An Act to Prevent Closures and Ensure Sustainability of Nursing Facilities, Private Nonmedical Institutions and Residential Care Facilities by Removing So-called Budget Neutrality
Maine Legislature, Session 131, LD 1827
Committee: Health and Human Services
Sponsors: JACKSON, BABIN, BALDACCI, GUERRETTE, THERIAULT
Amends: 22 MRSA §265, 22 MRSA §329, 22 MRSA §333-A, 22 MRSA §334-A

Legislative Document
No. 1827
S.P. 743
In Senate, April 27, 2023
An Act to Prevent Closures and Ensure Sustainability of Nursing 
Facilities, Private Nonmedical Institutions and Residential Care 
Facilities by Removing So-called Budget Neutrality
Reference to the Committee on Health and Human Services suggested and ordered printed.
DAREK M. GRANT
Secretary of the Senate
Presented by President JACKSON of Aroostook.
Cosponsored by Representative BABIN of Fort Fairfield and
Senator: BALDACCI of Penobscot, Representatives: GUERRETTE of Caribou, THERIAULT 
of Fort Kent.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  22 MRSA §265 is enacted to read:
§265.  Budget neutrality prohibited
Notwithstanding any provision of law to the contrary, the department may not 
implement policies or practices or adopt or enforce rules that provide that costs must be 
fully offset by reductions in MaineCare costs relating to nursing facilities, residential care 
facilities or private nonmedical institutions.
Sec. 2.  22 MRSA §329, sub-§6, ¶A, as amended by PL 2011, c. 424, Pt. B, §1 and 
affected by Pt. E, §1, is further amended to read:
A.  A nursing facility converting beds used for the provision of nursing services to beds 
to be used for the provision of residential care services. If such a conversion occurs, 
MaineCare and other public funds may not be obligated for payment of services 
provided in the converted beds unless approved by the department pursuant to the 
provisions of sections 333‑A and 334‑A.  In order to approve a conversion under this 
paragraph, the department must determine that any increased MaineCare residential 
care costs associated with the converted beds are fully offset by reductions in the 
MaineCare costs from the reduction in MaineCare nursing facility costs associated with 
the converted beds;
Sec. 3.  22 MRSA §333-A, sub-§3-A, as amended by PL 2011, c. 648, §4, is further 
amended to read:
3-A.  Transfers between nursing facility and residential care facility.  A nursing 
facility may delicense and sell or transfer beds to a residential care facility for the purpose 
of permitting the residential care facility to add MaineCare-funded beds to meet identified 
needs for such beds.  Such a transfer does not require a certificate of need but is subject to 
prior approval of the department on an expedited basis.  The divisions within the 
department that are responsible for licensing and MaineCare reimbursement for nursing 
facilities and residential care facilities shall work cooperatively to review and consider 
whether to approve such transfers on an expedited basis.  When the average then current 
occupancy rate for existing state-funded residential care beds within 30 miles of the 
applicant facility is 80% or less, the department in its review under section 335 shall 
evaluate the impact that the proposed additional state-funded residential care beds would 
have on these existing state-funded residential care beds and facilities.  Beds and 
MaineCare resources transferred pursuant to this subsection are not subject to the nursing 
facility MaineCare funding pool.  In order for the department to approve delicensing, 
selling or transferring under this subsection, the department must determine that any 
increased MaineCare residential care costs associated with the converted beds are fully 
offset by reductions in the MaineCare costs from the reduction in MaineCare nursing 
facility costs associated with the converted beds.
Sec. 4.  22 MRSA §334-A, sub-§1-A, ¶B, as amended by PL 2011, c. 648, §5, is 
further amended by repealing subparagraph (1).
Sec. 5.  Department of Health and Human Services to amend rules to 
remove so-called budget neutrality for nursing facilities, private nonmedical 
institutions and residential care facilities.  No later than January 1, 2024, the 
Department of Health and Human Services shall amend its rules to remove all requirements 
of and references to provisions that costs must be fully offset by reductions in MaineCare 
costs, or so-called budget neutrality, in all rules affecting the nursing facilities, residential 
care facilities or private nonmedical institutions or in the certificate of need process related 
to nursing facilities, including but not limited to:
1. 10-149 C.M.R. Chapter 5: Office of Aging and Disability Services Policy Manual, 
Section 71, Certificate of Need for Nursing Facility Level of Care Projects;
2. 10-144 C.M.R. Chapter 110: Regulations Governing the Licensing and Functioning 
of Skilled Nursing Facilities and Nursing Facilities;
3. 10-144 C.M.R. Chapter 115: Principles of Reimbursement for Residential Care 
Facilities - Room and Board Costs;
4. Chapter 101: MaineCare Benefits Manual, Chapter III, Section 67, Principles of 
Reimbursement for Nursing Facilities; and
5. Chapter 101: MaineCare Benefits Manual, Chapter III, Section 97, Private Non-
Medical Institution Services, including Appendices B, C, D, E and F.  
SUMMARY
This bill eliminates the so-called budget neutrality provisions relating to transferring 
and selling beds between nursing facilities and residential care facilities, converting beds 
from nursing services to residential care services and delicensing nursing facility beds.  It 
directs the Department of Health and Human Services to amend its rules regarding nursing 
facilities, residential care facilities and private nonmedical institutions to remove all 
requirements of and references to provisions that costs must be fully offset by reductions 
in MaineCare costs, or so-called budget neutrality, in all rules affecting nursing facilities, 
residential care facilities or private nonmedical institutions or the certificate of need process 
for nursing facilities.  It prohibits the Department of Health and Human Services from 
implementing so-called budget neutrality in its policies or practices or by adopting or 
enforcing rules relating to nursing facilities, residential care facilities and private 
nonmedical institutions.