SECTION 1. Replace the second paragraph of Section 7 of MGL 118G with the following language:

Such rates for nursing homes and rest homes, as defined under section seventy-one of chapter one hundred and eleven, shall be established as of October first of each year for facilities whose rate is set on a retrospective basis and as of July first of each year for facilities whose rate is set on a prospective basis. In setting such prospective or retrospective rates of reimbursement, the executive office shall use as base year costs for rate determination purposes the reported costs of the calendar year not more than four years prior to the current rate year for operating costs and not more than one year prior to the current rate year for capital costs, adjusted for reasonableness and to incorporate any audit findings applicable to said base year costs; provided, however, that no base year cost shall be incorporated unless a comprehensive desk audit has been completed for the costs incurred in that base year. In any appeal of any matter arising out of the setting of such prospective rates of reimbursement, the aggrieved party shall not be permitted to introduce into the record of such an appeal evidence of costs for any year other than the base year used to establish the rate. Notwithstanding any other general or special law or regulation to the contrary, except as provided in chapter one hundred and eighteen E, each governmental unit shall pay to a provider of services and each state institution shall charge as a provider of health care services, as the case may be, the rates for general health supplies, care and rehabilitative services and accommodations determined and certified by the executive office.