2019 -- H 5579

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LC001729

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO HUMAN SERVICES - MEDICAL ASSISTANCE

     Introduced By: Representatives Lima, Serpa, Shekarchi, Williams, and Vella-Wilkinson

     Date Introduced: February 27, 2019

     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

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 October, 2016, with the per diem rate

components described in subsections (a)(2)(i) and (ii) of this section adjusted accordingly to

reflect increases in direct and indirect care costs since the previous rearray;

     (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 1 of each year, beginning October 1, 2012. This adjustment will

not occur on October 1, 2013, October 1, 2014, or October 1, 2015, but will occur on April 1,

2015. The adjustment of rates will also not occur on October 1, 2017, or October 1, 2018.

Effective July 1, 2018, rates paid to nursing facilities from the rates approved by the Centers for

Medicare and Medicaid Services and in effect on October 1, 2017, both fee-for-service and

managed care, will be increased by one and one-half percent (1.5%) and further increased by one

percent (1%) on October 1, 2018. Said inflation index shall be applied without regard for the

transition factors in subsections (b)(1) and (b)(2). For purposes of October 1, 2016, adjustment

only, any rate increase that results from application of the inflation index to subsections (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 subsection (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.

     (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 subsection (a)(2) to payment

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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; 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.

     (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. Consistent

with the other provisions of this chapter, nothing in this provision shall require the executive

office to restore the rates to those in effect on April 1, 2015, at the end of this twelve-month (12)

period.

     (c) Rearray, adjustments. In the event the rearray described in subsection (a)(2)(iii) of this

section is not performed as scheduled, nursing facility per diem rates shall be increased by three

percent (3%) effective on the date that the rearray was scheduled to take place, which three

percent (3%) increase shall be irrespective of and in addition to any inflation index applied

pursuant to subsection (a)(2)(vi) of this section.

     (d) Changes to state minimum wage. Notwithstanding anything else in this section to the

contrary, at any time when the state increases the required minimum wage pursuant to § 28-12-3

or successor statute, the direct care and indirect care components of the Medicaid rates to be paid

by the state to nursing facilities under subsections (a)(2)(i) and (ii) of this section shall be

increased by the same percentage by which the minimum wage is increased. Such adjustment

shall become effective on the date that the minimum wage increase becomes effective, and shall

take place irrespective of and in addition to any inflation index applied pursuant to subsections

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(a)(2)(vi) of this section.

     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 the executive office of health and human services to adjust, once

every three (3) years beginning October 2016, the per diem reimbursement to nursing facilities,

by taking into consideration increases in direct and indirect care cases. If the scheduled

adjustment does not occur, the per diem reimbursement rate shall increase by three percent (3%)

as of the date of the scheduled adjustment.

     This act would also provide that any time the state increases the minimum wage the

direct and indirect care components of the Medicaid rates paid to nursing facilities shall be

increased by the same percentage by which the minimum wage is increased.

     This act would take effect upon passage.

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