BILL REQ. #: H-5027.2
| State of Washington | 61st Legislature | 2010 Regular Session |
Read first time 03/01/10. Referred to Committee on Ways & Means.
AN ACT Relating to revising the medicaid nursing facility payment system by moving rebasing to even years, changing the case mix adjustment cycle to six months, establishing pay for performance, adjusting rates based upon rates of direct care staff turnover, and modifying components related to variable return, operations, property, and finance; amending RCW 74.46.431, 74.46.435, 74.46.437, 74.46.439, 74.46.496, 74.46.501, 74.46.506, and 74.46.521; adding a new section to chapter 74.46 RCW; repealing RCW 74.46.433; and declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 RCW 74.46.431 and 2009 c 570 s 1 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))
six components: Direct care, therapy care, support services,
operations, property, and 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,)) the component rate allocations in ((direct care,)) therapy
care((,)) and 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
that have set up or use sixty beds or fewer, ((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 facilities other than essential community
providers that have set up or use more than sixty beds, the component
rate allocations in operations, property, and financing allowance shall
be based upon a minimum facility occupancy of ninety-two percent of
licensed beds. 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.)) 2012. Beginning July 1, 2012, the direct care component rate
allocation shall be rebased biennially during every even-numbered year
thereafter using adjusted cost report data from two years prior to the
rebase period, so adjusted cost report data for calendar year 2010 is
used for July 1, 2012, through June 30, 2014, 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)
(b) 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)) 2012.
Beginning July 1, 2012, the therapy care component rate allocation
shall be rebased biennially during every even-numbered year thereafter
using adjusted cost report data from two years prior to the rebase
period, so adjusted cost report data for calendar year 2010 is used for
July 1, 2012, through June 30, 2014, 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))
2012. Beginning July 1, 2012, the support services component rate
allocation shall be rebased biennially during every even-numbered year
thereafter using adjusted cost report data from two years prior to the
rebase period, so adjusted cost report data for calendar year 2010 is
used for July 1, 2012, through June 30, 2014, 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)) 2012. Beginning July 1, 2012, the operations care
component rate allocation shall be rebased biennially during every
even-numbered year thereafter using adjusted cost report data from two
years prior to the rebase period, so adjusted cost report data for
calendar year 2010 is used for July 1, 2012, through June 30, 2014, 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) Total payment rates under the nursing facility medicaid
payment system shall not exceed facility rates charged to the general
public for comparable services.
(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)
(((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.)) (9) 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: ((
(11)The need to prorate)) Inflation
adjustments 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))) (10) 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.)) (11) 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.
(14)
Sec. 2 RCW 74.46.435 and 2001 1st sp.s. c 8 s 7 are each amended
to read as follows:
(1) ((Effective July 1, 2001,)) The property component rate
allocation for each facility shall be determined by dividing the sum of
the reported allowable prior period actual depreciation, subject to
((RCW 74.46.310 through 74.46.380)) department rule, adjusted for any
capitalized additions or replacements approved by the department, and
the retained savings from such cost center, by the greater of a
facility's total resident days for the facility in the prior period or
resident days as calculated on ((eighty-five)) ninety-two percent
facility occupancy for all providers except (a) essential community
providers and (b) nonessential community providers with sixty or fewer
beds. ((Effective July 1, 2002, the property component rate allocation
for all facilities, except essential community providers, shall be set
by using the greater of a facility's total resident days from the most
recent cost report period or resident days calculated at ninety percent
facility occupancy.)) If a capitalized addition or retirement of an
asset will result in a different licensed bed capacity during the
ensuing period, the prior period total resident days used in computing
the property component rate shall be adjusted to anticipated resident
day level.
(2) A nursing facility's property component rate allocation shall
be rebased annually, effective July 1st, in accordance with this
section and this chapter.
(3) When a certificate of need for a new facility is requested, the
department, in reaching its decision, shall take into consideration
per-bed land and building construction costs for the facility which
shall not exceed a maximum to be established by the secretary.
(4) ((Effective July 1, 2001, for the purpose of calculating a
nursing facility's property component rate, if a contractor has elected
to bank licensed beds prior to April 1, 2001, or elects to convert
banked beds to active service at any time, under chapter 70.38 RCW, the
department shall use the facility's new licensed bed capacity to
recalculate minimum occupancy for rate setting and revise the property
component rate, as needed, effective as of the date the beds are banked
or converted to active service. However, in no case shall the
department use less than eighty-five percent occupancy of the
facility's licensed bed capacity after banking or conversion.
Effective July 1, 2002,)) In no case, other than essential community
providers or nonessential community providers with sixty beds or fewer,
shall the department use less than ninety percent occupancy of the
facility's licensed bed capacity after banking or conversion.
(5) The property component rate allocations calculated in
accordance with this section shall be adjusted to the extent necessary
to comply with RCW 74.46.421.
Sec. 3 RCW 74.46.437 and 2001 1st sp.s. c 8 s 8 are each amended
to read as follows:
(1) ((Beginning July 1, 1999,)) The department shall establish for
each medicaid nursing facility a financing allowance component rate
allocation. The financing allowance component rate shall be rebased
annually, effective July 1st, in accordance with the provisions of this
section and this chapter.
(2) ((Effective July 1, 2001,)) The financing allowance shall be
determined by multiplying the net invested funds of each facility by
.10, and dividing by the greater of a nursing facility's total resident
days from the most recent cost report period or resident days
calculated on ((eighty-five)) ninety-two percent facility occupancy for
all providers except (a) essential community providers and (b)
nonessential community providers with sixty or fewer beds. ((Effective
July 1, 2002, the financing allowance component rate allocation for all
facilities, other than essential community providers, shall be set by
using the greater of a facility's total resident days from the most
recent cost report period or resident days calculated at ninety percent
facility occupancy.)) However, assets acquired on or after May 17,
1999, shall be grouped in a separate financing allowance calculation
that shall be multiplied by ((.085)) .075. The financing allowance
factor of ((.085)) .075 shall not be applied to the net invested funds
pertaining to new construction or major renovations receiving
certificate of need approval or an exemption from certificate of need
requirements under chapter 70.38 RCW, or to working drawings that have
been submitted to the department of health for construction review
approval, prior to May 17, 1999. If a capitalized addition,
renovation, replacement, or retirement of an asset will result in a
different licensed bed capacity during the ensuing period, the prior
period total resident days used in computing the financing allowance
shall be adjusted to the greater of the anticipated resident day level
or ((eighty-five)) ninety-two percent of the new licensed bed capacity
for all providers except (a) essential community providers and (b)
nonessential community providers with sixty or fewer beds. Effective
July 1, 2002, for all facilities, other than essential community
providers, the total resident days used to compute the financing
allowance after a capitalized addition, renovation, replacement, or
retirement of an asset shall be set by using the greater of a
facility's total resident days from the most recent cost report period
or resident days calculated at ninety-two percent facility occupancy.
(3) In computing the portion of net invested funds representing the
net book value of tangible fixed assets, the same assets, depreciation
bases, lives, and methods referred to in ((RCW 74.46.330, 74.46.350,
74.46.360, 74.46.370, and 74.46.380)) rule, including owned and leased
assets, shall be utilized, except that the capitalized cost of land
upon which the facility is located and such other contiguous land which
is reasonable and necessary for use in the regular course of providing
resident care shall also be included. Subject to provisions and
limitations contained in this chapter, for land purchased by owners or
lessors before July 18, 1984, capitalized cost of land shall be the
buyer's capitalized cost. For all partial or whole rate periods after
July 17, 1984, if the land is purchased after July 17, 1984,
capitalized cost shall be that of the owner of record on July 17, 1984,
or buyer's capitalized cost, whichever is lower. In the case of leased
facilities where the net invested funds are unknown or the contractor
is unable to provide necessary information to determine net invested
funds, the secretary shall have the authority to determine an amount
for net invested funds based on an appraisal conducted according to
((RCW 74.46.360(1))) department rule.
(4) ((Effective July 1, 2001, for the purpose of calculating a
nursing facility's financing allowance component rate, if a contractor
has elected to bank licensed beds prior to May 25, 2001, or elects to
convert banked beds to active service at any time, under chapter 70.38
RCW, the department shall use the facility's new licensed bed capacity
to recalculate minimum occupancy for rate setting and revise the
financing allowance component rate, as needed, effective as of the date
the beds are banked or converted to active service. However, in no
case shall the department use less than eighty-five percent occupancy
of the facility's licensed bed capacity after banking or conversion.
Effective July 1, 2002,)) In no case, other than for essential
community providers and nonessential community providers with sixty or
fewer beds, shall the department use less than ninety-two percent
occupancy of the facility's licensed bed capacity after conversion.
(5) The financing allowance rate allocation calculated in
accordance with this section shall be adjusted to the extent necessary
to comply with RCW 74.46.421.
Sec. 4 RCW 74.46.439 and 1999 c 353 s 12 are each amended to read
as follows:
(1) In the case of a facility that was leased by the contractor as
of January 1, 1980, in an arm's-length agreement, which continues to be
leased under the same lease agreement, ((and for which the annualized
lease payment, plus any interest and depreciation expenses associated
with contractor-owned assets, for the period covered by the prospective
rates, divided by the contractor's total resident days, minus the
property component rate allocation, is more than the sum of the
financing allowance and the variable return rate determined according
to this chapter, the following shall apply:)) the financing allowance rate will be the greater of the rate
existing on June 30, 2010, or the rate calculated under RCW 74.46.437.
(a) The financing allowance shall be recomputed substituting the
fair market value of the assets as of January 1, 1982, as determined by
the department of general administration through an appraisal
procedure, less accumulated depreciation on the lessor's assets since
January 1, 1982, for the net book value of the assets in determining
net invested funds for the facility. A determination by the department
of general administration of fair market value shall be final unless
the procedure used to make such a determination is shown to be
arbitrary and capricious.
(b) The sum of the financing allowance computed under (a) of this
subsection and the variable return rate shall be compared to the
annualized lease payment, plus any interest and depreciation associated
with contractor-owned assets, for the period covered by the prospective
rates, divided by the contractor's total resident days, minus the
property component rate. The lesser of the two amounts shall be called
the alternate return on investment rate.
(c) The sum of the financing allowance and variable return rate
determined according to this chapter or the alternate return on
investment rate, whichever is greater, shall be added to the
prospective rates of the contractor.
(2) In the case of a facility that was leased by the contractor as
of January 1, 1980, in an arm's-length agreement, if the lease is
renewed or extended under a provision of the lease, the treatment
provided in subsection (1) of this section shall be applied, except
that in the case of renewals or extensions made subsequent to April 1,
1985, reimbursement for the annualized lease payment shall be no
greater than the reimbursement for the annualized lease payment for the
last year prior to the renewal or extension of the lease.
(3)
(2) The alternate return on investment component rate allocations
calculated in accordance with this section shall be adjusted to the
extent necessary to comply with RCW 74.46.421.
Sec. 5 RCW 74.46.496 and 2006 c 258 s 4 are each amended to read
as follows:
(1) Each case mix classification group shall be assigned a case mix
weight. The case mix weight for each resident of a nursing facility
for each calendar quarter or six-month period during a calendar year
shall be based on data from resident assessment instruments completed
for the resident and weighted by the number of days the resident was in
each case mix classification group. Days shall be counted as provided
in this section.
(2) The case mix weights shall be based on the average minutes per
registered nurse, licensed practical nurse, and certified nurse aide,
for each case mix group, and using the ((health care financing
administration of the)) United States department of health and human
services 1995 nursing facility staff time measurement study stemming
from its multistate nursing home case mix and quality demonstration
project. Those minutes shall be weighted by statewide ratios of
registered nurse to certified nurse aide, and licensed practical nurse
to certified nurse aide, wages, including salaries and benefits, which
shall be based on 1995 cost report data for this state.
(3) The case mix weights shall be determined as follows:
(a) Set the certified nurse aide wage weight at 1.000 and calculate
wage weights for registered nurse and licensed practical nurse average
wages by dividing the certified nurse aide average wage into the
registered nurse average wage and licensed practical nurse average
wage;
(b) Calculate the total weighted minutes for each case mix group in
the resource utilization group III classification system by multiplying
the wage weight for each worker classification by the average number of
minutes that classification of worker spends caring for a resident in
that resource utilization group III classification group, and summing
the products;
(c) Assign a case mix weight of 1.000 to the resource utilization
group III classification group with the lowest total weighted minutes
and calculate case mix weights by dividing the lowest group's total
weighted minutes into each group's total weighted minutes and rounding
weight calculations to the third decimal place.
(4) The case mix weights in this state may be revised if the
((health care financing administration)) United States department of
health and human services updates its nursing facility staff time
measurement studies. The case mix weights shall be revised, but only
when direct care component rates are cost-rebased as provided in
subsection (5) of this section, to be effective on the July 1st
effective date of each cost-rebased direct care component rate.
However, the department may revise case mix weights more frequently if,
and only if, significant variances in wage ratios occur among direct
care staff in the different caregiver classifications identified in
this section.
(5) Case mix weights shall be revised when direct care component
rates are cost-rebased as provided in RCW 74.46.431(4).
Sec. 6 RCW 74.46.501 and 2006 c 258 s 5 are each amended to read
as follows:
(1) From individual case mix weights for the applicable quarter,
the department shall determine two average case mix indexes for each
medicaid nursing facility, one for all residents in the facility, known
as the facility average case mix index, and one for medicaid residents,
known as the medicaid average case mix index.
(2)(a) In calculating a facility's two average case mix indexes for
each quarter, the department shall include all residents or medicaid
residents, as applicable, who were physically in the facility during
the quarter in question based on the resident assessment instrument
completed by the facility and the requirements and limitations for the
instrument's completion and transmission (January 1st through March
31st, April 1st through June 30th, July 1st through September 30th, or
October 1st through December 31st).
(b) The facility average case mix index shall exclude all default
cases as defined in this chapter. However, the medicaid average case
mix index shall include all default cases.
(3) Both the facility average and the medicaid average case mix
indexes shall be determined by multiplying the case mix weight of each
resident, or each medicaid resident, as applicable, by the number of
days, as defined in this section and as applicable, the resident was at
each particular case mix classification or group, and then averaging.
(4)(((a))) In determining the number of days a resident is
classified into a particular case mix group, the department shall
determine a start date for calculating case mix grouping periods as
((follows:)) specified by rule.
(i) If a resident's initial assessment for a first stay or a return
stay in the nursing facility is timely completed and transmitted to the
department by the cutoff date under state and federal requirements and
as described in subsection (5) of this section, the start date shall be
the later of either the first day of the quarter or the resident's
facility admission or readmission date;
(ii) If a resident's significant change, quarterly, or annual
assessment is timely completed and transmitted to the department by the
cutoff date under state and federal requirements and as described in
subsection (5) of this section, the start date shall be the date the
assessment is completed;
(iii) If a resident's significant change, quarterly, or annual
assessment is not timely completed and transmitted to the department by
the cutoff date under state and federal requirements and as described
in subsection (5) of this section, the start date shall be the due date
for the assessment.
(b) If state or federal rules require more frequent assessment, the
same principles for determining the start date of a resident's
classification in a particular case mix group set forth in subsection
(4)(a) of this section shall apply.
(c) In calculating the number of days a resident is classified into
a particular case mix group, the department shall determine an end date
for calculating case mix grouping periods as follows:
(i) If a resident is discharged before the end of the applicable
quarter, the end date shall be the day before discharge;
(ii) If a resident is not discharged before the end of the
applicable quarter, the end date shall be the last day of the quarter;
(iii) If a new assessment is due for a resident or a new assessment
is completed and transmitted to the department, the end date of the
previous assessment shall be the earlier of either the day before the
assessment is due or the day before the assessment is completed by the
nursing facility
(5) The cutoff date for the department to use resident assessment
data, for the purposes of calculating both the facility average and the
medicaid average case mix indexes, and for establishing and updating a
facility's direct care component rate, shall be one month and one day
after the end of the quarter for which the resident assessment data
applies.
(6) ((A threshold of ninety percent, as described and calculated in
this subsection, shall be used to determine the case mix index each
quarter. The threshold shall also be used to determine which
facilities' costs per case mix unit are included in determining the
ceiling, floor, and price. For direct care component rate allocations
established on and after July 1, 2006, the threshold of ninety percent
shall be used to determine the case mix index each quarter and to
determine which facilities' costs per case mix unit are included in
determining the ceiling and price. If the facility does not meet the
ninety percent threshold, the department may use an alternate case mix
index to determine the facility average and medicaid average case mix
indexes for the quarter. The threshold is a count of unique minimum
data set assessments, and it shall include resident assessment
instrument tracking forms for residents discharged prior to completing
an initial assessment. The threshold is calculated by dividing a
facility's count of residents being assessed by the average census for
the facility. A daily census shall be reported by each nursing
facility as it transmits assessment data to the department. The
department shall compute a quarterly average census based on the daily
census. If no census has been reported by a facility during a
specified quarter, then the department shall use the facility's
licensed beds as the denominator in computing the threshold.))(a) Although the facility average and the medicaid average
case mix indexes shall both be calculated quarterly, the cost-rebasing
period facility average case mix index will be used throughout the
applicable cost-rebasing period in combination with cost report data as
specified by RCW 74.46.431 and 74.46.506, to establish a facility's
allowable cost per case mix unit. A facility's medicaid average case
mix index shall be used to update a nursing facility's direct care
component rate quarterly.
(7)
(b) The facility average case mix index used to establish each
nursing facility's direct care component rate shall be based on an
average of calendar quarters of the facility's average case mix
indexes((.)) from the four calendar quarters occurring during the cost
report period used to rebase the direct care component rate allocations
as specified in RCW 74.46.431.
(i) For October 1, 1998, direct care component rates, the
department shall use an average of facility average case mix indexes
from the four calendar quarters of 1997.
(ii) For July 1, 2001, direct care component rates, the department
shall use an average of facility average case mix indexes from the four
calendar quarters of 1999.
(iii) Beginning on July 1, 2006, when establishing the direct care
component rates, the department shall use an average of facility case
mix indexes
(c) The medicaid average case mix index used to update or
recalibrate a nursing facility's direct care component rate
((quarterly)) semiannually shall be from the calendar ((quarter)) six-month period commencing ((six)) nine months prior to the effective date
of the ((quarterly)) semiannual rate. For example, ((October 1, 1998))
July 1, 2010, through December 31, ((1998)) 2010, direct care component
rates shall utilize case mix averages from the ((April 1, 1998))
October 1, 2009, through ((June 30, 1998)) April 30, 2010, calendar
quarters, and so forth.
Sec. 7 RCW 74.46.506 and 2007 c 508 s 3 are each amended to read
as follows:
(1) The direct care component rate allocation corresponds to the
provision of nursing care for one resident of a nursing facility for
one day, including direct care supplies. Therapy services and
supplies, which correspond to the therapy care component rate, shall be
excluded. The direct care component rate includes elements of case mix
determined consistent with the principles of this section and other
applicable provisions of this chapter.
(2) ((Beginning October 1, 1998,)) The department shall determine
and update ((quarterly)) semiannually for each nursing facility serving
medicaid residents a facility-specific per-resident day direct care
component rate allocation, to be effective on the first day of each
calendar ((quarter)) six-month period. In determining direct care
component rates the department shall utilize, as specified in this
section, minimum data set resident assessment data for each resident of
the facility, as transmitted to, and if necessary corrected by, the
department in the resident assessment instrument format approved by
federal authorities for use in this state.
(3) The department may question the accuracy of assessment data for
any resident and utilize corrected or substitute information, however
derived, in determining direct care component rates. The department is
authorized to impose civil fines and to take adverse rate actions
against a contractor, as specified by the department in rule, in order
to obtain compliance with resident assessment and data transmission
requirements and to ensure accuracy.
(4) Cost report data used in setting direct care component rate
allocations shall be for rate periods as specified in RCW
74.46.431(4)(a).
(5) ((Beginning October 1, 1998,)) The department shall rebase each
nursing facility's direct care component rate allocation as described
in RCW 74.46.431, adjust its direct care component rate allocation for
economic trends and conditions as described in RCW 74.46.431, and
update its medicaid average case mix index, consistent with the
following:
(a) ((Reduce)) Adjust total direct care costs reported by each
nursing facility for the applicable cost report period specified in RCW
74.46.431(4)(a) to reflect any department adjustments, and to eliminate
reported resident therapy costs and adjustments, in order to derive the
facility's total allowable direct care cost;
(b) Divide each facility's total allowable direct care cost by its
adjusted resident days for the same report period, ((increased if
necessary to a minimum occupancy of eighty-five percent; that is, the
greater of actual or imputed occupancy at eighty-five percent of
licensed beds,)) to derive the facility's allowable direct care cost
per resident day((. However, effective July 1, 2006, each facility's
allowable direct care costs shall be divided by its adjusted resident
days without application of a minimum occupancy assumption));
(c) ((Adjust the facility's per resident day direct care cost by
the applicable factor specified in RCW 74.46.431(4) to derive its
adjusted allowable direct care cost per resident day;)) Divide each facility's adjusted allowable direct care cost
per resident day by the facility average case mix index for the
applicable quarters specified by RCW 74.46.501((
(d)(7))) (6)(b) to derive
the facility's allowable direct care cost per case mix unit;
(((e) Effective for July 1, 2001, rate setting,)) (d) Divide
nursing facilities into at least two and, if applicable, three peer
groups: Those located in nonurban counties; those located in high
labor-cost counties, if any; and those located in other urban counties;
(((f))) (e) Array separately the allowable direct care cost per
case mix unit for all facilities in nonurban counties; for all
facilities in high labor-cost counties, if applicable; and for all
facilities in other urban counties, and determine the median allowable
direct care cost per case mix unit for each peer group;
(((g) Except as provided in (i) of this subsection, from October 1,
1998, through June 30, 2000, determine each facility's quarterly direct
care component rate as follows:)) (f) Determine each
facility's ((
(i) Any facility whose allowable cost per case mix unit is less
than eighty-five percent of the facility's peer group median
established under (f) of this subsection shall be assigned a cost per
case mix unit equal to eighty-five percent of the facility's peer group
median, and shall have a direct care component rate allocation equal to
the facility's assigned cost per case mix unit multiplied by that
facility's medicaid average case mix index from the applicable quarter
specified in RCW 74.46.501(7)(c);
(ii) Any facility whose allowable cost per case mix unit is greater
than one hundred fifteen percent of the peer group median established
under (f) of this subsection shall be assigned a cost per case mix unit
equal to one hundred fifteen percent of the peer group median, and
shall have a direct care component rate allocation equal to the
facility's assigned cost per case mix unit multiplied by that
facility's medicaid average case mix index from the applicable quarter
specified in RCW 74.46.501(7)(c);
(iii) Any facility whose allowable cost per case mix unit is
between eighty-five and one hundred fifteen percent of the peer group
median established under (f) of this subsection shall have a direct
care component rate allocation equal to the facility's allowable cost
per case mix unit multiplied by that facility's medicaid average case
mix index from the applicable quarter specified in RCW 74.46.501(7)(c);
(h) Except as provided in (i) of this subsection, from July 1,
2000, through June 30, 2006, determine each facility's quarterly direct
care component rate as follows:
(i) Any facility whose allowable cost per case mix unit is less
than ninety percent of the facility's peer group median established
under (f) of this subsection shall be assigned a cost per case mix unit
equal to ninety percent of the facility's peer group median, and shall
have a direct care component rate allocation equal to the facility's
assigned cost per case mix unit multiplied by that facility's medicaid
average case mix index from the applicable quarter specified in RCW
74.46.501(7)(c);
(ii) Any facility whose allowable cost per case mix unit is greater
than one hundred ten percent of the peer group median established under
(f) of this subsection shall be assigned a cost per case mix unit equal
to one hundred ten percent of the peer group median, and shall have a
direct care component rate allocation equal to the facility's assigned
cost per case mix unit multiplied by that facility's medicaid average
case mix index from the applicable quarter specified in RCW
74.46.501(7)(c);
(iii) Any facility whose allowable cost per case mix unit is
between ninety and one hundred ten percent of the peer group median
established under (f) of this subsection shall have a direct care
component rate allocation equal to the facility's allowable cost per
case mix unit multiplied by that facility's medicaid average case mix
index from the applicable quarter specified in RCW 74.46.501(7)(c);
(i)(i) Between October 1, 1998, and June 30, 2000, the department
shall compare each facility's direct care component rate allocation
calculated under (g) of this subsection with the facility's nursing
services component rate in effect on September 30, 1998, less therapy
costs, plus any exceptional care offsets as reported on the cost
report, adjusted for economic trends and conditions as provided in RCW
74.46.431. A facility shall receive the higher of the two rates.
(ii) Between July 1, 2000, and June 30, 2002, the department shall
compare each facility's direct care component rate allocation
calculated under (h) of this subsection with the facility's direct care
component rate in effect on June 30, 2000. A facility shall receive
the higher of the two rates. Between July 1, 2001, and June 30, 2002,
if during any quarter a facility whose rate paid under (h) of this
subsection is greater than either the direct care rate in effect on
June 30, 2000, or than that facility's allowable direct care cost per
case mix unit calculated in (d) of this subsection multiplied by that
facility's medicaid average case mix index from the applicable quarter
specified in RCW 74.46.501(7)(c), the facility shall be paid in that
and each subsequent quarter pursuant to (h) of this subsection and
shall not be entitled to the greater of the two rates.
(iii) Between July 1, 2002, and June 30, 2006, all direct care
component rate allocations shall be as determined under (h) of this
subsection.
(iv) Effective July 1, 2006, for all providers, except vital local
providers as defined in this chapter, all direct care component rate
allocations shall be as determined under (j) of this subsection.
(v) Effective July 1, 2006, through June 30, 2007, for vital local
providers, as defined in this chapter, direct care component rate
allocations shall be determined as follows:
(A) The department shall calculate:
(I) The sum of each facility's July 1, 2006, direct care component
rate allocation calculated under (j) of this subsection and July 1,
2006, operations component rate calculated under RCW 74.46.521; and
(II) The sum of each facility's June 30, 2006, direct care and
operations component rates.
(B) If the sum calculated under (i)(v)(A)(I) of this subsection is
less than the sum calculated under (i)(v)(A)(II) of this subsection,
the facility shall have a direct care component rate allocation equal
to the facility's June 30, 2006, direct care component rate allocation.
(C) If the sum calculated under (i)(v)(A)(I) of this subsection is
greater than or equal to the sum calculated under (i)(v)(A)(II) of this
subsection, the facility's direct care component rate shall be
calculated under (j) of this subsection;
(j) Except as provided in (i) of this subsection, from July 1,
2006, forward, and for all future rate setting,quarterly)) semiannual direct care component rate as
follows:
(i) Any facility whose allowable cost per case mix unit is greater
than one hundred twelve percent of the peer group median established
under (((f))) (e) of this subsection shall be assigned a cost per case
mix unit equal to one hundred twelve percent of the peer group median,
and shall have a direct care component rate allocation equal to the
facility's assigned cost per case mix unit multiplied by that
facility's medicaid average case mix index from the applicable
((quarter)) six-month period specified in RCW 74.46.501(((7))) (6)(c);
(ii) Any facility whose allowable cost per case mix unit is less
than or equal to one hundred twelve percent of the peer group median
established under (((f))) (e) of this subsection shall have a direct
care component rate allocation equal to the facility's allowable cost
per case mix unit multiplied by that facility's medicaid average case
mix index from the applicable ((quarter)) six-month period specified in
RCW 74.46.501(((7))) (6)(c).
(6) The direct care component rate allocations calculated in
accordance with this section shall be adjusted to the extent necessary
to comply with RCW 74.46.421.
(7) Costs related to payments resulting from increases in direct
care component rates, granted under authority of RCW 74.46.508(((1)))
for a facility's exceptional care residents, shall be offset against
the facility's examined, allowable direct care costs, for each report
year or partial period such increases are paid. Such reductions in
allowable direct care costs shall be for rate setting, settlement, and
other purposes deemed appropriate by the department.
Sec. 8 RCW 74.46.521 and 2007 c 508 s 5 are each amended to read
as follows:
(1) The operations component rate allocation corresponds to the
general operation of a nursing facility for one resident for one day,
including but not limited to management, administration, utilities,
office supplies, accounting and bookkeeping, minor building
maintenance, minor equipment repairs and replacements, and other
supplies and services, exclusive of direct care, therapy care, support
services, property, and financing allowance((, and variable return)).
(2) ((Except as provided in subsection (4) of this section,
beginning October 1, 1998,)) The department shall determine each
medicaid nursing facility's operations component rate allocation using
cost report data specified by RCW 74.46.431(7)(a). ((Effective July 1,
2002,)) Operations component rates for all facilities except essential
community providers and nonessential community providers with sixty or
fewer beds shall be based upon a minimum occupancy of ninety-two
percent of licensed beds((, and no operations component rate shall be
revised in response to beds banked on or after May 25, 2001, under
chapter 70.38 RCW)).
(3) ((Except as provided in subsection (4) of this section,)) To
determine each facility's operations component rate the department
shall:
(a) Array facilities' adjusted general operations costs per
adjusted resident day, as determined by dividing each facility's total
allowable operations cost by its adjusted resident days for the same
report period, increased if necessary to a minimum occupancy of ninety-two percent; that is, the greater of actual or imputed occupancy at
ninety-two percent of licensed beds, for each facility from facilities'
cost reports from the applicable report year, for facilities located
within urban counties and for those located within nonurban counties
and determine the median adjusted cost for each peer group;
(b) Set each facility's operations component rate at the lower of:
(i) The facility's per resident day adjusted operations costs from
the applicable cost report period adjusted if necessary to a minimum
occupancy of ((eighty-five percent of licensed beds before July 1,
2002, and)) ninety-two percent ((effective July 1, 2002)); or
(ii) The adjusted median per resident day general operations cost
for that facility's peer group, urban counties or nonurban counties;
and
(c) Adjust each facility's operations component rate for economic
trends and conditions as provided in RCW 74.46.431(7)(b).
(4)(((a) Effective July 1, 2006, through June 30, 2007, for any
facility whose direct care component rate allocation is set equal to
its June 30, 2006, direct care component rate allocation, as provided
in RCW 74.46.506(5), the facility's operations component rate
allocation shall also be set equal to the facility's June 30, 2006,
operations component rate allocation.)) The operations component rate allocations calculated in
accordance with this section shall be adjusted to the extent necessary
to comply with RCW 74.46.421.
(b) The operations component rate allocation for facilities whose
operations component rate is set equal to their June 30, 2006,
operations component rate, shall be adjusted for economic trends and
conditions as provided in RCW 74.46.431(7)(b).
(5)
NEW SECTION. Sec. 9 A new section is added to chapter 74.46 RCW
to read as follows:
The department shall establish, by rule, the procedures,
principles, and conditions for a pay for performance supplemental
payment structure that provides payment add-ons for high performing
facilities. To the extent that funds are appropriated for this
purpose, the pay-for-performance structure will include a one percent
reduction in payments to facilities with exceptionally high direct care
staff turnover, and a method by which the funding that is not paid to
these facilities is then used to provide a supplemental payment to
facilities with lower direct care staff turnover.
NEW SECTION. Sec. 10 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 are each repealed.
NEW SECTION. Sec. 11 This act is necessary for the immediate
preservation of the public peace, health, or safety, or support of the
state government and its existing public institutions, and takes effect
immediately.