Nursing Facility Reimbursement Rate Setting

The act adjusts the supplemental medicaid payment rates a qualifying nursing facility receives from the department of health care policy and financing (state department). Beginning July 1, 2024, the payment must not be less than 12% of total provider fee payments and must be adjusted for fiscal years 2024-25 and 2025-26. No later than July 1, 2026, the payment must not be less than 15% of total provider fee payments and must be annually adjusted thereafter.

Current law limits the annual increase of the general fund share of the aggregate statewide average of the per diem rate to not more than 3%. The act removes this limitation and requires that the general fund share be calculated based on specific percentage increases.

The act requires the state department to initiate a process no later than July 1, 2023, to remove the medicare costs from the provider rate setting by July 1, 2026.

The act repeals the requirement that only such costs as are reasonable, necessary, and patient-related be reported for reimbursement purposes.

The act authorizes the state department to require a nursing facility, as a condition of receiving medicaid funds, to submit any documentation necessary to ensure the state's interest in transparency, stability, and sound fiscal stewardship.

As part of developing and implementing a transition plan to regulate nursing facility reimbursement, the act requires the state department to:

• No later than July 1, 2026, define "nursing home reimbursement" and provide payments to nursing facilities;
• Engage with stakeholders regularly to seek input on any proposed methodology changes; and
• From November 1, 2023, to November 1, 2026, submit an annual report to the joint budget committee of the general assembly regarding the implementation process.

Each nursing facility that receives medicaid funds is required to submit a plan to the state department that demonstrates how the nursing facility will:

• Improve the health and safety of the nursing facility's residents, including infection control and staffing;
• Increase access to care;
• Improve financial sustainability, including opportunities for diversification of business lines and stabilization of revenue streams; and
• Promote innovation to meet the emerging needs of individuals with disabilities and aging and older adults.

The act requires the state department to issue additional supplemental payments to nursing facility providers with disproportionately high medicaid utilization, to facilities that are geographically critical to ensuring access to care, and to facilities that admit compassionate release individuals from the department of corrections.

The act requires each nursing facility that receives medicaid funds to develop and submit a plan to the state department that meets the state department's standards and demonstrates how the nursing facility will improve the health and safety of the nursing facility's residents, increase access to care, improve financial sustainability, and promote innovation to meet the emerging needs of individuals with disabilities and aging and older adults.

Effective July 1, 2028, the act repeals the requirement that the state department exempt certain nursing facility providers from the provider fee.

Effective July 1, 2026, the act repeals:

• The process for providing a wage enhancement supplemental payment to eligible nursing home providers that pay their employees a wage of at least $15 per hour; and
• Requirements for issuing additional supplemental payments to nursing facility providers that meet certain requirements.

For the 2023-24 state fiscal year, the act appropriates $30,509,457 from the general fund to the state department for medical and long-term care services for medicaid eligible individuals. For the 2023-24 state fiscal year, the general assembly anticipates that the state department will receive $31,754,740 in federal funds for medical and long-term care services for medicaid eligible individuals to implement the act.

APPROVED by Governor May 30, 2023

EFFECTIVE May 30, 2023
(Note: This summary applies to this bill as enacted.)