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Chapter 256B

Section 256B.434

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256B.434 ALTERNATIVE PAYMENT DEMONSTRATION PROJECT.
    Subdivision 1. Alternative payment demonstration project established. The commissioner
of human services shall establish a contractual alternative payment demonstration project for
paying for nursing facility services under the medical assistance program. A nursing facility may
apply to be paid under the contractual alternative payment demonstration project instead of the
cost-based payment system established under section 256B.431. A nursing facility electing to use
the alternative payment demonstration project must enter into a contract with the commissioner.
Payment rates and procedures for facilities electing to use the alternative payment demonstration
project are determined and governed by this section and by the terms of the contract. The
commissioner may negotiate different contract terms for different nursing facilities.
    Subd. 2. Requests for proposals. (a) At least twice annually the commissioner shall publish
in the State Register a request for proposals to provide nursing facility services according to this
section. The commissioner must respond to all proposals in a timely manner.
(b) The commissioner may reject any proposal if, in the judgment of the commissioner, a
contract with a particular facility is not in the best interests of the residents of the facility or
the state of Minnesota. The commissioner may accept up to the number of proposals that can
be adequately supported with available state resources, as determined by the commissioner. The
commissioner may accept proposals from a single nursing facility or from a group of facilities
through a managing entity. The commissioner shall seek to ensure that nursing facilities under
contract are located in all geographic areas of the state.
(c) In issuing the request for proposals, the commissioner may develop reasonable
requirements which, in the judgment of the commissioner, are necessary to protect residents or
ensure that the contractual alternative payment demonstration project furthers the interest of
the state of Minnesota. The request for proposals may include, but need not be limited to, the
following:
(1) a requirement that a nursing facility make reasonable efforts to maximize Medicare
payments on behalf of eligible residents;
(2) requirements designed to prevent inappropriate or illegal discrimination against residents
enrolled in the medical assistance program as compared to private paying residents;
(3) requirements designed to ensure that admissions to a nursing facility are appropriate
and that reasonable efforts are made to place residents in home and community-based settings
when appropriate;
(4) a requirement to agree to participate in a project to develop data collection systems and
outcome-based standards. Among other requirements specified by the commissioner, each facility
entering into a contract may be required to pay an annual fee. Revenue generated from the fees
is appropriated to the commissioner and must be used to contract with a qualified consultant or
contractor to develop data collection systems and outcome-based contracting standards;
(5) a requirement that contractors agree to maintain Medicare cost reports and to submit them
to the commissioner upon request or at times specified by the commissioner;
(6) a requirement for demonstrated willingness and ability to develop and maintain data
collection and retrieval systems to be used in measuring outcomes; and
(7) a requirement to provide all information and assurances required by the terms and
conditions of the federal waiver or federal approval.
(d) In addition to the information and assurances contained in the submitted proposals, the
commissioner may consider the following in determining whether to accept or deny a proposal:
(1) the facility's history of compliance with federal and state laws and rules, except that a
facility deemed to be in substantial compliance with federal and state laws and rules is eligible to
respond to a request for proposal. A facility's compliance history shall not be the sole determining
factor in situations where the facility has been sold and the new owners have submitted a proposal;
(2) whether the facility has a record of excessive licensure fines or sanctions or fraudulent
cost reports;
(3) financial history and solvency; and
(4) other factors identified by the commissioner that the commissioner deems relevant to a
determination that a contract with a particular facility is not in the best interests of the residents of
the facility or the state of Minnesota.
(e) If the commissioner rejects the proposal of a nursing facility, the commissioner shall
provide written notice to the facility of the reason for the rejection, including the factors and
evidence upon which the rejection was based.
    Subd. 3. Duration and termination of contracts. (a) Subject to available resources, the
commissioner may begin to execute contracts with nursing facilities November 1, 1995.
(b) All contracts entered into under this section are for a term not to exceed four years.
Either party may terminate a contract at any time without cause by providing 90 calendar days
advance written notice to the other party. The decision to terminate a contract is not appealable.
Notwithstanding section 16C.05, subdivision 2, paragraph (a), clause (5), the contract shall be
renegotiated for additional terms of up to four years, unless either party provides written notice of
termination. The provisions of the contract shall be renegotiated at a minimum of every four years
by the parties prior to the expiration date of the contract. The parties may voluntarily renegotiate
the terms of the contract at any time by mutual agreement.
(c) If a nursing facility fails to comply with the terms of a contract, the commissioner shall
provide reasonable notice regarding the breach of contract and a reasonable opportunity for the
facility to come into compliance. If the facility fails to come into compliance or to remain in
compliance, the commissioner may terminate the contract. If a contract is terminated, the contract
payment remains in effect for the remainder of the rate year in which the contract was terminated,
but in all other respects the provisions of this section do not apply to that facility effective the
date the contract is terminated. The contract shall contain a provision governing the transition
back to the cost-based reimbursement system established under section 256B.431 and Minnesota
Rules, parts 9549.0010 to 9549.0080. A contract entered into under this section may be amended
by mutual agreement of the parties.
    Subd. 4. Alternate rates for nursing facilities. (a) For nursing facilities which have their
payment rates determined under this section rather than section 256B.431, the commissioner shall
establish a rate under this subdivision. The nursing facility must enter into a written contract
with the commissioner.
(b) A nursing facility's case mix payment rate for the first rate year of a facility's contract
under this section is the payment rate the facility would have received under section 256B.431.
(c) A nursing facility's case mix payment rates for the second and subsequent years of a
facility's contract under this section are the previous rate year's contract payment rates plus
an inflation adjustment and, for facilities reimbursed under this section or section 256B.431,
an adjustment to include the cost of any increase in Health Department licensing fees for the
facility taking effect on or after July 1, 2001. The index for the inflation adjustment must be based
on the change in the Consumer Price Index-All Items (United States City average) (CPI-U)
forecasted by the commissioner of finance's national economic consultant, as forecasted in the
fourth quarter of the calendar year preceding the rate year. The inflation adjustment must be based
on the 12-month period from the midpoint of the previous rate year to the midpoint of the rate
year for which the rate is being determined. For the rate years beginning on July 1, 1999, July
1, 2000, July 1, 2001, July 1, 2002, July 1, 2003, July 1, 2004, July 1, 2005, July 1, 2006, July
1, 2007, and July 1, 2008, this paragraph shall apply only to the property-related payment rate,
except that adjustments to include the cost of any increase in Health Department licensing fees
taking effect on or after July 1, 2001, shall be provided. Beginning in 2005, adjustment to the
property payment rate under this section and section 256B.431 shall be effective on October 1. In
determining the amount of the property-related payment rate adjustment under this paragraph,
the commissioner shall determine the proportion of the facility's rates that are property-related
based on the facility's most recent cost report.
(d) The commissioner shall develop additional incentive-based payments of up to five
percent above a facility's operating payment rate for achieving outcomes specified in a contract.
The commissioner may solicit contract amendments and implement those which, on a competitive
basis, best meet the state's policy objectives. The commissioner shall limit the amount of any
incentive payment and the number of contract amendments under this paragraph to operate
the incentive payments within funds appropriated for this purpose. The contract amendments
may specify various levels of payment for various levels of performance. Incentive payments
to facilities under this paragraph may be in the form of time-limited rate adjustments or
onetime supplemental payments. In establishing the specified outcomes and related criteria, the
commissioner shall consider the following state policy objectives:
(1) successful diversion or discharge of residents to the residents' prior home or other
community-based alternatives;
(2) adoption of new technology to improve quality or efficiency;
(3) improved quality as measured in the Nursing Home Report Card;
(4) reduced acute care costs; and
(5) any additional outcomes proposed by a nursing facility that the commissioner finds
desirable.
    Subd. 4a. Facility rate increases. For the rate year beginning July 1, 1999, the nursing
facilities described in clauses (1) to (5) shall receive the rate increases indicated. The increases
provided under this subdivision shall be included in the facility's total payment rates for the
purpose of determining future rates under this section or any other section:
(1) a nursing facility in Becker County licensed for 102 nursing home beds on September 30,
1998, shall receive an increase of $1.30 in its case mix class A payment rate; an increase of $1.33
in its case mix class B payment rate; an increase of $1.36 in its case mix class C payment rate; an
increase of $1.39 in its case mix class D payment rate; an increase of $1.42 in its case mix class E
payment rate; an increase of $1.42 in its case mix class F payment rate; an increase of $1.45 in
its case mix class G payment rate; an increase of $1.49 in its case mix class H payment rate; an
increase of $1.51 in its case mix class I payment rate; an increase of $1.54 in its case mix class J
payment rate; and an increase of $1.59 in its case mix class K payment rate;
(2) a nursing facility in Chisago County licensed for 101 nursing home beds on September
30, 1998, shall receive an increase of $3.67 in each case mix payment rate;
(3) a nursing facility in Canby, licensed for 75 beds shall have its property-related per diem
rate increased by $1.21. This increase shall be recognized in the facility's contract payment
rate under this section;
(4) a nursing facility in Golden Valley with all its beds licensed to provide residential
rehabilitative services to young adults under Minnesota Rules, parts 9570.2000 to 9570.3400,
shall have the payment rate computed according to this section increased by $14.83; and
(5) a county-owned 130-bed nursing facility in Park Rapids shall have its per diem
contract payment rate increased by $1.02 for costs related to compliance with comparable
worth requirements.
    Subd. 4b. Facility rate increases effective July 1, 2000. For the rate year beginning July 1,
2000, the nursing facilities described in clauses (1) to (6) shall receive the rate increases indicated.
The increases under this subdivision shall be added following the determination under section
256B.431, subdivision 28, of the payment rate for the rate year beginning July 1, 2000, and
shall be included in the facility's total payment rates for the purposes of determining future
rates under this section or any other section:
(1) a nursing facility in Hennepin County licensed for 290 beds shall receive an operating
cost per diem increase of 5.9 percent, provided that the facility delicenses, decertifies, or places on
layaway status, if that status is otherwise permitted by law, 70 beds;
(2) a nursing facility in Goodhue County licensed for 84 beds shall receive an increase of
$1.54 in each case mix payment rate;
(3) a nursing facility located in Rochester and licensed for 103 beds on January 1, 2000,
shall receive an increase in its case mix resident class A payment of $3.78, and an increase in the
payment rate for all other case mix classes of that amount multiplied by the class weight for that
case mix class established in Minnesota Rules, part 9549.0058, subpart 3;
(4) a nursing facility in Wright County licensed for 154 beds shall receive an increase of
$2.03 in each case mix payment rate to be used for employee wage and benefit enhancements;
(5) a facility in Todd County licensed for 78 beds, shall have its operating cost per diem
increased by the following amounts:
(i) case mix class A, $1.16;
(ii) case mix class B, $1.50;
(iii) case mix class C, $1.89;
(iv) case mix class D, $2.26;
(v) case mix class E, $2.63;
(vi) case mix class F, $2.65;
(vii) case mix class G, $2.96;
(viii) case mix class H, $3.55;
(ix) case mix class I, $3.76;
(x) case mix class J, $4.08; and
(xi) case mix class K, $4.76; and
(6) a nursing facility in Pine City that decertified 22 beds in calendar year 1999 shall have
its property-related per diem payment rate increased by $1.59.
    Subd. 4c. Facility rate increases effective January 1, 2002. For the rate period beginning
January 1, 2002, and for the rate year beginning July 1, 2002, a nursing facility in Morrison
County licensed for 83 beds as of March 1, 2001, shall receive an increase of $2.54 in each case
mix payment rate to offset property tax payments due as a result of the facility's conversion from
nonprofit to for-profit status. The increase under this subdivision shall be added following the
determination under this chapter of the payment rate for the rate year beginning July 1, 2001,
and shall be included in the facility's total payment rates for the purposes of determining future
rates under this section or any other section.
    Subd. 4d. Facility rate increases effective July 1, 2001. For the rate year beginning July 1,
2001, a nursing facility in Hennepin County licensed for 302 beds shall receive an increase of 29
cents in each case mix payment rate to correct an error in the cost-reporting system that occurred
prior to the date that the facility entered the alternative payment demonstration project. The
increase under this subdivision shall be added following the determination under this chapter of
the payment rate for the rate year beginning July 1, 2001, and shall be included in the facility's total
payment rates for the purposes of determining future rates under this section or any other section.
    Subd. 4e. Rate increase effective July 1, 2001. A nursing facility in Anoka County licensed
for 98 beds as of July 1, 2000, shall receive a total increase of $10 in each case mix rate for the
rate year beginning July 1, 2001, as a result of increases provided under this subdivision and
section 256B.431, subdivision 33. The increases under this subdivision shall be added prior to
the determination under section 256B.431, subdivision 33, of the payment rate for the rate year
beginning July 1, 2001, and shall be included in the facility's total payment rate for purposes of
determining future rates under this section or any other section through June 30, 2004.
    Subd. 4f. Construction project rate adjustments effective October 1, 2006. (a) Effective
October 1, 2006, facilities reimbursed under this section may receive a property rate adjustment
for construction projects exceeding the threshold in section 256B.431, subdivision 16, and below
the threshold in section 144A.071, subdivision 2, clause (a). For these projects, capital assets
purchased shall be counted as construction project costs for a rate adjustment request made
by a facility if they are: (1) purchased within 24 months of the completion of the construction
project; (2) purchased after the completion date of any prior construction project; and (3) are
not purchased prior to July 14, 2005. Except as otherwise provided in this subdivision, the
definitions, rate calculation methods, and principles in sections 144A.071 and 256B.431 and
Minnesota Rules, parts 9549.0010 to 9549.0080, shall be used to calculate rate adjustments
for allowable construction projects under this subdivision and section 144A.073. Facilities
completing construction projects between October 1, 2005, and October 1, 2006, are eligible to
have a property rate adjustment effective October 1, 2006. Facilities completing projects after
October 1, 2006, are eligible for a property rate adjustment effective on the first day of the month
following the completion date.
(b) Notwithstanding subdivision 18, as of July 14, 2005, facilities with rates set under section
256B.431 and Minnesota Rules, parts 9549.0010 to 9549.0080, that commenced a construction
project on or after October 1, 2004, and do not have a contract under subdivision 3 by September
30, 2006, are eligible to request a rate adjustment under section 256B.431, subdivision 10, through
September 30, 2006. If the request results in the commissioner determining a rate adjustment is
allowable, the rate adjustment is effective on the first of the month following project completion.
These facilities shall be allowed to accumulate construction project costs for the period October 1,
2004, to September 30, 2006.
(c) Facilities shall be allowed construction project rate adjustments no sooner than 12 months
after completing a previous construction project. Facilities must request the rate adjustment
according to section 256B.431, subdivision 10.
(d) Capacity days shall be computed according to Minnesota Rules, part 9549.0060, subpart
11. For rate calculations under this section, the number of licensed beds in the nursing facility
shall be the number existing after the construction project is completed and the number of days in
the nursing facility's reporting period shall be 365.
(e) The value of assets to be recognized for a total replacement project as defined in section
256B.431, subdivision 17d, shall be computed as described in clause (1). The value of assets to be
recognized for all other projects shall be computed as described in clause (2):
(1) Replacement-cost-new limits under section 256B.431, subdivision 17e, and the number of
beds allowed under subdivision 3a, paragraph (c), shall be used to compute the maximum amount
of assets allowable in a facility's property rate calculation. If a facility's current request for a rate
adjustment results from the completion of a construction project that was previously approved
under section 144A.073, the assets to be used in the rate calculation cannot exceed the lesser of
the amount determined under sections 144A.071, subdivision 2, and 144A.073, subdivision 3b, or
the actual allowable costs of the construction project. A current request that is not the result of a
project under section 144A.073 cannot exceed the limit under section 144A.071, subdivision 2,
paragraph (a). Applicable credits must be deducted from the cost of the construction project.
(2)(i) Replacement-cost-new limits under section 256B.431, subdivision 17e, and the number
of beds allowed under section 256B.431, subdivision 3a, paragraph (c), shall be used to compute
the maximum amount of assets allowable in a facility's property rate calculation.
(ii) The value of a facility's assets to be compared to the amount in item (i) begins with
the total appraised value from the last rate notice a facility received when its rates were set
under section 256B.431 and Minnesota Rules, parts 9549.0010 to 9549.0080. This value shall
be indexed by the factor in section 256B.431, subdivision 3f, paragraph (a), for each rate year
the facility received an inflation factor on its property-related rate when its rates were set under
this section. The value of assets listed as previous capital additions, capital additions, and special
projects on the facility's base year rate notice and the value of assets related to a construction
project for which the facility received a rate adjustment when its rates were determined under this
section shall be added to the indexed appraised value.
(iii) The maximum amount of assets to be recognized in computing a facility's rate adjustment
after a project is completed is the lesser of the aggregate replacement-cost-new limit computed in
(i) minus the assets recognized in (ii) or the actual allowable costs of the construction project.
(iv) If a facility's current request for a rate adjustment results from the completion of a
construction project that was previously approved under section 144A.073, the assets to be
added to the rate calculation cannot exceed the lesser of the amount determined under sections
144A.071, subdivision 2, and 144A.073, subdivision 3b, or the actual allowable costs of the
construction project. A current request that is not the result of a project under section 144A.073
cannot exceed the limit stated in section 144A.071, subdivision 2, paragraph (a). Assets disposed
of as a result of a construction project and applicable credits must be deducted from the cost
of the construction project.
(f) For construction projects approved under section 144A.073, allowable debt may never
exceed the lesser of the cost of the assets purchased, the threshold limit in section 144A.071,
subdivision 2, or the replacement-cost-new limit less previously existing capital debt.
(g) For construction projects that were not approved under section 144A.073, allowable debt
is limited to the lesser of the threshold in section 144A.071, subdivision 2, for such construction
projects or the applicable limit in paragraph (e), clause (1) or (2), less previously existing capital
debt. Amounts of debt taken out that exceed the costs of a construction project shall not be
allowed regardless of the use of the funds.
For all construction projects being recognized, interest expense and average debt shall
be computed based on the first 12 months following project completion. "Previously existing
capital debt" means capital debt recognized on the last rate determined under section 256B.431
and Minnesota Rules, parts 9549.0010 to 9549.0080, and the amount of debt recognized for
a construction project for which the facility received a rate adjustment when its rates were
determined under this section.
For a total replacement project as defined in section 256B.431, subdivision 17d, the value of
previously existing capital debt shall be zero.
(h) In addition to the interest expense allowed from the application of paragraph (f), the
amounts allowed under section 256B.431, subdivision 17a, paragraph (a), clauses (2) and (3),
will be added to interest expense.
(i) The equity portion of the construction project shall be computed as the allowable assets in
paragraph (e), less the average debt in paragraph (f). The equity portion must be multiplied by
5.66 percent and the allowable interest expense in paragraph (f) must be added. This sum must be
divided by 95 percent of capacity days to compute the construction project rate adjustment.
(j) For projects that are not a total replacement of a nursing facility, the amount in paragraph
(i) is adjusted for nonreimbursable areas and then added to the current property payment rate
of the facility.
(k) For projects that are a total replacement of a nursing facility, the amount in paragraph
(i) becomes the new property payment rate after being adjusted for nonreimbursable areas. Any
amounts existing in a facility's rate before the effective date of the construction project for equity
incentives under section 256B.431, subdivision 16; capital repairs and replacements under section
256B.431, subdivision 15; or refinancing incentives under section 256B.431, subdivision 19, shall
be removed from the facility's rates.
(l) No additional equipment allowance is allowed under Minnesota Rules, part 9549.0060,
subpart 10, as the result of construction projects under this section. Allowable equipment shall
be included in the construction project costs.
(m) Capital assets purchased after the completion date of a construction project shall be
counted as construction project costs for any future rate adjustment request made by a facility
under section 144A.071, subdivision 2, clause (a), if they are purchased within 24 months of the
completion of the future construction project.
(n) In subsequent rate years, the property payment rate for a facility that results from the
application of this subdivision shall be the amount inflated in subdivision 4.
(o) Construction projects are eligible for an equity incentive under section 256B.431,
subdivision 16. When computing the equity incentive for a construction project under this
subdivision, only the allowable costs and allowable debt related to the construction project shall
be used. The equity incentive shall not be a part of the property payment rate and not inflated
under subdivision 4. Effective October 1, 2006, all equity incentives for nursing facilities
reimbursed under this section shall be allowed for a duration determined under section 256B.431,
subdivision 16, paragraph (c).
    Subd. 4g. Facility rate increase effective October 1, 2007; Otter Tail County. For the rate
year beginning October 1, 2007, a nursing facility in Otter Tail County that was licensed for 57
beds as of December 31, 2004, shall receive a rate increase to increase its operating rate to the 60th
percentile of the operating rates of all other Otter Tail County nursing facilities. The commissioner
shall determine the 60th percentile of the case mix portion of the operating rates with a RUG's
weight of 1.0 of all other Otter Tail County nursing facilities and then apply the case mix weights.
The 60th percentile of the other operating per diem for all other Otter Tail County nursing facilities
will be added to the above-determined case mix rates to compute the operating payment rates.
The nonoperating components of the facility's rates will not be adjusted under this subdivision.
    Subd. 4h. Nursing facility rate increase effective October 1, 2007; Martin County. For
the rate year beginning October 1, 2007, the commissioner shall provide to a nursing facility in
Martin County licensed for 93 beds as of January 1, 2006, an increase in the total operating
payment rate of $5 per resident day for all case mix classes.
    Subd. 5.[Repealed, 1Sp2001 c 9 art 5 s 41]
    Subd. 6. Contract payment rates; appeals. If an appeal is pending concerning the
cost-based payment rates that are the basis for the calculation of the payment rate under the
alternative payment demonstration project, the commissioner and the nursing facility may agree
on an interim contract rate to be used until the appeal is resolved. When the appeal is resolved, the
contract rate must be adjusted retroactively in accordance with the appeal decision.
    Subd. 7. Case mix assessments. The commissioner may allow a contract facility to develop
and implement a case mix assessment using the federal minimum data set resident assessment.
    Subd. 8. Optional higher payments for first 100 days. The commissioner may include
in the contract with a nursing facility under this section a higher rate for the first 100 days after
admission than for subsequent days. The rate for the subsequent days must be reduced so that
the estimated total cost to the medical assistance program will not exceed the estimated cost
without the differential payment rates.
    Subd. 9. Managed care contracts for other services. Beginning July 1, 1995, the
commissioner may contract with nursing facilities that have entered into alternative payment
demonstration project contracts under this section to provide medical assistance services other
than nursing facility care to residents of the facility under a prepaid, managed care payment
system. Managed care contracts for other services may be entered into at any time during the
duration of a nursing facility's alternative payment demonstration project contract, and the terms
of the managed care contracts need not coincide with the terms of the alternative payment
demonstration project contract.
    Subd. 10. Exemptions. (a) To the extent permitted by federal law, (1) a facility that
has entered into a contract under this section is not required to file a cost report, as defined
in Minnesota Rules, part 9549.0020, subpart 13, for any year after the base year that is the
basis for the calculation of the contract payment rate for the first rate year of the alternative
payment demonstration project contract; and (2) a facility under contract is not subject to audits
of historical costs or revenues, or paybacks or retroactive adjustments based on these costs or
revenues, except audits, paybacks, or adjustments relating to the cost report that is the basis for
calculation of the first rate year under the contract.
(b) A facility that is under contract with the commissioner under this section is not subject
to the moratorium on licensure or certification of new nursing home beds in section 144A.071,
unless the project results in a net increase in bed capacity or involves relocation of beds from
one site to another. Contract payment rates must not be adjusted to reflect any additional costs
that a nursing facility incurs as a result of a construction project undertaken under this paragraph.
In addition, as a condition of entering into a contract under this section, a nursing facility
must agree that any future medical assistance payments for nursing facility services will not
reflect any additional costs attributable to the sale of a nursing facility under this section and to
construction undertaken under this paragraph that otherwise would not be authorized under the
moratorium in section 144A.073. Nothing in this section prevents a nursing facility participating
in the alternative payment demonstration project under this section from seeking approval of an
exception to the moratorium through the process established in section 144A.073, and if approved
the facility's rates shall be adjusted to reflect the cost of the project. Nothing in this section
prevents a nursing facility participating in the alternative payment demonstration project from
seeking legislative approval of an exception to the moratorium under section 144A.071, and, if
enacted, the facility's rates shall be adjusted to reflect the cost of the project.
(c) Notwithstanding section 256B.48, subdivision 6, paragraphs (c), (d), and (e), and
pursuant to any terms and conditions contained in the facility's contract, a nursing facility that is
under contract with the commissioner under this section is in compliance with section 256B.48,
subdivision 6
, paragraph (b), if the facility is Medicare certified.
(d) Notwithstanding paragraph (a), if by April 1, 1996, the health care financing
administration has not approved a required waiver, or the Centers for Medicare and Medicaid
Services otherwise requires cost reports to be filed prior to the waiver's approval, the commissioner
shall require a cost report for the rate year.
(e) A facility that is under contract with the commissioner under this section shall be allowed
to change therapy arrangements from an unrelated vendor to a related vendor during the term of
the contract. The commissioner may develop reasonable requirements designed to prevent an
increase in therapy utilization for residents enrolled in the medical assistance program.
(f) Nursing facilities participating in the alternative payment system demonstration
project must either participate in the alternative payment system quality improvement program
established by the commissioner or submit information on their own quality improvement process
to the commissioner for approval. Nursing facilities that have had their own quality improvement
process approved by the commissioner must report results for at least one key area of quality
improvement annually to the commissioner.
    Subd. 11. Consumer protection. As a condition of entering into a contract under this
section, a nursing facility must agree to establish resident grievance procedures that are similar to
those required under section 256.045, subdivision 3. The commissioner may also require nursing
facilities to establish expedited grievance procedures to resolve complaints made by short-stay
residents. The facility must notify its resident council of its intent to enter into a contract and must
consult with the council regarding any changes in operation expected as a result of the contract.
    Subd. 12. Contracts are voluntary. Participation of nursing facilities in the alternative
payment demonstration project is voluntary. The terms and procedures governing the alternative
payment demonstration project are determined under this section and through negotiations
between the commissioner and nursing facilities that have submitted a letter of intent to participate
in the alternative demonstration project. For purposes of developing requests for proposals and
contract requirements, and negotiating the terms, conditions, and requirements of contracts the
commissioner is exempt from the rulemaking requirements in chapter 14 until December 31, 2000.
    Subd. 13.[Repealed, 2001 c 161 s 58]
    Subd. 14. Federal requirements. The commissioner shall implement the contractual
alternative payment demonstration project subject to any required federal waivers or approval
and in a manner that is consistent with federal requirements. If a provision of this section is
inconsistent with a federal requirement the federal requirement supersedes the inconsistent
provision. The commissioner shall seek federal approval and request waivers as necessary
to implement this section.
    Subd. 15. External review panel. The commissioner may establish an external review panel
consisting of persons appointed by the commissioner for their expertise on issues relating to
nursing facility services, quality, payment systems, and other matters, to advise the commissioner
on the development and implementation of the contractual alternative payment demonstration
project and to assist the commissioner in assessing the quality of care provided and evaluating
a facility's compliance with performance standards specified in a contract. The external review
panel must include, among other members, representatives of nursing facilities.
    Subd. 16. Alternative contracts. The commissioner may also contract with nursing facilities
in other ways through requests for proposals, including contracts on a risk or nonrisk basis,
with nursing facilities or consortia of nursing facilities, to provide comprehensive long-term
care coverage on a premium or capitated basis.
    Subd. 17.[Repealed, 1999 c 245 art 3 s 51]
    Subd. 18. Facilities without APS contracts as of October 1, 2006. Effective October
1, 2006, payment rates for property shall no longer be determined under section 256B.431. A
facility that does not have a contract with the commissioner under this section shall not be
eligible for a rate increase.
History: 1995 c 207 art 7 s 32; 1996 c 451 art 5 s 28; 1997 c 187 art 4 s 8; 1997 c 203 art 3
s 10-12; art 9 s 11,12; 1998 c 407 art 3 s 13; 1999 c 245 art 3 s 21-24; 2000 c 449 s 13,14; 2000 c
488 art 9 s 22; 1Sp2001 c 9 art 5 s 23-26; 2002 c 277 s 32; 2002 c 370 art 1 s 113; 2003 c 55 s 4;
1Sp2003 c 14 art 2 s 36,37,57; 1Sp2005 c 4 art 7 s 40-42; 2006 c 282 art 20 s 21-24