1.1 	A bill for an act
1.2 	relating to health; providing for a nursing facility
1.3 	closure and alternative service development process;
1.4 	requiring the commissioner of finance to issue
1.5 	appropriation bonds; establishing a critical access
1.6 	nursing facility designation; updating provisions
1.7 	governing the competitive moratorium exception
1.8 	process; appropriating money; amending Minnesota
1.9 	Statutes 2004, section 144A.073, subdivisions 2, 3, 4,
1.10 	5, by adding a subdivision; proposing coding for new
1.11 	in Minnesota Statutes, chapters 16A, 144A; repealing
1.12 	Minnesota Statutes 2004, section 144A.071, subdivision
1.13 	8.
1.14 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.15 	Section 1. [16A.663] NURSING FACILITY CLOSURE AND
1.16 	ALTERNATIVE SERVICE DEVELOPMENT PROCESS; APPROPRIATION BONDS.
1.17 		Subdivision 1.Goal. The commissioner of finance, in
1.18 	cooperation with the commissioner of health, shall issue
1.19 	appropriation bonds to establish a nursing facility closure and
1.20 	alternative service development process, that will further state
1.21 	goals of ensuring consumer access to a continuum of older adult
1.22 	services, creating an adequate supply of affordable home-based
1.23 	alternatives to care for people currently using nursing homes,
1.24 	and providing adequate funding for smaller, state of the art
1.25 	nursing homes.
1.26 		Subd. 2.Authorization. The commissioner is authorized
1.27 	to sell and issue, between July 1, 2005, and June 30, 2007, in
1.28 	one or more series or issues, state appropriation bonds to fund
1.29 	the nursing facility closure and alternative service development
2.1 	process under section 144A.074.  The proceeds of the bonds are
2.2 	appropriated for the purposes of section 144A.074.  The
2.3 	commissioner shall issue appropriation bonds at the direction of
2.4 	the commissioner of health.  The principal amount of the bonds
2.5 	must not exceed $90,000,000.  The bonds may be sold at any price
2.6 	and at public or private sale as determined by the
2.7 	commissioner.  The bonds must be sold and issued upon such terms
2.8 	and in such manner as the commissioner determines to be in the
2.9 	best interests of the state.  The bonds shall have a term of no
2.10 	more than 30 years.
2.11 		Subd. 3.Security; bonds not public debt. The bonds and
2.12 	the interest thereon must be payable solely from and secured by
2.13 	appropriations made each biennium to the debt service fund
2.14 	established for this purpose in this section and investment
2.15 	income thereon and any bond reserve established for the bonds.
2.16 	The bonds are not public debt and the full faith, credit, and
2.17 	taxing powers of the state are not pledged for their payment.
2.18 	The bonds and the interest thereon must not be paid, directly or
2.19 	indirectly, in whole or in part, from a tax of statewide
2.20 	application on any class of property, income, transaction, or
2.21 	privilege.
2.22 		Subd. 4.Debt service fund. There is established in the
2.23 	state treasury a separate and special debt service fund.  Money
2.24 	transferred or appropriated to the fund and investment income
2.25 	thereon on hand or required to be transferred to the fund must
2.26 	be used and are irrevocably appropriated for payment of the
2.27 	principal of and interest on the bonds authorized in this
2.28 	section when due.
2.29 		Subd. 5.Covenants; agreements. The commissioner may,
2.30 	for and on behalf of the state, enter into such covenants and
2.31 	agreements not inconsistent with section 144A.074 as may be
2.32 	necessary or desirable to facilitate the sale and issuance of
2.33 	the bonds on terms favorable to the state, including, but not
2.34 	limited to, covenants and agreements relating to the payment of
2.35 	and security for the bonds, tax-exemption, and disclosure of
2.36 	information required by federal and state securities laws.
3.1 	Sections 16A.672 and 16A.675 are applicable to the bonds.  The
3.2 	commissioner may pay to the United States of America any rebate
3.3 	in the amounts and at the times required by the United States
3.4 	Internal Revenue Code and treasury regulations promulgated
3.5 	thereunder in order to maintain the federal tax exemption of
3.6 	bonds issued under this section.
3.7 	
EFFECTIVE DATE. This section is effective the day
3.8 	following final enactment.

3.9 	Sec. 2. Minnesota Statutes 2004, section 144A.073,
3.10 	subdivision 2, is amended to read:
3.11 		Subd. 2.Request for proposals.  At the authorization by
3.12 	the legislature of additional medical assistance expenditures
3.13 	for exceptions to the moratorium on nursing homes, the
3.14 	commissioner shall publish in the State Register a request for
3.15 	proposals for nursing ~~home~~ facility projects to be licensed or
3.16 	certified under section 144A.071, subdivision 4a, clause (c).
3.17 	The public notice of this funding and the request for proposals
3.18 	must specify how the approval criteria will be prioritized by
3.19 	the commissioner.  The notice must describe the information that
3.20 	must accompany a request and state that proposals must be
3.21 	submitted to the commissioner within 90 days of the date of
3.22 	publication.  The notice must include the amount of the
3.23 	legislative appropriation available for the additional costs to
3.24 	the medical assistance program of projects approved under this
3.25 	section.  If no money is appropriated for a year, the
3.26 	commissioner shall publish a notice to that effect, and no
3.27 	proposals shall be requested.  If money is appropriated, the
3.28 	commissioner shall initiate the application and review process
3.29 	described in this section at least twice each biennium and up to
3.30 	four times each biennium~~, according to dates established by~~
3.31 	~~rule~~.  Authorized funds shall be allocated proportionally to the
3.32 	number of processes.  Funds not encumbered by an earlier process
3.33 	within a biennium shall carry forward to subsequent iterations
3.34 	of the process.  Authorization for expenditures does not carry
3.35 	forward into the following biennium.  To be considered for
3.36 	approval, a proposal must include the following information:
4.1 	(1) whether the request is for renovation, replacement,
4.2 	upgrading, conversion, or relocation;
4.3 	(2) a description of the problem the project is designed to
4.4 	address;
4.5 	(3) a description of the proposed project;
4.6 	(4) an analysis of projected costs of the nursing facility
4.7 	proposal, which are not required to exceed the cost threshold
4.8 	referred to in section 144A.071, subdivision 1, to be considered
4.9 	under this section, including initial construction and
4.10 	remodeling costs; site preparation costs; technology costs;
4.11 	financing costs, including the current estimated long-term
4.12 	financing costs of the proposal, which consists of estimates of
4.13 	the amount and sources of money, reserves if required under the
4.14 	proposed funding mechanism, annual payments schedule, interest
4.15 	rates, length of term, closing costs and fees, insurance costs,
4.16 	and any completed marketing study or underwriting review; and
4.17 	estimated operating costs during the first two years after
4.18 	completion of the project;
4.19 	(5) for proposals involving replacement of all or part of a
4.20 	facility, the proposed location of the replacement facility and
4.21 	an estimate of the cost of addressing the problem through
4.22 	renovation;
4.23 	(6) for proposals involving renovation, an estimate of the
4.24 	cost of addressing the problem through replacement;
4.25 	(7) the proposed timetable for commencing construction and
4.26 	completing the project; and 
4.27 	(8) a statement of any licensure or certification issues,
4.28 	such as certification survey deficiencies~~;~~
4.29 	~~(9) the proposed relocation plan for current residents if~~
4.30 	~~beds are to be closed so that the Department of Human Services~~
4.31 	~~can estimate the total costs of a proposal; and~~ 
4.32 	~~(10) other information required by permanent rule of the~~
4.33 	~~commissioner of health in accordance with subdivisions 4 and 8~~.

4.34 	Sec. 3. Minnesota Statutes 2004, section 144A.073,
4.35 	subdivision 3, is amended to read:
4.36 		Subd. 3.Review and approval of proposals.  Within the
5.1 	limits of money specifically appropriated to the medical
5.2 	assistance program for this purpose, the commissioner of health
5.3 	may grant exceptions to the nursing home licensure or
5.4 	certification moratorium for proposals that satisfy the
5.5 	requirements of this section.  The commissioner of health shall
5.6 	approve or disapprove a project. The commissioner of human
5.7 	services, at the recommendation of the commissioner of health,
5.8 	may adjust facility payment rates above current limits, if
5.9 	private lending financial institutions require a higher debt
5.10 	service coverage ratio.The commissioner of health shall base
5.11 	approvals or disapprovals on a comparison and ranking of
5.12 	proposals using only the criteria in subdivision 4 and ~~in rules~~
5.13 	~~adopted by the commissioner~~ recommendations made by the
5.14 	Interagency Review Panel established under subdivision 3d.  The
5.15 	cost to the medical assistance program of the proposals approved
5.16 	must be within the limits of the appropriations specifically
5.17 	made for this purpose.  Approval of a proposal expires 18 months
5.18 	after approval by the commissioner of health unless the facility
5.19 	has commenced construction as defined in section 144A.071,
5.20 	subdivision 1a, paragraph (d).

5.21 	Sec. 4. Minnesota Statutes 2004, section 144A.073, is
5.22 	amended by adding a subdivision to read:
5.23 		Subd. 3d.Interagency review panel. The commissioners of
5.24 	finance, human services, and housing finance, or their
5.25 	designees, and the director of the Minnesota Board on Aging
5.26 	shall serve in an advisory capacity to the commissioner in the
5.27 	selection and ranking of projects funded through the moratorium
5.28 	exception process under this section and the nursing facility
5.29 	closure and alternative service development process under
5.30 	section 144A.074.

5.31 	Sec. 5. Minnesota Statutes 2004, section 144A.073,
5.32 	subdivision 4, is amended to read:
5.33 		Subd. 4.Criteria for review.  The following criteria
5.34 	shall be used in a consistent manner to compare, evaluate, and
5.35 	rank all proposals submitted.  Except for the criteria specified
5.36 	in clause (3), the application of criteria listed under this
6.1 	subdivision shall not reflect any distinction based on the
6.2 	geographic location of the proposed project:
6.3 	(1) the extent to which the proposal furthers state
6.4 	long-term care goals, including the goal of enhancing the
6.5 	availability and use of alternative care services and the goal
6.6 	of reducing the number of long-term care resident rooms with
6.7 	more than two beds;
6.8 	(2) the proposal's long-term effects on state costs
6.9 	including the cost estimate of the project according to section
6.10 	144A.071, subdivision 5a;
6.11 	(3) the extent to which the proposal promotes equitable
6.12 	access to long-term care services in nursing homes through
6.13 	redistribution of the nursing home bed supply, as measured by
6.14 	the number of beds relative to the population 85 or older,
6.15 	projected ~~to the year 2000~~ by the state demographer, and
6.16 	according to items (i) to (iv):
6.17 	(i) reduce beds in counties where the supply is high,
6.18 	relative to the statewide mean, and increase beds in counties
6.19 	where the supply is low, relative to the statewide mean;
6.20 	(ii) adjust the bed supply so as to create the greatest
6.21 	benefits in improving the distribution of beds;
6.22 	(iii) adjust the existing bed supply in counties so that
6.23 	the bed supply in a county moves toward the statewide mean; and
6.24 	(iv) adjust the existing bed supply so that the
6.25 	distribution of beds as projected for the year 2020 would be
6.26 	consistent with projected need~~, based on the methodology~~
6.27 	~~outlined in the Interagency Long-Term Care Committee's nursing~~
6.28 	~~home bed distribution study~~;
6.29 	(4) the extent to which the project improves conditions
6.30 	that affect the health or safety of residents, such as narrow
6.31 	corridors, narrow door frames, unenclosed fire exits, and wood
6.32 	frame construction, and similar provisions contained in fire and
6.33 	life safety codes and licensure and certification rules;
6.34 	(5) the extent to which the project improves conditions
6.35 	that affect the comfort or quality of life of residents in a
6.36 	facility or the ability of the facility to provide efficient
7.1 	care, such as a relatively high number of residents in a room;
7.2 	inadequate lighting or ventilation; poor access to bathing or
7.3 	toilet facilities; a lack of available ancillary space for
7.4 	dining rooms, day rooms, or rooms used for other activities;
7.5 	problems relating to heating, cooling, or energy efficiency;
7.6 	inefficient location of nursing stations; narrow corridors; or
7.7 	other provisions contained in the licensure and certification
7.8 	rules;
7.9 	(6) the extent to which the applicant demonstrates the
7.10 	delivery of quality care, as defined in state and federal
7.11 	statutes and rules, to residents as evidenced by the two most
7.12 	recent state agency certification surveys and the applicants'
7.13 	response to those surveys;
7.14 	(7) the extent to which the project removes the need for
7.15 	waivers or variances previously granted by either the licensing
7.16 	agency, certifying agency, fire marshal, or local government
7.17 	entity;
7.18 	(8) the extent to which the project increases the number of
7.19 	private or single bed rooms; and
7.20 	(9) ~~other factors that may be developed in permanent rule~~
7.21 	~~by the commissioner of health that evaluate and assess how the~~
7.22 	~~proposed project will further promote or protect the health,~~
7.23 	~~safety, comfort, treatment, or well-being of the facility's~~
7.24 	~~residents~~ the extent to which the project ensures access to
7.25 	nursing facility or community-based services for specialized
7.26 	populations.

7.27 	Sec. 6. Minnesota Statutes 2004, section 144A.073,
7.28 	subdivision 5, is amended to read:
7.29 		Subd. 5.Replacement restrictions.  (a) Proposals
7.30 	submitted or approved under this section involving replacement
7.31 	must provide for replacement of the facility on the existing
7.32 	site except as allowed in this subdivision.
7.33 	(b) Facilities located in a metropolitan statistical area
7.34 	other than the Minneapolis-St. Paul seven-county metropolitan
7.35 	area may relocate to a site within the same census tract or a
7.36 	contiguous census tract.
8.1 	(c) Facilities located in the Minneapolis-St. Paul
8.2 	seven-county metropolitan area may relocate to a site within the
8.3 	same or contiguous health planning area as adopted in March 1982
8.4 	by the Metropolitan Council.
8.5 	(d) Facilities located outside a metropolitan statistical
8.6 	area may relocate to a site within the same city or township, or
8.7 	within a contiguous township.
8.8 	(e) A facility relocated to a different site under
8.9 	paragraph (b), (c), or (d) must not be relocated to a site more
8.10 	than six miles from the existing site, unless the relocation is
8.11 	necessary to meet criteria under subdivision 4 and if the
8.12 	relocation of beds is not opposed by existing nursing facility
8.13 	providers in the community to which the facility will be
8.14 	relocated.
8.15 	(f) The relocation of part of an existing first facility to
8.16 	a second location, under paragraphs (d) and (e), may include the
8.17 	relocation to the second location of up to four beds from part
8.18 	of an existing third facility located in a township contiguous
8.19 	to the location of the first facility.  The six-mile limit in
8.20 	paragraph (e) does not apply to this relocation from the third
8.21 	facility.
8.22 	(g) For proposals approved on January 13, 1994, under this
8.23 	section involving the replacement of 102 licensed and certified
8.24 	beds, the relocation of the existing first facility to the new
8.25 	location under paragraphs (d) and (e) may include the relocation
8.26 	of up to 75 beds of the existing facility.  The six-mile limit
8.27 	in paragraph (e) does not apply to this relocation.

8.28 	Sec. 7. [144A.074] NURSING FACILITY CLOSURE AND
8.29 	ALTERNATIVE SERVICE DEVELOPMENT PROCESS.
8.30 		Subdivision 1.Application process. (a) The commissioner
8.31 	of health shall request applications from nursing facilities
8.32 	that are interested in closing beds or facilities or developing
8.33 	alternative community-based services.  The commissioner shall
8.34 	request applications for at least two rounds of review between
8.35 	July 1, 2005, and June 30, 2007.  Nursing facilities applying
8.36 	for a payment must provide the commissioner, in the form and
9.1 	manner specified by the commissioner, with:
9.2 	(1) information on how any payment received will be used;
9.3 	(2) measurable outcomes, including, but not limited to, the
9.4 	number of beds closed and the number of persons expected to
9.5 	receive alternative services; and 
9.6 	(3) any other information required by the commissioner to
9.7 	review applications.
9.8 	(b) The commissioner shall give priority in the application
9.9 	process to nursing facilities that are proposing to completely
9.10 	close.  The commissioner may approve applications for partial
9.11 	closure if the commissioner believes that the savings from any
9.12 	partial closure will justify the expenditure of bond proceeds
9.13 	for that closure.  In reviewing applications, the commissioner
9.14 	shall also consider:
9.15 	(1) facility financial condition and occupancy;
9.16 	(2) the ratio of nursing home beds to the number of people
9.17 	age 85 and over in the economic development region where the
9.18 	facility is located; and 
9.19 	(3) the availability of alternatives to nursing homes in
9.20 	the economic development region in which the facility is located
9.21 	and willingness of the facility operator to develop and operate
9.22 	alternative services for people diverted from nursing facility
9.23 	care.
9.24 	(c) After reviewing applications, the commissioner shall
9.25 	forward recommendations for funding to the commissioner of human
9.26 	services.  The commissioner of human services may then authorize
9.27 	payments to nursing facilities that agree to close beds.
9.28 	Payments must not exceed $25,000 per closed bed for any facility
9.29 	and must not exceed an average of $15,000 per closed bed for any
9.30 	round of applications.
9.31 		Subd. 2.Coordination. The commissioner of health shall
9.32 	coordinate the application and review process with the
9.33 	competitive moratorium exception process under section 144A.073.
9.34 		Subd. 3.Use of payments to nursing facilities. (a)
9.35 	Nursing facilities receiving payments from the commissioner of
9.36 	health shall use the payments only for the following purposes:
10.1 	
10.2 	(1) to pay off debt on the facility incurred prior to July
10.3 	1, 2005;
10.4 	(2) to cover costs associated with closing the facility;
10.5 	and 
10.6 	(3) to cover the cost of developing and operating
10.7 	alternative services for the elderly.
10.8 	(b) The commissioner may audit nursing facilities' owners
10.9 	within two years after the owner has received a payment and
10.10 	shall recover any amounts that were not used as indicated in the
10.11 	original application.
10.12 		Subd. 4.Measurement of outcomes; report to legislature.
 10.13 	The commissioner of health, in cooperation with the commissioner
10.14 	of finance, shall verify expenditures, state savings, bed
10.15 	closures, the availability of alternative services, and progress
10.16 	toward measurable outcomes proposed by applicants and shall
10.17 	report this information to the legislature on December 1, 2006,
10.18 	and December 1, 2007.
10.19 		Subd. 5.Tracking and use of medical assistance savings.
 10.20 	The commissioner of finance shall track medical assistance
10.21 	savings from bed closures that occur both as part of and outside
10.22 	of the process described in this section and shall use the
10.23 	savings to fund requests for proposals described in subdivision
10.24 	1 and to fund initiatives as provided under section 9.  The
10.25 	commissioner of finance shall deposit all savings in a nursing
10.26 	facility closure account established in the general fund.

10.27 	Sec. 8. [144A.076] CRITICAL ACCESS NURSING FACILITIES.
10.28 	The commissioner of health, in consultation with the
10.29 	Interagency Review Panel under section 144A.073, subdivision 3d,
10.30 	shall designate as a critical access nursing facility any
10.31 	facility whose continued operation is necessary to provide
10.32 	adequate access to nursing facility services in the area of the
10.33 	state served by the facility.  The commissioner of health, in
10.34 	cooperation with the commissioner of human services, shall
10.35 	establish a special temporary rate add-on for each critical
10.36 	access nursing facility, based upon an analysis of the financial
11.1 	condition of the facility.  The commissioner of human services
11.2 	shall increase the medical assistance reimbursement rate of the
11.3 	critical access nursing facility by the amount of this rate
11.4 	add-on, following determination of the facility's rate under
11.5 	chapter 256B.  Rate increases provided under this section shall
11.6 	remain part of the base rate of the chosen critical access
11.7 	nursing facilities until the commissioner of health changes the
11.8 	amount of the special rate add-on or eliminates the critical
11.9 	access status of the facility.  The commissioner of health, in
11.10 	cooperation with the commissioner of human services, shall
11.11 	review the financial condition of a critical access nursing
11.12 	facility annually and may increase, reduce, or eliminate the
11.13 	special rate based upon the review after providing at least 30
11.14 	days' notice to the affected facility.

11.15 	Sec. 9. APPROPRIATIONS.
 11.16 		Subdivision 1.Moratorium exception process. $....... is
11.17 	appropriated from the general fund to the commissioner of human
11.18 	services for the fiscal year beginning July 1, 2006, to fund
11.19 	moratorium exceptions approved by the commissioner of health
11.20 	under Minnesota Statutes, section 144A.073.  Effective with this
11.21 	round of applications for this process, the Interagency Review
11.22 	Panel under Minnesota Statutes, section 144A.073, subdivision
11.23 	3d, shall review applications and make recommendations to the
11.24 	commissioner of health.  The Interagency Review Panel shall
11.25 	publish the request for proposals for moratorium exceptions.
11.26 	Nursing facility owners may apply for both a moratorium
11.27 	exception and a payment under the nursing facility closure and
11.28 	alternative service development process established under
11.29 	Minnesota Statutes, section 144A.074, in one application.
11.30 		Subd. 2.Community services grants. $....... is
11.31 	appropriated from the general fund to the commissioner of human
11.32 	services for the fiscal year beginning July 1, 2006, to fund
11.33 	community services grants under Minnesota Statutes, section
11.34 	256B.0917, subdivision 13.
11.35 		Subd. 3.Critical access nursing facilities. $....... is
11.36 	appropriated from the general fund to the commissioner of human
12.1 	services for the fiscal year beginning July 1, 2006, to fund
12.2 	special rate add-ons for critical access nursing facilities.
12.3 		Subd. 4.Bond repayment. $....... is appropriated from
12.4 	the general fund for the fiscal year beginning July 1, 2005, and
12.5 	$....... is appropriated from the general fund for the fiscal
12.6 	year beginning July 1, 2006, to the commissioner of finance to
12.7 	make payments to holders of the bonds used under Minnesota
12.8 	Statutes, section 16A.663.

12.9 	Sec. 10. REPEALER.
 12.10 	Minnesota Statutes 2004, section 144A.071, subdivision 8,
12.11 	is repealed.