The board may issue a licensed social worker conditional license under this subsection after June 30, 2002 to an individual who is employed or who seeks employment in a licensed nursing facility for an extended time frame if the Commissioner of Human Services certifies to the board that the license is necessary to permit nursing facilities to continue to attract and retain qualified personnel and fulfill applicable licensure requirements.

Sec. 2. Treatment of costs and inflation in the principles of reimbursement for residential care facilities rules. By July 1, 2002, the Department of Human Services shall amend its rules regarding principles of reimbursement for residential care facilities to ensure that reimbursement reflects the current cost of providing services in an efficient manner. The revised principles of reimbursement must:

1. Provide for a rebasing of reimbursement rates based on data from the most recent audited year and provide for future rebasing no less frequently than every 3 years;

2. Contain an annual inflation adjustment that reflects the actual increases in operating costs incurred by state residential care facilities;

3. Recognize regional variations in labor costs and establish at least 4 regions for purposes of quarterly adjustments;

4. Recognize and reimburse as fixed costs all necessary and proper expenditures for liability insurance and malpractice costs, along with other types of insurance;

5. Recognize and reimburse as fixed costs all necessary and proper expenditures that increase the pool of qualified health care workers or that are related to achieving compliance with the rules and regulations associated with the federal Health Insurance Portability and Accountability Act of 1996, including, but not limited to, consulting costs, employee education and training, tuition reimbursement and education loan forgiveness;

6. Allow each residential care facility to retain the entire amount, if any, by which the interim per diem payment rate for the "routine component" exceeds the actual allowable per diem costs classified within the "routine component" for any cost- reporting period; and

7. Determine allowable costs for particular categories of costs without imposing any peer group upper limits and remove those limits that are prescribed by the principles of reimbursement for residential care facilities. The principles of reimbursement may continue to impose any upper limits that are required by federal law or regulation. The rules must be designed to ensure that aggregate Medicaid payments for nursing facility services are sufficient to cover the total allowable costs of providing the Medicaid covered portion of those services.

Rules adopted pursuant to this section are routine technical rules as defined in the Maine Revised Statutes, Title 5, chapter 375, subchapter II-A. Rules amended pursuant to this section take effect no later than July 1, 2002.

Sec. 3. Treatment of costs and inflation in the principles of reimbursement for nursing facilities rules. By July 1, 2002, the Department of Human Services shall amend its rules regarding principles of reimbursement for nursing facilities to ensure that reimbursement reflects the current cost of providing services in an efficient manner. The revised principles of reimbursement must:

1. Provide for a rebasing of reimbursement rates based on data from the most recent audited year and provide for future rebasing no less frequently than every 3 years;

2. Contain an annual inflation adjustment that reflects the actual increases in operating costs incurred by state nursing facilities;

3. Recognize regional variations in labor costs and establish at least 4 regions for purposes of quarterly adjustments;

4. Allow each nursing facility to retain the entire amount, if any, by which the interim per diem payment rate for the so- called "routine component" exceeds the actual allowable per diem costs classified within the routine component for any cost- reporting period;

5. Recognize and reimburse as fixed costs all necessary and proper expenditures that increase the pool of qualified health care workers or that are related to achieving compliance with the rules and regulations associated with the federal Health Insurance Portability and Accountability Act of 1996, including, but not limited to, consulting costs, employee education and training, tuition reimbursement and education loan forgiveness; and

6. Determine allowable costs for particular categories of costs without imposing any peer group upper limits and remove those limits that are prescribed by the rules of the Department of Human Services, Chapter 101, Maine Medical Assistance Manual, Chapter III, Section 67 in Section 80.3.3.5 for the direct care cost component and in Section 80.5.4 for the routine cost component. The principles of reimbursement may continue to impose any upper limits that are required by federal law or regulation.

The rules must be designed to ensure that aggregate Medicaid payments for nursing facility services are sufficient to cover the total allowable costs of providing the Medicaid-covered portion of those services. Rules adopted pursuant to this section are routine technical rules as defined in the Maine Revised Statutes, Title 5, chapter 375, subchapter II-A. Rules amended pursuant to this section take effect no later than July 1, 2002.

Sec. 4. Rule amendments to remove penalties for occupancy declines. By July 1, 2002, the Department of Human Services shall amend its rules regarding the principles of reimbursement for nursing facilities and the principles of reimbursement for residential care facilities to remove any provision of those principles that reduces the total reimbursement of fixed costs when a facility's occupancy percentage, number of residents served or other measure of utilization relative to capacity falls below a specified percentage or threshold.

Rules adopted pursuant to this section are routine technical rules as defined in the Maine Revised Statutes, Title 5, chapter 375, subchapter II-A.

Sec. 5. Fair hearing proceedings and hearing officers. By October 1, 2002, the Department of Human Services shall amend the rules governing fair hearing proceedings for appeals by providers of Medicaid payment rates to require that the hearing officer for these proceedings be an individual who is not employed by the department and to vest in the hearing officer final authority to issue appropriate rulings that are not subject to modification by the Commissioner of Human Services.

Rules adopted pursuant to this section are routine technical rules as defined in the Maine Revised Statutes, Title 5, chapter 375, subchapter II-A.

Emergency clause. In view of the emergency cited in the preamble, this Act takes effect when approved.

SUMMARY

The bill amends the law administered by the State Board of Social Worker Licensure to permit issuance of conditional licenses following June 30, 2002 to individuals who seek employment in licensed nursing facilities, where the Commissioner of Human Services has certified that this option is necessary to permit nursing facilities to continue to attract and obtain qualified personnel.

The bill also requires the Department of Human Services to make several improvements in the system of payment for long-term care, including nursing facility services, residential care facility services and home health services, in order to fairly reflect the current cost of providing those services efficiently. These improvements include an overall requirement that the payment system reflect the current costs of efficiently providing necessary long-term care services, rebasing to the most recently available audited cost figures, rebasing every 3 years, relying on regional wage adjustments applied quarterly, adjusting for inflation using factors that reflect actual increases in operating costs experienced in Maine and allowing nursing facilities to retain, as an efficiency incentive, savings that they may produce in routine component costs. The bill includes language requiring recognition and payment as fixed costs of certain expenditures that increase the pool of qualified health care workers, including, but not limited to, employee education and training, tuition reimbursement and education loan forgiveness.

The bill further requires that residential care reimbursement rules be changed to include recognition and payment as fixed costs of liability insurance and malpractice costs along with other types of insurance. The current reimbursement rules recognize fire insurance. The bill also requires recognition of allowable costs without imposition of peer review caps.

The bill requires the Department of Human Services to amend its principles of reimbursement for both nursing facilities and residential care facilities to remove any provision that reduces the total reimbursement of fixed costs when a facility's occupancy percentage, number of residents served or other measurement of utilization relative to capacity falls below a specified percentage or threshold.

Under the current version of the principles of reimbursement for nursing facilities, the Department of Human Services rules, Chapter 101, Chapter II, Section 67, Section 44.10, facilities are subject to a negative adjustment in their fixed cost

component if their annual adjusted level of occupancy falls below 90% in the case of a facility with more than 60 beds or below 85% in the case of a facility with 60 beds or fewer. Under the current versions of the principles of reimbursement for residential care facilities, facilities are subject to a negative adjustment in their so-called "fixed component" if their annual adjusted level of occupancy falls below 90% in the case of a facility with more than 60 beds or below 85% in the case of a facility with 60 beds or fewer.

The bill also modifies fair hearing proceedings on Medicaid payment issues. By October 1, 2002, the Department of Human Services shall amend the rules governing fair hearing proceedings for appeals by providers of Medicaid payment rates to require that the hearing officer for these proceedings be an individual who is not employed by the department and to vest in the hearing officer final authority to issue appropriate rulings that are not subject to modification by the Commissioner of Human Services.