§ 2808. Residential health care facilities; rates of payment.

1-a. Notwithstanding sections one hundred twelve and one hundred
sixty-three of the state finance law and any other inconsistent
provision of law, the commissioner shall make grants to public
residential health care facilities without a competitive bid or request
for proposal process for the purposes of addressing the overall
increases in input costs borne by such facilities. Such modifications
shall also be primarily intended to promote the provision of quality
health care, quality operation, updated technology and improved staff
development and support by such facilities. Such grants shall be in the
following aggregate amounts for the following periods: five million for
the period April first, two thousand six through March thirty-first, two
thousand seven; fifteen million for the period April first, two thousand
seven through March thirty-first, two thousand eight; and ten million
for the period April first, two thousand eight through March
thirty-first, two thousand nine.

The amount allocated to each eligible public residential health care
facility for each period shall be calculated as the result of (i) the
total payment for each period multiplied by (ii) the ratio of patient
days for patients eligible for medical assistance pursuant to title
eleven of article five of the social services law provided by the public
residential health care facility, divided by the total of such patient
days summed for all eligible public residential health care facilities.
Grants under this subdivision shall be made on a quarterly basis.

* 2. (a) The commissioner, with the approval of the state hospital
review and planning council, shall promulgate regulations to be
effective the first day of January, nineteen hundred seventy-eight,
relating the rate of payment for each residential health care facility
to real property costs.

(b) Such regulations may differentiate based upon the form of
ownership of the facility, and shall provide for consideration of such
factors as the age, size, location and condition of the facility.

(c) For facilities granted operating certificates prior to March
tenth, nineteen hundred seventy-five, the real property costs shall be
computed upon a cost valuation basis of the facility as determined by
the commissioner, who, subject to the approval of the director of the
budget, may provide exceptions in circumstances where he finds that
application of the regulations would result in excessive reimbursement
or in severe economic hardship to the facility not caused by
circumstances reasonably under the control of the facility.

(d) For facilities granted operating certificates on or after March
tenth, nineteen hundred seventy-five, recognition of real property costs
in such regulations shall be based upon historical costs to the owner of
the facility, provided that payment for real property costs shall not be
in excess of the actual debt service, including principal and interest,
and payment with respect to owner's equity. For purposes of this
subdivision, owner's equity shall be calculated without regard to any
surplus created by revaluation of assets and shall not include amounts
resulting from mortgage amortization where the payment therefor has been
provided by real property cost reimbursement.

(e) All transactions, including leases and mortgages, which are not
bona fide and reasonable shall be disregarded.

* NB Expired December 31, 1978

2-a. (a) The commissioner, with the approval of the state hospital
review and planning council, shall promulgate regulations to be
effective the first day of January, nineteen hundred seventy-nine,
relating the rate of payment for each residential health care facility
to real property costs.

(b) Such regulations may differentiate based upon the form of
ownership of the facility, and shall provide for consideration of such
factors as the age, size, location and condition of the facility.

(c) For facilities granted operating certificates prior to March
tenth, nineteen hundred seventy-five, the real property costs shall be
computed upon a cost valuation basis of the facility as determined by
the commissioner, who, subject to the approval of the director of the
budget, may provide exceptions in circumstances where he finds that
application of the regulations would result in excessive reimbursement
or in severe economic hardship to the facility not caused by
circumstances reasonably under the control of the facility.

* (d) For facilities granted operating certificates on or after March
tenth, nineteen hundred seventy-five, recognition of real property costs
in such regulations shall be based upon historical costs to the owner of
the facility, provided that payment for real property costs shall not be
in excess of the actual debt service, including principal and interest,
and payment with respect to owner's equity, and further provided that,
subject to federal financial participation, and subject to the approval
of the commissioner, effective April first, two thousand fifteen, the
commissioner may modify such payments for real property costs for
purposes of effectuating a shared savings program, whereby facilities
share a minimum of fifty percent of savings, for facilities that elect
to refinance their mortgage loans. For purposes of this subdivision,
owner's equity shall be calculated without regard to any surplus created
by revaluation of assets and shall not include amounts resulting from
mortgage amortization where the payment therefor has been provided by
real property cost reimbursement.

* NB Effective until March 31, 2025

* (d) For facilities granted operating certificates on or after March
tenth, nineteen hundred seventy-five, recognition of real property costs
in such regulations shall be based upon historical costs to the owner of
the facility, provided that payment for real property costs shall not be
in excess of the actual debt service, including principal and interest,
and payment with respect to owner's equity. For purposes of this
subdivision, owner's equity shall be calculated without regard to any
surplus created by revaluation of assets and shall not include amounts
resulting from mortgage amortization where the payment therefor has been
provided by real property cost reimbursement.

* NB Effective March 31, 2025

(e) All transactions, including leases and mortgages, which are not
bona fide and reasonable shall be disregarded.

2-b. Notwithstanding any inconsistent provision of this section, or
any other contrary provision of law and subject to the availability of
federal financial participation, the operating cost component of rates
of payment by governmental agencies for inpatient services provided on
and after January first, two thousand seven by residential health care
facilities shall be in accordance with the following:

(a) (i) Subject to the provisions of subparagraphs (ii) through (vi)
of this paragraph, for the two thousand seven rate period the operating
cost component of rates of payment shall reflect the operating cost
component of rates effective for October first, two thousand six, as
adjusted for inflation in accordance with paragraph (c) of subdivision
ten of section twenty-eight hundred seven-c of this article; and for the
January first, two thousand eight through March thirty-first, two
thousand nine rate period the operating cost component of rates of
payment shall reflect the operating cost component of rates effective
for December thirty-first, two thousand six, as adjusted for inflation
in accordance with paragraph (c) of subdivision ten of section
twenty-eight hundred seven-c of this article.

(ii) Rates for the periods two thousand seven and two thousand eight
shall be further adjusted by a per diem add-on amount, as determined by
the commissioner, reflecting the proportional amount of each facility's
projected Medicaid benefit to the total projected Medicaid benefit for
all facilities of the imputed use of the rate-setting methodology set
forth in paragraph (b) of this subdivision, provided, however, that for
those facilities that do not receive a per diem add-on adjustment
pursuant to this subparagraph, rates shall be further adjusted to
include the proportionate benefit, as determined by the commissioner, of
the expiration of the opening paragraph and paragraph (a) of subdivision
sixteen of this section and of paragraph (a) of subdivision fourteen of
this section, provided, further, however, that the aggregate total of
the rate adjustments made pursuant to this subparagraph shall not exceed
one hundred thirty-seven million five hundred thousand dollars for the
two thousand seven rate period and one hundred sixty-seven million five
hundred thousand dollars for the two thousand eight rate period and
provided further, however, that such rate adjustments as made pursuant
to this subparagraph prior to two thousand twelve shall not be subject
to subsequent adjustment or reconciliation.

(iii) Revisions to two thousand six rates occurring on and after
January first, two thousand seven, shall be annually incorporated,
retroactively and prospectively, into two thousand seven and two
thousand eight rates on or about November thirtieth, two thousand seven
and November thirtieth, two thousand eight, respectively.

(iv) The capital cost component of rates pursuant to this paragraph
shall fully reflect the cost of local property taxes and payments made
in lieu of local property taxes, as reported in each facility's cost
report submitted for the year two years prior to the rate year.

(v) Rates for the two thousand seven and two thousand eight rate
periods, as computed pursuant to this paragraph, shall not be subject to
case mix adjustment, provided, however, that a facility may, in
accordance with its existing full house schedule of submission of
patient review instruments, submit data in support of a request for a
rate adjustment to reflect an increased facility case mix equal to or
greater than .05, provided further, however, that such a facility will
be required to continue to make such full house submissions in
accordance with its existing submission schedule for rate periods up
through December thirty-first, two thousand eight.

(vi) For the period January first, two thousand seven through December
thirty-first, two thousand eight, notwithstanding any contrary provision
of law or regulation, voluntary facilities shall not be required to
deposit reimbursement received for depreciation expenses into a
segregated depreciation fund account.

(b) (i) (A) Subject to the provisions of subparagraphs (ii) through
(xiv) of this paragraph, for periods on and after April first, two
thousand nine the operating cost component of rates of payment shall
reflect allowable operating costs as reported in each facility's cost
report for the two thousand two calendar year, as adjusted for inflation
on an annual basis in accordance with the methodology set forth in
paragraph (c) of subdivision ten of section twenty-eight hundred seven-c
of this article, provided, however, that for those facilities which are
determined by the commissioner to be qualifying facilities in accordance
with the provisions of clause (B) of this subparagraph, rates shall be
further adjusted to include the proportionate benefit, as determined by
the commissioner, of the expiration of the opening paragraph and
paragraph (a) of subdivision sixteen of this section and of paragraph
(a) of subdivision fourteen of this section, and provided further that
the operating cost component of rates of payment for those facilities
which are determined by the commissioner to be qualifying facilities in
accordance with the provisions of clause (B) of this subparagraph shall
not be less than the operating component such facilities received in the
two thousand eight rate period, as adjusted for inflation on an annual
basis in accordance with the methodology set forth in paragraph (c) of
subdivision ten of section twenty-eight hundred seven-c of this article
and further provided, however, that rates for facilities whose operating
cost component reflects base year costs subsequent to January first, two
thousand two shall have rates computed in accordance with this
paragraph, utilizing allowable operating costs as reported in such
subsequent base year period, and trended forward to the rate year in
accordance with applicable inflation factors.

(B) For the purposes of this subparagraph qualifying facilities are
those facilities for which the commissioner determines that their
reported two thousand two base year operating cost component, as defined
in accordance with the regulations of the department as set forth in 10
NYCRR 86-2.10(a)(7); is less than the operating component such
facilities received in the two thousand eight rate period, as adjusted
by applicable trend factors.

(ii) (A) The operating component of rates shall be subject to case mix
adjustment through application of the relative resource utilization
groups system of patient classification (RUG-III) employed by the
federal government with regard to payments to skilled nursing facilities
pursuant to title XVIII of the federal social security act (Medicare),
as revised by regulation to reflect New York state wages and fringe
benefits, provided, however, that such RUG-III classification system
weights shall be increased in the following amounts for the following
categories of residents: (1) thirty minutes for the impaired cognition A
category, (2) forty minutes for the impaired cognition B category, and
(3) twenty-five minutes for the reduced physical functions B category.
Such adjustments shall be made in January and July of each calendar
year. Such adjustments and related patient classifications in each
facility shall be subject to audit review in accordance with regulations
promulgated by the commissioner.

(B) Effective April first, two thousand twenty-four, the case mix
adjustment from the operating component of the rates for skilled nursing
facilities shall remain unchanged from the July two thousand
twenty-three rates during the development and until full implementation
of a case mix methodology using the Patient Driven Payment Model.

(iii) Specified adjustments to the operating component of rates in
effect for periods prior to January first, two thousand nine, with
regard to extended care for persons with traumatic brain injury and for
the cost of providing hepatitis B vaccinations shall continue on and
after January first, two thousand nine.

(iv) The capital cost component of rates on and after January first,
two thousand nine shall: (A) fully reflect the cost of local property
taxes and payments made in lieu of local property taxes, as reported in
each facility's cost report submitted for the year two years prior to
the rate year; (B) provided, however, notwithstanding any inconsistent
provision of this article, commencing April first, two thousand twenty
for rates of payment for patients eligible for payments made by state
governmental agencies, the capital cost component determined in
accordance with this subparagraph and inclusive of any shared savings
for eligible facilities that elect to refinance their mortgage loans
pursuant to paragraph (d) of subdivision two-a of this section, shall be
reduced by the commissioner by five percent; and (C) provided, however,
notwithstanding any inconsistent provision of this article, commencing
April first, two thousand twenty-four for rates of payment for patients
eligible for payments made by state governmental agencies, the capital
cost component determined in accordance with this subparagraph and
inclusive of any shared savings for eligible facilities that elect to
refinance their mortgage loans pursuant to paragraph (d) of subdivision
two-a of this section, shall be reduced by the commissioner by an
additional ten percent, provided, however, that such reduction shall not
apply to rates of payment for patients in pediatric residential health
care facilities as defined in paragraph (c) of subdivision two of
section twenty-eight hundred eight-e of this article.

(v) The direct component of the operating component of rates of
payment shall include allowable direct therapy costs and associated
overhead costs and shall exclude administrative overhead costs related
to pharmacy services and the costs of non-prescription drugs and
supplies, which shall be reflected in facility rates as non-comparable
costs.

(vi) For purposes of computing peer group cost ceilings for the direct
and indirect component of the operating component of rates, facilities
shall be organized into peer groups consisting of: (A) free-standing
facilities with certified bed capacities of less than three hundred
beds; (B) free-standing facilities with certified bed capacities of
three hundred beds or more; and (C) hospital based facilities.

(vii) In determining the operating cost component of rates, for each
peer group, a corridor shall be developed around the statewide mean
direct and indirect price per day, provided, however, that the corridor
around each mean direct and indirect price per day shall have a base no
less than eighty-five percent and no greater than ninety percent of each
mean direct and indirect price per day and a ceiling no greater than one
hundred fifteen percent and no less than one hundred ten percent of each
mean direct and indirect price per day, and further provided, however,
that the total financial impact of the application of the ceiling shall
be substantially equal to the total financial impact of the application
of the base.

(viii) The operating component of rates shall be adjusted to reflect a
per diem add-on amount of eight dollars, trended forward to reflect
applicable inflation factors from two thousand six to two thousand nine
and prospectively thereafter, for each patient who: (A) qualifies under
both the RUG-III impaired cognition and the behavioral problems
categories, or (B) has been diagnosed with Alzheimer's disease or
dementia, is classified in the reduced physical functions A, B or C, or
in behavioral problems A or B categories, and has an activities of daily
living index score of ten or less.

(ix) The operating component of rates shall be adjusted to reflect a
per diem add-on amount of seventeen dollars, trended forward to reflect
applicable inflation factors from two thousand six to two thousand nine
and prospectively thereafter, for each patient whose body mass index is
greater than thirty-five.

(x) For periods on and after January first, two thousand nine,
notwithstanding any contrary provision of law or regulation, voluntary
facilities shall not be required to deposit reimbursement received for
depreciation expenses into a segregated depreciation fund account.

(xi) Public facilities, and non-public facilities with fewer than
eighty certified beds, which have a facility specific direct adjusted
payment price per day equal to the ceiling direct price per day shall
have such direct adjusted payment price per day further adjusted through
the addition of fifty percent of the difference between the facility's
specific direct cost per day and the ceiling direct price per day.
Public facilities, and non-public facilities with fewer than eighty
certified beds, which have a facility specific indirect adjusted payment
price per day equal to the ceiling indirect price per day shall have
such indirect adjusted payment price per day further adjusted through
the addition of fifty percent of the difference between the facility's
specific indirect cost per day and the ceiling indirect price per day.
Such adjustments to direct and indirect adjusted payment prices per day
shall be increased to the rate year by application of the applicable
inflation factor and adjusted by the regional direct and indirect input
price adjustment factors calculated pursuant to subdivision seventeen of
this section.

(xii) Public facilities shall receive rates that are consistent with
the provisions of this paragraph, provided, however, that in no event
shall such rates, in aggregate, exceed the amount permitted under
federal upper payment limits applicable to public facilities. In the
event such public facilities are, pursuant to this subparagraph, subject
to limitations on such rates, the commissioner shall make grants from
state funds to such facilities equal to one-half of the additional
amount that such facilities would have received if such limitations had
not been applied.

(xiii) The appointment of a receiver or the establishment of a new
operator or replacement or renovation of an existing facility on or
after January first, two thousand seven shall not result in a revision
to the operating component of the facility's rates for any rate period
through December thirty-first, two thousand eleven, provided, however,
that the provisions of this subparagraph shall not apply to a facility
which has a certificate of need application filed with the department as
of December thirty-first, two thousand six, which is subsequently
approved and which otherwise meets existing department criteria for the
establishment of a new base year for rate-setting purposes.

(xiv) The commissioner may promulgate regulations, including emergency
regulations, to implement the provisions of this paragraph.

(c) In order to ensure that the quality of resident care is maintained
and improved for rate periods on and after January first, two thousand
seven, no less than sixty-five percent of the additional Medicaid
reimbursement received by a residential health care facility that is
attributable to the per-diem add-on amount received pursuant to
subparagraph (ii) of paragraph (a) of this subdivision or, for rate
periods on and after January first, two thousand nine, that is related
to utilization of two thousand two reported base year costs, as compared
to the reimbursement each such facility would have received had such
facility's Medicaid reimbursement rates continued to reflect base year
costs used with regard to such facility's two thousand six rates, shall
be allocated for the purpose of recruitment and retention of
non-supervisory workers or any worker with direct resident care
responsibility or for purposes authorized under the nursing home quality
improvement demonstration program as established by section twenty-eight
hundred eight-d of this article, provided, however, in no circumstance
shall facilities be required to spend more than seventy-five percent of
such funds for these purposes, and provided further, the commissioner is
authorized to audit each such facility for the purpose of ensuring
compliance with the provisions of this paragraph and shall recoup any
amount determined to have been in contravention of the requirements of
this paragraph, provided, however, that, upon application of a facility,
the commissioner may, after determining that other funds are not
available, waive the application of this paragraph insofar as it is
determined by the commissioner that additional funds must be expended by
such facility to correct deficiencies that constitute a threat to
resident safety.

(d) Cost reports submitted by residential health care facilities for
the two thousand two calendar year or any part thereof shall,
notwithstanding any contrary provision of law, be subject to audit
through December thirty-first, two thousand eighteen and facilities
shall retain for the purpose of such audits all fiscal and statistical
records relevant to such cost reports, provided, however, that any such
audit commenced on or before December thirty-first, two thousand
eighteen, may be completed and used for the purpose of adjusting any
Medicaid rates which utilize such costs.

(e) For rate periods subsequent to two thousand nine which utilize
reported costs from a base year subsequent to two thousand two, the
following categories of facilities, as established pursuant to
applicable regulations, shall receive rates that are no less than
equivalent, as determined by the commissioner, to the rates that were in
effect for such facilities on December thirty-first, two thousand six,
trended forward for inflation to the applicable rate period: (A) AIDS
facilities or discrete AIDS units within facilities, (B) discrete units
for residents receiving care in a long term inpatient rehabilitation
program for traumatic brain injured persons, (C) discrete units for long
term ventilator dependent residents, (D) discrete units providing
specialized programs for residents requiring behavioral interventions,
and (E) facilities or discrete units within facilities that provide
extensive nursing, medical, psychological and counseling support
services solely to children.

(f) The operating component of Medicaid rates of payment shall, by no
later than the two thousand twelve rate period, be based on allowable
costs, as reported on annual facility cost reports, from a base year
period no earlier than three years prior to the initial rate year, and
then trended forward by applicable inflation factors. Thereafter, the
base year utilized for rate-setting purposes shall be updated to be
current no less frequently than every six years provided, however, that
for the purposes of this paragraph, current shall mean that the
operating components of the initial rate year utilizing such updated
base year shall reflect allowable costs as reported in annual facility
cost reports for periods no earlier than three years prior to such
initial rate year and then trended forward to the rate year in
accordance with applicable inflation factors.

(g) Notwithstanding any contrary provision of this subdivision or any
other contrary provision of law, rule or regulation, rates of payment
for inpatient services provided on and after April first, two thousand
nine by residential health care facilities shall, except for the
establishment of any statewide or any peer group base, mean or ceiling
prices per day, be calculated utilizing only the number of patients
properly assessed and reported in each patient classification group and
eligible for medical assistance pursuant to title eleven of article five
of the social services law.

(h) Notwithstanding any contrary provision of law and subject to the
availability of federal financial participation, for the period April
first, two thousand eleven through June thirtieth, two thousand eleven,
the non-capital components of rates shall be subject to a uniform
percentage reduction sufficient to reduce such rates by an aggregate
amount of twenty-seven million one hundred thousand dollars, and
provided further, however, that such reductions shall be disregarded in
computations made pursuant to section two of part D of chapter
fifty-eight of the laws of two thousand nine, as amended.

2-c. (a) Notwithstanding any inconsistent provision of this section or
any other contrary provision of law and subject to the availability of
federal financial participation, the non-capital component of rates of
payment by governmental agencies for inpatient services provided by
residential health care facilities on or after October first, two
thousand eleven, but no later than January first, two thousand twelve,
shall reflect a direct statewide price component, and indirect statewide
price component, and a facility specific non-comparable component,
utilizing allowable operating costs for a base year as determined by the
commissioner by regulation. Such rate components shall be periodically
updated to reflect changes in operating costs.

(b) The direct and indirect statewide price components shall be
adjusted by a wage equalization factor and such other factors as
determined to be appropriate to recognize legitimate cost differentials
and the direct statewide price component shall be subject to a case mix
adjustment utilizing the patients that are eligible for medical
assistance pursuant to title eleven of article five of the social
services law. Such wage equalization factor shall be periodically
updated to reflect current labor market conditions.

(c) The non-capital component of the rates for: (i) AIDS facilities or
discrete AIDS units within facilities; (ii) discrete units for residents
receiving care in a long-term inpatient rehabilitation program for
traumatic brain injured persons; (iii) discrete units providing
specialized programs for residents requiring behavioral interventions;
(iv) discrete units for long-term ventilator dependent residents; and
(v) facilities or discrete units within facilities that provide
extensive nursing, medical, psychological and counseling support
services solely to children shall reflect the rates in effect for such
facilities on January first, two thousand nine, as adjusted for
inflation and rate appeals in accordance with applicable statutes,
provided, however, that such rates for facilities described in
subparagraph (i) of this paragraph shall reflect the application of the
provisions of section twelve of part D of chapter fifty-eight of the
laws of two thousand nine, and provided further, however, that insofar
as such rates reflect trend adjustments for trend factors attributable
to the two thousand eight and two thousand nine calendar years the
aggregate amount of such trend factor adjustments shall be subject to
the provisions of section two of part D of chapter fifty-eight of the
laws of two thousand nine, as amended.

(d) The commissioner shall promulgate regulations, and may promulgate
emergency regulations, to implement the provisions of this subdivision.
Such regulations shall be developed in consultation with the nursing
home industry and advocates for residential health care facility
residents and, further, the commissioner shall provide notification
concerning such regulations to the chairs of the senate and assembly
health committees, the chair of the senate finance committee and the
chair of the assembly ways and means committee. Such regulations shall
include provisions for rate adjustments or payment enhancements to
facilitate a minimum four-year transition of facilities to the
rate-setting methodology established by this subdivision and may also
include, but not be limited to, provisions for facilitating quality
improvements in residential health care facilities. For purposes of
facilitating quality improvements through the establishment of a nursing
home quality pool to be funded at the discretion of the commissioner by
(i) adjustments in medical assistance rates, (ii) funds made available
through state appropriations, or (iii) a combination thereof, those
facilities that contribute to the quality pool, but are deemed
ineligible for quality pool payments due exclusively to a specific case
of employee misconduct, shall nevertheless be eligible for a quality
pool payment if the facility properly reported the incident, did not
receive a survey citation from the commissioner or the Centers for
Medicare and Medicaid Services establishing the facility's culpability
with regard to such misconduct and, but for the specific case of
employee misconduct, the facility would have otherwise received a
quality pool payment. Regulations pertaining to the facilitation of
quality improvement may be made effective for periods on and after
January first, two thousand thirteen.

(e) With the exception of those enrollees covered under a payment rate
methodology agreement negotiated with a residential health care
facility, payments for inpatient residential health care facility
services provided to patients eligible for medical assistance pursuant
to title eleven of article five of the social services law made by
organizations operating in accordance with the provisions of article
forty-four of this chapter or by health maintenance organizations
organized and operating in accordance with article forty-three of the
insurance law, shall be the rates of payment that would be paid for such
patients under the medical assistance program as determined pursuant to
this section and subdivision ten of section twenty-eight hundred seven-d
of this article and as in effect at the time such services were
provided. The provisions of this paragraph shall not apply to payments
for patients whose placement in a residential health care facility is
for the purpose of receiving time-limited rehabilitation, to be followed
by discharge from the facility, during the period such time-limited
services are provided.

(f) The commissioner shall establish a prospective per diem adjustment
for all nursing homes, other than nursing homes providing services
primarily to children under the age of twenty-one, beginning April
first, two thousand seventeen and each year thereafter sufficient to
achieve eighteen million dollars in savings in each state fiscal year.

* (g) Notwithstanding any other provision of law or regulation to the
contrary, any residential health care facility established pursuant to
this article located in a county with a population of more than
seventy-two thousand and less then seventy-five thousand persons based
on the two thousand ten federal census, and operating between one
hundred ten and one hundred thirty beds, being reimbursed by the
department on a fee-for-services basis, shall be reimbursed at a rate of
no less than one hundred seventeen percent of the fee-for-service rate
of reimbursement calculated pursuant to this section for that facility
for inpatient services provided on or after March first, two thousand
eighteen.

* NB There are 2 par (g)'s

* (g) The commissioner shall reduce Medicaid revenue to a residential
health care facility in a payment year by two percent if in each of the
two most recent payment years for which New York state nursing home
quality initiative data is available, the facility was ranked in the
lowest two quintiles of facilities based on its nursing home quality
initiative performance, and was ranked in the lowest quintile in the
most recent payment year. The commissioner shall waive the application
of this paragraph to a facility if the commissioner determines that the
facility is in financial distress.

* NB There are 2 par (g)'s

2-d. Residential health care facility supplemental payments.
Notwithstanding any inconsistent provision of law, rule or regulation
and subject to the availability of federal financial participation, for
the period May first, two thousand eleven through May thirty-first, two
thousand eleven, the commissioner shall adjust inpatient medicaid rates
of payment established pursuant to this article for eligible residential
health care facilities in accordance with the following:

(a) Rate adjustments made pursuant to this subdivision shall be in the
form of rate add-ons and shall not exceed an aggregate amount of two
hundred twenty-one million three hundred thousand dollars.

(b) Eligible facilities are those facilities which the commissioner
determines have experienced a net reduction in their inpatient Medicaid
reimbursement for the period April first, two thousand nine through
March thirty-first, two thousand eleven as a result of the following:

(i) inpatient rate adjustments made pursuant to paragraph (b) of
subdivision two-b of this section;

(ii) use of the case mix methodology described in paragraph (g) of
subdivision two-b of this section;

(iii) inpatient rate adjustments made pursuant to section two of part
D of chapter fifty-eight of the laws of two thousand nine, as amended.

(c) The following eligible facilities shall receive rate adjustments
pursuant to this subdivision equal to one hundred percent of their net
reimbursement reduction as computed by the commissioner in accordance
with paragraph (b) of this subdivision:

(i) facilities that have been determined by the commissioner as being
eligible for distributions of amounts available for the two thousand
nine period as provided in subdivision twenty-one of this section;

(ii) non-public facilities whose total operating losses equal or
exceed five percent of total operating revenue and whose medicaid
utilization equals or exceeds seventy percent, based on either their two
thousand nine cost report or based on the otherwise most recently
available cost report, as determined by the commissioner;

(iii) facilities or distinct units of facilities providing inpatient
services primarily to children under the age of twenty-one.

(d) Eligible facilities, other than eligible facilities described in
paragraph (c) of this subdivision, shall receive rate adjustments
pursuant to this subdivision equal to fifty percent of their net
reimbursement reduction as computed by the commissioner in accordance
with paragraph (b) of this subdivision.

(e) Eligible facilities as described in paragraph (d) of this
subdivision which, as determined by the commissioner, after application
of the rate adjustments authorized by paragraph (d) of this subdivision,
remain subject to a net reduction in their inpatient Medicaid revenue
that is in excess of two percent, as measured with regard to the
non-capital components of facility inpatient rates in effect on March
thirty-first, two thousand nine as computed prior to the application of
trend factor adjustments attributable to the two thousand eight and two
thousand nine calendar years, shall have their rates further adjusted
such that such net reduction does not exceed such two percent.

(f) Eligible facilities as described in paragraph (d) of this
subdivision which, as determined by the commissioner, have experienced a
net reduction in their inpatient rates of more than six million dollars
as a result of the application of the factor described in subparagraph
(iii) of paragraph (b) of this subdivision shall after application of
the provisions of paragraph (e) of this subdivision, have their rates
further adjusted such that any such net reduction remaining after the
application of the other provisions of this subdivision is reduced to
zero.

(g) In computing net reductions of medicaid reimbursement pursuant to
paragraph (b) of this subdivision the commissioner shall:

(i) disregard the impact of case mix adjustments as otherwise
scheduled for July first, two thousand ten; and,

(ii) disregard the impact of any rate adjustments issued on or after
January first, two thousand eleven, including adjustments to rate
periods prior to January first, two thousand eleven.

(h) Payments made pursuant to this subdivision shall not be subject to
subsequent adjustment or reconciliation and, further, the computation
and application of limitations on medicaid rates of payment as described
in section two of part D of chapter fifty-eight of the laws of two
thousand nine, as amended, and as applicable to the rate periods
described in paragraph (a) of this subdivision, shall disregard payments
made pursuant to this subdivision.

(i) Additional rate adjustments shall be made pursuant to this
subdivision to eligible facilities in the form of rate add-ons for the
period May first, two thousand eleven through May thirty-first, two
thousand eleven which shall in aggregate be equal to twenty-five percent
of the aggregate amount described in paragraph (a) of this subdivision
and which shall be distributed to each eligible facility in the same
proportion as the total distributions otherwise received by each
facility pursuant to this subdivision.

(j) The commissioner may, with the approval of the director of the
budget, and subject to the identification of sufficient nursing home
related medicaid savings to offset the expenditures authorized by this
paragraph, make additional rate adjustments pursuant to this subdivision
to eligible facilities in the form of rate add-ons for the period
December first, two thousand eleven through December thirty-first, two
thousand eleven which shall in aggregate be equal to twelve and
five-tenths percent of the aggregate amount described in paragraph (a)
of this subdivision and which shall be distributed to each eligible
facility in the same proportion as the total distributions otherwise
received by each facility pursuant to this subdivision.

3. The commissioner, with the approval of the state hospital review
and planning council, shall promulgate regulations to be effective the
first day of January, nineteen hundred seventy-eight, which shall relate
the rate of payment to the efficient operation and program management of
the facility, as well as to the quality of patient care provided by the
facility. Such regulations shall be consistent with the requirements of
subdivision three of section twenty-eight hundred seven of this chapter
and with federal laws and regulations.

4. The commissioner, in determining and certifying to the director of
the budget the rates of payment to residential health care facilities,
shall exclude the following costs: (a) contributions or other payments
to political parties, candidates or organizations; (b) direct or
indirect costs incurred for advertising or promotion except as allowed
by the commissioner; (c) costs incurred for the promotion or opposition,
directly or indirectly, of the passage of bills or resolutions pending
before or passed by a legislative body of any jurisdiction; (d) costs
which principally afford diversion, entertainment or amusement to their
owners, operators or employees not properly related to patient care or
treatment; (e) any penalty imposed by governmental agencies or courts,
and the costs of policies obtained solely to insure against the
imposition of such a penalty; and (f) costs incurred by the residential
health care facility to obtain the security required under the
provisions of section twenty-eight hundred nine of this chapter.

5. (a) Any operator withdrawing equity or assets from a hospital
operated for profit so as to create or increase a negative net worth or
when the hospital is in a negative net worth position, calculated
without regard to any surplus created by revaluation of assets, must
obtain the prior approval of the commissioner in accordance with
regulations promulgated by the commissioner with the approval of the
state hospital review and planning council. The commissioner shall make
a determination to approve or disapprove a request for withdrawal of
equity or assets under this subdivision within sixty days of the date of
the receipt of such a request. Requests shall be made in a form
acceptable to the department by certified or registered mail. In
addition to any other remedy or penalty available under this chapter,
and after opportunity for a hearing, the commissioner may require
replacement of the withdrawn equity or assets and may impose a penalty
for violation of the provisions of this subdivision, relating to
withdrawing equity or assets, or the regulations promulgated thereunder,
in an amount not to exceed ten percent of any amount withdrawn without
prior approval. No facility shall enter into a real property mortgage or
lease transaction without thirty days prior notice in writing to the
commissioner.

(b) On and after April first, two thousand ten, no non-public
residential health care facility may withdraw equity or transfer assets
which in the aggregate exceed three percent of such facility's total
reported annual revenue for patient care services, based on the
facility's most recently available reported data, without prior written
notification to the commissioner. Notification shall be made in a form
acceptable to the department by certified or registered mail.

(c) Notwithstanding any inconsistent provision of this subdivision, on
and after April first, two thousand ten, no non-public residential
health care facility, whether operated as a for-profit facility or as a
not-for-profit facility, may withdraw equity or transfer assets which in
the aggregate exceed three percent of such facility's total reported
annual revenue for patient care services, based on the facility's most
recently available reported data, without the prior written approval of
the commissioner. The commissioner shall make a determination to approve
or disapprove a request for withdrawal of equity or assets under this
subdivision within sixty days of the date of the receipt of a written
request from the facility. Requests shall be made in a form acceptable
to the department by certified or registered mail. In reviewing such
requests the commissioner shall consider the facility's overall
financial condition, any indications of financial distress, whether the
facility is delinquent in any payment owed to the department, whether
the facility has been cited for immediate jeopardy or substandard
quality of care, and such other factors as the commissioner deems
appropriate. In addition to any other remedy or penalty available under
this chapter, and after opportunity for a hearing, the commissioner may
require replacement of the withdrawn equity or assets and may impose a
penalty for violation of the provisions of this subdivision in an amount
not to exceed ten percent of any amount withdrawn without prior
approval.

* 6. Prior to the approval by the state hospital review and planning
council of any regulations promulgated pursuant to this section, the
commissioner shall convene a public hearing, upon at least seven days
notice, to consider the proposed regulations. The commissioner shall
include a summary of the comments made at such hearing in a report to
the state hospital review and planning council at the meeting at which
it considers the regulations for approval.

* NB Expired December 31, 1985

* 7. The commissioner may assess an annual fee on each residential
health care facility to be used to reimburse any first instance
appropriation for the purpose of making payments to receivers pursuant
to subdivision three of section twenty-eight hundred ten of this
article. Such fee shall not exceed thirty dollars per bed certified
pursuant to this article, and shall be a reimbursable expense for the
purposes of determining rates of payment made by government agencies.
The reimbursement rate for a facility must reflect the cost of the
annual fee prior to requiring that the facility pay the fee. The
commissioner shall seek to obtain federal approval to include such fee
as a reimbursable expense for purposes of computing reimbursement rates
pursuant to title XVIII of the federal social security act.

* NB (Effective pending Federal Law - Expired December 31, 1983)

8. Every lease or lease renewal executed on or after September first,
nineteen hundred eighty-six between a landlord and the operator of a
residential health care facility shall contain a provision terminating
any interest the operator of such facility may have in any lease of
premises used for the operation of such facility after the public health
council has approved the establishment of a new operator. Nothing herein
shall be construed to affect any interest such operator may have in any
movable equipment located on the premises of the facility. In the event
any lease or lease renewal executed on or after September first,
nineteen hundred eighty-six fails to contain the termination provision
required by this subdivision, the lease or lease renewal shall be deemed
to be terminated upon the public health council approval of a new
operator. The commissioner, the landlord, or the new operator shall be
entitled to maintain a summary proceeding to recover possession of the
real property in any court of competent jurisdiction upon such
termination.

9. Trend factors. (a) The commissioner, in accordance with the
methodology developed by the consultants pursuant to paragraph (b) of
this subdivision, shall establish trend factors to project for the
effect of inflation. The factors shall be applied to the appropriate
portion of reimbursable costs of residential health care facilities. The
methodology for developing the trend factor shall include the
appropriate external price indicators and shall also include the data
from major collective bargaining agreements as reported quarterly by the
federal department of labor, bureau of labor statistics, for
nonsupervisory employees.

(b) The methodology shall be developed by four independent consultants
with expertise in health economics appointed by the commissioner
pursuant to paragraph (b) of subdivision ten of section twenty-eight
hundred seven-c of this chapter. On or about September first of each
year following the effective date of this subdivision, the consultants
shall provide to the commissioner and the council the methodology to be
used to determine the trend factors for subsequent rate periods only,
beginning with the nine month period commencing April first, nineteen
hundred ninety-one and for subsequent twelve month periods commencing
January first, nineteen hundred ninety-two and thereafter. The
commissioner shall monitor the actual price movements during these
periods of the external price indicators used in the methodology, shall
report the results of the monitoring to the consultants and shall
implement the recommendations of the consultants for one prospective
interim annual adjustment to the trend factors to reflect such price
movements and to be effective on January first, one year after the
initial trend factor was established and one prospective final annual
adjustment to the trend factors to reflect such price movements and to
be effective on January first, two years after the initial trend factor
was established.

11. Residential health care facility reimbursement rate promulgation.
With regard to a residential health care facility, the provisions of
subdivision seven of section twenty-eight hundred seven of this article
relating to advance notification of rates shall not apply to prospective
or retroactive adjustments to rates that are based on rate appeals filed
by such facility, audits, changes in patient conditions or acuity
levels, the correction of errors or omissions of data or errors in the
computations of such rates, the submission of cost report data from
facilities without an established cost basis, the judicial annulment or
invalidation of existing rates or changes in the methodology used to
compute rates which changes are promulgated following the judicial
annulment or invalidation of existing rates or as otherwise authorized
by law. Notwithstanding any inconsistent provision of law or regulation,
as of April first, two thousand nine, with regard to administrative rate
appeals, the department will only review such appeals for (a) the
correction of computational errors or omissions of data by the
department in determining the operating rate based upon the information
provided to the department prior to the computation of the rate, (b)
capital cost reimbursement, or (c) such reasons as the commissioner
determines are appropriate. The department will not consider any
revisions made to a facility's annual cost report for operating rate
adjustment purpose later than the due date established by the
commissioner.

12. (a) Notwithstanding any inconsistent provision of law or
regulation, the commissioner shall increase rates of payment established
pursuant to this article for non-state operated public residential
health care facilities in an aggregate amount not to exceed one hundred
million dollars in additional reimbursement for payments for services
provided during the period July first, nineteen hundred ninety-five
through March thirty-first, nineteen hundred ninety-six. The
commissioner may adopt rules and regulations necessary to implement this
paragraph.

(b) Notwithstanding any inconsistent provision of law or regulation,
the commissioner shall provide, in addition to payments established
pursuant to this article prior to application of this section,
additional payments under the medical assistance program pursuant to
title eleven of article five of the social services law for non-state
operated public residential health care facilities, excluding public
residential health care facilities operated by a town or city within a
county, in an aggregate amount of two hundred fifty-seven million
dollars in additional payments in the period August first, nineteen
hundred ninety-six through March thirty-first, nineteen hundred
ninety-seven.

(c) Notwithstanding any inconsistent provision of law or regulation,
the commissioner shall provide, in addition to payments established
pursuant to this article prior to application of this section,
additional payments under the medical assistance program pursuant to
title eleven of article five of the social services law for non-state
operated public residential health care facilities, including public
residential health care facilities located in the county of Nassau and
the county of Westchester, but excluding public residential health care
facilities operated by a town or city within a county, in an aggregate
amount of $631.1 million in additional payments in the period April
first, nineteen hundred ninety-seven through March thirty-first,
nineteen hundred ninety-eight, and a like amount in the period April
first, nineteen hundred ninety-eight through March thirty-first,
nineteen hundred ninety-nine.

(d) Notwithstanding any inconsistent provision of law or regulation,
the commissioner shall provide, in addition to payments established
pursuant to this article prior to application of this section,
additional payments under the medical assistance program pursuant to
title eleven of article five of the social services law for non-state
operated public residential health care facilities, including public
residential health care facilities located in the county of Nassau and
the county of Westchester, but excluding public residential health care
facilities operated by a town or city within a county, in an aggregate
amount of $914.5 million in additional payments in the period April
first, nineteen hundred ninety-nine through March thirty-first, two
thousand.

(e) Notwithstanding any inconsistent provision of law or regulation,
the commissioner shall provide, in addition to payments established
pursuant to this article prior to application of this section,
additional payments under the medical assistance program pursuant to
title eleven of article five of the social services law for non-state
operated public residential health care facilities, including public
residential health care facilities located in the county of Nassau and
the county of Westchester, but excluding public residential health care
facilities operated by a town or city within a county, in an aggregate
amount of up to $991.5 million in additional payments each state fiscal
year for the period beginning April first, two thousand through March
thirty-first, two thousand five.

* (e-1) Notwithstanding any inconsistent provision of law or
regulation, the commissioner shall provide, in addition to payments
established pursuant to this article prior to application of this
section, additional payments under the medical assistance program
pursuant to title eleven of article five of the social services law for
non-state operated public residential health care facilities, including
public residential health care facilities located in the county of
Nassau, the county of Westchester and the county of Erie, but excluding
public residential health care facilities operated by a town or city
within a county, in aggregate annual amounts of up to one hundred fifty
million dollars in additional payments for the state fiscal year
beginning April first, two thousand six and for the state fiscal year
beginning April first, two thousand seven and for the state fiscal year
beginning April first, two thousand eight and of up to three hundred
million dollars in such aggregate annual additional payments for the
state fiscal year beginning April first, two thousand nine, and for the
state fiscal year beginning April first, two thousand ten and for the
state fiscal year beginning April first, two thousand eleven, and for
the state fiscal years beginning April first, two thousand twelve and
April first, two thousand thirteen, and of up to five hundred million
dollars in such aggregate annual additional payments for the state
fiscal years beginning April first, two thousand fourteen, April first,
two thousand fifteen and April first, two thousand sixteen and of up to
five hundred million dollars in such aggregate annual additional
payments for the state fiscal years beginning April first, two thousand
seventeen, April first, two thousand eighteen, and April first, two
thousand nineteen, and of up to five hundred million dollars in such
aggregate annual additional payments for the state fiscal years
beginning April first, two thousand twenty, April first, two thousand
twenty-one, and April first, two thousand twenty-two, and of up to five
hundred million dollars in such aggregate annual additional payments for
the state fiscal years beginning April first, two thousand twenty-three,
April first, two thousand twenty-four, and April first, two thousand
twenty-five. The amount allocated to each eligible public residential
health care facility for this period shall be computed in accordance
with the provisions of paragraph (f) of this subdivision, provided,
however, that patient days shall be utilized for such computation
reflecting actual reported data for two thousand three and each
representative succeeding year as applicable, and provided further,
however, that, in consultation with impacted providers, of the funds
allocated for distribution in the state fiscal year beginning April
first, two thousand thirteen, up to thirty-two million dollars may be
allocated in accordance with paragraph (f-1) of this subdivision.

* NB Effective until January 1, 2025

* (e-1) Notwithstanding any inconsistent provision of law or
regulation, the commissioner shall provide, in addition to payments
established pursuant to this article prior to application of this
section, additional payments under the medical assistance program
pursuant to title eleven of article five of the social services law for
non-state operated public residential health care facilities, including
public residential health care facilities located in the county of
Nassau, the county of Westchester and the county of Erie, but excluding
public residential health care facilities operated by a town or city
within a county, in aggregate annual amounts of up to one hundred fifty
million dollars in additional payments for the state fiscal year
beginning April first, two thousand six and for the state fiscal year
beginning April first, two thousand seven and for the state fiscal year
beginning April first, two thousand eight and of up to three hundred
million dollars in such aggregate annual additional payments for the
state fiscal year beginning April first, two thousand nine, and for the
state fiscal year beginning April first, two thousand ten and for the
state fiscal year beginning April first, two thousand eleven, and for
the state fiscal years beginning April first, two thousand twelve and
April first, two thousand thirteen, and of up to five hundred million
dollars in such aggregate annual additional payments for the state
fiscal years beginning April first, two thousand fourteen, April first,
two thousand fifteen and April first, two thousand sixteen and of up to
five hundred million dollars in such aggregate annual additional
payments for the state fiscal years beginning April first, two thousand
seventeen, April first, two thousand eighteen, and April first, two
thousand nineteen, and of up to five hundred million dollars in such
aggregate annual additional payments for the state fiscal years
beginning April first, two thousand twenty, April first, two thousand
twenty-one, and April first, two thousand twenty-two, and of up to five
hundred million dollars in such aggregate annual additional payments for
the state fiscal years beginning April first, two thousand twenty-three,
and from April first, two thousand twenty-four until December
thirty-first, two thousand twenty-four, and for the calendar year
January first, two thousand twenty-five through December thirty-first,
two thousand twenty-five, and for each calendar year thereafter. The
amount allocated to each eligible public residential health care
facility for this period shall be computed in accordance with the
provisions of paragraph (f) of this subdivision, provided, however, that
patient days shall be utilized for such computation reflecting actual
reported data for two thousand three and each representative succeeding
year as applicable, and provided further, however, that, in consultation
with impacted providers, of the funds allocated for distribution in the
state fiscal year beginning April first, two thousand thirteen, up to
thirty-two million dollars may be allocated in accordance with paragraph
(f-1) of this subdivision.

* NB Effective January 1, 2025

(f) The amount allocated to each eligible public residential health
care facility for each period shall be calculated as the result of (A)
the total payment for each period multiplied by (B) the ratio of patient
days for patients eligible for medical assistance pursuant to title
eleven of article five of the social services law provided by the public
residential health care facility, divided by the total of such patient
days summed for all eligible public residential health care facilities.
For the period August first, nineteen hundred ninety-six through March
thirty-first, nineteen hundred ninety-seven, nineteen hundred
ninety-four patient days shall be utilized; for the period April first,
nineteen hundred ninety-seven through March thirty-first, nineteen
hundred ninety-eight, nineteen hundred ninety-five patient days shall be
utilized; for the period April first, nineteen hundred ninety-eight
through March thirty-first, nineteen hundred ninety-nine, nineteen
hundred ninety-six patient days shall be utilized; for the period April
first, nineteen hundred ninety-nine through March thirty-first, two
thousand, nineteen hundred ninety-seven patient days shall be utilized;
for the period April first, two thousand through March thirty-first, two
thousand one, nineteen hundred ninety-eight patient days shall be
utilized; for the period April first, two thousand one through March
thirty-first, two thousand two, nineteen hundred ninety-nine patient
days shall be utilized; for the period April first, two thousand two
through March thirty-first, two thousand three, two thousand patient
days shall be utilized; for the period April first, two thousand three
through March thirty-first, two thousand four, two thousand one patient
days shall be utilized; for the period April first, two thousand four
through March thirty-first, two thousand five, two thousand two patient
days shall be utilized.

(f-1) Funds allocated by the provisions of paragraph (e-1) of this
subdivision for distribution pursuant to this paragraph, shall be
allocated proportionally to those public residential health care
facilities which were subject to retroactive reductions in payments made
pursuant to this subdivision for state fiscal year periods beginning
April first, two thousand six.

(g) Payments may be made based on adjustments to rates of payment for
services provided during the applicable period or as lump sum payments
to an eligible residential health care facility.

13. Notwithstanding any inconsistent provision of law or regulation to
the contrary, residential health care facility rates of payment
determined pursuant to this article for governmental agencies for
services provided on or after July first, nineteen hundred ninety-five
through March thirty-first, nineteen hundred ninety-six shall be reduced
by the commissioner, to reflect the elimination of operational
requirements previously mandated by law or, consistent with the
standards specified in subparagraph (v) of paragraph (a) of subdivision
two of section twenty-eight hundred three of this article, regulation or
the commissioner or other governmental agency, by a factor determined as
follows:

(i) an aggregate reduction shall be calculated for each residential
health care facility as the result of (A) fifty-six million dollars on
an annualized basis for nineteen hundred ninety-five, trended to the
rate year by the trend factor for projection of reimbursable costs to
the rate year, multiplied by (B) the ratio of patient days for patients
eligible for payments made by governmental agencies provided in a base
year two years prior to the rate year by a residential health care
facility, divided by the total of such patient days summed for all
residential health care facilities; and

(ii) the result for each residential health care facility shall be
divided by such patient days provided in the residential health care
facility, for a per diem reduction in rates of payment for such
residential health care facility for patients eligible for payments made
by governmental agencies.

14. (a) Notwithstanding any inconsistent provision of law or
regulation to the contrary, for purposes of establishing rates of
payment by governmental agencies for residential health care facilities
for services provided on or after April first, nineteen hundred
ninety-five through March thirty-first, nineteen hundred ninety-nine and
for services provided on or after July first, nineteen hundred
ninety-nine through March thirty-first, two thousand and on and after
April first, two thousand through March thirty-first, two thousand three
and on and after April first, two thousand three through March
thirty-first, two thousand six and on and after April first, two
thousand six through December thirty-first, two thousand six, the
reimbursable base year administrative services and fiscal services
costs, as defined in the New York state residential health care facility
accounting and reporting manual, of a residential health care facility,
excluding a provider of services reimbursed on an initial budget basis,
shall, except as otherwise provided in this subdivision, not exceed the
statewide average of total reimbursable base year administrative and
fiscal services costs of residential health care facilities. For the
purposes of this subdivision, reimbursable base year administrative and
fiscal services costs shall mean those base year administrative and
fiscal services costs remaining after application of all other
efficiency standards, including but not limited to, peer group cost
ceilings or guidelines.

(b) A separate statewide average of total reimbursable base year
administrative and fiscal services costs shall be determined for each of
those facilities wherein eighty percent or more of its patients are
classified with a patient acuity equal to or less than .83 which is used
as the basis for a facility's case mix adjustment. For the period July
first, two thousand through March thirty-first, two thousand one, the
total reimbursable base year administrative and fiscal services costs of
such facilities shall not exceed such separate statewide average plus
one and one-half percentage points. For annual periods thereafter
through December thirty-first, two thousand six, the total reimbursable
base year administrative and fiscal services costs of such facilities
shall not exceed such separate statewide average. In no event shall the
calculation of such separate statewide average result in a change in the
statewide average determined under paragraph (a) of this subdivision.

(c) The limitation on reimbursement for provider administrative and
fiscal expenses provided by this subdivision shall be expressed as a
percentage reduction of the operating cost component of the rate
promulgated by the commissioner for each residential health care
facility.

15. Notwithstanding any inconsistent provision of law or regulation to
the contrary, for services provided by residential health care
facilities for the period April first, nineteen hundred ninety-five
through March thirty-first, nineteen hundred ninety-six, the
commissioner shall not be required to revise a certified rate of payment
established pursuant to this article based on consideration of rate
appeals filed by a residential health care facility. In cases where the
commissioner determines that a significant financial hardship exists, he
or she may, subject to the approval of the director of the budget,
consider an exemption to this subdivision. Beginning April first,
nineteen hundred ninety-six and thereafter, the commissioner shall
consider such rate appeals within a reasonable period. After April
first, nineteen hundred ninety-six, through March thirty-first, nineteen
hundred ninety-seven, the commissioner shall revise certified rates of
payment not to exceed an aggregate payment of forty-seven million
dollars, state share medical assistance.

16. Notwithstanding any inconsistent provision of law or regulation to
the contrary, residential health care facility rates of payment
determined pursuant to this article for governmental agencies for
services provided on or after April first, nineteen hundred ninety-six
through March thirty-first, nineteen hundred ninety-nine and on or after
July first, nineteen hundred ninety-nine through March thirty-first, two
thousand and on and after April first, two thousand through March
thirty-first, two thousand three and on and after April first, two
thousand three through March thirty-first, two thousand six and on and
after April first, two thousand six through December thirty-first, two
thousand six, shall be further reduced by the commissioner to encourage
improved productivity and efficiency by providers by a factor determined
as follows:

(a) an aggregate reduction shall be calculated for each residential
health care facility commencing April first, nineteen hundred ninety-six
through March thirty-first, nineteen hundred ninety-nine and on or after
July first, nineteen hundred ninety-nine through March thirty-first, two
thousand and on and after April first, two thousand through March
thirty-first, two thousand three and on and after April first, two
thousand three through March thirty-first, two thousand six and on and
after April first, two thousand six through December thirty-first, two
thousand six as the result of (i) fifty-six million dollars on an
annualized basis multiplied by (ii) the ratio of patient days for
patients eligible for payments made by governmental agencies provided in
a base year two years prior to the rate year by a residential health
care facility, or for residential health care facility beds not fully in
operation in such base year by an estimate of projected utilization for
the rate year, divided by the total of such patient days summed for all
residential health care facilities; and

(b) the result for each residential health care facility shall be
divided by such patient days provided in the residential health care
facility, for a per diem reduction in rates of payment for such
residential health care facility for patients eligible for payments made
by governmental agencies.

17. (a) Notwithstanding any inconsistent provision of law or
regulation to the contrary, for the period April first, nineteen hundred
ninety-seven through March thirty-first, nineteen hundred ninety-eight,
the commissioner shall not be required to revise a certified rate of
payment established pursuant to this article based on consideration of
rate appeals filed by a residential health care facility or based upon
adjustments to capital cost reimbursement as a result of approval by the
commissioner of an application for construction under section
twenty-eight hundred two of this article. For the period April first,
nineteen hundred ninety-eight, through March thirty-first, nineteen
hundred ninety-nine, the commissioner shall revise certified rates of
payment in an aggregate amount not to exceed twenty million dollars,
state share medical assistance. In cases where the commissioner
determines that a significant financial hardship exists, he or she may,
subject to the approval of the director of the budget, consider an
exemption to this subdivision. Beginning April first, nineteen hundred
ninety-nine and thereafter, the commissioner shall consider such rate
appeals within a reasonable period.

(b) Notwithstanding any inconsistent provision of law or regulation to
the contrary, for the state fiscal years beginning April first, two
thousand ten and ending March thirty-first, two thousand twenty-five,
the commissioner shall not be required to revise certified rates of
payment established pursuant to this article for rate periods prior to
April first, two thousand twenty-five, based on consideration of rate
appeals filed by residential health care facilities or based upon
adjustments to capital cost reimbursement as a result of approval by the
commissioner of an application for construction under section
twenty-eight hundred two of this article, in excess of an aggregate
annual amount of eighty million dollars for each such state fiscal year
provided, however, that for the period April first, two thousand eleven
through March thirty-first, two thousand twelve such aggregate annual
amount shall be fifty million dollars. In revising such rates within
such fiscal limit, the commissioner shall, in prioritizing such rate
appeals, include consideration of which facilities the commissioner
determines are facing significant financial hardship as well as such
other considerations as the commissioner deems appropriate and, further,
the commissioner is authorized to enter into agreements with such
facilities or any other facility to resolve multiple pending rate
appeals based upon a negotiated aggregate amount and may offset such
negotiated aggregate amounts against any amounts owed by the facility to
the department, including, but not limited to, amounts owed pursuant to
section twenty-eight hundred seven-d of this article; provided, however,
that the commissioner's authority to negotiate such agreements resolving
multiple pending rate appeals as hereinbefore described shall continue
on and after April first, two thousand twenty-five. Rate adjustments
made pursuant to this paragraph remain fully subject to approval by the
director of the budget in accordance with the provisions of subdivision
two of section twenty-eight hundred seven of this article.

(c) Notwithstanding any other contrary provision of law, rule or
regulation, for periods on and after April first, two thousand eleven
the commissioner shall promulgate regulations, and may promulgate
emergency regulations, establishing priorities and time frames for
processing rate appeals, including rate appeals filed prior to April
first, two thousand eleven, within available administrative resources;
provided, however, that such regulations shall not be inconsistent with
the provisions of paragraph (b) of this subdivision.

17-a. Notwithstanding any inconsistent provision of law or regulation
to the contrary, for purposes of establishing rates of payment by
governmental agencies for residential health care facilities for
services provided on and after January first, nineteen hundred
ninety-eight, the regional direct and indirect input price adjustment
factors to be applied to any such facility's rate calculation shall be
based upon the utilization of either nineteen hundred eighty-three,
nineteen hundred eighty-seven or nineteen hundred ninety-three calendar
year financial and statistical data and for periods beginning April
first, two thousand four through March thirty-first, two thousand nine
based on either nineteen hundred eighty-three, nineteen hundred
eighty-seven, nineteen hundred ninety-three or two thousand one calendar
year financial and statistical data; provided, however, the state share
amount for the utilization of two thousand one calendar year data shall
be no more than twenty-two million dollars on a pro rata basis per
calendar year. The determination of which calendar year's data to
utilize shall be based upon a methodology that ensures that the
particular year chosen by each facility results in a factor that yields
no less reimbursement to the facility than would result from the use of
any of the other three years' data. Such methodology shall utilize the
nineteen hundred eighty-three and nineteen hundred eighty-seven regional
direct and indirect input price adjustment factor corridor percentages
in existence on January first, nineteen hundred ninety-seven as well as
nineteen hundred ninety-three regional direct and indirect input price
adjustment factor corridor percentage in existence on January first, two
thousand four as well as a two thousand one regional direct and indirect
input price adjustment factor corridor percentage calculated in the same
manner as the nineteen hundred ninety-three direct and indirect input
price adjustment factor corridor percentages in existence on January
first, two thousand four; provided, however, for rate periods on and
after April first, two thousand nine, the regional input price
adjustment factors shall be based on the case mix predicted staffing for
registered nurses, licensed practical nurses, nurses' aides, licensed
therapists and therapist aides. For the rate period beginning April
first, two thousand nine through the day immediately prior to the day
the provisions of subdivision two-c of this section take effect, the
regional direct and indirect input price adjustment factors to be
applied to a facility's rate calculation shall be based upon the
utilization of two thousand two calendar year financial and statistical
data. Such methodology shall utilize two thousand two regional direct
and indirect input price adjustment factor corridor percentages
calculated in the same manner as the two thousand one regional direct
and indirect input price adjustment factor corridor percentages in
existence on December thirty-first, two thousand six except that every
region shall receive a corridor to reflect the region's actual variation
subject to a maximum statewide average variable corridor percentage of
ten percent.

18. Residential health care facility recruitment and retention of
health care workers. Notwithstanding any inconsistent provision of law,
rule or regulation and subject to the availability of federal financial
participation:

(a) (i) The commissioner shall adjust inpatient medical assistance
rates of payment established pursuant to this article for non-public
residential health care facilities in accordance with subparagraph (ii)
of this paragraph for purposes of recruitment and retention of health
care workers in the following aggregate amounts for the following
periods:

(A) fifty-three million five hundred thousand dollars on an annualized
basis for the period April first, two thousand two through December
thirty-first, two thousand two; eighty-three million three hundred
thousand dollars on an annualized basis for the period January first,
two thousand three through December thirty-first, two thousand three;
one hundred fifteen million eight hundred thousand dollars on an
annualized basis for the period January first, two thousand four through
December thirty-first, two thousand six; fifty-seven million nine
hundred thousand dollars for the period January first, two thousand
seven through June thirtieth, two thousand seven, fifty-seven million
nine hundred thousand dollars for the period July first, two thousand
seven through March thirty-first, two thousand eight, and fifty-nine
million four hundred thousand dollars for the period April first, two
thousand eight through March thirty-first, two thousand nine.

(ii) Such increases shall be allocated proportionally based on each
non-public residential health care facility's reported total gross
salary and fringe benefit costs on exhibit H of the 1999 RHCF - 4 cost
report or exhibit 11 of the 1999 institutional cost report submitted as
of November first, two thousand one, where applicable, to the total of
such reported costs for all non-public residential health care
facilities, provided, however, that for periods on and after July first,
two thousand seven, fifty percent of such increases shall be allocated
proportionally, based on each non-public residential health care
facility's reported total gross salary and fringe benefit costs on
exhibit H of the nineteen hundred ninety-nine RHFC - 4 cost report or
exhibit 11 of the nineteen hundred ninety-nine institutional cost report
submitted to the department prior to November first, two thousand one,
where applicable, to the total of such reported costs for all non-public
residential health care facilities, and fifty percent of such increases
shall be allocated proportionately, based on each such non-public
facility's reported Medicaid revenue, as reported in the applicable two
thousand five cost report as submitted to the department prior to
November first, two thousand six, to the total of such Medicaid revenue
reported by all such non-public facilities. These amounts shall be
included as a reimbursable cost add-on to medical assistance inpatient
rates of payment established pursuant to this article for non-public
residential health care facilities, based on medical assistance
utilization data in each facility's annual cost report submitted two
years prior to the rate year. Such amounts shall not be reconciled to
reflect changes in medical assistance utilization between the year two
years prior to the rate year and the rate year.

(b) (i) Notwithstanding sections one hundred twelve and one hundred
sixty-three of the state finance law and any other inconsistent
provision of law, the commissioner shall make grants to public
residential health care facilities without a competitive bid or request
for proposal process for purposes of recruitment and retention of health
care workers in the following aggregate amounts for the following
periods:

(A) seven million five hundred thousand dollars on an annualized basis
for the period April first, two thousand two through December
thirty-first, two thousand two; eleven million seven hundred thousand
dollars on an annualized basis for the period January first, two
thousand three through December thirty-first, two thousand three;
sixteen million two hundred thousand dollars on an annualized basis for
the period January first, two thousand four through December
thirty-first, two thousand six; and eight million one hundred thousand
dollars for the period January first, two thousand seven through June
thirtieth, two thousand seven, eight million one hundred thousand
dollars for the period July first, two thousand seven through March
thirty-first, two thousand eight, six million six hundred ninety
thousand dollars for the period April first, two thousand eight through
March thirty-first, two thousand nine.

(ii) Such grants shall be allocated proportionally based on each
public residential health care facility's reported total gross salary
and fringe benefit costs on exhibit H of the 1999 RHCF - 4 cost report
or exhibit 11 of the 1999 institutional cost report submitted as of
November first, two thousand one, where applicable, to the total of such
reported costs for all public residential health care facilities.

(c) (i) Non-public and public residential health care facilities in
operation as of the effective date of this paragraph which have not
submitted 1999 RHCF-4 cost reports or 1999 institutional cost reports
but which have submitted such reports for cost years subsequent to 1999,
shall have distributions authorized in subparagraph (i) of paragraph (a)
of this subdivision or in subparagraph (i) of paragraph (b) of this
subdivision allocated based on total gross salary and fringe benefit
costs on exhibit H of the earliest subsequently submitted RHCF-4 cost
report or exhibit 11 of the earliest subsequently submitted
institutional cost report, as trended downward to 1999 using trend
factors authorized in accordance with the provisions of section
twenty-one of chapter one of the laws of nineteen hundred ninety-nine.

(ii) Non-public and public residential health care facilities in
operation as of the effective date of this paragraph which have not
submitted 1999 or subsequent RHCF-4 cost reports or institutional cost
reports, shall have distributions authorized in subparagraph (i) of
paragraph (a) of this subdivision or in subparagraph (i) of paragraph
(b) of this subdivision allocated based on imputed total gross salary
and fringe benefit costs reflecting the average of such costs in the
region in which each such facility is located, provided, however, that
for periods on and after July first, two thousand seven, facilities that
have not submitted two thousand five cost reports shall have
distributions allocated based on imputed days of care to patients
eligible for medical assistance, reflecting the average of such medicaid
days of care in the region in which such facilities are located.

(iii) Non-public and public residential health care facilities which
received allocations pursuant to subparagraph (ii) of this paragraph and
which subsequently submit RHCF-4 cost reports or institutional cost
reports shall, for the purpose of setting medical assistance rates of
payment, have such allocations adjusted to reflect costs which were
incurred in connection with such allocations and which are contained in
such cost reports.

(d) Residential health care facilities which have their rates adjusted
or receive grants pursuant to paragraphs (a), (b) and (c) of this
subdivision, respectively, shall use such funds for the purpose of
recruitment and retention of non-supervisory workers at health care
facilities or any worker with direct patient care responsibility and are
prohibited from using such funds for any other purpose. Funds under this
subdivision are not intended to supplant support provided by a local
government. Each such residential health care facility shall submit, at
a time and in a manner to be determined by the commissioner, a written
certification attesting that such funds will be used solely for the
purpose of recruitment and retention of non-supervisory workers at
health care facilities or any worker with direct patient care
responsibility. The commissioner is authorized to audit each residential
health care facility to ensure compliance with the written certification
required by this paragraph and shall recoup any funds determined to have
been used for purposes other than recruitment and retention of
non-supervisory workers at health care facilities or any worker with
direct patient care responsibility. Such recoupment shall be in addition
to applicable penalties under sections twelve and twelve-b of this
chapter.

(e) Residential health care facilities which have their rates adjusted
or receive grants pursuant to paragraphs (a), (b) and (c) of this
subdivision, respectively, shall use such funds for the purpose of
recruitment and retention of non-supervisory workers at health care
facilities or any worker with direct patient care responsibility and are
prohibited from using such funds for any other purpose. Funds under this
subdivision are not intended to supplant support provided by a local
government. Each such residential health care facility shall submit, at
a time and in a manner to be determined by the commissioner, a written
certification attesting that such funds will be used solely for the
purpose of recruitment and retention of non-supervisory workers at
health care facilities or any worker with direct patient care
responsibility. The commissioner is authorized to audit each residential
health care facility to ensure compliance with the written certification
required by this paragraph and shall recoup any funds determined to have
been used for purposes other than recruitment and retention of
non-supervisory workers at health care facilities or any worker with
direct patient care responsibility. Such recoupment shall be in addition
to applicable penalties under sections twelve and twelve-b of this
chapter.

19. Notwithstanding any law, rule or regulation to the contrary, the
commissioner shall within amounts allocated pursuant to paragraph (hh)
of subdivision one of section twenty-eight hundred seven-v of this
article, make adjustments to the medical assistance rates of payment to
residential health care facilities to assist certain financially
disadvantaged nursing homes, in order to promote financial stability and
quality improvement. Such adjustments shall be made pursuant to
subdivision twenty-one of this section.

20. a. The commissioner shall timely develop and implement a
standardized process for assessing the feasibility of capital mortgage
re-financings, including a standard formula for determining the net cost
benefit of re-financing, inclusive of all transaction and closing costs.
On or before September first, two thousand three or thirty days after
the commissioner makes the standard formula available to facilities,
each residential health care facility established under this article and
certified as a provider pursuant to title XIX of the federal social
security act (Medicaid), except for those facilities established under
the nursing home companies law or the hospital loan construction law,
shall review its existing capital debt structure using the standard
formula to evaluate whether or not a material cost benefit could be
derived by re-financing its capital mortgage or mortgages, and shall
forward the results of such review to the commissioner. The commissioner
may request and such facilities shall submit descriptions of existing
mortgage arrangements and debt service reserve funds as needed to
implement paragraph b of this subdivision. Facilities established under
the nursing home companies law or the hospital loan construction law
shall submit to the dormitory authority, the housing finance agency
and/or the state of New York mortgage agency such information as is
required by such agency to evaluate potential re-financing of such
capital mortgages.

b. the commissioner shall review each facility's submission and make a
written determination as to whether or not the facility should
re-finance its capital mortgage or mortgages, and if so, for what
amount, within sixty days of the date of the facility's submission based
on the following parameters:

(i) the mortgage re-financing must result in a present value cost
benefit that "materially exceeds", as such term is defined by the
commissioner, the amount of all transaction and closing costs associated
with the re-financing, including any pre-payment penalties associated
with the current mortgage or mortgages. The commissioner shall do such
calculations in a manner consistent with comparable calculations in the
state finance law;

(ii) mortgages may be re-financed for a term greater than the
remaining term of the existing debt within certain limits, if doing so
would result in the present value cost benefit specified in subparagraph
(i) of this paragraph;

(iii) mortgages may be re-financed utilizing variable rate mortgage
loans, if doing so would result in the present value cost benefit
specified in subparagraph (i) of this paragraph. In such cases, for
purposes of determining the reimbursable capital interest expense
included in the capital cost component of rates of payment determined
pursuant to this article, the average interest rate over the life of the
re-financed mortgage shall not exceed the interest rate in effect on the
previous mortgage debt immediately prior to the re-financing;

(iv) not-for-profit and governmental residential health care
facilities may utilize taxable mortgage loans to re-finance their
existing debts, if doing so would result in the present value cost
benefit specified in subparagraph (i) of this paragraph;

(v) moneys contained in facility debt service reserve funds may be
considered in the evaluation of amounts necessary to be re-financed, but
only to the extent such moneys total more than the debt service reserves
needed to establish the successor capital mortgage financing;

(vi) in no event shall funded depreciation accounts, or building funds
accumulated through donor-restricted contributions or unrestricted
contributions, gifts, bequests, or legacies, be considered in the
evaluation of amounts necessary to be re-financed; and

(vii) notwithstanding any inconsistent provision of law or regulation
to the contrary, the principal amount, including all transaction and
closing costs and any pre-payment penalties associated with the previous
mortgage or mortgages, that is thereby deemed necessary to be
re-financed by the commissioner, as approved by the public authorities
control board and the United States department of housing and urban
development where appropriate, shall be considered the final, approved
mortgage amount for capital cost reimbursement under the relevant
provisions of this article.

c. Notwithstanding any inconsistent provision of law or regulation to
the contrary, the capital cost component of rates of payment for
services provided for the period beginning October first, two thousand
three or one hundred eighty days after the effective date of this
subdivision, whichever is later, through March thirty-first, two
thousand four for residential health care facilities established under
this article and certified as providers pursuant to title XIX of the
federal social security act (Medicaid), except for those facilities
established under the nursing home companies law or the hospital loan
construction law, that have been identified by the commissioner as
refinancing candidates pursuant to paragraph b of this subdivision shall
reflect capital interest costs equivalent to the lower of the prevailing
market borrowing rates available on or about July first, two thousand
three or ninety days after the effective date of this subdivision,
whichever is later, for refinancing capital mortgages for their
remaining term plus two hundred basis points, or the existing rate being
paid by the facility on its capital mortgage or mortgages as of that
date. The commissioner shall determine, in consultation with mortgage
financing experts, the prevailing market borrowing rates available to
not-for-profit and governmental residential health care facilities to
re-finance capital mortgages on a tax-exempt fixed rate basis, and to
proprietary residential health care facilities to re-finance capital
mortgages on a tax-exempt fixed rate basis, and to proprietary
residential health care facilities to re-finance capital mortgages on a
taxable fixed rate basis, for this purpose. Exceptions to this policy
shall be provided by the commissioner to each such facility that
demonstrates, prior to October first, two thousand three or thirty days
after receipt of the commissioner's written determination specified in
paragraph (b) of this subdivision, whichever occurs later, that:

(i) it has initiated or completed the process of re-financing the
mortgage or mortgages in question, in which case the capital cost
component of rates of payment shall be timely revised to reflect capital
interest costs associated with a re-financed mortgage that conforms to
the standards in paragraph (b) of this subdivision. For this purpose, a
facility that has applied for approval by the commissioner, the state
hospital review and planning council and/or the public health council to
re-finance its existing mortgage debt as part of a larger project
involving facility replacement, expansion, renovation or change of
ownership is considered to have initiated the process of re-financing;
or

(ii) it can not re-finance its capital mortgage or mortgages to
achieve the relevant present value cost benefit specified in
subparagraphs (i) and (ii) of paragraph (b) of this subdivision due to a
"lock out" or similar provision in its current mortgage agreement that
prevents re-financing; due to some other type of genuine re-financing
obstacle, such as an inability of the facility to obtain credit approval
from a lender or mortgage insurer, or due to an intervening change in
credit market conditions or other relevant circumstances, in which case
the capital cost component of rates of payment shall continue to reflect
capital interest costs associated with the existing mortgage or
mortgages, together with reasonable costs incurred in connection with
the facility's attempt to re-finance its existing mortgage debt.

d. Notwithstanding any contrary provision of law, rule or regulation,
for rate periods on and after April first, two thousand eleven, the
commissioner may reduce or eliminate the payment factor for return on or
return of equity in the capital cost component of Medicaid rates of
payment for services provided by residential health care facilities, and
for rate periods on and after April first, two thousand twenty, there
shall be no payment factor for residual equity reimbursement in the
capital cost component of Medicaid rates of payment for services
provided by residential health care facilities.

e. Notwithstanding any other provision of law or regulation to the
contrary, the commissioner shall adopt or amend on an emergency basis
any regulation the commissioner determines necessary to implement any
provision of this subdivision.

21. (a) Notwithstanding any inconsistent provision of law or
regulation to the contrary, for the purposes specified in subdivision
nineteen of this section, the commissioner shall adjust medical
assistance rates of payment established pursuant to this article for
services provided on and after October first, two thousand four through
December thirty-first, two thousand four and annually thereafter for
services provided on and after January first, two thousand five through
April thirtieth, two thousand eleven and on and after May first, two
thousand twelve, to include a rate adjustment to assist qualifying
facilities pursuant to this subdivision, provided, however, that public
residential health care facilities shall not be eligible for rate
adjustments pursuant to this subdivision for rate periods on and after
April first, two thousand nine, provided further, however, that
notwithstanding any contrary provision of law and subject to the
availability of federal financial participation, each facility that
receives a rate adjustment pursuant to this subdivision for the period
May first, two thousand ten through April thirtieth, two thousand eleven
shall have its medicaid rates reduced for the rate period December
first, two thousand eleven through December thirty-first, two thousand
eleven by an amount equal in aggregate to the aggregate amount of the
funds such facility received pursuant to this subdivision for the period
May first, two thousand ten through April thirtieth, two thousand
eleven.

(b) Eligibility for such rate adjustments shall be determined on the
basis of each residential health care facility's operating margin over
the most recent three-year period for which financial data are available
from the RHCF-4 cost report or the institutional cost report. For
purposes of the adjustments made for the period October first, two
thousand four through December thirty-first, two thousand four,
financial information for the calendar years two thousand through two
thousand two shall be utilized. For each subsequent rate year, the
financial data for the three-year period ending two years prior to the
applicable rate year shall be utilized for this purpose.

(c) Each facility's operating margin for the three-year period shall
be calculated by subtracting total operating expenses for the three-year
period from total operating revenues for the three-year period, and
dividing the result by the total operating revenues for the three-year
period, with the result expressed as a percentage. For hospital-based
residential health care facilities for which an operating margin cannot
be calculated on the basis of the submitted cost reports, the sponsoring
hospital's overall three-year operating margin, as reported in the
institutional cost report, shall be utilized for this purpose. All
facilities with negative operating margins calculated in this way over
the three-year period shall be arrayed into quartiles based on the
magnitude of the operating margin. Any facility with a positive
operating margin for the most recent three-year period, a negative
operating margin that places the facility in the quartile of facilities
with the smallest negative operating margins, a positive total margin in
the most recent year of the three year period, or an average Medicaid
utilization percentage of fifty percent or less during the most recent
year of the three-year period shall be disqualified from receiving an
adjustment pursuant to this subdivision, provided, however, that for
rate periods on and after April first, two thousand nine, such
disqualification:

(i) shall not be applied solely on the basis of a facility's having a
positive total margin in the most recent year of such three-year period;

(ii) shall be extended to those facilities in the quartile of
facilities with the second smallest negative operating margins; and

(iii) shall also be extended to those facilities with an average
Medicaid utilization percentage of less than seventy percent during the
most recent year of the three-year period.

(d) For each facility remaining after the exclusions made pursuant to
paragraph (c) of this subdivision, the commissioner shall calculate the
average annual operating loss for the three-year period by subtracting
total operating expenses for the three-year period from total operating
revenues for the three-year period, and dividing the result by three,
provided, however, that for periods on and after April first, two
thousand nine, the amount of such average annual operating loss shall be
reduced by an amount equal to the amount received by such facility
pursuant to subparagraph (ii) of paragraph (a) of subdivision two-b of
this section. For this purpose, for hospital-based residential health
care facilities for which the average annual operating loss cannot be
calculated on the basis of the submitted cost reports, the sponsoring
hospital's overall average annual operating loss for the three-year
period shall be apportioned to the residential health care facility
based on the proportion the residential health care facility's total
revenues for the period bears to the total revenues reported by the
sponsoring hospital, and such apportioned average annual operating loss
shall then be reduced by an amount equal to the amount received by such
facility pursuant to subparagraph (ii) of paragraph (a) of subdivision
two-b of this section.

(e) For periods prior to April first, two thousand nine, each such
facility's qualifying operating loss shall be determined by multiplying
the facility's average annual operating loss for the three-year period
as calculated pursuant to paragraph (d) of this subdivision by the
applicable percentage shown in the tables below for the quartile within
which the facility's negative operating margin for the three-year period
is assigned.

i. For a facility located in a county with a total population of two
hundred thousand or more as determined by the two thousand U.S. Census:
First Quartile (lowest operating margins): 30 percent

Second Quartile: 15 percent

Third Quartile: 7.5 percent
ii. For a facility located in a county with a total population of fewer
than two hundred thousand as determined by the two thousand U.S. Census:
First Quartile (lowest operating margins): 35 percent

Second Quartile: 20 percent

Third Quartile: 12.5 percent
(f) The amount of any facility's financially disadvantaged residential
health care facility distribution calculated in accordance with this
subdivision shall be reduced by the facility's estimated rate year
benefit of the two thousand one update to the regional input price
adjustment factors authorized pursuant to former subdivision seventeen
of this section as amended by section 24 of part C of chapter 58 of the
laws of 2004, or as authorized by subdivision seventeen-a of this
section, as added by section 56 of part C of chapter 58 of the laws of
2007, if any, provided, however, that such reduction shall not be
applied with regard to rate periods on and after April first, two
thousand nine. After all other adjustments to a facility's financially
disadvantaged residential health care facility distribution have been
made in accordance with this subdivision, the amount of each facility's
distribution shall be limited to no more than four hundred thousand
dollars during the period October first, two thousand four through
December thirty-first, two thousand four and, on an annualized basis,
for rate periods through March thirty-first, two thousand nine, and no
more than one million dollars for the period April first, two thousand
nine through December thirty-first, two thousand nine and for each
annual rate period thereafter.

(g) The adjustment made to each qualifying facility's medical
assistance rate of payment determined pursuant to this article shall be
calculated by dividing the facility's financially disadvantaged
residential health care facility distribution calculated in accordance
with this subdivision by the facility's total medical assistance patient
days reported in the cost report submitted two years prior to the rate
year, provided however, that such rate adjustments for the period
October first, two thousand four through December thirty-first, two
thousand four shall be calculated based on twenty-five percent of each
facility's reported total medical assistance patient days as reported in
the applicable two thousand two cost report. Such amounts shall not be
reconciled to reflect changes in medical assistance utilization between
the year two years prior to the rate year and the rate year.

(h) The total amount of funds to be allocated and distributed as
medical assistance for financially disadvantaged residential health care
facility rate adjustments to eligible facilities for a rate period in
accordance with this subdivision shall be thirty million dollars for the
period October first, two thousand four through December thirty-first,
two thousand four and thirty million dollars on an annualized basis for
rate periods on and after January first, two thousand five through
December thirty-first, two thousand eight and thirty million dollars on
an annualized basis on and after January first, two thousand nine,
provided that, subject to all necessary federal approvals, on and after
January first, two thousand thirteen funds allocated under this
paragraph shall be distributed pursuant to 10 NYCRR 86-2.39. The
nonfederal share of such rate adjustments shall be paid by the state,
with no local share, from allocations made pursuant to paragraph (hh) of
subdivision one of section twenty-eight hundred seven-v of this article.
In the event the statewide total of the annual rate adjustments
determined pursuant to paragraph (g) of this subdivision varies from the
amounts set forth in this paragraph, each qualifying facility's rate
adjustment shall be proportionately increased or decreased such that the
total of the annual rate adjustments made pursuant to this subdivision
is equal to the amounts set forth in this paragraph on a statewide
basis.

(i) This subdivision shall be effective if, and as long as, federal
financial participation is available for expenditures made for
beneficiaries eligible for medical assistance under title XIX of the
federal social security act for the rate adjustments determined in
accordance with this subdivision.

(j) For periods on and after April first, two thousand nine,
residential health care facilities which are otherwise eligible for rate
adjustments pursuant to this subdivision shall also, as a condition for
receipt of such rate adjustments, submit to the commissioner a written
restructuring plan that is acceptable to the commissioner and which is
in accord with the following:

(i) such an acceptable plan shall be submitted to the commissioner
within sixty days of the facility's receipt of rate adjustments pursuant
to this subdivision for a rate period subsequent to March thirty-first,
two thousand eight, provided, however, that facilities which are
allocated four hundred thousand dollars or less on an annualized basis
shall be required to submit such plans within one hundred twenty days,
and further provided that these periods may be extended by the
commissioner by no more than thirty days, for good cause shown; and

(ii) such plan shall provide a detailed description of the steps the
facility will take to improve operational efficiency and align its
expenditures with its revenues, and shall include a projected schedule
of quantifiable benchmarks to be achieved in the implementation of the
plan; and

(iii) such plan shall require periodic reports to the commissioner, in
accordance with a schedule acceptable to the commissioner, setting forth
the progress the facility has made in implementing its plan; and

(iv) such plan may include the facility's retention of a qualified
chief restructuring officer to assist in the implementation of the plan,
provided, however, that this requirement may be waived by the
commissioner, for good cause shown, upon written application by the
facility.

(k) If a residential health care facility fails to submit an
acceptable restructuring plan in accordance with the provisions of
paragraph (j) of this subdivision, the facility shall, from that time
forward, be precluded from receipt of all further rate adjustments made
pursuant to this subdivision and shall be deemed ineligible from any
future re-application for such adjustments. Further, if the commissioner
determines that a facility has failed to make substantial progress in
implementing its plan or in achieving the benchmarks set forth in such
plan, then the commissioner may, upon thirty days notice to that
facility, disqualify the facility from further participation in the rate
adjustments authorized by this subdivision and the commissioner may
require the facility to repay some or all of the previous rate
adjustments.

22. Nursing home incentives for improved performance in patient care.
Pursuant to such program, and within amounts as are appropriated
therefor, the commissioner shall investigate adjusted quality indicators
and quality measures including those defined by the federal centers for
medicare and medicaid service (CMS) with respect to nursing home quality
and quality benchmarks. The commissioner shall award rate enhancements
to those residential health care facilities who demonstrate to the
satisfaction of the commissioner, they can meet or exceed such defined
quality measures. Such quality measures may include, but not be limited
to, outcomes from state survey data, performance measures, and resident
outcomes based upon Minimum Data Sets as defined by CMS. The
commissioner shall consult with associations representing residential
health care facilities and associations representing nursing home
residents, and shall by July first, two thousand seven, adopt rules and
regulations that incorporate payment incentives, related to such quality
indicators and measures, including, but not limited to programs to
improve patient care outcomes and performance outcomes. Such programs
may include but not be limited to, clinician-centric electronic medical
records implementation, automation of assessments and care plans,
improved data collection, and the provision of accessible consumer
information as well as patient satisfaction, into rates of payment.

22-a. Modifications. (a) Notwithstanding any inconsistent provision of
law or regulation to the contrary, effective April first, two thousand
six and thereafter, residential health care facility rates of payment
determined pursuant to this section for payments made by governmental
agencies shall not contain a payment factor for interest on current
indebtedness if the residential health care facility cost report
utilized to determine such payment factor also shows a withdrawal of
equity, a transfer of assets, or a positive net income.

(b) Notwithstanding any inconsistent provision of law or regulation to
the contrary, for residential health care facility rates of payment
determined pursuant to this article for services provided on and after
April first, two thousand six, the annual cost report filed by each
residential health care facility for two thousand five and for each year
thereafter shall be examined and in the event the operating costs
reported by each such facility in any such cost report is less than
ninety percent of the operating costs reported in the cost report which
is being utilized to set such facility's existing rates of payment
trended to two thousand five and each year thereafter, then such rates
of payment shall be recalculated utilizing the more recent reported
operating cost data.

(c) Notwithstanding any inconsistent provision of law or regulation to
the contrary, effective on and after April first, two thousand six, for
purposes of establishing rates of payment by governmental agencies for
residential health care facilities licensed pursuant to this article,
the operating component of the rate for any residential health care
facility that did not or does not achieve ninety percent or greater
occupancy for any year within five calendar years from the date of
commencing operation, shall be recalculated utilizing the facility's
most recently available reported allowable costs divided by patient days
imputed at ninety percent occupancy. Such recalculated rates of payment
shall be effective January first of the sixth calendar year following
the date the facility commenced operations or April first, two thousand
six, whichever is later.

(d) (i) Notwithstanding any inconsistent provisions of subdivisions
two-b or two-c of this section or any other contrary provision of law,
and subject to the availability of federal financial participation, for
inpatient services provided by residential health care facilities on and
after April first, two thousand eleven, the commissioner may, subject to
the approval of the director of the budget, grant approval of a
temporary adjustment to Medicaid rates for eligible facilities, as
determined in accordance with this paragraph.

(ii) Eligible facilities shall be those residential health care
facilities which, as determined by the commissioner, require short-term
assistance to accommodate additional patient services requirements
stemming from the closure of other facilities in the area, including,
but not limited to, additional staff, service reconfiguration and
enhanced information technology capability.

(iii) Eligible facilities shall submit written proposals demonstrating
the need for additional short-term resources and how such additional
resources will result in improvements to:

(A) the cost effectiveness of service delivery;

(B) quality of care; and

(C) other factors deemed appropriate by the commissioner.

(iv) Such written proposals shall be submitted to the department at
least sixty days prior to the requested effective date of the temporary
rate adjustment. The temporary rate adjustment shall be in effect for a
specified period of time as determined by the commissioner. At the end
of the specified timeframe, the facility will be reimbursed in
accordance with otherwise applicable rate-setting methodologies. The
commissioner may establish, as a condition of receiving such a temporary
rate adjustment, benchmarks and goals to be achieved in accordance with
the facility's approved proposals and may also require that the facility
submit such periodic reports concerning the achievement of such
benchmarks and goals as the commissioner deems necessary. Failure to
achieve satisfactory progress, as determined by the commissioner, in
accomplishing such benchmarks and goals shall be a basis for ending the
facility's temporary rate adjustment prior to the end of the specified
timeframe.

23. Notwithstanding any inconsistent provision of law or regulation to
the contrary:

(a) (i) For adult day health care services provided by residential
health care facilities, effective April first, two thousand seven and
thereafter, the operating component of the rate of payment established
pursuant to this article for an adult day health care program which has
achieved an occupancy percentage of ninety percent or greater for a
calendar year prior to April first, two thousand seven, shall be
calculated utilizing allowable costs reported in the two thousand four,
two thousand five, or two thousand six calendar year residential health
care facility cost report filed by the sponsoring residential health
care facility, whichever is the earliest of such calendar year cost
reports in which the program has achieved an occupancy percentage of
ninety percent or greater, except that programs receiving rates of
payment based on allowable costs for a period prior to April first, two
thousand seven shall continue to receive rates of payment based on such
period.

(ii) For such programs which achieved an occupancy percentage of
ninety percent or greater prior to calendar year two thousand four, so
long as approved capacity in that year is the same as in calendar year
two thousand four, but which did not maintain occupancy of ninety
percent or greater in calendar years two thousand four, two thousand
five, or two thousand six, the operating component of the rate of
payment established pursuant to this article shall be calculated
utilizing allowable costs reported in the two thousand four calendar
year cost report divided by visits imputed at ninety percent occupancy.

(iii) For such programs which have not achieved an occupancy
percentage of ninety percent or greater for a calendar year prior to
April first, two thousand seven, the operating component of the rate of
payment established pursuant to this article shall be calculated
utilizing allowable costs reported in the first calendar year after two
thousand six in which such a program achieves an occupancy percentage of
ninety percent or greater effective January first of such calendar year
except for calendar year two thousand seven, effective no earlier than
April first of such year, provided, however, that effective January
first, two thousand nine, for programs that have not achieved an
occupancy percentage of ninety percent or greater for a calendar year
prior to January first, two thousand nine, the operating component of
the rate of payment established pursuant to this article shall be
calculated utilizing allowable costs reported in the two thousand nine
cost report filed by the sponsoring residential health care facility
divided by visits imputed at actual or ninety percent occupancy,
whichever is greater. This subparagraph shall also apply to programs
which achieved an occupancy percentage of ninety percent or greater
prior to calendar year two thousand four but in such year had an
approved capacity that was not the same as in calendar year two thousand
four.

(b) For a residential health care facility approved to operate an
adult day health care program on or after April first, two thousand
seven, rates of payment for such programs shall be computed based upon
annual budgeted allowable costs, as submitted by the residential health
care facility, and total estimated annual visits by adult day health
care registrants of not less than ninety percent of licensed occupancy,
and in accordance with the following:

(i) Each program shall be required to submit an individual budget.
Multiple programs operated by the same residential health care facility
shall submit a separate budget for each program. Multiple programs
operated by the same residential health care facility shall have
separate rates of payment.

(ii) Rates developed based upon budgets shall remain in effect for no
longer than two calendar years from the earlier of:

(A) the date the program commences operations; or

(B) the date the sponsoring residential health care facility submits a
full calendar year residential health care facility cost report in which
the program has achieved ninety percent or greater occupancy. If a
sponsoring residential health care facility submits such a cost report
within two years of the date the program commences operation, rates
shall then be computed utilizing such cost report.

(iii) If a program fails to achieve ninety percent or greater
occupancy within two calendar years of the date of its commencing
operations, rates shall be calculated utilizing allowable costs reported
in such second calendar year residential health care facility's cost
report for the applicable sponsoring residential health care facility
divided by visits imputed at ninety percent occupancy.

(c) Effective January first, two thousand eight, allowable costs shall
not include the costs of transportation.

(d) All rates of payment established pursuant to this subdivision are
subject to the maximum daily rate provided by law. Such maximum daily
rate of payment for adult day health care programs operated by
residential health care facilities that undergo a change of ownership
subsequent to nineteen hundred ninety shall be determined by utilizing
the inpatient rate of payment of the prior operator as in effect on
January first, nineteen hundred ninety. In the event a residential
health care facility establishes an off-site adult day health care
program outside the regional input price adjustment region in which it
is located, the computation of the maximum daily rate of payment for
such program shall utilize the weighted average of the inpatient rates
of payments for residential health care facilities in the region in
which the program is located, as in effect on January first, nineteen
hundred ninety, in place of the sponsoring residential health care
facility's inpatient rate of payment.

(e) Notwithstanding any inconsistent provision of the state
administrative procedure act or any other law or regulation to the
contrary, the commissioner shall adopt or amend on an emergency basis
any regulations the commissioner shall determine necessary to implement
any provision of this subdivision.

24. Notwithstanding any other provisions of this section and any other
law, rule or regulation to the contrary, for periods on and after July
first, two thousand seven, the operating component of all rates of
payment made by governmental agencies for services to individuals
eligible for medical assistance pursuant to title eleven of article five
of the social services law and provided by a residential health care
facility with fewer than sixty beds as of July first, two thousand
seven, which provides services primarily to neurologically impaired
individuals and is located in a county with a population between two
hundred ninety thousand and three hundred ten thousand as of July first,
two thousand seven shall be based solely on the methodology used to
establish rates for facilities which provide extensive nursing, medical,
psychological and counseling support services solely to children;
provided, however, this subdivision shall not apply if the application
would result in a lesser rate of payment than otherwise provided for
under this section. Nothing in this subdivision shall be construed to
limit the application to such facility of rate adjustments applied to
other residential health care facilities.

25. Reserved bed days. (a) For purposes of this subdivision, a
"reserved bed day" is a day for which a governmental agency pays a
residential health care facility to reserve a bed for a person eligible
for medical assistance pursuant to title eleven of article five of the
social services law while he or she is on therapeutic leave of absence
from the facility.

(b) Notwithstanding any other provisions of this section or any other
law or regulation to the contrary, for reserved bed days provided on
behalf of persons twenty-one years of age or older:

(i) payments for reserved bed days shall be made at ninety-five
percent of the Medicaid rate otherwise payable to the facility for
services provided on behalf of such person; and

(ii) payment to a facility for reserved bed days provided on behalf of
such person for therapeutic leaves of absence may not exceed ten days in
any twelve month period.

25-a. Reserved bed days for state veterans' homes. (a) For purposes of
this subdivision, a "reserved bed day" is a day for which the state pays
New York State Veterans' Home at Oxford, the New York State Veterans'
Home at St. Albans, the New York State Veterans' Home at Batavia, the
New York State Veterans' Home at Montrose or the Long Island State
Veterans' Home to reserve a bed for a person eligible for medical
assistance pursuant to title eleven of article five of the social
services law while he or she is temporarily hospitalized.

(b) (i) Payments for reserved bed days shall be made at fifty percent
of the Medicaid rate otherwise payable to the facility for services
provided on behalf of the person.

(ii) Payment to a facility for reserved bed days provided on behalf of
the person for temporary hospitalizations may not exceed fourteen days
in any twelve-month period.

(iii) The person must have resided in the applicable State Veterans'
home for at least thirty days since the date of his or her initial
admission.

(iv) Unless medically contraindicated, the applicable State Veterans'
home shall reserve the same bed and room the person occupied before
being hospitalized or placed on a therapeutic leave of absence.

(v) Reserved bed days under this subdivision are in addition to
reserve bed days for therapeutic leave of absence under subdivision
twenty-five of this section.

(vi) This subdivision shall apply subject to the availability of
federal financial participation.

26. Notwithstanding any inconsistent provision of law, for rate
periods on and after April first, two thousand ten, residential health
care facility Medicaid rates of payment shall not include reimbursement
for the cost of prescription drugs. Such reimbursement shall be in
accordance with otherwise applicable provisions of section three hundred
sixty-seven-a of the social services law.

* 27. The commissioner is authorized to conduct an energy audit and/or
disaster preparedness review of residential health care facilities. Such
audit or review shall explore the energy efficiency and/or disaster
preparedness of the real property capital aspects of each facility and
develop a cost/benefit analysis of potential modifications for each
facility. Such audit or review shall serve as the basis for an energy
efficiency and/or disaster preparedness program to be developed by the
department in regulations. Participation in such audit or review shall
be a condition to participation in any such program developed as a
result thereof, and shall also be a condition to receipt of any funding
available under such program. Such program shall only be implemented if
it is in the best financial interests of the state, as determined by the
commissioner. At least forty-five days prior to implementing such
program, the department shall report to the senate and assembly health
committees, the assembly ways and means committee and the senate finance
committee the results of the energy audit authorized herein and the
proposed eligibility criteria, funding sources, the manner in which
savings may be shared between the state and facilities and any other
information requested by such committees about such program prior to the
transmittal of the report.

* NB Repealed July 1, 2027