SECTION 1. That Title 56, Idaho Code, be, and the same is hereby amended by the addition thereto of a NEW SECTION, to be known and designated as Section 56-260, Idaho Code, and to read as follows:

56-260. SHORT TITLE.

This act shall be known and may be cited as the "Idaho Nursing Facility Sustainability and Quality Act."

SECTION 2. That Title 56, Idaho Code, be, and the same is hereby amended by the addition thereto of a NEW SECTION, to be known and designated as Section 56-261, Idaho Code, and to read as follows:

56-261. LEGISLATIVE FINDINGS AND INTENT.

(1) The Legislature of the State of Idaho hereby finds and declares that:

(a) Idaho's Medicaid nursing facility reimbursement rate of approximately two hundred fifty-nine dollars ($259) per patient day ranks forty-sixth (46th) among the fifty states and is the lowest in the Intermountain West region;

(b) The statewide average cost of providing nursing facility care in Idaho is approximately two hundred fifty-three dollars ($253) per patient day, and the current Medicaid reimbursement rate, after application of the budget adjustment factor, covers less than ninety percent (90%) of such costs in a majority of facilities;

(c) Idaho's current Medicaid nursing facility rate methodology relies upon the Resource Utilization Group, Version III (RUG-III) patient classification system, which the federal Centers for Medicare and Medicaid Services replaced with the Patient-Driven Payment Model (PDPM) in October 2019, leaving Idaho's methodology seven (7) years behind current federal standards;

(d) The property component of Idaho's rate methodology continues to utilize a base rate of nine dollars and twenty-four cents ($9.24) per patient day, established in 1985, which does not reflect current construction costs, capital expenditure needs, or the actual cost of maintaining aging physical infrastructure;

(e) The budget adjustment factor (BAF) applied to nursing facility rates systematically reduces reimbursement below calculated costs by failing to account for labor cost inflation, supply chain cost increases, regulatory compliance costs, insurance premium increases, technology and electronic health record mandates, and capital improvement needs;

(f) Idaho's current nursing facility provider assessment rate of approximately three and one-half percent (3.5%) of net patient revenue is substantially below the six percent (6%) federal safe harbor established by Section 1903(w) of the Social Security Act (42 U.S.C. § 1396b(w)), resulting in an estimated forty-five million dollars ($45,000,000) or more in available federal matching funds being left unclaimed annually;

(g) Idaho's federal medical assistance percentage (FMAP) of approximately seventy percent (70%) means that for every one dollar ($1.00) of state Medicaid expenditure, the federal government contributes approximately two dollars and thirty-three cents ($2.33), making strategic investment in Medicaid nursing facility reimbursement among the highest-return expenditures available to the state;

(h) Certified nursing assistant (CNA) wages in Idaho nursing facilities range from fourteen dollars ($14.00) to seventeen dollars ($17.00) per hour, which is below the starting wages offered by retail employers including national chains, creating a severe workforce recruitment and retention crisis;

(i) Idaho has experienced the closure of more than ten (10) Medicaid-certified nursing facilities since 2020, disproportionately affecting rural communities and displacing elderly and disabled residents who must then be placed in more costly alternative settings or relocated far from their families and communities;

(j) Approximately seventy-two percent (72%) of nursing facility bed days in Idaho are occupied by Medicaid beneficiaries, making Medicaid reimbursement the primary revenue source for the nursing facility industry and making rate adequacy a direct determinant of access to care;

(k) Neighboring states have substantially higher Medicaid nursing facility reimbursement rates, including Montana at three hundred fourteen dollars ($314) per day, Oregon at three hundred twenty-two dollars ($322) per day, and Washington at three hundred fifty-six dollars ($356) per day, placing Idaho facilities at a competitive disadvantage in recruiting qualified healthcare professionals;

(l) The Medicaid Payment Advisory Commission (MedPAC) and the Medicare Payment Advisory Commission have documented that states which modernize Medicaid nursing facility reimbursement experience improved facility financial stability, reduced closures, improved staffing levels, and better resident outcomes;

(m) Multiple states, including North Dakota, Colorado, Indiana, Montana, Oregon, and Washington, have successfully implemented modernized Medicaid nursing facility reimbursement methodologies, quality incentive programs, and enhanced provider assessment rates, providing proven models for Idaho's reform; and

(n) The current rate-setting process lacks adequate transparency, public participation, and legislative oversight, as evidenced by mid-year rate reductions implemented during holiday weekends without prior access impact studies, public comment periods, or review by the Joint Finance-Appropriations Committee.

(2) It is the intent of the Legislature that:

(a) Idaho's Medicaid nursing facility reimbursement methodology be modernized to align with current federal payment models, reflect actual costs of care delivery, and ensure access to quality nursing facility care for all Idaho Medicaid beneficiaries;

(b) The state maximize available federal matching funds through prudent adjustment of the provider assessment rate within the federal safe harbor;

(c) A quality incentive program be established to reward facilities that achieve superior clinical outcomes, maintain adequate staffing levels, and demonstrate high resident and family satisfaction;

(d) A dedicated workforce development fund be created to address the critical shortage of direct care workers in Idaho's nursing facilities;

(e) The rate-setting process be reformed to ensure transparency, public participation, provider input, and appropriate legislative oversight; and

(f) These reforms be implemented in a fiscally responsible manner that maximizes the return on state investment through federal matching funds while protecting the interests of Idaho taxpayers, Medicaid beneficiaries, and nursing facility providers.

SECTION 3. That Title 56, Idaho Code, be, and the same is hereby amended by the addition thereto of a NEW SECTION, to be known and designated as Section 56-262, Idaho Code, and to read as follows:

56-262. DEFINITIONS.

As used in Sections 56-260 through 56-274, Idaho Code:

(1) "Allowable costs" means costs incurred by a nursing facility that are reasonable, necessary, and related to the provision of nursing facility services to residents, as determined by the department through audited cost report review, and that conform to applicable state and federal guidelines.

(2) "Budget adjustment factor" or "BAF" means the multiplier or adjustment mechanism applied by the department to reduce calculated Medicaid nursing facility reimbursement rates below the level supported by reported allowable costs, as described in IDAPA 16.03.10 or any successor rule.

(3) "Capital component" means the portion of the per diem rate attributable to the costs of buildings, fixed equipment, major movable equipment, land improvements, and the financing costs associated therewith, calculated on the basis of current replacement value or fair rental value methodology.

(4) "Case-mix adjustment" means the methodology used to adjust per diem rates to reflect the acuity and resource needs of a facility's resident population, utilizing the Patient-Driven Payment Model classification system or any successor system adopted by the Centers for Medicare and Medicaid Services.

(5) "Component-based rate" means a per diem Medicaid reimbursement rate calculated as the sum of distinct cost components, including but not limited to nursing services, therapy services, non-case-mix operating costs, capital costs, and support services.

(6) "Cost report" means the annual audited financial report submitted by each Medicaid-certified nursing facility to the department detailing the facility's costs of operation, revenues, statistical data, and other information required by the department for rate-setting purposes.

(7) "Department" means the Idaho Department of Health and Welfare, or any successor agency.

(8) "Direct care worker" means any employee of a Medicaid-certified nursing facility who provides hands-on care to residents, including but not limited to certified nursing assistants, licensed practical nurses, and registered nurses providing bedside care.

(9) "Federal medical assistance percentage" or "FMAP" means the percentage of Medicaid expenditures for which the federal government provides matching funds to the State of Idaho, as determined annually by the United States Department of Health and Human Services pursuant to Section 1905(b) of the Social Security Act (42 U.S.C. § 1396d(b)).

(10) "Medicaid-certified nursing facility" means a nursing facility, as defined in Section 1919 of the Social Security Act (42 U.S.C. § 1396r), that has been certified by the department to participate in the Idaho Medicaid program and provides nursing facility services to Medicaid beneficiaries.

(11) "Net patient revenue" means the total revenue received by a nursing facility from all payer sources for nursing facility services rendered to residents, less contractual allowances and bad debt, as reported in the facility's audited cost report.

(12) "Non-case-mix operating costs" means the portion of per diem costs that do not vary with resident acuity, including but not limited to dietary services, laundry and linen services, housekeeping, plant operations and maintenance, administration, and professional liability insurance.

(13) "Nursing services component" means the portion of the per diem rate attributable to the costs of registered nurses, licensed practical nurses, and certified nursing assistants providing direct resident care, adjusted for case-mix.

(14) "Patient-Driven Payment Model" or "PDPM" means the case-mix classification system adopted by the Centers for Medicare and Medicaid Services effective October 1, 2019, for Medicare skilled nursing facility reimbursement, or any successor classification system adopted by the Centers for Medicare and Medicaid Services.

(15) "Provider assessment" means the assessment levied upon Medicaid-certified nursing facilities pursuant to Section 56-253, Idaho Code, and Section 1903(w) of the Social Security Act (42 U.S.C. § 1396b(w)).

(16) "Quality incentive payment" means an additional per diem payment made to a Medicaid-certified nursing facility that achieves designated performance thresholds under the quality incentive program established in Section 56-267, Idaho Code.

(17) "Rate floor" means the minimum Medicaid per diem reimbursement rate established in Section 56-266, Idaho Code, below which no Medicaid-certified nursing facility may be reimbursed.

(18) "Reasonable cost" means the cost that a prudent and cost-conscious provider would incur in providing quality nursing facility services, as determined by the department based on audited cost report data.

(19) "Rebasing" means the periodic recalculation of Medicaid nursing facility per diem rates using the most recent available audited cost report data.

(20) "Statewide median cost" means the median per patient day cost among all Medicaid-certified nursing facilities in Idaho, calculated from the most recent available audited cost reports.

(21) "Support services component" means the portion of the per diem rate attributable to ancillary services, medical supplies, pharmacy, and other resident support costs not included in the nursing, therapy, non-case-mix, or capital components.

(22) "Rural nursing facility" means a Medicaid-certified nursing facility located in a county with a population of ten thousand (10,000) or more but fewer than fifty thousand (50,000) persons, as determined by the most recent decennial census or annual population estimate published by the United States Census Bureau.

(23) "Frontier nursing facility" means a Medicaid-certified nursing facility located in a county with a population of fewer than ten thousand (10,000) persons, as determined by the most recent decennial census or annual population estimate published by the United States Census Bureau.

(24) "Urban nursing facility" means a Medicaid-certified nursing facility located in a county with a population of fifty thousand (50,000) or more persons.

(25) "Sole community nursing facility" means a Medicaid-certified nursing facility that is the only such facility located within a thirty-mile driving radius, or the only such facility within the county in which it is located, and whose closure would leave Medicaid beneficiaries in the service area without reasonable access to nursing facility services.

(26) "Bariatric resident" means a nursing facility resident who has a body mass index (BMI) of forty (40) or greater as documented by a physician, or who requires the use of bariatric-specific equipment including but not limited to bariatric beds, bariatric wheelchairs, ceiling-mounted or portable bariatric lifts rated for capacities exceeding four hundred (400) pounds, or reinforced bathroom fixtures, due to the resident's weight or body habitus.

(27) "Behavioral health resident" means a nursing facility resident who has a primary or secondary diagnosis of a serious mental illness as defined by the Pre-Admission Screening and Resident Review (PASRR) process under 42 U.S.C. § 1396r(e)(7), or who requires ongoing behavioral management interventions due to dementia-related behavioral disturbances, psychotic disorders, severe anxiety disorders, or other behavioral health conditions that necessitate enhanced staffing, specialized training, or environmental modifications.

(28) "Complex medical resident" means a nursing facility resident who requires ventilator or respiratory support, tracheostomy care, complex wound care with vacuum-assisted closure, total parenteral nutrition, or other medically complex services that require specialized nursing skills, equipment, or staffing above the level reflected in the standard case-mix adjustment.

(29) "Therapy services component" means the portion of the per diem rate attributable to physical therapy, occupational therapy, speech-language pathology, and respiratory therapy services, adjusted for case-mix.

SECTION 4. That Title 56, Idaho Code, be, and the same is hereby amended by the addition thereto of a NEW SECTION, to be known and designated as Section 56-263, Idaho Code, and to read as follows:

56-263. NURSING FACILITY MEDICAID RATE METHODOLOGY.

(1) Adoption of Component-Based Methodology. The department shall adopt and implement a component-based Medicaid nursing facility reimbursement methodology that:

(a) Calculates per diem rates as the sum of distinct cost components as specified in Section 56-264, Idaho Code;

(b) Utilizes the Patient-Driven Payment Model or any successor system adopted by the Centers for Medicare and Medicaid Services for case-mix adjustment of applicable rate components;

(c) Is based on audited cost report data that is no more than thirty-six (36) months old at the time of rate calculation;

(d) Includes an annual inflation adjustment applied to each rate component based on the CMS Skilled Nursing Facility Market Basket Index or, at the department's discretion, the Bureau of Labor Statistics Nursing Home Input Price Index; and

(e) Does not include a budget adjustment factor or any similar mechanism that reduces calculated rates below the level supported by reported allowable costs without a specific, publicly documented justification for each such adjustment.

(2) Elimination of Budget Adjustment Factor. Effective upon full implementation of the component-based methodology pursuant to Section 56-272, Idaho Code, the department shall not apply a budget adjustment factor or any blanket percentage reduction to calculated Medicaid nursing facility per diem rates. Any cost containment measures applied by the department shall be:

(a) Specific to identified cost categories;

(b) Based on documented evidence of unreasonable costs;

(c) Applied through the individual cost component ceilings and limitations established in this act; and

(d) Subject to the public transparency and notice requirements of Section 56-270, Idaho Code.

(3) Property Component Modernization. The department shall replace the existing property per diem base rate with a methodology that reflects:

(a) Current replacement value of nursing facility assets, updated no less frequently than every four (4) years using a recognized construction cost index applicable to Idaho;

(b) Fair rental value or actual depreciation and interest costs, whichever methodology the department determines more accurately reflects the capital costs of providing nursing facility services in Idaho; and

(c) Documented capital improvement needs, including costs associated with life safety code compliance, accessibility improvements, and infection control infrastructure.

(4) Rate Adequacy Standard. It shall be the goal of the department that the statewide average Medicaid nursing facility per diem rate, inclusive of all components and quality incentive payments, shall be sufficient to cover not less than ninety percent (90%) of the statewide average reasonable cost of providing nursing facility care. The department shall report annually to the Legislature on progress toward this goal.

(5) Upper Payment Limit Compliance. The department shall ensure that aggregate Medicaid payments to nursing facilities under this act do not exceed the upper payment limit established by 42 C.F.R. § 447.272, as amended. The department shall:

(a) Prepare and maintain an upper payment limit demonstration, updated no less frequently than annually, documenting that aggregate Medicaid payments to nursing facilities do not exceed an amount that could reasonably be estimated to have been paid under Medicare payment principles for the services furnished to the Medicaid population;

(b) Submit the upper payment limit demonstration to the Centers for Medicare and Medicaid Services as part of the state plan amendment required by Section 56-271, Idaho Code, and annually thereafter;

(c) Separately analyze and document upper payment limit compliance for any non-state government-operated nursing facilities; and

(d) If at any time the department determines that proposed rates would cause aggregate Medicaid payments to exceed the upper payment limit, the department shall proportionally adjust rate components to maintain compliance, provided that such adjustments shall be subject to the public transparency and notice requirements of Section 56-270, Idaho Code.

(6) Automatic Federal Alignment. In the event the Centers for Medicare and Medicaid Services adopts a successor patient classification system to PDPM, or modifies the case-mix methodology applicable to skilled nursing facilities, the department shall align the case-mix adjustment methodology under this act with such successor or modified system within twelve (12) months of the federal effective date, without requiring additional legislative authorization, provided that the department shall notify the germane committees of the Senate and House of Representatives of any such alignment.

SECTION 5. That Title 56, Idaho Code, be, and the same is hereby amended by the addition thereto of a NEW SECTION, to be known and designated as Section 56-264, Idaho Code, and to read as follows:

56-264. RATE COMPONENTS AND CALCULATION.

(1) Rate Components. The Medicaid nursing facility per diem rate for each facility shall be calculated as the sum of the following five (5) components:

(a) Nursing Services Component. The nursing services component shall reflect the cost of direct nursing care, including wages, benefits, and associated costs for registered nurses, licensed practical nurses, and certified nursing assistants. This component shall be case-mix adjusted using the PDPM nursing classification or successor system. The component ceiling shall be set at no less than the seventy-fifth (75th) percentile of reported statewide nursing costs per patient day, adjusted for case-mix.

(b) Therapy Services Component. The therapy services component shall reflect the cost of physical therapy, occupational therapy, speech-language pathology, and respiratory therapy services. This component shall be case-mix adjusted using the PDPM therapy classification or successor system. The component ceiling shall be set at no less than the seventy-fifth (75th) percentile of reported statewide therapy costs per patient day, adjusted for case-mix.

(c) Non-Case-Mix Operating Component. The non-case-mix operating component shall reflect the cost of dietary services, laundry and linen, housekeeping, plant operations and maintenance, administration, professional liability insurance, and other operating costs that do not vary with resident acuity. The component ceiling shall be set at no less than the median of reported statewide non-case-mix operating costs per patient day, with an efficiency incentive that permits facilities operating below the median to retain a portion of the savings.

(d) Capital and Property Component. The capital and property component shall reflect the cost of buildings, fixed equipment, major movable equipment, land improvements, and the financing costs associated therewith, calculated using the modernized methodology described in Section 56-263(3), Idaho Code. The nine dollar and twenty-four cent ($9.24) per patient day property base rate established prior to the effective date of this act is hereby superseded.

(e) Support Services Component. The support services component shall reflect the cost of ancillary services, medical supplies, pharmacy, and other resident support costs not included in the preceding components. The component ceiling shall be set at no less than the median of reported statewide support services costs per patient day.

(2) Calculation. The per diem rate for each facility shall be calculated as:

Per Diem Rate = (Nursing × Case-Mix Index) + (Therapy × Case-Mix Index) + Non-Case-Mix Operating + Capital + Support Services

(3) Peer Grouping. The department may establish peer groups based on facility size, geographic location, or level of care for purposes of calculating component ceilings, provided that:

(a) No peer group shall contain fewer than five (5) facilities;

(b) The peer grouping methodology shall be publicly documented and subject to comment; and

(c) Geographic Classification and Tiered Adjustments. Each Medicaid-certified nursing facility shall be classified into one of three geographic tiers based on the population of the county in which it is located, using the most recent decennial census or annual population estimate published by the United States Census Bureau:

(i) Urban facilities (counties with population of 50,000 or more): No geographic adjustment. Estimated 7 Idaho counties, approximately 40-45 facilities;

(ii) Rural facilities (counties with population of 10,000 to 49,999): A geographic adjustment of not less than five percent (5%) applied to the base rate calculated under this section, reflecting higher per-unit costs of administration, recruitment, supply chain, and plant operations in rural settings. Estimated 21 Idaho counties, approximately 18-22 facilities; and

(iii) Frontier facilities (counties with population of fewer than 10,000): A geographic adjustment of not less than ten percent (10%) applied to the base rate, reflecting the significantly higher per-unit costs, severe workforce recruitment challenges, limited supply chain access, and essential community role of nursing facilities in frontier communities. Estimated 15 Idaho counties, approximately 8-12 facilities.

(d) Sole Community Nursing Facility Designation. In addition to the geographic adjustment under subsection (c), a Medicaid-certified nursing facility that qualifies as a sole community nursing facility as defined in Section 56-262, Idaho Code, shall receive an additional sole community adjustment of not less than five percent (5%) applied to the base rate. The department shall:

(i) Maintain a current registry of sole community nursing facilities, updated annually;

(ii) Automatically designate any facility as a sole community nursing facility when the closure of another facility within a thirty-mile radius reduces the number of Medicaid-certified facilities to one;

(iii) Provide enhanced monitoring and early intervention for sole community nursing facilities showing financial distress; and

(iv) Report to the Legislature annually on the number, location, and financial condition of sole community nursing facilities.

(4) Acuity-Based Add-On Payments. In addition to the per diem rate calculated under subsections (1) through (3) of this section, the following acuity-based add-on payments shall be made for qualifying residents:

(a) Bariatric Resident Add-On. For each Medicaid patient day attributable to a bariatric resident as defined in Section 56-262, Idaho Code, the facility shall receive an add-on payment of not less than thirty-five dollars ($35.00) per day to reflect the documented higher costs of:

(i) Specialized bariatric equipment, including bariatric beds, lifts, wheelchairs, and reinforced bathroom fixtures;

(ii) Increased staffing requirements, as bariatric residents typically require two-person or three-person assistance for transfers, repositioning, and activities of daily living;

(iii) Facility modifications, including wider doorways, reinforced flooring, and specialized bathing facilities; and

(iv) Specialized wound prevention and skin integrity protocols.

(b) Bariatric Qualification. The bariatric add-on shall be authorized upon:

(i) Physician documentation of a body mass index (BMI) of forty (40) or greater, or physician certification that the resident requires bariatric-specific equipment due to weight or body habitus; and

(ii) Facility attestation that bariatric-specific equipment and staffing are being provided. The department may audit bariatric claims and shall recover overpayments for unsubstantiated claims.

(c) Behavioral Health Resident Add-On. For each Medicaid patient day attributable to a behavioral health resident as defined in Section 56-262, Idaho Code, the facility shall receive an add-on payment of not less than thirty dollars ($30.00) per day to reflect the documented higher costs of:

(i) Enhanced staffing ratios, including one-to-one or one-to-two monitoring for residents with elopement risk, self-harm risk, or aggressive behaviors;

(ii) Staff training in de-escalation techniques, trauma-informed care, and behavioral management;

(iii) Environmental modifications, including secured memory care units, quiet rooms, and specialized activity programming; and

(iv) Behavioral health specialist consultation, including psychiatric, psychological, and licensed clinical social work services.

(d) Behavioral Health Qualification. The behavioral health add-on shall be authorized upon:

(i) A Pre-Admission Screening and Resident Review (PASRR) Level II determination identifying serious mental illness under 42 U.S.C. § 1396r(e)(7); or

(ii) A clinical assessment by a licensed physician, psychiatrist, psychologist, or advanced practice registered nurse documenting that the resident requires ongoing behavioral management interventions due to dementia-related behavioral disturbances, psychotic disorders, or other behavioral health conditions; and

(iii) An individualized behavioral management plan that is reviewed and updated no less frequently than quarterly.

(e) Complex Medical Resident Add-On. For each Medicaid patient day attributable to a complex medical resident as defined in Section 56-262, Idaho Code, the facility shall receive an add-on payment of not less than fifty dollars ($50.00) per day to reflect the documented higher costs of:

(i) Ventilator management, tracheostomy care, or respiratory support equipment and monitoring;

(ii) Complex wound care requiring vacuum-assisted closure, specialized dressings, or wound care nursing specialists;

(iii) Total parenteral nutrition (TPN) administration and monitoring;

(iv) Specialized nursing skills, including IV therapy, central line management, and continuous monitoring; and

(v) Equipment costs exceeding those captured by the standard capital component.

(f) Complex Medical Qualification. The complex medical add-on shall be authorized upon physician certification that the resident meets the criteria in Section 56-262(28), Idaho Code, with documentation of the specific complex medical services being provided. The department shall establish clinical criteria by rule.

(g) Add-On Funding. Acuity-based add-on payments under this subsection shall be:

(i) Funded from the nursing facility sustainability fund established in Section 56-253(3), Idaho Code;

(ii) Eligible for federal financial participation at the applicable FMAP rate;

(iii) Adjusted annually by the mandatory inflation adjustment under subsection (5) of this section; and

(iv) Subject to rebasing every two (2) years based on reported costs for qualifying residents, as documented in facility cost reports.

(h) Access Incentive. Facilities that maintain a census in which bariatric, behavioral health, or complex medical residents constitute ten percent (10%) or more of their Medicaid population shall receive an additional access incentive of five dollars ($5.00) per Medicaid patient day, applied to all Medicaid days, not just qualifying resident days, in recognition of the facility's role in serving hard-to-place populations.

(5) Mandatory Annual Inflation Adjustment. Each component of the per diem rate shall be adjusted automatically, effective July 1 of each year, by the most recently published CMS Skilled Nursing Facility Market Basket Index ("Market Basket") percentage change. This adjustment is self-executing and shall not require annual legislative authorization, appropriation action, or department rulemaking.

(a) The inflation adjustment shall be applied as a multiplier to each component of the per diem rate as calculated under this section;

(b) If the department determines that a component-specific inflation index more accurately reflects cost changes for a particular component, the department may substitute such index, provided that the substituted index shall not produce an adjustment lower than the Market Basket percentage change;

(c) In no event shall the department apply an inflation adjustment of less than zero (0) percent, regardless of any negative Market Basket publication. Rates shall not decrease due to deflation;

(d) If CMS has not published a Market Basket update by May 1 of any year, the department shall apply the most recent four-quarter average of the Bureau of Labor Statistics Employment Cost Index for healthcare workers as the interim inflation adjustment, to be reconciled upon Market Basket publication; and

(e) The inflation adjustment shall be applied before any other adjustments, including case-mix, rural, rate floor, and quality incentive calculations.

SECTION 6. That Title 56, Idaho Code, be, and the same is hereby amended by the addition thereto of a NEW SECTION, to be known and designated as Section 56-265, Idaho Code, and to read as follows:

56-265. COST REPORT REQUIREMENTS AND RATE REBASING.

(1) Annual Cost Reports. Each Medicaid-certified nursing facility shall submit an audited cost report to the department annually, on a form and schedule prescribed by the department. Such cost reports shall include:

(a) Total costs of operation by category, including all components specified in Section 56-264, Idaho Code;

(b) Total patient days by payer source;

(c) Staffing data, including total hours and compensation for each category of direct care worker;

(d) Revenue by payer source;

(e) Capital expenditures and financing costs; and

(f) Such other information as the department may reasonably require for rate-setting purposes.

(2) Audit and Verification. The department shall audit or cause to be audited a statistically valid sample of cost reports annually and may audit any individual cost report. The department shall complete all audits within eighteen (18) months of cost report submission.

(3) Mandatory Rebasing. The department shall rebase Medicaid nursing facility per diem rates according to the following self-executing schedule:

(a) Rebasing shall occur no less frequently than every two (2) years, using the most recent available audited cost report data that is no more than thirty-six (36) months old at the time of rate calculation;

(b) The rebasing cycle shall be fixed: rates shall be rebased using cost report data from even-numbered fiscal years, with rebased rates taking effect on the July 1 immediately following the completion of audit and calculation;

(c) In the intervening year between rebasing cycles, rates shall be adjusted by the mandatory inflation adjustment under Section 56-264(4), Idaho Code, without rebasing;

(d) Automatic continuation. If the department fails to complete the rebasing calculation and publish proposed rebased rates by April 1 of a rebasing year, the prior year's rates shall automatically continue, adjusted upward by the mandatory inflation adjustment, until rebasing is completed. No facility shall receive a rate reduction as a result of the department's failure to complete rebasing on schedule;

(e) Rebasing shall not require annual legislative authorization, appropriation action, or additional rulemaking beyond the initial rules promulgated under Section 56-274, Idaho Code. The formula established in Sections 56-263 and 56-264, Idaho Code, shall be self-executing upon each rebasing cycle; and

(f) With public notice and opportunity for comment prior to each rebasing, provided that the comment period shall not delay the effective date of rebased rates beyond July 1.

(4) Data Publication. The department shall publish, on its publicly accessible website, aggregate cost report data, component ceilings, rate calculation methodology, and facility-specific per diem rates within sixty (60) days of each rate determination.

SECTION 7. That Title 56, Idaho Code, be, and the same is hereby amended by the addition thereto of a NEW SECTION, to be known and designated as Section 56-266, Idaho Code, and to read as follows:

56-266. RATE FLOOR AND PROTECTIONS AGAINST RATE REDUCTIONS.

(1) Rate Floor. No Medicaid-certified nursing facility shall receive a Medicaid per diem reimbursement rate that is less than ninety percent (90%) of the statewide median reasonable cost per patient day, as calculated from the most recent available audited cost report data.

(2) Prohibition on Mid-Year Rate Reductions. The department shall not reduce Medicaid nursing facility per diem rates at any time other than the annual rate adjustment effective date of July 1, unless:

(a) The Governor has declared a fiscal emergency pursuant to Section 67-3512, Idaho Code;

(b) The department has provided at least one hundred eighty (180) days' written notice to all affected facilities;

(c) The department has conducted and published an access impact study demonstrating that the proposed reduction will not impair access to nursing facility services for Medicaid beneficiaries in any region of the state;

(d) The department has provided a public comment period of not less than sixty (60) days and has held at least two (2) public hearings in geographically diverse locations within the state;

(e) The department has made specific written findings that the proposed reduction will not result in facility closures, significant reduction in services, or displacement of Medicaid residents; and

(f) The proposed reduction has been reviewed by the Joint Finance-Appropriations Committee or, if the Legislature is not in session, the Legislative Council.

(3) Hold Harmless During Transition. During the implementation and transition period described in Section 56-272, Idaho Code, no facility shall receive a per diem rate that is lower than the rate in effect for that facility on the day immediately preceding the effective date of this act, adjusted for inflation as provided in Section 56-264(4), Idaho Code.

(4) Access Monitoring and Automatic Trigger. The department shall monitor access to nursing facility services statewide and by region, and shall take automatic corrective action as follows:

(a) The department shall maintain a statewide nursing facility bed supply index, calculated as the ratio of Medicaid-certified nursing facility beds per one thousand (1,000) residents aged sixty-five (65) and older in each Health and Welfare region;

(b) If the bed supply index in any region falls below the statewide median bed supply index by more than twenty percent (20%), or if two (2) or more Medicaid-certified nursing facilities within a single region submit voluntary closure notices within any twelve-month period, the department shall:

(i) Conduct an emergency access review within sixty (60) days;

(ii) Implement an emergency rate adjustment of not less than five percent (5%) above the current rate for all remaining facilities in the affected region, effective within ninety (90) days, which adjustment shall continue until the access deficit is remedied;

(iii) Report to the Legislature and the Governor within thirty (30) days on the access deficit and corrective actions taken; and

(iv) Expedite any pending workforce development fund applications from facilities in the affected region.

(c) The access monitoring and automatic trigger provisions of this subsection are self-executing and shall not require additional legislative authorization or appropriation.

SECTION 8. That Section 56-253, Idaho Code, be, and the same is hereby amended to read as follows:

56-253. NURSING FACILITY ASSESSMENT.

(1) There is hereby imposed an assessment on each Medicaid-certified nursing facility in Idaho at a rate of five and one-half percent (5.5%) of net patient revenue, effective for fiscal years beginning on or after July 1, 2027.

(2) Federal Safe Harbor Compliance. The assessment rate established in subsection (1) of this section shall not exceed six percent (6%) of net patient revenue, consistent with the federal safe harbor provisions of Section 1903(w)(4) of the Social Security Act (42 U.S.C. § 1396b(w)(4)). If the federal safe harbor percentage is increased by act of Congress, the department may, by rule, increase the assessment rate to the extent permitted, subject to review and approval by the Joint Finance-Appropriations Committee.

(3) Revenue Dedication. All revenue generated by the assessment levied under this section shall be deposited in the nursing facility sustainability fund, hereby created in the state treasury, and shall be used exclusively for:

(a) Medicaid nursing facility per diem rate payments, including quality incentive payments under Section 56-267, Idaho Code;

(b) The nursing facility workforce development fund established in Section 56-269, Idaho Code;

(c) Administration of the Medicaid nursing facility program, provided that no more than three percent (3%) of assessment revenue shall be expended for administrative costs; and

(d) Drawing down the maximum available federal medical assistance percentage matching funds.

(4) Non-Supplantation. Revenue from the assessment levied under this section shall not be used to supplant, reduce, or replace state general fund appropriations for the Medicaid nursing facility program that would otherwise have been made in the absence of such assessment. The state general fund appropriation for Medicaid nursing facility services shall be maintained at a level no less than the amount appropriated in the fiscal year immediately preceding the effective date of this act, adjusted annually for inflation.

(5) Federal Match Maximization. The department shall seek and obtain federal financial participation at the applicable FMAP rate for all expenditures funded in whole or in part by assessment revenue. The department shall submit any necessary amendments to the Medicaid state plan to ensure that assessment revenue qualifies for federal matching funds.

(6) Quarterly Reporting. The department shall report quarterly to the Legislative Services Office on:

(a) Total assessment collections;

(b) Federal matching funds received;

(c) Total expenditures by purpose; and

(d) Fund balance.

(7) Continuity and Reauthorization. The assessment rate established in this section shall continue in effect unless affirmatively repealed or modified by act of the Legislature. The Joint Finance-Appropriations Committee shall review the assessment during the 2032 legislative session and every five (5) years thereafter to evaluate its effectiveness, impact on access to care, and continued compliance with federal law, provided that the assessment shall remain in full force and effect during and after any such review unless the Legislature enacts a specific repeal or modification. The assessment shall not expire, sunset, or lapse by operation of any review deadline.

(8) Fund Protection. Moneys in the nursing facility sustainability fund:

(a) Shall not be transferred, diverted, or appropriated for any purpose other than those specified in subsection (3) of this section;

(b) Shall not be included in calculations of general fund surplus, reserves, or ending balances;

(c) Shall not revert to the general fund at the end of any fiscal year; and

(d) Shall be carried forward and remain available for the purposes specified in subsection (3) of this section until fully expended. Any legislative action to transfer, divert, or repurpose moneys in the nursing facility sustainability fund shall require a two-thirds (2/3) vote of each chamber of the Legislature.

(9) Maintenance of Effort. The non-supplantation requirement in subsection (4) of this section shall be enforced as follows:

(a) The base year for maintenance of effort calculation shall be the fiscal year immediately preceding the effective date of this act;

(b) The state general fund appropriation for Medicaid nursing facility services shall be adjusted upward annually by the lesser of the Consumer Price Index or three percent (3%);

(c) The department shall certify to the Legislative Services Office annually that the maintenance of effort requirement has been met; and

(d) If the maintenance of effort requirement is not met in any fiscal year, assessment revenue collected during that fiscal year shall not be eligible for federal financial participation, and the department shall notify the Centers for Medicare and Medicaid Services of the noncompliance.

SECTION 9. That Title 56, Idaho Code, be, and the same is hereby amended by the addition thereto of a NEW SECTION, to be known and designated as Section 56-267, Idaho Code, and to read as follows:

56-267. QUALITY INCENTIVE PROGRAM.

(1) Establishment. There is hereby established the Idaho Nursing Facility Quality Incentive Program, to be administered by the department, for the purpose of rewarding Medicaid-certified nursing facilities that achieve and maintain high levels of quality in resident care, staffing, and operational performance.

(2) Quality Scorecard. The department shall develop and maintain a quality scorecard that assigns each Medicaid-certified nursing facility a score on a scale of zero (0) to one hundred (100) points, based on the following domains:

(a) Clinical Outcomes (40 points). Including but not limited to:

(i) CMS Five-Star Quality Rating;

(ii) Risk-adjusted rates of falls with major injury;

(iii) Risk-adjusted rates of pressure ulcers;

(iv) Risk-adjusted rates of healthcare-associated infections;

(v) Risk-adjusted rates of emergency department visits and hospitalizations; and

(vi) Successful discharge to community rates.

(b) Staffing (30 points). Including but not limited to:

(i) Total nursing hours per resident day (HPRD), verified by the CMS Payroll-Based Journal system;

(ii) Registered nurse hours per resident day;

(iii) Staff retention rates and turnover rates for direct care workers;

(iv) Staff training hours per employee; and

(v) Use of agency or temporary staffing as a percentage of total nursing hours.

(c) Resident and Family Satisfaction (15 points). Including but not limited to:

(i) Results of a standardized resident satisfaction survey administered no less frequently than annually;

(ii) Results of a standardized family satisfaction survey administered no less frequently than annually; and

(iii) Complaint rates reported to the department.

(d) Regulatory Compliance and Improvement (15 points). Including but not limited to:

(i) Annual survey deficiency scope and severity;

(ii) Absence of immediate jeopardy citations in the prior three (3) years;

(iii) Timely correction of identified deficiencies; and

(iv) Demonstrated quality improvement program with measurable outcomes.

(3) Quality Incentive Payments. In addition to the per diem rate calculated under Section 56-264, Idaho Code, facilities shall receive quality incentive payments as follows:

(a) Facilities scoring eighty (80) through eighty-nine (89) points: an additional fifteen dollars ($15.00) per Medicaid patient day;

(b) Facilities scoring ninety (90) through one hundred (100) points: an additional thirty dollars ($30.00) per Medicaid patient day.

(4) Payment Adjustments. Quality incentive payments shall be:

(a) Calculated quarterly based on the most recent quality scorecard data;

(b) Paid in addition to, and not in lieu of, the per diem rate and any other applicable supplemental payments;

(c) Eligible for federal financial participation at the applicable FMAP rate; and

(d) Funded from the nursing facility sustainability fund established in Section 56-253(3), Idaho Code.

(5) Transparency. The department shall publish, on its publicly accessible website, updated quarterly:

(a) The quality scorecard score for each Medicaid-certified nursing facility;

(b) The data underlying each domain score;

(c) Statewide trends in quality performance; and

(d) Total quality incentive payments made by facility.

(6) Improvement Plans. Facilities scoring below fifty (50) points for two (2) consecutive quarters shall be required to submit a quality improvement plan to the department and may be subject to enhanced monitoring, as determined by the department by rule.

SECTION 10. That Title 56, Idaho Code, be, and the same is hereby amended by the addition thereto of a NEW SECTION, to be known and designated as Section 56-269, Idaho Code, and to read as follows:

56-269. NURSING FACILITY WORKFORCE DEVELOPMENT FUND.

(1) Fund Established. There is hereby created in the state treasury the nursing facility workforce development fund. Moneys in the fund shall be used exclusively for the purposes set forth in this section and shall not revert to the general fund.

(2) Funding Sources. The nursing facility workforce development fund shall be funded by:

(a) A dedicated allocation of not less than ten percent (10%) of the total revenue deposited in the nursing facility sustainability fund established in Section 56-253(3), Idaho Code;

(b) Any appropriations made by the Legislature for purposes consistent with this section;

(c) Federal matching funds drawn down on qualifying expenditures from the fund; and

(d) Grants, gifts, and donations received for purposes consistent with this section.

(3) Authorized Expenditures. Moneys in the nursing facility workforce development fund shall be expended for the following purposes:

(a) CNA Training and Certification. Scholarships, grants, and stipends for individuals enrolled in certified nursing assistant training programs at Idaho community colleges, technical colleges, or department-approved training programs, including:

(i) Tuition, fees, and examination costs;

(ii) Living stipends during training periods; and

(iii) Transportation and childcare assistance for training program participants.

(b) Wage Enhancement Pass-Through. Direct wage enhancement payments to Medicaid-certified nursing facilities, to be passed through dollar-for-dollar to direct care workers as supplemental compensation. The department shall verify pass-through compliance through cost report review and may impose penalties for noncompliance.

(c) Apprenticeship Programs. Funding for registered apprenticeship programs in nursing facility care, developed in partnership with the Idaho Department of Labor and the Idaho Division of Career Technical Education.

(d) Loan Repayment Programs. Student loan repayment assistance for licensed nurses (RN and LPN) who commit to working in Idaho Medicaid-certified nursing facilities for a period of not less than three (3) years, with priority given to facilities in rural and underserved areas.

(e) Recruitment and Retention. Grants to nursing facilities for recruitment marketing, signing bonuses for direct care workers in designated shortage areas, and retention incentive programs.

(f) Career Ladder Development. Funding for programs that enable CNAs to advance to LPN or RN licensure while continuing employment in a Medicaid-certified nursing facility.

(4) Distribution Formula. The department shall develop a distribution formula that:

(a) Weights allocations toward rural and underserved areas of the state;

(b) Considers the severity of workforce shortages in each region;

(c) Provides proportional allocation based on the number of Medicaid patient days served by each facility; and

(d) Includes a competitive grant component for innovative workforce development proposals.

(5) Annual Report. The department shall include in the annual report required by Section 56-273, Idaho Code, a detailed accounting of workforce development fund expenditures, outcomes achieved, and workforce metrics including:

(a) Number of CNAs trained and certified;

(b) Statewide CNA vacancy and turnover rates;

(c) Average direct care worker wages by region; and

(d) Facility staffing levels relative to federal and state standards.

SECTION 11. That Title 56, Idaho Code, be, and the same is hereby amended by the addition thereto of a NEW SECTION, to be known and designated as Section 56-270, Idaho Code, and to read as follows:

56-270. RATE-SETTING PROCESS AND PUBLIC TRANSPARENCY.

(1) Annual Rate Calendar. The department shall publish, no later than January 1 of each year, a rate calendar for the upcoming fiscal year that includes:

(a) The timeline for cost report submission, audit, and rate calculation;

(b) Dates for public hearings on proposed rates;

(c) The deadline for written comments from providers, beneficiaries, and the public;

(d) The date on which proposed rates will be published;

(e) The date on which final rates will be announced; and

(f) The effective date for new rates, which shall be July 1 of each year.

(2) Public Hearings. The department shall hold no fewer than two (2) public hearings annually on proposed Medicaid nursing facility rates, in geographically diverse locations within the state, with at least sixty (60) days' advance notice.

(3) Provider Comment Period. The department shall provide a written comment period of no fewer than sixty (60) days prior to the adoption of any change to Medicaid nursing facility reimbursement rates or methodology. The department shall publish a written response to all substantive comments received.

(4) Legislative Review. The department shall present proposed Medicaid nursing facility rates and methodology changes to the Joint Finance-Appropriations Committee and the germane joint subcommittee of the Senate Health and Welfare Committee and the House Health and Welfare Committee during each regular legislative session, prior to the effective date of such rates.

(5) Data Transparency. The department shall maintain on its publicly accessible website, and update at least annually:

(a) The complete Medicaid nursing facility rate-setting methodology;

(b) Aggregate cost report data by component;

(c) Facility-specific per diem rates and quality scorecard scores;

(d) Statewide rate adequacy analysis comparing rates to costs; and

(e) Comparison of Idaho Medicaid nursing facility rates to national averages and rates in neighboring states.

SECTION 12. That Title 56, Idaho Code, be, and the same is hereby amended by the addition thereto of a NEW SECTION, to be known and designated as Section 56-271, Idaho Code, and to read as follows:

56-271. STATE PLAN AMENDMENT.

(1) Within one hundred eighty (180) days of the effective date of this act, the department shall submit to the Centers for Medicare and Medicaid Services a Medicaid state plan amendment incorporating all changes to the Medicaid nursing facility reimbursement methodology and provider assessment required by this act.

(2) The department shall keep the Legislature informed of the status of the state plan amendment through quarterly written reports to the Legislative Services Office and the germane committees of the Senate and House of Representatives.

(3) If the Centers for Medicare and Medicaid Services requires material modifications to any provision of the state plan amendment that would alter the substantive requirements of this act, the department shall notify the Legislature and shall not agree to such modifications without review by the germane joint subcommittee of the Senate Health and Welfare Committee and the House Health and Welfare Committee.

(4) Tribal Consultation. Prior to submission of the state plan amendment, the department shall conduct meaningful consultation with each of Idaho's federally recognized tribes, including the Shoshone-Bannock Tribes, the Shoshone-Paiute Tribes, the Nez Perce Tribe, the Coeur d'Alene Tribe, and the Kootenai Tribe of Idaho, regarding the impact of this act on tribal members and tribal healthcare facilities. The department shall:

(a) Provide written notice to each tribal government at least sixty (60) days prior to submission of the state plan amendment;

(b) Offer to meet with each tribal government to discuss the proposed changes and receive input;

(c) Document all tribal consultation activities and incorporate any resulting modifications into the state plan amendment or implementation rules as appropriate; and

(d) Report on tribal consultation activities in the annual report required by Section 56-273, Idaho Code.

SECTION 13. That Title 56, Idaho Code, be, and the same is hereby amended by the addition thereto of a NEW SECTION, to be known and designated as Section 56-272, Idaho Code, and to read as follows:

56-272. IMPLEMENTATION AND TRANSITION.

(1) Phase 1 — Assessment and Workforce (July 1, 2027 – June 30, 2028). During the first year following the effective date of this act:

(a) The provider assessment rate increase to five and one-half percent (5.5%) of net patient revenue shall take effect;

(b) The nursing facility workforce development fund shall be established and begin accepting and distributing funds;

(c) The department shall submit the state plan amendment required by Section 56-271, Idaho Code;

(d) The department shall begin development of the component-based rate methodology and quality scorecard; and

(e) Interim rate increases sufficient to maintain the rate floor established in Section 56-266, Idaho Code, shall take effect.

(2) Phase 2 — Rate Methodology (July 1, 2028 – June 30, 2029). During the second year:

(a) The component-based rate methodology shall be fully implemented for all Medicaid-certified nursing facilities;

(b) The property component modernization shall take effect, replacing the historical base rate;

(c) The budget adjustment factor shall be eliminated; and

(d) The first annual rate calendar shall be published and followed.

(3) Phase 3 — Quality Program (July 1, 2029 – ongoing). During the third year:

(a) The quality incentive program shall be fully operational;

(b) Quality scorecard data shall be published for all facilities; and

(c) Quality incentive payments shall begin.

(4) Transition Protection. During the implementation period, no facility shall receive a per diem rate lower than the rate in effect for that facility on June 30, 2027, adjusted annually for inflation.

(5) Rulemaking Timeline. The department shall initiate negotiated rulemaking within ninety (90) days of the effective date of this act and shall promulgate all rules necessary to implement this act within one (1) year of the effective date.

SECTION 14. That Title 56, Idaho Code, be, and the same is hereby amended by the addition thereto of a NEW SECTION, to be known and designated as Section 56-273, Idaho Code, and to read as follows:

56-273. ANNUAL REPORT TO THE LEGISLATURE.

(1) The department shall submit an annual report to the Legislature, the Joint Finance-Appropriations Committee, and the germane committees of the Senate and House of Representatives, no later than December 1 of each year, containing:

(a) An analysis of Medicaid nursing facility rate adequacy, including a comparison of statewide average rates to statewide average costs;

(b) Quality scorecard results, statewide trends, and quality incentive payments made;

(c) Workforce development fund expenditures, training program outcomes, and statewide direct care worker vacancy and turnover rates;

(d) Provider assessment collections, federal matching funds received, and nursing facility sustainability fund balance;

(e) The number and location of facility closures, new certifications, and bed capacity changes;

(f) Medicaid nursing facility occupancy rates and access metrics by region;

(g) Comparison of Idaho Medicaid nursing facility rates and quality metrics to national averages and rates in neighboring states (Montana, Oregon, Washington, Utah, Wyoming, and Nevada); and

(h) Recommendations for legislative or administrative action to improve rate adequacy, quality, workforce, or access.

SECTION 15. That Title 56, Idaho Code, be, and the same is hereby amended by the addition thereto of a NEW SECTION, to be known and designated as Section 56-274, Idaho Code, and to read as follows:

56-274. RULEMAKING AUTHORITY.

(1) The department is hereby authorized and directed to promulgate rules, consistent with the provisions of Sections 56-260 through 56-274, Idaho Code, as necessary to implement this act.

(2) All rules promulgated pursuant to this section shall be adopted in accordance with the Idaho Administrative Procedure Act, Chapter 52, Title 67, Idaho Code.

(3) The department may adopt temporary rules, pursuant to Section 67-5226, Idaho Code, to the extent necessary for initial implementation of this act during the first year following the effective date.

(4) Prior to initiating rulemaking for the component-based rate methodology and quality scorecard, the department shall conduct a negotiated rulemaking process, pursuant to Section 67-5220, Idaho Code, including participation by representatives of Medicaid-certified nursing facilities, consumer advocacy organizations, the Legislature, and other interested parties.

SECTION 16. APPROPRIATION.

There is hereby appropriated to the Department of Health and Welfare from the General Fund the sum of _____________________ dollars ($__________) for the period July 1, 2027, through June 30, 2028, for the purpose of implementing the provisions of this act, including staff, systems development, and administrative costs associated with developing the component-based rate methodology, quality incentive program, and workforce development fund. Such appropriation is in addition to, and not in replacement of, any other appropriation for Medicaid nursing facility services.

SECTION 17. SEVERABILITY.

The provisions of this act are hereby declared to be severable and if any provision of this act or the application of such provision to any person or circumstance is declared invalid for any reason, such declaration shall not affect the validity of the remaining portions of this act.

SECTION 18. EMERGENCY — EFFECTIVE DATE.

An emergency existing therefor, which emergency is hereby declared to exist, Section 8 of this act, relating to the provider assessment rate, and Section 10 of this act, relating to the nursing facility workforce development fund, shall be in full force and effect on and after July 1, 2027. All other sections of this act shall be in full force and effect on and after July 1, 2027, and shall be implemented in phases as provided in Section 56-272, Idaho Code.

STATEMENT OF PURPOSE

RS _________

This legislation establishes the Idaho Nursing Facility Sustainability and Quality Act, a comprehensive reform of Idaho's Medicaid skilled nursing facility reimbursement system. Idaho's current Medicaid nursing facility rate of approximately $259 per patient day ranks 46th in the nation and is the lowest in the Intermountain West region. The current methodology relies on a patient classification system (RUG-III) that the federal government abandoned in 2019 and a property base rate established in 1985. A budget adjustment factor systematically reduces calculated rates below the level supported by actual costs.

This act modernizes the rate methodology by adopting a component-based system aligned with the federal Patient-Driven Payment Model (PDPM), eliminates the blanket budget adjustment factor, establishes a rate floor at 90% of median cost, increases the provider assessment from approximately 3.5% to 5.5% of net patient revenue (within the 6% federal safe harbor) to maximize federal matching funds, creates a quality incentive program that rewards facilities for superior outcomes, establishes a workforce development fund to address the critical shortage of certified nursing assistants, and reforms the rate-setting process to ensure transparency, public participation, and legislative oversight.

The legislation prevents mid-year rate reductions without access impact studies, public comment, and legislative review. Implementation is phased over three years: assessment increase and workforce fund in Year 1, rate methodology transition in Year 2, and quality incentive program in Year 3.

FISCAL NOTE

General Fund Impact: Net state general fund cost is estimated at $5.3 million in Year 1 (Moderate scenario: +20% rate increase), rising to $26.7 million at full implementation if rates reach regional parity. At the Moderate scenario, this equals approximately $2.80 per Idaho resident per year. Every $1 of state investment generates approximately $2.33 in federal matching funds.

Revenue Offset: Increased federal matching funds and reduced costs associated with facility closures (emergency Medicaid placement of displaced residents, hospital-level care for those without nursing facility access) are expected to partially offset general fund expenditures. The Medicaid Payment Advisory Commission estimates that the average cost of care for a displaced nursing facility resident is 40–60% higher in alternative settings.

Local Government Impact: None. This legislation does not impose any mandate or cost on local governments.

Contact:

Representative _________________________, (208) ___-____
Senator _________________________, (208) ___-____

Prepared with assistance from:
Idaho Health Care Association (IHCA)
Robert Vande Merwe, Executive Director
Riley Sessions, President • Luke Malek, Policy Director
13945 W. Wainwright Drive, Suite 101 • Boise, ID 83713
(208) 343-9735

DRAFT — Idaho Nursing Facility Sustainability and Quality Act
Prepared August 2026 by the Idaho Health Care Association (IHCA)
Robert Vande Merwe, Executive Director • For review and refinement by Idaho Legislative Services Office