(a)  On an annual basis, every licensed nursing facility participating in the medical assistance program shall file a financial statement or other financial information acceptable to the department with its annual cost report (BM-64) for the time period covered by the cost report that would provide sufficient information for the department to assess the facility’s financial status.

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(b)  The department shall, by regulation:

(1)  Develop, in consultation with the department of health, criteria for the financial statements or financial information to be submitted in lieu of the financial statement as required in subsection (a);

(2)  Develop criteria for reviewing the financial statement or financial information submitted and assessing the financial status of facilities to determine if they have sufficient resources to meet operational and financial expenses and to comply with resident care and facility standards; and

(3)  Establish a set of indicators or criteria that would indicate if a facility’s financial status is marginal of if a facility is having severe financial difficulties. These criteria shall include, but not be limited to:

(i)  Significant operating losses for two (2) successive years;

(ii)  Frequent requests for advance on Medicaid reimbursements;

(iii)  Unfavorable working capital ratios of assets to liabilities;

(iv)  High proportion of accounts receivable more than ninety (90) days’ old;

(v)  Increasing accounts payable, unpaid taxes, and/or payroll-related costs;

(vi)  Minimal or decreasing equity and/or reserves;

(vii)  High levels of debt and high borrowing costs.

(c)  Whenever a facility’s financial status is determined to be marginal or to have severe financial difficulties, the department shall notify the director of the department of health.

(d) Special rate appeal pursuant to § 23-17-12.7.  The department shall file a state plan amendment with the United States Department of Health and Human Services to modify the principles of reimbursement for nursing facilities, to be effective on October 1, 2005, or as soon thereafter as is authorized by an approved state plan amendment, to assign a special prospective appeal rate for any facility for which, pursuant to § 23-17-12.6, the department of health has appointed an independent quality monitor; the department of health has required to engage an independent quality consultant or temporary manager; and/or the department of health pursuant to § 23-17-12.7 has been required to develop and implement a plan of correction and remediation to address concerns regarding resident care and coincident financial solvency. The special prospective appeal rate shall be assigned for a duration of not less than six (6) months, shall be based upon the additional cost of the independent quality monitor, independent quality consultant, or temporary manager, as the case may be, or the approved spending plan set forth in the plan of correction and remediation, and subject to review-of-cost report, and subsequent extension at the discretion of the department, at six-month (6) intervals for a maximum of eighteen (18) months thereafter. In calculating the prospective per diem, the department shall disregard the cost center ceilings for the direct labor and other operating expense cost centers. The department shall recoup any funds specified in the spending plan that have not been expended.