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The 192nd General Court of the Commonwealth of Massachusetts


Whereas, The deferred operation of this act would tend to defeat its purpose, which is to adjust forthwith the per diem rates to reflect any reduction in Medicaid utilization, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. (a) Notwithstanding any general or special law to the contrary, in fiscal year 2007, the division of health care finance and policy, referred to in this section as the division, shall establish nursing facility Medicaid rates, payable out of the Health Care Quality Improvement Trust Fund, established under section 2EEE of chapter 29 of the General Laws, effective July 1, 2006 through June 30, 2007 that cumulatively total $288,500,000 more than the annual payment rates established by the division under the rates in effect as of June 30, 2002, as mandated under section 1 of chapter 42 of the acts of 2003. The division shall adjust per diem rates to reflect any reductions in Medicaid utilization. Payments from the fund shall be allocated in the following manner in fiscal year 2007:

(1) effective July 1, 2006, an annual amount of $99,000,000 in the aggregate to fund the use of 2000 base year cost information for rate determination purposes; provided, that $9,000,000 of this amount shall be expended for purposes of reimbursing nursing facilities for up to 10 bed hold days for patients of the facility on medical and non-medical leaves of absence;

(2) effective July 1, 2006, an annual amount of $122,500,000 for enhanced payment rates to nursing homes;

(3) effective July 1, 2006, an annual amount of $50,000,000 to fund a rate add-on for wages, hours and benefits and related employee costs of direct care staff of nursing homes. As a condition for such a rate add-on, the division shall require that each nursing home document to the division that such funds are spent only on direct care staff by increasing the wages, hours and benefits of direct care staff, increasing the facility’s staff-to-patient ratio, or by demonstrably improving the facility’s recruitment and retention of nursing staff to provide quality care, which shall include expenditure of funds for nursing facilities which document actual nursing spending that is higher than the median nursing cost per management minute in the base year used to calculate Medicaid nursing facility rates. A facility’s direct care staff shall include all nursing personnel including registered nurses, licensed practical nurses, and certified nurses’ aides hired by the facility from any temporary nursing agency or nursing pool registered with the department of public health. The division shall credit wage increases that are over and above any previously collectively bargained wage increases. In monitoring compliance for this rate add-on, the division’s regulations shall adjust any spending compliance test to reflect any Medicaid nursing facility payment reductions, including, but not limited to, rate reductions imposed on or after October 1, 2002. The expenditure of these funds shall be subject to audit by the division in consultation with the department of public health and the executive office of health and human services. In implementing this section, the division shall consult with the Nursing Home Advisory Council;

(4) effective July 1, 2006, an annual amount of $17,000,000 (a) to fund rate adjustments for reasonable capital expenditures by nursing homes, giving priority to nursing homes located or constructed in under-bedded areas as determined by said executive office, in consultation with the division, that meet quality standards established by the executive office of health and human services in conjunction with the department of public health and the division for the purposes of encouraging the upgrading and maintenance of quality of care in nursing homes; and (b) to fund rate adjustments to eligible nursing homes that meet utilization standards established by the executive office of health and human services in consultation with the division for the purpose of reducing unnecessary nursing home admissions and facilitating the return of nursing home residents of non-institutional settings. To the extent that the annual amount of $17 million in this clause is not fully allocated, the division shall first provide operating or capital rate adjustments for publicly operated, urban and geographically-isolated nursing homes;

(5) $300,000 for the purposes of an audit of funds distributed under clause (3). The division, in consultation with the department of public health and with the assistance of the executive office of health and human services, shall establish penalties sufficient to deter noncompliance to be imposed against any facility that expends any or all monies in violation of clause (3), including but not limited to recoupment, assessment of fines or interest. The division shall report to the house and senate committees on ways and means not later than October 1, 2007 a preliminary analysis of funds expended under this subsection in fiscal year 2006 and a description and timeline for auditing of these funds;

(6) $250,000 to fund expenses of the division related to the implementation and administration of section 25 of chapter 118G of the General Laws; and

(7) an amount sufficient to implement section 622 of chapter 151 of the acts of 1996;
(b) The comptroller shall transfer from the Health Care Security Trust Fund to the Health Care Quality Improvement Trust Fund on the first business day of each quarter, the amount indicated by the division and the executive office of health and human services to provide the appropriate rate increases to nursing homes; and provided further, that any additional funds that may become available in the Health Care Quality Improvement Trust Fund due to decreased Medicaid utilization shall first fund a per-diem rate add-on for large Medicaid providers as specified in 114.2 CMR 6.06 (10) (a), as in effect on September 1, 2003 and then fund further enhanced rates to nursing homes.

SECTION 2. This act shall take effect as of July 1, 2006.

Approved July 19, 2006.