As Introduced

130th General Assembly Regular Session 2013-2014

H. B. No. 562

Representative Pillich 

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A BILL

To amend section 5165.01 of the Revised Code to

1

remove behavioral and mental health services from

2

nursing facilities' bundled services for purposes

3

of Medicaid payments.

4

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That section 5165.01 of the Revised Code be	5
amended to read as follows:	6

Sec. 5165.01.  As used in this chapter:

7

(A) "Affiliated operator" means an operator affiliated with	8
either of the following:	9

(1) The exiting operator for whom the affiliated operator is	10
to assume liability for the entire amount of the exiting	11
operator's debt under the medicaid program or the portion of the	12
debt that represents the franchise permit fee the exiting operator	13
owes;	14

(2) The entering operator involved in the change of operator	15
with the exiting operator specified in division (A)(1) of this	16
section.	17

(B) "Allowable costs" are a nursing facility's costs that the	18
department of medicaid determines are reasonable. Fines paid under	19
sections 5165.60 to 5165.89 and section 5165.99 of the Revised	20
Code are not allowable costs.	21

(C) "Ancillary and support costs" means all reasonable costs	22
incurred by a nursing facility other than direct care costs, tax	23
costs, or capital costs. "Ancillary and support costs" includes,	24
but is not limited to, costs of activities, social services,	25
pharmacy consultants, habilitation supervisors, qualified mental	26
retardation professionals, program directors, medical and	27
habilitation records, program supplies, incontinence supplies,	28
food, enterals, dietary supplies and personnel, laundry,	29
housekeeping, security, administration, medical equipment,	30
utilities, liability insurance, bookkeeping, purchasing	31
department, human resources, communications, travel, dues, license	32
fees, subscriptions, home office costs not otherwise allocated,	33
legal services, accounting services, minor equipment, maintenance	34
and repairs, help-wanted advertising, informational advertising,	35
start-up costs, organizational expenses, other interest, property	36
insurance, employee training and staff development, employee	37
benefits, payroll taxes, and workers' compensation premiums or	38
costs for self-insurance claims and related costs as specified in	39
rules adopted under section 5165.02 of the Revised Code, for	40
personnel listed in this division. "Ancillary and support costs"	41
also means the cost of equipment, including vehicles, acquired by	42
operating lease executed before December 1, 1992, if the costs are	43
reported as administrative and general costs on the nursing	44
facility's cost report for the cost reporting period ending	45
December 31, 1992.	46

(D)(1) "Capital costs" means the actual expense incurred by a	47
nursing facility for all of the following:	48

(a) Depreciation and interest on any capital assets that cost	49
five hundred dollars or more per item, including the following:	50

(i) Buildings;

51

(ii) Building improvements;

52

(iii) Except as provided in division (C) of this section,	53
equipment;	54

(iv) Transportation equipment.

55

(b) Amortization and interest on land improvements and	56
leasehold improvements;	57

(c) Amortization of financing costs;

58

(d) Lease and rent of land, buildings, and equipment.

59

(2) The costs of capital assets of less than five hundred	60
dollars per item may be considered capital costs in accordance	61
with a provider's practice.	62

(E) "Capital lease" and "operating lease" shall be construed	63
in accordance with generally accepted accounting principles.	64

(F) "Case-mix score" means a measure determined under section	65
5165.192 of the Revised Code of the relative direct-care resources	66
needed to provide care and habilitation to a nursing facility	67
resident.	68

(G) "Change of operator" means an entering operator becoming	69
the operator of a nursing facility in the place of the exiting	70
operator.	71

(1) Actions that constitute a change of operator include the	72
following:	73

(a) A change in an exiting operator's form of legal	74
organization, including the formation of a partnership or	75
corporation from a sole proprietorship;	76

(b) A transfer of all the exiting operator's ownership	77
interest in the operation of the nursing facility to the entering	78
operator, regardless of whether ownership of any or all of the	79
real property or personal property associated with the nursing	80
facility is also transferred;	81

(c) A lease of the nursing facility to the entering operator	82
or the exiting operator's termination of the exiting operator's	83
lease;	84

(d) If the exiting operator is a partnership, dissolution of	85
the partnership;	86

(e) If the exiting operator is a partnership, a change in	87
composition of the partnership unless both of the following apply:	88

(i) The change in composition does not cause the	89
partnership's dissolution under state law.	90

(ii) The partners agree that the change in composition does	91
not constitute a change in operator.	92

(f) If the operator is a corporation, dissolution of the	93
corporation, a merger of the corporation into another corporation	94
that is the survivor of the merger, or a consolidation of one or	95
more other corporations to form a new corporation.	96

(2) The following, alone, do not constitute a change of	97
operator:	98

(a) A contract for an entity to manage a nursing facility as	99
the operator's agent, subject to the operator's approval of daily	100
operating and management decisions;	101

(b) A change of ownership, lease, or termination of a lease	102
of real property or personal property associated with a nursing	103
facility if an entering operator does not become the operator in	104
place of an exiting operator;	105

(c) If the operator is a corporation, a change of one or more	106
members of the corporation's governing body or transfer of	107
ownership of one or more shares of the corporation's stock, if the	108
same corporation continues to be the operator.	109

(H) "Cost center" means the following:

110

(1) Ancillary and support costs;

111

(2) Capital costs;

112

(3) Direct care costs;

113

(4) Tax costs.

114

(I) "Custom wheelchair" means a wheelchair to which both of	115
the following apply:	116

(1) It has been measured, fitted, or adapted in consideration	117
of either of the following:	118

(a) The body size or disability of the individual who is to	119
use the wheelchair;	120

(b) The individual's period of need for, or intended use of,	121
the wheelchair.	122

(2) It has customized features, modifications, or components,	123
such as adaptive seating and positioning systems, that the	124
supplier who assembled the wheelchair, or the manufacturer from	125
which the wheelchair was ordered, added or made in accordance with	126
the instructions of the physician of the individual who is to use	127
the wheelchair.	128

(J)(1) "Date of licensure" means the following:

129

(a) In the case of a nursing facility that was required by	130
law to be licensed as a nursing home under Chapter 3721. of the	131
Revised Code when it originally began to be operated as a nursing	132
home, the date the nursing facility was originally so licensed;	133

(b) In the case of a nursing facility that was not required	134
by law to be licensed as a nursing home when it originally began	135
to be operated as a nursing home, the date it first began to be	136
operated as a nursing home, regardless of the date the nursing	137
facility was first licensed as a nursing home.	138

(2) If, after a nursing facility's original date of	139
licensure, more nursing home beds are added to the nursing	140
facility, the nursing facility has a different date of licensure	141
for the additional beds. This does not apply, however, to	142
additional beds when both of the following apply:	143

(a) The additional beds are located in a part of the nursing	144
facility that was constructed at the same time as the continuing	145
beds already located in that part of the nursing facility;	146

(b) The part of the nursing facility in which the additional	147
beds are located was constructed as part of the nursing facility	148
at a time when the nursing facility was not required by law to be	149
licensed as a nursing home.	150

(3) The definition of "date of licensure" in this section	151
applies in determinations of nursing facilities' medicaid payment	152
rates but does not apply in determinations of nursing facilities'	153
franchise permit fees.	154

(K) "Desk-reviewed" means that a nursing facility's costs as	155
reported on a cost report submitted under section 5165.10 of the	156
Revised Code have been subjected to a desk review under section	157
5165.108 of the Revised Code and preliminarily determined to be	158
allowable costs.	159

(L) "Direct care costs" means all of the following costs	160
incurred by a nursing facility:	161

(1) Costs for registered nurses, licensed practical nurses,	162
and nurse aides employed by the nursing facility;	163

(2) Costs for direct care staff, administrative nursing	164
staff, medical directors, respiratory therapists, and except as	165
provided in division (L)(8) of this section, other persons holding	166
degrees qualifying them to provide therapy;	167

(3) Costs of purchased nursing services;

168

(4) Costs of quality assurance;

169

(5) Costs of training and staff development, employee	170
benefits, payroll taxes, and workers' compensation premiums or	171
costs for self-insurance claims and related costs as specified in	172
rules adopted under section 5165.02 of the Revised Code, for	173
personnel listed in divisions (L)(1), (2), (4), and (8) of this	174
section;	175

(6) Costs of consulting and management fees related to direct	176
care;	177

(7) Allocated direct care home office costs;

178

(8) Costs of habilitation staff (other than habilitation	179
supervisors), medical supplies, emergency oxygen, over-the-counter	180
pharmacy products, behavioral and mental health services, physical	181
therapists, physical therapy assistants, occupational therapists,	182
occupational therapy assistants, speech therapists, audiologists,	183
habilitation supplies, and universal precautions supplies;	184

(9) Until January 1, 2014, costs of oxygen, wheelchairs, and	185
resident transportation;	186

(10) Beginning January 1, 2014, costs of both of the	187
following:	188

(a) Emergency oxygen;

189

(b) Wheelchairs other than the following:

190

(i) Custom wheelchairs;

191

(ii) Repairs to and replacements of custom wheelchairs and	192
parts that are made in accordance with the instructions of the	193
physician of the individual who uses the custom wheelchair.	194

(11) Until July 1, 2014, costs of behavioral and mental	195
health services;	196

(12) Costs of other direct-care resources that are specified	197
as direct care costs in rules adopted under section 5165.02 of the	198
Revised Code.	199

(M) "Dual eligible individual" has the same meaning as in	200
section 5160.01 of the Revised Code.	201

(N) "Effective date of a change of operator" means the day	202
the entering operator becomes the operator of the nursing	203
facility.	204

(O) "Effective date of a facility closure" means the last day	205
that the last of the residents of the nursing facility resides in	206
the nursing facility.	207

(P) "Effective date of an involuntary termination" means the	208
date the department of medicaid terminates the operator's provider	209
agreement for the nursing facility.	210

(Q) "Effective date of a voluntary withdrawal of	211
participation" means the day the nursing facility ceases to accept	212
new medicaid residents other than the individuals who reside in	213
the nursing facility on the day before the effective date of the	214
voluntary withdrawal of participation.	215

(R) "Entering operator" means the person or government entity	216
that will become the operator of a nursing facility when a change	217
of operator occurs or following an involuntary termination.	218

(S) "Exiting operator" means any of the following:

219

(1) An operator that will cease to be the operator of a	220
nursing facility on the effective date of a change of operator;	221

(2) An operator that will cease to be the operator of a	222
nursing facility on the effective date of a facility closure;	223

(3) An operator of a nursing facility that is undergoing or	224
has undergone a voluntary withdrawal of participation;	225

(4) An operator of a nursing facility that is undergoing or	226
has undergone an involuntary termination.	227

(T)(1) Subject to divisions (T)(2) and (3) of this section,	228
"facility closure" means either of the following:	229

(a) Discontinuance of the use of the building, or part of the	230
building, that houses the facility as a nursing facility that	231
results in the relocation of all of the nursing facility's	232
residents;	233

(b) Conversion of the building, or part of the building, that	234
houses a nursing facility to a different use with any necessary	235
license or other approval needed for that use being obtained and	236
one or more of the nursing facility's residents remaining in the	237
building, or part of the building, to receive services under the	238
new use.	239

(2) A facility closure occurs regardless of any of the	240
following:	241

(a) The operator completely or partially replacing the	242
nursing facility by constructing a new nursing facility or	243
transferring the nursing facility's license to another nursing	244
facility;	245

(b) The nursing facility's residents relocating to another of	246
the operator's nursing facilities;	247

(c) Any action the department of health takes regarding the	248
nursing facility's medicaid certification that may result in the	249
transfer of part of the nursing facility's survey findings to	250
another of the operator's nursing facilities;	251

(d) Any action the department of health takes regarding the	252
nursing facility's license under Chapter 3721. of the Revised	253
Code.	254

(3) A facility closure does not occur if all of the nursing	255
facility's residents are relocated due to an emergency evacuation	256
and one or more of the residents return to a medicaid-certified	257
bed in the nursing facility not later than thirty days after the	258
evacuation occurs.	259

(U) "Fiscal year" means the fiscal year of this state, as	260
specified in section 9.34 of the Revised Code.	261

(V) "Franchise permit fee" means the fee imposed by sections	262
5168.40 to 5168.56 of the Revised Code.	263

(W) "Inpatient days" means both of the following:

264

(1) All days during which a resident, regardless of payment	265
source, occupies a bed in a nursing facility that is included in	266
the nursing facility's medicaid-certified capacity;	267

(2) Fifty per cent of the days for which payment is made	268
under section 5165.34 of the Revised Code.	269

(X) "Involuntary termination" means the department of	270
medicaid's termination of the operator's provider agreement for	271
the nursing facility when the termination is not taken at the	272
operator's request.	273

(Y) "Low resource utilization resident" means a medicaid	274
recipient residing in a nursing facility who, for purposes of	275
calculating the nursing facility's medicaid payment rate for	276
direct care costs, is placed in either of the two lowest resource	277
utilization groups, excluding any resource utilization group that	278
is a default group used for residents with incomplete assessment	279
data.	280

(Z) "Maintenance and repair expenses" means a nursing	281
facility's expenditures that are necessary and proper to maintain	282
an asset in a normally efficient working condition and that do not	283
extend the useful life of the asset two years or more.	284
"Maintenance and repair expenses" includes but is not limited to	285
the costs of ordinary repairs such as painting and wallpapering.	286

(AA) "Medicaid-certified capacity" means the number of a	287
nursing facility's beds that are certified for participation in	288
medicaid as nursing facility beds.	289

(BB) "Medicaid days" means both of the following:

290

(1) All days during which a resident who is a medicaid	291
recipient eligible for nursing facility services occupies a bed in	292
a nursing facility that is included in the nursing facility's	293
medicaid-certified capacity;	294

(2) Fifty per cent of the days for which payment is made	295
under section 5165.34 of the Revised Code.	296

(CC)(1) "New nursing facility" means a nursing facility for	297
which the provider obtains an initial provider agreement following	298
medicaid certification of the nursing facility by the director of	299
health, including such a nursing facility that replaces one or	300
more nursing facilities for which a provider previously held a	301
provider agreement.	302

(2) "New nursing facility" does not mean a nursing facility	303
for which the entering operator seeks a provider agreement	304
pursuant to section 5165.511 or 5165.512 or (pursuant to section	305
5165.515) section 5165.07 of the Revised Code.	306

(DD) "Nursing facility" has the same meaning as in the	307
"Social Security Act," section 1919(a), 42 U.S.C. 1396r(a).	308

(EE) "Nursing facility services" has the same meaning as in	309
the "Social Security Act," section 1905(f), 42 U.S.C. 1396d(f).	310

(FF) "Nursing home" has the same meaning as in section	311
3721.01 of the Revised Code.	312

(GG) "Operator" means the person or government entity	313
responsible for the daily operating and management decisions for a	314
nursing facility.	315

(HH)(1) "Owner" means any person or government entity that	316
has at least five per cent ownership or interest, either directly,	317
indirectly, or in any combination, in any of the following	318
regarding a nursing facility:	319

(a) The land on which the nursing facility is located;

320

(b) The structure in which the nursing facility is located;

321

(c) Any mortgage, contract for deed, or other obligation	322
secured in whole or in part by the land or structure on or in	323
which the nursing facility is located;	324

(d) Any lease or sublease of the land or structure on or in	325
which the nursing facility is located.	326

(2) "Owner" does not mean a holder of a debenture or bond	327
related to the nursing facility and purchased at public issue or a	328
regulated lender that has made a loan related to the nursing	329
facility unless the holder or lender operates the nursing facility	330
directly or through a subsidiary.	331

(II) "Per diem" means a nursing facility's actual, allowable	332
costs in a given cost center in a cost reporting period, divided	333
by the nursing facility's inpatient days for that cost reporting	334
period.	335

(JJ) "Provider" means an operator with a provider agreement.

336

(KK) "Provider agreement" means a provider agreement, as	337
defined in section 5164.01 of the Revised Code, that is between	338
the department of medicaid and the operator of a nursing facility	339
for the provision of nursing facility services under the medicaid	340
program.	341

(LL) "Purchased nursing services" means services that are	342
provided in a nursing facility by registered nurses, licensed	343
practical nurses, or nurse aides who are not employees of the	344
nursing facility.	345

(MM) "Reasonable" means that a cost is an actual cost that is	346
appropriate and helpful to develop and maintain the operation of	347
patient care facilities and activities, including normal standby	348
costs, and that does not exceed what a prudent buyer pays for a	349
given item or services. Reasonable costs may vary from provider to	350
provider and from time to time for the same provider.	351

(NN) "Related party" means an individual or organization	352
that, to a significant extent, has common ownership with, is	353
associated or affiliated with, has control of, or is controlled	354
by, the provider.	355

(1) An individual who is a relative of an owner is a related	356
party.	357

(2) Common ownership exists when an individual or individuals	358
possess significant ownership or equity in both the provider and	359
the other organization. Significant ownership or equity exists	360
when an individual or individuals possess five per cent ownership	361
or equity in both the provider and a supplier. Significant	362
ownership or equity is presumed to exist when an individual or	363
individuals possess ten per cent ownership or equity in both the	364
provider and another organization from which the provider	365
purchases or leases real property.	366

(3) Control exists when an individual or organization has the	367
power, directly or indirectly, to significantly influence or	368
direct the actions or policies of an organization.	369

(4) An individual or organization that supplies goods or	370
services to a provider shall not be considered a related party if	371
all of the following conditions are met:	372

(a) The supplier is a separate bona fide organization.

373

(b) A substantial part of the supplier's business activity of	374
the type carried on with the provider is transacted with others	375
than the provider and there is an open, competitive market for the	376
types of goods or services the supplier furnishes.	377

(c) The types of goods or services are commonly obtained by	378
other nursing facilities from outside organizations and are not a	379
basic element of patient care ordinarily furnished directly to	380
patients by nursing facilities.	381

(d) The charge to the provider is in line with the charge for	382
the goods or services in the open market and no more than the	383
charge made under comparable circumstances to others by the	384
supplier.	385

(OO) "Relative of owner" means an individual who is related	386
to an owner of a nursing facility by one of the following	387
relationships:	388

(1) Spouse;

389

(2) Natural parent, child, or sibling;

390

(3) Adopted parent, child, or sibling;

391

(4) Stepparent, stepchild, stepbrother, or stepsister;

392

(5) Father-in-law, mother-in-law, son-in-law,	393
daughter-in-law, brother-in-law, or sister-in-law;	394

(6) Grandparent or grandchild;

395

(7) Foster caregiver, foster child, foster brother, or foster	396
sister.	397

(PP) "Residents' rights advocate" has the same meaning as in	398
section 3721.10 of the Revised Code.	399

(QQ) "Skilled nursing facility" has the same meaning as in	400
the "Social Security Act," section 1819(a), 42 U.S.C. 1395i-3(a).	401

(RR) "Sponsor" has the same meaning as in section 3721.10 of	402
the Revised Code.	403

(SS) "Tax costs" means the costs of taxes imposed under	404
Chapter 5751. of the Revised Code, real estate taxes, personal	405
property taxes, and corporate franchise taxes.	406

(TT) "Title XIX" means Title XIX of the "Social Security	407
Act," 42 U.S.C. 1396 et seq.	408

(UU) "Title XVIII" means Title XVIII of the "Social Security	409
Act," 42 U.S.C. 1395 et seq.	410

(VV) "Voluntary withdrawal of participation" means an	411
operator's voluntary election to terminate the participation of a	412
nursing facility in the medicaid program but to continue to	413
provide service of the type provided by a nursing facility.	414

Section 2. That existing section 5165.01 of the Revised Code	415
is hereby repealed.	416