2018 -- S 2381

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2018

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A N   A C T

RELATING TO HUMAN SERVICES -- MEDICAL ASSISTANCE

     Introduced By: Senators Goldin, Satchell, Miller, DiPalma, and Sosnowski

     Date Introduced: February 15, 2018

     Referred To: Senate 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

Assistance" is hereby amended to read as follows:

     40-8-19. Rates of payment to nursing facilities.

     (a) Rate reform.

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

title 23, and certified to participate in Title XIX of the Social Security Act for services rendered to

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

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

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

promulgate or modify the principles of reimbursement for nursing facilities in effect as of July 1,

2011, to be consistent with the provisions of this section and Title XIX, 42 U.S.C. § 1396 et seq.,

of the Social Security Act.

     (2) The executive office shall review the current methodology for providing Medicaid

payments to nursing facilities, including other long-term-care services providers, and is

authorized to modify the principles of reimbursement to replace the current cost-based

methodology rates with rates based on a price-based methodology to be paid to all facilities with

recognition of the acuity of patients and the relative Medicaid occupancy, and to include the

following elements to be developed by the executive office:

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

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

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

may or may not result in automatic per diem revisions;

     (iv) Application of a fair-rental-value system;

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

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

index to be applied on October 1st of each year, beginning October 1, 2012. This adjustment will

not occur on October 1, 2013, or October 1, 2015, but will occur on April 1, 2015. The

adjustment of rates will also not occur on October 1, 2017. Said inflation index shall be applied

without regard for the transition factor in subsection (b)(2). For purposes of October 1, 2016,

adjustment only, any rate increase that results from application of the inflation index to

subparagraphs (a)(2)(i) and (a)(2)(ii) shall be dedicated to increase compensation for direct-care

workers in the following manner: Not less than 85% of this aggregate amount shall be expended

to fund an increase in wages, benefits, or related employer costs of direct-care staff of nursing

homes. For purposes of this section, direct-care staff shall include registered nurses (RNs),

licensed practical nurses (LPNs), certified nursing assistants (CNAs), certified medical

technicians, housekeeping staff, laundry staff, dietary staff, or other similar employees providing

direct-care services; provided, however, that this definition of direct-care staff shall not include:

(i) RNs and LPNs who are classified as "exempt employees" under the Federal Fair Labor

Standards Act (29 U.S.C. § 201 et seq.); or (ii) CNAs, certified medical technicians, RNs, or

LPNs who are contracted, or subcontracted, through a third-party vendor or staffing agency. By

July 31, 2017, nursing facilities shall submit to the secretary, or designee, a certification that they

have complied with the provisions of this subparagraph (a)(2)(vi) with respect to the inflation

index applied on October 1, 2016. Any facility that does not comply with terms of such

certification shall be subjected to a clawback, paid by the nursing facility to the state, in the

amount of increased reimbursement subject to this provision that was not expended in compliance

with that certification.

     (vii) Beginning on October 1, 2018, any rate increase that results from application of the

inflation index to subsections (a)(2)(i) and (a)(2)(ii) of this section shall be dedicated to increase

compensation for direct-care workers in the following manner on October 1 of each year: Not less

than ninety-five percent (95%) of this aggregate amount shall be expended. This application of

the inflation index shall apply for Medicaid reimbursement in nursing homes for both managed

care and fee-for-service. For purposes of this subsection, direct care staff shall include registered

nurses (RNs), licensed practical nurses (LPNs), certified nursing assistants (CNAs), certified

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medical technicians, housekeeping staff, laundry staff, dietary staff or other similar employees

providing direct care services; provided, however that this definition of direct care staff shall not

include:

     (A) RNs and LPNs who are classified as "exempt employees" under the Federal Fair

Labor Standards Act (29 U.S.C. § 201 et seq.); or

     (B) CNAs, certified medical technicians, RNs or LPNs who are contracted or

subcontracted through a third-party vendor or staffing agency. By July 31, 2019, and July 31 of

each year thereafter, nursing facilities shall submit to the secretary or designee a certification that

they have complied with the provisions of subsection (a)(2)(vii) of this section with respect to the

inflation index applied on October 1. Any facility that does not comply with terms of such

certification shall be subjected to a clawback, paid by the nursing facility to the state, in the

amount of increased reimbursement subject to this provision that was not expended in compliance

with that certification.

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

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

rates, the executive office of health and human services shall implement a transition plan to

moderate the impact of the rate reform on individual nursing facilities. Said transition shall

include the following components:

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

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

time of passage of this act; for the year beginning October 1, 2017, the reimbursement for direct-

care costs under this provision will be phased out in twenty-five-percent (25%) increments each

year until October 1, 2021, when the reimbursement will no longer be in effect. No nursing

facility shall receive reimbursement for direct-care costs that is less than the rate of

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

passage of this act; and

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

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

twenty-five percent (25%) each year; except, however, for the years beginning October 1, 2015,

there shall be no adjustment to the per diem gain or loss, but the phase out shall resume

thereafter; and

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

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

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

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     (4) Notwithstanding any law to the contrary, for the twelve-month (12) period beginning

July 1, 2015, Medicaid payment rates for nursing facilities established pursuant to this section

shall not exceed ninety-eight percent (98%) of the rates in effect on April 1, 2015.

     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 increase the compensation of direct-care staff of nursing facilities as a

result of the application of the inflation index as of October 1, 2018, and on October 1 of each

year, with a certification of compliance, with respect to the inflation index, on each July 31

thereafter, subject to clawback provisions for noncompliance.

     This act would take effect upon passage.

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