1     
NURSING CARE FACILITY AMENDMENTS

2     
2016 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Francis D. Gibson

5     
Senate Sponsor: Evan J. Vickers

6     

7     LONG TITLE
8     General Description:
9          This bill amends the Health Care Facility Licensing and Inspection Act and other
10     provisions of the Utah Health Code.
11     Highlighted Provisions:
12          This bill:
13          ▸     amends definitions;
14          ▸     amends Medicaid certification provisions for nursing care facilities;
15          ▸     amends provisions governing the transfer of a license for a Medicaid bed from a
16     nursing care facility program to another entity;
17          ▸     permits a related-party nonnursing-care-facility entity to hold a license for a
18     Medicaid bed for a future nursing care facility program not yet identified;
19          ▸     amends licensing requirements for a new nursing care facility;
20          ▸     imposes a fine on certain health care facilities with Medicare inpatient revenue that
21     exceeds a specified amount;
22          ▸     requires the Department of Health to make rules specifying information a health
23     care facility must submit to the department so that the department can determine
24     whether the facility is subject to the fine;
25          ▸     requires that fines be deposited into the Nursing Care Facilities Account;
26          ▸     authorizes the use of money in the Nursing Care Facilities Account for Medicaid
27     quality incentive payments made to nursing care facilities; and
28          ▸     makes technical changes.
29     Money Appropriated in this Bill:
30          None
31     Other Special Clauses:
32          This bill provides a special effective date.
33     Utah Code Sections Affected:
34     AMENDS:
35          26-18-501, as last amended by Laws of Utah 2011, Chapters 297 and 366
36          26-18-502, as last amended by Laws of Utah 2013, Chapter 60
37          26-18-503, as last amended by Laws of Utah 2013, Chapter 60
38          26-18-505, as last amended by Laws of Utah 2011, Chapter 297
39          26-21-23, as last amended by Laws of Utah 2013, Chapter 60
40          26-35a-106, as last amended by Laws of Utah 2010, Chapter 340
41     

42     Be it enacted by the Legislature of the state of Utah:
43          Section 1. Section 26-18-501 is amended to read:
44          26-18-501. Definitions.
45          As used in this part:
46          (1) "Certified program" means a nursing care facility program with Medicaid
47     certification.
48          (2) "Director" means the director of the Division of Health Care Financing.
49          (3) "Medicaid certification" means the right [to Medicaid reimbursement] of a nursing
50     care facility, as a provider of a nursing care facility program [as established by division rule], to
51     receive Medicaid reimbursement for a specified number of beds within the facility.
52          (4) (a) "Nursing care facility" means the following facilities licensed by the department
53     under Chapter 21, Health Care Facility Licensing and Inspection Act:
54          (i) skilled nursing [homes] facilities;
55          (ii) intermediate care facilities; and
56          (iii) an intermediate care facility for people with an intellectual disability.
57          (b) "Nursing care facility" does not mean a critical access hospital that meets the
58     criteria of 42 U.S.C. 1395i-4(c)(2) (1998).
59          (5) "Nursing care facility program" means the personnel, licenses, services, contracts
60     and all other requirements that shall be met for a nursing care facility to be eligible for
61     Medicaid certification under this part and division rule.
62          (6) "Physical facility" means the buildings or other physical structures where a nursing
63     care facility program is operated.
64          (7) "Rural county" means a county with a population of less than 50,000, as determined
65     by:
66          (a) the most recent official census or census estimate of the United States Census
67     Bureau; or
68          (b) the most recent population estimate for the county from the Utah Population
69     Estimates Committee, if a population figure for the county is not available under Subsection
70     (7)(a).
71          [(7)] (8) "Service area" means the boundaries of the distinct geographic area served by
72     a certified program as determined by the division in accordance with this part and division rule.
73          (9) "Urban county" means a county that is not a rural county.
74          Section 2. Section 26-18-502 is amended to read:
75          26-18-502. Purpose -- Medicaid certification of nursing care facilities.
76          (1) The Legislature finds:
77          (a) that an oversupply of nursing care [facility programs] facilities in the state adversely
78     affects the state Medicaid program and the health of the people in the state; [and]
79          (b) it is in the best interest of the state to prohibit nursing care facilities from receiving
80     Medicaid certification [of nursing care facility programs], except as [authorized] provided by
81     this part[.]; and
82          (c) it is in the best interest of the state to encourage aging nursing care facilities with
83     Medicaid certification to renovate the nursing care facilities' physical facilities so that the
84     quality of life and clinical services for Medicaid residents are preserved.
85          (2) Medicaid reimbursement of nursing care facility programs is limited to:
86          (a) the number of nursing care facility programs with Medicaid certification as of May
87     [4, 2004] 9, 2016; and
88          (b) additional nursing care facility programs approved for Medicaid certification under
89     the provisions of Subsections 26-18-503(5) and (7).
90          (3) The division may not:
91          (a) except as authorized by Section 26-18-503:
92          (i) process initial applications for Medicaid certification or execute provider
93     agreements with nursing care facility programs; or
94          (ii) reinstate Medicaid certification for a nursing care facility whose certification
95     expired or was terminated by action of the federal or state government; or
96          (b) execute a Medicaid provider agreement with a certified program that moves [its
97     nursing care facility program] to a different physical facility, except as authorized by
98     Subsection 26-18-503(3).
99          Section 3. Section 26-18-503 is amended to read:
100          26-18-503. Authorization to renew, transfer, or increase Medicaid certified
101     programs -- Reimbursement methodology.
102          (1) (a) The division may renew Medicaid certification of a certified program if the
103     program, without lapse in service to Medicaid recipients, has its nursing care facility program
104     certified by the division at the same physical facility as long as the licensed and certified bed
105     capacity at the facility has not been expanded, unless the director has approved additional beds
106     in accordance with Subsection (5).
107          (b) The division may renew Medicaid certification of a nursing care facility program
108     that is not currently certified if:
109          (i) since the day on which the program last operated with Medicaid certification:
110          (A) the physical facility where the program operated has functioned solely and
111     continuously as a nursing care facility; and
112          (B) the owner of the program has not, under this section or Section 26-18-505,
113     transferred to another nursing care facility program the license for any of the Medicaid beds in
114     the program; and
115          (ii) the number of beds granted renewed Medicaid certification does not exceed the
116     number of beds certified at the time the program last operated with Medicaid certification,
117     excluding a period of time where the program operated with temporary certification under
118     Subsection 26-18-504(4).
119          (2) (a) The division may issue a Medicaid certification for a new nursing care facility
120     program if a current owner of the Medicaid certified program transfers its ownership of the
121     Medicaid certification to the new nursing care facility program and the new nursing care
122     facility program meets all of the following conditions:
123          (i) the new nursing care facility program operates at the same physical facility as the
124     previous Medicaid certified program;
125          (ii) the new nursing care facility program gives a written assurance to the director in
126     accordance with Subsection (4);
127          (iii) the new nursing care facility program receives the Medicaid certification within
128     one year of the date the previously certified program ceased to provide medical assistance to a
129     Medicaid recipient; and
130          (iv) the licensed and certified bed capacity at the facility has not been expanded, unless
131     the director has approved additional beds in accordance with Subsection (5).
132          (b) A nursing care facility program that receives Medicaid certification under the
133     provisions of Subsection (2)(a) does not assume the Medicaid liabilities of the previous nursing
134     care facility program if the new nursing care facility program:
135          (i) is not owned in whole or in part by the previous nursing care facility program; or
136          (ii) is not a successor in interest of the previous nursing care facility program.
137          (3) The division may issue a Medicaid certification to a nursing care facility program
138     that was previously a certified program but now resides in a new or renovated physical facility
139     if the nursing care facility program meets all of the following:
140          (a) the nursing care facility program met all applicable requirements for Medicaid
141     certification at the time of closure;
142          (b) the new or renovated physical facility is in the same county or within a five-mile
143     radius of the original physical facility;
144          (c) the time between which the certified program ceased to operate in the original
145     facility and will begin to operate in the new physical facility is not more than three years;
146          (d) if Subsection (3)(c) applies, the certified program notifies the department within 90
147     days after ceasing operations in its original facility, of its intent to retain its Medicaid
148     certification;
149          (e) the provider gives written assurance to the director in accordance with Subsection
150     (4) that no third party has a legitimate claim to operate a certified program at the previous
151     physical facility; and
152          (f) the bed capacity in the physical facility has not been expanded unless the director
153     has approved additional beds in accordance with Subsection (5).
154          (4) (a) The entity requesting Medicaid certification under Subsections (2) and (3) shall
155     give written assurances satisfactory to the director or the director's designee that:
156          (i) no third party has a legitimate claim to operate the certified program;
157          (ii) the requesting entity agrees to defend and indemnify the department against any
158     claims by a third party who may assert a right to operate the certified program; and
159          (iii) if a third party is found, by final agency action of the department after exhaustion
160     of all administrative and judicial appeal rights, to be entitled to operate a certified program at
161     the physical facility the certified program shall voluntarily comply with Subsection (4)(b).
162          (b) If a finding is made under the provisions of Subsection (4)(a)(iii):
163          (i) the certified program shall immediately surrender its Medicaid certification and
164     comply with division rules regarding billing for Medicaid and the provision of services to
165     Medicaid patients; and
166          (ii) the department shall transfer the surrendered Medicaid certification to the third
167     party who prevailed under Subsection (4)(a)(iii).
168          (5) (a) As provided in Subsection 26-18-502(2)(b), the director [shall issue additional
169     Medicaid certification when requested by a] may approve additional nursing care facility
170     programs for Medicaid certification, or additional beds for Medicaid certification within an
171     existing nursing care facility program, if a nursing care facility or other interested party [if there
172     is insufficient bed capacity with current certified programs in a service area. A determination
173     of insufficient bed capacity shall be based on the nursing care facility or other interested party
174     providing reasonable evidence of an inadequate number of beds in] requests Medicaid
175     certification for a nursing care facility program or additional beds within an existing nursing
176     care facility program, and the nursing care facility program or other interested party complies
177     with this section.
178          (b) The nursing care facility or other interested party requesting Medicaid certification
179     for a nursing care facility program or additional beds within an existing nursing care facility
180     program under Subsection (5)(a) shall submit to the director:
181          (i) proof of the following as reasonable evidence that bed capacity provided by
182     Medicaid certified programs within the county or group of counties impacted by the requested
183     additional Medicaid certification [based on] is insufficient:
184          [(i) current demographics which demonstrate]
185          (A) nursing care facility occupancy levels [of at least 90%] for all existing and
186     proposed facilities [within a prospective three-year period] will be at least 90% for the next
187     three years;
188          [(ii)] (B) current nursing care facility occupancy [levels of 90%] is 90% or more; or
189          [(iii)] (C) there is no other nursing care facility within a 35-mile radius of the nursing
190     care facility requesting the additional certification[.]; and
191          [(b) In addition to the requirements of Subsection (5)(a), a nursing care facility
192     program shall demonstrate by an independent analysis that the nursing care facility can
193     financially support itself at an after tax break-even net income level based on projected
194     occupancy levels.]
195          [(c) When making a determination to certify additional beds or an additional nursing
196     care facility program under Subsection (5)(a):]
197          [(i) the director shall consider whether the nursing care facility will offer specialized or
198     unique services that are underserved in a service area;]
199          (ii) an independent analysis demonstrating that at projected occupancy rates the nursing
200     care facility's after-tax net income is sufficient for the facility to be financially viable.
201          (c) The director shall determine whether to issue additional Medicaid certification by
202     considering:
203          (i) whether bed capacity provided by certified programs within the county or group of
204     counties impacted by the requested additional Medicaid certification is insufficient, based on
205     the information submitted to the director under Subsection (5)(b);
206          (ii) whether the county or group of counties impacted by the requested additional
207     Medicaid certification is underserved by specialized or unique services that would be provided
208     by the nursing care facility;
209          [(ii) the director shall consider] (iii) whether any Medicaid certified beds are subject to
210     a claim by a previous certified program that may reopen under the provisions of Subsections
211     (2) and (3); and
212          [(iii) the director may consider how to add]
213          (iv) how additional bed capacity should be added to the long-term care delivery system
214     to best meet the needs of Medicaid recipients, which may include the renovation of aging
215     nursing care facilities, as permitted by Subsection (7).
216          (6) The department shall adopt administrative rules in accordance with Title 63G,
217     Chapter 3, Utah Administrative Rulemaking Act, to adjust the Medicaid nursing care facility
218     property reimbursement methodology to:
219          (a) [beginning July 1, 2008,] only pay that portion of the property component of rates,
220     representing actual bed usage by Medicaid clients as a percentage of the greater of:
221          (i) actual occupancy; or
222          (ii) (A) for a nursing care facility other than a facility described in Subsection
223     (6)(a)(ii)(B), 85% of total bed capacity; or
224          (B) for a rural nursing care facility, 65% of total bed capacity; and
225          (b) [beginning July 1, 2008,] not allow for increases in reimbursement for property
226     values without major renovation or replacement projects as defined by the department by rule.
227          (7) (a) Notwithstanding Subsection 26-18-504(4), if a nursing care facility does not
228     seek Medicaid certification for a bed under [the provisions of] Subsections (1) through (6), the
229     department shall grant Medicaid certification for [a licensed non-Medicaid certified bed]
230     additional beds in an existing Medicaid certified nursing care facility that has 90 or fewer
231     licensed beds, including Medicaid certified beds, in the facility if:
232          (i) the nursing care facility [is licensed under Subsection 26-21-23(2)(b)] program was
233     previously a certified program for all beds but now resides in a new facility or in a facility that
234     underwent major renovations involving major structural changes, and 50% or greater facility
235     square footage design changes, requiring review and approval by the department;
236          (ii) the nursing care facility meets the quality of care regulations issued by the Center
237     for Medicare and Medicaid Services; and
238          [(iii) the Medicaid certified bed will be used by a patient who:]
239          [(A) is a resident of the nursing care facility;]
240          [(B) has exhausted the patient's Medicare benefits for skilled nursing services; and]
241          [(C) qualifies for Medicaid; and]
242          [(iv)] (iii) the total number of [licensed] additional beds in the facility [that are] granted
243     Medicaid certification under [the provisions of this Subsection (7)(a)] this section does not
244     exceed 10% of the [total] number of licensed beds in the facility.
245          (b) The department may not revoke the Medicaid certification of a bed under this
246     Subsection (7) as long as the provisions of [Subsections] Subsection (7)(a)(ii) [and (iii)] are
247     met.
248          (8) (a) If a nursing care facility or other interested party indicates in its request for
249     additional Medicaid certification under Subsection (5)(a) that the facility will offer specialized
250     or unique services, but the facility does not offer those services after receiving additional
251     Medicaid certification, the director may revoke the additional Medicaid certification.
252          (b) If a nursing care facility or other interested party obtains Medicaid certification for
253     a nursing care facility program or additional beds within an existing nursing care facility
254     program under Subsection (5), but Medicaid reimbursement is not received for a bed within
255     three years of the date on which Medicaid certification was obtained for the bed under
256     Subsection (5), Medicaid certification for the bed is revoked.
257          Section 4. Section 26-18-505 is amended to read:
258          26-18-505. Authorization to sell or transfer licensed Medicaid beds -- Duties of
259     transferor -- Duties of transferee -- Duties of division.
260          (1) This section provides a method to transfer or sell the license for a Medicaid bed
261     from [one] a nursing care facility program to another entity that is in addition to the
262     authorization to transfer under Section 26-18-503.
263          (2) (a) A nursing care facility program may transfer or sell one or more of its licenses
264     for Medicaid beds in accordance with Subsection (2)(b) if:
265          (i) at the time of the transfer, and with respect to the license for the Medicaid bed that
266     will be transferred, the nursing care facility program that will transfer the Medicaid license
267     meets all applicable regulations for Medicaid certification;
268          (ii) 30 days prior to the transfer, the nursing care facility program gives a written
269     assurance to the director and to the transferee in accordance with Subsection 26-18-503(4);
270     [and]
271          (iii) 30 days prior to the transfer, the nursing care facility program that will transfer the
272     license for a Medicaid bed notifies the division in writing of:
273          (A) the number of bed licenses that will be transferred;
274          (B) the date of the transfer; and
275          (C) the identity and location of the entity receiving the transferred licenses[.]; and
276          (iv) if the nursing care facility program for which the license will be transferred or
277     purchased is located in an urban county with a nursing care facility average annual occupancy
278     rate over the previous two years less than or equal to 75%, the nursing care facility program
279     transferring or selling the license demonstrates to the satisfaction of the director that the sale or
280     transfer:
281          (A) will not result in an excessive number of Medicaid certified beds within the county
282     or group of counties that would be impacted by the transfer or sale; and
283          (B) best meets the needs of Medicaid recipients.
284          (b) [A] Except as provided in Subsection (2)(c), a nursing care facility program may
285     transfer or sell one or more of its licenses for Medicaid beds to:
286          (i) a nursing care facility program that has the same owner or successor in interest of
287     the same owner;
288          (ii) a nursing care facility program that has a different owner; [or]
289          (iii) notwithstanding Section 26-18-502, an entity that intends to establish a nursing
290     care facility program[.]; or
291          (iv) notwithstanding Section 26-18-502, a related-party nonnursing-care-facility entity
292     that wants to hold one or more of the licenses for a future nursing care facility program not yet
293     identified, as long as:
294          (A) the licenses are subsequently transferred or sold to a nursing care facility program
295     within three years; and
296          (B) the nursing care facility program notifies the director of the transfer or sale in
297     accordance with Subsection (2)(a)(iii).
298          (c) A nursing care facility program may not transfer or sell one or more of its licenses
299     for Medicaid beds to an entity under Subsection (2)(b)(i), (ii), (iii), or (iv) that is located in a
300     rural county unless the entity requests, and the director issues, Medicaid certification for the
301     beds under Subsection 26-18-503(5).
302          (3) An entity under Subsection (2)(b)(i), (ii), (iii), or (iv) that receives or purchases a
303     license for a Medicaid bed under Subsection (2)(b):
304          (a) may receive a license for a Medicaid bed from more than one nursing care facility
305     program;
306          (b) within 14 days of seeking Medicaid certification of beds in the nursing care facility
307     program, give the division notice of the total number of licenses for Medicaid beds that the
308     entity received and who it received the licenses from;
309          (c) may only seek Medicaid certification for the number of licensed beds in the nursing
310     care facility program equal to the total number of licenses for Medicaid beds received by the
311     entity[, multiplied by a conversion factor of .7, and rounded down to the lowest integer];
312          (d) notwithstanding Section 26-18-502, does not have to demonstrate need or seek
313     approval for the Medicaid licensed [beds] bed under Subsection 26-18-503(5), except as
314     provided in Subsections (2)(a)(iv) and (2)(c) ;
315          (e) shall meet the standards for Medicaid certification other than those in Subsection
316     26-18-503(5), including personnel, services, contracts, and licensing of facilities under Chapter
317     21, Health Care Facility Licensing and Inspection Act; and
318          (f) shall obtain Medicaid certification for the licensed Medicaid beds within three years
319     of the date of transfer as documented under Subsection (2)(a)(iii)(B).
320          [(4) The conversion formula required by Subsection (3)(c) shall be calculated:]
321          [(a) when the nursing care facility program applies to the Department for Medicaid
322     certification of the licensed beds; and]
323          [(b) based on the total number of licenses for Medicaid beds transferred to the nursing
324     care facility at the time of the request for Medicaid certification.]
325          [(5)] (4) (a) When the division receives notice of a transfer of a license for a Medicaid
326     bed under Subsection (2)(a)(iii)(A), the [division] department shall reduce the number of
327     licenses for Medicaid beds at the transferring nursing care facility:
328          (i) equal to the number of licenses transferred; and
329          (ii) effective on the date of the transfer as reported under Subsection (2)(a)(iii)(B).
330          (b) For purposes of Section 26-18-502, the division shall approve Medicaid
331     certification for the receiving entity:
332          (i) in accordance with the formula established in Subsection (3)(c); and
333          (ii) if:
334          (A) the nursing care facility seeks Medicaid certification for the transferred licenses
335     within the time limit required by Subsection (3)(f); and
336          (B) the nursing care facility program meets other requirements for Medicaid
337     certification under Subsection (3)(e).
338          (c) A license for a Medicaid bed may not be approved for Medicaid certification
339     without meeting the requirements of Sections 26-18-502 and 26-18-503 if:
340          (i) the license for a Medicaid bed is transferred under this section but the receiving
341     entity does not obtain Medicaid certification for the licensed bed within the time required by
342     Subsection (3)(f); or
343          (ii) the license for a Medicaid bed is transferred under this section but the license is no
344     longer eligible for Medicaid certification as a result of the conversion factor established in
345     Subsection (3)(c).
346          Section 5. Section 26-21-23 is amended to read:
347          26-21-23. Licensing of a new nursing care facility -- Approval for a licensed bed
348     in an existing nursing care facility -- Fine for excess Medicare inpatient revenue.
349          [(1) Notwithstanding the provisions of Section 26-21-2, for purposes of this section
350     "nursing]
351          (1) Notwithstanding Section 26-21-2, as used in this section:
352          (a) "Medicaid" means the Medicaid program, as that term is defined in Section
353     26-18-2.
354          (b) "Medicaid certification" means the same as that term is defined in Section
355     26-18-501.
356          (c) "Nursing care facility" and "small health care facility":
357          [(a)] (i) mean the following facilities licensed by the department under this chapter:
358          [(i)] (A) a skilled nursing [homes] facility;
359          [(ii)] (B) an intermediate care [facilities] facility; or
360          [(iii)] (C) a small health care [facilities] facility with four to 16 beds functioning as a
361     skilled nursing [home] facility; and
362          [(b) does] (ii) do not mean:
363          [(i)] (A) an intermediate care facility for the [mentally retarded] intellectually disabled;
364          [(ii)] (B) a critical access hospital that meets the criteria of 42 U.S.C. 1395i-4(c)(2)
365     (1998);
366          [(iii)] (C) a small health care facility that is hospital based; or
367          [(iv)] (D) a small health care facility other than a skilled nursing [home] care facility
368     with no more than 16 beds [or less].
369          (d) "Rural county" means the same as that term is defined in Section 26-18-501.
370          (2) Except as provided in Subsection [(5)] (6), a new nursing care facility shall be
371     approved for a health facility license only if [the applicant proves to the division that]:
372          (a) [the facility will be Medicaid certified] under the provisions of Section 26-18-503
373     the facility's nursing care facility program has received Medicaid certification or will receive
374     Medicaid certification for each bed in the facility;
375          [(b) the facility will have at least 100 beds; or]
376          [(c) (i) the facility's projected Medicare inpatient revenues do not exceed 49% of the
377     facility's revenues;]
378          [(ii) the facility has identified projected non-Medicare inpatient revenue sources; and]
379          [(iii) the non-Medicare inpatient revenue sources identified in this Subsection
380     (2)(c)(iii) will constitute at least 51% of the revenues as demonstrated through an
381     independently certified feasibility study submitted and paid for by the facility and provided to
382     the division.]
383          (b) the facility's nursing care facility program has received or will receive approval for
384     Medicaid certification under Subsection 26-18-503(5), if the facility is located in a rural
385     county; or
386          (c) (i) the applicant submits to the department the information described in Subsection
387     (3); and
388          (ii) based on that information, and in accordance with Subsection (4), the department
389     determines that approval of the license best meets the needs of the current and future patients
390     of nursing care facilities within the area impacted by the new facility.
391          (3) A new nursing care facility seeking licensure under Subsection (2) shall submit to
392     the department the following information:
393          (a) proof of the following as reasonable evidence that bed capacity provided by nursing
394     care facilities within the county or group of counties that would be impacted by the facility is
395     insufficient:
396          (i) nursing care facility occupancy within the county or group of counties:
397          (A) has been at least 75% during each of the past two years for all existing facilities
398     combined; and
399          (B) is projected to be at least 75% for all nursing care facilities combined that have
400     been approved for licensure but are not yet operational;
401          (ii) there is no other nursing care facility within a 35-mile radius of the new nursing
402     care facility seeking licensure under Subsection (2); and
403          (b) a feasibility study that:
404          (i) shows the facility's annual Medicare inpatient revenue, including Medicare
405     Advantage revenue, will not exceed 49% of the facility's annual total revenue during each of
406     the first three years of operation;
407          (ii) shows the facility will be financially viable if the annual occupancy rate is at least
408     88%;
409          (iii) shows the facility will be able to achieve financial viability;
410          (iv) shows the facility will not:
411          (A) have an adverse impact on existing or proposed nursing care facilities within the
412     county or group of counties that would be impacted by the facility; or
413          (B) be within a three-mile radius of an existing nursing care facility or a new nursing
414     care facility that has been approved for licensure but is not yet operational;
415          (v) is based on reasonable and verifiable demographic and economic assumptions;
416          (vi) is based on data consistent with department or other publicly available data; and
417          (vii) is based on existing sources of revenue.
418          (4) When determining under Subsection (2)(c) whether approval of a license for a new
419     nursing care facility best meets the needs of the current and future patients of nursing care
420     facilities within the area impacted by the new facility, the department shall consider:
421          (a) whether the county or group of counties that would be impacted by the facility is
422     underserved by specialized or unique services that would be provided by the facility; and
423          (b) how additional bed capacity should be added to the long-term care delivery system
424     to best meet the needs of current and future nursing care facility patients within the impacted
425     area.
426          [(3)] (5) The division may [not] approve the addition of a licensed [beds] bed in an
427     existing nursing care facility [unless the nursing care facility satisfies the criteria established in
428     Subsection (2).] only if:
429          (a) each time the facility seeks approval for the addition of a licensed bed, the facility
430     satisfies each requirement for licensure of a new nursing care facility in Subsections (2)(c), (3),
431     and (4); or
432          (b) the bed has been approved for Medicaid certification under Section 26-18-503 or
433     26-18-505.
434          [(4) The department may make rules to administer and enforce this part in accordance
435     with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.]
436          [(5) The provisions of Subsection (2) do]
437          (6) Subsection (2) does not apply to a nursing care facility that:
438          (a) has[:], by the effective date of this act, submitted to the department schematic
439     drawings, and paid applicable fees, for a particular site or a site within a three-mile radius of
440     that site;
441          (b) before July 1, 2016:
442          [(a)] (i) filed an application with the department for licensure under this section and
443     paid all [applicable] related fees due to the department [on or before February 28, 2007]; and
444          [(b)] (ii) submitted to the department [the working drawings] architectural plans and
445     specifications, as defined by the department by administrative rule, [on or before July 1, 2008.]
446     for the facility;
447          (c) applies for a license within three years of closing for renovation;
448          (d) replaces a nursing care facility that:
449          (i) closed within the past three years; or
450          (ii) is located within five miles of the facility;
451          (e) is undergoing a change of ownership, even if a government entity designates the
452     facility as a new nursing care facility; or
453          (f) is a state-owned veterans home, regardless of who operates the home.
454          (7) (a) For each year the annual Medicare inpatient revenue, including Medicare
455     Advantage revenue, of a nursing care facility approved for a health facility license under
456     Subsection (2)(c) exceeds 49% of the facility's total revenue for the year, the facility shall be
457     subject to a fine of $50,000, payable to the department.
458          (b) A nursing care facility approved for a health facility license under Subsection (2)(c)
459     shall submit to the department the information necessary for the department to annually
460     determine whether the facility is subject to the fine in Subsection (7)(a).
461          (c) The department:
462          (i) shall make rules, in accordance with Title 63G, Chapter 3, Utah Administrative
463     Rulemaking Act, specifying the information a nursing care facility shall submit to the
464     department under Subsection (7)(b);
465          (ii) shall annually determine whether a facility is subject to the fine in Subsection
466     (7)(a);
467          (iii) may take one or more of the actions in Section 26-21-11 or 26-23-6 against a
468     facility for nonpayment of a fine due under Subsection (7)(a); and
469          (iv) shall deposit fines paid to the department under Subsection (7)(a) into the Nursing
470     Care Facilities Account, created by Section 26-35a-106.
471          Section 6. Section 26-35a-106 is amended to read:
472          26-35a-106. Restricted account -- Creation -- Deposits -- Uses.
473          (1) (a) There is created a restricted account in the General Fund known as the "Nursing
474     Care Facilities Account" consisting of:
475          (i) proceeds from the assessment imposed by Section 26-35a-104 which shall be
476     deposited in the restricted account to be used for the purpose described in Subsection (1)(b);
477          (ii) fines paid by nursing care facilities for excessive Medicare inpatient revenue under
478     Section 26-18-506;
479          [(ii)] (iii) money appropriated or otherwise made available by the Legislature; and
480          [(iii)] (iv) any interest earned on the account.
481          (b) (i) Money in the account shall only be used:
482          (A) to the extent authorized by federal law, to obtain federal financial participation in
483     the Medicaid program;
484          (B) to provide the increased level of hospice reimbursement resulting from the nursing
485     care facilities assessment imposed under Section 26-35a-104;
486          (C) for the Medicaid program to make quality incentive payments to nursing care
487     facilities , subject to approval of a Medicaid state plan amendment to do so by the Centers for
488     Medicare and Medicaid Services within the United States Department of Health and Human
489     Services ; and
490          [(C)] (D) in the manner described in Subsection (1)(b)(ii).
491          (ii) The money appropriated from the restricted account to the department:
492          (A) shall be used only to increase the rates paid prior to [the effective date of this act]
493     July 1, 2004, to nursing care facilities for providing services pursuant to the Medicaid program
494     and for administrative expenses as described in Subsection (1)(b)(ii)(C);
495          (B) may not be used to replace existing state expenditures paid to nursing care facilities
496     for providing services pursuant to the Medicaid program, except for increased costs due to
497     hospice reimbursement under Subsection (1)(b)(i)(B); and
498          (C) may be used for administrative expenses, if the administrative expenses for the
499     fiscal year do not exceed 3% of the money deposited into the restricted account during the
500     fiscal year.
501          (2) Money shall be appropriated from the restricted account to the department for the
502     purposes described in Subsection (1)(b) in accordance with Title 63J, Chapter 1, Budgetary
503     Procedures Act.
504          Section 7. Effective date.
505          If approved by two-thirds of all the members elected to each house, this bill takes effect
506     upon approval by the governor, or the day following the constitutional time limit of Utah
507     Constitution, Article VII, Section 8, without the governor's signature, or in the case of a veto,
508     the date of veto override.