1.2relating to human services; providing long-term care provider rate adjustments;
1.3modifying the phase-in of rebased nursing facility rates; providing funding for
1.4nursing facility moratorium exceptions and extending project approval; requiring
1.5the commissioner of human services to develop recommendations on specialized
1.6care;amending Minnesota Statutes 2008, sections 144A.073, by adding a
1.7subdivision; 256B.441, subdivisions 31, 51a, 55, by adding a subdivision.
1.8BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9    Section 1. Minnesota Statutes 2008, section 144A.073, is amended by adding a
1.10subdivision to read:
1.11    Subd. 12. Extension of approval of moratorium exception projects.
1.12Notwithstanding subdivision 3, the commissioner of health shall extend project approval
1.13by an additional 18 months for an approved proposal for an exception to the nursing home
1.14licensure and certification moratorium if the proposal was approved under this section
1.15between July 1, 2007, and June 30, 2009.

1.16    Sec. 2. Minnesota Statutes 2008, section 256B.441, subdivision 31, is amended to read:
1.17    Subd. 31. Prior system year operating cost payment rate. "Prior system year
1.18operating cost payment rate" means the operating cost payment rate in effect on September
1.1930, 2008, prior to the start of each rate year under Minnesota Rules and Minnesota
1.20Statutes, not including planned closure rate adjustments under section 256B.436 or
1.21256B.437 , or single bed room incentives under section 256B.431, subdivision 42, or
1.22performance-based incentive payments under section 256B.434, subdivision 4, paragraph
1.23(d). The rate shall include the temporary rate adjustment provided to nursing facilities in
1.24Laws 2008, chapter 363, article 18, section 3, subdivision 6, paragraph (c).

2.1    Sec. 3. Minnesota Statutes 2008, section 256B.441, subdivision 51a, is amended to
2.2read:
2.3    Subd. 51a. Exception allowing contracting for specialized care. (a) For rate years
2.4beginning on or after October 1, 2016, the commissioner may negotiate increases to
2.5the care-related limit for nursing facilities that provide specialized care, at a cost to the
2.6general fund not to exceed $600,000 per year. The commissioner shall publish a request
2.7for proposals annually, and may negotiate increases to the limits that shall apply for either
2.8one or two years before the increase shall be subject to a new proposal and negotiation.
2.9The care-related limit may be increased by up to 50 percent.
2.10    (b) In selecting facilities with which to negotiate, the commissioner shall consider:
2.11    (1) the diagnoses or other circumstances of residents in the specialized program that
2.12require care that costs substantially more than the RUG's rates associated with those
2.13residents;
2.14    (2) the nature of the specialized program or programs offered to meet the needs
2.15of these individuals; and
2.16    (3) outcomes achieved by the specialized program.
2.17(c) The commissioner, in consultation with stakeholders, shall develop
2.18recommendations on which facilities and residents should qualify for specialized care
2.19under this subdivision, and how rate adjustments for specialized care should be determined.
2.20The commissioner shall report the recommendations to the legislature by January 1, 2010.

2.21    Sec. 4. Minnesota Statutes 2008, section 256B.441, subdivision 55, is amended to read:
2.22    Subd. 55. Phase-in of rebased operating payment rates. (a) For the rate years
2.23beginning October 1, 2008, to October 1, 2015, the operating payment rate calculated
2.24under this section shall be phased in by blending the operating rate with the operating
2.25payment rate determined under section 256B.434 prior year operating cost payment
2.26rate. For purposes of this subdivision, the rate to be used that is determined under
2.27section 256B.434 shall not include the portion of the operating payment rate related to
2.28performance-based incentive payments under section 256B.434, subdivision 4, paragraph
2.29(d). For the rate year beginning October 1, 2008, the operating payment rate for each
2.30facility shall be 13 percent of the operating payment rate from this section, and 87 percent
2.31of the operating payment rate from section 256B.434. For the rate year beginning October
2.321, 2009, the operating payment rate for each facility shall be 14 25.5 percent of the
2.33operating payment rate from this section, and 86 74.5 percent of the prior year operating
2.34cost payment rate from section 256B.434. For the rate year beginning October 1, 2010, the
2.35operating payment rate for each facility shall be 14 38 percent of the operating payment
3.1rate from this section, and 86 62 percent of the prior year operating cost payment rate from
3.2section 256B.434. For the rate year beginning October 1, 2011, the operating payment
3.3rate for each facility shall be 31 50.5 percent of the operating payment rate from this
3.4section, and 69 49.5 percent of the prior year operating cost payment rate from section
3.5256B.434. For the rate year beginning October 1, 2012, the operating payment rate for
3.6each facility shall be 48 63 percent of the operating payment rate from this section, and
3.752 37 percent of the prior year operating cost payment rate from section 256B.434. For
3.8the rate year beginning October 1, 2013, the operating payment rate for each facility shall
3.9be 65 75.5 percent of the operating payment rate from this section, and 35 24.5 percent
3.10of the prior year operating cost payment rate from section 256B.434. For the rate year
3.11beginning October 1, 2014, the operating payment rate for each facility shall be 82 88
3.12percent of the operating payment rate from this section, and 18 12 percent of the prior year
3.13operating cost payment rate from section 256B.434. For the rate year beginning October
3.141, 2015, the operating payment rate for each facility shall be the operating payment rate
3.15determined under this section. The blending of operating payment rates under this section
3.16shall be performed separately for each RUG's class.
3.17    (b) For the rate year beginning October 1, 2008, the commissioner shall apply limits
3.18to the operating payment rate increases under paragraph (a) by creating a minimum
3.19percentage increase and a maximum percentage increase.
3.20    (1) Each nursing facility that receives a blended October 1, 2008, operating payment
3.21rate increase under paragraph (a) of less than one percent, when compared to its operating
3.22payment rate on September 30, 2008, computed using rates with RUG's weight of 1.00,
3.23shall receive a rate adjustment of one percent.
3.24    (2) The commissioner shall determine a maximum percentage increase that will
3.25result in savings equal to the cost of allowing the minimum increase in clause (1). Nursing
3.26facilities with a blended October 1, 2008, operating payment rate increase under paragraph
3.27(a) greater than the maximum percentage increase determined by the commissioner, when
3.28compared to its operating payment rate on September 30, 2008, computed using rates with
3.29a RUG's weight of 1.00, shall receive the maximum percentage increase.
3.30    (3) Nursing facilities with a blended October 1, 2008, operating payment rate
3.31increase under paragraph (a) greater than one percent and less than the maximum
3.32percentage increase determined by the commissioner, when compared to its operating
3.33payment rate on September 30, 2008, computed using rates with a RUG's weight of 1.00,
3.34shall receive the blended October 1, 2008, operating payment rate increase determined
3.35under paragraph (a).
4.1    (4) The October 1, 2009, through October 1, 2015, operating payment rate for
4.2facilities receiving the maximum percentage increase determined in clause (2) shall be
4.3the amount determined under paragraph (a) less the difference between the amount
4.4determined under paragraph (a) for October 1, 2008, and the amount allowed under clause
4.5(2). This rate restriction does not apply to rate increases provided in any other section.
4.6    (c) A portion of the funds received under this subdivision that are in excess of
4.7operating payment rates that a facility would have received under section 256B.434, as
4.8determined in accordance with clauses (1) to (3), shall be subject to the requirements in
4.9section 256B.434, subdivision 19, paragraphs (b) to (h).
4.10    (1) Determine the amount of additional funding available to a facility, which shall be
4.11equal to total medical assistance resident days from the most recent reporting year times
4.12the difference between the blended rate determined in paragraph (a) for the rate year being
4.13computed and the blended rate for the prior year.
4.14    (2) Determine the portion of all operating costs, for the most recent reporting year,
4.15that are compensation related. If this value exceeds 75 percent, use 75 percent.
4.16    (3) Subtract the amount determined in clause (2) from 75 percent.
4.17    (4) The portion of the fund received under this subdivision that shall be subject to
4.18the requirements in section 256B.434, subdivision 19, paragraphs (b) to (h), shall equal
4.19the amount determined in clause (1) times the amount determined in clause (3).

4.20    Sec. 5. Minnesota Statutes 2008, section 256B.441, is amended by adding a
4.21subdivision to read:
4.22    Subd. 59. Rate adjustments for October 1, 2009, and October 1, 2010. For the
4.23rate years beginning October 1, 2009, and October 1, 2010, the commissioner shall make
4.24available to each nursing facility reimbursed under this section operating payment rate
4.25adjustments equal to the change in the Nursing Home with Capital Market Basket as
4.26calculated by Global Insight from the midpoint of the previous rate year to the midpoint
4.27of the next rate year. This increase shall be applied to operating rates after the rebasing
4.28adjustment provided under subdivision 55.

4.29    Sec. 6. RATE ADJUSTMENTS FOR ELDERLY WAIVER AND ALTERNATIVE
4.30CARE PROGRAMS.
4.31For the rate years beginning July 1, 2009, and July 1, 2010, the commissioner of
4.32human services shall provide rate adjustments for the elderly waiver and alternative care
4.33programs that are equal to the change in the Nursing Home with Capital Market Basket as
4.34calculated by Global Insight from the midpoint of the previous nursing home rate year to
5.1the midpoint of the next nursing home rate year. Managed care organization payment rates
5.2to providers under the elderly waiver program must reflect these rate adjustments as of
5.3the date the adjustments are effective under this section.

5.4    Sec. 7. NURSING HOME MORATORIUM EXCEPTIONS.
5.5During fiscal year 2010, the commissioner of health may approve moratorium
5.6exception projects under Minnesota Statutes, section 144A.073, for which the full
5.7annualized state share of medical assistance costs does not exceed $3,000,000. During
5.8fiscal year 2011, the commissioner of health may approve moratorium exception projects
5.9under Minnesota Statutes, section 144A.073, for which the full annualized state share of
5.10medical assistance costs does not exceed $3,000,000 less the amount approved during
5.11the first year.