SLS 18RS-1122 ORIGINAL
2018 Regular Session
SENATE BILL NO. 531
BY SENATOR MILKOVICH
NURSING HOMES. Provides relative to the reimbursement methodology for nursing
homes. (8/1/18)
1 AN ACT
2 To amend and reenact R.S. 46:2742, relative to the reimbursement methodology for nursing
3 homes; to provide for utilization of funds; and to provide for related matters.
4 Be it enacted by the Legislature of Louisiana:
5 Section 1. R.S. 46:2742 is hereby amended and reenacted to read as follows:
6 ยง2742. Case Medicaid patient case mix reimbursement
7 A. The Louisiana Department of Health shall establish a Medicaid patient
8 case mix reimbursement methodology for nursing homes.
9 B. No later than October 1, 2010 2018, the department shall promulgate rules
10 and regulations in accordance with the Administrative Procedure Act to provide for
11 a Medicaid patient case mix reimbursement system. The rules and regulations shall
12 may include, at a minimum, the following:
13 (1) A payment commensurate with the resource requirements of Medicaid
14 patients through the use of an acuity-based system such as Resource Utilization
15 Groups III (RUGs III) or an acuity-based system with nursing resource predictability
16 comparable to RUGs. The payment and resource requirements shall be adjusted
17 quarterly based on the case mix score for all Medicaid patients of the nursing
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1 facility. Individual nursing facility rates shall may be adjusted quarterly based on the
2 overall Medicaid patient case mix. The direct care costs, as determined in this
3 Section, shall may be re-established when the rates are re-based in accordance with
4 the provisions of this Section.
5 (2) A payment for direct care costs at a level to achieve achievement of
6 attained quality outcomes for Medicaid patients and which is no less than one
7 hundred twelve and four-tenths percent of the median of direct care costs for all
8 facilities. The system establishes a spending floor of no more than ninety-four
9 percent of the median direct care costs. If the department implements, through
10 properly promulgated rules, reductions decreasing the average rate established under
11 this system before any inflationary adjustments, the direct care spending floor shall
12 be decreased in accordance with Subsection C of this Section.
13 (3) Incentives to encourage the admission and care of heavy-care Medicaid
14 patients.
15 (4) A rate for administrative and operating costs that is no less than one
16 hundred and seven and one-half percent of the median administrative and operating
17 costs of all facilities that provides facilities the resources to if the nursing home
18 demonstrates the following:
19 (a) Provide a home- and community-based service transition counselor
20 to assist nursing home residents who wish to receive services in the community
21 complete all applications necessary to achieve deinstitutionalization.
22 (a)(b) Recruit qualified employees.
23 (b)(c) Expand training and education.
24 (c)(d) Implement competency standards.
25 (d)(e) Develop the organizational capacity to implement quality management
26 systems and practice guidelines.
27 (5) A rental system for payment of property costs that:
28 (a) Differentiates payment based upon the size, age, and condition of the
29 facility. The system establishes a minimum of three hundred square feet per licensed
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1 bed and a maximum of four hundred and fifty square feet per licensed bed provided
2 that the maximum square feet per licensed bed may be waived for consideration of
3 private rooms.
4 (b) Provides the capital for renovation, improvement, and replacement of
5 facilities by establishing a minimum rate of return of nine and one-quarter percent,
6 a maximum annual depreciation rate of one and one-quarter percent and a maximum
7 depreciable life of thirty years. The system will utilize current construction costs,
8 indexed for inflation, adjusted by the facility's age and renovations and
9 improvements to determine the facility's value the current United States Treasury
10 Bond rate plus a risk factor of two and one-half percent.
11 (c) Encourages investment in physical plant upgrades and renovations by
12 reducing the effective age, on a quarterly basis, of the facility for physical plant
13 upgrades and renovations placed in service during the quarter. The reduction in the
14 effective age will result in the facility value increasing by the cost of the renovation.
15 (d) Encourages long-term ownership by limiting the minimum occupancy
16 penalty to no more than eighty-five percent of the licensed bed capacity and by
17 reimbursing on the basis of the facility value as opposed to reimbursing on
18 accounting cost.
19 (6) A rate pass-through for property taxes, property insurance, and provider
20 fees.
21 (7) Utilization of the most current cost reports which shall be either audited
22 or given an estimated audit adjustment factor based on historical audits for rate
23 rebasing, at a minimum, biennially.
24 (8) Utilization of inflation factors that are predictive of actual nursing home
25 cost increases during the rate year. At a minimum, the inflation factor to be applied
26 shall be the Skilled Nursing Home without Capital Market Basket Index, published
27 by Data Resources Incorporated, or a comparable index, if this index ceases to be
28 published. The inflation factors shall be applied to the costs from the mid-point of
29 the cost report year and projected to the mid-point of the rate year.
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1 (9) A method for providing interim adjustments to the rates for unanticipated
2 changes in costs.
3 (10) A provision for cost reports that shall be prepared in accordance with the
4 cost reporting instructions adopted by the Medicare program using the definition of
5 allowable and non-allowable costs contained in the Medicare/Medicaid provider
6 reimbursement manual, with the exception that the department shall determine due
7 dates and extensions.
8 (11) Rebasing of rates shall occur, at a minimum, biennially.
9 C. In the event the Louisiana Department of Health is required to implement
10 reductions in the nursing home program as a result of a budget shortfall, a budget
11 reduction category shall be created. This category shall reduce the statewide average
12 Medicaid rate, without changing the parameters established in this Section, by
13 reducing the reimbursement rate paid to each nursing home using an equal amount
14 per patient per day. The direct care spending floor shall be decreased one percentage
15 point for each thirty cent reduction in the average Medicaid rate computed under this
16 system not to be reduced to below ninety percent of the median.
17 D. The state portion of the amounts collected by the Louisiana Department
18 of Health pertaining to the difference between the direct care spending floor, as
19 defined in Paragraph (B)(2) of this Section, and the actual amounts expended by the
20 nursing homes on direct care and care related costs, as determined by the Louisiana
21 Department of Health, shall be deposited into the Medicaid Trust Fund for the
22 Elderly.
23 E. Funds saved by implementation of the case mix methodology adopted
24 by administrative rule on October 1, 2018, pursuant to this Section, and
25 identified as savings based on a comparison to the same expenditures in Fiscal
26 Year 2016, shall be utilized by the department as follows:
27 (1) Twelve and one-half million dollars realized as savings shall be
28 deposited into the Community and Family Support System Fund, established
29 pursuant to R.S. 28:826, and utilized by the department to increase the number
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SLS 18RS-1122 ORIGINAL
1 of recipients of waiver slots.
2 (2) Thirteen and one-half million dollars shall be utilized by the
3 department to restore reimbursement rate cuts to home- and community-based
4 service providers.
5 F. The provisions of this Section shall serve as legislative intent and
6 authorization of law for the department to adjust the reimbursement rate of
7 nursing homes based on a revised Medicaid case mix methodology to an amount
8 not to exceed that which was established in Fiscal Year 2013-2014.
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Christine Arbo Peck.
DIGEST
SB 531 Original 2018 Regular Session Milkovich
Present law establishes a case mix reimbursement methodology for nursing homes based on
certain enumerated criteria.
Present law provides for a case mix score based on all patients at the facility. Proposed law
provides that the case mix score is for Medicaid patients only.
Present law provides for a guaranteed minimum payment for direct care costs at a level to
achieve quality outcomes. Proposed law provides for payment for achievement of quality
outcomes for Medicaid patients.
Present law provides for a guaranteed minimum payment for administrative and operating
costs for certain events and occurrences. Proposed law provides for a payment for
administrative and operating costs if the nursing home demonstrates present law and the
addition of a home- and community-based service transition counselor to assist nursing
home residents who wish to receive services in the community complete all applications
necessary to achieve deinstitutionalization.
Present law proves for a guaranteed minimum payment of 9.25% for rental system for
payment of property costs to include the capital for renovation, improvement, and
replacement of facilities. Proposed law reduces the minimum payment to the current United
States Treasury Bond rate plus a risk factor of 2.5%.
Proposed law provides that funds saved by implementation of the case mix reimbursement
methodology for nursing homes established in proposed law shall be utilized by the
department in the amount of $12.5 million deposited into the Community and Family
Support System Fund to increase waiver slots and in the amount of $13.5 million to increase
reimbursement rates to home- and community-based service providers.
Effective August 1, 2018.
(Amends R.S. 46:2742)
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Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.