1.1                          A bill for an act 
  1.2             relating to health; modifying provisions relating to 
  1.3             nursing home moratorium exceptions; amending Minnesota 
  1.4             Statutes 1994, sections 144A.071, subdivision 2, and 
  1.5             by adding a subdivision; and 144A.073, subdivisions 1, 
  1.6             2, 3, 4, 5, 8, and by adding a subdivision; repealing 
  1.7             Minnesota Statutes 1994, section 144A.073, subdivision 
  1.8             3a. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 1994, section 144A.071, 
  1.11  subdivision 2, is amended to read: 
  1.12     Subd. 2.  [MORATORIUM.] The commissioner of health, in 
  1.13  coordination with the commissioner of human services, shall deny 
  1.14  each request for new licensed or certified nursing home or 
  1.15  certified boarding care beds except as provided in subdivision 3 
  1.16  or 4a, or section 144A.073.  "Certified bed" means a nursing 
  1.17  home bed or a boarding care bed certified by the commissioner of 
  1.18  health for the purposes of the medical assistance program, under 
  1.19  United States Code, title 42, sections 1396 et seq.  
  1.20     The commissioner of human services, in coordination with 
  1.21  the commissioner of health, shall deny any request to issue a 
  1.22  license under section 252.28 and chapter 245A to a nursing home 
  1.23  or boarding care home, if that license would result in an 
  1.24  increase in the medical assistance reimbursement amount.  
  1.25     In addition, the commissioner of health must not approve 
  1.26  any construction project whose cost exceeds $500,000, or 25 
  1.27  percent of the facility's appraised value, whichever is less, 
  2.1   unless: 
  2.2      (a) any construction costs exceeding the lesser of $500,000 
  2.3   or 25 percent of the facility's appraised value are not added to 
  2.4   the facility's appraised value and are not included in the 
  2.5   facility's payment rate for reimbursement under the medical 
  2.6   assistance program; or 
  2.7      (b) the project: 
  2.8      (1) has been approved through the process described in 
  2.9   section 144A.073; 
  2.10     (2) meets an exception in subdivision 3 or 4a; 
  2.11     (3) is necessary to correct violations of state or federal 
  2.12  law issued by the commissioner of health; 
  2.13     (4) is necessary to repair or replace a portion of the 
  2.14  facility that was ~~destroyed~~ damaged by fire, lightning, 
  2.15  groundshifts, or other such hazards, including environmental 
  2.16  hazards, provided that the provisions of subdivision 4a, clause 
  2.17  (a), are met; 
  2.18     (5) as of May 1, 1992, the facility has submitted to the 
  2.19  commissioner of health written documentation evidencing that the 
  2.20  facility meets the "commenced construction" definition as 
  2.21  specified in subdivision 1a, clause (d), or that substantial 
  2.22  steps have been taken prior to April 1, 1992, relating to the 
  2.23  construction project.  "Substantial steps" require that the 
  2.24  facility has made arrangements with outside parties relating to 
  2.25  the construction project and include the hiring of an architect 
  2.26  or construction firm, submission of preliminary plans to the 
  2.27  department of health or documentation from a financial 
  2.28  institution that financing arrangements for the construction 
  2.29  project have been made; or 
  2.30     (6) is being proposed by a licensed nursing facility that 
  2.31  is not certified to participate in the medical assistance 
  2.32  program and will not result in new licensed or certified beds. 
  2.33     Prior to the final plan approval of any construction 
  2.34  project, the commissioner of health shall be provided with an 
  2.35  itemized cost estimate for the project construction costs.  If a 
  2.36  construction project is anticipated to be completed in phases, 
  3.1   the total estimated cost of all phases of the project shall be 
  3.2   submitted to the commissioner and shall be considered as one 
  3.3   construction project.  Once the construction project is 
  3.4   completed and prior to the final clearance by the commissioner, 
  3.5   the total project construction costs for the construction 
  3.6   project shall be submitted to the commissioner.  If the final 
  3.7   project construction cost exceeds the dollar threshold in this 
  3.8   subdivision, the commissioner of human services shall not 
  3.9   recognize any of the project construction costs or the related 
  3.10  financing costs in excess of this threshold in establishing the 
  3.11  facility's property-related payment rate. 
  3.12     The dollar thresholds for construction projects are as 
  3.13  follows:  for construction projects other than those authorized 
  3.14  in clauses (1) to (6), the dollar threshold is $500,000 or 25 
  3.15  percent of appraised value, whichever is less.  For projects 
  3.16  authorized after July 1, 1993, under clause (1), the dollar 
  3.17  threshold is the cost estimate submitted with a proposal for an 
  3.18  exception under section 144A.073, plus inflation as calculated 
  3.19  according to section 256B.431, subdivision 3f, paragraph (a).  
  3.20  For projects authorized under clauses (2) to (4), the dollar 
  3.21  threshold is the itemized estimate project construction costs 
  3.22  submitted to the commissioner of health at the time of final 
  3.23  plan approval, plus inflation as calculated according to section 
  3.24  256B.431, subdivision 3f, paragraph (a). 
  3.25     The commissioner of health shall adopt emergency or 
  3.26  permanent rules to implement this section or to amend the 
  3.27  emergency rules for granting exceptions to the moratorium on 
  3.28  nursing homes under section 144A.073.  The authority to adopt 
  3.29  emergency rules continues to December 30, 1992. 
  3.30     Sec. 2.  Minnesota Statutes 1994, section 144A.071, is 
  3.31  amended by adding a subdivision to read: 
  3.32     Subd. 5a.  [COST ESTIMATE OF A MORATORIUM EXCEPTION 
  3.33  PROJECT.] (a) For the purposes of this section and section 
  3.34  144A.073, the cost estimate of a moratorium exception project 
  3.35  shall include the effects of the proposed project on the costs 
  3.36  of the state subsidy for community-based services, nursing 
  4.1   services, and housing in institutional and noninstitutional 
  4.2   settings.  The commissioner of health, in cooperation with the 
  4.3   commissioner of human services, shall define the method for 
  4.4   estimating these costs in the permanent rule implementing 
  4.5   section 144A.073.  The commissioner of human services shall 
  4.6   prepare an estimate of the total state annual long-term costs of 
  4.7   each moratorium exception proposal. 
  4.8      (b) The interest rate to be used for estimating the cost of 
  4.9   each moratorium exception project proposal shall be the lesser 
  4.10  of either the prime rate plus two percentage points, or the 
  4.11  posted yield for standard conventional fixed rate mortgages of 
  4.12  the Federal Home Loan Mortgage Corporation plus two percentage 
  4.13  points as published in the Wall Street Journal and in effect 56 
  4.14  days prior to the application deadline.  If the applicant's 
  4.15  proposal uses this interest rate, the commissioner of human 
  4.16  services, in determining the facility's actual property-related 
  4.17  payment rate to be established upon completion of the project 
  4.18  must use the actual interest rate obtained by the facility for 
  4.19  the project's permanent financing up to the maximum permitted 
  4.20  under subdivision 6. 
  4.21     The applicant may choose an alternate interest rate for 
  4.22  estimating the project's cost.  If the applicant makes this 
  4.23  election, the commissioner of human services, in determining the 
  4.24  facility's actual property-related payment rate to be 
  4.25  established upon completion of the project, must use the lesser 
  4.26  of the actual interest rate obtained for the project's permanent 
  4.27  financing or the interest rate which was used to estimate the 
  4.28  proposal's project cost.  For succeeding rate years, the 
  4.29  applicant is at risk for financing costs in excess of the 
  4.30  interest rate selected. 
  4.31     Sec. 3.  Minnesota Statutes 1994, section 144A.073, 
  4.32  subdivision 1, is amended to read: 
  4.33     Subdivision 1.  [DEFINITIONS.] For purposes of this 
  4.34  section, the following terms have the meanings given them: 
  4.35     (a) "Conversion" means the relocation of a nursing home bed 
  4.36  from a nursing home to an attached hospital. 
  5.1      (b) "Relocation" means the movement of licensed nursing 
  5.2   home beds or certified boarding care beds as permitted under 
  5.3   subdivisions 4, clause (3), and 5. 
  5.4      (c) "Renovation" means extensive remodeling of, or 
  5.5   construction of an addition to, a facility on an existing site 
  5.6   with a total cost exceeding ten percent of the appraised value 
  5.7   of the facility or $200,000, whichever is less. 
  5.8      ~~(c)~~ (d) "Replacement" means the demolition ~~or~~, delicensure, 
  5.9   reconstruction, or construction of an addition to all or part of 
  5.10  an existing facility. 
  5.11     ~~(d)~~ (e) "Upgrading" means a change in the level of 
  5.12  licensure of a bed from a boarding care bed to a nursing home 
  5.13  bed in a certified boarding care facility. 
  5.14     Sec. 4.  Minnesota Statutes 1994, section 144A.073, 
  5.15  subdivision 2, is amended to read: 
  5.16     Subd. 2.  [REQUEST FOR PROPOSALS.] At the ~~intervals~~ 
  5.17  ~~specified in rules~~ authorization by the legislature of 
  5.18  additional medical assistance expenditures for exceptions to the 
  5.19  moratorium on nursing homes, the interagency committee shall 
  5.20  publish in the State Register a request for proposals for 
  5.21  nursing home projects to be licensed or certified under section 
  5.22  144A.071, subdivision 4a, clause (c).  The public notice of this 
  5.23  funding and the request for proposals must specify how the 
  5.24  approval criteria will be prioritized by the advisory review 
  5.25  panel, the interagency long-term care planning committee, and 
  5.26  the commissioner.  The notice must describe the information that 
  5.27  must accompany a request and state that proposals must be 
  5.28  submitted to the interagency committee within 90 days of the 
  5.29  date of publication.  The notice must include the amount of the 
  5.30  legislative appropriation available for the additional costs to 
  5.31  the medical assistance program of projects approved under this 
  5.32  section.  If no money is appropriated for a year, ~~the notice for~~ 
  5.33  ~~that year must state that proposals will not be requested~~ 
  5.34  ~~because no appropriations were made~~ the interagency committee 
  5.35  shall publish a notice to that effect, and no proposals shall be 
  5.36  requested.  If money is appropriated, the interagency committee 
  6.1   shall initiate the application and review process described in 
  6.2   this section at least twice each biennium and up to four times 
  6.3   each biennium, according to dates established by rule.  
  6.4   Authorized funds shall be allocated proportionally to the number 
  6.5   of processes.  Funds not encumbered by an earlier process within 
  6.6   a biennium shall carry forward to subsequent iterations of the 
  6.7   process.  Authorization for expenditures does not carry forward 
  6.8   into the following biennium.  To be considered for approval, a 
  6.9   proposal must include the following information: 
  6.10     (1) whether the request is for renovation, replacement, 
  6.11  upgrading, ~~or~~ conversion, or relocation; 
  6.12     (2) a description of the problem the project is designed to 
  6.13  address; 
  6.14     (3) a description of the proposed project; 
  6.15     (4) an analysis of projected costs of the nursing facility 
  6.16  proposal, including initial construction and remodeling costs~~,~~; 
  6.17  site preparation costs~~,~~; financing costs, including the current 
  6.18  estimated long-term financing costs of the proposal, which 
  6.19  consists of estimates of the amount and sources of money, 
  6.20  reserves if required under the proposed funding mechanism, 
  6.21  annual payments scheduled, interest rates, length of term, 
  6.22  closing costs and fees, insurance costs, and any completed 
  6.23  marketing study or underwriting review; and estimated operating 
  6.24  costs during the first two years after completion of the 
  6.25  project; 
  6.26     (5) for proposals involving replacement of all or part of a 
  6.27  facility, the proposed location of the replacement facility and 
  6.28  an estimate of the cost of addressing the problem through 
  6.29  renovation; 
  6.30     (6) for proposals involving renovation, an estimate of the 
  6.31  cost of addressing the problem through replacement; 
  6.32     (7) the proposed timetable for commencing construction and 
  6.33  completing the project; ~~and~~ 
  6.34     (8) a statement of any licensure or certification issues, 
  6.35  such as certification survey deficiencies; 
  6.36     (9) the proposed relocation plan for current residents if 
  7.1   beds are to be closed so that the department of human services 
  7.2   can estimate the total costs of a proposal; and 
  7.3      (10) other information required by permanent rule of the 
  7.4   commissioner of health in accordance with subdivisions 4 and 8. 
  7.5      Sec. 5.  Minnesota Statutes 1994, section 144A.073, 
  7.6   subdivision 3, is amended to read: 
  7.7      Subd. 3.  [REVIEW AND APPROVAL OF PROPOSALS.] Within the 
  7.8   limits of money specifically appropriated to the medical 
  7.9   assistance program for this purpose, the interagency long-term 
  7.10  care planning committee may recommend that the commissioner of 
  7.11  health grant exceptions to the nursing home licensure or 
  7.12  certification moratorium for proposals that satisfy the 
  7.13  requirements of this section.  The interagency committee shall 
  7.14  appoint an advisory review panel composed of representatives of 
  7.15  consumers and providers to review proposals and provide comments 
  7.16  and recommendations to the committee.  The commissioners of 
  7.17  human services and health shall provide staff and technical 
  7.18  assistance to the committee for the review and analysis of 
  7.19  proposals.  The interagency committee shall hold a public 
  7.20  hearing before submitting recommendations to the commissioner of 
  7.21  health on project requests.  The committee shall submit 
  7.22  recommendations within 150 days of the date of the publication 
  7.23  of the notice~~, based on a comparison and ranking of proposals~~ 
  7.24  ~~using the criteria in subdivision 4~~.  The commissioner of health 
  7.25  shall approve or disapprove a project within 30 days after 
  7.26  receiving the committee's recommendations.  The advisory review 
  7.27  panel, the committee, and the commissioner of health shall base 
  7.28  their recommendations, approvals, or disapprovals on a 
  7.29  comparison and ranking of proposals using only the criteria in 
  7.30  subdivision 4 and in emergency and permanent rules adopted by 
  7.31  the commissioner.  The cost to the medical assistance program of 
  7.32  the proposals approved must be within the limits of the 
  7.33  appropriations specifically made for this purpose.  Approval of 
  7.34  a proposal expires 18 months after approval by the commissioner 
  7.35  of health unless the facility has commenced construction as 
  7.36  defined in section 144A.071, subdivision 1a, paragraph (d).  The 
  8.1   committee's report to the legislature, as required under section 
  8.2   144A.31, must include the projects approved, the criteria used 
  8.3   to recommend proposals for approval, and the estimated costs of 
  8.4   the projects, including the costs of initial construction and 
  8.5   remodeling, and the estimated operating costs during the first 
  8.6   two years after the project is completed. 
  8.7      Sec. 6.  Minnesota Statutes 1994, section 144A.073, is 
  8.8   amended by adding a subdivision to read: 
  8.9      Subd. 3c.  [COST NEUTRAL RELOCATION 
  8.10  PROJECTS.] Notwithstanding subdivision 3, the interagency 
  8.11  committee may at any time accept proposals for relocations that 
  8.12  are cost neutral with respect to state costs as defined in 
  8.13  section 144A.071, subdivision 5a.  The committee shall review 
  8.14  these applications and make recommendations to the commissioner 
  8.15  within 90 days.  The committee must evaluate proposals according 
  8.16  to subdivision 4, clauses (1) to (3), and other criteria 
  8.17  established in rule.  The commissioner shall approve or 
  8.18  disapprove a project within 30 days of receiving the committee's 
  8.19  recommendation. 
  8.20     Sec. 7.  Minnesota Statutes 1994, section 144A.073, 
  8.21  subdivision 4, is amended to read: 
  8.22     Subd. 4.  [CRITERIA FOR REVIEW.] ~~(a)~~ The following criteria 
  8.23  ~~must~~ shall be used in a consistent manner to compare ~~and~~, 
  8.24  evaluate, and rank all proposals submitted.  Except for the 
  8.25  criteria specified in clause (3), the application of criteria 
  8.26  listed under this subdivision shall not reflect any distinction 
  8.27  based on the geographic location of the proposed project: 
  8.28     (1) ~~the extent to which the average occupancy rate of the~~ 
  8.29  ~~facility supports the need for the proposed project;~~ 
  8.30     ~~(2) the extent to which the average occupancy rate of all~~ 
  8.31  ~~facilities in the county in which the applicant is located,~~ 
  8.32  ~~together with all contiguous Minnesota counties, supports the~~ 
  8.33  ~~need for the proposed project;~~ 
  8.34     ~~(3)~~ the extent to which the proposal furthers state 
  8.35  long-term care goals, including the goals stated in section 
  8.36  144A.31, and including the goal of enhancing the availability 
  9.1   and use of alternative care services and the goal of reducing 
  9.2   the number of long-term care resident rooms with more than two 
  9.3   beds; 
  9.4      ~~(4) the cost-effectiveness of the proposal, including~~ (2) 
  9.5   the proposal's long-term effects on ~~the~~ state costs ~~of the~~ 
  9.6   ~~medical assistance program, as determined by the commissioner of~~ 
  9.7   ~~human services; and~~ including the cost estimate of the project 
  9.8   according to section 144A.071, subdivision 5a; 
  9.9      ~~(5) other factors developed in rule by the commissioner of~~ 
  9.10  ~~health that evaluate and assess how the proposed project will~~ 
  9.11  ~~further promote or protect the health, safety, comfort,~~ 
  9.12  ~~treatment, or well-being of the facility's residents.~~ 
  9.13     ~~(b) In addition to the criteria in paragraph (a), the~~ 
  9.14  ~~following criteria must be used to evaluate, compare, and rank~~ 
  9.15  ~~proposals involving renovation or replacement:~~ 
  9.16     (3) the extent to which the proposal promotes equitable 
  9.17  access to long-term care services in nursing homes through 
  9.18  redistribution of the nursing home bed supply, as measured by 
  9.19  the number of beds relative to the population 85 or older, 
  9.20  projected to the year 2000 by the state demographer, and 
  9.21  according to items (i) to (iv): 
  9.22     (i) reduce beds in counties where the supply is high, 
  9.23  relative to the statewide mean, and increase beds in counties 
  9.24  where the supply is low, relative to the statewide mean; 
  9.25     (ii) adjust the bed supply so as to create the greatest 
  9.26  benefits in improving the distribution of beds; 
  9.27     (iii) adjust the existing bed supply in counties so that 
  9.28  the bed supply in the counties, together with all contiguous 
  9.29  Minnesota counties, moves toward the statewide mean; and 
  9.30     (iv) adjust the existing bed supply so that the 
  9.31  distribution of beds as projected for the year 2020 would be 
  9.32  consistent with projected need, based on the methodology 
  9.33  outlined in the interagency long-term care committee's 1993 
  9.34  nursing home bed distribution study; 
  9.35     ~~(1)~~ (4) the extent to which the project improves conditions 
  9.36  that affect the health or safety of residents, such as narrow 
 10.1   corridors, narrow door frames, unenclosed fire exits, and wood 
 10.2   frame construction, and similar provisions contained in fire and 
 10.3   life safety codes and licensure and certification rules; 
 10.4      ~~(2)~~ (5) the extent to which the project improves conditions 
 10.5   that affect the comfort or quality of life of residents in a 
 10.6   facility or the ability of the facility to provide efficient 
 10.7   care, such as a relatively high number of residents in a room; 
 10.8   inadequate lighting or ventilation; poor access to bathing or 
 10.9   toilet facilities; a lack of available ancillary space for 
 10.10  dining rooms, day rooms, or rooms used for other activities; 
 10.11  problems relating to heating, cooling, or energy efficiency; 
 10.12  inefficient location of nursing stations; narrow corridors; or 
 10.13  other provisions contained in the licensure and certification 
 10.14  rules; 
 10.15     (6) the extent to which the applicant demonstrates the 
 10.16  delivery of quality care, as defined in state and federal 
 10.17  statutes and rules, to residents as evidenced by the two most 
 10.18  recent state agency certification surveys and the applicants' 
 10.19  response to those surveys; 
 10.20     (7) the extent to which the project removes the need for 
 10.21  waivers or variances previously granted by either the licensing 
 10.22  agency, certifying agency, fire marshal, or local government 
 10.23  entity; and 
 10.24     (8) other factors that may be developed in permanent rule 
 10.25  by the commissioner of health that evaluate and assess how the 
 10.26  proposed project will further promote or protect the health, 
 10.27  safety, comfort, treatment, or well-being of the facility's 
 10.28  residents. 
 10.29     Sec. 8.  Minnesota Statutes 1994, section 144A.073, 
 10.30  subdivision 5, is amended to read: 
 10.31     Subd. 5.  [REPLACEMENT RESTRICTIONS.] (a) Proposals 
 10.32  submitted or approved under this section involving replacement 
 10.33  must provide for replacement of the facility on the existing 
 10.34  site except as allowed in this subdivision.  
 10.35     (b) Facilities located in a metropolitan statistical area 
 10.36  other than the Minneapolis-St. Paul seven-county metropolitan 
 11.1   area may relocate to a site within the same census tract or a 
 11.2   contiguous census tract.  
 11.3      (c) Facilities located in the Minneapolis-St. Paul 
 11.4   seven-county metropolitan area may relocate to a site within the 
 11.5   same or contiguous health planning area as adopted in March 1982 
 11.6   by the metropolitan council.  
 11.7      (d) Facilities located outside a metropolitan statistical 
 11.8   area may relocate to a site within the same city or township, or 
 11.9   within a contiguous township.  
 11.10     (e) A facility relocated to a different site under 
 11.11  paragraph (b), (c), or (d) must not be relocated to a site more 
 11.12  than six miles from the existing site. 
 11.13     (f) The relocation of part of an existing first facility to 
 11.14  a second location, under paragraphs (d) and (e), may include the 
 11.15  relocation to the second location of up to four beds from part 
 11.16  of an existing third facility located in a township contiguous 
 11.17  to the location of the first facility.  The six-mile limit in 
 11.18  paragraph (e) does not apply to this relocation from the third 
 11.19  facility. 
 11.20     (g) For proposals approved on January 13, 1994, under this 
 11.21  section involving the replacement of 102 licensed and certified 
 11.22  beds, the relocation of the existing first facility to the 
 11.23  second and third locations under paragraphs (d) and (e) may 
 11.24  include the relocation of up to 50 percent of the beds of the 
 11.25  existing first facility to each of the locations.  The six-mile 
 11.26  limit in paragraph (e) does not apply to this relocation to the 
 11.27  third location.  Notwithstanding subdivision 3, construction of 
 11.28  this project may be commenced any time prior to January 1, 1996. 
 11.29     Sec. 9.  Minnesota Statutes 1994, section 144A.073, 
 11.30  subdivision 8, is amended to read: 
 11.31     Subd. 8.  [RULEMAKING.] The commissioner of health shall 
 11.32  adopt ~~emergency or~~ permanent rules to implement this 
 11.33  section.  The permanent rules must be in accordance with and 
 11.34  implement only the criteria listed in this section.  The 
 11.35  authority to adopt ~~emergency~~ permanent rules continues until 
 11.36  ~~December 30, 1988~~ July 1, 1996.  
 12.1      Sec. 10.  [REPEALER.] 
 12.2      Minnesota Statutes 1994, section 144A.073, subdivision 3a, 
 12.3   is repealed. 
 12.4      Sec. 11.  [EFFECTIVE DATE.] 
 12.5      Sections 2, 3, 6, 7, and 8 are effective the day following 
 12.6   final enactment.