HB 1864

Present law requires each nursing home to pay an annual nursing home assessment, the proceeds of which are paid into the nursing home assessment trust fund ("fund""). The fund must be used exclusively to make expenditures to nursing facilities under the TennCare Program at the full rates for the specified fiscal year; to p rovide funding for the implementation of an acuity-based reimbursement system; and to pay nursing home covered services covered for medicaid beneficiaries within medicare upper payment limits. This bill requires the funds to be used to make expenditures fo r nursing facility services under the TennCare program for the 2026-2027 fiscal year. Further, this bill extends the nursing home annual assessment fee through June 30, 2027. Present law does not require the bureau of TennCare to procure additional funding to make payments for the purposes described above if the money in the fund is insufficient. Instead, the bureau of TennCare is authorized to reduce all payments on a pro r ata basis. This bill eliminates that authorization. Present law requires the total aggregated amount of all assessments for nursing facilities from July 1, 2025, through June 1, 2026, to be equal to 6% of the net patient service revenue. This bill extends such date range to July 1, 2026, to June 1, 2027. All nursing facilities licensed on July 1, 2026, must have their annual assessment amount determined by the method described in present law. REBASING Present law requires the base-year annualized medicaid resident day-weighted median costs to be rebased at an interval no longer than three years after a new base year period has been established. This bill replaces the current scheme for calculating su ch median costs. New base year median costs and process must be established using the most recently audited or desk reviewed cost reports that have a reporting period of at least six months, and with a cost report end date 18 months or more before the st ar t of the rebase period. As used in this bill, a ""new base year period"" or ""rebase year"" means the end product of the rebase process that establishes new nursing facility cost components reflecting median costs and prices that reflect the most recent purc hases of goods and services used by nursing homes to furnish care. Budget Adjustment Factor For the beginning of each state rate year that is not a rebase year, effective July 1 of that year, this bill requires the bureau of TennCare to establish a nursing facility program budget target and compare that to the annual expected medicaid expenditu res on nursing facility days. The bureau of TennCare must establish the budget adjustment factor to adjust the annual expected medicaid expenditures to meet the budget target. The budget adjustment factor may be positive or negative, and must be applied a s an across-the-board percentage adjustment to all provider reimbursement rate components. This bill provides the formula for calculating the budget adjustment factor. In order to calculate the rate system expected cost, the projected provider reimbursement rates prior to application of the budget adjustment factor must be multiplied by the n ew cost report medicaid days from the most recent cost report data or paid claims data. This yields the expected cost of the nursing facility reimbursement system. In order to calculate the nursing facility program budget target, the bureau of TennCare mu st multiply the July 1 provider reimbursement rates by the new cost report medicaid days from the most recent cost report data or paid claims data. This yields the target cost of the nursing facility reimbursement program prior to adjustments. Then, the state budgetary adjustments must be added or subtracted from that total to yield the final budget target for the nursing facility reimbursement system. In order to determine the budget adjustment factor percentage, this bill requires the nursing facility budget target to be divided by the rate system expected cost. This bill then requires that percentage be applied to all provider rates. The bureau of TennCare must recalculate the budget adjustment factor for each non-July 1 rate setting period to accommodate changes to the reimbursement system from the new case mix index, new facilities, statutory requirements, and other factors. The budget adjustme nt factor must be adjusted to ensure the state continues to meet the nursing facility budget target. This bill prohibits the base adjustment factor from being applied to alter the median cost and price calculations when calculating a new base period. Notice R equirement This bill requires the bureau of TennCare to provide notice to the chairs of legislative committees having jurisdiction over health matters if the bureau of TennCare intends to reduce payments on a pro rata basis using a budget adjustment factor. Further, the bureau of TennCar e must notify the committees if it is not able to fully fund rebased rates due to an overall medicaid budget shortfall and intends to reduce payments on a pro rata basis in a fiscal year. Either notification must be made prior to making any reduced payme nt s and must occur on or before March 1 of the fiscal year. RULEMAKING This bill authorizes the bureau of TennCare to promulgate rules to effectuate this bill. However, any rules must be developed in consultation with the comptroller of the treasury and the Tennessee Health Care Association. All rules must be in effect by December 31, 2026."