Page 700

residents, incentivize quality care for residents of nursing homes, 1 and establish minimum staffing standards for direct care. 2 (2) The new system must be based primarily on industry-wide 3 costs, and have three main components: Direct care, indirect care, 4 and capital. 5 (3)(a) The direct care component must include the direct care and 6 therapy care components of the previous system, along with food, 7 laundry, and dietary services. Except as provided in (b) of this 8 subsection, direct care must be paid at a fixed rate, based on one 9 hundred percent or greater of statewide case mix neutral median 10 costs, but shall be capped so that a nursing home provider's direct 11 care rate does not exceed 118 percent of its base year's direct care 12 allowable costs except if the provider is below the minimum staffing 13 standard established in RCW 74.42.360(2). ((The legislature intends 14 to remove the cap on direct care rates by June 30, 2027.)) Direct 15 care must be performance-adjusted for acuity every six months, using 16 case mix principles. Direct care must be regionally adjusted using 17 countywide wage index information available through the United States 18 department of labor's bureau of labor statistics. There is no minimum 19 occupancy for direct care. The direct care component rate allocations 20 calculated in accordance with this section must be adjusted to the 21 extent necessary to comply with RCW 74.46.421. 22 (b) Unless a nursing home provider is below the minimum staffing 23 standard established in RCW 74.42.360(2), a provider's direct care 24 rate relative to its base year's direct care allowable costs must be 25 capped as follows: 26 (i) For fiscal year 2023, the cap must not exceed 165 percent; 27 (ii) For fiscal year 2024, the cap must not exceed 153 percent; 28 and 29 (iii) For fiscal year 2025, the cap must not exceed 142 percent. 30 (4)(a) The indirect care component must include the elements of 31 administrative expenses, maintenance costs, and housekeeping services 32 from the previous system. Except as provided in (b) of this 33 subsection, a minimum occupancy assumption of ninety percent must be 34 applied to indirect care. Indirect care must be paid at a fixed rate, 35 based on ninety percent or greater of statewide median costs. The 36 indirect care component rate allocations calculated in accordance 37 with this section must be adjusted to the extent necessary to comply 38 with RCW 74.46.421. 39 p. 699 ESSB 5187.SL