House Bill No. 5050
               House Bill No. 5050

              PUBLIC ACT NO. 98-156


AN  ACT  CONCERNING  THE MEDICAID RATE FOR NURSING
FACILITIES.


    Be  it  enacted  by  the  Senate  and House of
Representatives in General Assembly convened:
    Section  1.  Subsection (f) of section 17b-340
of the general statutes, as amended by section  50
of  public  act  97-11  of  the  June  18  special
session,  is  repealed  and   the   following   is
substituted in lieu thereof:
    (f)  For the fiscal year ending June 30, 1992,
the rates paid by or for persons  aided  or  cared
for  by  the  state  or  any town in this state to
facilities for room, board and services  specified
in  licensing  regulations issued by the licensing
agency, except intermediate  care  facilities  for
the  mentally retarded and residential care homes,
shall be based on the cost year  ending  September
30,  1989.  For  the  fiscal years ending June 30,
1993, and June 30, 1994, such rates shall be based
on  the  cost  year  ending  September  30,  1990.
Notwithstanding the provisions of section 17b-344,
such rates shall be determined by the Commissioner
of Social Services in accordance with this section
and  the regulations of Connecticut state agencies
promulgated by the commissioner and in  effect  on
April 1, 1991, except that:
    (1)  Allowable costs shall be divided into the
following  five  cost  components:  Direct  costs,
which   shall   include   salaries   for   nursing
personnel, related  fringe  benefits  and  nursing
pool  costs;  indirect  costs, which shall include
professional fees, dietary expenses,  housekeeping
expenses,  laundry  expenses,  supplies related to
patient care, salaries for indirect care personnel
and  related  fringe  benefits;  fair  rent, which
shall be defined in accordance with subsection (f)
of   section   17-311-52  of  the  regulations  of
Connecticut state agencies; capital-related costs,
which  shall  include  property  taxes,  insurance
expenses,   equipment   leases    and    equipment
depreciation;   and   administrative  and  general
costs,  which  shall   include   maintenance   and
operation   of   plant   expenses,   salaries  for
administrative  and  maintenance   personnel   and
related  fringe  benefits.  The  commissioner  may
provide  a  rate   adjustment   for   nonemergency
transportation   services   required   by  nursing
facility residents. Such  adjustment  shall  be  a
fixed    amount   determined   annually   by   the
commissioner based upon  a  review  of  costs  and
other   associated  information.  Allowable  costs
shall not include  costs  for  ancillary  services
payable under Part B of the Medicare program.
    (2)   Two   geographic   peer   groupings   of
facilities shall be established for each level  of
care,  as  defined  by  the  Department  of Social
Services for the determination of rates,  for  the
purpose of determining allowable direct costs. One
peer  grouping  shall  be   comprised   of   those
facilities  located in Fairfield County. The other
peer grouping shall  be  comprised  of  facilities
located in all other counties.
    (3)  For the fiscal year ending June 30, 1992,
per diem maximum allowable  costs  for  each  cost
component  shall  be as follows: For direct costs,
the maximum shall be equal to  one  hundred  forty
per cent of the median allowable cost of that peer
grouping; for indirect costs, the maximum shall be
equal  to  one  hundred  thirty  per  cent  of the
state-wide median allowable cost; for  fair  rent,
the  amount  shall  be  calculated  utilizing  the
amount approved  by  the  Office  of  Health  Care
Access    pursuant   to   section   19a-638;   for
capital-related costs, there shall be no  maximum;
and  for  administrative  and  general  costs, the
maximum shall be equal to one hundred  twenty-five
per  cent of the state-wide median allowable cost.
For the fiscal year ending June 30, 1993, per diem
maximum  allowable  costs  for each cost component
shall be as follows: For direct costs, the maximum
shall  be  equal  to one hundred forty per cent of
the median allowable cost of that  peer  grouping;
for  indirect costs, the maximum shall be equal to
one hundred twenty-five per cent of the state-wide
median  allowable  cost; for fair rent, the amount
shall be calculated utilizing the amount  approved
by  the  Office  of Health Care Access pursuant to
section 19a-638; for capital-related costs,  there
shall  be  no  maximum; and for administrative and
general costs the maximum shall be  equal  to  one
hundred  fifteen per cent of the state-wide median
allowable cost. For the fiscal  year  ending  June
30,  1994,  per  diem  maximum allowable costs for
each cost  component  shall  be  as  follows:  For
direct  costs,  the  maximum shall be equal to one
hundred  thirty-five  per  cent  of   the   median
allowable cost of that peer grouping; for indirect
costs, the maximum shall be equal to  one  hundred
twenty per cent of the state-wide median allowable
cost;  for  fair  rent,  the   amount   shall   be
calculated  utilizing  the  amount approved by the
Office of Health Care Access pursuant  to  section
19a-638; for capital-related costs, there shall be
no maximum; and  for  administrative  and  general
costs  the  maximum  shall be equal to one hundred
ten per cent of the  state-wide  median  allowable
cost.  For  the  fiscal year ending June 30, 1995,
per diem maximum allowable  costs  for  each  cost
component  shall  be as follows: For direct costs,
the  maximum  shall  be  equal  to   one   hundred
thirty-five  per cent of the median allowable cost
of that peer grouping;  for  indirect  costs,  the
maximum  shall  be equal to one hundred twenty per
cent of the state-wide median allowable cost;  for
fair   rent,   the   amount  shall  be  calculated
utilizing the amount approved  by  the  Office  of
Health  Care  Access  pursuant to section 19a-638;
for  capital-related  costs,  there  shall  be  no
maximum;  and for administrative and general costs
the maximum shall be equal to one hundred five per
cent  of the state-wide median allowable cost. For
the fiscal year ending  June  30,  1996,  and  any
succeeding fiscal year, per diem maximum allowable
costs for each cost component shall be as follows:
For  direct  costs,  the maximum shall be equal to
one hundred thirty-five per  cent  of  the  median
allowable cost of that peer grouping; for indirect
costs, the maximum shall be equal to  one  hundred
fifteen   per   cent   of  the  state-wide  median
allowable cost; for fair rent, the amount shall be
calculated  utilizing the amount approved pursuant
to section  19a-638;  for  capital-related  costs,
there  shall be no maximum; and for administrative
and general costs the maximum shall  be  equal  to
the  state-wide  median  allowable  cost. Costs in
excess of the maximum  amounts  established  under
this   subsection   shall  not  be  recognized  as
allowable costs, except that the  Commissioner  of
Social  Services  (A) may allow costs in excess of
maximum amounts for any facility with patient days
covered  by  Medicare,  including  days  requiring
coinsurance, in  excess  of  twelve  per  cent  of
annual  patient  days  which also has patient days
covered by Medicaid in excess of fifty per cent of
annual  patient  days;  (B)  may establish a pilot
program whereby costs in excess of maximum amounts
shall  be allowed for beds in a nursing home which
has a managed care program and is affiliated  with
a  hospital  licensed  under chapter 368v; and (C)
may establish rates whereby  allowable  costs  may
exceed  such  maximum amounts for beds approved on
or after July 1, 1991, which are restricted to use
by   patients   with  acquired  immune  deficiency
syndrome or traumatic brain injury.
    (4)  For the fiscal year ending June 30, 1992,
(A) no facility shall receive a rate that is  less
than the rate it received for the rate year ending
June 30, 1991; (B)  no  facility  whose  rate,  if
determined  pursuant  to  this  subsection,  would
exceed  one  hundred  twenty  per  cent   of   the
state-wide  median rate, as determined pursuant to
this subsection, shall receive  a  rate  which  is
five  and  one-half per cent more than the rate it
received for the rate year ending June  30,  1991;
and  (C)  no  facility  whose  rate, if determined
pursuant to this subsection, would  be  less  than
one  hundred  twenty  per  cent  of the state-wide
median  rate,  as  determined  pursuant  to   this
subsection,  shall receive a rate which is six and
one-half per cent more than the rate  it  received
for  the  rate  year ending June 30, 1991. For the
fiscal year ending  June  30,  1993,  no  facility
shall receive a rate that is less than the rate it
received for the rate year ending June  30,  1992,
or six per cent more than the rate it received for
the rate year ending June 30, 1992. For the fiscal
year  ending  June  30,  1994,  no  facility shall
receive a rate that  is  less  than  the  rate  it
received  for  the rate year ending June 30, 1993,
or six per cent more than the rate it received for
the rate year ending June 30, 1993. For the fiscal
year ending  June  30,  1995,  no  facility  shall
receive  a  rate  that  is more than five per cent
less than the rate it received for the  rate  year
ending  June  30,  1994, or six per cent more than
the rate it received for the rate year ending June
30,  1994.  For  the  fiscal years ending June 30,
1996, and June 30, 1997, no facility shall receive
a  rate that is more than three per cent more than
the rate it received for the prior rate year.  For
the  fiscal  year ending June 30, 1998, a facility
shall receive a rate increase  that  is  not  more
than  two  per  cent  more  than the rate that the
facility received  in  the  prior  year.  For  the
fiscal year ending June 30, 1999, a facility shall
receive a rate increase  that  is  not  more  than
[two]  THREE  per cent more than the RATE THAT THE
facility received in the prior year  and  that  is
not less than one per cent more than the RATE THAT
THE facility received in the prior year.  FOR  THE
FISCAL   YEAR   ENDING  JUNE  30,  2000,  AND  ANY
SUCCEEDING FISCAL YEAR, NO FACILITY SHALL  RECEIVE
A  RATE  THAT IS MORE THAN THE RATE IT RECEIVED IN
THE PRIOR YEAR INCREASED BY THE ANNUAL INCREASE IN
THE  CONSUMER PRICE INDEX (ALL URBAN) FOR THE MOST
RECENT CALENDAR YEAR. The Commissioner  of  Social
Services  may  exclude  fair  rent  from  any rate
increase maximums  established  pursuant  to  this
subdivision  for  a facility which has undergone a
material change in circumstances related  to  fair
rent.
    (5)  For  the purpose of determining allowable
fair rent, a facility  with  allowable  fair  rent
less  than  the  twenty-fifth  percentile  of  the
state-wide allowable fair rent shall be reimbursed
as   having  allowable  fair  rent  equal  to  the
twenty-fifth   percentile   of   the    state-wide
allowable fair rent, provided for the fiscal years
ending June 30,  1996,  and  June  30,  1997,  the
reimbursement  may  not  exceed  the  twenty-fifth
percentile of the state-wide allowable  fair  rent
for   the   fiscal  year  ending  June  30,  1995.
Beginning with the fiscal  year  ending  June  30,
1996,  any  facility with a rate of return on real
property other than land in excess of  eleven  per
cent  shall  have such allowance revised to eleven
per cent.  Any  facility  or  its  related  realty
affiliate   which   finances  or  refinances  debt
through bonds issued by the State  of  Connecticut
Health  and  Education  Facilities Authority shall
report the terms and conditions of such  financing
or  refinancing  to  the  Commissioner  of  Social
Services within thirty  days  of  completing  such
financing  or  refinancing.  The  Commissioner  of
Social Services may  revise  the  facility's  fair
rent   component   of  its  rate  to  reflect  any
financial benefit  the  facility  or  its  related
realty  affiliate  received  as  a  result of such
financing  or  refinancing,  including   but   not
limited  to,  reductions  in  the  amount  of debt
service payments or period of debt repayment.  The
commissioner shall allow actual debt service costs
for bonds  issued  by  the  State  of  Connecticut
Health  and  Educational  Facilities  Authority if
such costs do not exceed  property  costs  allowed
pursuant to subsection (f) of section 17-311-52 of
the regulations  of  Connecticut  state  agencies,
provided  the  commissioner  may allow higher debt
service costs for such bonds for good  cause.  For
facilities which first open on or after October 1,
1992, the commissioner shall  determine  allowable
fair  rent for real property other than land based
on the rate of return for the cost year  in  which
such  bonds  were  issued.  The  financial benefit
resulting from a facility financing or refinancing
debt  through  such  bonds shall be shared between
the state and the facility to an extent determined
by  the  commissioner  on a case-by-case basis and
shall  be  reflected  in  an  adjustment  to   the
facility's allowable fair rent.
    (6)  A  facility shall receive cost efficiency
adjustments   for   indirect   costs    and    for
administrative and general costs if such costs are
below  the  state-wide  median  costs.  The   cost
efficiency adjustments shall equal twenty-five per
cent of the difference between allowable  reported
costs  and  the  applicable  median allowable cost
established pursuant to this subdivision.
    (7)  For the fiscal year ending June 30, 1992,
allowable operating costs,  excluding  fair  rent,
shall   be   inflated   using  the  Regional  Data
Resources  Incorporated  McGraw-Hill  Health  Care
Costs: Consumer Price Index (all urban)--All Items
minus one and one-half per cent.  For  the  fiscal
year  ending  June  30,  1993, allowable operating
costs, excluding  fair  rent,  shall  be  inflated
using  the  Regional  Data  Resources Incorporated
McGraw-Hill  Health  Care  Costs:  Consumer  Price
Index   (all   urban)--All  Items  minus  one  and
three-quarters per  cent.  For  the  fiscal  years
ending June 30, 1994, and June 30, 1995, allowable
operating costs, excluding  fair  rent,  shall  be
inflated   using   the   Regional  Data  Resources
Incorporated  McGraw-Hill   Health   Care   Costs:
Consumer  Price Index (all urban)--All Items minus
two per cent. For the fiscal year ending June  30,
1996,  allowable  operating  costs, excluding fair
rent, shall be inflated using  the  Regional  Data
Resources  Incorporated  McGraw-Hill  Health  Care
Costs: Consumer Price Index (all urban)--All Items
minus  two  and  one-half per cent. For the fiscal
year ending June  30,  1997,  allowable  operating
costs,  excluding  fair  rent,  shall  be inflated
using the  Regional  Data  Resources  Incorporated
McGraw-Hill  Health  Care  Costs:  Consumer  Price
Index  (all  urban)--All  Items  minus  three  and
one-half per cent. For the fiscal year ending June
30,  1992,  and  any   succeeding   fiscal   year,
allowable fair rent shall be those reported in the
annual report of long-term care facilities for the
cost   year   ending   the  immediately  preceding
September thirtieth. The  inflation  index  to  be
used pursuant to this subsection shall be computed
to reflect inflation between the midpoint  of  the
cost  year  through the midpoint of the rate year.
The Department  of  Social  Services  shall  study
methods  of  reimbursement for fair rent and shall
report its findings  and  recommendations  to  the
joint  standing  committee of the General Assembly
having cognizance of  matters  relating  to  human
services on or before January 15, 1993.
    (8)  On and after July 1, 1994, costs shall be
rebased no more frequently than  every  two  years
and  no  less frequently than every four years, as
determined by the commissioner.  The  commissioner
shall  determine  whether  and  to  what  extent a
change in ownership of a facility  shall  occasion
the rebasing of the facility's costs.
    (9)  The  method of establishing rates for new
facilities shall be determined by the commissioner
in   accordance   with   the  provisions  of  this
subsection.
    (10)   Rates  determined  under  this  section
shall comply with federal laws and regulations.
    (11)  For  the  fiscal  year  ending  June 30,
1992, and any succeeding fiscal year, one-half  of
the initial amount payable in June by the state to
a facility pursuant to this  subsection  shall  be
paid  to  the  facility in June and the balance of
such amount shall be paid in July.
    (12)  Notwithstanding  the  provisions of this
subsection, interim rates issued for facilities on
and  after  July  1,  1991,  shall  be  subject to
applicable fiscal year cost component  limitations
established  pursuant  to  subdivision (3) of this
subsection.
    (13)  A  chronic and convalescent nursing home
having an ownership affiliation with and  operated
at the same location as a chronic disease hospital
may  request  that  the  commissioner  approve  an
exception  to  applicable  rate-setting provisions
for chronic and  convalescent  nursing  homes  and
establish  a rate for the fiscal years ending June
30, 1992, and June 30, 1993,  in  accordance  with
regulations in effect June 30, 1991. Any such rate
shall not exceed one hundred sixty-five  per  cent
of  the  median  rate  established for chronic and
convalescent nursing homes established under  this
section for the applicable fiscal year.
    (14)  For  the  fiscal  year  ending  June 30,
1994, and any succeeding fiscal year, for purposes
of   computing  minimum  allowable  patient  days,
utilization of a facility's certified  beds  shall
be determined at a minimum of ninety-five per cent
of  capacity,  except  for  new   facilities   and
facilities which are certified for additional beds
which may be permitted a lower occupancy rate  for
the  first  three  months  of  operation after the
effective date of licensure.
    Sec.  2.  This  act  shall take effect July 1,
1998.

Approved June 4, 1998