By Naishtat, Wohlgemuth, et al.                       H.B. No. 1001
         77R11310 MCK-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the review of the reimbursement methodology for and
 1-3     resource needs of nursing facilities.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  REVIEW OF REIMBURSEMENT RATES. (a)  The Health
 1-6     and Human Services Commission, in conjunction with the Texas
 1-7     Department of Human Services, shall evaluate the methodology used
 1-8     for determining Medicaid reimbursement rates for nursing
 1-9     facilities.  The commission and department shall:
1-10                 (1)  consider including legitimate costs of doing
1-11     business that are not currently included in the reimbursement rate;
1-12     and
1-13                 (2)  explore methods to adjust the reimbursement rate
1-14     to account for sudden increases in liability insurance rates and
1-15     other costs of doing business.
1-16           (b)  The Health and Human Services Commission, in conjunction
1-17     with the Texas Department of Human Services, shall:
1-18                 (1)  evaluate the effectiveness of the Medicaid nursing
1-19     facility reimbursement rate methodology to provide incentives for
1-20     increased direct staffing;
1-21                 (2)  examine the possibility of adding incentives to
1-22     Medicaid reimbursement rates for increased spending to improve the
1-23     diet of residents and other increased spending to improve the
1-24     quality of care and quality of life for residents;
 2-1                 (3)  examine the possibility of developing a system of
 2-2     adjusted Medicaid reimbursement for nursing facilities that rewards
 2-3     a higher level of performance based on quality indicators;
 2-4                 (4)  examine any inadequacies of the current flat-rate
 2-5     system in accounting for regional and facility-specific differences
 2-6     in the cost of providing care and explore alternatives to the
 2-7     flat-rate system that better account for those differences; and
 2-8                 (5)  examine all the current methodology components,
 2-9     including inflation factors and occupancy adjustments.
2-10           (c)  In measuring the level of performance under Subsection
2-11     (b)(3) of this section, the criteria that should be examined should
2-12     include:
2-13                 (1)  a quality of care index that could include the
2-14     factors listed under Section 242.403(a), Health and Safety Code;
2-15                 (2)  a customer satisfaction index;
2-16                 (3)  a resolved complaint index; and
2-17                 (4)  any other criteria the commission considers
2-18     appropriate for examination.
2-19           SECTION 2.  REVIEW OF TILE CLASSIFICATION SYSTEM. (a)  The
2-20     Health and Human Services Commission, in conjunction with the Texas
2-21     Department of Human Services, shall evaluate the Texas Index for
2-22     Level of Effort classification system used to quantify the
2-23     intensity of the care needs of individuals in nursing facilities
2-24     and to assign daily reimbursement rates for that care to determine
2-25     whether the system accurately accounts for the care needs of
2-26     patients with dementia, including patients with Alzheimer's
2-27     disease.
 3-1           (b)  In conducting the evaluation of the Texas Index for
 3-2     Level of Effort classification system, the Health and Human
 3-3     Services Commission shall seek the input of relevant professionals
 3-4     and other individuals or organizations with expertise in caring for
 3-5     people with dementia, including Alzheimer's disease.
 3-6           SECTION 3.  REPORT TO LEGISLATURE. The Health and Human
 3-7     Services Commission shall report the results of the evaluations
 3-8     conducted under this Act to the governor, the lieutenant governor,
 3-9     and the speaker of the house of representatives not later than
3-10     December 1, 2002.
3-11           SECTION 4.  EFFECTIVE DATE. This Act takes effect September
3-12     1, 2001.