1.1                          A bill for an act 
  1.2             relating to human services; establishing a nursing 
  1.3             facility case mix transition plan; imposing a fine for 
  1.4             noncompliance; amending Minnesota Statutes 2000, 
  1.5             section 144A.04, subdivision 7; proposing coding for 
  1.6             new law in Minnesota Statutes, chapters 144; and 256B; 
  1.7             repealing Minnesota Statutes 2000, section 144.0721, 
  1.8             subdivision 1. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  [144.0724] [RESIDENT REIMBURSEMENT 
  1.11  CLASSIFICATION.] 
  1.12     Subdivision 1.  [RESIDENT REIMBURSEMENT 
  1.13  CLASSIFICATIONS.] The commissioner of health shall establish 
  1.14  resident reimbursement classifications based upon the 
  1.15  assessments of residents of nursing homes and boarding care 
  1.16  homes conducted under this section and according to section 
  1.17  256B.437.  The reimbursement classifications established under 
  1.18  this section shall be implemented after June 30, 2002, but no 
  1.19  later than January 1, 2003. 
  1.20     Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
  1.21  following terms have the meanings given. 
  1.22     (a) [ASSESSMENT REFERENCE DATE.] "Assessment reference 
  1.23  date" means the last day of the minimum data set observation 
  1.24  period.  The date sets the designated endpoint of the common 
  1.25  observation period, and all minimum data set items refer back in 
  1.26  time from that point. 
  1.27     (b) [CASE MIX INDEX.] "Case mix index" means the weighting 
  2.1   factors assigned to the RUG-III classifications. 
  2.2      (c) [INDEX MAXIMIZATION.] "Index maximization" means 
  2.3   classifying a resident who could be assigned to more than one 
  2.4   category, to the category with the highest case mix index. 
  2.5      (d) [MINIMUM DATA SET.] "Minimum data set" means the 
  2.6   assessment instrument specified by the Health Care Financing 
  2.7   Administration and designated by the Minnesota department of 
  2.8   health. 
  2.9      (e) [REPRESENTATIVE.] "Representative" means a person who 
  2.10  is the resident's guardian or conservator, the person authorized 
  2.11  to pay the nursing home expenses of the resident, a 
  2.12  representative of the nursing home ombudsman's office whose 
  2.13  assistance has been requested, or any other individual 
  2.14  designated by the resident. 
  2.15     (f) [RESOURCE UTILIZATION GROUPS OR RUG.] "Resource 
  2.16  utilization groups" or "RUG" means the system for grouping a 
  2.17  nursing facility's residents according to their clinical and 
  2.18  functional status identified in data supplied by the facility's 
  2.19  minimum data set. 
  2.20     Subd. 3.  [RESIDENT REIMBURSEMENT CLASSIFICATIONS.] (a) 
  2.21  Resident reimbursement classifications shall be based on the 
  2.22  minimum data set, version 2.0 assessment instrument, or its 
  2.23  successor version mandated by the Health Care Financing 
  2.24  Administration that nursing facilities are required to complete 
  2.25  for all residents.  The commissioner of health shall establish 
  2.26  resident classes according to the 34 group, resource utilization 
  2.27  groups, version III or RUG-III model.  Resident classes must be 
  2.28  established based on the individual items on the minimum data 
  2.29  set and must be completed according to the facility manual for 
  2.30  case mix classification issued by the Minnesota department of 
  2.31  health.  The facility manual for case mix classification shall 
  2.32  be drafted by the Minnesota department of health and presented 
  2.33  to the chairs of health and human services legislative 
  2.34  committees by December 31, 2001. 
  2.35     (b) Each resident must be assessed based on the information 
  2.36  from the minimum data set according to general domains in 
  3.1   clauses (1) to (7): 
  3.2      (1) extensive services where a resident requires 
  3.3   intravenous feeding or medications, suctioning, tracheostomy 
  3.4   care, or is on a ventilator or respirator; 
  3.5      (2) rehabilitation where a resident requires physical, 
  3.6   occupational, or speech therapy; 
  3.7      (3) special care where a resident has cerebral palsy; 
  3.8   quadriplegia; multiple sclerosis; pressure ulcers; fever with 
  3.9   vomiting, weight loss, or dehydration; tube feeding and aphasia; 
  3.10  or is receiving radiation therapy; 
  3.11     (4) clinically complex status where a resident has burns, 
  3.12  coma, septicemia, pneumonia, internal bleeding, chemotherapy, 
  3.13  wounds, kidney failure, urinary tract infections, oxygen, or 
  3.14  transfusions; 
  3.15     (5) impaired cognition where a resident has poor cognitive 
  3.16  performance; 
  3.17     (6) behavior problems where a resident exhibits wandering, 
  3.18  has hallucinations, or is physically or verbally abusive toward 
  3.19  others, unless the resident's other condition would place the 
  3.20  resident in other categories; and 
  3.21     (7) reduced physical functioning where a resident has no 
  3.22  special clinical conditions. 
  3.23     (c) The commissioner of health shall establish resident 
  3.24  classification according to a 34 group model based on the 
  3.25  information on the minimum data set and within the general 
  3.26  domains listed in paragraph (b), clauses (1) to (7).  Detailed 
  3.27  descriptions of each resource utilization group shall be defined 
  3.28  in the facility manual for case mix classification issued by the 
  3.29  Minnesota department of health.  The 34 groups are described as 
  3.30  follows: 
  3.31     (1) SE3:  requires four or five extensive services; 
  3.32     (2) SE2:  requires two or three extensive services; 
  3.33     (3) SE1:  requires one extensive service; 
  3.34     (4) RAD:  requires rehabilitation services and is dependent 
  3.35  in activity of daily living (ADL) at a count of 17 or 18; 
  3.36     (5) RAC:  requires rehabilitation services and ADL count is 
  4.1   14 to 16; 
  4.2      (6) RAB:  requires rehabilitation services and ADL count is 
  4.3   ten to 13; 
  4.4      (7) RAA:  requires rehabilitation services and ADL count is 
  4.5   four to nine; 
  4.6      (8) SSC:  requires special care and ADL count is 17 or 18; 
  4.7      (9) SSB:  requires special care and ADL count is 15 or 16; 
  4.8      (10) SSA:  requires special care and ADL count is seven to 
  4.9   14; 
  4.10     (11) CC2:  clinically complex with depression and ADL count 
  4.11  is 17 or 18; 
  4.12     (12) CC1:  clinically complex with no depression and ADL 
  4.13  count is 17 or 18; 
  4.14     (13) CB2:  clinically complex with depression and ADL count 
  4.15  is 12 to 16; 
  4.16     (14) CB1:  clinically complex with no depression and ADL 
  4.17  count is 12 to 16; 
  4.18     (15) CA2:  clinically complex with depression and ADL count 
  4.19  is four to 11; 
  4.20     (16) CA1:  clinically complex with no depression and ADL 
  4.21  count is four to 11; 
  4.22     (17) IB2:  impaired cognition with nursing rehabilitation 
  4.23  and ADL count is six to ten; 
  4.24     (18) IB1:  impaired cognition with no nursing 
  4.25  rehabilitation and ADL count is six to ten; 
  4.26     (19) IA2:  impaired cognition with nursing rehabilitation 
  4.27  and ADL count is four or five; 
  4.28     (20) IA1:  impaired cognition with no nursing 
  4.29  rehabilitation and ADL count is four or five; 
  4.30     (21) BB2:  behavior problems with nursing rehabilitation 
  4.31  and ADL count is six to ten; 
  4.32     (22) BB1:  behavior problems with no nursing rehabilitation 
  4.33  and ADL count is six to ten; 
  4.34     (23) BA2:  behavior problems with nursing rehabilitation 
  4.35  and ADL count is four to five; 
  4.36     (24) BA1:  behavior problems with no nursing rehabilitation 
  5.1   and ADL count is four to five; 
  5.2      (25) PE2:  reduced physical functioning with nursing 
  5.3   rehabilitation and ADL count is 16 to 18; 
  5.4      (26) PE1:  reduced physical functioning with no nursing 
  5.5   rehabilitation and ADL count is 16 to 18; 
  5.6      (27) PD2:  reduced physical functioning with nursing 
  5.7   rehabilitation and ADL count is 11 to 15; 
  5.8      (28) PD1:  reduced physical functioning with no nursing 
  5.9   rehabilitation and ADL count is 11 to 15; 
  5.10     (29) PC2:  reduced physical functioning with nursing 
  5.11  rehabilitation and ADL count is nine or ten; 
  5.12     (30) PD1:  reduced physical functioning with no nursing 
  5.13  rehabilitation and ADL count is nine or ten; 
  5.14     (31) PB2:  reduced physical functioning with nursing 
  5.15  rehabilitation and ADL count is six to eight; 
  5.16     (32) PB1:  reduced physical functioning with no nursing 
  5.17  rehabilitation and ADL count is six to eight; 
  5.18     (33) PA2:  reduced physical functioning with nursing 
  5.19  rehabilitation and ADL count is four or five; and 
  5.20     (34) PA1:  reduced physical functioning with no nursing 
  5.21  rehabilitation and ADL count is four or five. 
  5.22     Subd. 4.  [RESIDENT ASSESSMENT SCHEDULE.] (a) A facility 
  5.23  must conduct and electronically submit to the commissioner of 
  5.24  health case mix assessments that conform with the assessment 
  5.25  schedule defined by the Code of Federal Regulations, title 42, 
  5.26  section 483.20, and published by the United States Department of 
  5.27  Health and Human Services, Health Care Financing Administration, 
  5.28  in the Long Term Care Assessment Instrument User's Manual, 
  5.29  version 2.0, October 1995, and subsequent clarifications made in 
  5.30  the Long-Term Care Assessment Instrument Questions and Answers, 
  5.31  version 2.0, August 1996.  The commissioner of health may 
  5.32  substitute successor manuals or question and answer documents 
  5.33  published by the United States Department of Health and Human 
  5.34  Services, Health Care Financing Administration, to replace or 
  5.35  supplement the current version of the manual or document. 
  5.36     (b) The assessments used to determine a case mix 
  6.1   classification for reimbursement include the following: 
  6.2      (1) a new admission assessment must be completed by day 14 
  6.3   following admission; 
  6.4      (2) an annual assessment must be completed within 366 days 
  6.5   of the last comprehensive assessment; 
  6.6      (3) a significant change assessment must be completed 
  6.7   within 14 days of the identification of a significant change; 
  6.8   and 
  6.9      (4) the second quarterly assessment following either a new 
  6.10  admission assessment, an annual assessment, or a significant 
  6.11  change assessment.  Each quarterly assessment must be completed 
  6.12  within 92 days of the previous assessment. 
  6.13     Subd. 5.  [SHORT STAYS.] (a) A facility must submit to the 
  6.14  commissioner of health an initial admission assessment for all 
  6.15  residents who stay in the facility less than 14 days. 
  6.16     (b) Notwithstanding the admission assessment requirements 
  6.17  of paragraph (a), a facility may elect to accept a default rate 
  6.18  with a case mix index of 1.0 for all facility residents who stay 
  6.19  less than 14 days in lieu of submitting an initial assessment.  
  6.20  Facilities may make this election to be effective on the day of 
  6.21  implementation of the revised case mix system. 
  6.22     (c) After implementation of the revised case mix system, 
  6.23  nursing facilities must elect one of the options described in 
  6.24  paragraphs (a) and (b) on the annual report to the commissioner 
  6.25  of human services filed for each report year ending September 
  6.26  30.  The election shall be effective on the following July 1. 
  6.27     (d) For residents who are admitted or readmitted and leave 
  6.28  the facility on a frequent basis and for whom readmission is 
  6.29  expected, the resident may be discharged on an extended leave 
  6.30  status.  This status does not require reassessment each time the 
  6.31  resident returns to the facility unless a significant change in 
  6.32  the resident's status has occurred since the last assessment.  
  6.33  The case mix classification for these residents is determined by 
  6.34  the facility election made in paragraphs (a) and (b). 
  6.35     Subd. 6.  [PENALTIES FOR LATE OR NONSUBMISSION.] A facility 
  6.36  that fails to complete or submit an assessment for a RUG-III 
  7.1   classification within seven days of the time requirements in 
  7.2   subdivisions 4 and 5 is subject to a reduced rate for that 
  7.3   resident.  The reduced rate shall be the lowest rate for that 
  7.4   facility.  The reduced rate is effective on the day of admission 
  7.5   for new admission assessments or on the day that the assessment 
  7.6   was due for all other assessments and continues in effect until 
  7.7   the first day of the month following the date of submission of 
  7.8   the resident's assessment. 
  7.9      Subd. 7.  [NOTICE OF RESIDENT REIMBURSEMENT 
  7.10  CLASSIFICATION.] (a) A facility must elect between the options 
  7.11  in paragraphs (1) to (3) to provide notice to a resident of the 
  7.12  resident's case mix classification. 
  7.13     (1) The commissioner of health shall provide to a nursing 
  7.14  facility a notice for each resident of the reimbursement 
  7.15  classification established under subdivision 1.  The notice must 
  7.16  inform the resident of the classification that was assigned, the 
  7.17  opportunity to review the documentation supporting the 
  7.18  classification, the opportunity to obtain clarification from the 
  7.19  commissioner, and the opportunity to request a reconsideration 
  7.20  of the classification.  The commissioner must send notice of 
  7.21  resident classification by first class mail.  A nursing facility 
  7.22  is responsible for the distribution of the notice to each 
  7.23  resident, to the person responsible for the payment of the 
  7.24  resident's nursing home expenses, or to another person 
  7.25  designated by the resident.  This notice must be distributed 
  7.26  within three working days after the facility's receipt of the 
  7.27  notice from the commissioner of health. 
  7.28     (2) A facility may chose to provide a classification 
  7.29  notice, as prescribed by the commissioner of health, to a 
  7.30  resident upon receipt of the confirmation of the case mix 
  7.31  classification calculated by a facility or a corrected case mix 
  7.32  classification as indicated on the final validation report from 
  7.33  the commissioner.  A nursing facility is responsible for the 
  7.34  distribution of the notice to each resident, to the person 
  7.35  responsible for the payment of the resident's nursing home 
  7.36  expenses, or to another person designated by the resident.  This 
  8.1   notice must be distributed within three working days after the 
  8.2   facility's receipt of the validation report from the 
  8.3   commissioner.  If a facility elects this option, the 
  8.4   commissioner of health shall provide the facility with a list of 
  8.5   residents and their case mix classifications as determined by 
  8.6   the commissioner.  A nursing facility may make this election to 
  8.7   be effective on the day of implementation of the revised case 
  8.8   mix system. 
  8.9      (3) After implementation of the revised case mix system, a 
  8.10  nursing facility shall elect a notice or resident reimbursement 
  8.11  classification procedure as described in paragraph (1) or (2) on 
  8.12  the annual report to the commissioner of human services filed 
  8.13  for each report year ending September 30.  The election will be 
  8.14  effective the following July 1. 
  8.15     (b) If a facility submits a correction to an assessment 
  8.16  conducted under subdivision 3 that results in a change in case 
  8.17  mix classification, the facility shall give written notice to 
  8.18  the resident or the resident's representative about the item 
  8.19  that was corrected and the reason for the correction.  The 
  8.20  notice of corrected assessment may be provided at the same time 
  8.21  that the resident or resident's representative is provided the 
  8.22  resident's corrected notice of classification. 
  8.23     Subd. 8.  [REQUEST FOR RECONSIDERATION OF RESIDENT 
  8.24  CLASSIFICATIONS.] (a) The resident, or resident's 
  8.25  representative, or the nursing facility boarding care home may 
  8.26  request that the commissioner of health reconsider the assigned 
  8.27  reimbursement classification.  The request for reconsideration 
  8.28  must be submitted in writing to the commissioner within 30 days 
  8.29  of the day the resident or the resident's representative 
  8.30  receives the resident classification notice.  The request for 
  8.31  reconsideration must include the name of the resident, the name 
  8.32  and address of the facility in which the resident resides, the 
  8.33  reasons for the reconsideration, the requested classification 
  8.34  changes, and documentation supporting the requested 
  8.35  classification.  The documentation accompanying the 
  8.36  reconsideration request is limited to documentation which 
  9.1   establishes that the needs of the resident at the time of the 
  9.2   assessment justify a classification which is different than the 
  9.3   classification established by the commissioner of health. 
  9.4      (b) Upon request, the nursing facility must give the 
  9.5   resident or the resident's representative a copy of the 
  9.6   assessment form and the other documentation that was given to 
  9.7   the commissioner of health to support the assessment findings.  
  9.8   The nursing facility shall also provide access to and a copy of 
  9.9   other information from the resident's record that has been 
  9.10  requested by or on behalf of the resident to support a 
  9.11  resident's reconsideration request.  A copy of any requested 
  9.12  material must be provided within three working days of receipt 
  9.13  of a written request for the information.  If a facility fails 
  9.14  to provide the material within this time, it is subject to the 
  9.15  issuance of a correction order and penalty assessment under 
  9.16  sections 144.653 and 144A.10.  Notwithstanding those sections, 
  9.17  any correction order issued under this subdivision must require 
  9.18  that the nursing facility immediately comply with the request 
  9.19  for information and that as of the date of the issuance of the 
  9.20  correction order, the facility shall forfeit to the state a $100 
  9.21  fine for the first day of noncompliance, and an increase in the 
  9.22  $100 fine by $50 increments for each day the noncompliance 
  9.23  continues. 
  9.24     (c) In addition to the information required under 
  9.25  subdivision 9, a reconsideration request from a nursing facility 
  9.26  must contain the following information:  (i) the date the 
  9.27  reimbursement classification notices were received by the 
  9.28  facility; (ii) the date the classification notices were 
  9.29  distributed to the resident or the resident's representative; 
  9.30  and (iii) a copy of a notice sent to the resident or to the 
  9.31  resident's representative.  This notice must inform the resident 
  9.32  or the resident's representative that a reconsideration of the 
  9.33  resident's classification is being requested, the reason for the 
  9.34  request, that the resident's rate will change if the request is 
  9.35  approved by the commissioner, the extent of the change, that 
  9.36  copies of the facility's request and supporting documentation 
 10.1   are available for review, and that the resident also has the 
 10.2   right to request a reconsideration.  If the facility fails to 
 10.3   provide the required information with the reconsideration 
 10.4   request, the request must be denied, and the facility may not 
 10.5   make further reconsideration requests on that specific 
 10.6   reimbursement classification. 
 10.7      (d) Reconsideration by the commissioner must be made by 
 10.8   individuals not involved in reviewing the assessment, audit, or 
 10.9   reconsideration that established the disputed classification.  
 10.10  The reconsideration must be based upon the initial assessment 
 10.11  and upon the information provided to the commissioner under 
 10.12  paragraphs (a) and (b).  If necessary for evaluating the 
 10.13  reconsideration request, the commissioner may conduct on-site 
 10.14  reviews.  Within 15 working days of receiving the request for 
 10.15  reconsideration, the commissioner shall affirm or modify the 
 10.16  original resident classification.  The original classification 
 10.17  must be modified if the commissioner determines that the 
 10.18  assessment resulting in the classification did not accurately 
 10.19  reflect the needs or assessment characteristics of the resident 
 10.20  at the time of the assessment.  The resident and the nursing 
 10.21  facility or boarding care home shall be notified within five 
 10.22  working days after the decision is made.  A decision by the 
 10.23  commissioner under this subdivision is the final administrative 
 10.24  decision of the agency for the party requesting reconsideration. 
 10.25     (e) The resident classification established by the 
 10.26  commissioner shall be the classification that applies to the 
 10.27  resident while the request for reconsideration is pending. 
 10.28     (f) The commissioner may request additional documentation 
 10.29  regarding a reconsideration necessary to make an accurate 
 10.30  reconsideration determination. 
 10.31     Subd. 9.  [AUDIT AUTHORITY.] (a) The commissioner shall 
 10.32  audit the accuracy of resident assessments performed under 
 10.33  section 256B.437 through desk audits, on-site review of 
 10.34  residents and their records, and interviews with staff and 
 10.35  families.  The commissioner shall reclassify a resident if the 
 10.36  commissioner determines that the resident was incorrectly 
 11.1   classified. 
 11.2      (b) The commissioner is authorized to conduct on-site 
 11.3   audits on an unannounced basis. 
 11.4      (c) A facility must grant the commissioner access to 
 11.5   examine the medical records relating to the resident assessments 
 11.6   selected for audit under this subdivision.  The commissioner may 
 11.7   also observe and speak to facility staff and residents. 
 11.8      (d) The commissioner shall consider documentation under the 
 11.9   time frames for coding items on the minimum data set as set out 
 11.10  in the Resident Assessment Instrument Manual published by the 
 11.11  Health Care Financing Administration. 
 11.12     (e) The commissioner shall develop an audit selection 
 11.13  procedure that includes the following factors: 
 11.14     (1) The commissioner may target facilities that demonstrate 
 11.15  an atypical pattern of scoring minimum data set items, 
 11.16  nonsubmission of assessments, late submission of assessments, or 
 11.17  a previous history of audit changes of greater than 35 percent.  
 11.18  The commissioner shall select at least 20 percent of the most 
 11.19  current assessments submitted to the state for audit.  Audits of 
 11.20  assessments selected in the targeted facilities must focus on 
 11.21  the factors leading to the audit.  If the number of targeted 
 11.22  assessments selected does not meet the threshold of 20 percent 
 11.23  of the facility residents, then a stratified sample of the 
 11.24  remainder of assessments shall be drawn to meet the quota.  If 
 11.25  the total change exceeds 35 percent, the commissioner may 
 11.26  conduct an expanded audit up to 100 percent of the remaining 
 11.27  current assessments. 
 11.28     (2) Facilities that are not a part of the targeted group 
 11.29  shall be placed in a general pool from which facilities will be 
 11.30  selected on a random basis for audit.  Every facility shall be 
 11.31  audited annually.  If a facility has two successive audits in 
 11.32  which the percentage of change is five percent or less and the 
 11.33  facility has not been the subject of a targeted audit in the 
 11.34  past 36 months, the facility may be audited biannually.  A 
 11.35  stratified sample of 15 percent of the most current assessments 
 11.36  shall be selected for audit.  If more than 20 percent of the 
 12.1   RUGS-III classifications after the audit are changed, the audit 
 12.2   shall be expanded to a second 15 percent sample.  If the total 
 12.3   change between the first and second samples exceed 35 percent, 
 12.4   the commissioner may expand the audit to all of the remaining 
 12.5   assessments. 
 12.6      (3) If a facility qualifies for an expanded audit, the 
 12.7   commissioner may audit the facility again within six months.  If 
 12.8   a facility has two expanded audits within a 24-month period, 
 12.9   that facility will be audited at least every six months for the 
 12.10  next 18 months. 
 12.11     (4) The commissioner may conduct special audits if the 
 12.12  commissioner determines that circumstances exist that could 
 12.13  alter or affect the validity of case mix classifications of 
 12.14  residents.  These circumstances include, but are not limited to, 
 12.15  the following:  
 12.16     (i) frequent changes in the administration or management of 
 12.17  the facility; 
 12.18     (ii) an unusually high percentage of residents in a 
 12.19  specific case mix classification; 
 12.20     (iii) a high frequency in the number of reconsideration 
 12.21  requests received from a facility; 
 12.22     (iv) frequent adjustments of case mix classifications as 
 12.23  the result of reconsiderations or audits; 
 12.24     (v) a criminal indictment alleging provider fraud; or 
 12.25     (vi) other similar factors that relate to a facility's 
 12.26  ability to conduct accurate assessments. 
 12.27     (f) Within 15 working days of completing the audit process, 
 12.28  the commissioner shall mail the written results of the audit to 
 12.29  the facility, along with a written notice for each resident 
 12.30  affected to be forwarded by the facility.  The notice must 
 12.31  contain the resident's classification and a statement informing 
 12.32  the resident, the resident's authorized representative, and the 
 12.33  facility of their right to review the commissioner's documents 
 12.34  supporting the classification and to request a reconsideration 
 12.35  of the classification.  This notice must also include the 
 12.36  address and telephone number of the area nursing home ombudsman. 
 13.1      Subd. 10.  [TRANSITION.] After implementation of this 
 13.2   section, reconsiderations requested for classifications made 
 13.3   under section 144.0722, subdivision 1, shall be determined under 
 13.4   section 144.0722, subdivision 3. 
 13.5      Sec. 2.  Minnesota Statutes 2000, section 144A.04, 
 13.6   subdivision 7, is amended to read: 
 13.7      Subd. 7.  [MINIMUM NURSING STAFF REQUIREMENT.] 
 13.8   Notwithstanding the provisions of Minnesota Rules, part 
 13.9   4655.5600, the minimum staffing standard for nursing personnel 
 13.10  in certified nursing homes is as follows: 
 13.11     (a) The minimum number of hours of nursing personnel to be 
 13.12  provided in a nursing home is the greater of two hours per 
 13.13  resident per 24 hours or 0.95 hours per standardized resident 
 13.14  day. 
 13.15     (b) Upon implementation of the 34 group, RUG-III resident 
 13.16  classification system, the minimum number of hours of nursing 
 13.17  personnel to be provided in a nursing home is two hours per 
 13.18  resident per 24 hours.  
 13.19     (c) For purposes of this subdivision, "hours of nursing 
 13.20  personnel" means the paid, on-duty, productive nursing hours of 
 13.21  all nurses and nursing assistants, calculated on the basis of 
 13.22  any given 24-hour period.  "Productive nursing hours" means all 
 13.23  on-duty hours during which nurses and nursing assistants are 
 13.24  engaged in nursing duties.  Examples of nursing duties may be 
 13.25  found in Minnesota Rules, parts 4655.5900, 4655.6100, and 
 13.26  4655.6400.  Not included are vacations, holidays, sick leave, 
 13.27  in-service classroom training, or lunches.  Also not included 
 13.28  are the nonproductive nursing hours of the in-service training 
 13.29  director.  In homes with more than 60 licensed beds, the hours 
 13.30  of the director of nursing are excluded.  "Standardized resident 
 13.31  day" means the sum of the number of residents in each case mix 
 13.32  class multiplied by the case mix weight for that resident class, 
 13.33  as found in Minnesota Rules, part 9549.0059, subpart 2, 
 13.34  calculated on the basis of a facility's census for any given 
 13.35  day.  For the purpose of determining a facility's census, the 
 13.36  commissioner of health shall exclude the resident days claimed 
 14.1   by the facility for resident therapeutic leave or bed hold days. 
 14.2      ~~(c)~~ (d) Calculation of nursing hours per standardized 
 14.3   resident day is performed by dividing total hours of nursing 
 14.4   personnel for a given period by the total of standardized 
 14.5   resident days for that same period. 
 14.6      ~~(d)~~ (e) A nursing home that is issued a notice of 
 14.7   noncompliance under section 144A.10, subdivision 5, for a 
 14.8   violation of this subdivision, shall be assessed a civil fine of 
 14.9   $300 for each day of noncompliance, subject to section 144A.10, 
 14.10  subdivisions 7 and 8. 
 14.11     Sec. 3.  [256B.437] [IMPLEMENTATION OF A CASE MIX SYSTEM 
 14.12  FOR NURSING FACILITIES BASED ON THE MINIMUM DATA SET.] 
 14.13     Subdivision 1.  [SCOPE.] This section establishes the 
 14.14  method and criteria used to determine resident reimbursement 
 14.15  classifications based upon the assessments of residents of 
 14.16  nursing homes and boarding care homes whose payment rates are 
 14.17  established under section 256B.431, 256B.434, or 256B.435.  
 14.18  Resident reimbursement classifications shall be established 
 14.19  according to the 34 group, resource utilization groups, version 
 14.20  III or RUG-III model as described in section 144.0724.  
 14.21  Reimbursement classifications established under this section 
 14.22  shall be implemented after June 30, 2002, but no later than 
 14.23  January 1, 2003. 
 14.24     Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
 14.25  following terms have the meanings given. 
 14.26     (a) [ASSESSMENT REFERENCE DATE.] "Assessment reference 
 14.27  date" has the meaning given in section 144.0724, subdivision 2, 
 14.28  paragraph (a). 
 14.29     (b) [CASE MIX INDEX.] "Case mix index" has the meaning 
 14.30  given in section 144.0724, subdivision 2, paragraph (b). 
 14.31     (c) [INDEX MAXIMIZATION.] "Index maximization" has the 
 14.32  meaning given in section 144.0724, subdivision 2, paragraph (c). 
 14.33     (d) [MINIMUM DATA SET.] "Minimum data set" has the meaning 
 14.34  given in section 144.0724, subdivision 2, paragraph (d). 
 14.35     (e) [REPRESENTATIVE.] "Representative" has the meaning 
 14.36  given in section 144.0724, subdivision 2, paragraph (e). 
 15.1      (f) [RESOURCE UTILIZATION GROUPS OR RUG.] "Resource 
 15.2   utilization groups" or "RUG" has the meaning given in section 
 15.3   144.0724, subdivision 2, paragraph (f). 
 15.4      Subd. 3.  [CASE MIX INDICES.] (a) The commissioner of human 
 15.5   services shall assign a case mix index to each resident class 
 15.6   based on the Health Care Financing Administration's staff time 
 15.7   measurement study and adjusted for Minnesota-specific wage 
 15.8   indices.  The case mix indices assigned to each resident class 
 15.9   shall be published in the Minnesota State Register at least 120 
 15.10  days prior to the implementation of the 34 group, RUG-III 
 15.11  resident classification system. 
 15.12     (b) An index maximization approach shall be used to 
 15.13  classify residents. 
 15.14     (c) After implementation of the revised case mix system, 
 15.15  the commissioner of human services may annually rebase case mix 
 15.16  indices and base rates using more current data on average wage 
 15.17  rates and staff time measurement studies.  This rebasing shall 
 15.18  be calculated under subdivision 12, paragraph (b).  The 
 15.19  commissioner shall publish in the Minnesota State Register 
 15.20  adjusted case mix indices at least 45 days prior to the 
 15.21  effective date of the adjusted case mix indices. 
 15.22     Subd. 4.  [RESIDENT ASSESSMENT SCHEDULE.] (a) Nursing 
 15.23  facilities shall conduct and submit case mix assessments 
 15.24  according to the schedule established by the commissioner of 
 15.25  health under section 144.0724, subdivisions 4 and 5. 
 15.26     (b) The resident reimbursement classifications established 
 15.27  under section 144.0724, subdivision 3, shall be effective the 
 15.28  day of admission for new admission assessments.  The effective 
 15.29  date for significant change assessments shall be the assessment 
 15.30  reference date.  The effective date for annual and second 
 15.31  quarterly assessments shall be the first day of the month 
 15.32  following assessment reference date. 
 15.33     Subd. 5.  [NOTICE OF RESIDENT REIMBURSEMENT 
 15.34  CLASSIFICATION.] Nursing facilities shall provide notice to a 
 15.35  resident of the resident's case mix classification according to 
 15.36  procedures established by the commissioner of health under 
 16.1   section 144.0724, subdivision 7. 
 16.2      Subd. 6.  [RECONSIDERATION OF RESIDENT CLASSIFICATION.] Any 
 16.3   request for reconsideration of a resident classification must be 
 16.4   made under section 144.0724, subdivision 8. 
 16.5      Subd. 7.  [RATE DETERMINATION UPON TRANSITION TO RUG-III 
 16.6   PAYMENT RATES.] (a) The commissioner of human services shall 
 16.7   determine payment rates at the time of transition to the RUG 
 16.8   based payment model in a facility-specific, budget-neutral 
 16.9   manner.  The case mix indices as defined in subdivision 3 shall 
 16.10  be used to allocate the case mix adjusted component of total 
 16.11  payment across all case mix groups.  To transition from the 
 16.12  current calculation methodology to the RUG based methodology, 
 16.13  the commissioner of health shall report to the commissioner of 
 16.14  human services the resident days classified according to the 
 16.15  categories defined in subdivision 3 for the 12-month reporting 
 16.16  period ending September 30, 2001, for each nursing facility.  
 16.17  The commissioner of human services shall use this data to 
 16.18  compute the standardized days for the reporting period under the 
 16.19  RUG system. 
 16.20     (b) The commissioner of human services shall determine the 
 16.21  case mix adjusted component of the rate as follows: 
 16.22     (1) determine the case mix portion of the 11 case mix rates 
 16.23  in effect on June 30, 2002; 
 16.24     (2) multiply each amount in clause (1) by the number of 
 16.25  resident days assigned to each group for the reporting period 
 16.26  ending September 30, 2001; 
 16.27     (3) compute the sum of the amounts in clause (2); 
 16.28     (4) determine the total RUG standardized days for the 
 16.29  reporting period ending September 30, 2001; 
 16.30     (5) divide the amount in clause (3) by the amount in clause 
 16.31  (4) which shall be the average case mix adjusted component of 
 16.32  the rate under the RUG method; and 
 16.33     (6) multiply this average rate by the case mix weight in 
 16.34  subdivision 4 for each RUG group. 
 16.35     (c) The noncase mix component will be allocated to each RUG 
 16.36  group as a constant amount to determine the transition payment 
 17.1   rate.  Any other rate adjustments that are effective on or after 
 17.2   July 1, 2001, shall be applied to the transition rates 
 17.3   determined under this section. 
 17.4      Sec. 4.  [REPEALER.] 
 17.5      Minnesota Statutes 2000, section 144.0721, subdivision 1, 
 17.6   is repealed.