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S.F. No. 273 - Nursing Facility Payment Reform - the Second Engrossment
 
Author: Senator Tony Lourey
 
Prepared By: Liam Monahan, Senate Analyst (651/296-1791)
 
Date: April 14, 2015



 

S.F. 273 contains revisions to the value-based nursing facility reimbursement system contained in Minnesota Statutes 2014, section 256B.441.  The revisions result in a new payment system based on an existing quality scoring system. The new system includes a new property rate system to be developed by the Commissioner of Human Services, an additional rate increase for specialized care facilities, a hold harmless provision, and an automatic annual inflation adjustment to be applied to portions of the total operating payment. S.F. 273 also links the new rate system for nursing facilities to the rates to be offered to elderly waiver clients and certain group residential housing.

Section 1 (256B.0915, subdivision 3a): Current law restricts rate adjustments for the cost of waivered services provided to an individual elderly waiver client to legislatively adopted home and community-based services percentage rate adjustments.  Section 1 provides for rate adjustments to be the greater of the legislatively adopted home and community-based services percentage rate increase or the average of the statewide percentage increase in nursing facility operating payments rates under the value-based nursing facility reimbursement system (section 256B.441).

Section 2 (256B.431, subdivision 2b) requires a rate adjustment to be included in a nursing facility’s external fixed costs whenever the facility incurs excessive costs due to the accommodation of special dietary needs.

Section 3 (256B.441, subdivision 1, paragraphs (a) – (c)) strikes nursing facility rebasing language and replaces it with the requirement that each year, beginning in 2015, the Commissioner of Human Services calculate nursing facilities’ annual operating payment rates on the basis of the facilities’ cost reports from two years prior (e.g., the payment rates for 2015-2016 are based on the cost reports from 2013-2014).

 Paragraph (d) requires the commissioner to develop a new property payment rate system, and to use this new system to calculate property payment rates beginning in October, 2016.

Section 4 (256B.441, subdivision 5) includes property insurance as an administrative cost. (Section 6 removes property insurance from external fixed costs).

Section 5 (256B.441, subdivision 11a) adds a new subdivision defining employer health insurance costs. (In section 6, these costs are included in the definition of external fixed costs.)

Section 6 (256B.441, subdivision 13) removes long-term consultation fees and property insurance from the definition of external fixed costs but includes employer health insurance costs and certain costs associated with special dietary needs. Section 6 also includes in the definition of external fixed costs any shared responsibility payments under the Affordable Care Act.

Section 7 (256B.441, subdivision 14) replaces the previously defined RUG’s weights with the RUG’s weights prescribed in section 256B.438.

Section 8 (256B.441, subdivision 17) removes health insurance costs from fringe benefit costs and clarifies that health insurance is excluded from other employee insurance, and that PERA is excluded from pensions.

Section 9 (256B.441, subdivision 30) consolidates the three current geographical peer groups into two geographical peer groups and requires the commissioner to regularly review the appropriations to the peer groups, and to provide the legislature with biannual reports on wage data.

Section 10 (256B.441, subdivision 31) modifies the rate system used in the hold harmless provision (see section 18) from the rate system in effect on September 30, 2008, to the rate system in effect on September 30, 2015.

Section 11 (256B.441, subdivision 35) allows exceptions to the reporting period beginning date for facilities that are filing interim or settle-up period reports.

Section 12 (256B.441, subdivision 48) changes the name “operating per diem” to “care-related per diem” and moves the costs associated with other operating per diem from the care-related per diem to the other operating price (see section 14).

Section 13 (256B.441, subdivision 50) modifies the total care-related per diem limits. The calculation of the total care-related per diem limit begins with two calculations: (1) the calculation of the median of the total care-related per diem for each of the two geographical peer groups, and (2) each facility's individual quality score as determined under section 256B.441, subdivision 44, which is not amended by this bill.  If a facility has a quality score of ten or less, then the total care-related per diem limit is 95 percent of the median total care-related per diem of its geographical peer group.  If a facility has a quality score of 90 or more, then the total care-related limit is 140 percent of the median total care-related per diem of its geographical peer group. If a facility has a quality score greater than ten but less than 90, then its total care-related per diem limit will be a function of its quality score and the median total care-related per diem of its geographical peer group. Any facility with total care-related costs in excess of its total care-related limit will have its total care-related per diem reduced to its limit.

Section 14 (256B.441, subdivision 51) sets the other operating price for any facility equal to 105 percent of the median other operating per diem for the facility’s peer group.

Section 15 (256B.441, subdivision 51a) increases by 50 percent the total care-related limit for specialized care facilities, which are defined only as Rule 80 facilities or a certain facility in Robbinsdale.

 Section 16 (256B.441, subdivision 53) reorganizes some of the paragraphs describing the calculations for the external fixed costs payment rate, and:

  1. eliminates the costs associated with long-term care consultations from the external fixed costs payment rate;
  2. eliminates language that excludes planned closure rate adjustments from the external fixed costs payment rate;
  3. eliminates language that excludes single bedroom incentives from the external fixed costs payment rate;
  4. provides instructions for calculating the portion of the external fixed costs payment rate attributable to employer health insurance costs; and
  5. includes rate adjustments for special dietary needs.

Section 17 (256B.441, subdivision 54) introduces into the existing calculation of the total payment rate an automatic annual inflation adjustment for the total care-related per diem, the other operating price, and the external fixed cost per diem.

Section 18 (256B.441, subdivision 56) modifies the hold harmless provision by stating that no nursing facility shall receive an operating cost payment rate less than the rate it received under the rate system in place on September 30, 2015.

Section 19 (256I.05, subdivision 2) allows the payment system under section 256B.441 to be applied to certain group residential housing settings.

Section 20 repeals seven subdivisions of 256B.441.

  1. The repeal of section 256B.441, subdivision 14a, removes the classification of nursing facilities into facility types.
  2. The repeal of section 256B.441, subdivision 19, eliminates the category of hospital-attached nursing facility for the purposes of determining operating payment rates under section 256B.441.
  3. The repeal of section 256B.441, subdivision 50a, eliminates “proximity adjustments,” which are currently offered to a facility in close proximity to a facility in a different peer group with a higher limit for care-related or other operating costs.
  4. The repeal of section 256B.441, subdivision 52, eliminates efficiency incentives designed to reduce other operating per diems.
  5. The repeal of section 256B.441, subdivision 55, eliminates the phase-in provision for section 256B.441.
  6. The repeal of section 256B.441, subdivision 58, eliminates the implementation delays of section 256B.441.
  7. The repeal of section 256B.441, subdivision 62, eliminates the repeal of the rebased operating payment rates contained in section 256B.441.

 

 

 

 
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