1.1                          A bill for an act 
  1.2             relating to health care; adding an exception to the 
  1.3             nursing home moratorium; expanding a special provision 
  1.4             for medical assistance reimbursement of moratorium 
  1.5             exceptions; appropriating money; amending Minnesota 
  1.6             Statutes 1994, sections 144A.071, subdivision 4a; and 
  1.7             256B.431, subdivision 17. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 1994, section 144A.071, 
  1.10  subdivision 4a, is amended to read: 
  1.11     Subd. 4a.  [EXCEPTIONS FOR REPLACEMENT BEDS.] It is in the 
  1.12  best interest of the state to ensure that nursing homes and 
  1.13  boarding care homes continue to meet the physical plant 
  1.14  licensing and certification requirements by permitting certain 
  1.15  construction projects.  Facilities should be maintained in 
  1.16  condition to satisfy the physical and emotional needs of 
  1.17  residents while allowing the state to maintain control over 
  1.18  nursing home expenditure growth. 
  1.19     The commissioner of health in coordination with the 
  1.20  commissioner of human services, may approve the renovation, 
  1.21  replacement, upgrading, or relocation of a nursing home or 
  1.22  boarding care home, under the following conditions: 
  1.23     (a) to license or certify beds in a new facility 
  1.24  constructed to replace a facility or to make repairs in an 
  1.25  existing facility that was destroyed or damaged after June 30, 
  1.26  1987, by fire, lightning, or other hazard provided:  
  2.1      (i) destruction was not caused by the intentional act of or 
  2.2   at the direction of a controlling person of the facility; 
  2.3      (ii) at the time the facility was destroyed or damaged the 
  2.4   controlling persons of the facility maintained insurance 
  2.5   coverage for the type of hazard that occurred in an amount that 
  2.6   a reasonable person would conclude was adequate; 
  2.7      (iii) the net proceeds from an insurance settlement for the 
  2.8   damages caused by the hazard are applied to the cost of the new 
  2.9   facility or repairs; 
  2.10     (iv) the new facility is constructed on the same site as 
  2.11  the destroyed facility or on another site subject to the 
  2.12  restrictions in section 144A.073, subdivision 5; 
  2.13     (v) the number of licensed and certified beds in the new 
  2.14  facility does not exceed the number of licensed and certified 
  2.15  beds in the destroyed facility; and 
  2.16     (vi) the commissioner determines that the replacement beds 
  2.17  are needed to prevent an inadequate supply of beds. 
  2.18  Project construction costs incurred for repairs authorized under 
  2.19  this clause shall not be considered in the dollar threshold 
  2.20  amount defined in subdivision 2; 
  2.21     (b) to license or certify beds that are moved from one 
  2.22  location to another within a nursing home facility, provided the 
  2.23  total costs of remodeling performed in conjunction with the 
  2.24  relocation of beds does not exceed 25 percent of the appraised 
  2.25  value of the facility or $500,000, whichever is less; 
  2.26     (c) to license or certify beds in a project recommended for 
  2.27  approval under section 144A.073; 
  2.28     (d) to license or certify beds that are moved from an 
  2.29  existing state nursing home to a different state facility, 
  2.30  provided there is no net increase in the number of state nursing 
  2.31  home beds; 
  2.32     (e) to certify and license as nursing home beds boarding 
  2.33  care beds in a certified boarding care facility if the beds meet 
  2.34  the standards for nursing home licensure, or in a facility that 
  2.35  was granted an exception to the moratorium under section 
  2.36  144A.073, and if the cost of any remodeling of the facility does 
  3.1   not exceed 25 percent of the appraised value of the facility or 
  3.2   $500,000, whichever is less.  If boarding care beds are licensed 
  3.3   as nursing home beds, the number of boarding care beds in the 
  3.4   facility must not increase beyond the number remaining at the 
  3.5   time of the upgrade in licensure.  The provisions contained in 
  3.6   section 144A.073 regarding the upgrading of the facilities do 
  3.7   not apply to facilities that satisfy these requirements; 
  3.8      (f) to license and certify up to 40 beds transferred from 
  3.9   an existing facility owned and operated by the Amherst H. Wilder 
  3.10  Foundation in the city of St. Paul to a new unit at the same 
  3.11  location as the existing facility that will serve persons with 
  3.12  Alzheimer's disease and other related disorders.  The transfer 
  3.13  of beds may occur gradually or in stages, provided the total 
  3.14  number of beds transferred does not exceed 40.  At the time of 
  3.15  licensure and certification of a bed or beds in the new unit, 
  3.16  the commissioner of health shall delicense and decertify the 
  3.17  same number of beds in the existing facility.  As a condition of 
  3.18  receiving a license or certification under this clause, the 
  3.19  facility must make a written commitment to the commissioner of 
  3.20  human services that it will not seek to receive an increase in 
  3.21  its property-related payment rate as a result of the transfers 
  3.22  allowed under this paragraph; 
  3.23     (g) to license and certify nursing home beds to replace 
  3.24  currently licensed and certified boarding care beds which may be 
  3.25  located either in a remodeled or renovated boarding care or 
  3.26  nursing home facility or in a remodeled, renovated, newly 
  3.27  constructed, or replacement nursing home facility within the 
  3.28  identifiable complex of health care facilities in which the 
  3.29  currently licensed boarding care beds are presently located, 
  3.30  provided that the number of boarding care beds in the facility 
  3.31  or complex are decreased by the number to be licensed as nursing 
  3.32  home beds and further provided that, if the total costs of new 
  3.33  construction, replacement, remodeling, or renovation exceed ten 
  3.34  percent of the appraised value of the facility or $200,000, 
  3.35  whichever is less, the facility makes a written commitment to 
  3.36  the commissioner of human services that it will not seek to 
  4.1   receive an increase in its property-related payment rate by 
  4.2   reason of the new construction, replacement, remodeling, or 
  4.3   renovation.  The provisions contained in section 144A.073 
  4.4   regarding the upgrading of facilities do not apply to facilities 
  4.5   that satisfy these requirements; 
  4.6      (h) to license as a nursing home and certify as a nursing 
  4.7   facility a facility that is licensed as a boarding care facility 
  4.8   but not certified under the medical assistance program, but only 
  4.9   if the commissioner of human services certifies to the 
  4.10  commissioner of health that licensing the facility as a nursing 
  4.11  home and certifying the facility as a nursing facility will 
  4.12  result in a net annual savings to the state general fund of 
  4.13  $200,000 or more; 
  4.14     (i) to certify, after September 30, 1992, and prior to July 
  4.15  1, 1993, existing nursing home beds in a facility that was 
  4.16  licensed and in operation prior to January 1, 1992; 
  4.17     (j) to license and certify new nursing home beds to replace 
  4.18  beds in a facility condemned as part of an economic 
  4.19  redevelopment plan in a city of the first class, provided the 
  4.20  new facility is located within one mile of the site of the old 
  4.21  facility.  Operating and property costs for the new facility 
  4.22  must be determined and allowed under existing reimbursement 
  4.23  rules; 
  4.24     (k) to license and certify up to 20 new nursing home beds 
  4.25  in a community-operated hospital and attached convalescent and 
  4.26  nursing care facility with 40 beds on April 21, 1991, that 
  4.27  suspended operation of the hospital in April 1986.  The 
  4.28  commissioner of human services shall provide the facility with 
  4.29  the same per diem property-related payment rate for each 
  4.30  additional licensed and certified bed as it will receive for its 
  4.31  existing 40 beds; 
  4.32     (l) to license or certify beds in renovation, replacement, 
  4.33  or upgrading projects as defined in section 144A.073, 
  4.34  subdivision 1, so long as the cumulative total costs of the 
  4.35  facility's remodeling projects do not exceed 25 percent of the 
  4.36  appraised value of the facility or $500,000, whichever is less; 
  5.1      (m) to license and certify beds that are moved from one 
  5.2   location to another for the purposes of converting up to five 
  5.3   four-bed wards to single or double occupancy rooms in a nursing 
  5.4   home that, as of January 1, 1993, was county-owned and had a 
  5.5   licensed capacity of 115 beds; 
  5.6      (n) to allow a facility that on April 16, 1993, was a 
  5.7   106-bed licensed and certified nursing facility located in 
  5.8   Minneapolis to layaway all of its licensed and certified nursing 
  5.9   home beds.  These beds may be relicensed and recertified in a 
  5.10  newly-constructed teaching nursing home facility affiliated with 
  5.11  a teaching hospital upon approval by the legislature.  The 
  5.12  proposal must be developed in consultation with the interagency 
  5.13  committee on long-term care planning.  The beds on layaway 
  5.14  status shall have the same status as voluntarily delicensed and 
  5.15  decertified beds, except that beds on layaway status remain 
  5.16  subject to the surcharge in section 256.9657.  This layaway 
  5.17  provision expires July 1, 1995; 
  5.18     (o) to allow a project which will be completed in 
  5.19  conjunction with an approved moratorium exception project for a 
  5.20  nursing home in southern Cass county and which is directly 
  5.21  related to that portion of the facility that must be repaired, 
  5.22  renovated, or replaced, to correct an emergency plumbing problem 
  5.23  for which a state correction order has been issued and which 
  5.24  must be corrected by August 31, 1993; 
  5.25     (p) to allow a facility that on April 16, 1993, was a 
  5.26  368-bed licensed and certified nursing facility located in 
  5.27  Minneapolis to layaway, upon 30 days prior written notice to the 
  5.28  commissioner, up to 30 of the facility's licensed and certified 
  5.29  beds by converting three-bed wards to single or double 
  5.30  occupancy.  Beds on layaway status shall have the same status as 
  5.31  voluntarily delicensed and decertified beds except that beds on 
  5.32  layaway status remain subject to the surcharge in section 
  5.33  256.9657, remain subject to the license application and renewal 
  5.34  fees under section 144A.07 and shall be subject to a $100 per 
  5.35  bed reactivation fee.  In addition, at any time within three 
  5.36  years of the effective date of the layaway, the beds on layaway 
  6.1   status may be: 
  6.2      (1) relicensed and recertified upon relocation and 
  6.3   reactivation of some or all of the beds to an existing licensed 
  6.4   and certified facility or facilities located in Pine River, 
  6.5   Brainerd, or International Falls; provided that the total 
  6.6   project construction costs related to the relocation of beds 
  6.7   from layaway status for any facility receiving relocated beds 
  6.8   may not exceed the dollar threshold provided in subdivision 2 
  6.9   unless the construction project has been approved through the 
  6.10  moratorium exception process under section 144A.073; 
  6.11     (2) relicensed and recertified, upon reactivation of some 
  6.12  or all of the beds within the facility which placed the beds in 
  6.13  layaway status, if the commissioner has determined a need for 
  6.14  the reactivation of the beds on layaway status. 
  6.15     The property-related payment rate of a facility placing 
  6.16  beds on layaway status must be adjusted by the incremental 
  6.17  change in its rental per diem after recalculating the rental per 
  6.18  diem as provided in section 256B.431, subdivision 3a, paragraph 
  6.19  (d).  The property-related payment rate for a facility 
  6.20  relicensing and recertifying beds from layaway status must be 
  6.21  adjusted by the incremental change in its rental per diem after 
  6.22  recalculating its rental per diem using the number of beds after 
  6.23  the relicensing to establish the facility's capacity day 
  6.24  divisor, which shall be effective the first day of the month 
  6.25  following the month in which the relicensing and recertification 
  6.26  became effective.  Any beds remaining on layaway status more 
  6.27  than three years after the date the layaway status became 
  6.28  effective must be removed from layaway status and immediately 
  6.29  delicensed and decertified; 
  6.30     (q) to license and certify beds in a renovation and 
  6.31  remodeling project to convert 13 three-bed wards into 13 two-bed 
  6.32  rooms and 13 single-bed rooms, expand space, and add 
  6.33  improvements in a nursing home that, as of January 1, 1994, met 
  6.34  the following conditions:  the nursing home was located in 
  6.35  Ramsey county; was not owned by a hospital corporation; had a 
  6.36  licensed capacity of 64 beds; and had been ranked among the top 
  7.1   15 applicants by the 1993 moratorium exceptions advisory review 
  7.2   panel.  The total project construction cost estimate for this 
  7.3   project must not exceed the cost estimate submitted in 
  7.4   connection with the 1993 moratorium exception process; or 
  7.5      (r) to license and certify beds in a renovation and 
  7.6   remodeling project to convert 12 four-bed wards into 24 two-bed 
  7.7   rooms, expand space, and add improvements in a nursing home 
  7.8   that, as of January 1, 1994, met the following conditions:  the 
  7.9   nursing home was located in Ramsey county; had a licensed 
  7.10  capacity of 154 beds; and had been ranked among the top 15 
  7.11  applicants by the 1993 moratorium exceptions advisory review 
  7.12  panel.  The total project construction cost estimate for this 
  7.13  project must not exceed the cost estimate submitted in 
  7.14  connection with the 1993 moratorium exception process; or 
  7.15     (s) to license and certify 98 beds transferred from a 
  7.16  facility in South St. Paul to an existing 170-bed facility 
  7.17  located in Inver Grove Heights, provided that the existing 
  7.18  98-bed facility is delicensed and decertified, the 98 beds are 
  7.19  added as a third floor on the 170-bed facility, and the two 
  7.20  facilities are located within two miles of each other. 
  7.21     Sec. 2.  Minnesota Statutes 1994, section 256B.431, 
  7.22  subdivision 17, is amended to read: 
  7.23     Subd. 17.  [SPECIAL PROVISIONS FOR MORATORIUM EXCEPTIONS.] 
  7.24  (a) Notwithstanding Minnesota Rules, part 9549.0060, subpart 3, 
  7.25  for rate periods beginning on October 1, 1992, and for rate 
  7.26  years beginning after June 30, 1993, a nursing facility that has 
  7.27  completed a construction project approved under section 
  7.28  144A.071, subdivision 4a, clause (s), or has completed a 
  7.29  renovation, replacement, or upgrading project approved under the 
  7.30  moratorium exception process in section 144A.073 shall be 
  7.31  reimbursed for costs directly identified to that project as 
  7.32  provided in subdivision 16 and this subdivision. 
  7.33     (b) Notwithstanding Minnesota Rules, part 9549.0060, 
  7.34  subparts 5, item A, subitems (1) and (3), and 7, item D, 
  7.35  allowable interest expense on debt shall include: 
  7.36     (1) interest expense on debt related to the cost of 
  8.1   purchasing or replacing depreciable equipment, excluding 
  8.2   vehicles, not to exceed six percent of the total historical cost 
  8.3   of the project; and 
  8.4      (2) interest expense on debt related to financing or 
  8.5   refinancing costs, including costs related to points, loan 
  8.6   origination fees, financing charges, legal fees, and title 
  8.7   searches; and issuance costs including bond discounts, bond 
  8.8   counsel, underwriter's counsel, corporate counsel, printing, and 
  8.9   financial forecasts.  Allowable debt related to items in this 
  8.10  clause shall not exceed seven percent of the total historical 
  8.11  cost of the project.  To the extent these costs are financed, 
  8.12  the straight-line amortization of the costs in this clause is 
  8.13  not an allowable cost; and 
  8.14     (3) interest on debt incurred for the establishment of a 
  8.15  debt reserve fund, net of the interest earned on the debt 
  8.16  reserve fund. 
  8.17     (c) Debt incurred for costs under paragraph (b) is not 
  8.18  subject to Minnesota Rules, part 9549.0060, subpart 5, item A, 
  8.19  subitem (5) or (6). 
  8.20     (d) The incremental increase in a nursing facility's rental 
  8.21  rate, determined under Minnesota Rules, parts 9549.0010 to 
  8.22  9549.0080, and this section, resulting from the acquisition of 
  8.23  allowable capital assets, and allowable debt and interest 
  8.24  expense under this subdivision shall be added to its 
  8.25  property-related payment rate and shall be effective on the 
  8.26  first day of the month following the month in which the 
  8.27  moratorium project was completed. 
  8.28     (e) Notwithstanding subdivision 3f, paragraph (a), for rate 
  8.29  periods beginning on October 1, 1992, and for rate years 
  8.30  beginning after June 30, 1993, the replacement-costs-new per bed 
  8.31  limit to be used in Minnesota Rules, part 9549.0060, subpart 4, 
  8.32  item B, for a nursing facility that has completed a renovation, 
  8.33  replacement, or upgrading project that has been approved under 
  8.34  the moratorium exception process in section 144A.073, or that 
  8.35  has completed an addition to or replacement of buildings, 
  8.36  attached fixtures, or land improvements for which the total 
  9.1   historical cost exceeds the lesser of $150,000 or ten percent of 
  9.2   the most recent appraised value, must be $47,500 per licensed 
  9.3   bed in multiple-bed rooms and $71,250 per licensed bed in a 
  9.4   single-bed room.  These amounts must be adjusted annually as 
  9.5   specified in subdivision 3f, paragraph (a), beginning January 1, 
  9.6   1993. 
  9.7      (f) A nursing facility that completes a project identified 
  9.8   in this subdivision and, as of April 17, 1992, has not been 
  9.9   mailed a rate notice with a special appraisal for a completed 
  9.10  project, or completes a project after April 17, 1992, but before 
  9.11  September 1, 1992, may elect either to request a special 
  9.12  reappraisal with the corresponding adjustment to the 
  9.13  property-related payment rate under the laws in effect on June 
  9.14  30, 1992, or to submit their capital asset and debt information 
  9.15  after that date and obtain the property-related payment rate 
  9.16  adjustment under this section, but not both. 
  9.17     Sec. 3.  [APPROPRIATION.] 
  9.18     $....... is appropriated from the general fund to the 
  9.19  commissioner of human services for the purposes of sections 1 
  9.20  and 2, to be available until June 30, 1997.