BILL REQ. #:  S-4416.1 

Read first time 01/18/08.   Referred to Committee on Ways & Means.

     AN ACT Relating to the nursing facility medicaid payment system; adding a new section to chapter 74.46 RCW; creating new sections; repealing RCW 74.46.421, 74.46.431, 74.46.433, 74.46.441, 74.46.445, 74.46.475, 74.46.485, 74.46.496, 74.46.501, 74.46.506, 74.46.508, 74.46.511, 74.46.521, 74.46.531, 74.46.533, 74.46.435, 74.46.437, and 74.46.439; and providing effective dates.

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

NEW SECTION.  Sec. 1   The legislature finds that the current statute governing the nursing facility payment system is overly complex in contrast to Washington state's reimbursement systems for hospitals, doctors, adult family homes, and other vendors. The legislature finds that a simplified framework for the nursing home payment system is needed to improve accountability and make the system more transparent and easier to understand.

NEW SECTION.  Sec. 2   (1) By September 30, 2008, the department of social and health services shall develop a draft proposal for a simplified nursing facility payment system and shall consider stakeholder input in the process of developing the proposal. The proposal must include:
     (a) A direct care rate component consisting of direct care, therapy care, and support services closely related to care provided directly to nursing facility residents. The new direct care rate component shall continue to utilize the settlement process and shall include a case mix methodology similar to the payment system that was in effect during fiscal year 2008;
     (b) An indirect care rate component for costs associated with operations and support services that are not related to direct care;
     (c) The appropriate allocation of costs between the direct care and indirect care rate components;
     (d) The establishment of fair and reasonable limitations on costs;
     (e) The potential impact on the operating budget of implementing the new system;
     (f) The potential impact of the new system on the level and quality of services received by nursing facility residents whose care is paid for by the medical program;
     (g) Adjustments to minimum occupancy requirements, considering the new direct care and indirect care rates and reducing the likelihood that the state would be responsible for the cost of empty beds;
     (h) Continued cost rebasing;
     (i) Recommendations for performance measures and options for linking nursing facility payments to outcomes. National benchmarks for value-based purchasing shall be included as optional performance measures where reasonable. The department shall begin data collection on performance outcomes by July 1, 2009; and
     (j) Recommendations for programs that could be funded as a supplemental add-on to the base rate. For purposes of this section, "supplemental add-on" means a temporary payment that is paid in addition to the base rate for a specific purpose. Recommended programs:
     (i) Must not have a cost in excess of the dollar amount appropriated in fiscal year 2009 for the variable return rate component;
     (ii) Must not include funding for items that create on-going costs, such as cost-of-living adjustments; and
     (iii) May include, but are not limited to, pay-for-performance mechanisms or programs that provide additional supports to facilities willing to care for residents with substantial mental health or behavioral care needs.
     (2) On September 30, 2008, the department must provide its draft proposal to the joint legislative task force on long-term care residential facility payment systems.
     (3) On December 31, 2008, the department must provide a final proposal to the joint legislative task force on long-term care residential facility payment systems. The final proposal must consider:
     (a) Recommendations of the joint legislative task force on long-term care residential facility payment systems; and
     (b) Recommendations of the department regarding rules necessary to implement the proposed payment system.
     (4) As part of development on the final proposal, the department shall review current annual cost-reporting requirements and schedules with stakeholders. Where possible, schedules that are no longer necessary should be identified for potential elimination. Recommendations for revisions to the cost reporting must be cost neutral.

NEW SECTION.  Sec. 3   A new section is added to chapter 74.46 RCW to read as follows:
     If the legislature neither enacts the proposal made by the department under section 2 of this act, nor enacts another nursing facility medicaid payment system prior to the sine die adjournment of the 2009 regular legislative session, the department shall, in rule, adopt the nursing facility medicaid payment system as proposed in section 2 of this act.

NEW SECTION.  Sec. 4   By July 1, 2009, the department of social and health services must report its findings, based upon its review of the costs and benefits of a fair rental system to reimburse capital expenditures, to the joint legislative task force on long-term care residential facility payment systems.

NEW SECTION.  Sec. 5   (1) A joint legislative task force on long-term care residential facility payment systems is established to review recommendations of the department of social and health services on long-term care residential facility payment systems for the care of medicaid-eligible residents of nursing homes, boarding homes, and adult family homes in Washington state.
     (2) Membership of the task force shall consist of eight legislators. The president of the senate shall appoint two members from each of the two largest caucuses of the senate. The speaker of the house of representatives shall appoint two members of each of the two largest caucuses of the house of representatives. Each body shall select representatives from committees with jurisdiction over health and long-term care and fiscal matters. The task force expires January 1, 2010.
     (a) The task force will review and provide comments on department recommendations for a new payment system and report to the legislature by January 1, 2009.
     (b) The task force will provide recommendations on capital rate components to the legislature by December 30, 2009.
     (c) Staff support for the task force shall be provided by senate committee services and the house of representatives office of program research.
     (d) Legislative members of the task force shall be reimbursed for travel expenses in accordance with RCW 44.04.120.
     (e) The expenses of the task force shall be paid jointly by the senate and the house of representatives. Task force expenditures are subject to approval by the senate facilities and operations committee and the house of representatives executive rules committee, or their successor committees.

NEW SECTION.  Sec. 6   The following acts or parts of acts are each repealed:
     (1) RCW 74.46.421 (Purpose of part E -- Nursing facility medicaid payment rates) and 2001 1st sp.s. c 8 s 4, 1999 c 353 s 3, & 1998 c 322 s 18;
     (2) RCW 74.46.431 (Nursing facility medicaid payment rate allocations -- Components -- Minimum wage -- Rules) and 2007 c 508 s 2, 2006 c 258 s 2, 2005 c 518 s 944, 2004 c 276 s 913, 2001 1st sp.s. c 8 s 5, 1999 c 353 s 4, & 1998 c 322 s 19;
     (3) 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;
     (4) RCW 74.46.441 (Public disclosure of rate-setting information) and 1998 c 322 s 20;
     (5) RCW 74.46.445 (Contractors -- Rate adjustments) and 1999 c 353 s 15;
     (6) RCW 74.46.475 (Submitted cost report -- Analysis and adjustment by department) and 1998 c 322 s 21, 1985 c 361 s 13, & 1983 1st ex.s. c 67 s 23;
     (7) RCW 74.46.485 (Case mix classification methodology) and 1998 c 322 s 22;
     (8) RCW 74.46.496 (Case mix weights -- Determination -- Revisions) and 2006 c 258 s 4 & 1998 c 322 s 23;
     (9) RCW 74.46.501 (Average case mix indexes determined quarterly--Facility average case mix index -- Medicaid average case mix index) and 2006 c 258 s 5, 2001 1st sp.s. c 8 s 9, & 1998 c 322 s 24;
     (10) RCW 74.46.506 (Direct care component rate allocations--Determination -- Quarterly updates -- Fines) and 2007 c 508 s 3, 2006 c 258 s 6, & 2001 1st sp.s. c 8 s 10;
     (11) RCW 74.46.508 (Direct care component rate allocation--Increases -- Rules) and 2003 1st sp.s. c 6 s 1 & 1999 c 181 s 2;
     (12) RCW 74.46.511 (Therapy care component rate allocation--Determination) and 2007 c 508 s 4 & 2001 1st sp.s. c 8 s 11;
     (13) RCW 74.46.521 (Operations component rate allocation--Determination) and 2007 c 508 s 5, 2006 c 258 s 7, 2001 1st sp.s. c 8 s 13, 1999 c 353 s 8, & 1998 c 322 s 28;
     (14) RCW 74.46.531 (Department may adjust component rates--Contractor may request -- Errors or omissions) and 1998 c 322 s 31; and
     (15) RCW 74.46.533 (Combined and estimated rebased rates--Determination -- Hold harmless provision) and 2007 c 508 s 6.

NEW SECTION.  Sec. 7   The following acts or parts of acts are each repealed:
     (1) RCW 74.46.435 (Property component rate allocation) and 2001 1st sp.s. c 8 s 7, 1999 c 353 s 10, & 1998 c 322 s 29;
     (2) RCW 74.46.437 (Financing allowance component rate allocation) and 2001 1st sp.s. c 8 s 8 & 1999 c 353 s 11; and
     (3) RCW 74.46.439 (Facilities leased in arm's-length agreements--Recomputation of financing allowance -- Reimbursement for annualized lease payments -- Rate adjustment) and 1999 c 353 s 12.

NEW SECTION.  Sec. 8   If specific funding for the purposes of section 4 of this act, referencing section 4 of this act by bill or chapter number and section number, is not provided by June 30, 2008, in the omnibus appropriations act, section 4 of this act is null and void.

NEW SECTION.  Sec. 9   Section 6 of this act takes effect July 1, 2009.

NEW SECTION.  Sec. 10   Section 7 of this act takes effect July 1, 2010.