"NEW SECTION.  Sec. 1   (1) The legislature intends that the nursing facility medicaid payment system be structured to promote quality care provided by economically and efficiently operated nursing facilities and quality of life for residents. The legislature also intends that the nursing facility medicaid payment system is efficient to administer, accountable to the public and to the legislature, and transparent to taxpayers and providers. The legislature finds that the current statute governing the nursing facility medicaid payment system is overly complex in contrast to Washington state's statutes governing reimbursement systems for hospitals, physicians, boarding homes, and other vendors, and that this complexity has made it difficult to focus on systemic improvements in the nursing facility medicaid payment system and in other long-term care policies.
     (2) The legislature intends to simplify the existing nursing facility medicaid payment system so that it is fair, predictable, transparent, and accountable. The legislature further intends that, effective July 1, 2011, the essential structure of this simplified nursing facility medicaid payment system must be described in statute, and the details of the system must be described in rules adopted by the department of social and health services.

NEW SECTION.  Sec. 2   A new section is added to chapter 74.46 RCW to read as follows:
     The nursing facility medicaid payment system shall have the following structure:
     (1) Nursing facility medicaid payment rate allocations must be cost-based and facility-specific and have at least four components: Direct care, including therapy; support services; indirect care; and capital costs. Additional noncapital components may be considered if the entire nursing facility medicaid payment system does not result in a statewide weighted average payment rate that exceeds the appropriations level in the biennial appropriations act.
     (2) The direct care component shall use a case mix system.
     (3) Noncapital components shall be subject to limits based upon a determination of the median of facilities' costs with respect to a particular component.
     (4) Noncapital rates must be determined from annual cost reports filed by facilities, with costs rebased every two years. The capital rate component shall be determined July 1st of each year, based on cost reports filed by facilities for the preceding year.
     (5) Facilities must be separated into peer groups, based on location.
     (6) Payments must be subject to a settlement procedure that compares costs to rates received and recovers unspent moneys as appropriate.
     (7) An occupancy adjustment must be applied to the indirect and capital cost centers.
     (8) A statewide weighted average payment rate and adjustments to medicaid rate components for economic trends and conditions shall be specified in the biennial appropriations act and may adjust payments if necessary to ensure compliance. Any economic trends and conditions factor or factors defined in any earlier biennial appropriations act shall not be applied solely nor compounded to the medicaid rate components.
     (9) The department of social and health services must ensure that nursing facility medicaid payment rates, in the aggregate for all participating nursing facilities, comply with the biennial appropriations act.
     (10) Capital spending on nursing facilities subject to the requirement of a certificate of capital authorization must be limited by annual authorization amounts specified by the legislature pursuant to RCW 74.46.807.
     (11) The department is authorized within funds appropriated in the biennial appropriations act to establish payments linked to performance measures.

NEW SECTION.  Sec. 3   A new section is added to chapter 74.46 RCW to read as follows:
     The economic trends and conditions factor or factors defined in the biennial appropriations act shall not be compounded with the economic trends and conditions factor or factors defined in any other biennial appropriations acts before applying it to the component rate allocations established in accordance with this chapter. When no economic trends and conditions factor for either fiscal year is defined in a biennial appropriations act, no economic trends and conditions factor or factors defined in any earlier biennial appropriations act shall be applied solely or compounded to the component rate allocations established in accordance with this chapter.

NEW SECTION.  Sec. 4   A new section is added to chapter 74.46 RCW to read as follows:
     The department shall implement minimum data set 3.0 under the authority of this section. The department will notify nursing home contractors twenty-eight days in advance of the date of implementation of minimum data set 3.0. In the notification, the department must identify for all quarterly rate settings following the date of minimum data set 3.0 implementation a previously established quarterly case mix adjustment established for the quarterly rate settings to be used for quarterly case mix calculations in direct care until minimum data set 3.0 is fully implemented. After the department has fully implemented minimum data set 3.0, it will adjust any quarter in which it used the previously established quarterly case mix adjustment using the new minimum data set 3.0 data.

Sec. 5   RCW 74.46.421 and 2008 c 263 s 1 are each amended to read as follows:
     (1) ((The purpose of part E of this chapter is to determine nursing facility medicaid payment rates that, in the aggregate for all participating nursing facilities, are in accordance with the biennial appropriations act.
     (2)))(a) The department shall use the nursing facility medicaid payment rate methodologies described in this chapter and in rules adopted by the department to determine initial component rate allocations for each medicaid nursing facility.
     (b) The initial component rate allocations shall be subject to adjustment as provided in this section in order to assure that the statewide weighted average payment rate to nursing facilities is less than or equal to the statewide weighted average payment rate specified in the biennial appropriations act.
     (((3))) (2) Nothing in this chapter shall be construed as creating a legal right or entitlement to any payment that (a) has not been adjusted under this section or (b) would cause the statewide weighted average payment rate to exceed the statewide weighted average payment rate specified in the biennial appropriations act.
     (((4))) (3)(a) The statewide weighted average payment rate for any state fiscal year under the nursing facility medicaid payment system, weighted by patient days, shall not exceed the annual statewide weighted average nursing facility payment rate identified for that fiscal year in the biennial appropriations act.
     (b) If the department determines that the weighted average nursing facility payment rate calculated in accordance with this chapter is likely to exceed the weighted average nursing facility payment rate identified in the biennial appropriations act, then the department shall adjust all nursing facility payment rates proportional to the amount by which the weighted average rate allocations would otherwise exceed the budgeted rate amount. Any such adjustments for the current fiscal year shall only be made prospectively, not retrospectively, and shall be applied proportionately to each component rate allocation for each facility.
     (c) If any final order or final judgment, including a final order or final judgment resulting from an adjudicative proceeding or judicial review permitted by chapter 34.05 RCW, would result in an increase to a nursing facility's payment rate for a prior fiscal year or years, the department shall consider whether the increased rate for that facility would result in the statewide weighted average payment rate for all facilities for such fiscal year or years to be exceeded. If the increased rate would result in the statewide weighted average payment rate for such year or years being exceeded, the department shall increase that nursing facility's payment rate to meet the final order or judgment only to the extent that it does not result in an increase to the statewide weighted average payment rate for all facilities.

Sec. 6   RCW 74.46.800 and 1998 c 322 s 42 are each amended to read as follows:
     (1) Consistent with the principles and provisions described in section 2 of this act, the department shall have authority to adopt, amend, and rescind such administrative rules and definitions as it deems necessary to carry out the policies and purposes of this chapter, to administer the nursing facility medicaid payment system, to audit nursing facilities, and to resolve issues and develop procedures that it deems necessary to implement, update, and improve the case mix elements of the nursing facility medicaid payment system. In adopting rules, the department may consider the potential impact of the payment system on the level and quality of services received by nursing facility residents; the efficient and economical operation of nursing facilities; the anticipated impact of the system on private pay clients and on populations in other parts of the long-term care system; and the special circumstances presented by changes of ownership of nursing facilities, bed banking, exceptional care needs of residents, addition or deletion of licensed beds, facilities located in nonurban areas, closure of facilities, and facilities with low-occupancy levels, as well as other concerns.
     (2) Nothing in this chapter shall be construed to require the department to adopt or employ any calculations, steps, tests, methodologies, alternate methodologies, indexes, formulas, mathematical or statistical models, concepts, or procedures for medicaid rate setting or payment that are not expressly called for in this chapter.
     (3) The department shall adopt comprehensive rules to describe and administer the nursing facility medicaid payment system, to be effective July 1, 2011. The rules shall result in a statewide weighted average payment rate that does not exceed the appropriations level in the biennial appropriations act.

Sec. 7   RCW 74.46.431 and 2008 c 263 s 2 are each amended to read as follows:
     (1) Effective July 1, 1999, nursing facility medicaid payment rate allocations shall be facility-specific and shall have seven components: Direct care, therapy care, support services, operations, property, financing allowance, and variable return. The department shall establish and adjust each of these components, as provided in this section and elsewhere in this chapter, for each medicaid nursing facility in this state.
     (2) Component rate allocations in therapy care, support services, variable return, operations, property, and financing allowance for essential community providers as defined in this chapter shall be based upon a minimum facility occupancy of eighty-five percent of licensed beds, regardless of how many beds are set up or in use. For all facilities other than essential community providers, effective July 1, 2001, component rate allocations in direct care, therapy care, support services, and variable return shall be based upon a minimum facility occupancy of eighty-five percent of licensed beds. For all facilities other than essential community providers, effective July 1, 2002, the component rate allocations in operations, property, and financing allowance shall be based upon a minimum facility occupancy of ninety percent of licensed beds, regardless of how many beds are set up or in use. For all facilities, effective July 1, 2006, the component rate allocation in direct care shall be based upon actual facility occupancy. The median cost limits used to set component rate allocations shall be based on the applicable minimum occupancy percentage. In determining each facility's therapy care component rate allocation under RCW 74.46.511, the department shall apply the applicable minimum facility occupancy adjustment before creating the array of facilities' adjusted therapy costs per adjusted resident day. In determining each facility's support services component rate allocation under RCW 74.46.515(3), the department shall apply the applicable minimum facility occupancy adjustment before creating the array of facilities' adjusted support services costs per adjusted resident day. In determining each facility's operations component rate allocation under RCW 74.46.521(3), the department shall apply the minimum facility occupancy adjustment before creating the array of facilities' adjusted general operations costs per adjusted resident day.
     (3) Information and data sources used in determining medicaid payment rate allocations, including formulas, procedures, cost report periods, resident assessment instrument formats, resident assessment methodologies, and resident classification and case mix weighting methodologies, may be substituted or altered from time to time as determined by the department.
     (4)(a) Direct care component rate allocations shall be established using adjusted cost report data covering at least six months. Adjusted cost report data from 1996 will be used for October 1, 1998, through June 30, 2001, direct care component rate allocations; adjusted cost report data from 1999 will be used for July 1, 2001, through June 30, 2006, direct care component rate allocations. Adjusted cost report data from 2003 will be used for July 1, 2006, through June 30, 2007, direct care component rate allocations. Adjusted cost report data from 2005 will be used for July 1, 2007, through June 30, 2009, direct care component rate allocations. Effective July 1, 2009, the direct care component rate allocation shall be rebased biennially, and thereafter for each odd-numbered year beginning July 1st, using the adjusted cost report data for the calendar year two years immediately preceding the rate rebase period, so that adjusted cost report data for calendar year 2007 is used for July 1, 2009, through June 30, 2011, and so forth.
     (b) Direct care component rate allocations based on 1996 cost report data shall be adjusted annually for economic trends and conditions by a factor or factors defined in the biennial appropriations act. A different economic trends and conditions adjustment factor or factors may be defined in the biennial appropriations act for facilities whose direct care component rate is set equal to their adjusted June 30, 1998, rate, as provided in RCW 74.46.506(5)(i).
     (c) Direct care component rate allocations based on 1999 cost report data shall be adjusted annually for economic trends and conditions by a factor or factors defined in the biennial appropriations act. A different economic trends and conditions adjustment factor or factors may be defined in the biennial appropriations act for facilities whose direct care component rate is set equal to their adjusted June 30, 1998, rate, as provided in RCW 74.46.506(5)(i).
     (d) Direct care component rate allocations based on 2003 cost report data shall be adjusted annually for economic trends and conditions by a factor or factors defined in the biennial appropriations act. A different economic trends and conditions adjustment factor or factors may be defined in the biennial appropriations act for facilities whose direct care component rate is set equal to their adjusted June 30, 2006, rate, as provided in RCW 74.46.506(5)(i).
     (e) Direct care component rate allocations established in accordance with this chapter shall be adjusted annually for economic trends and conditions by a factor or factors defined in the biennial appropriations act. The economic trends and conditions factor or factors defined in the biennial appropriations act shall not be compounded with the economic trends and conditions factor or factors defined in any other biennial appropriations acts before applying it to the direct care component rate allocation established in accordance with this chapter. When no economic trends and conditions factor or factors for either fiscal year are defined in a biennial appropriations act, no economic trends and conditions factor or factors defined in any earlier biennial appropriations act shall be applied solely or compounded to the direct care component rate allocation established in accordance with this chapter.
     (5)(a) Therapy care component rate allocations shall be established using adjusted cost report data covering at least six months. Adjusted cost report data from 1996 will be used for October 1, 1998, through June 30, 2001, therapy care component rate allocations; adjusted cost report data from 1999 will be used for July 1, 2001, through June 30, 2005, therapy care component rate allocations. Adjusted cost report data from 1999 will continue to be used for July 1, 2005, through June 30, 2007, therapy care component rate allocations. Adjusted cost report data from 2005 will be used for July 1, 2007, through June 30, 2009, therapy care component rate allocations. Effective July 1, 2009, and thereafter for each odd-numbered year beginning July 1st, the therapy care component rate allocation shall be cost rebased biennially, using the adjusted cost report data for the calendar year two years immediately preceding the rate rebase period, so that adjusted cost report data for calendar year 2007 is used for July 1, 2009, through June 30, 2011, and so forth.
     (b) Therapy care component rate allocations established in accordance with this chapter shall be adjusted annually for economic trends and conditions by a factor or factors defined in the biennial appropriations act. The economic trends and conditions factor or factors defined in the biennial appropriations act shall not be compounded with the economic trends and conditions factor or factors defined in any other biennial appropriations acts before applying it to the therapy care component rate allocation established in accordance with this chapter. When no economic trends and conditions factor or factors for either fiscal year are defined in a biennial appropriations act, no economic trends and conditions factor or factors defined in any earlier biennial appropriations act shall be applied solely or compounded to the therapy care component rate allocation established in accordance with this chapter.
     (6)(a) Support services component rate allocations shall be established using adjusted cost report data covering at least six months. Adjusted cost report data from 1996 shall be used for October 1, 1998, through June 30, 2001, support services component rate allocations; adjusted cost report data from 1999 shall be used for July 1, 2001, through June 30, 2005, support services component rate allocations. Adjusted cost report data from 1999 will continue to be used for July 1, 2005, through June 30, 2007, support services component rate allocations. Adjusted cost report data from 2005 will be used for July 1, 2007, through June 30, 2009, support services component rate allocations. Effective July 1, 2009, and thereafter for each odd-numbered year beginning July 1st, the support services component rate allocation shall be cost rebased biennially, using the adjusted cost report data for the calendar year two years immediately preceding the rate rebase period, so that adjusted cost report data for calendar year 2007 is used for July 1, 2009, through June 30, 2011, and so forth.
     (b) Support services component rate allocations established in accordance with this chapter shall be adjusted annually for economic trends and conditions by a factor or factors defined in the biennial appropriations act. The economic trends and conditions factor or factors defined in the biennial appropriations act shall not be compounded with the economic trends and conditions factor or factors defined in any other biennial appropriations acts before applying it to the support services component rate allocation established in accordance with this chapter. When no economic trends and conditions factor or factors for either fiscal year are defined in a biennial appropriations act, no economic trends and conditions factor or factors defined in any earlier biennial appropriations act shall be applied solely or compounded to the support services component rate allocation established in accordance with this chapter.
     (7)(a) Operations component rate allocations shall be established using adjusted cost report data covering at least six months. Adjusted cost report data from 1996 shall be used for October 1, 1998, through June 30, 2001, operations component rate allocations; adjusted cost report data from 1999 shall be used for July 1, 2001, through June 30, 2006, operations component rate allocations. Adjusted cost report data from 2003 will be used for July 1, 2006, through June 30, 2007, operations component rate allocations. Adjusted cost report data from 2005 will be used for July 1, 2007, through June 30, 2009, operations component rate allocations. Effective July 1, 2009, and thereafter for each odd-numbered year beginning July 1st, the operations component rate allocation shall be cost rebased biennially, using the adjusted cost report data for the calendar year two years immediately preceding the rate rebase period, so that adjusted cost report data for calendar year 2007 is used for July 1, 2009, through June 30, 2011, and so forth.
     (b) Operations component rate allocations established in accordance with this chapter shall be adjusted annually for economic trends and conditions by a factor or factors defined in the biennial appropriations act. The economic trends and conditions factor or factors defined in the biennial appropriations act shall not be compounded with the economic trends and conditions factor or factors defined in any other biennial appropriations acts before applying it to the operations component rate allocation established in accordance with this chapter. When no economic trends and conditions factor or factors for either fiscal year are defined in a biennial appropriations act, no economic trends and conditions factor or factors defined in any earlier biennial appropriations act shall be applied solely or compounded to the operations component rate allocation established in accordance with this chapter. A different economic trends and conditions adjustment factor or factors may be defined in the biennial appropriations act for facilities whose operations component rate is set equal to their adjusted June 30, 2006, rate, as provided in RCW 74.46.521(4).
     (8) For July 1, 1998, through September 30, 1998, a facility's property and return on investment component rates shall be the facility's June 30, 1998, property and return on investment component rates, without increase. For October 1, 1998, through June 30, 1999, a facility's property and return on investment component rates shall be rebased utilizing 1997 adjusted cost report data covering at least six months of data.
     (9) Total payment rates under the nursing facility medicaid payment system shall not exceed facility rates charged to the general public for comparable services.
     (10) Medicaid contractors shall pay to all facility staff a minimum wage of the greater of the state minimum wage or the federal minimum wage.
     (11) The department shall establish in rule procedures, principles, and conditions for determining component rate allocations for facilities in circumstances not directly addressed by this chapter, including but not limited to: The need to prorate inflation for partial-period cost report data, newly constructed facilities, existing facilities entering the medicaid program for the first time or after a period of absence from the program, existing facilities with expanded new bed capacity, existing medicaid facilities following a change of ownership of the nursing facility business, facilities banking beds or converting beds back into service, facilities temporarily reducing the number of set-up beds during a remodel, facilities having less than six months of either resident assessment, cost report data, or both, under the current contractor prior to rate setting, and other circumstances.
     (12) The department shall establish in rule procedures, principles, and conditions, including necessary threshold costs, for adjusting rates to reflect capital improvements or new requirements imposed by the department or the federal government. Any such rate adjustments are subject to the provisions of RCW 74.46.421.
     (13) Effective July 1, 2001, medicaid rates shall continue to be revised downward in all components, in accordance with department rules, for facilities converting banked beds to active service under chapter 70.38 RCW, by using the facility's increased licensed bed capacity to recalculate minimum occupancy for rate setting. However, for facilities other than essential community providers which bank beds under chapter 70.38 RCW, after May 25, 2001, medicaid rates shall be revised upward, in accordance with department rules, in direct care, therapy care, support services, and variable return components only, by using the facility's decreased licensed bed capacity to recalculate minimum occupancy for rate setting, but no upward revision shall be made to operations, property, or financing allowance component rates. The direct care component rate allocation shall be adjusted, without using the minimum occupancy assumption, for facilities that convert banked beds to active service, under chapter 70.38 RCW, beginning on July 1, 2006. Effective July 1, 2007, component rate allocations for direct care shall be based on actual patient days regardless of whether a facility has converted banked beds to active service.
     (14) Facilities obtaining a certificate of need or a certificate of need exemption under chapter 70.38 RCW after June 30, 2001, must have a certificate of capital authorization in order for (a) the depreciation resulting from the capitalized addition to be included in calculation of the facility's property component rate allocation; and (b) the net invested funds associated with the capitalized addition to be included in calculation of the facility's financing allowance rate allocation.

Sec. 8   RCW 74.46.485 and 1998 c 322 s 22 are each amended to read as follows:
     (1) The department shall:
     (a) Employ the resource utilization group III case mix classification methodology. The department shall use the forty-four group index maximizing model for the resource utilization group III grouper version 5.10, but the department may revise or update the classification methodology to reflect advances or refinements in resident assessment or classification, subject to federal requirements; and
     (b) Implement minimum data set 3.0 under the authority of this section and RCW 74.46.431(3). The department must notify nursing home contractors twenty-eight days in advance the date of implementation of the minimum data set 3.0. In the notification, the department must identify for all quarterly rate settings following the date of minimum data set 3.0 implementation a previously established quarterly case mix adjustment established for the quarterly rate settings that will be used for quarterly case mix calculations in direct care until minimum data set 3.0 is fully implemented. After the department has fully implemented minimum data set 3.0, it must adjust any quarter in which it used the previously established quarterly case mix adjustment using the new minimum data set 3.0 data.
     (2) A default case mix group shall be established for cases in which the resident dies or is discharged for any purpose prior to completion of the resident's initial assessment. The default case mix group and case mix weight for these cases shall be designated by the department.
     (3) A default case mix group may also be established for cases in which there is an untimely assessment for the resident. The default case mix group and case mix weight for these cases shall be designated by the department.

NEW SECTION.  Sec. 9   The following acts or parts of acts, as now existing or hereafter amended, are each repealed:
     (1) RCW 74.46.010 (Short title -- Purpose) and 1998 c 322 s 1 & 1980 c 177 s 1;
     (2) RCW 74.46.020 (Definitions) and 2007 c 508 s 7, 2006 c 258 s 1, 2001 1st sp.s. c 8 s 1, 1999 c 353 s 1, 1998 c 322 s 2, 1995 1st sp.s. c 18 s 90, 1993 sp.s. c 13 s 1, 1991 sp.s. c 8 s 11, 1989 c 372 s 17, 1987 c 476 s 6, 1985 c 361 s 16, 1982 c 117 s 1, & 1980 c 177 s 2;
     (3) RCW 74.46.030 (Principles of reporting requirements) and 1980 c 177 s 3;
     (4) RCW 74.46.040 (Due dates for cost reports) and 1998 c 322 s 3, 1985 c 361 s 4, 1983 1st ex.s. c 67 s 1, & 1980 c 177 s 4;
     (5) RCW 74.46.050 (Improperly completed or late cost report--Fines -- Adverse rate actions -- Rules) and 1998 c 322 s 4, 1985 c 361 s 5, & 1980 c 177 s 5;
     (6) RCW 74.46.060 (Completing cost reports and maintaining records) and 1998 c 322 s 5, 1985 c 361 s 6, 1983 1st ex.s. c 67 s 2, & 1980 c 177 s 6;
     (7) RCW 74.46.080 (Requirements for retention of records by the contractor) and 1998 c 322 s 6, 1985 c 361 s 7, 1983 1st ex.s. c 67 s 3, & 1980 c 177 s 8;
     (8) RCW 74.46.090 (Retention of cost reports and resident assessment information by the department) and 1998 c 322 s 7, 1985 c 361 s 8, & 1980 c 177 s 9;
     (9) RCW 74.46.100 (Purposes of department audits--Examination--Incomplete or incorrect reports -- Contractor's duties -- Access to facility -- Fines -- Adverse rate actions) and 1998 c 322 s 8, 1985 c 361 s 9, 1983 1st ex.s. c 67 s 4, & 1980 c 177 s 10;
     (10) RCW 74.46.155 (Reconciliation of medicaid resident days to billed days and medicaid payments -- Payments due -- Accrued interest--Withholding funds) and 1998 c 322 s 9;
     (11) RCW 74.46.165 (Proposed settlement report -- Payment refunds--Overpayments -- Determination of unused rate funds -- Total and component payment rates) and 2001 1st sp.s. c 8 s 2 & 1998 c 322 s 10;
     (12) RCW 74.46.190 (Principles of allowable costs) and 1998 c 322 s 11, 1995 1st sp.s. c 18 s 96, 1983 1st ex.s. c 67 s 12, & 1980 c 177 s 19;
     (13) RCW 74.46.200 (Offset of miscellaneous revenues) and 1980 c 177 s 20;
     (14) RCW 74.46.220 (Payments to related organizations -- Limits--Documentation) and 1998 c 322 s 12 & 1980 c 177 s 22;
     (15) RCW 74.46.230 (Initial cost of operation) and 1998 c 322 s 13, 1993 sp.s. c 13 s 3, & 1980 c 177 s 23;
     (16) RCW 74.46.240 (Education and training) and 1980 c 177 s 24;
     (17) RCW 74.46.250 (Owner or relative -- Compensation) and 1980 c 177 s 25;
     (18) RCW 74.46.270 (Disclosure and approval or rejection of cost allocation) and 1998 c 322 s 14, 1983 1st ex.s. c 67 s 13, & 1980 c 177 s 27;
     (19) RCW 74.46.280 (Management fees, agreements -- Limitation on scope of services) and 1998 c 322 s 15, 1993 sp.s. c 13 s 4, & 1980 c 177 s 28;
     (20) RCW 74.46.290 (Expense for construction interest) and 1980 c 177 s 29;
     (21) RCW 74.46.300 (Operating leases of office equipment--Rules) and 1998 c 322 s 16 & 1980 c 177 s 30;
     (22) RCW 74.46.310 (Capitalization) and 1983 1st ex.s. c 67 s 16 & 1980 c 177 s 31;
     (23) RCW 74.46.320 (Depreciation expense) and 1980 c 177 s 32;
     (24) RCW 74.46.330 (Depreciable assets) and 1980 c 177 s 33;
     (25) RCW 74.46.340 (Land, improvements -- Depreciation) and 1980 c 177 s 34;
     (26) RCW 74.46.350 (Methods of depreciation) and 1999 c 353 s 13 & 1980 c 177 s 35;
     (27) RCW 74.46.360 (Cost basis of land and depreciation base of depreciable assets) and 1999 c 353 s 2, 1997 c 277 s 1, 1991 sp.s. c 8 s 18, & 1989 c 372 s 14;
     (28) RCW 74.46.370 (Lives of assets) and 1999 c 353 s 14, 1997 c 277 s 2, & 1980 c 177 s 37;
     (29) RCW 74.46.380 (Depreciable assets) and 1993 sp.s. c 13 s 5, 1991 sp.s. c 8 s 12, & 1980 c 177 s 38;
     (30) RCW 74.46.390 (Gains and losses upon replacement of depreciable assets) and 1980 c 177 s 39;
     (31) RCW 74.46.410 (Unallowable costs) and 2007 c 508 s 1, 2001 1st sp.s. c 8 s 3, 1998 c 322 s 17, 1995 1st sp.s. c 18 s 97, 1993 sp.s. c 13 s 6, 1991 sp.s. c 8 s 15, 1989 c 372 s 2, 1986 c 175 s 3, 1983 1st ex.s. c 67 s 17, & 1980 c 177 s 41;
     (32) RCW 74.46.431 (Nursing facility medicaid payment rate allocations -- Components -- Minimum wage -- Rules) and 2008 c 263 s 2, 2007 c 508 s 2, 2006 c 258 s 2, 2005 c 518 s 944, 2004 c 276 s 913, 2001 1st sp.s. c 8 s 5, 1999 c 353 s 4, & 1998 c 322 s 19;
     (33) RCW 74.46.433 (Variable return component rate allocation) and 2006 c 258 s 3, 2001 1st sp.s. c 8 s 6, & 1999 c 353 s 9;
     (34) RCW 74.46.435 (Property component rate allocation) and 2001 1st sp.s. c 8 s 7, 1999 c 353 s 10, & 1998 c 322 s 29;
     (35) RCW 74.46.437 (Financing allowance component rate allocation) and 2001 1st sp.s. c 8 s 8 & 1999 c 353 s 11;
     (36) RCW 74.46.439 (Facilities leased in arm's-length agreements--Recomputation of financing allowance -- Reimbursement for annualized lease payments -- Rate adjustment) and 1999 c 353 s 12;
     (37) RCW 74.46.441 (Public disclosure of rate-setting information) and 1998 c 322 s 20;
     (38) RCW 74.46.445 (Contractors -- Rate adjustments) and 1999 c 353 s 15;
     (39) RCW 74.46.475 (Submitted cost report -- Analysis and adjustment by department) and 1998 c 322 s 21, 1985 c 361 s 13, & 1983 1st ex.s. c 67 s 23;
     (40) RCW 74.46.485 (Case mix classification methodology) and 1998 c 322 s 22;
     (41) RCW 74.46.496 (Case mix weights -- Determination -- Revisions) and 2006 c 258 s 4 & 1998 c 322 s 23;
     (42) RCW 74.46.501 (Average case mix indexes determined quarterly--Facility average case mix index -- Medicaid average case mix index) and 2006 c 258 s 5, 2001 1st sp.s. c 8 s 9, & 1998 c 322 s 24;
     (43) RCW 74.46.506 (Direct care component rate allocations--Determination -- Quarterly updates -- Fines) and 2007 c 508 s 3, 2006 c 258 s 6, & 2001 1st sp.s. c 8 s 10;
     (44) RCW 74.46.508 (Direct care component rate allocation--Increases -- Rules) and 2003 1st sp.s. c 6 s 1 & 1999 c 181 s 2;
     (45) RCW 74.46.511 (Therapy care component rate allocation--Determination) and 2008 c 263 s 3, 2007 c 508 s 4, & 2001 1st sp.s. c 8 s 11;
     (46) RCW 74.46.515 (Support services component rate allocation--Determination -- Emergency situations) and 2008 c 263 s 4, 2001 1st sp.s. c 8 s 12, 1999 c 353 s 7, & 1998 c 322 s 27;
     (47) RCW 74.46.521 (Operations component rate allocation--Determination) and 2007 c 508 s 5, 2006 c 258 s 7, 2001 1st sp.s. c 8 s 13, 1999 c 353 s 8, & 1998 c 322 s 28;
     (48) RCW 74.46.531 (Department may adjust component rates--Contractor may request -- Errors or omissions) and 1998 c 322 s 31;
     (49) RCW 74.46.533 (Combined and estimated rebased rates--Determination -- Hold harmless provision) and 2007 c 508 s 6;
     (50) RCW 74.46.600 (Billing period) and 1980 c 177 s 60;
     (51) RCW 74.46.610 (Billing procedure -- Rules) and 1998 c 322 s 32, 1983 1st ex.s. c 67 s 33, & 1980 c 177 s 61;
     (52) RCW 74.46.620 (Payment) and 1998 c 322 s 33 & 1980 c 177 s 62;
     (53) RCW 74.46.625 (Supplemental payments) and 1999 c 392 s 1;
     (54) RCW 74.46.630 (Charges to patients) and 1998 c 322 s 34 & 1980 c 177 s 63;
     (55) RCW 74.46.640 (Suspension of payments) and 1998 c 322 s 35, 1995 1st sp.s. c 18 s 112, 1983 1st ex.s. c 67 s 34, & 1980 c 177 s 64;
     (56) RCW 74.46.650 (Termination of payments) and 1998 c 322 s 36 & 1980 c 177 s 65;
     (57) RCW 74.46.660 (Conditions of participation) and 1998 c 322 s 37, 1992 c 215 s 1, 1991 sp.s. c 8 s 13, & 1980 c 177 s 66;
     (58) RCW 74.46.680 (Change of ownership -- Assignment of department's contract) and 1998 c 322 s 38, 1985 c 361 s 2, & 1980 c 177 s 68;
     (59) RCW 74.46.690 (Change of ownership -- Final reports -- Settlement) and 1998 c 322 s 39, 1995 1st sp.s. c 18 s 113, 1985 c 361 s 3, 1983 1st ex.s. c 67 s 36, & 1980 c 177 s 69;
     (60) RCW 74.46.700 (Resident personal funds -- Records -- Rules) and 1991 sp.s. c 8 s 19 & 1980 c 177 s 70;
     (61) RCW 74.46.711 (Resident personal funds -- Conveyance upon death of resident) and 2001 1st sp.s. c 8 s 14 & 1995 1st sp.s. c 18 s 69;
     (62) RCW 74.46.770 (Contractor appeals -- Challenges of laws, rules, or contract provisions -- Challenge based on federal law) and 1998 c 322 s 40, 1995 1st sp.s. c 18 s 114, 1983 1st ex.s. c 67 s 39, & 1980 c 177 s 77;
     (63) RCW 74.46.780 (Appeals or exception procedure) and 1998 c 322 s 41, 1995 1st sp.s. c 18 s 115, 1989 c 175 s 159, 1983 1st ex.s. c 67 s 40, & 1980 c 177 s 78;
     (64) RCW 74.46.790 (Denial, suspension, or revocation of license or provisional license -- Penalties) and 1980 c 177 s 79;
     (65) RCW 74.46.820 (Public disclosure) and 2005 c 274 s 356, 1998 c 322 s 43, 1985 c 361 s 14, 1983 1st ex.s. c 67 s 41, & 1980 c 177 s 82;
     (66) RCW 74.46.835 (AIDS pilot nursing facility -- Payment for direct care) and 1998 c 322 s 46;
     (67) RCW 74.46.900 (Severability -- 1980 c 177) and 1980 c 177 s 93;
     (68) RCW 74.46.901 (Effective dates -- 1983 1st ex.s. c 67; 1980 c 177) and 1983 1st ex.s. c 67 s 49, 1981 1st ex.s. c 2 s 10, & 1980 c 177 s 94;
     (69) RCW 74.46.902 (Section captions -- 1980 c 177) and 1980 c 177 s 89;
     (70) RCW 74.46.905 (Severability -- 1983 1st ex.s. c 67) and 1983 1st ex.s. c 67 s 43;
     (71) RCW 74.46.906 (Effective date -- 1998 c 322 §§ 1-37, 40-49, and 52-54) and 1998 c 322 s 55; and
     (72) RCW 74.46.907 (Severability -- 1998 c 322) and 1998 c 322 s 56.

NEW SECTION.  Sec. 10   A new section is added to chapter 74.46 RCW to read as follows:
     Rates under the nursing facility medicaid payment system for care provided during the period before July 1, 2011, shall continue to be calculated and settled on the basis of the statutes and rules in effect during that period.

Sec. 11   RCW 74.46.835 and 1998 c 322 s 46 are each amended to read as follows:
     (1) Payment for direct care at the pilot nursing facility in King county designed to meet the service needs of residents living with AIDS, as defined in RCW 70.24.017, and as specifically authorized for this purpose under chapter 9, Laws of 1989 1st ex. sess., shall be exempt from case mix methods of rate determination set forth in this chapter and shall be exempt from ((the)) a direct care metropolitan statistical area peer group cost limitation ((set forth in this chapter)).
     (2) Direct care component rates at the AIDS pilot facility shall be based on direct care reported costs at the pilot facility, ((utilizing the same three-year, rate-setting cycle prescribed for other nursing facilities, and)) as supported by a staffing benchmark based upon a department-approved acuity measurement system.
     (3) The provisions of RCW 74.46.421 and all other rate-setting principles, cost lids, and limits, including settlement ((as provided in RCW 74.46.165)), shall apply to the AIDS pilot facility.
     (4) This section applies only to the AIDS pilot nursing facility.

NEW SECTION.  Sec. 12   Sections 2 through 4 and 9 of this act take effect July 1, 2011.

NEW SECTION.  Sec. 13   Sections 5 through 8, 10, and 11 of this act are necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and take effect July 1, 2009."