RCW 74.46.561 Nursing home payment rates—System components—Quality incentive—Reimbursement of safety net assessment—Rate reductions or increases limited. (1) The legislature adopts a new system for establishing nursing home payment rates beginning July 1, 2016. Any payments to nursing homes for services provided after June 30, 2016, must be based on the new system. The new system must be designed in such a manner as to decrease administrative complexity associated with the payment methodology, reward nursing homes providing care for high acuity residents, incentivize quality care for residents of nursing homes, and establish minimum staffing standards for direct care.
(2) The new system must be based primarily on industry-wide costs, and have three main components: Direct care, indirect care, and capital.
(3) The direct care component must include the direct care and therapy care components of the previous system, along with food, laundry, and dietary services. Direct care must be paid at a fixed rate, based on one hundred percent of facility-wide case mix neutral median costs. Direct care must be performance-adjusted for acuity every six months, using case mix principles. Direct care must be regionally adjusted for nonmetropolitan and metropolitan statistical areas. There is no minimum occupancy for direct care.
(4) The indirect care component must include the elements of administrative expenses, maintenance costs, and housekeeping services from the previous system. A minimum occupancy assumption of ninety percent must be applied to indirect care. Indirect care must be paid at a fixed rate, based on ninety percent of facility-wide median costs. Indirect care must be regionally adjusted for nonmetropolitan and metropolitan statistical areas.
(5) The capital component must use a fair market rental system to set a price per bed. The capital component must be adjusted for the age of the facility, and must use a minimum occupancy assumption of ninety percent.
(6) A quality incentive must be offered as a rate enhancement beginning July 1, 2016. An enhancement no larger than five percent of the statewide average daily rate must be paid to facilities that meet or exceed the standard established for the quality incentive. All providers must have the opportunity to earn the full quality incentive. The department must recommend four to six measures to become the standard for the quality incentive, and must describe a system for rewarding incremental improvement related to these four to six measures, within the report to the legislature described in section 6, chapter 2, Laws of 2015 2nd sp. sess. Infection rates, pressure ulcers, staffing turnover, fall prevention, utilization of antipsychotic medication, and hospital readmission rates are examples of measures that may be established for the quality incentive.
(7) Reimbursement of the safety net assessment imposed by chapter
74.48 RCW and paid in relation to medicaid residents must be continued.
(8) The direct care and indirect care components must be rebased in even-numbered years, beginning with rates paid on July 1, 2016. Rates paid on July 1, 2016, must be based on the 2014 calendar year cost report. On a percentage basis, after rebasing, the department must confirm that the statewide average daily rate has increased at least as much as the average rate of inflation, as determined by the skilled nursing facility market basket index published by the centers for medicare and medicaid services, or a comparable index. If after rebasing, the percentage increase to the statewide average daily rate is less than the average rate of inflation for the same time period, the department is authorized to increase rates by the difference between the percentage increase after rebasing and the average rate of inflation.
(9) The direct care component provided in subsection (3) of this section is subject to the reconciliation and settlement process provided in RCW
74.46.022(6). Beginning July 1, 2016, pursuant to rules established by the department, funds that are received through the reconciliation and settlement process provided in RCW
74.46.022(6) must be used for technical assistance, specialized training, or an increase to the quality enhancement established in subsection (6) of this section. The legislature intends to review the utility of maintaining the reconciliation and settlement process under a price-based payment methodology, and may discontinue the reconciliation and settlement process after the 2017-2019 fiscal biennium.
(10) Compared to the rate in effect June 30, 2016, including all cost components and rate add-ons, no facility may receive a rate reduction of more than one percent on July 1, 2016, more than two percent on July 1, 2017, or more than five percent on July 1, 2018. To ensure that the appropriation for nursing homes remains cost neutral, the department is authorized to cap the rate increase for facilities in fiscal years 2017, 2018, and 2019.
[2015 2nd sp.s. c 2 § 4.]
NOTES:
Work group—2015 2nd sp.s. c 2: "(1) The department of social and health services shall facilitate a work group process to propose modifications to the price-based nursing facility payment methodology outlined in RCW
74.46.561 and the minimum staffing standards outlined in RCW
74.42.360. The department shall keep a public record of comments submitted by stakeholders throughout the work group process. The work group shall consist of nursing facility provider associations, a representative from a not-for-profit hospital system that operates three or more nursing facilities and is not a member of either statewide nursing facility provider association, nursing facility employees, consumer groups, worker representatives, and the office of financial management. The department shall make its final recommendations to the appropriate legislative committees by January 2, 2016, and shall include a dissent report if agreement is not achieved among stakeholders and the department. The department shall include at least one meeting dedicated to review and analysis of other states with price-based methodologies and must include information on how well each state is achieving quality care outcomes and any specific quality metrics targeted for enhanced payments in comparison to the price-based rates paid to that state's nursing facilities.
(2) This section expires August 1, 2016." [2015 2nd sp.s. c 2 § 6.]
Effective date—2015 2nd sp.s. c 2: See note following RCW
74.46.431.