more than one rate 
        exception, up to 12 months duration, for an eligible client. 
           Sec. 40.  Minnesota Statutes 1994, section 256B.501, is 
        amended by adding a subdivision to read: 
           Subd. 8a.  [PAYMENT FOR PERSONS WITH SPECIAL NEEDS FOR 
        CRISIS INTERVENTION SERVICES.] State-operated, community-based 
        crisis services provided in accordance with section 252.50, 
        subdivision 7, to a resident of an intermediate care facility 
        for persons with mental retardation (ICF/MR) reimbursed under 
        this section shall be paid by medical assistance in accordance 
        with the paragraphs (a) to (h). 
           (a) "Crisis services" means the specialized services listed 
        in clauses (1) to (3) provided to prevent the recipient from 
        requiring placement in a more restrictive institutional setting 
        such as an inpatient hospital or regional treatment center and 
        to maintain the recipient in the present community setting. 
           (1) The crisis services provider shall assess the 
        recipient's behavior and environment to identify factors 
        contributing to the crisis. 
           (2) The crisis services provider shall develop a 
        recipient-specific intervention plan in coordination with the 
        service planning team and provide recommendations for revisions 
        to the individual service plan if necessary to prevent or 
        minimize the likelihood of future crisis situations.  The 
        intervention plan shall include a transition plan to aid the 
        recipient in returning to the community-based ICF/MR if the 
        recipient is receiving residential crisis services.  
           (3) The crisis services provider shall consult with and 
        provide training and ongoing technical assistance to the 
        recipient's service providers to aid in the implementation of 
        the intervention plan and revisions to the individual service 
        plan. 
           (b) "Residential crisis services" means crisis services 
        that are provided to a recipient admitted to the crisis services 
        foster care setting because the ICF/MR receiving reimbursement 
        under this section is not able, as determined by the 
        commissioner, to provide the intervention and protection of the 
        recipient and others living with the recipient that is necessary 
        to prevent the recipient from requiring placement in a more 
        restrictive institutional setting. 
           (c) Crisis services providers must be licensed by the 
        commissioner under section 245A.03 to provide foster care, must 
        exclusively provide short-term crisis intervention, and must not 
        be located in a private residence. 
           (d) Payment rates are determined annually for each crisis 
        services provider based on cost of care for each provider as 
        defined in section 246.50.  Interim payment rates are calculated 
        on a per diem basis by dividing the projected cost of providing 
        care by the projected number of contact days for the fiscal 
        year, as estimated by the commissioner.  Final payment rates are 
        calculated by dividing the actual cost of providing care by the 
        actual number of contact days in the applicable fiscal year.  
           (e) Payment shall be made for each contact day.  "Contact 
        day" means any day in which the crisis services provider has 
        face-to-face contact with the recipient or any of the 
        recipient's medical assistance service providers for the purpose 
        of providing crisis services as defined in paragraph (c). 
           (f) Payment for residential crisis services is limited to 
        21 days, unless an additional period is authorized by the 
        commissioner.  The additional period may not exceed 21 days. 
           (g) Payment for crisis services shall be made only for 
        services provided while the ICF/MR receiving reimbursement under 
        this section: 
           (1) has a shared services agreement with the crisis 
        services provider in effect in accordance with section 246.57; 
           (2) has reassigned payment for the provision of the crisis 
        services under this subdivision to the commissioner in 
        accordance with Code of Federal Regulations, title 42, section 
        447.10(e); and 
           (3) has executed a cooperative agreement with the crisis 
        services provider to implement the intervention plan and 
        revisions to the individual service plan as necessary to prevent 
        or minimize the likelihood of future crisis situations, to 
        maintain the recipient in the present community setting, and to 
        prevent the recipient from requiring a more restrictive 
        institutional setting. 
           (h) Payment to the ICF/MR receiving reimbursement under 
        this section shall be made for up to 18 therapeutic leave days 
        during which the recipient is receiving residential crisis 
        services, if the ICF/MR is otherwise eligible to receive payment 
        for a therapeutic leave day under Minnesota Rules, part 
        9505.0415.  Payment under this paragraph shall be terminated if 
        the commissioner determines that the ICF/MR is not meeting the 
        terms of the cooperative agreement under paragraph (g) or that 
        the recipient will not return to the ICF/MR. 
           Sec. 41.  Minnesota Statutes 1994, section 256B.69, is 
        amended by adding a subdivision to read: 
           Subd. 23.  [ALTERNATIVE INTEGRATED LONG-TERM CARE SERVICES; 
        ELDERLY AND DISABLED PERSONS.] (a) The commissioner may 
        implement demonstration projects to create alternative 
        integrated delivery systems for acute and long-term care 
        services to elderly and disabled persons that provide increased 
        coordination, improve access to quality services, and mitigate 
        future cost increases.  The commissioner may seek federal 
        authority to combine Medicare and Medicaid capitation payments 
        for the purpose of such demonstrations.  Medicare funds and 
        services shall be administered according to the terms and 
        conditions of the federal waiver and demonstration provisions.  
        For the purpose of administering medical assistance funds, 
        demonstrations under this subdivision are subject to 
        subdivisions 1 to 17.  The provisions of Minnesota Rules, parts 
        9500.1450 to 9500.1464, apply to these demonstrations, with the 
        exceptions of parts 9500.1452, subpart 2, item B; and 9500.1457, 
        subpart 1, items B and C, which do not apply to elderly persons 
        enrolling in demonstrations under this section.  An initial open 
        enrollment period may be provided.  Persons who disenroll from 
        demonstrations under this subdivision remain subject to 
        Minnesota Rules, parts 9500.1450 to 9500.1464.  When a person is 
        enrolled in a health plan under these demonstrations and the 
        health plan's participation is subsequently terminated for any 
        reason, the person shall be provided an opportunity to select a 
        new health plan and shall have the right to change health plans 
        within the first 60 days of enrollment in the second health 
        plan.  Persons required to participate in health plans under 
        this section who fail to make a choice of health plan shall not 
        be randomly assigned to health plans under these demonstrations. 
        Notwithstanding section 256.9363, subdivision 5, and Minnesota 
        Rules, part 9505.5220, subpart 1, item A, if adopted, for the 
        purpose of demonstrations under this subdivision, the 
        commissioner may contract with managed care organizations to 
        serve only elderly persons eligible for medical assistance, 
        elderly and disabled persons, or disabled persons only. 
           Before implementation of a demonstration project for 
        disabled persons, the commissioner must provide information to 
        appropriate committees of the house of representatives and 
        senate and must involve representatives of affected disability 
        groups in the design of the demonstration projects. 
           (b) A nursing facility reimbursed under the alternative 
        reimbursement methodology in section 256B.434 may, in 
        collaboration with a hospital, clinic, or other health care 
        entity provide services under paragraph (a).  The commissioner 
        shall amend the state plan and seek any federal waivers 
        necessary to implement this paragraph. 
           Sec. 42.  [ICF/MR RULE REVISION RECORDKEEPING.] 
           The commissioner shall consider various time record and 
        time distribution recordkeeping requirements when developing 
        rule revisions for cost allocation regarding intermediate care 
        facilities for persons with mental retardation or related 
        conditions.  The commissioner shall consider information from 
        the public, including providers, provider associations, 
        advocates, and counties when developing rule amendments in the 
        area of cost allocation. 
           From July 1, 1995, until June 30, 1996, all employees and 
        consultants of ICFs/MR, including any individual for whom any 
        portion of that individual's compensation is reported for 
        reimbursement under Minnesota Rules, parts 9553.0010 to 
        9553.0080, shall document their service to all sites according 
        to paragraphs (a) to (c).  For this purpose, and for paragraphs 
        (a) to (c), "employee" means an individual who is compensated by 
        a facility or provider group for necessary services on any 
        hourly or salaried basis.  Employees and consultants for whom no 
        portion of that individual's total compensation is reported for 
        reimbursement in Minnesota Rules, parts 9553.0010 to 9553.0080, 
        are exempt from the recordkeeping requirements in paragraphs (a) 
        to (c). 
           (a) Time and attendance records are required for all 
        employees and consultants as set forth in Minnesota Statutes, 
        section 256B.432, subdivision 8. 
           (b) Employees and consultants shall keep time records on a 
        daily basis showing the actual time spent on various activities, 
        as required by Minnesota Rules, part 9553.0030, except that 
        employees with multiple duties must not use a sampling method. 
           (c) All employees and consultants who work for the benefit 
        of more than one site shall keep a record of where work is 
        performed.  This record must specify the time in which work 
        performed at a site solely benefits that site.  The amount of 
        time reported for work performed at a site for the sole benefit 
        of that site does not need to be adjusted for brief, infrequent 
        telephone interruptions, time spent away from the site when 
        accompanying clients from that site, and time away from the site 
        for shopping or errands if the shopping or errands benefit 
        solely that site. 
           For recordkeeping purposes, "site" means a Minnesota 
        ICF/MR, waivered services location, semi-independent living 
        service arrangement, day training and habilitation operation, or 
        similar out-of-state service operation for persons with 
        developmental disabilities.  Site also means any 
        nondevelopmental disability service location or any business 
        operation owned or operated by a provider group, either in or 
        outside of Minnesota, whether or not that operation provides a 
        service to persons with developmental disabilities. 
           Sec. 43.  [REPEALER.] 
           Subdivision 1.  Minnesota Statutes 1994, sections 144.0723, 
        subdivision 5, 144A.073, subdivision 3a, 252.47, and 256B.501, 
        subdivision 3f, are repealed.  
           Subd. 2.  Minnesota Statutes 1994, section 256B.501, 
        subdivisions 3d and 3e, is repealed for rate years beginning 
        after September 30, 1996. 
           Sec. 44.  [EFFECTIVE DATES.] 
           Subdivision 1.  Sections 12 (144A.071, subdivision 5a), 13, 
        16, 17, and 18 (144A.073, subdivisions 1, 3c, 4, and 5), are 
        effective the day following final enactment.  
           Subd. 2.  Sections 39 and 40 (256B.501, subdivisions 8 and 
        8a) are effective upon publication in the State Register by the 
        commissioner of human services that federal approval has been 
        received. 
           Subd. 3.  Sections 27 to 31 (256B.432, subdivisions 1, 2, 
        3, 5, and 6) are effective for ICF/MR rate years beginning after 
        September 30, 1996. 
                                   ARTICLE 8
                      COMMUNITY MENTAL HEALTH AND REGIONAL 
                               TREATMENT CENTERS 
           Section 1.  Minnesota Statutes 1994, section 245.041, is 
        amended to read: 
           245.041 [PROVISION OF FIREARMS BACKGROUND CHECK 
        INFORMATION.] 
           Notwithstanding section 253B.23, subdivision 9, the 
        commissioner of human services shall provide commitment 
        information to local law enforcement agencies on an individual 
        request basis by means of electronic data transfer from the 
        department of human services through the Minnesota crime 
        information system for the sole purpose of facilitating a 
        firearms background check under section 624.7131, 624.7132, or 
        624.714.  The information to be provided is limited to whether 
        the person has been committed under chapter 253B and, if so, the 
        type of commitment. 
           Sec. 2.  Minnesota Statutes 1994, section 245.4871, 
        subdivision 12, is amended to read: 
           Subd. 12.  [EARLY MENTAL HEALTH IDENTIFICATION AND 
        INTERVENTION SERVICES.] "Early Mental health identification and 
        intervention services" means services that are designed to 
        identify children who are at risk of needing or who need mental 
        health services and that arrange for intervention and treatment. 
           Sec. 3.  Minnesota Statutes 1994, section 245.4871, 
        subdivision 33a, is amended to read: 
           Subd. 33a.  [SPECIAL CULTURALLY INFORMED MENTAL HEALTH 
        CONSULTANT.] "Special Culturally informed mental health 
        consultant" is a mental health practitioner or professional with 
        special expertise in treating children from a particular 
        cultural or racial minority group person who is recognized by 
        the culture as one who has knowledge of a particular culture and 
        its definition of health and mental health; and who is used as 
        necessary to assist the county board and its mental health 
        providers in assessing and providing appropriate mental health 
        services for children from that particular cultural, linguistic, 
        or racial heritage and their families. 
           Sec. 4.  Minnesota Statutes 1994, section 245.4871, is 
        amended by adding a subdivision to read: 
           Subd. 35.  [TRANSITION SERVICES.] "Transition services" 
        means mental health services, designed within an outcome 
        oriented process that promotes movement from school to 
        postschool activities, including post-secondary education, 
        vocational training, integrated employment including supported 
        employment, continuing and adult education, adult mental health 
        and social services, other adult services, independent living, 
        or community participation. 
           Sec. 5.  Minnesota Statutes 1994, section 245.4873, 
        subdivision 6, is amended to read: 
           Subd. 6.  [PRIORITIES.] By January 1, 1992, the 
        commissioner shall require that each of the treatment services 
        and management activities described in sections 245.487 to 
        245.4888 be developed for children with emotional disturbances 
        within available resources based on the following ranked 
        priorities.  The commissioner shall reassign agency staff and 
        use consultants as necessary to meet this deadline:  
           (1) the provision of locally available mental health 
        emergency services; 
           (2) the provision of locally available mental health 
        services to all children with severe emotional disturbance; 
           (3) the provision of early mental health identification and 
        intervention services to children who are at risk of needing or 
        who need mental health services; 
           (4) the provision of specialized mental health services 
        regionally available to meet the special needs of all children 
        with severe emotional disturbance, and all children with 
        emotional disturbances; 
           (5) the provision of locally available services to children 
        with emotional disturbances; and 
           (6) the provision of education and preventive mental health 
        services. 
           Sec. 6.  Minnesota Statutes 1994, section 245.4874, is 
        amended to read: 
           245.4874 [DUTIES OF COUNTY BOARD.] 
           The county board in each county shall use its share of 
        mental health and community social services act funds allocated 
        by the commissioner according to a biennial children's mental 
        health component of the community social services plan required 
        under section 245.4888, and approved by the commissioner.  The 
        county board must: 
           (1) develop a system of affordable and locally available 
        children's mental health services according to sections 245.487 
        to 245.4888; 
           (2) establish a mechanism providing for interagency 
        coordination as specified in section 245.4875, subdivision 6; 
           (3) develop a biennial children's mental health component 
        of the community social services plan required under section 
        256E.09 which considers the assessment of unmet needs in the 
        county as reported by the local children's mental health 
        advisory council under section 245.4875, subdivision 5, 
        paragraph (b), clause (3).  The county shall provide, upon 
        request of the local children's mental health advisory council, 
        readily available data to assist in the determination of unmet 
        needs; 
           (4) assure that parents and providers in the county receive 
        information about how to gain access to services provided 
        according to sections 245.487 to 245.4888; 
           (5) coordinate the delivery of children's mental health 
        services with services provided by social services, education, 
        corrections, health, and vocational agencies to improve the 
        availability of mental health services to children and the 
        cost-effectiveness of their delivery; 
           (6) assure that mental health services delivered according 
        to sections 245.487 to 245.4888 are delivered expeditiously and 
        are appropriate to the child's diagnostic assessment and 
        individual treatment plan; 
           (7) provide the community with information about predictors 
        and symptoms of emotional disturbances and how to access 
        children's mental health services according to sections 245.4877 
        and 245.4878; 
           (8) provide for case management services to each child with 
        severe emotional disturbance according to sections 245.486; 
        245.4871, subdivisions 3 and 4; and 245.4881, subdivisions 1, 3, 
        and 5; 
           (9) provide for screening of each child under section 
        245.4885 upon admission to a residential treatment facility, 
        acute care hospital inpatient treatment, or informal admission 
        to a regional treatment center; 
           (10) prudently administer grants and purchase-of-service 
        contracts that the county board determines are necessary to 
        fulfill its responsibilities under sections 245.487 to 245.4888; 
           (11) assure that mental health professionals, mental health 
        practitioners, and case managers employed by or under contract 
        to the county to provide mental health services are qualified 
        under section 245.4871; 
           (12) assure that children's mental health services are 
        coordinated with adult mental health services specified in 
        sections 245.461 to 245.486 so that a continuum of mental health 
        services is available to serve persons with mental illness, 
        regardless of the person's age; and 
           (13) assure that special culturally informed mental health 
        consultants are used as necessary to assist the county board in 
        assessing and providing appropriate treatment for children of 
        cultural or racial minority heritage. 
           Sec. 7.  Minnesota Statutes 1994, section 245.4875, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CHILDREN'S MENTAL HEALTH SERVICES.] The 
        children's mental health service system developed by each county 
        board must include the following services:  
           (1) education and prevention services according to section 
        245.4877; 
           (2) early mental health identification and intervention 
        services according to section 245.4878; 
           (3) emergency services according to section 245.4879; 
           (4) outpatient services according to section 245.488; 
           (5) family community support services according to section 
        245.4881; 
           (6) day treatment services according to section 245.4884, 
        subdivision 2; 
           (7) residential treatment services according to section 
        245.4882; 
           (8) acute care hospital inpatient treatment services 
        according to section 245.4883; 
           (9) screening according to section 245.4885; 
           (10) case management according to section 245.4881; 
           (11) therapeutic support of foster care according to 
        section 245.4884, subdivision 4; and 
           (12) professional home-based family treatment according to 
        section 245.4884, subdivision 4. 
           Sec. 8.  Minnesota Statutes 1994, section 245.4875, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [TRANSITION SERVICES.] The county board may 
        continue to provide mental health services as defined in 
        sections 245.487 to 245.4888 to persons over 18 years of age, 
        but under 21 years of age, if the person was receiving case 
        management or family community support services prior to age 18, 
        and if one of the following conditions is met:  
           (1) the person is receiving special education services 
        through the local school district; or 
           (2) it is in the best interest of the person to continue 
        services defined in sections 245.487 to 245.4888. 
           Sec. 9.  Minnesota Statutes 1994, section 245.4878, is 
        amended to read: 
           245.4878 [EARLY MENTAL HEALTH IDENTIFICATION AND 
        INTERVENTION.] 
           By January 1, 1991, early mental health identification and 
        intervention services must be available to meet the needs of all 
        children and their families residing in the county, consistent 
        with section 245.4873.  Early Mental health identification and 
        intervention services must be designed to identify children who 
        are at risk of needing or who need mental health services.  The 
        county board must provide intervention and offer treatment 
        services to each child who is identified as needing mental 
        health services.  The county board must offer intervention 
        services to each child who is identified as being at risk of 
        needing mental health services. 
           Sec. 10.  Minnesota Statutes 1994, section 245.4882, 
        subdivision 5, is amended to read: 
           Subd. 5.  [SPECIALIZED RESIDENTIAL TREATMENT SERVICES.] The 
        commissioner of human services shall continue efforts to further 
        interagency collaboration to develop a comprehensive system of 
        services, including family community support and specialized 
        residential treatment services for children.  The services shall 
        be designed for children with emotional disturbance who exhibit 
        violent or destructive behavior and for whom local treatment 
        services are not feasible due to the small number of children 
        statewide who need the services and the specialized nature of 
        the services required.  The services shall be located in 
        community settings.  If no appropriate services are available in 
        Minnesota or within the geographical area in which the residents 
        of the county normally do business, the commissioner is 
        responsible, effective July 1, 1995 1997, for 50 percent of the 
        nonfederal costs of out-of-state treatment of children for whom 
        no appropriate resources are available in Minnesota.  Counties 
        are eligible to receive enhanced state funding under this 
        section only if they have established juvenile screening teams 
        under section 260.151, subdivision 3, and if the out-of-state 
        treatment has been approved by the commissioner.  By January 1, 
        1995, the commissioners of human services and corrections shall 
        jointly develop a plan, including a financing strategy, for 
        increasing the in-state availability of treatment within a 
        secure setting.  By July 1, 1994, the commissioner of human 
        services shall also: 
           (1) conduct a study and develop a plan to meet the needs of 
        children with both a developmental disability and severe 
        emotional disturbance; and 
           (2) study the feasibility of expanding medical assistance 
        coverage to include specialized residential treatment for the 
        children described in this subdivision.  
           Sec. 11.  Minnesota Statutes 1994, section 245.4885, 
        subdivision 2, is amended to read: 
           Subd. 2.  [QUALIFICATIONS.] No later than July 1, 1991, 
        screening of children for residential and inpatient services 
        must be conducted by a mental health professional.  Where 
        appropriate and available, special culturally informed mental 
        health consultants must participate in the screening.  Mental 
        health professionals providing screening for inpatient and 
        residential services must not be financially affiliated with any 
        acute care inpatient hospital, residential treatment facility, 
        or regional treatment center.  The commissioner may waive this 
        requirement for mental health professional participation after 
        July 1, 1991, if the county documents that: 
           (1) mental health professionals or mental health 
        practitioners are unavailable to provide this service; and 
           (2) services are provided by a designated person with 
        training in human services who receives clinical supervision 
        from a mental health professional. 
           Sec. 12.  Minnesota Statutes 1994, section 245.4886, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [GRANTS FOR ADOLESCENT SERVICES.] The 
        commissioner may make grants for community-based services for 
        adolescents who have serious emotional disturbance and exhibit 
        violent behavior.  The commissioner may administer these grants 
        as a supplement to the grants for children's community-based 
        mental health services under subdivision 1.  The same 
        administrative requirements shall apply to these grants as the 
        grants under subdivision 1, except that these grants: 
           (1) shall be primarily for areas with the greatest need for 
        services; 
           (2) may be used for assessment, family community support 
        services, specialized treatment approaches, specialized 
        adolescent community-based residential treatment, and community 
        transition services for adolescents and preadolescents who have 
        serious emotional disturbance and exhibit violent behavior; 
           (3) shall emphasize intensive services as an alternative to 
        placement; 
           (4) shall not be used to supplant existing funds; 
           (5) shall require grantees to continue base level funding 
        as defined in section 245.492, subdivision 2; 
           (6) must, wherever possible, be administered under the 
        auspices of a children's mental health collaborative established 
        under section 245.491 if the collaborative chooses to serve the 
        target population; 
           (7) must be used for mental health services that are 
        integrated with other services whenever possible; and 
           (8) must be based on a proposal submitted to the 
        commissioner by a children's mental health collaborative or a 
        county board that is based on guidelines published by the 
        commissioner.  The guidelines must require that proposed 
        services be based on treatment methods that have proven 
        effective, or that show promise, in meeting the needs of this 
        population.  The guidelines may incorporate preferences for 
        proposals that would convert existing residential treatment beds 
        for children in the county or collaborative's service area to 
        community-based mental health services, encourage the active 
        participation of the children's families in the treatment plans 
        of these children, or promote the integration of these children 
        into school, home, and community.  The commissioner shall 
        consult with parents, educators, mental health professionals, 
        county mental health staff, and representatives of the 
        children's subcommittee of the state advisory board on mental 
        health in developing the guidelines and evaluating proposals. 
           Sec. 13.  Minnesota Statutes 1994, section 245.492, 
        subdivision 2, is amended to read: 
           Subd. 2.  [BASE LEVEL FUNDING.] "Base level funding" means 
        funding received from state, federal, or local sources and 
        expended across the local system of care in fiscal year 1993 
        1995 for children's mental health services or, for special 
        education services, and for other services for children with 
        emotional or behavioral disturbances and their families. 
        In subsequent years, base level funding may be adjusted to 
        reflect decreases in the numbers of children in the target 
        population. 
           Sec. 14.  Minnesota Statutes 1994, section 245.492, 
        subdivision 6, is amended to read: 
           Subd. 6.  [INITIAL OPERATIONAL TARGET POPULATION.] "Initial 
        Operational target population" means a population of children 
        that the local children's mental health collaborative agrees to 
        serve in the start-up phase and who meet fall within the 
        criteria for the target population.  The initial operational 
        target population may be less than the target population. 
           Sec. 15.  Minnesota Statutes 1994, section 245.492, 
        subdivision 9, is amended to read: 
           Subd. 9.  [INTEGRATED SERVICE SYSTEM.] "Integrated service 
        system" means a coordinated set of procedures established by the 
        local children's mental health collaborative for coordinating 
        services and actions across categorical systems and agencies 
        that results in: 
           (1) integrated funding; 
           (2) improved outreach, early identification, and 
        intervention across systems; 
           (3) strong collaboration between parents and professionals 
        in identifying children in the target population facilitating 
        access to the integrated system, and coordinating care and 
        services for these children; 
           (4) a coordinated assessment process across systems that 
        determines which children need multiagency care coordination and 
        wraparound services; 
           (5) multiagency plan of care; and 
           (6) wraparound individualized rehabilitation services. 
        Services provided by the integrated service system must meet the 
        requirements set out in sections 245.487 to 245.4887.  Children 
        served by the integrated service system must be economically and 
        culturally representative of children in the service delivery 
        area. 
           Sec. 16.  Minnesota Statutes 1994, section 245.492, 
        subdivision 23, is amended to read: 
           Subd. 23.  [WRAPAROUND INDIVIDUALIZED REHABILITATION 
        SERVICES.] "Wraparound Individualized rehabilitation services" 
        are alternative, flexible, coordinated, and highly 
        individualized services that are based on a multiagency plan of 
        care.  These services are designed to build on the strengths and 
        respond to the needs identified in the child's multiagency 
        assessment and to improve the child's ability to function in the 
        home, school, and community.  Wraparound Individualized 
        rehabilitation services may include, but are not limited to, 
        residential services, respite services, services that assist the 
        child or family in enrolling in or participating in recreational 
        activities, assistance in purchasing otherwise unavailable items 
        or services important to maintain a specific child in the 
        family, and services that assist the child to participate in 
        more traditional services and programs. 
           Sec. 17.  Minnesota Statutes 1994, section 245.493, 
        subdivision 2, is amended to read: 
           Subd. 2.  [GENERAL DUTIES OF THE LOCAL CHILDREN'S MENTAL 
        HEALTH COLLABORATIVES.] Each local children's mental health 
        collaborative must: 
           (1) notify the commissioner of human services within ten 
        days of formation by signing a collaborative agreement and 
        providing the commissioner with a copy of the signed agreement; 
           (2) identify a service delivery area and an initial 
        operational target population within that service delivery area. 
        The initial operational target population must be economically 
        and culturally representative of children in the service 
        delivery area to be served by the local children's mental health 
        collaborative.  The size of the initial operational target 
        population must also be economically viable for the service 
        delivery area; 
           (2) (3) seek to maximize federal revenues available to 
        serve children in the target population by designating local 
        expenditures for mental health services for these children and 
        their families that can be matched with federal dollars; 
           (3) (4) in consultation with the local children's advisory 
        council and the local coordinating council, if it is not the 
        local children's mental health collaborative, design, develop, 
        and ensure implementation of an integrated service system that 
        meets the requirements for state and federal reimbursement and 
        develop interagency agreements necessary to implement the 
        system; 
           (4) (5) expand membership to include representatives of 
        other services in the local system of care including prepaid 
        health plans under contract with the commissioner of human 
        services to serve the mental health needs of children in the 
        target population and their families; 
           (5) (6) create or designate a management structure for 
        fiscal and clinical responsibility and outcome evaluation; 
           (6) (7) spend funds generated by the local children's 
        mental health collaborative as required in sections 245.491 to 
        245.496; and 
           (7) (8) explore methods and recommend changes needed at the 
        state level to reduce duplication and promote coordination of 
        services including the use of uniform forms for reporting, 
        billing, and planning of services.; 
           (9) submit its integrated service system design to the 
        state coordinating council for approval within one year of 
        notifying the commissioner of human services of its formation; 
           (10) provide an annual report that includes the elements 
        listed in section 245.494, subdivision 2, and the 
        collaborative's planned timeline to expand its operational 
        target population to the state coordinating council; and 
           (11) expand its operational target population. 
           Each local children's mental health collaborative may 
        contract with the commissioner of human services to become a 
        medical assistance provider of mental health services according 
        to section 245.4933. 
           Sec. 18.  Minnesota Statutes 1994, section 245.4932, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PROVIDER COLLABORATIVE RESPONSIBILITIES.] 
        The children's mental health collaborative shall have the 
        following authority and responsibilities regarding federal 
        revenue enhancement: 
           (1) the collaborative must establish an integrated fund; 
           (2) the collaborative shall designate a lead county or 
        other qualified entity as the fiscal agency for reporting, 
        claiming, and receiving payments; 
           (2) (3) the collaborative or lead county may enter into 
        subcontracts with other counties, school districts, special 
        education cooperatives, municipalities, and other public and 
        nonprofit entities for purposes of identifying and claiming 
        eligible expenditures to enhance federal reimbursement; 
           (3) (4) the collaborative shall use any enhanced revenue 
        attributable to the activities of the collaborative, including 
        administrative and service revenue, solely to provide mental 
        health services or to expand the operational target population.  
        The lead county or other qualified entity may not use enhanced 
        federal revenue for any other purpose; 
           (5) the members of the collaborative must continue the base 
        level of expenditures, as defined in section 245.492, 
        subdivision 2, for services for children with emotional or 
        behavioral disturbances and their families from any state, 
        county, federal, or other public or private funding source 
        which, in the absence of the new federal reimbursement earned 
        under sections 245.491 to 245.496, would have been available for 
        those services.  The base year for purposes of this subdivision 
        shall be the accounting period closest to state fiscal year 
        1993; 
           (4) (6) the collaborative or lead county must develop and 
        maintain an accounting and financial management system adequate 
        to support all claims for federal reimbursement, including a 
        clear audit trail and any provisions specified in the 
        contract with the commissioner of human services; 
           (5) (7) the collaborative shall or its members may elect to 
        pay the nonfederal share of the medical assistance costs for 
        services designated by the collaborative; and 
           (6) (8) the lead county or other qualified entity may not 
        use federal funds or local funds designated as matching for 
        other federal funds to provide the nonfederal share of medical 
        assistance. 
           Sec. 19.  Minnesota Statutes 1994, section 245.4932, 
        subdivision 2, is amended to read: 
           Subd. 2.  [COMMISSIONER'S RESPONSIBILITIES.] (1) 
        Notwithstanding sections 256B.19, subdivision 1, and 256B.0625, 
        the commissioner shall be required to amend the state medical 
        assistance plan to include as covered services eligible for 
        medical assistance reimbursement, those services eligible for 
        reimbursement under federal law or waiver, which a collaborative 
        elects to provide and for which the collaborative elects to pay 
        the nonfederal share of the medical assistance costs. 
           (2) The commissioner may suspend, reduce, or terminate the 
        federal reimbursement to a provider collaborative that does not 
        meet the requirements of sections 245.493 to 245.496. 
           (3) The commissioner shall recover from the collaborative 
        any federal fiscal disallowances or sanctions for audit 
        exceptions directly attributable to the collaborative's actions 
        or the proportional share if federal fiscal disallowances or 
        sanctions are based on a statewide random sample. 
           Sec. 20.  Minnesota Statutes 1994, section 245.4932, 
        subdivision 3, is amended to read: 
           Subd. 3.  [PAYMENTS.] Notwithstanding section 256.025, 
        subdivision 2, payments under sections 245.493 to 245.496 to 
        providers for wraparound service expenditures and expenditures 
        for other services for which the collaborative elects to pay the 
        nonfederal share of medical assistance shall only be made of 
        federal earnings from services provided under sections 245.493 
        to 245.496. 
           Sec. 21.  Minnesota Statutes 1994, section 245.4932, 
        subdivision 4, is amended to read: 
           Subd. 4.  [CENTRALIZED DISBURSEMENT OF MEDICAL ASSISTANCE 
        PAYMENTS.] Notwithstanding section 256B.041, and except for 
        family community support services and therapeutic support of 
        foster care, county payments for the cost of wraparound services 
        and other services for which the collaborative elects to pay the 
        nonfederal share, for reimbursement under medical assistance, 
        shall not be made to the state treasurer.  For purposes of 
        wraparound individualized rehabilitation services under sections 
        245.493 to 245.496, the centralized disbursement of payments to 
        providers under section 256B.041 consists only of federal 
        earnings from services provided under sections 245.493 to 
        245.496. 
           Sec. 22.  [245.4933] [MEDICAL ASSISTANCE PROVIDER STATUS.] 
           Subdivision 1.  [REQUIREMENTS TO SERVE CHILDREN NOT 
        ENROLLED IN A PREPAID MEDICAL ASSISTANCE OR MINNESOTACARE HEALTH 
        PLAN.] (a) In order for a local children's mental health 
        collaborative to become a prepaid provider of medical assistance 
        services and be eligible to receive medical assistance 
        reimbursement, the collaborative must: 
           (1) enter into a contract with the commissioner of human 
        services to provide mental health services including inpatient, 
        outpatient, medication management, services under the 
        rehabilitation option, and related physician services; 
           (2) meet the applicable federal requirements; 
           (3) either carry stop-loss insurance or enter into a 
        risk-sharing agreement with the commissioner of human services; 
        and 
           (4) provide medically necessary medical assistance mental 
        health services to children in the target population who enroll 
        in the local children's mental health collaborative. 
           (b) Upon execution of the provider contract with the 
        commissioner of human services the local children's mental 
        health collaborative may: 
           (1) provide mental health services which are not medical 
        assistance state plan services in addition to the state plan 
        services described in the contract with the commissioner of 
        human services; and 
           (2) enter into subcontracts which meet the requirements of 
        Code of Federal Regulations, title 42, section 434.6, with other 
        providers of mental health services including prepaid health 
        plans established under section 256B.69. 
           Subd. 2.  [REQUIREMENTS TO SERVE CHILDREN ENROLLED IN A 
        PREPAID HEALTH PLAN.] A children's mental health collaborative 
        may serve children in the collaborative's target population who 
        are enrolled in a prepaid health plan under contract with the 
        commissioner of human services by contracting with one or more 
        such health plans to provide medical assistance or MinnesotaCare 
        mental health services to children enrolled in the health plan.  
        The collaborative and the health plan shall work cooperatively 
        to ensure the integration of physical and mental health services.
           Subd. 3.  [REQUIREMENTS TO SERVE CHILDREN WHO BECOME 
        ENROLLED IN A PREPAID HEALTH PLAN.] A children's mental health 
        collaborative may provide prepaid medical assistance or 
        MinnesotaCare mental health services to children who are not 
        enrolled in prepaid health plans until those children are 
        enrolled.  Publication of a request for proposals in the State 
        Register shall serve as notice to the collaborative of the 
        commissioner's intent to execute contracts for medical 
        assistance and MinnesotaCare services.  In order to become or 
        continue to be a provider of medical assistance or MinnesotaCare 
        services the collaborative may contract with one or more such 
        prepaid health plans after the collaborative's target population 
        is enrolled in a prepaid health plan.  The collaborative and the 
        health plan shall work cooperatively to ensure the integration 
        of physical and mental health services. 
           Subd. 4.  [COMMISSIONER'S DUTIES.] (a) The commissioner of 
        human services shall provide to each children's mental health 
        collaborative that is considering whether to become a prepaid 
        provider of mental health services the commissioner's best 
        estimate of a capitated payment rate prior to an actuarial study 
        based upon the collaborative's operational target population.  
        The capitated payment rate shall be adjusted annually, if 
        necessary, for changes in the operational target population. 
           (b) The commissioner shall negotiate risk adjustment and 
        reinsurance mechanisms with children's mental health 
        collaboratives that become medical assistance providers 
        including those that subcontract with prepaid health plans. 
           Subd. 5.  [NONCONTRACTING COLLABORATIVES.] A local 
        children's mental health collaborative that does not become a 
        prepaid provider of medical assistance or MinnesotaCare services 
        may provide services through individual members of a 
        noncontracting collaborative who have a medical assistance 
        provider agreement to eligible recipients who are not enrolled 
        in the health plan. 
           Subd. 6.  [INDIVIDUALIZED REHABILITATION SERVICES.] A 
        children's mental health collaborative with an integrated 
        service system approved by the state coordinating council may 
        become a medical assistance provider for the purpose of 
        obtaining prior authorization for and providing individualized 
        rehabilitation services. 
           Sec. 23.  Minnesota Statutes 1994, section 245.494, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [STATE COORDINATING COUNCIL.] The state 
        coordinating council, in consultation with the integrated fund 
        task force, shall: 
           (1) assist local children's mental health collaboratives in 
        meeting the requirements of sections 245.491 to 245.496, by 
        seeking consultation and technical assistance from national 
        experts and coordinating presentations and assistance from these 
        experts to local children's mental health collaboratives; 
           (2) assist local children's mental health collaboratives in 
        identifying an economically viable initial operational target 
        population; 
           (3) develop methods to reduce duplication and promote 
        coordinated services including uniform forms for reporting, 
        billing, and planning of services; 
           (4) by September 1, 1994, develop a model multiagency plan 
        of care that can be used by local children's mental health 
        collaboratives in place of an individual education plan, 
        individual family community support plan, individual family 
        support plan, and an individual treatment plan; 
           (5) assist in the implementation and operation of local 
        children's mental health collaboratives by facilitating the 
        integration of funds, coordination of services, and measurement 
        of results, and by providing other assistance as needed; 
           (6) by July 1, 1993, develop a procedure for awarding 
        start-up funds.  Development of this procedure shall be exempt 
        from chapter 14; 
           (7) develop procedures and provide technical assistance to 
        allow local children's mental health collaboratives to integrate 
        resources for children's mental health services with other 
        resources available to serve children in the target population 
        in order to maximize federal participation and improve 
        efficiency of funding; 
           (8) ensure that local children's mental health 
        collaboratives and the services received through these 
        collaboratives meet the requirements set out in sections 245.491 
        to 245.496; 
           (9) identify base level funding from state and federal 
        sources across systems; 
           (10) explore ways to access additional federal funds and 
        enhance revenues available to address the needs of the target 
        population; 
           (11) develop a mechanism for identifying the state share of 
        funding for services to children in the target population and 
        for making these funds available on a per capita basis for 
        services provided through the local children's mental health 
        collaborative to children in the target population.  Each year 
        beginning January 1, 1994, forecast the growth in the state 
        share and increase funding for local children's mental health 
        collaboratives accordingly; 
           (12) identify barriers to integrated service systems that 
        arise from data practices and make recommendations including 
        legislative changes needed in the data practices act to address 
        these barriers; and 
           (13) annually review the expenditures of local children's 
        mental health collaboratives to ensure that funding for services 
        provided to the target population continues from sources other 
        than the federal funds earned under sections 245.491 to 245.496 
        and that federal funds earned are spent consistent with sections 
        245.491 to 245.496. 
           Sec. 24.  Minnesota Statutes 1994, section 245.494, 
        subdivision 3, is amended to read: 
           Subd. 3.  [DUTIES OF THE COMMISSIONER OF HUMAN SERVICES.] 
        The commissioner of human services, in consultation with the 
        integrated fund task force, shall: 
           (1) beginning January 1, in the first quarter of 1994, in 
        areas where a local children's mental health collaborative has 
        been established, based on an independent actuarial 
        analysis, separate identify all medical assistance, general 
        assistance medical care, and MinnesotaCare resources devoted to 
        mental health services for children and their families in the 
        target population including inpatient, outpatient, medication 
        management, services under the rehabilitation option, and 
        related physician services from in the total health capitation 
        from of prepaid plans, including plans established under 
        contract with the commissioner to provide medical assistance 
        services under section 256B.69;, for the target population as 
        identified in section 245.492, subdivision 21, and develop 
        guidelines for managing these mental health benefits that will 
        require all contractors to: 
           (i) provide mental health services eligible for medical 
        assistance reimbursement; 
           (ii) meet performance standards established by the 
        commissioner of human services including providing services 
        consistent with the requirements and standards set out in 
        sections 245.487 to 245.4888 and 245.491 to 245.496; 
           (iii) provide the commissioner of human services with data 
        consistent with that collected under sections 245.487 to 
        245.4888; and 
           (iv) in service delivery areas where there is a local 
        children's mental health collaborative for the target population 
        defined by local children's mental health collaborative: 
           (A) participate in the local children's mental health 
        collaborative; 
           (B) commit resources to the integrated fund that are 
        actuarially equivalent to resources received for the target 
        population being served by local children's mental health 
        collaboratives; and 
           (C) meet the requirements and the performance standards 
        developed for local children's mental health collaboratives; 
           (2) ensure that any prepaid health plan that is operating 
        within the jurisdiction of a local children's mental health 
        collaborative and that is able to meet all the requirements 
        under section 245.494, subdivision 3, paragraph (1), items (i) 
        to (iv), shall have 60 days from the date of receipt of written 
        notice of the establishment of the collaborative to decide 
        whether it will participate in the local children's mental 
        health collaborative; the prepaid health plan shall notify the 
        collaborative and the commissioner of its decision to 
        participate; 
           (3) (2) assist each children's mental health collaborative 
        to determine an actuarially feasible operational target 
        population; 
           (3) ensure that a prepaid health plan that contracts with 
        the commissioner to provide medical assistance or MinnesotaCare 
        services shall pass through the identified resources to a 
        collaborative or collaboratives upon the collaboratives meeting 
        the requirements of section 245.4933 to serve the 
        collaborative's operational target population.  The commissioner 
        shall, through an independent actuarial analysis, specify 
        differential rates the prepaid health plan must pay the 
        collaborative based upon severity, functioning, and other risk 
        factors, taking into consideration the fee-for-service 
        experience of children excluded from prepaid medical assistance 
        participation; 
           (4) ensure that a children's mental health collaborative 
        that enters into an agreement with a prepaid health plan under 
        contract with the commissioner shall accept medical assistance 
        recipients in the operational target population on a first-come, 
        first-served basis up to the collaborative's operating capacity 
        or as determined in the agreement between the collaborative and 
        the commissioner; 
           (5) ensure that a children's mental health collaborative 
        that receives resources passed through a prepaid health plan 
        under contract with the commissioner shall be subject to the 
        quality assurance standards, reporting of utilization 
        information, standards set out in sections 245.487 to 245.4888, 
        and other requirements established in Minnesota Rules, part 
        9500.1460; 
           (6) ensure that any prepaid health plan that contracts with 
        the commissioner, including a plan that contracts under section 
        256B.69, must enter into an agreement with any collaborative 
        operating in the same service delivery area that: 
           (i) meets the requirements of section 245.4933; 
           (ii) is willing to accept the rate determined by the 
        commissioner to provide medical assistance services; and 
           (iii) requests to contract with the prepaid health plan; 
           (7) ensure that no agreement between a health plan and a 
        collaborative shall terminate the legal responsibility of the 
        health plan to assure that all activities under the contract are 
        carried out.  The agreement may require the collaborative to 
        indemnify the health plan for activities that are not carried 
        out; 
           (8) ensure that where a collaborative enters into an 
        agreement with the commissioner to provide medical assistance 
        and MinnesotaCare services a separate capitation rate will be 
        determined through an independent actuarial analysis which is 
        based upon the factors set forth in clause (3) to be paid to a 
        collaborative for children in the operational target population 
        who are eligible for medical assistance but not included in the 
        prepaid health plan contract with the commissioner; 
           (9) ensure that in counties where no prepaid health plan 
        contract to provide medical assistance or MinnesotaCare services 
        exists, a children's mental health collaborative that meets the 
        requirements of section 245.4933 shall: 
           (i) be paid a capitated rate, actuarially determined, that 
        is based upon the collaborative's operational target population; 
           (ii) accept medical assistance or MinnesotaCare recipients 
        in the operational target population on a first-come, 
        first-served basis up to the collaborative's operating capacity 
        or as determined in the contract between the collaborative and 
        the commissioner; and 
           (iii) comply with quality assurance standards, reporting of 
        utilization information, standards set out in sections 245.487 
        to 245.4888, and other requirements established in Minnesota 
        Rules, part 9500.1460; 
           (10) subject to federal approval, in the development of 
        rates for local children's mental health collaboratives, the 
        commissioner shall consider, and may adjust, trend and 
        utilization factors, to reflect changes in mental health service 
        utilization and access; 
           (11) consider changes in mental health service utilization, 
        access, and price, and determine the actuarial value of the 
        services in the maintenance of rates for local children's mental 
        health collaborative provided services, subject to federal 
        approval; 
           (12) provide written notice to any prepaid health plan 
        operating within the service delivery area of a children's 
        mental health collaborative of the collaborative's existence 
        within 30 days of the commissioner's receipt of notice of the 
        collaborative's formation; 
           (13) ensure that in a geographic area where both a prepaid 
        health plan including those established under either section 
        256.9363 or 256B.69 and a local children's mental health 
        collaborative exist, medical assistance and MinnesotaCare 
        recipients in the operational target population who are enrolled 
        in prepaid health plans will have the choice to receive mental 
        health services through either the prepaid health plan or the 
        collaborative that has a contract with the prepaid health plan, 
        according to the terms of the contract; 
           (14) develop a mechanism for integrating medical assistance 
        resources for mental health service with resources for general 
        assistance medical care, MinnesotaCare, and any other state and 
        local resources available for services for children in the 
        operational target population, and develop a procedure for 
        making these resources available for use by a local children's 
        mental health collaborative; 
           (4) (15) gather data needed to manage mental health care 
        including evaluation data and data necessary to establish a 
        separate capitation rate for children's mental health services 
        if that option is selected; 
           (5) (16) by January 1, 1994, develop a model contract for 
        providers of mental health managed care that meets the 
        requirements set out in sections 245.491 to 245.496 and 256B.69, 
        and utilize this contract for all subsequent awards, and before 
        January 1, 1995, the commissioner of human services shall not 
        enter into or extend any contract for any prepaid plan that 
        would impede the implementation of sections 245.491 to 245.496; 
           (6) (17) develop revenue enhancement or rebate mechanisms 
        and procedures to certify expenditures made through local 
        children's mental health collaboratives for services including 
        administration and outreach that may be eligible for federal 
        financial participation under medical assistance, including 
        expenses for administration, and other federal programs; 
           (7) (18) ensure that new contracts and extensions or 
        modifications to existing contracts under section 256B.69 do not 
        impede implementation of sections 245.491 to 245.496; 
           (8) (19) provide technical assistance to help local 
        children's mental health collaboratives certify local 
        expenditures for federal financial participation, using due 
        diligence in order to meet implementation timelines for sections 
        245.491 to 245.496 and recommend necessary legislation to 
        enhance federal revenue, provide clinical and management 
        flexibility, and otherwise meet the goals of local children's 
        mental health collaboratives and request necessary state plan 
        amendments to maximize the availability of medical assistance 
        for activities undertaken by the local children's mental health 
        collaborative; 
           (9) (20) take all steps necessary to secure medical 
        assistance reimbursement under the rehabilitation option for 
        family community support services and therapeutic support of 
        foster care, and for residential treatment and wraparound 
        services when these services are provided through a local 
        children's mental health collaborative individualized 
        rehabilitation services; 
           (10) (21) provide a mechanism to identify separately the 
        reimbursement to a county for child welfare targeted case 
        management provided to children served by the local 
        collaborative for purposes of subsequent transfer by the county 
        to the integrated fund; and 
           (11)  where interested and qualified contractors are 
        available, finalize contracts within 180 days of receipt of 
        written notification of the establishment of a local children's 
        mental health collaborative. 
           (22) ensure that family members who are enrolled in a 
        prepaid health plan and whose children are receiving mental 
        health services through a local children's mental health 
        collaborative file complaints about mental health services 
        needed by the family members, the commissioner shall comply with 
        section 256B.031, subdivision 6.  A collaborative may assist a 
        family to make a complaint; and 
           (23) facilitate a smooth transition for children receiving 
        prepaid medical assistance or MinnesotaCare services through a 
        children's mental health collaborative who become enrolled in a 
        prepaid health plan. 
           Sec. 25.  Minnesota Statutes 1994, section 245.495, is 
        amended to read: 
           245.495 [ADDITIONAL FEDERAL REVENUES.] 
           (a) Each local children's mental health collaborative shall 
        report expenditures eligible for federal reimbursement in a 
        manner prescribed by the commissioner of human services under 
        section 256.01, subdivision 2, clause (17).  The commissioner of 
        human services shall pay all funds earned by each local 
        children's mental health collaborative to the collaborative.  
        Each local children's mental health collaborative must use these 
        funds to expand the initial operational target population or to 
        develop or provide mental health services through the local 
        integrated service system to children in the target population.  
        Funds may not be used to supplant funding for services to 
        children in the target population. 
           For purposes of this section, "mental health services" are 
        community-based, nonresidential services, which may include 
        respite care, that are identified in the child's multiagency 
        plan of care. 
           (b) The commissioner may set aside a portion of the federal 
        funds earned under this section to repay the special revenue 
        maximization account under section 256.01, subdivision 2, clause 
        (15).  The set-aside must not exceed five percent of the federal 
        reimbursement earned by collaboratives and repayment is limited 
        to: 
           (1) the costs of developing and implementing sections 
        245.491 to 245.496, including the costs of technical assistance 
        from the departments of human services, education, health, and 
        corrections to implement the children's mental health integrated 
        fund; 
           (2) programming the information systems; and 
           (3) any lost federal revenue for the central office claim 
        directly caused by the implementation of these sections. 
           (c) Any unexpended funds from the set-aside described in 
        paragraph (b) shall be distributed to counties according to 
        section 245.496, subdivision 2. 
           Sec. 26.  Minnesota Statutes 1994, section 245.496, 
        subdivision 3, is amended to read: 
           Subd. 3.  [SUBMISSION AND APPROVAL OF LOCAL COLLABORATIVE 
        PROPOSALS FOR INTEGRATED SYSTEMS.] By December 31, 1994, a local 
        children's mental health collaborative that received start-up 
        funds must submit to the state coordinating council its proposal 
        for creating and funding an integrated service system for 
        children in the target population.  A local children's mental 
        health collaborative which forms without receiving start-up 
        funds must submit its proposal for creating and funding an 
        integrated service system within one year of notifying the 
        commissioner of human services of its existence.  Within 60 days 
        of receiving the local collaborative proposal the state 
        coordinating council must review the proposal and notify the 
        local children's mental health collaborative as to whether or 
        not the proposal has been approved.  If the proposal is not 
        approved, the state coordinating council must indicate changes 
        needed to receive approval. 
           Sec. 27.  Minnesota Statutes 1994, section 245.496, is 
        amended by adding a subdivision to read: 
           Subd. 4.  [APPROVAL OF A COLLABORATIVE'S INTEGRATED SERVICE 
        SYSTEM.] A collaborative may not become a medical assistance 
        provider unless the state coordinating council approves a 
        collaborative's proposed integrated service system design.  The 
        state coordinating council shall approve the integrated service 
        system proposal only when the following elements are present: 
           (1) interagency agreements signed by the head of each 
        member agency who has the authority to obligate the agency and 
        which set forth the specific financial commitments of each 
        member agency; 
           (2) an adequate management structure for fiscal and 
        clinical responsibility including appropriate allocation of risk 
        and liability; 
           (3) a process of utilization review; and 
           (4) compliance with sections 245.491 to 245.496. 
           Sec. 28.  Minnesota Statutes 1994, section 246.18, 
        subdivision 4, is amended to read: 
           Subd. 4.  [COLLECTIONS DEPOSITED IN THE GENERAL FUND.] 
        Except as provided in subdivisions 2 and, 5, and 6, all receipts 
        from collection efforts for the regional treatment centers, 
        state nursing homes, and other state facilities as defined in 
        section 246.50, subdivision 3, must be deposited in the general 
        fund.  The commissioner shall ensure that the departmental 
        financial reporting systems and internal accounting procedures 
        comply with federal standards for reimbursement for program and 
        administrative expenditures and fulfill the purpose of this 
        paragraph. 
           Sec. 29.  Minnesota Statutes 1994, section 246.18, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [COLLECTIONS DEDICATED.] Except for 
        state-operated programs and services funded through a direct 
        appropriation from the legislature, money received within the 
        regional treatment center system for the following 
        state-operated services is dedicated to the commissioner for the 
        provision of those services: 
           (1) community-based residential and day training and 
        habilitation services for mentally retarded persons; 
           (2) community health clinic services; 
           (3) accredited hospital outpatient department services; 
           (4) certified rehabilitation agency and rehabilitation 
        hospital services; or 
           (5) community-based transitional support services for 
        adults with serious and persistent mental illness. 
        These funds must be deposited in the state treasury in a 
        revolving account and funds in the revolving account are 
        appropriated to the commissioner to operate the services 
        authorized, and any unexpended balances do not cancel but are 
        available until spent. 
           Sec. 30.  Minnesota Statutes 1994, section 246.56, is 
        amended by adding a subdivision to read: 
           Subd. 3.  The commissioner of human services is not 
        required to include indirect costs as defined in section 16A.127 
        in work activity contracts for patients of the regional 
        treatment centers, and is not required to reimburse the general 
        fund for indirect costs related to work activity programs. 
           Sec. 31.  Minnesota Statutes 1994, section 253B.091, is 
        amended to read: 
           253B.091 [REPORTING JUDICIAL COMMITMENTS INVOLVING PRIVATE 
        TREATMENT PROGRAMS OR FACILITIES.] 
           Notwithstanding section 253B.23, subdivision 9, when a 
        committing court judicially commits a proposed patient to a 
        treatment program or facility other than a state-operated 
        program or facility, the court shall report the commitment to 
        the commissioner of human services through the supreme court 
        information system for purposes of providing commitment 
        information for firearm background checks under section 245.041. 
           Sec. 32.  Minnesota Statutes 1994, section 254B.05, 
        subdivision 4, is amended to read: 
           Subd. 4.  [REGIONAL TREATMENT CENTERS.] Regional treatment 
        center chemical dependency treatment units are eligible 
        vendors.  The commissioner may expand the capacity of chemical 
        dependency treatment units beyond the capacity funded by direct 
        legislative appropriation to serve individuals who are referred 
        for treatment by counties and whose treatment will be paid for 
        with a county's allocation under section 254B.02 or other 
        funding sources.  Notwithstanding the provisions of sections 
        254B.03 to 254B.041, payment for any person committed at county 
        request to a regional treatment center under chapter 253B for 
        chemical dependency treatment and determined to be ineligible 
        under the chemical dependency consolidated treatment fund, shall 
        become the responsibility of the county. 
           Sec. 33.  Minnesota Statutes 1994, section 256B.0625, 
        subdivision 37, is amended to read: 
           Subd. 37.  [WRAPAROUND INDIVIDUALIZED REHABILITATION 
        SERVICES.] Medical assistance covers wraparound individualized 
        rehabilitation services as defined in section 245.492, 
        subdivision 20, that are provided through a local children's 
        mental health collaborative, as that entity is defined in 
        section 245.492, subdivision 11 23, that are provided by a 
        collaborative, county, or an entity under contract with a county 
        through an integrated service system, as described in section 
        245.4931, that is approved by the state coordinating council, 
        subject to federal approval. 
           Sec. 34.  Minnesota Statutes 1994, section 256B.092, 
        subdivision 4, is amended to read: 
           Subd. 4.  [HOME AND COMMUNITY-BASED SERVICES FOR PERSONS 
        WITH MENTAL RETARDATION OR RELATED CONDITIONS.] (a) The 
        commissioner shall make payments to approved vendors 
        participating in the medical assistance program to pay costs of 
        providing home and community-based services, including case 
        management service activities provided as an approved home and 
        community-based service, to medical assistance eligible persons 
        with mental retardation or related conditions who have been 
        screened under subdivision 7 and according to federal 
        requirements.  Federal requirements include those services and 
        limitations included in the federally approved application for 
        home and community-based services for persons with mental 
        retardation or related conditions and subsequent amendments.  
           (b) Effective July 1, 1995, and contingent upon federal 
        approval and state appropriations made available for this 
        purpose, and in conjunction with section 40, the commissioner of 
        human services shall allocate resources to county agencies for 
        home and community-based waivered services for persons with 
        mental retardation or related conditions authorized but not 
        receiving those services as of June 30, 1995, based upon the 
        average resource need of persons with similar functional 
        characteristics.  To ensure service continuity for service 
        recipients receiving home and community-based waivered services 
        for persons with mental retardation or related conditions prior 
        to July 1, 1995, the commissioner shall make available to the 
        county of financial responsibility home and community-based 
        waivered services resources based upon fiscal year 1995 
        authorized levels. 
           (c) Home and community-based resources for all recipients 
        shall be managed by the county of financial responsibility 
        within an allowable reimbursement average established for each 
        county.  Payments for home and community-based services provided 
        to individual recipients shall not exceed amounts authorized by 
        the county of financial responsibility.  For specifically 
        identified former residents of regional treatment centers and 
        nursing facilities, the commissioner shall be responsible for 
        authorizing payments and payment limits under the appropriate 
        home and community-based service program.  Payment is available 
        under this subdivision only for persons who, if not provided 
        these services, would require the level of care provided in an 
        intermediate care facility for persons with mental retardation 
        or related conditions.  
           Sec. 35.  Laws 1993, First Special Session chapter 1, 
        article 7, section 51, subdivision 5, is amended to read: 
           Subd. 5.  Sections 42 and 43 are effective October 1, 1994 
        July 1, 1996. 
           Sec. 36.  [SERVICES FOR DEVELOPMENTALLY DISABLED PERSONS; 
        FARIBAULT REGIONAL CENTER CATCHMENT AREA.] 
           (a) This section governs the downsizing of the Faribault 
        regional center (FRC).  As residents are discharged from the 
        Faribault regional center, the buildings will be transferred to 
        the department of corrections, and the department of human 
        services will develop a system of state-operated services that:  
        (1) meets the needs of clients discharged from the Faribault 
        regional center; (2) is fiscally sound; and (3) accommodates the 
        evolving nature of the health care system. 
           (b) The Minnesota correctional facility at Faribault 
        (MCF-FRB) shall expand its existing capacity by 300 beds.  The 
        department of human services shall transfer buildings related to 
        this expansion according to agreements between the department of 
        corrections and the Faribault community task force, established 
        pursuant to Minnesota Statutes, section 252.51, no sooner than 
        July 1, 1995. 
           After the city of Faribault has held a public hearing, the 
        Minnesota correctional facility at Faribault may subsequently 
        proceed with expansion of its capacity by an additional 300 
        beds, on or after a date when the commissioner of human services 
        certifies that the Faribault regional center campus will be 
        vacated because alternative community-based services, including 
        those developed by the department of human services in 
        accordance with section 12, will be available for the remaining 
        residents of the Faribault regional center.  The actual date on 
        which the remainder of the Faribault regional center campus will 
        be transferred to the commissioner of corrections shall be 
        determined by mutual agreement between the commissioners of 
        human services and corrections, after consultation with the 
        exclusive representatives and the Faribault communi