2007 California Health and Safety Code Article 7.6. Skilled Nursing Facility Quality Assurance Fee

CA Codes (hsc:1324.20-1324.30)

1324.20.  For purposes of this article, the following definitions
shall apply:
   (a) "Continuing care retirement community" means a provider of a
continuum of services, including independent living services,
assisted living services as defined in paragraph (5) of subdivision
(a) of Section 1771, and skilled nursing care, on a single campus,
that is subject to Section 1791, or a provider of such a continuum of
services on a single campus that has not received a Letter of
Exemption pursuant to subdivision (b) of Section 1771.3.
   (b) "Exempt facility" means a skilled nursing facility that is
part of a continuing care retirement community, a skilled nursing
facility operated by the state or another public entity, a unit that
provides pediatric subacute services in a skilled nursing facility, a
skilled nursing facility that is certified by the State Department
of Mental Health for a special treatment program and is an
institution for mental disease as defined in Section 1396d(i) of
Title 42 of the United States Code, or a skilled nursing facility
that is a distinct part of a facility that is licensed as a general
acute care hospital.
   (c) (1) "Net revenue" means gross resident revenue for routine
nursing services and ancillary services provided to all residents by
a skilled nursing facility, less Medicare revenue for routine and
ancillary services including Medicare revenue for services provided
to residents covered under a Medicare managed care plan, less payer
discounts and applicable contractual allowances as permitted under
federal law and regulation.
   (2) "Net revenue" does not mean charitable contributions and bad
debt.
   (d) "Payer discounts and contractual allowances" means the
difference between the facility's resident charges for routine or
ancillary services and the actual amount paid.
   (e) "Skilled nursing facility" means a licensed facility as
defined in subdivision (c) of Section 1250.



1324.21.  (a) For facilities licensed under subdivision (c) of
Section 1250, there shall be imposed each state fiscal year a uniform
quality assurance fee per resident day. The uniform quality
assurance fee shall be based upon the entire net revenue of all
skilled nursing facilities subject to the fee, except an exempt
facility, as defined in Section 1324.20, calculated in accordance
with subdivision (b).
   (b) The amount of the uniform quality assurance fee to be assessed
per resident day shall be determined based on the aggregate net
revenue of skilled nursing facilities subject to the fee, in
accordance with the methodology outlined in the request for federal
approval required by Section 1324.27 and in regulations, provider
bulletins, or other similar instructions. The uniform quality
assurance fee shall be calculated as follows:
   (1) (A) For the rate year 2004-05, the net revenue shall be
projected for all skilled nursing facilities subject to the fee. The
projection of net revenue shall be based on prior rate year data.
Once determined, the aggregate projected net revenue for all
facilities shall be multiplied by 2.7 percent, as determined under
the approved methodology, and then divided by the projected total
resident days of all providers subject to the fee.
   (B) Notwithstanding subparagraph (A), the Director of Health Care
Services may increase the amount of the fee up to 3 percent of the
aggregate projected net revenue if necessary for the implementation
of Article 3.8 (commencing with Section 14126) of Chapter 7 of Part 3
of Division 9 of the Welfare and Institutions Code.
   (2) For the rate year 2005-06 and subsequent rate years through
and including the 2010-11 rate year, the net revenue shall be
projected for all skilled nursing facilities subject to the uniform
quality assurance fee. The projection of net revenue shall be based
on the prior rate year's data. Once determined, the aggregate
projected net revenue for all facilities shall be multiplied by 6
percent, as determined under the approved methodology, and then
divided by the projected total resident days of all providers subject
to the fee. The amounts so determined shall be subject to the
provisions of subdivision (d).
   (c) The director may assess and collect a nonuniform fee
consistent with the methodology approved pursuant to Section 1324.27.

   (d) In no case shall the fees collected annually pursuant to this
article, taken together with applicable licensing fees, exceed the
amounts allowable under federal law.
   (e) If there is a delay in the implementation of this article for
any reason, including a delay in the approval of the quality
assurance fee and methodology by the federal Centers for Medicare and
Medicaid Services, in the 2004-05 rate year or in any other rate
year, all of the following shall apply:
   (1) Any facility subject to the fee may be assessed the amount the
facility will be required to pay to the department, but shall not be
required to pay the fee until the methodology is approved and
Medi-Cal rates are increased in accordance with paragraph (2) of
subdivision (a) of Section 1324.28 and the increased rates are paid
to facilities.
   (2) The department may retroactively increase and make payment of
rates to facilities.
   (3) Facilities that have been assessed a fee by the department
shall pay the fee assessed within 60 days of the date rates are
increased in accordance with paragraph (2) of subdivision (a) of
Section 1324.28 and paid to facilities.
   (4) The department shall accept a facility's payment
notwithstanding that the payment is submitted in a subsequent fiscal
year than the fiscal year in which the fee is assessed.



1324.22.  (a) The quality assurance fee, as calculated pursuant to
Section 1324.21, shall be paid by the provider to the department for
deposit in the State Treasury on a monthly basis on or before the
last day of the month following the month for which the fee is
imposed, except as provided in subdivision (e) of Section 1324.21.
   (b) On or before the last day of each calendar quarter, each
skilled nursing facility shall file a report with the department, in
a prescribed form, showing the facility's total resident days for the
preceding quarter and payments made. If it is determined that a
lesser amount was paid to the department, the facility shall pay the
amount owed in the preceding quarter to the department with the
report. Any amount determined to have been paid in excess to the
department during the previous quarter shall be credited to the
amount owed in the following quarter.
   (c) On or before August 31 of each year, each skilled nursing
facility subject to an assessment pursuant to Section 1324.21 shall
report to the department, in a prescribed form, the facility's total
resident days and total payments made for the preceding state fiscal
year. If it is determined that a lesser amount was paid to the
department during the previous year, the facility shall pay the
amount owed to the department with the report.
   (d) A newly licensed skilled nursing facility, as defined by the
department, shall complete all requirements of subdivision (a) for
any portion of the year in which it commences operations and of
subdivision (b) for any portion of the quarter in which it commences
operations.
   (e) When a skilled nursing facility fails to pay all or part of
the quality assurance fee within 60 days of the date that payment is
due, the department may deduct the unpaid assessment and interest
owed from any Medi-Cal reimbursement payments to the facility until
the full amount is recovered. Any deduction shall be made only after
written notice to the facility and may be taken over a period of time
taking into account the financial condition of the facility.
   (f) Should all or any part of the quality assurance fee remain
unpaid, the department may take either or both of the following
actions:
   (1) Assess a penalty equal to 50 percent of the unpaid fee amount.

   (2) Delay license renewal.
   (g) In accordance with the provisions of the Medicaid state plan,
the payment of the quality assurance fee shall be considered as an
allowable cost for Medi-Cal reimbursement purposes.
   (h) The assessment process pursuant to this section shall become
operative not later than 60 days from receipt of federal approval of
the quality assurance fee, unless extended by the department. The
department may assess fees and collect payment in accordance with
subdivision (e) of Section 1324.21 in order to provide retroactive
payments for any rate increase authorized under this article.



1324.23.  (a) The Director of Health Care Services, or his or her
designee, shall administer this article.
   (b) The director may adopt regulations as are necessary to
implement this article. These regulations may be adopted as emergency
regulations in accordance with the rulemaking provisions of the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
For purposes of this article, the adoption of regulations shall be
deemed an emergency and necessary for the immediate preservation of
the public peace, health and safety, or general welfare. The
regulations shall include, but need not be limited to, any
regulations necessary for any of the following purposes:
   (1) The administration of this article, including the proper
imposition and collection of the quality assurance fee not to exceed
amounts reasonably necessary for purposes of this article.
   (2) The development of any forms necessary to obtain required
information from facilities subject to the quality assurance fee.
   (3) To provide details, definitions, formulas, and other
requirements.
   (c) As an alternative to subdivision (b), and notwithstanding the
rulemaking provisions of Chapter 3.5 (commencing with Section 11340)
of Part 1 of Division 3 of Title 2 of the Government Code, the
director may implement this article, in whole or in part, by means of
a provider bulletin, or other similar instructions, without taking
regulatory action, provided that no such bulletin or other similar
instructions shall remain in effect after July 31, 2010. It is the
intent of the Legislature that the regulations adopted pursuant to
subdivision (b) shall be adopted on or before July 31, 2010.



1324.24.  The quality assurance fee assessed and collected pursuant
to this article shall be deposited in the State Treasury.



1324.25.  The funds assessed pursuant to this article shall be
available to enhance federal financial participation in the Medi-Cal
program or to provide additional reimbursement to, and to support
facility quality improvement efforts in, licensed skilled nursing
facilities.



1324.26.  In implementing this article, the department may utilize
the services of the Medi-Cal fiscal intermediary through a change
order to the fiscal intermediary contract to administer this program,
consistent with the requirements of Sections 14104.6, 14104.7,
14104.8, and 14104.9 of the Welfare and Institutions Code.




1324.27.  (a) (1) The department shall request approval from the
federal Centers for Medicare and Medicaid Services for the
implementation of this article. In making this request, the
department shall seek specific approval from the federal Centers for
Medicare and Medicaid Services to exempt facilities identified in
subdivision (b) of Section 1324.20, including the submission of a
request for waiver of broad-based requirement, waiver of uniform fee
requirement, or both, pursuant to paragraphs (1) and (2) of
subdivision (e) of Section 433.68 of Title 42 of the Code of Federal
Regulations.
   (2) The director may alter the methodology specified in this
article, to the extent necessary to meet the requirements of federal
law or regulations or to obtain federal approval. The Director of
Health Services may also add new categories of exempt facilities or
apply a nonuniform fee to the skilled nursing facilities subject to
the fee in order to meet requirements of federal law or regulations.
The Director of Health Services may apply a zero fee to one or more
exempt categories of facilities, if necessary to obtain federal
approval.
   (3) If after seeking federal approval, federal approval is not
obtained, this article shall not be implemented.
   (b) The department shall make retrospective adjustments, as
necessary, to the amounts calculated pursuant to Section 1324.21 in
order to assure that the aggregate quality assurance fee for any
particular state fiscal year does not exceed 6 percent of the
aggregate annual net revenue of facilities subject to the fee.



1324.28.  (a) This article shall be implemented as long as both of
the following conditions are met:
   (1) The state receives federal approval of the quality assurance
fee from the federal Centers for Medicare and Medicaid Services.
   (2) Legislation is enacted in the 2004 legislative session making
an appropriation from the General Fund and from the Federal Trust
Fund to fund a rate increase for skilled nursing facilities, as
defined under subdivision (c) of Section 1250, for the 2004-05 rate
year in an amount consistent with the Medi-Cal rates that specific
facilities would have received under the rate methodology in effect
as of July 31, 2004, plus the proportional costs as projected by
Medi-Cal for new state or federal mandates.
   (b) This article shall remain operative only as long as all of the
following conditions are met:
   (1) The federal Centers for Medicare and Medicaid Services
continues to allow the use of the provider assessment provided in
this article.
   (2) The Medi-Cal Long Term Care Reimbursement Act, Article 3.8
(commencing with Section 14126) of Chapter 7 of Part 3 of Division 9
of the Welfare and Institutions Code, as added during the 2003-04
Regular Session by the act adding this section, is enacted and
implemented on or before July 31, 2005, or as extended as provided in
that article, and remains in effect thereafter.
   (3) The state has continued its maintenance of effort for the
level of state funding of nursing facility reimbursement for rate
year 2005 -06, and for every subsequent rate year continuing through
the 2010 -11 rate year, in an amount not less than the amount that
specific facilities would have received under the rate methodology in
effect on July 31, 2004, plus Medi-Cal's projected proportional
costs for new state or federal mandates, not including the quality
assurance fee.
   (4) The full amount of the quality assurance fee assessed and
collected pursuant to this article remains available for the purposes
specified in Section 1324.25 and for related purposes.
   (c) If all of the conditions in subdivision (a) are met, this
article is implemented, and subsequently, any one of the conditions
in subdivision (b) is not met, on and after the date that the
department makes that determination, this article shall not be
implemented, notwithstanding that the condition or conditions
subsequently may be met.
   (d) Notwithstanding subdivisions (a), (b), and (c), in the event
of a final judicial determination made by any state or federal court
that is not appealed, or by a court of appellate jurisdiction that is
not further appealed, in any action by any party, or a final
determination by the administrator of the federal Centers for
Medicare and Medicaid Services, that federal financial participation
is not available with respect to any payment made under the
methodology implemented pursuant to this article because the
methodology is invalid, unlawful, or contrary to any provision of
federal law or regulations, or of state law, this section shall
become inoperative.



1324.29.  The quality assurance fee shall cease to be assessed and
collected on or after July 31, 2011.



1324.30.  This article shall become inoperative on July 31, 2011,
and, as of January 1, 2012, is repealed, unless a later enacted
statute, that becomes operative on or before January 1, 2012, deletes
or extends the dates on which it becomes inoperative and is
repealed.