Laws of Minnesota 1985 

                        CHAPTER 267-S.F.No. 251 
           An act relating to nursing homes; establishing an 
          educational program for resident and family advisory 
          councils; authorizing a surcharge on license fees; 
          requiring evaluation and a report to the legislature 
          by the Minnesota board on aging; appropriating money; 
          amending Minnesota Statutes 1984, sections 256B.421, 
          subdivision 8; and 256B.431, subdivision 2b; proposing 
          coding for new law in Minnesota Statutes, chapter 144A.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [144A.33] [RESIDENT AND FAMILY ADVISORY COUNCIL 
EDUCATION.] 
    Subdivision 1.  [EDUCATIONAL PROGRAM.] Each resident and 
family council authorized under section 144.651, subdivision 27, 
shall be educated and informed about the following: 
    (1) care in the nursing home or board and care home; 
    (2) resident rights and responsibilities; 
    (3) resident and family council organization and 
maintenance; 
    (4) laws and rules that apply to homes and residents; 
    (5) human relations; and 
    (6) resident and family self-help methods to increase 
quality of care and quality of life in a nursing home or board 
and care home. 
    Subd. 2.  [PROVIDING EDUCATIONAL SERVICES.] The Minnesota 
board on aging shall provide a grant-in-aid to a statewide, 
independent, nonprofit, consumer-sponsored agency to provide 
educational services to councils. 
    Subd. 3.  [FUNDING OF ADVISORY COUNCIL EDUCATION.] A 
license application or renewal fee for nursing homes and 
boarding care homes under section 144.53 or 144A.07 must be 
increased by $1.73 per bed to fund the development and education 
of resident and family advisory councils. 
    Subd. 4.  [SPECIAL ACCOUNT.] All money collected by the 
commissioner of health under subdivision 3 must be deposited in 
the state treasury and credited to a special account called the 
nursing home advisory council fund. 
    Subd. 5.  [REPORT; EVALUATION.] The Minnesota board on 
aging shall evaluate the programs and funding sources 
established under this section and report to the legislature by 
February 1 of each year concerning the programs established and 
the effectiveness of the programs. 
    Sec. 2.  Minnesota Statutes 1984, section 256B.421, 
subdivision 8, is amended to read: 
    Subd. 8.  [OPERATING COSTS.] "Operating costs" means the 
day-to-day costs of operating the facility in compliance with 
licensure and certification standards.  Operating cost 
categories are:  nursing, including nurses and nursing 
assistants training; dietary; laundry and linen; housekeeping; 
plant operation and maintenance; other care-related services; 
medical directors; licenses and, other than license fees 
required by the Minnesota department of health; permits; general 
and administration; payroll taxes; real estate taxes, license 
fees required by the Minnesota department of health, and actual 
special assessments paid; and fringe benefits, including 
clerical training; and travel necessary for training programs 
for nursing personnel and dieticians required to maintain 
licensure, certification, or professional standards requirements.
     Sec. 3.  Minnesota Statutes 1984, section 256B.431, 
subdivision 2b, is amended to read: 
    Subd. 2b.  [OPERATING COSTS, AFTER JULY 1, 1985.] (a) For 
rate years beginning on or after July 1, 1985, the commissioner 
shall establish procedures for determining per diem 
reimbursement for operating costs.  
         (b) The commissioner shall contract with an econometric 
firm with recognized expertise in and access to national 
economic change indices that can be applied to the appropriate 
cost categories when determining the operating cost payment rate.
     (c) The commissioner shall analyze and evaluate each 
nursing home's cost report of allowable operating costs incurred 
by the nursing home during the reporting year immediately 
preceding the rate year for which the payment rate becomes 
effective.  
     (d) The commissioner shall establish limits on actual 
allowable historical operating cost per diems based on cost 
reports of allowable operating costs for the reporting year that 
begins October 1, 1983, taking into consideration relevant 
factors including resident needs, geographic location, age, size 
of the nursing home, and the costs that must be incurred for the 
care of residents in an efficiently and economically operated 
nursing home.  The limits established by the commissioner shall 
not be less, in the aggregate, than the 60th percentile of total 
actual allowable historical operating cost per diems for each 
group of nursing homes established under subdivision 1 based on 
cost reports of allowable operating costs in the previous 
reporting year.  The limits established under this paragraph 
remain in effect until the commissioner establishes a new base 
period.  Until the new base period is established, the 
commissioner shall adjust the limits annually using the 
appropriate economic change indices established in paragraph (e).
In determining allowable historical operating cost per diems for 
purposes of setting limits and nursing home payment rates, the 
commissioner shall divide the allowable historical operating 
costs by the actual number of resident days, except that where a 
nursing home is occupied at less than 90 percent of licensed 
capacity days, the commissioner may establish procedures to 
adjust the computation of the per diem to an imputed occupancy 
level at or below 90 percent.  The commissioner shall establish 
efficiency incentives as appropriate.  The commissioner may 
establish efficiency incentives for different operating cost 
categories.  The commissioner shall consider establishing 
efficiency incentives in care related cost categories.  The 
commissioner may combine one or more operating cost categories 
and may use different methods for calculating payment rates for 
each operating cost category or combination of operating cost 
categories.  
         (e) The commissioner shall establish a composite index or 
indices by determining the appropriate economic change 
indicators to be applied to specific operating cost categories 
or combination of operating cost categories.  
    (f) Each nursing home shall receive an operating cost 
payment rate equal to the sum of the nursing home's operating 
cost payment rates for each operating cost category.  The 
operating cost payment rate for an operating cost category shall 
be the lesser of the nursing home's historical operating cost in 
the category increased by the appropriate index established in 
paragraph (e) for the operating cost category plus an efficiency 
incentive established pursuant to paragraph (d) or the limit for 
the operating cost category increased by the same index.  If a 
nursing home's actual historic operating costs are greater than 
the prospective payment rate for that rate year, there shall be 
no retroactive cost settle-up.  In establishing payment rates 
for one or more operating cost categories, the commissioner may 
establish separate rates for different classes of residents 
based on their relative care needs.  
    (g) The commissioner shall include the reported actual real 
estate tax liability of each proprietary nursing home as an 
operating cost of that nursing home.  The commissioner shall 
include a reported actual special assessment, and reported 
actual license fees required by the Minnesota department of 
health, for each nursing home as an operating cost of that 
nursing home.  Total real estate tax liability and, actual 
special assessments paid, and license fees paid as required by 
the Minnesota department of health, for each nursing home (1) 
shall be divided by actual resident days in order to compute the 
operating cost payment rate for this operating cost category, 
(2) shall not be used to compute the 60th percentile or other 
operating cost limits established by the commissioner, and (3) 
shall not be increased by the composite index or indices 
established pursuant to paragraph (e). 
    Sec. 4.  [APPROPRIATION.] 
    Money in the nursing home advisory council fund is 
appropriated to the Minnesota board on aging for the purposes of 
section 1 to be available until June 30, 1987. 
    Approved May 31, 1985