2023 Colorado Revised Statutes › Title 25.5 - HEALTH CARE POLICY AND FINANCING (§§ 25.5-1-101 — 25.5-11-101) › COLORADO MEDICAL ASSISTANCE ACT (§§ 25.5-4-101 — 25.5-6-2001) › Article 6 - COLORADO MEDICAL ASSISTANCE ACT - LONG-TERM CARE (§§ 25.5-6-101 — 25.5-6-2001) › Part 2 - NURSING FACILITIES (§§ 25.5-6-201 — 25.5-6-210) › Section 25.5-6-202 - Providers - nursing facility provider reimbursement - exemption - rules - repeal

(1)
(a)
(I)
Subject to available appropriations, for the purpose of reimbursing a medicaid-certified class I nursing facility provider a per diem rate for the cost of direct and indirect health-care services and raw food, the state department shall establish an annually readjusted schedule to pay each nursing facility provider the actual amount of the costs. The payment shall not exceed one hundred twenty-five percent of the median cost of direct and indirect health-care services and raw food as determined by an array of all facility providers; except that, for state veteran nursing homes, the payment shall not exceed one hundred thirty percent of the median cost.
(II)
For the fiscal year commencing July 1, 2009, and for each fiscal year thereafter, any increase in the direct and indirect health-care services and raw food costs shall not exceed eight percent per year. The calculation of the eight percent per year limitation for rates effective on July 1, 2009, shall be based on the direct and indirect health-care services and raw food costs in the as-filed facility's cost reports up to and including June 30, 2009. For the purposes of calculating the eight-percent limitation for rates effective after July 1, 2009, the limitation shall be determined and indexed from the direct and indirect health-care services and raw food costs as reported and audited for the rates effective July 1, 2009.
(b)
In computing per diem cost, each nursing facility provider shall annually submit cost reports, and actual days of care shall be counted, not occupancy-imputed days of care. In addition, in determining the median cost, the cost of direct health care shall be case-mix neutral. The cost reports used by the state department to establish the per diem cost shall be those filed with the state department during the period ending December 31 of the prior year following implementation of this subsection (1) and for each succeeding year. The state department shall redetermine the median per diem cost based upon the most recent cost reports filed during the period ending December 31 of the prior year.
(2)
The state department shall further adjust and, subject to available appropriations, pay the per diem rate to the nursing facility provider for the cost of direct health-care services based upon the acuity or case-mix of the nursing facility provider residents in order to provide for the resource utilization of its residents. The state department shall determine this adjustment in accordance with each resident's status as identified and reported by the nursing facility provider on its federal medicare and medicaid minimum data set assessment. The state department shall establish a case-mix index for each nursing facility provider according to the case-mix group determined by the state department. The state department shall calculate nursing weights based upon standard nursing time studies and weighted by facility population distribution and Colorado-specific nursing salary ratios. The state department shall determine an average case-mix index for each nursing facility provider's medicaid residents on a quarterly basis.
(3)
(a)
Subject to available appropriations, for the purpose of reimbursing a medicaid-certified class I nursing facility provider a per diem rate for the cost of its administrative and general services, the state department shall establish an annually readjusted schedule to pay each nursing facility provider a reasonable price for the costs, which reasonable price shall be a percentage of the median per diem cost of administrative and general services as determined by an array of all nursing facility providers. For facilities of sixty licensed beds or fewer, the reasonable price shall be one hundred ten percent of the median per diem cost for all class I facilities. For facilities of sixty-one licensed beds and more, the reasonable price shall be one hundred five percent of the median per diem cost for all class I facilities.
(b)
In computing per diem cost, each nursing facility provider shall annually submit cost reports to the state department, and actual days of care shall be counted, not occupancy-imputed days of care. The cost reports used to establish this median per diem cost shall be those filed during the period ending December 31 of the prior year following implementation of this subsection (3), and, for each succeeding fourth year, the state department shall redetermine the median per diem cost based upon the most recent cost reports filed during the period ending December 31 of the prior year.
(c)
Repealed.
(4)
In addition to the reimbursement components paid pursuant to subsections (1) to (3) of this section, a per diem rate constituting a fair rental allowance for capital-related assets shall be paid to each nursing facility provider as a rental rate based upon the nursing facility's appraised value.
(5)
Subject to available appropriations and the priority of the uses of the provider fees as established in section
25.5-6-203 (2)(b)
, in addition to the reimbursement rate components paid pursuant to subsections (1) to (4) of this section, the state department shall make a supplemental medicaid payment based upon performance to those nursing facility providers that provide services that result in better care and higher quality of life for their residents. The state department shall determine the payment amount based upon performance measures established in rules adopted by the state board in the domains of quality of life, quality of care, and facility management. Beginning July 1, 2024, the payment must not be less than twelve percent of total provider fee payments and must be adjusted for fiscal years 2024-25 and 2025-26. No later than July 1, 2026, the payment must not be less than fifteen percent of total provider fee payments and must be annually adjusted thereafter. During each state fiscal year, the state department may discontinue the supplemental medicaid payment established pursuant to this subsection (5) to any nursing facility provider that fails to comply with the established performance measures during the state fiscal year, and the state department may initiate the supplemental medicaid payment established pursuant to this subsection (5) to any provider that comes into compliance with the established performance measures during the state fiscal year.
(6)
Subject to available appropriations and the priority of the uses of the provider fees as established in section
25.5-6-203 (2)(b)
, in addition to the reimbursement rate components paid pursuant to subsections (1) to (5) of this section, the state department shall make a supplemental medicaid payment to nursing facility providers that serve residents:
(a)
Who have severe mental health conditions that are classified at a level II by the medicaid program's preadmission screening and resident review assessment tool. The state department shall compute this payment annually as of July 1, 2009, and each July 1 thereafter, and it must not be less than two percent of the statewide average per diem rate for the combined rate components determined pursuant to subsections (1) to (4) of this section. Beginning July 1, 2023, the state department shall annually adjust the rate to ensure access to care for residents who have severe mental health conditions.
(b)
With severe dementia diseases and related disabilities or acquired brain injury. The state department shall calculate the payment based upon the resident's cognitive assessment established in rules adopted by the state board. The state department shall compute this payment annually as of July 1, 2009, and each July 1 thereafter, and it must not be less than one percent of the statewide average per diem rate for the combined rate components determined pursuant to subsections (1) to (4) of this section. Beginning July 1, 2023, the state department shall annually adjust the rate to ensure access to care for residents with severe dementia diseases and related disabilities or acquired brain injury.
(7)
Subject to available moneys and the priority of the uses of the provider fees as established in section
25.5-6-203 (2)(b)
, in addition to the reimbursement rate components paid pursuant to subsections (1) to (6) of this section, the state department shall pay a nursing facility provider a supplemental medicaid payment for care and services rendered to medicaid residents to offset payment of the provider fee assessed under the provisions of section
25.5-6-203
. The state department shall compute this payment annually, as of July 1, 2009, and each July 1 thereafter.
(8)
(Deleted by amendment, L. 2009, (SB 09-263), ch. 912, p. 912, § 2, effective May 1, 2009.)
(9)
(a)
The per diem amount paid for direct and indirect health-care services and administrative and general services costs shall include an allowance for inflation in the costs for each category using a nationally recognized service that includes the federal government's forecasts for the prospective medicare reimbursement rates recommended to the United States congress. Amounts contained in cost reports used to determine the per diem amount paid for each category shall be adjusted by the percentage change in this allowance measured from the midpoint of the reporting period of each cost report to the midpoint of the payment-setting period.
(b)
(I)
Except for changes in the number of patient days, the state department shall establish the general fund share of the aggregate statewide average of the per diem rate net of patient payment pursuant to subsections (1) to (4) of this section. The state's share of the reimbursement rate components pursuant to subsections (1) to (4) of this section may be funded through the provider fee assessed pursuant to section
25.5-6-203
and any associated federal funds. Any provider fee used as the state's share and all federal funds must be excluded from the calculation of the general fund share. For the fiscal year commencing July 1, 2009, and for each fiscal year thereafter, the state department shall calculate the general fund share of the aggregate statewide average per diem rate net of patient payment pursuant to subsections (1) to (4) of this section using the rates that were effective on July 1 of that fiscal year; except that:
(A)
For fiscal year 2023-24, the state department shall increase the aggregate statewide average of the per diem rate by at least ten percent;
(B)
For fiscal year 2024-25, the state department shall increase the aggregate statewide average of the per diem rate by at least three percent;
(C)
For fiscal year 2025-26, the state department shall increase the aggregate statewide average of the per diem rate by at least one and one-half percent; and
(D)
Beginning in fiscal year 2026-27, and for each fiscal year thereafter, the state department shall establish the aggregate statewide average of the per diem rate.
(I.5)
When increasing the aggregate statewide average of the per diem rate for fiscal years 2023 through 2027, the reimbursement rate for a class I nursing facility that operates efficiently and economically must be reasonable and adequate to meet the nursing home's costs in order to provide care and services in conformity with applicable state and federal laws, regulations, and quality and safety standards, and must be based on the most recent audited and finalized cost and utilization data available.
(II)
If the aggregate statewide average per diem rate net of patient payment pursuant to subsections (1) to (4) of this section exceeds the general fund share, the amount of the average statewide per diem rate that exceeds the general fund share shall be paid as a supplemental medicaid payment using the provider fee established under section
25.5-6-203
. Subject to the priority of the uses of the provider fee established under section
25.5-6-203 (2)(b)
, if the provider fee is insufficient to fully fund the supplemental medicaid payment, the supplemental medicaid payment shall be reduced to all providers proportionately.
(III) to (V)
Repealed.
(VI)
Notwithstanding any other provision of law, for the fiscal year commencing July 1, 2013, and each fiscal year thereafter, the general fund portion of the per diem rate pursuant to subsections (1) to (4) of this section shall be reduced by one and one-half percent. The state department may, but is not required to, increase the supplemental medicaid payment pursuant to subparagraph (II) of this paragraph (b) due to this reduction; except that the provider fee shall not exceed the amount specified in section
25.5-6-203 (1)(a)(II)
.
(VII)
Notwithstanding any other provision of law to the contrary, for the 2020-21 and 2021-22 fiscal years, the general fund portion of the per diem rate pursuant to subsections (1) to (4) of this section is limited to an annual increase of two percent.
(b.3)
(I)
For the fiscal year commencing July 1, 2009, and for each fiscal year thereafter, if the provider fee established under section
25.5-6-203
is insufficient to fully fund the supplemental medicaid payments established under subsections (5) to (7) of this section, subject to the priority of the uses of the provider fee established pursuant to section
25.5-6-203 (2)(b)
, the state department may suspend or reduce the supplemental medicaid payment subject to the uses of the provider fee established under section
25.5-6-203
.
(II)
If it is determined by the state department that the case-mix reimbursement includes a factor for nursing facility providers that serve residents with severe dementia diseases and related disabilities or acquired brain injury, the state department may eliminate the supplemental medicaid payment to those providers that serve residents with severe dementia diseases and related disabilities or acquired brain injury.
(b.5)
Notwithstanding any other provision of law or any federal law that temporarily increases the federal matching participation rate for any fiscal year, payments to nursing facility providers from the general fund share of the aggregate statewide average of the per diem rate shall be calculated based on a fifty-percent federal match.
(b.7)
Repealed.
(c)
(I)
The general assembly finds that the historical growth in nursing facility provider rates has significantly exceeded the rate of inflation. These increases have been caused in part by the inclusion of medicare costs in medicaid cost reports. The state of Colorado has an interest in limiting these exceptional increases in medicaid nursing facility provider rates by removing medicare costs from the medicaid nursing facility provider rates and by imposing a ceiling on the medicare part A ancillary costs that are included in calculating medicaid nursing facility rates. No later than July 1, 2023, the state department shall initiate a process to remove medicare costs from the provider rate setting by July 1, 2026. The state board shall promulgate rules establishing the specific methodology used for removing medicare costs.
(II)
Repealed.
(III)
The specific methodology for calculating the limitations and cost-reporting requirements described in this paragraph (c) shall be established by rules promulgated by the state board.
(d)
The reimbursement rate components pursuant to subsections (5) to (7) of this section shall be funded entirely through the provider fee assessed pursuant to the provisions of section
25.5-6-203
and any associated federal funds. No general fund moneys shall be used to pay for the reimbursement rate components established pursuant to subsections (5) to (7) of this section.
(10)
The state board shall promulgate rules pursuant to the "State Administrative Procedure Act", article
4
of title
24
, C.R.S., to implement this section, including establishing uniform accounting, reporting, and payment procedures consistent with this section, to determine a nursing facility provider's costs and payments to the provider.
(11)
(Deleted by amendment, L. 2009, (SB 09-263), ch. 912, p. 912, § 2, effective May 1, 2009.)
(12)
The state department may exempt facilities with five or fewer medicaid beds from the methodology described in this section and instead require the facilities to be reimbursed at the statewide average rate.
(13)
(a)
As a condition of receiving medicaid funds, the state department may require a nursing facility to submit any documentation necessary to ensure the state's interest in transparency, stability, and sound fiscal stewardship, including, but not limited to:
(I)
Annual audited financial statements, prepared by an independent accountant, for a facility, management company, and any related party conducting business with a medicaid-certified nursing facility, including audited and consolidated financial statements for any parent company that accepts, or whose subsidiaries accept, medicaid payments from the state of Colorado;
(II)
Details on transactions between related parties or entities that have common ownership; and
(III)
Ownership interest in real estate, management companies, facility operators, and all related parties.
(b)
The state department shall determine the format for the documentation provided by each nursing facility.
(c)
The state board shall establish by rule any penalties for noncompliance with the financial reporting required pursuant to this subsection (13).
(d)
The costs associated with the financial reporting required pursuant to this subsection (13), including any audit costs incurred by a nursing facility, are an allowable expense on the medicaid cost report and must be incorporated as a component of the overall reimbursement methodology.
(14)
The general assembly finds that the inflexible nature of statutorily fixed reimbursement rates is not in the best interest of the state of Colorado. Therefore, the state department shall develop and implement a transition plan to regulate nursing facility reimbursement aimed at improving the health and safety of residents, promoting innovation and improved infection control efforts, improving access to care, and promoting innovation in Colorado nursing facilities. As part of this process, the state department shall:
(a)
No later than July 1, 2026, define "nursing home reimbursement" through rules promulgated by the state board and provide payments to nursing facilities consistent with the promulgated rules;
(b)
Engage with stakeholders regularly to seek input on any proposed methodology changes and ensure the methodology is reasonable and adequate to meet the costs of an efficiently and economically operated nursing facility that provides care and services in conformity with applicable state and federal laws, regulations, and quality and safety standards based on the most recent audit and finalized cost and utilization data available; and
(c)
From November 1, 2023, to November 1, 2026, submit an annual report to the joint budget committee of the general assembly regarding the implementation progress described in this subsection (14), including, at a minimum:
(I)
Records of stakeholder engagement;
(II)
Conclusions drawn from financial oversight activities;
(III)
Issues regarding payment equity and access to care coordination; and
(IV)
Expected budgetary impacts of any methodology change.
(15)
(a)
Each nursing facility that receives medicaid funds shall develop and submit a plan to the state department that meets state department standards and demonstrates how the nursing facility will:
(I)
Improve the health and safety of the nursing facility's residents, including infection control and staffing;
(II)
Increase access to care;
(III)
Improve financial sustainability, including opportunities for diversification of business lines and stabilization of revenue streams; and
(IV)
Promote innovation to meet the emerging needs of individuals with disabilities and aging and older adults.
(b)
The state board shall promulgate rules implementing this subsection (15).
(16)
Subsections (1) to (9) of this section and this subsection (16) are repealed, effective July 1, 2026.
Amended by 2023 Ch. 278,§ 1, eff. 5/30/2023.
Amended by 2021 Ch. 192, § 3, eff. 9/7/2021.
Amended by 2020 Ch. 203, § 1, eff. 6/30/2020.
Amended by 2018 Ch. 74, § 5, eff. 8/8/2018.
Amended by 2013 Ch. 162, § 1, eff. 5/3/2013.
L. 2006: Entire article added with relocations, p. 1925, § 7, effective July 1. L. 2008: Entire section R&RE, p. 1777, § 3, effective July 1. L. 2009: (1)(a), (3), (5), (6), (7), (8), (9)(b), and (11) amended and (9)(b.3), (9)(b.5), and (9)(b.7) added, (SB 09-263), ch. 912, p. 912, § 2, effective May 1. L. 2010: (9)(b)(III) added, (HB 10 -1324), ch. 69, p. 69, § 1, effective March 1; (9)(b)(III) and (9)(b.7)(II) amended, (HB 10-1379), ch. 930, p. 930, §§ 1, 2, effective May 6. L. 2011: (9)(b)(IV) added, (SB 11-215), ch. 514, p. 514, § 1, effective May 5. L. 2012: (9)(b)(V) added, (HB 12-1340), ch. 154, p. 552, § 1, effective May 3. L. 2013: (9)(b)(III) and (9)(b)(IV) repealed, (9)(b)(V) amended, and (9)(b)(VI) added, (HB 13-1152), ch. 520, p. 520, § 1, effective May 3. L. 2018: IP(6), (6)(b), and (9)(b.3)(II) amended, (HB 18-1091), ch. 643, p. 643, § 5, effective August 8. L. 2020: (9)(b)(VII) added, (HB 20-1362), ch. 1005, p. 1005, § 1, effective June 30. L. 2021: (2) amended and (12) added, (HB 21-1227), ch. 1016, p. 1016, § 3, effective September 7.
(1) This section is similar to former § 26-4-502.5 as it existed prior to 2006.
(2) Subsection (9)(b.7)(III) provided for the repeal of subsection (9)(b.7), effective July 1, 2011. (See L. 2009, p. 912.)
(3) Subsection (9)(b)(V)(B) provided for the repeal of subsection (9)(b)(V), effective July 1, 2014. (See L. 2012, p. 552.)
(4) Subsection (3)(c)(III) provided for the repeal of subsection (3)(c), effective July 1, 2015. (See L. 2009, p. 912.)
2021 Ch. 192, was passed without a safety clause. See Colo. Const. art. V, § 1(3).
For the legislative declaration contained in the 2008 act repealing and reenacting this section, see section 1 of chapter 383, Session Laws of Colorado 2008.