Amended in Assembly April 18, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2079

Introduced by Assembly Member Calderon

February 17, 2016

An act to amend Sections 1276.5 and 1276.65 of the Health and Safety Code, and to amend Section 14126.022 of, and to repeal and add Section 14110.7 of, the Welfare and Institutions Code, relating to health facilities.

LEGISLATIVE COUNSEL’S DIGEST

AB 2079, as amended, Calderon. Skilled nursing facilities: staffing.

(1) Existing law provides for the licensure and regulation by the State Department of Public Health of health facilities, including skilled nursing facilities. Existing law requires the department to develop regulations that become effective August 1, 2003, that establish staff-to-patient ratios for direct caregivers working in a skilled nursing facility. Existing law requires that these ratios include separate licensed nurse staff-to-patient ratios in addition to the ratios established for other direct caregivers. Existing law also requires every skilled nursing facility to post information about staffing levels in the manner specified by federal requirements. Existing law makes it a misdemeanor for any person to willfully or repeatedly violate these provisions.

This bill would require the department to develop regulations that become effective July 1, 2017, and include a minimum overall staff-to-patient ratio that includes specific staff-to-patient ratios for certified nurse assistants and for licensed nurses that comply with specified requirements. The bill would require the posted information to include a resident census and an accurate report of the number of staff working each shift and to be posted in specified locations, including an area used for employee breaks. The bill would require a skilled nursing facility to make staffing data available, upon oral or written request and at a reasonable cost, within 15 days of receiving a request. By expanding the scope of a crime, this bill would impose a state-mandated local program.

(2) Existing law generally requires that skilled nursing facilities have a minimum number of nursing hours per patient day of 3.2 hours.

This bill would substitute the term “direct care service hours” for the term “nursing hours” and, commencing begin delete July 1, 2017, end delete begin insert January 1, 2018, end insert except as specified, increase the minimum number of direct care service hours per patient day to 4.1 hours.

(3) Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions.

Existing law, the Medi-Cal Long-Term Care Reimbursement Act, operative until August 1, 2020, requires the department to make a supplemental payment to skilled nursing facilities based on specified criteria and according to performance measure benchmarks. Existing law requires the department to establish and publish quality and accountability measures, which are used to determine supplemental payments. Existing law requires, beginning in the 2011-12 fiscal year, the measures to include, among others, compliance with specified nursing hours per patient per day requirements.

This bill would also require, beginning in the 2017-18 fiscal year, the measures to include compliance with specified direct care service hour requirements for skilled nursing facilities.

(4) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 1276.5 of the Health and Safety Code is
amended to read:

1276.5.  

(a) (1) The department shall adopt regulations setting
forth the minimum number of equivalent direct care service hours
per patient required in intermediate care facilities, subject to the
specific requirements of Section 14110.7 of the Welfare and
Institutions Code.

(2) For the purposes of this subdivision, “direct care service
hours” means the number of hours of work performed per patient
day by aides, nursing assistants, or orderlies plus two times the
number of hours worked per patient day by registered nurses and
licensed vocational nurses (except directors of nursing in facilities
of 60 or larger capacity) and, in the distinct part of facilities and
freestanding facilities providing care for persons with
developmental disabilities or mental health disorders by licensed
psychiatric technicians who perform direct nursing services for
patients in intermediate care facilities, except when the intermediate
care facility is licensed as a part of a state hospital.

(b) (1) The department shall adopt regulations setting forth the
minimum number of equivalent direct care service hours per patient
required in skilled nursing facilities, subject to the specific
requirements of Section 14110.7 of the Welfare and Institutions
Code. However, notwithstanding Section 14110.7 of the Welfare
and Institutions Code or any other law, the minimum number of
direct care service hours per patient required in a skilled nursing
facility shall be 3.2 hours, and, commencing begin delete July 1, 2017, end delete begin insert January
1, 2018, end insert shall be 4.1 hours, except as provided in paragraph (2) or
Section 1276.9.

(2) Notwithstanding Section 14110.7 or any other law, the
minimum number of direct care service hours per patient required
in a skilled nursing facility that is a distinct part of a facility
licensed as a general acute care hospital shall be 3.2 hours, except
as provided in Section 1276.9.

(3) For the purposes of this subdivision “direct care service
hours” means the numbers of hours of work performed per patient
day by a direct caregiver, as defined in Section 1276.65.

(c) Notwithstanding Section 1276, the department shall require
the utilization of a registered nurse at all times if the department
determines that the services of a skilled nursing and intermediate
care facility require the utilization of a registered nurse.

(d) (1) Except as otherwise provided by law, the administrator
of an intermediate care facility/developmentally disabled,
intermediate care facility/developmentally disabled habilitative,
or an intermediate care facility/developmentally disabled--nursing
shall be either a licensed nursing home administrator or a qualified
intellectual disability professional as defined in Section 483.430
of Title 42 of the Code of Federal Regulations.

(2) To qualify as an administrator for an intermediate care
facility for the developmentally disabled, a qualified intellectual
disability professional shall complete at least six months of
administrative training or demonstrate six months of experience
in an administrative capacity in a licensed health facility, as defined
in Section 1250, excluding those facilities specified in subdivisions
(e), (h), and (i).

SEC. 2.  

Section 1276.65 of the Health and Safety Code is
amended to read:

1276.65.  

(a) For purposes of this section, the following
definitions shall apply:

begin delete

(1) (A) “Direct caregiver” means a registered nurse, as referred
to in Section 2732 of the Business and Professions Code, a licensed
vocational nurse, as referred to in Section 2864 of the Business
and Professions Code, a psychiatric technician, as referred to in
Section 4516 of the Business and Professions Code, a certified
nurse assistant, as defined in Section 1337 of this code, or a nurse
assistant in an approved training program, as defined in Section
1337, while the nurse assistant in an approved training program
is performing nursing services as described in Sections 72309,
72311, and 72315 of Title 22 of the California Code of Regulations.

(B) “Direct caregiver” also includes (i) a licensed nurse serving
as a minimum data set coordinator and (ii) a person serving as the
director of nursing services in a facility with 60 or more licensed
beds and a person serving as the director of staff development
when that person is providing nursing services in the hours beyond
those required to carry out the duties of these positions, as long as
these direct care service hours are separately documented.

end delete begin insert

(1) (A) Except as provided in subparagraph (B), “direct
caregiver” means a registered nurse, as referred to in Section
2732 of the Business and Professions Code, a licensed vocational
nurse, as referred to in Section 2864 of the Business and
Professions Code, a psychiatric technician, as referred to in
Section 4516 of the Business and Professions Code, or a certified
nursing assistant or a nursing assistant who is participating in an
approved training program, as defined in Section 1337, while
performing nursing services as described in Sections 72309, 72311,
and 72315 of Title 22 of the California Code of Regulations.

end insert begin insert

(B) A person serving as the director of nursing services in a
facility with 60 or more licensed beds is not a direct caregiver.

end insert

(2) “Licensed nurse” means a registered nurse, as referred to in
Section 2732 of the Business and Professions Code, a licensed
vocational nurse, as referred to in Section 2864 of the Business
and Professions Code, and a psychiatric technician, as referred to
in Section 4516 of the Business and Professions Code.

(3) “Skilled nursing facility” means a skilled nursing facility as
defined in subdivision (c) of Section 1250.

(b) A person employed to provide services such as food
preparation, housekeeping, laundry, or maintenance services shall
not provide nursing care to residents and shall not be counted in
determining ratios under this section.

(c) (1) (A) Notwithstanding any other law, the State
Department of Public Health shall develop regulations that become
effective July 1, 2017, that establish a minimum staff-to-patient
ratio for direct caregivers working in a skilled nursing facility. The
ratio shall include as a part of the overall staff-to-patient ratio,
specific staff-to-patient ratios for licensed nurses and certified
nurse assistants.

(B) (i) For a skilled nursing facility that is not a distinct part of
a general acute care hospital, the certified nurse assistant
staff-to-patient ratios developed pursuant to subparagraph (A) shall
be no less than the following:

(I) During the day shift, a minimum of one certified nurse
assistant for every six patients, or fraction thereof.

(II) During the evening shift, a minimum of one certified nurse
assistant for every eight patients, or fraction thereof.

(III) During the night shift, a minimum of one certified nurse
assistant for every 17 patients, or fraction thereof.

(ii) For the purposes of this subparagraph, the following terms
have the following meanings:

(I) “Day shift” means the 8-hour period during which the
facility’s patients require the greatest amount of care.

(II) “Evening shift” means the 8-hour period when the facility’s
patients require a moderate amount of care.

(III) “Night shift” means the 8-hour period during which a
facility’s patients require the least amount of care.

(2) The department, in developing an overall staff-to-patient
ratio for direct caregivers, and in developing specific
staff-to-patient ratios for certified nurse assistants and licensed
nurses as required by this section, shall convert the requirement
under Section 1276.5 of this code and Section 14110.7 of the
Welfare and Institutions Code for 3.2 direct care hours per patient
day, and commencing July 1, 2017, except as specified in
paragraph (2) of subdivision (b) of Section 1276.5, for 4.1 direct
care service hours per patient day, including a minimum of 2.8
direct care service hours per patient day for certified nurse
assistants, and a minimum of 1.3 direct care service hours per
patient day for licensed nurses, and shall ensure that no less care
is given than is required pursuant to Section 1276.5 of this code
and Section 14110.7 of the Welfare and Institutions Code. Further,
the department shall develop the ratios in a manner that minimizes
additional state costs, maximizes resident access to care, and takes
into account the length of the shift worked. In developing the
regulations, the department shall develop a procedure for facilities
to apply for a waiver that addresses individual patient needs except
that in no instance shall the minimum staff-to-patient ratios be less
than the 3.2 direct care service hours per patient day, and,
commencing July 1, 2017, except as specified in paragraph (2) of
subdivision (b) of Section 1276.5, be less than the 4.1 direct care
service hours per patient day, required under Section 1276.5 of
this code and Section 14110.7 of the Welfare and Institutions Code.

(d) The staffing ratios to be developed pursuant to this section
shall be minimum standards only and shall be satisfied daily.
Skilled nursing facilities shall employ and schedule additional staff
as needed to ensure quality resident care based on the needs of
individual residents and to ensure compliance with all relevant
state and federal staffing requirements.

(e) No later than January 1, 2019, and every five years thereafter,
the department shall consult with consumers, consumer advocates,
recognized collective bargaining agents, and providers to determine
the sufficiency of the staffing standards provided in this section
and may adopt regulations to increase the minimum staffing ratios
to adequate levels.

(f) (1) In a manner pursuant to federal requirements, effective
January 1, 2003, every skilled nursing facility shall post
information about resident census and staffing levels that includes
the current number of licensed and unlicensed nursing staff directly
responsible for resident care in the facility. This posting shall
include staffing requirements developed pursuant to this section
and an accurate report of the number of direct care staff working
during the current shift, including a report of the number of
registered nurses, licensed vocational nurses, psychiatric
technicians, and certified nurse assistants. The information shall
be posted on paper that is at least 8.5 inches by 14 inches and shall
be printed in a type of at least 16 point.

(2) The information described in paragraph (1) shall be posted
daily, at a minimum, in the following locations:

(A) An area readily accessible to members of the public.

(B) An area used for employee breaks.

(C) An area used by residents for communal functions,
including, but not limited to, dining, resident council meetings, or
activities.

(3) (A) Upon oral or written request, every skilled nursing
facility shall make direct caregiver staffing data available to the
public for review at a reasonable cost. A skilled nursing facility
shall provide the data to the requestor within 15 days after receiving
a request.

(B) For the purpose of this paragraph, “reasonable cost”
includes, but is not limited to, a ten-cent ($0.10) per page fee for
standard reproduction of documents that are 8.5 inches by 14 inches
or smaller or a retrieval or processing fee not exceeding sixty
dollars ($60) if the requested data is provided on a digital or other
electronic medium and the requestor requests delivery of the data
in a digital or other electronic medium, including electronic mail.

(g) (1) Notwithstanding any other law, the department shall
inspect for compliance with this section during state and federal
periodic inspections, including, but not limited to, those inspections
required under Section 1422. This inspection requirement shall
not limit the department’s authority in other circumstances to cite
for violations of this section or to inspect for compliance with this
section.

(2)  A violation of the regulations developed pursuant to this
section may constitute a class “B,” “A,” or “AA” violation pursuant
to the standards set forth in Section 1424.

(h)  The requirements of this section are in addition to any
requirement set forth in Section 1276.5 of this code and Section
14110.7 of the Welfare and Institutions Code.

(i) In implementing this section, the department may contract
as necessary, on a bid or nonbid basis, for professional consulting
services from nationally recognized higher education and research
institutions, or other qualified individuals and entities not
associated with a skilled nursing facility, with demonstrated
expertise in long-term care. This subdivision establishes an
accelerated process for issuing contracts pursuant to this section
and contracts entered into pursuant to this section shall be exempt
from the requirements of Chapter 1 (commencing with Section
10100) and Chapter 2 (commencing with Section 10290) of Part
2 of Division 2 of the Public Contract Code.

(j) This section shall not apply to facilities defined in Section
1276.9.

SEC. 3.  

Section 14110.7 of the Welfare and Institutions Code
is repealed.

SEC. 4.  

Section 14110.7 is added to the Welfare and
Institutions Code, to read:

14110.7.  

(a) In skilled nursing facilities, the minimum number
of equivalent direct care service hours shall be 3.2, except as set
forth in Section 1276.9 of the Health and Safety Code.

(b) Commencing July 1, 2017, in skilled nursing facilities,
except those skilled nursing facilities that are a distinct part of a
general acute care facility, the minimum number of equivalent
direct care service hours shall be 4.1, except as set forth in Section
1276.9 of the Health and Safety Code.

(c) In skilled nursing facilities with special treatment programs,
the minimum number of equivalent direct care service hours shall
be 2.3.

(d) In intermediate care facilities, the minimum number of
equivalent direct care service hours shall be 1.1.

(e) In intermediate care facilities/developmentally disabled, the
minimum number of equivalent direct care service hours shall be
2.7.

SEC. 5.  

Section 14126.022 of the Welfare and Institutions
Code is amended to read:

14126.022.  

(a) (1) By August 1, 2011, the department shall
develop the Skilled Nursing Facility Quality and Accountability
Supplemental Payment System, subject to approval by the federal
Centers for Medicare and Medicaid Services, and the availability
of federal, state, or other funds.

(2) (A) The system shall be utilized to provide supplemental
payments to skilled nursing facilities that improve the quality and
accountability of care rendered to residents in skilled nursing
facilities, as defined in subdivision (c) of Section 1250 of the
Health and Safety Code, and to penalize those facilities that do
not meet measurable standards.

(B) A freestanding pediatric subacute care facility, as defined
in Section 51215.8 of Title 22 of the California Code of
Regulations, shall be exempt from the Skilled Nursing Facility
Quality and Accountability Supplemental Payment System.

(3) The system shall be phased in, beginning with the 2010-11
rate year.

(4) The department may utilize the system to do all of the
following:

(A) Assess overall facility quality of care and quality of care
improvement, and assign quality and accountability payments to
skilled nursing facilities pursuant to performance measures
described in subdivision (i).

(B) Assign quality and accountability payments or penalties
relating to quality of care, or direct care staffing levels, wages, and
benefits, or both.

(C) Limit the reimbursement of legal fees incurred by skilled
nursing facilities engaged in the defense of governmental legal
actions filed against the facilities.

(D) Publish each facility’s quality assessment and quality and
accountability payments in a manner and form determined by the
director, or his or her designee.

(E) Beginning with the 2011-12 fiscal year, establish a base
year to collect performance measures described in subdivision (i).

(F) Beginning with the 2011-12 fiscal year, in coordination
with the State Department of Public Health, publish the direct care
staffing level data and the performance measures required pursuant
to subdivision (i).

(5) The department, in coordination with the State Department
of Public Health, shall report to the relevant Assembly and Senate
budget subcommittees by May 1, 2016, information regarding the
quality and accountability supplemental payments, including, but
not limited to, its assessment of whether the payments are adequate
to incentivize quality care and to sustain the program.

(b) (1) There is hereby created in the State Treasury, the Skilled
Nursing Facility Quality and Accountability Special Fund. The
fund shall contain moneys deposited pursuant to subdivisions (g)
and (j) to (m), inclusive. Notwithstanding Section 16305.7 of the
Government Code, the fund shall contain all interest and dividends
earned on moneys in the fund.

(2) Notwithstanding Section 13340 of the Government Code,
the fund shall be continuously appropriated without regard to fiscal
year to the department for making quality and accountability
payments, in accordance with subdivision (n), to facilities that
meet or exceed predefined measures as established by this section.

(3) Upon appropriation by the Legislature, moneys in the fund
may also be used for any of the following purposes:

(A) To cover the administrative costs incurred by the State
Department of Public Health for positions and contract funding
required to implement this section.

(B) To cover the administrative costs incurred by the State
Department of Health Care Services for positions and contract
funding required to implement this section.

(C) To provide funding assistance for the Long-Term Care
Ombudsman Program activities pursuant to Chapter 11
(commencing with Section 9700) of Division 8.5.

(c) No appropriation associated with this bill is intended to
implement the provisions of Section 1276.65 of the Health and
Safety Code.

(d) (1) There is hereby appropriated for the 2010-11 fiscal year,
one million nine hundred thousand dollars ($1,900,000) from the
Skilled Nursing Facility Quality and Accountability Special Fund
to the California Department of Aging for the Long-Term Care
Ombudsman Program activities pursuant to Chapter 11
(commencing with Section 9700) of Division 8.5. It is the intent
of the Legislature for the one million nine hundred thousand dollars
($1,900,000) from the fund to be in addition to the four million
one hundred sixty-eight thousand dollars ($4,168,000) proposed
in the Governor’s May Revision for the 2010-11 Budget. It is
further the intent of the Legislature to increase this level of
appropriation in subsequent years to provide support sufficient to
carry out the mandates and activities pursuant to Chapter 11
(commencing with Section 9700) of Division 8.5.

(2) The department, in partnership with the California
Department of Aging, shall seek approval from the federal Centers
for Medicare and Medicaid Services to obtain federal Medicaid
reimbursement for activities conducted by the Long-Term Care
Ombudsman Program. The department shall report to the fiscal
committees of the Legislature during budget hearings on progress
being made and any unresolved issues during the 2011-12 budget
deliberations.

(e) There is hereby created in the Special Deposit Fund
established pursuant to Section 16370 of the Government Code,
the Skilled Nursing Facility Minimum Staffing Penalty Account.
The account shall contain all moneys deposited pursuant to
subdivision (f).

(f) (1) Beginning with the 2010-11 fiscal year, the State
Department of Public Health shall use the direct care staffing level
data it collects to determine whether a skilled nursing facility has
met the direct care services hours per patient per day requirements
pursuant to Section 1276.5 of the Health and Safety Code.

(2) (A) Beginning with the 2010-11 fiscal year, the State
Department of Public Health shall assess a skilled nursing facility,
licensed pursuant to subdivision (c) of Section 1250 of the Health
and Safety Code, an administrative penalty if the State Department
of Public Health determines that the skilled nursing facility fails
to meet the direct care service hours per patient per day
requirements pursuant to Section 1276.5 of the Health and Safety
begin delete Code end delete begin insert Code, end insert as follows:

(i) Fifteen thousand dollars ($15,000) if the facility fails to meet
the requirements for 5 percent or more of the audited days up to
49 percent.

(ii) Thirty thousand dollars ($30,000) if the facility fails to meet
the requirements for over 49 percent or more of the audited days.

(B) (i) If the skilled nursing facility does not dispute the
determination or assessment, the penalties shall be paid in full by
the licensee to the State Department of Public Health within 30
days of the facility’s receipt of the notice of penalty and deposited
into the Skilled Nursing Facility Minimum Staffing Penalty
Account.

(ii) The State Department of Public Health may, upon written
notification to the licensee, request that the department offset any
moneys owed to the licensee by the Medi-Cal program or any other
payment program administered by the department to recoup the
penalty provided for in this section.

(C) (i) If a facility disputes the determination or assessment
made pursuant to this paragraph, the facility shall, within 15 days
of the facility’s receipt of the determination and assessment,
simultaneously submit a request for appeal to both the department
and the State Department of Public Health. The request shall
include a detailed statement describing the reason for appeal and
include all supporting documents the facility will present at the
hearing.

(ii) Within 10 days of the State Department of Public Health’s
receipt of the facility’s request for appeal, the State Department
of Public Health shall submit, to both the facility and the
department, all supporting documents that will be presented at the
hearing.

(D) The department shall hear a timely appeal and issue a
decision as follows:

(i) The hearing shall commence within 60 days from the date
of receipt by the department of the facility’s timely request for
appeal.

(ii) The department shall issue a decision within 120 days from
the date of receipt by the department of the facility’s timely request
for appeal.

(iii) The decision of the department’s hearing officer, when
issued, shall be the final decision of the State Department of Public
Health.

(E) The appeals process set forth in this paragraph shall be
exempt from Chapter 4.5 (commencing with Section 11400) and
Chapter 5 (commencing with Section 11500), of Part 1 of Division
3 of Title 2 of the Government Code. The provisions of Sections
100171 and 131071 of the Health and Safety Code shall not apply
to appeals under this paragraph.

(F) If a hearing decision issued pursuant to subparagraph (D)
is in favor of the State Department of Public Health, the skilled
nursing facility shall pay the penalties to the State Department of
Public Health within 30 days of the facility’s receipt of the
decision. The penalties collected shall be deposited into the Skilled
Nursing Facility Minimum Staffing Penalty Account.

(G) The assessment of a penalty under this subdivision does not
supplant the State Department of Public Health’s investigation
process or issuance of deficiencies or citations under Chapter 2.4
(commencing with Section 1417) of Division 2 of the Health and
Safety Code.

(g) The State Department of Public Health shall transfer, on a
monthly basis, all penalty payments collected pursuant to
subdivision (f) into the Skilled Nursing Facility Quality and
Accountability Special Fund.

(h) Nothing in this section shall impact the effectiveness or
utilization of Section 1278.5 or 1432 of the Health and Safety Code
relating to whistleblower protections, or Section 1420 of the Health
and Safety Code relating to complaints.

(i) (1) Beginning in the 2010-11 fiscal year, the department,
in consultation with representatives from the long-term care
industry, organized labor, and consumers, shall establish and
publish quality and accountability measures, benchmarks, and data
submission deadlines by November 30, 2010.

(2) The methodology developed pursuant to this section shall
include, but not be limited to, the following requirements and
performance measures:

(A) Beginning in the 2011-12 fiscal year:

(i) Immunization rates.

(ii) Facility acquired pressure ulcer incidence.

(iii) The use of physical restraints.

(iv) Compliance with the direct care service hours per patient
per day requirements pursuant to Section 1276.5 of the Health and
Safety Code.

(v) Resident and family satisfaction.

(vi) Direct care staff retention, if sufficient data is available.

(B) Beginning in the 2017-18 fiscal year, compliance with the
direct care service hour requirements for skilled nursing facilities
established pursuant to Section 1276.65 of the Health and Safety
Code and Section 14110.7 of this code.

(C) If this act is extended beyond the dates on which it becomes
inoperative and is repealed, in accordance with Section 14126.033,
the department, in consultation with representatives from the
long-term care industry, organized labor, and consumers, beginning
in the 2013-14 rate year, shall incorporate additional measures
into the system, including, but not limited to, quality and
accountability measures required by federal health care reform
that are identified by the federal Centers for Medicare and Medicaid
Services.

(D) The department, in consultation with representatives from
the long-term care industry, organized labor, and consumers, may
incorporate additional performance measures, including, but not
limited to, the following:

(i) Compliance with state policy associated with the United
States Supreme Court decision in Olmstead v. L.C. ex rel. Zimring
(1999) 527 U.S. 581.

(ii) Direct care staff retention, if not addressed in the 2012-13
rate year.

(iii) The use of chemical restraints.

(E) Beginning with the 2015-16 fiscal year, the department, in
consultation with representatives from the long-term care industry,
organized labor, and consumers, shall incorporate direct care staff
retention as a performance measure in the methodology developed
pursuant to this section.

(j) (1) Beginning with the 2010-11 rate year, and pursuant to
subparagraph (B) of paragraph (5) of subdivision (a) of Section
14126.023, the department shall set aside savings achieved from
setting the professional liability insurance cost category, including
any insurance deductible costs paid by the facility, at the 75th
percentile. From this amount, the department shall transfer the
General Fund portion into the Skilled Nursing Facility Quality and
Accountability Special Fund. A skilled nursing facility shall
provide supplemental data on insurance deductible costs to
facilitate this adjustment, in the format and by the deadlines
determined by the department. If this data is not provided, a
facility’s insurance deductible costs will remain in the
administrative costs category.

(2) Notwithstanding paragraph (1), for the 2012-13 rate year
only, savings from capping the professional liability insurance cost
category pursuant to paragraph (1) shall remain in the General
Fund and shall not be transferred to the Skilled Nursing Facility
Quality and Accountability Special Fund.

(k)  For the 2013-14 rate year, if there is a rate increase in the
weighted average Medi-Cal reimbursement rate, the department
shall set aside the first 1 percent of the weighted average Medi-Cal
reimbursement rate increase for the Skilled Nursing Facility Quality
and Accountability Special Fund.

(l) If this act is extended beyond the dates on which it becomes
inoperative and is repealed, for the 2014-15 rate year, in addition
to the amount set aside pursuant to subdivision (k), if there is a
rate increase in the weighted average Medi-Cal reimbursement
rate, the department shall set aside at least one-third of the weighted
average Medi-Cal reimbursement rate increase, up to a maximum
of 1 percent, from which the department shall transfer the General
Fund portion of this amount into the Skilled Nursing Facility
Quality and Accountability Special Fund.

(m) Beginning with the 2015-16 rate year, and each subsequent
rate year thereafter for which this article is operative, an amount
equal to the amount deposited in the fund pursuant to subdivisions
(k) and (l) for the 2014-15 rate year shall be deposited into the
Skilled Nursing Facility Quality and Accountability Special Fund,
for the purposes specified in this section.

(n) (1) (A) Beginning with the 2013-14 rate year, the
department shall pay a supplemental payment, by April 30, 2014,
to skilled nursing facilities based on all of the criteria in subdivision
(i), as published by the department, and according to performance
measure benchmarks determined by the department in consultation
with stakeholders.

(B) (i) The department may convene a diverse stakeholder
group, including, but not limited to, representatives from consumer
groups and organizations, labor, nursing home providers, advocacy
organizations involved with the aging community, staff from the
Legislature, and other interested parties, to discuss and analyze
alternative mechanisms to implement the quality and accountability
payments provided to nursing homes for reimbursement.

(ii) The department shall articulate in a report to the fiscal and
appropriate policy committees of the Legislature the
implementation of an alternative mechanism as described in clause
(i) at least 90 days prior to any policy or budgetary changes, and
seek subsequent legislation in order to enact the proposed changes.

(2) Skilled nursing facilities that do not submit required
performance data by the department’s specified data submission
deadlines pursuant to subdivision (i) shall not be eligible to receive
supplemental payments.

(3) Notwithstanding paragraph (1), if a facility appeals the
performance measure of compliance with the direct care service
hours per patient per day requirements, pursuant to Section 1276.5
of the Health and Safety Code, to the State Department of Public
Health, and it is unresolved by the department’s published due
date, the department shall not use that performance measure when
determining the facility’s supplemental payment.

(4) Notwithstanding paragraph (1), if the department is unable
to pay the supplemental payments by April 30, 2014, then on May
1, 2014, the department shall use the funds available in the Skilled
Nursing Facility Quality and Accountability Special Fund as a
result of savings identified in subdivisions (k) and (l), less the
administrative costs required to implement subparagraphs (A) and
(B) of paragraph (3) of subdivision (b), in addition to any Medicaid
funds that are available as of December 31, 2013, to increase
provider rates retroactively to August 1, 2013.

(o) The department shall seek necessary approvals from the
federal Centers for Medicare and Medicaid Services to implement
this section. The department shall implement this section only in
a manner that is consistent with federal Medicaid law and
regulations, and only to the extent that approval is obtained from
the federal Centers for Medicare and Medicaid Services and federal
financial participation is available.

(p) In implementing this section, the department and the State
Department of Public Health may contract as necessary, with
California’s Medicare Quality Improvement Organization, or other
entities deemed qualified by the department or the State
Department of Public Health, not associated with a skilled nursing
facility, to assist with development, collection, analysis, and
reporting of the performance data pursuant to subdivision (i), and
with demonstrated expertise in long-term care quality, data
collection or analysis, and accountability performance measurement
models pursuant to subdivision (i). This subdivision establishes
an accelerated process for issuing any contract pursuant to this
section. Any contract entered into pursuant to this subdivision shall
be exempt from the requirements of the Public Contract Code,
through December 31, 2020.

(q) Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code,
the following shall apply:

(1) The director shall implement this section, in whole or in
part, by means of provider bulletins, or other similar instructions
without taking regulatory action.

(2) The State Public Health Officer may implement this section
by means of all-facility letters, or other similar instructions without
taking regulatory action.

(r) Notwithstanding paragraph (1) of subdivision (n), if a final
judicial determination is made by any state or federal court that is
not appealed, in any action by any party, or a final determination
is made by the administrator of the federal Centers for Medicare
and Medicaid Services, that any payments pursuant to subdivisions
(a) and begin delete (n), end delete begin insert (n) end insert are invalid, unlawful, or contrary to any begin delete provision
of end delete federal law or begin delete regulations, end delete begin insert regulation, end insert or begin delete of end delete state law, these
subdivisions shall become begin delete inoperative, end delete begin insert inoperative end insert and for the
2011-12 rate year, the rate increase provided under subparagraph
(A) of paragraph (4) of subdivision (c) of Section 14126.033 shall
be reduced by the amounts described in subdivision (j). For the
2013-14 and 2014-15 rate years, any rate increase shall be reduced
by the amounts described in subdivisions (j) to (l), inclusive.

SEC. 6.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.