Provides that component rate allocations in direct care, therapy care, support services, and operations shall be adjusted for economic trends and conditions by three and seven-tenths percent for the July 1, 2008, rate setting: (1) Beginning on July 1, 2009, and for subsequent odd-numbered July 1st rate periods, direct care, therapy care, support services, and operations rate allocations shall be adjusted for economic trends and conditions by the factor determined by sum of the United States consumer price indicator from the midpoint of the cost year through December 31st of the rate year;

(2) Beginning on July 1, 2010, and for subsequent even-numbered July 1st rate periods, direct care, therapy care, support services, and operations rate allocations shall be adjusted by a factor determined by the forecasted United States consumer price indicator for the year in which the rate period commences.

Provides that effective July 1, 2008, the property component rate allocation for all facilities shall be set by using the total resident days from the most recent cost report period.

Requires the department of social and health services to establish for each medicaid nursing facility a financing allowance component rate allocation to be rebased annually, effective July 1st, in accordance with certain provisions of this act.