Kolkhorst Bill’s 80 Percent Care Rule Can’t Cost Nursing Homes Medicaid

The text as introduced · 1,398 words

89R3103 JG-D

By: Kolkhorst
S.B. No. 457

A BILL TO BE ENTITLED

AN ACT

relating to the regulation of certain nursing facilities, including

licensing requirements and Medicaid participation requirements.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 540.0752(b), Government Code, as

effective April 1, 2025, is amended to read as follows:

(b) Subject to Section 540.0701 and notwithstanding any

other law, the commission shall provide Medicaid benefits through

the STAR+PLUS Medicaid managed care program to recipients who

reside in nursing facilities. In implementing this subsection, the

commission shall ensure that:

(1) a nursing facility is paid not later than the 10th

day after the date the facility submits a clean claim;

(1-a) a nursing facility complies with the direct care

expense ratio adopted under Section 32.0286, Human Resources Code;

(2) services are used appropriately, consistent with

criteria the commission establishes;

(3) the incidence of potentially preventable events

and unnecessary institutionalizations is reduced;

(4) a Medicaid managed care organization providing

services under the program:

(A) provides discharge planning, transitional

care, and other education programs to physicians and hospitals

regarding all available long-term care settings;

(B) assists in collecting applied income from

recipients; and

(C) provides payment incentives to nursing

facility providers that:

(i) reward reductions in preventable acute

care costs; and

(ii) encourage transformative efforts in

the delivery of nursing facility services, including efforts to

promote a resident-centered care culture through facility design

and services provided;

(5) a portal is established that complies with state

and federal regulations, including standard coding requirements,

through which nursing facility providers participating in the

program may submit claims to any participating Medicaid managed

care organization;

(6) rules and procedures relating to certifying and

decertifying nursing facility beds under Medicaid are not affected;

(7) a Medicaid managed care organization providing

services under the program, to the greatest extent possible, offers

nursing facility providers access to:

(A) acute care professionals; and

(B) telemedicine, when feasible and in

accordance with state law, including rules adopted by the Texas

Medical Board; and

(8) the commission approves the staff rate enhancement

methodology for the staff rate enhancement paid to a nursing

facility that qualifies for the enhancement under the program.

SECTION 2. Subchapter F, Chapter 540, Government Code, as

effective April 1, 2025, is amended by adding Section 540.0283 to

read as follows:

Sec. 540.0283. NURSING FACILITY PROVIDER AGREEMENTS:

COMPLIANCE WITH DIRECT CARE EXPENSE RATIO. (a) A contract to which

this subchapter applies must require that each provider agreement

between the contracting Medicaid managed care organization and a

nursing facility include a requirement that the facility comply

with the direct care expense ratio adopted under Section 32.0286,

Human Resources Code.

(b) This section does not apply to a state-owned facility.

SECTION 3. Section 242.032, Health and Safety Code, is

amended by adding Subsection (b-1) to read as follows:

(b-1) The application must:

(1) include the name of each person with a direct or

indirect ownership interest of five percent or more in:

(A) the nursing facility, including a subsidiary

or parent company of the facility; and

(B) the real property on which the nursing

facility is located, including any owner, common owner, tenant, or

sublessee; and

(2) describe the exact ownership interest of each of

those persons in relation to the facility or property.

SECTION 4. Subchapter B, Chapter 242, Health and Safety

Code, is amended by adding Section 242.0333 to read as follows:

Sec. 242.0333. NOTIFICATION OF CHANGE TO OWNERSHIP INTEREST

APPLICATION INFORMATION. A license holder shall notify the

commission, in the form and manner the commission requires, of any

change to the ownership interest application information provided

under Section 242.032(b-1).

SECTION 5. Section 32.028, Human Resources Code, is amended

by amending Subsection (i) and adding Subsection (i-1) to read as

follows:

(i) The executive commissioner shall ensure that rules

governing the incentives program described by Subsection (g)(1):

(1) provide that participation in the program by a

nursing facility is voluntary;

(2) do not impose on a nursing facility not

participating in the program a minimum spending requirement for

direct care staff wages and benefits;

(3) do not set a base rate for a nursing facility

participating in the program that is more than the base rate for a

nursing facility not participating in the program; [ and ]

(4) establish a funding process to provide incentives

for increasing direct care staff and direct care wages and benefits

in accordance with appropriations provided ; and

(5) to the extent permitted by federal law, require

the commission to recoup all or part of an incentive payment if the

nursing facility fails to satisfy a program requirement .

(i-1) The commission shall prohibit a provider who is the

subject of the recoupment of an incentive payment under Subsection

(i)(5) from participating in the incentives program described by

Subsection (g)(1) for a period of not less than two consecutive

years following the date on which the recoupment occurs. The

commission shall publish and maintain on the commission's Internet

website a list of each provider prohibited from participating in

the incentives program under this subsection.

SECTION 6. Subchapter B, Chapter 32, Human Resources Code,

is amended by adding Section 32.0286 to read as follows:

Sec. 32.0286. ANNUAL DIRECT CARE EXPENSE RATIO FOR

REIMBURSEMENT OF CERTAIN NURSING FACILITY PROVIDERS. (a) In this

section, "direct care expense":

(1) includes an expense for:

(A) non-revenue generating support services,

such as laundry, housekeeping, dietary services, and nursing

administration;

(B) ancillary services, such as laboratory tests

and services, physical therapy services, occupational therapy

services, speech-language pathology services, or audiological

services; and

(C) program services, such as an adult day-care

program; and

(2) does not include an expense for:

(A) administrative costs other than nursing

administration;

(B) capital costs;

(C) debt service;

(D) taxes, other than sales and payroll taxes;

(E) capital depreciation;

(F) rental or lease payments; or

(G) financial services.

(b) Notwithstanding any other law, the executive

commissioner by rule shall establish an annual direct care expense

ratio, including a process for determining the ratio, applicable to

the reimbursement of nursing facility providers for providing

services to recipients under the medical assistance program. In

establishing the ratio, the executive commissioner shall require

that at least 80 percent of the portion of the medical assistance

reimbursement amount paid to a nursing facility that is

attributable to patient care expenses is spent on reasonable and

necessary direct care expenses.

(c) The executive commissioner shall adopt rules necessary

to ensure each nursing facility provider that participates in the

medical assistance program complies with the direct care expense

ratio adopted under this section.

(d) To the extent permitted by federal law, the commission

may recoup all or part of the reimbursement amounts paid to a

nursing facility that are subject to the direct care expense ratio

under this section if the facility fails to spend the reimbursement

amounts in accordance with the direct care expense ratio.

(e) The commission may not require a nursing facility to

comply with the direct care expense ratio as a condition of

participation in Medicaid.

(f) This section does not apply to a state-owned facility.

SECTION 7. (a) The Health and Human Services Commission

shall, in a contract between the commission and a managed care

organization under Chapter 540, Government Code, as effective April

1, 2025, that is entered into or renewed on or after the effective

date of this Act, require the managed care organization to comply

with Section 540.0283, Government Code, as added by this Act.

(b) The Health and Human Services Commission shall seek to

amend contracts entered into with managed care organizations under

Chapter 540, Government Code, as effective April 1, 2025, before

the effective date of this Act to require those managed care

organizations to comply with Section 540.0283, Government Code, as

added by this Act. To the extent of a conflict between that section

and a provision of a contract with a managed care organization

entered into before the effective date of this Act, the contract

provision prevails.

SECTION 8. If before implementing any provision of this Act

a state agency determines that a waiver or authorization from a

federal agency is necessary for implementation of that provision,

the agency affected by the provision shall request the waiver or

authorization and may delay implementing that provision until the

waiver or authorization is granted.

SECTION 9. This Act takes effect September 1, 2025.