1.1 	A bill for an act
1.2 	relating to human services; eliminating the medical assistance rate equalization 
1.3 	requirement for nursing facilities; making conforming changes; amending 
1.4 	Minnesota Statutes 2004, sections 256.9657, subdivision 1; 256B.431, 
1.5 	subdivision 34; 256B.433, subdivision 3; 256B.48, subdivision 1.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2004, section 256.9657, subdivision 1, is amended to 
1.8 	read:
1.9 		Subdivision 1.Nursing home license surcharge. (a) Effective July 1, 1993, 
1.10 	each non-state-operated nursing home licensed under chapter 144A shall pay to the 
1.11 	commissioner an annual surcharge according to the schedule in subdivision 4. The 
1.12 	surcharge shall be calculated as $620 per licensed bed. If the number of licensed beds 
1.13 	is reduced, the surcharge shall be based on the number of remaining licensed beds the 
1.14 	second month following the receipt of timely notice by the commissioner of human 
1.15 	services that beds have been delicensed. The nursing home must notify the commissioner 
1.16 	of health in writing when beds are delicensed. The commissioner of health must notify 
1.17 	the commissioner of human services within ten working days after receiving written 
1.18 	notification. If the notification is received by the commissioner of human services by 
1.19 	the 15th of the month, the invoice for the second following month must be reduced 
1.20 	to recognize the delicensing of beds. Beds on layaway status continue to be subject to 
1.21 	the surcharge. The commissioner of human services must acknowledge a medical care 
1.22 	surcharge appeal within 30 days of receipt of the written appeal from the provider.
1.23 	(b) Effective July 1, 1994, the surcharge in paragraph (a) shall be increased to $625.
1.24 	(c) Effective August 15, 2002, the surcharge under paragraph (b) shall be increased 
1.25 	to $990.
2.1 	(d) Effective July 15, 2003, the surcharge under paragraph (c) shall be increased 
2.2 	to $2,815.
2.3 	(e) The commissioner may reduce, and may subsequently restore, the surcharge 
2.4 	under paragraph (d) based on the commissioner's determination of a permissible surcharge.
2.5 	(f) Between April 1, 2002, and August 15, 2004, a facility governed by this 
2.6 	subdivision may elect to assume full participation in the medical assistance program 
2.7 	by agreeing to comply with all of the requirements of the medical assistance program, 
2.8 	including the rate equalization law in section  256B.48, subdivision 1, paragraph (a), and 
2.9 	all other requirements established in law or rule, and to begin intake of new medical 
2.10 	assistance recipients. Rates will be determined under Minnesota Rules, parts 9549.0010 
2.11 	to 9549.0080. Notwithstanding section  256B.431, subdivision 27, paragraph (i), rate 
2.12 	calculations will be subject to limits as prescribed in rule and law. Other than the 
2.13 	adjustments in sections  256B.431, subdivisions 30 and 32;  256B.437, subdivision 3, 
2.14 	paragraph (b), Minnesota Rules, part 9549.0057, and any other applicable legislation 
2.15 	enacted prior to the finalization of rates, facilities assuming full participation in medical 
2.16 	assistance under this paragraph are not eligible for any rate adjustments until the July 1 
2.17 	following their settle-up period. 

2.18 	EFFECTIVE DATE. This section is effective July 1, 2006.

2.19 	Sec. 2. Minnesota Statutes 2004, section 256B.431, subdivision 34, is amended to read:
2.20 		Subd. 34.Nursing facility rate increases beginning July 1, 2001, and July 1, 
2.21 	2002. (a) For the rate years beginning July 1, 2001, and July 1, 2002, two-thirds of the 
2.22 	money resulting from the rate adjustment under subdivision 31 and one-half of the money 
2.23 	resulting from the rate adjustment under subdivisions 32 and 33 must be used to increase 
2.24 	the wages and benefits and pay associated costs of all employees except management fees, 
2.25 	the administrator, and central office staff.
2.26 	(b) Money received by a facility as a result of the rate adjustments provided in 
2.27 	subdivisions 31 to 33, which must be used as provided in paragraph (a), must be used only 
2.28 	for wage and benefit increases implemented on or after July 1, 2001, or July 1, 2002, 
2.29 	respectively, and must not be used for wage increases implemented prior to those dates.
2.30 	(c) Nursing facilities may apply for the portions of the rate adjustments under 
2.31 	subdivisions 31 to 33, which must be used as provided in paragraph (a). The application 
2.32 	must be made to the commissioner and contain a plan by which the nursing facility 
2.33 	will distribute to employees of the nursing facility the funds, which must be used as 
2.34 	provided in paragraph (a). For nursing facilities in which the employees are represented 
2.35 	by an exclusive bargaining representative, an agreement negotiated and agreed to by the 
3.1 	employer and the exclusive bargaining representative constitutes the plan. A negotiated 
3.2 	agreement may constitute the plan only if the agreement is finalized after the date of 
3.3 	enactment of all increases for the rate year. The commissioner shall review the plan to 
3.4 	ensure that the rate adjustments are used as provided in paragraph (a). To be eligible, a 
3.5 	facility must submit its plan for the wage and benefit distribution by December 31 each 
3.6 	year. If a facility's plan for wage and benefit distribution is effective for its employees 
3.7 	after July 1 of the year that the funds are available, the portion of the rate adjustments, 
3.8 	which must be used as provided in paragraph (a), are effective the same date as its plan.
3.9 	(d) A hospital-attached nursing facility may include costs in their distribution plan 
3.10 	for wages and benefits and associated costs of employees in the organization's shared 
3.11 	services departments, provided that:
3.12 	(1) the nursing facility and the hospital share common ownership; and
3.13 	(2) adjustments for hospital services using the diagnostic-related grouping payment 
3.14 	rates per admission under Medicare are less than three percent during the 12 months prior 
3.15 	to the effective date of these rate adjustments.
3.16 	If a hospital-attached facility meets the qualifications in this paragraph, the difference 
3.17 	between the rate adjustments approved for nursing facility services and the rate increase 
3.18 	approved for hospital services may be permitted as a distribution in the hospital-attached 
3.19 	facility's plan regardless of whether the use of those funds is shown as being attributable to 
3.20 	employee hours worked in the nursing facility or employee hours worked in the hospital.
3.21 	For the purposes of this paragraph, a hospital-attached nursing facility is one that 
3.22 	meets the definition under subdivision 2j, or, in the case of a facility reimbursed under 
3.23 	section    256B.434, met this definition at the time their last payment rate was established 
3.24 	under Minnesota Rules, parts 9549.0010 to 9549.0080, and this section. 
3.25 	(e) A copy of the approved distribution plan must be made available to all employees 
3.26 	by giving each employee a copy or by posting it in an area of the nursing facility to 
3.27 	which all employees have access. If an employee does not receive the wage and benefit 
3.28 	adjustment described in the facility's approved plan and is unable to resolve the problem 
3.29 	with the facility's management or through the employee's union representative, the 
3.30 	employee may contact the commissioner at an address or telephone number provided by 
3.31 	the commissioner and included in the approved plan.
3.32 	(f) Notwithstanding section    256B.48, subdivision 1, clause (a), Upon the request 
3.33 	of a nursing facility, the commissioner may authorize the facility to raise per diem 
3.34 	rates for private-pay residents on July 1 by the amount anticipated to be required upon 
3.35 	implementation of the rate adjustments allowable under subdivisions 31 to 33. The 
3.36 	commissioner shall require any amounts collected under this paragraph, which must be 
4.1 	used as provided in paragraph (a), to be placed in an escrow account established for 
4.2 	this purpose with a financial institution that provides deposit insurance until the medical 
4.3 	assistance rate is finalized. The commissioner shall conduct audits as necessary to ensure 
4.4 	that: 
4.5 	(1) the amounts collected are retained in escrow until medical assistance rates are 
4.6 	increased to reflect the wage-related adjustment; and
4.7 	(2) any amounts collected from private-pay residents in excess of the final medical 
4.8 	assistance rate are repaid to the private-pay residents with interest at the rate used by 
4.9 	the commissioner of revenue for the late payment of taxes and in effect on the date the 
4.10 	distribution plan is approved by the commissioner of human services.

4.11 	EFFECTIVE DATE. This section is effective July 1, 2006.

4.12 	Sec. 3. Minnesota Statutes 2004, section 256B.433, subdivision 3, is amended to read:
4.13 		Subd. 3.Separate billings for therapy services. Until new procedures are 
4.14 	developed under subdivision 4, payment for therapy services provided to nursing facility 
4.15 	residents that are billed separate from nursing facility's payment rate or according 
4.16 	to Minnesota Rules, parts 9505.0170 to 9505.0475, shall be subject to the following 
4.17 	requirements:
4.18 	(a) The practitioner invoice must include, in a format specified by the commissioner, 
4.19 	the provider number of the nursing facility where the medical assistance recipient resides 
4.20 	regardless of the service setting.
4.21 	(b) Nursing facilities that are related by ownership, control, affiliation, or 
4.22 	employment status to the vendor of therapy services shall report, in a format specified by 
4.23 	the commissioner, the revenues received during the reporting year for therapy services 
4.24 	provided to residents of the nursing facility. For rate years beginning on or after July 1, 
4.25 	1988, the commissioner shall offset the revenues received during the reporting year for 
4.26 	therapy services provided to residents of the nursing facility to the total payment rate 
4.27 	of the nursing facility by dividing the amount of offset by the nursing facility's actual 
4.28 	resident days. Except as specified in paragraphs (d) and (f), the amount of offset shall be 
4.29 	the revenue in excess of 108 percent of the cost removed from the cost report resulting 
4.30 	from the requirement of the commissioner to ensure the avoidance of double payments 
4.31 	as determined by section  256B.47. Therapy revenues that are specific to mental health 
4.32 	services shall be subject to this paragraph for rate years beginning after June 30, 1993. 
4.33 	In establishing a new base period for the purpose of setting operating cost payment rate 
4.34 	limits and rates, the commissioner shall not include the revenues offset in accordance 
4.35 	with this section. 
5.1 	(c) For rate years beginning on or after July 1, 1987, nursing facilities shall limit 
5.2 	charges in total to vendors of therapy services for renting space, equipment, or obtaining 
5.3 	other services during the rate year to 108 percent of the annualized cost removed from the 
5.4 	reporting year cost report resulting from the requirement of the commissioner to ensure 
5.5 	the avoidance of double payments as determined by section  256B.47. If the arrangement 
5.6 	for therapy services is changed so that a nursing facility is subject to this paragraph instead 
5.7 	of paragraph (b), the cost that is used to determine rent must be adjusted to exclude the 
5.8 	annualized costs for therapy services that are not provided in the rate year. The maximum 
5.9 	charges to the vendors shall be based on the commissioner's determination of annualized 
5.10 	cost and may be subsequently adjusted upon resolution of appeals. Mental health services 
5.11 	shall be subject to this paragraph for rate years beginning after June 30, 1993. 
5.12 	(d) The commissioner shall require reporting of all revenues relating to the provision 
5.13 	of therapy services and shall establish a therapy cost, as determined by section  256B.47, to 
5.14 	revenue ratio for the reporting year ending in 1986. For subsequent reporting years, the 
5.15 	ratio may increase five percentage points in total until a new base year is established under 
5.16 	paragraph (e). Increases in excess of five percentage points may be allowed if adequate 
5.17 	justification is provided to and accepted by the commissioner. Unless an exception is 
5.18 	allowed by the commissioner, the amount of offset in paragraph (b) is the greater of the 
5.19 	amount determined in paragraph (b) or the amount of offset that is imputed based on one 
5.20 	minus the lesser of (1) the actual reporting year ratio or (2) the base reporting year ratio 
5.21 	increased by five percentage points, multiplied by the revenues. 
5.22 	(e) The commissioner may establish a new reporting year base for determining 
5.23 	the cost to revenue ratio.
5.24 	(f) If the arrangement for therapy services is changed so that a nursing facility is 
5.25 	subject to the provisions of paragraph (b) instead of paragraph (c), an average cost to 
5.26 	revenue ratio based on the ratios of nursing facilities that are subject to the provisions of 
5.27 	paragraph (b) shall be imputed for paragraph (d).
5.28 	(g) This section does not allow unrelated nursing facilities to reorganize related 
5.29 	organization therapy services and provide services among themselves to avoid offsetting 
5.30 	revenues. Nursing facilities that are found to be in violation of this provision shall be 
5.31 	subject to the penalty requirements of section  256B.48, subdivision 1, paragraph (f) (e). 

5.32 	EFFECTIVE DATE. This section is effective July 1, 2006.

5.33 	Sec. 4. Minnesota Statutes 2004, section 256B.48, subdivision 1, is amended to read:
5.34 		Subdivision 1.Prohibited practices. A nursing facility is not eligible to receive 
5.35 	medical assistance payments unless it refrains from all of the following:
6.1 	(a) Charging private paying residents rates for similar services which exceed those 
6.2 	which are approved by the state agency for medical assistance recipients as determined by 
6.3 	the prospective desk audit rate, except under the following circumstances: the nursing 
6.4 	facility may (1) charge private paying residents a higher rate for a private room, and (2) 
6.5 	charge for special services which are not included in the daily rate if medical assistance 
6.6 	residents are charged separately at the same rate for the same services in addition to 
6.7 	the daily rate paid by the commissioner. Services covered by the payment rate must be 
6.8 	the same regardless of payment source. Special services, if offered, must be available 
6.9 	to all residents in all areas of the nursing facility and charged separately at the same 
6.10 	rate. Residents are free to select or decline special services. Special services must not 
6.11 	include services which must be provided by the nursing facility in order to comply with 
6.12 	licensure or certification standards and that if not provided would result in a deficiency 
6.13 	or violation by the nursing facility. Services beyond those required to comply with 
6.14 	licensure or certification standards must not be charged separately as a special service if 
6.15 	they were included in the payment rate for the previous reporting year. A nursing facility 
6.16 	that charges a private paying resident a rate in violation of this clause is subject to an 
6.17 	action by the state of Minnesota or any of its subdivisions or agencies for civil damages. 
6.18 	A private paying resident or the resident's legal representative has a cause of action for 
6.19 	civil damages against a nursing facility that charges the resident rates in violation of this 
6.20 	clause. The damages awarded shall include three times the payments that result from the 
6.21 	violation, together with costs and disbursements, including reasonable attorneys' fees 
6.22 	or their equivalent. A private paying resident or the resident's legal representative, the 
6.23 	state, subdivision or agency, or a nursing facility may request a hearing to determine 
6.24 	the allowed rate or rates at issue in the cause of action. Within 15 calendar days after 
6.25 	receiving a request for such a hearing, the commissioner shall request assignment of an 
6.26 	administrative law judge under sections  14.48 to  14.56 to conduct the hearing as soon as 
6.27 	possible or according to agreement by the parties. The administrative law judge shall issue 
6.28 	a report within 15 calendar days following the close of the hearing. The prohibition set 
6.29 	forth in this clause shall not apply to facilities licensed as boarding care facilities which 
6.30 	are not certified as skilled or intermediate care facilities level I or II for reimbursement 
6.31 	through medical assistance. 
6.32 	(b) (a)(1) Charging, soliciting, accepting, or receiving from an applicant for 
6.33 	admission to the facility, or from anyone acting in behalf of the applicant, as a condition of 
6.34 	admission, expediting the admission, or as a requirement for the individual's continued 
6.35 	stay, any fee, deposit, gift, money, donation, or other consideration not otherwise required 
6.36 	as payment under the state plan;
7.1 	(2) requiring an individual, or anyone acting in behalf of the individual, to loan 
7.2 	any money to the nursing facility;
7.3 	(3) requiring an individual, or anyone acting in behalf of the individual, to promise 
7.4 	to leave all or part of the individual's estate to the facility; or
7.5 	(4) requiring a third-party guarantee of payment to the facility as a condition of 
7.6 	admission, expedited admission, or continued stay in the facility.
7.7 	Nothing in this paragraph would prohibit discharge for nonpayment of services in 
7.8 	accordance with state and federal regulations.
7.9 	(c) (b) Requiring any resident of the nursing facility to utilize a vendor of health 
7.10 	care services chosen by the nursing facility. A nursing facility may require a resident 
7.11 	to use pharmacies that utilize unit dose packing systems approved by the Minnesota 
7.12 	Board of Pharmacy, and may require a resident to use pharmacies that are able to meet 
7.13 	the federal regulations for safe and timely administration of medications such as systems 
7.14 	with specific number of doses, prompt delivery of medications, or access to medications 
7.15 	on a 24-hour basis. Notwithstanding the provisions of this paragraph, nursing facilities 
7.16 	shall not restrict a resident's choice of pharmacy because the pharmacy utilizes a specific 
7.17 	system of unit dose drug packing.
7.18 	(d) (c) Providing differential treatment on the basis of status with regard to public 
7.19 	assistance.
7.20 	(e) (d) Discriminating in admissions, services offered, or room assignment on the 
7.21 	basis of status with regard to public assistance or refusal to purchase special services. 
7.22 	Admissions discrimination shall include, but is not limited to:
7.23 	(1) basing admissions decisions upon assurance by the applicant to the nursing 
7.24 	facility, or the applicant's guardian or conservator, that the applicant is neither eligible for 
7.25 	nor will seek public assistance for payment of nursing facility care costs; and
7.26 	(2) engaging in preferential selection from waiting lists based on an applicant's 
7.27 	ability to pay privately or an applicant's refusal to pay for a special service.
7.28 	The collection and use by a nursing facility of financial information of any applicant 
7.29 	pursuant to a preadmission screening program established by law shall not raise an 
7.30 	inference that the nursing facility is utilizing that information for any purpose prohibited 
7.31 	by this paragraph.
7.32 	(f) (e) Requiring any vendor of medical care as defined by section  256B.02, 
7.33 	subdivision 7, who is reimbursed by medical assistance under a separate fee schedule, 
7.34 	to pay any amount based on utilization or service levels or any portion of the vendor's 
7.35 	fee to the nursing facility except as payment for renting or leasing space or equipment 
7.36 	or purchasing support services from the nursing facility as limited by section  256B.433. 
8.1 	All agreements must be disclosed to the commissioner upon request of the commissioner. 
8.2 	Nursing facilities and vendors of ancillary services that are found to be in violation of 
8.3 	this provision shall each be subject to an action by the state of Minnesota or any of its 
8.4 	subdivisions or agencies for treble civil damages on the portion of the fee in excess of that 
8.5 	allowed by this provision and section  256B.433. Damages awarded must include three 
8.6 	times the excess payments together with costs and disbursements including reasonable 
8.7 	attorney's fees or their equivalent. 
8.8 	(g) (f) Refusing, for more than 24 hours, to accept a resident returning to the same 
8.9 	bed or a bed certified for the same level of care, in accordance with a physician's order 
8.10 	authorizing transfer, after receiving inpatient hospital services.
8.11 	For a period not to exceed 180 days, the commissioner may continue to make 
8.12 	medical assistance payments to a nursing facility or boarding care home which is in 
8.13 	violation of this section if extreme hardship to the residents would result. In these cases 
8.14 	the commissioner shall issue an order requiring the nursing facility to correct the violation. 
8.15 	The nursing facility shall have 20 days from its receipt of the order to correct the violation. 
8.16 	If the violation is not corrected within the 20-day period the commissioner may reduce 
8.17 	the payment rate to the nursing facility by up to 20 percent. The amount of the payment 
8.18 	rate reduction shall be related to the severity of the violation and shall remain in effect 
8.19 	until the violation is corrected. The nursing facility or boarding care home may appeal the 
8.20 	commissioner's action pursuant to the provisions of chapter 14 pertaining to contested 
8.21 	cases. An appeal shall be considered timely if written notice of appeal is received by the 
8.22 	commissioner within 20 days of notice of the commissioner's proposed action.
8.23 	In the event that the commissioner determines that a nursing facility is not eligible 
8.24 	for reimbursement for a resident who is eligible for medical assistance, the commissioner 
8.25 	may authorize the nursing facility to receive reimbursement on a temporary basis until the 
8.26 	resident can be relocated to a participating nursing facility.
8.27 	Certified beds in facilities which do not allow medical assistance intake on July 1, 
8.28 	1984, or after shall be deemed to be decertified for purposes of section  144A.071 only. 

8.29 	EFFECTIVE DATE. This section is effective July 1, 2006.