HB-5055, As Passed Senate, October 12, 2005

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 5055

     A bill to amend 1978 PA 368, entitled

"Public health code,"

by amending section 20161 (MCL 333.20161), as amended by 2004 PA

469.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 20161. (1) The department shall assess fees and other

assessments for health facility and agency licenses and

certificates of need on an annual basis as provided in this

article. Except as otherwise provided in this article, fees and

assessments shall be paid in accordance with the following

schedule:

     (a) Freestanding surgical outpatient

facilities................................ $238.00 per facility.

     (b) Hospitals....................... $8.28 per licensed bed.

     (c) Nursing homes, county medical care

facilities, and hospital long-term care

units .................................... $2.20 per licensed bed.

     (d) Homes for the aged.............. $6.27 per licensed bed.

     (e) Clinical laboratories...........   $475.00 per laboratory.

(f) Hospice residences..............   $200.00 per license

survey; and $20.00 per

licensed bed.

     (g) Subject to subsection (13), quality

assurance assessment for  nongovernmentally

owned nursing homes and hospital long-term

care units................................ an amount resulting in

                                             not more than 6% of

                                             total industry

                                             revenues.

     (h) Subject to subsection (14), quality

assurance assessment for hospitals........ at a fixed or variable

rate that generates

                                             funds not more than the

maximum allowable under

                                             the federal matching

                                             requirements, after

                                             consideration for the

                                             amounts in subsection

                                             (14)(a) and  (j)  (i).

     (2) If a hospital requests the department to conduct a

certification survey for purposes of title XVIII or title XIX of

the social security act, the hospital shall pay a license fee

surcharge of $23.00 per bed. As used in this subsection, "title

XVIII" and "title XIX" mean those terms as defined in section

20155.

     (3) The base fee for a certificate of need is $1,500.00 for

each application. For a project requiring a projected capital

expenditure of more than $500,000.00 but less than $4,000,000.00,

an additional fee of $4,000.00 shall be added to the base fee. For

a project requiring a projected capital expenditure of

$4,000,000.00 or more, an additional fee of $7,000.00 shall be

added to the base fee. The department of community health shall use

the fees collected under this subsection only to fund the

certificate of need program. Funds remaining in the certificate of

need program at the end of the fiscal year shall not lapse to the

general fund but shall remain available to fund the certificate of

need program in subsequent years.

     (4) If licensure is for more than 1 year, the fees described

in subsection (1) are multiplied by the number of years for which

the license is issued, and the total amount of the fees shall be

collected in the year in which the license is issued.

     (5) Fees described in this section are payable to the

department at the time an application for a license, permit, or

certificate is submitted. If an application for a license, permit,

or certificate is denied or if a license, permit, or certificate is

revoked before its expiration date, the department shall not refund

fees paid to the department.

     (6) The fee for a provisional license or temporary permit is

the same as for a license. A license may be issued at the

expiration date of a temporary permit without an additional fee for

the balance of the period for which the fee was paid if the

requirements for licensure are met.

     (7) The department may charge a fee to recover the cost of

purchase or production and distribution of proficiency evaluation

samples that are supplied to clinical laboratories pursuant to

section 20521(3).

     (8) In addition to the fees imposed under subsection (1), a

clinical laboratory shall submit a fee of $25.00 to the department

for each reissuance during the licensure period of the clinical

laboratory's license.

     (9) The cost of licensure activities shall be supported by

license fees.

     (10) The application fee for a waiver under section 21564 is

$200.00 plus $40.00 per hour for the professional services and

travel expenses directly related to processing the application. The

travel expenses shall be calculated in accordance with the state

standardized travel regulations of the department of management and

budget in effect at the time of the travel.

     (11) An applicant for licensure or renewal of licensure under

part 209 shall pay the applicable fees set forth in part 209.

     (12) Except as otherwise provided in this section, the fees

and assessments collected under this section shall be deposited in

the state treasury, to the credit of the general fund.

     (13) The quality assurance assessment collected under

subsection (1)(g) and all federal matching funds attributed to that

assessment shall be used only for the following purposes and under

the following specific circumstances:

     (a) The quality assurance assessment and all federal matching

funds attributed to that assessment shall be used to finance

medicaid nursing home reimbursement payments. Only licensed nursing

homes and hospital long-term care units that are assessed the

quality assurance assessment and participate in the medicaid

program are eligible for increased per diem medicaid reimbursement

rates under this subdivision.

     (b) The quality assurance assessment shall be implemented on

May 10, 2002.

(b)  (c) The  Except as otherwise provided under subdivision

(c), beginning October 1, 2005, the quality assurance assessment is

based on the  number of licensed nursing home beds and the number

of licensed hospital long-term care unit beds in existence on July

1 of each year, shall be assessed upon implementation pursuant to

subdivision (b)  total number of patient days of care each nursing

home and hospital long-term care unit provided to nonmedicare

patients within the immediately preceding year and shall be

assessed at a uniform rate on October 1, 2005 and subsequently on

October 1 of each following year, and is payable on a quarterly

basis, the first payment due 90 days after the date the assessment

is assessed.

     (c) Within 30 days after the effective date of the amendatory

act that added this subdivision, the department shall submit an

application to the federal centers for medicare and medicaid

services to request a waiver pursuant to 42 CFR 433.68(e) to

implement this subdivision as follows:

     (i) If the waiver is approved, the quality assurance assessment

rate for a nursing home or hospital long-term care unit with less

than 40 licensed beds or with the maximum number, or more than the

maximum number, of licensed beds necessary to secure federal

approval of the application is $2.00 per nonmedicare patient day of

care provided within the immediately preceding year or a rate as

otherwise altered on the application for the waiver to obtain

federal approval. If the waiver is approved, for all other nursing

homes and long-term care units the quality assurance assessment

rate is to be calculated by dividing the total statewide maximum

allowable assessment permitted under subsection (1)(g) less the

total amount to be paid by the nursing homes and long-term care

units with less than 40 or with the maximum number, or more than

the maximum number, of licensed beds necessary to secure federal

approval of the application by the total number of nonmedicare

patient days of care provided within the immediately preceding year

by those nursing homes and long-term care units with more than 39,

but less than the maximum number of licensed beds necessary to

secure federal approval. The quality assurance assessment, as

provided under this subparagraph, shall be assessed in the first

quarter after federal approval of the waiver and shall be

subsequently assessed on October 1 of each following year, and is

payable on a quarterly basis, the first payment due 90 days after

the date the assessment is assessed.

     (ii) If the waiver is approved, continuing care retirement

centers are exempt from the quality assurance assessment if the

continuing care retirement center requires each center resident to

provide an initial life interest payment of $150,000.00, on

average, per resident to ensure payment for that resident's

residency and services and the continuing care retirement center

utilizes all of the initial life interest payment before the

resident becomes eligible for medical assistance under the state's

medicaid plan. As used in this subparagraph, "continuing care

retirement center" means a nursing care facility that provides

independent living services, assisted living services, and nursing

care and medical treatment services, in a campus-like setting that

has shared facilities or common areas, or both.

     (d) Beginning October 1, 2007, the department shall no longer

assess or collect the quality assurance assessment or apply for

federal matching funds.

     (e)  Upon implementation pursuant to subdivision (b) Beginning

May 10, 2002, the department of community health shall increase the

per diem nursing home medicaid reimbursement rates for the balance

of that year. For each subsequent year in which the quality

assurance assessment is assessed and collected, the department of

community health shall maintain the medicaid nursing home

reimbursement payment increase financed by the quality assurance

assessment.

     (f) The department of community health shall implement this

section in a manner that complies with federal requirements

necessary to assure that the quality assurance assessment qualifies

for federal matching funds.

     (g) If a nursing home or a hospital long-term care unit fails

to pay the assessment required by subsection (1)(g), the department

of community health may assess the nursing home or hospital long-

term care unit a penalty of 5% of the assessment for each month

that the assessment and penalty are not paid up to a maximum of 50%

of the assessment. The department of community health may also

refer for collection to the department of treasury past due amounts

consistent with section 13 of 1941 PA 122, MCL 205.13.

     (h) The medicaid nursing home quality assurance assessment

fund is established in the state treasury. The department of

community health shall deposit the revenue raised through the

quality assurance assessment with the state treasurer for deposit

in the medicaid nursing home quality assurance assessment fund.

     (i) The department of community health shall not implement

this subsection in a manner that conflicts with 42 USC 1396b(w).

     (j) The quality assurance assessment collected under

subsection (1)(g) shall be prorated on a quarterly basis for any

licensed beds added to or subtracted from a nursing home or

hospital long-term care unit since the immediately preceding July

1. Any adjustments in payments are due on the next quarterly

installment due date.

     (k) In each fiscal year governed by this subsection, medicaid

reimbursement rates shall not be reduced below the medicaid

reimbursement rates in effect on April 1, 2002 as a direct result

of the quality assurance assessment collected under subsection

(1)(g).

     (l) In fiscal year  2004-2005, $21,900,000.00  2005-2006,

$39,900,000.00 of the quality assurance assessment collected

pursuant to subsection (1)(g) shall be appropriated to the

department of community health to support medicaid expenditures for

long-term care services. These funds shall offset an identical

amount of general fund/general purpose revenue originally

appropriated for that purpose.

     (14) The quality assurance dedication is an earmarked

assessment collected under subsection (1)(h). That assessment and

all federal matching funds attributed to that assessment shall be

used only for the following  purposes  purpose and under the

following specific circumstances:

     (a)  Part of the quality assurance assessment shall be used to

To maintain the increased medicaid reimbursement rate increases as

provided for in subdivision  (d)  (c).  A portion of the funds

collected from the quality assurance assessment may be used to

offset any reduction to existing intergovernmental transfer

programs with public hospitals that may result from implementation

of the enhanced medicaid payments financed by the quality assurance

assessment. Any portion of the funds collected from the quality

assurance assessment reduced because of existing intergovernmental

transfer programs shall be used to finance medicaid hospital

appropriations.

     (b) The quality assurance assessment shall be implemented on

October 1, 2002.

(b)  (c) The quality assurance assessment shall be assessed

on all net patient revenue, before deduction of expenses, less

medicare net revenue, as reported in the most recently available

medicare cost report and is payable on a quarterly basis, the first

payment due 90 days after the date the assessment is assessed. As

used in this subdivision, "medicare net revenue" includes medicare

payments and amounts collected for coinsurance and deductibles.

(c)  (d) Upon implementation pursuant to subdivision (b)

Beginning October 1, 2002, the department of community health shall

increase the hospital medicaid reimbursement rates for the balance

of that year. For each subsequent year in which the quality

assurance assessment is assessed and collected, the department of

community health shall maintain the hospital medicaid reimbursement

rate increase financed by the quality assurance assessments.

(d)  (e) The department of community health shall implement

this section in a manner that complies with federal requirements

necessary to assure that the quality assurance assessment qualifies

for federal matching funds.

(e)  (f) If a hospital fails to pay the assessment required

by subsection (1)(h), the department of community health may assess

the hospital a penalty of 5% of the assessment for each month that

the assessment and penalty are not paid up to a maximum of 50% of

the assessment. The department of community health may also refer

for collection to the department of treasury past due amounts

consistent with section 13 of 1941 PA 122, MCL 205.13.

(f)  (g) The hospital quality assurance assessment fund is

established in the state treasury. The department of community

health shall deposit the revenue raised through the quality

assurance assessment with the state treasurer for deposit in the

hospital quality assurance assessment fund.

(g)  (h) In each fiscal year governed by this subsection, the

quality assurance assessment shall only be collected and expended

if medicaid hospital inpatient DRG and outpatient reimbursement

rates and disproportionate share hospital and graduate medical

education payments are not below the level of rates and payments in

effect on April 1, 2002 as a direct result of the quality assurance

assessment collected under subsection (1)(h), except as provided in

subdivision  (i)  (h).

(h)  (i) The quality assurance assessment collected under

subsection (1)(h) shall no longer be assessed or collected after

September 30,  2007  2008, or in the event that the quality

assurance assessment is not eligible for federal matching funds.

Any portion of the quality assurance assessment collected from a

hospital that is not eligible for federal matching funds shall be

returned to the hospital.

(i)  (j) In fiscal year  2004-2005, $18,900,000.00  2005-

2006, $42,400,000.00 of the quality assurance assessment collected

pursuant to subsection (1)(h) shall be appropriated to the

department of community health to support medicaid expenditures for

hospital services and therapy. These funds shall offset an

identical amount of general fund/general purpose revenue originally

appropriated for that purpose.

     (15) The quality assurance assessment provided for under this

section is a tax that is levied on a health facility or agency.

     (16) As used in this section, "medicaid" means that term as

defined in section 22207.

     Enacting section 1. Section 20161 of the public health code,

1978 PA 368, MCL 333.20161, as amended by this amendatory act is

retroactive and is effective for all quality assurance assessments

made after September 30, 2005.