State of Illinois
2021 and 2022


Introduced 1/21/2022, by Rep. Elizabeth Hernandez - LaToya Greenwood - Jay Hoffman - Jonathan Carroll - Daniel Didech, et al.


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.

LRB102 24090 KTG 33314 b





HB4443LRB102 24090 KTG 33314 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
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
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
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.