2021 -- H 6050

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LC002160

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2021

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A N   A C T

RELATING TO HUMAN SERVICES -- MEDICAL ASSISTANCE

     Introduced By: Representative June Speakman

     Date Introduced: March 01, 2021

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 40-8-19.1 of the General Laws in Chapter 40-8 entitled "Medical

Assistance" is hereby amended to read as follows:

     40-8-19.1. Nursing facility financial oversight.

     (a) On an annual basis, every licensed nursing facility participating in the medical

assistance program shall file with the department: a financial statement or other financial

information acceptable to the department with its annual cost report (BM-64) for the time period

covered by the cost report that would provide sufficient information for the department to assess

the facility's financial status.

     (1) A BM-64 cost report; and

     (2) Audited financial statements including, but not limited to, an income statement, a

balance sheet, a cash flow statement, and a statement of shareholders equity, that are prepared:

     (i) By a certified public accountant who is licensed in the state of Rhode Island; and

     (ii) In accordance with generally acceptable accounting principles.

     (b) The department shall, by regulation:

     (1) Develop, in consultation with the department of health, criteria for the financial

statements or financial information to be submitted in lieu of the financial statement as required in

subsection (a);

     (2)(1) Develop criteria for reviewing the BM-64 cost reports and financial statement

statements or financial information submitted and assessing the financial status of facilities to

determine if they have sufficient resources to meet operational and financial expenses and to

comply with resident care and facility standards; and

     (3)(2) Establish a set of indicators or criteria that would indicate if a facility's financial

status is marginal of if a facility is having severe financial difficulties. These criteria shall include,

but not be limited to:

     (i) Significant operating losses for two (2) successive years;

     (ii) Frequent requests for advance on Medicaid reimbursements;

     (iii) Unfavorable working capital ratios of assets to liabilities;

     (iv) High proportion of accounts receivable more than ninety (90) days' old;

     (v) Increasing accounts payable, unpaid taxes, and/or payroll-related costs;

     (vi) Minimal or decreasing equity and/or reserves;

     (vii) High levels of debt and high borrowing costs.

     (c) Whenever a facility's financial status is determined to be marginal or to have severe

financial difficulties, the department shall notify the director of the department of health.

     (d) Special rate appeal pursuant to § 23-17-12.7. The department shall file a state plan

amendment with the United States Department of Health and Human Services to modify the

principles of reimbursement for nursing facilities, to be effective on October 1, 2005, or as soon

thereafter as is authorized by an approved state plan amendment, to assign a special prospective

appeal rate for any facility for which, pursuant to § 23-17-12.6, the department of health has

appointed an independent quality monitor; the department of health has required to engage an

independent quality consultant or temporary manager; and/or the department of health pursuant to

§ 23-17-12.7 has been required to develop and implement a plan of correction and remediation to

address concerns regarding resident care and coincident financial solvency. The special prospective

appeal rate shall be assigned for a duration of not less than six (6) months, shall be based upon the

additional cost of the independent quality monitor, independent quality consultant, or temporary

manager, as the case may be, or the approved spending plan set forth in the plan of correction and

remediation, and subject to review-of-cost report, and subsequent extension at the discretion of the

department, at six-month (6) intervals for a maximum of eighteen (18) months thereafter. In

calculating the prospective per diem, the department shall disregard the cost center ceilings for the

direct labor and other operating expense cost centers. The department shall recoup any funds

specified in the spending plan that have not been expended.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO HUMAN SERVICES -- MEDICAL ASSISTANCE

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     This act would require that audited financial statements be submitted by nursing homes to

ensure better financial reporting.

     This act would take effect upon passage.

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LC002160

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