AN ACT RELATING TO HUMAN SERVICES -- MEDICAL ASSISTANCE (Requires the executive office of health and human services to consider a new element when reviewing the appropriate Medicaid payments to be paid to nursing facilities.)

S2880

2026 -- S 2880
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LC005531
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
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A N A C T
RELATING TO HUMAN SERVICES -- MEDICAL ASSISTANCE

Introduced By:
Senator Louis P. DiPalma

Date Introduced:
March 04, 2026

Referred To:
Senate Health & Human Services
It is enacted by the General Assembly as follows:
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SECTION 1. Section 40-8-19 of the General Laws in Chapter 40-8 entitled "Medical
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Assistance" is hereby amended to read as follows:
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40-8-19. Rates of payment to nursing facilities.
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(a)
Rate reform.
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(1) The rates to be paid by the state to nursing facilities licensed pursuant to chapter 17 of
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title 23, and certified to participate in Title XIX of the Social Security Act for services rendered to
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Medicaid-eligible residents, shall be reasonable and adequate to meet the costs that must be
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incurred by efficiently and economically operated facilities in accordance with 42 U.S.C. §
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1396a(a)(13). The executive office of health and human services (“executive office”) shall
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promulgate or modify the principles of reimbursement for nursing facilities in effect as of July 1,
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2011, to be consistent with the provisions of this section and Title XIX, 42 U.S.C. § 1396 et seq.,
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of the Social Security Act.
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(2) The executive office shall review the current methodology for providing Medicaid
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payments to nursing facilities, including other long-term care services providers, and is authorized
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to modify the principles of reimbursement to replace the current cost-based methodology rates with
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rates based on a price-based methodology to be paid to all facilities with recognition of the acuity
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of patients and the relative Medicaid occupancy, and to include the following elements to be
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developed by the executive office:
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(i) A direct-care rate adjusted for resident acuity;

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(ii) An indirect-care and other direct-care rate comprised of a base per diem for all facilities;
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(iii) Revision of rates as necessary, based on increases in direct and indirect costs beginning
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October 2027 utilizing data from the most recent finalized year of the facility's cost report. The per
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diem rate components referred in subsections (a)(2)(i) and (a)(2)(ii) of this section shall be adjusted
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accordingly to reflect changes in direct and indirect care costs since the previous rate review;
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(iii)
(iv)
Revision of rates as necessary based on increases in direct and indirect costs
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beginning October 2024 utilizing data from the most recent finalized year of facility cost report.
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The per diem rate components deferred in subsections (a)(2)(i) and (a)(2)(ii) of this section shall
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be adjusted accordingly to reflect changes in direct and indirect care costs since the previous rate
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review;
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(iv)
(v)
Application of a fair-rental value system;
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(v)
(vi)
Application of a pass-through system; and
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(vi)
(vii)
Adjustment of rates by the change in a recognized national nursing home inflation
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index to be applied on October 1 of each year, beginning October 1, 2012. This adjustment will not
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occur on October 1, 2013, October 1, 2014, or October 1, 2015, but will occur on April 1, 2015.
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The adjustment of rates will also not occur on October 1, 2017, October 1, 2018, October 1, 2019,
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and October 2022. Effective July 1, 2018, rates paid to nursing facilities from the rates approved
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by the Centers for Medicare and Medicaid Services and in effect on October 1, 2017, both fee-for-
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service and managed care, will be increased by one and one-half percent (1.5%) and further
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increased by one percent (1%) on October 1, 2018, and further increased by one percent (1%) on
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October 1, 2019. Effective October 1, 2022, rates paid to nursing facilities from the rates approved
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by the Centers for Medicare and Medicaid Services and in effect on October 1, 2021, both fee-for-
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service and managed care, will be increased by three percent (3%). In addition to the annual nursing
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home inflation index adjustment, there shall be a base rate staffing adjustment of one-half percent
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(0.5%) on October 1, 2021, one percent (1.0%) on October 1, 2022, and one and one-half percent
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(1.5%) on October 1, 2023. For the twelve-month (12) period beginning October 1, 2025, rates paid
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to nursing facilities from the rates approved by the Centers for Medicare and Medicaid Services
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and in effect on October 1, 2024, both fee-for-service and managed care, will be increased by two
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and three-tenths percent (2.3%). There shall also be a base rate staffing adjustment of three percent
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(3%) effective October 1, 2025. Not less than one hundred percent (100%) of this base-rate staffing
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adjustment shall be expended by each nursing facility to increase compensation, wages, benefits,
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and related employer costs, for eligible direct-care staff, including the cost of hiring additional
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eligible direct-care positions, as defined in this subsection (a)(2)(vi). The inflation index shall be
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applied without regard for the transition factors in subsections (b)(1) and (b)(2). For purposes of

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October 1, 2016, adjustment only, any rate increase that results from application of the inflation
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index to subsections (a)(2)(i) and (a)(2)(ii) shall be dedicated to increase compensation for direct-
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care workers in the following manner: Not less than eighty-five percent (85%) of this aggregate
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amount shall be expended to fund an increase in wages, benefits, or related employer costs of direct-
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care staff of nursing homes. For purposes of this section, direct-care staff shall include registered
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nurses (RNs), licensed practical nurses (LPNs), certified nursing assistants (CNAs), certified
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medical technicians, housekeeping staff, laundry staff, dietary staff, or other similar employees
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providing direct-care services; provided, however, that this definition of direct-care staff shall not
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include: (i) RNs and LPNs who are classified as “exempt employees” under the federal Fair Labor
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Standards Act (29 U.S.C. § 201 et seq.); or (ii) CNAs, certified medical technicians, RNs, or LPNs
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who are contracted, or subcontracted, through a third-party vendor or staffing agency. By July 31,
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2017, nursing facilities shall submit to the secretary, or designee, a certification that they have
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complied with the provisions of this subsection (a)(2)(vi) with respect to the inflation index applied
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on October 1, 2016. Any facility that does not comply with the terms of such certification shall be
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subjected to a clawback, paid by the nursing facility to the state, in the amount of increased
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reimbursement subject to this provision that was not expended in compliance with that certification.
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(3) Commencing on October 1, 2021, eighty percent (80%) of any rate increase that results
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from application of the inflation index to subsections (a)(2)(i) and (a)(2)(ii) of this section shall be
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dedicated to increase compensation for all eligible direct-care workers in the following manner on
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October 1, of each year.
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(i) For purposes of this subsection, compensation increases shall include base salary or
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hourly wage increases, benefits, other compensation, and associated payroll tax increases for
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eligible direct-care workers. This application of the inflation index shall apply for Medicaid
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reimbursement in nursing facilities for both managed care and fee-for-service. For purposes of this
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subsection, direct-care staff shall include registered nurses (RNs), licensed practical nurses (LPNs),
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certified nursing assistants (CNAs), certified medication technicians, licensed physical therapists,
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licensed occupational therapists, licensed speech-language pathologists, mental health workers
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who are also certified nurse assistants, physical therapist assistants, social workers, or any nurse
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aides with a valid license, even if it is probationary, housekeeping staff, laundry staff, dietary staff,
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or other similar employees providing direct-care services; provided, however that this definition of
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direct-care staff shall not include:
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(A) RNs and LPNs who are classified as “exempt employees” under the federal Fair Labor
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Standards Act (29 U.S.C. § 201 et seq.); or
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(B) CNAs, certified medication technicians, RNs, or LPNs who are contracted or

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subcontracted through a third-party vendor or staffing agency.
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(4)(i) By July 31, 2021, and July 31 of each year thereafter, nursing facilities shall submit
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to the secretary or designee a certification that they have complied with the provisions of subsection
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(a)(3) of this section with respect to the inflation index applied on October 1. The executive office
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of health and human services (EOHHS) shall create the certification form nursing facilities must
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complete with information on how each individual eligible employee’s compensation increased,
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including information regarding hourly wages prior to the increase and after the compensation
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increase, hours paid after the compensation increase, and associated increased payroll taxes. A
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collective bargaining agreement can be used in lieu of the certification form for represented
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employees. All data reported on the compliance form is subject to review and audit by EOHHS.
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The audits may include field or desk audits, and facilities may be required to provide additional
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supporting documents including, but not limited to, payroll records.
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(ii) Any facility that does not comply with the terms of certification shall be subjected to a
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clawback and twenty-five percent (25%) penalty of the unspent or impermissibly spent funds, paid
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by the nursing facility to the state, in the amount of increased reimbursement subject to this
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provision that was not expended in compliance with that certification.
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(iii) In any calendar year where no inflationary index is applied, eighty percent (80%) of
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the base rate staffing adjustment in that calendar year pursuant to subsection (a)(2)(vi) of this
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section shall be dedicated to increase compensation for all eligible direct-care workers in the
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manner referenced in subsections (a)(3)(i), (a)(3)(i)(A), and (a)(3)(i)(B) of this section.
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(b)
Transition to full implementation of rate reform.
For no less than four (4) years after
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the initial application of the price-based methodology described in subsection (a)(2) to payment
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rates, the executive office of health and human services shall implement a transition plan to
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moderate the impact of the rate reform on individual nursing facilities. The transition shall include
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the following components:
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(1) No nursing facility shall receive reimbursement for direct-care costs that is less than
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the rate of reimbursement for direct-care costs received under the methodology in effect at the time
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of passage of this act; for the year beginning October 1, 2017, the reimbursement for direct-care
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costs under this provision will be phased out in twenty-five-percent (25%) increments each year
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until October 1, 2021, when the reimbursement will no longer be in effect; and
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(2) No facility shall lose or gain more than five dollars ($5.00) in its total, per diem rate the
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first year of the transition. An adjustment to the per diem loss or gain may be phased out by twenty-
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five percent (25%) each year; except, however, for the years beginning October 1, 2015, there shall
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be no adjustment to the per diem gain or loss, but the phase out shall resume thereafter; and

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(3) The transition plan and/or period may be modified upon full implementation of facility
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per diem rate increases for quality of care-related measures. Said modifications shall be submitted
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in a report to the general assembly at least six (6) months prior to implementation.
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(4) Notwithstanding any law to the contrary, for the twelve-month (12) period beginning
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July 1, 2015, Medicaid payment rates for nursing facilities established pursuant to this section shall
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not exceed ninety-eight percent (98%) of the rates in effect on April 1, 2015. Consistent with the
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other provisions of this chapter, nothing in this provision shall require the executive office to restore
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the rates to those in effect on April 1, 2015, at the end of this twelve-month (12) period.
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SECTION 2. This act shall take effect upon passage.
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO HUMAN SERVICES -- MEDICAL ASSISTANCE
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This act would require the executive office of health and human services to consider a new
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element when reviewing the appropriate Medicaid payments to be paid to nursing facilities. The
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act would require the executive office to specifically review the increases in direct and indirect
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costs beginning October of 2027 to reflect changes using data from the most recent finalized year
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of a facility's costs.
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This act would take effect upon passage.
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LC005531
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