1.    The department shall establish procedures for determining per diem reimbursement for operating costs.

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2.    The department shall analyze and evaluate each nursing home’s cost report of allowable operating costs incurred by the nursing home during the reporting year immediately preceding the rate year for which the payment rate becomes effective.

3.    The department shall establish price limits on actual allowable historical operating cost per diems, increased by the market basket for skilled nursing facility before productivity assessment, based on cost reports of allowable operating costs taking into consideration relevant factors including resident needs, nursing hours necessary to meet resident needs, size of the nursing home, and the costs that must be incurred for the care of residents in an efficiently and economically operated nursing home. For the rate year beginning 2022, the department shall establish price limits for cost categories using the June 30, 2021, cost report year as the base period. The price limits must be established using the same percentage of the median used to establish the limits for the June 30, 2020, base period. In determining allowable historical operating cost per diems for purposes of setting price limits, the department shall divide the allowable historical operating costs by the actual number of resident days, except that when a nursing home is occupied at less than ninety percent of licensed capacity days, the department may establish procedures to adjust the computation of the indirect care cost per diem to an imputed occupancy level at or below ninety percent. To encourage the development of home and community-based services as an alternative to nursing home care, the department may waive the imputed occupancy level requirements for a nursing home that the department determines to be providing significant home and community-based services in coordination with home and community-based service providers to avoid duplicating existing services.

4.    In establishing payment rates for one or more operating cost categories, the department may establish separate rates for different classes of residents based on their relative care needs.

5.    The department shall include in the ratesetting system for nursing homes those costs associated with computer software and any related technology, including cloud-based services. These expenses are allowed as a direct passthrough.

6.    A new base period must be established with the cost report period June 30, 2023.

7.    The margin cap used for the rate year beginning 2022 price limits must be no less than three and forty-six hundredths percent.

8.    The market basket for skilled nursing facility before productivity adjustment is the preferred index to adjust historical operating costs when a new base period is     established and to adjust the price rate in subsequent years until a new base rate period is established.

9.    For the rate years beginning 2022 and 2023, the department shall inform the nursing home of the operating rate using historical operating costs and the operating rate using price limits. The nursing home shall inform the department if the nursing home wants to accept the operating rate using historical operating costs as the established rate.