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Chapter 144A

Section 144A.071

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144A.071 MORATORIUM ON CERTIFICATION OF NURSING HOME BEDS.
    Subdivision 1. Findings. The legislature declares that a moratorium on the licensure and
medical assistance certification of new nursing home beds and construction projects that exceed
$1,000,000 is necessary to control nursing home expenditure growth and enable the state to
meet the needs of its elderly by providing high quality services in the most appropriate manner
along a continuum of care.
    Subd. 1a. Definitions. For purposes of sections 144A.071 to 144A.073, the following terms
have the meanings given them:
(a) "Attached fixtures" has the meaning given in Minnesota Rules, part 9549.0020, subpart 6.
(b) "Buildings" has the meaning given in Minnesota Rules, part 9549.0020, subpart 7.
(c) "Capital assets" has the meaning given in section 256B.421, subdivision 16.
(d) "Commenced construction" means that all of the following conditions were met: the
final working drawings and specifications were approved by the commissioner of health; the
construction contracts were let; a timely construction schedule was developed, stipulating dates
for beginning, achieving various stages, and completing construction; and all zoning and building
permits were applied for.
(e) "Completion date" means the date on which clearance for the construction project
is issued, or if a clearance for the construction project is not required, the date on which the
construction project assets are available for facility use.
(f) "Construction" means any erection, building, alteration, reconstruction, modernization, or
improvement necessary to comply with the nursing home licensure rules.
(g) "Construction project" means:
(1) a capital asset addition to, or replacement of a nursing home or certified boarding care
home that results in new space or the remodeling of or renovations to existing facility space; and
(2) the remodeling or renovation of existing facility space the use of which is modified as a
result of the project described in clause (1). This existing space and the project described in clause
(1) must be used for the functions as designated on the construction plans on completion of the
project described in clause (1) for a period of not less than 24 months.
(h) "Depreciation guidelines" means the most recent publication of "The Estimated Useful
Lives of Depreciable Hospital Assets," issued by the American Hospital Association, 840 North
Lake Shore Drive, Chicago, Illinois, 60611.
(i) "New licensed" or "new certified beds" means:
(1) newly constructed beds in a facility or the construction of a new facility that would
increase the total number of licensed nursing home beds or certified boarding care or nursing
home beds in the state; or
(2) newly licensed nursing home beds or newly certified boarding care or nursing home beds
that result from remodeling of the facility that involves relocation of beds but does not result in an
increase in the total number of beds, except when the project involves the upgrade of boarding
care beds to nursing home beds, as defined in section 144A.073, subdivision 1. "Remodeling"
includes any of the type of conversion, renovation, replacement, or upgrading projects as defined
in section 144A.073, subdivision 1.
(j) "Project construction costs" means the cost of the following items that have a completion
date within 12 months before or after the completion date of the project described in item (g),
clause (1):
(1) facility capital asset additions;
(2) replacements;
(3) renovations;
(4) remodeling projects;
(5) construction site preparation costs;
(6) related soft costs; and
(7) the cost of new technology implemented as part of the construction project and
depreciable equipment directly identified to the project, if the construction costs for clauses (1) to
(6) exceed the threshold for additions and replacements stated in section 256B.431, subdivision
16
. Technology and depreciable equipment shall be included in the project construction costs
unless a written election is made by the facility, to not include it in the facility's appraised
value for purposes of Minnesota Rules, part 9549.0020, subpart 5. Debt incurred for purchase
of technology and depreciable equipment shall be included as allowable debt for purposes of
Minnesota Rules, part 9549.0060, subpart 5, items A and C, unless the written election is to not
include it. Any new technology and depreciable equipment included in the project construction
costs that the facility elects not to include in its appraised value and allowable debt shall be
treated as provided in section 256B.431, subdivision 17, paragraph (b). Written election under this
paragraph must be included in the facility's request for the rate change related to the project, and
this election may not be changed.
(k) "Technology" means information systems or devices that make documentation,
charting, and staff time more efficient or encourage and allow for care through alternative
settings including, but not limited to, touch screens, monitors, hand-helds, swipe cards, motion
detectors, pagers, telemedicine, medication dispensers, and equipment to monitor vital signs and
self-injections, and to observe skin and other conditions.
    Subd. 2. Moratorium. The commissioner of health, in coordination with the commissioner
of human services, shall deny each request for new licensed or certified nursing home or certified
boarding care beds except as provided in subdivision 3 or 4a, or section 144A.073. "Certified
bed" means a nursing home bed or a boarding care bed certified by the commissioner of health
for the purposes of the medical assistance program, under United States Code, title 42, sections
1396 et seq.
The commissioner of human services, in coordination with the commissioner of health,
shall deny any request to issue a license under section 252.28 and chapter 245A to a nursing
home or boarding care home, if that license would result in an increase in the medical assistance
reimbursement amount.
In addition, the commissioner of health must not approve any construction project whose
cost exceeds $1,000,000, unless:
(a) any construction costs exceeding $1,000,000 are not added to the facility's appraised
value and are not included in the facility's payment rate for reimbursement under the medical
assistance program; or
(b) the project:
(1) has been approved through the process described in section 144A.073;
(2) meets an exception in subdivision 3 or 4a;
(3) is necessary to correct violations of state or federal law issued by the commissioner
of health;
(4) is necessary to repair or replace a portion of the facility that was damaged by fire,
lightning, groundshifts, or other such hazards, including environmental hazards, provided that the
provisions of subdivision 4a, clause (a), are met;
(5) as of May 1, 1992, the facility has submitted to the commissioner of health written
documentation evidencing that the facility meets the "commenced construction" definition as
specified in subdivision 1a, clause (d), or that substantial steps have been taken prior to April 1,
1992, relating to the construction project. "Substantial steps" require that the facility has made
arrangements with outside parties relating to the construction project and include the hiring of
an architect or construction firm, submission of preliminary plans to the Department of Health
or documentation from a financial institution that financing arrangements for the construction
project have been made; or
(6) is being proposed by a licensed nursing facility that is not certified to participate in the
medical assistance program and will not result in new licensed or certified beds.
Prior to the final plan approval of any construction project, the commissioner of health shall
be provided with an itemized cost estimate for the project construction costs. If a construction
project is anticipated to be completed in phases, the total estimated cost of all phases of the
project shall be submitted to the commissioner and shall be considered as one construction
project. Once the construction project is completed and prior to the final clearance by the
commissioner, the total project construction costs for the construction project shall be submitted
to the commissioner. If the final project construction cost exceeds the dollar threshold in
this subdivision, the commissioner of human services shall not recognize any of the project
construction costs or the related financing costs in excess of this threshold in establishing the
facility's property-related payment rate.
The dollar thresholds for construction projects are as follows: for construction projects
other than those authorized in clauses (1) to (6), the dollar threshold is $1,000,000. For projects
authorized after July 1, 1993, under clause (1), the dollar threshold is the cost estimate submitted
with a proposal for an exception under section 144A.073, plus inflation as calculated according
to section 256B.431, subdivision 3f, paragraph (a). For projects authorized under clauses (2)
to (4), the dollar threshold is the itemized estimate project construction costs submitted to the
commissioner of health at the time of final plan approval, plus inflation as calculated according to
section 256B.431, subdivision 3f, paragraph (a).
The commissioner of health shall adopt rules to implement this section or to amend the
emergency rules for granting exceptions to the moratorium on nursing homes under section
144A.073.
    Subd. 3. Exceptions authorizing an increase in beds. The commissioner of health, in
coordination with the commissioner of human services, may approve the addition of a new
certified bed or the addition of a new licensed nursing home bed, under the following conditions:
(a) to license or certify a new bed in place of one decertified after July 1, 1993, as long as the
number of certified plus newly certified or recertified beds does not exceed the number of beds
licensed or certified on July 1, 1993, or to address an extreme hardship situation, in a particular
county that, together with all contiguous Minnesota counties, has fewer nursing home beds per
1,000 elderly than the number that is ten percent higher than the national average of nursing home
beds per 1,000 elderly individuals. For the purposes of this section, the national average of nursing
home beds shall be the most recent figure that can be supplied by the federal Centers for Medicare
and Medicaid Services and the number of elderly in the county or the nation shall be determined
by the most recent federal census or the most recent estimate of the state demographer as of July
1, of each year of persons age 65 and older, whichever is the most recent at the time of the request
for replacement. An extreme hardship situation can only be found after the county documents the
existence of unmet medical needs that cannot be addressed by any other alternatives;
(b) to certify or license new beds in a new facility that is to be operated by the commissioner
of veterans affairs or when the costs of constructing and operating the new beds are to be
reimbursed by the commissioner of veterans affairs or the United States Veterans Administration;
(c) to license or certify beds in a facility that has been involuntarily delicensed or decertified
for participation in the medical assistance program, provided that an application for relicensure
or recertification is submitted to the commissioner within 120 days after delicensure or
decertification;
(d) to certify two existing beds in a facility with 66 licensed beds on January 1, 1994, that
had an average occupancy rate of 98 percent or higher in both calendar years 1992 and 1993, and
which began construction of four attached assisted living units in April 1993; or
(e) to certify four existing beds in a facility in Winona with 139 beds, of which 129 beds
are certified.
    Subd. 3a.[Repealed, 1992 c 513 art 7 s 135]
    Subd. 4. Monitoring exceptions for replacement beds. The commissioner of health, in
coordination with the commissioner of human services, shall implement mechanisms to monitor
and analyze the effect of the moratorium in the different geographic areas of the state. The
commissioner of health shall submit to the legislature, no later than January 15, 1984, and
annually thereafter, an assessment of the impact of the moratorium by geographic area, with
particular attention to service deficits or problems and a corrective action plan.
    Subd. 4a. Exceptions for replacement beds. It is in the best interest of the state to ensure
that nursing homes and boarding care homes continue to meet the physical plant licensing
and certification requirements by permitting certain construction projects. Facilities should be
maintained in condition to satisfy the physical and emotional needs of residents while allowing
the state to maintain control over nursing home expenditure growth.
    The commissioner of health in coordination with the commissioner of human services, may
approve the renovation, replacement, upgrading, or relocation of a nursing home or boarding
care home, under the following conditions:
    (a) to license or certify beds in a new facility constructed to replace a facility or to make
repairs in an existing facility that was destroyed or damaged after June 30, 1987, by fire, lightning,
or other hazard provided:
    (i) destruction was not caused by the intentional act of or at the direction of a controlling
person of the facility;
    (ii) at the time the facility was destroyed or damaged the controlling persons of the facility
maintained insurance coverage for the type of hazard that occurred in an amount that a reasonable
person would conclude was adequate;
    (iii) the net proceeds from an insurance settlement for the damages caused by the hazard are
applied to the cost of the new facility or repairs;
    (iv) the new facility is constructed on the same site as the destroyed facility or on another site
subject to the restrictions in section 144A.073, subdivision 5;
    (v) the number of licensed and certified beds in the new facility does not exceed the number
of licensed and certified beds in the destroyed facility; and
    (vi) the commissioner determines that the replacement beds are needed to prevent an
inadequate supply of beds.
Project construction costs incurred for repairs authorized under this clause shall not be considered
in the dollar threshold amount defined in subdivision 2;
    (b) to license or certify beds that are moved from one location to another within a nursing
home facility, provided the total costs of remodeling performed in conjunction with the relocation
of beds does not exceed $1,000,000;
    (c) to license or certify beds in a project recommended for approval under section 144A.073;
    (d) to license or certify beds that are moved from an existing state nursing home to a different
state facility, provided there is no net increase in the number of state nursing home beds;
    (e) to certify and license as nursing home beds boarding care beds in a certified boarding care
facility if the beds meet the standards for nursing home licensure, or in a facility that was granted
an exception to the moratorium under section 144A.073, and if the cost of any remodeling of the
facility does not exceed $1,000,000. If boarding care beds are licensed as nursing home beds, the
number of boarding care beds in the facility must not increase beyond the number remaining at
the time of the upgrade in licensure. The provisions contained in section 144A.073 regarding the
upgrading of the facilities do not apply to facilities that satisfy these requirements;
    (f) to license and certify up to 40 beds transferred from an existing facility owned and
operated by the Amherst H. Wilder Foundation in the city of St. Paul to a new unit at the same
location as the existing facility that will serve persons with Alzheimer's disease and other related
disorders. The transfer of beds may occur gradually or in stages, provided the total number of
beds transferred does not exceed 40. At the time of licensure and certification of a bed or beds in
the new unit, the commissioner of health shall delicense and decertify the same number of beds in
the existing facility. As a condition of receiving a license or certification under this clause, the
facility must make a written commitment to the commissioner of human services that it will not
seek to receive an increase in its property-related payment rate as a result of the transfers allowed
under this paragraph;
    (g) to license and certify nursing home beds to replace currently licensed and certified
boarding care beds which may be located either in a remodeled or renovated boarding care or
nursing home facility or in a remodeled, renovated, newly constructed, or replacement nursing
home facility within the identifiable complex of health care facilities in which the currently
licensed boarding care beds are presently located, provided that the number of boarding care beds
in the facility or complex are decreased by the number to be licensed as nursing home beds
and further provided that, if the total costs of new construction, replacement, remodeling, or
renovation exceed ten percent of the appraised value of the facility or $200,000, whichever is less,
the facility makes a written commitment to the commissioner of human services that it will not
seek to receive an increase in its property-related payment rate by reason of the new construction,
replacement, remodeling, or renovation. The provisions contained in section 144A.073 regarding
the upgrading of facilities do not apply to facilities that satisfy these requirements;
    (h) to license as a nursing home and certify as a nursing facility a facility that is licensed as
a boarding care facility but not certified under the medical assistance program, but only if the
commissioner of human services certifies to the commissioner of health that licensing the facility
as a nursing home and certifying the facility as a nursing facility will result in a net annual savings
to the state general fund of $200,000 or more;
    (i) to certify, after September 30, 1992, and prior to July 1, 1993, existing nursing home beds
in a facility that was licensed and in operation prior to January 1, 1992;
    (j) to license and certify new nursing home beds to replace beds in a facility acquired by
the Minneapolis Community Development Agency as part of redevelopment activities in a city
of the first class, provided the new facility is located within three miles of the site of the old
facility. Operating and property costs for the new facility must be determined and allowed under
section 256B.431 or 256B.434;
    (k) to license and certify up to 20 new nursing home beds in a community-operated hospital
and attached convalescent and nursing care facility with 40 beds on April 21, 1991, that suspended
operation of the hospital in April 1986. The commissioner of human services shall provide the
facility with the same per diem property-related payment rate for each additional licensed and
certified bed as it will receive for its existing 40 beds;
    (l) to license or certify beds in renovation, replacement, or upgrading projects as defined in
section 144A.073, subdivision 1, so long as the cumulative total costs of the facility's remodeling
projects do not exceed $1,000,000;
    (m) to license and certify beds that are moved from one location to another for the purposes
of converting up to five four-bed wards to single or double occupancy rooms in a nursing home
that, as of January 1, 1993, was county-owned and had a licensed capacity of 115 beds;
    (n) to allow a facility that on April 16, 1993, was a 106-bed licensed and certified nursing
facility located in Minneapolis to layaway all of its licensed and certified nursing home beds.
These beds may be relicensed and recertified in a newly constructed teaching nursing home
facility affiliated with a teaching hospital upon approval by the legislature. The proposal must
be developed in consultation with the interagency committee on long-term care planning. The
beds on layaway status shall have the same status as voluntarily delicensed and decertified beds,
except that beds on layaway status remain subject to the surcharge in section 256.9657. This
layaway provision expires July 1, 1998;
    (o) to allow a project which will be completed in conjunction with an approved moratorium
exception project for a nursing home in southern Cass County and which is directly related to
that portion of the facility that must be repaired, renovated, or replaced, to correct an emergency
plumbing problem for which a state correction order has been issued and which must be corrected
by August 31, 1993;
    (p) to allow a facility that on April 16, 1993, was a 368-bed licensed and certified nursing
facility located in Minneapolis to layaway, upon 30 days prior written notice to the commissioner,
up to 30 of the facility's licensed and certified beds by converting three-bed wards to single or
double occupancy. Beds on layaway status shall have the same status as voluntarily delicensed
and decertified beds except that beds on layaway status remain subject to the surcharge in section
256.9657, remain subject to the license application and renewal fees under section 144A.07 and
shall be subject to a $100 per bed reactivation fee. In addition, at any time within three years of
the effective date of the layaway, the beds on layaway status may be:
    (1) relicensed and recertified upon relocation and reactivation of some or all of the beds
to an existing licensed and certified facility or facilities located in Pine River, Brainerd, or
International Falls; provided that the total project construction costs related to the relocation of
beds from layaway status for any facility receiving relocated beds may not exceed the dollar
threshold provided in subdivision 2 unless the construction project has been approved through the
moratorium exception process under section 144A.073;
    (2) relicensed and recertified, upon reactivation of some or all of the beds within the facility
which placed the beds in layaway status, if the commissioner has determined a need for the
reactivation of the beds on layaway status.
    The property-related payment rate of a facility placing beds on layaway status must be
adjusted by the incremental change in its rental per diem after recalculating the rental per diem
as provided in section 256B.431, subdivision 3a, paragraph (c). The property-related payment
rate for a facility relicensing and recertifying beds from layaway status must be adjusted by the
incremental change in its rental per diem after recalculating its rental per diem using the number
of beds after the relicensing to establish the facility's capacity day divisor, which shall be effective
the first day of the month following the month in which the relicensing and recertification became
effective. Any beds remaining on layaway status more than three years after the date the layaway
status became effective must be removed from layaway status and immediately delicensed and
decertified;
    (q) to license and certify beds in a renovation and remodeling project to convert 12 four-bed
wards into 24 two-bed rooms, expand space, and add improvements in a nursing home that, as
of January 1, 1994, met the following conditions: the nursing home was located in Ramsey
County; had a licensed capacity of 154 beds; and had been ranked among the top 15 applicants
by the 1993 moratorium exceptions advisory review panel. The total project construction cost
estimate for this project must not exceed the cost estimate submitted in connection with the
1993 moratorium exception process;
    (r) to license and certify up to 117 beds that are relocated from a licensed and certified
138-bed nursing facility located in St. Paul to a hospital with 130 licensed hospital beds located in
South St. Paul, provided that the nursing facility and hospital are owned by the same or a related
organization and that prior to the date the relocation is completed the hospital ceases operation of
its inpatient hospital services at that hospital. After relocation, the nursing facility's status under
section 256B.431, subdivision 2j, shall be the same as it was prior to relocation. The nursing
facility's property-related payment rate resulting from the project authorized in this paragraph
shall become effective no earlier than April 1, 1996. For purposes of calculating the incremental
change in the facility's rental per diem resulting from this project, the allowable appraised value of
the nursing facility portion of the existing health care facility physical plant prior to the renovation
and relocation may not exceed $2,490,000;
    (s) to license and certify two beds in a facility to replace beds that were voluntarily
delicensed and decertified on June 28, 1991;
    (t) to allow 16 licensed and certified beds located on July 1, 1994, in a 142-bed nursing
home and 21-bed boarding care home facility in Minneapolis, notwithstanding the licensure and
certification after July 1, 1995, of the Minneapolis facility as a 147-bed nursing home facility after
completion of a construction project approved in 1993 under section 144A.073, to be laid away
upon 30 days' prior written notice to the commissioner. Beds on layaway status shall have the
same status as voluntarily delicensed or decertified beds except that they shall remain subject to
the surcharge in section 256.9657. The 16 beds on layaway status may be relicensed as nursing
home beds and recertified at any time within five years of the effective date of the layaway upon
relocation of some or all of the beds to a licensed and certified facility located in Watertown,
provided that the total project construction costs related to the relocation of beds from layaway
status for the Watertown facility may not exceed the dollar threshold provided in subdivision 2
unless the construction project has been approved through the moratorium exception process
under section 144A.073.
    The property-related payment rate of the facility placing beds on layaway status must be
adjusted by the incremental change in its rental per diem after recalculating the rental per diem
as provided in section 256B.431, subdivision 3a, paragraph (c). The property-related payment
rate for the facility relicensing and recertifying beds from layaway status must be adjusted by the
incremental change in its rental per diem after recalculating its rental per diem using the number
of beds after the relicensing to establish the facility's capacity day divisor, which shall be effective
the first day of the month following the month in which the relicensing and recertification became
effective. Any beds remaining on layaway status more than five years after the date the layaway
status became effective must be removed from layaway status and immediately delicensed and
decertified;
    (u) to license and certify beds that are moved within an existing area of a facility or to a
newly constructed addition which is built for the purpose of eliminating three- and four-bed rooms
and adding space for dining, lounge areas, bathing rooms, and ancillary service areas in a nursing
home that, as of January 1, 1995, was located in Fridley and had a licensed capacity of 129 beds;
    (v) to relocate 36 beds in Crow Wing County and four beds from Hennepin County to
a 160-bed facility in Crow Wing County, provided all the affected beds are under common
ownership;
    (w) to license and certify a total replacement project of up to 49 beds located in Norman
County that are relocated from a nursing home destroyed by flood and whose residents were
relocated to other nursing homes. The operating cost payment rates for the new nursing facility
shall be determined based on the interim and settle-up payment provisions of Minnesota Rules,
part 9549.0057, and the reimbursement provisions of section 256B.431, except that subdivision
26, paragraphs (a) and (b), shall not apply until the second rate year after the settle-up cost report
is filed. Property-related reimbursement rates shall be determined under section 256B.431, taking
into account any federal or state flood-related loans or grants provided to the facility;
    (x) to license and certify a total replacement project of up to 129 beds located in Polk County
that are relocated from a nursing home destroyed by flood and whose residents were relocated
to other nursing homes. The operating cost payment rates for the new nursing facility shall be
determined based on the interim and settle-up payment provisions of Minnesota Rules, part
9549.0057, and the reimbursement provisions of section 256B.431, except that subdivision 26,
paragraphs (a) and (b), shall not apply until the second rate year after the settle-up cost report is
filed. Property-related reimbursement rates shall be determined under section 256B.431, taking
into account any federal or state flood-related loans or grants provided to the facility;
    (y) to license and certify beds in a renovation and remodeling project to convert 13 three-bed
wards into 13 two-bed rooms and 13 single-bed rooms, expand space, and add improvements in a
nursing home that, as of January 1, 1994, met the following conditions: the nursing home was
located in Ramsey County, was not owned by a hospital corporation, had a licensed capacity of
64 beds, and had been ranked among the top 15 applicants by the 1993 moratorium exceptions
advisory review panel. The total project construction cost estimate for this project must not
exceed the cost estimate submitted in connection with the 1993 moratorium exception process;
    (z) to license and certify up to 150 nursing home beds to replace an existing 285 bed nursing
facility located in St. Paul. The replacement project shall include both the renovation of existing
buildings and the construction of new facilities at the existing site. The reduction in the licensed
capacity of the existing facility shall occur during the construction project as beds are taken out of
service due to the construction process. Prior to the start of the construction process, the facility
shall provide written information to the commissioner of health describing the process for bed
reduction, plans for the relocation of residents, and the estimated construction schedule. The
relocation of residents shall be in accordance with the provisions of law and rule;
    (aa) to allow the commissioner of human services to license an additional 36 beds to
provide residential services for the physically disabled under Minnesota Rules, parts 9570.2000
to 9570.3400, in a 198-bed nursing home located in Red Wing, provided that the total number
of licensed and certified beds at the facility does not increase;
    (bb) to license and certify a new facility in St. Louis county with 44 beds constructed to
replace an existing facility in St. Louis County with 31 beds, which has resident rooms on
two separate floors and an antiquated elevator that creates safety concerns for residents and
prevents nonambulatory residents from residing on the second floor. The project shall include
the elimination of three- and four-bed rooms;
    (cc) to license and certify four beds in a 16-bed certified boarding care home in Minneapolis
to replace beds that were voluntarily delicensed and decertified on or before March 31, 1992. The
licensure and certification is conditional upon the facility periodically assessing and adjusting
its resident mix and other factors which may contribute to a potential institution for mental
disease declaration. The commissioner of human services shall retain the authority to audit the
facility at any time and shall require the facility to comply with any requirements necessary to
prevent an institution for mental disease declaration, including delicensure and decertification
of beds, if necessary;
    (dd) to license and certify 72 beds in an existing facility in Mille Lacs County with 80
beds as part of a renovation project. The renovation must include construction of an addition to
accommodate ten residents with beginning and midstage dementia in a self-contained living unit;
creation of three resident households where dining, activities, and support spaces are located
near resident living quarters; designation of four beds for rehabilitation in a self-contained area;
designation of 30 private rooms; and other improvements;
    (ee) to license and certify beds in a facility that has undergone replacement or remodeling as
part of a planned closure under section 256B.437;
    (ff) to license and certify a total replacement project of up to 124 beds located in Wilkin
County that are in need of relocation from a nursing home significantly damaged by flood. The
operating cost payment rates for the new nursing facility shall be determined based on the interim
and settle-up payment provisions of Minnesota Rules, part 9549.0057, and the reimbursement
provisions of section 256B.431, except that section 256B.431, subdivision 26, paragraphs (a) and
(b), shall not apply until the second rate year after the settle-up cost report is filed. Property-related
reimbursement rates shall be determined under section 256B.431, taking into account any federal
or state flood-related loans or grants provided to the facility;
    (gg) to allow the commissioner of human services to license an additional nine beds to
provide residential services for the physically disabled under Minnesota Rules, parts 9570.2000
to 9570.3400, in a 240-bed nursing home located in Duluth, provided that the total number of
licensed and certified beds at the facility does not increase;
    (hh) to license and certify up to 120 new nursing facility beds to replace beds in a facility
in Anoka County, which was licensed for 98 beds as of July 1, 2000, provided the new facility
is located within four miles of the existing facility and is in Anoka County. Operating and
property rates shall be determined and allowed under section 256B.431 and Minnesota Rules,
parts 9549.0010 to 9549.0080, or section 256B.434 or 256B.435. The provisions of section
256B.431, subdivision 26, paragraphs (a) and (b), do not apply until the second rate year
following settle-up; or
    (ii) to transfer up to 98 beds of a 129-licensed bed facility located in Anoka County that, as of
March 25, 2001, is in the active process of closing, to a 122-licensed bed nonprofit nursing facility
located in the city of Columbia Heights or its affiliate. The transfer is effective when the receiving
facility notifies the commissioner in writing of the number of beds accepted. The commissioner
shall place all transferred beds on layaway status held in the name of the receiving facility. The
layaway adjustment provisions of section 256B.431, subdivision 30, do not apply to this layaway.
The receiving facility may only remove the beds from layaway for recertification and relicensure
at the receiving facility's current site, or at a newly constructed facility located in Anoka County.
The receiving facility must receive statutory authorization before removing these beds from
layaway status, or may remove these beds from layaway status if removal from layaway status is
part of a moratorium exception project approved by the commissioner under section 144A.073.
    Subd. 4b. Licensed beds on layaway status. A licensed and certified nursing facility may
lay away, upon prior written notice to the commissioner of health, up to 50 percent of its licensed
and certified beds. A nursing facility may not discharge a resident in order to lay away a bed.
Notice to the commissioner shall be given 60 days prior to the effective date of the layaway. Beds
on layaway shall have the same status as voluntarily delicensed and decertified beds and shall
not be subject to license fees and license surcharge fees. In addition, beds on layaway may be
removed from layaway at any time on or after one year after the effective date of layaway in the
facility of origin, with a 60-day notice to the commissioner. A nursing facility that removes beds
from layaway may not place beds on layaway status for one year after the effective date of the
removal from layaway. The commissioner may approve the immediate removal of beds from
layaway if necessary to provide access to those nursing home beds to residents relocated from
other nursing homes due to emergency situations or closure. In the event approval is granted,
the one-year restriction on placing beds on layaway after a removal of beds from layaway shall
not apply. Beds may remain on layaway for up to five years. The commissioner may approve
placing and removing beds on layaway at any time during renovation or construction related to a
moratorium project approved under this section or section 144A.073.
    Subd. 4c. Exceptions for replacement beds after June 30, 2003. (a) The commissioner of
health, in coordination with the commissioner of human services, may approve the renovation,
replacement, upgrading, or relocation of a nursing home or boarding care home, under the
following conditions:
(1) to license and certify an 80-bed city-owned facility in Nicollet County to be constructed
on the site of a new city-owned hospital to replace an existing 85-bed facility attached to a hospital
that is also being replaced. The threshold allowed for this project under section 144A.073 shall be
the maximum amount available to pay the additional medical assistance costs of the new facility;
(2) to license and certify 29 beds to be added to an existing 69-bed facility in St. Louis
County, provided that the 29 beds must be transferred from active or layaway status at an existing
facility in St. Louis County that had 235 beds on April 1, 2003.
The licensed capacity at the 235-bed facility must be reduced to 206 beds, but the payment rate at
that facility shall not be adjusted as a result of this transfer. The operating payment rate of the
facility adding beds after completion of this project shall be the same as it was on the day prior to
the day the beds are licensed and certified. This project shall not proceed unless it is approved and
financed under the provisions of section 144A.073;
(3) to license and certify a new 60-bed facility in Austin, provided that: (i) 45 of the new
beds are transferred from a 45-bed facility in Austin under common ownership that is closed
and 15 of the new beds are transferred from a 182-bed facility in Albert Lea under common
ownership; (ii) the commissioner of human services is authorized by the 2004 legislature to
negotiate budget-neutral planned nursing facility closures; and (iii) money is available from
planned closures of facilities under common ownership to make implementation of this clause
budget-neutral to the state. The bed capacity of the Albert Lea facility shall be reduced to 167
beds following the transfer. Of the 60 beds at the new facility, 20 beds shall be used for a special
care unit for persons with Alzheimer's disease or related dementias; and
(4) to license and certify up to 80 beds transferred from an existing state-owned nursing
facility in Cass County to a new facility located on the grounds of the Ah-Gwah-Ching campus.
The operating cost payment rates for the new facility shall be determined based on the interim
and settle-up payment provisions of Minnesota Rules, part 9549.0057, and the reimbursement
provisions of section 256B.431. The property payment rate for the first three years of operation
shall be $35 per day. For subsequent years, the property payment rate of $35 per day shall be
adjusted for inflation as provided in section 256B.434, subdivision 4, paragraph (c), as long as the
facility has a contract under section 256B.434.
(b) Projects approved under this subdivision shall be treated in a manner equivalent to
projects approved under subdivision 4a.
    Subd. 5.[Repealed, 1Sp2003 c 14 art 2 s 57]
    Subd. 5a. Cost estimate of a moratorium exception project. (a) For the purposes of this
section and section 144A.073, the cost estimate of a moratorium exception project shall include
the effects of the proposed project on the costs of the state subsidy for community-based services,
nursing services, and housing in institutional and noninstitutional settings. The commissioner
of health, in cooperation with the commissioner of human services, shall define the method for
estimating these costs in the permanent rule implementing section 144A.073. The commissioner
of human services shall prepare an estimate of the total state annual long-term costs of each
moratorium exception proposal.
(b) The interest rate to be used for estimating the cost of each moratorium exception project
proposal shall be the lesser of either the prime rate plus two percentage points, or the posted yield
for standard conventional fixed rate mortgages of the Federal Home Loan Mortgage Corporation
plus two percentage points as published in the Wall Street Journal and in effect 56 days prior to
the application deadline. If the applicant's proposal uses this interest rate, the commissioner of
human services, in determining the facility's actual property-related payment rate to be established
upon completion of the project must use the actual interest rate obtained by the facility for the
project's permanent financing up to the maximum permitted under subdivision 6.
The applicant may choose an alternate interest rate for estimating the project's cost. If the
applicant makes this election, the commissioner of human services, in determining the facility's
actual property-related payment rate to be established upon completion of the project, must
use the lesser of the actual interest rate obtained for the project's permanent financing or the
interest rate which was used to estimate the proposal's project cost. For succeeding rate years, the
applicant is at risk for financing costs in excess of the interest rate selected.
    Subd. 6. Property-related payment rates of new beds. The property-related payment rates
of nursing home or boarding care home beds certified or recertified under subdivision 3 or 4a,
shall be adjusted according to Minnesota nursing facility reimbursement laws and rules unless the
facility has made a commitment in writing to the commissioner of human services not to seek
adjustments to these rates due to property-related expenses incurred as a result of the certification
or recertification. Any licensure or certification action authorized under repealed statutes which
were approved by the commissioner of health prior to July 1, 1993, shall remain in effect. Any
conditions pertaining to property rate reimbursement covered by these repealed statutes prior to
July 1, 1993, remain in effect.
    Subd. 7. Submission of cost information. Before approval of final construction plans for a
nursing home or a certified boarding care home construction project, the licensee shall submit to
the commissioner of health an itemized statement of the project construction cost estimates.
If the construction project includes a capital asset addition, replacement, remodeling, or
renovation of space such as a hospital, apartment, or shared or common areas, the facility must
submit to the commissioner an allocation of capital asset costs, soft costs, and debt information
prepared according to Minnesota Rules, chapter 9549.
Project construction cost estimates must be prepared by a contractor or architect and other
licensed participants in the development of the project.
    Subd. 8. Final approval. Before conducting the final inspection of the construction project
required by Minnesota Rules, part 4660.0100, and issuing final clearances for use, the licensee
shall provide to the commissioner of health the total project construction costs of the construction
project. If total costs are not available, the most recent cost figures shall be provided. Final cost
figures shall be submitted to the commissioner when available. The commissioner shall provide a
copy of this information to the commissioner of human services.
History: 1983 c 199 s 1; 1983 c 289 s 115 subd 1; 1984 c 654 art 5 s 58; 1984 c 655 art 1
s 28; 1Sp1985 c 3 s 10-12; 1987 c 186 s 15; 1987 c 403 art 4 s 3; 1Sp1987 c 4 art 2 s 1; 1988
c 689 art 2 s 36; 1989 c 209 art 2 s 1; 1989 c 282 art 3 s 11; 1990 c 472 s 1; 1990 c 612 s 6;
1991 c 93 s 1; 1991 c 292 art 4 s 1,2; art 7 s 25 subd 1,3; 1992 c 513 art 7 s 2,3; 1993 c 4 s 22;
1Sp1993 c 1 art 5 s 2; 1994 c 625 art 8 s 46; 1995 c 207 art 7 s 9-12; 1995 c 263 s 2; 1996 c 305
art 2 s 28; 1996 c 451 art 3 s 1,2; 1997 c 105 s 1; 1997 c 203 art 3 s 1,2,15; 1998 c 407 art 3 s 2;
2000 c 449 s 16; 2000 c 488 art 9 s 2,; 1Sp2001 c 9 art 5 s 3-6; 2002 c 240 s 1; 2002 c 277 s 32;
2002 c 375 art 2 s 1; 2002 c 379 art 1 s 113; 2003 c 16 s 1; 1Sp2003 c 14 art 2 s 9; 2004 c 218 s
1; 2005 c 56 s 1; 2005 c 68 art 1 s 1; 2006 c 282 art 20 s 3-5