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 August 21, 1996 shall be permitted to effect a prior certificate from the licensing agency consistent with any 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 the 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, an assisted living residence licensed pursuant to chapter 17.4 of this title may propose to seek nursing facility licensure by conversion of assisted living residence 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 assisted living residence;

(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 assisted living residence;

(iv) The assisted living residence must participate in the Medicaid program;

(v) (iv) The application must be submitted to the health services council on or before October 1, 1999;

(vi) (v) 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, 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 to greater than the level of the facility's licensed bed capacity as of August 21, 1996 plus the greater of ten (10) beds or ten percent (10%) of such licensed bed capacity. 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 (a) shall be permitted to effect a prior certificate from the licensing agency consistent with any other statutory and regulatory provisions which may further apply.

(c) Notwithstanding any other provision of the law to the contrary, including any moratorium on increasing bed capacity in nursing facilities that may otherwise apply, a nursing facility may take out of service any or all beds of its licensed capacity without impediment to its right to place back into service such beds at a future date under the same terms and conditions as applied at the time of taking them out of service.

SECTION 2. This act shall take effect upon passage.