04-14-2021 Council Packet - Laserfiche WebLink

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12 the specific needs of residents with Alzheimer’s disease, fee schedules, and programs and activities for residents, among other requirements. In addition, staff members of housing with services establishments that are considered “special care units” must meet certain additional training requirements prescribed by statute. Other State Laws Impacting the Project. In addition to the requirements for special care units for Alzheimer’s patients, the Project is subject to various other laws and regulations administered by MDH and other state government agencies, including landlord-tenant laws, laws requiring registration of sex offenders or violent crime offenders seeking placement at the Project, laws requiring criminal arrest checks on certain persons offered employment, laws relating to the employment of nurse’s aides, and laws related to compensation of caregivers. Licensing Minnesota has a moratorium on the licensure and medical assistance certification of new nursing home beds and construction projects that exceed stated thresholds, unless certain exceptions are approved in accordance with the regulations. The Corporation plans to close the current St. Paul Facilities upon completion of construction of the Project and transfer 64 skilled nursing beds to the Project. The remaining beds will be de-licensed, and the overall number of skilled nursing beds for the Corporation will be reduced from 76 to 64. The Corporation received an approval from MDH for a consolidation rate adjustment for building a replacement facility (i.e., the Project), which allows a portion of the State’s savings from an affiliate’s closed 250 bed facility to be allocated to the Project. The Corporation’s allocated savings portion is approximately $55 of additional skilled nursing facilities reimbursement per bed/per census day in addition to the Corporation’s current reimbursement rate. Medicaid The revenues of the Corporation historically have been and in the future are expected to be derived in significant part from payments made on behalf of qualifying nursing home residents under the Minnesota Medical Assistance Program (“Medicaid”). States currently fund a substantial portion of Medicaid payments and exercise considerable discretion in determining Medicaid payments made to care providers. Federal regulations provide that states are not required to pay for long-term care services on a cost-related basis, but may do so according to payment rate systems established by the state and identified in a state Medicaid plan. Those payment systems may be implemented after the state provides public notice of its methodologies and justifications and affords providers, beneficiaries and other interested parties a reasonable opportunity to comment on any proposed rates, methodologies and justifications. As a result, the payments allowed by states for qualifying residents may be based on factors other than the actual costs of the nursing services, creating a more competitive environment for applicable nursing facilities. The political emphasis on budget cutting, further changes in Medicaid and Medicare funding, and changes in the payment patterns of the federal government and the State of Minnesota may have an adverse effect upon the revenues of the Project. Minnesota Medicaid Reimbursement System. Minnesota implemented a new payment system effective January 1, 2016, called the value-based reimbursement system that takes into account the actual costs to deliver services and quality scores achieved. Under this payment system, resident rates paid through the Medicaid program to applicable nursing facilities are divided into separate and distinct components: Operating Costs, Property Costs and External Fixed Costs. For any particular resident, the sum of the Operating, Property, and External Fixed Costs is the Total Rate paid to the applicable nursing facility per resident day; however, reimbursement will only occur up to a certain facility-specific limit based on the facility’s quality score. Additionally, the Minnesota Rate Equalization Law requires applicable nursing facilities participating in the Medicaid program to charge private-pay residents the same rate as Medicaid pays for similar services. Higher rates, however, are allowed to be charged to private-pay residents in single-bed rooms and for special services that are not included in the daily rate if Medicaid residents are charged separately at the same rate for the same services in addition to the daily rate paid. Medicaid Operating Costs. Under Minnesota’s value-based reimbursement system, Operating Costs take into account a resident’s level of need, partly based on a system of categorization called a RUG (Resource Utilization Group) case-mix classification. Operating Costs include: (1) direct care costs such as salaries of health care staff; (2) other care-related costs such as activity and food costs; and (3) other operating costs such as property insurance and other administrative costs. Only direct care costs are subject to the RUG case-mix classification while all other