S-1450               _______________________________________________

                                                   SENATE BILL NO. 5800

                        _______________________________________________

State of Washington                               51st Legislature                              1989 Regular Session

By Senators Lee, Smitherman and Sellar

Read first time 2/8/89 and referred to Committee on  Health Care & Corrections.

AN ACT Relating to nursing home prospective rate adjustments; and amending RCW 74.46.495 and 74.46.500.

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

        Sec. 1.  Section 26, chapter 67, Laws of 1983 1st ex. sess. and RCW 74.46.495 are each amended to read as follows:

          (1) References in RCW 74.46.490 and 74.46.481 to adjustments for inflation mean ((percentages determined by the legislature in the biennial budget act)) adjustments based on the department's calculating the annual percentage increase or decrease in the facility's total desk audited allowable costs for the referenced cost centers using state-wide nursing home's most recent cost report and the next prior year's cost reports.  The calculated annual percentage increase or decrease shall then be adjusted for projected economic trends and conditions specific to the referenced cost centers and multiplied by one and one-half yielding an eighteen month inflationary factor.

          (2) Inflation adjustments shall be applied as follows:

          (a) Where a prior period rate forms the basis for the next period rate, the adjustment in subsection (1) of this section shall be applied to that prior period rate.

          (b) In the nursing services cost center rates beginning July 1, 1984, and the administration and operations cost center rate, the adjustments in subsection (1) of this section shall be applied to prior period annual costs in establishing July rates.  Where a July rate is based upon a cost report covering less than twelve months, the department shall reduce the inflation adjustment factor in subsection (1) of this section proportionately.

        Sec. 2.  Section 50, chapter 177, Laws of 1980 and RCW 74.46.500 are each amended to read as follows:

          (1) The administration and operations cost center shall include all items not included in the cost centers of nursing services, food, and property.

          (2) The administration and operations cost center reimbursement rate for each facility shall be:  Adjusted based on the inflationary factor described in RCW 74.46.495 except that the desk audited allowable costs in the administration and operations cost center will be compared; based on the computation in this subsection; and shall not exceed the eighty-fifth percentile of (a) the rates of all reporting facilities derived from the computation below, or (b) reporting facilities grouped in accordance with subsection (3) of this section:

AR = TAC/TPD, where

!ixAR!sc ,1=!sc ,1!ih*the administration and operations cost center reimbursement rate for a facility;

!ixTAC!sc ,1=!sc ,1!ih*the total costs of the administration and operations cost center plus the retained savings from such cost center as provided in RCW 74.46.180 of a facility; and

!ixTPD!sc ,1=!sc ,1!ih*the total patient days for a facility for the prior year.

          (3) The secretary may group facilities based on factors which could reasonably influence cost requirements of this cost center, other than ownership or legal organization characteristics.