SECTION 1. Chapter 6D of the General Laws, as appearing in the 2016 Official Edition, is hereby amended by adding after section 15 the following section:

Section 15(1/2). In contracting with a nursing home licensed under chapter 111, section 71 of the General Laws, an Health Policy Commission certified Accountable Care Organization established under this chapter shall reimburse the nursing facility for care and services provided to an Accountable Care Organization patient as defined in this chapter at a rate of payment that is no less than the Medicare rate of payment that would have applied if the nursing home had been reimbursed for care and services rendered to the Accountable Care Organization patient under the Medicare Part A Fee-For-Service program.

SECTION 2. Chapter 118E of the Massachusetts General Laws, as so appearing, is hereby amended by inserting the following new section after section 77:

Section 78. In contracting with a nursing home licensed under chapter 111, section 71 of the General Laws, any Managed Care Organization (MCO) or Accountable Care Organization (ACO) with which the MassHealth agency contracts to provide and coordinate care and certain other medical services to members on a capitated basis shall reimburse the nursing home for care and services provided to a MassHealth member based on the facility’s actual base year costs adjusted by an inflation factor to recognize changes in the prices of inputs, including staff wages, for providing nursing facility care. Actual base year costs shall be set using facility specific costs reported to the center for health information and analysis. The MCO and/or ACO shall inflate base year costs to the current rate year through an adjustment equal to the cumulative Medicare Skilled Nursing Facility (SNF) market basket update as defined under Section 1888 (e)(B) of the federal Social Security Act.  For the purposes of this section, MCO and/or ACO is defined as any entity with which the MassHealth agency contracts to provide and coordinate care and certain other medical services to members on a capitated basis, including a senior care organization (SCO), an integrated care organization (ICO), or an entity that is approved by the Massachusetts Division of Insurance as a health maintenance organization (HMO), or that otherwise meets the State Plan definition of an HMO.