It is enacted by the General Assembly as follows:

SECTION 1. Section 23-17-44 of the General Laws in Chapter 23-17 entitled "Licensing of Health Care Facilities" is hereby amended to read as follows:

23-17-44. Moratorium on new initial nursing facility licensed beds and on increases to the licensed capacity of existing nursing facility licenses -- (a) The licensing agency shall issue no new initial licenses for nursing facilities prior to July 1, 2004; provided, however, that: (1) any person holding a previously issued and valid certificate of need as of the date of passage of this section [August 21, 1996] shall be permitted to effect such prior certificate from the licensing agency consistent with such other statutory and regulatory provisions which may further apply; (2) any person holding a nursing facility license may undertake activities to construct and operate a replacement nursing facility with the same or lower bed capacity as is presently licensed provided that such replacement facility may only be licensed upon the otherwise unconditional cessation of operation of the previously licensed nursing facility; (3) any certificate of need application under active review before the state agency as of January 10, 1996, which application seeks approval of a proposal to establish a new nursing facility or seeks to increase the licensed bed capacity of an existing nursing facility shall continue to be reviewed under all the statutory and regulatory requirements in effect at the time the application was accepted for review by the state agency; and (4) on July 1, 1999, if the statewide occupancy rate of licensed nursing facility beds exceeds ninety-two percent (92%) for the preceding calendar year, as determined by the department of human services, a residential care/assisted living facility licensed pursuant to chapter 17.4 of this title may propose to seek nursing facility licensure by conversion of residential care/assisted living facility rooms within its existing physical plant; provided however, that: (i) the number of nursing facility beds to be licensed does not exceed the lesser of twenty (20) beds or ten percent (10%) of the licensed bed capacity of the residential care/assisted living facility; (ii) the capital expenditures associated with the implementation of the nursing facility beds does not exceed five hundred thousand dollars ($500,000); (iii) the nursing facility shall be limited in taking residents to those persons who are transferring from residency at the residential care/assisted living facility; (iv) the residential care/assisted living facility must participate in the Medicaid program; (v) the application must be submitted to the health services council on or before October 1, 1999; (vi) the facility must comply with all requirements of the Health Care Certificate of Need Act, chapter 15 of title 23.

(b) Prior to July 1, 2001 July 1, 2004, the licensing agency shall not increase the licensed bed capacity of any existing licensed nursing facility, including any nursing facility approved for change in ownership pursuant to section 23-17-14, except for the greater of ten (10) beds or ten percent (10%) of the facility's licensed capacity; provided, however, that any person holding a previously issued and valid certificate of need as of the date of passage of this section or who shall subsequently be granted a certificate of need pursuant to subsection (1) above shall be permitted to effect such prior certificate from the licensing agency consistent with such other statutory and regulatory provisions which may further apply.

SECTION 2. This act shall take effect upon passage.