102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB3116
 
Introduced 1/11/2022, by Sen. Linda Holmes, Michael E. Hastings and David Koehler
 
SYNOPSIS AS INTRODUCED:



305 ILCS 5/5-5.2a new

 Amends the Medical Assistance Article of the Illinois Public Aid Code. Declares that all changes to the existing nursing facility direct care reimbursement rate methodologies and to the bed assessment and collection procedures must be approached with caution, executed deliberately, and held to the highest of standards in order to protect nursing facility residents from disruption in care, protect workers from lost wages and jobs, and protect providers from the increased instability within the industry. Provides that a Nursing Facility Oversight Committee (Committee) shall be named by the 4 legislative leaders to oversee, assess, and provide direction to the Department of Healthcare and Family Services as it relates to long term care services. Contains provisions on the Committee's composition, meetings, proxy voting, and other matters. Requires the Department to seek the advice and consent of the Committee prior to filing emergency or permanent administrative rules with the Secretary of State or submitting Medicaid State Plan amendments and all correspondence to the Centers for Medicare and Medicaid Services. Requires the Department to prepare transition plans for the redesign of the direct care reimbursement rate methodologies and the assessment tax schedule and collection proceedings. Contains provisions concerning advanced notice to nursing facilities of all payment, award, and rate changes; a quarterly direct care per diem reimbursement rate for each nursing facility; direct care reimbursement rate components subject to redesign; establishment of a single quarterly non-Medicare occupied bed varied tax assessment; State Plan amendments to permit expedited implementation of the redesigned bed assessment; compliance requirements for managed care organizations; penalties for non-compliance; and other matters. Effective immediately.



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A BILL FOR
 


SB3116LRB102 23754 KTG 32945 b



1 AN ACT concerning public aid.


2 Be it enacted by the People of the State of Illinois,

3represented in the General Assembly:



4 Section 5. The Illinois Public Aid Code is amended by 
5adding Section 5-5.2a as follows:

6 (305 ILCS 5/5-5.2a new)
7 Sec. 5-5.2a. Nursing facility direct care reimbursement 
8rates and bed tax methodologies.
9 (a) This Section may be referred to as the Nursing 
10Facilities Direct Care Reimbursement Rate and Bed Tax Redesign 
11of 2022 Act.
12 The General Assembly declares that the following are in 
13the best interest of the State:
14  (1) All changes to the existing nursing facility 
15 direct care reimbursement rate methodologies and to the 
16 bed assessment and collection procedures must be 
17 approached with caution, executed deliberately, and held 
18 to the highest of standards to protect nursing facility 
19 residents from disruption in care, protect workers from 
20 lost wages and jobs, and protect providers from the 
21 increased instability within the industry.
22  (2) All direct care reimbursements shall be paid on a 
23 per diem basis, except lump sum awards for staff years of 
 
 
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1 service and specialized training. Nothing shall preclude 
2 the State from providing additional funding to nursing 
3 facilities for direct care in a form other than a per diem 
4 rate in an emergency.
5  (3) The Department of Healthcare and Family Services 
6 shall represent the interests of the State and the managed 
7 care organizations in the redesign of the nursing facility 
8 direct care reimbursement rates and bed tax methodologies; 
9 as such, the managed care organizations shall be bound by 
10 the negotiated agreements of the Department.
11  (4) Managed care organizations under contract with the 
12 State must pay to each individual nursing facility no less 
13 than the Medicaid fee-for-service reimbursement rate 
14 established by the Department in accordance with this 
15 Section, and all subsequent modifications to the Medicaid 
16 reimbursement system, and in effect at the time the 
17 service is provided.
18  (5) Managed care organizations are expressly 
19 prohibited, at any time and for any reason, from offering, 
20 negotiating, or entering into contracts with a nursing 
21 facility for a level of compensation less than the 
22 Medicaid fee-for-service rate in effect at the time the 
23 service is rendered.
24 (b) Nursing Facility Oversight Committee.
25  (1) A Nursing Facility Oversight Committee shall be 
26 named by the 4 legislative leaders to oversee, assess, and 
 
 
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1 provide direction to the Department as it relates to long 
2 term care services, including, but not limited to, 
3 Medicaid reimbursement, bed assessments, managed long term 
4 care, and Medicaid and long term care eligibility. The 
5 Committee shall be expressly charged with overseeing, 
6 assessing, and providing leadership to the Department on 
7 the execution of this Section and with the ongoing 
8 evaluation of the effectiveness of any and all provisions.
9  (2) The Committee shall be comprised of 12 voting 
10 members with each legislative leader appointing 2 
11 legislative members and a member of the general public 
12 recommended by membership-based nursing home trade 
13 associations. Each legislative leader shall identify one 
14 legislative member to serve as a co-chair. Members shall 
15 serve until a replacement is named. Citizen members shall 
16 serve without compensation.
17  (3) The co-chairs shall call the first meeting within 
18 30 days after the effective date of this amendatory Act of 
19 the 102nd General Assembly, but no later than 10 business 
20 days prior to the Department's initial submission of State 
21 Plan amendments in accordance with this Section.
22  (4) The Department shall provide copies of all 
23 documents at least 10 days in advance of a meeting at which 
24 the Department is asking the Committee to give comment or 
25 approval.
26  (5) The Committee shall meet at least monthly during 
 
 
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1 the implementation of redesigns, quarterly thereafter, and 
2 more frequently at the call of the co-chairs.
3  (6) Voting members unable to attend a meeting may 
4 submit comments in writing prior to the meeting. Voting 
5 members may attend and vote in person, by phone or by 
6 teleconference, or may name a proxy to attend and vote in 
7 their place. Proxies shall be named in writing, which may 
8 be submitted by the appointee or by the legislative leader 
9 who appointed them, and delivered to each of the 
10 co-chairs.
11  (7) The Committee shall hold at least 2 open forums, 
12 one in Chicago and one in Springfield, to accept comments 
13 on implementation of this Section, to host the Department 
14 to respond to questions concerning its implementation 
15 plans, and to encourage members of the public, family 
16 members of nursing home residents, and licensed operators 
17 to share their issues and concerns.
18  (8) Prior to filing emergency or permanent 
19 administrative rules with the Secretary of State or 
20 submitting Medicaid State Plan amendments and all 
21 substantive correspondence with the Centers for Medicare 
22 and Medicaid Services, the Department shall seek the 
23 advice and consent of the Committee. The Department shall 
24 provide the Committee members with no fewer than 10 
25 business days to review materials and seek additional 
26 information prior to requesting the members' advice and 
 
 
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1 consent. The Department shall designate a person to answer 
2 questions and accept comments in advance of the meeting, 
3 at which time a vote shall occur.
4 (c) Direct care rate methodologies and assessment 
5schedules and collection procedures.
6  (1) As used in this Section:
7  "Direct care" means the direct care component of the 
8 Medicaid reimbursement rate paid to nursing facilities.
9  "Direct care reimbursement" means compensation for 
10 direct care paid by the Department or a managed care 
11 company to a Medicaid certified nursing facility.
12  "Nursing facility" means a nursing home that is 
13 licensed under the Nursing Home Care Act.
14  "Per diem add-ons" means additional direct care 
15 compensation paid to a nursing facility meeting the 
16 standards or benchmarks as specified in this Section as 
17 part of its daily Medicaid rate.
18  "PDPM" means the Patient Driven Payment Model 
19 developed by the federal Centers for Medicare and Medicaid 
20 Services.
21  "RUG" means the Resource Utilization Group system for 
22 grouping a nursing facility's residents according to their 
23 clinical and functional status identified in Minimum Data 
24 Set data supplied by a facility.
25  (2) The Department shall prepare a transition plan for 
26 the redesign of the direct care reimbursement rate 
 
 
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1 methodologies and a transition plan for the redesign of 
2 assessment tax schedule and collection procedures, which 
3 shall include projected implementation dates. The plan 
4 shall be submitted to the Nursing Facility Oversight 
5 Committee for its review, comment, and approval; posted on 
6 the Department's website; and provided to the public by 
7 the Department upon request.
8  (3) Individual nursing facilities shall be notified by 
9 the Department of any and all changes prior to their 
10 taking effect that impact payments, awards, or rates paid 
11 to or paid by individual nursing facilities, including, 
12 but not be limited to, direct care reimbursement rates 
13 methodologies, taxes and assessments, rate add-ons and 
14 adjustments, levels of staffing compliance, directed 
15 payments, incentive payments, lump sum awards, case mix 
16 indices, census, and bed days.
17  (4) No less than 60 days' notice shall be given by the 
18 Department to nursing facilities before any modifications 
19 to any portion of the reimbursement methodologies and bed 
20 assessment tax schedule and collection procedures become 
21 effective.
22  (5) No less than 30 days' notice shall be given by the 
23 Department to nursing facilities before any rebasing, rate 
24 adjustments, bed tax adjustment, or Medicaid bed days 
25 become effective.
26  (6) Notices shall include sufficient information to 
 
 
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1 permit the nursing facilities to challenge the accuracy of 
2 the data, the validity of the formulas used, or the 
3 specific calculations. The notice shall include 
4 instructions on how to file an appeal.
5 (d) Direct care reimbursement rate redesign.
6  (1) Direct care reimbursement methodologies in place 
7 on the effective date of this amendatory Act of the 102nd 
8 General Assembly and identified for phase-out or 
9 modification shall remain in place in whole or in part 
10 until the replacement methodologies are fully operational 
11 to ensure continuity and to provide a safety net necessary 
12 to achieve the General Assembly's declaration.
13  (2) The Department shall establish a direct care per 
14 diem reimbursement rate on a quarterly basis for each 
15 nursing facility. The direct care per diem reimbursement 
16 rate shall be inclusive of all compensation paid by the 
17 State for the direct care whether determined by formula, 
18 add-ons or adjustments, awards, or any other type of 
19 compensation. Only funding for years of service and 
20 specialized training shall be paid to nursing facilities 
21 in a lump sum. Nothing precludes the State from providing 
22 additional funding to nursing facilities for direct care 
23 in a form other than a per diem rate in an emergency.
24  (3) Authorization for the direct care reimbursement 
25 rate redesign provided in this Section shall be dependent 
26 on securing an additional $60,000,000 in General Revenue 
 
 
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1 funding for State Fiscal Year 2023. Failure of the General 
2 Assembly to appropriate the additional funds shall result 
3 in the repeal of the authorization, require modification 
4 of the redesign, and necessitate reauthorization by the 
5 General Assembly. The Department shall work with the 
6 Nursing Facility Oversight Committee and membership-based 
7 nursing home trade associations to develop a redesign 
8 consistent with the available funding.
9  (4) Direct care reimbursement rate components subject 
10 to the redesign shall include all of the following:
11   (A) A case mix protocol.
12   (B) A regional wage adjuster per diem add-on.
13   (C) A direct care base per diem rate.
14   (D) A staffing per diem add-on.
15   (E) A special care needs per diem add-on.
16   (F) A Medicaid access per diem add-on.
17   (G) A quality incentive performance measure per 
18 diem add-on.
19   (H) Quality incentive lump sum awards.
20 (e) Case mix protocol. The current RUGs-based case mix 
21protocol shall remain operational until replaced by a fully 
22operational PDPM-based case mix protocol, which shall be 
23resident-centered, facility-specific, and cost-based. Costs 
24shall be annually rebased and the case mix index quarterly 
25updated.
26  (1) PDPM nursing case mix indices shall be applied to 
 
 
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1 all resident classes at no less than 79% of the Centers for 
2 Medicare and Medicaid Services' PDPM unadjusted case mix 
3 values utilizing an index maximization approach. No 
4 resident class shall be held at the level applicable to 
5 the RUG-IV model in effect prior to January 1, 2022.
6  (2) The per diem rate shall be based on 
7 Medicaid-qualified residents on record as of 30 days prior 
8 to the beginning of the rate period in the Department's 
9 Medicaid Management Information System, or its successor, 
10 as present in the nursing facility on the last day of the 
11 second quarter preceding the rate period based upon the 
12 Assessment Reference Date of the Minimum Data Set (MDS). 
13 Case mix indices and PDPM unadjusted case mix values used 
14 shall be for the same period of time.
15  (3) A 24-month hold harmless period shall begin with 
16 the first month the PDPM is fully operational. During the 
17 hold harmless period, the Department shall pay each 
18 nursing facility based on its PDPM-based score or its 
19 RUGS-based score, whichever is greater.
20 (f) Regional wage adjustor. The regional wage adjustors, 
21as provided in paragraph (3) of subsection (d) of Section 
225-5.2, in effect January 1, 2022 shall remain in effect.
23 (g) Direct care base per diem rate. $5 shall be added to 
24the base per diem rate produced by the cost-based formula 
25contained in paragraph (5) of subsection (d) of Section 5-5.2 
26in effect on January 1, 2022.
 
 
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1 (h) Variable staff per diem add-on.
2  (1) The direct care staffing add-on shall be replaced 
3 by the variable staffing per diem add-on, which shall be 
4 based on compliance with the Centers for Medicare and 
5 Medicaid Services' RUGs-based staff time measurement 
6 STRIVE study and rebased quarterly using the Payroll Based 
7 Journal report for the same period of time adjusted for 
8 psychiatric services rehabilitation directors, 
9 psychiatric services rehab coordinators, and psychiatric 
10 services rehab aides employed by facilities described in 
11 77 Ill. Adm. Code 300.Subpart S and for acuity. Until the 
12 Centers for Medicare and Medicaid Services releases a PDPM 
13 staff time measurement study and its use for determining 
14 staffing compliance is approved by the General Assembly, 
15 the Department shall maintain the RUGs-based case mix 
16 system for the purpose of determining compliance with the 
17 STRIVE-based staffing requirements.
18  (2) No nursing facility's variable staffing per diem 
19 add-on shall be reduced by more than 5% in 2 consecutive 
20 quarters.
21  (3) Variable staffing per diem add-ons shall be 
22 adjusted for each whole percentage point:
23   (A) $6 for under 70% compliance.
24   (B) $9 for 70% compliance and adjusted 
25 incrementally for each whole percentage point up to 
26 and including 79% compliance.
 
 
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1   (C) $14.88 for 80% compliance and adjusted 
2 incrementally for each whole percentage point up to 
3 and including 91% compliance.
4   (D) $23.80 for 92% compliance and adjusted 
5 incrementally for each whole percentage point up to 
6 and including 99% compliance.
7   (E) $29.75 for 100% compliance and adjusted 
8 incrementally for each whole percentage point up to 
9 and including 109% compliance.
10   (F) $35.70 for 110% compliance and adjusted 
11 incrementally for each whole percentage point up to 
12 and including 124% compliance.
13   (G) $38.68 for 125% and above compliance.
14 (i) Special care needs per diem add-on. A special care 
15needs per diem add-on shall be applicable for the following 
16residents:
17  (1) Alzheimer and other dementia diseases add-on of 
18 $0.89 for residents scoring in I4200 or I4800 on the MDS.
19  (2) Mental health add-on of $2.67 for residents who 
20 scores either a "1" or "2" in any items S1200A through 
21 S1200I and also scores in a RUGs group PA1, PA2, BA1, or 
22 BA2.
23 (j) Medicaid access per diem add-on. Nursing facilities 
24with annual Medicaid bed days between 5,001 to 55,000, which 
25comprise at least 70% of all annual occupied bed days for the 
26same period of time, shall receive a $6 Medicaid access per 
 
 
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1diem add-on, which shall be rebased quarterly.
2 (k) Quality incentive per diem add-ons.
3  (1) Performance measure per diem add-on. Nursing 
4 facilities shall receive a performance measure per diem 
5 add-on, which shall be adjusted quarterly based on the 
6 Centers for Medicare and Medicaid Services actual quality 
7 star ratings for long term stays contained in the 
8 Five-Star Quality Ratings System for the quarter in which 
9 the per diem is calculated based on the add-on schedule 
10 below:
 
11Five-Star Long Stay Performance Measure 
12Quality Rating Per Diem Add-on 
135 Stars $9.66 
144 Stars $6.90 
153 Stars $4.14 
162 Stars $2.07 
171 Star $0 
18  In the first year, the Department shall at the end of 
19 the third quarter proportionately adjust the add-on 
20 schedule for fourth quarter awards to ensure that no less 
21 than $70,000,000 and no more than $70,000,000 is awarded 
22 in the aggregate for the entire year. The Department shall 
23 recalibrate the table above to reflect the actual dollar 
24 values for an entire 12-month period and request the 
25 assistance of the Nursing Facility Oversight Committee to 
26 correct the table in statute.
 
 
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1  In the second and subsequent years, the Department 
2 shall apply the per diem add-on schedule in statute, and 
3 no change to the table shall be requested or made that 
4 would limit the growth of the performance measure per diem 
5 add-on in the aggregate.
6  (2) Years of services and specialized training lump 
7 sum awards.
8   (A) Years of service lump sum award. Nursing 
9 facilities shall receive quarterly lump sum awards 
10 based on staff years of service data contained in the 
11 Payroll Based Journal. The incentive calculation shall 
12 be based on hours of service and shall range from $1.50 
13 per hour of service for workers with the equivalent of 
14 more than one year and less than 2 years of service to 
15 $6.50 per hour of service for workers with the 
16 equivalent of 6 or more years of service.
17   (B) Specialized training lump sum award. The 
18 Department shall assist nursing facilities in 
19 providing specialized training for qualified staff. 
20 Cost sharing awards shall be based on annual reports 
21 filed with the Department detailing specific costs and 
22 employees participating in the training program and 
23 the facility's percentage of Medicaid bed days. In the 
24 first year the State's share shall be no greater than 
25 50% of the cost of the training attributed to Medicaid 
26 bed days with the State's share growing to 80% over 5 
 
 
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1 years.
2 (l) Bed assessment redesign. The existing non-Medicare 
3occupied bed flat tax assessment and the licensed bed fee 
4shall remain operational until a replacement is approved by 
5the Centers for Medicare and Medicaid Services and is fully 
6operational. Both levies shall be replaced by a single 
7quarterly non-Medicare occupied bed varied tax assessment. The 
8tax schedule shall be based on Medicaid bed days and levied 
9against all non-Medicare occupied beds. One-fourth of the 
10annual Medicaid bed days in the table below shall be 
11attributed to each quarter for the purposes of determining an 
12individual facility's tax for a specific quarter. The tax 
13schedule as it appears below shall remain in effect until it is 
14modified by the General Assembly.
15Annual Medicaid Bed Days Tax 
16No certified Medicaid beds $7 
171-5,000 $10.67 
185,001-15,000 $19.20 
1915,001-35,000 $22.40 
2035,001-55,000 $19.20 
2155,001-65,000 $13.86 
22greater than 65,000 $10.67 
23  (1) To expedite collection and distribution of the 
24 enhanced revenue generated by the bed assessment redesign, 
25 the Department shall submit to the Centers for Medicare 
26 and Medicaid Services a State Plan amendment providing for 
 
 
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1 an immediate start date for the collection of the enhanced 
2 assessment and distribution using the existing direct care 
3 reimbursement methodology with a gradual phase-in of the 
4 reimbursement rate redesign.
5  (2) In the first year, it is assumed the new 
6 assessment, which shall be calculated and paid on a 
7 quarterly basis, will generate an amount approximately 
8 equal to 6% of revenues annually. All funds generated by 
9 the bed assessment redesign shall be used exclusively to 
10 increase the funding for nursing facilities in Illinois.
11  (3) Medicaid bed day calculation shall be based on 
12 Medicaid-qualified residents on record as of 30 days prior 
13 to the beginning of the assessment quarter in the 
14 Department's Medicaid Management Information System, or 
15 its successor.
16  (4) Prior to the collection of the enhanced bed 
17 assessment, the Department shall attest that all managed 
18 care companies are paying no less than the fee-for-service 
19 rate in effect when a service is rendered.
20 (m) Centers for Medicare and Medicaid Services approval. 
21The Department shall submit initial State Plan amendments to 
22the Centers for Medicare and Medicaid Services no later than 
2360 days after the effective date of this amendatory Act of the 
24102nd General Assembly. All amendments and substantive 
25correspondence shall be posted on the Department's website 
26with copies sent to the 4 legislative leaders and members of 
 
 
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1the Nursing Facility Oversight Committee. The State Plan 
2amendment shall permit an expedited implementation of the 
3enhanced bed assessment provisions distributed initially 
4through the existing reimbursement system with distribution 
5shifting to the redesigned direct care methodologies when the 
6redesigned methodologies are fully operational. Failure of the 
7Centers for Medicare and Medicaid Services to approve any 
8portion of the reimbursement rate redesigns shall constitute a 
9withdrawal of the General Assembly authorization and 
10necessitate reauthorization prior to moving forward with 
11implementation.
12 (n) Managed care organization compliance.
13  (1) The Department shall be responsible for and 
14 actively oversee managed care organization compliance and 
15 must attest to managed care organization compliance with 
16 all provisions of this Section prior to implementing the 
17 enhanced bed assessment. The Department shall perform 
18 quarterly audits of each managed care organization's 
19 business practices to ensure they align with the 
20 provisions of this Section. The Department shall 
21 immediately modify all contractual arrangements with each 
22 of the managed care organizations in conflict with the 
23 provisions of this Section. Failure of a managed care 
24 organization to agree to all necessary amendments to its 
25 contract with the State shall constitute the company's 
26 notice of withdrawal from the medical assistance program.
 
 
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1  (2) A sanction of $20,000 per incident shall be levied 
2 against a managed care organization for failure to comply, 
3 which shall double for each subsequent incident of the 
4 same or similar violation. All fines shall be deposited 
5 into the Long-Term Care Provider Fund. Use of the funds 
6 shall be limited to expenditures that qualify for federal 
7 matching funds, promote quality of resident care, and have 
8 the approval of the Nursing Facility Oversight Committee. 
9 Legislative approval, where needed, shall be requested 
10 with approval of the Nursing Facility Oversight Committee.
11  (3) A managed care organization's participation in the 
12 medical assistance program shall be terminated for failure 
13 to make all necessary changes to business practices in 
14 conflict with this Section.


15 Section 99. Effective date. This Act takes effect upon 
16becoming law.