AN ACT Relating to quality of care in nursing homes; amending RCW 74.46.481, 74.42.240, 74.42.380, 18.51.054, 18.51.060, 18.51.065, 74.42.580, 18.51.050, 18.51.430, 18.51.500, 18.51.410, 18.51.440, 18.51.460, 74.46.410, and 74.46.465; creating new sections; and repealing RCW 18.52A.050.

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

Sec. 1. Section 24, chapter 67, Laws of 1983 1st ex. sess. as amended by section 5, chapter 476, Laws of 1987 and RCW 74.46.481 are each amended to read as follows:

(1) The nursing services cost center shall include all costs related to the direct provision of nursing and related care, including fringe benefits and payroll taxes for the nursing and related care personnel. For rates effective for state fiscal year 1984, the department shall adopt by administrative rule a definition of "related care" which shall incorporate, but not exceed services reimbursable as of June 30, 1983. For rates effective for state fiscal year 1985, the definition of related care shall include ancillary care.

(2) The department shall adopt by administrative rules a method for establishing a nursing services cost center rate consistent with the principles stated in this section.

(3) Utilizing regression or other statistical technique, the department shall determine a reasonable limit on facility nursing staff taking into account facility patient characteristics. For purposes of this section, facility nursing staff refers to registered nurses, licensed practical nurses and nursing assistants‑-registered employed by the facility or obtained through temporary labor contract arrangements. Effective January 1, 1988, the hours associated with the training of nursing assistants‑-registered and directors-of-nursing-services-in-training and the supervision of that training for nursing assistants‑-registered and directors-of-nursing-services-in-training shall not be included in the calculation of facility nursing staff. In selecting a measure of patient characteristics, the department shall take into account:

(a) The correlation between alternative measures and facility nursing staff; and

(b) The cost of collecting information for and computation of a measure.

If regression is used, the limit shall be set at predicted nursing staff plus 1.75 regression standard errors. If another statistical method is utilized, the limit shall be set at a level corresponding to 1.75 standard errors above predicted staffing computed according to a regression procedure.

(4) No facility shall receive reimbursement for nursing staff levels in excess of the limit, except that, if a facility was reimbursed for a nursing staff level in excess of the limit as of June 30, 1983, the facility may chose to continue to receive its June, 1983 nursing services rate plus any adjustments in rates, such as adjustments for economic trends, made available to all facilities. The reasonableness limit established pursuant to this subsection shall remain in effect for the period July 1, 1983 through June 30, 1985. At that time the department may revise the measure of patient characteristics or method used to establish the limit.

(5) (a) The nursing services cost center amount shall be increased as follows:

(i) The total wages, benefits, and payroll taxes for registered nurses, licensed practical nurses, and nursing assistants‑-registered at each facility shall be computed based on the 1988 cost report, except that the total wages, benefits, and payroll taxes for overtime and contract labor shall be calculated at the average compensation rate for registered nurses, licensed practical nurses, and nursing assistants‑-registered at the facility;

(ii) The amount shall be increased by any percentage inflation adjustment granted under RCW 74.46.495; and

(iii) Twenty-five percent of such adjusted amount shall be computed and added to the nursing services cost center amount, and shall be excluded from all reimbursement limitations cited in this section.

(b) Each contractor shall spend the amount specified in this subsection on wages, benefits, and payroll taxes for registered nurses, licensed practical nurses and nursing assistants‑-registered.

(c) The department shall determine whether each contractor has spent the amount as required by (b) of this subsection. The department shall make that determination as follows:

(i) Overtime and contract labor hours and wages used by a facility shall be converted to facility-specific straight time hours and wages;

(ii) The current year cost report of hours and costs, including the converted contract and overtime hours and wages, shall be compared to the previous year cost report, also including converted contract and overtime hours and wages;

(iii) To the extent that there is an increase in such costs from one cost reporting period over the previous cost reporting period, then the department can assume that the amount has been properly spent as required by (b) of this subsection.

(d) If the contractor does not spend the amount as required by (b) of this subsection, then the amounts not so spent shall be recouped at preliminary or final settlement pursuant to RCW 74.46.160.

(6) The department shall select an index of cost increase relevant to the nursing and related services cost area. In the absence of a more representative index, the department shall use the medical care component index as maintained by the United States bureau of labor statistics.

((~~(6)~~)) (7) If a facility's nursing staff level is below the limit specified in subsection (3) of this section, the department shall determine the percentage increase for all items included in the nursing services cost center between the facility's most recent cost reporting period and the next prior cost reporting period.

(a) If the percentage cost increase for a facility is below the increase in the selected index for the same time period, the facility's reimbursement rate in the nursing services cost center shall equal the facility's cost from the most recent cost reporting period plus any allowance for inflation provided by legislative appropriation.

((~~(7)~~)) (8) If the facility's nursing staff level exceeds the reasonableness limit established in subsection (3) of this section, the department shall determine the increase for all items included in the nursing services cost center between the facility's most recent cost reporting period and the next prior cost reporting period.

(a) If the percentage cost increase for a facility is below the increase in the index selected pursuant to subsection ((~~(5)~~)) (6) of this section, the facility's reimbursement rate in the nursing cost center shall equal the facility's cost from the most recent cost reporting period adjusted downward to reflect the limit on nursing staff, plus any allowance for inflation provided by legislative appropriation subject to the provisions of subsection (4) of this section.

(b) If the percentage cost increase for a facility exceeds the increase in the selected index, the department shall limit the cost used for setting the facility's rate in the nursing services cost center to a level reflecting the nursing staff limit and the cost increase limit, subject to the provisions of subsection (4) of this section, plus any allowance for inflation provided by legislative appropriation.

((~~(8)~~)) (9) Effective July 1, 1989, subsections (6), (7), and (8) of this section shall not be applied to the establishment of the nursing services cost center. Subsections (6), (7), and (8) of this section shall be subject to review by the legislature in 1991.

(10) The department is authorized to determine on a systematic basis facilities with unmet patient care service needs. The department may increase the nursing services cost center prospective rate for a facility beyond the level determined in accordance with subsection ((~~(6)~~)) (7) of this section if the facility's actual and reported nursing staffing is one standard error or more below predicted staffing as determined according to the method selected pursuant to subsection (3) of this section and the facility has unmet patient care service needs: PROVIDED, That prospective rate increases authorized by this subsection shall be funded only from legislative appropriations made for this purpose and the increases shall be conditioned on specified improvements in patient care at such facilities.

((~~(9)~~)) (11) The department shall establish a method for identifying patients with exceptional care requirements and a method for establishing or negotiating on a consistent basis rates for such patients.

((~~(10)~~)) (12) The department, in consultation with interested parties, shall adopt rules to establish the criteria the department will use in reviewing any requests by a contractor for a prospective rate adjustment to be used to increase the number of nursing staff. These rules shall also specify the time period for submission and review of staffing requests: PROVIDED, That a decision on a staffing request shall not take longer than sixty days from the date the department receives such a complete request. In establishing the criteria, the department may consider, but is not limited to, the following:

(a) Increases in acuity levels of contractors' residents;

(b) Staffing patterns for similar facilities;

(d) Survey, inspection of care, and department consultation results.

NEW SECTION. Sec. 2. The legislature finds that the quality of patient care in nursing homes is dependent upon the competence of the personnel who staff their facilities. To assure the availability of trained directors of nursing services, the legislature recognizes the need for the development of an in-service program.

NEW SECTION. Sec. 3. Unless the context requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Department" means the department of social and health services.

(2) "Nursing home" means a facility licensed under chapter 18.51 RCW, a wing of a hospital licensed under chapter 70.41 RCW if the wing is certified to provide nursing home care under Title XVIII or Title XIX of the social security act, or any nursing care facility operated under the direction of the department of veterans affairs.

(3) "Board" means the state board of nursing.

NEW SECTION. Sec. 4. The board shall develop, administer, and supervise a director-of-nursing-services-in-training program. The board may undertake whatever actions are necessary for the implementation of the program, including, but not limited to:

(1) Approving education and training programs;

(2) Establishing standards for preceptor programs and standards of qualification for preceptors;

(3) Establishing criteria for creating and evaluating individual programs; and

(4) Monitoring programs to assure compliance with rules and regulations adopted by the board.

NEW SECTION. Sec. 5. Costs incurred by a contractor or a nursing home for an individual to participate in an approved director-of-nursing-services-in-training program shall be an allowable cost under RCW 74.46.240 and shall be reimbursed by an adjustment to the current rate.

Sec. 6. Section 24, chapter 211, Laws of 1979 ex. sess. and RCW 74.42.240 are each amended to read as follows:

(1) No staff member may administer any medication to a resident unless the staff member is licensed to administer medication. Nothing herein prohibits graduate nurses or student nurses from administering medications when permitted to do so under chapters 18.88 and 18.78 RCW and rules adopted thereunder.

(2) The facility may only allow a resident to give himself or herself medication with the attending physician's permission.

(3) Medication shall only be administered to or used by the resident for whom it is ordered.

Sec. 7. Section 38, chapter 211, Laws of 1979 ex. sess. as amended by section 2, chapter 284, Laws of 1985 and RCW 74.42.380 are each amended to read as follows:

(1) The facility shall have a director of nursing services. The director of nursing services shall be a registered nurse.

(2) The director of nursing services is responsible for:

(a) Coordinating the plan of care for each resident;

(b) Permitting only licensed personnel to administer medications: PROVIDED, That nothing herein shall be construed as prohibiting graduate nurses((~~, and student nurses under the supervision of their clinical instructor,~~)) or student nurses from administering medications when permitted to do so under chapters 18.88 and 18.78 RCW and rules promulgated pursuant thereto: PROVIDED FURTHER, That nothing herein shall be construed as prohibiting persons certified under chapter 18.135 RCW from practicing pursuant to the delegation and supervision requirements of chapter 18.135 RCW and rules promulgated pursuant thereto; and

(c) Insuring that the licensed practical nurses comply with chapter 18.78 RCW, the registered nurses comply with chapter 18.88 RCW, and persons certified under chapter 18.135 RCW comply with the provisions of that chapter and rules promulgated pursuant thereto.

Sec. 8. Section 1, chapter 284, Laws of 1985 and RCW 18.51.054 are each amended to read as follows:

The department may deny a license to any applicant ((~~who~~)) that:

(1) Operated a nursing home without a license or under a revoked or suspended license;

(2) Has knowingly or with reason to know made a false statement of a material fact (a) in an application for license or any data attached thereto, or (b) in any matter under investigation by the department;

(3) Refused to allow representatives or agents of the department to inspect (a) all books, records, and files required to be maintained, or (b) any portion of the premises of the nursing home;

(4) Willfully prevented, interfered with, or attempted to impede in any way (a) the work of any authorized representative of the department, or (b) the lawful enforcement of any provision of this chapter or chapter 74.42 RCW; or

(5) Has a history of significant noncompliance with federal or state regulations in providing nursing home care. In deciding whether to deny a license under this section, the factors the department considers shall include the gravity and frequency of the noncompliance.

Sec. 9. Section 7, chapter 117, Laws of 1951 as last amended by section 23, chapter 476, Laws of 1987 and RCW 18.51.060 are each amended to read as follows:

(1) ((The department is authorized to deny, suspend, or revoke a license or, in lieu thereof or in addition thereto, assess monetary penalties of a civil nature not to exceed three thousand dollars per violation)) In any case in which ((it)) the department finds that ((~~the applicant, or~~)) a licensee, or any partner, officer, director, owner of five percent or more of the assets of the nursing home, or managing employee((:

~~(a)~~)) failed or refused to comply with the requirements of this chapter or of chapter 74.42 RCW, or the standards((~~, rules and regulations~~)) and rules established under them((;)) or, in the case of a medicaid contractor, failed or refused to comply with the medicaid requirements of Title XIX of the social security act and regulations adopted thereunder; the department may take any or all of the following actions:

(a) Suspend, revoke, or refuse to renew a license;

(b) Order stop placement;

(d) Deny payment to a nursing home for any medicaid resident admitted after notice to deny payment.

(2) The department may also suspend, revoke, or refuse to renew a license, assess monetary penalties of a civil nature, or both, in any case in which it finds that the licensee, or any partner, officer, director, owner of five percent or more of the assets of the nursing home, or managing employee:

((~~(b)~~)) (a) Operated a nursing home without a license or under a revoked or suspended license; or

((~~(c)~~)) (b) Has knowingly or with reason to know made a false statement of a material fact in his application for license or any data attached thereto, or in any matter under investigation by the department; or

((~~(d)~~)) (c) Refused to allow representatives or agents of the department to inspect all books, records, and files required to be maintained or any portion of the premises of the nursing home; or

((~~(e)~~)) (d) Willfully prevented, interfered with, or attempted to impede in any way the work of any duly authorized representative of the department and the lawful enforcement of any provision of this chapter or of chapter 74.42 RCW; or

((~~(f)~~)) (e) Willfully prevented or interfered with any representative of the department in the preservation of evidence of any violation of any of the provisions of this chapter or of chapter 74.42 RCW or the standards, rules, and regulations adopted under them; or

((~~(g)~~)) (f) Failed to report patient abuse or neglect in violation of chapter 70.124 RCW; or

((~~(h)~~)) (g) Fails to pay any civil monetary penalty assessed by the department pursuant to this chapter within ten days after such assessment becomes final((: PROVIDED, That in no event shall the department assess a civil monetary penalty authorized pursuant to this section or post the said premises as provided in RCW 18.51.260 or include in the report required pursuant to RCW 18.51.270 during any period in which it has not reasonably implemented and funded its cost-related reimbursement system for public patients.

(2) A contractor subject to civil penalty under subsection (1)(a) of this section shall have a reasonable opportunity, not to exceed sixty days from notification of the violation, to correct the violation before being assessed a civil monetary penalty under this section. However, if the department determines that the violation resulted in serious harm to or death of a patient, constitutes a serious threat to patient life, health, or safety, or substantially limits the nursing home's capacity to render adequate care, the violator shall be so notified and a penalty may be assessed without prior opportunity to correct. Each day the violation continues may constitute a separate violation subject to assessment of a separate penalty.

The correction of a standard or condition level deficiency, as defined by the authority of Title XVIII of the social security act and 42 C.F.R. 405-110 subpart K, shall be maintained for a period of at least one year. Failure to maintain such correction shall constitute a separate violation for each day the deficiency is not corrected and may be subject to the assessment of a separate penalty not to exceed three thousand dollars without a prior opportunity to correct the violation.

(3) A person subject to civil penalty under subsection (1)(b) through (h) of this section shall not have a prior opportunity to correct the violation before being assessed a civil monetary penalty under this section.

Following the notification of a violation of subsection (1)(b) through (h) of this section, each day upon which the same or a substantially similar action occurs shall constitute a separate violation subject to the assessment of a separate penalty.

(4) Any civil penalty assessed under this section or chapter 74.46 RCW shall bear a reasonable rate of interest from the date of notification of the violation. The department may administer civil fines under this section or chapter 74.46 RCW by:

~~(a) Requiring payment in full; or~~

~~(b) Permitting installment payments; or~~

~~(c) Requiring that the full amount or a portion of the assessed civil penalty be expended to ameliorate the violation or to improve nonadministrative services within the facility; or~~

(d) Defer the penalty or a portion thereof until one year after corrective action has been completed to assure maintenance of such action: PROVIDED, That the penalty may be reduced all or in part at the end of such year: PROVIDED FURTHER, That the penalty may be trebled if such corrective action is not maintained for one year)).

((~~(5)~~)) (3) If the department determines that an emergency affecting the health and safety of residents exists as a result of a nursing home's failure or refusal to comply with requirements of this chapter or, in the case of a medicaid contractor, its failure or refusal to comply with medicaid requirements of Title XIX of the social security act and rules adopted thereunder, the department is authorized to order the immediate closure of the nursing home, the immediate transfer of residents, or both.

(4) The department shall deny payment to a nursing home having a medicaid contract with respect to any medicaid-eligible individual admitted to the nursing home after the department has found the nursing home not in compliance with the requirements of this chapter if:

(a) The facility has not corrected the deficiencies within three months. In that case the department shall continue to deny payment until correction has been achieved; or

(b) The department has found on three consecutive standard surveys that the nursing home provided substandard quality of care; in such case, the department shall continue to deny payment with respect to such individuals until the facility has demonstrated to the satisfaction of the department that it is in compliance with medicaid requirements and that it will remain in compliance with such requirements.

(5)(a) Civil penalties collected under this section or under chapter 74.42 RCW shall be deposited into a special fund administered by the department to be applied to the protection of the health or property of residents of nursing facilities found to be deficient, including payment for the costs of relocation of residents to other facilities, maintenance of the operation of a facility pending correction of deficiencies or closure, and reimbursement of residents for personal funds lost.

(b) Civil monetary penalties, if imposed, may be assessed and collected, with interest, for each day a nursing home is or was out of compliance. Civil monetary penalties shall not exceed three thousand dollars per violation. Each day upon which the same or a substantially similar action occurs is a separate violation subject to the assessment of a separate penalty.

(c) Any civil penalty assessed under this section or chapter 74.46 RCW shall be a nonreimbursable item under chapter 74.46 RCW.

(6)(a) The department shall order stop placement in a nursing home, effective upon oral or written notice to the nursing home administrator, when the department determines:

(i) The nursing home no longer substantially meets the requirements of:

(A) 42 U.S.C. Sec. 1395 x(j);

(B) 42 U.S.C. Sec. 1396 d(c);

(D) Chapter 74.42 RCW; or

(E) Any federal or state regulation or regulations adopted under authority of the above referenced statutes; or

(ii) The deficiency or deficiencies in the nursing home:

(A) Jeopardize the health and safety of the residents; or

(B) Seriously limit the nursing home's capacity to provide adequate care.

(b) When the department has initiated a stop placement, the department may approve a readmission to the nursing home from a hospital when the department determines the readmission would be in the best interest of the individual seeking readmission.

(i) The provider states in writing that the deficiencies necessitating the stop placement action have been corrected; and

(ii) Department staff confirms in a timely fashion not to exceed fifteen working days that:

(A) The deficiencies necessitating stop placement action have been corrected; and

(B) The provider exhibits the capacity to maintain adequate care and service.

(d) A nursing home provider shall have the right to an informal review to present written evidence to refute the deficiencies cited as the basis for the stop placement. If an informal review is desired, the nursing home shall request the review in writing within ten days of the effective date of the stop placement.

(e) A stop placement shall not be delayed or suspended because the nursing home requests a contested hearing or an informal review. The stop placement shall remain in effect until:

(i) The department terminates the stop placement;

(ii) Fourteen days after an initial decision terminating the stop placement is mailed and the department does not file a petition for administrative review; or

(iii) A review decision terminating the stop placement is mailed.

(7) The department shall specify by rule criteria as to when and how the sanctions specified in this section shall be applied. Such criteria shall provide for the imposition of incrementally more severe penalties for deficiencies that are repeated, uncorrected, pervasive, or present a threat to the health, safety, or welfare of the residents.

Sec. 10. Section 16, chapter 99, Laws of 1975 1st ex. sess. as amended by section 19, chapter 2, Laws of 1981 1st ex. sess. and RCW 18.51.065 are each amended to read as follows:

(1) All orders of the department denying, suspending, or revoking the license or assessing a monetary penalty shall become final twenty days after the same has been served upon the applicant or licensee unless a hearing is requested. All hearings hereunder and judicial review of such determinations shall be in accordance with the administrative procedure act, chapter ((~~34.04~~)) 34.05 RCW.

(2) Orders of the department imposing stop placement, emergency closure or emergency transfer shall be effective immediately upon notice and pending any hearing.

(3) Orders of the department imposing stop payment shall be effective immediately upon notice and pending any hearing whenever such orders are imposed because a facility's deficiencies jeopardize the health, safety, or welfare of the facility's residents. In all other situations in which the department imposes stop payment, orders imposing stop payment shall become final twenty days after the same have been served upon the licensee unless a hearing is requested.

(4) All hearings hereunder and judicial review of such determinations shall be in accordance with the administrative procedure act, chapter 34.05 RCW, except for receivership, which is instituted by direct petition to superior court as provided for in RCW 18.51.410 through 18.51.520.

Sec. 11. Section 58, chapter 211, Laws of 1979 ex. sess. as last amended by section 27, chapter 476, Laws of 1987 and RCW 74.42.580 are each amended to read as follows:

The department may deny, suspend, ((or)) revoke, or refuse to renew a license or provisional license ((~~or, in lieu thereof or in addition thereto~~)), assess monetary penalties of a civil nature, deny payment, seek receivership, order stop placement, order emergency closure, or order emergency transfer as provided in RCW 18.51.054 and 18.51.060 for violations of requirements of this chapter or of sections 1919(b), (c), or (d) of the social security act or rules adopted thereunder. Chapter ((~~34.04~~)) 34.05 RCW shall apply to any such actions, except for receivership.

Sec. 12. Section 6, chapter 117, Laws of 1951 as last amended by section 4, chapter 284, Laws of 1985 and RCW 18.51.050 are each amended to read as follows:

Upon receipt of an application for license, the department shall issue a license if the applicant and the nursing home facilities meet the requirements established under this chapter except that the department shall issue a temporary license to a court-appointed receiver for a period not to exceed six months from the date of appointment. Prior to the issuance or renewal of the license, the licensee shall pay a license fee as established by the department. No fee shall be required of government operated institutions or court-appointed receivers. All licenses issued under the provisions of this chapter shall expire on a date to be set by the department, but no license issued pursuant to this chapter shall exceed thirty-six months in duration. When a change of ownership occurs, the entity becoming the licensed operating entity of the facility shall pay a fee established by the department at the time of application for the license. The previously determined date of license expiration shall not change. The department shall conduct, without charge to the nursing homes, one annual licensing and certification survey per calendar year and one postsurvey for standards and conditions cited during each survey visit.

For all additional surveys required beyond the initial postsurvey or postsurveys, nursing homes shall pay an inspection fee of six dollars per bed to the department. No inspection fee shall be charged for a postsurvey conducted prior to the date specified in the facility's plan of correction unless the postsurvey is an additional postsurvey beyond the initial postsurvey and is requested by the nursing home. The inspection fee shall be due within thirty days of the completion date of the additional survey or postsurvey.

All applications and fees for renewal of the license shall be submitted to the department not later than thirty days prior to the date of expiration of the license. All applications and fees for change of ownership licenses shall be submitted to the department not later than sixty days before the date of the proposed change of ownership. Each license shall be issued only to the operating entity and those persons named in the license application. The license is valid only for the operation of the facility at the location specified in the license application. Licenses are not transferable or assignable. Licenses shall be posted in a conspicuous place on the licensed premises.

Sec. 13. Section 12, chapter 476, Laws of 1987 and RCW 18.51.430 are each amended to read as follows:

A petition for receivership shall include the name of the candidate for receiver. The department shall maintain a list of qualified persons to act as receivers, however, no person may be considered to be qualified to be a receiver who:

(1) Is the owner, licensee, or administrator of the facility;

(2) Is affiliated with the facility;

(3) Has ((a)) no financial interest in the facility at the time the receiver is appointed; or

(4) Has owned or operated a nursing home that has been ordered into receivership.

If a receiver is appointed, he or she may be drawn from the list but need not be, but an appointee shall have experience in providing long-term health care and a history of satisfactory operation of a nursing home. Preference may be granted to persons expressing an interest in permanent operation of the facility.

Sec. 14. Section 19, chapter 476, Laws of 1987 and RCW 18.51.500 are each amended to read as follows:

Upon order of the court, the department shall provide emergency or transitional financial assistance to a receiver not to exceed thirty thousand dollars. The receiver shall file with the court an accounting for any money expended. Any emergency or transitional expenditure made by the department on behalf of a nursing home not certified to participate in the medicaid Title XIX program shall be recovered from revenue generated by the facility which revenue is not obligated to the operation of the facility. ((~~If such funds are not fully recovered at the termination of the receivership,~~)) An action to recover such sums may be filed by the department against the former licensee or owner at the time the expenditure is made, regardless of whether the facility is certified to participate in the medicaid Title XIX program or not.

In lieu of filing an action, the department may file a lien on the facility or on the proceeds of the sale of the facility. Such a lien shall take priority over all other liens except for liens for wages to employees. The owner of the facility shall be entitled to the proceeds of the facility or the sale of the facility to the extent that these exceed the liabilities of the facility, including liabilities to the state, receiver, employees, and contractors, at the termination of the receivership.

Revenues relating to services provided by the current or former licensee, operator, or owner and available operating funds belonging to such licensee, operator, or owner shall be under the control of the receiver. The receiver shall consult the court in cases of extraordinary or questionable debts incurred prior to his or her appointment and shall not have the power to close the home or sell any assets of the home without prior court approval.

Priority shall be given to debts and expenditures directly related to providing care and meeting the needs of patients. The receiver shall pay from revenues due the facility, transitional financial assistance, and available operating funds, all back wages and salaries for nonowner employees employed on the date the court appoints the receiver, and assume responsibility for current payments on all outstanding debts. The former licensee or owner of the nursing home shall be responsible for all short-term and long-term debts past due as of the appointment date of the receiver. Any payment made to the receiver shall discharge the obligation of the payor to the owner of the facility.

Sec. 15. Section 10, chapter 476, Laws of 1987 and RCW 18.51.410 are each amended to read as follows:

A petition to establish a receivership shall allege that one or more of the following conditions exist and that the current operator has demonstrated an inability or unwillingness to take actions necessary to immediately correct the conditions alleged:

(1) The facility is operating without a license;

(2) The facility has not given the department prior written notice of its intent to close and has not made arrangements within thirty days before closure for the orderly transfer of its residents: PROVIDED, That if the facility has given the department prior written notice but the department has not acted with all deliberate speed to transfer the facility's residents, this shall bar the filing of a petition under this section;

(3) ((~~An emergency exists that specifically demonstrates an immediate and serious threat of harm to~~)) The health, ((~~security~~)) safety, or welfare of the facility's residents((~~, including, but not limited to, abandonment of the facility by the owner~~)) is immediately jeopardized;

(4) ((A condition exists in the facility in violation of a licensing statute or regulation that specifically demonstrates an immediate and serious threat of harm to the health, safety, or welfare of the residents of the facility;

~~(5)~~)) The facility demonstrates a pattern and practice of violating chapter 18.51 or 74.42 RCW((~~, or other statutes or regulations adopted by the department designed to safeguard the health, security, or welfare of residents~~)) and rules adopted thereunder such that the facility has demonstrated a repeated inability to maintain minimum patient care standards; or

((~~(6)~~)) (5) The facility demonstrates a pattern or practice of violating a condition level as defined by the federal government under the authority of Title XIX of the social security act.

The department ((~~may~~)) shall have the exclusive right to file a petition in the superior court in the county in which the nursing home is located or in the superior court of Thurston county. The current or former operator or licensee and the owner of the nursing home, if different than the operator or licensee, shall be made a party to the action. The court shall grant the petition if it finds, by a preponderance of the evidence, that one or more of the conditions listed in subsections (1) through ((~~(6)~~)) (5) of this section exists and, subject to RCW 18.51.420, that the current operator is unable or unwilling to take actions necessary to immediately correct the conditions.

Sec. 16. Section 13, chapter 476, Laws of 1987 and RCW 18.51.440 are each amended to read as follows:

Upon receipt of a petition for receivership, the court shall hear the matter within fourteen days. Temporary relief may be obtained under chapter 7.40 RCW and other applicable laws. In all actions arising under RCW 18.51.410 through 18.51.530, the posting of a certified copy of the summons and petition in a conspicuous place in the nursing home shall constitute service of those documents upon the respondent.

((~~In considering the petition, the court shall consider the following factors, among others:~~

~~(1) The history of the provider, including any prior history of deficiencies and corrective action taken; and~~

~~(2) Whether the circumstances alleged in the petition occurred for reasons that were beyond the control of the facility's current or former operator, licensee, or owner.~~))

Sec. 17. Section 15, chapter 476, Laws of 1987 and RCW 18.51.460 are each amended to read as follows:

(1) The receivership shall terminate:

((~~(1)~~)) (a) At the end of the appointed term;

((~~(2)~~)) (b) When all residents have been transferred and the facility closed;

((~~(3)~~)) (c) When all deficiencies have been eliminated and:

(i) The facility has been sold or returned to its former owner((: PROVIDED, That when a rehabilitated facility is returned to its former owner, the court may impose conditions to assure the continued compliance with chapters 18.51 and 74.42 RCW, and other applicable laws and regulations; or

~~(4) Upon possession and control of the nursing home by a licensed replacement operator~~)); or

(ii) A licensed replacement operator will assume possession and control of the nursing home.

(2) Upon the return of a rehabilitated facility to its former owner, the court may impose conditions to assure the continued compliance with chapters 18.51 and 74.42 RCW and other applicable laws and regulations.

Sec. 18. Section 41, chapter 177, Laws of 1980 as last amended by section 3, chapter 175, Laws of 1986 and RCW 74.46.410 are each amended to read as follows:

(1) Costs will be unallowable if they are not documented, necessary, ordinary, and related to the provision of care services to authorized patients.

(2) Unallowable costs include, but are not limited to, the following:

(a) Costs of items or services not covered by the medical care program. Costs of such items or services will be unallowable even if they are indirectly reimbursed by the department as the result of an authorized reduction in patient contribution;

(b) Costs of services and items provided to recipients which are covered by the department's medical care program but not included in care services established by the department under this chapter;

(c) Costs associated with a capital expenditure subject to section 1122 approval (part 100, Title 42 C.F.R.) if the department found it was not consistent with applicable standards, criteria, or plans. If the department was not given timely notice of a proposed capital expenditure, all associated costs will be unallowable up to the date they are determined to be reimbursable under applicable federal regulations;

(d) Costs associated with a construction or acquisition project requiring certificate of need approval pursuant to chapter 70.38 RCW if such approval was not obtained;

(e) Interest costs other than those provided by RCW 74.46.290 on and after the effective date of RCW 74.46.530;

(f) Salaries or other compensation of owners, officers, directors, stockholders, and others associated with the contractor or home office, except compensation paid for service related to patient care;

(g) Costs in excess of limits or in violation of principles set forth in this chapter;

(h) Costs resulting from transactions or the application of accounting methods which circumvent the principles of the cost-related reimbursement system set forth in this chapter;

(i) Costs applicable to services, facilities, and supplies furnished by a related organization in excess of the lower of the cost to the related organization or the price of comparable services, facilities, or supplies purchased elsewhere;

(j) Bad debts of non-Title XIX recipients. Bad debts of Title XIX recipients are allowable if the debt is related to covered services, it arises from the recipient's required contribution toward the cost of care, the provider can establish that reasonable collection efforts were made, the debt was actually uncollectible when claimed as worthless, and sound business judgment established that there was no likelihood of recovery at any time in the future;

(k) Charity and courtesy allowances;

(l) Cash, assessments, or other contributions, excluding dues, to charitable organizations, professional organizations, trade associations, or political parties, and costs incurred to improve community or public relations;

(m) Vending machine expenses;

(n) Expenses for barber or beautician services not included in routine care;

(o) Funeral and burial expenses;

(p) Costs of gift shop operations and inventory;

(q) Personal items such as cosmetics, smoking materials, newspapers and magazines, and clothing, except those used in patient activity programs;

(r) Fund-raising expenses, except those directly related to the patient activity program;

(s) Penalties and fines;

(t) Expenses related to telephones, televisions, radios, and similar appliances in patients' private accommodations;

(u) Federal, state, and other income taxes;

(v) Costs of special care services except where authorized by the department;

(w) Expenses of key-man insurance and other insurance or retirement plans not made available to all employees;

(x) Expenses of profit-sharing plans;

(y) Expenses related to the purchase and/or use of private or commercial airplanes which are in excess of what a prudent contractor would expend for the ordinary and economic provision of such a transportation need related to patient care;

(z) Personal expenses and allowances of owners or relatives;

(aa) All expenses of maintaining professional licenses or membership in professional organizations;

(bb) Costs related to agreements not to compete;

(cc) Amortization of goodwill;

(dd) Expenses related to vehicles which are in excess of what a prudent contractor would expend for the ordinary and economic provision of transportation needs related to patient care;

(ee) Legal and consultant fees in connection with a fair hearing against the department where a decision is rendered in favor of the department or where otherwise the determination of the department stands;

(ff) Legal and consultant fees of a contractor or contractors in connection with a lawsuit against the department;

(gg) Lease acquisition costs and other intangibles not related to patient care;

(hh) All rental or lease costs other than those provided in RCW 74.46.300 on and after the effective date of RCW 74.46.510 and 74.46.530;

(ii) Postsurvey charges incurred by the facility as a result of subsequent inspections under section 12 of this act which occur beyond the initial postsurvey during the certification survey calendar year.

Sec. 19. Section 8, chapter 476, Laws of 1987 and RCW 74.46.465 are each amended to read as follows:

(1) The department, in consultation with interested parties, shall adopt rules to establish criteria the department will use in reviewing any request by a contractor for a prospective rate adjustment for a physical plant capital improvement. The rules shall also specify the time periods for submission and review of proposed physical plant capital improvements. In establishing the criteria, the department may consider, but is not limited to, the following:

(a) The remaining functional life of the facility and the length of time since the facility's last significant improvement;

(b) The amount and scope of renovation or remodel to the facility and whether the facility will be able to serve better the needs of its residents;

(d) Whether the proposed improvement might eliminate life safety, building code, or construction standard waivers;

(e) The percentage of public-pay residents in the facility.

(2) The department shall report to the legislature on the adoption of these rules by December 1, 1989.

(3) Rate adjustments under this section may be provided only if funds are appropriated for this purpose.

NEW SECTION. Sec. 20. (1) The department shall require that the license application or renewal fee for nursing homes under RCW 18.51.050 shall be increased to include a charge of two dollars and fifty cents per bed to fund the support of resident, staff, family, and community involvement in promoting quality nursing home care. All money collected by the department shall be credited to a special account for purposes of educating and informing the above-mentioned groups regarding: (a) Care in the nursing home; (b) resident rights and responsibilities; (c) resident and family council organization and maintenance; (d) laws and rules that apply to homes and residents; (e) human relations; and (f) resident and family self-help methods to increase quality of care and life in nursing homes.

(2) The department of community development, in consultation with the nursing home advisory council established under RCW 18.51.100 and the state long-term care ombudsman advisory committee established under chapter 43.190 RCW shall allocate the funds to a public or nonprofit consumer oriented organization or organizations which meet the requirements set forth in subsection (1) (a) through (f) of this section. The department of community development shall submit a report annually to the legislature evaluating the program or programs and funding sources established under this section.

NEW SECTION. Sec. 21. The department shall require nursing homes to hold a hospitalized medicaid residents' bed for five days beyond the day of transfer for each hospitalization. The department shall reimburse the nursing home, if required to hold a medicaid resident bed, at the facility's per diem medicaid rate, and if the facility is at or above the minimum occupancy lid. Medical leave days for both public and private pay residents shall be included in calculating the facility's occupancy level.

NEW SECTION. Sec. 22. (1) The aging and adult services administration shall undertake a study in consultation with the nursing home advisory council that will involve an assessment of the number of special needs residents in nursing homes; their distribution throughout the state; the particular elements of care required by such residents; and the capability of long-term care facilities to meet the needs of special care populations. The results of this study including any recommendations shall be provided to the appropriate committees of the legislature by December 1, 1989.

(2) The aging and adult services administration, in consultation with affected groups, shall gather information regarding utilization of nursing personnel in meeting the various care level needs of nursing home residents. This information shall include current levels of nursing personnel staffing levels on a per shift basis and levels of staff as related to resident acuity in nursing homes in Washington. The process for defining resident acuity shall be determined by the affected groups.

Aging and adult services administration in consultation with affected groups shall report its findings to the 1990 legislature.

(3) There is a need for a centralized comprehensive data base for nursing home services in Washington state for purposes of planning and policy formation. Therefore, the legislative budget committee shall: (a) Analyze existing data collected by the department and examine the use for such data in operational planning and policy formation; (b) identify information necessary to develop a centralized comprehensive data base for nursing home services in Washington state; and (c) make and report recommendations that shall achieve an integrated nursing home data base and reporting system to the appropriate committees of the legislature by December 1989.

NEW SECTION. Sec. 23. Section 5, chapter 114, Laws of 1979 and RCW 18.52A.050 are each repealed.