1.1                          A bill for an act 
  1.2             relating to nursing homes; changing staffing ratios; 
  1.3             modifying exceptions for beds; changing nursing 
  1.4             facility salary adjustment per diem; prohibiting costs 
  1.5             for unionization for use in setting payment rates; 
  1.6             changing nursing facility reimbursement; amending 
  1.7             Minnesota Statutes 1996, sections 144A.04, subdivision 
  1.8             7; 256B.431, subdivision 2i, and by adding a 
  1.9             subdivision; Minnesota Statutes 1997 Supplement, 
  1.10            sections 144A.071, subdivision 4a; and 256B.431, 
  1.11            subdivisions 25 and 26. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13     Section 1.  Minnesota Statutes 1996, section 144A.04, 
  1.14  subdivision 7, is amended to read: 
  1.15     Subd. 7.  [MINIMUM NURSING STAFF REQUIREMENT.] 
  1.16  Notwithstanding the provisions of Minnesota Rules, part 
  1.17  4655.5600, the minimum staffing standard for nursing personnel 
  1.18  in certified nursing homes is as follows: 
  1.19     (a) ~~The minimum number of hours of nursing personnel to be~~ 
  1.20  ~~provided in a nursing home is the greater of two hours per~~ 
  1.21  ~~resident per 24 hours or 0.95 hours per standardized resident~~ 
  1.22  ~~day.~~ A nursing home shall maintain a ratio of residents to 
  1.23  nonlicensed nursing personnel of no more than: 
  1.24     (1) 8:1 during a morning shift; 
  1.25     (2) 10:1 during a day shift; and 
  1.26     (3) 15:1 during an evening shift. 
  1.27     (b) ~~For purposes of this subdivision, "hours of nursing~~ 
  1.28  ~~personnel" means the paid, on-duty, productive nursing hours of~~ 
  2.1   ~~all nurses and nursing assistants, calculated on the basis of~~ 
  2.2   ~~any given 24-hour period.  "Productive nursing hours" means all~~ 
  2.3   ~~on-duty hours during which nurses and nursing assistants are~~ 
  2.4   ~~engaged in nursing duties.  Examples of nursing duties may be~~ 
  2.5   ~~found in Minnesota Rules, parts 4655.5900, 4655.6100, and~~ 
  2.6   ~~4655.6400.  Not included are vacations, holidays, sick leave,~~ 
  2.7   ~~in-service classroom training, or lunches.  Also not included~~ 
  2.8   ~~are the nonproductive nursing hours of the in-service training~~ 
  2.9   ~~director.  In homes with more than 60 licensed beds, the hours~~ 
  2.10  ~~of the director of nursing are excluded.  "Standardized resident~~ 
  2.11  ~~day" means the sum of the number of residents in each case mix~~ 
  2.12  ~~class multiplied by the case mix weight for that resident class,~~ 
  2.13  ~~as found in Minnesota Rules, part 9549.0059, subpart 2,~~ 
  2.14  ~~calculated on the basis of a facility's census for any given~~ 
  2.15  ~~day.  For the purpose of determining a facility's census, the~~ 
  2.16  ~~commissioner of health shall exclude the resident days claimed~~ 
  2.17  ~~by the facility for resident therapeutic leave or bed hold days.~~ 
  2.18  A person employed to provide services such as food preparation, 
  2.19  housekeeping, laundry, or maintenance services shall not provide 
  2.20  nursing care to residents and shall not be counted in 
  2.21  determining the ratios in paragraph (a). 
  2.22     (c) ~~Calculation of nursing hours per standardized resident~~ 
  2.23  ~~day is performed by dividing total hours of nursing personnel~~ 
  2.24  ~~for a given period by the total of standardized resident days~~ 
  2.25  ~~for that same period.~~ A nursing home shall post for each wing 
  2.26  and floor of the facility and for each shift the current number 
  2.27  of licensed and nonlicensed nursing staff directly responsible 
  2.28  for resident care and the current ratios of residents to staff, 
  2.29  which show separately the number of residents to licensed 
  2.30  nursing staff and the number of residents to nonlicensed nursing 
  2.31  staff.  In addition, such information shall be posted for the 
  2.32  most recently concluded cost reporting period in the form of 
  2.33  average daily staffing ratios for the period.  This information 
  2.34  must be posted in a manner which is visible and accessible to 
  2.35  all residents, their families, caregivers, and potential 
  2.36  consumers in each facility. 
  3.1      (d) A nursing home that is issued a notice of noncompliance 
  3.2   under section 144A.10, subdivision 5, for a violation of this 
  3.3   subdivision, shall be assessed a civil fine of $300 for each day 
  3.4   of noncompliance, subject to section 144A.10, subdivisions 7 and 
  3.5   8. 
  3.6      Sec. 2.  Minnesota Statutes 1997 Supplement, section 
  3.7   144A.071, subdivision 4a, is amended to read: 
  3.8      Subd. 4a.  [EXCEPTIONS FOR REPLACEMENT BEDS.] It is in the 
  3.9   best interest of the state to ensure that nursing homes and 
  3.10  boarding care homes continue to meet the physical plant 
  3.11  licensing and certification requirements by permitting certain 
  3.12  construction projects.  Facilities should be maintained in 
  3.13  condition to satisfy the physical and emotional needs of 
  3.14  residents while allowing the state to maintain control over 
  3.15  nursing home expenditure growth. 
  3.16     The commissioner of health in coordination with the 
  3.17  commissioner of human services, may approve the renovation, 
  3.18  replacement, upgrading, or relocation of a nursing home or 
  3.19  boarding care home, under the following conditions: 
  3.20     (a) to license or certify beds in a new facility 
  3.21  constructed to replace a facility or to make repairs in an 
  3.22  existing facility that was destroyed or damaged after June 30, 
  3.23  1987, by fire, lightning, or other hazard provided:  
  3.24     (i) destruction was not caused by the intentional act of or 
  3.25  at the direction of a controlling person of the facility; 
  3.26     (ii) at the time the facility was destroyed or damaged the 
  3.27  controlling persons of the facility maintained insurance 
  3.28  coverage for the type of hazard that occurred in an amount that 
  3.29  a reasonable person would conclude was adequate; 
  3.30     (iii) the net proceeds from an insurance settlement for the 
  3.31  damages caused by the hazard are applied to the cost of the new 
  3.32  facility or repairs; 
  3.33     (iv) the new facility is constructed on the same site as 
  3.34  the destroyed facility or on another site subject to the 
  3.35  restrictions in section 144A.073, subdivision 5; 
  3.36     (v) the number of licensed and certified beds in the new 
  4.1   facility does not exceed the number of licensed and certified 
  4.2   beds in the destroyed facility; and 
  4.3      (vi) the commissioner determines that the replacement beds 
  4.4   are needed to prevent an inadequate supply of beds. 
  4.5   Project construction costs incurred for repairs authorized under 
  4.6   this clause shall not be considered in the dollar threshold 
  4.7   amount defined in subdivision 2; 
  4.8      (b) to license or certify beds that are moved from one 
  4.9   location to another within a nursing home facility, provided the 
  4.10  total costs of remodeling performed in conjunction with the 
  4.11  relocation of beds does not exceed $750,000; 
  4.12     (c) to license or certify beds in a project recommended for 
  4.13  approval under section 144A.073; 
  4.14     (d) to license or certify beds that are moved from an 
  4.15  existing state nursing home to a different state facility, 
  4.16  provided there is no net increase in the number of state nursing 
  4.17  home beds; 
  4.18     (e) to certify and license as nursing home beds boarding 
  4.19  care beds in a certified boarding care facility if the beds meet 
  4.20  the standards for nursing home licensure, or in a facility that 
  4.21  was granted an exception to the moratorium under section 
  4.22  144A.073, and if the cost of any remodeling of the facility does 
  4.23  not exceed $750,000.  If boarding care beds are licensed as 
  4.24  nursing home beds, the number of boarding care beds in the 
  4.25  facility must not increase beyond the number remaining at the 
  4.26  time of the upgrade in licensure.  The provisions contained in 
  4.27  section 144A.073 regarding the upgrading of the facilities do 
  4.28  not apply to facilities that satisfy these requirements; 
  4.29     (f) to license and certify up to 40 beds transferred from 
  4.30  an existing facility owned and operated by the Amherst H. Wilder 
  4.31  Foundation in the city of St. Paul to a new unit at the same 
  4.32  location as the existing facility that will serve persons with 
  4.33  Alzheimer's disease and other related disorders.  The transfer 
  4.34  of beds may occur gradually or in stages, provided the total 
  4.35  number of beds transferred does not exceed 40.  At the time of 
  4.36  licensure and certification of a bed or beds in the new unit, 
  5.1   the commissioner of health shall delicense and decertify the 
  5.2   same number of beds in the existing facility.  As a condition of 
  5.3   receiving a license or certification under this clause, the 
  5.4   facility must make a written commitment to the commissioner of 
  5.5   human services that it will not seek to receive an increase in 
  5.6   its property-related payment rate as a result of the transfers 
  5.7   allowed under this paragraph; 
  5.8      (g) to license and certify nursing home beds to replace 
  5.9   currently licensed and certified boarding care beds which may be 
  5.10  located either in a remodeled or renovated boarding care or 
  5.11  nursing home facility or in a remodeled, renovated, newly 
  5.12  constructed, or replacement nursing home facility within the 
  5.13  identifiable complex of health care facilities in which the 
  5.14  currently licensed boarding care beds are presently located, 
  5.15  provided that the number of boarding care beds in the facility 
  5.16  or complex are decreased by the number to be licensed as nursing 
  5.17  home beds and further provided that, if the total costs of new 
  5.18  construction, replacement, remodeling, or renovation exceed ten 
  5.19  percent of the appraised value of the facility or $200,000, 
  5.20  whichever is less, the facility makes a written commitment to 
  5.21  the commissioner of human services that it will not seek to 
  5.22  receive an increase in its property-related payment rate by 
  5.23  reason of the new construction, replacement, remodeling, or 
  5.24  renovation.  The provisions contained in section 144A.073 
  5.25  regarding the upgrading of facilities do not apply to facilities 
  5.26  that satisfy these requirements; 
  5.27     (h) to license as a nursing home and certify as a nursing 
  5.28  facility a facility that is licensed as a boarding care facility 
  5.29  but not certified under the medical assistance program, but only 
  5.30  if the commissioner of human services certifies to the 
  5.31  commissioner of health that licensing the facility as a nursing 
  5.32  home and certifying the facility as a nursing facility will 
  5.33  result in a net annual savings to the state general fund of 
  5.34  $200,000 or more; 
  5.35     (i) to certify, after September 30, 1992, and prior to July 
  5.36  1, 1993, existing nursing home beds in a facility that was 
  6.1   licensed and in operation prior to January 1, 1992; 
  6.2      (j) to license and certify new nursing home beds to replace 
  6.3   beds in a facility condemned as part of an economic 
  6.4   redevelopment plan in a city of the first class, provided the 
  6.5   new facility is located within one mile of the site of the old 
  6.6   facility.  Operating and property costs for the new facility 
  6.7   must be determined and allowed under existing reimbursement 
  6.8   rules; 
  6.9      (k) to license and certify up to 20 new nursing home beds 
  6.10  in a community-operated hospital and attached convalescent and 
  6.11  nursing care facility with 40 beds on April 21, 1991, that 
  6.12  suspended operation of the hospital in April 1986.  The 
  6.13  commissioner of human services shall provide the facility with 
  6.14  the same per diem property-related payment rate for each 
  6.15  additional licensed and certified bed as it will receive for its 
  6.16  existing 40 beds; 
  6.17     (l) to license or certify beds in renovation, replacement, 
  6.18  or upgrading projects as defined in section 144A.073, 
  6.19  subdivision 1, so long as the cumulative total costs of the 
  6.20  facility's remodeling projects do not exceed $750,000; 
  6.21     (m) to license and certify beds that are moved from one 
  6.22  location to another for the purposes of converting up to five 
  6.23  four-bed wards to single or double occupancy rooms in a nursing 
  6.24  home that, as of January 1, 1993, was county-owned and had a 
  6.25  licensed capacity of 115 beds; 
  6.26     (n) to allow a facility that on April 16, 1993, was a 
  6.27  106-bed licensed and certified nursing facility located in 
  6.28  Minneapolis to layaway all of its licensed and certified nursing 
  6.29  home beds.  These beds may be relicensed and recertified in a 
  6.30  newly-constructed teaching nursing home facility affiliated with 
  6.31  a teaching hospital upon approval by the legislature.  The 
  6.32  proposal must be developed in consultation with the interagency 
  6.33  committee on long-term care planning.  The beds on layaway 
  6.34  status shall have the same status as voluntarily delicensed and 
  6.35  decertified beds, except that beds on layaway status remain 
  6.36  subject to the surcharge in section 256.9657.  This layaway 
  7.1   provision expires July 1, 1998; 
  7.2      (o) to allow a project which will be completed in 
  7.3   conjunction with an approved moratorium exception project for a 
  7.4   nursing home in southern Cass county and which is directly 
  7.5   related to that portion of the facility that must be repaired, 
  7.6   renovated, or replaced, to correct an emergency plumbing problem 
  7.7   for which a state correction order has been issued and which 
  7.8   must be corrected by August 31, 1993; 
  7.9      (p) to allow a facility that on April 16, 1993, was a 
  7.10  368-bed licensed and certified nursing facility located in 
  7.11  Minneapolis to layaway, upon 30 days prior written notice to the 
  7.12  commissioner, up to 30 of the facility's licensed and certified 
  7.13  beds by converting three-bed wards to single or double 
  7.14  occupancy.  Beds on layaway status shall have the same status as 
  7.15  voluntarily delicensed and decertified beds except that beds on 
  7.16  layaway status remain subject to the surcharge in section 
  7.17  256.9657, remain subject to the license application and renewal 
  7.18  fees under section 144A.07 and shall be subject to a $100 per 
  7.19  bed reactivation fee.  In addition, at any time within three 
  7.20  years of the effective date of the layaway, the beds on layaway 
  7.21  status may be: 
  7.22     (1) relicensed and recertified upon relocation and 
  7.23  reactivation of some or all of the beds to an existing licensed 
  7.24  and certified facility or facilities located in Pine River, 
  7.25  Brainerd, or International Falls; provided that the total 
  7.26  project construction costs related to the relocation of beds 
  7.27  from layaway status for any facility receiving relocated beds 
  7.28  may not exceed the dollar threshold provided in subdivision 2 
  7.29  unless the construction project has been approved through the 
  7.30  moratorium exception process under section 144A.073; 
  7.31     (2) relicensed and recertified, upon reactivation of some 
  7.32  or all of the beds within the facility which placed the beds in 
  7.33  layaway status, if the commissioner has determined a need for 
  7.34  the reactivation of the beds on layaway status. 
  7.35     The property-related payment rate of a facility placing 
  7.36  beds on layaway status must be adjusted by the incremental 
  8.1   change in its rental per diem after recalculating the rental per 
  8.2   diem as provided in section 256B.431, subdivision 3a, paragraph 
  8.3   (d).  The property-related payment rate for a facility 
  8.4   relicensing and recertifying beds from layaway status must be 
  8.5   adjusted by the incremental change in its rental per diem after 
  8.6   recalculating its rental per diem using the number of beds after 
  8.7   the relicensing to establish the facility's capacity day 
  8.8   divisor, which shall be effective the first day of the month 
  8.9   following the month in which the relicensing and recertification 
  8.10  became effective.  Any beds remaining on layaway status more 
  8.11  than three years after the date the layaway status became 
  8.12  effective must be removed from layaway status and immediately 
  8.13  delicensed and decertified; 
  8.14     (q) to license and certify beds in a renovation and 
  8.15  remodeling project to convert 12 four-bed wards into 24 two-bed 
  8.16  rooms, expand space, and add improvements in a nursing home 
  8.17  that, as of January 1, 1994, met the following conditions:  the 
  8.18  nursing home was located in Ramsey county; had a licensed 
  8.19  capacity of 154 beds; and had been ranked among the top 15 
  8.20  applicants by the 1993 moratorium exceptions advisory review 
  8.21  panel.  The total project construction cost estimate for this 
  8.22  project must not exceed the cost estimate submitted in 
  8.23  connection with the 1993 moratorium exception process; 
  8.24     (r) to license and certify up to 117 beds that are 
  8.25  relocated from a licensed and certified 138-bed nursing facility 
  8.26  located in St. Paul to a hospital with 130 licensed hospital 
  8.27  beds located in South St. Paul, provided that the nursing 
  8.28  facility and hospital are owned by the same or a related 
  8.29  organization and that prior to the date the relocation is 
  8.30  completed the hospital ceases operation of its inpatient 
  8.31  hospital services at that hospital.  After relocation, the 
  8.32  nursing facility's status under section 256B.431, subdivision 
  8.33  2j, shall be the same as it was prior to relocation.  The 
  8.34  nursing facility's property-related payment rate resulting from 
  8.35  the project authorized in this paragraph shall become effective 
  8.36  no earlier than April 1, 1996.  For purposes of calculating the 
  9.1   incremental change in the facility's rental per diem resulting 
  9.2   from this project, the allowable appraised value of the nursing 
  9.3   facility portion of the existing health care facility physical 
  9.4   plant prior to the renovation and relocation may not exceed 
  9.5   $2,490,000; 
  9.6      (s) to license and certify two beds in a facility to 
  9.7   replace beds that were voluntarily delicensed and decertified on 
  9.8   June 28, 1991; 
  9.9      (t) to allow 16 licensed and certified beds located on July 
  9.10  1, 1994, in a 142-bed nursing home and 21-bed boarding care home 
  9.11  facility in Minneapolis, notwithstanding the licensure and 
  9.12  certification after July 1, 1995, of the Minneapolis facility as 
  9.13  a 147-bed nursing home facility after completion of a 
  9.14  construction project approved in 1993 under section 144A.073, to 
  9.15  be laid away upon 30 days' prior written notice to the 
  9.16  commissioner.  Beds on layaway status shall have the same status 
  9.17  as voluntarily delicensed or decertified beds except that they 
  9.18  shall remain subject to the surcharge in section 256.9657.  The 
  9.19  16 beds on layaway status may be relicensed as nursing home beds 
  9.20  and recertified at any time within five years of the effective 
  9.21  date of the layaway upon relocation of some or all of the beds 
  9.22  to a licensed and certified facility located in Watertown, 
  9.23  provided that the total project construction costs related to 
  9.24  the relocation of beds from layaway status for the Watertown 
  9.25  facility may not exceed the dollar threshold provided in 
  9.26  subdivision 2 unless the construction project has been approved 
  9.27  through the moratorium exception process under section 144A.073. 
  9.28     The property-related payment rate of the facility placing 
  9.29  beds on layaway status must be adjusted by the incremental 
  9.30  change in its rental per diem after recalculating the rental per 
  9.31  diem as provided in section 256B.431, subdivision 3a, paragraph 
  9.32  (d).  The property-related payment rate for the facility 
  9.33  relicensing and recertifying beds from layaway status must be 
  9.34  adjusted by the incremental change in its rental per diem after 
  9.35  recalculating its rental per diem using the number of beds after 
  9.36  the relicensing to establish the facility's capacity day 
 10.1   divisor, which shall be effective the first day of the month 
 10.2   following the month in which the relicensing and recertification 
 10.3   became effective.  Any beds remaining on layaway status more 
 10.4   than five years after the date the layaway status became 
 10.5   effective must be removed from layaway status and immediately 
 10.6   delicensed and decertified; 
 10.7      (u) to license and certify beds that are moved within an 
 10.8   existing area of a facility or to a newly constructed addition 
 10.9   which is built for the purpose of eliminating three- and 
 10.10  four-bed rooms and adding space for dining, lounge areas, 
 10.11  bathing rooms, and ancillary service areas in a nursing home 
 10.12  that, as of January 1, 1995, was located in Fridley and had a 
 10.13  licensed capacity of 129 beds; 
 10.14     (v) to relocate 36 beds in Crow Wing county and four beds 
 10.15  from Hennepin county to a 160-bed facility in Crow Wing county, 
 10.16  provided all the affected beds are under common ownership; 
 10.17     (w) to license and certify a total replacement project of 
 10.18  up to 49 beds located in Norman county that are relocated from a 
 10.19  nursing home destroyed by flood and whose residents were 
 10.20  relocated to other nursing homes.  The operating cost payment 
 10.21  rates for the new nursing facility shall be determined based on 
 10.22  the interim and settle-up payment provisions of Minnesota Rules, 
 10.23  part 9549.0057, and the reimbursement provisions of section 
 10.24  256B.431~~, except that subdivision 26, paragraphs (a) and (b),~~ 
 10.25  ~~shall not apply until the second rate year after the settle-up~~ 
 10.26  ~~cost report is filed~~.  Property-related reimbursement rates 
 10.27  shall be determined under section 256B.431, taking into account 
 10.28  any federal or state flood-related loans or grants provided to 
 10.29  the facility; 
 10.30     (x) to license and certify a total replacement project of 
 10.31  up to 129 beds located in Polk county that are relocated from a 
 10.32  nursing home destroyed by flood and whose residents were 
 10.33  relocated to other nursing homes.  The operating cost payment 
 10.34  rates for the new nursing facility shall be determined based on 
 10.35  the interim and settle-up payment provisions of Minnesota Rules, 
 10.36  part 9549.0057, and the reimbursement provisions of section 
 11.1   256B.431~~, except that subdivision 26, paragraphs (a) and (b),~~ 
 11.2   ~~shall not apply until the second rate year after the settle-up~~ 
 11.3   ~~cost report is filed~~.  Property-related reimbursement rates 
 11.4   shall be determined under section 256B.431, taking into account 
 11.5   any federal or state flood-related loans or grants provided to 
 11.6   the facility; or 
 11.7      (y) to license and certify beds in a renovation and 
 11.8   remodeling project to convert 13 three-bed wards into 13 two-bed 
 11.9   rooms and 13 single-bed rooms, expand space, and add 
 11.10  improvements in a nursing home that, as of January 1, 1994, met 
 11.11  the following conditions:  the nursing home was located in 
 11.12  Ramsey county, was not owned by a hospital corporation, had a 
 11.13  licensed capacity of 64 beds, and had been ranked among the top 
 11.14  15 applicants by the 1993 moratorium exceptions advisory review 
 11.15  panel.  The total project construction cost estimate for this 
 11.16  project must not exceed the cost estimate submitted in 
 11.17  connection with the 1993 moratorium exception process. 
 11.18     Sec. 3.  Minnesota Statutes 1996, section 256B.431, 
 11.19  subdivision 2i, is amended to read: 
 11.20     Subd. 2i.  [OPERATING COSTS AFTER JULY 1, 1988.] (a)  
 11.21  [OTHER OPERATING COST LIMITS.] For the rate year beginning July 
 11.22  1, 1988, the commissioner shall increase the other operating 
 11.23  cost limits established in Minnesota Rules, part 9549.0055, 
 11.24  subpart 2, item E, to 110 percent of the median of the array of 
 11.25  allowable historical other operating cost per diems and index 
 11.26  these limits as in Minnesota Rules, part 9549.0056, subparts 3 
 11.27  and 4.  The limits must be established in accordance with 
 11.28  subdivision 2b, paragraph (d).  For rate years beginning on or 
 11.29  after July 1, 1989, the adjusted other operating cost limits 
 11.30  must be indexed as in Minnesota Rules, part 9549.0056, subparts 
 11.31  3 and 4.  For the rate period beginning October 1, 1992, and for 
 11.32  rate years beginning after June 30, 1993, the amount of the 
 11.33  surcharge under section 256.9657, subdivision 1, shall be 
 11.34  included in the plant operations and maintenance operating cost 
 11.35  category.  The surcharge shall be an allowable cost for the 
 11.36  purpose of establishing the payment rate. 
 12.1      (b)  [CARE-RELATED OPERATING COST LIMITS.] For the rate 
 12.2   year beginning July 1, 1988, the commissioner shall increase the 
 12.3   care-related operating cost limits established in Minnesota 
 12.4   Rules, part 9549.0055, subpart 2, items A and B, to 125 percent 
 12.5   of the median of the array of the allowable historical case mix 
 12.6   operating cost standardized per diems and the allowable 
 12.7   historical other care-related operating cost per diems and index 
 12.8   those limits as in Minnesota Rules, part 9549.0056, subparts 1 
 12.9   and 2.  The limits must be established in accordance with 
 12.10  subdivision 2b, paragraph (d).  For rate years beginning on or 
 12.11  after July 1, 1989, the adjusted care-related limits must be 
 12.12  indexed as in Minnesota Rules, part 9549.0056, subparts 1 and 2. 
 12.13     (c)  [SALARY ADJUSTMENT PER DIEM.] ~~For the rate period~~ 
 12.14  Effective October 1, ~~1988~~ 1998, ~~to June 30, 1990,~~ the 
 12.15  commissioner shall ~~add the appropriate~~ make available the salary 
 12.16  adjustment per diem calculated in clause (1) or (2) to the total 
 12.17  operating cost payment rate of each nursing facility.  The 
 12.18  salary adjustment per diem for each nursing facility must be 
 12.19  determined as follows:  
 12.20     (1) for each nursing facility that reports salaries for 
 12.21  registered nurses, licensed practical nurses, and aides, 
 12.22  orderlies and attendants separately, the commissioner shall 
 12.23  determine the salary adjustment per diem by multiplying the 
 12.24  total salaries, payroll taxes, and fringe benefits allowed in 
 12.25  each operating cost category, except management fees and 
 12.26  administrator and central office salaries and the related 
 12.27  payroll taxes and fringe benefits, by ~~3.5~~ 5 percent and then 
 12.28  dividing the resulting amount by the nursing facility's actual 
 12.29  resident days; and 
 12.30     (2) for each nursing facility that does not report salaries 
 12.31  for registered nurses, licensed practical nurses, aides, 
 12.32  orderlies, and attendants separately, the salary adjustment per 
 12.33  diem is the weighted average salary adjustment per diem increase 
 12.34  determined under clause (1).  
 12.35     (3) A nursing facility may apply for the salary adjustment 
 12.36  per diem calculated under clauses (1) and (2).  The application 
 13.1   must be made to the department of human services and contain a 
 13.2   plan by which the nursing facility will distribute the salary 
 13.3   adjustment to employees of the nursing facility.  For nursing 
 13.4   facilities in which the employees are represented by an 
 13.5   exclusive bargaining representative, an agreement negotiated and 
 13.6   agreed to by the employer and the exclusive bargaining 
 13.7   representative, after July 1, 1998, may constitute the plan for 
 13.8   the salary distribution.  The department shall review the plan 
 13.9   to ensure that the salary adjustment per diem is used solely to 
 13.10  increase the compensation of nursing home facility employees. 
 13.11     ~~Each nursing facility that receives a salary adjustment per~~ 
 13.12  ~~diem pursuant to this subdivision shall adjust nursing facility~~ 
 13.13  ~~employee salaries by a minimum of the amount determined in~~ 
 13.14  ~~clause (1) or (2).  The commissioner shall review allowable~~ 
 13.15  ~~salary costs, including payroll taxes and fringe benefits, for~~ 
 13.16  ~~the reporting year ending September 30, 1989, to determine~~ 
 13.17  ~~whether or not each nursing facility complied with this~~ 
 13.18  ~~requirement.  The commissioner shall report the extent to which~~ 
 13.19  ~~each nursing facility complied with the legislative commission~~ 
 13.20  ~~on long-term care by August 1, 1990.~~  
 13.21     (d)  [NEW BASE YEAR.] The commissioner shall establish new 
 13.22  base years for both the reporting year ending September 30, 
 13.23  1989, and the reporting year ending September 30, 1990.  In 
 13.24  establishing new base years, the commissioner must take into 
 13.25  account:  
 13.26     (1) statutory changes made in geographic groups; 
 13.27     (2) redefinitions of cost categories; and 
 13.28     (3) reclassification, pass-through, or exemption of certain 
 13.29  costs such as public employee retirement act contributions. 
 13.30     (e)  [NEW BASE YEAR.] The commissioner shall establish a 
 13.31  new base year for the reporting years ending September 30, 1991, 
 13.32  and September 30, 1992.  In establishing a new base year, the 
 13.33  commissioner must take into account:  
 13.34     (1) statutory changes made in geographic groups; 
 13.35     (2) redefinitions of cost categories; and 
 13.36     (3) reclassification, pass-through, or exemption of certain 
 14.1   costs. 
 14.2      Sec. 4.  Minnesota Statutes 1996, section 256B.431, is 
 14.3   amended by adding a subdivision to read: 
 14.4      Subd. 2s.  [NONALLOWABLE COST.] Costs incurred for 
 14.5   activities directly related to influencing employees with 
 14.6   respect to unionization shall not be allowable for purposes of 
 14.7   setting payment rates. 
 14.8      Sec. 5.  Minnesota Statutes 1997 Supplement, section 
 14.9   256B.431, subdivision 25, is amended to read: 
 14.10     Subd. 25.  [CHANGES TO NURSING FACILITY REIMBURSEMENT 
 14.11  BEGINNING JULY 1, 1995.] The nursing facility reimbursement 
 14.12  changes in paragraphs (a) to ~~(g)~~ (d) shall apply in the sequence 
 14.13  specified to Minnesota Rules, parts 9549.0010 to 9549.0080, and 
 14.14  this section, beginning July 1, 1995. 
 14.15     (a) The eight-cent adjustment to care-related rates in 
 14.16  subdivision 22, paragraph (e), shall no longer apply. 
 14.17     ~~(b) For rate years beginning on or after July 1, 1995, the~~ 
 14.18  ~~commissioner shall limit a nursing facility's allowable~~ 
 14.19  ~~operating per diem for each case mix category for each rate year~~ 
 14.20  ~~as in clauses (1) to (3).~~ 
 14.21     ~~(1) For the rate year beginning July 1, 1995, the~~ 
 14.22  ~~commissioner shall group nursing facilities into two groups,~~ 
 14.23  ~~freestanding and nonfreestanding, within each geographic group,~~ 
 14.24  ~~using their operating cost per diem for the case mix A~~ 
 14.25  ~~classification.  A nonfreestanding nursing facility is a nursing~~ 
 14.26  ~~facility whose other operating cost per diem is subject to the~~ 
 14.27  ~~hospital attached, short length of stay, or the rule 80 limits.~~  
 14.28  ~~All other nursing facilities shall be considered freestanding~~ 
 14.29  ~~nursing facilities.  The commissioner shall then array all~~ 
 14.30  ~~nursing facilities in each grouping by their allowable case mix~~ 
 14.31  ~~A operating cost per diem.  In calculating a nursing facility's~~ 
 14.32  ~~operating cost per diem for this purpose, the commissioner shall~~ 
 14.33  ~~exclude the raw food cost per diem related to providing special~~ 
 14.34  ~~diets that are based on religious beliefs, as determined in~~ 
 14.35  ~~subdivision 2b, paragraph (h).  For those nursing facilities in~~ 
 14.36  ~~each grouping whose case mix A operating cost per diem:~~ 
 15.1      ~~(i) is at or below the median minus 1.0 standard deviation~~ 
 15.2   ~~of the array, the commissioner shall limit the nursing~~ 
 15.3   ~~facility's allowable operating cost per diem for each case mix~~ 
 15.4   ~~category to the lesser of the prior reporting year's allowable~~ 
 15.5   ~~operating cost per diems plus the inflation factor as~~ 
 15.6   ~~established in paragraph (f), clause (2), increased by six~~ 
 15.7   ~~percentage points, or the current reporting year's corresponding~~ 
 15.8   ~~allowable operating cost per diem;~~ 
 15.9      ~~(ii) is between minus .5 standard deviation and minus 1.0~~ 
 15.10  ~~standard deviation below the median of the array, the~~ 
 15.11  ~~commissioner shall limit the nursing facility's allowable~~ 
 15.12  ~~operating cost per diem for each case mix category to the lesser~~ 
 15.13  ~~of the prior reporting year's allowable operating cost per diems~~ 
 15.14  ~~plus the inflation factor as established in paragraph (f),~~ 
 15.15  ~~clause (2), increased by four percentage points, or the current~~ 
 15.16  ~~reporting year's corresponding allowable operating cost per~~ 
 15.17  ~~diem; or~~ 
 15.18     ~~(iii) is equal to or above minus .5 standard deviation~~ 
 15.19  ~~below the median of the array, the commissioner shall limit the~~ 
 15.20  ~~nursing facility's allowable operating cost per diem for each~~ 
 15.21  ~~case mix category to the lesser of the prior reporting year's~~ 
 15.22  ~~allowable operating cost per diems plus the inflation factor as~~ 
 15.23  ~~established in paragraph (f), clause (2), increased by three~~ 
 15.24  ~~percentage points, or the current reporting year's corresponding~~ 
 15.25  ~~allowable operating cost per diem.~~ 
 15.26     ~~(2) For the rate year beginning on July 1, 1996, the~~ 
 15.27  ~~commissioner shall limit the nursing facility's allowable~~ 
 15.28  ~~operating cost per diem for each case mix category to the lesser~~ 
 15.29  ~~of the prior reporting year's allowable operating cost per diems~~ 
 15.30  ~~plus the inflation factor as established in paragraph (f),~~ 
 15.31  ~~clause (2), increased by one percentage point or the current~~ 
 15.32  ~~reporting year's corresponding allowable operating cost per~~ 
 15.33  ~~diems; and~~ 
 15.34     ~~(3) For rate years beginning on or after July 1, 1997, the~~ 
 15.35  ~~commissioner shall limit the nursing facility's allowable~~ 
 15.36  ~~operating cost per diem for each case mix category to the lesser~~ 
 16.1   ~~of the reporting year prior to the current reporting year's~~ 
 16.2   ~~allowable operating cost per diems plus the inflation factor as~~ 
 16.3   ~~established in paragraph (f), clause (2), or the current~~ 
 16.4   ~~reporting year's corresponding allowable operating cost per~~ 
 16.5   ~~diems.~~ 
 16.6      ~~(c) For rate years beginning on July 1, 1995, the~~ 
 16.7   ~~commissioner shall limit the allowable operating cost per diems~~ 
 16.8   ~~for high cost nursing facilities.  After application of the~~ 
 16.9   ~~limits in paragraph (b) to each nursing facility's operating~~ 
 16.10  ~~cost per diems, the commissioner shall group nursing facilities~~ 
 16.11  ~~into two groups, freestanding or nonfreestanding, within each~~ 
 16.12  ~~geographic group.  A nonfreestanding nursing facility is a~~ 
 16.13  ~~nursing facility whose other operating cost per diems are~~ 
 16.14  ~~subject to hospital attached, short length of stay, or rule 80~~ 
 16.15  ~~limits.  All other nursing facilities shall be considered~~ 
 16.16  ~~freestanding nursing facilities.  The commissioner shall then~~ 
 16.17  ~~array all nursing facilities within each grouping by their~~ 
 16.18  ~~allowable case mix A operating cost per diems.  In calculating a~~ 
 16.19  ~~nursing facility's operating cost per diem for this purpose, the~~ 
 16.20  ~~commissioner shall exclude the raw food cost per diem related to~~ 
 16.21  ~~providing special diets that are based on religious beliefs, as~~ 
 16.22  ~~determined in subdivision 2b, paragraph (h).  For those nursing~~ 
 16.23  ~~facilities in each grouping whose case mix A operating cost per~~ 
 16.24  ~~diem exceeds 1.0 standard deviation above the median, the~~ 
 16.25  ~~commissioner shall reduce their allowable operating cost per~~ 
 16.26  ~~diems by two percent.  For those nursing facilities in each~~ 
 16.27  ~~grouping whose case mix A operating cost per diem exceeds 0.5~~ 
 16.28  ~~standard deviation above the median but is less than or equal to~~ 
 16.29  ~~1.0 standard deviation above the median, the commissioner shall~~ 
 16.30  ~~reduce their allowable operating cost per diems by one percent.~~ 
 16.31     ~~(d) For rate years beginning on or after July 1, 1996, the~~ 
 16.32  ~~commissioner shall limit the allowable operating cost per diems~~ 
 16.33  ~~for high cost nursing facilities.  After application of the~~ 
 16.34  ~~limits in paragraph (b) to each nursing facility's operating~~ 
 16.35  ~~cost per diems, the commissioner shall group nursing facilities~~ 
 16.36  ~~into two groups, freestanding or nonfreestanding, within each~~ 
 17.1   ~~geographic group.  A nonfreestanding nursing facility is a~~ 
 17.2   ~~nursing facility whose other operating cost per diems are~~ 
 17.3   ~~subject to hospital attached, short length of stay, or rule 80~~ 
 17.4   ~~limits.  All other nursing facilities shall be considered~~ 
 17.5   ~~freestanding nursing facilities.  The commissioner shall then~~ 
 17.6   ~~array all nursing facilities within each grouping by their~~ 
 17.7   ~~allowable case mix A operating cost per diems.  In calculating a~~ 
 17.8   ~~nursing facility's operating cost per diem for this purpose, the~~ 
 17.9   ~~commissioner shall exclude the raw food cost per diem related to~~ 
 17.10  ~~providing special diets that are based on religious beliefs, as~~ 
 17.11  ~~determined in subdivision 2b, paragraph (h).  In those nursing~~ 
 17.12  ~~facilities in each grouping whose case mix A operating cost per~~ 
 17.13  ~~diem exceeds 1.0 standard deviation above the median, the~~ 
 17.14  ~~commissioner shall reduce their allowable operating cost per~~ 
 17.15  ~~diems by three percent.  For those nursing facilities in each~~ 
 17.16  ~~grouping whose case mix A operating cost per diem exceeds 0.5~~ 
 17.17  ~~standard deviation above the median but is less than or equal to~~ 
 17.18  ~~1.0 standard deviation above the median, the commissioner shall~~ 
 17.19  ~~reduce their allowable operating cost per diems by two percent.~~ 
 17.20     ~~(e)~~ (b) For rate years beginning on or after July 1, 1995, 
 17.21  the commissioner shall determine a nursing facility's efficiency 
 17.22  incentive by first computing the allowable difference, which is 
 17.23  the lesser of $4.50 or the amount by which the facility's other 
 17.24  operating cost limit exceeds its nonadjusted other operating 
 17.25  cost per diem for that rate year.  The commissioner shall 
 17.26  compute the efficiency incentive by: 
 17.27     (1) subtracting the allowable difference from $4.50 and 
 17.28  dividing the result by $4.50; 
 17.29     (2) multiplying 0.20 by the ratio resulting from clause 
 17.30  (1), and then; 
 17.31     (3) adding 0.50 to the result from clause (2); and 
 17.32     (4) multiplying the result from clause (3) times the 
 17.33  allowable difference. 
 17.34     The nursing facility's efficiency incentive payment shall 
 17.35  be the lesser of $2.25 or the product obtained in clause (4). 
 17.36     ~~(f)~~ (c) For rate years beginning on or after July 1, 1995, 
 18.1   the forecasted price index for a nursing facility's allowable 
 18.2   operating cost per diems shall be determined under clauses (1) 
 18.3   to (3) using the change in the Consumer Price Index-All Items 
 18.4   (United States city average) (CPI-U) or the change in the 
 18.5   Nursing Home Market Basket, both as forecasted by Data Resources 
 18.6   Inc., whichever is applicable.  The commissioner shall use the 
 18.7   indices as forecasted in the fourth quarter of the calendar year 
 18.8   preceding the rate year, subject to subdivision 2l, paragraph 
 18.9   (c).  If, as a result of federal legislative or administrative 
 18.10  action, the methodology used to calculate the Consumer Price 
 18.11  Index-All Items (United States city average) (CPI-U) changes, 
 18.12  the commissioner shall develop a conversion factor or other 
 18.13  methodology to convert the CPI-U index factor that results from 
 18.14  the new methodology to an index factor that approximates, as 
 18.15  closely as possible, the index factor that would have resulted 
 18.16  from application of the original CPI-U methodology prior to any 
 18.17  changes in methodology.  The commissioner shall use the 
 18.18  conversion factor or other methodology to calculate an adjusted 
 18.19  inflation index.  The adjusted inflation index must be used to 
 18.20  calculate payment rates under this section instead of the CPI-U 
 18.21  index specified in paragraph (d).  If the commissioner is 
 18.22  required to develop an adjusted inflation index, the 
 18.23  commissioner shall report to the legislature as part of the next 
 18.24  budget submission the fiscal impact of applying this index. 
 18.25     (1) The CPI-U forecasted index for allowable operating cost 
 18.26  per diems shall be based on the 21-month period from the 
 18.27  midpoint of the nursing facility's reporting year to the 
 18.28  midpoint of the rate year following the reporting year. 
 18.29     (2) The Nursing Home Market Basket forecasted index for 
 18.30  allowable operating costs and per diem limits shall be based on 
 18.31  the 12-month period between the midpoints of the two reporting 
 18.32  years preceding the rate year. 
 18.33     (3) For rate years beginning on or after July 1, 1996, the 
 18.34  forecasted index for operating cost limits referred to in 
 18.35  subdivision 21, paragraph (b), shall be based on the CPI-U for 
 18.36  the 12-month period between the midpoints of the two reporting 
 19.1   years preceding the rate year. 
 19.2      ~~(g)~~ (d) After applying these provisions for the respective 
 19.3   rate years, the commissioner shall index these allowable 
 19.4   operating costs per diems by the inflation factor provided for 
 19.5   in paragraph ~~(f)~~ (c), clause (1), and add the nursing facility's 
 19.6   efficiency incentive as computed in paragraph ~~(e)~~ (b). 
 19.7      ~~(h)(1) A nursing facility licensed for 302 beds on~~ 
 19.8   ~~September 30, 1993, that was approved under the moratorium~~ 
 19.9   ~~exception process in section 144A.073 for a partial replacement,~~ 
 19.10  ~~and completed the replacement project in December 1994, is~~ 
 19.11  ~~exempt from paragraphs (b) to (d) for rate years beginning on or~~ 
 19.12  ~~after July 1, 1995.~~ 
 19.13     ~~(2) For the rate year beginning July 1, 1997, after~~ 
 19.14  ~~computing this nursing facility's payment rate according to~~ 
 19.15  ~~section 256B.434, the commissioner shall make a one-year rate~~ 
 19.16  ~~adjustment of $8.62 to the facility's contract payment rate for~~ 
 19.17  ~~the rate effect of operating cost changes associated with the~~ 
 19.18  ~~facility's 1994 downsizing project.~~ 
 19.19     ~~(3) For rate years beginning on or after July 1, 1997, the~~ 
 19.20  ~~commissioner shall add 35 cents to the facility's base property~~ 
 19.21  ~~related payment rate for the rate effect of reducing its~~ 
 19.22  ~~licensed capacity to 290 beds from 302 beds and shall add 83~~ 
 19.23  ~~cents to the facility's real estate tax and special assessment~~ 
 19.24  ~~payment rate for payments in lieu of real estate taxes.  The~~ 
 19.25  ~~adjustments in this clause shall remain in effect for the~~ 
 19.26  ~~duration of the facility's contract under section 256B.434.~~ 
 19.27     ~~(i) Notwithstanding Laws 1996, chapter 451, article 3,~~ 
 19.28  ~~section 11, paragraph (h), for the rate years beginning on July~~ 
 19.29  ~~1, 1996, July 1, 1997, and July 1, 1998, a nursing facility~~ 
 19.30  ~~licensed for 40 beds effective May 1, 1992, with a subsequent~~ 
 19.31  ~~increase of 20 Medicare/Medicaid certified beds, effective~~ 
 19.32  ~~January 26, 1993, in accordance with an increase in licensure is~~ 
 19.33  ~~exempt from paragraphs (b) to (d).~~ 
 19.34     Sec. 6.  Minnesota Statutes 1997 Supplement, section 
 19.35  256B.431, subdivision 26, is amended to read: 
 19.36     Subd. 26.  [CHANGES TO NURSING FACILITY REIMBURSEMENT 
 20.1   BEGINNING JULY 1, 1997.] The nursing facility reimbursement 
 20.2   changes in paragraphs (a) to ~~(f)~~ (d) shall apply in the sequence 
 20.3   specified in Minnesota Rules, parts 9549.0010 to 9549.0080, and 
 20.4   this section, beginning July 1, 1997. 
 20.5      ~~(a) For rate years beginning on or after July 1, 1997, the~~ 
 20.6   ~~commissioner shall limit a nursing facility's allowable~~ 
 20.7   ~~operating per diem for each case mix category for each rate year.~~
 20.8   ~~The commissioner shall group nursing facilities into two groups,~~ 
 20.9   ~~freestanding and nonfreestanding, within each geographic group,~~ 
 20.10  ~~using their operating cost per diem for the case mix A~~ 
 20.11  ~~classification.  A nonfreestanding nursing facility is a nursing~~ 
 20.12  ~~facility whose other operating cost per diem is subject to the~~ 
 20.13  ~~hospital attached, short length of stay, or the rule 80 limits.~~  
 20.14  ~~All other nursing facilities shall be considered freestanding~~ 
 20.15  ~~nursing facilities.  The commissioner shall then array all~~ 
 20.16  ~~nursing facilities in each grouping by their allowable case mix~~ 
 20.17  ~~A operating cost per diem.  In calculating a nursing facility's~~ 
 20.18  ~~operating cost per diem for this purpose, the commissioner shall~~ 
 20.19  ~~exclude the raw food cost per diem related to providing special~~ 
 20.20  ~~diets that are based on religious beliefs, as determined in~~ 
 20.21  ~~subdivision 2b, paragraph (h).  For those nursing facilities in~~ 
 20.22  ~~each grouping whose case mix A operating cost per diem:~~ 
 20.23     ~~(1) is at or below the median of the array, the~~ 
 20.24  ~~commissioner shall limit the nursing facility's allowable~~ 
 20.25  ~~operating cost per diem for each case mix category to the lesser~~ 
 20.26  ~~of the prior reporting year's allowable operating cost per diem~~ 
 20.27  ~~as specified in Laws 1996, chapter 451, article 3, section 11,~~ 
 20.28  ~~paragraph (h), plus the inflation factor as established in~~ 
 20.29  ~~paragraph (d), clause (2), increased by two percentage points,~~ 
 20.30  ~~or the current reporting year's corresponding allowable~~ 
 20.31  ~~operating cost per diem; or~~ 
 20.32     ~~(2) is above the median of the array, the commissioner~~ 
 20.33  ~~shall limit the nursing facility's allowable operating cost per~~ 
 20.34  ~~diem for each case mix category to the lesser of the prior~~ 
 20.35  ~~reporting year's allowable operating cost per diem as specified~~ 
 20.36  ~~in Laws 1996, chapter 451, article 3, section 11, paragraph (h),~~ 
 21.1   ~~plus the inflation factor as established in paragraph (d),~~ 
 21.2   ~~clause (2), increased by one percentage point, or the current~~ 
 21.3   ~~reporting year's corresponding allowable operating cost per diem.~~
 21.4      ~~(b) For rate years beginning on or after July 1, 1997, the~~ 
 21.5   ~~commissioner shall limit the allowable operating cost per diem~~ 
 21.6   ~~for high cost nursing facilities.  After application of the~~ 
 21.7   ~~limits in paragraph (a) to each nursing facility's operating~~ 
 21.8   ~~cost per diem, the commissioner shall group nursing facilities~~ 
 21.9   ~~into two groups, freestanding or nonfreestanding, within each~~ 
 21.10  ~~geographic group.  A nonfreestanding nursing facility is a~~ 
 21.11  ~~nursing facility whose other operating cost per diem are subject~~ 
 21.12  ~~to hospital attached, short length of stay, or rule 80 limits.~~  
 21.13  ~~All other nursing facilities shall be considered freestanding~~ 
 21.14  ~~nursing facilities.  The commissioner shall then array all~~ 
 21.15  ~~nursing facilities within each grouping by their allowable case~~ 
 21.16  ~~mix A operating cost per diem.  In calculating a nursing~~ 
 21.17  ~~facility's operating cost per diem for this purpose, the~~ 
 21.18  ~~commissioner shall exclude the raw food cost per diem related to~~ 
 21.19  ~~providing special diets that are based on religious beliefs, as~~ 
 21.20  ~~determined in subdivision 2b, paragraph (h).  For those nursing~~ 
 21.21  ~~facilities in each grouping whose case mix A operating cost per~~ 
 21.22  ~~diem exceeds 1.0 standard deviation above the median, the~~ 
 21.23  ~~commissioner shall reduce their allowable operating cost per~~ 
 21.24  ~~diem by three percent.  For those nursing facilities in each~~ 
 21.25  ~~grouping whose case mix A operating cost per diem exceeds 0.5~~ 
 21.26  ~~standard deviation above the median but is less than or equal to~~ 
 21.27  ~~1.0 standard deviation above the median, the commissioner shall~~ 
 21.28  ~~reduce their allowable operating cost per diem by two percent.~~  
 21.29  ~~However, in no case shall a nursing facility's operating cost~~ 
 21.30  ~~per diem be reduced below its grouping's limit established at~~ 
 21.31  ~~0.5 standard deviations above the median.~~ 
 21.32     ~~(c)~~ (a) For rate years beginning on or after July 1, 1997, 
 21.33  the commissioner shall determine a nursing facility's efficiency 
 21.34  incentive by first computing the allowable difference, which is 
 21.35  the lesser of $4.50 or the amount by which the facility's other 
 21.36  operating cost limit exceeds its nonadjusted other operating 
 22.1   cost per diem for that rate year.  The commissioner shall 
 22.2   compute the efficiency incentive by: 
 22.3      (1) subtracting the allowable difference from $4.50 and 
 22.4   dividing the result by $4.50; 
 22.5      (2) multiplying 0.20 by the ratio resulting from clause 
 22.6   (1), and then; 
 22.7      (3) adding 0.50 to the result from clause (2); and 
 22.8      (4) multiplying the result from clause (3) times the 
 22.9   allowable difference. 
 22.10     The nursing facility's efficiency incentive payment shall 
 22.11  be the lesser of $2.25 or the product obtained in clause (4). 
 22.12     ~~(d)~~ (b) For rate years beginning on or after July 1, 1997, 
 22.13  the forecasted price index for a nursing facility's allowable 
 22.14  operating cost per diem shall be determined under clauses (1) 
 22.15  and (2) using the change in the Consumer Price Index-All Items 
 22.16  (United States city average) (CPI-U) as forecasted by Data 
 22.17  Resources, Inc.  The commissioner shall use the indices as 
 22.18  forecasted in the fourth quarter of the calendar year preceding 
 22.19  the rate year, subject to subdivision 2l, paragraph (c).  
 22.20     (1) The CPI-U forecasted index for allowable operating cost 
 22.21  per diem shall be based on the 21-month period from the midpoint 
 22.22  of the nursing facility's reporting year to the midpoint of the 
 22.23  rate year following the reporting year. 
 22.24     (2) For rate years beginning on or after July 1, 1997, the 
 22.25  forecasted index for operating cost limits referred to in 
 22.26  subdivision 21, paragraph (b), shall be based on the CPI-U for 
 22.27  the 12-month period between the midpoints of the two reporting 
 22.28  years preceding the rate year. 
 22.29     ~~(e)~~ (c) After applying these provisions for the respective 
 22.30  rate years, the commissioner shall index these allowable 
 22.31  operating cost per diem by the inflation factor provided for in 
 22.32  paragraph ~~(d)~~ (b), clause (1), and add the nursing facility's 
 22.33  efficiency incentive as computed in paragraph ~~(c)~~ (a). 
 22.34     ~~(f) For rate years beginning on or after July 1, 1997, the~~ 
 22.35  ~~total operating cost payment rates for a nursing facility shall~~ 
 22.36  ~~be the greater of the total operating cost payment rates~~ 
 23.1   ~~determined under this section or the total operating cost~~ 
 23.2   ~~payment rates in effect on June 30, 1997, subject to rate~~ 
 23.3   ~~adjustments due to field audit or rate appeal resolution.  This~~ 
 23.4   ~~provision shall not apply to subsequent field audit adjustments~~ 
 23.5   ~~of the nursing facility's operating cost rates for rate years~~ 
 23.6   ~~beginning on or after July 1, 1997.~~ 
 23.7      ~~(g) For the rate years beginning on July 1, 1997, and July~~ 
 23.8   ~~1, 1998, a nursing facility licensed for 40 beds effective May~~ 
 23.9   ~~1, 1992, with a subsequent increase of 20 Medicare/Medicaid~~ 
 23.10  ~~certified beds, effective January 26, 1993, in accordance with~~ 
 23.11  ~~an increase in licensure is exempt from paragraphs (a) and (b).~~ 
 23.12     ~~(h)~~ (d) For a nursing facility whose construction project 
 23.13  was authorized according to section 144A.073, subdivision 5, 
 23.14  paragraph (g), the operating cost payment rates for the third 
 23.15  location shall be determined based on Minnesota Rules, part 
 23.16  9549.0057.  ~~Paragraphs (a) and (b) shall not apply until the~~ 
 23.17  ~~second rate year after the settle-up cost report is filed.~~  
 23.18  Notwithstanding subdivision 2b, paragraph (g), real estate taxes 
 23.19  and special assessments payable by the third location, a 
 23.20  501(c)(3) nonprofit corporation, shall be included in the 
 23.21  payment rates determined under this subdivision for all 
 23.22  subsequent rate years. 
 23.23     ~~(i) For the rate year beginning July 1, 1997, the~~ 
 23.24  ~~commissioner shall compute the payment rate for a nursing~~ 
 23.25  ~~facility licensed for 94 beds on September 30, 1996, that~~ 
 23.26  ~~applied in October 1993 for approval of a total replacement~~ 
 23.27  ~~under the moratorium exception process in section 144A.073, and~~ 
 23.28  ~~completed the approved replacement in June 1995, with other~~ 
 23.29  ~~operating cost spend-up limit under paragraph (a), increased by~~ 
 23.30  ~~$3.98, and after computing the facility's payment rate according~~ 
 23.31  ~~to this section, the commissioner shall make a one-year positive~~ 
 23.32  ~~rate adjustment of $3.19 for operating costs related to the~~ 
 23.33  ~~newly constructed total replacement, without application of~~ 
 23.34  ~~paragraphs (a) and (b).  The facility's per diem, before the~~ 
 23.35  ~~$3.19 adjustment, shall be used as the prior reporting year's~~ 
 23.36  ~~allowable operating cost per diem for payment rate calculation~~ 
 24.1   ~~for the rate year beginning July 1, 1998.  A facility described~~ 
 24.2   ~~in this paragraph is exempt from paragraph (b) for the rate~~ 
 24.3   ~~years beginning July 1, 1997, and July 1, 1998.~~ 
 24.4      ~~(j) For the purpose of applying the limit stated in~~ 
 24.5   ~~paragraph (a), a nursing facility in Kandiyohi county licensed~~ 
 24.6   ~~for 86 beds that was granted hospital-attached status on~~ 
 24.7   ~~December 1, 1994, shall have the prior year's allowable~~ 
 24.8   ~~care-related per diem increased by $3.207 and the prior year's~~ 
 24.9   ~~other operating cost per diem increased by $4.777 before adding~~ 
 24.10  ~~the inflation in paragraph (d), clause (2), for the rate year~~ 
 24.11  ~~beginning on July 1, 1997.~~ 
 24.12     ~~(k) For the purpose of applying the limit stated in~~ 
 24.13  ~~paragraph (a), a 117 bed nursing facility located in Pine county~~ 
 24.14  ~~shall have the prior year's allowable other operating cost per~~ 
 24.15  ~~diem increased by $1.50 before adding the inflation in paragraph~~ 
 24.16  ~~(d), clause (2), for the rate year beginning on July 1, 1997.~~ 
 24.17     ~~(l) For the purpose of applying the limit under paragraph~~ 
 24.18  ~~(a), a nursing facility in Hibbing licensed for 192 beds shall~~ 
 24.19  ~~have the prior year's allowable other operating cost per diem~~ 
 24.20  ~~increased by $2.67 before adding the inflation in paragraph (d),~~ 
 24.21  ~~clause (2), for the rate year beginning July 1, 1997.~~