(a) (1) As provided in subsection (e) of this section, a portion of the revenues from the quality assessment that is assessed under § 19-310.1 of this title shall be distributed to nursing facilities subject to § 19-310.1 of this title based on accountability measures that indicate quality of care or a commitment to quality of care.

(2) In consultation with representatives of the nursing facilities and other stakeholders, the Maryland Department of Health shall develop accountability measures to use in a pay-for-performance program that take into account both performance and improvement.

(3) The accountability measures shall be objective, measurable, and when considered in combination with each other, deemed to have a correlation to residents’ quality of life and care.

(b) (1) On or before December 1, 2009, and each year thereafter, the Department shall, in consultation with representatives of nursing facilities and other interested stakeholders, make necessary changes to the pay-for-performance program to determine the effect on providers and to determine if the measures satisfy the requirements of being objective, measurable, and, when considered in combination with each other, have a correlation to residents’ quality of life and care.

(2) In performing the review required under paragraph (1) of this subsection, on or before December 1, 2009, and on or before December 1, 2010, the Department shall examine and modify the pay-for-performance program to include improvement measures in the scoring criteria.

(c) (1) A portion of the revenues generated by the quality assessment under § 19-310.1 of this title shall be in an incentive program to be distributed as provided in this section, to the extent federal law allows.

(2) The distribution of revenues as provided in this section shall be used as an incentive for nursing facilities to provide quality care and may not be used to directly or indirectly hold harmless any nursing facility.

(d) On or before December 1, 2008, the plan required under this section shall be submitted by the Department, in accordance with § 2-1257 of the State Government Article, to the General Assembly.

(e) (1) On or before July 1, 2009, the Department shall:

(i) Score nursing facilities based on scoring criteria developed and reported to the General Assembly in the December 1, 2008 report as required by Chapter 200 of the Acts of the General Assembly of 2008; and

(ii) Send each nursing facility a transmittal with the scoring criteria, the performance of the nursing facility relative to the scoring, and the money that would have been received by the nursing facility using the scoring criteria.

(2) Beginning July 1, 2010, the Department shall distribute 50% of the revenues generated by the quality assessment that is assessed under § 19-310.1 of this title and required for use in a pay-for-performance program to nursing facilities as provided in this section.

(3) Beginning July 1, 2011, the Department shall fully implement the pay-for-performance program as provided in this section.