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SB143 ENROLLED
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SB143
2JVXESS-2
By Senator Albritton
RFD: Finance and Taxation General Fund
First Read: 14-Jan-26
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First Read: 14-Jan-26
Enrolled, An Act,
Relating to the privilege assessment for nursing homes;
to amend Section 40-26B-21, as last amended by Act 2025-299,
2025 Regular Session, Code of Alabama 1975; to make the
supplemental privilege assessment, the secondary supplemental
privilege assessment, and the surcharge permanent by removing
the August 31, 2028, sunset date each place it appears; to
amend Section 40-26B-26, Code of Alabama 1975, to make
Medicaid reimbursement of nursing homes to be in accordance
with the reimbursement methodology contained in Chapter
560-X-22 of the Alabama Administrative Code in effect as of
May 1, 2026.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Section 40-26B-21, as last amended by Act
2025-299, 2025 Regular Session, Code of Alabama 1975, is
amended to read as follows:
"§40-26B-21
To provide further for the availability of indigent
health care, the operation of the Medicaid program, and the
maintenance and expansion of medical services:
(a) There is levied and shall be collected a privilege
assessment on the business activities of every nursing
facility in the State of Alabama. The privilege assessment
imposed is in addition to all other taxes and assessments, and
shall be at the annual rate of one thousand eight hundred
ninety-nine dollars and ninety-six cents ($1,899.96) for each
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ninety-nine dollars and ninety-six cents ($1,899.96) for each
bed in the nursing facility. Beginning September 1, 2020, the
privilege assessment shall be increased from one thousand
eight hundred ninety-nine dollars and ninety-six cents
($1,899.96) for each bed in the nursing facility, by an
addition to the privilege assessment equal to three hundred
twenty-seven dollars and forty-eight cents ($327.48) per
annum. The addition to the privilege assessment shall be paid
in equal monthly installments and shall merge into and be a
part of the privilege assessment described in this subsection.
The payment to nursing facilities of the determined allowable
costs in respect to the addition to the privilege assessment
described in this subsection shall be included in Medicaid per
diem rates for services provided commencing as of October 1,
2020, and shall continue to be included in such Medicaid per
diem rates in the same manner that reimbursement for the
privilege assessment is included in Medicaid per diem rates.
For each Medicaid nursing facility, in determining the October
1, 2020 adjustment to the Medicaid per diem for the allowable
costs associated with the addition to the privilege
assessment, the Medicaid Agency shall divide the total
addition to the privilege assessment by the total of all
incurred resident days , (regardless of payor class ,) reported
by each nursing facility in its Medicaid cost report filed for
the period then ending ended June 30, 2019. Notwithstanding the
foregoing, in the event that the June 30, 2019 cost report is
for a period of less than one year, the resident days reported
shall be annualized. After the October 1, 2020 adjustment
under this subsection, the addition to the privilege
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under this subsection, the addition to the privilege
assessment shall be fully merged into the privilege assessment
and reimbursed in accordance with the method set forth for
calculating the reimbursement for the privilege assessment. In
the event that any portion of the privilege assessment paid by
a facility cannot be included in the computation of Medicaid
per diem rate because of the effect of any cost ceiling
provision of the reimbursement methodology, the cost ceiling
shall be adjusted to ensure continued treatment of the total
privilege assessments as an allowable cost.
(b)(1) For the period Beginning September 1, 2010 ,
through August 31, 2028 , there is levied and shall be
collected a supplemental privilege assessment on the business
activities of every nursing facility in the State of Alabama.
The supplemental privilege assessment imposed is in addition
to all other taxes and assessments, including, without
limitation, the privilege taxes provided for under this
article, and from September 1, 2010, through August 31, 2011,
shall be at the annual rate of one thousand sixty-three
dollars and eight cents ($1,063.08) for each bed in the
nursing facility, and one thousand six hundred three dollars
and eight cents ($1,603.08) for the period periods beginning of
September 1, 2011, through August 31, 2028, except that
beginning May 19, 2012. Beginning with the monthly payment for
the supplemental privilege assessment due beginning May 20,
2012, and ending August 31, 2028, there shall be a monthly
surcharge due with each monthly payment of the supplemental
privilege assessment. The initial monthly surcharge shall be
one hundred thirty-one dollars and twenty-five cents ($131.25)
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one hundred thirty-one dollars and twenty-five cents ($131.25)
per licensed bed. Beginning with the monthly payment of the
supplemental privilege assessment due on September 20, 2012,
the monthly surcharge shall be reduced to forty-three dollars
and seventy-five cents ($43.75) per bed, per month.
(2) For the period Beginning October 1, 2015 , through
August 31, 2028 , there shall be collected a secondary
supplemental privilege assessment on the business activities
of every nursing facility in the State of Alabama. The
secondary supplemental privilege assessment imposed in this
subdivision is contingent upon the minimum appropriation
provided in Section 2 of Act 2015-536, and is in addition to
all other taxes and assessments, including, without
limitation, the privilege taxes provided for under this
article, and beginning October 1, 2015, shall be at the annual
rate of four hundred one dollars and twenty-eight cents
($401.28) for each bed in the nursing facility, payable
monthly.
(c) The total privilege assessment (and the addition to
the privilege assessment), supplemental privilege assessment,
secondary privilege assessment, (privilege assessments) and
surcharge paid by a nursing facility pursuant to this article
shall be considered an allowable cost, as that term is defined
in the reimbursement methodology for nursing facilities
contained in Title 560 of the Alabama Administrative Code,
and, to the extent permitted under applicable federal law
governing the Alabama Medicaid nursing home program, the total
privilege assessments paid must be included in the computation
of the Medicaid per diem rate determined under the
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of the Medicaid per diem rate determined under the
reimbursement methodology for nursing facilities contained in
Title 560 of the Alabama Administrative Code. The payment to
nursing facilities of the determined allowable costs in
respect to the supplemental privilege assessment described in
subsection (b) shall be included in Medicaid per diem rates
for services provided commencing as of January 1, 2011, and
shall continue to be included in such Medicaid per diem rates
for a period equal to the number of months during which the
supplemental assessments have been in effect. For each
Medicaid nursing facility, in determining the adjustment to
the Medicaid per diem for the allowable costs associated with
the supplemental assessment, the Medicaid Agency shall divide
the total supplemental assessment due under subsection (b) by
the total of all incurred resident days , (regardless of payor
class,) reported by such nursing facility in its Medicaid cost
report filed for the period then ending ended June 30, 2010. To
accommodate the increase in the supplemental assessment and
the surcharge described in subsection (b), the agency shall
use the mechanism described in this subsection to adjust each
nursing facility's rate effective as of October 1, 2011,
regarding the privilege assessment, and May 1, 2012, regarding
the surcharge. Notwithstanding the foregoing, in the event
that such cost report shall be for a period less than one
year, the resident days reported shall be annualized. In the
event that any portion of the privilege assessment paid by a
facility cannot be included in the computation of the Medicaid
per diem rate because of the effect of any cost ceiling
provision of the reimbursement methodology, the cost ceiling
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provision of the reimbursement methodology, the cost ceiling
must be adjusted to ensure continued treatment of the total
privilege assessments as an allowable cost.
(d) The privilege assessment rate or the supplemental
privilege assessment rate or the surcharge rate shall be
reduced by the department upon the advice of the Medicaid
Agency if, but only if, such reduction is required to ensure
that the total revenues to the State of Alabama produced by
this privilege assessment or, if the supplemental privilege
assessment and surcharge are in effect, the aggregate of the
supplemental privilege assessment and surcharge and the
privilege assessment, during any state fiscal year are less
than or equal to six percent of the total revenues received by
the nursing facilities in the state subject to the assessment
during that same fiscal year. In the event that the
supplemental privilege assessment or surcharge are reduced as
provided in the preceding sentence, then for each Medicaid
nursing facility a corresponding reduction shall be made to
the Medicaid per diem adjustment described in subsection (c)
to ensure that only the amount of supplemental privilege
assessment or surcharge actually paid is used in computing
that Medicaid nursing facility's allowable costs.
(e) The Medicaid nursing facility program shall
continue to be administered directly by the Medicaid Agency
during the period in which the provider assessment provided by
this section is levied and collected."
Section 2. Section 40-26B-26, Code of Alabama 1975, is
amended to read as follows:
"§40-26B-26
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"§40-26B-26
(a) No revenues resulting from the privilege assessment
established by this article and applied to increases in
covered services or reimbursement levels or other enhancements
of the Medicaid program shall be subject to reduction or
elimination while the privilege assessment is in effect.
(b) Every nursing facility participating in the
Medicaid program in the State of Alabama shall be reimbursed
according to the reimbursement methodology contained in
Chapter 560-X-22 of the Alabama Administrative Code, as it is
in effect as of May 1, 2026, which methodology is incorporated
by reference herein, except that the following shall apply:
(1) The ceiling for the operating cost center described
in Rule 560-X-22-.06(2)(a) of the Alabama Administrative Code
shall be computed at the median plus five percent.
(2) The ceiling for the direct patient care cost center
described in Rule 560-X-22-.06(2)(b) of the Alabama
Administrative Code shall be computed at the median plus 10
percent, and the provider's actual allowable reported cost per
patient day plus 11 percent, or the established ceiling plus
11 percent, whichever is less, will be used for each
provider's rate computation.
(3) The Medicaid Inflation Index described in Rule
560-X-22-.07 of the Alabama Administrative Code shall be
computed without regard to the trend factor variance described
in Rule 560-X-22-.07(4) of the Alabama Administrative Code.
(4) In calculating the ceiling for the operating cost
center, the direct patient care cost center or the indirect
patient care cost center, any increase in that ceiling over
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patient care cost center, any increase in that ceiling over
such ceiling set in the year next preceding, shall not exceed
an amount equal to the product of such ceiling for the
previous year times the sum of the Medicaid Inflation Index,
described in Rule 560-X-22-.07 of the Alabama Administrative
Code, plus four percent.
(5) In determining the reimbursement in any fiscal year
to a nursing facility for certain specialized medical
equipment as described in Rule 560-X-22-.14(19) of the Alabama
Administrative Code, there shall be added to the daily
Medicaid per diem rate computed for that fiscal year, without
regard to the cost of such specialized medical equipment, an
amount equal to the actual cost of such specialized medical
equipment utilized for Medicaid residents during the fiscal
year next preceding and divided by the actual number of
Medicaid patient days incurred during that preceding fiscal
year. For the purpose of this subdivision, the terms "Medicaid
patient days ,"", "Medicaid per diem rate ,"", and "fiscal year"
shall have the meanings assigned to them in Chapter 560-X-22
of the Alabama Administrative Code.
(6) For the period that the federal financial
participation under Title XIX of the Social Security Act for
certain intergovernmental transfers is available to the
Alabama Medicaid program, the commissioner of the agency may
pay an enhancement, not to exceed the upper limits for
Medicare nursing facility payments, to rural hospital
connected nursing facilities under governmental authority or
control. Notwithstanding the foregoing, the enhancement shall
not be limited by the provisions of Chapter 560-X-22 of the
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not be limited by the provisions of Chapter 560-X-22 of the
Alabama Administrative Code.
(7) Notwithstanding subdivision (3), from October 1,
2011, through September 30, 2014, in applying the inflation
factor, zero percent shall be used to compute overall rates.
(8) Beginning with the setting of Medicaid nursing
facility rates based on the cost reporting period ending ended
June 30, 2020, the current asset value, as described in Rule
560-X-22-.14(11) of the Alabama Administrative Code, for each
nursing facility, after applying the July 1, 2020, rebasing as
provided under Rule 560-X-22-.14(11) of the Alabama
Administrative Code, used to calculate nursing facility rates,
shall be recalculated by adding to each respective nursing
facility's current asset value an amount equal to the product
derived by multiplying the June 30, 2020, rebasing as provided
under Rule 560-X-22-.14(11) of the Alabama Administrative Code
by 41.03 percent %. The current asset value as adjusted herein,
shall be rebased each subsequent year in accordance with Rule
560-X-22.14 of the Alabama Administrative Code, and applied to
calculate Medicaid nursing facility rates each subsequent cost
reporting year. Notwithstanding anything to the contrary in
the foregoing, for the purposes of applying the recalculated
current asset value to calculate a nursing facility's Medicaid
rate for the cost reporting year beginning July 1, 2020, any
resulting rate increase shall be effective for services
provided on or after October 1, 2020. No nursing facility
Medicaid rate increase for the recalculation of current asset
value described in this subdivision shall be effective for
services provided prior to October 1, 2020.
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services provided prior to October 1, 2020.
(9) For purposes of revising or adjusting the ceiling
under Rule 560-X-22-.06(3) of the Alabama Administrative Code,
once the ceiling has been established for a fiscal year, it
shall be final and not subject to revision or adjustment
during that year, except as provided in this subdivision. At
the discretion of the agency, the ceiling may be revised or
adjusted upon either the discovery of a material error or upon
a determination by the commissioner that it is necessary to
increase one or more of the ceilings in the event nursing
facilities are unable to be reimbursed for increases in
allowable costs that were required to be expended by nursing
facilities to meet a nationwide or statewide public health
emergency or because of a new federal or state law or
regulation or a statewide uncontrollable catastrophic event
affecting a majority of nursing facilities, and the resulting
increase in allowable costs would not be reimbursed due to the
annual ceiling increase limitation set forth in Rule
560-X-22-.06(2) of the Alabama Administrative Code. Because
the ceiling rate is based on information provided in the cost
reports, it is to the benefit of each provider to ensure that
the provider's information is correct and accurate. If obvious
errors are detected during the desk audit process, providers
shall be given an opportunity to submit corrected data to the
agency.
(c) Payments by the Medicaid program to each nursing
facility for nursing home services shall be sufficient to
cover the costs determined by cost reporting principles
incurred by each such nursing facility in providing care in an
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incurred by each such nursing facility in providing care in an
economical and efficient manner and that is adequate to permit
the provision of care and services necessary to attain or
maintain the highest practicable, physical, mental, and
psychosocial well-being of each resident eligible for Alabama
Medicaid nursing home benefits in conformity with applicable
state and federal laws, rules, and regulations and quality and
safety standards.
(d) Notwithstanding subsection (b), Medicaid shall be
empowered to create a special reimbursement model to
accommodate enhanced reimbursed care provided in dedicated
ventilator units in nursing facilities that meet special
physical plant requirements such as dedicated emergency power
generation, through-the-wall medical gases and suction,
24-hour per day staffing with trained licensed respiratory
therapists, and medical direction through contract with or
employment of an Alabama licensed physician who is a board
certified pulmonologist.
(e)(1) Notwithstanding subsection (b), the Alabama
Medicaid Agency may create a quality incentive program for
nursing facilities that meet certain quality measures during
the scoring year. For the purpose of this subsection, the
scoring year for any year is the cost reporting year beginning
July 1 and ending June 30. The first scoring period shall be
July 1, 2020, through June 30, 2021. The quality incentive
shall be paid to nursing facilities in a lump sum on or before
February 1, following the scoring period ending ended the
immediately prior June 30. For each scoring year, the Alabama
Medicaid Agency shall establish a quality incentive fund of
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Medicaid Agency shall establish a quality incentive fund of
not less than five-million dollars ( $5,000,000 ), from which
quality incentive awards will be awarded and paid to those
nursing facilities qualifying for a quality incentive award.
Quality incentive scoring for each scoring period shall be
determined from certain measures selected by the Alabama
Medicaid Agency from both of the following:
a. Five of the MDS Quality Measures compiled by the
Centers for Medicare and Medicaid Services (CMS), Department
of Health and Human Services.
b. Three of customer satisfaction survey categories
that are independently gathered and prepared by NRC Health, or
another nationally recognized satisfaction survey company with
experience in the long - term care field.
(2) The Alabama Medicaid Agency shall determine the
manner that scoring points are awarded, provided that to be
eligible to earn points for any category, a nursing facility
must do either of the following:
a. Show improvement in that category during the current
scoring period over the most recent prior scoring period.
b. Rank for that category at or above the established
national average."
Section 3. This act shall become effective on June 1,
2026.
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2026.
________________________________________________
President and Presiding Officer of the Senate
________________________________________________
Speaker of the House of Representatives
SB143
Senate 11-Mar-26
I hereby certify that the within Act originated in and passed
the Senate.
Patrick Harris,
Secretary.
House of Representatives
Passed: 01-Apr-26
By: Senator Albritton
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