1.1                          A bill for an act 
  1.2             relating to human services; providing a contractual 
  1.3             alternative payment demonstration project for 
  1.4             community-based services with persons with mental 
  1.5             retardation or related conditions; proposing coding 
  1.6             for new law in Minnesota Statutes, chapter 256B.  
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  [256B.505] [CONTRACTUAL ALTERNATIVE PAYMENT 
  1.9   DEMONSTRATION PROJECT.] 
  1.10     Subdivision 1.  [ALTERNATIVE PAYMENT DEMONSTRATION PROJECT 
  1.11  ESTABLISHED.] The commissioner of human services shall establish 
  1.12  a contractual alternative payment demonstration project to pay 
  1.13  for services provided in intermediate care facilities for 
  1.14  persons with mental retardation or related conditions (ICFs/MR) 
  1.15  under the medical assistance program.  An intermediate care 
  1.16  facility for persons with mental retardation or related 
  1.17  conditions may apply to be paid for services under the 
  1.18  contractual alternative payment demonstration project instead of 
  1.19  the cost-based payment system established under section 
  1.20  256B.501.  An intermediate care facility for persons with mental 
  1.21  retardation or related conditions electing to use the 
  1.22  alternative payment demonstration project must enter into a 
  1.23  contract with the commissioner.  Payment rates and procedures 
  1.24  for facilities electing to use the alternative payment 
  1.25  demonstration project are determined and governed by this 
  1.26  section and by the terms of the contract.  The commissioner may 
  2.1   negotiate different contract terms for different services 
  2.2   provided by intermediate care facilities for persons with mental 
  2.3   retardation or related conditions.  
  2.4      Subd. 2.  [REQUESTS FOR PROPOSALS.] (a) No later than 
  2.5   August 1, 1996, the commissioner shall publish in the State 
  2.6   Register a request for proposals to provide ICF/MR services 
  2.7   according to this section.  The commissioner must respond to all 
  2.8   proposals in a timely manner.  
  2.9      (b) The commissioner may reject any proposal if, in the 
  2.10  judgment of the commissioner, a contract with a particular 
  2.11  facility is not in the best interests of the residents of the 
  2.12  facility or the state of Minnesota.  The commissioner may accept 
  2.13  up to the number of proposals that can be adequately supported 
  2.14  with available state resources, as determined by the 
  2.15  commissioner.  The commissioner may accept proposals from a 
  2.16  single ICF/MR or from a group of ICF/MR facilities through a 
  2.17  managing entity.  The commissioner shall seek to ensure that 
  2.18  ICFs/MR under contract are located in all geographic areas of 
  2.19  the state.  
  2.20     (c) In issuing the request for proposals, the commissioner 
  2.21  may develop reasonable requirements which, in the judgment of 
  2.22  the commissioner, are necessary to protect residents or ensure 
  2.23  that the contractual alternative payment demonstration project 
  2.24  for ICFs/MR furthers the interest of the state of Minnesota.  
  2.25  The request for proposals may include, but not be limited to, 
  2.26  the following requirements:  
  2.27     (1) a design to ensure that admissions to an ICF/MR are 
  2.28  appropriate and that reasonable efforts are made to place 
  2.29  residents in home and community-based settings when appropriate; 
  2.30     (2) a design to include a demonstrated willingness and 
  2.31  ability to develop and maintain data collection and retrieval 
  2.32  systems to be used in measuring outcomes; and 
  2.33     (3) a design to provide all information and assurances 
  2.34  required by the terms and conditions of the federal waiver or 
  2.35  federal approval.  
  2.36     (d) In addition to the information and assurances contained 
  3.1   in the submitted proposals, the commissioner may consider the 
  3.2   following in determining whether to accept or deny a proposal: 
  3.3      (1) the facility's history of compliance with federal and 
  3.4   state laws and rules; 
  3.5      (2) whether the facility has a record of excessive 
  3.6   licensure fines, sanctions or fraudulent cost reports; 
  3.7      (3) financial history and solvency; and 
  3.8      (4) other factors identified by the commissioner that the 
  3.9   commissioner deems relevant to a determination that a contract 
  3.10  with a particular facility is not in the best interests of the 
  3.11  residents of the facility or the state of Minnesota.  
  3.12     (e) If the commissioner rejects the proposal of an ICF/MR, 
  3.13  the commissioner shall provide written notice to the facility of 
  3.14  the reasons for the rejection, including the factors and 
  3.15  evidence upon which the rejection was based.  
  3.16     Subd. 3.  [DURATION AND TERMINATION OF CONTRACTS.] (a) 
  3.17  Subject to available resources, the commissioner may begin to 
  3.18  execute contracts with ICFs/MR October 1, 1996.  
  3.19     (b) All contracts entered into under this section are for a 
  3.20  term of four years.  Either party may terminate a contract 
  3.21  effective October 1 of any year by providing written notice to 
  3.22  the other party no later than July 1 of that year.  If neither 
  3.23  party provides written notice of termination by July 1, the 
  3.24  contract is automatically renewed for the next rate year.  The 
  3.25  parties may voluntarily renegotiate the terms of the contract at 
  3.26  any time by mutual agreement.  
  3.27     (c) If an ICF/MR fails to comply with the terms of a 
  3.28  contract, the commissioner shall provide reasonable notice 
  3.29  regarding the breach of contract and a reasonable opportunity 
  3.30  for the facility to come into compliance.  If the facility fails 
  3.31  to come into compliance or to remain in compliance, the 
  3.32  commissioner may terminate the contract.  If a contract is 
  3.33  terminated, the contract payment remains in effect for the 
  3.34  remainder of the rate year in which the contract was terminated, 
  3.35  but in all other respects the provisions of this section do not 
  3.36  apply to that facility effective the date the contract is 
  4.1   terminated.  The contract shall contain a provision governing 
  4.2   the transition back to the reimbursement system established 
  4.3   under section 256B.501.  A contract entered into under this 
  4.4   section may be amended by mutual agreement of the parties.  
  4.5      Subd. 4.  [ALTERNATIVE BASE RATES FOR ICFs/MR.] (a) For 
  4.6   ICFs/MR which have their payment rates determined under this 
  4.7   section rather than section 256B.501, the commissioner shall 
  4.8   establish a base rate under this subdivision.  The ICF/MR must 
  4.9   enter into a written contract with the commissioner.  
  4.10     (b) The payment rate for the first rate year of a 
  4.11  facility's contract under this section is the payment rate the 
  4.12  facility would have received under section 256B.431, subdivision 
  4.13  25.  
  4.14     (c) The payment rates for the second and subsequent years 
  4.15  of a facility's contract under this section are the facility's 
  4.16  previous rate year's contract payment rates plus an inflation 
  4.17  adjustment.  The index for the inflation adjustment must be 
  4.18  based on the change in the Consumer Price Index-All Items 
  4.19  (United States City Average) (CPI-U) forecasted by the Data 
  4.20  Resources, Inc., as forecasted in the fourth quarter of the 
  4.21  calendar year preceding the rate year.  The inflation adjustment 
  4.22  must be based on the 12-month period from the midpoint of the 
  4.23  previous rate year to the midpoint of the rate year for which 
  4.24  the rate is being determined. 
  4.25     Subd. 5.  [ADDITIONAL SERVICE RATES.] The commissioner may 
  4.26  include additional service payments above the base rates 
  4.27  established in section 256B.505, subdivision 4, for ICFs/MR that 
  4.28  have entered into an alternative payment demonstration 
  4.29  contract.  The additional service payment rates shall be 
  4.30  negotiated in each individual ICF/MR contract to cover all or 
  4.31  some of the following services:  (1) day training and 
  4.32  habilitation services; (2) transportation services; (3) therapy 
  4.33  services; (4) pharmacy services; (5) psychological services; (6) 
  4.34  physician or clinic services; and (7) acute care hospitalization 
  4.35  services.  Beginning October 1, 1996, the commissioner may 
  4.36  contract with ICFs/MR that have entered into alternative payment 
  5.1   demonstration project contracts under this section to provide 
  5.2   medical assistance services other than ICF/MR services to 
  5.3   residents of the facility under a prepaid, managed care payment 
  5.4   system.  For purposes of contracts entered into under this 
  5.5   subdivision, the commissioner may waive one or more of the 
  5.6   requirements for payment of ancillary services in section 
  5.7   256B.433.  Managed care contracts for other services may be 
  5.8   entered into at any time during the duration of an ICF/MR's 
  5.9   alternative payment demonstration project contract, and the 
  5.10  terms of the managed care contracts need not coincide with the 
  5.11  terms of the alternative payment demonstration project contract. 
  5.12     Subd. 6.  [CONTRACT PAYMENT RATES; APPEALS.] If an appeal 
  5.13  is pending concerning the payment rate that is the basis for 
  5.14  calculation of the payment rate under the alternative payment 
  5.15  demonstration project, the commissioner and the ICF/MR may agree 
  5.16  on an interim contract rate to be used until the appeal is 
  5.17  resolved.  When the appeal is resolved, the contract rate must 
  5.18  be adjusted retroactively in accordance with the appeal decision.
  5.19     Subd. 7.  [EXEMPTIONS.] (a) To the extent permitted by 
  5.20  federal law:  (1) a facility that has entered into a contract 
  5.21  under this section is not required to file a cost report, as 
  5.22  defined in Minnesota Rules, part 9553.0020, subpart 12, for any 
  5.23  year after the base year that is the basis for the calculation 
  5.24  of the contract payment rate for the first rate year of the 
  5.25  alternative payment demonstration project contract; and (2) a 
  5.26  facility under contract is not subject to audits of historical 
  5.27  costs of revenues, paybacks, or retroactive adjustments based on 
  5.28  these costs or revenues, except audits, paybacks, or adjustments 
  5.29  relating to the cost report that is the basis for calculation of 
  5.30  the first rate year under the contract.  
  5.31     (b) Notwithstanding paragraph (a), if by April 1, 1997, the 
  5.32  health care financing administration has not approved a required 
  5.33  waiver, or the health care financing administration otherwise 
  5.34  requires cost reports to be filed prior to the waiver's 
  5.35  approval, the commissioner shall require a cost report for the 
  5.36  rate year.  
  6.1      Subd. 8.  [CONTRACTS ARE VOLUNTARY.] Participation by an 
  6.2   ICF/MR in the alternative payment demonstration project is 
  6.3   voluntary.  The terms and procedures governing the alternative 
  6.4   payment demonstration project are determined under this section 
  6.5   and through negotiations between the commissioner and ICFs/MR 
  6.6   that have submitted a letter of intent to participate in the 
  6.7   alternative demonstration project.  For purposes of developing 
  6.8   requests for proposals and contract requirements, and 
  6.9   negotiating the terms, conditions, and requirements of 
  6.10  contracts, the commissioner is exempt from the rulemaking 
  6.11  requirements in chapter 14.  
  6.12     Subd. 9.  [FEDERAL REQUIREMENTS.] The commissioner shall 
  6.13  implement the contractual alternative payment demonstration 
  6.14  project subject to any required federal waivers or approval and 
  6.15  in a manner that is consistent with federal requirements.  If a 
  6.16  provision of this section is inconsistent with a federal 
  6.17  requirement, the federal requirement supersedes the inconsistent 
  6.18  provision.  The commissioner shall seek federal approval and 
  6.19  request waivers as necessary to implement this section.  
  6.20     Subd. 10.  [ADDITIONAL DEMONSTRATION PROJECTS.] This 
  6.21  section does not preclude the commissioner from establishing 
  6.22  demonstration projects which offer additional options for 
  6.23  providers.