2012 -- S 2720 SUBSTITUTE A

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LC01288/SUB A/2

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO HUMAN SERVICES - MEDICAL ASSISTANCE - NURSING FACILITIES

RATE REFORM

     Introduced By: Senators Goodwin, Pichardo, and Ruggerio

     Date Introduced: March 06, 2012

     Referred To: Senate Health & Human Services

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 40-8-19 of the General Laws in Chapter 40-8 entitled "Medical

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Assistance" is hereby amended to read as follows:

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     40-8-19. Rates of payment to nursing facilities. -- (a) Rate reform.

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      (1) The rates to be paid by the state to nursing facilities licensed pursuant to chapter 17

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of title 23, and certified to participate in the Title XIX Medicaid program for services rendered to

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Medicaid-eligible residents, shall be reasonable and adequate to meet the costs which must be

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incurred by efficiently and economically operated facilities in accordance with 42 U.S.C. section

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1396a(a)(13). The department of executive office of health and human services shall promulgate

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or modify the principles of reimbursement for nursing facilities in effect as of July 1, 2011 to be

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consistent with the provisions of this section and Title XIX, 42 U.S.C. section 1396 et seq., of the

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Social Security Act.

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      (2) The department of executive office of health and human services ("Executive

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Office") shall review the current methodology for providing Medicaid payments to nursing

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facilities, including other long-term care services providers, and is authorized to modify the

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principles of reimbursement to replace the current cost based methodology rates with rates based

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on a price based methodology to be paid to all facilities with recognition of the acuity of patients

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and the relative Medicaid occupancy, and to include the following elements to be developed by

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the executive office:

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     (i) A direct care rate adjusted for resident acuity;

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     (ii) An indirect care rate comprised of a base per diem for all facilities;

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     (iii) A rearray of costs for all facilities every three (3) years beginning October, 2015,

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which may or may not result in automatic per diem revisions;

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     (iv) Application of a fair rental value system;

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     (v) Application of a pass-through system; and

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     (vi) Adjustment of rates by the change in a recognized national nursing home inflation

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index to be applied on October 1st of each year, beginning October 1, 2012. Said inflation index

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shall be applied without regard for the transition factor in subsection (b)(2) below.

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     (b) Transition to full implementation of rate reform. For no less than four (4) years after

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the initial application of the price-based methodology described in subdivision (a)(2) to payment

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rates, the department shall implement a transition plan to moderate the impact of the rate reform

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on individual nursing facilities. Said transition shall include the following components:

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     (1) No nursing facility shall receive reimbursement for direct care costs that is less than

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the rate of reimbursement for direct care costs received under the methodology in effect at the

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time of passage of this act; and

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     (2) No facility shall lose or gain more than five dollars ($5.00) in its total per diem rate

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the first year of the transition. The adjustment to the per diem loss or gain may be phased out by

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twenty-five percent (25%) each year; and

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     (3) The transition plan and/or period may be modified upon full implementation of

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facility per diem rate increases for quality of care related measures. Said modifications shall be

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submitted in a report to the general assembly at least six (6) months prior to implementation.

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      (3) By no later than January 1, 2012, under the direction of the Secretary of Health and

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Human Services, the Department of Human Services shall modify the principles of

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reimbursement to include the acuity needs of patients and the relative Medicaid occupancy as a

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factor in determining the reimbursement rates to nursing facilities.

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     (b) Phase I Implementation. The department shall file a state plan amendment with the

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U.S. Department of Health and Human Services on or before November 1, 2011 to modify the

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principles of reimbursement for nursing facilities, to be effective on January 1, 2012, or as soon

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thereafter as is authorized by an approved state plan amendment, to establish price based payment

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rates for nursing facilities, recognizing patient acuity and Medicaid occupancy.

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     SECTION 2. This act shall take effect upon passage.

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LC01288/SUB A/2

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO HUMAN SERVICES - MEDICAL ASSISTANCE - NURSING FACILITIES

RATE REFORM

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     This act would make various changes to the methodology of computing nursing facility

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reimbursement rates.

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     This act would take effect upon passage.

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LC01288/SUB A/2

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