GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1993

S	1 

SENATE BILL 213

Short Title:  GPAC/Medicaid Nursing Home Payment.	(Public)
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Sponsors: Senators Martin of Guilford; and Blackmon.
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Referred to:  Government Performance Audit.
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February 17, 1993

A BILL TO BE ENTITLED
AN ACT TO IMPLEMENT A RECOMMENDATION OF THE GOVERNMENT PERFORMANCE AUDIT COMMITTEE TO IMPLEMENT A PROSPECTIVE PEER-GROUPED, CASE MIX-BASED MEDICAID PAYMENT METHODOLOGY FOR NURSING HOMES.
The General Assembly of North Carolina enacts:
Section 1.  The General Assembly finds that peer grouping identifies facilities that can be expected to incur similar costs based on certain statistically valid variables such as geographic location, bed size, and occupancy levels.  A peer group ceiling rate, generally based on a percentile of costs or on the median cost, establishes the standard for efficient and economic facilities.  The General Assembly finds that peer grouping will achieve savings for North Carolina because facilities with costs above the ceiling will have payments capped at the ceiling level.  To encourage facilities with costs below the ceiling to maintain these costs, an efficiency incentive can be paid.
The General Assembly further finds that separate peer group ceilings should be established for each cost component.  North Carolina's current policy to allow more generous reimbursement of direct patient care costs to ensure quality of care should continue, but costs such as housekeeping and laundry and linen, which do not reflect the costs of hands-on patient care, should be moved into another component with more stringent ceilings.
Sec. 2.  Effective July 1, 1994, the Division of Medical Assistance, Department of Human Resources, shall implement a prospective peer-grouped, case mix-based Medicaid reimbursement methodology for nursing homes, not only to achieve savings but also to promote access for patients requiring a higher level of care, because this reimbursement is more closely tied to patient needs than the one currently employed.  This methodology shall address the findings made in Section 1 of this act and, in addition, shall:
(1)	Update rates each year by an appropriate inflation factor, in order to allow greater predictability in estimating nursing facility expenditures;
(2)	Adjust payments by the case mix, to reflect the varying levels of resources required to treat patients; and
(3)	Incorporate the input of nursing facilities in the development of the methodology, to promote greater understanding of its goals and objectives.
Sec. 3.  There is appropriated from the General Fund to the Division of Medical Assistance, Department of Human Resources, the sum of one hundred eighty thousand dollars ($180,000) for the 1993-94 fiscal year in administrative costs incurred in implementing this act.
Sec. 4.  The base budget of the Division of Medical Assistance, Department of Human Resources, is reduced by nine million six hundred thousand dollars ($9,600,000) for the 1994-95 fiscal year due to the implementation of this act.
Sec. 5.  It is the intent of the General Assembly to reduce the base budget of the Division of Medical Assistance, Department of Human Resources, in subsequent fiscal years due to the implementation of this act, according to the following schedule:
Fiscal Year	  Amount
1995-96	$10,200,000
1996-97	$10,800,000
1997-98	$11,400,000
1998-99	$12,100,000
1999-00	$12,800,000
2000-01	$13,600,000
2001-02	$14,400,000.
Sec. 6.  This act becomes effective July 1, 1993.