2025 -- H 5986
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LC001540
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S T A T E O F R H O D E I S L A N D
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2025
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A N A C T
RELATING TO HUMAN SERVICES -- MEDICAL ASSISTANCE
Introduced By: Representatives Place, J. Brien, and Perez
Date Introduced: February 28, 2025
Referred To: House Finance
It is enacted by the General Assembly as follows:
SECTION 1. Section 40-8-19 of the General Laws in Chapter 40-8 entitled "Medical 1
Assistance" is hereby amended to read as follows: 2
40-8-19. Rates of payment to nursing facilities. 3
(a) Rate reform. 4
(1) The rates to be paid by the state to nursing facilities licensed pursuant to chapter 17 of 5
title 23, and certified to participate in Title XIX of the Social Security Act for services rendered to 6
Medicaid-eligible residents, shall be reasonable and adequate to meet the costs that must be 7
incurred by efficiently and economically operated facilities in accordance with 42 U.S.C. § 8
1396a(a)(13). The executive office of health and human services (“executive office”) shall 9
promulgate or modify the principles of reimbursement for nursing facilities in effect as of July 1, 10
2011, to be consistent with the provisions of this section and Title XIX, 42 U.S.C. § 1396 et seq., 11
of the Social Security Act. 12
(2) The executive office shall review the current methodology for providing Medicaid 13
payments to nursing facilities, including other long-term care services providers, and is authorized 14
to modify the principles of reimbursement to replace the current cost-based methodology rates with 15
rates based on a price-based methodology to be paid to all facilities with recognition of the acuity 16
of patients and the relative Medicaid occupancy, and to include the following elements to be 17
developed by the executive office: 18
(i) A direct-care rate adjusted for resident acuity; 19
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(ii) An indirect-care and other direct-care rate comprised of a base per diem for all facilities; 1
(iii) Revision of rates as necessary based on increases in direct and indirect costs beginning 2
October 2024 utilizing data from the most recent finalized year of facility cost report. The per diem 3
rate components deferred in subsections (a)(2)(i) and (a)(2)(ii) of this section shall be adjusted 4
accordingly to reflect changes in direct and indirect care costs since the previous rate review; 5
(iv) Application of a fair-rental value system; 6
(v) Application of a pass-through system; and 7
(vi) Adjustment of rates by the change in a recognized national nursing home inflation 8
index to be applied on October 1 of each year, beginning October 1, 2012. This adjustment will not 9
occur on October 1, 2013, October 1, 2014, or October 1, 2015, but will occur on April 1, 2015. 10
The adjustment of rates will also not occur on October 1, 2017, October 1, 2018, October 1, 2019, 11
and October 2022. Effective July 1, 2018, rates paid to nursing facilities from the rates approved 12
by the Centers for Medicare and Medicaid Services and in effect on October 1, 2017, both fee-for-13
service and managed care, will be increased by one and one-half percent (1.5%) and further 14
increased by one percent (1%) on October 1, 2018, and further increased by one percent (1%) on 15
October 1, 2019. Effective October 1, 2022, rates paid to nursing facilities from the rates approved 16
by the Centers for Medicare and Medicaid Services and in effect on October 1, 2021, both fee-for-17
service and managed care, will be increased by three percent (3%). In addition to the annual nursing 18
home inflation index adjustment, there shall be a base rate staffing adjustment of one-half percent 19
(0.5%) on October 1, 2021, one percent (1.0%) on October 1, 2022, and one and one-half percent 20
(1.5%) on October 1, 2023. The inflation index shall be applied without regard for the transition 21
factors in subsections (b)(1) and (b)(2). For purposes of October 1, 2016, adjustment only, any rate 22
increase that results from application of the inflation index to subsections (a)(2)(i) and (a)(2)(ii) 23
shall be dedicated to increase compensation for direct-care workers in the following manner: Not 24
less than 85% of this aggregate amount shall be expended to fund an increase in wages, benefits, 25
or related employer costs of direct-care staff of nursing homes. For purposes of this section, direct-26
care staff shall include registered nurses (RNs), licensed practical nurses (LPNs), certified nursing 27
assistants (CNAs), certified medical technicians, housekeeping staff, laundry staff, dietary staff, or 28
other similar employees providing direct-care services; provided, however, that this definition of 29
direct-care staff shall not include: (i) RNs and LPNs who are classified as “exempt employees” 30
under the federal Fair Labor Standards Act (29 U.S.C. § 201 et seq.); or (ii) CNAs, certified medical 31
technicians, RNs, or LPNs who are contracted, or subcontracted, through a third-party vendor or 32
staffing agency. By July 31, 2017, nursing facilities shall submit to the secretary, or designee, a 33
certification that they have complied with the provisions of this subsection (a)(2)(vi) with respect 34
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to the inflation index applied on October 1, 2016. Any facility that does not comply with the terms 1
of such certification shall be subjected to a clawback, paid by the nursing facility to the state, in the 2
amount of increased reimbursement subject to this provision that was not expended in compliance 3
with that certification. 4
(3) Commencing on October 1, 2021, eighty percent (80%) of any rate increase that results 5
from application of the inflation index to subsections (a)(2)(i) and (a)(2)(ii) of this section shall be 6
dedicated to increase compensation for all eligible direct-care workers in the following manner on 7
October 1, of each year. 8
(i) For purposes of this subsection, compensation increases shall include base salary or 9
hourly wage increases, benefits, other compensation, and associated payroll tax increases for 10
eligible direct-care workers. This application of the inflation index shall apply for Medicaid 11
reimbursement in nursing facilities for both managed care and fee-for-service. For purposes of this 12
subsection, direct-care staff shall include registered nurses (RNs), licensed practical nurses (LPNs), 13
certified nursing assistants (CNAs), certified medication technicians, licensed physical therapists, 14
licensed occupational therapists, licensed speech-language pathologists, mental health workers 15
who are also certified nurse assistants, physical therapist assistants, housekeeping staff, laundry 16
staff, dietary staff, or other similar employees providing direct-care services; provided, however 17
that this definition of direct-care staff shall not include: 18
(A) RNs and LPNs who are classified as “exempt employees” under the federal Fair Labor 19
Standards Act (29 U.S.C. § 201 et seq.); or 20
(B) CNAs, certified medication technicians, RNs, or LPNs who are contracted or 21
subcontracted through a third-party vendor or staffing agency. 22
(4)(i) By July 31, 2021, and July 31 of each year thereafter, nursing facilities shall submit 23
to the secretary or designee a certification that they have complied with the provisions of subsection 24
(a)(3) of this section with respect to the inflation index applied on October 1. The executive office 25
of health and human services (EOHHS) shall create the certification form nursing facilities must 26
complete with information on how each individual eligible employee’s compensation increased, 27
including information regarding hourly wages prior to the increase and after the compensation 28
increase, hours paid after the compensation increase, and associated increased payroll taxes. A 29
collective bargaining agreement can be used in lieu of the certification form for represented 30
employees. All data reported on the compliance form is subject to review and audit by EOHHS. 31
The audits may include field or desk audits, and facilities may be required to provide additional 32
supporting documents including, but not limited to, payroll records. 33
(ii) Any facility that does not comply with the terms of certification shall be subjected to a 34
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clawback and twenty-five percent (25%) penalty of the unspent or impermissibly spent funds, paid 1
by the nursing facility to the state, in the amount of increased reimbursement subject to this 2
provision that was not expended in compliance with that certification. 3
(iii) In any calendar year where no inflationary index is applied, eighty percent (80%) of 4
the base rate staffing adjustment in that calendar year pursuant to subsection (a)(2)(vi) of this 5
section shall be dedicated to increase compensation for all eligible direct-care workers in the 6
manner referenced in subsections (a)(3)(i), (a)(3)(i)(A), and (a)(3)(i)(B) of this section. 7
(b) Transition to full implementation of rate reform. For no less than four (4) years after 8
the initial application of the price-based methodology described in subsection (a)(2) to payment 9
rates, the executive office of health and human services shall implement a transition plan to 10
moderate the impact of the rate reform on individual nursing facilities. The transition shall include 11
the following components: 12
(1) No nursing facility shall receive reimbursement for direct-care costs that is less than 13
the rate of reimbursement for direct-care costs received under the methodology in effect at the time 14
of passage of this act; for the year beginning October 1, 2017, the reimbursement for direct-care 15
costs under this provision will be phased out in twenty-five-percent (25%) increments each year 16
until October 1, 2021, when the reimbursement will no longer be in effect; and 17
(2) No facility shall lose or gain more than five dollars ($5.00) in its total, per diem rate the 18
first year of the transition. An adjustment to the per diem loss or gain may be phased out by twenty-19
five percent (25%) each year; except, however, for the years beginning October 1, 2015, there shall 20
be no adjustment to the per diem gain or loss, but the phase out shall resume thereafter; and 21
(3) The transition plan and/or period may be modified upon full implementation of facility 22
per diem rate increases for quality of care-related measures. Said modifications shall be submitted 23
in a report to the general assembly at least six (6) months prior to implementation. 24
(4) Notwithstanding any law to the contrary, for the twelve-month (12) period beginning 25
July 1, 2015, Medicaid payment rates for nursing facilities established pursuant to this section shall 26
not exceed ninety-eight percent (98%) of the rates in effect on April 1, 2015. Consistent with the 27
other provisions of this chapter, nothing in this provision shall require the executive office to restore 28
the rates to those in effect on April 1, 2015, at the end of this twelve-month (12) period. 29
(5) There is hereby appropriated out of any money in the treasury not otherwise 30
appropriated for the fiscal year 2026, the sum of thirty three million three hundred thousand dollars 31
($33,300,000), of which fourteen million four hundred fifteen thousand ninety-seven dollars 32
($14,415,097) shall come from general revenues and eighteen million eight hundred eighty-four 33
thousand nine hundred three dollars ($18,884,903) shall come from available federal funds, thereby 34
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reducing Medicaid managed care and increasing Medicaid nursing facility rates. 1
SECTION 2. This act shall take effect upon passage. 2
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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 reduce the appropriation to Medicaid managed care in fiscal year 2025 - 1
2026 in order to increase the rates for Medicaid nursing facilities. 2
This act would take effect upon passage. 3
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