§2742. Case mix reimbursement

            A. The Louisiana Department of Health shall establish a case mix reimbursement methodology for nursing homes.

            B. No later than October 1, 2010, the department shall promulgate rules and regulations in accordance with the Administrative Procedure Act to provide for a case mix reimbursement system. The rules and regulations shall include, at a minimum, the following:

            (1) A payment commensurate with the resource requirements of patients through the use of an acuity-based system such as Resource Utilization Groups III (RUGs III) or an acuity-based system with nursing resource predictability comparable to RUGs. The payment and resource requirements shall be adjusted quarterly based on the case mix score for all patients of the nursing facility. Individual nursing facility rates shall be adjusted quarterly based on the overall case mix. The direct care costs, as determined in this Section, shall be re-established when the rates are re-based in accordance with the provisions of this Section.

            (2) A payment for direct care costs at a level to achieve quality outcomes for patients and which is no less than one hundred twelve and four-tenths percent of the median of direct care costs for all facilities. The system establishes a spending floor of no more than ninety-four percent of the median direct care costs. If the department implements, through properly promulgated rules, reductions decreasing the average rate established under this system before any inflationary adjustments, the direct care spending floor shall be decreased in accordance with Subsection C of this Section.

            (3) Incentives to encourage the admission and care of heavy-care patients.

            (4) A rate for administrative and operating costs that is no less than one hundred and seven and one-half percent of the median administrative and operating costs of all facilities that provides facilities the resources to:

            (a) Recruit qualified employees.

            (b) Expand training and education.

            (c) Implement competency standards.

            (d) Develop the organizational capacity to implement quality management systems and practice guidelines.

            (5) A rental system for payment of property costs that:

            (a) Differentiates payment based upon the size, age, and condition of the facility. The system establishes a minimum of three hundred square feet per licensed bed and a maximum of four hundred and fifty square feet per licensed bed provided that the maximum square feet per licensed bed may be waived for consideration of private rooms.

            (b) Provides the capital for renovation, improvement, and replacement of facilities by establishing a minimum rate of return of nine and one-quarter percent, a maximum annual depreciation rate of one and one-quarter percent and a maximum depreciable life of thirty years. The system will utilize current construction costs, indexed for inflation, adjusted by the facility's age and renovations and improvements to determine the facility's value.

            (c) Encourages investment in physical plant upgrades and renovations by reducing the effective age, on a quarterly basis, of the facility for physical plant upgrades and renovations placed in service during the quarter. The reduction in the effective age will result in the facility value increasing by the cost of the renovation.

            (d) Encourages long-term ownership by limiting the minimum occupancy penalty to no more than eighty-five percent of the licensed bed capacity and by reimbursing on the basis of the facility value as opposed to reimbursing on accounting cost.

            (6) A rate pass-through for property taxes, property insurance, and provider fees.

            (7) Utilization of the most current cost reports which shall be either audited or given an estimated audit adjustment factor based on historical audits for rate rebasing, at a minimum, biennially.

            (8) Utilization of inflation factors that are predictive of actual nursing home cost increases during the rate year. At a minimum, the inflation factor to be applied shall be the Skilled Nursing Home without Capital Market Basket Index, published by Data Resources Incorporated, or a comparable index, if this index ceases to be published. The inflation factors shall be applied to the costs from the mid-point of the cost report year and projected to the mid-point of the rate year.

            (9) A method for providing interim adjustments to the rates for unanticipated changes in costs.

            (10) A provision for cost reports that shall be prepared in accordance with the cost reporting instructions adopted by the Medicare program using the definition of allowable and non-allowable costs contained in the Medicare/Medicaid provider reimbursement manual, with the exception that the department shall determine due dates and extensions.

            (11) Rebasing of rates shall occur, at a minimum, biennially.

            C. In the event the Louisiana Department of Health is required to implement reductions in the nursing home program as a result of a budget shortfall, a budget reduction category shall be created. This category shall reduce the statewide average Medicaid rate, without changing the parameters established in this Section, by reducing the reimbursement rate paid to each nursing home using an equal amount per patient per day. The direct care spending floor shall be decreased one percentage point for each thirty-cent reduction in the average Medicaid rate computed under this system not to be reduced to below ninety percent of the median.

            D. Repealed by Acts 2018, No. 612, §22, eff. July 1, 2020.

            Acts 2001, No. 694, §1, eff. July 1, 2001; Acts 2006, No. 848, §1; Acts 2009, No. 244, §1, eff. July 1, 2009; Acts 2010, No. 150, §1, eff. July 1, 2011; Acts 2010, No. 891, §1; Acts 2018, No. 612, §22, eff. July 1, 2020; Acts 2019, No. 404, §1, eff. July 1, 2020; Acts 2022, No. 271, §5.