AN ACT Relating to nursing home employee wages; amending RCW 74.46.180 and 74.46.470; and adding a new section to chapter 74.46 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. A new section is added to chapter 74.46 RCW to read as follows:

(1) The department may, through regulation, establish minimum hourly wage levels for employees working in nursing homes.

(2) (a) An enhancement cost center is established to reimburse contractors for specific legislatively authorized enhancements for nonadministrative wages, and to ensure that such enhancements are used exclusively for the legislatively authorized purposes.

(b) Actual allowable costs prospectively reimbursed under the enhancement cost center shall be reported within the cost center of nursing services or administration and operations, whichever includes the job classes for whose wage increases the funds were appropriated, under RCW 74.46.040, and shall be included in rates for the ensuing rate period if the contractor has increased nonadministrative wages to at least the highest level paid in any of the last three cost years, plus the percentage inflation adjustment under RCW 74.46.495, plus the adjustment specified in the appropriation to the enhancement cost center.

(c) For purposes of settlement, funds appropriated to the enhancement cost center shall be expended only as authorized by the legislature. If the contractor does not spend the amount appropriated to this cost center as authorized by the legislature, then the amounts not so spent shall be recouped at preliminary or final settlement pursuant to RCW 74.46.160.

(d) For purposes of this section, "nonadministrative wages" means wages paid to, and payroll taxes paid with respect to, employees in job classes specified in an appropriation, which may not include administrators, assistant administrators, or administrators in training.

Sec. 2. Section 18, chapter 177, Laws of 1980 as last amended by section 1, chapter 361, Laws of 1985 and RCW 74.46.180 are each amended to read as follows:

(1) The state shall make payment of any underpayments within thirty days after the date the preliminary or final settlement report is submitted to the contractor.

(2) A contractor found to have received either overpayments or erroneous payments under a preliminary or final settlement shall refund such payments to the state within thirty days after the date the preliminary or final settlement report is submitted to the contractor, subject to the provisions of subsections (3), (4), and (7) of this section.

(3) Within the cost centers of nursing services and food, all savings resulting from the respective allowable costs being lower than the respective reimbursement rate paid to the contractor during the report period shall be refunded. In computing a preliminary or final settlement, savings in a cost center may be shifted to cover a deficit in another cost center up to the amount of any savings: PROVIDED, That not more than twenty percent of the rate in a cost center may be shifted into that cost center and no shifting may be made into the property cost center. No savings may be shifted from the enhancement cost center, the nursing services cost center, or the food cost center.

(4) Within the cost centers of administration and operations and property, the contractor shall retain at least fifty percent, but not more than seventy-five percent, of any savings resulting from the respective audited allowable costs being lower than the respective reimbursement rates paid to the contractor during the report period multiplied by the number of authorized medical care client days in which said rates were in effect, except that no savings may be retained if reported costs in the property cost center and the administration and operations cost center exceed audited allowable costs by ten cents or more per patient day. The secretary, by rule and regulation, shall establish the basis for the specific percentages of savings to the contractors. Such rules and regulations may provide for differences in the percentages allowed for each cost center to individual facilities based on performance measures related to administrative efficiency.

(5) All allowances provided by RCW 74.46.530 shall be retained by the contractor. Any industrial insurance dividend or premium discount under RCW 51.16.035 shall be retained by the contractor to the extent that such dividend or premium discount is attributable to the contractor's private patients.

(6) In the event the contractor fails to make repayment in the time provided in subsection (2) of this section, the department shall either:

(a) Deduct the amount of refund due plus assessment of interest, as determined by the secretary, from payment amounts due the contractor; or

(b) In the instance the contract has been terminated, (i) deduct the amount of refund due plus an assessment of interest, determined by the secretary, from any payments due; or (ii) assess the amount due plus interest, as determined by the secretary, on the amount due.

(7) Where the facility is pursuing timely-filed judicial or administrative remedies in good faith regarding settlement issues, the contractor need not refund nor shall the department withhold from the facility current payment amounts the department claims to be due from the facility but which are specifically disputed by the contractor. If the judicial or administrative remedy sought by the facility is not granted after all appeals are exhausted or mutually terminated, the facility shall make payment of such amounts due plus interest accrued from the date of filing of the appeal, as payable on judgments, within sixty days of the date such decision is made.

Sec. 3. Section 47, chapter 177, Laws of 1980 as amended by section 22, chapter 67, Laws of 1983 1st ex. sess. and RCW 74.46.470 are each amended to read as follows:

A contractor's reimbursement rates for medical care recipients will be determined utilizing desk-reviewed cost report data within the following cost centers:

(1) Nursing services;

(2) Food;

(3) Administration and operations; and

(4) Property.

In addition, a contractor's reimbursement rates for medical care recipients may include enhancements authorized by legislative appropriation and reimbursed within the enhancement cost center.