1.1                          A bill for an act 
  1.2             relating to human services; making changes to 
  1.3             long-term care provisions; changing provisions for 
  1.4             nursing facilities payment rates; amending Minnesota 
  1.5             Statutes 1998, sections 144D.01, subdivision 4; 
  1.6             256B.0911, subdivision 6; 256B.0913, subdivisions 5, 
  1.7             10, 12, and 16; 256B.421, subdivisions 9 and 11; 
  1.8             256B.431, subdivisions 1, 2b, 2d, 2i, 2r, 3a, 3f, 10, 
  1.9             11, 12, 13, 15, 16, 17, 18, 22, 26, and 27; 256B.434, 
  1.10            subdivisions 3 and 13; 256B.435; 256B.48, subdivisions 
  1.11            1, 1a, 1b, and 6; 256B.50, subdivisions 1 and 1e; 
  1.12            256I.04, subdivision 3; and 256I.05, subdivisions 1 
  1.13            and 1a; repealing Minnesota Statutes 1998, sections 
  1.14            256B.03, subdivision 2; 256B.431, subdivisions 2, 2a, 
  1.15            2c, 2f, 2h, 2j, 2k, 2l, 2m, 2n, 2o, 2p, 2q, 3, 3b, 3d, 
  1.16            3e, 3h, 3j, 4, 5, 7, 8, 9, 9a, 23, 24, and 25; 
  1.17            256B.433; 256B.434; 256B.47, subdivisions 3 and 4; 
  1.18            256B.48, subdivision 9; and 256B.50, subdivisions 1f 
  1.19            and 3. 
  1.20  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.21                             ARTICLE 1 
  1.22                           LONG-TERM CARE 
  1.23     Section 1.  Minnesota Statutes 1998, section 144D.01, 
  1.24  subdivision 4, is amended to read: 
  1.25     Subd. 4.  [HOUSING WITH SERVICES ESTABLISHMENT OR 
  1.26  ESTABLISHMENT.] "Housing with services establishment" or 
  1.27  "establishment" means an establishment providing sleeping 
  1.28  accommodations to one or more adult residents, at least 80 
  1.29  percent of which are 55 years of age or older, and offering or 
  1.30  providing, for a fee, one or more regularly scheduled 
  1.31  health-related services or two or more regularly scheduled 
  1.32  supportive services, whether offered or provided directly by the 
  2.1   establishment or by another entity arranged for by the 
  2.2   establishment. 
  2.3      Housing with services establishment does not include: 
  2.4      (1) a nursing home licensed under chapter 144A; 
  2.5      (2) a hospital, certified boarding care home, or supervised 
  2.6   living facility licensed under sections 144.50 to 144.56; 
  2.7      (3) a board and lodging establishment licensed under 
  2.8   chapter 157 and Minnesota Rules, parts 9520.0500 to 9520.0670, 
  2.9   9525.0215 to 9525.0355, 9525.0500 to 9525.0660, or 9530.4100 to 
  2.10  9530.4450, or under chapter 245B; 
  2.11     (4) a board and lodging establishment which serves as a 
  2.12  shelter for battered women or other similar purpose; 
  2.13     (5) a family adult foster care home licensed by the 
  2.14  department of human services; 
  2.15     (6) private homes in which the residents are related by 
  2.16  kinship, law, or affinity with the providers of services; 
  2.17     (7) residential settings for persons with mental 
  2.18  retardation or related conditions in which the services are 
  2.19  licensed under Minnesota Rules, parts 9525.2100 to 9525.2140, or 
  2.20  applicable successor rules or laws; 
  2.21     (8) a home-sharing arrangement such as when an elderly or 
  2.22  disabled person or single-parent family makes lodging in a 
  2.23  private residence available to another person in exchange for 
  2.24  services or rent, or both; 
  2.25     (9) a duly organized condominium, cooperative, common 
  2.26  interest community, or owners' association of the foregoing 
  2.27  where at least 80 percent of the units that comprise the 
  2.28  condominium, cooperative, or common interest community are 
  2.29  occupied by individuals who are the owners, members, or 
  2.30  shareholders of the units; or 
  2.31     (10) services for persons with developmental disabilities 
  2.32  that are provided under a license according to Minnesota Rules, 
  2.33  parts 9525.2000 to 9525.2140 in effect until January 1, 1998, or 
  2.34  under chapter 245B. 
  2.35     Sec. 2.  Minnesota Statutes 1998, section 256B.0911, 
  2.36  subdivision 6, is amended to read: 
  3.1      Subd. 6.  [PAYMENT FOR PREADMISSION SCREENING.] (a) The 
  3.2   total screening payment for each county must be paid monthly by 
  3.3   certified nursing facilities in the county.  The monthly amount 
  3.4   to be paid by each nursing facility for each fiscal year must be 
  3.5   determined by dividing the county's annual allocation for 
  3.6   screenings by 12 to determine the monthly payment and allocating 
  3.7   the monthly payment to each nursing facility based on the number 
  3.8   of licensed beds in the nursing facility. 
  3.9      (b) The commissioner shall include the total annual payment 
  3.10  for screening for each nursing facility according to section 
  3.11  256B.431, subdivision 2b, paragraph (g), or 256B.435. 
  3.12     (c) Payments for screening activities are available to the 
  3.13  county or counties to cover staff salaries and expenses to 
  3.14  provide the screening function.  The lead agency shall employ, 
  3.15  or contract with other agencies to employ, within the limits of 
  3.16  available funding, sufficient personnel to conduct the 
  3.17  preadmission screening activity while meeting the state's 
  3.18  long-term care outcomes and objectives as defined in section 
  3.19  256B.0917, subdivision 1.  The local agency shall be accountable 
  3.20  for meeting local objectives as approved by the commissioner in 
  3.21  the CSSA biennial plan. 
  3.22     (c) (d) Notwithstanding section 256B.0641, overpayments 
  3.23  attributable to payment of the screening costs under the medical 
  3.24  assistance program may not be recovered from a facility.  
  3.25     (d) (e) The commissioner of human services shall amend the 
  3.26  Minnesota medical assistance plan to include reimbursement for 
  3.27  the local screening teams. 
  3.28     Sec. 3.  Minnesota Statutes 1998, section 256B.0913, 
  3.29  subdivision 5, is amended to read: 
  3.30     Subd. 5.  [SERVICES COVERED UNDER ALTERNATIVE CARE.] (a) 
  3.31  Alternative care funding may be used for payment of costs of: 
  3.32     (1) adult foster care; 
  3.33     (2) adult day care; 
  3.34     (3) home health aide; 
  3.35     (4) homemaker services; 
  3.36     (5) personal care; 
  4.1      (6) case management; 
  4.2      (7) respite care; 
  4.3      (8) assisted living; 
  4.4      (9) residential care services; 
  4.5      (10) care-related supplies and equipment; 
  4.6      (11) meals delivered to the home; 
  4.7      (12) transportation; 
  4.8      (13) skilled nursing; 
  4.9      (14) chore services; 
  4.10     (15) companion services; 
  4.11     (16) nutrition services; 
  4.12     (17) training for direct informal caregivers; and 
  4.13     (18) telemedicine devices to monitor recipients in their 
  4.14  own homes as an alternative to hospital care, nursing home care, 
  4.15  or home visits.; and 
  4.16     (19) other services including direct cash payments to 
  4.17  clients, approved by the county agency, subject to the 
  4.18  provisions of paragraph (m).  Total annual payments for other 
  4.19  services for all clients within a county may not exceed either 
  4.20  ten percent of that county's annual alternative care program 
  4.21  base allocation or $5,000, whichever is greater.  In no case 
  4.22  shall this amount exceed the county's total annual alternative 
  4.23  care program base allocation. 
  4.24     (b) The county agency must ensure that the funds are used 
  4.25  only to supplement and not supplant services available through 
  4.26  other public assistance or services programs. 
  4.27     (c) Unless specified in statute, the service standards for 
  4.28  alternative care services shall be the same as the service 
  4.29  standards defined in the elderly waiver.  Except for the county 
  4.30  agencies' approval of direct cash payments to clients, persons 
  4.31  or agencies must be employed by or under a contract with the 
  4.32  county agency or the public health nursing agency of the local 
  4.33  board of health in order to receive funding under the 
  4.34  alternative care program. 
  4.35     (d) The adult foster care rate shall be considered a 
  4.36  difficulty of care payment and shall not include room and 
  5.1   board.  The adult foster care daily rate shall be negotiated 
  5.2   between the county agency and the foster care provider.  The 
  5.3   rate established under this section shall not exceed 75 percent 
  5.4   of the state average monthly nursing home payment for the case 
  5.5   mix classification to which the individual receiving foster care 
  5.6   is assigned, and it must allow for other alternative care 
  5.7   services to be authorized by the case manager. 
  5.8      (e) Personal care services may be provided by a personal 
  5.9   care provider organization.  A county agency may contract with a 
  5.10  relative of the client to provide personal care services, but 
  5.11  must ensure nursing supervision.  Covered personal care services 
  5.12  defined in section 256B.0627, subdivision 4, must meet 
  5.13  applicable standards in Minnesota Rules, part 9505.0335. 
  5.14     (f) A county may use alternative care funds to purchase 
  5.15  medical supplies and equipment without prior approval from the 
  5.16  commissioner when:  (1) there is no other funding source; (2) 
  5.17  the supplies and equipment are specified in the individual's 
  5.18  care plan as medically necessary to enable the individual to 
  5.19  remain in the community according to the criteria in Minnesota 
  5.20  Rules, part 9505.0210, item A; and (3) the supplies and 
  5.21  equipment represent an effective and appropriate use of 
  5.22  alternative care funds.  A county may use alternative care funds 
  5.23  to purchase supplies and equipment from a non-Medicaid certified 
  5.24  vendor if the cost for the items is less than that of a Medicaid 
  5.25  vendor.  A county is not required to contract with a provider of 
  5.26  supplies and equipment if the monthly cost of the supplies and 
  5.27  equipment is less than $250.  
  5.28     (g) For purposes of this section, residential care services 
  5.29  are services which are provided to individuals living in 
  5.30  residential care homes.  Residential care homes are currently 
  5.31  licensed as board and lodging establishments and are registered 
  5.32  with the department of health as providing special services.  
  5.33  Residential care services are defined as "supportive services" 
  5.34  and "health-related services."  "Supportive services" means the 
  5.35  provision of up to 24-hour supervision and oversight.  
  5.36  Supportive services includes:  (1) transportation, when provided 
  6.1   by the residential care center only; (2) socialization, when 
  6.2   socialization is part of the plan of care, has specific goals 
  6.3   and outcomes established, and is not diversional or recreational 
  6.4   in nature; (3) assisting clients in setting up meetings and 
  6.5   appointments; (4) assisting clients in setting up medical and 
  6.6   social services; (5) providing assistance with personal laundry, 
  6.7   such as carrying the client's laundry to the laundry room.  
  6.8   Assistance with personal laundry does not include any laundry, 
  6.9   such as bed linen, that is included in the room and board rate.  
  6.10  Health-related services are limited to minimal assistance with 
  6.11  dressing, grooming, and bathing and providing reminders to 
  6.12  residents to take medications that are self-administered or 
  6.13  providing storage for medications, if requested.  Individuals 
  6.14  receiving residential care services cannot receive both personal 
  6.15  care services and residential care services.  
  6.16     (h) For the purposes of this section, "assisted living" 
  6.17  refers to supportive services provided by a single vendor to 
  6.18  clients who reside in the same apartment building of three or 
  6.19  more units which are not subject to registration under chapter 
  6.20  144D.  Assisted living services are defined as up to 24-hour 
  6.21  supervision, and oversight, supportive services as defined in 
  6.22  clause (1), individualized home care aide tasks as defined in 
  6.23  clause (2), and individualized home management tasks as defined 
  6.24  in clause (3) provided to residents of a residential center 
  6.25  living in their units or apartments with a full kitchen and 
  6.26  bathroom.  A full kitchen includes a stove, oven, refrigerator, 
  6.27  food preparation counter space, and a kitchen utensil storage 
  6.28  compartment.  Assisted living services must be provided by the 
  6.29  management of the residential center or by providers under 
  6.30  contract with the management or with the county. 
  6.31     (1) Supportive services include:  
  6.32     (i) socialization, when socialization is part of the plan 
  6.33  of care, has specific goals and outcomes established, and is not 
  6.34  diversional or recreational in nature; 
  6.35     (ii) assisting clients in setting up meetings and 
  6.36  appointments; and 
  7.1      (iii) providing transportation, when provided by the 
  7.2   residential center only.  
  7.3      Individuals receiving assisted living services will not 
  7.4   receive both assisted living services and homemaking or personal 
  7.5   care services.  Individualized means services are chosen and 
  7.6   designed specifically for each resident's needs, rather than 
  7.7   provided or offered to all residents regardless of their 
  7.8   illnesses, disabilities, or physical conditions.  
  7.9      (2) Home care aide tasks means:  
  7.10     (i) preparing modified diets, such as diabetic or low 
  7.11  sodium diets; 
  7.12     (ii) reminding residents to take regularly scheduled 
  7.13  medications or to perform exercises; 
  7.14     (iii) household chores in the presence of technically 
  7.15  sophisticated medical equipment or episodes of acute illness or 
  7.16  infectious disease; 
  7.17     (iv) household chores when the resident's care requires the 
  7.18  prevention of exposure to infectious disease or containment of 
  7.19  infectious disease; and 
  7.20     (v) assisting with dressing, oral hygiene, hair care, 
  7.21  grooming, and bathing, if the resident is ambulatory, and if the 
  7.22  resident has no serious acute illness or infectious disease.  
  7.23  Oral hygiene means care of teeth, gums, and oral prosthetic 
  7.24  devices.  
  7.25     (3) Home management tasks means:  
  7.26     (i) housekeeping; 
  7.27     (ii) laundry; 
  7.28     (iii) preparation of regular snacks and meals; and 
  7.29     (iv) shopping.  
  7.30     Assisted living services as defined in this section shall 
  7.31  not be authorized in boarding and lodging establishments 
  7.32  licensed according to sections 157.011 and 157.15 to 157.22. 
  7.33     (i) For establishments registered under chapter 144D, 
  7.34  assisted living services under this section means the services 
  7.35  described and licensed under section 144A.4605. 
  7.36     (j) For the purposes of this section, reimbursement for 
  8.1   assisted living services and residential care services shall be 
  8.2   a monthly rate negotiated and authorized by the county agency 
  8.3   based on an individualized service plan for each resident. The 
  8.4   rate shall not exceed the nonfederal share of the greater of 
  8.5   either the statewide or any of the geographic groups' weighted 
  8.6   average monthly medical assistance nursing facility payment rate 
  8.7   of the case mix resident class to which the 180-day eligible 
  8.8   client would be assigned under Minnesota Rules, parts 9549.0050 
  8.9   to 9549.0059, unless the services are provided by a home care 
  8.10  provider licensed by the department of health and are provided 
  8.11  in a building that is registered as a housing with services 
  8.12  establishment under chapter 144D and that provides 24-hour 
  8.13  supervision. 
  8.14     (k) For purposes of this section, companion services are 
  8.15  defined as nonmedical care, supervision and oversight, provided 
  8.16  to a functionally impaired adult.  Companions may assist the 
  8.17  individual with such tasks as meal preparation, laundry and 
  8.18  shopping, but do not perform these activities as discrete 
  8.19  services.  The provision of companion services does not entail 
  8.20  hands-on medical care.  Providers may also perform light 
  8.21  housekeeping tasks which are incidental to the care and 
  8.22  supervision of the recipient.  This service must be approved by 
  8.23  the case manager as part of the care plan.  Companion services 
  8.24  must be provided by individuals or nonprofit organizations who 
  8.25  are under contract with the local agency to provide the 
  8.26  service.  Any person related to the waiver recipient by blood, 
  8.27  marriage or adoption cannot be reimbursed under this service.  
  8.28  Persons providing companion services will be monitored by the 
  8.29  case manager. 
  8.30     (l) For purposes of this section, training for direct 
  8.31  informal caregivers is defined as a classroom or home course of 
  8.32  instruction which may include:  transfer and lifting skills, 
  8.33  nutrition, personal and physical cares, home safety in a home 
  8.34  environment, stress reduction and management, behavioral 
  8.35  management, long-term care decision making, care coordination 
  8.36  and family dynamics.  The training is provided to an informal 
  9.1   unpaid caregiver of a 180-day eligible client which enables the 
  9.2   caregiver to deliver care in a home setting with high levels of 
  9.3   quality.  The training must be approved by the case manager as 
  9.4   part of the individual care plan.  Individuals, agencies, and 
  9.5   educational facilities which provide caregiver training and 
  9.6   education will be monitored by the case manager. 
  9.7      (m) A county agency may make payment from their alternative 
  9.8   care program allocation for other services provided to an 
  9.9   alternative care program recipient if those services prevent, 
  9.10  shorten, or delay institutionalization.  These services may 
  9.11  include direct cash payments to the recipient for the purpose of 
  9.12  purchasing the recipient's services.  The following provisions 
  9.13  apply to payments under this paragraph: 
  9.14     (1) a cash payment to a client under this provision cannot 
  9.15  exceed 50 percent of the monthly payment limit for that client 
  9.16  as specified in subdivision 4, paragraph (a), clause (7); 
  9.17     (2) a county may not approve any cash payment for a client 
  9.18  who has been assessed as having a dependency in orientation or 
  9.19  for a client who is concurrently receiving adult foster care, 
  9.20  residential care, or assisted living services; 
  9.21     (3) any service approved under this section must be a 
  9.22  service which meets the purpose and goals of the program as 
  9.23  listed in subdivision 1; and 
  9.24     (4) cash payments must also meet the criteria in section 
  9.25  256.476, subdivision 4, paragraph (b), and recipients of cash 
  9.26  grants must meet the requirements in section 256.476, 
  9.27  subdivision 10. 
  9.28  Upon implementation of direct cash payments to clients under 
  9.29  this section, any person determined eligible for the alternative 
  9.30  care program who chooses a cash payment approved by the county 
  9.31  agency shall receive the cash payment under this section and not 
  9.32  under section 256.476 unless the person was receiving a consumer 
  9.33  support grant under section 256.476 before implementation of 
  9.34  direct cash payments under this section. 
  9.35     Sec. 4.  Minnesota Statutes 1998, section 256B.0913, 
  9.36  subdivision 10, is amended to read: 
 10.1      Subd. 10.  [ALLOCATION FORMULA.] (a) The alternative care 
 10.2   appropriation for fiscal years 1992 and beyond shall cover only 
 10.3   180-day eligible clients. 
 10.4      (b) Prior to July 1 of each year, the commissioner shall 
 10.5   allocate to county agencies the state funds available for 
 10.6   alternative care for persons eligible under subdivision 2.  The 
 10.7   allocation for fiscal year 1992 shall be calculated using a base 
 10.8   that is adjusted to exclude the medical assistance share of 
 10.9   alternative care expenditures.  The adjusted base is calculated 
 10.10  by multiplying each county's allocation for fiscal year 1991 by 
 10.11  the percentage of county alternative care expenditures for 
 10.12  180-day eligible clients.  The percentage is determined based on 
 10.13  expenditures for services rendered in fiscal year 1989 or 
 10.14  calendar year 1989, whichever is greater. 
 10.15     (c) If the county expenditures for 180-day eligible clients 
 10.16  are 95 percent or more of its adjusted base allocation, the 
 10.17  allocation for the next fiscal year is 100 percent of the 
 10.18  adjusted base, plus inflation to the extent that inflation is 
 10.19  included in the state budget. 
 10.20     (d) If the county expenditures for 180-day eligible clients 
 10.21  are less than 95 percent of its adjusted base allocation, the 
 10.22  allocation for the next fiscal year is the adjusted base 
 10.23  allocation less the amount of unspent funds below the 95 percent 
 10.24  level. 
 10.25     (e) For fiscal year 1992 only, a county may receive an 
 10.26  increased allocation if annualized service costs for the month 
 10.27  of May 1991 for 180-day eligible clients are greater than the 
 10.28  allocation otherwise determined.  A county may apply for this 
 10.29  increase by reporting projected expenditures for May to the 
 10.30  commissioner by June 1, 1991.  The amount of the allocation may 
 10.31  exceed the amount calculated in paragraph (b).  The projected 
 10.32  expenditures for May must be based on actual 180-day eligible 
 10.33  client caseload and the individual cost of clients' care plans.  
 10.34  If a county does not report its expenditures for May, the amount 
 10.35  in paragraph (c) or (d) shall be used. 
 10.36     (f) Calculations for paragraphs (c) and (d) are to be made 
 11.1   as follows:  for each county, the determination of expenditures 
 11.2   shall be based on payments for services rendered from April 1 
 11.3   through March 31 in the base year, to the extent that claims 
 11.4   have been submitted by June 1 of that year.  Calculations for 
 11.5   paragraphs (c) and (d) must also include the funds transferred 
 11.6   to the consumer support grant program for clients who have 
 11.7   transferred to that program from April 1 through March 31 in the 
 11.8   base year.  
 11.9      (g) For the biennium ending June 30, 2001, the allocation 
 11.10  of state funds to county agencies shall be calculated as 
 11.11  described in paragraphs (c) and (d).  If the annual legislative 
 11.12  appropriation for the alternative care program is inadequate to 
 11.13  fund the combined county allocations for fiscal year 2000 or 
 11.14  2001, the commissioner shall distribute to each county the 
 11.15  entire annual appropriation as that county's percentage of the 
 11.16  computed base as calculated in paragraph (f). 
 11.17     Sec. 5.  Minnesota Statutes 1998, section 256B.0913, 
 11.18  subdivision 12, is amended to read: 
 11.19     Subd. 12.  [CLIENT PREMIUMS.] (a) A premium is required for 
 11.20  all 180-day eligible clients to help pay for the cost of 
 11.21  participating in the program.  The amount of the premium for the 
 11.22  alternative care client shall be determined as follows: 
 11.23     (1) when the alternative care client's income less 
 11.24  recurring and predictable medical expenses is greater than the 
 11.25  medical assistance income standard but less than 150 percent of 
 11.26  the federal poverty guideline, and total assets are less than 
 11.27  $6,000 $10,000, the fee is zero; 
 11.28     (2) when the alternative care client's income less 
 11.29  recurring and predictable medical expenses is greater than 150 
 11.30  percent of the federal poverty guideline, and total assets are 
 11.31  less than $6,000 $10,000, the fee is 25 percent of the cost of 
 11.32  alternative care services or the difference between 150 percent 
 11.33  of the federal poverty guideline and the client's income less 
 11.34  recurring and predictable medical expenses, whichever is less; 
 11.35  and 
 11.36     (3) when the alternative care client's total assets are 
 12.1   greater than $6,000 $10,000, the fee is 25 percent of the cost 
 12.2   of alternative care services.  
 12.3      For married persons, total assets are defined as the total 
 12.4   marital assets less the estimated community spouse asset 
 12.5   allowance, under section 256B.059, if applicable.  For married 
 12.6   persons, total income is defined as the client's income less the 
 12.7   monthly spousal allotment, under section 256B.058. 
 12.8      All alternative care services except case management shall 
 12.9   be included in the estimated costs for the purpose of 
 12.10  determining 25 percent of the costs. 
 12.11     The monthly premium shall be calculated based on the cost 
 12.12  of the first full month of alternative care services and shall 
 12.13  continue unaltered until the next reassessment is completed or 
 12.14  at the end of 12 months, whichever comes first.  Premiums are 
 12.15  due and payable each month alternative care services are 
 12.16  received unless the actual cost of the services is less than the 
 12.17  premium. 
 12.18     (b) The fee shall be waived by the commissioner when: 
 12.19     (1) a person who is residing in a nursing facility is 
 12.20  receiving case management only; 
 12.21     (2) a person is applying for medical assistance; 
 12.22     (3) a married couple is requesting an asset assessment 
 12.23  under the spousal impoverishment provisions; 
 12.24     (4) a person is a medical assistance recipient, but has 
 12.25  been approved for alternative care-funded assisted living 
 12.26  services; 
 12.27     (5) a person is found eligible for alternative care, but is 
 12.28  not yet receiving alternative care services; or 
 12.29     (6) a person's fee under paragraph (a) is less than $25. 
 12.30     (c) The county agency must collect the premium from the 
 12.31  client and forward the amounts collected to the commissioner in 
 12.32  the manner and at the times prescribed by the commissioner.  
 12.33  Money collected must be deposited in the general fund and is 
 12.34  appropriated to the commissioner for the alternative care 
 12.35  program.  The client must supply the county with the client's 
 12.36  social security number at the time of application.  If a client 
 13.1   fails or refuses to pay the premium due, the county shall supply 
 13.2   the commissioner with the client's social security number and 
 13.3   other information the commissioner requires to collect the 
 13.4   premium from the client.  The commissioner shall collect unpaid 
 13.5   premiums using the Revenue Recapture Act in chapter 270A and 
 13.6   other methods available to the commissioner.  The commissioner 
 13.7   may require counties to inform clients of the collection 
 13.8   procedures that may be used by the state if a premium is not 
 13.9   paid.  
 13.10     (d) The commissioner shall begin to adopt emergency or 
 13.11  permanent rules governing client premiums within 30 days after 
 13.12  July 1, 1991, including criteria for determining when services 
 13.13  to a client must be terminated due to failure to pay a premium.  
 13.14     Sec. 6.  Minnesota Statutes 1998, section 256B.0913, 
 13.15  subdivision 16, is amended to read: 
 13.16     Subd. 16.  [CONVERSION OF ENROLLMENT.] Upon approval of the 
 13.17  elderly waiver amendments described in section 256B.0915, 
 13.18  subdivision 1d, persons currently receiving services shall have 
 13.19  their eligibility for the elderly waiver program determined 
 13.20  under section 256B.0915.  Persons currently receiving 
 13.21  alternative care services whose income is under the special 
 13.22  income standard according to Code of Federal Regulations, title 
 13.23  42, section 435.236, who are eligible for the elderly waiver 
 13.24  program shall may, at their option, be transferred to that 
 13.25  program and shall receive priority access to elderly waiver 
 13.26  slots for six months after implementation of this subdivision.  
 13.27  Persons currently enrolled in the alternative care program who 
 13.28  are not eligible for the elderly waiver program shall continue 
 13.29  to be eligible for the alternative care program.  as long as 
 13.30  continuous eligibility is maintained.  Continued eligibility for 
 13.31  the alternative care program shall be reviewed every six 
 13.32  months.  Persons who apply for the alternative care program 
 13.33  after approval of the elderly waiver amendments in section 
 13.34  256B.0915, subdivision 1d, are not eligible for alternative care 
 13.35  if they would qualify for the elderly waiver, with or without a 
 13.36  spenddown.  
 14.1      Sec. 7.  Minnesota Statutes 1998, section 256B.434, 
 14.2   subdivision 3, is amended to read: 
 14.3      Subd. 3.  [DURATION AND TERMINATION OF CONTRACTS.] (a) 
 14.4   Subject to available resources, the commissioner may begin to 
 14.5   execute contracts with nursing facilities November 1, 1995. 
 14.6      (b) All contracts entered into under this section are for a 
 14.7   term of one year.  Either party may terminate a contract at any 
 14.8   time without cause by providing 30 90 calendar days advance 
 14.9   written notice to the other party.  The decision to terminate a 
 14.10  contract is not appealable.  If neither party provides written 
 14.11  notice of termination the contract shall be renegotiated for 
 14.12  additional one-year terms, for up to a total of four consecutive 
 14.13  one-year terms Notwithstanding section 16C.05, subdivision 2, 
 14.14  paragraph (a), clause (5), the contract shall be renegotiated 
 14.15  for additional one-year terms, unless either party provides 
 14.16  written notice of termination.  The provisions of the contract 
 14.17  shall be renegotiated annually by the parties prior to the 
 14.18  expiration date of the contract.  The parties may voluntarily 
 14.19  renegotiate the terms of the contract at any time by mutual 
 14.20  agreement. 
 14.21     (c) If a nursing facility fails to comply with the terms of 
 14.22  a contract, the commissioner shall provide reasonable notice 
 14.23  regarding the breach of contract and a reasonable opportunity 
 14.24  for the facility to come into compliance.  If the facility fails 
 14.25  to come into compliance or to remain in compliance, the 
 14.26  commissioner may terminate the contract.  If a contract is 
 14.27  terminated, the contract payment remains in effect for the 
 14.28  remainder of the rate year in which the contract was terminated, 
 14.29  but in all other respects the provisions of this section do not 
 14.30  apply to that facility effective the date the contract is 
 14.31  terminated.  The contract shall contain a provision governing 
 14.32  the transition back to the cost-based reimbursement system 
 14.33  established under section 256B.431, subdivision 25, and 
 14.34  Minnesota Rules, parts 9549.0010 to 9549.0080.  A contract 
 14.35  entered into under this section may be amended by mutual 
 14.36  agreement of the parties. 
 15.1      Sec. 8.  Minnesota Statutes 1998, section 256B.434, 
 15.2   subdivision 13, is amended to read: 
 15.3      Subd. 13.  [PAYMENT SYSTEM REFORM ADVISORY COMMITTEE.] (a) 
 15.4   The commissioner, in consultation with an advisory committee, 
 15.5   shall study options for reforming the regulatory and 
 15.6   reimbursement system for nursing facilities to reduce the level 
 15.7   of regulation, reporting, and procedural requirements, and to 
 15.8   provide greater flexibility and incentives to stimulate 
 15.9   competition and innovation.  The advisory committee shall 
 15.10  include, at a minimum, representatives from the long-term care 
 15.11  provider community, the department of health, and consumers of 
 15.12  long-term care services.  The advisory committee sunsets on June 
 15.13  30, 1997.  Among other things, the commissioner shall consider 
 15.14  the feasibility and desirability of changing from a 
 15.15  certification requirement to an accreditation requirement for 
 15.16  participation in the medical assistance program, options to 
 15.17  encourage early discharge of short-term residents through the 
 15.18  provision of intensive therapy, and further modifications needed 
 15.19  in rate equalization.  The commissioner shall also include 
 15.20  detailed recommendations for a permanent managed care payment 
 15.21  system to replace the contractual alternative payment 
 15.22  demonstration project authorized under this section.  The 
 15.23  commissioner shall submit a report with findings and 
 15.24  recommendations to the legislature by January 15, 1997. 
 15.25     (b) If a permanent managed care payment system has not been 
 15.26  enacted into law by July 1, 1997, the commissioner shall develop 
 15.27  and implement a transition plan to enable nursing facilities 
 15.28  under contract with the commissioner under this section to 
 15.29  revert to the cost-based payment system at the expiration of the 
 15.30  alternative payment demonstration project.  The commissioner 
 15.31  shall include in the alternative payment demonstration project 
 15.32  contracts entered into under this section a provision to permit 
 15.33  an amendment to the contract to be made after July 1, 1997, 
 15.34  governing the transition back to the cost-based payment system.  
 15.35  The transition plan and contract amendments are not subject to 
 15.36  rulemaking requirements.  
 16.1      Sec. 9.  Minnesota Statutes 1998, section 256B.48, 
 16.2   subdivision 1, is amended to read: 
 16.3      Subdivision 1.  [PROHIBITED PRACTICES.] A nursing facility 
 16.4   is not eligible to receive medical assistance payments unless it 
 16.5   refrains from all of the following: 
 16.6      (a) Charging private paying residents rates for similar 
 16.7   services which exceed those which are approved by the state 
 16.8   agency for medical assistance recipients as determined by the 
 16.9   prospective desk audit rate under section 256B.435, except under 
 16.10  the following circumstances:  the nursing facility may (1) 
 16.11  charge private paying residents a higher rate for a private 
 16.12  room, and (2) charge for special services which are not included 
 16.13  in the daily rate if medical assistance residents are charged 
 16.14  separately at the same rate for the same services in addition to 
 16.15  the daily rate paid by the commissioner.  Services covered by 
 16.16  the payment rate must be the same regardless of payment source.  
 16.17  Special services, if offered, must be available to all residents 
 16.18  in all areas of the nursing facility and charged separately at 
 16.19  the same rate.  Residents are free to select or decline special 
 16.20  services.  Special services must not include services which must 
 16.21  be provided by the nursing facility in order to comply with 
 16.22  licensure or certification standards and that if not provided 
 16.23  would result in a deficiency or violation by the nursing 
 16.24  facility.  Services beyond those required to comply with 
 16.25  licensure or certification standards must not be charged 
 16.26  separately as a special service if they were included in the 
 16.27  payment rate for the previous reporting year.  A nursing 
 16.28  facility that charges a private paying resident a rate in 
 16.29  violation of this clause is subject to an action by the state of 
 16.30  Minnesota or any of its subdivisions or agencies for civil 
 16.31  damages.  A private paying resident or the resident's legal 
 16.32  representative has a cause of action for civil damages against a 
 16.33  nursing facility that charges the resident rates in violation of 
 16.34  this clause.  The damages awarded shall include three times the 
 16.35  payments that result from the violation, together with costs and 
 16.36  disbursements, including reasonable attorneys' fees or their 
 17.1   equivalent.  A private paying resident or the resident's legal 
 17.2   representative, the state, subdivision or agency, or a nursing 
 17.3   facility may request a hearing to determine the allowed rate or 
 17.4   rates at issue in the cause of action.  Within 15 calendar days 
 17.5   after receiving a request for such a hearing, the commissioner 
 17.6   shall request assignment of an administrative law judge under 
 17.7   sections 14.48 to 14.56 to conduct the hearing as soon as 
 17.8   possible or according to agreement by the parties.  The 
 17.9   administrative law judge shall issue a report within 15 calendar 
 17.10  days following the close of the hearing.  The prohibition set 
 17.11  forth in this clause shall not apply to facilities licensed as 
 17.12  boarding care facilities which are not certified as skilled or 
 17.13  intermediate care facilities level I or II for reimbursement 
 17.14  through medical assistance. 
 17.15     (b)(1) Requiring Charging, soliciting, accepting, or 
 17.16  receiving from an applicant for admission to the facility, or 
 17.17  the guardian or conservator from anyone acting in behalf of the 
 17.18  applicant, as a condition of admission, to pay expediting the 
 17.19  admission, or as a requirement for the individual's continued 
 17.20  stay, any fee or, deposit in excess of $100, gift, money, 
 17.21  donation, or other consideration; 
 17.22     (2) requiring an individual, or anyone acting in behalf of 
 17.23  the individual, to loan any money to the nursing facility, or; 
 17.24     (3) requiring an individual, or anyone acting in behalf of 
 17.25  the individual, to promise to leave all or part of the 
 17.26  applicant's individual's estate to the facility; or 
 17.27     (4) requiring a third-party guarantee of payment to the 
 17.28  facility as a condition of admission, expedited admission, or 
 17.29  continued stay in the facility.  
 17.30     (c) requiring any resident of the nursing facility to 
 17.31  utilize a vendor of health care services chosen by the nursing 
 17.32  facility. 
 17.33     (d) Providing differential treatment on the basis of status 
 17.34  with regard to public assistance.  
 17.35     (e) Discriminating in admissions, services offered, or room 
 17.36  assignment on the basis of status with regard to public 
 18.1   assistance or refusal to purchase special services.  Admissions 
 18.2   discrimination shall include, but is not limited to:  
 18.3      (1) basing admissions decisions upon assurance by the 
 18.4   applicant to the nursing facility, or the applicant's guardian 
 18.5   or conservator, that the applicant is neither eligible for nor 
 18.6   will seek public assistance for payment of nursing facility care 
 18.7   costs; and 
 18.8      (2) engaging in preferential selection from waiting lists 
 18.9   based on an applicant's ability to pay privately or an 
 18.10  applicant's refusal to pay for a special service. 
 18.11     The collection and use by a nursing facility of financial 
 18.12  information of any applicant pursuant to a preadmission 
 18.13  screening program established by law shall not raise an 
 18.14  inference that the nursing facility is utilizing that 
 18.15  information for any purpose prohibited by this paragraph.  
 18.16     (f) Requiring any vendor of medical care as defined by 
 18.17  section 256B.02, subdivision 7, who is reimbursed by medical 
 18.18  assistance under a separate fee schedule, to pay any amount 
 18.19  based on utilization or service levels or any portion of the 
 18.20  vendor's fee to the nursing facility except as payment for 
 18.21  renting or leasing space or equipment or purchasing support 
 18.22  services from the nursing facility as limited by section 
 18.23  256B.433.  All agreements must be disclosed to the commissioner 
 18.24  upon request of the commissioner.  Nursing facilities and 
 18.25  vendors of ancillary services that are found to be in violation 
 18.26  of this provision shall each be subject to an action by the 
 18.27  state of Minnesota or any of its subdivisions or agencies for 
 18.28  treble civil damages on the portion of the fee in excess of that 
 18.29  allowed by this provision and section 256B.433.  Damages awarded 
 18.30  must include three times the excess payments together with costs 
 18.31  and disbursements including reasonable attorney's fees or their 
 18.32  equivalent.  
 18.33     (g) Refusing, for more than 24 hours, to accept a resident 
 18.34  returning to the same bed or a bed certified for the same level 
 18.35  of care, in accordance with a physician's order authorizing 
 18.36  transfer, after receiving inpatient hospital services. 
 19.1      The prohibitions set forth in clause (b) shall not apply to 
 19.2   a retirement facility with more than 325 beds including at least 
 19.3   150 licensed nursing facility beds and which:  
 19.4      (1) is owned and operated by an organization tax-exempt 
 19.5   under section 290.05, subdivision 1, clause (i); and 
 19.6      (2) accounts for all of the applicant's assets which are 
 19.7   required to be assigned to the facility so that only expenses 
 19.8   for the cost of care of the applicant may be charged against the 
 19.9   account; and 
 19.10     (3) agrees in writing at the time of admission to the 
 19.11  facility to permit the applicant, or the applicant's guardian, 
 19.12  or conservator, to examine the records relating to the 
 19.13  applicant's account upon request, and to receive an audited 
 19.14  statement of the expenditures charged against the applicant's 
 19.15  individual account upon request; and 
 19.16     (4) agrees in writing at the time of admission to the 
 19.17  facility to permit the applicant to withdraw from the facility 
 19.18  at any time and to receive, upon withdrawal, the balance of the 
 19.19  applicant's individual account. 
 19.20     For a period not to exceed 180 days, the commissioner may 
 19.21  continue to make medical assistance payments to a nursing 
 19.22  facility or boarding care home which is in violation of this 
 19.23  section if extreme hardship to the residents would result.  In 
 19.24  these cases the commissioner shall issue an order requiring the 
 19.25  nursing facility to correct the violation.  The nursing facility 
 19.26  shall have 20 days from its receipt of the order to correct the 
 19.27  violation.  If the violation is not corrected within the 20-day 
 19.28  period the commissioner may reduce the payment rate to the 
 19.29  nursing facility by up to 20 percent.  The amount of the payment 
 19.30  rate reduction shall be related to the severity of the violation 
 19.31  and shall remain in effect until the violation is corrected.  
 19.32  The nursing facility or boarding care home may appeal the 
 19.33  commissioner's action pursuant to the provisions of chapter 14 
 19.34  pertaining to contested cases.  An appeal shall be considered 
 19.35  timely if written notice of appeal is received by the 
 19.36  commissioner within 20 days of notice of the commissioner's 
 20.1   proposed action.  
 20.2      In the event that the commissioner determines that a 
 20.3   nursing facility is not eligible for reimbursement for a 
 20.4   resident who is eligible for medical assistance, the 
 20.5   commissioner may authorize the nursing facility to receive 
 20.6   reimbursement on a temporary basis until the resident can be 
 20.7   relocated to a participating nursing facility.  
 20.8      Certified beds in facilities which do not allow medical 
 20.9   assistance intake on July 1, 1984, or after shall be deemed to 
 20.10  be decertified for purposes of section 144A.071 only.  
 20.11     Sec. 10.  Minnesota Statutes 1998, section 256I.04, 
 20.12  subdivision 3, is amended to read: 
 20.13     Subd. 3.  [MORATORIUM ON THE DEVELOPMENT OF GROUP 
 20.14  RESIDENTIAL HOUSING BEDS.] (a) County agencies shall not enter 
 20.15  into agreements for new group residential housing beds with 
 20.16  total rates in excess of the MSA equivalent rate except:  (1) 
 20.17  for group residential housing establishments meeting the 
 20.18  requirements of subdivision 2a, clause (2) with department 
 20.19  approval; (2) for group residential housing establishments 
 20.20  licensed under Minnesota Rules, parts 9525.0215 to 9525.0355, 
 20.21  provided the facility is needed to meet the census reduction 
 20.22  targets for persons with mental retardation or related 
 20.23  conditions at regional treatment centers; (3) to ensure 
 20.24  compliance with the federal Omnibus Budget Reconciliation Act 
 20.25  alternative disposition plan requirements for inappropriately 
 20.26  placed persons with mental retardation or related conditions or 
 20.27  mental illness; (4) up to 80 beds in a single, specialized 
 20.28  facility located in Hennepin county that will provide housing 
 20.29  for chronic inebriates who are repetitive users of 
 20.30  detoxification centers and are refused placement in emergency 
 20.31  shelters because of their state of intoxication, and planning 
 20.32  for the specialized facility must have been initiated before 
 20.33  July 1, 1991, in anticipation of receiving a grant from the 
 20.34  housing finance agency under section 462A.05, subdivision 20a, 
 20.35  paragraph (b); or (5) notwithstanding the provisions of 
 20.36  subdivision 2a, for up to 190 supportive housing units in Anoka, 
 21.1   Dakota, Hennepin, or Ramsey county for homeless adults with a 
 21.2   mental illness, a history of substance abuse, or human 
 21.3   immunodeficiency virus or acquired immunodeficiency syndrome.  
 21.4   For purposes of this section, "homeless adult" means a person 
 21.5   who is living on the street or in a shelter or discharged from a 
 21.6   regional treatment center, community hospital, or residential 
 21.7   treatment program and has no appropriate housing available and 
 21.8   lacks the resources and support necessary to access appropriate 
 21.9   housing.  At least 70 percent of the supportive housing units 
 21.10  must serve homeless adults with mental illness, substance abuse 
 21.11  problems, or human immunodeficiency virus or acquired 
 21.12  immunodeficiency syndrome who are about to be or, within the 
 21.13  previous six months, has been discharged from a regional 
 21.14  treatment center, or a state-contracted psychiatric bed in a 
 21.15  community hospital, or a residential mental health or chemical 
 21.16  dependency treatment program.  If a person meets the 
 21.17  requirements of subdivision 1, paragraph (a), and receives a 
 21.18  federal or state housing subsidy, the group residential housing 
 21.19  rate for that person is limited to the supplementary rate under 
 21.20  section 256I.05, subdivision 1a, and is determined by 
 21.21  subtracting the amount of the person's countable income that 
 21.22  exceeds the MSA equivalent rate from the group residential 
 21.23  housing supplementary rate.  A resident in a demonstration 
 21.24  project site who no longer participates in the demonstration 
 21.25  program shall retain eligibility for a group residential housing 
 21.26  payment in an amount determined under section 256I.06, 
 21.27  subdivision 8, using the MSA equivalent rate.  Service funding 
 21.28  under section 256I.05, subdivision 1a, will end June 30, 1997, 
 21.29  if federal matching funds are available and the services can be 
 21.30  provided through a managed care entity.  If federal matching 
 21.31  funds are not available, then service funding will continue 
 21.32  under section 256I.05, subdivision 1a.; or (6) for group 
 21.33  residential housing beds in settings meeting the requirements of 
 21.34  subdivision 2, paragraph (a), clause (3), which are used 
 21.35  exclusively for recipients receiving elderly waiver services 
 21.36  under section 256B.0915 and who resided in a nursing facility 
 22.1   for the six months immediately prior to the month of entry into 
 22.2   the group residential housing setting.  The group residential 
 22.3   housing rate for these beds must be set so that the monthly 
 22.4   group residential housing payment for an individual occupying 
 22.5   the bed when combined with the nonfederal share of services 
 22.6   delivered under the waiver for that person does not exceed the 
 22.7   nonfederal share of the monthly medical assistance payment made 
 22.8   for the person to the nursing facility in which the person 
 22.9   resided prior to entry into the group residential housing 
 22.10  establishment.  The rate may not exceed the MSA equivalent rate 
 22.11  plus $426.37 for any case. 
 22.12     (b) A county agency may enter into a group residential 
 22.13  housing agreement for beds with rates in excess of the MSA 
 22.14  equivalent rate in addition to those currently covered under a 
 22.15  group residential housing agreement if the additional beds are 
 22.16  only a replacement of beds with rates in excess of the MSA 
 22.17  equivalent rate which have been made available due to closure of 
 22.18  a setting, a change of licensure or certification which removes 
 22.19  the beds from group residential housing payment, or as a result 
 22.20  of the downsizing of a group residential housing setting.  The 
 22.21  transfer of available beds from one county to another can only 
 22.22  occur by the agreement of both counties. 
 22.23     Sec. 11.  Minnesota Statutes 1998, section 256I.05, 
 22.24  subdivision 1, is amended to read: 
 22.25     Subdivision 1.  [MAXIMUM RATES.] Monthly room and board 
 22.26  rates negotiated by a county agency for a recipient living in 
 22.27  group residential housing must not exceed the MSA equivalent 
 22.28  rate specified under section 256I.03, subdivision 5, with the 
 22.29  exception that a county agency may negotiate a supplementary 
 22.30  room and board rate that exceeds the MSA equivalent rate by up 
 22.31  to $426.37 for recipients of waiver services under title XIX of 
 22.32  the Social Security Act.  This exception is subject to the 
 22.33  following conditions: 
 22.34     (1) that the Secretary of Health and Human Services has not 
 22.35  approved a state request to include room and board costs which 
 22.36  exceed the MSA equivalent rate in an individual's set of waiver 
 23.1   services under title XIX of the Social Security Act; or 
 23.2      (2) that the Secretary of Health and Human Services has 
 23.3   approved the inclusion of room and board costs which exceed the 
 23.4   MSA equivalent rate, but in an amount that is insufficient to 
 23.5   cover costs which are included in a group residential housing 
 23.6   agreement in effect on June 30, 1994; and 
 23.7      (3) the amount of the rate that is above the MSA equivalent 
 23.8   rate has been approved by the commissioner the setting is 
 23.9   licensed by the commissioner of human services under Minnesota 
 23.10  Rules, parts 9555.5050 to 9555.6265; 
 23.11     (2) the setting is not the primary residence of the license 
 23.12  holder and in which the license holder is not the primary 
 23.13  caregiver; and 
 23.14     (3) the average supplementary room and board rate in a 
 23.15  county for a calendar year may not exceed the average 
 23.16  supplementary room and board rate for that county in effect on 
 23.17  January 1, 2000.  
 23.18  The county agency may at any time negotiate a higher or lower 
 23.19  room and board rate than the average supplementary room and 
 23.20  board rate that would otherwise be paid under this subdivision. 
 23.21     Sec. 12.  Minnesota Statutes 1998, section 256I.05, 
 23.22  subdivision 1a, is amended to read: 
 23.23     Subd. 1a.  [SUPPLEMENTARY SERVICE RATES.] (a) Subject to 
 23.24  the provisions of section 256I.04, subdivision 3, in addition to 
 23.25  the room and board rate specified in subdivision 1, the county 
 23.26  agency may negotiate a payment not to exceed $426.37 for other 
 23.27  services necessary to provide room and board provided by the 
 23.28  group residence if the residence is licensed by or registered by 
 23.29  the department of health, or licensed by the department of human 
 23.30  services to provide services in addition to room and board, and 
 23.31  if the provider of services is not also concurrently receiving 
 23.32  funding for services for a recipient under a home and 
 23.33  community-based waiver under title XIX of the Social Security 
 23.34  Act; or funding from the medical assistance program under 
 23.35  section 256B.0627, subdivision 4, for personal care services for 
 23.36  residents in the setting; or residing in a setting which 
 24.1   receives funding under Minnesota Rules, parts 9535.2000 to 
 24.2   9535.3000.  If funding is available for other necessary services 
 24.3   through a home and community-based waiver, or personal care 
 24.4   services under section 256B.0627, subdivision 4, then the GRH 
 24.5   rate is limited to the rate set in subdivision 1.  Unless 
 24.6   otherwise provided in law, in no case may the supplementary 
 24.7   service rate plus the supplementary room and board rate exceed 
 24.8   $426.37.  The registration and licensure requirement does not 
 24.9   apply to establishments which are exempt from state licensure 
 24.10  because they are located on Indian reservations and for which 
 24.11  the tribe has prescribed health and safety requirements.  
 24.12  Service payments under this section may be prohibited under 
 24.13  rules to prevent the supplanting of federal funds with state 
 24.14  funds.  The commissioner shall pursue the feasibility of 
 24.15  obtaining the approval of the Secretary of Health and Human 
 24.16  Services to provide home and community-based waiver services 
 24.17  under title XIX of the Social Security Act for residents who are 
 24.18  not eligible for an existing home and community-based waiver due 
 24.19  to a primary diagnosis of mental illness or chemical dependency 
 24.20  and shall apply for a waiver if it is determined to be 
 24.21  cost-effective.  
 24.22     (b) The commissioner is authorized to make cost-neutral 
 24.23  transfers from the GRH fund for beds under this section to other 
 24.24  funding programs administered by the department after 
 24.25  consultation with the county or counties in which the affected 
 24.26  beds are located.  The commissioner may also make cost-neutral 
 24.27  transfers from the GRH fund to county human service agencies for 
 24.28  beds permanently removed from the GRH census under a plan 
 24.29  submitted by the county agency and approved by the 
 24.30  commissioner.  The commissioner shall report the amount of any 
 24.31  transfers under this provision annually to the legislature. 
 24.32     (c) The provisions of paragraph (b) do not apply to a 
 24.33  facility that has its reimbursement rate established under 
 24.34  section 256B.431, subdivision 4, paragraph (c). 
 24.35     Sec. 13.  [REPEALER.] 
 24.36     Minnesota Statutes 1998, section 256B.434, subdivision 17, 
 25.1   is repealed effective July 1, 1999. 
 25.2      Sec. 14.  [EFFECTIVE DATE.] 
 25.3      (a) Sections 1 to 8 and 10 to 12 are effective July 1, 1999.
 25.4      (b) Section 9, the amendment to Minnesota Statutes, section 
 25.5   256B.48, subdivision 1, paragraph (a), is effective July 1, 
 25.6   2000.  Section 9, the amendments to Minnesota Statutes, section 
 25.7   256B.48, subdivision 1, paragraphs (b) and (g), are effective 
 25.8   July 1, 1999. 
 25.9                              ARTICLE  2  
 25.10                         NURSING FACILITIES 
 25.11     Section 1.  Minnesota Statutes 1998, section 256B.421, 
 25.12  subdivision 9, is amended to read: 
 25.13     Subd. 9.  [PAYMENT RATE.] "Payment rate" means the rate 
 25.14  determined under section 256B.431 256B.435. 
 25.15     Sec. 2.  Minnesota Statutes 1998, section 256B.421, 
 25.16  subdivision 11, is amended to read: 
 25.17     Subd. 11.  [RATE YEAR.] "Rate year" means the fiscal year 
 25.18  for which a payment rate determined under section 256B.431 
 25.19  256B.435 is effective, from July 1 to the next June 30.  
 25.20     Sec. 3.  Minnesota Statutes 1998, section 256B.431, 
 25.21  subdivision 1, is amended to read: 
 25.22     Subdivision 1.  [IN GENERAL.] The commissioner shall 
 25.23  determine prospective payment rates for resident care costs.  In 
 25.24  determining the rates, the commissioner shall group nursing 
 25.25  facilities according to different levels of care and geographic 
 25.26  location until July 1, 1985.  For rates established on or after 
 25.27  July 1, 1985, the commissioner shall develop procedures for 
 25.28  determining operating cost payment rates that take into account 
 25.29  the mix of resident needs, geographic location, and other 
 25.30  factors as determined by the commissioner.  Effective for rates 
 25.31  established on or after July 1, 2000, the rules developed under 
 25.32  this subdivision shall be used to set property rates according 
 25.33  to section 256B.435, for newly constructed or newly established 
 25.34  facilities, and to determine case-mix assessments for 
 25.35  residents.  The commissioner shall consider whether the fact 
 25.36  that a facility is attached to a hospital or has an average 
 26.1   length of stay of 180 days or less should be taken into account 
 26.2   in determining rates.  The commissioner shall consider the use 
 26.3   of the standard metropolitan statistical areas when developing 
 26.4   groups by geographic location.  Until the commissioner 
 26.5   establishes procedures for determining operating cost payment 
 26.6   rates, the commissioner shall group all convalescent and nursing 
 26.7   care units attached to hospitals into one group for purposes of 
 26.8   determining reimbursement for operating costs.  On or before 
 26.9   June 15, 1983, the commissioner shall mail notices to each 
 26.10  nursing facility of the rates to be effective from July 1 of 
 26.11  that year to June 30 of the following year.  In subsequent 
 26.12  years, The commissioner shall provide notice to each nursing 
 26.13  facility on or before May 1 of the rates effective for the 
 26.14  following rate year.  If a statute enacted after May 1 affects 
 26.15  the rates, the commissioner shall provide a revised notice to 
 26.16  each nursing facility as soon as possible there is pending 
 26.17  legislation on May 1 that will affect rates for nursing 
 26.18  facilities, the commissioner will set the rates as soon as 
 26.19  possible after the legislation is enacted.  
 26.20     The commissioner shall establish, by rule, limitations on 
 26.21  compensation recognized in the historical base for top 
 26.22  management personnel.  For rate years beginning July 1, 1985, 
 26.23  the commissioner shall not provide, by rule, limitations on top 
 26.24  management personnel.  Compensation for top management personnel 
 26.25  shall continue to be categorized as a general and administrative 
 26.26  cost and is subject to any limits imposed on that cost 
 26.27  category.  The commissioner shall also establish, by rule, 
 26.28  limitations on allowable nursing hours for each level of care 
 26.29  for the rate years beginning July 1, 1983 and July 1, 1984.  For 
 26.30  the rate year beginning July 1, 1984, nursing facilities in 
 26.31  which the nursing hours exceeded 2.9 hours per day for skilled 
 26.32  nursing care or 2.3 hours per day for intermediate care for the 
 26.33  reporting year ending on September 30, 1983, shall be limited to 
 26.34  a maximum of 3.2 hours per day for skilled nursing care and 2.6 
 26.35  hours per day for intermediate care.  
 26.36     Sec. 4.  Minnesota Statutes 1998, section 256B.431, 
 27.1   subdivision 2b, is amended to read: 
 27.2      Subd. 2b.  [OPERATING COSTS, AFTER JULY 1, 1985.] (a) For 
 27.3   rate years beginning on or after July 1, 1985, the commissioner 
 27.4   shall establish procedures for determining per diem 
 27.5   reimbursement for operating costs.  
 27.6      (b) The commissioner shall contract with an econometric 
 27.7   firm with recognized expertise in and access to national 
 27.8   economic change indices that can be applied to the appropriate 
 27.9   cost categories when determining the operating cost payment rate.
 27.10     (c) The commissioner shall analyze and evaluate each 
 27.11  nursing facility's cost report of allowable operating costs 
 27.12  incurred by the nursing facility during the reporting year 
 27.13  immediately preceding the rate year for which the payment rate 
 27.14  becomes effective.  
 27.15     (d) The commissioner shall establish limits on actual 
 27.16  allowable historical operating cost per diems based on cost 
 27.17  reports of allowable operating costs for the reporting year that 
 27.18  begins October 1, 1983, taking into consideration relevant 
 27.19  factors including resident needs, geographic location, and size 
 27.20  of the nursing facility.  In developing the geographic groups 
 27.21  for purposes of reimbursement under this section, the 
 27.22  commissioner shall ensure that nursing facilities in any county 
 27.23  contiguous to the Minneapolis-St. Paul seven-county metropolitan 
 27.24  area are included in the same geographic group.  The limits 
 27.25  established by the commissioner shall not be less, in the 
 27.26  aggregate, than the 60th percentile of total actual allowable 
 27.27  historical operating cost per diems for each group of nursing 
 27.28  facilities established under subdivision 1 based on cost reports 
 27.29  of allowable operating costs in the previous reporting year.  
 27.30  For rate years beginning on or after July 1, 1989, facilities 
 27.31  located in geographic group I as described in Minnesota Rules, 
 27.32  part 9549.0052, on January 1, 1989, may choose to have the 
 27.33  commissioner apply either the care related limits or the other 
 27.34  operating cost limits calculated for facilities located in 
 27.35  geographic group II, or both, if either of the limits calculated 
 27.36  for the group II facilities is higher.  The efficiency incentive 
 28.1   for geographic group I nursing facilities must be calculated 
 28.2   based on geographic group I limits.  The phase-in must be 
 28.3   established utilizing the chosen limits.  For purposes of these 
 28.4   exceptions to the geographic grouping requirements, the 
 28.5   definitions in Minnesota Rules, parts 9549.0050 to 9549.0059 
 28.6   (Emergency), and 9549.0010 to 9549.0080, apply.  The limits 
 28.7   established under this paragraph remain in effect until the 
 28.8   commissioner establishes a new base period.  Until the new base 
 28.9   period is established, the commissioner shall adjust the limits 
 28.10  annually using the appropriate economic change indices 
 28.11  established in paragraph (e).  In determining allowable 
 28.12  historical operating cost per diems for purposes of setting 
 28.13  limits and nursing facility payment rates, the commissioner 
 28.14  shall divide the allowable historical operating costs by the 
 28.15  actual number of resident days, except that where a nursing 
 28.16  facility is occupied at less than 90 percent of licensed 
 28.17  capacity days, the commissioner may establish procedures to 
 28.18  adjust the computation of the per diem to an imputed occupancy 
 28.19  level at or below 90 percent.  The commissioner shall establish 
 28.20  efficiency incentives as appropriate.  The commissioner may 
 28.21  establish efficiency incentives for different operating cost 
 28.22  categories.  The commissioner shall consider establishing 
 28.23  efficiency incentives in care related cost categories.  The 
 28.24  commissioner may combine one or more operating cost categories 
 28.25  and may use different methods for calculating payment rates for 
 28.26  each operating cost category or combination of operating cost 
 28.27  categories.  For the rate year beginning on July 1, 1985, the 
 28.28  commissioner shall: 
 28.29     (1) allow nursing facilities that have an average length of 
 28.30  stay of 180 days or less in their skilled nursing level of care, 
 28.31  125 percent of the care related limit and 105 percent of the 
 28.32  other operating cost limit established by rule; and 
 28.33     (2) exempt nursing facilities licensed on July 1, 1983, by 
 28.34  the commissioner to provide residential services for the 
 28.35  physically handicapped under Minnesota Rules, parts 9570.2000 to 
 28.36  9570.3600, from the care related limits and allow 105 percent of 
 29.1   the other operating cost limit established by rule. 
 29.2      For the purpose of calculating the other operating cost 
 29.3   efficiency incentive for nursing facilities referred to in 
 29.4   clause (1)  or (2), the commissioner shall use the other 
 29.5   operating cost limit established by rule before application of 
 29.6   the 105 percent. 
 29.7      (e) The commissioner shall establish a composite index or 
 29.8   indices by determining the appropriate economic change 
 29.9   indicators to be applied to specific operating cost categories 
 29.10  or combination of operating cost categories.  
 29.11     (f) Each nursing facility shall receive an operating cost 
 29.12  payment rate equal to the sum of the nursing facility's 
 29.13  operating cost payment rates for each operating cost category.  
 29.14  The operating cost payment rate for an operating cost category 
 29.15  shall be the lesser of the nursing facility's historical 
 29.16  operating cost in the category increased by the appropriate 
 29.17  index established in paragraph (e) for the operating cost 
 29.18  category plus an efficiency incentive established pursuant to 
 29.19  paragraph (d) or the limit for the operating cost category 
 29.20  increased by the same index.  If a nursing facility's actual 
 29.21  historic operating costs are greater than the prospective 
 29.22  payment rate for that rate year, there shall be no retroactive 
 29.23  cost settle-up.  In establishing payment rates for one or more 
 29.24  operating cost categories, the commissioner may establish 
 29.25  separate rates for different classes of residents based on their 
 29.26  relative care needs.  
 29.27     (g) The commissioner shall include the reported actual real 
 29.28  estate tax liability or payments in lieu of real estate tax of 
 29.29  each nursing facility as an operating cost of that nursing 
 29.30  facility.  Allowable costs under this subdivision for payments 
 29.31  made by a nonprofit nursing facility that are in lieu of real 
 29.32  estate taxes shall not exceed the amount which the nursing 
 29.33  facility would have paid to a city or township and county for 
 29.34  fire, police, sanitation services, and road maintenance costs 
 29.35  had real estate taxes been levied on that property for those 
 29.36  purposes.  For rate years beginning on or after July 1, 1987, 
 30.1   the reported actual real estate tax liability or payments in 
 30.2   lieu of real estate tax of nursing facilities shall be adjusted 
 30.3   to include an amount equal to one-half of the dollar change in 
 30.4   real estate taxes from the prior year.  The commissioner shall 
 30.5   include a reported actual special assessment, and reported 
 30.6   actual license fees required by the Minnesota department of 
 30.7   health, for each nursing facility as an operating cost of that 
 30.8   nursing facility.  For rate years beginning on or after July 1, 
 30.9   1989, the commissioner shall include a nursing facility's 
 30.10  reported Public Employee Retirement Act contribution for the 
 30.11  reporting year as apportioned to the care-related operating cost 
 30.12  categories and other operating cost categories multiplied by the 
 30.13  appropriate composite index or indices established pursuant to 
 30.14  paragraph (e) as costs under this paragraph.  Total adjusted 
 30.15  real estate tax liability, payments in lieu of real estate tax, 
 30.16  actual special assessments paid, the indexed Public Employee 
 30.17  Retirement Act contribution, and license fees paid as required 
 30.18  by the Minnesota department of health, for each nursing facility 
 30.19  (1) shall be divided by actual resident days in order to compute 
 30.20  the operating cost payment rate for this operating cost 
 30.21  category, (2) shall not be used to compute the care-related 
 30.22  operating cost limits or other operating cost limits established 
 30.23  by the commissioner, and (3) shall not be increased by the 
 30.24  composite index or indices established pursuant to paragraph 
 30.25  (e), unless otherwise indicated in this paragraph. 
 30.26     (h) For rate years beginning on or after July 1, 1987, the 
 30.27  commissioner shall adjust the rates of a nursing facility that 
 30.28  meets the criteria for the special dietary needs of its 
 30.29  residents and the requirements in section 31.651.  The 
 30.30  adjustment for raw food cost shall be the difference between the 
 30.31  nursing facility's allowable historical raw food cost per diem 
 30.32  and 115 percent of the median historical allowable raw food cost 
 30.33  per diem of the corresponding geographic group. 
 30.34     The rate adjustment shall be reduced by the applicable 
 30.35  phase-in percentage as provided under subdivision 2h. 
 30.36     Sec. 5.  Minnesota Statutes 1998, section 256B.431, 
 31.1   subdivision 2d, is amended to read: 
 31.2      Subd. 2d.  If an annual cost report or field audit 
 31.3   indicates that expenditures for direct resident care have been 
 31.4   reduced in amounts large enough to indicate a possible 
 31.5   detrimental effect on the quality of care, the commissioner 
 31.6   shall notify the commissioner of health and the interagency 
 31.7   long-term care planning committee.  If a field audit reveals 
 31.8   that unallowable expenditures have been included in the nursing 
 31.9   facility's historical operating costs, the commissioner shall 
 31.10  disallow the expenditures and recover the entire overpayment. 
 31.11  The commissioner shall establish, by rule, procedures for 
 31.12  assessing an interest charge at the rate determined for unpaid 
 31.13  taxes or penalties under section 270.75 on any outstanding 
 31.14  balance resulting from an overpayment or underpayment. 
 31.15     Sec. 6.  Minnesota Statutes 1998, section 256B.431, 
 31.16  subdivision 2i, is amended to read: 
 31.17     Subd. 2i.  [OPERATING COSTS AFTER JULY 1, 1988.] (a)  
 31.18  [OTHER OPERATING COST LIMITS.] For the rate year beginning July 
 31.19  1, 1988, the commissioner shall increase the other operating 
 31.20  cost limits established in Minnesota Rules, part 9549.0055, 
 31.21  subpart 2, item E, to 110 percent of the median of the array of 
 31.22  allowable historical other operating cost per diems and index 
 31.23  these limits as in Minnesota Rules, part 9549.0056, subparts 3 
 31.24  and 4.  The limits must be established in accordance with 
 31.25  subdivision 2b, paragraph (d).  For rate years beginning on or 
 31.26  after July 1, 1989, the adjusted other operating cost limits 
 31.27  must be indexed as in Minnesota Rules, part 9549.0056, subparts 
 31.28  3 and 4.  For the rate period beginning October 1, 1992, and for 
 31.29  rate years beginning after June 30, 1993, the amount of the 
 31.30  surcharge under section 256.9657, subdivision 1, shall be 
 31.31  included in the plant operations and maintenance operating cost 
 31.32  category.  The surcharge shall be an allowable cost for the 
 31.33  purpose of establishing the payment rate. 
 31.34     (b)  [CARE-RELATED OPERATING COST LIMITS.] For the rate 
 31.35  year beginning July 1, 1988, the commissioner shall increase the 
 31.36  care-related operating cost limits established in Minnesota 
 32.1   Rules, part 9549.0055, subpart 2, items A and B, to 125 percent 
 32.2   of the median of the array of the allowable historical case mix 
 32.3   operating cost standardized per diems and the allowable 
 32.4   historical other care-related operating cost per diems and index 
 32.5   those limits as in Minnesota Rules, part 9549.0056, subparts 1 
 32.6   and 2.  The limits must be established in accordance with 
 32.7   subdivision 2b, paragraph (d).  For rate years beginning on or 
 32.8   after July 1, 1989, the adjusted care-related limits must be 
 32.9   indexed as in Minnesota Rules, part 9549.0056, subparts 1 and 2. 
 32.10     (c) (b)  [SALARY ADJUSTMENT PER DIEM EFFECTIVE JULY 1, 1999 
 32.11  AND JULY 1, 2000.] Effective July 1, 1998 1999, to June 30, 
 32.12  2000, the commissioner shall make available the salary 
 32.13  adjustment per diem calculated in clause (1) or (2) to the total 
 32.14  operating cost payment rate of each nursing facility reimbursed 
 32.15  under this section or section 256B.434.  For July 1, 1999, 
 32.16  nursing facilities with rates set according to section 256B.434 
 32.17  shall not receive increases according to this paragraph but 
 32.18  shall receive inflation increases according to section 256B.434. 
 32.19  Effective July 1, 2000, the commissioner shall make available an 
 32.20  additional salary adjustment per diem as calculated in clause 
 32.21  (1) or (2) to the total operating cost payment rate of each 
 32.22  nursing facility reimbursed under this section or section 
 32.23  256B.435.  The salary adjustment per diem for each nursing 
 32.24  facility must be determined as follows:  
 32.25     (1) For each nursing facility that reports salaries for 
 32.26  registered nurses, licensed practical nurses, and aides, 
 32.27  orderlies and attendants separately, the commissioner shall 
 32.28  determine the salary adjustment per diem by multiplying the 
 32.29  total salaries, payroll taxes, and fringe benefits allowed in 
 32.30  each operating cost category, except management fees and 
 32.31  administrator and central office salaries and the related 
 32.32  payroll taxes and fringe benefits, by 3.0 percent and then 
 32.33  dividing the resulting amount by the nursing facility's actual 
 32.34  resident days. 
 32.35     (2) For each nursing facility that does not report salaries 
 32.36  for registered nurses, licensed practical nurses, aides, 
 33.1   orderlies, and attendants separately, the salary adjustment per 
 33.2   diem is the weighted average salary adjustment per diem increase 
 33.3   determined under clause (1).  
 33.4      (3) A nursing facility may apply for the salary adjustment 
 33.5   per diem calculated under clauses (1) and (2).  The application 
 33.6   must be made to the commissioner and contain a plan by which the 
 33.7   nursing facility will distribute the salary adjustment to 
 33.8   employees of the nursing facility.  In order to apply for a July 
 33.9   1, 2000, salary adjustment, a nursing facility reimbursed under 
 33.10  section 256B.434, must report the information required by clause 
 33.11  (1) or (2) in the application, in the manner specified by the 
 33.12  commissioner.  For nursing facilities in which the employees are 
 33.13  represented by an exclusive bargaining representative, an 
 33.14  agreement negotiated and agreed to by the employer and the 
 33.15  exclusive bargaining representative, after July 1, 1998, may 
 33.16  constitute the plan for the salary distribution.  The 
 33.17  commissioner shall review the plan to ensure that the salary 
 33.18  adjustment per diem is used solely to increase the compensation 
 33.19  of nursing home facility employees.  To be eligible, a facility 
 33.20  must submit its plan for the salary distribution by December 31, 
 33.21  1998 1999.  A facility may amend its plan for the second rate 
 33.22  year by submitting a revised plan by December 31, 2000.  If a 
 33.23  facility's plan for salary distribution is effective for its 
 33.24  employees after July 1, 1998 of the year that the funds are 
 33.25  available, the salary adjustment cost per diem shall be 
 33.26  effective the same date as its plan. 
 33.27     (4) A copy of the approved distribution plan must be made 
 33.28  available to all employees.  This must be done by giving each 
 33.29  employee a copy or by posting it in an area of the nursing 
 33.30  facility to which all employees have access.  If an employee 
 33.31  does not receive the salary adjustment described in the 
 33.32  facility's approved plan and is unable to resolve the problem 
 33.33  with the facility's management, the employee may contact the 
 33.34  employee's union representative.  If the employee is not covered 
 33.35  by a collective bargaining agreement, the employee may contact 
 33.36  the department of human services at a telephone number provided 
 34.1   by the commissioner and included in the approved plan.  
 34.2      (5) Additional costs incurred by nursing facilities as a 
 34.3   result of this salary adjustment are not allowable costs for 
 34.4   purposes of the September 30, 1998 1999, cost report. 
 34.5      (d)  [NEW BASE YEAR.] The commissioner shall establish new 
 34.6   base years for both the reporting year ending September 30, 
 34.7   1989, and the reporting year ending September 30, 1990.  In 
 34.8   establishing new base years, the commissioner must take into 
 34.9   account:  
 34.10     (1) statutory changes made in geographic groups; 
 34.11     (2) redefinitions of cost categories; and 
 34.12     (3) reclassification, pass-through, or exemption of certain 
 34.13  costs such as Public Employee Retirement Act contributions. 
 34.14     (e) (c)  [NEW BASE YEAR.] The commissioner shall establish 
 34.15  a new base year for the reporting years ending September 30, 
 34.16  1991, and September 30, 1992.  In establishing a new base year, 
 34.17  the commissioner must take into account:  
 34.18     (1) statutory changes made in geographic groups; 
 34.19     (2) redefinitions of cost categories; and 
 34.20     (3) reclassification, pass-through, or exemption of certain 
 34.21  costs. 
 34.22     Sec. 7.  Minnesota Statutes 1998, section 256B.431, 
 34.23  subdivision 2r, is amended to read: 
 34.24     Subd. 2r.  [PAYMENT RESTRICTIONS ON LEAVE DAYS.] Effective 
 34.25  July 1, 1993, The commissioner shall limit payment for leave 
 34.26  days in a nursing facility to 79 percent of that nursing 
 34.27  facility's total payment rate for the involved resident. 
 34.28     Sec. 8.  Minnesota Statutes 1998, section 256B.431, 
 34.29  subdivision 3a, is amended to read: 
 34.30     Subd. 3a.  [PROPERTY-RELATED COSTS AFTER JULY 1, 1985.] (a) 
 34.31  For rate years beginning on or after July 1, 1985, the 
 34.32  commissioner, by permanent rule, shall reimburse nursing 
 34.33  facility providers that are vendors in the medical assistance 
 34.34  program for the rental use of real estate and depreciable 
 34.35  equipment.  "Real estate" means land improvements, buildings, 
 34.36  and attached fixtures used directly for resident care.  
 35.1   "Depreciable equipment" means the standard movable resident care 
 35.2   equipment and support service equipment generally used in 
 35.3   long-term care facilities.  
 35.4      (b) In developing the method for determining payment rates 
 35.5   for the rental use of nursing facilities, the commissioner shall 
 35.6   consider factors designed to:  
 35.7      (1) simplify the administrative procedures for determining 
 35.8   payment rates for property-related costs; 
 35.9      (2) minimize discretionary or appealable decisions; 
 35.10     (3) eliminate any incentives to sell nursing facilities; 
 35.11     (4) recognize legitimate costs of preserving and replacing 
 35.12  property; 
 35.13     (5) recognize the existing costs of outstanding 
 35.14  indebtedness allowable under the statutes and rules in effect on 
 35.15  May 1, 1983; 
 35.16     (6) address the current value of, if used directly for 
 35.17  patient care, land improvements, buildings, attached fixtures, 
 35.18  and equipment; 
 35.19     (7) establish an investment per bed limitation; 
 35.20     (8) reward efficient management of capital assets; 
 35.21     (9) provide equitable treatment of facilities; 
 35.22     (10) consider a variable rate; and 
 35.23     (11) phase-in implementation of the rental reimbursement 
 35.24  method.  
 35.25     (c) No later than January 1, 1984, the commissioner shall 
 35.26  report to the legislature on any further action necessary or 
 35.27  desirable in order to implement the purposes and provisions of 
 35.28  this subdivision.  
 35.29     (d) (a) For rate years beginning on or after July 1, 1987, 
 35.30  a nursing facility which has reduced licensed bed capacity after 
 35.31  January 1, 1986, shall be allowed to: 
 35.32     (1) aggregate the applicable investment per bed limits 
 35.33  based on the number of beds licensed prior to the reduction; and 
 35.34     (2) establish capacity days for each rate year following 
 35.35  the licensure reduction based on the number of beds licensed on 
 35.36  the previous April 1 if the commissioner is notified of the 
 36.1   change by April 4.  The notification must include a copy of the 
 36.2   delicensure request that has been submitted to the commissioner 
 36.3   of health. 
 36.4      (e) Until the rental reimbursement method is fully phased 
 36.5   in, a nursing facility whose final property-related payment rate 
 36.6   is the rental rate shall continue to have its property-related 
 36.7   payment rates established based on the rental reimbursement 
 36.8   method. 
 36.9      (f) (b) For rate years beginning on or after July 1, 1989, 
 36.10  the interest expense that results from a refinancing of a 
 36.11  nursing facility's demand call loan, when the loan that must be 
 36.12  refinanced was incurred before May 22, 1983, is an allowable 
 36.13  interest expense if: 
 36.14     (1) the demand call loan or any part of it was in the form 
 36.15  of a loan that was callable at the demand of the lender; 
 36.16     (2) the demand call loan or any part of it was called by 
 36.17  the lender through no fault of the nursing facility; 
 36.18     (3) the demand call loan or any part of it was made by a 
 36.19  government agency operating under a statutory or regulatory loan 
 36.20  program; 
 36.21     (4) the refinanced debt does not exceed the sum of the 
 36.22  allowable remaining balance of the demand call loan at the time 
 36.23  of payment on the demand call loan and refinancing costs; 
 36.24     (5) the term of the refinanced debt does not exceed the 
 36.25  remaining term of the demand call loan, had the debt not been 
 36.26  subject to an on-call payment demand; and 
 36.27     (6) the refinanced debt is not a debt between related 
 36.28  organizations as defined in Minnesota Rules, part 9549.0020, 
 36.29  subpart 38. 
 36.30     Sec. 9.  Minnesota Statutes 1998, section 256B.431, 
 36.31  subdivision 3f, is amended to read: 
 36.32     Subd. 3f.  [PROPERTY COSTS AFTER JULY 1, 1988.] (a) 
 36.33  [INVESTMENT PER BED LIMIT.] For the rate year beginning July 1, 
 36.34  1988, the replacement-cost-new per bed limit must be $32,571 per 
 36.35  licensed bed in multiple bedrooms and $48,857 per licensed bed 
 36.36  in a single bedroom.  For the rate year beginning July 1, 1989, 
 37.1   the replacement-cost-new per bed limit for a single bedroom must 
 37.2   be $49,907 adjusted according to Minnesota Rules, part 
 37.3   9549.0060, subpart 4, item A, subitem (1).  Beginning January 1, 
 37.4   1990, the replacement-cost-new per bed limits must be adjusted 
 37.5   annually as specified in Minnesota Rules, part 9549.0060, 
 37.6   subpart 4, item A, subitem (1).  Beginning January 1, 1991, the 
 37.7   replacement-cost-new per bed limits will be adjusted annually as 
 37.8   specified in Minnesota Rules, part 9549.0060, subpart 4, item A, 
 37.9   subitem (1), except that the index utilized will be the Bureau 
 37.10  of the Census:  Composite fixed-weighted price index as 
 37.11  published in the C30 Report, Value of New Construction Put in 
 37.12  Place. 
 37.13     (b) [RENTAL FACTOR.] For the rate year beginning July 1, 
 37.14  1988, the commissioner shall increase the rental factor as 
 37.15  established in Minnesota Rules, part 9549.0060, subpart 8, item 
 37.16  A, by 6.2 percent rounded to the nearest 100th percent for the 
 37.17  purpose of reimbursing nursing facilities for soft costs and 
 37.18  entrepreneurial profits not included in the cost valuation 
 37.19  services used by the state's contracted appraisers.  For rate 
 37.20  years beginning on or after July 1, 1989, the rental factor is 
 37.21  the amount determined under this paragraph for the rate year 
 37.22  beginning July 1, 1988. 
 37.23     (c) [OCCUPANCY FACTOR.] For rate years beginning on or 
 37.24  after July 1, 1988, in order to determine property-related 
 37.25  payment rates under Minnesota Rules, part 9549.0060, for all 
 37.26  nursing facilities except those whose average length of stay in 
 37.27  a skilled level of care within a nursing facility is 180 days or 
 37.28  less, the commissioner shall use 95 percent of capacity days.  
 37.29  For a nursing facility whose average length of stay in a skilled 
 37.30  level of care within a nursing facility is 180 days or less, the 
 37.31  commissioner shall use the greater of resident days or 80 
 37.32  percent of capacity days but in no event shall the divisor 
 37.33  exceed 95 percent of capacity days. 
 37.34     (d) [EQUIPMENT ALLOWANCE.] For rate years beginning on July 
 37.35  1, 1988, and July 1, 1989, the commissioner shall add ten cents 
 37.36  per resident per day to each nursing facility's property-related 
 38.1   payment rate.  The ten-cent property-related payment rate 
 38.2   increase is not cumulative from rate year to rate year.  For the 
 38.3   rate year beginning July 1, 1990, the commissioner shall 
 38.4   increase each nursing facility's equipment allowance as 
 38.5   established in Minnesota Rules, part 9549.0060, subpart 10, by 
 38.6   ten cents per resident per day.  For rate years beginning on or 
 38.7   after July 1, 1991, the adjusted equipment allowance must be 
 38.8   adjusted annually for inflation as in Minnesota Rules, part 
 38.9   9549.0060, subpart 10, item E.  For the rate period beginning 
 38.10  October 1, 1992, the equipment allowance for each nursing 
 38.11  facility shall be increased by 28 percent.  For rate years 
 38.12  beginning after June 30, 1993, the allowance must be adjusted 
 38.13  annually for inflation. 
 38.14     (e) [POST CHAPTER 199 RELATED-ORGANIZATION DEBTS AND 
 38.15  INTEREST EXPENSE.] For rate years beginning on or after July 1, 
 38.16  1990, Minnesota Rules, part 9549.0060, subpart 5, item E, shall 
 38.17  not apply to outstanding related organization debt incurred 
 38.18  prior to May 23, 1983, provided that the debt was an allowable 
 38.19  debt under Minnesota Rules, parts 9510.0010 to 9510.0480, the 
 38.20  debt is subject to repayment through annual principal payments, 
 38.21  and the nursing facility demonstrates to the commissioner's 
 38.22  satisfaction that the interest rate on the debt was less than 
 38.23  market interest rates for similar arms-length transactions at 
 38.24  the time the debt was incurred.  If the debt was incurred due to 
 38.25  a sale between family members, the nursing facility must also 
 38.26  demonstrate that the seller no longer participates in the 
 38.27  management or operation of the nursing facility.  Debts meeting 
 38.28  the conditions of this paragraph are subject to all other 
 38.29  provisions of Minnesota Rules, parts 9549.0010 to 9549.0080. 
 38.30     (f) [BUILDING CAPITAL ALLOWANCE FOR NURSING FACILITIES WITH 
 38.31  OPERATING LEASES.] For rate years beginning on or after July 1, 
 38.32  1990, a nursing facility with operating lease costs incurred for 
 38.33  the nursing facility's buildings shall receive its building 
 38.34  capital allowance computed in accordance with Minnesota Rules, 
 38.35  part 9549.0060, subpart 8.  If an operating lease provides that 
 38.36  the lessee's rent is adjusted to recognize improvements made by 
 39.1   the lessor and related debt, the costs for capital improvements 
 39.2   and related debt shall be allowed in the computation of the 
 39.3   lessee's building capital allowance, provided that reimbursement 
 39.4   for these costs under an operating lease shall not exceed the 
 39.5   rate otherwise paid. 
 39.6      Sec. 10.  Minnesota Statutes 1998, section 256B.431, 
 39.7   subdivision 10, is amended to read: 
 39.8      Subd. 10.  [PROPERTY RATE ADJUSTMENTS AND CONSTRUCTION 
 39.9   PROJECTS.] A nursing facility's request for a property-related 
 39.10  payment rate adjustment and the related supporting documentation 
 39.11  of project construction cost information must be submitted to 
 39.12  the commissioner within 60 days after the construction project's 
 39.13  completion date to be considered eligible for a property-related 
 39.14  payment rate adjustment.  Construction projects with completion 
 39.15  dates within one year of the completion date associated with the 
 39.16  property rate adjustment request and phased projects with 
 39.17  project completion dates within three years of the last phase of 
 39.18  the phased project must be aggregated for purposes of the 
 39.19  minimum thresholds in subdivisions 16 and 17, and the maximum 
 39.20  threshold in section 144A.071, subdivision 2.  "Construction 
 39.21  project," and "project construction costs," and "phased project" 
 39.22  have the meanings given them in Minnesota Rules, part 4655.1110 
 39.23  (Emergency) Statutes, section 144A.071, subdivision 1a. 
 39.24     Sec. 11.  Minnesota Statutes 1998, section 256B.431, 
 39.25  subdivision 11, is amended to read: 
 39.26     Subd. 11.  [SPECIAL PROPERTY RATE SETTING PROCEDURES FOR 
 39.27  CERTAIN NURSING FACILITIES.] (a) Notwithstanding Minnesota 
 39.28  Rules, part 9549.0060, subpart 13, item H, to the contrary, for 
 39.29  the rate year beginning July 1, 1990, a nursing facility leased 
 39.30  prior to January 1, 1986, and currently subject to adverse 
 39.31  licensure action under section 144A.04, subdivision 4, paragraph 
 39.32  (a), or section 144A.11, subdivision 2, and whose ownership 
 39.33  changes prior to July 1, 1990, shall be allowed a 
 39.34  property-related payment equal to the lesser of its current 
 39.35  lease obligation divided by its capacity days as determined in 
 39.36  Minnesota Rules, part 9549.0060, subpart 11, as modified by 
 40.1   subdivision 3f, paragraph (c), or the frozen property-related 
 40.2   payment rate in effect for the rate year beginning July 1, 
 40.3   1989.  For rate years beginning on or after July 1, 1991, the 
 40.4   property-related payment rate shall be its rental rate computed 
 40.5   using the previous owner's allowable principal and interest 
 40.6   expense as allowed by the department prior to that prior owner's 
 40.7   sale and lease-back transaction of December 1985. 
 40.8      (b) Notwithstanding other provisions of applicable law, a 
 40.9   nursing facility licensed for 122 beds on January 1, 1998, and 
 40.10  located in Columbia Heights shall have its property-related 
 40.11  payment rate set under this subdivision.  The commissioner shall 
 40.12  make a rate adjustment by adding $2.41 to the facility's July 1, 
 40.13  1997, property-related payment rate.  The adjusted 
 40.14  property-related payment rate shall be effective for rate years 
 40.15  beginning on or after July 1, 1998.  The adjustment in this 
 40.16  paragraph shall remain in effect so long as the facility's rates 
 40.17  are set under this section.  If the facility participates in the 
 40.18  alternative payment system under section 256B.434, the 
 40.19  adjustment in this paragraph shall be included in the facility's 
 40.20  contract payment rate.  If historical rates or property costs 
 40.21  recognized under this section become the basis for future 
 40.22  medical assistance payments to the facility under a managed 
 40.23  care, capitation, or other alternative payment system, the 
 40.24  adjustment in this paragraph shall be included in the 
 40.25  computation of the facility's payments. 
 40.26     Sec. 12.  Minnesota Statutes 1998, section 256B.431, 
 40.27  subdivision 12, is amended to read: 
 40.28     Subd. 12.  [INTERIM PROPERTY-RELATED PAYMENT RATES.] For 
 40.29  the rate period July 1, 1991, to June 30, 1993, the commissioner 
 40.30  shall continue the property-related payment rate in effect on 
 40.31  June 30, 1991, for each nursing facility, except as provided in 
 40.32  section 256B.431, subdivision 3i, paragraphs (f) and (g), and 
 40.33  subdivision 11, except that:. 
 40.34     (1) A chain organization consisting of 28 nursing 
 40.35  facilities which has a majority of owners beyond the retirement 
 40.36  age of 62 and that has a change in ownership or reorganization 
 41.1   of provider entity between July 1, 1991, and June 30, 1993, or 
 41.2   until the property reimbursement system is changed, shall 
 41.3   receive the property-related payment rate in effect at the time 
 41.4   of the sale or reorganization.  This exception is not effective 
 41.5   until the commissioner has received approval of its state plan 
 41.6   from the federal government; and 
 41.7      (2) If the property-related payment rate in effect on June 
 41.8   30, 1991, is later adjusted by the commissioner, the 
 41.9   property-related payment rate for the rate period July 1, 1991, 
 41.10  to July 1, 1993, shall also be adjusted correspondingly. 
 41.11     Sec. 13.  Minnesota Statutes 1998, section 256B.431, 
 41.12  subdivision 13, is amended to read: 
 41.13     Subd. 13.  [HOLD-HARMLESS PROPERTY-RELATED RATES.] (a) 
 41.14  Terms used in subdivisions 13 to 21 shall be as defined in 
 41.15  Minnesota Rules, parts 9549.0010 to 9549.0080, and this section. 
 41.16     (b) Except as provided in this subdivision, for rate 
 41.17  periods beginning on October 1, 1992, and for rate years 
 41.18  beginning after June 30, 1993, the property-related rate for a 
 41.19  nursing facility shall be the greater of $4 or the 
 41.20  property-related payment rate in effect on September 30, 1992.  
 41.21  In addition, the incremental increase in the nursing facility's 
 41.22  rental rate will be determined under Minnesota Rules, parts 
 41.23  9549.0010 to 9549.0080, and this section. 
 41.24     (c) Notwithstanding Minnesota Rules, part 9549.0060, 
 41.25  subpart 13, item F, a nursing facility that has a sale permitted 
 41.26  under subdivision 14 after June 30, 1992, shall receive the 
 41.27  property-related payment rate in effect at the time of the sale 
 41.28  or reorganization.  For rate periods beginning after October 1, 
 41.29  1992, and for rate years beginning after June 30, 1993, a 
 41.30  nursing facility shall receive, in addition to its 
 41.31  property-related payment rate in effect at the time of the sale, 
 41.32  the incremental increase allowed under subdivision 14. 
 41.33     (d) For rate years beginning after June 30, 1993, the 
 41.34  property-related rate for a nursing facility licensed after July 
 41.35  1, 1989, after relocating its beds from a separate nursing home 
 41.36  to a building formerly used as a hospital and sold during the 
 42.1   cost reporting year ending September 30, 1991, shall be its 
 42.2   property-related rate prior to the sale in addition to the 
 42.3   incremental increases provided under this section effective on 
 42.4   October 1, 1992, of 29 cents per day, and any incremental 
 42.5   increases after October 1, 1992, calculated by using its rental 
 42.6   rate under Minnesota Rules, parts 9549.0010 to 9549.0080, and 
 42.7   this section, recognizing the current appraised value of the 
 42.8   facility at the new location, and including as allowable debt 
 42.9   otherwise allowable debt incurred to remodel the facility in the 
 42.10  new location prior to the relocation of beds. 
 42.11     Sec. 14.  Minnesota Statutes 1998, section 256B.431, 
 42.12  subdivision 15, is amended to read: 
 42.13     Subd. 15.  [CAPITAL REPAIR AND REPLACEMENT COST REPORTING 
 42.14  AND RATE CALCULATION.] For rate years beginning after June 30, 
 42.15  1993, a nursing facility's capital repair and replacement 
 42.16  payment rate shall be established annually as provided in 
 42.17  paragraphs (a) to (e).  For rate years beginning on or after 
 42.18  July 1, 2000, the payment rate determined in this subdivision 
 42.19  shall be considered a component of the operating cost payment 
 42.20  rate. 
 42.21     (a) Notwithstanding Minnesota Rules, part 9549.0060, 
 42.22  subpart 12, the costs of any of the following items not included 
 42.23  in the equity incentive computations under subdivision 16 or 
 42.24  reported as a capital asset addition under subdivision 18, 
 42.25  paragraph (b), including cash payment for equity investment and 
 42.26  principal and interest expense for debt financing, must be 
 42.27  reported in the capital repair and replacement cost category: 
 42.28     (1) wall coverings; 
 42.29     (2) paint; 
 42.30     (3) floor coverings; 
 42.31     (4) window coverings; 
 42.32     (5) roof repair; and 
 42.33     (6) window repair or replacement. 
 42.34     (b) Notwithstanding Minnesota Rules, part 9549.0060, 
 42.35  subpart 12, the repair or replacement of a capital asset not 
 42.36  included in the equity incentive computations under subdivision 
 43.1   16 or reported as a capital asset addition under subdivision 18, 
 43.2   paragraph (b), must be reported under this subdivision when the 
 43.3   cost of the item exceeds $500, or in the plant operations and 
 43.4   maintenance cost category when the cost of the item is equal to 
 43.5   or less than $500. 
 43.6      (c) To compute the capital repair and replacement payment 
 43.7   rate, the allowable annual repair and replacement costs for the 
 43.8   reporting year must be divided by actual resident days for the 
 43.9   reporting year.  The annual allowable capital repair and 
 43.10  replacement costs shall not exceed $150 per licensed bed.  The 
 43.11  excess of the allowed capital repair and replacement costs over 
 43.12  the capital repair and replacement limit shall be a cost 
 43.13  carryover to succeeding cost reporting periods, except that sale 
 43.14  of a facility, under subdivision 14, shall terminate the 
 43.15  carryover of all costs except those incurred in the most recent 
 43.16  cost reporting year.  The termination of the carryover shall 
 43.17  have effect on the capital repair and replacement rate on the 
 43.18  same date as provided in subdivision 14, paragraph (f), for the 
 43.19  sale.  For rate years beginning after June 30, 1994, the capital 
 43.20  repair and replacement limit shall be subject to the index 
 43.21  provided in subdivision 3f, paragraph (a).  For purposes of this 
 43.22  subdivision, the number of licensed beds shall be the number 
 43.23  used to calculate the nursing facility's capacity days.  The 
 43.24  capital repair and replacement rate must be added to the nursing 
 43.25  facility's total payment rate. 
 43.26     (d) Capital repair and replacement costs under this 
 43.27  subdivision shall not be counted as either care-related or other 
 43.28  operating costs, nor subject to care-related or other operating 
 43.29  limits. 
 43.30     (e) If costs otherwise allowable under this subdivision are 
 43.31  incurred as the result of a project approved under the 
 43.32  moratorium exception process in section 144A.073, or in 
 43.33  connection with an addition to or replacement of buildings, 
 43.34  attached fixtures, or land improvements for which the total 
 43.35  historical cost of these assets exceeds the lesser of $150,000 
 43.36  or ten percent of the nursing facility's appraised value, these 
 44.1   costs must be claimed under subdivision 16 or 17, as appropriate.
 44.2      Sec. 15.  Minnesota Statutes 1998, section 256B.431, 
 44.3   subdivision 16, is amended to read: 
 44.4      Subd. 16.  [MAJOR ADDITIONS AND REPLACEMENTS; EQUITY 
 44.5   INCENTIVE.] For rate years beginning after June 30, 1993, if a 
 44.6   nursing facility acquires capital assets in connection with a 
 44.7   project approved under the moratorium exception process in 
 44.8   section 144A.073 or in connection with an addition to or 
 44.9   replacement of buildings, attached fixtures, or land 
 44.10  improvements for which the total historical cost of those 
 44.11  capital asset additions exceeds the lesser of $150,000 or ten 
 44.12  percent of the most recent appraised value, the nursing facility 
 44.13  shall be eligible for an equity incentive payment rate as in 
 44.14  paragraphs (a) to (d).  This computation is separate from the 
 44.15  determination of the nursing facility's rental rate.  An equity 
 44.16  incentive payment rate as computed under this subdivision is 
 44.17  limited to one in a 12-month period.  For rate years beginning 
 44.18  on or after July 1, 2000, the payment rate determined in 
 44.19  paragraphs (a) to (c) shall be considered a component of the 
 44.20  operating cost payment rate. 
 44.21     (a) An eligible nursing facility shall receive an equity 
 44.22  incentive payment rate equal to the allowable historical cost of 
 44.23  the capital asset acquired, minus the allowable debt directly 
 44.24  identified to that capital asset, multiplied by the equity 
 44.25  incentive factor as described in paragraphs (b) and (c), and 
 44.26  divided by the nursing facility's occupancy factor under 
 44.27  subdivision 3f, paragraph (c).  This amount shall be added to 
 44.28  the nursing facility's total payment rate and shall be effective 
 44.29  the same day as the incremental increase in paragraph (d) or 
 44.30  subdivision 17.  The allowable historical cost of the capital 
 44.31  assets and the allowable debt shall be determined as provided in 
 44.32  Minnesota Rules, parts 9549.0010 to 9549.0080, and this section. 
 44.33     (b) The equity incentive factor shall be determined under 
 44.34  clauses (1) to (4):  
 44.35     (1) divide the initial allowable debt in paragraph (a) by 
 44.36  the initial historical cost of the capital asset additions 
 45.1   referred to in paragraph (a), then cube the quotient, 
 45.2      (2) subtract the amount calculated in clause (1) from the 
 45.3   number one, 
 45.4      (3) determine the difference between the rental factor and 
 45.5   the lesser of two percentage points above the posted yield for 
 45.6   standard conventional fixed rate mortgages of the Federal Home 
 45.7   Loan Mortgage Corporation as published in the Wall Street 
 45.8   Journal and in effect on the first day of the month the debt or 
 45.9   cost is incurred, or 16 percent, 
 45.10     (4) multiply the amount calculated in clause (2) by the 
 45.11  amount calculated in clause (3). 
 45.12     (c) The equity incentive payment rate shall be limited to 
 45.13  the term of the allowable debt in paragraph (a), not greater 
 45.14  than 20 years nor less than ten years.  If no debt is incurred 
 45.15  in acquiring the capital asset, the equity incentive payment 
 45.16  rate shall be paid for ten years.  The sale of a nursing 
 45.17  facility under subdivision 14 shall terminate application of the 
 45.18  equity incentive payment rate effective on the date provided in 
 45.19  subdivision 4, paragraph (f), for the sale. 
 45.20     (d) A nursing facility with an addition to or a renovation 
 45.21  of its buildings, attached fixtures, or land improvements 
 45.22  meeting the criteria in this subdivision and not receiving the 
 45.23  property-related payment rate adjustment in subdivision 17, 
 45.24  shall receive the incremental increase in the nursing facility's 
 45.25  rental rate as determined under Minnesota Rules, parts 9549.0010 
 45.26  to 9549.0080, and this section.  The incremental increase shall 
 45.27  be added to the nursing facility's property-related payment rate.
 45.28  The effective date of this incremental increase shall be the 
 45.29  first day of the month following the month in which the addition 
 45.30  or replacement is completed. 
 45.31     Sec. 16.  Minnesota Statutes 1998, section 256B.431, 
 45.32  subdivision 17, is amended to read: 
 45.33     Subd. 17.  [SPECIAL PROVISIONS FOR MORATORIUM EXCEPTIONS.] 
 45.34  (a) Notwithstanding Minnesota Rules, part 9549.0060, subpart 3, 
 45.35  for rate periods beginning on October 1, 1992, and for rate 
 45.36  years beginning after June 30, 1993, a nursing facility that (1) 
 46.1   has completed a construction project approved under section 
 46.2   144A.071, subdivision 4a, clause (m); (2) has completed a 
 46.3   construction project approved under section 144A.071, 
 46.4   subdivision 4a, and effective after June 30, 1995; or (3) has 
 46.5   completed a renovation, replacement, or upgrading project 
 46.6   approved under the moratorium exception process in section 
 46.7   144A.073 shall be reimbursed for costs directly identified to 
 46.8   that project as provided in subdivision 16 and this subdivision. 
 46.9      (b) Notwithstanding Minnesota Rules, part 9549.0060, 
 46.10  subparts 5, item A, subitems (1) and (3), and 7, item D, 
 46.11  allowable interest expense on debt shall include: 
 46.12     (1) interest expense on debt related to the cost of 
 46.13  purchasing or replacing depreciable equipment, excluding 
 46.14  vehicles, not to exceed six percent of the total historical cost 
 46.15  of the project; and 
 46.16     (2) interest expense on debt related to financing or 
 46.17  refinancing costs, including costs related to points, loan 
 46.18  origination fees, financing charges, legal fees, and title 
 46.19  searches; and issuance costs including bond discounts, bond 
 46.20  counsel, underwriter's counsel, corporate counsel, printing, and 
 46.21  financial forecasts.  Allowable debt related to items in this 
 46.22  clause shall not exceed seven percent of the total historical 
 46.23  cost of the project.  To the extent these costs are financed, 
 46.24  the straight-line amortization of the costs in this clause is 
 46.25  not an allowable cost; and 
 46.26     (3) interest on debt incurred for the establishment of a 
 46.27  debt reserve fund, net of the interest earned on the debt 
 46.28  reserve fund. 
 46.29     (c) Debt incurred for costs under paragraph (b) is not 
 46.30  subject to Minnesota Rules, part 9549.0060, subpart 5, item A, 
 46.31  subitem (5) or (6). 
 46.32     (d) The incremental increase in a nursing facility's rental 
 46.33  rate, determined under Minnesota Rules, parts 9549.0010 to 
 46.34  9549.0080, and this section, resulting from the acquisition of 
 46.35  allowable capital assets, and allowable debt and interest 
 46.36  expense under this subdivision shall be added to its 
 47.1   property-related payment rate and shall be effective on the 
 47.2   first day of the month following the month in which the 
 47.3   moratorium project was completed. 
 47.4      (e) Notwithstanding subdivision 3f, paragraph (a), for rate 
 47.5   periods beginning on October 1, 1992, and for rate years 
 47.6   beginning after June 30, 1993, the replacement-costs-new per bed 
 47.7   limit to be used in Minnesota Rules, part 9549.0060, subpart 4, 
 47.8   item B, for a nursing facility that has completed a renovation, 
 47.9   replacement, or upgrading project that has been approved under 
 47.10  the moratorium exception process in section 144A.073, or that 
 47.11  has completed an addition to or replacement of buildings, 
 47.12  attached fixtures, or land improvements for which the total 
 47.13  historical cost exceeds the lesser of $150,000 or ten percent of 
 47.14  the most recent appraised value, must be $47,500 per licensed 
 47.15  bed in multiple-bed rooms and $71,250 per licensed bed in a 
 47.16  single-bed room.  These amounts must be adjusted annually as 
 47.17  specified in subdivision 3f, paragraph (a), beginning January 1, 
 47.18  1993. 
 47.19     (f) A nursing facility that completes a project identified 
 47.20  in this subdivision and, as of April 17, 1992, has not been 
 47.21  mailed a rate notice with a special appraisal for a completed 
 47.22  project, or completes a project after April 17, 1992, but before 
 47.23  September 1, 1992, may elect either to request a special 
 47.24  reappraisal with the corresponding adjustment to the 
 47.25  property-related payment rate under the laws in effect on June 
 47.26  30, 1992, or to submit their capital asset and debt information 
 47.27  after that date and obtain the property-related payment rate 
 47.28  adjustment under this section, but not both. 
 47.29     (g) (f) For purposes of this paragraph, a total replacement 
 47.30  means the complete replacement of the nursing facility's 
 47.31  physical plant through the construction of a new physical plant 
 47.32  or the transfer of the nursing facility's license from one 
 47.33  physical plant location to another.  For total replacement 
 47.34  projects completed on or after July 1, 1992, the commissioner 
 47.35  shall compute the incremental change in the nursing facility's 
 47.36  rental per diem, for rate years beginning on or after July 1, 
 48.1   1995, by replacing its appraised value, including the historical 
 48.2   capital asset costs, and the capital debt and interest costs 
 48.3   with the new nursing facility's allowable capital asset costs 
 48.4   and the related allowable capital debt and interest costs.  If 
 48.5   the new nursing facility has decreased its licensed capacity, 
 48.6   the aggregate investment per bed limit in subdivision 3a, 
 48.7   paragraph (d), shall apply.  If the new nursing facility has 
 48.8   retained a portion of the original physical plant for nursing 
 48.9   facility usage, then a portion of the appraised value prior to 
 48.10  the replacement must be retained and included in the calculation 
 48.11  of the incremental change in the nursing facility's rental per 
 48.12  diem.  For purposes of this part, the original nursing facility 
 48.13  means the nursing facility prior to the total replacement 
 48.14  project.  The portion of the appraised value to be retained 
 48.15  shall be calculated according to clauses (1) to (3): 
 48.16     (1) The numerator of the allocation ratio shall be the 
 48.17  square footage of the area in the original physical plant which 
 48.18  is being retained for nursing facility usage. 
 48.19     (2) The denominator of the allocation ratio shall be the 
 48.20  total square footage of the original nursing facility physical 
 48.21  plant. 
 48.22     (3) Each component of the nursing facility's allowable 
 48.23  appraised value prior to the total replacement project shall be 
 48.24  multiplied by the allocation ratio developed by dividing clause 
 48.25  (1) by clause (2). 
 48.26     In the case of either type of total replacement as 
 48.27  authorized under section 144A.071 or 144A.073, the provisions of 
 48.28  this subdivision shall also apply.  For purposes of the 
 48.29  moratorium exception authorized under section 144A.071, 
 48.30  subdivision 4a, paragraph (s), if the total replacement involves 
 48.31  the renovation and use of an existing health care facility 
 48.32  physical plant, the new allowable capital asset costs and 
 48.33  related debt and interest costs shall include first the 
 48.34  allowable capital asset costs and related debt and interest 
 48.35  costs of the renovation, to which shall be added the allowable 
 48.36  capital asset costs of the existing physical plant prior to the 
 49.1   renovation, and if reported by the facility, the related 
 49.2   allowable capital debt and interest costs. 
 49.3      Sec. 17.  Minnesota Statutes 1998, section 256B.431, 
 49.4   subdivision 18, is amended to read: 
 49.5      Subd. 18.  [APPRAISALS; UPDATING APPRAISALS, ADDITIONS, AND 
 49.6   REPLACEMENTS.] (a) Notwithstanding Minnesota Rules, part 
 49.7   9549.0060, subparts 1 to 3, the appraised value, routine 
 49.8   updating of the appraised value, and special reappraisals are 
 49.9   subject to this subdivision. 
 49.10     (1) For rate years beginning after June 30, 1993, the 
 49.11  commissioner shall permit a nursing facility to appeal its 
 49.12  appraisal.  Any reappraisals conducted in connection with that 
 49.13  appeal must utilize the comparative-unit method as described in 
 49.14  the Marshall Valuation Service published by Marshall-Swift in 
 49.15  establishing the nursing facility's depreciated replacement cost.
 49.16     Nursing facilities electing to appeal their appraised value 
 49.17  shall file written notice of appeal with the commissioner of 
 49.18  human services before December 30, 1992.  The cost of the 
 49.19  reappraisal, if any, shall be considered an allowable cost under 
 49.20  Minnesota Rules, parts 9549.0040, subpart 9, and 9549.0061. 
 49.21     (2) The redetermination of a nursing facility's appraised 
 49.22  value under this paragraph shall have no impact on the rental 
 49.23  payment rate determined under subdivision 13 but shall only be 
 49.24  used for calculating the nursing facility's rental rate under 
 49.25  Minnesota Rules, parts 9549.0010 to 9549.0080, and this section 
 49.26  for rate years beginning after June 30, 1993.  
 49.27     (3) For all rate years after June 30, 1993, the 
 49.28  commissioner shall no longer conduct any appraisals under 
 49.29  Minnesota Rules, part 9549.0060, for the purpose of determining 
 49.30  property-related payment rates. 
 49.31     (b) Notwithstanding Minnesota Rules, part 9549.0060, 
 49.32  subpart 2, for rate years beginning after June 30, 1993, the 
 49.33  commissioner shall routinely update the appraised value of each 
 49.34  nursing facility by adding the cost of capital asset 
 49.35  acquisitions to its allowable appraised value.  
 49.36     The commissioner shall also annually index each nursing 
 50.1   facility's allowable appraised value by the inflation index 
 50.2   referenced in subdivision 3f, paragraph (a), for the purpose of 
 50.3   computing the nursing facility's annual rental rate.  In 
 50.4   annually adjusting the nursing facility's appraised value, the 
 50.5   commissioner must not include the historical cost of capital 
 50.6   assets acquired during the reporting year in the nursing 
 50.7   facility's appraised value. 
 50.8      In addition, the nursing facility's appraised value must be 
 50.9   reduced by the historical cost of capital asset disposals or 
 50.10  applicable credits such as public grants and insurance 
 50.11  proceeds.  Capital asset additions and disposals must be 
 50.12  reported on the nursing facility's annual cost report in the 
 50.13  reporting year of acquisition or disposal.  The incremental 
 50.14  increase in the nursing facility's rental rate resulting from 
 50.15  this annual adjustment as determined under Minnesota Rules, 
 50.16  parts 9549.0010 to 9549.0080, and this section shall be added to 
 50.17  the nursing facility's property-related payment rate for the 
 50.18  rate year following the reporting year.  
 50.19     Sec. 18.  Minnesota Statutes 1998, section 256B.431, 
 50.20  subdivision 22, is amended to read: 
 50.21     Subd. 22.  [CHANGES TO NURSING FACILITY REIMBURSEMENT.] The 
 50.22  nursing facility reimbursement changes in paragraphs (a) to (e) 
 50.23  apply to Minnesota Rules, parts 9549.0010 to 9549.0080, and this 
 50.24  section, and are effective for rate years beginning on or after 
 50.25  July 1, 1993, unless otherwise indicated. 
 50.26     (a) In addition to the approved pension or profit sharing 
 50.27  plans allowed by the reimbursement rule, the commissioner shall 
 50.28  allow those plans specified in Internal Revenue Code, sections 
 50.29  403(b) and 408(k). 
 50.30     (b) The commissioner shall allow as workers' compensation 
 50.31  insurance costs under section 256B.421, subdivision 14, the 
 50.32  costs of workers' compensation coverage obtained under the 
 50.33  following conditions: 
 50.34     (1) a plan approved by the commissioner of commerce as a 
 50.35  Minnesota group or individual self-insurance plan as provided in 
 50.36  section 79A.03; 
 51.1      (2) a plan in which: 
 51.2      (i) the nursing facility, directly or indirectly, purchases 
 51.3   workers' compensation coverage in compliance with section 
 51.4   176.181, subdivision 2, from an authorized insurance carrier; 
 51.5      (ii) a related organization to the nursing facility 
 51.6   reinsures the workers' compensation coverage purchased, directly 
 51.7   or indirectly, by the nursing facility; and 
 51.8      (iii) all of the conditions in clause (4) are met; 
 51.9      (3) a plan in which: 
 51.10     (i) the nursing facility, directly or indirectly, purchases 
 51.11  workers' compensation coverage in compliance with section 
 51.12  176.181, subdivision 2, from an authorized insurance carrier; 
 51.13     (ii) the insurance premium is calculated retrospectively, 
 51.14  including a maximum premium limit, and paid using the paid loss 
 51.15  retro method; and 
 51.16     (iii) all of the conditions in clause (4) are met; 
 51.17     (4) additional conditions are: 
 51.18     (i) the costs of the plan are allowable under the federal 
 51.19  Medicare program; 
 51.20     (ii) the reserves for the plan are maintained in an account 
 51.21  controlled and administered by a person which is not a related 
 51.22  organization to the nursing facility; 
 51.23     (iii) the reserves for the plan cannot be used, directly or 
 51.24  indirectly, as collateral for debts incurred or other 
 51.25  obligations of the nursing facility or related organizations to 
 51.26  the nursing facility; 
 51.27     (iv) if the plan provides workers' compensation coverage 
 51.28  for non-Minnesota nursing facilities, the plan's cost 
 51.29  methodology must be consistent among all nursing facilities 
 51.30  covered by the plan, and if reasonable, is allowed 
 51.31  notwithstanding any reimbursement laws regarding cost allocation 
 51.32  to the contrary; 
 51.33     (v) central, affiliated, corporate, or nursing facility 
 51.34  costs related to their administration of the plan are costs 
 51.35  which must remain in the nursing facility's administrative cost 
 51.36  category and must not be allocated to other cost categories; 
 52.1      (vi) required security deposits, whether in the form of 
 52.2   cash, investments, securities, assets, letters of credit, or in 
 52.3   any other form are not allowable costs for purposes of 
 52.4   establishing the facilities payment rate; and 
 52.5      (vii) for the rate year beginning on July 1, 1998, a group 
 52.6   of nursing facilities related by common ownership that 
 52.7   self-insures workers' compensation may allocate its directly 
 52.8   identified costs of self-insuring its Minnesota nursing facility 
 52.9   workers among those nursing facilities in the group that are 
 52.10  reimbursed under this section or section 256B.434.  The method 
 52.11  of cost allocation shall be based on the ratio of each nursing 
 52.12  facility's total allowable salaries and wages to that of the 
 52.13  nursing facility group's total allowable salaries and wages, 
 52.14  then similarly allocated within each nursing facility's 
 52.15  operating cost categories.  The costs associated with the 
 52.16  administration of the group's self-insurance plan must remain 
 52.17  classified in the nursing facility's administrative cost 
 52.18  category.  A written request of the nursing facility group's 
 52.19  election to use this alternate method of allocation of 
 52.20  self-insurance costs must be received by the commissioner no 
 52.21  later than May 1, 1998, to take effect July 1, 1998, or such 
 52.22  costs shall continue to be allocated under the existing cost 
 52.23  allocation methods.  Once a nursing facility group elects this 
 52.24  method of cost allocation for its workers' compensation 
 52.25  self-insurance costs, it shall remain in effect until such time 
 52.26  as the group no longer self-insures these costs; 
 52.27     (5) any costs allowed pursuant to clauses (1) to (3) are 
 52.28  subject to the following requirements: 
 52.29     (i) if the nursing facility is sold or otherwise ceases 
 52.30  operations, the plan's reserves must be subject to an 
 52.31  actuarially based settle-up after 36 months from the date of 
 52.32  sale or the date on which operations ceased.  The facility's 
 52.33  medical assistance portion of the total excess plan reserves 
 52.34  must be paid to the state within 30 days following the date on 
 52.35  which excess plan reserves are determined; 
 52.36     (ii) any distribution of excess plan reserves made to or 
 53.1   withdrawals made by the nursing facility or a related 
 53.2   organization are applicable credits and must be used to reduce 
 53.3   the nursing facility's workers' compensation insurance costs in 
 53.4   the reporting period in which a distribution or withdrawal is 
 53.5   received; 
 53.6      (iii) if reimbursement for the plan is sought under the 
 53.7   federal Medicare program, and is audited pursuant to the 
 53.8   Medicare program, the nursing facility must provide a copy of 
 53.9   Medicare's final audit report, including attachments and 
 53.10  exhibits, to the commissioner within 30 days of receipt by the 
 53.11  nursing facility or any related organization.  The commissioner 
 53.12  shall implement the audit findings associated with the plan upon 
 53.13  receipt of Medicare's final audit report.  The department's 
 53.14  authority to implement the audit findings is independent of its 
 53.15  authority to conduct a field audit. 
 53.16     (c) In the determination of incremental increases in the 
 53.17  nursing facility's rental rate as required in subdivisions 14 to 
 53.18  21, except for a refinancing permitted under subdivision 19, the 
 53.19  commissioner must adjust the nursing facility's property-related 
 53.20  payment rate for both incremental increases and decreases in 
 53.21  recomputations of its rental rate;. 
 53.22     (d) A nursing facility's administrative cost limitation 
 53.23  must be modified as follows: 
 53.24     (1) if the nursing facility's licensed beds exceed 195 
 53.25  licensed beds, the general and administrative cost category 
 53.26  limitation shall be 13 percent; 
 53.27     (2) if the nursing facility's licensed beds are more than 
 53.28  150 licensed beds, but less than 196 licensed beds, the general 
 53.29  and administrative cost category limitation shall be 14 percent; 
 53.30  or 
 53.31     (3) if the nursing facility's licensed beds is less than 
 53.32  151 licensed beds, the general and administrative cost category 
 53.33  limitation shall remain at 15 percent. 
 53.34     (e) The care related operating rate shall be increased by 
 53.35  eight cents to reimburse facilities for unfunded federal 
 53.36  mandates, including costs related to hepatitis B vaccinations. 
 54.1      (f) For the rate year beginning on July 1, 1998, a group of 
 54.2   nursing facilities related by common ownership that self-insures 
 54.3   group health, dental, or life insurance may allocate its 
 54.4   directly identified costs of self-insuring its Minnesota nursing 
 54.5   facility workers among those nursing facilities in the group 
 54.6   that are reimbursed under this section or section 256B.434.  The 
 54.7   method of cost allocation shall be based on the ratio of each 
 54.8   nursing facility's total allowable salaries and wages to that of 
 54.9   the nursing facility group's total allowable salaries and wages, 
 54.10  then similarly allocated within each nursing facility's 
 54.11  operating cost categories.  The costs associated with the 
 54.12  administration of the group's self-insurance plan must remain 
 54.13  classified in the nursing facility's administrative cost 
 54.14  category.  A written request of the nursing facility group's 
 54.15  election to use this alternate method of allocation of 
 54.16  self-insurance costs must be received by the commissioner no 
 54.17  later than May 1, 1998, to take effect July 1, 1998, or those 
 54.18  self-insurance costs shall continue to be allocated under the 
 54.19  existing cost allocation methods.  Once a nursing facility group 
 54.20  elects this method of cost allocation for its group health, 
 54.21  dental, or life insurance self-insurance costs, it shall remain 
 54.22  in effect until such time as the group no longer self-insures 
 54.23  these costs. 
 54.24     Sec. 19.  Minnesota Statutes 1998, section 256B.431, 
 54.25  subdivision 26, is amended to read: 
 54.26     Subd. 26.  [CHANGES TO NURSING FACILITY REIMBURSEMENT 
 54.27  BEGINNING JULY 1, 1997.] The nursing facility reimbursement 
 54.28  changes in paragraphs (a) to (f) shall apply in the sequence 
 54.29  specified in Minnesota Rules, parts 9549.0010 to 9549.0080, and 
 54.30  this section, beginning July 1, 1997. 
 54.31     (a) For rate years beginning on or after July 1, 1997, the 
 54.32  commissioner shall limit a nursing facility's allowable 
 54.33  operating per diem for each case mix category for each rate year.
 54.34  The commissioner shall group nursing facilities into two groups, 
 54.35  freestanding and nonfreestanding, within each geographic group, 
 54.36  using their operating cost per diem for the case mix A 
 55.1   classification.  A nonfreestanding nursing facility is a nursing 
 55.2   facility whose other operating cost per diem is subject to the 
 55.3   hospital attached, short length of stay, or the rule 80 limits.  
 55.4   All other nursing facilities shall be considered freestanding 
 55.5   nursing facilities.  The commissioner shall then array all 
 55.6   nursing facilities in each grouping by their allowable case mix 
 55.7   A operating cost per diem.  In calculating a nursing facility's 
 55.8   operating cost per diem for this purpose, the commissioner shall 
 55.9   exclude the raw food cost per diem related to providing special 
 55.10  diets that are based on religious beliefs, as determined in 
 55.11  subdivision 2b, paragraph (h).  For those nursing facilities in 
 55.12  each grouping whose case mix A operating cost per diem: 
 55.13     (1) is at or below the median of the array, the 
 55.14  commissioner shall limit the nursing facility's allowable 
 55.15  operating cost per diem for each case mix category to the lesser 
 55.16  of the prior reporting year's allowable operating cost per diem 
 55.17  as specified in Laws 1996, chapter 451, article 3, section 11, 
 55.18  paragraph (h), plus the inflation factor as established in 
 55.19  paragraph (d), clause (2), increased by two percentage points, 
 55.20  or the current reporting year's corresponding allowable 
 55.21  operating cost per diem; or 
 55.22     (2) is above the median of the array, the commissioner 
 55.23  shall limit the nursing facility's allowable operating cost per 
 55.24  diem for each case mix category to the lesser of the prior 
 55.25  reporting year's allowable operating cost per diem as specified 
 55.26  in Laws 1996, chapter 451, article 3, section 11, paragraph (h), 
 55.27  plus the inflation factor as established in paragraph (d), 
 55.28  clause (2), increased by one percentage point, or the current 
 55.29  reporting year's corresponding allowable operating cost per diem.
 55.30     For purposes of paragraph (a), if a nursing facility 
 55.31  reports on its cost report a reduction in cost due to a refund 
 55.32  or credit for a rate year beginning on or after July 1, 1998, 
 55.33  the commissioner shall increase that facility's spend-up limit 
 55.34  for the rate year following the current rate year by the amount 
 55.35  of the cost reduction divided by its resident days for the 
 55.36  reporting year preceding the rate year in which the adjustment 
 56.1   is to be made. 
 56.2      (b) For rate years beginning on or after July 1, 1997, the 
 56.3   commissioner shall limit the allowable operating cost per diem 
 56.4   for high cost nursing facilities.  After application of the 
 56.5   limits in paragraph (a) to each nursing facility's operating 
 56.6   cost per diem, the commissioner shall group nursing facilities 
 56.7   into two groups, freestanding or nonfreestanding, within each 
 56.8   geographic group.  A nonfreestanding nursing facility is a 
 56.9   nursing facility whose other operating cost per diem are subject 
 56.10  to hospital attached, short length of stay, or rule 80 limits.  
 56.11  All other nursing facilities shall be considered freestanding 
 56.12  nursing facilities.  The commissioner shall then array all 
 56.13  nursing facilities within each grouping by their allowable case 
 56.14  mix A operating cost per diem.  In calculating a nursing 
 56.15  facility's operating cost per diem for this purpose, the 
 56.16  commissioner shall exclude the raw food cost per diem related to 
 56.17  providing special diets that are based on religious beliefs, as 
 56.18  determined in subdivision 2b, paragraph (h).  For those nursing 
 56.19  facilities in each grouping whose case mix A operating cost per 
 56.20  diem exceeds 1.0 standard deviation above the median, the 
 56.21  commissioner shall reduce their allowable operating cost per 
 56.22  diem by three percent.  For those nursing facilities in each 
 56.23  grouping whose case mix A operating cost per diem exceeds 0.5 
 56.24  standard deviation above the median but is less than or equal to 
 56.25  1.0 standard deviation above the median, the commissioner shall 
 56.26  reduce their allowable operating cost per diem by two percent.  
 56.27  However, in no case shall a nursing facility's operating cost 
 56.28  per diem be reduced below its grouping's limit established at 
 56.29  0.5 standard deviations above the median. 
 56.30     (c) For rate years beginning on or after July 1, 1997, the 
 56.31  commissioner shall determine a nursing facility's efficiency 
 56.32  incentive by first computing the allowable difference, which is 
 56.33  the lesser of $4.50 or the amount by which the facility's other 
 56.34  operating cost limit exceeds its nonadjusted other operating 
 56.35  cost per diem for that rate year.  The commissioner shall 
 56.36  compute the efficiency incentive by: 
 57.1      (1) subtracting the allowable difference from $4.50 and 
 57.2   dividing the result by $4.50; 
 57.3      (2) multiplying 0.20 by the ratio resulting from clause 
 57.4   (1), and then; 
 57.5      (3) adding 0.50 to the result from clause (2); and 
 57.6      (4) multiplying the result from clause (3) times the 
 57.7   allowable difference. 
 57.8      The nursing facility's efficiency incentive payment shall 
 57.9   be the lesser of $2.25 or the product obtained in clause (4). 
 57.10     (d) For rate years beginning on or after July 1, 1997, the 
 57.11  forecasted price index for a nursing facility's allowable 
 57.12  operating cost per diem shall be determined under clauses (1) 
 57.13  and (2) using the change in the Consumer Price Index-All Items 
 57.14  (United States city average) (CPI-U) as forecasted by Data 
 57.15  Resources, Inc.  The commissioner shall use the indices as 
 57.16  forecasted in the fourth quarter of the calendar year preceding 
 57.17  the rate year, subject to subdivision 2l, paragraph (c) the 
 57.18  budget change request procedure in section 256B.435, subdivision 
 57.19  1.  
 57.20     (1) The CPI-U forecasted index for allowable operating cost 
 57.21  per diem shall be based on the 21-month period from the midpoint 
 57.22  of the nursing facility's reporting year to the midpoint of the 
 57.23  rate year following the reporting year. 
 57.24     (2) For rate years beginning on or after July 1, 1997, the 
 57.25  forecasted index for operating cost limits referred to in 
 57.26  subdivision 21, paragraph (b), shall be based on the CPI-U for 
 57.27  the 12-month period between the midpoints of the two reporting 
 57.28  years preceding the rate year. 
 57.29     (e) After applying these provisions for the respective rate 
 57.30  years, the commissioner shall index these allowable operating 
 57.31  cost per diem by the inflation factor provided for in paragraph 
 57.32  (d), clause (1), and add the nursing facility's efficiency 
 57.33  incentive as computed in paragraph (c). 
 57.34     (f) For rate years beginning on or after July 1, 1997, the 
 57.35  total operating cost payment rates for a nursing facility shall 
 57.36  be the greater of the total operating cost payment rates 
 58.1   determined under this section or the total operating cost 
 58.2   payment rates in effect on June 30, 1997, subject to rate 
 58.3   adjustments due to field audit or rate appeal resolution.  This 
 58.4   provision shall not apply to subsequent field audit adjustments 
 58.5   of the nursing facility's operating cost rates for rate years 
 58.6   beginning on or after July 1, 1997. 
 58.7      (g) For the rate years beginning on July 1, 1997, July 1, 
 58.8   1998, and July 1, 1999, a nursing facility licensed for 40 beds 
 58.9   effective May 1, 1992, with a subsequent increase of 20 
 58.10  Medicare/Medicaid certified beds, effective January 26, 1993, in 
 58.11  accordance with an increase in licensure is exempt from 
 58.12  paragraphs (a) and (b). 
 58.13     (h) (f) For a nursing facility whose construction project 
 58.14  was authorized according to section 144A.073, subdivision 5, 
 58.15  paragraph (g), the operating cost payment rates for the third 
 58.16  location shall be determined based on Minnesota Rules, part 
 58.17  9549.0057.  Paragraphs (a) and (b) shall not apply until the 
 58.18  second rate year after the settle-up cost report is filed.  
 58.19  Notwithstanding subdivision 2b, paragraph (g), real estate taxes 
 58.20  and special assessments payable by the third location, a 
 58.21  501(c)(3) nonprofit corporation, shall be included in the 
 58.22  payment rates determined under this subdivision for all 
 58.23  subsequent rate years. 
 58.24     (i) For the rate year beginning July 1, 1997, the 
 58.25  commissioner shall compute the payment rate for a nursing 
 58.26  facility licensed for 94 beds on September 30, 1996, that 
 58.27  applied in October 1993 for approval of a total replacement 
 58.28  under the moratorium exception process in section 144A.073, and 
 58.29  completed the approved replacement in June 1995, with other 
 58.30  operating cost spend-up limit under paragraph (a), increased by 
 58.31  $3.98, and after computing the facility's payment rate according 
 58.32  to this section, the commissioner shall make a one-year positive 
 58.33  rate adjustment of $3.19 for operating costs related to the 
 58.34  newly constructed total replacement, without application of 
 58.35  paragraphs (a) and (b).  The facility's per diem, before the 
 58.36  $3.19 adjustment, shall be used as the prior reporting year's 
 59.1   allowable operating cost per diem for payment rate calculation 
 59.2   for the rate year beginning July 1, 1998.  A facility described 
 59.3   in this paragraph is exempt from paragraph (b) for the rate 
 59.4   years beginning July 1, 1997, and July 1, 1998. 
 59.5      (j) For the purpose of applying the limit stated in 
 59.6   paragraph (a), a nursing facility in Kandiyohi county licensed 
 59.7   for 86 beds that was granted hospital-attached status on 
 59.8   December 1, 1994, shall have the prior year's allowable 
 59.9   care-related per diem increased by $3.207 and the prior year's 
 59.10  other operating cost per diem increased by $4.777 before adding 
 59.11  the inflation in paragraph (d), clause (2), for the rate year 
 59.12  beginning on July 1, 1997. 
 59.13     (k) For the purpose of applying the limit stated in 
 59.14  paragraph (a), a 117 bed nursing facility located in Pine county 
 59.15  shall have the prior year's allowable other operating cost per 
 59.16  diem increased by $1.50 before adding the inflation in paragraph 
 59.17  (d), clause (2), for the rate year beginning on July 1, 1997. 
 59.18     (l) For the purpose of applying the limit under paragraph 
 59.19  (a), a nursing facility in Hibbing licensed for 192 beds shall 
 59.20  have the prior year's allowable other operating cost per diem 
 59.21  increased by $2.67 before adding the inflation in paragraph (d), 
 59.22  clause (2), for the rate year beginning July 1, 1997. 
 59.23     Sec. 20.  Minnesota Statutes 1998, section 256B.431, 
 59.24  subdivision 27, is amended to read: 
 59.25     Subd. 27.  [CHANGES TO NURSING FACILITY REIMBURSEMENT 
 59.26  BEGINNING JULY 1, 1998.] (a) For the purpose of applying the 
 59.27  limit stated in subdivision 26, paragraph (a), a nursing 
 59.28  facility in Hennepin county licensed for 181 beds on September 
 59.29  30, 1996, shall have the prior year's allowable care-related per 
 59.30  diem increased by $1.455 and the prior year's other operating 
 59.31  cost per diem increased by $0.439 before adding the inflation in 
 59.32  subdivision 26, paragraph (d), clause (2), for the rate year 
 59.33  beginning on July 1, 1998. 
 59.34     (b) For the purpose of applying the limit stated in 
 59.35  subdivision 26, paragraph (a), a nursing facility in Hennepin 
 59.36  county licensed for 161 beds on September 30, 1996, shall have 
 60.1   the prior year's allowable care-related per diem increased by 
 60.2   $1.154 and the prior year's other operating cost per diem 
 60.3   increased by $0.256 before adding the inflation in subdivision 
 60.4   26, paragraph (d), clause (2), for the rate year beginning on 
 60.5   July 1, 1998. 
 60.6      (c) For the purpose of applying the limit stated in 
 60.7   subdivision 26, paragraph (a), a nursing facility in Ramsey 
 60.8   county licensed for 176 beds on September 30, 1996, shall have 
 60.9   the prior year's allowable care-related per diem increased by 
 60.10  $0.803 and the prior year's other operating cost per diem 
 60.11  increased by $0.272 before adding the inflation in subdivision 
 60.12  26, paragraph (d), clause (2), for the rate year beginning on 
 60.13  July 1, 1998. 
 60.14     (d) For the purpose of applying the limit stated in 
 60.15  subdivision 26, paragraph (a), a nursing facility in Brown 
 60.16  county licensed for 86 beds on September 30, 1996, shall have 
 60.17  the prior year's allowable care-related per diem increased by 
 60.18  $0.850 and the prior year's other operating cost per diem 
 60.19  increased by $0.275 before adding the inflation in subdivision 
 60.20  26, paragraph (d), clause (2), for the rate year beginning on 
 60.21  July 1, 1998. 
 60.22     (e) For the rate year beginning July 1, 1998, the 
 60.23  commissioner shall compute the payment rate for a nursing 
 60.24  facility, which was licensed for 110 beds on May 1, 1997, was 
 60.25  granted approval in January 1994 for a replacement and 
 60.26  remodeling project under the moratorium exception process in 
 60.27  section 144A.073, and completed the approved replacement and 
 60.28  remodeling project on March 14, 1997, by increasing the other 
 60.29  operating cost spend-up limit under paragraph (a) by $1.64.  
 60.30  After computing the facility's payment rate for the rate year 
 60.31  beginning July 1, 1998, according to this section, the 
 60.32  commissioner shall make a one-year positive rate adjustment of 
 60.33  48 cents for increased real estate taxes resulting from 
 60.34  completion of the moratorium exception project, without 
 60.35  application of paragraphs (a) and (b). 
 60.36     (f) For the rate year beginning July 1, 1998, the 
 61.1   commissioner shall compute the payment rate for a nursing 
 61.2   facility exempted from care-related limits under subdivision 2b, 
 61.3   paragraph (d), clause (2), with a minimum of three-quarters of 
 61.4   its beds licensed to provide residential services for the 
 61.5   physically handicapped under Minnesota Rules, parts 9570.2000 to 
 61.6   9570.3400, with the care-related spend-up limit under 
 61.7   subdivision 26, paragraph (a), increased by $13.21 for the rate 
 61.8   year beginning July 1, 1998, without application of subdivision 
 61.9   26, paragraph (b).  For rate years beginning on or after July 1, 
 61.10  1999, the commissioner shall exclude that amount in calculating 
 61.11  the facility's operating cost per diem for purposes of applying 
 61.12  subdivision 26, paragraph (b). 
 61.13     (g) For the rate year beginning July 1, 1998, a nursing 
 61.14  facility in Canby, Minnesota, licensed for 75 beds shall be 
 61.15  reimbursed without the limitation imposed under subdivision 26, 
 61.16  paragraph (a), and for rate years beginning on or after July 1, 
 61.17  1999, its base costs shall be calculated on the basis of its 
 61.18  September 30, 1997, cost report. 
 61.19     (h) (a) The nursing facility reimbursement changes in 
 61.20  paragraphs (i) (b) and (j) (c) shall apply in the sequence 
 61.21  specified in this section and Minnesota Rules, parts 9549.0010 
 61.22  to 9549.0080, beginning July 1, 1998. 
 61.23     (i) (b) For rate years beginning on or after July 1, 1998, 
 61.24  the operating cost limits established in subdivisions 2, 2b, 2i, 
 61.25  3c, and 22, paragraph (d), and any previously effective 
 61.26  corresponding limits in law or rule shall not apply, except that 
 61.27  these cost limits shall still be calculated for purposes of 
 61.28  determining efficiency incentive per diems.  For rate years 
 61.29  beginning on or after July 1, 1998, the total operating cost 
 61.30  payment rates for a nursing facility shall be the greater of the 
 61.31  total operating cost payment rates determined under this section 
 61.32  or the total operating cost payment rates in effect on June 30, 
 61.33  1998, subject to rate adjustments due to field audit or rate 
 61.34  appeal resolution.  
 61.35     (j) (c) For rate years beginning on or after July 1, 1998, 
 61.36  the operating cost per diem referred to in subdivision 26, 
 62.1   paragraph (a), clauses (1) and (2), is the sum of the 
 62.2   care-related and other operating per diems for a given case mix 
 62.3   class.  Any reductions to the combined operating per diem shall 
 62.4   be divided proportionately between the care-related and other 
 62.5   operating per diems. 
 62.6      (k) (d) For rate years beginning on or after July 1, 1998, 
 62.7   the commissioner shall modify the determination of the spend-up 
 62.8   limits referred to in subdivision 26, paragraph (a), by indexing 
 62.9   each group's previous year's median value by the factor in 
 62.10  subdivision 26, paragraph (d), clause (2), plus one percentage 
 62.11  point.  
 62.12     (l) (e) For rate years beginning on or after July 1, 1998, 
 62.13  the commissioner shall modify the determination of the high cost 
 62.14  limits referred to in subdivision 26, paragraph (b), by indexing 
 62.15  each group's previous year's high cost per diem limits at .5 and 
 62.16  one standard deviations above the median by the factor in 
 62.17  subdivision 26, paragraph (d), clause (2), plus one percentage 
 62.18  point. 
 62.19     Sec. 21.  Minnesota Statutes 1998, section 256B.435, is 
 62.20  amended to read: 
 62.21     256B.435 [NURSING FACILITY REIMBURSEMENT SYSTEM EFFECTIVE 
 62.22  JULY 1, 2000.] 
 62.23     Subdivision 1.  [IN GENERAL.] Effective July 1, 2000, the 
 62.24  commissioner shall implement a performance-based contracting 
 62.25  system to replace the current method of setting operating cost 
 62.26  payment rates under sections 256B.431 and 256B.434 and Minnesota 
 62.27  Rules, parts 9549.0010 to 9549.0080.  Operating cost payment 
 62.28  rates for newly established facilities under Minnesota Rules, 
 62.29  part 9549.0057, shall be established using section 256B.431 and 
 62.30  Minnesota Rules, parts 9549.0010 to 9549.0070.  A nursing 
 62.31  facility in operation on May 1, 1998, with payment rates not 
 62.32  established under section 256B.431 or 256B.434 on that date, is 
 62.33  ineligible for this performance-based contracting system.  In 
 62.34  determining prospective payment rates of nursing facility 
 62.35  services, the commissioner shall distinguish between operating 
 62.36  costs and property-related costs.  The commissioner of finance 
 63.1   shall include an annual inflationary adjustment in operating 
 63.2   costs for nursing facilities using the inflation factor 
 63.3   specified in subdivision 3 as a budget change request in each 
 63.4   biennial detailed expenditure budget submitted to the 
 63.5   legislature under section 16A.11.  Property related payment 
 63.6   rates, including real estate taxes and special assessments, 
 63.7   shall be determined under section 256B.431 or 256B.434 or under 
 63.8   a new property-related reimbursement system, if one is 
 63.9   implemented by the commissioner under subdivision 3. 
 63.10     Subd. 1a.  [REQUESTS FOR PROPOSALS.] (a) For nursing 
 63.11  facilities with rates established under section 256B.434 on 
 63.12  January 1, 2000, the commissioner shall renegotiate contracts 
 63.13  without requiring a response to a request for proposal, 
 63.14  notwithstanding the solicitation process described in chapter 
 63.15  16C. 
 63.16     (b) Prior to July 1, 2000, the commissioner shall publish 
 63.17  in the State Register a request for proposals to provide nursing 
 63.18  facility services according to this section.  The commissioner 
 63.19  will consider proposals from all nursing facilities that have 
 63.20  payment rates established under section 256B.431.  The 
 63.21  commissioner must respond to all proposals in a timely manner. 
 63.22     (c) In issuing a request for proposals, the commissioner 
 63.23  may develop reasonable requirements which, in the judgment of 
 63.24  the commissioner, are necessary to protect residents or ensure 
 63.25  that the performance-based contracting system furthers the 
 63.26  interests of the state of Minnesota.  The request for proposals 
 63.27  may include, but need not be limited to: 
 63.28     (1) a requirement that nursing facility make reasonable 
 63.29  efforts to maximize Medicare payments on behalf of eligible 
 63.30  residents; 
 63.31     (2) requirements designed to prevent inappropriate or 
 63.32  illegal discrimination against residents enrolled in the medical 
 63.33  assistance program as compared to private paying residents; 
 63.34     (3) requirements designed to ensure that admissions to a 
 63.35  nursing facility are appropriate and that reasonable efforts are 
 63.36  made to place residents in home and community-based settings 
 64.1   when appropriate; 
 64.2      (4) a requirement to agree to participate in the 
 64.3   development of data collection systems and outcome-based 
 64.4   standards.  Among other requirements specified by the 
 64.5   commissioner, each facility entering into a contract may be 
 64.6   required to pay an annual fee.  The commissioner must use 
 64.7   revenue generated from the fees to contract with a qualified 
 64.8   consultant or contractor to develop data collection systems and 
 64.9   outcome-based contracting standards; 
 64.10     (5) a requirement that Medicare-certified contractors agree 
 64.11  to maintain Medicare cost reports and to submit them to the 
 64.12  commissioner upon request, or at times specified by the 
 64.13  commissioner; and that contractors that are not 
 64.14  Medicare-certified agree to maintain a uniform cost report in a 
 64.15  format established by the commissioner and to submit the report 
 64.16  to the commissioner upon request, or at times specified by the 
 64.17  commissioner; 
 64.18     (6) a requirement that demonstrates willingness and ability 
 64.19  to develop and maintain data collection and retrieval systems to 
 64.20  measure outcomes; and 
 64.21     (7) a requirement to provide all information and assurances 
 64.22  required by the terms and conditions of the federal waiver or 
 64.23  federal approval. 
 64.24     (d) In addition to the information and assurances contained 
 64.25  in the submitted proposals, the commissioner may consider the 
 64.26  following criteria in developing the terms of the contract: 
 64.27     (1) the facility's history of compliance with federal and 
 64.28  state laws and rules.  A facility deemed to be in substantial 
 64.29  compliance with federal and state laws and rules is eligible to 
 64.30  respond to a request for proposals.  A facility's compliance 
 64.31  history shall not be the sole determining factor in situations 
 64.32  where the facility has been sold and the new owners have 
 64.33  submitted a proposal; 
 64.34     (2) whether the facility has a record of excessive 
 64.35  licensure fines or sanctions or fraudulent cost reports; 
 64.36     (3) the facility's financial history and solvency; and 
 65.1      (4) other factors identified by the commissioner deemed 
 65.2   relevant to developing the terms of the contract, including a 
 65.3   determination that a contract with a particular facility is not 
 65.4   in the best interests of the residents of the facility or the 
 65.5   state of Minnesota. 
 65.6      (e) If the commissioner rejects the proposal of a nursing 
 65.7   facility, the commissioner shall provide written notice to the 
 65.8   facility of the reason for the rejection, including the factors 
 65.9   and evidence upon which the rejection was based.  If the 
 65.10  rejection results in a termination of the nursing facility's 
 65.11  participation in the medical assistance program, procedures 
 65.12  specified in section 256B.48, subdivision 1a, shall apply. 
 65.13     (f) Notwithstanding the requirements of the solicitation 
 65.14  process described in chapter 16C, the commissioner may contract 
 65.15  with nursing facilities established according to section 
 65.16  144A.073 without issuing a request for proposals. 
 65.17     (g) Notwithstanding subdivision 1, after July 1, 2000, the 
 65.18  commissioner may contract with additional nursing facilities, 
 65.19  according to requests for proposals. 
 65.20     Subd. 2.  [CONTRACT PROVISIONS.] (a) The performance-based 
 65.21  contract with each nursing facility must include provisions that:
 65.22     (1) apply the resident case mix assessment provisions of 
 65.23  Minnesota Rules, parts 9549.0051, 9549.0058, and 9549.0059, or 
 65.24  another assessment system, with the goal of moving to a single 
 65.25  assessment system; 
 65.26     (2) monitor resident outcomes through various methods, such 
 65.27  as quality indicators based on the minimum data set and other 
 65.28  utilization and performance measures; 
 65.29     (3) require the establishment and use of a continuous 
 65.30  quality improvement process that integrates information from 
 65.31  quality indicators and regular resident and family satisfaction 
 65.32  interviews; 
 65.33     (4) require annual reporting of facility statistical and 
 65.34  cost information, including resident days by case mix category, 
 65.35  productive nursing hours, wages and benefits, and raw food costs 
 65.36  for use by the commissioner in the development of facility 
 66.1   profiles that include trends in payment and service utilization; 
 66.2      (5) require from each nursing facility an annual certified 
 66.3   audited financial statement consisting of a balance sheet, 
 66.4   income and expense statements, and an opinion from either a 
 66.5   licensed or certified public accountant, if a certified audit 
 66.6   was prepared, or unaudited financial statements if no certified 
 66.7   audit was prepared; and 
 66.8      (6) specify the method for resolving disputes; 
 66.9      (7) establish additional requirements and penalties for 
 66.10  nursing facilities not meeting the standards set forth in the 
 66.11  performance-based contract. 
 66.12     (b) The commissioner may develop additional incentive-based 
 66.13  payments for achieving specified outcomes specified in each 
 66.14  contract.  The specified facility-specific outcomes must be 
 66.15  measurable and approved by the commissioner.  In establishing 
 66.16  the specified outcomes and related criteria, the commissioner 
 66.17  shall consider the following quality measures: 
 66.18     (1) excellent clinical outcomes; 
 66.19     (2) achievement of quality as determined by the department 
 66.20  of health in licensure and certification surveys, complaint 
 66.21  investigations, and case mix recommendations; 
 66.22     (3) positive impact on quality of life; 
 66.23     (4) level of consumer satisfaction; or 
 66.24     (5) any additional outcomes proposed by a nursing facility 
 66.25  that the commissioner finds desirable. 
 66.26     (c) The commissioner may also contract with nursing 
 66.27  facilities in other ways through requests for proposals, 
 66.28  including contracts on a risk or nonrisk basis, with nursing 
 66.29  facilities or consortia of nursing facilities, to provide 
 66.30  comprehensive long-term care coverage on a premium or capitated 
 66.31  basis. 
 66.32     (d) The commissioner may negotiate different contract terms 
 66.33  for different nursing facilities. 
 66.34     Subd. 2a.  [DURATION AND TERMINATION OF CONTRACTS.] (a) All 
 66.35  contracts entered into under this section are for a term of one 
 66.36  year.  Either party may terminate this contract at any time 
 67.1   without cause by providing 90 calendar days' advance written 
 67.2   notice to the other party.  Notwithstanding section 16C.05, 
 67.3   subdivisions 2, paragraph (a); and 5, if neither party provides 
 67.4   written notice of termination, the contract shall be 
 67.5   renegotiated for additional one-year terms or the terms of the 
 67.6   existing contract will be extended for one year.  The provisions 
 67.7   of the contract shall be renegotiated annually by the parties 
 67.8   prior to the expiration date of the contract.  The parties may 
 67.9   voluntarily renegotiate the terms of the contract at any time by 
 67.10  mutual agreement. 
 67.11     (b) If a nursing facility fails to comply with the terms of 
 67.12  a contract, the commissioner shall provide reasonable notice 
 67.13  regarding the breach of contract and a reasonable opportunity 
 67.14  for the facility to come into compliance.  If the facility fails 
 67.15  to come into compliance or to remain in compliance, the 
 67.16  commissioner may terminate the contract.  If a contract is 
 67.17  terminated, provisions of section 256B.48, subdivision 1a, shall 
 67.18  apply. 
 67.19     Subd. 3.  [PAYMENT RATE PROVISIONS.] (a) For rate years 
 67.20  beginning on or after July 1, 2000, within the limits of 
 67.21  appropriations specifically for this purpose, the commissioner 
 67.22  shall determine operating cost payment rates for each licensed 
 67.23  and certified nursing facility by indexing its operating cost 
 67.24  payment rates in effect on June 30, 2000, for inflation.  The 
 67.25  inflation factor to be used must be based on the change in the 
 67.26  Consumer Price Index-All Items, United States city average 
 67.27  (CPI-U) as forecasted by Data Resources, Inc. in the fourth 
 67.28  quarter preceding the rate year.  The CPI-U forecasted index for 
 67.29  operating cost payment rates shall be based on the 12-month 
 67.30  period from the midpoint of the nursing facility's prior rate 
 67.31  year to the midpoint of the rate year for which the operating 
 67.32  payment rate is being determined.  The operating cost payment 
 67.33  rate to be inflated shall be the total payment rate in effect on 
 67.34  June 30, 2000, minus the portion determined to be the 
 67.35  property-related payment rate, minus the per diem amount of the 
 67.36  preadmission screening cost included in the nursing facility's 
 68.1   last payment rate established under section 256B.431. 
 68.2      (b) A per diem amount for preadmission screening will be 
 68.3   added onto the contract payment rates according to the method of 
 68.4   distribution of county allocation described in section 
 68.5   256B.0911, subdivision 6, paragraph (a). 
 68.6      (b) (c) Beginning July 1, 2000, each nursing facility 
 68.7   subject to a performance-based contract under this section shall 
 68.8   choose one of two methods of payment for property-related costs: 
 68.9      (1) the method established in section 256B.434 256B.431; or 
 68.10     (2) the method established in section 256B.431 the 
 68.11  property-related payment rate in effect on June 30, 2000, 
 68.12  indexed annually for inflation using the index specified in 
 68.13  paragraph (a).  In calculating the property-related payment rate 
 68.14  under this method, the commissioner shall adjust the rate to 
 68.15  reflect a reduction in the licensed bed capacity which is 
 68.16  effective on or after October 1, 1998, and meets the 
 68.17  requirements of section 256B.431, subdivision 3a, paragraph (d), 
 68.18  clause (2). 
 68.19     Nursing facilities must notify the commissioner in writing 
 68.20  of their election on or before December 31, 1999.  Once the 
 68.21  nursing facility has made the election in this paragraph, that 
 68.22  election shall remain in effect for at least four years or until 
 68.23  an alternative property payment system is developed.  An 
 68.24  election to have a property-related payment rate set according 
 68.25  to clause (2) will prevent a nursing facility from changing its 
 68.26  option for the amount charged to residents occupying single-bed 
 68.27  rooms as described in Minnesota Rules, parts 9549.0060, subpart 
 68.28  11, and 9549.0070, subpart 3.  Having a property-related payment 
 68.29  rate set under clause (2) will require a nursing facility to 
 68.30  keep its single-bed option that was chosen the last time its 
 68.31  rates were determined under section 256B.431 for the entire 
 68.32  four-year period.  A nursing facility electing to have its 
 68.33  property-related payment rate effective July 1, 2000, 
 68.34  established under the method described in paragraph (c), clause 
 68.35  (1), shall also file a cost report for the reporting year ending 
 68.36  September 30, 1999, according to the procedures specified in 
 69.1   section 256B.431 and Minnesota Rules, parts 9549.0010 to 
 69.2   9549.0070.  The cost report form shall be specified by the 
 69.3   commissioner. 
 69.4      (c) (d) For rate years beginning on or after July 1, 2000, 
 69.5   the commissioner may implement a new method of payment for 
 69.6   property-related costs that addresses the capital needs of 
 69.7   nursing facilities.  Notwithstanding paragraph (b) (c), the new 
 69.8   property payment system or systems, if implemented, shall 
 69.9   replace the current method methods of setting property payment 
 69.10  rates under sections 256B.431 and 256B.434. 
 69.11     Subd. 4.  [CONTRACT PAYMENT RATES; APPEALS.] If an appeal 
 69.12  is pending concerning the cost-based payment rates that are the 
 69.13  basis for the calculation of the payment rate under this 
 69.14  section, the commissioner and the nursing facility may agree on 
 69.15  an interim contract rate to be used until the appeal is 
 69.16  resolved.  When the appeal is resolved, the contract rate must 
 69.17  be adjusted retroactively according to the appeal decision. 
 69.18     Subd. 5.  [EXEMPTIONS.] (a) A facility that elected to have 
 69.19  its property related payment rate established according to 
 69.20  subdivision 3, paragraph (c), clause (2), is not subject to the 
 69.21  moratorium on licensure or certification of new nursing home 
 69.22  beds in section 144A.071, unless the project results in a net 
 69.23  increase in bed capacity or involves relocation of beds from one 
 69.24  site to another.  Contract payment rates must not be adjusted to 
 69.25  reflect any additional costs that a nursing facility incurs as a 
 69.26  result of a construction project undertaken under this 
 69.27  paragraph.  In addition, as a condition of exercising this 
 69.28  exemption, a nursing facility must agree that any future medical 
 69.29  assistance payments for nursing facility services will not 
 69.30  reflect any additional costs attributable to the sale of a 
 69.31  nursing facility under this section and to construction 
 69.32  undertaken under this paragraph that otherwise would not be 
 69.33  authorized under the moratorium in sections 144A.071 and 
 69.34  144A.073.  Nothing in this section prevents a nursing facility 
 69.35  from seeking approval of an exception to the moratorium through 
 69.36  the process established in sections 144A.071 and 144A.073, and 
 70.1   if approved the facility's rates shall be adjusted to reflect 
 70.2   the cost of the project. 
 70.3      (b) Notwithstanding section 256B.48, subdivision 6, 
 70.4   paragraphs (d) and (e), and according to any terms and 
 70.5   conditions contained in the facility's contract, a nursing 
 70.6   facility that is under contract with the commissioner under this 
 70.7   section is in compliance with section 256B.48, subdivision 6, 
 70.8   paragraph (b), if the facility is Medicare certified. 
 70.9      Subd. 6.  [CONSUMER PROTECTION.] In addition to complying 
 70.10  with all applicable laws regarding consumer protection, as a 
 70.11  condition of entering into a contract under this section, a 
 70.12  nursing facility must agree to: 
 70.13     (1) establish resident grievance procedures that are 
 70.14  comparable to those required under section 256.045, subdivision 
 70.15  3; 
 70.16     (2) establish expedited grievance procedures to resolve 
 70.17  complaints made by short-stay residents; and 
 70.18     (3) make available to residents and families a copy of the 
 70.19  performance-based contract and outcomes to be achieved. 
 70.20     Subd. 7.  [CONTRACTS ARE VOLUNTARY.] Participation of 
 70.21  nursing facilities in the medical assistance program is 
 70.22  voluntary.  The terms and procedures governing the 
 70.23  performance-based contract are determined under this section and 
 70.24  through negotiations between the commissioner and nursing 
 70.25  facilities.  
 70.26     Subd. 8.  [FEDERAL REQUIREMENTS.] The commissioner shall 
 70.27  implement the performance-based contracting system subject to 
 70.28  any required federal waivers or approval and in a manner that is 
 70.29  consistent with federal requirements.  If a provision of this 
 70.30  section is inconsistent with a federal requirement, the federal 
 70.31  requirement supersedes the inconsistent provision.  The 
 70.32  commissioner shall seek federal approval and request waivers as 
 70.33  necessary to implement this section. 
 70.34     Subd. 9.  [EXTERNAL REVIEW PANEL.] The commissioner may 
 70.35  establish an external review panel consisting of persons 
 70.36  appointed by the commissioner for their expertise on issues 
 71.1   relating to nursing facility services, quality, payment systems, 
 71.2   and other matters, to advise the commissioner on the development 
 71.3   and implementation of the performance-based contracting system, 
 71.4   and to assist the commissioner in assessing the quality 
 71.5   components of the performance-based contracting system and 
 71.6   development of new ideas on how to improve various components 
 71.7   which may emerge.  The external review panel must include, among 
 71.8   other members, representatives of nursing facilities. 
 71.9      Sec. 22.  Minnesota Statutes 1998, section 256B.48, 
 71.10  subdivision 1a, is amended to read: 
 71.11     Subd. 1a.  [TERMINATION.] If a nursing facility terminates 
 71.12  its participation in the medical assistance program, whether 
 71.13  voluntarily or involuntarily, the commissioner may authorize the 
 71.14  nursing facility to receive continued medical assistance 
 71.15  reimbursement only on a temporary basis until medical assistance 
 71.16  residents can be relocated to nursing facilities participating 
 71.17  in the medical assistance program. 
 71.18     Sec. 23.  Minnesota Statutes 1998, section 256B.48, 
 71.19  subdivision 1b, is amended to read: 
 71.20     Subd. 1b.  [EXCEPTION.] Notwithstanding any agreement 
 71.21  between a nursing facility and the department of human services 
 71.22  or the provisions of this section or section 256B.411, other 
 71.23  than subdivision 1a, the commissioner may authorize continued 
 71.24  medical assistance payments to a nursing facility which ceased 
 71.25  intake of medical assistance recipients prior to July 1, 1983, 
 71.26  and which charges private paying residents rates that exceed 
 71.27  those permitted by subdivision 1, paragraph (a), for (i) 
 71.28  residents who resided in the nursing facility before July 1, 
 71.29  1983, or (ii)  residents for whom the commissioner or any 
 71.30  predecessors of the commissioner granted a permanent individual 
 71.31  waiver prior to October 1, 1983.  Nursing facilities seeking 
 71.32  continued medical assistance payments under this subdivision 
 71.33  shall make the reports required under subdivision 2, except that 
 71.34  on or after December 31, 1985, the financial statements required 
 71.35  need not be audited by or contain the opinion of a certified 
 71.36  public accountant or licensed public accountant, but need only 
 72.1   be reviewed by a certified public accountant or licensed public 
 72.2   accountant.  In the event that the state is determined by the 
 72.3   federal government to be no longer eligible for the federal 
 72.4   share of medical assistance payments made to a nursing facility 
 72.5   under this subdivision, the commissioner may cease medical 
 72.6   assistance payments, under this subdivision, to that nursing 
 72.7   facility.  Between October 1, 1992, and July 1, 1993, a facility 
 72.8   governed by this subdivision may elect to resume full 
 72.9   participation in the medical assistance program by agreeing to 
 72.10  comply with all of the requirements of the medical assistance 
 72.11  program, including the rate equalization law in subdivision 1, 
 72.12  paragraph (a), and all other requirements established in law or 
 72.13  rule, and to resume intake of new medical assistance recipients. 
 72.14     Sec. 24.  Minnesota Statutes 1998, section 256B.48, 
 72.15  subdivision 6, is amended to read: 
 72.16     Subd. 6.  [MEDICARE CERTIFICATION.] (a) [DEFINITION.] For 
 72.17  purposes of this subdivision, "nursing facility" means a nursing 
 72.18  facility that is certified as a skilled nursing facility or, 
 72.19  after September 30, 1990, a nursing facility licensed under 
 72.20  chapter 144A that is certified as a nursing facility.  
 72.21     (b) [MEDICARE PARTICIPATION REQUIRED.] All nursing 
 72.22  facilities shall participate in Medicare part A and part B 
 72.23  unless, after submitting an application, Medicare certification 
 72.24  is denied by the federal health care financing administration.  
 72.25  Medicare review shall be conducted at the time of the annual 
 72.26  medical assistance review.  Charges for Medicare-covered 
 72.27  services provided to residents who are simultaneously eligible 
 72.28  for medical assistance and Medicare must be billed to Medicare 
 72.29  part A or part B before billing medical assistance.  Medical 
 72.30  assistance may be billed only for charges not reimbursed by 
 72.31  Medicare.  
 72.32     (c) [UNTIL SEPTEMBER 30, 1990.] Until September 30, 1990, a 
 72.33  nursing facility satisfies the requirements of paragraph (b) 
 72.34  if:  (1) at least 50 percent of the facility's beds that are 
 72.35  licensed under section 144A and certified as skilled nursing 
 72.36  beds under the medical assistance program are Medicare 
 73.1   certified; or (2) if a nursing facility's beds are licensed 
 73.2   under section 144A, and some are medical assistance certified as 
 73.3   skilled nursing beds and others are medical assistance certified 
 73.4   as intermediate care facility I beds, at least 50 percent of the 
 73.5   facility's total skilled nursing beds and intermediate care 
 73.6   facility I beds or 100 percent of its skilled nursing beds, 
 73.7   whichever is less, are Medicare certified. 
 73.8      (d) [AFTER SEPTEMBER 30, 1990.] After September 30, 1990, a 
 73.9   nursing facility satisfies the requirements of paragraph (b) if 
 73.10  at least 50 percent of the facility's beds certified as nursing 
 73.11  facility beds under the medical assistance program are Medicare 
 73.12  certified. 
 73.13     (e) (d) [CONFLICT WITH MEDICARE DISTINCT PART 
 73.14  REQUIREMENTS.] At the request of a facility, the commissioner of 
 73.15  human services may reduce the 50 percent Medicare participation 
 73.16  requirement in paragraphs (c) and (d) to no less than 20 percent 
 73.17  if the commissioner of health determines that, due to the 
 73.18  facility's physical plant configuration, the facility cannot 
 73.19  satisfy Medicare distinct part requirements at the 50 percent 
 73.20  certification level.  To receive a reduction in the 
 73.21  participation requirement, a facility must demonstrate that the 
 73.22  reduction will not adversely affect access of Medicare-eligible 
 73.23  residents to Medicare-certified beds. 
 73.24     (f) (e) [INSTITUTIONS FOR MENTAL DISEASE.] The commissioner 
 73.25  may grant exceptions to the requirements of paragraph (b) for 
 73.26  nursing facilities that are designated as institutions for 
 73.27  mental disease. 
 73.28     (g) (f) [NOTICE OF RIGHTS.] The commissioner shall inform 
 73.29  recipients of their rights under this subdivision and section 
 73.30  144.651, subdivision 29. 
 73.31     Sec. 25.  Minnesota Statutes 1998, section 256B.50, 
 73.32  subdivision 1, is amended to read: 
 73.33     Subdivision 1.  [SCOPE.] A provider may appeal from a 
 73.34  determination of a payment rate established pursuant to this 
 73.35  chapter and reimbursement rules of the commissioner if the 
 73.36  appeal, if successful, would result in a change to the 
 74.1   provider's payment rate or to the calculation of maximum charges 
 74.2   to therapy vendors as provided by section 256B.433, subdivision 
 74.3   3.  Appeals must be filed in accordance with procedures in this 
 74.4   section.  This section does not apply to a request from a 
 74.5   resident or long-term care facility for reconsideration of the 
 74.6   classification of a resident under section 144.0722 or 
 74.7   144.0723.  For rate years beginning on or after July 1, 2000, 
 74.8   the procedures in this section shall not apply. 
 74.9      Sec. 26.  Minnesota Statutes 1998, section 256B.50, 
 74.10  subdivision 1e, is amended to read: 
 74.11     Subd. 1e.  [ATTORNEY'S FEES AND COSTS.] (a) Notwithstanding 
 74.12  section 15.472, paragraph (a), for an issue appealed under 
 74.13  subdivision 1, the prevailing party in a contested case 
 74.14  proceeding or, if appealed, in subsequent judicial review, must 
 74.15  be awarded reasonable attorney's fees and costs incurred in 
 74.16  litigating the appeal, if the prevailing party shows that the 
 74.17  position of the opposing party was not substantially justified.  
 74.18  The procedures for awarding fees and costs set forth in section 
 74.19  15.474 must be followed in determining the prevailing party's 
 74.20  fees and costs except as otherwise provided in this 
 74.21  subdivision.  For purposes of this subdivision, "costs" means 
 74.22  subpoena fees and mileage, transcript costs, court reporter 
 74.23  fees, witness fees, postage and delivery costs, photocopying and 
 74.24  printing costs, amounts charged the commissioner by the office 
 74.25  of administrative hearings, and direct administrative costs of 
 74.26  the department; and "substantially justified" means that a 
 74.27  position had a reasonable basis in law and fact, based on the 
 74.28  totality of the circumstances prior to and during the contested 
 74.29  case proceeding and subsequent review. 
 74.30     (b) When an award is made to the department under this 
 74.31  subdivision, attorney fees must be calculated at the cost to the 
 74.32  department.  When an award is made to a provider under this 
 74.33  subdivision, attorney fees must be calculated at the rate 
 74.34  charged to the provider except that attorney fees awarded must 
 74.35  be the lesser of the attorney's normal hourly fee or $100 per 
 74.36  hour. 
 75.1      (c) In contested case proceedings involving more than one 
 75.2   issue, the administrative law judge shall determine what portion 
 75.3   of each party's attorney fees and costs is related to the issue 
 75.4   or issues on which it prevailed and for which it is entitled to 
 75.5   an award.  In making that determination, the administrative law 
 75.6   judge shall consider the amount of time spent on each issue, the 
 75.7   precedential value of the issue, the complexity of the issue, 
 75.8   and other factors deemed appropriate by the administrative law 
 75.9   judge.  
 75.10     (d) When the department prevails on an issue involving more 
 75.11  than one provider, the administrative law judge shall allocate 
 75.12  the total amount of any award for attorney fees and costs among 
 75.13  the providers.  In determining the allocation, the 
 75.14  administrative law judge shall consider each provider's monetary 
 75.15  interest in the issue and other factors deemed appropriate by 
 75.16  the administrative law judge.  
 75.17     (e) Attorney fees and costs awarded to the department for 
 75.18  proceedings under this subdivision must not be reported or 
 75.19  treated as allowable costs on the provider's cost report.  
 75.20     (f) Fees and costs awarded to a provider for proceedings 
 75.21  under this subdivision must be reimbursed to them by reporting 
 75.22  the amount of fees and costs awarded as allowable costs on the 
 75.23  provider's cost report for the reporting year in which they were 
 75.24  awarded.  Fees and costs reported pursuant to this subdivision 
 75.25  must be included in the general and administrative cost category 
 75.26  but are not subject to categorical or overall cost limitations 
 75.27  established in rule or statute within 120 days of the final 
 75.28  decision on the award of attorney fees and costs. 
 75.29     (g) If the provider fails to pay the awarded attorney fees 
 75.30  and costs within 120 days of the final decision on the award of 
 75.31  attorney fees and costs, the department may collect the amount 
 75.32  due through any method available to it for the collection of 
 75.33  medical assistance overpayments to providers.  Interest charges 
 75.34  must be assessed on balances outstanding after 120 days of the 
 75.35  final decision on the award of attorney fees and costs.  The 
 75.36  annual interest rate charged must be the rate charged by the 
 76.1   commissioner of revenue for late payment of taxes that is in 
 76.2   effect on the 121st day after the final decision on the award of 
 76.3   attorney fees and costs.  
 76.4      (h) Amounts collected by the commissioner pursuant to this 
 76.5   subdivision must be deemed to be recoveries pursuant to section 
 76.6   256.01, subdivision 2, clause (15). 
 76.7      (i) This subdivision applies to all contested case 
 76.8   proceedings set on for hearing by the commissioner on or after 
 76.9   April 29, 1988, regardless of the date the appeal was filed. 
 76.10     Sec. 27.  [REPEALER.] 
 76.11     Minnesota Statutes 1998, sections 256B.03, subdivision 2; 
 76.12  256B.431, subdivisions 2, 2a, 2c, 2f, 2h, 2j, 2k, 2l, 2m, 2n, 
 76.13  2o, 2p, 2q, 3, 3b, 3d, 3e, 3h, 3j, 4, 5, 7, 8, 9, 9a, 23, 24, 
 76.14  and 25; 256B.433; 256B.434; 256B.47, subdivisions 3 and 4; 
 76.15  256B.48, subdivision 9; and 256B.50, subdivisions 1f and 3, are 
 76.16  repealed effective July 1, 2000. 
 76.17     Sec. 28.  [EFFECTIVE DATE.] 
 76.18     (a) Sections 6 and 21 are effective July 1, 1999. 
 76.19     (b) Sections 1 to 5, 7 to 20, and 22 to 26 are effective 
 76.20  July 1, 2000.