First Regular Session
Seventy-fourth General Assembly
STATE OF COLORADO
INTRODUCED
LLS NO. 23-0700.01 Shelby Ross x4510
HOUSE BILL 23-1228
House Committees Senate Committees
Public & Behavioral Health & Human Services
A BILL FOR AN ACT
C
ONCERNING NURSING FACILITY REIMBURSEMENT RATE SETTING .101
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill will be available at
http://leg.colorado.gov
.)
The bill adjusts the supplemental medicaid payment rates a
qualifying nursing facility receives from the department of health care
policy and financing (state department).
Current law limits the annual increase of the general fund share of
the aggregate statewide average of the per diem rate to not more than 3%.
The bill removes this limitation and requires the general fund share be
calculated based on specific percentage increases.
The bill requires the state department to initiate a process no later
HOUSE SPONSORSHIP
McCluskie and Willford,
SENATE SPONSORSHIP
Zenzinger,
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing law.
Dashes through the words or numbers indicate deletions from existing law. than July 1, 2023, to remove the medicare costs from the provider rate
setting by July 1, 2026.
The bill repeals the requirement that only such costs as are
reasonable, necessary, and patient-related be reported for reimbursement
purposes.
The bill authorizes the state department to require a nursing
facility, as a condition of receiving medicaid funds, to submit any
documentation necessary to ensure the state's interest in transparency,
stability, and sound fiscal stewardship.
As part of developing and implementing a transition plan to
regulate nursing facility reimbursement, the bill requires the state
department to:
! No later than July 1, 2026, define "nursing home
reimbursement" and provide payments to nursing facilities;
! Engage with stakeholders regularly to seek input on any
proposed methodology changes; and
! From November 1, 2023, to November 1, 2026, submit an
annual report to the joint budget committee of the general
assembly regarding the implementation process.
The bill requires the state department to issue additional
supplemental payments to nursing facility providers with
disproportionately high medicaid utilization, to facilities that are
geographically critical to ensuring access to care, and to facilities that
admit compassionate release individuals from the department of
corrections.
Effective July 1, 2026, the bill repeals:
! The requirement that the state department exempt certain
nursing facility providers from the provider fee;
! The process for providing a wage enhancement
supplemental payment to eligible nursing home providers
that pay their employees a wage of at least $15 per hour;
and
! Requirements for issuing additional supplemental payments
to nursing facility providers that meet certain requirements.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. In Colorado Revised Statutes, 25.5-6-202, amend2
(5), (6), (9)(b)(I), and (9)(c)(I); repeal (9)(c)(II); and add (9)(b)(I.5),3
(13), (14), and (15) as follows:4
25.5-6-202. Providers - nursing facility provider5
HB23-1228-2- reimbursement - exemption - rules. (5) Subject to available moneys1
APPROPRIATIONS and the priority of the uses of the provider fees as2
established in section 25.5-6-203 (2)(b), in addition to the reimbursement3
rate components paid pursuant to subsections (1) to (4) of this section, the4
state department shall make a supplemental medicaid payment based5
upon performance to those nursing facility providers that provide services6
that result in better care and higher quality of life for their residents. This7
amount shall be determined by The state department SHALL DETERMINE8
THE PAYMENT AMOUNT based upon performance measures established in9
rules adopted by the state board in the domains of quality of life, quality10
of care, and facility management. The payment shall be computed11
annually as of July 1, 2009, and each July 1 thereafter, and shall not be12
less than twenty-five hundredths of one percent of the statewide average13
per diem rate for the combined rate components determined pursuant to14
subsections (1) to (4) of this section. BEGINNING JULY 1, 2023, THE15
PAYMENT MUST NOT BE LESS THAN TWO DOLLARS PER PATIENT PER DAY16
FOR EACH QUALIFYING FACILITY . THE STATE DEPARTMENT SHALL17
ANNUALLY REVIEW AND ADJUST THE PAYMENT BASED ON THE18
ESTABLISHED PERFORMANCE MEASURES . During each state fiscal year, the19
state department may discontinue the supplemental medicaid payment20
established pursuant to this subsection (5) to any nursing facility provider21
that fails to comply with the established performance measures during the22
state fiscal year, and the state department may initiate the supplemental23
medicaid payment established pursuant to this subsection (5) to any24
provider who THAT comes into compliance with the established25
performance measures during the state fiscal year.26
(6) Subject to available money APPROPRIATIONS and the priority27
HB23-1228
-3- of the uses of the provider fees as established in section 25.5-6-2031
(2)(b), in addition to the reimbursement rate components
PAID pursuant2
to subsections (1) to (5) of this section, the state department shall make3
a supplemental medicaid payment to nursing facility providers that have
4
SERVE residents: who have moderately to very severe mental health5
conditions, dementia diseases and related disabilities, or acquired brain6
injury as follows:7
(a) A supplemental medicaid payment shall be made to nursing8
facility providers that serve residents Who have severe mental health9
conditions that are classified at a level II by the medicaid program's10
preadmission screening and resident review assessment tool. The state11
department shall compute this payment annually as of July 1, 2009, and12
each July 1 thereafter, and it shall be MUST not BE less than two percent13
of the statewide average per diem rate for the combined rate components14
determined pursuant to subsections (1) to (4) of this section. B
EGINNING15
J
ULY 1, 2023, THE STATE DEPARTMENT SHALL ANNUALLY ADJUST THE16
RATE TO ENSURE ACCESS TO CARE FOR RESIDENTS WHO HAVE SEVERE17
MENTAL HEALTH CONDITIONS .18
(b) A supplemental medicaid payment shall be made to nursing
19
facility providers that serve residents With severe dementia diseases and20
related disabilities or acquired brain injury. The state department shall21
calculate the payment based upon the resident's cognitive assessment22
established in rules adopted by the state board. The state department shall23
compute this payment annually as of July 1, 2009, and each July 124
thereafter, and it shall be MUST not BE less than one percent of the25
statewide average per diem rate for the combined rate components26
determined under PURSUANT TO subsections (1) to (4) of this section.27
HB23-1228
-4- BEGINNING JULY 1, 2023, THE STATE DEPARTMENT SHALL ANNUALLY1
ADJUST THE RATE TO ENSURE ACCESS TO CARE FOR RESIDENTS WITH2
SEVERE DEMENTIA DISEASES AND RELATED DISABILITIES OR ACQUIRED3
BRAIN INJURY.4
(9) (b) (I) Except for changes in the number of patient days,
THE5
STATE DEPARTMENT SHALL ESTABLISH the general fund share of the6
aggregate statewide average of the per diem rate net of patient payment7
pursuant to subsections (1) to (4) of this section. shall be limited to an
8
annual increase of three percent The state's share of the reimbursement9
rate components pursuant to subsections (1) to (4) of this section may be10
funded through the provider fee assessed pursuant to the provisions of11
section 25.5-6-203 and any associated federal funds. Any provider fee12
used as the state's share and all federal funds shall MUST be excluded from13
the calculation of the general fund limitation on the annual increase14
SHARE. For the fiscal year commencing July 1, 2009, and for each fiscal15
year thereafter,
THE STATE DEPARTMENT SHALL CALCULATE the general16
fund share of the aggregate statewide average per diem rate net of patient17
payment pursuant to subsections (1) to (4) of this section shall be
18
calculated using the rates that were effective on July 1 of that fiscal year;19
EXCEPT THAT:20
(A) F
OR FISCAL YEAR 2023-24, THE STATE DEPARTMENT SHALL21
INCREASE THE AGGREGATE STATEWIDE AVERAGE OF THE PER DIEM RATE22
BY AT LEAST TEN PERCENT;23
(B) F
OR FISCAL YEAR 2024-25, THE STATE DEPARTMENT SHALL24
INCREASE THE AGGREGATE STATEWIDE AVERAGE OF THE PER DIEM RATE25
BY AT LEAST THREE PERCENT;26
(C) F
OR FISCAL YEAR 2025-26, THE STATE DEPARTMENT SHALL27
HB23-1228
-5- INCREASE THE AGGREGATE STATEWIDE AVERAGE OF THE PER DIEM RATE1
BY AT LEAST ONE AND ONE-HALF PERCENT; AND2
(D) B
EGINNING IN FISCAL YEAR 2026-27, AND FOR EACH FISCAL3
YEAR THEREAFTER, THE STATE DEPARTMENT SHALL ESTABLISH THE4
AGGREGATE STATEWIDE AVERAGE OF THE PER DIEM RATE .5
(I.5) W
HEN INCREASING THE AGGREGATE STATEWIDE AVERAGE OF6
THE PER DIEM RATE FOR FISCAL YEARS 2023 THROUGH 2027, THE7
REIMBURSEMENT RATE FOR A CLASS I NURSING FACILITY THAT OPERATES8
EFFICIENTLY AND ECONOMICALLY MUST BE REASONABLE AND ADEQUATE9
TO MEET THE NURSING HOME 'S COSTS IN ORDER TO PROVIDE CARE AND10
SERVICES IN CONFORMITY WITH APPLICABLE STATE AND FEDERAL LAWS ,11
REGULATIONS, AND QUALITY AND SAFETY STA NDARDS , AND MUST BE12
BASED ON THE MOST RECENT AUDITED AND FINALIZED COST AND13
UTILIZATION DATA AVAILABLE.14
(c) (I) The general assembly finds that the historical growth in15
nursing facility provider rates has significantly exceeded the rate of16
inflation. These increases have been caused in part by the inclusion of17
medicare costs in medicaid cost reports. The state of Colorado has an18
interest in limiting these exceptional increases in medicaid nursing facility19
provider rates by removing medicare part B direct
costs from the20
medicaid nursing facility provider rates and by imposing a ceiling on the21
medicare part A ancillary costs that are included in calculating medicaid22
nursing facility rates. N
O LATER THAN JULY 1, 2023, THE STATE23
DEPARTMENT SHALL INITIATE A PROCESS TO REMOVE MEDICARE COSTS24
FROM THE PROVIDER RATE SETTING BY JULY 1, 2026. THE STATE BOARD25
SHALL PROMULGATE RULES ESTABLISHING THE SPECIFIC METHODOLOGY26
USED FOR REMOVING MEDICARE COSTS .27
HB23-1228
-6- (II) For all rates effective on or after July 1, 1997, for each class1
I nursing facility provider, only such costs as are reasonable, necessary,2
and patient-related may be reported for reimbursement purposes. Nursing3
facility providers may include the level of medicare part A ancillary costs4
that was included and allowed in the facility's last medicaid cost report5
filed prior to July 1, 1997. Any subsequent increase in this amount shall6
be limited to either the increase in the facility's allowable medicare part7
A ancillary costs or the percentage increase in the cost of medical care8
reported in the United States department of labor bureau of labor statistics9
consumer price index for the same time period, whichever is lower. Part10
B direct costs for medicare shall be excluded from the allowable11
reimbursement for facilities.12
(13) (a) A
S A CONDITION OF RECEIVING MEDICAID FUNDS , THE13
STATE DEPARTMENT MAY REQUIRE A NURSING FACILITY TO SUBMIT ANY14
DOCUMENTATION NECESSARY TO ENSURE THE STATE 'S INTEREST IN15
TRANSPARENCY, STABILITY, AND SOUND FISCAL STEWARDSHIP ,16
INCLUDING, BUT NOT LIMITED TO:17
(I) A
NNUAL AUDITED FINANCIAL STATEMENTS , PREPARED BY AN18
INDEPENDENT ACCOUNTANT , FOR A FACILITY, MANAGEMENT COMPANY ,19
AND ANY RELATED PARTY C ONDUCTING BUSINESS WITH A20
MEDICAID-CERTIFIED NURSING FACILITY , INCLUDING AUDITED AND21
CONSOLIDATED FINANCIAL STATEMENTS FOR ANY PARENT COMP ANY THAT22
ACCEPTS, OR WHOSE SUBSIDIARIES ACCEPT, MEDICAID PAYMENTS FROM23
THE STATE OF COLORADO;24
(II) D
ETAILS ON TRANSACTIONS BETWEEN RELATED PARTIES OR25
ENTITIES THAT HAVE COMMON OWNERSHIP ; AND26
(III) O
WNERSHIP INTEREST IN REAL ESTATE , MANAGEMENT27
HB23-1228
-7- COMPANIES, FACILITY OPERATORS, AND ALL RELATED PARTIES.1
(b) T
HE STATE DEPARTMENT SHALL DETERMINE THE FORMAT FOR2
THE DOCUMENTATION PROVIDED BY EACH NURSING FACILITY .3
(c) T
HE STATE BOARD SHALL ESTABLISH BY RULE ANY PENALTIES4
FOR NONCOMPLIANCE WITH THE FINANCIAL REPORTING REQUIRED5
PURSUANT TO THIS SUBSECTION (13).6
(d) T
HE COSTS ASSOCIATED WITH THE FINANCIAL REPORTING7
REQUIRED PURSUANT TO THIS SUBSECTION (13), INCLUDING ANY AUDIT8
COSTS INCURRED BY A NURSING FACILITY , ARE AN ALLOWABLE EXPENSE9
ON THE MEDICAID COST REPORT AND MUST BE INCORPORATED AS A10
COMPONENT OF THE OVERALL REIMBURSEMENT METHODOLOGY .11
(14) T
HE GENERAL ASSEMBLY FINDS THAT THE INFLEXIBLE12
NATURE OF STATUTORILY FIXED REIMBURSEMENT RATES IS NOT IN THE13
BEST INTEREST OF THE STATE OF COLORADO. THEREFORE, THE STATE14
DEPARTMENT SHALL DEVELOP AND IMPLEMENT A TRANSITION PLAN TO15
REGULATE NURSING FACILITY REIMBURSEMENT AIMED AT IMPROVING THE16
HEALTH AND SAFETY OF RESIDENTS , PROMOTING INNOVATION AND17
IMPROVED INFECTION CONTROL EFFORTS , IMPROVING ACCESS TO CARE,18
AND PROMOTING INNOVATION IN COLORADO NURSING FACILITIES. AS PART19
OF THIS PROCESS, THE STATE DEPARTMENT SHALL :20
(a) N
O LATER THAN JULY 1, 2026, DEFINE "NURSING HOME21
REIMBURSEMENT" THROUGH RULES PROMULGATED BY THE STATE BOARD22
AND PROVIDE PAYMENTS TO NURSING FACILITIES CONSISTENT WITH THE23
PROMULGATED RULES;24
(b) E
NGAGE WITH STAKEHOLDERS REGULARLY TO SEEK INPUT ON25
ANY PROPOSED METHODOLOGY CHANGES AND ENSURE THE METHODOLOGY26
IS REASONABLE AND ADEQUATE TO MEET THE COSTS OF AN EFFICIENTLY27
HB23-1228
-8- AND ECONOMICALLY OPERATED NURSING FACILITY THAT PROVIDES CARE1
AND SERVICES IN CONFORMITY WITH APPLICABLE STATE AND FEDERAL2
LAWS, REGULATIONS, AND QUALITY AND SAFETY STANDARDS BASED ON3
THE MOST RECENT AUDIT AND FINALIZED COST AND UTILIZATION DATA4
AVAILABLE; AND5
(c) F
ROM NOVEMBER 1, 2023, TO NOVEMBER 1, 2026, SUBMIT AN6
ANNUAL REPORT TO THE JOINT B UDGET COMMITTEE OF THE GENERAL7
ASSEMBLY REGARDING THE IMPLEMENTATION PROGRESS DESCRIBED IN8
THIS SUBSECTION (14), INCLUDING, AT A MINIMUM:9
(I) R
ECORDS OF STAKEHOLDER ENGAGEMENT ;10
(II) C
ONCLUSIONS DRAWN FROM FINANCIAL OVERSIGHT11
ACTIVITIES;12
(III) I
SSUES REGARDING PAYMENT EQUITY AND ACCESS TO CARE13
COORDINATION; AND14
(IV) E
XPECTED BUDGETARY IMPACTS OF ANY METHODOLOGY15
CHANGE.16
(15) S
UBSECTIONS 1 TO 9 OF THIS SECTION AND THIS SUBSECTION17
(15)
ARE REPEALED, EFFECTIVE JULY 1, 2026.18
SECTION 2. In Colorado Revised Statutes, 25.5-6-203, amend19
(1)(c) as follows:20
25.5-6-203. Nursing facilities - provider fees - federal waiver21
- fund created - rules - repeal. (1) (c) (I) In accordance with the22
redistributive method set forth in 42 CFR 433.68 (e)(1) and (e)(2), the23
state department shall seek a waiver from the broad-based provider fees24
requirement or the uniform provider fees requirement, or both, to exclude25
nursing facility providers from the provider fee. The state department26
shall exempt the following nursing facility providers to obtain federal27
HB23-1228
-9- approval and minimize the financial impact on nursing facility providers:1
(I) (A) A facility operated as a continuing care retirement2
community that provides a continuum of services by one operational3
entity providing independent living services, assisted living services, and4
skilled nursing care on a single, contiguous campus. Assisted living5
services include an assisted living residence as defined in section6
25-27-102 C.R.S., or that provides assisted living services on-site,7
twenty-four hours per day, seven days per week.8
(II) (B) A skilled nursing facility owned and operated by the state;9
(III) (C) A nursing facility that is a distinct part of a facility that10
is licensed as a general acute care hospital; and11
(IV) (D) A facility that has forty-five or fewer licensed beds.12
(II) T
HIS SUBSECTION (1)(c) IS REPEALED, EFFECTIVE JULY 1, 2026.13
SECTION 3. In Colorado Revised Statutes, 25.5-6-208, add (7)14
as follows:15
25.5-6-208. Nursing facility provider reimbursement - rules -16
definition - repeal. (7) T
HIS SECTION IS REPEALED, EFFECTIVE JULY 1,17
2026.18
SECTION 4. In Colorado Revised Statutes, 25.5-6-210, amend19
(10); repeal (1)(a), (1)(b), (6), (7), (8), and (9); and add (1)(c) and (1)(d)20
as follows:21
25.5-6-210. Additional supplemental payments - nursing22
facilities - funding methodology - reporting requirement - rules -23
repeal. (1) Notwithstanding any other provision of law to the contrary24
and subject to available appropriations, for the purposes of reimbursing25
a medicaid-certified class I nursing facility provider, the state department26
shall issue additional supplemental payments to nursing facility providers27
HB23-1228
-10- that meet the requirements outlined in this section and the state1
department's subsequent regulation as follows:2
(a) For the 2021-22 state fiscal year, funds appropriated by the3
general assembly are for the purposes of supporting nursing facility4
providers experiencing increased staffing costs resulting from the5
COVID-19 pandemic, nursing facility providers with high medicaid6
utilization rates, or nursing facility providers currently serving individuals7
with complex needs.8
(b) Payments made in addition to those specified in subsection9
(1)(a) of this section may also be made to nursing facility providers that10
accept new admissions of medicaid-enrollment individuals with complex11
needs.12
(c) A
PAYMENT TO A NURSING FACILITY WITH13
DISPROPORTIONATELY HIGH MEDICAID UTILIZATION OR GEOGRAPHICALLY14
CRITICAL TO ENSURING ACCESS TO CARE . IN DETERMINING QUALIFYING15
FACILITIES FOR THIS PAYMENT, THE STATE DEPARTMENT SHALL CONSIDER16
ANY ACCESS TO CARE IMPACTS TO INDIVI DUALS NOT COVERED BY17
MEDICAID, INCLUDING, BUT NOT LIMITED TO, VETERANS ADMINISTRATION18
BENEFICIARIES, INDIVIDUALS WITHOUT HEALTH -CARE COVERAGE, AND19
INDIVIDUALS PENDING MEDICAID COVERAGE .20
(d) A
PAYMENT TO A NURSING FACILITY ADMITTING21
COMPASSIONATE RELEASE INDIVIDUALS FROM THE DEPARTMENT OF22
CORRECTIONS WHO NEED ADDITIONAL SERVICES TO ENSURE ACCESS TO23
CARE.24
(6) To receive an additional payment pursuant to subsection (1)(b)
25
of this section, a nursing facility provider shall work with a hospital to26
facilitate the timely discharge of medicaid members from the hospital into27
HB23-1228
-11- the nursing facility, serve medicaid members with complex needs, or1
accept compassionate release individuals from the department of2
corrections.3
(7) On or before November 1, 2022, the state department shall4
engage with stakeholders and submit a report and recommendations to the5
joint budget committee, the health and human services committee of the6
senate, and the public and behavioral health and human services7
committee of the house of representatives, or any successor committees,8
concerning suggested changes for permanently changing medicaid9
nursing facility provider reimbursement policy in Colorado to prioritize10
quality, sustainability, and sound fiscal stewardship to avoid further11
one-time cash infusions. The report must include changes that can be12
made to affirm a nursing facility provider's commitment to accountability13
and must include, at a minimum:14
(a) Infection control and culture change practices, including:15
(I) Single occupancy rooms;16
(II) Smaller facility models; and17
(III) Innovative facility models;18
(b) Behavioral health needs;19
(c) Practices regarding individuals who have complex needs20
requiring hospital discharge;21
(d) Practices regarding care and services to compassionate release22
individuals from the department of corrections;23
(e) Options for diversified funding streams to ensure continuity of24
services;25
(f) Competitive staffing practices;26
(g) The timeline and costs associated with implementing the27
HB23-1228
-12- recommended changes, including the impact on nursing facility provider1
rates; and2
(h) Identification of the amount of supplemental payments to each3
nursing facility provider and the outcome evaluation required pursuant to4
subsection (3) of this section.5
(8) The state department shall meet with the following6
stakeholders, at a minimum, to seek input on any proposed reimbursement7
methodology changes and report as required by this section:8
(a) A representative from an urban nursing facility provider;9
(b) A representative from a rural nursing facility provider;10
(c) A representative from a nursing facility trade organization;11
(d) A representative from a nursing facility with a high medicaid12
utilization rate; and13
(e) A representative from a nursing facility that serves individuals14
with complex needs.15
(9) The state board shall promulgate any rules necessary to16
implement this section.17
(10) This section is repealed, effective July 1, 2023 2026.18
SECTION 5. In Colorado Revised Statutes, 25-48-102, amend19
(4) as follows:20
25-48-102. Definitions. As used in this article 48, unless the21
context otherwise requires:22
(4) "Health-care provider" or "provider" means a person who is23
licensed, certified, registered, or otherwise authorized or permitted by law24
to administer health care or dispense medication in the ordinary course of25
business or practice of a profession. The term includes a health-care26
facility, including a long-term care facility as defined in section27
HB23-1228
-13- 25-3-103.7 (1)(f.3) and a continuing care retirement community as1
described in section 25.5-6-203 (1)(c)(I), C.R.S. (1)(c)(I)(A).2
SECTION 6. Safety clause. The general assembly hereby finds,3
determines, and declares that this act is necessary for the immediate4
preservation of the public peace, health, or safety.5
HB23-1228
-14-