S T A T E O F N E W Y O R K
________________________________________________________________________
3582
2009-2010 Regular Sessions
I N S E N A T E
March 25, 2009
___________
Introduced by Sen. KLEIN -- read twice and ordered printed, and when
printed to be committed to the Committee on Health
AN ACT to amend the public health law, in relation to rates of payment
for residential health care facilities
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Paragraphs (a), (b) and (c) of subdivision 2-b of section
2808 of the public health law, as amended by section 47 of part C of
chapter 109 of the laws of 2006, subparagraph (i) of paragraph (a) as
amended by section 2 and subparagraph (i) of paragraph (b) as amended by
section 3 of part I of chapter 2 of the laws of 2009, subparagraph (iv)
of paragraph (a) as amended by section 13 and subparagraph (iv) of para-
graph (b) as amended by section 14 of part OO of chapter 57 of the laws
of 2008, are amended to read as follows:
(a) (i) Subject to the provisions of subparagraphs (ii) through (vi)
of this paragraph, for the two thousand seven rate period the operating
cost component of rates of payment shall reflect the operating cost
component of rates effective for October first, two thousand six, as
adjusted for inflation in accordance with paragraph (c) of subdivision
ten of section twenty-eight hundred seven-c of this article; and for the
January first, two thousand eight through March thirty-first, two thou-
sand nine rate period the operating cost component of rates of payment
shall reflect the operating cost component of rates effective for Decem-
ber thirty-first, two thousand six, as adjusted for inflation in accord-
ance with paragraph (c) of subdivision ten of section twenty-eight
hundred seven-c of this article.
(ii) Rates for the periods two thousand seven [and], two thousand
eight, AND JANUARY FIRST, TWO THOUSAND NINE THROUGH MARCH THIRTY-FIRST,
TWO THOUSAND NINE shall be further adjusted by a per diem add-on amount,
as determined by the commissioner, reflecting the proportional amount of
each facility's projected Medicaid benefit to the total projected Medi-
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10241-01-9
S. 3582 2
caid benefit for all facilities of the imputed use of the rate-setting
methodology set forth in paragraph (b) of this subdivision, provided,
however, that for those facilities that do not receive a per diem add-on
adjustment pursuant to this subparagraph, rates shall be further
adjusted to include the proportionate benefit, as determined by the
commissioner, of the expiration of the opening paragraph and paragraph
(a) of subdivision sixteen of this section and of paragraph (a) of
subdivision fourteen of this section, provided, further, however, that
the aggregate total of the rate adjustments made pursuant to this
subparagraph shall not exceed one hundred thirty-seven million five
hundred thousand dollars for the two thousand seven rate period [and],
one hundred sixty-seven million five hundred thousand dollars for the
two thousand eight rate period, AND FORTY-ONE MILLION EIGHT HUNDRED
SEVENTY-FIVE THOUSAND DOLLARS FOR THE JANUARY FIRST, TWO THOUSAND NINE
THROUGH MARCH THIRTY-FIRST, TWO THOUSAND NINE RATE PERIOD.
(iii) Revisions to two thousand six rates occurring on and after Janu-
ary first, two thousand seven, shall be annually incorporated, retroac-
tively and prospectively, into two thousand seven and two thousand eight
rates on or about November thirtieth, two thousand seven and November
thirtieth, two thousand eight, respectively.
(iv) The capital cost component of rates pursuant to this paragraph
shall fully reflect the cost of local property taxes and payments made
in lieu of local property taxes, as reported in each facility's cost
report submitted for the year two years prior to the rate year.
(v) Rates [for the two thousand seven and two thousand eight rate
periods,] as computed pursuant to this paragraph, shall not be subject
to case mix adjustment, provided, however, that a facility may, in
accordance with its existing full house schedule of submission of
patient review instruments, submit data in support of a request for a
rate adjustment to reflect an increased facility case mix equal to or
greater than .05, provided further, however, that such a facility will
be required to continue to make such full house submissions in accord-
ance with its existing submission schedule for rate periods up through
December thirty-first, two thousand eight.
(vi) For the period January first, two thousand seven through [Decem-
ber] MARCH thirty-first, two thousand [eight] NINE, notwithstanding any
contrary provision of law or regulation, voluntary facilities shall not
be required to deposit reimbursement received for depreciation expenses
into a segregated depreciation fund account.
(b) (i) Subject to the provisions of subparagraphs (ii) through (xiv)
of this paragraph, for periods on and after April first, two thousand
nine the operating cost component of rates of payment shall reflect
allowable operating costs as reported in each facility's cost report for
the two thousand two calendar year, as adjusted for inflation on an
annual basis in accordance with the methodology set forth in paragraph
(c) of subdivision ten of section twenty-eight hundred seven-c of this
article, provided, however, that for those facilities which do not
receive a per diem add-on adjustment pursuant to subparagraph (ii) of
paragraph (a) of this subdivision, rates shall be further adjusted to
include the proportionate benefit, as determined by the commissioner, of
the expiration of the opening paragraph and paragraph (a) of subdivision
sixteen of this section and of paragraph (a) of subdivision fourteen of
this section, and provided further that the operating cost component of
rates of payment for those facilities which did not receive a per diem
adjustment in accordance with subparagraph (ii) of paragraph (a) of this
subdivision shall not be less than the operating component such facili-
S. 3582 3
ties received in the two thousand eight rate period, as adjusted for
inflation on an annual basis in accordance with the methodology set
forth in paragraph (c) of subdivision ten of section twenty-eight
hundred seven-c of this article and further provided, however, that
rates for facilities whose operating cost component reflects base year
costs subsequent to January first, two thousand two shall have rates
computed in accordance with this paragraph, utilizing allowable operat-
ing costs as reported in such subsequent base year period, and trended
forward to the rate year in accordance with applicable inflation
factors.
(ii) The operating component of rates shall be subject to case mix
adjustment through application of the relative resource utilization
groups system of patient classification (RUG-III) employed by the feder-
al government with regard to payments to skilled nursing facilities
pursuant to title XVIII of the federal social security act (Medicare),
as revised by regulation to reflect New York state wages and fringe
benefits, provided, however, that such RUG-III classification system
weights shall be increased in the following amounts for the following
categories of residents: (A) thirty minutes for the impaired cognition A
category, (B) forty minutes for the impaired cognition B category, and
(C) twenty-five minutes for the reduced physical functions B category.
Such adjustments shall be made in January and July of each calendar
year. Such adjustments and related patient classifications in each
facility shall be subject to audit review in accordance with regulations
promulgated by the commissioner.
(iii) Specified adjustments to the operating component of rates in
effect for periods prior to [January] APRIL first, two thousand nine,
with regard to extended care for persons with traumatic brain injury and
for the cost of providing hepatitis B vaccinations shall continue on and
after [January] APRIL first, two thousand nine.
(iv) The capital cost component of rates on and after [January] APRIL
first, two thousand nine shall fully reflect the cost of local property
taxes and payments made in lieu of local property taxes, as reported in
each facility's cost report submitted for the year two years prior to
the rate year.
(v) The direct component of the operating component of rates of
payment shall include allowable direct therapy costs and associated
overhead costs and shall exclude administrative overhead costs related
to pharmacy services and the costs of non-prescription drugs and
supplies, which shall be reflected in facility rates as non-comparable
costs.
(vi) For purposes of computing peer group cost ceilings for the direct
and indirect component of the operating component of rates, facilities
shall be organized into peer groups consisting of: (A) free-standing
facilities with certified bed capacities of less than three hundred
beds; (B) free-standing facilities with certified bed capacities of
three hundred beds or more; and (C) hospital based facilities.
(vii) In determining the operating cost component of rates, for each
peer group, a corridor shall be developed around the statewide mean
direct and indirect price per day, provided, however, that the corridor
around each mean direct and indirect price per day shall have a base no
less than eighty-five percent and no greater than ninety percent of each
mean direct and indirect price per day and a ceiling no greater than one
hundred fifteen percent and no less than one hundred ten percent of each
mean direct and indirect price per day, and further provided, however,
that the total financial impact of the application of the ceiling shall
S. 3582 4
be substantially equal to the total financial impact of the application
of the base.
(viii) The operating component of rates shall be adjusted to reflect a
per diem add-on amount of eight dollars, trended forward to reflect
applicable inflation factors from two thousand six to two thousand nine
and prospectively thereafter, for each patient who: (A) qualifies under
both the RUG-III impaired cognition and the behavioral problems catego-
ries, or (B) has been diagnosed with Alzheimer's disease or dementia, is
classified in the reduced physical functions A, B or C, or in behavioral
problems A or B categories, and has an activities of daily living index
score of ten or less.
(ix) The operating component of rates shall be adjusted to reflect a
per diem add-on amount of seventeen dollars, trended forward to reflect
applicable inflation factors from two thousand six to two thousand nine
and prospectively thereafter, for each patient whose body mass index is
greater than thirty-five.
(x) For periods on and after [January] APRIL first, two thousand nine,
notwithstanding any contrary provision of law or regulation, voluntary
facilities shall not be required to deposit reimbursement received for
depreciation expenses into a segregated depreciation fund account.
(xi) Public facilities, and non-public facilities with fewer than
eighty certified beds, which have a facility specific direct adjusted
payment price per day equal to the ceiling direct price per day shall
have such direct adjusted payment price per day further adjusted through
the addition of fifty percent of the difference between the facility's
specific direct cost per day and the ceiling direct price per day.
Public facilities, and non-public facilities with fewer than eighty
certified beds, which have a facility specific indirect adjusted payment
price per day equal to the ceiling indirect price per day shall have
such indirect adjusted payment price per day further adjusted through
the addition of fifty percent of the difference between the facility's
specific indirect cost per day and the ceiling indirect price per day.
Such adjustments to direct and indirect adjusted payment prices per day
shall be increased to the rate year by application of the applicable
inflation factor and adjusted by the regional direct and indirect input
price adjustment factors calculated pursuant to subdivision seventeen of
this section.
(xii) Public facilities shall receive rates that are consistent with
the provisions of this paragraph, provided, however, that in no event
shall such rates, in aggregate, exceed the amount permitted under feder-
al upper payment limits applicable to public facilities. In the event
such public facilities are, pursuant to this subparagraph, subject to
limitations on such rates, the commissioner shall make grants from state
funds to such facilities equal to one-half of the additional amount that
such facilities would have received if such limitations had not been
applied.
(xiii) The appointment of a receiver or the establishment of a new
operator or replacement or renovation of an existing facility on or
after January first, two thousand seven shall not result in a revision
to the operating component of the facility's rates for any rate period
through December thirty-first, two thousand eleven, provided, however,
that the provisions of this subparagraph shall not apply to a facility
which has a certificate of need application filed with the department as
of December thirty-first, two thousand six, which is subsequently
approved and which otherwise meets existing department criteria for the
establishment of a new base year for rate-setting purposes.
S. 3582 5
(xiv) The commissioner may promulgate regulations, including emergency
regulations, to implement the provisions of this paragraph.
(c) In order to ensure that the quality of resident care is maintained
and improved for rate periods on and after January first, two thousand
seven, no less than sixty-five percent of the additional Medicaid
reimbursement received by a residential health care facility that is
attributable to the per-diem add-on amount received pursuant to subpara-
graph (ii) of paragraph (a) of this subdivision or, for rate periods on
and after [January] APRIL first, two thousand nine, that is related to
utilization of two thousand two reported base year costs, as compared to
the reimbursement each such facility would have received had such facil-
ity's Medicaid reimbursement rates continued to reflect base year costs
used with regard to such facility's two thousand six rates, shall be
allocated for the purpose of recruitment and retention of non-superviso-
ry workers or any worker with direct resident care responsibility or for
purposes authorized under the nursing home quality improvement demon-
stration program as established by section twenty-eight hundred eight-d
of this article, provided, however, in no circumstance shall facilities
be required to spend more than seventy-five percent of such funds for
these purposes, and provided further, the commissioner is authorized to
audit each such facility for the purpose of ensuring compliance with the
provisions of this paragraph and shall recoup any amount determined to
have been in contravention of the requirements of this paragraph,
provided, however, that, upon application of a facility, the commission-
er may, after determining that other funds are not available, waive the
application of this paragraph insofar as it is determined by the commis-
sioner that additional funds must be expended by such facility to
correct deficiencies that constitute a threat to resident safety.
S 2. This act shall take effect immediately.
