Whereas, the quality of care for residents in nursing facilities is threatened by high staff turnover, the burdens of excessive paperwork and the current rates and methods of reimbursement used in the Medicare and Medicaid programs; and

Whereas, in the judgment of the Legislature, these facts create an emergency within the meaning of the Constitution of Maine and require the following legislation as immediately necessary for the preservation of the public peace, health and safety; now, therefore,

Be it enacted by the People of the State of Maine as follows:

Sec. 1. Pilot projects on performance contracts in the nursing facility field. The Department of Human Services shall undertake pilot projects to reward high-quality care in nursing facilities based on successful performance by the facilities. Successful performance must be measured using quality indicators from the minimum data set forms already in use and from consumer and family satisfaction surveys. Successful performance rewards may include but are not limited to financial rewards, favorable public information and decreased regulation by the State. The department shall avoid inadvertently restricting access to care; avoid preserving, with financial or other assistance, facilities that perform poorly because of incompetence; and act to preserve consumer choice in urban and rural settings to the extent practical.

Sec. 2. Report regarding principles of reimbursement. The Department of Human Services shall develop new approaches to reimbursement of nursing facilities under the Medicaid program targeted to specific problems and shall report those approaches to the Joint Standing Committee on Health and Human Services by February 1, 1999. The approaches must include the following:

1. Examining operating costs. Examining operating costs to determine specific areas in which reimbursement may be inadequate. In doing so, the department shall consider the following options for reimbursement:

A. Reimbursing facilities' costs for medical directors at a level reflecting the increased level of care required for nursing facility residents;

B. Merging the indirect and routine cost components;