D. Reviewing the most recent information from time studies being used for the Medicare prospective payment system and making a determination whether the time study presently in use reflects nursing costs in the State's facilities and is appropriate for use; and

E. Studying employment markets, labor costs and turnover rates at facilities around the State and, for those facilities that are at or above direct care limits, developing methods for providing increased reimbursement.

This study must be conducted in conjunction with the Department of Labor and must build upon the work already done by that department and by the Maine Health Care Association;

2. Rebasing reimbursement rates. Rebasing reimbursement rates from 1993 to 1996 or the most recent complete audited year and adopting new medians and new cost caps in order to keep up with the higher costs faced by facilities due to inflation, increased paperwork requirements and higher resident need for care. In doing so the department shall consider the following options:

A. Rebasing costs with an emphasis on those most directly affecting high-quality resident care; and

B. Rebasing cost components on a rolling schedule whether periodically or when a stated event occurs, such as when 50% of the facilities are over the cap;

3. Tying caps to types of facilities. Tying caps applicable to the different cost components to the size of the facility, thus placing higher caps on the smaller facilities, which are often in rural areas, in recognition of the higher costs faced by those facilities and the importance of maintaining access to nursing facility care in rural areas; and

4. Removing certain reimbursement incentives. Removing any reimbursement incentives that have unintended adverse impacts on resident care.

Sec. 3. Minimum staffing requirements. The Department of Human Services shall replace its current minimum staffing ratios with minimum staffing requirements that are tied to the care needs of residents and to the other needs of residents that affect the quality of their lives and that ensure that adequate numbers of direct care staff are available at all times to meet